Sunday, September 24, 2017

Monday Watch

Today's Headlines
  • Merkel Chastised as Far-Right Surge Taints Fourth-Term Win. (video) Angela Merkel won a fourth term as German chancellor in a victory that was marred by the hollowing out of support for the two main parties and a surge for the populist AfD in a clear rebuke to her open-doors refugee policy. Both Merkel’s Christian Democrat-led bloc and her main challenger, Martin Schulz’s Social Democrats, plunged to historic lows as votes flowed to the anti-immigration Alternative for Germany, or AfD, in a sign of the growing polarization in Europe’s biggest economy. Six parties are now poised to enter the lower house, the Bundestag, for the first time since 1953.
  • Euro Falls as Merkel Faces German Coalition Test After Win. (video) The euro slipped 0.4 percent to $1.1903 in early Monday trading in New Zealand. “Currencies are less liquid this early in the Asia session and the price action may be only the beginning of a more meaningful correction lower in euro crosses later today,” said Credit Agricole SA strategist Valentin Marinov.
  • Yen, Kiwi Drop as Politics in Focus; Stocks Mixed. (video) The yen declined on speculation Japan’s prime minister will press for a stimulus package alongside his expected call for a snap election -- sending the nation’s stocks higher. The kiwi and euro both slid initially as ballot results foreshadowed potentially complex political coalition building. New Zealand’s vote kicked off what could be weeks of coalition-building talks, weighing on the currency amid disappointment the ruling party failed to get a majority. The euro was modestly weaker against the dollar after Chancellor Angela Merkel won Germany’s election with a smaller share of the vote, with focus on a surprisingly strong result for a far-right party. South Korea’s currency rose as concerns over North Korean tensions faded, despite fresh rhetorical exchanges with the U.S. over the weekend. Japan’s Topix index advanced 0.5 percent as of 9:30 a.m. Tokyo time. Australia’s S&P/ASX 200 Index was up 0.3 percent and South Korea’s Kospi index swung between gains and losses. Contracts on Hang Seng Index futures were up 0.1 percent.
  • Five Things You Need to Know to Start Your Day.
  • Trump Says He Wants 15% Corporate Tax Rate Despite Plan for 20%. (video) Republican tax negotiators are targeting a corporate tax rate of 20 percent, according to two people familiar with the matter -- but there’s at least one potential obstacle: President Donald Trump. “We’ll see what happens, but I hope it’s going to be 15 percent,” Trump told reporters Sunday as he prepared to return to Washington after a weekend in New Jersey. The current corporate tax rate is 35 percent. Meanwhile, the group of administration officials and congressional leaders that’s planning a framework for tax legislation is also expected to recommend cutting the top individual tax rate to 35 percent, down from 39.6 percent, according to two people familiar with the matter.
Wall Street Journal:
Zero Hedge:
Night Trading
  • Asian indices are -.5% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 80.5 +.75 basis point.
  • Asia Pacific Sovereign CDS Index 16.0 +1.0 basis point.
  • Bloomberg Emerging Markets Currency Index 74.60 +.02%.
  • S&P 500 futures +.04%.
  • NASDAQ 100 futures +.08%.

Earnings of Note
  • (RHT)/.67
Economic Releases 
8:30 am EST
  • Chicago Fed National Activity Index for August. 
10:30 am EST
  • The Dallas Fed Manufacturing Activity Index for September is estimated to fall to 11.5 versus 17.0 in August.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Kashkari speaking, Fed's Evans speaking, German IFO, Johnson Rice Energy Conference, Cantor Fitzgerald Healthcare Conference and the (TOT) Investor Day could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and financial shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the week.

No comments: