Tuesday Watch

Evening Headlines

Bloomberg:

• Australian Business Conditions Surge to Highest on Record. Australian business conditions surged to the highest on record, reinforcing signs of a strengthening labor market and pickup in investment. The sentiment index jumped seven points to 21 in October and was driven by spikes in sales and profitability gauges, according to a National Australia Bank Ltd. survey of more than 400 firms conducted in the last week of the month. The business confidence index was unchanged at a revised 8.

• Eastern EU Economic Growth Seen Speeding Up on Consumer Spending. Economic growth in the European Union’s eastern members probably picked up in the third quarter as rising wages propelled consumer spending. Four of the region’s six countries releasing third-quarter gross domestic product data on Tuesday will report accelerating annual growth rates, raging from 3.4 percent in Slovakia to 6.2 percent in Romania, according to Bloomberg surveys. Growth in the Czech Republic was unchanged at 4.7 percent and in Hungary it was 3.7 percent, according to estimates.

• Stocks in Asia Open Mixed Ahead of China Data. Equity markets in Asia fluctuated at the open ahead of a deluge of economic data due in China. U.S. stocks edged up overnight, the dollar was flat and benchmark Treasury yields held recent gains as investors awaited clues on monetary policy and tax reform. Japanese stock benchmarks swung between gains and losses, halting a slump in Tokyo that began Thursday afternoon. Australia’s stocks fell, while futures in Hong Kong were little changed. Short-term U.S. Treasury yields climbed ahead of key U.S. economic data this week. The pound remained weak amid renewed political pressure on U.K. Prime Minister Theresa May. Bitcoin clawed back some losses after extending its slump from last week’s record high to as much as 29 percent. The Topix index was little changed as of 9:26 a.m. in Tokyo, while the Nikkei 225 Stock Average rose 0.2 percent. Australia’s S&P/ASX 200 index was down 0.8 percent and the Kospi index in Seoul was little changed. Hang Seng Index futures fell 0.1 percent.

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

• IEA Sees U.S. Shale Surge as Biggest Oil and Gas Boom in History. The supply surge from U.S. shale oil and gas will beat the biggest gains seen in the history of the industry, the International Energy Agency predicted. By 2025, the growth in American oil production will equal that achieved by Saudi Arabia at the height of its expansion, and increases in natural gas will surpass those of the former Soviet Union, the agency said in its annual World Energy Outlook. The boom will turn the U.S., still among the biggest oil importers, into a net exporter of fossil fuels.

Wall Street Journal:

• WSJ CEO Council 2017 -- Full Coverage.

• Nearly Half of U.S. Adults Have High Blood Pressure Under New Guidelines. Hypertension will now be defined as a reading of 130/80 and above, a threshold that will include 103.3 million people.

• The Great Progressive Tax Escape. IRS data show an accelerating flight from high-tax states.

• Senators Support Rollback of Bank Oversight. Bipartisan deal raises threshold dictating which banks would face heightened oversight from the Federal Reserve.

• IPOs Roar Back World-Wide, With Asia Driving the Boom. This year is on track to be busiest in a decade for new listings.

MarketWatch.com: 

• Why strong earnings aren’t just a U.S. story—in one chart.

Fox News:

• Sessions directs prosecutors to 'evaluate certain issues' involving Uranium One and Clinton, leaves door open on special counsel. (video)

CNBC:

• Wal-Mart(WMT) is having its best year since 1999, and it’s still a buy. (video)

• Wal-Mart(WMT) raising prices online shows the difference between it and Amazon, strategists say. (video)

Zero Hedge:

• S&P Downgrades Venezuela To "Selective Default" After Bondholder Meeting Devolves Into Total Chaos.

• How The Fed Destroyed The Functioning American Democracy And Bankrupted The Nation.

• Federal Prosecutors Are Running Amok.

• "Hotbed For Racist Behavior": 100 Tesla(TSLA) Employees File Lawsuit Alleging "Severe And Pervasive Harassment".

• Goldman Discovers Something Odd: Stock Moves Are Increasing Even As Index Moves Are Decreasing.

• Welcome To The Sue-nited States Of America.

• Dow Closes Green: GE Crashes, Bitcoin Bounces, & Junk Bonds Suffer Record Outflows. (graph)

Business Insider:

• Buffalo Wild Wings(BWLD) explodes 28% on report that it has received a takeover offer.

• 4 charts perfectly illustrate the bitcoin bubble.

• Apple(AAPL) could give shareholders a huge dividend if tax reform actually happens.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 79.25 -.25 basis point. 

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

• Bloomberg Emerging Markets Currency Index 72.49 +.04%.

• S&P 500 futures -.1%.

• NASDAQ 100 futures -.04%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AAP)/1.22

• (DKS).,26

• (HD)/1.82

• (IGT)/.24

• (KLIC)/.39

• (SSYS)/.34

• (TJX)/1.00

• (BZH)/.53

Economic Releases 

6:00 am EST

• The NFIB Small Business Optimism Index for October is estimated to rise to 104.0 versus 103.0 in September.

8:30 am EST

• PPI Final Demand MoM for October is estimated to rise +.1% versus a +.4% gain in September.

• PPI Ex Food and Energy MoM for October is estimated to rise +.2% versus a +.4% gain.

Upcoming Splits

• (UFPI) 3-for-1

Other Potential Market Movers

• The Fed's Bullard speaking, Eurozone Industrial Production report, China Retail Sales report, German GDP report, UK Retail Sales report, weekly US retail sales reports, UBS Transport/Industrials Conference, UBS Healthcare Conference, Stifel Healthcare Conference, Morgan Stanley Consumer/Retail Conference, Scotiabank Transport/Industrials Conference, JP Morgan Services Investor Conference, Goldman Sachs Industrials Conference, BofA Merrill Financials Conference, Needham Networking/Security Conference and the Morgan Stanley Chemicals/Ag Conference could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by industrial and financial 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.