Stocks Lower into Final Hour on Regional Bank Contagion Fears, US Policy-Induced Stagflation Concerns, Earnings Outlook Worries, Financial/Airlines Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 20.2 +9.9%
• DJIA Intraday % Swing 1.26%
  
• Bloomberg Global Risk On/Risk Off Index 49.9 -4.0%

• Euro/Yen Carry Return Index 154.5 -.90%

• Emerging Markets Currency Volatility(VXY) 9.9 -.1%

• CBOE S&P 500 Implied Correlation Index 38.3 +8.1% 

• ISE Sentiment Index 81.0 -18.0 points
  

• Total Put/Call .82 -24.8%

• NYSE Arms .85 -34.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 83.6 +2.5%
  

• US Energy High-Yield OAS 433.73 +3.4%
• Bloomberg TRACE # Distressed Bonds Traded 413.0 unch.
  

• European Financial Sector CDS Index 106.8 +3.6% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 385.25 +2.8%
  

• Italian/German 10Y Yld Spread 193.0 basis points +6.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 135.5 +1.9%
  

• Emerging Market CDS Index 250.92 +2.9%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.62 -.01%

• 2-Year Swap Spread 26.25 basis points -3.25 basis points
  

• TED Spread 6.5 basis points -8.0 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -25.5 -2.5 basis points
  
• MBS  5/10 Treasury Spread 164.0 +1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 708.0 +6.0 basis points
  
• Avg. Auto ABS OAS 94.0 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.8 +.05%
• 3-Month T-Bill Yield 5.21% +1.0 basis point
  

• China Iron Ore Spot 96.4 USD/Metric Tonne -3.1%
• Dutch TTF Nat Gas(European benchmark) 35.6 euros/megawatt-hour -3.1%

• Citi US Economic Surprise Index 15.9 -.7 point

• Citi Eurozone Economic Surprise Index 5.30 -7.3 points
  

• Citi Emerging Markets Economic Surprise Index 36.6 +1.5 points
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 227.5 +.00:  Growth Rate +2.0% -.1 percentage point, P/E 17.8 -.3
  
• S&P 500 Current Year Estimated Profit Margin 12.26% unch.
  
• Bloomberg US Financial Conditions Index -.23 -11.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index -4.70 -11.0 basis points
  
• US Yield Curve -37.5 basis points (2s/10s) +17.75 basis points
• US Atlanta Fed 2Q GDPNow Forecast +2.66% +82.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.66% unch.: CPI YoY +5.19% unch.
  
• 10-Year TIPS Spread 2.19 -3.0 basis points
  
• Highest target rate probability for July 26th FOMC meeting: 59.8%(+25.2 percentage points) chance of 4.75%-5.0%. Highest target rate probability for Sept. 20th meeting: 53.3%(+30.2 percentage points) chance of 4.5%-4.75%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -523 open in Japan 
• China A50 Futures: Indicating -1 open in China

• DAX Futures: Indicating +108 open in Germany

Portfolio:

• Slightly Higher:  On gains in my tech/utility sector longs and index hedges
  

• Disclosed Trades:  None
  

• Market Exposure: 25% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Growth -1.3%
  

Sector Underperformers:

• 1) Regional Banks -5.1% 2) Airlines -4.4% 3) Steel -3.4%

Stocks Falling on Unusual Volume: 

• USB, FITB, WFC, CUBI, QCOM, MTSI, JKHY, FORM, SNV, OWL, CFG, INFA, CNOB, SSTK, KNTK, NVST, IBP, GTLB, TNDM, RYI, EVH, AVID, REGN, ETSY, HTLF, XRX, SPR, BAND, URI, WOLF, COHR, TRIP, KTB, TFC, BKU, FULT, FOUR, CDAY, ANDE, LNC, EWBC, ECVT, MET, STAA, UGI, GNK, RVLV, DINO, BWA, TFX, ACLS, CVBF, EQH, SPWR, BOH, OUT, SPT, NGVT, CMA, SBH, PTLO, PENN, ZION, KYMR, CARS, WCC, CG, PLNT, SYNA, RUN, SITM, OPCH, PARA, WAL and FHN
  

Stocks With Unusual Put Option Activity:

• 1) DB 2) VSCO 3) AIG 4) FHN 5) KEY
  

Stocks With Most Negative News Mentions:

• 1) EVA 2) PACW 3) PARA 4) CG 5) SYNA
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth -.3%
  

Sector Outperformers:

• Gold & Silver +2.7% 2) REITs +1.1% 3) Utilities +1.0%

Stocks Rising on Unusual Volume:

• ARNC, LMND, GRBK, FROG, W, BALL, CFLT, DDOG, LNTH, VSTO, TSVT, UPBD, MGI, SHAK, FLT, IMGN, ZG, QTRX, VITL, RCL, VMC, DGII, SUM, NFE, OLED, PCOR, HUBS, BERY, EXP, CCRN, MRCY, CPE, KTOS, SPB and SDGR
  

Stocks With Unusual Call Option Activity:

• 1) IAT 2) FHN 3) BZ 4) LMND 5) MNOX

Stocks With Most Positive News Mentions:

• 1) LMND 2) SMGI 3) VITL 4) GRBK 5) SEDG
  

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:

• (AMC)/-.17
• (AXL)/-.07
• (CBOE)/1.87
• (CNHI)/.32
• (D)/.97
• (FUBO)/-.38
  
• (FLR)/.37
• (MGA)/.83
  
• (JCI)/.74
• (WBD)/-.12
  

After the Close: 

• None of note
  

Economic Releases

8:30 am EST:

• The Change in Non-Farm Payrolls for April is estimated to fall to 180K versus 236K in March.
• The Unemployment Rate for April is estimated to rise +3.6% versus a +3.5% gain in March.
• Average Hourly Earnings MoM for April is estimated to rise +.3% versus a +.3% gain in March.
• The Labor Force Participation Rate for April is estimated at 62.6% versus 62.6% in March.
  

3:00 pm EST

• Consumer Credit for March is estimated at $17.0B versus $15.290B in Feb.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The German Factory Orders report 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 +37.3% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 7.1 -2.1
  
• 9 Sectors Declining, 2 Sectors Rising
• 22.2% of Issues Advancing, 75.4% Declining
• 30 New 52-Week Highs, 196 New Lows
• 37.5%(-2.2%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 39.0 -7
  
• Bloomberg Global Risk-On/Risk-Off Index 47.6 -7.7%
  
• Russell 1000: Growth/Value 16,193.9 +.49%
• 1-Day Vix 16.7 -5.2%
  
• Vix 21.3 +16.3% 
  
• Total Put/Call .89 -18.4%
• TRIN/Arms 1.03 -20.8%
  

Thursday Watch

Evening Headlines

Bloomberg:  

• High Taxes and Regulations Mean UK Can’t Grow, Economist Warns.
• Don’t Bother Investing in China Unless You’re Chinese.
• Asia Stocks Face Pressure After Fed, Yen to Rally: Strategists.
• Oil’s Chaotic Selloff Worsens With 7.2% Tumble at Asia Open.
• Fed’s Powell Opens Door to June Rate Pause, Stresses Inflation Job Not Done.
• Recession Odds Are ‘Pretty Darn High’ Right Now, Gundlach Says.
• What Wall Street Is Saying About the Fed Rate Decision.
• PacWest Is Weighing Strategic Options, Including Possible Sale.
• Regional Banks Sink as PacWest Weighs Strategic Options.
• Icahn Short Sellers Reap Only a Fraction of Billionaire’s $6 Billion Stock Drop.
• Milken Attendees Obesses Over Recession and What’s Next.
• Doing, Not Just Chatting, Is the Next Stage of the AI Hype Cycle.
• Microsoft Economist Warns Bad Actors Will Use AI to Cause Damage.
• Bill Ackman Warns US Regional Banking System Is at Risk.
• Sovereign Debt Costs to Double by 2025 as Rates Rise, Says Janus.
• The Iconic American School Bus Is Going Electric.
• US Turns to Familiar Name to Clean Up $114 Billion Banking Mess: BlackRock.
• Big Hedge Funds Face New 72-Hour Deadline to Report Losses.

Zero Hedge:

• Here We Go Again: Troubled California Bank PacWest Craters 60% On Report It Is Seeking Buyers Or Capital Raise.
• Joe Biden 'Engaged In A Bribery Scheme With A Foreign National': FBI Internal Document Alleges.
• No, Washington Post, The Experts Were The Whole Problem.
• Bolsonaro Raided, Aide Arrested Amid Fake Covid-19 Vaccination Records Scandal.
• A Record Low 13% Of Eighth Grade Students Are Proficient In History.
• Nordstrom Closing San Francisco Stores, Citing "Deteriorating Situation" Amid Crime Crisis.
• Watchdog: IRS Has Spent $10M On Weapons, Ammo, & Combat Gear Since 2020.
• Pow(OI)elld.
• Gov. Newsom Activates National Guard And Highway Patrol To Combat San Francisco's Drug Crisis.
• Fed hiked rates by 25bps but laid the groundwork for a pause, while Powell pushed back on rate cuts - Newsquawk Asia-Pac Market Open.
• Tucker Carlson Gets $100 Million Offer As MSNBC Dominates Fox In His Absence.
• Confirmed: Jeffrey Epstein’s History As An FBI Source.
• Stocks & Bond Yields Tumble On 'Hawkish Pause'; Gold Gains As Crude Collapses.
• Wall Street Reacts To Powell's Hawkish Pause.
• FTC Says "Facebook Repeatedly Violated Its Privacy Promises," Puts "Young Users At Risk".

Wall Street Journal:

• Workers Have High Hopes for Pay Raises, Companies Less So.
• Dinners With Lawrence Summers and Movie Screenings With Woody Allen.
• TikTok Launches Ad Product for Publishers, Giving 50% Cut.
• FTC Proposes Barring Meta From Monetizing Young Users’ Data.
• San Francisco’s Dying Downtown. Major retailers continue to flee the culture of lawlessness.
• New York’s Migrant Crisis Is About to Get Worse. Covid-era restrictions on entry expire May 11. Mayor Adams says Washington ‘has turned its back.’

