Stocks Soaring into Final Hour on Diminishing Trade War Fears, Earnings Optimism, Oil Gain, Energy/Tech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 20.8 -4.0%

• Euro/Yen Carry Return Index 137.93 +.73%

• Emerging Markets Currency Volatility(VXY) 8.55 +2.03%

• S&P 500 Implied Correlation 50.31 +3.95%

• ISE Sentiment Index 144.0 -1.0%
  

• Total Put/Call .82 -16.3%

• NYSE Arms .47 -48.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 62.91 -3.39%
  

• America Energy Sector High-Yield CDS Index 458.0 -.81%

• European Financial Sector CDS Index 60.47 -1.38%

• Italian/German 10Y Yld Spread 128.0 +1.25 basis points
  

• Asia Pacific Sovereign Debt CDS Index 12.19 -3.18%

• Emerging Market CDS Index 140.30 -.18%
  

• iBoxx Offshore RMB China Corporate High Yield Index 148.82 -.01%

• 2-Year Swap Spread 29.5 -1.25 basis points

• TED Spread 60.5 -2.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -3.5 +1.0 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 74.43 -.13%
• 3-Month T-Bill Yield 1.72% +1.0 basis point
  

• Yield Curve 48.75 -1.25 basis points

• China Iron Ore Spot 65.85 USD/Metric Tonne +1.15%

• Citi US Economic Surprise Index 32.80 -3.1 points

• Citi Eurozone Economic Surprise Index -89.0 -2.3 points

• Citi Emerging Markets Economic Surprise Index 22.10 -.7 point

• 10-Year TIPS Spread 2.09 +1.0 basis point
  
• 84.3% chance of Fed rate hike at June 13 meeting, 85.6% chance at August 1 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +131 open in Japan 
• China A50 Futures: Indicating +45 open in China

• DAX Futures: Indicating -5 open in Germany

Portfolio: 

• Higher: On gains in my industrial/medical/biotech/tech/retail sector longs

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and and some of my emerging market shorts

• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Value +1.3%

Sector Underperformers:

• 1) Airlines -1.0% 2) REITs -.3 3) Utilities -.4%

Stocks Falling on Unusual Volume: 

• TUP, AAL, SBAC and CCI

Stocks With Unusual Put Option Activity:

• 1) HLT 2) PAA 3) CLF 4) AAL 5) MNK

Stocks With Most Negative News Mentions:

• 1) HSY 2) RDN 3) UAL 4) ESNT 5) MTG

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.7%

Sector Outperformers:

• 1) Oil Service +5.8% 2) Computer Hardware +3.4% 3) Steel +3.3%

Stocks Rising on Unusual Volume:

• PAY, SPPI, NEWA, WATT, GRA, AVXS, TMUS, TEN, AET, ACAD, XENT, PTR, KPTI, RGNX, STO, HLG, AMN, NICE, SSTI, MSM, AA and SMLP

Stocks With Unusual Call Option Activity:

• 1) HLT 2) KNX 3) HON 4) NAV 5) ZION

Stocks With Most Positive News Mentions:

• 1) TNDM 2) WATT 3) NVDA 4) BA 5) TEN

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -1.3% Below 100-Day Average
• 10 Sectors Rising, 1 Sector Declining
• 79.6% of Issues Advancing, 16.1% Declining
• 26 New 52-Week Highs, 8 New Lows
• 37.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 45.1%
• Vix 21.2 -2.5%
• Total Put/Call .98 unch.
• TRIN/Arms .66 -28.9%

Tuesday Watch

Evening Headlines

Bloomberg:

• Live Now: Chinese President Xi Jinping Speaks at Boao Forum. Here is a quick CATCHUP as Xi's speech continues: Xi sees an "open and prosperous" approach to Asian economic development. Cold War and zero-sum mentalities are "out of place". Says dialogue is the way to resolve disputes. China will significantly lower import tariffs for vehicles. Says China will increase transparency, strengthen property-rights protection and oppose monopolies.  

• Trump Hints at Deal on Chinese Trade as Xi Readies Response.

• Global Debt Jumped to Record $237 Trillion Last Year .

• Asian Stocks Trade Mixed as Focus on Xi Address: Markets Wrap. Japan’s Topix index was little changed as of 10:31 a.m. in Tokyo. Australia’s S&P/ASX 200 Index rose 0.3 percent. The Kospi index lost 0.5 percent. Hong Kong’s Hang Seng Index added 0.2 percent. The Shanghai Composite Index was little changed. Futures on the S&P 500 rose 0.1 percent.

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

• Iron Ore Giant Says Miners Have Shut Gates on Adding New Supply.

• Bitcoin, the Biggest Bubble in History, Is Popping.  

• United Sees First-Quarter Revenue Gauge Near High End of Outlook.

Wall Street Journal:

• Comfiest Seat in the House: Struggling Movie Theaters Go Upscale to Survive. 

• CBO Sees Annual Deficits Exceeding $1 Trillion by 2020. 

• Zuckerberg: Facebook(FB) Made Mistakes on ‘Fake News,’ Privacy.

• PayPal(PYPL) Makes a Move Toward Traditional Banking.

