Wednesday Watch

Night Trading 

• Asian equity indices are -.25% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 109.75 +1.0 basis point. 

• China Sovereign CDS  70.5 +3.0 basis points.
  

• Bloomberg Emerging Markets Currency Index 52.25 -.02%.  
• Bloomberg Global Risk-On/Risk Off Index 3,994.0 - points.
• Volatility Index(VIX) futures 28.2 +.%.
• Euro Stoxx 50 futures n/a.

• S&P 500 futures +.44%.

• NASDAQ 100 futures +.38%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (CONN)/.17
• (DCI)/.72
• (WB)/.46
  

After the Close:

• (AI)/-.29
• (CHWY)/-.13
• (GME)/-1.22
• (HPE)/.45
• (MDB)/-.10
• (NTAP)/1.28
• (PVH)/1.60
• (SMTC)/.76
  

Economic Releases

10:00 am EST

• Construction Spending MoM for April is estimated to rise +.5% versus a +.1% gain in March.
• ISM Manufacturing for May is estimated to fall to 54.5 versus 55.4 in April.
• ISM Prices Paid for May is estimated to fall to 80.5 versus 84.6 in April.
• JOLTS Job Openings for April is estimated to fall to 11300K versus 11549K in March.
  

2:00 pm EST

• US Fed Beige Book release.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Bullard speaking, Fed's Williams speaking, Eurozone PMI report, weekly MBA Mortgage Applications report, weekly US retail sales reports, Cowen Tech/Media/Telecom Conference, Wells Fargo Energy Conference, Loop Capital Investor Conference,  RBC Consumer/Retail Conference, (LEVI) investor day and the (PCAR) analyst day could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are modestly higher, boosted by industrial and financial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Slightly Lower into Afternoon on More Hawkish Fed Commentary, Higher Long-Term Rates, Technical Selling, Biotech/Retail Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance:  Most Sectors Declining
  

• Volume:  Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 26.3 -1.0%
• Bloomberg Global Risk On/Risk Off Index 4,430.0 +240.0 points

• Euro/Yen Carry Return Index 142.13 +.42%

• Emerging Markets Currency Volatility(VXY) 12.1 -1.3%

• CBOE S&P 500 Implied Correlation Index 45.9 -1.3% 

• ISE Sentiment Index 97.0 +9.0 points
  

• Total Put/Call .91 +62.5%

• NYSE Arms .75 -14.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 79.52 +.6%
  

• US Energy High-Yield OAS 379.40 -2.7%

• European Financial Sector CDS Index 97.2 +3.5%

• Italian/German 10Y Yld Spread 200.0 basis points +6.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 110.75 +2.3%
  

• Emerging Market CDS Index 270.07 +1.7%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 28.7 -.42%
  
• Russia Sovereign Debt Credit Default Swap 9,643.46 -20.6%
  

• 2-Year Swap Spread 34.0 basis points +3.0 basis points
  

• TED Spread 54.75 basis points +1.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -15.5 basis points unch.
  
• MBS  5/10 Treasury Spread  117.0 +2.0 basis points
  
• iShares CMBS ETF 48.62 -.4%
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 52.25 -.03%
• 3-Month T-Bill Yield 1.04% +1.0 basis point
  

• Yield Curve 29.0 basis points (2s/10s) +3.25 basis points
  

• China Iron Ore Spot 131.0 USD/Metric Tonne -1.6%

• Citi US Economic Surprise Index -37.8 +5.9 points

• Citi Eurozone Economic Surprise Index 19.6 +8.3 points
  

• Citi Emerging Markets Economic Surprise Index 19.2 +7.2 points

• 10-Year TIPS Spread 2.70 +4.0 basis points
  
• 0.0%(unch.) chance of no change at July 27th FOMC meeting, 0.0%(unch.) chance of no change at September 21st meeting

US Covid-19:

• 219 new infections/100K people(last 7 days total). 13.0%(unch.) of 1/14 peak +0/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -83.7%(n/a) from peak 7-day avg. of 1/9/21 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +6 open in Japan 
• China A50 Futures: Indicating -73 open in China

• DAX Futures: Indicating +53 open in Germany

Portfolio:

• Slightly Lower:  On losses in my tech/consumer discretionary/industrial sector longs
  

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

• Market Exposure:  Moved to 50% Net Long
  

Bear Radar

Style Underperformer:

• Mid-Cap Growth -1.4%

Sector Underperformers:

• 1) Biotech -2.1% 2) Retail -1.9% 3) Shipping -1.7%

Stocks Falling on Unusual Volume: 

