Stocks Higher into Final Hour on Lower Long-Term Rates, More Massive US Deficit Spending Expectations, Short-Covering, Alt Energy/Transport Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Sector Rising
  

• Volume: Around Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 17.0 -4.2%
• DJIA Intraday % Swing .87% -59.3%
  
• Bloomberg Global Risk On/Risk Off Index 71.7 +1.4%

• Euro/Yen Carry Return Index 167.8 +.46%

• Emerging Markets Currency Volatility(VXY) 8.9 -.23%

• CBOE S&P 500 Implied Correlation Index 24.5 -4.6% 

• ISE Sentiment Index 104.0 +13.0 points
  

• Total Put/Call .88 -18.5%

• NYSE Arms .66 -40.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 74.1 -1.6%
  

• US Energy High-Yield OAS 352.6 -1.2%
• Bloomberg TRACE # Distressed Bonds Traded 380 unch.
  

• European Financial Sector CDS Index 95.2 -5.3% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 314.4 -4.7%
  

• Italian/German 10Y Yld Spread 195.0 basis points -11.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 129.9 -3.8%
  

• Emerging Market CDS Index 228.09 -1.6%
• Israel Sovereign CDS 97.3 +4.5%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.8 +.6%

• 2-Year SOFR Swap Spread -10.5 basis points -.5 basis point
  

• TED Spread 18.5 basis points +2.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -30.25 +.25 basis point
  
• MBS  5/10 Treasury Spread 180.0 +2.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 909.0 unch.
  
• Avg. Auto ABS OAS 82.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.25 +.24%
• 3-Month T-Bill Yield 5.48% -2.0 basis points
  

• China Iron Ore Spot 111.8 USD/Metric Tonne  +.9%
• Dutch TTF Nat Gas(European benchmark) 49.5 euros/megawatt-hour +12.5%

• Citi US Economic Surprise Index 56.8 -1.5 points

• Citi Eurozone Economic Surprise Index -39.3 +1.1 points

• Citi Emerging Markets Economic Surprise Index 12.3 -.7 point
• S&P 500 Current Quarter EPS Growth Rate YoY(21 of 500 reporting) +4.9% +1.5 percentage points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 240.13 +.02:  Growth Rate +9.2% unch., P/E 18.3 +.4
  
• S&P 500 Current Year Estimated Profit Margin 12.19% unch.
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 266.66 +.97: Growth Rate +57.3% -2.9 percentage points, P/E 29.1 +.5
  
• Bloomberg US Financial Conditions Index -.02 -9.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index -1.03 -93.0 basis points
  
• US Yield Curve -32.75 basis points (2s/10s) -4.25 basis points
  
• US Atlanta Fed 2Q GDPNow Forecast +4.86% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.73% unch.: CPI YoY +3.69% unch.
  
• 10-Year TIPS Spread 2.32 unch.
  
• Highest target rate probability for Dec. 13th FOMC meeting: 72.5%(-2.4 percentage points) chance of 5.25%-5.5%. Highest target rate probability for Jan. 31st meeting: 69.6%(+1.1 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +139 open in Japan 
• China A50 Futures: Indicating +108 open in China

• DAX Futures: Indicating +79 open in Germany

Portfolio:

• Higher:  On gains in my industrial/tech/commodity/transport/medical sector longs
  

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my emerging market shorts
  

• Market Exposure: Moved to 75% Net Long
  

Bear Radar

Style Underperformer:

• Mid-Cap Value +1.0%
  

Sector Underperformers:

• 1) Insurance -.2% 2) Software -.1% 3) Computer Services unch.

Stocks Falling on Unusual Volume: 

• VRNA, PKX, KRNT, WLY, VTYX, GRPN and AKRO
  

Stocks With Unusual Put Option Activity:

• 1) GRPN 2) WBD 3) VRT 4) AKRO 5) PZZA
  

Stocks With Most Negative News Mentions:

• 1) VTYX 2) ETNB 3) AKRO 4) QRVO 5) TPR
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.8%
  

Sector Outperformers:

• 1) Alt Energy +6.3% 2) Airlines +2.9% 3) Digital Health +2.5%

Stocks Rising on Unusual Volume:

• PGTI, RUN, COHR, AEHR, BILI, ACMR, NEP, CYTK, WOLF, SMCI, WW, H, FVRR, BALY, TFC, CRS, FUTU, CAMT, FSLR, AY, SQ, BEP, GFI, ENV, INMD, SEDG, MMYT, SCS, NEE, GPCR, AGR, KTOS and U
  

Stocks With Unusual Call Option Activity:

• 1) EWG 2) TUP 3) STNE 4) TECK 5) PEP

Stocks With Most Positive News Mentions:

• 1) INTZ 2) PGTI 3) H 4) TFC 5) VLD
  

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:

• None of note
  

After the Close: 

• None of note
  

Economic Releases  

8:30 am EST:

• PPI Final Demand MoM for Sept. is estimated to rise +.3% versus a +.7% gain in Aug.
• PPI Ex Food and Energy MoM for Sept. is estimated to rise +.2% versus a +.2% gain in Aug.
  

