Wednesday Watch

Evening Headlines

Bloomberg:

• Stock Rally Extends in Asia as U.S. Hits New Highs. Equities in Asia extended gains seen around the world and Treasuries held on to declines on bets economic growth is strong enough to withstand heightened geopolitical tensions. Benchmarks advanced in Tokyo and Sydney after the S&P 500 Index, the Dow Jones Industrial Average and the Nasdaq Composite Index all closed at fresh record highs on Tuesday. The dollar held onto gains ahead of U.S. inflation data later this week that could impact the timing of the next Federal Reserve interest-rate hike. Oil rose as OPEC and its allies are discussing an extension of output curbs. The Topix index rose 0.5 percent of 9:16 a.m. Tokyo time. Australia’s S&P/ASX 200 Index added 0.4 percent and the Kospi index in Seoul was little changed. Futures on Hong Kong’s Hang Seng Index rose 0.1 percent.

• Five Things You Need to Know to Start Your Day.

• Bond Market's Hot Trade Is Betting a 2017 Fed Hike Still in Play. Bets on another Federal Reserve rate hike this year are gaining favor after being all but abandoned a few days ago. Eurodollar futures, among the most sensitive financial instruments to Fed speculation, show some traders have concluded that wagers on additional tightening in 2017 are too cheap to pass up. Last week, the market-implied odds of another rate increase by year-end plunged below 25 percent, and at one point fed funds futures didn’t fully price in another hike until 2019.

• Dozens of Senators Seek Probe of Equifax(EFX) Executives' Stock Sales. (video)

Wall Street Journal:

• U.S. Threatens China Over North Korea Sanctions. Treasury officials warn of measures if Beijing doesn’t do more to isolate Pyongyang.

• Goldman’s(GS) New Obsession: Adding $5 Billion in Revenue. But big questions remain over the future of its debt-trading arm.

• U.S. Household Incomes Rose in 2016 to New Record. The median household income last year was $59,039. 

• Democrats Endorse Single-Payer Health Plan. Odds of Sen. Bernie Sanders’s bill becoming law remain remote; Republicans are quick to criticize.

• Why the Most-Hated Stock Rally Won’t Die. Even with major indexes at records, many are finding reasons why the eight-year bull market will end.

• Trump Administration to Tread Lightly on Autonomous-Vehicles Rules. Announcement comes as U.S. probe places some blame on Tesla for fatal crash.

• Herculean Task as Crews Race to Restore Power Cut by Irma. Almost 60,000 utility workers from the U.S. and Canada work to fix downed lines and flooded substations.

Fox News:

• White House: DOJ 'should certainly look at' prosecuting James Comey. (video)

• Irma left its mark on 'every' house in Florida Keys, FEMA says. (video)

CNBC:

• Here are all the big products Apple announced on Tuesday. (video)

• Stocks could see more new highs before a significant pull back.

• Nordstrom(JWN) family nears deal with Leonard Green in bid to take department store private. (video)

• Centene in a $3.75 billion deal for New York Medicaid leader Fidelis Care.

• After Buffalo Wild Wings fight, activist fund sets eyes on construction equipment maker.

• Analyst insists hurricanes 'insufficient to derail strong trends' in cruise industry.

• JPMorgan(JPM) CEO Jamie Dimon says bitcoin is a 'fraud' that will eventually blow up. (video)

Zero Hedge: 

• Dimon Doubles Down: "My Daughter Bought Bitcoin. It Went Up, Now She Thinks She Is A Genius".

• What Fiduciary Duty? San Fran Politicians Try To Force Pension To Dump $470MM Of "Fossil Fuel" Stocks.

• Calls To Imprison "Climate Change Deniers" Grow In The Wake Of Hurricane Irma. When retired Georgia Tech professor Judith Curry penned a blog post on her "Climate Etc." website suggesting that it was scientifically irresponsible to tie the intensity of Hurricanes Harvey and Irma directly to climate change, she probably didn't expect that she might trigger 1,000's of progressives to call for her immediate imprisonment. Unfortunately, for both Curry and society at large, that is exactly what happened. 

• Duke Recruits Men For Program To Fight "Toxic Masculinity".

• Facebook(FB) Believes That $50,000 Changed The Election; Senator Warner Agrees.

• The Real Story Behind America's New $20 Trillion Debt.

• WTI/RBOB Extend Gains After Biggest Gasoline Draw On Record. (graph)

• Julian Robertson: "There's A Bubble" And "It's The Federal Reserve's Fault".

• Stocks, Dollar Extend "Not-The-End-Of-The-World" Gains; Bitcoin, Apple Drop. (graph)

Business Insider:

• China, Russia, and the US are in an artificial-intelligence arms race.

Night Trading 

• Asian equity indices are unch. to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 74.50 -.5 basis point. 

• Asia Pacific Sovereign CDS Index 18.0 -.5 basis point.

• Bloomberg Emerging Markets Currency Index 74.91 +.02%.

• S&P 500 futures -.02%.

• NASDAQ 100 futures -.01%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CBRL)/2.19

• (UNFI)/.70

Economic Releases 
8:30 am EST

• PPI Final Demand MoM for August is estimated to rise +.3% versus a -.1% decline in July.

• PPI Ex Food and Energy MoM for August is estimated to rise +.2% versus a -.1% decline in July.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +4,392,100 barrels versus a +4,580,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -1,941,700 barrels versus a -3,199,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,499,2000 barrels versus a -1,396,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +3.1% versus a -16.9% decline prior.
  

2:00 pm EST

• The Monthly Budget Statement for August is estimated at -$119.0B versus -$107.1B in July.

Upcoming Splits

• None of note

Other Potential Market Movers

• The German CPI report, $12B 30Y T-Bond Auction, weekly MBA Mortgage Applications report, RBC Industrials Conference, BofA Merrill Healthcare Conference and the (EFX) investor meeting could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by commodity and industrial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing modestly mixed.  The Portfolio is 75% net long heading into the day.