Stocks Lower into Afternoon on Inflation Concerns, Valuation Worries, Oil Decline, Retail/Commodity Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 23.1 +8.3%
• Bloomberg Global Risk On/Risk Off Index 2,944.0 -193.0 points

• Euro/Yen Carry Return Index 137.4 -.14%

• Emerging Markets Currency Volatility(VXY) 9.3 +.2%

• S&P 500 Implied Correlation 53.2 -.5%

• ISE Sentiment Index 89.0 -46.0 points
  

• Total Put/Call 1.06 +27.7%

• NYSE Arms 1.4 -16.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 52.92 +1.09%
  

• US Energy High-Yield OAS 437.22 +1.25%

• European Financial Sector CDS Index 61.6 +1.4%

• Italian/German 10Y Yld Spread 123.0 +2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 85.95 +1.0%
  

• Emerging Market CDS Index 164.50 +1.32%
  

• China Corp. High-Yield Bond USD ETF(KCCB) 39.30 +.01%

• 2-Year Swap Spread 10.0 unch.

• TED Spread 14.75 -.5 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap .75 +1.25 basis points
  
• MBS  5/10 Treasury Spread  62.0 -1.25 basis points
  
• IHS Markit CMBX BBB- 6 71.75 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 61.46 -.16%
• 3-Month T-Bill Yield .01% +1.0 basis point
  

• Yield Curve 149.0 unch.
  

• China Iron Ore Spot 197.25 USD/Metric Tonne -3.9%

• Citi US Economic Surprise Index 3.6 -.7 point

• Citi Eurozone Economic Surprise Index 136.20 -9.9 points
  

• Citi Emerging Markets Economic Surprise Index 50.10 -1.0 point

• 10-Year TIPS Spread 2.53 -2.0 basis points
• 93.0% chance of no change at Sept. 22nd meeting, 93.0% chance of no change at Nov. 3rd meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -94 open in Japan 
• China A50 Futures: Indicating -55 open in China

• DAX Futures: Indicating +54 open in Germany

Portfolio:

• Slightly Higher: On gains in my tech sector longs, index hedges and emerging market shorts
  

• Disclosed Trades:  None
  

• Market Exposure: 50% Net Long
  

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -8.3% Below 100-Day Average 
• 0 Sectors Rising, 11 Sectors Declining
• 23.6% of Issues Advancing, 72.6% Declining
• 23 New 52-Week Highs, 25 New Lows
• 87.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.5%
  
• Bloomberg Global Risk-On/Risk-Off Index 2,896.0 -241.0 points
• Vix 23.5 +10.3%
• Total Put/Call 1.21 +45.8%
• TRIN/Arms 1.41 -12.4%

Wednesday Watch

Night Trading 

• Asian equity indices are -1.25% to -.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 85.0 +.5 basis point.

• China Sovereign CDS 40.0 +1.75 basis points.

• Bloomberg Emerging Markets Currency Index 61.56 unch.
• Bloomberg Global Risk-On/Risk Off Index 3,188.0 -19.0 points.
• Volatility Index(VIX) futures 21.6 +.81%.
• FTSE 100 futures -.68%.

• S&P 500 futures -.18%.

• NASDAQ 100 futures -.09%.

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (ADI)/1.45
• (CCL)/-1.50
• (EXP)/1.24
• (LOW)/2.44
• (TGT)/2.02
• (TJX)/.28
• (VIPS)/2.17
  

After the Close:

• (CSCO)/.82
• (CPRT)/.78
• (JEF)/.95
• (LB)/.98
• (SCVL)/1.40
• (SQM)/.23
• (SNPS)/1.53
  

Economic Releases

2:00 pm EST

• FOMC Meeting Minutes.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The UK inflation data, weekly EIA energy inventory report, weekly MBA Mortgage Applications report, BMO Farm to Market Conference, Wells Fargo Financial Services Conference, JPMorgan Homebuilding/Products Conference, BofA Transport/Airlines/Industrials Conference and the (AVID) investor day could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are lower, weighed down by industrial and commodity shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Reversing Lower into Afternoon on Inflation Worries, Oil Decline, Technical Selling, Commodity/Homebuilding Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 19.6 -.61%
• Bloomberg Global Risk On/Risk Off Index 3,267.0 +50.0 points

• Euro/Yen Carry Return Index 137.56 +.30%

• Emerging Markets Currency Volatility(VXY) 9.3 -.2%

• S&P 500 Implied Correlation 52.9 +3.1%

• ISE Sentiment Index 122.0 +18.0 points
  

• Total Put/Call .81 -10.0%

• NYSE Arms 1.21 +89.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 51.93 +.94%
  

• US Energy High-Yield OAS 431.90 +.01%

• European Financial Sector CDS Index 60.72 +1.85%

• Italian/German 10Y Yld Spread 121.0 -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 85.25 +1.27%
  

• Emerging Market CDS Index 161.93 -.11%
  

• China Corp. High-Yield Bond USD ETF(KCCB) 39.30 -.17%

• 2-Year Swap Spread 10.0 unch.

• TED Spread 15.25 -.5 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap .75 +1.25 basis points
  
• MBS  5/10 Treasury Spread  63.25 unch.
  
• IHS Markit CMBX BBB- 6 71.75 +.25 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 61.59 +.28%
• 3-Month T-Bill Yield .00% unch.
  

• Yield Curve 149.0 +2.0 basis points
  

• China Iron Ore Spot 208.15 USD/Metric Tonne -3.4%

• Citi US Economic Surprise Index 4.3 -8.1 points

• Citi Eurozone Economic Surprise Index 146.10 -3.5 points
  

• Citi Emerging Markets Economic Surprise Index 51.10 +1.0 points

• 10-Year TIPS Spread 2.55 unch.
• 91.0% chance of no change at Sept. 22nd meeting, 91.0% chance of no change at Nov. 3rd meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -136 open in Japan 
• China A50 Futures: Indicating -6 open in China

• DAX Futures: Indicating -14 open in Germany

Portfolio:

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

• Disclosed Trades:  None
  

• Market Exposure: 75% Net Long
  

Bear Radar

 Style Underperformer:

• Large-Cap Value -.2%

Sector Underperformers:

• 1) Oil Service -1.9% 2) Energy -1.5% 3) Steel -1.2%

Stocks Falling on Unusual Volume: 

• ACVA, PRAX, T, PFGC, AXON, GAN, RXDX, TLS and TPGY
  

Stocks With Unusual Put Option Activity:

• 1) BTU 2) PSX 3) XOP 4) DISCA 5) QRVO
  

Stocks With Most Negative News Mentions:

• 1) ADTN 2) GTE 3) OLN 4) EBS 5) IIVI
  

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.3%

Sector Outperformers:

• 1) Alt Energy +3.5% 2) Shipping +3.4% 3) Video Gaming +2.6%

Stocks Rising on Unusual Volume:

• RIDE, ATER, DDD, SI, CRC, DNMR, SRPT, FSR, LEGN, PLUG, EOSE, RAVN, BTX, HOOK, RETA, LRN, OAS, LGF/B, NKLA, DRNA, SNOW, LGF/A, BOLT, UBER, LITE, PTON, CVS, CORE, LYV, GNK, ABNB, MGM, PLCE, YEXT, BSY, UPST and GWRE
  

Stocks With Unusual Call Option Activity:

• 1) AGEN 2) CLMT 3) SM 4) XLV 5) VG

Stocks With Most Positive News Mentions:

• 1) SNOW 2) SRPT 3) MAX 4) IQ 5) WMT
  

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume