Stocks Falling into Afternoon on European/US High-Yield Debt Angst, Oil Decline, Less Economic Optimism, Commodity/Telecom Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Slightly Higher
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 12.9 +3.0%

• Euro/Yen Carry Return Index 132.82 -.36%

• Emerging Markets Currency Volatility(VXY) 9.1 unch.

• S&P 500 Implied Correlation 35.1 +1.7%

• ISE Sentiment Index 139.0 +46.3%
  

• Total Put/Call .96 +12.9%

• NYSE Arms 2.09 +65.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 63.16 +1.75%
  

• America Energy Sector High-Yield CDS Index 368.0 +3.38%

• European Financial Sector CDS Index 76.10 +7.24%

• Italian/German 10Y Yld Spread 205.5 +12.75 basis points
  

• Asia Pacific Sovereign Debt CDS Index 12.20 -.93%

• Emerging Market CDS Index 161.76 +1.81%
  

• iBoxx Offshore RMB China Corporate High Yield Index 149.79 +.20%

• 2-Year Swap Spread 22.50 -.75 basis point

• TED Spread 43.5 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -15.75 -3.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 71.04 -.29%
• 3-Month T-Bill Yield 1.89% unch.
  

• Yield Curve 45.25 -2.0 basis points

• China Iron Ore Spot 64.03 USD/Metric Tonne +.16%

• Citi US Economic Surprise Index 12.0 +4.0 points

• Citi Eurozone Economic Surprise Index -96.60 +1.6 points

• Citi Emerging Markets Economic Surprise Index -7.0 -.5 point

• 10-Year TIPS Spread 2.11 -3.0 basis points
  
• 100.0% chance of Fed rate hike at August 1 meeting, 100.0% chance at September 26 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -90  open in Japan 
• China A50 Futures: Indicating -12 open in China

• DAX Futures: Indicating -2 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Morning Market Internals

NYSE Composite Index:

• Volume Running -2.6% Below 100-Day Average
• 6 Sectors Rising, 5 Sectors Declining
• 46.5% of Issues Advancing, 50.1% Declining
• 61 New 52-Week Highs, 33 New Lows
• 48.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.5%
• Vix 12.9 +3.3%
• Total Put/Call .90 +5.9%
• TRIN/Arms 2.2 +74.0%

Friday Watch

Night Trading 

• Asian equity indices are -.25% to +.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 75.5 -.25 basis point. 
• Asia Pacific Sovereign CDS Index 12.25 -.25 basis point.
• Bloomberg Emerging Markets Currency Index 71.02 -.12%.
• FTSE 100 futures +.41%.
• S&P 500 futures +.32%.
• NASDAQ 100 futures +.60%.

Morning Preview Links

Earnings of Note
Company/Estimate

Before the Open:

• (BKE)/.36
• (CAE)/.32
• (FL)/1.24
• (HIBB)/1.14

After the Close:

• None of note

Economic Releases
8:30 am EST

• Durable Goods Orders for April is estimated to fall -1.3% versus a +2.6% gain in March.
• Durables Ex Transports for April is estimated to rise +.5% versus a +.1% gain in March.
• Cap Goods Orders Non-Defense Ex Air for April is estimated to rise +.7% versus a -.4% decline in March.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Kaplan speaking, Fed's Bostic speaking, Fed's Evans speaking, German IFO and the (EFX) investor meeting could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by consumer and energy shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon.  The Portfolio is 100% net long heading into the day.

Stocks Slightly Lower into Final Hour on Trade War Worries, Geopolitical Tensions, Oil Decline, Energy/Telecom Sector Weakness

 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) 12.74 +1.27%

• Euro/Yen Carry Return Index 133.45 -.46%

• Emerging Markets Currency Volatility(VXY) 9.1 -.65%

• S&P 500 Implied Correlation 34.86 -.31%

• ISE Sentiment Index 99.0 +6.45%
  

• Total Put/Call .84 -15.15%

• NYSE Arms 1.21 -7.19%

Credit Investor Angst:

• North American Investment Grade CDS Index 62.19 +.60%
  

• America Energy Sector High-Yield CDS Index 358.0 +.86%

• European Financial Sector CDS Index 70.97 +2.17%

• Italian/German 10Y Yld Spread 192.75 +3.5 basis points
  

• Asia Pacific Sovereign Debt CDS Index 12.31 -1.05%

• Emerging Market CDS Index 158.69 +1.32%
  

• iBoxx Offshore RMB China Corporate High Yield Index 149.49 -.04%

• 2-Year Swap Spread 23.25 +.75 basis point

• TED Spread 43.5 +2.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -12.75 +.5 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 71.12 -.29%
• 3-Month T-Bill Yield 1.89% -2.0 basis points
  

• Yield Curve 47.25 -.5 basis point

• China Iron Ore Spot 65.15 USD/Metric Tonne +1.18%

• Citi US Economic Surprise Index 8.0 -1.8 points

• Citi Eurozone Economic Surprise Index -98.20 +.6 point

• Citi Emerging Markets Economic Surprise Index -6.50 -.5 point

• 10-Year TIPS Spread 2.14 -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 -152  open in Japan 
• China A50 Futures: Indicating +7 open in China

• DAX Futures: Indicating +21 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 100% Net Long

Morning Market Internals

NYSE Composite Index:

• Volume Running +1.6% Above 100-Day Average
• 3 Sectors Rising, 8 Sectors Declining
• 42.0% of Issues Advancing, 55.1% Declining
• 38 New 52-Week Highs, 42 New Lows
• 48.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.3%
• Vix 13.5 +7.2%
• Total Put/Call .85 -14.1%
• TRIN/Arms 1.28 -1.99%