Stocks Higher into Afternoon on Lower Long-Term Rates, Earnings Outlook Optimism, Short-Covering, Gambling/Metals & Mining Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Above Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 15.4 -2.0%
• DJIA Intraday % Swing .48% -30.8%
  
• Bloomberg Global Risk On/Risk Off Index 64.7 -1.6%

• Euro/Yen Carry Return Index 171.2 +.35%

• Emerging Markets Currency Volatility(VXY) 7.82 -.64%

• CBOE S&P 500 Implied Correlation Index 25.8 -.9% 

• ISE Sentiment Index 101.0 +6.0
  

• Total Put/Call .88 -9.3%

• NYSE Arms 1.04 +28.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 70.54 -2.96%
  

• US Energy High-Yield OAS 325.70 -1.56%
• Bloomberg TRACE # Distressed Bonds Traded 391 -18
  

• European Financial Sector CDS Index 89.70 -2.1% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 258.66 -2.2%
  

• Italian/German 10Y Yld Spread 187.0 basis points -4.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 127.3 -1.9%
  

• Emerging Market CDS Index 206.80 -2.0%
• Israel Sovereign CDS 142.57 +2.1%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.82 +.45%

• 2-Year SOFR Swap Spread -13.0 basis points +.5 basis point
  

• TED Spread 24.5 basis points +3.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -20.0 +2.5 basis points
  
• MBS  5/10 Treasury Spread 169.0 -3.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 923.0 -3.0 basis points
  
• Avg. Auto ABS OAS 97.0 -1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.75 +.64%
• 3-Month T-Bill Yield 5.41% -1.0 basis point
  

• China Iron Ore Spot 123.2 USD/Metric Tonne +1.2%
• Dutch TTF Nat Gas(European benchmark) 48.1 euros/megawatt-hour -1.0%

• Citi US Economic Surprise Index 51.2 -5.2 points

• Citi Eurozone Economic Surprise Index -47.9 -.2 point

• Citi Emerging Markets Economic Surprise Index 24.3 +.3 point
• S&P 500 Current Quarter EPS Growth Rate YoY(404 of 500 reporting) +2.2% +.5 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 240.56 +.06:  Growth Rate +8.9% -.6 percentage point, P/E 18.1 +.2
  
• S&P 500 Current Year Estimated Profit Margin 12.20% +3.0 basis points
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +38.4% -13.5 percentage points
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 273.42 +.13: Growth Rate +61.3% +.1 percentage point, P/E 27.5 +.1
  
• Bloomberg US Financial Conditions Index -.07 -2.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index .66 +6.0 basis points
  
• US Yield Curve -28.5 basis points (2s/10s) +2.5 basis points
  
• US Atlanta Fed 3Q GDPNow Forecast +1.24% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.63% unch.: CPI YoY +3.28% unch.
  
• 10-Year TIPS Spread 2.38 -2.0 basis points
  
• Highest target rate probability for Jan. 31st FOMC meeting: 89.4%(+18.4 percentage points) chance of 5.25%-5.5%. Highest target rate probability for March 20th meeting: 67.3%(+3.6 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +830 open in Japan 
• China A50 Futures: Indicating +79 open in China

• DAX Futures: Indicating +64 open in Germany

Portfolio:

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
  

• Market Exposure: Moved to 100% Net Long
  

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

Earnings of Note 
Company/Estimate 

Before the Open:

• (AMG)/3.74
• (CEG)/1.48
• (DISH)/.11
• (HGV)/.97
• (THS)/.50
  

After the Close: 

• (AAON)/.55
• (ADTN)/-.02
• (CE)/2.23
• (COHR)/.12
• (FANG)/5.01
• (FN)/1.85
• (GT)/.19
• (MYGN)/-.08
• (NXPI)3/62
• (RNG)/.75
• (SANM)/1.53
• (TRIP)/.47
• (VECO)/.37
• (VRTX)/3.92
  

Economic Releases

• None of note
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Fed's Cook speaking, 3/6 Month T-Bill auctions, Loan Officer Survey, CB Employment Trends Index for Oct. and the Baird Industrial Conference could also impact global trading on Monday.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• NYSE Volume Running +34.2% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 7.5 -.6
  
• 1 Sector Declining, 10 Sectors Rising
• 83.5% of Issues Advancing, 15.4% Declining
• 62 New 52-Week Highs, 14 New Lows
• 37.0%(+13.2%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 58.0 +6.0
  
• Bloomberg Global Risk-On/Risk-Off Index 64.6 -1.8%
  
• Russell 1000: Growth/Value 17,952.6 -.61%
  
• 1-Day Vix 12.4 -19.0%
  
• Vix 15.5 -.7%
  
• Total Put/Call .86 -11.3%
• TRIN/Arms 1.06 +30.9%
  

Friday Watch

Evening Headlines

Bloomberg:

• Biden Says Israel and Hamas Should ‘Pause’ for Hostage Release.
• China’s EV Makers Want Top Oil Producing Nations to Go Electric.
• Foxconn Makes Your iPhone. Now It Wants to Make Your Electric Car.
• China’s Grip on Africa’s Minerals Sparks a US Response. 
• These Five Countries Are Key Economic ‘Connectors’ in a Fragmenting World.
• Asia Stocks Rise, Apple Sales Weigh US Futures: Markets Wrap.
• Oil Heads for Second Weekly Drop as Israel War Still Contained.
• Bankman-Fried Found Guilty of Fraud at FTX Criminal Trial.
• Nothing Worries CEOs Right Now as Much as Geopolitics.
• Harvard, Yale Warned by Top Law Firms About Antisemitism.
• Apple Warns of Sluggish Holiday Quarter After China Slowdown.
• The US Housing Market Has Become an Impossible Mess.
• Goldman Sachs Managing Director Class Shrinks 5% From 2021 Level. 
• UAW President Is Ready to Take on Tesla and Beat Elon Musk.
• Franklin Templeton, Citadel Securities Curb Bond Optimism.
• Nascar Accused of Bias Against White Men in Its Diversity Efforts. 
• Powell Touts Tight Financial Conditions, Causing Them to Loosen.

Zero Hedge:

• Sam Bankman-Fried Found Guilty On All Counts, Faces Over 100 Years In Prison.
• Bridgeport Election Overturned After City Official Pleads 5th To Ballot Harvesting.
• China's Largest Memory Chip Maker Forced To Raise Capital Due To U.S. Blacklists. 
• "People With Cervices": IU Med-School Doubles-Down On Gender Ideology.
• RFK Jr Scores 22% Vs Biden, Trump - Is Top Choice Among Independents: Quinnipiac.
• Waste Of The Day: $800,000 To Texas Organization That Distributes Crack Pipes.
• US Mulling 'Day After' Hamas, Including An International Peacekeeping Force In Gaza.
• OPEC Oil Production Remains Relatively Flat In October.
• Albert Edwards: "Will The BOJ Fiasco Be The Straw That Breaks The Back Of US Debt".
• House Passes $14.3 Billion Israel Aid Package, Which Will Promptly Die In The Senate.
• Keep calm and risk on.
• Victor Davis Hanson: One Sick War.
• Democratic 'Sanctuary City' Mayors Beg Biden For Bailout Amid Worsening Migrant Crisis.
• US stocks gained and yields declined as Labour Cost data added to the dovish impulse - Newsquawk Asia-Pac Market Open.
• Israeli Army Has Gaza City Surrounded, But Hamas Tunnels Remain Serious Problem.
• Traders Buy Middle East Crude At Premiums Amid Rising Geopolitical Risk.
• Apple Slides After Revenues Drop For 4th Straight Quarter; Unexpectedly Weak Guidance.
• Hezbollah Escalates Rocket Attacks Amid Reports Russia Could Supply Anti-Air System.
• We're Eating Our Seed Corn.
• Bank Bailout Fund Hits New Record High As Stocks Recouple With Fed Reserves.
• Post-Fed Stock rally continues, aided by dovish US data and BoE on hold - Newsquawk US Market Wrap. 
• 'Face-Ripping' Squeeze Sends Stocks Soaring As Yield Curve & The Dollar Dump.

Wall Street Journal:

• How Hamas Won Hearts and Minds on the American Left. For 30 years, the terror organization has made a concerted effort to appeal to Western intellectuals.
• A Warning to the Law Schools on Anti-Semitism. Major law firms tell deans to protect students and resist anti-Semitism.
• Apple Sales Decline as China Market Weighs on Results.
• Democrats Have an Anti-Semitism Problem. The party never expected Jew-hatred to be a feature of its coalition. Now it is.
• National Association of Realtors’ CEO Stepping Down.
• Fake Nudes of Real Students Cause an Uproar at a New Jersey High School.
• Fight Over Return-to-Office Is Becoming a Disability Dispute.
• Adam Neumann Wounded WeWork. An Office-Market Bust Finished It Off.
• FBI Searches Home of Fundraiser for New York City Mayor.

CNBC.com:

• Sam Bankman-Fried found guilty on all seven criminal fraud counts.
• The ‘biggest threat to global order since the 1930s’ is underway and every CEO is talking about it.
• Atlassian sinks despite better-than-expected results and in-line forecast.
• FedEx CEO warned of ‘worldwide recession’ a year ago. Here’s what he sees now.

 MarketWatch.com:

• Opinion: Apple’s grim streak of revenue declines could continue into the holidays.
• Apple’s stock falls as earnings show another revenue decline, China pressure.
• Starbucks wants to have 55,000 stores by 2030 — and expects to pay its workers more long before then.
• Ray Dalio likens U.S. restrictions on China tech exports to embargo before Pearl Harbor
• Block’s stock soars as company sets big earnings goal, launches buyback program.
• Fortinet’s stock slides after earnings as guidance misses the mark yet again.
• Cloudflare’s stock drops after earnings as forecast comes up a bit shy.
• Bill.com’s stock tumbles nearly 30% on weaker forecast.
• DraftKings’ stock pops on narrowing loss, raised fiscal year revenue guidance.

Newsmax:

• Israeli Volunteer Testifies Hamas Baked Baby to Death.
• Sen. Cruz: Biden's Call for Israel Pause 'Obscene'.
• Alina Habba: Trump Prosecutions Geared to Block '24 Run.

 Fox News:

• House Republicans pass $14.3 billion Israel aid bill offset by IRS funding cuts.
• Americans rally around House speaker after report claims he lives paycheck to paycheck.

TheGatewayPundit.com:

• House Approves $14.3 Billion Israel Aid Package, Slashes IRS Budget – Biden Regime Threatens to Veto the Bill.
• Report: Congress Sneaks Through $34,000 Pay Raise for Itself.
• Enormous Development: Colorado Prosecutors Caught in Major Lie in Court Case to Remove President Trump from Ballot – With Video Evidence.
• Minnesota Supreme Court Chief Justice Dresses Down Leftist Lawyer Working to Keep Trump Off 2024 Ballot (VIDEO).
• BREAKING: FBI Raids Home of Eric Adams’ Fundraising Chief, Brianna Suggs.
• Miss Israel Goes Viral After Video Exposing Atrocities by Hamas.
• MTG Lashes Out at 22 RINOs Who Voted to Table the Motion to Censure Antisemite Rashida Tlaib: “American People are So Disgusted with Republicans Who Never Do a Damn Thing to Stop the Injustices”.
• ‘No One is Disputing the Fact the Bidens were Influence Peddling Now’.
• Leftist Takeover of South America: Chilean Conservative Kast Throws in with Globalists.
• U.S. Infant Mortality Rate Sees Largest Increase in 20 Years, Says CDC.
• Elon Musk Says Ventilators, Not COVID-19 Virus, Responsible for Millions of Deaths (VIDEO).
• RFK Jr. Explains Why He Went on Jeffrey Epstein’s Private Jet in 1993.
• Feckless Republicans Voted Against Censuring Pro-Terrorist Rashida Tlaib – Here are the 22 RINOS Who Sided with Democrats.
• Mayors from Sanctuary Cities New York, Los Angeles, Houston, Denver, and Chicago Appeal for $5 Billion Aid from Biden Regime Amidst Invasion.

The Epoch Times:

• Beijing’s Heavy Hand in Hong Kong Has Added to China’s Economic Woes.
• Yellen Assures No US–China Decoupling, Setting Stage for Biden–Xi Meeting.

Twitter:

• @FinanceLancelot - BREAKING: Critical infrastructure operators in the U.S. are stepping up security for "potential onslaught" of Iranian cyberattacks - Politico (video)
• @sentdefender - The Islamic Resistance in Iraq has just announced that next week they will be beginning a New Phase in their Operation to Fight for the People in Palestine and in Confronting the Enemies (Israel and the United States); they state that this Phase will be much more Severe and Widespread against the Bases of the Enemies in the Region.
• @TheNewsSpark - ALERT: The pro-Iranian militias in Iraq announce their entry into the campaign against Israel starting Sunday.
• @EndWokeness - A judge in Connecticut just overturned an election over a video showing 2 people stuffing ballot boxes. Trump was arrested in Georgia for trying to make this happen in 2020 This is a video from Georgia in 2020 after poll watchers were forced out over a mysterious “water pipe burst”. They literally pulled suitcases of ballots from under the table and ran them through the machines for hours unsupervised. (video)

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 988,705 Reports(+1,488 from prior week) Through September 29th, 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 +.5% to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 127.75 -4.0 basis points.

• China Sovereign CDS 75.5 -1.25 basis points.
  
• China Iron Ore Spot 122.2 USD/Metric Tonne -.32%.

• Bloomberg Emerging Markets Currency Index 41.5 -.06%.
• Bloomberg Global Risk-On/Risk Off Index 65.7 unch. 
• Bloomberg US Financial Conditions Index .00 +4.0 basis points.
  
• Volatility Index(VIX) futures 17.5 +.6%.
• Euro Stoxx 50 futures +.36%.

• S&P 500 futures -.13%.

• NASDAQ 100 futures -.31%.  

Morning Preview Links

BOTTOM LINE: Asian indices are modestly higher, boosted by technology and industrial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 75% net long heading into the day.

Stocks Surging into Final Hour on Falling Long-Term Rates, Earnings Outlook Optimism, Short-Covering, Alt Energy/Regional Bank Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Every Sector Rising
  

• Volume: Above Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 16.0 -5.3%
• DJIA Intraday % Swing .70% -14.5%
  
• Bloomberg Global Risk On/Risk Off Index 65.2 +.5%

• Euro/Yen Carry Return Index 170.6 +.7%

• Emerging Markets Currency Volatility(VXY) 7.91 -2.0%

• CBOE S&P 500 Implied Correlation Index 27.1 -5.1% 

• ISE Sentiment Index 90.0 -12.0
  

• Total Put/Call .91 -4.1%

• NYSE Arms 1.02 -36.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 72.6 -5.4%
  

• US Energy High-Yield OAS 331.1 -6.9%
• Bloomberg TRACE # Distressed Bonds Traded 409 +21
  

• European Financial Sector CDS Index 91.45 -5.2% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 264.76 -5.3%
  

• Italian/German 10Y Yld Spread 191.0 basis points -5.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 130.2 -3.7%
  

• Emerging Market CDS Index 211.3 -4.2%
• Israel Sovereign CDS 139.6 -2.6%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.7 +.37%

• 2-Year SOFR Swap Spread -13.5 basis points -1.5 basis points
  

• TED Spread 21.0 basis points -1.5 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -22.5 +1.25 basis points
  
• MBS  5/10 Treasury Spread 172.0 -6.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 926.0 +3.0 basis points
  
• Avg. Auto ABS OAS 98.0 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.48 +.29%
• 3-Month T-Bill Yield 5.42% -4.0 basis points
  

• China Iron Ore Spot 122.6 USD/Metric Tonne +.16%
• Dutch TTF Nat Gas(European benchmark) 48.6 euros/megawatt-hour +1.7%

• Citi US Economic Surprise Index 56.4 +2.0 points

• Citi Eurozone Economic Surprise Index -47.7 -1.2 points

• Citi Emerging Markets Economic Surprise Index 24.0 +.8 point
• S&P 500 Current Quarter EPS Growth Rate YoY(377 of 500 reporting) +1.7% -1.2 percentage points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 240.50 +.19:  Growth Rate +9.5% +.1 percentage point, P/E 17.9 +.4
  
• S&P 500 Current Year Estimated Profit Margin 12.17% -1.0 basis point
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(6 of 10 reporting) +51.9% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 273.29 +.35: Growth Rate +61.2% +.2 percentage point, P/E 27.4 +.5
  
• Bloomberg US Financial Conditions Index -.10 +3.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index .60 +5.0 basis points
  
• US Yield Curve -31.0 basis points (2s/10s) -11.75 basis points
  
• US Atlanta Fed 3Q GDPNow Forecast +1.24% -1.02 percentage points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.63% unch.: CPI YoY +3.28% unch.
  
• 10-Year TIPS Spread 2.40 unch.
  
• Highest target rate probability for Jan. 31st FOMC meeting: 70.4%(-1.0 percentage point) chance of 5.25%-5.5%. Highest target rate probability for March 20th meeting: 61.8%(-1.4 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +400 open in Japan 
• China A50 Futures: Indicating +79 open in China

• DAX Futures: Indicating +116 open in Germany

Portfolio:

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
  

• Market Exposure: Moved to 100% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Growth +1.5%
  

Sector Underperformers:

• 1) Insurance +.5% 2) Healthcare Providers +.5% 3) Computer Services +.5%

Stocks Falling on Unusual Volume: 

• NFE, H, GMAB, PRGS, AVT, SMCI, SSRM, QRVO, ALTR, EG, Z, ZG, ALGT, BMRN, CMP, HSIC, KW, CROX, AXS, RNR, WSC, SEDG, NVST, TPX, ACA, MRNA, RCM, LAUR, CORT, APTV, VAC, GKOS, TNDM, CRTO, BWA, KBR, BDC, RRX, TENB, PCOR, NARI, OMCL, STAA, RELY and CFLT
  

Stocks With Unusual Put Option Activity:

• 1) EZU 2) DPST 3) SABR 4) AIG 5) ROKU
  

Stocks With Most Negative News Mentions:

• 1) TNDM 2) WE 3) MRNA 4) SEDG 5) GCI
  

Charts:

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