Wednesday, November 01, 2017

Thursday Watch

Posted by Gary .....at 9:40 PM
Evening Headlines
Bloomberg:
  • Asia Stocks Face Mixed Start as Dollar Holds Gains. Asian stocks look set to consolidate around 10-year highs as investors digest news that President Donald Trump will pick Jerome Powell to lead the Federal Reserve. The dollar held gains and oil prices hovered near their peak for the year. Powell, a governor on the Fed board who’s never differed with Chair Janet Yellen on policy decisions, will be nominated by Trump to succeed her, according to three people familiar with the decision. The succession question overshadowed the Fed’s policy statement Wednesday, where it subtly upgraded its assessment of the economy and reinforced expectations of a December interest-rate hike. Contracts on Japan’s Nikkei 225 Stock Average added 0.4 percent in most recent trading in Singapore. Australia’s S&P/ASX 200 Index was flat. Futures contracts on Hong Kong’s Hang Seng Index were little changed.
  • Corporate Tax Cut to Be Phased Out After a Decade. House tax writers are planning on phasing out the proposed corporate rate of 20 percent after a decade, according to a Republican lawmaker familiar with the negotiations. Cutting the corporate tax rate to 20 percent from 35 percent is a key provision of the tax legislation that Republican congressional leaders plan to unveil on Thursday. But there have been conflicting reports about when the rate cut would take effect -- or how long it would last. Making the rate-cut temporary would limit its ability to spur economic growth -- a key selling point cited by President Donald Trump and others.
Wall Street Journal: 
CNBC: 
Zero Hedge:
Telegraph:
Night Trading 
  • Asian equity indices are -.25% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 74.25 -.5 basis point. 
  • Asia Pacific Sovereign CDS Index 15.25 -.5 basis point.
  • Bloomberg Emerging Markets Currency Index 72.64 +.11%.
  • S&P 500 futures -.25%.
  • NASDAQ 100 futures -.39%.
Morning Preview Links

Earnings of Note
Company/Estimate
  • (BABA)/1.03
  • (ABC)/1.32
  • (APA)/.00
  • (AVP)/.07
  • (BDX)/2.37
  • (CI)/2.36
  • (DLPH)/1.57
  • (DISCA)/1.54
  • (FSS)/.21
  • (GCI)/.11
  • (IT)/.52
  • (HCP)/.46
  • (H)/.17
  • (ICE)/.70
  • (ITT)/.61
  • (MLM)/2.51
  • (RL)/1.88
  • (RDS/A)/.45
  • (SFM)/.18
  • (TK)/-.45
  • (VMC)/1.06
  • (YUM)/.67
  • (ZTS)/.63
  • (ATVI)/.49
  • (AIG)/-.79
  • (AAPL)/1.87
  • (ANET)/1.19
  • (CBS)/1.07
  • (FLR)/.60
  • (SBUX)/.55
  • (TRUP)/-.01
  • (OLED)/.11
  • (YRCW)/.34
Economic Releases 
7:30 am EST
  • The Challenger Job Cuts YoY report for October.
8:30 am EST
  • Initial Jobless Claims for last week are estimated to rise to 235K versus 233K the prior week.
  • Continuing Claims are estimated to rise to 1894K versus 1893K prior.
  • Preliminary 3Q Non-Farm Productivity is estimated to rise +2.6% versus a +1.5% gain in 2Q.
  • Preliminary 3Q Unit Labor Costs are estimated to rise +.4% versus a +.2% gain in 2Q.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The President's Fed Chair decision, Full Tax Bill release by Congress, Fed's Raphael Bostic speaking, Fed's Dudley speaking, Eurozone Manufacturing PMI report, Eurozone Unemployment Rate report, Bloomberg weekly Consumer Comfort Index, weekly EIA natural gas inventory report, (LB)/(CATO)/(BKE) monthly sales reports, (LB) investor meeting and the (MO) investor day could also impact trading today.
BOTTOM LINE:  Asian indices are mostly higher, boosted by metals/mining and technology shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 75% net long heading into the day.
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Stocks Mostly Higher into Final Hour on Economic Optimism, Earnings Outlooks, Yen Weakness, Gaming/Energy Sector Strength

