Tuesday, September 19, 2017

Today's Headlines

Bloomberg:
  • China Considers Opening Up to Foreign Electric Carmakers. China is discussing a plan to allow foreign carmakers to set up wholly owned electric-vehicle businesses in its free-trade zones in a major revision of a fundamental principle governing the country’s auto industry policy since the 1990s, according to company officials briefed on the matter. The plan, which is subject to change as a final decision hasn’t been made, could be put in place as early as next year, the people said, asking not to be identified as the deliberations are private. If the policy takes effect, it would be a landmark departure from the existing rules, which require foreign automakers to set up joint ventures with local counterparts.
  • Your Evening Briefing.
  • The Sizzling Stock Market Is Making Investors Uneasy. Bearish bets are also piling up among mega-cap stocks, the biggest contributors to U.S. equity gains this year. As the Nasdaq 100 Index rose to a new high on Sept. 13, demand for protection grew to the most in over a year on the most popular ETF tracking the index, the Powershares QQQ Trust.
  • FANG Stocks Take Repeated Hits and the World Keeps Spinning. You may have missed it, but the FANG block -- Facebook Inc., Amazon.com Inc. Netflix Inc. and Google parent Alphabet Inc. -- dropped almost 7 percent during the August selloff, while Apple Inc. was down 3.5 percent from its 2017 peak at its worst point. But even with all the carnage, the S&P 500 kept going up, climbing above 2,500 for the first time.
Wall Street Journal:
MarketWatch.com:
Zero Hedge:
AJC.com:
  • Georgia Tech president: Unrest mainly caused by “outside agitators”. Georgia Tech president G.P. “Bud” Peterson said “outside agitators” were mainly to blame for the unrest that took place on campus Monday night. Peterson said in a letter to students, faculty and alumni Tuesday that a vigil held for a student shot and killed a Tech police officer Saturday night was disrupted “by several dozen others intent on creating a disturbance and inciting violence. We believe many of them were not part of our Georgia Tech community, but rather outside agitators intent on disrupting the event.” Peterson added they did not honor the memory of the student who was killed, Scout Schultz, with their actions.

Bear Radar

Style Underperformer:
  • Mid-Cap Value -.1%
Sector Underperformers:
  • 1) HMOs -2.5% 2) Hospitals -2.1% 3) Oil Service -1.0%
Stocks Falling on Unusual Volume: 
  • SNCR, SUPN, EVHC, PTLA, BBY, NUVA, CNC, AZO, UNIT, GOGO, AYI, EVH, MD, ATGE and COO
Stocks With Unusual Put Option Activity:
  • 1) TMUS 2) BBBY 3) FINL 4) MET 5) MAT
Stocks With Most Negative News Mentions:
  • 1) AYI 2) SUPN 3) NUVA 4) APRN 5) UA
Charts:

Bull Radar

Style Outperformer:
  • Large-Cap Value +.3%
Sector Outperformers:
  • 1) Gaming +2.2% 2) Banks +1.1% 3) Telecom +.9%
Stocks Rising on Unusual Volume:
  • BOBE, VERI, QDEL, ASYS, HOFT, ZAGG, EFX, GDS, UBNT, MTOR, TMUS, KAI, COHR, KBWB, ADMS, VRNS, OLED, ACIA, SQM, VZ, AAOI, DQ, EPZM, NOC, REV, LUK and EROS
Stocks With Unusual Call Option Activity:
  • 1) S 2) STAY 3) BBBY 4) AAOI 5) GLW
Stocks With Most Positive News Mentions:
  • 1) COHR 2) KORS 3) QDEL 4) NTAP 5) USB
Charts:

Morning Market Internals

NYSE Composite Index:

Monday, September 18, 2017

Tuesday Watch

Evening Headlines
Bloomberg:
  • Weakest China Developers Threatened by $38 Billion in Bond Puts. Chinese property developers face a wall of local bonds that investors can force them to pay off next year ahead of schedule, just as rising interest rates raise the risk that more note holders may opt to do so. Investors have an option to offload 250 billion yuan ($38 billion) of such notes in 2018, according to Bloomberg data. To put some perspective on that amount, it’s five times all their regularly maturing onshore bond principal this year.
  • Stocks in Asia Rise; Yen Steady After Two-Day Loss. Japan’s equity benchmarks gained more than 1 percent, playing catch-up to a rally on Monday, when Tokyo was closed for a holiday. The S&P 500 Index held above 2,500 to notch a fresh record Monday, and the Dow Jones Industrial Average added to its all-time high. The yen inched higher though held on to most of the losses in the two previous sessions. Gold was little changed as demand for safe-haven assets waned the past two trading days, while oil was steady just under $50 a barrel. Japan’s Topix index added 1.1 percent as of 9:17 a.m. Tokyo time. The Kospi index fluctuated and Australia’s main gauge increased 0.3 percent. Hang Seng Index futures were little changed.
  • Far From the Texas Coast, Hurricane Harvey Hits Oil Refiners. Three weeks after Hurricane Harvey ravaged the massive fuel-making industry along the Texas coast, the region’s recovery from storm damage is starting to disrupt plans for crucial maintenance at refineries thousands of miles away from the flood zones.
Wall Street Journal:
CNBC:
Zero Hedge:
Business Insider:
Night Trading 
  • Asian equity indices are unch. to +.75% on average.
  • Asia Ex-Japan Investment Grade CDS Index 71.75 -1.0 basis point. 
  • Asia Pacific Sovereign CDS Index 18.25 unch.
  • Bloomberg Emerging Markets Currency Index 74.56 +.03%.
  • S&P 500 futures +.03%.
  • NASDAQ 100 futures +.06%.
Morning Preview Links

Earnings of Note
Company/Estimate

  • (APOG)/.85
  • (AZO)/15.12
  • (AIR)/.31
  • (ADBE)/1.01
  • (BBBY/.95
  • (CPRT)/.31
  • (FDX)/3.11
Economic Releases 
8:30 am EST
  • Housing Starts for August are estimated to rise to 1174K versus 1155K in July.
  • Building Permits for August are estimated to fall to 1220K versus 1223K in July.
  • The Current Account Deficit for 2Q is estimated at -$116.0B versus -$116.8B in 1Q.
  • The Import Price Index MoM for August is estimated to rise +.4% versus a +.1% gain in July.
  • The Export Price Index MoM for August is estimated to rise +.2% versus a +.4% gain in July.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The German ZEW Index, weekly US retail sales reports, (BIG) analyst conference and the (BBY) investor day could also impact trading today.
BOTTOM LINE:  Asian indices are mostly higher, boosted by financial and industrial shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.

Stocks Slightly Higher into Final Hour on Economic Optimism, Yen Weakness, Technical Buying, Financial/Defense Sector Strength

Broad Equity Market Tone:
  • Advance/Decline Line: Higher
  • Sector Performance: Mixed
  • Volume: Below Average
  • Market Leading Stocks: Outperforming
Equity Investor Angst:
  • Volatility(VIX) 10.33 +1.57%
  • Euro/Yen Carry Return Index 138.80 +.51%
  • Emerging Markets Currency Volatility(VXY) 7.63 -.65%
  • S&P 500 Implied Correlation 24.50 +3.95%
  • ISE Sentiment Index 86.0 +19.4%
  • Total Put/Call .91 -15.0%
  • NYSE Arms 1.1 -8.21%
Credit Investor Angst:
  • North American Investment Grade CDS Index 56.20 -.06%
  • America Energy Sector High-Yield CDS Index 423.0 +1.37%
  • European Financial Sector CDS Index 47.55 -1.96%
  • Western Europe Sovereign Debt CDS Index 4.69 -5.26%
  • Asia Pacific Sovereign Debt CDS Index 18.22 -.44%
  • Emerging Market CDS Index 170.84 +.99%
  • iBoxx Offshore RMB China Corporate High Yield Index 141.75 +.02%
  • 2-Year Swap Spread 26.0 +.75 basis point
  • TED Spread 29.50 +.5 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -24.5 -1.75 basis points
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 74.5 -.34%
  • 3-Month T-Bill Yield 1.02% -1.0 basis point
  • Yield Curve 84.0 +2.0 basis points
  • China Import Iron Ore Spot $71.76/Metric Tonne -.51%
  • Citi US Economic Surprise Index -22.60 -3.6 points
  • Citi Eurozone Economic Surprise Index 18.20 -.2 point
  • Citi Emerging Markets Economic Surprise Index 14.40 -1.4 basis points
  • 10-Year TIPS Spread 1.88 +2.0 basis points
  • 15.6% chance of Fed rate hike at Nov. 1 meeting, 56.0% chance at Dec. 13 meeting
Overseas Futures:
  • Nikkei 225 Futures: Indicating +86 open in Japan 
  • China A50 Futures: Indicating +62 open in China
  • DAX Futures: Indicating -17 open in Germany
Portfolio: 
  • Slightly Higher: On gains in my medical/tech sector longs
  • Disclosed Trades: None of note
  • Market Exposure: 100% Net Long