Stocks Slightly Higher into Final Hour on Lower Long-Term Rates, FOMC Commentary, Short-Covering, Tech/Metals & Mining Sector Strength

 

 Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 19.4 -3.0%
• Bloomberg Global Risk On/Risk Off Index 3,201.0 -70.0 points

• Euro/Yen Carry Return Index 135.51 +.30%

• Emerging Markets Currency Volatility(VXY) 8.94 -.56%

• S&P 500 Implied Correlation 55.8 -2.3%

• ISE Sentiment Index 111.0  +14.0 points
  

• Total Put/Call .83 +5.1%

• NYSE Arms 1.20 +1.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 54.45 -.78%
  

• US Energy High-Yield OAS 372.99 -.05%

• European Financial Sector CDS Index 60.0 -.6%

• Italian/German 10Y Yld Spread 103.0 +2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 93.5 -1.0%
  

• Emerging Market CDS Index 186.45 -1.1%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 33.99 -.32%

• 2-Year Swap Spread 13.0 +.75 basis point
  

• TED Spread 8.75 +1.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -18.75 unch.
  
• MBS  5/10 Treasury Spread  72.5 +.75 basis point
  
• IHS Markit CMBX BBB- 6 71.5 -.25 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 58.58 +.2%
• 3-Month T-Bill Yield .04% -1.0 basis point
  

• Yield Curve 123.0 -3.0 basis points
  

• China Iron Ore Spot 120.0 USD/Metric Tonne -1.9%

• Citi US Economic Surprise Index -20.3 +1.8 points

• Citi Eurozone Economic Surprise Index -74.0 +1.1 points
  

• Citi Emerging Markets Economic Surprise Index -2.0 +2.3 points

• 10-Year TIPS Spread 2.52 +3.0 basis points
• 100.0% chance of no change at Dec. 15th meeting, 95.1% chance of no change at Jan. 26th meeting

US Covid-19:

• 191 new infections/100K people(last 7 days total) +4/100K people
• 36% of Jan. 7th, 2021 peak(highest daily avg. new infections) +1.0 percentage point
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +65 open in Japan 
• China A50 Futures: Indicating +85 open in China

• DAX Futures: Indicating +3 open in Germany

Portfolio:

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

• Disclosed Trades:  Covered some of my (IWM)/(QQQ) hedges
  

• Market Exposure: Moved to 50% Net Long
  

Bear Radar

 Style Underperformer:

• Samll-Cap Value -.4%

Sector Underperformers:

• 1) Airlines -3.2% 2) Steel -1.4% 3) Banks -1.0%

Stocks Falling on Unusual Volume: 

• WRK, MNST, REVG, AGL, PVAC, EFC, PEB, AAL, MTW, OCUL, HA, JBLU, COF, AXP, GRPH, BRBR, LPI, SAVE, NAPA, SNBR, CAR, DAL, LGF/B, AHT, ALGN, EVH, SNCY, LEGN, GRWG, ATRA and SRPT
  

Stocks With Unusual Put Option Activity:

• 1) ALGN 2) MAT 3) ADI 4) JNK 5) SPLK
  

Stocks With Most Negative News Mentions:

• 1) STIM 2) SRPT 3) ALGN 4) CRSP 5) BRBR
  

Charts:

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

Bull Radar

 Style Outperformer:

• Mid-Cap Growth +.8%

Sector Outperformers:

• 1) Gold & Silver +3.6% 2) Video Gaming +1.9% 3) Social Media +1.3%

Stocks Rising on Unusual Volume:

• SGH, RLAY, RVNC, VMEO, RXRX, PLUG, VST, ALLO, ALHC, BE, BLI, ZUO, AFRM, BLK, HUBS and LOKB
  

Stocks With Unusual Call Option Activity:

• 1) WTRH 2) BLMN 3) DBRG 4) DBA 5) BLK

Stocks With Most Positive News Mentions:

• 1) JSPR 2) WTRH 3) SOTK 4) SGH 5) VMEO
  

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -8.6% Below 100-Day Average 
• 2 Sectors Rising, 9 Sectors Declining
• 51.7% of Issues Advancing, 43.6% Declining
• 40 New 52-Week Highs, 23 New Lows
• 56.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.2%
  
• Bloomberg Global Risk-On/Risk-Off Index 3,208.0 -63.0 points
• Russell 1000: Growth/Value 17,438 +.42%
  
• Vix 19.4 -2.3%
• Total Put/Call .80 +1.3%
• TRIN/Arms 1.22 +3.4%

Wednesday Watch

Evening Headlines

Bloomberg:                   

• Sunak to Urge G-7 Counterparts to Coordinate Over Supply Issues.
• LVMH Growth Slows as Post-Lockdown Comparisons Get Tougher.
• Stocks Set for Steady Start as Earnings, CPI Loom: Markets Wrap.
• Oil Edges Higher With Energy Shortages Boosting Winter Demand.
  
• Banks Analysts Warn That 60/40 Portfolios Could Be Battered by Inflation.
  
• Cathie Wood’s ARK Funds Snapped Up Crispr Shares Ahead of Plunge.
  
• Progressives Say They Won’t Give Up Priorities in Spending Plan.  
• Warren Buffett’s Son Granted Colombian Citizenship.
• Online Boutique Lulu’s Files for IPO Disclosing Sales Growth.
• Mastercard-Backed AvidXchange Upsizes IPO to Raise $660 Million.

Wall Street Journal: 

• The Nets Ban Kyrie Irving Until He Gets Vaccinated.
• L.O.L. Dolls Are Stuck in the Supply Chain. John Baker Must Free Them Before Christmas.
• Southwest Pilots Warn Fatigue, Frustration Could Fuel More Outages.
• GM to Recover $1.9 Billion in Bolt-Recall Costs in Deal With LG.
• Vaccine Mandate Madness.  
• Wait, We Still Want Fossil Fuels?  
• Covid on Campus: Are the Restrictions Overkill?  
• Boom Times in the Beltway.
• Home Sales Are Falling Sharply in China.
• North Korea Puts on Show of Missile Might as Kim Jong Un Snubs U.S.
• Taliban Allow Teenage Girls Back in Some Schools—but Not in Kabul.
  

Fox News:

• Dad cuffed at school board meeting: Sex attack covered up to shield trans agenda.
• Dozens of illegal migrants arrested after agents make stunning discovery on train.

CNBC.com:  

• Boeing says employees must show proof of Covid vaccination by Dec. 8 under federal contractor rules.
• A record 4.3 million workers quit their jobs in August, led by food and retail industries.
• House approves debt limit increase that will last through part of December, sends bill to Biden.
• FDA approves Vuse vaping products for sale, marking a first for the e-cigarette industry.
• Health insurance options if you’re fired for refusing to get a Covid vaccine.
• FDA staff doesn’t take stance on Moderna Covid boosters, says two doses protect against severe disease.
• Sharp surge in energy prices threatens economic recovery and is already slowing growth.
• Fed’s Bullard says bond purchases should be tapered quickly in case rate hikes are needed.
• Hasbro CEO Brian Goldner dies, days after stepping down for health reasons.

MarketWatch.com:           

• Why a majority of Silicon Valley residents want to move.

Zero Hedge:

• California Bans Small Off-Road Gas Engines, Including Lawnmowers And Chainsaws.
• NYC’s Unvaccinated Teachers Must Waive Right To Sue If They Want To Keep Health Benefits.
• Oregon Senators Call For Investigation Into Alleged COVID-19 Statistical Manipulation.
• Third Quarter Earnings Season Begins Tomorrow: It Could Be Ugly.
• It's All Fake: Kamala Harris Used Child Actors Who Had To Audition For Weird NASA Promo.
• Fed's Quarles To No Longer Chair Committee On Supervision, Setting Stage For Brainard Ascent.
• Southwest To Comply With Biden Vaccine Order, Ignore Texas Ban.
• Vaccine Effectiveness In New York Dropped As Delta Variant Surged During Summer, Study Shows.
• Judge Overrules NY Governor - Says Employers Must Grant Religious Exemptions To Healthcare Workers.
• Apple Tumbles After iPhone Production Goal Slashed On Chip Shortage.
• Stocks Stink As Curve Pancakes On Stagflation Fears.

Newsmax:

• Lump of Coal for Christmas: 'There Will Be Things That People Can't Get,' WH Warns.  
• Ric Grenell: WH Unprepared for China, Other Scenarios.

