Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -7.0% Below 100-Day Average 
• 4 Sectors Declining, 7 Sectors Rising
• 70.7% of Issues Advancing, 26.0% Declining
• 2 New 52-Week Highs, 172 New Lows
• 19.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 34.6% 
• Bloomberg Global Risk-On/Risk-Off Index 4,712.0 +64.0 points
• Russell 1000: Growth/Value 14,907.8 +.89%
  
• Vix 30.1 -7.8%
• Total Put/Call 1.04 -4.6%
• TRIN/Arms .86 +8.9%

Wednesday Watch

Evening Headlines

Bloomberg:           

• Real-Yield Rout Bigger Than 2008 Inflicts Pain Across the World.
• Beijing’s Virus Cases Remain Elevated in Threat to Covid Zero.  
• China Will Test Markets With Biggest Offshore Bond Sale Since 2016.  
• Looming Debt Crunch Positions Laos as Next Possible Asia Default.
• Yen’s Slide to 24-Year Low Deepens on Widening Rates Gap.
• The World’s Most Important Market Has a Big and Repetitive Problem.
  
• Stocks Subdued, US Futures Up Before Fed Decision: Markets Wrap.
• Big Money in Stock Market Is In Mad Dash to Get Out of Fed’s Way.
  
• Ongoing Market Selloff Is No Reason Not to Buy, Says Avenue’s Marc Lasry.  
• Fed Mulls ‘Game Changer’ to Jolt Inflation: Decision Day Guide.  
• Bitcoin Rout Hits ‘Darkest’ Phase With Entire Market Underwater.
• Bill Gates Blasts Crypto, NFTs as Based on ‘Greater-Fool’ Theory.  
• Biden to Unveil Plan for Next Pandemic While Seeking $88 Billion in Funds.  
• In Reality Show ‘Squid Game,’ Contestants Compete for $4.56 Million.  
• Americans Are Building Vacation-Home Empires With Easy-Money Loans.

 Wall Street Journal:

• Fed’s Stern Message Amplifies Stock-Valuation Worries.
• S&P 500 Extends Its Fall Into Bear Market Territory.
• Mental-Health Startup Cerebral Investigated by FTC. 
• The Federal Reserve and Recession Fears. As interest rates rise, Biden can help by ending his anti-growth policies of higher taxes and more regulation. 
• The 19th-Century Technology Driving Russia’s Latest Gains in Ukraine: Railroads.
• Caterpillar to Move Headquarters to Texas From Illinois.

Fox News:

• DEEP DIVE: New poll reveals how Americans really feel about transgender athletes competing in women’s sports.
• 27 Dems voted against increased security for Supreme Court justices days after Kavanaugh threat.
• Issa slams AOC, Pelosi over SCOTUS security bill stall: 'It is astonishing'.
• WHO caves after scientists demand monkeypox name be changed.

CNBC.com:

• Luxury brands say China’s latest Covid wave has whacked consumer demand.
• 30-year mortgage rate surges to 6.28%, up from 5.5% just a week ago.
• Market is on a one way trip to misery until Fed hikes stop, Jim Bianco warns.
• S&P 500 falls for a fifth day, slips deeper into bear market territory ahead of Fed decision.
• 10-year Treasury yield tops 3.48%, the highest in 11 years.
• Real estate firms Compass and Redfin announce layoffs as housing market slows.

MarketWatch:               

• Liquidity is vanishing in this pivotal corner of U.S. housing-finance market as the Fed steps back.
  
• Financial markets are ‘fragile’ ahead of Fed’s decision as some traders and strategists see risk of an instant recession.
  
• Opinion: Better late than never: It’s time for an interest-rate shock from the Federal Reserve to fight inflation.
  
• How big is the stock-market selloff? The S&P 500 erased $9.3 trillion from its market cap.
  
• Half of bitcoin holders on Coinbase exchange may face losses, Mizuho says.

Zero Hedge

• Is A Catastrophic Recession Inevitable: Here Are The 5 Things That Can Force The Fed To "Pivot".
• Capitol Police Chief Debunks J6 Committee Conspiracy Theory.
• Cass: Freight Shipments Bounce Back In May, Expenditures Dip From Record Highs.
• Biden's Mandates For Increased Production Of Ethanol Are Wrong-Headed.
• Pilot Murder-Suicides Account For Growing Share Of Airline Crashes.
• Boudin Recall Reveals Democrats' Rift With Minority Voters.
• 1000s Of Sydney Homes Plunged Into Darkness As Aussie 'Price Cap' Policy Sparks Energy Shortage.
• Biden Ally's Bill Would Slap 21% Surtax On Oil Profits.
• King MOVE.
• US stocks remained cautious and bonds tumbled on the eve of the FOMC - Newsquawk Asia-Pac Market Open.
• Pentagon: US Will Arm Ukraine For Years To Come.
• Hedge Funds Just Sold Stocks At The Fastest Pace On Record, Surpassing Even Lehman Liquidation Spree. 
• Slowing Money Supply Growth In 2022 Points To Recession.
• WTI Holds Losses After Second Straight Weekly Crude Build.
• Leaked Internal Messages Show Twitter Employees Debating Whether To Ban Libs Of TikTok.
• More bond selling with Fed priced for 75bps with risk of Volckering - Newsquawk US Market Wrap.
• Stocks, Bonds, Oil & Gas Dump; Dollar & VIX Jump Ahead Of Fed.

