Wednesday Watch

Evening Headlines

Bloomberg:   

• Covid Has Wiped Out the Economic Dreams of a Generation in Asia.  
• ECB Study Finds Signs of Eroding Central Bank Independence.
• Stocks Drop as U.S. Stimulus Talks End; Dollar Up: Markets Wrap. Asian equities declined after President Donald Trump said he is ending stimulus talks until after next month’s election. The dollar extended gains. Japanese and South Korean shares declined, with more modest losses than the S&P 500’s fall of over 1%. Trump’s comment came just hours after Federal Reserve Chairman Jerome Powell renewed his warning that the economy will stumble without additional support. Treasury yields maintained declines. Nasdaq futures slipped after a House panel proposed a series of far-reaching antitrust reforms to curb the power of U.S. technology giants including Amazon.com and Alphabet Inc. Australian shares were flat after Tuesday’s budget announcement while the country’s 3-year bond yield dropped to an all-time low on plans to issue less debt than estimated. Crude oil sank. S&P 500 futures lost 0.2% as of 9:04 a.m. in Tokyo. The index fell 1.4% on Tuesday. Japan’s Topix index lost 0.6%. Australia’s S&P/ASX 200 Index was little changed. South Korea’s Kospi lost 0.5%.
• Trump Halts Stimulus Talks, Spurning Powell and Roiling Markets.  
• GE Warns of Likely SEC Action in Probe of Insurance Reserves.  
• Businesses in NYC Hot Spots Must Close by Friday, Cuomo Says.  
• America’s Municipal Governments Fret As Stimulus Talks Collapse.  
• Bitcoin’s Rising Correlation With Stocks Debunks Haven Narrative.
• Big Tech Under Attack: Key Allegations in House Antitrust Report.

Wall Street Journal:

• President Plans to Attend Debate, Plays Down Virus.
• Pelosi’s Taxpayer Ransom Demand.
• Trump Halts Covid-19 Relief Aid Talks Until After Election.
• Bill Gates Says Antibody Drugs Could Sharply Reduce Covid-19 Death Rate.
• JPMorgan Pledges to Push Clients to Align With Paris Climate Agreement.
• Hurricane Delta Bears Down on Mexico.

Fox News:

• President Trump pauses stimulus talks so McConnell can focus on Amy Coney Barrett confirmation.
• Biden's remarks about 'beautiful young ladies' stun onlookers, go viral -- again.
• McCloskeys indicted on charges from BLM protesters standoff.
  

CNBC.com:

• Jim Cramer reveals a list of stocks worth buying after Trump shut down stimulus talks.
• Apple announces Oct. 13 event, where it’s expected to reveal new iPhones.
• An inflation scare will hit the markets, investor Peter Boockvar predicts.
  

MarketWatch.com:       

• Joe Biden defines income of $400,000 as ‘wealthy,’ but here’s why it’s barely scraping by for some.  
• Facebook will remove all QAnon content across its platforms: report.

Zero Hedge:

• DNI Declassifies Brennan Notes; Briefed Obama On Intelligence That Hillary Clinton Concocted Trump-Russia Allegations.
• "Political Hit Job!" - Trump Slams FDA's Guidance Precluding COVID-19 Vaccine Before Nov. 3.
• The Pandemic That Killed Debate.
• Biden Says "We Shouldn't Have Debate" Next Week If Trump Still Has Coronavirus.
• Corruption Is Now Our Way Of Life.
• 21 Scholars Demand '1619 Project' Writer Lose Pulitzer For Fabricating History.
• Asking The Question That Nobody Dares To Ask Publicly.
• 32 Sickened In White House COVID-19 Outbreak As 4th Press Shop Aide Tests Positive.
• Snyder: Our Society Is In The Process Of Breaking Down All Around Us.
• COVID-19 Outbreaks Worsen In NY, NJ & CT As Cuomo Outlines New Plan For Containing 'Hot Spots': Live Updates.
• "Defund Walter Reed" & Other Insanity - Trump Critics Meltdown Over Release From Hospital.
• Netflix Indicted Over 'Lewd Visual Material Depicting Child' In Cuties.
• WTI Slides Back Below $40 After Surprise Crude Build.
• House Dems Anti-Trust Report Accuses "Big Four" Tech Firms Of Enjoying "Monopoly Power".
• Shart Of The Deal - Stocks & Bond Yields Puke On Trump 'No Stimulus' Tweet.

