Thursday Watch

Night Trading 

• Asian equity indices are -.75% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 68.50 +.5 basis point. 

• Asia Pacific Sovereign CDS Index 12.0 -.75 basis point.

• Bloomberg Emerging Markets Currency Index 75.22 -.04%.

• FTSE 100 futures -.75%.

• S&P 500 futures -.31%.

• NASDAQ 100 futures -.13%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (BUD)/.99

• (BKS)/.97

• (BBY)/2.03

• (KSS)/1.77

• (LOXO)/-1.07

• (PDCO)/.52

• (BID)/1.32

• (TD)/1.46

• (CPLA)/.98

• (EFX)/1.35

• (GPS)/.59

• (NKTR)/-.36

• (JWN)/1.23

• (RH)/1.54

• (SPLK)/.33

• (STRA)/1.29

• (VMW)/1.63

Economic Releases

8:30 am EST

• Personal Income for January is estimated to rise +.3% versus a +.4% gain in December.

• Personal Spending for January is estimated to rise +.2% versus a +.4% gain in December.

• The PCE Core MoM for January is estimated to rise +.3% versus a +.2% gain in December.

• Initial Jobless Claims for last week are estimated to rise to 225K versus 222K the prior week. 

• Continuing Claims are estimated to rise to 1925K versus 1875K prior.

10:00 am EST

• Construction Spending MoM for January is estimated to rise +.3% versus a +.7% gain in December.

• ISM Manufacturing for February is estimated to fall to 58.6 versus 59.1 in January.

• ISM Prices Paid for February is estimated to fall to 70.0 versus 72.7 in January.
  

Afternoon

• Wards Total Vehicle Sales for February is estimated to rise to 17.2M versus 17.07M in January.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed Chair Powell's testimony to Senate, Fed's Dudley speaking, Eurozone PMI report, Eurozone Unemployment Rate report, Japan CPI report, weekly EIA natural gas inventory report, (IRBT) analyst day, (F) Feb. Sales Conference Call, (GPN) investor conference, (FEYE) analyst day, (MCHP) analyst day, KBW Cards/Payments/Financial Tech Symposium, (CR) investor day, could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by industrial and commodity shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 50% net long heading into the day.

Stocks Reversing Lower into Final Hour on Mueller Probe Worries, Yen Strength, Technical Selling, Energy/Homebuilding Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 19.17 +3.2%

• Euro/Yen Carry Return Index 135.51 -.93%

• Emerging Markets Currency Volatility(VXY) 8.04 -.25%

• S&P 500 Implied Correlation 39.96 -.79%

• ISE Sentiment Index 71.0 +14.52%
  

• Total Put/Call 1.0 +8.7%

• NYSE Arms 1.17 -45.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 55.27 +.80%
  

• America Energy Sector High-Yield CDS Index 371.0 +1.45%

• European Financial Sector CDS Index 52.85 -.84%

• Italian/German 10Y Yld Spread 131.75 -1.0 basis point
  

• Asia Pacific Sovereign Debt CDS Index 12.13 -3.88%

• Emerging Market CDS Index 121.24 +.05%
  

• iBoxx Offshore RMB China Corporate High Yield Index 147.91 +.07%

• 2-Year Swap Spread 28.5 +.25 basis point

• TED Spread 33.0 +3.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -33.5 -2.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 75.28 -.17%

• 3-Month T-Bill Yield 1.66% +1.0 basis point
  

• Yield Curve 61.25 -3.0 basis points

• China Iron Ore Spot 77.38 USD/Metric Tonne +.48%

• Citi US Economic Surprise Index 32.90 -.6 point

• Citi Eurozone Economic Surprise Index 2.40 -2.5 points

• Citi Emerging Markets Economic Surprise Index 7.90 +.7 point

• 10-Year TIPS Spread 2.12 -1.0 basis point
  

• 100.0% chance of Fed rate hike at May 2 meeting, 100.0% chance at June 13 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -103 open in Japan 

• China A50 Futures: Indicating -36 open in China

• DAX Futures: Indicating -45 open in Germany

Portfolio: 

• Slightly Lower: On losses in my biotech/industrial sector longs

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back

• Market Exposure: 50% Net Long

Today's Headlines

Bloomberg:

• Brexit Talks in Peril After May Rejects EU Draft Deal. (video) The EU commission set out in minute detail how it wanted to arrange Britain’s withdrawal, but key passages on avoiding new customs checks at the U.K.’s land border with Ireland made the 118-page draft impossible for May to support. It proposes keeping Northern Ireland in the bloc’s customs union, under the jurisdiction of the European Court of Justice -- both of which May wants the whole of the U.K. to leave.

