Wednesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 68.75 +3.5 basis points.

• China Sovereign CDS 48.5 +4.75 basis points.

• Bloomberg Emerging Markets Currency Index  64.08 +.08%.
• FTSE 100 futures -.35%.

• S&P 500 futures +.60%.

• NASDAQ 100 futures +.75%.

Morning Preview Links

Earnings of Note 

Company/Estimate

Before the Open:

• (ANF)/1.23
• (BF/B)/.50
• (CPB)/.66
• (DLTR)/1.75
• (JW/A)/.54
• (NAV)/-.24
• (PLCE)/1.57 

After the Close:

• (AEO)/.36
• (MRVL)/.16
• (SPLK)/.97
• (ZM)/.07

Economic Releases 

8:15 am EST

• The ADP Employment Change for Feb. is estimated to fall to 170K versus 291K in Jan.
  

10:00 am EST

• The ISM Non-Manufacturing Index for Feb. is estimated to fall to 54.9 versus 55.5 in Jan.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +2,865,830 barrels versus a +452,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -2,079,180 barrels versus a -2,691,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,887,730 barrels versus a -2,115,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.37% versus a -1.5% decline prior.
  

2:00 pm EST

• US Fed Beige Book report.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone Services PMI report, weekly MBA Mortgage Applications report, UBS Consumer/Retail Conference, Morgan Stanley Energy/Power Conference, (JCOM) analyst day, (ZEN) investor day and the (GE) investor call 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 day.

Stocks Reversing Substantially Lower into Final Hour on Coronavirus Fears, Central Bank Action Disappointment, Global Growth Worries, Energy/Transport Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Heavy

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 37.8 +12.9%

• Euro/Yen Carry Return Index 124.3 -.7%

• Emerging Markets Currency Volatility(VXY) 8.0 -3.5%

• S&P 500 Implied Correlation 59.1 +9.2%

• ISE Sentiment Index 111.0 +39
  

• Total Put/Call .93 -30.0%

• NYSE Arms 2.50 +117.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 69.64 +7.23%
  

• America Energy Sector High-Yield CDS Index 584.0 -4.15%

• European Financial Sector CDS Index 69.64 -12.44%

• Italian/German 10Y Yld Spread 162.75 -14.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 66.88 -1.23%
  

• Emerging Market CDS Index 233.69 +.72%
  

• iBoxx Offshore RMB China Corporate High Yield Index 171.25 -.04%

• 2-Year Swap Spread 7.5 +1.25 basis points

• TED Spread 29.0 +9.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap 13.25 +38.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 64.0 +.17%
• 3-Month T-Bill Yield .91% -26.0 basis points

• Yield Curve .27 -4.0 basis points

• China Iron Ore Spot 86.0 USD/Metric Tonne +.22%

• Citi US Economic Surprise Index 55.70 -1.3 points

• Citi Eurozone Economic Surprise Index 3.9 +.8 point

• Citi Emerging Markets Economic Surprise Index -14.5 -.6 point

• 10-Year TIPS Spread 1.45 +4.0 basis points
• 57.9% chance of 75.0 basis point Fed rate cut at April 29th meeting, 53.8% chance of 75.0 basis point cut at June 10th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -217 open in Japan 
• China A50 Futures: Indicating -29 open in China

• DAX Futures: Indicating -167 open in Germany

Portfolio:

• Slightly Lower: On losses in my tech/industrial/biotech/medical/retail sector longs

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 25% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Value -1.0%

Sector Underperformers:

• 1) Oil Service -4.1% 2) Banks -4.0% 3) Gaming -3.6%

Stocks Falling on Unusual Volume: 

• IBKC, TGT, WEX, CORE, BKU, FHN, AXP, MAR, JPM, HLT, ASB, PRU, HSC, VIAC, CCL, ZYXI, HA, RCUS, TRMK, WFC, FUN, FITB, UAA, TWLO, ALK, BAC, RNG, GH, NTNX, SNV, CFR, FOE, NTRS, H, UMPQ, LPSN, AMBC, FL, MTB, XEC, PENN, NCLH, AMP, ZION, ESTC, MGM, HTZ, HCAT, CFG, MRNA, RUBI, NAVI, HAL, FGEN, RJF, EWBC, CMA, CNXM, SCHW, AMTD, ZEN, CODX, UNVR, KPTI, CORT, AX, PI and VIR

Stocks With Unusual Put Option Activity:

• 1) GNW 2) XLP 3) FISV 4) URBN 5) VGK

Stocks With Most Negative News Mentions:

• 1) TLRY 2) MNK 3) CDEV 4) ZEN 5) UMRX

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth -.1%

Sector Outperformers:

• 1) Gold & Silver +6.6% 2) Homebuilding +3.4% 3) Alt Energy +2.7%

Stocks Rising on Unusual Volume:

• OMER, WIFI, FIXX, KRMD, VSLR, ATSG, RAD, NEM, IRTC, SE, APPN, KURA, TMO, SYNH, WELL, FSLY and VMC

Stocks With Unusual Call Option Activity:

• 1) LYV 2) WPX 3) BIG 4) WRK 5) MCK

Stocks With Most Positive News Mentions:

• 1) SQM 2) ACM 3) A 4) FTSV 5) NAV

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +73.0% Above 100-Day Average
• 8 Sectors Rising, 3 Sectors Declining
• 72.3% of Issues Advancing, 26.3% Declining
• 21 New 52-Week Highs, 33 New Lows
• 31.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 35.8%
• Vix 31.3 -6.3%
• Total Put/Call .77 -41.7%
• TRIN/Arms 1.89 +64.4%

Tuesday Watch

Evening Headlines

Bloomberg:   

• ECB Joins Central Banks Pledging Coronavirus Action If Needed.

• U.S. Cases, Deaths Climb; Treatment Seen in Months: Virus Update.  

• Kneeling, Korea’s Sect Leader Seeks Forgiveness for Virus Spike.

• Asian Stocks Gain After Big Wall Street Rebound. Asian stocks climbed Tuesday after the biggest advance in U.S. shares since their December 2018 rebound from a brush with a bear market. Central bankers from the U.S., Japan and Europe spurred the gains by pledging to act as appropriate to address mounting risks from the coronavirus. Group of Seven finance chiefs and central-bank governors confer by telephone later Tuesday. Futures on the S&P 500 rose after the benchmark gauge rallied 4.6%. Stocks in Asia had more subdued moves, with Japan lagging behind Australia, China and South Korea. Hong Kong opened modestly higher. Crude oil added to a jump of more than 4%. Treasury yields were steady, while the dollar ticked lower. S&P 500 futures rose 0.7% as of 10:29 a.m. in Tokyo. The S&P 500 Index rose 4.6%. Topix index climbed 0.5%. Australia’s S&P/ASX 200 Index climbed 1.7%. South Korea’s Kospi index rose 1.7%. Hong Kong’s Hang Seng Index rose 0.5%. Shanghai Composite Index added 1.2%. MSCI Asia-Pacific Index added 0.8%.  

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

• Oil Extends Rally as G-7 and OPEC+ Step Up Response to Virus.

• Trump Tells Drug Companies ‘Get It Done’ on Virus Treatments.

• Washington Gov. Inslee Seeking $100M for Coronavirus Outbreak.  

• Stock Pops Like Today’s 5% Have Mixed History of Going Anywhere.  

• Twitter(TWTR) Advises 5,000 Global Employees to Work From Home.  

• Citadel, Millennium Hedge Funds Post Gains in February Rout.

Wall Street Journal:

• Israel Election Exit Polls Put Netanyahu Ahead.

• Capital Is Part of the Coronavirus Cure.

• Tim Cook and Apple Bet Everything on China. Then Coronavirus Hit.

• U.S. Orders Cap on Chinese State Media Personnel.

• Moderate Democrats Coalesce Around Biden Ahead of Super Tuesday.

