Friday Watch

Evening Headlines

Bloomberg:   

• Traders Ease Back on Short Yuan Bets to Gauge U.S.-China Dispute.

• Asia Stock Rally Set to Extend; Dollar Slips. Asian stocks looked set to extend a rally after technology shares drove U.S. equities higher. The dollar fell after data showed a gauge of underlying U.S. inflation unexpectedly cooled in August. Futures signaled equities in Japan, Hong Kong and China will start Friday higher, building on Thursday’s rally as investors assess whether trade frictions between the world’s two biggest economies are easing. U.S. stocks pulled back from the day’s highs after President Donald Trump tweeted that the U.S. isn’t under pressure to reach a trade agreement with China. Emerging-market currencies climbed, with the lira surging after Turkey’s central bank defied the country’s president and hiked rates by a larger than expected amount. Futures on Japan’s Nikkei 225 rose 0.7 percent in Singapore. Futures on Hong Kong’s Hang Seng gained 1 percent. FTSE China A50 futures climbed 0.6 percent. Futures on Australia’s S&P/ASX 200 Index rose 0.4 percent.  

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

• Panicked Neighborhoods Evacuate as Gas Blasts Destroy Homes. 

• Adobe(ADBE) Sales Forecast Beats Estimates With Creative Products Leading.

Wall St. Journal:

• Lawmakers Reach Deal to Avoid Shutdown Drama Before Midterms.

• Boeing(BA) Shores Up Its Defenses.

• Facebook(FB) to Start Fact-Checking Photos and Videos.

• Despite Pledges, Smartphones Keep Miners Digging by Hand in Congo.

• Storm Edges Near Coast With Catastrophic Threat.

• Founders of Shuttered $6 Billion Hedge Fund Planning a Comeback.

MarketWatch.com:

• Pot stocks drop after report that Canadian marijuana investors may be barred from U.S.

• Nvidia(NVDA) outlines how the company will grow for the next 10 years.

Fox News:

• Senator throws Kavanaugh confirmation into chaos with vague accusation, call for probe.

• WATCH LIVE: Surf cams show hurricane bearing down on Carolina coast.

CNBC: 

• After-hours buzz: SHLD, ADBE & more.

• Sears slows same-store sales decline, but losses double with more closures ahead.

• WATCH LIVE: Multiple explosions, fires reported in Massachusetts' Merrimack Valley region.

• The Apple(AAPL) Watch is like 'the gateway drug' to Apple's whole ecosystem.

• House panel advances tax-cut bills.

• A 'super cell tower' in the stratosphere: AeroVironment(AVAV) and SoftBank's 5G vision.

• Tepper says he's still 'very, very long' 

• Investors shouldn't let trade tensions scare them out of US equities, investment expert says  

• Tepper says he's still 'very, very long' Micron's(MU) stock.

Zero Hedge: 

• Bank Of England Warns "No Deal" Brexit Would Lead To Chaos, Crisis "As Bad As 2008 Crash".

• Alex Jones Was Banned By Twitter For Mean Words, Yet Antifa Groups Calling For Assassination Thrive.

• Bill Gross Used Massive Amounts Of Leverage To Double Down On Losing Interest-Rate Bet.

• Stocks Face Swarm Of Hindenburg Omens As Treasury Vol Nears Record Low.

Business Insider:

• Goldman Sachs(GS) announces major leadership shakeup as incoming CEO David Solomon picks his team.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 78.5 -.75 basis point. 

• Asia Pacific Sovereign CDS Index 12.25 -.5 basis point.

• Bloomberg Emerging Markets Currency Index 65.09 -.09%.

• FTSE 100 futures -.42%.

• S&P 500 futures -.02%.

• NASDAQ 100 futures +.03%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• PLAY/(.67)

After the Close:

• None of note

Economic Releases

8:30 am EST

• Retail Sales Advance MoM for August are estimated to rise +.4% versus a +.5% gain in July.

• Retail Sales Ex Autos MoM for August are estimated to rise +.5% versus a +.6% gain in July.

• Retail Sales Ex Autos and Gas for August are estimated to rise +.5% versus a +.6% gain in July.

• The Import Price Index MoM for August is estimated to fall -.2% versus unch. in July.

• The Export Price Index MoM for August is estimated unch. versus a -.5% decline in July.

9:15 am EST

• Industrial Production MoM for August is estimated to rise +.3% versus a +.1% gain in July.

• Capacity Utilization for August is estimated to rise to 78.2% versus 78.1% in July.

• Manufacturing Production for August is estimated to rise +.3% versus a +.3% gain in July.
  

10:00 am EST

• Business Inventories for July are estimated to rise +.6% versus a +.1% gain in June. 

• Preliminary Univ. of Mich. Consumer Sentiment for September is estimated to rise to 96.6 versus 96.2 in August.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Evans speaking, China GDP/Industrial Production/Retail Sales reports and the Eurozone Trade Balance 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 Higher into Final Hour on Less Emerging Markets Currency/Debt Angst, Economic Optimism, Technical Buying, Tech/Medical Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Slightly Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 12.4 -5.6%

• Euro/Yen Carry Return Index 136.04 +1.1%

• Emerging Markets Currency Volatility(VXY) 12.11 -1.78%

• S&P 500 Implied Correlation 35.51 -1.25%

• ISE Sentiment Index 95.0 -31.65%
  

• Total Put/Call .82 unch.

• NYSE Arms 1.18 +60.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 55.94 -2.4%
  

• America Energy Sector High-Yield CDS Index 404.0 -.86%

• European Financial Sector CDS Index 67.98 -2.92%

• Italian/German 10Y Yld Spread 252.75 -1.25 basis points
  

• Asia Pacific Sovereign Debt CDS Index 12.25 -2.93%

• Emerging Market CDS Index 210.60 -5.22%
  

• iBoxx Offshore RMB China Corporate High Yield Index 151.35 -.14%

• 2-Year Swap Spread 17.75 -.25 basis point

• TED Spread 20.0 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -12.5-.75 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.18 +.91%

• 3-Month T-Bill Yield 2.14% unch.

• Yield Curve 21.25 +.25 basis point

• China Iron Ore Spot 68.27 USD/Metric Tonne -.04%

• Citi US Economic Surprise Index -10.1 -6.8 points

• Citi Eurozone Economic Surprise Index -13.0 -.5 point

• Citi Emerging Markets Economic Surprise Index -7.70 -2.6 points

• 10-Year TIPS Spread 2.10 -2.0 basis points

• 99.8% chance of Fed rate hike at Nov. 8th meeting, 100.0% chance at Dec. 19th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +10 open in Japan 

• China A50 Futures: Indicating +111 open in China

• DAX Futures: Indicating +23 open in Germany

Portfolio: 

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my emerging market shorts

• Market Exposure: Moved to 100% Net Long

Morning Market Internals

NYSE Composite Index:

• Volume Running +7.4% Above 100-Day Average
• 9 Sectors Rising, 2 Sectors Declining
• 58.5% of Issues Advancing, 38.% Declining
• 112 New 52-Week Highs, 68 New Lows
• 51.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.9%
• Vix 12.7 -3.2%
• Total Put/Call .68 -17.1%
• TRIN/Arms 1.59 +116.7%

Thursday Watch

Evening Headlines

Bloomberg:   

• U.S. Asks China for New Round of Trade Talks Led by Mnuchin.   

• Wall Street Is Bullish on Global Economy Despite Emerging Markets.

