Wednesday Watch

Evening Headlines

Bloomberg:                 

• Chinese Shoppers Can Go Out Again. Online Buys Show They Won’t.

• Italy Relaxes Virus Rule, Allowing Kids to Go Out With a Parent.

• U.K. Scrambles to Catch Up in the Race to Test for Coronavirus.

• Trump Warns of Painful Weeks; Birx Projects Up to 200,000 Deaths.

• Social Distancing Shows Signs of Curbing Virus on West Coast.

• U.S. Futures Drop; Asian Stocks Set for Mixed Open: Markets Wrap. U.S. stock futures declined as investors assessed worsening American coronavirus figures as a new quarter begins. Asian shares looked set for a mixed start. Futures on the S&P 500 Index were about 1% lower as President Donald Trump warned of a “painful” two weeks ahead, with the country grappling to get the spread under control. Cases in New York state surged by 9,000, with more than 300 new deaths. Futures in Japan and Hong Kong retreated, while Australian shares opened higher. In China, a private reading on the country’s manufacturing sector that’s due Wednesday is expected to show a rebound for March. Treasuries edged higher. Futures on the S&P 500 slid 1% as of 8:10 a.m. in Tokyo. The gauge fell 1.6% on Tuesday. Futures on Japan’s Nikkei 225 slid 0.5%. Hang Seng Index futures dipped 0.7%. Australia’s S&P/ASX 200 Index rose 2.4%.   

• Oil Declines With More Turbulence Seen After Worst Quarter Ever.

• Five Things You Need to Know to Start Your Day.

• Fed Goes Global, No V-Shape Recovery, China Worst Over: Eco Day.

• U.S. Betting Furloughed Is Better Than Fired for 600,000 Workers. 

• Gundlach Says Stocks to Fall Beyond Lows Reached in March.   

• California to Release Up to 3,500 Inmates in Response to Virus.  

• There’s a Battle Brewing for Your $1,200 Government Relief Check.  

• Hospitals Tell Doctors They’ll Be Fired If They Speak Out About Lack of Gear.  

• A Lot Is Riding on Stock Bottom Calls That Worked in a Bull Market.

Wall Street Journal:

• U.S. Braces for Patient Surge as Virus Cases Climb.

• Huawei Warns U.S. of Retaliation by Beijing; Profit Growth Slows.

• Pain in the Oil Patch.

• Federal Prisons Heighten Restrictions to Stem Spread of Coronavirus.

• U.S. Stocks Turn In Worst Quarter Since 2008.

• Airlines Seeking Aid for Virus Losses Can’t Share Flights.

CNBC.com:  

• Netflix, others are market bright spots after S&P 500′s worst first quarter ever.

• With strikes and a ‘sick out,’ some grocery and delivery workers call for more pay, safety measures.

• Coronavirus updates: Virus expected to cripple US auto sales, NY cases jump to over 75,000. 

• Start-ups cut nearly 4,000 jobs in March as the coronavirus ripples through tech.

• The Fed’s Loretta Mester says to expect ‘some really bad economic numbers’ before things get better.

Fox News:

• These states threaten fines, jail for people who ignore self-isolation orders.

• McConnell says impeachment trial 'diverted' government's attention.

MarketWatch.com:       

• The Dow just booked the worst 1st quarter in 124 years — here’s how the stock market tends to perform after brutal quarters.

• Should all Americans be wearing face masks to protect against coronavirus? These scientists say yes.

• Trillions in coronavirus spending could explode deficits to World War II levels.

Zero Hedge:

• Trump Tells America "Get Ready For A Painful 2 Weeks" As Task Force Goes 'All-In' On Mitigation.

• "There Are Basically No Sales": U.S. Auto Industry Enters Total Collapse As A Result Of Nationwide Lockdown.

• As The Crisis Deepens, Keep An Eye On Illinois' Unpaid Bills.

