Stocks Higher into Afternoon on US Debt Ceiling Deal Optimism, US Economic "Soft-Landing" Hopes, AI Stock Frenzy, Tech/Airline Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 17.9 -6.6%
• DJIA Intraday % Swing 1.12%
  
• Bloomberg Global Risk On/Risk Off Index 59.5 +2.9%

• Euro/Yen Carry Return Index 158.2 +.4%

• Emerging Markets Currency Volatility(VXY) 9.6 -.1%

• CBOE S&P 500 Implied Correlation Index 26.1 -7.8% 

• ISE Sentiment Index 125.0 +12.0 points
  

• Total Put/Call .82 -5.8%

• NYSE Arms .82 -28.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 75.9 -2.5%
  

• US Energy High-Yield OAS 384.8 -1.7%
• Bloomberg TRACE # Distressed Bonds Traded 420.0 -4.0
  

• European Financial Sector CDS Index 91.5 -3.6% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 313.5 -2.7%
  

• Italian/German 10Y Yld Spread 186.0 basis points -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 126.6 -.18%
  

• Emerging Market CDS Index 250.1 -2.3%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.6 -.2%

• 2-Year Swap Spread 19.25 basis points -1.5 basis points
  

• TED Spread 19.5 basis points +12.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -23.0 -1.25 basis points
  
• MBS  5/10 Treasury Spread 191.0 -4.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 718.0 -1.0 basis point
  
• Avg. Auto ABS OAS 91.0 -1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.0 +.25%
• 3-Month T-Bill Yield 5.24% -8.0 basis points
  

• China Iron Ore Spot 101.4 USD/Metric Tonne +.8%
• Dutch TTF Nat Gas(European benchmark) 24.5 euros/megawatt-hour  -3.7%

• Citi US Economic Surprise Index 22.0 +15.1 points

• Citi Eurozone Economic Surprise Index -46.7 -.7 point

• Citi Emerging Markets Economic Surprise Index 12.6 -1.2 points
• S&P 500 Current Quarter EPS Growth Rate YoY(485 of 500 reporting) -3.0% unch.
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 228.98 +.01:  Growth Rate +2.4% unch., P/E 18.3 +.2
  
• S&P 500 Current Year Estimated Profit Margin 12.24% +1.0 basis point
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(10 of 10 reporting) -2.7% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 200.31 +.28: Growth Rate +31.6% +2.4 percentage points, P/E 34.5 -.1
  
• Bloomberg US Financial Conditions Index -.09 -3.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index -4.63 +10.0 basis points
  
• US Yield Curve -76.5 basis points (2s/10s) -7.0 basis points
• US Atlanta Fed 2Q GDPNow Forecast +1.90% -99.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.71% +6.0 basis points: CPI YoY +4.12% unch.
  
• 10-Year TIPS Spread 2.26 unch.
  
• Highest target rate probability for July 26th FOMC meeting: 54.2%(+4.2 percentage points) chance of 5.25%-5.5%. Highest target rate probability for Sept. 20th meeting: 47.1%(+2.9 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +623 open in Japan 
• China A50 Futures: Indicating +15 open in China

• DAX Futures: Indicating +36 open in Germany

Portfolio:

• Higher:  On gains in my tech/industrial sector longs
  

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

• Market Exposure: Moved to 75% Net Long
  

Bear Radar

Style Underperformer:

• Mid-Cap Value +.5%
  

Sector Underperformers:

• 1) Utilities -.6% 2) Homebuilders -.5% 3) Oil Service -.3%

Stocks Falling on Unusual Volume: 

• BTAI, NEWR, LNTH, HIBB, DOMO and ULTA
  

Stocks With Unusual Put Option Activity:

• 1) SABR 2) ULTA 3) SBGI 4) D 5) SLG
  

Stocks With Most Negative News Mentions:

• 1) TGT 2) BIG 3) TLRY 4) DLO 5) CAN
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +2.0%
  

Sector Outperformers:

• Disk Drives +6.6% 2) Semis +5.6% 3) Networking +3.9%

Stocks Rising on Unusual Volume:

• MRVL, ITOS, RCUS, AI, RNG, CRDO, COHR, LGF/B, MOD, LITE, PATH, WDAY, VICR, IONQ, PLTR, AVGO, ANET, DLR, AMBA, LSCC, F, MPWR, ENTG, CGEM, BAH, MU, SGH, SMCI, PARA, FORM, AMZN, VRT, SNCY, QCOM, ADBE, PLAB, ZUO, AMD, RMBS, VMW, COHU, DLTR, TDC, COST, EQIX and DECK
  

Stocks With Unusual Call Option Activity:

• 1) PSTG 2) MRVL 3) PAGS 4) WDAY 5) ASML

Stocks With Most Positive News Mentions:

• 1) ELEV 2) MRVL 3) MAX 4) RCUS 5) ITOS
  

Charts:

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

Tuesday's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open:

• None of note
  

After the Close: 

• (AMBA)/-.21
• (BOX)/.27
• (HPE)/.48
• (HPQ)/.76
  

Economic Releases 

9:00 am EST

• 1Q House Price Purchase Index. 
• The FHHA House Price Index MoM for March is estimated to rise +.2% versus a +.5% gain in Feb.
• The S&P CoreLogic CS 20-City MoM SA for March is estimated unch. versus a +.06% gain in Feb.

10:00 am EST

• The Conference Board Consumer Confidence Index for May is estimated to fall to 99.3 versus 101.3 in April.
  

10:30 am EST

• The Dallas Fed Manufacturing Activity Index for May is estimated to rise to -18.8 versus -23.4 in April.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Barkin speaking, Eurozone Consumer Confidence report, weekly US retail sales reports, KeyBanc Industrials/Basic Materials Conference and the TD Cowen Oncology Summit could also impact global trading on Tuesday.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Morning Market Internals

NYSE Composite Index:

• NYSE Volume Running -7.2% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 9.5 +1.3
  
• 2 Sectors Declining, 9 Sectors Rising
• 67.3% of Issues Advancing, 28.7% Declining
• 29 New 52-Week Highs, 48 New Lows
• 39.2%(+3.8%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 43.0 +4.0
  
• Bloomberg Global Risk-On/Risk-Off Index 60.0 +4.0%
  
• Russell 1000: Growth/Value 17,230.2 +.58%
• 1-Day Vix 13.8 -16.6%
  
• Vix 17.5 -8.8% 
  
• Total Put/Call .83 -4.6%
• TRIN/Arms .79 -31.3%
  

Friday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 126.75 +.25 basis point. 

• China Sovereign CDS 67.75 -1.5 basis points
  
• China Iron Ore Spot 95.2 USD/Metric Tonne -.5%.

• Bloomberg Emerging Markets Currency Index 46.8 -.04%.
• Bloomberg Global Risk-On/Risk Off Index 59.4 +2.8%. 
• Bloomberg US Financial Conditions Index -.12 -6.0 basis points.
  
• Volatility Index(VIX) futures 20.6 +.9%.
• Euro Stoxx 50 futures +.09%.

• S&P 500 futures -.28%.

• NASDAQ 100 futures -.28%.  

Morning Preview Links

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 50% net long heading into the day.