Stocks Reversing Slightly Higher into Close on US Economic "Soft-Landing" Hopes, Earnings Outlook Optimism, Technical Buying, Tech/Healthcare Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 13.1 -.45%
• DJIA Intraday % Swing .50%
  
• Bloomberg Global Risk On/Risk Off Index 63.5 +2.2%

• Euro/Yen Carry Return Index 164.7 +.49%

• Emerging Markets Currency Volatility(VXY) 8.7 -.57%

• CBOE S&P 500 Implied Correlation Index 20.1 +.7% 

• ISE Sentiment Index 122.0 +1.0 point
  

• Total Put/Call .78 -13.3%

• NYSE Arms 1.17 -6.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 71.28 +.7%
  

• US Energy High-Yield OAS 379.60 -.59%
• Bloomberg TRACE # Distressed Bonds Traded 377.0 -2.0
  

• European Financial Sector CDS Index 90.1 +.14% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 294.3 +.31%
  

• Italian/German 10Y Yld Spread 164.0 basis points +2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 114.5 +.6%
  

• Emerging Market CDS Index 218.8 +.48%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.38 -.1%

• 2-Year Swap Spread 18.75 basis points -2.0 basis points
  

• TED Spread 25.5 basis points +2.75 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -15.5 +.75 basis point
  
• MBS  5/10 Treasury Spread 161.0 +1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 729.0 +1.0 basis point
  
• Avg. Auto ABS OAS 83.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 44.6 -1.7%
• 3-Month T-Bill Yield 5.28% unch.
  

• China Iron Ore Spot 111.1 USD/Metric Tonne -.5%
• Dutch TTF Nat Gas(European benchmark) 34.1 euros/megawatt-hour  -7.2%

• Citi US Economic Surprise Index 28.9 -1.3 points

• Citi Eurozone Economic Surprise Index -92.2 -.9 point

• Citi Emerging Markets Economic Surprise Index 3.9 -1.5 points
• S&P 500 Current Quarter EPS Growth Rate YoY(7 of 500 reporting) -.6% +3.3 percentage points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 231.38 +.14:  Growth Rate +3.5% -.2 percentage point, P/E 18.9 unch.
  
• S&P 500 Current Year Estimated Profit Margin 12.23% +.1 percentage point
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 212.15 +3.08: Growth Rate +39.4% +2.0 percentage points, P/E 36.1 -.3
  
• Bloomberg US Financial Conditions Index .36 +2.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index -4.22 -9.0 basis points
  
• US Yield Curve -100.0 basis points (2s/10s) -2.0 basis points
• US Atlanta Fed 2Q GDPNow Forecast +1.95% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.70% unch.: CPI YoY +3.22% unch.
  
• 10-Year TIPS Spread 2.24 +2.0 basis points
  
• Highest target rate probability for Sept. 20th FOMC meeting: 67.2%(+.6 percentage point) chance of 5.25%-5.5%. Highest target rate probability for  Nov. 1st meeting: 60.8%(-2.5 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +256 open in Japan 
• China A50 Futures: Indicating -71 open in China

• DAX Futures: Indicating +15 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 50% Net Long
  

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

Earnings of Note 
Company/Estimate 

Before the Open:

• (APOG)/.90
• (KMX)/.79
  

After the Close: 

• None of note
  

Economic Releases   

9:45 am EST

• The S&P Global US Manufacturing PMI report for June is estimated to rise to 48.5 versus 48.4 in May.
• The S&P Global US Services PMI report for June is estimated to fall to 54.0 versus 54.9 in May.
• The S&P Global US Composite PMI for June is estimated to fall to 53.5 versus 54.3 in May.
  

11:00 am EST

• The Kansas City Fed Services Activity for June.

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Fed's Bullard speaking, Fed's Bostic speaking, Fed's Mester speaking, Eurozone PMI report, Bloomberg June US Economic Survey and the (DXCM) investor day could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Afternoon Market Internals

NYSE Composite Index:

• NYSE Volume Running -16.3% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 9.9 -1.8
  
• 6 Sectors Declining, 5 Sectors Rising
• 29.0% of Issues Advancing, 68.1% Declining
• 41 New 52-Week Highs, 30 New Lows
• 48.4%(-3.5%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 56.0 -3.0
  
• Bloomberg Global Risk-On/Risk-Off Index 63.1 +1.3%
  
• Russell 1000: Growth/Value 17,526.2 +.92%
• 1-Day Vix 9.5 -13.1%
  
• Vix 13.4 +1.4% 
  
• Total Put/Call .78 -13.3%
• TRIN/Arms 1.22 -2.4%
  

Thursday Watch

Evening Headlines

Bloomberg:

• Biden’s ‘Dictator’ Xi Riff Undercuts Painstaking China Diplomacy.
• China Begins Nationwide Push to Reveal Hidden Government Debt.
• US Warns of China’s IP-Theft ‘Playbook’ for AI, Advanced Tech.
• China Wants to Buy Off Europe. The Price Is Too High.
• Yen Slides to Seven-Month Low as Powell Underscores Policy Gap.
• Goldman Adds to Calls on Overvalued Mexico Peso After Big Rally.
• Asia Stocks Muted as Investors Weigh Rates Outlook: Markets Wrap.
• Powell Signals Higher Rates as Lawmakers Press Him on Bank Rules.
• Here Are the Key Takeaways From Powell’s Testimony Before US House. 
• Home Listings Plummet as High Mortgage Rates Tie Owners Down.
• Retail Army Bets Record $1.5 Billion on Stocks at Fastest Pace Ever, JPMorgan Says. 
• Tesla Seen Staying as Top EV Seller in US Through 2026, Buoyed by Discounts.

Zero Hedge:

• Durham Goes Off On FBI, CIA, Schiff During Wednesday Testimony.
• Wearing Shirt Saying 'There Are Only Two Genders' Not Protected Speech, Rules Obama-Appointed Judge.
• Disney Chief Diversity Officer Latondra Newton Quits After Pair Of Box Office Bombs.
• House Votes To Censure Adam Schiff.
• Raytheon CEO Explains Why China Has US Military By The Balls.
• LGBT Schoolbooks For Kindergarten, Elementary Students At Center Of Parents' Lawsuit.
• Pentagon Paying The Price For Going 'Woke'.
• Google Cloud Launches New AI-Powered Anti-Money-Laundering Product For Big Banks.
• 'Only Human Creators': Grammys Set Rules Around AI And Music.
• Hedge Funds Sell US Stocks For 9 Of The Past 10 Days, "Position For Downside Risk": Goldman PB.
• Financial Hardship Surges As Cost-of-Living Crisis Squeezes Workers.
• US stocks declined for the third consecutive day amid a slew of Fed rhetoric and hot UK CPI data - Newsquawk Asia-Pac Market Open.
• Supreme Court Considering If 'Americans With Disabilities Act' Covers Gender Dysphoria.
• Prices Of Middle Eastern Oil Skyrocket On Sudden Surge In Chinese Demand.
• "Strange Days".
• Stocks post third down day as NDX underperforms ahead of BoE bombshell - Newsquawk US Market Wrap. 
• 'Hawkish' FedSpeak Hits Big-Tech; Bitcoin Soars As The Buck Breaks Down.

Wall Street Journal:  

• China Lashes Out at U.S. After Biden Calls Xi a Dictator
• Fox News’s Greg Gutfeld Rides ‘Anti-Woke’ Humor to Ratings Stardom
• U.S. Companies Held Hostage by the Whims of TikTok
• Rescuers Follow Banging Noises in Search for Missing Titanic Submersible
• Modi’s Vision for India Rests On Six Giant Companies.
• Elliott Seeks Ouster of NRG Energy CEO.
• U.S. Tracked ZTE, Huawei Workers at Suspected Chinese Spy Sites in Cuba.

CNBC.com:

• Google accuses Microsoft of unfair practices in Azure cloud unit.
• Powell expects more Fed rate hikes ahead as inflation fight ‘has a long way to go’.
• Intel stock drops 6% as company updates chip manufacturing plans.
• Weekly mortgage demand was flat, even as interest rates drop for the third straight week.
• Inside China’s spy war on American corporations.
• Pharmaceutical trade group sues Biden administration over Medicare drug price negotiations.

MarketWatch:

• Tesla’s stock suffers biggest one-day decline in months.
• Nvidia board member sells $51 million in stock, joining a pair of other long-timers in unloading shares.
• Amazon allegedly duped people into subscribing to Prime and made it nearly impossible to cancel. Here’s how feds say they did it. 
• Boomers worried about a recession are selling their homes now. 
• Economist who anticipated bank failures this spring says U.S. recession may be just around the corner.

 Newsmax:

• House Censures Dem Rep. Schiff Over Trump-Russia Probes.
• Poll: 62 Percent Say Trump Indictment Is Clearly Political.
• Sen. Cruz: Left Willing to Gut Girls' and Women's Sports.

Fox News:

• CEO of company behind missing sub didn't want 'White guys' piloting vessels.
• Titanic sub 'did not perform well,' doc was nixed over safety concerns.
• Adam Schiff hit with punishment for 'false' Trump-Russia collusion allegations.

TheGatewayPundit.com:

• VOTE PASSES! US House of Representatives Votes to Censure Adam Schiff – 213 Republicans Vote “Yes” to Seal the Deal!
• BREAKING: Democrats Chant “Shame!… Shame!…” After Adam Schiff Is Censured for LYING REPEATEDLY to American Public About Trump-Russia Hoax.
• Trump-Appointed Judge Who Previously Donated to Hillary Clinton, McCain and Romney Assigned to Hunter Biden Case.
• Boston First Responders Horrified to Find Four Children at Transgender-Drag Party with a Dead Body and Drugs and Sex Toys Scattered Throughout the Home.
• WHY ARE CELEBRITIES PUSHING THIS BEHAVIOR? Sick Video Shows NFL Hall-of-Famer Michael Strahan Praising Little Boy Who Danced For Money In Gay Bar [VIDEO].
• Biden Mocks “Tree of Liberty” Second Amendment Supporters: “You Need an F-16” to “Work Against the Government”.
• Can’t Come Soon Enough – MT Greene is Converting Articles of Impeachment Against Dirty Chris Wray into Privileged Resolution – Forcing Full House Vote.
• Even CNN Acknowledges Impact Of Boycotts On Woke Corporations — “The Pressure Is Working On The C-Suites – They Are Pulling Back”.
• “How Dare You!” – Five Years Ago Today, Climate Change Hoaxer Greta Thunberg Said the World Would End.
• Dr. Ben Hu, Patient Zero? New FOIA Documents Released Reveal a ‘Smoking Gun’: COVID Was Created at Wuhan Lab, Escaped From ‘Gain of Function’ Research – And Was Financed by US Taxpayer Money!
• Dirty Facebook META Announces Release of “Twitter Rival” Called THREADS So They Can Censor, Ban and Silence Conservatives on a Whole New Platform.

The Epoch Times:

• US and China ‘Drifting Into War’: Former Joint Chiefs Chairman.
• US ‘Working to Disrupt’ Chinese Expansion in Cuba: State Department.

Twitter: 

• @TuckerCarlson - Ep. 5. As in most of the developing world, it's safer to be the president's son than his opponent. (video)
• @XVanFleet - Some may have missed this video clip which Tucker covered in one of his Dec 2020 shows. Top Chinese professor Di Dongsheng bluntly implied in a 2020 televised conf that it was the CCP who set up the foundations for Hunter Biden.
• @Fxhedgers - TAIWAN ON ALERT FOR CHINESE-FUNDED ELECTION INTERFERENCE: RTRS.
• @JamesOKeefeIII - BREAKING: @BlackRock Recruiter Who “Decides People’s Fate” Spills Info on Company’s World Impact “It’s not who the president is- it’s who’s controlling the wallet of the president” “You got $10K? You can buy a senator" “War is real f***ing good for business”. (video)
• @zerohedge - Goldman Offers 5 Reasons To Start Hedging The Equity Melt-Up. (graph)

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 964,389 Reports(+1,106 from prior week) Through June 2nd, 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 -.50% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 113.75 +.75 basis point. 

• China Sovereign CDS 58.75 -.5 basis point.
  
• China Iron Ore Spot 111.0 USD/Metric Tonne +.3%.

• Bloomberg Emerging Markets Currency Index 45.3 +.04%.
• Bloomberg Global Risk-On/Risk Off Index 63.1 +1.3%. 
• Bloomberg US Financial Conditions Index .31 -3.0 basis points.
  
• Volatility Index(VIX) futures 16.3 +.6%.
• Euro Stoxx 50 futures -.21%.

• S&P 500 futures +.02%.

• NASDAQ 100 futures -.02%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly lower, weighed down by financial and technology 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 Lower into Afternoon on Subsiding FANG+ Stock Frenzy, Less Dovish Fed Commentary, Earnings Outlook Concerns, Tech/Regional Bank Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 13.4 -3.2%
• DJIA Intraday % Swing .64%
  
• Bloomberg Global Risk On/Risk Off Index 62.4 +.8%

• Euro/Yen Carry Return Index 163.7 +.8%

• Emerging Markets Currency Volatility(VXY) 8.8 -1.1%

• CBOE S&P 500 Implied Correlation Index 20.7 +2.8% 

• ISE Sentiment Index 122.0 +14.0 points
  

• Total Put/Call .87 +1.2%

• NYSE Arms 1.48 -10.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 71.0 +1.7%
  

• US Energy High-Yield OAS 380.2 +1.5%
• Bloomberg TRACE # Distressed Bonds Traded 379.0 -17.0
  

• European Financial Sector CDS Index 90.1 +1.1% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 293.7 +.6%
  

• Italian/German 10Y Yld Spread 162.0 basis points -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 1136 +.9%
  

• Emerging Market CDS Index 218.7 +.3%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.4 -.15%

• 2-Year Swap Spread 20.75 basis points -.75 basis point
  

• TED Spread 22.75 basis points -6.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -16.25 +.75 basis point
  
• MBS  5/10 Treasury Spread 160.0 +1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 728.0 +2.0 basis points
  
• Avg. Auto ABS OAS 83.0 +2.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 45.4 +.34%
• 3-Month T-Bill Yield 5.28% +6.0 basis points
  

• China Iron Ore Spot 111.0 USD/Metric Tonne +.3%
• Dutch TTF Nat Gas(European benchmark) 36.7 euros/megawatt-hour  -5.1%

• Citi US Economic Surprise Index 30.2 unch.

• Citi Eurozone Economic Surprise Index -93.1 unch.

• Citi Emerging Markets Economic Surprise Index 5.4 unch.
• S&P 500 Current Quarter EPS Growth Rate YoY(4 of 500 reporting) -3.9% -6.6 percentage points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 231.24 +.14:  Growth Rate +3.7% +.3 percentage point, P/E 18.9 unch.
  
• S&P 500 Current Year Estimated Profit Margin 12.22% -.1 percentage point
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 209.07 +.32: Growth Rate +37.4% +.2 percentage point, P/E 36.4 -.5
  
• Bloomberg US Financial Conditions Index .36 +14.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index -4.13 +4.0 basis points
  
• US Yield Curve -98.0 basis points (2s/10s) -1.0 basis points
• US Atlanta Fed 2Q GDPNow Forecast +1.95% +18.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.70% unch.: CPI YoY +3.22% unch.
  
• 10-Year TIPS Spread 2.22 unch.
  
• Highest target rate probability for Sept. 20th FOMC meeting: 68.8%(+.5 percentage point) chance of 5.25%-5.5%. Highest target rate probability for  Nov. 1st meeting: 66.3%(-1.7 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -10 open in Japan 
• China A50 Futures: Indicating -45 open in China

• DAX Futures: Indicating +123 open in Germany

Portfolio:

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

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges
  

• Market Exposure: Moved to 25% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Growth -.8%
  

Sector Underperformers:

• 1) Semis -2.3% 2) Internet -2.0% 3) Networking -1.8%

Stocks Falling on Unusual Volume: 

• BEKE, TSEM, SSL, GTLB, TSLA, INTC, CRWD, U, EXAS, ERJ, LMND, RIVN, ASAN, PLTR, WKC, RBLX, SYM, CYRX, ZI, LITE, VYGR, MSGE, COHR, TRUP, TRUP and QURE
  

Stocks With Unusual Put Option Activity:

• 1) EWU 2) CPNG 3) UNP 4) FDX 5) GT
  

Stocks With Most Negative News Mentions:

• 1) COHR 2) PTON 3) CUTR 4) FDX 5) IEP
  

Charts:

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