Stocks Slightly Lower into Final Hour on China Economy Worries, Mid-East Regional War Fears, Dollar Strength, Commodity/Financial Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 12.9 -1.3%
• DJIA Intraday % Swing .46% -19.8%
  
• Bloomberg Global Risk On/Risk Off Index 57.0 -.8%

• Euro/Yen Carry Return Index 169.88 unch.

• Emerging Markets Currency Volatility(VXY) 7.71 -1.3%

• CBOE S&P 500 Implied Correlation Index 18.7 -2.8% 

• ISE Sentiment Index 149.0 +40.0
  

• Total Put/Call .90 +7.1%

• NYSE Arms 1.25 -3.9% 
• NYSE Non-Block Money Flow -$309.3M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 56.70 -.95%
  

• US Energy High-Yield OAS 336.5 -.05%
• Bloomberg TRACE # Distressed Bonds Traded 313 +15
  

• European Financial Sector CDS Index 71.9 -1.4% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 219.8 -1.2%
  

• Italian/German 10Y Yld Spread 166.0 basis points -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 102.4 -1.5%
  

• Emerging Market CDS Index 181.45 +.41%
• Israel Sovereign CDS 124.74 +9.7%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.24 +.04%

• 2-Year SOFR Swap Spread -15.75 basis points -.75 basis point
  

• TED Spread 21.75 basis points -.75 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -3.25 +.25 basis point
  
• MBS  5/10 Treasury Spread 149.0 +4.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 969.0 +3.0 basis points
  
• Avg. Auto ABS OAS 75.0 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.2 -.22%
• 3-Month T-Bill Yield 5.37% unch.
  

• China Iron Ore Spot 135.5 USD/Metric Tonne -1.7%
• Dutch TTF Nat Gas(European benchmark) 30.6 euros/megawatt-hour -3.0%

• Citi US Economic Surprise Index 6.5 +.6 point

• Citi Eurozone Economic Surprise Index -17.5 -.1 point

• Citi Emerging Markets Economic Surprise Index 16.9 -.6 point
• S&P 500 Current Quarter EPS Growth Rate YoY(21 of 500 reporting) +9.1% unch.
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 243.52 -.11:  Growth Rate +11.9% -.1 percentage point, P/E 19.5 +.1
  
• S&P 500 Current Year Estimated Profit Margin 12.05% 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 290.63 +.26: Growth Rate +36.2% +.1 percentage point, P/E 29.8 +.3
  
• Bloomberg US Financial Conditions Index n/a
  
• Bloomberg Euro-Zone Financial Conditions Index .39 -1.0 basis point
  
• US Yield Curve -35.25 basis points (2s/10s) +.25 basis point
  
• US Atlanta Fed 4Q GDPNow Forecast +2.23% -28.0 basis points
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 64.3% +.1 percentage point
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.02% unch.: CPI YoY +3.32% unch.
  
• 10-Year TIPS Spread 2.22 -1.0 basis point
  
• Highest target rate probability for March 20th FOMC meeting: 62.7%(+.1 percentage point) chance of 5.0%-5.25%. Highest target rate probability for May 1st meeting: 52.5%(-1.3 percentage points) chance of 4.75%-5.0%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +122 open in Japan 
• China A50 Futures: Indicating -52 open in China

• DAX Futures: Indicating +131 open in Germany

Portfolio:

• Higher:  On gains in my tech/biotech sector longs, index hedges and emerging market shorts
  

• Disclosed Trades: None
  

• Market Exposure: 75% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Value -.9%
  

Sector Underperformers:

• 1) Oil Service -2.7% 2) Steel -2.3% 3) Shipping -1.8%

Stocks Falling on Unusual Volume: 

• ES, CYTK, U, HPE, NEOG and CORT
  

Stocks With Unusual Put Option Activity:

• 1) CART 2) LUMN 3) UNG 4) CVEA 5) SPR
  

Stocks With Most Negative News Mentions:

• 1) JBLU 2) NEOG 3) TLRY 4) EXTR 5) HPE
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.2%
  

Sector Outperformers:

• 1) Cybersecurity +1.9% 2) Networking +1.1% 3) Medical Equipment +.7%

Stocks Rising on Unusual Volume:

• ACCD, CAMT, METC, JNPR, PRTA, SIDU, PRCT, IMTX, CENX, ACMR, SRPT, RXRX, AYI, VKTX, URBN, GCT, VERA, ILMN, STAA, SMCI, CRWD, TENB, PZZA, IGMS, NXT AND SAGE
  

