Morning Market Internals

NYSE Composite Index:

• Volume Running -2.9% Below 100-Day Average
• 7 Sectors Rising, 4 Sectors Declining
• 48.9% of Issues Advancing, 46.8% Declining
• 71 New 52-Week Highs, 44 New Lows
• 46.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.5%
• Vix 13.6 +.9%
• Total Put/Call .95 +14.5%
• TRIN/Arms 1.76 +81.2%

Friday Watch

Evening Headlines

Bloomberg:   

• China Offered Trump $200 Billion Cut in U.S. Trade Deficit, Official Says. (video) China has offered President Donald Trump a $200 billion reduction in its annual trade surplus with the U.S. by increasing imports of American products and other steps, said a Trump administration official. China made the offer during talks in Washington this week as Chinese Vice Premier Liu He visited to try to resolve a trade dispute, the official said, speaking on condition of anonymity. Liu met with Trump Thursday afternoon at the White House. The official didn’t describe the U.S. response. Trump expressed doubt ahead of his meeting with Liu that China and the U.S. would come to an agreement to avoid a damaging trade war.  

• Nafta Countries ‘Nowhere Near Close to a Deal,’ Trump’s Negotiator Says.      

• Japan’s Inflation Slows Amid Rising Calls for Delay in BOJ Exit.  

• Reasons Why Global Growth Is Speeding Up, Not Slowing Down.

• Asian Stocks Set for Modest Gains; Yields Climb: Markets Wrap. Asian shares are set for a slightly higher open though still on track for a weekly loss as investors take in the implications of a jump in benchmark U.S. 10-year Treasury yields to their highest level since 2011. The dollar remains near its strongest for the year. News that China has offered President Donald Trump a $200 billion reduction in the bilateral trade gap with the U.S. had little immediate reaction as trading got going in Asia Friday. Futures in Japan, Australia and South Korea all pointed to modest gains. The S&P 500 Index closed little changed after a direction-shifting session, though domestically focused U.S. small caps hit a fresh record. Brent crude rose to a level unseen since 2014 amid mounting signs that global stockpiles are shrinking. Nikkei 225 futures were up 0.2 percent in Singapore. S&P/ASX 200 futures were up 0.2 percent. Futures on the S&P 500 Index were little changed after the underlying gauge closed down 0.1 percent. The MSCI Emerging Markets Index was down 1 percent.  

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

• Amgen(AMGN) Says Just-Approved Migraine Drug Will Cost $6,900 a Year.

Wall Street Journal:

• Oil Is Above $70, but Frackers Still Struggle to Make Money.

• Buyer Beware: Hundreds of New Cryptocurrencies Show Hallmarks of Fraud.

• What Happened When Schools Cut Back on Suspensions.

• North Korea Doubles Down on Criticism of Seoul, U.S.

• Legislation to Curb Chinese Deals Moves Through Congress.

• Kroger Makes Bold Push to Boost Online Shopping.

MarketWatch.com:

• Bitcoin may fall below $8,000 as crypto confab fails to stoke buying, analyst says. 

• Here are the 20 stocks that the biggest hedge funds love most.

• This breakout in stocks means the bull market isn’t about to end.

Fox News:

• Manafort judge who ripped Special Counsel Mueller’s team obtains ‘scope’ memo.

CNBC:     

• After-hours buzz: PYPL, JWN, AMAT & more.

• The last two times Walmart shares did this the stock saw a huge rally.

• Trump: I 'doubt' China trade negotiations will succeed.

• PayPal(PYPL) is buying payments start-up iZettle for $2.2 billion ahead of IPO.

• The number of 401(k) plan millionaires hits a new high.

• Activision(ATVI) announces ‘Call of Duty’ battle-royale game to compete with ‘Fortnite’.  
  

• Bear markets don't start when Russell 2000 hits new high: NYSE governor.

• YouTube's music head sees 'great opportunity' in streaming, touts 'world's biggest catalog'.

Zero Hedge:         

• China Reportedly Offers $200BN Trade Deficit Reduction.

• Mueller Files Unredacted Memo Revealing Scope Of Russia Probe, There Is Just One Problem...

• Tesla Will Need Over $10 BIllion In New Capital By 2020: Goldman.

• Wells Fargo Caught Altering Information on Business Customers Documents .

• Trump Slams Obama FBI 'Spying' Report As "Bigger Than Watergate".

