Tuesday, September 19, 2017

Wednesday Watch

Evening Headlines
  • China's Under-the-Radar Bond Boom May Be Next Risk Target. China’s riskiest borrowers are ramping up sales of short-term dollar debt again, reigniting speculation the authorities will clamp down on what has become a way to raise cash under the radar. Beijing’s deleveraging drive -- endorsed by President Xi Jinping and the Politburo in April -- has inadvertently fueled a boom in short-end notes this year. As the National Development and Reform Commission started withholding approvals for offshore debt issuance by property developers and local government financing vehicles, companies got resourceful, selling debt due in one year or less as that doesn’t require permission from the authorities.
  • Japan's Exports Jump 18% in Biggest Gain in Almost 4 Years. Japan has enjoyed a run of strong growth in exports this year, while rising imports add to signs that domestic demand is firming as well. The Japanese economy grew at an annualized 2.5 percent in the second quarter, more than double its potential growth rate. But while a weaker yen has improved trade data, inflation remains well below the Bank of Japan’s 2 percent target.
  • Traders Hold Back Before Fed Decides on Policy. (video) The Topix index was little changed as of 9:10 a.m. Tokyo time. Australia’s S&P/ASX 200 fell 0.4 percent, while the Kospi index in Seoul rose 0.1 percent. Futures on the Hang Seng Index in Hong Kong were little changed.
  • McConnell Won't Promise Obamacare Repeal Vote as Foes Mobilize. (video) Senate Majority Leader Mitch McConnell refused to promise a vote on Republicans’ last-ditch proposal to repeal Obamacare as Democrats and other opponents started ramping up a new campaign Tuesday to block it. "If we were going to go forward, we would have to act before Sept. 30," McConnell told reporters when asked if the GOP-only bill will come to the Senate floor before next week’s procedural deadline. "We are in the process of discussing all of this."
Wall Street Journal:
Zero Hedge:
Night Trading 
  • Asian equity indices are -.25% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 71.75 unch. 
  • Asia Pacific Sovereign CDS Index 18.0 -.25 basis point.
  • Bloomberg Emerging Markets Currency Index 74.64 +.05%.
  • S&P 500 futures -.05%.
  • NASDAQ 100 futures -.08%.
Morning Preview Links

Earnings of Note

  • (GIS)/.77
  • (MLHR)/.57
Economic Releases 
10:00 am EST
  • Existing Home Sales for August are estimated to rise to 5.45M versus 5.44M in July.
10:30 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory build of +3,593,630 barrels versus a +5,888,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -2,060,130 barrels versus a -8,428,000 barrel decline the prior week. Distillate inventories are estimated to fall by -2,033,500 barrels versus a -3,215,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise +5.24% versus a -2.0% decline prior.
2:00 pm EST
  • The FOMC is expected to leave the benchmark Fed Funds Rate at 1.0%-1.25%.
Upcoming Splits
  • (FMAO) 2-for-1
Other Potential Market Movers
  • The weekly MBA Mortgage Applications report, BofA Consumer/Retail Conference and the (PPC) analyst day could also impact trading today.
BOTTOM LINE:  Asian indices are slightly lower, weighed down by commodity and consumer 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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