Friday Watch

Evening Headlines

Bloomberg:   

• China's Stock Market Is Sending a Scary Signal About the Economy.

• A Synchronized Slowdown Is Looming: World Economy This Week.

• Asia Stocks Rally Faces Apple-Disappointment Test. The best weekly rally for Asian stocks since September, stoked by hopes for trade talks and China stimulus, faced a test on Friday after underwhelming news from Apple Inc. U.S. equity futures declined. Apple stoked concerns by saying it will stop reporting unit sales of its top product, sending its stock tumbling after hours and taking down futures on the Nasdaq, which had gained Thursday. Earlier, a phone call between Presidents Donald Trump and Xi Jinping showed the door is still open for U.S.-China trade talks, a development that had tipped gains for Asian shares. Futures on Chinese and Hong Kong stock indexes climbed. Japanese contracts more recently pointed to marginal gains and Australia headed for a flat start. Oil prices tumbled again in New York Thursday, alleviating pressure on importers such as India. Futures on the Nikkei 225 Stock Average in Singapore traded close to the level they were at when Tokyo cash equity trading ended Thursday. Contracts on Australia’s S&P/ASX 200 were flat. Futures on the FTSE China A50 surged 2.9 percent earlier. Futures on the Hang Seng Index rose 2.1 percent earlier. The S&P 500 Index increased 1.1 percent, capping a three-day surge of almost 4 percent. The Nasdaq Composite Index climbed 1.8 percent. Futures on the S&P 500 lost 0.4 percent, while Nasdaq futures declined 1.1 percent.      

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

• Economic Arms Race, Fresh Japan Stimulus, Shorting Yuan: Eco Day.

• Stanford Pals Hit the Jackpot With Juul's Meteoric Rise.

• Shorts Piled Into Stock ETFs at Extreme Rate During October Rout.  

• Trump Administration Adviser on Drug Price Policy Dies

Wall St. Journal:

• On Hold for 45 Minutes? It Might Be Your Secret Customer Score.

• A Consequential Congress.

• Trump and Xi Talk as U.S.-China Tech Fight Brews.

• Google(GOOGL) Employees Stage Global Walkout Over the Treatment of Sexual Harassment.

MarketWatch.com:

• Apple(AAPL) shares fall, forecast suggests little sales growth for holidays: Live blog recap.

• Alaska is on the verge of an oil resurgence.

Fox News:   

• President pushes tough limits for asylum seekers, issues warning to violent migrants in caravan.

CNBC:         

• Apple(AAPL) earnings drag tech stocks down after hours.

• Peter Thiel: Silicon Valley has 'jumped the shark,' maybe no more big consumer internet companies.

• Apple(AAPL) tumbles 7% after earnings on light guidance.

• Stocks to surge 8 percent to new records in final two months of year, market bull predicts.

• Shake Shack(SHAK) tumbles after missing on same-store sales.

• Wells Fargo: A double-digit market rally is coming.

• Stocks making the biggest moves after hours: Apple, Starbucks and more.

• DNA sequencing giant Illumina(ILMN) just bought rival Pac Bio for $1.2 billion — here's why.

• US charges Chinese companies in trade secrets theft.

Zero Hedge:

• Apple(AAPL) Tumbles On Soft Guidance, iPhone Sales Miss; To Stop iPhone Unit Sales Data.

• Satellite Imagery Confirms China's Economy Contracted In October.

• Dartmouth Prof.: "If We Don't Abolish Capitalism, Capitalism Will Abolish Us".

• Preparing For The Bust: Investors Load Up On Record Leveraged Loan ETF Shorts.

• After The Rout: These Are The Top 20 Hedge Fund Long And Short Positions.

• Adam Schiff, Maxine Waters Vow Revenge And Ramped-Up Russiagate If Dems Take House.

• John Bolton Warns National Debt Is An "Economic Threat" To The US Security.

• Nomi Prins: Expect The Fed To Pause If Volatility Continues.

• The Best And Worst Performing Assets In "Brutal" October.

• Stocks Jump On Biggest Short-Squeeze Since Brexit As Dollar Dumps.

Night Trading 

• Asian equity indices are +.25% to +1.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 90.5 -.75 basis point. 

• Asia Pacific Sovereign CDS Index 10.25 unch.

• Bloomberg Emerging Markets Currency Index 66.70 unch.

• FTSE 100 futures -.56%.

• S&P 500 futures -.05%.

• NASDAQ 100 futures -.78%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (ABBV)/2.01

• (BABA)/1.10

• (AXL)/.90

• (CBOE)/1.01

• (CVX)/2.09

• (DUK)/1.51

• (XOM)/1.21

• (ITT)/.79

• (NWL)/.64

• (COL)/2.03

• (RUTH)/.11

• (STX)/1.55

After the Close:

• None of note

Economic Releases

8:30 am EST

• The Trade Deficit for September is estimated at -$53.6B versus -$53.2B in August.