• SD, DKS, SIX, MDB, ALB, NTNX, LUNG, PGNY, MLM, TRIP, ARLP, PINS, BCC, LESL, FLYW, EVH, REGN, X, CDNA, HALO, RADI, IVT, BMRN, GPS, SCVL, METC, TDW, ILMN, QDEL, BIG, PCH, ZEN, RELY, DKNG, SNAP, AMR, LTHM, MOV, ARCH, AEO, RNA, ANF, GME, NTCT, PODD, UDMY, MYGN, SIGA and PMVP
  

Stocks With Unusual Put Option Activity:

• 1) AMRS 2) MULN 3) MAT 4) JEF 5) CRM
  

Stocks With Most Negative News Mentions:

• 1) KIRK 2) PODD 3) FRO 4) GME 5) SNAP
  

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Growth -.3%

Sector Outperformers:

• 1) Energy +1.4% 2) Restaurants -.6% 3) Agriculture +.4%

Stocks Rising on Unusual Volume:

• SAVA, MSTR, COIN, CLAR, DXCM, HDSN, FPI and SWTX
  

Stocks With Unusual Call Option Activity:

• 1) GSAT 2) FLR 3) HUSA 4) NOG 5) AMRS

Stocks With Most Positive News Mentions:

• 1) MULN 2) DXCM 3) MRO 4) DISH 5) GRAB
  

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +4.5% Above 100-Day Average 
• 8 Sectors Declining, 3 Sectors Rising
• 31.6% of Issues Advancing, 65.0% Declining
• 84 New 52-Week Highs, 17 New Lows
• 33.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.8% 
• Bloomberg Global Risk-On/Risk-Off Index 4,465.0 +270.0 points
• Russell 1000: Growth/Value 14,961.0 +.5%
  
• Vix 26.1 -1.5%
• Total Put/Call .95 +69.6%
• TRIN/Arms .60 -31.8%

Tuesday Watch

Today's Headlines

Bloomberg:            

• Commodities Turn Higher as China Loosens Its Virus Restrictions. 
• EU Leaders Back Push to Ban Most Russia Oil Over Putin’s War.
• Russia Readies New Bond-Payment Plan in Bid to Avoid Default.  
• Ukraine Latest: EU Backs Partial Oil Ban as Biden Shrugs Rockets.
• Israel’s Long-Delayed Sovereign Wealth Fund to Open on June 1.
• ECB’s Lane Calls Two Quarter-Point Rate Hikes ‘Benchmark Pace’.
• Biden to Meet Powell to Discuss Economy as Inflation Bites.  
• Dimensional’s ESG Boss Voices Doubts Over Investing Strategy .   
• Stocks Seen Steady Amid Inflation Woes; Oil Jumps: Markets Wrap.
• Brent Crude Hits $120 as China Eases Curbs, EU Eyes Russia Ban.
  
• Bonds Rally Everywhere in May With Bulls Saying Selloff Is Over.
• Fed Won’t Flinch as Labor Market Starts Tailing Off.
  
• US Gasoline Surges to Fresh Record in Another Blow to Drivers.  
• British Airways Staff Vote on Possible Strike Amid Staffing Woes.
• Even Children and Teenagers Are Worrying About the Cost-of-Living Crisis.

Wall Street Journal:

• Latest: French Journalist Killed.
• Oil Prices Hit Two-Month High as China Eases Lockdowns
• Summer Worker Shortage Means Things Will Be Closed. Again. 
• The Baby Formula Shortage Fall Guy. Congress beats up the FDA chief, fairly and unfairly.  
• Why Electricity Blackouts Are Coming to Michigan. The shutdown of a nuclear power plant makes the state vulnerable to cloudy, windless days. 
• Lumber Prices Slump With Rising Interest Rates.
• While Electric Vehicles Proliferate, Charging Stations Lag Behind.
• Market Slide Forces Rookie Traders to Grow Up Fast.
• Shipping Companies Added Capacity, but Now Containers Are Stuck in Port.
• Companies Rush to Cash In on EPA’s Methane Rules.

Fox News: 

• ‘Top Gun: Maverick’ crushes Memorial Day records, Tom's biggest launch.
• Former Navy SEAL on how to best honor those who made the ultimate sacrifice.
• Meet the American who makes it his life's work to honor 200,000 fallen war heroes.
• Pelosi's mega-millionaire husband arrested on DUI charge after collision. 
• Brazen thieves rob church of $2M tabernacle, decapitate angel statues.

CNBC:

• China faces a nearly $1 trillion funding gap. It will need more debt to fill it.
• Federal Reserve minutes point to more rate hikes that go further than the market anticipates.
• Fed Governor Waller is prepared to take rates past ‘neutral’ to fight inflation.
• BeReal is the latest buzzy social media app trying to go mainstream. Here’s how it works.
• The luna cryptocurrency has been resurrected after its $40 billion collapse. It’s already crashing.
• EU struggles to reach an agreement on Russian oil embargo as Hungary holds firm.

Zero Hedge:

• Kremlin Makes Announcement Amid Rumors On Putin’s Health
• Mastercard CEO: SWIFT Payment System May Be Replaced By CBDCs In Five Years.
• Key Events This Week: US Jobs, European Inflation And Tons Of Fed Speakers.
• Greece Alerts Its Tankers In Gulf After Iran Threatens More 'Retaliation' Seizures.
• Russia Plans Bond Payment System Like 'Rubles-For-Gas' Scheme To Get Around Sanctions.
• Elizabeth Warren Desperately Seeks "More" Inflation.
• Newsquawk Asia-Pac Market Open - European stocks and US equity futures gained but with volumes light on Memorial Day.
• As US Economic Data Crashes, Biden 'Invites' Powell To Oval Office.
• Dozens Of Border Patrol Agents Uninvited From Biden Event In Uvalde.
• A Golden Opportunity: How To Invest For The Coming Stagflation.
• Watch: Climate Activist Smashes Cake Into Mona Lisa At Louvre.
• Watch: Ted Cruz Asserts "We're Not Responding To Tragedy By Giving Up Rights".
• Pakistan On The Verge Of Inflationary Collapse - Pleads For Larger IMF Bailout.
• German Inflation Hits 60-Year-High, 'Worse To Come', Says Allianz.
• "I'm Watching": Image Of Father Standing Guard Outside Daughter's Elementary School Goes Viral.
  
• Ukraine: A New Narrative As Europe Unravels?
• "Risk Is Back In Business": Futures, Bitcoin, Oil Jump As China Eases Covid Curbs.
• Households Worldwide Wrecked By Soaring Gas Prices.
• Historically Hawkish Heritage Hits The Brakes On Ukraine Aid.
• Zelensky Signals Donbas Could Soon Fall: "Indescribably Difficult" Russian Onslaught.
• Russia Claims Control Of Key Railway Hub, Solidifying Eastern Ukraine Gains.
• Presence Of New, More Potent Opioid Growing In Canada's Illegal Drug Supply, Warns Substance-Use Research Org.

MarketWatch.com:          

• Here’s the asset investors want if inflation stays high, says Deutsche Bank. And crypto isn’t even ‘on the radar’.
  
• Brent crude hits two-month high as China lifts COVID restrictions. Analyst predicts $124/barrel is next.

NewsMax:    

• Biden Rejects Giving Ukraine Key Strategic Rocket Systems to Fight Russia.
  
• Russian, Ukrainian Troops Fight Block by Block in Key City.  
• Probe Could Shed Light on Police Lag in Response to Uvalde School Shooting.
  

TheGatewayPundit.com:

• UPDATE: Mile-Long Line of Cars to Pick Up Baby Formula in Michigan as Biden’s Baby Formula Crisis Continues (Video). 
• WATCH: Justin Trudeau As He Announces Canada’s Proposed Legislation to Ban Handguns.
• SoCal Doctor Who Smuggled, Sold Hydroxychloroquine as Covid Cure Sentenced to Prison.
• One Of The Largest Egg Factories In US Torched In The Middle Of The Night Amid Outbreak Of Fires In Food Processing Facilities Across The Nation.
• US Medical Company Sues Chinese Manufacturer Over 100,000+ Defective COVID Tests with False Positive Results.
• Joe Biden Suggests He Wants to Ban “High Caliber” 9mm Handguns (VIDEO).
• The Biden Administration Is Exploiting Poor Kids To Further Transgender Policies.
• Confirmed: ‘True the Vote’ to Present Findings of Ballot Harvesting in Yuma and Maricopa Counties to Arizona Lawmakers on Tuesday at 3 PM.
• US Parents Travel to Tijuana to Purchase Baby Formula as Biden Baby Formula Crisis Worsens – Out-of-Stock Rate Hits 70% (VIDEO).
• WATCH: Fox News Pundits Demand Gun Control, Call Republicans the ‘Party of Egregious Mass Shootings and Uncontrolled Guns’.
• Virginia Parents Protest Policy Changes That Expand Discipline For Students Who “Misgender” Or “Deadname” Other Students.
• Travel Hell: More Canceled Flights Pile Up on Memorial Day Weekend – 5,260 Canceled Flights as of Sunday Evening.
• 2000 Mules Investigator Gregg Phillips To FOX News: “It’s One Thing that You Chose to Stay Silent While 2000 Mules Went Viral – It’s an Entirely Different Matter that You Have Chosen to Lie to the World”…”Game on Boys and Girls” [VIDEO].
  

