Monday, December 18, 2023

Stocks Modestly Higher into Final Hour on Stable Long-Term Rates, Loose US Financial Conditions, Technical Buying, Tech/Commodity Sector Strength

Broad Equity Market Tone:

  • Advance/Decline Line: Modestly Lower
  • Sector Performance: Most Sectors Rising
  • Volume: Around Average
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • Volatility(VIX) 12.4 +1.3%
  • DJIA Intraday % Swing .55% n/a
  • Bloomberg Global Risk On/Risk Off Index 58.0 +2.5%
  • Euro/Yen Carry Return Index 167.5 +.7%
  • Emerging Markets Currency Volatility(VXY) 7.9 -.63%
  • CBOE S&P 500 Implied Correlation Index 18.8 +1.0% 
  • ISE Sentiment Index 171.0 +20.0
  • Total Put/Call .92 +18.0%
  • NYSE Arms .85 -.53% 
  • NYSE Non-Block Money Flow +$100.7M 
Credit Investor Angst:
  • North American Investment Grade CDS Index 58.0 +1.2%
  • US Energy High-Yield OAS 347.61 -.08%
  • Bloomberg TRACE # Distressed Bonds Traded 369 -5.0
  • European Financial Sector CDS Index 70.8 +4.1% 
  • Deutsche Bank Subordinated 5Y Credit Default Swap 212.72 +3.1%
  • Italian/German 10Y Yld Spread 169.0 basis points -2.0 basis points
  • Asia Ex-Japan Investment Grade CDS Index 89.94 +.86%
  • Emerging Market CDS Index 172.29 -.02%
  • Israel Sovereign CDS 109.54 +.56%
  • China Corp. High-Yield Bond USD ETF(KHYB) 23.9 -7.4%
  • 2-Year SOFR Swap Spread -19.5 basis points -.5 basis point
  • TED Spread 25.0 basis points -1.0 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -7.25 +1.75 basis points
  • MBS  5/10 Treasury Spread 147.0 +3.0 basis points
  • Bloomberg CMBS Investment Grade Bbb Average OAS 962.0 -1.0 basis point
  • Avg. Auto ABS OAS 81.0 -1.0 basis point
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 41.72 -.12%
  • 3-Month T-Bill Yield 5.38% unch.
  • China Iron Ore Spot 132.2 USD/Metric Tonne -.21%
  • Dutch TTF Nat Gas(European benchmark) 35.5 euros/megawatt-hour +7.0%
  • Citi US Economic Surprise Index 13.0 -.8 point
  • Citi Eurozone Economic Surprise Index -46.0 -4.2 points
  • Citi Emerging Markets Economic Surprise Index 19.7 -.4 point
  • S&P 500 Current Quarter EPS Growth Rate YoY(7 of 500 reporting) +12.2% -.1 percentage point
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 242.48 +.15:  Growth Rate +11.4% +.1 percentage point, P/E 19.6 +.1
  • S&P 500 Current Year Estimated Profit Margin 12.08% +1.0 basis point
  • NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) +0.0% -0.0 percentage points
  • NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 294.45 +1.17: Growth Rate +38.0% +.5 percentage point, P/E 29.6 +.4
  • Bloomberg US Financial Conditions Index .67 -1.0 basis point
  • Bloomberg Euro-Zone Financial Conditions Index .45 +5.0 basis points
  • US Yield Curve -50.75 basis points (2s/10s) +.5 basis point
  • US Atlanta Fed 4Q GDPNow Forecast +2.61% unch.
  • US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 63.1% -.7 percentage point
  • Cleveland Fed Inflation Nowcast Core PCE YoY +3.43% unch.: CPI YoY +3.38% unch.
  • 10-Year TIPS Spread 2.22 -1.0 basis point
  • Highest target rate probability for March 20th FOMC meeting: 63.4%(+.7 percentage point) chance of 5.0%-5.25%. Highest target rate probability for May 1st meeting: 55.6%(+2.7 percentage points) chance of 4.75%-5.0%.
Overseas Futures:
  • Nikkei 225 Futures: Indicating +66 open in Japan 
  • China A50 Futures: Indicating -14 open in China
  • DAX Futures: Indicating +224 open in Germany
Portfolio:
  • Higher:  On gains in my consumer discretionary/tech/industrial sector longs
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
  • Market Exposure: Moved to 100% Net Long

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