Stocks Higher into Afternoon on China Peak Virus Lockdown Optimism, Dollar Weakness, Short-Covering, Airlines/Alt Energy Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance:  Almost Every Sector Rising
  

• Volume:  Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 25.7 -6.5%
• Bloomberg Global Risk On/Risk Off Index 4,426.0 +361.0 points

• Euro/Yen Carry Return Index 140.15 +1.09%

• Emerging Markets Currency Volatility(VXY) 12.6 -1.3%

• CBOE S&P 500 Implied Correlation Index 46.4 -1.6% 

• ISE Sentiment Index 107.0 +11.0 points
  

• Total Put/Call 1.0 +2.0%

• NYSE Arms .66 -39.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 84.6 -1.8%
  

• US Energy High-Yield OAS 425.0 -2.4%

• European Financial Sector CDS Index 101.52 -1.8%

• Italian/German 10Y Yld Spread 192.0 basis points +1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 126.39 -2.4%
  

• Emerging Market CDS Index 292.43 -1.6%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 28.72 -.07%
  
• Russia Sovereign Debt Credit Default Swap 5,432.32 -2.5%
  

• 2-Year Swap Spread 28.75 basis points +.25 basis point
  

• TED Spread 41.75 basis points -9.75 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -18.0 basis points -2.25 basis points
  
• MBS  5/10 Treasury Spread  126.0 +4.0 basis points
  
• iShares CMBS ETF 48.2 -.82%
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 51.77 +.01%
• 3-Month T-Bill Yield 1.05% +5.0 basis points
  

• Yield Curve 26.5 basis points (2s/10s) -4.0 basis points
  

• China Iron Ore Spot 128.9 USD/Metric Tonne -.5%

• Citi US Economic Surprise Index .2 +3.5 points

• Citi Eurozone Economic Surprise Index 26.1 +3.6 points
  

• Citi Emerging Markets Economic Surprise Index 17.8 +3.7 points

• 10-Year TIPS Spread 2.75 +5.0 basis points
  
• 0.0%(unch.) chance of no change at July 27th FOMC meeting, 0.0%(unch.) chance of no change at September 21st meeting

US Covid-19:

• 206 new infections/100K people(last 7 days total). 12.0%(+1.0 percentage point) of 1/14 peak +22/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -87.5%(-.5 percentage point) from peak 7-day avg. of 1/9/21 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +49 open in Japan 
• China A50 Futures: Indicating -79 open in China

• DAX Futures: Indicating -7 open in Germany

Portfolio:

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

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

• Market Exposure:  Moved to 25% Net Long
  

Bear Radar

 Style Underperformer:

• Large-Cap Value +1.5%

Sector Underperformers:

• 1) Foods -.5% 2) Restaurants +.2% 3) Utilities +.3%

Stocks Falling on Unusual Volume: 

• DUOL, KR, ACET, KDP, DDOG, FLR, WMT, HPK and ALBO
  

Stocks With Unusual Put Option Activity:

• 1) ALLY 2) XLY 3) WMT 4) PHM 5) KR
  

Stocks With Most Negative News Mentions:

• 1) AUTO 2) IMPP 3) WMT 4) ALLT 5) MAXR
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +2.7%

Sector Outperformers:

• 1) Airlines +5.4% 2) Alt Energy +5.3% 3) Semis +4.2%

Stocks Rising on Unusual Volume:

• JBI, QTWO, PARA, SG, SSYS, TTWO, KTOS, COIN, VERU, MAC, TDW, RPAY, PBT, CGEM, GSHD, BL and PHM
  

Stocks With Unusual Call Option Activity:

• 1) UAA 2) PPL 3) COF 4) REKR 5) AR

Stocks With Most Positive News Mentions:

• 1) MVST 2) JMIA 3) PARA 4) RSKD 5) NIO
  

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +5.5% Above 100-Day Average 
• 1 Sector Declining, 10 Sectors Rising
• 76.4% of Issues Advancing, 20.6% Declining
• 33 New 52-Week Highs, 100 New Lows
• 25.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 39.8% 
• Bloomberg Global Risk-On/Risk-Off Index 4,369.0 +306.0 points
• Russell 1000: Growth/Value 14,917.0 +.23%
  
• Vix 26.3 -4.4%
• Total Put/Call 1.05 +7.1%
• TRIN/Arms .76 -30.3%

Tuesday Watch

Evening Headlines

Bloomberg:             

• EU Braces for Storm as Ukraine Fallout Cascades in Economy.  
• Ukraine Latest: First Fighters Are Evacuated From Mariupol Plant. 
• One-Time Richest Singapore Tycoon Has Lost 80% of His Fortune.
• Asia Stocks Set for Cautious Open on Growth Worry: Markets Wrap.  
• OPEC+ Ministers Say Pumping More Oil Won’t Ease Gasoline Prices.
• Gasoline Metrics Are Flashing Red for a Tight, Costly US Summer. 
• Bitcoin’s Plunge Exposes Idea of Uncorrelated Asset as ‘Big Lie’.
• Musk Sees US as ‘Probably’ in Recession Lasting Up to 18 Months.
  
• Twitter Wipes Out All Gains Since Elon Musk Disclosed His Stake.
• Demand Is Up at Human Milk Banks Amid Baby Formula Crisis.
• Here’s How US Cities Rank on Baby Formula Shortages.  
• California Push to Seat More Women on Boards Ruled Unlawful.  
• US Set to Extend Covid-19 Public Health Emergency Past July.  
• Meet the Hedge-Fund Manager Who Warned of Terra’s $60 Billion Implosion.  
• Another Stablecoin Loses Peg as Algorithm Fails to Keep Pace.
  
• Is It Covid or Flu? New At-Home Test Spots Multiple Viruses.

Wall Street Journal:

• CBO Sounds a Warning of American Fiscal Ruin. As lawmakers defer the reckoning, stabilizing the federal debt gets more difficult each year. 
• China’s Economic Distress Deepens as Lockdowns Go On.
  
• Ukrainians in Occupied Village Learn to Live With the Enemy.
• Latest Updates: More Than 260 Azovstal Fighters Evacuated From Steel Plant. 
• Falling Markets Will Crush Government Budgets. Tax revenue from capital gains is about to dry up. Are federal and state officials ready for it? 
  

Fox News:

• Former Biden COVID advisor dismisses latest White House warning.
• Justice Clarence Thomas rips into his liberal media critics.

CNBC.com:

• How Carvana went from a Wall Street top pick to trading with meme stocks.
• White House hits back at Amazon’s Bezos after Biden inflation spat.   
  
• Rivian’s shares sink after a report says legal battle with a supplier could delay Amazon vans.

MarketWatch:     

• Economists conclude remote learning could hurt children’s future earnings and economic mobility, after crunching data from 2.1 million students in 10,000 schools .
  
• Odds of ‘hard landing’ jump as stock, bond investors worry about economic growth, says Morgan Stanley.
  
• Take-Two sales and forecast undershoot Wall Street’s expectations, but the stock is doing fine  
• PayPal borrows $3 billion to help fund debt buyback plan.  
• 15 stocks that have fallen at least 33% but by these measures are still standouts in their sectors.  
• Bitcoin will not become an alternative form of money, or a store of value, says Bernanke.

Zero Hedge: 

• Did Fauci Just Convince Swing-Voters To Pull For Trump?
• Twitter Deal Still Happening? Musk Says 'Not Out Of The Question' But At Lower Price.
• The Post-Roe World: A Reality Check On The Implications Of The Leaked Supreme Court Opinion.
• Lott: Guess How Many Violent Crimes Actually Involve Guns?
• Goya CEO Issues Dire Warning On Looming Food Crisis.
• Newsquawk Asia-Pac Market Open - Choppy mood on Wall St amid growth concerns.
• Oil Prices Surge Past $113 As Shanghai Signals End Of Lockdown.
• White House 'Near Deal' To Reopen Abbott Baby Formula Plant, Allow Imports.
• Newsquawk US Market Wrap: Stocks choppy and Treasuries supported on mounting growth concerns.
• Morgan Stanley Sees S&P Tumbling As Low As 3,400: "That's Where Valuation And Technical Support Lie".
• "Debt Piles Haven't Shrunk": SocGen Warns Bear Market Will Lead To Fresh Corp Leverage Concerns.
• Foreigners Sold The Most US Stocks On Record In March, China Dumps TSY Holdings To Lowest Since 2010.
• Growth Scare Sparks Stock Chaos; Bonds & Bullion Jump As Bitcoin & The Buck Dump.

Newsmax: 

• Turkey: No to Sweden, Finland Joining NATO.
• Gorka: Putin Will Not Stop With Ukraine.

TheGatewayPundit.com: 

• New Peer-Reviewed Study Finds Pfizer’s Covid-19 Vaccine Protection Against Omicron Wanes Just a Week After Receiving Second and Third Dose.
• Michigan Vote Investigators Reveal Mountain of New Evidence.
• Ignored by Fake News Media: Gas Prices Reach ALL-TIME RECORD HIGH for SEVENTH STRAIGHT DAY.
• WATCH: Peter Doocy Grills White House Spox: How Come Biden is Visiting Buffalo, But He Couldn’t Visit Waukesha?
• Surgeon General to Panicked Parents Looking for Baby Formula: “Check with Your Dr. To See if They Have Samples” (VIDEO).
• Authorities Say Gunman in SoCal Church Attack is Chinese Immigrant Motivated by Hate For Taiwanese.
• Get Woke, Go Broke: Sports Illustrated Puts Big Girl and 74-Year-Old on Cover of Swimsuit Issue.
• True the Vote Announces They Now Have Footage of the 2020 Green Bay Drop Boxes – Are Working with Law Enforcement in Wisconsin (VIDEO).

