First Call - Hedge Fund Telemetry

S&P futures down 0.2% after index suffered first back-to-back weekly decline since late June. Asian markets lower overnight with China down over 3.5% after returning from a week-long holiday. European markets weaker. Treasuries closed for the Columbus Day holiday in the US following the bear steepening move last week. Dollar firmer vs euro and sterling, but lagging on yen cross. Gold down 0.7%. WTI crude off 1.4%.
Busy from a headline perspective. PBoC cut RRR by 100 bp, but not enough to help sentiment as move was widely expected and chunk of the liquidity support will go to replacing a maturing medium-term lending facility (MLF). This pushing the Yuan to fresh 6 week lows. Also more signs of deterioration in US-China relations with Beijing telling Secretary of State Pompeo Trump administration needs to stop its "misguided" actions and allegations. In addition, WSJ article said tariffs on China likely to be around for a while.
Italian stocks (FTSE -2.3%) have broken down to new 1 ½ year lows as the EU criticized Italian plans for a bigger budget deficit. Setting up concerns another overhang on sentiment with looming showdown between Rome and Brussels. Deputy Prime Minister Di Maio, the head of the Five-Star Movement, reiterated over the weekend that Italy stick with its budget position and said next year’s EU parliament elections will lead to a relaxation of budget rules.
Multiple tech firms including Apple, Amazon have no issued denials of the Bloomberg China hacking article and Homeland Security said no reason to doubt them. Large consortium of private equity firms has formed to bid on Arconic. Freeport Mac said any strategic move now possible, including acquisitions, partnerships or even outright sale. Ford to cut jobs as it reorganizes salaries workforce. Target launching new line of low-priced consumer staples.
Bloomberg noting $230B in US debt will be auctioned this week (one of the heaviest weeks of issuance YTD). Last week’s spike in rates led to the highest weekly outflows from Bond funds this year per the WSJ ($1.6B). Worth noting $1.2B of that went into stocks
FANG led to the downside last week, as Friday the NYSE FANG index closed below its 200 dma for the first time since June 2016 (was -4.9% Thurs/Friday).
Brazil is the one bright spot this morning – the weekend election outcome was more market-friendly than expected and prices are reacting in kind (Brazilian-linked ETFs are trading up ~5%+ pre-open).

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