Friday’s Market Prepper

Friday's Market Prepper






North Korea threatened to detonate a hydrogen bomb in the Pacific Ocean, putting a damper on the first day of fall in the Northern Hemisphere. The warning from Pyongyang follows sanctions from the Trump administration on the regime. The yen jumped in comparison to the dollar, while Japan's Nikkei and South Korea's Kospi fell moderately on the day. A mild sell-off in China followed a downgrade of the country's sovereign credit by Standard & Poor's to go along with the North Korea escalation of rhetoric.


U.K. Prime Minister Theresa May is due to make a speech today in Florence, Italy, on Britain's future relationship with the European Union. Indications are that May will signal that she supports a "soft" exit for Britain from the EU. She is also expected to say that the U.K. and EU should be "imaginative and creative" about establishing a new relationship. A harder Brexit is supported by some in the cabinet, including foreign minister Boris Johnson. The fourth round of Brexit talks are scheduled to begin on Monday.

Eurozone PMI came in very solid for September as growth of business activity accelerated. "Across both manufacturing and services, job creation was the second-highest seen over the past decade," notes IHS Markit. Flash services PMI was recorded at 55.6 vs. 54.8 estimated. The gauge on incoming new business rose to 55.6. Flash manufacturing PMI blazed to 58.2 to top the 57.2 mark anticipated by economists. Eurozone flash composite PMI was 56.7 vs. 55.6 estimated to rise to its highest level since May.

Commerce Secretary Wilbur Ross is getting ahead of a more challenging third round of NAFTA negotiations with Mexico and Canada by pushing for tougher rules of origin, based on the Trump administration's belief that auto imports in particular have too little U.S. content. The U.S. Trade Representative will submit new proposals in Ottawa starting Saturday covering rules of origin, labor standards in Mexico and dispute resolution.

OPEC members plan to wait a bit longer to see if any further action is needed to clear out the global oil glut. The main focus of today's meeting of OPEC officials in Vienna is expected to be compliance and supply cut extensions. Crude oil prices are slightly lower after a strong week. WTI crude oil futures -0.12% to $50.49/bbl at last check. Brent crude -0.19% to $56.32/bbl.

Fedspeak day: It's time to talk shop after the FOMC set October as the month to begin trimming the central bank's balance sheet earlier this week. San Francisco Fed president John Williams is scheduled to speak today at the Swiss National Bank Research Conference 2017. Kansas City Fed president Esther George delivers the keynote speech at an oil conference in Oklahoma City, while Dallas Fed chief Robert Kaplan takes questions at the same event.


The rise of low-cost carriers in Southeast Asia is expected to be a boost for Boeing (NYSE:BA). The company lifted its 20-year forecast for planes in the region by 460 aircraft to now see total demand of 4,210 new airplanes worth ~$650B. Southeast Asia is taking on greater importance to Boeing and Airbus (OTCPK:EADSFOTCPK:EADSY) due to the explosive growth of carriers such as Lion Air, Vietjet and AirAsia.

In a cost-cutting move, Hewlett Packard Enterprise (NYSE:HPE) will trim 5,000 jobs (about 10% of its workforce) by the end of this year, according to reports. Reductions will come worldwide and won't spare management; the company is targeting $1.5B in savings over three years, and CEO Meg Whitman has been throwing divisions overboard for the past couple of years. Shares are up 0.65% in premarket trading.

U.S. regulators are considering the possible removal of federal oversight and the designation as a "systemically important financial institution" from AIG (NYSE:AIG), and plan to discuss the matter at a meeting tomorrow. The symbolic step strikes at a company that was at the center of the global markets meltdown in 2008 and was effectively nationalized through a ~$185B government bailout.

The U.S. box office will be on watch this weekend with Entertainment Studios' Friend Request, Fox's (NASDAQ:FOXAKingsman: The Golden Circleand Warner Bros. (NYSE:TWX) film The LEGO Ninjago Movie all due to open. A stellar performance by It has the September box running about 18% ahead of last year's pace through September 20. A good run over the next three days at theaters could boost investor confidence in exhibitors Cinemark (NYSE:CNK), Regal Entertainment (NYSE:RGC), IMAX (NYSE:IMAX) and AMC Entertainment (NYSE:AMC) amid growing concerns over the emergence of the MoviePass subscription model and an earlier premium video on demand window.

It’s a nice win for General Dynamics (NYSE:GD) after its Electric Boat subsidiary was awarded a $5.1B contract to complete the design of the lead Columbia-class submarine, the U.S. Navy's next-generation ballistic missile submarine. Construction of the lead submarine is scheduled to begin in fall 2020.

Excitement is building in Macau for the Golden Week holiday. A channel check by Deutsche Bank indicated strong booking trends ahead of the holiday which runs from October 1 to October 8. Investors hope the bookings translate into more casino traffic as several new resorts host their first Golden Week and look to bounce back from the typhoon lull. Keep an eye on MGM Resorts (NYSE:MGM), Las Vegas Sands (NYSE:LVS), Wynn Resorts (NASDAQ:WYNN), Melco Resorts & Entertainment (NASDAQ:MLCO) and Galaxy Entertainment (OTCPK:GXYEF) to see if their recent uptrend continues into Golden Week.

Rail service disruptions are still a problem for CSX (NYSE:CSX). The latest issue is a snag at a CSX yard in Ohio that is causing automobile shipments to be rerouted. CSX lowered its profit guidance earlier this month, due in part to the impact of the operational misfires. The company will be the subject of a hearing of the Surface Transportation Board in Washington on October 11.

The tender offer for the acquisition of NXP Semiconductors (NASDAQ:NXPI) by Qualcomm (NASDAQ:QCOM) expires today. The deal was first announced on October 27, 2016, but has hit several regulatory roadblocks and isn't widely backed by NXP shareholders. Elliott Management and Third Point both have stakes in the buyout candidate.

Thursday's Key Earnings
Presidio (NASDAQ:PSDO-5.4% AH on Q4 revenue miss.

Today's Markets 
In Asia, Japan -0.25%. Hong Kong -0.82%. China -0.16%. India -1.38%.
In Europe, at midday, London +0.19%. Paris +0.42%. Frankfurt +0.13%.
Futures at 6:20, Dow -0.11%. S&P -0.14%. Nasdaq -0.22%. Crude -0.02%to $50.54. Gold +0.40% to $1,300.
Ten-year Treasury Yield -3 bps 2.248%

Today's Economic Calendar
6:00 Fed's Williams Speech
9:45 PMI Composite Flash
10:00 Atlanta Fed's Business Inflation Expectations
1:00 PM Baker-Hughes Rig Count

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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