Tuesday, December 06, 2016

Wednesday Watch

Evening Headlines
  • China Is Pausing on U.S. Deals, Ex-Goldman Rainmaker Says. Chinese investors are hitting the pause button on U.S. and other outbound deals as they grapple with the ramifications of a Trump presidency and possible government curbs on overseas acquisitions, according to Fred Hu, a former Greater China chairman for Goldman Sachs Group Inc. The 53-year-old founder and chairman of Beijing-based investment firm Primavera Capital Group said in an interview in Hong Kong that he and other investors are focusing on industries spurred by consumer demand in China. Primavera has stakes in companies from e-commerce giant Alibaba Group Holding Ltd. to Yum China Holdings Inc., which operates the KFC and Pizza Hut chains there.
  • How a China-U.S. Trade War Would Affect the iPhone. (video)
  • Australia’s Economy Shrinks More Than Expected; Currency Slumps. Australia’s economy shrank the most in almost eight years in the third quarter as government spending fell and imports rose. The local currency slumped.
  • The Yen's Swift Decline Could Go Too Far. The yen’s swift decline in the wake of Donald Trump’s election victory last month could go too far, according to Hakubun Shimomura, a senior member of Japan’s ruling Liberal Democratic Party. A weaker currency is generally welcome in Japan because it helps exporters and fuels desired inflationary pressures. But Shimomura, a former education minister and close ally of Prime Minister Shinzo Abe, said he worries that the currency could drive up the nation’s import bill.
  • Stock Rally Extends Into Asia as Traders Await RBI, Aussie GDP. (video) Stock futures signaled a rally in U.S. equities will extend into Asian markets as traders await India’s central bank policy meeting, while the Australian dollar held losses before data expected to show the world’s 12th-largest economy shrank. Australia’s benchmark index jumped 0.6 percent, as equity-index contracts in Japan, Hong Kong and South Korea climbed at least 0.1 percent. Analysts forecast the Reserve Bank of India will cut its key interest rate on Wednesday, while the European Central Bank is expected Thursday to extend its bond-buying program beyond the current March end date. Australian gross domestic product probably declined 0.1 percent last quarter, its first contraction since the start of 2011. The MSCI Asia Pacific Index added 0.2 percent.
  • Health Insurers Willing to Give Up a Key Obamacare Provision. U.S. health insurers signaled Tuesday that they’re willing to give up a cornerstone provision of Obamacare that requires all Americans to have insurance, replacing it with a different set of incentives less loathed by Republicans who have promised to repeal the law. Known as the “individual mandate,” the rule was a major priority for the insurance industry when the Affordable Care Act was legislated, and also became a focal point of opposition for Republicans. In a position paper released Tuesday -- the first since President-elect Donald Trump’s victory -- health insurers laid out changes they’d be willing to accept.
  • Goldman Tells Stock Pickers to Rejoice as Correlations Decline. (video)
  • Tesla(TSLA) Recalls 7,000 Charging Adapters After Two Overheat. The limited notice to customers only applies to plugs sold in the U.S
Wall Street Journal:
Fox News:
  • House Report: US facing biggest Islamic terror threat since 9/11. The United States faces its highest threat from Islamist terrorists since 9/11 and much of that stems from those radicalized at home, according to the House Homeland Security Committee’s December Terror Threat Snapshot released Tuesday. What’s more, the report said, the threat to the United States and Europe will persist in 2017.
Zero Hedge:
Business Insider:
Night Trading 
  • Asian equity indices are unch. to +.5% on average.
  • Asia Ex-Japan Investment Grade CDS Index 118.0 -6.5 basis points.
  • Asia Pacific Sovereign CDS Index 39.5 -1.0 basis point.
  • Bloomberg Emerging Markets Currency Index 69.68 +.01%
  • S&P 500 futures +.02%. 
  • NASDAQ 100 futures +.05%.
Morning Preview Links

Earnings of Note

  • (BF/B)/.50
  • (HAIN)/.56
  • (JW/A)/.66
  • (KFY)/.57
  • (VRA)/.22
  • (CASY)/1.58
  • (COST)/1.19
  • (HRB)/-.68
  • (LULU)/.43
  • (UNFI)/.62
Economic Releases
10:00 am EST
  • JOLTS Job Openings for October are estimated to rise to 5500 versus 5486 in September.
10:30 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,294,250 barrels versus a -884,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +1,663,750 barrels versus a +2,097,000 barrel gain the prior week. Distillate inventories are estimated to rise by +1,523,000 barrels versus a +4,957,000 gain the prior week. Finally, Refinery Utilization is estimated to rise +.7% versus a -1.0% decline the prior week.
3:00 pm EST
  • Consumer Credit for October is estimated to fall to $18.3B versus $19.292B in September. 
Upcoming Splits 
  • None of note
Other Potential Market Movers
  • The China Trade Balance report, weekly MBA mortgage applications report, Barclays Tech/Media/Telecom Conference, Citi Healthcare Conference and the (SBUX) Investor Day could also impact trading today.
BOTTOM LINE:  Asian indices are mostly higher, boosted by commodity and financial 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 day.

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