Thursday Watch

Evening Headlines

Bloomberg:  

• Asia Stocks Pricing in 20% Chance of Serious Trade War, UBS Says.

• U.S. Issues First Round of Products Excluded From Steel Tariffs.

• China Just Handed the World a 111-Million-Ton Trash Problem.

• Xiaomi Starts Taking Orders for the World’s Biggest IPO for Two Years.

• Australian Stocks Rally to Highest in Decade Fueled by Banks.

• Saudi Arabia Wins Coveted Emerging-Market Status in MSCI Upgrade.

• Asia Stocks Edge Higher; Dollar, Treasuries Steady. Asian stocks had a muted start to trading Thursday as concern simmers about an escalation of trade tensions between the U.S. and China. Treasury yields and the dollar were steady as oil retreated. Benchmarks edged higher in Japan, while South Korean shares were little changed. Australian stocks rose, cementing gains at an eight-year high. Futures in Hong Kong pointed to a muted opening. The S&P 500 broke a three-day losing streak and the Nasdaq Composite Index advanced to an all-time high, buoyed by Facebook Inc.’s rally. The pound was stable after U.K. Prime Minister Theresa May won a key vote on Brexit. Exchange-traded funds tracking equities in Argentina and Saudi Arabia climbed after MSCI Inc. upgraded the nations to emerging-market status. Japan’s Topix index rose 0.1 percent as of 9:08 a.m. in Tokyo. Australia’s S&P/ASX 200 Index gained 0.5 percent. Futures on Hong Kong’s Hang Seng added 0.1 percent. S&P 500 futures were up 0.1 percent. 

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

Wall Street Journal:

• In a Year Marked by Controversy, Cboe Seeks to Improve the VIX.

• How Amazon Became One of Washington’s Most Powerful Players.

• Trump Retreats After Fury Over Border Separations.

• Disney Sweetens Deal for Fox Assets, Topping Comcast Bid.

• Match Group Deepens Its Connection With Dating-App Hinge.

• Deals on Wheels: Group Bike Rides Are the New Boardroom.

• White House to Propose Merging Education, Labor Departments.

MarketWatch.com:

• Micron(MU) earnings show big profit and sales gains, shares turn higher after forecast.

• Michael Bloomberg plans to spend $80 million to help Democrats win back House. 

• Twitter(TWTR) short sellers double down, as Square(SQ) shorts run for cover.

Fox News:

• Feds slam airlines for 'buckling to a false media narrative' on migrant child passengers.

CNBC:     

• Tesla's(TSLA) alleged rogue employee is exactly what Congress is worried about with self-driving cars.

• After-hours buzz: BNED, HPQ & more.

• Airlines to Trump administration: Don't fly migrant children separated from families on our planes.  

• 10 tech jobs that offer six-figure salaries.

Zero Hedge: 

• This Is The Greatest Short-Squeeze In History.

• Stunning Video Shows Global Migration Flows Into The US.

• Sharyl Attkisson: The Left Invented Fake News.

• Melania Calls Secret Service On Peter Fonda After Pedo Rape-Cage Tweet.

• Trump Signs Order Keeping Migrant Families Together At Border, "Zero-Tolerance" To Continue.  

• Here Are The Three Possible Outcomes From Friday's OPEC Meeting.

• As Trump Concedes, Europe Prepares Crackdown On Illegal Immigrants.

• Regulators Stunned By Deutsche Bank's Spectacular, 12x VaR Trading Blowup.

• Big-Tech Blasts Higher As Dow Slumps To Worst Losing Streak In 15 Months.

Business Insider:

• Check out these photos of the US military drills in Europe that have Russia spooked.

• Shake Shack(SHAK) is adding more cashless kiosks as part of a trend sweeping the fast-food industry. Here's how to use them.

Telegraph:

• Comment: 'China First' pursuit of hi-tech hegemony was bound to provoke America.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 79.25 -1.75 basis points. 

• Asia Pacific Sovereign CDS Index 13.25 -.5 basis point.

• Bloomberg Emerging Markets Currency Index 69.53 -.12%.

• FTSE 100 futures +.30%.

• S&P 500 futures +.16%.

• NASDAQ 100 futures +.21%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (BKS)/-.2

• (CMC)/.42

• (DRI)/1.35

• (KR)/.63

• (PDCO)/.30

After the Close:

• (RHT)/.68

Economic Releases

8:30 am EST

• Initial Jobless Claims for last week are estimated to rise to 220K versus 218K the prior week.

