Tuesday, November 13, 2018

Wednesday Watch

Evening Headlines
  • Asia Stocks Set for Mixed Start; Crude Slumps. Asian stocks headed for a mixed start ahead of key data on China’s economy, following a topsy-turvy session for U.S. equities that saw tech shares rally and energy shares slide. Oil’s unprecedented slump deepened. Futures pointed to a dip in Japanese stocks, while shares in Hong Kong were indicated higher. Australia shares opened flat. The S&P 500 Index finished Tuesday lower as a surge in optimism over trade talks with China was offset by the plunging crude price, with U.S. oil sliding more than 7 percent. Treasuries climbed and the dollar fell from an 18-month high. The pound extended gains amid optimism the U.K. and the European Union have agreed on a draft Brexit divorce deal. Futures on Japan’s Nikkei 225 Stock Average fell 0.2 percent in Singapore. FTSE China A50 futures slid 0.2 percent. Hang Seng Index futures climbed 0.5 percent. Australia’s S&P/ASX 200 Index opened flat. The S&P 500 Index fell 0.2 percent. Futures on the S&P 500 were little changed.  
Wall St. Journal:
Zero Hedge:
Business Insider:
Night Trading 
  • Asian equity indices are -% to -% on average.
  • Asia Ex-Japan Investment Grade CDS Index 88.25 -.25 basis point. 
  • Asia Pacific Sovereign CDS Index 9.75 unch.
  • Bloomberg Emerging Markets Currency Index 66.41 +.07%.
  • FTSE 100 futures -.07%.
  • S&P 500 futures +.38%.
  • NASDAQ 100 futures +.51%.
Morning Preview Links

Earnings of Note

Before the Open:
  • (GOOS)/.26
  • (M)/.14
  • (SINA)/.73
  • (WB)/.72
After the Close:
  • (CSCO)/.72
  • (NTAP)/.99
  • (NTES)/2.48
Economic Releases
8:30 am EST
  • The CPI MoM for October is estimated to rise +.3% versus a +.1% gain in September.
  • The CPI Ex Food and Energy MoM for October is estimated to rise +.2% versus a +.1% gain in September.
  • Real Avg. Hourly Earnings YoY for October.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Powell speaking, Fed's Quarles speaking, China Retail Sales/Industrial Production reports, Eurozone Industrial Production report, weekly MBA Mortgage Applications report, Jefferies Healthcare Conference, Barclays Automotive Conference, BofA Merrill Energy Conference, Scotiabank Energy Infrastructure Conference, JPMorgan TMT Conference, Morgan Stanley TMT Conference, (AVID) Investor Day, (OI) Investor Day, (WEX) Investor Day and the (MMM) Investor Day could also impact trading today.
BOTTOM LINE:  Asian indices are mostly higher, boosted by financial and industrial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed.  The Portfolio is 25% net long heading into the day.

Stocks Reversing Lower into Final Hour on Fed Rate-Hikes Fears, Global Growth Worries, Oil Plunge, Energy/Healthcare Sector Weakness

 Broad Equity Market Tone:
  • Advance/Decline Line: Around Even
  • Sector Performance: Mixed
  • Volume: Heavy
  • Market Leading Stocks: Outperforming
Equity Investor Angst:
  • Volatility(VIX) 20.5 +.15%
  • Euro/Yen Carry Return Index 133.45 +.49%
  • Emerging Markets Currency Volatility(VXY) 10.17 +.59%
  • S&P 500 Implied Correlation 42.14 +2.96%
  • ISE Sentiment Index 61.0 -4.7%
  • Total Put/Call .96 -18.6%
  • NYSE Arms .95 -46.0%
Credit Investor Angst:
  • North American Investment Grade CDS Index 69.03 +3.28%
  • America Energy Sector High-Yield CDS Index 602.0 +1.98%
  • European Financial Sector CDS Index 89.0 -1.64%
  • Italian/German 10Y Yld Spread 303.75 -.25 basis point
  • Asia Pacific Sovereign Debt CDS Index 9.78 +1.40%
  • Emerging Market CDS Index 199.17 +3.32%
  • iBoxx Offshore RMB China Corporate High Yield Index 148.12 +.28%
  • 2-Year Swap Spread 18.50 -.5 basis point
  • TED Spread 28.25 +1.0 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -47.75 +.75 basis point
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 66.32 -.08%
  • 3-Month T-Bill Yield 2.34% unch.
  • Yield Curve 25.0 -.75 basis point
  • China Iron Ore Spot 69.0 USD/Metric Tonne -.20%
  • Citi US Economic Surprise Index 10.40 +.5 point
  • Citi Eurozone Economic Surprise Index -55.2 +1.4 points
  • Citi Emerging Markets Economic Surprise Index -6.20 -1.8 points
  • 10-Year TIPS Spread 2.03 -2.0 basis points
  • 75.5% chance of Fed rate hike at Jan. 30th meeting, 91.4% chance at March 20th meeting
Overseas Futures:
  • Nikkei 225 Futures: Indicating -105 open in Japan 
  • China A50 Futures: Indicating +51 open in China
  • DAX Futures: Indicating -68 open in Germany
  • Slightly Lower: On losses in my medical/biotech sector longs and emerging market shorts
  • Disclosed Trades: Covered some of my (IWM)/QQQ hedges, then added them back
  • Market Exposure: 25% Net Long

Bear Radar

Style Underperformer:
  • Small-Cap Growth -.3%
Sector Underperformers:
  • 1) Oil Service -4.0% 2) Energy -2.3% 3) Healthcare Providers -1.5%
Stocks Falling on Unusual Volume: 
Stocks With Unusual Put Option Activity:
  • 1) KSS 2) NYT 3) VLY 4) ATHN 5) USO
Stocks With Most Negative News Mentions:
  • 1) ACHC 2) DQ 3) INFN 4) LNN 5) CTV