Stocks Falling into Final Hour on US Policy-Induced Stagflation Fears, Diminished US Debt Ceiling Agreement Hopes, Earnings Outlook Jitters, Medical/Gambling Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Around Even
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 18.4 +6.8%
• DJIA Intraday % Swing .59%
  
• Bloomberg Global Risk On/Risk Off Index 57.4 -1.4%

• Euro/Yen Carry Return Index 156.6 -.3%

• Emerging Markets Currency Volatility(VXY) 9.5 -.3%

• CBOE S&P 500 Implied Correlation Index 30.7 +4.2% 

• ISE Sentiment Index 97.0 -8.0 points
  

• Total Put/Call .91 +7.1%

• NYSE Arms .74 -12.9%

Credit Investor Angst:

• North American Investment Grade CDS Index 77.92 +.9%
  

• US Energy High-Yield OAS 394.91 -.17%
• Bloomberg TRACE # Distressed Bonds Traded 427.0 unch.
  

• European Financial Sector CDS Index 93.7 -.46% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 312.40 -1.4%
  

• Italian/German 10Y Yld Spread 185.0 basis points -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 124.5 -1.3%
  

• Emerging Market CDS Index 256.80 -.89%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 25.8 -.14%

• 2-Year Swap Spread 18.25 basis points unch.
  

• TED Spread 11.0 basis points -6.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -18.75 -.25 basis point
  
• MBS  5/10 Treasury Spread 177.0 +1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 718.0 +2.0 basis points
  
• Avg. Auto ABS OAS 94.0 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.1 -.12%
• 3-Month T-Bill Yield 5.27% +4.0 basis points
  

• China Iron Ore Spot 98.9 USD/Metric Tonne -1.0%
• Dutch TTF Nat Gas(European benchmark) 29.1 euros/megawatt-hour  -2.0%

• Citi US Economic Surprise Index 1.6 -1.4 points

• Citi Eurozone Economic Surprise Index -35.9 -7.2 points
  

• Citi Emerging Markets Economic Surprise Index 13.9 -2.8 points
• S&P 500 Current Quarter EPS Growth Rate YoY(473 of 500 reporting) -3.4% unch.
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 228.57 +.03:  Growth Rate +2.4% unch., P/E 18.3 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 199.82 +.06: Growth Rate +29.0% unch., P/E 34.1 unch.
  
• Bloomberg US Financial Conditions Index -.04 -6.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index -4.59 -7.0 basis points
  
• US Yield Curve -64.0 basis points (2s/10s) -3.5 basis points
• US Atlanta Fed 2Q GDPNow Forecast +2.89% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.65% unch.: CPI YoY +4.12% -1.0 basis point
  
• 10-Year TIPS Spread 2.26 +1.0 basis point
  
• Highest target rate probability for July 26th FOMC meeting: 57.7%(-5.5 percentage points) chance of 5.0%-5.25%. Highest target rate probability for Sept. 20th meeting: 50.4%(-2.6 percentage points) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -242 open in Japan 
• China A50 Futures: Indicating -55 open in China

• DAX Futures: Indicating -51 open in Germany

Portfolio:

• Slightly Higher:  On gains in my index hedges and emerging market shorts
  

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

• Market Exposure: Moved to 25% Net Long
  

Bear Radar

Style Underperformer:

• Mid-Cap Growth -1.3%
  

Sector Underperformers:

• 1) Gambling -4.0% 2) Medical Equipment -3.1% 3) Homebuilding -1.9%

Stocks Falling on Unusual Volume: 

• LSPD, FYBR, DKNG, BRZE, MA, VIPS, ATEC, FERG, PSFE, ZIM, USFD, AI, TPG, MTH, SCCO, LTH, ABNB, WB, SHOP, PERI, GRBK, NVST, NVO, HLT, IEP, ALC, DAVA, GTES, SE, RACE, MASI, ACHC, TGLS, BZ, SYK, HTHT, INSP, RYAN, LVS, WYNN, BRP, GLBE, IDXX, VCTR, PACB, ALGN, RIOT, HEI, ZM, MAXN, NNOX, MLCO, TXG, BJ, IMVT, VYGR, STAA, TRUP and IART
  

Stocks With Unusual Put Option Activity:

• 1) OTIS 2) VMW 3) PHM 4) ZM 5) DKS
  

Stocks With Most Negative News Mentions:

• 1) IART 2) KC 3) PERI 4) MASI 5) FRCB
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.6%
  

Sector Outperformers:

• Regional Banks +2.1% 2) Energy +1.1% 3) Airlines +.8%

Stocks Rising on Unusual Volume:

• QTRX, CVNA, PLTR, YELP, COCO, TWLO, PETS, TGNA and PDCE
  

Stocks With Unusual Call Option Activity:

• 1) TIP 2) BBIO 3) ASAN 4) PATH 5) DNA

Stocks With Most Positive News Mentions:

• 1) LFCR 2) PACW 3) YELP 4) NVGS 5) MYGN
  

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:

• (ANF)/.02
• (CRMT)/.99
• (ADI)/2.76
• (BMO)/3.23
• (KSS)/-.44
• (WOOF)/.05
• (PLCE)/-1.78
  

After the Close: 

• (AEO)/.17
• (ELF)/.20
• (GES)/-.28
• (NVDA)/.92
• (SNOW)/.05
• (SPLK)/-.12
• (ZUO)/.00
  

Economic Releases 

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +932,290 barrels versus a +5,040,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -1,165,290 barrels versus a -1,381,000 barrel decline the prior week. Distillate inventories are estimated to rise by +319,140 barrels versus an +80,000 gain the prior week
  

2:00 pm EST

• May 3rd FOMC Meeting Minutes.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Waller speaking, UK CPI report, 5Y T-note auction, weekly MBA Mortgage Applications report and the (TMO) 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:

• NYSE Volume Running +6.4% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 7.7 -1.1
  
• 9 Sectors Declining, 2 Sectors Rising
• 49.5% of Issues Advancing, 47.4% Declining
• 18 New 52-Week Highs, 21 New Lows
• 45.1%(+4.1%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.0 -4.0
  
• Bloomberg Global Risk-On/Risk-Off Index 57.3 -1.5%
  
• Russell 1000: Growth/Value 16,654.1 +.05%
• 1-Day Vix 11.4 -7.4%
  
• Vix 18.3 +6.0% 
  
• Total Put/Call .85 unch.
• TRIN/Arms .80 -5.9%
  

Tuesday Watch

Evening Headlines

Bloomberg:

• China Blasts US ‘Sincerity’ as Biden Calls for More Talks.
• How a Billion-Dollar Hong Kong Luxury Tower Highlights Developer Distress.
• US Stock Futures Rise on ‘Productive’ Debt Talks: Markets Wrap.
• Oil Edges Higher as Traders Track Talks to Head Off US Default.
• Jamie Dimon Has No Plans to Step Down as JPMorgan CEO Anytime Soon.
• Hedge Funds Rush to Buy Stocks on S&P 500’s Momentum.
• Key Takeaways From JPMorgan’s Investor Day Presentation.
• Two Fed Officials Say More Interest-Rate Raises May Be Needed to Cool Prices.
• Fed’s Kashkari Argues for Much Higher Capital to Bolster Banks.
• How Fake AI Photo of a Pentagon Blast Went Viral and Briefly Spooked Stocks.
• Regional Banks Rallied Last Week. Traders Continued to Short the Sector.
• More Americans Struggling With Their Finances, Fed Survey Shows.

Zero Hedge:

• Former Deputy Nat'l Security Adviser: FBI, CIA & DOJ Will Rig 2024 Election.
• Russia Issues Dire Warning After US Approves Ukrainian Strikes On Crimea.
• Will June Tax Payments Bump Debt Debate Into July?
• Panama Canal Hit By Shipping Restrictions As Water Crisis Set To Worsen.
• PAC To 'Draft' Tucker Carlson For President In 2024 Launches.
• Trump Town Hall Destroys Fake News Silo.
• Hedge Funds Most Bearish On Oil Since 2011 Just As Physical Demand Surges.
• 646 Hospitals At Risk Of Closure, Ranked By State.
• Narrow goes narrower.
• Lawmakers Want Answers On NIH Trans Kids Study That Led To Two Suicides.
• US stocks finished mixed amid the debt ceiling overhang - Newsquawk Asia-Pac Market Open.
• WTF Chart Of The Day: Bud Light Sales Dump For 6th Straight Week.
• Back-To-Office Trend Fades, Worsening Potential 'Doom Loop' For Big Downtowns Like Chicago's.
• Markets in trepidation mode ahead of Biden/McCarthy debt limit meet - Newsquawk US Market Wrap.
• The Middle Class Is Being Systematically Destroyed.
• Despite Hawkish FedSpeak & Deposit Outflows, Banks Lead Squeezy Stocks Higher; Hedges Hit Record High.

Wall Street Journal:

• Meta Fined $1.3 Billion Over Data Transfers to U.S.
• Activist Investor Calls on Yelp to Explore Sale.
• Slow Return to Work Pummels Office Stocks.
• How Did Hyundai Get So Cool?
• Biden Courts Another Mortgage Crisis. Housing officials double down on the policies that preceded the crash of 2008.
• Your Company Doesn’t Want You to Take Ozempic for Weight Loss. Here’s Why.
• Immigrants’ Share of the U.S. Labor Force Grows to a New High.
• Peaceful Sweden Has Become Europe’s Gun-Murder Capital.
• As Borrowing Costs Rise, Big Companies Get the Upper Hand.
• Bank Runs Trash Long-Held Assumption on Deposits.

CNBC.com:

• Biden, McCarthy cautiously optimistic about debt ceiling deal as Treasury reaffirms June 1 deadline.
• Jamie Dimon warns souring commercial real estate loans could threaten some banks.
• Paramount streaming service to merge with Showtime on June 27.
• Fed’s Kashkari says a June pause on rates wouldn’t indicate an end to hiking cycle.
• Walmart will offer pet telehealth in latest bid to compete with Amazon.

MarketWatch:

• Apple readies launch of $3,000 headset: Will it succeed where others have failed?
• Market’s favorite recession gauge has been flashing for longest streak since 1980.
• Investors rushing into stocks are wandering into a bull trap, warns Morgan Stanley Mike Wilson and others.
• A stock-market milestone: Apple is now worth more than the entire Russell 2000. 
• Home buyers will now be able to put down as little as 1% on their house purchase, Rocket Mortgage says.

 Newsmax:

• Former AG Whitaker: Congress Should Reform FBI

Fox News:

• Biden admin announces 'historic' plan to reduce western states' water supply
• Bud Light reportedly buying back unsold, expired beer from wholesalers

TheGatewayPundit.com:

• FDA Posts Tweet Warning about Dangers of Online Disinformation – Then Reality Comes Back Hard and Bites Them in the Horse’s Ass.
• Biden DOJ Formally Shut Down Clinton Foundation “Investigation” in August 2021 – FBI Destroyed All Evidence!
• JUST IN: AZ State Senator Borrelli Throws Down The Gauntlet, ORDERS County Supervisors to Comply With SCR1037 Which Bans Foreign Voting Machines in Arizona.
• Tucker Biographer Discloses Final Tucker Monologue That Did Not Air and What It Entailed – Says Dominion Demanded Tucker’s Ouster as Part of Fox News Settlement – Tucker Tweets in Response (VIDEO).
• Kevin McCarthy in Driver’s Seat as Debt Ceiling Negotiations With Biden Resume Monday; Polls Show Strong Majority of Americans Back GOP Position, Approval of McCarthy Rising.
• Report Confirms Dozens of Senators Are Being Issued Taxpayer-Funded Satellite Phones in Preparation for a “Disruptive Event”.
• “It Is Marxist” – They Want to Gather Biodata from All Humans and Share It – Dean Michele Bachmann Gives Update from World Health Assembly in Geneva (VIDEO).
• Stunning! Kari Lake Reveals Maricopa Had 99 Signature Validators Who Could Work from Home, Alone, Unsupervised, Behind Closed Doors – At Least 250,000 Ballots in Question (VIDEO).
• Croatian EU Parliamentarian Mislav Kolakusic Publicly Declares WHO a TERRORIST Organization (VIDEO).
• WATCH: High School Track Star Flashes Unhappy Gesture After Being Cheated Out of State Championship Opportunity by Arrogant Trans Competitor – Security Kicks Out People Peacefully Protesting Trans Athlete’s Inclusion.
• Princeton University Announces Pro-Abortion Musical ‘Comedy’ Playing on Campus This Month -‘To All the Babies I’ve Killed Before’.
• JUST IN: Fox News Caves to Marxist Democrat Ideology With New Woke Policies…Viewers Respond.

The Epoch Times:

• House Committee Recommends Foreign Agent Registry Amid Concerns of Chinese Interference in Canada
• Depletion of US Munitions Stockpile Due to Ukraine War Will Benefit China: Former Military Officials
• China Has ‘an Edge’ Over US Naval Power: Expert

Twitter: 

• @MichaelKantro - Consumers confidence has dropped sharply in recent days … consumers seems more worried about the debt ceiling than investors. (graph)
• @KatieDaviscourt - NETHERLANDS: The war on the Dutch farmers continues as the government proposes to limit 2 cows per acre. Pres. Biden’s climate czar John Kerry made recent remarks insisting that the US govt needs to start taking similar measures My report for @HumanEvents.
• @kylenabecker - Dominion CEO predicts bleak future for the voting machine company.
• @xxclusionary - College student gets a 0 on an assignment for using the words “biological women.” (video)
• @JennieSTaer - NEW:‘These Numbers Are Staggering’: Chinese Migrants Continue To Surge Across Southern Border. “Right now in China there’s extreme pessimism, especially among people in their 20s about the future of their country,”
  @GordonGChang tells me.
• @MikeZaccrdi - The World Trade Uncertainty Index has spiked to its highest level since the start of the pandemic. (graph)
• @zerohedge - S&P 500 % of stocks outperforming the index. (graph) 
• @catturd2 - They’re so worried they sent $350 million to Ukraine yesterday.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 961,352 Reports(+1,715 from prior week) Through May 12th, 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 125.75 -1.0 basis point. 

• China Sovereign CDS 67.25 -1.0 basis point.
  
• China Iron Ore Spot 101.60 USD/Metric Tonne -.53%.

• Bloomberg Emerging Markets Currency Index 47.2 -.02%.
• Bloomberg Global Risk-On/Risk Off Index 58.9 +1.2%. 
• Bloomberg US Financial Conditions Index .05 +3.0 basis points.
  
• Volatility Index(VIX) futures 19.6 -.62%.
• Euro Stoxx 50 futures +.18%.

• S&P 500 futures +.28%.

• NASDAQ 100 futures +.31%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and tech shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed.  The Portfolio is 50% net long heading into the day.