Thursday Watch

Evening Headlines

Bloomberg:     

• Asian Stocks Set to Gain; 10-Year Yield Eyes 3.1%.  

• Five Things You Need to Know to Start Your Day.

• Mueller Turns His Focus to Longtime Trump Adviser Roger Stone.

• Venture Capitalists Fret Over U.S. Bill Targeting Chinese Investors.

Wall Street Journal:

• European Firms Start Pulling Back From Iran.

• Venezuela’s Creditors Are Cutting Its Crude-Oil Lifeline.

MarketWatch.com:

• Here are Morgan Stanley’s(MS) 30 top stock picks.

Fox News:

• Mueller will follow DOJ guidelines saying sitting president can’t be indicted, Giuliani says.

CNBC:    

• Cisco(CSCO) drops despite earnings beat.

• Here are the stocks the top-performing hedge funds are buying — including Chipotle.

• After-hours buzz: CSCO, JACK & more.   

• Ford to resume production of popular F-Series pickup.

• Small-cap stocks quietly rise to new all-time high.

• These humanoid robots will make you question reality.

Zero Hedge:      

• Mueller Tells Trump Team He Won't Indict President: Giuliani.

• "Operation Crossfire Hurricane": FBI Sent Strzok On Secret Mission To London Before Election.

• The Trump-volution Explained In 4 Macro Charts.

• Broke Illinois Pension System Leaves Every Resident With $11,000 Of Debt.

• Senate Votes To Save Net Neutrality.

• Peter Navarro "Who Behaved Erratically And Unprofessionally", To Be Excluded From China Talks.

• Dollar Drops, Yields Pop As Small Caps Squeeze To New Record High.

Business Insider:

• Preakness Stakes 2018: Post positions and opening odds for the second leg of the Triple Crown.

• What's happening in the bond market could be pointing to a stock rally ahead.

Night Trading 

• Asian equity indices are -.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 76.0 unch. 

• Asia Pacific Sovereign CDS Index 13.0 +.75 basis point.

• Bloomberg Emerging Markets Currency Index 71.71 -.02%.

• FTSE 100 futures +.03%.

• S&P 500 futures +.04%.

• NASDAQ 100 futures +.04%.

Morning Preview Links

Earnings of Note
Company/Estimate 
Before the Open:

• (DDS)/2.77

• (TK)/-.08

• (PLCE)/2.21

• (WMT)/1.12

After the Close:

• (AMAT)/1.15

• (JWN)/.45

Economic Releases

8:30 am EST

• Initial Jobless Claims for last week is estimated to rise to 215K versus 211K the prior week.

• Continuing Claims are estimated to fall to 1780K versus 1790K prior. 

• The Philly Fed Business Outlook Index for May is estimated to fall to 21.0 versus 23.2 in April.

 10:00 am EST

• The Leading Index for April is estimated to rise +.4% versus a +.3% gain in March.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Kashkari speaking, Australia Unemployment report, Bloomberg Economic Expectations Index for May, weekly Bloomberg Consumer Comfort Index and the (ZEN) analyst day could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by technology and commodity shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 50% net long heading into the day.

Stocks Rising into Final Hour on Earnings Optimism, Short-Covering, Technical Buying, Retail/Transport Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Below Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 13.5 -7.59%

• Euro/Yen Carry Return Index 135.5 -.37%

• Emerging Markets Currency Volatility(VXY) 9.03 +1.8%

• S&P 500 Implied Correlation 34.78 -3.2%

• ISE Sentiment Index 87.0 -18.7%
  

• Total Put/Call .87 -20.9%

• NYSE Arms .83 -1.39%

Credit Investor Angst:

• North American Investment Grade CDS Index 60.81 -.25%
  

• America Energy Sector High-Yield CDS Index 368.0 +.41%

• European Financial Sector CDS Index 61.4 +5.36%

• Italian/German 10Y Yld Spread 151.0 +20.0 basis points
  

• Asia Pacific Sovereign Debt CDS Index 12.89 +5.05%

• Emerging Market CDS Index 159.31 -1.2%
  

• iBoxx Offshore RMB China Corporate High Yield Index 149.39 unch.

• 2-Year Swap Spread 22.75 +1.5 basis points

• TED Spread 41.5 -2.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -6.5 +.75 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 71.71 +.26%
• 3-Month T-Bill Yield 1.90% unch.
  

