Wednesday Watch

Evening Headlines

Bloomberg:     

• China's Top Steelmaker Says Demand Has Probably Peaked for Now.

• Manufacturing Exit From China to Dodge Trump's Duties Gains Pace.

• U.S. Futures, Yen Mixed as Investors Await Outcome. U.S. stock futures were little changed and the yen held steady versus the dollar as markets remained cautious with investors bracing for American midterm election results. Contracts on the S&P 500 edged lower, while the main exchange-traded fund tracking the equity benchmark was flat ahead of the outcome in congressional races seen as a referendum on the policies of President Donald Trump. Stocks in Tokyo rose and the yen edged higher versus the dollar. E-minis on the S&P 500 slipped 0.1 percent as of 7:18 p.m. in New York. The SPDR S&P 500 ETF Trust was flat. Tokyo’s Topix Index opened up 0.5 percent. Australia’s S&P/ASX 200 was down 0.2 percent. South Korea’s Kospi Index rose 0.2 percent. The 10-year Treasury yield held near 3.21 percent. The offshore yuan extended this week’s losses.   

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

• Race for Senate, U.S.-China Deal Forecast, Powell-Speak: Eco Day.

Wall St. Journal:

• Midterms 12018:  Live Analysis.
• Health Care, Trump Animate Voters.
• State AGs for Rent.
• Erdogan to Defy U.S. Sanctions on Iran.
• Not Just Midterms: Investors Bracing for Packed November.
• Oil Teeters on Brink of a Bear Market.
• U.S. Troops’ First Order at the Border: Laying Razor Wire.
• Supply Crunch Looms in Commodities Markets.

MarketWatch.com:

• Foxconn mulls importing Chinese skilled workers for Wisconsin plant.

• This market feature has coincided with every stock-market bottom since 2016 — and it’s flashing now.

Fox News:   

• LIVE BLOG: First midterm races of election night called in Vermont, Virginia, South Carolina.

CNBC:       

• Stocks making the biggest moves after hours: Wendy's, Zillow(ZG) and more.

• Polls have started closing: This map shows which early results to watch in today's midterms.

• Amazon(AMZN) is reportedly moving into Long Island City, Queens: Here's what the neighborhood is like.

• Investors haven't been this pessimistic since the 2016 election, and it could lead to a big bounce.

• Telecom gear provider CommScope is near a deal to acquire Arris for about $5.6 billion.

• Twilio shares surge on better-than-expected earnings, revenue and guidance.

• These charts suggest stocks will rip higher into next year.

Zero Hedge:

• Live Updates: As More Polls Close, The Night's Most Interesting Races Emerge.

• Long Island City To Offer Amazon Huge Tax Incentives.

• China's Middle Class Is Again Desperate To Move Its Money Out Of The Country.

• Non-Citizens Voting In Texas? "We Got Tons Of Them" Admits Polling Official On Undercover Veritas Video.

• Not 'Too Big To Fail': Why Facebook's(FB) Long Reign May Be Coming To An End.

• WTI Extends Losses After Big Surprise Crude Build.

• Florida's Richest Man Blasts America's Wanna-Be Socialists, Says "Soros Is An Anarchist".

• Breakevens & Black Gold Battered As Stocks Rally On Ultra-Low Volumes.

Telegraph:

• Italy flirts with recession as eurozone slumps.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 86.25 -1.5 basis points. 

• Asia Pacific Sovereign CDS Index 9.75 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 67.19 -.03%.

• FTSE 100 futures +.38%.

• S&P 500 futures +.14%.

• NASDAQ 100 futures +.22%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (FOXA)/.52

• (CARS)/.56

• (DF)/-.06

• (DLPH)/.76

• (DISH)/.67

• (HUM)/4.24

• (KORS)/1.10

• (ODP)/.12

• (ROK)/2.02

• (SMG)/-.66

• (TSG)/.50

• (WWW)/.56

After the Close:

• (ADT)/.26

• (ALB)/1.25

• (CVNA)/-.36

• (FLO)/.25

• (FOSL)/-.10

• (IAC)/1.85

• (MRO)/.20

• (MCHP)/1.73

• (MNST)/.46

• (MUR)/.35

• (NWSA)/.05

• (PRU)/3.16

• (QCOM)/.84

• (SQ)/.11

• (TTWO)/.93

• (WYNN)/1.67

Economic Releases

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +2,050,100 barrels versus a +3,217,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -1,898,780 barrels versus a -3,161,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,518,110 barrels versus a -4,054,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.83% versus a +.2% gain prior.
  

