Stocks Surging into Close on Global Stimulus Hopes, Short-Covering, Oil Gain, Financial/Energy Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Heavy

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 49.5 -9.1%

• Euro/Yen Carry Return Index 123.72 +1.8%

• Emerging Markets Currency Volatility(VXY) 10.0 -5.8%

• S&P 500 Implied Correlation 67.49 +20.0%

• ISE Sentiment Index 72.0 -20
  

• Total Put/Call 1.14 -37.4%

• NYSE Arms .43 -71.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 104.40 -1.93%
  

• America Energy Sector High-Yield CDS Index 1,056.0 -2.26%

• European Financial Sector CDS Index 115.94 -5.37%

• Italian/German 10Y Yld Spread 211.50 -13.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 93.80 -8.73%
  

• Emerging Market CDS Index 319.91 -5.7%
  

• iBoxx Offshore RMB China Corporate High Yield Index 171.68 -.15%

• 2-Year Swap Spread 5.75 -8.25 basis points

• TED Spread 50.75 +6.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -18.25 +9.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 62.63 +.54%
• 3-Month T-Bill Yield .41% +5.0 basis points

• Yield Curve .22 +2.0 basis points

• China Iron Ore Spot 89.20 USD/Metric Tonne +.47%

• Citi US Economic Surprise Index 72.10 +2.5 points

• Citi Eurozone Economic Surprise Index 11.3 +2.7 points

• Citi Emerging Markets Economic Surprise Index -18.3 +.1 point

• 10-Year TIPS Spread 1.02 +2.0 basis points
• 51.6% chance of 75.0 basis point Fed rate cut at April 29th meeting, 51.2% chance of 75.0 basis point cut at June 10th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +138 open in Japan 
• China A50 Futures: Indicating +161 open in China

• DAX Futures: Indicating +323 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 50% Net Long

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +90.1% Above 100-Day Average
• 3 Sectors Rising, 8 Sectors Declining
• 47.5% of Issues Advancing, 51.1% Declining
• 11 New 52-Week Highs, 568 New Lows
• 14.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 27.5%
• Vix 54.3 -.1%
• Total Put/Call .98 -46.2%
• TRIN/Arms 1.16 -22.2%

Tuesday Watch

Evening Headlines

Bloomberg:    

• Italy Goes Into a Nationwide Lockdown As Virus Numbers Spiral.

• Trump Seeks to Support Economy; Pandemic Warning: Virus Update.

• Trump Floats Payroll Tax Cut After Worst Stock Drop Since 2008.  

• Brazil Central Bank to Step Into Markets Again to Support Real.

• U.S. Futures Gain After Worst Stock Drop Since ‘08. U.S. stock futures saw a modest gain in early Asian trading Tuesday after the biggest rout in equities on Wall Street since 2008. Contracts on the S&P 500 Index, which briefly traded down 20% from their high -- signaling a bear market -- gained after the Trump administration previewed economic measures to be unveiled Tuesday to address the blow from the coronavirus. Treasury Secretary Steven Mnuchin rejected comparisons with the financial crisis. Australia’s benchmark fell as much as 3.8% before erasing most of the losses. Japan stocks are set to open weaker, while bonds and currencies stabilized after wild moves on Monday. Futures on the S&P 500 gained 1.5% as of 8:40 a.m. in Tokyo. The S&P 500 Index sank 7.6% to the lowest since June. S&P/ASX 200 Index fell 0.7%. Nikkei 225 futures fell 3.1% in Singapore.

• Oil in Grips of Chaos After Price War Triggers Historic Crash.    

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

• China Renewed Hit, When America Went Big, Oil Shockwave: Eco Day.

• Shale’s New Reality: Almost All Wells Drilled Now Lose Money.  

• Quest Diagnostics Rolls Out Virus Tests in California.

Wall Street Journal:

• Live Updates: The Virus and Business.

• Heard on the Street: OPEC, R.I.P.

• U.S. Shale Drillers Could Be Casualties of Oil-Price War.

• Virus Clouds China’s Prospects to Meet U.S. Trade Commitments.

• Virus Symptoms Start About Five Days After Infection, Research Finds.

• Trump to Propose Steps to Ease Economic Fallout From Coronavirus.

Fox News:

• Socialist slams Biden, Hillary at Fox News Town Hall ahead of Michigan primary. 

• Tucker: We must remain calm but not complacent about the Chinese coronavirus epidemic. (video)

MarketWatch.com:     

• Why ‘one of the most dangerous charts’ in all of finance should be ringing alarm bells.

CNBC: 

• Dow futures rise more than 300 points, erase 400-point loss after Trump floats payroll tax cut.

• Australia stocks fall into bear market as Wall Street tumbles.

• Nearly 3 in 5 Medicare beneficiaries oppose Medicare for All, eHealth CEO says.

• Trump floats payroll tax cut, other financial relief amid coronavirus outbreak.

• Circuit breakers, triggered for the first time in 20 years, pass a crucial test.

• Coronavirus live updates: NJ declares state of emergency, Italy quarantines entire country.

• Stitch Fix shares crater more than 35% as sales miss and outlook disappoints.

