Stocks Rising into Final Hour on Earnings Optimism, Stable Long-Term Rates, Short-Covering, Tech/Alt Energy Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 16.3 -4.1%
• Bloomberg Global Risk On/Risk Off Index 3,325.0 -13.0 points

• Euro/Yen Carry Return Index 136.69 +.38%

• Emerging Markets Currency Volatility(VXY) 9.11 -.11%

• S&P 500 Implied Correlation 53.2 -2.9%

• ISE Sentiment Index 131.0  +44.0 points
  

• Total Put/Call .64 -23.8%

• NYSE Arms .92 -46.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 51.37 -.46%
  

• US Energy High-Yield OAS 353.04 +.01%

• European Financial Sector CDS Index 56.99 +2.8%

• Italian/German 10Y Yld Spread 119.0 +7.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 80.02 +.38%
  

• Emerging Market CDS Index 181.37 +.01%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 33.62 -.99%

• 2-Year Swap Spread 17.25 +1.0 basis point
  

• TED Spread 9.0 +.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -23.25 -.75 basis point
  
• MBS  5/10 Treasury Spread  65.0 -1.25 basis points
  
• IHS Markit CMBX BBB- 6 72.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 58.38 -.02%
• 3-Month T-Bill Yield .05% unch.
  

• Yield Curve 103.0 -13.0 basis points
  

• China Iron Ore Spot 110.0 USD/Metric Tonne -3.7%

• Citi US Economic Surprise Index -19.5 -7.0 points

• Citi Eurozone Economic Surprise Index -56.0 +10.5 points
  

• Citi Emerging Markets Economic Surprise Index -5.1 +2.7 points

• 10-Year TIPS Spread 2.61 -6.0 basis points
• 97.8% chance of no change at Dec. 15th meeting, 93.0% chance of no change at Jan. 26th meeting

US Covid-19:

• 160 new infections/100K people(last 7 days total) +10/100K people
• 30% of Jan. 7th, 2021 peak(highest daily avg. new infections) +2.0 percentage points
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +30 open in Japan 
• China A50 Futures: Indicating +76 open in China

• DAX Futures: Indicating -28 open in Germany

Portfolio:

• Higher: On gains in my industrial/consumer discretionary/tech/commodity sector longs and emerging market shorts
  

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

• Market Exposure:  Moved to 100% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Value +.7%

Sector Underperformers:

• 1) Gambling -1.5% 2) Gold & Silver -.8% 3) Steel -.3%

Stocks Falling on Unusual Volume: 

• TPX, AGNC, PSXP, TFX, KREF, EHC, MQ, MO, NTGR, BKKT, TTMI, NOC, EBAY, FLS, AGC, RDBX, SCPL, NVCR, UPWK, SGMS, WEX, STEM, FOUR, ALNY, TWLO, PRLB and IRNT
  

Stocks With Unusual Put Option Activity:

• 1) NLY 2) LC 3) TWLO 4) OSTK 5) ZEN
  

Stocks With Most Negative News Mentions:

• 1) IRNT 2) PRLB 3) FUTU 4) EBAY 5) NTGR
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +2.2%

Sector Outperformers:

• 1) Alt Energy +5.1% 2) Construction +2.5% 3) Computer Hardware +2.3%

Stocks Rising on Unusual Volume:

• LCID, LC, WOLF, OSTK, CYH, MXL, UCTT, ATI, INSM, FSR, TER, ICHR, IONQ, PRCH, PLUG, PTRA, IRBT, FLWS, F, ENSG, VC, AOS, W, BE, CCS, CHWY, SAIA, TDOC, LWLG, FUV, NOVA, BMRN, URI, BSIG, OCGN, MRK, FCF, OCGN, CNMD, ARCB, HYFM, INSE, MGTX, TROW, DT, SLGC, KN, TPIC, BWXT, ARNA, MC, ALSN, KLAC, NOW, DRVN, ALGM, TRU, SNAP, MTH, CARA, TSLA, SNBR, ALGN and LKQ
  

Stocks With Unusual Call Option Activity:

• 1) WOLF 2) TWLO 3) LC 4) AIG 5) JNPR

Stocks With Most Positive News Mentions:

• 1) WOLF 2) IFRX 3) LC 4) MXL 5) UCTT
  

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +5.6% Above 100-Day Average 
• 10 Sectors Rising, 1 Sector Declining
• 63.1% of Issues Advancing, 32.5% Declining
• 101 New 52-Week Highs, 35 New Lows
• 56.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.6%
  
• Bloomberg Global Risk-On/Risk-Off Index 3,290.0 -50.0 points
• Russell 1000: Growth/Value 17,999 +.21%
  
• Vix 16.3 -4.0%
• Total Put/Call .64 -23.8%
• TRIN/Arms 1.04 -39.2%

Thursday Watch

Evening Headlines

Bloomberg:          