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 817,537 Reports(+4,517 from prior week) Through May 13th, 2022.
  

SKirsch.com:

• Using the MGH numbers with our own VAERS queries, we have 247 cases per million doses from the MGH study divided by 5.97 cases per million doses from VAERS. 247/5.97 = 41. This suggests that the VAERS under-reporting factor (URF) is 41X.

Covid-19(Data, Maps, Graphs):

• Our World in Data:  New Global Covid-19 Cases(7-day rolling average graphs). New US Covid Hospital Admissions/ICU Admissions/Deaths
  
• FT.com:  Fully Vaccinated by Country(graph). Global Lockdown Stringency Index(map).
• Bloomberg.com:  International Travel Restrictions.  Case Graphs by State.
  
• NYTimes.com:  County Trends and Clusters. Local ICU Occupancy.
  
• Brown School of Public Health:  Covid Severity by State/County(map).  US Hospital Capacity(region).
  
• CovidActNow:  Covid Severity/Infection Rate by Metro Area.
  
• KFF:  US Vaccinations by Race/Ethnicity.
  
• Carnegie Mellon: Covid-Like Symptoms in Community. Covid Symptom Searches on Google. Covid-Related Dr.Visits.  Restaurant Visits. Wearing Masks. (graphs)
  
• Safegraph.com:  Commerce Patterns(graphs). 
• COVID Money Tracker. Tracking the Covid response.
  

Night Trading

• Asian indices are -.25% to +.5% on average.
• Asia Ex-Japan Investment Grade CDS Index 108.75 +.5 basis point.
• China Sovereign CDS 67.5 -5.0 basis points.
• Bloomberg Emerging Markets Currency Index 52.28 +.03%.
• Bloomberg Global Risk-On/Risk Off Index 4,308.0 +116.0 points.
• Volatility Index(VIX) futures 26.8 -.18%. 
• Euro Stoxx 50 futures n/a.
• S&P 500 futures +.51%.
• NASDAQ 100 futures +1.06%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• None of note
  

After the Close:

• (AMBA)/.37
• (HPQ)/1.05
• (CRM)/.94
• (VSCO)/.84
  

Economic Releases

9:00 am EST

• The FHFA House Price Index MoM for March is estimated to rise +2.0% versus a +2.1% gain in Feb.
• The S&P CoreLogic CS 20-City MoM for March is estimated to rise +1.9% versus a +2.39% gain in Feb.
  

9:45 am EST

• The MNI Chicago PMI for May is estimated to fall to 55.0 versus 56.4 in April.

10:00 am EST

• The Conference Board Consumer Confidence Index for May is estimated to fall to 103.7 versus 107.3 in April.

10:30 am EST

• The Dallas Fed Manufacturing Activity Index for May is estimated to rise to 1.5 versus 1.1 in April.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The China Non-Manufacturing PMI report, Jefferies Software Conference and the KeyBanc Industrials/Basic Materials Conference could also impact trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

BOTTOM LINE: Asian indices are modestly lower, weighed down by consumer and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed.  The Portfolio is 75% net long heading into the week.

Today's Headlines

Bloomberg:

• China Covid Outbreak Wanes, With Curbs Eased to Boost Economy.
• China in Danger of Exporting Fresh Inflation Turmoil: MLIV Pulse.  
• Shanghai Unveils Economic Support Measures as Lockdowns Ease.
  
• Ukraine Latest: Zelenskiy Visits Troops; EU Oil Embargo Stalled.
  
• Asia Stocks, US Futures Rise as China Curbs Eased: Markets Wrap.  
• Oil Stable at Week’s Open as Investors Weigh China, EU Talks.
• Wild Five Months Leaves Wall Street Split on When Selloff Ends.
  
• Democrats Seek Swift Action on Limited Gun-Control Proposals.
• Goldman Says Bull Market in Battery Metals Is Finished for Now.  
• US Farmland Is a Hot Commodity. That’s Not Great for Farms.

Wall Street Journal:

• America’s Summer of Rolling Blackouts. Green energy policies are making the nation’s electric-power grid increasingly unstable.
• 17 States Where Unemployment Is at Record Lows.
• Uvalde Mourns in Grief and Anger.
• Streetwise: Where to Look for the Next Wall Street Blowup.
• Parents Try to Keep Kids Safe From Fentanyl With Warnings, Pleas and Naloxone Training.
• Robots Pick Up More Work at Busy Factories.

