Wednesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 58.0 -.25 basis point.

• China Sovereign CDS 40.0 +.25 basis point.

• Bloomberg Emerging Markets Currency Index  67.33 -.01%.

• S&P 500 futures +.18%.

• NASDAQ 100 futures +.37%.

Morning Preview Links 

Earnings of Note 

Company/Estimate

Before the Open:

• (AMT)/1.74

• (APTV)/1.14

• (ADP)/1.13

• (BLMN)/.35

• (BG)/.33

• (CME)/1.76

• (FCAU)/.60

• (GE)/.12

• (HES)/-.12

• (HUM)/5.27

• (JCI)/.62

• (TAP)/1.65

• (SMG)/2.74

• (SPG)/2.99

• (SSYS)/.15

After the Close:

• (AMED)/.99

• (APA)/.14

• (AVB)/2.31

• (CF)/.82

• (CAKE)/.81

• (CRUS)/.15

• (CTSH)/.92

• (ESV)/-1.28

• (ETH)/.48

• (HCP)/.43

• (H)/.46

• (KTOS)/.06

• (LRCX)/3.43

• (MCK)/3.01

• (MET)/1.34

• (OI)/.76

• (PPC)/.60

• (PRU)/3.22

• (QCOM)/.77

• (SKYW)/1.59

• (TDOC)/-.41

• (TWLO)/.02

• (WDC)/.19

• (WMB)/.23

Economic Releases

8:15 am EST

• The ADP Employment Change for July is estimated to rise to 150K versus 102K in June.

8:30 am EST

• The 2Q Employment Cost Index is estimated to rise +.7% versus a +.7% gain in 1Q.

9:45 am EST

• The MNI Chicago PMI report for July is estimated to rise to 51.0 versus 49.7 in June.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,739,250 barrels versus a -10,835,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -1,481,270 barrels versus a -226,000 barrel decline the prior week. Distillate inventories are estimated to rise by +769,520 barrels versus a +613,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.74% versus a -1.3% decline prior.
  

2:00 pm EST

• The FOMC is expected to lower the benchmark Fed Funds rate -.25 basis points to 2.0-2.25%.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's press conference, China Manufacturing PMI report, Eurozone CPI/GDP reports, weekly MBA Mortgage Applications report, Democratic Presidential Debate and the (MYL) investor day could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and consumer shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.

Stocks Slightly Lower into Final Hour on China Trade Deal Concerns, Earnings Jitters, Profit-Taking, Restaurant/Pharma Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 13.7 +6.7%

• Euro/Yen Carry Return Index 125.83 -.08%

• Emerging Markets Currency Volatility(VXY) 7.02 +.57%

• S&P 500 Implied Correlation 35.45 +4.82%

• ISE Sentiment Index 87.0 +26.1%
  

• Total Put/Call 1.03 +28.8%

• NYSE Arms 1.36 1.0 -34.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 52.70 +.41%
  

• America Energy Sector High-Yield CDS Index 527.0 +.51%

• European Financial Sector CDS Index 64.32 +3.82%

• Italian/German 10Y Yld Spread 198.5 +2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 58.31 +.82%
  

• Emerging Market CDS Index 158.04 +.52%
  

• iBoxx Offshore RMB China Corporate High Yield Index 165.03 -.07%

• 2-Year Swap Spread 3.0 +.5 basis point

• TED Spread 18.0 +3.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -24.5 +1.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.33 +.05%
• 3-Month T-Bill Yield 2.06% -4.0 basis points

• Yield Curve 21.25 +.5 basis point

• China Iron Ore Spot 117.30 USD/Metric Tonne +2.15%

• Citi US Economic Surprise Index -33.4 +4.0 points

• Citi Eurozone Economic Surprise Index -46.60 -5.7 points

• Citi Emerging Markets Economic Surprise Index -17.3 +.2 point

• 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 -198 open in Japan 
• China A50 Futures: Indicating -131 open in China

