Tuesday Watch

Night Trading 

• Asian equity indices are unch. to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 138.0 +10.0 basis points. 

• China Sovereign CDS 76.0 +1.75 basis points.
  

• Bloomberg Emerging Markets Currency Index 48.3 -.06%.  
• Bloomberg Global Risk-On/Risk Off Index 45.2 +1.2%. 
• Bloomberg US Financial Conditions Index -.81 -1.0 basis point
  
• Volatility Index(VIX) futures 26.3 -1.0%
• Euro Stoxx 50 futures n/a.

• S&P 500 futures +.32%.

• NASDAQ 100 futures +.41%  

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (APOG)/.83
  

After the Close:

• (SFIX)
  

Economic Releases

8:30 am EST

• Housing Starts for Aug. is estimated to rise to 1450K versus 1446K in July.
• Building Permits for Aug. is estimated to fall to 1608K versus 1674K in July.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Eurozone PPI report, 20Y T-Bond auction, weekly US retail sales reports, Wells Fargo Consumer Conference, (BXP) investor conference, (CRWD) investor briefing, (TA) investor day, (RGEN) investor day and the (IRM) investor event 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 utility shares in the region. I expect US stocks to open modestly modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.

Stocks Reversing Slightly Higher into Final Hour on Bargain Hunting, Technical Buying, Oil Gain, Transport/Metals & Mining Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Mixed
  

• Volume:  Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 26.1 -.8%
• DJIA Intraday % Swing 1.27%
  
• Bloomberg Global Risk On/Risk Off Index 44.46 +2.1%

• Euro/Yen Carry Return Index 147.77 +.33%

• Emerging Markets Currency Volatility(VXY) 11.5 -.26%

• CBOE S&P 500 Implied Correlation Index 48.6 +2.0% 

• ISE Sentiment Index 80.0 unch.
  

• Total Put/Call 1.01 -15.8%

• NYSE Arms .72 -42.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 88.17 -1.2%
  

• US Energy High-Yield OAS 403.04 -.54%
• Bloomberg TRACE # Distressed Bonds Traded 341.0 -6.0
  

• European Financial Sector CDS Index 121.18 -.48%

• Italian/German 10Y Yld Spread 228.0 basis points unch.
  

• Asia Ex-Japan Investment Grade CDS Index 129.42 +1.8%
  

• Emerging Market CDS Index 314.80 +.31%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.79 -.06%

• 2-Year Swap Spread 37.25 basis points -1.0 basis point
  

• TED Spread 47.25 basis points +6.0 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -18.75 basis points unch.
  
• MBS  5/10 Treasury Spread  157.0 +2.0 basis points
  
• iShares CMBS ETF 46.57 -.35%
• Avg. Auto ABS OAS .66 -1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 48.30 +.11%
• 3-Month T-Bill Yield 3.10% -3.0 basis points
  

• Yield Curve -47.0 basis points (2s/10s) -4.5 basis points
  

• China Iron Ore Spot 98.6 USD/Metric Tonne -.2%
• Dutch TTF Nat Gas(European benchmark) 175.0 euros/megawatt-hour -6.5%

• Citi US Economic Surprise Index 3.6 +1.3 points

• Citi Eurozone Economic Surprise Index 1.20 +12.0 points
  

• Citi Emerging Markets Economic Surprise Index -1.8 unch.
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 237.60 -.02:  Growth Rate +15.9% -.3 percentage point, P/E 16.3 +.1
  
• Bloomberg US Financial Conditions Index -.78 -3.0 basis points
  
• US Atlanta Fed GDPNow Forecast +.52% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.68% unch.: CPI YoY +8.21% unch.
  
• 10-Year TIPS Spread 2.33 -5.0 basis points
  
• Highest target rate probability for November 2nd FOMC meeting: 60.4%(+.7 percentage point) chance of 3.75%-4.0%. Highest target rate probability for December 14th meeting: 46.7%(+6.0 percentage points) chance of 4.25%-4.5%.
  

US Covid-19:

• 119 new infections/100K people(last 7 days total). 6.8%(-.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 -82.1%(-2.4 percentage points) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -132 open in Japan 
• China A50 Futures: Indicating +18 open in China

• DAX Futures: Indicating +36 open in Germany

Portfolio:

• Slightly Higher:  On gains in my commodity and industrial sector longs
  

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

• Market Exposure:  Moved to 50% Net Long
  

Bear Radar

Style Underperformer:

• Mid-Cap Growth -.3%
  

Sector Underperformers:

• 1) Computer Hardware -2.2% 2) Medical Equipment -1.7% 3) Biotech -1.5%

Stocks Falling on Unusual Volume: 

• MSTR, GPN, MFIC, BSY, APPN, GWRE, BPT, TROX, TNDM, HALO, RUTH, BYND, RIVN, Z, RXRX, SBOW, EW, MKTX, CPRX, DVAX, NVCR, SMCI, MRNA, VERU and SHC
  

