Tuesday Watch

Evening Headlines

Bloomberg:  

• Donald Trump-Kim Jong Un Summit in Singapore.

• U.S. Lawmakers Seek to Restore ZTE Penalties in Defense Bill.

• Asia Stocks Set to Gain Ahead of Trump-Kim Summit. Asian stocks are set for a positive open as investors look beyond weekend trade ructions to focus on the three major central bank meetings this week and Tuesday’s historic summit between President Donald Trump and North Korea’s leader. Equity index futures were higher in Japan, Australia and Hong Kong. The S&P 500 Index rose Monday for the second straight session, though it gave up some gains just before the close. The dollar climbed and U.S. Treasury yields ticked higher. The pound fell as Theresa May’s landmark Brexit legislation goes to Parliament. Futures on the Nikkei 225 Stock Average rose 0.4 percent in Singapore. S&P/ASX 200 Index futures were up 0.4 percent. Hang Seng Index futures gained 0.1 percent. S&P 500 futures were little changed as of 7:01 a.m. in Tokyo.

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

• Seattle Poised to Repeal Tax On Amazon and Large Employers. 

• Someone Bet Big on Boston Scientific Before Stryker Deal Report.

Wall Street Journal:

• Summit Draws All Eyes to Singapore.

• Stryker Makes Takeover Approach to Boston Scientific.

• U.S.-Canada Rift After G-7 Meeting Roils Nafta Talks.

• The Fed’s Biggest Dilemma: Is the Booming Job Market a Problem?  

• AT&T’s(T) Dream Deal Hangs on Ruling.

• Invented at Duke, Financed in Beijing: Powerful Spy Camera Shows China’s AI Ambition.

• Electric-Vehicle Frenzy Sweeps Up Once-Unloved Metal: Nickel. 

• Philly’s Affordable-Housing Plan: Tax New Buildings.

MarketWatch.com:

• Here’s why stock-market investors are so relaxed about trade wars and North Korea.

• Bitcoin tumbles 10%, crypto market cap down $300 billion year-to-date.

• Economic adviser Larry Kudlow suffers heart attack, Trump says.

Fox News: 

• Trump's North Korea bargaining chips: What is president prepared to offer?

• DOJ slams univ’s ‘bias response team,’ calls college ‘shelter for fragile egos’.

CNBC:    

• Corporate executives are using stock buybacks to pad their own compensation, according to the SEC.

• Tesla(TSLA) stock rallies after Elon Musk promises 'full self-driving features,' rocket-powered Roadster.

• Comcast preparing to announce bid for Fox on Wednesday if AT&T-Time Warner is approved, sources say.

• After-hours buzz: RH, PLAY and more.

• US Steel(X) planning to add more than 800 jobs this year.

• Soon you may be able to change your car's interior at the touch of a button.

Zero Hedge:    

• Obama Secretly Meeting With 2020 Democratic Contenders.

• Maltese Professor Who Lured Papadopoulos Tied To Soros' Open Society Foundation. 

• Sessions Further Limits US Immigrants: Rules Gang Violence Not Basis For Asylum.

• The History (And Rising Power) Of Central Banks.

• Boris Johnson Leaked Recording: "I Am Increasingly Admiring Donald Trump. There's Method In His Madness".

• Senate Releases Facebook Hearing Responses: Willing To Write Own Regulations, Promises Not Spying On Users.

• Stocks Gain, Bonds Feel No Pain As Cryptos Crash & Dollar Triggers 'Golden Cross'.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 78.75 +.75 basis point 

• Asia Pacific Sovereign CDS Index 13.0 unch.

• Bloomberg Emerging Markets Currency Index 70.83 -.09%.

• FTSE 100 futures -.10%.

• S&P 500 futures -.03%.

• NASDAQ 100 futures -.05%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (CASY)/.66

• (JW/A)/.79

• (LE)/-.17

After the Close:

• (HRB)/5.27

• (OXM)/1.23

Economic Releases

6:00 am EST

• The NFIB Small Business Optimism Index for May is estimated to rise to 105.0 versus 104.8 in April.
  

8:30 am EST

• The CPI MoM for May is estimated to rise +.2% versus a +.2% gain in April.

• The CPI Ex Food & Energy for May is estimated to rise +.2% versus a +.1% gain in April.

