Stocks Sharply Higher into Afternoon on Less European/Emerging Markets/US High-Yield Debt Angst, Option Expiration Week, Short-Covering, Tech/Gambling Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Every Sector Rising
  

• Volume:  Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 30.8 -3.8%
• DJIA Intraday % Swing 1.0%
  
• Bloomberg Global Risk On/Risk Off Index 49.1 -.4%

• Euro/Yen Carry Return Index 151.0 +1.2%

• Emerging Markets Currency Volatility(VXY) 12.6 +.6%

• CBOE S&P 500 Implied Correlation Index 51.6 +.12% 

• ISE Sentiment Index 106.0 +19.0 points
  

• Total Put/Call .95 +4.4%

• NYSE Arms .42 -74.9%

Credit Investor Angst:

• North American Investment Grade CDS Index 99.96 -3.6%
  

• US Energy High-Yield OAS 409.81 -2.1%
• Bloomberg TRACE # Distressed Bonds Traded 427.0 -18.0
  

• European Financial Sector CDS Index 139.23 -4.2% 
• Credit Suisse Subordinated 5Y Credit Default Swap 408.0 -4.9%
  

• Italian/German 10Y Yld Spread 239.0 basis points -5.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 211.57 +4.1%
  

• Emerging Market CDS Index 326.50 -2.3%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.99 unch.

• 2-Year Swap Spread 37.5 basis points +1.0 basis point
  

• TED Spread 49.75 basis points +13.75 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -68.5 basis points +1.25 basis points
  
• MBS  5/10 Treasury Spread  175.0 -2.0 basis points
  
• iShares CMBS ETF 45.16-.22%
• Avg. Auto ABS OAS .85 +2.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 46.45 +.37%
• 3-Month T-Bill Yield 3.76% +4.0 basis points
  

• Yield Curve -45.75 basis points (2s/10s) +2.75 basis points
  

• China Iron Ore Spot 92.7 USD/Metric Tonne -.1%
• Dutch TTF Nat Gas(European benchmark) 123.2 euros/megawatt-hour -13.3%

• Citi US Economic Surprise Index 19.40 +2.0 points

• Citi Eurozone Economic Surprise Index 9.4 +3.7 points
  

• Citi Emerging Markets Economic Surprise Index -7.0 -3.3 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 234.95 -.20:  Growth Rate +15.3% -.2 percentage point, P/E 15.7 +.4
  
• Bloomberg US Financial Conditions Index -1.40 -15.0 basis points
  
• US Atlanta Fed GDPNow Forecast +2.81% -8.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +5.16% unch.: CPI YoY +8.13% unch.
  
• 10-Year TIPS Spread 2.46 +7.0 basis points
  
• Highest target rate probability for December 14th FOMC meeting: 66.7%(-3.1 percentage points) chance of 4.5%-4.75%. Highest target rate probability for February 1st meeting: 53.7%(-.5 percentage point) chance of 4.75%-5.0%.
  

US Covid-19:

• 77 new infections/100K people(last 7 days total). 4.4%(-.4 percentage point) of 1/14/22 peak(1,740) +0/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -86.1%(-1.3 percentage points) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +280 open in Japan 
• China A50 Futures: Indicating +61 open in China

• DAX Futures: Indicating -2 open in Germany

Portfolio:

• Slightly Lower:  On losses in my index hedges and emerging market shorts
  

• Disclosed Trades:  Covered some of my (IWM)/(QQQ) hedges and some of my emerging market shorts
  

• Market Exposure:  Moved to 50% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Value +2.2%
  

Sector Underperformers:

• 1) Foods +.9% 2) I-Banking +1.2% 3) Electric Vehicles +1.3%

Stocks Falling on Unusual Volume: 

• ACLX, EPC, SCHW, SM, DICE, DAWN, FOX, VRDN and FOXA
  

Stocks With Unusual Put Option Activity:

• 1) RITM 2) CNK 3) MDGL 4) CTRA 5) SWKS
  

Stocks With Most Negative News Mentions:

• 1) NERV 2) SMIT 3) CANO 4) FOXA 5) NKLA
  

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +3.1%

Sector Outperformers:

