Wednesday Watch

Evening Headlines

Bloomberg:       

• Trump Says He Delayed China Talks, Faults Beijing Over Virus.  
• Hong Kong Protesters Adapt as Security Law Stifles Old Tactics.
• U.S. Stocks Rise to Record; Asia to See Muted Open. Asian shares looked set for a muted start Wednesday, even as U.S. stocks closed above their February highs for the first time since the pandemic upended financial markets. The dollar fell to the lowest in more than two years and Treasuries advanced. Futures were little changed in Japan, and dipped in Hong Kong and Australia. S&P 500 contracts were flat after the gauge eked out a gain, having failed to better the Feb. 19 closing level in three of the past four sessions. Amazon.com Inc. paced the advance on Tuesday, pushing its surge this year to 79%. Homebuilders also rose as a report showed housing starts increased the most since 2016. Chinese shares will be in focus after the Trump administration warned U.S. colleges to divest them, while traders in Hong Kong are monitoring storm warning signals that forced the closure of pre-market trading on Wednesday. Futures on the S&P 500 were little changed as of 8:07 a.m. in Tokyo. The index rose 0.2% on Tuesday. Futures on Japan’s Nikkei 225 were little changed. Hang Seng Index futures earlier slipped 0.3%. Futures on Australia’s S&P/ASX 200 Index dipped 0.1%.
• Pelosi Hints Democrats Might Pare Stimulus Plan, Seek More Later.
• U.S. Cases Rise 0.8%; More Colleges Shift Online: Virus Update.
• Postmaster General Suspends Service Changes Until After Election.  
• What the ‘Tech Exodus’ Could Mean for Silicon Valley.  
• Trump Says Amazon Should Pay Cost of Postal Service.  
• Fidelity Assets Under Management Reach Record $3.3 Trillion.

Wall Street Journal:

• China’s Xi Jinping Tightens Grip on Domestic Security Forces in First Broad Purge.
• S&P 500 Closes at New High, Erasing Virus Plunge.
• If You Like Lockdowns, You’ll Love the Carbon-Free Future.
• What Derailed America’s Testing: Three Lost Weeks.
• Nancy Pelosi Goes Politically Postal.
• Coronavirus, Contracts and the Constitution.
• Notre Dame, Michigan State Act to Slow Spread of Virus.
• Amazon Bets on Office-Based Work With Expansion in Major Cities.
• Selloff in Emerging-Market Currencies Shows No Sign of Respite.
• Texas Governor Threatens Cities That Defund Police.
  

Fox News:

• Why Biden could regret having support from these voters.
• Portland police identify suspect in brutal assault caught on camera.
  

CNBC.com:

• Why stay-at-home retail plays are likely in the ‘early innings’.
• Jim Cramer: A U.S. dollar rally might be in the cards, according to the charts.
• After-hours buzz: Cree, Agilent Technologies, Target and more.
• Treasury Secretary Mnuchin says Democrats are unwilling to strike a ‘reasonable’ relief deal.
  

MarketWatch.com:     

• Stock-market investors’ biggest election fear? A contested outcome.   
• Sorrento stock falls after company fires CFO.

NY Post: 

• Baltimore Republican Kim Klacik shows ‘reality for black people’ in viral ad. (video)
  

Zero Hedge:  

• DNC Viewership Disaster: Less Than Half Tune In To Watch Democratic Convention Compared To 2016.
• "None Of It Was True" - YouTube Stars Who "Re-Homed" Adopted Son Say China Lied About Child's Health.
• Just 12 US Billionaires Now Own More Than $1 Trillion in Combined Wealth.
• Manhunt Launched For BLM Thug Who Put Truck Driver In Hospital With Head-Kick.
• 250,000 Las Vegans Face Eviction Next Month.  
• Robinhood Valuation Tops $11 Billion As IPO Chatter Looms.
• "This War Can't Be Civil": Berkeley Columnist Calls For "Violent Resistance".
• Notre Dame Moves To Virtual Classes; Texas COVID-19 Cases Bounce Back: Live Updates.
• Election Roulette: How To Rig An Outcome.
• US Launches Soft Capital Control Attack On Beijing, "Urges" Colleges To Sell Chinese Stocks.
• 'Something's Not Right With Biden' According To Former White House Physician.
• WTI Dips After Big Gasoline Build Offsets Crude Draw.
• Gold Jumps, Dollar Dumps As S&P Ends "Shortest Bear Market In History".

The Epoch Times:

• Asian-Americans Support Ban on WeChat, Despise CCP’s Hooliganism.
  

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 64.75 -.5 basis point.

• China Sovereign CDS 39.0 -1.0 basis point.

• Bloomberg Emerging Markets Currency Index 60.40 +.03%.
• FTSE 100 futures n/a.

• S&P 500 futures +.04%.

