Thursday Watch

Evening Headlines

Bloomberg:

• Trump and Macron Get to Push Reset on Their Awkward Relationship. The awkward relationship between Donald Trump and Emmanuel Macron that began with a white-knuckle handshake and the U.S. president’s repudiation of the Paris climate accords gets a chance for a reset with Trump’s two-day visit to France. For Trump, a businessman who first rose to prominence with a book celebrating deal-making, the meeting with the new French president offers an opportunity for the type of face-to-face transactional diplomacy he relishes.

• Workers of the Euro Area Rise Up and Ask for More Pay, Maybe. Euro-area labor representatives are about to test whether the broadest economic growth in years can finally deliver a decent pay rise. Unions in the currency bloc’s largest nations, interviewed by Bloomberg this month, blame lackluster pay gains on dampened expectations among workers since the region’s financial crises, and reforms that have weakened their negotiating power. Now they can point to four years of economic recovery and the return of inflation as they urge employers to countenance bigger increases in collective-bargaining agreements.

• Bank of Korea Holds Key Rate Steady, to Review Economic Outlook. South Korea’s central bank held its benchmark rate on Thursday as export growth and planned fiscal stimulus add to optimism about the economy. The decision to keep the seven-day repurchase rate at a record-low 1.25 percent was forecast by all 20 economists surveyed by Bloomberg. The Bank of Korea will also update its quarterly outlooks for gross domestic product and inflation later Thursday, having previously forecast 2.6 percent and 1.9 percent, respectively, for this year.

• Asian Stocks to Gain as Yellen Spurs U.S. Rally. Futures on the Nikkei 225 Stock Average in Chicago were trading 0.4 percent higher than the index’s Wednesday close. Contracts on equities in Australia rose 0.5 percent, while those on the Kospi were up 0.6 percent and FTSE A50 China futures gained 0.3 percent. The yen was at 113.22 per dollar as of 7:16 a.m. in Tokyo, after climbing 0.7 percent Wednesday in its biggest gain for more than a month.

• Nigeria Signals Willingness to Cap Oil Production. (video)

• Five Things You Need to Know to Start Your Day.

• MacroPolicy Perspectives Says Yellen was a Bit Dovish. (video)

• NFL Teams Split Record $7.8 Billion in 2016, Up 10 Percent.

Wall Street Journal:

• China’s Booming Housing Market Proves Impossible to Tame. Beijing’s efforts to curb speculation have only made buyers more determined; many believe the government won’t allow a market collapse.

• McConnell Faces Increasing Pressure Over Health Bill as Timetable Tightens. Senate GOP to unveil latest draft on Thursday as internal squabbling imperils path forward.

• FBI Nominee Christopher Wray Promises to Remain Independent of White House. Senators focus on autonomy in wake of Trump’s firing of ex-Director James Comey.

Fox News:

• Shadowy company tied to Russia meeting linked to Trump Jr. troubles. (video)

• White House goes on offense, slams DNC, Clintons for ‘collusion’. (video)

CNBC:

• A big deal in nonprime mortgages proves leery investors are finally hungry again.

• Major defense stocks reach all-time highs as investors see weapons spending boost.

• Machines taking over hedge funds despite lack of evidence they outperform humans. (video)

Zero Hedge:

• "Canada Is In Serious Trouble" Again, And This Time It's For Real. (graph)

• Trump: "I Think Many People Would Have Held That Meeting".

• Wal-Mart(WMT) Threatens To Fine Suppliers For Delivering Goods Early.

• China Deploys Troops To Its First Overseas Military Base In Africa.  

• New Op-Ed From Senator Rand Paul Blasts GOP Decision To "Keep Obamacare".

• "Buy All The Things" - Yellen's Dovish Flip Sparks Bid In Stocks, Bonds, Bullion, & Bitcoin. (graph)

Business Insider:

• Jared Kushner is under fire as all eyes turn to the only White House adviser in on the Don Jr. meeting with a Russian lawyer.

• Central banks could be moving us closer to the next financial crisis.

Night Trading 

• Asian equity indices are +.5% to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 86.25 -1.0 basis point. 

• Asia Pacific Sovereign CDS Index 22.0 unch.

• Bloomberg Emerging Markets Currency Index 72.96 +.66%.

• S&P 500 futures +.07%.

• NASDAQ 100 futures +.23%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CBSH)/.70

• (DAL)/1.66

• (TSM)/2.63

Economic Releases 
8:30 am EST

• Initial Jobless Claims for last week are estimated to fall to 245K versus 248K the prior week.

• Continuing Claims are estimated to fall to 1950K versus 1956K prior.

• The PPI Final Demand MoM for June is estimated unch. versus unch. in May.

• The PPI Ex Food and Energy MoM for June is estimated to rise +.2% versus a +.3% gain in May.
  

2:00 pm EST

• The Monthly Budget Deficit for June is estimated at -$38.0B.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Yellen testifying to Senate, Fed's Evans speaking, CBO analysis of 2018 budget, China Trade Balance report, Eurozone CPI report, weekly Bloomberg Consumer Comfort Index and the $12B 30Y bond auction could also impact trading today.

BOTTOM LINE:  Asian indices are higher, boosted by technology and industrial shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.