Stocks Surging into Final Hour on US-Global Trade Deals, Rising US Economic Acceleration Odds, Earnings Outlook Optimism, Tech/Transport Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising

• Volume: Above Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 18.0 -2.0%
• S&P 500 Intraday % Swing .94 +26.9%
• Bloomberg Global Risk On/Risk Off Index 70.4 -1.1% 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.55 +.5%

• Euro/Yen Carry Return Index 185.4 +.27%

• Emerging Markets Currency Volatility(VXY) 8.2 -4.8%

• CBOE S&P 500 Implied Correlation Index 20.6 -13.0% 

• ISE Sentiment Index 159.0 +27.0

• Total Put/Call .72 -15.3%

• NYSE Arms 1.0 +31.6%
• NYSE Non-Block Money Flow +$162.8M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 54.1 -2.3%
  

• US Energy High-Yield OAS 400.7 -2.3%
• Bloomberg TRACE # Distressed Bonds Traded 248.0 -8.0

• European Financial Sector CDS Index 60.0 -3.7%
  
• Deutsche Bank Subordinated 5Y Credit Default Swap 144.9 -3.2%
  

• Italian/German 10Y Yld Spread 102.0 basis points -3.0 basis points

• Asia Ex-Japan Investment Grade CDS Index 80.7 -.1%
  

• Emerging Market CDS Index 168.0 -2.7%
• Israel Sovereign CDS 101.6 -1.4%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 23.94 +.16%

• 2-Year SOFR Swap Spread -21.25 basis points +.25 basis point

• 3M T-Bill Treasury Repo Spread 10.25 basis point -.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -1.5 unch.
• MBS  5/10 Treasury Spread 150.0 +2.0 basis points
• Bloomberg CMBS Investment Grade Bbb Average OAS 634.0 -2.0 basis points
• Avg. Auto ABS OAS 70.0 -1.0 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 36.95 +.3% 
• US 10-Year T-Note Yield 4.50% +3.0 basis points
• 3-Month T-Bill Yield 4.37% -2.0 basis points

• China Iron Ore Spot 100.5 USD/Metric Tonne +1.0%
• Dutch TTF Nat Gas(European benchmark) 35.74 euros/megawatt-hour +1.0%

• Citi US Economic Surprise Index -8.3 -3.0 points

• Citi Eurozone Economic Surprise Index 15.8 +5.3 points

• Citi Emerging Markets Economic Surprise Index 26.9 +.1 point
• S&P 500 Current Quarter EPS Growth Rate YoY(455 of 500 reporting) +12.2% -.1 percentage point
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 276.50 +.16:  Growth Rate +12.1% unch., P/E 21.3 +.3
• S&P 500 Current Year Estimated Profit Margin 13.34% +1.0 basis point
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +29.1% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 425.13 +.35: Growth Rate +22.9% +.1 percentage point, P/E 31.9 +1.1
• Bloomberg US Financial Conditions Index .35 +27.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index 1.30 +11.0 basis points
• Bloomberg Global Trade Policy Uncertainty Index 8.6 -.3 point
• US Yield Curve 48.25 basis points (2s/10s) +2.75 basis points
• US Atlanta Fed GDPNow Q2 Forecast +2.3% unch.
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 37.6% +1.4 percentage points

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.60% -1.0 basis point: CPI YoY +2.40% +6.0 basis points
• 1-Year TIPS Spread 2.80 -6.0 basis points
  
• 10-Year TIPS Spread 2.34 +3.0 basis points
• Highest target rate probability for July 30th FOMC meeting: 63.3% (+1.9 percentage points) chance of 4.25%-4.5%. Highest target rate probability for Sept. 17th meeting: 51.2%(-1.7 percentage points) chance of 4.0%-4.25%. (current target rate is 4.25-4.5%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +300 open in Japan 
• China A50 Futures: Indicating +22 open in China

• DAX Futures: Indicating +65 open in Germany

Portfolio:

• Higher: On gains in my consumer discretionary/utility/technology/industrial/financial sector longs
• Disclosed Trades: None
• Market Exposure: 100% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Value +.1%
  

Sector Underperformers:

• 1) Healthcare Providers -4.9% 2) Pharma -1.7% 3) Biotech -1.3%

Stocks Falling on Unusual Volume: 

