Monday Watch

Night Trading

• Asian indices are -1.75% to -.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 84.25 +1.0 basis point.
• China Sovereign CDS 37.5 +2.0 basis points.
• Bloomberg Emerging Markets Currency Index 60.30 -.01%.
• Bloomberg Global Risk-On/Risk Off Index 2,915.0 -80.0 points.
• Volatility Index(VIX) futures 21.32 -.09%. 
• Euro Stoxx 50 futures -.04%.
• S&P 500 futures -.13%.
• NASDAQ 100 futures -.01%

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• None of note
  

After the Close:

• (LMNX)/.23
  

Economic Releases

8:30 am EST

• The Chicago Fed National Activity Index for May is estimated to rise to .73 versus .24 in April.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The PBOC rate decision, Raymond James Health Innovations Conference and the Morgan Stanley Electric Vehicle Investor Conference could also impact trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

BOTTOM LINE: Asian indices are lower, weighed down by financial 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 week.

Today's Headlines

Bloomberg:       

• Iran Elects Hardliner as Nuclear Talks Enter Critical Phase.  
• Apple Daily Is Running Low on Funds to Print Hong Kong Newspaper.
• Investors Eye Pockets of Value in Near-Record European Markets.
• Japan’s Refusal to Sanction Myanmar Undermines Biden’s Strategy.
• Maverick’s Last Shot at BOE Will Sound Inflation Alarm: Eco Week.
• Commodities Bulls Nurse Their Wounds But Fight’s Not Over Yet.
• U.S. Sends Taiwan Shots; Brazil Deaths Top 500,000: Virus Update.
• Cathie Wood Inspires Boom in New Funds That Upend ETF Order.  
• Bank Stocks Lurch Into Ranks of June’s Worst as Rally Unravels.  
• Taper No Grounds for Tantrum to Stock Bulls Wielding $28 Billion.  
• Bond Sales to Dwindle as U.S. Summer Lull Begins.
• Charting the Global Economy: Fed Pulls Up Expected Liftoff Date.  
• Fed Shocks Stocks With Blow to Dreams of Value Investor Nirvana.

Wall Street Journal:

• Colorado Lets Cities Set Their Own Gun Laws, and Boulder Plans to Move Quickly.
• Iran Sends a Message to Biden.
• Why Shutdowns and Masks Suit the Elite.
• Doctors for Progressive Conformity.
• Laptops Are Finally Catching Up to Phones.
• For Maker of Boats, Motorcycles, ATVs, Supply Chain Is in Charge.
• Future of U.S. Healthcare May Be Playing Out in Nevada.
• Delta Covid-19 Strain Set to Be Dominant in U.S., CDC Says.
• The Chips That Run the World.
• The New Tween Status Look: LoveShackFancy Dresses and Golden Goose Sneakers.

CNBC:

• Target looks to lure shoppers with deals on groceries in its Prime Day rival sale.
• As Europe cracks the door open to visitors, airlines pounce with new trans-Atlantic flights.
• Americans are heading back to gyms as interest in at-home workouts wanes, Jefferies says.

IG:

• Weekend Markets Trading Live.

Barron's:

• Had bullish commentary on (APTV), (GM), (ORCL), (SIX), (TGT), (NKE), (VFC), (LEVI), (AEO), (RL), (TDUP) and (GOOGL).
• Had bearish commentary on (TSLA).

MarketWatch.com:        

• ‘Nice underpinning to the market’: Buybacks may prop stock market rattled after Fed meeting.

Fox News:

• Social media torches Grammy winner over tone-deaf assault on 'divisive' US flag, demand for replacement. 
• Liberal mayor tries to blame crime surge on Republicans easing COVID lockdown.

