Wednesday Watch

Evening Headlines

Bloomberg:

• China’s Poor Squeezed by Surging Food Prices and Stagnant Wages.
• Asian Stocks Drift After U.S. Losses; Gold Steady. Asian stocks drifted Wednesday after their U.S. peers retreated on doubts over the timing of a spending package from Washington. Gold steadied after tumbling the most in seven years. Shares ticked higher in Japan and fluctuated in South Korea and Australia. S&P 500 futures edged higher after the benchmark fell for the first time in eight trading sessions as investors sold some of the rally’s biggest winners. Some traders cited comments from Senate Majority Leader Mitch McConnell saying stimulus talks are at a stalemate as a catalyst for the declines. Treasury yields held their overnight rise. New Zealand’s main stock gauge fell about 2% after evidence of new coronavirus cases in the country forced fresh restrictions. Crude oil was little changed. Futures on the S&P 500 rose 0.3% as of 9:06 a.m. in Tokyo. The index fell 0.8% on Tuesday. Japan’s Topix Index rose 0.6%. Korea’s Kospi Index rose 0.1%. Australia’s S&P/ASX 200 Index advanced 0.1%. New Zealand’s S&P/NZX 50 fell 1.8%.
• Oil Dips Lower After Facing Resistance at Key Technical Level.  
• Central Bank Reprieve, Youth Hit Hard, Australia Splits: Eco Day.
• Hedge Funds Warn Crowded Dollar Shorts in Danger of Backfiring.
• Stimulus Impasse Risks Dragging to September, Imperiling Economy.
• Kamala Harris Brings Prosecutor’s Legacy to Biden Ticket, for Better or Worse.
  
• U.S. Cases Up 0.9%; Texas Tops 500,000 Infections: Virus Update.  
• New York, Miami Leading America in Mortgage Delinquencies.  
• Small Businesses Are Dying by the Thousands — And No One Is Tracking the Carnage. 
• Gundlach Says Trump Will Win, Calls Harris Too Charismatic.

Wall Street Journal:

• Harris Named as Biden’s Running Mate in Historic Vice Presidential Choice.
• Kamala Harris Won’t Satisfy Progressives.
• TikTok Tracked User Data Using Tactic Banned by Google.
• Airbnb Plans to File for IPO in August.
• Fox News Launches International Streaming Service.
• After Chicago Looting and Coronavirus, Businesses Consider Closing Shop.
  

Fox News:

• President reveals why he was surprised Biden chose 'nasty' Harris as running mate.
  

CNBC.com:

• McConnell urges White House, Democrats to restart coronavirus relief negotiations.
• Trump says U.S. has reached deal with Moderna for 100 million doses of coronavirus vaccine.
• After-hours buzz: Tesla, Eastman Kodak, Shutterstock and more.

MarketWatch.com:     

• Lemonade stock declines following first public quarterly results.
  
• Opinion: As Big Ten cancels its football season because of COVID-19, college sports programs are facing a financial apocalypse.
  
• U.S. will eventually experience ‘the normal effects of recession,’ says J.P. Morgan’s Jamie Dimon.

Zero Hedge:

• Facebook Cracks Down On 'Fake' Local News Networks Run By Political Operatives.
• Biden Picks Kamala Harris As Running Mate.
• Central Bank Balance Sheets To Hit $28 Trillion Next Year.
• Exposing COVID-19's "Orgy Of Incoherence".
• Commercial Real Estate Bankruptcy Legislation Introduced.
• Pennsylvania Is Playing Politics With Drug Rationing.
• Peak Insanity: Tesla Adds $16 Billion In Market Cap After Announcing 5-For-1 Stock Split.
• CNN Is Hosed If Trump Loses: Former Exec.
• Texas Becomes Third State To Pass Half A Million Confirmed COVID-19 Cases: Live Updates.
• "The Greatest Pull-Forward In History": Why This Recession Is Different, Similar, & Worse.
• Shares Of Jimmy Lai's Newspaper Soar As Hong Kong Vows To "Fight On" Against CCP Crackdown.
• Apple Shares Slump After Evercore Warns Of "Surprisingly Negative" Chinese Smartphone Data.
• Big 10 Becomes First 'Power Five' Conference To Delay Football Season.
• Silver Crashes Most Since Lehman Bankruptcy.
• Far-Left Democrat Rep. Pramila Jayapal Brags About Manipulating Joe Biden.
• Economic Prosperity Is No Longer The Priority. Guess What Happens Next...
• Majority Of Americans Think Biden Unlikely To Finish 4 Year Term In White House.
• Surging Gun Sales Triggers Second Ammo Shortage Of This Year.
• WTI 'Off The Lows' After Bigger Than Expected Crude Draw.
• Liquidation: Stocks, Bonds, Bullion, & Bitcoin All Puked.

The Epoch Times:

• China’s Xinjiang Region Pushes More Lockdown Measures In Response to Virus, Drawing Residents’ Ire.
  

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 -1.25%  to -.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 66.0 -1.25 basis points.

• China Sovereign CDS 40.75 +.25 basis point.

• Bloomberg Emerging Markets Currency Index 60.07 -.%.
• FTSE 100 futures +.11%.

• S&P 500 futures +.17%.

• NASDAQ 100 futures +.36%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (EAT)/-1.37
• (VIPS)/1.92
  

After the Close:

• (CACI)/3.47
• (CSCO)/.74
• (LYFT)/-.97
• (SPTN)/.34
  

Economic Releases

8:30 am EST

• The CPI MoM for July is estimated to rise +.3% versus a +.6% gain in June.
• The CPI Ex Food and Energy MoM for July is estimated to rise +.2% versus a +.2% gain in June. 
• Real Avg. Weekly Earnings.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,523,000 barrels versus a -7,373,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -424,110 barrels versus a +419,000 barrel gain the prior week. Distillate inventories are estimated to rise by +552,440 barrels versus a +1,591,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.02% versus a +.1% gain prior.
  

2:00 pm EST

• The Monthly Budget Statement for July is estimated at -$137.5B versus -$119.7B in June.

Upcoming Splits

• None of note

Other Potential Market Movers

• The UK GDP report, China Loan Data report, $38B 10Y T-Note auction and the weekly MBA Mortgage Applications report 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 technology and metals/mining 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 Slightly Higher into Final Hour on Vaccine Optimism, Global Stimulus Hopes, Short-Covering, Transport/Gaming Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 21.7 -1.9%

• Euro/Yen Carry Return Index 129.96 +.81%

• Emerging Markets Currency Volatility(VXY) 11.3 -1.2%

• S&P 500 Implied Correlation 41.8 -2.2%

• ISE Sentiment Index 130 .0 +19.0 points

• Total Put/Call .60 -9.09%

• NYSE Arms 1.08 +38.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 65.11 -1.25%
  

• US Energy High-Yield OAS 754.42 -.74%

• European Financial Sector CDS Index 62.32 -3.33%

• Italian/German 10Y Yld Spread 144.5 +1.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index  65.90 -2.1%
  

• Emerging Market CDS Index 182.0 -3.02%
  

• iBoxx Offshore RMB China Corporate High Yield Index 177.12 -.02%

• 2-Year Swap Spread 8.0 -1.0 basis point

• TED Spread 15.5 -.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -1.25 unch.
  