3:00 pm EST

• Consumer Credit for September is estimated at $15.0B versus $20.08B in August.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Japan Machine Orders report, China Foreign Exchange Reserves report, German Industrial Production report, weekly MBA Mortgage Applications report, $19B 30Y T-Bond auction and the (COST)/(ZUMZ)/(PSMT) October sales reports 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 75% net long heading into the day.

Stocks Higher into Final Hour on Mid-Term Election Optimism, Less US High-Yield Debt Angst, Bargain-Hunting, Restaurant/Ag Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 20.43 +2.45%

• Euro/Yen Carry Return Index 134.62 +.46%

• Emerging Markets Currency Volatility(VXY) 10.10 +.20%

• S&P 500 Implied Correlation 42.79 +2.12%

• ISE Sentiment Index 45.0 -50.55%
  

• Total Put/Call 1.15 +12.8%

• NYSE Arms 1.12 +41.77%

Credit Investor Angst:

• North American Investment Grade CDS Index 64.73 -.89%
  

• America Energy Sector High-Yield CDS Index 541.0 +.58%

• European Financial Sector CDS Index 87.58 +1.15%

• Italian/German 10Y Yld Spread 296.25 +6.5 basis points
  

• Asia Pacific Sovereign Debt CDS Index 9.74 -2.01%

• Emerging Market CDS Index 190.66 -.55%
  

• iBoxx Offshore RMB China Corporate High Yield Index 147.40 -.43%

• 2-Year Swap Spread 19.0 -.5 basis point

• TED Spread 25.25 -1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -41.75 -2.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.17 +.01%
• 3-Month T-Bill Yield 2.34% +3.0 basis points

• Yield Curve 29.0 -.25 basis point

• China Iron Ore Spot 71.60 USD/Metric Tonne -.32%

• Citi US Economic Surprise Index 9.80 -.2 point

• Citi Eurozone Economic Surprise Index -47.5 +8.6 points

• Citi Emerging Markets Economic Surprise Index -9.30 +.7 point

• 10-Year TIPS Spread 2.07 unch.
• 76.3% chance of Fed rate hike at Dec. 19th meeting, 77.3% chance at Jan. 30th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +53 open in Japan 
• China A50 Futures: Indicating unch. open in China

• DAX Futures: Indicating +25 open in Germany

Portfolio: 

• Higher: On gains in my medical/tech/industrial sector longs and index hedges

• Disclosed Trades: None

• Market Exposure: 75% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Growth +.1%

Sector Underperformers:

• 1) Gold & Silver -1.4% 2) Alt Energy -1.1% 3) Steel -.8%

Stocks Falling on Unusual Volume: 

• TWOU, UNVR, PLOW, ACHC, NVRO, BPFH, GLT, RL, LDL, LMNX, WPP, SBRA, GAIA, APTS, COHU, FRGI, GAIN, WBT, SNHY, VVV, BE, AVNS, FRPT, ABC, CORE, NBIX, FRPT, ITRI, CAR, ABC, MAR, TCMD, RL, SPLK, BCC, CXW, THC, CPLG, VVV, PINC, ORA, IIN, BR, APTS, LGIH, CTLT, NVRO, UNVR, COHU, AVNS, CORE, GLT, BE, FRGI and FTDR

Stocks With Unusual Put Option Activity:

• 1) ASNA 2) BHGE 3) MAR 4) SPLK 5) OCN

Stocks With Most Negative News Mentions:

• 1) VNRO 2) TVRN 3) NYT 4) DAL 5) VVV

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Value +.4%

Sector Outperformers:

• 1) Agriculture +1.8% 2) Restaurants +1.4% 3) Computer Services +1.1%

Stocks Rising on Unusual Volume:

• CVON, VCEL, ELF, MYL, ISBC, QUAD, FN, PEN, AY, SYMC, LKSD, OUT, GTN, BHC, MOS, XENT, TVTY, NOVT, MBUU, LASR, ADMS, MOS, ATUS, AMRX, JCOM, MTW, ZBRA, CHRS, MWA, TISI, NRE, GPK, DRI, MDRX, PEGI, TACO, AET, CRZO, SE and BHF

Stocks With Unusual Call Option Activity:

• 1) MAR 2) KNX 3) GOGO 4) RL 5) AVEO

Stocks With Most Positive News Mentions:

• 1) VCEL 2) CALX 3) MYL 4) MNK 5) CVS

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +.6% Above 100-Day Average
• 9 Sectors Rising, 2 Sectors Declining
• 57.4% of Issues Advancing, 38.4% Declining
• 33 New 52-Week Highs, 32 New Lows
• 29.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 44.9%
• Vix 20.1 +.5%
• Total Put/Call 1.28 +25.5%
• TRIN/Arms 1.16 +49.4%

Tuesday Watch

Evening Headlines

Bloomberg:   

• China Still Ready to Talk Trade With Trump, Xi's No. 2 Says.

• Lego Wins Intellectual Property Lawsuit in China.

• Asia Stocks Edge Higher at Open; Treasuries Slip. Asian stocks eked out modest gains at the open after a mixed U.S. session ahead of midterm elections. Treasury yields ticked higher and the dollar was steady. Equities climbed in Japan, Australia and South Korea, while Hong Kong and China futures also tipped gains. Earlier, Warren Buffett’s Berkshire Hathaway Inc. underpinned an advance in the S&P 500 Index after the billionaire stock-picker revealed he’d been buying back his firm’s own shares. Apple Inc. suppliers may come under pressure on a report the iPhone maker wouldn’t boost some production -- the stock slumped and Facebook Inc. and Amazon.com Inc. also sank, weighing on the Nasdaq indexes. Japan’s Topix index rose 0.5 percent as of 9:09 a.m. in Tokyo. Australia’s S&P/ASX 200 Index rose 0.5 percent. FTSE China A50 futures rose 0.3 percent. Hong Kong Hang Seng Index futures added 0.2 percent. S&P 500 Index futures were little changed.  

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

• Oil Declines to 7-Month Low as Worldwide Supply Anxieties Ease.

• LIVE: News and Analysis From the New Economy Forum.

Wall St. Journal:

• Trophy Infrastructure, Troublesome Debt: China Makes Inroads in Europe. 

• Predicting the Next Bear Market in Six Charts.  
  

• Amazon Plans to Split HQ2 Evenly Between Two Cities.

• Under Armour’s #MeToo Moment: No More Strip Clubs on Company Dime.

• Lowe’s(LOW) to Close Nearly 50 Stores.

• Hedge Fund D1 Capital Partners Stumbles.

Fox News:   

• Grassley report reveals details behind mistaken identity claims, more.

• President Trump gives closing argument on eve of Election Day.

CNBC:         

• Midterm election outcome could be 'glowing good news' or 'disaster' for markets.

• Stocks making the biggest moves after hours: ELF Beauty, Booking Holdings, Avis, Marriott and more.

• Raymond James: Buy stocks in these four sectors no matter what happens in Tuesday's midterms  

• Confident shoppers could actually hurt Amazon this holiday season: Retail veteran Jan Kniffen. 

Zero Hedge:

• Your Complete Midterm Elections Guide.

• Illinois Private Sector Jobs Growth Among Worst In Nation Since 2017 Tax-Hike.

• Doug Casey Shines A Light On "The Sociopaths In Politics".

• The Abject Failure Of Abenomics In Two Extremely Sad Charts.

• For The First Time In 19 Months, More Companies Are Cutting Than Raising Revenue Guidance.

• America's Largest Bridal-Chain Prepares For Bankruptcy After Skipped Debt Payment.

• Johnstone: Midterms Would Be A Walkover If Dems Had Not Wasted 2 Years On 'Russiagate'.

• Midterm-Mania Sparks Chaos In Quiet Markets.

Business Insider:

• The Obamas are worth $40 million — here's how they make and spend their money.

• Germany's military is about to get a big spending boost.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 87.75 +.25 basis point. 

• Asia Pacific Sovereign CDS Index 10.0 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 67.18 +.02%.

• FTSE 100 futures +.06%.

• S&P 500 futures +.12%.

• NASDAQ 100 futures +.11%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (APD)/1.99

• (ABC)/1.46

• (ADM)/.83

• (BDX)/2.93

• (CVS)/1.71

• (LLY)/1.35

• (EMR)/.90

• (FSS)/.32

• (JLL)/2.32

• (MLM)/2.80

• (RL)/2.16

• (COL)/2.03

• (SAGE)/-2.40

• (STE)/1.09

After the Close:

• (COHR)/2.96

• (PZZA)/.21

• (RRGB)/.11

• (TWLO)/.02

• (WEN)/.15

• (ZG)/.16

Economic Releases

10:00 pm EST

• JOLTS Job Openings for September are estimated to fall to 7085 versus 7136 in August.
  

Upcoming Splits

• (TJX) 2-for-1

Other Potential Market Movers

• The US mid-term elections, Eurozone PMI report, US weekly retail sales report, $27B 10Y T-Note auction, Goldman Sachs China conference, Stephens Investment Conference and the Baird Industrial Conference 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 75% net long heading into the day.