Monday, January 08, 2024

Stocks Close at Session Highs on US Economic "Soft-Landing" Hopes, Lower Long-Term Rates, Short-Covering, Tech/Biotech Sector Strength

Broad Equity Market Tone:

  • Advance/Decline Line: Substantially Higher
  • Sector Performance: Most Sectors Rising
  • Volume: Around Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 13.3 -.7%
  • DJIA Intraday % Swing .58% -27.7%
  • Bloomberg Global Risk On/Risk Off Index 57.2 -2.0%
  • Euro/Yen Carry Return Index 169.88 -.19%
  • Emerging Markets Currency Volatility(VXY) 7.79 -1.6%
  • CBOE S&P 500 Implied Correlation Index 19.5 -4.9% 
  • ISE Sentiment Index 109.0 -36.0
  • Total Put/Call .81 -33.0%
  • NYSE Arms 1.49 +129.2% 
  • NYSE Non-Block Money Flow +$144.1M 
Credit Investor Angst:
  • North American Investment Grade CDS Index 57.69 -3.1%
  • US Energy High-Yield OAS 341.33 -1.5%
  • Bloomberg TRACE # Distressed Bonds Traded 298 +1
  • European Financial Sector CDS Index 72.96 +.4% 
  • Deutsche Bank Subordinated 5Y Credit Default Swap 222.5 -.45%
  • Italian/German 10Y Yld Spread 168.0 basis points -2.0 basis points
  • Asia Ex-Japan Investment Grade CDS Index 104.1 +2.0%
  • Emerging Market CDS Index 181.92 -.03%
  • Israel Sovereign CDS 113.68 +.76%
  • China Corp. High-Yield Bond USD ETF(KHYB) 24.24 unch.
  • 2-Year SOFR Swap Spread -15.0 basis points +1.75 basis points
  • TED Spread 22.5 basis points +.25 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -3.5 +1.0 basis point
  • MBS  5/10 Treasury Spread 145.0 -4.0 basis points
  • Bloomberg CMBS Investment Grade Bbb Average OAS 966.0 unch.
  • Avg. Auto ABS OAS 74.0 -1.0 basis point
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 41.3 -.11%
  • 3-Month T-Bill Yield 5.37% -1.0 basis point
  • China Iron Ore Spot 137.5 USD/Metric Tonne -.36%
  • Dutch TTF Nat Gas(European benchmark) 31.6 euros/megawatt-hour -8.6%
  • Citi US Economic Surprise Index 5.9 -.2 point
  • Citi Eurozone Economic Surprise Index -17.4 +13.9 points
  • Citi Emerging Markets Economic Surprise Index 17.5 +2.0 points
  • S&P 500 Current Quarter EPS Growth Rate YoY(21 of 500 reporting) +9.1% unch.
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 243.63 +.15:  Growth Rate +12.0% +.1 percentage point, P/E 19.4 +.1
  • S&P 500 Current Year Estimated Profit Margin 12.05% +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 290.37 +.34: Growth Rate +36.1% +.1 percentage point, P/E 29.5 +.4
  • Bloomberg US Financial Conditions Index n/a
  • Bloomberg Euro-Zone Financial Conditions Index .39 -1.0 basis point
  • US Yield Curve -35.5 basis points (2s/10s) unch.
  • US Atlanta Fed 4Q GDPNow Forecast +2.51% unch.
  • US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 64.2% +1.2 percentage points
  • Cleveland Fed Inflation Nowcast Core PCE YoY +3.02% unch.: CPI YoY +3.32% unch.
  • 10-Year TIPS Spread 2.23 unch.
  • Highest target rate probability for March 20th FOMC meeting: 60.9%(-1.2 percentage points) chance of 5.0%-5.25%. Highest target rate probability for May 1st meeting: 51.1%(-2.1 percentage points) chance of 4.75%-5.0%.
Overseas Futures:
  • Nikkei 225 Futures: Indicating +538 open in Japan 
  • China A50 Futures: Indicating +22 open in China
  • DAX Futures: Indicating +127 open in Germany
Portfolio:
  • Higher:  On gains in my tech/consumer discretionary/biotech/utility/transport sector longs
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my emerging market shorts
  • Market Exposure: Moved to 75% Net Long

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