Friday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 130.0 +8.0 basis points. 

• China Sovereign CDS 83.75 +4.5 basis points.
  
• China Iron Ore Spot 112.3 USD/Metric Tonne +.4%.

• Bloomberg Emerging Markets Currency Index 43.1 -.17%.
• Bloomberg Global Risk-On/Risk Off Index 68.9 +.9%. 
• Bloomberg US Financial Conditions Index 26.0 -4.0 basis points.
  
• Volatility Index(VIX) futures 17.9 -.6%.
• Euro Stoxx 50 futures -.19%.

• S&P 500 futures +.13%.

• NASDAQ 100 futures +.02%.  

Morning Preview Links

BOTTOM LINE: Asian indices are modestly lower, weighed down by industrial and technology 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.

Stocks Reversing Lower into Final Hour on More Hawkish Fed Worries, Rising Long-Term Rates, Dollar Strength, Tech/Retail Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Below Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 16.8 +5.1%
• DJIA Intraday % Swing 1.25%
  
• Bloomberg Global Risk On/Risk Off Index 68.2 -.6%

• Euro/Yen Carry Return Index 166.98 +.22%

• Emerging Markets Currency Volatility(VXY) 9.0 +1.0%

• CBOE S&P 500 Implied Correlation Index 23.9 +10.3% 

• ISE Sentiment Index 92.0 -17.0 points
  

• Total Put/Call 1.0 -14.5%

• NYSE Arms 1.33 -31.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 67.3 +1.52%
  

• US Energy High-Yield OAS 331.72 +.7%
• Bloomberg TRACE # Distressed Bonds Traded 359.0 -4.0
  

• European Financial Sector CDS Index 85.27 +.26% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 267.45 -.48%
  

• Italian/German 10Y Yld Spread 166.0 basis points +1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 128.61 -.47%
  

• Emerging Market CDS Index 208.82 -.58%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.9 unch.

• 2-Year SOFR Swap Spread -12.75 basis points -.25 basis point
  

• TED Spread 18.5 basis points -.5 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -12.0 -.75 basis point
  
• MBS  5/10 Treasury Spread 179.0 unch.
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 772.0 unch.
  
• Avg. Auto ABS OAS 70.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 43.3 +1.8%
• 3-Month T-Bill Yield 5.47% +4.0 basis points
  

• China Iron Ore Spot 112.3 USD/Metric Tonne +.36%
• Dutch TTF Nat Gas(European benchmark) 31.9 euros/megawatt-hour -13.3%

• Citi US Economic Surprise Index 60.5 +.5 point

• Citi Eurozone Economic Surprise Index -64.8 +.4 point

• Citi Emerging Markets Economic Surprise Index 2.4 -.3 point
• S&P 500 Current Quarter EPS Growth Rate YoY(482 of 500 reporting) -6.2%  +1.1 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 235.73 n/a:  Growth Rate +7.4% n/a, P/E 18.8 n/a
  
• S&P 500 Current Year Estimated Profit Margin 12.18% -1.0 basis point
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(10 of 10 reporting) +24.3% +7.3 percentage points
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 234.17 n/a: Growth Rate +42.7% n/a, P/E 32.8 n/a
  
• Bloomberg US Financial Conditions Index .32 +6.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index -.09 -11.0 basis points
  
• US Yield Curve -78.75 basis points (2s/10s) -2.25 basis points
  
• US Atlanta Fed 2Q GDPNow Forecast +5.91% +15.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.23% unch.: CPI YoY +3.83% +1.0 basis point
  
• 10-Year TIPS Spread 2.33 -2.0 basis points
  
• Highest target rate probability for Nov. 1st FOMC meeting: 54.6%(-3.2 percentage points) chance of 5.25%-5.5%. Highest target rate probability for Dec. 13th meeting: 53.7%(-1.4 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -532 open in Japan 
• China A50 Futures: Indicating -57 open in China

• DAX Futures: Indicating +19 open in Germany

Portfolio:

• Lower:  On losses in my tech/industrial/medical/transport sector longs
  

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my emerging market shorts
  

• Market Exposure: Moved to 50% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Growth -.9%
  

Sector Underperformers:

• 1) Alt Energy -2.3% 2) Semis -1.9% 3) Airlines -1.9%

Stocks Falling on Unusual Volume: 

• SNOW, CLDX, UPWK, SMCI, BURL, DLTR, SPR and AMC
  

Stocks With Unusual Put Option Activity:

• 1) DLTR 2) CHPT 3) GRPN 4) BURL 5) LC
  

Stocks With Most Negative News Mentions:

• 1) OIG 2) WOOF 3) OPRA 4) UFI 5) SPR
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value -.3%
  

Sector Outperformers:

• Insurance +.7% 2) Electric Vehicles +.5% 3) Regional Banks +.5%

Stocks Rising on Unusual Volume:

• GES, VFS, BBW, SPLK, EHAB, FL, FIHL, GRPN, SAVA, WB, BMA, FUTU, ITOS, FWRD and NVDA
  

Stocks With Unusual Call Option Activity:

• 1) SPLK 2) DLTR 3) IYR 4) ADSK 5) ANF

Stocks With Most Positive News Mentions:

• 1) NVDA 2) GES 3) BBW 4) SPLK 5) BLZE
  

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:

• (HIBB)/.73

After the Close: 

• None of note
  

Economic Releases  

10:00 am EST

• Univ. of Mich. Consumer Sentiment final readings.

11:00 am EST

• Kansas City Fed Services Activity Index for Aug.
  

Upcoming Splits 

• (RUSHA) 3-for-2
  

Other Potential Market Movers

• The Fed's Powell speaking and the German GDP report could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• NYSE Volume Running -12.5% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 9.8 +1.9
  
• 7 Sectors Declining, 4 Sectors Rising
• 35.9% of Issues Advancing, 60.6% Declining
• 41 New 52-Week Highs, 69 New Lows
• 45.9%(-.5%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 40.0 -1.0
  
• Bloomberg Global Risk-On/Risk-Off Index 68.4 -.2%
  
• Russell 1000: Growth/Value 17,398.8 -.71%
• 1-Day Vix 13.3 -13.4%
  
• Vix 16.6 +3.7%
  
• Total Put/Call 1.07 -8.6%
• TRIN/Arms 1.22 -37.4%