• Supplies Are Starting To Get Really Tight Nationwide As Food Distribution Systems Break Down.

• FBI Report: Border Agents Stopped A Chinese Biologist Sneaking Viable SARS, MERS Viruses Into US Airport.

• 28 Spring-Breaker 'Covidiots' Test Positive In Texas After Group Trip To Cabo.

• Steve Cohen Doubts This Is The Bottom: "Markets Don't Come Back In A Straight Line".

• New York Reports Largest Daily Jump In Hospitalizations: Live Updates.

• Universities Panic As Dorms Sit Empty: Recruiting, Tuition, & Faculty Contracts In Limbo.

• After Worst Quarter Ever, WTI Extends Losses On Massive Crude & Gasoline Build.

• Stocks Suffer Worst Start To A Year Ever... As Trump Approval Reaches Record High.

Business Insider:   

• Passengers on Holland America's 2 stranded cruise ships, the Zaandam and Rotterdam, may be stuck at sea indefinitely as Florida officials fret over letting them dock.

• Iraq reportedly plans to join the global oil war with prices already near 18-year lows.

John Hopkins University:

• Coronavirus Global Cases. (map)

BNO News:

• Tracking Coronavirus: Map, data and timeline.

Google Docs:

• Coronavirus Testing by State.

Night Trading 

• Asian equity indices are -1.0% to +1.0% on average.

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

• China Sovereign CDS 53.0 -6.0 basis points.

• Bloomberg Emerging Markets Currency Index  58.53 -.04%.

• Euro Stoxx 50 futures n/a.

• S&P 500 futures -1.21%.

• NASDAQ 100 futures -.89%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (LW)/.92

• (UNF)/1.67 

After the Close:

• (PVH)

Economic Releases 
8:15 am EST

• The ADP Employment Change for March is estimated at -150K versus 183K in Feb.
  

10:00 am EST

• Construction Spending MoM for Feb. is estimated to rise +.6% versus a +1.8% gain in Jan.

• ISM Manufacturing for March is estimated to fall to 44.8 versus 50.1 in Feb.

• ISM Prices Paid for March is estimated to fall to 41.6 versus 45.9 in Feb.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +3,920,180 barrels versus a +1,623,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +1,086,550 barrels versus a -1,537,000 barrel decline the prior week. Distillate inventories are estimated to rise by +316,000 barrels versus a -678,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -1.33% versus a +.9% gain prior. 
  

Afternoon

• Wards Total Vehicle Sales for March is estimated to fall to 12.0m versus 16.83M in Feb.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone PMI report, weekly MBA Mortgage Applications report, (ANDE) investor day, (TECK) analyst day and the (OKTA) investor day could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly lower, weighed down by financial and technology shares in the region. I expect US stocks to open lower and to maintain losses into the afternoon. The Portfolio is 25% net long heading into the day.

Stocks Reversing Substantially Lower into Final Hour on Coronavirus Fears, Global Recession Worries, Technical Selling, Tech/Financial Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Mixed
  

• Volume: Heavy

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 55.3 -3.2%

• Euro/Yen Carry Return Index 123.21 -.35%

• Emerging Markets Currency Volatility(VXY) 12.4 -2.1%

• S&P 500 Implied Correlation 80.7 +3.1%

• ISE Sentiment Index 56.0 -44.0 points
  

• Total Put/Call 1.19 +8.2%

• NYSE Arms .95 -21.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 111.34 +3.17%
  

• America Energy Sector High-Yield CDS Index 1,242.0 -8.45%

• European Financial Sector CDS Index 117.92 -.42%

• Italian/German 10Y Yld Spread 199.5 +2.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 140.68 -2.5%
  

• Emerging Market CDS Index 340.50 -2.87%
  

• iBoxx Offshore RMB China Corporate High Yield Index 164.72 -.59%

• 2-Year Swap Spread 26.0 -1.0 basis point

• TED Spread 141.0 -8.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap 43.5 +15.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 58.55 +.11%
• 3-Month T-Bill Yield .03% +1.0 basis point

• Yield Curve .46 +1.0 basis point

• China Iron Ore Spot 82.5 USD/Metric Tonne +1.37%

• Citi US Economic Surprise Index -2.9 -1.4 points

• Citi Eurozone Economic Surprise Index -50.20 -8.6 points

• Citi Emerging Markets Economic Surprise Index -6.6 +18.2 points

• 10-Year TIPS Spread .87 -8.0 basis points
• n/a chance of no change at April 29th meeting, n/a chance of no change at June 10th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -62 open in Japan 
• China A50 Futures: Indicating -112 open in China

• DAX Futures: Indicating -141 open in Germany

Portfolio:

• Slightly Lower: On losses in my consumer staple/tech/biotech/industrial/medical sector longs

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 25% Net Long

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +30.1% Above 100-Day Average
• 7 Sectors Rising, 4 Sectors Declining
• 51.0% of Issues Advancing, 47.8% Declining
• 4 New 52-Week Highs, 12 New Lows
• 5.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 40.5%
• Vix 51.9 -9.1%
• Total Put/Call 1.22 +10.9%
• TRIN/Arms .75 -38.0%

Tuesday Watch

Evening Headlines

Bloomberg:                

• Trump Says Coronavirus Travel Ban May Extend to More Countries.

• As Rest of World Locks Down, China Struggles to Get Shoppers Out.

• Retailers Furlough 500,000 Despite Stimulus Law, More Expected.

• New York City Marshals All Hospitals; Navy Sails In to Help.

• Stay-at-Home Orders Expand; J&J in Vaccine Deal: Virus Update.

• Asia Stocks Set to Track U.S. Higher; Dollar Gains: Markets Wrap. Asian stocks looked set to rise after a rally in their U.S. counterparts, as investors saw glimmers of optimism in efforts to deliver rapid testing for the new coronavirus. The dollar climbed. Futures pointed higher in Japan and Hong Kong on the last trading day of the quarter. Australia opened modestly higher. S&P 500 futures were little changed in Asia after the index climbed for the fourth time in five days with health-care shares among the biggest gainers. Crude gained after tumbling in New York Monday even though President Donald Trump spoke with Russia’s Vladimir Putin about falling oil prices. The 10-year Treasury yield rose, while gold dipped. S&P 500 futures rose 0.1% as of 8:06 a.m. in Tokyo. The S&P 500 Index climbed 3.4%. Nikkei 225 futures rose 2.7%. Australia’s S&P/ASX 200 Index added 1%. Hong Kong’s Hang Seng Index contracts climbed 1.7%.  

• Oil Sell-Off Pauses as Market Grapples With Supply-Demand Shock.  

• Five Things You Need to Know to Start Your Day.

• U.S. Jobless Soar, Australia Slump, Supply-Chain Sages: Eco Day.  

• Visa Says Consumer Spending Has ‘Sharply Declined,’ Even Online.  

• Bacon Left Out of Surge Beef and Eggs Are Getting From Lockdowns.  

• Millions More Jobless Claims to Show Reeling U.S. Economy.

Wall Street Journal: 

• How Coronavirus Invaded a New York Community: ‘We Weren’t Expecting It to Be Ground Zero’.

• Nurses Are the Coronavirus Heroes.

• Coronavirus Models of Uncertainty.

• The Fed Transformed: Powell Leads Central Bank Into Uncharted Waters.

• U.S. Extends Shutdowns as Virus Strains Hospitals.

• DOJ Investigating Lawmakers for Possible Insider Trading.

CNBC.com:   

• Moody’s cuts outlook on $6.6 trillion US corporate debt pile to ‘negative’.

• Microsoft jumps 7% as cloud services see pickup.

• Ford, GE plan to produce 50,000 ventilators in 100 days.

• Coronavirus job losses could total 47 million, unemployment rate may hit 32%, Fed estimates.

