Market Week in Review

• S&P 500 2,014.89 +3.26%*

The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 2,014.89 +3.26%

• DJIA 17,084.49 +3.72%

• NASDAQ 4,830.47 +2.61%

• Russell 2000 1,165.36 +4.60%

• S&P 500 High Beta 31.24 +6.54%

• Goldman 50 Most Shorted 118.34 +4.70% 

• Wilshire 5000 20,962.12 +3.36%

• Russell 1000 Growth 977.40 +2.59%

• Russell 1000 Value 969.75 +3.96%

• S&P 500 Consumer Staples 508.10 +3.45%

• Solactive US Cyclical 124.84 +6.06%

• Morgan Stanley Technology 1,057.37 +4.04%

• Transports 8,253.16 +4.82%

• Utilities 583.36 +1.06%

• Bloomberg European Bank/Financial Services 105.95 +5.3%

• MSCI Emerging Markets 35.63 +4.55%

• HFRX Equity Hedge 1,157.85 +.97%

• HFRX Equity Market Neutral 1,026.05 -.77%

Sentiment/Internals

• NYSE Cumulative A/D Line 232,114 +3.43%

• Bloomberg New Highs-Lows Index -39 +481

• Bloomberg Crude Oil % Bulls 39.0 +6.41%

• CFTC Oil Net Speculative Position 258,261 +2.60%

• CFTC Oil Total Open Interest 1,675,676 +3.57%

• Total Put/Call .86 -21.1%

• OEX Put/Call 4.48 +190.91%

• ISE Sentiment 93.0 +17.72%

• NYSE Arms 1.27 +122.80%

• Volatility(VIX) 17.08 -18.43%

• S&P 500 Implied Correlation 60.68 -1.16%

• G7 Currency Volatility (VXY) 9.20 -5.74%

• Emerging Markets Currency Volatility (EM-VXY) 11.36 -3.73%

• Smart Money Flow Index 17,554.92 +3.54%

• ICI Money Mkt Mutual Fund Assets $2.688 Trillion +.73%

• ICI US Equity Weekly Net New Cash Flow -$7.181 Billion

• AAII % Bulls 37.5 +33.5%

• AAII % Bears 28.2 -29.4%

Futures Spot Prices

• CRB Index 202.69 +4.42%

• Crude Oil 49.63 +8.70%

• Reformulated Gasoline 141.67 +4.95%

• Natural Gas 2.50 +1.30%

• Heating Oil 159.09 +4.53%

• Gold 1,155.90 +1.61%

• Bloomberg Base Metals Index 152.85 +5.53%

• Copper 241.40 +2.94%

• US No. 1 Heavy Melt Scrap Steel 199.0 USD/Ton unch.

• China Iron Ore Spot 56.01 USD/Ton +5.40%

• Lumber 244.40 +10.14%

• UBS-Bloomberg Agriculture 1,071.18 +2.04%

Economy

• ECRI Weekly Leading Economic Index Growth Rate -1.1% +60.0 basis points

• Philly Fed ADS Real-Time Business Conditions Index -.0890 +14.5%

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 125.72 -.28%

• Citi US Economic Surprise Index -26.30 +3.4 points

• Citi Eurozone Economic Surprise Index 9.0 -22.3 points

• Citi Emerging Markets Economic Surprise Index -18.9 +1.4 points

• Fed Fund Futures imply 90.0% chance of no change, 10.0% chance of 25 basis point hike on 10/28
• # of Months to 1st Fed Rate Hike(Morgan Stanley) 6.44 +10.09%

• US Dollar Index 94.88 -1.08%

• Euro/Yen Carry Return Index 142.57 +1.61%

• Yield Curve 145.0 +5.0 basis points

• 10-Year US Treasury Yield 2.09% +11.0 basis points

• Federal Reserve's Balance Sheet $4.448 Trillion +.05%

• U.S. Sovereign Debt Credit Default Swap 19.0 +5.88%

• Illinois Municipal Debt Credit Default Swap 260.0 +.71%

• Western Europe Sovereign Debt Credit Default Swap Index 20.92 -1.34%

• Asia Pacific Sovereign Debt Credit Default Swap Index 79.36 -12.08%
  

• Emerging Markets Sovereign Debt CDS Index 172.08 -38.67%
  

• Israel Sovereign Debt Credit Default Swap 66.5 -3.02%

• Iraq Sovereign Debt Credit Default Swap 802.62 -9.29%

• Russia Sovereign Debt Credit Default Swap 320.0 -13.76%

• iBoxx Offshore RMB China Corporates High Yield Index 120.57 +.73%

• 10-Year TIPS Spread 1.53% +4.0 basis points

• TED Spread 31.75 +2.25 basis points

• 2-Year Swap Spread 12.5 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -23.25 +3.25 basis points

