Stocks Reversing Lower into Final Hour on China Bubble-Bursting Fears, Earnings Outlook Worries, Oil Decline, Financial/Healthcare Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Below Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 15.41 -2.10%

• Euro/Yen Carry Return Index 142.10 +.03%

• Emerging Markets Currency Volatility(VXY) 11.12 -.71%

• S&P 500 Implied Correlation 60.52 -3.26%

• ISE Sentiment Index 115.0 +55.41%

• Total Put/Call .94 -6.0%

• NYSE Arms 1.39 +18.33% 

Credit Investor Angst:

• North American Investment Grade CDS Index 81.53 +.70%

• America Energy Sector High-Yield CDS Index 1,064.0 +.75%

• European Financial Sector CDS Index 73.75 -1.02%

• Western Europe Sovereign Debt CDS Index 20.61 +4.04%

• Asia Pacific Sovereign Debt CDS Index 78.14 +1.03%

• Emerging Market CDS Index 334.83 +.11%
  

• iBoxx Offshore RMB China Corporates High Yield Index 121.74 +.06%

• 2-Year Swap Spread 10.75 unch.

• TED Spread 31.25 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -24.75 -.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.26 -.58%
• 3-Month T-Bill Yield .00% -1.0 basis point

• Yield Curve 141.0 -3.0 basis points

• China Import Iron Ore Spot $52.79/Metric Tonne -.26%

• Citi US Economic Surprise Index -5.60 +1.6 points

• Citi Eurozone Economic Surprise Index 9.0 +1.5 point

• Citi Emerging Markets Economic Surprise Index -15.60 +1.8 points

• 10-Year TIPS Spread 1.46 -2.0 basis points
• # of Months to 1st Fed Rate Hike(Morgan Stanley) 6.37 -.38

Overseas Futures:

• Nikkei 225 Futures: Indicating +49 open in Japan 
• China A50 Futures: Indicating -162 open in China

• DAX Futures: Indicating -16 open in Germany

Portfolio: 

• Slightly Higher: On gains in my medical sector longs, index hedges and emerging markets shorts

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 25% Net Long

Today's Headlines

Bloomberg: 

• China Defaults Seen Rising After Sinosteel Misses Payment. China bond defaults are forecast to climb after a state-owned steelmaker missed an interest payment, raising questions about the government’s commitment to stand behind such firms. Sinosteel Co. failed to pay interest due Tuesday on 2 billion yuan ($315 million) of 5.3 percent notes maturing in 2017 after saying it will extend the deadline as it plans to add a unit’s stock as collateral. That came after the National Development and Reform Commission planned to meet noteholders and ask them not to exercise a redemption option on Tuesday to force full repayment, people familiar with the matter said last week.

• China's Stocks Fall Most in Month as Small-Caps Lead Declines. China’s stocks dropped the most in a month on heavy volume, led by smaller companies, as investors weighed whether an equity rebound had gone too far. The Shanghai Composite Index slid 3.1 percent to 3,320.68 at the close, the most since Sept. 15. The ChiNext index of smaller companies slumped 6.6 percent after soaring 40 percent through Tuesday from last month’s low. Leshi Internet Information & Technology Corp. and East Money Information Co., the heaviest-weighted ChiNext stocks, both tumbled by the 10 percent daily limit. Jiangxi Copper Co. paced declines for material producers, tumbling 7.8 percent.

• ABB Profit Drops 21% Amid China Slowdown, Drop in Oil Prices. ABB Ltd, the power-grid maker that has activist Cevian Capital as a shareholder, said third-quarter margins improved on cost cutting even as profit dropped 21 percent amid a slowdown in China and feeble demand from oil and gas customers. Net income declined to $577 million, the Oerlikon, Switzerland-based company said in a statement on Wednesday. Earnings before interest, taxes and amortization fell 9 percent to $1.08 billion while a savings push lifted the operating ebitda margin 50 basis points to 12.5 percent. 

• Khamenei Endorses Nuclear Deal But With Warning Over Sanctions. Iranian Supreme Leader Ayatollah Ali Khamenei threw his authority behind the country’s nuclear accord with world powers for the first time, while issuing a warning over the removal of sanctions. In a statement addressed to President Hassan Rouhani and published by state news agencies, Khamenei said he appreciated the work of Iran’s diplomats in securing the deal. But he said the government should remain vigilant over any failure to deliver on commitments to remove sanctions by European nations and the U.S. 

