Wednesday Watch

Evening Headlines

Bloomberg:

• Tillerson Says ‘Peaceful Pressure’ Still Best North Korea Option. U.S. Secretary of State Rex Tillerson urged continued “peaceful pressure” on North Korea, even as one Republican senator ratcheted up talk of war. Taking stock of his tenure after six months in office, Tillerson told reporters at the State Department Tuesday that the U.S. goal isn’t to topple Kim Jong Un’s regime or find “an excuse to send our military north.” Instead, he said, it’s to get the regime to develop the “willingness to sit and talk with us and others, but with an understanding that a condition of those talks” is North Korea giving up its nuclear weapons capability.

• Euro's Big Month Has Chart-Watchers Looking Back to 2010 Levels. After the euro surged through a critical technical level last week, analysts who study charts to help guide their predictions are looking back to 2010 for perspective on how high it could rise. Europe’s common currency traded at about $1.18 Tuesday, holding above the key $1.1714 mark that it breached July 26 for the first time since August 2015. The euro is coming off a five-month rally, its longest since 2013, propelled by interest-rate differentials that have gone in its favor and broad dollar weakness.

• Toyota, Nissan, Honda Beat U.S. Forecasts as Local Cars Wane. Toyota Motor Corp. stood out as the only major automaker to increase U.S. sales last month and Nissan Motor Co. and Honda Motor Co. both beat projections as demand at traditional U.S. automakers slumped. Sales at Toyota rose 3.6 percent in July, defying estimates of a decline of about the same magnitude. While sales at Nissan dropped 3.2 percent and slipped 1.2 percent at Honda, analysts surveyed by Bloomberg News had expected larger declines.

• Technology Shares in Asia Gain on Apple Results. (video) Nasdaq futures advanced after Apple projected revenue in the current quarter that topped analysts’ estimates, while shares of Honda Motor Co. gained in Tokyo trading following the company’s higher profit forecast. The kiwi sank after hiring declined unexpectedly in New Zealand. Treasuries were steady after climbing with the dollar as data gave mixed signals on the strength of American economic growth. A drop in the Bloomberg Commodity Index weighed on raw-material producers in Asia after a stellar run. Japan’s Topix index gained 0.3 percent. Australia’s S&P/ASX 200 Index fell 0.3 percent and South Korea’s Kospi index added 0.2 percent.

• Pesticide ‘Drifting’ Wreaks Havoc Across U.S. Crops. Larry Martin in Illinois says he’s never seen anything like it in his 35 years of farming. Arkansas soybean grower Joe McLemore says he faces the loss of his life savings. They’re among farmers across the U.S. suffering from a pesticide "drifting" across from neighboring fields onto their crops, leaving behind a trail of damage. Although not a new problem, it’s re-emerged with a vengeance this year. At least 2.5 million acres (1 million hectares) have been damaged in this growing season through mid-July, according to estimates from Kevin Bradley, a professor of plant sciences at the University of Missouri.

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

• Dow's Trip Toward 22,000 Brought to You by Boeing(BA), Visa(V) Earnings. The Dow Jones Industrial Average’s latest rally toward a round-number milestone is being fueled by a series of earnings-fomented share ignitions at companies from Boeing Co. to Visa Inc. Helped by the index’s old-fashioned methodology that apportions greater weight to higher-priced stocks, those two companies alone accounted for more than half of the Dow’s 614-point jump since the start of July. UnitedHealth Group Inc., Caterpillar Inc., and Chevron Corp. rounded out the top five, contributing an additional 135 points.

Wall Street Journal:

• Banking Regulator to Take First Step Toward Changing Volcker Rule. OCC may seek comment on the trading ban as early as Wednesday.

• U.S. Plans Trade Measures Against China. Trump administration aims to force Beijing to crack down on intellectual-property theft and ease market access.

• ObamaCare for Congress. Trump can change a rule that exempts Members from the law’s pain.

Fox News: 

• Pentagon investigators find ‘security risks’ in government's immigrant recruitment program, ‘infiltration’ feared. (video)

CNBC:

• Apple(AAPL) jumps 6% to record high after earnings beat estimates. (video)

• 'Sheikhs versus shale' to keep oil prices capped at $50 in third quarter, experts say.

• Hedge fund legends are losing assets and underperforming the market significantly this year.

Zero Hedge: 

• Apple(AAPL) Surges To New Record High On Strong iPhone 8 Guidance, Earnings Beat Despite iPhone Sales Miss.

• WTI Tumbles After Surprise Crude Inventory Build. (graph)

• Gold Surges To Six-Week Highs Despite Biggest Fund Outflows In 4 Years. (graph)

• Crude Crashes, Bonds Bid, & Trannies Turmoil But VIX Vanquished To 9 Handle Again. (graph)

Business Insider: 

• Amazon(AMZN) is staffing up several new teams to go big in cloud and distribution tech.

• Industrial metals and mining are bouncing back together. (graph)

• Despite Trump's tough talk on the border, migrants are still making the dangerous trip north.

Night Trading 

• Asian equity indices are -.25% to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 80.75 -1.5 basis points. 

• Asia Pacific Sovereign CDS Index 19.0 unch.

• Bloomberg Emerging Markets Currency Index 73.88 -.04%.

• S&P 500 futures +.01%.

• NASDAQ 100 futures +.70%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AAWW)/.89

• (BG)/.16

• (CAH)/1.24

• (DLPH)/1.65

• (D)/.67

• (HUM)/3.07

• (IPI)/-.06

• (JLL)/1.60

• (KLIC)/.68

• (MBLY)/.26

• (TAP)/2.12

• (MDLZ)/.46

• (OSK)/1.37

• (RDC)/-.30

• (VMC)/1.21

• (DDD)/.12

• (AIG)/1.20

• (CF)/-.05

• (CAKE)/.76

• (CRUS)/.66

• (CLVS)/-1.90

• (IAC)/.65

• (MET)/1.28

• (NXPI)/1.49

• (OXY)/.12

• (PPC)/.83

• (PRU)/2.71

• (RGR)/1.11

• (SYMC)/.31

• (TSLA)/-1.92

• (RIG)/-.09

• (WMB)/.26

Economic Releases  
8:15 am EST

• The ADP Employment Change for July is estimated to rise to 190K versus 159K in June.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -3,614,200 barrels versus a -7,208,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -1,380,100 barrels versus a -1,015,000 barrel decline the prior week. Distillate supplies are estimated to fall by -1,377,500 barrels versus a -1,852,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.17% versus a +.3% gain prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Williams speaking, Fed's Mester speaking, China Services PMI report, Eurozone PPI report, weekly MBA Mortgage Applications report and the (COST)/(ZUMZ) monthly sales reports could also impact trading today.

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