• CAE, CAMT, IIIV, ARGX, LEGN, BCO, LOAR, HMC, TARS, SPG, POWI, ENPH, HUM, BBIO, BCAX, SATS, UTI, RPD, ELV, IGT, FLOC, PONY, ODD, RGTI, PSFE, UNH, XENE, HALO and NCTL

Stocks With Unusual Put Option Activity:

• 1)  2) EH 3) INDA 4) PONY 5) ZI

Stocks With Most Negative News Mentions:

• 1) HTZ 2) HALO 3) DDD 4) HALO 5) UNH

Sector ETFs With Most Negative Money Flow:

• 1) KBWB 2) XOP 3) QTEC 4) IYW 5) OIH

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +2.5%

Sector Outperformers:

• 1) Alt Energy +4.0% 2) Semis +3.3% 3) Airlines +2.7%

Stocks Rising on Unusual Volume:

• LSEA, LIF, LUNR, SMR, OCIN, FSLR, ACHR, HNRG, GRAL, RUN, SMCI, HIMS, ONON, GCT, OKLO, TEM, PLTR, CLS, HOOD, PERI, ARWR, NXT, BZH, APP, DQ, SE, ALAB, QXO, SEZL, VG, CRDO, RUM, VST, NNE, AAOI, COOP, MNDY, NTNX, ACHC, RDNT, RBRK, SOC, AVPT, NVDA, GEV, PRIM, NBIS, WGS, CVNA, RYET, FTK, NET, PSX, VTLE, RKT, AES, LASR, BLDR, ZIM, CLMT, JD, DXYZ, VIV, HUT, FOXA, BTSG, RDW, WDS, CTRI, AMRC, ELF, KLAC, HSAI, OEC, TITN, SN, RBLX, AAL, NRG, MU, TOST, XYZ, AS, AMD, VCTR, SHOP, QNST, AEVA, GLNG, PSIX, NEE, PAM, TME, MATX, HRTG, ONTO, CAT, NVT, SMLR, PAR, MPC, FROG, BA, XP, WNS, XP, ECG, LQDT, IMXI, GLPG, OSCR, ROK, GLBE, TEN, GDEN, XYF, AFRM and GLPG

Stocks With Unusual Call Option Activity:

• 1) PSX 2) NEXT 3) IGT 4) MVST 5) CONL

Stocks With Most Positive News Mentions:

• 1) ONON 2) COIN 3) HIMS 4) RUN 5) OPRX

Sector ETFs With Most Positive Money Flow:

• 1) SOXX 2) IYT 3) XRT 4) SMH 5) XLF

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:

• (TSEM)/.38

After the Close: 

• (BOOT)/1.24
• (CSCO)/.92
• (JACK)/1.11
• (LGF/A)/.42
• (STE)/2.60
• (TGI)/.35
  

Economic Releases

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,776,200 barrels versus a -2,032,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -775,200 barrels versus a +188,000 barrel gain the prior week. Distillate inventories are estimated to rise by +23,400 barrels versus a -1,107,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.42% versus a +.4% gain prior.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Daly speaking, Fed's Jefferson speaking, weekly MBA Mortgage Applications report, (HES) annual meeting, (HOG) annual meeting, (RHI) annual meeting, (FSLR) annual meeting, (LUV) annual meeting, (AMD) annual meeting, (CSGS) annual meeting, (AAP) annual meeting, (GEV) annual meeting, (STT) annual meeting, (CAR) annual meeting, (OC) investor day, BMO Farm to Market Conference, BofA Industrials/Trnaports/Airlines Key Leaders Conference and the JPMorgan Tech/Media/Communications Conference 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 +18.1% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 14.9 +.5
• 3 Sectors Declining, 8 Sectors Rising
• 65.5% of Issues Advancing, 32.1% Declining 
• TRIN/Arms .94 +23.7%
  
• Non-Block Money Flow +$252.0M
  
• 66 New 52-Week Highs, 25 New Lows
• 41.9% (+15.3%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 64.9 +2.2

Other:

• Bloomberg Global Risk-On/Risk-Off Index 70.0 -1.6%
• Bloomberg Cyclicals/Defensives Index 246.1 +1.8%
  
