Friday Watch

Night Trading 

• Asian equity indices are -6.5% to -5.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 164.0 +54.5 basis points.

• China Sovereign CDS 84.75 +12.25 basis points.

• Bloomberg Emerging Markets Currency Index  60.82 -.26%.
• Euro Stoxx 50 futures -3.5%.

• S&P 500 futures -1.5%.

• NASDAQ 100 futures -2.3%.

Morning Preview Links

Earnings of Note 

Company/Estimate

Before the Open:

• (BKE)/.87
• (JBL)/.67
• (KKS)/1.45
• (LK)/-.13
• (OSTK)/-.47

After the Close:

• None of note

Economic Releases

8:30 am EST

• The Import Price Index MoM for Feb. is estimated to fall -1.0% versus unch. in Jan.
• The Export Price Index MoM for Feb. is estimated to fall -.4% versus a +.7% gain in Jan.

10:00 am EST

• Preliminary Univ. of Mich. Consumer Sentiment for March is estimated to fall to 95.0 versus 101.0 in Feb.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The German IFO Business Climate Index, Bloomberg US Economic Survey for March and the (ITW) investor day could also impact trading today.

Market Hours

Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are sharply lower, weighed down by technology and industrial shares in the region. The Portfolio is 25% net long heading into the day.

Stocks Substantially Lower into Final Hour on Coronavirus Fears, European/Emerging Markets/US High-Yield Debt Angst, Oil Decline, Commodity/Transport 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) 67.1 +24.5%

• Euro/Yen Carry Return Index 121.91 -.14%

• Emerging Markets Currency Volatility(VXY) 13.0 +27.4%

• S&P 500 Implied Correlation 87.7 +32.0%

• ISE Sentiment Index 68.0 +16
  

• Total Put/Call 1.55 +14.0%

• NYSE Arms .71 -65.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 134.66 +17.0%
  

• America Energy Sector High-Yield CDS Index 1,352.0 +5.87%

• European Financial Sector CDS Index 150.65 +29.3%

• Italian/German 10Y Yld Spread 250.0 +58.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 131.71 +30.3%
  

• Emerging Market CDS Index 400.0 +15.0%
  

• iBoxx Offshore RMB China Corporate High Yield Index 171.34 +.09%

• 2-Year Swap Spread -2.5 -4.0 basis points

• TED Spread 45.0 +6.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -15.25 +3.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 61.10 -1.22%
• 3-Month T-Bill Yield .41% unch.

• Yield Curve .33 +11.0 basis points

• China Iron Ore Spot 85.36 USD/Metric Tonne -2.0%

• Citi US Economic Surprise Index 73.50 +1.2 points

• Citi Eurozone Economic Surprise Index 13.5 +1.7 point

• Citi Emerging Markets Economic Surprise Index -17.3 +2.9 points

• 10-Year TIPS Spread .93 -1.0 basis point
• 70.7% chance of 100.0 basis point Fed rate cut at April 29th meeting, 67.4% chance of 100.0 basis point cut at June 10th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -1,129 open in Japan 
• China A50 Futures: Indicating -560 open in China

• DAX Futures: Indicating +15 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 25% Net Long

Morning Market Internals

NYSE Composite Index:

• Volume Running +98.3% Above 100-Day Average
• 0 Sectors Rising, 11 Sectors Declining
• 2.3% of Issues Advancing, 97.5% Declining
• 0 New 52-Week Highs, 2,250 New Lows
• 8.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 27.5%
• Vix 66.0 +22.5%
• Total Put/Call 1.42 +4.4%
• TRIN/Arms 1.0 -51.5%

Thursday Watch

Evening Headlines

Bloomberg:      

• Italy Shuts Down All Non-Essential Services as Virus Toll Rises.

• Cases Top 124,000; Australia Announces Stimulus: Virus Update.

• World Stock Rout Builds After Dow Hits Bear Market. A global equity rout deepened in Asia on Thursday after a renewed sell-off in U.S. equities, with investors concerned by a lack of clarity from the Trump administration on a coronavirus stimulus package. Shares in Japan sank and Australian equities extended recent losses, getting little respite from that nation’s stimulus package. Treasuries found a renewed bid. The World Health Organization earlier called the virus spread a pandemic and the Dow Jones Industrial Average tipped into a bear market, ending the longest bull-run in history for U.S. shares. Early gains for American equity futures fizzled as investors awaited a press conference from President Donald Trump. Oil edged up after another slide. Japan’s Topix index fell 1.8% as of 9:02 a.m. in Tokyo. Futures on the S&P 500 lost 0.1%. The gauge lost 4.9% on Wednesday. Australia’s S&P/ASX 200 Index declined 2.7%. South Korea’s Kospi index sank 0.9%.

