Wednesday Watch

Night Trading 

• Asian equity indices are -.25% to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 73.0 -.5 basis point.

• China Sovereign CDS 49.25 -1.25 basis points.
  
• China Iron Ore Spot 101.3 USD/Metric Tonne +.5%

• Bloomberg Emerging Markets Currency Index 37.4 -.04%.
• Bloomberg Global Risk-On/Risk Off Index 71.3 +.5%.
• Volatility Index(VIX) futures 22.4 -1.0%.
• Euro Stoxx 50 futures +.83%

• S&P 500 futures +.22%.

• NASDAQ 100 futures +.29%.  

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.

Stocks Slightly Lower into Final Hour on Higher Long-Term Rates, Growing Tariff Uncertainties, Earnings Outlook Jitters, Road & Rail/Consumer Discretionary Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Mixed

• Volume: Heavy

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 28.4 +1.8%
• S&P 500 Intraday % Swing 1.4 +9.4%.
  
• Bloomberg Global Risk On/Risk Off Index 71.0 +.9%

• Euro/Yen Carry Return Index 180.4 +1.0%

• Emerging Markets Currency Volatility(VXY) 8.21 unch.

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

• ISE Sentiment Index 124.0 +6.0 points
  

• Total Put/Call .93 +1.1%

• NYSE Arms .74 -17.7%
• NYSE Non-Block Money Flow -$170.2M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 57.1 +2.8%
  

• US Energy High-Yield OAS 368.6 +1.7%
• Bloomberg TRACE # Distressed Bonds Traded 227.0 +27.0

• European Financial Sector CDS Index 60.9 +1.9%
  
• Deutsche Bank Subordinated 5Y Credit Default Swap 136.3 +1.5%
  

• Italian/German 10Y Yld Spread 112.0 basis points -1.0 basis point

• Asia Ex-Japan Investment Grade CDS Index 72.3 +2.2%
  

• Emerging Market CDS Index 162.8 +.5%
• Israel Sovereign CDS 81.5 +.4%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.24 -.02%

• 2-Year SOFR Swap Spread -17.0 basis points unch.

• 3M T-Bill Treasury Repo Spread -3.75 basis point -.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap 0.0 unch.
• MBS  5/10 Treasury Spread 138.0 +2.0 basis points
• Bloomberg CMBS Investment Grade Bbb Average OAS 588.0 +2.0 basis points
• Avg. Auto ABS OAS 49.0 +2.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 37.44 +.37%
• 3-Month T-Bill Yield 4.28% -1.0 basis point

• China Iron Ore Spot 101.8 USD/Metric Tonne +1.0%
• Dutch TTF Nat Gas(European benchmark) 42.7 euros/megawatt-hour +3.6%

• Citi US Economic Surprise Index -4.2 +2.7 points

• Citi Eurozone Economic Surprise Index 25.4 -.5 point

• Citi Emerging Markets Economic Surprise Index 1.6 -2.3 points
• S&P 500 Current Quarter EPS Growth Rate YoY(495 of 500 reporting) +13.5% unch.
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 277.10 +.04:  Growth Rate +12.5% unch., P/E 20.1 -.3
• S&P 500 Current Year Estimated Profit Margin 13.64% -1.0 basis point
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(10 of 10 reporting) +32.1% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 410.56 +.35: Growth Rate +18.7% +.1 percentage point, P/E 28.6 +.5
• Bloomberg US Financial Conditions Index -.01 -28.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index 1.07 -10.0 basis points
• US Yield Curve 34.5 basis points (2s/10s) +3.0 basis points
• US Atlanta Fed GDPNow Q1 Forecast -2.41% unch.
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 38.3% +2.9 percentage points

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.62% unch.: CPI YoY +2.83% unch.
• 10-Year TIPS Spread 2.32 +1.0 basis point
• Highest target rate probability for May 7th FOMC meeting: 59.8% (+9.6 percentage points) chance of 4.25%-4.5%. Highest target rate probability for June 18th meeting: 55.4%(+5.7 percentage points) chance of 4.0%-4.25%. (current target rate is 4.25-4.5%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -153 open in Japan 
• China A50 Futures: Indicating -20 open in China

• DAX Futures: Indicating +224 open in Germany

Portfolio:

• Higher: On gains in my industrial/financial/tech sector longs
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some emerging market shorts
• Market Exposure: Moved to 75% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Value -1.7%
  

Sector Underperformers:

• 1) Road & Rail -3.4% 2) Retail -3.1% 3) Telecom -2.4%

Stocks Falling on Unusual Volume: 

• INFY, KLIC, FRPT, CCL, ALK, HLT, DEA, APLE, HTGC, RHP, PEB, JBGS, SD, MAIN, ARR, HGV, RTO, HPK, UCTT, FSK, NAMS, STLA, MAR, BCSF, DIS, MFIC, TME, GAP, UNFI, MLYS, VIK, OSCR, AAL, DKS, TECH, VZ, DAL, PCOR, GMAB, VKTX, EXPE, NX, SIRI, CAR, AVO, TER and ASAN

Stocks With Unusual Put Option Activity:

• 1) TER 2) AMKR 3) FBTC 4) ARCC 5) ASAN

Stocks With Most Negative News Mentions:

• 1) ASAN 2) KSS 3) VZ 4) DAL 5) EXPE

Sector ETFs With Most Negative Money Flow:

• 1) XLI 2) XLP 3) FTEC 4) XLE 5) IYW

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth -.6%

Sector Outperformers:

• 1) Gold & Silver +2.2% 2) Steel +.6% 3) Electric Vehicles +.6%

Stocks Rising on Unusual Volume:

• HSAI, METC, BVS, PAY, ZK, XPEV, CYD, CENX, ROOT, LUV, RDDT, KFY, ESTC, DRD, MTN, TXNM, CRWD, LITE, APP, MDB, SATS, BZ, TWST, NFLX, BEKE and SPOT

Stocks With Unusual Call Option Activity:

• 1) MCHI 2) HSAI 3) HTZ 4) SMG 5) PRMW

Stocks With Most Positive News Mentions:

• 1) BVS 2) XPEV 3) HSAI 4) HLLY 5) GH

Sector ETFs With Most Positive Money Flow:

• 1) FDN 2) KRE 3) XLV 4) XBI 5) XRT

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:

• (ABM)/.78
• (IRBT)/-1.73
  

After the Close: 

• (ADBE)/4.97
• (AEO)/.50
• (BRY)/.15
• (CCI)/1.80
• (S)/.01
• (PATH)/.20
• (WSM)/2.92
  

Economic Releases

8:30 am EST

• The CPI MoM for Feb. is estimated to rise +.3% versus a +.5% gain in Jan.
• The CPI Ex Food & Energy MoM for Feb. is estimated to rise +.3% versus a +.4% gain in Jan.
• Real Avg. Weekly Earnings YoY for Feb.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +2,238,000 barrels versus a +3,614,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -1,454,170 barrels versus a -1,433,000 barrel decline the prior week. Distillate inventories are estimated to decline by -66,000 barrels versus a -1,318,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.6% versus a -.6% decline prior.
  

2:00 pm EST

• The Federal Budget Deficit for Feb. is estimated at -$308.0B versus -$128.6B in Jan.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The OPEC monthly report, Cleveland CPI MoM for Feb., Thomson Reuters IPSOS PCSI for March, weekly MBA Mortgage Applications report, UBS Consumer/Retail Conference, Barclays Healthcare Conference, JPMorgan Industrials Conference, Cantor Fitzgerald Tech Conference, (SBUX) annual meeting, (PII) capital markets day, (NET) investor day and the Wolfe FinTech Forum 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 +38.0% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 13.7 -3.5
• 11 Sectors Declining, 0 Sectors Rising
• 33.6% of Issues Advancing, 64.2% Declining 
• TRIN/Arms .95 +4.4%
  
• Non-Block Money Flow -$119.0M
  
• 10 New 52-Week Highs, 93 New Lows
• 36.5% (+1.9%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 32.5 -4.7

Other:

• Bloomberg Global Risk-On/Risk-Off Index 69.7 +.3%
• Bloomberg Cyclicals/Defensives Index 227.8 -.7%
  
• Russell 1000: Growth/Value 19,557.6 +.5%
• CNN Fear & Greed Index 14.0 (EXTREME FEAR) -1.0
• 1-Day Vix 25.1 -12.4%
  
• Vix 29.3 +5.2%
  
• Total Put/Call .74 -19.6%