Posted by Gary .....at 3:33 PM
Broad Equity Market Tone:
  • Advance/Decline Line: Lower
  • Sector Performance: Mixed
  • Volume: Heavy
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • Volatility(VIX) 9.99 -1.87%
  • Euro/Yen Carry Return Index 138.37 +.28%
  • Emerging Markets Currency Volatility(VXY) 8.07 -.49%
  • S&P 500 Implied Correlation 15.31 +16.6%
  • ISE Sentiment Index 98.0 -17.7%
  • Total Put/Call .90 +3.45%
  • NYSE Arms .74 -42.98%
Credit Investor Angst:
  • North American Investment Grade CDS Index 52.67 +.51%
  • America Energy Sector High-Yield CDS Index 370.0 -3.11%
  • European Financial Sector CDS Index 49.96 -2.53%
  • Western Europe Sovereign Debt CDS Index 4.15 -1.54%
  • Asia Pacific Sovereign Debt CDS Index 15.14 -3.07%
  • Emerging Market CDS Index 174.84 +.24%
  • iBoxx Offshore RMB China Corporate High Yield Index 144.93 +.1%
  • 2-Year Swap Spread 21.0 -1.5 basis points
  • TED Spread 22.5 -6.25 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -42.75 -.75 basis point
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 72.57 +.03%
  • 3-Month T-Bill Yield 1.16% +3.0 basis points
  • Yield Curve 75.0 -3.0 basis points
  • China Import Iron Ore Spot $59.35/Metric Tonne +1.42%
  • Citi US Economic Surprise Index 40.50 +.3 point
  • Citi Eurozone Economic Surprise Index 58.70 -.3 basis point
  • Citi Emerging Markets Economic Surprise Index 19.10 -4.5 points
  • 10-Year TIPS Spread 1.88 unch.
  • 98.1% chance of Fed rate hike at Jan. 31 meeting, 99.0% chance at March 21 meeting
Overseas Futures:
  • Nikkei 225 Futures: Indicating +155 open in Japan 
  • China A50 Futures: Indicating +39 open in China
  • DAX Futures: Indicating +3 open in Germany
Portfolio: 
  • Slightly Higher: On gains in my tech/retail sector longs
  • Disclosed Trades: None
  • Market Exposure: 100% Net Long
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Today's Headlines

