Friday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 79.0 -.75 basis point.

• China Sovereign CDS 49.0 -1.0 basis point.

• Bloomberg Emerging Markets Currency Index  65.51 +.05%.
• FTSE 100 futures +.54%.

• S&P 500 futures -.08%.

• NASDAQ 100 futures -.10%.

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 Sept. is estimated to rise to 146K versus 130K in Aug.
• The Unemployment Rate for Sept. is estimated at 3.7% versus 3.7% in Aug.
• Average Hourly Earnings MoM for Sept. is estimated to rise +.3% versus a +.4% gain in Aug.
• The Trade Balance for Aug. is estimated at -$54.5B versus -$54.0B in July.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Powell speaking, Fed's Brainard speaking, Fed's Quarles speaking, Eurozone Retail Sales report and the (JW/A) investor day could also impact trading today.

BOTTOM LINE: Asian indices are slightly higher, boosted by technology and industrial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.

Stocks Reversing Higher into Final Hour on Rising Fed Rate-Cut Odds, Diminished China Trade Deal Tensions, Short-Covering, Biotech/Tech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 19.25 -6.4%

• Euro/Yen Carry Return Index 121.83 -.1%

• Emerging Markets Currency Volatility(VXY) 8.14 +.12%

• S&P 500 Implied Correlation 46.96 -5.0%

• ISE Sentiment Index 82.0 +34.0%
  

• Total Put/Call 1.32 +3.94%

• NYSE Arms .65 -59.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 63.05 +.64%
  

• America Energy Sector High-Yield CDS Index 491.0 -4.44%

• European Financial Sector CDS Index 69.15 +2.99%

• Italian/German 10Y Yld Spread 141.75 -3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 78.73 +2.13%
  

• Emerging Market CDS Index 212.29 -.45%
  

• iBoxx Offshore RMB China Corporate High Yield Index 166.12 +.04%

• 2-Year Swap Spread 4.25 +.75 basis point

• TED Spread 38.75 +6.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -27.5 +1.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.50 +.51%
• 3-Month T-Bill Yield 1.70% -5.0 basis points

• Yield Curve .15 +4.0 basis points

• China Iron Ore Spot 88.30 USD/Metric Tonne -.32%

• Citi US Economic Surprise Index 24.50 -8.6 points

• Citi Eurozone Economic Surprise Index -77.20 -7.9 points

• Citi Emerging Markets Economic Surprise Index -8.80 +.2 point

• 10-Year TIPS Spread 1.48 -2.0 basis points
• 95.7% chance of Fed rate cut at Dec. 11th meeting, 99.5% chance of cut at Jan. 29th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +14 open in Japan 
• China A50 Futures: Indicating -54 open in China

• DAX Futures: Indicating +29 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Value +.4%

Sector Underperformers:

• 1) Airlines -.7% 2) I-Banks -.5% 3) Gaming -.4%

Stocks Falling on Unusual Volume: 

• SCHW, MRCY, COWN, SNAP, TSLA, IAA, STZ and INOV

Stocks With Unusual Put Option Activity:

• 1) UNFI 2) GPRO 3) STZ 4) BKLN 5) PEP

Stocks With Most Negative News Mentions:

• 1) DAL 2) AMTD 3) CARO 4) ANET 5) COF

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.8%

Sector Outperformers:

• 1) Video Gaming +1.8% 2) Software +1.4% 3) Biotech +1.3%

Stocks Rising on Unusual Volume:

• QTRX, TAL, IMMU, OKTA, CRWD, EPRT, LW, HRTX, ATVI, PEP, AYI, ROKU, SMAR, WPX, APO, WING, EW and ZYXI

Stocks With Unusual Call Option Activity:

• 1) STZ 2) ADP 3) APC 4) EMB 5) AMTD

Stocks With Most Positive News Mentions:

• 1) PEP 2) MEET 3) COST 4) CIEN 5) LEN

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +7.0% Above 100-Day Average
• 6 Sectors Rising, 5 Sectors Declining
• 41.6% of Issues Advancing, 55.2% Declining
• 32 New 52-Week Highs, 96 New Lows
• 49.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 41.8%
• Vix 19.8 -3.8%
• Total Put/Call 1.43 +12.6%
• TRIN/Arms .89 -44.7%

Thursday Watch

Evening Headlines

Bloomberg:           

• Police Call for Hong Kong Curfew as Shooting of Protester Sparks Fury.

• U.S. to Put Tariffs on Europe Planes, Whiskies After WTO Ruling. 

