Wednesday Watch

Evening Headlines

Bloomberg:          

• Wuhan Beat the Virus. Now It’s Moving on by Shutting Out the World.   
• Losses from China Overseas Takeover Binge Are Piling Up Fast.   
• Three-Decade Economic Boom Comes to a Sudden Halt in Vietnam.
• Seoul Doctors Strike; FDA Chief Addresses Mistake: Virus Update.  
• Asian Stocks See Muted Start; Dollar Holds Retreat: Markets Wrap.  Asian stocks began Wednesday in mixed fashion, despite another record high on Wall Street, as investors mulled the pace of the recent equity rally and expectations for loose monetary policy. The dollar retained losses. Shares fluctuated in Japan and South Korea, and dipped in Australia. S&P 500 futures were steady after both the benchmark and the Nasdaq Composite notched fresh highs, helped by gains in Facebook Inc. Crude oil traded near the highest in five months as Hurricane Laura bore down on key refining facilities on the U.S. Gulf Coast. The yen dipped and gold was little changed. Treasuries edged lower. S&P 500 futures were little changed as of 9:01 a.m. in Tokyo. The gauge gained 0.4% on Tuesday. Japan’s Topix index slipped 0.3%. South Korea’s Kospi index dropped 0.2%. Australia’s S&P/ASX 200 Index lost 0.2%.
• Oil, Gasoline Climb to Five-Month Highs With Hurricane Nearing.  
• U.S.-China Cooperate, Vietnam Stall, German Job Support: Eco Day.
• Wisconsin Governor Declares State of Emergency After Jacob Blake Protests.
  
• Bed Bath & Beyond to Eliminate 2,800 Jobs in Restructuring Plan.  
• Carnival’s Princess Cancels Some World Cruises in Early 2021.
• Hurricane Laura Threatens the U.S. With an $18 Billion Disaster.  
• Toll Brothers Orders Jump 26% in U.S. Rebound for Home Sales.  
• Commercial Mortgage Debt in Distress Surges 320%, Moody’s Says.

Wall Street Journal:

• Wisconsin’s Governor Declares State of Emergency Amid Protests.
• Chinese Diplomats Helped Military Scholars Visiting the U.S. Evade FBI Scrutiny, U.S. Says.
• Exxon’s Departure From Dow Highlights Market’s Retreat From Energy Bets.
• Remember the Trump Economy?
• Some Mortgage Firms Ask Borrowers to Pledge They Won’t Skip Payments.
  

Fox News:

• Melania Trump seeks positive message as she and Pompeo take spotlight at RNC night 2.
• Clinton says Biden should not concede on election night.
  

CNBC.com:

• Stocks making the biggest moves after hours: Salesforce, Nordstorm, HP Enterprise and more.
• Etsy CEO says Amazon is trying to squash competitors by backing California bill.
• Palantir files to go public, lost about $580 million last year.
• New cases of the coronavirus are falling in most of the U.S., but epidemiologists urge caution.
• Nordstrom’s sales fall 53% as department store chain suffers store closures amid pandemic.

MarketWatch.com:       

• The stock market’s record rally is on the cusp of ‘euphoria’ — here’s what’s driving it.  
• These ‘Dividend Aristocrat’ stocks have been raising their dividends for decades, and there have been no dividend cuts during the pandemic.

Zero Hedge: 

• Gov Evers Declares 'State Of Emergency' As Wisconsin Braces For 3rd Night Of Violence.
• Russia Declassifies Footage Of Biggest Nuke Ever Tested: "Mushroom Cloud 7 Times Higher Than Everest".
• New Jersey Governor Proposes Hiking Millionaire Taxes To Plug $1 Billion Spending Hole.
• "Stand Down!" - How One Navy Seal Killed A Multi-Billion Hedge Fund.
• Snyder: We Should Mourn For What Is Happening To America.
• Sun Belt's Summer Outbreak Continues To Ease; Spain Rejects Another National COVID-19 Lockdown: Live Updates.
• Police Requests To Access Your Smart Speaker Are Up 72% Since 2016.
• Trump Reportedly Considers Accusing China Of "Genocide" Over Treatment Of Uighurs.
• "There's Too Much Product": Miami Has 30 Months' Of Unsold Condos After Covid Ravages Its Economy.
• Schiff: Government Is Trying To Replace The Economy With A Printing Press.
• WTI Holds Near 6-Month Highs Amid Gulf Shut-Ins, Inventory Draws.
• Nasdaq Hits New Record High As Confidence Crashes To 6 Year Lows.
  

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 unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 62.0 -.75 basis point.

• China Sovereign CDS 36.0 -1.25 basis points.

• Bloomberg Emerging Markets Currency Index 60.19 +.01%.
• FTSE 100 futures +.19%.

• S&P 500 futures +.07%.

• NASDAQ 100 futures +.2%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (PLAN)/-.12
• (CHS)/-.26
• (DKS)/1.22
• (EV)/.78
  

After the Close:

• (BOX)/.05
• (NTAP)/.41
• (SMTC)/.42
• (SPLK)/-.34
• (WSM)/.98
  

Economic Releases

8:30 am EST

• Durable Goods Orders for July is estimated to rise +4.5% versus a +7.6% gain in June.
• Durables Ex Transports for July is estimated to rise +1.9% versus a +3.6% gain in June.
• Cap Goods Orders Non-Defense Ex-Air for July is estimated to rise +1.8% versus a 3.3% gain in June.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,530,400 barrels versus a -1,632,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -1,746,400 barrels versus a -3,322,000 barrel decline the prior week. Distillate inventories are estimated to fall by -166,600 barrels versus a +152,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.36% versus a -.1% decline prior.
  

Upcoming Splits

• (AAPL)/4-for-1
• (TSLA)/5-for-1
  

Other Potential Market Movers

• The Mexico GDP report, $51B 5Y 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 financial and industrial 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.

 

Stocks Slightly Higher into Final Hour on China Trade Deal Optimism, Oil Gain, Technical Buying, Biotech/Restaurant Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: About Even
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 22.6 +1.1%

• Euro/Yen Carry Return Index 130.39 +.71%

• Emerging Markets Currency Volatility(VXY) 11.08 -1.2%

• S&P 500 Implied Correlation 40.1 +3.9%

• ISE Sentiment Index 97.0 +22.0 points

• Total Put/Call .60 -21.1%

• NYSE Arms 1.05 +94.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 66.19 -.09%
  

• US Energy High-Yield OAS 769.15 -.86%

• European Financial Sector CDS Index 62.97 +1.21%

• Italian/German 10Y Yld Spread 143.75 +1.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index  62.10 -1.5%
  

• Emerging Market CDS Index 179.03 +.36%
  

• iBoxx Offshore RMB China Corporate High Yield Index 177.39 -.01%

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

• TED Spread 16.0 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -1.5 +1.0 basis point
  
• MBS  5/10 Treasury Spread  89.5 +.5 basis point
  
• IHS Markit CMBX BBB- 6 68.25 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.16 +.12%
• 3-Month T-Bill Yield .09% unch.

• Yield Curve 50.5 +2.0 basis points
  

• China Iron Ore Spot 116.9 USD/Metric Tonne -3.2%

• Citi US Economic Surprise Index 235.30 -1.4 points

• Citi Eurozone Economic Surprise Index 146.60 +13.4 points

• Citi Emerging Markets Economic Surprise Index 24.7 -.7 point

• 10-Year TIPS Spread 1.70 +2.0 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 -53 open in Japan 
• China A50 Futures: Indicating -34 open in China

• DAX Futures: Indicating -7 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -.7%

Sector Underperformers:

• 1) Gold & Silver -1.7% 2) Steel -1.6% 3) Homebuilding -1.5%

Stocks Falling on Unusual Volume: 

• AAL, XOM, GTLS, TIF, SHLL, SJI, APPS, CIEN, PRPL, BBY, OSTK, WSM, PINC, IMUX, PSNL, LL, ROAD, CARG, SLQT, USX, NVAX, POR, CWH, HAIN, SWBI and PLCE
  

Stocks With Unusual Put Option Activity:

• 1) JETS 2) BBY 3) PANW 4) TOL 5) USB
  

Stocks With Most Negative News Mentions:

• 1) POR 2) ROAD 3) NPTN 4) TIF  5) XEL
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.2%

Sector Outperformers:

• 1) Restaurants +1.5% 2) Biotech +1.4% 3) Alt Energy +1.2%

Stocks Rising on Unusual Volume:

• BIGC, CYRX, GPS, AMRC, DKNG, CVET, SJM, TCDA, AMGN and IMVT
  

Stocks With Unusual Call Option Activity:

• 1) HYG 2) ODT 3) BBY 4) PANW 5) HON

Stocks With Most Positive News Mentions:

• 1) TCDA 2) FB 3) GPS 4) SJM 5) MDT

Charts:

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

 

Morning Market Internals

NYSE Composite Index:

• Volume Running -25.8% Below 100-Day Average
• 1 Sector Rising, 10 Sectors Declining
• 36.2% of Issues Advancing, 61.1% Declining
• 54 New 52-Week Highs, 7 New Lows
• Bloomberg Risk-On/Risk-Off Index 5.80 +.96 point
  
• 47.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 51.0%
• Vix 23.0 +2.7%
• Total Put/Call .51 -32.9%
• TRIN/Arms 1.15 +118.5%

Tuesday Watch

Evening Headlines

Bloomberg:       

