Stocks Slightly Lower into Final Hour on US Policy-Induced Stagflation Fears, China Economy Concerns, Technical Selling, Financial/Biotech 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) 14.6 -1.6%
• DJIA Intraday % Swing .75% +42.4%
  
• Bloomberg Global Risk On/Risk Off Index 63.1 -2.4%

• Euro/Yen Carry Return Index 172.7 +.5%

• Emerging Markets Currency Volatility(VXY) 7.78 -.77%

• CBOE S&P 500 Implied Correlation Index 23.8 -3.0% 

• ISE Sentiment Index 119.0 -4.0
  

• Total Put/Call .91 -7.1%

• NYSE Arms 1.38 +1.47% 
• NYSE Non-Block Money Flow -$37.9M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 69.30 -1.2%
  

• US Energy High-Yield OAS 347.05 +1.76%
• Bloomberg TRACE # Distressed Bonds Traded 376 +9
  

• European Financial Sector CDS Index 87.7 -2.0% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 265.7 +.03%
  

• Italian/German 10Y Yld Spread 186.0 basis points -3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 113.32 -4.5%
  

• Emerging Market CDS Index 210.56 -.86%
• Israel Sovereign CDS 122.87 -1.7%
  

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

• 2-Year SOFR Swap Spread -15.25 basis points +.5 basis point
  

• TED Spread 20.25 basis points -.75 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -18.75 -2.75 basis points
  
• MBS  5/10 Treasury Spread 170.0 +2.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 908.0 unch.
  
• Avg. Auto ABS OAS 98.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.60 -.18%
• 3-Month T-Bill Yield 5.42% unch.
  

• China Iron Ore Spot 125.6 USD/Metric Tonne +.7%
• Dutch TTF Nat Gas(European benchmark) 45.78 euros/megawatt-hour -.6%

• Citi US Economic Surprise Index 50.6 +.1 point

• Citi Eurozone Economic Surprise Index -45.2 -.1 point

• Citi Emerging Markets Economic Surprise Index 22.2 +1.3 points
• S&P 500 Current Quarter EPS Growth Rate YoY(424 of 500 reporting) +2.2% -.3 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 239.84 +.08:  Growth Rate +8.4% +.1 percentage point, P/E 18.2 -.1
  
• S&P 500 Current Year Estimated Profit Margin 12.14% +1.0 basis point
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +38.4% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 274.84 +.13: Growth Rate +62.1% unch., P/E 28.4 unch.
  
• Bloomberg US Financial Conditions Index .12 +5.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index .81 -2.0 basis points
  
• US Yield Curve -40.75 basis points (2s/10s) -6.0 basis points
  
• US Atlanta Fed 3Q GDPNow Forecast +2.09% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.63% unch.: CPI YoY +3.28% unch.
  
• 10-Year TIPS Spread 2.36 -3.0 basis points
  
• Highest target rate probability for Jan. 31st FOMC meeting: 82.9%(-1.7 percentage points) chance of 5.25%-5.5%. Highest target rate probability for March 20th meeting: 68.2%(+1.8 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +143 open in Japan 
• China A50 Futures: Indicating +1 open in China

• DAX Futures: Indicating +50 open in Germany

Portfolio:

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

• Disclosed Trades: None
  

• Market Exposure: 75% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Growth -1.1%
  

Sector Underperformers:

• 1) Gold & Silver -2.5% 2) Biotech -2.0% 3) Alt Energy -1.9%

Stocks Falling on Unusual Volume: 

• EBAY, COOP, IDA, ALPN, GILD, RIVN, SWAV, SAVE, KW, AMRK, CRSR, SPHR, IRBT, FOXF, BIIB, PGNY, STE, CRSP, XNCR, CAVA, ATSG, ARVN, SHLS, SPR, ADNT, XPEL, CPNG, EWCZ, BRP, TOST, RILY, INSP, ARRY, WRBY, UPST, FLYW and ESTA
  

Stocks With Unusual Put Option Activity:

• 1) RILY 2) XRX 3) TOST 4) TTWO 5) HOOD
  

Stocks With Most Negative News Mentions:

• 1) UPST 2) HOOD 3) ARRY 4) ESTA 5) ANDE
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.2%
  

Sector Outperformers:

• 1) Airlines +1.5% 2) Video Gaming +1.0% 3) Software +.8%

Stocks Rising on Unusual Volume:

• NVEI, NFE, TH, RBLX, ENVX, FOUR, BALY, AVDL, KD, YOU, UPWK, INTA, EH, EXR, AMR, LZ, AMBC, TTWO, NYT, ZLAB, TBPH, CARG, GMAB, DVA, PRIM, CELH, GXO, FVRR, JKHY, REPL, GKOS, STRL, RYAAY, TPG and FTNT
  

Stocks With Unusual Call Option Activity:

• 1) USM 2) HEAR 3) SPR 4) BMBL 5) PAYO

Stocks With Most Positive News Mentions:

• 1) UPWK 2) KD 3) RBLX 4) BLDE 5) GAN
  

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:

• (MT)/1.00
• (AZN)/.84
• (BDX)/3.42
• (EVBG)/.42
• (GDRX)/.06
• (HBI)/.11
• (DNUT)/.06
• (NVAX)/-1.80
• (RBC)/2.04
• (SCSC)/.90
• (TPR)/.90
• (WB)/.55
• (WWW)/.07
• (YETI)/.55
  

After the Close: 

• (BLNK)/-.46
• (FLO)/.28
• (ILMN)/.13
• (LGF/A)/-.05
• (NWSA)/.12
• (TTD)/.29
• (U)/.17
• (WYNN)/.74
• (DDS)/7.23
• (JCI)/1.09
  

Economic Releases

8:30 am EST

• Initial Jobless Claims for last week are estimated to rise to 219K versus 217K the prior week.
• Continuing Claims is estimated to rise to 1820K versus 1818K prior.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Fed's Powell speaking, 30Y T-Bond auction, Fed Balance Sheet report, WASDE Report, IBB/TIPP Economic Optimism Index, Truist Securities Healthcare Conference, (HCA) investor day, (ANET) investor day and the (COHR) annual meeting could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Morning Market Internals

NYSE Composite Index:

• Volume Running -1.6% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 9.6 +1.4
  
• 5 Sectors Declining, 6 Sectors Rising
• 43.5% of Issues Advancing, 53.3% Declining 
• TRIN/Arms 1.47 +8.1% 
• Non-Block Money Flow +$5.5M
  
• 29 New 52-Week Highs, 37 New Lows
• 35.7%(+2.2%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 54.0 -1.0

Other:

• Bloomberg Global Risk-On/Risk-Off Index 63.9 -1.2%
  
• Russell 1000: Growth/Value 18,504.4 +.19%
  
• 1-Day Vix 9.2 -13.1%
  
• Vix 14.7 -1.0%
  
• Total Put/Call .85 -13.3%

Wednesday Watch

Evening Headlines

Bloomberg:

• Israel Latest: Troops Are Moving Into the Heart of Gaza City.
• Biden Briefed on Chinese Effort to Put Military Base in Oman.
• China Vice President Sees ‘Positive Signals’ in Ties With US.
• Xi to Meet US Business Executives for Dinner in San Francisco.
• China Is Having a Hard Time Wooing Foreign Investors Back.
• China’s State-Backed Iron Ore Giant Says Prices Are Too High.
• Chaos Sweeps Australia as Telecoms Outage Leaves Millions Without Phone, Internet Access.
• Asia Stocks Edge Higher After S&P Extends Rally: Markets Wrap. 
• Oil Falls to Lowest Since July on China Trade Data, Fed Comments.
• Cooling EV Sales Have Tesla, General Motors and Ford Rethinking Investments.
• Robinhood Shares Fall on Revenue Miss After Crypto Volumes Tumble.
• Bond Traders Are Betting for a Seventh Time on a Fed Shift to Rate Cuts. 
• The First Glimpse Into Musk’s AI Company.
• Fed Officials Want More Time to Assess Impact of Rise in Yields.

Zero Hedge:

• How Treasury Averted A Bond Market "Earthquake" In The Last Second: What Everyone Missed In The TBAC's Remarkable Refunding Presentation.
• Israeli Troops Fighting "In The Heart" Of Gaza City, Hamas Leader Surrounded In A Bunker. 
• 30,000 Pounds Of Tyson "Fun Nuggets" Hit With Recall Over Metal Shards.
• Data Analyst Defends 2020 Georgia Election Rolls Challenges.
• California Spent $4 Million On Gender-Affirming 'Enhancements' For Prisoners.
• China's Grand Strategy & The Four Wars.
• NYC Speed Cameras Have Issued 4.5 Million Tickets Totaling "Hundreds Of Millions" This Year.
• Another Hugo Chavez-Style Idea On Electricity Rates From California's One-Party Regime.
• World's Top Tractor Maker Slashes Outlook, Trims Jobs In Response To Slowing Sales .
• Behind Mike Bloomberg's $500 Million Donation To 'Finish The Job On Coal'.
• Biden Briefed On China's Plans For First Military Base In The Middle East.
• Escaping The Socioeconomic Bullseye.
• Worst Sales Beats Since 2019 Expose Weak US Consumer.
• "Not At Liberty To Release": Nashville PD Blows Smoke Over Leaked Manifesto.
• Mixed trade in US stocks with tech leading the charge - Newsquawk Asia-Pac Market Open.
• Is Gavin Newsom Running A Shadow Presidential Campaign?
• WTI Extends Losses After API Reports Biggest Crude Build Since Feb.
• Stocks mixed with Dollar and Bonds bid amid weak global data - Newsquawk US Market Wrap. 
• Credit Card Debt Grinds To A Halt As Average APR Hits New Record High.
• P/L pain, CTA chasing and imploding war hedges.
• Whose Wealth Will Get "Clawed Back" First?
• "Earthquakes", "Golden Paths", & "Everything's Booming": FedSpeak Sparks Bond, Bitcoin, & Big-Tech Gains.

Wall Street Journal:

• U.S. Pushes Back on Israel’s Plan for Gaza After War.
• Big U.S. Banks Cook Up New Way to Unload Risk.
• Abortion Rights Measure Takes Lead Shortly After Ohio Polls Close.
• WeWork Files for Bankruptcy.
• EV Makers Turn to Discounts to Combat Waning Demand.
• Flights to Europe Are Becoming Cheap Again.
• Races in Virginia, Kentucky Offer Early Read on 2024 Election.
• China Has Become a Losing Proposition for Wall Street Deal Makers.
• The Cannabis That People Are Using for Anxiety Is Probably Making It Worse.

CNBC.com:

• Microsoft closes at all-time high on fresh OpenAI-related optimism.
• Lockheed Martin CEO says America needs to invest in digital defense systems.
• Stocks making the biggest moves after hours: eBay, Extra Space Storage, Akamai Technologies and more.
• Credit card debt hit new $1.08 trillion record in the third quarter. Here’s how we got here.
• U.S. crude oil prices fall below $78 a barrel to their lowest since July.
• Meta failed to act to protect teens, second whistleblower testifies.

 MarketWatch.com:

• Upwork’s stock is soaring 18% on big earnings beat.
• Rivian raises production guidance for the year, ends exclusivity deal with Amazon for its vans.
• Why oil prices just dropped to their lowest since July.
• Nintendo is making a live-action ‘Legend of Zelda’ film, on heels of hit ‘Super Mario Bros. Movie’.
• Virgin Galactic to cut staff to focus on lower-cost Delta spacecraft.

Newsmax:

• 10 Days Before Next Shutdown, Congress Expands To-Do List With Ukraine, Border.
• Hostage Families' Warning: America 'You Are Next'.
• Senate Dems Block GOP Bid to Aid Israel, Not Ukraine.

Fox News:

• Polls begin to close in key states where Republicans hope to secure major victories.
• Dems fail to shield Rashida Tlaib from House censure vote over anti-Israel remarks.

TheGatewayPundit.com:

• It’s Happening: Voting Machines Down in Several Districts in Pennsylvania Due to “Votes Getting Flipped”
• WATCH: Rep. Troy Nehls GRILLS Bureau of Prisons Director Colette Peters on Transgender Prison Policies in House Judiciary Hearing – Peters Confirms Bureau of Prisons is Paying for Prisoners’ “Gender Affirming Surgeries”.
• France Votes on Bill to Tighten Migration Control as Europe Is Overrun With Illegals.
• UPDATE: PA Voter Describes Votes Caught Being Switched Real-time in Judicial Election – From Republican to Democrat – Was Told Trust that Their Vote Would Be Counted Correctly (AUDIO).
• Electric Vehicle Manufacturers Forced to Slash Prices as Consumers Send a Clear Message.
• Update: ‘Coding Error’ in Voting Machines Blamed For Votes Flipping in Pennsylvania.
• Chinese Dictator Xi Jinping to Meet with Business Leaders in San Francisco.
• NBC Quietly Changes “Man Dies After Hitting Head” Headline on Death of Elderly Jewish Man by Pro-Palestine Protestor.
• Former ICE Director Tom Homan On President Trump’s Return to the White House-I’m Going to Run the Biggest Deportation Operation the World Has Ever Seen!’ (Video).
• Leo Hohmann: Islam is Getting Restless at Home and Abroad, and the U.S. Government Loves It.
• Cue in the Androids: China Plans to Rapidly Advance Mass Production of ‘Disruptive’ Humanoid Robots.
• Approaching End of Term, Zelenskyy Cancels Next Election: ‘Not the Right Time’.
• BREAKING: Nashville TRANS SHOOTER Manifesto LEAKED. Big Tech CENSORS it. | Elijah Schaffer’s Top 5 (VIDEO).
• NEVER FORGET: Today is the One Month Anniversary of the Horrific Hamas Massacre of 1,400 in Israel – Videos Left Behind Show Barbarity of Greatest Mass Slaughter of Jews Since WW II.
• New Emails Show DHS Created Stanford University ‘EIP’ Censorship Group Before 2020 Election – The Gateway Pundit Was Second Most Targeted Outlet – Now Is Lead Plaintiff in the MO-LA v Biden Lawsuit.

The Epoch Times:

• State Department Expresses Concern Over CCP Blocking Shen Yun in South Korea.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 988,705 Reports(+5,406 from prior week) Through October 27th, 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 +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 116.0 -5.5 basis points.

• China Sovereign CDS 71.0 +1.0 basis point.
  
• China Iron Ore Spot 121.7 USD/Metric Tonne -1.1%.

• Bloomberg Emerging Markets Currency Index 41.66 -.02%.
• Bloomberg Global Risk-On/Risk Off Index 66.4 +2.7%
  
• Bloomberg US Financial Conditions Index .07 +1.0 basis point.
  
• Volatility Index(VIX) futures 16.4 +.2%.
• Euro Stoxx 50 futures -.07%.

• S&P 500 futures -.06%.

• NASDAQ 100 futures -.10%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly lower, weighed down by energy and financial 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.