Stocks Lower into Final Hour on Global Virus Shutdown/Mandate Worries, China Economic Crackdown Fears, Dollar Strength, Commodity/Airlines Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 18.0 +1.7%
• Bloomberg Global Risk On/Risk Off Index 2,647.0 -107.0 points

• Euro/Yen Carry Return Index 134.47 +.07%

• Emerging Markets Currency Volatility(VXY) 8.5 -.2%

• S&P 500 Implied Correlation 52.5 +4.4%

• ISE Sentiment Index 95.0  -20.0 points
  

• Total Put/Call .76 +!3.4%

• NYSE Arms 1.6 +68.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 49.24 +1.1%
  

• US Energy High-Yield OAS 424.38 +.8%

• European Financial Sector CDS Index 54.23 +.69%

• Italian/German 10Y Yld Spread 108.0 unch.
  

• Asia Ex-Japan Investment Grade CDS Index 91.1 +.5%
  

• Emerging Market CDS Index 163.83 +1.5%
  

• China Corp. High-Yield Bond USD ETF(KCCB) 37.8 -.45%

• 2-Year Swap Spread 7.75 unch.

• TED Spread 8.5 -.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -4.75 -.25 basis point
  
• MBS  5/10 Treasury Spread  72.5 +2.5 basis points
  
• IHS Markit CMBX BBB- 6 73.75 +.25 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.06 -.37%
• 3-Month T-Bill Yield .04% unch.
  

• Yield Curve 105.0 +1.0 basis point
  

• China Iron Ore Spot 176.80 USD/Metric Tonne -7.1%

• Citi US Economic Surprise Index -13.8 +5.2 points

• Citi Eurozone Economic Surprise Index 40.4 -5.0 points
  

• Citi Emerging Markets Economic Surprise Index 49.3 -.3 point

• 10-Year TIPS Spread 2.40 -2.0 basis points
• 100.0% chance of no change at Nov. 3rd meeting, 100.0% chance of no change at Dec. 15th meeting

US Covid-19:

• 144 infections/100K people(last 7 days) +7/100K people
• 27% of Jan. 7th, 2021 peak(highest daily avg. new infections) +1.0 percentage point
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +230 open in Japan 
• China A50 Futures: Indicating -51 open in China

• DAX Futures: Indicating -7 open in Germany

Portfolio:

• Slightly Higher: On gains in my tech/medical sector longs, index hedges and emerging market shorts
  

• Disclosed Trades: None
  

• Market Exposure: 75% Net Long
  

Bear Radar

 Style Underperformer:

• Large-Cap Growth -.5%

Sector Underperformers:

• 1) Oil Service -3.1% 2) Airlines -2.5% 3) Internet -1.9%

Stocks Falling on Unusual Volume: 

• CAKE, VFC, KMPR, TXRH, MGI, AMZN, ATR, SWKS, EHTH, NWL, W, VNDA, UPWK, ZEN, ZYXI, ANVS, PINS, TBIO and SAVA
  

Stocks With Unusual Put Option Activity:

• 1) ATOS 2) SIX 3) JWN 4) SWKS 5) DRI
  

Stocks With Most Negative News Mentions:

• 1) PENS 2) ZEN 3) ROG 4) AMZN 5) EBAY
  

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Value -.1%

Sector Outperformers:

• 1) Disk Drives +1.9% 2) Medical Equipment +1.1% 3) Digital Health +.8%

Stocks Rising on Unusual Volume:

• SILK, POWI, DXCM, VCYT, GDYN, MITK, KLAC, DSP, CLPT, RDNT, MMSI, JBI, XM, FTV, CHTR, ASIX, SGEN, MAXR, ICHR, INT, HLMN, CODX, GOGO, AMD, EBS, FSLR and TNDM
  

Stocks With Unusual Call Option Activity:

• 1) HP 2) TXRH 3) FOXA 4) TOL 5) FTNT

Stocks With Most Positive News Mentions:

• 1) TEAM 2) SIMO 3) DXCM 4) CPRI 5) MSON
  

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Morning Market Internals

NYSE Composite Index:

• Volume Running -12.2% Below 100-Day Average 
• 6 Sectors Rising, 5 Sector Declining
• 43.7% of Issues Advancing, 51.4% Declining
• 129 New 52-Week Highs, 19 New Lows
• 78.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.4%
  
• Bloomberg Global Risk-On/Risk-Off Index 2,625.0 -128.0 points
• Russell 1000: Growth/Value 17,494 -.64%
  
• Vix 18.1 +2.3%
• Total Put/Call .73 +9.0%
• TRIN/Arms 1.30 +34.0%

Friday Watch

Evening Headlines

Bloomberg:      

• U.S-Listed Chinese Stocks Resume Decline While Didi Jumps.
• Peru’s New President, Prime Minister Raise Risks as Debt Tumbles.
• U.S. Futures Fall on Amazon, Asia Eyes Muted Open: Markets Wrap.  
• Oil Heading for Weekly Gain as Investors Bet on Resilient Demand.
• U.S. GDP Miss, Inflation Jitters, China Olive Branch: Eco Day.
• More Than 4 Billion Shots Given; New U.S. Rules: Virus Update.
• Amazon’s Pandemic Bump Fades as Vaccinated Shoppers Venture Out.
  
• PayPal Faces SEC Probe of Fees Paid to Bank Behind Debit Cards.
• Robinhood’s Race to Meet Meme Stock Moment Faces Harsh Reality.
• ‘I’m Not a Huge Fan’: Robinhood Users Who Passed on the IPO.  
• Uber Pushes Office Return to October, Requires Vaccines.  
• Crypto Surprise Rattles Industry in Rare Bipartisan Tax Plan.  
• Lung Virus Fills U.S. Children’s Hospitals as Isolation Ends. 
• Elon Musk’s Brain-Computer Startup Neuralink Raises $205 Million.

Wall Street Journal:

• A Not So Grand Infrastructure Deal.
• The Jan. 6 Committee Carries History’s Weight.
• Scarlett Johansson Sues Disney Over ‘Black Widow’ Streaming Release.
• Congress Passes $2.1 Billion Bill for Capitol Security, Afghan Refugees.
• ‘Industrial Policy’ Is Back: The West Dusts Off Old Idea to Counter China.
• Didi Weighs Going Private to Placate China, Investors.
• U.S. Threatens to Sue Texas Over Its Latest Challenge to Federal Immigration Authority.

Fox News:

• See how House Republicans are standing up against Pelosi's 'arbitrary' mask mandate, threat of arrests.   
  
• NBC boss makes bold prediction about Olympics as viewers, advertisers flee.
• Restaurant owner calls out Chris Cuomo to his face for breaking COVID protocol.
  

CNBC.com:

• Shopping center CEO says foot traffic is back to pre-Covid levels as retail evolves.
• Cramer’s lightning round: ‘I love Lear and I love Magna’.
• Procter & Gamble names Jon Moeller as new CEO, will replace current chief David Taylor in November.
• Stocks making the biggest moves after hours: Amazon, Pinterest, Gilead & more.
  

MarketWatch.com:         

• Pinterest stock plunges after saying U.S. users are logging off.

Zero Hedge:

• Biden Mandates All Federal Workers Must Be Vaccinated... Except Postal Workers.
• Amazon Crashes After Missing Revenues, Guiding Far Below Consensus.
• Containers Are Being Built At A Record Pace. It's Still Not Enough.
• Biden Admin Targets New Homeowner Aid That Could Reduce Mortgage Payments By Up To 25%.
• Dr. Gottlieb Explains Why US COVID Hot Spots May Have Reached Point Where Delta Surge Reversed.
• $2.5 Trillion In Reverse Repo By Year End.
• "The Enemies Of The State": The New York Times And The Fluidity of Advocacy Journalism.
• Greenwald: "What Message Do Dreary Images Like This Send?".
• Makary To Fauci: "It's Time To Stop The Fearmongering" Amid Widespread Natural Immunity.
• Former Nikola CEO Milton Charged With Three Counts Of Fraud, Pleads Not Guilty And Posts $100 Million Bail.
• Huge Unemployment Claims Gap Opens Between Red And Blue States.
• The "Real" Real Yield Is -4.15%... And We Are Stuck With It Forever.
• Rewarding The Hesitant: Biden Calls On States To Bribe Vaccine Holdouts With $100 Incentive.
• Robinhood Suffers Worst Big IPO Debut Ever As Dollar Dumps To 1-Month Lows.

Newsmax:

• Rep. Cammack: Capitol Mask Arrest Order 'Tyrannical'.
• Rep. Keller: Biden's Actions Conflict With 'Buy American' Plan.
  

TheGatewayPundit.com:

• Reward Offered: $10,000 to the First Individual Who Can Successfully Address and Defend as Legitimate the 2020 Election Anomaly Referred to as the ‘Drop and Roll’.
• “Formalize Their Departure:” More Republican House Members Call For Cheney & Kinzinger to be Purged From Party for Participating in Pelosi’s Jan 6 Witch Hunt.
• Biden the Bully Snaps at Peter Doocy For Confronting Him on His Complete Flip on Mask Mandates on Vaccinated Americans (VIDEO).

The Epoch Times:  

• Chinese Smartphone Maker Xiaomi Leaps to Second Place Globally as Biden Administration Removes It From Blacklist.

Covid-19(Data, Maps, Graphs):

• Our World in Data:  New Global Covid-19 Cases(7-day rolling average graphs). New Covid Hospital Admissions/ICU Admissions/Deaths
  
• FT.com:  Fully Vaccinated by Country(graph). Global Lockdown Stringency Index(map).
  