• China Mengniu, Kirin Scrap Australia Deal Over Political Tension.  
• Losses from China’s Overseas Takeover Binge Are Piling Up Fast.  
• Australia’s Recession Will Extend Into Third Quarter, CBA Says.
• Hong Kong Reports Reinfection; U.S. Cases Up 0.6%: Virus Update. 
• Asian Stocks Set to Gain With U.S. at Record Highs. Asian stocks looked poised for modest gains after U.S. equities rose to a record high on optimism about treatments for the coronavirus. Treasuries retreated. Futures pointed higher in Japan and Australia, though slipped in Hong Kong. S&P 500 futures were little changed after the benchmark notched another all-time high as optimism mounted that the virus wouldn’t hamper growth. The Nasdaq Composite also closed at a record for a second consecutive session. Companies that benefit from a more robust economic recovery led the gains such as Carnival Corp. and United Airlines Holdings Inc. The dollar strengthened. S&P 500 futures were little changed as of 7:17 a.m. in Tokyo. The S&P 500 Index climbed 1%. Nikkei 225 futures rose 0.6%. Australia’s S&P/ASX 200 Index futures gained 0.7%. Hong Kong’s Hang Seng Index contracts earlier fell 0.4%.
• Oil Gains as U.S. Gulf Output and Refineries Halted Before Storm.  
• Official Nomination, TikTok Block, China Hiring Spree: Eco Day.
• Another Wall Street Bear Concedes as Citi Boosts S&P 500 Target.

Wall Street Journal:

• Europe Props Up Jobs While the U.S. Props Up Workers.
• The FDA’s Good Plasma Decision.
• The Pentagon Is Prepared for China.
• Big-Box Stores, Worried About Amazon, Were Ready for Virus.
• New Thinking on Lockdowns: They’re Overly Blunt and Costly.
  

Fox News:

• LA jails keep 25K criminal illegal immigrants from ICE.
• Rescued hostages, COVID frontline workers among the featured speakers at first night of RNC.
  

CNBC.com:

• Powell set to deliver ‘profoundly consequential’ speech, changing how the Fed views inflation.
• Google is investing $100 million in telehealth provider Amwell, which will use Google Cloud.
• Snowflake to IPO, taking on Amazon and Microsoft cloud databases.
• What to watch for on the first night of the Republican National Convention.
• Delta plans to furlough more than 1,900 pilots in October.
• Judge ‘inclined’ to block Apple’s move to hamper Epic’s Unreal Engine.

Zero Hedge:  

• Opaque Level 3 Assets Mysteriously Rose In Value 20% For Major Banks During COVID Crisis.
• NY Subway Windows Being Smashed At Such Rate The MTA Can't Get Glass Fast Enough To Replace Them.
• Pelosi Calls Republicans 'Domestic Enemies Of The State'.
• "It's Getting Worse With Every Shock" - One Bank Turns Apocalyptic On The Coming End-Game.
• Texas A&M Prof, NASA Researcher Arrested For Alleged China Ties.
• Leon Cooperman: "The Fed Has Created A Speculative Bubble".
• In Historic Reshuffling, Exxon, Pfizer & Raytheon Kicked Out Of Dow Jones Industrial Average, Replaced By Saleforce, Amgen & Honeywell.
• Wisconsin Governor Sending National Guard To Kenosha.
• Illinois Worsens Retirement Home Deaths Fiasco With More Failed Executive Orders.
• "The General Public Gets It": Sheila Bair Blasts Fed For Creating Income Inequality, Slams Politicians For Keeping Silent.
• White Supremacist Richard Spencer Endorses Joe Biden.
• Florida, Arizona See New COVID-19 Cases Slow To Lowest Levels In Months: Live Updates.
• Kamala Harris Furiously Backpedals Over Eliminating Private Health Insurance.
• AAPLocalypse Now? Nasdaq & S&P Hit Record Highs, Bonds & Bullion Slide.
  

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 +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 62.75 -1.25 basis points.

• China Sovereign CDS 37.25 -.75 basis point.

• Bloomberg Emerging Markets Currency Index 60.09 unch.
• FTSE 100 futures +.39%.

• S&P 500 futures +.21%.

• NASDAQ 100 futures +.08%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (AMWD)/1.33
• (ATHM)/1.03
• (BBY)/1.08
• (HAIN)/.27
• (HRL)/.36
• (SJM)/1.67
• (MDT)/.18
• (PLCE)/-1.25
  

After the Close:

• (ADSK)/.90
• (HPE)/.23
• (INTU)/1.12
• (JWN)/-1.5
• (CRM)/.67
• (TOL)/.67
• (URBN)/.37
  

Economic Releases

9:00 am EST

• The FHFA House Price Index MoM for June is estimated to rise +.3% versus a -.3% decline in May.
• The S&P CoreLogic CS 20-City MoM for June is estimated to rise +.1% versus a +.04% gain in May.
  

10:00 am EST

• Conference Board Consumer Confidence Index for August is estimated to rise to 93.0 versus 92.6 in July.
• New Home Sales for July is estimated to rise to 790K versus 776K in June.
• The Richmond Fed Manufacturing Index for Aug. is estimated at 10.0 versus 10.0 in July.
  

Upcoming Splits

• (AAPL)/4-for-1
• (TSLA)/5-for-1
  

Other Potential Market Movers

• The German GDP report, weekly US retail sales reports and the $50B 2Y T-Note auction could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly higher, boosted by financial and commodity 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.