Friday Watch

Evening Headlines

Bloomberg:               

• The Virus Has Revived All the Worst-Case U.S.-China Scenarios.  

• Second Waves Are Plaguing Asia’s Virus Recovery.

• Mexico Stirs Confusion Over When the Auto Industry Can Reopen.  

• Eastern EU Tumbles Toward Worst Economic Slump Since Communism.  

• Japan’s Slide Into Recession to Be Confirmed With Worse to Come.

• Asia Stocks Poised to Gain; Treasuries Advance: Markets Wrap. Asian stocks looked set for gains as investors awaited data that may show China’s post-lockdown economic recovery is picking up steam. U.S. shares closed higher and Treasuries climbed. Futures rose in Japan, Hong Kong and Australia, while U.S. contracts opened flat. In a volatile Wall Street session, beaten-up bank stocks led gains on the S&P 500 and energy shares joined a surge in crude oil. Stocks earlier fell as President Donald Trump said he doesn’t want to talk to his Chinese counterpart Xi Jinping right now and weak U.S. jobless claims offered a reminder of the lingering concerns. The dollar dipped. Futures on the S&P 500 were little changed as of 7:17 a.m. in Tokyo. The gauge rose 1.2% Thursday. Futures on Japan’s Nikkei 225 rose 1.3%. Hang Seng futures earlier added 0.2%. Futures on Australia’s S&P/ASX 200 Index gained 0.8%.

• Oil Set for Third Weekly Advance as Producers Slam the Brakes. 
  

• CDC Posts Advice on Reopening U.S. Bars, Restaurants and Workplaces.

• Economists See Georgia’s Reopening as ‘Bellwether’ for Nation.   

• One-Quarter of American Restaurants Won’t Reopen, OpenTable Says. 

• A $3.5 Billion Hedge Fund Lures Clients With Rare Fee Discount. 

• McDonald’s Reopening Guide Reveals Restaurants’ New Complexities. 

• NYC and Long Island Are Several Steps Away From Reopening.

Wall Street Journal:

• New York Sent Recovering Covid-19 Patients to Nursing Homes: ‘It Was a Fatal Error’.

• Branson’s Virgin Atlantic in Talks to Raise More Than $900 Million.

• Obama’s Crocodile Tears for the Rule of Law.

• A Republican Upset in California.

• Why Big Investors Aren’t Betting It All on a Coronavirus Cure.

• Mexican Drug Cartels Distribute Aid to Win Support.

• Taiwan Firm to Build Chip Factory in U.S.

• Senate Approves Measure to Renew Some Domestic Spying Powers.

 Fox News:

• As Pelosi offers to deal on $3T spending bill, Trump WH gives this response.

• Star of Trump impeachment hearing is accused of lying under oath.

CNBC.com:

• White House preparing executive order requiring certain essential drugs be made in U.S., sources say.

• Nike says coronavirus having ‘material’ impact on its business, as U.S. stores start to reopen.

• Mark Cuban says the market is overvalued because it’s ‘almost impossible’ to predict consumer demand.

• New York Stock Exchange to partially reopen May 26, with ‘vital new safety measures,’ president says.

• Coronavirus live updates: Nascar to return to Georgia in June without fans, New Jersey beaches to reopen.

• Charts forecast more downside is in store for the market, Jim Cramer says.

• Sixth confirmed Amazon worker dies amid calls to disclose coronavirus infections.

• Stocks making the biggest moves after hours: Aurora Cannabis, Dillard’s, Applied Materials and more.

MarketWatch.com:          

• Green-tech blogger slams Elon Musk as ‘a self-important jerk,’ reconsiders buying a new Tesla.  

• Delta Air to retire all of its 777 jets, in latest blow to Boeing.

Zero Hedge:

• Flynn's Lawyer Excoriates Obama In Open Letter.

• Texas Sees Record Jump In COVID-19 Deaths 2 Weeks Into Reopening: Live Update.

• Colombia Militarizes Brazilian Border As COVID Deaths Soar.

• Companies Call The Market Top With Most Stock Sales In Eight Years.

• Space Force Starts Recruiting With First Ad: "Maybe Your Purpose Isn't On This Planet".

• Crisis & 2020 Election: Investors Should Brace For An Earthquake Of Change.

• "These Threats Will Not Be Taken Lightly": States Mull Crackdown On Intentional Corona Spreaders.

• The Collapse Of Main Street And Local Tax Revenues Cannot Be Reversed.

• The Fed's Visible Hand: Powell Buys $305 Million In ETFs In Two Days.

• Strategist: I Have Received More Emails From People Who Are Bullish Because "Everyone" Is Bearish, Than From Actual Bears.

• Banks, Bonds, Black Gold, Bitcoin, & Bullion Bounce Despite Jobspocalypse.

Business Insider:  

• This chart shows how restaurants will struggle even after they're allowed to reopen.

• No place on Earth is anywhere close to herd immunity for the coronavirus.

The Epoch Times:

• Wuhan Locals Describe Panic as City Experiences Second-Wave Outbreak.

• US Condemns China’s Attempts to Steal American COVID-19 Research: Pompeo.

