Stocks Modestly Lower into Afternoon on US Policy-Induced Stagflation Fears, China Economy Worries, Technical Selling, Tech/Commodity Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume: Above Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 13.2 +4.8%
• DJIA Intraday % Swing .58% -24.5%
  
• Bloomberg Global Risk On/Risk Off Index 59.7 -1.90%

• Euro/Yen Carry Return Index 170.9 -.19%

• Emerging Markets Currency Volatility(VXY) 7.83 unch.

• CBOE S&P 500 Implied Correlation Index 21.6 +2.4% 

• ISE Sentiment Index 139.0 +12.0
  

• Total Put/Call .82 -2.4%

• NYSE Arms .97 +10.2% 
• NYSE Non-Block Money Flow -$89.8M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 62.0 +.96%
  

• US Energy High-Yield OAS 344.26 -1.17%
• Bloomberg TRACE # Distressed Bonds Traded 352 +7.0
  

• European Financial Sector CDS Index 75.95 -.85% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 234.80 +.42%
  

• Italian/German 10Y Yld Spread 177.0 basis points +3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 97.77 -.47%
  

• Emerging Market CDS Index 186.53 +.94%
• Israel Sovereign CDS 14.58 -.03%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.39 unch.

• 2-Year SOFR Swap Spread -20.0 basis points -1.5 basis points
  

• TED Spread 28.5 basis points +3.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -11.75 +.25 basis point
  
• MBS  5/10 Treasury Spread 152.0 -1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 947.0 +3.0 basis points
  
• Avg. Auto ABS OAS 85.0 -3.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.61 -.42%
• 3-Month T-Bill Yield 5.38% +1.0 basis point
  

• China Iron Ore Spot 127.90 USD/Metric Tonne -.76%
• Dutch TTF Nat Gas(European benchmark) 40.10 euros/megawatt-hour -7.8%

• Citi US Economic Surprise Index 15.9 -9.7 points

• Citi Eurozone Economic Surprise Index -18.6 +5.1 points

• Citi Emerging Markets Economic Surprise Index 23.7 -2.1 points
• S&P 500 Current Quarter EPS Growth Rate YoY(491 of 500 reporting) +4.5% unch.
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 242.26 +.19:  Growth Rate +9.4% +.1 percentage point, P/E 18.8 -.1
  
• S&P 500 Current Year Estimated Profit Margin 12.12% -1.0 basis point
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(9 of 10 reporting) +50.6% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 284.89 +.43: Growth Rate +33.6% +.2 percentage point, P/E 28.4 -.6
  
• Bloomberg US Financial Conditions Index .52 +6.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index .29 +6.0 basis points
  
• US Yield Curve -37.25 basis points (2s/10s) -3.5 basis points
  
• US Atlanta Fed 4Q GDPNow Forecast +1.19% -58.0 basis points
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 58.4% +3.1 percentage points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.46% unch.: CPI YoY +3.04% unch.
  
• 10-Year TIPS Spread 2.22 unch.
  
• Highest target rate probability for Jan. 31st FOMC meeting: 87.4%(+2.7 percentage points) chance of 5.25%-5.5%. Highest target rate probability for March 20th meeting: 51.5%(-3.6 percentage points) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -211 open in Japan 
• China A50 Futures: Indicating -6 open in China

• DAX Futures: Indicating +42 open in Germany

Portfolio:

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

• Disclosed Trades: None
  

• Market Exposure: 75% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Growth -.3%
  

Sector Underperformers:

• 1) Gold & Silver -2.9% 2) Gambling -2.0% 3) Disk Drives -1.9%

Stocks Falling on Unusual Volume: 

• CRM, ANSS, SSL, MRUS, RMBS, PLTR, BZ, HUT, MNSO and ALK
  

Stocks With Unusual Put Option Activity:

• 1) GTLB 2) BMEA 3) EYPT 4) DELL 5) HCP
  

Stocks With Most Negative News Mentions:

• 1) SPCE 2) LPSN 3) FSR 4) URI 5) DG
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +1.1%
  

Sector Outperformers:

• 1) Airlines +10.6% 2) Retail +1.5% 3) Digital Health +1.5%

Stocks Rising on Unusual Volume:

• HA, EYPT, BMEA, CVNA, CERE, VKTX, RILY, GME, SAIC, RIOT, MARA, SPOT, GCT, COIN, MSTR, BBWI, MMYT, ALKS, ARWR, IDXX, EL, IBN, UBER, FLNC, NCLH, AMPH, AWI, SLG, PVH, CRSP, SAVE, MTW, CFLT, MNDY, CHWY, HLI, HDB, BYON, BRP, UPST, EQH, KTOS, EWCZ, TBBK and GM
  

Stocks With Unusual Call Option Activity:

• 1) ALK 2) BITF 3) ALT 4) BMEA 5) DELL

Stocks With Most Positive News Mentions:

• 1) CVNA 2) UBER 3) MSTR 4) SAIC 5) FLNC
  

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:

• (CRMT)/.79
• (AZO)/31.59
• (GIII)/2.06
• (SIG)/.18
  

After the Close: 

• (AVAV)/.62
• (BOX)/.38
• (PLAY)/-.15
• (MDB)/.51
• (SFIX)/-.25
• (TOL)/3.72
• (CONN)/1.53
• (SJM)/2.47
  

Economic Releases

10:00 am EST

• JOLTS Job Openings for Oct. are estimated to fall to 9300K versus 9553K in Sept.
• ISM Services Index for Nov. is estimated to rise to 52.2 versus 51.8 in Oct.
• ISM Services Prices Paid.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The weekly US retail sales reports, IBD/TIPP Economic Optimism Index, API Weekly Crude Oil Stock report, Barclays Tech Conference, Scotiabank Tech Conference, Morgan Stanley Consumer/Retail Conference, Wolfe Research Reshoring Conference, UBS Media/Communications Conference, Goldman Sachs Financial Services Conference, Raymond James Tech Conference, Raymond James TMT/Consumer Conference, Jefferies Cybersecurity Summit, Deutsche Bank Lithium/Battery Supply Chain Conference, (CVS) investor day, (SHOP) investor day and the Sidoti Small-Cap 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 +24.6% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 11.4 +2.4
  
• 9 Sectors Declining, 2 Sectors Rising
• 43.3% of Issues Advancing, 54.0% Declining 
• TRIN/Arms .93 +5.7% 
• Non-Block Money Flow -$129.8M
  
• 124 New 52-Week Highs, 5 New Lows
• 53.4%(+1.7%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 71.0 -3.0

Other:

• Bloomberg Global Risk-On/Risk-Off Index 60.4 -.8%
  
• Russell 1000: Growth/Value 18,124.6 -1.16%
  
• 1-Day Vix 8.5 -20.0%
  
• Vix 13.4 +6.0%
  
• Total Put/Call .81 -3.6%

Monday Watch

Today's Headlines

Bloomberg:

• Israel Calls for Gaza Evacuations After US Urges Restraint. 
• Analyst Who Called Chinese Bank Turmoil Says Trusts Are Next.
• UK Workers’ High Job Confidence Raises Inflation Worries for BOE.
• Britain’s Economic Stagnation Leaves Households £8,300 Worse Off.
• US Defense Secretary’s Israel Warning Is Naive, GOP Senator Says.
• Retail Traders in Korea Are Sinking Billions Into Exotic US ETFs.
• Israel, Threatened by Hezbollah, Seeks Solution for Empty North. 
• Oil Gains With US Interest Rates and Venezuelan Supply in Focus.
• Alaska Air Agrees to Buy Hawaiian in $1.9 Billion Deal.
• US Warns Iran-Backed Houthis After Attacks on Red Sea Shipping.
• Bond Market Euphoria Shifts to Debate Over How Low Fed Will Need to Go.
• Bitcoin Hits $40,000 Level for the First Time Since May 2022.
• Eerie Calm in S&P 500 Signals Historic Rally Has Staying Power.

Zero Hedge:

• Gold Spikes To Record High Over $2,130, Bitcoin Soars Above $40,000 As Market Calls Powell's Bluff.
• Pentagon Confirms US Warship, Commercial Ships Under Attack In Red Sea.
• US Signs New Climate Pact To Shut Down All Coal Plants.
• Will China Really Invade Taiwan.
• Hundreds Of Illegal Chinese-Owned Marijuana Operations Taking Over Maine.
• Is The Consumer Breaking Records This Holiday... Or Is Spending Disappointing? Here Is The Bottom Line.
• "Two Words... Tucker Carlson": Greg Gutfeld Gores Fox After Musk Blasts Activist Advertisers.
• Democrats Unveil What NRA Calls 'Most Sweeping Gun Prohibition Bill Of The 21st Century'.
• San Francisco 'Poop Map' Has Been Updated, And Things Are Sh**tier Than Ever.
• Weekend News Round Up - Newsquawk Asia-Pac Market Open.
• The Failure Of Western Feminism When It's Most Needed.
• "No One Cares About Your Dividends".
• TME Weekend: Some still have plenty of room to add.
• Leftist Hatred Of Kyle Rittenhouse Is Boundless As He Announces New Book.
• The Dublin Riots & BLM – A Comparison Of Reactions.
• Trump Vows To Cancel Biden's Executive Order 'Weaponizing Artificial Intelligence'.
• Recent Homeowners Lose Over $200 Per Day In Property Value Each Day.
• It Seems Like Silly Season Is Here For Markets, But Things Are Likely To Get Even Sillier.
• Elon Musk Vs. Dark Forces.
• Hammer-Wielding Man Shouting 'Allahu Akbar' Kills Paris Tourist, Wounds 2 More.
• Just Admit You Were Wrong!
• Jan. 6 Committee Tapes Have Disappeared, Says House Republican.
• Germany Infiltrated By 'Economic Migrants' Abusing An Asylum System, Claims Country's Former Top Judge.
• King Charles Delivers Highly-Politicised Speech To Support Collectivist Net Zero Project.
• Number Of Kids Put On Puberty Blockers Doubles Despite NHS Promising To Stop.

Wall Street Journal:

• Alaska Air Reaches Deal to Acquire Hawaiian Airlines.
• Goods Deflation Is Back. It Could Speed Inflation’s Return to 2%.
• Why Repairing Your EV Is So Expensive.
• U.S. Destroyer, Commercial Vessels Attacked by Drones, Missiles in Red Sea
• The Opioid Victims Who Won’t Sign Off on Purdue’s $6 Billion Settlement
• First They Came for the Cars, Then the Cows. The climate lobby is now aiming to use taxes and regulation to restrict your meat consumption.
• Tourist Stabbed to Death Near Eiffel Tower in Suspected Terrorist Attack.
• Supreme Court Case Could Mess Up Chunks of Tax Code.
• Billions in U.S. Funding Hasn’t Persuaded Developing World to Ditch Coal.

CNBC:

• Meta’s AI chief doesn’t think AI super intelligence is coming anytime soon.
• Three reasons a strong Black Friday weekend may not mean a blowout holiday season for retailers.
• A major CEO backer of the remote office model concedes one big work from home failure.
• IMF chief makes the case for carbon pricing as ‘writing on the wall’ for oil and gas.
• Alaska Airlines agrees to buy Hawaiian Airlines in $1.9 billion deal.

Reuters:

• Exclusive: Top development banks at COP28 vow to up climate game, quiet on fossil fuels.
• China has more space to cut reserve ratio instead of interest rates, says ex-official.
• UBS to expand presence in U.S. market, NZZ Am Sonntag reports.

NewsMax:

• Israel Uncovers 800 Shafts to Hamas Tunnels Below Gaza.
• Arab Leaders to Israel: Annihilate Hamas.
• Israel, Hezbollah Trade Fire Across Lebanon Border.

Fox News:

• US warship, multiple commercial vessels 'under attack' in Red Sea, says Pentagon
• Joint Chiefs chair responds to mounting fears US isn't prepared to face China threat
• More illegal immigrants caught ransacking Macy's store packed with shoppers
• US ambassador, longtime diplomat arrested in Miami, charged with spying for Castro's Cuba.

TheGatewayPundit.com:

• Bill Maher Says He Agrees With Trump That Schools Teach Kids to Hate America (VIDEO). 
• BREAKING: New Zealand Health Ministry Employee and Whistleblower’s Home Raided and Arrested by Police for Exposing Deaths Linked to ‘Bad Batches’ of COVID Vaccine — Another Person Also Targeted in Raids (VIDEO). 
• The Battle of Big Pharma’s Domination Over Connecticut’s Behavioral Health Begins. 
• Commie Pope Calls for Elimination of Fossil Fuels in Historic Speech at Cop28 Conference.
• Defender of Democracy? Increasingly Authoritarian Zelensky Forbids Former President Poroshenko From Leaving Ukraine, Calls Him ‘A Tool in the Hands of the Russians’.
• Queens Stabbing: Five Stabbed, Four Dead Including Children; Suspect Fatally Shot After Injuring Two Officers (VIDEO).
• “One of the Greatest Injustices in American History – We’re Saw a Grandmother Thrown Down the Steps by Capitol Police” – Kari Lake Responds to Latest Evidence of Police Abuse and FBI Operatives on Jan. 6 (VIDEO).
• Lancaster County Voters Seek Answers from Postal Service as Mail-In Ballots Missed Election Deadline Resulting in Disqualification.
• Biden’s Push to Allow Illegal Aliens to Live in National Parks Using Federal Funds Results in House GOP Block.
• Biden’s Borders: Foreign-Born US Population Hits Highest Level Ever Recorded in American History.
• Joe Biden’s Department of Veterans Affairs Processed 161,000 Medical and Dental Claims for ILLEGALS in 2022 while Delaying Service to US VETERANS (VIDEO).
• Fox News Board Member Paul Ryan is Working to Get Endorsements for Neocon Nikki Haley.
• Over 140 Mail-in Ballots Discovered from Inactive Mailboxes Across Washington State.
• UPDATE: Democrat John Kerry Vows to Shut Down All Coal Plants in US that Supply 22% of Electricity to US Homes and Businesses and Replace It with Chinese Windmills.
• Man Arrested in Plot to Kill Elon Musk, Cause ‘Mass Casualty Event’ at Tesla Cybertruck Launch, Officials Say.
• U.S. Governmnent Inks $75 Million Contract for Recently Approved Anthrax Vaccines.
• Tucker Carlson Talks About Leaving FOX News and How Advertisers Can Shape Media Stories (VIDEO).
• Gavin Newsom’s Wife Intervenes and Reportedly THROWS IN TOWEL to Prevent Extended Face-Off After DeSantis Destroyed Him in Debate (VIDEO).
• Just Like A Dictatorship: Florida Democrats Announce Only Joe Biden Will be on the Primary Ballot — And No Write In Candidates Allowed!
• Because She’s a Liar. J6 Select Committee Star Witness Made SIGNIFICANT CHANGES to Her Testimony – Then J6 Committee Deleted Her Taped Deposition. 
• Philippines Bans Smartmatic Voting Machines from Country’s Elections to ‘Safeguard Integrity of Elections’.

The Epoch Times:

• China Takes Time in UN Meeting on Israel-Hamas to Make Statement on Pneumonia Outbreak.

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 -.25% to +.5% on average.
• Asia Ex-Japan Investment Grade CDS Index 97.25 -1.5 basis points.
  
• China Sovereign CDS 57.0 -2.5 basis points.
• China Iron Ore Spot 131.15 USD/Metric Tonne +.03%.
  
• Bloomberg Emerging Markets Currency Index 41.81 +.05%.
• Bloomberg Global Risk-On/Risk Off Index 61.69 +1.4%.
• Bloomberg US Financial Conditions Index .52 +6.0 basis points. 
  
• Volatility Index(VIX) futures 15.5 +.01%. 
• Euro Stoxx 50 futures +.07%.
• S&P 500 futures -.15%.
• NASDAQ 100 futures -.25%.

Morning Preview Links

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