Stocks Higher into Afternoon on Earnings Optimism, Yen Weakness, US Housing Data, Tech/Consumer Discretionary Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance:  Most Sectors Gaining
  

• Volume:  Below Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 20.9 -5.8%
• Bloomberg Global Risk On/Risk Off Index 4,880.0 +234.0 points

• Euro/Yen Carry Return Index 142.93 +1.5%

• Emerging Markets Currency Volatility(VXY) 10.9 +.4%

• CBOE S&P 500 Implied Correlation Index 39.8 -4.5% 

• ISE Sentiment Index 115.0 +16.0 points
  

• Total Put/Call 96.0 -5.0%

• NYSE Arms .89 +15.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 74.11 +.77%
  

• US Energy High-Yield OAS 354.41 -1.5%

• European Financial Sector CDS Index 89.68 +2.3%

• Italian/German 10Y Yld Spread 164.0 unch.
  

• Asia Ex-Japan Investment Grade CDS Index 112.16 +2.8%
  

• Emerging Market CDS Index 258.72 -.4%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 29.5 unch.
• Russia Sovereign Debt Credit Default Swap 10,198.1 -4.0%
  

• 2-Year Swap Spread 25.0 -1.75 basis points
  

• TED Spread 22.5 -9.0 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -21.5 +1.25 basis points
  
• MBS  5/10 Treasury Spread  114.0 -3.0 basis points
  
• iShares CMBS ETF 48.87 -.28%
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 53.28 -.24%
• 3-Month T-Bill Yield .82% +5.0 basis points
  

• Yield Curve 33.75 -6.25 basis points
  

• China Iron Ore Spot 151.5 USD/Metric Tonne +.5%

• Citi US Economic Surprise Index 69.90 +3.6 points

• Citi Eurozone Economic Surprise Index 24.0 -1.0 point
  

• Citi Emerging Markets Economic Surprise Index 44.7 -.4 point

• 10-Year TIPS Spread 2.96 +2.0 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:

• 81 new infections/100K people(last 7 days total). 5.0%(+1.0 percentage point) of 1/14 peak +7/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -93.4%(unch.) from peak 7-day avg. of 1/9/21 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +180 open in Japan 
• China A50 Futures: Indicating -56 open in China

• DAX Futures: Indicating +51 open in Germany

Portfolio:

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

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

• Market Exposure:  Moved to 75% Net Long
  

Tuesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 109.25 +.75 basis point. 

• China Sovereign CDS  68.25 +1.0 basis point.
  

• Bloomberg Emerging Markets Currency Index 53.38 -.06%. 
• Bloomberg Global Risk-On/Risk Off Index 4,632.0 -13.0 points.
• Volatility Index(VIX) futures 23.7 -.43%.
• Euro Stoxx 50 futures -.77%.

• S&P 500 futures +.25%.

• NASDAQ 100 futures +.39%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (BMI)/.51
• (CBSH)/.88
• (FITB)/.69
• (HAL)/.34
• (HAS)/.64
• (JNJ)/2.57
• (LMT)/6.19
• (MAN)/1.59
• (TRV)/3.62
• (TFC)/1.11
  

After the Close:

• (IBM)/1.39
• (IBKR)/.82
• (MRTN)/.26
• (NFLX)/2.92
• (OMC)/1.33
  

Economic Releases

8:30 am EST

• Housing Starts for March is estimated to fall to 1741K versus 1769K in Feb.
• Building Permits for March is estimated to fall to 1820K versus 1859K in Feb.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Evans speaking, Fed's Kashkari speaking, PBOC rate decision and the US weekly retail sales reports 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 commodity 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 day.

