Stocks Surging into Afternoon on Less Hawkish Fed Hopes, Rising China Re-Opening Expectations, Short-Covering, Alt Energy/Tech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume:  Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 21.6 -1.1%
• DJIA Intraday % Swing 1.21%
  
• Bloomberg Global Risk On/Risk Off Index 48.6 +1.9%

• Euro/Yen Carry Return Index 148.5 +.28%

• Emerging Markets Currency Volatility(VXY) 11.8 -.17%

• CBOE S&P 500 Implied Correlation Index 42.8 +1.1% 

• ISE Sentiment Index 106.0 -5.0 points
  

• Total Put/Call 1.47 +42.7%

• NYSE Arms .79 +38.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 78.24 -3.8%
  

• US Energy High-Yield OAS 375.57 -.02%
• Bloomberg TRACE # Distressed Bonds Traded 375.0 +15.0
  

• European Financial Sector CDS Index 102.64 +2.2% 
• Credit Suisse Subordinated 5Y Credit Default Swap 453.68 +1.4%
  

• Italian/German 10Y Yld Spread 195.0 basis points +5.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 138.79 -1.94%
  

• Emerging Market CDS Index 230.36 -2.0%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.6 +.04%

• 2-Year Swap Spread 31.5 basis points -.5 basis point
  

• TED Spread 40.0 basis points -2.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -33.5 basis points +2.25 basis points
  
• MBS  5/10 Treasury Spread  146.0 +1.0 basis point
  
• Bloomberg US Agg CMBS Avg OAS 127.0 unch.
  
• Avg. Auto ABS OAS 1.21 +2.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.73 +.31%
• 3-Month T-Bill Yield 4.34% +4.0 basis points
  

• Yield Curve -72.5 basis points (2s/10s) +2.0 basis points
  

• China Iron Ore Spot 101.0 USD/Metric Tonne +1.24%
• Dutch TTF Nat Gas(European benchmark) 146.0 euros/megawatt-hour +7.2%

• Citi US Economic Surprise Index 8.9 -5.1 points

• Citi Eurozone Economic Surprise Index 32.5 -2.4 points
  

• Citi Emerging Markets Economic Surprise Index -3.1 -5.0 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 229.70 -.05:  Growth Rate +11.0% -.1 percentage point, P/E 17.4 +.2
  
• Bloomberg US Financial Conditions Index -.53 +5.0 basis points
  
• US Atlanta Fed GDPNow Forecast +4.26% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +5.02% unch.: CPI YoY +7.49% unch.
  
• 10-Year TIPS Spread 2.32 +6.0 basis points
  
• Highest target rate probability for Feb. 1st FOMC meeting: 49.0%(-1.0 percentage point) chance of 4.75%-5.0%. Highest target rate probability for March 22nd meeting: 42.9%(+4.4 percentage points) chance of 4.75%-5.0%.
  

US Covid-19:

• 91 new infections/100K people(last 7 days total). 5.2%(+.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 -81.8%(+3.7 percentage points) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +266 open in Japan 
• China A50 Futures: Indicating +228 open in China

• DAX Futures: Indicating +81 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 75% Net Long
  

Wednesday Watch

Evening Headlines

Bloomberg:                

• China’s Air Traffic Is Shrinking Again as Covid Tumult Grows.
• NYC Becomes One Billionaire Family’s Haven From China Property Crash.   
• Alibaba Founder Jack Ma Living in Tokyo for Half a Year, FT Says.
• Even BOJ Workers Aren't Getting Pay Rises That Kuroda Wants to Stabilize Inflation.
  
• Chevron to Send First Venezuelan Crude Shipment to US by Late December.
  
• Asia Stocks Track US Drop Amid Focus on Fed, China: Markets Wrap.
• Oil Rises a Third Day on OPEC+ Cut Chatter, Falling Stockpiles.
• Billionaires Change How They Give Away Their Fortunes to Avoid Taxes and Keep Control.  
• Sam Bankman-Fried Set to Face a Public Still Seeking Answers on FTX’s Collapse.

Wall Street Journal:

• Why America Doesn’t Have Enough EV Charging Stations.
• U.S. to Backstop Mortgages Above $1 Million in High-Cost Areas.
• What to Know About the Protests in China.
• Chinese Surveillance State Targets Protesters. 
• New Alzheimer’s Drug Shows Positive Results but Side Effects.
• OPEC+ Favors Maintaining Flat Production, Delegates Say.

CNBC.com:

• Congressional leaders clear the way for a bipartisan bill to avert a railroad strike.
  

MarketWatch:             

• ‘It was not sustainable or real’: Tech layoffs approach Great Recession levels.
• What legal strategy? Sam Bankman-Fried’s FTX comments will cause headaches, experts say.
  
• FTX collapse to be focus of Senate hearing Thursday — here’s what to watch for.  
• AMC Networks stock slips after abrupt CEO exit, news of layoff plans.  
• CrowdStrike stock drops nearly 20% as elongating sales cycle slows new subscriptions.  
• Workday stock rises 5% following raised outlook and share-buyback plan.   
• TurboTax maker Intuit lowers revenue guidance for the year.

Zero Hedge:

• End Of Zero-COVID Will Not Cure China's Deep-Set Debt Problem.
• Pennsylvania County That Ran Out Of Paper Ballots Fails To Certify Election Results.
• Bahamas AG Says FTX 'Debacle' Not Their Fault. 
• Cyber Monday Sales Hit Record $11.3B, Fueled By Deep Discounts.
• There's A $19 Billion Backlog Of Weapons Bound For Taiwan.
• 'Gaslighting' Is The Word Of The Year For Good Reason.
• Goldman's Supply Chain Congestion Indicator Signals Largest Weekly Decline This Year.
• "I'm Witnessing History In The Making", Says Protester In Shanghai.
• Canadian Fashion Firm Releases Ad Celebrating "Beauty" Of Assisted Suicide.
• US stocks were subdued as higher yields offset China reopening optimism - Newsquawk Asia-Pac Market Open.
• Watch: Fauci Again Defends Chinese Lockdowns.
• WTI Extends Gains After API Reports Large Crude Draw.
• NBC News Reporter Not Seen On Air Since Paul Pelosi Attack Report Retracted.
• Stocks unwind China optimism after yields rise - Newsquawk US Market Wrap.
• Big-Tech & Bonds Sink As Global Yield Curve Inverts For First Time In Decades.

Newsmax:   

• Railway Unions Aren't Backing Off Strike Date, Despite DC Push to Avert.  
• Dr. Birx: Americans Need COVID Info, Not Mandates.
• Rep.-Elect Kolodin: Ariz. Dems Making a 'Farce' of Elections.
• Senate Passes Same-Sex Marriage Protection Bill; 12 Repubs Join Dems.

TheGatewayPundit.com:

• Pentagon Fails Another Audit – Over $2 Trillion in Assets Included in Failed Audits.
• BREAKING: DC Jury Reaches Decision – Finds Stewart Rhodes GUILTY of “Seditious Conspiracy” Charges – Government Refused to Expose Their Operatives Who Were the Only Ones Who Called for Violence. 
• BREAKING: Democrat Appointed Judge Dismisses AZ Attorney General Nominee Abe Hamadeh’s Election Lawsuit – Stating Results Must Be Certified First.
• Third Crypto Boss Dies in Helicopter Crash.
• Project Veritas: HHS Whistleblower Reveals ‘Tax Dollars’ Spent to ‘Put Children in the Hands of Criminals’… Migrant Child: My Female Sponsor ‘Would Pimp Me to Men’ (VIDEO).
• Celebrity Trainer Dies Suddenly at 53 at His Los Angeles Home.
• “I Vote “Aye” Under Duress” – Arizona Mohave County Board of Supervisor Coerced to Certify 2022 Election.
• Former Commander in 101st Airborne: Refusing Jab Was a ‘No Brainer’.
• Biden to Union Workers in Michigan: “Ten Years Ago, How Many of You Knew What the Hell a Supply Chain Was?” (VIDEO).
• Woke Pastor Says “Spirit of God Will Arrest” People Who Do Not Vote For Democrat Sen. Raphael Warnock.
• Rep. Andy Biggs Says There Are 20 Firm ‘No’ Votes Against House Minority Leader Kevin McCarthy Becoming Speaker.
• EXCLUSIVE: Angry Artist Vandalizes Balenciaga Store in London After Campaign Controversy – “More Stores will be Visited in Due Course”.