TheGatewayPundit.com: 

• BREAKING: Mitch McConnell Says He Will Likely Vote For Gun Control Bill That Includes Red Flag Laws (VIDEO).
• EXCLUSIVE: Mayor Rudy Guiliani Gives Statement to The Gateway Pundit Regarding the Fraudulent January 6th Hearing. “WHAT ROLE DID ANTIFA AND THE FBI PLAY?”.
• John Kerry as Gas Prices Skyrocket: “We Absolutely Don’t” Need to Drill For More Oil (VIDEO).
• “This is All About Money”, “You Will Burn in Hell for Eternity” — Speakers Lambasted FDA Advisers During Advisory Committee Hearing (VIDEO).
• Latest Polls Have Liz Cheney Down 28 Points in Wyoming House Race – With Unfavorability Rating as High as 71%.
• The Jan 6 Committee Failing Big Time – Even Rachel Maddow Doesn’t Buy It.
• Joe Biden Downplays Inflation – Then Starts Screaming: “I Don’t Wanna Hear Anymore of These Lies About Reckless Spending!” (VIDEO).
• AUDIO: Hunter Biden Boasts His Father Joe will Do Anything He Tells Him to – ‘If It’s Important to Me… He Will Make it a Part of His Platform’.
• The Definition of Dirty: Bill Barr Tells Congress He Was Not Interested in Investigating ANY Ballot Trafficking in the 2020 Election — And Laughed About It Openly During Testimony (VIDEO).

The Epoch Times:

• Children in China Diagnosed With Diabetes After Getting Chinese COVID-19 Vaccines.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 829,308 Reports(+3,855 from prior week) Through June 3rd, 2022.

SKirsch.com:

• Using the MGH numbers with our own VAERS queries, we have 247 cases per million doses from the MGH study divided by 5.97 cases per million doses from VAERS. 247/5.97 = 41. This suggests that the VAERS under-reporting factor (URF) is 41X.

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 -1.25% to -.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 134.0 unch. 

• China Sovereign CDS 85.0 -1.75 basis points.
  

• Bloomberg Emerging Markets Currency Index 50.59 +.04%.  
• Bloomberg Global Risk-On/Risk Off Index 4,632.0 -15.0 points.
• Volatility Index(VIX) futures 31.8 -.19%.
• Euro Stoxx 50 futures +.20%.

• S&P 500 futures +.41%.

• NASDAQ 100 futures +.61%. 

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

• Empire Manufacturing for June is estimated to rise to 2.5 versus -11.6 in May.  
• Retail Sales Advance MoM for May is estimated to rise +.1% versus a +.9% gain in April.
• Retail Sales Ex Autos MoM for May is estimated to rise +.7% versus a +.6% gain in April.
• Retail Sales Ex Autos and Gas for May is estimated to rise +.4% versus a +1.0% gain in April.
• The Import Price Index MoM for for May is estimated to rise +1.1% versus unch. in April.
• The Import Price Index ex Petrol MoM for May is estimated to rise +.6% versus a +.4% gain in April.
• The Export Price Index MoM for May is estimated to rise +1.3% versus a +.6% gain in April.
  

10:00 am EST

• Business Inventories for April is estimated to rise +1.2% versus a +2.0% gain in March.
• The NAHB Housing Market Index for June is estimated to fall to 67.0 versus 69.0 in May.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of-1,230,860 barrels versus a +2,025,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +223,570 barrels versus a -812,000 barrel decline the prior week. Distillate inventories are estimated to rise by +168,430 barrels versus a +2,592,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.47% versus a +1.6% gain prior.
  

2:00 pm EST

• The FOMC is expected to raise the benchmark Fed Funds Rate +50.0 basis points to 1.25%-1.5%. 

4:00 pm EST

• Net Long-Term TIC Flows for April.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The FOMC Presser, China Industrial Production report, weekly MBA Mortgage Applications report, (BDC) investor day and the JMP Securities Life Sciences Conference could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are lower, weighed down by commodity and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

Stocks Reversing Lower into Final Hour on US Policy-Induced Stagflation Fears, Fed "Behind the Curve" Worries, Escalating European Debt Angst, Utility/Medical Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance:  Most Sectors Declining
  

• Volume:  Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 32.5 -4.6%
• DJIA Intraday % Swing 1.42% -31.8%
  
• Bloomberg Global Risk On/Risk Off Index 4,528.0 -54.0 points

• Euro/Yen Carry Return Index 144.71 +.54%

• Emerging Markets Currency Volatility(VXY) 13.2 unch.

