Friday Watch

Evening Headlines

Bloomberg:   

• China's Debt Crackdown Helps Revive Flagging Dim Sum Bond Market.

• Trump Approves $50 Billion China Tariffs, Focuses More Closely on High Tech. 

• Asian Stocks Set for Gains; Dollar Strengthens. Asian stocks are set to rise Friday after their U.S. and European counterparts closed higher. The dollar hit an 11-month high and 10-year Treasury yields retreated. Futures in Japan, Australia and Hong Kong all pointed to gains. The S&P 500 closed with a modest rise Thursday, while the Nasdaq Composite Index hit a record high. Earlier, European stocks jumped and the euro suffered its biggest drop in about two years after the region’s central bank delivered a somewhat dovish message to investors. Europe’s bonds rallied. The greenback strengthened against all major peers. Nikkei 225 futures rose 0.6 percent in Singapore. S&P/ASX 200 futures rose 0.5 percent. Hang Seng futures rose 0.2 percent.

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

Wall Street Journal:

• Report Blasts FBI Agents, Comey Over Clinton Email Probe.

• The FBI’s Document Blackouts.

• U.S. Economy Seen Chugging Ahead of Europe and Asia.

• Big Investors Don’t Want Wall Street Analysts Snooping on Them.

• Disney, Comcast Bids for Fox Assets Could Face Regulatory Sticking Point: Sports.

• China’s Investors Pour Into Western Biotech Startups.

• Attacks on Libya Ports Shut Nearly Quarter of Libyan Crude Output.

MarketWatch.com:

• Qualcomm(QCOM), NXP stocks spike after report that China has cleared acquisition.

• ‘Dr. Doom’ calls out crypto bull.

Fox News:

• Lawmakers from both parties slam FBI after IG report: 'destructive level of animus'.

• Alan Dershowitz: DOJ watchdog should have been much tougher on Comey.

CNBC:    

• Amazon(AMZN) is stacking Whole Foods with execs to weave it into Jeff Bezos' broader vision. 

• Trump's forecast of 4% GDP growth close to coming true as Americans spend tax-bill proceeds.  

• Adobe(ADBE) stock drops even though it handily beat earnings estimates.

• Billionaire hedge fund titan: 'The gates are wide open' for more mergers after AT&T ruling.

• Julian Robertson says FANG stock valuations are 'cheap' versus the market.

• Hedge fund billionaire Julian Robertson: Trump is doing an ‘excellent job,’ deserves more credit.

Zero Hedge: 

• Here Is The Full OIG Report: Faults "Insubordinate" Comey, Notes FBI "Hostility" Against Trump.

• Emerging Markets Massacred As Dovish Draghi Sends Dollar Soaring.

• Pelosi: "I Just Don't Even Know Why There Isn't An Uprising In This Country".

• "Don't Panic": Bank of America's 20 Must-Know Stats For Investors. 

• "Unbiased" FBI Agent Strzok Texted "We'll Stop" Trump From Becoming President: OIG Report.

• Free Money? The Fed Is About To Give $36.93 Billion Of Taxpayer Money To Banks.

• Great News: The Fewest Americans In 8 Years Are Dependent On Government For Food.

Business Insider:

• Brutal 568-page watchdog report blasts Comey, finds FBI officials may have wanted to hurt Trump's chances of winning the election.

• Zelle, a payments service created by the 7 biggest US banks, is on track to be more popular than Venmo in 2018.

• FBI employees on Clinton email probe called Trump voters 'lazy pieces of s--t,' blamed themselves for Clinton loss in messages.

Telegraph:

• Comment: AT&T-Time Warner opens floodgates for merger frenzy.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 77.0 -.5 basis point 

• Asia Pacific Sovereign CDS Index 12.75 unch.

• Bloomberg Emerging Markets Currency Index 69.90 -.09%.

• FTSE 100 futures -.15%.

• S&P 500 futures -.06%.

• NASDAQ 100 futures -.03%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (GOOS)/-.08

After the Close:

• None of note

Economic Releases

8:30 am EST

• Empire Manufacturing for June is estimated to fall to 18.8 versus 20.1 in May.

9:15 am EST

• Industrial Production MoM for May is estimated to rise +.2% versus a +.7% gain in April.

• Manufacturing Production for May is estimated unch. versus a +.5% gain in April.

• Capacity Utilization for May is estimated to rise to 78.1% versus 78.0% in April.
  

10:00 am EST

• Preliminary Univ. of Mich. Consumer Sentiment for  June is estimated to rise to 98.5 versus 98.0 in May.
  

4:00 pm EST

• Net Long-Term TIC Flows for April.
  

Upcoming Splits

• (TREX) 2-for-1

• (HBNC) 3-for-2

Other Potential Market Movers

• The BoJ rate decision, Eurozone CPI report, US China tariff list announcement, (CNC) investor day and the (BLUE) business update conference call 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 mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.

Stocks Modestly Higher into Final Hour on Economic Optimism, Stable Long-Term Rates, Yen Weakness, Tech/Biotech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 12.18 -5.87%

• Euro/Yen Carry Return Index 133.58 -1.4%

• Emerging Markets Currency Volatility(VXY) 9.51 +.11%

• S&P 500 Implied Correlation 34.04 -4.28%

• ISE Sentiment Index 97.0 +22.78%
  

• Total Put/Call .90 +23.29%

• NYSE Arms 1.18 -1.42%

Credit Investor Angst:

• North American Investment Grade CDS Index 61.43 -3.31%
  

• America Energy Sector High-Yield CDS Index 377.0 -.21%

• European Financial Sector CDS Index 75.87 -6.55%

• Italian/German 10Y Yld Spread 231.25 -1.25 basis points
  

• Asia Pacific Sovereign Debt CDS Index 12.71 -.74%

• Emerging Market CDS Index 188.31 +2.39%
  

• iBoxx Offshore RMB China Corporate High Yield Index 150.04 +.17%

• 2-Year Swap Spread 26.75 +.25 basis point

• TED Spread 41.75 +1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -4.75 +1.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 70.03 -.77%

• 3-Month T-Bill Yield 1.92% -1.0 basis point
  

• Yield Curve 37.25 -2.75 basis points

• China Iron Ore Spot 65.80 USD/Metric Tonne -.6%

• Citi US Economic Surprise Index 16.20 +6.6 points

• Citi Eurozone Economic Surprise Index -98.90 +1.4 points

• Citi Emerging Markets Economic Surprise Index -26.70 -9.7 points

• 10-Year TIPS Spread 2.13 -1.0 basis point
  

• 84.5% chance of Fed rate hike at Sept. 26th meeting, 85.4% chance at November 8th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +142 open in Japan 

• China A50 Futures: Indicating -20 open in China

• DAX Futures: Indicating +41 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

•   Large-Cap Value unch.

Sector Underperformers:

• 1) Paper -1.0% 2) Retail -.8% 3) Banks -.7%

Stocks Falling on Unusual Volume: 

• TLRD, MIK, PTY, KTWO, WAT, DQ, BITA, HMI, GLMD, MYL, GGAL and ORCL

Stocks With Unusual Put Option Activity:

• 1) ASNA 2) DBX 3) TLRD 4) ACAD 5) MYL

Stocks With Most Negative News Mentions:

• 1) TLRD 2) CULP 3) WAT 4) KSS 5) ORCL

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.7%

Sector Outperformers:

• 1) Internet +1.6% 2) Utilities +1.0% 3) Medical Equipment +.8%

Stocks Rising on Unusual Volume:

• ETSY, DBX, SE, BILI, SOGO, USAC, SFIX, TWX, CBLK, CCS, QLYS, IQ, SNY, DLTH, ELOX, IBUY, CVNA, RCL, ROKU, SEND, SSTI, TIER, WBAI, JD, FSCT, PBYI, ZUO, TRCO, HAE, VKTX, CCRN, ROKU and HASI

Stocks With Unusual Call Option Activity:

• 1) RF 2) ETSY 3) DBX 4) ORCL 5) XLE

Stocks With Most Positive News Mentions:

• 1) DBX 2) ETSY 3) QLYS 4) RCL 5) WTI

Charts:

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