Stocks Slightly Lower into Final Hour on US Debt Rating Downgrade, Mid-East Regional War Fears, Technical Selling, REIT/Utility Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 14.6 +3.2%
• DJIA Intraday % Swing .95% +35.6%
  
• Bloomberg Global Risk On/Risk Off Index 65.8 -.4%

• Euro/Yen Carry Return Index 173.4 +.19%

• Emerging Markets Currency Volatility(VXY) 7.74 +.13%

• CBOE S&P 500 Implied Correlation Index 21.9 -1.2% 

• ISE Sentiment Index 131.0 +17.0
  

• Total Put/Call 1.05 +.96%

• NYSE Arms 1.07 +3.9% 
• NYSE Non-Block Money Flow -$124.2M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 67.8 -1.15%
  

• US Energy High-Yield OAS 344.05 +1.2%
• Bloomberg TRACE # Distressed Bonds Traded 350 unch.
  

• European Financial Sector CDS Index 85.12 -2.3% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 269.5 -1.3%
  

• Italian/German 10Y Yld Spread 185.0 basis points -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 115.3 +.43%
  

• Emerging Market CDS Index 210.72 -.25%
• Israel Sovereign CDS 128.2 +4.8%
  

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

• 2-Year SOFR Swap Spread -17.5 basis points -.5 basis point
  

• TED Spread 23.5 basis points +.75 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -19.0 -1.5 basis points
  
• MBS  5/10 Treasury Spread 170.0 -2.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 914.0 +4.0 basis points
  
• Avg. Auto ABS OAS 94.0 -4.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.5 -.01%
• 3-Month T-Bill Yield 5.42% +1.0 basis point
  

• China Iron Ore Spot 127.5 USD/Metric Tonne -.55%
• Dutch TTF Nat Gas(European benchmark) 47.9 euros/megawatt-hour +2.66%

• Citi US Economic Surprise Index 41.6 -3.5 points

• Citi Eurozone Economic Surprise Index -44.5 unch.

• Citi Emerging Markets Economic Surprise Index 21.4 +.4 point
• S&P 500 Current Quarter EPS Growth Rate YoY(460 of 500 reporting) +2.6% -.2 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 239.97 +.11:  Growth Rate +8.6% unch., P/E 18.4 +.3
  
• S&P 500 Current Year Estimated Profit Margin 12.13% +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 275.32 +.31: Growth Rate +62.4% +.2 percentage point, P/E 29.1 +.3
  
• Bloomberg US Financial Conditions Index .17 -2.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index .25 +1.0 basis point
  
• US Yield Curve -40.75 basis points (2s/10s) +2.25 basis points
  
• US Atlanta Fed 3Q GDPNow Forecast +2.06% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.63% unch.: CPI YoY +3.28% unch.
  
• 10-Year TIPS Spread 2.34 unch.
  
• Highest target rate probability for Jan. 31st FOMC meeting: 73.3%(-4.4 percentage points) chance of 5.25%-5.5%. Highest target rate probability for March 20th meeting: 65.5%(-3.1 percentage point) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +225 open in Japan 
• China A50 Futures: Indicating +98 open in China

• DAX Futures: Indicating +75 open in Germany

Portfolio:

• Slightly Lower:  On losses in my tech/utility/transport sector longs
  

• Disclosed Trades: None
  

• Market Exposure: 75% Net Long
  

Bear Radar

Style Underperformer:

• Mid-Cap Value -.2%
  

Sector Underperformers:

• 1) Utilities -1.1% 2) REITs -.8% 3) Disk Drives -.8%

Stocks Falling on Unusual Volume: 

• TSN, AX, LTHM, NABL and RILY
  

Stocks With Unusual Put Option Activity:

• 1) APLD 2) BAX 3) TAN 4) ARMK 5) RILY
  

Stocks With Most Negative News Mentions:

• 1) FTCH 2) PCT 3) MPW 4) TSN 5) GCT
  

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +.2%
  

Sector Outperformers:

• 1) Medical Equipment +2.6% 2) Defense +1.5% 3) Digital Health +1.4%

Stocks Rising on Unusual Volume:

• PEN, METC, FTRE, STNE, MNDY, ARVN, DVA, HSIC, SQM, SWAV, NARI, FLYW, BA, U, WRBY, SIBN, BAX, EWCZ, CWAN and COLL
  

Stocks With Unusual Call Option Activity:

• 1) BAX 2) RILY 3) IHI 4) BBWI 5) ARMK

Stocks With Most Positive News Mentions:

• 1) PEN 2) MNDY 3) STNE 4) SNDL 5) RLX
  

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:

• (ARMK)/.64
• (CSIQ)/.82
• (ENR)/1.13
• (HD)/3.75
• (ONON)/.14
• (SBH)/.46
• (SE)/.12
• (VIPS)/2.87
  

After the Close: 

• (ALC)/.66

Economic Releases

6:00 am EST

• The NFIB Small Business Optimism Index for Oct. is estimated to fall to 90.5 versus 90.8 in Sept.
  

8:30 am EST

• The CPI MoM for Oct. is estimated to rise +.1% versus a +.4% gain in Sept.
• The CPI Ex Food and Energy MoM for Oct. is estimated to rise +.3% versus a +.3% gain in Sept.
• Real Average Weekly Earnings YoY for Oct.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Fed's Jefferson speaking, Fed's Goolsbee speaking, Fed's Williams speaking, Fed's Barr speaking, IEA Monthly report, weekly US retail sales reports, API weekly crude oil inventory report, Stephens Investment Conference, Needham Security/Networking/Communications Conference, (BJRI) investor day, (DKNG) investor day and the RBC Capital Markets Tech/Internet/Media/Telecom Conference, Roth Capital Tech Conference, Wolfe Healthcare Conference and the Jefferies Healthcare Conference could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -13.9% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 9.6 +.1
  
• 4 Sectors Declining, 7 Sectors Rising
• 49.6% of Issues Advancing, 47.4% Declining 
• TRIN/Arms .97 -5.8% 
• Non-Block Money Flow -$98.3M
  
• 40 New 52-Week Highs, 58 New Lows
• 34.3%(+1.6%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 55.0 +5.0

Other:

• Bloomberg Global Risk-On/Risk-Off Index 66.3 +.1%
  
• Russell 1000: Growth/Value 18,745.0 -.05%
  
• 1-Day Vix 12.0 -1.2%
  
• Vix 14.7 +4.0%
  
• Total Put/Call 1.07 +2.9%

Monday Watch

Today's Headlines

Bloomberg:

• Israel Latest: Hostage Deal Floated Amid Gaza Hospital Crisis. 
• The World Must Prepare for Xi’s Next Move on Taiwan.
• US Sets Military Talks With China as Priority at Biden-Xi Summit. 
• China's Grip on Africa Sparks a US Response. 
• China Set to Add Liquidity Support to Stave Off Cash Squeeze.
• Australia Struggles to Restart Port Operations After Cyberattack.
• Traders Say UK Inflation Risks Undoing Aggressive Rate-Cut Bets. 
• Asian Equities Climb After Wall Street Tech Rally: Markets Wrap.
• Oil Extends Three Weekly Drops With Focus on Demand Outlook.
• US Military Launches Strikes at Iran Linked Targets in Syria.
• FTX Adds a Complex Chapter to the Financial-Fraud History Books. 
• Shipping Shifts From Jackpot to Job Cuts After $364 Billion Boom.
• Cyber ‘Catastrophe Bonds’ Move Step Closer to Hitting Public Debt Markets.
• Stubborn Core Inflation Helps Explain Some Fed Restlessness. 
• A Big Bond Rally Needs a Recession With Fed Wary of ‘Head Fakes’.
• Goldman Sachs, Morgan Stanley Diverge on Fed Rate-Cut Forecasts.
• US Shutdown Risk Lingers Despite House Speaker’s Compromise Plan.
• Charting the Global Economy: IMF Sees a Soft Landing for Europe,
• Five Things to Watch This Week.

Zero Hedge:

• San Francisco: Clean For Xi, Not For Thee. 
• Morgan Stanley's 2024 Outlook: Slowing Economy, Policy Easing And Challenging Set-Up For Markets.
• Trump Lawyers To Mount Counterattack After Weeks Of Bruising Cross-Examination In NY Civil Case.
• Trump's Veterans Day Message Was Quite Different From Biden's.
• Weekend News Round Up - Newsquawk Asia-Pac Market Open.
• "Antisemitism Has No Place Here" - Harvard President Condemns "From The River To The Sea" Phrase After 1600 Jewish Alum Pull Donations.
• Los Angeles County Approves New 'Office Of Food Equity'.
• Palestinians 'Disappointed' Hezbollah Hasn't Escalated A Northern War On Israel.
• WaPo Drops Bombshell On The Nord Stream Pipeline Sabotage Narrative: A Ukrainian Colonel, Covert Ops, & The CIA's Shadow.
• The House 'Concentrates The Mind' Of Hunter Biden With A Game-Changing Subpoena.
• The "Safety" Dance.
• TME Weekend: One group to rule them all. 
• The Fed Has No Plan, And Is Just Hoping For The Best.
• Raids, Detention Camps, Mass Deportations: Trump's Immigration Plan For Second Term.
• Russia Begins Evacuating Some 600 Citizens From Gaza Strip.
• NBC Compares Criticism Of Hunter's Influence Peddling To Haley's Daughter's TikTok Posts.
• US Seeks Clarification From Netanyahu After Remarks On Gaza's Future.
• The Polycrisis.
• Chinese Bitcoin Mines: A Threat To US National Security.
• EU Moves Forward With Digital ID Despite Security Concerns And Potential For Abuse.
• US Military Aircraft Crashes In Eastern Mediterranean.
• European Parliament Lifts Immunity Of Conservative MEPs Facing Criminal Charges For Retweeting Criticism Of Illegal Immigration.
• The Globalist Vision: "15 Minute" Prison Cities And The End Of Private Property.
• Is Abortion, Not Trump, The GOP's Albatross?
• Goldman Prime Brokerage Spots A Remarkable Divergence Beneath The Market's Surface.
• Certain COVID-19 Vaccines Linked To Elevated Risk Of Guillain-Barré Syndrome.
• Dear Greta...
• Raided Pro-Life Activist Sues DOJ For 'Malicious Prosecution,' Emotional Distress.

Wall Street Journal:

• Bankman-Fried’s Parents Stand by Their Sam—and Face Their Own Legal Perils.
• Hamas Needed a New Way to Get Money From Iran. It Turned to Crypto.
• Stocks Are Suddenly Up—and FOMO Is Back.
• The Path to Green Energy Is Getting Messier.
• The Coastal State Where Home Insurance Is Relatively Affordable.
• Oregon Decriminalized Hard Drugs. It Isn’t Working.
• Your 401(k) Is Falling Behind. Here’s What You Should Do.
• How Bidenomics May Cost Biden the Youth Vote. He’ll soon be 81, and it shows, but his economic policies have punished young people in particular.
• The Biggest ‘Shrinkflation’ Scandal Yet: Oreo Fans Think Cookies Have Less Filling.
• Cooks Beware: Olive Oil Is Getting More Expensive.

CNBC:

• As Biden and Xi gear up for a high-stakes meeting, experts have low expectations.
• ‘The Marvels’ has worst opening weekend ever for any MCU film at $47 million.
• Public workers may receive reduced Social Security benefits. How Congress may change that.
• 15 cities where U.S. homebuyers make the largest down payments—the top 5 are in California. 
• Boeing close to Emirates deal for more 777 jets, reports say.

Reuters:

• Exclusive-US, Indonesia to discuss potential for deal on EV minerals -sources.
• China's Singles Day festival wraps up with e-commerce giants reporting sales growth.

MarketWatch.com:

• Stock-market rally faces make-or-break moment. How to play U.S. October inflation data.
• Retail earnings begin this week. ‘It’s getting worse,’ an analyst says.

NewsMax:

• Israel Says Current Palestinian Authority Should Not Run Gaza.
• Trump's Vow to World, N.H. Voters: 'I Will Be Your Peacemaker'.
• Netanyahu Dismisses Calls for a Cease-Fire as Fighting Intensifies.

Fox News:

• Biden's lawyer is 'panicking' amidst House probe's 'aggressive' next phase, columnist claims. 
• Trump attorney sounds alarm on New York AG Letitia James amid former president's civil fraud case.
• Sheriff's scathing takedown of Target in candid post takes internet by storm.
• SEE IT: MMA fighter's T-shirt drops the mic on America's justice system.
• City employees instructed to give up the Christmas spirit this holiday season.
• Biden admin delivers grim update on Americans kidnapped in terror attack.
• Disney's absurd new trend in long lines has social media disgusted: 'WTF?'.

TheGatewayPundit.com:

• MUST SEE: Kari Lake DESTROYS Nasty Trump Hating Trolls From Showtime’s The Circus Who Swear at Her for Final Episode of Canceled Show – “Answer The F*cking Question!” (FULL INTERVIEW).
• ‘I’m Working Three Jobs…My House is More Expensive’ – Latino Biden Voters in Georgia Have Buyer’s Remorse (VIDEO).
• Bill Maher Slams Obama’s “Moral Equivalency” on Hamas-Israel War-“When They Fired at Israel. It’s a War. When Israel Fires Back, it’s a War Crime”.
• Spain Awakens: Millions Take to the Streets Against Socialist Coup and Catalan Separatist Amnesty.
• South Africa: White-Owned Farms No Longer Allowed to Export to EU, UK.
• Climate Change Brat and Hoaxer Greta Thunberg Interrupted at Dutch Protest — Makes Anti-Israel Rant: ‘No Climate Justice on Occupied Land’ (VIDEO).
• EXPECT BIG NAMES TO DROP: Feds Will Likely Identify Client List of “Johns” After High-End Asian Brothel Bust.
• Virginia Democrats on the Brink of Losing State Senate Majority Following Revelations That Candidate Ghazala Hashmi Lied About District Residency.
• MUST SEE: Crowd Goes Wild as President Trump and Tucker Carlson Walk Into UFC 295 (VIDEO).
• IDF Eliminates 150 Terrorists as Hamas Fires on Soldiers Helping Civilians Escape to Safety.
• SHOCK VIDEO: White High School Student Severely Beaten and Kicked to Death by 15 Thugs at Las Vegas School After Defending His Friend (VIDEO).
• Tragic: 15-Month-Old Girl Dies from Organ Failure and Cardiac Arrest Two Days After Receiving Three Vaccines During Routine Visit.
• Retired Air Force Brig. Gen. Blaine Holt on Newsmax: US Should Reinvoke Sanctions on Iran (Video).
• Another WaPo Report Goes Bust: Accused Ukrainian General Allegedly Behind Nord Stream Attack Was AWOL from Military at the Time of Explosion.
• UK and Canada Declare Simultaneous Travel Threat Alerts Against Each Other.
• McDaniel, RNC Cave After Threatening to Disqualify Candidates Over Christian Event.
• Patriotic Poles Take to Warsaw’s Streets Celebrating Independence Day – Nationalist Forces Show Strength Ahead of Struggle to Form New Government.
• Sick: LA Charter School Teachers Removed After Teaching 1st Graders About ‘Genocide in Palestine’ at School Housed in Synagogue.
• Nothing to See Here: Democrats and Anti-Israel Protesters March to Joe Biden’s Beach House Chanting for the Destruction of Israel.
• Another Woke Disney Flop? ‘The Marvels’ Crashes with $6.5 Million Opening Night.
• GiveSendGo Fundraising Page Set Up for J6 Defendant Sgt. Gregory Yetman After Heavily Armed FBI Agents Hunt Him Down in the Woods Like an Animal.
• Italian Archbishop Viganò Slams Commie Pope After Dismissing Conservative US Bishop — “Cowardly Form of Authoritarianism”.
• “I Think He Always Had a Deep Hatred of Israel in His Heart” – Alan Dershowitz RIPS Barack Obama Over His Israel Comments (VIDEO).
• San Francisco Somehow Manages to Remove Homeless and Clean Streets Ahead of Visit by China’s Communist Dictator Xi (VIDEO).

The Epoch Times:

• China Makes a Strategic Move in the Middle East Ahead of Biden-Xi Meeting.
• 'We Have Your Back': Gallagher Says Congress Supports US Allies Facing China Threats.
• CCP's Global Strategy of Economic Coercion: Rep. Gallagher on Cancellation of US Show in South Korean Theaters.

X:

• @kylenabecker - Here are some of the children that Hamas tried to intentionally slaughter at the Be’eri kibbutz. Look them in their eyes while they tell their personal stories. Don't turn away. Heartbreaking. (video)
• @BillAckman - What percentage of the student protesters who support Hamas are not U.S. citizens? Why do we want them taking the place of American citizens at our most prestigious universities? This is a math class this morning at @MIT. This is the state of learning and ‘free speech’ at our top universities. It would not be happening without a failure leadership at MIT. Imagine being a student who borrowed $250k to attend MIT or a professor who is trying to do research in this environment. (video)
• @RahamimoffTamar - Raisi publicly promotes Israel’s annihilation by lacing his speech with antisemitic holocaust and Hamas terminology. This should be condemned in the strongest possible terms by the international community as well as the @UN.
• @Mayhem4Markets - Japanese investors are selling US corporate debt at a record pace. (graph)
• @ImMeme0 - For Xi visit San Francisco cleared our homeless and put about 100 new planters. It’s amazing what can happen if government wants to actually fix things. (video) San Francisco got cleaned up and homeless population disappeared for Xi Jinping. El Paso did the same for Biden’s visit in January. This proves to you that our government is capable to fix things overnight but doesn’t want to do it for you peasants. (video)
• @CitizenFreePres - San Francisco before and after For Americans For Xi Jinping. (pic) MMA fighter Joel "King Bau" Bauman just walked into the arena wearing a shirt that reads "Trump was indicted before anyone on Epstein’s client list.” (video)
• @Libsoftiktok - They cleaned up the streets of San Francisco for China’s dictator. They can fix the crisis plaguing our cities. They just don’t want to because they hate you. (video)
• @NICEnforcement - What isn’t in the House Republican bill to continue funding the federal government through January? Border security or immigration enforcement provisions. What is? A payment to the daughter of one of the wealthiest lawmakers who recently passed. (pic)
• @KobeissiLetter - The U.S. Now Has: 1. Record $17.29 trillion in household debt 2. Record $12.14 trillion in mortgages 3. Record $1.60 trillion in auto loans 4. Record $1.08 trillion in credit card debt.
• @TPostMillenial - President Trump and Tucker Carlson enter UFC 295 to thunderous applause in Madison Square Garden. (video)
• @_aussie17 - Shocking scenes as former Ghana striker Raphael Dwamena dies after collapsing during game. (video)
• @theinformantofc - #Hezbollah has issued a new warning to the #UnitedStates about its readiness to destroy its fleet off its shores! It is noteworthy that a little earlier Reuters reported that Hezbollah was likely to acquire Russian-developed Onyx missiles. (video)
• @crushthemarket - But they told us they are running QT. Meanwhile they keep pumping QE officially & unofficially. (graph)
• @JohnBasham - EXCLUSIVE: More Whistleblowers Step Forward & Congress High-Ranking @FBI Officials Are TARGETING AGENTS FOR THEIR POLITICAL BELIEFS & Forcing Them Out Of The Bureau, Specifically Going After Military Veterans. Congress' Response Was To Award FBI New HQ!
• @LauraLoomer - SHAMEFUL BEHAVIOR BY 70 HOUSE REPUBLICANS. Yesterday, while everyone was distracted by the Trump rally and the 3rd GOP Presidential debate, 70
  @HouseGOP REPUBLICANS Voted in support of the @FBI getting an additional $300 MILLION for their new headquarter office which will be larger than the Pentagon. These 70 Republicans just supported the massive expansion of WEAPONIZED GOVERNMENT! (list)

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 indices are -.5% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 115.5 -1.0 basis point.
  
• China Sovereign CDS 71.5 -1.75 basis points.
• China Iron Ore Spot 127.9 USD/Metric Tonne +.8%.
  
• Bloomberg Emerging Markets Currency Index 41.5 -.03%.
• Bloomberg Global Risk-On/Risk Off Index 68.8 +4.1%.
• Bloomberg US Financial Conditions Index .18 -1.0 basis point. 
  
• Volatility Index(VIX) futures 16.3 +1.7%. 
• Euro Stoxx 50 futures +.31%.
• S&P 500 futures -.31%.
• NASDAQ 100 futures -.33%.

Morning Preview Links

BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and financial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 75% net long heading into the week.