Morning Market Internals

NYSE Composite Index:

• Volume Running -7.4% Below 100-Day Average
• 9 Sectors Rising, 2 Sector Declining
• 43.6% of Issues Advancing, 51.8% Declining
• 179 New 52-Week Highs, 26 New Lows
• 61.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 51.9%
• Vix 12.7 -2.6%
• Total Put/Call .72 -17.2%
• TRIN/Arms .90 -18.2%

Thursday Watch

Evening Headlines
Bloomberg:           

• Powell Sounds Dovish Enough to Open Door for a Half-Point Cut.

• Australian Banks Ordered to Boost Capital After Regulator Finds Risks.

• Deutsche Bank Ended Its Relationship With Jeffrey Epstein This Year.  

• Asian Stock Gains Muted; Dollar Slips on Powell. Asian stocks posted modest gains, following their U.S. counterparts, after comments by Federal Reserve Chairman Jerome Powell cemented market bets for a rate cut this month. Treasuries rose with the yen and the dollar retreated. Shares climbed in South Korea and ticked higher in Japan and Australia. U.S. futures were little changed. Earlier, the S&P 500 briefly topped 3,000 for the first time after Powell signaled a willingness to lower rates, citing a slowing global economy and trade issues. Minutes from the Fed’s June meeting confirmed an inclination among officials to ease policy soon. But stocks came off their highs, with financial shares leading the pullback. S&P 500 futures rose 0.1% as of 9:45 a.m. in Tokyo. The S&P 500 rose 0.5% Wednesday. Topix Index rose 0.2%. Kospi Index rose 0.1%. S&P/ASX 200 was up 0.3%.

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

• Powell Flags Cut, U.S. Defies China, Korea-Japan Woes: Eco Day.  

• Oil Rides to 7-Week High on Gulf Storm, Tightening U.S. Supply.

Wall Street Journal:

• U.S. Investigates Deutsche Bank’s Dealings With 1MDB.

• The Democrats Go to Extremes.

• U.K. Ambassador to U.S. Quits Over Leak Furor.

• PG&E Knew for Years Its Lines Could Spark Wildfires, and Didn’t Fix Them.

• Former Puerto Rico Officials Are Accused of Corruption.

• Powell Sends Strong Signal of Possible Fed Rate Cut in July.

• GE Union Workers Reject Labor Deal.

Fox News:

• Iranian gunboats tried, failed to seize British oil tanker, US official says.

MarketWatch.com:

• Health care is one of the stock market’s healthiest sectors right now.

• Banks should shine among S&P 500 stocks this earnings season.

• 9 stock picks for the second half of 2019.

CNBC:

• How much would a wealth tax really raise? Dueling economists reflect new split in Democratic Party.

• Storm could become first hurricane of season and is already shutting down energy operations.

• America’s Top States for Business 2019: The full list.

• These are the stocks that have led the S&P 500′s five-year run to 3,000 from 2,000.

• When the Fed cuts rates without a recession, stocks go higher 100% of the time.

Zero Hedge:

• US Launches Probe Of French Tax On Tech Giants.

• Russian Nuclear Sub Wreck Leaking Radiation 100,000 Times Higher Than Normal: Report.

• Iranian Boats Attempt To Seize UK Tanker In Straits Of Hormuz.

• PBOC Panics, Demands Central Bank Oversight Of Facebook's Libra.

• Controversial Images Emerge Of Steve Mnuchin Posing In Risqué Poolside Picture.

• Socialism: A Man-Made Malthusian Trap.

• Paul Craig Roberts Rages "Government Can Know Everything About Us Except Our Citizenship?!"

• BET Founder Praises 'A+' Trump; Says Democrats Have 'Moved Too Far To The Left'.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 63.25 -1.25 basis points.

• China Sovereign CDS 40.5 -2.0 basis points.

• Bloomberg Emerging Markets Currency Index  67.64 +.04%.

• S&P 500 futures +.12%.

• NASDAQ 100 futures +.15%.

Morning Preview Links 

Earnings of Note 
Company/Estimate

Before the Open:

• (DAL)/2.28

• (FAST)/.37

After the Close:

• None of note

Economic Releases 
8:30 am EST

• The CPI MoM for June is estimated unch. versus a +.1% gain in May.

• The CPI Ex Food and Energy MoM for June is estimated to rise +.2% versus a +.1% gain in May.

• Initial Jobless Claims for last week are estimated at 221K versus 221K the prior week.

• Continuing Claims are estimated to fall to 1683K versus 1686K prior. 

• Real Avg. Weekly Earnings YoY for June.
  

2:00 pm EST

• The Monthly Budget Statement for June is estimated at -$7.9B versus -$207.8B in May.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Powell testimony to Congress, Fed's Quarles speaking, Fed's Williams speaking, German CPI report, $16B 30Y T-Note auction, White House Summit on Social Media, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report and the (BKE)/(CATO) sales updates could also impact trading today.

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

Stocks Rising into Afternoon on Dovish FOMC Commentary, Less European/Emerging Markets/US High-Yield Debt Angst, Oil Gain, Commodity/Tech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 13.1 -7.2%

• Euro/Yen Carry Return Index 126.68 +.04%

• Emerging Markets Currency Volatility(VXY) 7.6 +.93%

• S&P 500 Implied Correlation 33.87 -2.5%

• ISE Sentiment Index 102.0 +25.9%
  

• Total Put/Call .88 -5.38%

• NYSE Arms .88 unch.

Credit Investor Angst:

• North American Investment Grade CDS Index 52.67 -2.47%
  

• America Energy Sector High-Yield CDS Index 610.0 -.02%

• European Financial Sector CDS Index 60.66 -3.89%

• Italian/German 10Y Yld Spread 204.25 -4.5 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 64.25 -1.68%
  

• Emerging Market CDS Index 162.19 -2.07%
  

• iBoxx Offshore RMB China Corporate High Yield Index 164.84 +.02%

• 2-Year Swap Spread 2.25 -.25 basis point

• TED Spread 11.25 -1.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -11.25 +4.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.61 +.53%
• 3-Month T-Bill Yield 2.18% -4.0 basis points

• Yield Curve 22.75 +7.0 basis points

• China Iron Ore Spot 114.0 USD/Metric Tonne -.54%

• Citi US Economic Surprise Index -56.30 +.5 point

• Citi Eurozone Economic Surprise Index -8.90 +4.2 points

• Citi Emerging Markets Economic Surprise Index -34.60 +.4 point

• 10-Year TIPS Spread 1.75 +3.0 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 +27 open in Japan 
• China A50 Futures: Indicating +31 open in China

• DAX Futures: Indicating +6 open in Germany

Portfolio:

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

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges, then covered some

• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Value +.3%

Sector Underperformers:

• 1) Gaming -.8% 2) Banks -.5% 3) I-Banks -.3%

Stocks Falling on Unusual Volume: 

• LEVI, MFGP, ICPT, DLTH, GVA, AAOI, AIMT and UNM

Stocks With Unusual Put Option Activity:

• 1) AET 2) CYH 3) NWL 4) HTZ 5) RSX

Stocks With Most Negative News Mentions:

• 1) UNM 2) WSFS 3) HMST 4) JD 5) CC

Charts:

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

Bull Radar

Style Outperformer:

• Lrage-Cap Growth +.7%

Sector Outperformers:

• 1) Steel +2.4% 2) Oil Service +2.1% 3) Disk Drives +2.1%

Stocks Rising on Unusual Volume:

• MINI, KRP, HQY, SGH, ACIA, HELE, WDFC, SLG, TMUS, OSTK, TCP, BREW, TBRG, NP, IGV, ARCE, DCO, WTTR, MDR, BITA, FCN, RVI, ADVM, MU, ARD, SGH, MDR and ELF

Stocks With Unusual Call Option Activity:

• 1) CRZO 2) CARS 3) DBX 4) EPD 5) FAST

Stocks With Most Positive News Mentions:

• 1)  2) INS 3) MBRX 4) FDX 5) DAL

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +1.7% Above 100-Day Average
• 10 Sectors Rising, 1 Sector Declining
• 63.0% of Issues Advancing, 33.5% Declining
• 219 New 52-Week Highs, 33 New Lows
• 60.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.9%
• Vix 13.1 -7.1%
• Total Put/Call .65 -30.1%
• TRIN/Arms .89 +1.14%