Stocks Finish at Session Highs on Lower Long-Term Rates, Less Hawkish Fed Hopes, Less European/Emerging Markets/US High-Yield Debt Angst, Alt Energy/Utility 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) 22.6 -2.8%
• DJIA Intraday % Swing 1.95% +294.0%
  
• Bloomberg Global Risk On/Risk Off Index 3,477.0 -253.0 points

• Euro/Yen Carry Return Index 140.82 -1.8%

• Emerging Markets Currency Volatility(VXY) 12.0 -.6%

• CBOE S&P 500 Implied Correlation Index 43.2 -2.7% 

• ISE Sentiment Index 93.0 -1.0 point
  

• Total Put/Call .92 -9.8%

• NYSE Arms 1.19 +36.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 81.78 -2.7%
  

• US Energy High-Yield OAS 479.04 -1.4%
• Bloomberg TRACE # Distressed Bonds Traded 484.0 -13.0
  

• European Financial Sector CDS Index 114.74 -4.7%

• Italian/German 10Y Yld Spread 235.0 basis points -3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 149.22 -4.33%
  

• Emerging Market CDS Index 337.98 -4.4%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.60 +.25%
  
• Ukraine Sovereign Debt Credit Default Swap 11,938.0 -3.9%
  

• 2-Year Swap Spread 26.25 basis points +1.25 basis points
  

• TED Spread 44.5 basis points +14.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -20.0 basis points +1.5 basis points
  
• MBS  5/10 Treasury Spread  120.0 -16.0 basis points
  
• iShares CMBS ETF 48.94 +.82%
• Avg. Auto ABS OAS .96 -2.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 49.0 +.20%
• 3-Month T-Bill Yield 2.35% -5.0 basis points
  

• Yield Curve -20.25 basis points (2s/10s) +5.25 basis points
  

• China Iron Ore Spot 118.25 USD/Metric Tonne +3.1%

• Citi US Economic Surprise Index -66.40 -12.9 points

• Citi Eurozone Economic Surprise Index -105.0 -10.3 points
  

• Citi Emerging Markets Economic Surprise Index 22.6 +.6 point

• 10-Year TIPS Spread 2.49 +8.0 basis points
  
• Highest target rate probability for November 2nd FOMC meeting: 73.7%(+23.5 percentage points) chance of 3.0%-3.25%. Highest target rate probability for December 14th meeting: 46.2%(+2.0 percentage points) chance of 3.25%-3.5%.
  

US Covid-19:

• 280 new infections/100K people(last 7 days total). 16.1%(+1.4 percentage points) of 1/14/22 peak(1,740) +7/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -70.5%(-.7 percentage point) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +69 open in Japan 
• China A50 Futures: Indicating -28 open in China

• DAX Futures: Indicating -7 open in Germany

Portfolio:

• Higher:  On gains in my medical/commodity/industrial/tech/utility sector longs
  

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

• Market Exposure:  Moved to 75% net long
  

Morning Market Internals

NYSE Composite Index:

• Volume Running +1.6% Above 100-Day Average 
• 4 Sectors Declining, 7 Sectors Rising
• 58.8% of Issues Advancing, 37.1% Declining
• 32 New 52-Week Highs, 28 New Lows
• 22.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.4% 
• Bloomberg Global Risk-On/Risk-Off Index 3,404.0 -338.0 points
• Russell 1000: Growth/Value 15,702.0 +.59%
  
• Vix 22.7 -2.3%
• Total Put/Call .98 -3.9%
• TRIN/Arms 1.28 +45.5%

Thursday Watch

Evening Headlines

Bloomberg:          

• Crippling Energy Crisis Set to Worsen for Debt-Ridden South Asia.  
• Inflation Reckoning Arrives for Turkey While Credibility Is Shot.  
• China-US Deal Needed Very Soon to Avoid Delistings, SEC’s Gensler Says.  
• Tech Roars in Post-Fed Rally as Bond Yields Slump: Markets Wrap.
• Record US Oil Exports Set to Grow as WTI Discount Deepens.
  
• Fed Hike Leads Gulf to Follow, But Rate Paths Diverge Again.
  
• Powell Signals More Fed Hikes Coming, Leaves Out Details This Time.
  
• Fed Watchers Say Markets Got It All Wrong on Powell ‘Pivot’.
• Dudley Says Fed Will Hike Rates Much Further Than What Markets Expect.
• Manchin Backs $369 Billion Energy-Climate Plan, Rejects SALT.
• What’s in the Manchin-Schumer Deal on Taxes, Climate and Energy.  
• Rivian Plans to Cut 6% of Its Workforce as CEO Cites Volatile Economy.  
• Ron DeSantis Takes Aim at ‘Woke CEOs’.  
• Coinbase SEC Probe Into Listed Tokens Has Crypto Traders Rattled.
• Specter of Next-Day Losses Haunts Stock Bulls’ Post-Fed Rally.

Wall Street Journal:    

• Ford’s Profit Rises on Higher Sales, More Inventory.
  
• Fed Signals More Increases Coming.
• Spirit, Frontier End Merger Agreement.
• Boise’s Housing Market Boomed Early in the Pandemic. Now It Is Cooling Fast.
• Senate Approves $280 Billion Bill to Boost Chip Making, Technology.
• The Worst Flight Delays at the World’s Busiest Airports: See the List.
• ‘Make Instagram Instagram Again’: The App’s Evolution Is Causing Users to Question Its Future.
• Container Ship Backlog Grows Again at the Port of Savannah.

Fox News:

• Manchin surrenders to Democrats' revised social spending bill after more than a year of negotiations.
• Expert warns US not to give notorious criminal back to Russia in prisoner swap.
• Court hands Republican governor big win in battle over mask mandates.

CNBC.com:

• Fed hikes interest rates by 0.75 percentage point for second consecutive time to fight inflation.
• Schumer, Manchin announce deal on reconciliation bill with tax, climate, energy provisions.
• Mark Zuckerberg says economic downturn is here, so Meta must do more with less.
• Stocks making the biggest moves after hours: Meta Platforms, Ford, Qualcomm, Teladoc and more. 
• Qualcomm sales rise 37% despite ‘challenging macroeconomic environment’.

MarketWatch:             

• ServiceNow’s stock is down after it announced revenue slightly shy of estimates.
  
• Ford stock rallies more than 6% after auto maker’s Q2 sales rise 50%.
  
• Traders are talking about chance of between-meetings rate hike by Fed in August, if inflation fails to ease.
  
• Best Buy adds to retailer woes, cutting outlook as end of PC boom takes its toll.
  
• The top 10 cities where home prices are being slashed amid cooling real estate market.
  
• Teladoc loses $3 billion in three months, stock plummets.

Zero Hedge:

• Wall Street Reacts To The Fed's Stagflationary Statement.
• Watch: Fed Chair Powell Desperately Avoid Saying The 'R-Word'.
• Manchin And Dems Reach Deal On Reconciliation Package, Call It "Inflation Reduction Act".
• Why Do South American Drug Runners Keep Getting Caught With Uranium?
• Doctor Announces $25 Million Defamation Lawsuit Against Houston Methodist Following Suspension.
• Ghislaine Maxwell Transferred To Low-Security Prison In Florida. 
• Trump Files 'Notice Of Intent' To Sue CNN Over 'False Statements'.
• WHO Recommends Gay And Bisexual Men Limit Sexual Partners, Anonymous Sex, To Reduce Monkeypox Spread.
• Watch: Iraqi Protesters Storm Parliament Amid Record Run Without Government.
• Fed Hikes 75bps: Remains "Highly Attentive" To Inflation But Cautions Economy "Softening".
• Academy Of Breastfeeding Medicine Advising Hospitals To Use Term "Father's Milk".
• US Carrier Group Heads Towards Taiwan Ahead Of Potential Pelosi Trip After China Warns Of 'Forceful Response'.
• Stocks rise and DXY tumbles in the wake of a dovishly-received FOMC - Newsquawk Asia-Pac Market Open.
• "Rebalance The Bench": Turley Opines On Democrat Push For 'Sweeping' Supreme Court Changes.
• VOX Media Cuts Staff Due To "Current Economic Conditions".
• Facebook Slides After Miss On Top And Bottom Line, Atrocious Guidance Amid "Weak Ad Demand".
• Stocks rally as Powell tilts dovish - Newsquawk US Market Wrap.
• Stocks, Bonds, Gold, & Crypto Soar As Fed Confirms 'Bad News Is Great News' Again.

Newsmax:

• Russia Doing Better Than Expected Despite Sanctions: IMF.
• In Turnabout, Dem 'Roadblock' Manchin Announces Deal With Schumer on Drugs, Energy Bill.

TheGatewayPundit.com: 

• Peter Doocy Humiliates Karine Jean-Pierre by Reading Biden Econ Advisor Brian Deese’s 2008 Definition of a Recession (VIDEO).
• Florida Files Lawsuit Against Bar That Hosts Obscene Drag Shows For Children.
• MUST SEE: Biden’s Behavior Abruptly Changes in Spliced Video Speech Released by The White House; From Sleepy-Eyed to Bug-Eyed and Not Blinking.
• FBI Whistleblowers Reveal Bureau Leadership is Pressuring Agents to Artificially Pad Domestic Terrorism Data to Help Push Biden Narrative.
• BREAKING: President Trump Announces He Will Sue CNN for “Repeated Defamatory. Statements” Which Have “Defamed Me and Defrauded the Public Regarding the Overwhelming Evidence of Fraud Throughout the 2020 Election”.
• Tucker Carlson Exposes Big Pharma’s Murderous Antidepressant Scheme: Drugs For Depression Cause Birth Defects, Sexual Dysfunction And Suicide.
• More Lies: Joe Biden Claims Majority of People Dying From Covid “Are Not Up to Date on Their Shots” (VIDEO).
• UPDATE: ‘The View’ Apologizes To Turning Point USA Over Defamatory Statements After #SUETHEVIEW Trends Nationwide On Twitter (VIDEO).
• 81 Million Votes!… Breaking Poll: 75% of Democrats Want Different Candidate Selected and Installed in 2024.
• Joe Biden’s Cybersecurity Czar Says “Systemic Racism” Is the Major Threat – And US Is Intrinsically Racist Society.   
  

The Epoch Times:

• US Sold Nearly 6 Million Barrels of Oil From Reserves to China, Records Show.
• Lifting China Tariffs to Tame Inflation Is ‘Foolish’ Move, Says Trump’s Trade Czar Lighthizer.

Twitter: 

• @TPostMillennial - Tucker Carlson takes a look at the effects the COVID vaccine is being shown to have on people. (video) Tucker Carlson: "It turns out the entire premise behind the most commonly antidepressant drugs appears to be completely wrong." (video)
  
• @VaxxedFox - Yuval Noah Harari of the World Economic Forum: "Very Soon, We Will Be Beyond the God of the Bible" "In the Bible, God is the Creator. His chief power is to create; it creates animals and plants and humans according to his wishes. Now we are gaining this power to create life, just like God." (video)
• @SpencerLndqst - Here is day 2 of my effort to highlight one member of the medical industry every day who has received money from puberty blocker companies while peddling the drugs to children.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 845,608 Reports(+3,035 from prior week) Through July 15th, 2022.

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.

Covid-19(Data, Maps, Graphs):

• Our World in Data:  New Global Covid-19 Cases(7-day rolling average graphs). New US Covid Hospital Admissions/ICU Admissions/Deaths
  
• FT.com:  Fully Vaccinated by Country(graph). Global Lockdown Stringency Index(map).
• Bloomberg.com:  International Travel Restrictions.  Case Graphs by State.
  
• NYTimes.com:  County Trends and Clusters. Local ICU Occupancy.
  
• Brown School of Public Health:  Covid Severity by State/County(map).  US Hospital Capacity(region).
  
• CovidActNow:  Covid Severity/Infection Rate by Metro Area.
  
• KFF:  US Vaccinations by Race/Ethnicity.
  
• Carnegie Mellon: Covid-Like Symptoms in Community. Covid Symptom Searches on Google. Covid-Related Dr.Visits.  Restaurant Visits. Wearing Masks. (graphs)
  
• Safegraph.com:  Commerce Patterns(graphs).

Night Trading 

• Asian equity indices are +.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 156.5 +4.0 basis points. 

• China Sovereign CDS 81.25 -2.0 basis points.
  

• Bloomberg Emerging Markets Currency Index 48.92 +.02%.  
• Bloomberg Global Risk-On/Risk Off Index 3,734.0 -9.0 points.
• Volatility Index(VIX) futures 25.0 unch.
• Euro Stoxx 50 futures n/a.

• S&P 500 futures -.12%.

• NASDAQ 100 futures -.31%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (AGCO)/2.11
• (MO)/1.25
• (AMT)/2.46
• (BUD)/.75
• (MT)/4.30
• (ARCH)/21.79
• (BAX)/.87
• (BC)/2.70
• (CP)/.94
• (CMCSA)/.92
• (FCN)/1.67
• (HOG)/1.05
• (HSY)/1.68
• (HTZ)/1.20
• (HON)/2.03
• (IP)/1.08
• (KDP)/.39
• (LH)/4.68
• (MA)/2.36
• (MRK)/1.70
• (NOC)/6.10
• (BTU)/3.10
• (PFE)/1.78
• (PBI)/.03
• (RS)/9.01
• (RCL)/-2.30
• (SAH)/2.55
• (SO)/.84
• (LUV)/1.18
• (SWK)/2.13
• (TROW)/2.15
• (VLO)/9.19
• (WING)/.36
  

After the Close:

• (AMZN)/.12
• (AAPL)/1.15
• (BZH)/1.42
• (DECK)/1.24
• (EIX)/.90
• (EW)/.64
• (FSLR)/-.13
• (INTC)/.70
• (KLAC)/5.49
• (LHX)/3.18
• (MHK)/4.29
• (OLN)/2.53
• (ROKU)/-.68
• (SKYW)/.44
• (X)/3.86
• (VFC)/.14
• (YUMC)/.01
• (ZEN)/.12
  

Economic Releases

8:30 am EST:

• 2Q GDP is estimated to rise +.4% versus a -1.6% decline in 1Q.
• 2Q Personal Consumption is estimated to rise +1.2% versus a +1.8% gain in 1Q.
• 2Q GDP Price Index is estimated to rise +8.0% versus a +8.2% gain in 1Q.
• 2Q Core PCE QoQ is estimated to rise +4.4% versus a +5.2% gain in 1Q.
• Initial Jobless Claims for last week is estimated to fall to 250K versus 251K the prior week.
• Continuing Claims is estimated to rise to 1386K versus 1384K prior.

11:00 am EST

• The Kansas City Fed Manufacturing Activity Index for July is estimated to fall to 4.0 versus 12.0 in June.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The German retail sales, Japan Industrial Production, 7Y T-Note auction, weekly EIA natural gas inventory report and the (SCHW) business update could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly higher, boosted 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 50% net long heading into the day.

Stocks Surging into Final Hour on Less Hawkish FOMC Commentary, US Dollar Weakness, Less European/Emerging Markets/US High-Yield Debt Angst, Tech/Gambling Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance:  Most Sectors Rising
  

• Volume:  Below Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 23.6 -4.4%
• DJIA Intraday % Swing .49% -16.9%
  
• Bloomberg Global Risk On/Risk Off Index 3,700.0 +6.0 points

• Euro/Yen Carry Return Index 143.2 +.47%

• Emerging Markets Currency Volatility(VXY) 12.1 +1.0%

• CBOE S&P 500 Implied Correlation Index 43.6 +3.7% 

• ISE Sentiment Index 89.0 -11.0 points
  

• Total Put/Call .98 -1.0%

• NYSE Arms .99 -25.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 83.60 -4.1%
  

• US Energy High-Yield OAS 489.93 -.45%
• Bloomberg TRACE # Distressed Bonds Traded 497.0 +28.0
  

• European Financial Sector CDS Index 120.42 -3.6%

• Italian/German 10Y Yld Spread 238.0 basis points +6.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 156.32 +3.6%
  

• Emerging Market CDS Index 356.74 -3.6%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.58 +.36%
  
• Ukraine Sovereign Debt Credit Default Swap 12,427.0 +2.4%
  

• 2-Year Swap Spread 25.0 basis points +1.25 basis points
  

• TED Spread 30.0 basis points +.75 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -21.5 basis points +1.75 basis points
  
• MBS  5/10 Treasury Spread  136.0 -1.0 basis point
  
• iShares CMBS ETF 48.56 +.10%
• Avg. Auto ABS OAS .98 +2.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 48.89 +.27%
• 3-Month T-Bill Yield 2.40% -4.0 basis points
  

• Yield Curve -25.5 basis points (2s/10s) +.75 basis point
  

• China Iron Ore Spot 113.4 USD/Metric Tonne +1.7%

• Citi US Economic Surprise Index -53.50 +4.8 points

• Citi Eurozone Economic Surprise Index -94.70 -.2 point
  

• Citi Emerging Markets Economic Surprise Index 22.0 +.1 point

• 10-Year TIPS Spread 2.41 +5.0 basis points
  
• Highest target rate probability for November 2nd FOMC meeting: 50.7%(+13.4 percentage points) chance of 3.0%-3.25%. Highest target rate probability for December 14th meeting: 45.5%(+4.9 percentage points) chance of 3.25%-3.5%.
  

US Covid-19:

• 273 new infections/100K people(last 7 days total). 15.7%(+.0 percentage point) of 1/14/22 peak(1,740) +0/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -69.8%(+.4 percentage point) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +260 open in Japan 
• China A50 Futures: Indicating +63 open in China

• DAX Futures: Indicating +23 open in Germany

Portfolio:

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

• Disclosed Trades:  Covered some of my (IWM)/(QQQ) hedges and emerging market shorts
  

• Market Exposure:  Moved to 75% net long