• MBS  5/10 Treasury Spread  81.0 +1.25 basis points
  
• IHS Markit CMBX BBB- 6 67.75 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.46 +.65%
• 3-Month T-Bill Yield .10% +1.0 basis point

• Yield Curve 45.25 +4.75 basis points
  

• China Iron Ore Spot 113.90 USD/Metric Tonne -1.14%

• Citi US Economic Surprise Index 225.2 -.3 point

• Citi Eurozone Economic Surprise Index 212.40 +4.4 points

• Citi Emerging Markets Economic Surprise Index 13.6 +9.9 points

• 10-Year TIPS Spread 1.64 +3.0 basis points
• 100.0% chance of no change at Nov. 5th meeting, 100.0% chance of no change at Dec. 16th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +99 open in Japan 
• China A50 Futures: Indicating -92 open in China

• DAX Futures: Indicating -21 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 25% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth -.2%

Sector Underperformers:

• 1) Gold & Silver -7.6% 2) Video Gaming -2.4% 3) Utilities -1.9%

Stocks Falling on Unusual Volume: 

• NKLA, RVLV, IFF, OXY, SFM, TWOU, TDOC, TNDM, CHGG, AXNX, TPIC, AMD, STAA, NOVA, QLYS, CLX, SC, WTRG, KKR, GH, CSTL, ETSY, PETQ, EBS, PHYS, FLGT, SRG, OSUR, ZM, NARI, SCPL, FSK, SWI, NEM, TRUP, SDGR, RUN, VCRA, MCRB, ESPR, ZI, FIXX, XPER, ANGI, ARCT, STMP, NVAX, OTRK, SSTK, ADVM, UPLD, UCSG, SRNE, OMER and INO
  

Stocks With Unusual Put Option Activity:

• 1) KRE 2) CSCO 3) DE 4) XLI 5) TOL
  

Stocks With Most Negative News Mentions:

• 1) GEN 2) ED 3) ZNGA 4) GTT  5) XSPA
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +1.3%

Sector Outperformers:

• 1) Gaming +5.5% 2) Airlines +4.6% 3) Education +4.6%

Stocks Rising on Unusual Volume:

• JCOM, NLS, AVYA, PRTS, RNG, CNK, HDS, W, TGNA, ASIX, CARA, GRPN, AYX, USX, LVS, LITE, SPG, OSTK and GTHX
  

Stocks With Unusual Call Option Activity:

• 1) RF 2) PUMP 3) JCI 4) IBIO 5) RWT

Stocks With Most Positive News Mentions:

• 1) MSTR 2) ATCO 3) NLS 4) MESA 5) RCL

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +11.6% Above 100-Day Average
• 4 Sectors Rising, 7 Sectors Declining
• 68.6% of Issues Advancing, 29.2% Declining
• 88 New 52-Week Highs, 1 New Lows
• 47.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 56.8%
• Vix 21.9 -1.2%
• Total Put/Call .48 -27.3%
• TRIN/Arms 1.12 +43.6%

Tuesday Watch

Evening Headlines

Bloomberg: 

• Hong Kong’s Stocks Buckle Under Weight of Negative News Flow.  
• Singapore’s Economy Posts Worse Contraction in Second Quarter.
• Cases Top 20 Million as Pandemic Keeps Spreading: Virus Update.  
• Asian Stocks Set for Muted Start; Oil Rises. Asian stocks looked set for a muted open Tuesday after a lackluster session on Wall Street. Crude oil rallied and the dollar touched a one-week high. Futures were little changed in Japan, which reopens after a holiday Monday. Contracts were flat in Australia and edged higher in Hong Kong. S&P 500 futures were little changed after the benchmark approached its all-time high from February. The tech- heavy Nasdaq 100 lost ground. Treasuries slipped, pushing yields to the highest in two weeks. S&P 500 futures were little changed as of 8:30 a.m. in Tokyo. The S&P 500 Index increased 0.3%. Nikkei 225 futures rose 0.1%. Australia’s S&P/ASX 200 Index futures were flat. Hong Kong’s Hang Seng Index futures rose 0.4% earlier.  
• Lazard Sees Danger, Recovery Troubles, N.Z.’s Big Call: Eco Day.
• Active Managers Had Worst Stumble in Two Years Last Month.
• Trump’s Executive Action Fails to Jolt Stalled Relief Talks.
• Shale Job Losses Accelerating and the Worst May Be Yet to Come.
• Investor Who Pushed NFL Team Rebrand Shifts Focus to Evictions.
• U.S. Junk Bond Market Sets Record-Low Coupon in Relentless Rally.

