Stocks Reversing Lower into Afternoon on Regional Bank Contagion Worries, US Policy-Induced Stagflation Fears, Fed Higher-for-Longer Concerns, Tech/Healthcare Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume:  Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 20.7 +.5%
• DJIA Intraday % Swing .67%
  
• Bloomberg Global Risk On/Risk Off Index 50.5 +2.2%

• Euro/Yen Carry Return Index 147.7 -.3%

• Emerging Markets Currency Volatility(VXY) 12.0 unch.

• CBOE S&P 500 Implied Correlation Index 37.2 +5.2% 

• ISE Sentiment Index 130.0 +46.0 points
  

• Total Put/Call 1.02 +12.1%

• NYSE Arms .83 +7.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 84.56 +1.4%
  

• US Energy High-Yield OAS 434.02 -.82%
• Bloomberg TRACE # Distressed Bonds Traded 471.0 +12
  

• European Financial Sector CDS Index 114.83 -1.1% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 489.6 +15.9%
  

• Italian/German 10Y Yld Spread 185.0 basis basis points +1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 145.2 -1.2%
  

• Emerging Market CDS Index 251.2 +1.1%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.6 +.36%

• 2-Year Swap Spread 33.0 basis points +4.0 basis points
  

• TED Spread 49.0 basis points unch.
  

• 3-Month EUR/USD Cross-Currency Basis Swap -21.75 +.25 basis point
  
• MBS  5/10 Treasury Spread  161.0 +7.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 663.0 +2.0 basis points
  
• Avg. Auto ABS OAS 90.0 -1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.8 +.28%
• 3-Month T-Bill Yield 4.64% -4.0 basis points
  

• China Iron Ore Spot 121.9 USD/Metric Tonne +.5%
• Dutch TTF Nat Gas(European benchmark) 42.7 euros/megawatt-hour +.5%

• Citi US Economic Surprise Index 61.3 +1.8 points

• Citi Eurozone Economic Surprise Index 60.9 +1.4 points
  

• Citi Emerging Markets Economic Surprise Index 23.5 -.1 point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 226.26 -.05:  Growth Rate +1.7% -.1 percentage point, P/E 17.6 unch.
  
• S&P 500 Current Year Estimated Profit Margin 12.33% unch.
  
• Bloomberg US Financial Conditions Index -.61 -10.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index -4.19 +19.0 basis points
  
• US Yield Curve -49.25 basis points (2s/10s) -.25 basis point
• US Atlanta Fed 1Q GDPNow Forecast +3.19% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.73% unch.: CPI YoY +5.22% unch.
  
• 10-Year TIPS Spread 2.31 +6.0 basis points
  
• Highest target rate probability for June 14th FOMC meeting: 55.5%(-3.5 percentage points) chance of 4.75%-5.0%. Highest target rate probability for July 26th meeting: 42.0%(+.2 percentage point) chance of 4.75%-5.0%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -293 open in Japan 
• China A50 Futures: Indicating +61 open in China

• DAX Futures: Indicating +89 open in Germany

Portfolio:

• Lower:  On losses in my tech/medical sector longs and emerging market shorts
  

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

• Market Exposure: Moved to 25% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Growth -.7%
  

Sector Underperformers:

• 1) Disk Drives -2.8% 2) Semis -1.8% 3) Regional Banks -1.0%

Stocks Falling on Unusual Volume: 

• SCHW, CNMD, HRT, CDW, AMD, POWI, IOT, FYBR, RMBS, DOCS, IVR, SMCI, DBRG, DRS, FUTU, FRC, DAWN and HRMY
  

Stocks With Unusual Put Option Activity:

• 1) KEY 2) SIRI 3) SBNY 4) NYCB 5) SCHW
  

Stocks With Most Negative News Mentions:

• 1) HRMY 2) WISA 3) IHRT 4) AFRM 5) MTCH
  

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Value +.2%
  

Sector Outperformers:

• Oil Service +2.8% 2) Energy +1.8% 3) Gold & Silver +1.7%

Stocks Rising on Unusual Volume:

• VKTX, PVH, TERN, ITCI, LOVE, MKC, BOWL, CIEN, ACLX and WBA
  

Stocks With Unusual Call Option Activity:

• 1) PACW 2) REI 3) SCHW 4) KEY 5) KRE

Stocks With Most Positive News Mentions:

• 1) PVH 2) VKTX 3) LOVE 4) MKC 5) CIEN
  

Charts:

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

Tomorrow's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open: 

• (BLUE)/-.20
• (CTAS)/3.03
• (CONN)/-.86
• (PAYX)/1.24
  

After the Close: 

• (FUL)/.59
• (RH)/3.36
• (SMTC)/.47
• (VRNT)/.72
  

Economic Releases

10:00 am EST

• Pending Home Sales MoM for Feb. is estimated to fall -3.0% versus an +8.1% gain in Jan.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +608,170 barrels versus a +1,117,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -2,171,170 barrels versus a -6,399,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,837,000 barrels versus a -3,313,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.53% versus a +.4% gain prior.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Barr speaking, Eurozone Industrial Production report, 7Y T-Note auction, weekly MBA Mortgage Applications report, (INTC) data center/AI investor webinar, BofA Energy/Utilities/Infrastructure Conference, BofA (DELL) fireside chat and the (CLH) investor day could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Morning Market Internals

NYSE Composite Index:

• Volume Running -3.3% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 8.4 +1.3
  
• 6 Sectors Declining, 5 Sectors Rising
• 61.7% of Issues Advancing, 34.4% Declining
• 16 New 52-Week Highs, 25 New Lows
• 40.9%(+3.2%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 45.0 +2.0
  
• Bloomberg Global Risk-On/Risk-Off Index 51.2 +3.6%
  
• Russell 1000: Growth/Value 15,855.8 -.86%
  
• Vix 20.6 +.1%
• Total Put/Call .94 +3.3%
• TRIN/Arms .70 -9.1%
  

Tuesday Watch

Evening Headlines

Bloomberg:       

• Regulator Tells Australian Banks to Boost Cyberattack Defences.
• Asian Equities Advance as Bank-Sector Fears Ease: Markets Wrap.
• Oil Holds Surge as Supply Disruption Adds to Market Optimism.
• Three Things to Watch as Congress Begins Banking Hearings.
• Schwab’s $7 Trillion Empire Built on Low Rates Is Showing Cracks.
• Billionaire Family Expands First Citizens by Scooping Up Failed Banks.
• Binance Crypto Empire Dwarfs FTX at Peak and Dominates Industry.
• FDIC Is Probing Management’s Conduct in SVB, Signature Bank Failures.
• Banking Crisis Raises Concerns About Hidden Leverage in the System.

Wall Street Journal:

• Israel’s Netanyahu Suspends Judicial Overhaul Plan.
• A Tale of Two Housing Markets: Prices Fall in the West While the East Booms.
• Employers Need to Put the Squeeze on Woke Intolerance. Young people like the Stanford students who heckled Kyle Duncan should be unemployable.
• The FDIC’s Sweetheart Bank Deal for SVB. First Citizens scores a great deal, while the deposit insurance fund takes a $20 billion hit.
• America Pulls Back From Values That Once Defined It.
• U.S. Faces Electrician Shortage as It Tries to Go Green.
• China Boosts Loans for Belt and Road Borrowers.

Fox News:

• Christian school massacre suspect identified as transgender, police found maps, manifesto.
• A look at the background of 28-year-old trans suspect who opened fire at Christian school.
• Biden criticized for joking about ice cream before comments on horrific school massacre.

CNBC.com:

• Here’s why the U.S. had to sweeten terms to get the SVB sale done.
• First Citizens takeover of SVB won’t solve the bank run problem, Jim Cramer says.
• Binance and founder Changpeng Zhao violated compliance rules to attract U.S. users, CFTC alleges.

MarketWatch:

• Here are 9 eye-popping allegations in the U.S. government’s lawsuit against Binance.
• Lyft brings in new CEO, pushing co-founders from helm after stock’s plunge.
• Disney begins layoffs of 7,000 this week in first of three phases. 
• 3 charts show U.S. bank failures causing stock-market pain beneath the surface.
• Opinion: Sen. Sherrod Brown: American consumers losing power over their savings and paychecks is an emergency, too.
• These housing markets are cooling the most. Tech cities are high on the list. 
• There’s another looming cliff — the end of the student-loan repayment moratorium.

