Stocks Reversing Higher into Final Hour on Diminished Fed Rate-Hike Fears, Less China Trade Deal Pessimism, Oil Gain, Energy/Healthcare Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 18.76 +1.46%

• Euro/Yen Carry Return Index 134.31 -.05%

• Emerging Markets Currency Volatility(VXY) 10.11 +.10%

• S&P 500 Implied Correlation 43.67 -2.57%

• ISE Sentiment Index 155.0 +61.5%
  

• Total Put/Call .94 +11.9%

• NYSE Arms 1.14 +164.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 73.92 -1.94%
  

• America Energy Sector High-Yield CDS Index 675.0 -1.66%

• European Financial Sector CDS Index 103.08 +.04%

• Italian/German 10Y Yld Spread 288.25 -2.5 basis points
  

• Asia Pacific Sovereign Debt CDS Index 10.20 -1.07%

• Emerging Market CDS Index 206.89 -1.06%
  

• iBoxx Offshore RMB China Corporate High Yield Index 146.64 -.45%

• 2-Year Swap Spread 17.0 -.5 basis point

• TED Spread 33.25 +1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -12.25 +9.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.53 +.51%
• 3-Month T-Bill Yield 2.36% -2.0 basis points

• Yield Curve 21.75 -2.75 basis points

• China Iron Ore Spot 63.35 USD/Metric Tonne +.86%

• Citi US Economic Surprise Index -4.5 +.4 point

• Citi Eurozone Economic Surprise Index -56.60 +6.3 points

• Citi Emerging Markets Economic Surprise Index -6.0 unch.

• 10-Year TIPS Spread 1.99 +4.0 basis points
• 80.0% chance of Fed rate hike at Jan. 30th meeting, 90.0% chance at March 20th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +118 open in Japan 
• China A50 Futures: Indicating +120 open in China

• DAX Futures: Indicating +47 open in Germany

Portfolio: 

• Slightly Higher: On gains in my biotech/industrial/tech/medical sector longs

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Morning Market Internals

NYSE Composite Index:

• Volume Running +2.4% Above 100-Day Average
• 2 Sectors Rising, 9 Sectors Declining
• 36.0% of Issues Advancing, 61.8% Declining
• 23 New 52-Week Highs, 95 New Lows
• 28.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.7%
• Vix 20.4 +10.4%
• Total Put/Call 1.17 +39.3%
• TRIN/Arms 1.47 +222.2%

Thursday Watch

Evening Headlines

Bloomberg:      

• Less Than Half of U.S. Factories Expect Tariff Price Impact.

• Stock Rally Builds in Asia on Powell's Dovish Tilt. An equity rally spread from the U.S. into Asia after a dovish tone from the Federal Reserve Chairman Jerome Powell fueled speculation the central bank may pause lifting interest rates next year. The dollar maintained its retreat. Stocks in Japan, South Korea and Australia gained after the S&P 500 Index surged the most since March. Emerging-market equities hit a three-week high and the Nasdaq 100 jumped 3.2 percent. The Bloomberg Dollar Index held steady after sinking the most in two weeks, when two-year Treasury yields dipped. Japan’s Topix index climbed 1 percent as of 9:05 a.m. South Korea’s Kospi index rose 1.3 percent. Australia’s S&P/ASX 200 Index advanced 0.9 percent. Futures were little changed on the S&P 500, which gained 2.3 percent Wednesday and the Nasdaq 100 rose 3.2 percent.   

• Five Things You Need to Know to Start Your Day.  

• How a Dovish Tone at the Fed Sounded Across Markets.

• Powell Opens Door to Possible Pullback in Fed Rate-Hike Outlook.  

• America's Heavily Levered Companies Layer Loans Over Loans.  

• Shale Patch Expected to Cut Budgets for First Time Since Last Crash.

Wall St. Journal:

• Stocks Surge, Erase November Losses on Powell Rate Remarks.

