Morning Market Internals

NYSE Composite Index:

• NYSE Volume Running +29.5% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 4.8 -6.9
  
• 2 Sectors Declining, 9 Sectors Rising
• 40.0% of Issues Advancing, 56.0% Declining
• 115 New 52-Week Highs, 7 New Lows
• 53.7%(+1.5%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 68.0 +2.0
  
• Bloomberg Global Risk-On/Risk-Off Index 63.7 -.2%
  
• Russell 1000: Growth/Value 17,458.0 unch.
• 1-Day Vix 10.8 -28.2%
  
• Vix 14.2 -2.0% 
  
• Total Put/Call .76 -14.6%
• TRIN/Arms .94 +49.2%
  

Friday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 112.75 -.25 basis point. 

• China Sovereign CDS 61.25 +.25 basis point.
  
• China Iron Ore Spot 112.4 USD/Metric Tonne -.86%.

• Bloomberg Emerging Markets Currency Index 45.4 +.15%.
• Bloomberg Global Risk-On/Risk Off Index 64.7 +1.4%. 
• Bloomberg US Financial Conditions Index .09 -1.0 basis point.
  
• Volatility Index(VIX) futures 17.1 +.07%.
• Euro Stoxx 50 futures -.11%.

• S&P 500 futures -.24%%.

• NASDAQ 100 futures -.36%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and healthcare shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 75% net long heading into the day.

Stocks Surging into Close on US Economic "Soft-Landing" Hopes, Fed Pause Expectations, China Stimulus Optimism, Financial/Homebuilding Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 14.4 +3.5%
• DJIA Intraday % Swing 1.58%
  
• Bloomberg Global Risk On/Risk Off Index 63.8 +1.2%

• Euro/Yen Carry Return Index 161.5 +1.3%

• Emerging Markets Currency Volatility(VXY) 9.0 -1.9%

• CBOE S&P 500 Implied Correlation Index 19.4 +1.6% 

• ISE Sentiment Index 130.0 +19.0 points
  

• Total Put/Call .81 -19.8%

• NYSE Arms .63 -41.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 70.3 -.9%
  

• US Energy High-Yield OAS 373.49 -.58%
• Bloomberg TRACE # Distressed Bonds Traded 403.0 -1.0
  

• European Financial Sector CDS Index 90.21 +.57% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 295.3 +1.7%
  

• Italian/German 10Y Yld Spread 163.0 basis points -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 113.12 +.23%
  

• Emerging Market CDS Index 214.57 +.29%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.1 -.3%

• 2-Year Swap Spread 21.5 basis points +.5 basis point
  

• TED Spread 32.75 basis points +1.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -18.5 +1.75 basis points
  
• MBS  5/10 Treasury Spread 157.0 -7.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 731.0 +2.0 basis points
  
• Avg. Auto ABS OAS 85.0 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 45.3 +.16%
• 3-Month T-Bill Yield 5.20% -2.0 basis points
  

• China Iron Ore Spot 112.0 USD/Metric Tonne -1.2%
• Dutch TTF Nat Gas(European benchmark) 41.1 euros/megawatt-hour  +7.4%

• Citi US Economic Surprise Index 18.2 -1.3 points

• Citi Eurozone Economic Surprise Index -91.3 -.1 point

• Citi Emerging Markets Economic Surprise Index 7.1 -2.9 points
• S&P 500 Current Quarter EPS Growth Rate YoY(500 of 500 reporting) -3.6% -.9 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 230.50 unch.:  Growth Rate +3.1% unch., P/E 19.1 +.1
  
• S&P 500 Current Year Estimated Profit Margin 12.23% -1.0 basis point
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(10 of 10 reporting) -2.9% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 207.93 +.24: Growth Rate +36.8% +.2 percentage point, P/E 37.5 +.4
  
• Bloomberg US Financial Conditions Index .09 -2.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index -4.03 +7.0 basis points
  
• US Yield Curve -91.5 basis points (2s/10s) +1.0 basis point
• US Atlanta Fed 2Q GDPNow Forecast +1.77% -43.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.70% unch.: CPI YoY +3.22% unch.
  
