Wednesday Watch

Night Trading 

• Asian equity indices are +.25% to +1.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 83.75 -1.25 basis points.

• China Sovereign CDS 48.25 -1.25 basis points.

• Bloomberg Emerging Markets Currency Index 60.90 +.10%.

• FTSE 100 futures -.45%.

• S&P 500 futures +.03%.

• NASDAQ 100 futures +.13%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (PDCO)/.19

• (WGO)/-.37

After the Close:

• (BB)/-.01

• (FUL)/.55

• (KBH)/.58

• (FIZZ)/.60

Economic Releases 
9:00 am EST

• The FHFA House Price Index MoM for April is estimated to rise +.3% versus a +.1% gain in March.
  

10:00 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of 1,140,450 barrels versus a +1,215,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -1,759,090 barrels versus a -1,666,000 barrel decline the prior week. Distillate inventories are estimated to fall by -210,910 barrels versus a -1,358,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.65% versus a +.7% gain prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The German IFO report, $47B 5Y T-Note auction, weekly MBA Mortgage Applications report, (SMTC) analyst day and the (BG) business update could also impact trading today.

Market Hours

Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and healthcare 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 Higher into Final Hour on Global Stimulus Hopes, Less European/Emering Markets/US High-Yield Debt Angst, Short-Covering, Transport/Tech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 30.6 -3.8%

• Euro/Yen Carry Return Index 125.0 +.11%

• Emerging Markets Currency Volatility(VXY) 10.5 -.19%

• S&P 500 Implied Correlation 64.3 -3.9%

• ISE Sentiment Index 145.0 +41.0 points

• Total Put/Call .76 -5.0%

• NYSE Arms 1.06 +50%

Credit Investor Angst:

• North American Investment Grade CDS Index 73.86 -3.66%
  

• US Energy High-Yield OAS 923.81 -.14%

• European Financial Sector CDS Index 76.83 -4.59%

• Italian/German 10Y Yld Spread 166.5 -6.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 84.19 -1.17%
  

• Emerging Market CDS Index 189.84 -6.64%
  

• iBoxx Offshore RMB China Corporate High Yield Index 169.37 +.09%

• 2-Year Swap Spread 6.25 unch.

• TED Spread 16.0 +.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -11.5 +2.5 basis points
• MBS  5/10 Treasury Spread  113.0-2.0 basis points
• IHS Markit CMBX BBB- 6 70.0 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.86 +.43%
• 3-Month T-Bill Yield .14% unch.

• Yield Curve 51.75 +1.5 basis points

• China Iron Ore Spot 99.45 USD/Metric Tonne +.05%

• Citi US Economic Surprise Index 145.40 +17.2 points

• Citi Eurozone Economic Surprise Index -92.20 +75.9 points

• Citi Emerging Markets Economic Surprise Index -10.9 -2.0 points

• 10-Year TIPS Spread 1.36 +4.0 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 +96 open in Japan 
• China A50 Futures: Indicating -11 open in China

• DAX Futures: Indicating -69 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value +.2%

Sector Underperformers:

• 1) Utilities -1.0% 2) Airlines -.9% 3) Disk Drives -1.0%

Stocks Falling on Unusual Volume: 

• WCC, SPCE, UBA, VERI, NET, UAL, OSTK, ONEM, FMCI, CORT, BEAM, AAL, AGLE, VMD, VVNT and SPR

Stocks With Unusual Put Option Activity:

• 1) BFYT 2) PLUG 3) INO 4) YETI 5) UPS

Stocks With Most Negative News Mentions:

• 1) SPR 2) CBOE 3) DCP 4) MU  5) JNJ

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +1.3%

Sector Outperformers:

• 1) Social Media +2.5% 2) Alt Energy +2.0% 3) Gaming +1.8%

Stocks Rising on Unusual Volume:

• INO, TBIO, PENN, NLTX, MHK, GO, FSLY, EDIT, NK, NVTA, FOCS, STAA, KPTI, ITCI, AMRC, EXPI, YEXT, SONO, AAXN, ACTT and XLRN

Stocks With Unusual Call Option Activity:

• 1) HOG 2) ITCI 3) WW 4) WKHS 5) HALO

Stocks With Most Positive News Mentions:

• 1) PLUG 2) KPTI 3) PTON 4) NUVA 5) NKE

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -15.9% Above 100-Day Average
• 8 Sectors Rising, 3 Sectors Declining
• 60.6% of Issues Advancing, 36.4% Declining
• 56 New 52-Week Highs, 2 New Lows
• 23.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.8%
• Vix 30.5 -3.8%
• Total Put/Call .75 -6.3%
• TRIN/Arms .97 -3.96%

Tuesday Watch

Evening Headlines

Bloomberg:          

• China in Recession and Heading for Full-Year Decline: Beige Book.

