Stocks Reversing Slightly Lower into Final Hour on US Policy-Induced Stagflation Fears, Earnings Outlook Worries, Technical Selling, Energy/Insurance Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Above Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 12.7 -.9%
• DJIA Intraday % Swing .48% +23.7%
  
• Bloomberg Global Risk On/Risk Off Index 57.9 -1.1%

• Euro/Yen Carry Return Index 170.1 -.1%

• Emerging Markets Currency Volatility(VXY) 7.90 +.1%

• CBOE S&P 500 Implied Correlation Index 21.1 +.6% 

• ISE Sentiment Index 153.0 +19.0
  

• Total Put/Call .80 -11.1%

• NYSE Arms 1.30 -32.3% 
• NYSE Non-Block Money Flow +$81.0M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 62.69 +.15%
  

• US Energy High-Yield OAS 352.6 +1.0%
• Bloomberg TRACE # Distressed Bonds Traded 364 +3.0
  

• European Financial Sector CDS Index 76.1 -.8% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 231.36 -1.7%
  

• Italian/German 10Y Yld Spread 174.0 basis points unch.
  

• Asia Ex-Japan Investment Grade CDS Index 100.14 +.23%
  

• Emerging Market CDS Index 185.86 -.06%
• Israel Sovereign CDS 114.50 +.29%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.5 +.05%

• 2-Year SOFR Swap Spread -18.75 basis points +1.0 basis point
  

• TED Spread 24.0 basis points -.5 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -9.75 +1.0 basis point
  
• MBS  5/10 Treasury Spread 150.0 -3.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 949.0 -1.0 basis point
  
• Avg. Auto ABS OAS 85.0 -1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.6 +.02%
• 3-Month T-Bill Yield 5.40% +5.0 basis points
  

• China Iron Ore Spot 131.0 USD/Metric Tonne -.5%
• Dutch TTF Nat Gas(European benchmark) 39.3 euros/megawatt-hour +3.1%

• Citi US Economic Surprise Index 12.2 -2.1 points

• Citi Eurozone Economic Surprise Index -20.6 -6.7 points

• Citi Emerging Markets Economic Surprise Index 25.1 +.6 point
• S&P 500 Current Quarter EPS Growth Rate YoY(494 of 500 reporting) +4.5% unch.
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 242.39 +.47:  Growth Rate +9.5% -1.3 percentage points, P/E 18.9 unch.
  
• S&P 500 Current Year Estimated Profit Margin 12.13% unch.
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(9 of 10 reporting) +50.6% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 285.37 +.16: Growth Rate +33.9% +.1 percentage point, P/E 28.6 +.1
  
• Bloomberg US Financial Conditions Index .53 +6.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index .25 -2.0 basis points
  
• US Yield Curve -48.75 basis points (2s/10s) -7.0 basis points
  
• US Atlanta Fed 4Q GDPNow Forecast +1.27% +8.0 basis points
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 57.7% +1.2 percentage points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.46% unch.: CPI YoY +3.04% unch.
  
• 10-Year TIPS Spread 2.15 -5.0 basis points
  
• Highest target rate probability for Jan. 31st FOMC meeting: 85.9%(+5.1 percentage points) chance of 5.25%-5.5%. Highest target rate probability for March 20th meeting: 53.4%(-.1 percentage point) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -210 open in Japan 
• China A50 Futures: Indicating -34 open in China

• DAX Futures: Indicating +32 open in Germany

Portfolio:

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

• Disclosed Trades: None
  

• Market Exposure: 75% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Growth -.1%
  

Sector Underperformers:

• 1) Oil Service -2.1% 2) Energy -1.7% 3) Insurance -.7%

Stocks Falling on Unusual Volume: 

• CRDO, BXMT, SYM, MDB, BTI, HUT, INMD, BF/B, AVAV, OLMA, BOX, FLNC amd ASAN
  

Stocks With Unusual Put Option Activity:

• 1) FIS 2) UMC 3) NXE 4) FTI 5) BTI
  

Stocks With Most Negative News Mentions:

• 1) ASAN 2) BOX 3) FLNC 4) INMD 5) MDB
  

Charts:

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

Bull Radar

 Style Outperformer:

• Small-Cap Value +.9%
  

Sector Outperformers:

• 1) Airlines +3.7% 2) Homebuilders +2.9% 3) Electric Vehicles +2.2%

Stocks Rising on Unusual Volume:

• ARVN, PHR, EYPT, S, TGTX, ASPN, LOVE, LTHM, SPHR, UPST, RIVN, CPB, ZI, AAOI, HOOD, SIG, ALB, CUK, RKT, INFA, CHWY, RCM, EVH, PLAY, SAVE, RYTM, CAR, THO, DOCU, GRFS, MMSI, AAL, C, AFRM, ATAT, PYPL, CVS, MARA and SONY
  

Stocks With Unusual Call Option Activity:

• 1) FIS 2) UMC 3) NXE 4) FTI 5) BTI

Stocks With Most Positive News Mentions:

• 1) SERA 2) HOOD 3) S 4) PHR 5) CPB
  

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:

• (CIEN)/.69
• (DG)/1.20
  

After the Close: 

• (AVGO)/10.96
• (COO)/3.48
• (DOCU)/.63
• (LULU)/2.28
• (RH)/.94
• (SWBI)/.18
• (MTN)/-4.59
• (FIZZ)/.47
  

Economic Releases

7:30 am EST

• Challenger Job Cuts YoY for Nov. 

8:30 am EST

• Initial Jobless Claims are estimated to rise to 220K versus 218K the prior week.
• Continuing Claims are estimated to fall to 1910K versus 1927K prior.
  

10:00 am EST

• Wholesale Trade Sales MoM for Oct. is estimated to rise +1.0% versus +2.2% gain in Sept.
  

12:00 pm EST

• 3Q Household Change in Net Worth.

3:00 pm EST

• Consumer Credit for Oct. is estimated to fall to $8.5B versus $9.057B in Sept. 
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Atlanta Fed GDPNow 4Q update, Fed's balance sheet report, weekly EIA natural gas inventory report, Barclays TMT Conference, (DPZ) investor day, (MRNA) investor day, (MSFT) annual meeting and the (CPRT) annual meeting could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Afternoon Market Internals

NYSE Composite Index:

• Volume Running +19.2% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 9.2 -2.4
  
• 4 Sectors Declining, 7 Sectors Rising
• 61.5% of Issues Advancing, 35.7% Declining 
• TRIN/Arms 1.27 -32.8% 
• Non-Block Money Flow +$119.3M
  
• 125 New 52-Week Highs, 17 New Lows
• 52.6%(+2.4%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 67.0 unch.

Other:

• Bloomberg Global Risk-On/Risk-Off Index 57.6 -1.5%
  
• Russell 1000: Growth/Value 18,348.1 -.36%
  
• 1-Day Vix 8.7 -7.6%
  
• Vix 12.9 +.23%
  
• Total Put/Call .80 -11.1%

Wednesday Watch

Evening Headlines

Bloomberg:

• Israel Rebuffs Calls to Halt Gaza War as Forces Move South. 
• Taiwan Wants to Push Bounds of US Trade Deal to Beat Isolation.
• Worsening China Earnings Give Bears More Reasons to Sell.
• Australian Economy Surprisingly Slows as Rates Damp Spending.
• Taiwan’s Big China ETF Bust Shows Extent of Financial Decoupling.
• Traders Turbocharge Bets That ECB to Lead World on Rate Cuts.
• How Russia Punched an $11 Billion Hole in the West’s Oil Sanctions.
• Putin Plans Visit to Gulf in Wake of OPEC+ Deal on Output Cuts.
• Yellen Appeals to Congress as Republicans Block Fresh Aid to Ukraine.
• Asia Stocks to Gain, Treasuries Rally on US Jobs: Markets Wrap.
• Oil Falls for Fifth Day as US Exports Add to Oversupply Concerns.
• Wall Street CEOs Head to Washington With Capital-Rule Concerns.
• Truck-Stop Billionaire Fights Warren Buffett to Increase $18 Billion Fortune.
• A Pipeline Giant Is Helping to Push Texas's Power Grid to the Brink.
• Harvard, Penn Heads Defend Response to Israel-Gaza Protests.
• Dalio Says End of ‘Free Money’ Is Making Climate Fixes Difficult.
• El-Erian Says Fed Risks Losing Control of Messaging on US Rates.

Zero Hedge:

• The Canary Just Died: Sudden Spike In SOFR Hints At Mounting Reserve Shortage, Early Restart Of QE.
• Trump Campaign Strikes Back At 'Dictator' Hit-Piece In WaPo, Gaetz Says 'Green-Lighting Assassination'.
• Philadelphia Macy's Security Guard Fatally Stabbed By Shoplifter With Over A Dozen Prior Arrests.
• Don’t Let Government Get Away With Poisoning Americans: Hawley.
• Putin's Saudi Visit To Talk OPEC+ Cuts & Gaza War Highlights US Failure To Isolate Russia.
• FBI Arrests Conservative Actor For Taking Part In Jan. 6 Protests.
• Biden Impeachment Inquiry Vote To Come Next Week: Speaker Johnson.
• Transgender Bathroom Battle Heating Up State By State.
• Climate Grifters Want $2.4 Trillion Per Year, Much More Taxes To "Solve" Global Warming.
• Watch Live: Taibbi Discusses 'Hamilton 68' Link To Government's 'Cyber Threat League'.
• Zelensky Abruptly Cancels Address To Senators, Lashes Out At Failure To Secure More Taxpayer Funds.
• Democratic Senator Wants Illegal Immigrants To Join The Military.
• US stocks were choppy and treasuries bull-flattened amid mixed data including a drop in JOLTS job openings- Newsquawk Asia-Pac Market Open.
• Analysts Fear Possible Delays Of Grand Theft Auto VI Release.
• Paul Krugman Blames Economic Pessimism On Partisanship. He's Wrong!
• WTI Extends Losses To 5-Month Lows After API Reports Huge Crude Build At Cushing.
• Are You Still Middle Class?
• Stocks chop and bonds rip after tumbling job openings data - Newsquawk US Market Wrap.
• TLT's tumultuous trend and tech troubles.
• Lousy Labor Data Sends Yields Lower; Bitcoin, Big-Tech, & The Buck Soar. 
• Russia Says OPEC+ Ready To Deepen Oil Output Cuts If Needed.
• 'Very Creepy Backstory': Massive Explosion Destroys Home In Arlington, Virginia Neighborhood.
• Hoax-Funding LinkedIn Founder Who Bankrolled Trump Accuser Donates To Nikki Haley.

Wall Street Journal:

• Russia Rejects Trade for WSJ’s Evan Gershkovich.
• Supreme Court Wary of Remaking Income Tax.
• Gen Z Flirts With Socialism. Students discuss the American economy and why many of their peers seem so keen to turn away from free markets.
• Republican Lawmakers Spar With University Presidents at Campus Antisemitism Hearing.
• P&G Bought Gillette 18 Years Ago. It’s Still Paying the Price.

CNBC.com:

• An EU wealth tax and the end of U.S. capitalism: One bank’s ‘outrageous’ predictions for 2024
• Wall Street opens wallets wide for ‘Trump alternative’ Nikki Haley at $500K fundraiser.
• Ex-OpenAI director Reid Hoffman says we still don’t ‘fully know’ why board forced out Altman.
• Elon Musk’s AI startup — X.AI — files to raise $1 billion in fresh capital.
• Goldman Sachs is betting on the small cap rally. Here’s how. 
• Charter shares plunge after CFO says company may lose broadband subscribers in fourth quarter.

 MarketWatch.com:

• Bitcoin rally expands to smaller crypto, like Dogecoin.
• Apple is a $3 trillion company again, for the first time since August
• Box’s stock drops 11% on tepid revenue forecast
• MongoDB earnings clear Wall Street’s bar, but stock falls
• Asana’s stock is falling after another quarterly loss.
• Bond market signals a swift U.S. economic slowdown isn’t off the table.
• Nvidia and Microsoft CEOs say industrial companies will benefit most from AI. Here are stocks to put on your watch list.

Newsmax:

• Netanyahu: Israel Must Have Post-war Control of Gaza Security.
• Schumer Looks to Move Military Promotions ASAP.
• Sen. Tuberville Lifts Blockade on Some US Military Promotions.
• US Official: Hamas Keeps Hostages to Hide Sexual Abuse.

Fox News:

• Riley Gaines fires back at 'Squad' Dem after 'transphobic' shot during House hearing.
• Michigan governor orders all state vehicles to be 100% electric.

TheGatewayPundit.com:

• Zelensky Versus Zaluzhny: The Infighting Worsens as the President Gives Orders Directly to Battlefield, Bypassing the General That Is Polling Much Higher Than Him.
• “They Swept it Under the Rug and That is Wrong!” – Senator Marsha Blackburn Confronts Chris Wray Over the FBI Not Releasing Jeffrey Epstein’s Flight Logs and Refusing to Help His Victims (VIDEO).
• Actor Jamie Foxx in First Speech Since Mysterious Hospitalization, Says “I’m Not A Clone” Later Describes Vision of Hell.
• SHOCK VIDEO: Smuggler Stands on US Soil as He Helps Illegal Aliens Rush Through Hole in Border Wall in Arizona While Border Patrol Agents Do Nothing.
• Republicans in the Senate Suddenly Take Strong Stand on the Border and Illegal Immigration in Exchange for Funding Ukraine.
• In 2021 Congress Gave Joe Biden $7.5 Billion For Electric Vehicle Chargers – Two Years Later NOT ONE Charger Has Been Installed.
• WHAT ARE THEY HIDING?… Lara Logan and Truth in Media Releases New Information on Jan 6 Fedsurrection (VIDEO).
• “You’re Not Doing the Work…You’re Hiding Behind the Skirts of the Attorney General!” – Ted Cruz UNLEASHES on Dirty Chris Wray Over Joe Biden’s Crimes (VIDEO).
• US Students’ Math Scores Drop to Lowest Levels Ever in Global Education Assessment as Millions of Illegals Flood Over Border.
• It Took Almost TWO MONTHS for the UN’s Women’s Rights Body to Condemn Hamas’ Use of Rape as a Weapon of War (Video).
• Major Liberal City Set to Discipline Students Based on Their Race and Gender Identity for ‘Restorative Justice’.
• Delusional Liz Cheney, Who Lost Her Primary to Trump-Backed Challenger, Now Considers a Third-Party Presidential Run “to Stop Trump from Winning”.
• White House Now Sounds Just Like Hamas in Gaza.
• Despite All the Climate Alarmism Over ‘Global Warming’ at the COP28, the Northern Hemisphere Suffers Through Blistering Cold Temperatures at the Onset of Winter.

The Epoch Times:

• CCP Won’t Relinquish Control of China's Economy to Save It.
• ‘Total Trust’: The Horror of Communist Surveillance.
• GOP Senators Urge Biden Admin to Reinstate Sanctions on Chinese Institute Accused of Human Rights Violations.

Twitter:

• @zerohedge - Billionaire Democratic Donor Reid Hoffman Donates to Nikki Haley. well that clears that up.
• @MarshaBlackburn - @SenatorDurbin just tried to tell me he was “not aware” of the subpoena request I filed for Jeffrey Epstein’s flight logs. Here’s the receipt.
• @WallStreetSilv - Many of these "DINKs" (Dual Income No Kids) have been brainwashed by the media into believing that children are a negative. (video)
• @Libsoftiktok - Nikita Teran was 100% sure she was trans. Doctors rushed her through surgery for a double mastectomy. She breaks down as she discusses the surgery and complications. She says she was just a tomboy. She’s now detransitioning and warning others of this dangerous contagion. (video)
• @tuxzito12345 - FBI targeted Catholic Americans as potential terrorists. (video)
• @charliekirk11 - Researchers found that between September 14 and October 5, there were 4.4 million new shares sold short in Bank Leumi, one of Israel’s largest banks. Bank Leumi’s share prices tumbled 23% between October 4 and October 23.” What on earth is going on here? Who knew what and when? Why are we allowing these people to get away with this? We need criminal investigations immediately.
• @gatewaypundit - Tucker Carlson Destroys John Kerry and Climate Change Zealots with Facts. (video)
• @disclosetv - NOW - Groups of "mostly Chinese men" crossing illegally into the United States at the border in California. (video)
• @greg_price11 - BREAKING: Joe Biden received direct monthly payments beginning in 2018 from Hunter Biden's LLC Owasco PC, which received millions of dollars of CCP linked payments, according to redacted bank records released today by
  @GOPoversight.
• @songpinganq - Over 100,000 people living in this Chinese 15-minute city zone in Hunan province. It has everything: schools, restaurants, barber shops...and gyms. But facial recognition is mandatory to enter and leave every building & this zone. Authority knows where you are in real time! (video)
• @JimFergusonUK - Breaking News: The #NewZealand government are desperate to stop this information getting out. They have failed. (video)
  

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 unch. to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 100.25 +2.5 basis points.

• China Sovereign CDS 62.75 +3.25 basis points.
  
• China Iron Ore Spot 130.3 USD/Metric Tonne +.93%.

• Bloomberg Emerging Markets Currency Index 41.6 unch.
• Bloomberg Global Risk-On/Risk Off Index 59.5 +1.8%.
  
• Bloomberg US Financial Conditions Index .51 +5.0 basis points.
  
• Volatility Index(VIX) futures 15.3 -.43%.
• Euro Stoxx 50 futures +.31%.

• S&P 500 futures +.23%.

• NASDAQ 100 futures +.40%.  

Morning Preview Links

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