• Yield Curve 50.5 +1.25 basis points

• China Iron Ore Spot 67.64 USD/Metric Tonne -.03%

• Citi US Economic Surprise Index 11.20 -6.7 points

• Citi Eurozone Economic Surprise Index -95.40 +1.5 points

• Citi Emerging Markets Economic Surprise Index -6.0 -2.1 points

• 10-Year TIPS Spread 2.20 +1.0 basis point
  
• 100.0% chance of Fed rate hike at August 1 meeting, 100.0% chance at September 26 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +97  open in Japan 
• China A50 Futures: Indicating +63 open in China

• DAX Futures: Indicating +17 open in Germany

Portfolio: 

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my emerging market shorts

• Market Exposure: Moved to 75% Net Long

Today's Headlines

Bloomberg:

• Trump Says ‘We’ll Have to See’ If Kim Summit Goes On. (video)

• Williams Says Fed's Era of Market Hand-Holding Is Nearing an End.  

• Morgan Stanley(MS) Says a Shipping Revolution Has Oil Headed for $90.  

• Harvard’s Reinhart Says Emerging Markets Are in Tougher Spot Than During ‘08 Crisis. 

• Bitcoin’s True Believers Are Still Waiting on a Conference-Fueled Rally.

• SEC Tries to Scam ICO Investors to Show Them How Easy It Is.

Wall Street Journal:

• North Korea Balks at Hard Line on Nukes, Widening the Divide. 

• Youth Suicidal Behavior on the Rise, Especially Among Girls.

• Sports-Betting Companies Race to Expand After Supreme Court Decision.

MarketWatch.com:

• 15 dividend stocks whose 4%-plus yields beat Treasury bonds.

• An investor shopping list: 20 high-conviction stocks with average upside of 25%. 

Fox News:

• Transcripts on Trump Jr., Russian lawyer sitdown fail to fuel collusion narrative.

CNBC: 

• Trump says his push to save ZTE is part of a 'larger trade deal,' contradicting administration stance.

• AMD(AMD) shares rise after analyst upgrades chipmaker due to Intel’s manufacturing technology delay.

• Retailers' global expansion cools as businesses get smart about opening new stores.

• Red-hot chip stock Micron to soar another 50%, RBC Capital says.

• Square(SQ) Cash app is growing faster than Venmo, getting a boost from bitcoin, analyst says.

Zero Hedge:

• North Korea Threatens To Abandon Trump Summit, Furious Over Bolton Comments.

• Trump Slams Accusations He "Folded" On ZTE As China Trade Talks Begin.

• Industrial Production Growth Stabilizes At 7-Year Highs.

• Hedge Funds Dump Most Apple Stock Since 2008: Full 13F Summary.

• Housing Starts, Permits Tumble In April.

• Russell 2000 Surges To Record High As US Economic Data Dumps.

• Italian Bond Futures, Euro Climb As Italian Coalition Agreement Reached.

• Brennan Was Feeding Obama Unverified Info From Steele Dossier, Contradicting 2017 Testimony.

• WTI/RBOB Bounce After Crude Draw Despite New Record Production.

• Conservatives In An Uproar After Twitter Deploys Draconian Shadowban Filter.

• Italian Bonds Tumble Amid Political Chaos, Debt Writedown Fears.

• IEA Cuts 2018 Oil Demand Forecast On Soaring Oil Prices.

Bear Radar

Style Underperformer:

• Large-Cap Value +.5%

Sector Underperformers:

• 1) Utilities -.9% 2) Shipping -.3% 3) Energy -.1%

Stocks Falling on Unusual Volume: 

• EOLS, IQV, OMER, SFIX and PRTY

Stocks With Unusual Put Option Activity:

• 1) TBT 2) ZNGA 3) TUR 4) GME 5) M

Stocks With Most Negative News Mentions:

• 1) RYB 2) AVT 3) CVG 4) AES 5) MMM

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.1%

Sector Outperformers:

• 1) Steel +2.3% 2) Airlines +2.2% 3) Retail +1.8%

Stocks Rising on Unusual Volume:

• ABAX, FARM, GTXI, BOOT, M, ANIK, SE, HEAR, AYX, BOLD, CSTE, PETQ, NEWR, ORIG, COOL, EIGR, VIPS, MCFT, HF, GGAL, KELYA, CHDN, AIZ, AMBA, TTD, JNCE, RCKT, IOVA, CCXI and HRC

Stocks With Unusual Call Option Activity:

• 1) NRG 2) ANF 3) LQD 4) LYB 5) ITB

Stocks With Most Positive News Mentions:

• 1) BLNK 2) BOOT 3) M 4) URBN 5) IP

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -8.2% Below 100-Day Average
• 10 Sectors Rising, 1 Sector Declining
• 62.4% of Issues Advancing, 33.1% Declining
• 74 New 52-Week Highs, 28 New Lows
• 45.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.5%
• Vix 13.9 -5.0%
• Total Put/Call 1.15 +4.6%
• TRIN/Arms 1.02 +21.0%