Stocks Reversing Higher into Afternoon on Fed Rate-Cut Hopes, Earnings Outlook Optimism, Technical Buying, Electrification/Healthcare Sector Strength

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) 15.2 +.7%
• S&P 500 Intraday % Swing .37 -5.4%
• Bloomberg Global Risk On/Risk Off Index 79.8 -.4% 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.94 -.46%

• Euro/Yen Carry Return Index 194.93 -.41%

• Emerging Markets Currency Volatility(VXY) 7.02 -.57%

• CBOE S&P 500 Implied Correlation Index 15.5 +1.0% 

• ISE Sentiment Index 124.0 -44.0

• Total Put/Call .90 +13.9%

• NYSE Arms .70 -59.3%
• NYSE Non-Block Money Flow -$247.5M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 50.0 -.08%
  

• US Energy High-Yield OAS 363.7 +.34%
• Bloomberg TRACE # Distressed Bonds Traded 198.0 +5.0

• European Financial Sector CDS Index 56.6 -.7%
  
• Deutsche Bank Subordinated 5Y Credit Default Swap 124.6 -1.1%
  

• Italian/German 10Y Yld Spread 82.0 -1.0 basis point

• Asia Ex-Japan Investment Grade CDS Index 63.4 +.1%
  

• Emerging Market CDS Index 145.8 -.01%%
• Israel Sovereign CDS 76.7 +4.2%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.43 +.06%

• 2-Year SOFR Swap Spread -24.25 basis points -.5 basis point

• 3M T-Bill Treasury Repo Spread -36.75 basis points +1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap .75 unch.
• MBS  5/10 Treasury Spread 128.0 +3.0 basis points
• Bloomberg CMBS Investment Grade Bbb Average OAS 586.0 +3.0 basis points
• Avg. Auto ABS OAS 49.0 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 36.4 -.14%
• US 10-Year T-Note Yield 4.07% +3.0 basis points
• 3-Month T-Bill Yield 4.02% +2.0 basis points

• China Iron Ore Spot 106.6 USD/Metric Tonne -.7%
• Dutch TTF Nat Gas(European benchmark) 32.9 euros/megawatt-hour -.4%

• Citi US Economic Surprise Index 21.8 unch.

• Citi Eurozone Economic Surprise Index 19.3 +1.5 points

• Citi Emerging Markets Economic Surprise Index 12.7 +.9 point
• S&P 500 Current Quarter EPS Growth Rate YoY(496 of 500 reporting) +12.6% unch.
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 291.67 +1.42:  Growth Rate +11.4% +.1 percentage point, P/E 22.3 unch.
• S&P 500 Current Year Estimated Profit Margin 13.49% unch.
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(10 of 10 reporting) +28.4% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 484.41 +.58: Growth Rate +18.5% +.2 percentage point, P/E 32.7 -.2
• Bloomberg US Financial Conditions Index .62 +2.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index 1.49 +2.0 basis points
• Bloomberg Global Trade Policy Uncertainty Index 3.0 -.2
• US Yield Curve 53.25 basis points (2s/10s) -1.5 basis points
• US Atlanta Fed GDPNow Q2 Forecast +3.0% unch.
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 43.0% +.9 percentage point

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.95% unch.: CPI YoY +2.84% unch.
• 1-Year TIPS Spread 2.69 +4.0 basis points
• 10-Year TIPS Spread 2.37 +1.0 basis point
• Highest target rate probability for Oct. 29th FOMC meeting: 72.6% (-3.7 percentage points) chance of 3.75%-4.0%. Highest target rate probability for Dec. 10th meeting: 65.5%(-4.6 percentage points) chance of 3.5%-3.75%. (current target rate is 4.25-4.5%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -114 open in Japan 
• China A50 Futures: Indicating +24 open in China

• DAX Futures: Indicating +40 open in Germany

Portfolio:

• Higher: On gains in my industrial/financial/tech sector longs
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
• Market Exposure: Moved to 100% Net Long