Wednesday, August 13, 2025

Stocks Higher into Final Hour on Falling Long-Term Rates, Rising Fed Rate-Cut Odds, Earnings Outlook Optimism, Biotech/Transport Sector Strength

Broad Equity Market Tone:

  • Advance/Decline Line: Substantially Higher
  • Sector Performance: Most Sectors Rising
  • Volume: Around Average
  • Market Leading Stocks: Outperforming
Equity Investor Angst:
  • Volatility(VIX) 14.6 -.9%
  • S&P 500 Intraday % Swing .55 -42.5%
  • Bloomberg Global Risk On/Risk Off Index 79.1 +.7% 
  • Swiss Franc/Offshore Chinese Renminbi Cross 8.92 +.12%
  • Euro/Yen Carry Return Index 194.6 -.05%
  • Emerging Markets Currency Volatility(VXY) 7.17 +.14%
  • CBOE S&P 500 Implied Correlation Index 14.9 -1.1% 
  • ISE Sentiment Index 157.0 -2.0
  • Total Put/Call .73 -22.3%
  • NYSE Arms 1.53 +50.0%
  • NYSE Non-Block Money Flow +$208.0M 
Credit Investor Angst:
  • North American Investment Grade CDS Index 49.7 -.7%
  • US Energy High-Yield OAS 355.0 -1.0%
  • Bloomberg TRACE # Distressed Bonds Traded 206.0 -5.0
  • European Financial Sector CDS Index 53.8 -1.6%
  • Deutsche Bank Subordinated 5Y Credit Default Swap 118.3 -1.54%
  • Italian/German 10Y Yld Spread 77.0 -2.0 basis points
  • Asia Ex-Japan Investment Grade CDS Index 67.4 -1.7%
  • Emerging Market CDS Index 145.9 -1.0%
  • Israel Sovereign CDS 77.9 +4.9%
  • China Corp. High-Yield Bond USD ETF(KHYB) 24.3 +.1%
  • 2-Year SOFR Swap Spread -24.5 basis points unch.
  • 3M T-Bill Treasury Repo Spread -13.25 basis points -2.75 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap 2.5 unch.
  • MBS  5/10 Treasury Spread 138.0 unch.
  • Bloomberg CMBS Investment Grade Bbb Average OAS 584.0 unch.
  • Avg. Auto ABS OAS 52.0 unch.
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 36.7 +.05%
  • US 10-Year T-Note Yield 4.24% -5.0 basis points
  • 3-Month T-Bill Yield 4.21% -1.0 basis point
  • China Iron Ore Spot 103.7 USD/Metric Tonne +.2%
  • Dutch TTF Nat Gas(European benchmark) 32.6 euros/megawatt-hour +.6%
  • Citi US Economic Surprise Index 8.0 +.1 point
  • Citi Eurozone Economic Surprise Index 24.9 -.1 point
  • Citi Emerging Markets Economic Surprise Index 9.6 -2.0 points
  • S&P 500 Current Quarter EPS Growth Rate YoY(454 of 500 reporting) +11.4% unch.
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 287.29 +.12:  Growth Rate +12.5% +.1 percentage point, P/E 22.5 +.1
  • S&P 500 Current Year Estimated Profit Margin 13.45% unch.
  • NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +23.6% unch.
  • NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 469.06 +.65: Growth Rate +24.3% +.1 percentage point, P/E 32.9 unch.
  • Bloomberg US Financial Conditions Index .66 +8.0 basis points
  • Bloomberg Euro-Zone Financial Conditions Index 1.46 +9.0 basis points
  • Bloomberg Global Trade Policy Uncertainty Index 6.1 -.3
  • US Yield Curve 55.25 basis points (2s/10s) +4.75 basis points
  • US Atlanta Fed GDPNow Q2 Forecast +2.5% unch.
  • US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 43.7% +1.2 percentage points
  • Cleveland Fed Inflation Nowcast Core PCE YoY +2.89% unch.: CPI YoY +2.84% -1.0 basis point
  • 1-Year TIPS Spread 2.67 -1.0 basis point
  • 10-Year TIPS Spread 2.38 -2.0 basis points
  • Highest target rate probability for Oct. 29th FOMC meeting: 66.9% (+6.7 percentage points) chance of 3.75%-4.0%. Highest target rate probability for Dec. 10th meeting: 55.0%(+4.7 percentage points) chance of 3.5%-3.75%. (current target rate is 4.25-4.5%)
Overseas Futures:
  • Nikkei 225 Futures: Indicating -124 open in Japan 
  • China A50 Futures: Indicating +68 open in China
  • DAX Futures: Indicating +75 open in Germany
Portfolio:
  • Slightly Higher: On gains in my tech/consumer discretionary sector longs
  • Disclosed Trades: None
  • Market Exposure: 100% Net Long

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