Stocks Rising into Afternoon on US Economic "Soft-Landing" Optimism, China Stimulus Hopes, Short-Covering, Tech/Commodity Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Above Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 15.8 -11.8%
• DJIA Intraday % Swing 1.29%
  
• Bloomberg Global Risk On/Risk Off Index 55.1 +3.3%

• Euro/Yen Carry Return Index 156.7 +.3%

• Emerging Markets Currency Volatility(VXY) 9.8 +.2%

• CBOE S&P 500 Implied Correlation Index 22.3 -8.9% 

• ISE Sentiment Index 141.0 +39.0 points
  

• Total Put/Call .78 -25.0%

• NYSE Arms .82 -25.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 74.0 -1.6%
  

• US Energy High-Yield OAS 394.04 -.86%
• Bloomberg TRACE # Distressed Bonds Traded 376.0 unch.
  

• European Financial Sector CDS Index 89.9 -3.3% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 310.6 -1.9%
  

• Italian/German 10Y Yld Spread 184.0 basis points +4.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 123.0 +.17%
  

• Emerging Market CDS Index 242.0 -1.9%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.7 +.02%

• 2-Year Swap Spread 19.0 basis points -2.25 basis points
  

• TED Spread 15.5 basis points +8.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -20.75 +1.0 basis point
  
• MBS  5/10 Treasury Spread 172.0 -6.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 721.0 unch.
  
• Avg. Auto ABS OAS 91.0 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 46.4 +.24%
• 3-Month T-Bill Yield 5.36% -4.0 basis points
  

• China Iron Ore Spot 102.3 USD/Metric Tonne +.17%
• Dutch TTF Nat Gas(European benchmark) 23.1 euros/megawatt-hour  -14.0%

• Citi US Economic Surprise Index 30.9 +7.2 points

• Citi Eurozone Economic Surprise Index -72.8 -9.9 points

• Citi Emerging Markets Economic Surprise Index 20.0 +9.4 points
• S&P 500 Current Quarter EPS Growth Rate YoY(493 of 500 reporting) -2.7% +.9 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 229.80 +.06:  Growth Rate +2.8% unch., P/E 18.2 unch.
  
• S&P 500 Current Year Estimated Profit Margin 12.25% -1.0 basis point
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(10 of 10 reporting) -2.7% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 205.62 +.27: Growth Rate +35.1% +.2 percentage point, P/E 34.9 unch.
  
• Bloomberg US Financial Conditions Index .02 +7.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index -4.71 +14.0 basis points
  
• US Yield Curve -74.25 basis points (2s/10s) +1.75 basis points
• US Atlanta Fed 2Q GDPNow Forecast +1.96% +.6 percentage point
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.71% unch.: CPI YoY +4.13% unch.
  
• 10-Year TIPS Spread 2.18 -1.0 basis point
  
• Highest target rate probability for July 26th FOMC meeting: 47.6%(-4.6 percentage points) chance of 5.25%-5.5%. Highest target rate probability for Sept. 20th meeting: 42.1%(+3.8 percentage points) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +20 open in Japan 
• China A50 Futures: Indicating +4 open in China

• DAX Futures: Indicating +40 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 75% Net Long
  

Bear Radar

Style Underperformer:

• Mid-Cap Value +.7%
  

Sector Underperformers:

• 1) Utilities -1.1% 2) Cyber Security -.4% 3) Retail -.2%

Stocks Falling on Unusual Volume: 

• ABBV, SIG, JAMF, DLTR, FIVE, CXM, CXRM, AAP, SDA, XPER, VSCO, PVH, NCNO, AI, OKTA and DG
  

Stocks With Unusual Put Option Activity:

• 1) GTLB 2) DG 3) JWN 4) IOT 5) OKTA
  

Stocks With Most Negative News Mentions:

• 1) DG 2) AI 3) OKTA 4) NCNO 5) CRM  
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +1.2%
  

Sector Outperformers:

