Stocks Slightly Higher into Final Hour on Plunging Long-Term Rates, US Economic "Soft-Landing" Hopes, Dollar Weakness, Biotech/Consumer Discretionary Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Light

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 12.7 -2.4%
• DJIA Intraday % Swing .40% -1.5%
  
• Bloomberg Global Risk On/Risk Off Index 54.6 -3.1%

• Euro/Yen Carry Return Index 169.1 +.15%

• Emerging Markets Currency Volatility(VXY) 8.0 +.8%

• CBOE S&P 500 Implied Correlation Index 18.9 -4.8% 

• ISE Sentiment Index 142.0 +24.0
  

• Total Put/Call 1.04 +14.3%

• NYSE Arms 1.57 +82.6% 
• NYSE Non-Block Money Flow -$26.7M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 55.77 -.16%
  

• US Energy High-Yield OAS 334.1 +.02%
• Bloomberg TRACE # Distressed Bonds Traded 263 -30
  

• European Financial Sector CDS Index 67.42 -.15% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 208.35 unch.
  

• Italian/German 10Y Yld Spread 159.0 basis points +1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 91.7 +1.1%
  

• Emerging Market CDS Index 165.60 -.54%
• Israel Sovereign CDS 110.71 -.43%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.03 +.08%

• 2-Year SOFR Swap Spread -17.0 basis points +4.75 basis points
  

• TED Spread 22.5 basis points -1.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -4.5 +4.5 basis points
  
• MBS  5/10 Treasury Spread 139.0 -2.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 968.0 +7.0 basis points
  
• Avg. Auto ABS OAS 77.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.77 +.17%
• 3-Month T-Bill Yield 5.38% +2.0 basis points
  

• China Iron Ore Spot 139.4 USD/Metric Tonne -1.3%
• Dutch TTF Nat Gas(European benchmark) 35.51 euros/megawatt-hour +3.9%

• Citi US Economic Surprise Index 13.1 -1.2 points

• Citi Eurozone Economic Surprise Index -40.4 +1.8 points

• Citi Emerging Markets Economic Surprise Index 15.9 -.3 point
• S&P 500 Current Quarter EPS Growth Rate YoY(17 of 500 reporting) +13.5% unch.
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 242.98 +.05:  Growth Rate +11.6% unch., P/E 19.7 +.1
  
• S&P 500 Current Year Estimated Profit Margin 12.04% unch.
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) +0.0% -0.0 percentage points
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 288.63 +.10: Growth Rate +35.3% unch., P/E 30.5 +.1
  
• Bloomberg US Financial Conditions Index n/a
  
• Bloomberg Euro-Zone Financial Conditions Index 1.60 +114.0 basis points
  
• US Yield Curve -45.25 basis points (2s/10s) +.25 basis point
  
• US Atlanta Fed 4Q GDPNow Forecast +2.26% unch.
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 67.2% +2.3 percentage points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.02% unch.: CPI YoY +3.32% -1.0 basis point
  
• 10-Year TIPS Spread 2.17 -2.0 basis points
  
• Highest target rate probability for March 20th FOMC meeting: 73.9%(+3.8 percentage points) chance of 5.0%-5.25%. Highest target rate probability for May 1st meeting: 73.3%(+4.1 percentage points) chance of 4.75%-5.0%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -216 open in Japan 
• China A50 Futures: Indicating +21 open in China

• DAX Futures: Indicating +190 open in Germany

Portfolio:

• Slightly Higher:  On gains in my industrial/transport/consumer discretionary sector longs
  

• Disclosed Trades: None
  

• Market Exposure: 75% Net Long
  

Bear Radar

Style Underperformer:

• Mid-Cap Growth -.1%
  

Sector Underperformers:

• 1) Oil Service -.7% 2) Energy -.7% 3) Alt Energy -.6%

Stocks Falling on Unusual Volume: 

• NTES
  

Stocks With Unusual Put Option Activity:

• 1) CYTK 2) VLY 3) NTES 4) IREN 5) GEO
  

Stocks With Most Negative News Mentions:

• 1) IOVA 2) GDHG 3) SKIN 4) NTES 5) MICS
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.7%
  

Sector Outperformers:

• 1) Biotech +1.5% 2) Gold & Silver +1.2% 3) Homebuilding +.9%

Stocks Rising on Unusual Volume:

• CYTK, EWTX, BTDR, BUR, NVCR, MARA, HUT, CLSK, MSTR, GCT, DYN, COIN, CELH, RDFN, SOFI, UPST, AFRM, HZO, AXSM, ASPN, RIOT, LI, SATS, HOOD and RILY
  

Stocks With Unusual Call Option Activity:

• 1) BKKT 2) EQX 3) ANY 4) CYTK 5) COP

Stocks With Most Positive News Mentions:

• 1) CYTK 2) CHRS 3) EWTX 4) BTBT 5) FUSN
  

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:

• None of note
  

After the Close: 

• None of note
  

Economic Releases

8:30 am EST

• The Advance Goods Trade Deficit for Nov. is estimated at -88.9B versus -$89.8B in Oct.
• Wholesale Inventories MoM for Nov. is estimated to fall -.2% versus a -.4% decline in Oct.
• Retail Inventories MoM for Nov. is estimated to rise +.2% versus unch. in Oct.
• Initial Jobless Claims for last week is estimated to rise to 210K versus 205K the prior week.
• Continuing Claims is estimated to rise to 1875K versus 1865K prior.
  

10:00 am EST

• Pending Home Sales MoM for Nov. is estimated to rise +.9% versus a -1.5% in Oct.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,880,250 barrels versus a +2,909,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -65,250 barrels versus a +2,710,000 barrel gain the prior week. Distillate inventories are estimated to rise by +34,750 barrels versus a +1,485,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.1% versus a +2.2% gain prior.
  

Bloomberg 

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The UK Housing Data report, 7Y T-Note auction, weekly EIA natural gas inventory report and the (TGLS) annual meeting 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 -29.6% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 25.3 +4.8
  
• 3 Sectors Declining, 8 Sectors Rising
• 59.1% of Issues Advancing, 38.2% Declining 
• TRIN/Arms 1.39 +61.6% 
• Non-Block Money Flow -$15.3M
  
• 193 New 52-Week Highs, 3 New Lows
• 67.4%(+.2%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 71.0+1.0

Other:

• Bloomberg Global Risk-On/Risk-Off Index 55.5 -1.6%
• Bloomberg Cyclicals/Defensives Pair Index 142.423 +.04%
  
• Russell 1000: Growth/Value 18,376.3 -.08%
• CNN Fear & Greed Index 79.0 (Extreme Greed) unch.
• 1-Day Vix 7.55 -8.0%
  
• Vix 12.4 -4.3%
  
• Total Put/Call .74 -18.7%

Wednesday Watch

Night Trading 

• Asian equity indices are unch. to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 90.75 +.25 basis point.

• China Sovereign CDS 59.75 unch.
  
• China Iron Ore Spot 140.1 USD/Metric Tonne -.05%.

• Bloomberg Emerging Markets Currency Index 41.7 -.01%.
• Bloomberg Global Risk-On/Risk Off Index 57.1 +1.3%.
  
• Bloomberg US Financial Conditions Index n/a.
  
• Volatility Index(VIX) futures 14.6 -.32%.
• Euro Stoxx 50 futures +.26%.

• S&P 500 futures -.02%.

• NASDAQ 100 futures -.01%.  

Morning Preview Links

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