Stocks Surging into Final Hour on Coordinated Central Bank Action Hopes, Oil Gain, Short-Covering, Utility/Healthcare Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Heavy

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 35.0 -12.8%

• Euro/Yen Carry Return Index 125.0 +1.1%

• Emerging Markets Currency Volatility(VXY) 8.4 +3.3%

• S&P 500 Implied Correlation 53.6 +9.2%

• ISE Sentiment Index 72.0 -17
  

• Total Put/Call 1.32 +3.94%

• NYSE Arms 1.41 +125.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 68.30 +1.85%
  

• America Energy Sector High-Yield CDS Index 611.0 +.03%

• European Financial Sector CDS Index 79.53 +5.51%

• Italian/German 10Y Yld Spread 176.0 +1.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 68.5 -3.12%
  

• Emerging Market CDS Index 238.05 -3.18%
  

• iBoxx Offshore RMB China Corporate High Yield Index 171.32 +.06%

• 2-Year Swap Spread 6.25 +.5 basis point

• TED Spread 19.5 -9.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -24.75 -9.5 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 63.83 +.78%
• 3-Month T-Bill Yield 1.17% -10.0 basis points

• Yield Curve .31 +6.0 basis points

• China Iron Ore Spot 85.53 USD/Metric Tonne -.57%

• Citi US Economic Surprise Index 57.0 +.8 point

• Citi Eurozone Economic Surprise Index 3.1 +2.7 points

• Citi Emerging Markets Economic Surprise Index -15.1 -30.5 points

• 10-Year TIPS Spread 1.41 -5.0 basis points
• 75.0% chance of 75.0 basis point Fed rate cut at April 29th meeting, 50.7% chance of 75.0 basis point cut at June 10th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -279 open in Japan 
• China A50 Futures: Indicating -43 open in China

• DAX Futures: Indicating -37 open in Germany

Portfolio:

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 50% Net Long

Morning Market Internals

NYSE Composite Index:

• Volume Running +72.0% Above 100-Day Average
• 11 Sectors Rising, 0 Sectors Declining
• 75.0% of Issues Advancing, 24.1% Declining
• 10 New 52-Week Highs, 150 New Lows
• 22.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 28.3%
• Vix 33.8 -15.7%
• Total Put/Call 1.33 +4.7%
• TRIN/Arms 1.33 +111.1%

Monday Watch

Today's Headlines

Bloomberg:

• China Economy Seen Headed for Deeper Contraction on Factory Drop.

• China Allows Banks to Delay Bad Loan Recognition on Virus.  

• Macau Gaming Revenue Suffers Record Plunge From Virus Blow.

• Sunday Mass on Facebook Is Milan’s New Normal as Virus Spreads.

• Air Pollution Vanishes Across China’s Industrial Heartland.

• German Auto Industry Bracing for Slump as Demand Dips, Ifo Says.

• Turkey Shoots Down Two Syrian Fighter Jets as Clashes Intensify.  

• Policy-Watch and Prayers: Emerging Markets Gird for More Turmoil.

• Japan Virus Woes Pose Existential Threat to Abe Government.

• Pope Francis to Skip Weeklong Retreat Near Rome, Citing Cold .

• Middle Eastern Stocks Plunge as Oil Gets Hammered by Coronavirus.

• Putin Says Russia to Work With OPEC+ But Content With Oil Price.

• Stock Rout Eases, But Bond Yields Set New Records. Equities began Monday recouping early declines as investors weighed signals of support from central banks. Sovereign bond yields continued to slide as investors reacted to a much deeper decline in China’s manufacturing than expected amid the continued spread of the coronavirus. Japanese stocks pared losses after the Bank of Japan said it will take efforts to try and stabilize markets. Hong Kong shares opened flat and losses for S&P 500 futures eased. The Federal Reserve on Friday said that it’s open to easing policy. Moves did ease somewhat in currencies in early trading and oil pared its losses, while South Korea’s won climbed on strong trade data. Australian and New Zealand 10-year yields set new record lows and Treasury yields slid below 1.05%. Japan’s Topix index fell 0.2% as of 10:22 a.m. in Tokyo. South Korea’s Kospi index added 0.2%. Futures on the S&P 500 dropped 0.6%. The underlying gauge fell 0.8% on Friday. Australia’s S&P/ASX 200 Index slid 2.2%. Hong Kong’s Hang Seng lost 0.2%.    

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

• Goldman Sees 50bps Fed Cut, Banks on Alert, China Shock: Eco Day.

• Oil Looks Into Abyss as Virus Threatens Demand Contraction.

• New York State, California Report New Cases: Virus Update.

• Ex-FDA Chief Expects U.S. Coronavirus Cases to Jump Rapidly.

Wall Street Journal:

• Walmart, Verizon in Talks to Test 5G Services in Some Stores.

• AmEx Staff Misled Small-Business Owners to Boost Card Sign-Ups.

• Wall Street Prepares for Another Unruly Week.

