Morning Market Internals

NYSE Composite Index:

• Volume Running +17.1% Above 100-Day Average
• 9 Sectors Rising, 2 Sectors Declining
• 50.1% of Issues Advancing, 47.2% Declining
• 14 New 52-Week Highs, 175 New Lows
• 22.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 41.6%
• Vix 20.5 -4.6%
• Total Put/Call 1.94 +104.2%
• TRIN/Arms .67 -16.3%

Thursday Watch

Evening Headlines

Bloomberg:  

• May Survives Confidence Vote to Face Uphill Struggle in Brexit.

• Bemused by Brexit? Here’s a Guide to the Endgame.

• China Orders Up to 2 Million Tons of Soybeans, U.S. Council Says.

• Qualcomm Seeks iPhone Import Ban, Stepping Up Patent Fight.

• Asia Stocks Edge Higher on Trade Hopes, U.S. Gains. Asian equities ticked higher alongside U.S. equity futures Thursday after a series of positive developments in U.S.-China trade talks buoyed global stocks. The British pound held its advance after U.K. Prime Minister Theresa May survived an attempt to oust her. Benchmarks were higher in Japan, Australia and South Korea, and futures on the S&P 500 rose as news broke that Chinese importers have bought U.S. soybeans. Earlier, the S&P 500 Index added to rallies in Europe and Asia, though the gains were pared in afternoon trading. Futures indicated a stronger open in Hong Kong. The dollar and Treasuries were steady after overnight declines as data showed a key measure of U.S. inflation picked up as expected in November. Japan’s Topix index rose 0.4 percent as of 9:12 a.m. in Tokyo. Australia’s S&P/ASX 200 Index was little changed. South Korea’s Kospi index added 0.3 percent. FTSE China A50 Index futures gained 0.4 percent. Hang Seng Index futures were up 0.9 percent. Futures on the S&P 500 gained 0.1 percent.  

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

• China Goal Delay, U.S. Inflation, Central Bank Thursday: Eco Day.

Wall St. Journal:

• U.K.’s May Survives Leadership Test, but Brexit Path Unclear.

• Plastic Water Bottles, Which Enabled a Drinks Boom, Now Threaten a Crisis.

• The Flynn Entrapment.

• The Global Swamp.

• Congress Agrees on Sexual Harassment Bill.

• Boy Scouts Weigh Bankruptcy.

• Detention of Canadian Seen as Retaliation for Huawei Arrest.

• Cohen Sentencing, Tabloid Deal Intensify Spotlight on Trump.

• China Prepares to Increase Access for Foreign Companies.

MarketWatch.com:

• A rare batch of selling suggests the stock market may have just hit ‘rock bottom’.

Fox News:

• Mueller probe twists revive Dem talk of possible Trump impeachment.

CNBC:         

• UK Prime Minister Theresa May wins confidence vote, but faces uphill battle to pass Brexit deal.

• Apple now has dozens of doctors on staff, showing it's serious about health tech.

• How China's currency moves will be the best measure of how well US-China trade talks are going.

• Here are the stocks that will get the biggest boost if US-China trade talks are successful: Cramer. 

• Chart analyst Katie Stockton sees 'very bullish' signs for S&P, Apple and Amazon.

• Incoming New York attorney general plans wide-ranging investigations of Trump and family.

Zero Hedge: 

• Central American Migrants Demand Trump Pay $50K Each To Go Home.

• US Households Now Own More Treasuries Than The Fed.

• The Next Generation Of "America's Thought Police" Is Being Birthed On Our College Campuses.

• California Dem Admits "I'd Love To Regulate The Content Of Speech".

• Shocking Data Show 40% Of American College Students Never Graduate.

• France In A Nutshell: "The Government Stopped Listening To The People 20 Years Ago".

• Civil Unrest? Trump Believes "The People Would Revolt" If He Is Impeached.

• Harvard's $39B Endowment Is Secretly Acquiring California's Water Supply.

• High Yield Bond Shorts Hit Record Highs Amid IG Credit's Worst Year Since Lehman.

• May Survives Confidence Vote; Final Tally Is 200-117.

• Here's What To Expect If Government Shuts Down After Dec 21 Deadline.

• House Passes $867 Billion Farm Bill Which Rejects Curbs On Food Stamps.

• Stocks Pump'n'Dump As Trump Hush-Money Headlines Spoil Trade-War-Win Gains.

Telegraph:

• Comment: Recession risk leaves EU acutely vulnerable to a British Brexit walk-out.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 92.5 -2.5 basis points. 

• Asia Pacific Sovereign CDS Index 9.5 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 67.07 +.01%.

• FTSE 100 futures -.22%.

• S&P 500 futures +.21%.

• NASDAQ 100 futures +.29%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (CIEN)/.48

After the Close:

• (ADBE)/1.88

• (COST)/1.62

Economic Releases

8:30 am EST

• The Import Price Index MoM for November is estimated to fall -1.0% versus a +.5% gain in October.

• The Import Price Index Ex Petro MoM for November is estimated to fall -.1% versus a +.2% gain in October.

• The Export Price Index MoM for November is estimated to fall -.3% versus a +.4% gain in October.

• Initial Jobless Claims for last week are estimated to fall to 226K versus 231K the prior week.

• Continuing Claims are estimated to rise to 1649K versus 1631K prior.

Upcoming Splits

• (EBIX) 5-for-1

Other Potential Market Movers

• The ECB rate decision/press conference, $16B 30Y T-Bond auction, Bloomberg Dec. US Economic Survey, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, (DAL) investor day, (DHR) analyst meeting, (EZPW) investor day, (HIIQ) analyst day, (SBUX) investor day and the (FLS) analyst day could also impact trading today.

BOTTOM LINE:  Asian indices are modestly higher, boosted by technology and healthcare shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed.  The Portfolio is 50% net long heading into the day.

Stocks Higher into Final Hour on China Trade Deal Optimism, Less European/Emerging Market/US High-Yield Debt Angst, Short-Covering, Biotech/Tech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 21.3 -2.0%

• Euro/Yen Carry Return Index 133.72 +.23%

• Emerging Markets Currency Volatility(VXY) 10.10 -.1%

• S&P 500 Implied Correlation 47.71 +1.3%

• ISE Sentiment Index 92.0 -6.12%
  

• Total Put/Call 1.07 +13.8%

• NYSE Arms .51 -54.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 77.81 -3.17%
  

• America Energy Sector High-Yield CDS Index 686.0 -.38%

• European Financial Sector CDS Index 102.75 -5.53%

• Italian/German 10Y Yld Spread 272.25 -16.75 basis points
  

• Asia Pacific Sovereign Debt CDS Index 9.55 -2.45%

• Emerging Market CDS Index 201.82 -2.07%
  

• iBoxx Offshore RMB China Corporate High Yield Index 149.63 +.04%

• 2-Year Swap Spread 14.0 +2.5 basis points

• TED Spread 37.75 -1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -11.75 -4.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.08 +.44%
• 3-Month T-Bill Yield 2.42% +2.0 basis points

• Yield Curve 13.75 +2.75 basis points

• China Iron Ore Spot 65.3 USD/Metric Tonne +.29%

• Citi US Economic Surprise Index -7.3 -.2 point

• Citi Eurozone Economic Surprise Index -44.0 +1.6 points

• Citi Emerging Markets Economic Surprise Index .7 +6.5 points

• 10-Year TIPS Spread 1.84 +1.0 basis point
• 74.0% chance of Fed rate hike at Jan. 30th meeting, 83.3% chance at March 20th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +73 open in Japan 
• China A50 Futures: Indicating +58 open in China

• DAX Futures: Indicating +13 open in Germany

Portfolio: 

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

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Value +1.3%

Sector Underperformers:

• 1) REITs -1.2% 2) unch. 3) Airlines +.9%

Stocks Falling on Unusual Volume: 

• NBIX, PLAY, BHLB, XPO, APU, UNIT, UAA, MOS, HIIQ and APU

Stocks With Unusual Put Option Activity:

• 1) AET 2) HAL 3) FSLR 4) SFIX 5) RAMP

Stocks With Most Negative News Mentions:

• 1) MOS 2) KMB 3) VZ 4) TX 5) GPOR

Charts:

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