Sunday, November 26, 2017

Monday Watch

Today's Headlines
  • Aramco Sees Oil Market Balanced as U.A.E. Dismisses Shale Threat. Global crude inventories are declining and supply and demand are in balance, according to the head of Saudi Aramco, while the United Arab Emirates energy minister said U.S. shale oil doesn’t threaten OPEC’s efforts to support the market. Demand for crude is continuing to rise and oil inventories are returning to the levels of the past five years, Aramco Chief Executive Officer Amin Nasser said Sunday in the eastern Saudi city of Dhahran. “This is helping prices improve,” he said, as the Organization of Petroleum Exporting Countries and allied suppliers prepared to gather this week in Vienna to assess the market.
  • Not Even Egypt's Deadliest Terror Attack Can Faze Stock Traders. Holders of Egyptian stocks seem to have developed thick skin. The benchmark index rose 0.8 percent in Cairo on Sunday even after more than 300 people were killed in a militant attack in northern Sinai on Friday. “No one is in shock as investors have, unfortunately, become immune to such events,” said Ashraf Akhnoukh, the director of Middle East and North Africa sales trading at Arqaam Capital. Still, “there is negative sentiment triggered by the attack.”
  • Shell Joins Automakers to Offer Charging Stations Across Europe. Royal Dutch Shell Plc is linking up with some of the world’s biggest carmakers to expand its electric-vehicle charging business in Europe as it prepares for life beyond oil. The second-biggest oil company has agreed with IONITY -- a Munich-based venture between BMW Group, Daimler AG, Ford Motor Co. and Volkswagen AG -- to start charging stations in 10 European nations, Shell said on Monday in a statement.
  • Asia Stocks to Nudge Higher, South Africa in Focus. Asian stocks look set to build on record prices after fresh highs for U.S. equities and little in the way of news flow over the weekend to dampen sentiment ahead of a busy week with data on the health of the world’s biggest economies. Equity-index futures in Japan, China and Hong Kong climbed after the S&P 500 Index closed at a record 2,602.42 level. Australia’s S&P/ASX 200 Index was little changed at the open. The South African rand halted its slide triggered by S&P Global Ratings cutting the country’s local-currency debt to junk on Friday, sending the currency 2 percent lower. Bitcoin surged 13 percent over the weekend. Futures on Japan’s Nikkei 225 Stock Average added 0.2 percent in Singapore. Futures on the FTSE China A50 Index gained 0.2 percent and contracts on Hong Kong’s Hang Seng Index added 0.4 percent. Australia’s S&P/ASX 200 Index was flat.
  • Republicans Rush to Shore Up Support Ahead of Senate Tax Debate. Republican lawmakers are scrambling to lock up the votes need to finalize a tax bill that can make it to President Donald Trump’s desk by the end of the year, days before the Senate prepares to debate its version. “I hope we can get it done by Christmas,” Senator Tim Scott of South Carolina said Sunday on ABC’s “This Week.” “If not, we’ll be here through Christmas, looking at the end of the year.”
  • Bond Traders Start to See Crack in Fed's Resolve About Inflation. Traders are about to find out just how worried Federal Reserve officials are about the outlook for inflation. The depth of that angst has ramifications for the U.S. bond market’s dominant trend: the flattening yield curve. Fed Chair Janet Yellen and the nominee to succeed her, Jerome Powell, lead a busy lineup of central bankers speaking this week. They may opine on inflation after minutes of their most recent meeting published last week showed several policy makers were concerned about low expectations for consumer-price gains and underscored that further interest-rate hikes will hinge on economic data. It’s only fitting, then, that the Fed’s preferred gauge of price growth will also be released this week, with a survey of economists indicating it’s likely to slow to a 1.5 percent year-on-year pace.
Wall Street Journal:
Night Trading
  • Asian indices are -.75% to unch. on average.
  • Asia Ex-Japan Investment Grade CDS Index 76.75 -.25 basis point.
  • Asia Pacific Sovereign CDS Index 15.0 -.75 basis point.
  • Bloomberg Emerging Markets Currency Index 73.25 -.05%.
  • S&P 500 futures -.12%.
  • NASDAQ 100 futures -.14%.

Earnings of Note
  • (TECD)/1.91
  • (THO)/1.84
  • (MTSC)/.35
Economic Releases   
10:00 am EST
  • New Home Sales for October are estimated to fall to 625K versus 667K in September.
10:30 am EST
  • Dallas Fed Manf. Activity for November is estimated to fall to 24.0 versus 27.6 in October.
Upcoming Splits
  • (CGNX) 2-for-1
Other Potential Market Movers
  • The Fed's Dudley speaking, Fed's Kashkari speaking, China Industrial Production report, German Retail Sales report, 2/5 Yr T-Note auctions, Goldman Sachs Metals/Mining Conference and the CSFB Tech/Media/Telecom Conference 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 modestly lower and to rally into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the week.

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