Tuesday, October 17, 2017

Morning Market Internals

NYSE Composite Index:

Monday, October 16, 2017

Tuesday Watch

Evening Headlines
Bloomberg:
  • Asian Stocks to Gain as Fed Chair Talk Hits Bonds. Equity benchmarks rose in Tokyo and Sydney. Global stocks began the week supported by Fed chair Janet Yellen saying that she expects to continue raising rates gradually amid solid U.S. growth, even as inflation remains surprisingly low. Treasuries slid as John Taylor, a candidate for Fed chairman who is known for a monetary policy rule that would generally advocate higher interest rates, was said to have impressed President Donald Trump in an interview last week. The pound was steady after breaking a five-day winning streak on speculation that Brexit talks could be headed for a breakdown. Japan’s Topix index added 0.4 percent as of 9:12 a.m. Tokyo time. Australia’s S&P/ASX 200 Index rose 0.5 percent and South Korea’s Kospi index was little changed. Contracts on Hong Kong’s Hang Seng Index were flat.
  • Rio on Track for Record Iron Ore Exports as China Imports Surge. Rio Tinto Group is on track for record annual shipments of iron ore as the world’s second-largest exporter’s rail capacity increases and imports by China’s steel mills keep surging. The company confirmed shipments from Western Australia will hit about 330 million metric tons in 2017, London-based Rio said Tuesday in its production report that showed quarterly cargoes continued to gain. The total would top the 327.6 million tons exported last year.
Wall Street Journal:
  • U.S. Seeks to Stay Neutral in Iraq Conflict. Trump’s declaration comes as Baghdad government forces push into Kirkuk amid conflict with Kurds over disputed territory, threatening to disprupt fight against Islamic State.
MarketWatch.com: 
Fox News:
CNBC:
Zero Hedge: 
Night Trading 
  • Asian equity indices are unch. to +.5% on average.
  • Asia Ex-Japan Investment Grade CDS Index 77.25 -.25 basis point
  • Asia Pacific Sovereign CDS Index 16.0 unch.
  • Bloomberg Emerging Markets Currency Index 73.80 -.09%.
  • S&P 500 futures -.03%.
  • NASDAQ 100 futures -.02%.
Morning Preview Links

Earnings of Note
Company/Estimate

  • (CMA)/1.23
  • (CSX)/.51
  • (GS)/4.16
  • (HOG)/.40
  • (JNJ)/1.80
  • (MS)/.81
  • (PGR)/.36
  • (UNH)/2.57
  • (WWW)/.37
  • (CP)/2.86
  • (CREE)/.04
  • (IBM)/3.28
  • (IBKR)/.37
  • (LRCX)/3.27
  • (SCSS)/.68
Economic Releases 
8:30 am EST
  • The Import Price Index MoM for September is estimated to rise +.6% versus a +.6% gain in August.
  • The Export Price Index MoM for September is estimated to rise +.5% versus a +.6% gain in August.
9:15 am EST
  • Industrial Production MoM for September is estimated to rise +.3% versus a -.9% decline in August.
  • Capacity Utilization for September is estimated to rise to 76.2% versus 76.3% in August.
  • Manufacturing Production for September is estimated to rise +.2% versus a -.3% decline in August.
10:00 am EST
  • The NAHB Housing Market Index for October is estimated at 64 versus 64 in September.
4:00 pm EST
  • Net Long-Term TIC Flows for August.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Eurozone CPI report, UK CPI report, weekly US retail sales reports, BIO Investor Forum and the (YUMC) investor day could also impact trading today.
BOTTOM LINE:  Asian indices are mostly higher, boosted by commodity and technology shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.

Stocks Higher into Final Hour on Tax Reform Hopes, Oil Gain, Yen Weakness, Financial/Gaming Sector Strength

Broad Equity Market Tone:
  • Advance/Decline Line: Modestly Lower
  • Sector Performance: Mixed
  • Volume: Below Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 9.88 +2.8%
  • Euro/Yen Carry Return Index 137.96 +.09%
  • Emerging Markets Currency Volatility(VXY) 8.11 +.12%
  • S&P 500 Implied Correlation 15.47 -1.28%
  • ISE Sentiment Index 730 -32.4%
  • Total Put/Call 1.21 +42.35%
  • NYSE Arms .96 -15.34%
Credit Investor Angst:
  • North American Investment Grade CDS Index 54.36 -.84%
  • America Energy Sector High-Yield CDS Index 394.0 +.03%
  • European Financial Sector CDS Index 58.74 +.12%
  • Western Europe Sovereign Debt CDS Index 4.99 -2.06%
  • Asia Pacific Sovereign Debt CDS Index 16.1 +.06%
  • Emerging Market CDS Index 177.75 +.11%
  • iBoxx Offshore RMB China Corporate High Yield Index 144.43 +1.49%
  • 2-Year Swap Spread 26.0 +.25 basis point
  • TED Spread 28.0 -1.25 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -40.75 +.25 basis point
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 73.84 +.66%
  • 3-Month T-Bill Yield 1.07% unch.
  • Yield Curve 77.0 -1.0 basis point
  • China Import Iron Ore Spot $62.94/Metric Tonne +.66%
  • Citi US Economic Surprise Index 2.50 -1.4 points
  • Citi Eurozone Economic Surprise Index 55.40 -.3 point
  • Citi Emerging Markets Economic Surprise Index 20.10 -2.2 basis points
  • 10-Year TIPS Spread 1.85 -1.0 basis point
  • 80.4% chance of Fed rate hike at Dec. 13 meeting, 81.5% chance at Jan. 31 meeting
Overseas Futures:
  • Nikkei 225 Futures: Indicating +135 open in Japan 
  • China A50 Futures: Indicating +22 open in China
  • DAX Futures: Indicating -11 open in Germany
Portfolio: 
  • Slightly Higher: On gains in my tech/biotech sector longs
  • Disclosed Trades: None
  • Market Exposure: 100% Net Long

Today's Headlines

Bloomberg:
Wall Street Journal:
Zero Hedge:

Bear Radar

Style Underperformer:
  • Small-Cap Growth unch.
Sector Underperformers:
  • 1) Airlines -1.2% 2) Retail -.7% 3) Networking -.6%
Stocks Falling on Unusual Volume: 
  • PCG, DFRG, MTSI, JWN, IMPV, MELI, SJI and SGH
Stocks With Unusual Put Option Activity:
  • 1) PCG 2) PGR 3) GPRO 4) GGP 5) PXD
Stocks With Most Negative News Mentions:
  • 1) MTSI 2) BOLD 3) PGE 4) CHS 5) CENT
Charts: