Bear Radar

Style Underperformer:

• Large-Cap Growth +1.6%

Sector Underperformers:

• 1) Internet -1.6% 2) Oil Tankers -.7% 3) Biotech -.2%

Stocks Falling on Unusual Volume:

• NGVC, MNST, QSII, ABAX, PFPT, MTSI, ALV, WLK, FFIN, EA, GILD, LANC, AMZN, PNFP, NOW, BOFI, TGI, MDVN, RARE, BC, COBZ, EFII, HMC, EPAY, SC, ACAD, CHUY, ALDR, TGI, SGEN, XON and EMN

Stocks With Unusual Put Option Activity:

• 1) LC 2) MNST 3) AMZN 4) XLP 5) STLD

Stocks With Most Negative News Mentions:

• 1) VALE 2) NTCT 3) AAL 4) MNST 5) LZB

Charts:

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

Bull Radar

Style Outperformer: 

• Small-Cap Growth +1.8% 

Sector Outperformers:

• 1) Computer Hardware +4.9% 2) Disk Drives +4.5% 3) Gaming +3.6% 
  

Stocks Rising on Unusual Volume: 

• AXLL, COHR, SMCI, GIMO, ALGN, N, QLGC, MA, SNE, MTW, UIS, WDC, EXP, OLN, SYNA, USG, HAR, IDXX, V, MSFT, SNDK and CRUS

Stocks With Unusual Call Option Activity: 

• 1) EPI 2) KR 3) EA 4) FXY 5) KO

Stocks With Most Positive News Mentions: 

• 1) JCP 2) SNDK 3) MSFT 4) FLEX 5) MSCC

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +20.0% Above 100-Day Average
• 10 Sectors Rising, 0 Sectors Declining
• 83.8% of Issues Advancing, 14.3% Declining
• 38 New 52-Week Highs, 34 New Lows
• 17.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 36.7%
• Vix 20.8 -7.4%
• Total Put/Call .72 -17.2%
• TRIN/Arms 1.24 -16.9%

Weekday Watch

Evening Headlines

Bloomberg:

• U.S. Plans to Sanction More Venezuelans Tied to Maduro. The U.S. is preparing to expand sanctions against Venezuela by freezing assets of 10 to 20 additional people tied to the government of President Nicolas Maduro, according to two people familiar with the matter. The action could come as soon as Tuesday, though it may be delayed as the Trump administration seeks a coordinated international response in imposing penalties on the Maduro regime for undermining democracy in the South American country, the people said. The U.S. is pressing to enlist European and South American countries -- including neighboring Colombia -- to match the sanctions and may hold off taking unilateral action if necessary for a coordinated announcement.
• Japan Posts Current Account Surplus as Trade Turns Positive. Japan recorded a 36th consecutive current account surplus in June, supported by returns on overseas investments and a trade balance that returned to positive territory.
• Investors Jump Back Into the Euro as Going Short Proves 'Lethal'. Hedge funds. Asset managers. Central banks. These are just some of the players in the $5.1 trillion-a-day currency market who are buying the euro after shunning it over the past three years.
• Asia Stocks Nudge Higher Before China Trade Data. It’s been a relatively quiet start to the week for markets ahead of Friday’s U.S. inflation data that may give clues on the path of U.S. monetary policy. Gains in Japan and South Korean equities follow a muted U.S. session which saw the dollar extend its advance and gains in technology stocks offset a slide in energy producers as crude declined. West Texas Intermediate crude sat below $50 a barrel. Japan’s Topix index rose less than 0.1 percent, while Australia’s S&P/ASX 200 Index added 0.2 percent. South Korea’s Kospi index advanced 0.3 percent. Hang Seng Index futures slipped 0.2 percent.
• Your Evening Briefing.
• Fannie-Freddie Might Need $100 Billion in New Crisis, FHFA Says.

Wall Street Journal:

• North Korea Says ‘Under No Circumstances’ Will It Negotiate Over Nuclear Weapons. Pyongyang threatened it will use its nuclear weapons against U.S. if provoked militarily.
• Tesla(TSLA) to Sell $1.5 Billion in Debt to Fuel Aggressive Expansion. The Silicon Valley auto maker taps debt market to push broader sales of its lower-price Model 3 sedan.
• Rates Shmates: Banks Poised to Boost Buybacks and Dividends. Financial stocks have been strongly correlated to the yield on 10-year Treasurys.
• EPA Resignation Facts. The rest of the story behind those loud civil-servant protests.

