Friday Watch

Evening Headlines

Bloomberg:

• Asia Stocks Trade Mixed as Apple(AAPL) Suppliers Rise. Equities in Asia were mixed as investors assessed the latest news on U.S. tax-cut plans and looked ahead to Friday’s American jobs report. The Australian dollar took a hit and bond yields headed lower after retail sales data raised doubts about the strength of the economy. Apple Inc. supported Nasdaq futures after its forecast for holiday sales topped estimates and suppliers of the iPhone maker climbed in Hong Kong and Taiwan. The S&P 500 Index closed little changed as investors weighed the impact of House Republican leaders’ sweeping tax plan, which includes lowering the corporate tax rate to 20 percent from 35 percent. The dollar is headed for a weekly loss. Venezuela’s president said the nation will restructure its global debt as it struggles to meet its obligations. Australia’s S&P/ASX 200 Index rose 0.4 percent and South Korea’s Kospi index added 0.1 percent. Hong Kong’s Hang Seng Index rose 0.1 percent. Hon Hai Precision Industry Co., the main assembler of Apple devices, rose 0.9 percent in Taiwan.

• Five Things You Need to Know to Start Your Day. (video)

• Billionaire Joe Ricketts Shuts Down Gothamist and DNAinfo. DNAinfo and Gothamist, which chronicled the daily grind of New York City life, are shutting down in the latest sign of struggle for online media. The decision to close both sites was announced in a letter posted on their homepages by billionaire Joe Ricketts, their chief executive officer. While he attributed the decision to the costs involved in operating the site, he didn’t mention a vote last week by editorial staffs of both websites to unionize with the Writers Guild of America.

• Big Oil's Surprisingly Strong Quarter Explained in Five Charts.

• Powell has Shown Yellen-like Sensitivity to Policy Spillovers. (video)

Wall Street Journal: 

• House GOP Tax Plan Sticks With Big Corporate Cuts. The Tax Cuts and Jobs Act seeks the biggest transformation of tax code in more than 30 years; leaves top individual tax rate at 39.6%.

MarketWatch.com: 

• Apple(AAPL) earnings send stock to record levels ahead of iPhone X launch: Live blog recap.

Fox News:

• Tax reform bill revealed by House GOP - here's what it does. (video)

• CNN's Jeff Zucker's future unclear as AT&T's Time Warner deal hangs in the balance.

• Tucker & Lawyer for Las Vegas Victims Examine Unanswered Questions Surrounding Massacre. (video)

CNBC:

• Tim Cook talks on Apple's earnings beat and iPhone X demand.

• Apple blows past Wall Street expectations as the iPhone 8 becomes a surprise best-seller. (video)

• Sprint(S), T-Mobile(TMUS) shares jump after WSJ says the companies are working to salvage their merger.

• Mueller Is Investigating Tony Podesta's Ties To Manafort Lobbying Campaign.

• Starbucks(SBUX) tanks on revenue miss, to sell Tazo tea brand to Unilever. (video)

• Activision Blizzard(ATVI) earnings beat, company raises guidance.

• One chart shows why financials may be set to surge. (video)

• What Jerome Powell means for your pocketbook. (video)

Zero Hedge:

• Elizabeth Warren: "Yes" The Democratic Primary Was Rigged For Clinton. (video)

• Krieger Rants "Washington D.C. Is Swarming With Unaccountable Parasites".

• Millennials Prefer Socialism To Capitalism.

• ESPN Lost 15,000 Subscribers A Day In October.

• Apple(AAPL) Soars To $900BN In Mkt Cap After Crushing Earnings And iPhone X Guidance.

• Default Time: Venezuela Announces It Will Restructure All Debt After Tomorrow's Final Payment.

• Corey Feldman Names Names: Accuses Former Co-Star Of Molesting Him.

• Coinbase Adds A Record 100,000 Bitcoin Traders In One Day.

• Yield Curve Crushed To 10 Year Lows As Stocks Signal Trump-Tax-Plan Won't Pass. (graph)

Telegraph:

• Trump’s ambition of sustained US growth is starting to pay dividends.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 74.75 +.5 basis point. 

• Asia Pacific Sovereign CDS Index 15.0 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 72.79 +.01%.

• S&P 500 futures +.05%.

• NASDAQ 100 futures +.28%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AXL)/.66

• (CBG)/.54

• (DUK)/1.55

• (MCO)/1.37

• (BID)/-.68

• (BRK/B)/2350.93

Economic Releases 

8:30 am EST

• The Change in Non-Farm Payrolls for October is estimated to rise to 310K versus -33K in September.

• The Unemployment Rate for October is estimated at 4.2% versus 4.2% in September.

• Average Hourly Earnings MoM for October is estimated to rise +.2% versus a +.5% gain in September.

• The Trade Deficit for September is estimated at -$43.2B versus -$42.4B in August.
  

10:00 am EST

• The ISM Non-Manufacturing Composite for October is estimated to fall to 58.5 versus 59.8 in September.

• Factory Orders for September is estimated to rise +1.2% versus a +1.2% gain in August.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Kashkari speaking and the Canadian Unemployment rate report could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by commodity and technology 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 Lower into Afternoon on Earnings Outlooks, Profit-Taking, Technical Selling, Homebuilding/Airline Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Slightly Higher
  

• Sector Performance: Mixed
  

• Volume: Heavy

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 10.19 -.1%

• Euro/Yen Carry Return Index 138.62 +.23%

• Emerging Markets Currency Volatility(VXY) 8.03 umch.

• S&P 500 Implied Correlation 16.79 +3.5%

• ISE Sentiment Index 88.0 -12.9%
  

• Total Put/Call .79 -.15%

• NYSE Arms 1.25 +54.45%

Credit Investor Angst:

• North American Investment Grade CDS Index 52.98 +.29%
  

• America Energy Sector High-Yield CDS Index 368.0 -.44%

• European Financial Sector CDS Index 50.20 +.44%

• Western Europe Sovereign Debt CDS Index 3.99 -3.74%

• Asia Pacific Sovereign Debt CDS Index 15.08 -.33%

• Emerging Market CDS Index 174.21 -.26%
  

• iBoxx Offshore RMB China Corporate High Yield Index 144.95 +.02%

• 2-Year Swap Spread 21.75 +.75 basis point

• TED Spread 22.25 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -43.0 -.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.61 +.07%
• 3-Month T-Bill Yield 1.16% unch.
  

• Yield Curve 73.75 -1.25 basis points

• China Import Iron Ore Spot $59.79/Metric Tonne +.74%

• Citi US Economic Surprise Index 41.10 +.36 point

• Citi Eurozone Economic Surprise Index 58.60 -.1 basis point

• Citi Emerging Markets Economic Surprise Index 18.70 -.4 point

• 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 +16 open in Japan 
• China A50 Futures: Indicating +25 open in China

• DAX Futures: Indicating +1 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Value unch.

Sector Underperformers:

• 1) Homebuilders -1.3% 2) Oil Service -.8% 3) Airlines -.7%

Stocks Falling on Unusual Volume: 

• NTLA, XNET, PI, THS, OSUR, NWL, W, TWX, TEVA, SYMC, FEYE, GOLD, TSLA, TPX, HBI, RLGY, CAKE, PBH, DISCA, OMI, MDC, CCRN, FNSR, CATM, CCOI, MYGN, W, KEM and PI

Stocks With Unusual Put Option Activity:

• 1) CIEN 2) OCLR 3) NWL 4) SYMC 5) RL

Stocks With Most Negative News Mentions:

• 1) OMI 2) OCLR 3) HABT 4) EPZM 5) OMER

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.7%

Sector Outperformers:

• 1) Insurance +1.3% 2) Restaurants +1.2% 3) I-Banks +1.1%

Stocks Rising on Unusual Volume:

• ESIO, NBIX, AMED, AKRX, ABY, ITT, AAC, CSU, NOVT, ZAGG, RL, FMI, AFAM, CRCM, FLT, ZEN, ULTI, CWST, PZZA, OMF, VMC, FSS, KL, TDC, AXGN, LNTH, NMIH, JUNO, TWI, AN, ALNY, ZEN, BKD, ACXM, KMT, LB, ANSS, SFM, NRG, TTMI, LOPE, ULTI, HLS, EXEL, TFX, BDX, EPAM, TDOC, YUM, HMHC, DXCM, VMC, ZTS, TRGP, NUAN, HCP, ICE, PDM, QCOM, BOJA, EQIX, WPX and HYH

Stocks With Unusual Call Option Activity:

• 1) DISCA 2) NRG 3) TOL 4) CIEN 5) ITB

Stocks With Most Positive News Mentions:

• 1) AMED 2) JUNO 3) BLUE 4) NBIX 5) X

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +34.7% Above 100-Day Average
• 5 Sectors Rising, 5 Sectors Declining
• 44.8% of Issues Advancing, 51.3% Declining
• 101 New 52-Week Highs, 63 New Lows
• 45.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 36.6%
• Vix 10.1 -.6%
• Total Put/Call .97 +4.3%
• TRIN/Arms 1.51 +87.3%