Stocks Lower into Final Hour on Global Growth Concerns, Profit-Taking, Oil Decline, Energy/Utility Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Slightly Higher
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 18.55 -4.9%

• Euro/Yen Carry Return Index 129.30 -.25%

• Emerging Markets Currency Volatility(VXY) 9.56 +.1%

• S&P 500 Implied Correlation 47.39 -1.4%

• ISE Sentiment Index 121.0 +42.4%
  

• Total Put/Call 1.13 unch.

• NYSE Arms .79 -34.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 77.77 +.18%
  

• America Energy Sector High-Yield CDS Index 713.0 +2.68%

• European Financial Sector CDS Index 104.59 -2.45%

• Italian/German 10Y Yld Spread 261.5 -1.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 89.37 -1.27%
  

• Emerging Market CDS Index 195.69 +2.01%
  

• iBoxx Offshore RMB China Corporate High Yield Index 153.52 +.37%

• 2-Year Swap Spread 15.75 +1.0 basis point

• TED Spread 37.75 +3.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap .25 -2.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.94 -.10%
• 3-Month T-Bill Yield 2.41% -1.0 basis point

• Yield Curve 15.75 -1.0 basis point

• China Iron Ore Spot 72.29 USD/Metric Tonne -.33%

• Citi US Economic Surprise Index -6.10 +.5 point

• Citi Eurozone Economic Surprise Index -88.6 -1.8 points

• Citi Emerging Markets Economic Surprise Index -20.3 -6.8 points

• 10-Year TIPS Spread 1.82 +1.0 basis points
• .5% chance of Fed rate hike at March 20th meeting, 10.8% chance at May 1st meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -69 open in Japan 
• China A50 Futures: Indicating +12 open in China

• DAX Futures: Indicating -6 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth -.3%

Sector Underperformers:

• 1) Oil Service -1.6% 2) Video Gaming -1.4% 3) Utilities -.8%

Stocks Falling on Unusual Volume: 

• NEXA, MTN, ATHM, WTW, ATVI, WDR and CDNA

Stocks With Unusual Put Option Activity:

• 1) PCG 2) CHS 3) CMCSA 4) DLTR 5) WTW

Stocks With Most Negative News Mentions:

• 1) MTN 2) ATVI 3) PETX 4) WTW 5)PCG

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value unch.

Sector Outperformers:

• 1) Semis +1.3% 2) Homebuilders +1.3% 3) Retail +.9%

Stocks Rising on Unusual Volume:

• TAK, COWN, BBBY, INFY, SNX, SLP, UFS, ZLAB, GM, ERJ, BOLD, TPIC, IPHI, PVH, ALLK, TWLO, PYX, NFLX, BUD, EYE, MTLS, TXRH and CRON

Stocks With Unusual Call Option Activity:

• 1) ATVI 2) XLP 3) GM 4) DNR 5) YELP

Stocks With Most Positive News Mentions:

• 1) SNX 2) PVH 3) GM 4) TGT 5) MU

Charts:

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

Mid-day Market Internals

NYSE Composite Index:

• Volume Running -2.2% Below 100-Day Average
• 3 Sectors Rising, 8 Sectors Declining
• 46.3% of Issues Advancing, 50.9% Declining
• 15 New 52-Week Highs, 6 New Lows
• 23.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 52.5%
• Vix 19.1 -1.9%
• Total Put/Call 1.15 +1.8%
• TRIN/Arms .76 -36.7%

Friday Watch

Evening Headlines

Bloomberg:         

• China's Liu Expected to Visit U.S. Soon for Trade Talks, Mnuchin Says.

• Australia’s Housing-Sector Slump Shows Up in Another Sickly Set of Data 

• Asia Stocks Extend Week's Climb; Yuan Adds to Gain. Asian equities climbed Friday and were on course for the strongest week since early November that’s been driven in part by optimism over U.S.-China trade negotiations. The yuan extended its advance, while Treasury yields dipped. Shares in Tokyo rose and futures pointed to a higher start in Hong Kong. The S&P 500 earlier extended its rally since Christmas Eve beyond 10 percent, though gains were limited as retailers sank amid concerns about a sales slowdown. Markets also saw some volatility as Federal Reserve Chairman Jerome Powell said the central bank is sticking with its process of shrinking its balance sheet to a more normal level, while comments from vice chair Richard Clarida suggested caution about moving ahead with interest-rate increases. Japan’s Topix index rose 0.8 percent as of 9:02 a.m. in Tokyo. Australia’s S&P/ASX 200 Index added 0.1 percent. The S&P 500 Index rose 0.5 percent. Hang Seng futures rose 0.8 percent.  

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

• Powell's Patience, Yuan Defies Slowdown, U.S. Inflation: Eco Day.

• Mexico Finance Ministry Completes Oil Hedges at $55 a Barrel.

• JPMorgan to Boost Bonus Pool for Stock Traders, Bankers.

• Google Board Sued for Hushing Misconduct Claims About Rubin.

• The Winners and Losers of Big Oil's Offshore Spending Revival.

Wall St. Journal: 

• Fed Chief Affirms Flexibility on Rates.

• How the U.S. Can Protect Corporate America’s Tech Secrets From China.

• Ford to Slash Jobs, Shut Plants in Major European Revamp.

• Cohen Will Testify Before House Oversight Committee.

• Pentagon Pushes Forward on Syria Pullout.

• Apple’s Pressing Challenge: Build Its Services Business.

• Mortgage Rates Hit Lowest Point in Nine Months.

MarketWatch.com:

• The stock market just got off to its best start in 13 years.

• Fed’s Clarida: At this stage, patience on interest rates ‘is a virtue’.

• Bitcoin tumbles 10% to hit lowest level in nearly 4 weeks.

Fox News:

• Trump highlights human trafficking as he calls for 'strong barrier' in border visit.

• BRETT VELICOVICH: Mainstream media hiding facts about border security.

CNBC:

• Stocks are rallying on days they should drop and that’s a good sign, says Jim Cramer.

• Fed’s No. 2 says US policy would react if ‘crosswinds’ persist.

• Netflix(NFLX) shares rise after hours on upgrade by UBS.

• These are the 25 best-paying jobs in America in 2019.

• Stocks making the biggest moves after hours: Netflix, Activision Blizzard and more.

• Intel(INTC) has the biggest addressable market it’s ever seen, says company’s interim CEO.

Zero Hedge:

• Seattle TV Station Caught Doctoring Trump's Face During National Address.

• Graham Calls On Trump "To Use Emergency Powers" To Build Wall.

• Cars Will Soon Be Monitoring Their Drivers And Selling The Data They Collect.

• Trump Could Use Money Earmarked For Puerto Rico To Build The Wall: Reports.

• Mexico Reinforces Southern Border As New Caravan Prepares For Northbound Exodus.

• Global Earnings Downgrades At Highest Level In 10 Years.  

• "I Can't Say I Know": Fed's Evans Surprised Market Is "Concerned" About Fed's Balance Sheet.

• White House Prepares For Ginsburg Supreme Court Vacancy: Report.

• "Patient" Powell "Substantially" Spooks Stocks But Dip-Buyers Rescue Best Run In A Decade.

Telegraph:

• A no-deal Brexit is off the table, and sterling assets are a screaming buy.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 89.25 -1.25 basis points. 

• China Sovereign CDS 63.25 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 67.99 -.03%.

• FTSE 100 futures +.34%.

• S&P 500 futures -.08%.

• NASDAQ 100 futures -.08%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• None of note

After the Close:

• None of note

Economic Releases

8:30 am EST

• The CPI MoM for Dec. is estimated to fall -.1% versus unch. in Nov.

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

• Real Avg. Weekly Earnings YoY for Dec. are estimated to rise +1.2% versus a +.5% gain in Nov.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The UK Industrial Production report and the Bloomberg US Economic Survey for Jan. 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 strengthen into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.