Friday Watch

Evening Headlines

Bloomberg:   

• Disagreement on Japan Evacuees; Cops Quarantined: Virus Update.    

• Hubei Adds 115 Deaths; Hong Kong Cops Quarantined: Virus Update

• Hubei Changes Virus Count Method With Data Mistrust Growing.  

• Fecal Transmission May Be Behind Coronavirus’s Rapid Spread.  

• Japan Inflation Picks Up Pace Again Buoyed by Energy Prices. 

• Stocks Mixed on Virus Jitters; Dollar Holds Gain. U.S. equity futures slipped and Asian stocks saw a mixed start to Friday trading amid renewed concern about the impact of the coronavirus. The dollar and Treasuries held overnight gains. Shares slid in Korea, edged lower in Australia and saw modest gains in Japan. The won declined after South Korean export data fueled concern about the economy. Earlier, U.S. stocks closed lower and the Dollar Index climbed to the highest in almost three years as the rise in virus cases outside of China hit sentiment. The yen steadied around 112 per dollar and the yuan held declines. Futures on the S&P 500 Index dipped 0.3% as of 10:07 a.m. in Tokyo. The underlying gauge fell 0.4% on Thursday. Japan’s Topix index added 0.3%. Australia’s S&P/ASX 200 Index fell 0.1%. South Korea’s Kospi index dropped 1.1%.

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

• Nevada Democrats Fret Over Repeat of Iowa Chaos: ‘I Am Nervous’.  

• E*Trade Deal Highlights Tech-Driven Change Felt in Many Markets.

Wall Street Journal:

• China’s Facade of Stability

• ‘I Feel Like This Is the End’: A Million Fleeing Syrians Trapped by Assad’s Final Push.

• Japan Defends Handling of Virus-Struck Cruise Ship.

• Bloomberg Says Me Too to Leftism.

• Sprint, T-Mobile Revise Merger Terms.

• Global Terror-Finance Watchdog Set to Sanction Iran.

• Founders of Hedge Fund Senator Splitting Up.

• Two Big Workplace-Software Providers to Merge.

Fox News:

• DOJ's original Roger Stone sentence proposal was excessive, Jackson agrees.

• NBC's Dem debate leaves liberal competitor with lowly viewership.

MarketWatch.com:    

• Dropbox shares jump on better-than-expected results.

CNBC:

• Stocks making the biggest moves after hours: First Solar, Dropbox, Fitbit & more.

• Dow falls more than 100 points after suffering a sudden midday sell-off that confused traders.

• NRC Health cyberattack sparks privacy concerns about patient records in US. 

• Elizabeth Warren reverses her position on super PAC support as she seeks comeback.

Zero Hedge:

• South Korean Soldier Tests Positive For Coronavirus; Hubei Reports 411 New Cases, 115 Deaths.

• US Agency Which Secures President's Communications Says Its Systems Were "Breached".

• Houthi Missiles Target Aramco Facility Just After Pompeo Arrives In Saudi Arabia.

• The Rate Of Diamond Princess Infections Suggest Worldwide Infections Are Much Higher Than Official Reports.

• Meet Nikola Motors' Stunning EV Pickup Truck Competitor To Tesla's Cybertruck.

• Chinese Regime Deploys 1,600 Online Trolls To Suppress Information On Coronavirus.

• Bolton Admits Testimony Based On Leaked Book Excerpts Would Have Been Impeachment Nothingburger.

• MGM Seeks To Replace 2,000 Workers With Robots By 2020.

• On Leaving California: "I've Watched Grown Adults Dress Up As Vaginas & Parade The Streets".

• European Close Sparks Buying-Panic Bid After Morning Momo Massacre.

Business Insider:

• VOICE ASSISTANTS IN HEALTHCARE: An inside look at 3 emerging voice use cases healthcare providers can deploy to cut costs, build loyalty, and drive revenue.

John Hopkins University:

• Coronavirus Global Cases. (map)

BNO News:

• Tracking Coronavirus: Map, data and timeline.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 47.75 +.75 basis point.

• China Sovereign CDS 34.75 +.75 basis point.

• Bloomberg Emerging Markets Currency Index  64.42 -.02%.

