Stocks Surging into Final Hour on Global Stimulus Hopes, Less European/Emerging Markets/US High-Yield Debt Angst, Short-Covering, Energy/Consumer Descretionary Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Heavy

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 60.0 -2.7%

• Euro/Yen Carry Return Index 124.41 +.58%

• Emerging Markets Currency Volatility(VXY) 13.5 -6.7%

• S&P 500 Implied Correlation 66.8 +70%

• ISE Sentiment Index 60.0 -14
  

• Total Put/Call .86 -21.8%

• NYSE Arms .82 -12.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 108.44 -15.5%
  

• America Energy Sector High-Yield CDS Index 1,553.0 -.31%

• European Financial Sector CDS Index 108.87 -16.3%

• Italian/German 10Y Yld Spread 188.75 -6.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 187.69 -11.9%
  

• Emerging Market CDS Index 360.18 -13.7%
  

• iBoxx Offshore RMB China Corporate High Yield Index 170.09 +.10%

• 2-Year Swap Spread 12.75 -6.25 basis points

• TED Spread 125.0 +1.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -.75 +10.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 58.19 +1.1%
• 3-Month T-Bill Yield -.04% -1.0 basis point

• Yield Curve .50 -4.0 basis points

• China Iron Ore Spot 81.39 USD/Metric Tonne +.63%

• Citi US Economic Surprise Index 62.30 +15.2 points

• Citi Eurozone Economic Surprise Index -54.80 -56.8 points

• Citi Emerging Markets Economic Surprise Index -28.7 -.3 point

• 10-Year TIPS Spread .97 +15.0 basis points
• n/a chance of no change at April 29th meeting, n/a chance of no change at June 10th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +1,128 open in Japan 
• China A50 Futures: Indicating +143 open in China

• DAX Futures: Indicating -142 open in Germany

Portfolio:

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 50% Net Long

Morning Market Internals

NYSE Composite Index:

• Volume Running +76.8% Above 100-Day Average
• 11 Sectors Rising, 0 Sectors Declining
• 92.7% of Issues Advancing, 6.6% Declining
• 1 New 52-Week Highs, 37 New Lows
• 2.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 27.5%
• Vix 56.2 -8.8%
• Total Put/Call .94 -14.6%
• TRIN/Arms .85 -10.6%

Tuesday Watch

Evening Headlines

Bloomberg:      

• China’s Companies Have Worst Quarter on Record, Beige Book Says.
• Johnson Puts U.K. in Lockdown to Tackle ‘National Emergency’.
• Trump Urges Senate to ‘Make a Deal’ on Stimulus: Congress Update.
• Birx Says Virus Could Recur, So Slowing Spread Is Key.
• U.K. in Lockdown; Trump Wants U.S. Reopened Soon: Virus Update.  
• U.K. in Lockdown; Florida to Isolate N.Y. Arrivals: Virus Update. 
• U.S. Futures Climb After Stocks Hit Three-Year Low. U.S. futures climbed in early Asian trading Tuesday after Wall Street benchmarks closed at their lowest in more than three years. The dollar slipped against major peers. Futures pointed higher in Japan and Hong Kong after a massive further wave of initiatives from the Federal Reserve helped ease some measures of corporate credit risk. Investors are now watching U.S. congressional talks on a fiscal package. Treasury yields retreated and oil clawed back some gains after plunging 29% last week. S&P 500 futures rose 1.9% as of 8:04 a.m. in Tokyo. The S&P 500 Index fell 2.9% as of 4 p.m. in New York; the Dow Jones Industrial Average lost 3%. Nikkei 225 futures rose 2.4% in Singapore. Australia’s S&P/ASX 200 Index rose 0.9%. Hong Kong’s Hang Seng Index futures rose 1.8% earlier.
• Oil Advances Despite Looming Demand Crisis, OPEC Deal Hopes Fade.
• Five Things You Need to Know to Start Your Day.  
• Fed Goes All-In, China Dollar Bonds, Germany-Italy Help: Eco Day.
• Fed Sidesteps Congress’s Bickering With Sweeping Rescue Plan.   
• Economists See U.S. Facing Worst-Ever Quarterly Contraction.  
• Markets Get Weirder With Stocks and Volatility Tumbling Together.

Wall Street Journal:

• Boeing(BA) to Halt All Seattle Production as Virus Spreads.
• The Pelosi-Schumer Coronavirus Contagion.
• Senate Again Fails to Advance Coronavirus Rescue Package.
• As Economic Toll Mounts, Nation Ponders Trade-Offs.
• Countries Roll Out Restrictions to Curb Virus.
• Digital Payments Soar Amid Coronavirus Restrictions.
• New York City Police Step Up Patrols to Enforce Social Distancing.

CNBC.com:

• Board games, yoga mats and yeast: What people are buying as they heed stay-at-home orders.
• Stocks making the biggest moves after hours: Zoom Video, Fiat Chrysler, Twitter and more.
• Teladoc Health CEO on ‘verge of a new era’ for virtual health care.
• Business bailouts will not stop economic fallout of coronavirus, Jim Cramer says.
• Consumers could spend $20 billion less for gasoline this April.
• Coronavirus live updates: US cases top 43,000, Florida implements NY and NJ travel rules.
• Nordstrom suspends dividend, halts buybacks and taps credit in midst of coronavirus pandemic.
• Coronavirus stimulus bill blocked again in Senate as talks continue.
• CDC says coronavirus survived in Princess Cruise ship cabins for up to 17 days after passengers left.
• Fed surprises market with program to support corporate bonds amid coronavirus pandemic.
• US health officials say 147 nursing homes have at least one resident with coronavirus.
• Coronavirus may be the ‘tipping point’ in favor of working from home.

Fox News:

• Pelosi's virus stimulus includes return of 'Obamaphones,' other items, GOP says.

MarketWatch.com:     

• The Fed is going to buy ETFs. What does it mean?
• No, China’s economy hasn’t gotten better. The implications could be more serious than investors realize.
• A ‘third wave?’ Hong Kong thought it had a handle on the coronavirus pandemic — it doesn’t.

Zero Hedge:

• Jackpot: The "Big Short 2" Trade Has Absolutely Crushed It.
• India Is Now Hand-Stamping People Who Are Suspected To Have COVID-19 Infections.
• Ackman Goes All In: "That's About The Most Bullish Thing We've Done. We're All Long, No Shorts".
• Moderna's Experimental COVID-19 Vaccine Might Be Ready For Limited Use By The Fall.
• The Third Bull Run For Precious Metals Is Here As Physical Demand Soars.
• As "Big Short 2" Explodes, Citi, Deutsche Bank Stuck With Billions In Unsellable CMBS Debt.
• Twitter Withdraws Q1 Guidance As Ad Revenues Crash.
• David Tepper: "My Balls Are In My Jockstrap," As Stocks Could Drop Another 15%.
• Unnamed White House Correspondent Has Suspected COVID-19 Case.
• Gold Surges Most Since 2009 After Fed Unveils QEternity, Stocks & Bond Yields Tumble.

Business Insider: 

• Public-health experts are warning Trump officials against sending Americans back to work too early to jumpstart the economy.
• The UK has gone into full lockdown with the public barred from leaving home for non-essential reasons.
• 'It's Gen Z you want': Millennials are defending themselves from accusations that they're out partying and ignoring warnings amid the coronavirus pandemic.
• Domino's, Pizza Hut, and Papa John's plan to hire more than 50,000 workers amid the coronavirus outbreak.

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 +2.0% to +3.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 213.0 +15.5 basis points.

• China Sovereign CDS 71.75 +1.75 basis points.

• Bloomberg Emerging Markets Currency Index  57.67 +.18%.
• Euro Stoxx 50 futures +2.54%.

• S&P 500 futures +1.4%.

• NASDAQ 100 futures +1.27%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (CCL)/.31
• (FLR)/.22 

After the Close:

• (AIR)/.64
• (HOME)/.37
• (NKE)/.56
• (SCS)/.32

Economic Releases 
9:45 am EST

• Preliminary Markit US Manufacturing PMI for March is estimated to fall to 43.5 versus 50.7 in Feb.
• Preliminary US Services PMI for March is estimated to fall to 42.0 versus 49.4 in Feb.
  

10:00 am EST

• Richmond Fed Manufacturing Index for March is estimated to fall to -15 versus -2 in Feb.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone PMI report, weekly US retail sales reports, Georgia Democratic Primary, Barclays Leisure/Transport Conference, (ADS) conference call, (NVDA) investor call, (COTT) investor day and the (SQ) investor day 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 healthcare shares in the region. I expect US stocks to open higher and to weaken into the afternoon, finishing mixed. The Portfolio is 25% net long heading into the day.

Stocks Falling Substantially into Final Hour on Coronavirus Fears, US Stimulus Debate, Emerging Market/US High-Yield Debt Angst

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Heavy

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 66.6 +.91%

• Euro/Yen Carry Return Index 124.09 +.82%

• Emerging Markets Currency Volatility(VXY) 14.8 +2.1%

• S&P 500 Implied Correlation 70.5 +19.0%

• ISE Sentiment Index 74.0 +4
  

• Total Put/Call 1.13 -8.9%

• NYSE Arms .80 -42.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 126.28 -14.8%
  

• America Energy Sector High-Yield CDS Index 1,544.0 +1.87%

• European Financial Sector CDS Index 130.13 -2.95%

• Italian/German 10Y Yld Spread 195.5 +.25 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 213.03 +14.75%
  

• Emerging Market CDS Index 419.19 +3.22%
  

• iBoxx Offshore RMB China Corporate High Yield Index 169.93 -.54%

• 2-Year Swap Spread 19.0 -.5 basis point

• TED Spread 124.0 +11.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -11.75 -11.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 57.68 -.89%
• 3-Month T-Bill Yield -.03% unch.

• Yield Curve .54 -21.0 basis points

• China Iron Ore Spot 78.45 USD/Metric Tonne +.03%

• Citi US Economic Surprise Index 47.10 +1.8 points

• Citi Eurozone Economic Surprise Index 2.0 -.6 point

• Citi Emerging Markets Economic Surprise Index -28.4 +8.9 points

• 10-Year TIPS Spread .82 +15.0 basis points
• n/a chance of no change at April 29th meeting, n/a chance of no change at June 10th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +892 open in Japan 
• China A50 Futures: Indicating -24 open in China

• DAX Futures: Indicating +83 open in Germany

Portfolio:

• Slightly Higher: On gains in my tech sector longs, emerging market shorts and index hedges

• Disclosed Trades: None

• Market Exposure: 25% Net Long

Morning Market Internals

NYSE Composite Index:

• Volume Running +69.5% Above 100-Day Average
• 0 Sectors Rising, 11 Sectors Declining
• 13.7% of Issues Advancing, 85.4% Declining
• 2 New 52-Week Highs, 657 New Lows
• 2.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 28.5%
• Vix 67.0 +1.4%
• Total Put/Call 1.0 -19.4%
• TRIN/Arms .86 -37.9%