Wednesday Watch

Evening Headlines

Bloomberg:       

• China’s Coronavirus Diplomacy Has Finally Pushed Europe Too Far.  

• Missouri Sues China for ‘Deceit’ Over Extent of Outbreak.  

• China Called Out in U.S. Warning Over Emerging Market Investing.

• U.S. Cases Accelerate; Singapore Extends Lockdown: Virus Update.   

• A Trickle of Bad U.K. Property Loans Is About to Become a Flood.  

• Top Private Bank Asks Clients to Stop Binging on India Stocks.

• Asian Stocks Retreat; Oil Futures Jump After Rout. Asian stocks retreated Wednesday after a risk-off session on Wall Street, amid continued volatility in energy markets and further signs companies are finding it hard to provide outlooks. Crude edged up after a two-day tumble. Shares fell in Tokyo, Seoul and Sydney though declines were shallower than those in the U.S. on Tuesday. S&P 500 futures were little changed after the gauge closed down more than 3%, with investors shrugging off a deal reached by the White House and congressional leaders on fresh spending to combat the impact of the coronavirus pandemic. June crude futures rose as much as 20%, after tumbling more than 50% over the previous two sessions. The yield on benchmark 10-year Treasuries was steady after dropping below 0.6%. Futures on the S&P 500 added 0.1% as of 9:12 a.m. in Tokyo. The gauge declined 3.1% on Tuesday. Japan’s Topix index fell 1.5%. South Korea’s Kospi index lost 1.4%. Australia’s S&P/ASX 200 Index dropped 1.7%.

• Oil Tankers Are Surrounding California With Nowhere to Unload.

• Trump Is Urged to Pressure China on Its Promise to Buy U.S. Oil.  

• Negative Oil Prices Are Literally Breaking Traders’ Risk Models.

• Historic Oil Rout Poised to Bust Shale, Trump’s Energy Dominance.  

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

• Oil Crash Disinflation, Grim Economics, Firehose Unwind: Eco Day.

• Wealthy Mortgage Borrowers Face Cold Shoulder From Lenders.

• U.S. Debt to Surge Past Wartime Record, Deficit to Quadruple.

Wall Street Journal: 

• Oil-Price Crash Deepens, Weighs on Global Markets.

• Bill and Melinda Gates Buy Oceanfront Home Near San Diego for $43 Million.

• Young Voters Could Be Biden’s Achilles’ Heel.

• What Won’t Cure Corona: Lawsuits.

• Drone Tests Target Drug Deliveries, Spotting Infected People.

• ‘The French Are Very Bad at Picking Asparagus.’ Virus Imperils European Farming.

• Some States Look to Reopen, but Others Want More Testing First.

CNBC.com:

• White House advisor says US needs to prepare for more deaths as coronavirus outbreak moves past peak

• Senate passes $484 billion coronavirus bill for small business and hospital relief, testing

• LendingClub slashes roughly 30% of workforce as Covid-19 dampens demand for loans

• Chipotle earnings top estimates as diners shifted orders online, driving its digital sales up 81%.

• Stocks making the biggest moves after hours: Snap, Netflix, Texas Instruments and more.

Fox News:

• Trump defends move to suspend immigration for 60 days, says Americans need the jobs.

• Coverage of GOP governors reopening states ignores Dem's actions, critic says.

Zero Hedge:

• "Yesterday Was Scary, Today Is A Lot More Scary": Black Gold Bloodbath As 'Paper' Oil Plunges Everywhere.

• "Fed Can't Print Gold": BofA Calls Gold "Ultimate Store Of Value", Raises Price Target To $3,000.

• 'It's Not The Same': College Students Revolt Against Online Classes, Sue For Tuition Refunds.

• Pentagon Pressures Mexico To Reopen Factories Vital To Making US Weapons.

• China Slams Australia For "Taking Orders From The US" As Canberra Questions Coronavirus Origins: Live Updates.

• Alexandria Ocasio-Cortez Rejoices At Negative Oil Prices.

• The Real Reason Why A Harvard Professor Thinks Homeschooling Should Be Banned.

• CME Will Allow Negative Oil Options Effective April 22.

• FDA Finally Approves At-Home Coronavirus Test.

• Zuck'd Again? State Governors Say Facebook Contacted Them About "Reopen America" Events.

• Senate Passes $484 Billion Coronavirus Funding Bill.

• Interactive Brokers Stuck With $88 Million Loss After Oil-Trading Clients Bust.

• United Airlines Stock Slides After Massive Secondary Offering.

• WTI Maintains Losses As Crude Inventories Rise For 13th Straight Week.

• Netflix Adds Record 15.77MM Paid Subs, Crushing Estimates But Offers Disappointing Outlook.

• It's Not Just Oil: Another Critical Index Turns Negative, Hinting Funding "Crisis" Has Returned.

• ECB To Discuss Accepting Junk Bonds As Collateral.

• TSY Yields Hit Record Lows, Stocks Slammed As Crude Carnage Spreads.

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 -1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 117.75 +8.0 basis points.

• China Sovereign CDS 51.75 +5.5 basis points.

• Bloomberg Emerging Markets Currency Index 57.82 +.01%.

• Euro Stoxx 50 futures +.22%.

• S&P 500 futures +.05%.

• NASDAQ 100 futures +.19%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (T)/.87

• (BIIB)/7.72

• (DAL)/-.87

• (KMB)/1.96

• (KNX)/.35

• (NDAQ)/1.45

• (DGX)/.88

• (STM)/.21

• (TMO)/2.83

• (WWW)/.20

After the Close:

• (AA)/-.17

• (SAM)/1.92

• (CSX)/.95

• (KMI)/.25

• (LRCX)/3.48

• (LSTR)/1.11

• (LVS)/-.09

• (ORLY)/4.03

• (STX)/1.19

• (SAVE)/-.30

• (AMTD)/.88

• (VMI)/1.39

• (XLNX)/.78

Economic Releases
9:00 am EST

• The FHFA House Price Index MoM for Feb. is estimated to rise +.3% versus a +.3% gain in Jan.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +13,919,200 barrels versus a +19,248,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +4,551,000 barrels versus a +4,914,000 barrel gain the prior week. Distillate inventories are estimated to rise by +3,658,600 barrels versus a +6,280,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -1.96% versus a -6.5% decline prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The UK CPI report, Eurozone Consumer Confidence report 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 lower, weighed down by financial and technology shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

Stocks Falling Substantially into Final Hour on Global Recession Fears, European/Emerging Markets/US High-Yield Debt Angst, Oil Collapse, Tech/Financial Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Every Sector Declining
  

• Volume: Above-Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 45.4 +3.6%

• Euro/Yen Carry Return Index 121.35 +.05%

• Emerging Markets Currency Volatility(VXY) 11.73 +3.08%

• S&P 500 Implied Correlation 81.21 +3.0%

• ISE Sentiment Index 52.0 -29.0 points
  

• Total Put/Call 1.13 +22.8%

• NYSE Arms .98 -18.3%

Credit Investor Angst:

• North American Investment Grade CDS Index 97.73 +6.4%
  

• America Energy Sector High-Yield CDS Index 1,323.0 -1.45%

• European Financial Sector CDS Index 115.64 +7.3%

• Italian/German 10Y Yld Spread 263.25 +24.5 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 122.91 +5.81%
  

• Emerging Market CDS Index 365.15 +5.6%
  

• iBoxx Offshore RMB China Corporate High Yield Index 166.10 -.02%

• 2-Year Swap Spread 20.5 -1.75 basis point

• TED Spread 103.0 +1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap 38.50 -7.0 basis points
• MBS  5/10 Treasury Spread  139.0 +3.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 57.81 -.66%
• 3-Month T-Bill Yield .08% -1.0 basis point

• Yield Curve 40.0 -3.0 basis points

• China Iron Ore Spot 80.50 USD/Metric Tonne -3.49%

• Citi US Economic Surprise Index -133.10 unch.

• Citi Eurozone Economic Surprise Index -31.50 +30.2 points

• Citi Emerging Markets Economic Surprise Index -6.70 +.5 point

• 10-Year TIPS Spread .96 +2.0 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 -220 open in Japan 
• China A50 Futures: Indicating -186 open in China

• DAX Futures: Indicating -2 open in Germany

Portfolio:

• Slightly Higher: On gains in my index hedges and emerging market shorts

• Disclosed Trades: None

• Market Exposure: 25% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Growth -3.0%

Sector Underperformers:

• 1) Banks -4.6% 2) Gaming -4.1% 3) Semis -3.8%

Stocks Falling on Unusual Volume: 

• CATS, ROKU, IBM, MRNA, ETSY, ENSG, WRE, OXY, AMD, WPP, ZS, LVS, MYOK, CRM, NET, MRTX, NVAX, CDLX, AMN, PLMR, APLT, WPP, TSLA, TREX, VAR, RCL, PCTY, CRM, FSLY, RVLV, C, NTRS, OKE, INSG, WORK, BFAM, APPN, AYX, AAXN, CIT, CDLX, NVAX, SDGR, PLMR, CACC and APLT

Stocks With Unusual Put Option Activity:

• 1)  HYD 2) VNQ 3) USO 4) CME 5) IBM

Stocks With Most Negative News Mentions:

• 1) LMRK 2) MNK 3) HTZ 4) CACC 5) COP

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value -2.4%

Sector Outperformers:

• 1) Gold & Silver -.7% 2) Education -.7% 3) Homebuilding -.7%

Stocks Rising on Unusual Volume:

• TSC, BYND, FLIR, KRMD and KARA

Stocks With Unusual Call Option Activity:

• 1) OIL 2) SYF 3) LABD 4) FLIR 5) MOS

Stocks With Most Positive News Mentions:

• 1) WATT 2) VXRT 3) EME 4) UPS 5) PCAR

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +12.8% Above 100-Day Average
• 0 Sectors Rising, 11 Sectors Declining
• 12.4% of Issues Advancing, 86.6% Declining
• 7 New 52-Week Highs, 27 New Lows
• 9.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.6%
• Vix 46.5 +6.0%
• Total Put/Call 1.17 +27.2%
• TRIN/Arms .95 -20.8%