Friday Watch

Evening Headlines

Bloomberg:       

• Global Economy Endures a Case of the Mondays, All Week Long.   

• Asia's Hedge Funds Just Had Their Worst Year Since 2008. Stocks in Asia edged higher after a week that’s seen the equity rally stall amid conflicting signals on a U.S.-China trade talks front. The pound climbed on reports Northern Ireland’s Democratic Unionist Party has privately agreed to back the Brexit deal. Japanese stocks saw modest gains as did their Australian counterparts. Technology shares were in focus after a weak sales forecast from Intel Corp. Sentiment remained fragile as Secretary of Commerce Wilbur Ross said the world’s two biggest economies remain “miles and miles” apart on trade. White House economic adviser Lawrence Kudlow later said President Donald Trump is optimistic about trade talks and the January jobs report will be up a significant amount. Treasuries steadied after Thursday’s climb and the dollar held gains. Japan’s Topix Index rose 0.7 percent at 9:09 a.m. Tokyo time. Futures on the S&P 500 Index rose 0.2 percent after the underlying gauge rose 0.1 percent. Hang Seng futures added 0.6 percent earlier. Australia’s S&P/ASX 200 Index rose 0.4 percent.

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

• Global Trade Cracks, PBOC Swap Tool, Draghi Rate Window: Eco Day.   

• Divergent Data Can Make for a Whiplash World for Oil Traders.

• Starbucks(SBUX) Is Basically a China Stock Now.  

• Period-Tracking Apps Are Monetizing Women’s Extremely Personal Data.

Wall St. Journal: 

• Shutdown Talks Revived After Senate Bills Fail.

• Financial Abuse of Seniors Hits Record.

• What if the FBI Had Probed Obama?

• L.A., Other Cities Stash Money to Prepare for a Recession.

• Airlines Warn Shutdown Strains Are Worsening.

• Michael Cohen Subpoenaed to Testify Before Senate Intelligence Committee.

• House Democrats Planning Hearings With Biggest U.S. Banks.

MarketWatch.com:

• 4 stocks set to rally in this ‘ongoing bull market,’ according to billionaire Bill Miller.

Fox News:

• White House signals ‘large down payment’ on border wall could end partial shutdown.

• DAVID BOSSIE: Covington, BuzzFeed & Trump – the liberal hatred is unhealthy.

CNBC:

• Intel(INTC) misses on revenue and gives weak guidance — stock falls after hours.

• Stocks making the biggest moves after hours: Intel, Starbucks and more.

Zero Hedge:

• White House Drafting National Emergency Proclamation To Include $7B For Border Wall.

• Clinton's 2016 Strategy Revealed: Overwhelm FBI With Trump-Russia Narrative Until Something Stuck.

• Will Policy-Makers Turn A Global Economic Slowdown Into A Crisis?

• Shutdown Now Costs $1 BIlion Per Day, And Consumer Sentiment Is Starting To Slide.

• US Order Non-Emergency Government Employees Out Of Venezuela.

• The Ruling Elites Love How Easily We're Distracted And Turned Against Each Other.

• DOJ Study: Gun Control Laws Won't Work Because Criminals Get Their Guns Illegally.

• Soros Agrees With Trump: China Is A "Mortal Danger" And US Must "Crack Down".

• Facebook(FB) Slides After Report Claims 50% Of Its Users Are Fake.

• China Joins Russia In Slamming US Interference In Venezuela.

• PG&E Shares Surges, Are Halted After Company Cleared In Deadliest 2017 Wildfire.

• Bonds & Dollar Bid And Kudlow Rescues Stocks From Ross Rout.

Telegraph:

• Italy 'gripped by despair' over European failures, says Conte.

• IMF fears political rage will block Federal Reserve's rescue efforts when the next crisis hits.

Night Trading 

• Asian equity indices are +.25% to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 85.0 -1.5 basis points. 

• China Sovereign CDS 59.0 -1.5 basis points.

• Bloomberg Emerging Markets Currency Index 67.87 +.01%.

