Friday Watch

Night Trading 

• Asian equity indices are -.25% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 73.75 -4.75 basis points.

• China Sovereign CDS 35.5 unch.
  

• Bloomberg Emerging Markets Currency Index 59.18 +.02%.
• Bloomberg Global Risk-On/Risk Off Index 2,198.0 -96.0 points.
• Volatility Index(VIX) futures 22.0 -1.6%.
• FTSE 100 futures +.5%.

• S&P 500 futures +.09%.

• NASDAQ 100 futures +.17%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (DE)/4.58
• (FL)/1.02
  

After the Close:

• None of note
  

Economic Releases

8:30 am EST

• Chicago Fed National Activity Index for July.
  

9:45 am EST

• The Markit US Manufacturing PMI for August is estimated to fall to 62.8 versus 63.4 in July.
• The Markit US Services PMI for August is estimated to fall to 59.4 versus 59.9 in July.
  

10:00 am EST

• Existing Home Sales for July is estimated to fall to 5.84M versus 5.86M in June.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Eurozone PPI report could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are slightly lower, weighed down by commodity 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 75% net long heading into the day.

Stocks Lower into Final Hour on Afghanistan Pullout Debacle, Virus Mandate/Lockdown Fears, Fed Taper Worries, Commodity/Transport Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 21.7 +.3%
• Bloomberg Global Risk On/Risk Off Index 2,287.0 -117.0 points

• Euro/Yen Carry Return Index 132.42 -.24%

• Emerging Markets Currency Volatility(VXY) 9.0 +3.1%

• S&P 500 Implied Correlation 42.5 +.4%

• ISE Sentiment Index 100.0  -9.1 points
  

• Total Put/Call 1.0 +12.4%

• NYSE Arms 1.53 +17.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 50.66 +1.1%
  

• US Energy High-Yield OAS 460.30 +2.4%

• European Financial Sector CDS Index 54.16 +1.5%

• Italian/German 10Y Yld Spread 105.0 +2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 75.0 -7.3%
  

• Emerging Market CDS Index 167.03 +1.7%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 38.32 -.18%

• 2-Year Swap Spread 9.5 +.25 basis point

• TED Spread 8.5 +2.0 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -2.25 -.25 basis point
  
• MBS  5/10 Treasury Spread  75.5 -.5 basis point
  
• IHS Markit CMBX BBB- 6 71.5 -.25 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 59.15 -.53%
• 3-Month T-Bill Yield .05% -1.0 basis point
  

• Yield Curve 105.0 -1.0 basis point
  

• China Iron Ore Spot 134.45 USD/Metric Tonne -7.6%

• Citi US Economic Surprise Index -37.1 -1.0 point

• Citi Eurozone Economic Surprise Index 6.2 -.9 point
  

• Citi Emerging Markets Economic Surprise Index 36.9 -.5 point

• 10-Year TIPS Spread 2.30 -2.0 basis points
• 100.0% chance of no change at Nov. 3rd meeting, 100.0% chance of no change at Dec. 15th meeting

US Covid-19:

• 296 new infections/100K people(last 7 days total) +3/100K people
• 56% of Jan. 7th, 2021 peak(highest daily avg. new infections) +1.0 percentage point
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -51 open in Japan 
• China A50 Futures: Indicating -1 open in China

• DAX Futures: Indicating +7 open in Germany

Portfolio:

• Higher: On gains in my tech/medical sector longs, index hedges and emerging market shorts
  

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my emerging market shorts
  

• Market Exposure: Moved to 50% Net Long
  

Morning Market Internals

NYSE Composite Index:

• Volume Running +4.1% Above 100-Day Average 
• 6 Sectors Rising, 5 Sectors Declining
• 28.2% of Issues Advancing, 67.3% Declining
• 13 New 52-Week Highs, 57 New Lows
• 67.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 44.0%
  
• Bloomberg Global Risk-On/Risk-Off Index 2,308.0 -94.0 points
• Russell 1000: Growth/Value 17,394 +.11%
  
• Vix 21.4 -.8%
• Total Put/Call .91 +2.3%
• TRIN/Arms 1.17 -10.0%

Thursday Watch

Night Trading 

• Asian equity indices are -.75% to -.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 78.5 -5.5 basis points.

• China Sovereign CDS 35.5 -2.0 basis points.
  

