Stocks Reversing Modestly Higher into Afternoon on Falling Fed Rate-Hike Odds, Lower Long-Term Rates, Dollar Weakness, Tech/Homebuilding Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 18.9 -4.4%
• DJIA Intraday % Swing .79% -36.6%
  
• Bloomberg Global Risk On/Risk Off Index 71.6 +.1%

• Euro/Yen Carry Return Index 166.6 +.35%

• Emerging Markets Currency Volatility(VXY) 8.9 +1.8%

• CBOE S&P 500 Implied Correlation Index 28.0 -2.9% 

• ISE Sentiment Index 99.0 +12.0 points
  

• Total Put/Call 1.17 +3.5%

• NYSE Arms 1.62 +126.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 77.79 +.7%
  

• US Energy High-Yield OAS 361.91 +3.4%
• Bloomberg TRACE # Distressed Bonds Traded 368 +19
  

• European Financial Sector CDS Index 98.46 +2.5% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 320.20 +.1%
  

• Italian/German 10Y Yld Spread 194.0 basis points -3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 134.2 +3.6%
  

• Emerging Market CDS Index 237.82 -1.9%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.65 -.15%

• 2-Year SOFR Swap Spread -8.5 basis points +.25 basis point
  

• TED Spread 18.0 basis points +1.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -29.75 +2.75 basis points
  
• MBS  5/10 Treasury Spread 183.0 +1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 913.0 -2.0 basis points
  
• Avg. Auto ABS OAS 81.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.2 unch.
• 3-Month T-Bill Yield 5.50% +2.0 basis points
  

• China Iron Ore Spot 115.2 USD/Metric Tonne -.27%
• Dutch TTF Nat Gas(European benchmark) 38.4 euros/megawatt-hour +3.9%

• Citi US Economic Surprise Index 50.3 +4.3 points

• Citi Eurozone Economic Surprise Index -48.0 +2.6 points

• Citi Emerging Markets Economic Surprise Index 16.5 +3.8 points
• S&P 500 Current Quarter EPS Growth Rate YoY(17 of 500 reporting) +1.4% unch.
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 239.88 -.79:  Growth Rate +9.1% -.5 percentage point, P/E 17.6 unch.
  
• S&P 500 Current Year Estimated Profit Margin 12.19% -6.0 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 264.76 +.31: Growth Rate +59.7% +.2 percentage point, P/E 28.1 +.3
  
• Bloomberg US Financial Conditions Index -.02 +2.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index -.19 -7.0 basis points
  
• US Yield Curve -30.75 basis points (2s/10s) +4.0 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 2.34 -1.0 basis point
  
• Highest target rate probability for Dec. 13th FOMC meeting: 64.2%(+10.9 percentage points) chance of 5.25%-5.5%. Highest target rate probability for Jan. 31st meeting: 61.9%(+8.5 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +80 open in Japan 
• China A50 Futures: Indicating -209 open in China

• DAX Futures: Indicating +137 open in Germany

Portfolio:

• Slightly Higher:  On gains in my tech/transport sector longs and emerging market shorts
  

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
  

• Market Exposure: Moved to 75% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Value +.1%
  

Sector Underperformers:

• 1) Oil Service -3.4% 2) Energy -3.3% 3) Gold & Silver -1.1%

Stocks Falling on Unusual Volume: 

• RVMD, SKM, ONON, RUN, LSCC, ODD, PBF, CALM, NFE, CABA, HELE and ATEN
  

Stocks With Unusual Put Option Activity:

• 1) ICLN 2) ZIM 3) CAG 4) GRAB 5) GOEV
  

Stocks With Most Negative News Mentions:

• 1) CALM 2) DISH 3) RUN 4) TRN 5) BGS
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +1.1%
  

Sector Outperformers:

• 1) Airlines +3.1% 2) Software +1.6% 3) Homebuilding +1.4%

Stocks Rising on Unusual Volume:

• NUVL, SFWL, ROAD, RIVN, AYI, RPM, CNM, SEDG, AMN, TSLA, PLTR, CLS, MLM, BOWL, CUK, ASML, HDB, CCL, SUM, FLR, WOLF, STM, SMCI, STNE, NCLH, AAL, MKTX, PCAR, ASAI, RELX, PAR and PPG
  

Stocks With Unusual Call Option Activity:

• 1) ICLN 2) EQT 3) BBIO 4) SCO 5) EMB

Stocks With Most Positive News Mentions:

• 1) PLTR 2) PXLW 3) AYI 4) BOF 5) FLR
  

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:

• (CAG)/.60
• (STZ)/3.37
• (LW)/1.08
  

After the Close: 

• (LEVI)/.27

Economic Releases  

7:30 am EST

• Challenger Job Cuts YoY for Sept.
  

