Tuesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 129.5 unch. 

• China Sovereign CDS 72.25 -.25 basis point.
  
• China Iron Ore Spot 101.6 USD/Metric Tonne -.3%.

• Bloomberg Emerging Markets Currency Index 47.6 unch.
• Bloomberg Global Risk-On/Risk Off Index 57.1 +1.3%. 
• Bloomberg US Financial Conditions Index .14 +7.0 basis points.
  
• Volatility Index(VIX) futures 21.2 +1.9%.
• Euro Stoxx 50 futures +.21%.

• S&P 500 futures -.08%.

• NASDAQ 100 futures -.10%.  

Morning Preview Links

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

Stocks Reversing Slightly Lower into Final Hour on US Policy-Induced Stagflation Fears, Regional Bank Contagion Worries, European/Emerging Markets/US High-Yield Debt Angst, Financial/Alt Energy Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Around Even
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 15.7 -.3%
• DJIA Intraday % Swing .41%
  
• Bloomberg Global Risk On/Risk Off Index 56.7 +2.0%

• Euro/Yen Carry Return Index 157.7 +.4%

• Emerging Markets Currency Volatility(VXY) 9.9 +.9%

• CBOE S&P 500 Implied Correlation Index 30.9 -3.9% 

• ISE Sentiment Index 75.0 -17.0 points
  

• Total Put/Call .94 -4.1%

• NYSE Arms 1.10 +14.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 76.6 +1.0%
  

• US Energy High-Yield OAS 379.51 -1.4%
• Bloomberg TRACE # Distressed Bonds Traded 399.0 -1.0
  

• European Financial Sector CDS Index 98.6 +.6% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 360.10 +.8%
  

• Italian/German 10Y Yld Spread 186.0 basis points unch.
  

• Asia Ex-Japan Investment Grade CDS Index 127.4 -1.4%
  

• Emerging Market CDS Index 234.8 -1.2%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.7 -.06%

• 2-Year Swap Spread 29.0 basis points -.25 basis point
  

• TED Spread 27.25 basis points +4.75 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -18.75 unch.
  
• MBS  5/10 Treasury Spread 169.0 -1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 698.0 +2.0 basis points
  
• Avg. Auto ABS OAS 94.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.6 -.08%
• 3-Month T-Bill Yield 5.01% -6.0 basis points
  

• China Iron Ore Spot 101.9 USD/Metric Tonne -.11%
• Dutch TTF Nat Gas(European benchmark) 38.8 euros/megawatt-hour +.77%

• Citi US Economic Surprise Index 19.0 -3.0 points

• Citi Eurozone Economic Surprise Index 10.2 -5.0 points
  

• Citi Emerging Markets Economic Surprise Index 32.3 -3.3 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 227.56 +.83:  Growth Rate +2.2% +.3 percentage point, P/E 18.4 +.1
  
• S&P 500 Current Year Estimated Profit Margin 12.27% -2.0 basis points
  
• Bloomberg US Financial Conditions Index .10 +8.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index -4.50 -1.0 basis point
  
• US Yield Curve -56.75 basis points (2s/10s) +3.25 basis points
• US Atlanta Fed 2Q GDPNow Forecast +1.84% +18.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.66% unch.: CPI YoY +5.19% unch.
  
• 10-Year TIPS Spread 2.23 +1.0 basis point
  
• Highest target rate probability for June 14th FOMC meeting: 67.1%(+2.5 percentage points) chance of 5.0%-5.25%. Highest target rate probability for July 26th meeting: 61.2%(+5.7 percentage points) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +162 open in Japan 
• China A50 Futures: Indicating +14 open in China

• DAX Futures: Indicating +91 open in Germany

Portfolio:

• Higher:  On gains in my tech/utility/industrial 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:

• Small-Cap Value -.1%
  

Sector Underperformers:

• 1) Regional Banks -2.1% 2) Alt Energy -1.8% 3) Oil Service -1.4%

Stocks Falling on Unusual Volume: 

• MANU, SEDG, ARCB, VRNA, CHKP, ALGT, ETSY, PINS, DOCS, GTLS, GNK, ASO, ACCD, NET, UPST, ORC, MSTR, PNC, CFG, TRMD, COUR, W, AYX, BZH, COIN, GPN, NWL, RIOT, MCB, PLRX and TOP
  

Stocks With Unusual Put Option Activity:

• 1) TMDX 2) EXPD 3) NNOX 4) FE 5) MUB
  

Stocks With Most Negative News Mentions:

• 1) RIDE 2) VLY 3) HBNC 4) SBNY 5) CHKP
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.6%
  

Sector Outperformers:

• Gambling +2.1% 2) Road & Rail +1.5% 3) Defense +1.2%

Stocks Rising on Unusual Volume:

• ZYXI, TGTX, DAWN, ISEE, NCLH, ON, SMG and KBR
  

Stocks With Unusual Call Option Activity:

• 1) HYFM 2) NNOX 3) VSTO 4) LIVN 5) EOLS

Stocks With Most Positive News Mentions:

• 1) MDWT 2) NCLH 3) ISEE 4) ELDN 5) VKTX
  

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: 

• (ADT)/.08
• (AGCO)/2.71
• (ABC)/3.30
• (BP)/.24
• (LNG)/6.65
• (CMI)/4.70
• (DD)/.80
• (ETN)/1.78
• (EXPD)/1.33
• (FSS)/.40
• (IT)/2.10
• (IDXX)/2.43
• (ITW)/2.23
• (LDOS)/1.59
• (MPC)/5.60
• (MAR)/1.84
• (MDC)/.54
• (TAAP)/.26
• (PFE)/.99
• (RGEN)/.59
• (SAGE)/-2.45
• (SEE)/.77
• (SYY)/.92
• (TROW)/1.63
• (TRN)/.25
• (UBER)/.15
• (ZBH)/1.64
  

After the Close: 

• (AMD)/.56
• (ANDE)/.18
• (CZR)/.06
• (CHK)/1.66
• (CLX)/1.22
• (EIX)/.98
• (F)/.44
• (LOPE)/1.96
• (HLF)/.70
• (JKHY)/1.10
• (MTW)/.15
• (MTCH)/.56
• (PRU)/2.92
• (SPG)/2.81
• (SBUX)/.65
• (SMCI)/1.71
• (YUMC)/.44
  

Economic Releases

10:00 am EST

• JOLTS Job Openings for March is estimated to fall to 9736K versus 9931K in Feb.
• Factory Orders for March is estimated to rise +1.2% versus a -.7% decline in Feb.
• Durable Goods Orders revisions for March.
  

Afternoon:

• Wards Total Vehicle Sales for April is estimated to rise to 15.1M versus 14.82M in March.

Upcoming Splits

• (SMH) 2-for-1
  

Other Potential Market Movers

• The Eurozone CPI report, RBA Decision, US weekly retail sales reports and the (ALLE) analyst day could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Morning Market Internals

NYSE Composite Index:

• NYSE Volume Running -23.2% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 12.0 +.9
  
• 4 Sectors Declining, 7 Sectors Rising
• 55.9% of Issues Advancing, 40.2% Declining
• 60 New 52-Week Highs, 11 New Lows
• 42.8%(+2.2%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 57.0 +4
  
• Bloomberg Global Risk-On/Risk-Off Index 56.9 +2.4%
  
• Russell 1000: Growth/Value 15,942.2 -.14%
• 1-Day Vix 8.9 -32.7%
  
• Vix 15.6 -1.1% 
  
• Total Put/Call .86 -10.4%
• TRIN/Arms 1.07 +11.5%