Friday Watch

Evening Headlines

Bloomberg:

• Stocks Drop, Yen Rises on Renewed N. Korea Tension. After a flat start to Friday’s Asian session, benchmarks dropped in Tokyo and Seoul, and S&P 500 Index futures declined. Bond yields retreated and the yen and gold climbed after Yonhap News cited a North Korean official saying the “highest level of hard-line” countermeasures against the U.S. could refer to a hydrogen-bomb in the Pacific Ocean. North Korea’s nuclear tests up to now have taken place on its own soil. Japan’s Topix index fell 0.3 percent as of 11:30 a.m. Tokyo time and South Korea’s Kospi index slid 0.5 percent. Australia’s S&P/ASX 200 Index added 0.3 percent. Hong Kong’s Hang Seng Index lost 0.8 percent and the Shanghai Composite Index dropped 0.7 percent.

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

• Shale Billionaire Hamm Slams 'Exaggerated' U.S. Oil Projections. (video) Billionaire oilman Harold Hamm says the government was way too optimistic with its prediction of more than 1 million new barrels a day in U.S. production, and the snafu is “distorting" global crude prices. This year’s rise is likely to be closer to about 500,000 barrels, far off an initial forecast by the U.S. Energy Information Administration, according to Hamm, the chairman of Continental Resources Inc. and a pioneer in the shale industry.

Wall Street Journal:

• Puerto Rico After Maria: No Power, No Cell Signal, and Lots of Damage. Many communities are cut off from communication; governor warns flooding, mudslides are ‘giant problem’.

• U.S. Monitored Manafort After He Left Trump Campaign. The surveillance came as part of a counterintelligence probe into Russian interference with presidential election.

• Top SEC Officials Only Recently Learned of 2016 Company-Database Hack. Edgar system stores confidential forms that could be juicy targets for hackers.

• Facebook(FB) Says It Will Hand Over Russia-Backed Ads to Congress. The social-media giant has been under pressure from for withholding information.

Fox News:

• Trump signs executive order targeting North Korea's trading partners. (video)

Zero Hedge:

• Stocks, USDJPY Stumble After North Korean "H-Bomb Test" Threat Reports. (graph)

• Kim Jong Un Vows To Tame "Mentally Deranged Dotard" Trump "With Fire".

• A Look At How Nestle Makes Billions Selling You Groundwater In A Bottle.

• "No One Knows How To Interpret The Fed" Trader Reflects On Crushed Curve-Steepening Trade.

• "Choose North Korea Or The US": White House Releases Details On Latest N.Korean Sanctions.  

• VIX Set For Calmest September In History (Despite Nukes, Fed, Quakes, And Storms). (graph)

• Dallas School Board Designates Founding Fathers As Having "Confederate Links".

• Yield Curve Collapse To 10-Year Lows Kills Dow Win Streak (But Banks Surge). (graph)

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 78.75 +.5 basis point. 

• Asia Pacific Sovereign CDS Index 15.0 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 74.46 +.04%.

• S&P 500 futures -.30%.

• NASDAQ 100 futures -.49%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (KMX)/.95

• (FINL)/.11

Economic Releases 
9:45 am EST

• Preliminary Markit US Manufacturing PMI for September is estimated to rise to 53.0 versus 52.8 in August.

• Preliminary Markit US Services PMI for September is estimated to fall to 557 versu 56.0 in August.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Williams speaking, Fed's Kaplan speaking, Fed's George speaking and the Eurozone PMI report could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by industrial and technology shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 75% net long heading into the day.