Thursday Watch

Evening Headlines

Bloomberg:         

• U.S., China Resume Trade Talks as Trump Imposes New Tariffs.

• China Infrastructure Push Spurs Debt Sales, Calls for New Liquidity.  

• Mexican Peso Rally Shows Traders Are Betting a Nafta Deal Is Near.

• Facebook(FB) Suspends 400 Apps in Developer Data Investigation.  

• Asian Stocks Set for Modest Gains; Dollar Slips. Asian stocks looked set for small gains at the start of trading Thursday, while the dollar retreated after the Federal Reserve signaled no change to the pace of monetary policy tightening. Futures on equity indexes in Japan, Hong Kong and Australia all nudged higher after U.S. stocks ended the day little changed. The dollar weakened a fifth day and the 10-year Treasury yield fell to 2.82 percent after the Fed indicated in meeting minutes a readiness to hike again if the economy stays on track. Oil jumped after a U.S. government report showed the biggest decline in crude inventories since late July. Futures on Japan’s Nikkei 225 added 0.2 percent. Futures on Australia’s S&P/ASX 200 Index gained 0.3 percent. Futures on the FTSE China A50 Index rose 0.3 percent. Futures on Hong Kong’s Hang Seng Index climbed 0.3 percent.  

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

Wall Street Journal:

• S&P 500 Reaches Bull-Run Milestone.

• Trump Denies Directing Cohen to Pay Off Women. 

• The Next Big Bet in Fracking: Vast Volumes of Wastewater.

• U.S. Seizes on China’s Woes as Talks Start. 

• Short Squeeze Roils a Favorite Wall Street Trade.

• Fed Signals Rate Increase Next Month.

MarketWatch.com:

• Here’s why the stock market remains immune to Trump’s legal woes. 

• This bull market may soon silence all the critics.

• This stock market can just keep hitting one home run after another. 

• This analyst just got a lot more bullish on Amazon, Alphabet and Spotify.

Fox News:

• KRUMHOLZ: Trump-hating Dems who pursue impeachment will be punished.

CNBC: 

• It's going to take a lot more for the stock market to start caring about Trump's legal woes.

• SEC rejects bitcoin ETFs.

• Stocks making the biggest moves after hours: JWN, WSM and more.

• One of Facebook's(FB) earliest executives, Dan Rose, is leaving.

• Fed officials worry that the trade war poses the biggest threat to 'strong' economy.

• Commerce Secretary Ross on NAFTA: A deal with Mexico is in reach.

• GOP billionaire Ken Langone: 'We've been patsies' on trade, but Trump will level the playing field.

• Saudi Arabia reportedly calls off Aramco IPO and disbands advisers.

Zero Hedge:

• This Is What $4 Million Buys You In Vancouver's "Housing" Market.

• Audience Boos, Laughs As Cohen Lawyer's GoFundMe Campaign Tops $100k.

• Not The Onion: Cali Health Org Replaces Word "Vagina" With Gender-Inclusive "Front-Hole".

• Loan Demand Suddenly Tumbles As Companies Revolt To Rising Rates.

• Michael Cohen Subpoeaned By NY Investigators In Trump Foundation Probe.

• Spooked Banks Slash Subprime Credit Card Exposure For First Time In Three Years.

• Hawaii Braces For Powerful Cat 4 Hurricane, Could See Direct Hit.

• US Stocks Reach Longest Bull Market Ever... Amid Ruble, Real, & Rate-Curve Rout.

Telegraph:    

• Greece will not escape debt servitude until the euro is destroyed.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 80.0 -.75 basis point. 

• Asia Pacific Sovereign CDS Index 10.75 unch.

• Bloomberg Emerging Markets Currency Index 66.87 -.07%.

• FTSE 100 futures -.17%

• S&P 500 futures +.03%.

• NASDAQ 100 futures +.03%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (FLWS)/-.13

• (BABA)/1.24

• (CTRN)/.07

• (HRL)/.39

• (SAFM)/1.27

• (PLCE)/.59

• (TTC)/.66

After the Close:

• (ADSK)/.16

• (GPS)/.72

• (HPQ)/.51

• (INTU)/.23

• (ROST)/1.01

• (VMW)/1.49

Economic Releases 
8:30 am EST

• Initial Jobless Claims for last week are estimated to rise to 215K versus 212K the prior week.

