Monday Watch

Today's Headlines

Bloomberg:

• North Korea Warns U.S. of Retaliation for Tougher UN Sanctions. North Korea warned of retaliation if the United Nations Security Council approves harsher sanctions proposed by the U.S. for Pyongyang conducting another nuclear test. The isolated nation “is closely following the moves of the U.S. with vigilance,” its state-run Korean Central News Agency said Monday, citing a statement by the Ministry of Foreign Affairs. “In case the U.S. eventually does rig up the illegal and unlawful ‘resolution’ on harsher sanctions, the DPRK shall make absolutely sure that the U.S. pays a due price,” it said, using its formal country name.

• China Factory Prices Give an Unexpected Lift to Global Inflation. Inflationary pressure emanating from the factory to the world is proving more resilient than economists have anticipated. China’s producer-price inflation accelerated to 6.3 percent in August from a year earlier, exceeding all but one of 38 estimates in Bloomberg’s survey of economists. That data released Saturday followed 5.5 percent readings in the prior three months and was unexpected for analysts, who have been forecasting more moderation in pricing pressures.

• China Sends One of the West's Most Critical Materials Soaring. The price of one of the most critical materials for the Western world’s economy and defenses is spiking faster than any major commodity. Tungsten, used to harden steel in ballistic missiles and in drill bits, has surged more than 50 percent in the last two months amid growing concern about supply cutbacks in China, where about 80 percent of the metal comes from. The country is clamping down on polluting mines and enforcing production quotas.

• Asia Stocks Rise, Dollar Bounces as Irma Weakens. (video) Asian stocks rose with U.S equity-index futures and the dollar rebounded from its lowest in more than two years as hurricane Irma’s force waned and as the United Nations prepared to vote on tougher North Korean sanctions. Equities advanced in Tokyo, Seoul and Sydney as Treasuries fell. The dollar rose against major peers as Irma, while devastating, didn’t reach the feared Category 5 storm that some had expected and looks to have spared Miami. Markets in China will come into focus after inflation accelerated in August, exceeding estimates, and the yuan will be watched as China’s central bank is said to have removed a reserve requirement on the trading of foreign-exchange forwards. The Topix index advanced 1.3 percent as of 9:28 a.m. Tokyo time, while South Korea’s Kospi index was up 1 percent. The S&P/ASX 200 Index rose 0.5 percent. Hong Kong Hang Seng Index futures fell 0.1 percent.

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

• Miami's Financial District Flooded by Hurricane Irma. (video)

• What to Expect at Apple's Biggest Event in Years. (video)

• Bannon Says Legalizing DACA Could Cost Republicans House Control. Donald Trump’s former chief strategist said the president’s request for Congress to legalize some people brought to the U.S. unlawfully as children could cost Republicans their majority in the House of Representatives in the 2018 mid-term elections. “I’m worried about losing the House now because of this -- because of DACA,” Steve Bannon said in a prerecorded interview to be broadcast in full Sunday on CBS’s “60 Minutes,” referring to the Deferred Action for Childhood Arrivals program.

Wall Street Journal:

• Hurricane Irma: Live Updates.

• China Is Striving to Contain Its Once-Diving, Now-Thriving Yuan. The currency’s recent surge has prompted Beijing to shift course after two-year effort to keep it from weakening too quickly.

MarketWatch.com:

• Home Depot(HD), Wal-Mart(WMT) among retailers that could get a boost from hurricanes Harvey, Irma.

• How Equifax(EFX) hackers could file taxes in your name and get a refund from the IRS.

Fox News:

• Hurricane Center: (map)

• Irma inundates Naples area with storm surge after second Florida landfall. (video)

CNBC:

• Hurricane Harvey probably shaved 1% from third-quarter growth, Goldman Sachs says.

• Hurricane Irma pummels South Florida. (pic)

• Florida utility officials say more than 1 million customers without power as Hurricane Irma makes landfall. (pic)

Zero Hedge:

• China Warns Trump: "We Will Back North Korea If The US Strikes First".

