Thursday Watch

Evening Headlines

Bloomberg:   

• China Ramps Up Virus Propaganda, And Stirs Even More Outrage   

• China Rolls Out Legal Game Changer for $5 Trillion Bond Market.

• Hubei Adds 349 New Cases on Revised Guidelines: Virus Update

• CDC Warns Travelers on Hong Kong; Two Die in Iran: Virus Update   

• China Back in the Market for U.S. Farm Goods After Waivers.

• Japan Stocks Rise as Yen Slides; U.S. Futures Gain. Japanese stocks gained after a slide in the yen, while stocks elsewhere in Asia opened with more modest gains as investors scrutinized the infection rate for the coronavirus after another methodology change in China. The yen slumped overnight to its weakest in nine months amid concern the Japanese economy is heading toward recession and as Chinese stimulus reduces demand for some haven assets. China’s benchmark borrowing costs for new loans is expected to drop Thursday amid a swath of policy measures to fight the impact of the deadly coronavirus. Shares in South Korea and Australia opened firmer, while U.S. and European equities earlier closed at record highs. Japan’s Topix index rose 1.1% as of 9:10 a.m. in Tokyo. Futures on the S&P 500 Index added 0.2%. The gauge advanced 0.5% on Wednesday, when the Stoxx Europe 600 Index jumped 0.8%. South Korea’s Kospi index added 0.6%. Australia’s S&P/ASX 200 Index rose 0.4%.

• Fed Officials Saw Policy Appropriate ‘For a Time’ Amid Risks

• Options Traders Are So Bullish It’s Sending Warning Signals.

• Police Say 8 Killed in Shootings in the German City of Hanau.

• Five Things You Need to Know to Start Your Day   

• Fed Policy Plan, China Strains, IMF Sees Global Rebound: Eco Day.

Wall Street Journal:

• China Struggles to Give Care to Patients Without Coronavirus.

• Why the Young Back Bernie Sanders.

• Cord-Cutting Accelerates, Raising Pressure on Cable Providers.

• How the Drug Lobby Lost Its Mojo in Washington.

• Bloomberg Bankrolls a Social-Media Army to Push Message.

Fox News:

• Whoopi takes AOC to woodshed for treatment of older Dems, moderates.

MarketWatch.com:  

• Here are 25 Dividend Aristocrat stocks screened for ‘quality’.

• Nvidia(NVDA) stock rockets past $300 to third straight record close as holdout analyst turns bullish.

CNBC:

• Coronavirus live updates: Fed sees risk to global growth, markets face ‘pretty serious reckoning’.

• Goldman says market underestimating coronavirus: ‘Correction is looking much more probable’.

• Democrat plans to tax the wealthy could hit an unintended target: Average Americans.

Zero Hedge:

• Hubei Reports Huge Drop In New Cases On Wednesday As President Xi Touts Progress In 'People's War' Against COVID-19.

• Israel To Step Up "Offensive Action" - Will Turn Syria Into "Iranian Vietnam": Israeli Defense Chief.

• "They Completely Dropped The Ball": Critics Bash Japan's Government.

• Assange's Lawyer Flip-Flops - Admits He Offered Russia Exoneration Quid Pro Quo, White House Ignored. 

• CDC Issues Hong Kong Travel Advisory; Dems Demand Trump Reimburse States Battling Coronavirus.

• Terrifying Charts Show China's Economy Remains Completely Paralyzed.

• Did The Diamond Princess "Quarantine" Just Infect More People With Covid-19 And Spread It Further?

• WTI Extends Gains Despite Bigger Than Expected Crude Build. 

• Sanders Widens Lead Over 2020 Dems After New Poll Reveals 32% Support

• 10 Very Important Questions That The Mainstream Media Should Be Asking About This Coronavirus Outbreak.

• Stocks Up, Bonds Up, Gold Up, Dollar Up, Oil Up, Virus-Death-Count Up!

John Hopkins University:

• Coronavirus Global Cases. (map) 

Night Trading 

• Asian equity indices are +.25% to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 46.75 -.75 basis point.

• China Sovereign CDS 34.0 -.5 basis point.

• Bloomberg Emerging Markets Currency Index  64.75 -.08%.

• FTSE 100 futures +.26%.

• S&P 500 futures +.14%.

• NASDAQ 100 futures +.14%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (AKS)/-.10

• (AEP)/.58

• (AAWW)/3.01

• (CLF)/.24

• (DPZ)/2.97

• (HRL)/.46

• (NEM)/.47

• (RS)/1.73

• (RGEN)/.18

After the Close:

• (BYD)/.45

• (ED)/.80

• (DBX)/.14

• (FSLR)/2.04

• (RMAX)/.46

• (SFM)/.14

• (OLED)/.75

• (ZS)/.03

Economic Releases 
8:30 am EST

• The Philly Fed Business Outlook Index for Feb. is estimated to fall to 11.0 versus 17.0 in Jan.

• Initial Jobless Claims for last week are estimated to rise to 210K versus 205K the prior week.

• Continuing Claims are estimated to rise to 1717K versus 1698K prior.

10:00 am EST

• The Leading Index for Jan. is estimated to rise +.4% versus a -.3% decline in Dec.
  

11:00 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +2,627,000 barrels versus a +7,459,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +228,100 barrels versus a -95,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,337,300 barrels versus a -2,013,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.45% versus a +.6% gain prior.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Barkin speaking, Japan CPI report, weekly Bloomberg Consumer Comfort Index, Bloomberg Economic Expectations Index for Feb. and the Germany IFO Business Climate Index could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are higher, boosted by technology and commodity shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.