• Cramer: Science can stop economy from entering ‘coronavirus-induced depression’

• Stocks making the biggest moves after hours: RH, Domino’s Pizza, Marathon Oil & more.

• Coronavirus live updates: USNS Comfort’s arrival draws crowds, CA has ordered over 100 million N95 masks.

• Kohl’s will furlough about 85,000 employees, Macy’s furloughs majority as retailers cope with significant sales losses.

• Oil drops more than 6% to 18-year low as global demand evaporates.

• 6 promising Nasdaq-100 companies that are leading the way for technological and financial innovation.

Fox News:

• Trump shows off new rapid coronavirus test kit in Rose Garden, as HHS announces milestone of tests.

• Coronavirus causing rise in relapses among people recovering, expert says.

• Rising virus numbers in these states are cause for concern, Harvard official says.

Zero Hedge:

• Tent Hospital Erected In Central Park As Hospital Ship Arrives In New York City.

• Energy Collapse, Earnings Ennui, & Consumer Credit Cracks.

• Fed's Kashkari Goes Full-On God-Complex, Lectures "This Is Not The Time To Worry About Moral Hazard".

• IV Vitamin C "Widely Used" To Treat COVID-19 In NY Hospitals.

• "This Will Be A Tsunami" - America Has A New Problem: How To Give Away $2 Trillion In 2 Weeks.

• One Oilman's Plea To President Trump.

• Retailers Prepare For Civil Unrest; Boarded-Up Stores Seen From SoHo To Beverly Hills.

• In Late February, Nancy Pelosi Encouraged Large Groups To Congregate In Chinatown.

• Second US Aircraft Carrier Is Facing A COVID-19 Outbreak Among Crew.

• Mortgage Lenders Demand Fed Bailout... After Blaming Fed For Forcing "Staggering, Unprecedented" Margin Calls.

• Stocks Bid Into Month-End Despite Americans' Unprecedented Cash-Hoarding.

Business Insider: 

• Ford will make 50,000 ventilators in the next 100 days to meet critical coronavirus pandemic demand.

• Wuhan's death toll could be astronomically higher than the Chinese government has reported, some residents say.

• Billionaire David Geffen deleted his Instagram after being slammed for a post about how he's self-isolating on his $590 million superyacht.

• Leaked memo from Delta reveals plans to cut worker hours and pay, despite protections in the coronavirus stimulus package. United and other airlines are doing the same.

John Hopkins University:

• Coronavirus Global Cases. (map)

BNO News:

• Tracking Coronavirus: Map, data and timeline.

Google Docs:

• Coronavirus Testing by State.

Night Trading 

• Asian equity indices are +1.75% to +2.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 144.25 +3.25 basis points.

• China Sovereign CDS 59.0 +6.0 basis points.

• Bloomberg Emerging Markets Currency Index  58.51 -.02%.

• Euro Stoxx 50 futures n/a.

• S&P 500 futures +.39%.

• NASDAQ 100 futures +.47%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (CAG)/.49

• (CONN)/.35

• (FLR)/.13

• (MKC)/1.03

• (REV)/-1.08

After the Close:

• (BB)/.04

• (CRON)/.04

• (VRNT)/1.16

Economic Releases 
9:00 am EST

• The S&P CoreLogic CS 20-City MoM for Jan. is estimated to rise +.4% versus a +.43% gain in Dec.
  

9:45 am EST

• The MNI Chicago PMI for March is estimated to fall to 40.0 versus 49.0 in Feb.
  

10:00 am EST

• The Conference Board Consumer Confidence Index for March is estimated to fall to 110.0 versus 130.7 in Feb.

Upcoming Splits

• None of note

Other Potential Market Movers

• The German Unemployment Rate report, Eurozone CPI report, US weekly retail sales reports, (EPD) analyst day, (TSEM) online investor conference, (BKD) investor day and the (PFE) investor day could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

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