Stocks Falling Substantially into Final Hour on Coronavirus Fears, European/Emerging Markets/US High-Yield Debt Angst, Oil Decline, Energy/Homebuilding Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Every Sector Declining
  

• Volume: Heavy

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 53.5 +13.0%

• Euro/Yen Carry Return Index 122.53 -.8%

• Emerging Markets Currency Volatility(VXY) 10.06 +3.60%

• S&P 500 Implied Correlation 72.9 +8.5%

• ISE Sentiment Index 52.0 -20
  

• Total Put/Call 1.36 +14.3%

• NYSE Arms 2.39 +670.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 115.76 +9.44%
  

• America Energy Sector High-Yield CDS Index 1,273.0 +23.3%

• European Financial Sector CDS Index 116.31 +.32%

• Italian/German 10Y Yld Spread 191.75 -20.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 101.50 +7.0%
  

• Emerging Market CDS Index 348.13 +11.9%
  

• iBoxx Offshore RMB China Corporate High Yield Index 171.19 -.29%

• 2-Year Swap Spread 1.5 -4.25 basis points

• TED Spread 38.5 -12.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -18.5 -.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 62.0 -.93%
• 3-Month T-Bill Yield .41% unch.

• Yield Curve .22 unch.

• China Iron Ore Spot 86.45 USD/Metric Tonne -.49%

• Citi US Economic Surprise Index 72.30 +.2 point

• Citi Eurozone Economic Surprise Index 11.7 +.4 point

• Citi Emerging Markets Economic Surprise Index -20.2 -1.9 points

• 10-Year TIPS Spread .94 -8.0 basis points
• 50.1% chance of 75.0 basis point Fed rate cut at April 29th meeting, 54.3% chance of 75.0 basis point cut at June 10th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -351 open in Japan 
• China A50 Futures: Indicating -80 open in China

• DAX Futures: Indicating -140 open in Germany

Portfolio:

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

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my emerging market shorts

• Market Exposure: Moved to 25% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth -5.3%

Sector Underperformers:

• 1) Gaming -8.7% 2) Homebuilding -8.2% 3) Oil Service -8.1%

Stocks Falling on Unusual Volume: 

• MAR, HUN, DGX, PBCT, APLE, AL WEX, DOW, OHI, EPD, WSC, HLT, WHD, CBRL, GEO, SNV, H, SBRA, NOV, FUN, PAR, SRG,VAC, MTN, PTY, CAKE, DY, RETA, LYV, ZYXI, PENN, WDR, DRI, KFY, MAC, PETQ, CCL, CAR, MGM, IIVI, DIN, BA, FANG, SFIX, LYFT, OXY, WYND, EAT, RCL, AAWW, NCLH, ERI  and FLGT

Stocks With Unusual Put Option Activity:

• 1) CC 2) CIM 3) ITB 4) NLY 5) MGM

Stocks With Most Negative News Mentions:

• 1) OXY 2) BA 3) MTDR 4) VAL 5) WOW

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth -4.4%

Sector Outperformers:

• 1) I-Banks -3.5% 2) Video Gaming -3.7% 3) Biotech -4.0%

Stocks Rising on Unusual Volume:

• VIR, MRNA, NS, LGND and GILD

Stocks With Unusual Call Option Activity:

• 1) VSTM 2) VIRT 3) MGM 4) HBAN 5) APC

Stocks With Most Positive News Mentions:

• 1) CLDR 2) DQ 3) DXC 4) BWXT 5) MAS

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +63.2% Above 100-Day Average
• 0 Sectors Rising, 11 Sectors Declining
• 6.3% of Issues Advancing, 92.9% Declining
• 3 New 52-Week Highs, 486 New Lows
• 17.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 31.5%
• Vix 52.7 +10.6%
• Total Put/Call 1.06 -10.9%
• TRIN/Arms 1.80 -22.2%

Wednesday Watch

Evening Headlines

Bloomberg:        

• Emergency Rate Cuts Loom for Asia as Virus Slams Economies.  

• Over 100 Homebuilders Go Bust in China as Virus Strains Deepen.

• Coronavirus Is Making Life Hell for China’s Tech Workers.

• How the Coronavirus and Tumbling Oil Prices May Affect Global Growth. Stocks Drop With U.S. Stimulus Plan Still Pending. U.S equity futures retreated and Asian equities opened lower as investors awaited details from the Trump administration on planned stimulus to counter the coronavirus impact. S&P 500 futures fell about 1.5%, following a strong rally on Wall Street. President Donald Trump didn’t appear at a White House briefing on the outbreak after promising a day earlier that he would hold a news conference to announce a “major” economic aid package. The yen clawed back some of a steep overnight retreat, while Japanese and Australian shares opened lower. The S&P 500 Index earlier closed up almost 5% to end a topsy-turvy session, with the U.S. looking at measures including cutting payroll taxes and aiding ailing businesses like airlines and cruise operators. Oil steadied after rising 10% on the back of Monday’s plunge. Japan’s Topix index declined 0.5% as of 8:01 a.m. in Tokyo. South Korea’s Kospi index retreated 0.3%. S&P 500 futures fell 1.5%. The index rose 4.9% on Tuesday. Australia’s S&P/ASX 200 Index lost 1.7%.