• Disk Drives +5.0% 2) Oil Service +4.2% 3) Gold & Silver +3.9%

Stocks Rising on Unusual Volume:

• CHWY, BHVN, PSTG, CVNA, VEEV, CRDO, AEHR, AVDX, AYX, IRBT, NTAP, ENVX, UPST, STEP, TASK, MTCH, CELH, NFE, TTEK, CEG, KURA, HRL, NEM, PHR, DKNG, MRVL, ELV, CNOB, SIL, NVDA, AMBA and PD
  

Stocks With Unusual Call Option Activity:

• 1) ETRN 2) CCJ 3) CHWY 4) DG 5) OKTA

Stocks With Most Positive News Mentions:

• 1) CHWY 2) VEEV 3) PSTG 4) CRDO 5) NTAP
  

Charts:

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

Tomorrow's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open:

• None of note
  

After the Close: 

• None of note
  

Economic Releases 

8:30 am EST

• The Change in Non-Farm Payrolls for May is estimated to fall to 195K versus 253K in April.
• The Unemployment Rate for May is estimated to rise to 3.5% versus 3.4% in April.
• Average Hourly Earnings MoM for May is estimated to rise +.3% versus a +.5% gain in April.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Australia Home Price report and the ASCO annual meeting could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Morning Market Internals

NYSE Composite Index:

• NYSE Volume Running +7.0% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 7.8 -1.3
  
• 2 Sectors Declining, 9 Sectors Rising
• 68.6% of Issues Advancing, 28.7% Declining
• 11 New 52-Week Highs, 62 New Lows
• 39.1%(+1.5%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 41.0 +2.0
  
• Bloomberg Global Risk-On/Risk-Off Index 54.5 +2.2%
  
• Russell 1000: Growth/Value 17,366.5 -.12%
• 1-Day Vix 10.5 -30.7%
  
• Vix 16.2 -9.7% 
  
• Total Put/Call .76 -26.9%
• TRIN/Arms .94 -14.6%
  

Thursday Watch

Evening Headlines

Bloomberg:

• Everywhere You Look in China Are Signs of More Market Misery.
• Global Money Is Fast Chasing Alternatives in Asian Equities as China Anxiety Grows.
• ECB Warns Rate Hikes Are Putting Market Stability at Risk.
• Korea Creates Software to Boost Its $1.8 Trillion Stock Market.
• Asia to Echo Wall Street Drop; Dollar, USTs Rise: Markets Wrap.
• Oil Slumps as Weak Chinese Data Dominates Market Sentiment.
• Debt-Limit Bill Overcomes Key Hurdle With House Passage in Sight.
• Trump Stays Quiet on McCarthy's Debt Deal as Other 2024 GOP Contenders Trash It.
• Jes Staley to Be Deposed in JPMorgan Epstein Cases on June 10.
• Billionaire Perot Warns of Real Estate Recession as Loans Dry Up.
• Wall Street Banks Are Using AI to Rewire the World of Finance.
• Bud Light Slump Results in AB InBev’s Worst Month Since 2020.
• Citi Strategist Says Tech Stock Rally Is Now at Risk of Fizzling Out.
• Investors Slam Brakes on US Home Purchases as Profits Dry Up.
• Hedge Funds Are Deploying ChatGPT to Handle All the Grunt Work.
• US Job Openings Surge to 10.1 Million, Upping Odds for Fed Hike.
• Fed Signal for Rate Pause Takes Pressure Off Hot Jobs Report.

Zero Hedge:

• House Approves Debt-Limit Bill Rule Ahead Of Evening Vote As McCarthy Needs Democrat Votes.
• Epstein Pal Jes Staley Throws Jamie Dimon Under The Bus, Setting Stage For Massive Legal Battle.
• Carbon Footprint Of Lab-Grown Beef "Orders Of Magnitude" Worse Than Traditionally Raised: Study.
• Beige Book Shows US Economy Turning More Sluggish.
• Chick-fil-A Faces Growing Backlash Over 'Diversity, Equity, And Inclusion' Efforts.
• University Of Colorado Declares Misgendering An "Act Of Violence".
• Quinn: Fall Of American Empire & Descent Into A New Dark Ages.
• AI-Mania Meltup In May Hides Recession Signals From Commodities & Credit Curves.
• Major Grocery Chain Struggles To Survive Amid Wave Of Thefts.
• Nasdaq Triggers A New Volatility Correlation Sell Signal.
• How Flipping Colorado Blue Has Become Democrats' Blueprint For The Rest Of America.
• RFK Jr Calls For "Mature Conversation" On Ukraine As Admin Is "Lying To Us".
• US stocks were lower after weak Chinese and Chicago PMIs, although JOLTS data jumped - Newsquawk Asia-Pac Market Open.
• Rickards: Biden's Scheme Is "Cynical And Manipulative".
• WTI Extends Losses After API Reports Big Surprise Crude Build.
• Bud Light's Sales Implosion, Explained (By Mises).
• Hawkish bets unwind on dovish Fed Speak and weak mfg. data despite hot JOLTS - Newsquawk US Market Wrap.

Wall Street Journal:

• Workers on Why They’re Not Coming Back to the Office.
• Capital Account: A Debt-Ceiling Deal That Doesn’t Deal With Debt.
  
• Fed Prepares to Skip June Rate Rise but Hike Later.
• Coastal Town Brings Mass Litigation—and an ‘Existential Threat’—to Chemical Giants.
• Racial Preferences Won’t Go Easily. Colleges will seek sneaky ways of filling quotas. But they’ll have trouble defending them in court.
• Where Is the U.S. Economy Headed? Follow the Money.
• AI Is Writing Code Now. For Companies, That Is Good and Bad.
• American Manufacturers Rethink Reliance on China.
• DOJ Sues Coal Companies Owned by Family of West Virginia Gov. Jim Justice.
• The Data Science Behind Raising Fast Food Prices.

CNBC.com:

• Debt ceiling bill advances to final House vote after McCarthy gets help from Democrats.
• Stocks making the biggest moves after hours: C3.ai, Nordstrom, Salesforce, CrowdStrike and more.
• FDA approves Pfizer RSV vaccine for older adults.
• Amazon workers walk out over ‘lack of trust’ in leadership.
• Salesforce raises guidance but sees pressure as customers back away from big consulting deals.
• Not just shoplifting: Here’s why companies say retail theft is such a big deal.
• Nordstrom tops Wall Street’s first-quarter sales expectations, even as shoppers spend less.

MarketWatch:

• AI startup C3.ai’s stock is down 20% after softer revenue guidance.
• A big short in Treasurys? Traders are building up bets around a debt-ceiling resolution.
• CrowdStrike stock drops more than 10% after less-than-perfect earnings outlook.
• Okta stock plunges, CEO sees tough times ahead even as earnings forecast moves higher.
• ZipRecruiter to cut 20% of staff, CEO to get 30% salary cut.
• ‘Potent liquidity squeeze’ threatens stock market once debt-ceiling deal is done.
• Stocks may have put the debt ceiling behind them, but here are more risks to the 2023 market rally.
• Debt-ceiling deal seals end to student-debt moratorium — a nearly $400-per-month shock to budgets.

Newsmax:

• Debt Ceiling Bill Advances to Tight Vote in House.
• Sen. Tim Scott: Raising Limit Gives Biden Open Checkbook. 
• Rep. Ralph Norman to Newsmax: McCarthy Caved 'Too Much'.
• Rep. Bob Good to Newsmax: Not Enough 'Cuts or Reforms' to Vote for Debt Deal.
• Sen. Paul to Newsmax: Debt Ceiling Deal 'Absolute Disaster for Conservatives'.
• Boebert to Newsmax: McCarthy Negotiated 'a Gift' for Biden.

Fox News:

• Target's financial nightmare continues amid anti-woke rage.
• Lawmakers to honor anti-Catholic Sisters of Perpetual Indulgence member.

TheGatewayPundit.com:

• MUST READ… German Lawmaker Beatrix Von Storch: How BlackRock, the WEF and the Global Climate Cabal are Fleecing the Taxpayers.
• FBI Director Wray Admits FD-1023 Biden Bribe Document Exists; Offers Private Viewing to Comer and Grassley; Comer Again Warns of Contempt if Document Not Given to Congress.
• UPDATE: Here are the 46 Republicans Who Stand with “We the People” and Won’t Vote for Biden & McCarthy’s Flawed Uniparty Bill.
• What Debt Ceiling Crisis? Biden Regime to Send Another $300M Package for Ukraine.
• JUST IN: Project Veritas Sues James O’Keefe.
• “Wow!” Stunned John Kirby Stammers Out a Denial and Leaves Podium after White House Reporter Details Joe Biden Bribe Allegations and Whistleblower Charges, Asks About Majority of Americans Believing Biden is Corrupt.
• RINO Mitch McConell on Debt Limit Deal: “When this Agreement Reaches the Senate, I’ll Be Proud to Support it Without Delay”.
• Grammy-Nominated Singer Dies After Suffering Heart Attack on Stage, Collapsing During NYC Show (VIDEO).
• COMPLETE COLLAPSE: Bud Light Suffers Worst Week Ever – Mexican Competitor Now Poised to Surpass Woke Company as World’s Number 1 Beer.
• He Who Must Not Be Named… Report: FOX News Employees Are Banned from Saying the Name “Tucker” on Air (VIDEO).
• New Evidence Found in Maricopa: Tabulators Had Wrong Data Base and Machine Behavior Settings During 2022 Election.

The Epoch Times:

• US Lacks ‘Effective Tool’ to Stop China’s Tech Theft: Treasury Official.
• Republicans Call for Action as China Turns US Into ‘Hunting Ground’ for Dissidents.

Twitter: 

• @USBurning - Over 300 COVID-related medical papers retracted due to scientific errors, compromised ethical standards. PetSmart faces backlash for LGBTQ themed products 'for your gender-fluid fish' and other pets.
• @ChuckCallesto - BREAKING NOW: 21 states join lawsuit backing Florida parents suing 13-year-old daughter's school after teachers made her a 'TRANSGENDER SUPPORT PLAN' WITHOUT their consent.
• @GRDecter - Everyone's talking about how the U.S just hit $1 trillion in total credit card debt. But what's more concerning: That number has increased by +$250 billion in just 2 years. This doesn't end well. (graph) US national debt per citizen 10 years ago: $52k. This year it will end up being: about $95k. What's the end game here? (graph)
  
• @michaelpsenger - “Former New York Gov. Andrew Cuomo’s staff reportedly shared emails about drafting his bombastic $5.1 million COVID-19 response memoir as early as March 2020…weeks before the first deadly wave…with the help of state staff and resources.”
• @NEWSMAX - Several states have taken the baton from conservatives who have raised awareness of the risks of investment strategies involving environmental, social, and governance (ESG) factors by passing laws against it.
• @laralogan - Could not possibly have had anything to do with this…could it? (video)

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 961,868 Reports(+516 from prior week) Through May 19th, 2023.

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.

Night Trading 

• Asian equity indices are -.25% to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 120.0 - basis points. 

• China Sovereign CDS 64.5 - basis points
  
• China Iron Ore Spot 99.2 USD/Metric Tonne +.8%.

• Bloomberg Emerging Markets Currency Index 46.3 +.02%.
• Bloomberg Global Risk-On/Risk Off Index 54.2 +1.5%. 
• Bloomberg US Financial Conditions Index .12 -7.0 basis points.
  
• Volatility Index(VIX) futures 20.4 -.4%.
• Euro Stoxx 50 futures +.66%.

• S&P 500 futures +.14%.

• NASDAQ 100 futures +.08%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by tech and financial 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.