Wednesday Watch

Evening Headlines
Bloomberg:

• China Hawks Gain Upper Hand as Trump Squeezes Beijing Over Trade.

• Jeffrey Gundlach Sees Better Than 50% Chance of Higher China Tariffs.    

• China Defaults Hit Record in 2018. The 2019 Pace Is Triple That.

• Property Slowdown Beckons as Next Risk for Emerging Markets.

• Asia Stocks Resume Slide as Tariff Worries Linger. Asian stocks dropped after the U.S. threat of higher tariffs on imports from China pushed American equities down the most since March. The yen held near a six-week high. The brunt of equity declines was in Japan, with losses also seen in Australia and South Korea. Futures on the S&P 500 Index edged down after U.S. shares had the broadest day of declines since the Christmas Eve sell-off, despite closing off the session lows. China’s top trade negotiator still intends to visit Washington later this week as President Donald Trump ratchets up pressure to clinch a deal that many market participants had expected was all but done. Treasuries ticked up and the dollar edged higher. “The two largest economic powerhouses, the U.S. and China, either will be at a trade war or a trade peace and in reality there’s only a couple of people who know the answer to that and it isn’t those of us on Wall Street,” Larry Robbins, Glenview Capital Management’s CEO, told Bloomberg TV in New York. “It’s to be expected that there’s some volatility into this critical week.” Japan’s Topix index fell 1.2 percent as of 9:03 a.m. in Tokyo. Australia’s S&P/ASX 200 Index dropped 0.4 percent. Hang Seng Index futures earlier declined 1.5 percent. Futures on the S&P 500 Index dipped 0.2 percent.  

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

• Pelosi Issues Impeachment Warning as White House Escalates Fight.

• The Ferocity of This Market Sell-Off Eclipses the Christmas Eve Rout.  

• Electronics Arts(EA) Jumps After Apex Legends Helps Fuel Results.  

• Citadel's Flagship Hedge Funds Return 10% So Far This Year.  

• Scramble for Stock Protection Surpasses Fourth-Quarter Risk Rout.

Wall Street Journal:

• Stocks Sink as Trade Concerns Intensify.

• China Agrees to Resume U.S. Trade Negotiations.

• Bristol-Myers Sells $19 Billion of Bonds to Fund Celgene Purchase.

MarketWatch.com:

• The S&P 500 got hammered on tariff fears — here are the only 36 stocks in the index that closed with gains.

CNBC:

• Stocks making the biggest moves after hours: Lyft, Papa John’s, EA and more.

Zero Hedge:

• Infuriating Democrats, Trump Plans To Redefine Poverty, Cutting Americans From Welfare.

• California's Mandatory Minimum Wage-Hikes Are Starting To Backfire.

• Lyft Plunges As Revenue Doubles But Losses Soar Almost 400%.

• How AG Barr Could Change The Federal Culture Of Corruption In Just 60 Days.

• Oil Algos Confused By Bigger Than Expected Crude Build, Gasoline Draw.

• Consumer Credit Growth Slowest In 9 Months As Credit Card Debt Unexpectedly Shrank.

• Traders Bet Worst-To-Come As Trade Turmoil Sparks Huge Deleveraging.

Business Insider:

• Trump's threat to sharply increase tariffs would hit China's economy like a sucker punch.

Night Trading 

• Asian equity indices are -1.25% to -.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 68.5 +1.75 basis points.

• China Sovereign CDS 45.25 +5.0 basis points.

• Bloomberg Emerging Markets Currency Index 65.99 -.05%.

• S&P 500 futures -.10%.

• NASDAQ 100 futures -.17%.

Morning Preview Links 

Earnings of Note 
Company/Estimate

Before the Open:

• (BJ)/.24

• (BG)/.05

• (CHK)/.15

• (HMC)/64.78

• (MCK)/3.66

• (MCHP)/1.40

• (ODP)/.06

• (WEN)/.12

• (YRCW/-.55

After the Close:

• (ALB)/1.23

• (CECO)/.32

• (CVNA)/-.48 

• (FOSL)/-.61

• (FOXA)/.67

• (IAC)/1.30

• (PETQ)/.09

• (DIS)/1.57

Economic Releases
10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +1,248,000 barrels versus a +9,934,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -993,560 barrels versus a +917,000 barrel gain the prior week. Distillate inventories are estimated to fall by -1,141,440 barrels versus a -1,307,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.71% versus a -.9% decline prior.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Brainard speaking, China Trade Data report, Eurozone Industrial Production report, House Hearing on Privacy/Data Security, weekly MBA Mortgage Applications report, (INTC) investor meeting, JPMorgan China Summit, Jefferies Software Conference, (COST) April sales results, Bernstein Software Summit and the (MORN) investor conference could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down by commodity and industrial 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.