Wednesday Watch

Evening Headlines

Bloomberg:

• China Early Data Show Resilient Economy. Earliest indicators show that China’s economic engine is humming this summer. Confidence of small- and medium-sized companies rebounded in July, satellites are picking up increasing activity on the ground, sentiment of steel traders and producers has improved, while that of sales managers is at the highest level in more than two years. This buoyancy helps offset concern from wary financial investors.

• It's Five Years Since Draghi's 'Whatever It Takes'. Five years ago today, Mario Draghi was talking about bumblebees. The European Central Bank president’s speech in London on July 26, 2012, became instantly famous because of his pledge to do “whatever it takes” to save the euro. But for all the power and clarity of that phrase, he started his remarks more obliquely.

• Stocks Extend Global Rally on Earnings, Bonds Fall. Positive corporate earnings and improving business confidence in Germany, Europe’s largest economy, spurred a rally in global equities and dragged bonds lower as the Federal Reserve prepares to conclude its policy meeting. Equity-index futures indicated an advance in U.S. and European stocks will extend to Asia on Wednesday after earnings from Caterpillar Inc. and McDonald’s Corp. led to outsize gains in the Dow Jones Industrial Average. The euro held near the highest in almost two years after German business confidence data beat expectations. Oil rose above $48 a barrel for the first time since early June. Futures on Japan’s Nikkei 225 Stock Average rose 0.5 percent. Contracts on Australia’s S&P/ASX 200 Index added 0.7 percent and those on Hong Kong’s Hang Seng Index advanced 0.2 percent.

• Big Oil Bosses Are Learning to Live With $50 Crude. Big Oil is starting to beat the crude-market slump as the industry rediscovers how to make money at lower prices. Exxon Mobil Corp. and Royal Dutch Shell Plc are forecast to more than double second-quarter profit from a year earlier, far outstripping the 8 percent gain in benchmark Brent crude, according to analyst estimates compiled by Bloomberg. Chevron Corp. will return to profit, while France’s Total SA is expected to report a third consecutive quarter of higher year-on-year earnings.

• Your Evening Briefing.

• U.S. Signals Clampdown on Red-Hot Digital Coin Offerings. U.S. regulators said they have jurisdiction over one of the hottest new areas of finance: initial coin offerings of digital currencies. Companies that raise money through the sale of digital assets must adhere to federal securities laws, the Securities and Exchange Commission said Tuesday. Issuers must register the deals with the government unless they have a valid excuse, as should exchanges that offer trading of cryptocurrencies like bitcoin and ether, the regulator said.

• Uber’s New CEO Short List Is Said to Include HPE’s Meg Whitman.

• Texas Instruments(TXN) Signals Growing Demand in Chips for Cars. Texas Instruments Inc., the largest maker of analog semiconductors that are the basic building blocks of every electronic device, gave a forecast that indicated steady demand from the automotive industry. Third-quarter profit will be $1.04 to $1.18 a share, the Dallas-based company said Tuesday in a statement. Revenue will be $3.74 billion to $4.06 billion. Analysts on average projected profit of $1.05 a share on sales of $3.8 billion, according to data compiled by Bloomberg.

• SoftBank Takes Stake in Roomba-Maker iRobot(IRBT). SoftBank Group Corp. has taken a stake in Roomba vacuum-cleaner maker IRobot Corp., people familiar with the matter said, as the Japanese company builds its holdings in robotics firms. SoftBank has built a less than 5 percent stake in IRobot, below the amount that would require a regulatory disclosure in the U.S., the people said, asking not to be identified because the purchase was private. The Bedford, Massachusetts-based technology company has a market value of $2.4 billion. Shares in IRobot rose 22 percent in late trading in New York.

• First Facebook(FB) TV Episodes Are Said to Be Ready for Mid-August. Facebook Inc.’s version of television is coming online in mid-August after several false starts, according to people familiar with the matter. The company has been asking its partners to turn in the first episodes of their spotlight shows, the people said. Some already have finished these short-form, inexpensive programs. Facebook is also funding higher-end TV-style shows, which will be launched later on the site, said the people, who asked not to be identified because the plans aren’t public.

Wall Street Journal:

• Senate Votes to Begin Debate on Health-Care Bill With Pence Breaking Tie. Series of amendments will now be offered with final vote possible this week.

• California Governor Signs Cap-and-Trade Legislation. State’s program, considered a global model, aims to cut greenhouse-gas emissions to 40% below 1990 levels by 2030.

• Caterpillar(CAT) Boosts Outlook Signaling Cautious Optimism in Recovery. Equipment sales grew in many of the manufacturing company’s construction markets.

• Europe’s Next Crisis: The Balkans. Russia and Turkey stir up trouble, while the EU focuses on its own problems first.

Fox News:

• Trump holds 'Make America Great Again' rally in Ohio -- live blog. (video)

CNBC:

• The good news about this earnings season. (video)

• Steve Wynn cautions against 'short-term myopia' in defending Macau mass-market softness.

• Trump administration may freeze fuel economy standards.

• Bitcoin slammed by more than 10% to below $2,500; Ethereum down big too.

• AMD(AMD) stock soars after strong guidance, earnings beat. (video)

• Facebook's(FB) three-pronged plan to get businesses to use Messenger more.

Zero Hedge:

• Wasserman-Schultz IT Aide Arrested While Attempting To Flee Country, Charged With Bank Fraud.

• "If The VIX Goes Bananas", Morgan Stanley Shows What It Would Look Like.

• House Overwhelmingly Passes Veto-Proof Russia Sanctions Deal.

• The Death Cross Of Central Bank Credibility. (graph)

• Business Customers Are Tired Of Being Bilked Of Billions; Demand Rate Increases On Their Bank Deposits.

• Politics Of The Next 4 Years: Part 2 (Last Chance For The Democrats).

• WTI Jumps Above $48 After API Inventory Report Shows Huge Crude Draw. (graph)

• Trump: Cohn, Yellen Are Top Fed Chair Contenders, "Two Or Three Other Candidates".

• Central Bankers 'Are' The Crisis.

• Senate Passes Critical Motion To Advance Obamacare Repeal Efforts.

• Stocks Scramble To 4th Longest Stretch Of 'Dip-less' Gains In 90 Years.

Business Insider:

• The Trump administration just toughened its crackdown on 'sanctuary cities'.

• Here are the 3 sectors that could benefit from the Fed’s great balance-sheet unwind.

• Canada is uniquely primed for a housing bust.

Night Trading 

• Asian equity indices are +.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 84.0 -.75 basis point. 

• Asia Pacific Sovereign CDS Index 20.75 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 73.52 -.04%.

• S&P 500 futures +.04%.

• NASDAQ 100 futures -.01%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (ALK)/2.51

• (BAX)/.57

• (BA)/2.31

• (KO)/.57

• (GLW)/.40

• (DHI)/.75

• (F)/.43

• (GD)/2.43

• (HES)/-1.29

• (HLT)/.50

• (IR)/1.46

• (LH)/2.41

• (LEA)/4.11

• (R)/.95

• (STT)/1.58

• (WHR)/3.53

• (ABX)/.17

• (BWLD)/1.05

• (ESZ)/-.11

• (FFIV)/2.03

• (FB)/1.11

• (GILD)/2.17

• (LRCX)/3.01

• (LVS)/.59

• (PYPL)/.43

• (TER)/.86

• (TSCO)/1.27

• (WFM)/.33

• (XLNX)/.60

• (VAR)/.94

Economic Releases  
10:00 am EST

• New Home Sales for June are estimated to rise to 615K versus 610K in May.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -3,125,000 barrels versus a -4,727,000 barrel decline prior. Gasoline supplies are estimated to fall by -1,766,670 barrels versus a -4,445,000 barrel decline the prior week. Distillate supplies are estimated to fall by -461,330 barrels versus a -2,137,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.11% versus a -.5% decline prior.
  

2:00 pm EST

• The FOMC is expected to leave the benchmark Fed Funds rate at 1.0-1.25%.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed Policy Update, UK GDP report, $34B 5Y T-Note auction, weekly MBA Mortgage Applications report and the (PII) investor meeting could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by commodity and technology 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.