Tuesday, October 01, 2019

Wednesday Watch

Evening Headlines
Bloomberg:       
  • Stocks in Asia Drop After U.S. Data Disappoints. Asian stocks tracked losses in U.S. equities after a weak reading on American manufacturing added to concern about the global economy. Treasuries retained gains. Japan and South Korea bore the brunt of declines, with Australian equities also lower. Earlier, the S&P 500 fell the most in five weeks and pushed through a key support level after the Institute for Supply Management’s factory index slipped to the lowest since June 2009. The yield on 10-year Treasuries was at 1.64%. Hong Kong securities will also be in focus after further clashes between protesters and police. Japan’s Topix index dropped 0.8% as of 9:03 a.m. in Tokyo. Futures on the S&P 500 Index rose 0.3%. The underlying gauge fell 1.2% on Tuesday. Australia’s S&P/ASX 200 Index lost 0.5%. South Korea’s Kospi declined 0.8%.  
Zero Hedge:
Night Trading 
  • Asian equity indices are -1.25% to -.5% on average.
  • Asia Ex-Japan Investment Grade CDS Index 77.0 +.5 basis point.
  • China Sovereign CDS 49.0 +1.75 basis points.
  • Bloomberg Emerging Markets Currency Index  65.04 +.01%.
  • FTSE 100 futures -.53%.
  • S&P 500 futures +.16%.
  • NASDAQ 100 futures +.16%.
Morning Preview Links 

Earnings of Note 
Company/Estimate

Before the Open:
  • (AYI)/2.83
  • (LEN)/1.32
  • (PAYX)/.69
After the Close:
  • (BBBY)/.31
  • (RECN)/.14
Economic Releases
8:15 am EST
  • The ADP Employment Change for Sept. is estimated to fall to 140K versus 195K in Aug.
10:30 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory gain of +1,497,450 barrels versus a +2,412,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +12,000 barrels versus a +519,000 barrel gain the prior week. Distillate inventories are estimated to fall by -1,932,180 barrels versus a -2,978,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.26% versus a -1.4% decline prior.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The China National Day 2, weekly MBA Mortgage Applications report, Cantor Healthcare Conference, (TK) investor day, (CLX) analyst day, (MSFT) product event and the (F) 3Q sales call could also impact trading today.
BOTTOM LINE: Asian indices are lower, weighed down by technology and industrial 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 Reversing Sharply Lower into Final Hour on Global Growth Fears, Impeachment Talk, European/Emerging Markets/US High-Yield Debt Angst, Road & Rail/Financial Sector Weakness

 Broad Equity Market Tone:
  • Advance/Decline Line: Substantially Lower
  • Sector Performance: Almost Every Sector Declining
  • Volume: Above Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 18.5 +13.9%
  • Euro/Yen Carry Return Index 122.25 -.04%
  • Emerging Markets Currency Volatility(VXY) 8.16 +.12%
  • S&P 500 Implied Correlation 45.10 +11.0%
  • ISE Sentiment Index 68.0 -12.3%
  • Total Put/Call 1.10 -4.4%
  • NYSE Arms 1.76 +45.45%
Credit Investor Angst:
  • North American Investment Grade CDS Index 60.56 +.5%
  • America Energy Sector High-Yield CDS Index 464.0 +5.84%
  • European Financial Sector CDS Index 63.87 -.96%
  • Italian/German 10Y Yld Spread 142.25 +3.0 basis points
  • Asia Ex-Japan Investment Grade CDS Index 76.49 +.07%
  • Emerging Market CDS Index 210.28 +1.55%
  • iBoxx Offshore RMB China Corporate High Yield Index 166.0 -.01%
  • 2-Year Swap Spread 2.5 +1.75 basis points
  • TED Spread 30.0 -2.0 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -32.25 +4.5 basis points
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 65.0 -.36%
  • 3-Month T-Bill Yield 1.77% -4.0 basis points
  • Yield Curve .09 +4.0 basis points
  • China Iron Ore Spot 89.70 USD/Metric Tonne +.40%
  • Citi US Economic Surprise Index 35.0 -8.0 points
  • Citi Eurozone Economic Surprise Index -70.40 +1.6 points
  • Citi Emerging Markets Economic Surprise Index -7.5 -1.0 point
  • 10-Year TIPS Spread 1.52 +3.0 basis points
  • 82.6% chance of Fed rate cut at Dec. 11th meeting, 91.0% chance of cut at Jan. 29th meeting
Overseas Futures:
  • Nikkei 225 Futures: Indicating -185 open in Japan 
  • China A50 Futures: Indicating -74 open in China
  • DAX Futures: Indicating -37 open in Germany
Portfolio:
  • Slightly Lower: On losses in my biotech/industrial/medical/retail/tech sector longs
  • Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my emerging market shorts
  • Market Exposure: Moved to 25% Net Long

Bear Radar

Style Underperformer:
  • Small-Cap Growth -1.7%
Sector Underperformers:
  • 1) I-Banks -6.0% 2) Oil Service -3.6% 3) Road & Rail -3.2%
Stocks Falling on Unusual Volume: 
  • HRTX, DD, IBKR, AMTB, NVT, VCEL, GSHD, THOR, LMAT, TGH, PTCT, BMRN, ARLP, LYFT, GO, SLG, FANG, VIRT, XLNX, KFY, UBER, HEES, LPLA, AAWW, CHWY, URGN, IIVI, USCR, CIEN, HXL, VCEL, ANAB, SCHW, ENSG, AXSM, ETFC and AMTD
Stocks With Unusual Put Option Activity:
  • 1) AMTD 2) IYT 3) OIH 4) XLI 5) JWN
Stocks With Most Negative News Mentions:
  • 1) AMTD 2) ETFC 3) CIEN 4) NVT 5) OSTK
Charts:

Bull Radar

Style Outperformer:
  • Mid-Cap Growth -.7%
Sector Outperformers:
  • 1) Gold & Silver +1.4% 2) Retail -.1% 3) Steel -.2%
Stocks Rising on Unusual Volume:
  • MKC, ULTA, X, TW and COUP
Stocks With Unusual Call Option Activity:
  • 1) SCHW 2) ETFC 3) ETFC 4) HAL 5) DG
Stocks With Most Positive News Mentions:
  • 1) UPLD 2) GPRO 3) MKC 4) ADT 5) BBBY
Charts:

Morning Market Internals

NYSE Composite Index:

Monday, September 30, 2019

Tuesday Watch

Evening Headlines
Bloomberg:        
  • Asia Stocks Set for Modest Gains; Dollar Rises. Asian stocks looked set for modest gains after U.S. stocks advanced as investors weighed the latest turns in the trade war between the world’s two largest economies. The dollar rose and Treasuries edged higher. Futures pointed higher in Japan and were little changed in Australia. The S&P 500 on Monday capped a third month of gains out of the last four, rebounding from the August slide. Technologya fueled Monday’s rise after the Trump administration partially refuted a report it would target Chinese capital, reversing losses sparked by the news Friday. Ten-year Treasuries erased an early drop to trade higher, after data showed weakening business activity. Nikkei 225 futures rose 0.5%. S&P/ASX 200 futures rose 0.1%.  
Night Trading 
  • Asian equity indices are -.25% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 76.5 +.25 basis point.
  • China Sovereign CDS 47.25 -.5 basis point.
  • Bloomberg Emerging Markets Currency Index  65.27 -.07%.
  • FTSE 100 futures -.05%.
  • S&P 500 futures +.18%.
  • NASDAQ 100 futures +.18%.
Morning Preview Links 

Earnings of Note 
Company/Estimate

Before the Open:
  • (MKC)/1.29
After the Close:
  • (SFIX)/.04
  • (UNFI)/.55
Economic Releases
10:00 am EST
  • ISM Manufacturing for Sept. is estimated to rise to 50.0 versus 49.1 in Aug.
  • ISM Prices Paid for Sept. is estimated to rise to 50.5 versus 46.0 in Aug.
  • Construction Spending for Aug. is estimated to rise +.5% versus a +.1% gain in July.
Afternoon:
  • Wards Total Vehicle Sales for Sept. is estimated to rise to 17.0M versus 16.97M in Aug.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Vice Chair Clarida speaking, Fed's Bowman speaking, Eurozone CPI report and the weekly US retail sales reports could also impact trading today.
BOTTOM LINE: Asian indices are slightly higher, boosted by technology and consumer shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.