Morning Market Internals

NYSE Composite Index:

• Volume Running -4.6% Below 100-Day Average 
• 9 Sectors Declining, 2 Sectors Rising
• 38.3% of Issues Advancing, 58.1% Declining
• 8 New 52-Week Highs, 71 New Lows
• 29.6%(+3.5%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 52.0% 
• Bloomberg Global Risk-On/Risk-Off Index 44.1 +.1%
  
• Russell 1000: Growth/Value 15,315.29 -1.10%
  
• Vix 26.4 +1.0%
• Total Put/Call 1.0 -7.4%
• TRIN/Arms .93 -1.1% 

Thursday Watch

Evening Headlines

Bloomberg:           

• China Braces for a Slowdown That Could be Even Worse Than 2020.
• Japan Trade Deficit Hits Record as Weak Yen Inflates Imports.  
• Yen Steadies as Traders Weigh Impact of Japan Intervention Threat.  
• Most European Investments in China Are From a Few Firms, Study Says.
  
• UK Consumer Confidence Drop Feeds Concern About House Prices.
• Asia Stocks Edge Higher as Traders Assess Fed Path: Markets Wrap.
• US Rail Strike Risks Inflation Boost at Worst Possible Time.
  
• Yellen Warns of Challenges From Rail Strike, European Economy.
• Chicago Faces Deep-Seated Ills in Shadow of Citadel-Boeing Defections.
• Alcoa Squeezed by ‘Stubbornly High’ Costs, Lower Aluminum Prices.   
• AIG’s Corebridge Raises $1.68 Billion at Bottom of IPO Range.  
• NFL Is Latest Target in Lawsuits Over Data-Sharing With Meta.  
• Stock Rout Spurs $2 Billion in Dip Buying by Retail Investors.

Wall Street Journal:

• Is Biden Working on the Railroad Unions? You’d think all of the President’s favors to Big Labor over two years would be enough to avert a railway strike.
• U.S. Officials Press Railroads, Union to Avert Strike.
• New Ford Mustang Sticks With Gas Engine.
• Latino Voters, Once Solidly Democratic, Split Along Economic Lines.
• How Robert Mueller Shredded the FBI’s Credibility. His post-9/11 attempts to change the culture led to politicized investigations like Crossfire Hurricane.
• Biden’s Make-Believe Victory Over Inflation. It’s hard to reassure voters when their rent and grocery bills won’t stop rising.
• Illinois Governor Declares Emergency Over Migrants Bused From Texas.
• McDonald’s CEO Raises Crime Concerns for Business in Chicago.

Fox News:  

• Biden dipped into your wallet to vote in-person despite pushing absentee ballots.
• Harris roasted for traveling to promote climate policy: ‘Hope you’re flying coach’.

CNBC.com:

• U.S. passenger railroad Amtrak to cancel all long-distance trains.
• Tesla struggles with Elon Musk’s strict return-to-office policy.
• Patagonia founder just donated the entire company, worth $3 billion, to fight "climate change".
• Ford asks dealers to invest in EVs as it chases Tesla-like profit.
• Bitcoin slips lower, and South Korea issues arrest warrant for Terra’s Do Kwon: CNBC Crypto World.

MarketWatch:        

• Mortgage rates hit 6% for the first time since 2008, while applications fall to lowest level since 1999.
  
• Potential railroad strike: Why Amtrak is canceling trains, and everything else you need to know.
  
• The next financial crisis may already be brewing — but not where investors might expect.

Zero Hedge:

• Bernie Sanders Blocks Proposal Which Would Avoid Rail Strike. 
• Anti-Green Blowback: T. Rowe Says "Increasing Difficult To Find Credible" ESG Bonds.
• Anthony Fauci: From AIDS To COVID-19, A Pharma Love Story.
• 40% Of Americans Believe CCP Considers Itself At War With US: Poll.
• US Navy Quietly Cancels Vaccine Requirement Order For SEALs.
• Here's Why Toyota Isn't Going All-In On Electric Vehicles.
• China Issues Highest Typhoon Warning As Storm Approaches World's Largest Container Ports.
• US stocks posted marginal gains after relatively inline PPI data provided some solace from the inflationary woes - Newsquawk Asia-Pac Market Open.
• California Sues Amazon Over Alleged Antitrust Violations, Inflated Prices.
• 'Suspicious Actors' Who Conspired To Raid Capitol On Jan. 6 Never Arrested, Attorney Alleges.
• Armenia Warns Allies Clashes Spiraling Toward War: Azerbaijan Has 'Taken Territory'.
• "Cool" PPI helps soothe inflation fears, but not completely - Newsquawk US Market Wrap.
• Half Of Americans Think US Will No Longer Be A Global Superpower Within Ten Years; New Poll Finds.
• Watch: Dem Senator Slams Kamala Harris As "Dead Wrong" For Claiming Border Is Secure.
• Cathie Wood Goes Wild On 'Dip Buying' Amid Stock Market Rout.
• Dead-Cat-Bounce Finds Extra Life With Late-Day Panic-Buying.
• Powell's Pivot To "Pain" But No Gain: Triggering The Coming Recession.

TheGatewayPundit.com: 

• Denmark Bars Covid Vaccines for Almost Everyone Under Age 50.
• 2000Mules Texas Style: Newly Discovered Police Body Cam Footage Implicates Top Tarrant Co. Texas Democrat Officials in Ballot Harvesting.
• Is Lindsey Graham Trying to Throw the Midterm Elections to Democrats?… Was Mitch McConnell Behind It?
• Maricopa County Appointed OVER 100 More Democratic Poll Workers Than Republicans In Extremely Flawed Primary Election – ELEVEN Locations Had No Republicans At All.
• NYC Deporting Illegal Aliens Bused from Texas… to Florida.
• Biden to Pay $80 Per Barrel to Fill Strategic Oil Reserve – Two Years After Democrats Blocked Trump From Filling Reserve at $24 Per Barrel.
• Report: Leaked Video Shows Israeli Ministry of Health’s Plan to Manipulate Expert Report on Adverse Events to Avoid Lawsuits; Experts Found Serious Safety Issues – Lied to Public.
• Could California Gas Car Ban Happen at the Federal Level? Buttigieg Wants It to Happen ‘Quickly’.
• Schizophrenic Homeless Drug Dealers Are On A RAMPAGE Taking Over The Streets Of San Francisco — This Is What Democrat-Run Cities Look Like Across The U.S.
• “We Are Officially Living in a Weaponized Police State” -President Trump Responds to FBI Raid on “The Pillow Guy” Mike Lindell.
  

The Epoch Times:

• US Green Initiatives Benefit Top Officials’ Family Members With Ties to China: Cybersecurity Expert.
• Chinese Police Conducting Mass DNA Collection From Tibetans for Purposes of ‘Social Control’: Canadian Researchers.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 863,663 Reports(+2,426 from prior week) Through September 2nd, 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 unch. to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 125.75 -3.0 basis points. 

• China Sovereign CDS 71.25 -1.0 basis point.
  

• Bloomberg Emerging Markets Currency Index 48.4 -.05%.  
• Bloomberg Global Risk-On/Risk Off Index 44.6 +1.2%. 
• Bloomberg US Financial Conditions Index -.28 -1.0 basis point
  
• Volatility Index(VIX) futures 27.3 -.63%
• Euro Stoxx 50 futures +.17%.

• S&P 500 futures +.11%.

• NASDAQ 100 futures +.12%  

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• None of note
  

After the Close:

• (ADBE)/3.35
  

Economic Releases

8:30 am EST

• Initial Jobless Claims for last week are estimated to rise to 227K versus 222K the prior week.
• Continuing Claims are estimated to rise to 1478K versus 1473K prior.
• Empire Manufacturing for Sept. is estimated to rise to -12.8 versus -31.3 in Aug.
• Retail Sales Advance MoM for Aug. is estimated to fall -.1% versus unch. in July.
• Retail Sales Ex Autos MoM for Aug. is estimated unch. versus a +.4% gain in July.
• Retail Sales Ex Autos and Gas for Aug. is estimated to rise +.5% versus a +.7% gain in July.
• Philly Fed Business Outlook for Sept. is estimated to fall to 2.5 versus 6.2 in Aug.
• The Import Price Index MoM for Aug. is estimated to fall -1.3% versus a -1.4% decline in July.
• The Import Price Index YoY for Aug. is estimated to rise +7.7% versus an +8.8% gain in July.
• The Export Price Index MoM for Aug. is estimated to fall -1.1% versus a -3.3% decline in July.
• The Export Price Index YoY for Aug. is estimated to rise +12.5% versus a +13.1% gain in July.
  

9:15 am EST

• Industrial Production MoM for Aug. is estimated unch. versus a +.6% gain in July.
• Capacity Utilization for Aug. is estimated to fall to 80.2% versus 80.3% in July.
• Manufacturing Production for Aug. is estimated to fall -.1% versus a +.7% gain in July.
  

10:00 am EST

• Business Inventories for July is estimated to rise +.6% versus a +1.4% gain in June.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The BofE rate decision, China home sales report, weekly EIA natural gas inventory report, (SQM) investor day, (HUM) investor update and the (RBLX) investor day could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are slightly higher, boosted by commodity and industrial 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, US Rail Strike Worries, Escalating European Energy Crisis Concerns, Road & Rail/Healthcare Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume:  Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 26.9 -1.2%
• DJIA Intraday % Swing .99%
  
• Bloomberg Global Risk On/Risk Off Index 43.4 -1.5%

• Euro/Yen Carry Return Index 147.11 -.84%

• Emerging Markets Currency Volatility(VXY) 11.3 -.4%

• CBOE S&P 500 Implied Correlation Index 48.6 +2.7% 

• ISE Sentiment Index 90.0 +1.0 points
  

• Total Put/Call 1.03 -11.2%

• NYSE Arms .98 -60.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 85.28 +.43%
  

• US Energy High-Yield OAS 394.61 +1.5%
• Bloomberg TRACE # Distressed Bonds Traded 361.0 +19.0
  

• European Financial Sector CDS Index 115.91 -1.96%

• Italian/German 10Y Yld Spread 229.0 basis points +2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 126.26 +2.25%
  

• Emerging Market CDS Index 305.27 -1.8%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.72 +.54%

• 2-Year Swap Spread 40.5 basis points +5.5 basis points
  

• TED Spread 6.0 basis points -2.75 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -24.5 basis points -2.5 basis points
  
• MBS  5/10 Treasury Spread  147.0 +5.0 basis points
  
• iShares CMBS ETF 46.89 +.09%
• Avg. Auto ABS OAS .69 -1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 48.41 -.07%
• 3-Month T-Bill Yield 3.19% +1.0 basis point
  

• Yield Curve -36.75 basis points (2s/10s) -2.75 basis points
  

• China Iron Ore Spot 102.7 USD/Metric Tonne +.2%
• Dutch TTF Nat Gas(European benchmark) 222.0 euros/megawatt-hour +11.8%

• Citi US Economic Surprise Index 5.8 +.4 point

• Citi Eurozone Economic Surprise Index -15.2 -2.9 points
  

• Citi Emerging Markets Economic Surprise Index -10.2 -1.2 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 237.58 -.03:  Growth Rate +15.9% unch., P/E 16.6 -.2
  
• Bloomberg US Financial Conditions Index -.21 -6.0 basis points
  
• US Atlanta Fed GDPNow Forecast +1.30% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.68% unch.: CPI YoY +8.21% unch.
  
• 10-Year TIPS Spread 2.47 +2.0 basis points
  
• Highest target rate probability for November 2nd FOMC meeting: 55.6%(+5.8 percentage points) chance of 3.75%-4.0%. Highest target rate probability for December 14th meeting: 39.3%(+5.9 percentage points) chance of 4.25%-4.5%.
  

US Covid-19:

• 140 new infections/100K people(last 7 days total). 8.0%(+.0 percentage point) of 1/14/22 peak(1,740) +0/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -79.1%(+.1 percentage point) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -130 open in Japan 
• China A50 Futures: Indicating -16 open in China

• DAX Futures: Indicating -1 open in Germany

Portfolio:

• Slightly Higher:  On gains in my commodity/utility sector longs
  

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

• Market Exposure:  Moved to Market Neutral
  

Bear Radar

Style Underperformer:

• Small-Cap Value unch.
  

Sector Underperformers:

• 1) Steel -4.6% 2) Road & Rail -1.8% 3) REITs -1.2%

Stocks Falling on Unusual Volume: 

• SQ, UNP, TROX, PLCE, MO, CNC, MPW, BYND, CMC, BIII, FCX, PARA, KRO, ARQT, NAPA, AVNT, LOVE, SAFE, MHK, ORCL, WYNN, DISH, RS, STAR, NHI, FIGS, APP, OHI, SBRA, AKRO, CLF, X, FLS, STLD, CXM, ZNTL, NUE, AA, ALT and ADTX
  

Stocks With Unusual Put Option Activity:

• 1) RLMD 2) SYF 3) VNQ 4) EWW 5) CSX
  

Stocks With Most Negative News Mentions:

• 1) KSPN 2) VWE 3) NUE 4) STLD 5) CLF
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.8%

Sector Outperformers:

• 1) Oil Service +3.5% 2) Energy +3.1% 3) Alt Energy +2.7%

Stocks Rising on Unusual Volume:

• TWLO, CCRN, CFVI, SBUX, STEM, RLMD, STOK, SWBI and BOWL
  

Stocks With Unusual Call Option Activity:

• 1) RLMD 2) SWBI 3) TH 4) ALT 5) CL

Stocks With Most Positive News Mentions:

• 1) NKLA 2) PL 3) LNG 4) IREN 5) SBUX
  

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -12.8% Below 100-Day Average 
• 6 Sectors Declining, 5 Sectors Rising
• 52.9% of Issues Advancing, 43.3% Declining
• 25 New 52-Week Highs, 123 New Lows
• 28.5%(+1.7%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 44.1% 
• Bloomberg Global Risk-On/Risk-Off Index 43.8 -.5%
  
• Russell 1000: Growth/Value 15,464.03 +.33%
  
• Vix 26.7 -2.2%
• Total Put/Call 1.01 -12.9%
• TRIN/Arms 1.22 -51.20%