Wednesday Watch

Evening Headlines

Bloomberg:

• U.S. Missile Defense Gets $400 Million After North Korea Threats. Congressional defense committees have approved shifting more than $400 million from other accounts into missile defense programs to clear the way for more ground-based interceptors, sensors and upgrades to Navy anti-missile vessels in the face of threats led by North Korea. Boeing Co., Raytheon Co. and Orbital ATK Inc. are likely to be the top beneficiaries. Defense Secretary Jim Mattis disclosed the approval Tuesday during a Senate hearing on Afghanistan. He said he requested approval to shift, or “reprogram,” unspent funds for fiscal 2017 totaling $440 million from accounts such as Army wartime operations and maintenance. A formal six-page request listed $416 million of the total.

• Dollar Slips, Stocks Mixed as Fed Chief Pick Looms. (video) The rally in the dollar petered out as investors awaited fresh triggers for trades from President Donald Trump’s pending decision on the leadership of the Federal Reserve, along with upcoming policy maker speeches and U.S. economic data. Asian stocks were mixed after American benchmarks closed at record highs. The Bloomberg dollar index retreated from recent highs and Treasury yields edged lower as news emerged that Trump has been presented with a shortlist of Fed chair candidates with a spectrum of views on policy. Ex Fed board member Kevin Warsh had been seen as a potential pick who would favor more aggressive monetary tightening, while current board member Jerome Powell is considered in sync with current Chair Janet Yellen’s gradualist approach. Japan’s Topix index was little changed at 1,683.82. Australia’s S&P/ASX 200 Index fell 0.7 percent. Futures on Hong Kong’s Hang Seng index added 0.3 percent.

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

• U.S. Tax Reforms Would Leave Renewable Energy Out in the Cold. The prospects for a broad tax reform with lower corporate rates has excited business leaders and boosted the stock market -- except for renewable energy. Tax reform “will make renewables more expensive,” Keith Martin, a partner at law firm Norton Rose Fulbright, said in an interview Tuesday at Infocast’s Solar Connect conference in San Diego.

• Trump to Seek $29 Billion in Disaster, Flood Funding. The Trump administration will ask Congress to provide $29 billion in disaster aid and national flood insurance for hurricane-recovery efforts, a Republican lawmaker said Tuesday. Of that amount, $16 billion would be used for loan forgiveness under the National Flood Insurance Program and a little more than $12 billion would go for federal disaster relief operations, said the lawmaker, who spoke on condition of anonymity. The funding is in response to Hurricane Maria, which hit Puerto Rico, as well as Harvey and Irma, which struck the Gulf Coast.

• Office Depot(ODP) to Buy CompuCom for $1 Billion.

Wall Street Journal:

• Senate Republicans Signal Support for ‘Dreamers,’ With Conditions. Democrats oppose tying program to tighter immigration enforcement within U.S.

• Warren Buffett’s Berkshire Bets Big on America’s Truckers, Buys Stake in Pilot Flying J. Billionaire’s conglomerate takes initial 38.6% interest in truck-stop operator. 

• Spanish King Says Catalan Leaders Have ‘Undermined Harmony’ as Protests Swell in Restive Region. Tensions flare over continued presence of national police after crackdown on independence referendum.

• Trump and the Fed. Will he embrace the monetary policy that he campaigned against?

Fox News:

• Las Vegas shooter installed cameras in and out of hotel room ahead of 'premeditated' attack. (video)

• Las Vegas shooting: From ISIS to gambling debts, theories abound for shooter's motive. (video)

CNBC:

• JPMorgan's(JPM) top quant says tax reform will boost the stock market. (video)

• House tax plan 'highly likely' to include fourth rate on wealthy, likely not higher than 39.6%, source says. (video)

• Ford(F) CEO outlines plan to aggressively cut costs, funneling savings to electric, self-driving cars. (video)

Zero Hedge:

• Vegas Shooter Filmed Himself During Slaughter, May Have Left A Note; Suicide Photo Emerges.

• Spanish Showdown: Catalonia To Declare Independence "In Days" Puidgemont Says Despite King's Condemnation.

• Trump Gets Final List Of Fed Candidates, Yellen Gets The Cold Shoulder.

• Was There A Second Shooter In Vegas? (video)

• Three Straight Weeks Of This Can't Be Ignored.

• Second Company Decides To Pull NFL Ads Over Continued Protests.

• WTI/RBOB Extend Losses After Another Big Gasoline Inventory Build. (graph)

• Spain's King Felipe Condemns Catalan "Disloyalty" As Rajoy Mulls "Nuclear Option".

• Spain's, Planes, & Automobiles Soar As Small Caps Rebound To Another New High. (graph)

Business Insider:

• Uber will IPO by 2019 and let Softbank buy a huge stake, following a big board meeting.

• Every single Yahoo account was compromised by hackers.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 78.5 -2.0 basis points. 

• Asia Pacific Sovereign CDS Index 17.0 -1.75 basis points.

• Bloomberg Emerging Markets Currency Index 73.63 +.15%.

• S&P 500 futures -.05%.

• NASDAQ 100 futures -.06%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AYI)/2.43

• (MON)/-.39

• (PEP)/1.43

• (RECN)/.13

Economic Releases 
8:15 am EST:

• The ADP Employment Change for September is estimated to fall to 135K versus 237K in August.

10:00 am EST:

• The ISM Non-Manufacturing Composite for September is estimated to rise to 55.5 versus 55.3 in August.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -466,110 barrels versus a -1,846,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +1,038,330 barrels versus a +1,107,000 barrel gain the prior week. Distillate inventories are estimated to fall by -1,272,670 barrels versus a -814,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.93% versus a +5.4% gain prior.

Upcoming Splits

• (ISRG) 3-for-1

Other Potential Market Movers

• The Fed's Yellen speaking, Fed's Bullard speaking, Eurozone Services PMI/Retail Sales reports, weekly MBA Mortgage Applications report and the (ZUMZ) monthly sales report 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 lower and to rally into the afternoon, finishing mixed.  The Portfolio is 100% net long heading into the day.