Thursday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 132.25 +2.25 basis points. 

• China Sovereign CDS 74.5 +.25 basis point. 
• China Iron Ore Spot 117.1 USD/Metric Tonne -.64%.

• Bloomberg Emerging Markets Currency Index 47.7 -.09%.
• Bloomberg Global Risk-On/Risk Off Index 53.8 +1.7%. 
• Bloomberg US Financial Conditions Index -.45 -6.0 basis points.
  
• Volatility Index(VIX) futures 22.1 +1.2%.
• Euro Stoxx 50 futures +.12%.

• S&P 500 futures -.18%.

• NASDAQ 100 futures -.30%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and industrial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 25% net long heading into the day.

Stocks Lower into Afternoon on US Policy-Induced Stagflation Fears, Regional Bank Contagion Worries, European/Emerging Markets/US High-Yield Debt Angst, Tech/Alt Energy Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume:  Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 19.6 +3.3%
• DJIA Intraday % Swing .5%
  
• Bloomberg Global Risk On/Risk Off Index 52.9 -1.5%

• Euro/Yen Carry Return Index 1549.3 -.9%

• Emerging Markets Currency Volatility(VXY) 11.7 unch.

• CBOE S&P 500 Implied Correlation Index 34.5 +2.5% 

• ISE Sentiment Index 102.0 +4.0 points
  

• Total Put/Call .94 -15.3%

• NYSE Arms 1.04 -16.1%

Credit Investor Angst:

• North American Investment Grade CDS Index 80.62 +3.5%
  

• US Energy High-Yield OAS 401.7 +3.5%
• Bloomberg TRACE # Distressed Bonds Traded 445.0 +3
  

• European Financial Sector CDS Index 107.2 +4.6% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 422.7 +7.3%
  

• Italian/German 10Y Yld Spread 183.0 basis basis points -4.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 130.0 +.8%
  

• Emerging Market CDS Index 241.3 +2.3%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.97 +.06%

• 2-Year Swap Spread 32.0 basis points -1.75 basis points
  

• TED Spread 48.25 basis points -13.25 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -19.0 -4.25 basis points
  
• MBS  5/10 Treasury Spread 152.0 -1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 689.0 +3.0 basis points
  
• Avg. Auto ABS OAS 94.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.8 -.20%
• 3-Month T-Bill Yield 4.79% +7.0 basis points
  

• China Iron Ore Spot 117.25 USD/Metric Tonne -.51%
• Dutch TTF Nat Gas(European benchmark) 44.6 euros/megawatt-hour -4.3%

• Citi US Economic Surprise Index 47.3 -.8 point

• Citi Eurozone Economic Surprise Index 53.8 +7.0 points
  

• Citi Emerging Markets Economic Surprise Index 25.5 +.1 point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 226.14 +.03:  Growth Rate +1.7% unch., P/E 18.1 unch.
  
• S&P 500 Current Year Estimated Profit Margin 12.29% unch.
  
• Bloomberg US Financial Conditions Index -.46 -2.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index -4.02 -7.0 basis points
  
• US Yield Curve -47.25 basis points (2s/10s) +4.0 basis points
• US Atlanta Fed 1Q GDPNow Forecast +1.47% -24.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.60% unch.: CPI YoY +5.22% unch.
  
• 10-Year TIPS Spread 2.25 -2.0 basis points
  
• Highest target rate probability for June 14th FOMC meeting: 56.1%(+2.7 percentage points) chance of 4.75%-5.0%. Highest target rate probability for July 26th meeting: 46.4%(+8.6 percentage points) chance of 4.5%-4.75%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -130 open in Japan 
• China A50 Futures: Indicating +13 open in China

• DAX Futures: Indicating +139 open in Germany

Portfolio:

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

• Disclosed Trades:  None
  

• Market Exposure: 25% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Growth -1.7%
  

Sector Underperformers:

• 1) Alt Energy -3.8% 2) Gambling -3.0% 3) Semis -2.6%

Stocks Falling on Unusual Volume: 

• MSTR, ALTG, SAFE, TECK, BE, FOUR, SEDG, DWAC, SMPL, RCKT, GTLS, RNA, VRNA, PII, EDR, WSC, S, CMI, ENPH, EWCZ, AMBA, ASAI, FLNC, PCOR, DE, ERJ, PD, CRH, KSS, ROKU, SCHN, CNHI, ALB, IOT, CRWD, VSCO, LAC, AGCO, FIX, RVLV, U, AEHR, TW, TWLO, TMDX, SPT, GLBE, ENVX, SPT, HCP, GLBE, ENVX, TMDX, XPOF, MNDY, ZS, EVCM, RGP, ZIM, ONON, OSTK, MKTX, FOXF, AI, PTGX, WAL and DLO
  

Stocks With Unusual Put Option Activity:

• 1) DLO 2) BUD 3) TWLO 4) TD 5) AI
  

Stocks With Most Negative News Mentions:

• 1) DLO 2) AI 3) WAL 4) SG 5) MKTX
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value -.2%
  

Sector Outperformers:

• Utilities +2.2% 2) Pharma +1.8% 3) Healthcare Providers +1.5%

Stocks Rising on Unusual Volume:

• COCO, SGH and CAG
  

Stocks With Unusual Call Option Activity:

• 1) MP 2) TXN 3) WDC 4) GFI 5) SBUX

Stocks With Most Positive News Mentions:

• 1) CAG 2) UNH 3) IFRX 4) CBNT 5) BURU
  

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: 

• (STZ)/1.84
• (LW)/.99
• (LEVI)/.33
• (RPM)/.31
  

After the Close: 

• (MDRX)/.27
• (WDFC)/1.15
  

Economic Releases

7:30 am EST

• Challenger Job Cuts YoY for March.

8:30 am EST

• Initial Jobless Claims for last week is estimated to rise to 200K versus 198K the prior week.
• Continuing Claims is estimated to rise to 1700K versus 1689K prior.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Australia trade export report and the weekly EIA natural gas inventory report 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 -2.8% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 8.0 +.5
  
• 8 Sectors Declining, 3 Sectors Rising
• 26.3% of Issues Advancing, 71.0% Declining
• 19 New 52-Week Highs, 35 New Lows
• 42.4%(-3.6%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 53.0 -3.0
  
• Bloomberg Global Risk-On/Risk-Off Index 51.9 -3.4%
  
• Russell 1000: Growth/Value 15,891.3 -.97%
  
• Vix 20.0 +5.3%
• Total Put/Call 1.03 -7.2%
• TRIN/Arms 1.41 +13.7%