Monday Watch

Today's Headlines

Bloomberg:

• Japan’s Best Export Performance Since 2008 Crisis Rolls On. Improving global demand has fueled strong growth in Japan’s exports throughout the year, with new smartphones creating demand for parts and machinery in recent months. In the nine months through September, Japan exported 57 trillion yen worth of goods, the most over that period in any year since 2008. This has helped drive Japan’s economy to seven straight quarterly expansions, while investors expecting growing earnings have pushed stock prices to multi-year highs. Exports to China, Japan’s largest trading partner, rose 26 percent from a year earlier. Those to the U.S. rose 7.1 percent. Shipments to the EU climbed 15.8 percent.

• China's Quest for Clean Air Is Shaking Up Industry and Inflation. The great Chinese environmental cleanup, now in full swing, is shifting the corporate landscape in unexpected ways and even stoking inflationary pressure that may soon be felt in supply chains worldwide. As President Xi Jinping’s government intensifies the fight against the country’s world-class pollution problem, companies are scrambling to adapt to tighter regulation while investing in cleaner energy. In industries from steel to textiles and consumer goods, the resulting shakeout has left the survivors with far more pricing power. That in turn is reinforcing the already-resurgent factory prices that contribute to global inflation.

• The Latest on the Political Turmoil in Zimbabwe. Zimbabweans say they feel profoundly disappointed that longtime President Robert Mugabe is resisting pressure to step aside.

• Singapore Growth Could Top 3% in 2017, Prime Minister Lee Says. Singaporean Prime Minister Lee Hsien Loong says his country is expected to exceed expectations this year by recording economic growth above 3 percent. Addressing his People’s Action Party’s 2017 convention on Sunday, Lee said Singapore was benefiting from an improved world economy, but would have to press on with plans to restructure and upgrade the economy to sustain growth.

• Euro Drops as German Talks Fail; Asian Stocks Slip. The euro declined after German Chancellor Angela Merkel’s push to form a coalition government collapsed. Asian stocks resumed last week’s slide in early trading Monday amid signs of fatigue following a stellar year for the region’s equities. Shares fell in Japan and Sydney, while Hong Kong pointed to weaker start. The dollar advanced against most G-10 counterparts, giving it a better start this week after dropping the past two. U.S. equities dropped on Friday, when the gap between two- and 10-year Treasury yields hit the tightest level in a decade, adding to concern about the pace of future economic growth. Bitcoin climbed to a fresh high, topping $8,000. Japan’s Topix index lost 0.1 percent as of 9:26 a.m. in Tokyo. The Nikkei 225 Stock Average decreased 0.1 percent. Australia’s S&P/ASX 200 Index slid 0.2 percent. South Korea’s Kospi index gained 0.2 percent.

Wall Street Journal: 

• Reducing Corporate Tax Games. The GOP reforms are far tougher on income shifting than Obama was.

• Key GOP Senator Cites Concerns Over Senate Tax Bill. Raising pressure on party leadership to make changes to secure passage. 

• The Latest Path to Silicon Valley Riches: Stake Sales. Entrepreneurs, venture investors reap riches through secondary sales in startups, rather than waiting for IPO.

• Buoyant Central and Eastern Europe Revives Overheating Fears. The economic turnaround in the region has been impressive, but there are also challenges.

MarketWatch.com:

• Will millennials give housing shares and the broader stock market a boost?

• The reasons Americans give for buying bitcoin show they have no idea what they’re doing.

Fox News: 

• Franken reportedly won't resign, amid more congressional calls to deal with allegations against him and Roy Moore. (video)

CNBC: 

• The anti-regulatory environment that Trump promised just got a big boost. (video)

• Tax reform could come before 2018, and here are the two names you want to buy: Strategist. (video)

• Many ICOs are fraudulent, say men behind two top bitcoin rivals.

Zero Hedge:

• "Worst Case Scenario" Looms As Merkel's "Jamaica Coalition" Collapses; EUR Sinks.

• ECB Proposes End To Deposit Protection.

• "People Ask, Where's The Leverage This Time?" - Eric Peters Answers.

• Apple(AAPL) Diversity Chief Forced Out After Saying White Men Can Also Be 'Diverse'.

• Big Brother Is Here: Twitter(WTR) Will Monitor Users Behavior 'Off Platform'.

• "Our Flag Is Very Special" - NFL Superstar Herschel Walker Blames NFL Commissioner For Crisis. 

• "You're So Dumb, You're Beyond Hope" - ESPN Host Hits Out At Conservative Critics.

• Weinstein Watershed - Here's A List Of The 42 Men Accused Of Sexual Misconduct (So Far).

• Think Bitcoin Is A Bubble? Here's Your Chance To Short It.

• "I Should Have Left Them In Jail" - Trump Slams UCLA Player's Parents Indignation.