10:30 am EST

• Weekly EIA energy inventory data.

2:00 pm EST

• The Sept. 20th FOMC Meeting Minutes.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Fed's Waller speaking, Fed's Bowman speaking, 10Y T-Note auction, weekly MBA Mortgage Applications report and the (WOR) investor day 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 -6.5% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 9.2 +.3
  
• 0 Sectors Declining, 11 Sectors Rising
• 82.3% of Issues Advancing, 15.7% Declining
• 39 New 52-Week Highs, 15 New Lows
• 38.2%(+8.4%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.0 +12.0
  
• Bloomberg Global Risk-On/Risk-Off Index 71.6 +1.3%
  
• Russell 1000: Growth/Value 18,104.8 +.03%
  
• 1-Day Vix 12.1 -19.7%
  
• Vix 16.6 -6.2%
  
• Total Put/Call .89 -17.6%
• TRIN/Arms .50 -54.5%
  

Tuesday Watch

Evening Headlines

Bloomberg:

• A Fractured Israel Unites Around a Singular Goal: Crush the Enemy
• Israel Latest: First Round of US Security Aid Is on the Way.
• Larry Summers ‘Sickened’ by Harvard’s Silence Over Attack on Israel. 
• Chinese Copper Tycoon Goes Missing, Believed to Be Detained by Police.
• Asia Stocks Gain With Treasuries on Rate Optimism: Markets Wrap. 
• Oil Holds Biggest Gain in Six Months Amid Middle East Tension.
• Treasuries Jump on Dovish Fed Comments, Middle East Conflict.
• Treasury’s Debt Deluge Is Finally Straining US Funding Markets.
• Some US Tech Investors Pledge Support to Israel Relief Efforts.
• FBI Is Searching for Americans After Hamas Attacks on Israel.
• Robert F. Kennedy Jr. Is Running for President as an Independent.
• Global PC Shipments Fall 9% in Quarter Seen as Bottom for Market.

Zero Hedge:

• Over 100 Bodies Found In Israeli Kibbutz; Biden Confirms 11 Americans Killed & "Likely" More In Captivity.
• In US, Concern Over An Increasing Number Of Boy Victims Of Human Trafficking.
• "A Real Trend": Trump Now Ahead Of Biden In Key Battleground States According To Polls.
• US Gives More Than $4.1 Billion In Grants For LGBT Initiatives Worldwide.
• McCarthy Would Entertain Return As Speaker In GOP Deadlock.
• What If UFOs Have Been A Cover For High-Tech Human Defense Research Programs?
• Rabies Vaccines Airdropped From Planes Throughout The Southeastern States In October.
• Thoughts On Proclamation 7463, Or "Digital McCarthyism" On The Move.
• Dovish Fed rhetoric helped stocks recover the initial losses triggered by the Israel conflict - Newsquawk Asia-Pac Market Open.
• Smith & Wesson Celebrates New Tennessee Headquarters After Ditching Massachusetts.
• The Welfare-Warfare State's War On Income And Savings.
• Desperate Disneyland Slashes Children's Ticket Prices By More Than 50%.
• Victor Davis Hanson: Israel, Our White-House Absurdities, & The Left's Empire Of Lies.
• The Costs Of The Afghanistan Withdrawal Debacle.
• OPEC Says Oil Industry Needs $14 Trillion Of Investment By 2045.
• Stocks and dollar reverse initial geopolitical reaction on dovish Fed speak - Newsquawk US Market Wrap.
• Stocks, Bonds, Gold And Oil Soar As Dovish Fed Comments Trample Israel War Fears.

Wall Street Journal:

• How Biden’s Policy Enriched Iran. Failure to enforce oil sanctions has helped Tehran finance Hamas.
• Israel’s Hostage Crisis Deepens With Execution Threat
• Oil Climbs as Israel-Hamas War Rattles Energy Markets
• Schools Cut Honors Classes to Address Racial Equity. It Isn’t a Quick Fix.
• Home Depot Tracked a Crime Ring and Found an Unusual Suspect.
• Not Your Father’s Shoplifters. Criminals get bolder as American cities abandon broken-windows policing. 
• Big Tech Struggles to Turn AI Hype Into Profits. 

CNBC.com:

• Consumers starting to buckle for first time in a decade: Former Walmart U.S. CEO.
• Israel mobilizes a record 300,000 reservists; Gaza under ‘complete siege’.
• Pentagon pushing U.S. defense industry to bolster Israel in fight against Hamas.

MarketWatch.com:

• An Israel-Hamas war could change what the Fed does about interest rates.
• Treasury-market selloff has become the worst bond bear market of all time, according to BofA.
• Birkenstock IPO expected to prove the next test of investor appetite for deals.

Newsmax:

• Survivors Recount Terror of Massacre at Music Festival.
• US Says Americans Likely Held by Hamas After 'ISIS-Level Savagery'.
• Harvard Students Hit for Blaming Israel.
• Poll: Republicans Want Speaker Loyal to Trump.
• Biden Urged to Freeze $6B to Iran Over Attack Role.

Fox News:

• Radical NYC protesters blame Israel for deadly Hamas terror.
• Barack Obama breaks silence on Hamas terrorist attacks against Israel.

TheGatewayPundit.com:

• Victor Reacts: What an Embarrassment! Joe Biden Takes Day Off as Hamas Threatens to Execute Civilians (VIDEO)
• Private Group Is Headingto Israel to Rescue Americans: “The Biden Administration Refuses to Protect Its Own People” (Video)
• Chicago Area Mom And Daughter Missing In Israel – Feared Kidnapped By Hamas Terrorists
• Hezbollah High Command Releases Video Warning Israel, “We Are Coming”
• California County Ordered to Pay $85,000 for Unlawfully Withholding 2020 “Boring” Public Election Records.
• IT BEGINS: Iraqi Forces Issue Stark Warning: U.S. Will Become a Legitimate Target if It Intervenes in Palestine.
• Election Results in Riverside County, California Are Illegitimate After Activities Went Against State Code for Years.
• BOOM! President Trump: “Frankly His Boss, Barack Hussein Obama–I Think it’s His Boss!” – Trump Tells New Hampshire Crowd That Obama is Controlling Biden (VIDEO).
• “The American People Aren’t Stupid, They Know What Happened”: Trump National Security Advisor Robert O’Brien Blasts Biden Admin for Denying $6 Billion Ransom Paid to Iran Aided Hamas Attack on Israel (Video).
• JUST IN: Hamas Terrorists Threaten Mass Execution of Civilian Hostages (Including Americans) on Live TV as Joe Biden Takes the Rest of Monday Off (VIDEO).
• SICKENING: Hamas Savages Chop Off the Heads of Israeli Soldiers (VIDEO).
• Internal Canadian Broadcasting Corporation Memo: ‘Don’t Refer to Hamas as Terrorists’.
• BREAKING: Robert F. Kennedy Jr. Officially Announces He’s Running as an Independent (VIDEO).
• PURE EVIL: Hamas Barbarians Call the Mother of Two Beautiful Israeli Sisters They Kidnapped at Dance Party to Taunt Her.
• MUST SEE: Aussie Reporter Sharri Markson Breaks Down Crying on Air Over Barbarity of Hamas Attacks in Israel (VIDEO). 
• BREAKING: At Least Nine Americans Slaughtered by Hamas Terrorists in Israel UPDATE: Total Rises to at Least 11.

The Epoch Times:

• Western Business Fed Up With China.
• ANALYSIS: Sudden Hamas Attack on Israel May Be Used by CCP to Distract West's Attention: Expert.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 987,217 Reports(+1,799 from prior week) Through September 22nd, 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 +.25% to +1.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 132.5 -2.75 basis points

• China Sovereign CDS 89.75 +2.5 basis points.
  
• China Iron Ore Spot 110.7 USD/Metric Tonne -1.5%.

• Bloomberg Emerging Markets Currency Index 41.2 +.01%
• Bloomberg Global Risk-On/Risk Off Index 70.6 -.09%. 
• Bloomberg US Financial Conditions Index -.06 -13.0 basis points.
  
• Volatility Index(VIX) futures 18.2 -.14%.
• Euro Stoxx 50 futures +.87%.

• S&P 500 futures +.09%.

• NASDAQ 100 futures +.17%.  

Morning Preview Links

BOTTOM LINE: Asian indices are modestly higher, boosted by commodity and industrial 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.