Friday Watch

Evening Headlines

Bloomberg:   

• Trump Says Day One of U.S.-China Trade Talks Went Very Well.

• China to Ask U.S. to End Sanctions on Its Biggest Shipping Company China Hit by EU Tariffs as High as 66%.

• Europe Says It’s Ready for a Trade War If Pressured by the U.S. 

• Stocks Rise as Trade Talks Head Into Second Day. Stocks in Asia gained as high-level U.S.-China trade talks progressed into a second day and optimism grew that a truce can be achieved. Treasury yields edged back after jumping overnight. Shares opened higher in Seoul, Tokyo and Sydney, while S&P 500 futures rose after President Donald Trump said discussions with Chinese counterparts are going “really well” and that they will continue on Friday. Ten-year Treasury yields dipped after rising rose to the highest in a week and the yuan steadied after its climb. The pound retained its advance spurred by talk of a Brexit deal. Futures on the S&P 500 Index gained 0.1% as of 10:10 a.m. in Tokyo. The underlying gauge rose 0.6% Thursday. Japan’s Topix index advanced 0.5%. South Korea’s Kospi index gained 1%. Australia’s S&P/ASX 200 Index advanced 1%.

• Oil Jumps as U.S-China Trade Talks Lift Gloom Over Demand.

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

• Dark Shops, Spotty Phones, Rotting Fish: This Is Life in California's Mass Blackout.

• Nonsense Market Moves Have Investors ‘Exhausted’ by Trade Talks.

Wall Street Journal:

• A Hostile Climate for Children.

• Two Men Who Helped Giuliani on Ukraine Arrested.

• Political Campaigns Know Where You’ve Been. They’re Tracking Your Phone.

• Ukraine Smoke and Mirrors.

• NBA China Game Goes On as Tensions Persist.

• Trump to Meet With China’s Top Trade Negotiator on Friday.

• Those Probiotics May Actually Be Hurting Your ‘Gut Health’.

Fox News:

• These celebs are joining the fight over Ellen DeGeneres' friendship with President Bush.

• DAVID BOSSIE: Americans are witnessing an impeachment conclusion.

MarketWatch.com:  

• For hedge funds, software-as-a-service stocks are the new FAANG.

CNBC:

• SAP CEO Bill McDermott stepping down after over nine years leading software giant.

• More than two dozen now dead from vaping lung illness as outbreak spreads, CDC says.

• Apple deferred to the Chinese government long before the Hong Kong protests.

• Florida is scooping up data on schoolchildren, from security cam footage to social media.

• Stocks making the biggest moves after hours: Roku, Walmart, Slack and more.

Zero Hedge:  

• US China Business Council: A Deal Is Coming (But It Will Be Small).

• Watch: CNN Reporter Abruptly Muzzled While Asking NBA Stars About China.

• Climate Alarmists Superglue Themelves To Street, Get Arrested After Bringing Times Square To Standstill.

• Humor? NBA Now Requiring All Players To Stand For Chinese National Anthem.

• Pound Rallies On Report Johnson And Varadkar Nearing Brexit Deal.

• New Vaccines Are In Our Future That Will "Literally Change Your DNA".

• US Futures Spike On Trump Trade Talks Comments.

• America 2019: Even The Wealthy Are Poorer In Everything That Matters.

• After Overnight Chaos, Trump Trade Tweet Sparks Stock Buying-Panic.

Business Insider:

• Apple CEO Tim Cook addressed employees to explain why he stands by the company's decision to remove an app that Hong Kong protesters were using to track police.

• Austin's homeless crisis is so dire, a nonprofit built an $18 million tiny home village to get the chronically homeless off the streets. Take a look inside Community First Village.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 78.0 -.75 basis point.

• China Sovereign CDS 46.75 -1.25 basis points.

• Bloomberg Emerging Markets Currency Index  65.46 -.01%.

• FTSE 100 futures n/a.

• S&P 500 futures +.31%.

• NASDAQ 100 futures +.36%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (FAST)/.36

• (INFY)/9.38

After the Close:

• None of note

Economic Releases
8:30 am EST

• The Import Price Index MoM for Sept. is estimated unch. versus a -.5% decline in Aug. 

• The Export Price Index MoM for Sept. is estimated to fall -.1% versus a -.6% decline in Aug.

10:00 am EST

• Preliminary Univ. of Mich. Consumer Sentiment for Oct. is estimated to fall to 92.0 versus 93.2 in Sept.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Canada Unemployment Rate, Bloomberg Oct. US Economic Survey and the (WEN) investor day could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by technology and financial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.

Stocks Higher into Final Hour on China Trade Deal Hopes, Oil Gain, Short-Covering, Financial/Commodity Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 18.2 -2.3%

• Euro/Yen Carry Return Index 123.41 +.78%

• Emerging Markets Currency Volatility(VXY) 8.27 +.73%

• S&P 500 Implied Correlation 44.0 -3.5%

• ISE Sentiment Index 99.0 -13.1%
  

• Total Put/Call 1.03 -4.6%

• NYSE Arms .86 +14.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 60.28 -2.6%
  

• America Energy Sector High-Yield CDS Index 524.0 -.4%

• European Financial Sector CDS Index 65.81 -3.52%

• Italian/German 10Y Yld Spread 142.75 +1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 78.14 -.32%
  

• Emerging Market CDS Index 210.18 -1.34%
  

• iBoxx Offshore RMB China Corporate High Yield Index 166.34 -.01%

• 2-Year Swap Spread 3.0 +.5 -.5 basis point

• TED Spread 34.25 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -25.5 -.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.43 +.33%
• 3-Month T-Bill Yield 1.67% unch.

• Yield Curve .12 +1.0 basis point

• China Iron Ore Spot 85.90 USD/Metric Tonne -3.3%

• Citi US Economic Surprise Index 11.0 -6.7 points

• Citi Eurozone Economic Surprise Index -79.0 -2.3 points

• Citi Emerging Markets Economic Surprise Index -12.60 -1.4 points

• 10-Year TIPS Spread 1.52 +3.0 basis points
• 89.8% chance of Fed rate cut at Dec. 11th meeting, 93.7% chance of cut at Jan. 29th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +124 open in Japan 
• China A50 Futures: Indicating +73 open in China

• DAX Futures: Indicating -25 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth +.4%

Sector Underperformers:

• 1) Homebuilding -.7% 2) Networking -.3% 3) Airlines -.2%

Stocks Falling on Unusual Volume: 

• HRC, ZEN, IIPR, SDC, KRA and FSCT

Stocks With Unusual Put Option Activity:

• 1) TUR 2) CXW 3) MDCO 4) NTAP 5) APA

Stocks With Most Negative News Mentions:

• 1) PCG 2) KRA 3) ADTN 4) FSCT 5) CRK

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value +.9%

Sector Outperformers:

• 1) Steel +3.0% 2) Paper +2.9% 3) Banks +2.0%

Stocks Rising on Unusual Volume:

• RARX, BBBY, RETA, TPTX, APLS, SWKS, QRVO, GNK and PSTG

Stocks With Unusual Call Option Activity:

• 1) BERY 2) KWEB 3) KBH 4) FLEX 5) DAL

Stocks With Most Positive News Mentions:

• 1) RARX 2) PUMP 3) FCX 4) RADA 5) SWKS

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -3.5% Below 100-Day Average
• 10 Sectors Rising, 1 Sector Declining
• 66.1% of Issues Advancing, 30.6% Declining
• 43 New 52-Week Highs, 32 New Lows
• 48.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 43.1%
• Vix 17.9 -3.9%
• Total Put/Call .90 -16.7%
• TRIN/Arms .88 +27.3%