Thursday Watch

Evening Headlines

Bloomberg:

• China Factory Output, Investment Slow Amid Pollution, Debt Curbs. Industrial output rose 6.1 percent from a year earlier in November, in line with the projection in Bloomberg’s survey and edging down from 6.2 percent the prior month. Retail sales expanded 10.2 percent from a year earlier, less than the estimated 10.3 percent. Fixed-asset investment excluding rural households rose 7.2 percent in the first 11 months of the year over the same period in 2016, in line with estimates.

• PBOC Raises Market Borrowing Costs in Surprise Move After Fed.

• Japan Plans Carrot-and-Stick Tax Changes to Drive Wage Gains.

• Asia Stocks Mixed; Dollar Steady on Fed's Outlook. Asian stocks were mixed and the dollar maintained losses after the Federal Reserve raised its outlook for U.S. growth and held its forecast for the number of interest-rate increases next year amid benign inflation. The Australian dollar jumped after the release of better-than-expected jobs figures. Equity indexes in Japan fluctuated, while they rose in Hong Kong, Australia and South Korea. The S&P 500 Index ended lower after a swoon in the final 15 minutes of trading. The Fed increased interest rates and raised its outlook for economic growth in 2018 without lifting its forecast for the number of hikes next year, while Chair Janet Yellen struck a dovish tone in her final scheduled press conference. The Bloomberg dollar index nudged lower as Treasury yields were slightly higher in Asia. The Topix index was down 0.1 percent as of 10:35 a.m. in Tokyo, as was the Nikkei 225 Stock Average. Australia’s S&P/ASX 200 Index rose 0.1 percent and the Kospi index in Seoul was up 0.8 percent. Hong Kong’s Hang Seng Index rose 0.2 percent, while the Shanghai Composite Index was little changed.

• Five Things You Need to Know to Start Your Day.

• Yellen Pans Bitcoin Boom, Shows Scant Worry Over Surging Stocks. (video)

• Famed Short-Seller Jim Chanos Says Tesla(TSLA) Headed for ‘Brick Wall’. (video)

Wall Street Journal:

• House, Senate Republicans Reach Deal on Final Tax Bill. Agreement lowers top individual rate to 37%, sets 21% corporate rate.

• Disney(DIS) Nears Pact to Acquire Assets From 21st Century Fox. Deal would value assets Disney is acquiring at $60 billion, including debt.

• From German Faucets to Italian Chocolate, Trade Barriers Are Rising Again in Europe. The rise of economic nationalism is clashing with the open-market ideals of the EU’s original founders.

• Bulldozer Dealers to Congress: Don’t Tax Us Like Tractor Dealers. Construction-equipment dealers object to a tax provision offered to farm-equipment dealers; last-minute tweaks for one industry can throw up problems for another.

MarketWatch.com:

• Here’s what’s in the Republican tax deal.

CNBC:

• Trump: Americans will see 'bigger paychecks beginning in February' if GOP finishes tax bill by Christmas. (video)

• Markets are skeptical Fed will stick to its rate hiking plan. (video)

• Jamie Dimon says tax cut will cause companies to buy back their own stock and that's not a 'bad thing'. (video)

• 3 ETFs are testing key levels, and they could be about to break out. (video)

Zero Hedge:

• FBI Texts Reveal "Insurance Policy" To Prevent Trump Presidency.

• New York City Developers Are Relying On A Shrinking Pool Of Buyers.

• Bloomberg Pronounces The Early Death Of The Traditional Long-Short Hedge Fund Model.

• Global Negative Yielding Debt Surges To $9.7 Trillion Despite ECB's QE Taper.

• The Enemy Within - The "Intelligence Community".

• Gold Pops As Bitcoin Drops, Dollar Snaps Longest Win Streak Since Jan 2016.

Business Insider:

• PBS suspends 'Tavis Smiley' following sexual misconduct investigation.

Night Trading 

• Asian equity indices are -.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 70.25 -.25 basis point. 

• Asia Pacific Sovereign CDS Index 13.75 unch.

• Bloomberg Emerging Markets Currency Index 73.23 +.03%.

• S&P 500 futures +.08%.

• NASDAQ 100 futures +.12%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (SAFM)/3.52

• (SCHL)/1.75

• (ADBE)/1.16

• (COST)/1.35

• (JBL)/.78

• (ORCL)/.68

Economic Releases

8:30 am EST

• Initial Jobless Claims for last week are estimated at 236K versus 236K the prior week.

• Continuing Claims are estimated to fall to 1900K versus 1908K prior. 

• Retail Sales Advance MoM for November is estimated to rise +.3% versus a +.2% gain in October.

• Retail Sales Ex Autos MoM for November is estimated to rise +.6% versus a +.1% gain in October.

• Retail Sales Ex Autos and Gas for November is estimated to rise +.4% versus a +.3% gain in October.

• The Import Price Index MoM for November is estimated to rise +.7% versus a +.2% gain in October.

• The Export Price Index MoM for November is estimated to rise +.3% versus unch. in October.

9:45 am EST

• The Preliminary Markit US Manufacturing PMI for December is estimated at 53.9 versus 53.9 in November.

• The Preliminary Markit US Services PMI for December is estimated to rise to 54.7 versus 54.5 in November. 

10:00 am EST

• Business Inventories for October are estimated to fall -.1% versus unch. in September.
  

Upcoming Splits

• (NSP) 2-for-1

Other Potential Market Movers

• The China Retail Sales/Industrial Production reports, Australia Unemployment report, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, BMO Healthcare Conference and the (DAL) investor day could also impact trading today.

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