• 1) Internet +4.9% 2) Video Gaming +4.5% 3) Gambling +4.1%

Stocks Rising on Unusual Volume:

• LFG, RBLX, APPS, AVXL, RETA, CLR, APPN, SPLK, INSP, BAC, FRC, TVTX, AVEO, NWSA, HASI, NABL and NWS
  

Stocks With Unusual Call Option Activity:

• 1) RITM 2) DBX 3) R 4) CLNE 5) VNQ

Stocks With Most Positive News Mentions:

• 1) INPX 2) RBLX 3) SRG 4) CLNE 5) MNTK
  

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +4.3% Above 100-Day Average 
• 0 Sectors Declining, 11 Sectors Rising
• 89.2% of Issues Advancing, 8.4% Declining
• 25 New 52-Week Highs, 39 New Lows
• 23.9%(+12.4%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.0 +6.0
  
• Bloomberg Global Risk-On/Risk-Off Index 48.6 -1.3%
  
• Russell 1000: Growth/Value 15,100.77 +.64%
  
• Vix 31.1 -2.9%
• Total Put/Call .98 +7.7%
• TRIN/Arms .50 -69.5% 

Monday Watch

Today's Headlines

Bloomberg:        

• Xi Gives Little Reassurance China’s Main Economic Risks to Ease.
• China Traders See Tech Focus, More Covid Gloom After Xi’s Speech.  
• Truss Faces Whim of Markets and Mutinous UK MPs in Key Week.  
• Biden Aide Says Change in US Military Aid to Saudis Is Possible.
• London Leads UK Home Asking Prices to Biggest Gain in 5 Months.  
• Lula, Bolsonaro Face Off in Debate Before Tight Brazil Runoff.
• Stocks Set to Extend Declines, Currencies on Edge: Markets Wrap.  
• Oil Edges Higher After Weekly Loss as Slowdown Hangs Over Market .
  
• Mercedes Unveils Latest Electric SUV Aimed at Tesla’s Model Y.

Wall Street Journal:

• A Mail-Vote Time Bomb in Pennsylvania. A close Senate election will mean another legal fight over undated ballots.
• Market Whiplash Shows Investors Are Still on Edge.
• Stocks Can Always Get Cheaper. The bottom still feels far off as bad earnings reports and defaults begin to surface.
• Xi Jinping’s Quest for Control Over China Targets Even Old Friends.
• U.S. Executives in Limbo at Chinese Chip Companies.
• Junk-Rated Companies Search for the Right Time to Tap Investors.

Fox News:

• Biden rebuked by foreign officials for calling nuclear-armed country 'one of the most dangerous nations'.
• Christian teacher fired for refusing to read LGBT books to kids fights back.
• Fauci makes big admission on harm of school closures — then deflects blame.

CNBC:

• China’s Xi downplays need for rapid growth, touts Covid achievements.
• Xi on Taiwan interference: China will ‘never promise to renounce’ force.
• The 6 common signs of a sociopath: ‘They can be harder to spot than a psychopath,’ says psychotherapist.

Zero Hedge:

• "Liquidity Breaks And Credit Freezes": BofA's Credit Dysfunction Indicator Breaches The Critical Zone.
• Obama Calls Democrats 'Buzzkills' Who Make People 'Walk On Eggshells'.
• "We Have Entered The Stage Where Policy Makers May Feel They Have Control, But Are Nevertheless No Longer In Control".
• Morgan Stanley: Trouble In The Kingdom Is Just Starting.
• Weekend News Round Up - Newsquawk Asia-Pac Market Open.
• The Wall Of Worry Knows No Bounds.
• Remember the Santa rally?
• "This Is What Annihilation Looks Like": Biden Export Controls 'Wreaking Havoc' On China's Chip Industry.
• Texas Sheriff Declares Undocumented Migrants "Crime Victims" To Secure Visas.
• Tourists Shocked As Number Of Homeless Encampments Explodes In DC.
• Few Getting Updated COVID-19 Boosters Despite White House Pleas.
• In Groundbreaking Speech, Xi Vows To Guide China To "Incomparable Glory", An Alternative To The US.
• A Generational Opportunity In Commodities?
• Watch: Bitter Roger Stone Blasts Trump, "Run Again & You'll Get Your F**king Brains Beat In".
• Election Software CEO Surrenders To LA Authorities; Prosecutors Allege 'Massive Data Breach'.
• Japan Considers Removing 60 Year Limit On Nuclear Plant Operations.
• "It's Global Govt Re-Engineering" - Austin Fitts Warns Fed Actions Are "100% Power Politics... It's A War".
• Lawsuit To Block Student Loan Bailout Can Set Stage For Solving Debt Crisis.
• "Uncharted Territory": Housing Market Predictions For 2023.
• Morgan Stanley Says Auto Estimates For 2023 Must Fall "Significantly" On "Demand Destruction".
• Sweden Refuses To Share Nord Stream Attack Data, Opts Out Of Joint EU Investigation.
• More Foods Will Be Gene-Edited Than You Think.
• Why Are Student Test Scores Plunging? Look At Politicized Education.
• Arctic Blast To Blanket Eastern Half Of US Next Week.
• In Overheated Economy, Dems Forced To Cool Climate Messaging.