• Stocks making the biggest moves after hours: Stitch Fix, Vail Resorts, Marathon Oil and more.

• Tesla shares plummet as cheap oil and coronavirus challenge electric car and solar sales.

• Russia, Saudi Arabia squabble over oil strategy, but the real battle is with the US.

Zero Hedge:

• Italy Expands Quarantine Throughout Country As Coronavirus Cases, Deaths Surge: Live Updates.

• Hate Hoax: Black Woman Carves "White Pride" Into Sidewalk Outside Black-Owned Gym

• These Are The Banks With Most Energy Exposure.

• Coronavirus-Infested Cruise Ship Docks In Oakland After Being Turned Away From San Francisco.

• Robinhood Says Platform Is Back Online Minutes Before Billions Pour Into To Sell On Close.

• Prince Andrew Has 'Completely Shut The Door' To Cooperation With Epstein Probe: Prosecutors.

• Coronavirus Can Stay In Air For 30 Minutes, Travel Twice 'Safe Distance' According To Study.

• 78 Public & Private Labs Approved To Test For Coronavirus On Monday, CDC Says.

• "There Is No Liquidity" - Market Paralyzed As FRA/OIS Explodes.

• Pentagon Deploys Troops To California Border To Block Surge Of Possibly Infected Migrants.

Business Insider: 

• CDC: If you're over 60, stock up on food, stay home.

• Italy PM extends restriction zone to entire country.

• CLEAN YOUR PHONE. Your smartphone carries more germs and bacteria than a toilet seat. Here's how you should disinfect it without ruining the screen.

• Companies are pulling back on one of the market's biggest boosters as the coronavirus sell-off escalates.

John Hopkins University:

• Coronavirus Global Cases. (map)

BNO News:

• Tracking Coronavirus: Map, data and timeline.

Google Docs:

• Coronavirus Testing by State.

Night Trading 

• Asian equity indices are -1.75% to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 99.25 +17.25 basis points.

• China Sovereign CDS 71.0 +15.5 basis points.

• Bloomberg Emerging Markets Currency Index  63.54 +.09%.

• Euro Stoxx 50 futures +1.3%.

• S&P 500 futures +2.6%.

• NASDAQ 100 futures 2.8%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (DKS)/1.16

• (FLR)/.22

After the Close:

• (APEI)/.37

• (CLDR)/-.03

• (KFY)/.73

Economic Releases
6:00 am EST

• The NFIB Small Business Optimism Index for Feb. is estimated to fall to 103.0 versus 104.3 in Jan.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Japan Machine Orders report, weekly US retail sales reports, $38B 3Y T-Note auction, FedEx March update, RBC Financial Institutions Conference, JPMorgan Aviation/Tranport/Industrials Conference, Barclays Healthcare Conference, BofA Merrill Consumer/Retail Tech Conference, SunTrust Tech/Internet/Services 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 commodity and financial shares in the region. I expect US stocks to open higher and to maintain gains into the afternoon. The Portfolio is 25% net long heading into the day.

Stocks Falling Substantially into Final Hour on Coronavirus Fears, Trump Re-Election Worries, Oil Plunge, Energy/Financial Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially lower
  

• Sector Performance: Every Sector Declining
  

• Volume: Heavy

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 53.8 +28.2%

• Euro/Yen Carry Return Index 121.38 -1.64%

• Emerging Markets Currency Volatility(VXY) 11.24 +30.7%

• S&P 500 Implied Correlation 68.0 +21.0%

• ISE Sentiment Index 60.0 -20
  

• Total Put/Call 2.05 +72.3%

• NYSE Arms 1.50 +26.05%

Credit Investor Angst:

• North American Investment Grade CDS Index 114.25 +41.5%
  

• America Energy Sector High-Yield CDS Index 1,073.0 +27.8%

• European Financial Sector CDS Index 122.51 +34.6%

• Italian/German 10Y Yld Spread 225.0 +49.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 109.56 +50.0%
  

• Emerging Market CDS Index 343.86 +29.6%
  

• iBoxx Offshore RMB China Corporate High Yield Index 171.93 +.14%

• 2-Year Swap Spread 14.0 +2.25 basis points

• TED Spread 44.50 -14.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -28.0 -14.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 62.15 -1.78%
• 3-Month T-Bill Yield .36% -10.0 basis points

• Yield Curve .20 -13.0 basis points

• China Iron Ore Spot 84.0 USD/Metric Tonne -1.20%

• Citi US Economic Surprise Index 69.60 +.7 point

• Citi Eurozone Economic Surprise Index 7.6 -.6 point

• Citi Emerging Markets Economic Surprise Index -18.4 -2.5 points

• 10-Year TIPS Spread 1.0 -30.0 basis points
• 50.5% chance of 100.0 basis point Fed rate cut at April 29th meeting, 53.4% chance of 75.0 basis point cut at June 10th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -833 open in Japan 
• China A50 Futures: Indicating -175 open in China

• DAX Futures: Indicating -135 open in Germany

Portfolio:

• Slightly Higher: On gains in my index hedges and emerging market shorts

• Disclosed Trades: None

• Market Exposure: 25% Net Long