• Continuing Claims are estimated to rise to 1730K versus 1721K prior.

9:00 am EST

• The FHFA House Price Index MoM for June is estimated to rise +.3% versus a +.2% gain in May.
  

9:45 am EST

• The Preliminary Markit US Manufacturing PMI for August is estimated to fall to 55.0 versus 55.3 in July.

• The Preliminary Markit US Services PMI for August is estimated to fall to 55.8 versus 56.0 in July.

10:00 am EST

• New Home Sales for July are estimated to rise to 645K versus 631K in June.
  

11:00 am EST

• Kansas City Fed Manufacturing Activity for August is estimated at 23.0 versus 23.0 in July.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The $16B tariff tranche on China imports taking effect, Eurozone PMI report, Eurozone Consumer Confidence report, Jackson Hole Fed Conference, Japan CPI report, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report and the (UHAL) analyst/investor meeting could also impact trading today.

BOTTOM LINE:  Asian indices are slightly higher, boosted by technology and consumer 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 Slightly Higher into Final Hour on Less Emerging Markets Debt/Currency Angst, Earnings Optimism, Oil Gain, EnergyBiotech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 12.18 -5.3%

• Euro/Yen Carry Return Index 133.25 +.37%

• Emerging Markets Currency Volatility(VXY) 12.04 -1.55%

• S&P 500 Implied Correlation 29.37 +.07%

• ISE Sentiment Index 99.0 unch.
  

• Total Put/Call .96 +18.5%

• NYSE Arms 1.02 -17.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 59.86 -.92%
  

• America Energy Sector High-Yield CDS Index 402.0 -1.09%

• European Financial Sector CDS Index 80.71 -1.71%

• Italian/German 10Y Yld Spread 271.75 +6.0 basis points
  

• Asia Pacific Sovereign Debt CDS Index 10.61 -2.08%

• Emerging Market CDS Index 205.05 -.59%
  

• iBoxx Offshore RMB China Corporate High Yield Index 150.98 -.02%

• 2-Year Swap Spread 19.25 -.5 basis point

• TED Spread 23.5 -2.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -10.0 -1.5 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.88 +.15%
• 3-Month T-Bill Yield 2.07% +1.0 basis point

• Yield Curve 23.0 -.75 basis point

• China Iron Ore Spot 66.59 USD/Metric Tonne +.27%

• Citi US Economic Surprise Index -17.30 -.8 point

• Citi Eurozone Economic Surprise Index -8.70 +.3 point

• Citi Emerging Markets Economic Surprise Index -9.80 -.2 point

• 10-Year TIPS Spread 2.08 unch.
  
• 92.3% chance of Fed rate hike at Nov. 8th meeting, 97.1% chance at Dec. 19th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +50 open in Japan 
• China A50 Futures: Indicating +36 open in China

• DAX Futures: Indicating -11 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Value -.1%

Sector Underperformers:

• 1) Airlines -1.2% 2) Telecom -1.1% 3) Homebuilders -1.0%

Stocks Falling on Unusual Volume: 

• SMCI, AZUL, CTL and PSA

Stocks With Unusual Put Option Activity:

• 1) SVXY 2) HIG 3) URBN 4) LOW 5) SIG

Stocks With Most Negative News Mentions:

• 1) SMCI 2) CTL 3) FNSR 4) HI 5) PDD

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.4%

Sector Outperformers:

• 1) Oil Service +2.1% 2) Energy +1.6% 3) Disk Drives +1.1%

Stocks Rising on Unusual Volume:

• NEWA, NAVG, LZB, CGC, STAR, PSTG, LOW, EXAS, RGS, TGT, KEYS, MYGN, SKY, MOMO, MBUU, YRCW, CTRL, DWCH, JKHY, ATTU, GLT, DBVT, TOT, MOV, PETQ, FPRX, TGT and SFIX

Stocks With Unusual Call Option Activity:

• 1) LOW 2) TELL 3) TGT 4) ADI 5) WSM

Stocks With Most Positive News Mentions:

• 1) EXAS 2) MYGN 3) PSTG 4) ZNGA 5) KEYS

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -14.7% Below 100-Day Average
• 4 Sectors Rising, 7 Sectors Declining
• 46.4% of Issues Advancing, 48.6% Declining
• 77 New 52-Week Highs, 15 New Lows
• 55.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 51.4%
• Vix 12.5 -2.6%
• Total Put/Call 1.16 +43.2%
• TRIN/Arms 1.0 -18.4%

Wednesday Watch

Evening Headlines

Bloomberg:        

• America's Booming Economy Comes With a Cost for Global Growth.   

• BOJ's Threat to Global Bonds Fizzles as Japan Insurers Stay Put.

• Yen, Treasuries Rise as Cohen Plea Hits Sentiment. The yen and Treasuries climbed after President Donald Trump’s longtime lawyer pleaded guilty to federal charges, weighing on U.S. equity futures. Asian stocks opened mixed. News of Michael D. Cohen’s plea deal sparked mild demand for haven assets and sent U.S. equity futures lower after American stocks closed at a fresh all-time high. The deal included his saying he was directed to violate campaign law at the direction of a candidate for federal office. Also following the regular session, Trump’s former campaign chairman was found guilty of tax fraud, among other charges. The dollar held its slide ahead of low-level trade talks between the U.S. and China. Japan’s Topix index was little changed as of 9:02 a.m. in Tokyo. Australia’s S&P/ASX 200 Index fell less than 0.5 percent. South Korea’s Kospi index added 0.2 percent. Futures on the S&P 500 lost 0.5 percent.  

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

• Demand for Junk-Bond ETF Signals Strong Investor Appetite for Risk.

Wall Street Journal:

• Analysis: Cohen Deals a Blow.

• Benchmark Capital Stays Lean, Even After $14 Billion Bonanza.

• Toll Brothers(TOL) Profit Jumps as Wealthy Americans Spend.

• Kohl’s(KSS), T.J. Maxx(TJX) Continue Strong Run for Retailers.

• Property Investors Turn Lenders, Prompting Warnings.

• North Korea’s Continued Nuclear Work Raises ‘Grave Concerns’ for U.N. Atomic Agency.

• After Toppling of UNC’s Silent Sam, Security Tightened at Other Monuments.

MarketWatch.com:

• Here’s who owns a record $21.21 trillion of U.S. debt.

• This bull market may soon silence all the naysayers.

Fox News:

• Mollie Tibbetts’ suspected killer ID'd as 24-year-old illegal immigrant; student's body found in corn field.

CNBC:  

• S&P hits all-time high, ties record for longest bull market in history.

• Stocks making the biggest moves after hours: RRGB, URBN and more.

• Goldman: Here are the 10 stocks most loved by hedge funds — including Microsoft.

• Cramer: The longest-ever bull market overcame these 10 obstacles.  

• Netflix(NFLX), Amazon(AMZN) and Nvidia(NVDA) are some of the top stocks since the ’09 bottom. One looks better than the rest.

Zero Hedge:

• Trump Responds To Manafort Vedict: "Nothing To Do With Russia Collusion".

• US Futures Tumble After Cohen "Campaign Finance Violation" Headlines.

• Michael Cohen Pleads Guilty, Says Violated Campaign Law At "Direction Of Candidate".

• Antifa Violently Attacks Man Holding American Flag - Except He's A Bernie Supporter.

• Paul Manafort Found Guilty On 8 Counts, Mistrial Declared On Other Ten.

• WTI Rebounds After Bigger Than Expected Crude Draw.

• Stocks & Gold Jump As Real Routed, Dollar Dumped.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 80.75 -1.0 basis point. 

• Asia Pacific Sovereign CDS Index 10.75 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 66.76 -.03%.

• FTSE 100 futures -.52%

• S&P 500 futures -.45%.

• NASDAQ 100 futures -.45%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (ADI)/1.45

• (FRO)/-.20

• (LOW)/2.02

• (TGT)/1.40

After the Close:

• (LB)/.35

• (SNPS)/.92

• (WSM)/.68

Economic Releases 
10:00 am EST

• Existing Home Sales for July are estimated to rise to 5.4M versus 5.38M in June.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,863,920 barrels versus a +6,805,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -446,580 barrels versus a -740,000 barrel decline the prior week. Distillate inventories are estimated to rise by +1,502,750 barrels versus a +3,566,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.55% versus a +1.5% gain prior.
  

2:00 pm EST

• FOMC Meeting Minutes

Upcoming Splits

• None of note

Other Potential Market Movers

• The US/China lower level trade talks, US sanctions on Russia and the weekly MBA Mortgage Applications report 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 mixed.  The Portfolio is 75% net long heading into the day.