Stocks Rising into Final Hour on Diminished Coronavirus Fears, US Economic Data, 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: Outperforming

Equity Investor Angst:

• Volatility(VIX) 14.5 -2.3%

• Euro/Yen Carry Return Index 124.99 +1.58%

• Emerging Markets Currency Volatility(VXY) 6.38 -2.15%

• S&P 500 Implied Correlation 37.26 -1.71%

• ISE Sentiment Index 110.0 -3
  

• Total Put/Call .82 +3.8%

• NYSE Arms .63 -41.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 44.53 -.15%
  

• America Energy Sector High-Yield CDS Index 644.0 +1.8%

• European Financial Sector CDS Index 47.24 +.25%

• Italian/German 10Y Yld Spread 137.0 +4.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 47.85 -1.16%
  

• Emerging Market CDS Index 191.48 +.41%
  

• iBoxx Offshore RMB China Corporate High Yield Index 170.57 +.05%

• 2-Year Swap Spread 2.75 +.5 basis point

• TED Spread 12.5 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -9.5 +1.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 64.80 +.01%
• 3-Month T-Bill Yield 1.57% unch.

• Yield Curve .15 unch.

• China Iron Ore Spot 87.45 USD/Metric Tonne +1.2%

• Citi US Economic Surprise Index 55.60 +10.8 points

• Citi Eurozone Economic Surprise Index -29.9 unch.

• Citi Emerging Markets Economic Surprise Index 19.6 -1.1 points

• 10-Year TIPS Spread 1.66 -1.0 basis point
• 23.2% chance of Fed April 29th meeting, 44.1% chance of cut at June 10th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +230 open in Japan 
• China A50 Futures: Indicating -3 open in China

• DAX Futures: Indicating -16 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Value +.3%

Sector Underperformers:

• 1) REITs -1.1% 2) Utilities -.9% 3) Papers -.8%

Stocks Falling on Unusual Volume: 

• ACMR, INMD, AMED, PSA, SAH, FLR, TWST, BLUE, GEL, ALLY, KNL and SGMS

Stocks With Unusual Put Option Activity:

• 1) GRPN 2) WMB 3) ENPH 4) SPCE 5) CVNA

Stocks With Most Negative News Mentions:

• 1) BLUE 2) FLR 3) RIG 4) APPN 5) MAT

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.9%

Sector Outperformers:

• 1) Alt Energy +5.7% 2) Semis +2.4% 3) Video Gaming +1.6%

Stocks Rising on Unusual Volume:

• ENPH, XPER, GSX, UNIT, SPCE, CVNA, EVBG, BE, SOI, NOVA, SPWR, HQY, GLDD, RUBI, CVM, TLRA, TSLA, FSLY, ZM, BBBY, TLND, CXO, CARG, SONO, CARS, AAWW, FANG, EVRI, PHR, PI, TNET, ACM, TPH, NVDA, XEC, BCOR, OC, TPIC, ZENT, STMP, KAR, ZG, Z, VSLR, YMAB, COLL, RUTH, GPC, FIVN, BLMN, ADI, FOCS, IART, AA, VRRM, RTLR, VC and MODN

Stocks With Unusual Call Option Activity:

• 1) GRPN 2) NLSN 3) FANG 4) ALLY 5) CXO

Stocks With Most Positive News Mentions:

• 1) ENPH 2) FPRX 3) GRMN 4) NVDA 5) HQY

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +1.9% Above 100-Day Average
• 9 Sectors Rising, 2 Sectors Declining
• 58.2% of Issues Advancing, 38.8% Declining
• 211 New 52-Week Highs, 49 New Lows
• 63.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.7%
• Vix 14.5 -2.0%
• Total Put/Call .78 -1.3%
• TRIN/Arms .84 -28.2%

Wednesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 47.5 -1.0 basis point.

• China Sovereign CDS 34.5 +.25 basis point.

• Bloomberg Emerging Markets Currency Index  64.78 -.02%.

• FTSE 100 futures +.56%.

• S&P 500 futures +.21%.

• NASDAQ 100 futures +.24%.

Morning Preview Links

Earnings of Note 

Company/Estimate

Before the Open:

• (ADI)/1.00

• (DISH)/.54

• (ELAN)/.23

• (FDP)/-.03

• (GRMN)/1.04

• (GPC)/1.30

• (NHI)/1.39

• (OC)/1.13

• (SOHU)/-.40

• (SAH)/.88

• (VIPS)/2.17

• (WING)/.17

After the Close:

• (ALB)/1.75

• (Y)/8.51

• (CRMT)/1.77

• (CAR)/.50

• (SAM)/1.75

• (CAKE)/.61

• (CYH)/-.46

• (CPRT)/.66

• (FOSL)/.77

• (GDOT)/.11

• (JACK)/1.38

• (MOS)/.-.05

• (NTES)/3.54

• (STMP)/.98

• (SNPS)/.92

• (VMI)/1.84

• (WMB)/.26

• (ZG)/-.35

Economic Releases 

8:30 am EST

• Housing Starts for Jan. is estimated to fall to 1425K versus 1608K in Dec.

• Building Permits for Jan. is estimated to rise to 1450K versus 1416K in Dec.

• PPI Final Demand MoM for Jan. is estimated to rise +.1% versus a +.1% gain in Dec.

• PPI Ex Food and Energy MoM for Jan. is estimated to rise +.2% versus a +.1% gain in Dec.

2:00 pm EST

• The Jan. 29 FOMC Meeting Minutes.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Barkin speaking, Fed's Kaplan speaking, Fed's Kashkari speaking, Fed's Bostic speaking, ECB decision/press conference, UK inflation data report, weekly US retail sales reports, weekly MBA Mortgage Applications report, Barclays Industrial Select Conference, Citi Industrials Conference and the (TROW) investor day could also impact trading today.

Market Hours

Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are slightly higher, boosted by consumer 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.