Stocks Rising into Final Hour on Less Hawkish Fed Hopes, Diminished European/Emerging Markets/US High-Yield Debt Angst, Short-Covering, Alt Energy/Commodity Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance:  Almost Every Sector Rising
  

• Volume:  Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 25.9 -3.1%
• DJIA Intraday % Swing n/a
  
• Bloomberg Global Risk On/Risk Off Index 4,433.0 +311.0 points

• Euro/Yen Carry Return Index 142.21 -.1%

• Emerging Markets Currency Volatility(VXY) 12.3 +.2%

• CBOE S&P 500 Implied Correlation Index 46.7 -.2% 

• ISE Sentiment Index 111.0 +7.0 points
  

• Total Put/Call .79 -7.1%

• NYSE Arms .43 -71.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 93.1 -5.3%
  

• US Energy High-Yield OAS 524.5 -2.9%
• Bloomberg TRACE # Distressed Bonds Traded 496.0 +2.0
  

• European Financial Sector CDS Index 128.93 -3.9%

• Italian/German 10Y Yld Spread 199.0 basis points +4.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 151.5 +2.1%
  

• Emerging Market CDS Index 339.49 -2.5%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.8 -.4%
  
• Ukraine Sovereign Debt Credit Default Swap 11,352.6 +12.4%
  

• 2-Year Swap Spread 27.75 basis points +.75 basis point
  

• TED Spread 52.0 basis points -5.75 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -18.5 basis points +3.75 basis points
  
• MBS  5/10 Treasury Spread  141.0 -1.0 basis point
  
• iShares CMBS ETF 47.78 -.5%
• Avg. Auto ABS OAS .96 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 49.05 +.12%
• 3-Month T-Bill Yield 1.9% +5.0 basis points
  

• Yield Curve -4.0 basis points (2s/10s) +1.5 basis points
  

• China Iron Ore Spot 114.70 USD/Metric Tonne +1.1%

• Citi US Economic Surprise Index -64.3 -.6 point

• Citi Eurozone Economic Surprise Index -39.4 -.8 point
  

• Citi Emerging Markets Economic Surprise Index 30.9 -2.0 points

• 10-Year TIPS Spread 2.34 +4.0 basis points
  
• Highest target rate probability for September 21st FOMC meeting: 79.6%(-1.2 percentage points) chance of 2.75%-3.0%. Highest target rate probability for November 2nd meeting: 48.3%(-5.6 percentage points) chance of 3.0%-3.25%.
  

US Covid-19:

• 231 new infections/100K people(last 7 days total). 13.0%(+0.0 percentage point) of 1/14 peak +29/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -76.4%(-.2 percentage point) from peak 7-day avg. of 1/9/21 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +195 open in Japan 
• China A50 Futures: Indicating +20 open in China

• DAX Futures: Indicating -7 open in Germany

Portfolio:

• Higher:  On gains in my in my tech/industrial/commodity/medical sector longs
  

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

• Market Exposure:  75% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Value +1.1%

Sector Underperformers:

• 1) Education -.6% 2) Telecom -.4% 3) Utilities -.1%

Stocks Falling on Unusual Volume: 

• NEOG, FRPT, HELE and NAPA
  

Stocks With Unusual Put Option Activity:

• 1) ALNY 2) ARMK 3) BBBY 4) TDOC 5) GT
  

Stocks With Most Negative News Mentions:

• 1) USNA 2) HELE 3) SAR 4) SAM 5) XRAY
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +2.8%

Sector Outperformers:

• 1) Alt Energy +6.3% 2) Oil Service +4.8% 3) Steel +4.7%

Stocks Rising on Unusual Volume:

• SBOW, INBX, GME, AVLR, TEN, HALO and CYTK
  

Stocks With Unusual Call Option Activity:

• 1) CROX 2) IGT 3) GSAT 4) SGEN 5) SJT

Stocks With Most Positive News Mentions:

• 1) OVV 2) SPCE 3) GROV 4) TH 5) AVLR
  

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -16.5% Below 100-Day Average 
• 2 Sectors Declining, 9 Sectors Rising
• 76.3% of Issues Advancing, 19.9% Declining
• 9 New 52-Week Highs, 36 New Lows
• 17.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 40.9% 
• Bloomberg Global Risk-On/Risk-Off Index 4,485.0 +365.0 points
• Russell 1000: Growth/Value 15,464.0 +.25%
  
• Vix 25.9 -2.9%
• Total Put/Call .83 -2.4%
• TRIN/Arms .51 -65.8%

Thursday Watch

Evening Headlines

Bloomberg:                  

• Russia Targets Europe With a Commodity Weapon: Kazakh Crude.  
• Ukraine Doubts Deal to Unblock Grain Exports Will Happen Soon.
• Defiant Boris Johnson Refuses to Quit, Fires Key UK Minister.  
• Ukraine Latest: NATO Expansion; Kyiv Casts Doubts on Grain Deal.
• Stocks Climb in Asia as Crude Remains Below $100: Markets Wrap. 
• Oil Extends Its Losses as Growth Concerns Stoke Two-Day Decline.  
• Copper Crash Deepens as Recession Fears Loom Over Metals Trading.
• Fed Sees ‘More Restrictive’ Rates Possible If Inflation Persists.
• Tycoon Whose Bet Broke the Nickel Market Walks Away a Billionaire.
  
