Monday, February 03, 2025

Stocks Lower into Final Hour on Escalating US Trade Tensions, Earnings Outlook Jitters, Technical Selling, Homebuilding/Alt Energy Sector Weakness

Broad Equity Market Tone:

  • Advance/Decline Line: Lower
  • Sector Performance: Mixed
  • Volume: Above Average
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • Volatility(VIX) 17.7 +7.9%
  • S&P 500 Intraday % Swing 1.48 -1.0%.
  • Bloomberg Global Risk On/Risk Off Index 68.3 -4.4%
  • Euro/Yen Carry Return Index 178.1 -.9%
  • Emerging Markets Currency Volatility(VXY) 8.8 +4.2%
  • CBOE S&P 500 Implied Correlation Index 13.4 +8.1% 
  • ISE Sentiment Index 133.0 -4.0 points
  • Total Put/Call .91 +4.6%
  • NYSE Arms .86 -43.8%
  • NYSE Non-Block Money Flow -$145.0M 
Credit Investor Angst:
  • North American Investment Grade CDS Index 49.0 +.6%
  • US Energy High-Yield OAS 284.7 +.8%
  • Bloomberg TRACE # Distressed Bonds Traded 169 +3
  • European Financial Sector CDS Index 61.2 +2.7%
  • Deutsche Bank Subordinated 5Y Credit Default Swap 145.5 +2.5%
  • Italian/German 10Y Yld Spread 111.0 basis points +1.0 basis point
  • Asia Ex-Japan Investment Grade CDS Index 77.7 +4.3%
  • Emerging Market CDS Index 160.0 -.08%
  • Israel Sovereign CDS 85.4 +.8%
  • China Corp. High-Yield Bond USD ETF(KHYB) 23.9 +.06%
  • 2-Year SOFR Swap Spread -15.75 basis points -.75 basis point
  • 3M T-Bill Treasury Repo Spread 5.0 basis points +.75 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -1.75 -.75 basis point
  • MBS  5/10 Treasury Spread 137.0 +1.0 basis point
  • Bloomberg CMBS Investment Grade Bbb Average OAS 607.0 +2.0 basis points
  • Avg. Auto ABS OAS 46.0 +2.0 basis points
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 37.2 +.2%
  • 3-Month T-Bill Yield 4.29% +1.0 basis point
  • China Iron Ore Spot 104.20 USD/Metric Tonne -.1%
  • Dutch TTF Nat Gas(European benchmark) 53.8 euros/megawatt-hour +1.0%
  • Citi US Economic Surprise Index 16.8 +7.4 points
  • Citi Eurozone Economic Surprise Index 1.6 +1.3 points
  • Citi Emerging Markets Economic Surprise Index 10.5 +7.0 points
  • S&P 500 Current Quarter EPS Growth Rate YoY(181 of 500 reporting) +7.8% -4.7 percentage points
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 274.54 -.20:  Growth Rate +15.9% +.5 percentage point, P/E 21.8 -.3
  • S&P 500 Current Year Estimated Profit Margin 12.11% -9.0 basis points
  • NYSE FANG+ Current Quarter EPS Growth Rate YoY(5 of 10 reporting) +17.2% -9.3 percentage points
  • NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 402.67 +2.47: Growth Rate +30.2% +2.2 percentage points, P/E 33.3 -.4
  • Bloomberg US Financial Conditions Index .78 +2.0 basis points
  • Bloomberg Euro-Zone Financial Conditions Index 1.80 -1.0 basis point
  • US Yield Curve 28.0 basis points (2s/10s) -3.25 basis points
  • US Atlanta Fed Q4 GDPNow Forecast +2.89% +62.0 basis points
  • US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 24.0% -2.3 percentage points
  • Cleveland Fed Inflation Nowcast Core PCE YoY +2.52% -31.0 basis points: CPI YoY +2.85% unch.
  • 10-Year TIPS Spread 2.45 +7.0 basis points
  • Highest target rate probability for May 7th FOMC meeting: 65.4% (+4.7 percentage points) chance of 4.25%-4.5%. Highest target rate probability for June 18th meeting: 44.6%(-2.0 percentage points) chance of 4.0%-4.25%. (current target rate is 4.25-4.5%)
Overseas Futures:
  • Nikkei 225 Futures: Indicating +350 open in Japan 
  • China A50 Futures: Indicating +8 open in China
  • DAX Futures: Indicating +120 open in Germany
Portfolio:
  • Slightly Higher: On gains in my utility sector longs
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
  • Market Exposure: Moved to 75% Net Long

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