Stocks Reversing Slightly Higher into Afternoon on Earnings Outlook Optimism, China Stimulus Hopes, Technical Buying, Commodity/Pharma Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 14.0 +.1%
• DJIA Intraday % Swing .52 -24.8%
  
• Bloomberg Global Risk On/Risk Off Index 73.3 +1.8%

• Euro/Yen Carry Return Index 175.0 +.24%

• Emerging Markets Currency Volatility(VXY) 6.7 -.6%

• CBOE S&P 500 Implied Correlation Index 16.3 +.4% 

• ISE Sentiment Index 124.0 -18.0
  

• Total Put/Call .96 +6.7%

• NYSE Arms .90 -15.1% 
• NYSE Non-Block Money Flow -$123.2M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 52.7 +.04%
  

• US Energy High-Yield OAS 303.88 -.53%
• Bloomberg TRACE # Distressed Bonds Traded 294 -12
  

• European Financial Sector CDS Index 67.3 -1.5% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 211.3 -.3%
  

• Italian/German 10Y Yld Spread 148.0 basis points -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 99.9 -1.7%
  

• Emerging Market CDS Index 176.14 unch.
• Israel Sovereign CDS 115.4 +.8%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.6 -.12%

• 2-Year SOFR Swap Spread -13.5 basis points -1.75 basis points
  

• Treasury Repo 3M T-Bill Spread 7.5 basis points +.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -4.75 +.5 basis point
  
• MBS  5/10 Treasury Spread 159.0 +5.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 833.0 -9.0 basis points
  
• Avg. Auto ABS OAS 66.0 +1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 40.4 -.06%
• 3-Month T-Bill Yield 5.37% unch.
  

• China Iron Ore Spot 130.8 USD/Metric Tonne -.4%
• Dutch TTF Nat Gas(European benchmark) 24.8 euros/megawatt-hour -.6%

• Citi US Economic Surprise Index 40.4 -5.4 points

• Citi Eurozone Economic Surprise Index 34.7 +.1

• Citi Emerging Markets Economic Surprise Index -2.1 +.3 point
• S&P 500 Current Quarter EPS Growth Rate YoY(396 of 500 reporting) +5.0% +.1 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 245.81 -.03:  Growth Rate +11.0% -.1 percentage point, P/E 20.5 +.1
  
• S&P 500 Current Year Estimated Profit Margin 11.20% -3.0 basis points
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +44.2% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 306.94 +.20: Growth Rate +43.9% +.1 percentage point, P/E 32.2 +.2
  
• Bloomberg US Financial Conditions Index 1.08 unch.
  
• Bloomberg Euro-Zone Financial Conditions Index .89 +4.0 basis points
  
• US Yield Curve -36.0 basis points (2s/10s) -3.25 basis points
  
• US Atlanta Fed 1Q GDPNow Forecast +2.9% -.5 percentage point
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 54.3% -1.9 percentage points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.74% unch.: CPI YoY +3.06% unch.
  
• 10-Year TIPS Spread 2.33 +3.0 basis points
  
• Highest target rate probability for May 1st FOMC meeting: 66.2%(+4.6 percentage points) chance of 5.25%-5.5%. Highest target rate probability for June 12th meeting: 52.2%(-1.5 percentage points) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +73 open in Japan 
• China A50 Futures: Indicating +142 open in China

• DAX Futures: Indicating +63 open in Germany

Portfolio:

• Slightly Lower:  On losses in my tech/industrial/transport sector longs

• Disclosed Trades: None
  

• Market Exposure: 100% Net Long
  

Tuesday's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open:

• (AWI)/1.04
• (CHH)/1.35
• (FLR)/.57
• (HD)/2.77
• (LGIH)/2.54
• (MDT)/1.26
• (TPH)/1.18
• (VC)/2.09
• (WMT)/1.64
  

After the Close: 

• (ANDE)/.99
• (CZR)/-.04
• (CHK)/.71
• (CYH)/.05
• (CWK)/.40
• (FANG)/4.70
• (FLS)/.60
• (LZB)/.72
• (PANW)/1.30
• (PAAS)/.09
• (PSA)/4.14
• (RNG)/.82
• (SEDG)/-1.34
• (TDOC)/-.22
• (TOL)/1.78
• (BCC)/2.58
• (CAMT)/.53
• (DDS)/12.34
  

Economic Releases

8:30 am EST

• Philly Fed Non-Manufacturing Activity Index for Feb.
  

10:00 am EST

• The Leading Index for Jan. is estimated to fall -.3% versus a -.1% decline in Dec.  
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Citi Industrial Tech/Mobility Conference, Consumer Analyst Group of NY Conference, (HXL) investor day and the BofA Financial Conference could also impact global on Tuesday.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -.3% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 9.2 -2.1
  
• 3 Sectors Declining, 8 Sectors Rising
• 41.9% of Issues Advancing, 55.3% Declining 
• TRIN/Arms .91 -14.2%
  
• Non-Block Money Flow -$104.8M
  
• 169 New 52-Week Highs, 17 New Lows
• 62.1% (-1.2%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 67.0 +3.0
  

Other:

• Bloomberg Global Risk-On/Risk-Off Index 73.5 +2.1%
• Bloomberg Cyclicals/Defensives Pair Index 139.3 -.09%
  
• Russell 1000: Growth/Value 19,351.5 -.2%
• CNN Fear & Greed Index 77.0 (Extreme Greed) +4.0
• 1-Day Vix 10.5 -19.0%
  
• Vix 13.9 -.7%
  
• Total Put/Call .95 +5.6%

Friday Watch

Night Trading 

• Asian equity indices are +.25% to +1.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 100.75 -.75 basis point.