Barron's:

• Had bullish commentary on (GOOG), (LRCX), (FB), (MU), (NFLX), (BMY) and (WELL).

Fox News:

• DOJ gets involved after series of failures reported in police response to Texas school shooting.
• Survey of Ivy League school's graduates reveals near-total political monopoly
• Nancy Pelosi's husband arrested in California for DUI.

CNBC:

• ‘Top Gun: Maverick’ grosses $124 million – Tom Cruise’s best domestic debut.
• Netflix’s fall from grace has media investors questioning how to value the industry.
• Some investors got rich before a popular stablecoin imploded, erasing $60 billion in value.
• Flight cancellations ease after rocky start to Memorial Day weekend.
• Terra’s epic collapse, explained, and why crypto may see wild swings this weekend: CNBC Crypto World.
• Recession-fearing investors keep slashing the fastest-growing cloud stocks.

Zero Hedge:

• Zelensky Signals Donbas Could Soon Fall: "Indescribably Difficult" Russian Onslaught.
• When Will Powell Trigger The "Fed Put": Here Are The Four Things To Watch, As Well As The Most Important One.
• GOP Must Hold 'Radical' Health Officials Like Fauci 'Accountable': Republican Study Committee.
• Newsquawk Asia-Pac Market Open - Weekend News Round Up.
• Valuation and draw-downs.
  
• ...Turns Out Keynes Was A Commie.
• "Only Criminals Are Gonna Have Guns": Joe Rogan Warns Against Confiscation.
• "Quite Misleading": DuckDuckGo CEO Responds To Microsoft Tracker Controversy.
• Elon Musk Says Bill Gates' Short Position In Tesla Has Ballooned To $1.5 To $2 Billion.
• Showdown On The Second Amendment: Harris Calls For Ban On "Assault Weapons".
• 11 Statistics That Expose The Reality Facing US Consumers In This Rapidly Deteriorating Economy.
• The EU Needs More Than $1 Trillion For Plan To Ditch Russian Oil And Gas.
• Davos Reveals Building-Blocks For "Green" Social-Credit System.
• Army Replenishing Stinger Missiles In $687M Deal As Raytheon's Ukraine Cash Bonanza Continues.
• Texas Moms Demand Revision Of Textbook That Encourages Withholding Info From Parents.

MarketWatch.com:

• How a crypto crash could spread to Treasury bonds and other fixed-income securities.  
• Dividend stocks have trounced the market this year. Here are 15 high-yield stocks expected to raise payouts the most through 2024.

NewsMax:

• Russia Has Begun Mobilization of Reserves.
• Justice Dept. to Review Response to Texas School Shooting.

TheGatewayPundit.com: 

• HUGE! CNN Admits Dominion Voting Software Has Flaws That Can Be Exploited — THEN WHY ARE WE USING THEM?
• George Soros Says He Worked with Biden “Who Was Very Deeply Involved in Ukraine”.
• Democrat Senator From MA Calls For Packing “Illegitimate” U.S. Supreme Court (VIDEO).
• WATCH: Minority Leader Kevin McCarthy Booed at Trump Rally.
• MORE LIES: Biden Tells Grads Trump Supporters Broke Through Doors at US Capitol — WHEN MAGNETIC DOORS WERE OPENED FROM INSIDE.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 820,787 Reports(+3,250 from prior week) Through May 20th, 2022. 

SKirsch.com:

• Using the MGH numbers with our own VAERS queries, we have 247 cases per million doses from the MGH study divided by 5.97 cases per million doses from VAERS. 247/5.97 = 41. This suggests that the VAERS under-reporting factor (URF) is 41X.

Covid-19(Data, Maps, Graphs):

• Our World in Data:  New Global Covid-19 Cases(7-day rolling average graphs). New US Covid Hospital Admissions/ICU Admissions/Deaths
  
• FT.com:  Fully Vaccinated by Country(graph). Global Lockdown Stringency Index(map).
• Bloomberg.com:  International Travel Restrictions.  Case Graphs by State.
  
• NYTimes.com:  County Trends and Clusters. Local ICU Occupancy.
  
• Brown School of Public Health:  Covid Severity by State/County(map).  US Hospital Capacity(region).
  
• CovidActNow:  Covid Severity/Infection Rate by Metro Area.
  
• KFF:  US Vaccinations by Race/Ethnicity.
  
• Carnegie Mellon: Covid-Like Symptoms in Community. Covid Symptom Searches on Google. Covid-Related Dr.Visits.  Restaurant Visits. Wearing Masks. (graphs)
  
• Safegraph.com:  Commerce Patterns(graphs).