• A Flood of $25-a-Barrel Saudi Arabian Oil Is Headed for Europe.

• Trump’s Answer to the Oil Crash Could Be a Tax on Saudi Crude.

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

• China Policy, Trump Response, Australia Fiscal Stimulus: Eco Day.

• Aboard Air Force One, Trump Was Shaken Into Action on Virus.

• Economists Start Forecasting Negative U.S. GDP Numbers on Coronavirus.

Wall Street Journal:

• Dow Jones Industrial Average’s 11-Year Bull Run Comes to an End

• Saudi Arabia’s Crown Prince Tanked Oil Markets. Here’s the Back Story.

• House Passes War Powers Resolution Limiting President’s Ability to Strike Iran

• Rocket Attack on Iraqi Base Kills Two U.S. Troops, British Soldier

• Hollywood Relies More Than Ever on Streaming Revenue From Overseas.

CNBC.com:

• Watch: President Donald Trump addresses nation on US response to coronavirus.

• No automakers ‘coming out unscathed’ as US coronavirus cases grow.

• Dow drops 1,400 points and tumbles into a bear market, down 20% from last month’s record close.

• Fed boosts money it’s providing to banks in overnight repo lending to $175 billion.

• Travel industry could lose $24 billion as coronavirus cripples tourism from outside US.

• New York late-night shows will ditch live audiences to help prevent coronavirus from spreading.

• American troops killed, injured in Iraq rocket attack, US officials say.

Fox News:

• White House takes steps to protect health care workers, hours before Trump's Oval Office address.

MarketWatch.com:      

• All eyes on Lagarde, as ECB meets following emergency rate interest rate cuts by Fed, Bank of England .

• Carl Icahn takes nearly 10% stake in Occidental Petroleum as shares plunge.

Zero Hedge:

• The CDC's Budget Is Larger Now than Under Obama.

• "March Madness" Tournament Will Be Played In Front Of No Fans, NCAA Says.

• Los Angeles County Confirms First Coronavirus Death; Seattle Closes Schools For "A Minimum" Of 2 Weeks: Live Updates.

• Treasury Future Crash Sparks Speculation Of Risk Parity Liquidation.

• 10 Rockets Fired At Iraqi Base Holding US Troops: Officials.

• Earnings Expectations Are Starting To Plunge: Here Are The Most-Impacted Sectors.

• Is This The Next Major Roadblock To The White House's Coronavirus Response?

• Stocks Puke Into Bear Market As US Financial Conditions Crash Most 'Since Lehman'. 

• Trump Bans All Travel From Europe For Next 30 Days: Live Updates.

Business Insider: 

• Walmart, McDonald's, Home Depot, and 15 other retailers share how the coronavirus outbreak could affect business.

Axios:

• Beijing's Cornavirus Propaganda Blitz Goes Global.

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 -2.75% to -1.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 109.50 +13.5 basis points.

• China Sovereign CDS 72.50 +8.5 basis points.

• Bloomberg Emerging Markets Currency Index  61.80 -.1%.

• Euro Stoxx 50 futures -2.49%.

• S&P 500 futures -1.55%.

• NASDAQ 100 futures -1.42%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (DG)/2.01

• (GCO)/2.74

• (GNC)/-.02

• (SPAR)/.20

• (TUP)/-.74

After the Close:

• (ADBE)/2.24

• (AVGO)/5.36

• (DOCU)/.05

• (GPS)/.41

• (ORCL)/.96

• (ULTA)/3.73

• (ZUMZ)/1.36

Economic Releases
8:30 am EST

• PPI Final Demand MoM for Feb. is estimated to fall -.1% versus a +.5% gain in Jan. 

• PPI Ex Food and Energy MoM for Feb. is estimated to rise +.1% versus a +.5% gain in Jan. 

• Initial Jobless Claims are estimated to rise to 220K versus 216K the prior week.

• Continuing Claims are estimated to rise to 1733K versus 1729K prior.

12:00 pm EST

• 4Q Change in Household Net Worth.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The ECB Decision/Press Conference, Eurozone Industrial Production report, $16B 30Y T-Bond auction, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, DA Davidson Consumer Growth Conference, (SLAB) investor day and the (PH) investor meeting could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are lower, weighed down by commodity and technology shares in the region. I expect US stocks to open lower and to maintain losses into the afternoon. The Portfolio is 25% net long heading into the day.