• FTSE 100 futures -.13%.

• S&P 500 futures +.1%.

• NASDAQ 100 futures +.13%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (ABBV)/1.93

• (APD)/1.87

• (CL)/.73

• (DHI)/.77

• (LEA)/3.93

After the Close:

• None of note

Economic Releases

8:30 am EST

• Preliminary Durable Goods Orders for Dec. is estimated to rise +1.7%.

• Preliminary Durables Ex Transports for Dec. is estimated to rise +.2%.

• Cap Goods Orders Non-Defense Ex-Air for Dec. is estimated unch.
  

10:00 am EST

• New Home Sales for Dec. is estimated at 574K.

Upcoming Splits

• None of note

Other Potential Market Movers

• The German IFO Business Climate Index could also impact trading today.

BOTTOM LINE:  Asian indices are slightly higher, boosted by industrial and technology shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 50% net long heading into the day.

Stocks Slightly Higher into Final Hour on Earnings Optimism, Less European/Emerging Markets Debt Angst, Oil Gain, Tech/Transport Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 19.17 -1.8%

• Euro/Yen Carry Return Index 128.82 -.64%

• Emerging Markets Currency Volatility(VXY) 9.04 -.22%

• S&P 500 Implied Correlation 45.29 -3.9%

• ISE Sentiment Index 97.0 +76.4%
  

• Total Put/Call .91 -22.2%

• NYSE Arms 1.25 +12.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 73.87 -1.0%
  

• America Energy Sector High-Yield CDS Index 733.0 +1.15%

• European Financial Sector CDS Index 92.53 -.4%

• Italian/German 10Y Yld Spread 248.0 -4.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 85.48 -1.55%
  

• Emerging Market CDS Index 178.67 -.40%
  

• iBoxx Offshore RMB China Corporate High Yield Index 155.0 +.14%

• 2-Year Swap Spread 15.0 -.25 basis point

• TED Spread 38.0 +2.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -2.0 -.75 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.88 -.08%
• 3-Month T-Bill Yield 2.36% -4.0 basis points

• Yield Curve 15.25 -1.25 basis points

• China Iron Ore Spot 74.50 USD/Metric Tonne +.03%

• Citi US Economic Surprise Index 1.80 +7.9 points

• Citi Eurozone Economic Surprise Index -83.0 -13.0 points

• Citi Emerging Markets Economic Surprise Index -11.9 -.6 point

• 10-Year TIPS Spread 1.78-1.0 basis point
• 3.3% chance of Fed rate hike at March 20th meeting, 7.3% chance at May 1st meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +40 open in Japan 
• China A50 Futures: Indicating +64 open in China

• DAX Futures: Indicating +20 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Value -.3%

Sector Underperformers:

• 1) Tobacco -2.5% 2) Drugs -2.2% 3) Foods -1.7%

Stocks Falling on Unusual Volume: 

• URGN, WVE, BGG, MKC, CNMD, GOOS, PTC, CTXS, TAL, FCX, GWW, MO, COLB, PTC and LOB

Stocks With Unusual Put Option Activity:

• 1) AKS 2) XLNX 3) AET 4) KR 5) TXN

Stocks With Most Negative News Mentions:

• 1) GOOS 2) DOX 3) BID 4) CTL 5) XPO

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +.5%

Sector Outperformers:

• 1) Semis +5.2% 2) Disk Drives +4.1% 3) Oil Service +2.8%

Stocks Rising on Unusual Volume:

• EHTH, XLNX, SLM, LRCX, MMYT, ADTN, FSB, TER, TGI, CYOU, CATS, CVTI, AZPN, DQ, SYF, RH, FISV, HXL, MU, QSR, STL, SAP, WDC, TXT, ON, URI, EVH, JELD, STL and RES

Stocks With Unusual Call Option Activity:

• 1) ON 2) XLNX 3) LRCX 4) TPX 5) RH

Stocks With Most Positive News Mentions:

• 1) LRCX 2) XLNX 3) PANW 4) CP 5) BWB

Charts:

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