Thursday Watch

Night Trading 

• Asian equity indices are -.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 64.25 -1.0 basis point. 

• Asia Pacific Sovereign CDS Index 11.25 unch.

• Bloomberg Emerging Markets Currency Index 76.22 -.01%.

• S&P 500 futures +.36%.

• NASDAQ 100 futures +.33%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (BABA)/1.67

• (MO)/.80

• (AN)/.92

• (APTV)/1.33

• (BAX)/.59

• (BSX)/.34

• (CI)/1.86

• (CME)/1.10

• (COP)/.44

• (ETN)/1.24

• (HSY)/1.07

• (IDXX)/.73

• (IP)/1.19

• (MA)/1.12

• (MCK)/2.95

• (DX)/1.37

• (RL)/1.86

• (TWX)/1.44

• (UPS)/1.66

• (VLO)/1.09

• (GOOG)/10.07

• (AMZN)/1.83

• (AMGN)/3.03

• (AAPL)/3.84

• (CY)/.25

• (DECK)/3.82

• (MAT)/.17

• (OSTK)/-.03

• (SKYW)/.71

• (V)/.98

• (YRCW)/.03

Economic Releases

7:30 am EST

• Challenger Job Cuts YoY for January.

8:30 am EST

• Preliminary 4Q Non-Farm Productivity is estimated to rise +.7% versus a +3.0% gain in 3Q. 

• Preliminary 4Q Unit Labor Costs are estimated to rise +.9% versus a -.2% decline in 3Q.

• Initial Jobless Claims are estimated to rise to 235K versus 233K the pior week.

• Continuing Claims are estimated to fall to 1929K versus 1937K prior.

10:00 am EST

• Construction Spending MoM for December is estimated to rise +.4% versus a +.8% gain in November.

• ISM Manufacturing for January is estimated to fall to 58.6 versus 59.7 in December.

• ISM Prices Paid for January is estimated to fall to 68.8 versus 69.0 in December.
  

Afternoon

• Wards Total Vehicle Sales for January are estimated to fall to 17.25M versus 17.76M in December.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone PMI report, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report and the (F) sales conference call could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by technology and industrial 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 Reversing Slightly Lower into Final Hour on Profit-Taking, Fed Rate-Hike Worries, Technical Selling, Pharma/Gaming Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 14.3 -3.5%

• Euro/Yen Carry Return Index 141.07 +.36%

• Emerging Markets Currency Volatility(VXY) 8.21 -.85%

• S&P 500 Implied Correlation 34.8 -6.6%

• ISE Sentiment Index 100.0 -5.66%
  

• Total Put/Call .85 -10.5%

• NYSE Arms 1.27 +7.44%

Credit Investor Angst:

• North American Investment Grade CDS Index 47.34 +.55%
  

• America Energy Sector High-Yield CDS Index 307.0 +1.07%

• European Financial Sector CDS Index 42.25 -.54%

• Italian/German 10Y Yld Spread 133.25 -1.5 basis points
  

• Asia Pacific Sovereign Debt CDS Index 11.38 +1.56%

• Emerging Market CDS Index 114.65 -1.98%
  

• iBoxx Offshore RMB China Corporate High Yield Index 146.69 +.05%

• 2-Year Swap Spread 18.75 -.5 basis point

• TED Spread 32.25 -1.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -30.75 -.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 76.22 +.32%
• 3-Month T-Bill Yield 1.46% +4.0 basis points
  

• Yield Curve 57.25 -2.75 basis points

• China Iron Ore Spot 71.12 USD/Metric Tonne -.36%

• Citi US Economic Surprise Index 38.50 +3.2 points

• Citi Eurozone Economic Surprise Index 35.60 -8.1 basis points

• Citi Emerging Markets Economic Surprise Index -1.5 -4.8 basis points

• 10-Year TIPS Spread 2.11 +1.0 basis point
  
• 100.0% chance of Fed rate hike at March 21 meeting, 100.0% chance at May 2 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +132 open in Japan 
• China A50 Futures: Indicating +25 open in China

• DAX Futures: Indicating -11 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 75% Net Long

Today's Headlines

Bloomberg:

• China Needs to Quicken AI Adoption in the Real Economy, Xi Says.

