Stocks Slightly Higher into Final Hour on Lower Long-Term Rates, Loosening US Financial Conditions, More Massive US Deficit Spending Expectations, REIT/Pharma Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 17.8 +4.2%
• DJIA Intraday % Swing .69% -21.3%
  
• Bloomberg Global Risk On/Risk Off Index 69.7 -2.4%

• Euro/Yen Carry Return Index 168.5 +.4%

• Emerging Markets Currency Volatility(VXY) 8.7 -1.5%

• CBOE S&P 500 Implied Correlation Index 24.5 -.08% 

• ISE Sentiment Index 110.0 +5.0 points
  

• Total Put/Call 1.21 +22.0%

• NYSE Arms 1.19 +61.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 74.2 -.31%
  

• US Energy High-Yield OAS 353.34 +.22%
• Bloomberg TRACE # Distressed Bonds Traded 338 -42
  

• European Financial Sector CDS Index 95.69 +.54% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 301.6 -4.2%
  

• Italian/German 10Y Yld Spread 195.0 basis points unch.
  

• Asia Ex-Japan Investment Grade CDS Index 128.3 -.93%
  

• Emerging Market CDS Index 229.08 +.22%
• Israel Sovereign CDS 100.9 +3.7%
  

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

• 2-Year SOFR Swap Spread -10.5 basis points unch.
  

• TED Spread 18.75 basis points +.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -26.5 +3.75 basis points
  
• MBS  5/10 Treasury Spread 179.0 -1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 913.0 +4.0 basis points
  
• Avg. Auto ABS OAS 86.0 +4.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.4 +.19%
• 3-Month T-Bill Yield 5.50% +2.0 basis points
  

• China Iron Ore Spot 112.1 USD/Metric Tonne  -.36%
• Dutch TTF Nat Gas(European benchmark) 46.1 euros/megawatt-hour -6.9%

• Citi US Economic Surprise Index 55.4 -1.4 points

• Citi Eurozone Economic Surprise Index -39.0 +.3 point

• Citi Emerging Markets Economic Surprise Index 13.5 +1.2 points
• S&P 500 Current Quarter EPS Growth Rate YoY(21 of 500 reporting) +4.9% unch.
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 240.04 +.09:  Growth Rate +9.2% unch., P/E 18.2 -.1
  
• S&P 500 Current Year Estimated Profit Margin 12.18% -1.0 basis point
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 266.76 +.10: Growth Rate +57.4% +.1 percentage point, P/E 28.9 -.2
  
• Bloomberg US Financial Conditions Index .10 +13.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index -.20 +83.0 basis points
  
• US Yield Curve -41.75 basis points (2s/10s) -9.0 basis points
  
• US Atlanta Fed 2Q GDPNow Forecast +5.15% +29.0 basis points
  

• 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: 72.1%(-.8 percentage point) chance of 5.25%-5.5%. Highest target rate probability for Jan. 31st meeting: 69.3%(-.6 percentage point) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +39 open in Japan 
• China A50 Futures: Indicating +139 open in China

• DAX Futures: Indicating +103 open in Germany

Portfolio:

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

• Disclosed Trades: Took profits in my medical longs and added utility longs
  

• Market Exposure: 75% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Growth -1.1%
  

Sector Underperformers:

• 1) Medical Equipment -4.4% 2) Digital Health -2.0% 3) Healthcare Providers -1.5%

Stocks Falling on Unusual Volume: 

• SUI, PD, SNX, SNN, BG, ALLY, ABT, NOG, XOM, HUBS, PAX, BSX, IE, INMD, SYK, FNA, PTLO, NEOG, ZBH, SWAV, VTYX, MLTX, DXCM, PEN, QTRX, BAX, INSP, TMDX, FMS, DVA and AKRO
  

Stocks With Unusual Put Option Activity:

• 1) PTEN 2) BAX 3) PXD 4) AMT 5) MDT
  

Stocks With Most Negative News Mentions:

• 1) DVA 2) BAX 3) SILK 4) ETWO 5) COIN
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.2%
  

Sector Outperformers:

• 1) Pharma +1.3% 2) Gold & Silver +1.2% 3) REITs +.8%

Stocks Rising on Unusual Volume:

• NCR, NTNX, SHLS, SYM, COHR, AMGN, LLY and AMC
  

Stocks With Unusual Call Option Activity:

• 1) PTEN 2) BAX 3) PXD 4) TEVA 5) AMT

Stocks With Most Positive News Mentions:

• 1) TUP 2) ADES 3) VOXX 4) SHCR 5) VINO
  

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:

• (CMC)/1.77
• (DAL)/1.96
• (DPZ)/3.31
• (FAST)/.50
• (WBA)/.69
  

After the Close: 

• (SGH)/.46
  

Economic Releases  

8:30 am EST:

• The CPI MoM for Sept. is estimated to rise +.3% versus a +.6% gain in Aug.
• The CPI Ex Food and Energy MoM for Sept. is estimated to rise +.3% versus a +.3% gain in Aug.
• Real Avg. Weekly Earnings YoY for Sept. 
• Initial Jobless Claims for last week are estimated to rise to 210K versus 207K the prior week.
• Continuing Claims are estimated to rise to 1676K versus 1664K prior.
  

2:00 pm EST

• The Monthly Budget Deficit for Sept. is estimated at -$141.5B versus -$429.8B in Aug.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Australia Unemployment report, 30Y T-Note auction, weekly EIA natural gas inventory report and the (HRL) 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 -1.6% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 8.6 -.6
  
• 5 Sectors Declining, 6 Sectors Rising
• 56.7% of Issues Advancing, 40.3% Declining
• 23 New 52-Week Highs, 29 New Lows
• 37.0%(-.1%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 45.0 -3.0
  
• Bloomberg Global Risk-On/Risk-Off Index 71.0 -1.8%
  
• Russell 1000: Growth/Value 18,249.4 +1.12%
  
• 1-Day Vix 13.4 -8.5%
  
• Vix 16.6 -2.7%
  
• Total Put/Call .86 -13.1%
• TRIN/Arms 1.66 +121.3%
  

Wednesday Watch

Night Trading 

• Asian equity indices are +.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 127.75 -4.75 basis points

• China Sovereign CDS 82.75 -7.0 basis points.
  
• China Iron Ore Spot 111.5 USD/Metric Tonne +.65%.

• Bloomberg Emerging Markets Currency Index 41.29 +.02%
• Bloomberg Global Risk-On/Risk Off Index 72.4 +1.3%. 
• Bloomberg US Financial Conditions Index .01 +5.0 basis points.
  
• Volatility Index(VIX) futures 17.7 +.53%.
• Euro Stoxx 50 futures n/a.

• S&P 500 futures +.06%.

• NASDAQ 100 futures +.15%.  

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 75% net long heading into the day.