Fox News:

• US spy satellites detect North Korea moving anti-ship cruise missiles to patrol boat. (video)
• Sessions: Sanctuary city Chicago's hostility to law-enforcement protection 'astounding'. (video)

CNBC:

• These Chinese tech stocks are even hotter than FANG. (video)
• Twilio(TWLO) soars after revenue jumps nearly 50%. (video)
• Allergan CEO sees more millennials and men turning to aesthetic medical treatments. (video)

Zero Hedge:

• Trump - Blumenthal Twitter War Goes Nuclear As Trump Fires Back.
• Debt Ceiling Deal Doubts Rise - USA Default Risk Hasn't Done This Since Lehman. (graph)
• The Uber Effect: Avis Plunges On Huge Miss, Margin Collapse, Guidance Cut, "Over-Fleeting".
• US Credit Card Debt Surpasses Financial Crisis Record, As Student And Auto Loans Hit New All Time High. (graph)
• Sessions Humiliates Rahm: "No Amount Of Federal Funds Will Help A City That Refuses To Help Its Own Residents".
• Russia To Cut Dependence On U.S. Dollar, Payment Systems.
• Dow Rises To 9th Straight Record Close On Lowest Volume In Years. (graph)

Business Insider:

• This chart helps explain why financial markets are so quiet, and why they could stay that way.
• Apple's(AAPL) earnings call revealed 3 key things about iPad sales.

Telegraph:

• Rip up London’s green belt and the whole country will benefit. House prices are way too high. The transport system is creaking. The schools are impossible to get into, and if you want to get a doctor’s appointment this side of 2020, good luck. We all know the reasons why people leave London for somewhere with a better quality of life. Only this month, it was reported that numbers quitting the capital had hit fresh records, up by 80pc over the last five years.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 79.25 -.75 basis point. 

• Asia Pacific Sovereign CDS Index 19.25 +.5%.

• Bloomberg Emerging Markets Currency Index 73.84 +.02%.

• S&P 500 futures -.07%.

• NASDAQ 100 futures -.05%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CVS)/1.31
• (DF)/.32
• (EXPD)/.59
• (FSS)/.22
• (IT)/.84
• (JEC)/.79
• )KORS)/.62
• (RL)/.95
• (SEE)/.36
• (STE)/.80
• (VRX)/.96
• (ZTS)/.53
• (FOSL)/-.40
• (HTZ)/-.22
• (JAZZ)/2.75
• (MBI)/.01
• (MNST)/.40
• (MYGN)/.26
• (PHH)/-.91
• (PCLN)/14.22
• (RRGB)/.52
• (TRIP)/.31
• (DIS)/1.55
• (WBMD)/.52
• (ZG)/-.01

Economic Releases 
6:00 am EST

• The NFIB Small Business Optimism Index for July is estimated to fall to 103.5 versus 103.6 in June.

10:00 am EST

• JOLTS Job Openings for June are estimated to rise to 5700 versus 5666 in May.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The China Trade Balance report, German Trade Balance report, $24B 3Y T-Note auction, US weekly retail sales reports, Oppenheimer Tech/Internet/Communications Conference, UBS Financial Services Conference, JPMorgan Auto Conference and the Needham MedTech Conference could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by energy and financial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.

Stocks Higher into Final Hour on Central Bank Hopes, Less Emerging Markets/US High-Yield Debt Angst, Oil Bounce, Energy/Tech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: About Even
  

• Sector Performance: Mixed
  

• Volume: Above Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 22.30 -3.46%

• Euro/Yen Carry Return Index 135.98 +.64%

• Emerging Markets Currency Volatility(VXY) 11.91 +.34%

• S&P 500 Implied Correlation 62.67 -3.68%

• ISE Sentiment Index 114.0 -17.99%

• Total Put/Call .83 -11.70%

• NYSE Arms 1.32 +83.41% 

Credit Investor Angst:

• North American Investment Grade CDS Index 102.92 -1.92%

• America Energy Sector High-Yield CDS Index 1,765.0 -4.59%

• European Financial Sector CDS Index 92.25 +5.34%

• Western Europe Sovereign Debt CDS Index 18.95 -3.17%

• Asia Pacific Sovereign Debt CDS Index 73.11 -1.22%

• Emerging Market CDS Index 370.47 -1.61%
  

• iBoxx Offshore RMB China Corporate High Yield Index 122.14 +.05%

• 2-Year Swap Spread 7.0 unch.

• TED Spread 31.0 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -20.75 +1.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.86 +.8%
• 3-Month T-Bill Yield .32% unch.

• Yield Curve 117.0 unch.

• China Import Iron Ore Spot $41.92/Metric Tonne -1.20%

• Citi US Economic Surprise Index -47.3 -14.0 points

• Citi Eurozone Economic Surprise Index -26.50 -9.2 points

• Citi Emerging Markets Economic Surprise Index -6.6 +.8 point

• 10-Year TIPS Spread 1.41% +1.0 basis point
• 14.0% chance of Fed rate hike at March 16 meeting, 20.9% chance at April 27 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +109 open in Japan 
• China A50 Futures: Indicating -11 open in China

• DAX Futures: Indicating +9 open in Germany

Portfolio: 

• Lower: On losses in my biotech/medical sector longs, index hedges and emerging markets shorts

• Disclosed Trades: None

• Market Exposure: 25% Net Long

Today's Headlines

Bloomberg:

• China Stocks Cap Worst Losing Streak in Three Weeks on Economy. Chinese stocks fell for a third day as concern slumping commodity prices and a weakening economy will reduce corporate profits overshadowed the biggest cash injection into the financial markets in three years. The Shanghai Composite Index slumped 2.9 percent to 2,655.66 at the close. Shippers led declines among industrial shares. China Shipbuilding Industry Co. and China CSSC Holdings Ltd. dropped by the maximum daily limit after a measure of commodity shipping costs slid to a 30-year low. China Southern Airlines Co. extended losses to 17 percent in a four-day rout as Daiwa Capital Markets Hong Kong Ltd. said the carrier likely swung to a fourth-quarter loss because of a weaker yuan. Chinese stocks capped their longest losing streak in three weeks amid concern slowing growth and yuan volatility will spur capital outflows. The world’s second-largest economy will absolutely not see a “hard landing” as it has adequate macro-control policy tools, according to commentary in the People’s Daily. “The correction isn’t over and stocks will fall to an even lower level as pressure for yuan depreciation, capital outflows and slowing growth is still quite big,” said Zhang Haidong, chief strategist at Jinkuang Investment Management in Shanghai, who’s now on the sidelines after cutting his stock holdings to less than 50 percent of total assets. All these factors “will weigh on the market,” he said.
• Alibaba(BABA) Falls as Sales Volume Slows, Adding to China Concerns. (video) Alibaba Group Holding Ltd. shares fell after the Chinese online retailer reported flagging growth in sales on its marketplaces, adding to concerns about the country’s economic slowdown. The shares dropped as much as 3.7 percent in New York at the open, reversing gains in pre-market trading. They declined 1.9 percent to $68.21 at 11:54 a.m.
• Draghi's Shield Under Attack as Politics Exposes European Risks. Mario Draghi may be the euro region’s great protector, but investors can still get hurt. From Portuguese government bonds to Italian bank stocks, the most stressed parts of the euro region are providing a reminder that the European Central Bank president’s stimulus and safety-net programs don’t bring immunity from losses. It’s an alarm that could prove timely if a series of political risks from Spain to Greece materialize. With the ECB’s crisis-busting Outright Monetary Transactions program unveiled in 2012 and the quantitative-easing plan since last March, markets were mostly anesthetized to politics until now. While they look nothing like they did during the meltdown five years ago, investors wondering when the drugs would start to wear off may have their answer. “The minute there’s a real motivation to sell, it doesn’t matter that someone is buying bonds through QE,” said Charles Diebel, the London-based head of rates at Aviva Investors, which oversees about $351 billion. “As long as nothing really changes you could say that QE provides some support, but in and of itself it doesn’t really.”
• Euro-Area Economic Confidence Drops to Lowest in Five Months. Euro-area economic confidence slumped more than analysts predicted in January, strengthening the European Central Bank’s case for increasing stimulus. An index of executive and consumer confidence fell to 105 from a revised 106.7 in December, the European Commission in Brussels said on Thursday. That’s the lowest since August and compares to a median estimate for a drop to 106.4 in a Bloomberg survey of economists. The figure for December was previously reported at 106.8.
• Europe Stocks Snap 2-Day Gain as Roche, H&M Earnings Disappoint. (video) Worse-than-estimated earnings from companies including Roche Holding AG and Hennes & Mauritz AB dragged European stocks lower. Roche slid 3.8 percent, leading drugmakers lower. H&M dropped 4.8 percent after also warning a stronger dollar will continue to weigh on first-quarter profit. Stocks have moved more in step with with crude prices lately, and Europe’s benchmark deepened losses after energy shares pared some gains. The Stoxx Europe 600 Index dropped 1.6 percent at the close.
• Crude Carriers Cutting Speeds as World Swims in Glut of Oil. (video) The world’s biggest oil companies are asking tanker operators to slow down delivery of crude amid an ever-expanding supply glut on land, Europe’s largest owner of supertankers said. Tankers hauling 2 million-barrel cargoes are delivering them at speeds of about 13 knots, compared with a maximum of 15, Paddy Rodgers, chief executive officer of Antwerp, Belgium-based Euronav NV, said in an interview in London on Thursday. The slower speeds might result in a voyage that would normally take 40 days instead lasting 48. Shore-based supplies are getting so big that it’s probable the need for storage at sea may soon grow, he said.
• Comcast(CMCSA) Wants to Limit Your Netflix(NFLX) Binges. Comcast Corp. customers used to be able to binge on all the Netflix and YouTube videos they wanted without repercussions. Now many are being put on a diet. In a growing number of cities, the nation’s largest cable company has begun imposing extra fees on Internet customers who use what it considers excessive amounts of data. The move could bring in new revenue to offset losses from cord-cutters dropping pay-TV service to stream videos online.

CNBC:

• EU to set dumping duties on Chinese, Russian steel imports. The European Union will impose duties on imports of cold-rolled flat steel from China and Russia while its investigation into alleged dumping by the two countries continues.

Zero Hedge: 

• Manufacturing Matters.
• This Could Be A Problem: China's Debt-To-GDP Rises To A Gargantuan 346%. (graph)
• You Won't "Buy The Dip" After Seeing These 2 Charts. (graph)
• Want To Know What The S&P500 Does Next? Just Look At The Fed's Balance Sheet. (graph)
• Time Is Running Out For Freeport After Downgrade To Junk And Striking Warning From Moody's. (graph)
• Will Record January Stock Volatility Produce Long-Term Tremors?
• Saudis Have No Proposal To Cut Output. (graph)
• Biotech Bloodbath As Investors Seek Safety Of Facebook 83x P/E. (graph)
• Pending Home Sales Disappoint, "Sizable Stock Market Losses" Blamed. (graph)
• Durable Goods Devastation: Capital Goods Orders Crash To Fresh Crisis Lows, Scream Recession. (graph)
• This Trend Is Not Your Friend - Initial Jobless Claims Average Surges To 10-Month Highs. (graph)
• Caterpillar(CAT) Q4 Sales Miss, Tumble 23%; Guidance Obliterated. (graph)

CBS News:

• Veterans groups to Donald Trump: Don't use us to hide from Megyn Kelly. (video) Some veterans groups are pushing back against Donald Trump's veterans fundraising event scheduled for Thursday night, condemning the billionaire's feud with Fox News and his decision to opt out of the Republican primary debate hosted by the cable network. One organization, the Iraq and Afghanistan Veterans of America, pledged to refuse any funds that Trump may try to donate from his Iowa event, to be held at Drake University at the same time the Republican frontrunner was originally scheduled to appear on Fox News' debate main stage.
• How could the next president reshape the Supreme Court? In the next few years, the Supreme Court may face as many as four vacancies as some of the justices age or enter retirement. That means the outcome of November's elections could be critical in determining the court's future composition. Nearly half of the court -- four of the nine justices -- has served on it for 20 to 30 years and are either over the age of 80 or approaching it.

Fortune:

• Will They, Won't They? OPEC Denies Russian Talk of Cutting Oil Output. However, nothing in global oil politics is that simple: Bloomberg has reported OPEC delegates as saying that there are no plans for talks. There has been a deathly silence from Riyadh, and Iran–for all that anyone can see–remains set on restoring its past output levels as fast as possible (Prime Minister Rouhani has been in Rome and Paris over the last two days talking to Italian and French oil companies about doing just that).

Reuters:

• Iran Said to Want to Recoup Lost Oil Market Share. Iran wants to recoup lost oil market share, is a challenge to any deal to cut oil output, citing OPEC sources.

Daily Mail:

• Cologne carnival organisers hand out leaflets telling migrants not to rape women or urinate in public in the wake of New Year sex attacks.

Independent:

• Zika virus could infect four million people in the Americas - and has 'explosive pandemic potential'.

Euromoney:

Emerging markets: Big trouble from brittle China

Full article: http://www.euromoney.com/Article/3524393/Emerging-markets-Big-trouble-from-brittle-China.html?copyrightInfo=true
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Emerging markets: Big trouble from brittle China

Full article: http://www.euromoney.com/Article/3524393/Emerging-markets-Big-trouble-from-brittle-China.html?copyrightInfo=true
Visit http://www.euromoney.com/reprints for additional distribution rights. For more articles like this, follow us @euromoney on Twitter.

Emerging markets: Big trouble from brittle China

Full article: http://www.euromoney.com/Article/3524393/Emerging-markets-Big-trouble-from-brittle-China.html?copyrightInfo=true
Visit http://www.euromoney.com/reprints for additional distribution rights. For more articles like this, follow us @euromoney on Twitter.

• Emerging Markets: Big Trouble from Brittle China. The January fall in emerging market currencies, the exodus of foreign capital and a global bear market in equities all point to a new financial crisis. How China reacts to this threat holds the key for emerging markets.