Stocks Reversing Lower into Afternoon on US Policy-Induced Stagflation Fears, Fed "Higher for Longer" Worries, Dollar Strength, Energy/Tech Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 17.2 +.9%
• DJIA Intraday % Swing .36%
  
• Bloomberg Global Risk On/Risk Off Index 58.2 +1.5%

• Euro/Yen Carry Return Index 153.3 -.3%

• Emerging Markets Currency Volatility(VXY) 10.0 -.20%

• CBOE S&P 500 Implied Correlation Index 31.6 -.4% 

• ISE Sentiment Index 103.0 +11.0 points
  

• Total Put/Call 1.03 +14.4%

• NYSE Arms .95 +10.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 74.7 +.91%
  

• US Energy High-Yield OAS 362.91 +.24%
• Bloomberg TRACE # Distressed Bonds Traded 366.0 -1
  

• European Financial Sector CDS Index 94.7 -.39% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 355.1 -2.4%
  

• Italian/German 10Y Yld Spread 183.0 basis basis points -3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 122.3 -1.8%
  

• Emerging Market CDS Index 233.3 +.66%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.99 +.03%

• 2-Year Swap Spread 30.0 basis points -1.5 basis points
  

• TED Spread 27.75 basis points +2.75 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -15.5 +1.0 basis point
  
• MBS  5/10 Treasury Spread 164.0 +2.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 693.0 -1.0 basis point
  
• Avg. Auto ABS OAS 95.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.7 -.35%
• 3-Month T-Bill Yield 5.05% +5.0 basis points
  

• China Iron Ore Spot 117.0 USD/Metric Tonne +.2%
• Dutch TTF Nat Gas(European benchmark) 41.1 euros/megawatt-hour -.05%

• Citi US Economic Surprise Index 39.1 +8.1 points

• Citi Eurozone Economic Surprise Index 43.8 -4.6 points
  

• Citi Emerging Markets Economic Surprise Index 23.9 -3.9 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 225.98 +.15:  Growth Rate +1.6% +.1 percentage point, P/E 18.3 -.1
  
• S&P 500 Current Year Estimated Profit Margin 12.26% unch.
  
• Bloomberg US Financial Conditions Index .25 +8.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index -4.13 -17.0 basis points
  
• US Yield Curve -61.0 basis points (2s/10s) -3.25 basis points
• US Atlanta Fed 1Q GDPNow Forecast +2.47% +30.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.58% unch.: CPI YoY +5.12% unch.
  
• 10-Year TIPS Spread 2.31 unch.
  
• Highest target rate probability for June 14th FOMC meeting: 64.0%(-2.1 percentage points) chance of 5.0%-5.25%. Highest target rate probability for July 26th meeting: 53.7%(+6.0 percentage points) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +3 open in Japan 
• China A50 Futures: Indicating -19 open in China

• DAX Futures: Indicating +121 open in Germany

Portfolio:

• Slightly Higher:  On gains in my medical/industrial sector longs and index hedges
  

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

• Market Exposure: Moved to 25% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Growth -.4%
  

Sector Underperformers:

• 1) Energy -1.4% 2) Networking -1.3% 3) Semis -1.2%

Stocks Falling on Unusual Volume: 

• HDB, TALO, GOOG, GOOGL, AFYA, TFPM, BNTX, MARA, PAAS, UBS, CBRL, TER, KEYS, PARR, ASML, ALGM, MAG, MSTR, RVLV, BK, RIOT, HCM, MRNA, TRUP, STT and RBLX
  

Stocks With Unusual Put Option Activity:

• 1) IGV 2) STT 3) PTGX 4) AQN 5) BOX
  

Stocks With Most Negative News Mentions:

• 1) RBLX 2) STT 3) MANU 4) BK 5) TER
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.7%
  

Sector Outperformers:

• Shipping +2.1% 2) Alt Energy +1.7% 3) Electric Vehicles +1.1%

Stocks Rising on Unusual Volume:

• RXDX, MORF, PCVX, LIND, NRIX, VTYX, CLDX, CGEM, ENPH, ACLX, MTB, IOT, CTLT, KDNY, RARE and BTU
  

Stocks With Unusual Call Option Activity:

• 1) CTLT 2) TME 3) BNGO 4) BK 5) CVE

Stocks With Most Positive News Mentions:

• 1) PRST 2) RXDX 3) XPEV 4) MTB 5) NIO
  

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: 

• (BAC)/.83
• (BK)/1.11
• (CBSH)/.93
• (ERIC)/.69
• (GS)/8.06
• (JNJ)/2.51
• (LMT)/6.06
• (PLD)/1.22
• (SBNT)/3.88
  

After the Close: 

• (FHN)/.47
• (IBKR)/1.41
• (ISRG)/1.19
• (MRTN)/.27
• (NFLX)/2.87
• (OMC)/1.40
• (UAL)/-.73
• (WAL)/2.03
  

Economic Releases

8:30 am EST

• Housing Starts for March is estimated to fall to 1400K versus 1450K in Feb.
• Building Permits for March is estimated to fall to 1450K versus 1524K in Feb.
• NY Fed Services Business Activity for April.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Bowman speaking, China Industrial Production report, US weekly retail sales report and the (SIG) investor day could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -9.8% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 9.8 -.1
  
• 5 Sectors Declining, 6 Sectors Rising
• 54.9% of Issues Advancing, 41.4% Declining
• 46 New 52-Week Highs, 27 New Lows
• 46.6%(+2.5%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 61.0 unch.
  
• Bloomberg Global Risk-On/Risk-Off Index 58.3 +1.7%
  
• Russell 1000: Growth/Value 15,793.2 -.20%
  
• Vix 17.3 +1.3%
• Total Put/Call 1.03 +14.4%
• TRIN/Arms 1.04 +20.9%
  

Monday Watch

Today's Headlines

Bloomberg:

• China Tensions High on Agenda as G-7 Diplomats Meet in Japan.
• Blinken Looks to Deepen Vietnam Ties as China Tensions Simmer.
• Tesla’s Price War Pushes Xpeng to Focus on Cheaper Manufacturing.
• Bomb Targeting Japan PM Complicates Timing of Election, BOJ Move.
• Sudan Death Toll Mounts as Clashes Escalate on Second Day.
• US Stock Futures Rise, Currencies in Tight Ranges: Markets Wrap.
• Oil Holds Fourth Weekly Advance as IEA Warns of Higher Prices.
• World Gas Supply Shifts From Shortage to Glut With Demand Muted.
• Fuel That Powers the Global Economy Is Flashing Recession Signs.
• Merck-Moderna Vaccine Helps Keytruda Keep Melanoma Patients Cancer-Free.
• CVC Is in Talks to Buy Network International for £2 Billion.
• Engaged Couples Issue Verdict on Bed Bath & Beyond.  
• In Morgan Stanley CEO Race, Wealth Boss Emerges as One to Watch.
• Google ‘Racing’ to Build New AI Tools for Search, NYT Says.
• Apple Plans to Launch More Than Just Its New Headset at WWDC. 
• Five Things You Need to Know to Start Your Day.
• Your Sunday US Briefing: Regional Banks and a Rocket for Mars.

Wall Street Journal:

• Banks Finally Face Pressure to Pay Depositors More.
• A Texas-Sized Energy Fiasco. Austin passes subsidies for gas power to counter wind-power subsidies that have destabilized the state electric grid.
• Lula Cozies Up to America’s Enemies. Biden’s presidential pal in Brazil moves closer to a global cast of dictators.
• GM Ditches Apple CarPlay on EVs.
• Joe Manchin’s Faux Betrayal and an Endless Green Bill of Goods. The Inflation Reduction Act is welfare for the rich, not investment for places like West Virginia.
• Saudi Arabia Transfers Nearly $78 Billion of Aramco Shares to Wealth Fund.
• Online Account Overseen by Ex-Navy Member Aided Spread of Secrets.
• Determined to Flee China, Thousands Take Long Route to the Southern U.S. Border.
• Fed Pause Wouldn’t Necessarily Refresh Stock Market.
• Inflation Tests Global Economy That Weathered Covid, War.
• Moderna Shows Progress Toward Cancer Vaccines.
• Does Your Résumé Pass the Six-Second Test?
• Fox News, Dominion Prepare for Battle in $1.6 Billion Defamation Trial.
• Green-Energy Projects Spark Anti-China Backlash.
• WeightWatchers Gets a Makeover With Obesity-Drug Business.
• Iran Makes Fresh Push to Force Women to Wear Hijab.

Fox News:

• State bill to allow medical transgender interventions on minors without parental consent.
• Police shoot and kill armed homeowner after responding to wrong house.
• Hundreds of kids terrorize streets of Chicago, destroying property and attacking tourists.
• Mass shooting leaves at least four people dead and 20 others hurt at birthday party in Alabama.
• Democrats' favorite green mode of transportation is causing explosions and even death.
• Transgender teacher baffled companies would partner with 'juvenile' Mulvaney.

CNBC:

• No date for coal phase out as G-7 environment ministers wrap meeting in Japan.
• The $25,000 EV is coming, with big implications for car makers and buyers.
• Merck to buy Prometheus Biosciences for about $11 billion.
• Top Wall Street analysts say buy these stocks amid the latest macroeconomic uncertainty.

Zero Hedge: 

• Dramatic Video Shows Indian Gangster-Turned-Politician Gun Down On Live TV.
• Biden Announces New Actions On Secret Documents After 'Embarrassing' Leak.
• Both Bulls And Bears Have Experienced Multiple "Lucy" Moments In The Past Year.
• Border Patrol "Brace For F**king Impact" As End Of Trump-Era Immigration Policy Looms.
• CVS 'Gender Transition' Guide Requires Use Of Preferred Pronouns, Sharing Bathrooms.
• US Appeals Court Judge Rejects ProPublica Story On Justice Clarence Thomas.
• All Hell Breaks Out In Chicago As Hundreds Of Teenagers Wreak Havoc.
• South Korea Fires Warning Shots At North Korean Patrol Boat That Breached Boundary.
• Weekend News Round Up - Newsquawk Asia-Pac Market Open.
• Macleod: It's All Hotting Up.
• Community Leaders Furious Over Businesses Leaving Chicago - Refuse To Take Responsibility.
• The Empty Downtown - A New Normal?
• What We Know About Jack Teixeira, Accused Of Involvement In Classified Documents Leak.
• California's Cautionary Clean Energy.
• More Than 20 Shot At Alabama Party.
• Italy ChatGPT Ban: Data Watchdog Demands Transparency To Lift Restriction.
• Deadliest Q1 Since 2017 For Mediterranean Migrant Crossing.
• TME Weekend: Squeeze 5.0.
• Europe's Energy Troubles Continue: Hydro And Nuclear Output Declining.
• Sudan: All-Out War Erupts In Clash Of Rival Military Forces - Casualties Mount.
• The Global Great Awokening.
• Watch: Beyond The Reset.
• They Must Have A Good Reason.
• US Criticizes China's Death Sentence Of 'Wrongfully Detained' American Citizen.
• Hacking Humanity: Transhumanism.

MarketWatch.com:

• Social Security’s expected shortfall sparks debate over tax increases.
• Tesla, Netflix earnings due: Cheaper cars, cheaper content, more workout videos, as ‘earnings recession’ seems likely.

NewsMax:

• Fleitz to Newsmax: Leaks Reveal White House 'Lying to Us'.
• Tenney: EPA's EV Push a 'Hand-Off to China'.  
• House Republicans Chart New Strategy to Pressure Biden, Democrats.
• China Invasion of Taiwan Would Start With Cyberattack on US.

