Friday Watch

Night Trading 

• Asian equity indices are +.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 58.75 -1.75 basis points.

• China Sovereign CDS 40.75 -3.0 basis points.

• Bloomberg Emerging Markets Currency Index  65.56 +.01%.
• FTSE 100 futures +.01%.

• S&P 500 futures +.30%.

• NASDAQ 100 futures +.30%.

Morning Preview Links 

Earnings of Note 

Company/Estimate

Before the Open:

• (GCO)/-.01

After the Close:

• None of note

Economic Releases

8:30 am EST

• The Change in Non-Farm Payrolls for Aug. is estimated at 160K versus 164K in July.
• The Unemployment Rate for Aug. is estimated at 3.7% versus 3.7% in July. 
• Average Hourly Earnings MoM for August is estimated to rise +.3% versus a +.3% gain in July.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Powell speaking, Eurozone GDP report and the Eurozone Industrial Production 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 100% net long heading into the day.

Stocks Surging into Afternoon on China Trade Deal Hopes, Diminished Global Growth Fears, Less European/Emerging Markets/US High-Yield Debt Angst, Transport/Retail Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Above Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 15.99 -7.7%

• Euro/Yen Carry Return Index 122.58 +.53%

• Emerging Markets Currency Volatility(VXY) 8.5 -1.05%

• S&P 500 Implied Correlation 39.5 -6.5%

• ISE Sentiment Index 80.0 -10.1%
  

• Total Put/Call .81 -16.5%

• NYSE Arms .77 +35.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 52.28 -3.56%
  

• America Energy Sector High-Yield CDS Index 423.0 -2.56%

• European Financial Sector CDS Index 58.70 -3.64%

• Italian/German 10Y Yld Spread 153.75 +5.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 59.46 -4.78%
  

• Emerging Market CDS Index 200.04 -1.50%
  

• iBoxx Offshore RMB China Corporate High Yield Index 165.14 -.05%

• 2-Year Swap Spread -2.0 -1.25 basis points

• TED Spread 16.50 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -16.5 -1.0 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.61 +.11%
• 3-Month T-Bill Yield 1.96% +2.0 basis points

• Yield Curve .03 +2.0 basis points

• China Iron Ore Spot 87.33 USD/Metric Tonne +.41%

• Citi US Economic Surprise Index 7.7 +15.4 points

• Citi Eurozone Economic Surprise Index -34.30 -2.5 points

• Citi Emerging Markets Economic Surprise Index -14.6 -1.1 points

• 10-Year TIPS Spread 1.55+4.0 basis points
• 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 +95 open in Japan 
• China A50 Futures: Indicating +100 open in China

• DAX Futures: Indicating -6 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Value +1.1%

Sector Underperformers:

• 1) Gold & Silver -4.5% 2) Utilities -1.2% 3) REITs -.8%

Stocks Falling on Unusual Volume: 

• MDP, GMS, NNN, VRNT, BGNE, USLV, CDAY, CIEN, ATRC, MTCH, CHD, MDB, SMAR, QURE, MMSI, APPN, INOV, SA, AG, ROKU, ZS, UPWK, IAC and BTU

Stocks With Unusual Put Option Activity:

• 1) CIEN 2) FXE 3) DOCU 4) RTN 5) SLV

Stocks With Most Negative News Mentions:

• 1) MNK 2) MDP 3) BTU 4) REVG 5) ABX

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +2.1%

Sector Outperformers:

• 1) Retail +3.7% 2) Oil Service +3.6% 3) Semis +3.1%

Stocks Rising on Unusual Volume:

• DSLV, SIG, ADUS, IGV, INMD, GIII, PANW, APO, GBT, DGLD, BILI, IJT, NOBL, AVAV, ECPG, ULTA, VTWO, DCI, AAXJ, FLY, NDSN, DSGX, CPRT, TLRY, RYAAY, CRC, AEO, LCI, PSN, NAV, INMD, GNRC, NVDA, PII, MBUU, XENT, CG, HTLD, STAY, OLED, MXL, ADVM, ECPG, YEXT, SAIA and RARE

Stocks With Unusual Call Option Activity:

• 1) ASHR 2) XEC 3) ATUS 4) ZGNX 5)CIEN

Stocks With Most Positive News Mentions:

• 1) CLDR 2) LE 3) LULU 4) INTC 5) SCHW

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +34.4% Above 100-Day Average
• 8 Sectors Rising, 3 Sector Declining
• 70.2% of Issues Advancing, 27.5% Declining
• 198 New 52-Week Highs, 11 New Lows
• 49.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 47.8%
• Vix 15.9 -8.3%
• Total Put/Call .80 -17.5%
• TRIN/Arms .88 +54.4%

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.