Morning Market Internals

NYSE Composite Index:

• Volume Running -8.5% Below 100-Day Average
• 10 Sectors Rising, 1 Sector Declining
• 74.1% of Issues Advancing, 22.7% Declining
• 218 New 52-Week Highs, 53 New Lows
• 47.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.4%
• Vix 15.9 -.4%
• Total Put/Call .75 -11.8%
• TRIN/Arms 1.04 +25.3%

Friday Watch

Evening Headlines
Bloomberg:     

• Pence Warns Mexico Tariffs Are Coming With More Talks Set Friday.     

• Quick U.S. Trade Deal Is Unlikely, Former Chinese Minister Says.

• Here's What to Watch at the G-20 Finance Meetings This Weekend.    

• Investors Signal Draghi Is Running Out of Time and Ammunition.   

• Investors Are Deserting Junk Bonds as Trade Tensions Sour Mood.

• Fitch Cuts Pemex to Junk as Markets Lose Faith in Rescue. 

• Asia Stocks Seen Higher on Mexico Tariff Optimism. Asian stocks looked set to follow their U.S. counterparts higher amid optimism Washington may delay a plan to impose tariffs on Mexico. Treasuries edged higher. Futures rose in Japan and Australia, with markets in Hong Kong and China shut for holidays. The S&P 500 Index extended its advance after Bloomberg News reported that Mexico is pushing for more time to negotiate, though Vice President Mike Pence said at this point, the tariffs will be imposed on Monday. Treasury yields retreated and the dollar slipped ahead of key U.S. employment data Friday. Futures on Japan’s Nikkei 225 rose 0.4% in Singapore. Futures on Australia’s S&P/ASX 200 added 0.4%. Futures on the S&P 500 dipped 0.2%.

• Amazon's Satellite Project Will Cost Billions, Jeff Bezos Says.  

• Baffled Stock Analysts Have No Idea What They Want in Jobs Data.   

• Caesars Is in Advanced Talks to Merge With Eldorado Resorts.   

• Bloomberg’s Week in Pictures.   

• Ballyhooed Bitcoin Futures Contract Bows Out With a Whimper.

Wall Street Journal:

• Five Things to Watch in the May Jobs Report.

• Fed Begins Debate on Whether to Cut Rate as Soon as June.

• AT&T Eyes $16- to $17-a-Month Streaming Service in Shift.

• U.S., Mexico Make Progress on Migration, but Tariffs Still Loom.

Fox News:

• Amid deaths at Caribbean resorts, US couple claims chemicals made them ill.

MarketWatch.com:

• Hop on now before Dow reaches 40,000, says forecaster who nailed 2018 selloff.

CNBC:

• The jobs report is Friday and economic reports don’t get much more important than this one.

• Stocks making the biggest moves after hours: Beyond Meat, Zoom Video, DocuSign and more.

• Beyond Meat stock soars after first quarterly report since IPO.

Zero Hedge:

• "I'm Willing To Go To Jail Over It": Camping World CEO Defies City Lawsuit Over Flying Oversized US Flag.

• "This Will Not End Well" - YouTube's Latest Purge Of "Extremist Content".

• Peso, Futures Slide As Pence Confirms "At This Point, Tariffs To Be Imposed Monday".

• Rabobank: "We've Lost Track How Many Times Central Bankers And Key Economists Spread Blatantly Fake News".

• Mexico Freezes Human Traffickers' Bank Accounts, Sends National Guard To Border Amid 'Very Good Discussion'.

• Twitter Suspends Another Alexandria Ocasio-Cortez Parody Account.

• Bonds & Bullion Bid As Investors Buy Defensive Stocks At 2019 Record Pace.

Telegraph:

• Ambrose Evans-PritchardDeflation alert in Europe as markets lose faith in 'powerless' ECB.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 76.0 -.75 basis point.

• China Sovereign CDS 55.0 -1.75 basis points.

• Bloomberg Emerging Markets Currency Index 66.47 +.01%.

• S&P 500 futures -.08%.

• NASDAQ 100 futures -.13%.

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 Change in Non-Farm Payrolls for May is estimated at 178K versus 263K in April.

• The Unemployment Rate for May is estimated at 3.6% versus 3.6% in April.

• Average Hourly Earnings MoM for May is estimated to rise +.3% versus a +.2% gain in April.
  

10:00 am EST

• Wholesale Trade Sales MoM for April is estimated to fall -.2% versus a +2.3% gain in March.
  

3:00 pm EST

• Consumer Credit for April is estimated to rise to $13.0B versus $10.281B in March.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The UK Brexit vote and the Eurozone Industrial Production/Trade Data reports could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by commodity 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 Higher into Final Hour on Diminished Mexico Tariff Worries, Oil Gain, Technical Buying, Energy/Tech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 16.0 -.81%

• Euro/Yen Carry Return Index 126.95 +.43%

• Emerging Markets Currency Volatility(VXY) 8.69 +.12%

• S&P 500 Implied Correlation 39.1 -1.21%

• ISE Sentiment Index 52.0 -30.7%
  

• Total Put/Call .89 -11.9%

• NYSE Arms .80 -41.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 63.61 -1.46%
  

• America Energy Sector High-Yield CDS Index 625.0 +1.86%

• European Financial Sector CDS Index 83.78 +2.05%

• Italian/German 10Y Yld Spread 272.75 +3.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 76.08 -2.71%
  

• Emerging Market CDS Index 200.87 -.74%
  

• iBoxx Offshore RMB China Corporate High Yield Index 163.42 +.1%

• 2-Year Swap Spread 5.25 +.5 basis point

• TED Spread 14.75 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -11.0 -.5 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.48 +.03%

• 3-Month T-Bill Yield 2.31% -3.0 basis points

• Yield Curve 24.5 -3.5 basis points

• China Iron Ore Spot 94.99 USD/Metric Tonne -.44%

• Citi US Economic Surprise Index -47.30 -.5 point

• Citi Eurozone Economic Surprise Index -18.60 +1.2 points

• Citi Emerging Markets Economic Surprise Index -31.20 -.3 point

• 10-Year TIPS Spread 1.75 -2.0 basis point

• 67.3% chance of Fed rate cut at July 31st meeting, 92.7% chance of cut at Sept. 18th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +56 open in Japan 

• China A50 Futures: Indicating -25 open in China

• DAX Futures: Indicating +16 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth -.9%

Sector Underperformers:

• 1) Alt Energy -1.2% 2) Road & Rail -1.1% 3) Retail -1.1%

Stocks Falling on Unusual Volume: 

• IIIV, ORTX, DD, GEF, LZB, FIVE, STBA, SIG, GIII, ARES, DDS, CODA, GES, CDXS, AERI and ZUMZ

Stocks With Unusual Put Option Activity:

• 1) JNK 2) BBT 3) GES 4) RH 5) HSY

Stocks With Most Negative News Mentions:

• 1) EROS 2) KIRK 3) MIK 4) HOME 5) LFIN

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value +.3%

Sector Outperformers:

• 1) Restaurants +1.3% 2) Networking +1.3% 3) Gold & Silver +1.1%

Stocks Rising on Unusual Volume:

• SFIX, DSGX, CIEN, GRFS, FRPT, CMTL, EFAV, HQY, SAIC, FTCH, HIIQ, NGG, FANH, SMAR, PLAN, RMAX, TSLA, AMD, ABM, GLP, NVO, ILPT, CPB, WNS, AZUL and BF/B

Stocks With Unusual Call Option Activity:

• 1) CIEN 2) SFIX 3) HOME 4) AR 5) CLDR

Stocks With Most Positive News Mentions:

• 1) INSY 2) ZUO 3) QCOM 4) BLK 5) HD

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -12.9% Below 100-Day Average
• 7 Sectors Rising, 4 Sectors Declining
• 42.0% of Issues Advancing, 54.4% Declining
• 160 New 52-Week Highs, 88 New Lows
• 47.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.1%
• Vix 16.3 +1.6%
• Total Put/Call .93 -7.9%
• TRIN/Arms 1.18 -13.2%