• Arab League Holds Emergency Session: Iran And "Terrorist" Hezbollah Must Be Stopped.

• The Stage Has Been Set For The Next Financial Crisis.

• The U.S. Is Crushing Its Clean Energy Forecasts.

• Who's Next? Venezuela's Collapse Puts These Nations At Risk.

•  "The President Is Gone" - Zimbabwe Ruling Party Officially Ousts Mugabe.

Business Insider:

• 60,000 people in Poland held one of the largest far-right marches in Europe ever.

• New PACs are emerging on the left and the right to get women elected in 2018.

• The breakneck speed of the Republican tax bill is angering Democrats and increasing the odds it passes.

• Robots aren't just taking our jobs, they're creating them – here are 21 weird jobs humans will have in the future.

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 79.25 +.25 basis point.

• Asia Pacific Sovereign CDS Index 15.75 +25 basis point.

• Bloomberg Emerging Markets Currency Index 72.85 -.06%.

• S&P 500 futures -.26%.

• NASDAQ 100 futures -.30%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (BITA)/.29

• (A)/.62

• (CUB)/.27

• (INTU)/.04

• (PANW)/.68

• (URBN)/.34

• (VIPS)/.96

Economic Releases   
10:00 am EST

• The Leading Index for October is estimated to rise +.7% versus a -.2% decline in September.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Eurozone PPI report and the (AXGN) analyst day could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and financial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 100% net long heading into the week.

Weekly Outlook

• Week Ahead on Wall Street by CNBC(video).
• Wall St. Week Ahead by Reuters. 
• Week Ahead by TheStreet.
• Stocks to Watch Next Week by Seeking Alpha.
• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly higher on tax reform hopes, oil gains, seasonal strength, buyout speculation, short-covering and economic optimism. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 100% net long heading into the week.

Today's Headlines

Bloomberg:

• China Home Prices Stop Three-Month Drop as Market Stabilizes. Chinese home prices rose in more cities in October, snapping a three-month decline, a sign the market is stabilizing amid government efforts to curb property speculation. New-home prices, excluding state-subsidized housing, climbed in 50 of the 70 cities tracked by the government, compared with 44 in September, the National Bureau of Statistics said on Saturday. Prices fell in 14 cities from the previous month and were unchanged in six. The moderate gains show China is having some success in its bid to rein in the buoyant property market without forcing a sharp deceleration. Prices had been coming off after the government imposed restrictions on purchases earlier in the year. Giving support to that campaign, President Xi Jinping used his speech to the twice-a-decade Communist Party congress last month to say that homes are meant “to be inhabited, not for speculation.”

• Goldman Sachs(GS) Sees Four 2018 Fed Rate Hikes as U.S. Growth Gains. The U.S. economy is heading into 2018 with strong momentum that’s likely to boost wages and inflation more broadly, requiring the Federal Reserve to raise interest rates four times next year, Goldman Sachs Group Inc. economists said in a research note. The New York-based investment banking and securities firm raised its growth outlook for 2018 to 2.5 percent and lowered its forecast for unemployment to 3.7 percent by the end of 2018, said Goldman chief economist Jan Hatzius, a co-author of the note, which was released by email late Friday. Before the latest revision the most recent Goldman Sachs forecast for 2018 growth was 2.4 percent, according to forecasts compiled by Bloomberg.

• American Drivers Boost Fuel Use to New High on Stronger Economy. American drivers took gasoline consumption to a new high as the U.S. economy strengthens and adds jobs. Demand for the motor fuel rose to the highest level on record for the month of October, the American Petroleum Institute said in a monthly report Friday. Consumption of distillate fuel, however, declined. "The economy continues to grow as fuel demand remains strong and more people find work," said API Director of Statistics Hazem Arafa. "Unemployment went down last month and gas prices remain relatively low benefiting American businesses and workers."

Wall Street Journal:

• Trump vs. the Deep Regulatory State. The tempestuous president is overseeing a principled, far-reaching reform of agencies that had exceeded their constitutional writ.

• Germany’s Green Energy Meltdown. Voters promised a virtuous revolution get coal and high prices instead.

• Trump Administration Ramps Up Dispute With Local Governments Over Sanctuary Policies. Justice Department issues letters to more than two dozen authorities saying immigration directives may violate federal law.

Barron's:

• Had bullish commentary on (IBM), (JWN), (WMT), (RH), (ROST), (GOOGL), (WDAY), (BHGE) and (ZEN).

• Had bearish commentary on (PG), (SNAP), (T), (ATUS), (GPRO), (APRN) and (CL).

MarketWatch.com: 

• Here’s how Apple(AAPL) gets to a $2 trillion market value.

• The best business schools of 2017, according to Bloomberg.

Fox News:

• Trump calls Clinton 'biggest loser of all time' after she contests election loss. (video)

• Roy Moore slams Gloria Allred, challenges her to release 'fake yearbook'. (video)

CNBC:

• Medicare Part B premiums jumping 23 percent for many retirees.

• Applied Materials(AMAT) CEO: 'The future of competition' is changing across industries, and it's fueling our business.

• Goldman Sachs(GS) says if you thought 2017 was surprisingly good, just wait for 2018.

Zero Hedge:

• FBI Informant Has Video Of Russian Agents With Briefcases Of Bribe Money In Clinton-Uranium Scandal.

• "Helpless, Raging" Charlottesville Families Shocked By These 2018 Obamacare Premiums..."It's Horrific".

• "We're Not Stupid" - Top US Nuclear Commander Would Disobey "Illegal" Trump Orders. 

• Dan Hannan Destroys The Growing Support For 'Socialism' In 100 Seconds. (video)

• China Is Testing Weapons That Can Reach The US In 14 Minutes.

• Another US Navy Warship Crashes.

• Hunting Angels: What The World's Most Bearish Hedge Fund Will Short Next.

• Amazon(AMZN)-opoly: Jeff Bezos May Be About To Control $53 Billion In Federal Government Spending.

• NYC Subway Managers Receive $300,000 Salaries While MTA Cuts Mechanics.

• Can You Do A Backflip? Because This Robot Can.

• Why People Will Happily Line Up To Be Microchipped Like Dogs.

• Saudi 'Corruption' Probe Widens: Dozens Of Military Officials Arrested.

• "We Paid A Heavy Price For This Mistake" - Europe To Be Flooded With 2nd Refugee Wave, UN Warns.

• "Beyond Resistance" - Soros, Pelosi Headline Left's Biggest Dark Money Conference.

• Weekend Reading: You Have Been Warned.

• Gold Gains As Stocks Slide, Yield Curve Crashes, & Dollar Dumps. (graph)

Business Insider: 

• Walmart(WMT) is making a mockery of the retail apocalypse — and traders are betting it'll keep soaring.

• The US Marine Corps is 242 years old — here are 42 striking photos of its storied history. (pic)

• Mexican heroin is flooding the US, and the Sinaloa cartel is steering the flow.

• The number of teens who are depressed is soaring — and all signs point to smartphones.

Weekly Scoreboard*

S&P 500 2,581.23 -.04%

The Weekly Wrap by Briefing.com.

 

Indices

• DJIA 23,367.70 -.24%

• NASDAQ 6,785.50 +.55%

• Russell 2000 1,492.74 +1.19%

• S&P 500 High Beta 40.31 +.50%

• Goldman 50 Most Shorted 131.53 +1.4%

• Wilshire 5000 26,738.50 +.12%

• Russell 1000 Growth 1,314. +.11%

• Russell 1000 Value 1,172.44 -.02%

• S&P 500 Consumer Staples 564.25 +1.0%

• Vanda Cyclicals-Defensives 1.3772 -.39%
  

• NYSE Technology 1,712.94 +1.48%

• Transports 9,500.20 unch.

• Utilities 759.10 +.32%

• Bloomberg European Bank/Financial Services 97.73 -1.79%

• MSCI Emerging Markets 46.87 +.99%

• HFRX Equity Hedge 1,235.69 -.75%

• HFRX Equity Market Neutral 1,009.86 -.17%

Sentiment/Internals

• NYSE Cumulative A/D Line 306,441 -.22%

• Bloomberg New Highs-Lows Index 311 +255

• Bloomberg Crude Oil % Bulls 13.89 -58.3%

• CFTC Oil Net Speculative Position 545,206 +8.4%

• CFTC Oil Total Open Interest 2,601,977 +3.67%

• Total Put/Call .76 -33.62%

• OEX Put/Call .55 -36.25%

• ISE Sentiment 89.0 +8.43%

• NYSE Arms .66 -21.59%

• Volatility(VIX) 11.43 +1.15%

• S&P 500 Implied Correlation 16.17 -14.96%

• G7 Currency Volatility (VXY) 7.40 +3.06%

• Emerging Markets Currency Volatility (EM-VXY) 7.95 -2.33%

• Smart Money Flow Index 20,273.28 +.80%

• ICI Money Mkt Mutual Fund Assets $2.739 Trillion -.05%

• ICI US Equity Weekly Net New Cash Flow -$4.313 Billion

• AAII % Bulls 29.4 -34.9%

• AAII % Bears 35.2 +52.6%

Futures Spot Prices

• CRB Index 190.43 -.67%

• Crude Oil 56.55 -.9%

• Reformulated Gasoline 175.02 -4.48%

• Natural Gas 3.1 -3.04%

• Heating Oil 195.02 +.21%

• Gold 1,295.40 +1.50%

• Bloomberg Base Metals Index 199.66 -1.83%

• Copper 307.05 -.16%

• US No. 1 Heavy Melt Scrap Steel 258.33 USD/Metric Tonne unch.

