Wednesday, February 28, 2024

Stocks Modestly Lower into Final Hour on China Economy Worries, Sector Rotation, Technical Selling, Biotech/Healthcare Sector Weakness

Broad Equity Market Tone:

  • Advance/Decline Line: Lower
  • Sector Performance: Mixed
  • Volume: Around Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 13.8 +2.5%
  • DJIA Intraday % Swing .51 -2.7%
  • Bloomberg Global Risk On/Risk Off Index 72.0 -1.8%
  • Euro/Yen Carry Return Index 176.7 +.04%
  • Emerging Markets Currency Volatility(VXY) 6.3 +.8%
  • CBOE S&P 500 Implied Correlation Index 16.2 +3.7% 
  • ISE Sentiment Index 158.0 -7.0
  • Total Put/Call .82 -14.6%
  • NYSE Arms 1.19 +88.9% 
  • NYSE Non-Block Money Flow -$200.3M 
Credit Investor Angst:
  • North American Investment Grade CDS Index 52.6 +1.2%
  • US Energy High-Yield OAS 304.3 +1.5%
  • Bloomberg TRACE # Distressed Bonds Traded 279 +13
  • European Financial Sector CDS Index 65.04 -.08% 
  • Deutsche Bank Subordinated 5Y Credit Default Swap 209.5 +.18%
  • Italian/German 10Y Yld Spread 143.0 basis points -1.0 basis point
  • Asia Ex-Japan Investment Grade CDS Index 98.2 +.7%
  • Emerging Market CDS Index 168.18 -.27%
  • Israel Sovereign CDS 120.2 -.27%
  • China Corp. High-Yield Bond USD ETF(KHYB) 24.6 -.04%
  • 2-Year SOFR Swap Spread -10.25 basis points +.25 basis point
  • Treasury Repo 3M T-Bill Spread 9.5 basis points +2.0 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -5.5 unch.
  • MBS  5/10 Treasury Spread 156.0 -2.0 basis points
  • Bloomberg CMBS Investment Grade Bbb Average OAS 826.0 -2.0 basis points
  • Avg. Auto ABS OAS 64.0 -2.0 basis points
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 40.2 -.17%
  • 3-Month T-Bill Yield 5.39% +1.0 basis point
  • China Iron Ore Spot 115.15 USD/Metric Tonne -.8%
  • Dutch TTF Nat Gas(European benchmark) 25.6 euros/megawatt-hour +5.0%
  • Citi US Economic Surprise Index 37.8 -.5 point
  • Citi Eurozone Economic Surprise Index 35.2 -11.9 points
  • Citi Emerging Markets Economic Surprise Index -3.8 -.5 point
  • S&P 500 Current Quarter EPS Growth Rate YoY(476 of 500 reporting) +7.7% +.3 percentage point
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 246.97 -.55:  Growth Rate +10.8% -.2 percentage point, P/E 20.6 +.1
  • S&P 500 Current Year Estimated Profit Margin 12.84% unch.
  • NYSE FANG+ Current Quarter EPS Growth Rate YoY(8 of 10 reporting) +57.2% unch.
  • NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 314.63 -.11: Growth Rate +47.5% -.1 percentage point, P/E 31.8 -.1
  • Bloomberg US Financial Conditions Index 1.13 -1.0 basis point
  • Bloomberg Euro-Zone Financial Conditions Index .92 unch.
  • US Yield Curve -38.5 basis points (2s/10s) +1.0 basis point
  • US Atlanta Fed 1Q GDPNow Forecast +3.3% unch.
  • US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 52.4% +.9 percentage point
  • Cleveland Fed Inflation Nowcast Core PCE YoY +2.74% unch.: CPI YoY +3.12% unch.
  • 10-Year TIPS Spread 2.33 +1.0 basis point
  • Highest target rate probability for May 1st FOMC meeting: 80.7%(-3.1 percentage points) chance of 5.25%-5.5%. Highest target rate probability for June 12th meeting: 52.8%(+1.1 percentage points) chance of 5.0%-5.25%.
Overseas Futures:
  • Nikkei 225 Futures: Indicating -145 open in Japan 
  • China A50 Futures: Indicating -12 open in China
  • DAX Futures: Indicating +43 open in Germany
Portfolio:
  • Slightly Higher:  On gains in my consumer discretionary/industrial sector longs and emerging market shorts
  • Disclosed Trades: None
  • Market Exposure: 75% Net Long

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