Stocks Lower into Afternoon on Rising Fed Rate-Hike Odds, Mideast War-Induced Inflation Fears, Technical Selling, Pharma/Insurance Sector Weakness

Overseas Futures:

• Nikkei 225 Futures: Indicating +730 open in Japan 
• China A50 Futures: Indicating +23 open in China
• KOSPI 200 Futures: Indicating +32 open in South Korea 

• DAX Futures: Indicating +45 open in Germany

Portfolio:

• Higher: On gains in my tech/consumer discretionary/industrial sector longs and index hedges
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges
• Market Exposure: Moved to 75% net long

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

Earnings of Note 
Company/Estimate 

Before the Open:

• (ABM)/1.01
• (UNFI)/.61 
• (GME)/.27 

After the Close: 

• (BRZE)/.15
• (CASY)/6.75
• (AVO)/.12
• (TTAN)/.35 

Economic Releases 

6:00 am EST

• The NFIB Small Business Optimism Index for Aug. is estimated to fall to 99.2 versus 99.8 in July.

3:00 pm EST

• Consumer Credit for July is estimated to fall to $11.34B versus $14.173B in June. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The 3Y T-Note auction, NY Fed Inflation Expectations Index, weekly ADP employment change index, CB Employment Trends Index for Aug., KBW Insurance Conference, Jefferies Industrials Conference, Wolfe Research TMT Conference, Goldman Sachs Communicopia Tech Conference, Citi TMT Conference, Cantor Healthcare Conference, Baird Healthcare Conference, (IONQ) investor day and the (NKE) annual meeting could also impact global trading on Tuesday.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Friday Watch

Night Trading 

• Asian equity indices are +.5% to +1.5% on average. 
• Asia Ex-Japan Investment Grade CDS Index 66.0 -.75 basis point. 
• China Sovereign CDS 34.75 -.5 basis point.
• China Iron Ore Spot 99.3 USD/Metric Tonne +.1%. 
• Crude Oil 91.81/bbl. +.6% 
• Gold 4,523.60 USD/t oz. -.35%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.31 +.05%.
• Bloomberg Emerging Markets Currency Index 34.26 -.08%.
• Bloomberg Global Risk-On/Risk Off Index 128.9 -.3%.
• US 10-Year Yield 4.77% unch.
• Japan 30-Year Yield 4.02% -5.0 basis points.
• Volatility Index(VIX) futures 18.1 -.3%.
• Euro Stoxx 50 futures -.03%. 
• S&P 500 futures +.01%.
• NASDAQ 100 futures +.06%.

Morning Preview Links

BOTTOM LINE: Asian indices are modestly higher, boosted by industrial and technology shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.

Stocks Surging into Final Hour Mideast War De-escalation Rhetoric, Falling Fed Rate-Hike Odds, Earnings Outlook Optimism, Tech/Financial Sector Strength

Economic/Market Gauges:

• North American Investment Grade CDS Index 50.2 -.7%
• BofA Private Credit Proxy Index 73.4 -.1% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .31 -1.0 basis point
• BofA Global Financial Stress Indicator -.13 +2.0 basis points
• European Financial Sector CDS Index 53.9 -1.0%
• Emerging Market CDS Index 136.9 -1.0%
• Israel Sovereign CDS 53.1 +.2%
• Bloomberg Global Trade Policy Uncertainty Index .7 -.1
• US Morning Consult Daily Consume Sentiment Index 90.0 +3.6

• Citi US Economic Surprise Index 18.5 +1.8

• Citi Eurozone Economic Surprise Index 75.4 +2.5

• Citi Emerging Markets Economic Surprise Index 23.4 +.4
• S&P 500 Current Quarter EPS Growth Rate YoY(492 of 500 reporting) +53.2% +.7 percentage point
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 397.78 +.54:  Growth Rate +21.2% +.1 percentage point, P/E 19.5 +.2
• S&P 500 Current Year Estimated Profit Margin 16.29% +1.0 basis point
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(10 of 10 reporting) +131.5% -1.8 percentage points
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 971.40 +.89: Growth Rate +44.7% -42.4 percentage points, P/E 19.5 +.4
• Bloomberg US Financial Conditions Index 1.25 +2.0 basis points
• US Yield Curve 42.75 basis points (2s/10s) +2.5 basis points
• Bloomberg Industrial Metal Index 180.91 +.8%
• Dutch TTF Nat Gas(European benchmark) 71.2 euros/megawatt-hour -3.3%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 12.0 unch.
• US Atlanta Fed GDPNow Q3 Forecast +4.7% -.1 percentage point
• US 10-Year T-Note Yield 4.76% -2.0 basis points
• 1-Year TIPS Spread 2.29 +2.0 basis points

• Highest target rate probability for Oct. 28th FOMC meeting: 50.2% (-5.4 percentage points) chance of 3.75%-4.0%. Highest target rate probability for Dec. 9th meeting: 42.9%(+5.2 percentage points) chance of 3.75%-4.0%. (current target rate is 3.5-3.75%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +350 open in Japan 
• China A50 Futures: Indicating -3 open in China
• KOSPI 200 Futures: Indicating +17 open in South Korea 

• DAX Futures: Indicating +55 open in Germany

Portfolio:

• Higher: On gains in my tech/consumer discretionary/industrial sector longs
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
• Market Exposure: Moved to 100% net long

Bear Radar

Style Underperformer:

• Small-Cap Value +.5%

Sector Underperformers:

• 1) Oil Service -1.6% 2) Foods -1.5% 3) Agriculture -.9%

Stocks Falling on Unusual Volume: 

• HPE, VALE, AVGO, GIII, FRVO, CLYM, TCOM, AEHR, TTC, GOLD, TSN, CPB, CIEN, VSXY, MEI and RARE

Stocks With Unusual Put Option Activity:

• 1) LUMN 2) PATH 3) SNOW 4) AS 5) PBR

Stocks With Most Negative News Mentions:

• 1) WIX 2) CAPR 3) REPL 4) PSNY 5) TSN

Sector ETFs With Most Negative Money Flow:

• 1) DRAM 2) GDX 3) ICLN 4) IYW 5) IGV

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +2.0%

Sector Outperformers:

• 1) Software +3.6% 2) I-Banking +3.5% 3) Robotics +2.7%

Stocks Rising on Unusual Volume:

• SNOW, CRCL, HOOD, SMMT, MSTR, BMNR, CBIO, ALMS, CIFR, HSAI, BULL, RIOT, BLSH, ASST, CLS, GLXY, COIN, MARA, BTDR, CLSK, PURR, BE, MIR, SPCX, TSLA, GFI, HMY, PFG, ESTC, PCG, OCTV, DELL, NEXA, IOT, NMCO, LCLN, AYA, CWK, VCX, WLY, ZS, WD, MRX, CIGI, AGX, GNW, BLBD, NTSK, LII, SBSW, FUBO, TRLV, AI and EXK

Stocks With Unusual Call Option Activity:

• 1) DPRO 2) CHGG 3) RARE 4) FXY 5) SNOW 

Stocks With Most Positive News Mentions:

• 1) SNOW 2) HOOD 3) DLTH 4) CHPT 5) CRCL

Sector ETFs With Most Positive Money Flow:

• 1) SMH 2) KRE 3) XLE 4) XLI 5) XLV

Charts: 

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