Wednesday Watch

Evening Headlines

Bloomberg:

• Xi Jinping Poised to Put His Stamp on Chinese History. (video) President Xi Jinping kicks off China’s most important political event on Wednesday, a twice-a-decade meeting of party leaders that may signal if Xi will appoint a successor to rule after 2022. Xi will start the weeklong event this morning with what’s known as the work report, seen as the ruling Communist Party’s most significant policy document. It will cover achievements since Xi took power in 2012, and lay out his vision for everything from party building to the economy to the military.

• U.S. Softens China FX Criticism, Cuts Taiwan From Watch List. The U.S. Treasury said no major trading partner is manipulating its currency to gain an advantage in trade, while lauding China for acting to avoid a “disorderly” depreciation and then allowing the yuan to rise against the dollar this year. “The Chinese currency has moved recently in a direction that would help correct the bilateral trade imbalance with the United States,” according to the Treasury’s twice-yearly foreign currency report released Tuesday in Washington. “But on a trade-weighted basis, the currency has become more competitive globally” amid a weakening greenback.

• Watch These 11 China Activity Measures to Predict Global Trade.

• Caution Prevails as China Party Congress Begins. Asian equities were mixed at the start, despite fresh records for U.S. stocks, while the dollar reversed its rally from the start of the week. While analysts expect little in the way of substantial reforms to emerge from the twice-a-decade congress in Beijing, which begins Wednesday, investors will focus on comments about deleveraging, capacity reduction and the global belt-and-road infrastructure plan. Japan’s Topix index was slightly higher as of 9:17 a.m. in Tokyo along with Australia’s S&P/ASX 500 Index and South Korea’s Kospi index. Hong Kong’s Hang Seng Index futures contracts were 0.3 percent lower.

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

• Luxembourg's Gramegna Sees European Growth Strengthening. (video)

• Trump Pitches Tax Plan to Policy Group That Helped Write It. (video) President Donald Trump sought to rally support for his effort to overhaul the nation’s tax code on Tuesday at a conservative policy group that helped write the plan. Trump made his argument for a dramatic cut in tax rates for corporations and many individual Americans at the Heritage Foundation’s annual President’s Club meeting -- and asked for the group’s help in getting legislation passed by year’s end. “So let’s give our country the best Christmas present of all -- massive tax relief,” Trump said.

Wall Street Journal:

• U.S.-Backed Forces Say They Have Taken Raqqa, Islamic State’s Last Urban Stronghold. Syrian Democratic Forces say four-month battle for de facto capital is over.

• Future of Tech and Media: Waging a War for People’s Time. Activate co-founder Michael Wolf says the battle of internet giants will enter new technologies and take them deeper into each other’s turf.

Fox News:

• Trump dossier firm's 'smear' tactics unveiled: Fusion GPS labeled critic a 'pedophile,' 'extortionist' and 'drug trafficker'. (video)

CNBC:

• IBM(IBM) shares up after earnings beat. (video)

• It sounds like a 'Goldilocks' market to me: Expert.

• PG&E(PGE) shares spike after suspected wildfires arsonist is arrested in Northern California.

Zero Hedge:

• CIA Urges Trump To Delay Release Of 3,000 Never-Before-Seen Documents On JFK Assassination.

• Amazon(AMZN) Strikes Deal With Landlords To Install Lockers In Apartment Buildings.

• George Soros Donates $18 Billion To His 'Open Society' Foundation.

• "No Devilishly Effective Plot" - Clinton Chief Strategist Admits "You Can't Buy The Presidency For $100,000".

• John McCain Says He Will Vote 'Yes' On Crucial Budget Bill.

• Look Out, New Yorkers: GM To Begin Testing Driverless Cars In The Big Apple(AAPL).

• Trump Meets Tsipras, "Evil" Awkwardness Follows.

• WTI Shrugs Despite Huge Crude Draw. (graph)

• Dow Fails To Hold 23,000 As Yield Curve Carnage Continues. (graph)

 Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 77.25 unch. 

• Asia Pacific Sovereign CDS Index 16.25 +.25 basis point.

• Bloomberg Emerging Markets Currency Index 73.75 +.02%.

• S&P 500 futures +.02%.

• NASDAQ 100 futures +.04%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (ABT)/.65

• (ASML)/1.10

• (MTB)/2.40

• (USB)/.88

• (AA)/.79

• (AXP)/1.48

• (CCI)/1.04

• (EBAY)/.48

• (KMI)/.14

• (STLD)/.66

• (UAL)/2.12

• (URI)/3.03

• (VMI)/1.60

Economic Releases 
8:30 am EST

• Housing Starts for September are estimated to fall to 1175K versus 1180K in August.

• Building Permits for September are estimated to fall to 1245K versus 1300K in August.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -3,850,000 barrels versus a -2,747,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +775,000 barrels versus a +2,490,000 barrel gain the prior week. Distillate inventories are estimated to fall by -1,300,000 barrels versus a -1,480,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise +.24% versus a +1.1% gain the prior week.
  

2:00 pm EST

• Fed's Beige Book report.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Dudley speaking, Fed's Kaplan speaking, UK Jobless Claims, weekly MBA Mortgage Applications report, (HPE) analyst meeting and the (ECA) investor day 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.