Thursday Watch

Night Trading 

• Asian equity indices are -1.0% to -.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 123.0 +.25 basis point. 

• China Sovereign CDS 76.75 +2.75 basis points.
  
• China Iron Ore Spot 121.3 USD/Metric Tonne -.44%.

• Bloomberg Emerging Markets Currency Index 42.3 -.04%.
• Bloomberg Global Risk-On/Risk Off Index 72.4 +.04%. 
• Bloomberg US Financial Conditions Index 47.0 +1.0 basis point.
  
• Volatility Index(VIX) futures 16.2 +.2%.
• Euro Stoxx 50 futures n/a.

• S&P 500 futures -.09%.

• NASDAQ 100 futures -.16%.  

Morning Preview Links

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

Stocks Reversing Lower into Final Hour on Less Dovish Fed Commentary, US Govt Shutdown Worries, US Auto Strike Concerns, Tech/Electric Vehicle Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 14.2 +.4%
• DJIA Intraday % Swing .45%
  
• Bloomberg Global Risk On/Risk Off Index 72.9 -1.1%

• Euro/Yen Carry Return Index 168.1 +.23%

• Emerging Markets Currency Volatility(VXY) 8.34 -.24%

• CBOE S&P 500 Implied Correlation Index 21.5 +1.4% 

• ISE Sentiment Index 128.0 +28.0 points
  

• Total Put/Call .92 +1.1%

• NYSE Arms 1.15 +19.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 68.4 +8.3% (new series)
  

• US Energy High-Yield OAS 306.4 -1.27%
• Bloomberg TRACE # Distressed Bonds Traded 329.0 -8
  

• European Financial Sector CDS Index 85.63 +7.3% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 280.2 +6.1%
  

• Italian/German 10Y Yld Spread 175.0 basis points -3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 122.2 +4.6%
  

• Emerging Market CDS Index 211.08 +5.5%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.08 +.02%

• 2-Year SOFR Swap Spread -9.75 basis points +.75 basis point
  

• TED Spread 18.5 basis points -2.75 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -10.0 -.5 basis point
  
• MBS  5/10 Treasury Spread 166.0 +3.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 908.0 +2.0 basis points
  
• Avg. Auto ABS OAS 78.0 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 42.3 +.23%
• 3-Month T-Bill Yield 5.47% +2.0 basis points
  

• China Iron Ore Spot 121.6 USD/Metric Tonne -.24%
• Dutch TTF Nat Gas(European benchmark) 37.3 euros/megawatt-hour +1.4%

• Citi US Economic Surprise Index 57.2 -.3 point

• Citi Eurozone Economic Surprise Index -51.2 +6.8 points

• Citi Emerging Markets Economic Surprise Index 11.9 -.7 point
• S&P 500 Current Quarter EPS Growth Rate YoY(5 of 500 reporting) +6.1% -1.1 percentage points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 239.41 +.01:  Growth Rate +8.9% unch., P/E 18.6 +.1
  
• S&P 500 Current Year Estimated Profit Margin 12.13% -2.0 basis points
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 262.45 +.24: Growth Rate +58.3% +.2 percentage point, P/E 29.1 +.1
  
• Bloomberg US Financial Conditions Index .48 +1.0 basis point
  
• Bloomberg Euro-Zone Financial Conditions Index .28 -6.0 basis points
  
• US Yield Curve -78.0 basis points (2s/10s) -3.75 basis points
  
• US Atlanta Fed 2Q GDPNow Forecast +4.86% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +3.95% unch.: CPI YoY +3.69% unch.
  
• 10-Year TIPS Spread 2.35 -2.0 basis points
  
• Highest target rate probability for Dec. 13th FOMC meeting: 56.9%(-2.3 percentage points) chance of 5.25%-5.5%. Highest target rate probability for Dec. 13th meeting: 54.5%(-4.7 percentage points) chance of 5.25%-5.5%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +56 open in Japan 
• China A50 Futures: Indicating +27 open in China

• DAX Futures: Indicating +155 open in Germany

Portfolio:

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

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges
  

• Market Exposure: Moved to 25% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Growth -.1%
  

Sector Underperformers:

• 1) Electric Vehicles -.6% 2) Energy -.3% 3) Software -.1%

Stocks Falling on Unusual Volume: 

• ZIP, ZGN, XMTR, WMG, CHWY, HDB, ZBRA, CELH, AKRO, BGNE and EBC
  

Stocks With Unusual Put Option Activity:

• 1) BXMT 2) SLG 3) VLY 4) ARM 5) KBH
  

Stocks With Most Negative News Mentions:

• 1) CHWY 2) IBB 3) MASI 4) CLX 5) HE
  

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Value +.8%
  

Sector Outperformers:

• 1) Computer Services +2.6% 2) Gold & Silver +1.8% 3) Road & Rail +1.6%

Stocks Rising on Unusual Volume:

• SCS, HAIN, GCT, DOMO, GT, BBW, GSHD, WDC, COTY, SLVM, TXT, IFF, SBRA, SWBI, JBI, PINS, EBIX, VSTO, BALL, IBM, CDLX and MIRM
  

Stocks With Unusual Call Option Activity:

• 1) APO 2) ARM 3) GT 4) CWH 5) GLD

Stocks With Most Positive News Mentions:

• 1) SCS 2) CATC 3) COTY 4) SLVM 5) WDC
  

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:

• (DRI)/1.74
• (FDS)/3.51
  

After the Close: 

• (MANU)/-.04
• (RAD)/-1.47
  

Economic Releases  

8:30 am EST

• The Current Account Deficit for 2Q is estimated to widen to $-220.0B versus -$219.3B in 1Q.
• Initial Jobless Claims for last week are estimated to rise to 225K versus 220K the prior week.
• Continuing Claims are estimated to rise to 1692K versus 1688K prior.
• Philly Fed Business Outlook for Sept. is estimated to fall to -1.0 versus 12.0 in Aug.
  

10:00 am EST

• Existing Home Sales for Aug. is estimated to rise to 4.1M versus 4.07M in July.
• The Leading Index for Aug. is estimated to fall to -.5% versus -.4% in July.
  

Upcoming Splits 

• (NVO) 2-for-1
  

Other Potential Market Movers

• The BoE rate decision/minutes, weekly EIA natural gas inventory, KeyBanc Investor Conference, (ORCL) CloudWorld 2023, (ADBE) fireside chat, (CRL) investor day and the (MSFT) product event report 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 -23.3% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 13.8 +2.8
  
• 2 Sectors Declining, 9 Sectors Rising
• 76.7% of Issues Advancing, 20.3% Declining
• 31 New 52-Week Highs, 25 New Lows
• 44.8%(+5.7%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 53.0 +6.0
  
• Bloomberg Global Risk-On/Risk-Off Index 73.1 -.9%
  
• Russell 1000: Growth/Value 17,411.6 -.57%
• 1-Day Vix 12.9 -6.4%
  
• Vix 14.0 -1.0%
  
• Total Put/Call .96 +5.5%
• TRIN/Arms 1.08 -24.4%