Bull Radar

Style Outperformer:

• Mid-Cap Value -.2%

Sector Outperformers:

• 1) Retail +1.7% 2) Oil Service +1.0% 3) Telecom +.8%

Stocks Rising on Unusual Volume:

• SAGE, BRS, STAA, GOOS, PRAA, COLL, PRGO, PRTY, CHUBA, M, OSTK, VOD, SEDG, COTY, BREW, WWD, TWNK, WRD, MNK, GMED, TGH, BOOT, CBS, NTGR, VRTV, ROKU, MAC, PLSE, HSNI, WRD, SKT, DIN, RNG, TCO, NKTR, VYGR, WLL, JWN, FOXA and SSP

Stocks With Unusual Call Option Activity:

• 1) ROKU 2) AET 3) JNPR 4) OIH 5) JWN

Stocks With Most Positive News Mentions:

• 1) OSTK 2) SEDG 3) OTIC 4) PRAA 5) SAGE

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +26.7% Above 100-Day Average
• 4 Sectors Rising, 6 Sectors Declining
• 32.3% of Issues Advancing, 65.0% Declining
• 57 New 52-Week Highs, 62 New Lows
• 61.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.0%
• Vix 11.6 +18.4%
• Total Put/Call .98 unch.
• TRIN/Arms .61 -37.3%

Thursday Watch

Evening Headlines

Bloomberg:

• China Factory Prices Surge Again as Pollution Drive Curbs Output. The producer price index rose 6.9 percent in October from a year earlier, versus a projected 6.6 percent rise in a Bloomberg survey and matching September’s pace. The consumer price index climbed 1.9percent, the statistics bureau said Thursday, exceeding the median forecast of 1.8 percent.

• Asia Stocks Test Record High, Extend Global Rally. (video) Stocks in Asia extended a global rally and are poised for a record high, underpinned by a solid earnings season and modest gains in U.S. shares overnight, with Japan’s equity benchmarks cementing advances to two-decade highs. Tokyo shares have touched their highest in about 25 years this week, supported by earnings, a weakening yen -- the currency is near its lowest since March -- the global equity rally and Prime Minister Shinzo Abe’s landslide re-election. They continued to outperform regional benchmarks on Thursday. The MSCI Asia Pacific Index passed its 2007 peak. All major U.S. equity gauges edged higher, led by the Nasdaq 100 Index. Japan’s Topix index rose 0.9 percent as of 10:55 a.m. in Tokyo, while the Nikkei 225 added 1.3 percent. They are trading at the highest since 1991 and 1992, respectively. South Korea’s Kospi index was little changed. Australia’s S&P/ASX 200 Index was up 0.4 percent. Hong Kong’s Hang Seng Index climbed 0.6 percent.

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

• Bipartisan Dodd-Frank Rollback Could Benefit Banks Big and Small. The top Republican on the Senate Banking Committee is getting closer to striking a deal on a bipartisan bill to ease financial rules that could have wins for banks both big and small. Senator Mike Crapo of Idaho, the panel’s chairman, is in talks with moderate Democrats including Jon Tester of Montana, Heidi Heitkamp of North Dakota and Joe Donnelly of Indiana on a plan for rolling back parts of the Dodd-Frank Act. A deal could come as soon as this week, Tester has said.

• Carlos Ghosn Says Car Ownership Is Here to Stay. (video) Personal car ownership isn’t going anywhere, regardless of the rise of Uber Technologies Inc. and ride-sharing, according to the man who may oversee more auto sales than anyone else this year. Global vehicle sales will continue to expand, with alternative forms of mobility making only a marginal impact or actually boosting demand, said Carlos Ghosn, the chairman of the alliance between Renault SA, Nissan Motor Co. and Mitsubishi Motors Corp. “A lot of people think this is substitution. It’s not -- it’s addition,” Ghosn said in an interview Wednesday at Bloomberg’s The Year Ahead conference in New York. “The traditional business of building cars and selling cars and owning cars is going to continue.”

Wall Street Journal:

• Trump Says Democrats Will Like Senate Tax Plan More Than House Version. President dialed into meeting of Senate Democrats from Asia trip and may have muddied the issue.

• Republicans Take Stock After Election Losses. Both parties re-examine plans for 2018 House and Senate campaigns following Democratic victories.

• Video Shows Texas Gunman Methodically Killing Church Members. Investigators are reviewing the video; Pence to visit region to attend prayer service and meet with victims and survivors.

• New Skin for 7-Year-Old Boy Marks Advance in Gene Therapy. Researchers transplanted genetically modified skin onto a boy with a life-threatening genetic disorder. The skin now covers approximately 80% of his epidermis.

Fox News:

• Mexico fights to stop Texas from executing convicted murderer, citing treaty.

CNBC:

• Roku(ROKU) shares skyrocket as sales crush Wall Street estimates. (video)

• The drivers behind the 10 top-performing stocks since Trump's election. (video)

• AT&T(T) should just dump CNN and not try to fight the Trump administration.