• Beijing Lashes Out as Congress Seeks to Empower Trump to Sanction China Over Pandemic.

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 unch. to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 121.25 +2.0 basis points.

• China Sovereign CDS 53.25 unch.

• Bloomberg Emerging Markets Currency Index 58.17 -.03%.

• FTSE 100 futures +1.2%.

• S&P 500 futures +.12%.

• NASDAQ 100 futures +.21%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (JD)/.63

• (VFC)/.15

• (PBF)/-1.06

After the Close:

• None of note

Economic Releases
8:30 am EST

• Retail Sales Advance MoM for April is estimated to fall -12.0% versus a -8.7% decline in March.

• Retail Sales Ex Autos & Gas for April is estimated to fall -7.6% versus a -3.1% decline in March.

• Empire Manufacturing for May is estimated to fall to -60.0 versus -78.2 in April.
  

9:15 am EST

• Industrial Production MoM for April is estimated to fall -12.0% versus a -5.4% decline in March.

• Capacity Utilization for April is estimated to fall to 63.8% versus 72.7% in March.

• Manufacturing Production for April is estimated to fall -14.6% versus a -6.3% decline in March.
  

10:00 am EST

• Business Inventories for March is estimated to fall -.2% versus a -.4% decline in February. 

• JOLTS Job Openings for March is estimated to fall to 5800 versus 6882 in February.

• Preliminary Univ. of Mich. Consumer Confidence for May is estimated to fall to 68.0 versus 71.8 in April.
  

4:00 pm EST

• Net Long-Term TIC Flows for March.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone GDP report, enforcement provision on US/China trade deal, Bloomberg US Economic Survey for May, Needham Virtual Tech/Media Conference, BofA Auto Summit and the (PFE) business update call could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

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

Stocks Reversing Higher into Final Hour on Oil Gain, Short-Covering, Technical Buying, Financial/Gaming Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 34.96 -.9%

• Euro/Yen Carry Return Index 119.98 -.1%

• Emerging Markets Currency Volatility(VXY) 11.92 +1.5%

• S&P 500 Implied Correlation 71.15 -4.1%

• ISE Sentiment Index 56.0 -16.0 points

• Total Put/Call .97 -17.8%

• NYSE Arms .54 -57.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 96.64 +.37%
  

• US Energy High-Yield OAS 1,282.77 +1.51%

• European Financial Sector CDS Index 109.23 +3.27%

• Italian/German 10Y Yld Spread 236.0 +2.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 120.84 +2.65%
  

• Emerging Market CDS Index 345.41 +.22%
  

• iBoxx Offshore RMB China Corporate High Yield Index 164.46 -.07%

• 2-Year Swap Spread 10.75 +.5 basis point

• TED Spread 27.75 -4.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -10.0 -3.0 basis points
• MBS  5/10 Treasury Spread  107.0 -5.0 basis points
• IHS Markit CMBX BBB- 6 63.25 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 58.10 +.02%
• 3-Month T-Bill Yield .11% +1.0 basis point

• Yield Curve 48.25 -1.5 basis points

• China Iron Ore Spot 87.80 USD/Metric Tonne -1.08%

• Citi US Economic Surprise Index -69.70 -8.6 points

• Citi Eurozone Economic Surprise Index -301.20 -.5 point

• Citi Emerging Markets Economic Surprise Index .6 -2.9 points

• 10-Year TIPS Spread 1.05 -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 +110 open in Japan 
• China A50 Futures: Indicating -6 open in China

• DAX Futures: Indicating +87 open in Germany

Portfolio:

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth -.9%

Sector Underperformers:

• 1) Shipping -2.7% 2) Road & Rail -2.0% 3) Defense -1.9%

Stocks Falling on Unusual Volume: 

• CBRL, PFS, TRN, PRA, REXR, JBT, CMTL, TBIO, VIVO, LYFT, AMPH, SHOO, UAL, VECO, TXG, PING, YMAB, LORL, TDOC, CNST, SKYW, PRPL, ALE, BWXT, DDS, MOG/A, OSTK, MDGL, MD, ALGT, IIVI, EGHT, VGR, MGNX, GRUB, PGNY, VTIQ, SSYS, DDOG, PGTI, MDP, PETQ, VAPO, ARVN, UNFI and VRTU

Stocks With Unusual Put Option Activity:

• 1) CODX 2) PXD 3) BSX 4) OIH 5) XLF

Stocks With Most Negative News Mentions:

• 1) CRK 2) VMW 3) W 4) JMIA 5) EIDX

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value +.5%

Sector Outperformers:

• 1) Banks +3.0% 2) Gaming +1.8% 3) Gold & Silver +1.8%

Stocks Rising on Unusual Volume:

• ALLO, ACMR, ONEM, CTAS, MYOK WFC, QDEL, VREX, RVLV and DKNG

Stocks With Unusual Call Option Activity:

• 1) SAVA 2) BLMN 3) MMP 4) OPK 5) RIOT

Stocks With Most Positive News Mentions:

• 1) CTAS 2) WIX 3) CMG 4) BBY 5)CVS

Charts:

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