• Beijing Outbreak Shows Covid-19’s Insidious Ability to Hide.  

• A Rally in Indian Bank Debt Under Threat as Defaults Seen Rising.

• An Influx of Stimulus Cash Could Turn Green Tech Into a Nightmare.

• Asian Stocks Set to Open Higher; Dollar Drops: Markets Wrap. Asian stocks looked poised to open higher Tuesday after technology shares lifted U.S. benchmarks as investors bet on companies that will better weather a patchy economic recovery. Futures in Japan, Australia and Hong Kong pointed higher. The Nasdaq 100 jumped more than 1% and the Nasdaq Composite capped a seventh straight advance in its longest rally of the year. S&P 500 futures were little changed in Asia after the gauge lagged, with some sectors under pressure as investors weighed the economic impact of virus flareups in some states. The dollar weakened and Treasuries dipped. Gold tested a seven-year high. Crude oil remained above $40 a barrel in New York. S&P 500 futures were little changed as of 7:02 a.m. in Tokyo. The S&P 500 Index climbed 0.7%. Nikkei 225 futures rose 1%. Hang Seng Index futures gained 0.8%. Australia’s S&P/ASX 200 Index futures added 0.6%.  

• Oil Futures Jump to a Three-Month High on Demand Optimism.

• Infections Top 9 Million; Latin America Leads Jump: Virus Update.

• Pence Warns of Young People Testing Positive as Hot Spots Worsen.

• U.S. Preps for ‘Tremendous Burden’ of Flu, Covid Hit at Once.

Wall Street Journal:

• What the Data Say About Police.

• The New Urban Flight.

• Black Lives Matter Protests Spread to White, Rural Areas.

• U.S. to Temporarily Suspend New H-1B and Other Job Visas.

• America Is Reopening. Coronavirus Tracing Apps Aren’t Ready.

Fox News:

• LISTEN: Kimmel used 'N-word' in 1996 song, impersonated black comic on 2013 podcast.

CNBC.com:

• Stocks making the biggest moves after hours: Carnival, T-Mobile, Virgin Galactic and more.

• The Fed’s corporate bond buying is stoking bubble fears.

• The era of stock buybacks could be over, economist Jim O’Neill says.

MarketWatch.com:     

• Here is everything that has been announced so far at Apple’s big developer event.  

• Here are 9 hand sanitizers that the FDA warns can be toxic if absorbed by the body.

Zero Hedge:   

• China Must Prepare To Be Cut Off From Dollar-Based Financial System, Official Warns.

• After The Biggest Rally Since 1933, JPMorgan Finally Tells Its Clients To Buy US Stocks.

• Texas COVID-19 Hospitalizations See Biggest Jump In More Than 2 Weeks: Live Updates.

• Biden Commits To Three Debates With Trump.

• Trump Urges Legislation For Flag Burning To Be Federal Offense With One Year In Jail.

• Stocks, Gold, Oil, And COVID-Cases Soar.

The Epoch Times:

• FCC Blocks Chinese-Language Radio Station Amid Propaganda Concerns.

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 85.0 -.75 basis point.

• China Sovereign CDS 49.5 +.25 basis point.

• Bloomberg Emerging Markets Currency Index 60.67 +.11%.

• FTSE 100 futures +.64%.

• S&P 500 futures +.34%.

• NASDAQ 100 futures +.23%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (INFO)/.67

After the Close:

• (AVAV)/.69

• (LZB)/.20

Economic Releases 
9:45 am EST

• The Markit US Manufacturing PMI report for June is estimated to rise to 50.8 versus 39.8 in May.

• The Markit US Services PMI report for June is estimated to rise to 48.0 versus 37.5 in May.
  

10:00 am EST

• New Home Sales for May is estimated to rise to 640K versus 623K in April.

• The Richmond Fed Manufacturing Index for June is estimated to rise to -5 versus -27 in May.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone PMI report, US weekly retail sales reports, $46B 2Y T-Note Auction, BMO Capital Virtual Healthcare Conference, Jefferies Virtual Consumer Conference and the (IR) fireside chat with Barclays 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 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.