Thursday Watch

Night Trading 

• Asian equity indices are -1.25% to -.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 72.5 +1.25 basis points. 

• China Sovereign CDS 46.5 +.25 basis point.
  

• Bloomberg Emerging Markets Currency Index 67.22 +.01%.

• FTSE 100 futures -.28%.

• S&P 500 futures -.46%.

• NASDAQ 100 futures -.52%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (ACN)/1.57
• (MOV)/.55

After the Close:

• (OXM)/1.05
• (PRGS)/.47
• (RH)/2.86

Economic Releases
8:30 am EST

• 4Q GDP is estimated to rise +2.3% versus a prior estimate of a +2.6% gain.
• 4Q Personal Consumption is estimated to rise +2.6% versus a prior estimate of a +2.8% gain.
• 4Q Core PCE is estimated to rise +1.7% versus a +1.7% gain in 3Q.
• Initial Jobless Claims for last week are estimated to fall to 220K versus 221K prior.
• Continuing Claims are estimated to rise to 1778K versus 1750K the prior week.
  

10:00 am EST

• Pending Home Sales MoM for Feb. is estimated to fall -.5% versus a +4.6% gain in Jan.

11:00 am EST

• The Kansas City Fed Manf. Activity Index for March is estimated at 0.0 versus 1.0 in February.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Bowman speaking, China Trade Talks, Japan Industrial Production report, Eurozone Industrial Production report, Eurozone CPI report, weekly Bloomberg Consumer Comfort Index, $32B 7Y T-Note auction, EIA natural gas inventory report, Evercore ISI Retail Summit, (FL) investor meeting, (MOS) Analyst Day, (ADSK) Investor Day and the Sidoti Investor Conference could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by technology and industrial 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 Lower into Final Hour on Emerging Markets Debt Angst, Oil Decline, Technical Selling, Metals&Mining/Gaming Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 15.4 +5.2%

• Euro/Yen Carry Return Index 129.18 -.25%

• Emerging Markets Currency Volatility(VXY) 9.2 +7.2%

• S&P 500 Implied Correlation 41.24 +3.5%

• ISE Sentiment Index 83.0 -21.0%
  

• Total Put/Call 1.03 +17.1%

• NYSE Arms 1.82 +203.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 68.42 +.15%
  

• America Energy Sector High-Yield CDS Index 528.0 -.11%

• European Financial Sector CDS Index 83.41 -2.25%

• Italian/German 10Y Yld Spread 253.5 +5.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 72.02 +.32%
  

• Emerging Market CDS Index 187.0 +6.03%
  

• iBoxx Offshore RMB China Corporate High Yield Index 160.86 +.08%

• 2-Year Swap Spread 10.75 +2.0 basis points

• TED Spread 17.0 +.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -11.5 -3.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.39 -.45%
• 3-Month T-Bill Yield 2.42% -2.0 basis points

• Yield Curve 16.5 +.75 basis point

• China Iron Ore Spot 84.20 USD/Metric Tonne +.73%

• Citi US Economic Surprise Index -40.30 unch.

• Citi Eurozone Economic Surprise Index -54.40 -.6 point

• Citi Emerging Markets Economic Surprise Index -17.80 +1.0 point

• 10-Year TIPS Spread 1.84 -2.0 basis points
• 27.9% chance of Fed rate cut at June 19th meeting, 35.3% chance of cut at July 31st meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -188 open in Japan 
• China A50 Futures: Indicating -58 open in China

• DAX Futures: Indicating +41 open in Germany

Portfolio:

• Slightly Higher: On gains in my industrial/retail sector longs, index hedges and emerging market shorts

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth -.8%

Sector Underperformers:

• 1) Semis -1.7% 2) Gaming -1.7% 3) Gold & Silver -1.6%

Stocks Falling on Unusual Volume: 

• HOME, CNC, IRTC, TITN, TUR, VFF, GOL, TREX, TEO, SCWX, DOMO, GGAL, BEAT, STM, MTSI, NTNX and EXAS

Stocks With Unusual Put Option Activity:

• 1) LQD 2) AET 3) CNC 4) TUR 5) MGM

Stocks With Most Negative News Mentions:

• 1) RVP 2) AVP 3) TTD 4) STMP 5) SMG

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.3%

Sector Outperformers:

• 1) Homebuilding +2.8% 2) Airlines +1.7% 3) Retail +1.1%

Stocks Rising on Unusual Volume:

• RBZ, WCG, SCVL, XHR, TIGR, CLAR, AXSM, KBH, ITB, LEN, OLLI, MG, LGIH, HCC, YETI, BPY, ULTI, OIS, FIVE, CRTO, CCXI, SYNA, UNF, BPR, YETI and CPLG

Stocks With Unusual Call Option Activity:

• 1) CNC 2) KBH 3) CF 4) COL 5) FIVE

Stocks With Most Positive News Mentions:

• 1) SCVL 2) RL 3) WCG 4) KNH 5) CHRA

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -12.4% Below 100-Day Average
• 5 Sectors Rising, 6 Sectors Declining
• 51.9% of Issues Advancing, 44.0% Declining
• 83 New 52-Week Highs, 13 New Lows
• 45.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.9%
• Vix 15.1 +2.9%
• Total Put/Call 1.22 +38.6%
• TRIN/Arms 1.59 +165.0%

Wednesday Watch

Evening Headlines

Bloomberg:

• U.S., China Trade Talks to Resume as Trump Vows ‘Excellent’ Deal. 

