Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -5.0% Below 100-Day Average 
• 9 Sectors Rising, 2 Sectors Declining
• 59.7% of Issues Advancing, 36.2% Declining
• 94 New 52-Week Highs, 40 New Lows
• 56.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 44.3%
  
• Bloomberg Global Risk-On/Risk-Off Index 2,979.0 +213.0 points
• Russell 1000: Growth/Value 17,312 +.82%
  
• Vix 21.0 -8.5%
• Total Put/Call .81 -17.4%
• TRIN/Arms .84 +31.3%

Tuesday Watch

Evening Headlines

Bloomberg:                  

• China PCR Testing Purchases Spiked in Months Before First Known Covid Cases, Firm Says. The Chinese province that was the initial epicenter of the Covid-19 outbreak made significant purchases of equipment used to test for infectious diseases months before Beijing notified international authorities of the emergence of a new coronavirus, according to research by a cybersecurity company. The province’s purchase of polymerase chain reaction, or PCR, testing equipment, which allows scientists to amplify DNA samples to test for infectious disease or other genetic material, shot upward in 2019, with most of the increase coming in the second half of the year, the Australian-U.S. firm Internet 2.0 found.
  
• China’s Energy Crisis Has Villagers Questioning Its Climate Path.  
• Asia Stocks to Drop on Risks From Inflation, China: Markets Wrap.
• Oil Surges to Highest Since 2014 as OPEC Maintains Supply Hike.
• Facebook Shares Suffer Worst Drop This Year as Tech Losses Mount.
• Mark Zuckerberg Loses $7 Billion in Hours as Facebook Plunges.  
• Law Firm At Center of Pandora Helped Global Rich Hide Billions.
• Ken Griffin Sees Young People Making ‘Grave Mistake’ Working at Home.  
• JPMorgan Restricts Business Travel for Unvaccinated Staff.
• October’s Historic Volatility on Display With Stocks Whipsawed.  
• Christmas at Risk as Supply Chain ‘Disaster’ Only Gets Worse.  
• Fire Pit Maker Solo Brands Files for U.S. IPO.  
• Commodities Index Hits Record as World Rebound Meets Shortages.
• Seattle Votes to Decriminalize Psilocybin and Similar Substances. 
• Vaccine Mandates Hit Amid Historic Health-Care Staff Shortage. Nearly one in four beds lies empty at TaraVista Behavioral Health Center in central Massachusetts -- not for lack of patients, but for lack of staff. Even before the pandemic, nurses and lower-paid aides were in perennially short supply, but the 116-bed facility could still run full, said Chief Executive Officer Michael Krupa. At similar hospitals around Massachusetts, hundreds of beds can’t be filled, and “the reason is exclusively staff,” he said. What some are calling the worst U.S. health-care labor crisis in memory is sharpening concerns about attrition from resistance to vaccine mandates -- even in the medical mecca of Massachusetts, where Covid cases remain well within hospital capacity. About 16% of American hospitals had critical staffing shortages as of Oct. 1, according to the U.S. Department of Health and Human Services. 
  

Wall Street Journal: 

• Empty Buildings in China’s Provincial Cities Testify to Evergrande Debacle.
• Democrats Destroy Political Norms to Save Them.  
• The Next Progressive Budget Trick.
• Broader Inflation Pressures Are Beginning to Show.
• California Oil Spill May Have Been Caused by Anchor Hitting Pipeline.
• OPEC Opts Against Big Output Boost; Oil Hits 7-Year High.
• Thousands of Unvaccinated New York City School Employees Placed on Unpaid Leave.
• Is It Flu or Covid-19? It’s Harder to Tell This Year.
  

Fox News: 

• Facebook goes dark during LONGEST outage ever hours after whistleblower blows lid off social giant.
• GOP sen to introduce bill holding social media companies accountable for harm they cause children.
• Facebook whistleblower accuses company of 'tearing our societies apart'.  Dem state's largest health care provider fires employees who refused the vaccine. 
  

