Sunday, May 21, 2017

Monday Watch

Today's Headlines
  • U.K. Threatens to Quit Brexit Talks If It Faces Massive Bill. The U.K. will quit talks on leaving the European Union unless the bloc drops its demands for a divorce payment as high as 100 billion euros ($112 billion), Brexit Secretary David Davis said. Britain’s negotiations would otherwise be plunged into “chaos,” and even a 1 billion-pound settlement would be “a lot of money,” Davis said in an interview published in the Sunday Times.
  • Greece's Bailout Review Stalls as Creditors Debate Debt Relief. Euro-area finance ministers gather in Brussels on Monday to try to clinch a deal on easing Greece’s debt burden, which would resolve a stalled review of the country’s bailout and pave the way for a new set of rescue loans. While Greece and its bailout supervisors have agreed on economic overhauls, the completion of the country’s review has been held back by disagreements between key creditors over how much debt relief is needed.
  • Spanish Radical Wins Socialist Vote Signaling Trouble for Rajoy. Pedro Sanchez won back the leadership of the Spanish Socialist party after promising to mount tougher opposition to Mariano Rajoy’s minority government. With 91 percent of votes counted, Sanchez was backed by 49.8 percent of party members who took part in the vote against 40.2 percent for the establishment favorite Susana Diaz, the party said on its website. The result was a vindication for Sanchez, who was ousted by party grandees in September against the wishes of the rank-and-file membership.
  • Pressure Mounts on Temer as Brazil Lawyers Vote for Impeachment. (video) Brazil President Michel Temer suffered a setback in trying to fend off allegations of corruption and cover-up after the country’s influential bar association voted in favor of his impeachment. The council of Brazil’s Order of Lawyers, or OAB by its Brazilian acronym, voted 25 to 1 in favor of an impeachment hearing for Temer, and will file its request in the lower house of Congress in coming days, it said early on Sunday. The OAB says Temer failed to denounce criminal activities, broke with presidential decorum, and promised undue favors to individuals.
  • Aussie Housing Spurs S&P to Cut Banks; Biggest Lenders Spared. S&P Global Ratings downgraded the credit scores of almost all of Australia’s financial institutions as it warned the risks of a property market downturn are increasing, although expectations of government support saw the very largest banks spared.
  • Asian Stocks May Rise, Oil Extends Gains Above $50. Crude oil climbed toward $51 a barrel and Asian stocks advanced, helped by a rise in energy producers amid speculation cuts to crude supplies will be extended further. The yen declined after a volatile week for markets. Stocks from Sydney to Hong Kong rose with energy and raw-materials posting the biggest moves on the MSCI Asia Pacific Index. Saudi Arabia’s energy minister said all producers participating in a deal to limit output agree on extending the cuts by nine months. The won surged even after North Korea conducted another ballistic missile test on Sunday. The pound fell as the U.K. threatened to exit talks on its departure from Europe. Japan’s Topix index rose 0.4 percent, paring an earlier gain of 0.6 percent. The measure lost 1.3 percent last week. Australia’s S&P/ASX 200 Index climbed 0.8 percent and South Korea’s Kospi index advanced 0.3 percent. Hong Kong’s Hang Seng climbed 0.8 percent and the Hang Seng China Enterprises Index jumped 0.9 percent. The Shanghai Composite added 0.2 percent.
Wall Street Journal:
  • The Quants Run Wall Street Now. For decades, investors imagined a time when data-driven traders would dominate financial markets. That day has arrived.
Zero Hedge: 
Night Trading
  • Asian indices are +.25% to +.75% on average.
  • Asia Ex-Japan Investment Grade CDS Index 91.0 +1.5 basis points.
  • Asia Pacific Sovereign CDS Index 20.25 -1.0 basis point.
  • Bloomberg Emerging Markets Currency Index 72.89 +.08%.
  • S&P 500 futures +.07%.
  • NASDAQ 100 futures +.11%.

Earnings of Note
  • (BAH)/.43
  • (A)/.48
  • (CRMT)/.61
Economic Releases
8:30 am EST
  • Chicago Fed National Activity Index for April.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Kashkari speaking, Fed's China April Leading Economic Index, UBS Global Healthcare Conference, JPMorgan TMT Conference, UBS Oil and Gas Conference, (ESV) annual meeting and the (XLNX) annual meeting could also impact trading today.
BOTTOM LINE: Asian indices are higher, boosted by commodity and technology shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the week.

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