Stocks Reversing Modestly Higher into Afternoon on Global Stimulus Hopes, Oil Gain, Short-Covering, Tech/Retail Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: About Even
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 32.8 -6.6%

• Euro/Yen Carry Return Index 124.84 +.81%

• Emerging Markets Currency Volatility(VXY) 10.6 -1.1%

• S&P 500 Implied Correlation 69.2 -10.9%

• ISE Sentiment Index 104.0 +8.0 points

• Total Put/Call .78 -15.2%

• NYSE Arms .87 -43.9%

Credit Investor Angst:

• North American Investment Grade CDS Index 76.67 -.45%
  

• US Energy High-Yield OAS 1,045.0 -.43%

• European Financial Sector CDS Index 76.83 +2.6%

• Italian/German 10Y Yld Spread 172.75 -4.5 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 85.15 +.39%
  

• Emerging Market CDS Index 195.66 -4.79%
  

• iBoxx Offshore RMB China Corporate High Yield Index 169.22 -.04%

• 2-Year Swap Spread 6.25 -.5 basis point

• TED Spread 15.75 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -13.5 -2.5 basis points
• MBS  5/10 Treasury Spread  115.0 unch.
• IHS Markit CMBX BBB- 6 70.0 -1.0 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.62 +.34%
• 3-Month T-Bill Yield .14% -1.0 basis point

• Yield Curve 50.25 -.5 basis point

• China Iron Ore Spot 99.04 USD/Metric Tonne -1.86%

• Citi US Economic Surprise Index 145.40 +17.2 points

• Citi Eurozone Economic Surprise Index -168.10 +17.8 points

• Citi Emerging Markets Economic Surprise Index -8.9 -5.1 points

• 10-Year TIPS Spread 1.32 +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 +93 open in Japan 
• China A50 Futures: Indicating -36 open in China

• DAX Futures: Indicating +3 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 50% Net Long

Morning Market Internals

NYSE Composite Index:

• Volume Running -14.9% Above 100-Day Average
• 5 Sectors Rising, 6 Sectors Declining
• 44.1% of Issues Advancing, 53.3% Declining
• 46 New 52-Week Highs, 5 New Lows
• 23.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.5%
• Vix 33.5 -4.8%
• Total Put/Call .72 -21.7%
• TRIN/Arms .96 -36.8%

Monday Watch

Today's Headlines

Bloomberg: 

• Barr Says U.S. Businesses ‘Part of Problem’ in Battling China.
• Emerging Market Fiscal Stimulus Not Enough to Fill Lost Income Hole.
• China’s Smothering of Hong Kong Has Democrats Preparing for Jail.
• New Virus Hotspots Are Emerging in Rural Villages Across India.
• Beijing’s Latest Virus Outbreak Disrupts Tyson Foods and PepsiCo.
• Brazil Deaths Top 50,000; China Bars Tyson Poultry: Virus Update.
• U.S. Futures Drop, Asian Stocks Look Set to Follow: Markets Wrap. Asian stocks kicked off the week with modest losses as investors mulled the impact of coronavirus outbreaks in countries from the U.S. to Australia, though U.S. futures recouped much of an early decline. S&P 500 contracts pared most of the slide of as much as 1% after Monday’s open. Shares in Japan, South Korea and Australia started lower. California reported record new cases and Florida infections jumped more than the weekly average. The Aussie was weaker as one Australian state tightened restrictions due to fresh cases. Treasuries were little changed. Futures on the S&P 500 dipped 0.3% as of 9:01 a.m. in Tokyo. The index fell 0.6% on Friday. Japan’s Topix index lost 0.5%. South Korea’s Kospi dropped 0.8%. Australia’s S&P/ASX 200 Index declined 0.2%.
• Oil Slips as Signs of Virus Resurgence Cloud Demand Outlook.  

• $11 Trillion Dilemma, IMF Outlook Worsens, RBA Cruises: Eco Day.
• California Reports a Record 4,515 New Virus Cases; 71 New Deaths.
• Trump to Order New Restrictions on H-1B Visas by Monday.
• American Air Braces Balance Sheet With $3.5 Billion in Financing.
• JPMorgan Says Investors Should Get More Selective in Second Half.

Wall Street Journal:

• Vaccine Efforts Focus on Vulnerable Group: Older Adults.

• Cash Remains King as Companies Close a Dismal Second Quarter.

• City Living Is Losing Its Appeal During the Pandemic.

• After Tulsa Rally, Trump Heads to Arizona, Wisconsin.

• Huawei’s 5G Dominance Threatened by U.S. Policy on Chips.

• Apple’s WWDC Goes Virtual, and Tech Industry Is Taking Note.

• Stimulus Options Create Quandary for Senate GOP.

• New Yorkers Now Can Return to the Office. Most Are Staying Away.

• After China Border Fight, India Likely Weighs Closer U.S. Military Ties.

Fox News:

• NEWT GINGRICH: Statue topplers, Pelosi, show they don’t know their US history.

• Trump camp rejects claims of rally-ticket sabotage online, says this is what's to blame.

• Barr signals concern over tech giants censoring viewpoints.

CNBC:

• Goldman hikes gold price forecast on debasement fears and a weaker dollar.

• People are asking their friends to take Covid-19 tests before hanging out.

• Apple still has a lot of room to grow in the $3.5 trillion health care sector.

• The demise of America’s malls can deal a blow to the towns that depend on them.

• China unveils details of national security law for Hong Kong amid backlash.

