Tuesday Watch

Evening Headlines

Bloomberg:

• Trump's Iran Threats Pull From Playbook He Used for North Korea.

• China Hedge Funds Trigger Investor Unease With June Implosion.

• Asia Stocks Set to Gain; U.S. Yields Eye 3% Again. Futures tipped Asian stocks to open higher, with strong Alphabet Inc. sales potentially boosting technology shares and rising yields boosting financials. Ten-year Treasuries slipped, pushing yields to the highest in more than a month. Equity index futures rose in Japan, Australia and Hong Kong. Even so, gains may be kept in check as U.S. futures opened lower in Asia. The S&P 500 Index started the week higher, with financials leading the gainers amid below-average trading volume. Amazon.com pulled consumer discretionary stocks lower after President Donald Trump renewed his public campaign against Jeff Bezos’s Washington Post. Alphabet shares were 3.7 percent higher in after-market trading. Futures on the Nikkei 225 Stock Average gained 0.2 percent in Singapore. Futures on Australia’s S&P/ASX 200 Index climbed 0.3 percent. Hong Kong’s Hang Seng Index futures rose 0.2 percent. S&P 500 Index futures were little changed as of 7:09 a.m. in Tokyo. 

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

• Oil Demand Outlook Clouded by Emerging Economies’ Currency Pain.

• Case for a Steeper U.S. Curve Gets a Boost From BOJ Speculation.

Wall Street Journal:

• Church Becomes Target in Nicaragua Crisis.

• Trump Escalates Exchange of Taunts With Iran.

• EU Counts on Top Official to Try to Calm U.S. Trade Fight.

• Cooperman to Turn Omega Fund Into Family Office.

• Central Bank Chatter Rattles Bond Market.

• Las Vegas Shooting Victims Speak Out Against MGM Lawsuit Against Them.

MarketWatch.com:

• This selloff in U.S. government debt will prove short-lived, Morgan Stanley says.

• Activist investor Loeb calls this the ‘single most important factor to follow’ for the stock market.

Fox News:

• Authorities say Faisal Hussain behind shooting that killed 2, injured 13 others.

• Manafort trial could reveal embarrassing details about Dem consultants.

CNBC:

• Nike is about to give 7,000 employees raises.

• Tech stocks rise to record before big earnings.

• Whirlpool falls more than 9% after earnings miss.

• After-hours buzz: GOOGL, WHR & more. 

• Google(GOOGL) is mulling a new market for Nest smart home products: seniors.

Zero Hedge:   

• We "Displaced The Political Establishment", Mexico's Leftist Leader Tells Trump.

• Trump May Revoke Security Clearance For Brennan, Clapper, Comey, McCabe, & Rice.

• Toronto Mass Shooter Identified As 29-Year-Old Faisal Hussain.

• "She Is 14 But Looks Older": Sweden Launches "Migrant Sex Courses" To Teach Newcomers How To Behave.

• Google Soars After Smashing Expectations; Nasdaq Jumps.

• Japanese Jawboning Sparks Global Bond Rout; Stocks, Dollar Unimpressed.

Business Insider:

• Furious moms unleash on Target(TGT) and Walmart(WMT) over 'hooker style' shorts for kids.

Night Trading 

• Asian equity indices are unch. to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 85.75 -.75 basis point. 

• Asia Pacific Sovereign CDS Index 12.75 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 69.61 -.02%.

• FTSE 100 futures +.22%

• S&P 500 futures +.11%.

• NASDAQ 100 futures +.05%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (MMM)/2.60

• (BIIB)/5.09

• (LLY)/1.30

• (HOG)/1.43

• (JBLU)/.36

• (KMB)/1.57

• (LMT)/3.92

• (PCAR)/1.43

• (BTU)/1.07

• (DGX)/1.76

• (SHW)/5.64

• (UTX)/1.86

• (VZ)/1.15

• (WAT)/1.92

After the Close:

• (T)/.89

• (CB)/2.62

• (IEX)/1.31

• (IRBT)/.21

• (RHI)/.86

• (SYK)/1.73

• (TER)/.49

• (TXN)/1.35

Economic Releases 
9:00 am EST

• The FHFA House Price Index MoM for May is estimated to rise +.4% versus a +.1% gain in April.

9:45 am EST

• Preliminary Markit US Manufacturing PMI for July is estimated to fall to 55.1 versus 55.4 in June.

