Wednesday Watch

Evening Headlines

Bloomberg:

• China’s Factory Inflation Eases to Lowest Since November 2016. China’s factory inflation slid to the lowest level since November 2016 last month amid slowing output and higher year-ago base comparisons. The producer price index rose 4.9 percent in December from a year earlier, versus a projected 4.8 percent rise in a Bloomberg survey and 5.8 percent in November. The consumer price index climbed 1.8 percent, the statistics bureau said Wednesday, compared with a median forecast of 1.9 percent.

• Asia Stock Rally Fades as Investors Eye Yield Jump. (video) Asia’s stock rally to record highs looked to take a breather on Wednesday as investors consider the impact of a jump in bond yields that spurred the fixed-income veteran Bill Gross to declare a bond bear market. Rising commodity prices, looming U.S. debt sales and prospects for reduced central bank asset purchases support the case for higher bond yields, in a potential test to surging equity valuations. Chinese inflation data Wednesday and U.S. consumer prices Friday offer the latest check on cost pressures in the world’s top two economies. Oil is near its highest since 2014. Japan’s Topix index and Australia’s S&P/ASX 200 Index climbed 0.1 percent. Futures on Hong Kong’s Hang Seng Index added 0.1 percent. The MSCI All-Country World Index is trading near the highest on record, hit Tuesday.

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

Wall Street Journal:

• Donald Trump Is Optimistic a Deal Can Be Reached on ‘Dreamers’. President agrees to put off some contentious issues in talks with lawmakers; wall appears to remain a stumbling block.

• Trump Signs Order Expanding Mental-Health Help for New Veterans. Aim is to curb suicides in year after service members depart military.

• How Millions of Iranians Are Evading the Internet Censors. Tehran’s online crackdown aimed to help stamp out protests, but could weaken its control of information.

• A Glimpse of Brilliant, Necessary and/or Totally Crazy Technologies to Come. 

• Trump Says Drilling Won’t Be Allowed Off Florida Coast. Interior Secretary Ryan Zinke says he made decision after meeting with Republican Gov. Rick Scott.

MarketWatch.com

• Why bitcoin is worth exactly $0 (and blockchain might be very valuable).

• Nvidia(NVDA) now has a two-year lead over its competition in autonomous driving.

• White men who can’t get jobs say they’re being discriminated against. A new Pew survey indicates that some STEM workers believe they’re victims of reverse discrimination.

Fox News: 

• 'Somebody's already been killed' because of Trump dossier, Fusion GPS rep revealed. (video)

CNBC:

• Legendary investor Bill Miller: Market could be headed for a 'melt-up' of 30%. (video)

• January and its unusual string of new highs is setting a good tone for the market.

• Toyota, Mazda to build $1.6 billion plant in Alabama.

• Between Walmart(WMT) and Kroger(KRO), 500 stores are about to ditch cashiers.

• Nordstrom's(JWN) holiday sales up 2.5 percent, boosted by its Rack stores.

• Another firm just pulled its plans to launch bitcoin ETFs. (video)

Zero Hedge:

• Bridgewater's Dalio Decries America's "Trial By Gossip" New Normal.

• "The S&P Will Have Negative Return In 2018": Complete Gundlach Presentation Highlights.

• North Korea: "All Our Atomic Bombs And ICBMs Are Aimed At The U.S., Not Seoul, China Or Russia".

• NFL Wildcard Playoff Ratings Crash 14% Versus 2017.

• WTI/RBOB Spike After Massive Crude Draw. (graph)

• RussiaGate Turns On Its Originators.

• Bonds Bloodbath, Ripple Recked, S&P Surges To Best Start In 30 Years. (graph)

Business Insider: 

• The Australian tax office is coming after crypto traders.

• Clint Carlson's hedge fund assets drop $1 billion in five months after brutal performance.

Night Trading 

• Asian equity indices are -.5% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 59.75 -1.25 basis points. 

• Asia Pacific Sovereign CDS Index 9.75 -1.25 basis points.

• Bloomberg Emerging Markets Currency Index 74.82 +.04%.

• S&P 500 futures -.07%.

• NASDAQ 100 futures -.13%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (LEN)/1.47

• (SVU)/.51

• (KBH)/.77

• (PRGS)/.60

• (RMAX)/.51

Economic Releases

8:30 am EST

• The Import Price Index MoM for December is estimated to rise +.4% versus a +.7% gain in November.

• The Export Price Index MoM for December is estimated to rise +.3% versus a +.5% gain in November.

10:00 am EST

• Wholesale Sales MoM for November are estimated to rise +.6% versus a +.7% gain in October.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -3,441,000 barrels versus a -7,419,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +3,037,500 barrels versus a +4,813,000 barrel gain the prior week. Distillate inventories are estimated to rise by +2,264,100 barrels versus a +8,899,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.65% versus a +1.0% gain prior.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Evans speaking, Fed's Kashkari speaking, Fed's Bullard speaking, $20B 10Y T-Note auction, China CPI report, UK Industrial Production report, weekly MBA Mortgage Applications report, CSFB China Tech/Internet Conference and the (DPZ) investor day could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by technology and financial 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.