Tuesday Watch

Evening Headlines

Bloomberg:   

• China Inc. to Suffer More Debt Defaults in 2019 as Profits Stall.  

• China Mutual Fund Closures Hit Record on Shadow Banking Purge.   

• Where the World’s Smart Money Made and Lost It in 2018.

• Asia Braces for Slide as S&P 500 Hits 14-Month Low. A sell-off in U.S. stocks that sent the S&P 500 Index to its lowest close in 14 months looks set to spread to Asia as investors awaited the Federal Reserve’s rate decision and assessed the outlook for global growth. Futures fell in Japan, Australia and China after the S&P 500 finished Monday at the lowest since October 2017 and the Russell 2000 Index of smaller companies entered a bear market. The dollar dropped, while Treasuries gained. West Texas crude settled below $50 for the first time since October 2017 as glut fears grew. Chinese assets will be closely watched as President Xi Jinping gives a speech on the nation’s reform path. Futures on the Nikkei 225 fell 2.4 percent in Singapore. Australia’s S&P/ASX 200 Index futures were down 1.5 percent. FTSE China A50 futures dropped 0.5 percent. Hong Kong’s Hang Seng Index futures were little changed.  

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

• BOJ's Stale Stimulus, Xi Speech, Trump Slams Fed Again: Eco Day.

• Stock Sell-Off Defies Everything the Bulls Hoped Would Stop It.

• Oil Closes Below $50 for First Time in a Year.  

• Trump Opposes Short-Term Funding to Avoid Shutdown.  

• NYC Subway Chief Warns of ‘Death Spiral’ Without $40 Billion Fix.  

• IDW's Ilana Weinstein Says Hedge Fund Shakeout ‘Far From Over’.

• Fed Rate Hikes Are Extremely Rare When Stocks Are This Beat Up.

Wall St. Journal:

• Goldman(GS) Ignored Worrisome Signals In Malaysian Fund.

• Rubio’s Buyback Tax.

• The Yellow Jackets Are Right About Green Policies. 

• From Silk to Smartphones: China’s Emergence as a Trade Leviathan.

• Stocks Fall Sharply as Investors Fret Over Growth Outlook.

• The Most Striking Images From 2018.

• New Hedge Funds Lure Record Cash, but Results Fall Flat. 

• U.S. Prepares More Payments to Trade-Hit Farmers.

Fox News: 

• Defiant Comey lashes out at House GOP over ‘frustrating’ hearing.

CNBC:         

• China’s Xi is about to deliver a speech that could have major consequences for the trade war.

• Small-cap stocks enter bear market, with Russell 2000 benchmark down 20% from highs.

• Boeing(BA) raises its dividend 20%, boosts buyback plan to $20 billion, reaffirming its bullish outlook.

• Johnson & Johnson(JNJ) CEO: 'We unequivocally believe' our baby powder does not contain asbestos.

• Twitter(TWTR) tanks after disclosing that its support form exposed data to IPs in China and Saudi Arabia.

• Jeffrey Gundlach says passive investing has reached a ‘mania’ – investors should avoid index funds.

• Four things need to happen for the stock market to bottom, Jim Cramer says. 

• Goldman Sachs says it was lied to in 1MDB scandal that has plagued its stock.

• Stocks making the biggest moves after hours: Oracle, Boeing and more.

• Google(GOOGL) has reportedly ended China search project.

Zero Hedge:

• Comey Lashes Out At Trump, GOP Lawmakers; Refuses To Deny He Leaked Classified Info.

• Mueller Finally Releases Heavily Redacted Key Flynn Memo On Eve Of Sentencing.

• Christopher Steele Admits He Was Hired To Help Hillary Challenge 2016 Election.

• BBC Claim Putin Is Weaponizing Humor (Don't Laugh, That's Exactly What He Wants).

• CBS Denies Les Moonves $120MM Severance, Will Terminate "For Cause".

• "Yellow Vests" & The Downward Mobility Of The Middle Class.

• The US Government Will (Likely) Shut Down On Dec. 21: What To Expect.

• Foreigners Dump US Treasuries As They Liquidate A Record Amount Of US Stocks.

• Stocks Slammed As Liquidations Accelerate; Bitcoin, Bonds, & Bullion Bid. 

Night Trading 

• Asian equity indices are -1.25% to -.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 91.5 -1.5 basis points. 

• Asia Pacific Sovereign CDS Index 9.25 -.5 basis point.

• Bloomberg Emerging Markets Currency Index 66.83 +.02%.

• FTSE 100 futures -.60%.

• S&P 500 futures +.26%.

• NASDAQ 100 futures +.34%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (DRI)/.91

• (FDS)/2.29

• (NAV)/1.75

• (WOR)/.73

After the Close:

• (AIR)/.57

• (ABM)/.56

• (FDX)/3.94

• (JBL)/.88

• (MU)/2.96

• (SCS)/.30

Economic Releases

8:30 am EST

• Housing Starts for November are estimated to fall to 1225K versus 1228K in October.

• Building Permits for November are estimated to fall to 1260K versus 1263K in October.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Japan Trade Balance report, weekly US retail sales reports, (ELAN) financial guidance, (AGCO) analyst meeting and the (THS) analyst meeting could also impact trading today.

BOTTOM LINE:  Asian indices are lower, weighed down by technology and industrial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 50% net long heading into the day.