Thursday, October 27, 2022

Stocks Reversing Lower into Final Hour on US Policy-Induced Stagflation Fears, Earnings Outlook Worries, China Hard-Landing Concerns, Tech/Biotech Sector Weakness

Broad Equity Market Tone:

  • Advance/Decline Line: Higher
  • Sector Performance: Most Sectors Rising
  • Volume:  Around Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 27.01 -.99%
  • DJIA Intraday % Swing 1.0%
  • Bloomberg Global Risk On/Risk Off Index 44.5 -5.9%
  • Euro/Yen Carry Return Index 150.6 -1.2%
  • Emerging Markets Currency Volatility(VXY) 13.0 +.54%
  • CBOE S&P 500 Implied Correlation Index 50.3 -1.7% 
  • ISE Sentiment Index 98.0 -3.0 points
  • Total Put/Call .97 +4.3%
  • NYSE Arms 1.02 +3.0%
Credit Investor Angst:
  • North American Investment Grade CDS Index 90.94 -1.6%
  • US Energy High-Yield OAS 374.74 -.61%
  • Bloomberg TRACE # Distressed Bonds Traded 450.0 -4.0
  • European Financial Sector CDS Index 124.03 -.5% 
  • Credit Suisse Subordinated 5Y Credit Default Swap 335.0 -3.0%
  • Italian/German 10Y Yld Spread 205.0 basis points -17.0 basis points
  • Asia Ex-Japan Investment Grade CDS Index 218.5 -2.6%
  • Emerging Market CDS Index 288.57 -2.1%
  • China Corp. High-Yield Bond USD ETF(KHYB) 24.20 +.53%
  • 2-Year Swap Spread 34.75 basis points +.5 basis point
  • TED Spread 36.0 basis points -1.25 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -46.75 basis points +4.0 basis points
  • MBS  5/10 Treasury Spread  166.0 -5.0 basis points
  • Bloomberg US Agg CMBS Avg OAS 127.0 unch.
  • Avg. Auto ABS OAS 1.07 +4.0 basis points
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 46.7 +.11%
  • 3-Month T-Bill Yield 4.01% +1.0 bps
  • Yield Curve -37.75 basis points (2s/10s) +3.0 basis points
  • China Iron Ore Spot 81.55 USD/Metric Tonne -2.3%
  • Dutch TTF Nat Gas(European benchmark) 108.50 euros/megawatt-hour +4.0%
  • Citi US Economic Surprise Index 13.7 -2.7 points
  • Citi Eurozone Economic Surprise Index 3.5 -2.0 points
  • Citi Emerging Markets Economic Surprise Index 6.5 +2.9 points
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 233.33 -.10:  Growth Rate +14.6% -.1 percentage point, P/E 16.4 +.1
  • Bloomberg US Financial Conditions Index -1.17 -3.0 basis points
  • US Atlanta Fed GDPNow Forecast +3.09% unch.
  • Cleveland Fed Inflation Nowcast Core PCE YoY +5.16% unch.: CPI YoY +8.11% unch.
  • 10-Year TIPS Spread 2.47 +4.0 basis points
  • Highest target rate probability for December 14th FOMC meeting: 57.0%(-2.8 percentage points) chance of 4.25%-4.5%. Highest target rate probability for February 1st meeting: 47.0%(+5.7 percentage points) chance of 4.5%-4.75%.
US Covid-19:
  • 49 new infections/100K people(last 7 days total). 2.8%(-.4 percentage point) of 1/14/22 peak(1,740) -4/100K people from prior report.
  • New Covid-19 patient hospital admissions per 100K population -84.9%(-.1 percentage point) from peak 7-day avg. of 1/9/22 - 1/15/22
Overseas Futures:
  • Nikkei 225 Futures: Indicating -230 open in Japan 
  • China A50 Futures: Indicating -35 open in China
  • DAX Futures: Indicating +5 open in Germany
Portfolio:
  • Higher:  On gains in my industrial/commodity sector longs, index hedges and emerging market shorts
  • Disclosed Trades:  Added to my (IWM)/(QQQ) hedges
  • Market Exposure:  Moved to 25% Net Long

Bear Radar

Style Underperformer:

  • Large-Cap Growth -.6%
Sector Underperformers:
  • 1) Social Media -3.2% 2) Steel -1.1% 3) Biotech -.9%
Stocks Falling on Unusual Volume: 
  • SLAB, TYL, BKI, COLM, LII, WMG, INFA, AMH, CNX, RILY, SIVB, CCS, AEHR, CLF, MEDP, CTLT, OSTK, NXGN, SRG, LH, CNMD, ASGN, BAX, INVH, SWAV, BMRN, LC, OPCH, RRX, TRIN, WST, AMED, FCN, ALGN, FORM, SNBR, WOLF and META
Stocks With Unusual Put Option Activity:
  • 1) RITM 2) VNQ 3) INVH 4) TEN 5) TDOC
Stocks With Most Negative News Mentions:
  • 1) META 2) BAX 3) LH 4) AMED 5) VRTX
Charts:

Bull Radar

Style Outperformer:

  • Small-Cap Value +1.4%
Sector Outperformers:
  • 1) Airlines +3.0% 2) Homebuilding +1.9% 3) Defense +1.8%
Stocks Rising on Unusual Volume:
  • PI, OII, HZO, NOW, ASPN, PRG, ETD, OMF, UCTT, ANET, FCFS, CAT, TDOC, PTEN, NOVA, MUSA, BA and MDC
Stocks With Unusual Call Option Activity:
  • 1) R 2) PARR 3) WOLF 4) CAG 5) META
Stocks With Most Positive News Mentions:
  • 1) PI 2) ARCH 3) OII 4) CHKP 5) CAT

Morning Market Internals

NYSE Composite Index:

  • Volume Running +12.4% Above 100-Day Average 
  • 5 Sectors Declining, 6 Sectors Rising
  • 69.5% of Issues Advancing, 27.1% Declining
  • 57 New 52-Week Highs, 76 New Lows
  • 33.5%(+6.4%) of Issues Above 200-day Moving Average
  • Average 14-Day RSI 61.0 +3.0
  • Bloomberg Global Risk-On/Risk-Off Index 45.2 -4.6%
  • Russell 1000: Growth/Value 14,884.21 -.77%
  • Vix 27.2 -.3%
  • Total Put/Call 1.0 +7.5%
  • TRIN/Arms 1.23 +24.2% 

Wednesday, October 26, 2022

Thursday Watch

Night Trading 

  • Asian equity indices are +.25% to +.75% on average.
  • Asia Ex-Japan Investment Grade CDS Index 220.0 -4.5 basis points. 
  • China Sovereign CDS 117.50 -3.0 basis points.
  • Bloomberg Emerging Markets Currency Index 46.6 +.02%.  
  • Bloomberg Global Risk-On/Risk Off Index 48.1 +1.6%. 
  • Bloomberg US Financial Conditions Index -1.14 +1.0 basis point.
  • Volatility Index(VIX) futures 27.3 -.61%
  • Euro Stoxx 50 futures -.39%.
  • S&P 500 futures +.47%.
  • NASDAQ 100 futures +.47%  
Morning Preview Links

Earnings of Note 
Company/Estimate 
 
Before the Open: 
  • (MO)/1.30
  • (AMT)/2.59
  • (BUD)/.74
  • (ARCH)/9.10
  • (AN)/6.27
  • (BAX)/.62
  • (BWA)/1.03
  • (BC)/2.65
  • (CAT)/3.16
  • (CBRE)/1.30
  • (CMCSA)/.90
  • (FCN)/2.04
  • (HTZ)/1.08
  • (HON)/2.15
  • (IP)/1.20
  • (KDP)/.46
  • (LH)/4.68
  • (MA)/2.58
  • (MCD)/2.58
  • (MDC)/2.24
  • (MRK)/1.71
  • (NOC)/6.11
  • (OSK)1.18
  • (BTU)/1.80
  • (RS)/6.19
  • (SHOP)/-.07
  • (LUV)/.42
  • (SWK)/.70
  • (WDC)/.39
  • (XEL)/1.22
After the Close:
  • (AMZN)/.21
  • (AAPL)/1.27
  • (COF)/5.04
  • (CUZ)/.66
  • (DECK)/3.70
  • (EW)/.62
  • (FSLR)/-.26
  • (GILD)/1.43
  • (INTC)/.33
  • (LHX)/3.40
  • (MHK)/3.34
  • (PXD)/7.26
  • (SKYW)/.75
  • (X)/1.99
  • (WY)/.37
  • (ZEN)/.21
Economic Releases
8:30 am EST
  • 3Q GDP Annualized QoQ is estimated to rise +2.4% versus a -.6% decline in 2Q. 
  • 3Q Personal Consumption is estimated to rise +1.0% versus a +2.0% gain in 2Q.
  • 3Q GDP Price Index is estimated to rise +5.3% versus a +9.0% gain in 2Q.
  • Durable Goods Orders for Sept. is estimated to rise +.6% versus a -.2% decline in Aug.
  • Durables Ex Transports for Sept. is estimated to rise +.2% versus a +.3% gain in Aug.
  • Cap Goods Orders Non-Defense Ex-Air for Sept. is estimated to rise +.3% versus a +1.4% gain in Aug.
  • Initial Jobless Claims for last week is estimated to rise to 220K versus 214K the prior week. 
  • Continuing Claims is estimated to rise to 1390 versus 1385K prior.
11:00 am EST
  • Kansas City Fed Manufacturing Activity for Oct. is estimated to fall to -2 versus 1 in Sept.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The ECB rate decision, 7Y T-Note auction, (CS) investor day and the (SCHW) business update could also impact global trading today.
US Equity Market Hours
  • 9:30 am - 4:00 pm EST
BOTTOM LINE: Asian indices are modestly higher, boosted by technology and commodity 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.

Tuesday, October 25, 2022

Wednesday Watch

Evening Headlines

Bloomberg:                                 
Fox News:
Zero Hedge:
Newsmax:   
TheGatewayPundit.com:
OpenVAERS:
SKirsch.com:
Night Trading 
  • Asian equity indices are unch. to +.5% on average.
  • Asia Ex-Japan Investment Grade CDS Index 230.75 +2.75 basis points. 
  • China Sovereign CDS 130.50 -1.5 basis points.
  • Bloomberg Emerging Markets Currency Index 46.34 -.02%   
  • Bloomberg Global Risk-On/Risk Off Index 49.1 +.96%. 
  • Bloomberg US Financial Conditions Index -1.15 +2.0 basis points.
  • Volatility Index(VIX) futures 28.8 +2.3%
  • Euro Stoxx 50 futures -.45%.
  • S&P 500 futures -1.12%.
  • NASDAQ 100 futures -2.3%  
Morning Preview Links

Earnings of Note 
Company/Estimate 
 
Before the Open: 
  • (ADP)/1.79
  • (BA)/.07
  • (BSX)/.44
  • (BMY)/1.83
  • (BG)/2.56
  • (CME)/1.94
  • (EXP)/3.58
  • (GD)/3.16
  • (HOG)/1.39
  • (HES)/1.89
  • (HLT)/1.24
  • (KBR)/.63
  • (KHC)/.56
  • (EDU)/.33
  • (NSC)/3.60
  • (ODFL)/3.08
  • (OTIS)/.78
  • (PAG)/4.35
  • (R)/3.66
  • (STX)/.72
  • (TMO)/4.82
  • (WING)/.36
After the Close:
  • (AEM)/.43
  • (ALGN)/2.17
  • (BOOT)/.90
  • (CACI)/4.25
  • (CP)/1.00
  • (CYH)/-.02
  • (DLR)/1.68
  • (EQT)/1.07
  • (F)/.30
  • (FWRD)/1.90
  • (GGG)/.64
  • (KLAC)/6.23
  • (META)/1.89
  • (OII)/.14
  • (OLN)/1.82
  • (ORLY)/8.50
  • (PTEN)/.17
  • (PPC)/.78
  • (RJF)/2.00
  • (NOW)/1.85
  • (SAVE)/-.08
  • (TDOC)/-.49
  • (URI)/9.06
  • (VFC)/.73
  • (VMI)/3.41
Economic Releases
8:30 am EST
  • Advance Goods Trade Deficit for Sept. is estimated at -$87.5B versus -$87.3B in Aug.
  • Wholesale Inventories MoM for Sept. is estimated to rise +1.0% versus a +1.3% gain in Aug.
  • Retail Inventories MoM for Sept. is estimated to rise +1.2% versus a +1.4% gain in Aug. 
10:00 am EST
  • New Home Sales for Sept. is estimated to fall to 580K versus 685K in Aug.
10:30 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory build of +462,570 barrels versus a -1,725,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -1,033,860 barrels versus a -114,000 barrel decline the prior week. Distillate inventories are estimated to fall by -646,860 barrels versus a +124,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.2% versus a -.4% decline prior.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Australia CPI report, 5-Y T-Note auction, weekly MBA Mortgage Applications report and the ThinkEquity Conference could also impact global trading today.
US Equity Market Hours
  • 9:30 am - 4:00 pm EST
BOTTOM LINE: Asian indices are mostly higher, boosted by transport and consumer staple shares in the region. I expect US stocks to open lower and to maintain losses into the afternoon. The Portfolio is 50% Net Long heading into the day.