Friday Watch

Night Trading 

• Asian equity indices are -.25% to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 138.75 +2.25 basis points.

• China Sovereign CDS 84.25 +.5 basis point.
  
• China Iron Ore Spot 116.2 USD/Metric Tonne -.77%.

• Bloomberg Emerging Markets Currency Index 41.22 +.01%
• Bloomberg Global Risk-On/Risk Off Index 66.3 +2.60%. 
• Bloomberg US Financial Conditions Index -.30 +1.0 basis point.
  
• Volatility Index(VIX) futures 20.2 -1.9%.
• Euro Stoxx 50 futures +.07%.

• S&P 500 futures +.41%.

• NASDAQ 100 futures +.61%.  

Morning Preview Links

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

Stocks Falling into Final Hour on Mid-East Regional War Fears, Earnings Outlook Jitters, Tightening US Financial Conditions, Tech/Energy Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 20.6 +2.1%
• DJIA Intraday % Swing .92% +9.0%
  
• Bloomberg Global Risk On/Risk Off Index 64.4 -.7%

• Euro/Yen Carry Return Index 169.4 +.06%

• Emerging Markets Currency Volatility(VXY) 8.44 +.48%

• CBOE S&P 500 Implied Correlation Index 32.3 +1.3% 

• ISE Sentiment Index 111.0 +15.0
  

• Total Put/Call 1.05 -12.5%

• NYSE Arms .87 +22.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 80.4 +.4%
  

• US Energy High-Yield OAS 3711.53 +1.2%
• Bloomberg TRACE # Distressed Bonds Traded 342 +13
  

• European Financial Sector CDS Index 103.09 +2.4% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 297.60 unch.
  

• Italian/German 10Y Yld Spread 201.0 basis points -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 138.6 +3.1%
  

• Emerging Market CDS Index 238.8 +.03%
• Israel Sovereign CDS 144.17 +1.1%
  

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

• 2-Year SOFR Swap Spread -11.0 basis points -.25 basis point
  

• TED Spread 19.25 basis points +1.0 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -24.5 -.25 basis point
  
• MBS  5/10 Treasury Spread 188.0 -1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 932.0 +1.0 basis point
  
• Avg. Auto ABS OAS 93.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.2 +.03%
• 3-Month T-Bill Yield 5.45% -1.0 basis point
  

• China Iron Ore Spot 116.8 USD/Metric Tonne -.21%
• Dutch TTF Nat Gas(European benchmark) 50.81 euros/megawatt-hour +1.8%

• Citi US Economic Surprise Index 61.2 +8.6 points

• Citi Eurozone Economic Surprise Index -42.6 -1.4 points

• Citi Emerging Markets Economic Surprise Index 27.4 +3.7 points
• S&P 500 Current Quarter EPS Growth Rate YoY(209 of 500 reporting) +11.1% +2.6 percentage points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 240.09 -.17:  Growth Rate +9.2% -.1 percentage point, P/E 17.3 -.2
  
• S&P 500 Current Year Estimated Profit Margin 12.11% +1.0 basis point
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(4 of 10 reporting) +22.8% +43.7 percentage points
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 268.39 +.24: Growth Rate +58.3% +.1 percentage point, P/E 27.4 -.5
  
• Bloomberg US Financial Conditions Index -.25 -8.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index -.04 +5.0 basis points
  
• US Yield Curve -16.5 basis points (2s/10s) +9.5 basis points
  
• US Atlanta Fed 2Q GDPNow Forecast +5.41% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.70% unch.: CPI YoY +3.32% unch.
  
• 10-Year TIPS Spread 2.42 -2.0 basis points
  
• Highest target rate probability for Dec. 13th FOMC meeting: 72.9%(+3.8 percentage points) chance of 5.25%-5.5%. Highest target rate probability for Jan. 31st meeting: 67.1%(+6.4 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +94 open in Japan 
• China A50 Futures: Indicating +33 open in China

• DAX Futures: Indicating +69 open in Germany

Portfolio:

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

• Disclosed Trades: None
  

• Market Exposure: 25% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Growth -1.5%
  

Sector Underperformers:

• 1) Disk Drives -3.6% 2) Computer Hardware -2.1% 3) Oil Service -1.8%

Stocks Falling on Unusual Volume: 

• NVST, XRAY, LTH, VRE, AEM, META, MSTR, SHOP, TRU, INVH, TSCO, SAVE, MAA, ZLAB, UPS, PRG, MA, PINS, VMC, CHX, BMY, HZO, WCN, EH, WEX, MAT, IGT, HOG, MO, CMCSA, ANET, TAK, TTD, OII, WST, ALSN, WU, WDC, STVN, CLS, HAS, RTO, PRTA, WHR, XPRO, MXL and ALGN
  

Stocks With Unusual Put Option Activity:

• 1) VNQ 2) HAS 3) ALGN 4) ALK 5) VNET
  

Stocks With Most Negative News Mentions:

• 1) ALGN 2) HAS 3) WHR 4) CLS 5) HOG
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.7%
  

Sector Outperformers:

• 1) Regional Banks +2.8% 2) Computer Services +2.8% 3) Steel +2.1%

Stocks Rising on Unusual Volume:

• BPMC, EDR, PI, ITGR, SRRK, FCN, SAH, FLEX, OLMA, AMT, MAS, LII, ORLY, TROX, PEGA, EXEL, NOW, IBM, UCTT, FAF, CNMD, VC, NTRS and LEA
  

Stocks With Unusual Call Option Activity:

• 1) EDR 2) GT 3) XP 4) ETRN 5) MAT

Stocks With Most Positive News Mentions:

• 1) BPMC 2) WTW 3) SAH 4) FLEX 5) FCFS
  

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:

• (ABBV)/2.87
• (AON)/2.21
• (ARCB)/1.49
• (AN)5.49
• (B)/.48
• (BAH)/1.33
• (CRI)/1.54
• (CBRE)/.67
• (CHTR)/8.06
• (CVX)/3.70
• (CL)/.80
• (XOM)/2.37
• (GNTX)/.44
• (LYB)/2.03
• (NWL)/.23
• (PSX)/4.82
• (PIPR)/1.59
• (SWK)/.83
• (TROW)/1.78
  

After the Close: 

• None of note
  

Economic Releases

8:30 am EST

• Personal Income for Sept. is estimated to rise +.4% versus a +.4% gain in Aug.
• Personal Spending for Sept. is estimated to rise +.5% versus a +.4% gain in Aug.
• The PCE Core MoM for Sept. is estimated to rise +.3% versus a +.1% gain in Aug.
  

10:00 am EST

• Final Univ. of Mich. Consumer Sentiment readings for Oct.
  

11:00 am EST

• The Kansas City Fed Services Activity Index for Oct.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Fed's Barr speaking, Dallas Fed PCE Core for Sept., Baker Hughes Oil Rig Count and the CFTC Commodity spec positioning reports could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Morning Market Internals

NYSE Composite Index:

• NYSE Volume Running +17.5% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 8.4 -.4
  
• 6 Sectors Declining, 5 Sectors Rising
• 64.8% of Issues Advancing, 32.4% Declining
• 10 New 52-Week Highs, 190 New Lows
• 25.8%(+2.3%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 36.0 unch.
  
• Bloomberg Global Risk-On/Risk-Off Index 64.6 -.44%
  
• Russell 1000: Growth/Value 17,739.4 -1.22%
  
• 1-Day Vix 15.2 -14.0%
  
• Vix 20.4 +1.2%
  
• Total Put/Call 1.01 -15.8%
• TRIN/Arms .98 +38.0%