Bear Radar

Style Underperformer:

• Large-Cap Value -.6%

Sector Underperformers:

• 1) Coal -3.9% 2) Oil Service -1.3% 3) Computer Hardware -1.0%

Stocks Falling on Unusual Volume: 

• BTI, MGPI, ATHN, SKX, MMLP, TWLO, EEFT, NXPI, CLW, T, STS, RLI, TAST, MCO, CYNO, LZB, IMOS, HXL, SWN, TRV, SYNT, DXPE, SNA, VAR and UFPI

Stocks With Unusual Put Option Activity:

• 1) SWN 2) BK 3) XLF 4) UPS 5) TWX

Stocks With Most Negative News Mentions:

• 1) SKX 2) MGPI 3) MEMP 4) YHOO 5) DATA

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.1%

Sector Outperformers:

• 1) Software +1.7% 2) Tobacco +1.5% 3) Restaurants +1.2%

Stocks Rising on Unusual Volume:

• HMNY, EVDY, ALKS, RAI, TWX, ROK, PFPT, LECO, PYPL, KNL, SIVB, DISCA, MAN, VRSN, RRGB, WLH and SNI

Stocks With Unusual Call Option Activity:

• 1) ETP 2) MO 3) CYH 4) AMT 5) SVU

Stocks With Most Positive News Mentions:

• 1) ALKS 2) ETFC 3) PYPL 4) MSFT 5) MCD

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +2.0% Above 100-Day Average
• 3 Sectors Rising, 7 Sectors Declining
• 42.7% of Issues Advancing, 53.4% Declining
• 45 New 52-Week Highs, 24 New Lows
• 57.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 37.9%
• Vix 13.7 -.8%
• Total Put/Call .94 -4.1%
• TRIN/Arms 1.35 +109.4%

Friday Watch

Evening Headlines

Bloomberg: 

• PineBridge Sees China Dollar Debt Flood Knocking Developer Bonds. PineBridge Investments says a rally in dollar junk bonds sold by Chinese developers is about to fizzle as they return to the offshore market to raise funds. Chinese builders issued $2.4 billion of high-yield U.S. currency notes in the third quarter, 63 percent more than the same period last year. The higher supply widened yield premiums over Treasuries on China’s dollar-denominated junk bonds by 30 basis points from a nine-year low on Oct. 10. PineBridge, which manages $81 billion of globally, is “very concerned about the current spread,” said Arthur Lau, co-head of emerging-market fixed income in Hong Kong.
• Residents Who Fled Fukushima Meltdown Fear Return to Ghost Town. Weed-engulfed buildings and shuttered businesses paint an eerie picture of a coastal Japanese town abandoned after a monstrous earthquake and tsunami triggered meltdowns in the Fukushima nuclear plant. Namie, one of the communities hardest hit by the 2011 disaster, had 21,000 residents before they fled radiation spewing from the reactors eight kilometers (five miles) away. Prime Minister Shinzo Abe is now looking to repopulate the town as early as next year, a symbolic step toward recovery that might also help soften opposition to his government’s plan to restart Japan’s mostly mothballed nuclear industry.
• Asian Shares Outside Japan Slip as Dollar Revival Weighs on Oil. Asian stocks outside of Japan retreated following a pullback in oil prices, as the dollar solidified its rebound amid a weaker euro. Equities in Sydney and Seoul declined, while Tokyo shares fluctuated, following a drop in the S&P 500 Index amid mixed earnings results. The yen weakened for a second day as the greenback gained against New Zealand’s currency and its Asian emerging-market peers, while the euro lingered near its lowest point since June. U.S. crude was below $51 a barrel after sinking Thursday as Russia’s largest oil company said the nation could boost output. The MSCI Asia Pacific excluding Japan Index fell 0.2 percent as of 9:25 a.m. Tokyo time, declining for a second session to trim its gain in the week to 0.9 percent.
• In Global Iron Ore, Singapore Is Bossing China in Setting Prices. In the $7 billion-a-day global iron ore futures market, size doesn’t matter when it comes to clout. Contracts in Singapore have greater pricing power than those traded in China even though the volumes in the city-state are more than 20 times smaller, according to Goldman Sachs Group Inc.
• Whole Foods(WFM) Declines on Hepatitis Investigation in Detroit. Whole Foods Market Inc. shares declined as much as 2.5 percent after the Detroit Health Department said it’s investigating two cases of hepatitis A that may be connected to one of the chain’s stores.

