Stocks Lower into Final Hour on Global Recession Fears, Earnings Outlook Jitters, Oil Decline, Energy/Tech Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 24.2 -2.3%

• Euro/Yen Carry Return Index 127.81 -.42%

• Emerging Markets Currency Volatility(VXY) 10.09 +2.6%

• S&P 500 Implied Correlation 56.8 -1.0%

• ISE Sentiment Index 125 .0 -20.0 points

• Total Put/Call .80 +29.0%

• NYSE Arms .90 -23.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 70.74 +.64%
  

• US Energy High-Yield OAS 862.77 +.35%

• European Financial Sector CDS Index 70.27 +2.58%

• Italian/German 10Y Yld Spread 146.75 +2.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index  74.58 -.34%
  

• Emerging Market CDS Index 189.38 +3.21%
  

• iBoxx Offshore RMB China Corporate High Yield Index 176.72 +.57%

• 2-Year Swap Spread 7.5 +1.0 basis point

• TED Spread 14.5 +.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -5.75 -1.25 basis points
• MBS  5/10 Treasury Spread  96.25 -2.25 basis points
• IHS Markit CMBX BBB- 6 66.75 +.5 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 61.36 -.41%
• 3-Month T-Bill Yield .10% unch.

• Yield Curve 47.75 +4.0 basis points

• China Iron Ore Spot 105.26 USD/Metric Tonne +.98%

• Citi US Economic Surprise Index 236.2 -2.3 points

• Citi Eurozone Economic Surprise Index 147.60 +9.0 points

• Citi Emerging Markets Economic Surprise Index -18.9 +5.2 points

• 10-Year TIPS Spread 1.51 unch.
• 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 -77 open in Japan 
• China A50 Futures: Indicating -100 open in China

• DAX Futures: Indicating -10 open in Germany

Portfolio:

• Slightly Higher: On gains in my index hedges and emerging market shorts

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

• Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -.1%

Sector Underperformers:

• 1) Oil Service -3.6% 2) Steel -2.8% 3) Computer Hardware -1.7%

Stocks Falling on Unusual Volume: 

• JNPR, AMG, COWN, SSD, VSLR, BCEL, CNC, HUN, OMC, RUN, NCR, BEN, EHTH, TERP, WDR, USAC, VMC, HPQ, MMM, ST, SPWR, MLM, PRLB, TBIO, RDFN, ALEC, FFIV, BCOV, LW, AWI, NOV and BTAI

Stocks With Unusual Put Option Activity:

• 1) LQD 2) MMM 3) XLP 4) MCD 5) HOG

Stocks With Most Negative News Mentions:

• 1) TLRD 2) RDFN 3) MHK 4) WINS  5) TYL

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value unch.

Sector Outperformers:

• 1) Gaming +2.6% 2) Airlines +2.3% 3) REITs +1.7%

Stocks Rising on Unusual Volume:

• VCRA, TBI, SSTK, AJRD, INSG, FRTA, FIX, TNET, MEDP, OMF, CVLT, FBC, MTCH, PII, IRDM and AXNX

Stocks With Unusual Call Option Activity:

• 1) MARA 2) INSG 3) FFIV 4) CAPR 5) HEAR

Stocks With Most Positive News Mentions:

• 1) VCRA 2) TPB 3) LMT 4) FELE 5) MO

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -24.6% Below 100-Day Average
• 3 Sectors Rising, 8 Sectors Declining
• 48.5% of Issues Advancing, 47.5% Declining
• 56 New 52-Week Highs, 6 New Lows
• 36.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 52.0%
• Vix 24.7 -.16%
• Total Put/Call .58 -6.5%
• TRIN/Arms .68 -42.4%

Tuesday Watch

Evening Headlines

Bloomberg:    

• China Reports Biggest Virus Spike Since End of Wuhan Outbreak.  

• China Is Buying American But Not Enough to Hit Trade Deal Target.

• U.K. Hospitality Industry Sales Slump 87% as Coronavirus Lockdown Bites.  

• Asian Stocks Set for Muted Start; Gold Steadies: Markets Wrap.  

• Silver Futures Extend Gains to $25 as Gold at All-Time High.  

• Safety in Bullion, U.S. Stimulus Haggle, Debt Defaults: Eco Day.

• GOP Rolls Out $1 Trillion Stimulus to Start Talks With Democrats.

• Student Loan Relief, Childcare Grants Included in GOP Stimulus.

• Collins Is Second Republican to Oppose Shelton for the Fed.

• U.S. Economic Recovery Stalls for a Fourth Consecutive Week.  

• U.S. Cases Up 1.3%; Infections Slow in Key States: Virus Update.  

• Hedge Fund Fees in Free Fall Is the New Reality For a Humbled Industry.  

• Gold Rips Up Record Book as $2,000 Test Looms in Hunt for Haven.  

• Trump Advances Bid to Weaken Shield for Twitter, Facebook.

Wall Street Journal:

• Why Do Democrats Defend Disorder?

• Google Employees to Work From Home Until Summer 2021.

• Marlins’ Coronavirus Outbreak Throws Baseball Into Turmoil.

• Joe Biden May Want to Forget About the Russia Investigation.

• Stalin’s Man at the New York Times.

