Wednesday Watch

Evening Headlines

Bloomberg:           

• Pandemic Grips Britain With Johnson Still in Intensive Care.

• China’s Faltering Dollar Bonds Show Limits of State Intervention.    

• China Braces for Wave of Soured Loans With New Bad-Debt Manager.

• China Debates Slashing Economic Growth Target Amid Virus Reality.

• First Australian Bank Defers Dividend After Regulator Intervenes.
• France Reports Fewer New Virus Cases as Deaths Rise Sharply.
• Trump Team Preps Plans to Reopen Economy That Depend on Testing.
• Wuhan Reopens; U.K., New York Have Deadliest Days: Virus Update.
• More Countries Are Embracing Face Masks After Initial Reluctance.

• Asia Stock Futures Drop; Dollar Holds Losses: Markets Wrap. Stocks in Asia looked set to halt a two-day rally after U.S. equities gave up solid gains, with investors weighing signs of a slowing rate of coronavirus spread against more fatalities. The dollar held losses amid an easing in funding strains, and the offshore yuan traded near its strongest in three weeks. U.S. equity futures erased losses and edged higher in early trading, signaling more volatility to come after the S&P 500 Index gave up a gain of as much as 3.5% Tuesday to close lower. Futures declined in Japan, Hong Kong and Australia. Treasuries dipped on Tuesday. Futures on the S&P 500 added 0.5% as of 8:43 a.m. in Tokyo. The index lost 0.2% on Tuesday. Futures on Japan’s Nikkei 225 dropped 1.2%. Hang Seng futures earlier fell 1.4%. Futures on Australia’s S&P/ASX 200 Index retreated 1%. 

• Oil Holds Below $25 on Worries an Output Cut Won’t Be Big Enough.
• Five Things You Need to Know to Start Your Day.
• Fed Survey Exposes Perilous State of Small-Business Finances.

• Democrats Push for Fed to Buy Low-Rated Muni Debt to Ease Strain.

• U.S. Labs Face Crisis After Crisis Despite Improvements in Testing.

• Wisconsin Voters Defy Stay-at-Home Orders With Polls Open.

• CEOs Ditching Dividends Should Consider Their Pay, Investors Say.

• Oil Companies Warn Kansas City Fed of Widespread Insolvencies.

Wall Street Journal:

• Global Virus Deaths Top 81,000 as Four States Report Highest Daily Toll.

• Acting Navy Secretary Resigns in Wake of USS Roosevelt Comments.

• ‘A Flood of Death That I Cannot Manage’: Pandemic in Doctors’ Own Words.

• Attention Turns to Eventual Reopening of U.S. Economy.

• Fannie, Freddie Unlikely to Aid Mortgage Firms as Payments Dry Up.

• Companies Offer FEMA Critical Supplies the Government Can’t Buy.

• Coronavirus Could Cause Youth Sports Recession.

CNBC.com: 

• Coronavirus live updates: US cases top 387,000, Amazon testing disinfectant fog after protests.

• Jim Cramer: Economy ‘will bounce back gradually,’ predicting a ‘U’ shape recovery.

• Mnuchin seeks $250 billion more in small business aid, as Senate vote is planned for Thursday.

• Mayo Clinic CEO says convalescent plasma could be effective treatment for coronavirus.

• Stocks making the biggest moves after hours: Pinterest, Levi Strauss, Square & more.

• New Jersey closes most public parks, extends emergency order as deaths surge.

Fox News:

• Trump mulls freezing US funding to World Health Organization over response to coronavirus crisis.

MarketWatch.com:         

• ‘I thought I would never see that many body bags in my life’ — NYC funeral directors on dealing with coronavirus deaths .

• Goldman analyst who predicted coronavirus would kill the bull market says ‘risk to the downside is greater’ despite rally.

• Opinion: These low-risk stocks have high potential in this volatile market.  

• Grocery prices are rising as eat-at-home demand soars during the coronavirus pandemic.

Zero Hedge:

• Inmate Outbreak Numbers Explode As Prison Bureau Buys Massive Stockpile Of Trump's Favorite COVID-19 Drug: Live Updates.

• Major Auto Insurers Now Refunding Premiums Due To "Unprecedented" Driving Slump.

• Millions Of Workers Fired Over Zoom As 'Remote Layoffs' Become Part Of America's 'New Normal'.

• Collapsing Liquidity During End-Of-Day Rebalancing Has Led In An Unprecedented Mispricing Of Options.

• World Is "Sleepwalking Into Surveillance State" As COVID-19 Crackdowns Escalate.

•  Watch Live: White House Delivers Tuesday Press Briefing As BBG Reports On New Plan To Revive The Economy.

• "They Missed The Call" - Trump Plans To Withhold Money From WHO Over 'Botched' Crisis Response.

• Consumer Credit Soared In February, Just Before The Economy Shut Down.

• S&P Futures Crater 40 Points In One Tick On Huge For Sell Closing Imbalance.

• Just How "Cheap" Is The Market? Here Is The Shocking Answer.

• Burglaries, Thefts Up More Than 75% In Major Cities Amid Coronavirus Lockdown.

• Trump Admin Wants To 'Work Directly' With Wuhan Institute Of Virology.

• Stocks Surrender Biggest Intraday Gain Since Oct 2008 As Crude Crashes.

Business Insider:  

• 'In order to make a living I must put myself and my community in danger': Uber drivers say the company's inconsistent sick pay policy is pushing them to keep working — even if they get sick.

• Almost all of San Francisco's public transit will be shut down as the city gears up for an expected surge in coronavirus cases.

• A major grocer is pushing to classify its employees as first responders, giving them priority for testing and protective gear.

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 -.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 139.25 -1.5 basis points.

• China Sovereign CDS 52.50 -2.0 basis points.

• Bloomberg Emerging Markets Currency Index 57.98 -.10%.

• Euro Stoxx 50 futures -1.66%.

• S&P 500 futures -.47%.

• NASDAQ 100 futures -.32%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (RPM)/.21

After the Close:

• (PSMT)/.79

Economic Releases
10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +9,678,500 barrels versus a +13,833,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +5,821,000 barrels versus a +7,524,000 barrel gain the prior week. Distillate inventories are estimated to rise by +787.600 barrels versus a -2,194,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -1.79% versus a -5.0% decline prior. 
  

2:00 pm EST

• FOMC March 15 Meeting Minutes.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The weekly MBA Mortgage Applications report, weekly Bloomberg Consumer Comfort Index and the $17B 30Y T-Bond auction 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 financial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.

Stocks Higher into Final Hour on Peak Coronavirus Hopes, Global Stimulus, Short-Covering, Airline/Gaming 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) 44.6 -1.3%

• Euro/Yen Carry Return Index 123.22 +.75%

• Emerging Markets Currency Volatility(VXY) 12.3 -2.5%

• S&P 500 Implied Correlation 74.8 +4.1%

• ISE Sentiment Index 101.0 +32.0 points
  

• Total Put/Call .87 -9.4%

• NYSE Arms .80 +9.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 112.26 -5.1%
  

• America Energy Sector High-Yield CDS Index 1,417.0 +8.0%

• European Financial Sector CDS Index 111.64 -5.51%

• Italian/German 10Y Yld Spread 192.5 +1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 136.96 -5.1%
  

• Emerging Market CDS Index 341.16 -6.74%
  

• iBoxx Offshore RMB China Corporate High Yield Index 155.62 -.33%

• 2-Year Swap Spread 25.0 +2.25 basis points

• TED Spread 128.0 -5.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap 47.0 -7.5 basis points
• MBS  5/10 Treasury Spread  117.0 -5.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 58.62 +1.16%
• 3-Month T-Bill Yield .10% +2.0 basis points

• Yield Curve .46 +6.0 basis points

• China Iron Ore Spot 79.53 USD/Metric Tonne -.23%

• Citi US Economic Surprise Index -42.9 +1.4 points

• Citi Eurozone Economic Surprise Index -67.60 +5.1 points

• Citi Emerging Markets Economic Surprise Index .4 +2.3 points

• 10-Year TIPS Spread 1.17 +14.0 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 +395 open in Japan 
• China A50 Futures: Indicating -138 open in China

• DAX Futures: Indicating -61 open in Germany

Portfolio:

• Higher: On gains in my consumer staple/industrial/tech/medical sector long

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth +1.7%

Sector Underperformers:

• 1) Coal -7.3% 2) Paper -.6% 3) Biotech unch.

Stocks Falling on Unusual Volume: 

• TXG, WORK, OTIS, BIG, SILK, GILD, HAE, AXSM, DXCM, EHTH, APOG, BLKB, NXTC, QDEL, ZM, TDOC, SSYS, RNG, OSUR, PETS and VIR

Stocks With Unusual Put Option Activity:

• 1) UCO 2) KSS 3) RF 4) CSX 5) CY

Stocks With Most Negative News Mentions:

• 1) XOM 2) SDC 3) CLR 4) PSX 5) F

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Value +4.6%

Sector Outperformers:

• 1) Airlines +12.1% 2) Gaming +8.4% 3) Homebuilding +5.6%

Stocks Rising on Unusual Volume:

• KSS, CNK, CAR, THC, RCL, PVH, AAL, CCL, SAVE, WD, GBX, VAC, ERI, EAT, JWN, STWD, NCLH, SIX, DRI, PLCE, URBN, PLNT, WING, CHEF, WYNN, MGM, BXMT, LASR, DKS, LUV, IAA, NMIH, PLAY, UAL, WYND, DIN, HOG, MAR, MBUU, ELY, LVGO, OXY, MXL, HHC, MCS, PENN, W, SPR, DAL, FUN, ABM, RTX and BOOM

Stocks With Unusual Call Option Activity:

• 1) WPX 2) DUK 3) RUN 4) WMB 5) APC

Stocks With Most Positive News Mentions:

• 1) CCL 2) WING 3) STZ 4) ANGO 5) NIO

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +93.6% Above 100-Day Average
• 11 Sectors Rising, 0 Sectors Declining
• 82.7% of Issues Advancing, 16.0% Declining
• 6 New 52-Week Highs, 4 New Lows
• 5.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 42.3%
• Vix 45.5 +.6%
• Total Put/Call .83 -13.5%
• TRIN/Arms .64 -12.3%