• NASDAQ 100 futures +.04%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (ADI)/1.29
• (LOW)/2.96
• (TGT)/1.64
• (TJX)/-.15
• (VIPS)/1.92
  

After the Close:

• ((LB)/-.42
• (NVDA)/1.68
• (SQM)/.21
• (SNPS)/1.34 
  

Economic Releases

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -3,079,780 barrels versus a -4,512,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -999,440 barrels versus a -722,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,053,670 barrels versus a -2,322,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.29% versus a +1.4% decline prior.

2:00 pm EST

• The July 29 FOMC Meeting Minutes.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Daly speaking, China Loan Data report, Eurozone PMI report, UK Inflation Data report 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 mostly higher, boosted 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.

Stocks Modestly Higher into Final Hour on Global Stimulus Hopes, US Economic Data, Technical Buying, Tech/Restaurant Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Light

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 21.5 +.5%

• Euro/Yen Carry Return Index 130.41 unch.

• Emerging Markets Currency Volatility(VXY) 11.19 -.09%

• S&P 500 Implied Correlation 43.8 +1.3%

• ISE Sentiment Index 71.0 -34.0 points

• Total Put/Call .65 -12.2%

• NYSE Arms 1.09 -24.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 66.26 -.72%
  

• US Energy High-Yield OAS 774.50 +.31%

• European Financial Sector CDS Index 65.02 +.71%

• Italian/German 10Y Yld Spread 138.5 -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index  64.93 -.66%
  

• Emerging Market CDS Index 186.27 -1.73%
  

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

• 2-Year Swap Spread 7.25 -.75 basis point

• TED Spread 17.75 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -2.0 -1.25 basis points
  
• MBS  5/10 Treasury Spread  90.75 -.25 basis point
  
• IHS Markit CMBX BBB- 6 68.75 +.25 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.37 +.38%
• 3-Month T-Bill Yield .10% +1.0 basis point

• Yield Curve 52.25 -.75 basis point
  

• China Iron Ore Spot 122.10 USD/Metric Tonne +3.1%

• Citi US Economic Surprise Index 253.1 +13.8 points

• Citi Eurozone Economic Surprise Index 183.0 -7.2 points

• Citi Emerging Markets Economic Surprise Index 20.2 +.8 point

• 10-Year TIPS Spread 1.68 +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 +29 open in Japan 
• China A50 Futures: Indicating -90 open in China

• DAX Futures: Indicating -8 open in Germany

Portfolio:

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

• Disclosed Trades: None
  

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -1.5%

Sector Underperformers:

• 1) Oil Service -2.4% 2) Banks -1.7% 3) Shipping -1.7%

Stocks Falling on Unusual Volume: 

• CPF, IIVI, FL, MRTX, KDP, ROAD, HASI, ARWR, USX, URBN, FBK, SPG, LITE, COOP, ACC, CREE, MYGN, MLHR, DDS, AEO, VG, ICPT, GTHX, REGI, KEX, ANF, ALEC, NVAX, VNDA, CNK, CALM, JWN, PLCE and KSS
  

Stocks With Unusual Put Option Activity:

• 1) PTEN 2) FXI 3) WMT 4) EWZ 5) XLP
  

Stocks With Most Negative News Mentions:

• 1) UBX 2) NBR 3) IDEX 4) SCS  5) HWM
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.6%

Sector Outperformers:

• 1) Internet +1.2% 2) Video Gaming +1.0% 3) Homebuilders +.7%

Stocks Rising on Unusual Volume:

• BE, GRPN, EVTC, SYRS, GRWG, EXPI, BEAM, EIGR and TDOC
  

Stocks With Unusual Call Option Activity:

• 1) ORCL 2) FHN 3) IEF 4) AAP 5) KSS

Stocks With Most Positive News Mentions:

• 1) SE 2) DQ 3) ZM 4) AAP 5) JD

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -28.0% Below 100-Day Average
• 2 Sectors Rising, 9 Sectors Declining
• 33.6% of Issues Advancing, 63.7% Declining
• 58 New 52-Week Highs, 7 New Lows
• 49.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 53.7%
• Vix 21.9 +2.8%
• Total Put/Call .57 -23.0%
• TRIN/Arms 1.3 -11.7%

Tuesday Watch

Evening Headlines

Bloomberg:     