• Short Interest in High-Yield ETFs Hits Record.

• Telegram Triples Price in Largest Initial Coin Offering.

Wall Street Journal:

• Good Climate News Isn’t Told. Reporting scientific progress would require admitting uncertainties. The biggest lie in American climate journalism is that reporters cover climate science as a science.

• Why Italian Elections Matter: A New Type of Populism Is Rising. 5 Star Movement is poised to be the country’s largest party after Sunday’s national elections.

• CEOs Choose Sides on Gun Control at Their Own Risk. CEOs feel pressure from younger, digitally savvy consumers and from employees to take a stand on issues, but corporate reputation can suffer. 

• Sessions Fires Back at Trump Over DOJ Surveillance Probe.

MarketWatch.com:

• Tech stocks reclaim a key milestone from the dot-com era — but this time it’s different.

• Tech stands to be only positive S&P 500 sector in February.

Fox News:

• Trump faces rumblings of GOP primary challenge, as he rolls out 2020 team. (video)

CNBC:

• This index shows enthusiasm for the economy is getting out of hand.

• Palantir CEO says investors will be 'positively surprised' at the company's margins. 

• 'Big Short' Steve Eisman is bullish on banks due to ‘massive deregulation’.  

• Netflix(NFLX) is forcing media companies to think globally: Ex-DirecTV CEO.

• The biggest loser in an Amazon(AMZN)-Ring deal is alarm company ADT, VC Jason Calacanis says. (video)

Zero Hedge:

• Mueller Probing What Trump Knew About Hacked DNC Emails.

• "We’re Going To Take A Stand" - Dick's Stops Selling Assault Rifles Permanently.

• Ackman Building Stake In UTX(UTX), "All Gone" From Herbalife.

• "This Is A New Low" - ICE Director Slams "Gang Lookout" Oakland Mayor.

• "We’re Going To  Take A Stand" - Dick's Stops Selling Assault Rifles Permanently.

• WTI/RBOB Tumble After Bigger Than Expected Crude, Gasoline Builds.

• Chicago PMI Tumbles To 6-Month Lows.

• Trump Blasts Sessions "Disgraceful" Investigation Into FISA Abuses.

• January Pending Home Sales Crash Most Since 2010.  

• Trump Border Wall Greenlit By Hispanic "Trump-Hating" California Judge.

• Q4 GDP Revised Lower To 2.5% Despite Stronger Spending.

• Pizza Hut Will Replace Papa John's As "Official Pizza" Of The NFL.

• Comey's FBI Was A Hotbed Of Sexual Misconduct: Official Report. 

Business Insider: 

• The states where Americans have the best quality of life, ranked.

• Millions of Europeans are asking Google(GOOGL) to be 'forgotten' — here's why Americans don't have that same option.

Bear Radar

Style Underperformer:

• Small-Cap Value unch.

Sector Underperformers:

• 1) Oil Service -1.4% 2) Steel -1.1% 3) Homebuilders -1.1%

Stocks Falling on Unusual Volume: 

• FTR, IBP, AKRX, ACAD, MIDD, SSYS, ELF, ROG, LOW, DISCK, BHS, HTZ, TSRO, DQ, CELG, MNK, DFIN, ALB, ALRM and CROX

Stocks With Unusual Put Option Activity:

• 1) FL 2) LB 3) SEAS 4) ETE 5) DUK

Stocks With Most Negative News Mentions:

• 1) FTR 2) ELF 3) CELG 4) MNKD 5) VNTR

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume