Friday Watch

Evening Headlines

Bloomberg:               

• ‘This Is the End’: Hong Kong Opposition Decries China Power Grab.
• Senators Propose Sanctions on Chinese Officials Over Hong Kong.

• Asia Investors Hunt Property That Gains From Social Distancing. Asian stocks saw a muted open Friday as rising tension between the U.S. and China added to concern about the pace of economic recovery from the coronavirus pandemic. U.S. futures edged higher. Stocks were little changed in Tokyo, Seoul and Sydney, while futures in Hong Kong pointed lower. China responded to accusations from President Donald Trump, warning that it will safeguard its sovereignty, security and interests, and threatened countermeasures, dragging down a big Hong Kong exchange traded fund by almost 4%. The S&P 500 closed lower, with signs mounting that Trump will make his tough-on-China stance a key element of his re-election bid. The dollar and Treasuries were steady. S&P 500 futures rose 0.4% as of 9:01 a.m. in Tokyo. The S&P 500 fell 0.8% on Thursday. Japan’s Topix index added 0.1%. South Korea‘s Kospi was little changed. Australia’s S&P/ASX 200 Index slid less than 0.1%.  

• Hong Kong Security Law, U.S. Pushes Back, Fed Pausing: Eco Day.

• Japan’s Corporate Profit Tumbles Most Since Financial Crisis.  

• Bolsonaro Makes Deal With Governors as Virus Seizes Brazil.
• Traders Bet on More Pain for Hong Kong With FX Forwards, ETFs.  

• Asian Stocks Set to Slip on U.S.-China Tension: Markets Wrap.
• U.S. Jobless-Claims Data Become Much Trickier as Economic Gauge.
• Scared and Sick, U.S. Meat Workers Crowd in Reopened Plants.  

• Infamous ‘No-Coupon-At-All’ Club May Soon Welcome Another Member.  

• Senators Seek DOJ Probe of Planned Parenthood Stimulus Loans.  

• Nvidia Gives In-Line Forecast Helped by Data Center Demand.  

• Ford Throws Lifeline to Auto-Parts Suppliers Facing Cash Crunch.

• IBM Is Latest Tech Giant to Cut Jobs in Midst of Pandemic.

Wall Street Journal:

• States Don’t Agree on How to Determine When It Is Safe to Reopen.

• How to Keep Workers Off the Job.

• Global Businesses Steady, but Recovery Appears Far Off.

• The Crucial Reopening Question.

• U.S. Plans Nuclear Arms Talks With Russia Aimed at Adding China to Pact.

• Covid Deaths Likely Missed in Michigan, Data Suggest.

• University of California Will Stop Using SAT, ACT.

Fox News:

• US should keep close eye on this part of the world, Dr. Siegel says.

CNBC.com:

• Coronavirus live updates: Universal Orlando sets June target date for reopening, more states now opening indoor dining at restaurants.

• Marc Lasry: The market has not realized U.S. will be in recession ‘for a while’.

• Target saw strength in April ‘across our entire portfolio,’ CEO Brian Cornell says.

• Trump says he won’t close the country if second wave of coronavirus hits.

• The coronavirus is crushing bankrupt retailers’ hopes for a rebound – and threatening even more jobs.

• Stocks making the biggest moves after hours: Ross Stores, Splunk, Palo Alto Networks and more.

• Shelter-in-place will have a ‘lasting impact on consumer behavior,’ Jim Cramer says.

• American billionaires got $434 billion richer during the pandemic.

MarketWatch.com:       

• Mortgage rates fall to near-historic low on concerns about coronavirus pandemic.

Zero Hedge:    

• Quarter Of Americans Have No Interest In Taking COVID Vaccine. 

• COVID Showdowns Brewing Across Illinois As Angry Residents, Sheriffs Reject Lockdown.

• America's Largest Mall On Verge Of Default After Missing Two Loan Payments.

• Why California Is In Trouble: 340,000 Public Employees With $100,000+ Paychecks Cost Taxpayers $45 Billion.

• Senators Introduce Bill Sanctioning Chinese Officials, Banks Over Hong Kong Crackdown.

• Beijing Has Finally Run Out Of Patience With Hong Kong.

• "Unlike Anything We Have Seen In History": The Coronacrisis Will Wipe Out Over 4 Years Of GDP Growth.

• YouTube Censors Video With Medical Doctors Saying Hydroxychloroquine Might Help Treat COVID-19.

• Early Morning Naval Base Shooting In Texas "Terrorism-Related"; FBI Hunting 2nd Suspect.