Wall Street Journal:

• Ex-NSA Contractor Stole at Least 500 Million Pages of Records and Secrets, U.S. Says. The Justice Department outlines details of the probe, says it will likely charge Harold Martin with additional crimes.

Fox News:

• Abedin implicated Clinton in foundation trade-off with Morocco amid $12 million commitment. (video) Just hours after Hillary Clinton dodged a question at the final presidential debate about charges of "pay to play" at the Clinton Foundation, a new batch of WikiLeaks emails surfaced with stunning charges that the candidate herself was at the center of negotiating a $12 million commitment from King Mohammed VI of Morocco.

Zero Hedge:

• Wikileaks Releases First Batch Of Emails Sent To And From President Obama's Secret Email Address.
• Clinton Email That Caused The "Quid Pro Quo" Controversy Included Intel On Benghazi Attackers.
• 'Smoking Gun' Email Confirms DNC Involvement In Inciting Violence At Trump Rallies.
• Stocks Are On The Wrong Side Of A Rate Hike.
• Microsoft(MSFT) Hits All Time High After Beating Estimates Thanks To Windows 10 "Revenue Deferral".
• Nigeria Slashes Oil Prices, Admits There Is A "Huge" Cargo Glut. (graph)
• "Something's Broken" - VIXnado Sparks Total Chaos In Stocks As Copper & Crude Crumble.

Business Insider:

• China continues to produce more steel than the rest of the world, combined.
• NBCUniversal doubles its bet on BuzzFeed to $400 million.
• It's going to be nearly impossible for Hillary Clinton to offer debt-free college without adding 'a penny' to the national debt.
• The US freight index just collapsed at its fastest rate since 2009. (graph)
• Hedge funds are getting whacked, and it could spell bad news for the global economy.

Night Trading 

• Asian equity indices are -.25% to unch. on average.
• Asia Ex-Japan Investment Grade CDS Index 113.25 -3.25 basis points. 
• Asia Pacific Sovereign CDS Index 34.0 +.25 basis point.
• Bloomberg Emerging Markets Currency Index 72.37 -.05%. 
• S&P 500 futures -.11%. 
• NASDAQ 100 futures -.04%.

Morning Preview Links

Earnings of Note
Company/Estimate 

• (GE)/.30
• (HON)/1.66
• (MAN)/1.72
• (MCD)/1.48
• (MWW)/.06
• (MCO)/1.20
• (PH)/1.57
• (SAP)/.96
• (STI)/.89

Economic Releases

• None of note

Upcoming Splits 

• None of note

Other Potential Market Movers

• The Fed's Tarullo speaking, Fed's Williams speaking and the Eurozone Consumer Confidence report could also impact trading today.

BOTTOM LINE:  Asian indices are slightly lower, weighed down by commodity and technology shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

Stocks Modestly Lower into Final Hour on Fed Rate-Hike Fears, Earnings Outlook Concerns, Oil Decline, Road & Rail/Homebuilding Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Slightly Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 14.01 -2.78%

• Euro/Yen Carry Return Index 118.61 +.03%

• Emerging Markets Currency Volatility(VXY) 9.44 -2.38%

• S&P 500 Implied Correlation 42.35 -4.1%

• ISE Sentiment Index 77.0 +10.0%
  

• Total Put/Call 1.03 +9.57%

• NYSE Arms .53 -31.36% 

Credit Investor Angst:

• North American Investment Grade CDS Index 73.90 -.02%
  

• America Energy Sector High-Yield CDS Index 521.0 -3.46%

• European Financial Sector CDS Index 94.12 -1.19%

• Western Europe Sovereign Debt CDS Index 19.0 +.58%

• Asia Pacific Sovereign Debt CDS Index 33.92 +.37%

• Emerging Market CDS Index 234.58 -1.03%
  

• iBoxx Offshore RMB China Corporate High Yield Index 132.45 -.04%

• 2-Year Swap Spread 23.75 +.5 basis point

• TED Spread 55.25 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -41.5 -3.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.41 -.25%
• 3-Month T-Bill Yield .32% -1.0 basis point

• Yield Curve 93.0 -2.0 basis points
  

• China Import Iron Ore Spot $58.85/Metric Tonne +.82%

• Citi US Economic Surprise Index -23.80 -.2 point

• Citi Eurozone Economic Surprise Index 17.6 -.7 point

• Citi Emerging Markets Economic Surprise Index -18.30 +.1 point

• 10-Year TIPS Spread 1.69% unch.
• 69.2% chance of Fed rate hike at Dec. 14 meeting, 70.5% chance at Feb. 1 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +80 open in Japan 
• China A50 Futures: Indicating +4 open in China

• DAX Futures: Indicating +8 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Today's Headlines

Bloomberg:

• ECB Leaves Stimulus Unchanged as Decision Deadline for QE Looms. (video) The European Central Bank kept its quantitative-easing program and interest rates unchanged as suspense builds up over a possible extension of bond-buying later this year. The Governing Council left the main refinancing rate at zero, the deposit rate at minus 0.4 percent and asset purchases at 80 billion euros ($88 billion) a month, as predicted by all economists in a Bloomberg survey. The future path of asset purchases, which are currently scheduled to end in March, will loom large when President Mario Draghi addresses reporters at 2:30 p.m. in Frankfurt. “The Governing Council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases,” the ECB said in a statement Thursday. “The Governing Council confirms that the monthly asset purchases of 80 billion euros are intended to run until the end of March 2017, or beyond, if necessary, and in any case until it sees a sustained adjustment in the path of inflation consistent with its inflation aim.”
• European High-Yield Investors Are Getting Defensive. Event risks and poor liquidity challenge the outlook. 
• China’s Housing Bubble Wobble. 
• China Construction Slows, in Potential Sign of Turn in Property. China’s construction growth slowed in the third quarter, signaling that developers might have turned more cautious toward a property market seen at risk of becoming a bubble. Construction output rose 6 percent from a year earlier in the quarter, the National Bureau of Statistics said Thursday. That was down from 7.3 percent in the second quarter, and marked a second straight period of slower growth.
• Luxury Market Stagnates as Wealthy Chinese Shoppers Stay at Home. The world’s luxury-goods market stopped growing this year, according to a forecast from researcher Bain & Co., as the industry struggles to emerge from one of its weakest periods since the global recession. Sales of personal luxury goods from Louis Vuitton coats to Hermes handbags are projected to linger at about 249 billion euros ($273 billion) in 2016, the weakest performance since 2009 at constant exchange rates. At actual rates, sales are set to slip 1 percent, Bain predicts. The outlook adds to the gathering gloom around the industry. Burberry Group Plc this week reported declines in its Asian business and worsening results at its wholesale unit. The luxury market is entering a slower “new normal”, said Claudia D’Arpizio, head of Bain & Co.’s luxury division. The top of the market “will not have an enormous number of new consumers coming up in the near future.”
• Brexit Drop Almost Forgotten for Euro-Area Bank Shares After ECB. (video) Mario Draghi’s policy update lifted almost all European equity markets, with euro-area banking shares stealing the spotlight. The Euro Stoxx Banks Index climbed 2.1 percent, a fifth day of gains and the most on a European Central Bank decision day since January. Draghi said the ECB probably won’t stop its asset buying abruptly, indicating a potential extension of its stimulus program. Speculation that the central bank president is getting ready to loosen the limits of assets eligible for buying has sent lenders rallying about four times more than the rest of the market in October. The benchmark Euro Stoxx 50 Index rose 0.7 percent to its highest level since Sept. 8, while its banks closed just 1.2 percent away from its level before the U.K. vote to leave the European Union.
• OPEC Price War Offers Meager Rewards as U.S. Shale Survives. When the Organization of Petroleum Exporting Countries started its price war, the U.S. shale boom looked doomed. Two years and one OPEC policy u-turn later, executives at the annual Oil & Money conference in London painted an upbeat outlook for shale, with giants like Exxon Mobil Corp. and ConocoPhillips saying the industry hasn’t just survived the bust, but will continue to have a global influence. "We have confirmed the viability of a very large resource base in North America," said Exxon Chief Executive Officer Rex Tillerson. "Never bet against the creativity and tenacity of this segment of our industry."
• El-Erian Holds 30% in Cash as Central Banks Distort Markets. (video) Mohamed El-Erian said he’s favoring cash as well as the riskiest investments, such as venture capital, in his own portfolio. El-Erian is less bullish on publicly traded securities such as stocks and bonds because global central banks have pushed their prices to “distorted” levels, he said in an interview in Singapore. Cash comprises about 30 percent of his portfolio, which is more than most people have, according to El-Erian. “There’s enormous risk in public markets because that’s the one that central banks have distorted to the greatest extent,” said El-Erian, chief economic adviser at Allianz SE and a Bloomberg View columnist. “It’s very hard to say I’m going to buy a basket of public equities and go to sleep for the next five to 10 years and feel good about the returns. Similarly with bonds.” 
• Hedge Fund Managers Expect ‘Massive’ 34% Pay Cut, Survey Says.
• Hedge Fund Investors Withdrew $28.2 Billion in Third Quarter. Hedge fund investors pulled $28.2 billion from the industry in the third quarter, the most since the aftermath of the global financial crisis, according to Hedge Fund Research Inc.

Wall Street Journal:

• Donald Trump Says He Will Respect Election Outcome ‘If I Win’. Republican nominee doubles down on his refusal to commit to accepting results, as stated during debate.

Fox News: 

• Clinton server email at heart of 'quid pro quo' controversy contained Benghazi intel. (video) The email at the heart of a "quid pro quo" controversy involving a senior State Department executive and the FBI contained intelligence about suspects in the 2012 Benghazi terrorist attack, two government sources told Fox News.

CNBC:

• Apple(AAPL): Many 'genuine' Apple products on Amazon(AMZN) are fake.

Zero Hedge:

• "America Has Lost" - Duterte Announces "Separation" From United States, Alligns With China; Seeks Alliance With Putin. (video)
• DNC Chair Donna Brazile Pummeled Over Leaked Debate Question, Plays "Persecuted Christian Woman" Card.
• The Fed Has Made Another Massive Policy Error.
• German Bund Yields Tumble Back Below Zero For First Time In 2 Weeks. (graph)
• Why They Keep Trade Deals Secret.
• Existing Home Sales Growth Stalls As Prices Rise For 55th Straight Month. (graph)
• Wikileaks Releases Part 13 Of Podesta Data Dump; Total Emails Released Is Now 23,423.
• Deplorable!! American Consumer Confidence Tumbles To Lowest Since 2015. (graph)
• Draghi: "So Far We Have Not Seen An Evidence Of Bubbles".
• Initial Jobless Claims Jump Most In Over 5 Months Off 43 Year Lows. (graph)
• Deutsche Bank Spikes 4% On Report Of Possible New Investment By Qatar, Abu Dhabi And China. (graph)

Business Insider:

• Pentagon: A North Korean nuclear attack 'will be met with an overwhelming and effective response'.
• Iran seeking ‘many billions of dollars’ to free US prisoners detained in Iran.
• The euro is tumbling. (graph)