Stocks Reversing Higher into Afternoon on Lower Long-Term Rates, Dovish Fed Commentary, Earnings Outlook Optimism, Consumer Discretionary/Alt Energy Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Below Average
  

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 16.8 +5.5%
• DJIA Intraday % Swing .58 +79.1%
  
• Bloomberg Global Risk On/Risk Off Index 50.9 -2.0%

• Euro/Yen Carry Return Index 178.4 +.1%

• Emerging Markets Currency Volatility(VXY) 8.7 +1.5%

• CBOE S&P 500 Implied Correlation Index 14.8 +6.3% 

• ISE Sentiment Index 157.0 -4.0
  

• Total Put/Call .83 +1.2%

• NYSE Arms 1.18 -23.9%
  
• NYSE Non-Block Money Flow +$255.8M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 51.02 -.52%
  

• US Energy High-Yield OAS 303.4 +.36%
• Bloomberg TRACE # Distressed Bonds Traded 269 +1
  

• European Financial Sector CDS Index 61.03 -.86%
  
• Deutsche Bank Subordinated 5Y Credit Default Swap 165.5 +.24%
  

• Italian/German 10Y Yld Spread 137.0 basis points -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 95.3 +3.0%
  

• Emerging Market CDS Index 163.4 -.2%
  
• Israel Sovereign CDS 138.5 -1.8%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.04 -.08%

• 2-Year SOFR Swap Spread -20.75 basis points -.25 basis point
  

• Treasury Repo 3M T-Bill Spread -16.25 basis points -2.0 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -1.5 +.25 basis point
  
• MBS  5/10 Treasury Spread 138.0 -2.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 696.0 unch.
  
• Avg. Auto ABS OAS 67.0 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 39.0 -.1%
• 3-Month T-Bill Yield 5.15% -2.0 basis points
  

• China Iron Ore Spot 98.1 USD/Metric Tonne -.4%
• Dutch TTF Nat Gas(European benchmark) 37.0 euros/megawatt-hour -2.5%

• Citi US Economic Surprise Index -41.2 -.7 point

• Citi Eurozone Economic Surprise Index -59.9 +.4

• Citi Emerging Markets Economic Surprise Index -12.1 -.3 point
• S&P 500 Current Quarter EPS Growth Rate YoY(472 of 500 reporting) +9.4% +1.0 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 264.26 +.12:  Growth Rate +15.8% +.1 percentage point, P/E 21.2 unch.
  
• S&P 500 Current Year Estimated Profit Margin 12.65% unch.
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +26.3% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 343.83 +.29: Growth Rate +28.2% +.1 percentage point, P/E 33.1 -.2
  
• Bloomberg US Financial Conditions Index .74 -15.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index .76 unch.
  
• US Yield Curve -15.0 basis points (2s/10s) +3.25 basis points
  
• US Atlanta Fed 3Q GDPNow Forecast +1.99% unch.
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 69.2% +1.2 percentage points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.64% unch.: CPI YoY +2.59% unch.
  
• 10-Year TIPS Spread 2.06 -1.0 basis point
  
• Highest target rate probability for Nov. 7th FOMC meeting: 45.7%(+4.8 percentage points) chance of 4.5%-4.75%. Highest target rate probability for Dec. 18th meeting: 43.7%(-.5 percentage point) chance of 4.25%-4.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -91 open in Japan 
• China A50 Futures: Indicating -2 open in China

• DAX Futures: Indicating +75 open in Germany

Portfolio:

• Higher:  On gains in my consumer discretionary/industrial/tech/utility/biotech sector longs
  

• Disclosed Trades: None
  

• Market Exposure: 100% Net Long