• Coronavirus Is Different. Almost No Company Is Safe.

• Strike a Pose: The Bowling Shirt Is Back.

MarketWatch.com:

• New study says these are the 10 most ‘overpaid’ CEOs in the S&P 500.

Fox News:

• Biden calls SC primary win ‘a big boost’; ready for Super Tuesday battle with Sanders.

• MSNBC host absent after sexism allegations, on-air slip-ups.

CNBC:

• Coronavirus live updates: China reports 202 cases as total crosses 80,000.

• Coronavirus updates: Pence says markets will recover, WHO chief warns of more Europe outbreaks

• In Greek village, tensions escalating between refugees and locals

• More than 15,000 coronavirus testing kits are on the way to health professionals, Pence says

• Bernie Sanders leads in Texas, a pivotal Super Tuesday primary, NBC/Marist poll says.

• Virus recession? Top economist Ed Hyman sees zero US growth the next two quarters.

Zero Hedge:      

• Alameda County Declares State Of Emergency After Medics Test Positive, Global Virus Deaths Pass 3,000: Live Updates.

• Trump Warns "Dems Taking Bernie Of Play" After Buttigieg Quits Democratic Presidential Race.

• Coronavirus Panic Is Causing A Worst-Case Scenario For Oil.

• Goldman Now Sees 2 Rate Cuts In Next 2 Weeks, Expects "Coordinated" Central Bank Easing.

• Covid-19 - The Five Things We Need To Know!

• "There's No Pollution" - NASA Satellite Images Expose China's "Production Has Resumed" False Narrative.

• At Stores Across The Country, The Panic Coronavirus Hoarding Begins.

• Coronavirus Has Reached 'Community Spread' Within United States: Dr. Anthony Fauci.

• US Carrier Strike Group Enters Mediterranean As Syria & Turkey Move To State Of War.

• Illinois Reports Another "Presumptive" Case Of Coronavirus, Bringing US Total To 24; Washington Declares State Of Emergency After 1st US Death: Live Updates.

• Turkey Asks NATO To Join Its War Against Syria And Russia.

• Two Syrian Jets Shot Down By Turkey Near Idlib As War Escalates.

• "We're All Going To Get It": Life In Italy's Coronavirus 'Red Zone' Getting 'A Little Crazy'.

• The Countries Best And Worst Prepared For An Epidemic.

• Tom Steyer Drops Out After Getting Spanked By Joe Biden In South Carolina.

• Wealth Of World's Ten Richest Men Now Greater Than GDP Of 85 Poorest Countries.

• "The Public Doesn't Decide The Nominee": DNC Leaders Move To Limit Democratic Choice In The Convention.

• After The Market's Week From Hell, Here's A List Of Who Was Puking.

• 2A Under Fire In CA: Santa Clara Forms Gun Confiscation Team.

Business Insider:

• The stock market erased $6 trillion in wealth last week over coronavirus fears — but 3 charts show why it won't immediately impact most Americans.

• GOLDMAN SACHS: Hide out in these 15 stocks that are staying strong as coronavirus tanks global markets.

• These are the hottest fintech startups and companies in the world.

John Hopkins University:

• Coronavirus Global Cases. (map)

BNO News:

• Tracking coronavirus: Map, data and timeline.

Night Trading

• Asian indices are -1.0% to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 70.75 +9.0 basis points.

• China Sovereign CDS 53.5 +6.75 basis points.

• Bloomberg Emerging Markets Currency Index 63.43 +.15%.

• FTSE 100 futures +1.6%.

• S&P 500 futures +.30%.

• NASDAQ 100 futures +.24%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• (EBIX)/1.05

• (JD)/.43

After the Close:

• (MDRX)/.18

• (SQM)/.25

• (TDW)/-.27

• (TLRY)/-.38

Economic Releases
10:00 am EST

• Construction Spending for Jan. is estimated to rise +.6% versus a -.2% decline in Dec.

• ISM Manufacturing for Feb. is estimated to fall to 50.5 versus 50.9 in Jan. 

• ISM New Orders for Feb. is estimated to fall to 51.3 versus 52.0 in Jan.

• ISM Prices Paid for Feb. is estimated to fall to 51.2 versus 53.3 in Jan.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The South Carolina Democratic Primary results, Eurozone Manufacturing report, Cowen Healthcare Conference, Morgan Stanley Tech/Media/Telecom Conference, Morgan Stanley Energy/Power Conference and the (ETN) investor conference could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST

BOTTOM LINE: Asian indices are mostly 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 25% net long heading into the week.

Weekly Outlook

• Wall St. Week Ahead by Reuters.
• Global Economy Week by Bloomberg. 
• The Week Ahead by Yahoo. (video)
• Stocks to Watch Next Week by Seeking Alpha.
• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week mixed as coronavirus fears, oil weakness and European/Emerging Markets/US High-Yield debt angst offset coordinated central bank action hopes, short-covering and technical buying. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 25% net long heading into the week.