Stocks Rising into Afternoon on Earnings Optimism, US Economic Data, Short-Covering, Restaurant/Gaming Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 12.4 -2.7%

• Euro/Yen Carry Return Index 125.61 -.13%

• Emerging Markets Currency Volatility(VXY) 6.96 -.29%

• S&P 500 Implied Correlation 33.33 -1.45%

• ISE Sentiment Index 89.0 -10.1%
  

• Total Put/Call .71 -6.58%

• NYSE Arms 1.14 -1.72%

Credit Investor Angst:

• North American Investment Grade CDS Index 50.87 -.06%
  

• America Energy Sector High-Yield CDS Index 522.0 +.25%

• European Financial Sector CDS Index 58.0 +5.37%

• Italian/German 10Y Yld Spread 194.25 +6.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 57.50 -.42%
  

• Emerging Market CDS Index 156.55 unch.
  

• iBoxx Offshore RMB China Corporate High Yield Index 165.06 +.08%

• 2-Year Swap Spread 3.0 +1.25 basis points

• TED Spread 17.5 -1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -23.75 -1.0 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.29 -.13%
• 3-Month T-Bill Yield 2.11% unch.

• Yield Curve 21.0 -1.0 basis point

• China Iron Ore Spot 113.90 USD/Metric Tonne -.92%

• Citi US Economic Surprise Index -37.2 +3.4 points

• Citi Eurozone Economic Surprise Index -37.50 +2.3 points

• Citi Emerging Markets Economic Surprise Index -20.4 +1.3 points

• 10-Year TIPS Spread 1.78 -2.0 basis points
• 100.0% chance of Fed rate cut at Sept. 18th meeting, 100.0% chance of cut at October 30th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +5 open in Japan 
• China A50 Futures: Indicating -11 open in China

• DAX Futures: Indicating -1 open in Germany

Portfolio:

• Higher: On gains in my tech/medical/retail/biotech sector longs

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Value +.4%

Sector Underperformers:

• 1) Homebuilders -.6% 2) Construction -.3% 3) Energy -.1%

Stocks Falling on Unusual Volume: 

• CARB, MMSI, VCRA, BOOM, MHK, GT, DECK, COG, TTEK, CVA, FTV, MXL, NMIH, TILE and ERIE

Stocks With Unusual Put Option Activity:

• 1) GT 2) FIVE 3) MDR 4) WMB 5) JNPR

Stocks With Most Negative News Mentions:

• 1) MHK 2) MMSI 3) CARB 4) GT 5) EMN

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +1.0%

Sector Outperformers:

• 1) Restaurants +2.6% 2) Gaming +2.3% 3) Social Media +2.2%

Stocks Rising on Unusual Volume:

• TYPE, GSB, EHTH, YNDX, SNBR, VGR, IGV, PHR, POWI, TWTR, ENVA, ROCK, GOOGL, ZBH, HIIQ, SAVE, UHS, TEAM, PSO, LEXEA, FISV, SPSC, CRSP, INT, LOGM, MAT, UHS, DBD, INT, FDC, SBUX, GSX, OMCL, ARVN, IGT, UFPI, WST, MGM, SIVB, COWN, EIX, GHDX, PFPT and SAVE

Stocks With Unusual Call Option Activity:

• 1) INVA 2) GT 3) XLB 4) DKS 5) MMM

Stocks With Most Positive News Mentions:

• 1) GOOGL 2) TWTR 3) TEAM 4) DKS 5) MGM

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +.8% Above 100-Day Average
• 7 Sectors Rising, 4 Sectors Declining
• 63.2% of Issues Advancing, 33.7% Declining
• 161 New 52-Week Highs, 72 New Lows
• 62.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.2%
• Vix 12.2 -15.6%
• Total Put/Call .59 -22.4%
• TRIN/Arms 1.22 +5.2%

Friday Watch

Evening Headlines

Bloomberg:

• Pompeo Says He Would Go to Tehran to Take Message to Iranians.  

• No-Deal Brexit Risk Grows After EU Rejects Boris Johnson’s Demands.    

• Why China's Getting Ready to Shake Up Interest Rates.

• Asian Stocks Set to Fall; Draghi Whipsaws Euro. Asian stocks are set to slip Friday after their U.S. counterparts fell from record highs amid a torrent of corporate results. The euro fluctuated and European bond yields climbed from all-time lows in the wake of the European Central Bank meeting. Futures pointed lower in Japan, Hong Kong and Australia, as the S&P 500 finished lower a day after the benchmark index closed at an all-time high. After the close of regular trading, Amazon fell after posting lower-than-forecast earnings and Alphabet rallied after exceeding revenue estimates. Treasury yields climbed and the dollar was stronger against most G-10 peers. Nikkei 225 futures fell 0.7%. Hang Seng futures fell 0.7%. S&P/ASX 200 futures declined 0.5%.

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

• T-Mobile Investors Stuck in Waiting Game Over Sprint Deal.  

• Puerto Rico’s Next Governor Hasn’t Been Sworn In and She’s Already Under Investigation.  

• This Millennial Adviser Says Her Generation Is Headed for a Fall.

Wall Street Journal:

• House Approves Debt-Ceiling Bill Despite GOP Dissent.

• Nissan to Cut 12,500 Jobs as Profit Plunge Deepens Turmoil.

