Thursday Watch

Evening Headlines

Bloomberg: 

• Johnson Gets Boxed In Over Brexit With Election Only Way Out.

• EU Says U.K. Has Failed to Deliver New Proposals: Brexit Update.    

• China’s Private Bond Defaults Climb to Record $4.4 Billion.

• Asia Stocks, U.S. Futures Open Higher; Dollar Flat.  

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

• Fed Consumer Warning, Dudley Tries Again, Johnson Mess: Eco Day.

• Fed Officials Warn Consumer Is Alone in Carrying U.S. Economy.

• Why Apple Is Borrowing $7 Billion While Sitting on a $200 Billion Cash Pile.

• Fed Says Most Businesses Are Optimistic, Consumer Spending ‘Mixed’.

Wall Street Journal:

• U.K. Lawmakers Foil Johnson With Votes to Delay Brexit and Bar Snap Election.

• How U.S. Banks Took Over the World.

• Hurricane Dorian Churns Northward Toward Carolinas.

• The Biggest Bargains Among U.S. Colleges.

• Goldman Sachs’s Partnership Is Shrinking.

• Planned Parenthood to Expand Telemedicine Program.

Fox News:

• Hurricane Dorian’s death toll in Bahamas has more than doubled, official reveals.

MarketWatch.com:     

• Get ready for bigger home-price increases next year, except in these two states.

• Porsche just unveiled a huge threat to Tesla’s high-end electric crown.

CNBC:

• In a world of disappearing income, these stable stocks pay a high dividend yield.

• Slack plunges after posting first earnings report since going public.

• YouTube fine shows the US government is not serious about a Big Tech crackdown.

• Apple(AAPL) is borrowing in the bond market for the first time since US tax reform.

• Stocks making the biggest moves after hours: Slack, Cloudera and Palo Alto Networks.

• Strength in tech stocks will keep driving S&P 500 higher, trader predicts.

• Mallinckrodt stock tanks after report it may consider bankruptcy amid wave of opioid lawsuits.

• Stocks could buck historical trend to turn out a September ‘surprise’, strategist says.

Zero Hedge:

• As China Settles In For A Long Trade War, Economic Pressure On Trump Continues To Grow.

• The Best And Worst Hedge Funds Of 2019: Momos On Rampage.

• 73% Of Republican Students Have Withheld Views In Class Fearing Grades Would Suffer.

• San Francisco Declares NRA 'Domestic Terrorist Organization'.

• This Is What Social Media Is Doing To Us...

• "The 2020s Will Begin With The Lowest Interest Rates In 5000 Years".

• Trump Says Dow "Would Be 10,000 Points Higher" If He Caved On Trade.

• WTI Tumbles After Surprise Crude Build.

• Traders Buy Everything As Uber-Dovish FedSpeak Sparks Dollar Dump.

Night Trading 

• Asian equity indices are +.5% to +1.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 60.5 -3.75 basis points.

• China Sovereign CDS 43.75 -2.75 basis points.

• Bloomberg Emerging Markets Currency Index  65.53 -.01%.

• FTSE 100 futures +.05%.

• S&P 500 futures +.16%.

• NASDAQ 100 futures +.30%.

Morning Preview Links 

Earnings of Note 
Company/Estimate

Before the Open:

• (CIEN)/.58

• (DCI)/.61

• (GIII)/.22

• (JW/A)/.25

• (LE)/-.19

• (MDP)/1.58

• (SIG)/.24

After the Close:

• (ABM)/.58

• (DOCU)/.04

• (KFY)/.77

• (LULU)/.89

• (NX)/.36

• (ZUMZ)/.19

Economic Releases
7:30 am EST

• Challenger Job Cuts YoY for Aug.
  

8:15 am EST

• ADP Employment Change for Aug. is estimated to fall to 148K versus 156K in July.

8:30 am EST

• Initial Jobless Claims for last week are estimated at 215K versus 215K the prior week.