• Stocks Slide, Bonds Rise as Slowdown Fears Grow. Asian stocks declined after a fall in U.S. equities following disappointing American data that increased concerns about a global slowdown. Treasuries ticked higher. Japan’s Topix index dropped 1.7% at the open, with Australian shares also lower. Stock markets in China and South Korea are closed. Earlier, the S&P 500 suffered its first back-to-back drops of more than 1% this year as private payrolls fell short of estimates a day after a manufacturing gauge slumped to the lowest in a decade. The hiring numbers pushed the 10-year Treasury yield lower to 1.59%. Gold traded above $1,500 an ounce. Japan’s Topix lost 1.8% as of 9:03 a.m. in Tokyo. Futures on the S&P 500 Index added 0.2%. The underlying gauge fell 1.8% on Wednesday. Australia’s S&P/ASX 200 Index lost 0.8%.  

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

• U.S. to Put Tariffs on EU, Jokowi Vows Reform: Eco Day.  

• Oil Extends Decline on Rising U.S. Stockpiles and Slowdown Fears.

• Jeep Dealer’s $50,000 Sticker Shock Captures Auto Sales Stress.  

• Slumping Data May Force Powell to Move to Third Cut.

Wall Street Journal:

• Democrats Lost in Ukrainia.

• The Whistleblower Executive.

• FanDuel Owner Buys PokerStars in $6 Billion Deal.

• USA Swimming Faces Probe Into Sex-Abuse Claims, Business Practices.

Fox News:

• Ex-Ukraine prosecutor was told to drop probe of Biden-linked firm, files reveal.

• INGRAHAM: How deep are Schiff's Ukraine ties, and where's the media?

MarketWatch.com:     

• Here are the 25 S&P 500 stocks that ended higher on Wall Street’s worst day in 6 weeks.

CNBC:

• ‘Toxic chemical fumes,’ not oils, may be causing vaping illness, Mayo Clinic researchers find. “It seems to be some kind of direct chemical injury, similar to what one might see with exposures to toxic chemical fumes, poisonous gases and toxic agents,” said Dr. Brandon Larsen, a surgical pathologist at Mayo Clinic Arizona and a lead author of the study. “Based on what we have seen in our study, we suspect that most cases involve chemical contaminants, toxic byproducts or other noxious agents within vape liquids.”

• Trump administration to slap tariffs on EU aircraft and agricultural products.

• Bed Bath & Beyond(BBBY) boosts store closure estimates, says 60 stores may close by end of 2019.

• Kroger(KR) to lay off hundreds, as questions about its turnaround plan linger.

• Stocks making the biggest moves after hours: Tesla, Bed Bath & Beyond, GoPro and more.

Zero Hedge:

• Schiff And NYT Do Damage Control Over Sneak Peek At CIA Whistleblower Complaint; Trump Says Schiff Wrote It.

• Red-State Democrats Worry Impeachment Will Backfire.

• US To Slap Tariffs On European Airplanes, Cheese, Wine, Scotch And Coffee.

• "The Press Has Gone Crazy": Trump Mocks NYT Report That He Wanted 'Moat Stuffed With Alligators'.

• Solomon Hits Back With Receipts After MSM Denies DNC-Ukraine Collusion Attempt In 2016.

• Another Narrative Collapse: Eating Meat Is Not Ritualistic Suicide.

• Tesla Stock Tumbles After Disappointing Q3 Deliveries.

• Markets 'Feel The Bern' As Global Growth Scare Accelerates. 

Night Trading 

• Asian equity indices are -2.0% to -1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 79.75 +2.75 basis points.

• China Sovereign CDS 50.0 +1.0 basis point.

• Bloomberg Emerging Markets Currency Index  65.16 -.01%.

• FTSE 100 futures -.16%.

• S&P 500 futures +.27%.

• NASDAQ 100 futures +.25%.

Morning Preview Links 

Earnings of Note 
Company/Estimate

Before the Open:

• (ANGO)/.04

• (STZ)/2.62

• (PEP)/1.51

After the Close:

• (COST)/2.56

Economic Releases
7:30 am EST

• Challenger Job Cuts YoY report for Sept.

8:30 am EST

• Initial Jobless Claims for last week are estimated to rise to 215K versus 213K the prior week.

• Continuing Claims are estimated to rise to 1654K versus 1650K prior.
  

10:00 am EST

• The ISM Non-Manufacturing Index for Sept. is estimated to fall to 55.1 versus 56.4 in Aug.

• Factory Orders for Aug. is estimated to fall -.2% versus a +1.4% gain in July.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Clarida speaking, Eurozone PMI report, weekly EIA natural gas inventory report, Berenberg US Stockpicker Conference, (TOT) investor day, (INTU) investor day, (VRA) investor day and the (HPQ) analyst meeting could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down by commodity and industrial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.