• China Sovereign CDS 64.5 -.5 basis point.
  
• China Iron Ore Spot 129.5 USD/Metric Tonne +.04%.

• Bloomberg Emerging Markets Currency Index 40.3 -.11%.
• Bloomberg Global Risk-On/Risk Off Index 72.7 +1.0%.
• Volatility Index(VIX) futures 15.1 +.21%.
• Euro Stoxx 50 futures +.36%

• S&P 500 futures -.09%.

• NASDAQ 100 futures +.09%.  

Morning Preview Links

BOTTOM LINE: Asian indices are modestly higher, boosted by industrial and technology shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.

Stocks Rising into Final Hour on US Economic Data, Stable Long-Term Rates, Earnings Outlook Optimism, Financial/Commodity Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Gaining
  

• Volume: Above Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 14.5 +.5%
• DJIA Intraday % Swing .70 +17.5%
  
• Bloomberg Global Risk On/Risk Off Index 71.9 +22.0%

• Euro/Yen Carry Return Index 174.5 -.02%

• Emerging Markets Currency Volatility(VXY) 6.7 -2.2%

• CBOE S&P 500 Implied Correlation Index 16.7 -1.8% 

• ISE Sentiment Index 147.0 -5.0
  

• Total Put/Call .89 -5.3%

• NYSE Arms 1.14 +18.8% 
• NYSE Non-Block Money Flow +$257.3M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 52.7 -2.8%
  

• US Energy High-Yield OAS 307.7 -.91%
• Bloomberg TRACE # Distressed Bonds Traded 306 +6
  

• European Financial Sector CDS Index 67.3 -1.4% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 211.83 -.02%
  

• Italian/German 10Y Yld Spread 150.0 basis points -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 101.75 -.8%
  

• Emerging Market CDS Index 176.40 -2.0%
• Israel Sovereign CDS 114.4 -1.7%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.6 +.24%

• 2-Year SOFR Swap Spread -11.75 basis points -.75 basis point
  

• Treasury Repo 3M T-Bill Spread 7.25 basis points unch.
  

• 3-Month EUR/USD Cross-Currency Basis Swap -5.25 +.75 basis point
  
• MBS  5/10 Treasury Spread 154.0 -5.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 842.0 -1.0 basis point
  
• Avg. Auto ABS OAS 65.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 40.4 +.05%
• 3-Month T-Bill Yield 5.37% unch.
  

• China Iron Ore Spot 129.2 USD/Metric Tonne -.19%
• Dutch TTF Nat Gas(European benchmark) 25.0 euros/megawatt-hour +.44%

• Citi US Economic Surprise Index 45.8 -1.4 points

• Citi Eurozone Economic Surprise Index 34.6 unch.

• Citi Emerging Markets Economic Surprise Index -2.4 -2.1 points
• S&P 500 Current Quarter EPS Growth Rate YoY(388 of 500 reporting) +4.9% -.8 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 245.84 +.14:  Growth Rate +11.1% +.1 percentage point, P/E 20.4 +.4
  
• S&P 500 Current Year Estimated Profit Margin 11.23% -1.0 basis point
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +44.2% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 306.74 +.35: Growth Rate +43.8% +.2 percentage point, P/E 32.0 +.3
  
• Bloomberg US Financial Conditions Index 1.08 +3.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index .85 -4.0 basis points
  
• US Yield Curve -32.75 basis points (2s/10s) -2.0 basis points
  
• US Atlanta Fed 1Q GDPNow Forecast +3.4% unch.
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 56.2% +1.1 percentage points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.74% unch.: CPI YoY +3.06% unch.
  
• 10-Year TIPS Spread 2.30 unch.
  
• Highest target rate probability for May 1st FOMC meeting: 61.4%(-.3 percentage point) chance of 5.25%-5.5%. Highest target rate probability for June 12th meeting: 53.7%(-.1 percentage points) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +440 open in Japan 
• China A50 Futures: Indicating -23 open in China

• DAX Futures: Indicating +160 open in Germany

Portfolio:

• Higher:  On gains in my tech/consumer discretionary/industrial/biotech/transport sector longs

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my emerging market shorts
  

• Market Exposure: Moved to 100% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Growth +.1%
  

Sector Underperformers:

• 1) Software -.5% 2) Cyber Security -.1% 3) Gambling +.2

Stocks Falling on Unusual Volume: 

• CART, VGR, STVN, NSIT, ROL, MSTR, ARCH, DE, HCC, UPWK, UTI, ITGR,SPTN, ALNY, RILY, IRDM, MTW, WST, PENN, YETI, TWLO, UDMY, NUS and FSLY
  

Stocks With Unusual Put Option Activity:

• 1) SOUN 2) HUN 3) FSLY 4) PLCE 5) XLE
  

Stocks With Most Negative News Mentions:

• 1) FSLY 2) PENN 3) YETI 4) HLF 5) TWLO
  

Charts:

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