Weekly Scoreboard*

Indices

• S&P 500 1,988.77 +.91%

• DJIA 16,643.01 +1.11%

• NASDAQ 4,828.32 +2.60%

• Russell 2000 1,162.91 +.53%

• S&P 500 High Beta 30.46 +2.95%

• Goldman 50 Most Shorted 125.36 +4.34% 

• Wilshire 5000 20,766.01 +.88%

• Russell 1000 Growth 971.92 +1.53%

• Russell 1000 Value 954.80 +.27%

• S&P 500 Consumer Staples 487.80 -.32%

• Solactive US Cyclical 121.56 +. 70%

• Morgan Stanley Technology 1,022.02 +2.49%

• Transports 7,908.66 +.47%

• Utilities 572.21 -4.26%

• Bloomberg European Bank/Financial Services 108.50 +.74%

• MSCI Emerging Markets 33.72 +5.66%

• HFRX Equity Hedge 1,152.19 -3.46%

• HFRX Equity Market Neutral 1,011.41 -.23%

Sentiment/Internals

• NYSE Cumulative A/D Line 227,557 -.55%

• Bloomberg New Highs-Lows Index -317 +723

• Bloomberg Crude Oil % Bulls 35.42 +45.22%

• CFTC Oil Net Speculative Position 210,564 -6.8%

• CFTC Oil Total Open Interest 1,688,731 +.75%

• Total Put/Call 1.28 -23.81%

• OEX Put/Call .74 -73.94%

• ISE Sentiment 79.0 +12.86%

• NYSE Arms 1.06 -63.32%

• Volatility(VIX) 26.05 -7.06%

• S&P 500 Implied Correlation 60.01 +3.57%

• G7 Currency Volatility (VXY) 10.16 +5.94%

• Emerging Markets Currency Volatility (EM-VXY) 11.62 +1.93%

• Smart Money Flow Index 16.764.56 -1.80%

• ICI Money Mkt Mutual Fund Assets $2.695 Trillion +.34%

• ICI US Equity Weekly Net New Cash Flow -$5.204 Billion

• AAII % Bulls 32.5 +21.2%

• AAII % Bears 38.3 +14.8%

Futures Spot Prices

• CRB Index 1917.10 +3.01%

• Crude Oil 45.36 +12.7%

• Reformulated Gasoline 1551.55 -1.57%

• Natural Gas 2.72 +1.19%

• Heating Oil 157.65 +7.95%

• Gold 1,133.50 -2.24%

• Bloomberg Base Metals Index 145.78 +.42%

• Copper 233.80 +2.09%

• US No. 1 Heavy Melt Scrap Steel 210.67 USD/Ton unch.

• China Iron Ore Spot 56.04 USD/Ton -.11%

• Lumber 237.10 -3.34%

• UBS-Bloomberg Agriculture 1,017.42 -.2%

Economy

• ECRI Weekly Leading Economic Index Growth Rate -.9% -50.0 basis points

• Philly Fed ADS Real-Time Business Conditions Index .1913 -3.57%

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 126.21 -.03%

• Citi US Economic Surprise Index -7.5 +10.7 points

• Citi Eurozone Economic Surprise Index 14.6 -2.3 points

• Citi Emerging Markets Economic Surprise Index -9.6 -1.0 point

• Fed Fund Futures imply 62.0% chance of no change, 38.0% chance of 25 basis point hike on 9/17
• # of Months to 1st Fed Rate Hike(Morgan Stanley) 5.61 +39.55%

• US Dollar Index 96.09 +1.37%

• Euro/Yen Carry Return Index 141.84 -2.32%

• Yield Curve 147.0 +5.0 basis points

• 10-Year US Treasury Yield 2.18% +14.0 basis points

• Federal Reserve's Balance Sheet $4.436 Trillion -.29%

• U.S. Sovereign Debt Credit Default Swap 16.28 +1.72%

• Illinois Municipal Debt Credit Default Swap 253.0 +1.75%

• Western Europe Sovereign Debt Credit Default Swap Index 22.34 -5.58%

• Asia Pacific Sovereign Debt Credit Default Swap Index 80.11 -1.37%
  

• Emerging Markets Sovereign Debt CDS Index 278.84 -15.39%
  

• Israel Sovereign Debt Credit Default Swap 68.69 -2.22%

• Iraq Sovereign Debt Credit Default Swap 736.50 -1.33%

• Russia Sovereign Debt Credit Default Swap 372.80 -11.2%

• iBoxx Offshore RMB China Corporates High Yield Index 116.79 -1.45%

• 10-Year TIPS Spread 1.62% +8.0 basis points

• TED Spread 27.25 -4.0 basis points

• 2-Year Swap Spread 15.25 -7.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -21.25 -3.25 basis points