• 10-Year TIPS Spread 2.22 unch.
  
• Highest target rate probability for Sept. 20th FOMC meeting: 62.2%(+4.6 percentage points) chance of 5.25%-5.5%. Highest target rate probability for  Nov. 1st meeting: 60.4%(+5.3 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +95 open in Japan 
• China A50 Futures: Indicating +24 open in China

• DAX Futures: Indicating +40 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 75% Net Long
  

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

Earnings of Note 
Company/Estimate 

Before the Open:

• None of note
  

After the Close: 

• None of note
  

Economic Releases   

8:30 am EST

• NY Fed Services Business Activity for June.
  

10:00 am EST

• Univ. of Mich. Consumer Sentiment for June is estimated to rise to 60.0 versus 59.2 in May.
• Univ. of Mich. 1Y Inflation Expectations for June is estimated to fall to +4.1% versus +4.2% in May.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Fed's Waller speaking and the German CPI report could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Thursday Watch

Evening Headlines

Bloomberg:

• China Needs More Tax Revenue, Risking Backlash From Middle Class.
• Japan’s Exports Weaken Further Amid Global Economic Slowdown.
• Strategists See Resilience in Asia FX, Stocks After Fed.
• Stocks Tread Water After Fed, Before China Data: Markets Wrap.
• Oil Holds Loss on Jump in US Stockpiles, Fed Rate-Hike Signal.
• Powell Says Nearly All Officials Expect ‘Some’ Further Fed Hikes.
• Bond Traders Step Up Bets the Fed Will Steer US Economy Into Recession.
• Biggest Losers of AI Boom Are Knowledge Workers, McKinsey Says.
• AI Proves Mightier Than the Fed for Stocks Divorced From Economy.
• Citigroup’s CFO Warns 1,600 Job Cuts Will Boost Expenses This Quarter.
• NYC’s Rent Surge Defied by New Grads Pursuing a TikTok Lifestyle.
• Harvard Medical Morgue Chief Charged With Selling Body Parts.
• The Bubble Portfolio Is Surging Once Again.
• Fed to Release Banks' Stress Test Results on June 28. 
• Five Things You Need to Know to Start Your Day.

Zero Hedge:

• GOP: Where Did Joe Biden's $10 Million Windfall In 2017 Actually Come From?
• "Don't Call It A Skip" - Fed 'Pause' Prompts Wild Swings Across All Assets
• Federal Agencies Routinely Spy On Phone Calls, Texts, Emails Of American Citizens, Experts Say.
• "They Expect To Imprison You": GOP Lawmaker Warns Trump Supporters Against 'DOJ Trap'.
• Watchdog Observes Lack Of Oversight, Says 'Increased Risk' US Arms Could Be Lost En Route To Ukraine.
• Amazon Locks Man Out Of Smart Home Devices Over False Racism Claims.
• A Quiet Revolution Is Unfolding Against 'Woke' Corporate America - Here's The Strategy Behind It.
• Middle School Students Stage Rebellion Against LGBTQ Indoctrination.
• Life after FOMC.
• New Truck Sales Are Robust – But There's Still A Trucking Bloodbath.
• China Rebukes US In Phone Call Ahead Of Blinken's Arrival In Beijing Sunday.
• "Biden Bucks" And The War On Crypto.
• CIA Knew Ukraine Was Planning To Bomb Nord Stream Pipelines: Report.
• US stocks finished mixed post-FOMC after the hawkish reaction to the Fed's dot plots unwound at Powell's presser - Newsquawk Asia-Pac Market Open.
• Asian Central Banks To Adopt Iran's SWIFT Alternative As De-Dollarization Accelerates.
• Federal Agencies Admit To $3 Trillion In Improper Payments Since 2004.
• Markets recover after Powell distances himself from hawkish dot plot - Newsquawk US Market Wrap.
• Trump's Boxes And Clinton's Sock Drawer.