• Bitcoin & Bullion Battered As Stocks, Bonds, & The Dollar Do Nothing.

Business Insider:   

• It's a perfect storm of stupid in the stock market right now.

• How to activate COVID-19 exposure notifications on your iPhone through the latest iOS update.

The Epoch Times:

• House Committees to Review Senate Passed Bill That Could Delist Some Chinese Firms: Pelosi.

• All CCP Virus-Related Information Considered State Secrets in China: Leaked Classified Documents.

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 -.25% to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 106.5 -1.75 basis points.

• China Sovereign CDS 47.5 +1.5 basis points.

• Bloomberg Emerging Markets Currency Index 59.57 unch.

• FTSE 100 futures +.22%.

• S&P 500 futures +.31%.

• NASDAQ 100 futures +.39%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (BABA)/6.07

• (BKE)/-.14

• (CPB)/.54

• (DE)/1.65

• (FL)/-.23

After the Close:

• None of note

Economic Releases

• None of note

Upcoming Splits

• None of note

Other Potential Market Movers

• The German PMI report could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and consumer 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 Lower into Final Hour on Escalating China Tensions, Global Recession Fears, Profit-Taking, Energy/Tech Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 28.7 +2.6%

• Euro/Yen Carry Return Index 122.30 -.10%

• Emerging Markets Currency Volatility(VXY) 10.75 -1.2%

• S&P 500 Implied Correlation 65.15 +4.7%

• ISE Sentiment Index 68.0 -32.0 points

• Total Put/Call .80 -1.2%

• NYSE Arms 1.01 -6.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 85.90 +1.1%
  

• US Energy High-Yield OAS 1,083.58 -.54%

• European Financial Sector CDS Index 94.35 +.86%

• Italian/German 10Y Yld Spread 211.0 +1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 106.41 -3.71%
  

• Emerging Market CDS Index 302.37 -1.65%
  

• iBoxx Offshore RMB China Corporate High Yield Index 166.71 +.41%

• 2-Year Swap Spread 8.75 -.25 basis point

• TED Spread 26.0 +.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -9.0 -.5 basis point
• MBS  5/10 Treasury Spread  106.0 +5.0 basis points
• IHS Markit CMBX BBB- 6 64.0 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 59.56 +.51%
• 3-Month T-Bill Yield .11% -1.0 basis point

• Yield Curve 49.0 -3.0 basis points

• China Iron Ore Spot 95.14 USD/Metric Tonne +1.69%

• Citi US Economic Surprise Index -81.50 +8.8 points

• Citi Eurozone Economic Surprise Index -252.10 +43.1 points

• Citi Emerging Markets Economic Surprise Index -.3 -2.2 points

• 10-Year TIPS Spread 1.13 -3.0 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 -37 open in Japan 
• China A50 Futures: Indicating -117 open in China

• DAX Futures: Indicating +12 open in Germany

Portfolio:

• Slightly Higher: On gains in my industrial sector longs, index hedges and emerging market shorts

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth -.6%

Sector Underperformers:

• 1) Gold & Silver -2.9% 2) Gaming -2.1% 3) Semis -1.9%

Stocks Falling on Unusual Volume: 

• HP, NFLX, ZBH, BBY, ALL, PING, DKNG, CSGP, BOOT, TTWO, ALRM, HRL, ONEM, OSTK, BILL, ENPH, BSX, VIR and MRNA

Stocks With Unusual Put Option Activity:

• 1) BKLN 2) TIF 3) XLB 4) LEN 5) FXI

Stocks With Most Negative News Mentions:

• 1) HUYA 2) ZTO 3) IGT 4) MGM 5) SCHW

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.5%

Sector Outperformers:

• 1) Airlines +2.9% 2) Homebuilders +2.7% 3) Retail +1.5%

Stocks Rising on Unusual Volume:

• LB, BJ, SONO, FOCS, GMED, NCLH, ARNA, SCVL, PENN, TJX, NERV, EGHT, SAVE and EIGR

Stocks With Unusual Call Option Activity:

• 1) EGHT 2) TIF 3) LB 4) TTWO 5) CLDR

Stocks With Most Positive News Mentions:

• 1) BJ 2) TNK 3) CAR 4) EDUC 5) IFRX

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +2.8% Above 100-Day Average
• 0 Sectors Rising, 11 Sectors Declining
• 42.0% of Issues Advancing, 55.5% Declining
• 19 New 52-Week Highs, 4 New Lows
• 16.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 51.7%
• Vix 30.2 +7.7%
• Total Put/Call .69 -14.8%
• TRIN/Arms 1.40 +29.6%