• N. America Investment Grade Credit Default Swap Index 79.21 -3.53%

• America Energy Sector High-Yield Credit Default Swap Index 1,872.0 +.06%

• European Financial Sector Credit Default Swap Index 81.20 -3.0%
  

• Emerging Markets Credit Default Swap Index 344.58 -2.94%
  

• CMBS AAA Super Senior 10-Year Treasury Spread  to Swaps 101.0 unch.

• M1 Money Supply $3.039 Trillion -.31%

• Commercial Paper Outstanding 1,049.70 -.70%

• 4-Week Moving Average of Jobless Claims 272,500 +1,000

• Continuing Claims Unemployment Rate 1.7% unch.

• Average 30-Year Mortgage Rate 3.84% -9 basis points

• Weekly Mortgage Applications 412.70 +.24%

• Bloomberg Consumer Comfort 42.0 +.9 point

• Weekly Retail Sales +1.70% unch.

• Nationwide Gas $2.51/gallon -.12/gallon

• Baltic Dry Index 905.0 -8.95%

• China (Export) Containerized Freight Index 833.25 -1.32%

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 20.0 -20.0%

• Rail Freight Carloads 278,972 +.91%

Best Performing Style

• Large-Cap Growth +1.1%

Worst Performing Style

• Small-Ca Value -.5%

Leading Sectors

• Oil Service +9.6%

• Semis +5.5%

• Biotech +3.0%

• Alt Energy +2.9%

• Computer Hardware +2.8%

Lagging Sectors

• Airlines -2.3% 

• REITs -3.3%

• Homebuilders -4.8%

• Utilities -4.9%

• Gold & Silver -6.3%

Weekly High-Volume Stock Gainers (14)

• CAM, GAS, MOV, BBY, DY, BEAT, ANF, BRCD, GB, ACOR, GES, HRTX, NMBL and OSK

Weekly High-Volume Stock Losers (42)

• MS, EWBC, WDR, NTK, MCK, PCL, PX, ADSK, AZZ, SYF, ARG, ABT, PLUS, EXC, HEI, TIF, ULTA, NTRS, VAL, BLOX, NDSN, GSBD, TYPE, SLB, SSS, COG, DG, FMC, PDCO, LEG, DE, JLL, TOL, ROST, CBG, OPK, DSW, WSM, CRMT, POM, INTU and TFM

Weekly Charts

ETFs

• High-Volume Gainers

• High-Volume Losers

Stocks

• High-Volume Gainers

• High-Volume Losers

*5-Day Change

Stocks Modestly Lower into Afternoon on China Bubble-Bursting Fears, Fed Uncertainty, Earnings Worries, Utility/Pharma Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 27.21 +4.25%

• Euro/Yen Carry Return Index 141.90 -.15%

• Emerging Markets Currency Volatility(VXY) 11.56 -.94%

• S&P 500 Implied Correlation 62.06 +9.41%

• ISE Sentiment Index 86.0 unch.

• Total Put/Call 1.23 +3.36%

• NYSE Arms .92 +165.13% 

Credit Investor Angst:

• North American Investment Grade CDS Index 79.71 +.97%

• America Energy Sector High-Yield CDS Index 1,872.0 -2.51%

• European Financial Sector CDS Index 81.26 +2.38%

• Western Europe Sovereign Debt CDS Index 22.34 -2.66%

• Asia Pacific Sovereign Debt CDS Index 79.70 +1.55%

• Emerging Market CDS Index 344.58 +.55%
  

• iBoxx Offshore RMB China Corporates High Yield Index 116.79 -.36%

• 2-Year Swap Spread 15.25 +.75 basis point

• TED Spread 27.25 -.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -21.25 -.75 basis point

Economic Gauges:

• 3-Month T-Bill Yield .06% +1.0 basis point

• Yield Curve 146.0 -3.0 basis points

• China Import Iron Ore Spot $56.04/Metric Tonne +3.91%

• Citi US Economic Surprise Index -7.5 -4.8 points

• Citi Eurozone Economic Surprise Index 14.6 -3.5 points

• Citi Emerging Markets Economic Surprise Index -9.6 -1.7 points

• 10-Year TIPS Spread 1.61 +2.0 basis points
• # of Months to 1st Fed Rate Hike(Morgan Stanley) 5.61 -.31

Overseas Futures:

• Nikkei 225 Futures: Indicating -1 open in Japan 
• China A50 Futures: Indicating -302 open in China

• DAX Futures: Indicating -8 open in Germany

Portfolio: 

• Slightly Higher: On gains in my retail sector longs and emerging markets shorts

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

• Market Exposure: Moved to 25% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth -.22%

Sector Underperformers:

• 1) Disk Drives -2.42% 2) Utilities -1.54% 3) HMOs -1.42%

Stocks Falling on Unusual Volume:

• GME, RGS, ADSK, SPLK, CEO, CEA, ZOES, ZIV, HCI, CHDN, CIVI, AAXJ, POM, XIV, GHL, SYK, ASND, AMG, USNA, WDAY, WSM, MAN, GAS, RHI and POM

Stocks With Unusual Put Option Activity:

• 1) S 2) BTU 3) HOT 4) BHI 5) LOCO
  

Stocks With Most Negative News Mentions:

• 1) DUK 2) BAC 3) RGS 4) TDC 5) TWC
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Value +.29%

Sector Outperformers:

• 1) Oil Service +4.15% 2) Gold & Silver +2.88% 3) Energy +2.21%
  

Stocks Rising on Unusual Volume:

• ATVI, BIG, SWHC, UAL, CPG, VEEV, MRO, LOCO, HP, SSTK and DDD

Stocks With Unusual Call Option Activity:

• 1) TIF 2) ADSK 3) EPI 4) SPWR 5) GME
  

Stocks With Most Positive News Mentions:

• 1) SWHC 2) UAL 3) SLB 4) BIG 5) MOV
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Morning Market Internals

NYSE Composite Index:

• Volume Running 19.0% Above 100-day average
• 2 Sectors Rising, 8 Sectors Declining
• 54.8% of Issues Advancing, 42.5% Declining
• 3 New 52-Week Highs, 10 New Lows
• 24.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 37.2
• Vix 27.0
• Total Put/Call 1.02
• TRIN/Arms .69

Friday Watch

Evening Headlines 

Bloomberg: 

• China Will Respond Too Late to Avoid Recession, Citigroup Says. China is sliding into recession and the leadership will not act quickly enough to avoid a major slowdown by implementing large-scale fiscal policies to stimulate demand, Citigroup Inc.’s top economist Willem Buiter said. The only thing to stop a Chinese recession, which the former external member of the Bank of England defines as 4 percent growth on “the mendacious official data” for a year, is a consumption-oriented fiscal stimulus program funded by central government and monetized by the People’s Bank of China, Buiter said. “Despite the economy crying out for it, the Chinese leadership is not ready for this,” Buiter, chief economist at Citigroup, said in a media call hosted Thursday by the Council on Foreign Relations in New York. “It’s an economy that’s sliding into recession.” The true rate of expansion “is probably something closer to 4.5 percent or less,” Buiter said. “They will respond but they will respond too late to avoid a recession, which is likely to drag the global economy with it down to a global growth rate below 2 percent -- which is in my definition a global recession,” said Buiter, a former external member of the Bank of England. The boom and bust in the Shanghai Composite Index, which more than doubled in about a year before a selloff erased $5 trillion in market value in two months, is raising questions about “the competence of the Chinese authorities as managers of the macro economy,” Buiter said.  

• Abenomics Starting to Look Like a Failure. (video)   

• Dollar Heads for Weekly Gain as Traders Boost Bets on Rate Rise. The dollar headed for its first weekly advance since the start of this month as a rally in stocks and accelerating growth fueled speculation the U.S. economy will be resilient to a slowdown in China. The greenback has gained against all its Group-of-10 peers except the yen this week as traders increased to 54 percent the odds the Federal Reserve will raise interest rates this year, from as low as 46 percent on Tuesday. The currency of New Zealand, which has China as its biggest trading partner, led declines among major counterparts this week.

• Asian Stocks Rise as U.S. Economy Grows Faster Than Forecast. Asian stocks rose for a third day as a global rally gathered pace and the U.S. economy grew faster than expected in the second quarter. The MSCI Asia Pacific Index gained 0.4 percent to 129.32 as of 9:01 a.m. in Tokyo. 

