Wednesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 85.75 +1.25 basis points. 

• China Sovereign CDS 44.25 +.25 basis point.
  

• Bloomberg Emerging Markets Currency Index 52.83 -.04%. 
• Bloomberg Global Risk-On/Risk Off Index 2,479.0 +52.0 points.
• Volatility Index(VIX) futures 23.6 +.58%.
• Euro Stoxx 50 futures +.34%.

• S&P 500 futures +.05%.

• NASDAQ 100 futures +.06%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (ABM)/.81
• (TTC)/.53
  

After the Close:

• (HEI)/.58
• (LEN)/4.15
• (NDSN)/2.10
  

Economic Releases

8:30 am EST

• The Empire Manufacturing Index for Dec. is estimated to fall to 25.0 versus 30.9 in Nov.
• Retail Sales Advance MoM for Nov. is estimated to rise +.8% versus a +1.7% gain in Oct.
• Retail Sales Ex Autos MoM for Nov. is estimated to rise +.9% versus a +1.7% gain in Oct.
• Retail Sales Ex Auto and Gas for Nov. is estimated to rise +.8% versus a +1.4% gain in Oct.
• The Import Price Index MoM for Nov. is estimated to rise +.6% versus a +1.2% gain in Oct.
• The Export Price Index MoM for Nov. is estimated to rise +.5% versus a +1.5% gain in Oct.
  

10:00 am EST

• Business Inventories for Oct. is estimated to rise +1.1% versus a +.7% gain in Sept.
• The NAHB Housing Market Index for Dec. is estimated to rise to 84.0 versus 83.0 in Nov.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,651,200 barrels versus a -241,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +2,358,300 barrels versus a +3,882,000 barrel decline the prior week. Distillate inventories are expected to rise by +1,187,500 barrels versus a +2,733,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise +.44% versus a +1.0% gain prior.
  

2:00 pm EST

• The FOMC is expected to leave the benchmark Fed Funds Rate at 0.0-.25%.

4:00 pm EST

• Net Long-Term TIC Flows for Oct.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The FOMC presser, Debt ceiling deadline, UK CPI report, weekly MBA Mortgage Applications report, (LOW) 2022 financial outlook webcast, (ABM) investor day, (XP) investor day and the (LLY) investment community meeting could also impact global trading today.

US Equity Market Hours

• 9:30 am - 1:00 pm EST
  

BOTTOM LINE: Asian indices are modestly lower, weighed down by commodity and technology shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Lower into Final Hour on US Policy-Induced Stagflation Fears, Fed Taper Pace Worries, Global Virus Lockdown Concerns, Tech/Alt Energy 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) 22.6 +11.2%
• Bloomberg Global Risk On/Risk Off Index 2,379.0 -167.0 points

• Euro/Yen Carry Return Index 132.03 -.04%

• Emerging Markets Currency Volatility(VXY) 10.7 -.4%

• CBOE S&P 500 Implied Correlation Index 35.9 +9.4% 

• ISE Sentiment Index 126.0  +22.0 points
  

• Total Put/Call .95 -2.1%

• NYSE Arms .61 -54.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 53.44 +1.9%
  

• US Energy High-Yield OAS 423.0 +1.6%

• European Financial Sector CDS Index 60.10 +.22%

• Italian/German 10Y Yld Spread 130.0 +1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 84.4 +.88%
  

• Emerging Market CDS Index 195.17 +1.8%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 33.19 -.02%

• 2-Year Swap Spread 19.5 -1.25 basis points
  

• TED Spread 15.75 +.75 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -14.0 +.75 basis point
  
• MBS  5/10 Treasury Spread  71.5 -.25 basis point
  
• IHS Markit CMBX BBB- 6 72.25 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 52.83 -1.14%
• 3-Month T-Bill Yield .04% -1.0 basis point
  