CNBC.com:  

• Inspector General probing whether Fed official trades broke ethics rules or the law.
• Facebook employees were unable to access critical work tools during outage.
• Rent the Runway files for IPO, revealing losses mounted during pandemic but subscribers rebounding. 
• Ken Griffin’s Citadel flagship hedge fund returns 8% in September during market sell-off.
• Qualcomm and investment firm SSW agree to buy auto-parts supplier Veoneer for $4.5 billion.

MarketWatch.com:               

• Cathie Wood’s ARK Innovation ETF deepens skid amid Monday’s tech-led stock-market slump.
  
• Robots are hiding 27 million workers from employers who need them.

Zero Hedge:

• Facebook Is Alive, DNS Issues Being Resolved After Six Hours Of Darkness.
• World's Largest Commodity Traders Face Massive Margin Calls As Global NatGas Arb Explodes.
• NYC's Abandoned Outdoor Restaurant Sheds Being Used As Garbage Dumps Or Homeless Shelters.
• What's The Driving Force In China?
• "Perfect Storm" - Global Energy Crisis Spreads To Brazil And India.
• Texas Company Offers Truckers $14K A Week Amid Historic Driver Shortage.
• China Placed Massive Order For PCR Tests Months Before First Official COVID Case.
• Ken Griffin Says Chicago Violence Like "Afghanistan On A Good Day", Claims Crypto Is "Jihadist" Attack On The Dollar.
• Antibodies Persist For More Than A Year After COVID-19 Infection, Study Finds.
• Xi Jinping Vows Chinese Labs Dealing With Deadly Pathogens To Face Greater Scrutiny.
• Stocks Haven't Done This Since The COVID-Crash In March 2020.
• Meanwhile In Australia...
• Cost Of Shipping Between China And U.S. Plunges... But For The Worst Possible Reason.

OANN:

• Sen. Paul: Biden, Fauci Continue To Ignore ‘The Science’ Of Natural Immunity.

NY 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:

• Missouri AG Schmitt: Mandates About Power, Not Science.

TheGatewayPundit.com:

• Fauci Walks Back Christmas Comments After Backlash, Now Says Americans Can Have a “Good, Normal Christmas” with Their Families (VIDEO).
• Psaki Argues with Newsmax Reporter Emerald Robinson, Refuses to Say if Hunter Biden has Divested From Chinese Government-Linked Firm (VIDEO).
• Fauci’s NIAID Funded an American Institute that Helped Train Chinese Researchers from Wuhan Where COVID Is Suspected of Originating.
• Human Resource Giant ADP Is Now Sorting Vaccinated from Unvaccinated in Employee Profiles.
• Taiwan Says It’s Preparing for War as China Sends a Record 52 Warplanes Into Taiwan Airspace.

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 -.75% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 84.25 unch.

• China Sovereign CDS 47.5 +1.0 basis point.
  

• Bloomberg Emerging Markets Currency Index 58.85 -.01%. 
• Bloomberg Global Risk-On/Risk Off Index 2,642.0 -23.0 points.
• Volatility Index(VIX) futures 23.63 -.09%.
• FTSE 100 futures +.47%.

• S&P 500 futures +.01%

• NASDAQ 100 futures +.12%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• None of note
  

After the Close:

• None of note
  

Economic Releases

8:30 am EST

• The Trade Deficit for Aug. is estimated to widen to -$70.7B versus -$70.1B in July.
  

10:00 am EST

• The ISM Services Index for Sept. is estimated to fall to 59.9 versus 61.7 in Aug.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Quarles speaking, RBA rate decision and the weekly US retail sales reports could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly 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 modestly higher. The Portfolio is 50% net long heading into the day.

Stocks Finish Substantially Lower on Policy-Induced Labor/Supply Shortages, Fed Tapering Worries, China Bubble-Bursting Fears, Biotech/Tech Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 23.9 +13.1%
• Bloomberg Global Risk On/Risk Off Index 2,796.0 -243.0 points

• Euro/Yen Carry Return Index 133.03 +.11%

• Emerging Markets Currency Volatility(VXY) 8.8 +.68%

• S&P 500 Implied Correlation 57.0 -9.1%

• ISE Sentiment Index 103.0  -3.0 points
  

• Total Put/Call .96 +4.4%

• NYSE Arms .79 +38.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 53.51 +1.9%
  

• US Energy High-Yield OAS 378.89 +.92%

• European Financial Sector CDS Index 57.92 +2.22%

• Italian/German 10Y Yld Spread 104.0 unch.
  