Stocks With Unusual Call Option Activity:

• 1) SSRM 2) FIS 3) SRPT 4) KBR 5) AMBC

Stocks With Most Positive News Mentions:

• 1) JNPR 2) CUTR 3) ACCD 4) OFIX 5) SRPT
  

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: 

• (KBH)/1.70
  

Economic Releases

10:00 am EST

• Wholesale Trade Sales MoM for Nov. is estimated to rise +.4% versus a -1.3% decline in Oct.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -199,170 barrels versus a -5,503,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +1,659,170 barrels versus a +10,900,000 barrel gain the prior week. Distillate inventories are estimated to rise by +987,830 barrels versus a +10,090,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.87% versus a +.2% gain prior.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Fed's Williams speaking, Atlanta Fed GDPNow 4Q update, 10Y T-Bond auction, weekly MBA Mortgage Applications report, Thomson Reuters IPSOS PCSI, JPMorgan Healthcare Conference and the ISI Utility 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 -5.4% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 11.1 -1.6
  
• 7 Sectors Declining, 4 Sectors Rising
• 30.9% of Issues Advancing, 67.0% Declining 
• TRIN/Arms 1.21 -6.9% 
• Non-Block Money Flow -$254.5M
  
• 26 New 52-Week Highs, 21 New Lows
• 63.1%(-2.2%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 61.0 -2.0
  

Other:

• Bloomberg Global Risk-On/Risk-Off Index 57.0 -.9%
• Bloomberg Cyclicals/Defensives Pair Index 137.2 -.45%
  
• Russell 1000: Growth/Value 18,285.5 +.77%
• CNN Fear & Greed Index 73.0 (Greed) +2.0
• 1-Day Vix 8.5 -9.7%
  
• Vix 12.9 -1.5%
  
• Total Put/Call .91 +8.3%

Tuesday Watch

Evening Headlines

Bloomberg:

• Chinese Billionaire Is Second-Biggest Foreign Owner of US Land.
• Xi, Biden and the $10 Trillion Cost of War Over Taiwan.
• UK Christmas Retail Sales Disappoint as Shoppers Pull Back.
• Asia Stocks Rise, Tracking Tech-Led Gains in US: Markets Wrap.
• Boeing 737 Max 9 Inspections Hit Snag as United Finds Loose Bolts.
• Boeing Supplier Spirit AeroSystems Tumbles After Plane Blowout.
• Bitcoin Rally Cools in Countdown to US Spot ETF Decision by SEC.
• Realtor Group President Resigns After Blackmail Threat.
• Jefferies Profit Drops by Half as Firm Closes ‘Trough Year’.
• First US Moon Lander Mission in 50 Years Goes Awry in Space.
• ESG Campaigns Seen Falling Out of Favor With Activist Investors.
• Nvidia Rolls Out New Chips, Claims Leadership of AI PC Race.

Zero Hedge:

• Parks Service Seeks To Remove William Penn Statue To Make Philadelphia More "Welcome And Inclusive".
• Shale Tycoon Harold Hamm Wants To Lure Gen Z To The Oil Industry.
• Here’s Where COVID Mask Mandates Are Coming Back Across The US.
• Victor Davis Hanson: A Culture In Collapse.
• The AARP Just Told Its 38 Million Members To Get An 8th (Yes, Eighth!!) Shot Of mRNA.
• Let The (Political) Games Begin.
• Israel Begins To Scale Back Gaza War, But Still Expects Fighting To Continue All Year.
• What Is Happening To College Sports?
• End The Cuba Embargo? Biden Begs Mexico To Stop Migrant Flows, But There's A Price.
• Tech led the US stock rally amid a softer yield environment - Newsquawk Asia-Pac Market Open.
• Supreme Court Declines X's Challenge To Surveillance Gag Order.
• CJ Hopkins Warns Americans: The 1st Amendment Will Not Save You.
• Trump Rips Austin For 'Improper Professional Conduct & Dereliction Of Duty' After Secretive Hospital Stay.
• Stocks jump on tech gains and falling inflation expectations - Newsquawk US Market Wrap. 
• Bitcoin & Big-Tech Burst Higher Amid Bloodbath In Boeing & Black Gold.

Wall Street Journal:

• Austin Declined to Tell White House Both Times He Was Hospitalized.
• Buying Home and Auto Insurance Is Becoming Impossible.
• Tiger Woods and Nike Split Up After 27 Years.

CNBC.com:

• U.S. companies in no hurry to disclose beneficial ownership under Treasury rule.
• Samsung warns fourth-quarter profit could plunge 35%, misses expectations.
• JetBlue CEO Robin Hayes to step down in February, COO Joanna Geraghty to take helm.
• United Airlines finds loose bolts on several Boeing 737 Max 9s after grounding.
• Mysterious crypto ‘dark money’ group ramps up lobbying efforts ahead of 2024 election.

MarketWatch.com:

• Investors kick off busy week that could set the tone for stocks, crypto and other assets in 2024.
• Investors should expect easier financial conditions this summer, says BofA Global
• Fed’s Bowman says inflation could drop without further rate hikes.
• Unity Software to cut 25% of staff amid restructuring.
• Juniper Networks’ stock spikes 22% on report it could be soon acquired by HPE.
• Nvidia’s stock breaks new ground after healthcare partnerships and ahead of CES.

Newsmax:

• Anti-Israel Protesters Clog New York Tunnel, Bridges.
• Deal on Ukraine Aid, Border Security Proves Elusive as D.C. Reconvenes.
• UN Seeks Accountability for Hamas Sex Torture.
• Fears Grow of All-Out War in Middle East. 
• Israeli Intelligence Minister: Iran Behind Hamas War.

Fox News:

• Debris scattered across streets after hotel explosion in Fort Worth, multiple people injured.
• Top strategist for a major bank includes Biden's campaign in his predictions for 2024.

TheGatewayPundit.com:

• BREAKING: Filing Accuses Fulton County DA Fani Willis of Having ‘Improper’ Romantic Relationship with Top Trump Prosecutor – Seeks to Disqualify Fani Willis From RICO Case.
• REPORT: Jeffrey Epstein’s Sex Slave Turned Accomplice Missing Following Release of Documents.
• Five House Republicans Vow to Shut Down the Government Until Biden Shuts Down Illegal Immigration at Southern Border (VIDEO).
• EPSTEIN DOCS: Hillary Clinton Sent Henchmen to Intimidate Victim – FOOTAGE OF CLINTON SEX TAPES BACKED UP ON USB STICKS – PAYOUTS FROM CLINTON FOUNDATION, FBI COVER-UP.
• EPSTEIN DOCS: New Pictures of Young Girls on Epstein’s ‘Pedo Island’ Emerge Amid Allegations of Bill Clinton Sex Tapes.
• Pittsburgh Police Union Warns the Public is ‘At Risk’ Due to Staffing Shortage.
• Outrageous! Secretary of State Brad Raffensperger Does Not Have to Testify in Upcoming Case Challenging Georgia Election Machines.
• Mexican President Demands Joe Biden Grant at Least 10 Million Hispanics Legal Status in US and $20 Billion to Latin America in Exchange for Assistance on the US Border.
• Rep. Stefanik Says She is Concerned About the ‘Treatment of January 6 Hostages’ on Meet the Press (VIDEO).
• NY Dem Rep. Yvette Clarke Says the Quiet Part Out Loud About Illegals -“I Need More People in My District Just for Redistricting Purposes” (Video).
• German Farmers Stage Largest Protest Ever, Blocking Roads All Over the Country – Movement Opposes Climate Alarmist Policies and End to Subsidies.
• CRIMINAL: Department of Health Paving the Way for the Next Lockdown.

The Epoch Times:

• China’s Private Security Companies: A CCP Tool.
• Free Artistic Expression Under Siege as CCP Attempts to Censor Shen Yun: Report.

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 +.25% to +1.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 102.5 unch.

• China Sovereign CDS 65.25 -.5 basis point.
  
• China Iron Ore Spot 137.0 USD/Metric Tonne -.69%.

• Bloomberg Emerging Markets Currency Index 41.3 +.01%.
• Bloomberg Global Risk-On/Risk Off Index 58.0 +.8%.
  
• Bloomberg US Financial Conditions Index n/a.
  
• Volatility Index(VIX) futures 14.8 +.08%.
• Euro Stoxx 50 futures +.27%.

• S&P 500 futures -.09%.

• NASDAQ 100 futures -.10%.  

Morning Preview Links

BOTTOM LINE: Asian indices are modestly higher, boosted by technology and industrial 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.