Stocks Higher into Final Hour on More Dovish FOMC Commentary Hopes, Less Emerging Markets Debt Angst, Short-Covering, Tech/Consumer Discretionary Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line:  Higher
  

• Sector Performance:  Almost Every Sector Rising
  

• Volume:  Above Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 30.8 -3.0%
• Bloomberg Global Risk On/Risk Off Index 2,636.0 -94.0 points

• Euro/Yen Carry Return Index 133.31 +.12%

• Emerging Markets Currency Volatility(VXY) 13.4 +.7%

• CBOE S&P 500 Implied Correlation Index 49.2 +.8% 

• ISE Sentiment Index 117.0 +21.0 points
  

• Total Put/Call .98 -2.0%

• NYSE Arms .88 +15.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 73.4 -2.7%
  

• US Energy High-Yield OAS 425.18 +1.3%

• European Financial Sector CDS Index 89.68 -1.5%

• Italian/German 10Y Yld Spread 157.0 -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 123.24 +4.7%
  

• Emerging Market CDS Index 326.86 -3.11%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 28.0 -.88% 
• Ukraine Sovereign Debt Credit Default Swap 5,506.0 +5.2%
  

• 2-Year Swap Spread 22.75 +.5 basis point
  

• TED Spread 39.75 -7.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -26.75 -1.75 basis points
  
• MBS  5/10 Treasury Spread  114.0 +1.0 basis point
  
• iShares CMBS ETF 50.48 +.11%
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 51.59 +1.39%
• 3-Month T-Bill Yield .43% +5.0 basis points
  

• Yield Curve 27.75 +3.25 basis points
  

• China Iron Ore Spot 142.2 USD/Metric Tonne -1.3%

• Citi US Economic Surprise Index 49.1 -5.5 points

• Citi Eurozone Economic Surprise Index 40.8 -18.9 points
  

• Citi Emerging Markets Economic Surprise Index 54.7 +19.1 points

• 10-Year TIPS Spread 2.87 -9.0 basis points
  
• 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:

• 70 new infections/100K people(last 7 days total). 4.0%(unch.) of 1/14 peak -5/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -88.7%(-.1 percentage point) from peak 7-day avg. of 1/9/21 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -56 open in Japan 
• China A50 Futures: Indicating -242 open in China

• DAX Futures: Indicating -77 open in Germany

Portfolio:

• Slightly Higher: On gains in my tech/industrial/medical/consumer discretionary sector longs and emerging market shorts
  

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

• Market Exposure:  Moved to 50% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Growth -2.3%

Sector Underperformers:

• 1) Oil Service -3.3% 2) Energy -2.9% 3) Steel -1.7%

Stocks Falling on Unusual Volume: 

• PSX, HAL, INVA, BIGC, WHD, SLB, WING, GTLS, TSE, DAR, CVX, XOM, ARNC, WFRD, AMTX, BKR, SLCA, SWTX, ARVN, LYB, LXU, VLO, TDW, CVI, RXDX, SD, VERV, DK, IPI, PBF, NTRA and COUP
  

Stocks With Unusual Put Option Activity:

• 1) COUP 2) SABR 3) MCHI 4) FEZ 5) KWEB
  

Stocks With Most Negative News Mentions:

• 1) COUP 2) NTRA 3) ANIP 4) BABA 5) ELMS
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +1.9%

Sector Outperformers:

• 1) Airlines +3.9% 2) Semis +2.9% 3) Restaurants +2.6%

Stocks Rising on Unusual Volume:

• GFS, GTLB, TMX, TWKS, AAL, DAL, ULCC, BRBR, ADPT, ASPN, ASO and UPST
  

Stocks With Unusual Call Option Activity:

• 1) EWC 2) HYMC 3) COUP 4) SM 5) ARCH

Stocks With Most Positive News Mentions:

• 1) SBFM 2) MCD 3) CODX 4) GTLB 5) SAVE
  

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +30.2% Above 100-Day Average 
• 10 Sectors Rising, 1 Sector Declining
• 63.0% of Issues Advancing, 33.7% Declining
• 23 New 52-Week Highs, 278 New Lows
• 34.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 43.3% 
• Bloomberg Global Risk-On/Risk-Off Index 2,657.0 -76.0 points
• Russell 1000: Growth/Value 15,781.0 +1.33%
  
• Vix 30.8 -3.2%
• Total Put/Call .99 -1.0%
• TRIN/Arms .94 +25.0%

Tuesday Watch

Evening Headlines

Bloomberg:              

• Ukraine's Address to Congress Is Zelenskiy's Churchill Moment.
• U.S. Says China Talks on Russia Were a ‘Substantial Discussion'.  
• EU Set to Add Luxury Goods, Steel, Iron to Russia Sanctions.
• Ukraine Update: U.S. Warns China Over Support for Russia’s War.
• Putin’s State Media News Is Interrupted: ‘They’re Lying to You’.  
• Time Is Running Out for China’s Developers to Come Clean on Debt .
  
• Stocks, Bonds Pressured by Concerns Over Inflation: Markets Wrap.
• Oil Extends Drop With Focus on Ukraine Conflict, China Lockdowns.
• CDC Moves to Retake Role as Leader on Pandemic Hospital Data.   
• Biden Hits Manchin Roadblock Again as Raskin Nomination Falters.  
• Fund Managers Run Away From China Stocks Even With 75% Discount.  
• Gas Taxes Get Rolled Back Across U.S. as Pump Prices Soar.  
• The 18 Minutes of Trading Chaos That Broke the Nickel Market.

Wall Street Journal:

• Russians Kill Civilians, Loot for Supplies in Occupied Ukraine, Residents Say
• The Inflation Hits Just Keep Coming, Raising Stakes for the Fed.
• Latest Updates | U.S. Presses China on Beijing’s Alignment With Russia
• Ukraine’s Zelensky to Press Congress for More Military Gear.
• Consortium Including Elliott in Advanced Talks to Buy Nielsen.
• Investors Dash to Haven Assets During Market Turmoil.
• Banks to Keep Talking on Nickel Trading Losses, Tsingshan Says.
• Foxconn in Talks to Build $9 Billion Factory in Saudi Arabia. 
• A Question for President Biden on Oil and Gas. Here’s something to ask him at his next press event.
• The Price of Biden’s Excuses for Inflation Keeps Rising. ‘Make no mistake,’ the president said last week, higher costs are ‘largely the fault of Putin.’ 
• Why Your Electric Bill Is Soaring—and Likely to Go Higher.
• Lockdowns Spread Across China to Contain Outbreak.

Fox News:  

• LIVE UPDATES: Missile blows up Ukraine bus in what Kyiv mayor calls Russia's 'war against civilians'.
• RUNNING ON FUMES: Dems pump out plan to ease gas prices — but experts say it could do opposite. 
• Rising costs affecting electric cars, too.
• Who's being hit hardest by rising prices and what it means for the midterms, according to a new poll.
  

CNBC.com:

• Here’s everything the Federal Reserve is expected to do at its meeting this week.
• Putin’s invasion of Ukraine will knock 30 years of progress off the Russian economy.
• Google employees becoming unhappy with pay, promotions and execution, survey results show.
• China’s Covid outbreak will cause ‘some disruption’ to tech supply chains, says Marvell CEO.
• With gas prices surging, here are the most and least expensive states to buy gas.
• 10-year Treasury yield hits 2.14% — its highest point since July 2019.

 MarketWatch:   

• What a Russia debt default would mean for financial markets as Ukraine invasion continues.
• Discovery CEO David Zaslav received walloping $246.6 million pay package in 2021.

Zero Hedge:

• Carnage: China Breaks, Apple Cracks Key Support, Yields Soar As Rate Hike Odds Surge.
• 1MDB Mastermind Jho Low Looted $1.4 Billion From Goldman-Backed Bond Deals.
• White House Warns China Over 'Deep Concerns' About Assistance To Russia In 7-Hour Rome Meeting.
• Kremlin Responds To US Claim Putin "Frustrated" Over Ukraine Operation, Says Military Was Told 'Avoid Storming Major Cities'.
• Almost 40% Of Americans Would Rather Flee Than Defend The US; New Poll Finds.
• Argentina Halts Soy Exports As Food Protectionism Soars.
• THE bull vs THE bear.
• UN Chief In 'Bone-Chilling' Statement: Nuclear War Back "Within Realm Of Possibility" Over Ukraine.
• Ammunition Price Hikes Imminent As Commodity Prices Soar.
• Israeli Government Sites Suffer Major Cyberattack In Possible Iranian 'Retaliation'.
• With Chinese Commodity Tycoon Bailed Out, LME Announces Nickel Market To Reopen.
• Nancy Pelosi 'WTF' Comment Of The Day: "Government Spending Reduces Debt".
• The Anti-ARK ETF's Share Price Has Just Blown Past ARKK For The First Time Ever.
• BoJo Begs Saudis For More Oil As MBS Invites Xi Jinping To Riyadh To Strengthen Ties.

Newsmax: 

• UN Chief Guterres: 'Ukraine on Fire,' Nuclear Conflict PossibleUN Chief Guterres: 'Ukraine on Fire,' Nuclear Conflict Possible.
• Ukraine Refugee Exodus Reaches 2.8 Million.

TheGatewayPundit.com: 

• “No One Person Should Have Unilateral Authority to Make Decisions For Millions of Americans” – Rand Paul Introduces Amendment to Fire Fauci as NIAID Director.
• This Is Big: Naomi Wolf Confirms Big Pharma Was Adding Varying Amounts of Active Ingredient to Batches of COVID Vaccine (VIDEO).
• NATO Moves Ahead With Military Drills in Norway – Deploys 30,000+ Troops, 50 Warships and 220 Aircraft Near Russia’s Border As Tensions Flare in Ukraine.
• Nobody Is Buying Biden’s Bull on Inflation – He Created It – He Owns It.
• Sign at Virginia Pediatrics Office to Student Athletes: “COVID Vaccination Affects Your Heart – If You Received Doses of Any COVID Shot” We Will Not Clear You “Without Lab Work”.
• Now Pelosi Claims that She Can End Gerrymandering – Through HR1 which Will Also End Free and Fair Elections Forever.
• CDC’s Morbidity and Mortality Weekly Report Reveals 31% Vaccine Effectiveness to Kids 5 -11 After Receiving 2 Doses of Pfizer Vaccine.
• Thailand Pays Out $45 Million as Compensation to 15,933 People Following Covid-19 Vaccine Adverse Reactions.
• MORE TRICKS FROM THE CDC: Child Flu Deaths Continued to Mysteriously Disappear in 2021 – So They Could Ramp Up COVID Death Numbers and Abuse Children.

The Epoch Times:

• Children in China Diagnosed With Leukemia After Taking Chinese Vaccines.

Twitter: 

• @aginnt - What lockdowns look like in China. Millions line up for daily testing. (video)
• @L_Team10 - #Ukraine: #Kharviv’s central market is on fire. (video) Russian strikes at Kharkiv’s residential areas .Footage from security camera. (video)
  

GETTR:

•  VigilantFox - Freedom Convoy Organizer Tamara Lich Is Welcomed Home With Astounding Love and Support. (video) Dr. Malone: The Hospital System Has Been Corrupted to Incentivize Bad Outcomes "I cannot explain the data, the observations, of what has transpired over the last two years without resorting to the explanation that there are multiple structural incentives in place in our system, which has caused it to become profoundly corrupt." (video) Dr. Paul Alexander: Drop the Mandates—Not Backed By Science—Vaccination Only Leads to Future Variants "If the vaccines continue to be used and rolled out, particularly in our children, because they do not cut the chain of transmission, they will drive variants... It is critical to stop the vaccines."

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 783,281 Reports(+8,909 from prior week) Through March 4th, 2022.
  

SKirsch.com:

• Using the MGH numbers with our own VAERS queries, we have 247 cases per million doses from the MGH study divided by 5.97 cases per million doses from VAERS. 247/5.97 = 41. This suggests that the VAERS under-reporting factor (URF) is 41X.

Covid-19(Data, Maps, Graphs):

• Our World in Data:  New Global Covid-19 Cases(7-day rolling average graphs). New US Covid Hospital Admissions/ICU Admissions/Deaths
  
• FT.com:  Fully Vaccinated by Country(graph). Global Lockdown Stringency Index(map).
• Bloomberg.com:  International Travel Restrictions.  Case Graphs by State.
  
• NYTimes.com:  County Trends and Clusters. Local ICU Occupancy.
  
