Stocks Slightly Lower into Afternoon on Diminished Stimulus Hopes, Rising Virus Lockdown Worries, Biden Presidency/Tax Hike Fears, Transport/Financial Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 32.3 -.62%
• Bloomberg Global Risk On/Risk Off Index -100.0 -26.0 points

• Euro/Yen Carry Return Index 127.90 -.25%

• Emerging Markets Currency Volatility(VXY) 11.07 unch.

• S&P 500 Implied Correlation 60.5 +.23%

• ISE Sentiment Index 93.0 -41.0 points
  

• Total Put/Call .78 -29.1%

• NYSE Arms 1.25 -12.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 59.81 +2.31%
  

• US Energy High-Yield OAS 810.74 +.68%

• European Financial Sector CDS Index 76.33 +.57%

• Italian/German 10Y Yld Spread 132.0 unch.
  

• Asia Ex-Japan Investment Grade CDS Index 66.32 +.96%
  

• Emerging Market CDS Index 207.49 -.48%
  

• iBoxx Offshore RMB China Corporate High Yield Index 179.64 -.01%

• 2-Year Swap Spread 8.75 +.25 basis point

• TED Spread 12.75 -.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -15.0 -.5 basis point
  
• MBS  5/10 Treasury Spread  82.75 +1.25 basis points
  
• IHS Markit CMBX BBB- 6 68.25 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 59.41 -.16%
• 3-Month T-Bill Yield .09% unch.

• Yield Curve 64.5 -2.0 basis points
  

• China Iron Ore Spot 113.20 USD/Metric Tonne +.63%

• Citi US Economic Surprise Index 116.8 +3.6 points

• Citi Eurozone Economic Surprise Index 10.20 +.3 point
  

• Citi Emerging Markets Economic Surprise Index 45.40 +6.2 points

• 10-Year TIPS Spread 1.72 unch.
• 100.0% chance of no change at Dec. 16th meeting, 100.0% chance of no change at Jan. 27th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -80 open in Japan 
• China A50 Futures: Indicating +25 open in China

• DAX Futures: Indicating -51 open in Germany

Portfolio:

• Slightly Higher: On gains in my biotech/consumer staple/tech/medical sector longs
  

• Disclosed Trades: None
  

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -1.4%

Sector Underperformers:

• 1) Airlines -2.9% 2) Road & Rail -2.5% 3) Homebuilding -2.2%

Stocks Falling on Unusual Volume: 

• CAT, AJRD, TWLO, SWK, TRU, OMC, BYD, SAH, PFG, CEQP, NEO, AMD, LLY, ROP, MEDP, DXCM, TCF, HGEN, CHGG, BEN, FIX, AMKR and KNL
  

Stocks With Unusual Put Option Activity:

• 1) PBF 2) HOG 3) IYR 4) IFF 5) FXE
  

Stocks With Most Negative News Mentions:

• 1) ET 2) SPWR 3) UMPQ 4) BTU 5) UBER
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.4%

Sector Outperformers:

• 1) Social Media +1.7% 2) Video Gaming +1.7% 3) Gold & Silver +1.6%

Stocks Rising on Unusual Volume:

• EXAS, HOG, EXPI, SSTK, MCFT, SHOO, UIS, FFIV, XLNX, TPTX, ELY, TIF, LRN, CVLT, MC and ANAB
  

Stocks With Unusual Call Option Activity:

• 1) RRR 2) HOG 3) SEAS 4) EXAS 5) ELY

Stocks With Most Positive News Mentions:

• 1) CASI 2) SSTK 3) XLNX 4) ANAB 5) MKTX
  

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -14.3% Below 100-Day Average
• 5 Sectors Rising, 6 Sectors Declining
• 35.7% of Issues Advancing, 61.0% Declining
• 26 New 52-Week Highs, 23 New Lows
• 51.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 45.7% 
• Bloomberg Global Risk-On/Risk-Off Index -113.0 -38.0 points
• Vix 32.4 -.3%
• Total Put/Call .80 -27.3%
• TRIN/Arms 1.29 -9.2%

Tuesday Watch

Evening Headlines

Bloomberg:

• Boris Johnson Hit by Lockdown Revolt From More Than 50 Tories.
• South Korea Rebounds From Recession as Exports Jump.  
• Lira’s New Low Underscores Central Bank’s Credibility Challenge.
• Asian Stocks Track U.S. Lower as Virus Spreads: Markets Wrap.  
• Oil Steady Near Three-Week Low With Bearish Headwinds Mounting.
• Surprise Strength, Climate’s Costs, Impossible Trinity: Eco Day.
• Five Things You Need to Know to Start Your Day.
• Pelosi, Mnuchin Fail to Reach Deal on Stimulus in Monday Call.
• Senate Confirms Amy Coney Barrett to U.S. Supreme Court.
• Las Vegas Sands Exploring $6 Billion Sale of Vegas Casinos.
  
• U.S. Trial of Lilly Antibody Therapy to End; No Safety Issue.

Wall Street Journal:

• Barrett Is Confirmed to Supreme Court.
• Justice Barrett Joins the Court.
• Saving Private Biden.
• Can Gap Escape the Whirlwind? New CEO Confronts Years of Decline.
• China to Sanction U.S. Arms Makers Over Sales to Taiwan.
• Ant to Raise More Than $34 Billion in Record IPO.
• Hospital Merger Seeks to Create Regional Giant in the West.
• China Is Far Behind on U.S. Purchases Under Trade Deal.
• A Trump Election Comeback? With These Pieces, It’s Still Possible.

Fox News:

• Senate confirms ACB as an associate justice on the nation's highest court.
  

CNBC.com:

• Charles Schwab to lay off 1,000 workers following merger with TD Ameritrade.
• Stimulus deal before Election Day looks less likely as Pelosi pushes Mnuchin over virus testing.
• Stocks making the biggest moves after hours: Twilio, Chegg, AIG and more.
  

MarketWatch.com:        

• Spain’s weary population may be a test for how many COVID-19 restrictions a population can take, says prominent epidemiologist.
• China’s Appetite for Meat Is Still Growing.

Zero Hedge:

• 'You'll Bury Everyone Involved': Bobulinski Recorded Biden Operatives Begging Him To Stay Quiet, Set To Release Tues.
• "Can I Change My Vote": Voter's Remorse Sets In As Searches For Do-Over Spike.
• CDC Reaffirms Warning Against Nonessential Travel, Including Cruises.
• One Client Responds To "Vain, Narcissistic" CEO Of Expensify After Unsolicited Political Email.
• Are We Going To Witness The Worst National Emotional Breakdown In History Once The Election Is Over?
• How Traders Are Responding To Today's VIX Surge And Put/Call Spike.
• Iconic Barbershop In NYC's East Village Closes After 73 Years In Business Due To COVID.
• Wells Fargo Is Selling Its $10 Billion Student Loan Book.
• Stock Reactions To Q3 Earnings "Smack Of The Tech Bubble".
• Creditors Finally Wake Up To An Apocalyptic Reality: Bond Losses As High As 99%.
• How Decades Of Media And Faculty Bias Have Pushed America To The Left.
• Stimulus Stalemate & SAP Slam Stocks, Hopes Crushed On COVID Chaos, Cresting 'Blue Wave'.

The Epoch Times:

• Chinese Regime Retaliates Against Six US Media Outlets, Requiring Reports on Operations.
• Biden Says He Will Collaborate With China If Elected.
  

Digital Blackboard:

• Daily New Cases by Region.

Worldometer:

• New Cases/Deaths by state.

Rt Covid-19:

• How fast virus is growing by state.

KFF:

• State Data(Tests/Hospitalizations).

Night Trading 

• Asian equity indices are -1.25% to -.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 66.0 +.5 basis point.

• China Sovereign CDS 38.5 +1.5 basis points.

• Bloomberg Emerging Markets Currency Index 59.51 +.01%.
• Bloomberg Global Risk-On/Risk Off Index 68.0 +6.0 points.
• Volatility Index(VIX) futures 28.85 +.19%
• FTSE 100 futures +.26%.

• S&P 500 futures +.27%.

• NASDAQ 100 futures +.26%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Economic Releases

8:30 am EST

• Durable Goods Orders for Sept. is estimated to rise +.5% versus a +.5% gain in Aug.
• Durables Ex Transports for Sept. is estimated to rise +.3% versus a +.6% gain in Aug.
• Cap Goods Orders Non-Defense Ex-Air for Sept. is estimated to rise +.5% versus a +1.9% gain in Aug.
  

9:00 am EST

• The FHFA House Price Index MoM for Aug. is estimated to rise +.7% versus a +1.0% gain in July.
• The S&P CoreLogic CS 20-City MoM for Aug. is estimated to rise +.5% versus a +.55% gain in July.
  

10:00 am EST

• The Conference Board Consumer Confidence Index for Oct. is estimated to rise to 102.0 versus 101.8 in Sept.
• The Richmond Fed Manufacturing Index for Oct. is estimated to fall to 18.0 versus 21.0 in Sept.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Australian inflation report, Mexico Trade Balance report, 2Y T-Note auction and the weekly US retail sales reports could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

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

Stocks Falling Substantially into Afternoon on Diminished Stimulus Hopes, Rising Virus Lockdown Worries, Biden Presidency/Tax Hike Fears, Transport/Energy Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Every Sector Declining
  

• Volume: Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 33.0 +19.6%
• Bloomberg Global Risk On/Risk Off Index -113.0 -431.0 points

• Euro/Yen Carry Return Index 128.32 -.32%

• Emerging Markets Currency Volatility(VXY) 11.07 +1.5%

• S&P 500 Implied Correlation 61.05 +21.6%

• ISE Sentiment Index 134.0 +35.0 points
  

• Total Put/Call .81 +2.53%

• NYSE Arms 1.44 +30.9%

Credit Investor Angst:

• North American Investment Grade CDS Index 58.76 +3.58%
  

• US Energy High-Yield OAS 804.38 +.43%

• European Financial Sector CDS Index 75.86 +4.6%

• Italian/German 10Y Yld Spread 132.0 -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 65.69 +.22%
  

• Emerging Market CDS Index 208.93 +2.72%
  

• iBoxx Offshore RMB China Corporate High Yield Index 179.66 +.06%

• 2-Year Swap Spread 8.5 +.25 basis point

• TED Spread 13.0 unch.
  

• 3-Month EUR/USD Cross-Currency Basis Swap -14.5 -1.0 basis point
  
• MBS  5/10 Treasury Spread  81.50 +1.5 basis points
  
• IHS Markit CMBX BBB- 6 68.25 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 59.51 -.38%
• 3-Month T-Bill Yield .09% unch.

• Yield Curve 66.5 -3.5 basis points
  

• China Iron Ore Spot 112.40 USD/Metric Tonne -1.1%

• Citi US Economic Surprise Index 113.2 -14.7 points

• Citi Eurozone Economic Surprise Index 9.90 -5.8 points
  

• Citi Emerging Markets Economic Surprise Index 39.20 -1.3 points

• 10-Year TIPS Spread 1.72 -1.0 basis point
• 100.0% chance of no change at Dec. 16th meeting, 100.0% chance of no change at Jan. 27th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -84 open in Japan 
• China A50 Futures: Indicating -26 open in China

• DAX Futures: Indicating -35 open in Germany

Portfolio:

• Slightly Lower: On losses in my biotech/industrial/consumer staple/tech/medical sector longs
  

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my emerging market shorts
  

• Market Exposure: Moved to 25% Net Long