Thursday Watch

Evening Headlines

Bloomberg:                 

• Vast Numbers of Unemployed Will Undermine China’s Recovery.

• Chinese Malls, Dependent on Restaurants, Face a Bleak Future.  

• Chinese-Made Drone Use by Police Spurs Lawmaker Questions.  

• Farmers’ Hopes Are Dashed in Australia on Souring of China Ties.  

• Hong Kong’s Economic Crisis Just Keeps Getting Worse.

• Asian Stocks Set for Declines After U.S. Retreat. Asian stocks looked set to follow U.S. shares lower, after Federal Reserve Chair Jerome Powell warned about economic risks and tensions with China flared. Treasuries ticked higher and the dollar advanced. Futures dropped in Japan, Hong Kong and Australia. Contracts on the S&P 500 edged up after the gauge briefly fell in the Wednesday session below 2,800, a level that has provided support in the past month. Powell said the threat of a lasting downturn could deepen without additional government spending. A federal savings plan delayed moving funds into an index with Chinese stocks, adding to tensions stoked by President Donald Trump. Futures on the S&P 500 rose 0.3% as of 7:07 a.m. in Tokyo. The gauge decreased about 1.7% on Wednesday. Futures on Japan’s Nikkei 225 declined 0.5%. Hang Seng futures retreated 0.9%. Futures on Australia’s S&P/ASX 200 Index lost 1.1%.

• Oil Falls With Doubts Over a Demand Recovery Looming Over Market.  

• Powell’s Warning, China Rate Cut, Australia’s Addiction: Eco Day.

• Trump Splits With Fauci; H.K. Ends No-Cases Streak: Virus Update.  

• Cowboys Owner Jones’ Shale Driller Selling Shares; Stock Tumbles.

• Goldman Sachs Now Sees U.S. Jobless Rate Peaking at 25%, Not 15%.   

• Regional Banks Take a Beating With Investors Expecting More Pain.

• New Jersey Moves Toward Reopening After 60% Drop in Revenue.  

• Mastercard Sees Progress on Spending as U.S. Eases Crisis Rules.

• False Negatives Raise More Questions About Virus Test Accuracy.

• Wall Street Heavyweights Are Sounding Alarm About Stock Prices.

• Connecticut Governor Says Days of Commuting to NYC May End.

• Virus Guts U.S. Clean-Energy Jobs Gained Since ‘17, Report Says.   

• Jack in the Box Suspends Dividend to Preserve Cash Amid Outbreak.

Wall Street Journal:

• Soaring Prices, Rotting Crops: Coronavirus Triggers Global Food Crisis.

• Stocks Fall as Fed’s Powell Says Outlook ‘Highly Uncertain’.

• Companies Start Reaping Billions in Tax Breaks to Help in Slump.

• The Flynn Unmaskers Unmasked.

• The Michael Flynn Debauchery.

• Can You Get Covid-19 Twice?

• U.S.: Chinese, Iranian Hackers Seek to Steal Virus Research.

• New York and New Jersey Start to Reopen Their Economies.

 Fox News:

• Slew of top Obama-era officials sought to 'unmask' Flynn: chief of staff, Biden, Comey and more.

• Network downplays Flynn bombshell after years of incessant Russia coverage.

CNBC.com:

• Stocks making the biggest moves after hours: Jack in the Box, Cisco, SmileDirectClub and more.

• Dow falls for a third-straight day, losing 500 points after Powell’s warning.

• Trump says Fauci’s warnings about reopening amid coronavirus crisis are not ‘acceptable’.

• Fed’s Mester: A recovery or ‘much more dire’ scenario are equally possible.

• Some Tesla factory employees say they’re being pressured to return to work.

• Gasoline demand improves as states reopen and drivers hit the road, but it’s still down 30%.

• Coronavirus is making grocery delivery services like Instacart popular, and they might stick around.

• Shoppers begin to shift from stockpiling to penny pinching at the grocery store.

• Home Depot could rally into earnings, and trader has a way to play it.

MarketWatch.com:         

• Investors should prepare for a U.S. ‘economic depression,’ warns Kyle Bass, but China’s fate could be even worse.  

• Cisco stock heads higher as profit continues to flow amid pandemic despite revenue slowdown.

• Oil prices could go negative again, so be prepared, CFTC warns futures industry.

Zero Hedge:

• Biden Spox Melts Down; Insults Journo Who Revealed Unmasking Role As 'Partisan, Rightwing Hack'.

• In Stunning Move, Flynn Judge Appoints Gotti Prosecutor To Argue Against DOJ Dismissal.

• Oil Price War Puts Entire Kingdom Of Saudi Arabia At Risk.

• Was Professor Panic's Flawed Computer Model Virtue-Signaling To His Radical Climate Activist Lover?

• A Third Of Americans Will Remain In Quarantine Even If Instructed To Get Back To Normal Life And Work.

• FBI 'Mistakenly' Releases 9/11 Bombshell In Court: Key Saudi Diplomat Who "Tasked" Hijackers Named.

• Republicans Win First Democrat-Held California House Seat Since 1998.

• LA County Issues New "Indefinite" Stay-At-Home Order As NJ Moves Up Timeline For Reopening: Live Updates.

• Georgia COVID Hospitalizations Drop After State Reopens.

• "Worse Than 2008" - American Pension Funds Report Record Losses In Q1.

• Stocks Tumble As Tepper Says Market "Most Overvalued Since The Bubble Of 1999".

• Stocks & Bond Yields Tumble On Beijing Blowback, A Fearful Fed, & Billionaire Alarm Bells.

The Epoch Times:

• New Senate Bill Aims to Reduce US Rare Earths Dependence on China.

• China’s Jilin City Announces Lockdown After Virus Outbreak.

