Stocks Lower into Afternoon on Mid-East Regional War Fears, Tightening US Financial Conditions, Earnings Outlook Worries, Financial/Tech Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 20.7 -3.2%
• DJIA Intraday % Swing .66% -52.7%
  
• Bloomberg Global Risk On/Risk Off Index 67.0 -2.2%

• Euro/Yen Carry Return Index 169.2 +.2%

• Emerging Markets Currency Volatility(VXY) 8.42 unch.

• CBOE S&P 500 Implied Correlation Index 30.0 -4.3% 

• ISE Sentiment Index 95.0 unch.
  

• Total Put/Call 1.01 -6.5%

• NYSE Arms 1.04 +11.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 80.68 -.08%
  

• US Energy High-Yield OAS 381.72 +1.8%
• Bloomberg TRACE # Distressed Bonds Traded 351 -3
  

• European Financial Sector CDS Index 103.67 +3.6% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 308.94 +.66%
  

• Italian/German 10Y Yld Spread 204.0 basis points +3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 136.3 +1.5%
  

• Emerging Market CDS Index 243.3 -.9%
• Israel Sovereign CDS 137.02 +6.4%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.7 unch.

• 2-Year SOFR Swap Spread -12.25 basis points -.5 basis point
  

• TED Spread 21.5 basis points +5.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -25.75 +.25 basis point
  
• MBS  5/10 Treasury Spread 187.0 +2.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 905.0 -4.0 basis points
  
• Avg. Auto ABS OAS 87.0 +2.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.2 +.1%
• 3-Month T-Bill Yield 5.46% -1.0 basis point
  

• China Iron Ore Spot 113.3 USD/Metric Tonne -3.5%
• Dutch TTF Nat Gas(European benchmark) 51.1 euros/megawatt-hour +1.9%

• Citi US Economic Surprise Index 52.9 -1.4 points

• Citi Eurozone Economic Surprise Index -32.4 +2.3 points

• Citi Emerging Markets Economic Surprise Index 23.0 -.9
• S&P 500 Current Quarter EPS Growth Rate YoY(86 of 500 reporting) +2.2% +.3 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 240.28 -.07:  Growth Rate +9.3% unch., P/E 17.7 -.3
  
• S&P 500 Current Year Estimated Profit Margin 12.11% -1.0 basis point
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(2 of 10 reporting) -20.9%
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 267.31 -.35: Growth Rate +57.7% -.2 percentage point, P/E 27.5 -.8
  
• Bloomberg US Financial Conditions Index -.21 -6.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index -.26 +67.0 basis points
  
• US Yield Curve -16.75 basis points (2s/10s) +1.5 basis points
  
• US Atlanta Fed 2Q GDPNow Forecast +5.41% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.70% unch.: CPI YoY +3.36% unch.
  
• 10-Year TIPS Spread 2.47 -3.0 basis points
  
• Highest target rate probability for Dec. 13th FOMC meeting: 73.1%(+3.2 percentage points) chance of 5.25%-5.5%. Highest target rate probability for Jan. 31st meeting: 65.9%(+4.6 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -34 open in Japan 
• China A50 Futures: Indicating -89 open in China

• DAX Futures: Indicating +111 open in Germany

Portfolio:

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

• Disclosed Trades: None
  

• Market Exposure: Market Neutral
  

Bear Radar

Style Underperformer:

• Mid-Cap Growth -1.1%
  

Sector Underperformers:

• 1) Alt Energy -3.1% 2) Regional Banks -2.8% 3) Oil Service -2.0%

Stocks Falling on Unusual Volume: 

• TEAM, HSBC, JD, WBS, AXP, SNV, MTB, SDRL, ZS, MTZ, DNLI, OFIX, PANW, SNV, PLL, SGML, SDRL, BEAM, HLIT, DO, NET, SMCI, CSIQ, SIX, COLB, EH, BANR, GGAL, ALKT, DVA, FHN, PLTR, USB, PSFE, GNRC, KEY, ZION, HRMY, BHLB, EH, RUN, MNDY, FITB, CMA, PKX, TRUP, ORCL, HPE, SGH, JKS, APGE, WAL, FLNC, SHYF, ENPH and SEDG
  

Stocks With Unusual Put Option Activity:

• 1) ROST 2) ADM 3) RF 4) ISRG 5) ASHR
  

Stocks With Most Negative News Mentions:

• 1) SEDG 2) ENPH 3) RF 4) RUN 5) HPE
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value -.4%
  

Sector Outperformers:

• 1) Road & Rail +.5% 2) Gold & Silver +.4% 3) Education +.3%

Stocks Rising on Unusual Volume:

• KNX, EEFT, BOWL and SMTC
  

Stocks With Unusual Call Option Activity:

• 1) VGK 2) RF 3) ACWI 4) SEDG 5) FITB

Stocks With Most Positive News Mentions:

• 1) KNX 2) LIPO 3) EEFT 4) BOWL 5) ALV
  

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:

• (BOH)/.97

After the Close: 

• (BRO)/.62
• (CDNS)/1.20
• (CALX)/.36
• (CLS)/.60
• (CLF)/.43
• (CR)/.87
• (CCK)/1.73
• (HXL)/.43
• (PKG)/1.93
• (AAN)/.07
  

Economic Releases  

8:30 am EST:

• The Chicago Fed National Activity Index for Sept. is estimated to rise to -.01 versus -.16 in Aug.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Australia PMI report and the (STLA) business update could also impact global trading on Monday.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Morning Market Internals

NYSE Composite Index:

• NYSE Volume Running +4.2% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 6.3 -2.5
  
• 8 Sectors Declining, 3 Sectors Rising
• 33.6% of Issues Advancing, 63.1% Declining
• 4 New 52-Week Highs, 280 New Lows
• 29.1%(-3.1%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 36.0 -5
  
• Bloomberg Global Risk-On/Risk-Off Index 66.3 -3.2%
  
• Russell 1000: Growth/Value 17,911.6 -.56%
  
• 1-Day Vix 17.3 -15.4%
  
• Vix 21.5 +.4%
  
• Total Put/Call .98 -9.3%
• TRIN/Arms 1.08 +16.1%
  

Friday Watch

Night Trading 

• Asian equity indices are -1.75% to -.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 135.5 +2.75 basis points.

• China Sovereign CDS 86.5 +3.0 basis points.
  
• China Iron Ore Spot 115.4 USD/Metric Tonne -1.3%.

• Bloomberg Emerging Markets Currency Index 41.13 -.07%
• Bloomberg Global Risk-On/Risk Off Index 70.3 +2.4%. 
• Bloomberg US Financial Conditions Index -.19 -4.0 basis points.
  
• Volatility Index(VIX) futures 20.7 +.51%.
• Euro Stoxx 50 futures -.93%.

• S&P 500 futures -.22%.

• NASDAQ 100 futures -.33%.  

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 mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is Market Neutral heading into the day.