• Stocks making the biggest moves after hours: ROKU, FOXA, SQ & more.

• 21st Century Fox earnings: 49 cents, vs expected EPS of 49 cents. (video)

• What's on kids' wish lists? Here are 14 of the hottest toys for the holidays.

Zero Hedge:

• Asian Stocks Surpass 2007 Peak, Hit Record High As Chinese Inflation Comes In Hot.

• Michael Lewis Reveals His New "Big Short".

• Donna Brazile Exposes "The Cult Of Clinton" - She Lost Due To "Arrogance".

• LAPD Launches Investigation Into Hollywood Pedophile Ring After Corey Feldman Files Formal Report. 

• "Delhi Has Become A Gas Chamber" - Apocalyptic Smog Causes Health Concerns For Millions.

• Satellite Images Reveal Saudis May Be Lying How Much Oil They Have In Storage.

• A Look At America's Retail Apocalypse In Charts.

• It Begins: Pension Bailout Bill To Be Introduced This Week.

• Healthcare Spending Now Accounts For Almost One-Fifth Of The Entire US Economy.

• Junk Bonds Dump To 3-Month Lows Amid Longest Curve Flattening Streak In 6 Years. (graph)

Night Trading 

• Asian equity indices are unch. to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 78.0 -.5 basis point. 

• Asia Pacific Sovereign CDS Index 15.75 +.25 basis point.

• Bloomberg Emerging Markets Currency Index 72.44 unch.

• S&P 500 futures +.11%.

• NASDAQ 100 futures +.12%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AZN)/1.09

• (GOOS)/.21

• (DDS)/.27

• (DISH)/.61

• (DHI)/.81

• (JCI)/.86

• (KSS)/.72

• (M)/.20

• (MGA)/1.31

• (ODP)/.13

• (SUP)/.31

• (TK)/-.45

• (HTZ)/1.33

• (NWSA)/.02

• (JWN)/.64

• (NVDA)/1.07

• (RDFN)/.12

• (DIS)/1.12

• (ZOES)/.00

Economic Releases 

8:30 am EST

• Initial Jobless Claims for last week are estimated to rise to 232K versus 229K the prior week.

• Continuing Claims are estimated to rise to 1885K versus 1884K prior.

10:00 am EST

• Wholesale Trade Sales MoM for September is estimated to rise +.9% versus a +1.7% gain in August.

Upcoming Splits

• None of note

Other Potential Market Movers

• The release of the Senate Tax Reform Bill, China CPI report, 20B 30Y T-Bond auction, WASDE Crop report, Bloomberg Nov. US Economic Survey, Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, Canaccord Medical Tech/Diagnostics Forum, Stifel Growth Conference, (GWR) investor day and the (MDSO) analyst day 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 mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.

Stocks Reversing Higher into Final Hour on Tax Reform Hopes, Earnings Outlooks, Economic Optimism, Tech/Homebuilding Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Slightly Lower
  

• Sector Performance: Most Sectors Rising
  

• Volume: Heavy

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 9.6 -2.9%

• Euro/Yen Carry Return Index 137.54 -.1%

• Emerging Markets Currency Volatility(VXY) 8.14 -.12%

• S&P 500 Implied Correlation 14.85 -5.8%

• ISE Sentiment Index 71.0 -4.05%
  

• Total Put/Call 1.0 -1.96%

• NYSE Arms .89 -18.29%

Credit Investor Angst:

• North American Investment Grade CDS Index 54.84 +1.68%
  

• America Energy Sector High-Yield CDS Index 362.0 +.43%

• European Financial Sector CDS Index 52.25 +1.86%

• Western Europe Sovereign Debt CDS Index 3.99 +1.40%

• Asia Pacific Sovereign Debt CDS Index 15.72 +1.42%

• Emerging Market CDS Index 188.55 -.62%
  

• iBoxx Offshore RMB China Corporate High Yield Index 145.18 +.03%

• 2-Year Swap Spread 19.50 -1.0 basis point

• TED Spread 18.25 -1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -46.25 -2.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.44 +.23%
• 3-Month T-Bill Yield 1.22% +2.0 basis points
  

• Yield Curve 68.5 +.25 basis point

• China Import Iron Ore Spot $62.26/Metric Tonne -.64%

• Citi US Economic Surprise Index 41.30 +.8 point

• Citi Eurozone Economic Surprise Index 60.40 -.4 basis point

• Citi Emerging Markets Economic Surprise Index 15.90 -.5 point

• 10-Year TIPS Spread 1.89 +1.0 basis point
  
• 100.0% chance of Fed rate hike at Jan. 31 meeting, 100.0% chance at March 21 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +78 open in Japan 
• China A50 Futures: Indicating -16 open in China

• DAX Futures: Indicating +21 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 100% Net Long

Today's Headlines

Bloomberg:

• Trump Team Plans $250 Billion in Deals From China Visit. (video) The White House expects to announce upwards of $250 billion in business deals in China this week, an administration official said -- exactly the sort of U.S. jobs-based diplomacy that President Donald Trump likes to deliver when traveling abroad. Commerce Secretary Wilbur Ross boasted of that number in a meeting with chief executives in China on Wednesday, but offered few details, according to two people who attended the meeting. A U.S. official confirmed the amount. The details of the pending deals couldn’t be immediately learned on Wednesday. Many of the deals are expected be in the form of nonbinding memorandums of understanding, not contracts.
• China Traders Take on Risk as Margin Debt Tops One Trillion Yuan. Chinese stock traders are boosting the use of borrowed money to increase their buying power. Outstanding margin debt on local bourses climbed above 1 trillion yuan ($151 billion) on Monday for the first time since January 2016 as the Shanghai Composite Index rallied 12 percent from this year’s low in May. That’s helping lifting sentiment toward brokerages, with Citic Securities Co. rising to a one-month high on Wednesday. Still, with the government emphasizing the need for stability and reduced leverage in the financial sector, any sharp increase in borrowed money is unlikely. Margin debt -- which helped fuel the boom to bust two years ago -- is still less than half of its 2015 peak, and has barely increased as percentage of market capitalization this year. New investors have also not rushed in.
• Your Evening Briefing.
• U.S. Copper Premium Holds Steady After Years-Long Drop. The world’s biggest copper producer is set to maintain its fee for physical delivery of the metal to the U.S., ending at least four years of declining premiums, according to people with direct knowledge of the matter. Codelco, Chile’s state-owned copper giant, will agree to charge about 2.5 cents a pound on top of the price traded in New York for metal delivered to southern U.S. ports in 2018, the people said, asking not to be identified because talks are private. The Santiago-based company declined to comment on negotiations.
• Here Are Five of Jim Coulter's Big Investment Themes for 2018.

Wall Street Journal:

• Trump’s China Trip Brings Admonitions on North Korea, Along With Business Deals. After fiery speech aimed at Kim Jong Un, U.S. and China announce deals valued at $9 billion.
• Look Inside the DeVos Family Office. Financial disclosures provide a rare peek inside an investment structure used by ultrawealthy families.
• The Anti-Trump Wave. Democrats come out in droves and the GOP is caught in the undertow. 
• In Virginia, Democrats Learn the Shape of an Anti-Trump Coalition. Northam won by nearly double Clinton’s margin, riding wave of energy that carried down ballot.
• House Lawmakers Face $74 Billion Revenue Gap in Tax Bill After Amendments. Changes to the tax bill made by Republicans Monday night removed 95% of a key revenue-raising provision.
• China’s Tencent Buys 12% Stake in Snap(SNAP). Purchase adds to an investment Tencent made in parent of Snapchat in 2013 before company went public.
• U.S. Regulator Signals Shift on Leveraged Lending Enforcement. Acting Comptroller of the Currency Keith Noreika criticizes crackdown on big banks’ lending to heavily indebted companies.

Fox News:

• 12 Months of Trump: Year since election brings economic boom, deepening divisions, probe politics.

CNBC:

• Wall Street's biggest bulls see another 10% gain coming in 2018.
• Wall Street can’t catch up to this surging tech stock. (video)
• DOJ demands CNN to be sold as condition for AT&T, Time Warner deal approval. (video)
• Kroger(KR) is using Google(GOOG) and Microsoft(MSFT) clouds to avoid paying Amazon(AMZN).
• Here's how I think Apple's(AAPL) new smart glasses and rOS software will work, and why we should be excited.
• Senate tax plan will not include controversial 20% excise tax on imports by multinational companies: Sources. (video)
• Why Virginia election results aren't a huge disaster for Trump and the GOP. (video)
• Stocks seeing rare stretch of 'overbought' conditions, and Bespoke's Paul Hickey calls it 'impressive'. (video)

Zero Hedge:

• Real Motive Behind Saudi Purge Emerges: $800 Billion In Confiscated Assets.
• Bitcoin Explodes To $7900 After Hard Fork Suspended. (graph)
• NBCUniversal Says NFL's Partners Haven't Followed Through With Threats To Pull Ads...Yet.
• When Gunmen Strike, You're On Your Own.
• "Fully Self-Driving Cars Are Here" - Waymo To Begin Testing Driver-Free Autonomous Taxis In Phoenix.
• One Year Later: These Are The Best And Worst Performing Assets Under President Trump. (graph)
• 'Take That OPEC' - WTI Slides As US Crude Production Jumps To Record High.
• Repealing Obamacare's Individual Mandate Would Save $338 Billion.
• Trump Receives Hero's Welcome In Beijing As Chinese Roll Out The Red Carpet.
• Sabotage?: Hillary's Fusion GPS Operative Met With Russian Lawyer Before And After Trump Jr. Meeting.