• ‘Bring Me Tariffs’—How Trump and Xi Drove Their Countries to the Brink of a Trade War.

• Stopping the Socialist Resurgence.

• Facebook(FB) Considered Charging for Access to User Data.

• Altria in Talks to Take Significant Minority Stake in Juul Labs.

• UPS Passes Early Holiday Test.

• Biggest Pay Raise on Wall Street Goes to Stock Derivatives Traders.

MarketWatch.com:

• How overparenting in America has created a generation of snowflakes.

• The iPhone XR has been Apple's best-selling phone since its launch: report.

• Michael Brush: These 2 shocks will jolt stocks higher — and 15 smart ways to prepare for that move.

Fox News:  

• Special counsel's hardball fuels Trump allies’ anger toward probe, may backfire.

CNBC:           

• Dow surges 600 points, biggest rally in eight months, after Powell signals rates are near neutral.

• Stocks still have one more hurdle before the 'bullish promised land,' Cramer says.

• Qualcomm(QCOM) CEO: We're 'on the doorstep' of a resolution with Apple(AAPL).

• Stocks making the biggest moves after hours: Guess, Tribune Media, Veeva Systems and more.

• Cramer: 'Powell blinked' on rates — 'very big change in view' from the Fed chief.

• After Powell comments, traders see just one rate hike next year.

• Landmark ransomware campaign that crippled Atlanta last March was created by two Iranians, says DoJ.

Zero Hedge:    

• Trump Threatens To Declassify "Devastating" Docs If Democrats Investigate Him.

• Ford Says It Won't Cut Jobs During Planned 'Restructuring'.

• Clintons Face Empty Seats As Trump-Trashing Speaking Tour Kicks Off With A Coughing Fit.

• Stocks Soar As Powell Abandons Hawkish "Long Way" From Neutral Stance.

• Democrats Nominate Pelosi As Speaker, But Bigger Test Lies Ahead.

• Novogratz Loses $136 Million Trading Crypto.

• Trump Tells Agencies To Find Ways To Cut GM Subsidies As Buyout Offer Details Emerge.

• 'Powell Put' Sparks Buying-Panic, Dovish Dollar Dump. 

Business Insider:

• Investors focused on Apple's(AAPL) disappointing iPhone sales are missing the company's hidden goldmine.

Night Trading 

• Asian equity indices are +.5% to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 94.75 -2.25 basis points. 

• Asia Pacific Sovereign CDS Index 10.25 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 67.22 +.04%.

• FTSE 100 futures +.76%.

• S&P 500 futures -.09%.

• NASDAQ 100 futures -.16%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (ANF)/.21

• (AMWD)/1.88

• (DLTR)/1.14

• (PDCO)/.37

• (TECD)/2.17

• (TITN)/.36

• (TD)/1.62

• (YETI)/.21

After the Close:

• (AVAV)/.20

• (AMBA)/.09

• (GME)/.56

• (HPQ)/.54

• (PANW)/1.05

• (PVH)/3.14

• (SPLK)/.32

• (VMW)/1.51

• (WDAY)/.14

Economic Releases

8:30 am EST

• Personal Income for October is estimated to rise +.4% versus a +.2% gain in September.

• Personal Spending for October is estimated to rise +.4% versus a +.4% gain in September. 

• The PCE Core MoM for October is estimated to rise +.2% versus a +.2% gain in September.

• Initial Jobless Claims for last week are estimated to fall to 220K versus 224K the prior week.

• Continuing Claims are estimated to fall to 1663K versus 1668K prior.

10:00 am EST

• Pending Home Sales MoM for October are estimated to rise +.5% versus a +.5% gain in September.
  

2:00 pm EST

• FOMC Nov. 8 Minutes
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Mester speaking, Fed's Evans speaking, France Household Consumption report, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, Goldman Automotive Conference, (DGX) investor day, (T) analyst event and the (CVNA) analyst day could also impact trading today.

BOTTOM LINE:  Asian indices are higher, boosted by technology and industrial shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.