Thursday Watch

Evening Headlines

Bloomberg:       

• Trump Pushes UN to Renew Iran Sanctions in Blow to Nuclear Deal.  
• A $2 Trillion Debt Deluge Means the BOJ Needs to Buy More Bills.  
• China’s Brokers Race to Raise Funds to Fuel Nation’s Stock Rally.
• Bond Yields in India Creeping Back to 6% as RBI Goes Silent. 
• Dollar Steadies After Gain; Asian Futures Slip. Asian stocks looked set for a cautious start Thursday after the dollar climbed and U.S. equities retreated in the wake of Federal Reserve minutes that signaled tempered optimism about second-half growth. Futures ticked lower in Japan, Australia and Hong Kong, while S&P 500 contracts were little changed. U.S. shares earlier erased gains as the Fed noted the health crisis would “weigh heavily” on economic activity and repeated its view that the path of the recovery would depend on containment of the virus. The greenback steadied, holding gains that came after a five-day selloff. Gold pared an overnight fall. Treasuries slipped as policy makers sounded unenthusiastic about yield-curve control. S&P 500 futures lost 0.1% as of 7:54 a.m. in Tokyo. The index dipped 0.4% Wednesday. Futures on Japan’s Nikkei 225 fell 0.2%. Hang Seng futures earlier dipped 0.1%. Futures on Australia’s S&P/ASX 200 Index declined 0.2%.  
• Fed Delays, U.S.-China Talks, Australia Negative Rates: Eco Day.  
• Cryptocurrencies Tumble Most in Two Months as Dollar Jumps.
• Fed Minutes Show FOMC Backs Away From September Guidance Shift.
• Democrats Attempted to Make a Quiet Platform Change. Climate Activists Objected Loudly.  
• U.S. Infections Rise 0.8%; Europe Cases Flare Up: Virus Update.  
• Trump Says Colleges Should Strive to Keep Students in School.  
• Nvidia Signals That Growth of Data Center Business Will Slow.

Wall Street Journal:

• China’s National-Security Law Makes Top U.S. Colleges Wary.
• Biden United the Democrats—It’s Not Likely to Last.
• Covid-19 Appeared to Be Under Control in Europe. Now It’s Surging Again.
• Pandemic Widens Gap Between Retail’s Winners and Losers.
• California’s Green Blackouts.
• The Postal Service Democrats.
• The Left Still Blames America First.
• Some States Are Pushing Laws to Restrict Police Behavior.
  

Fox News:

• DNC accused of hiding 'radical agenda' as speakers hit Trump's character.
• Longer version of graphic Portland attack video released.
  

CNBC.com:

• Cramer’s lightning round: Activision Blizzard to have a ‘fantastic’ holiday season.
• Kudlow says Trump wants to ‘deny China’ some of the proceeds of a TikTok sale.
• Stocks making the biggest moves after hours: Nvidia, Intel, Goodyear & more.
• Nvidia earnings beat expectations as data center business exceeds gaming for first time.
• Victoria’s Secret parent L Brands shares jump on better-than-expected quarterly sales.
• The lag in banks and small businesses makes Jim Cramer less optimistic for a V-shaped recovery. 
  

MarketWatch.com:        

• Airbnb files for initial public offering.
  
• Alibaba earnings: After COVID-19 recovery, U.S.-China tensions still loom.
  
• Apple is spending ‘dramatically below peers’ on innovation.
  
• ‘A tale told by an idiot’ — CNBC’s Jim Cramer urges investors not to be fooled by new highs in the stock market.

Zero Hedge:  

• Twitter Says Viral Mailbox Misinformation Does Not Violate Company's Policies.
• "That's Ridiculous": Jill Biden - Not Joe, Appears On Live TV To Defend VP's Cognitive Ability.
• Facebook Bans Hundreds Of QAnon Groups, Pages And Instagram Accounts.
• Intel Soars After Announcing Accelerated $10 Billion Stock Buyback.
• US Suspends Extradition & Tax Treaties With Hong Kong As It's "No Longer Sufficiently Autonomous".
• Key Takeaways From The FOMC Minutes: Market Spooked By Lack Of Fed Commitment To More QE, "Twist" Or Curve Control.
• Apartment Boom & Bust, Where It's Happening And Not.
• Tytler Cycle & Why More Government Help Leads To Less.
• 'Disavowed' BLM Leader Defends Looting & Rioting Because "US Steals Diamonds & Oil".
• Dollar Has Best Day In 2 Months As Fed Sinks Stocks, Bonds, & Bullion.

The Epoch Times:

• China’s State-Sanctioned Churches Required to Worship the CCP.
• Chinese Authorities Order an End to Food Waste as Food Shortage Hits China.
  

Digital Blackboard:

• Daily New Cases by Region.

Worldometer:

• New Cases/Deaths by state.

Rt Covid-19:

• How fast virus is growing by state.

KFF:

• State Data(Tests/Hospitalizations).

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 64.5 -.25 basis point.

• China Sovereign CDS 38.5 -.5 basis point.

• Bloomberg Emerging Markets Currency Index 60.40 -.03%.
• FTSE 100 futures -.73%.

• S&P 500 futures -.32%.

• NASDAQ 100 futures -.37%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (BABA)/13.57
• (BJ)/.60
• (EL)/-.17
  

After the Close:

• (ROST)/-.28  
• (KEYS)/.84
  
• (OSIS)/1.10
  

Economic Releases

8:30 am EST

• Philly Fed Business Outlook for Aug. is estimated to fall to 21.0 versus 24.1 in July. 
• Initial Jobless Claims for last week are estimated to fall to 920K versus 963K prior.
  

10:00 am EST

• The Leading Index for July is estimated to rise +1.1% versus a +2.0% gain in June.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Russia GDP report, Japan Inflation Data report, weekly Bloomberg Consumer Comfort Index, Bloomberg Economic Expectations Index for August, weekly EIA natural gas inventory report and the (UHAL) analyst meeting could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are modestly lower, weighed down by technology and healthcare shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

Stocks Reversing Lower into Final Hour on FOMC Commentary, Coronavirus 2nd Wave Concerns, Profit-Taking, Restaurant/REIT Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Light

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 21.5 -.09%

• Euro/Yen Carry Return Index 130.15 -.16%

• Emerging Markets Currency Volatility(VXY) 11.22 +.27%

• S&P 500 Implied Correlation 43.2 -.78%

• ISE Sentiment Index 105.0 +34.0 points

• Total Put/Call .64 -9.9%

• NYSE Arms 1.07 -18.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 66.79 +.80%
  

• US Energy High-Yield OAS 776.44 +.39%

• European Financial Sector CDS Index 64.86 -.27%

• Italian/German 10Y Yld Spread 139.0 +.5 basis point
  

• Asia Ex-Japan Investment Grade CDS Index  64.24 -.80%
  

• Emerging Market CDS Index 182.08 -2.41%
  

• iBoxx Offshore RMB China Corporate High Yield Index 177.20 +.05%

• 2-Year Swap Spread 7.5 +.25 basis point

• TED Spread 17.5 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -1.0 +1.0 basis point
  
• MBS  5/10 Treasury Spread  87.5 -3.25 basis points
  
• IHS Markit CMBX BBB- 6 68.75 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.43 +.09%
• 3-Month T-Bill Yield .9% -1.0 basis point

• Yield Curve 52.25 +1.75 basis points
  

• China Iron Ore Spot 124.90 USD/Metric Tonne +.48%

• Citi US Economic Surprise Index 249.6 -3.5 points

• Citi Eurozone Economic Surprise Index 182.20 -.8 point

• Citi Emerging Markets Economic Surprise Index 23.4 +3.2 points

• 10-Year TIPS Spread 1.67 -1.0 basis point
• 100.0% chance of no change at Nov. 5th meeting, 100.0% chance of no change at Dec. 16th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +20 open in Japan 
• China A50 Futures: Indicating -75 open in China

