Stocks Falling into Final Hour on Diminished Russia/Ukraine Ceasefire Hopes, US Policy-Induced Stagflation Fears, Earnings Outlook Worries, Tech/Consumer Discretionary Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line:  Lower
  

• Sector Performance:  Most Sectors Declining
  

• Volume:  Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 19.3 +2.2%
• Bloomberg Global Risk On/Risk Off Index 4,555.0 -40.0 points

• Euro/Yen Carry Return Index 140.02 -.23%

• Emerging Markets Currency Volatility(VXY) 12.0 -1.96%

• CBOE S&P 500 Implied Correlation Index 35.0 +4.8% 

• ISE Sentiment Index 105.0 +1.0 point
  

• Total Put/Call .77 -17.2%

• NYSE Arms 1.3 +27.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 67.28 -4.7%
  

• US Energy High-Yield OAS 358.65 +.53%

• European Financial Sector CDS Index 81.35 +1.3%

• Italian/German 10Y Yld Spread 148.0 unch.
  

• Asia Ex-Japan Investment Grade CDS Index 98.50 -3.6%
  

• Emerging Market CDS Index 226.40 +3.6%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 29.4 -.20% 
• Ukraine Sovereign Debt Credit Default Swap 2,708.35 +7.2%
  

• 2-Year Swap Spread 21.0 +.75 basis point
  

• TED Spread 44.5 +1.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -22.75 -1.75 basis points
  
• MBS  5/10 Treasury Spread  109.0 -3.0 basis points
  
• iShares CMBS ETF 49.58 +.08%
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 53.68 +.39%
• 3-Month T-Bill Yield .52% unch.
  

• Yield Curve 2.5 -1.5 basis points
  

• China Iron Ore Spot 160.6 USD/Metric Tonne +4.7%

• Citi US Economic Surprise Index 59.1 -.4 point

• Citi Eurozone Economic Surprise Index 45.0 +11.1 points
  

• Citi Emerging Markets Economic Surprise Index 39.9 -.8 point

• 10-Year TIPS Spread 2.89 +1.0 basis point
  
• 0.0%(unch.) chance of no change at June 15th FOMC meeting, 0.0%(unch.) chance of no change at July 27th meeting

US Covid-19:

• 62 new infections/100K people(last 7 days total). 4.0%(unch.) of 1/14 peak -0/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -92.6%(unch.) from peak 7-day avg. of 1/9/21 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -92 open in Japan 
• China A50 Futures: Indicating -68 open in China

• DAX Futures: Indicating -59 open in Germany

Portfolio:

• Slightly Higher: On gains in my commodity sector longs and index hedges
  

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

• Market Exposure:  Moved to 50% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Value -.9%

Sector Underperformers:

• 1) Retail -2.6% 2) Banks -2.1% 3) Semis -1.4%

Stocks Falling on Unusual Volume: 

• QCOM, CRC, ZUO, UMPQ, MTDR, SCVL, LOW, IGMS, SAIA, HRI, JELD, FBP, FND, HOOD, FIVE, BLD, PBCT, W, MTB, PLCE, PVH, WSM, BGFV, NWN, CONN, SGHT, AMC, RCUS, CNXC, RH and CHWY
  

Stocks With Unusual Put Option Activity:

• 1) REI 2) RH 3) IVV 4) INDA 5) KBE
  

Stocks With Most Negative News Mentions:

• 1) SDIG 2) RH 3) AKBA 4) CHWY 5) GLOB
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value -.2%

Sector Outperformers:

• 1) Energy +1.6% 2) Shipping +1.4% 3) Agriculture +1.3%

Stocks Rising on Unusual Volume:

• VIR, AMBC, LTHM, YETI, CALM, PLL, MLKN, MSM, AXSM, BROS, NEO, DICE, PINC, TVTY, QS, VIRT and AOSL
  

Stocks With Unusual Call Option Activity:

• 1) RH 2) MBI 3) HMHC 4) PLAY 5) NLSN

Stocks With Most Positive News Mentions:

• 1) VIR 2) LULU 3) NAT 4) SRAD 5) FRPT
  

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -.2% Below 100-Day Average 
• 3 Sectors Rising, 8 Sectors Declining
• 49.6% of Issues Advancing, 46.9% Declining
• 96 New 52-Week Highs, 10 New Lows
• 45.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.8% 
• Bloomberg Global Risk-On/Risk-Off Index 4,560.0 -35.0 points
• Russell 1000: Growth/Value 16,783 -.61%
  
• Vix 19.5 +3.0%
• Total Put/Call .77 -17.2%
• TRIN/Arms 1.13 +9.7%

Wednesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 97.25 -9.25 basis points. 

