Thursday Watch

Evening Headlines

Bloomberg:      

• South Korea’s Economy Slows as Trade War Hits Investment.  

• Bond Defaults Are the Highest on Record as India’s Economy Slows.  

• Mario Draghi Reaches the End of His Fight to Save Euro.

• Asia Stocks to Rise With Nasdaq Futures on Profits. Stocks in Asia looked primed for gains following an advance in U.S. equities, with investors taking solace from a raft of earnings that provided some optimism against a background of concern for global economic growth. Shares opened higher in Sydney and equity futures advanced in Japan and Hong Kong. The S&P 500 earlier added 0.3% and closed above the 3,000 level, though weakness in chipmaker stocks dragged the Philadelphia Semiconductor Index down almost 2% on Texas Instruments Inc.’s disappointing forecast. Nasdaq futures rose as revenue at Microsoft Corp. beat forecasts. Treasury yields rose off the lows of the session, while the dollar traded flat. Oil dipped after its surge. Futures on the S&P 500 Index were flat as of 8:23 a.m. in Tokyo. The underlying gauge increased 0.3% on Wednesday. Nasdaq futures gained 0.3%. Australia’s S&P/ASX 200 Index rose 0.6%. Futures on Japan’s Nikkei 225 advanced 0.7%. Hang Seng Index futures earlier gained 0.4%.

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

• Oil Climbs After Surprise Decline in U.S. Crude Stockpiles.

• Google Accused of Creating Spy Tool to Squelch Worker Dissent.

Wall Street Journal:

• Global Boundaries Break Down for Movies in U.S. and China.

• GOP Protest Delays Testimony on Holdup in Aid to Ukraine.

• Amazon Sells Clothes From Factories Other Stores Shun.

• Pelosi’s Impeachment Blunder.

• Zuckerberg Digs In on Libra.

• A Weary EU Moves Toward New Brexit Delay.

• Hunter Biden’s Name Was Used as Selling Point in Fraudulent Scheme.

Fox News:

• Whistleblower acknowledged additional element of potential anti-Trump bias, sources say.

MarketWatch.com:    

• PayPal(PYPL) stock surges after earnings beat across the board.

CNBC:

• Tesla(TSLA) shares soar after crushing third-quarter earnings.

• Earnings season has reached ‘maximum disorientation,’ Jim Cramer says.

• Microsoft(MSFT) beats on revenue and earnings; stock is little changed.

• Federal Reserve economist says growth would have been better with negative interest rates.

• ‘There are lives at stake’: PG&E criticized over blackouts to prevent California wildfires.

• Apple’s(AAPL) TV service will grow like crazy and be a $9 billion business by 2025, Morgan Stanley says.

• Stocks making the biggest moves after hours: Tesla, Ford, PayPal and more.

Zero Hedge:   

• NYT Stealth-Edits Story To Hide Hillary's Accusation Russia Is "Grooming" Gabbard.

• 'Be Careful What You Wish For' - Establishment Democrats Are Looking For A "Savior" To Enter The Race.

• Watch GOP Lawmakers Storm Secretive Impeachment Hearing In Capitol Basement.

• Google Confirms 'Quantum Supremacy' - Completes 10,000 Year Calculation In 200 Seconds.

• Stocks Surge As Fed Panics - Dramatically Increases Liquidity Provision Through Brexit Deadline.

• Billionaire Jeff Vinik Shutters Second "Comeback" Fund After Just 8 Months.

• Crypto Crashes, Black-Gold Bid, & Lira Lifted As Yields, Stocks Shrug.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 69.25 unch.

• China Sovereign CDS 39.75 +.5 basis point.

• Bloomberg Emerging Markets Currency Index  66.28 +.02%.

• FTSE 100 futures -.11%.

• S&P 500 futures -.03%.