Fox News:

• Bloomberg predicts Dems will have contested convention with ‘horse trading' at FNC Town Hall.

• Chris Matthews out at ‘Hardball’ after string of controversial comments.

MarketWatch.com:    

• These are the 10 biggest stock winners Monday as the market rebounds from coronavirus rout.

• Robinhood trading app goes down amid heavy volume.

• Coronavirus fatality rates vary dramatically depending on age, gender and country — why some patients fare worse than others.

CNBC:   

• Dow roars back from coronavirus sell-off with biggest gain since 2009, surges 5.1%.

• Facebook, Google and Adobe pull out of more conferences as coronavirus spreads.

• Cramer’s lightning round: DocuSign can be a ‘stay-at-home stock’.

• Coronavirus live updates: Seattle reports new deaths, CDC released woman who tested positive.

• Powell and Mnuchin will lead G-7 emergency call on the coronavirus Tuesday.

• Uber(UBER) acknowledges coronavirus poses material risk to its business.

• Stocks making the biggest moves after hours: Boingo, Tilray, Visa & more.

Zero Hedge:

• Did CDC Stop Disclosing How Many Americans Are Being Tested For Covid-19? - Live Updates.

• Is China's Economy Finally Starting To Recover? Here Is What The Real Data Shows.

• Forced Labor? - China Pushes 1000s Of Uyghur Muslims To Work In Factories.

• Friday's Dip Buying By Hedge Funds Was The Most Extreme In The Past Decade: Why This Is Worrying Morgan Stanley.

• Hillary Clinton Ordered To Give Sworn Deposition After Judge Tosses 'Preposterous' Defense.

• Shanghai Accord 2.0? Powell, Mnuchin To Lead Tuesday's Emergency G-7 Coronavirus Call.

• Covid-19 Risks - Doing The Math.

• Coronavirus Outbreak: How Employers & Employees Are Responding.

• Sanders Agrees With Trump: "They're Staging A Coup Against Bernie!".

• Visa Slashes Q2 Revenue Outlook By 2.5-3.5% On Lower Asia Travel; Microchip Pulls Guidance.

• "What Are The Odds?" - A Timeline Of Facts Linking Covid-19, HIV, & Wuhan's Secret Bio-Lab.

• DoubleLine Deputy CIO: "The Coronavirus Outbreak Is Way Beyond The Fed's Control".

• Panic-Buying Sends Dow To Best Point-Gain Ever On Hopes Of Intervention.

Business Insider: 

• Travelers are paying thousands of dollars to evacuate from coronavirus-affected areas on private jets. Thanks to aviation loopholes, they can get out quickly despite travel bans.

• What to buy for your home emergency kit if you're quarantined during the coronavirus outbreak.

• The nation's largest supermarket is enforcing a 5-item limit on orders of sanitization, cold, and flu products amid coronavirus fears.

• GOLDMAN SACHS: Commodities markets are facing their biggest demand shock since the financial crisis.

John Hopkins University:

• Coronavirus Global Cases. (map)

BNO News:

• Tracking Coronavirus: Map, data and timeline.

Night Trading 

• Asian equity indices are +.5% to +1.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 65.25 -5.5 basis points.

• China Sovereign CDS 43.75 -9.75 basis points.

• Bloomberg Emerging Markets Currency Index  63.90 unch.

• FTSE 100 futures +1.1%.

• S&P 500 futures +.34%.

• NASDAQ 100 futures +.32%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (AZO)/11.75

• (FLR)/.22

• (IGT)/.23

• (KSS)/1.88

• (TGT)/1.65

After the Close:

• (AVAV)/.17

• (AMBA)/.11

• (CDLX)/.04

• (HPE)/.44

• (JWN)/1.48

• (ROST)/1.26

• (URBN)/.63

Economic Releases 
Afternoon

• Wards Total Vehicle Sales for Feb. are estimated to fall to 16.8M versus 16.84M in Jan.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The weekly US retail sales reports 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 50% net long heading into the day.