Morning Market Internals

NYSE Composite Index:

• NYSE Volume Running -9.6% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 8.8 +.6
  
• 3 Sectors Declining, 8 Sectors Rising
• 59.3% of Issues Advancing, 31.7% Declining
• 38 New 52-Week Highs, 57 New Lows
• 40.3%(+3.9%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 43.0 unch.
  
• Bloomberg Global Risk-On/Risk-Off Index 53.6 -.63%
  
• Russell 1000: Growth/Value 16,668.2 -.03%
• 1-Day Vix 9.7 -30.9%
  
• Vix 17.7 -1.5% 
  
• Total Put/Call 1/.02 +10.9%
• TRIN/Arms .82 -43.5%
  

Wednesday Watch

Evening Headlines

Bloomberg:

• Yuan Weakens Toward Key Psychological Level Amid Data Misses.
• Wall Street’s Biggest Banks Face a Harsh Reality Check in China.
• UBS Maintains Investment Flows in Taiwan as Tensions Mount.
• Japan Economy Grows More Than Expected After Technical Recession.
• UBS Sees Multibillion Gain on Credit Suisse, But Legal Costs Too. 
• Japan Stocks Add to Gains After GDP Beats Forecast: Markets Wrap.
• Oil Edges Lower as Concerns Over China’s Recovery Cloud Outlook.
• The Key Points That Could Complicate a Debt-Limit Deal.
• Elon Musk Says Tesla Will Try Advertising.
• US Challenge to Amgen Deal Threatens Big Pharma Business Model.
• Fed Officials Reveal Debate Over Whether to Pause Rate Hike in June.
• Americans Have Never Been So Unwilling to Relocate for a New Job.

Zero Hedge:

• Bud Light Backlash Shows No Sign Of Letting Up, And Now There Is Contagion To Budweiser, Busch And Michelob.
• Russia Says It Took Out US-Supplied Patriot Missile In Hypersonic Strike On Kiev.
• Von Greyerz & Macleod: Insights On The Rotten State Of The Banking System.
• Report Reveals ATF Misappropriated $20 Million To Pay Bureaucrat Salaries.
• GOP Presidential Candidates React To Durham Report: 'Shut Down The FBI'.
• US X-Date Is Now June 5 As Treasury Burns $52BN Cash In One Day, Only $87BN Left.
• IEA Lift Global Oil Growth Forecast On Record Chinese Demand.
• Escobar: US Empire Of Debt Headed For Collapse.
• US stocks declined amid mixed data and debt ceiling concerns - Newsquawk Asia-Pac Market Open.
• This Is What Hedge Funds Bought And Sold In Q1: 13F Summary.
• From tech highs to debt ceiling and tail risks.
• Debt Ceiling Brinksmanship And The Necessity For Spending Reforms.
• Four Reasons Why Chicago Should Dump Its 'Sanctuary City' Status.
• WTI Holds Losses After Another Surprise Crude Build, Cushing Stocks Soar.
• Stocks and bonds lower after mixed data, Fed speak, debt ceiling talks and earnings - Newsquawk US Market Wrap.
• Victor Davis Hanson: Hang All The Members Of The Liars' Club?
• Biden & Bad Data: Big-Tech Bid, Banks Skid; Bonds & Bullion Breakdown.

Wall Street Journal:

• Rare Pharma Antitrust Action Seeks to Block Amgen-Horizon Deal.
• What Everyone—Except the U.S.—Has Learned About Immigration.
• The Return to the Office Has Stalled.
• The Left’s War on the Rule of Law. There’s no greater threat to our form of government than attacks on the Supreme Court and the judiciary’s legitimacy.
• The ESG Proxy Vote Ranking. Is your asset manager voting based on the interests of investors or for political agendas?
• Why the Durham Report Matters to Democracy. It is a damning account of the corruption of the FBI and its accomplices. 
• Americans Curb Spending on Home Improvements.
• ChatGPT’s Sam Altman Warns Congress That AI ‘Can Go Quite Wrong’.
• Couples Can Soon Put Over $10,000 a Year Into Health Savings Accounts.
• China’s Recovery Loses Steam, Signaling Trouble for Global Economy.

CNBC.com:

• Progress made in White House debt limit meeting, talks to continue as U.S. rushes to prevent default.
• Elon Musk talks Tesla, Twitter, and why he tweets freely — even if it costs him money.
• Elon Musk: Working from home is ‘morally wrong’.
• CNBC Daily Open: Consumer demand is flagging.
• Why Home Depot’s weak outlook could be a warning sign for Target earnings.
• Elon Musk on 2024 election: We want a good CEO of America.
• Apple’s next big iPhone update lets you create a digital voice that sounds like you.
• What Home Depot’s poor outlook means for stock market, economy.

