Stocks Reversing Higher into Final Hour on Lower Long-Term Rates, Earnings Outlook Optimism, Technical Buying, Tech/Pharma Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Slightly Higher
  

• Sector Performance: Mixed

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 15.7 +6.0%
• S&P 500 Intraday % Swing .26 +15.9%
• Bloomberg Global Risk On/Risk Off Index 83.2 -.4% 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.96 +.25%

• Euro/Yen Carry Return Index 195.73 unch.

• Emerging Markets Currency Volatility(VXY) 6.75 -1.6%

• CBOE S&P 500 Implied Correlation Index 14.1 +.8% 

• ISE Sentiment Index 202.0 +39.0

• Total Put/Call .87 +10.1%

• NYSE Arms .96 -18.0%
• NYSE Non-Block Money Flow +$113.7M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 47.0 -1.6%
  

• US Energy High-Yield OAS 350.0 -.7%
• Bloomberg TRACE # Distressed Bonds Traded 210.0 -11.0

• European Financial Sector CDS Index 53.0 -1.8%
  
• Deutsche Bank Subordinated 5Y Credit Default Swap 118.5 -1.6%
  

• Italian/German 10Y Yld Spread 78.0 -3.0 basis points

• Asia Ex-Japan Investment Grade CDS Index 60.9 +.9%
  

• Emerging Market CDS Index 139.4 -.6%
• Israel Sovereign CDS 75.6 -.9%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.57 +.24%

• 2-Year SOFR Swap Spread -24.0 basis points +.25 basis point

• 3M T-Bill Treasury Repo Spread -41.25 basis points -1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap 1.55 +.75 basis point
• MBS  5/10 Treasury Spread 116.0 -4.0 basis points
• Bloomberg CMBS Investment Grade Bbb Average OAS 588.0 -1.0 basis point
• Avg. Auto ABS OAS 50.0 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 36.4 +.15%
• US 10-Year T-Note Yield 4.10% -5.0 basis points
• 3-Month T-Bill Yield 3.93% unch.

• China Iron Ore Spot 103.7 USD/Metric Tonne -.1%
• Dutch TTF Nat Gas(European benchmark) 31.3 euros/megawatt-hour -.2%

• Citi US Economic Surprise Index 18.3 -4.5 points

• Citi Eurozone Economic Surprise Index 9.8 +1.6 points

• Citi Emerging Markets Economic Surprise Index 6.1 +3.5 points
• S&P 500 Current Quarter EPS Growth Rate YoY(19 of 500 reporting) +12.4% -3.1 percentage points
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 293.80 +.12:  Growth Rate +12.3% unch., P/E 22.8 +.1
• S&P 500 Current Year Estimated Profit Margin 13.49% -1.0 basis point
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 476.56 +.32: Growth Rate +17.3% +.1 percentage point, P/E 33.8 unch.
• Bloomberg US Financial Conditions Index .56 -12.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index 1.44 unch.
• Bloomberg Global Trade Policy Uncertainty Index 2.5 -.1
• US Yield Curve 56.0 basis points (2s/10s) +1.25 basis points
• US Atlanta Fed GDPNow Q2 Forecast +3.8% -10.0 basis points
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 33.9% unch.

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.87% unch.: CPI YoY +2.99% unch.
• 1-Year TIPS Spread 2.70 -1.0 basis point
• 10-Year TIPS Spread 2.35 -2.0 basis points
• Highest target rate probability for Dec. 10th FOMC meeting: 86.7% (+9.4 percentage points) chance of 3.5%-3.75%. Highest target rate probability for Jan. 28th meeting: 52.2%(-4.3 percentage points) chance of 3.5%-3.75%. (current target rate is 4.0-4.25%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +400 open in Japan 
• China A50 Futures: Indicating +53 open in China

• DAX Futures: Indicating +270 open in Germany

Portfolio:

• Higher: On gains in my tech/utility/industrial/consumer discretionary sector longs
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
• Market Exposure: Moved to 100% Net Long