Thursday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 95.75 +.5 basis point. 

• China Sovereign CDS 60.75 +2.25 basis points.
  
• China Iron Ore Spot 102.1 USD/Metric Tonne +.7%.

• Bloomberg Emerging Markets Currency Index 42.6 unch.
• Bloomberg Global Risk-On/Risk Off Index 68.7 +.5%. 
• Bloomberg US Financial Conditions Index .26 -4.0 basis points.
  
• Volatility Index(VIX) futures 17.6 -.2%.
• Euro Stoxx 50 futures +.44%.

• S&P 500 futures +.29%.

• NASDAQ 100 futures +.33%.  

Morning Preview Links

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

Thursday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 104.5 -1.5 basis points. 

• China Sovereign CDS 58.0 -.25 basis point.
  
• China Iron Ore Spot 112.5 USD/Metric Tonne -.65%.

• Bloomberg Emerging Markets Currency Index 43.4 +.07%.
• Bloomberg Global Risk-On/Risk Off Index 67.2 +.06%. 
• Bloomberg US Financial Conditions Index .46 -2.0 basis points.
  
• Volatility Index(VIX) futures 14.9 +.08%.
• Euro Stoxx 50 futures +.27%.

• S&P 500 futures +.17%.

• NASDAQ 100 futures +.46%.  

Morning Preview Links

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 modestly mixed.  The Portfolio is 75% net long heading into the day.

Stocks Finish Mostly Higher on Fed Pause Hopes, Loosening US Financial Conditions, Earnings Outlook Optimism, Transport/Financial Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 13.6 -2.2%
• DJIA Intraday % Swing .57%
  
• Bloomberg Global Risk On/Risk Off Index 66.5 +.98%

• Euro/Yen Carry Return Index 164.1 -.22%

• Emerging Markets Currency Volatility(VXY) 8.7 -.6%

• CBOE S&P 500 Implied Correlation Index 17.9 +7.7% 

• ISE Sentiment Index 127.0 +25.0 points
  

• Total Put/Call .89 +2.3%

• NYSE Arms .98 -26.9%

Credit Investor Angst:

• North American Investment Grade CDS Index 64.1 -1.1%
  

• US Energy High-Yield OAS 330.70 -.88%
• Bloomberg TRACE # Distressed Bonds Traded 365.0 -4.0
  

• European Financial Sector CDS Index 80.0 -.95% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 261.12 -1.0%
  

• Italian/German 10Y Yld Spread 162.0 basis points -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 105.5 -1.4%
  

• Emerging Market CDS Index 198.32 -.84%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.6 +.09%

• 2-Year Swap Spread 21.25 basis points unch.
  

• TED Spread 19.0 basis points -2.0 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -11.0 +.75 basis point
  
• MBS  5/10 Treasury Spread 160.0 -3.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 731.0 unch.
  
• Avg. Auto ABS OAS 73.0 -2.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 43.5 +.15%
• 3-Month T-Bill Yield 5.42% +1.0 basis point
  

• China Iron Ore Spot 112.9 USD/Metric Tonne -.3%
• Dutch TTF Nat Gas(European benchmark) 29.3 euros/megawatt-hour  -10.3%

• Citi US Economic Surprise Index 68.2 -2.1 points

• Citi Eurozone Economic Surprise Index -136.7 +2.2 points

• Citi Emerging Markets Economic Surprise Index -8.3 -.8 point
• S&P 500 Current Quarter EPS Growth Rate YoY(149 of 500 reporting) +4.0% +1.5 percentage points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 231.54 +.05:  Growth Rate +3.7% unch., P/E 19.7 unch.
  
• S&P 500 Current Year Estimated Profit Margin 12.07% -1.0 basis point
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(4 of 10 reporting) +15.9% +12.5 percentage points
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 220.01 +.14: Growth Rate +43.0% +.1 percentage point, P/E 35.4 -.3
  
• Bloomberg US Financial Conditions Index .51 +2.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index -.90 -83.0 basis points
  
• US Yield Curve -98.0 basis points (2s/10s) +1.0 basis point
  
• US Atlanta Fed 2Q GDPNow Forecast +2.41% -1.0 basis point
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.19% unch.: CPI YoY +3.37% unch.
  