• Jefferies Distressed-Debt Loss Said to Near $100 Million in 2015. A team of distressed-debt traders at Jefferies Group lost almost $100 million this year as the rout in oil prices battered the value of bonds and loans of energy companies, according to people with knowledge of the performance. The trading group incurred most of its losses from energy companies including Samson Resources, the driller that said Aug. 14 it was planning to file for bankruptcy protection, the people said Thursday. About half of the losses came during the firm’s fiscal third quarter, which began in June, one of the people said. The bank said it made $153.4 million trading across all fixed-income markets during the previous quarter.

• The Scary Number Hiding Behind Today’s GDP Party. To judge by gross domestic income, the U.S. economy appears much shakier. The federal government today released two very different estimates of the U.S. economy’s growth rate in the second quarter. The one that got all the attention was the robust 3.7 percent annual rate of increase in gross domestic product. Not many people noticed that gross domestic income increased at an annual rate of just 0.6 percent. That’s a big discrepancy for two numbers that should theoretically be the same, since they’re two ways of measuring the same thing: the size of the economy. If you believe the GDP number, you’re happy. If you believe the GDI number, you’re thinking the U.S. is skating close to a recession.

Wall Street Journal: 

• Overseas Bankers, Officials Urge Fed Not to Waver on Interest-Rate Rise by Jon Hilsenrath. Some international officials have a message for the U.S. central bank: Get on with it already.

• China’s Turbulence Exposes Risks to Europe’s Growth. Eurozone’s heavy reliance on exports leaves region vulnerable as emerging markets stumble. Turbulence in China and other emerging markets is exposing the risks in Europe’s strategy of relying heavily on global exports for growth. With Europe’s own demand choked by high public and private debt and often inflexible business regulation, eurozone governments have widely viewed exports as the answer to the Continent’s internal problems. That approach could leave Europe vulnerable now, as...

• How Do You Short China? Some traders pile into insurance-like credit-default swaps. Suddenly everyone wants to bet against China. But with limited access to the country’s hard-hit stock markets and thin trading in overseas markets for its currency, it can take a little creativity.
  
  As such, traders are scouring stock, bond and currency markets around the globe for ways to make money on the malaise afflicting the world’s second-largest economy. Some are piling into insurance-like contracts that would pay out if...

• How My Presidency Would Deal With China by Marco Rubio. Approaching Beijing on the basis of strength and example, not weakness and appeasement.

Fox News:

• Evidence mounts that soon-to-be flush Iran already spurring new attacks on Israel. (video) An unsettling surge in terrorism by Iranian proxies has many Israelis convinced the release to Tehran of tens of billions of dollars in frozen funds is already putting the Jewish state in danger.

• Inside Vester Lee Flanagan's life. (video) Vester Lee Flanagan, the crazed gunman who executed on live morning TV two local journalists who worked at his former station, was told before being fired by the station to seek help for possible mental health issues -- then lingered in Roanoke, Va., for more than two years, living in a squalor amid publicity photos of himself, porn and sex toys.

MarketWatch.com: 

• China’s economy may be in worse shape than people think. China may be in worse shape than authorities in Beijing are willing to admit. An analyst at Evercore ISI crunched the numbers and estimated that the Chinese economy actually shrank in July, suggesting that China’s forecast for 2015 is overly optimistic, if not unrealistic. “Our proprietary Synthetic Growth Index (SGI) fell 1.1% month-on-month in July, and was also down 1.1% year-on-year,” said analyst David Straszheim at Evercore ISI. “Even if we adjust our SGI upward (for too-little representation of services—lack of data), we believe actual economic growth in China is far below the official 7.0% year-on-year. And it is not improving.” The SGI is a weighted average of seven components including railway freight, airline passengers, and electricity consumption. The analyst used independent sources for his research, claiming that data released by official Chinese channels are too opaque due to an absence of consistent real or nominal deflators to work with. 

• China worries trigger largest outflow from emerging markets in over 7 years. Worries about China drove more than $10 billion in funds from emerging markets this week, the biggest outflow in over seven years. Investors withdrew more than $4.5 billion from both Asia ex-Japan and the diversified Global Emerging Markets Equity Funds in the week ended Aug. 26, according to EPFR Global Thursday.

CNBC:

• China's 'QT' is the real global economic threat. (video) "The (People's Bank of China's) actions are equivalent to an unwind of QE, or in other words quantitative tightening," he said. Saravelos said the world's biggest worry is "that QT has much more to go."

Zero Hedge: 

• China Strengthens Yuan Fix Most Since March As Bailout Fund Runs Out Of Fire-Power, Dong Leaks Lower After Failed Bond Auction.

• US Automaker Panic Button Looms After China's Top Carmaker Warns Of "Grim" Outlook. (graph)

• What China's Treasury Liquidation Means: $1 Trillion QE In Reverse. (graph)

• China Gets Creative, Turns To Swaps To Manage Yuan. (graph)

• Global Grain Stocks At 30 Year Highs Mean Food Deflation Is Next. (graph)

• The Best And Worst Performing Commodities Of 2015. (graph)

• Behold: A Chinese Liquidity Crunch. (graph)

• A Bottom, But Not THE Bottom.

• Freeport-McMoRan(FCX) Up Nearly 50% Today After Carl Icahn Goes Activist, Announces 8.5% Stake.

• Margin Calls Mount On Loans Against Stock Portfolios Used To Buy Homes, Boats, "Pretty Much Everything".

• Biggest 2 Day Surge In History Saved As Epic 3pm 'VIXtermination' Ramp Undoes "Quant Omen" Tumble. (graph)

Business Insider:

• The oil crash just spilled into Canada's broader economy.

• It looks like Iran built an extension to one of its most controversial nuclear sites.

• Civil unrest is already happening in America and it could get a lot worse in 2016.

• Earnings season hasn't been this disappointing in a decade.

• Stocks crashed the last two times this happened. (graph)

• Why Saudi Arabia won't cut oil production.

Reuters:

• FDA approves Amgen's(AMGN) cholesterol-lowering drug Repatha. The U.S. Food and Drug Administration on Thursday approved Amgen Inc's Repatha drug for patients with hereditary forms of high cholesterol and those with cardiovascular disease.

• U.S.-based stock funds post $17.8 bln outflows in latest week - Lipper.

• CAD software maker Autodesk's(ADSK) forecast disappoints. Autodesk Inc, the maker of computer-aided design (CAD) software, cut its full-year profit and revenue forecast for the second time this year, sending its shares down 7 percent. Autodesk also reported lower-than-expected quarterly revenue as its licensing revenue declined because of the company's shift to a cloud-based subscription model.

• Caterpillar(CAT) Inc plans to cut 475 more jobs amid revenue decline.

• China official blames Fed for global market rout, not yuan. The global stock market rout of the past week was sparked by concerns over a possible interest rate rise by the U.S. Federal Reserve and not by the devaluation of China's yuan currency, a senior Chinese central bank official told Reuters on Thursday. Yao Yudong, head of the bank's Research Institute of Finance and Banking, said the U.S. central bank should delay any rate hike to give fragile emerging market economies time to prepare. He said Beijing's decision to let the yuan fall in value against the dollar should not make it a scapegoat for the sell-off. "China's exchange rate reform had nothing to do with the global stock market volatility, it was mainly due to the upcoming U.S. Federal Reserve monetary policy move," Yao said. "We were wronged."

Zacks:

• Zoe's Kitchen(ZOES) Beats on Earnings and Revenue, Comps Lag. Shares of ZOE were up almost 3% today, but they’ve dropped in after-hours trading and are about -6% on the day. It seems that investors are reacting to the slightly disappointing comps.

Financial Times:

• Oil price fall hits Canada’s big banks. Canada’s biggest banks have warned of more troubles to come from the fall in the oil price, as they reported surges in bad loans and chilling effects on consumer demand in the world’s 11th-largest economy.

Evening Recommendations 

• None of note

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 127.75 -6.0 basis points.

• Asia Pacific Sovereign CDS Index 78.5 -1.25 basis points.

• S&P 500 futures -.04%.

• NASDAQ 100 futures +.05%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (BIG)/.34

• (BNS)/1.45 

Economic Releases

8:30 am EST

• Personal Income for July is estimated to rise +.4% versus a +.4% gain in June.

• Personal Spending for July is estimated to rise +.4% versus a +.2% gain in June.

• The PCE Core for July is estimated to rise +.1% versus a +.1% gain in June.
  

10:00 am EST

• Final Univ. of Mich. Consumer Sentiment for August is estimated to rise to 93.0 versus a 92.9 prior estimate.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Jackson Hole Fed Meeting Day 2, Eurozone CPI report and the UK GDP report could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by industrial and technology 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.