Friday Watch

Evening Headlines

Bloomberg:   

• May Meets Macron as She Charts an 11-Week Path to a Brexit Deal.

• Central Banks Take the Spotlight as Economic Anxiety Lingers: Eco Week.

• Asian Stocks Nudge Higher; Japanese Yields Steady: Markets Wrap. Asian stocks edged higher at the end of a volatile week, after optimism for technology shares lifted U.S. equities and overshadowed ongoing trade tensions. Japanese bond yields steadied ahead of a closely watched Bank of Japan bond purchase operation. Shares in Japan, South Korea and Australia opened with modest gains, while equity futures signaled Hong Kong and China will recoup some of Thursday slide. The S&P 500 rallied as Apple Inc.’s market value reached $1 trillion. The dollar maintained gains and the yield on 10-year Treasuries ticked back below 3 percent. The yuan steadied after its recent slide. Japan’s Topix index rose 0.1 percent as of 9:10 a.m. in Tokyo. Australia’s S&P/ASX 200 gained 0.5 percent. South Korea’s Kospi index rose 0.2 percent. Futures on Hong Kong’s Hang Seng rose 0.4 percent.

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

• How Apple Overcame Fits and Flops to Grow Into a Trillion-Dollar Company.

• U.S. Farmland Values Hit a Record Despite Trade Fears.

Wall Street Journal:

• White House Aims to Freeze Fuel Standards for Cars.

• CBS Scandal Gets Silent Treatment on Earnings Call.

Fox News:

• Colorful Manafort judge warns Mueller team case could tank without key witness. 

• WH spokeswoman lashes out at media abuse in fiery clash with CNN's Acosta.

CNBC: 

• The $717 billion defense bill just made its way to Trump's desk. Here's what the Pentagon is poised to get.

• The Trump administration is headed for a gigantic debt headache.

• After-hours buzz: GPRO, AIG & more. 

• Goldman says U.S. may base tariff decisions on whether China's currency keeps falling.

Zero Hedge:

• Socialism: So Bad Women Are Willing To Be Sexually Abused To Escape It.

• July Nonfarm Payrolls Preview: All Eyes On Wages.

• Superbugs Are Becoming Resistant To Alcohol Disinfectants.

• Entire Police Force Quits In This Massachusetts Town.

• Hysteria Over 3D-Printed Guns - Misconceptions Vs. Reality.

• Maxine Waters Hit With FEC Complaint After Daughter Rakes In $750,000 From Campaign Funds.

• Tim Cook Rescues US Stocks As Trump Crushes China, Turkey.

Business Insider:  

• The Trump administration is backing down on one of its tariffs, and it's a big win for the newspaper industry.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 82.25 +1.5 basis points. 

• Asia Pacific Sovereign CDS Index 11.0 unch.

• Bloomberg Emerging Markets Currency Index 69.30 -.09%.

• FTSE 100 futures +.52%

• S&P 500 futures -.03%.

• NASDAQ 100 futures -.01%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (AXL)/1.09

• (CBOE)/1.03

• (DISH)/.70

• (ITT)/.78

• (LYB)/2.90

• (TM)/216.13

After the Close:

• None of note

Economic Releases 
8:30 am EST

• The Trade Balance for June is estimated to widen to -$46.5B versus -$43.1B in May.

• The Change in Non-Farm Payrolls for July is estimated to fall to 192K versus 213K in June.

• The Unemployment Rate for July is estimated to fall to 3.9% versus 4.0% in June.

• Average Hourly Earnings MoM for July is estimated to rise +.3% versus a +.2% gain in June.

10:00 am EST

• The ISM Non-Manufacturing Composite for July is estimated to fall to 58.6 versus 59.1 in June.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The China Services PMI report and the Eurozone Services PMI report could also impact trading today.

BOTTOM LINE:  Asian indices are 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 Rising into Final Hour on Earnings Outlooks, Bargain-Hunting, Short-Covering, Tech/Healthcare Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Above Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 12.4 -5.9%

• Euro/Yen Carry Return Index 134.79 -.57%

• Emerging Markets Currency Volatility(VXY) 10.32 +3.7%

• S&P 500 Implied Correlation 29.95 -3.32%

• ISE Sentiment Index 121.0 +14.2%
  

• Total Put/Call 1.08 +6.9%

• NYSE Arms 1.11 -2.28%

Credit Investor Angst:

• North American Investment Grade CDS Index 58.83 +.78%
  

• America Energy Sector High-Yield CDS Index 366.0 +1.20%

• European Financial Sector CDS Index 77.42 +3.59%

• Italian/German 10Y Yld Spread 245.25 +14.0 basis points
  

• Asia Pacific Sovereign Debt CDS Index 10.97 -.99%

• Emerging Market CDS Index 173.87 +.97%
  

• iBoxx Offshore RMB China Corporate High Yield Index 150.14 +.09%

• 2-Year Swap Spread 22.0 +.25 basis point

• TED Spread 33.50 +1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -6.50 -1.5 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 69.37 -.57%
• 3-Month T-Bill Yield 2.0% -2.0 basis points
  

• Yield Curve 32.25 unch.

• China Iron Ore Spot 66.72 USD/Metric Tonne +.48%

• Citi US Economic Surprise Index -2.40 +.4 point

• Citi Eurozone Economic Surprise Index -25.60 +.6 point

• Citi Emerging Markets Economic Surprise Index -11.60 -8.3 points

• 10-Year TIPS Spread 2.13 -1.0 basis point
  
• 90.3% chance of Fed rate hike at Nov. 8th meeting, 97.1% chance at Dec. 19th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +78 open in Japan 
• China A50 Futures: Indicating +39 open in China

• DAX Futures: Indicating +33 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Value +.2%

Sector Underperformers:

• 1) Gaming -2.5% 2) Steel -.9% 3) Energy -.5%

Stocks Falling on Unusual Volume: 

• MZOR, EXAS, FND, MGPI, SGMS, RRGB, GTS, AXGN, SBH, NPO, IO, WATT, VECO, TRIP, ARRS, TFX, CTSH, WLK, AMN, CRUS, WYNN and CECO

Stocks With Unusual Put Option Activity:

• 1) TRIP 2) HLF 3) LLY 4) TMUS 5) CI

Stocks With Most Negative News Mentions:

• 1) RRGB 2) UNM 3) FLKS 4) IQ 5) CCRN

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +1.2%

Sector Outperformers:

• 1) Agriculture +1.7% 2) Telecom +1.6% 3) Software +1.5%

Stocks Rising on Unusual Volume:

• WIFI, GIL, DXCM, ETP, STAA, ESIO, OSB, GTES, RACE, HABT, INOV, ALG, PKI, IRTC, MSTR, SODA, HIIQ, STMP, HUBG, ITGR, W, HI, CVLT, UIHC, FOXF, NCI, INOV, TRMB, IRTC, LCII, TSLA, ETP, FTNT, HIIQ, GTES, EXEL, TTMI, SPAR, INSM, CNO, DNLI, SFM, HUBG, MASI, ICPT, CF, SQ, TTEK, PKI, TDOC, PAYC, MUSA, REGN, CLX, MD, ESRX, DIN, GPN, XENT, HI, LPSN, MTSI, IPGP and LFUS

Stocks With Unusual Call Option Activity:

• 1) EXAS 2) FTNT 3) REGN 4) SHAK 5) RCL

Stocks With Most Positive News Mentions:

• 1) DXCM 2) FTNT 3) SQ 4) AAPL 5) REGN

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +13.2% Above 100-Day Average
• 4 Sectors Rising, 7 Sectors Declining
• 46.7% of Issues Advancing, 49.4% Declining
• 54 New 52-Week Highs, 44 New Lows
• 52.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.9%
• Vix 13.5 +2.5%
• Total Put/Call 1.22 +20.8%
• TRIN/Arms 1.10 -3.0%

Thursday Watch

Evening Headlines

Bloomberg:  

• BOE Rate Hike Seen Despite Brexit on Horizon: Decision Day Guide.

• Asia Stocks Head for Weaker Start; Treasuries Drop. Asian stocks were set for small declines after a mixed U.S. equities session with the Federal Reserve doing little to alter expectations for two more rate hikes this year amid U.S.-China trade tensions. The dollar climbed with Treasury yields. Futures signaled losses for shares in Japan, Hong Kong and Australia. Trade concerns weighed on the S&P 500, overshadowing positive Apple Inc. earnings. Ten-year Treasury yields touched 3 percent for the first time since June as the Fed unanimously decided to leave rates unchanged while making it clear borrowing costs are headed higher. The offshore yuan extended losses. Futures on Japan’s Nikkei 225 slipped 0.4 percent in Singapore. Futures on Australia’s S&P/ASX 200 Index dropped 0.4 percent. Futures on Hong Kong’s Hang Seng slid 0.5 percent.

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

• Free Fidelity Funds Stoke Price War in Bid to Catch Index Giants.  

• Long Blockchain Gets Hit With SEC Subpoena After Nasdaq Ouster.   

• U.S. Steel Paints Rosy Picture With Restarts and Revitalization.

Wall Street Journal:

• America’s Long Love Affair With Beer Is on the Rocks.

• Wells Fargo to Pay $2 Billion Over Sale of Toxic Mortgages.

• Treasury Plans to Boost Borrowing as Trillion-Dollar Deficits Loom.

• Google(GOOGL) Considering Censored Search Engine for Return to China.

MarketWatch.com:

• These 10 companies have recently raised their dividends by at least 10%.

Fox News:

• Mueller prosecutors rebuked repeatedly by trial judge with history of colorful rulings.

CNBC: 

• Tesla(TSLA) CEO Elon Musk apologizes to analysts. 

• Fed leaves rates unchanged but upgrades view of the US economy to 'strong'.

• After-hours buzz: TSLA, TRIP & more.

• Carl Icahn has sizable stake in Cigna, plans to vote against Express Scripts deal: WSJ.

Zero Hedge:

• Democratic Socialists Set Up Shop On Campuses Nationwide.

• Tesla Soars On Production Outlook Despite Record Quarterly Loss, $8MM Daily Cash Burn.

• Car Sales Tumble As Automakers Slash Discounts For The First Time In 5 Years.

• Microsoft Rolls Out "Election Defense Technologies".

• Stocks, Yuan Bounce As Trump Extends China Tariff Comment Deadline By A Week.

• Stocks & Bonds Sink Despite Hot Apple, Roasted Turkey, Euphoric Fed.

Business Insider:

• There's no sign of advertisers boycotting CBS, despite a mounting list of disturbing allegations against CEO Les Moonves.

• Wall Street bankers are adding a so-called Weinstein clause to deals as part of #MeToo scrutiny.

• Video game fan Elon Musk wants to put video games in every Tesla, and he's asking game designers to apply.

Telegraph:   

• Comment: China's currency slide risks a horrible misunderstanding with Trump.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 80.75 +1.5 basis points. 

• Asia Pacific Sovereign CDS Index 11.0 unch.

• Bloomberg Emerging Markets Currency Index 69.79 +.03%.

• FTSE 100 futures +.04%

• S&P 500 futures +.12%.

• NASDAQ 100 futures +.18%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (AET)/3.04

• (ABC)/1.46

• (AAWW)/1.22

• (AVP)/.00

• (BDX)/2.86

• (CI)/3.30

• (CLX)/1.59

• (ICE)/.89

• (K)/1.05

• (MGM)/.30

• (REGN)/4.66

• (YUM)/.74

• (ZTS)/.70

After the Close:

• (ATVI)/.35

• (AIG)/1.21

• (ANET)/1.70

• (CBS)/1.11

• (EOG)/1.24

• (OSTK)/-.82

• (RMAX)/.59

• (SHAK)/.18

• (TTWO)/.08

• (TRUP)/-.03

• (WING)/.20

Economic Releases 
7:30 am EST

• Challenger Job Cuts YoY for July.

8:30 am EST

• Initial Jobless Claims are estimated to rise to 220K versus 217K the prior week.

• Continuing Claims are estimated to rise to rise to 1750K versus 1745K prior.
  

10:00 am EST

• Factory Orders for June are estimated to rise +.7% versus a +.4% gain in May.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone PPI report, BoE meeting, China Services PMI report and the weekly EIA natural gas inventory report could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by commodity 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 75% net long heading into the day.