Stocks Rising into Close on Earnings Outlook Optimism, More Dovish Fed Hopes, AI Stock Frenzy, Tech/Financial Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 13.5 +.15%
• DJIA Intraday % Swing 1.32%
  
• Bloomberg Global Risk On/Risk Off Index 63.7 -1.8%

• Euro/Yen Carry Return Index 164.5 +.08%

• Emerging Markets Currency Volatility(VXY) 8.5 +1.6%

• CBOE S&P 500 Implied Correlation Index 15.7 -5.4% 

• ISE Sentiment Index 116.0 -13.0 points
  

• Total Put/Call .75 -10.7%

• NYSE Arms 1.0 -9.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 65.1 -1.8%
  

• US Energy High-Yield OAS 340.2 -2.6%
• Bloomberg TRACE # Distressed Bonds Traded 397.0 +7.0
  

• European Financial Sector CDS Index 80.1 -2.1% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 266.8 -1.1%
  

• Italian/German 10Y Yld Spread 163.0 basis points -4.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 109.8 -1.1%
  

• Emerging Market CDS Index 202.5 -1.1%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.8 -.62%

• 2-Year Swap Spread 21.75 basis points unch.
  

• TED Spread 19.75 basis points -2.0 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -12.75 unch.
  
• MBS  5/10 Treasury Spread 160.0 -2.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 715.0 unch.
  
• Avg. Auto ABS OAS 78.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 43.5 -.65%
• 3-Month T-Bill Yield 5.38% unch.
  

• China Iron Ore Spot 113.6 USD/Metric Tonne -.12%
• Dutch TTF Nat Gas(European benchmark) 27.1 euros/megawatt-hour  +7.8%

• Citi US Economic Surprise Index 68.4 -6.4 points

• Citi Eurozone Economic Surprise Index -128.0 +1.5 points

• Citi Emerging Markets Economic Surprise Index -9.2 +1.0 point
• S&P 500 Current Quarter EPS Growth Rate YoY(36 of 500 reporting) +11.0% -1.7 percentage points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 231.50 +.17:  Growth Rate +3.5% unch., P/E 19.6 +.1
  
• S&P 500 Current Year Estimated Profit Margin 12.18% +1.0 basis point
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 216.97 +.10: Growth Rate +42.6% +.1 percentage point, P/E 37.5 +.3
  
• Bloomberg US Financial Conditions Index .42 unch.
  
• Bloomberg Euro-Zone Financial Conditions Index -4.32 -10.0 basis points
  
• US Yield Curve -97.25 basis points (2s/10s) -3.75 basis points
  
• US Atlanta Fed 2Q GDPNow Forecast +2.39% +10.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.19% unch.: CPI YoY +3.36% +1.0 basis point
  
• 10-Year TIPS Spread 2.23 -3.0 basis points
  
• Highest target rate probability for Sept. 20th FOMC meeting: 84.1%(-.4 percentage point) chance of 5.25%-5.5%. Highest target rate probability for  Nov. 1st meeting: 64.9%(-5.2 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +332 open in Japan 
• China A50 Futures: Indicating -70 open in China

• DAX Futures: Indicating +120 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 100% Net Long
  

Bear Radar

Style Underperformer:

• Mid-Cap Growth +.5%
  

Sector Underperformers:

• 1) Utilities -1.2% 2) REITs -.8% 3) Medical Equipment -.5%

Stocks Falling on Unusual Volume: 

• CCCS, BILI, MASI and APLS
  

Stocks With Unusual Put Option Activity:

• 1) APLS 2) MLCO 3) RRC 4) SBLK 5) BALL
  

Stocks With Most Negative News Mentions:

• 1) MASI 2) ABOS 3) FUTU 4) NMTR 5) APLS
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +1.4%
  

Sector Outperformers:

• Regional Banks +3.8% 2) Software +3.4% 3) Oil Service +2.5%

Stocks Rising on Unusual Volume:

• INOD, SCHW, CABA, BBIO, DO, AHCO, AMPH, AMRC, MS, IMVT, NE, ARCB, VITL, MSFT, AVDX, MDB, GENK, RIVN, UBER, PINS, SPWR, BAC, BK, DRQ, SAIA, UCBI, UNH and ENVX
  

Stocks With Unusual Call Option Activity:

• 1) DM 2) CFG 3) APLS 4) LMT 5) MS

Stocks With Most Positive News Mentions:

• 1) UNH 2) BAC 3) SAIA 4) BBIO 5) ATRO
  

Charts:

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

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

Earnings of Note 
Company/Estimate 

Before the Open:

• (ALLY)/.93
• (ASML)/5.10
• (BKR)/.33
• (GS)/3.16
• (HAL)/.75
• (MTB)/4.16
• (NDAQ)/.66
• (NTRS)/1.62
• (USB)/1.05

After the Close: 

• (AA)/-.49
• (CCI)/2.02
• (DFS)/3.67
• (EFX)/1.68
• (IBM)/2.01
• (KMI)/.24
• (LVS)/.44
• (MRTN)/.29
• (NFLX)/2.85
• (SLG)/1.34
• (STLD)/4.78
• (TSLA)/.80
• (UAL)/4.04
• (WTFC)/2.38
• (ZION)/1.08
  

Economic Releases  

8:30 am EST

• Housing Starts for June is estimated to fall to 1480K versus 1631K in May.
• Building Permits for June is estimated to rise to 1500K versus 1496K in May.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,368,600 barrels versus a +5,946,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -897,200 barrels versus a -4,000 barrel decline the prior week. Distillate inventories are estimated to rise by +584,800 barrels versus a +4,815,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.12% versus a +2.6% gain prior.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The UK CPI report, 20Y T-Bond auction and the weekly MBA Mortgage Applications report could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• NYSE Volume Running +5.8% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 9.2 -.8
  
• 4 Sectors Declining, 7 Sectors Rising
• 69.0% of Issues Advancing, 29.0% Declining
• 161 New 52-Week Highs, 7 New Lows
• 58.4%(+3.6%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 66.0 +2.0
  
• Bloomberg Global Risk-On/Risk-Off Index 63.6 -2.2%
  
• Russell 1000: Growth/Value 17,782.4 -.03%
• 1-Day Vix 8.3 -14.4%
  
• Vix 13.5 unch. 
  
• Total Put/Call .79 -6.0%
• TRIN/Arms .87 -20.9%
  

Tuesday Watch

Evening Headlines

Bloomberg:

• US Limits on China Tech Investment to Be Narrow and Slow.
• Yellen Says China Slowdown Risks Spillovers But No US Recession.
• Wall Street Cuts China Growth Forecasts as Economy Disappoints.
• Biden Deploys Pentagon to Beat Climate Change and China.
• Asia Shares Mixed Amid Lingering China Concerns: Markets Wrap. 
• Oil Drops as Libya’s Production Returns, China’s GDP Disappoints.
• Shale Oil Production in US Set to Decline From July Peak, EIA Says.
• Massive US Oil Caverns Sit Empty and Will Take Years to Refill.
• More Americans Are Getting Turned Down for Loans, Fed Data Shows.
• US Homeowners Are Tapping $9 Trillion in Real Estate Wealth.
• Meta Faces Weight Cut in Nasdaq 100’s Special Rebalance.
• No Testing, No Inspections: Contaminated Eyedrops Blinded and Killed Americans.

Zero Hedge:

• Affordable Diabetes Drug Reduces Long-COVID Risk By 41 Percent: Study
• Two Charts Show Consumers Worldwide Demand Teslas
• Biden Admin Touts "Moral Authority" Untarnished As Media Highlights Cluster Bombs Are Indiscriminate Killers.
• Kari Lake Files New Election Appeal To The Arizona Supreme Court.
• "Implied Bid" defies overbought markets.
• Trump Tells Packed House: Giving Up 'Easy' Life Was Worth It.
• China, Russia Hold Major Naval Drills Mirroring Recent US-Japan Activity.
• Homeless RV Sewage Is Going Into The Ocean In Southern California.
• BofA And Others Share Records With FBI Without A Warrant "All The Time", Director Wray Admits.
• US stocks were led higher by small caps after NY Fed Manufacturing softened the blow from Chinese GDP data - Newsquawk Asia-Pac Market Open.
• As 'Threads' Continues To Face-Plant, House Judiciary Demands Answers Over Censorship.
• The Coming Crisis Of Cities: Reinvention Or Bankruptcy.
• Bloomberg 'Sound Of Freedom' Hit Piece Written By Pro-Pedo Contributor.
• Stocks rally with US mfg. data softening the blow from disappointing China GDP - Newsquawk US Market Wrap.
• Cotton: Secret Service Didn't Even Talk To Hunter Biden About White House Cocaine.
• The 11 Trillion Dollar Question Behind The "Magnificent Seven".
• A Crisis Of Bad Faith & Sickness: "What Will Happen When Fear Turns To Anger?".
• Stocks Soar, Shrug Off China Chunder; Seth Klarman Warns "I'd Be Worried".

