Thursday, August 10, 2017

Friday Watch

Evening Headlines
  • Markets' Wildest Assets Are Becoming a Haven While Korea Tension Mounts. Some investors are turning to an unlikely safe haven as the rhetoric between U.S. President Donald Trump and North Korea intensifies. Bitcoin, ethereum and other digital currencies, among the most volatile assets around, are gaining in part as traditional refuges such as gold and U.S. Treasuries lose some of their luster. “We’re seeing investors transferring their funds into cryptocurrencies as they try to diversify their risk in case of a severe downturn in the market,” said Ron Chernesky, chief executive officer of trading platform InvestFeed Inc. which is switching from equity trading to cryptocurrencies. “The space has gone from niche to more widely adopted with one of the main draws being that crypto currencies are seen as less correlated with other assets.”
  • Equity Rout Deepens, Bonds Rise on Korea Tension. Stock-index futures in Australia, South Korea and Hong Kong indicated losses for the start of Friday trading after the S&P 500 Index halted an unprecedented stretch of calm on American equity markets and the CBOE Volatility Index soared 44 percent. U.S. President Donald Trump dialed up his warning to North Korea on threats to American allies, lifting gold to a nine-week high and pushing the yen toward 109 per dollar. Treasuries strengthened. Futures on Australia’s S&P/ASX 200 Index fell 1.2 percent and those on Hong Kong’s Hang Seng Index slipped 0.6 percent. Kospi futures lost 1.5 percent. Japanese markets are closed for the Mountain Day public holiday.
  • VIX's Highest Close Since Election Sparks Record Rush to Protect. The biggest selloff in U.S. equities since May sparked an unprecedented rush for protection in the options market. About 2.6 million puts and calls tied to the CBOE Volatility Index changed hands on Thursday, the most on record, as the VIX spiked 44 percent to close at the highest level since Nov. 8. About 3.4 call volatility options - a bearish equities trade - have changed hands for every put contract.
Wall Street Journal:
Zero Hedge:
Night Trading 
  • Asian equity indices are -1.25% to -.75% on average.
  • Asia Ex-Japan Investment Grade CDS Index 85.0 +3.0 basis points
  • Asia Pacific Sovereign CDS Index 21.0 +.25 basis point.
  • Bloomberg Emerging Markets Currency Index 73.48 unch.
  • S&P 500 futures -.03%.
  • NASDAQ 100 futures -.25%.
Morning Preview Links

Earnings of Note

  • (JCP)/-.04
  • (MGA)/1.47
Economic Releases 
8:30 am EST
  • The CPI MoM for July is estimated to rise +.2% versus unch. in June.
  • The CPI Ex Food & Energy for July is estimated to rise +.2% versus a +.1% gain in June.
  • Real Avg. Weekly/Hourly Earnings YoY for July.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Kaplan speaking, Fed's Kashkari speaking and the German CPI report could also impact trading today.
BOTTOM LINE:  Asian indices are lower, weighed down by industrial and technology shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 50% net long heading into the day.

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