Tuesday, June 27, 2023

Wednesday Watch

Night Trading 

  • Asian equity indices are -.25% to +.75% on average.
  • Asia Ex-Japan Investment Grade CDS Index 119.0 -.5 basis point. 
  • China Sovereign CDS 62.0 -.25 basis point.
  • China Iron Ore Spot 113.2 USD/Metric Tonne +.56%.
  • Bloomberg Emerging Markets Currency Index 43.7 -.04%.
  • Bloomberg Global Risk-On/Risk Off Index 61.5 +1.1%. 
  • Bloomberg US Financial Conditions Index .25 +12.0 basis points.
  • Volatility Index(VIX) futures 15.7 +.6%.
  • Euro Stoxx 50 futures +.28%.
  • S&P 500 futures -.21%.
  • NASDAQ 100 futures -.42%.  
Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and industrial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 50% net long heading into the day.

Stocks Surging into Final Hour on US Economic Acceleration Hopes, Loosening US Financial Conditions, FANG+ Stock Frenzy, Tech/Transport Sector Strength

Broad Equity Market Tone:

  • Advance/Decline Line: Substantially Higher
  • Sector Performance: Almost Every Sector Rising
  • Volume: Below Average
  • Market Leading Stocks: Outperforming
Equity Investor Angst:
  • Volatility(VIX) 13.7 -4.2%
  • DJIA Intraday % Swing .49%
  • Bloomberg Global Risk On/Risk Off Index 61.2 +2.9%
  • Euro/Yen Carry Return Index 166.0 +.9%
  • Emerging Markets Currency Volatility(VXY) 8.8 -.45%
  • CBOE S&P 500 Implied Correlation Index 19.2 -6.2% 
  • ISE Sentiment Index 120.0 -2.0 points
  • Total Put/Call .81 -8.0%
  • NYSE Arms .86 -3.4%
Credit Investor Angst:
  • North American Investment Grade CDS Index 71.4 -2.77%
  • US Energy High-Yield OAS 376.7 -3.2%
  • Bloomberg TRACE # Distressed Bonds Traded 363.0 +13.0
  • European Financial Sector CDS Index 90.9 -2.2% 
  • Deutsche Bank Subordinated 5Y Credit Default Swap 2985.5 -.87%
  • Italian/German 10Y Yld Spread 163.0 basis points -1.0 basis point
  • Asia Ex-Japan Investment Grade CDS Index 120.9 +2.2%
  • Emerging Market CDS Index 217.6 -2.5%
  • China Corp. High-Yield Bond USD ETF(KHYB) 26.3 +.19%
  • 2-Year Swap Spread 23.75 basis points +5.25 basis points
  • TED Spread 23.0 basis points -2.5 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -15.5 -.5 basis point
  • MBS  5/10 Treasury Spread 161.0 -2.0 basis points
  • Bloomberg CMBS Investment Grade Bbb Average OAS 721.0 +3.0 basis points
  • Avg. Auto ABS OAS 81.0 +1.0 basis point
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 43.75 -.03%
  • 3-Month T-Bill Yield 5.27% -3.0 basis points
  • China Iron Ore Spot 113.2 USD/Metric Tonne +.6%
  • Dutch TTF Nat Gas(European benchmark) 34.5 euros/megawatt-hour  +7.9%
  • Citi US Economic Surprise Index 40.8 +16.9 points
  • Citi Eurozone Economic Surprise Index -138.4 +1.8 points
  • Citi Emerging Markets Economic Surprise Index 1.3 -.9 point
  • S&P 500 Current Quarter EPS Growth Rate YoY(10 of 500 reporting) +13.8% -.9 percentage point
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 231.56 +.03:  Growth Rate +3.7% +.2 percentage point, P/E 18.8 unch.
  • S&P 500 Current Year Estimated Profit Margin 12.24% -.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 212.88 +.06: Growth Rate +41.1% +1.3 percentage points, P/E 35.4 unch.
  • Bloomberg US Financial Conditions Index .28 +3.0 basis points
  • Bloomberg Euro-Zone Financial Conditions Index -4.14 +12.0 basis points
  • US Yield Curve -99.5 basis points (2s/10s) +2.25 basis points
  • US Atlanta Fed 2Q GDPNow Forecast +1.77% -18.0 basis points
  • Cleveland Fed Inflation Nowcast Core PCE YoY +4.70% unch.: CPI YoY +3.22% unch.
  • 10-Year TIPS Spread 2.20 unch.
  • Highest target rate probability for Sept. 20th FOMC meeting: 67.2%(-.4 percentage point) chance of 5.25%-5.5%. Highest target rate probability for  Nov. 1st meeting: 58.4%(-4.4 percentage points) chance of 5.25%-5.5%.
Overseas Futures:
  • Nikkei 225 Futures: Indicating +350 open in Japan 
  • China A50 Futures: Indicating -3 open in China
  • DAX Futures: Indicating +194 open in Germany
Portfolio:
  • Higher:  On gains in my tech/industrial/utility/medical sector longs
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my emerging market shorts
  • Market Exposure: Moved to 75% Net Long

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

Earnings of Note 
Company/Estimate 

Before the Open:
  • (GIS)/1.07
After the Close: 
  • (BB)/-.06
  • (FUL)/1.04
  • (MU)/-1.61
  • (FIZZ)/.38
  • (WOR)/1.90
Economic Releases   
8:30 am EST
  • Advance Good Trade Balance for May is estimated at -$93.8B versus -$96.8B in April.
  • Wholesale Inventories MoM for May is estimated to fall -.1% versus a -.1% decline in April.
  • Retail Inventories MoM for May is estimated to rise +.2% versus a +.2% gain in April.

10:30 am EST

  • Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,266,430 barrels versus a -3,831,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +59,860 barrels versus a +479,000 barrel gain the prior week. Distillate inventories are estimated to rise by +240,430 barrels versus a +434,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.23% versus a -.6% decline prior.

Upcoming Splits 

  • None of note
Other Potential Market Movers
  • The Fed's Powell speaking, Italian PPI report, 7Y T-Note auction, weekly MBA Mortgage Applications report, (LOW) fireside chat, (AGCO) tech event and the (CP) 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:

  • NYSE Volume Running -17.9% Below 100-Day Average 
  • Nasdaq/NYSE Volume Ratio 11.6 +2.9
  • 3 Sectors Declining, 8 Sectors Rising
  • 71.5% of Issues Advancing, 25.9% Declining
  • 74 New 52-Week Highs, 23 New Lows
  • 48.4%(+3.5%) of Issues Above 200-day Moving Average
  • Average 14-Day RSI 56.0 +4.0
  • Bloomberg Global Risk-On/Risk-Off Index 61.0 +2.6%
  • Russell 1000: Growth/Value 17,333.8 +.34%
  • 1-Day Vix 8.5 -23.4%
  • Vix 13.6 -4.3% 
  • Total Put/Call .77 -12.5%
  • TRIN/Arms .86 -3.4%

Monday, June 26, 2023

Tuesday Watch

Evening Headlines

Bloomberg:

Zero Hedge:
Wall Street Journal:  
MarketWatch:
Newsmax:
Fox News:
TheGatewayPundit.com:
Twitter: 
OpenVAERS:
SKirsch.com:
Night Trading 
  • Asian equity indices are -.5% to +.5% on average.
  • Asia Ex-Japan Investment Grade CDS Index 120.5 +3.75 basis points. 
  • China Sovereign CDS 62.25 +2.0 basis points.
  • China Iron Ore Spot 110.2 USD/Metric Tonne +1.0%.
  • Bloomberg Emerging Markets Currency Index 43.7 -.04%.
  • Bloomberg Global Risk-On/Risk Off Index 59.7 +.3%. 
  • Bloomberg US Financial Conditions Index .13 -12.0 basis points.
  • Volatility Index(VIX) futures 16.0 +.03%.
  • Euro Stoxx 50 futures +.12%.
  • S&P 500 futures +.17%.
  • NASDAQ 100 futures +.16%.  
Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by financial and industrial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 50% net long heading into the day.

Stocks Reversing Slightly Lower into Final Hour on US Policy-Induced Stagflation Fears, Global Growth Concerns, Cooling FANG+ Stock Frenzy, Pharma/Biotech Sector Weakness

Broad Equity Market Tone:

  • Advance/Decline Line: Around Even
  • Sector Performance: Mixed
  • Volume: Below Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 14.2 +5.4%
  • DJIA Intraday % Swing .56%
  • Bloomberg Global Risk On/Risk Off Index 59.7 -2.8%
  • Euro/Yen Carry Return Index 164.7 +.01%
  • Emerging Markets Currency Volatility(VXY) 8.9 +2.2%
  • CBOE S&P 500 Implied Correlation Index 20.0 -1.6% 
  • ISE Sentiment Index 134.0 +31.0 points
  • Total Put/Call .85 -2.3%
  • NYSE Arms 1.05 -36.4%
Credit Investor Angst:
  • North American Investment Grade CDS Index 72.6 +.59%
  • US Energy High-Yield OAS 390.5 +.08%
  • Bloomberg TRACE # Distressed Bonds Traded 350.0 -17.0
  • European Financial Sector CDS Index 92.9 +.94% 
  • Deutsche Bank Subordinated 5Y Credit Default Swap 298.07 +.71%
  • Italian/German 10Y Yld Spread 164.0 basis points +1.0 basis point
  • Asia Ex-Japan Investment Grade CDS Index 119.1 +2.6%
  • Emerging Market CDS Index 223.07 +.14%
  • China Corp. High-Yield Bond USD ETF(KHYB) 26.3 -.34%
  • 2-Year Swap Spread 18.5 basis points -.25 basis point
  • TED Spread 25.5 basis points +.75 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -15.0 +.5 basis point
  • MBS  5/10 Treasury Spread 163.0 -1.0 basis point
  • Bloomberg CMBS Investment Grade Bbb Average OAS 718.0 +2.0 basis points
  • Avg. Auto ABS OAS 80.0 unch.
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 43.7 -.95%
  • 3-Month T-Bill Yield 5.30% +1.0 basis point
  • China Iron Ore Spot 109.1 USD/Metric Tonne +.04%
  • Dutch TTF Nat Gas(European benchmark) 32.0 euros/megawatt-hour  -1.6%
  • Citi US Economic Surprise Index 23.9 +1.4 points
  • Citi Eurozone Economic Surprise Index -140.2 -8.3 points
  • Citi Emerging Markets Economic Surprise Index 2.2 -1.0 point
  • S&P 500 Current Quarter EPS Growth Rate YoY(9 of 500 reporting) +14.7% +15.5 percentage points
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 231.53 +.16:  Growth Rate +3.5% unch., P/E 18.8 unch.
  • S&P 500 Current Year Estimated Profit Margin 12.25% +.3 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 212.82 +.55: Growth Rate +39.8% +.3 percentage point, P/E 35.4 -.6
  • Bloomberg US Financial Conditions Index .26 -4.0 basis points
  • Bloomberg Euro-Zone Financial Conditions Index -4.26 +10.0 basis points
  • US Yield Curve -101.75 basis points (2s/10s) unch.
  • 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 2.20 -2.0 basis points
  • Highest target rate probability for Sept. 20th FOMC meeting: 66.6%(+1.7 percentage point) chance of 5.25%-5.5%. Highest target rate probability for  Nov. 1st meeting: 61.7%(+1.5 percentage points) chance of 5.25%-5.5%.
Overseas Futures:
  • Nikkei 225 Futures: Indicating -20 open in Japan 
  • China A50 Futures: Indicating -40 open in China
  • DAX Futures: Indicating +124 open in Germany
Portfolio:
  • Slightly Higher:  On gains in my tech/industrial/utility sector longs
  • Disclosed Trades: None
  • Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

  • Large-Cap Growth -.9%
Sector Underperformers:
  • 1) Pharma -1.2% 2) Software -1.0% 3) Internet -1.0%
Stocks Falling on Unusual Volume: 
  • WEST, PFE, CVAC, KMX, PAX, MARA, SUPN, WKC, CCL, CUK, MRCY, AKRO, INTA and BMEA
Stocks With Unusual Put Option Activity:
  • 1) CGC 2) TOL 3) BB 4) FGEN 5) WBA
Stocks With Most Negative News Mentions:
  • 1) TSLA 2) IEP 3) CCL 4) PLYA 5) WKC
Charts:

Bull Radar

Style Outperformer:

  • Mid-Cap Value +.9%
Sector Outperformers:
  • Oil Service +2.4% 2) Regional Banks +2.1% 3) REITs +2.0%
Stocks Rising on Unusual Volume:
  • SLRN, SLG, ENFN, CABA, IONQ, ATEC, OPCH and VICR
Stocks With Unusual Call Option Activity:
  • 1) OPCH 2) WW 3) SLG 4) TOL 5) APLD
Stocks With Most Positive News Mentions:
  • 1) MLTX 2) ORIC 3) INVE 4) SLRN 5) APLD

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

Earnings of Note 
Company/Estimate 

Before the Open:
  • (KFY)/1.00
  • (SCHN)/.64
  • (SNX)/2.55
  • (WBA)/1.07
After the Close: 
  • (AVAV)/1.01
  • (JEF)/.27
Economic Releases   
8:30 am EST
  • Durable Goods Orders for May is estimated to fall -.8% versus a +1.1% gain in April.
  • Durables Ex Transports for May is estimated unch. versus a -.3% decline in April.
  • Cap Goods Orders Non-Defense Ex-Air for May is estimated to rise +.1% versus a +1.3% gain in April.
9:00 am EST
  • The FHFA House Price Index MoM for April is estimated to rise +.5% versus a +.6% gain in March. 
  • The S&P CoreLogic CS 20-City MoM SA for April is estimated to rise +.35% versus a +.45% gain in March.

10:00 am EST

  • New Home Sales for May is estimated to fall to 675K versus 683K in April. 
  • Conference Board Consumer Confidence for June is estimated to rise to 103.9 versus 102.3 in May.
  • The Richmond Fed Manufacturing Activity Index for June is estimated to rise to -12 versus -15 in May.

10:30 am EST

  • The Dallas Fed Services Activity Index for June.

Upcoming Splits 

  • None of note
Other Potential Market Movers
  • The Italy Business Confidence Index,  5Y T-Note auction, weekly US retail sales reports, (SNOW) investor day and the (DAL) investor day could also impact global trading tomorrow.
US Equity Market Hours
  • 9:30 am - 4:00 pm EST