• Continuing Claims are estimated to fall to 1688K versus 1698K prior.
  

10:00 am EST

• Factory Orders for July are estimated to rise +1.0% versus a +.6% gain in June.

• ISM Non-Manufacturing for August is estimated to rise to 54.0 versus 53.7 in July.
  

11:00 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,567,380 barrels versus a -10,027,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -1,508,500 barrels versus a -2,090,000 barrel decline the prior week. Distillate inventories are estimated to rise by +5,170 barrels versus a -2,063,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.29% versus a -.7% decline prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The German Factory Orders report, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, Morgan Stanley Industrials Conference, (RS) investor day and the (BKE)/(COST)/(CATO) monthly sales updates 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.

Stocks Rising into Final Hour on Diminished Global Growth Fears, Oil Gain, Short-Covering, Tech/Energy Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 17.6 -10.4%

• Euro/Yen Carry Return Index 121.89 +.95%

• Emerging Markets Currency Volatility(VXY) 8.61 -2.93%

• S&P 500 Implied Correlation 42.55 -6.1%

• ISE Sentiment Index 87.0 +22.5%
  

• Total Put/Call .97 -11.0%

• NYSE Arms .58 -55.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 54.03 -1.99%
  

• America Energy Sector High-Yield CDS Index 435.0 +1.52%

• European Financial Sector CDS Index 60.92 -5.09%

• Italian/German 10Y Yld Spread 148.5 -9.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 62.09 -3.32%
  

• Emerging Market CDS Index 203.90 -4.75%
  

• iBoxx Offshore RMB China Corporate High Yield Index 165.11 +.07%

• 2-Year Swap Spread -.75 unch.

• TED Spread 17.0 +2.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -15.5 -.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.50 +.83%
• 3-Month T-Bill Yield 1.94% -1.0 basis point

• Yield Curve .01 unch.

• China Iron Ore Spot 89.88 USD/Metric Tonne +2.29%

• Citi US Economic Surprise Index -7.7 +1.7 points

• Citi Eurozone Economic Surprise Index -31.80 +4.6 points

• Citi Emerging Markets Economic Surprise Index -13.5 +1.6 points

• 10-Year TIPS Spread 1.51 unch.
• 100.0% chance of Fed rate cut at Oct. 30th meeting, 100.0% chance of cut at Dec. 11th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +151 open in Japan 
• China A50 Futures: Indicating +17 open in China

• DAX Futures: Indicating -6 open in Germany

Portfolio:

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my emerging market shorts

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth +.6%

Sector Underperformers:

• 1) Gaming -.5% 2) Healthcare Providers -.4% 3) Education -.4%

Stocks Falling on Unusual Volume: 

• PODD, DSLV, AEO, FTV, RARE, HQY, AERI, JBLU, NSSC, WMS, TPTX, IIPR, TSN, MOMO, CONN, TPB and ECPG

Stocks With Unusual Put Option Activity:

• 1) AEO 2) MAT 3) CLVS 4) COUP 5) KEY

Stocks With Most Negative News Mentions:

• 1) JBLU 2) TSN 3) PS 4) PUMP 5) CERN

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value +.9%

Sector Outperformers:

• 1) Oil Service +3.1% 2) Steel +2.9% 3) Semis +2.6%

Stocks Rising on Unusual Volume:

• INMD, COUP, IHG, BOX, NAV, EFAV, PRAH, NOBL, RDY, PAM, FDT, LBTYK, XENT, ROKU, ESTC, PDP, TDOC, LL, USLV, EBS, IXUS, BMA, LCI and PFPT

Stocks With Unusual Call Option Activity:

• 1) YETI 2) COUP 3) BHVN 4) ADVM 5) MIK

Stocks With Most Positive News Mentions:

• 1) NAV 2) MIK 3) W 4) COUP 5) ROKU

Charts:

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