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• S&P futures down 0.7%, but off worst levels, following big selloff in US equities in prior session. Asian equities down big overnight. Asia playing catch-up post our selloff yesterday; Japan -3.9% and China -5.2% (lowest close for the Shanghai Comp since late ’14). European markets under pressure. Treasuries rallying with curve flattening. Dollar mostly weaker. Gold up over 1% after failing to get a meaningful flight to quality big yesterday. WTI crude down over 1.7% following big crude stockpile bid. Copper also down over 1.5%. High Yield ETF's hit 2 year lows yesterday and today I will look at credit spreads and explain why this time is really different.  
• Several factors blamed for recent risk-off trade. Speed of rate increase hit crowded growth and momentum plays that have been longstanding market leaders. Earnings sentiment shifting from strong overall results to peak margin concerns. More companies talking about softer China demand. US-China tensions continue to escalate (and beyond trade). Buyback blackouts dampening corporate support (windows should start reopening soon). Systematic selling pressure also flagged.  Way too many people calling to buy the dip on Bloomberg and CNBC TV.  S&P bullish sentiment continues to drop and is at 28% and this should work lower to 10%.  
• Very quiet from a headline perspective today with most of the discussion in the press revolving around the market selloff. Trump criticized Fed (again) for raising rates. However, also said he was not surprised by market "correction." Mnuchin and Fed officials also downplayed the move, highlighting underlying strength of US economy. Nothing particularly incremental on Italian budget or Brexit. No signs of any additional policy support on the horizon in China.
• Apple reached $600M deal to license Dialog Semiconductor’s power management technology and acquire other assets. Tesla CEO Musk pushed back against report James Murdoch likely to be company’s chairman and agreed to recent SEC agreement.  Fluor negatively preannounced. Square hit by CFO departure (Sarah Friar ex GS internet analyst, loved by street is leaving to take CEO job at Nextdoor). Costco reported better than expected September sales. Eddie Lampert reportedly won’t provide additional financing for Sears.  
• All eyes on the S&P’s 200 moving average (2765) given pre-open futures weakness.  Worth noting the 200 day held every time it was tested this Spring, and hasn’t traded below it since early 2016.  45& of the NYSE is now under the 200 day.  
• Tech continues to feel the most pain, with that subsector -4.8% yesterday.  Over the past 5 sessions the NYSE FANG Index is now -10.7%.
• Equity pain not diminishing the chances of further rate hikes; still 73% for a move by December vs. 77% a week ago.

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