• Rousseff Impeachment Bid Filed as Crisis Hits New Stage. A group of high-profile lawyers filed a request on Wednesday to impeach President Dilma Rousseff, bringing closer a decision on her political survival as months of uncertainty have paralyzed Congress, rattled financial markets and deepened an economic slump. Lower house President Eduardo Cunha, a vocal critic of Rousseff who himself faces corruption allegations, pledged no bias in deciding whether to accept the plea that alleges she manipulated budget accounts in 2014 and this year. Accepting the petition could take days or weeks and would trigger a protracted legal process that could eventually force the president from office.

• EU Calls for Talks as Migrant Crisis Deepens in Balkans. European Commission President Jean-Claude Juncker called for emergency talks and Slovenia gave its army a green light to help control a surge in migrants as Europe’s refugee crisis deepened before the onset of winter. German Chancellor Angela Merkel will join government leaders from eight other countries from central and southeastern Europe at the meeting scheduled for Sunday in Brussels, Juncker said. Earlier, Slovene lawmakers gave the army additional powers to help police man border posts overwhelmed with migrants, according to the parliament’s website. The Adriatic nation of 2 million people will also ask the European Union for assistance.

• Draghi May Lack What It Takes to Do Whatever It Takes on Prices. Having once saved the euro with his 2012 pledge to do “whatever it takes,” the European Central Bank president is now signaling a willingness to boost his 1.1 trillion-euro ($1.3 trillion) quantitative-easing program in response to a negative inflation rate. The problem is that the ECB risks running into political and technical limits on just what bonds it can purchase. Those constraints mean investors are already starting to question just how much more the euro area’s policy makers can do to revive inflation. The ECB Governing Council starts a two-day monetary policy meeting in Malta on Wednesday and Draghi will hold a press conference on Thursday.   

• HSBC: These Are the Economies That Could Run Into Trouble. Malaysia, Indonesia, Sweden, Norway, and ... New Zealand?

• Emerging Currencies Slide to Two-Week Low as China Stocks Drop. Emerging-market currencies fell to a two-week low and stocks retreated as falling commodity prices and a slide in Chinese shares refocused concern on slowing growth in the world’s second-largest economy. A gauge tracking 20 developing-nation currencies weakened 0.5 percent, dropping for a fourth day. South Africa’s rand and Russia’s ruble slumped at least 1.1 percent against the dollar as oil prices retreated. The real fell for a second day on speculation Brazil will change this year’s budget target to a deficit from a surplus, underscoring its inability to shore up government finances.

• Ibovespa Declines With Petrobras as Political Crisis Escalates. Brazil’s stocks dropped for a second day, led by oil producer Petroleo Brasileiro SA, amid speculation that heightened political turmoil will deepen the nation’s economic recession.

• European Stocks Are Little Changed as ARM Climbs, Miners Decline.  European stocks fluctuated throughout the day, before closing little changed, as investors oscillated between concern about global growth and optimism regarding corporate earnings. Anglo American Plc and Glencore Plc led resource-related companies lower, erasing an earlier advance, amid slumping commodity prices. ARM pushed a gauge of technology shares to the biggest gain on the Stoxx Europe 600 Index, jumping 6.5 percent after third-quarter revenue beat analyst estimates. Reckitt Benckiser climbed 2.5 percent after raising its full-year growth target. Credit Suisse Group AG lost 3.6 percent after saying it will raise fresh capital and reorganize its operational focus. The Stoxx 600 lost less than 0.1 percent to 362.64 at the close of trading, after earlier rising 0.4 percent and falling as much as 0.8 percent.

• Jim Chanos Nails the Link Between Debt and Energy. Shale companies have relied on eager capital markets for growth.  So begins the latest presentation from renowned short-seller Jim Chanos. What follows is a powerful outline of the spirally debt dynamics that now dominate the future of the oil industry. At the heart of Chanos's thesis is the contention that years of low interest rates, cheap financing, overeager investors and ambitious managers have helped propel the boom in U.S. shale and imbue it with near unstoppable momentum; U.S. oil production is expected to grow 6 percent in 2015, despite a stunning 59 percent drop in the U.S. rig count over the past year.

• Loan-Market Slump Threatens to Gum Up Wall Street's M&A Machine. Here’s an ominous sign for Wall Street’s debt-fueled M&A bonanza: Investors are increasingly wary of loans that fund leveraged takeovers. Almost half of the $75 billion buyout loans arranged in the U.S. last year and tracked by Bloomberg in the secondary market are trading below their issue price.

• Barclays Sees VIX Rebound With Risk Premium at Bull Market Low. The U.S. stock market is quiet -- too quiet. One example is the price investors are paying for options on the Standard & Poor’s 500 Index, a value that is captured by the Chicago Board Options Exchange Volatility Index. At present, options dealers are charging so little for protection in equities that the VIX is trading at a six-year low compared with the actual volatility of the benchmark gauge. That’s not a good sign to Barclays Plc derivatives strategist Maneesh S. Deshpande, who sees the potential for the VIX to snap back from its recent slide.

• Valeant(VRX) Plummets on Allegation of Enron-Like Accounting. Valeant Pharmaceuticals International Inc. shares took a beating, falling more than 20 percent, after a stock-commentary site run by a short seller accused the company of an Enron-like strategy of recording fake sales by using phony customers. Citron Research said Valeant is using a specialty pharmacy called Philidor RX Services to store inventory and record those transactions as sales. “Is this Enron part deux?” the report said. “These similarities are too close to ignore.”

• NYSE Pleads for Rules to Make Hedge Funds Reveal Short Positions.

Fox News:

• Biden announces he will not run for president in 2016. (video) Vice President Biden announced Wednesday he will not run for president, ending months of feverish speculation over his 2016 plans and likely settling the Democratic field.

Zero Hedge: 

• If Ackman Is About To Blow Up, This Is What Plunges Next. (graph)

• VRX(VRX) Halted Down 40%, Issues Statement, Says "Citron's Report Is Erroneous".

• Stocks Slammed Into Red For Week As Biotechs Break Key Support. (graph)

• NASA Warns: 99% Chance Of At Least A 5.0 Quake Hitting LA Within 30 Months.

• O Wage Inflation, Where Art Thou? (graph)

• WalMart(WMT) Lied: Must Remove "Made In USA" Logos From Products Made In China, Thailand.

• If Caterpillar's(CAT) Data Is Right, This Is A Global Industrial Depression. (graph)

• New Oil Order: Russia Again Tops Saudi Arabia As China's Largest Crude Supplier. (graph)

• Voices From The Real World - The 8 Biggest Questions On Investors' Minds.

• Crude Slammed To $44 Handle After Inventory Surges Most In 7 Months. (graph)

• Teetering Trannies? Oil "Could Get Very Very Ugly, Very Very Quickly". (graph)

• Biogen(BIIB) Fires 11% Of Workers Despite Reporting Stellar Earnings, Boosting Guidance.

Business Insider: 

• Credit Suisse is slashing a key trading business — and a lot of people are going to get fired.

• Chipotle's(CMG) stunning growth is screeching to a halt.

• Western Digital(WDC) is buying Sandisk(SNDK) for $19 billion.

TNW News:

• YouTube Red takes on Netflix(NFLX) with a subscription service for ad-free original content.

Telegraph:

• Eurozone integration will threaten Britain's financial stability, warns Mark Carney. Governor of the Bank of England wades in to Brexit debate, warning UK must secure safeguards to protect its interests outside of the euro.

Tehran Times:

• Russia Seeks Five-Fold Boost in Iran Trade to $10B. Russian Energy Minister Alexander Novak heading a high-ranking Russian energy delegation will arrive in Tehran today to explore ways for boosting the value of trade between Iran and Russia. The two-day visit of the Russian delegation is aimed at boosting Iran-Russia worth of annual trade to $10 billion from the current $2 billion, according to the IRNA news agency. 

Bear Radar

Style Underperformer:

• Small-Cap Growth -1.75%

Sector Underperformers:

• 1) Coal -6.16% 2) HMOs -4.03% 3) Hospitals -3.03%

Stocks Falling on Unusual Volume:

• VRX, CLS, WTW, VMW, CXRX, PII, WSBC, AGN, ABG, PSO, ENDP, BIN, EROS, WDC, FCAU, EFII, AOS, LTXB, HZNP, CMG, SLGN, KRC, CSL, MKTX, HOG, IBB, CREE, HOG, CEMP, IRBT, WWW, APH, RUSHA, AGIO, AMSG, EMC, PENN, PKG, HUM, STJ, CPHD, ZSPH, PII, INSY and RLYP

Stocks With Unusual Put Option Activity:

• 1) VRX 2) Z 3) AET 4) XRT 5) VMW
  

Stocks With Most Negative News Mentions:

• 1) PBR 2) HOG 3) VMW 4) VRX 5) TSLA
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Value -.15%

Sector Outperformers:

• 1) Semis +1.14% 2) Agriculture +.86% 3) Defense +.17%
  

Stocks Rising on Unusual Volume:

• KLAC, LRCX, SWI, TUP, FULT, SYT, DRII, GM and ISRG

Stocks With Unusual Call Option Activity:

• 1) MDLZ 2) KLAC 3) LMT 4) SYF 5) WTW
  

Stocks With Most Positive News Mentions:

• 1) EDU 2) FULT 3) SNDK 4) BA 5) IPG
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Morning Market Internals

NYSE Composite Index:

• Volume Running +2.8% Above 100-Day Average
• 5 Sectors Rising, 5 Sectors Declining
• 48.5% of Issues Advancing, 47.7% Declining
• 49 New 52-Week Highs, 27 New Lows
• 34.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 47.0
• Vix 15.5
• Total Put/Call .97
• TRIN/Arms 1.48

Wednesday Watch

Evening Headlines 

Bloomberg:

• Leverage in China's bond market at record high. Chinese bankers say a debt-driven bond market rally is starting to show the same signs of overheating that preceded a collapse in equities. Repurchase transactions allowing investors to use existing note holdings as collateral to borrow money for one day doubled in the past year to a record 2.1 trillion yuan ($330 billion) on Monday. The cost of such funding in the interbank market has risen to 1.89 per cent from a five-year low of 1 per cent in May and has swung violently before, reaching 11.74 per cent in June 2013. A similar contract on the Shanghai stock exchange climbed to 2.21 per cent as equities rallied. Credit spreads at the narrowest in six years are being questioned as a steel trader delays making debt payments. "There are signs of an overheating market, and certainly the rally can't last for long," said Wei Taiyuan, an investment manager at China Merchants Bank Co. in Shanghai. "Leverage in the bond market is much higher than at any time in history. If equities continue to perform well, or initial public offerings resume, the liquidity-fueled rally may come to an end."

• More Money Leaving China: Is It a Cause for Concern? (video)

• Japan's Exports Grow at the Slowest Pace in More Than a Year. Japan’s exports grew at the slowest pace in more than a year in September, with a drop in shipments to Asia all but overwhelming gains in sales to Europe and the U.S. The trade data are one of the most crucial economic indicators before the Bank of Japan meets on Oct. 30 to consider whether the nation needs more monetary stimulus to stoke inflation and economic activity. Exports to China, India, Indonesia, Thailand and Malaysia all fell as the slowdown in China’s economy sapped demand across Asia. The value of Japanese shipments rose just 0.6 percent in September from a year earlier, marking the third straight month of waning growth, the finance ministry reported Wednesday. Economists surveyed by Bloomberg had expected a 3.8 percent increase. The value of imports sank more than 11 percent, underscoring a lack of demand in Japan’s domestic economy as well as falling oil prices.  

• The Thai Connection That Tells You Turkish Bank Debt Is Souring. Before July, SCB Asset Management Co., part of Thailand’s second-largest bank, held about $2 billion of medium-term notes issued by Turkish lenders. That’s now dropped to about $1.2 billion. While a fraction of the more than $88 billion of debt due within a year from Turkish banks, the decline in holdings by Thai investors like SCB shows one of the most robust markets for nation’s lenders is waning. Since 2013, when Moody’s Investors Service lifted Turkey from junk status, Thais have become some of the biggest buyers of medium-term notes to capture the highest yields in the universe of investment-grade banks.

• Asian Stocks Follow U.S. Equities Lower as Drugmakers Retreat. Asian stocks fell after U.S. shares declined amid mixed company earnings. Drugmakers and finance shares led losses on the regional benchmark gauge. The MSCI Asia Pacific Index retreated 0.1 percent to 133.59 as of 9:01 a.m. in Tokyo.

• Disney's ESPN Said Planning to Eliminate as Many as 350 Jobs. Walt Disney Co.’s ESPN sports network, confronting rising programming costs and a loss of viewers, plans to eliminate as many as 350 positions, about 4.3 percent of its workforce, according to people with knowledge of the matter. 

Wall Street Journal:  

• Debt, Growth Concerns Rain on Deficit Parade. Budget success yields to concerns about debt-to-GDP ratio and the economic outlook. The U.S. budget deficit is lower than before the 2008 financial crisis. But the good news is tempered by concerns on two fronts, one about the nation’s debt load and the other about the economy. Deficit hawks are concerned that the improvement will lead both parties to overlook the red ink set to rise later this decade from a surge in spending on health care and retirement benefits for the baby-boom generation. They worry that while the deficit is at the lowest level since 2007, the U.S. has added nearly $8 trillion in debt, an increase of 140%. That has nearly doubled the nation’s debt-to-GDP ratio, which stands near 73%—based on federal debt held by the public—and isn’t projected to fall in the coming years.

• New Guidelines Push Back Age for Mammograms. American Cancer Society recommends women start having mammograms every year at age 45, instead of 40.

• Why Benghazi Still Makes a Difference. Hillary Clinton may not see the point, but her Thursday testimony may tell us much about her ability to lead. Only in Perry Mason stories does the real culprit break down in open court. After Hillary Clinton’s now-immortal Capitol Hill outburst about investigations into the deadly 2012 terrorist attack in Benghazi, Libya—“What difference, at this point, does it make?”—the former secretary of state and Democratic candidate for president is unlikely to offer any such spontaneity when she testifies Thursday before the House Select Committee on Benghazi. Nonetheless, the committee’s work is utterly serious, its preparations... 

Fox News: 

• Ryan to run for House speaker if he gets full party support. Wisc. Rep. Paul Ryan told House Republicans Tuesday he would run for speaker if he gets broad support from all wings of the party and gave colleagues until Friday to express their views. A statement released by his spokesman, Brendan Buck, said Ryan “discussed what’s necessary, in his view, for the next speaker to be successful” at the closed-door meeting. “If the members agree with his requests and share his vision, and if he is a unity candidate - with the endorsement of all the conference's major caucuses - then he will serve as speaker,” the statement said. “He will be all in.

MarketWatch.com: 

• What a Democratic president could mean for your taxes.

CNBC:

• Chipotle(CMG) stock falls after earnings disappoint. (video) Revenue increased to $1.22 billion from $1.08 billion a year ago. Wall Street analysts forecast Chipotle Mexican Grill would deliver earnings per share of $4.62 and revenue of $1.22 billion, according to a Thomson Reuters estimate. Shares were last 7 percent lower after the bell.

• Yahoo(YHOO) cuts Q4 guidance after earnings miss. (video) The firm cut its fourth-quarter revenue outlook to a range of $1.16 billion to $1.2 billion. Analysts expected $1.33 billion in sales, according to StreetAccount. 

Zero Hedge: 

• Offshore-Onshore Yuan Spread At 1-Month Wides Hinting At Outflows As Japanese Stocks 'Mysteriously' Meltup At The Open. (graph)

• Banks Turn Down Deposits As Stealth NIRP Takes Hold.

• Meet The New Generation Of Traders.

• PM-Elect Of 'US Ally' Canada Wastes No Time: Tells Obama Will Withdraw Fighter Jets From Syria, Iraq.

• Show Of Hands: Who's Interested In A CDO Backed By A Pool Of Subordinated Community Bank Debt?

• Then It Was BlackRock(BLK), Now It's Blackstone(BX) But The Result Will Be The Same.

• Confusion, Delusions, & Illusions. (graph) Telling people the truth today is meaningless, as they don’t want their illusions destroyed. But destroyed they will be, when this teetering edifice of debt comes crashing down on their heads. 

• Europe Secretly Starts Imposing TTIP Despite the Public’s Overwhelming Opposition.

• Crude Tumbles As API Reports Another Huge Inventory Build. (graph)

• Ferrari Prices IPO At $52 (Upper End Of Range), Raises $893 Million.

• How The Entire Short Volatility ETF Complex Could Be Wiped Out Overnight. (graph)

• Bonds & Stocks Drop Amid Crude Carnage; Bills, Biotechs, & Big-Boy-Toys Battered. (graph)

Business Insider:

• Gold is making a comeback. (graph)

• Obama just slammed the door on Arctic drilling.

• NSA chief: This is what keeps me up at night.

• Oil inventories are piling up. (graph)

Reuters: 

• VMware's(VMW) revenue forecast misses estimates, shares fall. Virtualization software maker VMware Inc forecast current-quarter revenue largely below Wall Street's estimates, sending its shares down 5 percent in extended trading. VMware, whose parent EMC Corp is being acquired by Dell Inc in a $67 billion deal, said EMC and Dell have committed to support the company's independent partnering strategy. The company said it had seen softer bookings in the quarter due to speculation about its future and weakness in China, Russia and Brazil.

• Bridgewater's $70 bln 'All Weather Fund' down 6 pct in 2015 - sources. The $70 billion Bridgewater All Weather Fund, managed by hedge fund titan Ray Dalio, was down 1.9 percent in September and is down 6 percent through the first nine months of the year, three people familiar with the fund's performance said on Tuesday.

• Texas teen arrested over clock is moving to Qatar with his family. The Texas boy arrested for bringing to school a homemade clock that was mistaken for a bomb is moving to Qatar, his family said on Tuesday, a few hours after he was at the White House for an astronomy night hosted by President Barack Obama. Ahmed Mohamed, 14, a bespectacled ninth-grader who became an Internet sensation for an arrest that supporters said was influenced by bias against his Muslim religion, has accepted an offer from the Qatar Foundation to study at its Young Innovators Program. "This means, that we, as a family, will relocate to Qatar where Ahmed will receive a full scholarship for secondary and undergraduate education," his family said in a statement. The teenager, who dabbles in robotics and had attended a Dallas-area high school, has basked in celebrity status since his arrest in September. The family has been traveling the globe to meet dignitaries. Sudanese state radio reported that his father took him to meet Sudanese President Omar al-Bashir. The Sudanese leader is accused by the International Criminal Court of masterminding genocide, crimes against humanity and war crimes during Sudan's Darfur conflict.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are -.25% to +.50% on average.

• Asia Ex-Japan Investment Grade CDS Index 138.75 -.5 basis point.

• Asia Pacific Sovereign CDS Index 77.25 +2.25 basis points.

• Bloomberg Emerging Markets Currency Index 72.68 -.01%. 

• S&P 500 futures +.11%.

• NASDAQ 100 futures +.13%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (ABT)/.53

• (ARMH)/.07

• (BHI)/-.14

• (BIIB)/3.79

• (BA)/2.20

• (CSL)/1.62

• (KO)/.50

• (EMC)/.43

• (GM)/1.19

• (ITW)/1.36

• (KMB)/1.49

• (MAN)/1.55

• (OC)/.67

• (STJ)/.97

• (TMO)/1.79

• (WFT)/-.11

• (WIT)/9.08

• (AXP)/1.31

• (CCI)/1.05

• (EBAY)/.40

• (FWRD)/.59

• (KMI)/.19

• (KNX)/.36

• (LRCX)/1.72

• (LVS)/.63

• (RJF)/.92

• (RHI)/.73

• (SNDK)/.80

• (TXN)/.73

• (TSCO)/.63

• (URI)/2.36

• (VMI)/1.36

Economic Releases

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +3,660,000 barrels versus a +7,562,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -745,000 barrels versus a -2,618,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,160,000 barrels versus a -1,520,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.34% versus a -1.5% decline prior.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Bank of Canada rate decision, Brazil Central Bank decision, OPEC special meeting, weekly MBA mortgage applications report, (STX) annual meeting and the (CS) 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 weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.