• Asia Stocks Set for Gains, Dollar Slides. Asian investors prepared for some respite from the recent trade-inflicted concerns that have pummeled equities in the region amid optimism trade talks with China will resume. The dollar fell and the yuan climbed. Futures on equities in Hong Kong and China rose after reports the U.S. is trying to de-escalate trade friction, which also boosted the Australian dollar. The greenback dropped the most in almost three weeks. U.S. stocks ended Wednesday mixed, with chipmakers remaining under pressure. Crude oil posted its biggest two-day increase since June amid signs that global supplies are shrinking and as Hurricane Florence edged closer to the U.S. east coast. Futures on Japan’s Nikkei 225 added 0.1 percent. Futures on Hong Kong’s Hang Seng Index rose 1.4 percent. FTSE China A50 Index futures climbed 1.4 percent.  

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

• Crypto’s 80% Plunge Is Now Worse Than the Dot-Com Crash.   

• Hurricane Florence May Disrupt Auto Parts and Packaged Food Supply Chains.

Wall St. Journal:

• U.S. Seeks New Trade Talks With China to Avoid Battle.

• China’s Wealth Fund Interested in HNA’s Deutsche Bank Stake.

• Median Household Income Rose 1.8% in 2017, Census Data Show.

• Fidelity Doubles Down on Its Strategy to Offer Free Index Funds.

• ‘Crypto Tourists’ Flee Bitcoin.

MarketWatch.com:

• Here’s the hit the global stock market has taken from trade-war worries so far, in one chart.

Fox News:

• Waves top 80 feet as monster storm barrels through Atlantic toward Carolina coast, sparking evacuations.

CNBC: 

• Yet another finance executive is leaving Tesla.

• Goldman Sachs stock reaches longest losing streak since its 1999 IPO.

• Here's a first look at the new iPhone Xs, iPhone Xs Max and iPhone XR.

• How game apps that captivate kids have been collecting their data. 

• US in early stages of proposing new trade talks with China in the near future.

Zero Hedge: 

• "Panic And Dismay": Leaked Video Reveals Distraught Google Execs Grappling With Hillary Clinton's Loss

• "Leaking Like Mad": FBI-DOJ-MSM Collusion Went Far Deeper Than Previously Known

• "A Life Changing Event": 3 Million To Lose Power, Hog Farmers Panic As Hurricane Set To Smash Into Coast

• "Who's Naked?": Ranking The Most Vulnerable Emerging Market Currencies.

• Dear Bill Dudley, It's The Fed - Not Investors - To Blame For Asset Bubbles.

• Stocks, Dollar Sink As Goldman Suffers Longest Losing Streak In History.

Business Insider:

• Here's everything that happened at Apple's huge iPhone launch event. 

• The 5 most important things Apple announced at its big annual iPhone event.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 79.25 +.5 basis point. 

• Asia Pacific Sovereign CDS Index 12.75 unch.

• Bloomberg Emerging Markets Currency Index 65.59 +.01%.

• FTSE 100 futures +.55%.

• S&P 500 futures -.04%.

• NASDAQ 100 futures -.05%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (KR)/.38

After the Close:

• (ADBE)/1.69

Economic Releases

8:30 am EST

• The CPI MoM for August is estimated to rise +.3% versus a +.2% gain in July.

• The CPI Ex Food and Energy MoM for August is estimated to rise +.2% versus a +.2% gain in July. 

• Real Average Hourly Earnings YoY for August.

• Initial Jobless Claims for last week are estimated to rise to 210K versus 203K the  prior week. 

• Continuing Claims are estimated to rise to 1710K versus 1707K prior.

2:00 pm EST

• The Monthly Budget Deficit for August is estimated to widen to -$185.0B versus -$107.7B in July.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Quarles speaking, Fed's Bostic speaking, BoE rate decision, ECB rate decision, ECB Press Conference, Australia Unemployment Rate, German CPI report, $15B 30Y T-Bond auction, Bloomberg Sept. US Economic Survey, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, BMO Capital Back to School Education Conference, CL King Best Ideas Conference and the BofA Merrill Gaming/Lodging Conference 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 75% net long heading into the day.