Weekday Watch

Evening Headlines

Bloomberg:      

• Brexit Will Be Delayed to Halloween After Macron Plays Hardball.    
• China's Property Market Is Feeling the Stimulus Effect.
• India's Weak Power Demand Points to More Slowdown Pain Ahead.
• Asia Stocks Trade Mixed; Bonds Steady After Gains. Asian stocks traded mixed Thursday after the Federal Reserve did little to alter investor expectations that interest rates in the U.S. are likely on hold for the remainder of this year. Treasuries steadied. Shares slipped in Japan and Australia, and were little changed in Seoul. Earlier, the S&P 500 Index posted modest gains as unexpectedly soft inflation boosted the Fed’s wait-and-see approach to rate hikes. Australian bonds climbed, tracking overnight moves higher in sovereign debt as central bankers detailed weakness in the economic outlook. The pound was steady as European Union leaders agreed to extend the date of Britain’s departure from the bloc to Oct. 31. Japan’s Topix index slipped 0.3 percent as of 9:07 a.m. in Tokyo. South Korea’s Kospi added 0.1 percent. Australia’s S&P/ASX 200 Index fell 0.2 percent. The S&P 500 Index gained 0.4 percent. Futures rose 0.1 percent.
• Five Things You Need to Know to Start Your Day.
• Fed Signals a Year of Patience Is Ahead With a Grab Bag of Growth Risks.

Wall St. Journal:

• Uber Aims for IPO Value of $100 Billion, Below Expectations.
• Disney’s Next Big Remake: Itself.
• Ex-Obama White House Counsel Expects to Be Indicted.
• Barr Examining Origins of Probe Into Trump-Russia Ties.
• Fed Minutes: Little Need Seen to Change Interest Rates This Year.
• After Floods, Snowy ‘Bomb Cyclone’ Moves In.

MarketWatch.com:

Fox News:




CNBC:

• Amazon(AMZN) reportedly has thousands of people listening to snippets of Alexa conversation.
• Treasury Secretary Mnuchin says US and China have agreed on the trade deal enforcement mechanism.
• More than 3,500 Amazon employees push for aggressive action on "climate change".
• Stocks making the biggest moves after hours: Bed Bath & Beyond, Costco and more.

Zero Hedge:

• Busted: Thousands Of Amazon Employees Listening To Alexa Conversations.
• Hong Kong Surpasses Japan As Asia's Second-Largest Stock Market.
• EU, UK Agree To Six-Month Brexit Delay As Tory 'Spartans' Demand May Resign.
• Kim Lashes Out At US, Says NKorea Must Deliver "Serious Blow" To Sanctioning Nations; Prepares For Talks With Putin.
• 18 States Offer In-State Tuition For Illegals... And Legal Residents Are Not Happy About That.
• "Spying Did Occur": Barr Vows To Investigate FBI, DOJ Conduct During 2016 Election.
• Globalists Are Bringing Their One World Currency Plans Out Into The Open.
• Short-Squeeze Sends Small Caps Soaring But Fed-Fear Triggers Bitcoin-Buying.

Business Insider:

Telegraph:





Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 66.50 -1.25 basis points. 

• China Sovereign CDS 43.0 -.25 basis point.
  

• Bloomberg Emerging Markets Currency Index 67.76 +.01%.

• FTSE 100 futures -.01%.

• S&P 500 futures +.10%.

• NASDAQ 100 futures +.15%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (APOG)/.91
• (CBSH)/.90
• (FAST)/.67

Economic Releases
8:30 am EST

• PPI Final Demand MoM for March is estimated to rise +.3% versus a +.1% gain in Feb. 
• PPI Ex Food and Energy MoM for March is estimated to rise +.2% versus a +.1% gain in Feb.
• Initial Jobless Claims for last week are estimated to rise to 210K versus 202K the prior week.
• Continuing Claims are estimated to rise to 1735K versus 1717K prior.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Clarida speaking, Fed's Bowman speaking, China CPI report, $16B 30Y T-Note auction, Bloomberg US Economic Survey for April, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, (LB)/(BKE)/(CATO) monthly sales releases and the (DIS) investor day could also impact trading today.

BOTTOM LINE:  Asian indices are slightly higher, boosted by technology and consumer shares in the region. I expect US stocks to open mixed and to strengthen into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.

Stocks Slightly Lower into Final Hour on Trade War Concerns, Earnings Outlooks, Technical Selling, Hospital/Alt Energy Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 10.0 -.5%

• Euro/Yen Carry Return Index 136.84 +.68%

• Emerging Markets Currency Volatility(VXY) 7.49 +.13%

• S&P 500 Implied Correlation 28.01 +9.2%

• ISE Sentiment Index n/a
  

• Total Put/Call .94 +9.3%

• NYSE Arms .94 -25.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 56.19 -.58%
  

• America Energy Sector High-Yield CDS Index 436.0 +.07%

• European Financial Sector CDS Index 50.04 -.06%

• Western Europe Sovereign Debt CDS Index 5.49 +7.54%

• Asia Pacific Sovereign Debt CDS Index 18.71 -.58%

• Emerging Market CDS Index 188.20 -.93%
  

• iBoxx Offshore RMB China Corporate High Yield Index 140.58 +.01%

• 2-Year Swap Spread 24.25 +.25 basis point

• TED Spread 23.25 -1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -26.75 +.35 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.98 +.11%
• 3-Month T-Bill Yield 1.07% unch.
  

