Stocks Reversing Higher into Final Hour on Global Stimulus Hopes, Economy Re-Opening Optimism, Short-Covering, Tech/Biotech Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 27.5 -1.8%

• Euro/Yen Carry Return Index 120.74 +.84%

• Emerging Markets Currency Volatility(VXY) 11.79 -.08%

• S&P 500 Implied Correlation 63.85 -4.50%

• ISE Sentiment Index 90.0 -7.0 points

• Total Put/Call .78 -8.24%

• NYSE Arms 1.80 +215.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 92.06 +.81%
  

• US Energy High-Yield OAS 1,262.38 -.30%

• European Financial Sector CDS Index 103.39 -3.36%

• Italian/German 10Y Yld Spread 239.0 +.75 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 117.70 -.76%
  

• Emerging Market CDS Index 328.13 -1.55%
  

• iBoxx Offshore RMB China Corporate High Yield Index 164.01 unch.

• 2-Year Swap Spread 8.5 -2.0 basis points

• TED Spread 34.0 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -5.25 +1.25 basis point
• MBS  5/10 Treasury Spread  108.0 -1.0 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 58.13 -.36%
• 3-Month T-Bill Yield .11% +1.0 basis point

• Yield Curve 53.50 +2.5 basis points

• China Iron Ore Spot 85.30 USD/Metric Tonne +.04%

• Citi US Economic Surprise Index -54.30 +.5 point

• Citi Eurozone Economic Surprise Index -304.60 -4.5 points

• Citi Emerging Markets Economic Surprise Index 14.0 +3.1 points

• 10-Year TIPS Spread 1.13 +1.0 basis point
• 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 +155 open in Japan 
• China A50 Futures: Indicating -117 open in China

• DAX Futures: Indicating +51 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -1.3%

Sector Underperformers:

• 1) Banks -3.8% 2) Gaming -3.8% 3) Airlines -3.2%

Stocks Falling on Unusual Volume: 

• GRUB, PLAY, PINS, SPG, KSS, TWNK, CDLX, SAH, CATS, LYFT, MAR, UAL, BHLB, BCO, PVH, VMC, KIM, C, NCLH, FMBI, ELY, TRIP, ON, ADS, ON, ADS, SPR, DSSI, YETI, FLS, RGS, KTB, BCC, SRI and CAR

Stocks With Unusual Put Option Activity:

• 1) AMC 2) BYD 3) MOS 4) MYOK 5) CTL

Stocks With Most Negative News Mentions:

• 1) CHK 2) UAA 3) CVX 4) LYFT 5) CF

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.1%

Sector Outperformers:

• 1) Biotech +3.6% 2) Video Gaming +1.7% 3) Pharma +1.5%

Stocks Rising on Unusual Volume:

• MYOK, CYTK, AVYA, QDEL, MGNX, VTIQ, ORA, MRNA, DDOG, RVLV, GOSS, CWH, SCPL, MTEM, DKNG and LMNX

Stocks With Unusual Call Option Activity:

• 1) ANGI 2) EGHT 3) MARK 4) CAH 5) AMC

Stocks With Most Positive News Mentions:

• 1) MYOK 2) CPST 3) NVAX 4) CAH 5) GIS

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +4.7% Above 100-Day Average
• 2 Sectors Rising, 9 Sectors Declining
• 23.6% of Issues Advancing, 75.0% Declining
• 21 New 52-Week Highs, 14 New Lows
• 14.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 51.5%
• Vix 29.1 +4.0%
• Total Put/Call .77 -9.4%
• TRIN/Arms 1.43 +150.8%

Monday Watch

Today's Headlines

Bloomberg:   

• Risks Abound in Emerging Markets as Traders Grapple With Shocks.  

• Australia Budget Deficit Will Gape to 7.2% of GDP in 2020, 2021.   

• Australia Concerned by Reports of China Barley Tariffs.    

• The Billionaire Poker Club Behind China’s Most Indebted Developer.  

• Tencent Weathers China Slowdown But a Deeper Threat Looms.  