Posted by Gary .....at 3:04 PM
Bloomberg:
  • U.S. Stocks Mixed, Dollar Erases Gain as Fed Holds. (video) U.S. stocks remained mixed and the dollar erased a slight gain after the Federal Reserve left rates unchanged as expected and acknowledged economic growth is solid. Small caps fell the most since August as the prospects for tax reform remained uncertain amid political wrangling in Congress. The Stoxx Europe 600 Index advanced 0.4 percent. Japan’s Nikkei 225 Stock Average climbed 1.9 percent to the highest in more than 21 years. The MSCI Asia Pacific Index climbed 0.9 percent to the highest in about 10 years. The MSCI Emerging Market Index jumped 0.9 percent to the highest in more than two weeks.
  • Watch the Curve For Iron Ore's Spring Promise. Iron ore’s in very unfamiliar territory. As China presses home its campaign to curb steel production, some investors are starting to wager that after a chill in winter, a torrent of pent-up demand will spur a springtime rebound in a move that’s shifted the shape of the futures curve.
  • Mnuchin Resisting Phased-In Corporate Tax Cut Over Growth Concerns, Sources Say. (video) Treasury Secretary Steven Mnuchin is resisting a gradual phase in of the proposed 20 percent corporate rate out of concern the move wouldn’t boost economic growth as much as he’s anticipated, according to a Trump administration official and another person familiar with Mnuchin’s thinking. Mnuchin is worried that a slow reduction of the corporate rate from its current 35 percent would also make the U.S. less competitive, as other countries cut their rates faster and foreigners delay their investments in the U.S., said the official, who asked not to be named because the discussions are private.
  • Next Time Bring Your CEOs, Lawmakers Tell Facebook(FB), Google(GOOG) and Twitter(TWTR). (video) Senator Angus King issued a simple admonishment to the lawyers representing Facebook, Google and Twitter at a Senate Intelligence Committee hearing on Russian meddling with social media during the 2016 presidential election. “I’m disappointed you are here and not your CEOs,” King, an independent from Maine who caucuses with Democrats, told the three corporate counsels. "We would appreciate seeing the top people who are actually making the decisions.”
  • October Was Apparently Pickup Truck Month in the U.S. (video) Ford Motor Co.’s F-Series led a gangbusters month for pickups, pacing a surprise uptick in total U.S. auto industry sales. Ford F-Series deliveries surged 16 percent for their best October since 2004, and the automaker’s total U.S. sales beat analysts’ estimates. Demand also jumped for GM’s Chevrolet Silverado and GMC Sierra, Fiat Chrysler Automobiles NV’s Ram pickup and Nissan Motor Co.’s Titan full-size trucks.
Wall Street Journal:
  • How China Swallowed the WTO. The U.S. helped create the group to smooth global commerce and integrate a rising China. Instead, it’s become a battleground for intense national rivalries.
Fox News:
  • DNC: White men shouldn't apply for tech jobs. DNC’s Data Service Manager Madeleine Leader purportedly wrote in an email that the desire for diversity excludes “cisgender straight white males.” Leader adds, “I personally would prefer that you not forward to cisgender straight white males, as they are already in the majority.” Cisgender is a term for people whose gender identity matches the sex that they were assigned to at birth.
Zero Hedge:
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Bear Radar

Posted by Gary .....at 1:49 PM
Style Underperformer:
  • Small-Cap Growth -1.1%
Sector Underperformers:
  • 1) Telecom -2.9% 2) Healthcare Providers -1.1% 3) Education -1.0%
Stocks Falling on Unusual Volume: 
  • EVHC, CHKP, NVMI, PZZA, PBI, ITG, PAYC, FORM, OMI, DNOW, EA, MMYT, LITE, STE, MD, NYT, QSII, SSYS, ESIO, OMI and ANF
Stocks With Unusual Put Option Activity:
  • 1) SEAS 2) GLUU 3) FTR 4) CTL 5) DDD
Stocks With Most Negative News Mentions:
  • 1) EVHC 2) DSW 3) ANF 4) SGRY 5) NYT
Charts:
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Bull Radar

Posted by Gary .....at 1:34 PM
Style Outperformer:
  • Large-Cap Value +.3%
Sector Outperformers:
  • 1) Steel +1.7% 2) Energy +1.0% 3) Gaming +1.0%
Stocks Rising on Unusual Volume:
  • HYH, EYE, MOD, SODA, DEL, MPO, EAT, BGS, WIRE, ZTO, CAA, AGN, PLT, ADMS, QLYS, EL, COMM, CVRR, X, RDWR, GRMN, VRSK, RYAAY, STRA, BLUE, CRC, JUNO, EAT, DVN,  QLYS, BLUE, W, ADMS, FSLR, WLH, RGR and CXO
Stocks With Unusual Call Option Activity:
  • 1) EA 2) EVHC 3) FLEX 4) KHC 5) LB
Stocks With Most Positive News Mentions:
  • 1) BGS 2) EL 3) AIR 4) MOS 5) WCG
Charts:
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Morning Market Internals

Posted by Gary .....at 11:55 AM
NYSE Composite Index:
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