Wednesday Watch

Evening Headlines

Bloomberg:    

• U.S. Says China Hackers Stole Secrets, Sought Virus Data.  

• Macau Casinos Likely to Post $1 Billion Loss in June Quarter.

• Asian Stocks Set to Slip; Dollar Extends Retreat: Markets Wrap. Asian stocks saw a muted start to trading Wednesday, after a mixed U.S. session on doubts over the timing of a fresh stimulus program. The dollar extended losses. Shares were little changed in Japan, ticked higher in South Korea and slipped in Australia. Futures on the S&P 500 edged up after the gauge finished well off session highs, with Senator Mitch McConnell casting doubt on reaching a fresh rescue bill before some current benefits expire. Earlier, tech shares led the Nasdaq Composite lower. Gold held on to overnight gains. Futures on the S&P 500 Index rose 0.3% as of 9:16 a.m. in Tokyo. The gauge rose 0.2% Tuesday. Japan’s Topix index was flat. South Korea’s Kospi index rose 0.2%. Australia’s S&P/ASX 200 Index fell 0.7%.

• Brent Climbs to Four-Month High on Signs of Economic Recovery.

• U.S. Trillion, EU Stimulus Deal, India Investment Drops: Eco Day.

• Trump Warns on Crisis, Japan Approves Treatment: Virus Update.
• Republicans Back Stimulus Checks But Payroll Tax Cut in Question.
• Texas Instruments Gives Strong Forecast But Urges Caution.
• New York, London Get Hit Hardest in Mega-Mansion Sales Plunge.

Wall Street Journal:

• Federal Agents Deploy to Chicago as Big-City Mayors Decry Involvement.

• A Way to Take Back Portland.

• How Angela Merkel’s Change of Heart Drove Historic EU Rescue Plan.

• Trump Relaunches Coronavirus News Briefings as Cases Surge.

• Trump Fed Nominees Shelton, Waller Confirmed by Senate Committee.

• U.S. Moving Military Assets Around Asia to Counter China, Esper Says.

Fox News:

• Trump says vaccine is progressing but admits COVID will get 'worse before it gets better'.

CNBC.com:

• LabCorp CEO says coronavirus in U.S. is spreading faster than it can add testing capacity.

• Fears of risky trading are surfacing in recent rally of Chinese stocks.

• United Airlines loses $1.6 billion in second quarter but expects to further lower cash burn.

• Stocks making the biggest moves after hours: Snap, United Airlines, Capital One and more.

MarketWatch.com:    

• This might be ‘the worst time in history’ to pile into these stocks, but investors keep doing it anyway.

• Best Buy says sales are better during pandemic, stock heads toward all-time high.

• Jamf prices IPO at $26 a share, way above range.

Zero Hedge:

• More People Contract COVID-19 From Family Members Than Outside Contacts: CDC.

• "The Situation Is Grim" - Hong Kong Dangerously Unprepared For Second Wave Of COVID-19.

• After Slamming Western Media "Hype", Chinese Officials Issue Highest Flood Alert As Three Gorges Dam Pushed To Limits.

• Unprecedented Recession Synchronization And What It Means.

• Trump Urges Americans To Wear Masks 'Whether They Like It Or Not', Says Outbreak "Will Probablt Get Worse Before It Gets Better".  

• Wall Street Firms Are Considering A Mass Exodus From New York.

• United Posts Record $2.6BN Loss As Revenue Plunges 87%; 6,000 Employees Agree To Quit.

• Hedge Fund Flows Are All That Matter, New Study Finds.

• "Wait, Why Is The Fed Buying My Biggest Competitors' Bonds?".

• Red Bull Fires "Woke" Diversity Directors Who Tried To Push For BLM Support.

• Gold Soars, Euro Roars As Dollar Dumps And Stocks Slump.

Business Insider:

• Just 40% of cruise ships operating in American waters since mid-April tested crew members for the coronavirus — and it's a red flag for those eager to hit the water.

The Epoch Times:

• Withdrawal From the CCP Gains Popularity in the United States.

• Rights Groups Denounce NYT Report for ‘Open Display of Religious Bigotry’.

Digital Blackboard:

• Daily New Cases by Region.

Worldometer:

• New Cases/Deaths by state.

Rt Covid-19:

• How fast virus is growing by state.

KFF:

• State Data(Tests/Hospitalizations).

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 76.25 -1.0 basis point.

• China Sovereign CDS 42.75 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 61.39 +.02%.

• FTSE 100 futures -.14%.

• S&P 500 futures +.24%.

• NASDAQ 100 futures +.24%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (ABB)/.13

• (APH)/.62

• (BKR)/.00

• (BIIB)/8.01

• (CP)/3.75

• (CHKP)/1.43

• (HCA)/-.44

• (KEY)/.09

• (KNX)/.35

• (NTRS)/1.38

• (NVR)/42.00

• (TMO)/2.85

After the Close:

• (ALGN)/-.04

• (CMG)/.36

• (CSX)/.64

• (DFS)/-.03

• (GGG)/.26

• (KMI)/.16

• (LSTR)/.71

• (LVS)/-.71

• (MTH)/1.49

• (MSFT)/1.38

• (SLM)/.11

• (SLG)/1.57

• (SAVE)/-2.81 

• (TSLA)/-.28

• (VMI)/1.44

• (WHR)/.87

Economic Releases

9:00 am EST

• The FHFA House Price Index MoM for May is estimated to rise +.3% versus a +.2% gain in April.
  

10:00 am EST

• Existing Home Sales MoM for June is estimated to rise +21.5% versus a -9.7% decline in May.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -588,550 barrels versus a -7,493,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -1,788,730 barrels versus a -3,147,000 barrel decline the prior week. Distillate inventories are estimated to rise by +672,360 barrels versus a -453,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.55% versus a +.6% gain the prior week. 
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The 20Y T-Bond auction, Canadian Inflation data report and the weekly MBA Mortgage Applications report could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and technology 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 Higher into Final Hour on Global Stimulus Hopes, Oil Gain, Short-Covering, Energy/Financial Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 24.5 -.04%

• Euro/Yen Carry Return Index 127.62 +.25%

• Emerging Markets Currency Volatility(VXY) 9.31 -.85%

• S&P 500 Implied Correlation 52.6 +1.2%

• ISE Sentiment Index 93.0 -5.0 points

• Total Put/Call .67 -13.0%

• NYSE Arms .62 -53.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 69.20 -1.37%
  

• US Energy High-Yield OAS 874.47 -1.20%

• European Financial Sector CDS Index 65.54 -3.96%

• Italian/German 10Y Yld Spread 155.0 -1.5 basis points
  

• Asia Ex-Japan Investment Grade CDS Index  76.68 -1.55%
  

• Emerging Market CDS Index 174.11 -4.9%
  

• iBoxx Offshore RMB China Corporate High Yield Index 173.96 -.76%

• 2-Year Swap Spread 7.5 +.5 basis point

• TED Spread 15.75 -1.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -8.0 -1.0 basis point
• MBS  5/10 Treasury Spread  99.0 -2.0 basis points
• IHS Markit CMBX BBB- 6 67.25 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 61.39 +.98%
• 3-Month T-Bill Yield .11% unch.

• Yield Curve 46.25 -1.0 basis point

• China Iron Ore Spot 108.55 USD/Metric Tonne +.42%

• Citi US Economic Surprise Index 246.5 -4.2 points

• Citi Eurozone Economic Surprise Index 57.7 +50.6 points

• Citi Emerging Markets Economic Surprise Index -7.9 -.8 points

• 10-Year TIPS Spread 1.47 +2.0 basis points
• 100.0% chance of no change at Sept. 16 meeting, 100.0% chance of no change at Nov. 5th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -80 open in Japan 
• China A50 Futures: Indicating -81 open in China

• DAX Futures: Indicating -34 open in Germany

Portfolio:

• Slightly Lower: On losses in my tech/biotech sector longs, index hedges and emerging market shorts

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth -.7%

Sector Underperformers:

• 1) Biotech -1.5% 2) Software -1.0% 3) Internet -.9%

Stocks Falling on Unusual Volume: 

• TCDA, NSTG, PSNL, FSLR, EBAY, ITCI, PASG, PTCT, EBS, DNLI, FE, DVAX, OPCH and ACAD

Stocks With Unusual Put Option Activity:

• 1) MUR 2) CSX 3) OPK 4) IBM 5) TXN

Stocks With Most Negative News Mentions:

• 1) EBS 2) DHI 3) PHM 4) TREX  5) AAL

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +2.9%

Sector Outperformers:

• 1) Oil Service +7.4% 2) Energy +6.0% 3) Banks +3.6%

Stocks Rising on Unusual Volume:

• OMI, HIBB, CODX, FHB, MUSA, SPCE, SFM, NOV, UNIT, SYNA, LCA, NBL, MBUU, RFST, TGNA and KEY

Stocks With Unusual Call Option Activity:

• 1) WBT 2) FE 3) NBEV 4) XME 5) OIH

Stocks With Most Positive News Mentions:

• 1) OMI 2) HAL 3) SYNA 4) MUSA 5) OPK

Charts:

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