Thursday Watch

Evening Headlines

Bloomberg:               

• China Considers Dropping Numerical GDP Growth Target for 2020.

• Australia Turns to Economic Reboot as Winter Raises Virus Fears.

• Asia Stocks to Follow U.S. Lower; Dollar Rises: Markets Wrap. Asian stocks opened lower after a drop in U.S. equities, with investors digesting mixed corporate earnings and worsening economic data. Japanese shares slid as Tokyo traders returned from Golden Week holidays, and Korean equities dipped. Treasuries edged up, taking back some of their recent declines amid a surge in U.S. debt issuance. Futures on the S&P 500 were flat after the index declined overnight. The dollar held gains, while the yen continued to trade near the highest since mid-March. Futures on the S&P 500 Index was little changed as of 9:10 a.m. in Tokyo. The index fell 0.7% on Wednesday. The Topix Index dropped 0.8%. Australia’s S&P/ASX 200 Index fell 0.4%. Kospi Index fell 0.5%. Hong Kong’s Hang Seng Index contracts fell 0.8% earlier.

• Oil Snaps 5-Day Rally With Supply Glut Eclipsing Demand Recovery

• Oil Tankers Drag Out Sailing Time With Ports Clogged and Glutted.  

• China Target, Australia Reboot, Inflationary Depression: Eco Day. 

• U.S. Debt Sales to Hit Record With Deficit Headed to $4 Trillion.

• Hundreds of Earnings Calls Show Companies Are More Scared Than 2008.  

• U.S. Infections Rise 1.9%, Budweiser Posts Loss: Virus Update.

• Gloom Grips U.S. Small Businesses, With 52% Predicting Failure.  

• Senators Call for Investigation Into Carnival Over Virus.  

• Auto-Parts Makers Seek U.S. Loans to Fuel Industry Restart.

• Perdue Says U.S. Meatpacking Plants Should Reopen Within 10 Days.

Wall Street Journal:

• Coronavirus Casts Deep Chill Over U.S.-China Relations.

• Stay Shut Down or We’ll Sue.

• Deficit Fears Put Senate Republicans and Trump on Collision Course.

• U.S. Virus Cases Top 1.2 Million, as Trump Refocuses Task Force.

• Costco’s Sales Fall for First Time in Over a Decade.

• Hit by Coronavirus, New York City Rushes Contracts to Untested Vendors.

CNBC.com:

• Peloton sales surge 66%, as more people buy bikes during coronavirus pandemic; shares jump.

• Jim Cramer on Wall Street trading trends: ‘This action makes little sense’.

• As coronavirus kills another Amazon worker, the company’s response is adding to employees’ fears.

• Coronavirus updates: Trump contradicts nurse over PPE, Costco sees drop off as customers stay at home.

• California’s recovery from the coronavirus will take ‘longer than people think,’ Gov. Gavin Newsom says.

• Carvana shares tumble double digits on first-quarter losses.

• Stocks making the biggest moves after hours: Spirit Airlines, Etsy, Paypal and more.

• ‘Very unusual’: Arctic air set to hit Eastern US with record-low temperatures for May.

• Twilio skyrockets as quarterly results fly past estimates.

Fox News:

• Senator: How ordinary Americans can punish China for COVID-19.

MarketWatch.com:          

• Majority of new COVID-19 hospitalizations in New York are people who stayed at home.

• Airline stocks suffer broad selloff as American, Delta fall to new COVID-19 lows.

Zero Hedge:   

• Belgium Accuses China Of Bio-Espionage; Biological Warfare Program And Vaccine Experts Targeted.

• The Problem Is Not Deflation, It's Attempts to Prevent It.W

• What Will Schools Look Like After COVID?

• Larry Fink Says Fed Must "Provide More Support" To Markets, Expects Higher Corporate Taxes.

• "Biblical" Wave Of Bankruptcies Is About To Flood The US.

• Lyft Soars After Smashing Expectations, But An Ugly Future Awaits.

• While Pandemic Destroys Lives, The Surveillance State Celebrates.

• Trump Says Coronavirus 'Worst Attack On US Since Pearl Harbor': Live Updates.

• "Stocks Have Never Been More Expensive": Disconnect Between Markets And Reality Hits Idiotic Levels.

• Nasdaq Continues Record Run Despite Biggest Job Loss Ever.

The Epoch Times:

• Pandemic Coverup Shines a Light on Beijing’s Pattern of Deception: Report.

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 -.75% to unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 121.5 +2.0 basis points.

• China Sovereign CDS 52.25 +4.0 basis points.

• Bloomberg Emerging Markets Currency Index 57.79 -.04%.

• FTSE 100 futures -.27%.

• S&P 500 futures +.25%.

