Stocks Higher into Final Hour on Global Stimulus Hopes, US Economic Data Bounce, Positive Coronavirus Study Results, Tech/Energy 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) 34.3 -.2%

• Euro/Yen Carry Return Index 125.36 -.52%

• Emerging Markets Currency Volatility(VXY) 10.7 +3.9%

• S&P 500 Implied Correlation 66.2 +2.4%

• ISE Sentiment Index 95.0 +27.0 points

• Total Put/Call .77 -12.5%

• NYSE Arms 1.09 +11.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 68.0 -4.26%
  

• US Energy High-Yield OAS 927.79 -3.38%

• European Financial Sector CDS Index 75.02 -8.0%

• Italian/German 10Y Yld Spread 182.5 -8.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 85.18 -8.7%
  

• Emerging Market CDS Index 187.59 -10.48%
  

• iBoxx Offshore RMB China Corporate High Yield Index 169.35 +.03%

• 2-Year Swap Spread 7.0 +.25 basis point

• TED Spread 15.75 -1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -14.0 +5.0 basis points
• MBS  5/10 Treasury Spread  111.0 unch.
• IHS Markit CMBX BBB- 6 70.0 -1.0 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.82 -.2%
• 3-Month T-Bill Yield .16% unch.

• Yield Curve 56.5 +8.0 basis points

• China Iron Ore Spot 101.5 USD/Metric Tonne +.23%

• Citi US Economic Surprise Index 119.30 +17.8 points

• Citi Eurozone Economic Surprise Index -200.10 +3.8 points

• Citi Emerging Markets Economic Surprise Index .6 -14.4 points

• 10-Year TIPS Spread 1.27 +5.0 basis points
• 100.0% chance of no change at Sept. 16 meeting, 100.0% chance of no change at Nov. 5th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -205 open in Japan 
• China A50 Futures: Indicating -134 open in China

• DAX Futures: Indicating -18 open in Germany

Portfolio:

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

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Growth +1.9%

Sector Underperformers:

• 1) Gold & Silver -1.6% 2) Restaurants +.5% 3) Gaming +.5%

Stocks Falling on Unusual Volume: 

• CLDR, DKNG, AMCX, NKLA, SEM, CNST and AAXN

Stocks With Unusual Put Option Activity:

• 1) CVM 2) KBE 3) LEN 4) ORCL 5) EEM

Stocks With Most Negative News Mentions:

• 1) NPTN 2) SHAK 3) ITRM 4) GSX  5) AYI

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +2.8%

Sector Outperformers:

• 1) Steel +6.2% 2) Networking +3.7% 3) Airlines +3.1%

Stocks Rising on Unusual Volume:

• USCR, LLY, FOLD, WW, GRPN, JWN, PRIM, DDS, FMCI, SAVE, SPT, COOP, PRVB, BA and APG

Stocks With Unusual Call Option Activity:

• 1) JNPR 2) IFF 3) LLY 4) WW 5) FLIR

Stocks With Most Positive News Mentions:

• 1) LLY 2) IQ 3) DAN 4) MAS 5) MCD

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +21.4% Above 100-Day Average
• 11 Sectors Rising, 0 Sectors Declining
• 85.7% of Issues Advancing, 12.9% Declining
• 36 New 52-Week Highs, 1 New Low
• 23.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.0%
• Vix 34.2 -.7%
• Total Put/Call .76 -13.6%
• TRIN/Arms 1.08 +10.2%

Tuesday Watch

Evening Headlines

Bloomberg:       

• North Korea Says It May Send Military Into Demilitarized Zone.  
• Salmon Shunned in China After Link to Beijing Virus Outbreak.  
• Reserve Bank of India May Look at Japan Playbook to Tame Yields.
• Global Cases Top 8 Million as Beijing Shuts Areas: Virus Update.  
• Asian Stocks, U.S. Futures Climb; Dollar Drops: Markets Wrap.
• Oil Holds Gains as Broad Producer Cuts Offset Demand Concerns. Asian stocks rebounded from their biggest decline since March and U.S. futures climbed after the Federal Reserve -- again -- boosted investor sentiment in face of worries over a second wave of the coronavirus. Japanese, Australian and Korean shares opened up over 2%. Futures on the S&P 500 advanced after the index erased losses and closed higher Monday. The dollar extended declines and Treasuries added to Monday’s losses, while crude oil held most of its gains. The Fed detailed plans to buy individual corporate bonds, underscoring its role as a backstop. S&P 500 futures rose 0.7% as of 9:13 a.m. in Tokyo. The S&P 500 Index rose 0.8% in New York. Japan’s Topix Index jumped 2.3%. Kospi Index rose 2.6%. Australia’s S&P/ASX 200 Index rose 2.8%. Hong Kong’s Hang Seng Index futures added 1.7% earlier.
• Fed Corporate QE, Outlook Less Bleak, EU Counters China: Eco Day.   
• Retail Struggles Point to Cotton Supply Glut, Stalling Rally.
• Bridgewater’s Assets Shrank 15% in Virus-Fueled Trading Slump.
• U.S. Airlines Vow Tougher Enforcement of Rules on Face Coverings.  
• Domino’s: This Is How A Pizza Chain Stock Did Just As Well As Google.

Wall Street Journal:

• Civil-Rights Law Protects LGBT Workers, Court Rules.
• Anarchy in the Streets of Philadelphia.
• FDA Pulls Covid-19 Approval for Malaria Drug Used by Trump.
• Tech Firms Are Spying on You. In a Pandemic, Governments Say That’s OK.
• The Toll Isolation Takes on Kids During Coronavirus Era.
• New Covid-19 Outbreak in China Rattles Beijing.
• Business Travel Won’t Be Taking Off Soon Amid Coronavirus.

Fox News:

• Trump reacts to police shooting death of Rayshard Brooks as anger builds in Atlanta.

CNBC.com:

• Campbell Soup CEO says June pantry sales are unusually high.
• Trump to sign executive order on police reform Tuesday.
• Texas reports record-breaking coronavirus hospitalizations, the sixth new high in a week.
• Stocks making the biggest moves after hours: Lennar, Nikola, DocuSign and more.
• Apple says consumers and advertisers spent more than $500 billion through apps last year.

MarketWatch.com:   

• The rise of mom-and-pop investors in the stock market will ‘end in tears,’ warns billionaire Cooperman.  
• MLB Commissioner Rob Manfred ‘not confident’ baseball season will happen.

Zero Hedge:

• Beijing Bars 'High Risk' Residents From Leaving, Closes 7 Compounds As Lockdowns Return.
• Chinese Scientist, Escorted Out Of Canadian Biolab, Sent Deadly Viruses To Wuhan.
• A Tip For The "CHAZ Republic": Start Thinking Like Conservatives.
• Bridgewater's Assets Plunged By $25 Billion During March, April Rout.
• Wealthy Chinese Rushing To Move Cash Abroad Ahead Of Yuan Weakness.
• "Slave Owner": Thomas Jefferson Statue Torn Down, Defaced At Portland High School.
• Trump: If Bolton Releases His Book "He's Broken The Law".
• Martin Armstrong: Is Defunding Police The Right Choice Or The Next Step In Revolution?
• This Is What Happens When The Twitter-Mob Takes Over.
• Calpers To Use $80 Billion In Leverage To Hit 7% Return Target.
• North Korean Army "Fully Ready" To Enter DMZ, "Throw Garbage In The Trash".
• Why The Obama Intel Assessment On Russia Collusion Is Under Investigation.
• NYC Mayor Orders Army Of COVID-19 Contact-Tracers Not To Ask About BLM Protests Attendance.
• NYPD Eliminates Entire Plainclothes Anti-Crime Unit In 'Seismic Cultural Shift'.
• Stocks Jump, Dollar Dumps As Fed Non-News Trumps Second-Wave Virus Fears.