MarketWatch.com:           

• Classic 60/40 investing strategy sees worst return in 100 years. How about 40/60?  
• Nearly every U.S. CEO bracing for recession over next 12 to 18 months: survey.

NewsMax:

• China's Xi Touts Growing Military Strength in Challenge to US. 
• Bernie Kerik: Dems' 'Rogue Policies' Endanger Police.

TheGatewayPundit.com:

• In 2009 Iranian Protesters Were Calling Out for Obama as They Were Being Shot Dead in the Street – This Week Obama Finally Says He Was Wrong to Ignore Them — But Would Not Have Changed His Policies (VIDEO). 
• CRAZY: Liberal Media Compares Stroke Victim Fetterman Who Can’t Carry on a Conversation to FDR (He’s More Like Biden). 
• Pfizer Exec Scott Gottlieb Responds to Evidence that He Pressured Twitter to Censor Author Berenson’s Account – Insists It Was to Protect Fauci (VIDEO).
• Haitian Singer Collapses on Stage and Dies Suddenly of Suspected Cardiac Arrest During Concert in Paris (VIDEO).
• Pandemic of the Vaccinated: New Data from Walgreens Reveals Vaccinated People are More Likely to Test Positive.
• China’s Xi Jinping Opens Annual CCP Conference and Announces Full Control of Hong Kong – Taiwan Is Next.
• FACEBOOK IS SPYING ON YOU: Facebook Suspends Wife of FBI Whistleblower Steve Friend After She Responds in Private Message to Post Asking if Family Needs Help.
• Number of Police Killed in Targeted Attacks Has Doubled Since Democrat-Sanctioned Anti-Police Protests in 2020.
• They Weren’t Gaffes – Joe Biden Did Exactly What He Campaigned On.
• “Our Economy is Strong as Hell” – Joe Biden with a Mouth Full of Ice Cream (VIDEO).
• Fetterman at PA Rally: “Send me to Washington DC to Take On — To Make Sure I Push Back Against Work to Work!” (VIDEO).
• Chants of ‘Death to Khamenei’ Heard Outside Burning Iranian Jail Where Hundreds of Regime’s Opponents Held.

The Epoch Times:

• Election Software CEO Surrenders to LA Authorities; Prosecutors Allege ‘Massive Data Breach’.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 880,882 Reports(+3,155 from prior week) Through October 7th, 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 -1.5% to -.5% on average.
• Asia Ex-Japan Investment Grade CDS Index 205.0 +2.0 basis points.
• China Sovereign CDS 115.0 +2.75 basis points.
• Bloomberg Emerging Markets Currency Index 46.3 +.02%.
• Bloomberg Global Risk-On/Risk Off Index 49.4 +.3%.
• Bloomberg US Financial Conditions Index -1.50 -26.0 basis points 
  
• Volatility Index(VIX) futures 31.6 -.12%. 
• Euro Stoxx 50 futures -.71%.
• S&P 500 futures +.31%.
• NASDAQ 100 futures +.27%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• (BAC)/.78
• (BK)/1.08
• (SCHW)/1.05
  

After the Close:

• (MRTN)/.33
  

Economic Releases

8:30 am EST

• Empire Manufacturing for Oct. is estimated to fall to -4.0 versus -1.5 in Sept.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Japan Capacity Utilization report 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 technology and financial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 25% net long heading into the week.

