Tuesday Watch

Evening Headlines

Bloomberg:

• China Factory PMI Falls From Five-Year High on Pollution Cleanup. China’s official factory gauge fell this month, with new orders and prices leading the decline, as officials increasingly prioritize a campaign to clamp down on polluting industries and rein in debt.

• Japan’s Industrial Production Declines 1.1% in September. (video) Japan’s industrial production declined in September from the previous month, while the labor market remained the tightest in decades and household spending fell modestly.

• Stocks in Asia Track U.S. Losses as Bonds Climb. Most equities in Asia declined as bonds added to gains, showing caution is creeping into markets with investors assessing developments on tax reform and ahead of key monetary policy decisions, economic data and earnings reports. Japan’s stocks fell, with SoftBank Group Corp. tumbling the most in almost a year on news that a deal to merge its Sprint Corp. unit with T-Mobile US Inc. may be in jeopardy. The Bloomberg dollar index maintained losses, though it remains on track for its best month since the election of Donald Trump as U.S. president. Ten-year Treasury yields held below 2.4 percent, with Trump’s choice to lead the Federal Reserve due by the end of the week. The yen was steady as the Bank of Japan meets to set policy. Japan’s Topix index declined 0.6 percent as of 9:24 a.m. in Tokyo, while the Nikkei 225 Stock Average fell 0.7 percent. SoftBank declined as much as 5.8 percent. Talks with Sprint, whose shares plunged in U.S. trading, have hit a serious snag over valuation, according to people familiar with the matter. Australia’s S&P/ASX 200 Index climbed 0.2 percent. South Korea’s Kospi index was little changed. Contracts on Hong Kong’s Hang Seng Index dropped 0.3 percent.

• Five Things You Need to Know to Start Your Day. (video)

• Apple(AAPL) Designing iPhones, iPads Without Qualcomm(QCOM) Parts, WSJ Says.

Wall Street Journal: 

• Colleges Should Protect Speech—or Lose Funds. Withhold federal research dollars from institutions that practice viewpoint discrimination.

• Lennar(LEN), CalAtlantic Strike Deal to Create Largest U.S. Home Builder. Combined company will be one of the top three home builders in 24 of the top 30 U.S. markets.

MarketWatch.com:

• EarningsWatch: Apple(AAPL), Tesla(TSLA) and Facebook(FB) are post-Halloween treats.

• What a Jerome Powell-led Fed may look like.

Fox News:

• Manafort, Gates plead not guilty in grand jury indictment. (video)

• Gregg Jarrett: Still no evidence of Trump-Russia 'collusion' - but Hillary is a different matter. (video)

Zero Hedge:

• China PMIs Disappoint, Tumble In October. (graph)

• The US Government Quietly Added $200 Billion To The National Debt This Month Alone.

• Russian Content May Have Reached 126 Million Facebook Users, There Is Just One Catch.

• Steve Bannon Declares War On Republican Mega Donor Paul Singer.

• China's Record Yield Curve Inversion "Spells Disaster". (graph)

• Chris Whalen: "Glad I Am On A George Soros-Funded Blacklist Of Journalists".

• US Special Forces Capture Militant Who Was Instrumental In 2012 Benghazi Attack.

• Tax Turmoil & China Contagion Slam US Stocks, Treasury Yields Tumble. (graph)

Business Insider: 

• Here's everything you need to know about Jerome Powell, Trump's likely pick to lead the Federal Reserve.

• Millennials shouldn't bank on clean energy jobs.

Night Trading 

• Asian equity indices are -.25% to +.50% on average.

• Asia Ex-Japan Investment Grade CDS Index 75.5 +.75 basis point. 

• Asia Pacific Sovereign CDS Index 15.25 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 72.57 -.01%.

• S&P 500 futures +.03%.

• NASDAQ 100 futures +.10%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AET)/2.10

• (AGCO)/.73

• (AKS)/.04

• (AMT)/1.64

• (ADM)/.55

• (BP)/.08

• (CMI)/2.46

• (ETN)/1.25

• (HCA)/1.21

• (IDXX)/.74

• (K)/.94

• (MA)/1.23

• (MOS)/.21

• (PFE)/.65

• (SNE)/50.75

• (DDD)/.11

• (CHRW)/.82

• (EA)/.54

• (PZZA)/.60

• (RGR)/.60

• (X)/.70

Economic Releases 

8:30 am EST

• The Employment Cost Index for 3Q is estimated to rise +.7% versus a +.5% gain in 2Q.

9:00 am EST

• S&P CoreLogic CS 20-City Home Price Index MoM for August is estimated to rise +.4% versus a +.35% gain in July.

9:45 am EST

• The Chicago Purchasing Manager Index for October is estimated to fall to 60.0 versus 65.2 in September.

10:00 am EST

• The Conference Board Consumer Confidence Index for October is estiamted to rise to 121.2 versus 119.8 in September.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The BoJ decision, China Industrial Production report, Eurozone GDP report, weekly US retail sales reports and the (FB)/(TWTR) testimony to Congress on Russia 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 mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.