• Preliminary Markit US Services PMI for July is estimated to fall to 56.3 versus 56.5 in June.

10:00 am EST

• The Richmond Fed Manufacturing Index for July is estimated to fall to 18.0 versus 20.0 in June.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone Manufacturing PMI report, $35B 2Y T-Note auction and the weekly US retail sales reports could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by technology and financial 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 Reversing Higher into Afternoon on US Economic Optimism, Diminishing Trade War Worries, Technical Buying, Financial/Transport Sector Strength

 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) 12.9 +.08%

• Euro/Yen Carry Return Index 135.66 -.21%

• Emerging Markets Currency Volatility(VXY) 10.24 +.99%

• S&P 500 Implied Correlation 30.84 -2.1%

• ISE Sentiment Index 105.0 +18.0%
  

• Total Put/Call .87 -10.31%

• NYSE Arms .87 -15.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 61.47 -.35%
  

• America Energy Sector High-Yield CDS Index 378.0 -.13%

• European Financial Sector CDS Index 80.31 -1.24%

• Italian/German 10Y Yld Spread 223.25 +1.25 basis points
  

• Asia Pacific Sovereign Debt CDS Index 12.68 -1.48%

• Emerging Market CDS Index 171.74 -.23%
  

• iBoxx Offshore RMB China Corporate High Yield Index 147.55 -.01%

• 2-Year Swap Spread 22.0 -1.25 basis points

• TED Spread 38.0 +.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -3.75 -1.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 69.54 -.16%
• 3-Month T-Bill Yield 1.97% -1.0 basis point
  

• Yield Curve 33.25 +3.25 basis points

• China Iron Ore Spot 65.52 USD/Metric Tonne +.41%

• Citi US Economic Surprise Index -2.30 -2.2 points

• Citi Eurozone Economic Surprise Index -34.80 +2.0 points

• Citi Emerging Markets Economic Surprise Index -1.70 -1.6 points

• 10-Year TIPS Spread 2.12 +1.0 basis point
  
• 91.4% chance of Fed rate hike at Sept. 26th meeting, 91.8% chance at November 8th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +130 open in Japan 
• China A50 Futures: Indicating -11 open in China

• DAX Futures: Indicating +5 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth unch.

Sector Underperformers:

• 1) Oil Service -1.9% 2) Gold & Silver -1.3% 3) Coal -1.2%

Stocks Falling on Unusual Volume: 

• HAL, PETS, RACE, NTGR, PZZA, ITW, WATT, SWK, RES, PTEN, TSLA, ENTA and SXT

Stocks With Unusual Put Option Activity:

• 1) HAS 2) CYH 3) IRBT 4) NFX 5) HPE

Stocks With Most Negative News Mentions:

• 1) PZZA 2) PAH 3) COOL 4) GE 5) PPG

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value +.2%

Sector Outperformers:

• 1) Banks +1.6% 2) Healthcare Providers +1.3% 3) Road & Rail +1.3%

Stocks Rising on Unusual Volume:

• LPNT, SYNT, HAS, HCLP, RETA, CLF, MGLN, WSFS, IIIN, WIX, RECN, INDB, CGC, ACMR, BPOP, TSC, MRSN, WERN, FNKO, MAT, MSB, MAN, OMC, DGLD, MBFI, THC, EGAN, MAT and MBFI

Stocks With Unusual Call Option Activity:

• 1) HAS 2) RETA 3) LPNT 4) CLF 5) APO

Stocks With Most Positive News Mentions:

• 1) HPQ 2) HAS 3) AIG 4) IBB 5) CLF

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -5.9% Below 100-Day Average
• 3 Sectors Rising, 8 Sectors Declining
• 35.0% of Issues Advancing, 61.2% Declining
• 43 New 52-Week Highs, 21 New Lows
• 50.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.0%
• Vix 13.2 +2.5%
• Total Put/Call .95 -2.1%
• TRIN/Arms .85 -17.9%

Monday Watch

Today's Headlines

Bloomberg:  

