Stocks Falling into Final Hour on Rising Long-Term Rates, Increasing War-Induced Inflation Expectations, Earnings Outlook Jitters, Retail/Defense Sector Weakness

Economic/Market Gauges:

• North American Investment Grade CDS Index 51.5 +.9%
• BofA Private Credit Proxy Index 73.7 -.1% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .27 -2.0 basis points
• BofA Global Financial Stress Indicator -.14 -2.0 basis points
• European Financial Sector CDS Index 54.37 +1.0%
• Emerging Market CDS Index 140.5 +1.0%
• Israel Sovereign CDS 54.0 +2.7%
• Bloomberg Global Trade Policy Uncertainty Index .9 +.1
• US Morning Consult Daily Consume Sentiment Index 90.9 -.2

• Citi US Economic Surprise Index 20.9 +5.6

• Citi Eurozone Economic Surprise Index 78.0 -.7

• Citi Emerging Markets Economic Surprise Index 25.2 +.3
• S&P 500 Current Quarter EPS Growth Rate YoY(466 of 500 reporting) +49.6% -.4 percentage point
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 390.57 +.40:  Growth Rate +32.6% unch., P/E 19.7 -.1
• S&P 500 Current Year Estimated Profit Margin 16.28% +2.0 basis points
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(8 of 10 reporting) +138.4% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 950.01 +.96: Growth Rate +83.2% +.2 percentage point, P/E 19.3 -.1
• Bloomberg US Financial Conditions Index 1.30 +5.0 basis points
• US Yield Curve 51.0 basis points (2s/10s) +4.0 basis points
• Bloomberg Industrial Metal Index 177.46 -.24%
• Dutch TTF Nat Gas(European benchmark) 65.45 euros/megawatt-hour +3.3%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 14.1% -1.0 percentage point
• US Atlanta Fed GDPNow Q3 Forecast +4.0% unch.
• US 10-Year T-Note Yield 4.69% +4.0 basis points
• 1-Year TIPS Spread 1.95 +13.0 basis points

• Highest target rate probability for Oct. 28th FOMC meeting: 52.4% (-1.2 percentage points) chance of 3.5%-3.75%. Highest target rate probability for Dec. 9th meeting: 44.9%(-.4 percentage point) chance of 3.75%-4.0%. (current target rate is 3.5-3.75%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -720 open in Japan 
• China A50 Futures: Indicating -74 open in China
• KOSPI 200 Futures: Indicating -7 open in South Korea 

• 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 Growth -2.0%

Sector Underperformers:

• 1) Defense -3.7% 2) Space -3.4% 3) Alt Energy -3.1%

Stocks Falling on Unusual Volume: 

• RS, IPX, TSAT, VIK, STLD, MT, FRVO, CPRI, ONON, BLZE, BBNX, ENVA, BMA, VAC, BBW, NTES, GPCR, KLAR, ARQT, VICR, DKS, UPST, PRG, KC, MRCY, MAIR, AERO, ATAT, UTI, EQPT, SEI, EIKN, WMT, EROC, ONT, WOLF, LYTS, MRNA, AAP and AADX

Stocks With Unusual Put Option Activity:

• 1) ROST 2) AAP 3) MRNA 4) WMT 5) GTM

Stocks With Most Negative News Mentions:

• 1) AAP 2) EQPT 3) CAPR 4) AARD 5) COTY

Sector ETFs With Most Negative Money Flow:

• 1) KRE 2) XLF 3) XLV 4) XLI 5) XNTK

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Value -.4%

Sector Outperformers:

• 1) Gold & Silver +1.8% 2) Agriculture +1.7% 3) Digital Health +1.6%

Stocks Rising on Unusual Volume:

• SCSC, MARA, SCTX, ANDG, TEM, CAI, ASST, BTDR, ALM, NDSN, COIN, DE, LB, AUPH, DQ, DRD, CRCL, LIF, AU, MFP, BMNR, RIOT, AGRO, CLSK, SMJF, PSNL, ARCT, KGC, CNH, AMLX, HIMS, ILMN, MOS, ETOR, VIST, VIRT, PCG, HSAI, EE and AGCO

Stocks With Unusual Call Option Activity:

• 1) PTEN 2) QXO 3) NYT 4) PURR 5) CSGP 

Stocks With Most Positive News Mentions:

• 1) DE 2) NDSN 3) MARA 4) SCSC 5) TEM

Sector ETFs With Most Positive Money Flow:

• 1) SMH 2) XBI 3) XME 4) XLP 5) IGV

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:

• (BJ)/1.17
• (BKE)/.81
• (UI)/4.03 

After the Close: 

• None of note

Economic Releases 

9:45 am EST

• The S&P Global US Manufacturing PMI for August is estimated at 53.9 versus 53.9 in July.
• The S&P Global US Services PMI for August is estimated at 54.0 versus 54.9 in July.
• The S&P Global US Composite PMI for August is estimated to fall to 53.9 versus 54.5 in July. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The Bloomberg US Economic Survey for August and the US Baker Hughes oil rig count 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 -9.5% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 16.2 +3.3
• 3 Sectors Rising, 8 Sectors Declining
• 37.5% of Issues Advancing, 60.1% Declining 
• TRIN/Arms .70 -34.0%
• Non-Block Money Flow -$316.5M
  
• 54 New 52-Week Highs, 50 New Lows
• 59.8% (-2.5%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 63.5 -3.0

Polymarket: 

• Will China invade Taiwan by June 30th 2027? 9.0% unch.
• Strait of Hormuz traffic returns to normal by September 30th 6.0% unch.
• Iran agrees to end enrichment of uranium by Sept. 30th 3.0% unch.
• Israel withdraws from Lebanon by September 30th 2.0% unch.
• US Invades Iran before 2027 18.0% unch.
• US announces end of Iranian blockade by September 30th 28.0% -5.0 percentage points

Other

• Bloomberg Global Risk-On/Risk-Off Index 126.8 +.2%
• Global Monitor Iran Instability Index 66.0 +12.0
• Strait of Hormuz Oil Tanker Traffic Curtailed Estimate 92.0% unch.
• US High-Yield Tech Sector OAS Index 470.5 +1.25 basis points
• Bloomberg Cyclicals/Defensives Index 268.4 -.1%
• Morgan Stanley Growth vs Value Index 147.2 -.8%
• CNN Fear & Greed Index 55.0 (Moved to NEUTRAL from GREED) -4.0
• 1-Day Vix 8.9 -9.3%
• Vix 15.9% +6.8%
• Total Put/Call .80 unch.

Thursday Watch

Around X:

• @Business

• The US will begin what President Trump said would be an unprecedented economic warfare operation against Iran, after faulting the country for failing to take its chance to make a deal with him. 
• The Trump administration is poised to reduce tariffs on automobiles imported from Canada to 15% from 25% as part of a broader deal that would see the US neighbor drop retaliatory trade measures, according to people familiar with the matter. 
• Hudson River Trading pulled in a record $11.4 billion of trading revenue in the second quarter and went on to post a gain for the month of July, defying an AI stock rout that caused a staggering monthly loss at rival Jane Street. 
• After US 30-year bond yields hit their highest levels since the financial crisis, the Treasury announced an increase in buy-backs. 
• US fuelmakers are running refineries harder than at any point since the outbreak of the conflict in Iran, part of an all-out effort to keep global markets supplied with diesel, jet fuel and gasoline. 
• YouTube is offering millions of dollars to popular channels if they upload their videos to the site exclusively for a certain period of time -- and don't upload to Netflix. 
• Investment experts see ways to capitalize on the AI trend beyond the usual. 
• The Commodity Futures Trading Commission is asking for public input on futures contracts for the computing power that undergirds the artificial intelligence sector as industry heavyweights move to embrace so-called compute as a tradable asset. 
• Get up to speed on what's moving global markets.   
• Here’s what you need to know to start your day. 

• @ZeroHedge

• Trump Indicates Plans To Meet North Korea's Kim Jong-Un Later This Year.
• "Doom Loop" Engaged: US Debt Hits $40 Trillion As Treasury Enters The Endgame. 
• Total US interest is now $1.4 trillion. It will surpass Social Security as the largest US government outlay ($1.6 trillion per year) by 2028.
• Amazon 'Prime Air' To Expand Drone Delivery To Nearly 500 US Cities This Year. 
• 8 Examples That Demonstrate That The Islamization Of America Is Steadily Progressing.
• Your Bank Data Could Become A Profit Center - And You'll Pay the Price.
• 'Quality Over Quantity': Reddit Is Mostly Wiped From ChatGPT Citations.
• All correlations breaking down. "What has been striking more recently is the bifurcation between the AI and non-AI trade, illustrated by the lowest and most negative correlation on record between our GS Broad AI basket (GSTMTAIP) and SPXXAI Index. The basket and the index have only traded in the same direction 1/3rd of the time in the last 3 months (vs ~2/3rd historical average)." - Goldman.
• The DSA's War On Wealth.
• "This Only Works For So Long": Wall Street Reacts To The Treasury's Shocking Buyback Boost. 
• Bets on Long-Bond ETF Spiked a Day Before US Announced Buyback: BBG. of course they did.
• Harvard To Pay $53 Million To Families Of Donors Whose Body Parts Were Sold Off.
• The $1.5 Million Rich Kid Socialist: NYC-DSA Co-Chair Gustavo Gordillo Lives The Revolution From Daddy's Townhouse.
• The Cruelty Of DEI.
• Bitcoin & Bullion Explode After Bessent-Bailout, Yield-Curve & Dollar Crushed; Tech Tepid On Momo-Mess.          

• @CNBC  

• CNBC Daily Open: Treasury attempts to rein in bond yields as U.S. debt swells past $40 trillion. 
• Thursday's big stock stories: What’s likely to move the market in the next trading session. 
• Japan exports growth accelerates for fifth straight month, beating estimates, on robust chip shipments. 
• Thursday's big stock stories: What’s likely to move the market in the next trading session.
• Trump announces 'economic warfare' on Iran, threatens ‘tremendous’ consequences for its backers.
• Call-buying bonanza around Trump's Hyperliquid comments includes some eyebrow-raising trades.
• S&P 500 futures are little changed after index snaps three-day slide: Live updates.

Night Trading 

• Asian equity indices are +.25% to +2.25% on average. 
• Asia Ex-Japan Investment Grade CDS Index 67.75 -.75 basis point. 
• China Sovereign CDS 35.5 -.75 basis point.
• China Iron Ore Spot 96.0 USD/Metric Tonne -.03%. 
• Crude Oil 86.10/bbl. +.3% 
• Gold 4,556.0 USD/t oz. +.24%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.41 +.35%.
• Bloomberg Emerging Markets Currency Index 34.46 +.02%.
• Bloomberg Global Risk-On/Risk Off Index 126.9 +.2%.
• US 10-Year Yield 4.63% -1.0 basis point.
• Japan 30-Year Yield 4.0% -12.0 basis points.
• Volatility Index(VIX) futures 17.5 -.6%.
• Euro Stoxx 50 futures -.26%. 
• S&P 500 futures +.17%.
• NASDAQ 100 futures +.53%.

Morning Preview Links

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