Stocks Closing Substantially Lower on Rising Long-Term Rates, Tightening US Financial Conditions, European/Emerging Markets/US High-Yield Debt Angst, Tech/Utility Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 19.1 +12.8%
• DJIA Intraday % Swing .66%
  
• Bloomberg Global Risk On/Risk Off Index 69.5 -1.7%

• Euro/Yen Carry Return Index 167.4 -.12%

• Emerging Markets Currency Volatility(VXY) 8.39 +.96%

• CBOE S&P 500 Implied Correlation Index 29.0 +13.4% 

• ISE Sentiment Index 77.0 -8.0 points
  

• Total Put/Call 1.11 +2.8%

• NYSE Arms .96 +45.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 74.96 +2.7%
  

• US Energy High-Yield OAS 335.58 +2.9%
• Bloomberg TRACE # Distressed Bonds Traded 325 +2
  

• European Financial Sector CDS Index 91.98 +3.7% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 299.11 +2.8%
  

• Italian/German 10Y Yld Spread 193.0 basis points +7.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 127.6 +1.5%
  

• Emerging Market CDS Index 220.40 +2.9%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.0 -.3%

• 2-Year SOFR Swap Spread -11.75 basis points -.75 basis point
  

• TED Spread 20.5 basis points +1.0 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -11.0 +.25 basis point
  
• MBS  5/10 Treasury Spread 175.0 +6.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 910.0 +2.0 basis points
  
• Avg. Auto ABS OAS 80.0 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.77 -.47%
• 3-Month T-Bill Yield 5.44% -3.0 basis points
  

• China Iron Ore Spot 114.7 USD/Metric Tonne -.31%
• Dutch TTF Nat Gas(European benchmark) 40.3 euros/megawatt-hour -9.3%

• Citi US Economic Surprise Index 44.24-1.8 points

• Citi Eurozone Economic Surprise Index -47.3 +.9 point

• Citi Emerging Markets Economic Surprise Index 11.5 -.1
• S&P 500 Current Quarter EPS Growth Rate YoY(9 of 500 reporting) +8.4% unch.
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 239.72 +.04:  Growth Rate +9.1% +.1 percentage point, P/E 17.9 -.1
  
• S&P 500 Current Year Estimated Profit Margin 12.13% unch.
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 262.99 +.10: Growth Rate +58.6% +.1 percentage point, P/E 27.7 -.2
  
• Bloomberg US Financial Conditions Index .06 -17.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index -.10 -39.0 basis points
  
• US Yield Curve -57.75 basis points (2s/10s) +2.75 basis points
  
• US Atlanta Fed 2Q GDPNow Forecast +4.86% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.95% unch.: CPI YoY +3.69% unch.
  
• 10-Year TIPS Spread 2.32 -5.0 basis points
  
• Highest target rate probability for Dec. 13th FOMC meeting: 62.3%(+1.4 percentage points) chance of 5.25%-5.5%. Highest target rate probability for Jan. 31st meeting: 59.7%(+2.6 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -440 open in Japan 
• China A50 Futures: Indicating -6 open in China

• DAX Futures: Indicating +76 open in Germany

Portfolio:

• Slightly Higher:  On gains in my index hedges and emerging market shorts
  

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges, then covered some
  

• Market Exposure: 25% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Growth -1.6%
  

Sector Underperformers:

• 1) Utilities -2.8% 2) Computer Services -2.0% 3) Software -2.0%

Stocks Falling on Unusual Volume: 

• HTZ, ORCL, SEDG, ZBH, CAMT, LOGI, SCS, NOW, BEKE, OSPN, OKE, JHG, SAP, OGN, AMRK, AMZN, WKC, SYK, SGML, LTHM, HLF, HPK, RCM, PAAS, AMPL, CTAS, SNX, WPC, SLG, MORF, TMCI, ARGX, CC, SSRM, NCNO, EC, EBIX and UNFI
  

Stocks With Unusual Put Option Activity:

• 1) FNGS 2) SABR 3) URA 4) IMVT 5) PAAS
  

Stocks With Most Negative News Mentions:

• 1) UNFI 2) AMZN 3) THO 4) CMA 5) LUMN
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth -.9%
  

Sector Outperformers:

• 1) Biotech +.9% 2) Gambling +.4% 3) Foods unch.

Stocks Rising on Unusual Volume:

• IMVT, ICPT, VERV, PLRX, IONS and LSXMA
  

Stocks With Unusual Call Option Activity:

• 1) HTZ 2) IAU 3) IMVT 4) ACI 5) WISH

Stocks With Most Positive News Mentions:

• 1) ACST 2) BFRG 3) ICPT 4) IMVT 5) ROIV
  

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:

• (PAYX)/1.12

After the Close: 

• (FUL)/1.14
• (JEF)/.33
• (MU)/-1.15
• (WOR)/2.04
  

Economic Releases  

8:30 am EST

• Durable Goods Orders for Aug. is estimated to fall -.5% versus a -5.2% decline in July. 
• Durables Ex Transports for Aug. is estimated to rise +.2% versus a +.4% gain in July.
• Cap Goods Orders Non-Defense Ex-Air for Aug. is estimated to rise +.1% versus a +.1% gain in July.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -600,000 barrels versus a -2,136,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -140,000 barrels versus a -831,000 barrel decline the prior week. Distillate inventories are estimated to fall by -640,000 barrels versus a -2,867,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.46% versus a -1.8% decline prior.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Eurozone Consumer Confidence report, 5Y T-Note auction, weekly MBA Mortgage Applications report, (MU) analyst call and the RBC Communications Infrastructure Conference, (GNRC) investor day, (WDAY) analyst day and the (JKS) business update 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 -20.8% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 11.2 +.7
  
• 11 Sectors Declining, 0 Sectors Rising
• 23.1% of Issues Advancing, 74.7% Declining
• 15 New 52-Week Highs, 192 New Lows
• 37.2%(-2.3%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 31.0 -2.0
  
• Bloomberg Global Risk-On/Risk-Off Index 69.9 -1.1%
  
• Russell 1000: Growth/Value 17,366.2 unch.
  
• 1-Day Vix 13.8 -7.7%
  
• Vix 18.6 +10.2%
  
• Total Put/Call 1.03 -4.6%
• TRIN/Arms .93 +40.9%
  

Tuesday Watch

Evening Headlines

Bloomberg:

• Nazi Veteran Lauded at Zelenskiy's Speech Embarrasses Trudeau.
• China Property Recovery Up to a Year Away, Ex-PBOC Adviser Says.
• EU Should Stick to Fossil Fuels for Making Hydrogen, NGO Says.
• Oil Steady Near $90 as Tightness Offset by Macroeconomic Concern.
• Bezos’ Blue Origin Methane Emissions Were Spotted by the Space Station.
• Only Richest 20% of Americans Still Have Excess Pandemic Savings.
• Hedge Funds Cut Stock Leverage at Fastest Pace Since 2020 Crash.
• Apple’s $59 Fake-Suede iPhone Case Is Its Biggest Dud of 2023.
• Goldman CEO Dismisses Calls to End Ties to Fossil-Fuel Firms.
• A Key American Plant Making Antibiotics for Kids Risks Shutting Down.
• JPMorgan’s Kolanovic Warns on Pricing Power, Lifts Energy Stocks.

Zero Hedge:

• Busted! Adam Schiff Funneled Millions To Defense Contractors After Taking Donations.
• 'Just Allegations': Menendez Refuses To Resign Amid Bribery Scandal, Claims Seized $480K Was For 'Emergencies'. 
• Oregon Sheriffs Association Says FBI Position Makes It Impossible To Legally Buy Guns.
• White House Pledges $100 Million Support Kenyan UN Soldiers In Haiti.
• Toyota Planning To Triple EV Output To 600,000 Vehicles By 2025.
• Justin Trudeau's Nazi Hot Take Flexibility: Taibbi.
• US To Keep Paying Salaries For Tens Of Thousands Of Ukrainians During Government Shutdown.
• Brace For The Inflationary Storm: Morgan Stanley Warns El Niño Will Unleash Another "Price Shock".
• Growing Numbers Of American Volunteers Wounded In Ukraine Treated At US Army Hospital In Germany.
• The SEC Is Spying On All Your Trades, Linking Them To Your SSN And Sharing The Data With 3,000 Agencies.
• Jefferies Downgrades Nike, Footlocker, Urban Outfitters As Student Debt Payment Restart Set To Spark Spending Pullback.
• Chicago' Problem Is Crime, The Mayor's Solution Is City-Run Grocery Stores.
• US stocks notched mild gains with trade choppy amid massive Treasury bear-steepening - Newsquawk Asia-Pac Market Open.
• Victor Davis Hanson: Is The Left Happy That They Got Their Wish?
• As Bankruptcies Soar, Debt Market Titans Warn "Default Cycle Has Started".
• "Events Are Moving Quickly Now" - Kunstler Warns Of Imminent "Banquet Of Consequences" For Biden Admin.
• Yields hit highs not seen since '07, supporting the Dollar - Newsquawk US Market Wrap.
• Bonds & Bullion Dumped, Dollar Jumps As Shutdown & Student-Loan Cliff Loom.

Wall Street Journal:

• The New Moral Order Is Already Crumbling. Globalism, climate-change alarmism and cultural self-annihilation have all come under serious challenge.
• The Relentless Rise in Yields.
• Why America Has a Long-Term Labor Crisis, in Six Charts.
• Writers’ Tentative Labor Deal Shifts Focus to Actors.
• Your Online Account May Have Been Breached? Don’t Just Sit There. Do Something.
• Taxpayers Stuck Paying the Bills for Oligarchs’ Seized Yachts, Mansions.
• Even a Booming Economy Can’t Save This City’s Office Market.
• How Auto CEOs’ Pay Stacks Up Against Their Median Worker.
• Amazon to Invest Up to $4 Billion in Anthropic as AI Arms Race Escalates.

CNBC.com:

• MicroStrategy buys $147.3 million in bitcoin, bringing total held to $4.68 billion: CNBC Crypto World.
• ‘Cash-flow’ podcaster made off with millions in Ponzi scheme, SEC alleges.
• Jeff Bezos’ Blue Origin to replace CEO Bob Smith with outgoing Amazon exec Dave Limp.
• ChatGPT can now ‘speak,’ listen and process images, OpenAI says.
• Merck Covid drug linked to virus mutations that can spread between people, new study says.

MarketWatch.com:

• Oil could hit $150, sending ‘shock through system,’ says top shale CEO.
• These are the most overvalued housing markets in the world, according to UBS.
• Why a surging U.S. dollar is about to become a problem for stock-market bulls.
• These 20 growth stocks are worth considering on a pullback, says Citi.
• The S&P 500 is still overvalued — even with the correction. Here’s why.  

Newsmax:

• Trump Rails Against N.Y. AG, Judge on Eve of Key Ruling.
• Judge Napolitano: New UK Bill Allows AI to Govern Speech.

Fox News: 

• City police to pay nearly $700,000 to former official who pushed to defund department
• Major automaker suddenly cancels massive EV project that GOP is probing over CCP ties
• Sen. Menendez's excuse for keeping piles of cash, gold bars in his home shredded by social media users

TheGatewayPundit.com:

• JUST IN: American Express Cuts Mike Lindell’s MyPillow’s Credit Line by 90% After 15-Year Partnership (VIDEO).
• RINO Fave for Mich. Senate Mike Rogers Admits he Didn’t Vote or Live in Mich., Drew Blank when asked about Major Abortion Referendum.
• Missing Whistleblower Dr. Gal Luft Accuses Bidens of Using FBI Mole Named “One-Eye” to Leak Sealed SDNY Indictments to CEFC China Energy Partners, On the Same Day Hunter Biden Demanded Millions in WhatsApp Message, Citing Joe Biden’s Presence
• Sarah Palin Says Michelle Obama Will Be the Democrat Presidential Nominee
• Fox News Immediately Cuts Away From Trump the Moment He Mentions His Blockbuster Interview with Tucker Carlson (VIDEO).
• How To Join The “Secret Boycott” Patriots Are Using To Crush Woke Corporations.
• Popular Pro-Trump Influencer Catturd Swatted During His Podcast.
• Slovakia Goes to the Polls and May Distance Itself From Ukraine – Bratislava Has Banned Grain From Kiev – Ex-PM Robert Fico Poised to Win and Turn Country Away From War.
• Michelle Obama to Rake in More Than $700,000 for One-Hour Lecture on “Diversity and Inclusion” in Munich.
• Gavin Newsom’s California: Over 200 Oakland Businesses to Strike on Tuesday Over Crime as City Reports Over 10,000 Stolen Cars So Far This Year.
• Smartmatic Implicated as “Uncharged Co-Conspirators” in Philippines Bribery and Money Laundering Scheme.
• Trump Says MSNBC and NBC News Will Be Investigated for ‘Country-Threatening Treason’ if He is Re-Elected.
• The Mad Dash to Net Zero Continues to Cause Chaos Across Europe.
• WATCH: AOC Doesn’t Rule Out Helping Gaetz Remove Kevin McCarthy, Says She Will ‘Cross That Bridge When We Get To It’.
• Newsom Signs Law Requiring Gender-Neutral Bathrooms in California K-12 Schools.
• Trudeau Faces Hard Pushback After Honoring SS Fighter on Parliament – Mistake by Globalist Poster Boy Exposes Ukrainian Nazism to the World – PM Deflects the Blame, Points to Speaker of the House.
• U.S. Offshore Wind Plans Are Utterly Collapsing.

The Epoch Times:

• Farewell, China Dream. Hello, Cold Dawn.
• Billionaire Donor Should Stop Opposing TikTok Ban.

Twitter:

• @jsolomonReports - Education Secretary says he doesn't 'respect' parents thinking 'they know what's right for kids'. 
• @disclosetv - JUST IN - U.S. recorded 11,000 illegal immigrant encounters over the past 24 hours: "The single highest day in recent memory".

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 985,418 Reports(+1,625 from prior week) Through September 8th, 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 -1.25% to -.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 126.0 +.75 basis point. 

• China Sovereign CDS 79.75 -.25 basis point.
  
• China Iron Ore Spot 115.2 USD/Metric Tonne -.8%.

• Bloomberg Emerging Markets Currency Index 41.9 -.04%.
• Bloomberg Global Risk-On/Risk Off Index 72.3 +2.2%. 
• Bloomberg US Financial Conditions Index 18.0 -5.0 basis points.
  
• Volatility Index(VIX) futures 17.6 +.7%.
• Euro Stoxx 50 futures -.07%.

• S&P 500 futures -.33%.

• NASDAQ 100 futures -.44%.  

Morning Preview Links

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