• 10-Year TIPS Spread 2.36 -3.0 basis points
  
• Highest target rate probability for Nov. 1st FOMC meeting: n/a(n/a) chance of 5.25%-5.5%. Highest target rate probability for  Dec. 13th meeting: n/a(n/a percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -113 open in Japan 
• China A50 Futures: Indicating +68 open in China

• DAX Futures: Indicating +81 open in Germany

Portfolio:

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

• Disclosed Trades: None
  

• Market Exposure: 75% Net Long
  

Tomorrow's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open:

• (ABBV)/2.84
• (AGCO)/3.73
• (AMT)/2.42
• (AEP)/1.13
• (MT)/1.82
• (BCS)/.41
• (BAX)/.60
• (BSX)/.49
• (BMY)/1.98
• (BC)/2.46
• (CBRE)/.76
• (CMCSA)/.98
• (CROX)/2.98
• (FSS)/.62
• (FCFS)/1.06
• (FCN)/1.60
• (HOG)/1.24
• (HCA)/4.25
• (HSY)/1.91
• (HTZ)/.64
• (HON)/2.21
• (IP)/.38
• (KDP)/.40
• (LH)/3.75
• (MLM)/4.85
• (MA)/2.83
• (MCD)/2.78
• (MBLY)/.12
• (NSC)/3.11
• (NOC)/5.33
• (OSK)/1.63
• (BTU)/1.72
• (RS)/6.55
• (RCL)/1.57
• (LUV)/1.09
• (STM)/1.09
• (STRA)/.69
• (TSCO)/3.92
• (VLO)/5.04
• (WEX)/3.52
• (XEL)/.57
  

After the Close: 

• (AB)/.66
• (BZH)/.88
• (SAM)/3.38
• (BYD)/1.67
• (CP)/.94
• (CUZ)/.65
• (DECK)/2.21
• (DLR)/1.66
• (FSLR)/1.00
• (F)/.54
• (INTC)/-.04
• (JNPR)/.54
• (KLAC)/4.86
• (LYV)/.65
• (MHK)/2.65
• (MDLZ)/.69
• (SKYW)/-.39
• (TXRH)/1.20
• (TMUS)/1.69
• (X)/1.79
• (WY)/.21
  

Economic Releases  

8:30 am EST

• 2Q GDP Annualized QoQ is estimated to rise +1.8% versus a +2.0% gain in 1Q.
• 2Q Personal Consumption is estimated to rise +1.3% versus a +4.2% gain in 1Q.
• 2Q GDP Price Index is estimated to rise +3.0% versus a +4.1% gain in 1Q.
• 2Q Core PCE Price Index QoQ is estimated to rise +4.0% versus a +4.9% gain in 1Q.
• Durable Goods Orders for June is estimated to rise +1.2% versus a +1.8% gain in May.
• Durables Ex Transports for June is estimated to rise +.1% versus a +.7% gain in May.
• Cap Goods Orders Non-Defense Ex Air for June is estimated to fall -.2% versus a +.7% gain in May.
• Initial Jobless Claims for last week is estimated to rise to 235K versus 228K the prior week.
• Continuing Claims is estimated to fall to 1750K versus 1754K prior.
• Advance Goods Trades Balance for June is estimated at -$91.9B versus -$91.1B in May.
• Wholesale Inventories MoM for June is estimated to fall -.1% versus unch. in May. 
• Retail Inventories MoM for June is estimated to rise +.4% versus a +.8% gain in May.
  

10:00 am EST

• Pending Home Sales MoM for June is estimated to fall -.5% versus a -2.7% decline in May.
  

11:00 am EST

• The Kansas City Fed Manufacturing Activity Index for July is estimated to rise to -10 versus -12 in June.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The ECB decision, Australia Import/Export Prices report and the weekly EIA natural gas inventory report could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Morning Market Internals

NYSE Composite Index:

• NYSE Volume Running +4.3% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 8.7 -.7
  
• 5 Sectors Declining, 6 Sectors Rising
• 60.6% of Issues Advancing, 36.3% Declining
• 84 New 52-Week Highs, 5 New Lows
• 60.8%(+2.8%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 73.0 +3.0
  
• Bloomberg Global Risk-On/Risk-Off Index 66.1 +.4%
  
• Russell 1000: Growth/Value 17,142.8 -.8%
• 1-Day Vix 13.4 -11.7%
  
• Vix 13.9 +.6%
  
• Total Put/Call .84 -3.5%
• TRIN/Arms 1.02 -23.8%
  

Wednesday Watch

Night Trading 

• Asian equity indices are -.5% to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 106.0 -3.0 basis points. 

• China Sovereign CDS 59.25 -2.25 basis points.
  
• China Iron Ore Spot 115.5 USD/Metric Tonne +.6%.

• Bloomberg Emerging Markets Currency Index 43.4 -.1%.
• Bloomberg Global Risk-On/Risk Off Index 65.9 +.2%. 
• Bloomberg US Financial Conditions Index .44 -5.0 basis points.
  
• Volatility Index(VIX) futures 15.30 -.3%.
• Euro Stoxx 50 futures -.29%.

• S&P 500 futures +.04%.

• NASDAQ 100 futures -.09%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by industrial 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 75% net long heading into the day.