Today's Headlines

Bloomberg:

• Guardians of World Economy Told to ‘Buckle Up’ as Outlook Dims.  
• Soaring Dollar Leaves Food Piled Up in Ports as World Hunger Grows.
• Energy ‘Subsidy War’ Risks Steeper ECB Rate Hikes, Wunsch Warns.  
• China Defends Xi Focus on Stability, Security Ahead of Reshuffle.
• Bailey Sees Clear Meeting of Minds With Hunt on UK Fiscal Policy.  
• Fire Engulfs Iran Prison Holding Political Prisoners Amid Unrest.
• Diesel Hits Chaos Mode in Fresh Blow for Global Economy.
  
• Credit Suisse Prepares to Sell Parts of Swiss Domestic Bank: FT.
  
• Pensions Drama Sparks Call for Rethink of £1.6 Trillion Market.
  
• Ukraine Latest: Russia Hits Energy Infrastructure in Kyiv Region.
• Animal Rebellion Protesters Pour Milk in Shops Across UK — Including Harrods.
• Torched Stocks Are About the Only Thing Working in Fed’s Favor.
• As Electric Car Production Falls Short, Flippers Step Up.
• NFT Bargain-Hunting Is in as Crypto Bust Craters Prices.   
• Apple, Amazon Facing Emboldened Labor Movement After Key Inroads.  
• Apple Nears M2 iPad Pro Launch and Plans Google Tablet-Like Home Hub.
• Bruised Bond Bulls See Rate-Hike Pain Sowing Seeds of 2023 Rally.
• China’s Lockdowns Take Toll on Limping Economy: Eco Week Ahead.
• Charting the Global Economy: IMF Warns of Deteriorating Outlook.

Wall Street Journal:

• Company Documents Show Meta’s Flagship Metaverse Falling Short.
• SPAC Sponsors Profited Even as Listed Stocks Fell.
• Senior KFC Executives Opt for Retirement as Interest Rates Hit Pension Payouts.
• Tesla, Netflix Set to Report Earnings as Recession Talk Mounts.
• Britain’s New Chancellor Says Some Taxes Will Rise.
• Some Unaccompanied Afghan Children in U.S. Suffer Panic Attacks, Depression.
• China’s Communist Party Faces Up to Slower-Growth Years Ahead.

Barron's:

• Had bullish commentary on (CVX), (EOG), (COP), (XOM), (PWR), (WCC), (DY), (GOOGL), (ODFL), (TMO), (SIVB), (BHP), (RIO), (ROST), (BURL), (TJX) and (DECK).

Fox News:

• Democratic strategists sound alarm on socialism after shock poll showing conservative Latino shift.
• China expert warns Xi's latest power grab will likely lead Asia into war. 
• Biden roasted online after giving 'creepy' dating advice to young teenager.

CNBC:

• This 23-year-old pays $1,100 a month to rent a 95 sq. ft NYC apartment.
• Cloud stocks just wrapped up their worst week since January, led by plunge in Five9 and SentinelOne.
• Apple workers in Oklahoma vote for company’s second U.S. union store.
• Inside the only lithium producer in the U.S., which provides critical battery mineral to Tesla, EV makers.

Zero Hedge: 

• With Stocks & Debt Up 50x In 50 Years, How Far Will They Collapse?
• Musk: Russia "May Kill Starlink"; White House And DoD Comment On SpaceX For Ukraine. 
• DeSantis Slams Light Sentence Given To Nikolas Cruz In Murder Of 17.
• Truckload Market Loosens Again As Tender Rejections Touch New Low.
• Dems Move To Transfer Air Defense Systems From Saudis To Ukraine As Punishment.
• Democratic Party Moved From Uncomfortable To Intolerable For Members: #WalkAway Founder.
• Federal Tax Haul Nears Record-High Share Of GDP. 
• TME Weekend: Some extremes and some "not so extreme"...
• Elon Musk Alarmed After Apparent Inclusion On Well-Known Ukrainian 'Kill List'.
• Central Banks Are "Impotent" - Russell Napier Warns Of "Shift Of Power That Cannot Be Underestimated". 
• Oregon May Elect First GOP Governor In 35 Years. 
• "Worst.Crisis.Ever." - Traders Begin Making Big Bets On Massive Volatility Ahead. 
• DOJ Sued Over Refusal To Explain Zero Protection For Conservative Supreme Court Justices' Homes.
• Latest Supply Chain Crisis Could Threaten Global Stash Of Food, Energy.
• Broken markets 2.0.
• Erdogan Eager To Act On Putin's Offer To Make Turkey A 'Gas Hub' .
• NATO Initiates 10-Year Plan To Rebuild Ukraine's Military & Defense Industry.
• 'The Post-Cold War Era Is Over': White House National Security Advisor.
• These Are The Best (And Most Expensive) Universities In America.
• Domestic Left-Wing Extremist Groups More Dangerous Than 'MAGA Republicans': Experts.
• India Expected To Overtake China As World's Most Populous Country This Year.
• Kaiser Permanente Sued For Wrongful Death After California Husband’s Remdesivir Treatment Fails.
• China Conducting 'Race-Baiting' Social Media Campaigns To Polarize Americans: Former CIA Officer.
• Moderna CEO Confirms New mRNA 'Injection' To Repair Heart Muscles After Heart Attack.

MarketWatch.com:          

• Why risk of lower 2023 earnings spells bad news for stock market as inflation crushes Fed-pivot hopes .
  
• Larry Summers says U.K. debt market stress could be the ‘tremor’ signaling global economic ‘earthquake’.

NewsMax:

• GOP Demands Archive Docs, Suspecting Dem Political Pressure Behind Trump Raid.

TheGatewayPundit.com:

• It Begins… Schools in The Netherlands Serve Mealworms and Insects to Children to Save Planet from Global Warming. 
• Ghislaine Maxwell Speaks From Prison, Says Woman Plotted to Kill Her in Her Sleep. 
• Emergency Complaint Filed with Georgia Election Board Alleges Dominion Voting “Erroneous Code” Thought Exclusive to Tennessee Exists in Georgia Counties.
• Election Software Firm Used in Swing States Gave ‘Superadministrator’ Privileges to Contractors in China. 
• “Those of You Who Think the Vaccine Kills People Can Use Me as a Test” – Bodybuilding Icon and Author Doug Brignole Passes Away At 63. 
• Public Relations Company For Big Pharma Now “Embedding” Employees At CDC.
• HUGE! Far-Left Politico Admits Election Machines are Vulnerable to Hacks.
• “No Borders, No Countries” – Biden Regime Calls for North American Union – Rep. Matt Gaetz Responds.
• Case Report of a Pro-Vaccine Researcher Suggests mRNA Vaccine Might Worsen Lymphoma Cancer.
• Florida State University Receives 51 New Defibrillators – Encourages the Campus Community to Get “Regular Heart Screenings”.
• ‘This Is The Reality Of Open Borders’: Texas Sheriffs Are Creating Makeshift Morgues To House Record Number Of Illegal Aliens’ Dead Bodies.
• “You Pat Yourself on the Back, But Families are Starving!” – Herschel Walker ABSOLUTELY EVISCERATES Anti-American Socialist Raphael Warnock at Georgia Debate — VIDEO.
• Here We Go… GOP US Senate Candidate’s Name Omitted from Ballots in Illinois County.

The Epoch Times:

• China Inflation Hits 29-Month High. 
  
• Election Software CEO Surrenders to LA Authorities; Prosecutors Allege ‘Massive Data Breach’.

Twitter:

• @IGSquawk - Weekend markets update: #DAX 12327 -0.17% #DOW 29659 +0.01% #NASDAQ 10670 -0.27% #FTSE 6841 +0.22% #HANGSENG 16295 +0.05% #GBPUSD 11214 +0.31% #EURUSD 9721 -0.02% #USDJPY 14859 -0.11%.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 877,727 Reports(+5,890 from prior week) Through September 30th, 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).