Monday Watch

Today's Headlines

Bloomberg:              

• Trump Weighs Action Against Saudis as Khashoggi Denials Continue.    

• Saudi Stocks Sink as Tension With U.S. Escalates Over Khashoggi.

• Brexit Talks Put on Hold as Stalemate Deepens. Japan, U.S. Stock Futures Slide; Pound Declines. Futures on Japanese and U.S. stocks dropped ahead of the market open in Asia Monday, suggesting Friday’s rebound in global equities may struggle to gain traction. The pound slipped as a Brexit deal hung in the balance with just days to go until a critical deadline. Contracts on Japan’s Nikkei 225 Stock Average fell, along with those on the S&P 500, following a weekend of warnings on global economic fragility from finance chiefs meeting at an annual IMF gathering. China’s ambassador to the U.S., in a rare appearance on American Sunday television, said his nation didn’t want a trade war but will respond. Oil climbed amid rising tensions between the U.S. and Saudi Arabia over a missing journalist. IMF Managing Director Christine Lagarde said policy makers should be ready for more market volatility, speaking after the worst sell-off in global stocks since February. Futures on Japan’s Nikkei 225 slipped 0.3 percent in most recent trading. Futures on the FTSE China A50 Index earlier rose 0.5 percent. Futures on Hong Kong’s Hang Seng Index fell 0.5 percent. Futures on Australia’s S&P/ASX 200 Index slid 0.9 percent. Futures on the S&P 500 dipped 0.3 percent after the benchmark tumbled 4.1 percent last week.  

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

• Global Economy Tremors, BOJ Exit Signs, PBOC Interview: Eco Day.

• A Decade From Crisis, Banks Face Risks From Italy to Trade Wars.

• Top 3% of U.S. Taxpayers Paid Majority of Income Taxes in 2016.

Wall Street Journal:

• Sears Set to File for Bankruptcy, With Its Survival in Question.

• Marsha Blackburn’s Tennessee Turnaround. 
  

• A Sexual-Assault Accusation in New Jersey Exposes a National Dilemma.

• Harris(HRS), L3 Technologies(LLL) Announce Merger Plan.

• The Bad Trade-Offs Emerging Markets Face.

• ‘You Just Realize It’s All Gone’: Hurricane Michael’s Heavy Toll.

MarketWatch.com:

• Forget the Wall Street carnage: To gauge the economy, look at how much Americans eat out.

Fox News:

• Hillary Clinton claims Bill's relationship with Lewinsky 'absolutely not' abuse of power.

CNBC:

• China's central bank still has plenty of tools to counter detrimental trade war effect: Governor.

• Riyadh says it would fight sanctions linked to missing journalist as Saudi stocks plunge.

• BOJ's Kuroda warns of darkening global prospects as trade tensions weigh.

• Here's why the market's 'Octoberphobia' selling could soon give way to a new rally.

• Not everyone is ready to ride as autonomous vehicles take to the road in ever-increasing numbers.

• Why it's never a good idea to sell when the market goes down quickly.

• Here's why one analyst thinks the sell-off could be saved by earnings.

Zero Hedge:              

• Violence, Public Anger Erupts In China As Home Prices Slide.

• Cables SLides After UK, EU 'Pause' Brexit Deal Negotiations, Blowing Monday Deadline.

• Why Used-Car Prices Are Plunging.

• Oil Jumps After Saudi Official Floats "Trial Balloon" Op-Ed Envisioning "Oil Weapon" Devastation.

• "This Is An Earthquake For Bavaria": CSU Suffers Stunning Defeat, Loses Absolute Majority In Worst Result Since 1950.

• "Someone Is Not Telling The Truth": Fusion GPS Founder "In Real Legal Jeopardy" According To GOP Lawmaker.

• Will China's "Debt Diplomacy" Backfire?

• Nervous Democrats Fear Midterm Disaster; GOP Pollster Says Trump Voters "Reengaged".

• Saudi Stocks Crash Most Since 2016 As Riyadh Threatens Retaliation Against US.

• Brexit Negotiators Poised To Miss Deal Deadline As UK Hardliners Rebel.

• The New 'Disappeared'.

Business Insider:

• Trump says Mattis is 'sort of a Democrat' and that the defense secretary 'may leave' the administration.

Night Trading

• Asian indices are -1.0% to unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 87.0 -.25 basis point.