• China Targets Vegetable Hoarders After Spinach More Than Doubles.  
• How China Is Rolling Out a Property Tax on Homes, and Why.
• Bulls Return to China’s Markets Just as Risks Start to Multiply.  
• Brazil Tightens Most in Years, With 150 Points Now and December.  
• Bank of Canada Accelerates Potential Timing of Rate Hikes.  
• Australia’s Biggest Bank Now Sees First RBA Hike in November ‘22. 
• Asia Stocks to Fall; Bond Curves Flag Growth Fears: Markets Wrap.
• Oil Drops as Iran and EU Prepare to Resume Nuclear Talks.   
• Democrats Clash on Billionaire Tax as Neal Rejects Senate Plan.  
• Anti-Ark ETF Betting Against Cathie Wood Changes Its Name.  
• Elon Musk Says Taxing Billionaires Won’t Ease Debt Burden.  
• Millions Resign Across America, Rekindling Labor Movement.  
• Markets Face an Even Bigger Inflation Test Next Year, Janus Says.  
• Tech Hangs Tough as Faltering Reopening Trade Slams Small Caps.  
• Bitcoin Slips Below $60,000 as ETF-Related Bliss Evaporates.  
• Robinhood Sinks Below IPO Price as Revenue Misses Estimates.

Wall Street Journal:

• Third Point Urges Shell to Split After Taking Big Stake.
• Alec Baldwin Fired Live Round on Set of ‘Rust,’ Sheriff Says.
• China’s Ambitious Climate Goals Collide With Reality, Hampering Global Efforts. 
• Where Are the Wuhan Subpoenas?  U.S. funding for risky Chinese virus research deserves investigation.
• CFTC Chief Says Recent Crypto Cases Are ‘Tip of the Iceberg’.
• SEC Won’t Approve Leveraged Bitcoin Fund.
• Election-Rigging Claims Fuel Virginia Governor’s Race.
• China’s Hypersonic Missile Test Is Close to ‘Sputnik Moment,’ U.S. Military Chief Says.

Fox News:   

• McAuliffe events show Democrat may be in serious trouble as Virginia race tightens with just days to go.
  

CNBC.com:

• CEO of paint-maker PPG says predicting sales is a challenge because of supply chain woes.
• Major business groups prepare to fight new Democratic tax proposals for Biden social bill.
• Ford shatters Wall Street’s earnings expectations, raises yearly guidance on new vehicle demand.
• Retail trade group expects holiday sales to rise by all-time record, despite congested ports.
• Stocks making the biggest moves after hours: Ford, eBay, Twilio and more.

MarketWatch.com:              

• Twilio stock dives 13% after weak earnings guidance, COO’s announced departure.  
• Starbucks raising pay to at least $15 an hour amid unionization rumblings.  
• Here are the companies that Apple’s ad changes are hurting, and the ones that can withstand the pain.  
• World’s richest 29-year-old says biggest risk to crypto is ‘a cascade, combining a big crash, liquidations,’ and U.S. regulatory crackdown.  
• Cheap, generic antidepressant shows promise in treating early COVID-19.

Zero Hedge:  

• Wait Until All These New Homebuyers See Their Property Taxes Go Up Next Year.
• US Coal Stockpiles Slump To Two Decade Low As Power Plant Demand Surges.
• Democrats Nix Paid Leave In Latest Cut To Social Spending Package.
• How Long Until Supply Chains Finally Normalize: Three Things To Watch.
• China Urges US To Immediately Lift Sanctions On Taliban As "Economic Chaos" Looms.
• Taiwan Is A 'Number One Issue' For The CIA’s New China Center.
• Gender "X": US Issues First Passport For People Who Don't Identify As Male Or Female.
• A Global Oil Shortage Is Inevitable.
• Billionaires To Fund "Anti-Disinformation" Media Companies To "Restore Social Trust".
• Bond Market Screams Fed Policy Error, Sparks Huge Value-To-Growth Rotation In Stocks.

Newsmax:

• Rep. Jordan to Newsmax: Time For Garland to Rescind Schools Memo.
  
• Sen. Rand Paul: Dems Won't Hold Fauci Accountable, But I Will.
• Sen. Rand Paul: Dog Torture Opening Public's Eyes on Fauci.

TheGatewayPundit.com:

• VIDEO: Journalist Reads Filthy Porn Book from School’s Library at FL School Board Meeting – Board Members Call Police to Have Him Forcefully Removed for Reading Obscene Content Aloud.
• SICK, EVIL PEOPLE: Buried in FDA Hearing the Editor-in-Chief of NEJM, Dr. Eric Rubin Says, “We’re Never Going to Learn About How Safe It Is Unless We Start Giving It”.
• Doctor Brags on Social Media About Letting Her 4-YEAR-OLD CHILD Be Used as a Human Guinea Pig for Vaccine Testing.
• 70 Percent of COVID-19 Deaths Both in Sweden and UK in September Were “Fully Vaccinated”.

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 unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 79.25 -2.5 basis points.

• China Sovereign CDS 44.75 -.75 basis point.
  

• Bloomberg Emerging Markets Currency Index 58.39 -.01%. 
• Bloomberg Global Risk-On/Risk Off Index 3,274.0 -66.0 points.
• Volatility Index(VIX) futures 19.10 -1.3%.
• FTSE 100 futures +.17%.

• S&P 500 futures +.19%

• NASDAQ 100 futures +.23%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (AGCO)/1.85
• (AB)/.86
• (MO)/1.26
• (AMT)/2.36
• (BUD)/.57
• (BAX)/.94
• (CAT)/2.21
• (CMCSA)/.75
• (DBD)/.52
• (FSS)/.46
• (FCN)/1.48
• (GPI)/9.04
• (HSY)/2.00
• (ITW)/2.02
• (ICE)/1.23
• (KDP)/.44
• (LH)/4.90
• (MA)/2.19
• (MRK)/1.5
• (TAP)/1.51
• (NEM)/.73
• (NOC)/5.98
• (OSK)/.93
• (PTEN)/-.44
• (BTU)/-.07
• (RS)/5.93
• (SHOP)/1.20
• (SWK)/2.47
• (TROW)/3.31
• (YUM)/1.08
  

After the Close:

• (AMZN)/8.96
• (AAPL)/1.24
• (COLM)/1.29
• (DECK)/3.90
• (GILD)/1.77
• (MSTR)/1.24
• (MHK)/3.80
• (SKYW)/1.23
• (SBUX)/1.00
• (SYK)/2.28
• (X)/4.93
• (WERN)/.95
• (WDC)/2.44
• (ZEN)/.17
  

Economic Releases

8:30 am EST

• Initial Jobless Claims for last week are estimated to fall to 289K versus 290K the prior week.
• Continuing Claims are estimated to fall to 2420K versus 2481K prior.
• 3Q GDP Annualized QoQ is estimated to rise +2.6% versus a +6.7% gain in 2Q.
• 3Q Personal Consumption is estimated to rise +.8% versus a +12.0% gain in 2Q.
• 3Q GDP Price Index is estimated to rise +5.3% versus a +6.1% gain in 2Q.
• 3Q Core PCE QoQ is estimated to rise +4.4% versus a +6.1% gain in 2Q.
  

10:00 am EST

• Pending Home Sales MoM for Sept. is estimated to rise +.5% versus a +8.1% gain in Aug.
  

11:00 am EST

• Kansas City Fed Manufacturing Activity for Oct. is estimated to fall to 20.0 versus 22.0 in Sept.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Eurozone Consumer Confidence report, ECB meeting, $62B 7Y T-Note auction, weekly EIA natural gas inventory report and the (HPE) analyst meeting could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are modestly lower, weighed down by industrial and commodity shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 75% net long heading into the day.

Stocks Reversing Slightly Lower into Final Hour on US Tax & Spend Worries, Policy-Induced Labor/Product Shortages, Technical Selling, Energy/Financial Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 15.6 -2.3%
• Bloomberg Global Risk On/Risk Off Index 3,485.0 -151.0 points

• Euro/Yen Carry Return Index 136.23 -.18%

• Emerging Markets Currency Volatility(VXY) 9.11 -.76%

• S&P 500 Implied Correlation 51.6 +2.4%

• ISE Sentiment Index 96.0  -21.0 points
  

• Total Put/Call .80 -4.8%

• NYSE Arms 1.34 +1.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 51.0 -.32%
  

• US Energy High-Yield OAS 351.49 +.30%

• European Financial Sector CDS Index 55.43 -.46%

• Italian/German 10Y Yld Spread 112.0 +1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 79.65 -2.86%
  

• Emerging Market CDS Index 179.42 -.08%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 33.89 +.07%

• 2-Year Swap Spread 16.25 -1.25 basis points
  

• TED Spread 8.75 +.75 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -22.5 -1.25 basis points
  
• MBS  5/10 Treasury Spread  66.25 -.75 basis point
  
• IHS Markit CMBX BBB- 6 72.0 +.25 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 58.46 +.04%
• 3-Month T-Bill Yield .05% unch.
  

• Yield Curve 116.0 -4.0 basis points
  

• China Iron Ore Spot 115.80 USD/Metric Tonne -1.7%

• Citi US Economic Surprise Index -12.5 +14.9 points

• Citi Eurozone Economic Surprise Index -66.5 +1.7 points
  

• Citi Emerging Markets Economic Surprise Index -7.8 -3.0 points

• 10-Year TIPS Spread 2.67 -2.0 basis points
• 100.0% chance of no change at Dec. 15th meeting, 92.6% chance of no change at Jan. 26th meeting

US Covid-19:

• 150 new infections/100K people(last 7 days total) -5/100K people
• 28% of Jan. 7th, 2021 peak(highest daily avg. new infections) -1.0 percentage point
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -243 open in Japan 
• China A50 Futures: Indicating -16 open in China

• DAX Futures: Indicating +1 open in Germany

Portfolio:

• Slightly Lower: On losses in my industrial/consumer discretionary sector longs
  

• Disclosed Trades:  Added to my (IWM)/(QQQ) hedges
  

• Market Exposure:  Moved to 75% Net Long