• China Iron Ore Spot 62.61 USD/Ton +.02%

• Lumber 439.70 -3.02%

• UBS-Bloomberg Agriculture 1,035.81 +.02%

Economy

• Atlanta Fed GDPNow Forecast +3.4% +10.0 basis points

• ECRI Weekly Leading Economic Index Growth Rate 2.7% -50.0 basis points
  

• Philly Fed ADS Real-Time Business Conditions Index .4297 -6.77% 

• US Economic Policy Uncertainty Index 106.88 -37.87%

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 143.63 +.17%

• Citi US Economic Surprise Index 56.0 +17.5 points

• Citi Eurozone Economic Surprise Index 58.90 unch.

• Citi Emerging Markets Economic Surprise Index 14.50 +.4 point

• Fed Fund Futures imply 0.0% chance of no change, 100.0% chance of 25 basis point hike on 12/13

• US Dollar Index 93.61 -.82%

• MSCI Emerging Markets Currency Index 1,629.86 +.32%

• Euro/Yen Carry Return Index 137.80 -.18%

• Yield Curve 62.0 -12.0 basis points
  

• 10-Year US Treasury Yield 2.34% -6.0 basis points

• Federal Reserve's Balance Sheet $4.409 Trillion -.24%

• U.S. Sovereign Debt Credit Default Swap 24.75 unch.

• Illinois Municipal Debt Credit Default Swap 337.30 -.05%

• Western Europe Sovereign Debt Credit Default Swap Index 3.90 -3.7%

• Asia Pacific Sovereign Debt Credit Default Swap Index 15.75 -1.25%
  

• Emerging Markets Sovereign Debt CDS Index 48.70 -6.99%
  

• Israel Sovereign Debt Credit Default Swap 58.87 +1.64%

• South Korea Sovereign Debt Credit Default Swap 65.62 -8.14%

• Russia Sovereign Debt Credit Default Swap 134.01 -4.24%

• iBoxx Offshore RMB China Corporate High Yield Index 145.33 +.08%

• 10-Year TIPS Spread 1.88% -3.0 basis points

• TED Spread 17.0 -1.75 basis points

• 2-Year Swap Spread 16.5 -3.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -48.0 -.25 basis point

• N. America Investment Grade Credit Default Swap Index 55.16 -1.16%

• America Energy Sector High-Yield Credit Default Swap Index 380.0 +4.38%

• European Financial Sector Credit Default Swap Index 51.21 -1.65%
  

• Emerging Markets Credit Default Swap Index 184.25 -4.07%
  

• CMBS AAA Super Senior 10-Year Treasury Spread to Swaps 155.0 +2.0 basis points
  

• M1 Money Supply $3.566 Trillion -.43%

• Commercial Paper Outstanding 1,032.60 -1.8%

• 4-Week Moving Average of Jobless Claims 237,750 +6,500

• Continuing Claims Unemployment Rate 1.3% -10.0 basis points
  

• Average 30-Year Mortgage Rate 3.95% +5.0 basis points

• Weekly Mortgage Applications 401.70 +3.08%

• Bloomberg Consumer Comfort 52.1 +.6 point

• Weekly Retail Sales +2.5% -10.0 basis points

• Nationwide Gas $2.56/gallon unch.

• Baltic Dry Index 1,361.0 -7.04%

• China (Export) Containerized Freight Index 794.47 +1.30%

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 27.50 unch.

• Rail Freight Carloads 284,215 +4.46%

Best Performing Style

• Small-Cap Growth +1.4%

Worst Performing Style

• Large-Cap Growth +.2%

Leading Sectors

• Airlines +5.0%

• Social Media +4.4%

• Disk Drives +4.1%

• Networking +4.0%

• Retail +3.9%

Lagging Sectors

• Gaming -.9% 

• Construction -1.7%

• Energy -2.6%

• Shipping -3.6%

• Oil Service -6.6%

Weekly High-Volume Stock Gainers (16)

• CCT, TIME, NKTR, ROKU, MRTX, WVE, AYX, ARA, ZOES, IMMU, AAP, TCO, RICK, VREX, DKS and VMI

Weekly High-Volume Stock Losers (22)

• SBH, JCI, LOXO, PETQ, TDW, TPC, INCR, DVAX, PSDO, SOI, WD, APPN, QUOT, MTSI, XON, SD, TTD, PBYI, ESL and NCSM

Weekly Charts

ETFs

• High-Volume Gainers

• High-Volume Losers

Stocks

• High-Volume Gainers

• High-Volume Losers

*5-Day Change