• Continuing Claims are estimated to rise to 1710K versus 1697K prior.

• The Philly Fed Business Outlook for June is estimated to fall to 29.0 versus 34.4 in May.

9:00 am EST

• The FHFA House Price Index MoM for April is estimated to rise +.5% versus a +.1% gain in May.
  

10:00 am EST

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

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone Consumer Confidence report, Japan CPI report, weekly EIA natural gas inventory report, Bloomberg Economic Expectations Index for June, weekly Bloomberg Consumer Comfort Index, Citi Chemical Conference, (HDS) analyst day and the (ETR) analyst day could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by commodity and technology 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 Higher into Final Hour on Less Emerging Markets Debt Angst, Oil Gain, Yen Weakness, Biotech/Retail Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 12.69 -4.94%

• Euro/Yen Carry Return Index 133.11 +.25%

• Emerging Markets Currency Volatility(VXY) 9.81 -2.29%

• S&P 500 Implied Correlation 34.94 -2.73%

• ISE Sentiment Index 118.0 +38.8%
  

• Total Put/Call .86 +3.61%

• NYSE Arms 1.02 +7.15%

Credit Investor Angst:

• North American Investment Grade CDS Index 62.95 +1.2%
  

• America Energy Sector High-Yield CDS Index 395.0 -.35%

• European Financial Sector CDS Index 77.89 -1.82%

• Italian/German 10Y Yld Spread 217.25 -1.25 basis points
  

• Asia Pacific Sovereign Debt CDS Index 13.34 -2.56%

• Emerging Market CDS Index 188.90 -2.27%
  

• iBoxx Offshore RMB China Corporate High Yield Index 149.80 -.11%

• 2-Year Swap Spread 26.0 +.25 basis point

• TED Spread 40.50 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -2.0 +3.5 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 69.62 +.05%
• 3-Month T-Bill Yield 1.93% unch.
  

• Yield Curve 36.75 +2.0 basis points

• China Iron Ore Spot 64.10 USD/Metric Tonne -.09%

• Citi US Economic Surprise Index 10.10 -1.1 points

• Citi Eurozone Economic Surprise Index -86.30 +.6 point

• Citi Emerging Markets Economic Surprise Index -19.0 +1.0 point

• 10-Year TIPS Spread 2.13 +1.0 basis point
  
• 82.4% chance of Fed rate hike at Sept. 26th meeting, 83.4% chance at November 8th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -55 open in Japan 
• China A50 Futures: Indicating -68 open in China

• DAX Futures: Indicating -6 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

•   Large-Cap Value +.1%

Sector Underperformers:

• 1) Restaurants -3.0% 2) Papers -1.0% 3) Insurance -.7%

Stocks Falling on Unusual Volume: 

• ANIK, SBUX, SLDB, GLMD, GEVO, ORCL, GLOB, ALRM, LZB and CVNA

Stocks With Unusual Put Option Activity:

• 1) DXJ 2) KR 3) BIG 4) SBUX 5) ORCL

Stocks With Most Negative News Mentions:

• 1) ORCL 2) SNAP 3) FMI 4) TAL 5) EIX

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.0%

Sector Outperformers:

• 1) Biotech +1.4% 2) Internet +1.4% 3) Networking +1.3%

Stocks Rising on Unusual Volume:

• FOX, SFIX, NVGS, FOXA, DGII, TSRO, PTCT, PZZA, SYNA, WGO, ATU, GLT, PCOM, BOX, GHDX, I, IQ, CRTO, SRPT, TPIC, PAR, COOL, MRAM, WBA, CWH, STAA, SEND, FOXA, BOLD, ARRY, COLL, EPZM and SD

Stocks With Unusual Call Option Activity:

• 1) VWO 2) PTCT 3) ORCL 4) TSRO 5) ARRY

Stocks With Most Positive News Mentions:

• 1) SRPT 2) I 3) WGO 4) ATU 5) SYNA

Charts:

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

Market Internals

NYSE Composite Index:

• Volume Running -1.9% Below 100-Day Average
• 9 Sectors Rising, 2 Sectors Declining
• 60.3% of Issues Advancing, 36.1% Declining
• 95 New 52-Week Highs, 27 New Lows
• 48.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.1%
• Vix 12.6 -5.9%
• Total Put/Call .99 +19.3%
• TRIN/Arms 1.02 +7.1%