CNBC.com:

• Apple expected to announce $90 billion in buybacks and dividends when it reports earnings.
• Google employees complain about CEO Sundar Pichai’s pay raise as company faces cost cuts.
• FDA commissioner praises Eli Lilly Alzheimer’s treatment results.
• Fed recap: Here are Chair Powell’s market-moving comments after the latest rate hike.
• PacWest falls more than 50% after hours on report bank is considering strategic options.
• The market is looking for the next ‘domino’ to fall, keeping banks under pressure.
• House China committee targets top clothing brands in forced labor inquiry.

MarketWatch:

• ‘Deposits are going to keep drifting out,’ says DoubleLine’s Gundlach, warning of echoes of S&L crisis at banks.
• Qualcomm stock falls as CEO says inventory problems will last ‘at least the next couple quarters’.
• Johnson & Johnson’s Kenvue IPO to command valuation of more than $40 billion in biggest public debut since 2021.
• 4 things we learned from Powell’s press conference after latest Fed rate hike.
• Zillow’s revenue falls nearly 90%, but the stock is still headed higher after earnings — here’s why.

 Newsmax:

• Trump: Biden Allowing End of Title 42 'Absolute Lunacy'.

Fox News:

• Biden administration's latest Navy recruiting effort draws sharp criticism.
• Bud Light's Dylan Mulvaney debacle only getting worse for embattled beer company, Clay Travis says.
• Another Dem-run city to set up reparations commission, seek payments for Black residents.

TheGatewayPundit.com:

• MI Democrats Get Last Laugh As Republican Leadership Helps Them Pass Radical Leftist Agenda After Taking Control of MI Legislature For First Time in 40 Years.
• BREAKING: GOP Sen. Grassley and Oversight Chair Comer Subpoena Chris Wray and FBI to Produce Damning Unclassified Record Showing Criminal Scheme Between Joe Biden and Foreign National.
• O’Keefe: DOJ Prison Official Says Merrick Garland “Rolling Over” On Trans Men Impregnating Women in Prison – Paying Transgender Rapists Millions in Lawsuit Settlements (VIDEO).
• JUST IN: Owner of MI Horse Farm, Who Refused to Sell Property to CCP-Tied Battery Plant, is Notified She’s Under Investigation by Gov. Agency Tied to Dirty Dem AG Dana Nessel.
• Kari Lake Announces Her First Book! “Unafraid: Just Getting Started” – PRE-ORDER TODAY.
• Dr. McCullough Discovers Alarming Study Out Of China: “mRNA Technology Has Just Entered a Whole New, Much Darker Phase”.
• Karine Jean-Pierre Proudly Announces Trilateral Commission Stooge Ajay Banga as New World Bank President Who Will Address ‘Climate Change and Pandemics’ (VIDEO).
• NEW: “There Should Be Consequences” – Former Ohio Secretary of State Ken Blackwell Releases Statement on Maricopa County Midterm Election and “Cover-Up” by Officials.
• US Track Star and 3X Olympic Medalist Tori Bowie Dead at 32.
• “I Vote for Aid for Ukraine, I Support Aid for Ukraine” – Kevin McCarthy Folds – Will Fund Ukraine-NATO War on Russia.
  

The Epoch Times:

• Senate Votes to Undo Freeze on Chinese Solar Tariffs, Setting Up Showdown with Biden.
• US Chamber of Commerce Warns of Heightened Risk for Firms Doing Business in China.

Twitter: 

•  @Rasmussen_Poll - Update: "How likely is it that cheating affected the outcome of the 2020 presidential election?" Likely / Not likely: All: 62% / 32% (new record high) Rep: 80% / 16% Dem: 45% / 50% Ind: 64% / 28%.
• @BreedLove22 - “Woke is Marxism evolved to take on The West…” The most brilliant description of our modern cultural sickness… this 30 min video is worth every second. We are in a struggle for the future of humanity: Awaken yourself to the malevolent reality of Woke. (video)
• @WallStreetSilv - Real estate … this time is different? Wages are quickly catching up, right? Right? (graph)
• @OldRowSwig - The uncomfortable cost of green energy. (video)

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 955,352 Reports(+1,937 from prior week) Through April 21st, 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 -.5% to unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 134.75 +2.75 basis points. 

• China Sovereign CDS 76.5 +1.25 basis points.
  
• China Iron Ore Spot 100.5 USD/Metric Tonne -.8%.

• Bloomberg Emerging Markets Currency Index 47.8 -.04%.
• Bloomberg Global Risk-On/Risk Off Index 51.8 -.3%. 
• Bloomberg US Financial Conditions Index -.12 -1.0 basis point.
  
• Volatility Index(VIX) futures 22.4 +1.6%.
• Euro Stoxx 50 futures -.51%.

• S&P 500 futures -.30%.

• NASDAQ 100 futures +.02%.  

Morning Preview Links

BOTTOM LINE: Asian indices are modestly lower, weighed down by commodity and technology 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.