• DAX Futures: Indicating -38 open in Germany

Portfolio:

• Slightly Lower: On losses in my biotech/tech/consumer staple sector longs
  

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my emerging market shorts
  

• Market Exposure: Moved to 25% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Growth -.1%

Sector Underperformers:

• 1) Coal -2.5% 2) Education -2.1% 3) Gold & Silver -2.1%

Stocks Falling on Unusual Volume: 

• BURL, ADVM, INSW, ACC, SUPN, GILD, OLN, ROST, TWST, SRPT, VIR, ATGE, EHTH, CREE, SRNE, JKHY, BMRN and TJX
  

Stocks With Unusual Put Option Activity:

• 1) DVN 2) GRWG 3) IEF 4) XLB 5) LOW
  

Stocks With Most Negative News Mentions:

• 1) BMRN 2) CREE 3) SJM 4) DRI  5) UBER
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.9%

Sector Outperformers:

• 1) Airlines +1.4% 2) I-Banks +1.2% 3) Social Media +1.2%

Stocks Rising on Unusual Volume:

• MNTA, IRTC, OTRK, GRWG, HOME, TGT, IMVT, PLUG, OSTK, PGNY, KBR, EXPI, PSNL and PETS
  

Stocks With Unusual Call Option Activity:

• 1) BMRN 2) FCEL 3) TGT 4) YETI 5) A

Stocks With Most Positive News Mentions:

• 1) REGN 2) MNTA 3) TGT 4) PFPT 5) PGR

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -28.5% Below 100-Day Average
• 6 Sectors Rising, 5 Sectors Declining
• 52.1% of Issues Advancing, 44.6% Declining
• 68 New 52-Week Highs, 11 New Lows
• 48.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 52.1%
• Vix 21.7 +.7%
• Total Put/Call .66 -7.0%
• TRIN/Arms .94 -28.2%

Wednesday Watch

Evening Headlines

Bloomberg:       

• Trump Says He Delayed China Talks, Faults Beijing Over Virus.  
• Hong Kong Protesters Adapt as Security Law Stifles Old Tactics.
• U.S. Stocks Rise to Record; Asia to See Muted Open. Asian shares looked set for a muted start Wednesday, even as U.S. stocks closed above their February highs for the first time since the pandemic upended financial markets. The dollar fell to the lowest in more than two years and Treasuries advanced. Futures were little changed in Japan, and dipped in Hong Kong and Australia. S&P 500 contracts were flat after the gauge eked out a gain, having failed to better the Feb. 19 closing level in three of the past four sessions. Amazon.com Inc. paced the advance on Tuesday, pushing its surge this year to 79%. Homebuilders also rose as a report showed housing starts increased the most since 2016. Chinese shares will be in focus after the Trump administration warned U.S. colleges to divest them, while traders in Hong Kong are monitoring storm warning signals that forced the closure of pre-market trading on Wednesday. Futures on the S&P 500 were little changed as of 8:07 a.m. in Tokyo. The index rose 0.2% on Tuesday. Futures on Japan’s Nikkei 225 were little changed. Hang Seng Index futures earlier slipped 0.3%. Futures on Australia’s S&P/ASX 200 Index dipped 0.1%.
• Pelosi Hints Democrats Might Pare Stimulus Plan, Seek More Later.
• U.S. Cases Rise 0.8%; More Colleges Shift Online: Virus Update.
• Postmaster General Suspends Service Changes Until After Election.  
• What the ‘Tech Exodus’ Could Mean for Silicon Valley.  
• Trump Says Amazon Should Pay Cost of Postal Service.  
• Fidelity Assets Under Management Reach Record $3.3 Trillion.

Wall Street Journal:

• China’s Xi Jinping Tightens Grip on Domestic Security Forces in First Broad Purge.
• S&P 500 Closes at New High, Erasing Virus Plunge.
• If You Like Lockdowns, You’ll Love the Carbon-Free Future.
• What Derailed America’s Testing: Three Lost Weeks.
• Nancy Pelosi Goes Politically Postal.
• Coronavirus, Contracts and the Constitution.
• Notre Dame, Michigan State Act to Slow Spread of Virus.
• Amazon Bets on Office-Based Work With Expansion in Major Cities.
• Selloff in Emerging-Market Currencies Shows No Sign of Respite.
• Texas Governor Threatens Cities That Defund Police.
  

Fox News:

• Why Biden could regret having support from these voters.
• Portland police identify suspect in brutal assault caught on camera.
  

CNBC.com:

• Why stay-at-home retail plays are likely in the ‘early innings’.
• Jim Cramer: A U.S. dollar rally might be in the cards, according to the charts.
• After-hours buzz: Cree, Agilent Technologies, Target and more.
• Treasury Secretary Mnuchin says Democrats are unwilling to strike a ‘reasonable’ relief deal.
  

MarketWatch.com:     

• Stock-market investors’ biggest election fear? A contested outcome.   
• Sorrento stock falls after company fires CFO.

NY Post: 

• Baltimore Republican Kim Klacik shows ‘reality for black people’ in viral ad. (video)
  

Zero Hedge:  

• DNC Viewership Disaster: Less Than Half Tune In To Watch Democratic Convention Compared To 2016.
• "None Of It Was True" - YouTube Stars Who "Re-Homed" Adopted Son Say China Lied About Child's Health.
• Just 12 US Billionaires Now Own More Than $1 Trillion in Combined Wealth.
• Manhunt Launched For BLM Thug Who Put Truck Driver In Hospital With Head-Kick.
• 250,000 Las Vegans Face Eviction Next Month.  
• Robinhood Valuation Tops $11 Billion As IPO Chatter Looms.
• "This War Can't Be Civil": Berkeley Columnist Calls For "Violent Resistance".
• Notre Dame Moves To Virtual Classes; Texas COVID-19 Cases Bounce Back: Live Updates.
• Election Roulette: How To Rig An Outcome.
• US Launches Soft Capital Control Attack On Beijing, "Urges" Colleges To Sell Chinese Stocks.
• 'Something's Not Right With Biden' According To Former White House Physician.
• WTI Dips After Big Gasoline Build Offsets Crude Draw.
• Gold Jumps, Dollar Dumps As S&P Ends "Shortest Bear Market In History".

The Epoch Times:

• Asian-Americans Support Ban on WeChat, Despise CCP’s Hooliganism.
  

Digital Blackboard:

• Daily New Cases by Region.

Worldometer:

• New Cases/Deaths by state.

Rt Covid-19:

• How fast virus is growing by state.

KFF:

• State Data(Tests/Hospitalizations).

Night Trading 

• Asian equity indices are -.25%  to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 64.75 -.5 basis point.

• China Sovereign CDS 39.0 -1.0 basis point.

• Bloomberg Emerging Markets Currency Index 60.40 +.03%.
• FTSE 100 futures n/a.

• S&P 500 futures +.04%.

• NASDAQ 100 futures +.04%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (ADI)/1.29
• (LOW)/2.96
• (TGT)/1.64
• (TJX)/-.15
• (VIPS)/1.92
  

After the Close:

• ((LB)/-.42
• (NVDA)/1.68
• (SQM)/.21
• (SNPS)/1.34 
  

Economic Releases

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -3,079,780 barrels versus a -4,512,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -999,440 barrels versus a -722,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,053,670 barrels versus a -2,322,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.29% versus a +1.4% decline prior.