Wall Street Journal:

• Lebanon’s Prime Minister, Cabinet Resign After Protests.
• Mayhem Continues, Protest Narrative Crumbles.
• Untangling the Media Myths of Covid-19.
• The No-Win School Reopening: One Superintendent’s Dilemma.
• Why Are Some Groceries Still So Hard to Find During Covid?
• U.S. Sent Workers Nearly $250 Billion in $600-a-Week Jobless Aid.
• Chicago Braces for More Looting After Chaotic Night.
• Jimmy Lai’s Arrest Signals New Limits for Hong Kong Dissent.
  

Fox News:

• Chicago takes steps to prevent another night of violence.
  

CNBC.com:

• Trump urges Americans to stop politicizing the coronavirus, blames China.
• China’s policies to boost chipmakers amid U.S. tensions may not help, analysts say.
• Big tech is bubbling up and could spark a correction: BTIG’s Julian Emanuel.
• TSA: July air travel down 75% from 2019, but gun confiscation rates triple.
• Trump’s extra unemployment could amount to $300 a week instead of $400, and you may not qualify.
• El-Erian says the biggest threat to stock market rally is wave of corporate bankruptcies.

MarketWatch.com:    

• After 150 days of the COVID-19 pandemic, here are the best- and worst-performing stocks.
• Uber and Lyft ordered to classify workers as employees in California.

Zero Hedge:

• Stelter Meltdown: CNN Host Says It's "Otherworldly, Offensive" To Question Biden's Mental Health.
• Police Comb "Thousands Of Hours" Of CCTV Footage, Make Looting Arrests Months After George Floyd Protests.
• Trump Pulled From Press Briefing After Shooting Outside White House.
• How Climate Alarmism Hijacked Environmentalism.
• China Mobilizes Invasion Craft On Coast Near Taiwan As Top US Official Arrives In Taipei: Report.
• What's Behind The Bizzare Break Between Breakevens And Crashing Real Rates.
• The Economy Is Mortally Wounded.
• Earnings Season Shocker: FAAMG Earnings Grew By 2% While EPS For The Other 495 S&P Companies Plunged 38%.
• Silver Soars Amid Momo Meltdown, Apple Almost As Big As Entire Russell 2000.

Business Insider:

• Some coronavirus patients say they're losing their hair in clumps. Doctors think it's a response to trauma.
• Young adults can't stop partying during the pandemic because they're wired that way

The Epoch Times:

• ‘Worst Fears’: Arrest of Hong Kong Media Mogul Jimmy Lai Draws International Condemnation.
• 49 Virginia Lawmakers Call for End to Torture, Organ Harvesting of Falun Gong in China.
  

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 67.25 -.25 basis point.

• China Sovereign CDS 40.5 -1.0 basis point.

• Bloomberg Emerging Markets Currency Index 60.07 -.02%.
• FTSE 100 futures +.57%.

• S&P 500 futures +.01%.

• NASDAQ 100 futures +.09%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (GOOS)/-.42
• (LITE)/.83
• (SYY)/-.31
  

After the Close:

• (LRN)/.04
• (RRGB)/-3.26
  

Economic Releases

6:00 am EST

• The NFIB Small Business Optimism Index for July is estimated to fall to 100.5 versus 100.6 in June.
  

8:30 am EST

• The PPI Final Demand MoM for July is estimated to rise +.3% versus a -.2% decline in June.
• PPI Ex Food and Energy MoM for July is estimated to rise +.1% versus a -.3% decline in June.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The UK unemployment report, weekly US retail sales reports, $48B 3Y T-Note auction, Oppenheimer Tech/Internet/Communications Conference, Canaccord Growth Conference, UBS Financial Services Conference and the Wedbush PacGrow Healthcare Conference 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 industrial 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.