Thursday, April 30, 2020

Friday Watch

Evening Headlines
Bloomberg:                     
  • Stocks Drop Amid Earnings Caution; Dollar Recovers. Japanese shares and U.S. futures dropped after sobering comments from Amazon and Apple about the impact of the coronavirus. The dollar pared overnight losses and Treasury yields ticked lower. Asian trading was limited Friday, with much of the region out on holidays. After U.S. markets closed, Amazon.com warned of a possible second-quarter loss, while Apple omitted an earnings forecast for the first time in more than a decade. Earlier, the S&P 500 Index fell from a seven-week high in wake of a larger-than-expected jump in U.S. jobless claims. Strong results from Microsoft Corp., Facebook Inc. and Tesla Inc. had limited losses on the tech-heavy Nasdaq gauges. Futures on the S&P 500 dropped 1% as of 9:08 a.m. in Tokyo after the index fell 0.9% Thursday. Japan’s Topix Index fell 0.8%. Australia’s ASX/S&P 200 slumped 2.5%. The Stoxx Europe 600 Index decreased 2% Thursday.
Wall Street Journal:
CNBC.com:
Zero Hedge:      
Night Trading 
  • Asian equity indices are -2.75% to -1.75% on average.
  • Asia Ex-Japan Investment Grade CDS Index 121.5 +3.25 basis points.
  • China Sovereign CDS 45.0 +1.75 basis points.
  • Bloomberg Emerging Markets Currency Index 58.49 -.14%.
  • FTSE 100 futures -1.1%.
  • S&P 500 futures -.9%.
  • NASDAQ 100 futures -1.5%.
Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:
  • (ABBV)/2.25
  • (APO)/.48
  • (CBOE)/1.53
  • (CHTR)/2.94
  • (CVX)/.67
  • (CLX)/1.49
  • (CL)/.73
  • (DISH)/.57
  • (EL)/.76
  • (XOM)/.06
  • (HON)/1.94
  • (ITT)/.75
  • (JCI)/.36
  • (LYB)/1.43
  • (MINI)/.40
  • (NWL)/.05
  • (PSX)/.63
  • (WY)/.13
After the Close:
  • None of note
Economic Releases
10:00 am EST
  • Construction Spending MoM for March is estimated to fall -3.5% versus a -1.3% decline in Feb.
  • ISM Manufacturing for April is estimated to fall to 36.0 versus a reading of 49.1 in March.
  • ISM Prices Paid for April is estimated to fall to 33.0 versus 37.4 in March.
Afternoon:
  • Wards Total Vehicle Sales for April is estimated to fall to 6.8M versus 11.37M in March.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The UK Money Supply report could also impact trading today.
Market Hours
Normal:
  • 9:30 am - 4:00 pm EST
BOTTOM LINE: Asian indices are lower, weighed down by consumer discretionary and financial 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 Falling into Final Hour on Global Recession Fears, Rising China Tensions, Technical Selling, Financial/Retail Sector Weakness

 Broad Equity Market Tone:
  • Advance/Decline Line: Substantially Lower
  • Sector Performance: Every Sector Declining
  • Volume: Heavy
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • Volatility(VIX) 34.6 +10.8%
  • Euro/Yen Carry Return Index 121.73 +1.2%
  • Emerging Markets Currency Volatility(VXY) 11.06 -1.95%
  • S&P 500 Implied Correlation 73.05 +7.9%
  • ISE Sentiment Index 123.0 +28.0 points
  • Total Put/Call .92 -9.8%
  • NYSE Arms .96 -21.3%
Credit Investor Angst:
  • North American Investment Grade CDS Index 87.05 -.88%
  • US Energy High-Yield OAS 1,383.52 -2.33%
  • European Financial Sector CDS Index 101.03 +5.95%
  • Italian/German 10Y Yld Spread 235.25 +10.0 basis points
  • Asia Ex-Japan Investment Grade CDS Index 115.0 -2.8%
  • Emerging Market CDS Index 335.45 -.19%
  • iBoxx Offshore RMB China Corporate High Yield Index 163.61 +.02%
  • 2-Year Swap Spread 12.75 -.25 basis point
  • TED Spread 67.0 -8.0 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap 8.0 -10.0 basis points
  • MBS  5/10 Treasury Spread  103.0 -18.0 basis points
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 58.64 -.23%
  • 3-Month T-Bill Yield .09% unch.
  • Yield Curve 42.25-1.75 basis points
  • China Iron Ore Spot 80.20 USD/Metric Tonne -.34%
  • Citi US Economic Surprise Index -144.60 -27.3 points
  • Citi Eurozone Economic Surprise Index -268.50 -28.7 points
  • Citi Emerging Markets Economic Surprise Index 10.2 -1.9 points
  • 10-Year TIPS Spread 1.08 -6.0 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 -173 open in Japan 
  • China A50 Futures: Indicating -350 open in China
  • DAX Futures: Indicating -37 open in Germany
Portfolio:
  • Slightly Higher: On gains in my tech sector longs, index hedges and emerging market shorts
  • Disclosed Trades: Added to my (IWM)/(QQQ) hedges and emerging market shorts
  • Market Exposure: Moved to 25% Net Long