The Epoch Times:

• Beijing Seeks to Aggressively Export Its COVID-19 Vaccines at Cheap Prices.
  

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 -.5% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 71.75 -1.0 basis point.

• China Sovereign CDS 45.25 -1.25 basis points.

• Bloomberg Emerging Markets Currency Index 59.34 -.04%.
• Bloomberg Global Risk-On/Risk Off Index 23.0 +7.0 points.
• Volatility Index(VIX) futures 32.32 +.29%
• FTSE 100 futures -.35%.

• S&P 500 futures -.17%.

• NASDAQ 100 futures -.10%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (LW)/.30
• (RPM)/1.18
  

After the Close:

• (RGP)/.05
  

Economic Releases

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -880,550 barrels versus a -1,980,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -555,000 barrels versus a +683,000 barrel gain the prior week. Distillate inventories are estimated to fall by -1,274,270 barrels versus a -3,184,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.2% versus a +1.0% gain prior. 

2:00 pm EST

• Sept. 16th FOMC Meeting Minutes.

3:00 pm EST

• Consumer Credit for Aug. is estimated to rise to $14.0B versus $12.25B in July.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Eurozone Industrial Production report, weekly MBA Mortgage Applications report, $35B 10Y T-Note auction and the (ALB) fireside chat with Robert Baird could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

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

Stocks Higher into Afternoon on Stimulus Hopes, Vaccine Optimism, Oil Gain, Transport/Financial Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 27.9 -.07%
• Bloomberg Global Risk On/Risk Off Index 144.0 +46.0 points

• Euro/Yen Carry Return Index 128.91 -.13%

• Emerging Markets Currency Volatility(VXY) 11.7 -.43%

• S&P 500 Implied Correlation 50.8 -2.8%

• ISE Sentiment Index 93.0 -10.0 points
  

• Total Put/Call .75 -2.6%

• NYSE Arms .97 +42.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 55.85 -1.96%
  

• US Energy High-Yield OAS 828.19 -.96%

• European Financial Sector CDS Index 72.22 -3.09%

• Italian/German 10Y Yld Spread 128.0 -4.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 71.64 -4.1%
  

• Emerging Market CDS Index 211.96 -1.72%
  

• iBoxx Offshore RMB China Corporate High Yield Index 178.15 +.04%

• 2-Year Swap Spread 8.75 +.25 basis point

• TED Spread 14.75 +.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -9.0 +2.75 basis points
  
• MBS  5/10 Treasury Spread  87.25 -.5 basis point
  
• IHS Markit CMBX BBB- 6 67.0 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 59.56 +.03%
• 3-Month T-Bill Yield .09% unch.

• Yield Curve 62.5 +5.0 basis points
  

• China Iron Ore Spot 117.60 USD/Metric Tonne +.11%

• Citi US Economic Surprise Index 157.3 -2.1 points

• Citi Eurozone Economic Surprise Index 52.70 +1.9 points

• Citi Emerging Markets Economic Surprise Index 47.4 +.4 point

• 10-Year TIPS Spread 1.68 unch.
• 100.0% chance of no change at Dec. 16th meeting, 100.0% chance of no change at Jan. 27th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +2 open in Japan 
• China A50 Futures: Indicating +198 open in China

• DAX Futures: Indicating +9 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth -.2%

Sector Underperformers:

• 1) Gold & Silver -1.0% 2) Pharma -.8% 3) Biotech -.3%

Stocks Falling on Unusual Volume: 

• EA, MD, IONS, BEPC, FMCI, DKNG, PDI, PACB, EHTH, SBE, SONO, FLGT, SLQT, IPOB, CELH, IOVA, IPOC and PLMR
  

Stocks With Unusual Put Option Activity:

• 1) AYX 2) ATUS 3) SPWR 4) PAYX 5) UAA
  

Stocks With Most Negative News Mentions:

• 1) MGEN 2) AXTI 3) BFAM 4) IOVA  5) BBIO
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +1.9%

Sector Outperformers:

• 1) Airlines +2.5% 2) Disk Drives +2.2% 3) Banks +1.9%

Stocks Rising on Unusual Volume:

