Wednesday, October 11, 2017

Thursday Watch

Evening Headlines
  • Asia Stocks to Nudge Higher as Fed Seen Dovish. Investors still expect borrowing costs to rise this year, with market-implied odds of a U.S. rate hike by year-end remaining at about 75 percent, based on January 2018 fed fund futures, after the release of the minutes from the Sept. 20 policy meeting. Futures for Japanese and Hong Kong equities climbed following a fresh S&P 500 Index record. Treasuries were steady. The euro remains on course for a strong week as the immediate threat of Spain’s breakup over Catalonia’s independence bid receded. Investors will be monitoring President Trump’s speech on tax reform. Futures on the Nikkei 225 advanced 0.6 percent. Contract on Australia’s S&P/ASX 200 Index were flat, while Hang Seng Index futures rose 0.2 percent.
  • Goldman(GS) Has a New Way for You to Bet on the Next Banking Crisis. Less than a decade after the last major banking crisis, Goldman Sachs Group Inc. and JPMorgan Chase & Co. are offering investors a new way to bet on the next one. The two financial giants are now offering trades in derivatives that enable investors to bet on or against high-risk bank bonds that financial regulators can wipe out if a lender runs into trouble. Others are also planning to start making markets in the contracts, known as total-return swaps, in the coming weeks, according to Max Ruscher, the London-based director of credit indexes at IHS Markit Ltd., which administers the benchmarks that the swaps are linked to.
  • The Daily Prophet: Rejoice, the 'Market of Stocks' Has Returned. According to the strategists at DataTrek, the correlation between the S&P 500 Index and the 10 market sectors outside of tech has dropped to 37 percent, which is a decade low. To DataTrek, that means it's gone back to being a more healthy "market of stocks" instead of simply "a stock market."
Wall Street Journal:
Zero Hedge: 
Night Trading 
  • Asian equity indices are +.25% to +.50% on average.
  • Asia Ex-Japan Investment Grade CDS Index 78.0 -.5 basis point
  • Asia Pacific Sovereign CDS Index 16.25 -.25 basis point.
  • Bloomberg Emerging Markets Currency Index 73.69 +.04%.
  • S&P 500 futures -.09%.
  • NASDAQ 100 futures -.03%.
Morning Preview Links

Earnings of Note

  • (C)/1.29
  • (DPZ)/1.23
  • (JPM)/1.66
  • (LNN)/.62
  • (EXFO)/.05
Economic Releases 
8:30 am EST
  • PPI Final Demand MoM for September is estimated to rise +.4% versus a +.2% gain in August.
  • PPI Ex Food & Energy MoM for September is estimated to rise +.2% versus a +.2% gain in August.
  • Initial Jobless Claims for last week are estimated to fall to 250K versus 260K the prior week. 
  • Continuing Claims are estimated to fall to 1930K versus 1938K prior.
11:00 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,041,900 barrels versus a -6,023,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -172,600 barrels versus a +1,644,000 barrel gain the prior week. Distillate inventories are estimated to fall by -1,713,9000 barrels versus a -2,606,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.14% versus a -.5% decline prior.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Powell speaking, Australia Home Loan data, Eurozone Industrial Production report, $12B 30Y T-Bond auction, Wasde Crop report, weekly Bloomberg Consumer Comfort Index and the weekly EIA natural gas inventory report could also impact trading today.
BOTTOM LINE:  Asian indices are higher, boosted by industrial 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.

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