Thursday Watch

Evening Headlines

Bloomberg:               

• China’s New Outbreak Shows Signs the Virus Could Be Changing.

• China’s Got a New Plan to Seize the World’s Tech Crown From the U.S.   

• Carson Block Says U.S. Should Be Willing to Drop China Listings.

• Asia Stocks to Rise After U.S. Gains; Dollar Dips: Markets Wrap. Asian stocks opened modestly in the green as investors weighed signs of economies continuing to reopen against the need for further stimulus down the road. The dollar ticked higher. Shares in Japan, South Korea and Australia edged up, with gains shallower than overnight in the Wall Street session. S&P 500 contracts dipped after the gauge closed higher Wednesday, when retailers reported sales that topped estimates and energy shares climbed. U.S.-China tensions remain at the forefront after the Senate passed a bill that could bar some Chinese companies from listing on American exchanges. Treasuries were steady, while the rally in crude oil eased. Futures on the S&P 500 dropped 0.2% as of 9:05 a.m. in Tokyo. The gauge rose 1.7% on Wednesday. Japan’s Topix index rose 0.4%. South Korea’s Kospi index advanced 0.6%. Australia’s S&P/ASX 200 Index added 0.4%.  

• Trading Blows, China Tech Powerhouse, Costly Debt Binge: Eco Day.

• Oil Demand Will Take Months to Recover in No. 3 Buyer India.

• U.S. Cases Rise 1.3%; Another Record Day in Brazil: Virus Update.

• Big Banks Plan Staffing Limits, Shift to Suburbs After Lockdown.

• Young Join the Rich Fleeing America’s Big Cities for Suburbs.

• Ford’s Three Shutdowns in Two Days Signal Bumpy Factory Restart.

• A Weakness in Giant CLO Market Exposed in Tiny Distressed Deal.

• Mark Cuban Says Americans Shouldn’t Expect Regular Relief Checks.

• Fed Worries Turned to Financial Stability in April Meeting.

Wall Street Journal:

• Senate Panel Approves Subpoena Related to Hunter Biden’s Work in Ukraine.

• Superspreader Events Offer a Clue on Curbing Coronavirus.

• The Evidence on Kids and Covid.

• The Day Coronavirus Nearly Broke the Financial Markets.

• Behind Bond Market’s Stall, Investors See Hard Times Ahead.

• New Coronavirus Outbreak in China Prompts Limited Lockdown.

 Fox News:

• Doctors raise alarm about health effects of continued shutdown, in letter to Trump.

• Rice email showed she wouldn't be Obama's 'scapegoat again,' Hanson says.

CNBC.com:

• Anna Wintour says coronavirus has been ‘catastrophic’ for the fashion industry.

• Coronavirus live updates: Apple and Google release contact tracing technology, University of California institutes pay freeze.

• Highly indebted ‘zombie’ companies control more than 2 million U.S. jobs.

• Here are 8 new, in-demand jobs created by the coronavirus pandemic.

• New coronavirus cases across the world jump by the most ever in a single day, WHO says.

• Stocks making the biggest moves after hours: Expedia, Aurora Cannabis, Take-Two and more.

• Expedia revenue falls 15% as travel is decimated by coronavirus pandemic.

MarketWatch.com:     

• Workers have lost out on nearly $9,000 in income due to coronavirus lockdown (so far).

• Shocking before-and-after photo shows what the coronavirus did to an otherwise healthy man in just 6 weeks.  

• Stock and bond prices say something troubling about the coronavirus economy.

• Senate passes bill that could delist Chinese companies from U.S. stock exchanges.

• The economy is finally recovering from the coronavirus, but the ill-effects aren’t going away for a long time.

Zero Hedge:

• "Trust Is Being Undermined" - Harvard Medical School Prof Questions Fauci's "Shading" Vaccine Results

• "Free Money": Most Americans Want The Government To Issue More Stimulus Checks

• Take This Quiz To See If You're "Qualified" To Join The Growing Army Of 'Contact Tracers' 

• US Banks On Hook For $150 Billion In "Frozen Loans" As Millions Of Americans Skip Credit Card And Car Payments.

• In Shocking Jump, Brazil Reports Nearly 20k Cases In A Single Day: Live Updates.

• Susan Rice Was Directed By Obama White House To Draft Inauguration Day Email To Herself.

• Ford Temporarily Shuts Down Two Plants Just Days After Reopening After Workers Test Positive For COVID-19.

• Nada For Nadler: Supreme Court Blocks House Democrats From Receiving Mueller Grand Jury Material.

• Leaked Pentagon Memo Warns "Real Possibility" Of COVID-19 Resurgence, No Vaccine Before Summer 2021

• Fannie, Freddie Will Need $240BN In Capital As Private Companies: Regulator.

• "It's Junk!" - Illinois' Borrowing Costs 5 Times Higher Than AAA-Rated States.

• "The Data Is Disturbing" - Extreme Options Sentiment Flash Red Light For Stocks

• Stocks, Bonds, Gold, & Oil Pop As Dollar & Crypto Drop.

The Epoch Times:

• Tide Turns Against Beijing-Backed Confucius Institutes on American Campuses.

