Friday Watch

Night Trading 

• Asian equity indices are -1.5% to -.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 84.5 -2.0 basis points.

• China Sovereign CDS 46.5 unch.
  

• Bloomberg Emerging Markets Currency Index 58.68 unch. 
• Bloomberg Global Risk-On/Risk Off Index 2,699.0 -145.0 points.
• Volatility Index(VIX) futures 23.3 -1.6%.
• FTSE 100 futures -.34%.

• S&P 500 futures +.24%

• NASDAQ 100 futures +.28%. 

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

• Personal Income for Aug. is estimated to rise +.2% versus a +1.1% gain in July.
• Personal Spending for Aug. is estimated to rise +.6% versus a +.3% gain in July. 
• The PCE Core MoM for Aug. is estimated to rise +.2% versus a +.3% gain in July.
  

10:00 am EST

• Construction Spending MoM for Aug. is estimated to rise +.3% versus a +.3% gain in July.
• ISM Manufacturing for Sept. is estimated to fall to 59.5 versus 59.9 in Aug.
• ISM Prices Paid for Sept. is estimated to fall to 78.5 versus 79.4 in Aug.
  

Afternoon:

• Wards Total Vehicle Sales for Sept. is estimated to fall to 13.0M versus 13.06M in Aug.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The China Manufacturing PMI report and the Eurozone PMI report could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are lower, weighed down by commodity and financial 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 Lower into Afternoon on Policy-Induced Labor/Supply Shortages, Less Dovish Fed Commentary, Dollar Strength, Retail/Homebuilding Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Slightly Higher
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 23.2 +3.0%
• Bloomberg Global Risk On/Risk Off Index 2,869.0 -28.0 points

• Euro/Yen Carry Return Index 133.03 -.74%

• Emerging Markets Currency Volatility(VXY) 8.9 -.45%.

• S&P 500 Implied Correlation 57.6 -.05%

• ISE Sentiment Index 65.0  -37.0 points
  

• Total Put/Call 1.05 +12.9%

• NYSE Arms .92 -14.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 52.62 +.9%
  

• US Energy High-Yield OAS 377.84 +.48%

• European Financial Sector CDS Index 56.47 +.36%

• Italian/German 10Y Yld Spread 106.0 +2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 85.0 -1.9%
  

• Emerging Market CDS Index 181.52 +.6%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 36.84 +.14%

• 2-Year Swap Spread 10.0 +1.5 basis points
  

• TED Spread 10.25 unch.
  

• 3-Month EUR/USD Cross-Currency Basis Swap -15.25 +1.5 basis points
  
• MBS  5/10 Treasury Spread  70.75 -1.5 basis points
  
• IHS Markit CMBX BBB- 6 71.75 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 58.63 +.01%
• 3-Month T-Bill Yield .03% unch.
  

• Yield Curve 122.0 -1.0 basis point
  

• China Iron Ore Spot 116.85 USD/Metric Tonne -3.1%

• Citi US Economic Surprise Index -33.2 +1.4 points

• Citi Eurozone Economic Surprise Index -58.6 +.2 point
  

• Citi Emerging Markets Economic Surprise Index 1.7 +3.0 points

• 10-Year TIPS Spread 2.38 unch.
• 99.5% chance of no change at Dec. 15th meeting, 97.1% chance of no change at Jan. 26th meeting

US Covid-19:

• 242 new infections/100K people(last 7 days total) -4/100K people
• 45% of Jan. 7th, 2021 peak(highest daily avg. new infections) -1.0 percentage point
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +28 open in Japan 
• China A50 Futures: Indicating -37 open in China

• DAX Futures: Indicating -4 open in Germany

Portfolio:

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

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges, then covered some of them
  

• Market Exposure: 50% Net Long
  

Bear Radar

 Style Underperformer:

• Mid-Cap Value -1.0%

Sector Underperformers:

• 1) Retail -4.2% 2) Homebuilding -2.3% 3) Airlines -1.9%

Stocks Falling on Unusual Volume: 

• TROW, SUM, UNFI, UAA, EDIT, CHPT, PRPL, LCID, THO, RH, RL, MLHR, MAT, WW, ATKR, LPI, TPR, DKS, DMYI, DLTR, W, OSTK, LAD, SAH, BOOT, TGNA, NWL, MO, HBI, DBI, WSM, GPS, ALHC, BIG, GTHX, ALT, M, JWN, TIL, CRCT, DDS, KMX, CCXI, AGFY, BGFV, KSS, IRNT and BBBY
  