• Why the market surge off low may be hitting a wall.

• U.S. reports more than 30,000 coronavirus cases two days straight, the highest number since May 1.

• Germany’s coronavirus reproduction rate jumps above key containment level.

Zero Hedge:

• NPR Busted Framing Self-Defense Getaway From Gun-Toting 'Protesters' As Right-Wing Extremist Attack.

• After The Lockdowns, Government "Fixes" For The Economy Will Make Things Even Worse.

• Sisi's 'Declaration Of War' Puts Egypt & Turkey On War Footing Over Libya.

• WHO Reports Record Single-Day Jump In Coronavirus Infections Led By Brazil, US: Live Update.

• Murders Spike In NYC As Residents Flee For Suburbs.

• 9 Dead, 56 Shot In Chicago Father's Day Weekend Violence; Toddler Killed.

• Biden Taps Former CIA, Obama Officials To Handle 'Pre-Transition'.

• Media Begging For A "Second Wave".

• More Studies Find Coronavirus Spread In China Much Earlier Than Beijing Admits.

• The Biggest Credit Impulse In History Leads To Some Very Awkward Questions.

• Stockman: The Fed's Unleashed "Speculation And Malinvestment On A Biblical Scale".

• Not Just Retail: Hedge Funds Go "All In" As Net Leverage Hits 99%-ile.

• Dear Junkies Addicted To Fed Smack: The Monkey On Your Back Is Now A Gorilla.

• Conservative Activist Calls To 'Cancel Yale' For Being Named After Slave Trader.

• Stabbing Spree At UK Park Now Labeled Terror Incident.

• Fed's Actions Have Obliterated True Price Discovery Mechanism.

• Nearly Half Of Americans Consider Selling Home As COVID Crushes Finances.

• In Friday Night Drama, US Attorney Geoffrey Berman Refuses To 'Step Down' After Barr Asks For Resignation.

• Von Greyerz: History Tells Us To Own Gold When Central Banks Run Out Of Control.

• UBS Tells Ultra-Rich Clients To "Avoid" Stock Bubbles; It's A "Dangerous Place To Be".

• London Mayor: Mandatory Masks Will Be The "New Normal" For At Least Another Year.

• North Korea Sends Troops & Ships To Border As More Attention-Grabbing 'Explosive Displays' Loom.

• Majority Of Americans Oppose Renaming Military Bases & Reparations: ABC/Ipsos Poll.

• Daytrading Icon Portnoy Now Using Random Scrabble Letters To Pick A Stock.

• Why Washington, D.C. Is In Trouble: 7,780 Public Employees With $100,000+ Salaries Cost Taxpayers $1 Billion.

• Why Changing CHAZ To CHOP Is Actually A Very Big Deal.

• Liberal Media Has 'Completely Ignored' Biden Cognitive Decline: Rogan.

• Brazil Coronavirus Total Tops 1 Million, Second Only To US: Live Updates.

• WHO Chief: "The Pandemic Is Accelerating," Warns of "New & Dangerous Phase".

• Major Cruise Lines 'Voluntarily Suspend' Trips Out Of US Ports Until Sept. 15.

• Robinhood Tightens Up Options Platform After Trader Suicide.

• COVID Concerns, Crude Collapse, & Quad-Witch Craziness Spark Stock Swoon.

MarketWatch.com:

• Here’s what stock investors think is the biggest factor in their market strategy as coronavirus cases rise.

• ‘La la land?’ The stock market is ‘insanely disconnected’ and due for a ‘reckoning,’ Warren Buffett buff warns.

Business Insider:

• The North Face becomes the first major company to boycott Facebook as the calls for advertisers to leave the platform in July intensify.

The Epoch Times:

• Pompeo Says Way US Treats Hong Kong Depends on How China Does.

• TikTok Censors Student Over Video Mocking Chinese National Anthem.

• Medical Staff Across China Dispatched to Beijing as Neighborhoods, Restaurants Hit Hard by Virus.

John Hopkins University:

• Coronavirus Global Cases. (map)

BNO News:

• Tracking coronavirus: Map, data and timeline.

KFF:

• State Data(Tests/Hospitalizations).

Night Trading

• Asian indices are -.75% to -.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 85.50 -.25 basis point.

• China Sovereign CDS 50.25 +1.0 basis point.

• Bloomberg Emerging Markets Currency Index 60.40 -.03%.

• FTSE 100 futures -1.26%.

• S&P 500 futures -.05%.

• NASDAQ 100 futures -.03%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• None of note

After the Close:

• None of note

Economic Releases
8:30 am EST

• The Chicago Fed National Activity Index for May.

10:00 am EST

• Existing Home Sales for May is estimated to fall to 4.12M versus 4.33M in April.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Eurozone Consumer Conference, (AAPL) virtual worldwide developers conference, Credit Suisse Biotech Conference and the (EA) fireside chat  could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST

BOTTOM LINE: Asian indices are modestly lower, weighed down by financial and industrial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 25% net long heading into the week.

Weekly Outlook

• Wall St. Week Ahead by Reuters.

• Global Economy Week by Bloomberg. 

• The Week Ahead by Yahoo. (video)

• Stocks to Watch Next Week by Seeking Alpha.

• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly lower on global recession fears, coronavirus second wave worries, oil weakness, rising Biden presidency odds, European/Emerging Market/US High-Yield Debt Angst and technical selling. My intermediate-term trading indicators are giving bearish signals and the Portfolio is 25% net long heading into the week.