• Korea Warns of Sharper Trade Pain That Will Shift Supply Chains.

• Johnson Starts to Ease U.K. Lockdown With Back to Work Plan.
• More Slog Than Snapback Is Outlook for Europe’s Virus Recovery.
• Gulf Banks Can Absorb $36 Billion in New Credit Losses, S&P Says.
• Dubai Stocks Fall in Mixed Trading; Kuwait Retreats: Inside EM. Asia Stocks Set for Mixed Open; U.S. Futures Drift. Asian stocks looked set for a mixed open, while U.S. futures drifted, as investors eyed continued moves to re-open economies amid the threat of further coronavirus outbreaks. Oil retreated. Futures ticked higher in Japan and were little changed in Australia. S&P 500 contracts slipped after the gauge closed higher Friday. The New Zealand dollar gave up gains to trade flat and moves elsewhere in currency markets were largely muted in early trading on Monday. Australian bonds fell. Futures on the S&P 500 slipped 0.1% as of 7:57 a.m. in Tokyo. The gauge rose 1.7% on Friday. Futures on Japan’s Nikkei 225 dipped 0.2%. Hang Seng futures added 0.4% on Friday. Futures on Australia’s S&P/ASX 200 Index gained 0.1%.

• U.S. Jobless Rate Could Top 20%; Saudi Cases Rise: Virus Update.  

• ‘Hidden’ Defaults Set to Soar as Recession Squeezes Companies.

• Bond Market Veers From Historic Rallies to Record-Smashing Sales.  

• Trump’s Economic Team Braces for Worsening Job Market in May.

Wall Street Journal:

• South Korea’s Early Coronavirus Wins Dim After Rash of New Cases.

• Some Doctors Pull Back on Ventilators.

• Antibody Knowledge Can Be Power.

• Barack Obama on Michael Flynn.

• Big Money Managers Take Lead Role in Managing Stimulus.

• U.S. Government Drafts Guidelines for Reopening Nursing Homes.

• Factories Close for Good as Pandemic Cuts Demand.

• Trump and Chip Makers Seek Self-Sufficiency.

• New York City Medical Examiner Limits Coronavirus Testing on Dead.

• Tesla Files Suit to Reopen Factory.

• Indian and Chinese Troops in Standoff at Disputed Border.

Fox News:

• State Dem tweets ‘F--- Elon Musk’ as Tesla sues, plans to shift jobs elsewhere over coronavirus rules.

• ANDREW McCARTHY: Obama officials, FBI crafted ‘Russian collusion’ story.

• Governor makes big change to nursing home rules as coronavirus deaths spark outcry.

CNBC:

• Mnuchin says jobless numbers will ‘get worse before they get better’ — unemployment may hit 25%.

• Fauci and other top health officials enter quarantine after exposure to White House aide with virus.

• American companies spent years in an economic boom. Then the coronavirus hit.

• Kudlow says White House holding informal talks with lawmakers on next steps in coronavirus relief.

Zero Hedge:         

• Former CEO Of Carl's Jr. Explains How Not To Get America Back To Work.

• Indian And Chinese Troops Clash In Fistfight At Disputed Border.

• "A Cabal Of Liars" - Sara Carter Demands Top Obama Officials Need To Be Held Accountable.

• A COVID State Of Mind - America's Mental Health Suffers As Anti-Anxiety Drug Prescriptions Soar.

• Iran Offers US 'Unconditional' Prisoner Swap, Fears 'Safety' Of Citizens Amid COVID-19.

• Wuhan Lab Hack Reveals Unreported COVID-19 Cases, Evidence Records Were Deleted.

• 6 Reasons Why Goldman Sees The S&P Sliding Back To 2,400 By August.

• Pentagon Randomly Tests Units Over 'Stealth Carriers' Concern, Starting With Nuclear Personnel.

• Iran Tried To Sabotage Israel's Water Supply In Major Cyberattack: US Officials.

• After China Forced Out Reporters, Trump Hits Back With Severe Restrictions On Chinese Media.

