Morning Market Internals

NYSE Composite Index:

• Volume Running -12.2% Below 100-Day Average
• 2 Sectors Rising, 9 Sectors Declining
• 49.1% of Issues Advancing, 46.9% Declining
• 107 New 52-Week Highs, 18 New Lows
• 54.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.7%
• Vix 15.6 +3.0%
• Total Put/Call .89 -3.3%
• TRIN/Arms .90 +21.6%

Wednesday Watch

Evening Headlines
Bloomberg:        

• BOJ Seen Holding for Now Amid Easing Talk: Decision Day Guide.

• Asia Stocks to Gain on Trade, Stimulus Optimism. Asian stocks looked set to follow gains in global shares on optimism over progress in the U.S.-China trade war and indications of more stimulus from the European Central Bank. Treasuries climbed and oil surged. Futures pointed higher in Japan, Hong Kong and Australia. The S&P 500 Index rose 1% after President Donald Trump tweeted he will meet Chinese President Xi Jinping at the G-20 summit next week, though gains were tempered by news his administration explored demoting Federal Reserve Chairman Jerome Powell in February. Ten-year Treasury yields came close to touching 2% before recovering. Futures on Japan’s Nikkei 225 climbed 1.3% in Singapore. Hang Seng futures earlier added 1.7%. Futures on Australia’s S&P/ASX 200 Index gained 0.6%. Futures on the S&P 500 Index were little changed.

• Facebook Triggers Fresh Washington Fury Over Crypto Project. 

• Fourth Carcinogen Discovered in Heart Pills Used by Millions.

• The Hot New Thing in Funds Is Higher Fees and More Restrictions.

• OPEC+ Close to Agreeing Next Meeting Takes Place on July 1-2.  

• Hedge Funds for Everyone: SEC Ponders Letting in the Not-So-Rich.

Wall Street Journal:

• FBI and Dominican Republic Officials Investigate Tourist Deaths.

• The Trick High-Schoolers Are Using to Boost Their Grades.

• Private-Equity Firms Are Raising Bigger and Bigger Funds. They Often Don’t Deliver.

• Trump Administration’s Plan to Step Up Deportations Faces Obstacles.

Fox News:

• As thousands line up for Trump rally, president preps to make his case for 2nd term.

• Fox News beats liberal CNN, MSNBC combined in ratings, tops all of cable.

• GOP congressman blasts Ocasio-Cortez's criticism of border facilities.

MarketWatch.com:

• Value of debt with negative-yields nears $12 trillion.

CNBC:

• Trump on demoting Fed Chair Jerome Powell, day before rate decision: ‘Let’s see what he does’.

• Adobe(ADBE) rises despite soft guidance.

• Tariffs hurt the economy, but China must be held accountable, Union Pacific CEO says.

• Stocks making the biggest moves after hours: Adobe, US Steel, and more.

Zero Hedge:

• How The "Draghi Shock" Unleashed Chaos On Powell's Most Important Day.

• Maxine Waters Demands Facebook Stop All Development Of Libra Crypto Project.

• WTI Holds Best Gains In 5 Months After API Reports Modest Crude Draw.

• What Your iPhone May Be Telling Mysterious Companies About You... Without Your Permission.

• Merkel Misfires; Shakes Violently At Ukraine Ceremony, Reboots By Drinking Water

• How Are Traders Positioned Ahead Of The Fed?

• Stocks Near Record Highs As Xi Hope & Powell Hype Trump Global Economic Collapse.

Business Insider:

• Truckers are warning of a 'bloodbath' as trucking companies go bankrupt or slash their profit expectations.

• Hong Kong protests dealt China’s all-powerful Xi Jinping an embarrassing blow that could sting for a while.

Telegraph:

• Facebook's Libra cryptocurrency plans should come with a 'health warning' as Europe's regulators circle.

Night Trading 

• Asian equity indices are +.5% to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 72.0 -.75 basis point.

• China Sovereign CDS 47.25 -3.0 basis points.

• Bloomberg Emerging Markets Currency Index 66.67 +.05%.

• S&P 500 futures +.09%.

• NASDAQ 100 futures +.17%.

