Wednesday, August 26, 2026

Stocks Reversing Higher into Final Hour on US Economic/Earnings Optimism, Falling Fed Rate-Hike Odds, Technical Buying, Tech/Industrial Sector Strength

Economic/Market Gauges:

  • North American Investment Grade CDS Index 50.2 -.9%
  • BofA Private Credit Proxy Index 73.7 -.4% 
  • Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .27 -2.0 basis points
  • BofA Global Financial Stress Indicator -.21 -6.0 basis points
  • European Financial Sector CDS Index 53.3 -.2%
  • Emerging Market CDS Index 137.3 +.3%
  • Israel Sovereign CDS 53.9 -.2%
  • Bloomberg Global Trade Policy Uncertainty Index 1.1 unch.
  • US Morning Consult Daily Consume Sentiment Index 89.1 -2.5
  • Citi US Economic Surprise Index 24.3 +1.6
  • Citi Eurozone Economic Surprise Index 89.9 -.9
  • Citi Emerging Markets Economic Surprise Index 23.2 -.4
  • S&P 500 Current Quarter EPS Growth Rate YoY(470 of 500 reporting) +49.6% unch.
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 392.06 +.14:  Growth Rate +33.2% +.1 percentage point, P/E 19.6 unch.
  • S&P 500 Current Year Estimated Profit Margin 16.28% -4.0 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 953.28 +.45: Growth Rate +83.9% +.1 percentage point, P/E 19.2 -.1
  • Bloomberg US Financial Conditions Index 1.20 -5.0 basis points
  • US Yield Curve 44.0 basis points (2s/10s) unch.
  • Bloomberg Industrial Metal Index 180.3 -.9%
  • Dutch TTF Nat Gas(European benchmark) 66.0 euros/megawatt-hour -.9%
  • US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 14.7 +.7% percentage point
  • US Atlanta Fed GDPNow Q3 Forecast +4.6% +60.0 basis points
  • US 10-Year T-Note Yield 4.66% +4.0 basis points
  • 1-Year TIPS Spread 2.03 +7.0 basis points
  • Highest target rate probability for Oct. 28th FOMC meeting: 48.3% (+2.6 percentage points) chance of 3.5%-3.75%. Highest target rate probability for Dec. 9th meeting: 45.4%(+.3 percentage point) chance of 3.75%-4.0%. (current target rate is 3.5-3.75%)
Overseas Futures:
  • Nikkei 225 Futures: Indicating -260 open in Japan 
  • China A50 Futures: Indicating -24 open in China
  • KOSPI 200 Futures: Indicating +4 open in South Korea 
  • DAX Futures: Indicating +40 open in Germany
Portfolio:
  • Higher: On gains in my financial/tech/industrial/consumer discretionary sector longs
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
  • Market Exposure: Moved to 100% net long

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