Tuesday Watch

Evening Headlines

Bloomberg:              

• Mumbai Converts Parks to Quarantine Centers as Virus Nears Peak.

• Asia Stocks to Advance After U.S. Rally; Oil Gains: Markets Wrap. Asian stocks are poised to open higher Tuesday, spurred by a surge on Wall Street, after early results for an experimental vaccine sparked speculation economies could snap back quickly. Crude oil advanced and yields on Treasuries rose. Futures gained almost 2% in Japan, Australia and Hong Kong. Contracts on the S&P 500 opened little changed. The U.S. benchmark jumped the most in almost six weeks after Moderna Inc. said its vaccine tests yielded signs it can create an immune-system response in the body. Companies that would benefit from a return toward more normal economic activity such as Carnival Corp. and Delta Air Lines jumped. Ten-year Treasury yields climbed to the highest in five weeks. Oil consolidated above $30 a barrel. S&P 500 futures were flat as of 7:02 a.m. in Tokyo. The S&P 500 Index surged 3.2%. The Dow Jones Industrial Average climbed 3.9% and the Nasdaq Composite Index rose 2.4%. Nikkei 225 futures climbed 1.8%. Australia’s S&P/ASX 200 Index futures rose 2%. Hong Kong’s Hang Seng Index futures advanced 1.8% earlier.

• Oil Surges as Vaccine Progress Bolsters Hopes for Demand Rebound.  

• U.S. Shale Output Seen Tumbling to 2018 Low, Led by Permian.

• China Blueprint, Merkel Breakthrough Deal, Fed Toolkit: Eco Day.

• U.S. Deaths Top 90,000; Xi Vows to Share Vaccine: Virus Update.  

• McConnell Picks Rubio to Replace Burr Atop Intelligence Panel.

• Trump Says It’s ‘Death Wish’ for L.A. to Extend Stay-at-Home.

• Trump Hails Virus Cure Progress as Restaurants Seek Added Help.  

• In Reopened States, Numbers Are Everywhere. Clarity Is Absent. 

• U.S. Equity Markets Stubbornly Ignore the Doom Everywhere.  

• M&A Legend Martin Lipton Warns of Coming Virus Lawsuit Wave.

• Unemployment Likely to Remain High Through 2021, Fed Study Says.

Wall Street Journal:

• The New Airline Travel: Fewer Flights, More Layovers, Rules for Bathrooms.

• Coronavirus Hits Southern California Harder Than North.

• Virus Increasingly Exacerbates the Red-Blue Divide.

• Uber Cuts 3,000 More Jobs, Shuts 45 Offices.

• The Fed’s Big Challenge: Lending Directly to Businesses.

• Barr Says Review of Trump-Russia Probe’s Origins Won’t Likely Lead to Investigation of Obama, Biden.

• As Coronavirus Lockdowns Lift, How Ready Are Gyms to Reopen?

• Brazil’s Nurses Are Dying as Covid-19 Overwhelms Hospitals.

 Fox News:

• Biden event marred by bloopers, from honking geese to ringing iPhone.

• Dems tell SCOTUS of 'ongoing' new impeachment inquiry in push for docs.

CNBC.com:

• How coronavirus accelerated the rise of telemedicine.

• Retail sales in the US could fall more than 6% in 2020: Euromonitor.

• Jim Cramer advises investors not to get too optimistic over Moderna vaccine progress.

• Coronavirus updates: States reopen gyms, casinos and malls as business owners adjust to precautions.

• TikTok nabs Disney’s streaming boss to be its new CEO.

• Stocks making the biggest moves after hours: Baidu, T-Mobile, Moderna and more.

• ‘There’s no other option:’ Costco, Gap, other retailers expand online offerings, hurting profits.

MarketWatch.com:         

• Over 4 million Americans are now skipping their mortgage payments.

• Used car e-commerce company Vroom files for IPO.

• Market valuations look vulnerable if Fed withdraws support, says billionaire investor Howard Marks.

Zero Hedge:

• Trump Admits To Taking Hydroxychloroquine With Zinc As Preventative Measure.

• Did Moderna Just Pull Off A Giant Bait-And-Switch: Company Offers To Sell Stock After Market-Moving Rally.

• Hickman: COVID-19 Defies Hyperbole.

• US Coronavirus Cases Pass 1.5 Million As Deaths Top 90k; Brazil Overtakes UK With World's 3rd-Largest Outbreak.

• 10 Horrifying Economic Numbers.   

• Trump Goes On Offense Against Obama.

• Bernie Sees COVID-19 "Silver Lining" - Will Change "Fundamental Tenets" Of America.

• "Null And Void": Judge Tosses Oregon Governor's COVID-19 Lockdown.

• Highlights From Powell's Prepared Remarks Before The Senate Banking Committee.

• Markets Go Manic Thanks To Money-Printing, Moderna, & Merkel.

The Epoch Times:

• China Steps up Lockdown Measures in ‘High-Risk’ Cities.

• US Lawmakers Urge Magnitsky Sanctions on Chinese Officials Over Pandemic Response.

