Stocks Higher into Afternoon on Earnings Optimism, Diminished China Economy Worries, Short-Covering, Transport/Tech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Below Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 14.0 +2.1%
• DJIA Intraday % Swing .55% n/a
  
• Bloomberg Global Risk On/Risk Off Index 54.9 -.02%

• Euro/Yen Carry Return Index 168.0 -.4%

• Emerging Markets Currency Volatility(VXY) 7.8 unch.

• CBOE S&P 500 Implied Correlation Index 20.7 +.1% 

• ISE Sentiment Index 128.0 +6.0
  

• Total Put/Call .94 +3.3%

• NYSE Arms .68 -80.8% 
• NYSE Non-Block Money Flow +$226.1M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 56.7 -2.4%
  

• US Energy High-Yield OAS 339.50 -.95%
• Bloomberg TRACE # Distressed Bonds Traded 331 -14
  

• European Financial Sector CDS Index 68.9 -.06% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 211.5 +.5%
  

• Italian/German 10Y Yld Spread 162.0 basis points unch.
  

• Asia Ex-Japan Investment Grade CDS Index 90.8 +.88%
  

• Emerging Market CDS Index 169.4 +1.1%
• Israel Sovereign CDS 110.1 +1.2%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.0 unch.

• 2-Year SOFR Swap Spread -21.75 basis points -2.0 basis points
  

• TED Spread 25.75 basis points +1.0 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -6.5 -3.0 basis points
  
• MBS  5/10 Treasury Spread 143.0 -2.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 964.0 +1.0 basis point
  
• Avg. Auto ABS OAS 80.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.72 -.01%
• 3-Month T-Bill Yield 5.37% -2.0 basis points
  

• China Iron Ore Spot 137.7 USD/Metric Tonne +.1%
• Dutch TTF Nat Gas(European benchmark) 34.20 euros/megawatt-hour +2.0%

• Citi US Economic Surprise Index 17.3 -4.1 points

• Citi Eurozone Economic Surprise Index -42.3 +1.0 point

• Citi Emerging Markets Economic Surprise Index 18.3 -.7 point
• S&P 500 Current Quarter EPS Growth Rate YoY(16 of 500 reporting) +13.0% +1.3 percentage points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 242.61 +.01:  Growth Rate +11.4% unch., P/E 19.4 -.3
  
• S&P 500 Current Year Estimated Profit Margin 12.04% unch.
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) +0.0% -0.0 percentage points
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 287.75 +.08: Growth Rate +34.9% unch., P/E 30.2 -.5
  
• Bloomberg US Financial Conditions Index n/a
  
• Bloomberg Euro-Zone Financial Conditions Index .38 -2.0 basis points
  
• US Yield Curve -45.75 basis points (2s/10s) +4.25 basis points
  
• US Atlanta Fed 4Q GDPNow Forecast +2.68% unch.
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 67.8% +3.7 percentage points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.43% unch.: CPI YoY +3.33% unch.
  
• 10-Year TIPS Spread 2.22 +2.0 basis points
  
• Highest target rate probability for March 20th FOMC meeting: 71.3%(+1.7 percentage points) chance of 5.0%-5.25%. Highest target rate probability for May 1st meeting: 70.6%(+3.1 percentage points) chance of 4.75%-5.0%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +35 open in Japan 
• China A50 Futures: Indicating +10 open in China

• DAX Futures: Indicating +161 open in Germany

Portfolio:

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

• Disclosed Trades: None
  

• Market Exposure: 50% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Value +.4%
  

Sector Underperformers:

• 1) Energy -.3% 2) Insurance -.2% 3) Utilities -.2%

Stocks Falling on Unusual Volume: 

• YPF, PARA, PAM, TGS, BMA, MLKN, PAYX, ZLAB and SAVA
  

Stocks With Unusual Put Option Activity:

• 1) OZK 2) FLNC 3) FDX 4) BB 5) FXI
  

Stocks With Most Negative News Mentions:

• 1) BB 2) CHPT 3) SMR 4) JRVR 5) SLRN
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.0%
  

Sector Outperformers:

• 1) Semis +2.0% 2) Airlines +1.9% 3) Steel +1.7%

Stocks Rising on Unusual Volume:

• MULN, TGI, CYTK, SPH, FROG, MP, MU, MARA, CCL, HUT and KMX
  

Stocks With Unusual Call Option Activity:

• 1) CF 2) ESPR 3) FLNC 4) BHC 5) MP

Stocks With Most Positive News Mentions:

• 1) AMST 2) MU 3) ANNX 4) FROG 5) WAVE
  

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:

• None of note
  

After the Close: 

• None of note
  

Economic Releases

8:30 am EST

• Personal Income for Nov. is estimated to rise +.4% versus a +.2% gain in Oct.
• Personal Spending for Nov. is estimated to rise +.3% versus a +.2% gain in Oct.
• The PCE Core Deflator MoM for Nov. is estimated to rise +.2% versus a +.2% gain in Oct.
• Durable Goods Orders for Nov. is estimated to rise +2.3% versus a -5.4% decline in Oct.
• Durables Ex Transports for Nov. is estimated to rise +.1% versus unch. in Oct.
• Cap Goods Orders Non-Defense Ex-Air for Nov. is estimated to rise +.1% versus a -.3% decline in Oct.
  

10:00 am EST

• New Home Sales for Nov. is estimated to rise to 690K versus 679K in Oct.
• Final Univ. of Mich. Consumer Confidence readings for Dec.
  

11:00 am EST

• The Kansas City Fed Services Activity Index for Dec.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Bloomberg US Economic Survey for Dec., UK retail sales report, Atlanta Fed GDPNow 4Q update, US Baker Hughes Rig Count, CFTC speculative positions report and the Dallas Fed PCE for Nov. 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 -13.3% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 12.3 +.2
  
• 2 Sectors Declining, 9 Sectors Rising
• 76.9% of Issues Advancing, 20.9% Declining 
• TRIN/Arms .71 -80.8% 
• Non-Block Money Flow +$252.6M
  
• 206 New 52-Week Highs, 22 New Lows
• 63.6%(+2.6%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 67.0 -9.0

Other:

• Bloomberg Global Risk-On/Risk-Off Index 55.4 +.9%
• Bloomberg Cyclicals/Defensives Pair Index 142.2 +.56%
  
• Russell 1000: Growth/Value 18,465.1 -.15%
  
• 1-Day Vix 11.2 -25.9%
  
• Vix 14.0 +2.4%
  
• Total Put/Call .91 unch.

Thursday Watch

X:

• @VigilantFox - Tucker Carlson Responds to Colorado’s Supreme Court Decision to Remove Trump off the Ballot. Here is his statement, word for word: “Whatever else January 6 was, and in some ways, we still don't know exactly what it was, it was not a Trump-led insurrection. The crowd had no guns. They had no plan to overthrow the government. Nothing like that has ever emerged. And above all, Trump was not leading it. He was miles away at the White House at the time, where he issued a public statement calling for calm and nonviolence. “So why were the people on television telling us that Trump led an insurrection? This was, of course, a lie, but it was also a very obvious lie. So, clearly, we were watching the rollout of a talking point, words crafted for a specific purpose. But what was the purpose? “We got an answer to that question yesterday when the Colorado Supreme Court ruled that because he led an insurrection, Donald Trump's name cannot appear on the state's ballot next fall. (video)
• @VivekGRamaswamy - I pledge to withdraw from the Colorado GOP primary ballot until Trump is also allowed to be on the ballot, and I demand that Ron DeSantis, Chris Christie, and Nikki Haley do the same immediately - or else they are tacitly endorsing this illegal maneuver which will have disastrous consequences for our country. (video)
• @kylenabecker - When is Joe Biden being removed from the 2024 ballot in red states for “failure to defend the Constitution of the United States” and “willful violation of his Oath of Office”? State legislatures: You know what to do.
• @The_Real_Fly - Chinese warships deployed in the Red Sea refused to assist Israeli cargo ships in Bab Al-Mandab and rejected their distress calls - AP. This is what you’re dealing with. Never attempt to reach a middle ground.
• @zerohedge - There Were At Least 19 Campus Hate-Crime Hoaxes In 2023.
• @AzzzatAtAlsaalem - Karin Giorno was killed at the Nova festival after Hamas terrorists called Karin's mother and said, 'We have your daughter, we will rape and kill her.' (pic)
• @Breaking911 - Teen Accused of Planning Massacre at Ohio Synagogue Ordered to Write Book Report. (video)
• @stclairashley - Tim Pool calls for Delta to get the “Bud Light treatment”. (video)
• @BillMelugin_ - BREAKING: Video from a contact on the ground in Eagle Pass, TX right now shows a mass of thousands of migrants waiting to be processed by Border Patrol after they crossed illegally today. I’ve spent hundreds of days there over the last 2+ years and I’ve never seen it like this. (video)
• @RepTonyGonzales - Piles of trash line our southern border — everything this border crisis touches turns to ash. (video)
• @JohnBasham - REPORT: BIDENOMICS MAKING EVERYTHING UNAFFORDABLE! Self-Checkout Kiosks At 4,500 @Walmart's Now Offer 'BUY NOW, PAY LATER' LOANS FOR BASIC ITEMS! (pic)
• @crushthemarket - None of this shit show the last few yrs has been a coincidence. Only question is.... Are you seeing it yet? (video)
  

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 997,917 Reports(+9,212 from prior week) Through November 3rd, 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 -1.25% to -.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 90.5 +.5 basis point.

• China Sovereign CDS 58.5 unch.
  
• China Iron Ore Spot 134.3 USD/Metric Tonne +.29%.

• Bloomberg Emerging Markets Currency Index 41.7 +.04%.
• Bloomberg Global Risk-On/Risk Off Index 55.0 +.2%.
  
• Bloomberg US Financial Conditions Index .67 n/a.
  
• Volatility Index(VIX) futures 15.7 -.67%.
• Euro Stoxx 50 futures -.72%.

• S&P 500 futures +.17%.

• NASDAQ 100 futures +.24%.  

Morning Preview Links

BOTTOM LINE: Asian indices are modestly lower, weighed down by technology and consumer shares in the region. I expect US stocks to open modestly higher and weaken into the afternoon, finishing modestly lower.  The Portfolio is 50% net long heading into the day.