• NASDAQ 100 futures +.43%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (AGN)/3.90

• (ABC)/2.27

• (BUD)/-.33

• (MT)/-1.86

• (AAWW)/.06

• (BDX)/2.29

• (BMY)/1.49

• (CBRE)/.71

• (DHR)/1.05

• (DISH)/.57

• (ELAN)/.24

• (HAIN)/.24

• (HES)/-.61

• (JBLU)/-.46

• (NCLH)/-.27

• (RTX)/1.05

• (TEVA)/.59 

• (THS)/.33

• (VIAC)/.95

• (YETI)/.05

After the Close:

• (BIDU)/3.92

• (BKNG)/4.94

• (CTSH)/.93

• (ED)/1.41

• (FSLR)/.31

• (LYV)/-.70

• (MCHP)/1.36

• (MNST)/.48

• (NWSA)/.00

• (POST)/.89

• (RDFN)/-.75 

• (SKYW)/.91

• (TTD)/.43

• (TRIP)/.16

• (UBER)/-.70

• (OLED)/.65

• (YELP)/.24

• (ZG)/-.33

Economic Releases
7:30 am EST

• Challenger Job Cuts YoY for April.
  

8:30 am EST:

• Preliminary 1Q Non-Farm Productivity is estimated to fall -5.5% versus a +1.2% gain in 4Q.

• Preliminary 1Q Unit Labor Costs are estimated to rise +4.5% versus a +.9% gain in 4Q.

• Initial Jobless Claims for last week are estimated to fall to 3000K versus 3839K the prior week.

• Continuing Claims are estimated to rise to 19800K versus 17992K prior.
  

3:00 pm EST

• Consumer Credit for March is estimated to fall to $15.0B versus $22.331B in Feb.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The BofE rate decision, weekly Bloomberg Consumer Comfort Index and the weekly EIA natural gas inventory report could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly lower, weighed down by tech and financial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Reversing Slightly Lower into Final Hour on Global Recession Fears, European/Emerging Markets/US High-Yield Debt Angst, Oil Decline, Commodity/Transport Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 32.8 -2.5%

• Euro/Yen Carry Return Index 118.81 -.74%

• Emerging Markets Currency Volatility(VXY) 12.12 +2.11%

• S&P 500 Implied Correlation 73.90 +.3%

• ISE Sentiment Index 106.0 +26.0 points

• Total Put/Call .85 -3.4%

• NYSE Arms 1.33 -16.9%

Credit Investor Angst:

• North American Investment Grade CDS Index 91.47 +1.72%
  

• US Energy High-Yield OAS 1,279.36 -1.0%

• European Financial Sector CDS Index 106.31 +2.01%

• Italian/German 10Y Yld Spread 248.25 +3.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 120.69 +2.01%
  

• Emerging Market CDS Index 344.28 +1.4%
  

• iBoxx Offshore RMB China Corporate High Yield Index 163.77 +.09%

• 2-Year Swap Spread 11.75 -1.0 basis point

• TED Spread 39.25 -4.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -5.5 -6.75 basis points
• MBS  5/10 Treasury Spread  107.0 -2.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 57.91 -.72%
• 3-Month T-Bill Yield .11% +1.0 basis point

• Yield Curve 44.0 unch.

• China Iron Ore Spot 81.10 USD/Metric Tonne +.12%

• Citi US Economic Surprise Index -101.60 +29.2 points

• Citi Eurozone Economic Surprise Index -275.30 -11.1 points

• Citi Emerging Markets Economic Surprise Index 10.60 -.6 point

• 10-Year TIPS Spread 1.10 unch.
• 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 -144 open in Japan 
• China A50 Futures: Indicating -219 open in China

• DAX Futures: Indicating -10 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 25% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -1.1%

Sector Underperformers:

• 1) Airlines -4.0% 2) Oil Service -3.4% 3) Insurance -2.7%

Stocks Falling on Unusual Volume: 

• TREE, EA, FRT, MATX, ZYXI, AEP, SPR, LEG, CATS, PSN, UCBI, ALGT, MDC, LUV, KURA, ANET, PRO, MCY, SIGI, SAVE, VNO, THC, SPG, HA, WIFI, DSSI, AKR, GNMK, CINF, COHU, OXY, BHLB, CVM, PINS, BG, SILK, BCO, ANDE and INGN

Stocks With Unusual Put Option Activity:

• 1) GNW 2) MAT 3) AGN 4) BBY 5) HTZ

Stocks With Most Negative News Mentions:

• 1) BG 2) PINS 3) PRU 4) BHLB 5) DAL

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +1.1%

Sector Outperformers:

• 1) Semis +2.2% 2) Alt Energy +2.2% 3) Software +1.7%

Stocks Rising on Unusual Volume:

• MGNX, LPSN, VAPO, BYND, EVBG, MED, NTNX, TGTX, CLW, CNST, ICPT, VIVO, ACLS, ADVM, FLIR, ARCT, LVGO, DKNG, SFM, RMBS, CHGG, ALNY, ATVI, AXNX, PTON and RGR

Stocks With Unusual Call Option Activity:

• 1) BBY 2) WEN 3) SFM 4) CHGG 5) ATVI

Stocks With Most Positive News Mentions:

• 1) LPSN 2) ATVI 3) JAZZ 4) KLAC 5) PLNT

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +7.2% Above 100-Day Average
• 3 Sectors Rising, 8 Sectors Declining
• 33.0% of Issues Advancing, 64.7% Declining
• 18 New 52-Week Highs, 13 New Lows
• 12.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.7%
• Vix 32.9 -2.2%
• Total Put/Call .886 -2.27%
• TRIN/Arms 1.35 -15.0%