Stocks Sharply Lower into Final Hour on Growing Tariff Uncertainties, Global Growth Worries, Earnings Outlook Jitters, Tech/Gambling Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining

• Volume: Above Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 24.7 +12.7%
• S&P 500 Intraday % Swing 1.3 +25.3%.
  
• Bloomberg Global Risk On/Risk Off Index 74.1 +1.9%

• Euro/Yen Carry Return Index 178.3 -.8%

• Emerging Markets Currency Volatility(VXY) 8.2 +.1%

• CBOE S&P 500 Implied Correlation Index 25.5 +17.6% 

• ISE Sentiment Index 138.0 -2.0 points
  

• Total Put/Call .91 +23.0%

• NYSE Arms .96 +43.3%
• NYSE Non-Block Money Flow -$547.5M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 52.0 +4.5%
  

• US Energy High-Yield OAS 352.0 +3.6%
• Bloomberg TRACE # Distressed Bonds Traded 198.0 unch.

• European Financial Sector CDS Index 57.2 +.3%
  
• Deutsche Bank Subordinated 5Y Credit Default Swap 131.9 -1.6%
  

• Italian/German 10Y Yld Spread 113.0 basis points +2.0 basis points

• Asia Ex-Japan Investment Grade CDS Index 68.6 -.6%
  

• Emerging Market CDS Index 159.1 +2.3%
• Israel Sovereign CDS 83.1 +1.6%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.23 +.23%

• 2-Year SOFR Swap Spread -17.0 basis points -.75 basis point

• 3M T-Bill Treasury Repo Spread -3.0 basis point -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap 1.5 +.25 basis point
• MBS  5/10 Treasury Spread 136.0 +1.0 basis point
• Bloomberg CMBS Investment Grade Bbb Average OAS 586.0 +1.0 basis point
• Avg. Auto ABS OAS 47.0 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 37.5 +.1%
• 3-Month T-Bill Yield 4.30% unch.

• China Iron Ore Spot 102.2 USD/Metric Tonne -.2%
• Dutch TTF Nat Gas(European benchmark) 38.2 euros/megawatt-hour -7.9%

• Citi US Economic Surprise Index -6.2 +3.6 points

• Citi Eurozone Economic Surprise Index 28.7 -1.1 points

• Citi Emerging Markets Economic Surprise Index 4.0 +.7 point
• S&P 500 Current Quarter EPS Growth Rate YoY(492 of 500 reporting) +13.2% +n/a
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 276.64 +n/a:  Growth Rate +12.5% +n/a, P/E 20.8 -n/a
• S&P 500 Current Year Estimated Profit Margin 13.65% unch.
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(9 of 10 reporting) +31.5% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 408.28 +n/a: Growth Rate +18.8% +n/a, P/E 30.0 -n/a
• Bloomberg US Financial Conditions Index .39 +10.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index 1.44 +20.0 basis points
• US Yield Curve 31.25 basis points (2s/10s) +4.25 basis points
• US Atlanta Fed GDPNow Q1 Forecast -2.41% -13.0 basis points
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 34.4% unch.

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.62% unch.: CPI YoY +2.83% unch.
• 10-Year TIPS Spread 2.34 unch.
• Highest target rate probability for May 7th FOMC meeting: 50.0% (-10.0 percentage points) chance of 4.25%-4.5%. Highest target rate probability for June 18th meeting: 48.7%(-3.4 percentage points) chance of 4.0%-4.25%. (current target rate is 4.25-4.5%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -675 open in Japan 
• China A50 Futures: Indicating unch. open in China

• DAX Futures: Indicating -162 open in Germany

Portfolio:

• Lower: On losses in my industrial/utility/financial/consumer discretionary/tech sector longs
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges then added more back
• Market Exposure: Moved to 25% Net Long
  

Bear Radar

Style Underperformer:

• Mid-Cap Growth -2.9%
  

Sector Underperformers:

• 1) Semis -4.2% 2) Internet -3.4% 3) Gambling -3.3%

Stocks Falling on Unusual Volume: 

