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BETWEEN THE HEDGES



Portfolio Manager's Commentary on Investing and Trading in the U.S. Financial Markets



Updated: 2017-10-17T22:10:04.318-04:00

 



Wednesday Watch

2017-10-17T22:10:04.335-04:00

Evening HeadlinesBloomberg: Xi Jinping Poised to Put His Stamp on Chinese History. (video) President Xi Jinping kicks off China’s most important political event on Wednesday, a twice-a-decade meeting of party leaders that may signal if Xi will appoint a successor to rule after 2022. Xi will start the weeklong event this morning with what’s known as the work report, seen as the ruling Communist Party’s most significant policy document. It will cover achievements since Xi took power in 2012, and lay out his vision for everything from party building to the economy to the military.U.S. Softens China FX Criticism, Cuts Taiwan From Watch List. The U.S. Treasury said no major trading partner is manipulating its currency to gain an advantage in trade, while lauding China for acting to avoid a “disorderly” depreciation and then allowing the yuan to rise against the dollar this year. “The Chinese currency has moved recently in a direction that would help correct the bilateral trade imbalance with the United States,” according to the Treasury’s twice-yearly foreign currency report released Tuesday in Washington. “But on a trade-weighted basis, the currency has become more competitive globally” amid a weakening greenback.Watch These 11 China Activity Measures to Predict Global Trade.Caution Prevails as China Party Congress Begins. Asian equities were mixed at the start, despite fresh records for U.S. stocks, while the dollar reversed its rally from the start of the week. While analysts expect little in the way of substantial reforms to emerge from the twice-a-decade congress in Beijing, which begins Wednesday, investors will focus on comments about deleveraging, capacity reduction and the global belt-and-road infrastructure plan. Japan’s Topix index was slightly higher as of 9:17 a.m. in Tokyo along with Australia’s S&P/ASX 500 Index and South Korea’s Kospi index. Hong Kong’s Hang Seng Index futures contracts were 0.3 percent lower.Five Things You Need to Know to Start Your Day. (video)Luxembourg's Gramegna Sees European Growth Strengthening. (video) Trump Pitches Tax Plan to Policy Group That Helped Write It. (video) President Donald Trump sought to rally support for his effort to overhaul the nation’s tax code on Tuesday at a conservative policy group that helped write the plan. Trump made his argument for a dramatic cut in tax rates for corporations and many individual Americans at the Heritage Foundation’s annual President’s Club meeting -- and asked for the group’s help in getting legislation passed by year’s end. “So let’s give our country the best Christmas present of all -- massive tax relief,” Trump said.Wall Street Journal: U.S.-Backed Forces Say They Have Taken Raqqa, Islamic State’s Last Urban Stronghold. Syrian Democratic Forces say four-month battle for de facto capital is over. Future of Tech and Media: Waging a War for People’s Time. Activate co-founder Michael Wolf says the battle of internet giants will enter new technologies and take them deeper into each other’s turf.Fox News: Trump dossier firm's 'smear' tactics unveiled: Fusion GPS labeled critic a 'pedophile,' 'extortionist' and 'drug trafficker'. (video)CNBC: IBM(IBM) shares up after earnings beat. (video)It sounds like a 'Goldilocks' market to me: Expert.PG&E(PGE) shares spike after suspected wildfires arsonist is arrested in Northern California.Zero Hedge: CIA Urges Trump To Delay Release Of 3,000 Never-Before-Seen Documents On JFK Assassination.Amazon(AMZN) Strikes Deal With Landlords To Install Lockers In Apartment Buildings.George Soros Donates $18 Billion To His 'Open Society' Foundation. "No Devilishly Effective Plot" - Clinton Chief Strategist Admits "You Can't Buy The Presidency For $100,000". John McCain Says He Will Vote 'Yes' On Crucial Budget Bill. Look Out, New Yorkers: GM To Begin Testing Driverless Cars In The Big Apple(AAPL). Trump Meets Tsipras, "Evil" Awkwardness Follows.WTI Shrugs Despite Huge Crude Draw. (graph)Dow Fails To Hold 23,000 As Yi[...]



Stocks Slightly Higher into Final Hour on Earnings Optimism, Healthcare/Tax Reform Hopes, Oil Gain, Healthcare/Retail Sector Strength

2017-10-17T15:39:44.470-04:00

Broad Equity Market Tone:Advance/Decline Line: LowerSector Performance: MixedVolume: Below Average Market Leading Stocks: UnderperformingEquity Investor Angst:Volatility(VIX) 10.28 +3.73% Euro/Yen Carry Return Index 137.70 -.19% Emerging Markets Currency Volatility(VXY) 8.21 +8.98% S&P 500 Implied Correlation 15.32 +6.11%ISE Sentiment Index 125.0 +52.4%Total Put/Call .84 -28.81% NYSE Arms .99 -1.96% Credit Investor Angst:North American Investment Grade CDS Index 54.09 -.54% America Energy Sector High-Yield CDS Index 391.0 -1.11%European Financial Sector CDS Index 58.57 -.33%Western Europe Sovereign Debt CDS Index 5.12 +2.61%Asia Pacific Sovereign Debt CDS Index 16.24 +.93%Emerging Market CDS Index 175.94 -.96%iBoxx Offshore RMB China Corporate High Yield Index 144.41 -.01%2-Year Swap Spread 25.50 -.5 basis point TED Spread 26.75 -1.25 basis points3-Month EUR/USD Cross-Currency Basis Swap -39.0 +1.75 basis pointsEconomic Gauges:Bloomberg Emerging Markets Currency Index 73.875 -.17% 3-Month T-Bill Yield 1.08% +1.0 basis pointYield Curve 75.0 -2.0 basis pointsChina Import Iron Ore Spot $62.72/Metric Tonne -.35%% Citi US Economic Surprise Index 6.30 +3.8 pointsCiti Eurozone Economic Surprise Index 54.0 -1.4 points Citi Emerging Markets Economic Surprise Index 17.90 -2.2 basis points10-Year TIPS Spread 1.83 -2.0 basis points83.9% chance of Fed rate hike at Dec. 13 meeting, 84.5% chance at Jan. 31 meetingOverseas Futures:Nikkei 225 Futures: Indicating +64 open in Japan China A50 Futures: Indicating +10 open in ChinaDAX Futures: Indicating +9 open in GermanyPortfolio: Higher: On gains in my retail/biotech/medical sector longs Disclosed Trades: None Market Exposure: 100% Net Long[...]



