Today's Headlines

Bloomberg:

• World Economy Is Set to Grow at Fastest Pace Since 2011.
• ECB's Top Officials on Parade Ahead of Critical October Decision.
• Your Evening Briefing.
• Fed to Shrink Assets Next Month, Boost Rates by Year-End. (video)
• Alcoa(AA) Set for Highest Close Since 2008 as Aluminum Prices Surge. Aluminum is on a roll and it’s taking its makers with it. Alcoa Corp., the largest U.S. producer of the metal, headed for the highest close since the global financial crisis hit in 2008 as aluminum extended its rally to a five-year high. The metal advanced for a third day after a report of possible production cuts in China, compounding supply concerns.
• The Fed’s New Dot Plot.

Wall Street Journal:

• Trump Urges GOP Senators to Back New Health Bill. President singles out Rand Paul in a tweet as Graham-Cassidy push continues.
• Apple(AAPL) Acknowledges Cellular Connectivity Problem in New Watch. Company says it is investigating a fix for a future software release.
• U.S. Demands Changes to Iran Nuclear Deal, Tillerson Says. U.S. to hold talks on Iran accord on sidelines of United Nations General Assembly gathering.

MarketWatch.com:

• Fed decision and Janet Yellen press conference – live blog and video.
• Welcome to the second biggest bull market since World War II.
• European stocks mark time as investors focus on U.S. Fed. The Stoxx Europe 600 index SXXP, -0.04% ended down 0.04% at 381.98, echoing quiet action seen in the U.S.

Fox News:

• North Korea’s Kim keeps teen sex slaves, executes musicians with anti-aircraft guns, defector reveals. (video)
• Rouhani calls Trump's threats 'ignorant,' vows to take action if nuclear pact is broken.

CNBC:

• Why Goldman Sachs(GS) sees $1 trillion in tax cuts coming.
• Here's what changed in the new Fed statement.
• These high-flying life sciences stocks make Netflix and Amazon look dull. (video)
• As smartphones last longer, a $999 iPhone could spell trouble for wireless carriers.
• California to file lawsuit over Trump border wall.
• General Mills'(GIS) earnings miss sparks a food stocks sell-off.

Zero Hedge: 

• "Extraordinary & Worrisome" - WSJ Demands To Know How FBI 'Meddled' In 2016 Elections.
• Iran's Rouhani Responds To "Rogue Newcomer" Trump's "Ugly, Ignorant Words".
• FX Traders Haven't Been This Worried About An FOMC Meeting Since Last Year.
• "I Have Decided": Trump Says He Has Made Decision On Iran Deal.
• Nasdaq Plunges As AAPL Suffers Triple Whammy.
• Venezuela Bankrupt? Caracas Fails To Make Sept 15 Interest Payment.
• WTI/RBOB Drop After Smaller-Than-Expected Gasoline Draw, Big Crude Production Rebound.
• Fed's Asset Bubbles Now At The Mercy Of The Rest Of The World's Central Bankers. (graph)
• Existing Home Sales Slump To 1-Year Lows, NAR Says "There's Simply Not Enough Homes For Sale".
• "We've Never Seen Anything Like This" - Maria Slams Puerto Rico With 9-Foot Storm Surge, 155Mph Winds.
• The Morning After: Mexican Earthquake Leaves Over 248 Dead, Millions Without Electricity.
• 32 Children Dead, 30 More Missing In Rubble Of Collapsed Mexico City School.
• How Did Toys "R" Us Implode So Fast? The CEO Explains.

Bear Radar

Style Underperformer:

• Large-Cap Growth unch.

Sector Underperformers:

• 1) Semis -1.8% 2) Computer Hardware -1.3% 3) Homebuilders -.9%

Stocks Falling on Unusual Volume: 

• BBBY, SQM, MDXG, GIS, IONS, RGR, MMYT, AOBC, AERI, TROX, RCII and WDC

Stocks With Unusual Put Option Activity:

• 1) ALNY 2) KMX 3) GIS 4) BBBY 5) SM

Stocks With Most Negative News Mentions:

• 1) BBBY 2) TNTR 3) LB 4) SNCR 5) SCS

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Value +.6%

Sector Outperformers:

• 1) Education +2.0% 2) Oil Service +1.6% 3) Road & Rail +1.4%

Stocks Rising on Unusual Volume:

• ALNY, JP, KPTI, VERI, MZOR, ACH, GEMP, TRU, ALOG, FANH, FDX, USG, CPRT, SELB, IMAX, AXON, AJRD, IGT, ALB, FSB, LBTYA, SPAR, MDCO, FPRX, HLNE and SCVL

Stocks With Unusual Call Option Activity:

• 1) PSEC 2) ALNY 3) NOV 4) FDX 5) ADBE

Stocks With Most Positive News Mentions:

• 1) ALNY 2) CPRT 3) ANET 4) HIBB 5) CRS

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Morning Market Internals

NYSE Composite Index:

• Volume Running -4.8% Below 100-Day Average
• 8 Sectors Rising, 2 Sectors Declining
• 60.3% of Issues Advancing, 35.1% Declining
• 135 New 52-Week Highs, 8 New Lows
• 44.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 39.3%
• Vix 10.1 -.8%
• Total Put/Call 1.0 +29.9%
• TRIN/Arms 1.21 +221.%

Wednesday Watch

Evening Headlines

Bloomberg:

• China's Under-the-Radar Bond Boom May Be Next Risk Target. China’s riskiest borrowers are ramping up sales of short-term dollar debt again, reigniting speculation the authorities will clamp down on what has become a way to raise cash under the radar. Beijing’s deleveraging drive -- endorsed by President Xi Jinping and the Politburo in April -- has inadvertently fueled a boom in short-end notes this year. As the National Development and Reform Commission started withholding approvals for offshore debt issuance by property developers and local government financing vehicles, companies got resourceful, selling debt due in one year or less as that doesn’t require permission from the authorities.

• Japan's Exports Jump 18% in Biggest Gain in Almost 4 Years. Japan has enjoyed a run of strong growth in exports this year, while rising imports add to signs that domestic demand is firming as well. The Japanese economy grew at an annualized 2.5 percent in the second quarter, more than double its potential growth rate. But while a weaker yen has improved trade data, inflation remains well below the Bank of Japan’s 2 percent target.

• Traders Hold Back Before Fed Decides on Policy. (video) The Topix index was little changed as of 9:10 a.m. Tokyo time. Australia’s S&P/ASX 200 fell 0.4 percent, while the Kospi index in Seoul rose 0.1 percent. Futures on the Hang Seng Index in Hong Kong were little changed.

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

• Traders Boost Odds of Third Rate Hike This Year as FOMC Meets.

• McConnell Won't Promise Obamacare Repeal Vote as Foes Mobilize. (video) Senate Majority Leader Mitch McConnell refused to promise a vote on Republicans’ last-ditch proposal to repeal Obamacare as Democrats and other opponents started ramping up a new campaign Tuesday to block it. "If we were going to go forward, we would have to act before Sept. 30," McConnell told reporters when asked if the GOP-only bill will come to the Senate floor before next week’s procedural deadline. "We are in the process of discussing all of this."

• Uber Faces Widespread Asia Bribery Allegations Amid U.S. Criminal Probe. Uber Technologies Inc., facing a federal probe into whether it broke laws against overseas bribery, has embarked on a review of its Asia operations and notified U.S. officials about payments made by staff in Indonesia, people with knowledge of the matter said.

Wall Street Journal:

• Latest Push for a Health-Law Repeal Picks Up Speed in the Senate. McConnell says talks for a vote to scrap most of the Affordable Care Act are under way, but challenges linger.

• Did Obama Know about Comey’s Surveillance? The media is less interested in Obama Administration wiretapping than in how Trump described it.

• United Nations General Assembly -- Live Analysis.

Fox News: 

• Hurricane Maria takes aim at Puerto Rico, US Virgin Islands as Category 5 storm strengthens. (video)

• 7.1 magnitude earthquake kills more than 100 in Mexico, collapses buildings. (video)

CNBC:

• GOP senators closing in on tax cut plan. (video)

• Images of devastation from the Mexico City earthquake. (pics)

• Elizabeth Warren urges Fed to 'step up' and remove Wells Fargo's(WFC) board. (video)

• China's bitcoin clampdown is likely here to stay, analysts say. (video)

• Amazon(AMZN) is firing on all cylinders to grow its retail presence. (video)

• Bed Bath and Beyond(BBBY) shares tumble after worse-than-expected sales.

