Tuesday Watch

Evening Headlines

Bloomberg:  

• U.S. Advises Citizens to Reconsider China Travel Over Virus.

• WHO Chief Heads to China as Virus Death Toll Tops 100.   

• China Warns Virus Spread Increasing, New U.S. Case: Virus Update.

• Asia Stocks Drop on Virus Fears; Yuan Steadies: Markets Wrap. Asian stocks retreated again on Tuesday as concern over the economic and human impact of China’s deadly coronavirus rattled global markets. Treasury yields and the yuan steadied after Monday’s declines. Japanese shares slid, with deeper losses in South Korea and Australia as those markets reopened after holidays. The yen fluctuated as new figures showed the death toll in China from the virus had increased. Chinese and Hong Kong markets remain closed. U.S. futures saw modest gains after the S&P 500 Index fell the most in almost four months. Chinese stock futures stabilized after a near-6% plunge Monday. Japan’s Topix Index fell 0.8% as of 10:08 a.m. in Tokyo. South Korea’s Kospi Index fell 2.6%. S&P/ASX 200 fell 1.3%. S&P 500 futures rose 0.4%. The S&P 500 slid 1.6% Monday. FTSE China A50 futures fell 0.1%.    

• Global Contagion Risk, Germany Stutters, Scotch Trade: Eco Day.

• Crude Oil Extends Decline in Asia as Virus Concerns Grip Markets.

• JPMorgan Keeps Bonuses Flat for Bankers, Traders.  

• Trump’s Immigrant Wealth Test Cleared to Start by Supreme Court.  

• Exxon at a 10-Year Low Shows Challenges for Oil’s Biggest Major.

Wall Street Journal:

• A Made-in-China Contagion.

• Iran’s Leaders Work to Heal Rifts Opened Amid Protests.

• Americans in Wuhan Prepare to Flee Outbreak—While Others Stay.

• Ultrafast Trading Costs Investors Nearly $5 Billion a Year, Study Says.

Fox News:

• FOLLOW LIVE: Trump defense says House critics don't trust voters in next election.

• What to know about potential effects of new coronavirus.

MarketWatch.com:  

• Apple and AMD to take earnings stage amid coronavirus fears, stocks’ sudden swoon.  

• The first stock-market ‘correction since October has begun,’ says analyst who called 2018 tech rout.

CNBC:

• China and Apple’s TV service will be under the spotlight when it reports earnings.

• These US stocks have the most exposure to China’s consumer market getting hit by coronavirus fears.

• Coronavirus prompts automakers to evacuate workers from China, weigh production delays.

• Boeing secures more than $12 billion in financing to help weather 737 Max crisis.

• Stocks making the biggest move after the bell: Whirlpool, F5 Networks, PerkinElmer & more.
  

Zero Hedge:

• China CDC Reveals 30,453 People Under Observation As Germany Reports First Confirmed Coronavirus Case.

• Guess Who Was In Charge Of Reviewing Bolton's Leaked Book At The NSC?

• "Surveillance Capitalism": A Summary Of Critics.

• San Francisco Activates Emergency Operations Center To Prepare For Coronavirus.

• DOJ Hires Antitrust Staff As "Broad Investigation" Into Big Tech Firms Accelerates.

• Is The Market Grossly Underestimating The Potential Impact Of The Coronavirus Epidemic?

• Markets In Turmoil: Corona-Chaos Sparks Carnage In Crude, Credit, & The Yield Curve.

Business Insider:

• Amazon(AMZN) engineer calls for Ring to be 'shut down immediately' over privacy concerns.

John Hopkins University:

• Wuhan Coronavirus Global Cases. (map)

Night Trading 

• Asian equity indices are -2.25% to -1.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 56.0 +2.25 basis points.

• China Sovereign CDS 41.0  +3.5 basis points.

• Bloomberg Emerging Markets Currency Index  65.64 -.02%.

• FTSE 100 futures +.02%.

• S&P 500 futures +.34%.

• NASDAQ 100 futures +.38%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (MMM)/2.10

• (ALV)/1.77

• (CIT)/1.08

• (HOG)/.22

• (HCA)/3.09

• (LEA)/2.21

• (LMT)/5.03

• (MKC)/1.61

• (NUE)/.31

• (PCAR)/1.51

• (PFE)/.54

• (PII)/1.79

• (PHM)/1.10

• (SAP)/1.71

• (UTX)/1.84

After the Close:

• (AMD)/.30

• (ALK)/1.41

• (AAPL)/4.38

• (CHRW)/.96

• (EBAY)/.76

• (MXIM)/.51

• (MSTR)/.83

• (MINI)/.57

• (SBUX)/.76

• (SYK)/2.46

• (XLNX)/.62

Economic Releases 
8:30 am EST

• Durable Goods Orders for Dec. is estimated to rise +.4% versus a -2.1% decline in Nov.

• Durables Ex Transports for Dec. is estimated to rise +.3% versus a -.1% decline in Nov.

• Capital Goods Orders Non-Defense Ex-Air for Dec. is estimated to rise +.2% versus a +.2% gain in Nov.

9:00 am EST

• The S&P CoreLogic CS 20-City YoY for Nov. is estimated to rise +2.4% versus a +2.23% gain in Oct.
  

10:00 am EST

• The Conference Board Consumer Confidence Index for Jan. is estimated to rise to 128.0 versus 126.5 in Dec. 

• The Richmond Fed Manufacturing Index for Jan. is estimated to rise to -3 versus -5 in Dec.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Australia CPI report, $32B 7Y T-Note auction, weekly US retail sales reports and the CIBC Institutional Investor Conference could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are lower, weighed down by technology and commodity 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 Sharply Lower into Final Hour on Coronavirus Fears, Global Growth Worries, Technical Selling, Tech/Commodity Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 17.1 +17.6%

• Euro/Yen Carry Return Index 124.56 -.39%

• Emerging Markets Currency Volatility(VXY) 6.64 +8.9%

• S&P 500 Implied Correlation 43.0 +4.0%

• ISE Sentiment Index 76.0 +9
  

• Total Put/Call 1.01 -7.0%

• NYSE Arms 1.82 -22.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 48.78 +4.37%
  

• America Energy Sector High-Yield CDS Index 628.0 +3.16%

• European Financial Sector CDS Index 54.75 +1.87%

• Italian/German 10Y Yld Spread 142.25 -14.5 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 58.0 +8.0%
  

• Emerging Market CDS Index 194.50 +.64%
  

• iBoxx Offshore RMB China Corporate High Yield Index 169.75 +.06%

• 2-Year Swap Spread 4.75 -1.0 basis point

• TED Spread 27.0 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -5.75 -1.0 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.66 -.52%
• 3-Month T-Bill Yield 1.54% +1.0 basis point

• Yield Curve .19 -4.0 basis points

• China Iron Ore Spot 84.85 USD/Metric Tonne -5.76%

• Citi US Economic Surprise Index 4.8 -5.2 points

• Citi Eurozone Economic Surprise Index 42.80 -8.0 points

• Citi Emerging Markets Economic Surprise Index 12.6 +3.3 basis points

• 10-Year TIPS Spread 1.63 -4.0 basis points
• 12.2% chance of Fed rate cut at March 18th meeting, 21.5% chance of cut at April 29th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -203 open in Japan 
• China A50 Futures: Indicating -744 open in China

• DAX Futures: Indicating +31 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:

• Large-Cap Growth -1.5%

Sector Underperformers:

• 1) Oil Service -4.9% 2) Gaming -4.4% 3) Steel -4.2%

Stocks Falling on Unusual Volume: 

• ALB, NFLX, DFS, AXP, ALGN, ANTM, NCLH, MGM, INTC, SBUX, HGV, BKNG, SMPL, DAL, CVM, CCL, MGPI, ISRG, ARCH, HT, SCCO, HA, EPZM, SSP, LSCC, SWKS, AVGO, NVDA, UAL, HTZ, MU, EL, PBF, SKT, SLB, DK, TCO, PINS, HFC, ON, AAL, SCHN, LVS, OLED, RCL, PRNB, PSNL, FCX, CC, WYNN, HSC and ENPH

Stocks With Unusual Put Option Activity:

• 1) URBN 2) MAC 3) EWH 4) ASHR 5) DO

Stocks With Most Negative News Mentions:

• 1) WYNN 2) SALT 3) ARLP 4) LVS 5) NIO

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth -.7%

Sector Outperformers:

• 1) Homebuilders +.5% 2) Utilities -.1% 3) Foods -.2%

Stocks Rising on Unusual Volume:

• VIVO, DNLI, MRNA, BYND, NVRO, ACMR, ALEC and ARNC

Stocks With Unusual Call Option Activity:

• 1) FSCT 2) INO 3) GASL 4) LVS 5) VIXY

Stocks With Most Positive News Mentions:

• 1) ARNC 2) PFE 3) EOLS 4) HMST 5) MCBC

Charts:

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