• Why Should Markets Care About a Paltry $150 Billion Trade War?

• Nafta Partners Seek Deal by Early May, Mexico Says.

MarketWatch.com:

• Nvidia(NVDA) stock gains after Morgan Stanley says cryptocurrency weakness offers buying opportunity. 

• Why stock-market investors shouldn’t expect China’s Xi to back down in trade battle.

Fox News:

• Trump attacks Mueller 'witch hunt' as WH source calls investigation 'out of control'. (video)

CNBC:

• Dow's 400-point rally is nearly erased in final hour on report of FBI raid of Trump's lawyer. (video)

• Stocks making the biggest moves after hours: Tupperware, Verifone, Nike & more.

• 'Emotional' market is providing opportunities: Trader. (video)

• Verifone surges more than 50 percent after acquisition announcement. (video)

• 'None of us will have any privacy anymore': Senator calls for Facebook regulation.

• Syria, Middle East tensions pose bigger risk for oil prices.  

• Trump rips Cohen raid: 'It's a disgraceful situation, it’s a total witch hunt'.

Zero Hedge:    

• US Futures Spike As Xi Pushes Globalization Agenda.

• Mueller Reportedly Investigating Trump Links To Ukrainian Who Gave Clintons More Than $13 Million.

• Trump Blasts "Disgraceful" FBI Raid Of Lawyer's Office: "A Whole New Level Of Unfairness".

• Iran Warns U.S. Would "Regret" Pulling Out of Nuclear Deal Soon After Doing So.

• Forget The Trade War, China Has Even Bigger Problems Domestically.

• Japan Activates Marines For First Time Since WWII On Chinese Border.

• Dow Roundtrips 800 Points As Trump Turmoil Returns. (graph)

Night Trading 

• Asian equity indices are +.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 77.25 -.75 basis point. 

• Asia Pacific Sovereign CDS Index 12.50 -.75 basis point.

• Bloomberg Emerging Markets Currency Index 74.55 +.04%.

• FTSE 100 futures +.72%.

• S&P 500 futures +1.0%.

• NASDAQ 100 futures +1.22%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (MSM)/1.31

• (LAYN)/-.16

• (HCSG)/.38

Economic Releases

6:00 am EST

• The NFIB Small Business Optimism Index for March is estimated to fall to 107.0 versus 107.6 in February.
  

8:30 am EST

• PPI Final Demand MoM for March is estimated to rise +.1% versus a +.2% gain in February.

• PPI Ex Food & Energy MoM for March is estimated to rise +.2% versus a +.2% gain in February.
  

10:00 am EST

• Wholesale Trade Sales MoM for February is estimated to rise +.1% versus a -1.1% decline in January.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Chinese President Xi speaking, China Money Supply report, WasDe Crop report, $30B 3Y T-Note auction, weekly US retail Sales reports, Zuckerberg's testimony before Senate Committee and the (ETH) investor meeting could also impact trading today.

BOTTOM LINE:  Asian indices are higher, boosted by technology and industrial shares in the region. I expect US stocks to open higher and to maintain gains into the afternoon.  The Portfolio is 50% net long heading into the day.

Stocks Higher into Final Hour on Diminishing Trade War Fears, Bargain-Hunting, Oil Gain, Biotech/Gaming Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Light

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 20.92 -2.7%

• Euro/Yen Carry Return Index 136.96 +.15%

• Emerging Markets Currency Volatility(VXY) 8.29 +.73%

• S&P 500 Implied Correlation 49.08 -2.7%

• ISE Sentiment Index 64.0 n/a
  

• Total Put/Call .91 -9.9%

• NYSE Arms .78 -74.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 64.03 -1.30%
  

• America Energy Sector High-Yield CDS Index 462.0 +.88%

• European Financial Sector CDS Index 61.32 -2.53%

• Italian/German 10Y Yld Spread 126.75 -2.0 basis points
  

• Asia Pacific Sovereign Debt CDS Index 12.59 -4.84%

• Emerging Market CDS Index 139.38 +1.21%
  

• iBoxx Offshore RMB China Corporate High Yield Index 148.84 +.12%

• 2-Year Swap Spread 30.75 +1.5 basis points

• TED Spread 62.75 +1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -4.5 +3.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 74.60 -.28%
• 3-Month T-Bill Yield 1.71% unch.
  

• Yield Curve 50.0 +.25 basis point

• China Iron Ore Spot 65.30 USD/Metric Tonne +2.25%

• Citi US Economic Surprise Index 35.90 unch.

• Citi Eurozone Economic Surprise Index -86.70 -7.5 points

• Citi Emerging Markets Economic Surprise Index 22.80 +.4 point

• 10-Year TIPS Spread 2.08 +1.0 basis point
  
• 80.9% chance of Fed rate hike at June 13 meeting, 82.5% chance at August 1 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +22 open in Japan 
• China A50 Futures: Indicating +6 open in China

• DAX Futures: Indicating +16 open in Germany

Portfolio: 

• Slightly Higher: On gains in my industrial/medical/biotech/tech sector longs

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and then added them back

• Market Exposure: 50% Net Long