• Global Growth Less Synchronized, More Uncertain, G-20 Draft Says. 
• Iran Warns Trump Not to Threaten Country's Oil Exports.
• China's Luck on Yuan Devaluation Risks Running Out on Trump Ire.
• Mnuchin Sees No Chance for Currency War Despite Trump Tweets.
• Mexico's President-Elect Calls for Nafta Agreement in Letter to Trump.
• Analysts Are Downgrading China's Small Banks at Record Pace.
• Bank of Korea Sees Possible Impact From China Deleveraging Plan.  
• BOJ Debating How to Keep Policy Sustainable, Reduce Side Effects.  
• Asia Stocks Face Mixed Start; Dollar Holds Loss: Markets Wrap. Asian stocks looked set for a mixed start to the week after President Donald Trump threw trade tensions back to the forefront of investor concerns and traders awaited guidance from a flurry of upcoming company earnings. Futures signaled small declines for equities in Japan and Australia, while contracts in Hong Kong pointed to gains. The dollar was hit on Friday and Treasuries fell after Trump said he’s “ready to go” with additional import tariffs and that China, the European Union and others have been manipulating their currencies and interest rates. The offshore yuan was steady after last week’s slide. In Japan, government bond yields are in focus after a slide in futures during U.S. trading Friday on speculation over the central bank’s policy intentions. Futures on Japan’s Nikkei 225 slipped 0.6 percent. Futures on Australia’s S&P/ASX 200 declined 0.3 percent. Futures on Hong Kong’s Hang Seng advanced 0.3 percent. 
• Five Things You Need to Know to Start Your Day.

Wall Street Journal:

• Prolonged Slump in Bond Liquidity Rattles Investors.
• China Targets Apple With Push Into Advanced Screens.
• Meat Piles Up in U.S. Warehouses.
• Trade Fight Poses Big Risks for Smaller Countries.
• Syrian Rescuers Evacuated as Assad Tightens Grip on Rebel Areas.
• Costs Are Crashing the Party for Manufacturers.
• 2.5 Billion Pounds of Meat Piles Up in U.S. as Exports Slow.
• Officials’ Stark Warnings on Russia Diverge From White House View.

MarketWatch.com:

• Alphabet(GOOGL) earnings: Android antitrust fine will demolish Google profit.

Fox News:

• Moms slam retail giants over 'teeny-tiny, itsy-bitsy' clothing for young girls.
• James Comey warns Democrats: 'Don't lose your minds' and vote for socialists.

CNBC:

• Korea's Genesis tops auto ratings, but is unknown to US buyers. Here's how it plans to change that.
• Top Alzheimer’s researchers report near-100 drugs in key trials, and hopes for a breakthrough. 

Zero Hedge:         

• Clapper: Obama Was Behind The Whole Thing. 
• "Hoax From The Beginning": Carter Page FISA Application Exposes Flimsy Underpinnings Of FBI "Witch Hunt".
• As Firms Buy-Back Shares In Record Amounts, Look Who Was Selling.
• Iran Warns Trump Not To Cut Off Oil Exports, Threatens "Mother Of All Wars".
• This Is What Happens Behind Closed Doors When U.S. Presidents Meet With Fed Chairs.
  
• Six Reasons Why Credit Suisse Is Very Worried About China's Economy.

Business Insider:

• One woman killed, gunman in custody after hostage standoff inside Los Angeles-area Trader Joe's, police say.
• Meet the campaigners who will stop at nothing in their quest to tear Facebook apart.
• Amazon quietly signed a $5.5 billion deal to sell its products to American cities — here are some of the biggest spenders.
• The US housing gap is at a 3-year low — but data suggests that's about to reverse.
• Mexico's president-elect wrote Trump a 7-page letter vowing to reduce migration to the US.

Night Trading

• Asian indices are -.5% to unch. on average.
• Asia Ex-Japan Investment Grade CDS Index 86.50 -1.5 basis points.
• Asia Pacific Sovereign CDS Index 13.0 unch.
• Bloomberg Emerging Markets Currency Index 69.71 +.09%.
• FTSE 100 futures -.12%
• S&P 500 futures +.12%.
• NASDAQ 100 futures +.12%.

Morning Preview Links

Earnings of Note

Company/Estimate
Before the Open:

• (CALM)/1.48
• (HAL)/.59
• (HAS)/.34
• (ITW)/1.97

After the Close:

• (GOOG)/9.83
• (BRO)/.28
• (OI)/.75
• (STLD)/1.49
• (AMTD).79
• (VMI)/1.94
• (WERN)/.50
• (WHR)/3.66

Economic Releases

8:30 pm EST

• The Chicago Fed National Activity Index for June is estimated to rise to .3 versus -.15 in May.

10:00 am EST

• Existing Home Sales for June is estimated to rise to 5.44M versus 5.43M in May.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Eurozone Consumer Confidence report could also impact trading today.

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