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

• Oil Revival Falters in Tug-of-War Between Supply and Stimulus.

• U.S. Fight Against Virus Enters New Phase.

• U.S. Recession a Coin Toss as Chances Climb to 53% Within Year.  

• Warning Bells Sound for U.S. Economy With Virus Squeezing Ports.  

• Google Tells All North America Staff to Work From Home.  

• Hedge Fund That Rarely Loses Has Its Worst Start to Year Ever.

• Hilton Pulls 2020 Earnings Forecast as Coronavirus Hits Travel.

Wall Street Journal:

• Biden and Sanders Square Off in Super Tuesday Sequel.

• Putin’s President-for-Life Plan.

• Trump Struggles to Balance Mitigating Epidemic, Protecting Economy.

• Ohio Governor Calls on Sports to Bar Spectators Amid Coronavirus Fears.

Fox News:

• Biden cites virus, wife's pregnancy to avoid deposition until after Election Day.

MarketWatch.com:    

• Kleenex parent Kimberly-Clark(KMB) upgraded on coronavirus stockpiling, long allergy season.

• U.S. State Department warns of an ‘increased risk of infection’ on cruise ships.

• Opinion: To save the economy from COVID-19, the only effective policy is medical, not monetary or fiscal.

CNBC:

• Trump pitched 0% payroll tax rate for the rest of the year, White House official says.

• Company balance sheets get a lot more important in ‘tough times,’ Jim Cramer says.

• Coronavirus live updates: Coachella and Stagecoach postponed, UK minister diagnosed with coronavirus.

• Sanders and Biden campaigns cancel Ohio rallies Tuesday due to coronavirus concerns.

• Walmart, Starbucks and others face a new coronavirus challenge: Sick workers and fearful customers.

• New York deploys National Guard to New Rochelle, establishes containment center.

• Stocks making the biggest moves after hours: DXC Technology, Cloudera, Korn Ferry and more.

• JetBlue CEO says demand for flights has fallen more due to coronavirus than after 9/11.

Zero Hedge:

• UK Health Minister Tests Positive For COVID-19; Bernie And Biden Cancel Rallies: Live Updates.
• White House Promises "Cost Will Not Be A Barrier" For Coronavirus Care But Offers Few Details About "Bold" Trump Stimulus Plan.
• Airport Says DHS Not Screening People Coming Into US From Virus-Stricken Italy Or South Korea.
• Only 4 Shale Drillers Are Still Profitable At $31 Oil. 
• Bank Of Japan Buys Record Amount Of ETFs, Admits 'Paper Losses', Plans Program Expansion.
• And Then Came The Lawsuits: Pandemic In A Litigious Society.
• Plunge Protection Team Holds "Market Conditions" Call After Monday's Market Crash.
• "It's Really Shaken My Confidence" - Robinhood Reportedly Maxed Out Credit Line Ahead Of Outages Crisis.
• US Not Prepared For "Coronavirus Winter" As Containment Window Passes.
• February Heavy Duty Truck Orders Plunge, New 2020 Estimates Call For A 31% Drop.
• WTI Maintains Gains Despite Much Bigger Than Expected Crude Build.
• "Deeper Than Corona" - The Real Causes Of The Oncoming Economic Collapse.
• Stocks & Oil 'Dead Bat Bounce' On Fiscal Dreams, But Credit Crash Continues.

Business Insider: 

• Risks of coronavirus infection from packages are 'extremely low,' even though the virus could live on surfaces for days, one expert says.

• 9 ways to protect yourself from getting sick in an open office.

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 -1.25% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 96.0 -3.25 basis points.

• China Sovereign CDS 64.0 -7.0 basis points.

• Bloomberg Emerging Markets Currency Index  62.59 +.02%.

• Euro Stoxx 50 futures +1.37%.

• S&P 500 futures -2.0%.

• NASDAQ 100 futures -2.0%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (LK)/-.13

• (UNFI)/.26

• (VRA)/.52

After the Close:

• (SMTC)/.36

• (ZAGG)/.94

• (KRO)/.10

Economic Releases
8:30 am EST

• The CPI MoM for Feb. is estimated unch. versus a +.1% gain in Jan.

• The CPI Ex Food and Energy MoM for Feb. is estimated to rise +.2% versus a +.2% gain in Jan.

• Real Avg. Weekly Earnings YoY.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +2,105,360 barrels versus a +784,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -2,691,200 barrels versus a -4,339,000 barrel decline the prior week. Distillate inventories are estimated to fall by -2,203,200 barrels versus a -4,008,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.09% versus a -1.0% decline prior.
  

2:00 pm EST

• The Monthly Budget Statement for Feb. is estimated at -$236.8B versus -$234.0B in Jan.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The UK Trade Balance report, weekly MBA Mortgage Applications report, $24B 10Y T-Note auction, BofA Merrill Refining Conference and the Susquehanna Tech 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 technology shares in the region. I expect US stocks to open lower and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.