Thursday, December 14, 2017

Friday Watch

Evening Headlines
Bloomberg:
  • Confidence Among Japan’s Manufacturers Rises to a Decade High. Sentiment among large manufacturers rose to 25 from 22 three months ago (forecast 24), the highest level since 2006, according to the quarterly Tankan survey released by the Bank of Japan on Friday. The outlook among large manufacturers was unchanged at 19 (forecast 22). Large companies across all industries say they plan to raise fixed investment by 7.4 percent in the year through March 2018 (forecast 7.5%).
  • As Tensions Ease, Beijing Keeps Building in the South China Sea. New satellite imagery shows China has built infrastructure covering 72 acres (28 hectares) in the Spratly and Paracel islands during 2017 to equip its larger outposts to be air and naval bases. The Washington-based Asia Maritime Transparency Initiative closely tracks developments in the South China Sea, where China and several Asian governments have conflicting territorial claims. It said Thursday there has been construction of hangars, underground storage, missile shelters, radar arrays and other facilities.
  • Dollar Eyes Weekly Drop on Tax; Asia Stocks Fall. In Tokyo, the Topix index fell and was poised for its first weekly slide in four, while South Korea’s Kospi index gained. The Bloomberg dollar index edged higher, trimming a drop for the week. U.S. equities slid and the greenback erased gains as Republican Senator Marco Rubio’s spokeswoman said he told Senate leaders he’ll oppose tax legislation unless they agree to a larger child tax credit. The euro held onto a retreat after the European Central Bank remained cautious about the prospects of reaching its inflation goals, even as it reiterated a pledge to keep stimulus in place. The Topix index fell 0.9 percent, dragged lower by telecommunication and technology stocks and banks, as of 9:36 a.m. in Tokyo. The Nikkei 225 Stock Average declined 0.8 percent. Australia’s S&P/ASX 200 Index fell 0.2 percent and the Kospi index rose 0.8 percent. Futures on Hong Kong’s Hang Seng Index lost 0.3 percent.
  • Five Things You Need to Know to Start Your Day.
  • Retailers Are Hoping For the Best Christmas Sales Since the Recession. With consumer spending surging, retailers are hoping for something they haven’t seen since the last recession began a decade ago: a truly great Christmas. The Commerce Department reported better-than-expected U.S. retail sales for November and revised its October figures upward, bringing a fresh wave of optimism to a long-embattled industry. Holiday shoppers are snapping up Nintendo Switch devices and Fingerlings toys as their disposable income grows, according to Craig Johnson, head of the Customer Growth Partners. His research firm just boosted its forecast for holiday sales to 5.6 percent, well above the 4.3 percent it had targeted earlier.
Wall Street Journal:
MarketWatch.com:
CNBC:
Night Trading 
  • Asian equity indices are -.75% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 71.0 +.75 basis point
  • Asia Pacific Sovereign CDS Index 13.75 unch.
  • Bloomberg Emerging Markets Currency Index 73.06 +.06%.
  • S&P 500 futures -.07%.
  • NASDAQ 100 futures -.12%.
Morning Preview Links

Earnings of Note
Company/Estimate

  • None of note
Economic Releases
8:30 am EST
  • Empire Manufacturing for Dec. is estimated to fall to 18.8 versus 19.4 in November.
9:15 am EST
  • Industrial Production MoM for November is estimated to rise +.3% versus a +.9% gain in October. 
  • Capacity Utilization for November is estimated to rise to 77.2% versus 77.0% in October.
  • Manufacturing Production for November is estimated to rise +.3% versus a +1.3% gain in October. 
4:00 pm EST
  • Net Long-Term TIC Flows for October.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Eurozone Trade Balance report, (CNC) investor day and the (MET) company update could also impact trading today.
BOTTOM LINE:  Asian indices are mostly lower, weighed down by financial and industrial 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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