Monday, December 26, 2016

Tuesday Watch

Today's Headlines
  • China to Cut Solar, Wind Power Prices as Project Costs Fall. China is reducing the amount of money it pays to newly completed solar and wind power generators for their electricity, in order to reflect declines in construction costs, the country’s price regulator and economic planner said Monday. The nation will cut tariffs paid to solar farms by as much as 19 percent in 2017 from this year’s levels, and by as much as 15 percent for wind mills in 2018 from current prices, according to a statement posted on the National Development and Reform Commission’s website. The changes will help reduce subsidies paid to new photovoltaic and wind power projects by about 6 billion yuan ($863 million) annually, the NDRC said.
  • Bundesbank’s Weidmann Warns of Hasty Rescue for Monte Paschi. Bundesbank President Jens Weidmann said the bar should be high for government funds being used in a rescue of Italian lender Banca Monte dei Paschi di Siena SpA. Government funds are intended as a “last resort,” Weidmann said in an interview with German newspaper Bild, with the banker adding that planned measures by the Italian government should only be directed to banks that are healthy at “their core.” If government funds are used, there should be matching public funding because of high government debt, he said.
  • Asia Stocks Poised for Mixed Open After Holiday: Markets Wrap. Futures on the Nikkei 225 Stock Average traded in Chicago were lower while contracts on South Korea’s Kospi Index indicated gains. Contracts on the FTSE China A50 index were lower, after the Shanghai Composite Index erased a decline of 1.3 percent on Monday. The yen slipped after climbing 0.7 percent over the previous four sessions. Financial markets in Australia, New Zealand and Hong Kong are shut on Tuesday, while those in the U.S. and Europe will resume trading after a holiday Monday.
  • Democrats Plotting ‘Collision Course’ With Trump’s Tax Plan. Congressional Democrats say they’ll try to thwart Republican plans to overhaul the U.S. tax code by portraying them as a boon for the rich that betrays President-elect Donald Trump’s campaign promise to fight for working Americans.
Wall Street Journal:
Zero Hedge:
Night Trading
  • Asian indices are -.25% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 115.0 -.25 basis point.
  • Asia Pacific Sovereign CDS Index 37.0 -.5 basis point.
  • Bloomberg Emerging Markets Currency Index 69.57 -.11%.
  • S&P 500 futures -.07%.
  • NASDAQ 100 futures -.01%.

Earnings of Note
  • None of note
Economic Releases
9:00 am EST
  • The S&P CoreLogic CS 20-City MoM for October is estimated to rise +.51% versus a +.37% gain in September.
10:00 am EST
  • Consumer Confidence for December is estimated to rise to 108.5 versus 107.1 in November.
  • The Richmond Fed Manufacturing Index for December is estimated to rise to 5.0 versus 4.0 in November. 
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Japan Jobless rate, Japan CPI, Japan Industrial Production and the $26B 2Y T-Note auction could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by consumer and technology shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the week.

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