Friday Watch

Night Trading 

• Asian equity indices are unch. to +1.0% on average.
• Asia Ex-Japan Investment Grade CDS Index 66.75 -2.5 basis points. 
• Asia Pacific Sovereign CDS Index 12.0 unch.
• Bloomberg Emerging Markets Currency Index 75.22 -.02%.
• FTSE 100 futures +.03%.
• S&P 500 futures -.09%.
• NASDAQ 100 futures -.01%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AMWD)/.96
• (BIG)/2.42
• (PRTY)/.80

Economic Releases

8:30 am EST

• The Change in Non-Farm Payrolls for February is estimated at 205K versus 200K in January.
• The Unemployment Rate for February is estimated at 4.0% versus 4.1% in January. 
• Average Hourly Earnings MoM for February is estimated to rise +.2% versus a +.3% gain in January.
  

10:00 am EST

• Wholesale Trade Sales MoM for January.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Evans speaking, China Inflation report and the Eurozone Industrial Production report 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 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 Diminishing Trade War Fears, Earnings Optimism, Technical Buying, Gaming/Pharma Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Around Even
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 17.4 -2.0%

• Euro/Yen Carry Return Index 136.12 -.72%

• Emerging Markets Currency Volatility(VXY) 8.0 +.76%

• S&P 500 Implied Correlation 41.63 +2.16%

• ISE Sentiment Index 104.0 +18.18%
  

• Total Put/Call .92 -11.5%

• NYSE Arms 1.61 +6.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 56.72 -.1%
  

• America Energy Sector High-Yield CDS Index 391.0 +.7%

• European Financial Sector CDS Index 51.90 -1.83%

• Italian/German 10Y Yld Spread 135.75 +5.75 basis points
  

• Asia Pacific Sovereign Debt CDS Index 11.95 -.21%

• Emerging Market CDS Index 118.54 -.63%
  

• iBoxx Offshore RMB China Corporate High Yield Index 148.06 +.02%

• 2-Year Swap Spread 29.5 +.5 basis point

• TED Spread 37.0 +1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -29.0 +1.0 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 75.23 -.38%
• 3-Month T-Bill Yield 1.67% -1.0 basis point
  

• Yield Curve 61.25 -1.75 basis points

• China Iron Ore Spot 70.10 USD/Metric Tonne +.06%

• Citi US Economic Surprise Index 38.0 -2.3 points

• Citi Eurozone Economic Surprise Index -12.80 -4.8 points

• Citi Emerging Markets Economic Surprise Index 31.30 +19.0 points

• 10-Year TIPS Spread 2.12 -1.0 basis point
  
• 100.0% chance of Fed rate hike at May 2 meeting, 100.0% chance at June 13 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +132 open in Japan 
• China A50 Futures: Indicating +31 open in China

• DAX Futures: Indicating +3 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -.8%

Sector Underperformers:

• 1) Retail -1.4% 2) Homebuilding -1.2% 3) Computer Services -.9%

Stocks Falling on Unusual Volume: 

• CI, TECD, CLSD, XOMA, ZAGG, TRNC, KR, THO, YY, FMI, REVG, PRGS, DFRG, CATO, BKE and AEO

Stocks With Unusual Put Option Activity:

• 1) ESRX 2) DVMT 3) KR 4) KMI 5) MBI

Stocks With Most Negative News Mentions:

• 1) ZAGG 2) CAMP 3) VBLT 4) FFIV 5) HOV

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.3%

Sector Outperformers:

• 1) Gaming +4.3% 2) Disk Drives +1.5% 3) Airlines +1.2%

Stocks Rising on Unusual Volume:

• PCMI, GTHX, ZSAN, ESRX, CMTL, PRAA, JNCE, INNT, AIMC, ACMR, DLTR, AQ, OKTA, IGV, BURL, NAV, ORBK, BZUN, ALOG, BDXA, RDNT, YEXT, NVTR, IGT, AAC, COLL, ESRX, OKTA, NTLA, AAOI, MTN, SAIL, AVAV, LGND, BOJA, ANDV and CZR

Stocks With Unusual Call Option Activity:

• 1) AVEO 2) EA 3) NRG 4) NAV 5) DLTR

Stocks With Most Positive News Mentions:

• 1) AKAM 2) WEN 3) AIMC 4) MU 5) NAV

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -14.2% Below 100-Day Average
• 6 Sectors Rising, 4 Sectors Declining
• 46.2% of Issues Advancing, 50.4% Declining
• 87 New 52-Week Highs, 34 New Lows
• 47.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.5%
• Vix 17.0 -4.1%
• Total Put/Call .89 -14.4%
• TRIN/Arms 1.55 +3.7%

Thursday Watch

Evening Headlines

Bloomberg:

• Japan’s GDP Growth Tops Forecasts on Investment, Inventories. The Japanese economy has grown for eight straight quarters, its longest expansion in nearly 30 years, as global demand for its exports fueled record corporate profits and rising business investment. Yet wage gains and household spending have remained lackluster, and key January indicators, including industrial production, suggest growth may weaken or even disappear in the first quarter. A build-up in inventories during the fourth quarter could weigh on first-quarter results.

• Trade War Is More Damp Squib Than Big Bang, EM Bond Traders Say. For bond investors in emerging markets, Donald Trump’s trade war is a non-event. The average yield of corporate bonds in developing nations is unchanged since the U.S. President threatened last week to raise import tariffs on aluminum and steel. In fact, investors have lowered the extra return they demand over Treasury yields to own the bonds.

• Draghi Stares at Trade War Abyss as ECB Ponders Stimulus Outlook. Mario Draghi’s progress toward a stimulus exit is likely to stay slow for now, with inflation too low for comfort and the global economy up against a trade-war-in-waiting. U.S. tariffs and retaliation by Europe and others could harm the outlook for the euro area, where exports have played a huge role towing the economy out of its slump. That could add to the European Central Bank president’s argument when he pushes back against some ECB officials lobbying for a change to policy guidance.

• Stocks Gain in Asia as Protectionism Worries Abate. (video) Equities rose in Tokyo, Sydney and Seoul, while futures signaled a firmer start for the Hong Kong market after White House officials suggested President Donald Trump’s tariff plan will spare select countries from much of the impact. The S&P 500 Index finished flat after falling as much as 1 percent. Investors spooked by the departure of pro-trade adviser Gary Cohn took solace in comments from White House Council of Economic Advisers Chairman Kevin Hassett that indicated the trade policy is not yet finalized. The Topix index was up 0.6 percent and the Nikkei 225 Stock Average rose 0.7 percent as of 9:26 a.m. in Tokyo. Australia’s S&P/ASX 200 Index rose 0.4 percent. South Korea’s Kospi index was up 0.5 percent. Futures on Hong Kong’s Hang Seng Index gained 0.2 percent, though those contracts stopped trading prior to the bulk of Wednesday’s rally in the S&P 500. Futures on the S&P 500 fell 0.1 percent. The MSCI Asia Pacific Index rose 0.3 percent.

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

• Buy-the-Dip Believers Rejoice After White House Tries to Ease Trade Tension. Gary Cohn’s departure from the White House won’t end the bull market, at least not yet. The S&P 500 Index stormed back from losses of almost 1 percent to end little changed, as investors heeded a strategy that’s worked more often than not during the nearly nine-year bull run: Buy the dip.

• Here Are the Names Circulating to Replace Gary Cohn. (video)

• Uber’s Travis Kalanick Starts Fund to Invest in Tech Startups.

• Costco(COST) Outshines Other Discount Chains, But Concerns Linger.

Wall Street Journal:

• Reports of Problems at Crypto Exchange Send Bitcoin Tumbling. Binance cites ‘irregularities in trading activity’; SEC warns of risks surrounding such exchanges.

Fox News:

• Trump's sanctions and hardline rhetoric brought North Korea to negotiating table, experts say. (video)

CNBC:

• The SEC just made it clearer that securities laws apply to most cryptocurrencies and exchanges trading them. (video)

• 107 House Republicans send letter to Trump asking him not to do his tariff plan.

• Stocks making the biggest moves after hours: Caesars Entertainment, Vivint Solar & more.

• White House says Trump may exempt Canada, Mexico from tariffs. (video)

• New iPhones aren't selling in Asia, says analyst, but new products later in 2018 could boost Apple(AAPL). (video)

• Bitcoin just tanked below $10,000 after SEC says crypto exchanges must register with agency. (video)

Zero Hedge: 

• Amazon(AMZN) Admits Alexa Is Creepily Laughing At People.

• "We're Ready" - The NYPD Is Planning To Arrest Harvey Weinstein On Sex-Crime Charges.

• John Kerry, State Dept In Crosshairs As House Intel Committee Enters "Phase Two" Of Investigation.

• "We're Going To War" California Governor Blasts "Full Of Liars" Administration Over Immigrant Lawsuit.

• Dem Rep: Trump-Russia Probe Is "Running Joke" Between Democrats.

• Trump To Sign Tariffs Proclamation Tomorrow, No Carve-Outs.

• 'Carve-Outs' Rescue Stocks From Cohn Carnage.

• After Record Debt-Fuelled Splurge, US Credit Card Usage Post Sharp Slowdown.

• DNC Hack Involved Russian Agents "Within The Democratic Party": Unreleased Steele Memo.

• Stocks Spike After White House Says Mexico, Canada May Be Exempt From Tariffs. (graph)

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 69.25 +.25 basis point. 

• Asia Pacific Sovereign CDS Index 12.0 +.25 basis point.

• Bloomberg Emerging Markets Currency Index 75.50 -.03%.

• FTSE 100 futures +.17%.

• S&P 500 futures +.08%.

• NASDAQ 100 futures +.08%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AEO)/.44

• (BURL)/2.09

• (DFRG)/.42

• (HOV)/-.08

• (IGT)/.39

• (JKS)/.17

• (KR)/.63

• (NAV)/-.41

• (SHLD)/1.16

• (TECD)/3.49

• (MTN)/3.48

• (COO)/2.51

• (LOCO)/.10

• (MRVL)/.31

• (OSTK)/-.03

• (PAY)/.22

Economic Releases

7:30 am EST

• Challenger Job Cuts YoY for Feb.

8:30 am EST

• Initial Jobless Claims for last week are estimated to rise to 220K versus 210K the prior week. 

• Continuing Claims are estimated to rise to 1919K versus 1931K prior.
  

12:00 pm EST

• 4Q Household Change in Net Worth.

Upcoming Splits

• None of note

Other Potential Market Movers

• The ECB rate decision/press conference, China Trade Balance report, WasDe Crop report, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, (BK) investor day, JPMorgan Gaming/Restaurant/Lodging/Leisure conference, (IBM) investor briefing, (BKE) monthly sales report, (LB) sales report, (FFIV) analyst meeting, (USG) investor day and the (CBG) investor day could also impact trading today.

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