Stocks Reversing Lower into Afternoon on US Policy-Induced Stagflation Fears, Earnings Outlook Jitters, US High-Yield Debt Angst, Biotech/Utility Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance:  Mixed
  

• Volume:  Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 25.1 +3.7%
• DJIA Intraday % Swing .75% -55.4%
  
• Bloomberg Global Risk On/Risk Off Index 4,359.0 +157.0 points

• Euro/Yen Carry Return Index 144.12 +.26%

• Emerging Markets Currency Volatility(VXY) 12.5 -.32%

• CBOE S&P 500 Implied Correlation Index 45.8 +1.4% 

• ISE Sentiment Index 83.0 -18.0 points
  

• Total Put/Call .93 +3.33%

• NYSE Arms .61 +15.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 90.0 -1.2%
  

• US Energy High-Yield OAS 516.46 -2.3%
• Bloomberg TRACE # Distressed Bonds Traded 529.0 -18.0
  

• European Financial Sector CDS Index 131.52 -2.2%

• Italian/German 10Y Yld Spread 207.0 basis points -7.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 169.05 -1.6%
  

• Emerging Market CDS Index 373.21 -.45%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.4 -.02%
  
• Ukraine Sovereign Debt Credit Default Swap 9,867.80 -9.5%
  

• 2-Year Swap Spread 24.25 basis points -3.75 basis points
  

• TED Spread 45.0 basis points +23.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -20.0 basis points +.5 basis point
  
• MBS  5/10 Treasury Spread  139.0 -3.0 basis points
  
• iShares CMBS ETF 47.87 -.46%
• Avg. Auto ABS OAS 1.0 -1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 49.08 +.14%
• 3-Month T-Bill Yield 2.31% +3.0 basis points
  

• Yield Curve -20.0 basis points (2s/10s) +1.25 basis points
  

• China Iron Ore Spot 102.4 USD/Metric Tonne +1.7%

• Citi US Economic Surprise Index -53.7 -2.4 points

• Citi Eurozone Economic Surprise Index -52.60 -4.6 points
  

• Citi Emerging Markets Economic Surprise Index 17.9 -2.1 points

• 10-Year TIPS Spread 2.38 unch.
  
• Highest target rate probability for September 21st FOMC meeting: 50.8%(+1.6 percentage points) chance of 3.0%-3.25%. Highest target rate probability for November 2nd meeting: 43.4%(-.2 percentage point) chance of 3.25%-3.5%.
  

US Covid-19:

• 273 new infections/100K people(last 7 days total). 15.7%(+.4 percentage point) of 1/14/22 peak(1,740) +7/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -73.7%(-1.2 percentage points) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +261 open in Japan 
• China A50 Futures: Indicating -67 open in China

• DAX Futures: Indicating -73 open in Germany

Portfolio:

• Slightly Higher:  On gains in my commodity/industrial sector longs and index hedges
  

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

• Market Exposure:  Moved to 25% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Growth +.2%

Sector Underperformers:

• 1) Biotech -1.4% 2) Utilities -.7% 3) Healthcare Providers -.6%

Stocks Falling on Unusual Volume: 

• ISEE, EFC, EVOP, TH, LEGN, MFA, SGEN, MRCY, SIGA, BIGC, BL, CLAR, AVXL, BMEA and COWN
  

Stocks With Unusual Put Option Activity:

• 1) GS 2) SIX 3) COF 4) WDAY 5) GOOG
  

Stocks With Most Negative News Mentions:

• 1) BL 2) DYAI 3) GOOG 4) CDNA 5) PARA
  

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +1.1%

Sector Outperformers:

• 1) Oil Service +4.4% 2) Alt Energy +4.1% 3) Shipping +3.9%

Stocks Rising on Unusual Volume:

• MARA, EXFY, CCRN, VERV, RYTM and VRRM
  

Stocks With Unusual Call Option Activity:

• 1) WEN 2) FEZ 3) SESN 4) GOOG 5) AXL

Stocks With Most Positive News Mentions:

• 1) MARA 2) TANH 3) QD 4) ODP 5) ETON
  

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -10.0% Below 100-Day Average 
• 5 Sectors Declining, 6 Sectors Rising
• 70.0% of Issues Advancing, 26.3% Declining
• 14 New 52-Week Highs, 36 New Lows
• 16.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 41.9% 
• Bloomberg Global Risk-On/Risk-Off Index 4,374.0 +168.0 points
• Russell 1000: Growth/Value 15,552.0 +.35%
  
• Vix 24.7 +1.9%
• Total Put/Call .89 -1.1%
• TRIN/Arms .53 unch.

Monday Watch

Today's Headlines

Bloomberg:        

• China Is Pariah for Global Investors as Xi’s Policies Backfire.  
• IMF to Cut Global Growth Outlook ‘Substantially’ at Next Review.
  
• Ukraine Latest: Russia Ramps Up; Zelenskiy Recalls MH17 Downing.  
• Sasol Outage Means All South African Oil Refineries Are Now Shut. 
• New Zealand Inflation Outpaces Forecasts at Fresh 32-Year High.
• Asia Stocks May Get Tailwind From US; Dollar Mixed: Markets Wrap.
• Oil Edges Lower as Traders Weigh Mideast Supply After Biden Trip.
• Boeing Vows It Won’t Build ‘Gliders’ as Engine Shortage Expands.
  
• Embraer Sees Supply Chain Snarls Clouding 2022 Jet Delivery Goal.
  
• Once-Hot Strategy of Holding Bitcoin Overnight Loses Some Luster.  
• Nearly 400 Officers Rushed to Uvalde School Shooting, Report Finds.  
• Apple’s New iPad Multitasking System Doesn’t Cut It.  
• Wall Street Set for New ETF Gold Rush as Single-Stock Era Begins.   
• World’s Rate Laggards at ECB and BOJ Take Center Stage: Eco Week.
• US Risks Talking Itself Into a Recession, Moody’s Economist Says.   
• A Goldman Legend, Crypto Star and Top Banker Warn of Next Big Risk.

Wall Street Journal: 

• The West’s Climate Policy Debacle. Utopian energy dreams are doing great economic and security damage.
• The Era of the $200-a-Person Picnic Is Here.
• Fed Prepares to Lift Rates Another 0.75 Percentage Point.
• Slow Start to Earnings Clouds Outlook for Stocks.
• Afghan Economy Crumbles Since Taliban Takeover.
• Dollar Extends Gains With No End to Rally in Sight.
• Supermarkets, Restaurants Hire Security and Limit Hours to Combat Crime.
• Chip Investment Decisions Await Congressional Action on $52 Billion Funding Bill.

Fox News:

• FOX NEWS POLL: Nearly all voters worried about one nationwide issue, expect it will get worse next year.
• Obama adviser tells New York Times that Democrats are likely doomed by inflation: 'Nothing can change'.
• Sean Duffy: People are getting poorer and growing more desperate by the day.
• 77-page report details law enforcement failures in school massacre.

CNBC:

• South Korea is not worried about capital outflows for now, finance minister says.
• From $25 billion to $167 million: How a major crypto lender collapsed and dragged many investors down with it.

Zero Hedge:

• Top Energy Regulator Warns Germany Won't Survive Winter Without Russian NatGas. 
• Watch: As Mask Mandate Looms, LA Hospital Officials Mock COVID "Media Hype".
• Did The Swiss Central Bank Quietly Move Its Gold.
• The 2022 House Midterm By The Numbers.
• Weekend News Round Up - Newsquawk.
• Housing Market Peaks: Home Prices Finally Drop From All-Time Highs. 
• Oil Prices Blamed For Inflation When The Driver Is Really Food.
• New COVID-19 Variant "Sensationalized" By Fauci, White House: Sen. Paul.
• "We Are Not Slaves": Farmers In Italy, Spain, & Poland Join Dutch Protests.
• Skittles Allegedly "Unfit For Human Consumption," Lawsuit Claims.
• Far Fewer Military Families Recommend Uniformed Service: Survey.
• Major Study Confirms COVID Vaccines Alter Women's Periods.
• California Spent $500 Million On Diversity, Equity, & Inclusion Training, Report Reveals.
• The Feds Pile Up Vaccine 'Adverse Event' Reports As They Decry Scaremongering Elsewhere.
• Biden Says Saudis Lying After FM "Didn't Hear" Him Confront MbS On Khashoggi's Killing.
• Container Shipping Spot Rates Still Falling: What Will Be The New Normal?
• Trans Swimmer Nominated For NCAA Woman Of The Year Honors.
• Chevron CEO Responds To Biden's Repeated Allegations Of Price-Gouging.
• Dutch Dairy Farmer Faces Having To Cull 95% Of His Cows.
• Four Scenarios: What Happens Next In Italy's Government Crisis.
• Dutch Nitrogen Scientist Questions Basis Of Government Climate Mandates.
• Satellite Imagery Shows Global Crop Declines – Except For Russia And China.
• These Are The Countries With The Highest Default Risk.

NewsMax:   

• Fmr. Israeli PM Olmert: US Has Military Play If Iran Backs Out of Nuclear Deal.
• Rep. Mullin: Biden Trip to Middle East 'an Embarrassment'.

TheGatewayPundit.com:

• Another Video Depicting the the 2020 Election. – This Time Fulton County, Georgia.
• LeBron James, Red Sox Partial Owner, Calls Boston Fans “Racist as F*ck”.
• EXCLUSIVE: Heather Sawyer, Attorney for Feinstein in Kavanaugh Hearing, Now Behind Efforts to Derail Judge Gableman’s Investigation in Wisconsin.
• Dr. Birx Tosses Tony Fauci Under the Bus: COVID ‘Came Out of a Box Ready to Infect’ and Made in China. 
• Canadian Chief of Emergency Medicine, Olympic Sailor, and Marathon Runner Dies Suddenly While on a Run.
• Biden’s America: Trans Soldiers Given Special Privileges in US Military While Christian Soldiers are Persecuted.
• Judge Blocks Biden’s LGBTQ Guidance that Allows Transgender in Girls’ Sports and Bathroom Access.
• EXCLUSIVE: Billions Continue to Be Laundered Through the National Institutes of Health (NIH) to China’s Biowarfare Program.
• NDAA Proposes Funding for Pilot Program on Research and Development of ‘Fake Meats’ for the US Navy.
• 27-Year-Old Transgender Inmate Moved to Youth Facility After Impregnating Two Female Inmates at Women’s Prison.
• For Months Now Key Individuals Involved in the 2020 Election in Wisconsin Still Refuse to Meet with Judge Gableman – What Are They Hiding?
• Rep. Burgess Owens Slams The Left Over Racist Attacks On Black Conservatives (VIDEO).
• Update: Man Who Fatally Stabbed NASCAR Driver Bobby East Killed in Police Shooting.
• CDC Directs Kids To Secretive Online Chat Space To Explore Sex Change Operations, ‘Having Mulitiple Genders,’ The Occult.

The Epoch Times:

• CCP Continues to Interfere With US Election: Chinese-American Congressional Candidate.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 839,297 Reports(+4,235 from prior week) Through July 1st, 2022.
  

SKirsch.com:

• Using the MGH numbers with our own VAERS queries, we have 247 cases per million doses from the MGH study divided by 5.97 cases per million doses from VAERS. 247/5.97 = 41. This suggests that the VAERS under-reporting factor (URF) is 41X.

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). 
• COVID Money Tracker. Tracking the Covid response.
  

Night Trading

• Asian indices are unch. to +.5% on average.
• Asia Ex-Japan Investment Grade CDS Index 172.5 +.75 basis point.
• China Sovereign CDS 86.25 +2.25 basis points.
• Bloomberg Emerging Markets Currency Index 49.04 +.05%.
• Bloomberg Global Risk-On/Risk Off Index 4,193.0 -9.0 points.
• Volatility Index(VIX) futures 26.6 +.15%. 
• Euro Stoxx 50 futures +.06%.
• S&P 500 futures +.16%.
• NASDAQ 100 futures +.34%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• (BAC)/.75
• (SCHW)/.91
• (GS)/6.70
• (PLD)/1.12
  

After the Close:

• (IBM)/2.29
• (MRTN)/.32
  

Economic Releases

10:00 am EST

• The NAHB Housing Market Index for July is estimated to fall to 66.0 versus 67.0 in June.

4:00 pm EST

• Net Long-Term TIC Flows for May.

Upcoming Splits

• GOOG 20-for-1
  

Other Potential Market Movers

• The Japan CPI report could also impact trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

BOTTOM LINE: Asian indices are modestly higher, boosted by healthcare and consumer 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 week.

Today's Headlines

Bloomberg:   

• Chaos Is Becoming the Rational Base Case in Market Ruled by Fear.  
  
• Surprise Tightening in Asia Ups Pressure on Dovish Central Banks.
  
• Macau Extends City-Wide Lockdown Amid Struggle to Contain Covid.  
• China Banks Report $312 Million of Bad Loans in Mortgage Boycott.
  
• China’s Property Sector Remains Biggest Drag on Economy.
  
• Italian Parties Brace for Snap Elections With Draghi Unmoved.  
• Heathrow Goes From Europe’s Gateway to UK’s Travel Nightmare.  
• Governments Risk Undoing Central Bank Inflation Fight, IMF Says.
  
• Europe to Ration Gas If Nord Stream Stays Shut, Ineos Says.
  
• Ukraine Latest: Russia Ramps Up Combat With Widespread Bombing.
• Manchin in Driver’s Seat Again After Inflation Fears Vindicated.
  
• Biden Team Slow-Walked Green Agenda in Failed Bid to Woo Manchin.
• Breyer Plans to Teach at Harvard Law School After Supreme Court Retirement.  
• ‘Things Are Going to Break’: Texas Power Plants Are Running Nonstop.  
• Coinbase May Drop From Ranks of Top Crypto Exchanges as Volume Falls.
  
• California’s Idle Crop Land May Double as Water Crisis Deepens.  
• Charting the Global Economy: Odds Recede for Bigger Fed Hike.  
• There’s Now a 911 for Mental Health.

Wall Street Journal:

• Crypto Crash Stalls WeWork Founder Adam Neumann’s Climate Venture.
• What Is the True Cost of Inflation? It’s Complicated.
• The Attorneys General Racket. A group of state AGs seem to have built an unaccountable litigation machine.
• Cities and Towns Are Paying Tech Workers to Abandon Silicon Valley. It’s Working.
• High-Tech Smell Sensors Aim to Sniff Out Disease, Explosives—and Even Moods.
• Who Is More Glued to Screens, Grandkids or Grandparents?
• Debt-Market Jitters Come for Leveraged Loans.
• Shoppers Spent More but Got Less in June.

Fox News:  

• LIVE UPDATES:Saudi prince MBS delivers bad news for Biden in his quest for more oil to help gas prices  
• Bobby East stabbed to death in California, suspect still on the loose.
  
• 'SHAMEFUL': Biden's decision to fist-bump MBS shocks Twitter, Washington Post CEO.

CNBC:

• Earnings could be an even bigger catalyst for stocks after the market’s wild ride on rate fears.

Zero Hedge:

• Deborah Birx's Guide To Destroying A Country From Within.
• Nancy Pelosi Urges Support Of $50 Billion 'CHIPS' Bill Hours After Disclosing $8 Million Nvidia Stake.
• "We're Facing The Biggest Crisis The Country Has Ever Had": President Of German Employers' Association Warns Of Historic Crisis Over Russian Gas Cut. 
• Davos Loses Big Time... Draghi On the Way Out In Italy.
• 'Very Unfavorable' Political Scenario Appears To Be Taking Shape For Democrats.
• WaPo Condemns Biden For "Shameful" MBS Fist-Bump; "Worse Than A Handshake".
• China Refinery Throughput Falls For First Time In 10 Years.
• Court Blocks Biden Admin From Punishing Unvaccinated Air Force Members.
• Manhattan Rents Soar To New Record Amid Inflation Storm.
• The $100 Trillion Global Economy In One Chart.
• House Democrats Pass Measure To Identify 'Neo-Nazis' In Military, Law Enforcement.
• Snyder: "The California Dream" Has Become "The California Cesspool".
• Stagflation Keeps Making A Fool Out Of Paul Krugman.
• Union-Organizing Surges To Six-Year High.
• Twitter Suspends Pro-Abortion Group Publicizing Justices’ Home Addresses.
• Food Banks Seeing Flood Of Families Despite Low Unemployment.
• Modern Monetary Theory Bites The Dust.
• The $48m question.....what is priced in?
• Ukraine Pushing Hard To Get Rockets With 300km Range From US.
• Central Bank Digital Currencies Are Coming – What Will The Consequences Be?
• Stocks bid as hawkish market pricing cools while earnings season gets underway - Newsquawk US Market Wrap. 
• Stagflation Scares Slam Stocks & Commodities As Fed Faces Yield-Curve Collapse.

MarketWatch.com:          

• Opinion: ‘I see buying opportunities.’ How this stock trader with 40 years of experience makes money in a bear market.

NewsMax:

• Again Thwarted by Fellow Dem Manchin, Biden Pushes Fast OK of Leaner Fiscal Plan.

TheGatewayPundit.com:

• Biden Was Fed Pills to Function During Campaign, Supervised by Dr. Jill; Before Dosing Biden Was ‘Like a Small Child’: Tucker Carlson Source. 
• Biden’s Effort to Import More Oil from the Saudis Will Help Russia and May Ultimately Come from Russia.
• Conservative Legal Group Sues Dick’s Sporting Goods Over New Abortion-Supporting Policy, “Racial Quotas”. 
• NY Times FINALLY Admits a Year After Gateway Pundit that the Experimental COVID Vaccine May Affect Menstruation. 
• Renowned Stand-Up Comedian, Writer and Actor Jak Knight Dies at 28 – Cause of Death Unknown.
• Biden Humiliated Again When Asked About Fist Bump With Saudi Crown Prince (VIDEO).
• Bombshell Report Shows $44 Billion of COVID Money Was Sent to States that Pushed CRT in Schools.
• Pelosi *Accidentally* Trashes Democrat Governors For Their Lockdowns, Reveals What Dems Have in Store Next (VIDEO).
• CDC and NIH Health Experts are Leaving in Droves Due to ‘Low Morale and Political Pressure’.
• Two Short Videos That Will Silence Any Doubters on the 2020 Election.
• Beijing Residents Forced to Wear Regime-Issued Electronic Bracelets if You Traveled Out of the City – Will Track Your Location and Monitor Temperature.
• Senate RINOs Working with Democrats to Basically Prevent Americans from Challenging Elections in the Future. 
• Biden’s New Iran Deal Offers Iran $1 Trillion by 2030 – This Is Treasonous.
• The Government “Has Gone from Saying It Was the Most Secure Election in History to Saying the Machines Shouldn’t be Used” – Exclusive Interview with Former Overstock CEO Patrick Byrne (VIDEO).

The Epoch Times:

• FBI Launched Inquiry Into NIH Funding of Wuhan Lab, Emails Show.  
• CCP Continues to Interfere With US Election: Chinese-American Congressional Candidate.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 839 ,297 Reports(+4,235 from prior week) Through July 1st, 2022. 

SKirsch.com:

• Using the MGH numbers with our own VAERS queries, we have 247 cases per million doses from the MGH study divided by 5.97 cases per million doses from VAERS. 247/5.97 = 41. This suggests that the VAERS under-reporting factor (URF) is 41X.

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).