• CBOE S&P 500 Implied Correlation Index 51.0 -.22% 

• ISE Sentiment Index 94.0 +12.0 points
  

• Total Put/Call 1.02 -23.3%

• NYSE Arms .75 -72.73%

Credit Investor Angst:

• North American Investment Grade CDS Index 99.5 +1.8%
  

• US Energy High-Yield OAS 414.0 +6.8%
• Bloomberg TRACE # Distressed Bonds Traded 357.0 +34.0
  

• European Financial Sector CDS Index 122.0 +3.9%

• Italian/German 10Y Yld Spread 242.0 basis points +2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 134.75 +1.9%
  

• Emerging Market CDS Index 328.47 -.42%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 28.2 -.21%
  
• Ukraine Sovereign Debt Credit Default Swap 5,922.51 -.21%
  

• 2-Year Swap Spread 35.5 basis points -3.5 basis points
  

• TED Spread 10.75 basis points -19.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -23.25 basis points -2.0 basis points
  
• MBS  5/10 Treasury Spread  137.0 +1.0 basis point
  
• iShares CMBS ETF 47.28 +.54%
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 50.70 -.18%
• 3-Month T-Bill Yield 1.72% +47.0 basis points
  

• Yield Curve 4.25 basis points (2s/10s) -4.25 basis points
  

• China Iron Ore Spot 132.9 USD/Metric Tonne -2.3%

• Citi US Economic Surprise Index -46.0 -1.0 point

• Citi Eurozone Economic Surprise Index 34.5 -.8 point
  

• Citi Emerging Markets Economic Surprise Index 21.4 +.3 point

• 10-Year TIPS Spread 2.63 -13.0 basis points
  
• 0.0%(unch.) chance of no change at July 27th FOMC meeting, 0.0%(unch.) chance of no change at September 21st meeting

US Covid-19:

• 226 new infections/100K people(last 7 days total). 13.0%(unch.) of 1/14 peak -2/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -80.3%(+1.7 percentage points) from peak 7-day avg. of 1/9/21 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -234 open in Japan 
• China A50 Futures: Indicating -93 open in China

• DAX Futures: Indicating -51 open in Germany

Portfolio:

• Slightly Higher:  On gains in my tech/commodity sector longs and index hedges
  

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

• Market Exposure:  Moved to Market Neutral
  

Bear Radar

Style Underperformer:

• Large-Cap Value -.8%

Sector Underperformers:

• 1) Utilities -3.0% 2) Gold & Silver -3.0% 3) Medical Equipment -2.2%

Stocks Falling on Unusual Volume: 

• CME, RC, TDG, BTZ, RCL, MKC, ABR, MCY, CHK, PG, EXC, GMRE, MKC, SMG, SBAC, CHK, PEN, WRE, ACRE, HHC,  NTRS, CTXS, FSK, CTRA, CCI, AGR, ACAD, CNP, NVST, HE, FOUR, LEG, SG, MFA, AWK, EXPE, ENVX, SIX, ETD, SD, XPER, THC, CC, PCRX, RRC, POOL, CNX, IVR, EQT, SWAV, CRK and AR
  

Stocks With Unusual Put Option Activity:

• 1) RWT 2) RDFN 3) EWT 4) INDA 5) EWU
  

Stocks With Most Negative News Mentions:

• 1) OM 2) POOL 3) CC 4) XRAY 5) PG
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.6%

Sector Outperformers:

• 1) Gambling +2.4% 2) I-Banking +1.7% 3) Shipping +1.4%

Stocks Rising on Unusual Volume:

• FDX, CLR, MSTR, ORCL, EYE, CHRW and DAWN
  

Stocks With Unusual Call Option Activity:

• 1) AQB 2) CLVS 3) COGT 4) BOIL 5) SJT

Stocks With Most Positive News Mentions:

• 1) QD 2) EDU 3) PDD 4) KAVL 5) COTY
  

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +4.7% Above 100-Day Average 
• 9 Sectors Declining, 2 Sectors Rising
• 47.9% of Issues Advancing, 47.8% Declining
• 2 New 52-Week Highs, 535 New Lows
• 25.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 39.9% 
• Bloomberg Global Risk-On/Risk-Off Index 4,505.0 -80.0 points
• Russell 1000: Growth/Value 14,728.0 +.48%
  
• Vix 32.9 -3.4%
• Total Put/Call 1.05 -21.1%
• TRIN/Arms .69 -74.6%