• Yield Curve 90.0 -1.0 basis point

• China Import Iron Ore Spot $72.30/Metric Tonne -1.71%

• Citi US Economic Surprise Index -45.60 -.8 point

• Citi Eurozone Economic Surprise Index 15.90 -.2 basis point

• Citi Emerging Markets Economic Surprise Index 18.80 -1.5 basis points

• 10-Year TIPS Spread 1.79 unch.
  
• 19.5% chance of Fed rate hike at Nov. 1 meeting, 46.7% chance at Dec. 13 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -5 open in Japan 
• China A50 Futures: Indicating +32 open in China

• DAX Futures: Indicating -4 open in Germany

Portfolio: 

• Lower: On losses in my tech/retail/medical sector longs 

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth -1.1%

Sector Underperformers:

• 1) Hospitals -2.3% 2) Alt Energy -2.0% 3) Gaming -1.4%

Stocks Falling on Unusual Volume: 

• UIS, COHR, AMC, MTSI, PXD, ULTI, SSTK, CSTE, WAGE, ENR, YRD, NVMI, AEGN, KTWO, RRC, RMD, COTV, NANO, GGP, AN, ENR, WD, CAH, PXD and COTV

Stocks With Unusual Put Option Activity:

• 1) CYH 2) RRC 3) CAG 4) FTR 5) DG

Stocks With Most Negative News Mentions:

• 1) AMC 2) FTK 3) AEGN 4) NCMI 5) ULTI

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth -.1%

Sector Outperformers:

• 1) Restaurants +.9% 2) HMOs +.8% 3) Oil Service +.5%

Stocks Rising on Unusual Volume:

• PMC, SPR, ONCE, LL, ILMN, LOPE, PZZA, CORT, XENT, SYX, VMC, FMC, DXCM, DISCK, GRMN, QUOT, AAPL, FTR, AAWW, MLM, HBI, OSK, FANG, MTOR, AGIO, XENT, KBR, BZH, DENN, HUM, DVAX, AME and DPZ

Stocks With Unusual Call Option Activity:

• 1) MAR 2) IPI 3) SO 4) ILMN 5) RRC

Stocks With Most Positive News Mentions:

• 1) ILMN 2) PZZA 3) MTW 4) SYX 5) AAPL

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +4.7% Above 100-Day Average
• 4 Sectors Rising, 6 Sectors Declining
• 29.7% of Issues Advancing, 66.5% Declining
• 95 New 52-Week Highs, 44 New Lows
• 47.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 37.3%
• Vix 10.6 +5.2%
• Total Put/Call .87 +1.2%
• TRIN/Arms 1.56 +23.4%

Wednesday Watch

Evening Headlines

Bloomberg:

• Tillerson Says ‘Peaceful Pressure’ Still Best North Korea Option. U.S. Secretary of State Rex Tillerson urged continued “peaceful pressure” on North Korea, even as one Republican senator ratcheted up talk of war. Taking stock of his tenure after six months in office, Tillerson told reporters at the State Department Tuesday that the U.S. goal isn’t to topple Kim Jong Un’s regime or find “an excuse to send our military north.” Instead, he said, it’s to get the regime to develop the “willingness to sit and talk with us and others, but with an understanding that a condition of those talks” is North Korea giving up its nuclear weapons capability.

• Euro's Big Month Has Chart-Watchers Looking Back to 2010 Levels. After the euro surged through a critical technical level last week, analysts who study charts to help guide their predictions are looking back to 2010 for perspective on how high it could rise. Europe’s common currency traded at about $1.18 Tuesday, holding above the key $1.1714 mark that it breached July 26 for the first time since August 2015. The euro is coming off a five-month rally, its longest since 2013, propelled by interest-rate differentials that have gone in its favor and broad dollar weakness.

• Toyota, Nissan, Honda Beat U.S. Forecasts as Local Cars Wane. Toyota Motor Corp. stood out as the only major automaker to increase U.S. sales last month and Nissan Motor Co. and Honda Motor Co. both beat projections as demand at traditional U.S. automakers slumped. Sales at Toyota rose 3.6 percent in July, defying estimates of a decline of about the same magnitude. While sales at Nissan dropped 3.2 percent and slipped 1.2 percent at Honda, analysts surveyed by Bloomberg News had expected larger declines.

