Stocks Modestly Lower into Final Hour on Rising Long-Term Rates, Escalating US Government Shutdown Concerns, Technical Selling, Energy/Gambling Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 14.2 +1.4%
• DJIA Intraday % Swing .75%
  
• Bloomberg Global Risk On/Risk Off Index 73.4 +.6%

• Euro/Yen Carry Return Index 167.7 -1.1%

• Emerging Markets Currency Volatility(VXY) 8.3 -1.1%

• CBOE S&P 500 Implied Correlation Index 21.3 +1.1% 

• ISE Sentiment Index 102.0 +12.0 points
  

• Total Put/Call .91 -16.5%

• NYSE Arms 1.06 -31.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 63.3 +.32%
  

• US Energy High-Yield OAS 310.48 -.01%
• Bloomberg TRACE # Distressed Bonds Traded 337.0 -18
  

• European Financial Sector CDS Index 69.66 +.57% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 264.2 -.85%
  

• Italian/German 10Y Yld Spread 178.0 basis points -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 116.7 -.4%
  

• Emerging Market CDS Index 199.8 -2.6%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.0 +.12%

• 2-Year SOFR Swap Spread -10.5 basis points +.25 basis point
  

• TED Spread 21.25 basis points +.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -9.5 -.5 basis point
  
• MBS  5/10 Treasury Spread 163.0 -1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 906.0 -3.0 basis points
  
• Avg. Auto ABS OAS 77.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 42.2 -.14%
• 3-Month T-Bill Yield 5.45% -1.0 basis point
  

• China Iron Ore Spot 121.2 USD/Metric Tonne +.81%
• Dutch TTF Nat Gas(European benchmark) 36.8 euros/megawatt-hour +6.7%

• Citi US Economic Surprise Index 57.5 -2.1 points

• Citi Eurozone Economic Surprise Index -58.0 +3.8 points

• Citi Emerging Markets Economic Surprise Index 12.6 -.6 point
• S&P 500 Current Quarter EPS Growth Rate YoY(4 of 500 reporting) +7.2% unch.
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 239.40 +.27:  Growth Rate +8.9% +.1 percentage point, P/E 18.5 -.2
  
• S&P 500 Current Year Estimated Profit Margin 12.15% +2.0 basis points
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 262.21 +14.67: Growth Rate +58.1% +8.8 percentage points, P/E 29.0 -2.1
  
• Bloomberg US Financial Conditions Index .50 +1.0 basis point
  
• Bloomberg Euro-Zone Financial Conditions Index .34 -12.0 basis points
  
• US Yield Curve -74.25 basis points (2s/10s) +.25 basis point
  
• US Atlanta Fed 2Q GDPNow Forecast +4.86% -8.0 basis pionts
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.95% unch.: CPI YoY +3.69% +3.0 basis points
  
• 10-Year TIPS Spread 2.37 +1.0 basis point
  
• Highest target rate probability for Nov. 1st FOMC meeting: 70.8%(+5.6 percentage points) chance of 5.25%-5.5%. Highest target rate probability for Dec. 13th meeting: 59.8%(+1.5 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -117 open in Japan 
• China A50 Futures: Indicating -18 open in China

• DAX Futures: Indicating +190 open in Germany

Portfolio:

• Slightly Higher:  On gains in my tech/medical sector longs, index hedges and emerging market shorts
  

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

• Market Exposure: Moved to 75% Net Long