The Epoch Times:

• Mass Defiance in China Shows Populace Fed Up With Communist Control.
• LIVE NOW: UPenn Students Protest China’s COVID-19 Lockdowns, Mourn Deaths of Urumqi Fire Victims.
• LIVE NOW: New Yorkers Protest China’s COVID-19 Lockdowns at Chinese Consulate, Mourn Deaths of Urumqi Fire Victims.
• CCP Continues to Seek Capital From the West as China’s Economy Deteriorates: Expert.

Twitter: 

• @WallStreetSilv - Huge crowds arriving by bus to an isolation camp in the city of Guangzhou… it is all for your health. What is the point with isolation rooms after they all mingle like this? Why not just keep them all in the same room together? Or maybe it is not really about a virus? (video)
  
• @theinformantofc - On Chinese-speaking social medias, it has been reported over the past hour that a "mass incident" took place in #Haizhu District, #Guangzhou, the Capital of the Cantonese province of #Guangdong of People's Republic of #China, the third richest province of the country. 1/2. (video) Quarantine camp in #Guangzhou, #China with a reported capacity of 90,000 isolation pods. (video)
  
• @BernieSpofforth - This is not China… This is Canada. Trudeau is calling on the Chinese government to respect the protesters & listen to them. Reminder: Trudeau detained protesters without trial, sent in armed police & then froze their bank accounts. Just saying. (video)
  
• @jenniferzeng97 - At Mao Ye Department Store in #Shenzhen City in #CCPChina, one cop in every meter. That's how the #CCP responds to #ChinaUprising #chinaprotest #ChinaUprising #A4Revolution in #China. (video)
  

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 901,032 Reports(+3,103 from prior week) Through November 18th, 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 +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 138.75 -5.5 basis points. 

• China Sovereign CDS 77.75 -6.25 basis points. 
• China Iron Ore Spot 99.4 USD/Metric Tonne -.5%

• Bloomberg Emerging Markets Currency Index 47.6 +.05%.
• Bloomberg Global Risk-On/Risk Off Index  47.8 +.14%. 
• Bloomberg US Financial Conditions Index -.59 -1.0 basis point.
  
• Volatility Index(VIX) futures 23.1 +.3%.
• Euro Stoxx 50 futures +.36%.

• S&P 500 futures +.02%.

• NASDAQ 100 futures -.01%  

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (DCI)/.70
• (FRO)/.38
• (HRL)/.50
• (LESL)/.31
• (WOOF)/.16
• (RY)/2.66
• (TITN)/1.16
  

After the Close:

• (BOX)/.30
• (FIVE)/.14
• (LZB)/.85
• (NTNX)/-.12
• (OKTA)/-.24
• (PVH)/2.18 
• (CRM)/1.22
• (SMTC)/.63
• (SNOW)/.05
• (SPLK)/.25
• (SNPS)/1.84
• (VSCO)/.23
  

Economic Releases

8:15 am EST

• The ADP Employment Change for Nov. is estimated to fall to 200K versus 239K in Oct.
  

8:30 am EST

• Second 3Q GDP readings. 
• Advance Goods Trade Balance for Oct. is estimated at -$90.6B versus -$92.2B in Sept.
• Wholesale Inventories MoM for Oct. is estimated to rise +.5% versus a +.6% gain in Sept.
• Retail Inventories MoM for Oct. is estimated to rise +.5% versus a +.4% gain in Sept.
  

9:45 am EST

• MNI Chicago PMI for Nov. is estimated to rise to 47.0 versus 45.2 in Oct.

 10:00 am EST

• Pending Home Sales MoM for Oct. is estimated to fall -5.7% versus a -10.2% decline in Sept.
• JOLTS Job Openings for Oct. is estimated to fall to 10250K versus 10717K in Sept.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,907,570 barrels versus a -3,690,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +1,737,000 barrels versus a +3,058,000 barrel gain the prior week. Distillate inventories are estimated to rise by +1,430,500 barrels versus a +1,718,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.18% versus a +1.0% gain prior.

2:00 pm EST

• US Fed Beige Book release.

Upcoming Splits

• (TECH) 4-for-1
  

Other Potential Market Movers

• The Fed's Powell speaking, Fed's Cook speaking, China Non-Manufacturing PMI report, weekly MBA Mortgage Applications report, CSFB Industrials, Barclays Automotive/Mobility Conference, (LESL) investor day, (RIO) investor seminar and the (NVS) investor day 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 financial 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 Slightly Lower into Afternoon on Higher Long-Term Rates, Earnings Outlook Worries, US Economic Data, Tech/Utility Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Around Even
  

• Sector Performance: Mixed
  

• Volume:  Below Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 22.1 -.3%
• DJIA Intraday % Swing .8%
  
• Bloomberg Global Risk On/Risk Off Index 47.6 +1.5%

• Euro/Yen Carry Return Index 147.9 -.33%

• Emerging Markets Currency Volatility(VXY) 11.9 +.1%

• CBOE S&P 500 Implied Correlation Index 42.5 -.8% 

• ISE Sentiment Index 116.0 +42.0 points
  

• Total Put/Call 1.01 -2.9%

• NYSE Arms .54 -70.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 81.60 +.11%
  

• US Energy High-Yield OAS 377.64 -.6%
• Bloomberg TRACE # Distressed Bonds Traded 360.0 +11.0
  

• European Financial Sector CDS Index 100.44 -1.6% 
• Credit Suisse Subordinated 5Y Credit Default Swap 447.63 +27.3%
  

• Italian/German 10Y Yld Spread 190.0 basis points -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 141.63 -.22%
  

• Emerging Market CDS Index 237.3 -1.92%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.6 +1.5%

• 2-Year Swap Spread 32.0 basis points unch.
  

• TED Spread 42.25 basis points -5.0 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -35.75 basis points +7.25 basis points
  
• MBS  5/10 Treasury Spread  145.0 +3.0 basis points
  
• Bloomberg US Agg CMBS Avg OAS 127.0 unch.
  
• Avg. Auto ABS OAS 1.19 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.58 +.26%
• 3-Month T-Bill Yield 4.30% +2.0 basis points
  

• Yield Curve -74.5 basis points (2s/10s) +2.5 basis points
  

• China Iron Ore Spot 99.6 USD/Metric Tonne -.35%
• Dutch TTF Nat Gas(European benchmark) 129.25 euros/megawatt-hour +4.8%

• Citi US Economic Surprise Index 14.0 -.2 point

• Citi Eurozone Economic Surprise Index 34.9 -2.6 points
  

• Citi Emerging Markets Economic Surprise Index 1.9 -.5 point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 229.75 +.10:  Growth Rate +11.1% unch., P/E 17.2 -.1
  
• Bloomberg US Financial Conditions Index -.58 +5.0 basis points
  
• US Atlanta Fed GDPNow Forecast +4.26% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +5.02% unch.: CPI YoY +7.49% -6.0 basis points
  
• 10-Year TIPS Spread 2.26 -2.0 basis points
  
• Highest target rate probability for Feb. 1st FOMC meeting: 50.8%(-1.8 percentage points) chance of 4.75%-5.0%. Highest target rate probability for March 22nd meeting: 39.7%(-2.3 percentage points) chance of 5.0%-5.25%.
  

US Covid-19:

• 91 new infections/100K people(last 7 days total). 5.2%(+.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 -85.5%(-0.0 percentage points) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -73 open in Japan 
• China A50 Futures: Indicating +52 open in China

• DAX Futures: Indicating +59 open in Germany

Portfolio:

• Slightly Higher:  On gains in my commodity/industrial sector longs and index hedges
  

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

• Market Exposure: Moved to 50% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Growth -.6%
  

Sector Underperformers:

• 1) Utilities -1.0% 2) Software -.9% 3) Construction -.7%

Stocks Falling on Unusual Volume: 

• AXSM, MITK, PBF, ZIP, AMCX, MRTX, MIRM, AZPN, SYM, HIBB, CINC and ENFN
  

Stocks With Unusual Put Option Activity:

• 1) BKLN 2) TOL 3) IEP 4) THC 5) KRE
  

Stocks With Most Negative News Mentions:

• 1) HIBB 2) OPEN 3) CC 4) HOOD 5) UNH
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.6%

Sector Outperformers:

• 1) Steel +3.3% 2) Gold & Silver +2.2 3) Oil Service +2.0%

Stocks Rising on Unusual Volume:

• GEO, CRNC, ARWR, CEIX, NXST, NUS, RVMD, CTLT and NVAX
  

Stocks With Unusual Call Option Activity:

• 1) FIS 2) GRWG 3) FEZ 4) SABR 5) REI

Stocks With Most Positive News Mentions:

• 1) CTRN 2) BILI 3) FUTU 4) NXST 5) YY
  

Charts:

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