Today's Headlines

2017-10-17T15:05:58.252-04:00

Bloomberg:Skeptics Question Abe Election Elation as Topix Hits Decade High. As Prime Minister Shinzo Abe’s ruling party heads for what polls suggest will be its best national election result in more than three decades, Japan’s stock market has surged to heights not seen since before the financial crisis. Some investors and analysts are asking whether the optimism is overdone. Jonathan Allum, a strategist at SMBC Nikko Capital Markets Ltd. in London, says he’s puzzled by the bullish view that a resounding Abe victory will revamp the premier’s program to revive the economy. In his opinion, nothing substantial will have changed: Abe will have the same ability to pursue his policy agenda as he had before the vote.Iran Official Backs Extension of OPEC Cuts, Dismisses Trump Risk. (video)Here Are Key Takeaways From Wall Street's Third-Quarter Earnings. (video)Wall Street Journal:George Soros Transfers $18 Billion to His Foundation, Creating an Instant Giant. The pioneer of hedge-fund investing has transferred the bulk of his wealth to Open Society Foundations.U.S.-Backed Forces Say They Have Taken Raqqa, Islamic State’s Last Urban Stronghold. Syrian Democratic Forces say four-month battle for de facto capital is over.Xi Jinping’s Power Plays Set the Stage for a Long Encore. China’s president is likely to emerge from a Communist Party congress with enhanced powers—but will he step down in 2022?Morgan Stanley’s(MS) Earnings Rise on Strength in Wealth Management. The bank’s return on equity stood at 9.6% in the quarter, versus a year-end target for a minimum of 9%.UnitedHealth(UNH) Revenue Grows Despite ACA Exit. Health insurer expands in employer insurance programs and delivery of care.British Intelligence Chief Notes Quickening Pace of Terror Threats. The U.K. is seeing more plots coming at a faster tempo, says MI5 head Andrew Parker.Fox News:Report: Russians used bribes, sought to pad Clinton charity amid Obama-era push to expand US nuclear footprint.ESPN's Sam Ponder calls out sexist history of network's new partner, Barstool Sports.CNBC:Dow hits 23,000 for the first time. (video)Senators have 'short-term plan' to stabilize Obamacare markets, as Trump's decision to kill crucial subsidies is raising health insurance rates.Europe markets close lower; Airbus shares rise; Merlin tumbles 15%. Zero Hedge:FBI Uncovered Russian Bribery Plot Before Obama Approved Uranium One Deal, Netting Clintons Millions.Marc Faber Racist Diatribe Costs Him CNBC, Fox Slots; Sprott Board Seat.Trump Expected To Announce His Pick For Fed Chair In Next Two Weeks.Iraqi Kurd Army Agrees To Return To 2003 Border, Oil Slides.Is The Aramco IPO On The Brink Of Collapse?Mexico, Canada Said To "Firmly Reject" US NAFTA Proposals.US Industrial Production Data Dashes 'Survey-Driven' Hopes Of Manufacturing Renaissance. (graph)NYT Editor Slams Pence As "F**king Horrible", Admits Reporters Tried To Sway Voters Against Trump.Import & Export Prices Jump As Fuel Costs Spike. (graph)TheStreet.com: Study: Atlanta notched second-highest boom rate among big-city economies. IT sector dominated 2016 growth in Atlanta, per the Bureau of Economic Analysis. A good sign for fetching Amazon(AMZN)?[...]



Bear Radar

2017-10-17T13:54:40.775-04:00

Style Underperformer: Mid-Cap Value -.2%Sector Underperformers: 1) Oil Service -1.0% 2) I-Banks -.9% 3) Gold and Silver -.8%Stocks Falling on Unusual Volume: IPXL, OSUR, JP, ERJ, TCAP, RGEN, FIZZ, XYL and BGGStocks With Unusual Put Option Activity: 1) GIMO 2) HOG 3) NTNX 4) JNJ 5) IBM Stocks With Most Negative News Mentions: 1) IMDZ 2) BUFF 3) DYN 4) FCX 5) ETN Charts: ETFs Falling on Unusual Volume Stocks Falling on Unusual Volume [...]



Bull Radar

2017-10-17T13:29:28.892-04:00

Style Outperformer: Large-Cap Growth +.1%Sector Outperformers: 1) Biotech +.7% 2) Retail +.7% 3) Alt Energy +.7% Stocks Rising on Unusual Volume:XRF, SYNT, PCG, HOG, GWW, KMG, SAVE, SONC, OSTK, TERP, ASYS, SJI, OMC, ABEO, SFBS, MPAA, UNH, VYGR, MSBI, SAM, SNDR, SPB, CXW, LULU, NL, VYGR and NAVIStocks With Unusual Call Option Activity: 1) HES 2) XLV 3) TRXC 4) HUN 5) SAVE Stocks With Most Positive News Mentions: 1) HK 2) RXDX 3) UNH 4) OMC 5) CELG Charts: ETFs Rising on Unusual Volume Stocks Rising on Unusual Volume [...]



Morning Market Internals

2017-10-17T12:26:27.795-04:00

NYSE Composite Index:
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Tuesday Watch

2017-10-16T22:39:48.557-04:00

Evening HeadlinesBloomberg: Australia’s Central Bank Reaffirms Growth Is Set to ‘Increase Gradually’. The Reserve Bank of Australia says economic conditions at home and abroad “had been more positive since 2016,” according to minutes of this month’s policy meeting where interest rates were left unchanged.Initial Coin Offerings Rake in Another Billion in Under 2 Months.Asian Stocks to Gain as Fed Chair Talk Hits Bonds. Equity benchmarks rose in Tokyo and Sydney. Global stocks began the week supported by Fed chair Janet Yellen saying that she expects to continue raising rates gradually amid solid U.S. growth, even as inflation remains surprisingly low. Treasuries slid as John Taylor, a candidate for Fed chairman who is known for a monetary policy rule that would generally advocate higher interest rates, was said to have impressed President Donald Trump in an interview last week. The pound was steady after breaking a five-day winning streak on speculation that Brexit talks could be headed for a breakdown. Japan’s Topix index added 0.4 percent as of 9:12 a.m. Tokyo time. Australia’s S&P/ASX 200 Index rose 0.5 percent and South Korea’s Kospi index was little changed. Contracts on Hong Kong’s Hang Seng Index were flat.Five Things You Need to Know to Start Your Day. (video)Rio on Track for Record Iron Ore Exports as China Imports Surge. Rio Tinto Group is on track for record annual shipments of iron ore as the world’s second-largest exporter’s rail capacity increases and imports by China’s steel mills keep surging. The company confirmed shipments from Western Australia will hit about 330 million metric tons in 2017, London-based Rio said Tuesday in its production report that showed quarterly cargoes continued to gain. The total would top the 327.6 million tons exported last year.Wall Street Journal: U.S. Seeks to Stay Neutral in Iraq Conflict. Trump’s declaration comes as Baghdad government forces push into Kirkuk amid conflict with Kurds over disputed territory, threatening to disprupt fight against Islamic State.How Google’s(GOOGL) Quantum Computer Could Change the World. The ultra-powerful machine has the potential to disrupt everything from science and medicine to national security—assuming it works.Trump and McConnell Declare They Have a Common Agenda. President says they’re both ‘fighting for lower taxes’ and they’re ‘closer than ever’ after months of tension.MarketWatch.com:  These stocks have popped more than 75% since Trump was elected.Fox News: Comey drafted letter on Clinton email investigation before completing interviews, FBI confirms. (video)Las Vegas guard Jesus Campos vanished after visiting urgent-care clinic, union leader says. The Mandalay Bay security guard who disappeared last week moments before he was scheduled to break his silence in television interviews has not been seen since he went to a walk-in health clinic, his union president said.CNBC: Netflix(NFLX) adds 5.3 million subscribers during Q3, beating analyst estimates. (video)Nobel-winning economist Shiller calls bitcoin a fad. (video)Apple(AAPL) explored buying a medical-clinic start-up as part of a bigger push into health care.CBS(CBS) earnings to disappoint due to weak NFL ratings, Credit Suisse says.US shale oil output will grow by another 81,000 barrels a day in November, Dept of Energy forecasts.Trump to interview Yellen about Fed chair appointment this week.Zero Hedge:  Kobe Steel Scandal Goes Nuclear: Company Faked Data For Decades, Had A "Fraud Manual".North Korea Drops Propaganda Leaflets On Seoul: "Let's Behead Mad Dog Trump, Death To The Old Lunatic"."That Money's Already Been Spent" - Clinton Foundation Won't Return $250,000 Weinstein Donation."He Shivved Me": Angry Hillary Lashes Out At Comey And Assange In Australian TV Interview. Catalan Independence Movement Furious After Spain J[...]



Stocks Higher into Final Hour on Tax Reform Hopes, Oil Gain, Yen Weakness, Financial/Gaming Sector Strength

2017-10-16T15:30:28.044-04:00

Broad Equity Market Tone:Advance/Decline Line: Modestly LowerSector Performance: MixedVolume: Below Average Market Leading Stocks: Performing In LineEquity Investor Angst:Volatility(VIX) 9.88 +2.8% Euro/Yen Carry Return Index 137.96 +.09% Emerging Markets Currency Volatility(VXY) 8.11 +.12% S&P 500 Implied Correlation 15.47 -1.28%ISE Sentiment Index 730 -32.4%Total Put/Call 1.21 +42.35% NYSE Arms .96 -15.34% Credit Investor Angst:North American Investment Grade CDS Index 54.36 -.84% America Energy Sector High-Yield CDS Index 394.0 +.03%European Financial Sector CDS Index 58.74 +.12%Western Europe Sovereign Debt CDS Index 4.99 -2.06%Asia Pacific Sovereign Debt CDS Index 16.1 +.06%Emerging Market CDS Index 177.75 +.11%iBoxx Offshore RMB China Corporate High Yield Index 144.43 +1.49%2-Year Swap Spread 26.0 +.25 basis point TED Spread 28.0 -1.25 basis points3-Month EUR/USD Cross-Currency Basis Swap -40.75 +.25 basis pointEconomic Gauges:Bloomberg Emerging Markets Currency Index 73.84 +.66% 3-Month T-Bill Yield 1.07% unch.Yield Curve 77.0 -1.0 basis point China Import Iron Ore Spot $62.94/Metric Tonne +.66% Citi US Economic Surprise Index 2.50 -1.4 pointsCiti Eurozone Economic Surprise Index 55.40 -.3 point Citi Emerging Markets Economic Surprise Index 20.10 -2.2 basis points10-Year TIPS Spread 1.85 -1.0 basis point80.4% chance of Fed rate hike at Dec. 13 meeting, 81.5% chance at Jan. 31 meetingOverseas Futures:Nikkei 225 Futures: Indicating +135 open in Japan China A50 Futures: Indicating +22 open in ChinaDAX Futures: Indicating -11 open in GermanyPortfolio: Slightly Higher: On gains in my tech/biotech sector longs Disclosed Trades: None Market Exposure: 100% Net Long[...]



Today's Headlines

2017-10-16T14:57:47.187-04:00

Bloomberg:Zhou Baffles China Watchers With Hints on 3Q Growth Surprise. (video)Your Evening Briefing. The World's Largest Oil Hedge Is Complete. Mexico has completed its annual oil hedge for 2018, which will lock in an average export price of $46 per barrel of crude, Deputy Finance Minister Vanessa Rubio said in an interview. In addition to the put options bought on the market, a larger Oil Revenue Stabilization Fund, with the help of the central bank’s exchange-rate surplus, will help guarantee the price, Rubio told Bloomberg News. "We have completed it and we’re assured that the hedge perfectly covers the price of a barrel that we included in the 2018 budget of $46 dollars," Rubio said.How Goldman(GS) and Morgan Stanley's(MS) Profits Might Still Surprise.Wall Street Journal:China’s Xi Approaches a New Term With a Souring Taste for Markets. As a Communist Party congress opens, the pro-market talk from Xi’s first term has faded as China’s priorities turn to economic intervention and supporting state companies.As Islamic State Recedes, Iraqi Forces and Kurds Turn on Each Other. Elite Iraqi forces take control of local government building in Kirkuk. EU Foreign Ministers Agree to Stand by Iran Nuclear Deal. Ministers criticize Trump’s decision to pull out of agreement, warn that U.S. administration could become isolated. Fox News:Trump delivers statement after meeting with Mitch McConnell -- live blog. (video)Dana Loesch forced to move due to 'repeated threats from gun control advocates'. (video)CNBC:Trump and Mitch McConnell say they want tax reform done by the end of the year.Americans would see up to a $9,000 raise if US cuts corporate taxes, says Trump economic advisor.Major Wi-Fi security flaw could allow hackers to listen in on any of your devices. (video)Top Trump advisor Cohn says tax reform has to get done this year.The new iPhones will be Apple’s(AAPL) most successful ever, says analyst Ives.Mobile-only customers are the key to the next wave of Netflix(NFLX) growth.Iraq made 'declaration of war' when its troops seized parts of oil-rich region, Kurdish forces say.Adobe(ADBE) warns that hackers are exploiting its Flash software.Zero Hedge:US Deploys Special Forces "Decapitation" Team To South Korea.Firm Behind "Trump Dossier" Refuses To Comply With Congressional Subpoena.Sears(SHLD) Crashes After Second Largest Shareholder Resigns From Board.Gold Drops Below $1300 As Taylor Reportedly Trump's Warsh For Fed Chair.  (graph)USDJPY Jumps And Dumps After Conflicting Reports Over North Korean Willingness To Negotiate. (graph) Healthcare Stocks Slide After Trump Says "Drug Prices Out Of Control". (graph)After Lightning Offensive, Kirkuk Is Now Fully Under Iraqi Military Control.NAFTA Talks Heat Up As Trump Administration Takes Aggressive Stance On Autos.Recession Red Flag Rears Its Ugly Head - Treasury Yield Curve Crashes To Post-Crisis Flats. (graph)Cable Plummets On Report Brexit Talks Headed For "Catastrophic Breakdown" If No EU Compromise.Empire Fed Survey Soars To Highest In 8 Years (As New Orders Plunge). (graph)[...]



Bear Radar

2017-10-16T13:49:35.133-04:00

Style Underperformer: Small-Cap Growth unch.Sector Underperformers: 1) Airlines -1.2% 2) Retail -.7% 3) Networking -.6%Stocks Falling on Unusual Volume: PCG, DFRG, MTSI, JWN, IMPV, MELI, SJI and SGHStocks With Unusual Put Option Activity: 1) PCG 2) PGR 3) GPRO 4) GGP 5) PXD Stocks With Most Negative News Mentions: 1) MTSI 2) BOLD 3) PGE 4) CHS 5) CENT Charts: ETFs Falling on Unusual Volume Stocks Falling on Unusual Volume [...]



Bull Radar

2017-10-16T13:12:00.460-04:00

Style Outperformer: Large-Cap Growth +.1%Sector Outperformers: 1) Gaming +1.1% 2) Papers +1.0% 3) Oil Service +.5% Stocks Rising on Unusual Volume:EXEL, SOHU, JP, LCI, THR, FPRX, HIIQ, ASYS, MTZ, AIMT, NVCR, IONS, SSYS, BEDU, NVO, AAAP, ESNT, IDT, CBPO, RARX, DVA, VRTX, HLF, PKX and WYNNStocks With Unusual Call Option Activity: 1) EXEL 2) HOG 3) RTN 4) CMCSA 5) DE Stocks With Most Positive News Mentions: 1) BLUE 2) WYNN 3) MU 4) GRPN 5) NVDA Charts: ETFs Rising on Unusual Volume Stocks Rising on Unusual Volume [...]



Morning Market Internals

2017-10-16T11:17:15.651-04:00

NYSE Composite Index:
(image)



Monday Watch

2017-10-15T22:59:14.478-04:00

Today's Headlines Bloomberg:Tillerson Pledges Diplomacy With North Korea 'Until the First Bomb Drops'. Secretary of State Rex Tillerson says President Donald Trump wants him to push forward on diplomacy with North Korea “until the first bomb drops.” Until? Tillerson’s comments on CNN’s “State of the Union” program on Sunday apparently weren’t meant literally as a timeline for war, as he preceded that quote by saying, “He has made it clear to me to continue my diplomatic efforts,” and that those efforts “will continue until the first bomb drops.”China's Zhou Warns Corporate Debt Too High, Urges Fiscal Reform. People’s Bank of China Governor Zhou Xiaochuan warned that Chinese companies have taken on too much debt, and argued for less financial leverage as well as fiscal reforms to constrain local government borrowing. “The main problem is that the corporate debt is too high,” Zhou said Sunday during a panel discussion at a Group of 30 seminar in Washington held in conjunction with the International Monetary Fund and World Bank annual meetings. While debt servicing costs remain low, “we need to pay further effort to deleveraging and strengthen policy for financial stability,” Zhou said. He appeared alongside policy makers including Federal Reserve Chair Janet Yellen and Bank of Japan Governor Haruhiko Kuroda.China Plots What’s Next as Influence on Global Markets Grows. Bond Traders Face Inflation Gamble That Will Last a Generation. If you’re a bond trader and agree with the Federal Reserve that low inflation is only transitory, then the Treasury has quite a deal for you. The U.S. will offer $5 billion of 30-year Treasury Inflation Protected Securities on Thursday, the third and final opportunity to buy them at auction this year. For those concerned that accelerating price growth will erode fixed-income returns, they’re a must-have hedge. The problem is that the latest inflation readings disappointed yet again. The core consumer price index rose 1.7 percent in September from a year earlier, missing estimates for 1.8 percent growth, according to the data released Oct. 13. That sent the 30-year breakeven rate, a market gauge of inflation expectations, down from its highest close since May, to about 1.93 percentage points.What Global Finance Chiefs Are Saying About the Economy. (video)Stocks in Asia Advance as U.S. Inflation Slows. (video) Stocks in Asia advanced with bonds after inflation data in the U.S. added to evidence that global growth is continuing steadily with limited price pressures in the American economy. Equity indexes climbed in Japan, Australia and South Korea with a gauge of Asian stocks trading at the highest level since 2007. Friday’s data bolstered the view that U.S. inflation below the Federal Reserve’s target may be structural rather than transitory, prompting traders to slightly reduce the odds of another interest-rate increase in December. China’s producer prices jumped more than expected last month and consumer prices also increased in one of the remaining data points ahead of the start of the Party Congress later this week. The MSCI Asia Pacific Index rose 0.4 percent to touch its highest level since November 2007.Five Things You Need to Know to Start Your Day. (video)Gary Cohn Calls Clearinghouses 'a New Systemic Problem'.Wall Street Journal: Your Next Home Could Run on Batteries. A combination of solar power and the rise of residential energy storage paves the way for a new kind of cable cutting.Pentagon Turns to High-Speed Traders to Fortify Markets Against Cyberattack. Experts attend brainstorming sessions to identify how hackers might wreak havoc.Central Bankers Cling to Stimulus Amid Weak In[...]



Weekly Outlook

2017-10-15T21:59:46.220-04:00

BOTTOM LINE: I expect US stocks to finish the week mixed as tax reform hopes, oil strength and earnings optimism offset geopolitical concerns, profit-taking and technical selling. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 100% net long heading into the week.
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Today's Headlines

2017-10-14T21:03:35.946-04:00

Bloomberg:China Credit Growth Exceeds Estimates Despite Debt Curb Vow. China’s broadest gauge of new credit exceeded projections, signaling that the funding taps remain open even as the government pushes to curb excessive borrowing.PBOC Governor Zhou Says China’s 6.9% Growth ‘May Continue’. Economic indicators show "stabilized and stronger growth" and the momentum of a 6.9 percent expansion in the first six months of 2017 "may continue in the second half," People’s Bank of China Governor Zhou Xiaochuan said. Imports and exports increased rapidly, fiscal income grew, and prices have been steady, Zhou said, according to a statement the central bank released Saturday after he attended meetings of global finance chiefs this week in Washington. The effects of a campaign to rein in leverage are showing, and China will monitor and prevent shadow banking and real estate risk, he said.Draghi Says ECB Is Confident About Reaching Inflation Goal. With the European Central Bank’s next policy update less than two weeks away, the institution’s chief is expressing both confidence and patience about achieving its inflation goal. “We are confident that as the conditions will continue to improve, the inflation rate will gradually converge in a self-sustained manner, as we’ve defined many times, and in a durable way to our objective,” ECB President Mario Draghi told reporters in Washington on Saturday. “But together with our confidence we should also be patient because it’s going to take time.”IMF Panel Says ‘No Room for Complacency’ on Global Growth. The IMF’s steering committee warned that global growth is at risk of faltering in coming years given uncomfortably low inflation and rising geopolitical risks, injecting a cautious note into an otherwise improving economic outlook. “The recovery is not yet complete, with inflation below target in most advanced economies, and potential growth remains weak in many countries,” the International Monetary and Financial Committee said in a communique released Saturday in Washington. “Near-term risks are broadly balanced, but there is no room for complacency because medium-term economic risks are tilted to the downside and geopolitical tensions are rising.”Saudis Consider Delaying Foreign Part of Aramco IPO. Saudi Arabia is considering delaying the international portion of the giant initial public offering of its state oil company until at least 2019, according to people familiar with the situation, who said a domestic share sale in Riyadh could still happen next year.Policy Makers Are Comfortable With Asset Prices But Bankers Are Cautious.U.S. Proposes Gutting Nafta Legal-Dispute Tribunals. U.S. Nafta negotiators are proposing to essentially do away with the independent tribunals that oversee the trading and investment relationship, either by eliminating them altogether or substantially scaling back their roles, people familiar with negotiations say. The U.S. has proposed its changes for two types of independent dispute settlement rules under the North American Free Trade Agreement -- so-called investor-state rules as well as provisions to settle state-to-state disputes at an independent panel.Wall Street Journal:Trump’s Moves Ratchet Up Pressure on Congress. President adds health care, Iran policy to an already long to-do list for lawmakers.China Takes On Its New Tycoons. Fearing the rise of Russia-style oligarchs, Xi Jinping looks to remind China’s wealthy class of entrepreneurs who is really in charge.New California Fires Spread, Triggering Further Evacuations. Officials gain control over some other blazes, allowing residents to retur[...]



Weekly Scoreboard*

2017-10-13T15:25:50.182-04:00

S&P 500 2,555.89 +.22%The Weekly Wrap by Briefing.com.   IndicesDJIA 22,888.04 +.46%NASDAQ 6,611.82 +.28%Russell 2000 1,504.84 -.42%S&P 500 High Beta 40.16 +.31% Goldman 50 Most Shorted 137.39 -1.79% Wilshire 5000 26,517.63 +.04%Russell 1000 Growth 1,283.40 +.64%Russell 1000 Value 1,178.13 -.23%S&P 500 Consumer Staples 562.91 +1.62%Vanda Cyclicals-Defensives 1.3665 -1.20% NYSE Technology 1,625.60 +.49%Transports 9,954.48 +.76%Utilities 738.29 +.79%Bloomberg European Bank/Financial Services 100.55 -1.66%MSCI Emerging Markets 46.39 +2.12%HFRX Equity Hedge 1,247.54 +.20%HFRX Equity Market Neutral 1,011.14 -.14%Sentiment/InternalsNYSE Cumulative A/D Line 308,249 +.33%Bloomberg New Highs-Lows Index 724 -220Bloomberg Crude Oil % Bulls 53.33 +42.21% CFTC Oil Net Speculative Position 444,316 -2.16% CFTC Oil Total Open Interest 2,471,226 +2.49% Total Put/Call .85 unch.OEX Put/Call 1.52 -1.94%ISE Sentiment 128.0 +43.68% NYSE Arms .81 +3.85%Volatility(VIX) 9.67 +5.0%S&P 500 Implied Correlation 15.97 -10.62%G7 Currency Volatility (VXY) 7.70 -1.66%Emerging Markets Currency Volatility (EM-VXY) 8.09 +2.53% Smart Money Flow Index 19,920.68 +.17%ICI Money Mkt Mutual Fund Assets $2.741 Trillion +.01%ICI US Equity Weekly Net New Cash Flow -$9.792 BillionAAII % Bulls 39.8 +11.7%AAII % Bears 26.9 -18.0% Futures Spot PricesCRB Index 184.36 +.98%Crude Oil 51.03 +4.47%Reformulated Gasoline 160.99 +3.92%Natural Gas 3.01 +5.06%Heating Oil 178.67 +3.13%Gold 1,304.0.20 +1.9%Bloomberg Base Metals Index 205.55 +2.14% Copper 313.0 +3.64%US No. 1 Heavy Melt Scrap Steel 288.33 USD/Metric Tonne unch.China Iron Ore Spot 62.53 USD/Ton +.47%Lumber 425.0 +2.91%UBS-Bloomberg Agriculture 1,036.77 +1.17%EconomyAtlanta Fed GDPNow Forecast +2.7 +20.0 basis points ECRI Weekly Leading Economic Index Growth Rate 1.2% +50.0 basis pointsPhilly Fed ADS Real-Time Business Conditions Index -.4439 +8.19% US Economic Policy Uncertainty Index 95.83 +3.32% S&P 500 Blended Forward 12 Months Mean EPS Estimate 141.66 +.16%Citi US Economic Surprise Index 3.9 +.6 pointCiti Eurozone Economic Surprise Index 55.7 +9.9 pointsCiti Emerging Markets Economic Surprise Index 22.30 +4.4 points Fed Fund Futures imply 85.5% chance of no change, 14.5% chance of 25 basis point hike on 11/1US Dollar Index 93.06 -.89%MSCI Emerging Markets Currency Index 1,633.56 +.71%Euro/Yen Carry Return Index 137.92 +.29% Yield Curve 78.0 -8.0 basis points10-Year US Treasury Yield 2.27% -9.0 basis pointsFederal Reserve's Balance Sheet $4.420 Trillion -.02%U.S. Sovereign Debt Credit Default Swap 24.78 unch.Illinois Municipal Debt Credit Default Swap 338.13 -.05% Western Europe Sovereign Debt Credit Default Swap Index 5.09 -6.08%Asia Pacific Sovereign Debt Credit Default Swap Index 16.09 -2.0%Emerging Markets Sovereign Debt CDS Index 38.31 -3.21%Israel Sovereign Debt Credit Default Swap 51.0 +8.78% South Korea Sovereign Debt Credit Default Swap 69.56 -.2% Russia Sovereign Debt Credit Default Swap 130.74 +.02% iBoxx Offshore RMB China Corporate High Yield Index 142.30 +.31%10-Year TIPS Spread 1.86% -1.0 basis pointTED Spread 29.25 +.5 basis point 2-Year Swap Spread 25.75 -1.75 basis points 3-Month EUR/USD Cross-Currency Basis Swap -41.0 -1.25 basis pointsN. America Investment Grade Credit Default Swap Index 54.67 +1.52%America Energy Sector High-Yield Credit Default Swap Index 396.0 -1.28% European Financial Sector Credit Default Swap Index 58.69 -2.11%Emerging Markets Credit Default Swap Index 177.53 -.65%CMBS AAA Super Senior 10-Year Treasury Spread to Swaps 155.0 unch.M1 Money Supply $3.540 Trillion +.01% Commercial Paper Outstanding 1,063.80 -.5%4-Week Moving Average of Jobless[...]



Stocks Slightly Higher into Final Hour on Earnings Optimism, Oil Gain, Technical Buying, Energy/Technology Sector Strength

2017-10-13T14:59:58.356-04:00

Broad Equity Market Tone:Advance/Decline Line: About EvenSector Performance: Most Sectors RisingVolume: Around Average Market Leading Stocks: Performing In LineEquity Investor Angst:Volatility(VIX) 9.63 -2.8% Euro/Yen Carry Return Index 137.84 -.37% Emerging Markets Currency Volatility(VXY) 8.09 -.49% S&P 500 Implied Correlation 16.05 -6.58%ISE Sentiment Index 125.0 +71.2%Total Put/Call .84 -.2% NYSE Arms .88 -42.12% Credit Investor Angst:North American Investment Grade CDS Index 54.55 -1.49% America Energy Sector High-Yield CDS Index 396.0 -1.28%European Financial Sector CDS Index 58.58 -1.1%Western Europe Sovereign Debt CDS Index 5.10 +4.3%Asia Pacific Sovereign Debt CDS Index 16.09 -.06%Emerging Market CDS Index 177.90 -.22%iBoxx Offshore RMB China Corporate High Yield Index 142.30 +.04%2-Year Swap Spread 25.75 -2.0 basis points TED Spread 29.25 +.5 basis points3-Month EUR/USD Cross-Currency Basis Swap -41.0 +.5 basis pointEconomic Gauges:Bloomberg Emerging Markets Currency Index 73.93 +.38% 3-Month T-Bill Yield 1.07% unch.Yield Curve 78.0 -3.0 basis points China Import Iron Ore Spot $62.53/Metric Tonne +4.06% Citi US Economic Surprise Index 3.90 -3.3 pointsCiti Eurozone Economic Surprise Index 55.70 -.1 point Citi Emerging Markets Economic Surprise Index 22.30 -1.1 basis points10-Year TIPS Spread 1.86 -3.0 basis points76.9% chance of Fed rate hike at Dec. 13 meeting, 77.8% chance at Jan. 31 meetingOverseas Futures:Nikkei 225 Futures: Indicating +110 open in Japan China A50 Futures: Indicating +44 open in ChinaDAX Futures: Indicating +1 open in GermanyPortfolio: Slightly Higher: On gains in my tech/retail sector longs Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges Market Exposure: Moved to 100% Net Long[...]



Bear Radar

2017-10-13T12:43:37.817-04:00

Style Underperformer: Small-Cap Growth -.1%Sector Underperformers: 1) Road & Rail -.9% 2) Utilities -.5% 3) Defense -.2%Stocks Falling on Unusual Volume: NEWT, PCG, TWNK, FRC, CNC, SSYS, AAOI, MOH, SSRM, DDD, GCP, FRC, SGH, ABEO, GLYC and VYGRStocks With Unusual Put Option Activity: 1) SRPT 2) DISH 3) MTZ 4) HUN 5) CNC Stocks With Most Negative News Mentions: 1) ATRS 2) PCG 3) TWNK 4) THC 5) MINI Charts: ETFs Falling on Unusual Volume Stocks Falling on Unusual Volume [...]



Bull Radar

2017-10-13T12:12:04.235-04:00

Style Outperformer: Mid-Cap Value +.4%Sector Outperformers: 1) Steel +4.0% 2) Computer Hardware +1.7% 3) Oil Service +1.5% Stocks Rising on Unusual Volume:SOHU, FARO, CEVA, SPAR, EQGP, MON, HMNY, XRF, BOX, HPQ, ULTA, MT, HUN, NFLX, ACLS, UNVR, JLL, LCI, X, TSE, RE, UN, LN, NEP, RDUS, ADS, IONS, VIAB and HUNStocks With Unusual Call Option Activity: 1) VIAB 2) OCN 3) BOX 4) CMCSA 5) THC Stocks With Most Positive News Mentions: 1) HPQ 2) ORIG 3) MOS 4) ETH 5) NVDA Charts: ETFs Rising on Unusual Volume Stocks Rising on Unusual Volume [...]



Morning Market Internals

2017-10-13T10:56:18.235-04:00

NYSE Composite Index:
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Friday Watch

2017-10-12T21:06:42.408-04:00

Night Trading Asian equity indices are unch. to +.25% on average.Asia Ex-Japan Investment Grade CDS Index 77.50 -.5 basis point.  Asia Pacific Sovereign CDS Index 16.0 -.25 basis point.Bloomberg Emerging Markets Currency Index 73.67 +.01%. S&P 500 futures -.03%. NASDAQ 100 futures -.04%. Morning Preview Links Earnings of Note Company/Estimate (BAC)/.45(DFRG)/-.01(JBHT)/.97(PNC)/2.13(WFC)/1.03 Economic Releases  8:30 am ESTThe CPI MoM for September is estimated to rise +.6% versus a +.4% gain in August. The CPI Ex Food and Energy MoM for September is estimated to rise +.2% versus a +.2% gain in August.Real Avg. Weekly Earnings YoY for Sept.Retail Sales Advance MoM for September are estimated to rise +1.7% versus a -.2% decline in August.Retail Sales Ex Autos MoM for September is estimated to rise +.9% versus a +.2% gain in August.Retail Sales Ex Autos and Gas  for September is estimated to rise +.4% versus a -.1% decline in August.10:00 am ESTPreliminary Univ. of Mich. Consumer Sentiment for October is estimated to fall to 95.0 versus 95.1 in September.Business Inventories for August are estimated to rise +.7% versus a +.2% gain in July.Upcoming Splits None of noteOther Potential Market Movers The Fed's Rosengren speaking, Fed's Evans speaking, Fed's Kaplan speaking, Fed's Powell speaking, China Trade Balance report and the (SAFM) investor event could also impact trading today.BOTTOM LINE:  Asian indices are slightly higher, boosted by commodity and consumer shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 75% net long heading into the day.[...]



Stocks Slightly Lower into Final Hour on Earnings Concerns, Oil Decline, Profit-Taking, Retail/Oil Service Sector Weakness

2017-10-12T15:34:44.850-04:00

Broad Equity Market Tone:Advance/Decline Line: About EvenSector Performance: MixedVolume: Above Average Market Leading Stocks: Performing In LineEquity Investor Angst:Volatility(VIX) 9.96 +1.12% Euro/Yen Carry Return Index 138.48 -.47% Emerging Markets Currency Volatility(VXY) 8.16 -.73% S&P 500 Implied Correlation 17.0 +1.74%ISE Sentiment Index 76.0 -2.56%Total Put/Call 1.02 +14.61% NYSE Arms 1.84 +40.69% Credit Investor Angst:North American Investment Grade CDS Index 55.40 +1.39% America Energy Sector High-Yield CDS Index 401.0 -.01%European Financial Sector CDS Index 59.20 +.39%Western Europe Sovereign Debt CDS Index 4.88 -.81%Asia Pacific Sovereign Debt CDS Index 16.26 -.98%Emerging Market CDS Index 177.18 -1.43%iBoxx Offshore RMB China Corporate High Yield Index 142.24 -.05%2-Year Swap Spread 25.75 -2.0 basis points TED Spread 28.75 +1.75 basis points3-Month EUR/USD Cross-Currency Basis Swap -41.50 +.5 basis pointEconomic Gauges:Bloomberg Emerging Markets Currency Index 73.72 +.08% 3-Month T-Bill Yield 1.07% -2.0 basis pointsYield Curve 81.0 -1.5 basis points China Import Iron Ore Spot $60.09/Metric Tonne +.74% Citi US Economic Surprise Index 7.20 +.8 pointCiti Eurozone Economic Surprise Index 55.80 +2.2 points Citi Emerging Markets Economic Surprise Index 23.40 +4.5 basis points10-Year TIPS Spread 1.89 unch.78.6% chance of Fed rate hike at Dec. 13 meeting, 79.9% chance at Jan. 31 meetingOverseas Futures:Nikkei 225 Futures: Indicating +76 open in Japan China A50 Futures: Indicating +38 open in ChinaDAX Futures: Indicating -4 open in GermanyPortfolio: Slightly Higher: On gains in my tech/medical sector longs Disclosed Trades: None Market Exposure: 100% Net Long[...]



Morning Market Internals

2017-10-12T10:20:01.319-04:00

NYSE Composite Index:
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Thursday Watch

2017-10-11T21:44:21.363-04:00

Evening HeadlinesBloomberg: Asia Stocks to Nudge Higher as Fed Seen Dovish. Investors still expect borrowing costs to rise this year, with market-implied odds of a U.S. rate hike by year-end remaining at about 75 percent, based on January 2018 fed fund futures, after the release of the minutes from the Sept. 20 policy meeting. Futures for Japanese and Hong Kong equities climbed following a fresh S&P 500 Index record. Treasuries were steady. The euro remains on course for a strong week as the immediate threat of Spain’s breakup over Catalonia’s independence bid receded. Investors will be monitoring President Trump’s speech on tax reform. Futures on the Nikkei 225 advanced 0.6 percent. Contract on Australia’s S&P/ASX 200 Index were flat, while Hang Seng Index futures rose 0.2 percent. Five Things You Need to Know to Start Your Day. (video)Trump Promises Benefits for Millions of Americans From Tax Plan. (video)Goldman(GS) Has a New Way for You to Bet on the Next Banking Crisis. Less than a decade after the last major banking crisis, Goldman Sachs Group Inc. and JPMorgan Chase & Co. are offering investors a new way to bet on the next one. The two financial giants are now offering trades in derivatives that enable investors to bet on or against high-risk bank bonds that financial regulators can wipe out if a lender runs into trouble. Others are also planning to start making markets in the contracts, known as total-return swaps, in the coming weeks, according to Max Ruscher, the London-based director of credit indexes at IHS Markit Ltd., which administers the benchmarks that the swaps are linked to.The Daily Prophet: Rejoice, the 'Market of Stocks' Has Returned. According to the strategists at DataTrek, the correlation between the S&P 500 Index and the 10 market sectors outside of tech has dropped to 37 percent, which is a decade low. To DataTrek, that means it's gone back to being a more healthy "market of stocks" instead of simply "a stock market."Wall Street Journal: Trump Says Separate Trade Pacts With Canada, Mexico Could Replace Nafta. U.S. president says his administration wants to remake the accord but will terminate it if that’s not possible.Beijing Pushes for a Direct Hand in China’s Big Tech Firms. Government regulators have discussed stakes in Tencent, Weibo and an Alibaba subsidiary.Fox News: Cara Delevingne: Harvey Weinstein wanted a three-way in hotel room, tried to kiss me.Trump and Mattis team up to refute NBC nuke report, blast 'disgusting' press. (video)CNBC: Why Amazon's(AMZN) No. 1 rival, Wal-Mart(WMT), isn't done going higher.Here comes earnings season: These 10 stocks are going to beat the Street, investors say.Brace for higher orange prices as USDA expected to forecast smallest crop since 1940s.Wilbur Ross says Trump administration does not want to walk away from NAFTA.Zero Hedge:  It's Not Just The Markets: Economic Volatility Tumbles To 50 Year Lows. (graph)Soda Tax Fizzles In Chicago As Cook County Officials Cast Decisive 15-1 Repeal Vote.Illinois Debt Crisis Deepens As Comptroller Admits No Idea What True Balance Of Outstanding Bills Is.Would You Pay $2,500 For One Hour With An Equity Analyst? This I-Bank Seems To Think So...Millennials Have Never Been More In Debt, And It Is Creating A Major Risk For The Economy. (graph) O'Keefe Drops Part 2: NYT Editor Brags About Colluding With YouTube To Push Political Agenda.WTI/R[...]



Stocks Reversing Slightly Higher into Final Hour on Tax Reform Hopes, Less Eurozone Debt Angst, Oil Strength, Restaurant/Road & Rail Sector Strength

2017-10-11T15:26:22.731-04:00

Broad Equity Market Tone:Advance/Decline Line: About EvenSector Performance: MixedVolume: Below Average Market Leading Stocks: Performing In LineEquity Investor Angst:Volatility(VIX) 10.02 -.6% Euro/Yen Carry Return Index 138.94 +.35% Emerging Markets Currency Volatility(VXY) 8.23 -1.2% S&P 500 Implied Correlation 17.16 -5.1%ISE Sentiment Index 80.0 -29.82%Total Put/Call .86 +17.81% NYSE Arms 1.52 +35.5% Credit Investor Angst:North American Investment Grade CDS Index 54.64 +.72% America Energy Sector High-Yield CDS Index 399.0 +.93%European Financial Sector CDS Index 58.97 -1.04%Western Europe Sovereign Debt CDS Index 4.93 -2.38%Asia Pacific Sovereign Debt CDS Index 16.26 -2.22%Emerging Market CDS Index 177.18 -1.43%iBoxx Offshore RMB China Corporate High Yield Index 142.31 +.03%2-Year Swap Spread 27.75 unch. TED Spread 27.0 -1.5 basis points3-Month EUR/USD Cross-Currency Basis Swap -42.0 -1.5 basis pointsEconomic Gauges:Bloomberg Emerging Markets Currency Index 73.65 +.44% 3-Month T-Bill Yield 1.09% +2.0 basis pointsYield Curve 82.50 -2.25 basis points China Import Iron Ore Spot $59.65/Metric Tonne -2.23% Citi US Economic Surprise Index 6.40 +1.9 pointsCiti Eurozone Economic Surprise Index 53.60 -.1 point Citi Emerging Markets Economic Surprise Index 18.90 -1.5 basis points10-Year TIPS Spread 1.89 +1.0 basis point78.6% chance of Fed rate hike at Dec. 13 meeting, 79.9% chance at Jan. 31 meetingOverseas Futures:Nikkei 225 Futures: Indicating +120 open in Japan China A50 Futures: Indicating +30 open in ChinaDAX Futures: Indicating -3 open in GermanyPortfolio: Slightly Higher: On gains in my tech/medical sector longs Disclosed Trades: None Market Exposure: 100% Net Long[...]