Zero Hedge:

• Wuhan's Bat Lady Found 'All Genes' Required To Genetically Engineer SARS-Like Coronavirus: 2017 Report.
• Hardline Cleric Ebrahim Raisi Wins Iran Presidential Election By A Landslide.
• Powell Just Made A Huge Error: What The Market's Shocking Response Means For The Fed's Endgame.
• Biden Orders Major Reversal Of Trump's Missile Battery Build-Up In Gulf.
• Fears Of Missing Out (On Promotions) Is Pushing More Young Workers Back To The Office
• Reining In the Fed.
• Chinese Investment In Europe Hits A 10-Year Low While Bilateral Relations Sour: Report.
• Trump Says Critical Race Theory In Schools Is "A Program For National Suicide".
• Buchanan: Who Is Really Killing American Democracy?
• 'Big Brother'? San Jose Requires Gun Purchases To Be Videotaped.
• "To The Moon": Rise In Trans-Pacific Spot Rates Is Relentless - And Accelerating.
• Australia Takes China To WTO Over Wine Tariffs As Biggest Export Market Gutted.
• Taibbi: Why Has "Ivermectin" Become A Dirty Word?
• Here Are All The "Technical Obstacles" Standing In The Way Of Biden's Global Corporate Tax Deal.
• Another Small Step For Autonomy: Shenzhen Proposes Special License Plates For Self-Driving Vehicles.
• NSA Agrees To Release Records On FBI's Improper Spying On 16,000 Americans.
• Bill Maher: Woke Liberals Have A Bad Case Of 'Progressophobia'.
• Megadrought Could Force California's Lake Oroville Hydroelectric Power Plant To Shut Down.
• Jon Stewart, The High Priest Of Cultural Liberalism, Reprimands His Flock.
• Shenzhen Airport Cancels Hundreds Of Flights Amid New COVID Cases.
• Questions About the FBI's Role In 1/6 Are Mocked Because The FBI Shapes Liberal Corporate Media.
• "Bullard Bomb" Sparks Quad-Witch Chaos, Yield Curve Collapse.
  

TheGatewayPundit.com:

• How Many dead VOTERS Voted In Georgia?! Raffensperger Cleans Voter Rolls AFTER Fraudulent Election.
• VIOLENCE BREAKS OUT at Denver Conservative Conference as Hundreds of Antifa Militants Threaten And Harass Drivers and Guests Outside Hotel.
• AZ AUDIT – Spox Randy Pullen: “The Report is Going to Come Out and There’s No Doubt that it Will Be Challenged”.
• Major Liberal Cities are Re-Funding The Police Again Amid Skyrocketing Crime.
• Childless CNN Activist Don Lemon Says Parents Have to ‘Stop Making It About You’ When Their Children Are Taught Critical Race Theory (VIDEO).
• Georgia’s Dominion Voting System Implementation Manager Gabe Sterling Negotiated a $144,000 Salary Increase for Himself Last Year.
• More Outlets Finally Report on Chinese Defector Who Claims China Released COVID on the World — While Others Downplay His Defection as a ‘Rumor’.

The Epoch Times:

• How Communist China Weaponizes Healthcare and Medicine Against Foreign Adversaries—Cleo Paskal.

Digital Blackboard:

• Daily New Cases by Region.

Worldometer:

• New Cases/Deaths by state.

Rt Covid-19:

• How fast virus is growing by state.

KFF:

• State Data(Tests/Hospitalizations).

Stocks Lower into Afternoon on Fed Taper Worries, Dollar Strength, Technical Selling, Commodity/Financial Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 20.0 +12.0%
• Bloomberg Global Risk On/Risk Off Index 3,027.0 -231.0 points

• Euro/Yen Carry Return Index 135.19 -.32%

• Emerging Markets Currency Volatility(VXY) 9.0 +.9%

• S&P 500 Implied Correlation 51.5 +7.5%

• ISE Sentiment Index 115.0  -5.0 points
  

• Total Put/Call .87 +4.8%

• NYSE Arms 1.47 -2.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 50.6 +2.1%
  

• US Energy High-Yield OAS 395.90 +.60%

• European Financial Sector CDS Index 56.22 +1.7%

• Italian/German 10Y Yld Spread 107.0 +6.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 84.13 -.34%
  

• Emerging Market CDS Index 15847 +1.40%
  

• China Corp. High-Yield Bond USD ETF(KCCB) 39.25 +.17%

• 2-Year Swap Spread 6.5 -.75 basis point

• TED Spread 9.5 unch.
  

• 3-Month EUR/USD Cross-Currency Basis Swap -3.75 -.5 basis point
  
• MBS  5/10 Treasury Spread  72.0 +.75 basis point
  
• IHS Markit CMBX BBB- 6 74.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.37 -.51%
• 3-Month T-Bill Yield .03% unch.
  

• Yield Curve 130.0 -7.0 basis points
  

• China Iron Ore Spot 206.85 USD/Metric Tonne -.3%

• Citi US Economic Surprise Index 44.8 +.3 point

• Citi Eurozone Economic Surprise Index 116.0 -4.4 points
  

• Citi Emerging Markets Economic Surprise Index 78.7 -.3 point

• 10-Year TIPS Spread 2.24 unch.
• 100.0% chance of no change at Nov. 3rd meeting, 100.0% chance of no change at Dec. 15th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -329 open in Japan 
• China A50 Futures: Indicating -125 open in China

• DAX Futures: Indicating +11 open in Germany

Portfolio:

• Slightly Lower: On losses in my commodity/industrial/biotech sector longs
  

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
  

• Market Exposure: Moved to 75% Net Long
  

Afternoon Market Internals

NYSE Composite Index:

• Volume Running +4.9% Above 100-Day Average 
• 0 Sectors Rising, 11 Sectors Declining
• 24.5% of Issues Advancing, 71.8% Declining
• 54 New 52-Week Highs, 26 New Lows
• 85.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.5%
  
• Bloomberg Global Risk-On/Risk-Off Index 3,0675.0 -189.0 points
• Vix 19.3 +9.0%
• Total Put/Call .87 +4.8%
• TRIN/Arms 1.56 +3.31%

Stocks Reversing Slightly Higher into Afternoon on Diminished Fed Taper Worries, Falling Inflation Fears, Multiple Expansion, Tech/Homebuilding Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 18.9 +4.2%
• Bloomberg Global Risk On/Risk Off Index 3,142.0 -61.0 points

• Euro/Yen Carry Return Index 135.55 -1.2%

• Emerging Markets Currency Volatility(VXY) 9.0 +3.8%

• S&P 500 Implied Correlation 36.8 +3.5%

• ISE Sentiment Index 114.0  -33.0 points
  

• Total Put/Call .81 -15.6%

• NYSE Arms 1.48 +37.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 49.53 +.53%
  

• US Energy High-Yield OAS 394.60 +1.8%

• European Financial Sector CDS Index 55.10 +.7%

• Italian/German 10Y Yld Spread 101.0 -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 84.43 +.93%
  

• Emerging Market CDS Index 155.63 +.51%
  

• China Corp. High-Yield Bond USD ETF(KCCB) 39.1 -.14%

• 2-Year Swap Spread 7.25 -.25 basis point

• TED Spread 9.5 -1.0 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -3.25 +.25 basis point
  
• MBS  5/10 Treasury Spread  71.25 -.25 basis point
  
• IHS Markit CMBX BBB- 6 74.0 -.75 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 60.68 -.66%
• 3-Month T-Bill Yield .03% -1.0 basis point
  

• Yield Curve 137.0 +4.0 basis points
  

• China Iron Ore Spot 207.25 USD/Metric Tonne +.5%

• Citi US Economic Surprise Index 44.5 -.4 point

• Citi Eurozone Economic Surprise Index 120.40 +1.0 point
  

• Citi Emerging Markets Economic Surprise Index 79.0 -.2 point

• 10-Year TIPS Spread 2.24 -10.0 basis points
• 100.0% chance of no change at Nov. 3rd meeting, 100.0% chance of no change at Dec. 15th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +97 open in Japan 
• China A50 Futures: Indicating -54 open in China

• DAX Futures: Indicating +2 open in Germany

Portfolio:

• Slightly Lower: On losses in my commodity/industrial sector longs
  

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
  

• Market Exposure: Moved to 75% Net Long
  

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +.2% Above 100-Day Average 
• 7 Sectors Rising, 4 Sectors Declining
• 33.7% of Issues Advancing, 62.0% Declining
• 92 New 52-Week Highs, 16 New Lows
• 87.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.3%
  
• Bloomberg Global Risk-On/Risk-Off Index 3,295.0 +93.0 points
• Vix 16.8 -7.7%
• Total Put/Call .83 -13.5%
• TRIN/Arms 1.39 +28.7%