Wall Street Journal:

• Big Banks’ Earnings Have Bad News for Smaller Banks.
• Russia Seizes Assets of Two Western Conglomerates.
• AT&T’s Stock Closes at Lowest Level Since 1993.
• Traveling by Bus Is No Longer a Plan B for Many Americans.
• Empty Government Buildings Galore. Not one major federal agency has in-office attendance above 50%.
• Europeans Are Becoming Poorer. ‘Yes, We’re All Worse Off.’.
• Peacock Becomes Latest Streaming Service to Raise Prices.
• Millions Are Under Air-Quality Alerts Again. 

CNBC.com:

• Russia axes landmark Ukraine grain deal just hours before deadline.
• The war against inflation is a long way away from being won.
• FDA approves AstraZeneca, Sanofi shot that protects infants and toddlers against RSV.

MarketWatch:

• Nvidia’s stock could have a pathway to $600, Citi says.
• Oddity Tech is going public: 5 things to know about the Israeli digital beauty company
• Apple has a juicy $40 billion opportunity ahead of it
• Meta is still at the ‘early stages’ of many catalysts, analyst says.
• Nvidia’s stock could have a pathway to $600, Citi says.  
• Commercial real estate prices are still expected to crater, Morgan Stanley warns. 
• Investors start to fret that China, Europe may drag U.S. economy down with them.

Newsmax:

• Trump: 1st-Term Mistakes With Some Cabinet Picks.
• Donor Pulls Funds to ASU Over 'Left-Wing Hostility'.

Fox News:

• Documents reveal ex-NIH director is still protected on taxpayer dime.
• Former FBI agent reportedly confirms key Hunter Biden whistleblower details, GOP says.

TheGatewayPundit.com:

• Canadian Prime Minister Justin Trudeau Loudly Booed at North American Indigenous Games (VIDEO).
• Dan Bongino: Secret Service Agents Are ‘Absolutely Furious’ Over Sham Cocaine Investigation… “They Know Exactly Who It Was” (VIDEO).
• Barack Obama – Who Pushed for Sex Education in Kindergarten – Is Very Sad Porn Books for Children are Being Banned in Several US Schools.
• The Musk-Zuck App War: Threads Reaches 150 Million Users, Accused of Censoring Americans and Spying on Them.
• Victor Reacts: Disney Replaces Dwarves With Diverse “Magical Creatures” in Woke New Snow White Movie (VIDEO).
• First Korean Transgender Athlete Wins Women’s Cycling Competition and Delivers a Shocking Message to the World.
• Billionaire Democrat Funder and Guest to Epstein Island and Epstein Townhouse Donates Nearly $700,000 to Joe Biden’s Campaign.
• The Spectre of Michelle Obama — Roger Stone Lays Out Frightening Scenario While Speaking to Turning Point USA.
• Sound of Freedom Projecting $85 Million Cumulative Box Office After Two Weekends – Expected to Hit $100 Million This Week.

The Epoch Times:

• ANALYSIS: China’s Economy Is Facing Its Biggest Challenge in Decades ANALYSIS:
• Social Control Can’t Halt CCP’s Downfall When China’s Economic Failure Takes Toll: Analysts.

Twitter: 

• @backtolife_2023 - From Contact Tracing To Carbon Footprint Tracking: WEF’s Carrot Or Stick Approach To COVID & Climate Policy With digital ID and CBDC, it would be easy to turn carbon footprint measurement into enforcement under a social credit system.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 969,243 Reports(+2,348 from prior week) Through June 30th, 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 -.25% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 110.0 -1.25 basis points. 

• China Sovereign CDS 61.5 unch.
  
• China Iron Ore Spot 113.3 USD/Metric Tonne +.7%.

• Bloomberg Emerging Markets Currency Index 43.8 +.03%.
• Bloomberg Global Risk-On/Risk Off Index 65.4 +.6%. 
• Bloomberg US Financial Conditions Index .36 -6.0 basis points.
  
• Volatility Index(VIX) futures 15.8 +.3%.
• Euro Stoxx 50 futures +.14%.

• S&P 500 futures -.08%.

• NASDAQ 100 futures -.16%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly lower, weighed down by financial and commodity 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.