First Call - Hedge Fund Telemetry

S&P futures up 0.1% after US equities were mostly lower on Wednesday, ending near their worst levels for the session. Asian equities mostly lower overnight. Japan lagged, down nearly 1%. European equities weaker with Italy a notable underperformer. Treasuries unchanged to slightly firmer after rallying yesterday. Dollar stronger on the major crosses. Gold up .15%. WTI crude up over 1%.
Busy from a headline perspective, though no big directional drivers for US equities. Big story this morning seems to be renewed concerns over Italian budget, with populists push for a deficit-to-GDP ratio of over 2% (recent reports have said they are targeting 2.4%), a dynamic that has led to another round of speculation that the country’s technocrat finance minister may resign. Italian bonds under outsized pressure. Italian banks -2%.
As widely expected, Fed raised rates by 25 bp today to 2.00%-2.25%. Fed statement maintained upbeat current economic assessment and reiterated near-target inflation and roughly balanced risks to the outlook. However, it scrapped Fed’s longstanding description of its monetary policy stance as "accommodative." Powell said this was not meant to signal rate-path change. Only minor changes in the SEP, including an upgrade to 2018 and 2019 growth expectations.
Trump dominating the headlines following his Wednesday press conference. In terms of things that the market may actually care about, he reiterated his criticism of Fed rate hikes, repeated his accusation that China is interfering in the November midterm elections (very unhelpful to tariff negotiations), said his preference would be to keep Deputy Attorney General Rosenstein on the job and expressed frustration with the lack of progress between the US and Canada on overhauling NAFTA (refused a meeting with Trudeau yesterday)
Bed Bath and Beyond under pressure following another miss. (Surprising since my wife and daughter emptied out a store in Dallas with her college move in) Usual suspects in focus in terms of margin pressure and market share loss. Amazon opening a new physical store in New York and rated new buy at JPM. Autozone boosted its buyback by $1.25B. Philip Morris lowered FY EPS guidance on FX.
China may buy ~$18B worth of planes from Airbus (not Boeing) as trade tensions w/the US escalate
US vs. China – "How China Systematically Prices Technology from US Companies" – the WSJ has a long profile article outlining how Chinese firms have extracted critical IP from American corporations over the last several years.
US farmers warn the aid recently authorized by Trump to assist the agriculture industry won’t be enough to cover the fallout from the China trade war – WSJ
Highlight of Trump’s Wed night press conf. – speaking in the 3rd person and "very, very large brain" - "from what I hear, if you look at Mr. Pillsbury, the leading authority on China ... he was saying that China has total respect for Donald Trump and for Donald Trump's very, very large brain. He said, Donald Trump, they don't know what to do" – CNBC

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