• Russell 1000: Growth/Value 20,956.8 +1.4%
• CNN Fear & Greed Index 69.0 (GREED) +3.0
• 1-Day Vix 12.3 -34.5%
  
• Vix 17.9 -2.6%
  
• Total Put/Call .72 -15.3%

Tuesday Watch

Around X:

• @ElonMusk

• For most of human existence, we had only 100 watts per person - enough food to fuel metabolism. Fire and animal labor expanded our power supply to a few hundred watts per person. Today, the average American has ~10,000 W at their disposal - a 100x increase. A 100x increase in power may seem just as unimaginable to us today as it would have to our ancestors, but in retrospect we can hardly imagine how people ever lived without the abundance we enjoy today. Our descendants will feel a similar sense of bewilderment as they look back on us. (graph)

• @ZeroHedge

• 1,000 Troops Who Identify As Transgender Being Discharged: Pentagon.
• Trump Seeking $1 Trillion In Saudi Investment, Air Force One En Route.
• Chief Justice John Roberts said that criticism of members of the US Supreme Court shouldn’t turn personal. Unless photos have been misplaced...
• Texas Gov. Abbott Halts Development Of Controversial 'Epic City' For Muslims.
• *US PROBES HARVARD'S HIRING AND PROMOTION PRACTICES: WSJ *US PROBES IF HARVARD PASSED OVER WHITES, ASIANS, MEN: WSJ
• Coincidence? Top Two MMR-Vaccinated States Lead In 2025 Measles Cases.
• *COINBASE GLOBAL TO REPLACE DISCOVER FINANCIAL IN S&P 500.
• Goldman Sachs reduces 12-month US recession odds to 35%. There it is.
• *HASSETT: REBOOTING THE RELATIONSHIP WITH CHINA. *HASSETT: GREER, BESSENT WILL CONTINUE TALKS WITH CHINA. *HASSETT: MARKETS COULD EXPECT 'NORMALIZATION' OF THINGS. 
• US Cattle Futures Hit New Highs After Mexican Beef Imports Halted To Stop "Pest Invasion". (graph)
• Trump Rallies GOP To Back 'Big, Beautiful Bill' As House Releases 389-Page Text.
  
• Trump "Total Reset" Wrecks Recession Narrative, Sends Nasdaq Into Bull Market.

• @MarioNawful

• GOOGLE PREVIEWS AI DEV AGENT AHEAD OF HIGH-STAKES I/O CONFERENCE. Google is privately demoing a new AI agent built to assist software engineers from task handling to code documentation, Early access has gone to select developers ahead of Google I/O—short for “Innovation in the Open”—its annual developer conference kicking off May 20 in Mountain View. The company may also debut Gemini’s voice-powered integration with Android XR glasses. 
• CLASHES ERUPT OUTSIDE ICE’S DELANEY HALL AS PROTESTERS BLOCK DETENTION CENTER GATES. Protesters faced off with security forces at Newark’s Delaney Hall on Saturday as arrests were made during a tense standoff outside the newly reopened ICE detention site. Demonstrators were pushed back from the main gates to allow vehicles through, while another group held ground nearby. (video)
• TRUMP: THE SUPREME COURT MUST LET US DEPORT CRIMINALS OR WE LOSE OUR COUNTRY. “If we’re not allowed to send the murderers and other criminals of every type, size, and shape, IMMEDIATELY out of our Country, we aren’t going to have a Country anymore. Radical Left Judges and politicians don’t care, but 90% of the people in the U.S.A. do. Hopefully, the Supreme Court will agree with this and, SAVE AMERICA!” 
• TRUMP: JACK CIATTARELLI WILL BE AN AMERICA FIRST GOVERNOR FOR NEW JERSEY. "Jack Ciattarelli is a terrific America First Candidate running to be the next Governor of a State that I love, NEW JERSEY! Jack, who after getting to know and understand MAGA, has gone ALL IN, and is now 100% (PLUS!). He is strongly supported by the most Highly Respected Leaders in New Jersey and, as your next Governor, Jack Ciattarelli will work closely with me and the Trump.  
• RUBIO: MAXIMUM PRESSURE AGAINST IRAN’S PROLIFERATION ACTIVITIES. "Today we are sanctioning Iranian nationals contributing to nuclear weapons-relevant research and development. Our actions are part of
  @POTUS’s call for maximum pressure against Iran’s proliferation activities and to ensure Tehran is never able to obtain a nuclear weapon." 
• EDAN ALEXANDER, FREED AFTER 584 DAYS, HUGS HIS FAMILY AND SHOUTS FOR TRUMP. After spending 584 days as a hostage in Gaza, Staff Sgt. Edan Alexander, a 21-year-old American-Israeli soldier, is finally free—reuniting with his family at an army base near Re’im, close to the Gaza border. Edan is seen at a military base near Re’im hugging his parents and siblings for the first time in nearly two years. He spots his younger brother and shouts, “Look how massive this kid is!” before pulling him into a hug. Edan eventually boards an Israeli Air Force helicopter to be flown to a hospital in Tel Aviv. Onboard, he grabs a whiteboard and writes: “Thank you President Trump!!! Am Yisrael Chai!!! Onward Golani 51”—a shoutout to his battalion. Edan was taken hostage on October 7, 2023, during a Hamas attack. His release came after extended negotiations led by U.S. officials and Middle East mediators. (video) 
• PERPLEXITY NEARS $500M RAISE AT $14B VALUATION—FIRES SHOT IN AI SEARCH WAR. AI search challenger Perplexity is closing in on a $500 million funding round led by Accel, pushing its valuation to $14 billion—up from $9B just five months ago. It’s still below their $18B target, but momentum’s real: ARR near $100M, a growing user base, and its upcoming AI browser, Comet, aiming straight at Google’s crown. With OpenAI, Anthropic, and even Bing crowding the space, the AI search war is on—and Perplexity’s having it. 
• STARMER: “WE NEED TO REDUCE IMMIGRATION SIGNIFICANTLY”. “These rules become even more important. Without them, we risk becoming an island of strangers, not a nation that walks forward together. You're not championing growth. You're not championing justice or whoever else people defend the status quo. You're actually contributing to the forces that are slowly pulling our country apart. I believe we need to reduce immigration significantly.” 
  

• @LauraLoomer

• Absolutely humiliating for RINO John Cornyn. He tried to attack Ken Paxton for working with a “woke” law firm that…checks notes…donated $30,000 to Cornyn!
• Any Republican who supports cuts to Medicaid and doesn’t start impeaching judges who are blocking President Trump’s mass deportation orders wants the GOP to lose the House in 2026 so they can impeach Trump. We all know how much the GOP loves losing and loves undermining Trump.
  

• @TheTranscript

• Q1 2025 Earnings Update: — 90% of S&P 500 companies have reported Q1 2025 results. — 78% have reported earnings above analyst estimates, above the 5-year average of 77% and the 10-year average of 75%. — Companies are reporting earnings 8.5% above estimates, slightly below the 5-year average of 8.8%, but above the 10-year average of 6.9%. — 62% of companies have exceeded revenue estimates, slightly below the 5-year average of 69% and the 10-year average of 64%. — Reported revenues are 0.7% above estimates, below the 5-year average of 2.1%. — Blended EPS growth stands at 13.4% YoY, up from 12.8% the previous week and 7.1% at the end of Q1. — Revenue growth is 4.8% YoY, maintaining the 18th consecutive quarter of revenue expansion. — Net profit margin for the S&P 500 is 12.4%, above the five-year average, marking the fourth consecutive quarter above 12%.

Night Trading 

• Asian equity indices are +.5% to +1.5% on average. 
• Asia Ex-Japan Investment Grade CDS Index 80.0 -7.5 basis points. 
• China Sovereign CDS 50.5 -5.0 basis points.
• China Iron Ore Spot 99.1 USD/Metric Tonne -.9%
• Swiss Franc/Offshore Chinese Renminbi Cross 8.53 +.22%.
• Bloomberg Emerging Markets Currency Index 36.9 -.02%.
• Bloomberg Global Risk-On/Risk Off Index 70.4 -.9%.
• US 10-Year Yield 4.45% -2.0 basis points.
• Volatility Index(VIX) futures 19.5 +.2%.
• Euro Stoxx 50 futures +.15%. 
• S&P 500 futures -.27%. 
• NASDAQ 100 futures -.37%.

Morning Preview Links

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