Morning Market Internals

NYSE Composite Index:

• Volume Running +7.3% Above 100-Day Average
• 2 Sectors Rising, 9 Sectors Declining
• 27.5% of Issues Advancing, 69.6% Declining
• 125 New 52-Week Highs, 69 New Lows
• 61.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.3%
• Vix 18.0 +16.2%
• Total Put/Call .97 +14.1%
• TRIN/Arms 1.81 +94.6%

Friday Watch

Evening Headlines

Bloomberg:  

• Global Cases Surpass SARS; WHO Declares Emergency: Virus Update.    

• China Death Toll at 80, More Cases Emerge Globally: Virus Update.

• Asian Stocks Push Higher After Late U.S. Rally: Markets Wrap. Asian stocks opened higher Friday, after a late-session rally in U.S. shares, as investors continued to gauge the implications of the spreading coronavirus. Stocks climbed in Japan, South Korea and Australia, with a regional Asian benchmark on track for its first gains in seven sessions. The S&P 500 Index, after a slide of nearly 1%, closed higher Thursday after the World Health Organization declared a global health emergency, while saying travel and trade restrictions weren’t necessary. Treasuries traded flat, while China's yuan is stronger than 7 per dollar after briefly weakening past the level Thursday. Japan’s Topix Index rose 0.9% as of 9:05 a.m in Tokyo. S&P/ASX 200 climbed 0.4%. Kospi Index rose 0.4%. Futures on the S&P 500 Index were little changed after the gauge advanced 0.3% Thursday. FTSE China A50 futures climbed 1.6% earlier.    

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

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

• Oil Pares Monthly Drop as WHO Steps Up Efforts to Combat Virus.

• The Inverting Yield Curve Is About More Than Recession This Time.

• Jeff Bezos Adds $13.2 Billion to His Fortune in Just Minutes.

• Third Point Gains 17% in 2019 After Betting on Soup and Sony.

Wall Street Journal:

• Wrapping Up Impeachment.

• Life Expectancy Rises in U.S.

• China Lavishes Funds on U.S. Academics, Who Often Don’t Disclose It. 

• U.S. Economy Heads Into 2020 With Steady Growth. 

• Luxury Brands Fear Coronavirus Sales Hit. 

• Gun-Control Bills Move Forward in Virginia.

Fox News:

• FOLLOW LIVE: Schiff explains why he opposes calling Joe Biden as impeachment witness.

MarketWatch.com: 

• Mortgage rates plunge to second lowest level in three years amid coronavirus concerns.

• Reynolds Consumer is taking its portfolio of everyday goods public in $1 billion-plus IPO.

CNBC:

• Coronavirus live updates: China says death toll hits 213, confirmed cases rise to 9,692.

• Amazon soars after huge earnings beat.

• IBM CEO Ginni Rometty is stepping down, Arvind Krishna to take over.

• It’s too early to tell whether the coronavirus will cause recession, Cramer says. 

• AWS generated revenue of $9.95 billion in Q4, up 34% from a year ago.

• Apple’s new and improved maps that cost ‘billions’ are now out across the U.S.

• Stocks making the biggest moves after hours: Amazon, Visa, Navistar and more.

• CDC confirms first human-to-human transmission of coronavirus in US.

Zero Hedge:

• Nordstrom Starts Selling Used Clothes To Broke Americans.

• Another 43 Coronavirus Deaths Reported In Hubei; 100,000 Chinese 'Under Observation'.

• Men More Prone To Coronavirus Infection Than Women, Study Finds.

• Chicago Police Are Using A Facial Recognition Program That Scans Billions Of Facebook Photos.

• In The Past 30 Years, The "Top 1%" Has Bought $1.2 Trillion In Stocks; The "Bottom 99%" Has Sold $1 Trillion.

• Carter Page Sues DNC Over Steele Dossier In "Opening Salvo".

• Tennessee State Rep. Files Bill To Officially Designate CNN As 'Fake News'.

• Stocks Panic-Bid, Bonds Dumped After WHO Doublespeak Over "Global Pandemic".

Business Insider:

• IBM SHAKEUP: Ginni Rometty out as CEO, cloud boss to replace her.

John Hopkins University:

• Wuhan Coronavirus Global Cases. (map)

Night Trading 

• Asian equity indices are +.25% to +1.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 57.0 +1.25 basis points.

• China Sovereign CDS 40.25  +.5 basis point.

• Bloomberg Emerging Markets Currency Index  65.40 +.02%.

• FTSE 100 futures +.83%.

• S&P 500 futures +.20%.

• NASDAQ 100 futures +.30%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (BAH)/.75

• (CAT)/2.38

• (CHTR)/2.22

• (CVX)/1.46 

• (CHD)/.55

• (CL)/.73

• (XOM)/.45

• (GNTX)/.37

• (HON)/2.04

• (IDXX)/.90

• (ITW)/1.86

• (JCI)/.38

• (LYB)/2.25

• (MAN)/2.04

• (PSX)/1.64

• (SOHU)/-.40

• (WY)/.06

After the Close:

• None of note

Economic Releases 
8:30 am EST

• Personal Income for Dec. is estimated to rise +.3% versus a +.5% gain in Nov.

• Personal Spending for Dec. is estimated to rise +.3% versus a +.4% gain in Nov.

• The PCE  Core MoM for Dec. is estimated to rise +.1% versus a +.1% gain in Nov.

• The 4Q Employment Cost Index is estimated to rise +.7% versus a +.7% gain in 3Q.

9:45 am EST

• The MNI Chicago PMI for Jan. is estimated to rise to 49.0 versus 48.9 in Dec. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The UK Brexit vote and the Eurozone GDP report could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

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

Stocks Slightly Lower into Final Hour on Coronavirus Fears, Emerging Market Debt Angst, Oil Decline, Biotech/Shipping Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 17.5 +6.7%

• Euro/Yen Carry Return Index 124.47 -.05%

• Emerging Markets Currency Volatility(VXY) 6.69 +5.52%

• S&P 500 Implied Correlation 43.65 -2.61%

• ISE Sentiment Index 76.0 -43
  

• Total Put/Call .84 unch.

• NYSE Arms 1.44 +9.92%

Credit Investor Angst:

• North American Investment Grade CDS Index 48.63 +2.32%
  

• America Energy Sector High-Yield CDS Index 615.0 -1.05%

• European Financial Sector CDS Index 53.83 +1.84%

• Italian/German 10Y Yld Spread 134.75 +1.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 58.0 +3.14%
  

• Emerging Market CDS Index 194.58 +2.03%
  

• iBoxx Offshore RMB China Corporate High Yield Index 169.90 +.02%

• 2-Year Swap Spread 5.75-.5 basis point

• TED Spread 21.5 +.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -4.5 +.75 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.33 -.45%
• 3-Month T-Bill Yield 1.56% +1.0 basis point

• Yield Curve .17 -3.0 basis points

• China Iron Ore Spot 81.65 USD/Metric Tonne -4.95%

• Citi US Economic Surprise Index 8.20 +1.2 points

• Citi Eurozone Economic Surprise Index 43.80 +3.2 points

• Citi Emerging Markets Economic Surprise Index 13.3 +.5 point

• 10-Year TIPS Spread 1.64 unch.
• 29.5% chance of Fed April 29th meeting, 49.0% chance of cut at June 10th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +52 open in Japan 
• China A50 Futures: Indicating -919 open in China

• DAX Futures: Indicating +16 open in Germany

Portfolio:

• Higher: On gains in my tech/medical sector longs, index hedges and emerging market shorts

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

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth -.9%

Sector Underperformers:

• 1) Shipping -3.3% 2) Social Media -2.5% 3) Oil Service -2.1%

Stocks Falling on Unusual Volume: 

• VRS, ANTM, BDN, POL, AA, RCL, PTLA, SKY, ACMR, NTLA, PAA, IP, CCL, MTSI, ILMN, BHVN, WRK EPD, TMO, ALXN, IEX, MTOR, FTI, NGVT, WCC, SPR, ADS, NCLH, URI, DAR, SSP, UPS, SHW, CVM, PGNY, PKG, GWW, HZO, MO, DD, WES, FB, MUSA, APO, MUR, TFC, TXG, MNRO, STAA, CREE, KEX, DNLI, AZPN and EGOV

Stocks With Unusual Put Option Activity:

• 1) MUR 2) FEZ 3) NOW 4) HCA 5) URI

Stocks With Most Negative News Mentions:

• 1) I 2) BGG 3) MO 4) CCL 5) RFP

Charts:

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