TheGatewayPundit.com:

• Psaki Says the Quiet Part Out Loud: ‘Biden Wants to Make Fundamental Change in Our Economy and He Feels Coming out Of the Pandemic is the Time to do That’ (VIDEO).
• “F**k the USA!” – Dominion’s Eric Coomer Admits Under Oath to Being former Skinhead, Heroin Addict – Lied in Denver Post Screed (VIDEO).
• Ohio Man’s Kidney Transplant Canceled Days Away From Scheduled Surgery Because Donor Wasn’t Vaxxed.
• Massachusetts Governor Activates National Guard to Test School Children For Covid.
• UPDATE: Evergrande Crisis Continues – 1.5 Million Chinese Worry About Their Deposits on Apartments Not Yet Built.
• REPORT: Indiana Walgreens “Accidentally” Gives Pfizer COVID Jabs To 4 and 5 Yr Old Siblings…Pediatric Cardiologist Is Reportedly Treating Both Kids For Heart Issues [VIDEO].

The Epoch Times:

• Nearly a Quarter of Coal Mines in China’s Shanxi Province Suspend Operations Due to Safety Concerns.

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 -.5% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 93.5 -4.25 basis points.

• China Sovereign CDS 55.5 -5.0 basis points.
  

• Bloomberg Emerging Markets Currency Index 58.57 +.02%. 
• Bloomberg Global Risk-On/Risk Off Index 3,241.0 -29.0 points.
• Volatility Index(VIX) futures 21.6 +.84%.
• FTSE 100 futures -.15%.

• S&P 500 futures -.16%

• NASDAQ 100 futures -.19%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (BLK)/9.55
• (DAL)/.17
• (JPM)/3.00
  

After the Close:

• None of note
  

Economic Releases

8:30 am EST

• The CPI MoM for Sept. is estimated to rise +.3% versus a +.3% gain in Aug.
• The CPI Ex Food and Energy MoM for Sept. is estimated to rise +.2% versus a +.1% gain in Aug.
• Real Avg. Weekly Earnings YoY for Sept.
  

2:00 pm EST

• The Sept. 22 FOMC Meeting Minutes.
  

Upcoming Splits

• (MCHP) 2-for-1
  

Other Potential Market Movers

• The Fed's Bowman speaking, Fed's Brainard speaking, China's Trade Data report, weekly MBA Mortgage Applications report,  30Y T-Bond auction and the Eurozone Industrial Production report 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 consumer cyclical shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

Stocks Reversing Slightly Lower into Afternoon on Policy-Induced Labor/Product Shortages, US Stagflation Fears, Less Dovish Fed Commentary, Tech/Pharma Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 19.4 -3.0%
• Bloomberg Global Risk On/Risk Off Index 3,342.0 -33.0 points

• Euro/Yen Carry Return Index 135.10 +.06%

• Emerging Markets Currency Volatility(VXY) 8.9 +.11%

• S&P 500 Implied Correlation 56.2 +.21%

• ISE Sentiment Index 111.0  +21.0 points
  

• Total Put/Call .76 -22.5%

• NYSE Arms 1.15 -1.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 54.54 +1.2%
  

• US Energy High-Yield OAS 372.03-.39%

• European Financial Sector CDS Index 60.36 +.57%

• Italian/German 10Y Yld Spread 101.0 -3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 94.17 -.84%
  

• Emerging Market CDS Index 188.92 +3.17%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 34.15 +.95%

• 2-Year Swap Spread 12.25 +1.5 basis points
  

• TED Spread 7.5 unch.
  

• 3-Month EUR/USD Cross-Currency Basis Swap -18.75 unch.
  
• MBS  5/10 Treasury Spread  72.5 +.75 basis point
  
• IHS Markit CMBX BBB- 6 71.75 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 58.58 +.2%
• 3-Month T-Bill Yield .04% -1.0 basis point
  

• Yield Curve 126.0 -1.0 basis point
  

• China Iron Ore Spot 120.0 USD/Metric Tonne -1.9%

• Citi US Economic Surprise Index -22.1 +.3 point

• Citi Eurozone Economic Surprise Index -75.1 -.3 point
  

• Citi Emerging Markets Economic Surprise Index -4.3 -2.1 points

• 10-Year TIPS Spread 2.49 -2.0 basis points
• 100.0% chance of no change at Dec. 15th meeting, 97.5% chance of no change at Jan. 26th meeting

US Covid-19:

• 187 new infections/100K people(last 7 days total) -15/100K people
• 35% of Jan. 7th, 2021 peak(highest daily avg. new infections) -3.0 percentage points
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +110 open in Japan 
• China A50 Futures: Indicating +!0 open in China

• DAX Futures: Indicating +7 open in Germany

Portfolio:

• Slightly Lower: On losses in my tech sector longs and index hedges
  

• Disclosed Trades:  None
  

• Market Exposure: 25% Net Long