Thursday, August 31, 2023

Stocks Higher into Afternoon on US Economic "Soft-Landing" Hopes, Lower Long-Term Rates, Earnings Outlook Optimism, Tech/Gambling Sector Strength

Broad Equity Market Tone:

  • Advance/Decline Line: Higher
  • Sector Performance: Mixed
  • Volume: Below Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 13.6 -1.8%
  • DJIA Intraday % Swing .51%
  • Bloomberg Global Risk On/Risk Off Index 68.8 -1.6%
  • Euro/Yen Carry Return Index 167.2 -1.2%
  • Emerging Markets Currency Volatility(VXY) 8.6 -.7%
  • CBOE S&P 500 Implied Correlation Index 18.9 -2.5% 
  • ISE Sentiment Index 118.0 +5.0 points
  • Total Put/Call .79 -28.8%
  • NYSE Arms 1.55 +20.2%
Credit Investor Angst:
  • North American Investment Grade CDS Index 63.3 +1.1%
  • US Energy High-Yield OAS 318.75 +.86%
  • Bloomberg TRACE # Distressed Bonds Traded 346.0 +7.0
  • European Financial Sector CDS Index 81.3 +1.9% 
  • Deutsche Bank Subordinated 5Y Credit Default Swap 262.0 +.61%
  • Italian/German 10Y Yld Spread 165.0 basis points unch.
  • Asia Ex-Japan Investment Grade CDS Index 128.9 -2.5%
  • Emerging Market CDS Index 201.97 +2.6%
  • China Corp. High-Yield Bond USD ETF(KHYB) 24.8 +.12%
  • 2-Year SOFR Swap Spread -10.0 basis points -1.0 basis point
  • TED Spread 21.75 basis points -.75 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -10.75 -1.5 basis points
  • MBS  5/10 Treasury Spread 169.0 +1.0 basis point
  • Bloomberg CMBS Investment Grade Bbb Average OAS 797.0 +25.0 basis points
  • Avg. Auto ABS OAS 74.0 +1.0 basis point
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 42.7 -.15%
  • 3-Month T-Bill Yield 5.45% -1.0 basis point
  • China Iron Ore Spot 113.3 USD/Metric Tonne -.8%
  • Dutch TTF Nat Gas(European benchmark) 35.0 euros/megawatt-hour -11.0%
  • Citi US Economic Surprise Index 46.4 +3.4 points
  • Citi Eurozone Economic Surprise Index -578.1 -.4 point
  • Citi Emerging Markets Economic Surprise Index -2.7 -.1 point
  • S&P 500 Current Quarter EPS Growth Rate YoY(495 of 500 reporting) -6.0%  +.2 percentage point
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 237.74 +.03:  Growth Rate +8.2% unch., P/E 19.0 unch.
  • S&P 500 Current Year Estimated Profit Margin 12.20% -2.0 basis points
  • NYSE FANG+ Current Quarter EPS Growth Rate YoY(10 of 10 reporting) +24.3% unch.
  • NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 243.61 +.22: Growth Rate +46.9% +.1 percentage point, P/E 32.3 +.1
  • Bloomberg US Financial Conditions Index .44 +1.0 basis point
  • Bloomberg Euro-Zone Financial Conditions Index .17 +2.0 basis points
  • US Yield Curve -78.0 basis points (2s/10s) -1.0 basis point
  • US Atlanta Fed 2Q GDPNow Forecast +5.63% -28.0 basis points
  • Cleveland Fed Inflation Nowcast Core PCE YoY +4.03% -20.0 basis points: CPI YoY +3.82% unch.
  • 10-Year TIPS Spread 2.25 -2.0 basis points
  • Highest target rate probability for Nov. 1st FOMC meeting: 54.6%(+4.5 percentage points) chance of 5.25%-5.5%. Highest target rate probability for Dec. 13th meeting: 52.7%(+3.2 percentage points) chance of 5.25%-5.5%.
Overseas Futures:
  • Nikkei 225 Futures: Indicating -99 open in Japan 
  • China A50 Futures: Indicating +30 open in China
  • DAX Futures: Indicating +39 open in Germany
Portfolio:
  • Higher:  On gains in my tech/industrial sector longs and emerging market shorts
  • Disclosed Trades: None
  • Market Exposure: 75% Net Long

Bear Radar

Style Underperformer:

  • Large-Cap Value +.1%
Sector Underperformers:
  • 1) Healthcare Providers -1.6% 2) Gold & Silver -1.0% 3) Digital Health -.8%
Stocks Falling on Unusual Volume: 
  • GMED, RA, FIVE, ZIP, EDR, CHWY, WWE, DG and VFS
Stocks With Unusual Put Option Activity:
  • 1) MSOS 2) UBS 3) DG 4) IOT 5) OKTA
Stocks With Most Negative News Mentions:
  • 1) DLTH 2) PSNY 3) DG 4) PLTR 5) SE
Charts:

Bull Radar

Style Outperformer:

  • Large-Cap Growth +.4%
Sector Outperformers:
  • Networking +3.2% 2) Disk Drives +2.1% 3) Cyber Security +1.7%%
Stocks Rising on Unusual Volume:
  • CIEN, ICCT, CAL, OKTA, GCO, ASO, UGI, TVTX, CRWD, OLMA, VEEV, CRNX, PI, VSCO, WDC, FL, RNG, TDW, ANET, TNET, OLLI, AA, IIPR, ACMR, CRM, CECO, CDLX and AMBA
Stocks With Unusual Call Option Activity:
  • 1) TIO 2) DG 3) MSOS 4) ACWI 5) CRM
Stocks With Most Positive News Mentions:
  • 1) ANET 2) CIEN 3) ASO 4) WDC 5) SHOP

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

Earnings of Note 
Company/Estimate 

Before the Open:
  • None of note
After the Close: 
  • None of note
Economic Releases  

8:30 am EST

  • The Change in Non-Farm Payrolls for Aug. is estimated at 170K versus 187K in July.
  • The Unemployment Rate for Aug. is estimated at 3.5% versus 3.5% in July.
  • Average Hourly Earnings MoM for Aug. is estimated to rise +.3% versus a .4% gain in July.
  • The Labor Force Participation Rate for Aug. is estimated at 62.6% versus 62.6% in July.

10:00 am EST

  • Construction Spending MoM for July is estimated to rise +.5% versus a +.5% gain in June. 
  • ISM Manufacturing for Aug. is estimated to rise to 47.0 versus 46.4 in July.
  • ISM Prices Paid for Aug. is estimated to rise to 44.0 versus 42.6 in July.

Afternoon:

  • Wards Total Vehicle Sales for Aug. is estimated to fall to 15.45M versus 15.74M in July.

Upcoming Splits 

  • None of note
Other Potential Market Movers
  • The Fed's Mester speaking and the China Manufacturing PMI report 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 -17.6% Below 100-Day Average 
  • Nasdaq/NYSE Volume Ratio 9.9 -1.7
  • 5 Sectors Declining, 6 Sectors Rising
  • 57.4% of Issues Advancing, 39.7% Declining
  • 58 New 52-Week Highs, 10 New Lows
  • 49.5%(+.8%) of Issues Above 200-day Moving Average
  • Average 14-Day RSI 55.0 -1.0
  • Bloomberg Global Risk-On/Risk-Off Index 68.8 -1.6%
  • Russell 1000: Growth/Value 17,725.4 +.45%
  • 1-Day Vix 10.1 -15.8%
  • Vix 13.7 -1.4%
  • Total Put/Call .75 -32.4%
  • TRIN/Arms 1.49 +15.5%

Wednesday, August 30, 2023

Thursday Watch

Evening Headlines

Bloomberg:

Zero Hedge:

CNBC.com:
TheGatewayPundit.com:
 The Epoch Times:  
Twitter:
OpenVAERS:
SKirsch.com:
Night Trading 
  • Asian equity indices are -.25% to +.50% on average.
  • Asia Ex-Japan Investment Grade CDS Index 128.75 -1.5 basis points. 
  • China Sovereign CDS 78.5 +1.75 basis points.
  • China Iron Ore Spot 115.95 USD/Metric Tonne +1.33%.
  • Bloomberg Emerging Markets Currency Index 42.76 +.04%.
  • Bloomberg Global Risk-On/Risk Off Index 70.92 +1.44%. 
  • Bloomberg US Financial Conditions Index 33.0 -10.0 basis points.
  • Volatility Index(VIX) futures 15.3 -.02%.
  • Euro Stoxx 50 futures +.05%.
  • S&P 500 futures +.07%.
  • NASDAQ 100 futures +.06%.  
Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and consumer shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 75% net long heading into the day.