Tuesday, August 26, 2014

Tuesday Watch

Evening Headlines 
Bloomberg: 
  • Putin to Meet Poroshenko as Ukraine Tensions Escalate. Russian President Vladimir Putin is set to meet his Ukrainian counterpart, Petro Poroshenko, as tensions flare on the two nations’ border. The leaders will attend talks today with European Union representatives in Minsk, Belarus, during a summit of the Customs Union, a Russian-led trade bloc. No separate bilateral meeting is yet planned between them, Russian Foreign Minister Sergei Lavrov said yesterday. The talks are bringing no respite to the conflict that the United Nations says has left at least 2,000 dead since Putin annexed Crimea in March. Ukraine yesterday said an armored column including 10 tanks entered from Russia as the government in Moscow unveiled plans to send a second convoy with humanitarian aid into its neighbor’s rebel-held territory.
  • Asian Stock Index Little Changed as Valuations Climb. Asian stocks were little changed after valuations on the regional benchmark index climbed to the highest level this year. Boart Longyear Ltd. (BLY) fell 10 percent, the most in a month, after the Australian mining-services firm posted a first-half loss. Dena Co., a Japanese website owner, surged 5.9 percent, leading gains in the region. Hyundai Heavy Industries Co. climbed 3 percent in Seoul, accounting for the largest increase on South Korea’s Kospi index. China Modern Dairy Holdings Ltd. climbed 7.8 percent in Hong Kong after sales topped analyst estimates. The MSCI Asia Pacific Index (MXAP) slid less than 0.1 percent to 148.64 as of 9:38 a.m in Hong Kong.
Wall Street Journal: 
  • Russia Plans New Aid Convoy; Ukraine Says Moscow Moved Tanks. Kiev Says Moscow Sent Tanks, Armored Vehicles Into Its Territory. Russia said it wants to send a second convoy of what it calls humanitarian aid into Ukraine in the coming days, while Kiev accused Moscow of moving tanks across the border, further damping hopes for peace talks between the Ukrainian and Russian presidents set for Tuesday in Minsk.
  • Insurgency Deepens Iraqi Ethnic, Sectarian Divides. Militant Offensive Threatens to Divide Territory Along Ethnic, Religious Lines. Sunni families in northern Iraq are being prevented from returning to their homes, suspected by their neighbors and Kurdish authorities who control the area of collaborating with the extremist group Islamic State. The offensive by the Sunni militants is threatening to reshape the demographics of once-mixed communities by dividing territory along ethnic and religious lines, Iraqi and Kurdish officials say. Kurds,...
  • How Would the Fed Raise Rates? With banks chock full of excess reserves, the federal-funds rate may prove useless as a tool to drain liquidity.
Fox News:
  • Obama authorizes use of surveillance drones over Syria. President Obama has authorized the use of drones for surveillance in Syria even as the Assad regime demanded that the U.S. seek permission before launching any airstrikes on its territory against Islamic State targets. A senior U.S. official confirmed to Fox News that Obama this weekend authorized the use of drone surveillance over Syria for the first time.
Zero Hedge: 
ValueWalk:
Business Insider:
Financial Times: 
  • James Bullard says Fed will need to alter guidance. The US Federal Reserve will soon need to modify its policy statement as the economy improves and asset purchases end, said St Louis Fed president James Bullard. Mr Bullard said in an interview with the Financial Times that the Fed would have to alter both its declaration of “significant” underutilisation of labour resources and its pledge not to change rates for a “considerable time” after it stops buying assets.
Evening Recommendations
  • None of note
Night Trading
  • Asian equity indices are -.50% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 99.0 -2.0 basis points.
  • Asia Pacific Sovereign CDS Index 67.5 -.25 basis point.
  • FTSE-100 futures +.47%.
  • S&P 500 futures -.10%.
  • NASDAQ 100 futures  -.02%.
Morning Preview Links

Earnings of Note

Company/Estimate
  • (TECD/.77)
  • (SAFM)/3.80
  • (BBY)/.31
  • (DSW)/.31
  • (BOBE)/.09
  • (ARUN)/.23
  • (ADI)/.63
  • (SWHC)/.25
Economic Releases 
8:30 am EST
  • Durable Goods Orders for July are estimated to rise +8.0% versus a +.7% gain in June.
  • Durables Ex Transports for July are estimated to rise +.5% versus a +.8% gain in June.
  • Cap Goods Orders Non-Defense Ex Air for July are estimated to rise +.2% versus a +1.4% gain in June.
9:00 am EST
  • The FHFA House Price Index for June is estimated to rise +.3% versus a +.4% gain in May.
  • The S&P/CS 20 City MoM SA for June is estimated unch. versus a -.31% decline in May.
10:00 am EST
  • Consumer Confidence for August is estimated to fall to 89.0 versus 90.9 in July.
  • The Richmond Fed Manufacturing Index for August is estimated to fall to 6.0 versus 7.0 in July.
Upcoming Splits
  • (RKT) 2-for-1
Other Potential Market Movers
  • The 2Y $29B T-Note auction and the weekly US retail sales reports could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down 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.

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