• US, Allies Discuss Capping Russian Oil at $40-$60 a Barrel to Cut War Revenue.  
• Roaring US Rental Market Shows Early Signs of Slowing Down.
• Musk Slated to Address Annual Sun Valley Gathering of the Elite.  
• Democrats Running in GOP-Leaning Ohio Snub Biden, Again.  
• Crypto Lender Genesis Confirms Exposure to Bankrupt Three Arrows Capital.
• Never-Ending Stock Market Churn Keeps Pushing Bottom Targets Lower.
• Michael Burry Sees Inflation Sticking Around as Geopolitical Turmoil Drives US Manufacturing.

Wall Street Journal:     

• Millions of Covid Vaccine Doses Being Thrown Away Amid Flagging Demand.
• Russia’s Tactical Shift in Ukraine Raises Prospect of Protracted War.
• Boris Johnson Left Clinging to Post as More U.K. Ministers Quit.
• Fed Takes Stricter Stance in Speeding Interest Rate Rise.
• That Fancy College Course? It Might Come From a For-Profit Education Contractor.

Fox News:

• Pastor in Democrat-run city demands 'same level of attention' for unseen victims as nearby parade horror.
  
• Chicago sees 37 people shot, 7 killed, in bloody July 4 weekend.

CNBC.com:

• Fed sees ‘more restrictive’ policy as likely if inflation fails to come down, minutes say.
• Treasury yields jump as Fed hints at another big hike at next meeting.
• Biden administration plans to make sweeping changes to ‘broken’ student loan system.
• There’s a battle over inflation-linked pay adding to European port contagion.
• GM reports worst sales in China since onset of Covid-19 lockdowns.
• The job market is still ‘red hot’ despite recession fears, as the Great Resignation continues.
• Op-Ed: Energy supply fears have Europe in a panic as it tries to avert a full-blown crisis. 
  

MarketWatch:           

• Fed officials in June resolute in tightening into ‘restrictive’ territory despite risk of slower growth.
• Opinion: What’s your plan for surviving the bear market? This investing pro with 50 years of experience has some tips.  
• ‘Peak inflation is not here yet’: Rents continue to rise, putting pressure on would-be homebuyers. That’s bad news for the Fed.  
• Here’s the loophole that makes the U.S. housing market more wobbly than it appears.
  
• Here’s how far house prices are set to fall as rates go up, according to this forecasting firm.

Zero Hedge:

• Mass Shooting By Two Illegal Immigrants In Richmond Foiled by Tipster: Police.
• Investors Take Bitcoin Off Exchanges As Crypto Winter Settles In.
• Corporate Media Insists Eating Insects Is "Really Delicious".
• Most Americans Say Federal Government Actions Are Hurting Them: Poll.
• Real-Time Indicator Shows Manhattan Housing Market Quickly Cooling.
• Biden's Green Agenda Is Causing US Power Grid To Be "Incredibly Vulnerable". 
• Tesla China Sales For June Come In At About 78,000 Vehicles, Up 142% Sequentially.
• San Diego Loses 22% Of Its Police Force Due To Vax Mandates.
• US Deploys F-35 Stealth Fighters To South Korea For Joint Military Drills.
• All about commodities, MOVE(s) and Fed.
• Top Democrats, Staffers Fume Over White House's Chaotic Impotence.
• "Very Unusual Situation": 2% Of All Global Freight Is At A Standstill In North Sea Due To Historic Congestion.
• US Marines Ask Court For Relief From COVID-19 Vaccine Mandate.
• WTI Extends Losses After Unexpected Crude Build.
• Stocks bounce and bonds sold; mixed data and damp squib FOMC minutes - Newsquawk US Market Wrap.
• Bonds, Bullion, & Black Gold Drop, Dollar Pops As Fed Confirms Hawkish Stance.

TheGatewayPundit.com:

• Georgia Guidestones Monument BOMBED at 4 AM… Structure Represents New World Order Calls for Significantly Smaller Human Population.
• Halifax Bank’s Woke Pronoun Policy and Bullying of Customers Leads to Mass Exodus of Clients.
• Richmond Police Say a Tip Helped Them Thwart Planned Mass Shooting on Fourth of July by Two ‘Non-American Citizens’.
• JUST IN: White House Comms Director Kate Bedingfield Leaving Post as Biden’s Poll Numbers Crater.
• NEW: Uvalde Police Officer Who Had Clear Shot to Take Out Ramos Before He Entered Robb Elementary School Asked Supervisor For Permission to Shoot but Got No Answer.
• EXCLUSIVE: “Arizona Is Under Attack.” – Trump-Endorsed AZ Gubernatorial Candidate Kari Lake’s New Ad Exposes Invasion At Arizona’s Southern Border (VIDEO).
• DOE Employee Alleges Gender Fluid Drag Queen into Kink and Pups Did Not Meet Qualifications to Be Deputy Secretary in Nuclear Energy Department.
• EU Parliament Declares Nuclear Power And Natural Gas As “Green” Energy.
• Woke National Teachers Union Agenda Includes Mandatory Masks, Vaccines and Banning the Words Mother and Father.
• George Soros Declares War on Supreme Court and Republican Party: “Enemies of Democracy”.
• Lawless Biden Regime Sues Arizona To Block Law Requiring Voters to Prove US Citizenship to Vote. 
• Pfizer’s Investor Call Reveals The Company’s Plan To Capitalize On Its Failed COVID Drugs For Years.