• AYX, HGEN, CLDX, GPI, BE, PSNL, VIR and TTMI
  

Stocks With Unusual Call Option Activity:

• 1) ELY 2) XSPA 3) AYX 4) BLMN 5) DDD

Stocks With Most Positive News Mentions:

• 1) GPI 2) AYX 3) KNSA 4) SGLB 5) VIR

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -22.8% Below 100-Day Average
• 6 Sectors Rising, 5 Sectors Declining
• 66.5% of Issues Advancing, 30.0% Declining
• 99 New 52-Week Highs, 13 New Lows
• 49.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.3% 
• Bloomberg Global Risk-On/Risk-Off Index 117.0 +19.0 points
• Vix 28.3 +1.1%
• Total Put/Call .70 -9.1%
• TRIN/Arms .75 +10.3%

 

Tuesday Watch

Evening Headlines

Bloomberg:   

• Brazil’s Economy Faces ‘Exceptionally High’ Risks, IMF Says.
• Hyundai Confident on Flying Cars, Steps Up Plans for Full Lineup.  
• Pompeo Seeks to Show United Front on China Despite Virus Crisis.
• Most Asian Stocks Follow U.S. Gains; Dollar Dips: Markets Wrap. Most Asian stocks followed their U.S. peers higher amid optimism over President Donald Trump leaving hospital and that lawmakers will move closer to providing more stimulus. The dollar remained under pressure and Treasuries steadied. Stocks saw modest gains in Japan and South Korea. S&P 500 contracts were little changed after U.S. stocks closed at the highest levels of the day with energy, health care and technology shares the biggest gainers. Nasdaq futures fluctuated on reports a House panel may propose sweeping reforms of the technology sector. Treasury yields held Monday’s gains after surging as traders adjusted their election bets following Joe Biden’s latest poll numbers. Australian shares slipped ahead of the budget announcement and central bank rate decision. S&P 500 futures were little changed at 9:05 a.m. in Tokyo. The S&P 500 Index rose 1.8% Monday. Nasdaq 100 futures fell 0.1%. Japan’s Topix Index rose 0.4%. South Korea’s Kospi Index rose 0.5%. Australia’s S&P/ASX 200 fell 0.2%. Hang Seng futures rose 0.3%.
• Oil Extends Gains Towards $40 on Optimism For More U.S. Stimulus.  
• Oil Pipeline Operators Offer New Discounts as Demand Craters.
• Pompeo Pressure, China’s Golden Tourism, Deficit Day: Eco Day.  
• U.S. Stimulus Talks Grind On Without a Deal Despite Trump Urging.
• Trump Leaves Hospital; Ireland Rejects Lockdown: Virus Update.
• President Leaves the Hospital, Walking Unassisted: Trump Update.  
• House Panel to Recommend Breakup of Tech Giants, Republican Says.
• Mapping New York City's New Covid Hotspots.  
• Apple Stops Selling Rival Earphones, Speakers Ahead of Launches.

Wall Street Journal:

• U.S. Steps Up Efforts to Counter China’s Dominance of Minerals Key to Electric Cars, Phones.
• Trump Leaves Hospital as Cases Rise Among Top Aides.
• Don’t Underestimate Mike Pence.
• An Illinois Tax Crossroads.
• The Covid Economy Carves Deep Divide Between Haves and Have-Nots.

Fox News:

• Trump vows return to campaign trail as he leaves Walter Reed, returns to WH after COVID treatment.
  

CNBC.com:

• Pelosi, Mnuchin speak for an hour but don’t reach a coronavirus stimulus deal
• CDC revises coronavirus guidance to acknowledge that it spreads through airborne transmission.
• Mike Pence, Kamala Harris to debate behind plexiglass barrier because of coronavirus concerns.
• Stocks making the biggest moves after hours: Alteryx, Iovance Biotherapeutics & more.
• Regal Cinemas closing all U.S. theaters because it really needs the blockbusters, CEO says. 
  

MarketWatch.com:        

• John McAfee faces federal charges related to cryptocurrency promotions.

