Stocks Reversing Lower into Final Hour on US Policy-Induced Stagflation Fears, Earnings Outlook Worries, Rising Fed Rate-Hike Odds, Tech/Homebuilding Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance:  Mixed
  

• Volume:  Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 23.9 +4.0%
• DJIA Intraday % Swing .53% -60.0%
  
• Bloomberg Global Risk On/Risk Off Index 3,886.0 -84.0 points

• Euro/Yen Carry Return Index 143.68 +.68%

• Emerging Markets Currency Volatility(VXY) 12.3 +1.3%

• CBOE S&P 500 Implied Correlation Index 43.1 +.61% 

• ISE Sentiment Index 117.0 +28.0 points
  

• Total Put/Call .93 -12.3%

• NYSE Arms .97 -51.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 85.0 -.9%
  

• US Energy High-Yield OAS 490.21 -2.3%
• Bloomberg TRACE # Distressed Bonds Traded 461.0 -3.0
  

• European Financial Sector CDS Index 115.51 -1.1%

• Italian/German 10Y Yld Spread 227.0 basis points -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 149.04 -6.4%
  

• Emerging Market CDS Index 354.17 -.06%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.58 +.43%
  
• Ukraine Sovereign Debt Credit Default Swap 11,420.0 -.4%
  

• 2-Year Swap Spread 23.0 basis points +.25 basis point
  

• TED Spread 38.75 basis points +1.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -22.75 basis points -.5 basis point
  
• MBS  5/10 Treasury Spread  135.0 +3.0 basis points
  
• iShares CMBS ETF 48.55 -.41%
• Avg. Auto ABS OAS .95 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 48.93 +.22%
• 3-Month T-Bill Yield 2.45% +6.0 basis points
  

• Yield Curve -22.0 basis points (2s/10s) -1.25 basis points
  

• China Iron Ore Spot 106.35 USD/Metric Tonne +.87%

• Citi US Economic Surprise Index -59.60 +5.2 points

• Citi Eurozone Economic Surprise Index -95.80 -3.6 points
  

• Citi Emerging Markets Economic Surprise Index 19.7 -2.2 points

• 10-Year TIPS Spread 2.37 +2.0 basis points
  
• Highest target rate probability for September 21st FOMC meeting: 45.5%(+5.2 percentage points) chance of 3.0%-3.25%. Highest target rate probability for November 2nd meeting: 45.1%(+2.2 percentage points) chance of 3.25%-3.5%.
  

US Covid-19:

• 266 new infections/100K people(last 7 days total). 15.3%(-.0 percentage point) of 1/14/22 peak(1,740) -0/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -72.6%(-1.3 percentage points) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +11 open in Japan 
• China A50 Futures: Indicating -1 open in China

• DAX Futures: Indicating -27 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 -.6%

Sector Underperformers:

• 1) Homebuilders -2.5% 2) Gold & Silver -2.5% 3) Restaurants -2.2%

Stocks Falling on Unusual Volume: 

• BJRI, SLRC, GFS, VRNS, AEHR, MTZ, CDLX, SKYT, LPRO and NEM
  

Stocks With Unusual Put Option Activity:

• 1) COOP 2) WHR 3) YETI 4) ANET 5) EWW
  

Stocks With Most Negative News Mentions:

• 1) WEBR 2) NEM 3) LPRO 4) LMPX 5) COOK
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.6%

Sector Outperformers:

• 1) Oil Service +4.5% 2) Energy +3.7% 3) Steel +2.6%

Stocks Rising on Unusual Volume:

• IEA, SIGA, MP, WWE and RTLR
  

Stocks With Unusual Call Option Activity:

• 1) PPL 2) EXPR 3) SIGA 4) NEM 5) HBAN

Stocks With Most Positive News Mentions:

• 1) SIGA 2) CMRX 3) MP 4) GOVX 5) WWE
  

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -22.8% Below 100-Day Average 
• 3 Sectors Declining, 9 Sectors Rising
• 62.3% of Issues Advancing, 33.7% Declining
• 17 New 52-Week Highs, 37 New Lows
• 20.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 47.0% 
• Bloomberg Global Risk-On/Risk-Off Index 3,873.0 -95.0 points
• Russell 1000: Growth/Value 15,505.0 -.71%
  
• Vix 23.6 +2.4%
• Total Put/Call .89 -16.0%
• TRIN/Arms 1.11 -44.8%

Monday Watch

Today's Headlines

Bloomberg:        

• World’s Key Workers Threaten to Hit Economy Where It Will Hurt.  
• Milley: China More Aggressive, Dangerous to US, Allies.  
• China on Alert for Evergrande Restructuring Plan After Shakeup.  
• China May Use Tiered-Data Strategy to Prevent US Delistings: FT.
  
• Macau Residents Ordered to Test Daily for Covid for a Week.    
• Favored Emerging-Market Trade Loses Luster on Recession Fears.
• Bolsonaro Starts Campaigning for Election He Says May Be Rigged.  
• Ukraine Latest: Lavrov Leans on UN; Kyiv Puts Out Call for Ships.   
• Recession Worries to Weigh on Stocks as Bonds Rise: Markets Wrap.
• Oil Edges Higher as Traders Weigh Tight Market, Slowdown Fears.
• Fed to Inflict More Pain on Economy as It Readies Big Rate Hike.
  
• Apple Begins to Show Rare Vulnerability Ahead of Economic Slowdown.  
• Monkeypox ‘Can Be Contained’ in US, White House Doctor Says. 
• Summers Says Fed Needs to Take Strong Action to Curb Inflation.
• Boeing Defense Workers Reject Contract, Plan to Strike Aug. 1.

Wall Street Journal: 

• How the Climate Elite Spread Misery. Most people are more worried about high gas and food prices, which green policies make worse.
• Joe Biden’s Political SWAT Team. The White House does damage control on crime amid growing lawlessness.
• The Fattest ‘Skinny’ Spending Bill Ever. ObamaCare expansions and drug price controls will have huge costs.
• Weak Earnings Reports Aren’t Fazing Investors.
• Cheaper Beer, Cigarettes Gain Favor as Inflation Pinches Shoppers.
• Gold Hit by Renewed Bets on Higher Yields, Stronger Dollar.
• Covid-19 Lab Companies Retrench as Rapid Tests Take Over.
• Pritzker, Newsom Boost Profiles as Many Democrats Look Beyond Biden for 2024.
• Challenges to Gun Laws Take Off, After High Court Ruling.
• Is Hybrid Work Killing Remote Summer? Yes, but It Doesn’t Have To.
• China Bets Big on Basic Chips in Self-Sufficiency Push.
• Disney Shows First R-Rated Movies on Disney+.
• Your Home Address and Other Personal Info Are a Search Away. Here’s What to Do About It.
• Pritzker, Newsom Boost Profiles as Many Democrats Look Beyond Biden for 2024.

Fox News:

• Intelligence committee members sound alarm on potential threat targeting Americans' DNA.
• China 'trying to study' Russia's failures; CIA director 'wouldn't rule out' near-term Taiwan invasion.
• Gore compares climate change deniers to botched Uvalde massacre response.   
• Recession 'is here' and will 'last for awhile,' former White House economist says.

CNBC:

• Bye bye, San Francisco: The top 7 U.S. cities homebuyers are seeking to leave.
• GM is behind Tesla in electric vehicle sales – CEO Mary Barra has bet the company that will change.
• These stocks are best for the long term, top Wall Street analysts say. 

Zero Hedge:

• About 45% Of Small US Businesses Are Freezing Hiring Amid Soaring Inflation, Labor Costs.
• Race Towards Net Zero Will Break Energy Market, Drive Up Energy Price: Analyst.
• ECB's Long Journey Into Currency Collapse Just Got A Lot Shorter. 
• Johnstone: Our Entire Civilization Is Structured Around Keeping Us From Realizing We Can Do This.
• Russia Belatedly Admits Strike On Odessa Port - Says Warship With US Missiles "Destroyed".
• The Day Fauci Reversed Course: February 27, 2020.
• Elon Musk 'Begged Forgiveness' After Allegedly Banging Sergei Brin's Wife: Report.
• Over 25% Of Home-Sellers Dropped Their Price In June In Most Metro Areas.
• Where Central Banks Have Issued Digital Currencies.
• Amusing Tales Of A Coal Bottleneck In Germany & The Failure To Plan.
• Swedish Rent Control Exposes The Problem With Government Price Controls.
• Rabobank: Welcome To Europe's New (Ab)normal.
• The Normalization Of The New Normal Reich.
• Mapped: The Top US Exports & Imports By State.
• Birx Admits She Knew COVID-19 Vaccines Were Never "Going To Protect Against Infection". 
• "Vouchers Are For Vultures": TX Lt Gov Hopeful Vilifies Parents Seeking School Choice.
• Did Russia And China Just Announce A "New Global Reserve Currency"?
• The Talented Mr. Pottinger: The US Intelligence Agent Who Pushed Lockdowns.

NewsMax:   

• Ukraine: Odesa Strike Shows It Will Not Be Easy to Export Grain.
• Dick Morris: Dems Trying to 'Divide and Conquer' GOP.

TheGatewayPundit.com:

• What’s Going On? Ireland Joins Canada and Netherlands and Targets Farmers with Carbon Emissions Cuts — Further Endangering Global Food Shortages.
• State Dept ‘Bureaucrat’ Who Proclaimed ‘Kindness’ Cheers High Gas Prices Crippling American Families. 
• President Trump Promises to Rehire Military Fired by Joe Biden for Refusing Experimental Vaccine – With Backpay (VIDEO).
• Another Set-Up? — Protesters with Nazi Flags and DeSantis Signs Show Up Outside TPUSA Event in Florida — Feds Really Need to Up Their Game.
• The Atlantic Council’s ‘Digital Forensics Lab’ – Involved in Rebutting Reporting in the 2020. Election Related to Fraud – Has NO Top People with Expertise in Digital Forensics.
• Famous Bodybuilder and NPC/IFBB Pro Judge “Jerry Ward” Dies Suddenly at Age 46.
• Developing: Luke Robinson, AKA #GingerGun, Was Only Protester Filmed with a Gun on Jan. 6, The FBI Later Removed Him from their Most Wanted List — Was Also Accused of Wearing an Earpiece.
• TRUMP WAS RIGHT: China Placed Huawei Equipment Atop Cell Towers on Purchased Farm Land Near US Military Bases Capable of Disrupting and Capturing Signals.
• A Democrat-Republican Tyrannical Junta Sustained by a Rogue National Security Apparatus Undermines the American Constitutional Republic.
• Greg Gutfeld: January 6th Hearings Have Backfired On Joe Biden And The Democrats (VIDEO).
• WHO Admits Everyone Who Receives a MonkeyPox Vaccine is Part of a “Clinical Trial” to Collect Data on its Effectiveness (VIDEO).

The Epoch Times:

• DC Rally Urges ‘Aggressive Actions’ by Congress to End CCP’s Forced Organ Harvesting of Falun Gong Practitioners.  
• Intelligence Committee Member Issues Warning of Possible Threat Targeting Americans’ DNA.
  

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 845,608 Reports(+3,035 from prior week) Through July 15th, 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 -.5% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 158.0 -3.75 basis points.
• China Sovereign CDS 82.25 -2.0 basis points.
• Bloomberg Emerging Markets Currency Index 48.80 -.05%.
• Bloomberg Global Risk-On/Risk Off Index 4,084.0 +117.0 points.
• Volatility Index(VIX) futures 25.8 +1.2%. 
• Euro Stoxx 50 futures n/a.
• S&P 500 futures -.10%.
• NASDAQ 100 futures -.04%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• (NEM)/.66
• (PHG)/.28
• (BOH)/1.35
  

After the Close:

• (BRO)/.49
• (CDNS)/.97
• (CR)/1.84
• (FFIV)/2.23
• (KALU)/.78
• (LOGI)/.73
• (NXPI)/3.38
• (UHS)/2.09
• (WHR)/5.29
  

Economic Releases

8:30 am EST

• The Chicago Fed National Activity Index for June.

10:30 am EST

• The Dallas Fed Manufacturing Activity Index for July is estimated to fall to -22.0 versus -17.7 in June.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Japan CPI report and the 2Y T-Note auction could also impact trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

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

Today's Headlines

Bloomberg:

• Ukraine Latest: Odesa Attack Condemned, US Lawmakers Visit Kyiv.
• JPMorgan’s Michele Says Bonds Have Recession Priced In.
• US Growth Is Looking Sickly as Fed Keeps Hiking Rates: Eco Week.
• Goldman Sachs Doubts Intervention on Euro, But Action on Yen Possible.
• Bond Sales to Taper Ahead of Rate Hike: U.S. Credit Week Ahead.
• Charting the Global Economy: ECB Joins Interest Rate-Hike Club.
  
• Google Fires Software Engineer Who Says He Talked to Sentient AI.  
• Biggest Oil Stock ETF Sees Short Sellers Unwind Bets After Rout.  
• The Diesel Market Slides From Mind-Blowing to Amazing.

Wall Street Journal:

• Russia Hits Ukraine Port Hours After Grain-Export Deal.
• They Thought ‘Crypto Banks’ Were Safe, and Then Came the Crash.
• Heat Wave Hits U.S. Farms, Stressing Crops and Herds.
• More Shoppers Buy Store Brands, Eating Into Big Food Companies’ Sales.
• Over 1,000 Aircraft Orders Behind: How Can Boeing Catch Up to Airbus?
• How to Deal With Product Shortages: Build Your Own Supply Chain.

Barron's:

• Had bullish commentary on (AMZN), (TIP), (MTG), (VICI), (TXN), (KO), (PEP), (MRK), (XOM) and (CVX).

Fox News: 

• Fauci now suggests there is possibility coronavirus leaked from lab after repeatedly dismissing theory.
• Dr. Deborah Birx says she 'knew' COVID vaccines would not 'protect against infection'.

CNBC:

• Amazon already knows a lot about me, but One Medical takes it to a whole new level.
• Markets face what could be the most important week of summer with Fed, earnings and economic data.
• A West Coast port worker union is fighting robots. The stakes for the supply chain are high.

Zero Hedge:

• Russia Informs Turkey It Had "Nothing To Do" With Odessa Port Attack.
• How Mattis Betrayed His Fellow Marines At The Behest Of The Deep State. 
• Tesla Is Refunding Cybertruck Reservations In Australia.
• WHO's Tedros Overrules Own Committee To Declare Monkeypox "Global Emergency".
• Biden Approves 16th Weapons Transfer To Ukraine - Total Security Aid Now Over $8BN.
• Panama's Inflation Upheaval Causing Food, Fuel Shortages. 
• Victor Davis Hanson: The Left Should Be Happy With Biden.
• Goldman Desk: We Now Have An Answer Whether "Long-Only" Demand Would Return After Barrage Of Soft Earnings.
• Nearly 30% Of Gen Z Living Permanently With Parents Amid Inflation Squeeze.
• Fish Tank: Mark Cuban Has Posted A Combined Net Loss On His 80+ Shark Tank Investments.
• How Central Planners Sow Seeds Of Economic Ruin.
• "All Of A Sudden, It Came To A Halt": After Posting Fresh Records Just Months Earlier, RV Industry Grinds To A Halt.
• The Fed Risks "Imploding The Highly Levered Global Financial System".
• David Stockman On Europe's Economic Suicide...
• UK Teenagers Increasingly Getting News From CCP-Backed TikTok.
• China And Japan Hold The Keys To Euro Recovery.
• Germans Taking Fewer Showers In Response To Cost Of Living Crisis.
• China Property: Is there potential here to derail things...?
• Bannon Found Guilty Of Contempt Of Congress For Defying J6 Subpoena.
• US Army Embraces "EV Future" With New Electric Hummer.
• Digital Authoritarianism: AI Surveillance Signals The Death Of Privacy.
• President's Party Up Against Poor Odds In The Midterms.
• Cadillac Reveals New $300,000 Electric Sedan.
• These Are The 20 Nations With The Fastest Declining Populations.
• Texas GOP Training 5,000 Election Workers, Poll Watchers To Improve Election Integrity: Spokesman.
• What We Know About The 22-Year-Old Who Stopped A Mass Shooting In Indiana.
• DOJ Sabotaged Trump Release Of Russiagate Docs.

MarketWatch.com:       

• Will the Federal Reserve kill the stock-market bounce?

NewsMax:

• WHO: Monkeypox Outbreak Global Health Emergency.  
• Russian Missiles Hit Port, Threaten Grain Deal. 

TheGatewayPundit.com:

• LOCK HER UP! Dr. Birx Admits She Knew the Dangerous Experimental mRNA Vaccines Would Not Work – Half of the People Who Died Were Vaccinated (VIDEO).
• J6 Defendant Mark Aungst Who Pled Guilty to “Parading in US Capitol” Commits Suicide Before Sentencing.
• Election Heroes Are Stopping Fraudulent Voting.
• MUST HAPPEN: Trump Promises to Gut and Fire “Tens of Thousands of Civil Servants” if and When He Wins in 2024.
• US Public Broadcasting Encourages People to Eat “Tasty” Insects to Help Battle Climate Change.
• EXCLUSIVE: Key Excerpts from President Trump’s Speech Tonight in Prescott Valley, Arizona – Kari Lake “Will Be One of the Fiercest Voices in the Country Standing Up Against Joe Biden’s Open Borders Catastrophe”.
• LA County Public Health Director Spotted Maskless at MLB All-Star Game as She Pushes to Reimpose Mask Mandate (VIDEO).
• Michigan City Decriminalizes Public Urination, Defecation, and Littering — For Equity!
• New Billboard in Times Square Trolls ‘Elite Pete’ Buttigieg — ‘Let Them Drive Electric Cars!’.
• Tyrant Trudeau Moves Forward with Plan to Reduce Fertilizer Use and Bankrupt Farmers During Global Food Shortage Emergency.
• Crayola Posts Transgender ‘Model’ Wearing a Chain-Link Bra Over Clothing to Virtue Signal About Diversity.
• Trans Pedophile Convicted of Making Child Porn With 7-Year-Old Daughter and Transgender Roommates Has Been Moved to Women’s Prison.

The Epoch Times:

• Unprecedented FBI, MI5, Joint Warning on CCP is Equal to ‘Break Glass in Case of Emergency’: Expert.
• Chinese-Made Vehicle GPS Tracker Has ‘Severe Vulnerabilities’: Report.
• House Democrats Block Legislative Amendment to Prevent US Oil Sales to China.
• TikTok’s Chinese Owner Spent Record-High $2.14 Million on Lobbying.
• China Threatens ‘Every Instrument of National Power’: Space Force Chief.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 842,573 Reports(+3,276 from prior week) Through July 8th, 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).