Stocks Slightly Higher into Final Hour on Diminished Earnings Outlook Fears, Stable Long-Term Rates, Technical Buying, Tech/Energy Sector Strength

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) 19.9 -.2%
• DJIA Intraday % Swing .43% -26.7%
  
• Bloomberg Global Risk On/Risk Off Index 3,942.0 -14.0 points

• Euro/Yen Carry Return Index 140.96 -.35%

• Emerging Markets Currency Volatility(VXY) 12.0 +1.44%

• CBOE S&P 500 Implied Correlation Index 41.4 -.7% 

• ISE Sentiment Index 106.0 +12.0 points
  

• Total Put/Call .87 -3.3%

• NYSE Arms 1.06 unch

Credit Investor Angst:

• North American Investment Grade CDS Index 77.44 -.59%
  

• US Energy High-Yield OAS 398.06 +1.21%
• Bloomberg TRACE # Distressed Bonds Traded 336.0 +4.0
  

• European Financial Sector CDS Index 105.19 -2.1%

• Italian/German 10Y Yld Spread 223.0 basis points unch.
  

• Asia Ex-Japan Investment Grade CDS Index 135.29 +1.16%
  

• Emerging Market CDS Index 311.32 +1.62%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.59 -.17%
  
• Ukraine Sovereign Debt Credit Default Swap 9,588.9 -3.5%
  

• 2-Year Swap Spread 34.5 basis points +3.0 basis points
  

• TED Spread 35.25 basis points +6.75 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -15.75 basis points +.5 basis point
  
• MBS  5/10 Treasury Spread  127.0 -2.0 basis points
  
• iShares CMBS ETF 48.32 +.33%
• Avg. Auto ABS OAS .93 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 48.90 -.78%
• 3-Month T-Bill Yield 2.63% +1.0 basis point
  

• Yield Curve -37.0 basis points (2s/10s) +4.25 basis points
  

• China Iron Ore Spot 101.55 USD/Metric Tonne -.1%

• Citi US Economic Surprise Index -17.6 +6.8 points

• Citi Eurozone Economic Surprise Index -51.6 +.2 point
  

• Citi Emerging Markets Economic Surprise Index 31.8 -1.1 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 236.61 +.04:  Growth Rate +15.6% -1.0 percentage point, P/E 18.1 unch.
  
• US Atlanta Fed GDPNow Q3 Forecast +1.62% unch.
  
• Bloomberg US Financial Conditions Index -.27 -17.0 basis points
  

• 1-Year TIPS Spread 2.84 -1.0 basis point: 10-Year TIPS Spread 2.53 +6.0 basis points
  
• Highest target rate probability for November 2nd FOMC meeting: 49.4%(-1.4 percentage points) chance of 3.25%-3.5%. Highest target rate probability for December 14th meeting: 45.2%(-1.5 percentage points) chance of 3.50%-3.75%.
  

US Covid-19:

• 210 new infections/100K people(last 7 days total). 12.1%(-.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 -73.6%(-.8 percentage point) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +133 open in Japan 
• China A50 Futures: Indicating -32 open in China

• DAX Futures: Indicating -7 open in Germany

Portfolio:

• Slightly Higher:  On gains in my commodity/utility/tech sector longs and emerging market shorts
  

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

• Market Exposure:  Moved to 50% net long
  

Bear Radar

Style Underperformer:

• Small-Cap Value -.3%

Sector Underperformers:

• 1) Digital Health -2.1% 2) Biotech -1.8% 3) Retail -1.5%

Stocks Falling on Unusual Volume: 

• ELAN, EVGO, EXAS, CERT, CLAR, ARVN, ALXO, DVAX, IEP, MRVI, URI, ENVX, PTON, PETQ, MRNA, YOU, OSTK, DKNG, UPST, BEAM, KSS, SKYT, AMC, COCO, WBA, ASTS, TXG, BGFV, EMBK, VERU and BBBY
  

Stocks With Unusual Put Option Activity:

• 1) ON 2) BBIG 3) ARKG 4) ROST 5) FL
  

Stocks With Most Negative News Mentions:

• 1) BBBY 2) CRMT 3) CATO 4) CVNA 5) KSS
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.2%

Sector Outperformers:

• 1) Oil Service +3.0% 2) Disk Drives +2.5% 3) Semis +2.1%

Stocks Rising on Unusual Volume:

• WOLF, FAZE, ENLC, DCP, ON, BJ, RETA, MNTK, SMCI, XPRO, AEHR, TH and DEN
  

Stocks With Unusual Call Option Activity:

• 1) WOLF 2) PSTG 3) CSCO 4) BBIG 5) HST

Stocks With Most Positive News Mentions:

• 1) WOLF 2) BJ 3) CSIQ 4) ON 5) KEYS
  

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -26.3% Below 100-Day Average 
• 5 Sectors Declining, 6 Sectors Rising
• 56.9% of Issues Advancing, 38.3% Declining
• 47 New 52-Week Highs, 19 New Lows
• 40.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 54.7% 
• Bloomberg Global Risk-On/Risk-Off Index 3,927.0 -28.0 points
• Russell 1000: Growth/Value 16,010.05 +.11%
  
• Vix 19.7 -.8%
• Total Put/Call .80 -11.11%
• TRIN/Arms .88 +22.2%

Thursday Watch

Evening Headlines

Bloomberg:                      

• A $379 Billion Hole Emerges in Developing Nations’ War Chests.
• Flotilla of Diesel Ships Sails for Europe as Energy Crisis Looms.
• US Futures Fall, Stocks Pressured as Yields Climb: Markets Wrap.
• Five Vital Commodity Industries Are Buckling Under Energy Crisis.
• Stock Plunge in First Half of 2022 Hammered 401(k) Millionaires.
  
• AMC’s CEO Will Do Whatever It Takes to Keep His Company a Meme Forever.
• Tips for Backing Out of a Home Purchase.
• US Housing Cools Further With Fewer Starts, More Canceled Deals.  
• Apple Targets Sept. 7 for iPhone 14 Launch in Flurry of New Devices.  
• Penn to Buy Rest of Online Gaming Partner Barstool Sports.   
• Treasury Wine Profit Meets Expectations; Warns of Inflation Risk.  
• Snowboard Maker Burton Seeks Sale That Could be Valued at $800 Million.  
• Netflix’s Ad-Supported Plan Will Block Downloads of Shows, Films.

Wall Street Journal:    

• When Bill Gates Dines with Politicians......taxpayers beware!
• The American Academy of Pediatrics’ Dubious Transgender Science. As other countries turn away from hormones and surgery, the AAP won’t even allow a debate. 
• U.S. Veterans Race to Train Ukrainians as Marines; ‘Time Is Not on Their Side’
• U.K. Inflation Tops 10%, Highest of Rich Nations
• FDA Approves $2.8 Million Gene Therapy for Rare Blood Disease
• Mexican Gangs Go on Rampage, Challenging President’s Security Strategy.
• Oil Giants Must Face Climate-Liability Suits in States, Appeals Court Rules.

Fox News:

• CDC to be overhauled after director’s scathing admission about agency’s COVID response.
  
• Stuart Varney: Blue states followed CDC guidelines and paid the price.
• Lawyers school district over 'illegal' plan to layoff White teachers first.

CNBC.com:

• Fed sees interest rate hikes continuing until inflation eases substantially, minutes show.
• Bed Bath & Beyond shares fall after investor Cohen reveals intent to sell stake.
• ‘It’s frustrating.’ 40 million people are in the dark about student loan payments resuming.
• Crypto broker Genesis slashes 20% of workforce and announces CEO exit after loans soured.

MarketWatch:        

• Cisco earnings and revenue forecast quell fears of slowdown, stock rises.
  
• ‘Zombie’ stocks AMC and GameStop could feel the cash burn, says New Constructs.

Zero Hedge:

• Lindsey Graham Calls For Release Of Trump Affidavit: 'We’re Flying Blind'.
• Judge Blocks Texas Restrictions On Using P.O. Boxes For Voter Registration.
• Tomato Shortage Emerges In Drought-Stricken Californian As Ketchup Prices Soar
• Rational or "suckers" rally?
• Apple Reportedly Shifting Watch And MacBook Production To Vietnam.
• The Incredible Shrinking Merrick Garland.
• US stocks declined as global markets digested red-hot UK CPI data and the latest FOMC Minutes - Newsquawk Asia-Pac Market Open.
• Is A Chinese Devaluation Imminent?
• Rugpull: After Stratospheric Gamma Squeeze, Ryan Cohen Files To Sell Stake In Bed, Bath & Beyond.
• FOMC Minutes: Anticipation For "Rate Increases" But Risk Fed Could Tighten "More Than Necessary"; Financial Conditions Already "Tightened Notably".
• Judge Orders Twitter To Provide Elon Musk With Executive Documents On Fake Accounts.
• "The West Is Really In Deep Trouble On Many Fronts – Many Self-Inflicted".
• UK inflation spike ignites risk aversion but dovish FOMC Minutes soften the blow - Newsquawk US Market Wrap.
• Stocks & Bonds Dump As Short-Squeeze Ammo Runs Dry At Critical Technical Level.

Newsmax: 

• N.Y. on Hunt for 5,000 Hotel Rooms as It Grapples With Waves of Bused-In Migrants.
• Rep. Cammack: CDC Overhaul a 'Long Time Coming'.

TheGatewayPundit.com: 

• Is Joe Biden Facilitating America’s Demise?
• BREAKING EXCLUSIVE: Trump Got’em – Huge Concerns About Peter Strzok Working for the CIA Are Likely at the Heart of Mar-a-Lago RAID
• Justin Trudeau Celebrates After Democrats Sign $700 Billion Spending Bill that Will Benefit Automobile Manufacturers in Canada.
• CDC Director Rochelle Walensky Admits Major Covid-19 Mistakes — Plans to Restructure the Agency Calling it a “Reset”.
• Double Vaxxed New Zealanders SEVEN TIMES Sicker this Year than Pre-COVID 2019! (VIDEO).
• Joe Biden Has Nothing on His Public Schedule Today and Hasn’t Done an On-Camera Interview with American Media Outlet Since February.
• Don’t Feel Sorry for Liz Cheney – She Increased Her Wealth by $36 Million After Serving Just 6.5 Years in Congress.
• Human Rights Attorney Leigh Dundas: ‘You Need To Teach Yourself To Be Disobedient,’ ‘The Brainwashing Needs To Stop,’ Or ‘We Are Going To Be Left With Klaus Schwab And The Tyrants’.
• Rank Choice Voting and Mail-In Ballots Debut in Deep Red Alaska. 
• 27-Year-Old High School Varsity Basketball Coach “Dies Unexpectedly” of Cardiac Arrest.
• Germany Electricity Benchmark Prices Surge over €500 for the First Time Ever — As Natural Gas Also Reach Record Highs.
• WAYNE ROOT: Seven Dead Doctors in 14 Days Don’t Lie.
  

The Epoch Times:

• States Warn BlackRock to Stop Pushing Political Agenda.
• China Increasing Nuclear Arsenal, With ‘Largest Military Buildup in History’: US Indo-Pacific Commander.

Breitbart:

• Nolte: 7 Reasons Pollsters Deliberately Lie to Us.

Twitter: 

• @EvaVlaar - “From a reanalysis of Pfizer’s and Moderna’s original trial data it appears that one was more likely to suffer a serious adverse event from the vaccine, than they ever were to be hospitalised from covid. This changes everything.” -  @DrAseemMalhotra (video)
  

 OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 854,081 Reports(+2,712 from prior week) Through August 5th, 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).

Night Trading 

• Asian equity indices are -1.0% to -.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 134.25 +3.5 basis points. 

• China Sovereign CDS 72.5 +1.0 basis point.
  

• Bloomberg Emerging Markets Currency Index 49.28 unch.  
• Bloomberg Global Risk-On/Risk Off Index 3,975.0 +19.0 points.
• Volatility Index(VIX) futures 23.6 +1.3%
• Euro Stoxx 50 futures n/a.

• S&P 500 futures -.20%.

• NASDAQ 100 futures -.32%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (BJ)/.81
• (EL)/.36
• (KSS)/1.12
• (NTES)/7.10
• (SPTN)/.55
• (TPR)/.77

After the Close:

• (AMAT)/1.79
• (ROST)/1.01
  

Economic Releases

8:30 am EST:

• Initial Jobless Claims for last week are estimated to rise to 264K versus 262K the prior week.
• Continuing Claims are estimated to rise to 1450K versus 1428K prior.
• Philly Fed Business Outlook for Aug. is estimated to rise to -5.0 versus -12.3 in July.  

10:00 am EST

• Existing Home Sales for July is estimated to fall to 4.87M versus 5.12M in June.
• The Leading Index for July is estimated to fall -.5% versus a -.8% decline in June.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's George speaking, China Industrial Production report and the weekly EIA natural gas inventory report could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are lower, weighed down by consumer and technology shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 25% net long heading into the day.

Stocks Modestly Lower into Afternoon on Rising Long-Term Rates, European/Emerging Markets/US High-Yield Debt Angst, Technical Selling, Consumer Discretionary/Alt Energy Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance:  Most Sectors Declining
  

• Volume:  Below Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 20.1 +2.3%
• DJIA Intraday % Swing .59% -45.2%
  
• Bloomberg Global Risk On/Risk Off Index 3,949.0 +158.0 points

• Euro/Yen Carry Return Index 141.53 +.88%

• Emerging Markets Currency Volatility(VXY) 11.8 -.08%

• CBOE S&P 500 Implied Correlation Index 41.5 +.68% 

• ISE Sentiment Index 103.0 +9.0 points
  

• Total Put/Call .87 +3.6%

• NYSE Arms .97 +34.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 77.52 +2.6%
  

• US Energy High-Yield OAS 389.77 -.44%
• Bloomberg TRACE # Distressed Bonds Traded 332.0 +9.0
  

• European Financial Sector CDS Index 107.61 +4.9%

• Italian/German 10Y Yld Spread 223.0 basis points +7.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 133.95 +2.43%
  

• Emerging Market CDS Index 306.87 +3.7%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.57 -.4%
  
• Ukraine Sovereign Debt Credit Default Swap 9,933.9 +10.2%
  

• 2-Year Swap Spread 31.5 basis points +1.0 basis point
  

• TED Spread 28.5 basis points -4.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -16.25 basis points +.75 basis point
  
• MBS  5/10 Treasury Spread  129.0 +15.0 basis points
  
• iShares CMBS ETF 48.10 -.55%
• Avg. Auto ABS OAS .92 -4.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 49.29 -.33%
• 3-Month T-Bill Yield 2.62% +2.0 basis points
  

• Yield Curve -41.25 basis points (2s/10s) +2.25 basis points
  

• China Iron Ore Spot 101.75 USD/Metric Tonne -4.3%

• Citi US Economic Surprise Index -25.4 +6.1 points

• Citi Eurozone Economic Surprise Index -51.8 -2.8 points
  

• Citi Emerging Markets Economic Surprise Index 32.9 -1.2 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 236.57 +.14:  Growth Rate +16.6% -.1 percentage point, P/E 18.1 -.2 point
  
• US Atlanta Fed GDPNow Q3 Forecast +1.62% -19.0 basis points
  
• Bloomberg US Financial Conditions Index -.10 -1.0 basis point
  

• 10-Year TIPS Spread 2.47 +2.0 basis point
  
• Highest target rate probability for November 2nd FOMC meeting: 51.0%(+.8 percentage point) chance of 3.25%-3.5%. Highest target rate probability for December 14th meeting: 46.9%(+2.3 percentage points) chance of 3.50%-3.75%.
  

US Covid-19:

• 217 new infections/100K people(last 7 days total). 12.5%(-.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 -72.8%(+.1 percentage point) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -141 open in Japan 
• China A50 Futures: Indicating -31 open in China

• DAX Futures: Indicating +69 open in Germany

Portfolio:

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

• Disclosed Trades:  None
  

• Market Exposure:  50% net long