• Elon Musk Says He "Sympathizes" With Anti-Globalist Movement.

• US Has 'Limited' Ability To Manufacture Coronavirus Treatments, Vaccines.

• Here Is The Real April Jobs Report: 42 Million Unemployed, 25.5% Unemployment Rate.

• Over 1 In 1000 People Living In NY/NJ Die From COVID-19.

• "We Sent Them Samples Of A Goat, A Papaya & A Pheasant": Tanzanian President Catches WHO In Epic Lie.

• Commercial Real Estate Is Crashing In Europe: Offices Obliterated, Retail Routed.

• Billionaire Cooperman's 11 Reasons To Be Skeptical Of Soaring Stocks Amid COVID Chaos.

• Eurozone Breakup Risk Reaches New High.

• Tesla's Head Of Europe Leaves After "Disputes" With Elon Musk.

• EU Defends Bowing To Communist Chinese Censors.

• "Your Every Move Will Be Watched": Post-COVID Offices To Resemble China's Social Credit System.

• One Bank Explains Why QE No Longer Stimulates The Economy And Only Leads To Higher Stock Prices.

• Wuhan Biolab Where Coronavirus Was Studied Mysteriously Shut Down In October, Report Claims.

• Distraction? Obama Smack-Talks Trump's "Chaotic Disaster" Virus Response As Russia Hoax Exposed.

Business Insider:

• A researcher behind one of the most accurate antibody tests available explains when you should get tested — and how to understand your results.

• 7 people in Sweden told us why they think their government made the right call in having no coronavirus lockdown.

• Here are 14 of the best quotes from notorious billionaire bond king Jeff Gundlach.

Crypto Briefing: 

• Bitcoin Plunges in Anticipation of Block Reward Halving. Bitcoin plunged by over $1,500 less than two days before the halving, showing that confidence in BTC is wavering.

The Epoch Times:

• More Outbreaks Reported in Northern China and Hubei Province.

• Pandemic Shows Pitfalls of Auto Industry Relying on China Market.

South China Morning Post:

• Coronavirus: China faces historic test as pandemic stokes fears of looming unemployment crisis.

Daily Mail:

• Cops review new security camera video of man who appears to be Ahmaud Arbery walking into a construction site and running off just minutes before he was shot - as armed Black Panthers protest in neighborhood where he was killed.

John Hopkins University:

• Coronavirus Global Cases. (map)

BNO News:

• Tracking coronavirus: Map, data and timeline.

Google Docs:

• Coronavirus Testing by State.

Night Trading

• Asian indices are -.25% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 118.75 -1.0 basis point.

• China Sovereign CDS 48.75 -1.5 basis points.

• Bloomberg Emerging Markets Currency Index 58.35 +.01%.

• FTSE 100 futures n/a.

• S&P 500 futures +.23%.

• NASDAQ 100 futures +.29%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• (AN)/.72

• (BLUE)/-4.05

• (CAH)/1.45

• (CLF)/-.17

• (EBIX)/.94

• (MAR)/.78

• (MYL)/.87

• (RCL)/-.39

• (UAA)/-.18

• (ZBH)/1.47

After the Close:

• (CZR)/-.32

• (ETH)/.02

• (SGMS)/-.22

• (SPG)/2.89

• (TLRY)/-.40

Economic Releases

• None of note

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The China Inflation Data report, $42B 3Y T-Note auction and the BofA Merrill Transports/Industrials Conference could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST

BOTTOM LINE: Asian indices are slightly higher, boosted by consumer and industrial 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 week.

Weekly Outlook

• Wall St. Week Ahead by Reuters.
• Global Economy Week by Bloomberg. 
• The Week Ahead by Yahoo. (video)
• Stocks to Watch Next Week by Seeking Alpha.
• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly lower on global recession fears, oil weakness, disappointing economy re-opening data, European/Emerging Market/US High-Yld debt angst, coronavirus 2nd wave worries and rising China tensions. My intermediate-term trading indicators are giving bearish signals and the Portfolio is 50% net long heading into the week.