Friday Watch

Evening Headlines

Bloomberg:         

• China Study Finds 5% to 15% of Covid-19 Cases Are Reactivated.  

• India Firms Are Leaning More on Japan Banks Amid Funding Freeze.  

• Japanese Households Cut Spending Most Since 2015 in March.  

• Britons Favor Saving as Pandemic Keeps Economic Confidence Weak.

• Crude-Rich Alberta Faces an Oil-Sands-Sized Hole in Its Economy.

• Asia Stocks Head For Mixed Start; Treasuries Climb: Markets Wrap. Asian equities opened higher on Friday and U.S. futures climbed as investors continue to weigh moves to reopen economies against data illustrating the enormous damage wreaked by the coronavirus. Japanese shares rose modestly at the open, along with those in Sydney and Seoul. S&P 500 contracts edged higher following gains in U.S. stocks Thursday. Filings for unemployment continued at historically high levels, but fell from the prior week. The tech-heavy Nasdaq Composite turned positive for the year, wiping out losses that reached as much as 24% at the depths of the pandemic-fueled sell-off. Two-year Treasury yields steadied after plunging to a record low. Futures on the S&P 500 added 0.6% as of 9:01 a.m. in Tokyo. The gauge rose 1.2% on Thursday. Japan’s Topix index advanced 1.2%. South Korea’s Kospi rose 0.9%. Australia’s S&P/ASX 200 Index added 0.5%.

• Oil Pares Second Weekly Gain as Glut Overrides Saudi Price Hike.   

• U.S.-China Trade, Heartbreaking Job Data, Growth Streak: Eco Day

• U.S. Covid-19 Cases Rise 2.4%, Deaths Top 75,000: Virus Update.

• Nisen: Here Are the States Where Reopening Is RiskiestSlow.  

• U.S. 2-Year Yield Falls to Record Low as Economy Shows Strain

• Macy’s Delays Earnings on Virus Disruption, Sees Goodwill Charge.

• Worst Postwar U.S. Jobs Report Is On Tap: Here’s What to Watch.  

• Wave of U.S. Bankruptcies Builds Toward Worst Run in Many Years.

Wall Street Journal:

• Coronavirus Hijacks the Body From Head to Toe, Perplexing Doctors.

• The Vindication of Michael Flynn.

• Unemployment Data Point to a Record Wave of Job Losses.

• The Glut Drowning the Oil Market.

• Among New Coronavirus Antibody Tests, Limited Value and Many Unknowns.

• Neiman Marcus, the Retailer to the Rich, Files for Bankruptcy.

• Antimalaria Drug Doesn’t Help Treat Covid-19, Study Finds.

• Spending Too Much Time Online? Here Are Tips for Unplugging.

• Three Doctors in Russia Have Fallen Out of Hospital Windows.

• U.S. to Remove Patriot Missile Batteries From Saudi Arabia.

CNBC.com:

• Frontier Airlines to check passenger temperatures. Too high, you won’t fly.

• Etsy CEO says sales spiked 79% in April, likens performance to ‘Cyber Monday’.

• California identifies nail salons as source of coronavirus community spread, Gov. Newsom says.

• Uber reports massive losses, and big layoffs hit Silicon Valley’s lucrative start-up sector: CNBC After Hours.

• Stocks making the biggest moves after hours: TripAdvisor, Motorola, Roku and more.

• Fed’s Harker warns about reopening the economy too quickly.

Fox News:

• Case against ex-Trump adviser Michael Flynn dropped after enormous cost to him and family.

• House Intel releases dozens of Russia probe transcripts after Grenell's OK.

MarketWatch.com:            

• ‘It’s devastating’ — Jobs number will be bad, but the reality is actually much worse, warns the Fed’s Neel Kashkari.

Zero Hedge:

• He Is "An Innocent Man" - Trump Happy After DoJ Drops All Charges Against General Flynn.

• 'Blame China, Save The Economy' - Trump Campaign Embraces New 2020 Messaging.

• Here's Where Friday's Employment Report Could Really Disappoint.

• Desperate Auto Dealers Betting Big On Discounts To Help Move Inventory.

• Governor Pritzker's Plan To Reopen Illinois Makes No Sense.

• Texas' Anti-Climactic Reopening: Malls & Restaurants Empty, Beaches & Parks Packed.

• Furor Erupts Over San Francisco Giving Drugs To Homeless Addicts As Businesses Prepare To Reopen: Live Update.

• It Begins: For The First Time Ever, Futures Price "Fatal" Negative US Rates Starting Dec 2020.

• San Antonio City Council Passes Resolution Declaring "Chinese Virus, Kung Flu" To Be Hate Speech".

• Tesla Has Shut Down Production In Shanghai.

• Kansas Officials Signal Readiness For 2nd Lockdown Ahead Of November Election.

• China's COVID Cover-Up, Economic War, & The Elites Who Benefit.

• Uber Surges Despite Continuing Cash Burn, "Eats" EBITDA Drops Despite Soaring Revenue.

• Record Plunge In Service Sector "Business Activity" Points To Profits Crash.

• US Consumer Credit Unexpectedly Crashes As Americans Repay A Record Amount Of Credit Card Debt.

• As Nasdaq Erases 2020 Losses, Negative Rate Forecasts Send Yields To Record Lows.

Business Insider:   

• Some essential workers are making less money than people getting unemployment benefits — and they're demanding hazard pay.

• Temperature checks, staggered lunch times, and spaced-out seating charts: Photos from around the world show what offices in the US could look like after lockdowns lift.

The Epoch Times:

• Pandemic Prompting World to ‘Wake Up’ to Threats Posed by Communist China: Pompeo.

• USDA: China’s Farm Purchases so Far Are ‘Very Disappointing’.

John Hopkins University:

• Coronavirus Global Cases. (map)

BNO News:

• Tracking Coronavirus: Map, data and timeline.

Google Docs:

• Coronavirus Testing by State.

Night Trading 

• Asian equity indices are +.5% to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 119.75 -2.75 basis points.

• China Sovereign CDS 50.25 -2.0 basis points.

• Bloomberg Emerging Markets Currency Index 58.05 +.12%.

• FTSE 100 futures n/a.

• S&P 500 futures +.51%.

• NASDAQ 100 futures +.53%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (AXL)/-.08

• (BLMN)/-1.20

• (EXC)/.85

• (TWNK)/.13

• (LEA)/1.33

• (TEN)/-.96

After the Close:

• None of note

Economic Releases
8:30 am EST:

• The Change in Non-Farm Payrolls for April is estimated at -21,653K versus -701K in March.

• The Unemployment Rate for April is estimated to rise to 16.0% versus 4.4% in March.

• Average Hourly Earnings MoM for April is estimated to rise +.4% versus a +.4% gain in March.

10:00 am EST

• Wholesale Trade Sales MoM for March are estimated to fall -3.0% versus a -.8% decline in Feb.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Canadian Unemployment Rate report could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

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

Stocks Higher into Final Hour on Global Stimulus Hopes, Economy Re-Opening Optimism, Short-Covering, Financial/Commodity Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 31.3 -8.3%

• Euro/Yen Carry Return Index 119.24 +.44%

• Emerging Markets Currency Volatility(VXY) 12.2 +1.16%

• S&P 500 Implied Correlation 71.77 -5.78%

• ISE Sentiment Index 115.0 +9.0 points

• Total Put/Call .81 -5.81%

• NYSE Arms 1.07 -37.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 91.66 -1.12%
  

• US Energy High-Yield OAS 1,283.44 -.01%

• European Financial Sector CDS Index 106.79 +.32%

• Italian/German 10Y Yld Spread 246.5 -1.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 120.17 -.15%
  

• Emerging Market CDS Index 342.87 -1.78%
  

• iBoxx Offshore RMB China Corporate High Yield Index 163.98 +.13%

• 2-Year Swap Spread 11.5 -.25 basis point

• TED Spread 37.25 -2.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -5.75 -.25 basis point
• MBS  5/10 Treasury Spread  117.0 +10.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 58.0 +.32%
• 3-Month T-Bill Yield .10% -1.0 basis point

• Yield Curve 51.75 +7.75 basis points

• China Iron Ore Spot 84.08 USD/Metric Tonne +3.4%

• Citi US Economic Surprise Index -104.30 -2.7 points

• Citi Eurozone Economic Surprise Index -293.40 -18.1 points

• Citi Emerging Markets Economic Surprise Index 10.90 +.3 point

• 10-Year TIPS Spread 1.08 -2.0 basis points
• 99.3% chance of no change at July 29th meeting, 99.3% chance of no change at Sept. 16th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +116 open in Japan 
• China A50 Futures: Indicating -125 open in China

• DAX Futures: Indicating -51 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth +1.6%

Sector Underperformers:

• 1) Pharma -.4% 2) Shipping -.3% 3) Healthcare Providers +.6%

Stocks Falling on Unusual Volume: 

• HII, VIAV, DRQ, MTCH, MNTA, FRPT, EYE, INMD, RST, CORE, BFAM, AMED, AYX, IIPR, CSGS, CVIO, KTB, GBT, MD, CCOI, AERI, CEQP, SHLX, GTS, VAPO, ARCT, PING, BFYT, MGNX, APLS, ELAN, KAR, SAVE, GRUB, INSG and SERV

Stocks With Unusual Put Option Activity:

• 1) HLF 2) UAA 3) RDFN 4) PYPL 5) TWLO

Stocks With Most Negative News Mentions:

• 1) AMED 2) OCSI 3) CMP 4) DHR 5) SWK

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Value +2.2%

Sector Outperformers:

• 1) I-Banks +4.3% 2) Insurance +4.1% 3) Oil Service +4.0%

Stocks Rising on Unusual Volume:

• TWLO, FSLY, GNMK, LYFT, LAMR, NUS, FTNT, NTRA, PTON, OUT, EPAY, IRM, NET, VIAC, PYPL, CNP, LVGO, CATS, VTIQ, SQ, MRNA, AEL, STOR, DXCM, QNST, LASR, AAWW, NCLH, QDEL, NBIX and FLIR

Stocks With Unusual Call Option Activity:

• 1) HEAR 2) FTNT 3) TWLO 4) DBX 5) TMUS

Stocks With Most Positive News Mentions:

• 1) TWLO 2) SQ 3) FTNT 4) PYPL 5) LVGO

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +10.7% Above 100-Day Average
• 11 Sectors Rising, 0 Sectors Declining
• 80.3% of Issues Advancing, 18.5% Declining
• 18 New 52-Week Highs, 10 New Lows
• 12.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 47.0%
• Vix 30.9 -9.3%
• Total Put/Call .81 -5.8%
• TRIN/Arms 1.25 -27.3%