Wednesday, January 31, 2018

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:
  • 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:

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: