Stocks Slightly Higher into Final Hour on Lower Long-Term Rates, End-of-Quarter Window Dressing, Technical Buying, Medical/Restaurant Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance:  Most Sectors Declining
  

• Volume:  Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 28.5 +.6%
• DJIA Intraday % Swing .84% -66.3%
  
• Bloomberg Global Risk On/Risk Off Index 4,622.0 -269.0 points

• Euro/Yen Carry Return Index 146.67 -.47%

• Emerging Markets Currency Volatility(VXY) 11.7 unch.

• CBOE S&P 500 Implied Correlation Index 48.1 +.6% 

• ISE Sentiment Index 142.0 +54.0 points
  

• Total Put/Call 1.07 +7.0%

• NYSE Arms 1.9 +41.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 99.93 +1.1%
  

• US Energy High-Yield OAS 491.46 +4.0%
• Bloomberg TRACE # Distressed Bonds Traded 421.0 +37.0
  

• European Financial Sector CDS Index 127.57 +2.0%

• Italian/German 10Y Yld Spread 188.0 basis points -5.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 135.23 +4.1%
  

• Emerging Market CDS Index 338.28 +.48%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 27.42 +.26%
  
• Ukraine Sovereign Debt Credit Default Swap 9,453.53 +9.1%
  

• 2-Year Swap Spread 34.25 basis points +.75 basis point
  

• TED Spread 49.25 basis points -1.0 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -25.5 basis points -2.5 basis points
  
• MBS  5/10 Treasury Spread  137.0 -2.0 basis points
  
• iShares CMBS ETF 47.67 -.06%
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 50.93 -.05%
• 3-Month T-Bill Yield 1.72% +1.0 basis point
  

• Yield Curve 3.25 basis points (2s/10s) -4.25 basis points
  

• China Iron Ore Spot 123.45 USD/Metric Tonne -.2%

• Citi US Economic Surprise Index -68.3 +.6 point

• Citi Eurozone Economic Surprise Index -16.9 +11.1 points
  

• Citi Emerging Markets Economic Surprise Index 22.8 -.7 point

• 10-Year TIPS Spread 2.39 -10.0 basis points
  
• Highest target rate probability for September 21st FOMC meeting: 66.2%(+1.3 percentage points) chance of 2.75%-3.0%. Highest target rate probability for November 2nd meeting: 48.0%(+.2 percentage point) chance of 3.25%-3.5%.
  

US Covid-19:

• 236 new infections/100K people(last 7 days total). 14.0%(-1.0 percentage point) of 1/14 peak -14/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -77.2%(+.6 percentage point) from peak 7-day avg. of 1/9/21 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -30 open in Japan 
• China A50 Futures: Indicating -111 open in China

• DAX Futures: Indicating -10 open in Germany

Portfolio:

• Slightly Higher:  On gains in my in my medical sector longs, index hedges and emerging market shorts
  

• Disclosed Trades:  Covered some my (IWM)/(QQQ) hedges
  

• Market Exposure:  Moved to 50% Net Long
  

Wednesday Watch

Evening Headlines

Bloomberg:           

• Recession Woes Hand Emerging Stocks Worst First Half Since 1998.
• UK Food Prices are Soaring and Plunging Millions Into Distress.   
• South Korean Consumers Turn Pessimistic as Prices, Rates Rise.  
• France Cuts Growth Forecast as Ukraine War Spurs Inflation Surge.
  
• Widow-Maker Trade Sweeps Tokyo’s Financial Markets Once Again.  
  
• Stocks Pressured Anew by the Specter of Recession: Markets Wrap.  
• OPEC+ Oil Output Is Half a Billion Barrels Behind on Supply Deal.
• Ghislaine Maxwell Gets 20 Years as Victims Get Last Word.
• Five Takeaways From Ghislaine Maxwell’s Sentencing.  
• Tesla Lays Off About 200 Autopilot Workers in Latest Cuts.  
• High Gas Prices Are Killing the Summer Road Trip.  
• Doomed Stock Rally Burns Fewer Bulls After $10 Billion ETF Exit —.
• US IPOs Can’t Shake 2022 Slump After Thriving Through Pandemic.

Wall Street Journal:

• Stocks Slide After Weak Consumer-Confidence Reading.
• Ernst & Young to Pay Record Fine in Ethics Exam-Cheating Probe.
• How Margin Calls Can Transform Market Downturns Into Market Crashes.
• NFT Artists Get First Major Test Since Crypto’s Collapse.

Fox News:

• Biden reportedly annoyed by one line of questioning he's facing from the press.
• Jeffrey Epstein's former lover slapped with lengthy sentence for sex trafficking. 
• Home to the rich and famous votes to defund sheriff's office — even as crime skyrockets 137%.
• Communities forced to take action as raging teen parties spiral out of control.

CNBC.com:

• Dow falls nearly 500 points as bear market bounce loses steam.
• First phase of market downturn is done. Two more to go: Billionaire Jim Coulter.
• Target will cover employees’ travel to other states for abortions, company memo says. 
  

MarketWatch:          

• How long will stocks stay in a bear market? It hinges on whether a recession hits, says Wells Fargo Institute.
  
• California is sending ‘inflation relief’ checks up to $1,050 — here’s who qualifies.
  
• ‘There seems to be little relief in sight’: More than half of Americans are living paycheck to paycheck, making them more vulnerable to recession.
  
• Americans are feeling increasingly uncomfortable about their savings as inflation takes its toll.  
• Pinterest stock rallies after Google exec named CEO as Silbermann steps down.  
• Disney board extends CEO Bob Chapek’s contract for three years.  
• A looming recession could force more employees to come back to the office — or never return.

Zero Hedge:

• Ghislaine Maxwell Sentenced To 20 Years In Prison.
• Joe Biden Covered Hunter's Russia-Linked Hooker Tab; Leaked Audio Proves Joe Spoke Of Dealings.
• FBI Raids Home Of Retired Texas Couple Who Attended Jan. 6 Capitol Rally.
• Life after the squeeze...
• The Biden Administration Hits Peak Energy Absurdity.
• West Coast Rail Networks Clogged As Supply Chain Normalization Delayed.
• Citadel Pays $363 Million For New Miami Headquarters Land Purchase.
• China Suggests It Could Maintain 'Zero COVID' Policy For 5 Years.
• White House Desperate To Make New Oil Deals As Gas Prices Crush Biden.
• NYC Mayor Eric Adams "Shocked" To Find Out "Just How Bad" The City Is.
• Economic Winter Has Arrived.
• Goldman Finally Admits "Large Cuts To Earnings" Are Imminent.
• Pentagon Moves To Wrest Rare Earths Control From China.
• WTI Extends Gains After Unexpected Crude Draw.
• Stocks sold after grim consumer confidence reading - Newsquawk US Market Wrap.
• Turkey Agrees To Back Finland, Sweden NATO Bid - US Claims It Offered 'No Concessions'.
• 'Bad News' Is Bad News Again: Stocks Slammed On Macro Meltdown, Bonds Shrug.

Newsmax:  

• Rasmussen: 50% Support SCOTUS Abortion Ruling.
• Amazon Employees Urge Work Stoppage in Pro-life States.  
• Pentagon Says It'll Continue to Provide Abortions Despite Roe Reversal.
• Poll: Court Expansion Still Opposed After Roe Ruling.

TheGatewayPundit.com: 

• DEBUNKED! Jan. 6 Committee “Surprise” Witness GETS CAUGHT – US Secret Service Sources DENY Trump Tried to Grab Steering Wheel — ARE WILLING TO TESTIFY!
• CDC Uses Elmo to Convince Children to Get Vaccinated For Covid (VIDEO).
• Former Senate Sergeant-at-Arms Michael Stenger Testified that Paid Professional Agitators Were Operating at Jan. 6 Riot — NOW HE’S DEAD (VIDEO).
• “The Fact of the Matter Is the Border Is Closed”: Karine Jean-Pierre on Mass Death of Illegal Alien Migrants in Texas Truck Smuggling Attempt.
• UNREAL: Same College Behind Bogus Study Used to Support Shutdowns Is Behind BS Study Used to Force COVID Vaccines on US Children.
• Angry Chicago Women Arrested After Twerking on Police Cars and Smacking Cops in the Face Following Gay Pride Parade.
• J6 Committee’s ‘Surprise’ Witness Was so Disgusted by Trump and Jan. 6 That She Was Planning to Go Work For Trump in Florida *After* January 6 Protest.
• Joe Biden Refuses to Answer Questions on Deaths of 46 Migrants in Texas as a Direct Result of His Open Border Policies (VIDEO).
• Hundreds of Delta Pilots to Picket Nationwide For Better Pay.
• Hillary Clinton Trashes Clarence Thomas as Driven by “Resentment, Grievance, Anger” (VIDEO).
• Soft-On-Crime California Releases Drug Traffickers Who Carried 150,000 Fentanyl Pills Into The U.S.
• Biden’s America: From Trump Energy Independence to Record High Gas Prices to Buying Oil from Iran and Venezuela.

 The Epoch Times:

• Wisconsin GOP Addressing ‘Zuckerbucks’ at Statewide Election Integrity Events: Party Director.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 835,062 Reports(+3,252 from prior week) Through June 17th, 2022.

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.

Covid-19(Data, Maps, Graphs):

• Our World in Data:  New Global Covid-19 Cases(7-day rolling average graphs). New US Covid Hospital Admissions/ICU Admissions/Deaths
  
• FT.com:  Fully Vaccinated by Country(graph). Global Lockdown Stringency Index(map).
• Bloomberg.com:  International Travel Restrictions.  Case Graphs by State.
  
• NYTimes.com:  County Trends and Clusters. Local ICU Occupancy.
  
• Brown School of Public Health:  Covid Severity by State/County(map).  US Hospital Capacity(region).
  
• CovidActNow:  Covid Severity/Infection Rate by Metro Area.
  
• KFF:  US Vaccinations by Race/Ethnicity.
  
• Carnegie Mellon: Covid-Like Symptoms in Community. Covid Symptom Searches on Google. Covid-Related Dr.Visits.  Restaurant Visits. Wearing Masks. (graphs)
  
• Safegraph.com:  Commerce Patterns(graphs).

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 131.5 +3.25 basis points. 

• China Sovereign CDS 82.25 +4.75 basis points.
  

• Bloomberg Emerging Markets Currency Index 50.99 +.08%.  
• Bloomberg Global Risk-On/Risk Off Index 4,934.0 +36.0 points.
• Volatility Index(VIX) futures 28.5 +.6%.
• Euro Stoxx 50 futures n/a.

• S&P 500 futures +.09%.

• NASDAQ 100 futures +.09%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (BBBY)/-1.39
• (GIS)/1.01
• (MKC)/.65
• (PDCO)/.56
• (PAYX)/.79
• (SCHN)/2.30

After the Close:

• (FIZZ)/.43

Economic Releases

10:30 am EST

• Weekly DOE energy report.
  

Upcoming Splits

• (SHOP) 10-for-1
  

Other Potential Market Movers

• The Fed's Powell speaking, Fed's Mester speaking, Australia retail sales report, weekly MBA Mortgage Applications report, (HAE) investor day, (PFGC) investor day, (BBY) investor day and the (FDX) analyst meeting could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are modestly lower, weighed down by technology and consumer 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.

Stocks Reversing Sharply Lower into Final Hour on US Policy-Induced Stagflation Fears, European/Emerging Markets/US High Yld Debt Angst, Earnings Outlook Worries, Tech/Consumer Discretionary Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance:  Almost Every Sector Declining
  

• Volume:  Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 28.0 +4.0%
• DJIA Intraday % Swing 2.47% +264.2%
  
• Bloomberg Global Risk On/Risk Off Index 4,947.0 +25.0 points

• Euro/Yen Carry Return Index 147.50 +.02%

• Emerging Markets Currency Volatility(VXY) 11.7 -.7%

• CBOE S&P 500 Implied Correlation Index 48.3 +5.5% 

• ISE Sentiment Index 89.0 -12.0 points
  

• Total Put/Call .95 unch.

• NYSE Arms 1.24 +17.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 98.98 +4.2%
  

• US Energy High-Yield OAS 465.81 +1.8%
• Bloomberg TRACE # Distressed Bonds Traded 384.0 -1.0
  

• European Financial Sector CDS Index 124.72 +4.3%

• Italian/German 10Y Yld Spread 193.0 basis points -9.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 129.73 +.6%
  

• Emerging Market CDS Index 339.50 +4.7%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 27.35 -.26%
  
• Ukraine Sovereign Debt Credit Default Swap 8,663.02 -8.6%
  

• 2-Year Swap Spread 33.5 basis points -.5 basis point
  

• TED Spread 50.25 basis points -5.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -23.0 basis points +.25 basis point
  
• MBS  5/10 Treasury Spread  139.0 +2.0 basis points
  
• iShares CMBS ETF 47.55 +.21%
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 50.95 -.2%
• 3-Month T-Bill Yield 1.71% +6.0 basis points
  

• Yield Curve 7.75 basis points (2s/10s) +1.75 basis points
  

• China Iron Ore Spot 123.80 USD/Metric Tonne +2.7%

• Citi US Economic Surprise Index -68.9 +2.8 points

• Citi Eurozone Economic Surprise Index -28.0 -2.2 points
  

• Citi Emerging Markets Economic Surprise Index 23.5 -2.1 points

• 10-Year TIPS Spread 2.49 -8.0 basis points
  
• Highest target rate probability for September 21st FOMC meeting: 65.7%(+.1 percentage point) chance of 2.75%-3.0%. Highest target rate probability for November 2nd meeting: 47.8%(+1.9 percentage points) chance of 3.25%-3.5%.
  

US Covid-19:

• 250 new infections/100K people(last 7 days total). 15.0%(+2.0 percentage points) of 1/14 peak +29/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -77.8%(+1.7 percentage points) from peak 7-day avg. of 1/9/21 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -225 open in Japan 
• China A50 Futures: Indicating -93 open in China

• DAX Futures: Indicating -131 open in Germany

Portfolio:

• Slightly Higher:  On gains in my in my index hedges and emerging market shorts
  

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

• Market Exposure:  Moved to Market Neutral
  

Bear Radar

Style Underperformer:

• Large-Cap Growth -2.2%

Sector Underperformers:

• 1) Alt Energy -4.3% 2) Internet -4.0% 3) Retail -3.0%

Stocks Falling on Unusual Volume: 

• COLL, APPS, RGP, SNOW, ABNB, RPD, ALT, ENTA, FND, RPAY, TREE, FNKO, VIVO, ESTC, TSLA, ALT, IAS, NKE, RGNX, SNX, PYCR, LYFT, NGM, PLAB and MDB
  

Stocks With Unusual Put Option Activity:

• 1) EWU 2) SMH 3) NKE 4) AA 5) EWG
  

Stocks With Most Negative News Mentions:

• 1) CAMP 2) TUP 3) VRCA 4) UNH 5) CDNA
  

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Value -.3%

Sector Outperformers:

• 1) Energy +2.3% 2) Oil Service +1.3% 3) Gambling +1.2%

Stocks Rising on Unusual Volume:

• ESTE, LE, LVS, WYNN, QCOM and VG
  

Stocks With Unusual Call Option Activity:

• 1) EVFM 2) DUK 3) NKE 4) WOW 5) QCOM

Stocks With Most Positive News Mentions:

• 1) KZR 2) WYNN 3) STRO 4) LVS 5) TOUR
  

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -9.0% Below 100-Day Average 
• 9 Sectors Declining, 2 Sectors Rising
• 44.5% of Issues Advancing, 52.0% Declining
• 7 New 52-Week Highs, 39 New Lows
• 19.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 42.0% 
• Bloomberg Global Risk-On/Risk-Off Index 4,986.0 +63.0 points
• Russell 1000: Growth/Value 15,120.0 -1.3%
  
• Vix 27.6 +2.4%
• Total Put/Call .91 -4.2%
• TRIN/Arms 1.27 +19.8%