Sunday, December 18, 2016

Monday Watch

Today's Headlines
  • Deal Reached That Could Restart Aleppo Evacuation. Rebel and government forces agreed Saturday to allow "humanitarian cases" to leave two besieged government-held Shiite villages in northwestern Syria, a step that would allow the resumption of civilian and rebel evacuations from eastern Aleppo which were suspended a day earlier, Hezbollah's media arm and a monitoring group said. The opposition's Britain-based Syrian Observatory for Human Rights said the evacuation of some 4,000 people, including wounded, from the villages of Foua and Kfarya was expected to start Saturday. It later reported that 29 buses were heading toward the two villages to start the evacuation process, adding that insurgents in the area rejected allowing 4,000 people to leave and saying they will only allow 400 people to be evacuated. The Syrian army said another 25 buses left later Saturday heading to the two villages.
  • Japan Posts Trade Surplus for Third Month as Imports Slump. Japan posted a trade surplus for a third straight month in November as imports continued to fall faster than exports. Exports declined at the slowest pace since September 2015
  • Top Yen Analysts Discuss Bull-Versus-Bear Outlook for 2017: Q&A.
  • High Noon for Australia’s AAA Rating as Weak Wages Drag Budget. A worsening of Australia’s deficit in a budget update due at midday could trigger a downgrade of its top credit score. Politicians are worried; economists less so. While the prospect of being the first government in 30 years to lose the coveted grade alarms lawmakers, some economists think its loss could pave the way for increased spending. Most predict the forecast deficit for the current fiscal year will be little changed from a May projection, and few are panicking about losing the AAA -- whether that happens this week, next year or at all.
  • Dollar Retreats, Crude Extends Drone Gain; Aussie Shares Advance. The Topix Index of Japanese shares slid .2% as of 9:51 a.m. in Tokyo, snapping a two-day advance; the Kospi Index also fell .2%.
Wall Street Journal:
Zero Hedge:
People's Daily:
  • China Should Cut Overcapacity in More Industries. China should expand production overcapacity reduction efforts from the coal, steel sectors to more industries, citing Yang Weimin, deputy director of the Office of the Central Leading Group on Finance and Economic Affairs. China must stick to deleveraging, Yang said.
Night Trading
  • Asian indices are -.50% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 118.25 -5.5 basis points.
  • Asia Pacific Sovereign CDS Index 37.25 unch.
  • Bloomberg Emerging Markets Currency Index 69.42 -.18%.
  • S&P 500 futures +.14%.
  • NASDAQ 100 futures +.10%.

Earnings of Note
  • (LEN)/1.27
  • (WOR)/.79
Economic Releases
9:45 am EST
  • The Preliminary Markit US Services PMI for December is estimated to rise to 55.1 versus 54.6 in November.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The German IFO Index and the China November Property Price report could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and energy shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the week.

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