Bull Radar

Style Outperformer:

• Large-Cap Growth +.3%

Sector Outperformers:

• 1) Homebuilders +1.2% 2) Biotech +1.1% 3) Gaming +.8%

Stocks Rising on Unusual Volume:

• DFIN, EPZM, HRB, NDRM, OMER, BKD, ALXN, YHOO, BABA, RAI, SJR, QSR, AXE, GIS, ADC, LLL, CAKE, CALA, ENZ, PAHC, CCRN, TGTX, WHR, HDS, TSLA, HTZ, DFIN and INFN

Stocks With Unusual Call Option Activity:

• 1) SCHW 2) TOL 3) DHI 4) PAYX 5) AKS

Stocks With Most Positive News Mentions:

• 1) HRB 2) ALXN 3) INFN 4) WNS 5) LMT

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -8.0% Below 100-Day Average
• 7 Sectors Rising, 3 Sectors Declining
• 44.6% of Issues Advancing, 52.1% Declining
• 117 New 52-Week Highs, 17 New Lows
• 50.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 39.7%
• Vix 10.7 +2.4%
• Total Put/Call .93 -4.1%
• TRIN/Arms 1.44 +64.5%

Wednesday Watch

Evening Headlines

Bloomberg:

• The Global Economy Is Rebounding, But There's One Big Problem. There’s a dark cloud building behind the world’s best period of synchronous growth among developed and emerging economies this decade -- one that in time could rain down volatility in global markets. The problem, identified by strategist and hedge fund manager Stephen Jen, is a deepening imbalance in the lack of new safe-haven assets as the world’s output expands. China and other developing nations are accumulating wealth, but failing to create sophisticated local markets that feature their own risk-free instruments. That’s left a dangerous reliance on U.S. Treasuries, according to Jen’s argument, perpetuating a bond bubble and pushing investors into riskier assets.

• Asia Stocks to Gain as U.S. Shares Hit Record High. Asian equities were poised to advance after U.S. stocks snapped a two-day slide to close at record highs as technology shares rebounded from the worst drop of the year. The dollar weakened and Treasuries were steady as the Federal Reserve policy meeting kicked off. Futures for share indexes in Japan, Australia, China, South Korea and Taiwan all rose after the Dow Jones Industrial Average and the S&P 500 Index ended at all-time highs, while European and emerging-market equities advanced. Sterling rose for the first time since the U.K. election. Ten-year Treasury yields held near 2.21 percent and the dollar slipped versus major peers before the Fed is projected to raise rates Wednesday. Nikkei 225 Average futures rose 0.6 percent in Chicago, while contracts on Australian equities rose 0.1 percent and those on South Korean shares advanced 0.3 percent.

• Five Things You Need to Know to Start Your Day. Get caught up on what’s moving markets in Asia.

• U.S. Government Reins in West Texas Shale Oil Exuberance: Chart.

Wall Street Journal:

• Administration Planning Rollback of U.S.-Cuba Normalization Efforts. Trump expected to detail likely changes Friday in Florida.

Fox News:

• Jeff Sessions denies Russia collusion, defends Comey firing. (video)

CNBC:

• Trump tells senators that health bill should be 'more generous' than ‘mean' House version.

• Death of the human investor: Just 10% of trading is regular stock picking, JPMorgan estimates.

Zero Hedge:

• Billionaire Chairman Of Chinese Conglomerate Anbang, Linked To Jared Kushner, Has Been Detained.

• RBC: Tomorrow's CPI Print Is More Important To The Market Than The Fed. (graph)

• AG Sessions Blasts Russian Collusion Accusations As "Appalling And Detestable Lie".

• China Says "Don't Panic" As Yield Curve Inversion Deepens Amid Liquidity Collapse. (graph)

• Lee Camp Explains How The New York Times Manufactures "Hit Piece Propaganda".

• Dramatic Images From 3 Months Of Deadly Anti-Government Protests In Venezuela.

• Goldman: The Fed Will Hike This Week, But Here Are "The Two Most Interesting Questions".

• WTI/RBOB Slump After Another Shocking Crude & Gasoline Inventory Build. (graph)

• Banks Are Becoming Less Safe... Again.

• 'Teflon' Tech Stocks Bounce Despite The Biggest Outflows Since 2007. (video)

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 84.5 -1.0 basis point. 

• Asia Pacific Sovereign CDS Index 17.5 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 73.36 +.01%.

• S&P 500 futures -.08%.

• NASDAQ 100 futures -.12%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (JBL)/.29

Economic Releases 
8:30 am EST

• The CPI MoM for May is estimated unch. versus a +.2% gain in April.

• The CPI Ex Food and Energy MoM for May is estimated to rise +.2% versus a +.1% gain in April. 

• Real Avg. Weekly Earnings YoY for May.

• Retail Sales Advance MoM for May are estimated unch. versus a +.4% gain in April.

• Retail Sales Ex Auto MoM for May are estimated to rise +.2% versus a +.3% gain in April.

• Retail Sales Ex Autos and Gas for May are estimated to rise +.3% versus a +.3% gain in April.

10:00 am EST

• Business Inventories for April are estimated to fall -.2% versus a +.2% gain in March.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,228,570 barrels versus a +3,295,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -714,290 barrels versus a +3,324,000 barrel gain the prior week. Distillate inventories are estimated to rise by +342,860 barrels versus a +4,355,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise +.02% versus a -.9% decline prior.

2:00 pm EST

• The FOMC is expected to raise the benchmark Fed Funds Rate to 1.0-1.25% from .75-1.0%.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The FOMC Policy Update & Econ Projections, Eurozone Industrial Production report, German CPI report, China Retail Sales report, weekly MBA Mortgage Applications report, (MAT) investor day and the (CAT) annual meeting could also impact trading today.

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

Stocks Rising into Final Hour on Less European/Emerging Markets/US High-Yield Debt Angst, Oil Gain, Bargain Hunting, Energy/Tech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 10.44 -8.81%

• Euro/Yen Carry Return Index 128.66 +.08%

• Emerging Markets Currency Volatility(VXY) 7.69 -.90%

• S&P 500 Implied Correlation 37.57 +1.32%

• ISE Sentiment Index 94.0 +38.24%
  

• Total Put/Call .96 unch.

• NYSE Arms .91 +13.41%

Credit Investor Angst:

• North American Investment Grade CDS Index 58.98 -2.0%
  

• America Energy Sector High-Yield CDS Index 409.0 -1.17%

• European Financial Sector CDS Index 62.12 -2.91%

• Western Europe Sovereign Debt CDS Index 6.66 -8.30%

• Asia Pacific Sovereign Debt CDS Index 17.58 -.57%

• Emerging Market CDS Index 191.08 -1.93%
  

• iBoxx Offshore RMB China Corporate High Yield Index 139.05 +.03%

• 2-Year Swap Spread 20.0 +.5 basis point

• TED Spread 24.0 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -32.75 +.75 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.37 +.18%
• 3-Month T-Bill Yield .99% -1.0 basis point
  

• Yield Curve 85.0 -1.0 basis point
  

• China Import Iron Ore Spot $53.36/Metric Tonne -2.75%

• Citi US Economic Surprise Index -45.10 +.2 point

• Citi Eurozone Economic Surprise Index 33.40 -2.5 points

• Citi Emerging Markets Economic Surprise Index 6.0 +2.9 points

• 10-Year TIPS Spread 1.77 unch.
  
• 100.0% chance of Fed rate hike at July 26 meeting, 100.0% chance at Sept. 20 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +62 open in Japan 
• China A50 Futures: Indicating -47 open in China

• DAX Futures: Indicating +33 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 75% Net Long

Today's Headlines

Bloomberg:

• Tory Veterans Tell May to Lay Off the Hard Brexit. Former U.K. Prime Minister John Major joined a growing chorus of voices telling Theresa May she doesn’t have a mandate to pursue the hard Brexit she was planning after a disastrous election left their Conservatives scrambling to form a minority government with a Northern Irish party. “The views of those who wish to stay in are going to have to be borne in mind to a much greater extent after this election: a hard Brexit was not endorsed by the electorate,” Major said on Tuesday in a BBC radio interview. “We have to recognize that the election changed if not everything, then a very great deal, and the government are going to have to respond to that.”
• Asian Wealth to Beat Europe's for First Time Amid Brexit Turmoil. Private wealth in Western Europe is set to fall behind the Asia-Pacific region for the first time this year, partly as a result of the political and economic uncertainty unleashed by Brexit, according to the Boston Consulting Group. Western Europe’s private-household wealth grew by 3.2 percent to $40.5 trillion last year, the smallest increase of any region, while Asia-Pacific had a surge of 9.5 percent to $38.4 trillion, the consulting firm said in a report Tuesday. Those totals are expected to climb to $41.9 trillion and $42.3 trillion respectively by the end of 2017, BCG said in an email.
• European Stocks Rebound on Tech Stock Gains. (video)
• These Five Charts Show the Seismic Shifts Happening in Global Energy.
• Your Evening Briefing.
• Wall Street Says Bank Regulatory Plans Are Better Than Expected. The U.S. Treasury Department’s banking regulatory proposals could be even better for finance firms than they initially hoped. Late Monday, the Trump administration laid out its highly anticipated plan for overhauling bank rules, and Wall Street likes what it sees. The proposals call for easing many of the regulations that were imposed on the industry after the financial crisis, which bankers have frequently complained about in the seven years since the passage of the Dodd-Frank Act. Bank stocks have also been reacting positively to the news, with the KBW Bank Index outperforming the broader markets today. Here’s a look at what Wall Street as a whole is saying.

Wall Street Journal:

• Hidden in Plain Sight: A Powerful Way to Beat the Market. The strategy is to track whether companies’ regulatory filings change.
• Beneath the Uneasy Peace Between Donald Trump and Janet Yellen. The president’s relationship with the Federal Reserve has so far been cordial, but that doesn’t mean Chairwoman Janet Yellen is likely to stay on.
• World Coal Output Fell by Record Amount in 2016. Coal accounted for 28% of energy production last year in a ‘marked shift toward lower-carbon fuels,’ BP says in annual energy review.

Fox News:

• Sessions talks Russia investigation, Comey firing in Senate Intel Committee hearing -- live blog. (video)

CNBC:

• Hedge fund legend Paul Tudor Jones' main fund is down this year.
• Fed rate hike this week to hit millions of borrowers. (video)
• This map shows how much of the United States could see zero or few Obamacare insurers selling health coverage next year.
• Bob Doll: Tech sell-off may not be over but it will breathe new life into market.

Zero Hedge:

• Obamacare Death Spiral: First 2018 Coverage Map Reveals At Least 47 Counties With No Coverage.
• Uber CEO To Take Leave Of Absence, "Dimished Role" After Holder's Report On Workplace Scandals.
• Deputy AG Rosenstein: Trump Can't Fire Special Counsel Mueller.
• What Trump Told Yellen In The Oval Office (Next To Gary Cohn).
• Citigroup(C) Stumbles As CFO Warns Of Second Quarter Slump In Trading Revenues.
• Sessions To Testify As Focus Turns To Whether Mysterious Third Russia Meeting Happened.
• Trump Lays Out "Highly Anticipated" Plan To Overhaul Bank Rules: Here Is Goldman's(GS) Take.
• Core Producer Prices Rise At Fastest Pace In 3 Years, Above Fed Mandate. (graph)
• A Record Number Of Market Participants Says The Market Is Overvalued, Surpassing 1999 Bubble Highs.
• Trump: "Fake News Media Has Never Been So Wrong Or So Dirty", Slams 9th Circuit

The Telegraph:

• Global credit bubble at risk of bursting as China and US reach tipping point.

Bear Radar

Style Underperformer:

• Large-Cap Value +.4%

Sector Underperformers:

• 1) Steel -.3% 2) Airlines -.2% 3) Computer Services -.1%

Stocks Falling on Unusual Volume: 

• CAKE, SAIC, GNMK, SYNA, EAT and HA

Stocks With Unusual Put Option Activity:

• 1) NUE 2) CLR 3) ATVI 4) MJN 5) HRB

Stocks With Most Negative News Mentions:

• 1) CAKE 2) LNG 3) ALKS 4) OCN 5) STLD

Charts:

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