Stocks With Unusual Put Option Activity:

• 1) DLTR 2) BBBY 3) KSS 4) XHB 5) KMX
  

Stocks With Most Negative News Mentions:

• 1) KSS 2) PETZ 3) KMX 4) LNDC 5) VLTA
  

Charts:

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

Bull Radar

 Style Outperformer:

• Mid-Cap Growth -.4%

Sector Outperformers:

• 1) Gold & Silver +2.0% 2) Video Gaming +1.3% 3) Social Media +1.1%

Stocks Rising on Unusual Volume:

• AVIR, INDI, ANGO, SPCE, AMTX, GOGO, EVH, ATUS, ARCB, PAYX, APR, ARLP, MBI and NAVI
  

Stocks With Unusual Call Option Activity:

• 1) SKX 2) NXTD 3) XLRN 4) BBBY 5) KMX

Stocks With Most Positive News Mentions:

• 1) SPCE 2) PRGO 3) BWEN 4) PAYX 5) ARCB
  

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -3.9% Below 100-Day Average 
• 0 Sectors Rising, 11 Sectors Declining
• 39.9% of Issues Advancing, 56.3% Declining
• 33 New 52-Week Highs, 45 New Lows
• 59.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 44.2%
  
• Bloomberg Global Risk-On/Risk-Off Index 2,963.0 +64.0 points
• Russell 1000: Growth/Value 17,467 +.51%
  
• Vix 22.1 -2.0%
• Total Put/Call 1.09 +17.2%
• TRIN/Arms .88 -18.5%

Thursday Watch

Evening Headlines

Bloomberg:              

• What Investors Are Saying About China's Crackdown.  
• An Obscure Chinese Mining Law Is Hobbling Global Energy Security.
• China’s Boozy Work Culture Fuels #MeToo Outcry at Alibaba, Didi.  
• Asian Stocks Open Steady; Treasury Yields Slip: Markets Wrap.
• Dollar at Highest Since November as Rally Extends to Four Days.
• Five Things You Need to Know to Start your Day.
• ‘Most Americans Today Believe the Stock Market Is Rigged, and They’re Right’.
• Biden Rushes to Rescue Agenda as Democrats Splinter on Cost.  
• U.S. Covid Recovery Spreads as Prospects Improve in 47 States.  
• U.S. Rents Are Increasing at ‘Shocking’ Rates of More Than 10%.  
• Bond Traders Are Skeptical of Bostic’s Steeper Yield-Curve Call.

Wall Street Journal:     

• North Korea Sees U.S. as Ongoing Threat, Kim Jong Un Says.
• U.S. Economy Is Expected to Pick Up Speed After Delta-Driven Downturn.
• Judge Rodney Gilstrap Sets an Unwanted Record: Most Cases With Financial Conflicts.  
• Biden’s Energy Price Shock.

Fox News:  

• Manchin refuses to fall in line with Biden's spending splurge, rails against party's push for 'fiscal insanity'.
• Biden team ripped as 'economically illiterate' for claim Build Back Better 'costs zero dollars'.
• Dems set to ram through nominee with controversial view on population control.
  

CNBC.com:  

• Evolent Health stock jumps after report of possible Walgreens takeover.
• Fed Chair Powell calls inflation ‘frustrating’ and sees it running into next year.
• We asked 3 major investors what happens next in the market — none of them see big returns.
• Warby Parker opens at $54.05 per share in public debut on NYSE, soaring 30% above reference price.
• House will vote on a debt ceiling suspension that is doomed in the Senate.

MarketWatch.com:             

• Opinion: Congress is about to put a brake on this popular retirement-account tax maneuver  
• Plastics tax pushed by Democrats as party debates $3.5 trillion budget bill  
• Sending mail is about to get slower and pricier just in time for the holidays.  
• More than a quarter of Nasdaq-100 stocks are in bear markets — Wall Street sees a buying opportunity.

Zero Hedge:

• Manchin Slams Dem Spending Plan As "Definition Of Fiscal Insanity", Will Not "Reengineer Social Fabric" With 'Vengeful' Taxation. 
• Fox Guarding The Henhouse? Yes, Indeed!
• A Dose Of Reality About Crime In America.
• Kemp: China's Electricity Crisis Caused By Coal Shortage.
• Dems Propose Subsidized 20-Year Mortgages For First-Generation Homebuyers.
• Republicans Warn DHS Is Planning To Fire Unvaxx'd Border Patrol Agents.
• Michigan Couple Dies Of COVID Within Minutes Of Each Other Despite Being Fully Vaccinated.
• An NBA Star & New York's Governor Show That Liberal COVID Discourse Is Devoid Of Science.
• Washington Worries Spark Dollar Buying-Panic; Bitcoin & Bullion Dive.
• Will ESG Create The Next Lehman Moment...???
• Biden Breaks The Buck: Dollar Tree Forced To Hike Prices Amid Soaring Inflation.
• Kamala Harris Under Fire For Nodding In Affirmation As Student Accuses Israel Of "Ethnic Genocide".
• Biden's Vax Mandate To Be Enforced By Fining Companies $70,000 To $700,000?
• "It's A F**king Kid": Johnson & Johnson Official Says Children Shouldn't Get Vax Due To 'Unknown Repercussions'.
• Natgas Drops 7% On Warmer Forecasts, Largest One-Day Decline Since January.
• Senate Will Vote To Avert Shutdown; Pelosi Reschedules Infrastructure Vote After Progressives Refuse To Budge.
• Biden Agrees With Obama That "Open Borders Are Unsustainable": Psaki.

NBC News: 

• More than 20,000 Haitians are gathered in Colombia for possible migration to U.S.

New York Times: 

• Covid on the Border: Migrants Aren’t Tested on Arrival in U.S. The Border Patrol says it has insufficient time and space to conduct coronavirus testing at crowded processing stations. Officials in border cities fear further spread of the virus.
  

ContagionLive:

• Immunity, Spike Immunoglobin G Antibodies, and Healthcare Workers. Fortunately, this study sheds some positive light on how durable spike antibodies are following a natural infection with SARS-CoV-2. Ten months as a time for protection against reinfection is a helpful data point to work with regarding public health guidance and recommendations. The authors noted that we should consider prioritizing vaccines for those without measurable antibodies...

Forbes: 

• Hospitals Begin Firing Staffers Who Refuse Covid Vaccines — Leading Some To Fear Staffing Shortages.

Newsmax:

• Milley: ‘Real Possibility’ of Al-Qaeda or ISIS Renewal in Afghanistan by Spring.
• Sen. Sullivan: Generals' Testimony Exposes Biden's Lies on Afghanistan.
• Rep. Fallon: Biden Lying About Pulling Troops from Afghanistan.
• Poll: Half of US Not Confident COVID Vaccines Suitable for Children.

TheGatewayPundit.com:

• Unvaccinated Students Ordered to Wear Armbands So They Can Be Identified.
• Former Notre Dame Professor Who Said, “Damn the Unvaccinated” Dies Two Weeks After Receiving 3rd Covid Shot. 
• New South Wales Premier Says Unvaccinated Sydney Residents Face Total Social Isolation *Indefinitely* When Covid Lockdown Ends (VIDEO). 
• Ron DeSantis on Australia: “That’s Not a Free Country… Is Australia Freer than Communist China Right Now? I Don’t Know” (VIDEO).
• Breaking: Google-YouTube to Ban ANY CLAIMS that “Vaccines are Ineffective or Dangerous” despite the Death Numbers – Suspends Robert F. Kennedy’s Account.
• Pelosi on Biden’s $3.5 Trillion Tax-and-Spend Spree: “It’s Not About a Dollar Amount… the Dollar Amount, as the President Said, is Zero” (VIDEO).
• Outrageous! Biden State Dept. Refuses Entry of Private Rescue Flight of 28 Americans and 83 Green Card Members from Afghanistan.
• EXCLUSIVE: Was a Chinese Army Sergeant a Casualty of a COVID-19 Test Release?
• Investigation Finds WHO Employees Raped or Sexually Abused Dozens of Women During Congo Ebola Crisis; Higher-ups “Were Aware” of the Rampant Abuse “But Did Not Act”.

Covid-19(Data, Maps, Graphs):

• Our World in Data:  New Global Covid-19 Cases(7-day rolling average graphs). New US Covid Hospital Admissions/ICU Admissions/Deaths
  
• FT.com:  Fully Vaccinated by Country(graph). Global Lockdown Stringency Index(map).
• Bloomberg.com:  International Travel Restrictions.  Case Graphs by State.
  
• NYTimes.com:  County Trends and Clusters. Local ICU Occupancy.
  
• Brown School of Public Health:  Covid Severity by State/County(map).  US Hospital Capacity(region).
  
• CovidActNow:  Covid Severity/Infection Rate by Metro Area.
  
• KFF:  US Vaccinations by Race/Ethnicity.
  
• Carnegie Mellon: Covid-Like Symptoms in Community. Covid Symptom Searches on Google. Covid-Related Dr.Visits.  Restaurant Visits. Wearing Masks. (graphs)
  
• Safegraph.com:  Commerce Patterns(graphs).

Night Trading 

• Asian equity indices are -.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 86.5 -.75 basis point.

• China Sovereign CDS 46.5 -.75 basis point.
  

• Bloomberg Emerging Markets Currency Index 58.63 +.01% 
• Bloomberg Global Risk-On/Risk Off Index 2,830.0 -67.0 points.
• Volatility Index(VIX) futures 22.5 -2.4%.
• FTSE 100 futures +.06%.

• S&P 500 futures +.38%

• NASDAQ 100 futures +.49%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (ANGO)/-.05
• (BBBY)/.52
• (KMX)/1.87
• (MKC)/.72
• (PAYX)/.80
  

After the Close:

• (JEF)/.99

Economic Releases

8:30 am EST

• Initial Jobless Claims for last week are estimated to fall to 330K versus 351K the prior week.
• Continuing Claims are estimated to fall to 2800K versus 2845K prior.
  

9:45 am EST

• The MNI Chicago PMI for Sept. is estimated to fall to 65.0 versus 66.8 in Aug.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Powell/Treasury Secretary Yellen's testimony to the House, US government funding deadline, China Services PMI report, weekly Langer Consumer Comfort Index and the weekly EIA natural gas inventory report could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and industrial 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 Rising into Final Hour on Stable Long-Term Rates, Declining US Covid Cases, Bargain-Hunting, Food/Utility Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 23.2 -.3%
• Bloomberg Global Risk On/Risk Off Index 2,803.0 -92.0 points

• Euro/Yen Carry Return Index 134.08 -.27%

• Emerging Markets Currency Volatility(VXY) 8.9 +.11%.

• S&P 500 Implied Correlation 57.9 +3.2%

• ISE Sentiment Index 119.0  +43.0 points
  

• Total Put/Call .89 -16.8%

• NYSE Arms 1.07 +13.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 51.83 -.17%
  

• US Energy High-Yield OAS 374.67 -.19%

• European Financial Sector CDS Index 56.27 -.78%

• Italian/German 10Y Yld Spread 104.0 -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 86.56 -.9%
  

• Emerging Market CDS Index 180.03 -.67%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 36.92 -.01%

• 2-Year Swap Spread 8.5 -.25 basis point
  

• TED Spread 10.25 unch.
  

• 3-Month EUR/USD Cross-Currency Basis Swap -16.75 -13.75 basis points
  
• MBS  5/10 Treasury Spread  72.25 -.25 basis point
  
• IHS Markit CMBX BBB- 6 71.75 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 58.59 -.37%
• 3-Month T-Bill Yield .03% unch.
  

• Yield Curve 123.0 +1.0 basis point
  

• China Iron Ore Spot 120.45 USD/Metric Tonne +5.8%

• Citi US Economic Surprise Index -34.6 +.1 point

• Citi Eurozone Economic Surprise Index -58.8 +4.1 points
  

• Citi Emerging Markets Economic Surprise Index -1.3 -.2 point

• 10-Year TIPS Spread 2.38 -1.0 basis point
• 100.0% chance of no change at Dec. 15th meeting, 100.0% chance of no change at Jan. 26th meeting

US Covid-19:

• 246 new infections/100K people(last 7 days total) -4/100K people
• 46% of Jan. 7th, 2021 peak(highest daily avg. new infections) -1.0 percentage point
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +286 open in Japan 
• China A50 Futures: Indicating -38 open in China

• DAX Futures: Indicating -13 open in Germany

Portfolio:

• Slightly Higher: On gains in my tech/biotech/medical/consumer discretionary/industrial sector longs
  

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
  

• Market Exposure: Moved to 75% Net Long