Stocks Surging into Final Hour on Economy Re-Opening Hopes, Oil Gain, Less European/Emerging Markets/US High-Yield Debt Angst, Tech/Medical Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 32.5 -9.7%

• Euro/Yen Carry Return Index 119.83 -.7%

• Emerging Markets Currency Volatility(VXY) 11.91 -.58%

• S&P 500 Implied Correlation 72.1 -2.7%

• ISE Sentiment Index 81.0 +4.0 points

• Total Put/Call .90 -6.3%

• NYSE Arms 1.50 +37.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 88.60 -2.26%
  

• US Energy High-Yield OAS 1,313.05 -2.94%

• European Financial Sector CDS Index 104.22 -3.88%

• Italian/German 10Y Yld Spread 244.5 +11.5 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 119.36 -.02%
  

• Emerging Market CDS Index 335.33 -3.27%
  

• iBoxx Offshore RMB China Corporate High Yield Index 163.61 +.04%

• 2-Year Swap Spread 12.75 -.25 basis point

• TED Spread 43.25 -1.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap 1.25 -2.75 basis points
• MBS  5/10 Treasury Spread  109.0 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 58.38 +.25%
• 3-Month T-Bill Yield .10%+1.0 basis point

• Yield Curve 44.0 unch.

• China Iron Ore Spot 80.65 USD/Metric Tonne +.19%

• Citi US Economic Surprise Index -130.80 +9.7 points

• Citi Eurozone Economic Surprise Index -264.20 +3.2 points

• Citi Emerging Markets Economic Surprise Index 11.20 +1.3 points

• 10-Year TIPS Spread 1.10 +2.0 basis points
• 99.3% chance of no change at July 29th meeting, 99.3% chance of no change at Sept. 16th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +96 open in Japan 
• China A50 Futures: Indicating -453 open in China

• DAX Futures: Indicating -17 open in Germany

Portfolio:

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value +1.1%

Sector Underperformers:

• 1) Coal -5.2% 2) Shipping -1.8% 3) Airlines -1.0%

Stocks Falling on Unusual Volume: 

• GNMK, CATM, BA, INSM, MCY, CHEF, PFGC, SYY, SPR, MDC, SHAK, MLM, XYL, USFD, DLB, ALXN, PRIM, TDG, UNM, CCL, RCL, HRI, INSW, LEG, DSSI, CODI, FLGT, BHLB, ITRI, WRK and NCLH

Stocks With Unusual Put Option Activity:

• 1) STWD 2) NYT 3) W 4) FXI 5) SHAK

Stocks With Most Negative News Mentions:

• 1) FNKO 2) LUV 3) ARNC 4) ATUS 5) AAL

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +2.7%

Sector Outperformers:

• 1) Disk Drives +4.2% 2) Medical +3.2% 3) Healthcare +2.8%

Stocks Rising on Unusual Volume:

• PTLA, CHGG, ADVM, AKBA, TGTX, W, EVER, IPGP, RMBS, CEQP, HTGC, ETSY, OSTK, VRNS, TWOU, TREX, LMNX, CALX, PTON, SWKS and CHWY

Stocks With Unusual Call Option Activity:

• 1) CHGG 2) MVIS 3) TGTX 4) STWD 5) WEN

Stocks With Most Positive News Mentions:

• 1) HOG 2) CHGG 3) W 4) IPGP 5) AKBA

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +21.9% Above 100-Day Average
• 11 Sectors Rising, 0 Sectors Declining
• 78.9% of Issues Advancing, 19.4% Declining
• 15 New 52-Week Highs, 2 New Lows
• 10.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.2%
• Vix 32.6 -9.4%
• Total Put/Call .88 -8.3%
• TRIN/Arms 1.33 +22.0%

Tuesday Watch

Evening Headlines

Bloomberg:                        

• Why There’s a Looming Debt Crisis in Emerging Markets.   

• Trade War Fears Are Returning to a Virus-Lashed Wall Street.

• As Hong Kong’s Economy Sinks, Scant Liquidity Underpins Dollar.

• Trump Promises ‘Conclusive’ U.S. Report on Virus’s China Origins.

• Deaths Top 250,000; California Moves Toward Reopen: Virus Update.

• Asia Stocks to Gain as Oil Rallies for Fourth Day. Asian stocks are poised for modest gains, with a few markets closed for holidays, following a late-session advance on Wall Street. Crude oil gained for a fourth consecutive day. Equity futures were higher in Australia and Hong Kong. Trading is likely to be subdued with markets closed in Japan, China and South Korea. Equities will likely remain under pressure amid simmering U.S.-China tensions and uncertainty over the impact of some American states beginning to re-open. S&P 500 Index futures ticked higher at the open after the benchmark staged a turnaround late in the session to end higher after California sounded a note of optimism in its fight against the virus. Hong Kong assets will be in focus after the economy contracted 8.9% in the first quarter from a year earlier, its worst quarter ever. West Texas oil extended gains. The dollar strengthened against most major peers. S&P 500 futures edged up 0.2% as of 6:27 a.m. in Hong Kong. The S&P 500 Index gained 0.4%. Australia’s S&P/ASX 200 Index futures rose 0.3%. Hong Kong’s Hang Seng Index futures earlier were up 0.2%.

• Oil Extends Gains Above $20 as Output Curbs Ease Glut Concerns.

• Mnuchin to Issue $3 Trillion in Debt After Virus Hobbles Economy.  

• White House Disclaims Projection Showing Surge in Virus Outbreak.

• Coronavirus Causes Blood Clots Harming Organs From Brain to Toes.

• For $39, Frontier Air Will Let Passengers Keep Their Distance. 

• Hedge Fund Stock Exposure Is the Highest in at Least Three Years.

Wall Street Journal:

• FDA Sets Standards for Coronavirus Antibody Tests in Fraud Crackdown.

• Call It Hero Pay or Hazard Pay, Essential Workers Want More of It.

• Virus Sweeps Across Brazil, a Land Ill-Equipped to Fight It.

• Chinese Media Denounce Pompeo Allegation About Lab.

• Rental-Car Industry Gets Crushed by Coronavirus.

• As Summer Camps Weigh Opening, Parents Scramble for Options.

CNBC.com:

• Coronavirus will shrink US home prices by 2-3% nationally, Zillow forecasts, but deeper dive could be in store.

• Cramer: Warren Buffett’s airline sell-off is a wake-up call for index investors.

• Coronavirus updates: Projection estimates 135,000 US deaths by August; Fujifilm drug testing expands.

• Shake Shack is seeing ‘significant’ increases in beef prices as coronavirus leads to plant closures.

• Stocks making the biggest moves after hours: Chegg, Hertz, L Brands and more.

• California Gov. Gavin Newsom says some businesses will reopen Friday, with conditions.

• Coronavirus deaths projected to hit 3,000 per day by June, Trump admin analysis says.

Fox News:

• 'Produce all documents': GOP reps make demands after bombshell revelations in Michael Flynn case.

• China 'playing a very dangerous game it can't win,' Gordon Chang warns.

• Coronavirus reopening plan deals Vegas casinos a losing hand.

MarketWatch.com:              

• Apple borrows $8.5 billion, joins record corporate debt borrowing spree.  

• 9 big-name stocks that are at risk for dividend cuts based on an analysis that removes accounting ‘noise’.

Zero Hedge:     

• Global Coronavirus Deaths Surpass 250,000: Live Updates.

• A Message From The Ministry Of COVID-Compliance.

• Despite China's "Reopening", Global Smartphone Market Suffers Record Crash In Shipments.

• Hertz Hurts! Car-Renter Shares Routed On Reports Restructuring Adviser Hired.

• Neiman Marcus Strikes Bankruptcy Deal With Creditors As 'Rona Rout Claims Latest Victim.

• What Happens When You Cancel Rent, Mortgages, And Debt?

• Victoria Dumped: L Brands Plunges After Agreeing To Terminate LBO Deal With Sycamore.

• Offices Will Never Look The Same In Post-COVID World Of Plexiglass & Temperature Checks.

• Shopping In A Time Of Corona: This Is What Americans Are (And Are Not) Spending On During The Crisis.

• Muscle'd Out: Gold's Gym Files For Chapter 11 Due To Government Lockdowns.

• Mexico's Economy Is Disintegrating.

• US To Borrow A Record $4.4 Trillion In 2020, More Than The Previous Five Years Combined.

• California First To Be Approved For Up To $10 Billion Bailout From Feds To Pay Unemployment Benefits.

• 'Investors' Ignore Mumbling 90-Year-Old Omaha Man - BTFD As Buffett Sells.

Business Insider:   

• Supermarkets are paying thousands of dollars for this touch-free handwashing machine that kills 99.9% of germs in 12 seconds.

The Epoch Times:

• Chinese State Media Target Pompeo in Latest Virus Propaganda Campaign.

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 unch. to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 120.0 +4.5 basis points.

• China Sovereign CDS 52.25 +4.0 basis points.

• Bloomberg Emerging Markets Currency Index 58.27 +.06%.

• FTSE 100 futures +1.1%.

• S&P 500 futures +.35%.

• NASDAQ 100 futures +.45%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (AGCO)/.41

• (ALK)/-1.14

• (AGN)/3.90

• (APTV)/.31

• (CRI)/.15

• (DBD)/-.26

• (DISH)/.57

• (D)/1.10

• (DD)/.77

• (FCAU)/.05

• (FLR)/.25

• (ITW)/1.68

• (J)/1.31

• (JLL)/.91

• (LHX)/2.59

• (MLM)/.52

• (NEM)/.42

• (REGN)/6.08

• (RCL)/-.39

• (SEE)/.58

• (SYY)/.60

• (W)/-2.61 

After the Close:

• (ATVI)/.38

• (Y)/7.78

• (ALL)/3.31

• (BGS)/.45

• (BYND)/-.08

• (CAKE)/-.30

• (DVN)/-.20

• (EA)/.97

• (EQR)/.87

• (EXPD)/.63

• (JAZZ)/.83

• (KLAC)/2.36

• (MTCH)/.41

• (MAT)/-.41

• (MELI)/-.67

• (MYGN)/.02

• (OXY)/-.61

• (PKI)/.53

• (PINS)/-.09

• (PRU)/2.80

• (SGMS)/-.12

• (SFM)/.54

• (TRIP)/.16

• (DIS)/.90

Economic Releases
8:30 am EST

• The Trade Deficit for March is estimated at -$44.2B versus -$39.9B in Feb.
  

10:00 am EST:

• ISM Non-Manufacturing for April is estimated to fall to 37.8 versus 52.5 in March.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Canadian Trade Balance report, weekly US retail sales report, Wells Fargo Virtual Industrials Conference, Oppenheimer Industrial Growth Conference and the Maxim Infectious Disease Virtual Conference  could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are modestly higher, boosted by energy and healthcare shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.