Morning Market Internals

NYSE Composite Index:

• Volume Running +34.2% Above 100-Day Average 
• 9 Sectors Declining, 2 Sectors Rising
• 47.5% of Issues Advancing, 49.4% Declining
• 0 New 52-Week Highs, 367 New Lows
• 19.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 36.0% 
• Bloomberg Global Risk-On/Risk-Off Index 4,282.0 +78.0 points
• Russell 1000: Growth/Value 14,943.47 +.73%
  
• Vix 32.8 -.6%
• Total Put/Call .83 -33.1%
• TRIN/Arms 1.77 -16.5%

Friday Watch

Evening Headlines

Bloomberg:                 

• China Steps Up Covid Tests as US Envoy Warns of Investment Chill.  
• China’s No. 2 Online Mall Warns Consumer Recovery Months Away.
• Spiraling Food Crisis Hits Sri Lanka as Farmers Abandon Fields.
• Recession Fear Sinks Stocks; Japan Yield Tops Band: Markets Wrap.
  
• Stock Traders Coming to Grips With a Fed as Baffled as They Are.
  
• US Junk-Bond Spreads Top 500 Basis Points in First Since 2020.  
• Citi’s $900 Million Revlon Gaffe Risks Getting Even More Painful.  
• Mortgage Surge Toward 6% Slams Brakes on Red-Hot Housing Market.  
• Real Estate Billionaire Stephen Ross Says Recession Would Drive People Back to Office.  
• It’s Not Exactly a Shortage, But Tampons Are Harder to Find Especially in These States.  
• Number of Underwater Russell 3000 Stocks Surges to Record.  
• Record US Homes Under Construction Raise Hope of Inventory Boost. 
• JPMorgan Strategists Say Stocks Imply 85% Chance of US Recession.   
• AMC Holders Rebuke CEO With Rejection of $19 Million Pay.  
• What’s Stagflation, and Why Is It Such a Worry Now?

Wall Street Journal:

• Investors Bet Big Wall Street Trade Will Unwind.
• Celsius Is Crashing, and Crypto Investors Are Spooked.
• ‘Bear Market’: From Cautionary Proverb to Finance Lingo.
• U.S. Economic Growth Shows Signs of Slipping.
• By Design, the Fed May Be Tightening Too Much.
• Three Money Mistakes to Avoid in a Bear Market.
• Mortgage Rates Hit 5.78%, Highest Level Since 2008.
• Russia Slashes Gas Flows, Aiming Economic Weapon at Europe.
• France, Germany, Italy, Romania Back Ukraine’s Bid for EU Membership.
• Illegal Border Crossings Hit Record in May.

Fox News:

• Pelosi pressed on Dems' abortion rhetoric as violence against churches, pro-life clinics on the rise.
• Catholic bishops urge politicians to address 'alarming rate' of vandalism against churches, clinics.
• Oil giant hits back after Biden threatens energy producers.

CNBC.com:

• Millennial millionaires are delaying home, car purchases due to inflation.
• A day after Powell’s assurances about the economy, markets are worried that ‘Fed breaks something’.
• Adobe shares move lower after full-year projections fall short.
• Airline stocks tumble as economic concerns overshadow travel surge.
• Everyone knows inflation is on fire. This is what’s really fueling it.
• Bitcoin falls, Celsius insolvency risk grows, and parallels to the 2008 recession: CNBC Crypto World. 
  

MarketWatch:                 

• The impact of skyrocketing gas prices on shopping trips could be as big as inflation.
  
• U.S. inflation expected to keep running hot: Traders see 4 straight months of roughly 9% or higher CPI readings.
  
• Wall Street is officially in a bear market — What strategists say investors should do.
  
• Bausch Health halts plan to IPO skin-care division, citing ‘challenging market conditions’.
  
• These 16 stocks in the S&P 500 crumpled at least 9% a day after the Fed raised rates.  
• Crypto crash: Celsius, Three Arrows potential contagion worries investors. Here’s what to watch.  
• As crypto crash deepens, here are 4 signs the worst could be yet to come.  
• ‘The economy is going to collapse,’ says Wall Street veteran Novogratz. ‘We are going to go into a really fast recession.’.  
• Four value-stock picks from a fund manager who steers clear of the energy sector.

Zero Hedge

• Chevron Hits Back, Says Biden Trying To "Impose Obstacles" To Energy Delivery.
• "The Country Is Going To Learn That A Recession Is Worse For Votes Than High Inflation". 
• Taiwan Touts "Ability To Attack Beijing" With Supersonic Cruise Missiles.
• Bill Gates & The Cognitive 'Frame' Game.
• Is Your Chinese Coffee Maker Spying On You? 
• Gasoline Demand Destruction Remains Elusive Despite Inflation.
• Millennials Are Responsible For More Of The "Great Resignation" Than Gen Z, New Survey Finds.
• Chevron Hits Back, Says Biden Trying To "Impose Obstacles" To Energy Delivery.
• California Can't Kick Its Fossil Fuel Addiction.
• Global stocks suffered after central banks hiked rates - Newsquawk Asia-Pac Market Open.
• Inmate "Offered Money" To Murder Ghislaine Maxwell: Court Filing.
• Hawkish central bank activity and weak data add to recessionary fears - Newsquawk US Market Wrap.
• Democrats "Would Rather Tesla Was Dead Than Be Alive And Non-Unionized": Elon Musk.
• One Bank Throws Up All Over The Fed's Latest Laughable Forecast.
• Joe Biden Read This: All You Need To Know About The US Refining Industry.
• Dow Dumps Below 30k As Huge OpEx Looms; Gold Gains, Greenback Gags.

Newsmax:  

• Trump Demands 'Equal Time' on TV to Spell Out 2020 Election Fraud Case.
• Biden: Tone Down Rhetoric Supporting Ukraine.
• Rep. McCaul: Iran Could Have Nuclear Bomb Within a Year.
• Taiwan Foreign Minister: China Preps for War, 'Very Threatening'.

TheGatewayPundit.com: 

• “That’s Not Science, That’s Conjecture” – Sen. Rand Paul On Fire After Fauci Admits ‘Not Enough Data’ to Show Booster Shots Reduce Hospitalization and Death in Children.
• King Hypocrite Obama to Install Massive 2,500 Gallons Propane Tank for his Seaside Home in Martha’s Vineyard.
• JUST IN: Incarcerated Creepy Porn Lawyer Michael Avenatti Pleads Guilty to Fraud, Tax Charges in California.
• RAND PAUL BRINGS THE FIRE! Grills Fauci on Royalties NIH Research Doctors Received from Vaccine Companies! (VIDEO).
• Walmart Cancels MyPillow — Reportedly Offers Ridiculous Excuse.
• White House Spox Confirms Joe Biden is Moving Forward with Plans to End Fossil Fuel Despite Soaring Gas Prices (VIDEO).
• Hollywood Actor Chris Evans Calls Critics of Lightyear’s Gay Kiss Including Muslims and Chinese as ‘Idiots’ Who Will ‘Die Off Like Dinosaurs’.
• Florida Woman Under FBI Investigation For Selling Ashley Biden’s Diary in Which Joe’s Daughter Recalls ‘Showers w/my Dad’.
• Oops! Report Shows Capitol Police Received First Warning About Jan. 6 Violence 2 WEEKS BEFORE Protests! — PELOSI TURNED DOWN NATIONAL GUARD.
• Joe Biden SHATTERS All Records of Migrants Entering The United States At Open Southern Border.
• Despite Ongoing Energy Crisis and Record Fuel Prices Nearly Every Day, Leftist Activists Sue Biden Administration to Block 3,500 Oil and Gas Permits.
• MSN Highlights Survey Showing ‘Severe COVID-19 Rare In Unvaccinated’ After Months Of ‘Safe And Effective’ Propaganda.

The Epoch Times: 

• ‘Fight Like Hell With a Smile on Our Faces’: CRT Debate Spurs Parents to Run for School Boards.
• Americans Warned of China Potentially Spying via Smart Coffee Makers: Researcher. 
  
• American Business Elites Have Become Lobbyists for China, Expert Says.

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 -2.25% to -1.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 140.75 +13.25 basis points. 

• China Sovereign CDS 90.25 +11.5 basis points.
  

• Bloomberg Emerging Markets Currency Index 50.74 -.13%.  
• Bloomberg Global Risk-On/Risk Off Index 4,430.0 +228.0 points.
• Volatility Index(VIX) futures 32.10 +.6%.
• Euro Stoxx 50 futures -.32%.

• S&P 500 futures +.12%.

• NASDAQ 100 futures +.29%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• None of note
  

After the Close:

• None of note
  

Economic Releases

9:15 am EST

• Industrial Production MoM for May is estimated to rise +.4% versus a +1.1% gain in April.
• Capacity Utilization for May is estimated to rise to 79.2% versus 79.0% in April.
• Manufacturing Production for May is estimated to rise +.3% versus a +.8% gain in April.
  

10:00 am EST

• The Leading Index for May is estimated to fall -.4% versus a -.3% decline in April.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Powell speaking, EU Economic Finance Ministers Meeting and the (CNC) investor day 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 mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

Thursday Watch

Night Trading 

• Asian equity indices are +.5% to +1.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 127.5 -6.5 basis points. 

• China Sovereign CDS 78.75 -6.25 basis points.
  

• Bloomberg Emerging Markets Currency Index 50.94 -.04%.  
• Bloomberg Global Risk-On/Risk Off Index 4,720.0 +108.0 points.
• Volatility Index(VIX) futures 29.4 -2.1%.
• Euro Stoxx 50 futures n/a.

• S&P 500 futures +.71%.

• NASDAQ 100 futures +.83%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (CMC)/1.85
• (JBL)/1.62
• (KR)/1.28
  

After the Close:

• (ADBE)/3.31
  

Economic Releases

8:30 am EST

• Housing Starts for May is estimated to fall to 1696K versus 1724K in April.
• Building Permits for May is estimated to fall to 1780K versus 1819K in April.
• The Philly Fed Business Outlook Index for June is estimated to rise to 5.0 versus 2.6 in May.
• Initial Jobless Claims for last week is estimated to fall to 217K versus 229K the prior week. 
• Continuing Claims is estimated to fall to 1304K versus 1306K prior.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Australia Employment Change report, Bank of England Decision, weekly EIA natural gas inventory report, (ETR) analyst day and the (KLAC) investor day could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

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

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

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance:  Most Sectors Rising
  

• Volume:  Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 30.5 -6.6%
• DJIA Intraday % Swing .99% -30.0%
  
• Bloomberg Global Risk On/Risk Off Index 4,455.0 -190.0 points

• Euro/Yen Carry Return Index 143.86 -.90%

• Emerging Markets Currency Volatility(VXY) 13.2 unch.

• CBOE S&P 500 Implied Correlation Index 47.8 -3.3% 

• ISE Sentiment Index 909.0 +5.0 points
  

• Total Put/Call 1.03 -5.5%

• NYSE Arms .96 +21.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 94.4 -4.5%
  

• US Energy High-Yield OAS 421.73 +1.5%
• Bloomberg TRACE # Distressed Bonds Traded 366.0 +9.0
  

• European Financial Sector CDS Index 117.6 -3.5%

• Italian/German 10Y Yld Spread 217.0 basis points -25.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 129.59 -3.8%
  

• Emerging Market CDS Index 313.40 -5.1%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 28.24 +.09%
  
• Ukraine Sovereign Debt Credit Default Swap 7,365.16 +24.4%
  

• 2-Year Swap Spread 36.75 basis points +1.25 basis points
  

• TED Spread 4.75 basis points -6.0 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -22.75 basis points +.5 basis point
  
• MBS  5/10 Treasury Spread  131.0 -6.0 basis points
  
• iShares CMBS ETF 47.05 +.15%
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 50.78 +.44%
• 3-Month T-Bill Yield 1.72% unch.
  

• Yield Curve 11.5 basis points (2s/10s) +7.25 basis points
  

• China Iron Ore Spot 131.4 USD/Metric Tonne -.9%

• Citi US Economic Surprise Index -49.0 -3.0 points

• Citi Eurozone Economic Surprise Index 32.4 -2.1 points
  

• Citi Emerging Markets Economic Surprise Index 24.7 +3.3 points

• 10-Year TIPS Spread 2.72 +9.0 basis points
  
• 0.0%(unch.) chance of no change at September 21st FOMC meeting, 0.0%(unch.) chance of no change at November 2nd meeting

US Covid-19:

• 225 new infections/100K people(last 7 days total). 13.0%(unch.) of 1/14 peak -1/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -79.9%(+.4 percentage point) from peak 7-day avg. of 1/9/21 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +144 open in Japan 
• China A50 Futures: Indicating +40 open in China

• DAX Futures: Indicating +29 open in Germany

Portfolio:

• Slightly Lower:  On losses in my emerging market shorts and index hedges
  

• Disclosed Trades:  Covered some of my index hedges and emerging market shorts
  

• Market Exposure:  Moved to 50% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Value +.4%

Sector Underperformers:

• 1) Energy -1.4% 2) Oil Service -.8% 3) Homebuilding -.7%

Stocks Falling on Unusual Volume: 

• FE, CHRW, TCPC, AINV, IVR, PMT, DAWN, AZEK, SGRY, VG, OLN and WLK
  

Stocks With Unusual Put Option Activity:

• 1) VG 2) VSTO 3) EWJ 4) ACAD 5) EWY
  

Stocks With Most Negative News Mentions:

• 1) TUYA 2) IRNT 3) SGRY 4) CANO 5) CYH
  

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +1.3%

Sector Outperformers:

• 1) Gambling +3.1% 2) Internet +2.4% 3) Airlines +1.8%

Stocks Rising on Unusual Volume:

• ACAD, OM, BA, MSTR, SOI and DRE
  

Stocks With Unusual Call Option Activity:

• 1) MBB 2) PCG 3) FANG 4) REV 5) VST

Stocks With Most Positive News Mentions:

• 1) EVOK 2) RBBN 3) EMWP 4) ACAD 5) EVCM
  

Charts:

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