• Chinese Company’s Bid to Buy Nunavut Gold Mine of ‘Grave Concern’: Security Expert.

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 +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 108.25 -4.0 basis points.

• China Sovereign CDS 45.75 -4.25 basis points.

• Bloomberg Emerging Markets Currency Index 59.24 -.04%.

• FTSE 100 futures -.26%.

• S&P 500 futures -.26%.

• NASDAQ 100 futures -.12%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (BBY)/.41

• (BJ)/.36

• (HRL)/.43

• (MDT)/.78

• (TNK)/2.91

• (TJX)/-.18

After the Close:

• (A)/.61

• (DECK)/.10

• (HPE)/.30

• (INTU)/4.48

• (NVDA)/1.53

• (PANW)/.96

• (ROST)/.02

• (SPLK)/-.57

Economic Releases
8:30 am EST

• Philly Fed Business Outlook for May is estimated to rise to -40.0 versus -56.6 in April.

• Initial Jobless Claims for last week are estimated to fall to 2400K versus 2981K the prior week.

• Continuing Claims are estimated to rise to 23500K versus 22833K prior.

9:45 am EST

• Preliminary Markit US Manufacturing PMI for May is estimated to rise to 39.5 versus 36.1 in April.
  

10:00 am EST

• The Leading Index for April is estimated to fall -5.4% versus a -6.7% decline in March.

• Existing Home Sales for April is estimated to fall to 4.22M versus 5.27M in March.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Powell speaking, Fed's Williams speaking, Fed's Clarida speaking, Japan inflation rate, Bloomberg Economic Expectations Index for May, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report and the (M) virtual fireside chat with JPM could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

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

Stocks Higher into Final Hour on Less European/Emerging Markets/US High-Yield Debt Angst, Oil Gain, Short-Covering, Energy/Transport Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 29.0 -5.0%

• Euro/Yen Carry Return Index 122.42 +.36%

• Emerging Markets Currency Volatility(VXY) 11.0 -1.4%

• S&P 500 Implied Correlation 63.58 -1.9%

• ISE Sentiment Index 100.0 -75.0 points

• Total Put/Call .77 +6.9%

• NYSE Arms 1.21 -35.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 85.82 -4.19%
  

• US Energy High-Yield OAS 1,100.02 -2.98%

• European Financial Sector CDS Index 93.52 -5.3%

• Italian/German 10Y Yld Spread 210.0 unch.
  

• Asia Ex-Japan Investment Grade CDS Index 110.36 -2.58%
  

• Emerging Market CDS Index 309.0 -3.8%
  

• iBoxx Offshore RMB China Corporate High Yield Index 166.03 +.58%

• 2-Year Swap Spread 9.0 +.5 basis point

• TED Spread 25.75 -1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -8.5 +2.25 basis points
• MBS  5/10 Treasury Spread  101.0 -4.0 basis points
• IHS Markit CMBX BBB- 6 64.0 +.5 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 59.29 +.87%
• 3-Month T-Bill Yield .12% +1.0 basis point

• Yield Curve 52.0 -1.0 basis point

• China Iron Ore Spot 93.40 USD/Metric Tonne -1.09%

• Citi US Economic Surprise Index -92.30 +1.9 points

• Citi Eurozone Economic Surprise Index -295.20 -3.0 points

• Citi Emerging Markets Economic Surprise Index 1.9 -1.0 point

• 10-Year TIPS Spread 1.16 +1.0 basis point
• 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 +105 open in Japan 
• China A50 Futures: Indicating +33 open in China

• DAX Futures: Indicating -44 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth +1.3%

Sector Underperformers:

• 1) Homebuilding -1.3% 2) Gold & Silver -.4% 3) Retail -.1%

Stocks Falling on Unusual Volume: 

• ZYXI, CFX, RGS, CPB, JWN, EV, NET, FND, ETSY, VTIQ, LB, BDX, SPCE, ALRM, ENPH, PGNY, FSCT, UPWK, URBN, ACMR, CYRX, VIPS, BIDU, BABA and JD

Stocks With Unusual Put Option Activity:

• 1) URBN 2) KWEB 3) LOW 4) EWA 5) XLK

Stocks With Most Negative News Mentions:

• 1) BABA 2) PIR 3) LUK 4) IQ 5) GSX

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +2.8%

Sector Outperformers:

• 1) Oil Service +4.7% 2) Airlines +4.5% 3) Energy +3.6%

Stocks Rising on Unusual Volume:

• ATRA, CAR, ONEM, GTHX, INO, VIR, PENN, TPTX, PING, CREE, NERV, KEYS, FB, ECOM, UAL, SHOO, TTWO, RRR and MODN

Stocks With Unusual Call Option Activity:

• 1) HOME 2) NTNX 3) RRR 4) GLW 5) HBI

Stocks With Most Positive News Mentions:

• 1) HAL 2) RRR 3) HOG 4) XP 5) SC

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +4.6% Above 100-Day Average
• 11 Sectors Rising, 0 Sectors Declining
• 85.6% of Issues Advancing, 13.2% Declining
• 27 New 52-Week Highs, 3 New Lows
• 14.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.2%
• Vix 28.3 -7.3%
• Total Put/Call .69 -4.2%
• TRIN/Arms 1.14 -39.4%