Wednesday Watch

Night Trading 

• Asian equity indices are unch. to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 74.75 +.25 basis point.

• China Sovereign CDS 45.25 +.25 basis point.

• Bloomberg Emerging Markets Currency Index 59.80 +.01%.
• Bloomberg Global Risk-On/Risk Off Index 95.0 -46.0 points.
• Volatility Index(VIX) futures 31.25 -.40%
• FTSE 100 futures +.8%.

• S&P 500 futures +.09%.

• NASDAQ 100 futures -.28%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (CTAS)/2.12
• (GIS)/.82
• (JKS)/.75
• (WB)/.46
• (WOR)/.44
  

After the Close:

• (CMTL)/.06
• (FUL)/.70
  

Economic Releases

9:00 am EST

• The FHFA House Price Index MoM for July is estimated to rise +.5% versus a +.9% gain in June.
  

9:45 am EST

• The Markit US Manufacturing PMI report for Sept. is estimated to rise to 53.5 versus 53.1 in Aug.
• The Markit US Services PMI report for Sept. is estimated to fall to 54.5 versus 55.0 in Aug.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,471,910 barrels versus a -4,389,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -749,800 barrels versus a -381,000 barrel decline the prior week. Distillate inventories are estimated to rise by +1,081,110 barrels versus a +3,461,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.18% versus a +4.0% gain prior.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Powell testimony to House, Fed's Evans speaking, Fed's Rosengren speaking, Fed's Bostic speaking, FEd's Quarles speaking, Fed's Mester speaking, Spain GDP report, Eurozone PMI report, weekly MBA Mortgage Applications report, $53B 5Y T-Note auction and the (INTU) investor 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 commodity and consumer shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.

Stocks Higher into Afternoon on US Economic Data, Short-Covering, Technical Buying, Homebuilding/Retail Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 27.2 -2.0%
• Bloomberg Global Risk On/Risk Off Index 104.0 +99.0 points

• Euro/Yen Carry Return Index 127.41 -.2%

• Emerging Markets Currency Volatility(VXY) 11.67 unch.

• S&P 500 Implied Correlation 59.4 +1.0%

• ISE Sentiment Index 97.0 +1.0 point

• Total Put/Call .86 -11.3%

• NYSE Arms 1.23 -8.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 52.27 -.79%
  

• US Energy High-Yield OAS 843.24 +1.4%

• European Financial Sector CDS Index 78.19 +.83%

• Italian/German 10Y Yld Spread 137.0 -8.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index  75.05 +1.46%
  

• Emerging Market CDS Index 233.07 +1.02%
  

• iBoxx Offshore RMB China Corporate High Yield Index 178.25 +.03%

• 2-Year Swap Spread 8.25 +.25 basis point

• TED Spread 14.0 -.5 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -2.5 +.75 basis point
  
• MBS  5/10 Treasury Spread  95.5 -1.5 basis points
  
• IHS Markit CMBX BBB- 6 67.0 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 59.8 -.42%
• 3-Month T-Bill Yield .09% +1.0 basis point

• Yield Curve 54.5 unch.
  

• China Iron Ore Spot 113.90 USD/Metric Tonne -.08%

• Citi US Economic Surprise Index 165.0 -1.1 points

• Citi Eurozone Economic Surprise Index 47.80 -.8 point

• Citi Emerging Markets Economic Surprise Index 49.7 +.4 point

• 10-Year TIPS Spread 1.61 -2.0 basis points
• 100.0% chance of no change at Dec. 16th meeting, 100.0% chance of no change at Jan. 27th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -480 open in Japan 
• China A50 Futures: Indicating -29 open in China

• DAX Futures: Indicating +29 open in Germany

Portfolio:

• Higher: On gains in my tech/biotech/industrial/consumer staple sector longs and emerging market shorts
  

• Disclosed Trades: None
  

• Market Exposure: 50% Net Long

Bear Radar

 Style Underperformer:

• Small-Cap Value -.4%

Sector Underperformers:

• 1) Banks -2.5% 2) Healthcare Providers -1.6% 3) Energy -1.2%

Stocks Falling on Unusual Volume: 

• DFS, STAY, PIC, JWN, AX, PGR, NFE, CNC, INO, OMCL, SCS, MRSN, MTB, EW, ANTM, SGRY, THC, CMA, INSW, SNDX, UBER, MOH, OLN, WLL, MOH, OLN, WLL, DPHC, KTOS, CUB and WKHS
  

Stocks With Unusual Put Option Activity:

• 1) BKNG 2) ON 3) TIF 4) MOS 5) ITB
  

Stocks With Most Negative News Mentions:

• 1) KTOS 2) EIDX 3) QTT 4) VXRT  5) CNC
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.5%

Sector Outperformers:

• 1) Homebuilding +2.6% 2) Retail +2.1% 3) Gaming +2.0%

Stocks Rising on Unusual Volume:

• CVNA, GME, VRM, BBBY, FLGT, BPMC, BYND, LEGN, SFIX, SPH and ZM
  

Stocks With Unusual Call Option Activity:

• 1) WPX 2) CNC 3) ATUS 4) VG 5) BLNK

Stocks With Most Positive News Mentions:

• 1) CVNA 2) BBBY 3) NEOG 4) EPAZ 5) MA

Charts:

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

Mid-Day Market Internals

 NYSE Composite Index:

• Volume Running -22.7% Below 100-Day Average
• 7 Sectors Rising, 4 Sectors Declining
• 46.1% of Issues Advancing, 50.9% Declining
• 16 New 52-Week Highs, 21 New Lows
• 40.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 41.0% 
• Bloomberg Global Risk-On/Risk-Off Index 104.0 +99.0 points
• Vix 27.2 -2.0%
• Total Put/Call .82 -15.5%
• TRIN/Arms 1.38 +2.99%

Evening Headlines

Bloomberg:  

• Remittance Boom Is Turning Into a Bust for Asia Emerging Markets.
• Broke Millennials Turn to Day Trading to Strike It Rich in Korea.
• Asia Stocks to Drop, Banks in Focus; Dollar Jumps: Markets Wrap. Asian stocks dipped at the open Tuesday after U.S. equities slid on concerns over coronavirus restrictions and prospects for economic stimulus. The dollar was steady after posting the biggest gain in three months. Benchmarks fell in Australia and South Korea, while S&P 500 futures ticked higher. After approaching the threshold that many investors consider to be a market correction, the U.S. benchmark came off session lows Monday. The Nasdaq 100 climbed. Japan is shut for a holiday and cash Treasuries won’t trade until the London open. S&P 500 futures rose 0.4% as of 10:19 a.m. in Sydney. The S&P 500 dipped 1.2%. Australia’s S&P/ASX 200 Index fell 0.7%. South Korea’s Kospi index fell 0.8%. Hong Kong’s Hang Seng Index futures lost 0.4% earlier.
• Oil Recovers to Near $40 as Tropical Storm Beta Inundates Texas.
• Fed on Recovery, ECB’s Room to Move, Stimulus Prospects: Eco Day.
• Fed’s Powell Says U.S. Economy Faces Long, Uncertain Recovery.
• Trump Zeroes In on Judge Barrett as Likely Supreme Court Pick.  
• Illinois May Look More Like Junk as Pressure Rises, S&P Says.
• Grassley Supports Voting on Trump Nominee, Adding to GOP Tally.
• SCOTUS Confirmation by Nov. 3 Would Be Difficult But Not Unprecedented.
• Morgan Stanley Warns Nasdaq 100 May Fall More Than 20% From Peak.
• CBO Sees U.S. Federal Debt Almost Double Economy’s Size in 2050.  
• U.S. Household Net Worth Soars to Surpass Pre-Pandemic Peak.

Wall Street Journal:

• Medicare Won’t Cover Costs for Emergency Virus Vaccine.
• Fever Isn’t a Good Gauge for Coronavirus, Doctors Say.
• TikTok’s Zero Hour: Haggling with Trump, Doubts in China and a Deal in Limbo.
• Activist Trian Fund Management Takes Stake in Comcast.
• Some New York Lawmakers Push to Raise Millionaires’ Taxes.
  

Fox News:

• Angry protests over Supreme Court vacancy target residences of top GOP lawmakers.
• Cuomo may deploy National Guard on Election Day.
• EXCLUSIVE: Trump previews debate with Biden.
  

CNBC.com:

• Dow drops more than 500 points, S&P 500 posts first 4-day losing streak since February.
• Coca-Cola will enter U.S. hard seltzer market in first half of 2021, CEO says.
• Nikola founder forfeits $166 million in stock he would have lost and gets to keep $3.1 billion.
• Stock sell-off accelerates and is expected to get worse before it gets better.
• Federal judge allows extra week for counting Wisconsin absentee ballots.
• Biden’s capital gains tax hike may spark a big sell-off in stocks: What that means for the market.
• Stocks making the biggest moves after hours: Nikola, Comcast, Roku & more.
• Jim Cramer says the ‘lockdown trade’ is back as coronavirus concerns rise.

Zero Hedge:    

• Emmys Hit Lowest-Ever Ratings With Just 6.1 Million Viewers.
• CNBC Screamfest Culminates With Muddy Waters Teasing Reveal Of New Short That "Makes Tesla Look Like Microsoft".
• "End School To Prison Pipeline" - New Kim Klacik Ad Highlights How Liberals Destroyed Baltimore.
• Another Bloody Chicago Weekend Sees Almost 40 Shot, With Homicides Up 50%.
• Inflation As A Tool Of The Radical Left.
• NYPD Officer Arrested, Charged With Spying For China.
• House GOP Report Reveals Extent Of China COVID-19 Coverup; Slams WHO Director Tedros Over "Gross Mishandling".
• Fears Of 2nd UK Lockdown Intensify, California 3rd State To Top 15,000 COVID-19 Deaths: Live Updates.
• Tesla Tumbles After Musk Pours Cold Water On Battery Day Expectations.
• Goldman Sachs Promotes First Woman To Lead Investment Bank As CEO Strives To Meet 'Diversity' Goals.
• Fed Releases Powell's Congressional Hearing Prepared Remarks, Defends Poor Uptake Of Main Street Bailout.
• 2020 Has Been A "Nightmare Year" For America, And The Economic Fallout Is Just Getting Started.
• Furious Mayors Of New York, Seattle And Portland Respond To Trump's "Anarchy" Designation.
• 'Bad' Banks, Bader Ginsburg, And Limey Lockdowns Slam Stocks & Silver, USD Soars.
  

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 -.75% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 74.5 (new series).

• China Sovereign CDS 45.0 (new series).

• Bloomberg Emerging Markets Currency Index 60.04 -.01%.
• Bloomberg Global Risk-On/Risk Off Index 2.0 -3.0 points.
• Volatility Index(VIX) futures 31.15 -.24%
• FTSE 100 futures +.89%.

• S&P 500 futures +.26%.

• NASDAQ 100 futures +.39%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (AZO)/22.72
  

After the Close:

• (HTZ)/-3.48
• (KBH)/.51
• (NKE)/.49
• (SCS)/.37
• (SFIX)/-.17
  

Economic Releases

10:00 am EST

• Existing Home Sales for Aug. is estimated to rise to 6.0M versus 5.86M in July.
• Richmond Fed Manufacturing Index for Sept. is estimated to fall to 12.0 versus 18.0 in Aug.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The House hearing with Treasury Secretary Mnuchin/Fed Chair Powell, Fed's Barkin speaking, Fed's Bostic speaking, weekly US retail sales report, $52B 2Y T-Note auction, DA Davidson Industrials/Services Conference, BofA Financials CEO Conference and the (TSLA) battery day event could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and financial 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.