• Bloomberg Emerging Markets Currency Index 59.56 -.05%.
• Bloomberg Global Risk-On/Risk Off Index 2,395.0 -9.0 points.
• Volatility Index(VIX) futures 21.4 -1.4%.
• FTSE 100 futures -.57%.

• S&P 500 futures +.02%.

• NASDAQ 100 futures +.06%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (BJ)/.65
• (EL)/.50
• (KSS)/1.26
• (M)/.18
• (WOOF)/.19
• (USCR)/1.42
  

After the Close:

• (AMAT)/1.78
• (ROST)/.96
  

Economic Releases

8:30 am EST

• Initial Jobless Claims for last week are estimated to fall to 364K versus 375K the prior week.
• Continuing Claims are estimated to fall to 2800K versus 2866K prior.
• Philly Fed Business Outlook Index for Aug. is estimated to rise to 23.3 versus 21.9 in July.
  

10:00 am EST

• The Leading Index for July is estimated to rise +.7% versus a +.7% gain in June.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Japan Inflation Data report, weekly Langer Consumer Comfort Index, weekly EIA natural gas inventory report, 2Q Mortgage Delinquencies/MBA Mortgage Foreclosures reports and the (UHAL) investor meeting could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are lower, weighed down by commodity 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 75% net long heading into the day.

Stocks Lower into Final Hour on Afghanistan Pullout Debacle, Rising China/Taiwan Tensions, Fed Taper Worries, Healthcare/Utility Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 17.7 -1.5%
• Bloomberg Global Risk On/Risk Off Index 2,683.0 +81.0 points

• Euro/Yen Carry Return Index 132.94 +.31%

• Emerging Markets Currency Volatility(VXY) 8.72 -.46%

• S&P 500 Implied Correlation 50.5 +2.9%

• ISE Sentiment Index 114.0  +13.0 points
  

• Total Put/Call .89 -3.3%

• NYSE Arms .75 -26.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 49.6 -.11%
  

• US Energy High-Yield OAS 448.03 -.40%

• European Financial Sector CDS Index 53.36 -.54%

• Italian/German 10Y Yld Spread 103.0 -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 80.72 -3.56%
  

• Emerging Market CDS Index 163.20 +.71%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 38.35 -.13%

• 2-Year Swap Spread 9.25 -.25 basis point

• TED Spread 6.5 -1.0 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -2.5 +.25 basis point
  
• MBS  5/10 Treasury Spread  76.0 -1.5 basis points
  
• IHS Markit CMBX BBB- 6 71.75 -1.75 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 59.53 -.03%
• 3-Month T-Bill Yield .06% unch.
  

• Yield Curve 106.0 +2.0 basis points
  

• China Iron Ore Spot 143.260 USD/Metric Tonne -9.1%

• Citi US Economic Surprise Index -36.1 -4.8 points

• Citi Eurozone Economic Surprise Index 7.1 -2.1 points
  

• Citi Emerging Markets Economic Surprise Index 37.4 +1.2 points

• 10-Year TIPS Spread 2.32 -2.0 basis points
• 100.0% chance of no change at Nov. 3rd meeting, 100.0% chance of no change at Dec. 15th meeting

US Covid-19:

• 293 new infections/100K people(last 7 days total) +6/100K people
• 55% of Jan. 7th, 2021 peak(highest daily avg. new infections) +1.0 percentage point
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +1 open in Japan 
• China A50 Futures: Indicating -138 open in China

• DAX Futures: Indicating -7 open in Germany

Portfolio:

• Slightly Higher: On gains in my tech/consumer discretionary sector longs and index hedges
  

• Disclosed Trades: None
  

• Market Exposure: 75% Net Long
  

Bear Radar

 Style Underperformer:

• Large-Cap Value -.3%

Sector Underperformers:

• 1) Gold & Silver -1.6% 2) Foods -.7% 3) Healthcare Providers -.6%

Stocks Falling on Unusual Volume: 

• HLMN, JKHY, CME, FWAA, MRNS, CDK and CREE
  

Stocks With Unusual Put Option Activity:

• 1) JNPR 2) CBOE 3) ATNF 4) BGCP 5) JDST
  

Stocks With Most Negative News Mentions:

• 1) CRMT 2) CREE 3) NREF 4) CDK 5) RCAR
  

Charts:

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