• China Sovereign CDS 57.25 -4.5 basis points.
  

• Bloomberg Emerging Markets Currency Index 53.32 -.29%. 
• Bloomberg Global Risk-On/Risk Off Index 4,512.0 -84.0 points.
• Volatility Index(VIX) futures 21.7 +.67%.
• Euro Stoxx 50 futures +.15%.

• S&P 500 futures -.13%.

• NASDAQ 100 futures -.08%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (FIVE)/2.48
• (PAYX)/1.05
• (MSM)/1.23
• (BNTX)/7.15
  

After the Close:

• (PATH)/.03

Economic Releases

8:15 am EST

• The ADP Employment Change for March is estimated to fall to 450K versus 475K in Feb.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,530,560 barrels versus a -2,508,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -1,216,440 barrels versus a -2,948,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,348,560 barrels versus a -2,071,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.36% versus a +.7% gain prior.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The German Import Price report, weekly MBA Mortgage Applications report, HC Wainwright Gene Editing/Therapy Conference, (CR) investor conference and the (FIVE) investor day 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 mixed. The Portfolio is 75% net long heading into the day.

Stocks Finish Higher on Russia/Ukraine Ceasefire Hopes, Quarter-End Short-Covering, Lower Long-Term Rates, Tech/Consumer Discretionary Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line:  Substantially Higher
  

• Sector Performance:  Most Sectors Rising
  

• Volume:  Above Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 19.0 -3.5%
• Bloomberg Global Risk On/Risk Off Index 4,511.0 +136.0 points

• Euro/Yen Carry Return Index 140.15 -.01%

• Emerging Markets Currency Volatility(VXY) 12.4 unch.

• CBOE S&P 500 Implied Correlation Index 33.5 -.39% 

• ISE Sentiment Index 122.0 +29.0 points
  

• Total Put/Call .96 +11.6%

• NYSE Arms 1.34 +34.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 67.28 -4.7%
  

• US Energy High-Yield OAS 361.18 -.62%

• European Financial Sector CDS Index 80.40 -8.4%

• Italian/German 10Y Yld Spread 148.0 -5.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 101.76 -5.4%
  

• Emerging Market CDS Index 219.65 -5.3%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 29.44 +.60% 
• Ukraine Sovereign Debt Credit Default Swap 2,526.07 -17.1%
  

• 2-Year Swap Spread 20.25 -6.0 basis points
  

• TED Spread 43.0 -3.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -23.5 -3.25 basis points
  
• MBS  5/10 Treasury Spread  112.0 -7.0 basis points
  
• iShares CMBS ETF 49.58 +.08%
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 53.57 +1.65%
• 3-Month T-Bill Yield .52% -1.0 basis point
  

• Yield Curve 4.0 -7.5 basis points
  

• China Iron Ore Spot 154.0 USD/Metric Tonne -.1%

• Citi US Economic Surprise Index 59.5 +2.6 points

• Citi Eurozone Economic Surprise Index 33.9 -1.4 points
  

• Citi Emerging Markets Economic Surprise Index 40.7 -.3 point

• 10-Year TIPS Spread 2.88 -8.0 basis points
  
• 0.0%(unch.) chance of no change at June 15th FOMC meeting, 0.0%(unch.) chance of no change at July 27th meeting

US Covid-19:

• 62 new infections/100K people(last 7 days total). 4.0%(unch.) of 1/14 peak -1/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -92.6%(+.3 percentage point) from peak 7-day avg. of 1/9/21 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +108 open in Japan 
• China A50 Futures: Indicating +79 open in China

• DAX Futures: Indicating +35 open in Germany

Portfolio:

• Higher: On gains in my medical/tech/consumer discretionary/industrial sector longs
  

• Disclosed Trades:  Covered some of my (IWM)/(QQQ) hedges, then added them back
  

• Market Exposure:  75% Net Long