Stocks Falling into Afternoon on Global Growth Fears, Earnings Outlooks, Technical Selling, Financial/Gaming Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Around Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 16.3 +3.6%

• Euro/Yen Carry Return Index 130.0 -1.0%

• Emerging Markets Currency Volatility(VXY) 8.27 +1.85%

• S&P 500 Implied Correlation 42.82 +6.45%

• ISE Sentiment Index 103.0 +71.7%
  

• Total Put/Call 1.08 +2.86%

• NYSE Arms 1.18 -45.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 63.16 +.98%
  

• America Energy Sector High-Yield CDS Index 516.0 +1.44%

• European Financial Sector CDS Index 75.68 +.72%

• Italian/German 10Y Yld Spread 240.25 -6.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 68.0 +1.62%
  

• Emerging Market CDS Index 176.19 +1.95%
  

• iBoxx Offshore RMB China Corporate High Yield Index 159.17 +.08%

• 2-Year Swap Spread 12.25 +1.0 basis point

• TED Spread 16.25 -.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -9.5 -.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.28 -.67%
• 3-Month T-Bill Yield 2.45% unch.

• Yield Curve 16.75 -.5 basis point

• China Iron Ore Spot 84.05 USD/Metric Tonne +.66%

• Citi US Economic Surprise Index -33.30 +.7 point

• Citi Eurozone Economic Surprise Index -48.4 +1.4 points

• Citi Emerging Markets Economic Surprise Index -15.20 -.2 point

• 10-Year TIPS Spread 1.91 unch.
• 0.0% chance of Fed rate hike at May 1st meeting, 0.0% chance at June 19th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -321 open in Japan 
• China A50 Futures: Indicating -136 open in China

• DAX Futures: Indicating -10 open in Germany

Portfolio:

• Slightly Higher: On gains in my index hedges and emerging market shorts

• Disclosed Trades: None

• Market Exposure: 25% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -.6%

Sector Underperformers:

• 1) Robotics -2.0% 2) Social Media -1.9% 3) Gaming -1.8%

Stocks Falling on Unusual Volume: 

• HMI, BURL, KR, CMTL, LTHM, REZI, IGT, SSYS, HUYA, BZUN, CTRP, HTZ, TECD, WB, AVAV, LTHM and ABM

Stocks With Unusual Put Option Activity:

• 1) EIX 2) SPG 3) KR 4) AET 5) SCHW

Stocks With Most Negative News Mentions:

• 1) BPI 2) CATO 3) MAXR 4) MOS 5)ASTER

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value -.4%

Sector Outperformers:

• 1) Homebuilders +2.7% 2) Telecom +.8% 3) Gold & Silver +.8%

Stocks Rising on Unusual Volume:

• BAND, BPTH, GWRE, RST, HIIQ, YEXT, LPSN, CDNA, TRUP, EAF, MEI, RARX, NSTG, QTRX, AMBA, ASND, HIIQ, AYX and APLS

Stocks With Unusual Call Option Activity:

• 1) RCII 2) GPRE 3) IGT 4) HRB 5)BURL

Stocks With Most Positive News Mentions:

• 1) ARQL 2) RST 3) FLY 4) DLTR 5) ATUS

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +12.5% Above 100-Day Average
• 2 Sectors Rising, 9 Sectors Declining
• 26.4% of Issues Advancing, 70.4% Declining
• 32 New 52-Week Highs, 45 New Lows
• 46.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.4%
• Vix 17.4 +10.6%
• Total Put/Call 1.25 +19.1%
• TRIN/Arms 1.19 -44.9%

Thursday Watch

Evening Headlines

Bloomberg:  

• EU Is Pessimistic That a Brexit Breakthrough Is in Reach.  

• Chinese Tourism Boom That Propped Up Luxury Brands Is Faltering.

• Trump Pushes China Trade Deal to Boost Markets as 2020 Heats Up.

• Asia Stocks Head for Muted Start; Dollar Climbs. Asian stocks were poised for a cautious start Thursday as global growth concerns resurfaced and U.S. equities dropped. The dollar rose for a sixth day. Futures on Japanese and Australian equities were little changed, while contracts on Hong Kong’s Hang Seng edged lower. The S&P 500 fell for a third day after reports showed the U.S. trade deficit widened in 2018 to a 10-year high and private companies added fewer employees than analysts forecast last month. Commodities were led lower by oil after a bigger-than-expected buildup in U.S. crude stockpiles. Treasuries and the yen climbed as investors sought out defensive assets. Futures on Japan’s Nikkei 225 and on Australia’s S&P/ASX 200 Index were flat. Hang Seng futures earlier slid 0.1 percent.

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

• Volcker 2.0 to Face Do-Over After Wall Street Complaints.

• Amazon-JPMorgan-Berkshire Health-Care Venture to Be Called Haven.

Wall St. Journal:

• WarnerMedia Content Chief Says Competitors ‘Eating Our Lunch’.

• U.S. Trade Deficit in Goods Hits Record.

• Before You Buy Plane Tickets, Remember These Four Things.

• Iranian Hackers Have Hit Hundreds of Companies in Past Two Years.

• House Democrats Split Over Measure Tied to Omar’s Comments.

• The Real Reason the Unemployment Rate Isn’t Lower.

• U.S., China Face Off Over Digital-Market Regulation.

MarketWatch.com:

• Bull-market’s 10th anniversary: the best (and worst) stocks over that run.

Fox News:

• Tlaib says she'll present articles of impeachment against Trump this month.

• DNC bars Fox News from hosting primary debates; network responds.

CNBC:

• Some advertisers are quitting Facebook, chiding the company’s ‘despicable business model’. 

• Buybacks are under attack again as a senator pushes to restrict insider sales after announcements.

• Stocks making the biggest moves after hours: American Eagle, Allergan and more.

• California federal judge bars Trump administration from adding citizenship question to 2020 census.
  

Zero Hedge:

• Anti-SJWs Launch "Alita Challenge" To Boycott Man-Hating Captain Marvel.

• Russiagate Grand Wizard Deceives Audience About Assange.

• Fed Plans Tighter Liquidity Rules For Foreign Banks To Limit Reliance On Discount Window During Crisis.

• Trade Isn't China's Only Worry.

• Trump Gives Carmakers An Ultimatum: It's My Way Or The I-5 Freeway.

• Beige Book Shocker: "Semiconductor Orders From China Plunged The Most Since The Collapse Of Lehman".

• Alan Howard Hedge Fund Tumbles 8.5% YTD After Blistering Returns In 2018.

• "They Raped Us So Many Times": DHS Secretary Reveals Every Migrant Girl Over Age 10 Gets Pregnancy Test.

• NYC Homicides Up 37% In 2019, Driven By Huge Spike In February.

• Rural Sheriff's Ominous Warning To Citizens: "Lock Your Doors, Load Your Guns, & Get A Barking, Biting Dog".

• American Civil War 2: US Media Will Have Only Itself To Blame If All Hell Breaks Loose.

• Small Caps Suffer Biggest Drop Since Mnuchin Massacre, Bonds & Bullion Bid.

Business Insider:

• Amazon(AMZN) is closing all 87 of its pop-up stores, reportedly laying off all employees

• It looks like Facebook is giving up on its years-long effort to bring its social network to China.

Telegraph:

• Italy to sign up to China's Belt and Road despite concern from allies.

Night Trading 

• Asian equity indices are -.5% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 67.50 +.5 basis point. 

• China Sovereign CDS 47.5 +1.75 basis points.

• Bloomberg Emerging Markets Currency Index 67.75 +.01%.

• FTSE 100 futures -.38%.

• S&P 500 futures -.15%.

• NASDAQ 100 futures -.15%.

Morning Preview Links

Earnings of Note
Company/Estimate
Before the Open:

• (BKS)/1.07

• (BURL)/2.77

• (HRB)/-.55

• (HOV)/-.10

• (IGT)/.37

• (KR)/.52

• (SSYS)/.20

• (SUP)/-.22

• (TECD)/4.03

After the Close:

• (COST)/1.69

• (LOCO)/.14

• (MRVL)/.26

• (OKTA)/-.08

Economic Releases
7:30 am EST

• Challenger Job Cuts YoY for Feb.

8:30 pm EST

• Initial Jobless Claims for last week are estimated at 225K versus 225K the prior week.

• Continuing Claims are estimated to fall to 1774K versus 1805K prior. 

• 4Q Non-Farm Productivity is estimated to fall to 1.5% versus 2.3% in 3Q.

• 4Q Unit Labor Costs is estimated to fall to 1.7% versus .9% in 3Q. 

12:00 pm EST

• 4Q Household Change in Net Worth.
  

3:00 pm EST

• Consumer Credit for Jan. is estimated at $17.0B versus $16.554B in Dec.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Brainard speaking, ECB rate decision/press conference, Eurozone GDP report, Japan GDP report, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, BofA Merrill Refining Conference, (LB) sales release, (BKE) sales release and the (CATO) sales release could also impact trading today.

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