Wednesday Watch

Night Trading 

• Asian equity indices are +.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 83.75 -1.5 basis points.

• China Sovereign CDS 47.0 -.75 basis point.
  

• Bloomberg Emerging Markets Currency Index 58.69 unch. 
• Bloomberg Global Risk-On/Risk Off Index 3,604.0 +1.0 point.
• Volatility Index(VIX) futures 19.6 +.4%.
• FTSE 100 futures +.13%.

• S&P 500 futures +.03%

• NASDAQ 100 futures -.07%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (ABT)/.94
• (ANTM)/6.37
• (ASML)/3.97
• (BKR)/.21
• (BIIB)/4.11
• (CP)/.94
• (CMA)/1.64
• (KNX)/1.07
• (LAD)/0.28
• (MTB)/3.49
• (NEE)/.72
• (VZ)/1.36
• (WGO)/2.05
  

After the Close:

• (CCI)/1.71
• (CSX)/.38
• (DFS)/3.38
• (GGG)/.63
• (IBM)/2.52
• (KMI)/.25
• (LRCX)/8.20
• (LSTR)2.53
• (LVS)/-.23
• (THC)/.98
• (TSLA)/1.57
• (VMI)/2.47
  

Economic Releases

2:00 pm EST

• US Fed's Beige Book report.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Quarles speaking, PBOC rate decision, 20Y T-Bond auction, weekly MBA Mortgage Applications report, (HPQ) analyst meeting, (EAT) investor day and the (RIO) investor seminar could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are higher, boosted by commodity and financial 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.

Stocks Higher into Final Hour on Earnings Optimism, Declining China Debt Bubble-Bursting Angst, Short-Covering, Tech/Healthcare Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 15.6 -4.2%
• Bloomberg Global Risk On/Risk Off Index 3,598.0 +166.0 points

• Euro/Yen Carry Return Index 137.29 +.25%

• Emerging Markets Currency Volatility(VXY) 8.87 +.45%

• S&P 500 Implied Correlation 52.5 -4.8%

• ISE Sentiment Index 130.0  +12.0 points
  

• Total Put/Call .74 -7.5%

• NYSE Arms .76 -30.9%

Credit Investor Angst:

• North American Investment Grade CDS Index 51.44 -1.3%
  

• US Energy High-Yield OAS 351.09 -1.3%

• European Financial Sector CDS Index 56.58 -1.8%

• Italian/German 10Y Yld Spread 105.0 unch.
  

• Asia Ex-Japan Investment Grade CDS Index 84.15 -1.2%
  

• Emerging Market CDS Index 177.74 -2.2%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 34.92 -.4%

• 2-Year Swap Spread 16.25 +.5 basis point
  

• TED Spread 8.25 +.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -21.75 +1.0 basis point
  
• MBS  5/10 Treasury Spread  67.25 -.75 basis point
  
• IHS Markit CMBX BBB- 6 71.75 +.25 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 58.68 +.19%
• 3-Month T-Bill Yield .04% unch.
  

• Yield Curve 117.0 -2.0 basis points
  

• China Iron Ore Spot 123.4 USD/Metric Tonne +.8%

• Citi US Economic Surprise Index -38.5 -6.5 points

• Citi Eurozone Economic Surprise Index -73.8 -.3 point
  

• Citi Emerging Markets Economic Surprise Index -4.4 unch.

• 10-Year TIPS Spread 2.55 +1.0 basis point
• 99.5% chance of no change at Dec. 15th meeting, 94.5% chance of no change at Jan. 26th meeting

US Covid-19:

• 177 new infections/100K people(last 7 days total) -0/100K people
• 33% of Jan. 7th, 2021 peak(highest daily avg. new infections) unch.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +165 open in Japan 
• China A50 Futures: Indicating +27 open in China

• DAX Futures: Indicating -33 open in Germany

Portfolio:

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

• Disclosed Trades:  None
  

• Market Exposure:  100% Net Long
  

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.1%

Sector Outperformers:

• 1) Alt Energy +3.0% 2) Social Media +2.6% 3) Medical Equipment +2.1%

Stocks Rising on Unusual Volume:

• DNA, HRMY, PRLD, BROS, ALVR, ASAN, FSLY, IRNT, PLBY, FLR, MQ, APO, SPWR, STAA, NOVA, TRUP, CDXS, RUN, BLND, GDRX, ETWO, PLXP, CHPT, COMP, GH, PENN, LOVE, DIN, ENPH, D, THC, MBI, FSLR, CURV, SNV, ACLS, IRDM, COIN, APP, DV, LHCG, IONS, TPIC, ZG, MARA, CLSK, SHLS and PYCR
  

Stocks With Unusual Call Option Activity:

• 1) FTEK 2) KODK 3) APO 4) WM 5) D

Stocks With Most Positive News Mentions:

• 1) HRMY 2) MEEC 3) GRVI 4) FFMR 5) MLI
  

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -14.6% Below 100-Day Average 
• 9 Sectors Rising, 2 Sectors Declining
• 55.0% of Issues Advancing, 41.0% Declining
• 82 New 52-Week Highs, 15 New Lows
• 61.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.7%
  
• Bloomberg Global Risk-On/Risk-Off Index 3,573.0 +142.0 points
• Russell 1000: Growth/Value 17,740 -.01%
  
• Vix 15.9 -2.4%
• Total Put/Call .71 -11.3%
• TRIN/Arms .83 -24.6%

Tuesday Watch

Evening Headlines

Bloomberg:     

• Boris Johnson Sees ‘Extremely Tough’ Global Climate Talks in Glasgow.  
• The 5 Biggest Takeaways From Bloomberg’s Interview with Boris Johnson.
• A $30 Billion Fortune Is Hiding in China’s Silicon Valley.
• India Rains Stoke Concern That Coal Shortages May Linger On.
• Biggest U.S. Coal Miner Surges 17% as Global Energy Crisis Boosts Demand. “We remain optimistic about the future, given strong coal pricing and global demand fundamentals,” Peabody(BTU) Chief Executive Officer Jim Grech said in the statement.  
• No. 1 Uranium Miner Backs Physical Fund in Nod to Robust Demand.  
• Goldman’s Jeff Currie: It’s a Commodities Supercycle, and We Still Haven’t Hit Max Pain.
  
• Stocks Set for Mixed Start Amid Inflation Concerns: Markets Wrap.
• A Third of Chicago Police Have Failed to Report Their Vaccine Status.
• ESPN’s Allison Williams to Leave Network After Refusing Vaccine.
• NHL Suspends Evander Kane 21 Games for COVID Violations.  
• Apple Drops Intel in Biggest MacBook Pro Overhaul in Years.  
• Manchin Casts Doubt on Oct. 31 Deadline to Act on Biden Plan.

Wall Street Journal:

• To Strike a Climate Deal, Poor Nations Say They Need Trillions From Rich Ones.
• FDA Nears Approval for Mixing Covid-19 Booster Shots.
• Google CEO Calls for Government Action on Cybersecurity, Innovation.
• FBI Will Help Investigate Kidnapping of Missionaries in Haiti.
• China’s Hypersonic Wake-Up Call. 
• Mexico Moves to Seize American Assets.
• Progressive Court-Packing Meltdown.
• Rent the Runway Targets Valuation of Up to $1.5 Billion in IPO.
• On Instagram, 20-Somethings Are Jumping, Twisting and Falling for the Likes.

Fox News:    

• Biden administration's chaotic and deadly Afghanistan withdrawal just got a rude awakening.
• GOP fights back after Dem says a state is 'irrelevant' to America's economy.
• WH's reaction to Biden without mask in posh restaurant likely to surprise you.
  

CNBC.com: 

• Faced with a power crisis, China may have ‘little choice’ but to ramp up coal consumption.
• Carl Icahn says the market over the long run will certainly ‘hit the wall’ because of money printing.
• SEC says brokers enticed by payment for order flow are making trading into a game to lure investors.
• Amazon cloud storage challenger Backblaze files to go public.
• Jim Cramer says he sold some of his ether holdings ahead of bitcoin futures ETF launch.

MarketWatch.com:            

• Microsoft says it warned Bill Gates about flirtatious emails in 2008.  
• Apple unveils new AirPods and high-end Mac computers as it expands its holiday lineup.

Zero Hedge:  

• Peabody Energy(BTU) Earnings Triple As Biden "Makes Coal Great Again".
• Gov. Newsom Signs Cultural Marxist Bills.
• CNN Accidentally Allows Someone To Tell The Truth On Air.
• Chicago Mayor Accuses Police Union Of Trying To 'Induce An Insurrection' Over Vaccine Mandate.
• Biden To Meet With Pope Days Before Pitching 15% Minimum Global Tax And Climate Plan To World Leaders.
• Locked & Loaded: Supreme Court Is Ready To Take Aim At The Second Amendment.
• "Striketober" - Walk-Outs Surge As Workers See Opportunity In Rising Job Openings.
• 'Nothing To See Here': SEC Refutes 'Short Squeeze' As Factor In GME Debacle, Blames HOOD & Payment-For-Order-Flow.
• GOP Senator Wants 'Senility Testing' For Aging Supreme Court Justices, Lawmakers.
• Quinn: Living In A Potemkin World.
• China's US Treasury Holdings Plunge To 10 Year Lows After Dumping In August.
• Powell's Stock Trades Leaked, Show Multi-Million Sale As Market Tanked.
• Bitcoin, Bonds, & Big-Tech Bounce As The Dollar Drops To Key Support.

Newsmax:

• Rep. McCaul: China's Missile Launch Came as US Appears Weak.
• Rep. Comer: Admin Has No Plan for Supply Crisis.

TheGatewayPundit.com:

• Chicago Threatens to Withhold Retirement Benefits From Cops Who Retire Rather than Submit to Mayor Lightfoot’s COVID Vaccine Mandate.
• Union Pacific Railroad Files Federal Lawsuit Over Unions’ Objections to Joe Biden’s Forced Vaccines.
• “We Welcome Stiff Competition” – Psaki When Asked About China’s Space Nukes That Could Evade US Missile Defense Systems (VIDEO).
• Violent Insurrection? New Security Footage From Jan 6th Shows Capitol Police Officers Herding Protesters Inside As They Enter The Capitol – Then Stood Back (Video).
• Japan Has Never Had Anything Close to a COVID Lockdown and Now Its COVID Crisis is Almost Over With New Cases Dropping to Less Than 100 a Day.
• Psaki Defends Joe Biden Violating DC’s Mask Mandate, Lectures Peter Doocy For ‘Overly Focusing’ on Biden’s Hypocrisy (VIDEO).
• Washington State Trooper Speaks Out After Being Fired Over Refusal to Take Mandated COVID Vaccine.
• Massive ‘World Freedom Rally’ Against Vaccine Mandates Takes Over Times Square in NYC; Crowd Marches Through Streets Chanting “WAKE UP NY” – (Video).

The Epoch Times:

• ‘We Just Don’t Know’ How to Defend Against Possible Chinese Hypersonic Missile: US Ambassador.
• Former State Senator Explains the Chinese Communist Party’s Influence in California.

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

• Asia Ex-Japan Investment Grade CDS Index 85.25 -3.25 basis points.

• China Sovereign CDS 47.75 -1.5 basis points.
  

• Bloomberg Emerging Markets Currency Index 58.59 +.03%. 
• Bloomberg Global Risk-On/Risk Off Index 3,393.0 -37.0 points.
• Volatility Index(VIX) futures 19.75 +.3%.
• FTSE 100 futures +.07%.

• S&P 500 futures +.06%

• NASDAQ 100 futures +.11%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (BK)/1.00
• (ERIC)/1.52
• (FITB)/.90
• (HAL)/.28
• (JNJ)/2.35
• (KSU)/2.04
• (MAN)/1.89
• (PM)/1.56
• (PG)/1.59
• (TRV)/2.05
  

After the Close:

• (CNI)/1.42
• (IBKR)/.76
• (ISRG)/1.16
• (MRTN)/.25
• (NFLX)/2.56
• (UAL)/-1.68
• (WDFC)/1.24
  

Economic Releases

8:30 am EST

• Housing Starts for Sept. is estimated at 1615K versus 1615K in Aug.
• Building Permits for Sept. is estimated to fall to 1680K versus 1728K in Aug.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Bowman speaking, Fed's Waller speaking, Eurozone CPI report, weekly US retail sales reports and the (ULTA) analyst day could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are higher, boosted by technology and consumer cyclical 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.

Stocks Reversing Slightly Higher into Afternoon on Earnings Optimism, Stable Long-Term Rates, Declining China Debt Bubble-Bursting Angst, Consumer Discretionary/Tech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 16.4 +.3%
• Bloomberg Global Risk On/Risk Off Index 3,444.0 -6.0 points

• Euro/Yen Carry Return Index 136.82 +.09%

• Emerging Markets Currency Volatility(VXY) 8.82 +.6%

• S&P 500 Implied Correlation 55.6 +.6%

• ISE Sentiment Index 119.0  +13.0 points
  

• Total Put/Call .77 -19.4%

• NYSE Arms 1.05 +4.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 52.35 +.46%
  

• US Energy High-Yield OAS 357.45 -1.4%

• European Financial Sector CDS Index 57.63 +.88%

• Italian/German 10Y Yld Spread 105.0 +1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 85.22 -2.5%
  

• Emerging Market CDS Index 182.75 +1.31%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 35.0 +.76%

• 2-Year Swap Spread 15.75 +1.5 basis points
  

• TED Spread 8.0 -.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -22.75 -.25 basis point
  
• MBS  5/10 Treasury Spread  68.0 +.75 basis point
  
• IHS Markit CMBX BBB- 6 71.75 +.25 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 58.63 -.27%
• 3-Month T-Bill Yield .04% unch.
  

• Yield Curve 119.0 +2.0 basis points
  

• China Iron Ore Spot 120.85 USD/Metric Tonne +.3%

• Citi US Economic Surprise Index -32.9 -10.8 points

• Citi Eurozone Economic Surprise Index -73.5 +.2 point
  

• Citi Emerging Markets Economic Surprise Index -4.4 -.1 point

• 10-Year TIPS Spread 2.54 -2.0 basis points
• 97.8% chance of no change at Dec. 15th meeting, 94.2% chance of no change at Jan. 26th meeting

US Covid-19:

• 177 new infections/100K people(last 7 days total) -8/100K people
• 33% of Jan. 7th, 2021 peak(highest daily avg. new infections) -2.0 percentage points
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +80 open in Japan 
• China A50 Futures: Indicating -1 open in China

• DAX Futures: Indicating -17 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 100% Net Long