• ECB Signals Rate Cut, Possible Asset Purchases.

Fox News:

• Freshman quartet rolls out twisted new boycott talking point, likening Israel to Hitler’s Germany.

MarketWatch.com:

• Intel(INTC) stock rallies more than 5% as earnings, outlook top Street view.

• Starbucks(SBUX) stock pops on earnings beat, sales growth in U.S., China.

• Cannabis companies are having a horrible summer as scandals mount and stocks slide.

CNBC:

• Apple(AAPL) plans to buy Intel’s wireless chip unit for $1 billion.

• Stocks making the biggest moves after hours: Alphabet, Amazon, Starbucks and more.

• Starbucks’(SBUX) stock pops after coffee chain crushes estimates, raises forecast.

• US growth could be weakest in more than two years but latest data might not affect Fed’s next move.

• Hedge fund manager Kyle Bass says a US-China trade deal can’t be reached.

Zero Hedge:   

• After Mueller Miasma, Stockman Says "Real Election Meddling" Probe Can Begin.

• Victoria's Secret Is About To Be Revealed: L Brands(LB) Hires Firm To Probe Epstein Ties.

• Barr And State AGs Discuss Big Tech Monopolies As 'Flipped' Facebook Co-Founder Helps Devise Antitrust Action.

• Sean Davis Sums Up Lies And Revelations From The Failed Effort To Take Down Donald Trump.

• The Rise Of Woke Capitalism.

• Beyond Volkswagen: BYND Shorts Crucified As Borrow Fee Hit 144%. 

• Amazon(AMZN) Tumbles On Disappointing Profit Outlook, Slowing AWS Growth.

• Dems Turning Trump Into 'Folk Hero' By Failing To Impeach: NYT Columnist

• Tesla(TSLA) Tumbles, Boeing Battered, Stocks & Bonds Dump On Draghi Disappointment.

Business Insider: 

• Facebook(FB) still has incredible control over your data.

• Alphabet(GOOGL) crushes analysts' expectations in Q2 earnings.

Night Trading 

• Asian equity indices are -.5% to unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 57.50 -3.0 basis points.

• China Sovereign CDS 39.25 -1.25 basis points.

• Bloomberg Emerging Markets Currency Index  67.37 -.01%.

• S&P 500 futures +.09%.

• NASDAQ 100 futures +.15%.

Morning Preview Links 

Earnings of Note 
Company/Estimate

Before the Open:

• (ABBV)/2.21

• (B)/.78

• (COG)/.33

• (CL)/.72

• (GT)/.34

• (ITW)/1.98

• (LEA)/3.74

• (MCD)/2.05

• (PSX)/2.70

• (TWTR)/.19

• (WY)/.10

• (ZBH)/1.91

After the Close:

• None of note

Economic Releases
8:30 am EST

• Advance 2Q GDP Annualized QoQ is estimated to rise +1.8% versus a +3.1% gain in 1Q.

• Advance 2Q Personal Consumption is estimated to rise +4.0% versus a +.9% gain in 1Q.

• Advance 2Q GDP Price Index is estimated to rise +2.0% versus a +.9% gain in 1Q.

• Advance 2Q Core PCE QoQ is estimated to rise +2.0% versus a +1.2% gain in 1Q.

Upcoming Splits

• None of note

Other Potential Market Movers

• The ECB Economic Survey could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down by financial and commodity 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 Lower into Final Hour on Earnings Jitters, Profit-Taking, Technical Selling, Commodity/Gaming Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 12.9 +7.1%

• Euro/Yen Carry Return Index 125.80 +.51%

• Emerging Markets Currency Volatility(VXY) 7.1 +1.2%

• S&P 500 Implied Correlation 34.1 +5.5%

• ISE Sentiment Index 101.0 +11.0%
  

• Total Put/Call .73 +2.8%

• NYSE Arms 1.22 +22.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 50.74 +1.62%
  

• America Energy Sector High-Yield CDS Index 525.0 -18.8%

• European Financial Sector CDS Index 55.05 +2.73%

• Italian/German 10Y Yld Spread 188.0 +1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 57.66 -3.0%
  

• Emerging Market CDS Index 156.44 +.23%
  

• iBoxx Offshore RMB China Corporate High Yield Index 164.94 -.03%

• 2-Year Swap Spread 1.75 -1.5 basis points

• TED Spread 18.75 -1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -22.75 -.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.37 -.20%
• 3-Month T-Bill Yield 2.11% +3.0 basis points

• Yield Curve 22.0 -1.0 basis point

• China Iron Ore Spot 112.68 USD/Metric Tonne +.09%

• Citi US Economic Surprise Index -40.6 +9.7 points

• Citi Eurozone Economic Surprise Index -39.80 -6.8 points

• Citi Emerging Markets Economic Surprise Index -21.7 +.5 point

• 10-Year TIPS Spread 1.80 +1.0 basis point
• 100.0% chance of Fed rate cut at Sept. 18th meeting, 100.0% chance of cut at October 30th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -106 open in Japan 
• China A50 Futures: Indicating -80 open in China

• DAX Futures: Indicating -7 open in Germany

Portfolio:

• Lower: On losses in my tech/medical/retail/biotech sector longs

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

• Market Exposure: Moved to 75% Net Long