Stocks Reversing Higher into Final Hour on Lower Long-Term Rates, US Economic Soft-Landing Hopes, Earnings Optimism, Tech/Homebuilding Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance:  Mixed
  

• Volume:  Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 23.5 -1.8%
• DJIA Intraday % Swing 1.24% +32.8%
  
• Bloomberg Global Risk On/Risk Off Index 4,358.0 -183.0 points

• Euro/Yen Carry Return Index 144.40 -.20%

• Emerging Markets Currency Volatility(VXY) 12.4 +.5%

• CBOE S&P 500 Implied Correlation Index 44.3 -1.8% 

• ISE Sentiment Index 89.0 +12.0 points
  

• Total Put/Call .95 +1.06%

• NYSE Arms 1.10 -8.94%

Credit Investor Angst:

• North American Investment Grade CDS Index 84.67 -.18%
  

• US Energy High-Yield OAS 505.65 +2.0%
• Bloomberg TRACE # Distressed Bonds Traded 484.0 -30.0
  

• European Financial Sector CDS Index 119.76 -1.4%

• Italian/German 10Y Yld Spread 232.0 basis points +19.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 164.70 -3.9%
  

• Emerging Market CDS Index 354.76 +.65%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.3 +.8%
  
• Ukraine Sovereign Debt Credit Default Swap 12,550.90 +10.8%
  

• 2-Year Swap Spread 23.75 basis points +.25 basis point
  

• TED Spread 30.25 basis points -.5 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -20.5 basis points -.5 basis point
  
• MBS  5/10 Treasury Spread  136.0 -3.75 basis points
  
• iShares CMBS ETF 48.14 +.54%
• Avg. Auto ABS OAS .95 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 48.86 -.57%
• 3-Month T-Bill Yield 2.42% -2.0 basis points
  

• Yield Curve -19.5 basis points (2s/10s) +1.0 basis point
  

• China Iron Ore Spot 98.3 USD/Metric Tonne -.3%

• Citi US Economic Surprise Index -60.0 -6.8 points

• Citi Eurozone Economic Surprise Index -61.60 unch.
  

• Citi Emerging Markets Economic Surprise Index 21.8 +.5 point

• 10-Year TIPS Spread 2.30 -8.0 basis points
  
• Highest target rate probability for September 21st FOMC meeting: 48.2%(-2.5 percentage points) chance of 3.0%-3.25%. Highest target rate probability for November 2nd meeting: 45.6%(+3.5 percentage points) chance of 3.25%-3.5%.
  

US Covid-19:

• 266 new infections/100K people(last 7 days total). 15.3%(-.4 percentage point) of 1/14/22 peak(1,740) -7/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -71.3%(+.4 percentage point) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +7 open in Japan 
• China A50 Futures: Indicating -20 open in China

• DAX Futures: Indicating -51 open in Germany

Portfolio:

• Slightly Higher:  On gains in my industrial/medical/technology sector longs
  

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

• Market Exposure:  Moved to 75% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Growth -.6%

Sector Underperformers:

• 1) Oil Service -5.0% 2) Energy -3.0% 3) Airlines -3.0%

Stocks Falling on Unusual Volume: 

• DLTR, PAG, AIR, DY, BX, FIGS, TSCO, LAD, WIRE, KURA, AN, XM, LNTH, HCSG, LUMN, HAYW, TDS, PACW, ALL, BKR, T, BPT, NCLH, CPE, AAL, VERV, POOL, RCL, DFS, UAL and PBF
  

Stocks With Unusual Put Option Activity:

• 1) T 2) ITB 3) SNAP 4) GOOG 5) AKAM
  

Stocks With Most Negative News Mentions:

• 1) CCL 2) DFS 3) UAL 4) SNDL 5) BX
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.9%

Sector Outperformers:

• 1) Digital Health +3.8% 2) Disk Drives +2.0% 3) Video Gaming +1.8%

Stocks Rising on Unusual Volume:

• ONEM, SMCI, RGEN, RYTM, OSH, AEHR, PRVA, LVS, AGL, SKYT, PEN, AKAM, IMXI and KNX
  

Stocks With Unusual Call Option Activity:

• 1) ARCH 2) BBWI 3) T 4) NLOK 5) DHR

Stocks With Most Positive News Mentions:

• 1) SMCI 2) ONEM 3) TBLT 4) CANO 5) RGEN
  

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -4.1% Below 100-Day Average 
• 5 Sectors Declining, 6 Sectors Rising
• 42.9% of Issues Advancing, 52.7% Declining
• 7 New 52-Week Highs, 24 New Lows
• 20.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 47.2% 
• Bloomberg Global Risk-On/Risk-Off Index 4,326.0 -220.0 points
• Russell 1000: Growth/Value 15,691.0 +.60%
  
• Vix 23.7 -.9%
• Total Put/Call .94 unch.
• TRIN/Arms 1.0 -18.7%

Thursday Watch

Evening Headlines

Bloomberg:

• ADB Downgrades Asia GDP Forecast as China Sticks To Covid Zero.
• Biden Expects to Speak With China’s Xi Within Next 10 Days.
• Yuan Shorts Gather Pace on Lockdown Threat, Property Sector Risk.
  
• Europe Counts Down to Dawn as Russia Gas Pipe Set to Restart.  
• Korean Early Exports Rise in Sign of Resilient Global Demand.
  
• Don’t Forget to Turn Off the Lights, French Government Urges.
• Japan Logs Trade Deficit for 11th Month on Energy, Weak Yen.
• Stock Rally Sputters in Asia as Dollar Advances: Markets Wrap.
• Microsoft Cuts Many Open Job Listings in Weakening Economy.
  
• Lyft Plans to Shut Down Its Car-Rental Unit and Cut About 60 Jobs.
  
• Microsoft, Google Are Latest Tech Giants to Hit Brakes on Hiring.
• Bitcoin Erases Gains After Tesla Discloses Second-Quarter Sales.  
• United Air Cuts 2023 Growth Plans as Flight Disruptions Persist.   
• Stocks Latest Rally Has Bears Calling It Just a Bounce.

Wall Street Journal:    

• Putin’s Gas Game: Toy With Europe’s Supply and Make Its Leaders Squirm.
• Crypto Market Rout Shows Dangers of Margin Lending.
• Putin Says Russia Will Honor Europe Gas Commitments but Warns of New Curbs.
• U.S. Starts Trade Fight With Mexico Over Energy Policy.
• Proposal Would Clarify Vice President’s Role in Vote Certification.
• The Senate’s Semiconductor Spending Trick. How a $76 billion bill became $250 billion. Hide the children.
• Robinhood Was Behind Phantom Surge in Berkshire Trade Volume, Study Finds.
• Travel Anxiety Is Soaring: Are Mindfulness Gadgets the Solution?
• Why More People Are Dating Without Drinking.

Fox News:

• Conservatives, journos criticize NPR's new 'disinformation reporting team,' recall Hunter Biden dismissal.
• Twitter erupts after Biden suggests home-state oil refinery gave him cancer.

CNBC.com:

• Tesla grows revenue 42%, but automotive margins decline.
• Tesla has dumped 75% of its bitcoin holdings a year after touting ‘long-term potential’.
• Mortgage demand drops to a 22-year low as higher interest rates and inflation crush homebuyers.
• Raimondo warns of ‘deep and immediate recession’ if U.S. cut off from Taiwan chip manufacturing. 
  

MarketWatch:         

• Who can afford a home? Roughly 60% of the U.S. could be frozen out of starter homes, warns S&P.
  
• Chip stocks rally despite an ominous forecast, as U.S. semiconductor funding bill advances in Senate.
  
• The news from this giant volcano suggests world economy getting worse — and the U.S. may be to blame.
  
• These are the airlines with the most delays and cancellations.

Zero Hedge: 

• Bitcoin Slides After Tesla Admits Dumping Most Of Its Crypto In Q1.
• Tesla Pumps And Dumps After Earnings Beat; Sells 75% Of All Bitcoins.
• "We Decided To Stop Paying": China's Mortgage Payment Boycott Spreads As Property Suppliers Refuse To Pay Their Bills.
• Current Flu Season More Severe Than COVID: Australian State Premier.
• ESG Funds Are Quietly Buying Oil Stocks.
• Biden Approval Rating Hits New All-Time Low Of 31%, Now 'Underwater' With Own Party.
• George Soros Gave $1 Million To Help Beto O'Rourke Unseat Texas Gov. Greg Abbott.
• Battery Replacement Of Family's EV Ford Focus Would Cost More Than Car Itself.
• Russia Declares War Goals Have Expanded After West Pumped More Arms Into Ukraine.
• Wall St. shrugged off European geopolitical concerns with tech underpinned by Netflix - Newsquawk Asia-Pac Market Open.
• Taibbi: The Great American Military Rebrand.
• Strengthening Ties With Iran, Putin Meets With Supreme Leader In Tehran.
• Ford Plans To Cut 8,000 Jobs To Help Fund EV Endeavors.
• TME Daily: Consensus complacency turns into complicated confusion.
• "This Is Just The Beginning": Starbucks CEO Warns Of More Store Closures In Leaked Video.
• Italy Government On Verge Of Collapse After Coalition Members Abandon Draghi; Euro Tumbles.
• US outperforms as Italy's crisis, NS1 angst, and Ukraine woes hit Europe - Newsquawk US Market Wrap.
• Army Set To Cut Force-Size By 20,000 Amid "Unprecedented Challenges" In Recruitment.
• Big-Tech & Bitcoin Jump, Bonds & Bullion Dump As Housing Market Slumps.