• The Change in Non-Farm Payrolls for October is estimated at 200K versus 134K in September.

• The Unemployment Rate for October is estimated at 3.7% versus 3.7% in September.

• Average Hourly Earnings MoM for October is estimated to rise +.2% versus a +.3% gain in September.

2:00 pm EST

• Factory Orders for September is estimated to rise +.5% versus a +2.3% gain in August.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone PMI report 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 modestly lower and to maintain losses into the afternoon.  The Portfolio is 50% net long heading into the day.

Stocks Rising into Final Hour on Diminished Trade War Fears, Less European/Emerging Markets/US High-Yield Debt Angst, Earnings Optimism, Biotech/Tech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Heavy

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 19.4 -8.5%

• Euro/Yen Carry Return Index 133.67 +.56%

• Emerging Markets Currency Volatility(VXY) 10.15 -.98%

• S&P 500 Implied Correlation 43.63 -5.4%

• ISE Sentiment Index 97.0 +12.79%
  

• Total Put/Call .85 -23.4%

• NYSE Arms 1.27 +33.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 67.74 -1.5%
  

• America Energy Sector High-Yield CDS Index 522.0 -.27%

• European Financial Sector CDS Index 89.23 -2.91%

• Italian/German 10Y Yld Spread 298.25 -6.0 basis points
  

• Asia Pacific Sovereign Debt CDS Index 10.38 -.1%

• Emerging Market CDS Index 200.06 -2.85%
  

• iBoxx Offshore RMB China Corporate High Yield Index 149.55 -.41%

• 2-Year Swap Spread 21.25 +1.25 basis points

• TED Spread 22.25 +2.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -40.75 +3.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 66.72 +.89%
• 3-Month T-Bill Yield 2.32% unch.

• Yield Curve 29.0 +.75 basis point

• China Iron Ore Spot 71.40 USD/Metric Tonne +.58%

• Citi US Economic Surprise Index .2 -5.2 points

• Citi Eurozone Economic Surprise Index -57.1 +.5 point

• Citi Emerging Markets Economic Surprise Index -7.20 +1.6 points

• 10-Year TIPS Spread 2.03-3.0 basis points
• 72.0% chance of Fed rate hike at Dec. 19th meeting, 73.7% chance at Jan. 30th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +22 open in Japan 
• China A50 Futures: Indicating +402 open in China

• DAX Futures: Indicating -18 open in Germany

Portfolio: 

• Slightly Higher: On gains in my tech/biotech/medical/industrial/retail sector longs

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Value +.6%

Sector Underperformers:

• 1) Utilities -1.1% 2) Restaurants -.4% 3) Software -.2%

Stocks Falling on Unusual Volume: 

• WPC, NRZ, JBT, CSV, AMAG, W, THS, SPOT, GDI, MYGN, MAXR, ROCK, HLNE, EEX, XPO, PKI, IT, TVPT, STMP, TYL, HCC, DSLV, CODI, IDXX, THS, FISV, CEIX, APA, XPO, MD, HBI, HCC, ALL, TRUP and TRN

Stocks With Unusual Put Option Activity:

• 1) YELP 2) MTZ 3) ITT 4) RCL 5) XPO

Stocks With Most Negative News Mentions:

• 1) AEGN 2) AEO 3) HON 4) BDC 5) WEC

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +2.7%

Sector Outperformers:

• 1) Gaming +8.4% 2) Semis +4.7% 3) Gold & Silver +4.6%

Stocks Rising on Unusual Volume:

• NFX, LKSD, TREE, QUAD, FND, IPHS, FORM, SSYS, MTSI, LXFR, GLOG, CLVS, JOE, HTHT, IBP, TILE, FOXF, OSK, CLVS, IIVI, RGEN, AMN, NTLA, MTSI, AIMT, CHD, QNST, USCR, STAA, PCRX, CMP, NEWM, USX, WSR, FEYE, MAS and URI

Stocks With Unusual Call Option Activity:

• 1) NFX 2) ARRY 3) FXI 4) CF 5) APC

Stocks With Most Positive News Mentions:

• 1) RMBL 2) ALV 3) HOG 4) AAL 5) MYL

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +44.2% Above 100-Day Average
• 9 Sectors Rising, 2 Sector Declining
• 71.3% of Issues Advancing, 26.3% Declining
• 18 New 52-Week Highs, 45 New Lows
• 26.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 39.6%
• Vix 20.1 -5.3%
• Total Put/Call .83 -25.2%
• TRIN/Arms .89 -6.3%