MarketWatch: 

• Tesla’s Elon Musk expects ‘a year of difficulty’ for the global economy.
• Pfizer borrows $31 billion in mega bond deal as debt issuance picks up ahead of debt-ceiling deadline.
• Home Depot’s bad news might not just be bad news for Lowe’s.

 Newsmax:

• Trump to Newsmax: Durham Offers 'Great Vindication' After Hoax.
• Rep. Fry: Durham Proves Govt Weaponized.

Fox News:

• Karine Jean-Pierre ends press briefing after being pressed on bombshell Durham report.
• 'Alarming' MLB team partnership with radical LGBT activists draws Catholic ire.

TheGatewayPundit.com:

• Sports Illustrated Puts Transgender Biological Man on Cover of Swimsuit Edition.
• BREAKING: Soros-Funded St. Louis Circuit Attorney Kim Gardner Resigns Early – Will Leave Office Today.
• House Oversight GOP Releases Statement After Biden Regime Retaliates Against IRS Whistleblower, Knifes Entire Team Investigating Hunter Biden.
• WATCH: Shocking Video Shows Maricopa County’s Fraudulent Signature Verification – Worker “Verifies” Signatures in LESS THAN 2 Seconds Per Signature.
• BREAKING: O’Keefe Media Group Releases Undercover Video, FOX News Producer Reveals, “Tucker Getting Fired Was Part of It” – The Dominion Settlement! (VIDEO).
• Never Forget the Misinformation and Collusion by the Mockingbird Media Regarding “Russia, Russia, Russia” – And Remember Who Had it Right from the Beginning.
• University of Wyoming Sorority Sisters Live “In Constant Fear” of Giant Transgender Student Who Sexually Harasses Them in Multiple Ways Including Silently Staring at Them While Visibly Aroused (VIDEO).
• MIT Scientists Create Device That Can Hack Dreams.
• 5th Grade Teacher Who Showed Students LGBT-Themed Disney Movie Says “Rights as Parents… Are Gone When Your Child is in the Public School System” (VIDEO).
• “They Dragged Us to Hell and We Are Standing and Fighting Back” – Kari Lake Has THREE Whistleblowers Who Will Testify that 130,000 Did Not Pass Signature Verification — But Election Officials Counted Them Anyway!
• NEVER FORGET: Nancy Pelosi Swore She Had “Cold Hard Evidence” of Collusion Between Russia and Trump Family – A COMPLETE LIE – Video.

The Epoch Times:

• Biden Vetoes Bill Restoring Tariffs on Some Chinese Solar Panels.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 959,637 Reports(+1,684 from prior week) Through May 5th, 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 -.25% to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 131.75 +1.75 basis points. 

• China Sovereign CDS 72.75 +.75 basis point.
  
• China Iron Ore Spot 104.0 USD/Metric Tonne -.9%.

• Bloomberg Emerging Markets Currency Index 47.4 unch.
• Bloomberg Global Risk-On/Risk Off Index 54.9 +1.7%. 
• Bloomberg US Financial Conditions Index -.17 -10.0 basis points.
  
• Volatility Index(VIX) futures 20.5 -.7%.
• Euro Stoxx 50 futures -.25%.

• S&P 500 futures +.15%.

• NASDAQ 100 futures +.15%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by financial and tech 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 day.

Stocks Lower into Afternoon on US Policy-Induced Stagflation Fears, Earnings Outlook Worries, Technical Selling, Biotech/Commodity 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) 17.4 +1.5%
• DJIA Intraday % Swing .62%
  
• Bloomberg Global Risk On/Risk Off Index 54.7 +.6%

• Euro/Yen Carry Return Index 155.4 +.21%

• Emerging Markets Currency Volatility(VXY) 9.4 unch.

• CBOE S&P 500 Implied Correlation Index 31.2 +1.5% 

• ISE Sentiment Index 100.0 -3.0 points
  

• Total Put/Call .89 -6.3%

• NYSE Arms 1.09 +43.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 81.8 +1.1%
  

• US Energy High-Yield OAS 418.31 +.17%
• Bloomberg TRACE # Distressed Bonds Traded 433.0 +13.0
  

• European Financial Sector CDS Index 101.1 +.09% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 375.5 -1.9%
  

• Italian/German 10Y Yld Spread 187.0 basis points -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 130.0 +.17%
  

• Emerging Market CDS Index 262.1 +1.3%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 26.1 -.4%

• 2-Year Swap Spread 20.0 basis points -.75 basis point
  

• TED Spread 17.0 basis points +.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -20.0 -.25 basis point
  
• MBS  5/10 Treasury Spread 175.0 +1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 711.0 unch.
  
• Avg. Auto ABS OAS 92.0 -1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.4 -.40%
• 3-Month T-Bill Yield 5.13% -1.0 basis point
  

• China Iron Ore Spot 104.3 USD/Metric Tonne -.7%
• Dutch TTF Nat Gas(European benchmark) 31.8 euros/megawatt-hour -1.5%

• Citi US Economic Surprise Index 2.2 +5.1 points

• Citi Eurozone Economic Surprise Index -27.3 -2.6 points
  

• Citi Emerging Markets Economic Surprise Index 15.4 -15.9 points
• S&P 500 Current Quarter EPS Growth Rate YoY(458 of 500 reporting) -3.3% -.1 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 228.11 +.02:  Growth Rate +2.2% unch., P/E 18.1 unch.
  
• S&P 500 Current Year Estimated Profit Margin 12.24% unch.
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(8 of 10 reporting) -2.1% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 198.99 +.14: Growth Rate +28.5% +.1 percentage point, P/E 32.6 +.4
  
• Bloomberg US Financial Conditions Index -.06 -2.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index -4.49 +6.0 basis points
  
• US Yield Curve -52.5 basis points (2s/10s) -2.75 basis points
• US Atlanta Fed 2Q GDPNow Forecast +2.61% -14.0 basis points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.65% unch.: CPI YoY +4.13% -1.0 basis point
  
• 10-Year TIPS Spread 2.21 +1.0 basis point
  
• Highest target rate probability for July 26th FOMC meeting: 64.0%(+4.9 percentage points) chance of 5.0%-5.25%. Highest target rate probability for Sept. 20th meeting: 42.9%(-3.0 percentage points) chance of 4.75%-5.0%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +83 open in Japan 
• China A50 Futures: Indicating -18 open in China

• DAX Futures: Indicating +42 open in Germany

Portfolio:

• Slightly Lower:  On losses in my industrial/medical/utility sector longs
  

• Disclosed Trades:  Added to my (IWM)/(QQQ) hedges and emerging market shorts
  

• Market Exposure: Moved to 25% Net Long
  

Bear Radar

Style Underperformer:

• Mid-Cap Growth -1.2%
  

Sector Underperformers:

• 1) Gambling -2.5% 2) Oil Service -2.4% 3) Biotech -2.3%

Stocks Falling on Unusual Volume: 

• SEDG, KRTX, NGVT, GOLD, AGL, DBX, SCCO, APLS, SBS, VRNA, CPRX, FND, CRS, WSM, IMCR, COUR, DKS, DECK, VEEV, BLBD, TOST, FLYW, AUPH, DRD, PENN, PZZA, FUTU, AGI, MODG, ASO, IMCR, CRSP, NOG, AUPH, PARA, FYBR, SGEN, RNG, FLNG, BYND, SOVO, AMLX, MGNI, U, ETSY, UPST, KDNY, NNOX, ALNY, FLNC, VOD, DNLI, GDS, RH, SA, MRVI, ONON, PSFE, TERN, HZNP and SE
  

Stocks With Unusual Put Option Activity:

• 1) HZNP 2) STLA 3) SE 4) HD 5) SGEN
  

Stocks With Most Negative News Mentions:

• 1) SE 2) PACW 3) LPSN 4) BIRD 5) SGEN

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.1%
  

Sector Outperformers:

• Disk Drives +1.1% 2) Computer Hardware +.8% 3) Semis +.7%

Stocks Rising on Unusual Volume:

• SSYS, VKTX, PX, BOH and ZI
  

Stocks With Unusual Call Option Activity:

• 1) SYF 2) HZNP 3) TJX 4) ZI 5) FUTU

Stocks With Most Positive News Mentions:

• 1) APLD 2) NVCR 3) CABA 4) NVTS 5) BKYI
  

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:

• (JACK)/1.22
• (TGT)/1.79
• (TJX)/.71
• (TGI)/.24
  

After the Close: 

• (BOOT)/1.44
• (CSCO)/.97
• (CPRT)/.64
• (SQM)/3.01
• (SNPS)/2.47
• (TTWO)/.67
• (VSAT)/3.50
  

Economic Releases

8:30 am EST

• Housing Starts for April is estimated to fall to 1400K versus 1420K in March.
• Building Permits for April is estimated to rise to 1430K versus 1413K in March.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -740,000 barrels versus a +295,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -1,940,000 barrels versus a -3,167,000 barrel decline the prior week. Distillate inventories are estimated to fall by -680,000 barrels versus a -4,170,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.68% versus a +.3% gain prior.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Japan Industrial Production report, 20Y T-Bond auction, weekly MBA Mortgage Applications report, (AAON) investor day, Barclays FinTech Forum and the BMO Capital Farm to Market Conference could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST