Monday, August 28, 2017

Tuesday Watch

Evening Headlines
Bloomberg:
  • North Korea Fires Missile Over Japan in 'Unprecedented' Act. (video) North Korea fired a ballistic missile over Japan on Tuesday, reigniting tensions after a war of words earlier this month between Pyongyang and U.S. President Donald Trump. The missile landed about 1,200 kilometers (745 miles) off Hokkaido in the Pacific Ocean, Chief Cabinet Secretary Yoshihide Suga told reporters, adding there were no reports of damage. Japan’s government said it didn’t try to shoot it down.
  • China's Central Bank Is Working Hard to Stand Still. While some of the biggest central banks are agonizing over changing direction, the People’s Bank of China is working hard to stay right where it is.That’s because, as the U.S. Federal Reserve or the European Central Bank are heading into phases of tighter policy, China’s monetary authority is engaged in an increasingly complex effort to preserve the status quo while the world changes around it. According to 60 percent of economists in a Bloomberg survey conducted this month, the PBOC’s broad policy stance will remain "roughly the same" through the end of 2017. It’s how they maintain the hold, though, that matters.
  • Online Shopping Is Taking Off in Southeast Asia. Thailand has seen an explosion of internet shopping in recent years as consumers become more tech savvy. And if that’s anything to go by, e-commerce in Southeast Asia is taking off as well. Online retail sales in Thailand of everything from washing machines and televisions to fish sauce are growing more than 100 percent, far outpacing purchases made at traditional stores, where sales are rising about 10 percent.
  • Stocks Drop, Yen Jumps After Korea Missile Launch. Equities fell in Tokyo, Seoul and Sydney, Japan’s currency gained versus all major developed peers, and the Swiss franc advanced while the Australian dollar dropped in a classic risk-off move. Several missiles were launched from Pyongyang and Japan said at least one landed off the eastern coast of Hokkaido. Gasoline added to a rally as traders counted the toll from the storm that inundated refineries along the Texas coast. The Topix index dropped 0.7 percent as of 9:18 a.m. in Tokyo, while South Korea’s Kospi index declined 0.9 percent and the S&P/ASX 200 Index in Sydney lost 0.8 percent.
  • Harvey Disrupts More Than One Third of U.S. Chemical Production. A third of U.S. chemical production has been disrupted by Tropical Storm Harvey, boosting prices and threatening shortages for basic industrial building blocks such as chlorine and ethylene. Producers such as Exxon Mobil Corp. and Occidental Chemical Corp. have shut plants and cut back operations in recent days along the flood-crippled Gulf Coast. Those disruptions have affected 37 percent of U.S. capacity for making chlorine and caustic soda, salt-derived chemicals used to make vinyl and PVC pipe, according to Bloomberg Intelligence.
Night Trading 
  • Asian equity indices are -.75% to -.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 79.0 +1.0 basis point. 
  • Asia Pacific Sovereign CDS Index 18.25 -1.5 basis points.
  • Bloomberg Emerging Markets Currency Index 74.42 -.11%.
  • S&P 500 futures -.54%.
  • NASDAQ 100 futures -.62%.
Morning Preview Links

Earnings of Note
Company/Estimate

  • (BBY)/.63
  • (CBK)/-.22
  • (HAIN)/.40
  • (AVAV)/-.34
  • (HRB)/-.62
Economic Releases 
9:00 am EST
  • The S&P CoreLogic CS 20-City MoM for June is estimated to rise +.1% versus a +.1% gain in May.
10:00 am EST
  • The Conference Board Consumer Confidence Index for August is estimated to fall to 120.6 versus 121.1 in July. 
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The France GDP report, German GfK Consumer Confidence report, weekly US Retail Sales reports, $28B 7Y T-Note auction and the Jefferies Semi/Hardware/Communications Infra Conference could also impact trading today.
BOTTOM LINE:  Asian indices are mostly lower, weighed down by energy 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 75% net long heading into the day.

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