Monday Watch

Today's Headlines

Bloomberg:    

• China Financial Warning Signs Are Flashing Almost Everywhere.  

• China’s Manufacturing Is Back in Expansion.     

• Australia Says Citizen’s ‘Interrogation’ by China Unacceptable.

• PBOC’s Yi Signals Policy to Stay Cautious Amid Uncertain Data.

• Hong Kong Unrest Rages On as Police Clash With Protesters.  

• South Korean Consumer Prices Eke Out Growth in November.

• Merkel’s Tenure on the Line as Coalition Partner Veers Left.  

• U.S. Traders Bet Most in Two Years That Europe Has Bottomed Out.

• The Way Out for a Global Economy Hooked On Debt? Even More Debt. 

• Stocks Set for Muted Start; Treasury Futures Dip. Stocks in Asia were set for a muted start to December as investors weighed data on China’s economy that showed a bright spot for manufacturing and the latest news on the trade front. Australian bond yields rose. S&P 500 futures edged up and contracts pointed marginally higher in Tokyo and Hong Kong. The S&P 500 Index dipped on Friday. On U.S.-China trade: the Global Times reported that China’s government wants tariffs to be rolled back as part of the phase one trade deal with the U.S. Oil recovered a sliver of Friday’s slide after Iraq said OPEC and its allies will consider deeper production cuts. Futures on the S&P 500 rose 0.1% as of 8:05 a.m. in Tokyo. The underlying gauge slipped 0.4% on Friday. Futures on Japan’s Nikkei 225 added 0.2%. Hang Seng Index futures rose 0.2%. Australia’s S&P/ASX 200 Index advanced 0.1%.   

• Oil Recovers as China Data Offers Hope for Global Demand.

• Five Things You Need to Know to Start Your Day

• Billions Minted: It Will Be Hard to Top Stocks in 2019.

• Online Sales Break Black Friday Record as Clicks Beat Queues.  

• Republican Says Schiff Should Testify in Impeachment Hearing.  

• Not Even a Blockbuster Jobs Report Will Move the Needle for Treasury Bulls.  

• Bitcoin Set to Post Worst Month of 2019.

Wall Street Journal:

• Saudis Push for Longer-Lasting OPEC Cuts as Aramco IPO Approaches.

• Huawei Manages to Make Smartphones Without U.S. Chips.

• Investors Bet on More Pain for Retailers.

• U.S., Europeans Clash Over How to Handle Islamic State Detainees.

• Highways Give Way to Homes as Cities Rebuild.

• Impeachment Fight at Home Hangs Over Trump’s NATO Trip.

• Private-Equity Cash Piles Up as Takeover Targets Get Pricier.

• U.S. Growth Enters Fourth Quarter on More Solid Footing.

• Retailers Revamp Staffing as Shopping Shifts Online.

• China and Russia Are Partners—and Now Have a $55 Billion Pipeline to Prove It.

MarketWatch.com:

• Disney(DIS) is giving us Baby Yoda toys for Christmas.  

• Will a Santa Claus rally power the S&P 500 and Dow to their best years in a generation?

Barron's:

• Had bullish commentary on (IBM), (SU), (SKT) and (GOOS).

Fox News:

• 21 killed, including police officers, as bullets fly during cartel gunbattle near Texas.

• NEWT GINGRICH: Plot against Trump is real – and bigger than many think.

CNBC:

• Black Friday shoppers spend record $7.4 billion in second largest online sales day ever.

• 5G broadband is an existential threat to cable companies, but execs and investors aren’t worried.

• ‘Tax Cuts 2.0’ could include a rate reduction for the middle class. Here’s who would benefit most.

Zero Hedge:           

• London Bridge Killer Was Released From Prison Early On Prior Terrorism Charge.

• In Shocking Blow To Merkel, Germany's SPD Elects Leftist Leaders, Risking Coalition Government Collapse.

• CTAs Caught In A Tug Of War Between Bonds And Stocks As Year-End Looms.

• Newsweek Reporter Fired After Peddling Fake News That Trump Golfed On Thanksgiving.

• Schwab Abandons High-Tax San Francisco For New $100 Million Mega-HQ In Dallas.

• BET Founder Says 2020 Election Is "Trump's To Lose".

• Two Storms One Weekend: 50 Million Under Winter Alerts As Travelers Return From Thanksgiving .

• Hong Kong Plunges Into Post-Election Chaos; Pro-Democracy Protesters Thank Trump For Signing Bill.

Business Insider:

• Another winter storm could spell trouble for return Thanksgiving travels across US. Here's the latest.

• Joe Biden nibbled on his wife's finger in a bizarre campaign stop moment.

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 64.50 unch.

• China Sovereign CDS 38.50 -.5 basis point.

• Bloomberg Emerging Markets Currency Index 65.14 +.01%.

• FTSE 100 futures +.16%.

• S&P 500 futures +.29%.

• NASDAQ 100 futures +.32%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• (DSX)/.02

After the Close:

• (COUP)/.06

Economic Releases
10:00 am EST

• The ISM Manufacturing Index for Nov. is estimated to rise to 49.2 versus 48.3 in Oct.

• The ISM Prices Paid Index for Nov. is estimated to rise to 47.0 versus 45.5 in Oct.

• The ISM Employment Index for Nov. is estimated to rise to 48.3 versus 47.7 in Oct.

