Tuesday, August 06, 2019

Wednesday Watch

Evening Headlines
Bloomberg:  
  • Asia Stocks Mixed, U.S. Futures Dip Amid Caution. Stocks in Asia opened mixed despite U.S. shares clawing back some of Monday’s rout, with traders remaining cautious in the face of deepening trade tensions. American equity futures dropped and Treasury yields steadied. Japanese shares saw modest declines, while Korean equities edged higher. S&P 500 Index futures were down 0.3% after a surge in the gauge on Tuesday went some way to easing the slump in the previous session. The daily yuan fixing will be in focus after China’s move to stabilize its currency fueled speculation cooler heads will prevent a full-blown trade war. Assets in India, New Zealand and Thailand will be in focus with monetary policy decisions due in all three countries Wednesday. Japan’s Topix index dropped 0.2% as of 9:03 a.m. in Tokyo. Futures on the S&P 500 Index fell 0.3%. The underlying gauge rose 1.3% on Tuesday. Australia’s S&P/ASX 200 Index declined 0.1%. South Korea’s Kospi index rose 0.5%.
Night Trading 
  • Asian equity indices are -.5% to unch. on average.
  • Asia Ex-Japan Investment Grade CDS Index 68.0 -3.75 basis points.
  • China Sovereign CDS 52.0 -4.25 basis points.
  • Bloomberg Emerging Markets Currency Index  66.20 +.04%.
  • FTSE 100 futures -.03%.
  • S&P 500 futures -.39%.
  • NASDAQ 100 futures -.41%.
Morning Preview Links 

Earnings of Note 
Company/Estimate

Before the Open:
  • (CVS)/1.69
  • (LAMR)/1.14
  • (LL)/.10
  • (ODP)/.05
  • (SINA)/.58
  • (WB)/.60
  • (WEN)/.17
  • (WWW)/.51
After the Close:
  • (ALB)/1.44
  • (UHAL)/7.61
  • (AIG)/1.16
  • (CECO)/.29
  • (CVNA)/-.43
  • (FLO)/.25
  • (FOSL)/-.05
  • (TWNK)/.15
  • (IAC)/1.73
  • (JACK)/1.00
  • (LYFT)/-1.00
  • (CLI)/.40
  • (MRO)/.14
  • (MELI)/.33
  • (MNST)/.56
  • (NTES)/2.74
  • (PAAS)/.04
  • (PETQ)/.35
  • (RCII)/.57
  • (ROKU)/-.20
  • (RGLD)/.46
  • (SFLY)/-.21
  • (SWKS)/1.34
  • (STMP)/.96
  • (ZG)/-.15
Economic Releases
10:30 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,933,900 barrels versus a -8,496,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -1,369,780 barrels versus a -1,791,000 barrel decline the prior week. Distillate inventories are estimated to fall by -166,330 barrels versus a -894,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.48% versus a -.1% decline prior.
3:00 pm EST
  • Consumer Credit for June is estimated to fall to $16.1B versus $17.086B in May.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Eurozone Industrial Production report, $27B 10Y T-Note auction, weekly MBA Mortgage Applications report and the (COST) monthly sales update could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and financial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.

Stocks Rising into Final Hour on Diminished China Currency War Fears, Less European/Emerging Markets/US High-Yield Debt Angst, Bargain-Hunting, Defense/Medical Sector Strength

 Broad Equity Market Tone:
  • Advance/Decline Line: Higher
  • Sector Performance: Most Sectors Rising
  • Volume: Heavy
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 20.4 -17.1%
  • Euro/Yen Carry Return Index 123.90 +.49%
  • Emerging Markets Currency Volatility(VXY) 8.66 -7.4%
  • S&P 500 Implied Correlation 46.44 -9.5%
  • ISE Sentiment Index 71.0 +10.9%
  • Total Put/Call 1.13 -10.3%
  • NYSE Arms 1.11 -36.2%
Credit Investor Angst:
  • North American Investment Grade CDS Index 59.50 -2.36%
  • America Energy Sector High-Yield CDS Index 548.0 +.81%
  • European Financial Sector CDS Index 69.43 -1.85%
  • Italian/German 10Y Yld Spread 204.75 -3.5 basis points
  • Asia Ex-Japan Investment Grade CDS Index 68.75 +2.5%
  • Emerging Market CDS Index 183.26 -1.81%
  • iBoxx Offshore RMB China Corporate High Yield Index 164.97 unch.
  • 2-Year Swap Spread .25 +1.5 basis points
  • TED Spread 19.25 +.5 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -13.75 +1.5 basis points
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 66.12 +.19%
  • 3-Month T-Bill Yield 2.02% +2.0 basis points
  • Yield Curve 14.25 +1.75 basis points
  • China Iron Ore Spot 93.0 USD/Metric Tonne -.24%
  • Citi US Economic Surprise Index -35.2 +1.5 points
  • Citi Eurozone Economic Surprise Index -50.7 +4.5 points
  • Citi Emerging Markets Economic Surprise Index -20.3 +.9 point
  • 10-Year TIPS Spread 1.62 +2.0 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 -30 open in Japan 
  • China A50 Futures: Indicating -73 open in China
  • DAX Futures: Indicating +77 open in Germany
Portfolio:
  • Slightly Higher: On gains in my tech/retail/biotech/medical/industrial sector longs
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my emerging market shorts
  • Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:
  • Small-Cap Value +.4%
Sector Underperformers:
  • 1) Oil Service -1.7% 2) Paper -.5% 3) Gold & Silver -.3%
Stocks Falling on Unusual Volume: 
  • GCI, IFF, PRMW, CLAR, TCMD, CARS, FRPT, ENR, COHU, EVBG, MCK, HSC, MOS, SSTK, RAMP, ABC, BHC, LPX, RBC, CXO, AXNX, TPC, PAYS, CARS and OR
Stocks With Unusual Put Option Activity:
  • 1) LL 2) RF 3) CHRW 4) BBT 5) MNK
Stocks With Most Negative News Mentions:
  • 1) IFF 2) MNK 3) MOS 4) CARS 5) OCN
Charts:

Bull Radar

Style Outperformer:
  • Mid-Cap Growth +1.6%
Sector Outperformers:
  • 1) Education +2.5% 2) Insurance +1.9% 3) Defense +1.8%
Stocks Rising on Unusual Volume:
  • EVER, SHAK, DCO, PODD, ALLK, USMV, IGV, PDP, PUK, TTWO, USFD, TDG, BMCH, CIB, ITRI, LCII, GSB, FBM, SERV, LGIH, BWXT, WEN, JCOM, DIOD, VCEL, USFD, ANSS, MTZ and FBM
Stocks With Unusual Call Option Activity:
  • 1) SIG 2) KNX 3) RF 4) MNK 5) SHAK
Stocks With Most Positive News Mentions:
  • 1) TWTR 2) GTT 3) EFX 4) IEP 5) NGHC
Charts:

Morning Market Internals

NYSE Composite Index: