Stocks Higher into Afternoon on US Economic Optimism, Stable Long-Term Rates, Less Emerging Market Debt Angst, Homebuilding/Shipping Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 16.3 -1.8%
• Bloomberg Global Risk On/Risk Off Index 3,287.0 +52.0 points

• Euro/Yen Carry Return Index 134.70 +.11%

• Emerging Markets Currency Volatility(VXY) 10.0 -.10%

• S&P 500 Implied Correlation 49.5 +6.3%

• ISE Sentiment Index 113.0 -31.0 points
  

• Total Put/Call .78 +2.6%

• NYSE Arms .77 -45.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 50.05 -.35%
  

• US Energy High-Yield OAS 450.87 -.72%

• European Financial Sector CDS Index 57.51 -.6%

• Italian/German 10Y Yld Spread 101.0 -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 82.10 -6.8%
  

• Emerging Market CDS Index 161.32 -2.4%
  

• iBoxx Offshore RMB China Corporate High Yield Index 189.12 +.03%

• 2-Year Swap Spread 11.75 +.25 basis point

• TED Spread 18.0 +.5 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -3.25 unch.
  
• MBS  5/10 Treasury Spread  65.75 +.75 basis point
  
• IHS Markit CMBX BBB- 6 72.25 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 61.07 +.04%
• 3-Month T-Bill Yield .01% unch.
  

• Yield Curve 142.0 -5.0 basis points
  

• China Iron Ore Spot 172.0 USD/Metric Tonne +1.5%

• Citi US Economic Surprise Index 41.20 +1.6 points

• Citi Eurozone Economic Surprise Index 141.70 -1.5 points
  

• Citi Emerging Markets Economic Surprise Index 36.8 -12.6 points

• 10-Year TIPS Spread 2.37 +4.0 basis points
• 90.1% chance of no change at June 16th meeting, 90.1% chance of no change at Sept. 22nd meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +112 open in Japan 
• China A50 Futures: Indicating +9 open in China

• DAX Futures: Indicating +37 open in Germany

Portfolio:

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

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

• Market Exposure: Moved to 100% Net Long
  

Bull Radar

Style Outperformer:

• Large-Cap Value +.4%

Sector Outperformers:

• 1) Shipping +2.7% 2) Homebuilding +2.3% 3) Alt Energy +1.1%

Stocks Rising on Unusual Volume:

• WKHS, LSCC, RUN, PPG, AA, BE, ARRY, WAL, PGNY, LOVE, MRNA, HGV, UFS, REVG, LEVI, MAX, AEVA, AXTA, SHW, PLUG, ALXN, PAR, WFC, RH, TTC, EHC, WMS, FGEN and UPLD
  

Stocks With Unusual Call Option Activity:

• 1) STAY 2) TXN 3) DBA 4) FIZZ 5) PVH

Stocks With Most Positive News Mentions:

• 1) AA 2) PPG 3) CSCO 4) USB 5) ALXN
  

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -23.0% Below 100-Day Average 
• 10 Sectors Rising, 1 Sector Declining
• 53.7% of Issues Advancing, 42.0% Declining
• 264 New 52-Week Highs, 17 New Lows
• 89.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 54.9%
  
• Bloomberg Global Risk-On/Risk-Off Index 3,270.0 +36.0 points
• Vix 16.5 -.3%
• Total Put/Call .73 -4.0%
• TRIN/Arms .71 -50.4%

Friday Watch

Night Trading 

• Asian equity indices are unch. to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 86.5 -4.25 basis points.

• China Sovereign CDS 39.75 -3.5 basis points.

• Bloomberg Emerging Markets Currency Index 61.04 -.01%.
• Bloomberg Global Risk-On/Risk Off Index 3,228.0 -8.0 points.
• Volatility Index(VIX) futures 20.40 +.52%.
• FTSE 100 futures -.01%.

• S&P 500 futures -.06%.

• NASDAQ 100 futures -.11%.

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (ALLY)/1.08
• (BK)/.86
• (KSU)/1.96
• (MS)/1.58
• (PNC)/2.72
• (STT)/1.35
  

After the Close:

• None of note
  

Economic Releases

8:30 am EST

• Housing Starts for March is estimated to rise to 1611K versus 1421K in Feb.
• Building Permits for March is estimated to rise to 1750K versus 1682K in Feb.
  

10:00 am EST 

• Univ. of Mich. Consumer Confidence for April is estimated to rise to 89.0 versus 84.9 in March.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Eurozone CPI report and the (RXT) business update could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and consumer shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.

Stocks Surging into Final Hour on US Economic Optimism, Lower Long-Term Rates, Less Emerging Market Debt Angst, Healthcare/Tech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Around Even
  

• Sector Performance: Most sectors rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 16.9 -.8%
• Bloomberg Global Risk On/Risk Off Index 3,209.0 -33.0 points

• Euro/Yen Carry Return Index 134.52 -.29%

• Emerging Markets Currency Volatility(VXY) 9.92 -1.3%

• S&P 500 Implied Correlation 48.0 -1.8%

• ISE Sentiment Index 151.0 +23.0 points
  

• Total Put/Call .77 -2.5%

• NYSE Arms 1.81 +147.9%

Credit Investor Angst:

• North American Investment Grade CDS Index 50.13 -1.91%
  

• US Energy High-Yield OAS 459.32 +.48%

• European Financial Sector CDS Index 57.86 -1.96%

• Italian/German 10Y Yld Spread 102.0 -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 88.21 -1.15%
  

• Emerging Market CDS Index 164.87 -4.91%
  

• iBoxx Offshore RMB China Corporate High Yield Index 189.06 -.12%

• 2-Year Swap Spread 11.5 -.5 basis point

• TED Spread 17.5 +.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -3.25 +.25 basis point
  
• MBS  5/10 Treasury Spread  65.0 -.25 basis point
  
• IHS Markit CMBX BBB- 6 72.25 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 61.05 +.36%
• 3-Month T-Bill Yield .01% -1.0 basis point
  

• Yield Curve 147.0 +1.0 basis point
  

• China Iron Ore Spot 170.50 USD/Metric Tonne +2.91%

• Citi US Economic Surprise Index 39.60 +1.8 points

• Citi Eurozone Economic Surprise Index 143.30 -1.4 points
  

• Citi Emerging Markets Economic Surprise Index 24.2 +3.4 points

• 10-Year TIPS Spread 2.33 -1.0 basis point
• 94.4% chance of no change at June 16th meeting, 94.4% chance of no change at Sept. 22nd meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +122 open in Japan 
• China A50 Futures: Indicating +58 open in China

• DAX Futures: Indicating +33 open in Germany

Portfolio:

• Higher: On gains in my tech/medical/biotech/industrial 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 -.2%

Sector Underperformers:

• 1) Alt Energy -3.9% 2) Oil Service -2.1% 3) Banks -1.3%

Stocks Falling on Unusual Volume: 

• BAC, BTBT, RAD, CLM, AGC, CRF, INTZ, QS, SPCE and AVIR
  

Stocks With Unusual Put Option Activity:

• 1) DELL 2) HAS 3) INO 4) ATUS 5) LFMD
  

Stocks With Most Negative News Mentions:

• 1) QS 2) EBON 3) OXY 4) FANG 5) PXD
  

Charts:

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