Wednesday Watch

Night Trading 

• Asian equity indices are -.5% to unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 89.25 +.25 basis point 

• China Sovereign CDS 52.5 +.25 basis point.
  

• Bloomberg Emerging Markets Currency Index 57.0 -.11%. 
• Bloomberg Global Risk-On/Risk Off Index 3,299.0 +39.0 points.
• Volatility Index(VIX) futures 19.9 -.3%.
• Euro Stoxx 50 futures -.07%.

• S&P 500 futures +.05%

• NASDAQ 100 futures +.03%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (BIDU)/12.95
• (LOW)/2.34
• (TGT)/2.81
• (TJX)/.81
• (WEBR)/-.18
  

After the Close:

• (BBWI)/.60
• (CSCO)/.80
• (CPRT)/1.00
• (KLIC)/2.16
• (NVDA)/1.11
• (VSCO)/.70
  

Economic Releases

8:30 am EST

• Housing Starts for Oct. is estimated to rise to 1580K versus 1555K in Sept.
• Building Permits for Oct. is estimated to rise to 1630K versus 1589K in Sept.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +871,700 barrels versus a +1,002,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -669,000 barrels versus a -1,555,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,103,000 barrels versus a -2,613,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise +.47% versus a +.4% gain prior.
  

Upcoming Splits

• (ANET) 4-for-1
  

Other Potential Market Movers

• The Fed's Waller speaking, UK Retail Sales report, UK CPI report, 20Y T-Bond auction, weekly MBA Mortgage Applications report, BofA Consumer/Retail Conference and the BofA Energy Conference could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and consumer shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.

Stocks Rising into Afternoon on US Economic Optimism, Stable Long-Term Rates, Short-Covering, Tech/Medical Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 16.2 -1.9%
• Bloomberg Global Risk On/Risk Off Index 3,282.0 +56.0 points

• Euro/Yen Carry Return Index 133.93 +.08%

• Emerging Markets Currency Volatility(VXY) 9.4 +2.8%

• S&P 500 Implied Correlation 48.8 +.2%

• ISE Sentiment Index 155.0  unch.
  

• Total Put/Call .73 -7.6%

• NYSE Arms 1.30 +73.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 50.5 -.4%
  

• US Energy High-Yield OAS 380.65 -.47%

• European Financial Sector CDS Index 57.1 -.5%

• Italian/German 10Y Yld Spread 121.0 -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 88.75 +.2%
  

• Emerging Market CDS Index 181.75 +1.1%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 33.31 -.1%

• 2-Year Swap Spread 24.75 +.75 basis point
  

• TED Spread 11.75 +.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -23.25 -2.0 basis points
  
• MBS  5/10 Treasury Spread  63.25 -2.0 basis points
  
• IHS Markit CMBX BBB- 6 73.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 57.10 -.81%
• 3-Month T-Bill Yield .04% unch.
  

• Yield Curve 109.0 +4.0 basis points
  

• China Iron Ore Spot 87.85 USD/Metric Tonne -.01%

• Citi US Economic Surprise Index 27.0 +11.1 points

• Citi Eurozone Economic Surprise Index -44.8 +4.7 points
  

• Citi Emerging Markets Economic Surprise Index -19.7 +.2 point

• 10-Year TIPS Spread 2.74 -3.0 basis points
• 97.5% chance of no change at Jan. 26th meeting, 78.6% chance of no change at March 16th meeting

US Covid-19:

• 185 new infections/100K people(last 7 days total) +9/100K people
• 35% of Jan. 7th, 2021 peak(highest daily avg. new infections) +2.0 percentage points
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +42 open in Japan 
• China A50 Futures: Indicating -15 open in China

• DAX Futures: Indicating +3 open in Germany

Portfolio:

• Higher: On gains in my consumer discretionary/industrial/commodity/tech/medical sector longs
  

• Disclosed Trades:  None
  

• Market Exposure:  100% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Value unch.

Sector Underperformers:

• 1) Airlines -2.7% 2) Tobacco -2.0% 3) Gold & Silver -1.4%

Stocks Falling on Unusual Volume: 

• CLI, EYPT, SVFA, ATVI, NWE, MQ, EVGO, WEBR, HTZ, BLND, NCLH, TDUP, LAZR, BLNK, FSLR, RIOT, WK, STEP, QS, COOK, VERI, DNMR and CMP
  

Stocks With Unusual Put Option Activity:

• 1) HLT 2) BSX 3) WMT 4) CMCSA 5) ATVI
  

Stocks With Most Negative News Mentions:

• 1) TALK 2) RSKD 3) BODY 4) QS 5) RIOT
  

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Mid-Cap Growth +1.2%

Sector Outperformers:

• 1) Semis +1.4% 2) Software +1.3% 3) Medical Equipment +1.3%

Stocks Rising on Unusual Volume:

• KZR, PLBY, LCID, AIP, IONQ, YELL, APLS, RXT, PTON, PRCH, RBLX, AQUA, VVNT, RIVN, LEGN, EBS, TRUP, AXON, LXU, EDR, DOCN, RKLB, RXRX, EXTR, W, PCT, PMVP, HD, UBER, ENVX, FND, ETSY, BRKS, SNII, SWCH, IQV, TIL, HAYW, FSR, TTD, WSM, LOW, RNA, VSH, M, QCOM, AMBC, SUI, ASPN, LFG, BLD, MTTR, DDS, VITL, VUZI, TSLA, SITM, ZIP, ELY, TALO, MARA, FLYW, FSR, VREX, TSCO, HCAT and SCVL
  

Stocks With Unusual Call Option Activity:

• 1) CONE 2) HD 3) YELL 4) REKR 5) WY

Stocks With Most Positive News Mentions:

• 1) ONON 2) KZR 3) LCID 4) RMO 5) BIEL
  

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -.6% Below 100-Day Average 
• 7 Sectors Rising, 4 Sectors Declining
• 50.7% of Issues Advancing, 45.4% Declining
• 119 New 52-Week Highs, 41 New Lows
• 62.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 52.8%
• Bloomberg Global Risk-On/Risk-Off Index 3,251.0 +23.0 points
• Russell 1000: Growth/Value 18,293 +.78%
  
• Vix 16.2 -1.8%
• Total Put/Call .69 -12.7%
• TRIN/Arms 1.41 +88.0%

Tuesday Watch

Evening Headlines

Bloomberg:    

• China Bill With Semiconductor Aid to Be Included in U.S. Defense Measure.  
• Asia Stocks Steady as Treasury Yields Hold Advance: Markets Wrap.
• Oil Edges Up as Supplies Remain Tight With No SPR Release.
• Republican Consumer Sentiment Is Worse Today Than the Height Of the Financial Crisis.
  
• Inflation Prompts Growing Chorus to Call on Fed to Speed Taper.  
• Corporate Snitching to SEC Surges as Telework Emboldens Tipsters.  
• Biden’s Fed Chair Pick Is ‘Imminent,’ Senate Banking Chair Says.  
• L.A., Long Beach to Delay Start of Fee for Lingering Containers.  
• Rice Goes Against the Grain as Other Crop Prices Soar.
• Celebrity NFTs Risk ‘Catastrophic Failure.’ Just Ask John Cena.  
• ASML, the Obscure Powerhouse at the Cutting Edge of Chip Technology.

Wall Street Journal:

• Tyson Foods Raises Meat Prices as Costs Escalate.
• Inflation Surge Fuels Demand for Gold.
  
• Left-Leaning Media Seek a Misinformation Monopoly. They peddle their own falsehoods while trying to drive opposing views out of circulation entirely.
• ‘We Want Them to Go Bankrupt’. Biden’s nominee for Comptroller has an idea on climate change.
• M.B.A. Starting Salaries Are Soaring.

Fox News:   

• Biden's trillion dollar wish list creates loophole for illegals to cash in on YOUR hard-earned money.
• Democrats face tumultuous process to get massive social spending package passed.
• Rittenhouse murder case goes to jury — when deliberations are set to begin.
• Dem switches to Republican Party over police defunding, 'chaos' on the border.
• Psaki could use ECON 101 after showing she doesn’t understand inflation.
  

CNBC.com:

• Factory shutdowns in Vietnam could have longer impact for apparel and footwear retailers, BofA warns.
• Ohio attorney general files lawsuit claiming Facebook misled investors about safety measures.

MarketWatch           

• EVgo stock tumbles after BofA says sell, citing recent EV ‘charging euphoria’ and pending lockup expiry.
  
• Can Nvidia show anything in earnings to boost stock after massive move higher?  
• Fed’s Barkin says he is happy to wait a few more months to gauge ‘reality’ of inflation.  
• Infrastructure law mandates new technology to prevent drunk driving — here’s how it would work.

Zero Hedge:

• Biden's Baffling Oil Policy Faces Backlash From All Sides.
• In Some Parts Of America, Looting Has Become A Way Of Life.
• "Jerome Powell Is Finished".
• US Calls Belarus Migrant Crisis "Distraction" From Ukraine, Threatens Fresh Russia Sanctions.
• Florida School District Abandons Mask Mandate After 8-Year-Old Girl Told Them They Should Be In Prison.
• Did COP26's "Humiliating Failure" Mark The Beginning Of The End Of UN's Climate Crisis Agenda?
• Even The WSJ Admits The Market Is Now Betting On A Fed Policy-Error.
• Waiting for seasonality (again)...?
• Trans Teen Pleads No Contest To Second Loudon County School Assault, To Face Sentencing In December.
• Home Ownership Elusive As Rise In Cost Of Mortgage Payments Far Outpace Wage Growth.
• CCP Accuses US Of "Building Trade Barricades" By Not Allowing Intel To Produce Semi Components In China.
• Paging Isaac Newton: Time To Buy The Top Of This Bubble.

Newsmax:

• Florida GOP Moves to Combat Vaccine Mandates, Virus Rules.
• Rep. Meuser: Infrastructure, Spending Bills Equals 'Disaster'.
• Wyoming GOP Votes to Stop Recognizing Cheney as a Republican.

TheGatewayPundit.com:

• Merriam-Webster Dictionary Adds ‘Fourth-Trimester’ to Describe Newborns as ‘More Fetus-Like Than Baby-Like’.
• It Begins… Elites Discuss Redefining “Booster” Since They Are Not Sure How Many “Booster” Shots Will Be Demanded of the Population.
• Biden Forgets His Mask, Tries to Find it, Then Gives Up After Insulting Kamala Harris’ Husband During Infrastructure Signing Ceremony (VIDEO).
• “We’re Going to Go on Offense – This Is Going to be the Misdemeanor from Hell” – UPDATE: Defiant Steve Bannon Emerges From Court Determined to Fight Back Against Regime (VIDEO).
• Critical Race Theory Supporter Threatens Parents Who Question CRT: “I’ve Got Over 1,000 Soldiers – Locked And Loaded” (VIdeo).
• TODAY 4 PM: AZ State Rep. Joseph Chaplik To Hold Press Conference With Parents Targeted By Greenburg Dossier – Will Call For Jann-Michael Greenburg’s Resignation.
• WATCH: Hero Taxi Driver Survives, Saves Countless Lives After Locking ‘Suicide Bomber’ In His Cab Before Blast Outside Liverpool Hospital – Cops Arrest 3 Others Who Helped Plan Attack – (Video).

The Epoch Times:

• Trapped in a ‘Dead’ City: The Cost of China’s Zero-COVID Policy.
• DEA Battling ‘Unprecedented Levels’ of Fentanyl, Meth at Southern Border: Official.
  

Covid-19(Data, Maps, Graphs):

• Our World in Data:  New Global Covid-19 Cases(7-day rolling average graphs). New US Covid Hospital Admissions/ICU Admissions/Deaths
  
• FT.com:  Fully Vaccinated by Country(graph). Global Lockdown Stringency Index(map).
• Bloomberg.com:  International Travel Restrictions.  Case Graphs by State.
  
• NYTimes.com:  County Trends and Clusters. Local ICU Occupancy.
  
• Brown School of Public Health:  Covid Severity by State/County(map).  US Hospital Capacity(region).
  
• CovidActNow:  Covid Severity/Infection Rate by Metro Area.
  
• KFF:  US Vaccinations by Race/Ethnicity.
  
• Carnegie Mellon: Covid-Like Symptoms in Community. Covid Symptom Searches on Google. Covid-Related Dr.Visits.  Restaurant Visits. Wearing Masks. (graphs)
  
• Safegraph.com:  Commerce Patterns(graphs).

Night Trading 

• Asian equity indices are -.5% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 89.0 unch.

• China Sovereign CDS 52.25 -.25 basis point.
  

• Bloomberg Emerging Markets Currency Index 57.55 -.04%. 
• Bloomberg Global Risk-On/Risk Off Index 3,233.0 +7.0 points.
• Volatility Index(VIX) futures 20.0 +.6%.
• Euro Stoxx 50 futures -.02%.

• S&P 500 futures -.02%

• NASDAQ 100 futures -.01%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (HD)/3.38
• (NTES)/6.12
• (ONON)/-.10
• (SE)/-.61
• (WMT)/1.39
  

After the Close:

• (DLB)/.56
• (LZB)/.73
• (RMAX)/.62

Economic Releases

8:30 am EST

• Retail Sales Advance MoM for October is estimated to rise +1.4% versus a +.7% gain in Sept.
• Retail Sales Ex Autos MoM for October is estimated to rise +1.0% versus a +.8% gain in Sept .
• Retail Sales Ex Autos and Gas for October is estimated to rise +.7% versus a +.7% gain in Sept.
• Import Price Index MoM for Oct. is estimated to rise +1.0% versus a +.4% gain in Sept.
• Import Price Index Ex Petrol for Oct. is estimated to rise +.3% versus a +.1% gain in Sept.
• Export Price Index MoM for Oct. is estimated to rise +1.0% versus a +.1% gain in Sept.
  

9:15 am EST

• Industrial Production MoM for Oct. is estimated to rise +.8% versus a -1.3% decline in Sept.
• Capacity Utilization for Oct. is estimated to rise to 75.9% versus 75.2% in Sept.
• Manufacturing Production for Oct. is estimated to rise +.8% versus a -.7% decline in Sept.
  

10:00 am EST

• Business Inventories for Sept. is estimated to rise +.6% versus a +.6% gain in Aug.
• The NAHB Housing Market Index for Nov. is estimated at 80.0 versus 80.0 in Oct.
  

4:00 pm EST

• Net Long-Term TIC Flows for Sept.

Upcoming Splits

• (ANET) 4-for-1
  

Other Potential Market Movers

• The Eurozone GDP report, RBA Minutes, weekly US retail sales reports, (QCOM) investor day, (ALV) capital markets day, Roth Tech Conference, (RBLX) investor day, (BMY) investor day, (CBOE) investor day, Deutsche Bank Industrials Conference, RBC Global Mining/Materials Conference, RBC Tech/Internet/Media/Telecom Conference and the (BRKS) investor day could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and healthcare shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.