• Construction Spending MoM for Oct. is estimated to rise +.3% versus a +.5% gain in Sept.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Eurzone PMI report, USTR report on France's digital tax, RBA meeting, Goldman Sachs Industrials Conference, Wells Fargo TMT Summit, Citi Basic Materials Conference and the CSFB Tech/Media/Telecom Conference could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by technology and commodity shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon.  The Portfolio is 100% net long heading into the week.

Weekly Outlook

• Wall St. Week Ahead by Reuters.

• Global Economy Week by Bloomberg. 

• The Week Ahead by Yahoo. (video)

• 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 higher on China trade deal hopes, fewer global growth concerns, earnings optimism, technical buying, seasonal strength and short-covering. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 100% net long heading into the week.

Friday Watch

Night Trading 

• Asian equity indices are -1.0% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 64.5 -.25 basis point.

• China Sovereign CDS 39.0 unch.

• Bloomberg Emerging Markets Currency Index  65.06 -.01%.

• FTSE 100 futures -.18%.

• S&P 500 futures -.25%.

• NASDAQ 100 futures -.35%.

Morning Preview Links

Earnings of Note 

Company/Estimate

Before the Open:

• None of note

After the Close:

• None of ntoe

Economic Releases

• None of note
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Black Friday retail results and the German Unemployment rate 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 modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.

Morning Market Internals

NYSE Composite Index:

• Volume Running -7.4% Above 100-Day Average
• 7 Sectors Rising, 4 Sectors Declining
• 56.6% of Issues Advancing, 38.8% Declining
• 94 New 52-Week Highs, 11 New Lows
• 58.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.7%
• Vix 11.6 +.1%
• Total Put/Call .69 -34.3%
• TRIN/Arms .81 -27.7%

Wednesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 64.75 -.25 basis point.

• China Sovereign CDS 39.0 unch.

• Bloomberg Emerging Markets Currency Index  65.22 -.02%.
• FTSE 100 futures +.04%.

• S&P 500 futures -.04%.

• NASDAQ 100 futures -.02%.

Morning Preview Links

Earnings of Note 

Company/Estimate

Before the Open:

• (DAKT)/.16
• (DE)/2.14
• (FRO)/.03

After the Close:

• None of ntoe

Economic Releases

8:30 am EST

• 3Q GDP QoQ is estimated to rise +1.9% versus a prior estimate of a +1.9% gain.
• 3Q Personal Consumption is estimated to rise +2.8% versus a prior estimate of a +2.9% gain.
• 3Q GDP Price Index is estimated to rise +1.7% versus a prior estimate of a +1.7% gain.
• 3Q Core PCE QoQ is estimated to rise +2.2% versus a prior estimate of a +2.2% gain.
• Durable Goods Orders for Oct. is estimated to fall -.9% versus a -1.2% decline in Sept.
• Durables Ex Transports for Oct. is estimated to rise +.1% versus a -.4% decline in Sept.
• Capital Goods Orders Non-Defense Ex-Air is estimated to fall -.2% versus a -.6% decline in Sept. 
• Initial Jobless Claims for last week are estimated to fall to 221K versus 227K the prior week. 
• Continuing Claims are estimated to fall to 1691K versus 1695K prior.

9:45 am EST

• The MNI Chicago PMI for Nov. is estimated to rise to 47.0 versus 43.2 in Oct.
  

10:00 am EST

• Personal Income for Oct. is estimated to rise +.3% versus a +.3% gain in Sept.
• Personal Spending for Oct. is estimated to rise +.3% versus a +.2% gain in Sept.
• The PCE Core MoM for Oct. is estimated to rise +.1% versus unch. in Sept. 
• Pending Home Sales MoM for Oct. is estimated to rise +.2% versus a +1.5% gain in Sept.
  

2:00 pm EST

• US Fed Beige Book release.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Japan Retail Trade report, weekly Bloomberg Consumer Comfort Index, weekly MBA Mortgage Applications report and the $32B 7Y T-Note auction 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 100% net long heading into the day.

Stocks Slightly Higher into Final Hour on US Economic Activity, Buyout Speculation, Short-Covering, Retail/Homebuilding Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: About Even
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 11.82 -.42%

• Euro/Yen Carry Return Index 124.76 +.19%

• Emerging Markets Currency Volatility(VXY) 6.99 -.43%

• S&P 500 Implied Correlation 41.39 -.79%

• ISE Sentiment Index 79.0 -81
  

• Total Put/Call 1.07 +13.8%

• NYSE Arms 1.56 +62.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 49.47 -1.6%
  

• America Energy Sector High-Yield CDS Index 618.0 +.60%

• European Financial Sector CDS Index 57.94 -1.93%

• Italian/German 10Y Yld Spread 154.0 +2.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 65.09 -.43%
  

• Emerging Market CDS Index 203.04 -.16%
  

• iBoxx Offshore RMB China Corporate High Yield Index 168.03 -.01%

• 2-Year Swap Spread -.25 +1.0 basis point

• TED Spread 34.25 +1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -13.75 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.23 -.19%
• 3-Month T-Bill Yield 1.58% unch.

• Yield Curve .16+1.0 basis point

• China Iron Ore Spot 84.08 USD/Metric Tonne -1.59%

• Citi US Economic Surprise Index 2.1 +1.9 basis points

• Citi Eurozone Economic Surprise Index -15.50 -.1 point

• Citi Emerging Markets Economic Surprise Index -27.20 +.6 basis point

• 10-Year TIPS Spread 1.64 unch.
• 11.7% chance of Fed rate cut at Jan. 29th meeting, 25.4% chance of cut at March 18th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +46 open in Japan 
• China A50 Futures: Indicating -33 open in China

• DAX Futures: Indicating +10 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long