Friday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 64.75 +. basis point.

• China Sovereign CDS 36.75 -. basis point.

• Bloomberg Emerging Markets Currency Index  66.19 -.03%.
• FTSE 100 futures -.15%.

• S&P 500 futures -.17%.

• NASDAQ 100 futures -.24%.

Morning Preview Links

Earnings of Note 

Company/Estimate

Before the Open:

• (EPAY)/.28
• (DUK)/1.67
• (HMC)/99.09
• (MGA)/1.34
• (ZEUS)/.06

After the Close:

• None of note

Economic Releases

8:30 am EST

• Wholesale Trade Sales MoM for Sept. is estimated to rise +.2% versus unch. in Aug.

10:00 am EST

• Preliminary Univ. of Mich. Consumer Sentiment for Nov. is estimated at 95.5 versus 95.5 in Oct.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Williams speaking, Fed's Brainard speaking, Fed's Daly speaking, China Loan Data report, Bloomberg Nov. US Economic Survey and the (STAA) investor day could also impact trading today.

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

Stocks Modestly Higher into Final Hour on China Trade Deal Hopes, Earnings Optimism, Oil Gain, Energy/Tech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 12.7 +.4%

• Euro/Yen Carry Return Index 125.40 +.15%

• Emerging Markets Currency Volatility(VXY) 7.24 -1.09%

• S&P 500 Implied Correlation 29.33 +1.28%

• ISE Sentiment Index 113.0 +24
  

• Total Put/Call .65 -31.6%

• NYSE Arms .72 -39.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 51.10 -1.47%
  

• America Energy Sector High-Yield CDS Index 535.0 +4.6%

• European Financial Sector CDS Index 56.89 -2.06%

• Italian/German 10Y Yld Spread 139.75 +6.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 63.24 -1.04%
  

• Emerging Market CDS Index 190.78 -1.52%
  

• iBoxx Offshore RMB China Corporate High Yield Index 167.49 +.08%

• 2-Year Swap Spread 4.25 +.25 basis point

• TED Spread 34.75 -1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -15.75 -3.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.22 +.05%
• 3-Month T-Bill Yield 1.55% unch.

• Yield Curve .21 -2.0 basis points

• China Iron Ore Spot 79.90 USD/Metric Tonne -.51%

• Citi US Economic Surprise Index 7.50 +.4 point

• Citi Eurozone Economic Surprise Index -27.20 +.5 point

• Citi Emerging Markets Economic Surprise Index -23.50 +.2 basis point

• 10-Year TIPS Spread 1.71 +3.0 basis points
• 22.1% chance of Fed rate cut at Jan. 29th meeting, 33.9% chance of cut at March 18th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +195 open in Japan 
• China A50 Futures: Indicating +61 open in China

• DAX Futures: Indicating -23 open in Germany

Portfolio:

• Higher: On gains in my industrial/tech sector longs

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

• Market Exposure: Moved to 75% Net Long

Afternoon Market Internals

NYSE Composite Index:

• Volume Running +26.9% Above 100-Day Average
• 7 Sectors Rising, 4 Sectors Declining
• 47.7% of Issues Advancing, 50.2% Declining
• 165 New 52-Week Highs, 42 New Lows
• 60.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.9%
• Vix 12.5 -.8%
• Total Put/Call .65 -31.6%
• TRIN/Arms .75 -37.0%

Thursday Watch

Evening Headlines

Bloomberg:

• Trump-Xi Trade Summit May Slip to December, Be Outside U.S.    

• Hong Kong Leaders Accused of Spending ‘Peanuts’ to Save Economy.

• Toxic Air Adds to India’s Woes as Economy Goes From Bad to Worse.    

• BOE to Hold Steady as Brexit Fog Thickens: Decision Day Guide.

• Smartphone Rebound Sparks Signs of Life in Asia’s Tech Cycle.

• Stocks Mixed as Interim Trade Deal Hits Roadblock. Stocks in Asia were mixed Thursday after reports that the signing of a partial U.S.-China trade deal may be delayed until next month. Treasuries extended Wednesday’s gains. Equities in Japan opened flat and South Korean stocks slipped, while shares in Sydney rose modestly. The S&P 500 Index closed little changed Wednesday. The latest news suggested that the signing of a preliminary trade agreement may not happen this month as originally planned as the two sides wrangle over a location. West Texas oil remained near $53 a barrel. Japan’s Topix index dipped 0.1% of as 9:07 a.m. in Tokyo. South Korea’s Kospi index dropped 0.3%. Australia’s S&P/ASX 200 Index rose 0.5%. Futures on the S&P 500 were flat.