• Real Avg. Weekly Earnings YoY for May.
  

2:00 pm EST

• The Monthly Budget Statement for May is estimated at -$139.5B versus $214.3B in April.
  

Upcoming Splits

• (TREX) 2-for-1

• (HBNC) 3-for-2

Other Potential Market Movers

• The Eurozone ZEW Index, monthly OPEC market report, $14B 30Y T-Note auction, WasDe Crop report, US weekly retail sales reports, Morgan Stanley US Financials Conference, Entertainment Electronics Expo, Deutsche Bank Consumer Conference, William Blair Growth Stock Conference, Wells Fargo Energy Conference and the Goldman Sachs Healthcare Conference could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by technology and industrial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing modestly higher.  The Portfolio is 75% net long heading into the day.

Stocks Rising into Final Hour on Less Eurozone Debt Angnst, Oil Gain, Yen Weakness, Transport/Retail Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: About Even
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 12.4 +1.6%

• Euro/Yen Carry Return Index 134.98 +.6%

• Emerging Markets Currency Volatility(VXY) 9.62 +.31%

• S&P 500 Implied Correlation 34.08 +.47%

• ISE Sentiment Index 97.0 -.23%
  

• Total Put/Call .69 -26.60%

• NYSE Arms .69 +.76%

Credit Investor Angst:

• North American Investment Grade CDS Index 64.66 -2.56%
  

• America Energy Sector High-Yield CDS Index 377.0 +.29%

• European Financial Sector CDS Index 83.58 -7.83%

• Italian/German 10Y Yld Spread 267.75 -33.25 basis points
  

• Asia Pacific Sovereign Debt CDS Index 12.97 -1.67%

• Emerging Market CDS Index 178.44 +1.09%
  

• iBoxx Offshore RMB China Corporate High Yield Index 149.74 -.03%

• 2-Year Swap Spread 27.25 unch.

• TED Spread 41.0 +1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -11.75 +1.5 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 70.87 -.28%
• 3-Month T-Bill Yield 1.90% -2.0 basis points
  

• Yield Curve 43.0 -.25 basis point

• China Iron Ore Spot 65.35 USD/Metric Tonne -.20%

• Citi US Economic Surprise Index 9.20 -1.0 point

• Citi Eurozone Economic Surprise Index -98.0 +2.1 points

• Citi Emerging Markets Economic Surprise Index -16.20 -1.3 points

• 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 +161 open in Japan 
• China A50 Futures: Indicating -15 open in China

• DAX Futures: Indicating +43 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

•   Small-Cap Value -.1%

Sector Underperformers:

• 1) Utilities -1.1% 2) Oil Service -.4% 3) Construction -.4%

Stocks Falling on Unusual Volume: 

• ADNT, CRSP, EDIT, NTLA, I, GDI, PCG, AAOI, FBC and BCOR

Stocks With Unusual Put Option Activity:

• 1) RCII 2) RH 3) CZR 4) GNW 5) CI

Stocks With Most Negative News Mentions:

• 1) ADNT 2) PCG 3) MXL 4) TSRO 5) ALE

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.4%

Sector Outperformers:

• 1) Gaming +2.0% 2) Airlines +1.6% 3) Healthcare Providers +1.5%

Stocks Rising on Unusual Volume:

• EVHC, GFN, IEFA, USG, BSTI, FSB, XNET, SRE, BSX, SOGO, WEB, HMI, SCWX, TOT, CBLK, PAR, PUK, SYNA, ZS, IQ, EOLS, GPRK, BABY, PTC, ROKU, MBI, ACOR, BGCP, RCII, SJM, RH and NXST

Stocks With Unusual Call Option Activity:

• 1) BGCP 2) FDC 3) XHB 4) RCII 5) GT

Stocks With Most Positive News Mentions:

• 1) GNW 2) PS 3) RCII 4) APA 5) USG

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -1.8% Below 100-Day Average
• 10 Sectors Rising, 1 Sector Declining
• 53.9% of Issues Advancing, 41.6% Declining
• 122 New 52-Week Highs, 16 New Lows
• 51.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 51.7%
• Vix 12.4 +1.7%
• Total Put/Call .73 -22.3%
• TRIN/Arms .63 -7.6%