Tuesday Watch

Evening Headlines

Bloomberg:     

• U.S. Concerned About Chinese Yuan’s Recent Drop, Official Says.

• Italy's Tria Faces Off Against Opposition Lawmakers Over Budget.

• IMF Cuts Forecast for Global Growth as Trade War Takes Its Toll.

• Asian Stocks Decline; U.S. Yields Hold Above 3.2%. Asian stocks opened lower on Tuesday following a mixed U.S. session as investors took stock of a friction-filled visit by the American secretary of state to Beijing. Ten-year Treasury yields were steady around seven-year highs as they resumed trading after a holiday. Japanese shares declined as traders came back after a long weekend, hurt by a strengthening in the yen. Australian stocks dropped, while Hong Kong futures were also lower. China’s markets remain a focal point after stocks slumped on Monday and the yuan weakened past 6.9 per dollar in onshore trading. Overseas investors dumped $1.4 billion of domestic Chinese shares through exchange links with Hong Kong Monday. “China has been selling off because of dollar strength but also because of the weak data” showing the economy in a slowdown, David Hauner, a cross-asset strategist at Bank of America Merrill Lynch, said in an interview with Bloomberg Television. “For China to rally you really need the domestic picture to improve. The external picture is unlikely to help much.” Japan’s Topix index fell 1.3 percent as of 9:40 a.m. in Tokyo. Australia’s S&P/ASX 200 Index fell 0.9 percent. Hang Seng Index futures lost 0.6 percent. S&P 500 Index futures fell 0.1 percent.  

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

• Trump's Yuan Worries, Nobel Winners, Jokowi's Jobs Woe: Eco Day.

• Fear Gauge’s 58% Surge Leaves Stock Strategists Asking What Next.  

• Tesla's(TSLA) Value Sinks by $10 Billion in a Week.

• Morgan Stanley Says It Was Wrong About Treasury Yields, Scraps Call on Curve Flattening.

• The Most Popular Hedge Fund Stocks Are Getting Hit the Hardest.

Wall St. Journal:

• Democrats, Try Some Self-Restraint.

• Trump Says He Has No Plans to Fire Rosenstein.

• Hedge Funds Retreat as Markets Advance.

• Emerging Markets Look to Contain Damage.

• Chinese Exporters Find 18,927 Ways to Avoid U.S. Trade Tariffs.

• Elliott Management, in a Shift, Goes on the Charm Offensive.

• Netflix(NFLX) to Open New Production Hub in New Mexico.

• Traders Bet on Oil Prices Rallying Back to $100.

Fox News:

• Trump apologizes to justice, family for campaign of 'destruction' resulting from misconduct claims.

• Hurricane Michael charges toward coast as Alabama declares state of emergency.

CNBC:       

• These are the areas of the stock market where investors should be when interest rates are rising.

• These ETFs are the biggest winners when interest rates are climbing. 

• Papa John's soars on report Wendy's stakeholder Trian interested in buying pizza chain.

• After-hours buzz: TSLA, EW & more.

• BlackRock's $2 trillion bond king: The recent spike in Treasury yields is almost done, as is the Fed.  

• Morgan Stanley: Belief in 'American exceptionalism' among global investors has never been higher.

Zero Hedge:

• Investigative Journalist Probing EU Corruption Found Brutally Raped And Murdered.

• Democrats Vow To Launch Post-Midterm Kavanaugh Investigation; Booker Floats Impeachment.

• "Unraveling Of A Cover-Up" - California DMV Admits 100s Of Non-Citizens Added To Voter Rolls.

• French PM Resignation Imminent As Macron Approval Hits All Time Low.

• The Global Doom Distortions, Part 1: Hyper-Indebted Zombie Corporations.

• Fifth Bond Sale Pulled As Europe's Junk Bond Market Cracks.

• Dow Trumps Tech For 7th Straight Day Despite Beijing, Brussels Bloodbath.

Business Insider:

• Google(GOOGL) shutters the Google+ social network after Wall Street Journal reports a huge security lapse.

• Google(GOOGL) drops out of contention for a $10 billion defense contract because it could conflict with its corporate values.

Telegraph:       

• Italian banks caught in vicious circle as bond spreads hit danger threshold.

Night Trading 

• Asian equity indices are -1.0% to -.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 85.25 +3.5 basis points. 

• Asia Pacific Sovereign CDS Index 9.75 unch.

• Bloomberg Emerging Markets Currency Index 66.12 -.01%.

• FTSE 100 futures -.01%.

• S&P 500 futures -.14%.

• NASDAQ 100 futures -.16%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (AZZ)/.47

• (HELE)/1.59

After the Close:

• None of note

Economic Releases

6:00 am EST

• The NFIB Small Business Optimism Index for September is estimated to fall to 108.3 versus 108.8 in August.
  

Upcoming Splits

• (SHOO) 3-for-2

Other Potential Market Movers

• The Fed's Evans speaking, German Trade Balance report, weekly US retail sales reports, (GOOGL) new product event and the (OKTA) investor day could also impact trading today.

BOTTOM LINE:  Asian indices are lower, weighed down by technology and commodity shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 50% net long heading into the day.