• DAX Futures: Indicating -23 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth -.2%

Sector Underperformers:

• 1) Tobacco -1.5% 2) Restaurants -1.1% 3) Drugs -1.1%

Stocks Falling on Unusual Volume: 

• BYND, SSNC, IT, TACO, GVA, SSD, COF, UAA, BERY, DORM, APPF, LGND, PFE, GRUB, HCA, GTX, CVLT, GLW, DISH and R

Stocks With Unusual Put Option Activity:

• 1) LEG 2) COF 3) MDR 4) UAA 5) MYL

Stocks With Most Negative News Mentions:

• 1) GVA 2) MDR 3) FCAU 4) PFE 5) DSX

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +1.1%

Sector Outperformers:

• 1) Oil Service +6.3% 2) Homebuilding +1.9% 3) Agriculture +1.3%

Stocks Rising on Unusual Volume:

• VRNS, NBIX, CURO, MEDP, OMF, JJSF, IRMD, RNG, SLCA, TREX, AOS, PI, CNXM, NOV, CGNX, MPLX, ARCT, GHDX, NVMI, CHGG, PG, STNE, LEG, NPO, NFG, CJ, OIS, CGNX, HUBB, OFC, TUP, FIX, AGCO and MAG

Stocks With Unusual Call Option Activity:

• 1) WDAY 2) GRUB 3) UA 4) ZEN 5) HAL

Stocks With Most Positive News Mentions:

• 1) MLM 2) AGCO 3) PG 4) BIIB 5)DHI

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +6.0% Above 100-Day Average
• 5 Sectors Rising, 6 Sectors Declining
• 50.9% of Issues Advancing, 46.1% Declining
• 236 New 52-Week Highs, 101 New Lows
• 63.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.6%
• Vix 13.4 +4.5%
• Total Put/Call 1.02 +27.5%
• TRIN/Arms 1.13 -25.7%

Tuesday Watch

Evening Headlines

Bloomberg:  

• Boris Johnson Issues Ultimatum to EU Over Brexit Talks as Pound Slumps.  

• China Warns Hong Kong Unrest Goes ‘Far Beyond’ Peaceful Protest.

• Hong Kong Stocks Succumb to Protests With Local Economy at Risk   

• Japan’s Industrial Output Falls More Than Expected in June.

• Asia Stocks Look Mixed; Dollar Pushes Higher. Asian stocks looked set to trade mixed after U.S. equities edged lower with technology giants weighing on benchmarks. The dollar climbed to the highest in almost two months. Futures pointed to modest gains in Japan and Australia, with stocks in Sydney within a whisker of a record high. Hong Kong contracts were flat amid escalating protests in the city, with China warning that unrest had gone “far beyond” peaceful protest. On Wall Street, the S&P 500 Index fell for the second time in three sessions after reaching a record Friday as Amazon Inc., Facebook Inc., Alphabet Inc. and Netflix Inc. all slid. Treasuries were little changed. Nikkei 225 futures rose 0.2% in Singapore. Australia’s S&P/ASX 200 Index contracts gained 0.5%. Hong Kong’s Hang Seng Index futures were little changed.  

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

• Rate Cuts' Dark Side, Fed Urged Go Big, China Struggles: Eco Day.

• Oil Advances Most in Almost Three Weeks as U.S. Rate Cut Awaited.

Wall Street Journal:

• California Wants to Teach Your Kids That Capitalism Is Racist.

• Alleged 9/11 Plotter May Help Victims’ Suit if U.S. Doesn’t Seek Death Penalty.

• Cloud Computing Is Here. Cloud Recycling Is Next.

• Kamala Harris Touts Tough-on-Banks Record. Others See a More Complicated Picture.

• Gang Fight Kills 57 in Brazil, 16 Beheaded.

Fox News:  

• McConnell hits 'feckless' Obama policies in fiery speech after critics call him 'Russian asset'.

MarketWatch.com:

• Why some restaurants are turning up their noses at Beyond Meat(BYND).

• Britain’s answer to Beyond Meat set to launch in the U.S.

• Apple’s(AAPL) report, even if ‘subpar,’ could boost stock market, Jim Cramer predicts.

CNBC:

• Companies are ramping up share buybacks, and they’re increasingly using debt to do so.

• Trump administration proposes rule requiring hospitals to publish the prices negotiated with insurers.

• Stocks making the biggest moves after hours: Beyond Meat, AK Steel and Cognex.

• Cramer: Get ready to buy these stocks as the market awaits a rate cut.

• As Fortnite’s world champion rakes in millions, here’s how to get your piece of the esports space.

Zero Hedge:   

• Capital One Admits Massive Data Breach: 100 Million Americans Affected, Seattle Woman Arrested.

• After Rand Paul Offers To Buy Ticket To Somalia, Ilhan Omar Supports Violent Attack.

• Iran, Russia Planning Joint Naval Drill In Contested Gulf Waters.

• Over 80,000 Quakes Have Hit California Since July 4th, Aftershocks Headed "Toward The Garlock Fault"

• Citi To Fire Hundreds Of Traders As Revenue Tumbles.

• 16-Year-Old Fortnite World Champion Wins Record-Breaking $3 Million Prize.

• Trump Slams Fed: "QT Was A Big Mistake" And "A Small Rate Cut Isn't Enough".

• US Treasury Now Expects To Borrow Over $800 Billion In Debt In Two Quarters.

• Beyond Meat Tumbles After Announcing 3.25 Million Share Secondary Offering.

• Bonds & Bullion Bid But Stocks Slide As Firms Slash Earnings Outlooks.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 58.25 +.75 basis point.

• China Sovereign CDS 39.75 +.25 basis point.

• Bloomberg Emerging Markets Currency Index  67.30 unch.

• S&P 500 futures +.13%.

• NASDAQ 100 futures +.18%.

Morning Preview Links 

Earnings of Note 
Company/Estimate

Before the Open:

• (AGCO)/1.59

• (MO)/1.10

• (COP)/1.04

• (GLW)/.45

• (CMI)/4.44

• (DHI)/1.05

• (ETN)/1.51

• (LLY)/1.45

• (FDP)/.66

• (GRUB)/.30

• (HCA)/2.47

• (IR)/2.06

• (LGND)/.55

• (MLM)/3.12

• (MA)/1.83

• (MRK)/1.16

• (PG)/1.05

• (RL)/1.66

• (R)/1.40

• (SNE)/89.80

• (UAA)/-.05

After the Close:

• (AMD)/.08

• (AAPL)/2.10

• (BYD)/.47

• (CHRW)/1.22

• (COHR)/1.34

• (EA)/.01

• (GILD)/1.71

• (MXIM)/.57

• (MSTR)/.21

• (MDLZ)/.57

• (TRUP)/.01

• (YUMC)/.38

• (ZEN)/.05

Economic Releases
8:30 am EST

• Personal Income for June is estimated to rise +.4% versus a +.5% gain in May.

• Personal Spending for June is estimated to rise +.3% versus a +.4% gain in May.

• The PCE Core MoM for June is estimated to rise +.2% versus a +.2% gain in May.

9:00 am EST

• The S&P CoreLogic CS 20-City MoM for May is estimated to rise +.2% versus unch. in April.

10:00 am EST

• Pending Home Sales MoM for June is estimated to rise +.5% versus a +1.1% gain in May.

• Conference Board Consumer Confidence for July is estimated to rise to 125.0 versus 121.5 in June.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The German CPI report, Eurozone Consumer Confidence report, weekly US retail sales reports, Democratic Presidential Debate and the Keefe Bruyette Woods Community Bank Conference could also impact trading today.

BOTTOM LINE: Asian indices are modestly higher, boosted by technology 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.