2:00 pm EST

• The July 29 FOMC Meeting Minutes.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Daly speaking, China Loan Data report, Eurozone PMI report, UK Inflation Data report and the weekly MBA Mortgage Applications report could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and consumer shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Modestly Higher into Final Hour on Global Stimulus Hopes, US Economic Data, Technical Buying, Tech/Restaurant Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Light

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 21.5 +.5%

• Euro/Yen Carry Return Index 130.41 unch.

• Emerging Markets Currency Volatility(VXY) 11.19 -.09%

• S&P 500 Implied Correlation 43.8 +1.3%

• ISE Sentiment Index 71.0 -34.0 points

• Total Put/Call .65 -12.2%

• NYSE Arms 1.09 -24.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 66.26 -.72%
  

• US Energy High-Yield OAS 774.50 +.31%

• European Financial Sector CDS Index 65.02 +.71%

• Italian/German 10Y Yld Spread 138.5 -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index  64.93 -.66%
  

• Emerging Market CDS Index 186.27 -1.73%
  

• iBoxx Offshore RMB China Corporate High Yield Index 177.12 +.02%

• 2-Year Swap Spread 7.25 -.75 basis point

• TED Spread 17.75 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -2.0 -1.25 basis points
  
• MBS  5/10 Treasury Spread  90.75 -.25 basis point
  
• IHS Markit CMBX BBB- 6 68.75 +.25 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.37 +.38%
• 3-Month T-Bill Yield .10% +1.0 basis point

• Yield Curve 52.25 -.75 basis point
  

• China Iron Ore Spot 122.10 USD/Metric Tonne +3.1%

• Citi US Economic Surprise Index 253.1 +13.8 points

• Citi Eurozone Economic Surprise Index 183.0 -7.2 points

• Citi Emerging Markets Economic Surprise Index 20.2 +.8 point

• 10-Year TIPS Spread 1.68 +3.0 basis points
• 100.0% chance of no change at Nov. 5th meeting, 100.0% chance of no change at Dec. 16th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +29 open in Japan 
• China A50 Futures: Indicating -90 open in China

• DAX Futures: Indicating -8 open in Germany

Portfolio:

• Slightly Higher: On gains in my medical/tech/consumer staple sector longs
  

• Disclosed Trades: None
  

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -1.5%

Sector Underperformers:

• 1) Oil Service -2.4% 2) Banks -1.7% 3) Shipping -1.7%

Stocks Falling on Unusual Volume: 

• CPF, IIVI, FL, MRTX, KDP, ROAD, HASI, ARWR, USX, URBN, FBK, SPG, LITE, COOP, ACC, CREE, MYGN, MLHR, DDS, AEO, VG, ICPT, GTHX, REGI, KEX, ANF, ALEC, NVAX, VNDA, CNK, CALM, JWN, PLCE and KSS
  

Stocks With Unusual Put Option Activity:

• 1) PTEN 2) FXI 3) WMT 4) EWZ 5) XLP
  

Stocks With Most Negative News Mentions:

• 1) UBX 2) NBR 3) IDEX 4) SCS  5) HWM
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.6%

Sector Outperformers:

• 1) Internet +1.2% 2) Video Gaming +1.0% 3) Homebuilders +.7%

Stocks Rising on Unusual Volume:

• BE, GRPN, EVTC, SYRS, GRWG, EXPI, BEAM, EIGR and TDOC
  

Stocks With Unusual Call Option Activity:

• 1) ORCL 2) FHN 3) IEF 4) AAP 5) KSS

Stocks With Most Positive News Mentions:

• 1) SE 2) DQ 3) ZM 4) AAP 5) JD

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -28.0% Below 100-Day Average
• 2 Sectors Rising, 9 Sectors Declining
• 33.6% of Issues Advancing, 63.7% Declining
• 58 New 52-Week Highs, 7 New Lows
• 49.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 53.7%
• Vix 21.9 +2.8%
• Total Put/Call .57 -23.0%
• TRIN/Arms 1.3 -11.7%