Newsmax:

• Yellen Welcomes Ukraine Debt Freeze, Calls on Creditors to Join.
• Russia Won't Supply Oil to the World Market if Price Caps Imposed.
• Rep. Burgess: Biden's Missteps 'Purposefully Destructive'.

TheGatewayPundit.com:

• NEW: Federal Investigators Weigh Charges Against Hunter Biden as Probe Enters Final Stages.
• The Deep State Coup’s Final Assault on President Trump: DOJ Blocked Release Declassified Documents that Revealed Truth of Trump-Russia Lies as Trump Requested.
• Biden To Use Executive Powers To ‘Combat Climate Crisis’: ‘Since Congress Is Not Acting As It Should…This Is An Emergency’.
• Buttigieg Says He’s “Astonished” That People “Seem to Really Struggle to Let Go” of Their Gas-Powered Vehicles in Favor of $65,000 Electric Vehicles (VIDEO).
• Biden Set to PURGE 27.5% of Army (Or More) Who Aren’t Fully Vaccinated Against COVID with Non-FDA Approved Vaccine.
• FBI Investigated Decision by NIH, Fauci and Dr. Collins to Fund Wuhan Lab – And Its Controversial Testing of Bat Coronavirus — BUT SAID NOTHING!

The Epoch Times: 

• SEC Chief Says It’s Unknown If China Can Avoid Its Companies Being Delisted From US Markets.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 842,573 Reports(+3,276 from prior week) Through July 8th, 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 -.5% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 170.75 unch. 

• China Sovereign CDS 85.25 +1.0 basis point.
  

• Bloomberg Emerging Markets Currency Index 49.14 -.01%.  
• Bloomberg Global Risk-On/Risk Off Index 4,619.0 +72.0 points.
• Volatility Index(VIX) futures 26.5 +.7%.
• Euro Stoxx 50 futures -.48%.

• S&P 500 futures -.15%.

• NASDAQ 100 futures -.17%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (AIR)/.73
• (ABB)/.41
• (ALK)/1.95
• (AAL)/.75
• (T)/.63
• (AN)/6.22
• (BX)/1.46
• (DHI)/4.52
• (DHR)/2.34
• (DPZ)/2.90
• (DOW)/2.13
• (FITB)/.87
• (FCX)/.68
• (HRI)/2.62
• (KEY)/.52
• (NUE)/8.69
• (PM)/1.25
• (POOL)/7.36
• (DGX)/2.26
• (SAP)/1.08
• (SNA)/3.95
• (TSCO)/3.52
• (TRV)/1.97
• (UNP)/2.84
  

After the Close:

• (BJRI)/.26
• (SAM)/4.62
• (COF)/5.05
• (ISRG)/1.20
• (MAT)/.06
• (PPG)/1.72
• (RHI)/1.59
• (STX)/1.89
• (SNAP)/-.032
• (THC)/.84
  

Economic Releases

8:30 am EST:

• The Philly Fed Business Outlook Index for July is estimated to rise to .8 versus -3.3 in June.
• Initial Jobless Claims for last week are estimated to fall to 240K versus 244K prior.
• Continuing Claims for last week are estimated to rise to 1340K versus 1331K the prior week.
  

10:00 am EST

• The Leading Index for June is estimated to fall -.6% versus a -.4% decline in May.

Upcoming Splits

• (GME) 4-for-1
  

Other Potential Market Movers

• The ECB rate decision, weekly EIA natural gas inventory report and the (CRTD) investor day 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 commodity and industrial 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.

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -18.2% Below 100-Day Average 
• 3 Sectors Declining, 8 Sectors Rising
• 65.0% of Issues Advancing, 30.7% Declining
• 10 New 52-Week Highs, 15 New Lows
• 17.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 41.8% 
• Bloomberg Global Risk-On/Risk-Off Index 4,580.0 +34.0 points
• Russell 1000: Growth/Value 15,624.0 +1.0%
  
• Vix 23.9 -2.5%
• Total Put/Call .90 -5.3%
• TRIN/Arms 1.38 +272.90%