Stocks Rising into Final Hour on Less Emerging Markets Currency/Debt Angst, Yen Weakness, Oil Gain, Biotech/Airline Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 12.11 -6.05%

• Euro/Yen Carry Return Index 137.47 -.14%

• Emerging Markets Currency Volatility(VXY) 10.78 -4.43%

• S&P 500 Implied Correlation 34.47 +.55%

• ISE Sentiment Index 105.0 +1.94%
  

• Total Put/Call .92 +6.98%

• NYSE Arms .92 -40.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 59.73 -2.93%
  

• America Energy Sector High-Yield CDS Index 427.0 -.55%

• European Financial Sector CDS Index 80.33 +.88%

• Italian/German 10Y Yld Spread 236.0 +2.75 basis points
  

• Asia Pacific Sovereign Debt CDS Index 9.15 -1.40%

• Emerging Market CDS Index 190.28 -1.43%
  

• iBoxx Offshore RMB China Corporate High Yield Index 150.74 +.08%

• 2-Year Swap Spread 16.50 -.75 basis point

• TED Spread 18.75 +1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -41.0 -24.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.03 +.28%

• 3-Month T-Bill Yield 2.18% -2.0 basis points

• Yield Curve 22.0 -2.25 basis points

• China Iron Ore Spot 67.48 USD/Metric Tonne -.84%

• Citi US Economic Surprise Index -2.5 -2.2 points

• Citi Eurozone Economic Surprise Index -24.50 +.7 point

• Citi Emerging Markets Economic Surprise Index -8.3 +1.1 points

• 10-Year TIPS Spread 2.15 unch.

• 71.3% chance of Fed rate hike at Dec. 19th meeting, 72.4% chance at Jan. 30th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +300 open in Japan 

• China A50 Futures: Indicating +56 open in China

• DAX Futures: Indicating -9 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth +.2%

Sector Underperformers:

• 1) Tobacco -1.6% 2) Homebuilders -1.4% 3) Foods -.7%

Stocks Falling on Unusual Volume: 

• BBBY, CMTL, CCXI, CUK, CCL, AAOI, CAG, FUL, CGC and ANGO

Stocks With Unusual Put Option Activity:

• 1) OPK 2) CCL 3) VGR 4) GERN 5) MPC

Stocks With Most Negative News Mentions:

• 1) BBBY 2) AAOI 3) OPK 4) WYNN 5) HCLP

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.9%

Sector Outperformers:

• 1) Airlines +1.7% 2) Biotech +1.3% 3) Utilities +1.1%

Stocks Rising on Unusual Volume:

• ALDX, CCJ, CSBR, GWPH, PTGX, ATHN, TOT, AMRN, BGSF, BP, CYBR, VNDA, COT, WPM, SCHL, WCG, SBLK, TOCA, SQ, FBM, AYR, TRUP, COHU, PDCE, BG and LGF/B

Stocks With Unusual Call Option Activity:

• 1) BBBY 2) RCL 3) BBT 4) GPRO 5)EMB

Stocks With Most Positive News Mentions:

• 1) CYBR 2) ALK 3) CRM 4) CCJ 5) AYR

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -4.9% Below 100-Day Average
• 10 Sectors Rising, 1 Sector Declining
• 65.7% of Issues Advancing, 30.9% Declining
• 23 New 52-Week Highs, 79 New Lows
• 46.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 44.0%
• Vix 12.1 -6.2%
• Total Put/Call .91 +5.8%
• TRIN/Arms .91 -40.7%

Thursday Watch

Evening Headlines

Bloomberg:           

• Trump Says Xi Might Not Be His Friend After Meddling Allegation.

• Powell Sees Bright Moment for Economy With More Fed Hikes Ahead.  

• FTSE Russell to Add Chinese Stocks to Its Indexes From 2019.

• Asia Stocks Open Mixed; Treasuries Steady Post Fed. Asian stocks edged lower at the open Thursday as investors assessed commentary from the Federal Reserve that reaffirmed the U.S. economy is strong enough to warrant another interest-rate increase by the end of this year. The dollar and Treasuries steadied. Equity benchmarks dipped in Japan and were little changed in Australia and South Korea, while futures signaled gains for stocks in Hong Kong. The S&P 500 Index dropped with the bulk of losses coming in the final 20 minutes of trading. U.S. equities had earlier gained after the central bank suggested inflation remained tepid, only to reverse as Chairman Jerome Powell said the Fed could raise rates past the perceived neutral level. Treasury 10-year yields held declines and the dollar wavered as the FOMC statement provided fodder for differing viewpoints. Japan’s Topix index fell 0.5 percent as of 9:30 a.m. in Tokyo. Australia’s S&P/ASX 200 Index was flat. South Korea’s Kospi index was little changed as trading resumed after a two-day holiday. Futures on Hong Kong’s Hang Seng Index rose 0.3 percent. FTSE China A50 Index futures added 0.6 percent. S&P 500 futures were little changed.

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

• Oil Rebounds After Rick Perry Rules Out Tapping Strategic Crude.

Wall St. Journal:

• How China Pries Technology From U.S. Companies.

• Trump Accuses China of Trying to Interfere in U.S. Elections.

• Fed Raises Interest Rates, Signals One More Increase This Year.

• Democrats Endorse Avenatti.

• The Kavanaugh Standard.

• The Fed Gets Optimistic.

• Yale Faces U.S. Investigation Over Admissions of Asian-Americans.

• Facebook’s(FB) Virtual Reality Meets Hard Reality.

Fox News:

• Kavanaugh, to investigators, rejects newly revealed anonymous 1998 assault claim.

• Key detail of Kavanaugh accuser Ford’s statement raises eyebrows.

CNBC:   

• 'Nonsense': Dozens of Kavanaugh supporters push back on new allegations of sexual misconduct.

• House passes spending package to avoid government shutdown, but Trump still has to sign.

• Bed Bath & Beyond(BBBY) falls 15% after earnings miss.

• After-hours buzz: BBBY, KRP & more.  

• Powell 'pulled a Goldilocks' and said policy is just right, Art Cashin says.

• Trump on Rosenstein: 'My preference would be to keep him'.

Zero Hedge:

• Kavanaugh Accuser Slammed For Not Reporting "Gang Rape" Parties Allegedly Attended As Adult.

• Uber Drivers Make $9.20/Hour, Half Of What They Earned Four Years Ago.

• Tulane Mandates New Students Take "Race & Inclusion" Course.

• Argentina Gets Record $57 Billion As IMF Boosts Bailout, Creates "No Intervention" Zone For The Peso.

• "Un-Accommodative" Powell Pummels Stocks As Yield Curve Crumbles.

Business Insider:

• Amazon(AMZN) is opening a new store that sells only its best products.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 80.50 -2.5 basis points. 

• Asia Pacific Sovereign CDS Index 9.25 -.5 basis point.

• Bloomberg Emerging Markets Currency Index 66.85 unch.

• FTSE 100 futures -.11%.

• S&P 500 futures +.09%.

• NASDAQ 100 futures +.23%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (ACN)/1.56

• (ANGO)/.18

• (CCL)/2.32

• (CAG)/.49

• (MKC)/1.27

• (RAD)/-.01

• (SCHL)/-1.93

After the Close:

• (CAMP)/.28

• (PRGS)/.58

Economic Releases

8:30 am EST

• Advance Goods Trade Balance for August is estimated at -$70.6B versus -$72.0B in July.

• Preliminary Wholesale Inventories MoM for August are estimated to rise +.3% versus a +.6% gain in July.

• Retail Inventories for August.

• 2Q GDP is estimated to rise +4.2% versus a prior estimate of a +4.2% gain.

• 2Q Personal Consumption is estimated to rise +3.8% versus a prior estimate of a +3.8% gain.

• 2Q GDP Price Index is estimated to rise +3.0% versus a prior estimate of a +3.0% gain.

• 2Q Core PCE QoQ is estimated to rise +2.0% versus a prior estimate of a +2.0% gain.

• Preliminary Durable Goods Orders for August is estimated to rise +2.0% versus a -1.7% decline in July.

• Preliminary Durables Ex Transports for August is estimated to rise +.4% versus a +.1% gain in July.

• Preliminary Cap Goods Orders Non-Defense Ex-Air for August is estimated to rise +.4% versus a +1.6% gain in July.

• Initial Jobless Claims for last week are estimated to rise to 210K versus 201K the prior week.

• Continuing Claims are estimated to rise to 1678K versus 1645K prior.

10:00 am EST

• Pending Home Sales MoM for August are estimated to fall -.5% versus a -.7% decline in July.
  

11:00 am EST

• Kansas City Fed Manufacturing Activity for September is estimated to rise to 17.0 versus 14.0 in August.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone CPI report, China Industrial Profits report, Japan CPI report, Brett Kavanaugh Hearing, weekly EIA natural gas inventory report, $31B 7Y T-Note auction, weekly Bloomberg Consumer Comfort Index, Sidoti Fall Conference, Barrington Fall Conference, Wells Fargo Consumer/Beauty Forum, Jefferies Gene Therapy/Editing Conference, BofA Merrill AI Conference, (TDOC) Investor Day, (INTU) invest and the (PM) investor day could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by consumer 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.