• FTSE 100 futures -.01%.

• S&P 500 futures -.22%.

• NASDAQ 100 futures -.26%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (B)/.84

• (DE)/1.27

• (ITT)/.92

• (MGA)/1.32

• (SOHU)/-.40

After the Close:

• None of note

Economic Releases 
9:45 am EST

• The Markit US Manufacturing PMI for Feb. is estimated to fall to 51.5 versus 51.9 in Jan.

• The Markit US Services PMI for Feb. is estimated at 53.4 versus 53.4 in Jan.

10:00 am EST

• Existing Home Sales for Jan. are estimated to fall to 5.44M versus 5.54M in Dec.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Kaplan speaking, Fed's Brainard speaking, Eurozone Services PMI report, Eurozone CPI report and the (HAS) investor day could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are lower, weighed down by technology and industrial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Reversing Lower into Final Hour on Coronavirus Fears, Global Growth Worries, Technical Selling, Tech/Healthcare Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Around Even
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 15.5 +8.0%

• Euro/Yen Carry Return Index 125.47 +.47%

• Emerging Markets Currency Volatility(VXY) 6.69 +4.69%

• S&P 500 Implied Correlation 38.18 +3.45%

• ISE Sentiment Index 105.0 -3
  

• Total Put/Call .82 -1.2%

• NYSE Arms .97 +29.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 45.45 +2.03%
  

• America Energy Sector High-Yield CDS Index 633.0 -2.5%

• European Financial Sector CDS Index 48.28 +2.1%

• Italian/German 10Y Yld Spread 135.0 -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 47.47 +05%
  

• Emerging Market CDS Index 195.84 +2.04%
  

• iBoxx Offshore RMB China Corporate High Yield Index 170.70 +.08%

• 2-Year Swap Spread 2.25 -.5 basis point

• TED Spread 12.5 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -9.25 +.25 basis pointt

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 64.42 -.58%
• 3-Month T-Bill Yield 1.57% unch.

• Yield Curve .14 -1.0 basis point

• China Iron Ore Spot 89.05 USD/Metric Tonne +.67%

• Citi US Economic Surprise Index 61.80 +6.2 points

• Citi Eurozone Economic Surprise Index -30.0 -.1 point

• Citi Emerging Markets Economic Surprise Index 20.8 +1.2 points

• 10-Year TIPS Spread 1.64 -2.0 basis points
• 28.8% chance of Fed April 29th meeting, 40.3% chance of cut at June 10th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +5 open in Japan 
• China A50 Futures: Indicating -189 open in China

• DAX Futures: Indicating +39 open in Germany

Portfolio:

• Slightly Higher: On gains in my retail sector longs, index hedges and emerging market shorts

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my emerging market shorts

• Market Exposure: Moved to 50% Net Long

Thursday Watch

Evening Headlines

Bloomberg:   

• China Ramps Up Virus Propaganda, And Stirs Even More Outrage   

• China Rolls Out Legal Game Changer for $5 Trillion Bond Market.

• Hubei Adds 349 New Cases on Revised Guidelines: Virus Update

• CDC Warns Travelers on Hong Kong; Two Die in Iran: Virus Update   

• China Back in the Market for U.S. Farm Goods After Waivers.

• Japan Stocks Rise as Yen Slides; U.S. Futures Gain. Japanese stocks gained after a slide in the yen, while stocks elsewhere in Asia opened with more modest gains as investors scrutinized the infection rate for the coronavirus after another methodology change in China. The yen slumped overnight to its weakest in nine months amid concern the Japanese economy is heading toward recession and as Chinese stimulus reduces demand for some haven assets. China’s benchmark borrowing costs for new loans is expected to drop Thursday amid a swath of policy measures to fight the impact of the deadly coronavirus. Shares in South Korea and Australia opened firmer, while U.S. and European equities earlier closed at record highs. Japan’s Topix index rose 1.1% as of 9:10 a.m. in Tokyo. Futures on the S&P 500 Index added 0.2%. The gauge advanced 0.5% on Wednesday, when the Stoxx Europe 600 Index jumped 0.8%. South Korea’s Kospi index added 0.6%. Australia’s S&P/ASX 200 Index rose 0.4%.

• Fed Officials Saw Policy Appropriate ‘For a Time’ Amid Risks

• Options Traders Are So Bullish It’s Sending Warning Signals.

• Police Say 8 Killed in Shootings in the German City of Hanau.

• Five Things You Need to Know to Start Your Day   

• Fed Policy Plan, China Strains, IMF Sees Global Rebound: Eco Day.

Wall Street Journal:

• China Struggles to Give Care to Patients Without Coronavirus.

• Why the Young Back Bernie Sanders.

• Cord-Cutting Accelerates, Raising Pressure on Cable Providers.

• How the Drug Lobby Lost Its Mojo in Washington.

• Bloomberg Bankrolls a Social-Media Army to Push Message.

Fox News:

• Whoopi takes AOC to woodshed for treatment of older Dems, moderates.

MarketWatch.com:  

• Here are 25 Dividend Aristocrat stocks screened for ‘quality’.

• Nvidia(NVDA) stock rockets past $300 to third straight record close as holdout analyst turns bullish.

CNBC:

• Coronavirus live updates: Fed sees risk to global growth, markets face ‘pretty serious reckoning’.

• Goldman says market underestimating coronavirus: ‘Correction is looking much more probable’.

• Democrat plans to tax the wealthy could hit an unintended target: Average Americans.

Zero Hedge:

• Hubei Reports Huge Drop In New Cases On Wednesday As President Xi Touts Progress In 'People's War' Against COVID-19.

• Israel To Step Up "Offensive Action" - Will Turn Syria Into "Iranian Vietnam": Israeli Defense Chief.

• "They Completely Dropped The Ball": Critics Bash Japan's Government.

• Assange's Lawyer Flip-Flops - Admits He Offered Russia Exoneration Quid Pro Quo, White House Ignored. 

• CDC Issues Hong Kong Travel Advisory; Dems Demand Trump Reimburse States Battling Coronavirus.

• Terrifying Charts Show China's Economy Remains Completely Paralyzed.

• Did The Diamond Princess "Quarantine" Just Infect More People With Covid-19 And Spread It Further?

• WTI Extends Gains Despite Bigger Than Expected Crude Build. 

• Sanders Widens Lead Over 2020 Dems After New Poll Reveals 32% Support

• 10 Very Important Questions That The Mainstream Media Should Be Asking About This Coronavirus Outbreak.

• Stocks Up, Bonds Up, Gold Up, Dollar Up, Oil Up, Virus-Death-Count Up!

John Hopkins University:

• Coronavirus Global Cases. (map) 

Night Trading 

• Asian equity indices are +.25% to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 46.75 -.75 basis point.

• China Sovereign CDS 34.0 -.5 basis point.

• Bloomberg Emerging Markets Currency Index  64.75 -.08%.

• FTSE 100 futures +.26%.

• S&P 500 futures +.14%.

• NASDAQ 100 futures +.14%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (AKS)/-.10

• (AEP)/.58

• (AAWW)/3.01

• (CLF)/.24

• (DPZ)/2.97

• (HRL)/.46

• (NEM)/.47

• (RS)/1.73

• (RGEN)/.18

After the Close:

• (BYD)/.45

• (ED)/.80

• (DBX)/.14

• (FSLR)/2.04

• (RMAX)/.46

• (SFM)/.14

• (OLED)/.75

• (ZS)/.03

Economic Releases 
8:30 am EST

• The Philly Fed Business Outlook Index for Feb. is estimated to fall to 11.0 versus 17.0 in Jan.

• Initial Jobless Claims for last week are estimated to rise to 210K versus 205K the prior week.

• Continuing Claims are estimated to rise to 1717K versus 1698K prior.

10:00 am EST

• The Leading Index for Jan. is estimated to rise +.4% versus a -.3% decline in Dec.
  

11:00 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +2,627,000 barrels versus a +7,459,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +228,100 barrels versus a -95,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,337,300 barrels versus a -2,013,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.45% versus a +.6% gain prior.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Barkin speaking, Japan CPI report, weekly Bloomberg Consumer Comfort Index, Bloomberg Economic Expectations Index for Feb. and the Germany IFO Business Climate Index could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are 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 75% net long heading into the day.