Wednesday Watch

Evening Headlines
Bloomberg:

• May, Merkel Face Brexit Red Lines on U.K. Premier’s Berlin Debut. Theresa May’s first meeting with Angela Merkel in Berlin will involve more pleasantries than hard bargaining. A week after taking office as U.K. prime minister, May, 59, will be keen to size up the woman who will be one of her main interlocutors as she navigates Britain’s exit from the European Union. The German chancellor, in office for almost 11 years, insists that while May needs some time to formulate how she wants to proceed, no concrete negotiations will take place until the U.K. triggers the EU’s exit clause.
• China’s Consumer Boom Risks Slowing as Income Gains Moderate. Chinese consumers, whose spending helped underpin the first-half expansion this year, may not be able to deliver a repeat performance in the second as income growth slows. Household income growth slumped to 6.5 percent in the first six months from 7.6 percent a year earlier, data released Friday showed. Headwinds on consumer spending may increase as officials signal they will step in to curb pay gains to keep manufacturing competitive with rival nations that have cheaper production costs. As shoppers become an increasingly crucial growth driver, any erosion of their strength would weaken the ability for the consumer-led expansion to offset weakness in exports and investment. That threatens the government goal of raising gross domestic product by 6.5 percent a year through 2020 and slow the rebalancing away from factory-led growth.
• BOJ Is Running Out of Room to Buy Bonds Amid Stimulus: Chart.
• Asian Stocks Retreat After Global Rally as Japan Shares Decline. Asian stocks fell as a global rally in equities stalled, with the S&P 500 Index slipping from a record and investors weighing corporate earnings and the prospects for global growth. The MSCI Asia Pacific Index dropped 0.2 percent to 133.59 as of 9:04 a.m. in Tokyo as Japanese shares fell for the first time in seven days. Global equities added more than $4.5 trillion in value since the U.K. shock decision to leave the European Union, pushing valuations on Asia-Pacific stocks close to the highest level this year. Investors are assessing corporate earnings amid concern sluggish global growth will persist as the International Monetary Fund scrapped its forecast for a pickup this year.

Wall Street Journal:

• How the GOP Platform Has Changed in the Trump Era. As Donald Trump has taken over the Republican Party, his influence is being felt in the party’s platform, which has adjusted from past conventions, in some cases strikingly so. On other issues, the party has been consistent. We compare and contrast highlights in this year’s GOP platform with those of recent decades on the following issues: trade, immigration, guns, Social Security, China, abortion, taxes and government.
• 21st Century Fox Negotiating Exit of Fox News Chief Roger Ailes.

Fox News:

• GOP Convention: Live Blog.

Zero Hedge:

• Prominent Gold Skeptic Willem Buiter Says "Gold Looks Pretty Good".
• "I Will Slaughter You With An Axe" - Terrorist Behind German Train Attack Leaves Chilling Suicide Video. (video)
• America Is Being Divided And Conquered Into Oblivion.
• 'Pokemon Go' Bubble Bursts: Nintendo Tumbles As Indonesia Issues "National Security Threat". (graph)
• Police Officer Killed After Kansas City Shooting, Suspects At Large.
• 'Elevator Down' Looms As Market Reaches 3-Standard Deviation Extreme. (graph)
• So What Did The ECB Buy? "In Short, Almost Everything".
• Microsoft Misses On GAAP Revenue, EPS; Beats On Non-GAAP After Using Lower Tax Rate; Stock Soars.
• Oil Slides After Unexpected Gasoline Inventory Build.
• Last-Minute Algo-Driven VIX-Crash Lifts Dow Green For 8th Straight Day. (graph)

Business Insider:

• Marissa Mayer made a cryptic comment about Apple that's raising eyebrows.
• The US is about to embark on 'a very questionable operation' with Russia in Syria.
• Housing markets are starting to look like they did before the 2008 crisis. (graph)
• BMW's new rechargeable home battery could rival Tesla's Powerwall.

Fortune:

• Investors Pull $600M After Ackman's Bad Bets.

Night Trading 

• Asian equity indices are -.50% to +.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 121.25 +2.0 basis points.
• Asia Pacific Sovereign CDS Index 48.0 +.5 basis point.
• Bloomberg Emerging Markets Currency Index 72.39 -.13%. 
• S&P 500 futures -.14%. 
• NASDAQ 100 futures -.13%.

Morning Preview Links

Earnings of Note
Company/Estimate 

• (ABT)/.53
• (ASML)/.80
• (CP)/2.01
• (HAL)/-.19
• (ITW)/1.40
• (MTB)/2.07
• (MS)/.59
• (STJ)/1.06
• (TUP)/1.11
• (AXP)/1.73
• (EBAY)/.42
• (FFIV)/1.79
• (INTC)/.53
• (KMI)/.15
• (MAT)/-.06
• (NEM)/.30
• (QCOM)/.97
• (RJF)/.90
• (TSCO)/1.16
• (URI)/1.81
• (VMI)/1.73 
  

Economic Releases  
10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,295,450 barrels versus a -2,546,000 barrel decline the prior week. Gasoline inventories are estimated to fall by -204,550 barrels versus a +1,213,000 barrel gain the prior week. Distillate inventories are estimated to rise by +959,450 barrels versus a +4,058,000 barrel gain prior. Finally, Refinery Utilization is estimated to rise by +.12% versus a -.2% decline prior.

Upcoming Splits 

• None of note

Other Potential Market Movers

• The UK Unemployment Rate report, weekly MBA mortgage applications report and the (CPB) investor day 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.