Thursday Watch

Evening Headlines

Bloomberg:      

• The U.K. Is on a Collision Course With China.

• Global Risk Rally Powers On as Asia Stocks Climb. The global stock rally extended into Thursday as investors clung to optimism for a speedy economic recovery from the pandemic. Treasury yields kept Wednesday’s jump and the dollar remained at its weakest since early March. South Korean shares led early gains in Asia, while Japanese stocks opened about 1% higher and U.S. equity futures edged up. The Nasdaq 100 earlier briefly surpassed its February closing record and banks led the S&P 500 Index to a three-month high. Treasuries retained declines as investors turned away from havens after U.S. private payrolls showed fewer job losses than forecast in May. Australian 10-year yields rose back above 1% for the first time since March. Futures on the S&P 500 Index rose 0.2% as of 9:01 a.m. in Tokyo. The gauge rose 1.4% on Wednesday. Japan’s Topix index advanced 0.9%. South Korea’s Kospi index rose 1.9%. Australia’s S&P/ASX 200 Index added 0.7%.  

• Singapore’s Challenge, Japan’s Spree, Merkel’s Billions: Eco Day.  

• U.S. Cases Rise 1.2%; N.Y. Deaths Hit 10-Week Low: Virus Update.  

• White House Works With Seven Drugmakers in ‘Warp Speed’ Push.

• The Things That Used to Matter to Stock Investors Don’t Anymore.

• Two Days of Stock Euphoria Show Risk Appetite Getting Gluttonous.

Wall Street Journal:

• Minnesota Brings New Charges in George Floyd Killing.

• Virginia to Remove Statue of Robert E. Lee in State Capital.

• CEO Pay for the S&P 500.

• U.S. Plans to Block Flights by Chinese Airlines.

• Coronavirus Stimulus Funds Largely Depleted.

• America’s New Nihilism.

• Looting Deals Second Blow to Reeling Businesses in Minority Neighborhoods.

• Snap Says It Won't Promote Trump’s Snapchat Account.

• Israel Shuts Schools as Coronavirus Cases Jump After Reopening.

Fox News:

• Feds probe possible 'command and control' over riots as bricks thrown at cops.

• Bail reform laws let alleged criminals back on the streets within hours.

• Tucker Carlson: The 'revolution' being waged in the George Floyd mob violence is against the working class. (video)

CNBC.com:

• Stocks making the biggest moves after hours: Cloudera, Fossil, Costco and more.

• Coronavirus: Delta caps plane capacity at 60%, WHO resumes study of malaria drug.

• This is the greatest 50-day rally in the history of the S&P 500.

• Twitter CEO Jack Dorsey gives $3 million to Colin Kaepernick’s organization.

MarketWatch.com:          

• The Fed has made valuing stocks like ‘cheating off the F student,’ strategist says.

Zero Hedge:

• Millions Of Higher-Paying Jobs Targeted As Next Wave Of COVID Layoffs Begins.

• Violent Protests Spread Across Europe, Virginia Gov Unveils Plan To Remove Statue Of Robert E Lee.

• "They Sent The World A Buy Signal": Minerd Says Fed Faces "Day Of Reckoning" For Unleashing The Final Bubble.

• HSBC Bends The Knee To Beijing, Says It Will "Respect & Support" Security Law.

• Merkel's Coalition Agrees To €130BN Stimulus Package To Boost German Economy.

• "Are Markets Suffering A Moment Of Madness?"

• Pompeo Tweets Pic Hosting 'Wanted' Chinese Dissidents & Tiananmen Survivors.

• "They're Getting The Sh*t Kicked Out Of Them": Antifa Attempt To Riot In California Suburb Goes Awry.

• Pelosi Turns To Black Caucus For Bill On Policing.

• Consumer "Cash" Spending Is Much Worse Than The Reported Figures.

• In Defense Of America.

• Canadian Car Sales "Recover", Only Crashing 44% In May, After April's 75% Plunge

• Social Unrest Rises As Confidence Falls.

• The Post-COVID Economy Will Be Very Different From The Pre-Pandemic Bubble Economy.

• Dow Soars Over 1000 Points Since Riots Started; Bonds, Bullion, & Dollar Dumped.

Business Insider:

• Boston opened its offices this week and almost no one showed up to work.

The Epoch Times:

• China’s Official Narrative on Wuhan Wet Market Contradicted by Leaked Document.

• Chinese Poet and Wife Arrested for ‘Inciting Subversion’.

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 +.5% to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 91.75 -4.25 basis points.

• China Sovereign CDS 48.5 -2.75 basis points.