• N. America Investment Grade Credit Default Swap Index 81.03 -15.30%

• America Energy Sector High-Yield Credit Default Swap Index 1,008.0 -9.59%

• European Financial Sector Credit Default Swap Index 80.76 -16.02%
  

• Emerging Markets Credit Default Swap Index 329.88 -11.0%
  

• CMBS AAA Super Senior 10-Year Treasury Spread  to Swaps 126.50 +6.5 basis points

• M1 Money Supply $3.054 Trillion -.30%

• Commercial Paper Outstanding 1,044.10.10 +9.0%

• 4-Week Moving Average of Jobless Claims 267,500 -3,250

• Continuing Claims Unemployment Rate 1.6% unch.

• Average 30-Year Mortgage Rate 3.76% -9.0 basis points

• Weekly Mortgage Applications 534.20 +25.55%

• Bloomberg Consumer Comfort 44.80 +1.8 points

• Weekly Retail Sales +1.10% -10.0 basis points

• Nationwide Gas $2.32/gallon+.03/gallon

• Baltic Dry Index 817.0 -8.1%

• China (Export) Containerized Freight Index 782.73 -3.85%

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 52.50 unch.

• Rail Freight Carloads 282,018 +.42%

Best Performing Style

• Small-Cap Value +5.7%

Worst Performing Style

• Mid-Cap Growth +2.7%

Leading Sectors

• Gold & Silver +14.3%

• Steel +13.2%

• Gaming +13.2%

• Oil Service +12.4%

• Energy +9.1%

Lagging Sectors

• Utilities +1.0% 

• Restaurants +.3%

• Drugs -.4%

• HMOs -.8%

• Biotech -2.2%

Weekly High-Volume Stock Gainers (27)

• JMG, GNE, MG, WYNN, PMCS, JOY, RSPP, PLCM, ENVA, CAMP, FF, ENS, KMT, ATRO, BMR, KRA, GPN, ONCE, RKUS, CFX, RAX, OLN, OVTI, PBF, CSCD, CBZ and DLR

Weekly High-Volume Stock Losers (9)

• KND, PRGS, ILMN, NUS, YUM, CSII, ATRC and TCS

Weekly Charts

ETFs

• High-Volume Gainers

• High-Volume Losers

Stocks

• High-Volume Gainers

• High-Volume Losers

*5-Day Change

Stocks Reversing Slightly Lower Midday on Global Growth Fears, Earnings Outlook Worries, Technical Selling, Financial/Homebuilding Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 17.85 +2.47%

• Euro/Yen Carry Return Index 142.93 +1.18%

• Emerging Markets Currency Volatility(VXY) 11.39 n/a

• S&P 500 Implied Correlation 60.09 +1.25%

• ISE Sentiment Index 101.0 -13.68%

• Total Put/Call .90 -2.17%

• NYSE Arms 1.25 +78.72% 

Credit Investor Angst:

• North American Investment Grade CDS Index 81.35 -1.17%

• America Energy Sector High-Yield CDS Index 1,008.0 -1.24%

• European Financial Sector CDS Index 79.76 -3.53%

• Western Europe Sovereign Debt CDS Index 20.92 +5.28%

• Asia Pacific Sovereign Debt CDS Index 79.36 -2.53%

• Emerging Market CDS Index 327.73 -.92%
  

• iBoxx Offshore RMB China Corporates High Yield Index 120.48 +.07%

• 2-Year Swap Spread 12.75 +.5 basis point

• TED Spread 31.75 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -23.0 +1.0 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.45 +.72%

• 3-Month T-Bill Yield .00% +1.0 basis point

• Yield Curve 146.0 +2.0 basis points

• China Import Iron Ore Spot $56.01/Metric Tonne +.07%

• Citi US Economic Surprise Index -26.30 +.5 point

• Citi Eurozone Economic Surprise Index 9.0 +.6 point

• Citi Emerging Markets Economic Surprise Index -18.90 -.4 point

• 10-Year TIPS Spread 1.55 -2.0 basis points

• # of Months to 1st Fed Rate Hike(Morgan Stanley) 6.44 n/a

Overseas Futures:

• Nikkei 225 Futures: Indicating -43 open in Japan 

• China A50 Futures: Indicating +8 open in China

• DAX Futures: Indicating -21 open in Germany

Portfolio: 

• Slightly Higher: On gains in my tech/medical sector longs

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 25% Net Long

Morning Market Internals

NYSE Composite Index:

• Volume Running 13.6% Above 100-Day Average
• 5 Sectors Rising, 5 Sectors Declining
• 59.4% of Issues Advancing, 36.7% Declining
• 51 New 52-Week Highs, 6 New Lows
• 32.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.5
• Vix 17.5
• Total Put/Call .9
• TRIN/Arms 1.34

Friday Watch

Evening Headlines 

Bloomberg:  

• If You Thought China's Equity Bubble Was Scary, Check Out Bonds. As a rout in Chinese stocks this year erased $5 trillion of value, investors fled for safety in the nation’s red-hot corporate bond market. They may have just moved from one bubble to another. So says Commerzbank AG, which puts the chance of a crash by year-end at 20 percent, up from almost zero in June. Industrial Securities Co. and Huachuang Securities Co. are warning of an unsustainable rally after bond prices climbed to six-year highs and issuance jumped to a record. The boom contrasts with caution elsewhere. A selloff in global corporate notes has pushed yields to a 21-month high, and credit-derivatives traders are demanding near the most in two years to insure against losses on Chinese government securities. While an imminent collapse isn’t yet the base-case scenario for most forecasters, China’s 42.1 trillion yuan ($6.6 trillion) bond market is flashing the same danger signs that triggered a tumble in stocks four months ago: stretched valuations, a surge in investor leverage and shrinking corporate profits. A reversal would add to challenges facing China’s ruling Communist Party, which has struggled to contain volatility in financial markets amid the deepest economic slowdown since 1990. “The Chinese government is caught between a rock and hard place," said Zhou Hao, a senior economist in Singapore at Commerzbank, Germany’s second-largest lender. "If it doesn’t intervene, the bond market will actually become a bubble. And if it does, the market could crash the way the equity market did due to fast de-leveraging.”   
• Is a Bubble Forming in China's Bond Market? (video)

• No Room for Mistakes as World Economic Waters Turn Choppy. For years, the global economy surfed a flood of easy money from central banks and a surge in Chinese demand for commodities. Now, policy makers are trying to anticipate what’s exposed when the tide goes out. “This is a pretty unforgiving environment,” and “not a type of economy in which one can make mistakes,” Bank of England Governor Mark Carney said Thursday at annual meetings of the International Monetary Fund and World Bank in Lima. “Everybody needs to recognize there isn’t going to be a big surge of demand from abroad.” 

• Fast Retailing Misses Estimates on U.S. Losses. (video) Fast Retailing has fallen the most in nearly 18 months after earnings and forecasts missed analysts estimates due to losses at its Uniqlo and J Brand businesses in the U.S. Bloomberg's Peter Elstrom reports on "Trending Business."

• PC Shipments Fall 7.7% as Strong Dollar Boosts Prices. Global personal-computer shipments fell 7.7 percent in the third quarter on slower desktop sales and higher dollar-based prices, market researcher Gartner Inc. said. PC manufacturers shipped 73.7 million units, compared with 79.8 million a year earlier, Gartner said in a statement Thursday. The introduction of Microsoft Corp.’s new Windows 10 operating system had a “minimal impact” as many upgrades went on existing PCs instead of new ones, the company said. Researcher IDC reported a similar drop in shipments. The decline, following a 9.5 percent drop in the prior quarter, underscores the persistent challenges facing PC makers as more shoppers opt for smartphones and tablets. The stronger dollar is making computers more pricey abroad even as companies try to lure buyers with new types of devices.  

• Asia Stocks Set for Best Week Since 2011 as Fed, Oil Buoy Shares. Asian stocks rose, with the regional benchmark index heading for its biggest weekly advance since December 2011, as U.S. shares rallied after minutes from the Federal Reserve’s latest meeting indicated the central bank won’t rush to raise interest rates. Energy companies led gains as oil headed for its steepest weekly increase since August. The MSCI Asia Pacific Index climbed 0.7 percent to 132.13 as of 9:00 a.m. in Tokyo, poised for a 4.6 percent rally this week.

• 85 Gas Projects Dying on the Vine as LNG's Promise Falls Short. Five years ago, energy companies hungry for the next big thing began planning as many as 90 terminals to send natural gas around the globe. Now, it seems the world only needs five more. Consulting firm IHS Inc. says only one in every 20 projects planned are actually necessary by 2025 as weakening Asia economies, cheap coal, the return of nuclear power in Japan and the ever-expanding glut of shale supply in North America temper demand for the power-plant fuel, putting tens of billions of dollars worth of export projects at risk.

Wall Street Journal: 

• Assad Seen Trying to Force the West to Choose Between his Regime, Islamic State. Russia’s intervention aims at opposition rebels. Syrian President Bashar al-Assad and his inner circle are engaged in a high-stakes gamble for the future of their fractured nation, betting Russian attacks on rebel positions will shift momentum in the conflict and shore up support from their core constituency. Russia’s intervention is lending credence to what is widely believed to be Mr. Assad’s... 

• Fed’s Rate Delay Spurred by Worry Over Low Inflation, Minutes Show. Inflation has been below the Fed’s 2% target for more than three years. Federal Reserve officials held off on raising short-term interest rates at their September policy meeting because of worries that inflation could remain stuck at exceptionally low levels, according to minutes released Thursday. The Fed has twin goals of a robust labor market and low, stable inflation. Policy makers concluded at the meeting they were near their goal of “full employment,” but they...

• Why Kevin McCarthy Came to Quit Speaker Race. House majority leader says he wanted to avoid a bruising battle on the floor.

Fox News:

• EXCLUSIVE: U.S. officials conclude Iran deal violates federal law. (video) Some senior U.S. officials involved in the implementation of the Iran nuclear deal have privately concluded that a key sanctions relief provision – a concession to Iran that will open the doors to tens of billions of dollars in U.S.-backed commerce with the Islamic regime – conflicts with existing federal statutes and cannot be implemented without violating those laws, Fox News has learned.

MarketWatch.com:

• Ruby Tuesday(RT) shares down after company misses earnings, sales. Ruby Tuesday shares lost 6% in late trading after ending the regular trading day up 2.3%.

CNBC:

• North American iPhone sales to fall 10%: Firm.

• Fed should have hiked in March: Morgan Stanley(MS) CEO.

• Medicare Part B premiums to rise 52% for 7 million enrollees.

Zero Hedge:

• Dollar Demolition Extends To 6th Day As EM/Asian FX Soars Most In Over 6 Years. (graph)

• Liquidity Strains Reappear As China's "Golden Week" Stock & Housing Market Disappoints.

• Goldman(GS) "Picks Apart" The Labor Paradigm: 50 Years Of A Productivity Paradox.

• Inflation Watch: Retiree Health-Care Costs Are Soaring. (graph)

• The Stock Market Rally... To Nowhere. (graph)

• Do You See What Happens, Alcoa, When Your "Restructuring" Non-GAAP Addbacks Tumble. (graph)

• "Market-Watching" Fed Watches Market Surge After Fearing Market Purge. (graph)

Business Insider: 

• 'Only a matter of time': Russian pilots are boarding helicopters in Syria with AK-74s.

• Apple(AAPL) Mac sales are slowing down for the first time in two years.

• ALBERT EDWARDS: The world is 'turning Japanese'. (graph)

• A debt addiction has been polluting the economy for 40 years.

• 90% of Russian airstrikes in Syria have not targeted ISIS.

• Obama's free trade deal isn't really about "free trade".

• Millions of Americans are losing the habit of hard work.

Reuters:

• Goldman(GS) lowers 2016 price forecasts for nickel, zinc, lead. Goldman Sachs on Thursday slashed its 2016 price forecasts for nickel, zinc, and lead by more than 20 percent, primarily citing challenges to Chinese metals and mining demand. "China's metals and mining commodity demand is likely to continue to be challenged by a substantial debt and property inventory overhang and further dollar strength," the influential U.S. investment bank said in a note. Goldman cut its 2016 outlook by 29 percent each for nickel and zinc to $14,500 per tonne and $2,383 per tonne, respectively, while lowering its outlook for lead by 21 percent to $2,083 per tonne. Low Chinese demand, increasing competition from nickel pig iron output in the country along with a depreciating Chinese currency, are among the factors that could provide a downside risk to nickel prices, Goldman said. Goldman said it expected copper and aluminum prices to decline from current levels over the coming year but left its 2016 outlook for both the metals unchanged. The bank, however, cut its copper forecast for this year to $5,582 from $5,670 per tonne.

The Standard:

• HK growth pace to slow. The Hong Kong Institute of Economics and Business Strategy expects local economic growth to ease to 1.9 percent in the fourth quarter from a year earlier the slowest gain in the same period since 2012.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are +.75% to +1.50% on average.

• Asia Ex-Japan Investment Grade CDS Index 142.5 -6.75 basis points.

• Asia Pacific Sovereign CDS Index 81.5 +.25 basis point.

• S&P 500 futures -.15%.

• NASDAQ 100 futures +.17%.

Morning Preview Links

Earnings of Note

Company/Estimate

• None of note

Economic Releases

8:30 am EST

• The Import Price Index for September is estimated to fall -.5% versus a -1.8% decline in August.
  

10:00 am EST

• Wholesale Inventories for August are estimated unch. versus a -.1% decline in July.

• Wholesale Sales for August are estimated to fall -.4% versus a -.3% decline in July.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Lockhart speaking, Fed's Evans speaking, IMF World Bank Meetings, UK Trade Balance and the WASDE Crop report could also impact trading today.

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

Stocks Slightly Lower Midday on Global Growth Fears, Earnings Outlook Concerns, Technical Selling, Biotech/Tech Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 18.81 +2.23%

• Euro/Yen Carry Return Index 141.31 +.32%

• Emerging Markets Currency Volatility(VXY) 11.34 unch.

• S&P 500 Implied Correlation 60.20 -.35%

• ISE Sentiment Index 91.0 -8.08%

• Total Put/Call 1.0 -8.26%

• NYSE Arms 1.37 +86.12% 

Credit Investor Angst:

• North American Investment Grade CDS Index 84.03 +.6%

• America Energy Sector High-Yield CDS Index 1,023.0 -.91%

• European Financial Sector CDS Index 83.40 +1.44%

• Western Europe Sovereign Debt CDS Index 21.10 +.98%

• Asia Pacific Sovereign Debt CDS Index 83.48 +2.62%

• Emerging Market CDS Index 337.73 -1.22%
  

• iBoxx Offshore RMB China Corporates High Yield Index 120.48 +.12%

• 2-Year Swap Spread 12.25 +.25 basis point

• TED Spread 32.25 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -24.0 +1.5 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.66 +.28%
• 3-Month T-Bill Yield -.01% unch.

• Yield Curve 144.0 unch.

• China Import Iron Ore Spot $55.97/Metric Tonne +5.33%

• Citi US Economic Surprise Index -26.80 +2.1 points

• Citi Eurozone Economic Surprise Index 8.40 unch.

• Citi Emerging Markets Economic Surprise Index -18.50 +3.1 points

• 10-Year TIPS Spread 1.57 +2.0 basis points
• # of Months to 1st Fed Rate Hike(Morgan Stanley) 6.44 +.38

Overseas Futures:

• Nikkei 225 Futures: Indicating +99 open in Japan 
• China A50 Futures: Indicating +121 open in China

• DAX Futures: Indicating unch. open in Germany

Portfolio: 

• Slightly Lower: On losses in my biotech/medical/tech sector longs

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 25% Net Long