• Asia Ex-Japan Investment Grade CDS Index 84.85 +.68%
  

• Emerging Market CDS Index 183.49 +1.54%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 36.46 -.60%

• 2-Year Swap Spread 9.5 -1.25 basis points
  

• TED Spread 10.25 +.5 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -16.5 -.75 basis point
  
• MBS  5/10 Treasury Spread  70.5 -.5 basis point
  
• IHS Markit CMBX BBB- 6 71.5 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 58.86 -.19%
• 3-Month T-Bill Yield .03% unch.
  

• Yield Curve 121.0 +1.0 basis point
  

• China Iron Ore Spot 115.75 USD/Metric Tonne -2.25%

• Citi US Economic Surprise Index -20.4 +3.4 points

• Citi Eurozone Economic Surprise Index -54.6 +5.1 points
  

• Citi Emerging Markets Economic Surprise Index 1.7 -2.0 points

• 10-Year TIPS Spread 2.39 +1.0 basis point
• 100.0% chance of no change at Dec. 15th meeting, 97.6% chance of no change at Jan. 26th meeting

US Covid-19:

• 229 new infections/100K people(last 7 days total) -11/100K people
• 43% of Jan. 7th, 2021 peak(highest daily avg. new infections) -2.0 percentage points
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -544 open in Japan 
• China A50 Futures: Indicating -432 open in China

• DAX Futures: Indicating +7 open in Germany

Portfolio:

• Lower: On losses in my tech/medical/industrial/consumer discretionary/biotech 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 -2.5%

Sector Underperformers:

• 1) Alt Energy -4.5% 2) Shipping -4.1% 3) Social Media -3.8%

Stocks Falling on Unusual Volume: 

• EW, SWX, RXRX, BX, MQ, MA, SWTX, FB, W, FIVN, PACB, SQ, SPWR, CHPT, Z, OLO, MDB, MCW, XM, DV, IIVI, HUBS, EXPI, VERX, COMP, LAW, PCRX, AMTX and RGNX
  

Stocks With Unusual Put Option Activity:

• 1) MAC 2) SKT 3) LUMN 4) EMB 5) MDLX
  

Stocks With Most Negative News Mentions:

• 1) OMER 2) VERX 3) IIVI 4) WISH 5) VIR
  

Charts:

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

Bull Radar

 Style Outperformer:

• Small-Cap Value -.1%

Sector Outperformers:

• 1) Oil Service +3.1% 2) Energy +1.8% 3) Road & Rail +.9%

Stocks Rising on Unusual Volume:

• BTU, ESTE, PVAC, CEIX, LXU, SI, AVIR, RRC, AR, HCC, NOG, DVN, PDCE, CNK, CPE, AMR, NGM, FANG, OVV, GEL, MRO, HP, LNG, VNOM, ARCH, SAH, OII, METC, WLL, ARLP, SM, PBF, SJI, MUR, HAL, CLR, CHK, PSX, MTOR, CHX, MCS, BFAM, SFM, LPI, WMB, WHD, MGY, EPD, METC, LBRT, IEP, EQT, EOG, ET, GT, MTDR, DCP, ES and PXD
  

Stocks With Unusual Call Option Activity:

• 1) INOV 2) VTNR 3) BTU 4) XLE 5) ARLP

Stocks With Most Positive News Mentions:

• 1) BTU 2) XENE 3) ADVM 4) NGS 5) OPGN
  

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +6.3% Above 100-Day Average 
• 2 Sectors Rising, 9 Sectors Declining
• 30.6% of Issues Advancing, 60.6% Declining
• 91 New 52-Week Highs, 71 New Lows
• 58.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 45.0%
  
• Bloomberg Global Risk-On/Risk-Off Index 2,693.0 -245.0 points
• Russell 1000: Growth/Value 17,106 -2.1%
  
• Vix 23.7 +12.0%
• Total Put/Call .94 +2.2%
• TRIN/Arms .67 +17.5%