Wednesday Watch

Evening Headlines

Bloomberg:

• 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.

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

• Traders Boost Odds of Third Rate Hike This Year as FOMC Meets.

• 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."

• Uber Faces Widespread Asia Bribery Allegations Amid U.S. Criminal Probe. Uber Technologies Inc., facing a federal probe into whether it broke laws against overseas bribery, has embarked on a review of its Asia operations and notified U.S. officials about payments made by staff in Indonesia, people with knowledge of the matter said.

Wall Street Journal:

• Latest Push for a Health-Law Repeal Picks Up Speed in the Senate. McConnell says talks for a vote to scrap most of the Affordable Care Act are under way, but challenges linger.

• Did Obama Know about Comey’s Surveillance? The media is less interested in Obama Administration wiretapping than in how Trump described it.

• United Nations General Assembly -- Live Analysis.

Fox News: 

• Hurricane Maria takes aim at Puerto Rico, US Virgin Islands as Category 5 storm strengthens. (video)

• 7.1 magnitude earthquake kills more than 100 in Mexico, collapses buildings. (video)

CNBC:

• GOP senators closing in on tax cut plan. (video)

• Images of devastation from the Mexico City earthquake. (pics)

• Elizabeth Warren urges Fed to 'step up' and remove Wells Fargo's(WFC) board. (video)

• China's bitcoin clampdown is likely here to stay, analysts say. (video)

• Amazon(AMZN) is firing on all cylinders to grow its retail presence. (video)

• Bed Bath and Beyond(BBBY) shares tumble after worse-than-expected sales.

Zero Hedge:

• At Least 94 Dead, 60 Pulled Alive From Rubble After Powerful Earthquake Rocks Central Mexico.

• Dramatic Footage Of Mexico Earthquake Shows Buildings Collapsing Into Rubble.

• Full Preview Of Tomorrow's "Historic" FOMC Meeting.

• Manafort Calls On DOJ To Release His Intercepted Phone Calls; Demands Investigation Of Leaks.

• Government By Goldman.

• Ahead Of Tomorrow's Historic Fed Meeting, Here Is The Only "Cheat Sheet" You Need.

• Cryptocurrency Concentration - Just 4% Own Over 95% Of Bitcoin.

• Trump Prevented War Between Saudi Arabia And Qatar In Last Minute: Report.

• The New 'Scariest Chart In The World'. (graph)

• Fedex(FDX) Tumbles After Missing Revenue, EPS, Guiding Lower; Blames Hackers, Harvey.

• Meanwhile, The "Next Big Short" Is Quietly Blowing Up. (graph)

• O'Keefe Promises "Fireworks Are Coming" In New Media Investigation; Says "People Will Be Fired".

• WTI/RBOB Jump After Smaller Than Expected Crude Build. (graph)

• Bank Stocks, Bullion, & Bond Yields Jump Ahead Of Fed As Small-Cap VIX Hits Record Low.

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
Company/Estimate

• (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.