Stocks Reversing Lower into Afternoon on US Auto Strike Concerns, US Govt Shutdown Worries, Technical Selling, Energy/Homebuilding Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 17.4 +.2%
• DJIA Intraday % Swing 1.3% +58.9%
  
• Bloomberg Global Risk On/Risk Off Index 71.8 -2.1%

• Euro/Yen Carry Return Index 168.0 +.17%

• Emerging Markets Currency Volatility(VXY) 8.6 -1.3%

• CBOE S&P 500 Implied Correlation Index 26.8 +3.8% 

• ISE Sentiment Index 97.0 +8.0 points
  

• Total Put/Call .99 +1.0%

• NYSE Arms 1.24 +53.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 73.18 +.01%
  

• US Energy High-Yield OAS 330.12 -.18%
• Bloomberg TRACE # Distressed Bonds Traded 342 +2
  

• European Financial Sector CDS Index 90.53 -.47% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 302.57 -.39%
  

• Italian/German 10Y Yld Spread 194.0 basis points unch.
  

• Asia Ex-Japan Investment Grade CDS Index 127.5 -1.2%
  

• Emerging Market CDS Index 225.5 +1.7%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.8 unch.

• 2-Year SOFR Swap Spread -7.75 basis points +.25 basis point
  

• TED Spread 21.0 basis points +3.0 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -35.5 +.25 basis point
  
• MBS  5/10 Treasury Spread 172.0 -2.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 907.0 -7.0 basis points
  
• Avg. Auto ABS OAS 79.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.8 +.23%
• 3-Month T-Bill Yield 5.45% unch.
  

• China Iron Ore Spot 120.5 USD/Metric Tonne +.5%
• Dutch TTF Nat Gas(European benchmark) 41.9 euros/megawatt-hour -2.9%

• Citi US Economic Surprise Index 45.1 -3.8 points

• Citi Eurozone Economic Surprise Index -54.0 -13.2 points

• Citi Emerging Markets Economic Surprise Index 11.9 -1.0 point
• S&P 500 Current Quarter EPS Growth Rate YoY(16 of 500 reporting) +1.5% +12.7 percentage points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 239.50 -.05:  Growth Rate +9.0% unch., P/E 18.0 unch.
  
• S&P 500 Current Year Estimated Profit Margin 12.14% unch.
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 263.91 +.29: Growth Rate +59.2% +.2 percentage point, P/E 28.1 +.2
  
• Bloomberg US Financial Conditions Index .09 +1.0 basis point
  
• Bloomberg Euro-Zone Financial Conditions Index -.73 -58.0 basis points
  
• US Yield Curve -48.75 basis points (2s/10s) -.5 basis point
  
• US Atlanta Fed 2Q GDPNow Forecast +4.92% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.73% -22.0 basis points: CPI YoY +3.69% unch.
  
• 10-Year TIPS Spread 2.34 -4.0 basis points
  
• Highest target rate probability for Dec. 13th FOMC meeting: 65.6%(+1.6 percentage points) chance of 5.25%-5.5%. Highest target rate probability for Jan. 31st meeting: 64.3%(+.3 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -70 open in Japan 
• China A50 Futures: Indicating +104 open in China

• DAX Futures: Indicating +100 open in Germany

Portfolio:

• Slightly Higher:  On gains in my tech sector longs, index hedges and emerging market shorts
  

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges
  

• Market Exposure: Moved to 50% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Growth unch.
  

Sector Underperformers:

• 1) Oil Service -2.2% 2) Energy -1.5% 3) Homebuilding -1.1%

Stocks Falling on Unusual Volume: 

• NEP, MDGL, NCLH, BEP, NAPA, EURN, MTN, ROIV, CUK, CCL, OPRA, SNDX and CORT
  

Stocks With Unusual Put Option Activity:

• 1) DLR 2) BURL 3) KGC 4) FXI 5) EFA
  

Stocks With Most Negative News Mentions:

• 1) MTN 2) BMI 3) OPRA 4) NCLH 5) EOSE
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.6%
  

Sector Outperformers:

• 1) Regional Banks +2.1% 2) Social Media +1.6% 3) Networking +1.3%

Stocks Rising on Unusual Volume:

• GPCR, TMCI, BNTX, WBA, GRPN, DUOL, VFC, KSS, NKE, ONON, AA, CCCS, ZS, INFA, PLNT, MU, FLNC, SBS, BILL, JKS, EAT, VERX, PLTR, BALL, HOLI, BUD, OLN, AFRM, BMBL, SKX, SMCI, FIVE, AYX, SQM, SE, TRMB, MKTX, FIVE and MDB
  

Stocks With Unusual Call Option Activity:

• 1) RKT 2) GEO 3) NKE 4) CCL 5) EVGO

Stocks With Most Positive News Mentions:

• 1) FEMY 2) EDIT 3) NKE 4) ZION 5) EAT
  

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:

• None of note
  

After the Close: 

• None of note
  

Economic Releases  

10:00 am EST

• Construction Spending MoM for Aug. is estimated to rise +.6% versus a +.7% gain in July.
• ISM Manufacturing for Sept. is estimated to rise to 47.8 versus 47.6 in Aug.
• ISM Prices Paid for Sept. is estimated to rise to 48.8 versus 48.4 in Aug.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The China Manufacturing PMI 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 -8.4% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 12.2 +2.8
  
• 1 Sector Declining, 10 Sectors Rising
• 71.4% of Issues Advancing, 26.7% Declining
• 22 New 52-Week Highs, 30 New Lows
• 39.1%(+4.3%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 36.0 +6.0
  
• Bloomberg Global Risk-On/Risk-Off Index 72.5 -1.1%
  
• Russell 1000: Growth/Value 17,557.2 +.59%
  
• 1-Day Vix 13.4 -31.4%
  
• Vix 16.1 -7.0%
  
• Total Put/Call .91 -7.1%
• TRIN/Arms .85 -1.2%
  

Friday Watch

Evening Headlines

Bloomberg:

• China Is Selling So Much to Russia That Containers Are Piling Up.
• China Economy Improved Further in September, Satellite Data Show.
• UK Homes in Debt on Energy Bills Surges 36% This Year, EDF Says.
• Huawei Takes Revenge as China Catches Up on Semiconductors.
• Asia Stocks Poised for Worst Quarter in a Year: Markets Wrap. 
• Oil Steady After Blistering Rally Ran Into Technical Resistance.
• Microsoft Discussed Selling Bing to Apple as Google Replacement.
• Henry Kravis, Endeavor, Fenway Eye PGA Tour Deal to Rival Saudi Arabia’s.
• UAW Targets At Least 30% Pay Raise, Lower Than Initial Demand.
• The Threat of an American Debt Crisis.
• Inside JPMorgan’s Year of Being Haunted by Jeffrey Epstein.
• Character.AI in Early Talks for Funding at More Than $5 Billion Valuation. 
• Uber, DoorDash, Grubhub Must Pay $18 an Hour to NYC Couriers.
• Long-Bond Yields Poised for Biggest Quarterly Jump Since 2009.

Zero Hedge:

• You Will Never Guess What Happened To "The Strong US Consumer" After Today's Huge GDP Revisions.
• "The American People Know The Fix Is In" - O'Reilly Warns Carlson "We Are In The Age Of Disorder Now".
• Major Cold Trend Set To Unleash 'Frost-Freeze' Threat Across Eastern US.
• Slouching Towards 1984.
• Murder Crisis Plagues DC As Mayor Begs For More Officers After 'Defunding Police'.
• NIH Doctor Flagged Wuhan Virus Lab Safety Problems As Early As 2017.
• Who Owns The Most Satellites?
• Jim Grant: Fed Policy Is A Ph.D. Standard Of Improvisation.
• Our Society Is Melting Down Even Faster Than Most People Thought That It Would.
• A Third Of All Workers Say They'd Quit Or Find A New Job If They Were Asked To Return To The Office.
• Fauci And The CIA: A New Explanation Emerges.
• US stocks gained as yields and oil prices eased back from recent peaks - Newsquawk Asia-Pac Market Open.
• Watch: Biden Tells People To Stop Questioning COVID Shots.
• Banks' Demands For Fed's Emergency Funds Remains Near Record Highs As Retail Money-Market Fund Inflows Continue.
• Stocks advance as Treasuries hit highs in choppy month-end trade - Newsquawk US Market Wrap.
• Victor Davis Hanson: The Ukrainian Gordian Knot.
• Bear barrage.
• Massive Short-Squeeze Lifts Stocks; Bitcoin Jumps As Bullion & Black Gold Dumped. 
• Watch Live: Biden Impeachment Inquiry Kicks Off.
  

Wall Street Journal:

• Thousands of Migrants Are Being Dropped Off on San Diego Streets.
• Border Security in Spotlight as Congress Seeks to Avert Shutdown
• How a Tiny Crew Struck a Blow Against China With a Wooden Boat and a Knife
• The Retail Theft Rampage Gets Worse. Target closes nine stores in four states because of crime, as looters run riot in Philadelphia.
• Oil Is Near $100. Shale Isn’t Coming to the Rescue.

CNBC.com:

• Automakers grow frustrated over pace of UAW negotiations as new deadline looms.
• AMD’s stock pops after Microsoft tech chief touts chipmaker’s AI products.
• Delivering Alpha recap: Bill Ackman on bonds and the biggest market calls from CNBC investor summit.
• Nike misses on revenue for first time in two years, but stock pops as earnings, margins beat.
• GameStop’s survival demands ‘extreme frugality,’ CEO Ryan Cohen tells employees.
• Brad Gerstner says AI will be bigger than the internet, bigger than mobile.

MarketWatch.com:

• The S&P 500 is brushing up against ‘the mother of all trend lines.’ What happens next could make or break the market.
• Nvidia identified as target of French antitrust raid: WSJ.
• 4 reasons oil prices are surging toward $100 a barrel.
• Betting markets now see a Trump 2024 win as likelier than a Biden victory — and give Newsom better chances than Trump’s GOP rivals.

Newsmax:

• Rep. Gooden: Hypocrisy Rampant Among Dems.
• Comer Subpoenaing Bank Info of Hunter, James Biden for Impeach Probe.
• Rep. Steube: DOJ 'Stonewalled' Biden Investigations.

Fox News:

• Hundreds busted in human trafficking operation — including Disney employees.

TheGatewayPundit.com:

• Neil Cavuto Shills For Biden, Trashes Republican Impeachment Hearing, Says Witnesses Did Not Provide Any Proof For Impeachment (VIDEO).
• BREAKING—GAME CHANGER! 11 HERO Lawmakers Sue MI SOS Jocelyn Benson and MI Director of Elections In Federal Court For Violating US and MI Constitution To Change Election Laws.
• Elon Musk Livestreams Biden Border Crisis in Eagle Pass, Texas (VIDEO).
• Outrageous! Georgia GOP Caucus Ousts Brave State Senator for Trying to Impeach Corrupt Fulton County DA Fani Willis.
• VIDEO: Trans Male Student Brutally Beats Defenseless Girl at Woke Oregon Middle School, Leaving Her in Tears While Fellow Students Film Incident.
• West Point Goes Full Woke, Pushes ‘Diversity & Inclusion Studies’.
• California Gov. Newsom Raises Minimum Wage for Fast Food Workers to $20 Per Hour.
• NaziGate: Canadian Prime Minister Trudeau Finally Apologizes – To Zelensky! It’s Time to Address the Contemporary Ukrainian Nazis From Azov Regiment.
• Missouri Atty Gen. Sues Woke School Board outside St. Louis for Violating Open Meetings Laws when Making Transgender Policies.
• Conservative MP Calls on the UK’s Only Right Wing TV Broadcaster to be Shut Down.
• Democrat El Paso Mayor Starts Bussing Migrants to New York, Chicago, and Denver.
• Former Congressman, Campaign Expert: Democrats Positioning to Replace Biden with Michelle Obama, Further Weaponize DOJ.
  

The Epoch Times:

• Faltering Chinese Economy Calls for Desperate Measures in Beijing.
• Chinese Hackers Stole 60,000 Emails From State Department Officials.
• While China and Russia Test Nukes, Biden Wants to Ban US Testing.

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 unch. to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 128.5 +.25 basis point. 

• China Sovereign CDS 82.0 -.5 basis point.
  
• China Iron Ore Spot 119.2 USD/Metric Tonne +.97%.

• Bloomberg Emerging Markets Currency Index 41.7 -.04%.
• Bloomberg Global Risk-On/Risk Off Index 74.6 +1.7%. 
• Bloomberg US Financial Conditions Index 5.0 -2.0 basis points.
  
• Volatility Index(VIX) futures 17.4 +.3%.
• Euro Stoxx 50 futures -.19%.

• S&P 500 futures -.14%.

• NASDAQ 100 futures -.13%.  

Morning Preview Links

BOTTOM LINE: Asian indices are modestly higher, boosted by technology and consumer shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 75% net long heading into the day.