Thursday Watch

Evening Headlines

Bloomberg:    

• China-Sanctions Bill on Hong Kong Law Passed by U.S. House.  

• China’s Central Bank Is Signaling a Slowing in Pace of Easing.  

• South Korean Prices Fail to Rise as Pandemic Drags on.

• Asian Stock Futures Climb; Nasdaq Hits Record: Markets Wrap. Asian stocks saw modest gains Thursday after positive vaccine developments and U.S. data tempered concern over a jump in coronavirus cases and tensions over Hong Kong. Treasuries and the dollar held losses. Shares edged higher in Japan, Australia and South Korea. U.S. futures were little changed after the S&P 500 rose for a third day and the Nasdaq Composite jumped to a record. An early trial of an experimental shot from Pfizer Inc. and BioNtech SE showed it was safe, and prompted patients to produce antibodies. Earlier, equities came off session highs after California and Arizona reported their biggest daily virus case increases and Houston’s intensive-care units exceeded full capacity. S&P 500 futures were little changed as of 9:06 a.m. in Tokyo. The S&P 500 climbed 0.5%. Japan’s Topix Index rose 0.7%. Australia’s S&P/ASX 200 Index gained 0.4%. Kospi Index rose 0.8%.  

• Hertz, Creditors in $11 Billion Standoff Over 494,000 Used Cars.

• Jeff Bezos’s Wealth Soars to $171.6 Billion to Top Pre-Divorce Record.

• Tech’s Embrace of Remote Work Sends San Francisco Rents Plunging.

• Economists Baffled by How Mexicans Can Send So Much Money Home.

• Young Americans Are Partying Hard and Spreading Covid-19 Quickly.

• Trump Raises $266 Million in Second Quarter, Widening Advantage.

Wall Street Journal:

• Inside Moderna: The Vaccine Front-Runner With No Track Record and an Unsparing CEO.

• FAA’s Handling of Boeing 737 MAX Issues Faulted in Review.

• Hong Kong Police Quickly Enforce New Security Law.

• How Success Against the Coronavirus Turned to Crisis in California.

• Three Months In, These Patients Are Still Ravaged by Covid’s Fallout.

• The Trump Campaign Needs to Hit ‘Reset’.

• A Recovery That Started Out Like a V Is Changing Shape.

Fox News:

• Media narrative of peaceful Seattle CHOP zone turned upside down.

• Gov. Cuomo ridicules de Blasio, NYC move to strip $1B in NYPD funding.

• Soccer player responds to critics after standing for national anthem.

CNBC.com:

• Stocks making the biggest moves after hours: Inovio, CBL, Coty and more.

• Trump says he supports ‘larger’ payments to Americans in next coronavirus relief bill.

• Health impacts of coronavirus will ‘haunt us for a generation,’ says Baylor University doctor.

• US reports second-highest day of new coronavirus cases as Arizona, California set records.

MarketWatch.com:   

• Opinion: Fed warns stock market of a second recession if the coronavirus pandemic isn’t brought under control.  

• McDonald’s puts reopening plans on hold as coronavirus cases rise.  

• House passes bill extending Paycheck Protection Program, sending to Trump for signature.

Zero Hedge:       

• Federal Safety Regulators Are Probing Tesla's Battery Cooling System.

• 88% Of Americans Say Attending Protests/Rallies Puts Health At Risk.

• JPMorgan Spots A Big Problem For Stocks.

• The Corporate Thought Police Are Merciless.

• House Unanimously Passes China Sanctions Bill In Response To Hong Kong Law.

• Firearms Background Checks Hit All Time High In June.

• Texas Reports 2nd Straight Daily Record In COVID-19 Cases; Most Deaths In 6 Weeks: Live Updates.

• The New Normal: Extremes Of Neofeudalism, Incompetence, Authoritarianism, & Relocalization.

• Vaccine Hype Redux Sparks Another Big-Tech Buying-Panic, Gold Dumped.

Business Insider:

• California governor says 70% of state must stop going to movie theaters, bars, and indoor restaurants as COVID-19 cases continue to surge.

The Epoch Times:

• UK Unveils Citizenship Offer for Hong Kong Residents After China Imposes Security Law.

Digital Blackboard:

• Daily New Cases by Region.

Worldometer:

• New Cases/Deaths by state.

Rt Covid-19:

• How fast virus is growing by state.

KFF:

• State Data(Tests/Hospitalizations).

Night Trading 

• Asian equity indices are unch. to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 83.0 -3.75 basis points.

• China Sovereign CDS 46.25 -2.5 basis points.

• Bloomberg Emerging Markets Currency Index 60.45 +.01%.

• FTSE 100 futures +.13%.

• S&P 500 futures -.11%.

• NASDAQ 100 futures -.08%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (KFY)/.39

• (LNN)/.88

After the Close:

• None of note

Economic Releases 
8:30 am EST

• The Change in Non-Farm Payrolls for June is estimated to rise to 3058K versus 2509K in May. 

• The Unemployment Rate for June is estimated to fall to 12.5% versus 13.3% in May.

• Average Hourly Earnings MoM for June is estimated to fall -.8% versus a -1.0% decline in May.

• Initial Jobless Claims for last week are estimated to fall to 1350K versus 1480K the prior week.

• Continuing Claims are estimated to fall to 19000K versus 19522K prior.

• The Trade Deficit for May is estimated at -$53.1B versus -$49.4B in April.
  

10:00 am EST

• Factory Orders for May is estimated to rise +8.6% versus a -13.0% decline in April.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Australia trade data report and the weekly Bloomberg Consumer Comfort Index could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly higher, boosted by consumer and technology shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Higher into Afternoon on Less European/Emerging Market/US High-Yld Debt Angst, Oil Gain, Technical Buying, Utility/REIT Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 28.9 -5.0%

• Euro/Yen Carry Return Index 125.38 -.27%

• Emerging Markets Currency Volatility(VXY) 10.4 -1.2%

• S&P 500 Implied Correlation 62.0 -.11%

• ISE Sentiment Index 123.0 +18.0 points

• Total Put/Call .80 -4.8%

• NYSE Arms 1.60 +100.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 74.08 -2.89%
  

• US Energy High-Yield OAS 995.27 -.26%

• European Financial Sector CDS Index 77.80 -2.63%

• Italian/German 10Y Yld Spread 177.5 unch.
  

• Asia Ex-Japan Investment Grade CDS Index 84.08 -3.17%
  

• Emerging Market CDS Index 185.66 -4.89%
  

• iBoxx Offshore RMB China Corporate High Yield Index 169.62 +.02%

• 2-Year Swap Spread 7.0 -.5 basis point

• TED Spread 16.25 -1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -8.0 -.5 basis point
• MBS  5/10 Treasury Spread  107.0 -2.0 basis points
• IHS Markit CMBX BBB- 6 68.25 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.40 +.54%
• 3-Month T-Bill Yield .13% unch.

• Yield Curve 52.75 +4.25 basis points

• China Iron Ore Spot 94.85 USD/Metric Tonne -.47%

• Citi US Economic Surprise Index 184.70 +3.5 points

• Citi Eurozone Economic Surprise Index -68.50 +21.7 points

• Citi Emerging Markets Economic Surprise Index -22.40 +3.1 points

• 10-Year TIPS Spread 1.35 +1.0 basis point
• 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 +94 open in Japan 
• China A50 Futures: Indicating -253 open in China

• DAX Futures: Indicating +7 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -1.7%

Sector Underperformers:

• 1) Steel -2.8% 2) Oil Service -2.6% 3) Banks -2.5%

Stocks Falling on Unusual Volume: 

• HRI, SNA, APA, GRPN, XPEL, ACMR, ICPT, USAC, FULT, SHLL, AYI, WRTC, USAC, ST, XLNX, BATRK, BBIO, OSUR, IBKC, IIVI, GIII, MEI, KOD, ODP, LCA, CELH, EXPI, CUE, PLXS, AKBA, MTCH, SCS, INO and IAC

Stocks With Unusual Put Option Activity:

• 1) DXC 2) SCHW 3) APA 4) FDX 5) EOG

Stocks With Most Negative News Mentions:

• 1) IDEX 2) FCAU 3) CAKE 4) RCII  5) INO

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.9%

Sector Outperformers:

• 1) Utilities +1.9% 2) REITs +1.8% 3) Internet +1.7%

Stocks Rising on Unusual Volume:

• AKRO, AXGN, FDX, ANGI, HRTX, ZGNX, SAIL, AMGN, MAXR, STZ, AMRC, RARE, NSTG, OOMA, IIPR, NOVA, PFE and WSC

Stocks With Unusual Call Option Activity:

• 1) DXC 2) SCHW 3) RSX 4) FDX 5) BLMN

Stocks With Most Positive News Mentions:

• 1) FDX 2) AKRO 3) SAIL 4) PFE 5) SQ

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -17.1% Below 100-Day Average
• 7 Sectors Rising, 4 Sectors Declining
• 48.7% of Issues Advancing, 49.1% Declining
• 30 New 52-Week Highs, 2 New Lows
• 22.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.7%
• Vix 29.4 -3.6%
• Total Put/Call .81 -3.6%
• TRIN/Arms 1.17 +48.1%