Tuesday Watch

Today's Headlines

Bloomberg:

• Johnson Threatens Oct. 14 Election Over No-Deal: Brexit Update.

• China, U.S. Struggle to Set Meeting as Tariffs Erode Trust.  

• Top Chinese Developers Shrink Workforce in Sign of Tough Times.

• Asian Stocks Mixed on Trade Doubts; Treasuries Dip. Asian stocks were mixed in thin trading as Chinese and American officials struggled to schedule a planned meeting this month to continue trade talks. Treasury yields ticked higher. Shares were little changed in Tokyo, Sydney and Seoul. U.S. futures dropped as Bloomberg reported the difficulties the two countries were having in arranging the talks, following Washington’s rejection of Beijing’s request to delay tariffs that took effect over the weekend. Cash markets for both U.S. stocks and bonds were closed for the Labor Day holiday. The dollar was steady near its highest in more than two years. The pound held losses with the U.K. facing a showdown in Parliament over delaying Brexit again. Japan’s Topix index dipped 0.1% as of 9:06 a.m. in Tokyo. Australia’s S&P/ASX 200 Index was little changed. South Korea’s Kospi index slipped 0.1%. Hong Kong’s Hang Seng Index contracts lost 0.6%. Futures on the S&P 500 Index declined 0.7%.

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

• Oil Extends Slide as Trade War, Hurricane Dorian Hit Confidence.   

• JPMorgan Says It’s Finally Time to Buy Stocks Despite Trade Woes.

Wall Street Journal:

• U.K.’s Johnson Brandishes Election in Bid to Stop Parliament From Foiling Brexit.

• Mobile Sports Betting Is the Moneymaker as More States Legalize.

• The Market Forces That Propelled a Massive Rally in Long Bonds.

• Cost of Infrastructure Fixes Is Going Up.

• Iran Curbs U.N. Probe Into Tehran Nuclear Site.

• Argentina’s Pro-Business President Pulls a U-Turn, Imposes Capital Controls.

MarketWatch.com:

• New delays could keep Boeing 737 MAX grounded into holiday travel season.

• ECB official calls Facebook’s Libra ‘treacherous’.

Fox News:

• Hurricane Dorian kills least 5 in Bahamas as powerful storm hinders emergency response.

CNBC:

• British Prime Minister Boris Johnson says Brexit deal chances are rising.

• Here’s a list of recession signals that are flashing red.

• Hurricane Dorian could cost insurers $25 billion, UBS says.

• Beyond Meat uses climate change to market fake meat substitutes. Scientists are cautious.

Zero Hedge: 

• Bahamian Official Filmed Cat-5 Dorian As It Swallowed His Home.

• 34 Reported Dead In Ventura County Dive-Boat Fire.

• "Please, Somebody Help Us!": Eye Of Slow-Moving Dorian Reaches Grand Bahama; Storm Recorded Gusts As High As 220 MPH.

• Why Has The U.S. CEO-To-Worker Pay Ratio Increased So Much?

• HK Security Chief Says Police Battling "Elements Of Terror" - For First Time Echoing Mainland.

• 'Anguished' Hong Kong Leader Wants To Quit - Says Ability To Resolve Crisis 'Very Limited'.

• Rebel MPs Reportedly Attempting To Force Another Brexit Delay.

• Investors Panic-Sell Emerging Market Funds, On Pace For Worst-Ever Outflow.

• These Were The Best And Worst Performing Assets In Rollercoaster August.

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 64.5 unch.

• China Sovereign CDS 47.0 +1.0 basis point.

• Bloomberg Emerging Markets Currency Index 64.78 -.07%.

• FTSE 100 futures -.04%.

• S&P 500 futures -.62%.

• NASDAQ 100 futures -.72%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• (CONN)/.51

After the Close:

• (COUP)/-.11

• (HQY)/.35

Economic Releases

10:00 am EST

• ISM Manufacturing for August is estimated at 51.2 versus 51.2 in July.

• ISM Prices Paid for August is estimated to rise to 46.8 versus 45.1 in July.

• Construction Spending MoM for July is estimated to rise +.3% versus a -1.3% decline in June.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Eurozone PPI report, Australia Retail Sales report, UBS Chemicals Conference, Barclays Consumer Staples Conference and the Barclays Energy/Power Conference could also impact trading today.

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

Weekly Outlook

• Wall St. Week Ahead by Reuters.
• Global Economy Week by Bloomberg.
• 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 lower on European/Emerging Markets/US High-Yield Debt Angst, technical selling, China trade tensions, oil weakness, global growth concerns and US dollar 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:         

• Trump Heaps More Tariffs on China, Still No Deal in Sight.

• Pressure Grows on Asia’s Factories as Tariff Escalation Bites.

• Hong Kong Property, Casino Stocks Slump After Violent Protests.

• India’s Shock GDP Slump Prompts Growth, Rate-Cut Revisions.

• Stocks Slip as Latest Tariffs Kick In; Yuan Lower: Markets Wrap.

• U.S.-China Trade Risk Keeps Emerging-Market Investors on Edge.

• U.S. Stock Index Futures Drop After Trump China Tariffs Kick In.  

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

• Recession-Risk Signals, Tariffs Kick In, Capital Clamps: Eco Day.

• Oil Extends Losses as Deepening Trade War Stokes Growth Concerns.  

• What to Dread and Love in Stocks as ‘Bad News’ September Arrives.

Wall Street Journal:

• U.S. Goes Ahead With New Tariffs on Chinese Products.

• A Famine of Fact at U.N. Climate Panel.

• Venture-Capital Stalwart Fights Crypto Crackdown.

• Truck Makers Apply the Brakes.

• Hong Kong Students Go Back to School, but Protests Won’t Cool. 
  

• German Anti-Immigration Party Appears Headed for Gains in Elections.

MarketWatch.com:

•   Home-improvement stocks mixed as hurricane expected to both help and hurt.

•   Brexit foes may seek another extension as U.K. Parliament gears up for fight.

Fox News: 

• Monster Cat. 5 hurricane slams Bahamas, triggering dangerous flooding, severely damaging homes.

CNBC:

• China’s factory activity unexpectedly expands in August, a private survey shows.

• A ‘fear bubble’ is creating a huge buying opportunity, long-time market bull Jim Paulsen says.

• ‘Catastrophic’ Hurricane Dorian becomes strongest on record for northwestern Bahamas.

• President Trump ordered US firms to ditch China, but many already have and more are on the way.

Zero Hedge:

• Gold Spikes, Yuan & Futures Plunge As Asia Opens After Trade War Tit-For-Tat.

• Watch As Cat-5 Dorian Devastates Bahamas In Historic Landfall.

• US Slaps New Tariffs On China; One Minute Later China Retaliates.

• Is China Backing Away From Xi's "Made In China, 2025" Plan?

• "Demand For EV Cars Now A Problem:" Global Lithium Bust Underway As Prices Collapse.

• Why The 100-Year Bond Is Unethical.

• Argentina Imposes Currency Controls.

• "Burn With Us" - Protesters Clash With Riot Police At Hong Kong Airport Amid Surge Of Violence.

• "Scariest Thing You'll Read All Day": Report Sounds Alarm Over Brain-Reading Technology & Neurocapitalism.

• Walmart's Creepy Robots Are Here.

• Dershowitz: The Dangerous Stalinism Of The "Woke" Hard-Left.

Today's Headlines

Bloomberg:           

• Hong Kong Masses Show China They're Ready to Fight.

• China Rebukes EU, U.S. Politicians for Interfering on Hong Kong.

• Trump Stays Defiant Before Tariffs, Lashing ‘Weak’ Critics.

• Hong Kong Students Vow to Keep Protests Alive as Classes Begin.

• Hong Kong Protesters Wave U.S. Flags, Urge Trump to Take Action.  

• South Korea’s Export Slump Extends to Ninth Month Amid Gloom.

• The Unstoppable Surge in Negative Yields Reaches $17 Trillion.

• All-or-Nothing Stock Market Lurches All Around —and Goes Nowhere.

• Emerging Markets Are Often Bad in August, But Rarely This Bad.  

• U.S. Unleashes Military to Fight Fake News and Disinformation. 

• U.S. Advises Non-Smokers to Avoid e-Cigarettes Amid Lung Disease Outbreak.

Wall Street Journal:

• Violence Erupts in Hong Kong as Protesters Defy Ban.

• Beijing Moves on Hong Kong.

• Markets Show Resilience in Topsy-Turvy August.

• Hurricane Comey Was a National Disaster.

• European Diplomats Swing Behind French Bid to Ease U.S.-Iran Tensions.

Barron's:

• Had bullish commentary on  (TPRE), (GLRE), (ATVI), (MRNA) and (TBIO).

MarketWatch.com:

• How Hurricane Dorian is affecting flights, cruises and theme parks in Florida.

Fox News: 

• Traffic stop sets off shooting rampage that leaves at least 24 shot, 5 dead, officials say.  

• 'High octane' storm heads toward four states, nears Category 5.

CNBC:

• Port of Los Angeles slammed with cargo as companies rush to get imports in ahead of tariffs.

• Trump’s tariffs on $112 billion of Chinese imports hit at midnight.

Zero Hedge:

• Hong Kong Police Fire Live Rounds To Quell Protesters As Chaos Rules Streets.

• 5 Dead, At Least 20 Injured In Another Texas Mass Shooting, Suspect Shot & Killed.

• The Real "Helicopter Money": Since 2009, China Has Created $21 Trillion Of New Money, More Than Double The US.

• America's Billionaires Congealing Around Warren And Buttigieg.

• Lula Admits, BRICS Was Created As A Tool Of Attack Against The US Dollar.

• iPhones Hacked As Malware Infected "Thousands Of Users A Week" For Years.

• AOC Claim That Millennials "Most Informed, Historically-Literate" Annihilated In Scathing Op-Ed.

• No Idea What's Going On With Brexit? Here Is The "Simplified" Flow Chart.

• "It Scares Me To Death": Coding Errors In Sex Robots Make Them Prone To Violence And Strangling Humans.

• A Climate Alarmist Sued A Skeptic For Defamation... And Lost.

• Chinese Youth Dangerously Drunk On Debt As Grandparents Roll In Graves.

• Virtue-Signaling Canadians Love Carbon Initiatives...Until They Have To Pay For Them.

• Yuan Crashes Most In 25 Years As August Ends With Bonds & Bullion Bid.

The Telegraph:   

• Eurozone suffering from ‘tremendous accumulation’ of debt, warns outgoing ECB policymaker.   

• Apple(AAPL) braces for $1bn tariff hit as it prepares for launch of new iPhone.

Morning Market Internals

NYSE Composite Index:

• Volume Running -22.4% Below 100-Day Average
• 9 Sectors Rising, 2 Sectors Declining
• 51.0% of Issues Advancing, 44.8% Declining
• 128 New 52-Week Highs, 32 New Lows
• 48.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.2%
• Vix 18.0 +.9%
• Total Put/Call 1.22 +22.0%
• TRIN/Arms .88 +51.7%

Friday Watch

Evening Headlines

Bloomberg:   

• Trump Promises Talk on Trade After China Defers Tariff Response.  

• U.S. Chamber Calls for Halting China Tariffs and Resuming Talks   

• U.K. and EU to Step Up Brexit Talks as Parliament Showdown Looms.

