Wednesday, September 27, 2017

Thursday Watch

Evening Headlines
  • China's Great Wealth Transfer Falls to Reluctant Heirs. Liu Chang, the daughter of a billionaire industrialist, went to boarding school in the U.S., traveled the world, and married a hip Chinese film director. Next move in her charmed life: Running one of China’s largest pig feed and dairy companies. “With my background, I am almost an outsider to the family business. Once I step in, I can bring new perspectives, new thoughts, fresh ideas,” says the 37-year-old, now being groomed to take over New Hope Group, the $15 billion agribusiness company founded by her father, 66-year-old Liu Yonghao.
  • Bonds Slide as Dollar Climbs on Tax Plan, Economy. Australian bonds joined a global sell-off and Treasury yields reached the highest levels in two months as investors raised their expectations for the Federal Reserve to raise rates one more time this year despite some of Chair Janet Yellen’s colleagues continuing to push back at her contention more hikes are on the way. Bitcoin extended its rally this week to 15 percent as Morgan Stanley CEO James Gorman said it’s "certainly something more than just a fad." Japan’s Topix index advanced 0.4 percent as of 9:15 a.m. Tokyo time. Australia’s S&P/ASX 200 Index gained 0.3 percent, while South Korea’s Kospi index was 0.2 percent lower. Hang Seng Index futures slid 0.5 percent.
  • Fed's Rosengren Says `Regular and Gradual' Tightening Warranted. Federal Reserve Bank of Boston President Eric Rosengren said the central bank should raise rates in a “regular and gradual” way despite low inflation, because weak price pressures appear temporary and a tight labor market risks overheating the economy. “Appropriate risk mitigation would argue for continued gradual removal of monetary accommodation, even though we are currently below the inflation target,” Rosengren said in prepared remarks for a speech Wednesday in New York. “I believe policy makers should not overreact to low current inflation readings that are widely expected to be temporary.”
  • Stocks Catch Tax Cut Fever. (video) As they have done repeatedly, investors used the public unveiling of details on Donald Trump’s tax overhaul as an occasion to celebrate in the stock market. Whether Wednesday’s plan ends up being a net positive for equities is something they’ll worry about later.
Wall Street Journal:
Fox News:
  • Fox News Poll: Fifty-five percent of voters in the latest Fox News poll see kneeling during the national anthem as an inappropriate form of protest.
Zero Hedge:
Business Insider: 
Night Trading 
  • Asian equity indices are -.25% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 83.0 +1.0 basis point
  • Asia Pacific Sovereign CDS Index 17.25 +.75 basis point.
  • Bloomberg Emerging Markets Currency Index 73.41 -.08%.
  • S&P 500 futures -.07%.
  • NASDAQ 100 futures -.05%.
Morning Preview Links

Earnings of Note

  • (ACN)/1.46
  • (ANGO)/.16
  • (BBRY)/.00
  • (CAG)/.40
  • (MKC)/1.06
  • (RAD)/-.01 
  • (MTN)/-1.85
  • (KBH)/.47
Economic Releases 
8:30 am EST
  • 2Q GDP is estimated to rise +3.0% versus a prior estimate of a +3.0% gain.
  • 2Q Personal Consumption is estimated to rise +3.3% versus a prior estimate of a +3.3%.
  • The GDP Price Index is estimated to rise +1.0% versus a prior estimate of a +1.0% gain.
  • The Core PCE is estimated to rise +.9% versus a prior estimate of a +.9% gain.
  • Initial Jobless Claims for last week are estimated to rise to 270K versus 259K the prior week.
  • Continuing Claims are estimated to rise to 1993K versus 1980K prior.
  • Advance Goods Trade Balance for August is estimated at -$65.1B versus -$63.9B in July.
  • Wholesale Inventories MoM for August are estimated to rise +.4% versus a +.6% gain in July.
11:00 am EST
  • The Kansas City Fed Manufacturing Activity for September is estimated to fall to 15.0 versus 16.0 in August.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's George speaking, German CPI report, $28B 7Y T-Note auction, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, Sidoti Conference, B. Riley Consumer Conference, JPMorgan Investor Forum, (AFL) analyst briefing and the (AAL) investor day could also impact trading today.
BOTTOM LINE:  Asian indices are mostly higher, boosted by industrial 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 100% net long heading into the day.

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