• North Korea Threatens US With "Greatest Pain And Suffering Ever" Over Fresh Sanctions. (graph)

• Jeff Sessions Wants To Put Entire National Security Council Through Lie Detector Test: Axios.

• Is The Yuan About To Tumble After Friday's Shocking PBOC News? Here Is Goldman's Take.

• The Fed Has Lost The Market - Traders Abandon 'Hype' Of More Rate Hikes. (graph)

• A Matter Of "Trust": A Look Inside China's Crackdown Of Its $3 Trillion Shadow Banking Industry. (graph)

• Bill Maher: Federal Aid For Climate-Change-Denying, Republican-Voting Texas And Florida "Seems Unfair". (video)

• The Clinton Private Rooftop Garden: An Obscene Violation Of Charity Law & Principles.

• Goldman Slashes Q3 GDP By 30% Due To Hurricane Disaster.

• Kyle Bass: "China's Credit System Is Reaching A Boiling Point".

• George Soros And The Politics Of Hope And Hate.

• The Real Estate Market, Explained In One Graph.

• Reports Confirm North Korea Has Enough Oil To Survive An Embargo.

Business Insider:

• Hundreds of thousands are planning to rally for Catalonia's independence from Spain.

• Hurricane Irma has slammed into Florida — here's what it looks like on the ground.

Night Trading

• Asian indices are +.25% to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 77.25 -1.25 basis points.

• Asia Pacific Sovereign CDS Index 19.5 -.75 basis point.

• Bloomberg Emerging Markets Currency Index 75.20 -.03%.

• S&P 500 futures +.49%.

• NASDAQ 100 futures +.59%.

Morning Preview Links

Earnings of Note

Company/Estimate

• None of note

Economic Releases

• None of note

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The $24B 3Y T-Note auction, KeyBanc Basic Materials/Packaging Conference, Barclays Financial Services Conference, CSFB Steel/Mining Conference, UBS Transport/Travel Conference, Morgan Stanley Healthcare Conference, could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by technology and industrial 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 week.

Weekly Outlook

• Wall St. Week Ahead by Reuters.
• Week Ahead by TheStreet. 
• Stocks to Watch Next Week by Seeking Alpha.
• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week mixed as Hurricane Irma concerns, less economic optimism and oil weakness offsets more dovish global central bank commentary, diminished geopolitical fears and yen weakness. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 75% net long heading into the week.

Today's Headlines

Bloomberg:

• Florida's West Coast in Irma's Crosshairs as Track Shifts. Hurricane Irma shifted track and took aim at southwestern Florida, raising the risk of severe damage in Tampa and other cities facing the Gulf of Mexico, in what could end up being the most expensive storm in U.S. history. President Donald Trump discussed round-the-clock preparations now under way with his Cabinet, calling Irma “a storm of enormous destructive power.” With top winds of 125 miles (201 kilometers) an hour, the deadly storm is expected to strike the Florida Keys Sunday morning then follow the state’s Gulf Coast north, the U.S. National Hurricane Center said in an advisory around 5 p.m. New York time. At Category 3, Irma is expected to regain strength later Saturday.
• China’s Factory, Consumer Inflation Pick Up, Exceeding Estimates. The producer price index rose 6.3 percent in August from a year earlier, versus an estimated 5.7 percent in a Bloomberg survey and a 5.5 percent July reading. PPI exceeded all but one of 38 estimates in Bloomberg’s survey of economists. The consumer price index climbed 1.8 percent, compared with 1.4 percent a month earlier, the statistics bureau said Saturday.
• China to Ban Sale of Fossil Fuel Cars in Electric Vehicle Push. China will set a deadline for automakers to end sales of fossil-fuel powered vehicles, a move aimed at pushing companies to speed efforts in developing electric vehicles for the world’s biggest auto market. Xin Guobin, the vice minister of industry and information technology, said the government is working with other regulators on a timetable to end production and sales. The move will have a profound impact on the environment and growth of China’s auto industry, Xin said at an auto forum in Tianjin on Saturday.
• Hurricane Fallout Could Cloud Picture for Data-Dependent Fed. Harvey and Irma probably aren’t going to dent U.S. growth in any lasting way, but back-to-back hurricanes could make it tough for Federal Reserve officials to take the economy’s pulse as they ponder the timing of their next interest-rate hike. “When we think about the impact of these storms, first of all it’s going to make it very difficult to read the economic data over the next few months because it’s going to be hard to know exactly what the data would have been ex the hurricanes,” William Dudley, president of the New York Fed, told CNBC in an interview Friday.
• Equifax’s Hacking Nightmare Gets Even Worse For Victims. (video) First one of the biggest hacks ever. Then a delay in revealing who was affected. Now consumers are infuriated about fine print that may bar lawsuits.
• Equifax's(EFX) Insurance Is Likely Inadequate for Breach. Equifax Inc.’s insurance against cyber breaches is likely inadequate to cover the credit-reporting company’s costs tied to one of the biggest hacks in history, according to people familiar with the coverage. The company holds a policy that would probably cover about $100 million to $150 million, with costs shared by carriers in the London market and elsewhere, said the people, who asked not to be identified discussing a private contract. Though Equifax’s eventual expense may not be known for years, it could be multiples higher than the insurance payout, given what the company has disclosed and the costs at hacking victims like Yahoo and Target Corp., they said.
• Apple's(AAPL) Top New Phone to Be Called ‘iPhone X,’ Code Leaks Show. (video) Apple Inc.’s most important new phone for years will be called the iPhone X, according to a leak of the company’s latest mobile operating system on Saturday. Strings of software code inside of the leaked operating system, first detailed by Apple news website 9to5Mac, show the expected three new phones will be called the iPhone 8, iPhone 8 Plus, and iPhone X. App and game developer Steven Troughton-Smith discovered the names in the software and tweeted about it on Saturday.

Wall Street Journal:

• Hurricane Irma: Live Updates.
• Why Entitlements Keep Growing, and Growing, and . . . Once granted, benefits always multiply and are nearly impossible to repeal, John Cogan says. Only three presidents have been able to rein them in.
• Bridgewater to Launch Big Investment Fund in China, Three Decades in the Making. Founder Ray Dalio’s fascination with China evolves into plans to raise billions of dollars, amass clout that has largely eluded outside hedge funds and banks.

Barron's:

• Had bullish commentary on (AABA), (CVS), (TXN), (SYY), (MDT) and (CG).
• Had bearish commentary on (NKE) and (VIAB).

Fox News:

• Hurricane Irma Complete Coverage: (video)

CNBC: 

• Were you affected by the Equifax(EFX) data breach? One click could cost you your rights in court. (video)

Zero Hedge:

• "It's A Killer" - Florida Orders A Third Of The Population To Evacuate As Irma Hurtles Toward Tampa.
• Republicans Furious After Trump's DOJ Declines To Charge Lois Lerner.
• Huge Solar Flare Sparks Widespread Blackouts, May Deter Korean Missile Launch This Weekend.
• "The Guy is Hiding Something": Top Hillary Aide Suggests Bernie Colluded With Russia Too.
• Facebook(FB) Engagement-For-Hire Economy Has Generated More Than 100 Million Fake Likes.
• "We're Just Trying To Feed Our Families" - Equifax Hackers Demand $2.6 Million Ransom In Bitcoin.
• Deutsche: "Recession Risk Is The Highest In Ten Years; It's Time For The Fed To Pause Tightening".
• "Worst Possible Choice For US Economy" - Peter Schiff Slams Plan To Repeal Debt-Ceiling.
• China's 2nd Biggest Bitcoin Exchange Responds To Report Beijing Is Shutting All Virtual Exchanges.
• Catastrophic Damage On Caribbean Islands As Seen From Space. 
• Mueller Requests Interviews With 6 Members Of Trump's "Inner Circle".
• Pay-To-Play: Chicago Tribune Blasts Rahm As Data Reveals 70% Of Donors Get Lucrative City Hall Contracts.
• Princeton Economist: Nearly Half Of Working Age Men Not In The Labor Force Take Opioids Daily.
• US Braces For ICBM Test As North Korean Holiday Begins.
• Weekend Reading: The "Real" Vampire Squid.
• AccuWeather: "No Way To Avoid Another Catastrophic Weather Event".
• Central Banks Have Purchased $2 Trillion In Assets In 2017.
• Kim, Don, Gary, & Irma Spark Dollar Exodus As Gold Gains Most Since Brexit. (graph)