The Epoch Times: 

• Trump Says Biden Administration’s Talk of Lifting China Tariffs Is ‘Terrible Mistake’.
• Evidence Points to China Ramping Up Forced Organ Harvesting From Uyghurs: Expert.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 837,191 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).

Night Trading 

• Asian equity indices are -.24% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 149.0 +2.25 basis points. 

• China Sovereign CDS 84.75 -2.25 basis points.
  

• Bloomberg Emerging Markets Currency Index 48.96 -.06%.  
• Bloomberg Global Risk-On/Risk Off Index 4,164.0 +47.0 points.
• Volatility Index(VIX) futures 28.4 +.7%.
• Euro Stoxx 50 futures +.38%.

• S&P 500 futures -.18%.

• NASDAQ 100 futures -.12%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (HELE)/2.00
  

After the Close:

• (LEVI)/.23
• (WDFC)/1.28
  

Economic Releases

7:30 am EST

• Challenger Job Cuts YoY for June.
  

8:30 am EST:

• The Trade Balance for May is estimated at -$84.7B versus -$87.1B in April.
• Initial Jobless Claims for last week are estimated to fall to 230K versus 231K the prior week.
• Continuing Claims are estimated to rise to 1330K versus 1328
  

11:00 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,152,670 barrels versus a -2,762,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -692,830 barrels versus a +2,645,000 barrel gain the prior week. Distillate inventories are estimated to rise by +1,018,830 barrels versus a +2,559,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.12% versus a +1.0% gain prior.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Bullard speaking, Eurozone Industrial Production report and the weekly EIA natural gas inventory report could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

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

Stocks Reversing Higher into Final Hour on Less Hawkish Fed Hopes, Technical Buying, Bargain-Hunting, Utility/Healthcare Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance:  Most Sectors Declining
  

• Volume:  Below Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 27.1 -1.5%
• DJIA Intraday % Swing n/a
  
• Bloomberg Global Risk On/Risk Off Index 4,058.0 +171.0 points

• Euro/Yen Carry Return Index 142.28 -.8%

• Emerging Markets Currency Volatility(VXY) 12.3 +.4%

• CBOE S&P 500 Implied Correlation Index 47.2 +.6% 

• ISE Sentiment Index 101.0 +1.0 point
  

• Total Put/Call .82 -9.9%

• NYSE Arms 2.2 +60.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 99.17 -.03%
  

• US Energy High-Yield OAS 542.35 -1.6%
• Bloomberg TRACE # Distressed Bonds Traded 494.0 +8.0
  

• European Financial Sector CDS Index 134.40 -1.3%

• Italian/German 10Y Yld Spread 195.0 basis points -3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 148.69 +1.5%
  

• Emerging Market CDS Index 348.82 +1.8%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.9 -.63%
  
• Ukraine Sovereign Debt Credit Default Swap 10,101.40 +2.9%
  

• 2-Year Swap Spread 27.0 basis points unch.
  

• TED Spread 46.25 basis points -17.75 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -22.25 basis points +.25 basis point
  
• MBS  5/10 Treasury Spread  142.0 +7.0 basis points
  
• iShares CMBS ETF 48.20 -.4%
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 49.02 -.8%
• 3-Month T-Bill Yield 1.85% +17.0 basis points
  

• Yield Curve -5.5 basis points (2s/10s) -5.75 basis points
  

• China Iron Ore Spot 111.30 USD/Metric Tonne +1.3%

• Citi US Economic Surprise Index -63.7 -5.6 points

• Citi Eurozone Economic Surprise Index -38.6 -.1 point
  

• Citi Emerging Markets Economic Surprise Index 32.9 +.6 point

• 10-Year TIPS Spread 2.3 -3.0 basis points
  
• Highest target rate probability for September 21st FOMC meeting: 80.8%(+.3 percentage point) chance of 2.75%-3.0%. Highest target rate probability for November 2nd meeting: 53.9%(-9.9 percentage points) chance of 3.0%-3.25%.
  

US Covid-19:

• 202 new infections/100K people(last 7 days total). 13.0%(+1.0 percentage point) of 1/14 peak -0/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -76.2%(+3.5 percentage points) from peak 7-day avg. of 1/9/21 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +183 open in Japan 
• China A50 Futures: Indicating -72 open in China

• DAX Futures: Indicating +39 open in Germany

Portfolio:

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

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

• Market Exposure:  50% Net Long