Zero Hedge:

• At Least 94 Dead, 60 Pulled Alive From Rubble After Powerful Earthquake Rocks Central Mexico.

• Dramatic Footage Of Mexico Earthquake Shows Buildings Collapsing Into Rubble.

• Full Preview Of Tomorrow's "Historic" FOMC Meeting.

• Manafort Calls On DOJ To Release His Intercepted Phone Calls; Demands Investigation Of Leaks.

• Government By Goldman.

• Ahead Of Tomorrow's Historic Fed Meeting, Here Is The Only "Cheat Sheet" You Need.

• Cryptocurrency Concentration - Just 4% Own Over 95% Of Bitcoin.

• Trump Prevented War Between Saudi Arabia And Qatar In Last Minute: Report.

• The New 'Scariest Chart In The World'. (graph)

• Fedex(FDX) Tumbles After Missing Revenue, EPS, Guiding Lower; Blames Hackers, Harvey.

• Meanwhile, The "Next Big Short" Is Quietly Blowing Up. (graph)

• O'Keefe Promises "Fireworks Are Coming" In New Media Investigation; Says "People Will Be Fired".

• WTI/RBOB Jump After Smaller Than Expected Crude Build. (graph)

• Bank Stocks, Bullion, & Bond Yields Jump Ahead Of Fed As Small-Cap VIX Hits Record Low.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 71.75 unch. 

• Asia Pacific Sovereign CDS Index 18.0 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 74.64 +.05%.

• S&P 500 futures -.05%.

• NASDAQ 100 futures -.08%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (GIS)/.77

• (MLHR)/.57

Economic Releases 
10:00 am EST

• Existing Home Sales for August are estimated to rise to 5.45M versus 5.44M in July.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +3,593,630 barrels versus a +5,888,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -2,060,130 barrels versus a -8,428,000 barrel decline the prior week. Distillate inventories are estimated to fall by -2,033,500 barrels versus a -3,215,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise +5.24% versus a -2.0% decline prior.
  

2:00 pm EST

• The FOMC is expected to leave the benchmark Fed Funds Rate at 1.0%-1.25%.
  

Upcoming Splits

• (FMAO) 2-for-1

Other Potential Market Movers

• The weekly MBA Mortgage Applications report, BofA Consumer/Retail Conference and the (PPC) analyst day could also impact trading today.

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

Stocks Slightly Higher into Final Hour on Tax/Healthcare Reform Hopes, Economic Optimism, Technical Buying, Financial/Gaming Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 10.23 +.79%

• Euro/Yen Carry Return Index 139.47 +.29%

• Emerging Markets Currency Volatility(VXY) 7.72 +.52%

• S&P 500 Implied Correlation 23.78 -1.95%

• ISE Sentiment Index 45.0 -37.97%
  

• Total Put/Call .75 -17.6%

• NYSE Arms 1.0 +11.67%

Credit Investor Angst:

• North American Investment Grade CDS Index 55.03 -1.53%
  

• America Energy Sector High-Yield CDS Index 413.0 -1.52%

• European Financial Sector CDS Index 46.42 -2.73%

• Western Europe Sovereign Debt CDS Index 4.72 +.75%

• Asia Pacific Sovereign Debt CDS Index 17.97 -1.45%

• Emerging Market CDS Index 174.68 +2.34%
  

• iBoxx Offshore RMB China Corporate High Yield Index 141.65 -.07%

• 2-Year Swap Spread 26.0 unch.

• TED Spread 29.75 +.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -25.5 -1.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 74.59 +.07%

• 3-Month T-Bill Yield 1.03% +1.0 basis point
  

• Yield Curve 84.0 unch.

• China Import Iron Ore Spot $68.85/Metric Tonne -4.06%

• Citi US Economic Surprise Index -17.50 +5.1 points

• Citi Eurozone Economic Surprise Index 21.20 +3.0 points

• Citi Emerging Markets Economic Surprise Index 15.40 +1.0 basis point

• 10-Year TIPS Spread 1.88 unch.
  

• 13.8% chance of Fed rate hike at Nov. 1 meeting, 56.9% chance at Dec. 13 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -114 open in Japan 

• China A50 Futures: Indicating -14 open in China

• DAX Futures: Indicating -12 open in Germany

Portfolio: 

• Slightly Higher: On gains in my tech sector longs

• Disclosed Trades: None of note

• Market Exposure: 100% Net Long