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 +.75% to +1.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 115.25 -4.0 basis points.

• China Sovereign CDS 50.0 -3.25 basis points.

• Bloomberg Emerging Markets Currency Index 58.64 +.10%.

• FTSE 100 futures +.39%.

• S&P 500 futures +.15%.

• NASDAQ 100 futures +.27%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (AAP)/1.59

• (EXP)/.87

• (HD)/2.28

• (KSS)/-1.69

• (SINA)/.15

• (WMT)/1.09

• (WB)/.30

After the Close:

• (NTES)/28.27

• (RRR)/-.02

• (SQM)/.25

• (URBN)/-.25

Economic Releases
8:30 am EST

• Housing Starts for April is estimated to fall to 904K versus 1216K in March.

• Building Permits for April is estimated to fall to 1000K versus 1353K.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone ZEW Economic Index, weekly US retail sales reports, RBC Capital Markets Virtual Healthcare Conference, Suntrust Robinson Humphrey Financial Services Conference and the (PAYX) business update conference 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 mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.

Stocks Rising Sharply into Final Hour on Global Stimulus Hopes, Coronavirus Vaccine Optimism, Oil Surge, Energy/Airline Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Heavy

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 28.7 -10.0%

• Euro/Yen Carry Return Index 121.55 +1.2%

• Emerging Markets Currency Volatility(VXY) 11.5 +.26%

• S&P 500 Implied Correlation 62.2 -10.1%

• ISE Sentiment Index 116.0 +5.0 points

• Total Put/Call .70 -12.5%

• NYSE Arms .84 -26.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 90.66 -4.9%
  

• US Energy High-Yield OAS 1,162.66 -2.4%

• European Financial Sector CDS Index 102.67 -6.8%

• Italian/German 10Y Yld Spread 214.0 -25.5 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 115.38 -3.26%
  

• Emerging Market CDS Index 321.97 -5.99%
  

• iBoxx Offshore RMB China Corporate High Yield Index 164.79 +.12%

• 2-Year Swap Spread 9.5 -.25 basis point

• TED Spread 28.25 +.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -9.5 unch.
• MBS  5/10 Treasury Spread  106.0 -1.0 basis point
• IHS Markit CMBX BBB- 6 63.0 +.5 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 58.55 +.76%
• 3-Month T-Bill Yield .11% unch.

• Yield Curve 54.0 +6.75 basis points

• China Iron Ore Spot 94.32 USD/Metric Tonne +3.76%

• Citi US Economic Surprise Index -97.30 -2.0 points

• Citi Eurozone Economic Surprise Index -299.70 +.9 point

• Citi Emerging Markets Economic Surprise Index 8.3 +2.7 points

• 10-Year TIPS Spread 1.16 +7.0 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 +481 open in Japan 
• China A50 Futures: Indicating +123 open in China

• DAX Futures: Indicating +39 open in Germany

Portfolio:

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my emerging market shorts

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth +2.4%

Sector Underperformers:

• 1) Gold & Silver -1.4% 2) Shipping +.4% 3) Pharma +.7%

Stocks Falling on Unusual Volume: 

• TECD, CATS, SCPL, OSUR, SNDX, ZYXI, SFIX, VIVO, EVER, ETSY, CHGG, UPWK, VTIQ, MYOK, CNST, PTON, QDEL, OSTK, W and FSCT

Stocks With Unusual Put Option Activity:

• 1) SRNE 2) XHB 3) FXE 4) IEF 5) PXD

Stocks With Most Negative News Mentions:

• 1) GSX 2) ZM 3) WDAY 4) SQ 5) ADP

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +6.9%

Sector Outperformers:

• 1) Airlines +13.2% 2) Oil Service +11.0% 3) Homebuilding +9.8%

Stocks Rising on Unusual Volume:

• NVAX, VIR, MRNA, SGRY, PBF, PAR, NCLH, EXPE, ERI, UAL, FUN, CAR, LB, HST, PLAY, RGS, MAR, SIX, LYV, SPR, BKNG, CWH, PENN, TBIO, ALGT, ALGN, LUV, DAL, ARNA, JELD, URBN, FOXF, PETQ, KRTX, BA, BBY, DEI, ARCT, APOG, CMTL, THO, SLG, BXP, FFBC, BHLB, GTN, KSS, HIW, ALE, DIS, CNA, NBIX, CCXI, PGNY, HCA, GOLF and ONEM

Stocks With Unusual Call Option Activity:

• 1) CL 2) BIG 3) AEO 4) EFX 5) HPQ

Stocks With Most Positive News Mentions:

• 1) MRNA 2) NVAX 3) FLR 4) EB 5) PLCE

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +48.3% Above 100-Day Average
• 11 Sectors Rising, 0 Sectors Declining
• 91.2% of Issues Advancing, 7.7% Declining
• 44 New 52-Week Highs, 1 New Low
• 11.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 44.8%
• Vix 29.2 -8.3%
• Total Put/Call .70 -12.5%
• TRIN/Arms 1.10 -3.5%