Stocks Slightly Higher into Final Hour on Earnings Optimism, Sector Rotation, Short-Covering, Tech/Commodity Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance:  Most Sectors Declining
  

• Volume:  Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 22.4 -1.2%
• Bloomberg Global Risk On/Risk Off Index 4,650.0 +48.0 points

• Euro/Yen Carry Return Index 140.80 -.03%

• Emerging Markets Currency Volatility(VXY) 10.9 -.3%

• CBOE S&P 500 Implied Correlation Index 42.1 -.12% 

• ISE Sentiment Index 104.0 +2.0 points
  

• Total Put/Call 105.0 +14.1%

• NYSE Arms .78 -26.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 73.65 -1.3%
  

• US Energy High-Yield OAS 356.67 -.31%

• European Financial Sector CDS Index 87.69 -.09%

• Italian/German 10Y Yld Spread 164.0 unch.
  

• Asia Ex-Japan Investment Grade CDS Index 109.17 +1.5%
  

• Emerging Market CDS Index 259.8 +.3%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 29.5 +.04%
• Russia Sovereign Debt Credit Default Swap 10,627.94 +.26%
  

• 2-Year Swap Spread 26.75 +1.0 basis point
  

• TED Spread 31.5 +3.0 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -22.75 -.5 basis point
  
• MBS  5/10 Treasury Spread  117.0 unch.
  
• iShares CMBS ETF 48.95 -.28%
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 53.36 +.28%
• 3-Month T-Bill Yield .77% +2.0 basis points
  

• Yield Curve 40.0 +3.0 basis points
  

• China Iron Ore Spot 154.4 USD/Metric Tonne -.3%

• Citi US Economic Surprise Index 66.30 +10.7 points

• Citi Eurozone Economic Surprise Index 25.0 -5.7 points
  

• Citi Emerging Markets Economic Surprise Index 45.1 +14.7 points

• 10-Year TIPS Spread 2.94 +3.0 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:

• 74 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 -93.4%(-.1 percentage point) from peak 7-day avg. of 1/9/21 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +215 open in Japan 
• China A50 Futures: Indicating -11 open in China

• DAX Futures: Indicating +33 open in Germany

Portfolio:

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

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

• Market Exposure:  Moved to 50% Net Long
  

Bear Radar

Style Underperformer:

• Mid-Cap Growth -1.9%

Sector Underperformers:

• 1) Digital Health -2.9% 2) Biotech -2.5% 3) Alt Energy -2.4%

Stocks Falling on Unusual Volume: 

• CRGY, MPW, CTRE, FRPT, JULC, SBRA, SI, TSCO, PATH, BGFV, LUNG, STT, PAYC, CRF, AMPH, BRP, PLBY, WDAY, SILK, FRSH, NUS, UUUU, BRZE, MP, FTAI, FND, WBD, DT, SAVA, TWLO, RARE, BEAM, NVAX, CLM, BCRX, AXSM, CDNA, HCP, EDIT, W, ETSY, SCHW, CRNX, TPTX, ZETA, EVGO and VERU
  

Stocks With Unusual Put Option Activity:

• 1) AX 2) BEN 3) MPW 4) TGTX 5) GRWG
  

Stocks With Most Negative News Mentions:

• 1) DIDI 2) SCHW 3) TGTX 4) NKTR 5) VLTA
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value -.3%

Sector Outperformers:

• 1) Oil Service +1.9% 2) Gold & Silver +1.4% 3) Energy +1.2%

Stocks Rising on Unusual Volume:

• SJT, HPK, SWX, TWTR and IPI
  

Stocks With Unusual Call Option Activity:

• 1) O 2) SFIX 3) UNIT 4) XXII 5) VICI

Stocks With Most Positive News Mentions:

• 1) CASA 2) PVSP 3) SYF 4) GWAV 5) CAT
  

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -8.4% Below 100-Day Average 
• 3 Sectors Rising, 8 Sectors Declining
• 41.7% of Issues Advancing, 54.0% Declining
• 125 New 52-Week Highs, 146 New Lows
• 41.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 45.9% 
• Bloomberg Global Risk-On/Risk-Off Index 4,571.0 -31.0 points
• Russell 1000: Growth/Value 15,867 +.14%
  
• Vix 23.5 +3.4%
• Total Put/Call .79 -14.1%
• TRIN/Arms 1.02 -3.8%