Friday Watch

Evening Headlines

Bloomberg:  

• Trump Approves U.S.-China Trade Deal to Halt Dec. 15 Tariffs.  

• Offshore Yuan Stages Biggest Rally Since August on Trade Deal.

• Apple Avoids $150-Per-iPhone Levy After U.S., China Reach Deal.  

• Japan Big Manufacturers Lose Optimism First Time Since 2013.

• U.K. Exit Poll Forecasts Majority for Johnson's Conservatives.

• Boris Johnson’s Next Brexit Steps: Get It Done, Then Define It.

• Pound Surges Most in 2 1/2 Years as Election Results Filter In.  

• Stocks Hit Record High, Bond Yields Jump, Pound Up. Global stocks hit a record high for the first time since early 2018 and bond yields climbed after news that President Donald Trump signed off on a trade deal with China averting tariffs set for Sunday. The pound surged the most in almost three years in the wake of exit polls showing a solid majority for U.K. Prime Minister Boris Johnson, offering greater clarity for Brexit. Shares jumped in Tokyo, Hong Kong and Seoul with more modest gains seen in Sydney and Shanghai. China’s yuan punched through 7 per dollar in offshore trading. Ten-year Treasury yields extended Thursday’s rise, and the yen retreated. Futures on the S&P 500 Index saw smaller gains and those on the U.K.’s FTSE 100 Index slipped as the rise in sterling weighed. The MSCI Asia Pacific Index rose 1.3% as of 10:25 a.m. in Tokyo. Japan’s Topix index rose 1.6%. Korea’s Kospi Index climbed 1.5%. S&P/ASX 200 climbed 0.4%. The Hang Seng Index rose 1.9%. The Shanghai Composite Index rose 0.8%. Futures on the S&P 500 Index were up 0.4% after the gauge rose 0.9% Thursday. FTSE 100 futures fell 0.3%. 

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

• Done Deal, U.K. is Backing Boris, Lagarde’s Optimism: Eco Day.   

• Oil Rises to Three-Month High After Trump Approves Trade Deal.  

• Adobe Reports Quarterly Sales That Beat Analyst Estimates.

Wall Street Journal:

• U.K. Exit Poll Suggests Big Victory for Boris Johnson.

• Vote Is Likely to Bring Brexit, but Not End Brexit Divisions.

• Trump Agrees to Limited Trade Deal With China.

• FTC Weighs Move Against Facebook Over How Its Apps Interact.

• Saudis Seek to Ease Tensions With Iran. 

• Liberty Media Seeks to Increase Stake in iHeartMedia. 

• Jersey City Shooting Seen as Potential Domestic Terror Act. 

MarketWatch.com:  

• The hottest housing markets of 2020 are far from the coasts.

• Broadcom outlook for 2020 gives hope for chip-earnings rebound, stock gains.

• Oracle stock falls as earnings show continuing struggle for revenue growth.

CNBC:

• US reaches a phase one trade deal with China in principle pending Trump’s approval.

• Stocks are set to add to Thursday’s rally as US and China near signing of trade deal.

• ‘Outrage’ over Harvey Weinstein settlement offer: Too little for victims, too much for lawyers.

• Jim Cramer reveals a list of stocks worth buying on a US-China trade deal.

• Stock market hasn’t priced in possibility of tariff rollbacks, says Strategas’ Jason Trennert.

• Stocks making the biggest moves after hours: Adobe, Oracle, Costco & more.

Zero Hedge:

• Cable Explodes Higher As First Polls Show Conservatives Blowout, Biggest Majority Since Thatcher.

• "Massive... Huge... Largest Ever": Fed Will Flood Market With Gargantuan $500 Billion In Liquidity To Avoid Year-End Repo Crisis.

• Shutdown Averted? Republicans And Democrats Reach $1.37 Trillion Deal "In Principle".

• The FBI Teams Up With The Post Office To Get Your Fingerprints.

• China Downturn Could Last Five Years Warns Central Bank.

• CFTC Increasingly Monitoring Futures For Suspicious Trading Around Trade Headlines.

• To Calm Markets, NY Fed Announces New Heads Of The Plunge Protection Team.

• Trade-Deal Rumorgasm Sparks Stock Meltup To Record Highs, Bond Bloodbath.

• President Trump Signs Off On US-China Trade Deal, Delays December Tariffs.

Business Insider:

• Federal regulators are considering blocking Facebook from combining WhatsApp, Instagram and its other apps.

Night Trading 

• Asian equity indices are +.75% to +1.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 61.5 -1.5 basis points.

• China Sovereign CDS 34.75 -2.5 basis points.

• Bloomberg Emerging Markets Currency Index  66.27 +.23%.

• FTSE 100 futures -.27%.

• S&P 500 futures +.43%.

• NASDAQ 100 futures +.53%.

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 Import Price Index MoM for Nov. is estimated to rise +.2% versus a -.5% decline in Oct.

• The Import Price Index ex Petrol MoM for Nov. is estimated to fall -.1% versus a -.1% decline in Oct.

• The Export Price Index for Nov. is estimated to rise +.1% versus a -.1% decline in Oct.

• Retail Sales Advance MoM for Nov. is estimated to rise +.5% versus a +.3% gain in Oct.

• Retail Sales Ex Autos MoM for Nov. is estimated to rise +.4% versus a +.2% gain in Oct.

• Retail Sales Ex Autos and Gas for Nov. is estimated to rise +.4% versus a +.1% gain in Oct.

10:00 am EST

• Business Inventories for Oct. is estimated to rise +.2% versus unch. in Sept.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Williams speaking, BoE inflation data, Bloomberg Dec. US Economic Survey, (CNC) investor day and the (AGCO) analyst meeting could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by industrial and technology 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 day.

Stocks Surging into Final Hour on China Trade Deal Hopes, Global Growth Optimism, Oil Gain, Financial/Technology Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 14.9 -.8%

• Euro/Yen Carry Return Index 126.11 +.54%

• Emerging Markets Currency Volatility(VXY) 6.74 -.74%

• S&P 500 Implied Correlation 42.15 -2.18%

• ISE Sentiment Index 91.0 -18
  

• Total Put/Call .87 -12.1%

• NYSE Arms .56 -59.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 48.08 -2.59%
  

• America Energy Sector High-Yield CDS Index 637.0 +.55%

• European Financial Sector CDS Index 54.71 -.91%

• Italian/German 10Y Yld Spread 150.25 -2.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 62.81 -.86%
  

• Emerging Market CDS Index 187.92 -2.56%
  

• iBoxx Offshore RMB China Corporate High Yield Index 167.02 -.29%

• 2-Year Swap Spread 1.75 +.75 basis point

• TED Spread 32.25 -1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -19.75 +1.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.06 +.24%

• 3-Month T-Bill Yield 1.56% unch.

• Yield Curve .23 +5.0 basis points

• China Iron Ore Spot 92.23 USD/Metric Tonne -.23%

• Citi US Economic Surprise Index -4.0 -8.2 basis points

• Citi Eurozone Economic Surprise Index 8.5 +.8 point

• Citi Emerging Markets Economic Surprise Index -21.4 +1.9 basis points

• 10-Year TIPS Spread 1.73 +3.0 basis points

• 13.5% chance of Fed rate cut at March 18th meeting, 22.5% chance of cut at April 29th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +300 open in Japan 

• China A50 Futures: Indicating +109 open in China

• DAX Futures: Indicating +15 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Growth +.2%

Sector Underperformers:

• 1) Homebuilders -1.7% 2) REITs -1.2% 3) Utilities -.5%

Stocks Falling on Unusual Volume: 

• DBX, PRAH, PLAY, WORK AEO, EVER, GMRE, PI, MNTA, VRA, AYX, RCKT and PLCE

Stocks With Unusual Put Option Activity:

• 1) GLW 2) BKLN 3) OLLI 4) AYX 5) GIS

Stocks With Most Negative News Mentions:

• 1) WSG 2) WST 3) BHVN 4) MMSI 5) GKOS

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value +1.0%

Sector Outperformers:

• 1) Gaming +3.1% 2) Oil Service +2.9% 3) Networking +2.5%

Stocks Rising on Unusual Volume:

• ASMB, KRTX, CIEN, CLVS, FTSV, MDLA, PLAB, WYNN, MODN, PLCE, LITE, CNST, FORM, PLAY, AEO, SWAV, IRBT, SOI, WDC, AMD, ANDE, DERM, SWK, LOGM, ADPT, GE, REVG, TKR, AB, CHWY, LASR, PGTI, ESI, SCHW and DNOW

Stocks With Unusual Call Option Activity:

• 1) EMB 2) LQD 3) KEY 4) LVS 5) DHR

Stocks With Most Positive News Mentions:

• 1) CIEN 2) LL 3) ASRT 4) DAL 5) GE

Charts:

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