Stocks Lower into Afternoon on Russia/Ukraine War Escalation Fears, US Policy-Induced Stagflation Concerns, Rising European/Emerging Markets Debt Angst, Financial/Tech Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line:  Substantially Lower
  

• Sector Performance:  Most Sectors Declining
  

• Volume:  Heavy

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 32.7 +7.4%
• Bloomberg Global Risk On/Risk Off Index 2,413.0 -362.0 points

• Euro/Yen Carry Return Index 129.08 -1.9%

• Emerging Markets Currency Volatility(VXY) 12.2 +6.8%

• CBOE S&P 500 Implied Correlation Index 49.9 +4.9% 

• ISE Sentiment Index 100.0 -13.0 points
  

• Total Put/Call .93 +1.1%

• NYSE Arms .86 -14.9%

Credit Investor Angst:

• North American Investment Grade CDS Index 74.28 +4.99%
  

• US Energy High-Yield OAS 417.09 +3.3%

• European Financial Sector CDS Index 96.24 +13.0%

• Italian/German 10Y Yld Spread 161.0 +6.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 113.82 +1.4%
  

• Emerging Market CDS Index 324.21 +8.8%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 29.62 -1.3% 
• Ukraine Sovereign Debt Credit Default Swap 8,219.0 +37.8%
  

• 2-Year Swap Spread 18.25 +.25 basis point
  

• TED Spread 27.75 +9.0 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -40.75 -17.0 basis points
  
• MBS  5/10 Treasury Spread  107.0 -1.0 basis point
  
• iShares CMBS ETF 51.47 +.49%
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 51.19 -1.9%
• 3-Month T-Bill Yield .31% -3.0 basis points
  

• Yield Curve 25.75 -12.25 basis points
  

• China Iron Ore Spot 160.15 USD/Metric Tonne -.3%

• Citi US Economic Surprise Index 59.10 +17.1 points

• Citi Eurozone Economic Surprise Index 66.1 -3.1 points
  

• Citi Emerging Markets Economic Surprise Index 40.7 +4.7 points

• 10-Year TIPS Spread 2.72 unch.
  
• 0.0%(unch.) chance of no change at May 4th FOMC meeting, 0.0%(unch.) chance of no change at June 15th meeting

US Covid-19:

• 118 new infections/100K people(last 7 days total). 7.0%(unch.) of 1/14 peak -6/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -81.4%(-1.4 percentage points) from peak 7-day avg. of 1/9/21 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -220 open in Japan 
• China A50 Futures: Indicating -101 open in China

• DAX Futures: Indicating -20 open in Germany

Portfolio:

• Higher: On gains in my industrial/commodity/medical sector longs, index hedges and emerging market shorts
  

• Disclosed Trades:  None
  

• Market Exposure:  25% Net Long
  

Morning Market Internals

NYSE Composite Index:

• Volume Running +28.7% Above 100-Day Average 
• 1 Sector Rising, 10 Sectors Declining
• 21.0% of Issues Advancing, 74.9% Declining
• 69 New 52-Week Highs, 150 New Lows
• 40.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 47.1% 
• Bloomberg Global Risk-On/Risk-Off Index 2,344.0 -430.0 points
• Russell 1000: Growth/Value 16,166.0 -.31%
  
• Vix 33.7 +10.5%
• Total Put/Call .88 -4.4%
• TRIN/Arms .81 -19.8%

Friday Watch

Night Trading 

• Asian equity indices are -2.0% to -1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 113.0 +2.5 basis points. 

• China Sovereign CDS 60.5 +2.0 basis points.
  

• Bloomberg Emerging Markets Currency Index 52.10 -.16%. 
• Bloomberg Global Risk-On/Risk Off Index 2,720.0 -53.0 points.
• Volatility Index(VIX) futures 30.4 +3.2%.
• Euro Stoxx 50 futures -2.26%.

• S&P 500 futures -.78%.

• NASDAQ 100 futures -.90%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (HIBB)/1.22
  

After the Close:

• None of note
  

Economic Releases

8:30 am EST

• The Change in Non-Farm Payrolls for Feb. is estimated to fall to 415K versus 467K in Jan.
• The Unemployment Rate for Feb. is estimated to fall to 3.9% versus 4.0% in Jan.
• Average Hourly Earnings MoM for Feb. is estimated to rise +.5% versus a +.7% gain in Jan.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Australia Job Ads report and the (KR) conference call could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are lower, weighed down by technology and financial shares in the region. I expect US stocks to open modestly lower and to maintain losses into the afternoon. The Portfolio is 25% net long heading into the day.

Stocks Lower into Final Hour on US Policy-Induced Stagflation Fears, Fed "Behind the Curve" Worries, Emerging Markets Debt Angst, Consumer Discretionary/Tech Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line:  Substantially Lower
  

• Sector Performance:  Mixed
  

• Volume:  Above-Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 29.4 -4.2%
• Bloomberg Global Risk On/Risk Off Index 2,874.0 +44.0 points

• Euro/Yen Carry Return Index 131.47 -.56%

• Emerging Markets Currency Volatility(VXY) 11.5 +.6%

• CBOE S&P 500 Implied Correlation Index 46.4 -4.2% 

• ISE Sentiment Index 116.0 -11.0 points
  

• Total Put/Call .90 -4.3%

• NYSE Arms 1.14 +107.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 69.79 +.05%
  

• US Energy High-Yield OAS 406.65 +.59%

• European Financial Sector CDS Index 86.56 +.59%

• Italian/German 10Y Yld Spread 155.0 +2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 112.08 +.17%
  

• Emerging Market CDS Index 297.08 +3.3%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 29.99 -.86% 
• Ukraine Sovereign Debt Credit Default Swap 8,219.0 +37.8%
  

• 2-Year Swap Spread 18.0 +4.0 basis points
  

• TED Spread 18.75 +1.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -23.75 +4.25 basis points
  
• MBS  5/10 Treasury Spread  108.0 +4.0 basis points
  
• iShares CMBS ETF 51.21 -.2%
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 52.13 -.75%
• 3-Month T-Bill Yield .34% +3.0 basis points
  

• Yield Curve 38.5 -.75 basis point
  

• China Iron Ore Spot 161.25 USD/Metric Tonne +7.4%

• Citi US Economic Surprise Index 42.0 -4.8 points

• Citi Eurozone Economic Surprise Index 69.2 -3.7 points
  

• Citi Emerging Markets Economic Surprise Index 36.0 -.5 point

• 10-Year TIPS Spread 2.72 unch.
  
• 0.0%(unch.) chance of no change at May 4th FOMC meeting, 0.0%(unch.) chance of no change at June 15th meeting

US Covid-19:

• 124 new infections/100K people(last 7 days total). 7.0%(-2.0 percentage points) of 1/14 peak -7/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -80.0%(-.7 percentage point) from peak 7-day avg. of 1/9/21 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -197 open in Japan 
• China A50 Futures: Indicating -57 open in China

• DAX Futures: Indicating -18 open in Germany

Portfolio:

• Higher: On gains in my industrial/commodity/medical sector longs, index hedges and emerging market shorts
  

• Disclosed Trades:  Added to my (IWM)/(QQQ) hedges and to my emerging market shorts
  

• Market Exposure:  Moved to 25% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Growth -1.8%

Sector Underperformers:

• 1) Internet -3.1% 2) Video Gaming -3.1% 3) Gambling -2.6%

Stocks Falling on Unusual Volume: 

• FTAI, AN, PLUG, AMBA, APLS, SOFI, CWAN, ZM, IAC, RARE, TREX, SPR, ZUO, FSLY, SDIG, INVA, GDYN, ARIS, CVNA, HCP, GMS, DDOG, IPGP, AEO, OKTA, CFLT, DKNG, EPAM, EHTH, DVAX, HYFM, BURL, MDB, NTLA, BMBL, HEAR, AMLX, NET, BJ, VEEV, SNOW and TSP
  

Stocks With Unusual Put Option Activity:

• 1) FEZ 2) AEO 3) NRZ 4) RUSL 5) USB
  

Stocks With Most Negative News Mentions:

• 1) WEAV 2) GRAB 3) RSI 4) BMBL 5) SNOW
  

Charts:

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

Bull Radar

 Style Outperformer:

• Large-Cap Value +.3%

Sector Outperformers:

• 1) Utilities +1.8% 2) Shipping +1.8% 3) Road & Rail +1.8%

Stocks Rising on Unusual Volume:

• GOGO, PSTG, BTU, KR, BBY, SGFY, GDRX, ARCH, CHPT, PLAN, HCC, LASR, FULC, SPLK, SKYH, AI and LXU
  

Stocks With Unusual Call Option Activity:

• 1) BBY 2) CORN 3) DBA 4) GSAT 5) WEAT

Stocks With Most Positive News Mentions:

• 1) KR 2) BF/B 3) BBY 4) SPLK 5) XOM
  

Charts:

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