• Stocks Climb on Trade Optimism; U.S. Yields Steady. Stocks in Asia tracked a U.S. rally after China indicated it wouldn’t immediately retaliate against the latest American tariff increase. Treasuries steadied. Shares in Tokyo, Sydney and Seoul advanced on the final trading day of a tumultuous month dominated by the trade war. Earlier, the S&P 500 Index rose for a second day after a spokesman for China’s commerce ministry said that escalating the conflict won’t benefit either side and that it was more important to discuss removing the extra duties. A gauge of the dollar remained near a two-year high. Futures on the S&P 500 Index dipped 0.1% as of 9:02 a.m. in Tokyo. The underlying gauge increased 1.3% on Thursday. Japan’s Topix index advanced 0.8%. South Korea’s Kospi added 1%. Australia’s S&P/ASX 200 Index rose 0.4%.  

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

• RBA Deficit Dilemma, Hong Kong Pain, Korea Rate Guide: Eco Day.

• Dorian Expected to Become Category 4 Hurricane on Way to Florida.

• New Miami Hurricane Hazard: Dockless Scooters as Projectiles.

• Uber, Lyft Pledge $60 Million to Possible Labor Ballot Fight.

• Americans Pushed to the Suburbs as City Prices Soar Out of Reach.  

• Dell Rises After Strong Computer Demand Fuels Rosy Forecast.

Wall Street Journal:

• Young Chinese Spend Like Americans—and Take on Worrisome Debt.

• Aramco Plans Split IPO, Shunning London, Hong Kong.

• Sneaky, Leaky James Comey.

• U.S. Prosecutors Probe Huawei on New Allegations of Technology Theft.

• Proposed Opioid Deal With Purdue Drawing Pushback From States.

• Hong Kong Police Ban Huge Rally Aimed at China’s Liaison Office.

• The Most Powerful Women in Business Wear Dresses, Not Suits.

Fox News:

• Joe Biden told moving military story at campaign stop – but it 'never happened'.

• IG report highlights apparent inconsistencies in Comey's testimony.

MarketWatch.com:

• Here are 2019’s biggest stock market winners and losers in the Dow, S&P 500 and Nasdaq.

CNBC:

• Senators ask Jeff Bezos to crack down on thousands of unsafe products on Amazon(AMZN).

• Dow surges more than 300 points after China hints it won’t retaliate for now in trade war.

• Disney(DIS) sells its stake in YES Network to investor group that includes Amazon in $3.47 billion deal.

• Hackers are going after colleges, leaving students at risk of identity theft.

• ‘Grossly irresponsible’ – Larry Summers blasts ex-Fed president’s call to thwart Trump in 2020.

• Stocks making the biggest moves after hours: Ulta(ULTA), Ambarella(AMBA) and Dell(DELL).

Zero Hedge:

• "People Will Be Shocked" - Bannon On Huawei & The Communist China Threat.

• Burger-Backed Bonds: Companies Scramble To Securitize Everything.

• "I Feel Helpless": Bottled Water, Gas Shortages Reported As Floridians Brace For Hurricane Dorian.

• Stocks Erase Trump-Trade-Tantrum Dump As Dollar Soars To New Record High.

Telegraph:

• Brexit is vibrant democracy in the raw: it is Europe that risks sliding under authoritarian control.

• China to miss out on $2.5 trillion of GDP growth if trade war intensifies.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 64.5 -2.0 basis points.

• China Sovereign CDS 46.0 -2.5 basis points.

• Bloomberg Emerging Markets Currency Index  64.87 +.01%.

• FTSE 100 futures +.06%.

• S&P 500 futures -.05%.

• NASDAQ 100 futures -.08%.

Morning Preview Links 

Earnings of Note 
Company/Estimate

Before the Open:

• (BIG)/.40

• (CPB)/.41

• (JKS)/.33

After the Close:

• None of note

Economic Releases
8:30 am EST

• Personal Income for July is estimated to rise +.3% versus a +.4% gain in June.

• Personal Spending for July is estimated to rise +.5% versus a +.3% gain in June.

• The PCE Core MoM for July is estimated to rise +.2% versus a +.2% gain in June.
  

9:45 am EST

• The MNI Chicago PMI for August is estimated to rise to 47.5 versus 44.4 in July.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone CPI report 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 rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.