Stocks Modestly Higher into Final Hour on Falling Long-Term Rates, Declining Inflation Expectations, Less European/Emerging Markets/US High Yld Debt Angst, Financial/Telecom Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average
  

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 16.6 -8.2%
• DJIA Intraday % Swing .79 -8.3%
  
• Bloomberg Global Risk On/Risk Off Index 50.4 +14.6%

• Euro/Yen Carry Return Index 178.59 +.48%

• Emerging Markets Currency Volatility(VXY) 8.60 -1.7%

• CBOE S&P 500 Implied Correlation Index 16.7 -7.5% 

• ISE Sentiment Index 151.0 +13.0
  

• Total Put/Call .86 -10.4%

• NYSE Arms 1.24 +17.0%
  
• NYSE Non-Block Money Flow +$3.71M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 56.2 -2.4%
  

• US Energy High-Yield OAS 315.1 -1.1%
• Bloomberg TRACE # Distressed Bonds Traded 265 +4
  

• European Financial Sector CDS Index 67.3 -3.9%
  
• Deutsche Bank Subordinated 5Y Credit Default Swap 178.1 -2.6%
  

• Italian/German 10Y Yld Spread 138.0 basis points -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 101.1 -1.1%
  

• Emerging Market CDS Index 174.4 -1.8%
  
• Israel Sovereign CDS 143.9 +.01%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.9 unch.

• 2-Year SOFR Swap Spread -20.5 basis points +.5 basis point
  

• Treasury Repo 3M T-Bill Spread -13.75 basis points +1.0 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -2.25 +.25 basis point
  
• MBS  5/10 Treasury Spread 143.0 -3.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 710.0 +1.0 basis point
  
• Avg. Auto ABS OAS 66.0 +2.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 39.07 +.16%
• 3-Month T-Bill Yield 5.20% +2.0 basis points
  

• China Iron Ore Spot 95.6 USD/Metric Tonne -.05%
• Dutch TTF Nat Gas(European benchmark) 39.0 euros/megawatt-hour -1.3%

• Citi US Economic Surprise Index -31.0 +.1 point

• Citi Eurozone Economic Surprise Index -59.0 -1.8 points

• Citi Emerging Markets Economic Surprise Index -9.9 +1.0 point
• S&P 500 Current Quarter EPS Growth Rate YoY(457 of 500 reporting) +9.2% unch.
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 264.18 -.19:  Growth Rate +15.8% -.1 percentage point, P/E 20.7 +.3
  
• S&P 500 Current Year Estimated Profit Margin 12.73% -1.0 basis point
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +26.3% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 342.16 -.06: Growth Rate +27.6% unch., P/E 32.1 +.04
  
• Bloomberg US Financial Conditions Index .61 +6.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index .64 +3.0 basis points
  
• US Yield Curve -13.0 basis points (2s/10s) -2.25 basis points
  
• US Atlanta Fed 3Q GDPNow Forecast +2.91% unch.
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 73.1% +3.3 percentage points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.64% -9.0 basis points: CPI YoY +2.60% -41.0 basis points
  
• 10-Year TIPS Spread 2.08 -2.0 basis points
  
• Highest target rate probability for Nov. 7th FOMC meeting: 46.0%(-4.8 percentage points) chance of 4.5%-4.75%. Highest target rate probability for Dec. 18th meeting: 44.0%(+1.5 percentage points) chance of 4.25%-4.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -117 open in Japan 
• China A50 Futures: Indicating -55 open in China

• DAX Futures: Indicating +80 open in Germany

Portfolio:

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

• Disclosed Trades: None
  

• Market Exposure: 75% Net Long