Stocks Surging into Afternoon on Less Hawkish Fed Hopes, Lower Long-Term Rates, Less European/Emerging Markets/US High-Yield Debt Angst, Commodity/Tech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume:  Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 30.2 -4.6%
• DJIA Intraday % Swing 1.95%
  
• Bloomberg Global Risk On/Risk Off Index 43.2 -4.7%

• Euro/Yen Carry Return Index 146.02 unch.

• Emerging Markets Currency Volatility(VXY) 12.3 -1.2%

• CBOE S&P 500 Implied Correlation Index 48.9 +.8% 

• ISE Sentiment Index 109.0 +12.0 points
  

• Total Put/Call .94 -14.6%

• NYSE Arms .89 -4.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 104.42 -3.14%
  

• US Energy High-Yield OAS 455.06 +1.86%
• Bloomberg TRACE # Distressed Bonds Traded 450.0 +39.0
  

• European Financial Sector CDS Index 146.30 -1.6%
  

• Italian/German 10Y Yld Spread 233.0 basis points -8.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 186.83 +.6%
  

• Emerging Market CDS Index 315.20 -4.75%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.59 +.41%

• 2-Year Swap Spread 30.0 basis points +.75 basis point
  

• TED Spread 50.75 basis points +5.75 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -67.75 basis points -1.5 basis points
  
• MBS  5/10 Treasury Spread  170.0 -3.0 basis points
  
• iShares CMBS ETF 46.17 +.91%
• Avg. Auto ABS OAS .66 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.38 +.67%
• 3-Month T-Bill Yield 3.22% -7.0 basis points
  

• Yield Curve -44.75 basis points (2s/10s) -3.0 basis points
  

• China Iron Ore Spot 92.45 USD/Metric Tonne -1.3%
• Dutch TTF Nat Gas(European benchmark) 169.0 euros/megawatt-hour -10.5%

• Citi US Economic Surprise Index 10.4 -7.5 points

• Citi Eurozone Economic Surprise Index -.6 -.8 point
  

• Citi Emerging Markets Economic Surprise Index -4.3 +.1 point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 236.0 -.05:  Growth Rate +15.7% -.1 percentage point, P/E 15.6 +.2
  
• Bloomberg US Financial Conditions Index -1.49 -14.0 basis points
  
• US Atlanta Fed GDPNow Forecast +2.28% -15.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +5.11% unch.: CPI YoY +8.20% unch.
  
• 10-Year TIPS Spread 2.20 +5.0 basis points
  
• Highest target rate probability for December 14th FOMC meeting: 54.4%(+.5 percentage point) chance of 4.25%-4.5%. Highest target rate probability for February 1st meeting: 46.4%(+.8 percentage points) chance of 4.25%-4.5%.
  

US Covid-19:

• 98 new infections/100K people(last 7 days total). 5.6%(-.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 -84.1%(-.7 percentage point) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +409 open in Japan 
• China A50 Futures: Indicating -30 open in China

• DAX Futures: Indicating +30 open in Germany

Portfolio:

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

• Disclosed Trades:  Covered some of my (IWM)/(QQQ) hedges and some of my emerging market shorts
  

• Market Exposure:  Moved to 75% net long
  

Bear Radar

Style Underperformer:

• Small-Cap Value -3.0%
  

Sector Underperformers:

• 1) REITs -.2% 2) Education -.2% 3) Electric Vehicles +.1%

Stocks Falling on Unusual Volume: 

• MDB and APLS
  

Stocks With Unusual Put Option Activity:

• 1) BGS 2) APRN 3) HTGC 4) VRAY 5) JBLU
  

Stocks With Most Negative News Mentions:

• 1) APRN 2) KRBP 3) OLO 4) NCMI 5) ENFN
  

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Value +2.4%

Sector Outperformers:

• 1) Steel +6.0% 2) Oil Service +5.7% 3) Networking +4.0%

Stocks Rising on Unusual Volume:

• VSAT, VRT, IDCC, FRPT, BOX, APA, RCII, BZH, MLKN, WTRG, TCDA, LEVI, FLR, B, WEX, GNK, LBRDK, UNFI, REGN, DGII, GBX, KMX, CHTR, AB, APG, T, TPVG, ECC, FLT, PTY, GMS, AKAM, TDW, MTG, NZF, ORCC and ARCC
  

Stocks With Unusual Call Option Activity:

• 1) CLR 2) EXC 3) SCO 4) BAX 5) XLU

Stocks With Most Positive News Mentions:

• 1) MYOV 2) LVWR 3) OVV 4) DVN 5) MRO
  

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +10.2% Above 100-Day Average 
• 2 Sectors Declining, 9 Sectors Rising
• 80.9% of Issues Advancing, 14.2% Declining
• 10 New 52-Week Highs, 190 New Lows
• 19.0%(+14.3%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 38.0 +7.0
  
• Bloomberg Global Risk-On/Risk-Off Index 42.6 -6.0%
  
• Russell 1000: Growth/Value 15,393.1 -.56%
  
• Vix 30.0 -5.0%
• Total Put/Call .88 -20.0%
• TRIN/Arms 1.13 +21.5% 

Monday Watch

Night Trading

• Asian indices are -1.0% to -.5% on average.
• Asia Ex-Japan Investment Grade CDS Index 187.25 -.5 basis point.
• China Sovereign CDS 109.5 -4.75 basis points.
• Bloomberg Emerging Markets Currency Index 47.05 unch.
• Bloomberg Global Risk-On/Risk Off Index 45.6 +.6%.
• Bloomberg US Financial Conditions Index -1.44 -9.0 basis points 
  
• Volatility Index(VIX) futures 31.3 +.73%. 
• Euro Stoxx 50 futures -2.23%.
• S&P 500 futures -.63%.
• NASDAQ 100 futures -1.04%.

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

• Construction Spending MoM for Aug. is estimated to fall -.2% versus a -.4% decline in July. 
• ISM Manufacturing for Sept. is estimated to fall to 52.3 versus 52.8 in Aug.
• ISM Prices Paid for Sept. is estimated to fall to 52.0 versus 52.5 in Aug.
  

Afternoon:

• Wards Total Vehicle Sales for Sept. is estimated to rise to 13.5M versus 13.18M in Aug.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Eurozone PMI report, (ILMN) investor day and the (SBGI) investor day could also impact trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

BOTTOM LINE: Asian indices are lower, weighed down by technology and financial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 25% net long heading into the week.

Today's Headlines

Bloomberg:

• Thousands March in UK Cities to Protest on Cost-of-Living Crisis.  
• City of London Shellshocked by Kwarteng’s ‘Fiasco’ of a Budget.  
• London Gold Dealer Runs Out of Bullion as Truss Budget Shocks.  
• Cow’s Milk Becomes Pricier Than Non-Dairy Alternatives in UK.  
• UK Regulators Meet to Prevent New Gilt Selloff, FT Says.
• ‘Fear Is Contagious’ as UK Crisis Boils Over Into Other Markets.
  
• Gazprom Cuts Off Supplies of Russian Gas to Italy  
• Ukraine Latest: Russia Says Its Troops Leave Key Town of Lyman.
• Chief Putin Critic Wins Elections in Latvia, Exit Poll Shows.  
• Iran’s Bloody Protests Stretch Into Third Week Amid Crackdowns.  
• Macau Casinos See Another Dismal Month as China Lockdowns Widens.
  
• Lula, Bolsonaro in Final Campaign Sprint for Brazilian Election.  
• OPEC+ to Hold In-Person Oil Meeting Next Week in Vienna.   
• Oil Traders Regain Their Swagger With World Desperate for Fuel.
  
• Demand for Aluminum Slows in Another Sign of Troubled Economy.
• Fed Begins to Split on the Need for Speed to Peak Rates.   
• RWE to Buy Con Edison Clean Energy Unit for $6.8 Billion.
• Your Saturday Briefing: The Aftermath of a Disaster.  
• Few Florida Homes Hit by Hurricane Ian Are Covered for Floods.
• Runaway Bear Market Blows Past Everything Meant to Slow It Down.   
• El-Erian Warns ‘Economic Accident’ Would Precede Any Central Bank Pivot.
• Raging Markets Selloff in Five Charts: $36 Trillion and Counting.
• Charting the Global Economy: UK Turmoil; Hurricane Ian Hits US.   
• US Jobs at Cruising Speed May Keep Up Pressure on Fed: Eco Week.

Wall Street Journal:

• U.K.’s Market Woes Show Pitfalls for Other Economies 
• Covid Fraud Hits $45.6 Billion. As the theft total mounts, Democrats in Congress refuse to do anything about it.
• Florida Death Toll Up to 23 as Ian Barrels North.
• FTC Probes Market Power of One of Country’s Biggest Anesthesia Providers.
• If Politics Is a ‘Joke,’ Voters Get It. The public is forced to learn the symbolism of Trump and Democratic hoaxes. 
• ‘Implicit Bias’ Training Cost Me My Nursing Job. States are forcing medical professionals to make false confessions of racism. I refused to go along. 
• CME Considers Brokerage, Taking Cue From Crypto Rival FTX.
• The Next Big Battle Between Google and Apple Is for the Soul of Your Car.
• Dish, Sling Subscribers Lose Access to Disney Networks in Contract Dispute.
• Nikola Tries to Ignite Market for Its Hydrogen Fuel-Cell Trucks.
• Elon Musk Unveils Prototype of Tesla’s Humanoid Robot Optimus, Says It Will Cost Less Than a Car.
• Iran Students, Shopkeepers Go on Strike as Protest Movement Maintains Strength.
  

Barron's:

• Had bullish commentary on (OWL), (SEAT), (CHPT), (LAZR), (VCSA) and (OLPX).

Fox News:

• LIVE UPDATES:Florida personnel go door to door warning of possible new threat in Ian's wake.
• Audience reaction when Maher suggests dropping VP in 2024 says it all. 
• Harris ripped for suggesting race-based relief for hurricane victims. 
• Obama judge slaps down election lawsuit in state where Biden slammed 'Jim Crow' voting system.

CNBC:

• Dow tumbles 500 points on Friday to end September down nearly 9%.
• This might be the biggest obstacle unions face in the coming months.
• ‘The Fed is breaking things’ – Here’s what has Wall Street on edge as risks rise around the world.
• The 10 least popular states to move to in 2022. 
• Underperformance is ‘abysmal’ in the long run for active fund managers.

Zero Hedge:

• FDA Withholding Autopsy Results On People Who Died After Getting COVID-19 Vaccines.
• Collapse In Money Supply Is Still A Major Risk For The Market. 
• Why Bonds Are Behaving Like Risky Assets.
• California City Holding 'Groceries For Guns' Drop-Off Event.
• 'The Crisis Is Upon Us' - Macleod Warns 'We Have Never Seen Anything Like This'.
• "Gone In 30 Minutes" - Next On Europe's Doomsday List: Collapse Of Cell Phone Networks.
• Malone: Human Cyborgs Are Just The Beginning.
• Senate GOP Judiciary Committee To Investigate 'Excessive' FBI Raid Of Pennsylvania Pro-Life Activist’s Home. 
• Pfizer CEO Bails On EU Testimony After Report Highlights 'Secretive' Vaccine Deal.
• The bounce case is appealing, but....
• California Gasoline Is Now More Than Double The Price In Texas.
• Election-Denier Stacey Abrams Loses Again After Judge Tosses 'Voter Suppression' Lawsuit. 
• U.S. Pension Funds Could Face Their Own "Lehman Moment".
• FBI Agents Improperly Saw Privileged Trump Communications: Lawyers.
• Faced With 'Acts Of Sabotage', EU Countries Rush To Secure Energy Assets.
• London On Verge Of Losing Europe Market Supremacy.
• Turkey Builds Up Troops In Northern Cyprus, Rages At "Inexplicable" US Decision.
• Luongo: The Curious Whodunit Of Nordstreams 1 & 2.
• Anti-Globalism Is Going Mainstream – Which Means Engineered Disaster Is About To Strike.
• Global 'Unhappiness' Is Soaring.
• 'Libs Of TikTok' Threatens To Sue Twitter Over New Suspension.
• How Do Americans Spend Their Money, By Generation?
• Stockman Slams Washington's Pointless War On Behalf Of A Fake Nation.
• Exxon CEO Pushes Back On Biden's Plan To Limit Fuel Exports.
• Durham Prosecutes FBI Informants, While Protecting Their Handlers: Sperry.
• "Globalists Are Marching Us Relentlessly Toward Nuclear Armageddon," Warns Former Senator.

MarketWatch.com:             

• Stocks and bonds are ‘discounting for a disaster’ after the worst stretch for investors in 20 years. 

NewsMax:  

• Fort Myers Beach 'Pretty Much Gone' After Ian.
  
• Herschel Walker: 'I'm Going to Win Outright'.
• Sen. Johnson: Biased Media Covering Up for Barnes, Fetterman.

TheGatewayPundit.com:

• Biden Signs Bill Honoring Rep. Jackie Walorski, Days After Forgetting that She Died.
• BREAKING: Maricopa County BLOCKS The Gateway Pundit Reporter Access To 2022 Midterm Election Coverage In County. 
• Speculation Grows That Dem Senator Will Switch Parties Or Become Independent.
• 20-Year-Old Nursing Student Dies Suddenly of Cardiac Arrest. 
• BIDEN ECONOMY: Stocks Endure Worst September Since 2002 in the Worst Year for the Markets Ever!
• Is China Secretly Operating Inside the Hawaiian Real Estate Market Under the Noses of the U.S. military?
• Sweden Removes Recommendation on General Vaccination Against COVID-19 for Ages 12 to 17.
• World Class Pakistani Cricketer Dead at 36 Years of Age From “Horrific Cardiac Arrest”.
• WATCH: Beto O’Rourke Claims He Doesn’t Support Defunding Police, But Here’s a Video of Him Saying the Opposite.
• 10 STRAIGHT MINUTES of Every Prominent Democrat Denying the Election Results in 2016 – Hypocrites Caught on Video.
• “I Don’t See How We Could Be Stupider in the West if We Actually Took Courses in Stupidity” – MUST SEE VIDEO: Jordan Peterson on the Collapse of Germany.
• President Trump Says that Mitch McConnell Has a “DEATH WISH” By Backing Insane Dem Spending Bills.
• Inflation Soars to 10% in Europe – Euro Zone Inflation Doubles in First 9 Months of 2022… And It Will Likely Get Worse.
• Despite Failed Ballot Initiative Leftist Katie Hobbs Attempts To BLOCK Historic School Choice Expansion That Would Refund Families Who Pay For Private School Or Homeschooling.
• Arizona Has A SOROS-BACKED Democrat Running For District Attorney In Maricopa County.
• “It’s Not About Kicking Balls in the Authority Or Anything” – John Fetterman When Asked How He’s Doing (VIDEO).
• Newsom Signs Bill Making California “Sanctuary State” For Children Seeking ‘Gender Affirming’ Surgery – Without Parental Consent.
  

The Epoch Times: 

• China’s Factory, Services Surveys Suggest Economy Struggling to Rebound.
• Detainment of US Diplomats in Chinese COVID-19 Camps Must End: Congressmen.

Twitter:

• @IGSquawk - Weekend markets update: #DAX 11943 -0.25% #DOW 28731 -0.16% #FTSE 6816 -0.22% #HANGSENG 17092 -0.08% #GBPUSD 11158 -0.10% #EURUSD 9791 -0.11% #USDJPY 14472 -0.02%.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 867,627 Reports(+2,042 from prior week) Through September 16th, 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).