Wednesday, October 25, 2017

Thursday Watch

Evening Headlines
Bloomberg:
  • Exports Drive Fastest Growth in South Korean Economy Since 2010. Gross domestic product expanded 1.4 percent in the three months through September from the previous quarter, when it grew 0.6 percent, the Bank of Korea said on Thursday. The median estimate of economists surveyed by Bloomberg was for 0.9 percent expansion. From a year earlier, the economy expanded 3.6 percent, far exceeding the 3 percent estimate by economists.
  • Kyle Bass Says History Will Remember Xi for Reckless Policies. Hedge fund manager Kyle Bass, who has been warning of a collapse in China’s banking system, said the nation will one day come to regret handing Xi Jinping more power than any leader in decades. “Today Xi is celebrated in media reports, but when future historians look back, he will be blamed for recklessly building the Chinese economy on a foundation of sand,” Bass, founder of Hayman Capital Management, said in an email Wednesday. “Xi desperately seeks credibility, but true developed economies do not impose severe capital controls or move short-term rates hundreds of basis points overnight in attempts to manipulate their own currency.”
  • Stocks in Asia Fluctuate on Earnings Jitters. Stocks in Asia were mixed at the open following the biggest declines in seven weeks on Wall Street as uneven corporate earnings keep traders on edge ahead of reports from technology giants, banks and a European Central Bank meeting. Equity benchmarks in Tokyo and Seoul fluctuated. Mexico’s peso declined after comments from U.S. President Donald Trump on terminating Nafta. Ten-year Treasury yields were steady after reaching their highest since March, and gold rose as investors sought havens from slumping equity markets. The dollar extended losses. Japan’s Topix index was up 0.2 percent as of 9:25 a.m. in Tokyo, while the Nikkei 225 Stock Average rose 0.3 percent. Australia’s S&P/ASX 200 Index fell 0.2 percent and South Korea’s Kospi index was flat. Hang Seng Index futures declined 0.8 percent.
  • The Bond-Market Doomsday Is a Dud to Traders Eyeing Opportunity to Buy. After 10-year Treasury yields broke through 2.4 percent, then 2.42 percent, then 2.45 percent on Tuesday and Wednesday, it looked like the market was buckling under the weight of what DoubleLine Capital LP’s Jeffrey Gundlach called “the moment of truth” for its three-decade bull run. Yet, as has happened time and again, investors saw a buying opportunity, pushing yields back down and leaving traders to assess the damage.
Wall Street Journal:
  • The Morningstar Mirage. Investors everywhere think a 5-star rating from Morningstar means a mutual fund will be a top performer—it doesn’t.
CNBC:
Zero Hedge:
Night Trading 
  • Asian equity indices are -.25% to unch. on average.
  • Asia Ex-Japan Investment Grade CDS Index 74.0 -1.0 basis point. 
  • Asia Pacific Sovereign CDS Index 15.75 +.25 basis point.
  • Bloomberg Emerging Markets Currency Index 73.1 +.12%.
  • S&P 500 futures -.01%.
  • NASDAQ 100 futures -.06%.
Morning Preview Links

Earnings of Note
Company/Estimate

  • (APD)/1.68
  • (ABB)/.34
  • (ALXN)/1.32
  • (MO)/.88
  • (BUD)/1.25
  • (BWA)/.88
  • (BSX)/.31
  • (BMY)/.77
  • (CELG)/1.87
  • (CME)/1.16
  • (CMCSA)/.49
  • (COP)/.08
  • (F)/.33
  • (HSY)/1.29
  • (LLL)/1.92
  • (MCK)/2.79
  • (NEM)/.33
  • (POT)/.12
  • (RTN)/1.90
  • (LUV)/.87
  • (TWX)/1.59
  • (TWTR)/.06
  • (UNP)/1.49
  • (UPS)/1.45
  • (VLO)/1.83
  • (VC)/1.27
  • (GOOG)/8.40
  • (AMZN)/-.01
  • (BIDU)/2.05
  • (CERN)/.62
  • (CB)/-.24
  • (DECK)/1.02
  • (EXPE)/2.61
  • (FSLR)/.84
  • (GILD)/2.13
  • (INTC)/.80
  • (KLAC)/1.64
  • (MAT)/.58
  • (MSFT)/.72
  • (MHK)/3.73
  • (PSMT)/.73
  • (WDC)/3.31
  • (WYNN)/1.41
Economic Releases 
8:30 am EST
  • Initial Jobless Claims for last week are estimated to rise to 235K versus 222K the prior week.
  • Continuing Claims are estimated to rise to 1890K versus 1888K prior.
  • Advance Goods Trade Balance for Sept. is estimated at -$64.0B versus -$63.3B in August.
  • Preliminary Wholesale Inventories MoM for Sept. are estimated to rise +.4% versus a +.9% gain in August.
10:00 am EST
  • Pending Home Sales MoM for September is estimated to rise +.3% versus a -2.6% decline in August.
11:00 am EST
  • The Kansas City Fed Manufacturing Activity Index for October is estimated at 17.0 versus 17.0 in September.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The ECB rate decision, ECB press conference, Fed's Kashkari speaking, Japan CPI report, House vote on budget resolution, $28B 7Y T-Bond auction, weekly Bloomberg Consumer Comfort Index and the weekly EIA natural gas inventory report could also impact trading today.
BOTTOM LINE:  Asian indices are slightly lower, weighed down by industrial and commodity shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 75% net long heading into the day.

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