• PBOC Expected to Adopt More Moderate Stimulus in 2019.

• May's Brexit Deal Wins Support -- But Price Might Be Her Job.

• These Are the Brexit Options That British MPs Are Suggesting.

• Stocks Rally Fizzles in Asia; Yen Edges Higher. Asian stocks fell in early Wednesday trading, with markets still reeling from this year’s biggest decline in shares at the start of the week. Treasuries steadied and the dollar maintained its climb. Shares in Japan sank as the Topix index, which recouped all of Monday’s slide on Tuesday, resumed declines. Equities in Seoul and Sydney also edged lower. Energy stocks helped push the S&P 500 Index higher on Tuesday as oil surged after Russia signaled commitment to output cuts. Treasury yields were steady as investors digested views from Stephen Moore, President Donald Trump’s pick for an open Federal Reserve seat, who said the central bank should immediately cut rates by 50 basis points. The yen trimmed overnight losses. Japan’s Topix index fell 0.9 percent as of 9:06 a.m. in Tokyo. Hang Seng Index futures earlier added 0.3 percent. Australia’s S&P/ASX 200 Index slid 0.4 percent. South Korea’s Kospi index fell 0.4 percent. The S&P 500 gained 0.7 percent. Futures dipped 0.1 percent.   

• Five Things You Need to Know to Start Your Day.  

• Fed Worries Worsen, PBOC Goes Easy on Gas, Trade Talks: Eco Day.

• Oil Heads for Its Best First Quarter Since 2002.  

• McDonald's(MCD) $300 Million Deal Is Another Feat for a Tech Dynasty.

Wall St. Journal:

• Smollett Gets a Pass in Chicago.

• Purdue Pharma Begins Resolution of Opioid Cases.

• A Decade After the Housing Bust, the Exurbs Are Back.

• Wall Street Profits Up In 2018, but Average Bonus Falls.

• Apple, Qualcomm Trade Blows in Patent Fight.

• How Colin Kaepernick’s Lawyer Dealt With Nike and Became Entangled in Extortion Charges.

• Lyft to Price Shares Above Target Range in Initial Offering.

MarketWatch.com:

• The lawyers who took on Big Tobacco are aiming at Realtors and their 6% fee.

• These Democrats and media figures are in Trump’s crosshairs after Mueller’s revelations.

Fox News:

• Senate test vote over Green New Deal fails 0-57; most Dems vote 'present'.

• Chicago police union: State's attorney deserves scrutiny after Smollett debacle. 

• SEAN DAVIS: Mueller probe coverage was a catastrophic media failure.

CNBC:

• 'There's no way' we're headed for recession—five experts on the bond market's warning sign.

• After-hours buzz: KB Home, Bed Bath & Beyond, Boeing & more.

• Blooming season has come for Home Depot, Lowe's, Lennar, and D.R. Horton.

Zero Hedge:

• Two Whistleblowers Awarded $50 Million In "Massive Enforcement Action" Against JPMorgan.

• "We Are Not Investigators": CNN's Jeff Zucker Unapologetic For Perpetual Russia-Hoax Coverage.

• Rahm Emanuel, Chicago's Top Cop Slam Dropped Smollett Charges As "Whitewash Of Justice".

• Google To Launch Local News Startups In 3 'Mid-Sized' American Cities.

• College Diversity Office Releases 40-Page 'Speech' Code, Quickly Rescinds It.

• Trump Plans Executive Order To Study Risks Of EMP Attack.

• Canada Might Nix Trump's NAFTA Deal Unless He Stops Steel Tariffs.

• WTI Drops Back Below $60 After Surprise Crude Build.

• AAPL Angst & Housing Horrors Hamper Stocks As Yield Curve Hits New Lows.

Business Insider:

• Trump's national emergency declaration for a border wall survives after House fails to override veto.

• A Southwest Boeing 737 Max headed for storage in the desert just made an emergency landing in Florida.

Night Trading 

• Asian equity indices are -.5% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 71.25 -1.5 basis points. 

• China Sovereign CDS 46.25 -1.5 basis points.
  

• Bloomberg Emerging Markets Currency Index 67.64 -.08%.

• FTSE 100 futures +.28%.

• S&P 500 futures -.04%.

• NASDAQ 100 futures -.01%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (LEN)/.76

• (PAYX)/.88

• (TITN)/.01

After the Close:

• (FIVE)/1.58

• (LULU)/1.76

• (PVH)/1.76

Economic Releases
8:30 am EST

• The Trade Balance report for January is estimated at -$57.0B versus -$59.8B in Dec.
  

10:00 am EST

• The Current Account Balance for 4Q is estimated at -$130.0B versus -$124.8B in 3Q.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Quarles speaking, Fed's Clarida speaking, China Industrial Profits report, Senate hearing on aviation safety, $41B 5Y T-Note auction, weekly EIA energy inventory report, weekly MBA Mortgage Applications report, RBC Basic Materials Conference, (TSG) investor day and the CIBC Retail/Consumer Conferece could also impact trading today.

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