• PIIGS Credit Risk Jumps Amid Italy's Five Star-League 'Agreement' Confusion .

• Bonds Battered, Submerging Markets Slump, & Small Caps Hit Record High.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 75.75 -.25 basis point. 

• Asia Pacific Sovereign CDS Index 13.0 unch.

• Bloomberg Emerging Markets Currency Index 71.36 +.01%.

• FTSE 100 futures -.11%.

• S&P 500 futures +.09%.

• NASDAQ 100 futures +.09%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (AZN)/.61

• (CPB)/.60

• (DE)/3.33

After the Close:

• None of note

Economic Releases

• None of note

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Mester speaking, Fed's Brainard speaking and the Eurozone Trade Balance report could also impact trading today.

BOTTOM LINE:  Asian indices are slightly 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 Slightly Lower into Afternoon on Trade War Tensions, Long-Term Rates, Emerging Market Debt Angst, Restaurant/Utility Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 13.07 -2.05%

• Euro/Yen Carry Return Index 136.06 +.24%

• Emerging Markets Currency Volatility(VXY) 8.96 unch.

• S&P 500 Implied Correlation 33.48 +3.8%

• ISE Sentiment Index 116.0 +12.6%
  

• Total Put/Call .82 -6.82%

• NYSE Arms .96 +7.78%

Credit Investor Angst:

• North American Investment Grade CDS Index 61.13 +.22%
  

• America Energy Sector High-Yield CDS Index 362.0 -1.54%

• European Financial Sector CDS Index 62.57 +1.9%

• Italian/German 10Y Yld Spread 147.50 -3.5 basis points
  

• Asia Pacific Sovereign Debt CDS Index 12.87 -.19%

• Emerging Market CDS Index 162.97 +2.73%
  

• iBoxx Offshore RMB China Corporate High Yield Index 149.35 -.03%

• 2-Year Swap Spread 25.0 +2.25 basis points

• TED Spread 41.25 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -5.25 +1.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 71.41 -.43%

• 3-Month T-Bill Yield 1.90% unch.
  

• Yield Curve 53.75 +3.25 basis points

• China Iron Ore Spot 67.84 USD/Metric Tonne +.38%

• Citi US Economic Surprise Index 12.50 +1.3 points

• Citi Eurozone Economic Surprise Index -93.60 +1.8 points

• Citi Emerging Markets Economic Surprise Index -4.90 +1.1 points

• 10-Year TIPS Spread 2.20 unch.
  

• 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 +15 open in China

• DAX Futures: Indicating -7 open in Germany

Portfolio: 

• Higher: On gains in my medical/industrial/retail sector longs and emerging market shorts

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth +.2%

Sector Underperformers:

• 1) Utilities -.4% 2) Papers -.4% 3) Foods -.4%

Stocks Falling on Unusual Volume: 

• JNCE, AYR, NTES, AMBA, PLCE, KEM, JACK, USCR, DVAX, BPMC, FLO, NKTR and CBS

Stocks With Unusual Put Option Activity:

• 1) NKTR 2) DNR 3) BYD 4) TTWO 5) KR

Stocks With Most Negative News Mentions:

• 1) JNCE 2) CBS 3) SAIC 4) PGR 5) WFC

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.9%

Sector Outperformers:

• 1) Oil Service +2.6% 2) Energy +2.1% 3) Road & Rail +1.1%

Stocks Rising on Unusual Volume:

• CURO, CSTE, CQH, LOXO, WWE, BZUN, IMMU, AKAM, EIGR, WPZ, AAXN, WRD, EFII, BOLD, ENS, EOLS, ATUS, BUSE, ESND, DDS, HEAR, SPPI, TTWO, M, FWONA, ECYT, GPRE, OMER, WRD, BCEI, REGI, CUTR, VLO, TDC, CDEV, LCI, GPK, MPC, STAA, FND and BRS

Stocks With Unusual Call Option Activity:

• 1) MYL 2) PVH 3) SIG 4) AIG 5) TGT

Stocks With Most Positive News Mentions:

• 1) LOXO 2) LTUM 3) IMMU 4) VLO 5) M

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +7.5% Above 100-Day Average
• 7 Sectors Rising, 4 Sectors Declining
• 61.8% of Issues Advancing, 34.1% Declining
• 107 New 52-Week Highs, 29 New Lows
• 47.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.7%
• Vix 12.9 -3.6%
• Total Put/Call .86 -2.3%
• TRIN/Arms .84 -4.5%