• Asia Pacific Sovereign CDS Index 9.75 -.5 basis point.

• Bloomberg Emerging Markets Currency Index 66.17 -.06%.

• FTSE 100 futures -.05%

• S&P 500 futures -.31%.

• NASDAQ 100 futures -.41%.

Morning Preview Links

Earnings of Note

Company/Estimate
Before the Open:

• (BAC)/.62

• (SCHW)/.65

After the Close:

• (JBHT)/1.41

• (KMG)/.98

Economic Releases
8:30 am EST

• Empire Manufacturing for October is estimated to rise to 20.5 versus 19.0 in September.

• Retail Sales Advance MoM for September is estimated to rise +.7% versus a +.1% gain in August.

• Retail Sales Ex Auto MoM for September is estimated to rise +.4% versus a +.3% gain in August. 

• Retail Sales Ex Autos and Gas for September are estimated to rise +.4% versus a +.1% gain in August.
  

10:00 am EST

• Business Inventories for August is estimated to rise +.5% versus a +.6% gain in July.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Japan Industrial Production report, (ADBE) financial analyst meeting and the (RIO) sales/revenue update could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and technology shares in the region. I expect US stocks to open lower and to rally into the afternoon, finishing mixed.  The Portfolio is 50% net long heading into the week.

Weekly Outlook

• Wall St. Week Ahead by Reuters. 
• Week Ahead by TheStreet.
• Stocks to Watch Next Week by Seeking Alpha.
• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly higher on technical buying, earnings optimism, less US high-yield debt angst, stable long-term rates, yen weakness and oil strength. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.

Today's Headlines

Bloomberg:     

• Brexit Deal Hangs in the Balance as Monday Deadline in Doubt.

• Kuroda Says Signal for Stimulus Exit Would Be Change in Target Rate.

• Hedge Fund Billionaire Rode the Worst Trade of His Life All the Way Down.

• Banks Need to Protect Themselves Much Better Against Risks From Italy to Trade.

• It Could Take Days to Find Out the Midterm Election Results.

• Early Bear Morgan Stanley Sees Possible Stock Rally Before 2019.  

• It’s Snowing So Much in Canada That Crops Can’t Get Harvested.

• Harris Corp. and L3 Technologies Are Close to a Merger Deal, WSJ Says.

• PayPal(PYPL) Raises Venmo Fee. Users Rant.

Wall Street Journal:

• U.S. Is Edging Closer to a New Cold-War Era With China.

• In China, a Dot-Com Déjà-Vu. 

• Housing Market Positioned for a Gentler Slowdown Than in 2007.

• Bank of America Is Missing Out on Wall Street’s Boom.

Barron's:

• Had bullish commentary on (WFC), (BAC), (ABI) and (JPM).

MarketWatch.com:

• Corporate insiders are taking the stock market’s big selloff in stride.

• Uptick in migration from Guatemala stumps U.S. officials.

Fox News:

• John Kelly blasted Warren after 'insulting' phone chat over Trump travel ban.

CNBC:     

• Here's why the market's 'Octoberphobia' selling could soon give way to a new rally.

• Draghi to Rome: Don't expect an ECB rescue if budget talks fail.

• IMF's Christine Lagarde says she's 'horrified' at journalist's disappearance, but still attending Saudi conference. 

• 'We're trusting the bounce': PNC Financial says it's too early to turn bearish on stocks.

• JP Morgan's(JPM) widely followed market analyst says it's time to buy the dip. 

• Cryptocurrencies suffer $18 billion drop in value over three days. 

• Earnings could be what turns the tide for stocks.

• Cramer says the Fed could cause a 2019 slowdown with its aggressive rate hike agenda.

Zero Hedge:    

• Trump Vows "Severe Punishment" If Saudis Killed Khashoggi.

• Italy Declares War On Merkel And The EU.

• Hurricane Cost May Skyrocket As Billions In Stealth Fighter Jets Unaccounted For; Tyndall AFB "Complete Loss".

• Were You One Of The 30 Million Hacked Facebook(FB) Users? Here's How To Check.

• SF Bay Area Realtor Caters To Mass Exodus Out Of The Region.

• Trump Meets Freed American Pastor Andrew Brunson In The Oval Office

• Dramatic Footage Captures Hypersonic Nuclear Aircraft Streaking Across China Sky.

• Boston Dynamics Terrifying Humanoid Robot Can Do Parkour Now.

• Poopocalypse - San Francisco Is Now 'Doo-Doo Capital' Of USA.

• ABC Regrets Firing Roseanne; "We Didn't Think It Through Properly".

• GOP Seizes On Left's "Unhinged Mob" Mentality In Viral Video.

• Fed Inspector Turned Whistleblower Reveals System Rigged For Goldman Sachs"

• "Potentially Terrible Situation" - President Trump To Speak To Saudi King About 'Missing' Journalist.

• Armstrong: Independent Audit Exposes The Fraud In Global Warming Data.

• Politico: Trump May Not Be Crazy, But He's Driving The Left Insane.

• Chinese Car Sales Suffer Record Drop, Set For Historic Collapse.

• Weekend Reading: We Are All In...Again!

• Global Markets Dump $6 Trillion As "Loco" Fed & Trade Turmoil Spark Panic.

Business Insider:

• Hackers stole millions of Facebook(FB) users’ personal data — here’s why you should be worried.

• Here's how to check if you were affected in the Facebook hack — and how to delete your Facebook(FB) account.

Weekly Scoreboard*

S&P 500 2,751.59 -4.98%

The Weekly Wrap by Briefing.com.

 
Indices

• DJIA 25,221.60 -5.11%

• NASDAQ 7,463.18 -4.82%

• Russell 2000 1,539.11 -5.96%

• S&P 500 High Beta 41.11 -6.69%

• Goldman 50 Most Shorted 155.54 -5.34%

• Wilshire 5000 28,392.10 -5.76%

• Russell 1000 Growth 1,460.90 -5.0%

• Russell 1000 Value 1,247.28 -5.12%

• S&P 500 Consumer Staples 538.27 -2.56%

• Vanda Cyclicals-Defensives 1.5991 -6.49%
  

• NYSE Technology 1,751.35 -5.4%

• Transports 10,449.70 -7.1%

• Utilities 721.38 -1.87%

• Bloomberg European Bank/Financial Services 81.36 -3.3%

• MSCI Emerging Markets 40.18 -2.27%

• HFRX Equity Hedge 1,217.36 -1.88%

• HFRX Equity Market Neutral 993.63 -.93%

Sentiment/Internals

• NYSE Cumulative A/D Line 321,882 -2.04%

• Bloomberg New Highs-Lows Index -1,499 -977

• Bloomberg Crude Oil % Bulls 32.0 -24.6%

• CFTC Oil Net Speculative Position 548,909 -2.0%

• CFTC Oil Total Open Interest 2,245,589 +.89%

• Total Put/Call 1.18 -.84%

• OEX Put/Call .66 -70.93%

• ISE Sentiment 82.0 +7.79%

• NYSE Arms .91 +79.6%

• Volatility(VIX) 25.4 +77.0%

• S&P 500 Implied Correlation 42.1 +27.3%

• G7 Currency Volatility (VXY) 7.56 unch. 

• Emerging Markets Currency Volatility (EM-VXY) 10.49 -4.6%

• Smart Money Flow Index 14,833.60 -8.38%

• ICI Money Mkt Mutual Fund Assets $2.888 Trillion +.56%

• ICI Domestic Equity Mutual Fund/ETFs Weekly Flows -$4.808 Billion

• AAII % Bulls 30.6 -33.0%

• AAII % Bears 35.5 +41.2%

Futures Spot Prices

• CRB Index 197.94 -.50%

• Crude Oil 71.38 -4.28%

• Reformulated Gasoline 194.12 -7.18%

• Natural Gas 3.16 +.63%

• Heating Oil 232.20 -3.11%

• Gold 1,223.0 +1.37%

• Bloomberg Base Metals Index 188.23 +.35%

• Copper 281.0 +1.85%

• US No. 1 Heavy Melt Scrap Steel 326.0 USD/Metric Tonne unch.

• China Iron Ore Spot 69.82 USD/Metric Tonne +2.7%

• Lumber 321.0 -8.42%

• UBS-Bloomberg Agriculture 954.45 +1.8%

Economy

• Atlanta Fed GDPNow Forecast +4.2% +12.0 basis points

• ECRI Weekly Leading Economic Index Growth Rate 0.6% +10.0 basis points
• Bloomberg US Recession Probability Next 12 Months 15.0% unch.