Business Insider:

• Google(GOOGL) calls The New York Times' report that female Google employees make less than men 'extremely flawed'.
• The Equifax hack isn't the biggest security breach of all time, but it could be one of the worst in history for Americans.
• A top analyst recommends buying Facebook, Amazon, Netflix and Google shares. (video)
• George Clooney’s latest directing effort is embarrassingly awful.

Windy.com:

• Hurricane Irma Live Radar. (map)

Miami New Times:

• Hurricane Irma Live Blog:

Weekly Scoreboard*

S&P 500 2,463.60 -.34%

  




















The Weekly Wrap by Briefing.com.
 
Indices

• DJIA 21,812.90 -.60%

• NASDAQ 6,365.48 -.98%

• Russell 2000 1,400.63 -.33%

• S&P 500 High Beta 36.94 -.30%

• Goldman 50 Most Shorted 136.38 +1.16%

• Wilshire 5000 25,465.0 -.36%

• Russell 1000 Growth 1,239.57 -.28%

• Russell 1000 Value 1,130.93 -.48%

• S&P 500 Consumer Staples 564.58 +.47%

• Vanda Cyclicals-Defensives 1.2479 -5.22%
  

• Morgan Stanley Technology 1,556.03 -.29%

• Transports 9,380.0 +.66%

• Utilities 747.02 +.51%

• Bloomberg European Bank/Financial Services 96.48 -2.23%

• MSCI Emerging Markets 44.88 +.31%

• HFRX Equity Hedge 1,215.62 -.24%

• HFRX Equity Market Neutral 1,006.74 -.26%

Sentiment/Internals

• NYSE Cumulative A/D Line 298,880 +.12%

• Bloomberg New Highs-Lows Index 348 -139

• Bloomberg Crude Oil % Bulls 39.47 -23.3%

• CFTC Oil Net Speculative Position 365,865 -17.9%

• CFTC Oil Total Open Interest 2,247,058 +.45%

• Total Put/Call .89 -3.57%

• OEX Put/Call .59 -86.3%

• ISE Sentiment 103.0 +81.5%

• NYSE Arms 1.6 +55.8%

• Volatility(VIX) 12.51 +13.6%

• S&P 500 Implied Correlation 34.78 +5.66%

• G7 Currency Volatility (VXY) 8.78 +5.30%

• Emerging Markets Currency Volatility (EM-VXY) 8.15 +4.44%

• Smart Money Flow Index 19,512.71 -1.0%

• ICI Money Mkt Mutual Fund Assets $2.727 Trillion +.41%

• ICI US Equity Weekly Net New Cash Flow -$3.606 Billion

• AAII % Bulls 29.3 +17.1%

• AAII % Bears 35.7 -10.4%

Futures Spot Prices

• CRB Index 181.42 +.60%

• Crude Oil 47.71 +2.27%

• Reformulated Gasoline 164.94 -6.67%

• Natural Gas 2.90 -3.76%

• Heating Oil 176.58 +.31%

• Gold 1,347.0 +1.71%

• Bloomberg Base Metals Index 199.49 -1.16%

• Copper 304.15 -1.03%

• US No. 1 Heavy Melt Scrap Steel 281.67 USD/Ton unch.

