Sunday, December 03, 2017

Monday Watch

Today's Headlines
Bloomberg:
  • Asian Banks See Funding Costs Rise, Making for Challenging 2018. It’s been a borrower’s market for a long time, in Asian syndicated loans as in the rest of the dollar universe. But Asia-Pacific lenders are facing increasing funding pressures, and a handful are aiming to pass those costs along -- in another sign that the beginning of the end of ultra-easy money may be coming. Half of the 50 banks in a Bloomberg News survey have experienced an increase in funding cost of as much as 20 basis points over the past few months. “Banks across the Asia Pacific in many cases will be challenged to maintain momentum on net interest margin primarily from a competitive standpoint in 2018,” said Gavin Gunning, senior director at S&P Global Ratings. “The banking sector regionally is becoming more competitive and in general that means that there are more pressure in terms of banks’ funding cost.”
  • Apple(AAPL), Google(GOOGL) CEOs Bring Star Power as China Promotes Censorship. Apple Inc.’s Tim Cook and Google’s Sundar Pichai made their first appearances at China’s World Internet Conference, bringing star power to a gathering the Chinese government uses to promote strict online censorship. Apple’s chief executive officer gave a surprise keynote at the opening ceremony on Sunday, calling for future internet and AI technologies to be infused with privacy, security and humanity. The same day, Politburo member Wang Huning called for more aggressive government involvement online to combat terrorism and criminals online, even calling for a global response team to go well beyond China’s borders.
  • U.K. Fears Brexit Breakdown as May Takes Her Best Offer to Lunch. While a deal on what happens to the Irish border after Brexit is still to be done, the role of the ECJ in enforcing the rights of citizens emerged as the greatest obstacle on Sunday after a weekend of intense talks, according to the British official and a person familiar with the EU side. May has offered all that she can and a rejection from Europe now would risk a breakdown in talks, according to the U.K. official.
  • Dollar, Yields Gain on Tax Cuts as Stocks Steady. The dollar, yields and U.S. equity-index futures rallied after Senate passage of tax-cut legislation drew focus away from events in the continuing investigation into connections between Donald Trump’s aides and Russia. Asian stocks opened steady. The greenback recovered some of Friday’s losses, and Treasuries paced gains in yields in Asia on Monday. Stocks were little changed in Tokyo and Sydney, and futures on the S&P 500 index surged, as investors unwound trades triggered by concerns about former national security adviser Michael Flynn’s guilty plea for lying to federal agents. Yields on 10-year Treasuries jumped in early Asian trading. Oil continued to trade around $58 a barrel. Japan’s Topix index was little changed as of 9:22 a.m. in Tokyo, while the Nikkei 225 Stock Average was down 0.2 percent. Australia’s S&P/ASX 200 Index was steady. South Korea’s Kospi index rose 0.4 percent.
Wall Street Journal: 
Zero Hedge:
Night Trading
  • Asian indices are -.25% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 72.75 -.5 basis point.
  • Asia Pacific Sovereign CDS Index 13.75 unch.
  • Bloomberg Emerging Markets Currency Index 73.19 unch.
  • S&P 500 futures +.57%.
  • NASDAQ 100 futures +.46%.

Earnings of Note
Company/Estimate
  • None of note
Economic Releases   
10:00 am EST
  • Factory Orders for October are estimated to fall -.4% versus a +1.4% gain in September.
Upcoming Splits
  • (CGNX) 2-for-1
Other Potential Market Movers
  • The Eurozone PPI report, UBS Media/Communications Conference, Raymond James Tech Conference, Wells Fargo Tech Summit and the Cowen Energy/Natural Resources Conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by energy and consumer shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon.  The Portfolio is 100% net long heading into the week.

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