• NASDAQ 100 futures +.19%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (MMM)/2.50

• (ADS)/5.25

• (AAL)/1.33

• (AEP)/1.23

• (AZN)/.97

• (BAX)/.84

• (CMCSA)/.74

• (DHR)/1.15

• (HSY)/1.60

• (LH)/2.85

• (NOC)/4.76

• (RTN)/2.84

• (SCHN)/.41

• (LUV)/1.08

• (SWK)/2.03

• (TROW)/1.97

• (TSCO)/1.03

• (TWTR)/.20

• (VLO)/1.35

After the Close:

• (AFL)/1.07

• (ALK)/2.52

• (AMZN)/4.49

• (COF)/2.92

• (CERN)/.66

• (CY)/.30

• (DECK)/2.33

• (FII)/.65

• (FSLR)/1.19

• (FWRD)/.78

• (GILD)/1.73

• (ILMN)/1.41

• (INTC)/1.24

• (JNPR)/.46

• (MHK)/2.64

• (V)/1.43

• (WERN)/.59

Economic Releases
8:30 am EST

• Durable Goods Orders for Sept. are estimated to fall -.7% versus a +.2% gain in Aug.

• Durables Ex Transports for Sept. is estimated to fall -.2% versus a +.5% gain in Aug.

• Cap Goods Orders Non-Defense Ex-Air for Sept. is estimated to fall -.1% versus a -.4% decline in Aug. 

• Initial Jobless Claims for last week are estimated to rise to 215K versus 214K the prior week.

• Continuing Claims is estimated to fall to 1678K versus 1679K prior.

9:45 am EST

• Markit US Manufacturing PMI for Oct. is estimated to fall to 50.9 versus 51.1 in Sept.

• Markit US Services PMI for Oct. is estimated to rise to 51.0 versus 50.9 in Sept.
  

10:00 am EST

• New Home Sales for Sept. is estimated to fall to 702K versus 713K in Aug.

11:00 am EST

• The Kansas City Fed Manufacturing Index for Oct. is estimated to fall to -3 versus -2 in Sept.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The ECB rate decision/press conference, Eurozone manufacturing report, $32B 7Y T-Note auction, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report and the (CTXS) financial analyst meeting could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and commodity 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 Slightly Higher into Final Hour on Earnings Outlooks, Diminished Global Growth Concerns, Oil Gain, Energy/Medical Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Around Even
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 14.5 +.1%

• Euro/Yen Carry Return Index 125.50 +.15%

• Emerging Markets Currency Volatility(VXY) 7.54 -1.6%

• S&P 500 Implied Correlation 32.2 -.22%

• ISE Sentiment Index 78.0 -16.1%
  

• Total Put/Call .91 -4.2%

• NYSE Arms .91 -7.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 54.71 +.63%
  

• America Energy Sector High-Yield CDS Index 492.0 -.28%

• European Financial Sector CDS Index 57.21 +.41%

• Italian/German 10Y Yld Spread 133.0 +3.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 69.40 -.04%
  

• Emerging Market CDS Index 198.55 -1.89%
  

• iBoxx Offshore RMB China Corporate High Yield Index 166.97 +.07%

• 2-Year Swap Spread 3.75 +1.75 basis points

• TED Spread 28.75 -4.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -24.25 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.30 +.31%
• 3-Month T-Bill Yield 1.65% +2.0 basis points

• Yield Curve .18 unch.

• China Iron Ore Spot 83.47 USD/Metric Tonne -.76%

• Citi US Economic Surprise Index 6.0 -.6 point

• Citi Eurozone Economic Surprise Index -57.3 -1.4 points

• Citi Emerging Markets Economic Surprise Index -20.80 -.3 basis point

• 10-Year TIPS Spread 1.62 +1.0 basis point
• 94.9% chance of Fed rate cut at Dec. 11th meeting, 96.7% chance of cut at Jan. 29th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +155 open in Japan 
• China A50 Futures: Indicating +42 open in China

• DAX Futures: Indicating -5 open in Germany

Portfolio:

• Slightly Lower: On losses in my tech sector longs

• Disclosed Trades: None

• Market Exposure: 75% Net Long