Stocks Reversing Slightly Higher into Afternoon on Earnings Outlook Optimism, Technical Buying, Short-Covering, Tech/Energy Sector Strength

Overseas Futures:

• Nikkei 225 Futures: Indicating +175 open in Japan 
• China A50 Futures: Indicating -39 open in China

• DAX Futures: Indicating +52 open in Germany

Portfolio:

• Higher: On gains in my industrial/tech/biotech/utility sector longs 
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges 
• Market Exposure: Moved to 75% Net Long

Monday's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open:

• (ARMK)/.64
• (JJSLF)/1.24
• (JKS)/-4.32 
• (XP)/2.43 

After the Close: 

• (TCOM)/8.02

Economic Release 

8:30 am EST

• Empire Manufacturing for Nov. is estimated to fall to 6.7 versus 10.7 in Oct. 

Upcoming Splits

• (NFLX) 10-for-1

Other Potential Market Movers

• The Fed's Kashkari speaking, Fed's Waller speaking, Fed's Williams speaking, Jefferies Healthcare Conference, (YUMC) investor day, (NTGR) investor day, RBC TIMT Conference, BofA Clean Tech Symposium, Wells Fargo TMT Summit, Stephens Investment Conference, Cowen Energy Conference, Wolfe Research Healthcare Conference and the JPMorgan Ultimate Services Investor Conference could also impact global trading on Monday.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Friday Watch

Around X:

• @Business  

• Defense Secretary Pete Hegseth announced a new operation against narco-terrorists, signaling that the US may be prepared to step up a campaign of deadly airstrikes against vessels in the Caribbean and eastern Pacific Ocean.
• Brazil hopes to reach a preliminary trade deal with the US as soon as this month, the South American nation’s top diplomat said, as relations between the two countries improve after a months-long feud.
• The US and Argentina reached a deal to deepen “bilateral trade and investment cooperation,” the White House said in a notice briefly posted to its government website. 
• Apple and OpenAI must answer to a lawsuit filed by Elon Musk’s X and xAI accusing the companies of conspiring to thwart competition in emerging markets in artificial intelligence, a federal judge in Texas ruled. 
• Bank of America asked a federal judge to throw out a proposed class-action lawsuit accusing the company of aiding in Jeffrey Epstein’s sex-trafficking scheme.
• The Trump administration rescinded restrictions on oil drilling in Alaska’s mammoth state petroleum reserve, reversing a move by former President Joe Biden that put an estimated 8.7 billion barrels of recoverable oil off limits.
• Applications for US unemployment benefits edged lower last week, according to a Bloomberg News analysis of unadjusted state-level filings.
• Federal Reserve policymakers are flying blind after the US government shutdown starved them of crucial data, and the uncertainty is testing the nerves of investors.
• Federal Reserve Bank of Minneapolis President Neel Kashkari said he didn’t support the US central bank’s last interest-rate cut.
• Asian stocks were primed to track Wall Street lower Friday, as optimism linked to the US government reopening were tempered by uncertainty over interest rates and equity valuations.
• Here's what you need to know to start your day.

• @ZeroHedge

• State Dept Labels Four Antifa-Linked Cells As Foreign Terrorist Organizations As Fight Against Radical Left Goes Global.
• Stall In China's M1 Is Nothing To Get Worried About... Yet.
• "Funding demand will increase into year end due to various equity liquidity events and as dealers look to optimize resources into year-end, and expect SRF usage to perk back up vs. recent usage." - Goldman.
• Underwater Mortgages Rise To 3-Year High Amid Cooling US Housing Market.
• The FOMC decision is Dec 10. The next CPI print is Dec 10.
• Momentum Meltdown And Massive Rotations.
• BREAKING: The Democrats deleted their post claiming that President Trump spent Thanksgiving with Epstein in 2017. Probably because it’s an easily disprovable lie and the attempts to connect President Trump to Epstein’s crimes are a giant hoax.  
• Pentagon Briefs Trump On 'Military Options' Against Venezuela For 'Coming Days'.
• *US PREPARES SOME TARIFF EXEMPTIONS TO LOWER FOOD PRICES: NYT.
• Risk appetite at 0.
• How China Grabbed Nvidia Racks Through Secret Jakarta Loophole.
• *VERIZON'S TARGET FOR LAYOFFS RISES TO 20,000.
• Swalwell Bares Fangs After Pulte Refers To DOJ For Criminal Mortgage Fraud.
• Momentum had its worst day of the year (down ~6.5%) since DeepSeek.  
• Trump Outlines Plan To Scrap "Stupid Obamacare", Redirect Money To Americans.
• Who Really Owns America? The Banks, The Billionaires, & The Deep State.
• Bloodbath In Bitcoin & Big-Tech After Big Vote; Rate-Cut Odds Tumble.  

• @CNBC

• China's economic slowdown deepens in October as housing slump worsens and investments shrink more than expected.
• CNBC Daily Open: Flying blind in markets and the economy.
• SoftBank shares plunge over 8%, extending selloff into third day.
• Friday's big stock stories: What’s likely to move the market in the next trading session.
• Asia-Pacific shares set to fall, tracking Wall Street declines as tech selloff deepens.
• Goldman Sachs stands by top lawyer Kathy Ruemmler after her emails with Jeffrey Epstein exposed.
• Stock futures little changed after major indexes notch worst day in a month: Live updates.
• AI isn't a bubble but rather an opportunity, JPMorgan's Erdoes says.     

• @WSJ  

• Exclusive: Paramount, Comcast and Netflix are preparing bids for Warner Bros. Discovery.

• @TheTranscript

• $AMAT gets a triple beat. Demand held steady in Display and Services, while Semi Systems softened; GM held ~48%, but OM stepped down due to lower volume and mix, as well as restructuring.
• Applied Materials CFO: "Based on our conversations with our customers and partners, we are preparing Applied’s operations and service organizations to be ready to support higher demand beginning in the second half of calendar 2026".

Night Trading 

• Asian equity indices are -2.0% to -1.0% on average. 
• Asia Ex-Japan Investment Grade CDS Index 66.5 +1.75 basis points.
• China Sovereign CDS 43.25 +1.75 basis points.
• China Iron Ore Spot 102.3 USD/Metric Tonne -.5%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.95 +.01%.
• Bloomberg Emerging Markets Currency Index 36.3 -.01%.
• Bloomberg Global Risk-On/Risk Off Index 82.9 -.9%.
• US 10-Year Yield 4.12% unch.
• Volatility Index(VIX) futures 20.5 -.4%.
• Euro Stoxx 50 futures -.12%. 
• S&P 500 futures +.15%.
• NASDAQ 100 futures +.14%.

Morning Preview Links

BOTTOM LINE: Asian indices are mostly 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 50% net long heading into the day.

Stocks Falling Substantially into Final Hour on Growing Fed Rate-Cut Uncertainty, AI Infrastructure Buildout Worries, Profit-Taking, Tech/Alt Energy Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining

• Volume: Around Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 20.8 +18.9%
• S&P 500 Intraday % Swing 1.03 +74.7%
• Bloomberg Global Risk On/Risk Off Index 82.6 -2.6% 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.96 +.5%

• Euro/Yen Carry Return Index 203.5 +.16%

• Emerging Markets Currency Volatility(VXY) 6.38 +2.1%

• CBOE S&P 500 Implied Correlation Index 18.6 +17.9% 

• ISE Sentiment Index 135.0 -18.0

• Total Put/Call .80 +1.3%

• NYSE Arms .87 -2.3%
• NYSE Non-Block Money Flow -$228.8M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 53.5 +2.5%
  

• US Energy Sector High-Yield OAS Index 355.8 +2.0%
• US Tech Sector High-Yield OAS Index 430.54 +3.1%
• Bloomberg TRACE # Distressed Bonds Traded 221.0 -24.0

• European Financial Sector CDS Index 58.57 +1.8%
  

• Italian/German 10Y Yld Spread 73.0 unch.

• Asia Ex-Japan Investment Grade CDS Index 65.6 +.8%
  

• Emerging Market CDS Index 136.0 +1.2%

• China Corp. High-Yield Bond USD ETF(KHYB) 24.4 -.25%

• 2-Year SOFR Swap Spread -20.75 basis points unch.

• 3M T-Bill Treasury Repo Spread -6.75 basis points -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -4.0 -.75 basis point
• MBS  5/10 Treasury Spread 128.0 +2.0 basis points
• Bloomberg CMBS Investment Grade Bbb Average OAS 613.0 +2.0 basis points
• Avg. Auto ABS OAS 58.0 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 36.3 -.09%
• US 10-Year T-Note Yield 4.10% +3.0 basis points
• 3-Month T-Bill Yield 3.88% +1.0 basis point

• China Iron Ore Spot 102.7 USD/Metric Tonne -.1%
• Dutch TTF Nat Gas(European benchmark) 30.5 euros/megawatt-hour -1.5%

• Citi US Economic Surprise Index 10.3 -.5 point

• Citi Eurozone Economic Surprise Index 31.3 -2.3 points

• Citi Emerging Markets Economic Surprise Index 31.0 -.9
• S&P 500 Current Quarter EPS Growth Rate YoY(459 of 500 reporting) +11.6% -.1 percentage point
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 301.77 +.22:  Growth Rate +15.3% +.1 percentage point, P/E 22.5 -.2
• S&P 500 Current Year Estimated Profit Margin 13.49% unch.
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +10.0% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 497.30 +.59: Growth Rate +22.4% +.2 percentage point, P/E 33.0 -.5
• Bloomberg US Financial Conditions Index .60 -3.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index 1.36 -49.0 basis points
• Bloomberg Global Trade Policy Uncertainty Index 1.9 -.1
• US Yield Curve 52.0 basis points (2s/10s) +2.0 basis points
• US Atlanta Fed GDPNow Q2 Forecast +4.0% unch.
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 35.8% -.1 percentage point

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.85% unch.: CPI YoY +2.96% unch.
• 1-Year TIPS Spread 2.66 +1.0 basis point
• 10-Year TIPS Spread 2.29 unch.
• Highest target rate probability for Jan. 28th FOMC meeting: 49.9% (-2.2 percentage points) chance of 3.5%-3.75%. Highest target rate probability for March 18th meeting: 41.5%(+2.6 percentage points) chance of 3.5%-3.75%. (current target rate is 3.75-4.0%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -1,121 open in Japan 
• China A50 Futures: Indicating -126 open in China

• DAX Futures: Indicating -25 open in Germany

Portfolio:

• Lower: On losses in my industrial/tech/biotech/utility/consumer discretionary sector longs 
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my emerging market shorts
• Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth -3.6%

Sector Underperformers:

• 1) Computer Hardware -8.1% 2) Alt Energy -5.8% 3) Gambling -5.8%

Stocks Falling on Unusual Volume: 

• XPEV, CTRI, CRCL, IONS, TLN, BX, STNE, BILI, WSC, CCAP, ETOR, BNTX, CHAC, GHRS, NBIS, DIS, BN, TSEM, DLO, CRWV, MOD, SYM, BWXT, CCOI, DAVE, WYFI, NGNE, LB, SOFI, HUT, STRL, FLUT, HTFL, CLS, FLNC, SNDK, FRMI, IBTA, BTDR, BE and WBTN

Stocks With Unusual Put Option Activity:

• 1) DLO 2) KDP 3) XP 4) AMKR 5) DIS

Stocks With Most Negative News Mentions:

• 1) ARDT 2) KRRO 3) KDK 4) ONEW 5) CLRB

Sector ETFs With Most Negative Money Flow:

• 1) SMH 2) XLK 3) ARKK 4) IGV 5) XLY

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value -.7%

Sector Outperformers:

• 1) Foods +1.3% 2) Pharma +.8% 3) energy +.7%

Stocks Rising on Unusual Volume:

• CLBT, SEE, FLY, TTEK, SPB, ATEX, NICE, MATW, ARX, TDW, ASH, SCVL, ASH, DIN, SON, CMBRT, ALB, PLNT, PAAS, CSCO, REGN, COKE, AVNT, FLNG, SD and AVNT

Stocks With Unusual Call Option Activity:

• 1) KDP 2) MTSR 3) PRMW 4) DIS 5) ICE

Stocks With Most Positive News Mentions:

• 1) SEE 2) DDS 3) CSCO 4) TTEK 5) ALB

Sector ETFs With Most Positive Money Flow:

• 1) XBI 2) XLV 3) XLI 4) XLF 5) XLP

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume