Monday, February 26, 2024

Stocks Lower into Final Hour on Higher Long-Term Rates, Diminishing Fed Rate Cut Hopes, Technical Selling, Utility/Gambling Sector Weakness

Broad Equity Market Tone:

  • Advance/Decline Line: Modestly Higher
  • Sector Performance: Mixed
  • Volume: Around Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 13.8 +.6%
  • DJIA Intraday % Swing .32 -32.6%
  • Bloomberg Global Risk On/Risk Off Index 72.1 -.3%
  • Euro/Yen Carry Return Index 176.9 +.4%
  • Emerging Markets Currency Volatility(VXY) 6.3 -1.4%
  • CBOE S&P 500 Implied Correlation Index 16.2 -1.6% 
  • ISE Sentiment Index 158.0 +2.0
  • Total Put/Call .94 -1.0%
  • NYSE Arms .72 -39.5% 
  • NYSE Non-Block Money Flow -$115.6M 
Credit Investor Angst:
  • North American Investment Grade CDS Index 52.2 +1.7%
  • US Energy High-Yield OAS 295.69 +.29%
  • Bloomberg TRACE # Distressed Bonds Traded 265 +11
  • European Financial Sector CDS Index 63.98 +1.11% 
  • Deutsche Bank Subordinated 5Y Credit Default Swap 206.7 +.18%
  • Italian/German 10Y Yld Spread 145.0 basis points +1.0 basis point
  • Asia Ex-Japan Investment Grade CDS Index 95.5 +.9%
  • Emerging Market CDS Index 167.35 +.48%
  • Israel Sovereign CDS 118.6 -.44%
  • China Corp. High-Yield Bond USD ETF(KHYB) 24.8 -.04%
  • 2-Year SOFR Swap Spread -14.0 basis points -.5 basis point
  • Treasury Repo 3M T-Bill Spread 10.5 basis points +1.0 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -5.25 +.25 basis point
  • MBS  5/10 Treasury Spread 159.0 +5.0 basis points
  • Bloomberg CMBS Investment Grade Bbb Average OAS 825.0 -11.0 basis points
  • Avg. Auto ABS OAS 66.0 +1.0 basis point
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 40.2 -.1%
  • 3-Month T-Bill Yield 5.41% +1.0 basis point
  • China Iron Ore Spot 114.1 USD/Metric Tonne -1.2%
  • Dutch TTF Nat Gas(European benchmark) 24.0 euros/megawatt-hour +4.7%
  • Citi US Economic Surprise Index 42.2 -1.6 points
  • Citi Eurozone Economic Surprise Index 44.7 +2.7 points
  • Citi Emerging Markets Economic Surprise Index -5.8 -1.5 points
  • S&P 500 Current Quarter EPS Growth Rate YoY(453 of 500 reporting) +7.1% +.3 percentage point
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 247.28 +.20:  Growth Rate +10.9% -1.0 percentage point, P/E 20.6 unch.
  • S&P 500 Current Year Estimated Profit Margin 12.84% +1.0 basis point
  • NYSE FANG+ Current Quarter EPS Growth Rate YoY(8 of 10 reporting) +57.2% unch.
  • NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 314.18 +1.03: Growth Rate +47.3% +.5 percentage point, P/E 31.9 -.1
  • Bloomberg US Financial Conditions Index 1.14 unch.
  • Bloomberg Euro-Zone Financial Conditions Index .94 +3.0 basis points
  • US Yield Curve -44.25 basis points (2s/10s) -1.25 basis points
  • US Atlanta Fed 1Q GDPNow Forecast +2.9% unch.
  • US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 52.2% +1.6 percentage points
  • Cleveland Fed Inflation Nowcast Core PCE YoY +2.74% unch.: CPI YoY +3.11% unch.
  • 10-Year TIPS Spread 2.31 +1.0 basis point
  • Highest target rate probability for May 1st FOMC meeting: 83.9%(+7.5 percentage points) chance of 5.25%-5.5%. Highest target rate probability for June 12th meeting: 51.4%(-.9 percentage point) chance of 5.0%-5.25%.
Overseas Futures:
  • Nikkei 225 Futures: Indicating +182 open in Japan 
  • China A50 Futures: Indicating -23 open in China
  • DAX Futures: Indicating +52 open in Germany
Portfolio:
  • Higher:  On gains in my industrial/biotech/consumer discretionary/tech sector longs and emerging market shorts
  • Disclosed Trades: None
  • Market Exposure: 75% Net Long

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