Stocks Reversing Slightly Lower into Final Hour on Declining Fed Rate-Cut Odds, China Economy Worries, Higher Long-Term Rates, Technology/Commodity Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 13.9 -1.2%
• DJIA Intraday % Swing .78% +32.0%
  
• Bloomberg Global Risk On/Risk Off Index 55.8 +3.4%

• Euro/Yen Carry Return Index 170.2 +1.2%

• Emerging Markets Currency Volatility(VXY) 8.04 -1.1%

• CBOE S&P 500 Implied Correlation Index 20.6 -2.3% 

• ISE Sentiment Index 160.0 +25.0
  

• Total Put/Call .93 -8.8%

• NYSE Arms .88 -25.4% 
• NYSE Non-Block Money Flow -$64.6M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 59.6 -.8%
  

• US Energy High-Yield OAS 347.16 -2.5%
• Bloomberg TRACE # Distressed Bonds Traded 271 +21
  

• European Financial Sector CDS Index 73.81 -.86% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 222.27 +1.0%
  

• Italian/German 10Y Yld Spread 169.0 basis points +1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 99.0 +3.1%
  

• Emerging Market CDS Index 183.9 +1.2%
• Israel Sovereign CDS 113.05 +1.1%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.2 +.04%

• 2-Year SOFR Swap Spread -17.0 basis points +.75 basis point
  

• TED Spread 20.75 basis points +1.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -3.25 -.75 basis point
  
• MBS  5/10 Treasury Spread 149.0 +2.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 966.0 unch.
  
• Avg. Auto ABS OAS 76.0 -1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.3 +.02%
• 3-Month T-Bill Yield 5.38% -1.0 basis point
  

• China Iron Ore Spot 139.6 USD/Metric Tonne -1.1%
• Dutch TTF Nat Gas(European benchmark) 33.41 euros/megawatt-hour +1.9%

• Citi US Economic Surprise Index 6.4 +6.0 points

• Citi Eurozone Economic Surprise Index -30.4 +9.6 points

• Citi Emerging Markets Economic Surprise Index 15.5 +1.1 points
• S&P 500 Current Quarter EPS Growth Rate YoY(20 of 500 reporting) +9.0% -4.5 percentage points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 243.43 +.01:  Growth Rate +11.9% +.1 percentage point, P/E 19.4 unch.
  
• S&P 500 Current Year Estimated Profit Margin 12.05% +1.0 basis point
  
• 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 289.90 +.28: Growth Rate +35.9% +.1 percentage point, P/E 29.1 unch.
  
• Bloomberg US Financial Conditions Index n/a
  
• Bloomberg Euro-Zone Financial Conditions Index .33 -11.0 basis points
  
• US Yield Curve -39.75 basis points (2s/10s) +2.25 basis points
  
• US Atlanta Fed 4Q GDPNow Forecast +2.51% +48.0 basis points
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 65.7% -.1 percentage point
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.02% unch.: CPI YoY +3.32% unch.
  
• 10-Year TIPS Spread 2.22 +2.0 basis points
  
• Highest target rate probability for March 20th FOMC meeting: 60.4%(-4.3 percentage points) chance of 5.0%-5.25%. Highest target rate probability for May 1st meeting: 49.4%(-7.0 percentage points) chance of 4.75%-5.0%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +48 open in Japan 
• China A50 Futures: Indicating -14 open in China

• DAX Futures: Indicating +102 open in Germany

Portfolio:

• Slightly Higher:  On gains in my biotech/transport sector longs and emerging market shorts
  

• Disclosed Trades: None
  

• Market Exposure: 25% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Growth unch.
  

Sector Underperformers:

• 1) Oil Service -1.6% 2) Energy -1.3% 3) Steel -1.1%

Stocks Falling on Unusual Volume: 

• ARHS, OVV, CHGG, RPM, IGT, OPRA, STM, SATS, KNSA, MED, NXT, COLL, SA, WBA, APA, ALGM, AVNS and MBLY
  

Stocks With Unusual Put Option Activity:

• 1) MBLY 2) QS 3) MCHP 4) AZN 5) WSM
  

Stocks With Most Negative News Mentions:

• 1) MBLY 2) WW 3) CAG 4) ON 5) SKIN
  

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +.6%
  

Sector Outperformers:

• 1) Shipping +2.5% 2) Airlines +1.3% 3) Banks +1.1%

Stocks Rising on Unusual Volume:

• DYN, KROS, GCT, SEM, SIDU, TW, LBPH, CALM, APPN, TCPC, CPE and FSK
  

Stocks With Unusual Call Option Activity:

• 1) MBLY 2) QS 3) TMUS 4) LW 5) DISH

Stocks With Most Positive News Mentions:

• 1) QS 2) SMPL 3) ALL 4) MUSA 5) KSCP
  

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:

• (ANGO)/-.08
• (STZ)/3.02
• (GBX)/.75
  

After the Close: 

• None of note
  

Economic Releases

8:30 am EST

• The Change in Non-Farm Payrolls for Dec. is estimated to fall to +175K versus +199K in Nov.
• The Unemployment Rate for Dec. is estimated to rise to 3.8% versus 3.7% in Nov.
• Average Hourly Earnings MoM for Dec. is estimated to rise +.3% versus a +.4% gain in Nov. 
• The Labor Force Participation Rate for Dec. is estimated at 62.8% versus 62.8% in Nov.
  

10:00 am EST

• Factory Orders for Nov. is estimated to rise +2.4% versus a -3.6% decline in Oct.
• Factory Orders Ex Transports for Nov. is estimated to fall -.1% versus a -1.2% decline in Oct.
• Final Durable Goods Orders for Nov.
• The ISM Services Index for Dec. is estimated to fall to 52.5 versus 52.7 in Nov.
• ISM Services Prices Paid for Dec. is estimated to fall to 57.0 versus 58.3 in Nov.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Fed's Barkin speaking, CFTC speculative positioning report, US Baker Hughes Rig Count, (ZS) annual meeting and the (GBX) 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 -7.2% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 11.8 +.8
  
• 4 Sectors Declining, 7 Sector Rising
• 59.1% of Issues Advancing, 37.5% Declining 
• TRIN/Arms .83 -29.7% 
• Non-Block Money Flow +$12.5M
  
• 49 New 52-Week Highs, 10 New Lows
• 63.1%(+1.4%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 64.0 +3.0
  

Other:

• Bloomberg Global Risk-On/Risk-Off Index 55.3 +2.5%
• Bloomberg Cyclicals/Defensives Pair Index 137.6 -.22%
  
• Russell 1000: Growth/Value 17,959.5 -.21%
• CNN Fear & Greed Index 78.0 (Extreme Greed) +3.0
• 1-Day Vix 9.0 -15.2%
  
• Vix 13.9 -1.0%
  
• Total Put/Call .90 -11.8%

Thursday Watch

Evening Headlines

Bloomberg:

• Confidential Jeffrey Epstein Documents Unsealed by New York Court.
• China Holds Sea Patrols as US, Philippines Drill in Same Region.
• China’s LGFVs Must Repay a Record $651 Billion of Bonds in 2024.
• Xi’s Mixed Messages Leave Whiplashed Investors Wary of China.
• Wall Street's Ambitions in China Run Into a Rising Firewall.
• TikTok Eyes $17.5 Billion Shopping Business on Amazon’s Turf.
• Asia Stocks Mirror US Declines After Fed Minutes: Markets Wrap.
• Oil Rises for Second Day on Libyan Outages, Red Sea Tensions.
• Trump Asks US Supreme Court to Overturn Colorado Ballot Ban.
• Trump Sues Maine Official Who Disqualified Him From Ballot.
• Fed Sees Rates Staying High for Some Time With Cuts Eyed in 2024.
• Zuckerberg Sold Nearly Half a Billion Dollars of Meta Stock In Last Two Months.
• Markets See Fed’s Exit From Quantitative Tightening Nearing.
• Key Takeaways From Minutes of Fed’s December Rate Meeting.
• JPMorgan, Goldman in Talks With Grayscale About Bitcoin ETF Role.
• Georgia Homebuilder Launches What Could Be 2024’s First US IPO.
• Apple Leads $383 Billion Tech Rout in Reversal From Group’s 2023 Rally.
• CVS to Replace AbbVie’s Blockbuster Humira With Cheaper Rivals.
• Five Key Charts to Watch in Global Commodity Markets in 2024.
• Five Things You Need to Know to Start Your Day.

Zero Hedge:

• "President Clinton Is A Key Person": Epstein Files Finally Unsealed.
• Feds Want To Jail Ray Epps For Just 6 Months Over Role In Jan. 6 Riot.
• Entry-Level Jobs Pay Six Figures In This Gritty Part Of America.
• Goldman Trading Desk: This Is The Biggest Risk To Markets This Year.
• Trump, Endorsed By All House GOP Leaders, Urges SCOTUS To Overturn Colorado Ballot Ban As Deadline Looms.
• Big (small) cap pain.
• Chicago Led Nation In Homicides For 12th Year In A Row, Murder-Rate Still 5x NYC's.
• Container Ship Desert In Red Sea As Biden's Operation Prosperity Guardian Fails.
• Hezbollah Losses Grow To 9 In One Day After Israel Mounts Another Major Airstrike.
• Review Shows COVID-19 Vaccines "Significantly" More Deadly Than Flu Shots: Sen. Ron Johnson.
• We Need A Return To An Emphasis On Meritocracy.
• The 5 Strangest Features Of The Modern Left.
• Stocks slip, Bitcoin slides and crude rips higher - Newsquawk Asia-Pac Market Open.
• WTI Holds Day's Gains After API Reports Big Crude Draw.
• Stock slide continues, oil climbs on geopolitics and supply risk - Newsquawk US Market Wrap. 
• Global Bonds & Stocks Suffer Biggest Rout To Start A Year Since 1999.

Wall Street Journal:

• China’s Balloons Are Back. This Time They Are Over Taiwan.
• At Least 95 Dead in Blasts at Memorial for Iranian Commander
• Inside a Flaming Jet, 367 Passengers Had Minutes to Flee. Here’s How They Did It.
• The West Badly Needs More Missiles—but the Wait Is Years Long
• Cigna Nears Deal to Offload Medicare Business
• Another California Gift to Texas. Chevron explains to Sacramento why the state is losing jobs and investment.
• A $3 Trillion Burden. Biden regulators spew out red tape at a historic pace. 

CNBC.com:

• Fed officials in December saw rate cuts likely, but path highly uncertain, minutes show.
• Red Sea crisis boosts shipping costs, delays – and inflation worries.
• Market forecaster Jim Bianco sees 10-year Treasury yield hitting 5.5%.
• Xerox to cut 15% of its workforce.

MarketWatch.com:

• Stock market fails to stage a ‘Santa Claus rally’ in rough start to 2024.
• Office-loan delinquencies hit 5-year high in 2023 and likely will rise even higher, Moody’s says.
• Fed officials haven’t ruled out further rate hikes, minutes show.
• Apple’s stock needs to get ‘unstuck’ — and its innovation rut may not be helping.

Newsmax:

• DOJ Challenges Texas' Bid to Ease Border Chaos by Arresting Illegals.
• Bernie Sanders: Stop Funding Israel's 'Immoral' War.
• Shifa Hospital Was Hamas Command Center, US Confirms.
• US, Allies Issue Ultimatum to Iran-Backed Houthis.

Fox News:

• High-profile names linked to sex trafficker Jeffrey Epstein unsealed in documents.
• Biden's green goals suffer blow as developer axes project hailed as Bidenomics success.
• Chick-fil-A raises its prices more than 20% as inflation rages.

TheGatewayPundit.com:

• MUST SEE VIDEO: Just Think… There Are Republicans Who Believe Democrats Are Running This Guy But Will Not Cheat in 2024!
• Trump Asks US Supreme Court to Overturn Colorado Decision to Remove Him From 2024 Ballot.
• BREAKING: HERE ARE THE EPSTEIN DOCUMENTS RELEASED TONIGHT
• Convicted Sex Trafficker Ghislaine Maxwell Breaks Silence on Epstein Associate List Release, Blames Gender Inequality: ‘It’s About Men Abusing Women for Years, Yet Only a Woman is Jailed’ (VIDEO)
• Associated Press’ Attempt to Spin Harvard President’s Departure Gets Publicly Fact-Checked.
• “The Democrat Party is Done in Chicago and That’s a Fact” – Black Chicagoans Vow to Flip Chicago Red for 2024 Election Over Migrant Crisis – Want to Meet with Trump (VIDEO).
• WATCH: Vivek Ramaswamy Obliterates Woke Washington Post ‘Reporter’ With Epic Response After She Asks Him a Stupid Gotcha Question Regarding White Supremacy.
• High-End Brothel Frequented by Military Officers, Politicians Believed to be ‘Honeypot’ Scheme by China, Russia, South Korea.
• Billionaire Bill Ackman Calls on Harvard Board Chair Penny Pritzker to Resign Along with Entire Board.
• Epstein List: Pedophile’s Assistant Sarah Kellen Awaits the Release of Documents, as She Holds Her ‘Mountain of Insider Secrets’ as Her ‘Get Out of Jail Free Card’.
• Florida State Surgeon General Ladapo Calls for Halt in Use of COVID-19 mRNA Vaccines.
• He’s a Uniter… Joe Biden Plans Speech on Dangers of White Supremacy at Valley Forge on Anniversary of J6 Protests – Because ALL Trump Supporters are White Supremacists.
• BREAKING: House Republicans to Begin Impeachment Proceedings Against Homeland Security Secretary Alejandro Mayorkas Over Border Crisis.

The Epoch Times:

• Chinese Workers’ Protests Doubled in 2023, Posing a Threat to CCP’s Rule: China Observers.
• China’s Leader Acknowledges Poor Economy, Has No Solution.
• Taiwanese Expert Pioneers AI Defense Technology to Thwart CCP’s Attempts to Manipulate Taiwan Elections.

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 -1.0% to unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 98.0 +4.0 basis points.

• China Sovereign CDS 64.75 +3.75 basis points.
  
• China Iron Ore Spot 142.3 USD/Metric Tonne -.3%.

• Bloomberg Emerging Markets Currency Index 41.3 -.06%.
• Bloomberg Global Risk-On/Risk Off Index 54.8 +1.5%.
  
• Bloomberg US Financial Conditions Index n/a.
  
• Volatility Index(VIX) futures 15.6 -.3%.
• Euro Stoxx 50 futures +.04%.

• S&P 500 futures +.11%.

• NASDAQ 100 futures +.08%.  

Morning Preview Links

BOTTOM LINE: Asian indices are lower, weighed down by technology and industrial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 25% net long heading into the day.