John Hopkins University:

• Coronavirus Global Cases. (map)

BNO News:

• Tracking Coronavirus: Map, data and timeline.

KFF:

• State Data(Tests/Hospitalizations).

Night Trading 

• Asian equity indices are -1.25% to -.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 119.25 +1.25 basis points.

• China Sovereign CDS 53.25 +3.0 basis points.

• Bloomberg Emerging Markets Currency Index 58.09 unch.

• FTSE 100 futures -.76%.

• S&P 500 futures -.03%.

• NASDAQ 100 futures +.01%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (AGN)/3.90

• (CCL)/-1.66

• (FLR)/.25

• (FOSL)/-1.51

• (NCLH)/-.49

• (SSYS)/-.06

After the Close:

• (AMAT)/.89

• (BOOT)/.28

Economic Releases
8:30 am EST

• The Import Price Index MoM for April is estimated to fall -3.2% versus a -2.3% decline in March. 

• The Import Price Index Ex Petrol for April is estimated to fall -.5% versus a -.1% decline in March.

• The Export Price Index MoM for April is estimated to fall -2.3% versus a -1.6% decline in March.

• Initial Jobless Claims for last week are estimated to fall to 2500K versus 3169K the prior week.

• Continuing Claims are estimated to rise to 25120K versus 22647K prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Kashkari speaking, Fed's Kaplan speaking, German Inflation Data report, Bloomberg weekly Consumer Comfort Index, weekly EIA natural gas inventory report, Credit Suisse Utilities/Power/Clean Tech Conference, Citi Virtual Chemical Conference and the UBS Virtual Insurance Conference could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are lower, weighed down by energy and financial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

Stocks Falling Substantially into Final Hour on Global Recession Fears, Escalating China Tensions, Rising Dem Senate Control Odds, Energy/Financial Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Every Sector Declining
  

• Volume: Heavy

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 35.9 +8.8%

• Euro/Yen Carry Return Index 120.09 -.38%

• Emerging Markets Currency Volatility(VXY) 11.74 +.17%

• S&P 500 Implied Correlation 76.90 +12.3%

• ISE Sentiment Index 72.0 -18.0 points

• Total Put/Call 1.19 +38.4%

• NYSE Arms 1.41 -6.62%

Credit Investor Angst:

• North American Investment Grade CDS Index 95.67 +3.44%
  

• US Energy High-Yield OAS 1,258.0 +.35%

• European Financial Sector CDS Index 105.77 +3.68%

• Italian/German 10Y Yld Spread 233.25 -6.25 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 118.11 +1.75%
  

• Emerging Market CDS Index 345.72 +5.58%
  

• iBoxx Offshore RMB China Corporate High Yield Index 164.58 +.07%

• 2-Year Swap Spread 10.25 +1.5 basis points

• TED Spread 31.75 -1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -10.0 -3.0 basis points
• MBS  5/10 Treasury Spread  112.0 -2.0 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 58.0 -.27%
• 3-Month T-Bill Yield .10%-1.0 basis point

• Yield Curve 49.75 -2.5 basis points

• China Iron Ore Spot 88.10 USD/Metric Tonne -.08%

• Citi US Economic Surprise Index -61.10 -.4 point

• Citi Eurozone Economic Surprise Index -301.70 +2.0 points

• Citi Emerging Markets Economic Surprise Index 3.5 +5.5 points

• 10-Year TIPS Spread 1.07 -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 -87 open in Japan 
• China A50 Futures: Indicating -201 open in China

• DAX Futures: Indicating -79 open in Germany

Portfolio:

• Slightly Higher: On gains in my index hedges and emerging market shorts

• Disclosed Trades: None

• Market Exposure: 25% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -4.0%

Sector Underperformers:

• 1) Coal -13.1% 2) Oil Service -7.6% 3) Alt Energy -5.0%

Stocks Falling on Unusual Volume: 

• BYND, PTON, FITB, MIDD, DKS, BLUE, NET, CYRX, CRM, SPR, MEDP, APPN, ECOM, QDEL, HUBG, CMD, CWH, OSUR, ICPT, PCI, VIRT, FIXX, GRUB, Z, TTD, PLNT, PDI, DAL, ZYXI, PENN, CATS, MUR, NCLH, PRA, LORL, SLG, WFC, ALLK, PRPL, DRNA, UAL, UTF, ARCT, ACC, BCO, RVLV, ADPT, AMCX, ACMR, ERI, CNST, PODD, SDGR, CAR, HCAT, VECO, AMBC and EGHT

Stocks With Unusual Put Option Activity:

• 1) H 2) GE 3) ULTA 4) KRE 5) WDAY

Stocks With Most Negative News Mentions:

• 1) INFN 2) VREX 3) SAVE 4) COTY 5) WFC

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth -2.2%

Sector Outperformers:

• 1) Video Gaming unch. 2) Pharma -.2% 3) Gold & Silver -1.0%

Stocks Rising on Unusual Volume:

• UNFI, PGNY, PGTI, VTIQ, TPTX, OSTK, UPWK, BEAM, BLK, TWOU and WW

Stocks With Unusual Call Option Activity:

• 1) WELL 2) ZUO 3) UNFI 4) JCP 5) FISV

Stocks With Most Positive News Mentions:

• 1) UNFI 2) JD 3) DT 4) ALGT 5) PGTI

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +37.2% Above 100-Day Average
• 4 Sectors Rising, 7 Sectors Declining
• 16.0% of Issues Advancing, 82.5% Declining
• 16 New 52-Week Highs, 51 New Lows
• 12.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 47.4%
• Vix 33.4 +1.4%
• Total Put/Call 1.05 +22.1%
• TRIN/Arms 1.41 -6.62%