Tuesday, November 28, 2017

Wednesday Watch

Evening Headlines
  • Tax Plan Gains Steam After Trump ‘Lovefest’ With GOP Senators. (video) The outlook for Republicans to deliver a U.S. tax overhaul by the end of the year brightened Tuesday after President Donald Trump addressed GOP Senate holdouts in a closed-door, lunchtime session. The GOP meeting was “somewhat of a lovefest,” Trump said later Tuesday, as he prepared to meet with Majority Leader Mitch McConnell and House Speaker Paul Ryan at the White House. “They want to see it happen.” 
  • Asia Stocks Track U.S. Gains, Shrug Off Missile. (video) Asian stocks climbed, following a surge in U.S. equities, and as a well-worn path of North Korean missile tests did little to dent investors’ optimism in the strength of global earnings and economic growth. The dollar maintained gains as U.S. tax cuts inched close to reality. Shares rose in Tokyo, Hong Kong, China and Sydney after the S&P 500 Index jumped 1 percent as the Senate budget committee advanced the Republican tax bill, also buoying the greenback. U.S. lenders advanced as Federal Reserve chair nominee Jerome Powell signaled a lighter touch on financial regulations. Stocks in Seoul were steady as markets demonstrated a familiar response to the latest intercontinental ballistic missile launchfrom North Korea, showing little sign of concern. The Topix index gained 0.7 percent as of 10:34 a.m. in Tokyo and the Nikkei 225 Stock Average rose 0.5 percent. Hong Kong’s Hang Seng Index rose 0.4 percent and the Shanghai Composite Index was up 0.3 percent. Australia’s S&P/ASX 200 Index rose 0.7 percent. The Kospi index was little changed.
  • Goldman(GS) Sees Iron Ore Sinking Back to $50. Iron ore will weaken next year as global supplies increase including from a new mine in Brazil at the same time that steel production risks topping out in China, according to Goldman Sachs Group Inc., which expects prices to decline back toward $50 a metric ton. The raw material may fall to $60 a ton in three months, $55 in six and $50 in 12, according to the New York-based bank’s projections, which suggest a second year of lower prices after they dropped in 2017. Benchmark ore with 62 percent content was last at $67.76 a dry ton, according to Metal Bulletin Ltd.
  • Million-Barrel Oil Hedging Surge Signals Shale Boom Here to Stay. (video) Oil explorers took advantage of a market rally to lock in prices for almost 1 million barrels a day’s worth of future output, signaling the shale boom’s staying power as OPEC ponders the extension of its supply curbs. New hedging contracts in the third quarter covered 897,000 barrels a day of annualized production, a 147 percent increase over the second quarter, according to an analysis of 33 companies released Tuesday by industry researcher Wood MacKenzie Ltd. It was the biggest jump in crude hedging volumes since Wood Mackenzie began tracking such activity two years ago.
Wall Street Journal: 
Night Trading 
  • Asian equity indices are -.25% to +.5% on average.
  • Asia Ex-Japan Investment Grade CDS Index 72.75 -1.75 basis points
  • Asia Pacific Sovereign CDS Index 13.75 -.5 basis point.
  • Bloomberg Emerging Markets Currency Index 73.32 -.03%.
  • S&P 500 futures -.07%.
  • NASDAQ 100 futures -.05%.
Morning Preview Links

Earnings of Note

  • (TIF)/.76
  • (JACK)/.89
  • (LZB)/.45
  • (PVH)/2.91
  • (RMAX)/.51
  • (SMTC)/.50
  • (SNPS)/.57
  • (WDAY)/.14
Economic Releases 
8:30 am EST
  • 3Q GDP QoQ is estimated to rise +32% versus a prior estimate of a +3.0% gain. 
  • 3Q Personal Consumption is estimated to rise +2.5% versus a prior estimate of a +2.4% gain.
  • 3Q GDP Price Index is estimated to rise +2.2% versus a prior estimate of a +2.2% gain.
  • Core PCE QoQ is estimated to rise +1.3% versus a prior estimate of a +1.3% gain.
10:00 am EST
  • Pending Home Sales MoM for October are estimated to rise +1.1% versus unch. in September.
10:30 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,640,140 barrels versus a -1,855,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +1,076,430 barrels versus a +44,000 barrel gain the prior week. Distillate inventories are estimated to rise by +311,140 barrels versus a +269,000 barrel gain the prior week. Refinery Utilization is estimated to rise by +.6% versus a +.3% gain prior.
2:00 pm EST
  • US Fed Beige Book report.
Upcoming Splits
  • (CGNX) 2-for-1
Other Potential Market Movers
  • The Senate vote on motion to proceed with tax reform debate, Fed's Yellen speaking, Eurozone Industrial Production report, Eurozone CPI report, weekly MBA Mortgage Applications report, (COST) Nov. sales results and the BofA Merrill Leveraged Finance Conference could also impact trading today.
BOTTOM LINE:  Asian indices are mostly higher, boosted by industrial and financial shares in the region. I expect US stocks to open mixed and to rally into the close, finishing modestly higher.  The Portfolio is 100% net long heading into the day.

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