Zero Hedge:

• 6 Dead At Nashville Christian School Attack, 28 Year-Old Shooter Identified As Transgender.
• Millennials Dominate Insolvencies In Canada As Credit Card, Student Loan And Other Debts Pile Up.
• Viagra Sales Went Soft As Exclusivity Expired.
• CFTC Calls Ether A Commodity In Binance Suit, Highlighting Complexity Of Classification.
• In "Huge" Chinese Push By Aramco, World's Biggest Oil Producer Will Build $10BN Petrochemical Complex, Buy 10% Stake In Top Chinese Refinery.
• "Power At Every Level", Brags Chicago Teachers Union, As 200 Members Skip School For Political Workshop.
• US stocks were mostly higher and bonds declined amid receding banking sector fears - Newsquawk Asia-Pac Market Open.
• US stocks were mostly higher and bonds declined amid receding banking sector fears - Newsquawk Asia-Pac Market Open.
• Global Financial Risks Have Risen Amid Bank Turmoil, IMF Chief Warns.
• Baltimore Lawmakers Unite To Stop Biden's EPA From Sending Toxic Ohio Train Waste To Facility.
• Bonds tumble as banking prospects improve - Newsquawk US Market Wrap.
• Is Elon Musk's Growing Global Influence A Dilemma For The White House?
• Bitcoin, Bonds, Big-Tech, & Bullion Breakdown As Banks & Black Gold Bounce.

Newsmax:     

• Dem Divide: In Poll, 46 Percent Say Bragg Charges Would Be 'Outrageous'.

TheGatewayPundit.com:

• 28-Year-Old Deceased Nashville Shooter Identified- ‘Audrey Hale” an Illustrator, Identifies as Transgender – Included Manifesto (PHOTOS).
• Fulton County Commissioners Attack Mexican-American Colleague: “Personally Offended by Your White Privilege” and “You Sound Like a ‘Karen’”.
• EXCLUSIVE: BPro-Knowink Election Software Used Throughout US Is Connected to Internet, Not Certified and Is Able to Backdate Election Records (Hawaii).
• Instead of Addressing Nashville Shooting, Biden Begins Event by Talking About Jeni’s Ice Cream: ‘I Came Down Because I Heard There Was Chocolate Chip Ice Cream’ (VIDEO).
• Here We Go Again… Massive 70 Car Train Derails in North Dakota Spilling Hazardous Materials.
• Good News: Italy Bans Insect Flour from its Pasta and Pizza.
• EXCLUSIVE: While the Country Was Focused on PA’s Corrupt 2020 Election Results – PA Was Busy Paying BPro Voting Systems Millions for Future Work.
• “This Market is Going to be Different in a Couple of Weeks” – Kenyan President Ruto Urges His Constituents Who Hold US Dollars to Get Rid of Them (VIDEO).
• “Only One China in the World” – Honduras Officially Cut Ties with Taiwan, Establishes Diplomatic Relations with China.
• Joe Biden Taunts Americans About Open Border – Blames Republicans for Fentanyl Crisis in America.

The Epoch Times:

• House Overwhelmingly Passes First Ever US Bill to Punish CCP’s Forced Organ Harvesting.

Twitter: 

• @MSmelkinsonPhD - Reading: Lowest in 30 years Math: lowest since testing began 54 years ago Mental health: ED visits up 50% Physical activity: "It's like wet cement" Future: "This will be a kind of lost generation" Predictable: totally Apologies: none Accountability: none.
• @FiveTimesAugust - Keep sharing this until everyone in the United States has watched it. (video)
• @MrAndyNgo - Breaking: The Antifa group organizing the "Trans Day of Vengeance" outside the Supreme Court has locked down its Twitter account following the deadly mass shooting on a Christian school in Nashville by a #trans shooter.
  

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 943,911 Reports(+1,877 from prior week) Through March 10th, 2023.
  

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.

Night Trading 

• Asian equity indices are unch. to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 147.25 +1.75 basis points. 

• China Sovereign CDS 85.75 unch. 
• China Iron Ore Spot 118.8 USD/Metric Tonne -.3%.

• Bloomberg Emerging Markets Currency Index 47.7 +.05%.
• Bloomberg Global Risk-On/Risk Off Index  49.9 +.9%. 
• Bloomberg US Financial Conditions Index -.57 -6.0 basis points.
  
• Volatility Index(VIX) futures 22.3 -.08%.
• Euro Stoxx 50 futures +.24%.

• S&P 500 futures +.12%.

• NASDAQ 100 futures +.19%.  

Morning Preview Links

BOTTOM LINE: Asian indices are modestly higher, boosted by consumer 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 50% net long heading into the day.