• Philly Fed ADS Real-Time Business Conditions Index -.0323 +2.71%

• US Economic Policy Uncertainty Index 67.94 -65.0%

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 173.85 +.16%

• Citi US Economic Surprise Index -.7 -7.1 points

• Citi Eurozone Economic Surprise Index -27.80 +1.5 points

• Citi Emerging Markets Economic Surprise Index -8.10 +4.0 points

• Fed Fund Futures imply 98.0% chance of no change, 2.0% chance of 25 basis point hike on 11/8

• US Dollar Index 95.27 -.33%

• MSCI Emerging Markets Currency Index 1,586.36 -.24%

• Bitcoin/USD 6,197.33 -4.96%

• Euro/Yen Carry Return Index 134.70 -1.22%

• Yield Curve 30.5 -4.25 basis points
  

• 10-Year US Treasury Yield 3.14% -10.0 basis points

• Federal Reserve's Balance Sheet $4.138 Trillion +.05%

• U.S. Sovereign Debt Credit Default Swap 20.55 unch.

• Illinois Municipal Debt Credit Default Swap 206.61 +3.02%

• Italian/German 10Y Yld Spread 308.0 +23.0 basis points

• Asia Pacific Sovereign Debt Credit Default Swap Index 9.81 +.06%
  

• Emerging Markets Sovereign Debt CDS Index 96.36 -.23%
  

• Israel Sovereign Debt Credit Default Swap 69.59 -1.89%

• South Korea Sovereign Debt Credit Default Swap 39.46 +.34%

• Russia Sovereign Debt Credit Default Swap 153.15 +1.73%

• iBoxx Offshore RMB China Corporate High Yield Index 150.32 -.24%

• 10-Year TIPS Spread 2.12% -6.0 basis points

• TED Spread 17.0 -2.75 basis points

• 2-Year Swap Spread 19.0 +2.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -47.25 -8.0 basis points

• N. America Investment Grade Credit Default Swap Index 64.64 +3.4%

• America Energy Sector High-Yield Credit Default Swap Index 403.0 +3.97%

• European Financial Sector Credit Default Swap Index 92.79 +6.57%
  

• Emerging Markets Credit Default Swap Index 207.02 -2.42%
  

• CMBS AAA Super Senior 10-Year Treasury Spread to Swaps 180.0 unch.
  

• M1 Money Supply $3.691 Trillion -.61%

• Commercial Paper Outstanding 1,102.10 +.2%

• 4-Week Moving Average of Jobless Claims 209,500 +3,000

• Continuing Claims Unemployment Rate 1.2% unch.
  

• Average 30-Year Mortgage Rate 4.90% +19.0 basis points

• Weekly Mortgage Applications 346.70 -1.67%

• Bloomberg Consumer Comfort 59.5 -2.1 points

• Weekly Retail Sales +5.90%+10.0 basis points

• Nationwide Gas $2.91/gallon unch.

• Baltic Dry Index 1,515.0 -1.37%

• China (Export) Containerized Freight Index 833.64 -2.34%

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 32.50 +8.33%

• Rail Freight Carloads 284,604 -5.01%

Best Performing Style

• Large-Cap Growth -4.7%

Worst Performing Style

• Small-Cap Growth -6.2%

Leading Sectors

• Tobacco +8.7%

• Gold & Silver +5.3%

• Restaurants -1.6%

• Utilities -2.0%

• Steel -2.2%

Lagging Sectors

• Banks -7.1% 

• Road & Rail -7.1%

• Robotics -7.3%

• Construction -7.3%

• Papers -7.8%

Weekly High-Volume Stock Gainers (2)

• SGH and PYX

Weekly High-Volume Stock Losers (38)

• HTH, USB, FOE, CMA, STI, ZION, MDR, FCX, HBAN, PMT, KEY, ACHC, CFG, PNFP, RF, CBSH, CFR, PETS, BPOP, WTFC, BXS, LTXB, HOMB, GWB, PB, HWC, FMBI, CHFC, TRMK, FNB, STL, VLY, CNSL, FFWM, KMPR, PNC, MNTA and WNC

Weekly Charts

ETFs

• High-Volume Gainers

• High-Volume Losers

Stocks

• High-Volume Gainers

• High-Volume Losers

*5-Day Change