Business Insider:

• Beware the 'Portnoy top': A former Wall Street chief strategist breaks down how the day-trading exploits of Barstool Sports' founder highlight an 'unholy speculative mix' infecting stocks.

The Epoch Times:

• Germany Pushes for Tougher EU Stance Towards China.
• Beijing City Releases Inconsistent Data on New Virus Infections as Outbreak Worsens.

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 +1.75% to +2.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 87.75 -5.25 basis points.

• China Sovereign CDS 49.0 -3.75 points.

• Bloomberg Emerging Markets Currency Index 60.99 +.08%.
• FTSE 100 futures +1.8%

• S&P 500 futures +.82%.

• NASDAQ 100 futures +.79%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• None of note

After the Close:

• (HRB)/2.61
• (ORCL)/1.16

Economic Releases 
8:30 am EST

• Retail Sales Advance MoM for May is estimated to rise +8.0% versus -16.4%.
• Retail Sales Ex Autos MoM for May is estimated to rise +5.2% versus a -17.2% decline in April.
• Retail Sales Ex Autos and Gas for May is estimated to rise +5.0% versus a -16.2% decline in April.
  

9:15 am EST

• Industrial Production MoM for May is estimated to rise +3.0% versus a -11.2% gain in April.
• Capacity Utilization for May is estimated to rise to 66.9% versus 64.9% in April. 
• Manufacturing Production for May is estimated to rise +5.0% versus a -13.7% decline in April.
  

10:00 am EST

• Business Inventories for April is estimated to fall -1.0% versus a -.2% decline in March.
• The NAHB Housing Market Index for June is estimated to rise to 45.0 versus 37.0 in May.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed Chairman Powell speaking, German Inflation report, UK Employment Change report and the JPMorgan Energy/Power/Renewables Conference could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

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

Stocks Reversing Higher into Final Hour on Global Stimulus Hopes, Oil Gain, Short-Covering, Homebuilding/Tech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 36.1 -.1%

• Euro/Yen Carry Return Index 125.99 +.52%

• Emerging Markets Currency Volatility(VXY) 10.37 +2.7%

• S&P 500 Implied Correlation 67.68 +2.0%

• ISE Sentiment Index 75.0 -11.0 points

• Total Put/Call .88 -9.28%

• NYSE Arms 1.08 +168.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 76.75 -3.1%
  

• US Energy High-Yield OAS 966.36 +.77%

• European Financial Sector CDS Index 81.79 +.14%

• Italian/German 10Y Yld Spread 190.5 +1.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 93.20 +2.84%
  

• Emerging Market CDS Index 203.22 -19.1%
  

• iBoxx Offshore RMB China Corporate High Yield Index 169.30 +.14%

• 2-Year Swap Spread 6.75 -1.0 basis point

• TED Spread 17.0 +1.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -19.0 -3.25 basis points
• MBS  5/10 Treasury Spread  111.0 +6.0 basis points
• IHS Markit CMBX BBB- 6 71.0 -1.0 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.96 +.03%
• 3-Month T-Bill Yield .16% unch.

• Yield Curve 48.5 -1.75 basis points

• China Iron Ore Spot 101.18 USD/Metric Tonne +.68%

• Citi US Economic Surprise Index 101.50 +19.3 points

• Citi Eurozone Economic Surprise Index -204.90 +11.0 points

• Citi Emerging Markets Economic Surprise Index 15.0 -5.9 points

• 10-Year TIPS Spread 1.22 +3.0 basis points
• 100.0% chance of no change at Sept. 16 meeting, 100.0% chance of no change at Nov. 5th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +455 open in Japan 
• China A50 Futures: Indicating +54 open in China

• DAX Futures: Indicating +179 open in Germany

Portfolio:

• Higher: On gains in my medical/tech/biotech/consumer staple/industrial sector longs and emerging market shorts

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

• Market Exposure: Moved to 50% Net Long