Stocks Higher into Afternoon on US Economic Soft-Landing Hopes, Less European/Emerging Markets/US High-Yield Debt Angst, Quarter-End Positioning, Tech/Gambling Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume:  Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 19.3 -3.3%
• DJIA Intraday % Swing .37%
  
• Bloomberg Global Risk On/Risk Off Index 53.1 +3.8%

• Euro/Yen Carry Return Index 150.0 +1.3%

• Emerging Markets Currency Volatility(VXY) 11.9 -.1%

• CBOE S&P 500 Implied Correlation Index 35.4 -.3% 

• ISE Sentiment Index 86.0 -49.0 points
  

• Total Put/Call .92 -14.0%

• NYSE Arms .81 -1.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 81.0 -3.3%
  

• US Energy High-Yield OAS 417.13 -2.9%
• Bloomberg TRACE # Distressed Bonds Traded 473.0 +2
  

• European Financial Sector CDS Index 107.50 -6.4% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 478.2 -2.3%
  

• Italian/German 10Y Yld Spread 182.0 basis basis points -3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 140.5 -3.3%
  

• Emerging Market CDS Index 241.5 -3.2%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.57 +.24%

• 2-Year Swap Spread 33.25 basis points +.25 basis point
  

• TED Spread 48.25 basis points -.75 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -21.75 unch.
  
• MBS  5/10 Treasury Spread  157.0 -4.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 666.0 +3.0 basis points
  
• Avg. Auto ABS OAS 91.0 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.83 +.08%
• 3-Month T-Bill Yield 4.73% +9.0 basis points
  

• China Iron Ore Spot 123.0 USD/Metric Tonne +.08%
• Dutch TTF Nat Gas(European benchmark) 42.8 euros/megawatt-hour +.1%

• Citi US Economic Surprise Index 60.8 -.5 point

• Citi Eurozone Economic Surprise Index 60.0 -.9 point
  

• Citi Emerging Markets Economic Surprise Index 22.5 -1.0 point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 226.29 +.03:  Growth Rate +1.8% +.1 percentage point, P/E 17.6 unch.
  
• S&P 500 Current Year Estimated Profit Margin 12.33% unch.
  
• Bloomberg US Financial Conditions Index -.41 +11.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index -4.15 +4.0 basis points
  
• US Yield Curve -50.75 basis points (2s/10s) -1.5 basis points
• 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 2.33 +2.0 basis points
  
• Highest target rate probability for June 14th FOMC meeting: 60.3%(+8.4 percentage points) chance of 4.75%-5.0%. Highest target rate probability for July 26th meeting: 45.8%(+2.2 percentage points) chance of 4.75%-5.0%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -88 open in Japan 
• China A50 Futures: Indicating +49 open in China

• DAX Futures: Indicating +149 open in Germany

Portfolio:

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

• Disclosed Trades:  None
  

• Market Exposure: 50% Net Long
  

Bear Radar

 Style Underperformer:

• Small-Cap Value +.5%
  

Sector Underperformers:

• 1) Shipping -1.0% 2) Homebuilding -.3% 3) Retail -.3%

Stocks Falling on Unusual Volume: 

• ACDC, TRMD, DRS, DQ, AMLX, BURL, PRGS and NRDS
  

Stocks With Unusual Put Option Activity:

• 1) CTLP 2) BMEA 3) NEOG 4) EPR 5) HAS
  

Stocks With Most Negative News Mentions:

• 1) MINM 2) GLYC 3) URBN 4) FL 5) NSC
  

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Value +1.1%
  

Sector Outperformers:

• Semis +2.5% 2) Alt Energy +2.5% 3) Gambling +2.2%

Stocks Rising on Unusual Volume:

• ARCT, ENVX, BBIO, BMEA, TERN, SSYS, NABL, HRMY, CALM, RMBS, PAYX, SPB, MU, FRC, CTAS and VKTX
  

Stocks With Unusual Call Option Activity:

• 1) CPSS 2) CVEO 3) CTLP 4) BMEA 5) JRMY

Stocks With Most Positive News Mentions:

• 1) ARCT 2) LULU 3) SSYS 4) PAYX 5) CALM
  

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: 

• (ANGO)/-.01
• (NEOG)/.15
  

After the Close: 

• (BB)/-.07
• (AUY)/.06
  

Economic Releases

8:30 am EST

• Initial Jobless Claims for last week are estimated to rise to 195K versus 191K the prior week.
• Continuing Claims are estimated to rise to 1699K versus 1694K prior.
• 4Q GDP revisions.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Barkin speaking, Fed's Collins speaking, Eurozone inflation report, weekly EIA natural gas inventory report, Maxim Electric Vehicle/Auto Tech Conference, (ROG) investor day and the (AMG) capital markets 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 +7.3% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 8.4 unch.
  
• 0 Sectors Declining, 11 Sectors Rising
• 82.0% of Issues Advancing, 15.0% Declining
• 24 New 52-Week Highs, 12 New Lows
• 42.1%(+5.4%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.0 +4.0
  
• Bloomberg Global Risk-On/Risk-Off Index 53.0 +3.6%
  
• Russell 1000: Growth/Value 15,943.8 +.17%
  
• Vix 19.2 -3.9%
• Total Put/Call .93 -13.1%
• TRIN/Arms 1.01 +23.2%
  

Wednesday Watch

Night Trading 

• Asian equity indices are -.25% to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 142.0 -1.5 basis points. 

• China Sovereign CDS 83.0 -.75 basis point. 
• China Iron Ore Spot 121.9 USD/Metric Tonne +.5%.

• Bloomberg Emerging Markets Currency Index 47.8 -.01%.
• Bloomberg Global Risk-On/Risk Off Index  51.1 -.3%. 
• Bloomberg US Financial Conditions Index -.57 -5.0 basis points.
  
• Volatility Index(VIX) futures 21.6 -.7%.
• Euro Stoxx 50 futures +.19%.

• S&P 500 futures +.37%.

• NASDAQ 100 futures +.37%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and consumer 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.