Bear Radar

Style Underperformer:

• Large-Cap Growth unch.

Sector Underperformers:

• 1) Semis -1.8% 2) Computer Hardware -1.3% 3) Homebuilders -.9%

Stocks Falling on Unusual Volume: 

• BBBY, SQM, MDXG, GIS, IONS, RGR, MMYT, AOBC, AERI, TROX, RCII and WDC

Stocks With Unusual Put Option Activity:

• 1) ALNY 2) KMX 3) GIS 4) BBBY 5) SM

Stocks With Most Negative News Mentions:

• 1) BBBY 2) TNTR 3) LB 4) SNCR 5) SCS

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.6%

Sector Outperformers:

• 1) Education +2.0% 2) Oil Service +1.6% 3) Road & Rail +1.4%

Stocks Rising on Unusual Volume:

• ALNY, JP, KPTI, VERI, MZOR, ACH, GEMP, TRU, ALOG, FANH, FDX, USG, CPRT, SELB, IMAX, AXON, AJRD, IGT, ALB, FSB, LBTYA, SPAR, MDCO, FPRX, HLNE and SCVL

Stocks With Unusual Call Option Activity:

• 1) PSEC 2) ALNY 3) NOV 4) FDX 5) ADBE

Stocks With Most Positive News Mentions:

• 1) ALNY 2) CPRT 3) ANET 4) HIBB 5) CRS

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -4.8% Below 100-Day Average
• 8 Sectors Rising, 2 Sectors Declining
• 60.3% of Issues Advancing, 35.1% Declining
• 135 New 52-Week Highs, 8 New Lows
• 44.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 39.3%
• Vix 10.1 -.8%
• Total Put/Call 1.0 +29.9%
• TRIN/Arms 1.21 +221.%

Wednesday Watch

Evening Headlines

Bloomberg:

• China's Under-the-Radar Bond Boom May Be Next Risk Target. China’s riskiest borrowers are ramping up sales of short-term dollar debt again, reigniting speculation the authorities will clamp down on what has become a way to raise cash under the radar. Beijing’s deleveraging drive -- endorsed by President Xi Jinping and the Politburo in April -- has inadvertently fueled a boom in short-end notes this year. As the National Development and Reform Commission started withholding approvals for offshore debt issuance by property developers and local government financing vehicles, companies got resourceful, selling debt due in one year or less as that doesn’t require permission from the authorities.

• Japan's Exports Jump 18% in Biggest Gain in Almost 4 Years. Japan has enjoyed a run of strong growth in exports this year, while rising imports add to signs that domestic demand is firming as well. The Japanese economy grew at an annualized 2.5 percent in the second quarter, more than double its potential growth rate. But while a weaker yen has improved trade data, inflation remains well below the Bank of Japan’s 2 percent target.

• Traders Hold Back Before Fed Decides on Policy. (video) The Topix index was little changed as of 9:10 a.m. Tokyo time. Australia’s S&P/ASX 200 fell 0.4 percent, while the Kospi index in Seoul rose 0.1 percent. Futures on the Hang Seng Index in Hong Kong were little changed.

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

• Traders Boost Odds of Third Rate Hike This Year as FOMC Meets.

• McConnell Won't Promise Obamacare Repeal Vote as Foes Mobilize. (video) Senate Majority Leader Mitch McConnell refused to promise a vote on Republicans’ last-ditch proposal to repeal Obamacare as Democrats and other opponents started ramping up a new campaign Tuesday to block it. "If we were going to go forward, we would have to act before Sept. 30," McConnell told reporters when asked if the GOP-only bill will come to the Senate floor before next week’s procedural deadline. "We are in the process of discussing all of this."

• Uber Faces Widespread Asia Bribery Allegations Amid U.S. Criminal Probe. Uber Technologies Inc., facing a federal probe into whether it broke laws against overseas bribery, has embarked on a review of its Asia operations and notified U.S. officials about payments made by staff in Indonesia, people with knowledge of the matter said.

Wall Street Journal:

• Latest Push for a Health-Law Repeal Picks Up Speed in the Senate. McConnell says talks for a vote to scrap most of the Affordable Care Act are under way, but challenges linger.

• Did Obama Know about Comey’s Surveillance? The media is less interested in Obama Administration wiretapping than in how Trump described it.

• United Nations General Assembly -- Live Analysis.

Fox News: 

• Hurricane Maria takes aim at Puerto Rico, US Virgin Islands as Category 5 storm strengthens. (video)

• 7.1 magnitude earthquake kills more than 100 in Mexico, collapses buildings. (video)

CNBC:

• GOP senators closing in on tax cut plan. (video)

• Images of devastation from the Mexico City earthquake. (pics)

• Elizabeth Warren urges Fed to 'step up' and remove Wells Fargo's(WFC) board. (video)

• China's bitcoin clampdown is likely here to stay, analysts say. (video)

• Amazon(AMZN) is firing on all cylinders to grow its retail presence. (video)

• Bed Bath and Beyond(BBBY) shares tumble after worse-than-expected sales.

Zero Hedge:

• At Least 94 Dead, 60 Pulled Alive From Rubble After Powerful Earthquake Rocks Central Mexico.

• Dramatic Footage Of Mexico Earthquake Shows Buildings Collapsing Into Rubble.

• Full Preview Of Tomorrow's "Historic" FOMC Meeting.

• Manafort Calls On DOJ To Release His Intercepted Phone Calls; Demands Investigation Of Leaks.

• Government By Goldman.

• Ahead Of Tomorrow's Historic Fed Meeting, Here Is The Only "Cheat Sheet" You Need.

• Cryptocurrency Concentration - Just 4% Own Over 95% Of Bitcoin.

• Trump Prevented War Between Saudi Arabia And Qatar In Last Minute: Report.

• The New 'Scariest Chart In The World'. (graph)

• Fedex(FDX) Tumbles After Missing Revenue, EPS, Guiding Lower; Blames Hackers, Harvey.

• Meanwhile, The "Next Big Short" Is Quietly Blowing Up. (graph)

• O'Keefe Promises "Fireworks Are Coming" In New Media Investigation; Says "People Will Be Fired".

• WTI/RBOB Jump After Smaller Than Expected Crude Build. (graph)

• Bank Stocks, Bullion, & Bond Yields Jump Ahead Of Fed As Small-Cap VIX Hits Record Low.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 71.75 unch. 

• Asia Pacific Sovereign CDS Index 18.0 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 74.64 +.05%.

• S&P 500 futures -.05%.

• NASDAQ 100 futures -.08%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (GIS)/.77

• (MLHR)/.57

Economic Releases 
10:00 am EST

• Existing Home Sales for August are estimated to rise to 5.45M versus 5.44M in July.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +3,593,630 barrels versus a +5,888,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -2,060,130 barrels versus a -8,428,000 barrel decline the prior week. Distillate inventories are estimated to fall by -2,033,500 barrels versus a -3,215,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise +5.24% versus a -2.0% decline prior.
  

2:00 pm EST

• The FOMC is expected to leave the benchmark Fed Funds Rate at 1.0%-1.25%.
  

Upcoming Splits

• (FMAO) 2-for-1

Other Potential Market Movers

• The weekly MBA Mortgage Applications report, BofA Consumer/Retail Conference and the (PPC) analyst day could also impact trading today.

BOTTOM LINE:  Asian indices are slightly lower, weighed down by commodity and consumer shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 75% net long heading into the day.

Stocks Slightly Higher into Final Hour on Tax/Healthcare Reform Hopes, Economic Optimism, Technical Buying, Financial/Gaming Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 10.23 +.79%

• Euro/Yen Carry Return Index 139.47 +.29%

• Emerging Markets Currency Volatility(VXY) 7.72 +.52%

• S&P 500 Implied Correlation 23.78 -1.95%

• ISE Sentiment Index 45.0 -37.97%
  

• Total Put/Call .75 -17.6%

• NYSE Arms 1.0 +11.67%

Credit Investor Angst:

• North American Investment Grade CDS Index 55.03 -1.53%
  

• America Energy Sector High-Yield CDS Index 413.0 -1.52%

• European Financial Sector CDS Index 46.42 -2.73%

• Western Europe Sovereign Debt CDS Index 4.72 +.75%

• Asia Pacific Sovereign Debt CDS Index 17.97 -1.45%

• Emerging Market CDS Index 174.68 +2.34%
  

• iBoxx Offshore RMB China Corporate High Yield Index 141.65 -.07%

• 2-Year Swap Spread 26.0 unch.

• TED Spread 29.75 +.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -25.5 -1.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 74.59 +.07%

• 3-Month T-Bill Yield 1.03% +1.0 basis point
  

• Yield Curve 84.0 unch.

• China Import Iron Ore Spot $68.85/Metric Tonne -4.06%

• Citi US Economic Surprise Index -17.50 +5.1 points

• Citi Eurozone Economic Surprise Index 21.20 +3.0 points

• Citi Emerging Markets Economic Surprise Index 15.40 +1.0 basis point

• 10-Year TIPS Spread 1.88 unch.
  

• 13.8% chance of Fed rate hike at Nov. 1 meeting, 56.9% chance at Dec. 13 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -114 open in Japan 

• China A50 Futures: Indicating -14 open in China

• DAX Futures: Indicating -12 open in Germany

Portfolio: 

• Slightly Higher: On gains in my tech sector longs

• Disclosed Trades: None of note

• Market Exposure: 100% Net Long

Today's Headlines

Bloomberg:

• China Considers Opening Up to Foreign Electric Carmakers. China is discussing a plan to allow foreign carmakers to set up wholly owned electric-vehicle businesses in its free-trade zones in a major revision of a fundamental principle governing the country’s auto industry policy since the 1990s, according to company officials briefed on the matter. The plan, which is subject to change as a final decision hasn’t been made, could be put in place as early as next year, the people said, asking not to be identified as the deliberations are private. If the policy takes effect, it would be a landmark departure from the existing rules, which require foreign automakers to set up joint ventures with local counterparts.
• Your Evening Briefing.
• The Sizzling Stock Market Is Making Investors Uneasy. Bearish bets are also piling up among mega-cap stocks, the biggest contributors to U.S. equity gains this year. As the Nasdaq 100 Index rose to a new high on Sept. 13, demand for protection grew to the most in over a year on the most popular ETF tracking the index, the Powershares QQQ Trust.
• FANG Stocks Take Repeated Hits and the World Keeps Spinning. You may have missed it, but the FANG block -- Facebook Inc., Amazon.com Inc. Netflix Inc. and Google parent Alphabet Inc. -- dropped almost 7 percent during the August selloff, while Apple Inc. was down 3.5 percent from its 2017 peak at its worst point. But even with all the carnage, the S&P 500 kept going up, climbing above 2,500 for the first time.

Wall Street Journal:

• Trump Issues Dire Warning to North Korea in Address to U.N. President threatens to ‘totally destroy’ Pyongyang regime and criticizes Iran deal at General Assembly.
• How to End ObamaCare in Two Pages. Call John Roberts’s bluff by disavowing the taxing power.
• How Antifa Violence Has Split the Left. Tactics of the group are creating a rift among liberals about whether to denounce a radical fringe whose objectives, if not methods, they often share.
• Cost Of Employer-Provided Health Insurance Rises Toward $19,000 a Year. And the share of firms that offer coverage continued to decline in 2017, according to a survey. 
• Senate’s Three Health-Care Proposals: A Guide. Since GOP effort to repeal ACA failed, senators pitch widely different options.
• Nvidia’s(NVDA) Gains Are Real, Not Virtual. Fading hype over cryptocurrency brings focus back to more real opportunities for chipmaker.

MarketWatch.com:

• More than half of these high-yield dividend stocks are on sale.
• Why stock market investors shouldn’t sweat a shrinking Fed balance sheet.
• European stocks waver as traders brace for Fed policy update. The Stoxx Europe 600 index SXXP, +0.04% ended marginally higher at 382.12, after trading in a relatively tight range during the session.

Fox News: 

• UN Speech: Trump Says 'Rocket Man' Kim Jong Un on 'Suicide Mission,' in Broadside at 'Rogue Regimes'. (video)
• '#TrumpVindicated'? Manafort Wiretap Report Could Boost Trump's Claim After Months of Media Mocking. (video)

CNBC:

• Here’s why the new GOP Obamacare-replacement bill might actually pass in Congress.
• As charts point to a big bank rally, a technician says there is one name you want to bet on. (video)
• The iPhone 8 reviews are out and here's what people are saying. (video)
• Volvo expanding US production plans in South Carolina.
• The opioid epidemic is so bad it's driving down life expectancy in the US. 
• The timing may be right for Facebook(FB) to enter China next year, analyst predicts.

Zero Hedge:

• "This Is Where The Next Financial Crisis Will Come From". (graph)
• Trump's "Fiery" United Nations Speech: Full Transcript.
• Biggest Hedge Fund Manager In The World Warns "Bitcoin Is A Bubble", Says Gold Is Money.
• Buildings Collapse, Thousands Take To The Street After Powerful Quake Shakes Mexico City.
• Ahead Of Tomorrow's Historic Fed Meeting, Here Is The Only "Cheat Sheet" You Need.
• Hillary Clinton: Women Only Voted For Trump Because Their Husbands Told Them To.
• Study Shows Student Debt Delays Home Buying By Seven Years.
• US Export, Import Prices Spike Most In 14 Months. (graph)
• Hurricane Maria Causes "Widespread Devastation" In Dominica As It Races Toward Puerto Rico.
• Building Permits Rebound In August As 'Rental Nation' Demand Returns. (graph)
• Defense Secretary Mattis Says US Will Act On North Korea Missiles That Pose A Threat.
• Boris Johnson Threatens To Resign If Theresa May "Goes Against His Brexit Demands", Pound Rises.
• Euro Tumbles On Report ECB Is "Concerned And Divided" Over End To QE.
• Toys "R" Us Files Chapter 11: Second Largest US Retail Bankruptcy In History.
• Global Equities Hit New All Time High Ahead Of The Fed; VIX < 10; Japan Stocks Surge. (graph)

AJC.com:

• Georgia Tech president: Unrest mainly caused by “outside agitators”. Georgia Tech president G.P. “Bud” Peterson said “outside agitators” were mainly to blame for the unrest that took place on campus Monday night. Peterson said in a letter to students, faculty and alumni Tuesday that a vigil held for a student shot and killed a Tech police officer Saturday night was disrupted “by several dozen others intent on creating a disturbance and inciting violence. We believe many of them were not part of our Georgia Tech community, but rather outside agitators intent on disrupting the event.” Peterson added they did not honor the memory of the student who was killed, Scout Schultz, with their actions.