Stocks Higher into Final Hour on Diminished Mid-East Regional War Fears, Stable Long-Term Rates, Earnings Outlook Optimism, Transport/Financial Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 19.8 -6.8%
• DJIA Intraday % Swing .80% -43.5%
  
• Bloomberg Global Risk On/Risk Off Index 63.2 +2.0%

• Euro/Yen Carry Return Index 168.8 +.08%

• Emerging Markets Currency Volatility(VXY) 8.22 -.72%

• CBOE S&P 500 Implied Correlation Index 32.2 -7.1% 

• ISE Sentiment Index 106.0 +23.0
  

• Total Put/Call .90 -26.8%

• NYSE Arms 1.06 -25.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 80.65 -.37%
  

• US Energy High-Yield OAS 370.30 -1.4%
• Bloomberg TRACE # Distressed Bonds Traded 365 +19
  

• European Financial Sector CDS Index 101.40 -.86% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 293.19 -.16%
  

• Italian/German 10Y Yld Spread 192.0 basis points -5.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 138.7 +.43%
  

• Emerging Market CDS Index 233.0 -2.7%
• Israel Sovereign CDS 142.34 -1.4%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.59 +.16%

• 2-Year SOFR Swap Spread -12.25 basis points -.75 basis point
  

• TED Spread 19.75 basis points -.5 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -25.75 -.25 basis point
  
• MBS  5/10 Treasury Spread 185.0 -2.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 921.0 -5.0 basis points
  
• Avg. Auto ABS OAS 96.0 +3.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.33 +.21%
• 3-Month T-Bill Yield 5.46% +1.0 basis point
  

• China Iron Ore Spot 120.9 USD/Metric Tonne -.63%
• Dutch TTF Nat Gas(European benchmark) 50.5 euros/megawatt-hour unch.

• Citi US Economic Surprise Index 61.4 +2.3 points

• Citi Eurozone Economic Surprise Index -41.6 +3.5 points

• Citi Emerging Markets Economic Surprise Index 26.1 -.3 point
• S&P 500 Current Quarter EPS Growth Rate YoY(252 of 500 reporting) +5.7% -.1 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 240.54 +.39:  Growth Rate +9.4% +.2 percentage point, P/E 17.3 unch.
  
• S&P 500 Current Year Estimated Profit Margin 12.15% +4.0 basis points
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(6 of 10 reporting) +51.9% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 272.13 +2.26: Growth Rate +60.5% +1.3 percentage points, P/E 26.7 unch.
  
• Bloomberg US Financial Conditions Index -.21 +9.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index -.12 -1.0 basis point
  
• US Yield Curve -16.75 basis points (2s/10s) +.25 basis point
  
• US Atlanta Fed 3Q GDPNow Forecast +2.26% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.63% unch.: CPI YoY +3.32% unch.
  
• 10-Year TIPS Spread 2.43 unch.
  
• Highest target rate probability for Dec. 13th FOMC meeting: 74.1%(-5.0 percentage points) chance of 5.25%-5.5%. Highest target rate probability for Jan. 31st meeting: 66.6%(-2.9 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -61 open in Japan 
• China A50 Futures: Indicating +31 open in China

• DAX Futures: Indicating +109 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 50% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Growth -.1%
  

Sector Underperformers:

• 1) Networking -3.5% 2) Semis -1.7% 3) Alt Energy -1.6%

Stocks Falling on Unusual Volume: 

• ILMN, MT, RGEN, WAT, PEAK, IFF, ALGN, TNP, SLAB, BRKR, LSCC, ALB, STM, PRVA, TECH, ENPH, O, FSLR, NXPI, DAN, ACMR, STVN, FNV, SAVE, SAVA, GDHG, ACLS, RVTY, ON and AEHR
  

Stocks With Unusual Put Option Activity:

• 1) ZI 2) BMBL 3) IGT 4) O 5) ASHR
  

Stocks With Most Negative News Mentions:

• 1) RVTY 2) ON 3) NSSC 4) FTCH 5) EVA
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.8%
  

Sector Outperformers:

• 1) Road & Rail +1.9% 2) Restaurants +1.3% 3) Insurance +1.3%

Stocks Rising on Unusual Volume:

• DAWN, DCPH, XPO, LITE, NRDS, SRC, GTLS, WDC, SAIA and TDOC
  

Stocks With Unusual Call Option Activity:

• 1) COMM 2) ETRN 3) ON 4) NU 5) SLM

Stocks With Most Positive News Mentions:

• 1) MCD 2) JKS 3) CHRS 4) XPO 5) DQ
  

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:

• (AGCO)/3.31
• (AMGN)/4.68
• (CCJ)/-.07
• (CAT)/4.80
• (ETN)/2.34
• (BEN)/.59
• (GPN)/2.71
• (IGT)/.44
• (JBLU)/-.25
• (LGIH)/2.18
• (MPC)/7.75
• (PFE)/-.08
• (RGEN)/.16
• (SFM)/.62
• (SYY)/1.04

After the Close: 

• (AMD)/.68
• (CZR)/.29
• (CHK)/.55
• (CGNX)/.14
• (EQR)/.97
• (FSLR)/2.05
• (LTHM)/.48
• (MTCH)/.53
• (MTH)/5.12
• (NE)/.81
• (UNM)/1.92
• (YUMC)/.66
  

Economic Releases

8:30 am EST

• The Employment Cost Index for 3Q is estimated to rise +1.0% versus a +1.0% gain in 2Q.
  

9:00 am EST

• The FHFA House Price Index MoM for Aug. is estimated to rise +.5% versus a +.8% gain in July.
• The S&P CoreLogic CS 20-City MoM SA for Aug. is estimated to rise +.75% versus a +.87% gain in July.

9:45 am EST

• The MNI Chicago PMI for Oct. is estimated to rise to 45.0 versus 44.1 in Sept.

10:00 am EST

• Conference Board Consumer Confidence for Oct. is estimated to fall to 100.5 versus 103.0 in Sept.

10:30 am EST

• The Dallas Fed Services Activity Index for Oct.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The weekly US retail sales reports could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Morning Market Internals

NYSE Composite Index:

• NYSE Volume Running -4.2% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 8.1 +.5
  
• 4 Sectors Declining, 7 Sectors Rising
• 61.2% of Issues Advancing, 36.2% Declining
• 13 New 52-Week Highs, 177 New Lows
• 25.0%(+5.0%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 33.0 +2.0
  
• Bloomberg Global Risk-On/Risk-Off Index 62.8 +1.5%
  
• Russell 1000: Growth/Value 18,027.6 +.67%
  
• 1-Day Vix 14.0 -32.8%
  
• Vix 20.3 -4.4%
  
• Total Put/Call .93 -24.4%
• TRIN/Arms 1.20 -15.5%
  

Monday Watch

Today's Headlines

Bloomberg:

• Risk of Israel-Hamas War Spillover Remains Elevated, US Says. 
• Israel-Hamas War Escalation Puts Qatar’s Clout to the Test.
• Israel Deepens a War With Hamas That Has No End in Sight. 
• How This Israel-Hamas Conflict Is Like Nothing That’s Happened Before. 
• China’s Government Debt Supply Surges in October to 2023 High.
• Germany Eyes Imports of Nigerian Natural Gas in Scholz Visit.
• House Prices Are Falling in Most Parts of the UK, Zoopla Says.
• Oil, Bonds Fall as Investors Temper Mideast Bets: Markets Wrap.
• Oil and Gas Markets Eye Escalation Risk as Gaza War Deepens.
• The Big Bond Market Event Wednesday Is at Treasury, Not the Fed. 
• Fed to Weigh How Much Fuel Consumers Have Left After Rate Hikes.
• Stock Traders Face Pivotal Week as Apple Steals Fed Spotlight. 
• 11 Hours With Sam Bankman-Fried: Inside the Bahamian Penthouse After FTX’s Fall.
• Hedge Funds Pile Into Uranium Stocks Poised for ‘Dramatic’ Gains.
• Johnson Says He Expects House to Pass Israel Aid Bill This Week. 
• Soaring Neutral Rate to Hurt Treasuries, Nasdaq, Survey Shows.

Zero Hedge:

• March 9, 2022... Will Live In Infamy
• David Hogg Now Blames "White Woman In Suburbs" For Gun Violence
• Breakthrough Study 'Infects' Animals With Human Alzheimer’s Through Microbiome.
• Gold's About To Have Its Day: Jim Grant Warns No One's Prepared For "Higher Yields For Much, Much, Much Longer".
• The Influence Of Influencers Is Rising... Except In China.
• Weekend News Round Up - Newsquawk Asia-Pac Market Open.
• Jack Smith's War On Free Speech: AG Garland Should Rein In His Special Counsel.
• Attacks On US Bases In Syria Continue Unhindered After Pentagon's Friday Airstrikes.
• Cocky Runner Sprints From 172nd To 5th Place After Competing As A Girl.
• Wider War Will Bring Inevitable Attempts At Martial Law In America.
• Watch: Muslim Rioters Storm Airport, Surround Rumored Flight From Israel, In Southern Russia.
• The Specter Of Hyperinflation Looms Over The Economy.
• Mike Wilson: Forget About The Year-End Rally.
• Kendi's Critical Race Theory Is A Failed Marxist Doctrine.
• TME Weekend: Will Powell prevent a “scarytale” ending?
• Visualizing The Key Investment Theme Of Each Decade (1950-Today).
• DOJ Corroborated Information From FBI Source Who Provided Biden Bribery Allegations: Official.
• We Didn't Start The Fire.
• Silence Around Surgical Errors Is Jeopardizing Patients, Experts Say. 
• The Political Risks Of Mandating EVs For Everyone.
• How Migration Flows To Europe And North America Changed.
• Hamas’s October 7 Attack: Discourse In The Age Of Artificial Intelligence.
• White House Freezes Gun Exports In New Attack On US Gun Manufacturers.
• COVID-19 mRNA Vaccines Reduce A Major Beneficial Bacteria, Gut Biodiversity: Research.
• Advice For Men From TV's 'Hercules': Bring Back Masculinity.
• Warnings About Alarming Pre-Oct 7 Hamas Activity Ignored, Say Israeli Surveillance Soldiers.
• Senator Demands Answers From FDA On Safety Signal For COVID Vaccines And Children.

Wall Street Journal:

• Saving More in 401(k) Can Boost Your College Financial Aid.
• The Hunt for Crypto’s Most Famous Fugitive. ‘Everyone Is Looking for Me.’
• Israeli Ground Operation Pushes Deeper Into Gaza.
• Antisemitic Comments Increase Across Chinese Social Media.
• Iran’s Fellow Traveler in Mexico City. President López Obrador seems to be playing footsie with Iranian allies.
• Americans Can’t Stop Spending. Five Reasons Why.
• ‘Buy the Dip’ Investing Mantra Lives On in Bond Market.
• Hedge Fund Two Sigma Is Hit by Trading Scandal.
• Alaska Fishermen Struggle as Rules to Save King Salmon Limit Their Catch.
• Insurers Spar With Administration Over Coverage for Mental-Health Care.
• Thanks to Big Data, Landlords Can Squeeze the Most Out of Renters.

CNBC:

• UAW in tentative deal to end labor strike with Stellantis but expands its strike at General Motors.
• Panera now displaying warning about its caffeinated lemonade in all stores after lawsuit over customer’s death.

MarketWatch.com:

• How to ride out the ‘fear cycle’ in a spooky week ahead after U.S. stocks slip into correction.
• Big Tech earnings have been strong, but Apple is about to answer the thousand-dollar question.
• Opinion: Robo-taxis remain a pipe dream and greedy companies have only themselves to blame.
• A major source of liquidity for buying U.S. government debt is draining. Here’s why that’s bad news for the Fed and the market.
• Here’s how a government shutdown in November would likely impact stocks.

NewsMax:

• IDF Strikes Lebanon as Rockets Pummel Central Israel.
• Israeli Tanks Deep Into Gaza as Jets Hit Hundreds of Targets.
• Sullivan: US Asking Israel 'Hard Questions' on Gaza Operation.
• DeSantis: Biden 'Letting Iran Take Potshots' at US Troops.
• Rep. Hageman: Biden's Actions Helping Fund Iran.  
• DeSantis: There's 'Sickness on These College Campuses'.
• Speaker Johnson: Standalone Bill For Israel Likely This Week.

 Fox News:

• 'Squad' member issues stark warning to Biden regarding stance on Israel war.
• Treasury just dropped a financial bomb, but Bidenomics means the worst is yet to come.
• Experts reveal the worst beverages for your health — and they're not all alcoholic.

TheGatewayPundit.com:

• Strategist James Carville Claims Top Democrats Are Telling Him to Shut Up About Biden’s Dismal Polling Numbers.
• “I’m Ashamed of the UN – Let’s Get Out” – Czech Defense Minister Jana Černochová Calls on Czech Republic to Exit UN After Rogue Regimes Cheer Hamas Following Slaughter of 1,400 Jewish Civilians
• Newsom Plows Over Small Child Then Spanks Him During Basketball Game in China (VIDEO)
• TERRIFYING VIDEOS: Muslim Lynch Mob Searches for Jews at Russian Airport in Dagestan; Storms Concourse and Tarmac, Tries to Search Planes After Rumor of Flight From Israel.
• Gun Sales Spike 200% in Maine After Tragic Mass Shooting.
• THOUSANDS of Palestinians Loot UN Warehouses in Gaza – UN Official Warns of “Civil Order Starting to Break Down” (VIDEO).
• At Least 18 Injured and 2 Dead in Shooting Incident During Halloween Celebration in Tampa, Florida.
• Michelle Obama Looks Disheveled in ‘Get Out the Vote’ Pitch Amid Rumors of Possible Presidential Bid.
• Canada’s Trudeau the Latest Leader to Backtrack and Delay on Climate Alarmist Policies – Rolls Back Home Heating Oil Carbon Tax for 3 Years.
• ‘It’s Not a Yes or No Question” – Crazed UMass Professor Rachel Weber Refuses to Say Hamas Slaughter of 1,400 Civilian Jews was a Terrorist Act (VIDEO).
• ‘Overcharged’: Major Study Reveals Alarming True Cost of Owning an EV, ‘Fueling’ Equal to $17.33 Per Gallon.
• Muslims Wave ISIS and Taliban Flags at Anti-Israel Protest in Hamburg, Germany.
• Engineering the Sky – The Great Climate Change Lie.
• AbleChild Founder Sheila Matthews on War Room: Psychology Industrial Complex Behind School Shootings (VIDEO).
• Mathew Perry’s Post Promoting “Could I Be Any More Vaccinated” Shirt Resurfaces After Star’s Death.
• New FDA Findings Reveal COVID-19 Shots Pose Stroke Risk in Older Adults When Combined with Certain Flu Shots – Just as the Biden Admin Was Promoting. 
• Sam Bankman-Fried Finally Deposes in His Defense, Gets Scolded by the Judge – Will Face Brutal Cross-Examination and Mysterious Rebuttal Witness.
• RED PILLED: Left Wing ‘Young Turks’ Co-Host Blasts Destructive Progressive Policies in California: ‘No One is Safe, Everyone’s Angry’ (VIDEO).

The Epoch Times:

• Chinese Ex-Premier's Sudden Deaths Adds to Leadership Turbulence: Analysts.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 988,705 Reports(+1,488 from prior week) Through September 29th, 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 indices are -1.0% to unch. on average.
• Asia Ex-Japan Investment Grade CDS Index 138.75 unch.
  
• China Sovereign CDS 84.0 -.25 basis point.
• China Iron Ore Spot 119.7 USD/Metric Tonne +.03%.
  
• Bloomberg Emerging Markets Currency Index 41.25 +.02%.
• Bloomberg Global Risk-On/Risk Off Index 62.6 +1.2%.
• Bloomberg US Financial Conditions Index -.30 -1.0 basis point. 
  
• Volatility Index(VIX) futures 20.9 -1.6%. 
• Euro Stoxx 50 futures -.22%.
• S&P 500 futures +.34%.
• NASDAQ 100 futures +.49%.

Morning Preview Links

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