Friday Watch

Evening Headlines

Bloomberg:  

• Asia Stocks Set for Muted Start; Dollar Climbs: Markets Wrap. Asian stocks were poised for a muted start to Friday trading after weakness in technology shares weighed on the Wall Street session. The dollar climbed. Futures in Japan were flat, while contracts in Hong Kong and Australia edged higher. S&P 500 futures opened flat after earlier falling as Microsoft Corp. and Apple Inc. led losses, while Netflix Inc. slumped in after-hours trading after the streaming service reported fewer subscriber additions than forecast. Treasuries ticked up as American initial jobless claims posted their smallest weekly decline since March. Futures on the S&P 500 were little changed as of 7:01 a.m. in Tokyo. The index slipped 0.3% on Thursday. Futures on Japan’s Nikkei 225 were little changed. Hang Seng futures earlier rose 0.7%. Futures on Australia’s S&P/ASX 200 Index added 0.2%. 

• Oil Slips as Looming OPEC Supply Surge Adds to Demand Woes.  

• White House Says Stimulus Bill ‘Must’ Include Payroll Tax Cut.

• Texas Deaths at Record; Brazil Cases Top 2 Million: Virus Update.

• Covid-19 Infections on the Rise in Kids and Teens With School Approaching.

• A $35 Billion Bite From U.S. Bank Profits May Only Be the Start.  

• Forty-Three Days of Nasdaq Dip Buying May Crater With Netflix.

Wall Street Journal:

• The $52 Trillion Bubble: China Grapples With Epic Property Boom.

• 30-Year Mortgage Rate Reaches Lowest Level Ever: 2.98%.

• Some Students Want Me Fired for a Thought Experiment.

• Trump’s Virus Non-Message.

• ‘I Cry Every Day’: In Texas, a Doctor Fights the Virus Surge.

• Trump Administration Turns Up Pressure on China on Several Fronts.

Fox News:

• 15 female ex-Redskins employees allege sexual harassment: report.

• EXCLUSIVE: Conservative group leads campaign to divest from liberal colleges.

• Californians turn on one another as state locks down again amid the pandemic.

CNBC.com:

• Netflix earnings, Twitter’s massive hack, and everything else you missed today: CNBC After Hours.

• Stocks making the biggest moves after hours: Netflix, Tesla, J.B. Hunt and more.

• CDC bans U.S. cruises through September, citing ‘ongoing’ coronavirus outbreaks on ships.

• AG Barr slams U.S. tech companies for becoming ‘pawns of Chinese influence’.

Zero Hedge:

• Florida, Texas Suffer Record Jump In COVID-19 Deaths: Live Updates.

• North Carolina City Unanimously Approves Reparations For Black Residents.

• Trump: No New Coronavirus Stimulus Without Payroll Tax Cut.

• Sham Bailout Statistics Shroud Shutdown Tyranny.  

• The FBI Has Launched An Official Inquiry Into Last Night's Twitter Hack.

• Foreigners Bought A Record Amount Of US Stocks In May, Sold Treasuries.

• Bonds Bid, Stocks Skid, As Banks & Big-Tech Breakdown.

The Epoch Times:

• UK to Purge Huawei From 5G by 2027, Angering China and Pleasing US.

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 -.25%  to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 79.0 +.75 basis point.

• China Sovereign CDS 44.25 +.25 basis point.

• Bloomberg Emerging Markets Currency Index 60.69 unch.

• FTSE 100 futures +.18%.

• S&P 500 futures +.25%.

• NASDAQ 100 futures +.63%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (ALLY)/.26

• (ALV)/-1.12

• (BLK)/6.92

• (ERIC)/.65

• (FHN)/.21

• (KSU)/1.14

• (RF)/.07

• (STT)/1.60

After the Close:

• None of note

Economic Releases

8:30 am EST

• Housing Starts for June are estimated to rise to 1184K versus 974K in May.