• IBKR, SE, BIP, HSBC, TPB, SGI, BN, ASTS, PSO, LAZ, COF, CG, BASE, LB, BAM, EVR, FA, GEV, VSCO, BBIO, NFLX, CCRN, TTC, SOBO, WRD, ZYME, GMS, CLS, NBIS, GTLS, RTO, CRDO, DSGX, KGS, APP, HIMS, GRND, LUNR, MRVL, BKSY, MDB and GRRR

Stocks With Unusual Put Option Activity:

• 1) CMCSA 2) MDB 3) NE 4) NVT 5) BEKE

Stocks With Most Negative News Mentions:

• 1) GRND 2) MDB 3) CORZ 4) MRVL 5) APP

Sector ETFs With Most Negative Money Flow:

• 1) XLK 2) XLE 3) XBI 4) XLF 5) XLU

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value -1.2%

Sector Outperformers:

• 1) Homebuilders +1.7% 2) Electric Vehicles +1.2% 3) Shipping +.9%

Stocks Rising on Unusual Volume:

• MYE, TREE, WLY, BJ, TRMD, BURL, VEEV, CAPR, REVG, STVN, CBRL, VKTX, FLGT, DAKT, ALGM, IBRTA, SA, ZS, ZK, ETWX, PII, XPEV, SG, PARR, BOOT, TGTX, PRG, THO, TIGO, SPRY, MAN, LGIH, ELVN, MKTX, CNH, ECPG, MKTX, BBY, SWTX and PKX

Stocks With Unusual Call Option Activity:

• 1) REAL 2) EWG 3) DB 4) PRMW 5) VFC

Stocks With Most Positive News Mentions:

• 1) PSTV 2) IHRT 3) CRMT 4) XERS 5) BJ

Sector ETFs With Most Positive Money Flow:

• 1) XLV 2) XLY 3) XLB 4) VDC 5) EUFN

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:

• (GCO)/3.31

After the Close: 

• (JKS)/-3.01

Economic Releases

8:30 am EST

• The Change in Non-Farm Payrolls for Feb. is estimated to rise to 160K versus 143K in Jan.
• Average Hourly Earnings MoM for Feb. is estimated to rise +.3% versus a +.5% gain in Jan.
• The Unemployment Rate for Feb. is estimated to remain at 4.0% versus 4.0% in Jan.
  

3:00 pm EST

• Consumer Credit for Jan. is estimated to fall to $15.0B versus $40.85B in Dec.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The President Trump's speech, Fed's Powell speaking, Fed's Kugler speaking, Fed's Williams speaking, Fed's Bowman speaking, Fed's Monetary Policy report, weekly US Baker Hughes rig count and the CFTC weekly speculative net positioning reports could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +12.4% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 12.0 -.1%
• 11 Sectors Declining, 0 Sectors Rising
• 22.2% of Issues Advancing, 76.1% Declining 
• TRIN/Arms .90 +34.3%
  
• Non-Block Money Flow -$476.7M
  
• 25 New 52-Week Highs, 55 New Lows
• 41.7% (-2.8%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 41.3 -2.7

Other:

• Bloomberg Global Risk-On/Risk-Off Index 74.7 +2.8%
• Bloomberg Cyclicals/Defensives Index 235.5 +.2%
  
• Russell 1000: Growth/Value 20,180.0 -.9%
• CNN Fear & Greed Index 19.0 (EXTREME FEAR) -2.0
• 1-Day Vix 25.3 +14.2%
  
• Vix 23.8 +8.7%
  
• Total Put/Call .67 +16.2%

Thursday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 67.75 -1.25 basis points.

• China Sovereign CDS 46.5 -.25 basis point.
  
• China Iron Ore Spot 100.3 USD/Metric Tonne +.5%

• Bloomberg Emerging Markets Currency Index 37.4 unch.
• Bloomberg Global Risk-On/Risk Off Index 73.9 +1.7%.
• Volatility Index(VIX) futures 21.0 +.8%.
• Euro Stoxx 50 futures +.55%

• S&P 500 futures -.14%.

• NASDAQ 100 futures -.28%.  

Morning Preview Links

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