Wednesday Watch

Evening Headlines

Bloomberg: 

• Wary of Trump’s Flip-Flops, China Prepares for the Worst on Trade.  

• Asia Makes Fiscal Push After Rate Cuts to Limit Trade War Damage   

• These Charts Show Japan Has the Advantage in Its Trade Spat With Korea.

• Asia Stocks Look Mixed on Trade; Treasuries Rise. Asian stocks looked set for a mixed session Wednesday as investors assessed the latest in the unpredictable path of trade talks between the U.S. and China. Treasuries rose. Futures slipped in Tokyo, were little changed in Seoul and pointed higher in Hong Kong. U.S. futures rose. U.S. equities finished lower after a seesaw session as it appeared that China was bracing for the worst on the negotiations with U.S. President Donald Trump’s credibility becoming a key impediment to a deal. The 10-year Treasury yield fell below 1.50% to a three-year low and the dollar was steady against major currencies. Crude extended gains on expectations of shrinking U.S. inventories. Nikkei 225 futures fell 0.1% in Singapore. Australia’s S&P/ASX 200 Index futures lost 0.2%. Hang Seng Index futures rose 0.4%. S&P 500 futures rose 0.2% as of 8:20 a.m. in Tokyo.  

• Your Evening Briefing.

• Oil Rises as Industry Data Shows U.S. Crude Inventory Draw.

• A Dollar Rising Into a Possible U.S. Recession Could Be a Bad Omen.  

• Trump Administration Says It Will Build 20 Miles of New ‘Border Barrier’.

• Delta Air Says the Quest for Instagram Photos Is Stoking Demand for Flights.

Wall Street Journal:

• Democrats’ Emerging Tax Idea: Look Beyond Income, Target Wealth.

• De Blasio Gives Up on Educating Poor Kids.

• Driver Complaints About Automatic Brakes Are Rising. 
  

• College Board Drops Plans for SAT Student Adversity Scores.

• Peloton to Pursue Nasdaq Listing, Dual-Class Stock Structure in IPO.

Fox News:

• WH officials respond after Taylor Swift calls them out at VMAs, pushes Equality Act petition.

MarketWatch.com:

• HPE earnings beat sends shares up 8%.   

• 2-year/10-year U.S. Treasury yield curve inversion deepens, flashing ‘red’. 

• Warning signs are flashing in funds that buy leveraged loans.

CNBC:

• Stock dividends are yielding more than the 30-year Treasury bond for the first time in a decade
  

• Purdue Pharma offers $10 billion - $12 billion to settle opioid claims.

• Hasbro CEO: Moving out of China has ‘gone very well for us’
  

• Stocks making the biggest moves after hours: Autodesk, HP and Heico.
  

Zero Hedge:  

• Fighting Escalates Dramatically As Both Sides Prepare For "The Final War" Between Israel And Iran.

• Sub-Prime Auto Credit Deteriorates In July, Says Report.

• Mexican Navy Seizes A Whopping 52k Pounds Of Fentanyl, Intended For The US.

• While Celebrities Pass Off Fake Pictures Of Burning Amazon, Here's What The Raging Fires Actually Look Like.

• Deutsche Bank Says It Has Tax Returns Subpoenaed By Anti-Trump Lawmakers.

• The 'World's Most Bearish Hedge Fund' Asks "Why People Are Not More Bearish" After Tumbling 22% YTD.

• Bill Dudley Shocker: Ex-NY Fed President Urges Fed's Powell To Prevent Trump Re-election.

• WTI Extends Gains Above $55 After Huge Crude Draw.

• China's Oil Imports From Iran Are Rising, New Customs Data Shows.

• New Poll: 70% Of Americans Are Angry At The Political Establishment.

• Silver & Gold Soar, Yields & Small Caps Plunge As Trade-Deal Hope Tanks.

Business Insider:

• Only 33% of Americans believe that Jeffrey Epstein actually died by suicide.

• Walmart says these will be the 48 toys every kid wants this holiday.

Night Trading 

• Asian equity indices are -.25% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 66.25 +1.0 basis point.

• China Sovereign CDS 48.25 unch.

• Bloomberg Emerging Markets Currency Index  64.98 -.02%.

• FTSE 100 futures -.13%.

• S&P 500 futures +.18%.

• NASDAQ 100 futures +.26%.

Morning Preview Links 

Earnings of Note 
Company/Estimate

Before the Open:

• (CHS)/.00

After the Close:

• (FIVE)/.50

• (GES)/.29

• (HRB)/-.75

• (NTNX)/-.56

• (OKTA)/-.10

• (OLLI)/.46

• (PVH)/1.89

• (SMTC)/.36

• (SCVL)/.79

• (WSM)/.83

Economic Releases
10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,941,000 barrels versus a -2,732,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -137,640 barrels versus a +312,000 barrel gain the prior week. Distillate inventories are estimated to rise by +1,156,730 barrels versus a +2,610,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.38% versus a +1.1% gain prior.

Upcoming Splits

• None of note

Other Potential Market Movers

• The German GFK Confidence report, $441B 5Y T-Note auction and the weekly MBA Mortgage Applications report could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and consumer shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.