Stocks Finish Slightly Lower on US Policy-Induced Stagflation Fears, China Economy Concerns, Technical Selling, Alt Energy/Road & Rail 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) 12.8 +2.4%
• DJIA Intraday % Swing .37% +30.0%
  
• Bloomberg Global Risk On/Risk Off Index 65.5 -2.8%

• Euro/Yen Carry Return Index 174.3 -.43%

• Emerging Markets Currency Volatility(VXY) 7.7 +.26%

• CBOE S&P 500 Implied Correlation Index 19.9 +3.6% 

• ISE Sentiment Index 127.0 +1.0
  

• Total Put/Call 1.02 -8.9%

• NYSE Arms 1.42 +65.1% 
• NYSE Non-Block Money Flow -$138.9M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 63.8 +1.4%
  

• US Energy High-Yield OAS 340.81 +2.2%
• Bloomberg TRACE # Distressed Bonds Traded 328 -38
  

• European Financial Sector CDS Index 80.4 +1.9% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 246.0 +1.3%
  

• Italian/German 10Y Yld Spread 174.0 basis points -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 99.3 -4.7%
  

• Emerging Market CDS Index 189.1 -.62%
• Israel Sovereign CDS 119.3 +2.1%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.51 unch.

• 2-Year SOFR Swap Spread -18.75 basis points +.25 basis point
  

• TED Spread 25.5 basis points +.75 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -15.5 -.5 basis point
  
• MBS  5/10 Treasury Spread 157.0 -2.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 938.0 unch.
  
• Avg. Auto ABS OAS 92.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.82 +.15%
• 3-Month T-Bill Yield 5.40% +1.0 basis point
  

• China Iron Ore Spot 131.4 USD/Metric Tonne -.97%
• Dutch TTF Nat Gas(European benchmark) 43.98 euros/megawatt-hour -5.7%

• Citi US Economic Surprise Index 30.20 -2.9 points

• Citi Eurozone Economic Surprise Index -18.70 +4.1 points

• Citi Emerging Markets Economic Surprise Index 22.7 -.3 point
• S&P 500 Current Quarter EPS Growth Rate YoY(482 of 500 reporting) +4.3% +1.7 percentage points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 242.06 +1.02:  Growth Rate +9.4% +.3 percentage point, P/E 18.8 unch.
  
• S&P 500 Current Year Estimated Profit Margin 12.15% -1.0 basis point
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(8 of 10 reporting) +50.6% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 282.78 unch.: Growth Rate +32.9% unch., P/E 29.4 unch.
  
• Bloomberg US Financial Conditions Index .47 -1.0 basis point
  
• Bloomberg Euro-Zone Financial Conditions Index .38 +2.0 basis points
  
• US Yield Curve -50.25 basis points (2s/10s) -1.5 basis points
  
• US Atlanta Fed 4Q GDPNow Forecast +2.10% unch.
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 46.9% unch.

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.55% unch.: CPI YoY +3.07% unch.
  
• 10-Year TIPS Spread 2.23 -1.0 basis point
  
• Highest target rate probability for Jan. 31st FOMC meeting: 88.8%(+1.2 percentage points) chance of 5.25%-5.5%. Highest target rate probability for March 20th meeting: 67.0%(-2.5 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +67 open in Japan 
• China A50 Futures: Indicating +2 open in China

• DAX Futures: Indicating +50 open in Germany

Portfolio:

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

• Disclosed Trades: None
  

• Market Exposure: 75% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Value -.2%
  

Sector Underperformers:

• 1) Alt Energy -2.9% 2) Road & Rail -1.7% 3) Electric Vehicles -1.4%

Stocks Falling on Unusual Volume: 

• OLMA, RILY, CHWY and IRBT
  

Stocks With Unusual Put Option Activity:

• 1) IRBT 2) XENE 3) UNP 4) FTCH 5) PATH
  

Stocks With Most Negative News Mentions:

• 1) AXLA 2) LEV 3) LCID 4) AMC 5) FNF
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.2%
  

Sector Outperformers:

• 1) Gold & Silver +2.0% 2) Disk Drives +.8% 3) REITs +.7%

Stocks Rising on Unusual Volume:

• XENE, GGAL, LASR, SYM, AFRM, BMA, ROKU, EH, ARVN, ARCT, AAOI, CRS, HSAI, SHOP, SEMR, CCI, COCO, SA, COIN, LAZ, IP and AGI
  

Stocks With Unusual Call Option Activity:

• 1) VOD 2) IRBT 3) XENE 4) PDD 5) IOT

Stocks With Most Positive News Mentions:

• 1) ASST 2) AFRM 3) SHOP 4) CUEN 5) CAPT
  

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:

• (BMO)/2.09
• (BNS)/1.21
  

After the Close: 

• (CRWD)/.74
• (HPE)/.50
• (INTU)/1.98
• (LESL)/.16
• (NTAP)/1.39
• (SPLK)/1.15
• (WDAY)/1.41
  

Economic Releases

9:00 am EST

• The FHFA House Price Index MoM for Sept. is estimated to rise +.4% versus a +.6% gain in Aug.
• The S&P CoreLogic CS 20-City MoM SA for Sept. is estimated to rise +.8% versus a +1.01% gain in Aug.
  

10:00 am EST

• The Conference Board Consumer Confidence Index for Nov. is estimated to fall to 101.0 versus 102.6 in Oct.
• The Richmond Fed Manufacturing Index for Nov. is estimated to fall to 1.0 versus 3.0 in Oct.
  

10:30 am EST

• The Dallas Fed Services Activity Index for Nov.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Fed's Barr speaking, Fed's Bowman speaking, Fed's Goolsbee speaking, Fed's Waller speaking, 7Y T-Note auction, weekly US retail sales reports, API weekly crude oil stock report, Wells Fargo TMT Conference, Citi Basic Materials Conference, UBS Industrials Summit, UBS Tech Conference, Evercore ISI Healthcare Conference, Piper Sandler Healthcare Conference and the (AVB) investor day 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 -15.5% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 9.4 +.9
  
• 7 Sectors Declining, 4 Sectors Rising
• 42.2% of Issues Advancing, 55.0% Declining 
• TRIN/Arms 1.25 +45.4% 
• Non-Block Money Flow -$168.7M
  
• 70 New 52-Week Highs, 18 New Lows
• 45.%(-1.4%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 65.0 -1.0

Other:

• Bloomberg Global Risk-On/Risk-Off Index 65.7 -2.4%
  
• Russell 1000: Growth/Value 18,696.3 -.25%
  
• 1-Day Vix 7.2 -18.4%
  
• Vix 12.8 +2.6%
  
• Total Put/Call 1.01 -9.8%

Monday Watch

Night Trading

• Asian indices are -.25% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 96.75 -.5 basis point.
  
• China Sovereign CDS 60.5 -.25 basis point.
• China Iron Ore Spot 132.4 USD/Metric Tonne -1.1%.
  
• Bloomberg Emerging Markets Currency Index 41.8 +.02%.
• Bloomberg Global Risk-On/Risk Off Index 70.0 +3.9%.
• Bloomberg US Financial Conditions Index .49 +1.0 basis point. 
  
• Volatility Index(VIX) futures 14.0 +1.1%. 
• Euro Stoxx 50 futures -.14%.
• S&P 500 futures -.16%.
• NASDAQ 100 futures -.27%.

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and consumer shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 75% net long heading into the week.