• NYTimes.com:  County Trends and Clusters.
  
• Brown School of Public Health:  Covid Severity by State/County(map).  US Hospital Capacity.
  
• CovidActNow:  Covid Severity/Infection Rate by Metro Area.
  
• KFF:  US Vaccinations by Race/Ethnicity.
  
• Carnegie Mellon: Covid-Like Symptoms in Community. Covid Symptom Searches on Google. Covid-Related Dr.Visits.  Restaurant Visits. Wearing Masks. (graphs)
  
• Safegraph.com:  Commerce Patterns(graphs).

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 89.0 -.75 basis point.

• China Sovereign CDS 39.0 -1.0 basis point.
  

• Bloomberg Emerging Markets Currency Index 60.27 -.01%.
• Bloomberg Global Risk-On/Risk Off Index 2,655.0 -99.0 points.
• Volatility Index(VIX) futures 20.6 +4.3%.
• FTSE 100 futures -.51%.

• S&P 500 futures -.61%.

• NASDAQ 100 futures -1.14%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (ABBV)/3.03
• (AXL)/.03
• (AON)/1.85
• (B)/.44
• (BLMN)/.68
• (BAH)/.97
• (CRI)/.79
• (CAT)/2.41
• (CBOE)/1.36
• (CERN)/.75
• (CHTR)/4.99
• (CVX)/1.60
• (CL)/.80
• (DISH)/.86
• (XOM)/.98
• (IDXX)/2.04
• (ITW)/2.09
• (JCI)/.83
• (LHX)/3.18 
• (LYB)/5.62
• (NWL)/.45
• (PG)/1.08
• (VFC)/.11
• (WY)1.39
  

After the Close:

• None of note
  

Economic Releases

8:30 am EST

• Employment Cost Index for 2Q is estimated to rise +.9% versus a +.9% gain in 1Q.
• Personal Income for June is estimated to fall -.3% versus a -2.0% decline in May.
• Personal Spending for June is estimated to rise +.7% versus unch. in May.
• The PCE Core MoM for June is estimated to rise +.6% versus a +.5% gain in May.

9:45 am EST

• The MNI Chicago PMI for July is estimated to fall to 64.1 versus 66.1 in June.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Japan Housing Data report could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are modestly lower, weighed down by healthcare 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.

Stocks Higher into Final Hour on Earnings Optimism, Dollar Weakness, Oil Gain, Commodity/Homebuilding Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Around Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 17.4 -4.8%
• Bloomberg Global Risk On/Risk Off Index 2,800.0 +159.0 points

• Euro/Yen Carry Return Index 134.44 +.02%

• Emerging Markets Currency Volatility(VXY) 8.6 -1.3%

• S&P 500 Implied Correlation 50.8 -.9%

• ISE Sentiment Index 115.0  -14.0 points
  

• Total Put/Call .63 -19.2%

• NYSE Arms 1.02 +37.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 48.45 -1.3%
  

• US Energy High-Yield OAS 422.44 -.98%

• European Financial Sector CDS Index 53.86 -.64%

• Italian/German 10Y Yld Spread 108.0 +1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 90.5 -2.0%
  

• Emerging Market CDS Index 161.35 -3.0%
  

• China Corp. High-Yield Bond USD ETF(KCCB) 38.0 -.35%

• 2-Year Swap Spread 7.75 unch.

• TED Spread 8.75 unch.
  

• 3-Month EUR/USD Cross-Currency Basis Swap -4.5 -.5 basis point
  
• MBS  5/10 Treasury Spread  70.0 -2.0 basis points
  
• IHS Markit CMBX BBB- 6 73.5 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.29 +.62%
• 3-Month T-Bill Yield .04% unch.
  

• Yield Curve 104.0 unch.
  

• China Iron Ore Spot 189.0 USD/Metric Tonne -2.4%

• Citi US Economic Surprise Index -19.0 -22.2 points

• Citi Eurozone Economic Surprise Index 45.4 +4.7 points
  

• Citi Emerging Markets Economic Surprise Index 49.6 -1.2 points

• 10-Year TIPS Spread 2.42 +4.0 basis points
• 100.0% chance of no change at Nov. 3rd meeting, 100.0% chance of no change at Dec. 15th meeting

US Covid-19:

• 137 infections/100K people(last 7 days) +7/100K people
• 26% of Jan. 7th, 2021 peak(highest daily avg. new infections) +1.0 percentage point
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +41 open in Japan 
• China A50 Futures: Indicating -124 open in China

• DAX Futures: Indicating -19 open in Germany

Portfolio:

• Higher: On gains in my industrial/tech/consumer discretionary/medical sector longs
  

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
  

• Market Exposure: Moved to 100% Net Long