Morning Market Internals

NYSE Composite Index:

• Volume Running +93.9% Above 100-Day Average
• 11 Sectors Rising, 0 Sectors Declining
• 88.1% of Issues Advancing, 10.6% Declining
• 57 New 52-Week Highs, 0 New Lows
• 27.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 59.3%
• Vix 23.9 -7.3%
• Total Put/Call .55 -25.7%
• TRIN/Arms .81 +44.6%

Friday Watch

Evening Headlines

Bloomberg:     

• Senators Push ‘Unprecedented’ Sanctions on China Over Hong Kong.

• Europe Unites in Stimulus Zeal Led by Lagarde-Merkel Double Act.

• U.K. Consumer Outlook Becomes Bleaker Even as Lockdown Eases.

• Sydney’s Open For Business Again. So Where Is Everybody?

• U.S. Agencies Work With WHO Despite Trump Threat to Cut Ties   

• Asian Stocks Open Mixed; U.S. Treasuries Stabilize: Markets Wrap. Asian stocks opened mixed on Friday amid concern the recent rally has gone too far, with another big drop in American payrolls looming from the May employment report. Japanese and Australian shares dipped when trading began, while those in South Korea were slightly higher. Contracts on the S&P 500 were little changed after the index snapped a four-day winning streak Thursday. Ten-year Treasury yields held near the highest level since March. The euro earlier surged after the European Central Bank announced a bigger-than-expected boost to its emergency bond-buying program. S&P 500 futures were little changed as of 9:01 a.m. in Tokyo. The index fell 0.3% Thursday. Japan’s Topix index dipped 0.2%. South Korea’s Kospi index rose 0.1%. Australia’s S&P/ASX 200 Index was little changed.

• Researchers Retract Study Linking Malaria Pill to Heart Risk.  

• Broadcom Warns of Weak Demand for Smartphone Components.

Wall Street Journal:

• Thousands Defy Beijing With Hong Kong Vigil for Tiananmen Victims.

• Coronavirus Antibody Tests: Facts, Myths and Everything You Need To Know.

• Some Restaurants Were Set to Reopen. Now They Are Repairing Damage.

• U.S. Exports and Imports Fell Amid Virus Disruptions.

• Las Vegas Casinos Reopen With Social Distancing, Sinks Next to Slot Machines.

• How Google, Facebook and Twitter Patrol Political Ads.

Fox News:

• Tucker Carlson: Is America being torn apart by a total, complete -- but provable -- lie? (video)

• De Blasio drowned out by boos, faces calls to resign, at George Floyd memorial.

• Minnesota AG's son, who allied with Antifa, makes stunning new claim.

CNBC.com:

• Amwell confidentially files for IPO amid surging demand for remote health care.

• Jim Cramer: The pandemic led to ‘one of the greatest wealth transfers in history’.

• U.S. coronavirus cases have been slowly ticking up since Memorial Day.

• Slack shares sink as revenue growth remains steady despite pandemic.

• Stocks making the biggest moves after hours: Slack, Gap, RH and more.

• Gap’s sales fall 43% as retailer takes hit from coronavirus pandemic; shares dive.

MarketWatch.com:        

• These are the 154 stores J.C. Penney will soon close.

• Mortgage rates are at historic lows — but the coronavirus pandemic is making homes less affordable for buyers.

Zero Hedge:

• NYC Pushes $1.1 Billion Cut To NYPD Budget As Ninth Night Of Demonstrations Begins.
• Researchers Retract Botched Anti- Hydroxychloroquine Study Which Was Used To Attack Trump.

• Japan's Three Decades Of Depressive Stimulus Schemes.

• 'A Child Mob Is In Charge Of The NYT': Cotton Slams Paper Of Record After Op-Ed Turmoil.
• Shenzen Adopts China's First Personal Bankruptcy Laws As Small Businesses, Freelancers Face Financial Ruin.
• Top NYC Health Official Says "Racism" To Blame For Imminent COVID Spike (Not 1000s Of Demonstrators Gathering in Close Proximity).
• NYT Implodes Over Cotton Op-Ed While Poll Finds Nearly 60% Of Americans Agree With Him.

• JPMorgan Is "Counting The Days" Until The Second Covid Wave.
• Police Use Contact Tracing And Big Tech To Identify Protesters.
• US Ambassador To India Issues Apology After Protesters Vandalize Gandhi Statue .

• NYC Finance Jobs Won't Recover Until 2026, Dashing Hopes Of V-Shaped Recovery.

• The Staggering "Powell Bubble" In Just One Amazing Chart.

• "A Protester Shot My Sister": Teenager Records Gut Wrenching Message After Deadly Riot.

• Gold Gains As Investors Dump Dollars, Bonds, & Stocks.

The Epoch Times:

• Pompeo Urges Global Stock Exchanges to Tighten Listing Rules for Chinese Companies,

• Chinese City Concealing Recent Virus Infections and Deaths, Residents Say,

John Hopkins University:

• Coronavirus Global Cases. (map)

BNO News:

• Tracking Coronavirus: Map, data and timeline.

KFF:

• State Data(Tests/Hospitalizations).

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 91.0 -.75 basis point.

• China Sovereign CDS 48.5 unch.

• Bloomberg Emerging Markets Currency Index 61.49 +.02%.

• FTSE 100 futures +.02%

• S&P 500 futures +.07%.

• NASDAQ 100 futures -.03%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• None of note

After the Close:

• None of note

Economic Releases 
8:30 am EST

• The Change in Non-Farm Payrolls for May is estimated at -7,500K versus -20,5347K in April.

• The Unemployment Rate for May is estimated to rise to 19.4% versus 14.7% in April.

• Average Hourly Earnings MoM for May is estimated to rise +1.0% versus a +4.7% gain in April.
  

3:00 pm EST

• Consumer Credit for April is estimated at -$20.0B versus -$12.04B in March.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The UK Housing Price report could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

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

Stocks Reversing Lower into Final Hour on China Tensions, Rising Long-Term Rates, Technical Selling, Homebuilding/Utility Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Around Even
  

• Sector Performance: Mixed
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 25.5 -.7%

• Euro/Yen Carry Return Index 128.43 +1.3%

• Emerging Markets Currency Volatility(VXY) 9.90 +.2%

• S&P 500 Implied Correlation 60.6 -.6%

• ISE Sentiment Index 89.0 -26.0 points

• Total Put/Call .73 +7.4%

• NYSE Arms .51 -25.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 72.69 -1.09%
  

• US Energy High-Yield OAS 953.39 -1.33%

• European Financial Sector CDS Index 73.94 -4.61%

• Italian/German 10Y Yld Spread 174.0 -16.75 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 90.90 -3.53%
  

• Emerging Market CDS Index 242.86 -.03%
  

• iBoxx Offshore RMB China Corporate High Yield Index 168.99 -.01%

• 2-Year Swap Spread 7.75 +.5 basis point

• TED Spread 19.0 +.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -13.25 -.5 basis point
• MBS  5/10 Treasury Spread  113.0 -1.0 basis point
• IHS Markit CMBX BBB- 6 69.0 +2.5 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 61.46 -.11%
• 3-Month T-Bill Yield .14% -1.0 basis point

• Yield Curve 55.25 +1.5 basis points

• China Iron Ore Spot 96.70 USD/Metric Tonne -.47%

• Citi US Economic Surprise Index 8.30 +.3 point

• Citi Eurozone Economic Surprise Index -209.80 +16.5 points

• Citi Emerging Markets Economic Surprise Index 42.4 -1.1 points

• 10-Year TIPS Spread 1.2 +1.0 basis point
• 99.3% chance of no change at July 29th meeting, 99.3% chance of no change at Sept. 16th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -4 open in Japan 
• China A50 Futures: Indicating -135 open in China

• DAX Futures: Indicating -49 open in Germany

Portfolio:

• Lower: On losses in my biotech/tech/medical/consumer staple sector longs 

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my emerging market shorts

• Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Growth -1.2%

Sector Underperformers:

• 1) Utilities -2.7% 2) Homebuilding -1.8% 3) Software -1.6%

Stocks Falling on Unusual Volume: 

• TBIO, LPSN, ZS, RETA, WORK, PD, IMVT, ZYXI, DRNA, GWRE, BILL, DOCU, MDB, HAE, CIEN, SJM, DOMO, LVGO, ESTC, FIVN, ZM, DXCM, APPN, PRA, APPN, CHNG, MDLA, TXG, NTLA, CLDR, VREX, CMTL and SMAR

Stocks With Unusual Put Option Activity:

• 1) CLDR 2) SRNE 3) AMC 4) CCL 5) F

Stocks With Most Negative News Mentions:

• 1) DXC 2) HPQ 3) ANF 4) GS  5) SABR

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.8%

Sector Outperformers:

• 1) Airlines +11.1% 2) Oil Service +4.4% 3) Banks +2.7%

Stocks Rising on Unusual Volume:

• AAL, SRG, PLAY, SAVE, UAL, JBLU, DAL, DENN, VERI, SPR, CAKE, NCLH, RGA, LUV, BA, ZUO, EBAY, BKE, AMTD, LASR, SPG and CRNC

Stocks With Unusual Call Option Activity:

• 1) GLUU 2) FISV 3) ZUO 4) MAC 5) MFA

Stocks With Most Positive News Mentions:

• 1) AAL 2) AMTD 3) BA 4) NAV 5) EBAY

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +24.3% Above 100-Day Average
• 3 Sectors Rising, 8 Sectors Declining
• 47.6% of Issues Advancing, 49.9% Declining
• 33 New 52-Week Highs, 2 New Lows
• 26.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 59.6%
• Vix 25.2 -1.9%
• Total Put/Call .67 -1.5%
• TRIN/Arms .58 -14.7%