Stocks Reversing Lower into Afternoon on Surging Long-Term Rates, European/Emerging Markets/US High-Yield Debt Angst, Dollar Strength, Utility/Alt Energy Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 18.0 +2.7%
• DJIA Intraday % Swing .87% +67.5%
  
• Bloomberg Global Risk On/Risk Off Index 72.6 +5.2%

• Euro/Yen Carry Return Index 167.2 -.15%

• Emerging Markets Currency Volatility(VXY) 8.6 unch.

• CBOE S&P 500 Implied Correlation Index 27.4 +3.0% 

• ISE Sentiment Index 90.0 -8.0 points
  

• Total Put/Call 1.03 -1.9%

• NYSE Arms 1.37 +29.9%

Credit Investor Angst:

• North American Investment Grade CDS Index 75.4 +2.3%
  

• US Energy High-Yield OAS 337.99 +1.9%
• Bloomberg TRACE # Distressed Bonds Traded 345 +3
  

• European Financial Sector CDS Index 93.2 +2.98% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 312.15 +3.2%
  

• Italian/German 10Y Yld Spread 188.0 basis points -6.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 127.77 -.13%
  

• Emerging Market CDS Index 231.44 +2.3%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.74 -.26%

• 2-Year SOFR Swap Spread -7.75 basis points unch.
  

• TED Spread 21.25 basis points +.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -31.5 +4.0 basis points
  
• MBS  5/10 Treasury Spread 178.0 +6.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 910.0 -3.0 basis points
  
• Avg. Auto ABS OAS 81.0 +2.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.5 -.63%
• 3-Month T-Bill Yield 5.47% +2.0 basis points
  

• China Iron Ore Spot 117.4 USD/Metric Tonne -.68%
• Dutch TTF Nat Gas(European benchmark) 39.3 euros/megawatt-hour -6.0%

• Citi US Economic Surprise Index 47.3 +2.2 points

• Citi Eurozone Economic Surprise Index -49.8 +4.2 points

• Citi Emerging Markets Economic Surprise Index 12.4 +.5 point
• S&P 500 Current Quarter EPS Growth Rate YoY(16 of 500 reporting) +1.5% unch.
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 240.50 +1.00:  Growth Rate +9.4% +.4 percentage point, P/E 17.8 -.2
  
• S&P 500 Current Year Estimated Profit Margin 12.23% +9.0 basis points
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 264.31 +.40: Growth Rate +59.4% +.2 percentage point, P/E 28.1 unch.
  
• Bloomberg US Financial Conditions Index .11 +5.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index -.06 +67.0 basis points
  
• US Yield Curve -42.75 basis points (2s/10s) +6.0 basis points
  
• US Atlanta Fed 2Q GDPNow Forecast +4.87% -5.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.73% unch.: CPI YoY +3.69% unch.
  
• 10-Year TIPS Spread 2.35 +1.0 basis point
  
• Highest target rate probability for Dec. 13th FOMC meeting: 55.1%(-9.7 percentage points) chance of 5.25%-5.5%. Highest target rate probability for Jan. 31st meeting: 55.1%(-9.7 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -180 open in Japan 
• China A50 Futures: Indicating +69 open in China

• DAX Futures: Indicating +81 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 Value -1.8%
  

Sector Underperformers:

• 1) Utilities -4.3% 2) Gold & Silver -4.0% 3) Alt Energy -3.8%

Stocks Falling on Unusual Volume: 

• BN, BXSL, MDGL, HNRG, MMM, UTG, GOF, BEP, EURN, LAC, TCPC, CWEN/A, ARR, CCJ, NI, GME, SNDX, ARCH, NEE, K, NEP and VFS
  

Stocks With Unusual Put Option Activity:

• 1) ICLN 2) UEC 3) BE 4) XLV 5) NEP
  

Stocks With Most Negative News Mentions:

• 1) SDC 2) NEP 3) DVN 4) SUI 5) MMM
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.3%
  

Sector Outperformers:

• 1) Disk Drives +.6% 2) Software +.5% 3) Computer Services +.4%

Stocks Rising on Unusual Volume:

• SPHR, GPCR, FWONK, PETQ, RIOT, DFS, HOLI, CRDO, SMCI, SPR, VTRS, ZS, BAH and PODD
  

Stocks With Unusual Call Option Activity:

• 1) IEI 2) LQD 3) NEP 4) RKT 5) KSS

Stocks With Most Positive News Mentions:

• 1) SPHR 2) DFS 3) FEMY 4) DFS 5) GEO
  

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:

• (MKC)/.65
  

After the Close: 

• (CALM)/.33
  

Economic Releases  

10:00 am EST

• Job Openings for Aug. is estimated to fall to 8808K versus 8827K in July.
  

Afternoon:

• Wards Total Vehicles Sales for Sept. is estimated to rise to 15.4M versus 15.04M in Aug.

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The RBA interest rate decision, weekly US retail sales reports, (ASAN) investor day and the (TAP) strategy day 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 -3.7% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 8.7 -3.5
  
• 9 Sectors Declining, 3 Sectors Rising
• 26.8% of Issues Advancing, 70.7% Declining
• 11 New 52-Week Highs, 182 New Lows
• 35.3%(-3.7%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 29.0 -7.0
  
• Bloomberg Global Risk-On/Risk-Off Index 72.9 +5.3%
  
• Russell 1000: Growth/Value 17,872.9 +1.98%
  
• 1-Day Vix 12.3 -28.5%
  
• Vix 17.2 -1.3%
  
• Total Put/Call .97 -7.6%
• TRIN/Arms 1.23 +14.0%
  

Monday Watch

Today's Headlines

Bloomberg:

• Water Bills to Rise 35% By 2030 in England To Fund Investment.
• Autonomous Driving Remains a Distant Reality in Japan.
• US Stock Futures Gain After Spending Deal Reached: Markets Wrap.
• Congress Averts US Government Shutdown Hours Before Deadline.
• Biden Presses McCarthy to Deliver Ukraine Aid Omitted in Bill.
• Traders Win Reprieve After ‘Political Circus’ of Shutdown Fight.
• Aging Trees Show a Crisis Looms for the World’s Everything Oil.
• Macau Casinos Revenue Growth Slows Before Golden Week Holiday.
• Microsoft’s Nadella to Testify at Google Antitrust Trial Monday.
• Why a US Recession Is Still Likely — and Coming Soon.

Zero Hedge:

• "This Is Personal": McCarthy Hits Back After Gaetz Removal Threat.
• AOC Defends Lawmaker Who Pulled Fire Alarm To 'Open Door' And Totally Not Disrupt The Democratic Process.
• For Some, Open Border Chaos Is The Goal.
• Canada To Create Registry Of Podcasters In Potential Censorship Initiative . 
• Weekend News Round Up - Newsquawk Asia-Pac Market Open.
• 20th Busload Of Illegal Immigrants Arrives In Downtown Los Angeles.
• Trump Receives Cheers From CA Crowd After Arguing In Favor Of Shooting Looters.
• "Who Do Americans Think They Are?" Charles Nenner Warns "It's Over, They Can't Rule The World Anymore".
• "Premiums Are Going Nuts Everywhere": Plunging US Supply Sends Oil Prices Around The World Soaring.
• Over 277,000 'Vaccinated' COVID-19 Cases Hidden By CDC In 2021: Newly Obtained Files Show.
• "These Morons Are Pushing Us Towards WW3": Sunak Backtracks After UK Defense Chief Wants To Send British Troops To Ukraine.
• Trump Sues Christopher Steele Over Hoax Dossier.
• Smart Borrowing Has Made Mo "Path Of Least Resistance Is Higher": Hedge Fund Short Selling Ends As Stocks Are Bought For First Time In 4 Weeks: Goldman PB netary Policy "Laggier".
• Homes Are "Unaffordable" In 99% Of US Counties.
• RFK Jr. Could Make Announcement On Run As Independent On Oct. 9.
• Class-Action Lawsuit Filed Against Remdesivir Manufacturer Over Alleged Deceptive Practices.
• Slovakia May Stop Backing Ukraine War After Populist Election Win.
• Hunter Biden's Daughter Was Living In White House While Representing Peruvian Government.
• Russia's Military Budget Set To Rise By 70%.
• "More Deceit": Gaetz Rages Over McCarthy-Ukraine Side Deal To Pass Stopgap.
• Anthropology Session On Importance Of Biological Sex Canceled To Appease LGBT Advocates.
• US Dominates World University Rankings.
• A Climate Of Fear.
• 11 Assumptions About The Future.
• Is The US Military Laying The Groundwork To Reinstitute The Draft?
• Victor Davis Hanson Blasts "The Most Politicalized & Weaponized 4-Star Chairman Of The Joint Chiefs Ever".
• What Is The Top Priority Or Number One Concern Of Most Americans?
• Satanic Pedophile Extortion Cult Uncovered By FBI After NY Arrest.
• TME Weekend: Some things are as neutral as they get.
• Time To End The Fed And Its Mismanagement Of Our Economy.
• Turley: Ten Reasons Why The Biden Impeachment Inquiry Is Justified. 
• GM, Ford CEOs Blast UAW Boss As Strikes Expand.
• 10 Numbers Which Prove That The US Economy Has Hit A Major Pivot Point. 
• COVID-19 Vaccine Found In The Hearts Of Dead People: Study.
• Parents, Teachers Start Winning Court Battles Against Secret Gender Transition Policies.

Wall Street Journal:

• The U.S. Military’s Weighty Challenge: ‘Skinny-Fat’ Recruits
• How ‘Preapproved Narratives’ Corrupt Science. Especially in climate and Covid research, abuse of peer review and self-censorship abound.
• New Interest-Rate Regime Rewrites Investing Playbook.
• PG&E’s $6 Billion Plan to Prevent Wildfires Is in Peril.
• Why Consumers Are Mad About Inflation Even as It Has Fallen.
• Does China’s Property Bust Make a Financial Crisis Inevitable?
• Children Are Dying in Ill-Prepared Emergency Rooms Across America.
• The Star Witness at Sam Bankman-Fried’s Trial: His Top Deputy and Ex-Girlfriend.
• Another Tesla Cybertruck Sales Launch Date Comes and Goes.
• Small Business Bankruptcies Rising at Worst Pace Since Pandemic.

Barron's:

• Had bullish commentary on (GD) and (SOFI).

CNBC:

• Biden signs 45-day funding bill to keep government open
• Amazon customers report false email confirmations for gift cards
• Bill Ackman would ‘absolutely’ do a deal with X with his new funding vehicle
• Big Food vs. Big Pharma: Companies bet on snacking just as weight loss drugs boom.
• Biden says there’s ‘not much time’ to keep aid flowing to Ukraine and Congress must ‘stop the games’.
• Student loan bills resume for 40 million Americans. How it could shake the economy.
• How much money you need to make to be in the top 1% in every U.S. state.
• JetBlue raises flight attendant pay, union agrees to support merger with Spirit.
• Is the party over? New data suggests revenge travel may be ending soon.

Reuters:

• South Korea Sept exports fall at mildest pace in 12 months.
• China new home prices tick up in Sept, ending four-month decline - survey.

MarketWatch.com:

• Stock-market history suggests a potential fourth-quarter rally. Why this year looks different.

NewsMax:

• Speaker McCarthy Says 'Bring It On' After Rep. Gaetz Vows Notice to Vacate.
• GOP Outraged Over Bowman Pulling House Fire Alarm.

Fox News:

• Liberal policies accused of causing innocent people to be ‘hunted like prey’.
• Iran regime official reportedly admits Tehran role in terror attack that killed 241 Americans.
• Americans aren't shying away from their stance towards the new COVID vaccine.

TheGatewayPundit.com:

• Biden’s America: Illegal Immigrant Gang Kidnaps Three Girls, Including 11-Year-Old, in Northern Minnesota and Rapes and Tortures Them – Not Making Headlines.
• Breaking: Smer Party Wins Slovakian Elections – Russia-Friendly Robert Fico to Be Next PM – NATO Country Now Expected to Curtail Ukraine Assistance.
• NaziGate: Former SS Fighter Yaroslav Hunka’s Family Is in Hiding, Following Controversy Over His Honoring by Canadian Parliament. 
• House RINOs Reportedly Looking to Expel Matt Gaetz Based on the Findings from the Ongoing Ethics Committee Investigation: “We Want Him Out”. 
• The Border “Is Too Open”: Democrat New York Governor Kathy Hochul Becomes Immigration Hawk; Calls for Limiting Number of Migrants and “Doubling or Quadrupling” Border Patrol Agents. 
• Pope Francis Chooses 21 New Cardinals – Globalist Leader of Catholics Wants His Successor to Keep Church in the Controversial ‘Progressive’ Path He Chose.
• Michigan High School Student Faces Felony Charges After Throwing Metal Chair at Teacher (VIDEO).
• McCarthy Says He Doesn’t Want to Part of Republican Team After Passing Continuing Resolution.
• Justin Trudeau Moves to Regulate Podcasts and to Analyze and Track Content and Subscribers.
• Biden Lashes Out After People Begin Doubting COVID Shots.
• Dr. Scott Atlas: Politicians and Doctors Still Pushing COVID-19 Vaccines Are a Complete Disgrace (VIDEO).
• 75,000 Healthcare Workers Set to Go on Strike – Biggest Healthcare Strike In U.S. History.
• Greg Gutfeld Dings FOX and RNC for Including Univision in GOP Debate: ‘Worst Partnership Since Bud Light Hired Dylan Mulvaney’ (VIDEO).
• “Our Voters Deserve to Know Who is Selling Them Out” – Donald Trump Jr. Calls Out and Exposes “Senate RINOs” for Pushing Billions More in Ukraine Funding.
• Senate Votes 88-9 to Avert Shutdown, Only 9 Republican Senators Vote Against Stop-Gap Spending Bill that Funds All of Democrat Policies to Destroy America.
• Tennessee Will Airdrop Vaccines from Helicopters and Small Planes to Combat Spread of Rabies.
• The Definition of Gaslighting: Old Joe Biden Lays Out Democrat’s Tyrannical Plan for America – Then Blames It on Republicans and Calls MAGA the Greatest Threat to Our Nation (VIDEO).

The Epoch Times:

• Wuhan Institute of Virology's 'Batwoman' Shi Zhengli Says Another COVID-19 Outbreak 'Highly Likely’.
• Japanese Companies Are Leaving China to De-risk.
• Communist China's Orwellian 'Global Community With a Shared Future'.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 986,103 Reports(+2,130 from prior week) Through September 15th, 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 indices are -.25% to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 127.75 -.75 basis point.
  
• China Sovereign CDS 82.75 +.75 basis point.
• China Iron Ore Spot 119.5 USD/Metric Tonne -.09%.
  
• Bloomberg Emerging Markets Currency Index 41.7 -.04%.
• Bloomberg Global Risk-On/Risk Off Index 73.0 +5.8%.
• Bloomberg US Financial Conditions Index .10 +3.0 basis points. 
  
• Volatility Index(VIX) futures 17.8 -2.4%. 
• Euro Stoxx 50 futures +.38%.
• S&P 500 futures +.54%.
• NASDAQ 100 futures +.71%.

Morning Preview Links

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