Wednesday Watch

Night Trading 

• Asian equity indices are -1.75% to -.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 58.75 +.5 basis point.

• China Sovereign CDS 36.75 +1.75 basis points.

• Bloomberg Emerging Markets Currency Index 60.20 -.05%.
• Bloomberg Global Risk-On/Risk Off Index -77.0 +10.0 points.
• Volatility Index(VIX) futures 35.1 +1.4%
• FTSE 100 futures -.7%.

• S&P 500 futures -.37%.

• NASDAQ 100 futures -.14%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (AEO)/-.18
• (GIII)/-.64
• (HDS)/.72
• (NAV)/-.18

After the Close:

• (AVAV)/.39
• (GME)/-1.14
• (FIZZ)/.96
• (RH)/3.33
• (VRNT)/.69
• (ZS)/.03
  

Economic Releases

10:00 am EST:

• JOLTS Job Openings for July are estimated to rise to 6000 versus 5889 in June.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Bank of Canada rate decision, 10Y T-Note auction, weekly MBA Mortgage Applications report, Raymond James Bank Conference, Credit Suisse Steel/Mining Conference, Keefe Bruyette Woods Insurance Conference, Baird Healthcare Conference, UBS Chemicals Conference, Wells Fargo Healthcare Conference, Cowen Transport/Sustainable Mobility Conference, DA Davidson Software/Internet Conference, Goldman Retailing Conference, Barrington Fall Investment Conference and the BofA Media/Communications/Entertainment Conference could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are lower, weighed down by technology and commodity shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

 

Stocks Falling Substantially into Final Hour on Biden Presidency Odds, Rising China Tensions, Oil Plunge, Energy/Tech Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 30.9 +.5%
• Bloomberg Global Risk On/Risk Off Index -126.0 -159.0 points

• Euro/Yen Carry Return Index 129.49 -.46%

• Emerging Markets Currency Volatility(VXY) 11.3 +.5%

• S&P 500 Implied Correlation 48.5 +3.7%

• ISE Sentiment Index 1027.0 +20.0 points

• Total Put/Call .80 -21.6%

• NYSE Arms .86 +17.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 68.29 +2.29%
  

• US Energy High-Yield OAS 786.67 +2.11%

• European Financial Sector CDS Index 62.68 +5.44%

• Italian/German 10Y Yld Spread 152.25 +6.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index  58.96 +.62%
  

• Emerging Market CDS Index 172.33 +2.76%
  

• iBoxx Offshore RMB China Corporate High Yield Index 177.88 +.03%

• 2-Year Swap Spread 8.5 -.25 basis point

• TED Spread 14.25 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -6.5 -1.0 basis point
  
• MBS  5/10 Treasury Spread  90.0 +5.5 basis points
  
• IHS Markit CMBX BBB- 6 68.25 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.28 -.40%
• 3-Month T-Bill Yield .11% +1.0 basis point

• Yield Curve 57.0 +6.25 basis points
  

• China Iron Ore Spot 123.40 USD/Metric Tonne +.02%

• Citi US Economic Surprise Index 183.90 -7.9 points

• Citi Eurozone Economic Surprise Index 95.90 -.7 point

• Citi Emerging Markets Economic Surprise Index 25.9 +10.6 points

• 10-Year TIPS Spread 1.69 +1.0 basis point
• 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 +16 open in Japan 
• China A50 Futures: Indicating -133 open in China

• DAX Futures: Indicating -1 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 25% Net Long

 

Morning Market Internals

NYSE Composite Index:

• Volume Running +5.2% Above 100-Day Average
• 0 Sectors Rising, 11 Sectors Declining
• 19.3% of Issues Advancing, 78.5% Declining
• 11 New 52-Week Highs, 19 New Lows
• 47.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.5% 
• Bloomberg Global Risk-On/Risk-Off Index -140.0 -173.0 points
• Vix 33.1 +7.5%
• Total Put/Call .88 -13.7%
• TRIN/Arms .91 +16.7%

Tuesday Watch

Today's Headlines

Bloomberg:        

• A Bubble Scarier Than Big Tech Is Brewing in China.  
• Australia’s Last Two Reporters in China Flee Amid Tensions.
• Japan’s Record GDP Plunge Is Slightly Worse on Revision.
• Singapore Faces Test as Virus Re-Emerges in Workers’ Dorms.
• Germany Ready to Link Gas Pipeline With Russian Navalny Response.
• Competing Pressures Build on U.K.’s Johnson as Covid Surges.
• Australian Wheat Production Seen Jumping 91% on Plentiful Rains.  
• Asian Stocks Rise; Pound Hit by Brexit Discord: Markets Wrap.
• European Stocks Gain; Pound Hit by Brexit Discord: Markets Wrap.
• Oil Extends Drop After Saudi Price Cuts Underline Demand Concern.
• Trump Threats, Pipeline Punishment, Divorce Discord: Eco Day.

Wall Street Journal:

• FBI Sweep of China Researchers Leads to Cat-and-Mouse Tactics.
• Sudden Volatility in Technology Stocks Unnerves Investors.
• Colleges Send Students Home Amid Outbreaks, Raising New Threat.
• Samsung, Verizon Sign $6.65 Billion 5G Contract.
• SoftBank Shares Drop on Concerns About Massive Options Bet.
• Companies Brace for Profit Hit From Euro Rally.
• China Exports Are Booming and Trade Surplus Is Widening—Why Is the Yuan Weak?
• Portlanders Reflect on the City’s Protests, 100 Days On.
• Immigration to New York City Declines, Amplifying Economic Concerns.
• Will Courts Pick the Next President?
• China to Launch Initiative to Set Global Data-Security Rules.
• Citigroup Feuds With Hedge Funds Over Botched Payment.

Fox News:

• Gender reveal party sparked wildfire now burning 7,000 acres in California.
• Protesters gather outside Nancy Pelosi's home, hang up hair curlers.
• SEE IT: Gunfight in Brooklyn apartment lobby caught on video as violence escalates.
• What conservative filmmaker says recent riots mean for America's future.
• Expert warns China's military wants to 'kill Americans'.

CNBC:

• China accuses U.S. of ‘hegemony’ over potential restrictions on chipmaker SMIC.
• ‘We’re certainly in a bubble,’ strategist warns — but don’t expect it to pop anytime soon.
• 9 retailers that are avoiding the industry’s shakeout and opening stores.
• Goldman’s ‘favorite’ commodity has been on a tear, and could have further to run.
• SMIC, China’s largest chipmaker, plunges 23% after U.S. says it could blacklist the firm.
  

Zero Hedge:

• SoftBank Has Closed Most Of Its "Nasdaq Whale" Positions.
• Beijing Delays Visas For Journalists From WSJ, CNN & Bloomberg As President Xi Cracks Down On Dissent.
• Rabo: While Everyone Is Handing Out Stimulus To Prop Up Demand; China Has Been Propping Up Supply.
• US Ambassador To France Denies Atlantic Story, Says Trump 'Has Never Denigrated Any Member Of US Military'. 
• Platts: 5 Commodity Charts To Watch.
• Trump Mulls Decoupling US From China: "If Biden Wins, China Will Own This Country"
• Goldman Warns Of "Near-Term Setback" For Stocks As Record Bullish Nasdaq Sentiment Suffers Near-Record Shock.
• 787MAX? Production Woes Strike Boeing Dreamliner.
• NYC Commercial Real Estate Sales Plummet 54% To Lowest On Record.
• American Airlines Faces Backlash After Allowing Employees To Wear BLM Pins.
• Is China On The 'Brink' Of A Major Food Shortage? 
• Surveillance Camera Captures 'Huge Pile Of Mail' Dumped In California Parking Lots.
• Crude Hits 2-Month Lows As Saudi Price Cuts Signal Demand Woes.
• Lockdown 2.0 - "There's Going To Be Hell To Pay".
• "The Correction Has Further Room To Go": Futures Recover Early Losses As European Markets Jump.
• France Again Being Forced To Stimulate Is Bad News.
• The Coming Coup.
• China "Parties Like It Is 2019" As Patrons Pack Pool Parties, Nightcubs & Bars From Wuhan To Beijing.  
• Texas AG: The State May Take Over Austin's Police To Prevent Defunding.
• A Few Of The Many Reasons To Celebrate The United States.
  

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 indices are +.25% to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 58.25 -.25 basis point.
• China Sovereign CDS 35.0 -1.0 basis point.
• Bloomberg Emerging Markets Currency Index 60.48 -.07%.
• Bloomberg Global Risk-On/Risk Off Index 30.0 -2.0 points.
• Volatility Index(VIX) futures 36.55 +1.0%. 
• Euro Stoxx 50 futures unch.
• S&P 500 futures +.38%.
• NASDAQ 100 futures -.24%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• (SINA)/.50
• (WB)/.46
  

After the Close:

• (ABM)/.42
• (CASY)/2.00
• (COUP)/.08
• (HQY)/.28
• (HTZ)/-3.48
• (LULU)/.54
• (WORK)/-.03

Economic Releases
6:00 am EST

• The NFIB Small Business Optimism Index for August is estimated to rise to 99.0 versus 98.8 in July.
  

3:00 pm EST

• The Consumer Credit report for July is estimated to rise to $12.9B versus $8.948B in June.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The German Trade Data report, 3Y T-Note auction, Citi Tech Conference, Barclays Consumer Staples Conference, Citi BioPharma Conference, Barclays Energy-Power Conference, (AAPL) special iPhone event and the (EFX) investor update 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 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 week.

Weekly Outlook

• Wall St. Week Ahead by Reuters.
• Global Economy Week by Bloomberg. 
• The Week Ahead by Yahoo. (video)
• Stocks to Watch Next Week by Seeking Alpha.
• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly lower on increasing Biden Presidency odds, global recession fears, rising China tensions, profit-taking, oil weakness and technical selling. My intermediate-term trading indicators are giving bearish signals and the Portfolio is 50% net long heading into the week.

 

Today's Headlines

Bloomberg:    

• Growth-Starved Emerging Markets Turn Wary as Risk Signals Build.
• U.K. Cases Jump by 2,988 to Highest Level Since May.
• What Else Could Go Wrong for World Economy Before 2020 Is Done.
• Mexico Registers 59% More Excess Deaths Than Expected Amid Covid.  
• Cases Near 27 Million; India Set to Top Brazil: Virus Update.
• The Options-Enhanced Stock Market Money Machine Is Going Global.    
• U.S. Stock Futures Dip, Asia Mixed; Oil Declines: Markets Wrap. Stocks kicked off the week in a nervy fashion after the biggest two-day slide for global equities since June left investors on edge in the wake of the recent sell-off. Crude oil extended its recent weakness and the dollar ticked higher. Japanese shares slipped along, while those in Australia. South Korea fluctuated. S&P 500 futures were down though came off the session lows. U.S. markets are shut Monday for a holiday after the worst week for the Nasdaq since March. The pound ticked lower going into another round of Brexit negotiations. Hong Kong markets will be in focus after protests again flared up on the city Sunday. Treasury futures edged higher after a slide in bonds on Friday, a move which Australian debt tracked early on Monday.S&P 500 futures fell 0.5% as of 9:13 a.m. in Tokyo. The index fell 0.8% on Friday. Japan’s Topix index fell 0.2%. Australia’s S&P/ASX 200 Index fell 0.6%. South Korea’s Kospi index added 0.1%.
• Mideast Markets Catch Up With Broader Equities Rout: Inside EM.
  
• ECB Finds Itself Stuck in Fed’s Policy Orbit: Eco Week Ahead.
• U.S. Stocks Could Fall Further With ‘Three-Day Rule’ in Play.
• Mnuchin Says Trump Pleased With How Recovery Is Progressing.
  
• Virus Fatigue Is Risk as U.S. Heads Into Fall, Ex-FDA Head Says.
• Wildfires, Heat Waves, Blackouts Are Back to Hit California.

Wall Street Journal:

• Companies Recruit 350,000 Poll Workers for U.S. Election.
• Too Much Distance Ruins Travel.
• Facebook’s Rittenhouse Mistake.
• Where Danger Lurks in the Big Tech Rally.
• Remote Learning Makes Taking Attendance a Challenge.
• Hong Kong Protesters Return to Streets Over Postponed Elections.

CNBC:

• Beyond work from home: Why ‘digital nomads’ think they’re the future of remote.
• ‘We are outnumbered’ — cybersecurity pros face staffing shortage as attacks surge during pandemic.
• Tesla could be the most dangerous stock on Wall Street, investment researcher says.

IG:

• Weekend Markets Trading Live.

MarketWatch.com:  

• Elon Musk’s brother Kimbal made more than $8 million selling Tesla stock 2 days before he bought them.

Fox News:

• Key unions for teachers, truckers and office workers vow pre-election job actions over police, racism.
  

Zero Hedge:    

• "In Complete Shock": China's Lead Chip Maker Denies PLA Military Ties As Trump Mulls Blacklisting.
• Connecting The Dots: How SoftBank Made Billions Using The Biggest "Gamma Squeeze" In History.
• Xi's Political Rivals Run For Cover: "A Purge Is Coming - Be Careful".  
• Global Times: Tesla Wreck In Nanchong Killed 2, Has "Raised Doubts" Over Car's Functions, Quality.
• UK Reports Most New COVID-19 Cases Since May; India Sees New Record Surge: Live Updates.
• Kamala Gets Conspiratorial: Says Russians May Cost Biden Election, Won't Trust Trump On COVID-19 Vaccine.
• Joe Biden Joked In 2013 About China 'Helping Him' Politically.
• Trump Says Schools Teaching NY Times' 1619 Project "Will Not Be Funded".
• Trump Tweets: "Baltimore's Poverty & Crime Will Only Get Worse Unless You Elect Kim Klasick".
• "BLM" Rioters "Shut Down" Restaurants In Rochester, Smash Bank Windows In Manhattan, During Latest Night Of Mayhem.
• Man Catches Fire After Molotov Cocktail Thrown In Portland; Riot Declared, Tear Gas Deployed.
• Outrage After University Suspends 11 Students For "Party" But Keeps $36,500 Tuition.
• The American Housing Market Is Splintering As Houses Get Bigger And Apartments Get Smaller.
• Turkey Escalates With Tanks & Armored Troop Carriers Deployed To Greek Border
• Their Summer Of Discontent.
• "Bipartisan" Washington Insiders Reveal Their Plan For Chaos If Trump Wins The Election.
• "Dead" Virus Cells Frequently Trigger "False Positives" In Most Common COVID Test, New Study Finds.
• Do Any Lives Actually Matter?
• MLB Ratings Crash As Wokeness Takes Its Toll.
• Trump Tells Feds: Stop "Anti-American" Training On 'Critical Race Theory'.
• Patriotism Punished? Virginia Shipyard Worker Fired Over Trump 2020 Hat; Air Force Vet Quits Over American Flag Mask Ban.

Business Insider:

• Kamala Harris walks back Biden's call for a nationwide mandate to wear a mask.
• 3 recent discoveries have upended scientists' understanding of how dogs age, navigate, and perceive human speech.
• Social media is a parasite, it bleeds you to live.
  

The Epoch Times:

• Hong Kong Police Arrest 90 at Protests Over Election Delay.
• China Imposes New Visa Restrictions Targeting US Media.
  

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).