• Technology Shares in Asia Gain on Apple Results. (video) Nasdaq futures advanced after Apple projected revenue in the current quarter that topped analysts’ estimates, while shares of Honda Motor Co. gained in Tokyo trading following the company’s higher profit forecast. The kiwi sank after hiring declined unexpectedly in New Zealand. Treasuries were steady after climbing with the dollar as data gave mixed signals on the strength of American economic growth. A drop in the Bloomberg Commodity Index weighed on raw-material producers in Asia after a stellar run. Japan’s Topix index gained 0.3 percent. Australia’s S&P/ASX 200 Index fell 0.3 percent and South Korea’s Kospi index added 0.2 percent.

• Pesticide ‘Drifting’ Wreaks Havoc Across U.S. Crops. Larry Martin in Illinois says he’s never seen anything like it in his 35 years of farming. Arkansas soybean grower Joe McLemore says he faces the loss of his life savings. They’re among farmers across the U.S. suffering from a pesticide "drifting" across from neighboring fields onto their crops, leaving behind a trail of damage. Although not a new problem, it’s re-emerged with a vengeance this year. At least 2.5 million acres (1 million hectares) have been damaged in this growing season through mid-July, according to estimates from Kevin Bradley, a professor of plant sciences at the University of Missouri.

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

• Dow's Trip Toward 22,000 Brought to You by Boeing(BA), Visa(V) Earnings. The Dow Jones Industrial Average’s latest rally toward a round-number milestone is being fueled by a series of earnings-fomented share ignitions at companies from Boeing Co. to Visa Inc. Helped by the index’s old-fashioned methodology that apportions greater weight to higher-priced stocks, those two companies alone accounted for more than half of the Dow’s 614-point jump since the start of July. UnitedHealth Group Inc., Caterpillar Inc., and Chevron Corp. rounded out the top five, contributing an additional 135 points.

Wall Street Journal:

• Banking Regulator to Take First Step Toward Changing Volcker Rule. OCC may seek comment on the trading ban as early as Wednesday.

• U.S. Plans Trade Measures Against China. Trump administration aims to force Beijing to crack down on intellectual-property theft and ease market access.

• ObamaCare for Congress. Trump can change a rule that exempts Members from the law’s pain.

Fox News: 

• Pentagon investigators find ‘security risks’ in government's immigrant recruitment program, ‘infiltration’ feared. (video)

CNBC:

• Apple(AAPL) jumps 6% to record high after earnings beat estimates. (video)

• 'Sheikhs versus shale' to keep oil prices capped at $50 in third quarter, experts say.

• Hedge fund legends are losing assets and underperforming the market significantly this year.

Zero Hedge: 

• Apple(AAPL) Surges To New Record High On Strong iPhone 8 Guidance, Earnings Beat Despite iPhone Sales Miss.

• WTI Tumbles After Surprise Crude Inventory Build. (graph)

• Gold Surges To Six-Week Highs Despite Biggest Fund Outflows In 4 Years. (graph)

• Crude Crashes, Bonds Bid, & Trannies Turmoil But VIX Vanquished To 9 Handle Again. (graph)

Business Insider: 

• Amazon(AMZN) is staffing up several new teams to go big in cloud and distribution tech.

• Industrial metals and mining are bouncing back together. (graph)

• Despite Trump's tough talk on the border, migrants are still making the dangerous trip north.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 80.75 -1.5 basis points. 

• Asia Pacific Sovereign CDS Index 19.0 unch.

• Bloomberg Emerging Markets Currency Index 73.88 -.04%.

• S&P 500 futures +.01%.

• NASDAQ 100 futures +.70%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AAWW)/.89

• (BG)/.16

• (CAH)/1.24

• (DLPH)/1.65

• (D)/.67

• (HUM)/3.07

• (IPI)/-.06

• (JLL)/1.60

• (KLIC)/.68

• (MBLY)/.26

• (TAP)/2.12

• (MDLZ)/.46

• (OSK)/1.37

• (RDC)/-.30

• (VMC)/1.21

• (DDD)/.12

• (AIG)/1.20

• (CF)/-.05

• (CAKE)/.76

• (CRUS)/.66

• (CLVS)/-1.90

• (IAC)/.65

• (MET)/1.28

• (NXPI)/1.49

• (OXY)/.12

• (PPC)/.83

• (PRU)/2.71

• (RGR)/1.11

• (SYMC)/.31

• (TSLA)/-1.92

• (RIG)/-.09

• (WMB)/.26

Economic Releases  
8:15 am EST

• The ADP Employment Change for July is estimated to rise to 190K versus 159K in June.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -3,614,200 barrels versus a -7,208,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -1,380,100 barrels versus a -1,015,000 barrel decline the prior week. Distillate supplies are estimated to fall by -1,377,500 barrels versus a -1,852,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.17% versus a +.3% gain prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Williams speaking, Fed's Mester speaking, China Services PMI report, Eurozone PPI report, weekly MBA Mortgage Applications report and the (COST)/(ZUMZ) monthly sales reports could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by industrial and technology shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon.  The Portfolio is 100% net long heading into the day.