5 Things to Know Before the Market Opens

THE DAY AHEAD

October 18

*Stocks were generally lower in Asian trade overnight. The Hang Seng lost 1.2%, Australia fell 0.8% and Shanghai was down a half percent, while the Nikkei was essentially unchanged. European indexes are currently mixed, with the Dax up a quarter percent and the Footsie has a fractional gain. US stock futures are down almost a half percent as I write.

*The September reading of Japan’s Nationwide Department Store Sales is -5.2% on a year over year basis; continuing a streak that has continued unabated since March 2008.

*A couple of Chinese central bank officials are out with comments that suggest a faster pace of Yuan appreciation is possible by increasing foreign exchange flexibility by widening the daily trading band of the currency, a move they say will also help curb inflation.

*Fedsters continued to talk at the Boston Fed conference over the weekend even after the chairman had his say Friday morning. Boston Fed boss Rosengren sounded as though he was on board with the program when he said, “Insuring against the risk of deflation may be much cheaper than waiting until it has occurred and they trying to address it, “ adding that, “the fact that Japan is still battling deflation highlights how pernicious deflation can be, and how difficult it is to counteract once it has been firmly established.” Chicago’s Evans is playing along as well, he said the US is in a “bona fide liquidity trap” and needs “much more” monetary accommodation. He suggested that “if you reach the conclusion that we are in a liquidity trap, or even near a perilous liquidity trap, more accommodation is not data-dependent or a close call.”

*Among the firms reporting earnings today are Citigroup before the close and Apple after the close.

*The Treasury is set to announce at 8:00am CDT the August net change in foreign holdings of long-term US securities; there is no Bloomberg survey estimate on the report; it was +$63.7 billion in July. The September readings of Industrial Production and Capacity Utilization are due out at 8:15am CDT; Production is forecast to increase 0.2% on a month on month basis and the estimate for Capacity usage is 74.8%, up one tenth from the month before. The October reading of the NAHB Housing Market Index is due out at 9:00am CDT, it is expected to rise one point on the month to 14.

*Atlanta Fed boss Lockhart is scheduled to give a speech on the economy at 11:55am CDT.