Wednesday Watch

Evening Headlines

Bloomberg:  

• In Trump-Xi Fight, Leaders Make Big Bets That May Backfire.  

• U.S. Slaps Duty on $4.4 Billion of China Cabinets Amid Trade War.  

• Hong Kong Assets Turn Toxic as Trade War and Protests Cloud Outlook.

• Asia Stocks Mixed, U.S. Futures Dip Amid Caution. Stocks in Asia opened mixed despite U.S. shares clawing back some of Monday’s rout, with traders remaining cautious in the face of deepening trade tensions. American equity futures dropped and Treasury yields steadied. Japanese shares saw modest declines, while Korean equities edged higher. S&P 500 Index futures were down 0.3% after a surge in the gauge on Tuesday went some way to easing the slump in the previous session. The daily yuan fixing will be in focus after China’s move to stabilize its currency fueled speculation cooler heads will prevent a full-blown trade war. Assets in India, New Zealand and Thailand will be in focus with monetary policy decisions due in all three countries Wednesday. Japan’s Topix index dropped 0.2% as of 9:03 a.m. in Tokyo. Futures on the S&P 500 Index fell 0.3%. The underlying gauge rose 1.3% on Tuesday. Australia’s S&P/ASX 200 Index declined 0.1%. South Korea’s Kospi index rose 0.5%.

• Oil Slumps Into Bear Market as Trade Tensions Feed Demand Angst.  

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

• U.S. Intervention, China Reassures on Yuan, Trump vs Xi: Eco Day.

• Barneys, Near Death Days Ago, Juggles Multiple Rescue Bids.

• Amazon, Facebook, Google Defend Practices Amid Lawmakers’ Probe.  

• Treasury Curve Signals Disappointment With Bullard’s Message.

Wall Street Journal:

• U.S. Stocks Regain Ground as China’s Yuan Stabilizes

• FBI Probes Shooters’ Motives Amid Wider Alarm Over Attacks

• Before Attack, Ohio Shooter’s Comments Drew Concern

• The Fall of Barneys Burns a Hedge-Fund Star

• Beijing Digs In to Outlast Washington in Trade Dispute.

• Can Energy-Producing Buildings Work in the Swampy South? Atlanta Is Trying.

Fox News:

• Ex-VP warns gun owners he’ll be coming for their firearms ‘if you have an assault weapon’.

MarketWatch.com:

• China warns punishment is coming for Hong Kong protesters.

• Now it’s getting serious: U.S. import tariffs on Chinese goods heading up to levels last seen in 1930s.

• Here are some of the Beyond Meat insiders who made millions on stock sales.

• Match stock soars after Tinder shows explosive growth once again.

• Shake Shack partners with GrubHub for nationwide delivery, warns of ‘volatility’.

CNBC:

• Disney(DIS) shares fall after earnings miss.

• Disney’s bundle of Disney+, ESPN+ and ad-supported Hulu will cost $12.99 per month.

• This will be Wall Street’s new obsession as the trade war intensifies.

• Stocks making the biggest moves after hours: Disney, Hertz, Weight Watchers and more.

• Walgreens(WAG) to close 200 US stores.

Zero Hedge:

• China Mulls Joining US 'Escort' Coalition In Gulf Even As It Defies Iran Oil Embargo.

• Lacking Self-Awareness, The Mexican Government Is Now Complaining About US Crime.

• 'Another Nail In The Coffin' Of Democracy & Journalism As US Newspaper Giants Announce $1.4 BN Merger.

• Smartphone Bust: Global Phone Sales In Downturn Ahead Of 5G Launch.

• Watch: Protesters Shout Death Threats Outside Mitch McConnell's Home.

• America's Largest Pension Funds Missed Their Targets Again In 2019.

• 6 Charts Showing How The American Middle Class Drowned In Debt Just To Maintain Its Lifestyle.

• WTI Extends Losses Despite 8th Weekly Crude Draw In A Row.

• Gold Gains As China 'Stability' Sparks Dead-Cat-Bounce In Stocks.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 68.0 -3.75 basis points.

• China Sovereign CDS 52.0 -4.25 basis points.

• Bloomberg Emerging Markets Currency Index  66.20 +.04%.

• FTSE 100 futures -.03%.

• S&P 500 futures -.39%.

• NASDAQ 100 futures -.41%.

Morning Preview Links 

Earnings of Note 
Company/Estimate

Before the Open:

• (CVS)/1.69

• (LAMR)/1.14

• (LL)/.10

• (ODP)/.05

• (SINA)/.58

• (WB)/.60

• (WEN)/.17

• (WWW)/.51

After the Close:

• (ALB)/1.44

• (UHAL)/7.61

• (AIG)/1.16

• (CECO)/.29

• (CVNA)/-.43

• (FLO)/.25

• (FOSL)/-.05

• (TWNK)/.15

• (IAC)/1.73

• (JACK)/1.00

• (LYFT)/-1.00

• (CLI)/.40

• (MRO)/.14

• (MELI)/.33

• (MNST)/.56

• (NTES)/2.74

• (PAAS)/.04

• (PETQ)/.35

• (RCII)/.57

• (ROKU)/-.20

• (RGLD)/.46

• (SFLY)/-.21

• (SWKS)/1.34

• (STMP)/.96

• (ZG)/-.15

Economic Releases
10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,933,900 barrels versus a -8,496,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -1,369,780 barrels versus a -1,791,000 barrel decline the prior week. Distillate inventories are estimated to fall by -166,330 barrels versus a -894,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.48% versus a -.1% decline prior.
  

3:00 pm EST

• Consumer Credit for June is estimated to fall to $16.1B versus $17.086B in May.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone Industrial Production report, $27B 10Y T-Note auction, weekly MBA Mortgage Applications report and the (COST) monthly sales update could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and financial 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 Rising into Final Hour on Diminished China Currency War Fears, Less European/Emerging Markets/US High-Yield Debt Angst, Bargain-Hunting, Defense/Medical Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Heavy

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 20.4 -17.1%

• Euro/Yen Carry Return Index 123.90 +.49%

• Emerging Markets Currency Volatility(VXY) 8.66 -7.4%

• S&P 500 Implied Correlation 46.44 -9.5%

• ISE Sentiment Index 71.0 +10.9%
  

• Total Put/Call 1.13 -10.3%

• NYSE Arms 1.11 -36.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 59.50 -2.36%
  

• America Energy Sector High-Yield CDS Index 548.0 +.81%

• European Financial Sector CDS Index 69.43 -1.85%

• Italian/German 10Y Yld Spread 204.75 -3.5 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 68.75 +2.5%
  

• Emerging Market CDS Index 183.26 -1.81%
  

• iBoxx Offshore RMB China Corporate High Yield Index 164.97 unch.

• 2-Year Swap Spread .25 +1.5 basis points

• TED Spread 19.25 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -13.75 +1.5 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.12 +.19%
• 3-Month T-Bill Yield 2.02% +2.0 basis points

• Yield Curve 14.25 +1.75 basis points

• China Iron Ore Spot 93.0 USD/Metric Tonne -.24%

• Citi US Economic Surprise Index -35.2 +1.5 points

• Citi Eurozone Economic Surprise Index -50.7 +4.5 points

• Citi Emerging Markets Economic Surprise Index -20.3 +.9 point

• 10-Year TIPS Spread 1.62 +2.0 basis points
• 100.0% chance of Fed rate cut at Sept. 18th meeting, 100.0% chance of cut at October 30th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -30 open in Japan 
• China A50 Futures: Indicating -73 open in China

• DAX Futures: Indicating +77 open in Germany

Portfolio:

• Slightly Higher: On gains in my tech/retail/biotech/medical/industrial sector longs

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my emerging market shorts

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value +.4%

Sector Underperformers:

• 1) Oil Service -1.7% 2) Paper -.5% 3) Gold & Silver -.3%

Stocks Falling on Unusual Volume: 

• GCI, IFF, PRMW, CLAR, TCMD, CARS, FRPT, ENR, COHU, EVBG, MCK, HSC, MOS, SSTK, RAMP, ABC, BHC, LPX, RBC, CXO, AXNX, TPC, PAYS, CARS and OR

Stocks With Unusual Put Option Activity:

• 1) LL 2) RF 3) CHRW 4) BBT 5) MNK

Stocks With Most Negative News Mentions:

• 1) IFF 2) MNK 3) MOS 4) CARS 5) OCN

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +1.6%

Sector Outperformers:

• 1) Education +2.5% 2) Insurance +1.9% 3) Defense +1.8%

Stocks Rising on Unusual Volume:

• EVER, SHAK, DCO, PODD, ALLK, USMV, IGV, PDP, PUK, TTWO, USFD, TDG, BMCH, CIB, ITRI, LCII, GSB, FBM, SERV, LGIH, BWXT, WEN, JCOM, DIOD, VCEL, USFD, ANSS, MTZ and FBM

Stocks With Unusual Call Option Activity:

• 1) SIG 2) KNX 3) RF 4) MNK 5) SHAK

Stocks With Most Positive News Mentions:

• 1) TWTR 2) GTT 3) EFX 4) IEP 5) NGHC

Charts:

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