Tuesday, March 31, 2020

Wednesday Watch

Evening Headlines
Bloomberg:                 
  • 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%.   
Wall Street Journal:
CNBC.com:  
Zero Hedge:
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:

Monday, March 30, 2020

Tuesday Watch

Evening Headlines
Bloomberg:                
  • 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%.  
Wall Street Journal: 
CNBC.com:   
Zero Hedge:
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.