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

• Europe Girds for Worse, Productivity Plunges, Trump-Xi: Eco Day.

• Vape Shops Likely to Be Exempted in Planned FDA E-Cig Curbs.  

• North Sea Oil Man Finds New Opportunities in Dying Fields.   

• ‘Powerfully’ Bullish Setup Fuels Year-End Optimism in Stocks.

Wall Street Journal:

• China Embraces Bankruptcy, U.S.-Style, to Cushion a Slowing Economy.

• Has Elizabeth Warren Wrecked the Left?

• If Warren Scraps Private Health Care, Beware Unintended Consequences.

• Sessions Plans to Enter Alabama Senate Race.

• Google(GOOG) Weighs Changes to Political Ad Policy.

• Mexico Says U.S. Homicides May Have Been Case of Mistaken Identity.

• The New College Rock Stars.

Fox News:

• Whistleblower attorney called for 'rebellion,' 'impeachment' in 2017.

MarketWatch.com:     

• Roku(ROKU) shares slump 15% on widening loss.  

• Square(SQ) gives a rosier revenue forecast after Caviar sale, but earnings outlook is light.  

• Short sellers are increasing bets on cannabis stocks even after summer selloff.

CNBC:

• Alphabet’s(GOOG) board of directors is investigating executives over inappropriate relationships.

• Qualcomm(QCOM) stock spikes after licensing business propels earnings and revenue past estimates.

• Netflix(NFLX) CEO Reed Hastings says subscriber numbers aren’t the right metric to track competition.

• This industrial stock could be the best way to ride sector surge, trader says.

Zero Hedge:   

• 'Coup Has Started': Whistleblower's Attorney Vowed To 'Get Rid Of Trump' In 2017.

• Arizona County Declares Itself A "Second Amendment Sanctuary".

• Almost 80,000 California Retirees Receive Over $100,000 In Pension Pay.

• Two Former Twitter Employees Charged With Spying For Saudi Arabia, May Be Involved In Khashoggi Murder.

• The 'Sissifying' Of America Continues.

• Ukrainians Pimped Hunter Biden's Seat For Leverage With Obama State Department.

• 45 Population-Control Quotes That Expose The Elites' Plan To Cut The Number Of People On The Planet.

• Democrats' 'Star Witness' Admits He Wasn't On Trump-Ukraine Call, Sole Source Was NY Times.

• Bonds & Bullion Bid As Trade-Deal-Delay Stalls Stocks.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 64.75 +.5 basis point.

• China Sovereign CDS 36.75 -.25 basis point.

• Bloomberg Emerging Markets Currency Index  66.16 -.05%.

• FTSE 100 futures +.15%.

• S&P 500 futures -.06%.

• NASDAQ 100 futures -.06%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (APD)/2.29

• (ABC)/1.58

• (MT)/-.28

• (CAH)/1.09

• (DISCA)/.81

• (DISH)/.58

• (HAIN)/.08

• (JCI)/.76

• (NCLH)/2.17

• (RL)/2.39

• (STRA)/1.20

• (TSG)/.42

• (WWW)/.63

• (ZTS)/.88

After the Close:

• (ATVI)/.23

• (MNST)/.54

• (NWSA)/.08

• (PETQ)/.35

• (SGMS)/.03

• (STMP)/.74

• (SYNA)/.73

• (TTWO)/1.70

• (TTD)/.66

• (DIS)/.97

• (YELP)/.50

• (ZG)/-.20

Economic Releases
8:30 am EST

• Initial Jobless Claims for last week are estimated to fall to 215K versus 218K the prior week.

• Continuing Claims are estimated to fall to 1682K versus 1690K prior.

3:00 pm EST

• Consumer Credit for Sept. is estimated to fall to $15.0B versus $17.901B in Aug.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Bostic speaking, Fed's Kaplan speaking, BofE rate decision/meeting, China Trade Balance report, $19B 30Y T-Bond auction, weekly EIA natural gas inventory report, weekly Bloomberg Consumer Comfort Index, (STRA) analyst day and the Stifel Growth Conference could also impact trading today.

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