Stocks Slightly Lower into Afternoon on Escalating China Economy Worries, Rising Long-Term Rates, Dollar Strength, Tech/Alt Energy Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 15.4 -3.2%
• DJIA Intraday % Swing .84%
  
• Bloomberg Global Risk On/Risk Off Index 71.5 +2.9%

• Euro/Yen Carry Return Index 167.7 -.16%

• Emerging Markets Currency Volatility(VXY) 8.97 +.67%

• CBOE S&P 500 Implied Correlation Index 22.1 -.9% 

• ISE Sentiment Index 105.0 +24.0 points
  

• Total Put/Call .92 -13.2%

• NYSE Arms .87 -5.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 66.7 -.24%
  

• US Energy High-Yield OAS 332.1 +.01%
• Bloomberg TRACE # Distressed Bonds Traded 353.0 +5.0
  

• European Financial Sector CDS Index 81.5 +1.2% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 237.5 -.92%
  

• Italian/German 10Y Yld Spread 163.0 basis points +1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 99.8 +3.0%
  

• Emerging Market CDS Index 202.8 +1.2%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.4 unch.

• 2-Year SOFR Swap Spread -10.75 basis points +.75 basis point
  

• TED Spread 20.75 basis points +.75 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -10.75 +.5 basis point
  
• MBS  5/10 Treasury Spread 175.0 +3.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 746.0 -11.0 basis points
  
• Avg. Auto ABS OAS 68.0 -2.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 42.5 -.3%
• 3-Month T-Bill Yield 5.43% unch.
  

• China Iron Ore Spot 102.3 USD/Metric Tonne +.9%
• Dutch TTF Nat Gas(European benchmark) 35.3 euros/megawatt-hour  -4.7%

• Citi US Economic Surprise Index 73.7 -.7 point

• Citi Eurozone Economic Surprise Index -83.3 +1.7 points

• Citi Emerging Markets Economic Surprise Index 2.6 -4.4 points
• S&P 500 Current Quarter EPS Growth Rate YoY(455 of 500 reporting) -8.3%  -.1 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 234.09 +.09:  Growth Rate +7.0% unch., P/E 19.1 -.1
  
• S&P 500 Current Year Estimated Profit Margin 12.14% unch.
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(8 of 10 reporting) +17.0% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 231.54 +.54: Growth Rate +41.1% +.3 percentage point, P/E 32.5 -.6
  
• Bloomberg US Financial Conditions Index .37 +3.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index -.08 +4.0 basis points
  
• US Yield Curve -72.75 basis points (2s/10s) +1.25 basis points
  
• US Atlanta Fed 2Q GDPNow Forecast +4.12% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.23% unch.: CPI YoY +3.81% unch.
  
• 10-Year TIPS Spread 2.37 +3.0 basis points
  
• Highest target rate probability for Nov. 1st FOMC meeting: 66.1%(-3.7 percentage points) chance of 5.25%-5.5%. Highest target rate probability for  Dec. 13th meeting: 62.5%(-2.1 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +22 open in Japan 
• China A50 Futures: Indicating -135 open in China

• DAX Futures: Indicating +69 open in Germany

Portfolio:

• Higher:  On gains in my medical/utility/commodity sector longs, index hedges and emerging market shorts
  

• Disclosed Trades: None
  

• Market Exposure: 50% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Growth -.5%
  

Sector Underperformers:

• 1) Semis -2.5% 2) Electric Vehicles -2.2% 3) Digital Health -1.7%

Stocks Falling on Unusual Volume: 

• PODD, GPCR, BUR, YETI, AMX, BLFS, RAMP, HELE, HSAI, BABA, JKS, LI, JD, BILI, PENN, AVTA, VTYX, BZ, DQ, FUTU, SMCI and MAXN
  

Stocks With Unusual Put Option Activity:

• 1) ASHR 2) VNQ 3) IAU 4) SOXX 5) BAX
  

Stocks With Most Negative News Mentions:

• 1) CANO 2) MAXN 3) GDS 4) CYAN 5) ILMN
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.3%
  

Sector Outperformers:

• Energy +1.4% 2) Oil Service +1.4% 3) Construction +.9%

Stocks Rising on Unusual Volume:

• INOD, IONQ, APLS, EBIX, SAGE, PX, ARLO, DKNG, SPB, JBI, CCOI, NTRA, NWS, CRGY, APP, NWSA, BROS, TGTX, DNUT, ENS, SRPT, FLO and OXY
  

Stocks With Unusual Call Option Activity:

• 1) ABCM 2) DB 3) LVS 4) RGTI 5) DBX

Stocks With Most Positive News Mentions:

• 1) RGTI 2) IONQ 3) EVLV 4) SHCO 5) SVV
  

Charts:

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

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

Earnings of Note 
Company/Estimate 

Before the Open:

• (JKS)/11.48
• (ERJ)/NA

After the Close: 

• (ALC)/.64
  

Economic Releases  

• None of note

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The German Wholesale Prices report could also impact global trading on Monday.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Morning Market Internals

NYSE Composite Index:

• NYSE Volume Running +7.7% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 12.0 -.4
  
• 5 Sectors Declining, 6 Sectors Rising
• 54.6% of Issues Advancing, 42.0% Declining
• 22 New 52-Week Highs, 25 New Lows
• 53.0%(+1.1%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 53.0 -5.0
  
• Bloomberg Global Risk-On/Risk-Off Index 71.1 +2.5%
  
• Russell 1000: Growth/Value 17,038.2 -.41%
• 1-Day Vix 11.9 -22.0%
  
• Vix 15.5 -2.5%
  
• Total Put/Call .89 -16.0%
• TRIN/Arms .73 -20.8%
  

Friday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 98.0 +2.25 basis points. 

• China Sovereign CDS 61.5 +.75 basis point.
  
• China Iron Ore Spot 101.4 USD/Metric Tonne +.67%.

• Bloomberg Emerging Markets Currency Index 42.6 +.01%.
• Bloomberg Global Risk-On/Risk Off Index 69.4 unch. 
• Bloomberg US Financial Conditions Index .33 -1.0 basis point.
  
• Volatility Index(VIX) futures 17.5 -1.1%.
• Euro Stoxx 50 futures -.25%.

• S&P 500 futures +.16%.

• NASDAQ 100 futures +.32%.  

Morning Preview Links

BOTTOM LINE: Asian indices are slightly lower, weighed down by consumer 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.