Stocks Reversing Lower into Afternoon on Mid-East Regional War Worries, Rising US Consumer Inflation Fears, Oil Surge, Tech/Regional Bank 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) 19.9 +19.4%
• DJIA Intraday % Swing 1.08% +73.3%
  
• Bloomberg Global Risk On/Risk Off Index 68.3 -5.3%

• Euro/Yen Carry Return Index 167.3 -.4%

• Emerging Markets Currency Volatility(VXY) 8.5 -.9%

• CBOE S&P 500 Implied Correlation Index 27.7 +16.8% 

• ISE Sentiment Index 108.0 +18.0 points
  

• Total Put/Call .97 -9.4%

• NYSE Arms .85 -25.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 76.1 +2.1%
  

• US Energy High-Yield OAS 356.05 +.43%
• Bloomberg TRACE # Distressed Bonds Traded 356 +18
  

• European Financial Sector CDS Index 98.02 +3.9% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 300.95 +.95%
  

• Italian/German 10Y Yld Spread 204.0 basis points +6.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 125.99 +1.12%
  

• Emerging Market CDS Index 237.54 +4.1%
• Israel Sovereign CDS 123.68 +11.4%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.89 unch.

• 2-Year SOFR Swap Spread -11.25 basis points -.5 basis point
  

• TED Spread 17.5 basis points +1.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -28.25 -1.75 basis points
  
• MBS  5/10 Treasury Spread 185.0 +3.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 912.0 -2.0 basis points
  
• Avg. Auto ABS OAS 85.0 -2.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.2 -.18%
• 3-Month T-Bill Yield 5.48% -2.0 basis points
  

• China Iron Ore Spot 114.7 USD/Metric Tonne  +.31%
• Dutch TTF Nat Gas(European benchmark) 54.0 euros/megawatt-hour +1.9%

• Citi US Economic Surprise Index 51.2 -4.7 points

• Citi Eurozone Economic Surprise Index -42.5 -3.8 points

• Citi Emerging Markets Economic Surprise Index 19.4 +2.5 points
• S&P 500 Current Quarter EPS Growth Rate YoY(32 of 500 reporting) +14.3% +8.5 percentage points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 239.98 -.04:  Growth Rate +9.2% unch., P/E 18.1 -.1
  
• S&P 500 Current Year Estimated Profit Margin 12.18% unch.
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 267.10 +.14: Growth Rate +57.6% +.1 percentage point, P/E 28.5 -.8
  
• Bloomberg US Financial Conditions Index -.03 -19.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index -.07 unch.
  
• US Yield Curve -43.0 basis points (2s/10s) -6.0 basis points
  
• US Atlanta Fed 2Q GDPNow Forecast +5.15% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.70% unch.: CPI YoY +3.42% unch.
  
• 10-Year TIPS Spread 2.35 +1.0 basis point
  
• Highest target rate probability for Dec. 13th FOMC meeting: 68.5%(+4.0 percentage points) chance of 5.25%-5.5%. Highest target rate probability for Jan. 31st meeting: 68.5%(+5.7 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -161 open in Japan 
• China A50 Futures: Indicating -41 open in China

• DAX Futures: Indicating +78 open in Germany

Portfolio:

• Slightly Higher:  On gains in my commodity sector longs, index hedges and emerging market shorts
  

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges
  

• Market Exposure: Moved to 25% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Growth -.9%
  

Sector Underperformers:

• 1) Semis -2.3% 2) Internet -1.8% 3) Gambling -1.7%

Stocks Falling on Unusual Volume: 

• GPRE, AMLX, BA, BIP, PNC, JD, SPHR, HRL, PERI, UCTT, MEOH, MORF, INMD, WCC, STRL, IDYA, TARS, SAVA, BDC, HRMY and SGH
  

Stocks With Unusual Put Option Activity:

• 1) GRAB 2) MBLY 3) JPM 4) SAVA 5) TAL
  

Stocks With Most Negative News Mentions:

• 1) SGH 2) BDC 3) HRMY 4) SAVA 5) PATH
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value +.3%
  

Sector Outperformers:

• 1) Gold & Silver +4.4% 2) Energy +2.4% 3) Oil Service +2.4%

Stocks Rising on Unusual Volume:

• RVMD, GRPN, VSAT, DG, PGR, TNDM, AVAV, CHEF, JPM and PXD
  

Stocks With Unusual Call Option Activity:

• 1) XP 2) IHI 3) PBR/A 4) JPM 5) GFI

Stocks With Most Positive News Mentions:

• 1) PSQH 2) CMTL 3) FRCB 4) PGR 5) IMVT
  

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Monday's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open:

• (SCHW)/.75

After the Close: 

• (ELS)/.72
  

Economic Releases  

8:30 am EST:

• Empire Manufacturing for Oct. is estimated to fall to -6.0 versus 1.9 in Sept.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Japan Industrial Production report, (JEF) investor meeting and the (SCHW) fall business udpate could also impact global on Monday.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• NYSE Volume Running -8.9% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 8.7 -.7
  
• 7 Sectors Declining, 4 Sectors Rising
• 43.7% of Issues Advancing, 53.4% Declining
• 17 New 52-Week Highs, 86 New Lows
• 33.5%(+.3%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 42.0 -3
  
• Bloomberg Global Risk-On/Risk-Off Index 69.1 -4.3%
  
• Russell 1000: Growth/Value 18,186.5 -.64%
  
• 1-Day Vix 16.5 +11.0%
  
• Vix 18.8 +12.8%
  
• Total Put/Call .85 -20.6%
• TRIN/Arms .85 -24.1%
  

Friday Watch

Night Trading 

• Asian equity indices are -1.25% to -.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 125.75 -1.25 basis points.

• China Sovereign CDS 83.25 +.25 basis point.
  
• China Iron Ore Spot 113.3 USD/Metric Tonne -1.1%.

• Bloomberg Emerging Markets Currency Index 41.2 -.10%
• Bloomberg Global Risk-On/Risk Off Index 73.6 +2.0%. 
• Bloomberg US Financial Conditions Index .09 -7.0 basis points.
  
• Volatility Index(VIX) futures 17.6 -.8%.
• Euro Stoxx 50 futures -.09%.

• S&P 500 futures +.11%.

• NASDAQ 100 futures +.14%.  

Morning Preview Links

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