• McDonald's(MCD) Says It's Solved the Industry’s Delivery Problem of Keeping Fries Hot.

• Digital Coins Tumble in January Amid Facebook, Tether Concerns. (video) Bitcoin is down about 29 percent this month, trading at $10,172 as of 8:35 in London, according to composite pricing compiled by Bloomberg. Rival coins Ripple and Litecoin have respectively slid about 45 percent and 29 percent, while Ethereum has managed a 47 percent increase. The four coins were little changed on Wednesday. “The regulatory oversight and the clampdown is really coming to the fore right now,” Stephen Innes, head of trading for Asia Pacific at Oanda, said by phone from Singapore. “I don’t think we’ve seen the last of it.”

Wall Street Journal:

• Trump’s Offer to Democrats. His agenda has plenty of room for bipartisan compromise.

• Fed Holds Rates Steady, Sees ‘Solid’ Economic Gains. The central bank signals no changes to its policy path.

• How J.D. Power Was Acquired by a Chinese Company Shrouded in Mystery. Hong Kong’s XIO Group, which acquired the U.S. auto-rating firm in 2016, is now embroiled in a dispute about the source of XIO’s funding.

• Food Distributors Sue Tyson, Pilgrim’s Pride and Others Alleging Collusion on Chicken Prices. Sysco, US Foods say chicken companies coordinated poultry supplies.

• Big Oil Returns to Drilling—but on a Budget. New projects around the world could double in 2018 but there aren’t many behemoths, as the global industry focuses on moderation.

Fox News:

• FBI has 'grave concerns' about 'omissions' in surveillance memo. (video)

CNBC:

• Fed leaves rates unchanged but gives more aggressive inflation expectations. (video)

• Here's what changed in the new Fed statement.

• Yellen leaving Fed Saturday, Powell to be sworn in Monday.

• US oil production tops 10 million barrels a day for first time since 1970.

• Wall Street is giddy over EA’s(EA) surging microtransaction profits, despite ‘horrific’ ‘Star Wars’ game sales.

• With stores going dark, Whole Foods(WFM) looks to fill retail's gaps.

• Expect to see commodities rise because the dollar will keep falling, analysts say.

• Boeing(BA) stock hits all-time after the company says it expects to crush record jet deliveries this year. (video)

Zero Hedge:

• Andrew McCabe Under Active DOJ Investigation For Sitting On Weiner Laptop Emails.

• Congressman Jason Lewis Hospitalized Following Deadly Train Collision.

• Are Volatility Traders Going Overboard?

• Betting On A Hawkish Farewell Party By Yellen? Not So Fast.

• WTI Algos Confused After Huge Crude Build, Production Spike. (graph)

• 'Soft' Survey Data Dumps In January, Chicago PMI Fades From 7-Year High. (graph)

• Trump's First Year Saw Americans' Compensation Rise At Fastest Pace Since 2008. (graph)

• Second "Trump Dossier" Emerges One Day After FISA Memo Vote.

• Germany To Stop Taking Migrants From Italy And Greece.

• ADP Shows Big Job Gains In January In "Excruciatingly Tight Labor Market". (graph

Bear Radar

Style Underperformer:

• Small-Cap Value unch.

Sector Underperformers:

• 1) Drugs -1.7% 2) Gaming -1.5% 3) Oil Service -1.0%

Stocks Falling on Unusual Volume: 

• TUP, TRI, SC, SXC, EXP, SMCI, GPOR, JNPR, LAUR, KTOS, LLY, SGEN, ENVA and CACC

Stocks With Unusual Put Option Activity:

• 1) HLT 2) UNIT 3) RRC 4) P 5) JNPR

Stocks With Most Negative News Mentions:

• 1) AKS 2) WYNN 3) BLCM 4) LAUR 5) MET

Charts:

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