Stocks Substantially Lower into Final Hour on Diminishing US Economic "Soft-Landing" Hopes, Surging Long-Term Rates, Rising European/Emerging Markets/US High-Yield Debt Angst, Tech/Homebuilding Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Sector Declining
  

• Volume: Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 19.9 +13.0%
• DJIA Intraday % Swing 1.24% +42.2%
  
• Bloomberg Global Risk On/Risk Off Index 71.6 -2.3%

• Euro/Yen Carry Return Index 165.96 -.63%

• Emerging Markets Currency Volatility(VXY) 8.67 +.93%

• CBOE S&P 500 Implied Correlation Index 28.9 +7.7% 

• ISE Sentiment Index 86.0 -8.0 points
  

• Total Put/Call 1.08 -.92%

• NYSE Arms .76 -29.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 77.6 +4.1%
  

• US Energy High-Yield OAS 350.77 +4.0%
• Bloomberg TRACE # Distressed Bonds Traded 349 +4
  

• European Financial Sector CDS Index 96.09 +3.1% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 319.90 +2.6%
  

• Italian/German 10Y Yld Spread 197.0 basis points +9.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 129.36 +1.2%
  

• Emerging Market CDS Index 242.2 +4.1%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.75 unch.

• 2-Year SOFR Swap Spread -8.75 basis points -1.0 basis point
  

• TED Spread 16.5 basis points -4.75 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -31.5 +4.0 basis points
  
• MBS  5/10 Treasury Spread 182.0 +4.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 915.0 +5.0 basis points
  
• Avg. Auto ABS OAS 81.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.3 -.5%
• 3-Month T-Bill Yield 5.48% +1.0 basis point
  

• China Iron Ore Spot 115.6 USD/Metric Tonne -.92%
• Dutch TTF Nat Gas(European benchmark) 36.9 euros/megawatt-hour -6.0%

• Citi US Economic Surprise Index 46.0 -1.3 points

• Citi Eurozone Economic Surprise Index -50.6 -.8 point

• Citi Emerging Markets Economic Surprise Index 12.7 +.3 point
• S&P 500 Current Quarter EPS Growth Rate YoY(17 of 500 reporting) +1.4% -.1 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 240.67 +.17:  Growth Rate +9.6% +.2 percentage point, P/E 17.6 -.2
  
• S&P 500 Current Year Estimated Profit Margin 12.25% +2.0 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 264.45 +.14: Growth Rate +59.5% +.1 percentage point, P/E 27.8 -.3
  
• Bloomberg US Financial Conditions Index -.03 -15.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index -.12 -6.0 basis points
  
• US Yield Curve -34.75 basis points (2s/10s) +8.0 basis points
  
• US Atlanta Fed 2Q GDPNow Forecast +4.87% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.73% unch.: CPI YoY +3.69% unch.
  
• 10-Year TIPS Spread 2.35 unch.
  
• Highest target rate probability for Dec. 13th FOMC meeting: 53.6%(-.4 percentage point) chance of 5.25%-5.5%. Highest target rate probability for Jan. 31st meeting: 53.6%(-.4 percentage point) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -498 open in Japan 
• China A50 Futures: Indicating -112 open in China

• DAX Futures: Indicating +126 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 25% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Growth -1.6%
  

Sector Underperformers:

• 1) Alt Energy -2.7% 2) Homebuilding -2.7% 3) Software -2.2%

Stocks Falling on Unusual Volume: 

• OCSL, CWEN/A, BUR, FSK, PARA, PAGP, AY, AWK, BEPC, TREX, SPHR, CSWC, AKR, ENPH, TCOM, ROIV, CVBF, BHVN, GME, VLO, ASAN, OMF, ALGM, SNDX, NVO, AES, ABNB, ARR, SNDX, SMCI, RUN, BALY, LPG, MRUS, NXT, GRPN, NEP,. W, ELF, HASI, MKC, ARRY and ENVX
  

Stocks With Unusual Put Option Activity:

• 1) ASHR 2) ARKG 3) SABR 4) ZION 5) ANF
  

Stocks With Most Negative News Mentions:

• 1) SDC 2) EHAB 3) WE 4) APLD 5) MKC
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value -1.4%
  

Sector Outperformers:

• 1) Gold & Silver +1.0% 2) Road & Rail +.5% 3) Oil Service unch.

Stocks Rising on Unusual Volume:

• PNT, KYMR, MORF, LNTH and WRBY
  

Stocks With Unusual Call Option Activity:

• 1) URTY 2) CAG 3) COMM 4) CNK 5) SDC

Stocks With Most Positive News Mentions:

• 1) SCU 2) SYNA 3) OMH 4) SLE 5) JCSE
  

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:

• (ANGO)/-.13
• (HELE)/1.64
• (RPM)/1.55
• (TLRY)/-.05
  

After the Close: 

• (RGP)/.16
• (AYI)/3.73
  

Economic Releases  

8:15 am EST

• The ADP Employment Change for Sept. is estimated to fall to 150K versus 177K in Aug.
  

9:45 am EST

• The S&P Global US Composite PMI revisions for Sept.

10:00 am EST

• Factory Orders for Aug. is estimated to rise +.3% versus a -2.1% decline in Sept.  
• Factory Orders Ex Transports for Aug. is estimated to rise +.2% versus a +.8% gain in Sept.
• Durable Goods Orders revisions for Aug. 
• ISM Services Index for Sept. is estimated to fall to 53.5 versus 54.5 in Aug.
• ISM Prices Paid for Sept.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Fed's Bowman speaking, China Services PMI report, OPEC meeting, weekly MBA Mortgage Applications report, (ONON) investor day and the (OKTA) investor conference 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 -1.5% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 9.1 +.4
  
• 11 Sectors Declining, 0 Sectors Rising
• 14.0% of Issues Advancing, 84.2% Declining
• 7 New 52-Week Highs, 333 New Lows
• 32.7%(-5.4%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 24.0 -5.0
  
• Bloomberg Global Risk-On/Risk-Off Index 71.5 -2.4%
  
• Russell 1000: Growth/Value 17,773.9 -.54%
  
• 1-Day Vix 14.4 -1.9%
  
• Vix 19.8 +12.4%
  
• Total Put/Call 1.04 -7.1%
• TRIN/Arms 1.23 +14.0%
  

Tuesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 127.75 unch. 

• China Sovereign CDS 84.5 +1.75 basis points.
  
• China Iron Ore Spot 117.5 USD/Metric Tonne -.68%.

• Bloomberg Emerging Markets Currency Index 41.5 unch.
• Bloomberg Global Risk-On/Risk Off Index 73.3 +.07%. 
• Bloomberg US Financial Conditions Index 9.0 +4.0 basis points.
  
• Volatility Index(VIX) futures 17.4 -.1%.
• Euro Stoxx 50 futures unch.

• S&P 500 futures -.03%.

• NASDAQ 100 futures -.02%.  

Morning Preview Links

BOTTOM LINE: Asian indices are modestly lower, weighed down by commodity and financial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed.  The Portfolio is 50% net long heading into the day.