8:30 am EST

• The Trade Balance for Aug. is estimated to shrink to -$59.8B versus -$65.0B in July.
• Initial Jobless Claims for last week is estimated to rise to 210K versus 204K the prior week.
• Continuing Claims is estimated to rise to 1671K versus 1670K prior.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Fed's Barr speaking, Eurozone trade data report, weekly EIA natural gas inventory report and the (DELL) analyst meeting 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 -6.3% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 8.1 -1.0
  
• 2 Sectors Declining, 9 Sectors Rising
• 55.6% of Issues Advancing, 41.6% Declining
• 6 New 52-Week Highs, 210 New Lows
• 31.5%(-1.5%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 24.0 unch.
  
• Bloomberg Global Risk-On/Risk-Off Index 72.1 +.9%
  
• Russell 1000: Growth/Value 17,949.1 +1.16%
  
• 1-Day Vix 13.5 -19.2%
  
• Vix 18.9 -4.5%
  
• Total Put/Call 1.15 +1.8%
• TRIN/Arms 1.23 +14.0%
  

Wednesday Watch

Evening Headlines

Bloomberg:

• Ray Dalio Says US-China Relations Are on the ‘Brink of Red Lines'.
• Hong Kong Banks Struggle to Sell Foreclosed Homes Even at 20% Discount.
• Dollar, China Imperil Asia Stocks’ Stellar Fourth-Quarter Record.
• Yen Surges From Weakest Level in a Year Amid Intervention Talk.
• Asia Stocks Under Pressure as Wall Street Slides: Markets Wrap. 
• Oil Steadies Ahead of OPEC+ Review and US Stockpiles Update.
• McCarthy Ouster Means More Turmoil as Next Shutdown Fight Looms.
• Here Are the Republicans in the Mix to Replace Kevin McCarthy. 
• Short Fast Food Credit Because of Ozempic, Barclays Says.
• Ford Sweetens Wage Offer in Proposal to Striking UAW Workers.
• Credit Markets Wobble as Fed Speak, Data Fan Rate-Hike Angst.
• Investors Find Little Reason to Buy Stocks as Rates Fears Spread.
• Panic Creeps Up as VIX Curves Invert for First Time Since March.

Zero Hedge:

• McCarthy Won't Seek Speaker Position In Re-Vote; Trump Nominated By Nehls
• "We're In The Middle Of A Revolution" - Victor Davis Hanson Warns Tucker: "The Next 12 Months Will Be The Most Explosive In History"
• Goldman Finally Admits The US Fiscal Horror, Warns Of Explosive Increase In Government Interest Costs
• IRS Hits MyPillow With Five Audits: Mike Lindell.
• Trump Campaign Asks RNC To Cancel All Future Debates.
• Mexico President Blasts US Billions To Ukraine As "Irrational" - Says Focus On Latin America.
• NY Judge Issues Gag Order After Trump Targets Clerk.
• Fatal NYC Stabbing Of Social-Justice Activist Caught On CCTV.
• Bankman-Fried Shows Up For Jury Selection Leaner And With A Haircut.
• Copper's Price Curve Hasn't Looked Like This In Decades.
• US stocks and bonds were sold after a spike in job openings - Newsquawk Asia-Pac Market Open.
• Ford, GM Layoff Another 500 Workers As Strikes Ripple Across Heartland. 
• The Geopolitical Forces Driving Today's Oil Market.
• India Orders 41 Canadian Diplomats Expelled In Latest Escalation.
• The 5 Stages Of America.
• WTI Holds Gains After API Reports Surprise Crude Draw, Cushing Build.
• Stocks and bonds tumble after surge in job openings precedes suspected Yen intervention - Newsquawk US Market Wrap.
• Goldman, JPMorgan Pull The Alarm: As Yields Soar "Risks Are Growing Of A Sharp, Impulsive, Negative Feedback Loop... There Will Be A Financial Accident".
• Please Stop Telling Us Everything Is Fine With The Economy; It Is Not.
• Juicy Jobs Data Slams Stocks, Sparks Bond Bloodbath & VIXplosion.
  

Wall Street Journal:

• Amazon Used Secret Algorithm to Raise Prices.
• Patrick McHenry of North Carolina Is Speaker Pro Tem.
• Republican leader falls after removal effort by party dissidents.
• Dow’s 2023 Gains Wiped Out as Bond Yields Rise.
• Ecuador Was a Retirement Paradise for Americans. Then the Drug Gangs Arrived.
• Tougher Return-to-Office Rules Aren’t Filling Buildings.
• Netflix Plans to Raise Prices After Actors Strike Ends.
• Americans’ Growing Reluctance to Quit Jobs.
• Wall Street Thinks America’s Homes Are Overvalued.

CNBC.com:

• Popular 30-year mortgage rate races toward 8% after hitting a high not seen since late 2000.
• Bond yields could race through 5% in next couple of weeks, Jim Bianco warns.
• Novavax updated Covid vaccine wins FDA, CDC backing, paving way to reach Americans within days.
• Bill Gross says the 10-year Treasury yield could test 5% in the short term.
• United Airlines buys 110 additional Boeing, Airbus jets with delivery slots scarce.
• Something is breaking in financial markets — Here’s what’s behind the sell-off.

MarketWatch.com:

• How Treasury market upheaval is rippling through global markets, in 4 charts.
• Banks are bracing for a recession as Treasury yields surge.
• U.S. dollar hits strongest level in nearly a year, heaping more pressure on stocks.
• Intel to spin off programmable solutions business in IPO over next few years.
• ‘Just like in 1987.’ Here’s what could deliver a ‘devastating blow’ to stocks, says SocGen strategist Albert Edwards.
• Supreme Court case on CFPB funding could have wider ramifications for mortgage borrowers.
  

Newsmax:

• Rep Luna: I'll Only Support Speaker Who Backs Biden Impeachment.
• McCarthy Out as Speaker, Won't Make an Attempt to Win Back the House Post.
• With McCarthy Out as Speaker. Here's What's Next.

Fox News:

• Aaron Rodgers gives Travis Kelce a new nickname after tight end teams up with Pfizer
• ‘Shell-shocked’ McCarthy confirms he will not run for speaker after ouster
• Tennis legend slams Biden admin's video with drag queen: 'Is this a joke?'

TheGatewayPundit.com:

• “I Think This Represents the Ripping Off of the Bandaid – To Get Back on Track” – Rep. Matt Gaetz Delivers Remarks Following Kevin McCarthy’s Removal as House Speaker (VIDEO).
• Lesbian Marxist Laphonza Butler of Maryland Sworn in to Replace Feinstein as California’s Newest Senator (VIDEO).
• BREAKING UPDATE: Kevin McCarthy REMOVED as Speaker of the House…. Here Are the Republicans Who Voted to Oust McCarthy
• BREAKING: Far-Left NY Judge Engoron Issues Gag Order in Trump Fraud Trial.
• UPDATE: Disturbing Video Released Showing the Tragic Fatal Stabbing of Leftist Activist Ryan Carson on NYC Street, Girlfriend Witnessed the Horror.
• Karine Jean-Pierre Blames Republicans After Democrat Congressman Carjacked in Democrat-Run DC (VIDEO).
• General Mike Flynn Warns 2024 May Be the Last Election We Have As a Republic.
• Tucker Carlson’s Story About the Russian Revolution Is Terrifying – Are We Living in a Similar Time?
• Democrat Rep. Henry Cuellar, Victim of Recent Carjacking, Previously Voted for Measures to Make it Easier to Defund Police – He Also Supported the George Floyd Justice in Policing Act.
• Pentagon Official Exposed: Department of Defense Deputy Chief Arrested for Running Dogfighting Ring for Over 20 Years.
• Here We Go: Marc Elias and National Democrats Sue Wisconsin to Block Absentee Voter Witness Requirements – Anything to Steal an Election!

The Epoch Times:

• Communist China's Orwellian 'Global Community With a Shared Future'.
• US Treasury Issues Sanctions Targeting China-Backed Fentanyl Entities, Individuals.
• CCP Threat in the Digital Space.

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 equity indices are -1.5% to -.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 130.0 +2.25 basis points

• China Sovereign CDS 87.75 +3.25 basis points.
  
• China Iron Ore Spot 115.6 USD/Metric Tonne -.96%.

• Bloomberg Emerging Markets Currency Index 41.2 -.03%
• Bloomberg Global Risk-On/Risk Off Index 71.5 -.01%. 
• Bloomberg US Financial Conditions Index -.08 -4.0 basis points.
  
• Volatility Index(VIX) futures 19.7 -.5%.
• Euro Stoxx 50 futures n/a.

• S&P 500 futures +.02%.

• NASDAQ 100 futures +.04%.  

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 modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 50% net long heading into the day.