• Brown School of Public Health:  Covid Severity by State/County(map).  US Hospital Capacity(region).
  
• CovidActNow:  Covid Severity/Infection Rate by Metro Area.
  
• KFF:  US Vaccinations by Race/Ethnicity.
  
• Carnegie Mellon: Covid-Like Symptoms in Community. Covid Symptom Searches on Google. Covid-Related Dr.Visits.  Restaurant Visits. Wearing Masks. (graphs)
  
• Safegraph.com:  Commerce Patterns(graphs).

Night Trading 

• Asian equity indices are -.75% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 118.5 +3.5 basis points. 

• China Sovereign CDS 66.75 +2.25 basis points.
  

• Bloomberg Emerging Markets Currency Index 50.92 +.08%. 
• Bloomberg Global Risk-On/Risk Off Index 2,746.0 +14.0 points.
• Volatility Index(VIX) futures 31.5 -.7%.
• Euro Stoxx 50 futures -.27%.

• S&P 500 futures +.16%.

• NASDAQ 100 futures +.37%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (DOLE)/.10
  

After the Close:

• (S)/-.18
  

Economic Releases

8:30 am EST

• Empire Manufacturing for March is estimated to rise to 6.4 versus 3.1 in February.
• PPI Final Demand MoM for Feb. is estimated to rise +.9% versus a +1.0% gain in Jan.
• PPI Ex Food and Energy MoM for Feb. is estimated to rise +.6% versus a +.8% gain in Jan.
  

4:00 pm EST

• Net Long-Term TIC Flows for Jan.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Eurozone Industrial Production report, US weekly retail sales reports, BofA Industrials Conference, Barclays Healthcare Conference and the JPMorgan Industrials Conference could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

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

Stocks Reversing Lower into Final Hour on Russia/Ukraine War Escalation Fears, China Bubble-Bursting Concerns, US Policy-Induced Stagflation Worries, Commodity/Technology Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line:  Substantially Lower
  

• Sector Performance:  Almost Every Sector Declining
  

• Volume:  Heavy

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 33.5 +5.6%
• Bloomberg Global Risk On/Risk Off Index 2,680.0 +20.0 points

• Euro/Yen Carry Return Index 133.33 +1.2%

• Emerging Markets Currency Volatility(VXY) 13.3 +2.4%

• CBOE S&P 500 Implied Correlation Index 50.9 +5.8% 

• ISE Sentiment Index 97.0 +4.0 points
  

• Total Put/Call .95 -9.5%

• NYSE Arms .97 -32.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 76.14 +2.0%
  

• US Energy High-Yield OAS 419.62 +.58%

• European Financial Sector CDS Index 90.92 -1.09%

• Italian/German 10Y Yld Spread 159.0 -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 117.80 +5.0%
  

• Emerging Market CDS Index 340.74 -1.3%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 28.3 -1.6% 
• Ukraine Sovereign Debt Credit Default Swap 8,219.0 +37.8%
  

• 2-Year Swap Spread 22.25 +1.75 basis points
  

• TED Spread 47.0 +4.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -25.0 +2.25 basis points
  
• MBS  5/10 Treasury Spread  113.0 +4.0 basis points
  
• iShares CMBS ETF 50.54 -.37%
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 50.85 +.63%
• 3-Month T-Bill Yield .38% unch.
  

• Yield Curve 24.5 -.75 basis point
  

• China Iron Ore Spot 145.5 USD/Metric Tonne -6.1%

• Citi US Economic Surprise Index 54.6 +.3 point

• Citi Eurozone Economic Surprise Index 59.7 -.8 point
  

• Citi Emerging Markets Economic Surprise Index 35.6 -1.5 points

• 10-Year TIPS Spread 2.96 -2.0 basis points
  
• 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:

• 75 new infections/100K people(last 7 days total). 4.0%(-1.0 percentage point) of 1/14 peak -8/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -88.6%(-2.2 percentage points) from peak 7-day avg. of 1/9/21 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -282 open in Japan 
• China A50 Futures: Indicating -339 open in China

• DAX Futures: Indicating -101 open in Germany

Portfolio:

• Slightly Higher: On gains in my index hedges and emerging market shorts
  

• Disclosed Trades:  Added to my (IWM)/(QQQ) hedges, then covered some
  

• Market Exposure:  25% Net Long