Wednesday Watch

Night Trading 

• Asian equity indices are -2.0% to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 140.0 -4.75 basis points.

• China Sovereign CDS 71.25 -8.0 basis points.

• Bloomberg Emerging Markets Currency Index  59.60 +.02%.
• Euro Stoxx 50 futures -3.0%.

• S&P 500 futures -3.2%.

• NASDAQ 100 futures -3.6%.

Morning Preview Links

Earnings of Note 

Company/Estimate

Before the Open:

• (GIS)/.76 

After the Close:

• (FIVE)/1.94
• (GES)/1.12
• (MLHR)/.70
• (WSM)/2.06

Economic Releases

8:30 am EST

• Housing Starts for Feb. is estimated to fall to 1500K versus 1567K in Jan.
• Building Permits for Feb. is estimated to fall to 1500K versus 1551K in Jan.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +4,405,750 barrels versus a +7,664,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -3,643,000 barrels versus a -5,049,000 barrel decline the prior week. Distillate inventories are estimated to fall by -3,492,250 barrels versus a -6,404,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.01% versus a -.5% decline prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The FOMC press conference/economic projections and the weekly MBA Mortgage Applications report could also impact trading today.

Market Hours

Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and consumer staple shares in the region. The Portfolio is 25% net long heading into the day.

Stocks Surging into Final Hour on Global Stimulus, Bargain-Hunting, Yen Weakness, Consumer Staple/Tech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Heavy

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 73.7 -10.8%

• Euro/Yen Carry Return Index 122.58 -.19%

• Emerging Markets Currency Volatility(VXY) 13.2 unch.

• S&P 500 Implied Correlation 85.8 +6.4%

• ISE Sentiment Index 61.0 -12
  

• Total Put/Call 1.03 -18.9%

• NYSE Arms .78 -23.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 123.12 -1.63%
  

• America Energy Sector High-Yield CDS Index 1,467.0 +8.05%

• European Financial Sector CDS Index 143.72 -.35%

• Italian/German 10Y Yld Spread 279.0 +25.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 141.07 -1.08%
  

• Emerging Market CDS Index 396.01 -5.39%
  

• iBoxx Offshore RMB China Corporate High Yield Index 170.97 +.05%

• 2-Year Swap Spread 10.25 +2.0 basis points

• TED Spread 62.75 +2.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -46.0 -35.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 59.62 -.53%
• 3-Month T-Bill Yield .17% -2.0 basis points

• Yield Curve .38 -2.0 basis points

• China Iron Ore Spot 88.10 USD/Metric Tonne +4.28%

• Citi US Economic Surprise Index 57.60 -4.1 points

• Citi Eurozone Economic Surprise Index 3.1 -11.1 point

• Citi Emerging Markets Economic Surprise Index -40.0 +1.2 points

• 10-Year TIPS Spread .64 -9.0 basis points
• n/a chance of 100.0 basis point Fed rate cut at April 29th meeting, n/a chance of 100.0 basis point cut at June 10th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +404 open in Japan 
• China A50 Futures: Indicating -4 open in China

• DAX Futures: Indicating +30 open in Germany

Portfolio:

• Higher: On gains in my consumer staple, biotech, tech sector longs

• Disclosed Trades: Covered some of my index hedges and emerging market shorts

• Market Exposure: Moved to 50% Net Long

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +104.90% Above 100-Day Average
• 11 Sectors Rising, 0 Sectors Declining
• 59.6% of Issues Advancing, 39.7% Declining
• 7 New 52-Week Highs, 1,189 New Lows
• 2.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 24.9%
• Vix 74.0 -10.0%
• Total Put/Call 1.0 -21.3%
• TRIN/Arms .80 -21.6%

Tuesday Watch

Evening Headlines

Bloomberg:    

• San Francisco Shut Down; Philippines Halts Markets: Virus Update.

• Rout to Extend in Asia After U.S. Stocks Suffer Worst Drop Since 1987.

• Key Source of Corporate Cash Seizing Up Amid Credit Market Rout.

• Asia Stocks Slide After U.S. Plunge; Yields Rise: Markets Wrap. Japanese and South Korean equities tumbled after Wall Street stocks plunged the most since 1987, and Australian bond yields gained as traders continue to rush for cash. The S&P 500 Index sank 12% Monday, erasing its gain for 2019, after President Donald Trump warned of a possible recession, with economic disruption from the coronavirus potentially extending into summer. U.S. futures fluctuated between gains and losses Tuesday, while Treasury yields edged up. The yen dipped. Crude oil traded near $29 a barrel after plunging almost 10% in New York. Topix Index plunged 2.7% as of 9:10 a.m. in Tokyo. S&P 500 futures were up 0.7% after the index plumetted 12% Monday. Kospi Index tumbled 3.4%. Australia’s S&P/ASX 200 rose 0.6%. Hong Kong’s Hang Seng Index futures fell 2% earlier.   

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

• Recession Looms, ‘Whatever Is Necessary,’ Credit Crunch: Eco Day.  

• Demand Collapse Pins Oil Below $30 Amid Deepening Global Rout.

• Colorado Suspects Virus Cluster in Ski-Resort Region.    

• U.S. Banks May Be Downgraded by Moody’s on Pandemic, Fed Move.

• Boeing Seeks U.S. Aid Plus Help for Suppliers, Airlines on Virus.  

• Coronavirus Strikes at Amazon’s Operational Heart: Its Delivery Machine.  

• Students on Spring Break Fail to Heed Coronavirus Warnings.  

• Virus Fears Don’t Keep Customers Away From Fast Food, Starbucks.

• Virus Vaccine Trial, Faster Testing Are Bright Spots in Outbreak.

Wall Street Journal:

• Dow Falls Nearly 3,000 Points as Virus Fears Spread.

• Why Are Markets So Volatile? It’s Not Just the Coronavirus.

• Fed Deploys Its Full Arsenal, but It Still Has Some Tools.

• How South Korea Built the World’s Most Aggressive Coronavirus Test Program .

• Coronavirus Closes School for Nearly 30 Million Children in U.S.

• Airlines Seek $50 Billion in Aid From Government.

• Relax, America: The U.S. Has Plenty of Toilet Paper.

• Africa, Latin America Brace as Coronavirus Threatens Weaker Health Systems.

CNBC.com:

• White House braces for political fight as it readies coronavirus airline bailout package

• Dow drops nearly 3,000 points, as coronavirus collapse continues; worst day since ’87

• Thermo Fisher ships coronavirus tests, aims to produce 5 million tests a week

• Coronavirus live updates: China reports 21 new cases, Malaysia shuts borders

• Stock market leaders unite against calls to stop trading, saying it would only compound anxiety.

• Coronavirus could be the tipping point for industries already suffering from disruption.

• Telemedicine companies are struggling to serve ‘extreme volumes’ of patients amid coronavirus surge.

• Stocks making the biggest moves after hours: MGM Resorts, Tencent Music, Amazon and more.

Fox News:

• Trump issues guidelines to slow virus spread in '15 days,' but warns crisis may last months.

MarketWatch.com:     

• These 64 stocks in the S&P 500 fell at least 20% on Monday as the coronavirus panic intensified.

Zero Hedge:

• Global Deaths From Covid-19 Pass 7,000; Silicon Valley Shuts Down: Virus Updates.

• US Food Industry Scrambles To Resupply Stores Amid Apocalyptic Surge In Demand.

• Why Saudi Arabia's Oil Price War Is Doomed To Fail.

• Boeing, Which Repurchased Over $100BN In Stock, Is Downgraded To BBB, Seeks "Short-Term" Bailout.

• Amazon Hiring 100,000 Warehouse And Delivery Workers As Coronavirus-Driven Purchases Explode.

• "Half Of America Will Get Sick": Here Is What Goldman Told 1,500 Clients In Its Emergency Sunday Conference Call.

• VIX Closes At Record High As S&P Breaks Critical Trendline Support.

• A.Gary Shilling: Globalists May Soon Become An Extinct Species.

• Spain, Italy Ban Short-Selling.

• Foreign Central Banks Dump Treasuries For 17th Straight Month, Continue To Hoard More Gold.

• Las Vegas Strip Shutting Down: "Hotel Occupancy Will Be In Low Teens" MGM Says.

• Plan For Cash Handouts Gains Steam In Congress As Consumption Collapses.

• Global Liquidation Accelerates Despite Massive Monetary Intervention.

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 +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 144.75 +14.75 basis points.

• China Sovereign CDS 79.25 +4.25 basis points.

• Bloomberg Emerging Markets Currency Index  60.0 +.10%.

• Euro Stoxx 50 futures +1.94%.

• S&P 500 futures +3.9%.

• NASDAQ 100 futures +3.36%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (FLR)/.22

• (HDS)/.56

• (LE)/.78

• (MIK)/1.26

After the Close:

• (FDX)/1.51

• (MDB)/-.28

Economic Releases
8:30 am EST

• Retail Sales Advance MoM for Feb. is estimated to rise +.2% versus a +.3% gain in Jan.

• Retail Sales Ex Autos MoM for Feb. is estimated to rise +.1% versus a +.3% gain in Jan.

• Retail Sales Ex Autos and Gas for Feb. is estimated to rise +.3% versus a +.4% gain in Jan.

9:15 am EST

• Industrial Production MoM for Feb. is estimated to rise +.4% versus a -.3% decline in Jan.

• Capacity Utilization for Feb. is estimated to rise to 77.1% versus 76.8% in Jan.

• Manufacturing Production for Feb. is estimated to rise +.2% versus a -.1% decline in Jan.
  

10:00 am EST

• Business Inventories for Jan. is estimated to fall -.1% versus a +.1% gain in Dec.

• JOLTS Job Opening for Jan. is estimated to fall to 6400 versus 6423 in Dec. 

• The NAHB Housing Market Index for March is estimated to fall to 73 versus 74 in Feb.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone ZEW Index, Democratic primaries, weekly US retail sales reports, Oppenheimer Healthcare Conference, BTIG Medtech Conference and the (AXP) investor call could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and consumer staple 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.