Friday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 106.75 +.25 basis point.

• China Sovereign CDS 65.25 -.25 basis point.
  
• China Iron Ore Spot 130.3 USD/Metric Tonne -.5%.

• Bloomberg Emerging Markets Currency Index 41.8 -.03%.
• Bloomberg Global Risk-On/Risk Off Index 66.9 +1.3%
  
• Bloomberg US Financial Conditions Index .29 -1.0 basis point.
  
• Volatility Index(VIX) futures 15.2 +.4%.
• Euro Stoxx 50 futures +.39%.

• S&P 500 futures +.08%.

• NASDAQ 100 futures -.03%.  

Morning Preview Links

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

Stocks Slightly Lower into Final Hour on US Policy-Induced Stagflation Fears, Earnings Outlook Worries, Technical Selling, Retail/Energy Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 14.1 -.71%
• DJIA Intraday % Swing .57% +53.7%
  
• Bloomberg Global Risk On/Risk Off Index 65.8 -3.5%

• Euro/Yen Carry Return Index 174.9 -.4%

• Emerging Markets Currency Volatility(VXY) 7.76 +.91%

• CBOE S&P 500 Implied Correlation Index 19.4 -7.2% 

• ISE Sentiment Index 107.0 -24.0
  

• Total Put/Call .93 +9.4%

• NYSE Arms 1.54 +126.4% 
• NYSE Non-Block Money Flow -$110.7M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 65.53 +.54%
  

• US Energy High-Yield OAS 350.9 +3.98%
• Bloomberg TRACE # Distressed Bonds Traded 346 -14
  

• European Financial Sector CDS Index 82.64 +1.4% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 254.41 +1.2%
  

• Italian/German 10Y Yld Spread 176.0 basis points -4.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 106.8 -.44%
  

• Emerging Market CDS Index 198.26 -.45%
• Israel Sovereign CDS 125.60 -.88%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.0 unch.

• 2-Year SOFR Swap Spread -17.25 basis points -.5 basis point
  

• TED Spread 23.5 basis points -.5 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -16.25 +1.75 basis points
  
• MBS  5/10 Treasury Spread 158.0 -5.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 942.0 +9.0 basis points
  
• Avg. Auto ABS OAS 97.0 -2.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.8 +.02%
• 3-Month T-Bill Yield 5.40% -1.0 basis point
  

• China Iron Ore Spot 131.0 USD/Metric Tonne +.03%
• Dutch TTF Nat Gas(European benchmark) 45.84 euros/megawatt-hour -2.5%

• Citi US Economic Surprise Index 34.2 -7.4 points

• Citi Eurozone Economic Surprise Index -40.5 +1.2 points

• Citi Emerging Markets Economic Surprise Index 22.3 -.4 point
• S&P 500 Current Quarter EPS Growth Rate YoY(468 of 500 reporting) +2.9% +.4 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 240.79 +.76:  Growth Rate +9.0% +.3 percentage point, P/E 18.7 -.1
  
• S&P 500 Current Year Estimated Profit Margin 12.15% +4.0 basis points
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +38.4% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 275.85 +.23: Growth Rate +62.7% +.1 percentage point, P/E 29.5 -.2
  
• Bloomberg US Financial Conditions Index .21 -2.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index .28 +3.0 basis points
  
• US Yield Curve -39.25 basis points (2s/10s) unch.
  
• US Atlanta Fed 4Q GDPNow Forecast +2.20% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.55% unch.: CPI YoY +3.10% unch.
  
• 10-Year TIPS Spread 2.29 -3.0 basis points
  
• Highest target rate probability for Jan. 31st FOMC meeting: 97.8%(-2.2 percentage points) chance of 5.25%-5.5%. Highest target rate probability for March 20th meeting: 66.5%(-9.5 percentage point) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -40 open in Japan 
• China A50 Futures: Indicating -66 open in China

• DAX Futures: Indicating +70 open in Germany

Portfolio:

• Higher:  On gains in my tech/utility/industrial sector longs, index hedges and emerging market shorts
  

• Disclosed Trades: None
  

• Market Exposure: 75% Net Long
  

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

Earnings of Note 
Company/Estimate 

Before the Open:

• (BJ)/.95
• (BKE)/.95
• (SPB)/1.03
  

After the Close: 

• None of note
  

Economic Releases

8:30 am EST

• Housing Starts for Oct. is estimated to fall to 1350K versus 1358K in Sept.
• Building Permits for Oct. is estimated to fall to 1450K versus 1471K in Sept.
  

11:00 am EST

• Kansas City Fed Services Activity Index for Nov.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Fed's Goolsbee speaking, Fed's Daly speaking, Atlanta Fed GDPNow 4Q Update, US Baker Hughes Rig Count, (FOXA) annual meeting, (LITE) annual meeting, (APD) fireside chat and the (EL) annual meeting could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +10.0% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 8.8 +.5
  
• 6 Sectors Declining, 5 Sectors Rising
• 33.0% of Issues Advancing, 64.7% Declining 
• TRIN/Arms 1.71 +151.4% 
• Non-Block Money Flow -$128.9M
  
• 31 New 52-Week Highs, 14 New Lows
• 41.2%(-6.2%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 60.0 -5.0

Other:

• Bloomberg Global Risk-On/Risk-Off Index 66.1 -2.9%
  
• Russell 1000: Growth/Value 18,707.6 +.56%
  
• 1-Day Vix 9.9 -14.8%
  
• Vix 14.3 +1.1%
  
• Total Put/Call .90 +5.9%

Thursday Watch

Evening Headlines

Bloomberg:

• Israel Latest: UN Envoy Rejects Security Council Call for Truce.
• Apple’s Cook, BlackRock’s Fink Among CEOs Attending Xi Dinner.
• Biden and Xi Strike Deals on Military Communications, Fentanyl, AI.
• China Slowdown Adds to Boycott Woes for Japanese Beauty Stocks.
• Australian Job Gains Remain Strong While Unemployment Edges Up.
• Japan’s Exports Decelerate, Putting Pressure on Fragile Economy.
• Asia Stocks Muted, Treasuries Steady After Decline: Markets Wrap.
• Oil Falls as US Crude Inventories Rise, Rate Concerns Flare Up.
• US Opens Talks With Global Gas Heavyweights on Emission Tracking.
• SpaceX Gets FAA Approval for Do-Over Starship Launch.
• Palo Alto Networks Slips After Missing Billings Estimate.
• Cisco Plunges After Corporate Spending Slump Hurts Forecast. 
• Wall Street Is Tapping Cities’ Precious Water Supply for Profit. 
• Joe Manchin Says He Is ‘Absolutely’ Considering a Run for President.
• Exxon CEO Says Making Big Oil ‘Villains’ Slows Path to Net Zero Emissions.

Zero Hedge:

• LIVE DEBATE: Loomer vs. Smith.
• Think Tank Warns Biden's Inner Circle 'Bidenomics' Media Blitz Failed. 
• The Rise Of Pharma Fascism And The Ruination of the Commons.
• Texas Bishop Joseph Strickland Speaks Out About His Removal By Pope Francis.
• Maryland Teachers Union 'Milking' Taxpayers While Test Scores Plummet .
• Gaza After The War: Biden Needs A Reality Check.
• Biden DOJ Quietly Hires More Lawyers For Vaccine Injury Lawsuits.
• JP Morgan Urges Oil And Gas Clients To Cut Methane Emissions.
• Democrats Introduce Bill To Restrict And Track Ammo Sales While Criminalizing “Straw Purchases”.
• Abrams-Founded Georgia Voting Group Under Fire For Financial Irregularities.
• US stocks eked mild gains in choppy trade as data remained the key driver - Newsquawk Asia-Pac Market Open.
• Actress Sues AstraZeneca After COVID-19 Jab Leaves Her With Brain Injuries.
• Trump Files Motion For Mistrial In NY, Claims Judge Has "Tainted" Case.
• Life after the traumatic squeeze.
• Yields and Dollar pare some CPI downside after better-than-feared retail sales - Newsquawk US Market Wrap.
• 10 Examples From 10 Different Cities Of The "Mad Max" Environment That Now Reigns In America's Streets.
• Crypto Jumps But Bonds Dump As FCI Doom-Loop Looms.
• Revealed: Govt-Contracted NewsGuard's Largest Investor Is Pfizer Partner. 
• "Red Cup Rebellion": Starbucks Workers Plan Largest-Ever Strike On Thursday.

CNBC.com:

• Target CEO claims customers are saying ‘a big thank you’ for locking up merchandise.
• The market thinks the Fed is going to start cutting rates aggressively. Investors could be let down.
• Microsoft is fine avoiding China as U.S. considers national security implications, CEO Nadella says.
• Cruise is taking all its vehicles off public roads amid expanded safety probe, staff changes.

MarketWatch.com:

• Cisco slashes earnings outlook, sending its stock tumbling.
• Forecast sinks Palo Alto Networks’ stock despite ‘unprecedented level’ of cybersecurity attacks.
• Earnings season is brutal, but it doesn’t need to be this bad — a message to corporate America.
• Options traders are piling into bullish bets on small-cap stocks at a record pace.

Newsmax:

• FBI Opens New Hamas Probe.
• Rep. Hinson: US Must Stop Appeasing China.
• Dozens of US Troops Injured in Attacks in Iraq, Syria.

Fox News:

• WATCH: Biden judicial nominee appears stumped by basic legal terms used regularly by judges.
• WATCH: Fox News' Trey Yingst reports from inside suspected Hamas stronghold during raid.
• Multimillionaire tech mogul quietly bankrolling pro-Palestinian protests identified.

TheGatewayPundit.com:

• BREAKING: Massachusetts Ballot Theft Caught on Camera — Security Footage Allegedly Reveals Woman Taking Man’s Mail-In Ballot After He’s Informed He Already Voted (VIDEO).
• “Your Day Is Coming Director Wray!” – HUGE! GOP Rep. Higgins NAILS Dirty FBI Chief Chris Wray During House Hearing – EXPOSES FBI GHOST BUSES!
• Biden’s Border Crisis: Hundreds Of Illegal Aliens Cross the Rio Grande Into Eagle Pass, Texas (VIDEO).
• Democrats Reeling as Spanish Language News Leader Changes Its Tune on Trump.
• Tucker Carlson Drops Episode 39: Candace Owens Responds to Ben Shapiro (VIDEO).
• CHRIS WRAY GETS CAUGHT! Rep. Higgins Releases PHOTO of the Secret J6 Ghost Buses – ANOTHER SET of Ghost Buses Also Filmed in DC That Day – And Guess Who Was Escorting Them? (Video).
• ‘No, Scholz, You Can’t Use Leftover Pandemic Money in Your Climate Alarmist Policies’: German Constitutional Court.
• Biden Smirks as His Handlers Scream at Press to Leave Room so He Can Privately Meet with China’s Xi Jinping (VIDEO).
• Hockey Player Arrested on Suspicion of Manslaughter Following Throat-Slashing Death of Ice Hockey Player Adam Johnson Released on Bail Pending Further Inquiries.
• UFC Chief Dana White Roasts Peloton for Trying to Cancel RFK Jr. (Video -Language Warning).
• Kappa Kappa Gamma Sorority Expels Alumnae for Standing Up for Women.
• San Francisco Holds Parade for Xi Jinping with Communist Flags Draping the Streets – As Xi Prepares to Meet His Poodle Joe Biden Later Today.
• Leo Hohmann: Law Enforcers Are Quietly Shifting the Traditional Concept of Self Defense in Favor of the Criminals: Here’s What You Need to Know.
• Gaza Children as Young as 10-Years-Old and Women Participated in Massive Slaughter of Jews in Israel on Oct. 7.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 988,705 Reports(+5,406 from prior week) Through October 27th, 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 -.5% to unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 106.5 -1.0 basis point.

• China Sovereign CDS 65.5 -1.25 basis points.
  
• China Iron Ore Spot 127.4 USD/Metric Tonne -2.1%.

• Bloomberg Emerging Markets Currency Index 41.8 -.1%.
• Bloomberg Global Risk-On/Risk Off Index 69.2 +1.7%
  
• Bloomberg US Financial Conditions Index .21 -2.0 basis points.
  
• Volatility Index(VIX) futures 15.4 unch.
• Euro Stoxx 50 futures -.12%.

• S&P 500 futures -.1%.

• NASDAQ 100 futures -.2%.  

Morning Preview Links

BOTTOM LINE: Asian indices are modestly lower, weighed down 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 75% net long heading into the day.

Stocks Modestly Higher into Final Hour on More Dovish Fed Hopes, Loosening US Financial Conditions, Short-Covering, Retail/Alt Energy Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Above Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 14.2 +.5%
• DJIA Intraday % Swing .37% -62.7%
  
• Bloomberg Global Risk On/Risk Off Index 65.4 +1.6%

• Euro/Yen Carry Return Index 175.6 +.4%

• Emerging Markets Currency Volatility(VXY) 7.69 +.26%

• CBOE S&P 500 Implied Correlation Index 20.9 -.8% 

• ISE Sentiment Index 134.0 +7.0
  

• Total Put/Call .77 -19.8%

• NYSE Arms .71 -22.8% 
• NYSE Non-Block Money Flow +$81.6M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 65.0 -.45%
  

• US Energy High-Yield OAS 334.79 -.92%
• Bloomberg TRACE # Distressed Bonds Traded 360 +6
  

• European Financial Sector CDS Index 81.49 +.65% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 251.40 -3.5%
  

• Italian/German 10Y Yld Spread 180.0 basis points -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 107.0 -3.7%
  

• Emerging Market CDS Index 199.15 -.14%
• Israel Sovereign CDS 126.70 -2.4%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.0 unch.

• 2-Year SOFR Swap Spread -16.75 basis points -.25 basis point
  

• TED Spread 24.0 basis points -2.75 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -18.0 +.75 basis point
  
• MBS  5/10 Treasury Spread 163.0 +2.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 933.0 +9.0 basis points
  
• Avg. Auto ABS OAS 99.0 +2.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 41.8 +.06%
• 3-Month T-Bill Yield 5.41% +3.0 basis points
  

• China Iron Ore Spot 128.1 USD/Metric Tonne -1.5%
• Dutch TTF Nat Gas(European benchmark) 47.0 euros/megawatt-hour -1.2%

• Citi US Economic Surprise Index 41.6 +5.3 points

• Citi Eurozone Economic Surprise Index -41.7 -.4 point

• Citi Emerging Markets Economic Surprise Index 22.7 +2.0 points
• S&P 500 Current Quarter EPS Growth Rate YoY(464 of 500 reporting) +2.5% unch.
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 240.03 +.03:  Growth Rate +8.7% unch., P/E 18.8 +.1
  
• S&P 500 Current Year Estimated Profit Margin 12.15% +4.0 basis points
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +38.4% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 275.62 +.18: Growth Rate +62.6% +.1 percentage point, P/E 29.7 +.1
  
• Bloomberg US Financial Conditions Index .01 -16.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index .25 +22.0 basis points
  
• US Yield Curve -39.25 basis points (2s/10s) -1.5 basis points
  
• US Atlanta Fed 4Q GDPNow Forecast +2.20% +14.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.55% unch.: CPI YoY +3.10% unch.
  
• 10-Year TIPS Spread 2.32 +2.0 basis points
  
• Highest target rate probability for Jan. 31st FOMC meeting: 100.0%(+2.2 percentage points) chance of 5.25%-5.5%. Highest target rate probability for March 20th meeting: 76.0%(+11.4 percentage point) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -110 open in Japan 
• China A50 Futures: Indicating +95 open in China

• DAX Futures: Indicating +60 open in Germany

Portfolio:

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

• Disclosed Trades: None
  

• Market Exposure: 100% Net Long