Tuesday, November 14, 2017

Wednesday Watch

Evening Headlines
  • Economists at Odds With Bond Traders on Global Inflation Outlook. Wall Street economists are clashing with Wall Street traders over whether inflation is poised to awaken around the world after a long slumber. From Morgan Stanley to Bank of America Corp. there’s a growing chorus of economists siding with Federal Reserve Chair Janet Yellen’s “best guess” that price pressures will soon gain momentum, paving the way for the Fed and other key central banks to continue unwinding ultra-loose monetary policy in a gradual fashion.
  • China Throws Lifeline to Developers Hitting Record Wall of Debt. Chinese developers facing a looming wall of debt repayments have been thrown a lifeline by regulators easing access to offshore financing. That won’t solve all their problems. The nation reported the deepest slowdown in new home sales in almost three years on Tuesday, as local authorities have rolled out curbs to cool runaway prices and President Xi Jinping urges citizens to end their speculation on housing.
  • Late-Cycle Market Means Wait to Sell Stocks, Morgan Stanley. As the developed world approaches the final stages of an upturn in the economy and financial markets, investors for now should remain invested in equities and avoid the temptation to sell during pullbacks, according to Morgan Stanley. "Without a doubt, most major asset classes look rich versus history," Morgan Stanley strategists including Serena Tang and Andrew Sheets, wrote in a 40-page plus report on "how the bull market will end." However, "equities can still get richer into end-of-cycle," they concluded.
  • U.S. Equity Declines to Spread to Asia; Oil Drops. Asian stocks look set to follow losses in U.S. equities as signs of oversupply in some commodities dragged down energy and raw-materials shares, while investors awaited tax plan details and inflation data. Equity-index futures signaled declines at the start of Wednesday trading in Japan, China and Hong Kong. Australian shares tracked losses on the S&P 500 Index. A Bloomberg commodities gauge dropped the most in six months and crude oil extended declines after the International Energy Agency cut its forecast for demand and cautioned the global market will remain oversupplied. Strong growth in Germany and Italy buoyed the euro, while the dollar touched a three-week low and Treasuries climbed. Nickel led declines in commodities. Australia’s S&P/ASX 200 Index declined 0.5 percent. Futures on Japan’s Nikkei 225 Stock Average slid 0.5 percent. FTSE China A50 futures lost 0.3 percent and contracts on Hong Kong’s Hang Seng Index slid 0.2 percent.
Wall St. Journal: 
Night Trading 
  • Asian equity indices are -.75% to -.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 79.75 +.5 basis point. 
  • Asia Pacific Sovereign CDS Index 15.75 -.5 basis point.
  • Bloomberg Emerging Markets Currency Index 72.30 -.02%.
  • S&P 500 futures -.30%.
  • NASDAQ 100 futures -.26%.
Morning Preview Links

Earnings of Note

  • (JASO)/.19
  • (TGT)/.86
  • (PLCE)/2.46
  • (CSCO)/.60
  • (HI)/.58
  • (LB)/.30
  • (NTAP)/.69
  • (NTES)/3.26
Economic Releases 
8:30 am EST
  • The CPI MoM for October is estimated to rise +.1% versus a +.5% gain in September.
  • The CPI Ex Food and Energy MoM for October is estimated to rise +.2% versus a +.1% gain in September.
  • Real Avg. Weekly Earnings YoY for Oct.
  • Empire Manufacturing for November is estimated to fall to 25.1 versus 30.2 in October.
  • Retail Sales Advance MoM for October are estimated unch. versus a +1.6% gain in September.
  • Retail Sales Ex Autos MoM for October are estimated to rise +.2% versus a +1.0% gain in September.
  • Retail Sales Ex Autos and Gas for October are estimated to rise +.3% versus a +.4% gain in September.
10:00 am EST
  • Business Inventories for Sept. are estimated unch. versus a +.7% gain in August.
10:30 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,736,300 barrels versus a +2,237,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -1,059,800 barrels versus a -3,312,000 barrel decline the prior week. Distillate inventories are estimated to fall by -2,052,100 barrels versus a -3,359,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise +.71% versus a +1.5% gain prior.
4:00 pm EST
  • Net Long-Term TIC Flows for September.
Upcoming Splits
  • (UFPI) 3-for-1
Other Potential Market Movers
  • The Fed's Evans speaking, Japan Industrial Production report, Eurozone Trade Balance report, weekly MBA Mortgage Applications report, Morgan Stanley Tech/Media/Telecom Conference and the Jefferies Healthcare Conference could also impact trading today.
BOTTOM LINE:  Asian indices are mostly lower, weighed down by industrial and financial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 100% net long heading into the day.

1 comment:

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