Stocks With Unusual Put Option Activity:

• 1) IBB 2) VRAY 3) SFIX 4) AMLP 5) VERU
  

Stocks With Most Negative News Mentions:

• 1) SHC 2) AMPE 3) LTCH 4) NVAX 5) BNTX
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.5%

Sector Outperformers:

• 1) Airlines +2.9% 2) Steel +2.4% 3) Agriculture +1.5%

Stocks Rising on Unusual Volume:

• KNBE, IIPR, INSW and RILY
  

Stocks With Unusual Call Option Activity:

• 1) RITM 2) CLR 3) VERU 4) UNIT 5) SLB

Stocks With Most Positive News Mentions:

• 1) ALLK 2) SHCR 3) IIPR 4) SNTI 5) KNBE
  

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -20.0% Below 100-Day Average 
• 4 Sectors Declining, 7 Sectors Rising
• 51.2% of Issues Advancing, 44.8% Declining
• 7 New 52-Week Highs, 158 New Lows
• 26.5%(-1.2%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 39.0 +1
  
• Bloomberg Global Risk-On/Risk-Off Index 43.9 +.8%
  
• Russell 1000: Growth/Value 15,368.5 +.07%
  
• Vix 26.6 +1.3%
• Total Put/Call 1.0 -16.7%
• TRIN/Arms .73 -41.7% 

Monday Watch

Today's Headlines

Bloomberg:           

• Biden Says US Would Defend Taiwan in ‘Unprecedented Attack’.  
• Biden Says He Warned Xi of Investment Chill If China Backs Putin.  
• Cost of Covid Zero Is Straining Municipal Finances Across China.
• Tycoon Running a Quarter of China’s Copper Trade Is on the Ropes.  
• Ukraine Latest: Pop Icon’s Protest; Kherson Counteroffensive.    
• Volkswagen Seeks to Raise $9.4 Billion in Porsche IPO.
• Lululemon Billionaire Helps China’s Anta in Consumer Sales Push.
• South Africa Facing Risk of Unprecedented Level of Power Outages.  
• Top Grower Brazil’s Coffee Supplies Have Never Been Lower.   
• Stocks Fluctuate in Cautious Start to Key Fed Week: Markets Wrap.  
• Oil Rises as Reopening of Chinese City Offsets Slowdown Concerns.
• Fed Tilts Toward Third 75 Basis-Point Hike on Stubborn Inflation.
• What to Watch as Commodities Traders Prepare for Powell.
• US Banks May Face New Rules for Dealing With Crises: Dow Jones.  
• US Rail-Union Deal Showcases Labor Angst Extending Beyond Wages.  
• Hurricane Threat as Tropical Storm Fiona Aims At Puerto Rico.  
• What to Watch as Commodities Traders Prepare for Powell.
• Stock Traders Face Off Against Hawkish Fed at Worst Time of Year.  
• Rail-Union Deal Showcases Labor Angst Extending Beyond Wages.
• Opinion: Ukraine War Shows the US Military Isn’t Ready for War With China.  
• Cities Faced With Migrant Influx Costs Could Win Federal Aid.

Wall Street Journal:

• Dollar’s Strength Spells Trouble for Global Economies.
• Electric Bills Soar Across the Country as Winter Looms.
• Big Regional Banks Might Face New Rules for Dealing With a Crisis.
• Home-Goods Retailers Jolted by Slowdown in Housing Market.
• Electric Vehicles Took Off. Car Makers Weren’t Ready.
• Russia Expands Attacks on Civilian Targets in Ukraine.
• Do Wages Drive Prices, or Vice Versa?
• China Steps Up Robotics Push as Workforce Shrinks.
• Pentagon Pushes Defense Companies to Limit Use of Chinese Supplies.

Fox News:

• We asked Martha's Vineyard celebs if they'd open their homes to migrants. Here's how they responded.
• Starbucks closes store over safety concerns in crime-ridden city. 
• Dem lawmaker from Texas debunks Harris’ border claim — and he has devastating data to prove it.
• Vast majority of Disney fans drop huge bomb on company’s outlook.
• Tech company announces mass layoffs made through 'Anti-Racist’ lens.

CNBC:

• Furniture, decor prices are up 10.6%. How to decorate on a budget, according to interior designers.

Zero Hedge:

• WEF Piece Lauds How "Billions" Across The World Complied With Lockdown Restrictions
• Biden Administration Intentionally Weakening Military: Retired General. 
• Organized Retail Crime Reaching "Crisis Scale".
• Surprise! Chinese Junk Bonds Yield Less Than US Treasuries.
• Here's What We Know About The Special Master Named To Review Seized Mar-a-Lago Documents.
• Why Bulls Are Bracing For Another Miserable Week: Bye Buy-Backs, Pension And CTA Selling, And More...
• Weekend News Round Up - Newsquawk Asia-Pac Market Open.
• Taibbi: The Justice Department Was Dangerous Before Trump. It's Out Of Control Now.
• Puerto Rico Suffers Islandwide Blackout, Internet Connectivity Crashes As Hurricane Nears.
• "This New Period Is Very Different, And Far Worse In Many Ways Than The 1970s".
• TME Weekend: Reflections on recession, inflation and earnings.
• California Governor Signs 'Most Aggressive' Package Of Green Laws.
• Biden Admin Awards Over $100M To Dismantle 'Racist' Highway In Detroit.
• Morgan Stanley: TINA Has Left The Building.
• This is not THE bottom.
• Hungary Can No Longer Be Considered A Full Democracy, Claim EU Lawmakers In Latest Attack On Orbán’s Conservative Government.
• Escalation: Recent Events Suggest Mounting Economic Danger.
• US Marine Corps Quietly Drops Punishments For Refusing Covid-19 Vaccine.
• Violence In California Reaches "Epidemic" Levels As Our Society Rapidly Deteriorates All Around Us.
• Mapping The World's Billionaire Population.
• Are Europe's Energy Crisis "Solutions" Doomed To Failure?
• 'World's Most Advanced' Humanoid Robot Promises Not To 'Take Over The World'.
• This Is Not Bail Reform, This Is Insanity.
• China's Xi Says Regional Alliance Will Thwart 'Color Revolutions'.
• Four Things We Should Teach Children About The Constitution.
• Fauci "Misled Congress" About Gain-Of-Function Research, But 'Protected By Biden Admin'; Former CDC Chief Says.

MarketWatch.com:        

• ‘We have yet to see a peak in food inflation’: Food prices haven’t risen so steeply since 1979, with one grocery staple up nearly 40% from a year ago .
  
• Another sign of a looming recession? Americans’ ability to pay bills on time fell for the first time in 5 years.  
• The worst year in U.S. history for the 60/40 portfolio.  
• The tightening squeeze on corporate profits is the biggest risk to the stock market right now.

NewsMax:

• Trump: Dems' 'Wild Socialist Spree' to Blame for Economy.
• Texas AG: BlackRock's ESG Push Makes No Sense.

TheGatewayPundit.com:

• Here We Go… Leftist Attorneys of Illegal Aliens Flown to Martha’s Vineyard Urge Criminal Investigations Against Gov. DeSantis for Daring to Send Unwanted Aliens to Liberal Elite Community.
• Axe-Wielding Man Who Smashed Up NYC McDonald’s and Threatened Diners Freed From Jail without Bail – And Gloats About It!
• “We Do Not Have to Rush to Go Backward” – Biden Climate Envoy John Kerry Jet-Sets to Africa to Lecture Them on Being “As Green As Possible” (VIDEO). 
• Biden Regime Moves Forward with US Central Bank Digital Currency.
• Whistleblower: Non-Citizen Voting Illegally in NYC for 13 Years and “Thousands” More Illegal Voters Could be Registered and Voting.
• EXCLUSIVE: Jan. 6 Committee Releases Alleged Violent “Walkie-Talkie” Recording from J-6 Protests — BUT THEY LIED AND GOT CAUGHT – The People on the Call WERE NOT EVEN AT CAPITOL!
• Democrat Candidate for GA Governor, Abrams, Supports Abortion “Up Until the Time of Birth”.
• DeSantis Unloads On the Hypocrisy of the Left’s Reaction to Having to Deal With Biden’s Border Crisis In Their Own Front Yards.
• Jill Biden To Host Hispanic Heritage Event Three Months After Comparing Latinos To Breakfast Tacos.
• SAD: 850 More NYC Teachers And Aides Fired For Not Complying With COVID Vax Mandate. 
  

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). 
• COVID Money Tracker. Tracking the Covid response.
  

Night Trading

• Asian indices are -.25% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 128.0 +5.0 basis points.
• China Sovereign CDS 74.25 +2.25 basis points.
• Bloomberg Emerging Markets Currency Index 48.26 +.03%.
• Bloomberg Global Risk-On/Risk Off Index 43.64 +.19%.
• Bloomberg US Financial Conditions Index -.79 -4.0 basis points 
  
• Volatility Index(VIX) futures 27.15 -.36%. 
• Euro Stoxx 50 futures +.55%.
• S&P 500 futures +.16%.
• NASDAQ 100 futures +.07%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• (AZO)/38.61
  

After the Close:

• None of note
  

Economic Releases

10:00 am EST

• The NAHB Housing Market Index for Sept. is estimated to fall to 47.0 versus 49.0 in Aug.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The EU Construction Output report and the (RL) investor day could also impact 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 mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 25% net long heading into the week.