Morning Preview Links 

Earnings of Note 
Company/Estimate

Before the Open:

• (BKS)/-.24

• (WGO)/1.03

After the Close:

• (AOBC)/.16

• (ORCL)/1.07

• (SCS)/.18

Economic Releases
10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,444,440 barrels versus a +2,206,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +231,250 barrels versus a +764,000 barrel gain the prior week. Distillate inventories are estimated to rise by +156,250 barrels versus a -1,000,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.3% versus a +1.4% gain prior.

2:00 pm EST

• The FOMC is expected to leave the benchmark Fed Funds rate at 2.25-2.5%.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The FOMC Press Conference, UK inflation data report, weekly MBA Mortgage Applications report, JMP Securities Life Sciences Conference and the (HQY) investor day 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 modestly higher and to weaken into the afternoon, finishing modestly mixed. The Portfolio is 75% net long heading into the day.

Stocks Surging into Final Hour on China Trade Deal Hopes, Dovish ECB Commentary, Oil Gain, Commodity/Tech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Advancing
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 15.1 -1.4%

• Euro/Yen Carry Return Index 126.1 -.3%

• Emerging Markets Currency Volatility(VXY) 8.4 unch.

• S&P 500 Implied Correlation 38.1 unch.

• ISE Sentiment Index 110.0 -19.9%
  

• Total Put/Call .87 -12.1%

• NYSE Arms .68 -34.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 57.92 -4.76%
  

• America Energy Sector High-Yield CDS Index 632.0 -.39%

• European Financial Sector CDS Index 70.07 -8.32%

• Italian/German 10Y Yld Spread 243.5 -10.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 71.82 -1.63%
  

• Emerging Market CDS Index 183.58 -4.67%
  

• iBoxx Offshore RMB China Corporate High Yield Index 163.76 +.05%

• 2-Year Swap Spread 2.50 unch.

• TED Spread 22.25 -2.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -15.75 +1.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.61 +.40%
• 3-Month T-Bill Yield 2.20% +2.0 basis points

• Yield Curve 19.25 -3.0 basis points

• China Iron Ore Spot 108.16 USD/Metric Tonne +7.57%

• Citi US Economic Surprise Index -61.20 +2.0 points

• Citi Eurozone Economic Surprise Index -21.1 -6.7 points

• Citi Emerging Markets Economic Surprise Index -31.40 -1.9 points

• 10-Year TIPS Spread 1.64 +3.0 basis points
• 83.0% chance of Fed rate cut at July 31st meeting, 94.9% chance of cut at Sept. 18th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +127 open in Japan 
• China A50 Futures: Indicating +190 open in China

• DAX Futures: Indicating -3 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 75% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Value +.8%

Sector Underperformers:

• 1) Tobacco -1.4% 2) Utilities -.8% 3) REITs -.5%

Stocks Falling on Unusual Volume: 

• BHVN, GCP, QURE, SA, BLUE, NEO, ALDR and BYND

Stocks With Unusual Put Option Activity:

• 1) LQD 2) ACAD 3) VNQ 4) IYR 5) AA

Stocks With Most Negative News Mentions:

• 1) KBH 2) DGLY 3) K 4) REGN 5) LEN

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +1.3%

Sector Outperformers:

• 1) Steel +4.6% 2) Semis +4.1% 3) Gaming +3.1%

Stocks Rising on Unusual Volume:

• GTHX, RUN, EBIX, PLAN, IIPR, VIAV, TDS, USM, REGI, SNAP, STLD, XLRN, KEM, APPN, CATM, LVS, SRPT, GLW, DXC and SMAR

Stocks With Unusual Call Option Activity:

• 1) XME 2) KRE 3) BHVN 4) OAS 5) XLE

Stocks With Most Positive News Mentions:

• 1) MGI 2) SNAP 3) PSN 4) BA 5) BBY

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +12.1% Above 100-Day Average
• 9 Sectors Rising, 2 Sectors Declining
• 89.7% of Issues Advancing, 10.3% Declining
• 192 New 52-Week Highs, 22 New Lows
• 51.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.0%
• Vix 15.3 -.7%
• Total Put/Call .92 -7.1%
• TRIN/Arms .78 -24.3%