• Southeast Asia Detects Mutated Virus Strain Sweeping the World.
• Asian Stocks Set for Modest Gains; Dollar Retreats. Asia stocks looked set to climb Tuesday after a rally in technology shares boosted their U.S. peers. Treasuries rose and the dollar retreated. Futures pointed to modest gains in Australia, Hong Kong and Japan. U.S. futures were little changed. For a third time in the past week, the S&P 500 Index rose above its February closing record during the session, but ended below it. The Nasdaq 100 outperformed, while big banks sank after Warren Buffett’s Berkshire Hathaway Inc. pared stakes in many of the industry’s top names. While a cash injection by China’s central bank Monday buoyed investors, tension between Washington and Beijing continues to weigh on sentiment, with the U.S. announcing new restrictions on Huawei Technologies Co. S&P 500 futures climbed 0.2% as of 8:39 a.m. in Tokyo. The S&P 500 rose 0.3%. Nikkei 225 futures rose 0.1%. Australia’s S&P/ASX 200 Index futures gained 0.5%. Hong Kong’s Hang Seng Index futures rose 0.6%.
• Europe Bird Wing, Fed CPI Strategy, Singapore Stimulus: Eco Day.
• Republicans Plan Scaled-Back Proposal for Virus Relief Bill.
• U.S. Cases Rise 0.8%; Texas Exceeds 10,000 Deaths: Virus Update.
• Boeing Plans Deeper Job Cuts With New Voluntary Buyout Offer.
• Elon Musk Gains $8 Billion to Become World’s Fourth-Richest Person.
• Options Measures Suggest Fervor for Technology Shares May Ebb.  
• Wall Street Firms Growing Cautious on Muni Bonds After Big Rally.  
• U.S. High-Grade Bond Sales Set Record, Reach $1.346 Trillion.

Wall Street Journal:

• California Blackouts a Warning for States Ramping Up Green Power.
• DOJ Disagreement Arises Over Possible Google Lawsuit.
• The Bernie Sanders Moment.
• Biden’s Assault on ‘Shareholder Capitalism’.
• China’s CDC, Built to Stop Pandemics, Stumbled When It Mattered Most.
• House Democrats Set Vote on Bill to Bolster USPS.
• Men Urged to Limit Alcohol to One Drink a Day Amid New Concerns.
  

Fox News:

• Trump calls Biden 'Trojan horse for Socialism' as he escalates attacks.
• AOC, Kasich clash ahead of former GOP governor's speech at the Democratic National Convention.
• Man dragged from truck, knocked out by rioter in Portland, investigation ongoing.
  

CNBC.com:

• Cramer expects ‘unbelievably positive’ reports from big-box retailers this week.
• Apple’s battle with Epic Games could affect hundreds of games beyond Fortnite.
• UNC abruptly halts in-person classes after coronavirus outbreak on campus.
• Stocks making the biggest moves after hours: America’s Car-Mart, Kohl’s, Uber & more.

MarketWatch.com:   

• Reports of COVID cases are growing on college campuses as schools bring students back for in-person classes .

Zero Hedge:

• Delinquent FHA Mortgages Soar By Record 60% To All Time High, As Homeowner Budgets Implode.
• Viral Videos Show Huge 'Back To Campus' College Parties Despite COVID-19 Bans In Effect.
• "Gosh Almighty": Democrats Call To End Durham Investigation Despite Proven Criminal Conduct.
• States To Sue Trump Over USPS Cuts As Pelosi Cancels Vacation For $25B Emergency Infusion.
• A Mass Exodus Away From Big Cities On Both Coasts.
• Does The USPS Deserve More Funding?
• Rolling Blackouts Expected Today For 3.3 Million California Households.
• Bloody Weekend - Dozens Shot Across Chicago, NYC.
• Texas COVID Deaths Top 10,000 As Hospitalizations Slow: Live Updates.
• Goldman's Head Of HF Sales: "If Anyone Had Told You 5 Months Ago This Would Happen, You'd Think They Were Crazy".
• China Was Biggest Dumper Of US Treasuries In June As Foreign Central Banks Resumed Selling.
• S&P Fails To Make New Record High As Buffett's Barrick Bid Pumps Precious Metals.
• Ex-CIA Officer Charged With Spying For China; Disclosed "Substantial Amount Of Highly Classified" Info.
• Fox's Chris Wallace Asks, What If Trump "Really Has A Point Here" Over Mail-In Voter Fraud?
  

The Epoch Times:

• Former CIA Officer Arrested, Charged With Spying for 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 unch.  to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 65.25 -.25 basis point.

• China Sovereign CDS 40.0 unch.

• Bloomberg Emerging Markets Currency Index 60.13 -.02%.
• FTSE 100 futures -.28%.

• S&P 500 futures +.18%.

• NASDAQ 100 futures +.15%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (AAP)/1.97
• (HD)/3.38
• (KSS)/-.88
• (SE)/-.43
• (WMT)/1.26
  

After the Close:

• (A)/.68
• (CREE)/-.19
• (JKHY)/.78
• (LZB)/-.13
  

Economic Releases

8:30 am EST

• Housing Starts for July is estimated to rise to 1284K versus 1186K in June.
• Building Permits for July is estimated to rise to 1325K versus 1241K in June.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Japan Trade Balance report, weekly US retail sales reports, (ON) business update and the (FORM) analyst day could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are modestly 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.