TheGatewayPundit.com: 

• California Schools’ Lawsuit Claims Social Media Companies are Causing Mental Health Crisis for Children and Teens. 
• “Blew My Mind”- Elon Musk Reveals Disturbing New Details Regarding Government Access to Twitter in Upcoming Interview with Tucker Carlson (VIDEO).
• Buttigieg Says Traffic Fatalities Happen Because of “A Lot of Reasons Related to Discrimination” (VIDEO).
• ‘Reign’: New Israeli Spyware Targeting Journalists All Over the World.
• Conservatives Are Looking For Ways To Boycott And Move Spending Away From Woke Corporations – Here Is One Way To Do It.
• SNL Goes All In on Supporting Mutilating Children, Has ‘Non-Binary’ Cast Member Go on Rant About ‘Protecting’ Trans Kids (VIDEO).
• California Power Companies Propose Fixed-Rate Bill Based on Income, Not Usage.
• Former Planned Parenthood Director Commits Suicide as Child Porn Investigation Intensifies.
• 7 Killed, Including Child, at Central Mexico Swimming Resort.
• EXCLUSIVE: GA Gov Kemp, Who Certified 2020 Election in State, Now Creating a New GOP Where Trump Supporters Will Have No Voice.
•   Piers Morgan Demolishes Dem Katie Porter for Attacking All American Swimmer Riley Gaines.
• UN Wants to Decriminalize Sex Between Minors and Adults.
• California Church Fined $1.2 Million for Holding Services During COVID – But Dems Who Broke Rules Get Nothing.
• Mark Levin and Conservative Media Now Reporting on “Voter Mules” First Reported by TGP After 2022 Election.
• Minneapolis Public Schools Holds ‘Gender Resource Fair’ Complete With Drag Queen Story Hour.

The Epoch Times:

• Chinese Defense Minister to Visit Russia for Talks With Military Leaders.
• US Should ‘Immediately’ Cut Off Flow of American Capital to Chinese AI Firms, Rep. Gallagher Says.

Twitter:

• @RWMaloneMD - “Rapid-onset gender dysphoria” results from group-think contagion effects and novel social pressures. Follow the money- billions are being made on trans surgeries and drugs. 5th-gen warfare tactics are being deployed to brainwash youth to think this is what the cool kids do.
• @USBurning - Army Trainee Had Two Heart Attacks After COVID-19 Vaccine. Now, She’s Likely To Be Discharged.
• @zerohedge - Mike Wilson Says A "Credit Crunch Has Started" And Margins Are Falling "Gradually, Then Suddenly" (graph)
• @NickTimiraos - WSJ survey: Economists have turned more pessimistic about inflation. Most see headline CPI falling to 3.5% this year, versus 3.1% in the January survey. Three in five economists don’t anticipate Fed rate cuts this year after a final 25 bps hike in May. (graph)
  
• @YahooFinance - Stocks have rebounded from a tough 2022, but retail traders are still feeling the pain. The average retail investor portfolio is down by about 27% since November 2021, according to data compiled by VandaTrack Research. (graph)

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 949,138 Reports(+1,651 from prior week) Through March 31st, 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 indices are -.25% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 124.25 +.25 basis point
  
• China Sovereign CDS 67.25 -.5 basis point.
• China Iron Ore Spot 114.5 USD/Metric Tonne -1.7%
  
• Bloomberg Emerging Markets Currency Index 47.88 -.04%.
• Bloomberg Global Risk-On/Risk Off Index 57.9 +1.0%.
• Bloomberg US Financial Conditions Index -.15 -2.0 basis points. 
  
• Volatility Index(VIX) futures 20.0 -.45%. 
• Euro Stoxx 50 futures +.25%.
• S&P 500 futures +.22%.
• NASDAQ 100 futures +.10%.

Morning Preview Links

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