• China Iron Ore Spot 78.39 USD/Ton -.66%

• Lumber 388.80 +1.22%

• UBS-Bloomberg Agriculture 1,034.78 +.37%

Economy

• Atlanta Fed GDPNow Forecast +2.9 -40.0 basis points

• ECRI Weekly Leading Economic Index Growth Rate +.9% -100.0 basis points
  

• Philly Fed ADS Real-Time Business Conditions Index -.2991 -4.95% 

• US Economic Policy Uncertainty Index 66.59 -37.1%

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 140.46 +.11%

• Citi US Economic Surprise Index -23.80 -5.6 points

• Citi Eurozone Economic Surprise Index 19.6 -6.2 points

• Citi Emerging Markets Economic Surprise Index 25.50 +5.7 points

• Fed Fund Futures imply 88.0% chance of no change, 12.0% chance of 25 basis point hike on 9/20

• US Dollar Index 91.35 -1.55%

• MSCI Emerging Markets Currency Index 1,653.90 +.55%

• Euro/Yen Carry Return Index 135.32 -.86%

• Yield Curve 79.0 -2.0 basis points
  

• 10-Year US Treasury Yield 2.06% -9.0 basis points

• Federal Reserve's Balance Sheet $4.413 Trillion +.03%

• U.S. Sovereign Debt Credit Default Swap 25.92 +.02%

• Illinois Municipal Debt Credit Default Swap 334.89 -.05%

• Western Europe Sovereign Debt Credit Default Swap Index 5.50 -1.7%

• Asia Pacific Sovereign Debt Credit Default Swap Index 19.46 +9.3%
  

• Emerging Markets Sovereign Debt CDS Index 43.48 +10.4%
  

• Israel Sovereign Debt Credit Default Swap 54.91 +3.82%

• South Korea Sovereign Debt Credit Default Swap 70.95 +17.5%

• Russia Sovereign Debt Credit Default Swap 139.75 +.16%

• iBoxx Offshore RMB China Corporate High Yield Index 141.50 +.16%

• 10-Year TIPS Spread 1.81% +2.0 basis points

• TED Spread 31.0 -1.0 basis point

• 2-Year Swap Spread 24.0 +3.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -22.0 +2.75 basis points

• N. America Investment Grade Credit Default Swap Index 59.71 +1.90%

• America Energy Sector High-Yield Credit Default Swap Index 444.0 -4.86%

• European Financial Sector Credit Default Swap Index 51.98 -1.71%
  

• Emerging Markets Credit Default Swap Index 176.62 -.97%
  

• CMBS AAA Super Senior 10-Year Treasury Spread to Swaps 149.0 +1.0 basis point
  

• M1 Money Supply $3.578 Trillion -1.11%

• Commercial Paper Outstanding 1,007.40 -1.6%

• 4-Week Moving Average of Jobless Claims 236,750 -1,000

• Continuing Claims Unemployment Rate 1.4% unch.
  

• Average 30-Year Mortgage Rate 3.78% -4.0 basis points

• Weekly Mortgage Applications 420.50 +3.27%

• Bloomberg Consumer Comfort 52.60 -.7 point

• Weekly Retail Sales +4.4% +120 basis points

• Nationwide Gas $2.67/gallon +.15/gallon

• Baltic Dry Index 1,296.0 +9.55%

• China (Export) Containerized Freight Index 833.61 -.74%

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 20.0 -11.1%

• Rail Freight Carloads 277,063 -.92%

Best Performing Style

•  Small-Cap Growth +.1%

Worst Performing Style

•  Small-Cap Value -.6%

Leading Sectors

• Oil Service +3.9%

• Retail +2.7%

• Gaming +2.7%

• Medical Equipment +2.1%

• Energy +2.0%

Lagging Sectors

• Insurance -2.0% 

• Networking -2.1%

• Banks -2.9%

• Telecom -3.4%

• Hospitals -3.5%

Weekly High-Volume Stock Gainers (29)

• INSM, NLNK, RH, VYGR, CLXT, ZGNX, TDW, SGH, CAB, SRPT, NAV, OXM, CLDR, BMS, ATNX, GKOS, LDR, NEO, GPRO, PANW, CISN, TWOU, GMS, PGTI, FUL, USG, GNRC, MTCH and CPT

Weekly High-Volume Stock Losers (14)

• HPE, NWL, SCVL, BOX, FNSR, HIIQ, UIHC, PLAY, ALNY, NCS, AMBA, UVE, HCI and TECD

Weekly Charts

ETFs

• High-Volume Gainers

• High-Volume Losers

Stocks

• High-Volume Gainers

• High-Volume Losers

*5-Day Change