Stocks Closing Slightly Higher on Lower Long-Term Rates, Less Hawkish Fed Hopes, Short-Covering, Consumer Discretionary/Tech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Around Even
  

• Sector Performance:  Mixed
  

• Volume:  Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 27.6 +.1%
• DJIA Intraday % Swing 2.12% unch.
  
• Bloomberg Global Risk On/Risk Off Index 3,906.0 -361.0 points

• Euro/Yen Carry Return Index 143.24 -1.4%

• Emerging Markets Currency Volatility(VXY) 12.2 +2.1%

• CBOE S&P 500 Implied Correlation Index 47.2 -.2% 

• ISE Sentiment Index 102.0 -10.0 points
  

• Total Put/Call .90 +38.5%

• NYSE Arms 1.1 +33.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 100.22 -.6%
  

• US Energy High-Yield OAS 549.09 +1.6%
• Bloomberg TRACE # Distressed Bonds Traded 486.0 +21.0
  

• European Financial Sector CDS Index 136.12 +3.8%

• Italian/German 10Y Yld Spread 198.0 basis points +5.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 146.35 +.29%
  

• Emerging Market CDS Index 342.92 +1.5%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 27.0 -.96%
  
• Ukraine Sovereign Debt Credit Default Swap 9,816.70 +7.9%
  

• 2-Year Swap Spread 27.0 basis points -5.75 basis points
  

• TED Spread 64.0 basis points +9.75 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -22.5 basis points +4.0 basis points
  
• MBS  5/10 Treasury Spread  135.0 -1.0 basis point
  
• iShares CMBS ETF 48.40 +.04%
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 49.43 -1.7%
• 3-Month T-Bill Yield 1.68% +4.0 basis points
  

• Yield Curve .25 basis point (2s/10s) -4.25 basis points
  

• China Iron Ore Spot 108.95 USD/Metric Tonne -4.1%

• Citi US Economic Surprise Index -69.3 +2.3 points

• Citi Eurozone Economic Surprise Index -38.5 -13.2 points
  

• Citi Emerging Markets Economic Surprise Index 33.5 +5.0 points

• 10-Year TIPS Spread 2.33 -2.0 basis points
  
• Highest target rate probability for September 21st FOMC meeting: 80.5%(+5.9 percentage points) chance of 2.75%-3.0%. Highest target rate probability for November 2nd meeting: 63.8%(+12.2 percentage points) chance of 3.0%-3.25%.
  

US Covid-19:

• 202 new infections/100K people(last 7 days total). 12.0%(-1.0 percentage point) of 1/14 peak -12/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -79.7%(-2.4 percentage points) from peak 7-day avg. of 1/9/21 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -222 open in Japan 
• China A50 Futures: Indicating -121 open in China

• DAX Futures: Indicating +117 open in Germany

Portfolio:

• Slightly Higher:  On gains in my in my tech sector longs and emerging market shorts
  

• Disclosed Trades:  Covered some of my (IWM)/(QQQ) hedges, then added them back
  

• Market Exposure:  50% Net Long
  

Morning Market Internals

NYSE Composite Index:

• Volume Running +.1% Above 100-Day Average 
• 11 Sectors Declining, 0 Sectors Rising
• 22.4% of Issues Advancing, 74.5% Declining
• 3 New 52-Week Highs, 258 New Lows
• 20.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 41.5% 
• Bloomberg Global Risk-On/Risk-Off Index 3,720.0 -542.0 points
• Russell 1000: Growth/Value 15,271.0 +1.4%
  
• Vix 29.1 +5.9%
• Total Put/Call 1.0 +53.9%
• TRIN/Arms 1.23 +53.8%

Tuesday Watch

Today's Headlines

Bloomberg:        

• Biden Close to Rollback of Chinese Tariffs to "Fight Inflation".  
• South Korea’s Inflation Hits Fastest Pace Since 1998 Ahead of BOK Decision.  
• Inflation Expectations Hit Record in Bank of Canada Surveys.  
• Vital TSMC Supplier Warns of Chip Material Price Hikes Into 2023.  
• BOJ Is Likely to Raise Price Forecast, Ex-Chief Economist Says.  
• Lockdown Pain Fails to Break Elderly Vaccine Resistance in China.  
• UK’s Biggest Pawnbroker Sees Demand Soar Amid Living Cost Crisis.  
• ECB’s Nagel Warns Crisis-Tool Use Can Lead to ‘Dire Straits’.
  
• Ukraine Latest: Putin Gives Troops a Rest After Taking Key City.
  
• Shippers Still Willing to Touch Russian Crude Oil Are Cashing In.  
• Energy Firms in Canada Keep Spending Tight Despite High Prices.
  
• US Futures Advance Amid China Tariff Speculation: Markets Wrap.
• Oil Gains as Traders Grapple With Tight Supplies, Demand Cuts.
  
• Tesla Pauses Plants After Ending Shaky Quarter With a Production Milestone.  
• The Age of Peak TV Is Ending. An Age of Austerity Is Beginning.

Wall Street Journal:

• Demand for Chips Eases as Sales of PCs Slow.
• Glut of Goods at Target, Walmart Is a Boon for Liquidators.
• Germany Hit With First Trade Deficit in Over Three Decades.
• Ukraine War Lessons: You Can’t Hide, Weapons Stockpiles Are Essential.
• Why the Rush for Toddler Vaccines? Covid was clearly a health emergency for adults in 2020. By contrast, the urgency now feels political.
• Bidenomics 101. The President doesn’t appear to know anything about how the private economy works.
• Biden Has to Choose: Climate Change or Human Rights in China. Electric-car batteries and solar panels rely on raw materials produced with forced and child labor.
• A Rude Awakening Is Ahead for Young Employees. A recession will hand the bargaining power to their bosses.
• Coal Makes a Comeback as the World Thirsts for Energy.
• Venture Capital Feels the Stock Market’s Pain.
• China Imposes Fresh Restrictions as Covid-19 Cases Rise.

Fox News:

• 'Armed and dangerous' suspect sought in Illinois parade massacre has dark past on social media.
• Highland Park shooting person of interest description, name released after July 4 parade attack.
• Woke Hollywood elites rally social media protests against Independence Day.

CNBC:

• Tired of swiping left, singles are turning to new matchmaking services for dates.
• The G-7 is considering a price cap on Russian oil. But energy analysts think it’s impossible.
• Another crypto lender Vauld pauses withdrawals as market crash takes its toll.
• Americans hoping for European vacations this summer should prepare for one thing: Chaos.
• Bezos slams Biden’s call for gasoline stations to cut prices.

Zero Hedge:

• EU President 'Can't Find' Texts With Pfizer Chief Discussing COVID-19 Vaccine.
• Twitter 'Silenced' Physicians Who Posted Truthful Information About COVID, Lawsuit Alleges.
• Police Announce 22-Year-Old Suspect In Chicago Suburb Shooting That Left 6 Dead.
• Dutch Protesters Pour Manure On Government Offices Over Industry-Killing Regulations.
• Dear America, Happy Birthday, Kind Regards From The Brits.
• US stock index futures were lacklustre and US cash markets closed for the Independence Day. holiday - Newsquawk Asia-Pac Market Open.
• Biden's Job Approval Enters Marianas Trench.
• German Energy Giant In Talks Over €9 Billion Bailout Package.
• Declare Your Independence From Tyranny, America.
• Despite Opposition From His Closest Advisors And Supporters, Biden Expected To Roll Back China Tariffs As Soon As This Week.
• American Pride Hits New Low.
• White House Quiet As BBQ Inflation Roils Americans On July 4.
• 100-Year-Old Veteran Laments "This Is Not The Country We Fought For".
• Key Events This Week: All Eyes On Payrolls.
• Rabobank: Global Recession?
• Are US Weapons Supplied To Ukraine Ending Up On DarkNet Marketplaces?
• This 4th Of July: Requiem For Freedoms Long Gone?
• 'We The People' Need To Stand Up For Our Nation.
• Von Greyerz: This Implosion Will Be Fast... Hold On To Your Seats.

MarketWatch.com:              

• With prices skirting a 17-month low, Dr Copper’s prognosis about the global economy is downbeat.
  
• European natural gas prices surge as Norwegian outage adds to supply woes.
  
• German regulator warns of possible gas shortage; Hamburg may ration hot water..  
• Opinion: Stocks could drop 50%, Nouriel Roubini argues. Things will get much worse before they get better.

NewsMax:    

• Suspect ID'd, at Large After 6 Are Fatally Shot at July 4 Parade in a Chicago Suburb.
• Rep. Cloud: Border Situation an Invasion.

TheGatewayPundit.com:

• Judge Gives Go-Ahead to Dominion to Sue FOX, OAN Despite Recent Report that Identifies Massive System Vulnerabilities in Dominion Systems That May Have Been Previously Exploited.
• Mitt Romney Attacks Trump in Scathing July 4 Op-Ed, Praises Joe Biden as a ‘Genuinely Good Man’.
• ANOTHER BIDEN RECORD: Over 728 Migrants Died Crossing Open Border Into the US in 2021 (VIDEO).
• Chicago’s Extreme Gun Control Hasn’t Stopped 60 being Shot And 15 Dead This Weekend.
• In the End, It Will Be the Decision of the American People to Fight for our Constitutional Republic or Submit to Tyranny – The Time Is Now.
• White House Doubles Down and UNLOADS on Jeff Bezos Following his Criticism of Biden’s Cluelessness of Basic Market Dynamics.
• BREAKING: Danish Mall Shooter Identified – 22-Year-Old Noah Esbensen — He Posted Weird Gun Videos on YouTube On Saturday Before Shooting.
• Eat Bugs and Live in a Pod: South African Entrepreneur Says Caterpillars Are “A Healthier Option” Than Steak in Latest Push to Convince People to Eat Bugs.

The Epoch Times:

• Fight to Control COVID-19 Narrative Sees Intensified Persecution of Falun Gong in China: Nonprofit Director.
• How the Chinese Military Is Buying American AI Chips: Report.
• House Republicans Seek to Designate June a ‘Month of Life’ in Celebration of Supreme Court Ruling.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 835,062 Reports(+2,129 from prior week) Through June 24th, 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). 
• COVID Money Tracker. Tracking the Covid response.
  

Night Trading

• Asian indices are unch. to +.5% on average.
• Asia Ex-Japan Investment Grade CDS Index 146.25 +2.5 basis points.
• China Sovereign CDS 85.5 +.5 basis point.
• Bloomberg Emerging Markets Currency Index 50.3 +.03%.
• Bloomberg Global Risk-On/Risk Off Index 4,346.0 +78.0 points.
• Volatility Index(VIX) futures 28.3 -.8%. 
• Euro Stoxx 50 futures +.2%.
• S&P 500 futures +.50%.
• NASDAQ 100 futures +.74%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• None of note
  

After the Close:

• None of note
  

Economic Releases

10:00 am EST

• Factory Orders for May is estimated to rise +.5% versus a +.3% gain in April.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Eurozone PPI report, China Services PMI report, RBA Rate Sentiment and the Eurozone Services PMI report could also impact trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

BOTTOM LINE: Asian indices are modestly higher, boosted by industrial 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 week.

Today's Headlines

Bloomberg:

• Germany’s Union Head Warns of Collapse of Entire Industries.
• Aggressive Interest Rate Hikes to Test Australian Consumer Might.  
• Australia Sees Commodities Boom Lifting Exports to Fresh Record.
• Ukraine Loses Its Final Eastern Stronghold in Luhansk Region.  
• Ukraine Latest: Kyiv Says Its Forces Withdraw From Lysychansk.
• Bruised Emerging Markets Are Battle-Ready for a US Recession.
• Long, Moderate and Painful: What Next US Recession May Look Like.
  
• Senate Democrat Urges Biden to Repeal Tariffs to Fight Inflation.
  
• Tether Fails to Calm Jittery Nerves With Short Sellers Circling.

Wall Street Journal:

• Americans Have Had It With Inflation.
• Bankers Brace for Lean Times After Deal Boom.
• Banks Get Burned by Risky Debt, Imperiling Buyout Activity.
• Celsius Customers Are Losing Hope for Their Frozen Crypto.
• Millennials Were Optimistic About Their Financial Future—but Now, Not So Much.
• Biden’s Raid on the Permian Basin. A new ozone decision would force less drilling in America’s most productive shale reserve.

Fox News:

• White House fires back after Bezos accuses Biden of 'misdirection' or ignorance over gas price tweet.
  
• 'NOT SURPRISING': Biden administration escalates Twitter spat with Bezos over gas price message.
• McEnany slams Biden official's remark on 'liberal world order': 'They're admitting it's intentional'.
• Dozens shot, at least 5 people killed, as violence erupts in big Democrat-run city.
• Former ESPN star says same LIV Golf 'outrage' should apply to NBA and China.

CNBC:

• How much money it takes to be considered wealthy in 12 major U.S. cities.
• It’s possible the Jan. 6 committee refers a criminal case against Trump, Liz Cheney says.
• Russia says its forces now have full control of east Ukraine region.
• Recession fears flare and June jobs report looms as jittery markets head into third quarter.
• More than 12,000 flights delayed, hundreds canceled during busy July Fourth weekend.
• German road traffic agency says 59,000 Tesla vehicles have software glitch.

Zero Hedge:

• Are You Willing To Suffer Through A Recession For The Good Of "The Liberal World Order"?
• Morgan Stanley: As The Recession Arrives, Will We See A Surge In Corporate Defaults.
• Home Price Cuts, Rising Inventories Are Ominous Signs Of Top.
• NY Governor To Require 3 Years Of Social Media History To Obtain Concealed Carry Permit.
• Oil Price Could Hit "Stratospheric" $380 If Russia Retaliates To G7 Oil Price Cap.
• "Misdirection" Or "Misunderstanding" - Bezos Blasts Biden Blaming Gas Station Owners For High Prices.
• Several Hit By Gunfire At Copenhagen Mall, Police Say.
• IEA: Global Nuclear Capacity Needs To Double To Meet Net-Zero Goals. 
• Amazon Cancels Or Delays Plans For At Least 16 Warehouses This Year.
• We Need To Declare Our Independence From The Federal Reserve.
• Several NYC Election Sites Had 'No Republican Ballots' During Last Week's Primary.
• Goldman's Permabullish Trader On The Verge Of Capitulating To The Bear Market.
• Leaked Documents Reveal Wide Scope Of China's Human Rights Violations In Xinjiang.
• 33 Problems With Media In One Chart.
• DeSantis Probe Of Human Traffickers Cleared By Florida Supreme Court.
• Singapore Brewery Launches New Beer Made From Recycled Sewage Water.
• Visualizing A Decade Of Population Growth And Decline In US Counties.

MarketWatch.com:       

• Recession fears are slamming the stock market. This GDP tracker explains why.  
• The cities where housing costs are poised to drop, according to one expert.
• Mark Zuckerberg issues dire economic warning to Facebook and other Meta employees.

NewsMax:

• Russia Claims to Have Taken Ukraine's Luhansk Region. 
• Rep. Smucker: America Has ‘Really Hard Times Ahead’.

TheGatewayPundit.com:

• Boom! Even Leftist Jeff Bezos Goes After Joe Biden for Spreading Lies and Not Understanding Cause of the Failing Economy. 
• Ilhan Omar Booed Off Stage at Somalia Independence Day Concert in Minneapolis (Video).
• Halsey Fans Walk Out Mid-Show After Controversial Pro-Abortion Speech in Arizona (VIDEO).
• 27-Year-Old Engineer Dies After Developing Blood Clot on Brain Following Covid Vaccine.
• BREAKING: Internal Memo Reveals Capitol Police Were Warned BLM from Baltimore Was Bussing in Rioters Disguised as Trump Supporters on Jan. 6.
• Biden And His G7 Fraternity Threaten To Devastate The World’s Economy – Analysts Warn Oil Prices Could Jump to $380 a Barrel.
• Bobby Kennedy’s Children’s Health Defense Aligns with Military Personnel Refusing to Take Experimental Vaccines.
• China and Billionaire Bill Gates Just Purchased Huge Parcels of Farmland in North Dakota Near US Air Base – Why Is That?
• Vocal Trump-Hater and America-Basher Megan Rapinoe to Receive the Presidential Medal of Freedom from Joe Biden.
• *Peer Reviewed* Study Finds YOUNG Moderna Jab Recipients Have a Jaw-Dropping 44X HIGHER Risk of Developing Myocarditis Than the Unvaccinated.
• Get Woke, Go Broke: Fresh Off “Lightyear” Trainwreck, Disney-Owned Marvel Announces Creation of New “Gay Spider-Man” With a “Fearlessly Femme Identity”.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 835,062 Reports(+2,129 from prior week) Through June 24th, 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).