Stocks Reversing Higher into Final Hour on Falling Long-Term Rates, Declining Fed Rate-Hike Odds, Short-Covering, Consumer Discretionary/Healthcare Sector Strength

Economic/Market Gauges:

• North American Investment Grade CDS Index 61.0 +1.0%
• BofA Private Credit Proxy Index 68.3 +2.2% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .40 unch.
• BofA Global Financial Stress Indicator .02 unch.
• European Financial Sector CDS Index 71.7 +.6% 
• Emerging Market CDS Index 161.0 +.6% 
• Israel Sovereign CDS 59.7 +1.4% 
• Bloomberg Global Trade Policy Uncertainty Index .6 unch.
• US Morning Consult Daily Consume Sentiment Index 85.3 -2.4

• Citi US Economic Surprise Index 42.2 +6.0

• Citi Eurozone Economic Surprise Index 45.0 -2.4

• Citi Emerging Markets Economic Surprise Index 26.3 -1.2
• S&P 500 Current Quarter EPS Growth Rate YoY(38 of 500 reporting) +49.9% -4.2 percentage points
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 409.95 +.49:  Growth Rate +24.9% +.1 percentage point, P/E 18.9 unch.
• S&P 500 Current Year Estimated Profit Margin 16.29% -5.0 basis points
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(1 of 10 reporting) +1,013.1% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 1,089.68 +.73: Growth Rate +62.3% +.1 percentage point, P/E 17.5 -.2
• Bloomberg US Financial Conditions Index 1.10 -11.0 basis points
• US Yield Curve 33.25 basis points (2s/10s) -5.0 basis points
• Bloomberg Industrial Metal Index 171.2 -1.2%
• Dutch TTF Nat Gas(European benchmark) 85.7 euros/megawatt-hour -1.6%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 10.9% +.6%
• US Atlanta Fed GDPNow Q3 Forecast +3.6% unch.
• US 10-Year T-Note Yield 5.09% -9.0 basis points
• 1-Year TIPS Spread 2.93 +1.0 basis point

• Highest target rate probability for Dec. 9th FOMC meeting: 63.6% (+1.4 percentage points) chance of 4.0%-4.25%. Highest target rate probability for Jan. 27th meeting: 43.5%(+4.5 percentage points) chance of 4.0%-4.25%. (current target rate is 3.75-4.0%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +1,470 open in Japan 
• China A50 Futures: Indicating -70 open in China
• KOSPI 200 Futures: Indicating +32 open in South Korea 

• DAX Futures: Indicating +203 open in Germany

Portfolio:

• Higher: On gains in my industrial/consumer discretionary/biotech sector longs and emerging market shorts
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
• Market Exposure: Moved to 75% net long

Bear Radar

Style Underperformer:

• Large-Cap Growth -.5%

Sector Underperformers:

• 1) Computer Hardware -4.4% 2) Lithography/Photonics -4.2% 3) Space -3.6%

Stocks Falling on Unusual Volume: 

• AMAT, NET, MKSI, WMB, TTMI, HAFN, CLS, FLEX, DOCN, STRL, ENTG, LFUS, LRCX, GDS, MOD, GTX, WDC, DHT, SIMO, JCI, LITE, OUST, STX, CMBT, NVT, AAOI, IOND, FRVO, VG, SHIP, ANET, CAMT, KEYS, SANM, MXL, FRO, VRT, AEHR, ONTO, ECO, AEIS, HPE, ASX, PRIM, FORM, COHR, AESI, COHU, LSCC, VIAV, ACMR, LBRT, SITM, SEI, RKLB, DELL, MTSI, BOT, AXTI, TH, PENG, SMTC, QMCO, MICR and MAN

Stocks With Unusual Put Option Activity:

• 1) IYR 2) TSEM 3) URA 4) WOLF 5) NYT

Stocks With Most Negative News Mentions:

• 1) RKLB 2) FMC 3) DELL 4) SNDK 5) NBIS

Sector ETFs With Most Negative Money Flow:

• 1) SMH 2) DRAM 3) XLI 4) XME 5) XLF

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Value +1.1%

Sector Outperformers:

• 1) Retail +3.7% 2) Homebuilding +2.9% 3) Computer Services +2.6%

Stocks Rising on Unusual Volume:

• REAL, MAX, APPN, Z, ALMR, ERIC, ANL, KRMN, ARHS, BBWI, ARQT, NGNE, TRU, PAG, QNT, LBRX, IP, POOL, ETSY, CRCL, SIG, OXM, BOOT, CROX, MMYT, APPF, PEGA, NKE, PATK, WGO, M, PFSI, LSPD, DUOL, LCII, BLDR, MH, INFY, THO, RH, WPP, EQX, WLTH, ONC, AJG, PSIX, VKTX, FTRE, CPRT, ROCK, VKTX, ELE, CBLL, USAR, PACS, CX, XRPN, ARIS, LEVI, MITK, LEVI, EBAY, EDU, MRSH, DIN, WMG, RKT, VFC, ACN, CWST, LLY, MAGN, NRIX, VEEV, EXP, ACN, SYM, KMB, WAY, WCN, MLM, SPHR, AON, ATEC, BMNR, AMN, SNN, ABVX, GLBE, IBN, RLI, IHG, PCOR, PPTA, ANGO, IONQ, BLK, SOFI, PRAX, YUMC and SYF

Stocks With Unusual Call Option Activity:

• 1) JBS 2) OLLI 3) ETN 4) AZN 5) NEXT 

Stocks With Most Positive News Mentions:

• 1) OPK 2) GPUS 3) NKE 4) VSTM 5) IP

Sector ETFs With Most Positive Money Flow:

• 1) IGV 2) SOXX 3) XLV 4) XLU 5) ALAI

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:

• (CFG)/1.39
• (MTB)/4.93
• (RF)/.66
• (TRV)/7.39
• (TFC)/1.14 

After the Close: 

• None of note

Economic Releases 

8:30 am EST

• The NY Fed Services Business Activity Index for Oct. is estimated to rise to -5.6 versus -8.7 in Sept.
• The Import Price Index MoM for Sept. is estimated to rise +.9% versus a +.7% gain in Aug.
• The Import Price Index Ex Petroleum MoM for Sept. is estimated to rise +.6% versus a +.8% gain in Aug.
• The Export Price Index MoM for Sept. is estimated to rise +.8% versus a +.6% gain in Aug. 

9:15 am EST

• Industrial Production MoM for Sept. is estimated to rise +.4% versus unch. in Aug.
• Manufacturing Production MoM for Sept. is estimated to rise +.3% versus a -.3% decline in Aug.
• Capacity Utilization for Sept. is estimated to rise to 76.5% versus 76.3% in Aug. 

2:00 pm EST

• The Federal Budget Deficit for Sept. is estimated at -$30.0B versus $197.9B in August.

4:00 pm EST

• Net Long-Term TIC Flows for Aug. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The IMF meetings, weekly US Baker Hughes rig count and the weekly CFTC speculative net positioning reports could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Afternoon Market Internals

NYSE Composite Index:

• Volume Running +20.6% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 16.1 +3.4
• 7 Sectors Rising, 4 Sectors Declining
• 72.8% of Issues Advancing, 26.1% Declining 
• TRIN/Arms 1.19 +91.9%
• Non-Block Money Flow +$208.0M
  
• 61 New 52-Week Highs, 122 New Lows
• 42.0% (+8.1%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 51.7 +6.9

Polymarket: 

• Will China invade Taiwan by June 30th 2027? 8.0% unch.
• Strait of Hormuz traffic returns to normal by November 30th 6.0% unch.
• Iran agrees to end enrichment of uranium by Dec. 31st 10.0% -1.0 percentage point
• Israel withdraws from Lebanon by December 31st 10.0% unch.
• US Invades Iran before 2027 17.0% -1.0 percentage point
• US announces end of Iranian blockade by November 30th 25.0% -1.0 percentage point

Other

• Bloomberg Global Risk-On/Risk-Off Index 130.4 -2.9%
• Global Monitor Iran Instability Index 70.0 +1.0
• Strait of Hormuz Oil Tanker Traffic Curtailed Estimate 45.0% unch.
• US High-Yield Tech Sector OAS Index 476.5 -.5 basis point
• Bloomberg Cyclicals/Defensives Index 264.6 -.3%
• Morgan Stanley Growth vs Value Index 144.3 -.9%
• CNN Fear & Greed Index 30.0 (FEAR) -2.0
• 1-Day Vix 11.7 -16.8%
• Vix 16.9 unch.
• Total Put/Call .80 -11.1%

Thursday Watch

Around X:

• @Business

• The OpenAI employee who was arrested and charged with allegedly using a hidden recording device in one of the ChatGPT maker’s San Francisco offices had a one-way ticket to Saudi Arabia booked for Oct. 12, according to a court filing.
• While angst around funding AI has been building for months, CoreWeave has drawn outsized attention for being an early entrant in the business that has been heavily reliant on the high-yield debt markets to finance its buildout.
• Anduril is allowing employees to sell shares as part of a tender that stands to value the defense technology startup at roughly $90 billion.
• Russia accused Ukraine of attacking two oil refineries and undermining a proposed energy ceasefire. Ukraine denied the claim.  

• @ZeroHedge

• Trump Admin Looking To Strip Ilhan Omar's Citizenship, Then Deport Her; Passport Seized In Raid.
• Anthropic Says Q3 Revenue Jumped To $16.8 Billion And Turned "Adjusted" Profitable... But Run-Rate Math Shows Growth Hitting The Brakes.
• Report Alleges Houthis Building Advanced Missiles With Help From China.
• *US MULLS EUROPEAN COUNTRIES UNFREEZING SOME RUSSIAN ASSETS: FT.
• Today was the first "-1% SPX / -2% NDX" move since late July. From Goldman's EOD wrap: 
• Congresswoman Warns Incoming Socialists Are "National Security Threat," Wants Their Access To Intel Limited.
• "Witching Hour": Goldman's Flow Desk Sees Technical Tide Turning As Buybacks, Retail And Foreigners All Line Up For Year-End.
• Judge "Highly Likely" To Grant Apple Injunction As OpenAI Fires Back With Its Own Theft Allegations.
• speaking of Alix, they're going to be soooo busy: Paramount CDS just took out Lehman highs. How much of this is cross-collateralized with Ellison and ORCL when it hits?          
• And scene: CRWV CDS closes +135bps, panic selling and "just get the me the fukk out of this" capitulation. Next, CRWV next points up as capital markets access freezes and the Alix Partners of the world start making phone calls.
• "I Come From Your Future": A Frenchman's Warning To All Americans Voting Democrat.
• *WARREN: BOFA SHOULD FACE ASSET CAP, OTHER RESTRICTIONS. for not using bitcoin to engage in money laundering?
• America Looks Richer Than Ever. What Happens When The Fed's Asset Bubble Bursts?      
• Useless Without Transmission: DOE Backs $581 Million TVA Grid Expansion. 
• Hawks Circle As Soaring CPI Lifts The Dollar, Hammers Everything Else... AI Credit Cracks Widen. 

• @CNBC  

• SK Hynix plunges 8% amid Asia tech rout as Fed rate hike fears, AI funding worries mount.   
• Thursday's big stock stories: What’s likely to move the market in the next trading session.
• CNBC Daily Open: A Singapore ship goes down as Hormuz risks rise.  

Night Trading 

• Asian equity indices are -4.5% to -1.5% on average. 
• Asia Ex-Japan Investment Grade CDS Index 72.75 +1.5 basis points. 
• China Sovereign CDS 37.0 +.5 basis point.
• China Iron Ore Spot 90.10 USD/Metric Tonne -.4%. 
• Crude Oil 93.91/bbl. -1.3%. 
• Gold 4,160.90 USD/t oz. +1.24%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.08 +.69%.
• Bloomberg Emerging Markets Currency Index 33.61 +.03%.
• Bloomberg Global Risk-On/Risk Off Index 131.2 -2.4%.
• US 10-Year Yield 5.11% -8.0 basis points.
• Japan 30-Year Yield 4.02 -4.0 basis points.
• Volatility Index(VIX) futures 18.4 +1.5%.
• Euro Stoxx 50 futures -.93%. 
• S&P 500 futures -.40%.
• NASDAQ 100 futures -.94%.

Morning Preview Links

BOTTOM LINE: Asian indices are sharply lower, weighed down by technology and metals & mining shares in the region. I expect US stocks to open lower and to maintain losses into the afternoon.  The Portfolio is 25% net long heading into the day.