• Building Permits for June are estimated to rise to 1289K versus 1220K in May.
  

10:00 am EST

• Univ. of Mich. Consumer Sentiment for July is estimated to rise to 79.0 versus 78.1 in June.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone Inflation report, (LOW) fireside chat and the (F) fireside chat 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 industrial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Falling into Final Hour on Coronavirus 2nd Wave Concerns, Biden Presidency Fears, Oil Decline, Tech/Airline Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Light

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 27.4 -1.3%

• Euro/Yen Carry Return Index 126.60 +.09%

• Emerging Markets Currency Volatility(VXY) 9.71 -.10%

• S&P 500 Implied Correlation 55.8 -.09%

• ISE Sentiment Index 109.0 +26.0 points

• Total Put/Call .67 +9.8%

• NYSE Arms 1.19 +45.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 72.11 -.03%
  

• US Energy High-Yield OAS 896.20 -.34%

• European Financial Sector CDS Index 70.97 -.96%

• Italian/German 10Y Yld Spread 165.25 +1.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index  79.19 -.16%
  

• Emerging Market CDS Index 196.95 +2.29%
  

• iBoxx Offshore RMB China Corporate High Yield Index 175.10 +.14%

• 2-Year Swap Spread 7.25 +.5 basis point

• TED Spread 15.5 +1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -6.0 +1.0 basis point
• MBS  5/10 Treasury Spread  96.25 -.75 basis point
• IHS Markit CMBX BBB- 6 67.75 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.73 -.19%
• 3-Month T-Bill Yield .10% -3.0 basis points

• Yield Curve 46.75 -1.25 basis points

• China Iron Ore Spot 106.85 USD/Metric Tonne -.47%

• Citi US Economic Surprise Index 270.8 +13.9 points

• Citi Eurozone Economic Surprise Index -14.0 +6.0 points

• Citi Emerging Markets Economic Surprise Index -11.30 +5.4 points

• 10-Year TIPS Spread 1.40 -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 +20 open in Japan 
• China A50 Futures: Indicating +86 open in China

• DAX Futures: Indicating +9 open in Germany

Portfolio:

• Slightly Lower: On losses in my tech/biotech/medical sector longs

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Morning Market Internals

NYSE Composite Index:

• Volume Running -22.1% Below 100-Day Average
• 5 Sectors Rising, 6 Sectors Declining
• 43.0% of Issues Advancing, 56.0% Declining
• 38 New 52-Week Highs, 1 New Low
• 31.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 52.5%
• Vix 28.2 +1.5%
• Total Put/Call .60 -1.6%
• TRIN/Arms 1.20 +46.3%

Thursday Watch

Evening Headlines

Bloomberg:  

• Bernstein Quants Say China Momentum Stocks ‘Extremely’ Expensive. 

• Asian Stocks Open Mixed: Dollar Holds Retreat: Markets Wrap. Asian stocks began Thursday in a mixed fashion ahead of a slew of economic data in China that will provide clues on the path of economic recovery from the pandemic. The dollar kept its decline. Share indexes in Japan, South Korea and Australia opened flat. S&P 500 contracts edged lower after the index gained almost 1% on Wednesday amid optimism about progress in developing a vaccine for the coronavirus. Twitter Inc. slipped in after-hours trading after accounts of some of America’s most prominent political and business leaders were hacked. Crude oil dipped, while Treasuries were little changed. The Federal Reserve said the economy showed signs of a nascent recovery at the beginning of July. Futures on the S&P 500 Index fell 0.3% as of 9:04 a.m. in Tokyo. The gauge rose 0.9% on Wednesday. Japan’s Topix index slid 0.1%. South Korea’s Kospi fell 0.1%. Australia’s S&P/ASX 200 Index gained less than 0.1%.

• Five Things You Need to Know to Start Your Day.  

• Trump Shies Off Sanctions, China’s Lexicon, EM Weakness: Eco Day.

• Nasdaq ‘Fear Gauge’ Flashes Warning Signs About Tech Rally.

Wall Street Journal:

• The Biden Election Stimulus.

• Hospitals in Covid-19 Hot Spots Are Filling Up.

• Remote Learning Widens America’s Education Gap.

• The Covid Fiscal Crisis Is About Debt and Taxes.

Fox News:

• National Association of Police Organizations endorses Trump after backing Obama-Biden twice.

• Trump campaign manager Brad Parscale out, adviser Bill Stepien in.

CNBC.com:

• Stocks making the biggest moves after hours: Virgin Galactic, Twitter, Norwegian and more.

MarketWatch.com:     

• ‘Fear’ is rising in the stock-market and so is ‘dumb money’ confidence as tech stocks reach an inflection point.

• This ‘anti-bubble’ investment could save your portfolio, says hedge-fund manager who’s returned 47% this year.

• Prominent Twitter accounts hijacked in crypto scam; Elon Musk and Warren Buffett among victims.

• American Airlines warns 25,000 workers of potential furloughs.

Zero Hedge:  

• Is The Federal Reserve Sowing Seeds Of Marxism?

• Barack Obama, Joe Biden, Bill Gates, Elon Musk, Jeff Bezos And Others Hacked In Unprecedented Twitter Attack And Bitcoin Scam; Over $100,000 Stolen In Minutes.

• 'Father Of Credit Risk Modeling' Has Ominous Warning Over "Insolvent" Companies Piling Up Debt.

• Never-Trump Project Lincoln Co-Founder Had Contract With Russian Government.

• Over A Third Of Americans Believe Biden Is Incapable Of Debating Trump.

• Family Of George Floyd Sues City Of Minneapolis, Four Police Officers.

• Fauci Expects Vaccine By Year-End, PA Reinstates State-Wide Restrictions, AL Hospitalizations Hit Record: Live Updates.

• S&P Stalls At Critical Resistance Again Despite Massive Short-Squeeze.

The Epoch Times:

• Trump’s Executive Order on Hong Kong will ‘Inflict Pain’ on Chinese Regime, Experts Say.

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 -.25%  to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 78.25 -1.0 basis point.

• China Sovereign CDS 44.0 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 60.80 -.06%.

• FTSE 100 futures -.33%.

• S&P 500 futures -.26%.

• NASDAQ 100 futures -.56%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (ABT)/.42

• (ANGO)/-.06

• (BMI)/.35

• (BAC)/.28

• (SCHW)/.53

• (DPZ)/2.25

• (FLR)/.25

• (HTLD)/.14

• (JNJ)/1.51

• (MS)/1.13

• (TSM)/3.21

• (TFC)/.71

After the Close:

• (JBHT)/.85

• (MRTN)/.23

• (NFLX)/1.83

• (PPG)/.70

• (WAL)/.76

Economic Releases

8:30 am EST

• Retail Sales Advance MoM for June are estimated to rise +5.0% versus a +17.7% gain in May.

• Retail Sales Ex Auto MoM for June is estimated to rise +5.0% versus a +12.4% gain in May.

• Philly Fed Business Outlook Index for July is estimated to fall to 20.0 versus 27.5 in June.

• Initial Jobless Claims for last week are estimated to fall to 1250K versus 1314K the prior week.

• Continuing Claims are estimated to fall to 17500K versus 18062K prior.
  

10:00 am EST

• Business Inventories for May are estimated to fall -2.3% versus a -1.3% decline in April.

• The NAHB Housing Market Index for July is estimated to rise to 61 versus 58 in June.
  

4:00 pm EST

• Net Long-Term TIC Flows for May.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Williams speaking, Fed's Evans speaking, ECB decision/press conference, China New Home Sales report, Bloomberg Weekly Consumer Comfort Index and the weekly EIA natural gas inventory report could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and consumer 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.