Zero Hedge: 

• Ginsburg's Nightmare: The Democratic Plan To Destroy The Supreme Court Of The United States.
• Watch: Trump Returns To White House Residence 72 Hours After Arriving At Walter Reed.
• Millions Risk Losing Power Over Unpaid Utilities As Most States' Pandemic Grace Period Expires.
• NBA Finals Game 2 Ratings Collapse 68% To All-Time Low.
• California Professor: "As A White American, I Am, By Definition, Racist".
• Senate Judiciary Hearing For Amy Coney Barrett To Take Place Oct 12-15.
• Stocks & Gold Jump, Bonds & The Dollar Dump As Election Fears Fade.

The Epoch Times:

• China Arrests Mother of Dissident Virologist Who Blamed Beijing for Virus Coverup.
• Chinese Communist Party Is Responsible for Trump’s Infection: Gordon Chang.
  

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 +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 72.75 -1.5 basis points.

• China Sovereign CDS 46.5 -1.0 basis point.

• Bloomberg Emerging Markets Currency Index 59.56 +.03%.
• Bloomberg Global Risk-On/Risk Off Index 113.0 +16.0 points.
• Volatility Index(VIX) futures 32.25 +.11%
• FTSE 100 futures -.24%.

• S&P 500 futures -.21%.

• NASDAQ 100 futures -.38%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (PAYX)/.55
  

After the Close:

• (LEVI)/-.22
  

Economic Releases

8:30 am EST

• The Trade Balance report for Aug. is estimated at -$66.2B versus -$63.6B in Sept.
  

10:00 am EST

• The JOLTS Job Openings report for Aug. is estimated to fall to 6500 versus 6618 in July. 

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Powell speaking, Canada Trade Balance report, US weekly retail sales reports, $52B 3Y T-Note auction and the (ALXN) investor day could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

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

 

Stocks Higher into Afternoon on Trump Health Improvement, Stimulus Hopes, Less European/Emerging Markets/US High-Yld Debt Angst, Oil Gain, Biotech/Commodity Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 28.5 +3.1%
• Bloomberg Global Risk On/Risk Off Index 47.0 +43.0 points

• Euro/Yen Carry Return Index 128.98 +.84%

• Emerging Markets Currency Volatility(VXY) 11.7 +.5%

• S&P 500 Implied Correlation 55.0 -3.0%

• ISE Sentiment Index 103.0 -14.0 points
  

• Total Put/Call .73 -18.0%

• NYSE Arms .74 +12.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 57.37 -3.4%
  

• US Energy High-Yield OAS 846.09 -.50%

• European Financial Sector CDS Index 74.52 -2.8%

• Italian/German 10Y Yld Spread 132.0 unch.
  

• Asia Ex-Japan Investment Grade CDS Index 74.75 -.81%
  

• Emerging Market CDS Index 216.45 -4.49%
  

• iBoxx Offshore RMB China Corporate High Yield Index 178.09 +.05%

• 2-Year Swap Spread 8.5 -.25 basis point

• TED Spread 14.75 +.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -11.75 -.75 basis point
  
• MBS  5/10 Treasury Spread  87.75 -2.75 basis points
  
• IHS Markit CMBX BBB- 6 67.0 +.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 59.51 +.38%
• 3-Month T-Bill Yield .09% unch.

• Yield Curve 57.5 +3.0 basis points
  

• China Iron Ore Spot 116.34 USD/Metric Tonne unch.

• Citi US Economic Surprise Index 159.4 -4.8 points

• Citi Eurozone Economic Surprise Index 50.80 +8.8 points

• Citi Emerging Markets Economic Surprise Index 47.0 -3.0 points

• 10-Year TIPS Spread 1.68 +3.0 basis points
• 100.0% chance of no change at Dec. 16th meeting, 100.0% chance of no change at Jan. 27th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +53 open in Japan 
• China A50 Futures: Indicating +77 open in China

• DAX Futures: Indicating -33 open in Germany

Portfolio:

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

• Disclosed Trades: None
  

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Value +1.2%

Sector Underperformers:

• 1) Gaming -2.9% 2) Homebuilding -1.6% 3) REITs -.5%

Stocks Falling on Unusual Volume: 

• TRNE, CCX, GEO, DHI, AMAG, FUN, CHEF, SBE, NKLA, DKNG and EPR
  

Stocks With Unusual Put Option Activity:

• 1) WMB 2) ATUS 3) XHB 4) URI 5) MNK
  

Stocks With Most Negative News Mentions:

• 1) NKLA 2) DNKN 3) BLD 4) IBP  5) T
  

Charts:

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