The Epoch Times:

• Something ‘Rotten’ With NIH Funding CCP-Controlled Labs: Natalie Winters.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 813,020 Reports(+2,363 from prior week) Through May 6th, 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 -.25% to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 129.0 -.25 basis point. 

• China Sovereign CDS  81.75 -.75 basis point.
  

• Bloomberg Emerging Markets Currency Index 51.8 +.01%  
• Bloomberg Global Risk-On/Risk Off Index 4,097.0 +32.0  points.
• Volatility Index(VIX) futures 28.1 -.02%.
• Euro Stoxx 50 futures n/a.

• S&P 500 futures -.01%.

• NASDAQ 100 futures +.11%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (HD)/3.69
• (JD)/1.64
• (ONON)/-.04
• (SE)/-1.22
• (WMT)/1.48
• (WB)/.46
  

After the Close:

• (DOCS)/.15
• (KEYS)/1.68
  

Economic Releases

8:30 am EST

• Retail Sales Advance MoM for April is estimated to rise +1.0% versus a +.5% gain in March.
• Retail Sales Ex Autos MoM for April is estimated to rise +.7% versus a +.2% gain in March.
• Retail Sales Ex Autos and Gas for April is estimated to rise +.7% versus a +.2% gain in March.
  

9:15 am EST

• Industrial Production MoM for April is estimated to rise +.5% versus a +.9% gain in March.
• Capacity Utilization for April is estimated to rise to 78.6% versus a 78.3% gain in March.
• Manufacturing Production for April is estimated to rise +.4% versus a +.9% gain in March.
  

10:00 am EST

• Business Inventories for March is estimated to rise +1.9% versus a +1.5% gain in Feb.
• The NAHB Housing Market Index for May is estimated to fall to 75.0 versus 77.0 in April.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Powell speaking, Fed's Mester speaking, Fed's Bullard speaking, China Industrial Production report, weekly US retail sales reports, BofA Metals/Mining/Steel Conference, Goldman Staples Forum, RBC Healthcare Conference, BofA Transport/Airlines/Industrials Conference, (MRNA) Science Day, Goldman Sachs Consumer Conference, (WING) investor day and the (CAT) 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 commodity and consumer shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Slightly Higher into Afternoon on Lower Long-Term Rates, US Dollar Weakness, Technical Buying, Commodity/Pharma Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance:  Mixed
  

• Volume:  Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 28.4 -1.8%
• Bloomberg Global Risk On/Risk Off Index 4,041.0 -36.0 points

• Euro/Yen Carry Return Index 138.5 unch.

• Emerging Markets Currency Volatility(VXY) 12.9 +.2%

• CBOE S&P 500 Implied Correlation Index 48.0 +.9% 

• ISE Sentiment Index 119.0 +13.0 points
  

• Total Put/Call .91 +6.2%

• NYSE Arms 1.05 +250.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 85.4 -.2%
  

• US Energy High-Yield OAS 488.33 +1.3%

• European Financial Sector CDS Index 103.72 +1.1%

• Italian/German 10Y Yld Spread 191.0 basis points +1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 129.51 -.89%
  

• Emerging Market CDS Index 297.95 +1.2%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 28.68 unch.
  
• Russia Sovereign Debt Credit Default Swap 5,573.62 +3.7%
  

• 2-Year Swap Spread 28.5 basis points -.25 basis point
  

• TED Spread 50.5 basis points +4.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -20.25 basis points -1.25 basis points
  
• MBS  5/10 Treasury Spread  122.0 -3.0 basis points
  
• iShares CMBS ETF 48.5 +.22%
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 51.72 +.04%
• 3-Month T-Bill Yield 1.0% +4.0 basis points
  

• Yield Curve 30.5 basis points (2s/10s) -2.75 basis points
  

• China Iron Ore Spot 129.4 USD/Metric Tonne -.37%

• Citi US Economic Surprise Index -3.3 -16.1 points

• Citi Eurozone Economic Surprise Index 22.5 -4.3 points
  

• Citi Emerging Markets Economic Surprise Index 14.1 -19.5 points

• 10-Year TIPS Spread 2.70 unch.
  
• 0.0%(unch.) chance of no change at July 27th FOMC meeting, 0.0%(unch.) chance of no change at September 21st meeting

US Covid-19:

• 184 new infections/100K people(last 7 days total). 11.0%(unch.) of 1/14 peak -7/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -87.0%(+.7 percentage point) from peak 7-day avg. of 1/9/21 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +13 open in Japan 
• China A50 Futures: Indicating +37 open in China

• DAX Futures: Indicating +56 open in Germany

Portfolio:

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

• Disclosed Trades:  None
  

• Market Exposure:  50% Net Long