• Walmart, Kroger Bottle Their Own Milk and Shake Up American Dairy Industry.

• Jumbo Mortgages Are No Longer the Cheapest Mortgages Around.

• A Weekend of Urban Anarchy.

• Jerome Powell’s Price-Fix Is In.

Fox News:

• New footage shows attacks on Seattle police, graphic images of officer injuries, 59 cops hurt.

• Report: Trump considering significant expansion of federal forces in Portland.

• Hundreds of Bernie Sanders delegates vow to rebel in struggle to unite Democratic Party.

• NFL star will stand for national anthem, read his blunt response to critics.

CNBC.com:

• Top CEOs ramp up GOP donations as Biden threatens to scale back corporate tax cuts.

• Senate GOP unveils coronavirus relief plan with 70% wage replacement in unemployment insurance.

• Republicans propose a second round of $1,200 stimulus checks. Here’s what we know.

• Coronavirus outbreak shows signs of slowing in Arizona, Texas and Florida.

• Dr. Anthony Fauci isn’t ‘particularly concerned’ about safety of Moderna coronavirus vaccine.

• Stocks making the biggest moves after hours: Pfizer, F5 Networks, Virgin Galactic and more.

• Pfizer and BioNTech began late-stage human trial for coronavirus vaccine Monday.

MarketWatch.com:    

• ‘Trouble’s coming,’ warns short-selling legend who just cashed in a roughly $100 million winning bet.

• Shares of Tesla have surged on hope of inclusion in the S&P 500. But does being added to an index help a stock?

Zero Hedge:

• "I Need To Buy A Firearm": Radio Host Who Defended "Peaceful" Protesters Has Apartment Destroyed By Rioters.

• This Is Bigger Than COVID But Few People Are Paying Attention.

• 10 Big Fat Lies You're Being Told About The Portland Riots.

• Q2 Earnings Management Mood: Abysmal Conditions, But Optimism At All Time High.

• The United States Will Not Recover By Raising Taxes Or Printing Money.

• Sun Belt States See Promising Drop In New Cases As Belgium Plans "Total Lockdown": Live Updates.

• Next Time You're Called A "Crank" Or "Flat Earther" On Concerns About A 'Rushed' Coronavirus Vaccine, Show Them This.

• When It Comes To Economic Suffering, Some Parts Of The US Are Feeling It Far More Than Others.

• America's Major Cities Are Being Turned Into War Zones, And It's Not Going To End In November.

• Schumer Fumes Over GOP 'HEALS' Act, Demands Avalanche Of Stimulus To Avoid 'Piecemeal' Solution.

• Notre Dame Withdraws From Hosting First Presidential Debate; "Could Be Conducted Online".

• Vaccine Execs Rake In $1 Billion In Stock Sales As Positive Headlines Boost Shares.

• Casino And Sports Betting Companies Dumped After Virus Outbreak Postpones MLB Games.

• Why Does It Feel Like We're In "Life During Wartime"?

• Dollarpocalypse Sends Gold, Silver, & Crypto Soaring.

The Epoch Times:

• Residents Across the US Receive Mysterious Seed Packages From China.

• Leaked Government Documents Reveal How Chinese Regime Closely Monitors Falun Gong Adherents.

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 +.5%  to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 74.75 unch.

• China Sovereign CDS 44.0 -.5 basis point.

• Bloomberg Emerging Markets Currency Index 61.62 unch.

• FTSE 100 futures +.49%.

• S&P 500 futures +.15%.

• NASDAQ 100 futures +.35%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (MMM)/1.79

• (MO)/1.06

• (B)/.20

• (GLW)/.14

• (CMI)/.93

• (DHI)/1.28

• (BEN)/.55

• (HOG)/.14

• (JBLU)/-1.97

• (LH)/.92

• (MLM)/2.97

• (MCD)/.76

• (MDC)/.83

• (PFE)/.66

• (PII)/.65

• (RTX)/.12

• (ROK)/1.17

• (SHW)/5.71

After the Close:

• (AMD)/.17

• (AFL)/1.05

• (AKAM)/1.21

• (AMED)/.81

• (AMGN)/3.77

• (CAR)/-5.84

• (BXP)/1.74

• (BYD)/-1.50

• (CHRW)/.61

• (CB)/-.39

• (CYH)/-.83

• (EBAY)/1.06

• (EIX)/1.00

• (FEYE)/-.02

• (JNPR)/.34

• (LSCC)/.15

• (MXIM)/.56

• (MDLZ)/.56

• (NCR)/.24

• (PKI)/.78

• (STX)/1.23

• (SBUX)/-.57

• (V)/1.04

• (WH)/-.06

Economic Releases

9:00 am EST

• The S&P CoreLogic CS 20-Ciuty MoM for May is estimated to rise +.3% versus a +.33% gain in April.
  

10:00 am EST

• The Conference Board Consumer Confidence Index for July is estimated to fall to 94.7 versus 98.1 in June.

• The Richmond Fed Manufacturing Index for July is estimated to rise to 5 versus 0 in June.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Spain Unemployment Rate, weekly US retail sales reports, $44B 7Y T-Note auction and the Keefe/Bruyette/Woods Community Bank Conference could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

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