Wednesday Watch

Evening Headlines

 

Bloomberg:              

• Evergrande Crisis Highlights Funding Risks for Other Developers.  
• Wall Street Banks Questioned by Fed On Evergrande Exposure.
• Stocks Selloff to Extend to Asia as Yields Spike: Markets Wrap.
• Democrats Hit Impasse on Biden Agenda, Debt Ceiling Increase.
  
• Progressives Defy Pelosi, Vow to Vote No on Infrastructure.
• Warren Cites Fear Over Another 2008 Meltdown in Opposing Powell.  
• Elon Musk Says Biden Administration Is ‘Biased’ Against Tesla.  
• United Says 593 U.S. Workers Face Firing Over Vaccine Refusal.  
• Markets Faced a Day of Superlatives as Wall of Worries Spread.  
• At Least Some in Congress Are Getting Behind the Trillion-Dollar Coin.
• Volatility Markets Light Up With S&P 500 Hitting Two-Month Low.
• Dollar Tree Tiptoes Away From $1 Limit in Test of Higher Prices.

Wall Street Journal:     

• The 2020 Murder Spike.
• Facebook Efforts to Attract Preteens Go Beyond Instagram, Documents Show.
• 131 Federal Judges Broke the Law by Hearing Cases Where They Had a Financial Interest.
• The Generals Contradict Biden on Afghanistan.  
• Biden Paints Himself Into a Corner on the Iran Nuclear Deal.  
• What Is in the $3.5 Trillion Reconciliation Bill?
• Havana Syndrome Attacks Widen.
  

Fox News:  

• Homeland Security chief makes chilling admission about COVID cases at border.
• Sanders threatens to blow up Biden's spending splurge if condition isn't met.

NY Post: 

• US companies riddled with members of Chinese Communist Party: Devine. Boeing(BA), Qualcomm(QCOM) and Pfizer(PFE) are just three US companies that have employed dozens of CCP members in their Chinese facilities, the database reveals. 
  

CNBC.com:  

• Sen. Warren calls Fed Chair Powell a ‘dangerous man,’ says she will oppose his renomination.
• EV start-up Lucid begins production of flagship Air sedan ahead of customer deliveries.
• Stocks could slide further as interest rates rise and Big Tech drags the market.
• 10-year yield continues rapid climb, hits the highest since June.
• CEOs worried about corporate tax hikes as Dems push bills.
• Amazon just revealed its first home robot. Here’s what it’s like to use it.
• Stocks making the biggest moves after the bell: Sherwin-Williams, Micron Technology and more.
• GM’s commercial EV business BrightDrop to supply new van to Verizon.
• People who sign up for ‘buy now, pay later’ services are using more credit.
• Charts suggest these four growth stocks are worth buying into weakness, says Jim Cramer.

MarketWatch.com:           

• New York health-care workers who are fired for refusing to be vaccinated won’t be eligible for unemployment benefits — in most cases.
  
• These high-flying stocks of 2021 dropped the most on Tuesday.
  
• Micron earnings forecast disappoints amid concerns about memory-chip prices, stock tumbles.
  
• Pfizer’s COVID vaccine for kids might not get FDA approval until November.   
• Netflix acquires Night School Studio in videogaming push.

Zero Hedge:

• Chaos On The Hill: Progressives Threaten To Nuke Infrastructure Deal, Schumer Blows Gasket Over Reconciliation, McConnell Smug.
• "It's A F**king Kid": Johnson & Johnson Official Says Children Shouldn't Get Vax Due To 'Unknown Repercussions'.
• Most Americans No Longer Trust Biden's COVID Info, New Poll Finds.
• "Disaster": NY Gov Triggers State Emergency To Replace Unvaccinated Healthcare Workers. 
• T-Shirt And Jean Inflation Coming With Decade High Cotton Prices.
• US Marine Who Sought Accountability From Military Leaders Over Afghanistan Withdrawal Is Jailed: Report.
• Port Of Los Angeles Demands More Federal Funding As Cargo Backlog Looms.
• Owner-Equivalent Rent Shock On Deck As Actual Rents Surge By Most On Record.
• Didn't Anyone See The 14,000 Haitians?
• Hurricane Forecasters Expect Two Storms To Form In Atlantic Basin This Week.
• Taiwan's Defense Minister Demands Long-Range Missiles For The Island To Repel China.
• WTI Extends Losses After Surprise Crude Build.
• We Are Entering The Most Aggressive Global Hiking Cycle In A Decade.
• 'Dangerous' Jerome & 'Doomsaying' Janet Spark Bond, Stock, Bullion, & Bitcoin Battering.

 Jerusalem Post:

• COVID-19: New 'Mu variant' from Colombia could be vaccine resistant - WHO.

NBC News: 

• More than 20,000 Haitians are gathered in Colombia for possible migration to U.S.

New York Times: 

• Covid on the Border: Migrants Aren’t Tested on Arrival in U.S. The Border Patrol says it has insufficient time and space to conduct coronavirus testing at crowded processing stations. Officials in border cities fear further spread of the virus.

Newsmax:

• Florida Sues Biden Administration Over Its Immigration Policy

TheGatewayPundit.com:

• North Carolina Hospital Systems Fires 175 Employees For Refusing to Get Covid Jab in Largest-Ever Mass Terminations.
• HUGE DEVELOPMENT! They Got Caught! 24 Criminal Operatives Caught on Video Stuffing Dropbox with 1,900 Ballots in 3 Days (VIDEO).
• Psaki Argues with Reporter, Refuses to Answer Which Military Advisor Told Joe Biden to withdraw From Afghanistan (VIDEO).
• It’s All Theater: Masks Come Off Shortly Before Obama Instructs Everyone How to Pose for Photos “Breaking Ground” on His Presidential Library (VIDEO).
• Pelosi Calls Joe Biden’s “Build Back Better” the “Obama Agenda” (VIDEO).
• Generals McKenzie, Milley Contradict Joe Biden’s Claim No One Warned Against His Afghanistan Withdrawal Timeline (VIDEO).

The Epoch Times:

• ‘3 Warfares’ Doctrine Underpins CCP’s Sprawling Campaign to Infiltrate the West: Report.

Covid-19(Data, Maps, Graphs):

• Our World in Data:  New Global Covid-19 Cases(7-day rolling average graphs). New US Covid Hospital Admissions/ICU Admissions/Deaths
  
• FT.com:  Fully Vaccinated by Country(graph). Global Lockdown Stringency Index(map).
• Bloomberg.com:  International Travel Restrictions.  Case Graphs by State.
  
• NYTimes.com:  County Trends and Clusters. Local ICU Occupancy.
  
• Brown School of Public Health:  Covid Severity by State/County(map).  US Hospital Capacity(region).
  
• CovidActNow:  Covid Severity/Infection Rate by Metro Area.
  
• KFF:  US Vaccinations by Race/Ethnicity.
  
• Carnegie Mellon: Covid-Like Symptoms in Community. Covid Symptom Searches on Google. Covid-Related Dr.Visits.  Restaurant Visits. Wearing Masks. (graphs)
  
• Safegraph.com:  Commerce Patterns(graphs).

Night Trading 

• Asian equity indices are -1.5% to -.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 87.25 unch.

• China Sovereign CDS 47.25 +2.0 basis points.
  

• Bloomberg Emerging Markets Currency Index 58.80 -.01% 
• Bloomberg Global Risk-On/Risk Off Index 2,859.0 -36.0 points.
• Volatility Index(VIX) futures 22.7 +.59%.
• FTSE 100 futures n/a.

• S&P 500 futures +.18%

• NASDAQ 100 futures +.12%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (CTAS)/2.76
• (JBL)/1.38
• (WOR)/1.86
  

After the Close:

• (MLHR)/.50

Economic Releases

10:00 am EST

• Pending Home Sales MoM for Aug. is estimated to rise +1.0% versus a -1.8% decline in July.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,484,200 barrels versus a -3,481,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +1,042,890 barrels versus a +3,474,000 barrel gain the prior week. Distillate inventories are estimated to fall by -1,615,110 barrels versus a -2,554,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.5% versus a +5.4% gain prior.

Upcoming Splits

• (INMD) 2-for-1
  

Other Potential Market Movers

• The Japan Industrial Production report, weekly MBA Mortgage Applications report, (ASML) investor day and the (GNRC) 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 technology and healthcare shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.

Stocks Lower into Final Hour on Labor/Product Shortage Fears, Less Dovish Fed Commentary, Higher Long-Term Rates, Tech/Biotech Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 23.2 +23.7%
• Bloomberg Global Risk On/Risk Off Index 2,842.0 -319.0 points

• Euro/Yen Carry Return Index 134.42 +.35%

• Emerging Markets Currency Volatility(VXY) 8.8 +1.2%.

• S&P 500 Implied Correlation 57.7 +4.1%

• ISE Sentiment Index 87.0  -19.0 points
  

• Total Put/Call 1.11 +38.8%

• NYSE Arms .68 +23.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 52.0 +2.1%
  

• US Energy High-Yield OAS 374.77 +.52%

• European Financial Sector CDS Index 56.71 +2.6%

• Italian/German 10Y Yld Spread 105.0 unch.
  

• Asia Ex-Japan Investment Grade CDS Index 87.30 +.63%
  

• Emerging Market CDS Index 182.53 +3.0%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 36.95 -.23%

• 2-Year Swap Spread 8.75 -2.5 basis points
  

• TED Spread 10.25 -.5 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -3.0 -.5 basis point
  
• MBS  5/10 Treasury Spread  72.5 -.25 basis point
  
• IHS Markit CMBX BBB- 6 71.75 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 58.79 -.50%
• 3-Month T-Bill Yield .03% unch.
  

• Yield Curve 122.0 +4.0 basis points
  

• China Iron Ore Spot 112.10 USD/Metric Tonne -1.2%

• Citi US Economic Surprise Index -34.7 -5.9 points

• Citi Eurozone Economic Surprise Index -62.9 +.9 point
  

• Citi Emerging Markets Economic Surprise Index -1.1 -.3 point

• 10-Year TIPS Spread 2.39 +3.0 basis points
• 99.5% chance of no change at Dec. 15th meeting, 99.5% chance of no change at Jan. 26th meeting

US Covid-19:

• 250 new infections/100K people(last 7 days total) -7/100K people
• 47% of Jan. 7th, 2021 peak(highest daily avg. new infections) -1.0 percentage point
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -490 open in Japan 
• China A50 Futures: Indicating -81 open in China

• DAX Futures: Indicating +19 open in Germany

Portfolio:

• Lower: On losses in my tech/biotech/medical/consumer discretionary sector longs,
  

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my emerging market shorts
  

• Market Exposure: Moved to 50% Net Long
  

Bear Radar

 Style Underperformer:

• Large-Cap Growth -2.6%

Sector Underperformers:

• 1) Semis -3.6% 2) Alt Energy -3.3% 3) Internet -3.3%

Stocks Falling on Unusual Volume: 

• APA, S, TDUP, AVTR, ZS, COUR, TLS, MSCI, ALNY, NET, AGIL, ALT, SNX, AFRM, ASAN, NVAX and EXPI
  

Stocks With Unusual Put Option Activity:

• 1) SKT 2) IRBT 3) EMB 4) AMLP 5) ARKG
  

Stocks With Most Negative News Mentions:

• 1) HYZN 2) NTZ 3) AMAT 4) LIVE 5) ZIOP
  

Charts:

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

Bull Radar

 Style Outperformer:

• Small-Cap Value -.9%

Sector Outperformers:

• 1) Oil Service +1.7% 2) Energy +1.0% 3) Education +.8%

Stocks Rising on Unusual Volume:

• GOGO, UNFI, THO, LYEL, HUN, OI, WGO, LIND, WFRD, TEN, CONE, ULCC, SLB, CHPT, EDR, XLRN and WW
  

Stocks With Unusual Call Option Activity:

• 1) INDA 2) GOGO 3) ONDS 4) WW 5) ALT

Stocks With Most Positive News Mentions:

• 1) SNDA 2) UNFI 3) PLAG 4) HUN 5) THOR
  

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +13.5% Above 100-Day Average 
• 1 Sector Rising, 10 Sectors Declining
• 16.0% of Issues Advancing, 81.5% Declining
• 58 New 52-Week Highs, 63 New Lows
• 63.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.9%
  
• Bloomberg Global Risk-On/Risk-Off Index 2,894.0 -269.0 points
• Russell 1000: Growth/Value 17,491 -1.38%
  
• Vix 23.9 +27.2%
• Total Put/Call 1.12 +40.0%
• TRIN/Arms .68 +23.6%

Tuesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 87.25 +1.25 basis points.

• China Sovereign CDS 45.25 +1.0 basis point.
  

• Bloomberg Emerging Markets Currency Index 59.09 unch.
• Bloomberg Global Risk-On/Risk Off Index 3,118.0 -48.0 points.
• Volatility Index(VIX) futures 20.4 +1.2%.
• FTSE 100 futures +.%.

• S&P 500 futures -.05%

• NASDAQ 100 futures -.14%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (FDS)/2.73
• (THO)/2.86
• (UNFI)/.80
  

After the Close:

• (CALM)/-.62
• (CMTL)/.49
• (MU)/2.34
  

Economic Releases

8:30 am EST

• The Advance Goods Trade Balance report for Aug. is estimated to widen to -$87.3B versus -$86.4B in July.
• Wholesales Inventories MoM for Aug. is estimated to rise +.8% versus a +.6% gain in July.
• Retail Inventories MoM for Aug. is estimated to rise +.4% versus a +.4% gain in July.
  

9:00 am EST

• The FHFA House Price Index MoM for July is estimated to rise +1.5% versus a +1.6% gain in June.
• The S&P CoreLogic CS 20-City MoM for July is estimated to rise +1.7% versus a +1.77% gain in June.
  

10:00 am EST

• The Conference Board Consumer Confidence Index for Sept. is estimated to rise to 115.0 versus 113.8 in Aug.
• The Richmond Fed Manufacturing Index for Sept. is estimated to rise to 115.0 versus 113.8 in Aug.
  

Upcoming Splits

• (INMD) 2-for-1
  

Other Potential Market Movers

• The Fed's Powell/Treasury Secretary Yellen's testimony to Senate, Fed's Bowman speaking, German Consumer Confidence reading, 7Y T-Note auction, weekly US retail sales reports, (AMZN) product event and the (HAIN) investor day could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

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