Wednesday, August 30, 2023

Stocks Modestly Higher into Afternoon on US Economic "Soft-Landing" Hopes, Loosening US Financial Conditions, Earnings Outlook Optimism, Homebuilding/Tech Sector Strength

Broad Equity Market Tone:

  • Advance/Decline Line: Higher
  • Sector Performance: Almost Every Sector Rising
  • Volume: Below Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 14.1 -2.7%
  • DJIA Intraday % Swing .61%
  • Bloomberg Global Risk On/Risk Off Index 69.1 -.1%
  • Euro/Yen Carry Return Index 169.1 +.6%
  • Emerging Markets Currency Volatility(VXY) 8.6 -.8%
  • CBOE S&P 500 Implied Correlation Index 19.7 -2.3% 
  • ISE Sentiment Index 127.0 +18.0 points
  • Total Put/Call .88 -8.3%
  • NYSE Arms 1.26 +34.0%
Credit Investor Angst:
  • North American Investment Grade CDS Index 62.4 -1.02%
  • US Energy High-Yield OAS 314.12 -1.2%
  • Bloomberg TRACE # Distressed Bonds Traded 339.0 +9.0
  • European Financial Sector CDS Index 79.79 -.52% 
  • Deutsche Bank Subordinated 5Y Credit Default Swap 260.5 -.3%
  • Italian/German 10Y Yld Spread 165.0 basis points +1.0 basis point
  • Asia Ex-Japan Investment Grade CDS Index 132.0 -2.5%
  • Emerging Market CDS Index 196.65 +.90%
  • China Corp. High-Yield Bond USD ETF(KHYB) 24.78 +.32%
  • 2-Year SOFR Swap Spread -9.0 basis points -.75 basis point
  • TED Spread 22.5 basis points -.5 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -12.25 +.5 basis point
  • MBS  5/10 Treasury Spread 168.0 -3.0 basis points
  • Bloomberg CMBS Investment Grade Bbb Average OAS 772.0 -6.0 basis points
  • Avg. Auto ABS OAS 73.0 +1.0 basis point
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 42.8 -.17%
  • 3-Month T-Bill Yield 5.46% +3.0 basis points
  • China Iron Ore Spot 114.7 USD/Metric Tonne +.19%
  • Dutch TTF Nat Gas(European benchmark) 36.0 euros/megawatt-hour +2.3%
  • Citi US Economic Surprise Index 43.0 -2.2 points
  • Citi Eurozone Economic Surprise Index -57.7 -1.9 points
  • Citi Emerging Markets Economic Surprise Index -2.6 -.4 point
  • S&P 500 Current Quarter EPS Growth Rate YoY(490 of 500 reporting) -6.2%  unch.
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 237.71 +.11:  Growth Rate +8.2% +.1 percentage point, P/E 19.0 +.1
  • S&P 500 Current Year Estimated Profit Margin 12.22% unch.
  • NYSE FANG+ Current Quarter EPS Growth Rate YoY(10 of 10 reporting) +24.3% unch.
  • NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 243.39 +.19: Growth Rate +46.8% +.1 percentage point, P/E 32.2 +.4
  • Bloomberg US Financial Conditions Index .41 +14.0 basis points
  • Bloomberg Euro-Zone Financial Conditions Index .15 +80.0 basis points
  • US Yield Curve -77.0 basis points (2s/10s) +.5 basis point
  • US Atlanta Fed 2Q GDPNow Forecast +5.91% unch.
  • Cleveland Fed Inflation Nowcast Core PCE YoY +4.23% unch.: CPI YoY +3.82% -1.0 basis point
  • 10-Year TIPS Spread 2.27 -2.0 basis points
  • Highest target rate probability for Nov. 1st FOMC meeting: 51.0%(-1.3 percentage points) chance of 5.25%-5.5%. Highest target rate probability for Dec. 13th meeting: 50.1%(-1.4 percentage points) chance of 5.25%-5.5%.
Overseas Futures:
  • Nikkei 225 Futures: Indicating +22 open in Japan 
  • China A50 Futures: Indicating +21 open in China
  • DAX Futures: Indicating +17 open in Germany
Portfolio:
  • Higher:  On gains in my tech/industrial/medical sector longs and emerging market shorts
  • Disclosed Trades: None
  • Market Exposure: 75% Net Long

Bear Radar

Style Underperformer:

  • Large-Cap Value +.3%
Sector Underperformers:
  • 1) Alt Energy -.4% 2) Social Media -.4% 3) Regional Banks -.4%
Stocks Falling on Unusual Volume: 
  • JXN, EVRG, PDCO, VFS, HPQ, BOX and AMBA
Stocks With Unusual Put Option Activity:
  • 1) AMBA 2) VFS 3) MSOS 4) BW 5) UBS
Stocks With Most Negative News Mentions:
  • 1) FGEN 2) HPQ 3) AMBA 4) EOSE 5) BOX
Charts:

Bull Radar

Style Outperformer:

  • Small-Cap Growth +1.1%
Sector Outperformers:
  • Disk Drives +2.3% 2) Hombuilding +2.0% 3) Medical Equipment +1.3%
Stocks Rising on Unusual Volume:
  • AMC, ZLAB, NVCR, PODD, CDLX, ALKS, NCNO, SCVL, ACMR, AEHR, DXCM, OII, LYFT, ONTO, RUN, ANF, IIPR, INSP, PDD, ELF, IONQ, SAVA, AFRM, PVH, MOD, SMCI, GCT, PRO, TOL, PRIM, STRL, MLYS, IMVT, BIDU, HEI and TSEM
Stocks With Unusual Call Option Activity:
  • 1) VFS 2) AMBA 3) HPQ 4) CPB 5) ERJ
Stocks With Most Positive News Mentions:
  • 1) NAOV 2) PODD 3) FANH 4) LX 5) ZLAB

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

Earnings of Note 
Company/Estimate 

Before the Open:
  • (ASO)/1.99
  • (CPB)/.50
  • (CM)/1.25
  • (CIEN)/.51
  • (DG)/2.47
  • (GCO)/-1.23
  • (HRL)/.41
  • (OLLI)/.61
  • (SIG)/1.45
  • (TITN)/1.17 
  • (UBS)/.51
After the Close: 
  • (AVGO)/10.43
  • (DELL)/1.43
  • (LULU)/2.54
  • (MDB)/.46
  • (OXM)/3.40
  • (PD)/.11
  • (VMW)/1.71
Economic Releases  
7:30 am EST
  • The Challenger Job Cuts YoY report for Aug.

8:30 am EST

  • Initial Jobless Claims for last week are estimated to rise to 235K versus 230K the prior week.
  • Continuing Claims are estimated to rise to 1706K versus 1702K prior.
  • Personal Income for July is estimated to rise +.3% versus a +.3% gain in June.
  • Personal Spending for July is estimated to rise +.7% versus a +.5% gain in June.
  • The PCE Core MoM for July is estimated to rise +.2% versus a +.2% gain in June.

9:45 am EST

  • The MNI Chicago PMI for Aug. is estimated to rise to 44.2 versus 42.8 in July.

Upcoming Splits 

  • (DSGR) 2-for-1
Other Potential Market Movers
  • The China Services PMI report, weekly EIA natural gas inventory report and the Stifel Transport Conference 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 -23.3% Below 100-Day Average 
  • Nasdaq/NYSE Volume Ratio 11.6 +.6
  • 2 Sectors Declining, 9 Sectors Rising
  • 64.4% of Issues Advancing, 32.6% Declining
  • 87 New 52-Week Highs, 10 New Lows
  • 49.6%(+1.1%) of Issues Above 200-day Moving Average
  • Average 14-Day RSI 56.0 +3.0
  • Bloomberg Global Risk-On/Risk-Off Index 70.2 +.60%
  • Russell 1000: Growth/Value 17,624.4 +.26%
  • 1-Day Vix 9.90 -19.6%
  • Vix 14.2 -2.0%
  • Total Put/Call .83 -13.5%
  • TRIN/Arms 1.46 +55.3%

Tuesday, August 29, 2023

Wednesday Watch

Evening Headlines

Bloomberg:

Zero Hedge:

CNBC.com:
Newsmax:
TheGatewayPundit.com:
Twitter: 
OpenVAERS:
SKirsch.com:
Night Trading 
  • Asian equity indices are -.25% to +.775% on average.
  • Asia Ex-Japan Investment Grade CDS Index 130.25 -1.75 basis points. 
  • China Sovereign CDS 76.75 -4.5 basis points.
  • China Iron Ore Spot 111.1 USD/Metric Tonne +.8%.
  • Bloomberg Emerging Markets Currency Index 42.9 +.06%.
  • Bloomberg Global Risk-On/Risk Off Index 70.4 +.95%. 
  • Bloomberg US Financial Conditions Index 28.0 +1.0 basis point.
  • Volatility Index(VIX) futures 15.9 -.14%.
  • Euro Stoxx 50 futures +.32%.
  • S&P 500 futures +.07%.
  • NASDAQ 100 futures +.17%.  
Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and technology 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.