Tuesday, January 30, 2018

Wednesday Watch

Evening Headlines
Bloomberg:
  • Trump to Credit Tax Cuts for Bonuses to 3 Million Workers. President Donald Trump will promote the benefits of his tax cuts in his first State of the Union speech on Tuesday, claiming that 3 million American workers received bonuses from their employers after he signed the legislation last year. The White House has billed the prime-time address as part economic victory lap and part uplifting and bipartisan rallying cry.
  • Japan Factory Output Surges in December on Strong Exports. Industrial production in Japan accelerated in December, pushing output to the highest level since the global financial crisis. The third straight month of rising factory output points to solid economic growth in the fourth quarter.
  • China Factory Gauge Weakened Amid Pollution, Leverage Campaigns. (video) China’s official factory gauge missed estimates as efforts to rein in debt and reduce pollution dragged on activity. The manufacturing purchasing managers index slipped to 51.3 in January, compared with a 51.6 forecast in a Bloomberg survey of economists and 51.6 the prior month, the National Bureau of Statistics said Wednesday. The non-manufacturing PMI rose to 55.3 from 55 in December. A new composite index covering both services and manufacturing was released for the first time; it stood at 54.6. Numbers above 50 indicate improving conditions while those below signal deterioration.
  • U.K. Consumers and Businesses Start 2018 With Confidence Boost. U.K. consumers and businesses have started 2018 with cautious optimism. GfK’s household confidence index rose for the first time in four months in January, with improvements in how consumers view the economy, their personal finances and willingness to spend big. Expectations for an easing of inflation may be helping, though wage growth remains sluggish.
  • Stocks Selloff Continues in Asia; Yields Steady. (video) Shares in Japan and Australia were down in early Wednesday trading, although stocks in Korea bucked the trend. The MSCI All-Country World Index suffered its biggest two-day slide since September 2016, as the Dow Jones Industrial Average tumbled more than 360 points on Tuesday. The 10-year Treasury yield held at 2.72 percent, near the highest since April 2014. Commodities retreated, led by crude and industrial metals. Japan’s Topix index sank 0.4 percent as of 9:25 a.m. in Tokyo. Australia’s S&P/ASX 200 Index slid 0.3 percent. South Korea’s Kospi index rose 0.2 percent. Futures on Hong Kong’s Hang Seng Index declined 0.8 percent. Futures on the S&P 500 Index were flat after the underlying gauge sank 1.1 percent Tuesday
Wall Street Journal:
CNBC:
Business Insider:
TheStreet:
Macrobusiness: 
Night Trading 
  • Asian equity indices are -.50% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 65.25 +1.75 basis point
  • Asia Pacific Sovereign CDS Index 11.25 +.5 basis point.
  • Bloomberg Emerging Markets Currency Index 76.02 +.05%.
  • S&P 500 futures +.13%.
  • NASDAQ 100 futures +.15%.
Morning Preview Links

Earnings of Note
Company/Estimate

  • (ANTM)/1.27
  • (MT)/.77
  • (ADP)/.90
  • (BA)/2.88
  • (DHI)/.64
  • (LLY)/1.07
  • (IR)/1.03
  • (JCI)/.53
  • (PBI)/.37
  • (TUP)/1.50
  • (AFL)/1.55
  • (T)/.65
  • (EBAY)/.59
  • (FB)/1.96
  • (LSTR)/1.02
  • (MSFT)/.87
  • (OSTK)/-.03
  • (PYPL)/.52
  • (QCOM)/.91
  • (SYMC)/.44
  • (TSCO)/.87
  • (X)/.68
Economic Releases
8:15 am EST
  • The ADP Employment Report for January is estimated to fall to 185K versus 250K in December.
8:30 am EST
  • The Employment Cost Index for 4Q is estimated to rise +.6% versus a +.7% gain in 3Q.
9:45 am EST
  • Chicago Purchasing Manager for January is estimated to fall to 64.0 versus 67.8 in December.
10:00 am EST
  • Pending Home Sales MoM for December are estimated to rise +.5% versus a +.2% gain in November.
10:30 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory gain of +308,800 barrels versus a -1,071,000 barrel decline the prior week. Distillate inventories are estimated to fall by -230,500 barrels versus a +639,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +1,877,400 barrels versus a +3,098,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.62% versus a -2.1% decline prior.
2:00 pm EST
  • The FOMC is expected to leave the benchmark Fed Funds Rate at 1.25%-1.5%.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The China Manufacturing PMI report, Eurozone CPI report, Australia CPI report, weekly MBA Mortgage Applications report and the Stifel Healthcare REIT 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 weaken into the afternoon, finishing mixed.  The Portfolio is 75% net long heading into the day.

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