• Yield Curve 77.75 -4.5 basis points
  

• China Iron Ore Spot 114.0 USD/Metric Tonne -.2%

• Citi US Economic Surprise Index 30.7 -1.8 points

• Citi Eurozone Economic Surprise Index 10.3 +1.7 points
  

• Citi Emerging Markets Economic Surprise Index -12.0 -1.6 points

• 10-Year TIPS Spread 2.40 -4.0 basis points
• 91.9%(+2.1 percentage points) chance of no change at Jan. 26th meeting, 67.0%(+1.6 percentage points) chance of no change at March 16th meeting

US Covid-19:

• 261 new infections/100K people(last 7 days total) +3/100K people
• 49% of Jan. 7th, 2021 peak(highest daily avg. new infections) unch.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -112 open in Japan 
• China A50 Futures: Indicating -23 open in China

• DAX Futures: Indicating +31 open in Germany

Portfolio:

• Slightly Higher: On gains in my index hedges and emerging market shorts
  

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

• Market Exposure:  Moved to 25% Net Long
  

Bear Radar

Style Underperformer:

• Mid-Cap Growth -2.4%

Sector Underperformers:

• 1) Alt Energy -4.1% 2) Software -4.0% 3) Shipping -2.5%

Stocks Falling on Unusual Volume: 

• AXNX, ARCC, TOL, FLWS, SPWH, PTY, FWRG, ACI, PTON, IGMS, EVBG, FSK, UPST, PCOR, HOOD, OLO, EPAM, DICE, ENPH, CXM, CDNS, CCCC, CVNA, SPT, FHTX, ADBE, GBT, DDOG, DOCN, SPWR, NOVA, ZS, NET, RUN and BASE
  

Stocks With Unusual Put Option Activity:

• 1) IWP 2) PCG 3) IWO 4) BHC 5) XHB
  

Stocks With Most Negative News Mentions:

• 1) GBIO 2) WB 3) DDOG 4) ZS 5) ADBE
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value -.3%

Sector Outperformers:

• 1) Banks +1.3% 2) Insurance +.9% 3) Steel +.5%

Stocks Rising on Unusual Volume:

• TMX, NEOG, BYND, AMC, CNC and GME
  

Stocks With Unusual Call Option Activity:

• 1) SEAC 2) PRPL 3) EWY 4) UUP 5) CVNA

Stocks With Most Positive News Mentions:

• 1) MIND 2) ZDGE 3) SIG 4) WGO 5) LH
  

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +5.9% Above 100-Day Average 
• 2 Sectors Rising, 9 Sectors Declining
• 35.4% of Issues Advancing, 58.8% Declining
• 17 New 52-Week Highs, 116 New Lows
• 49.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.0% 
• Bloomberg Global Risk-On/Risk-Off Index 2,398.0 -152.0 points
• Russell 1000: Growth/Value 18,126 -1.74%
  
• Vix 22.5 +10.5%
• Total Put/Call .94 -3.1%
• TRIN/Arms .60 -54.9%

Tuesday Watch

Night Trading 

• Asian equity indices are -1.0% to -.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 84.5 -.25 basis point. 

• China Sovereign CDS 44.0 +.5 basis point.
  

• Bloomberg Emerging Markets Currency Index 53.42 -.05%. 
• Bloomberg Global Risk-On/Risk Off Index 2,568.0 +22.0 points.
• Volatility Index(VIX) futures 23.0 -.8%.
• Euro Stoxx 50 futures +.25%.

• S&P 500 futures +.2%.

• NASDAQ 100 futures +.15%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• None of note
  

After the Close:

• None of note
  

Economic Releases 

6:00 am EST

• The NFIB Small Business Optimism Index for Nov. is estimated to rise to 98.4 versus 98.2 in Oct.
  

8:30 am EST

• The PPI Final Demand MoM for Nov. is estimated to rise +.5% versus a +.6% gain in Oct.
• PPI Ex Food and Energy MoM for Nov. is estimated to rise +.4% versus a +.4% gain in Oct.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The China Housing Index, Eurozone Industrial Production report, US weekly retail sales reports, (FAST) investor day and the (CPB) investor day could also impact global trading today.

US Equity Market Hours

• 9:30 am - 1:00 pm EST
  

BOTTOM LINE: Asian indices are modestly lower, weighed down by energy and consumer shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.