Wall Street Journal:

• Biden’s March to State Capitalism. The message being sent to John Q. Public is clear: You now work for us, the government.
• Fed Holds Rates Steady but Expects More Increases.
  
• Most officials penciled in two more rate increases this year.
• Capital Account | Market to Fed: You Haven’t Done Enough.
• Bud Light Loses Title as Top-Selling U.S. Beer.
• How Republicans and Big Business Broke Up.
• A Moon of Saturn Has All the Ingredients Needed for Life.
• AI Regulation Is Here. Almost.
• Beef Prices Are High. Here’s Why.

CNBC.com:

• Breaking down the market’s reaction to the Fed’s pause and all of Powell’s key comments.
• ‘Bite of these higher rates is gaining traction almost every day,’ KBW CEO warns.
• France sees global A.I. regulation ideas by end of year, wants to work with U.S.
• Oracle hits record after 50% surge in 2023, defying tech struggles.
• New Zealand enters technical recession after economy shrank 0.1% in the first quarter.
• Nearly all Americans cut back on spending due to inflation, CNBC survey finds.

MarketWatch:

• Why this $6 trillion pile of cash isn’t heading for stocks any time soon.
• 5 key takeaways from Fed Chair Jerome Powell’s press conference Wednesday
• Why the stock market shook off a ‘Jekyll and Hyde’ Fed meeting.
• DoubleLine’s Gundlach warns stocks are ‘exhibiting signs of a mania’.
• Cava Group is going public: 5 things to know about the fast-casual Mediterranean restaurant chain.

Newsmax:

• Rep. Gaetz: Preserve, Produce Jack Smith's Records
• Huckabee to Newsmax: People Sick of Trump Persecution
• Horowitz: Dems Have 'Mentality of Gangsters'
• Rep. Moore: Dems Accusing Trump of What They Did
• Sen. Ron Johnson: FBI 'Hiding the Ball' From Congress

Fox News:

• Kennedy sends clear message to DOJ and FBI as Biden bribery allegations swirl.

TheGatewayPundit.com:

• Trump Campaign Has Raised Over $7 Million Since Indictment News Broke.
• WATCH: GOP Congressman Stuns Woke Chief “Diversity” Officer After Asking Her a Question About His Ethnicity.
• AWFUL: 20 Republicans Vote with Democrats – Refuse to Censure Serial Liar Adam Schiff – Resolution Fails in House… UPDATE: Here is the List of RINOs Who Voted with Democrats.
• SoCal: Orange County Bans Pride Flags From Being Flown on County Properties.
• New Information on Jan 6 Bomber: Former FBI DC FBI Field Office Chief Says Data Used to Identify ‘Bomber’ Was Conveniently Corrupted – Blames Service Provider.
• WaPo Reporter and Karine Jean-Pierre Team Up to Bash Fox News for Running Chyron That Referred to Biden as “Wannabe Dictator” (VIDEO).
• All-Muslim Michigan City Council Bans “Pride” Flag Displays on Government Property With Passage of Flag Neutrality Resolution.
• Mike Pence Is Done – Says He Will Not Commit to Pardoning President Trump if the Biden Regime Jails Him (Video).
• In First Month in Office Crime Jumps 38% Under New Chicago Mayor Johnson.
• China Publishes Command and Conquer Red Alert Video – While America Promotes Trans Members for Pride Month.
• Tucker Carlson: “Trump Is the One Guy – Who Dissents from Washignton’s Long-Standing Pointless War Agenda. For That They Are Trying to Take Him Out”.

The Epoch Times:

• US Should Brace for ‘Aggressive’ Sabotage From Chinese Hackers, Top Cybersecurity Official Says.
  

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 964,389 Reports(+1,106 from prior week) Through June 2nd, 2023.

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.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 112.75 -.25 basis point. 

• China Sovereign CDS 61.25 +.25 basis point.
  
• China Iron Ore Spot 113.0 USD/Metric Tonne +.5%.

• Bloomberg Emerging Markets Currency Index 45.2 +.01%.
• Bloomberg Global Risk-On/Risk Off Index 63.7 +1.0%. 
• Bloomberg US Financial Conditions Index .10 -2.0 basis points.
  
• Volatility Index(VIX) futures 16.6 +.18%.
• Euro Stoxx 50 futures -.14%.

• S&P 500 futures +.02%.

• NASDAQ 100 futures +.03%.  

Morning Preview Links

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

Stocks Finish Slightly Higher on Fed Pause, Loosening US Financial Conditions, FANG+ Stock Frenzy, Tech/Transport Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 14.5 -.7%
• DJIA Intraday % Swing 1.09%
  
• Bloomberg Global Risk On/Risk Off Index 62.4 +.6%

• Euro/Yen Carry Return Index 159.1 +.1%

• Emerging Markets Currency Volatility(VXY) 9.3 -.64%

• CBOE S&P 500 Implied Correlation Index 20.0 -2.3% 

• ISE Sentiment Index 111.0 -24.0 points
  

• Total Put/Call .75 -5.1%

• NYSE Arms 1.07 +72.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 70.7 +.68%
  

• US Energy High-Yield OAS 376.71 +.79%
• Bloomberg TRACE # Distressed Bonds Traded 404.0 -15.0
  

• European Financial Sector CDS Index 89.67 +1.1% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 290.25 +.89%
  

• Italian/German 10Y Yld Spread 164.0 basis points +1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 112.4 -.84%
  

• Emerging Market CDS Index 213.9 -.18%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.6 +.85%

• 2-Year Swap Spread 21.0 basis points +.75 basis point
  

• TED Spread 31.5 basis points -2.75 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -20.25 -2.75 basis points
  
• MBS  5/10 Treasury Spread 164.0 +6.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 729.0 -2.0 basis points
  
• Avg. Auto ABS OAS 84.0 -1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 45.23 +.31%
• 3-Month T-Bill Yield 5.22% +1.0 basis point
  

• China Iron Ore Spot 111.2 USD/Metric Tonne -.4%
• Dutch TTF Nat Gas(European benchmark) 38.3 euros/megawatt-hour  +6.2%

• Citi US Economic Surprise Index 19.5 +.8 point

• Citi Eurozone Economic Surprise Index -91.2 -1.4 points

• Citi Emerging Markets Economic Surprise Index 10.0 -.1 point
• S&P 500 Current Quarter EPS Growth Rate YoY(499 of 500 reporting) -2.7% unch.
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 230.50 -.09:  Growth Rate +3.1% unch., P/E 19.0 +.1
  
• S&P 500 Current Year Estimated Profit Margin 12.24% unch.
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(10 of 10 reporting) -2.7% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 207.93 +.19: Growth Rate +36.6% +.1 percentage point, P/E 37.1 +.2
  
• Bloomberg US Financial Conditions Index .14 +10.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index -4.10 +7.0 basis points
  
• US Yield Curve -92.5 basis points (2s/10s) -6.0 basis points
• US Atlanta Fed 2Q GDPNow Forecast +2.20% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.70% unch.: CPI YoY +3.22% unch.
  
• 10-Year TIPS Spread 2.22 +1.0 basis point
  
• Highest target rate probability for Sept. 20th FOMC meeting: 57.6%(-.7 percentage point) chance of 5.25%-5.5%. Highest target rate probability for  Nov. 1st meeting: 54.2%(+4.3 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +28 open in Japan 
• China A50 Futures: Indicating +49 open in China

• DAX Futures: Indicating -23 open in Germany

Portfolio:

• Higher:  On gains in my tech/medical sector longs and index hedges
  

• Disclosed Trades:  Added to my (IWM)/(QQQ) hedges, then covered some
  

• Market Exposure: 50% Net Long