• Bloomberg Emerging Markets Currency Index 61.23 -.02%.

• FTSE 100 futures -.03%

• S&P 500 futures -.01%.

• NASDAQ 100 futures unch.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (CIEN)/.52

• (GIII)/-.67

• (SJM)/2.14

• (MIK)/.17

• (NAV)/-.39

• (TTC)/1.02

After the Close:

• (AVGO)/5.14

• (COO)/2.42

• (DOCU)/.09

• (GPS)/-.64

• (NX)/.05

• (RH)/.55

• (WORK)/-.06

• (MTN)/3.24

• (ZUMZ)/-.64

Economic Releases
7:30 am EST

• Challenger Job Cuts YoY for May.

8:30 am EST

• The Trade Deficit for April is estimated at -$49.2B versus -$44.4B in March. 

• Initial Jobless Claims for last week are estimated to fall to 1843K versus 2123K the prior week.

• Continuing Claims are estimated to fall to 20050K versus 21052K prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The ECB Decision/Press Conference, Eurozone Retail Sales report, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report and the RBC Global Mining/Materials conference could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are higher, boosted by commodity and technology 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 Surging into Final Hour on Global Stimulus Hopes, Economy Re-Opening Optimism, Diminishing US Social Unrest, Financial/Transport Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 25.5 -5.0%

• Euro/Yen Carry Return Index 126.89%

• Emerging Markets Currency Volatility(VXY) 10.07 -2.6%

• S&P 500 Implied Correlation 60.45 -.07%

• ISE Sentiment Index 115.0 -9.0 points

• Total Put/Call .68 -13.9%

• NYSE Arms .77 +.01%

Credit Investor Angst:

• North American Investment Grade CDS Index 72.13 -5.29%
  

• US Energy High-Yield OAS 972.46 -2.11%

• European Financial Sector CDS Index 76.43 -1.93%

• Italian/German 10Y Yld Spread 190.75 -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 92.61 -6.05%
  

• Emerging Market CDS Index 242.0 -5.73%
  

• iBoxx Offshore RMB China Corporate High Yield Index 169.0 +1.51%

• 2-Year Swap Spread 7.25 -1.0 basis point

• TED Spread 18.75 -2.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -13.25 -.5 basis point
• MBS  5/10 Treasury Spread  113.0 -1.0 basis point
• IHS Markit CMBX BBB- 6 66.5 +.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 61.50 +.58%
• 3-Month T-Bill Yield .15% +1.0 basis point

• Yield Curve 53.75 +4.75 basis points

• China Iron Ore Spot 97.50 USD/Metric Tonne +1.27%

• Citi US Economic Surprise Index 8.0 +61.9 points

• Citi Eurozone Economic Surprise Index -226.30 +35.8 points

• Citi Emerging Markets Economic Surprise Index 43.5 +13.9 points

• 10-Year TIPS Spread 1.20 +4.0 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 +309 open in Japan 
• China A50 Futures: Indicating +71 open in China

• DAX Futures: Indicating +59 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 75% Net Long

Morning Market Internals

NYSE Composite Index:

• Volume Running +25.2% Above 100-Day Average
• 10 Sectors Rising, 1 Sector Declining
• 80.3% of Issues Advancing, 17.8% Declining
• 58 New 52-Week Highs, 0 New Lows
• 23.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 57.0%
• Vix 25.9 -3.6%
• Total Put/Call .64 -19.0%
• TRIN/Arms .90 +18.4%

Wednesday Watch

Evening Headlines

Bloomberg:     

• In Hong Kong, Xi Jinping Takes a Page From Vladimir Putin’s Playbook.   

• Record $666 Billion China Local-Debt Wave Sees Foreigners Wary.

• Brazil Has Deadliest Day; NYC Keeps Reopening Plan: Virus Update. 

• Stocks Rise for Third Day on Outlook for Reopening: Markets Wrap. U.S. stocks rose alongside equities in Europe and Asia amid new bouts of stimulus and positive economic signals as coronavirus lockdowns ease. The dollar slumped for a fourth consecutive day. Two shares rose on the S&P 500 Index for every one that fell, lifting the benchmark to its highest since March 4. Gunmakers extended rallies in the wake of President Donald Trump’s promise to deploy large numbers of troops if cities and states don’t act to contain violence from protests over police brutality. The S&P 500 Index rose 0.8% at the close of trading in New York for its third straight gain. The Stoxx Europe 600 Index advanced 1.6%. The MSCI Asia Pacific Index increased 1%. The MSCI Emerging Market Index gained 1.7%.

• Oil’s Comeback Encourages U.S. Shale and Complicates OPEC+ Task.

• U.S. Cases Rise 1.2%; NYC Keeps Monday Reopening: Virus Update.

• NYC Nears Nighttime Curfew After Cuomo Scolding: Protest Update.  

• Amazon Delivery Drivers Say They Fear Becoming Target of Looters.  

• Gun Stocks Rally On After Background Checks Surge 75% In May.

• Google Sued for Secretly Amassing Vast Trove of User Web Data.

• Deutsche Bank’s Dealings With Epstein Under Scrutiny in New York.

Wall Street Journal:

• The Myth of Systemic Police Racism.

• U.S. Cities Tighten Curfews as Protests Continue.

• China Cites U.S. Unrest to Offset Criticism Over Hong Kong.

• Dave Patrick Underwood, RIP.

• Six Atlanta Officers Charged With Using Excessive Force.

• Array of Sports Stars Rush to Embrace ‘Black Lives Matter’.

• White House Weighs Options for Next Stimulus Bill.

• Warner Music, ZoomInfo Poised to Boost IPO Market.

• Cuomo, De Blasio Spar Over Handling of New York City Protests.

Fox News:

• Police may bust high-ranking Antifa members soon, amid concerns over riots hitting suburbia.

CNBC.com:

• This may be overtaking the coronavirus as the market’s biggest risk.

• Amazon plans summer sale for June 22 to ‘jumpstart sales’ after coronavirus crunch.

• Dr. Fauci says coronavirus vaccine may not provide immunity for very long.

• Zuckerberg stands firm in refusal to moderate Trump despite employee walkouts and resignations.

MarketWatch.com:        

• Zoom Video earnings and sales blow away expectations.

Zero Hedge: 

• Shocking New AP Report Shows WHO Actively Covered Up For China's Lies

• CEOs Of Looted Stores Pledge Solidarity With Protesters

• California Faces "Financial Collapse" As It Moves To Allow Businesses To Walk Away From Commercial Leases.

• NYC Bans Cars Below 96th Street As Riots Go Global.

• Lancet Issues Major Disclaimer On Anti-HCQ Study, As Manufactured Disinformation Foments Hysterics.

• Looters Steal $2.4 Million In Rolex Watches From New York Store.

• Overdose Deaths Skyrocketed In Chicago As COVID Lockdowns Continued

• Tiffany Plunges On Report LVMH Takeover "Uncertain"

• Silicon Valley Has Effectively Banned The Freedom Of Speech. It's Time We Take It Back

• America Is Literally Coming Apart At The Seams.

• There's No End In Sight To The Zombie Economy.

• WTI Holds Day's Big Gains After Surprise Crude Draw.

• Minnesota To Test All 7,000 National Guardsmen Deployed To Quell Riots As First Tests Positive

• S&P Futures Surge 10 Points In One Tick On $3.2BN Market On Close Buy Imbalance

•  Dead Cops, Looted Shops, Cities Burning, Buy Stocks!

The Epoch Times:

• WHO Praised Beijing in Public While Complaining Internally About Its Withholding of Virus Data: Report.

• Wuhan’s Mass Virus Testing Results Called Into Question as Another Doctor Dies.

• Telus, Bell Announce Partnership With Huawei Rivals for 5G, Delivering Major Blow to Chinese Telecom Giant.

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 96.0 -3.5 basis points.

• China Sovereign CDS 51.25 -3.25 basis points.

• Bloomberg Emerging Markets Currency Index 61.23 +.13%.

• FTSE 100 futures +.65%

• S&P 500 futures +.32%.

• NASDAQ 100 futures +.25%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (AEO)/-.31

• (CPB)/.54

• (GOOS)/-.12

• (VRA)/-.27

After the Close:

• (CLDR)/.01

Economic Releases
8:15 am EST

• The ADP Employment Change for May is estimated at -9000K versus -20236K in April.

10:00 am EST

• The ISM Non-Manufacturing Index for May is estimated to rise to 44.4 versus 41.8 in April.

• Factory Orders for April are estimated to fall -13.4% versus a -10.3% decline in March.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +3,326,360 barrels versus a +7,928,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -238,550 barrels versus a -724,000 barrel decline the prior week. Distillate inventories are estimated to rise by +3,198,450 barrels versus a +5,495,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.8% versus a +1.9% gain prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The German Unemployment report, weekly MBA Mortgage Applications report, (COST) May sales results, Piper Sandler Virtual FinTech Conference, Needham Virtual Auto Tech Conference and the (ADSK) investor day could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are higher, boosted by industrial and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.