Stocks Falling Substantially into Afternoon on Coronavirus Fears, Global Growth Concerns, Earnings Outlooks, Commodity/Retail 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) 19.0 +22.5%

• Euro/Yen Carry Return Index 124.52 -.11%

• Emerging Markets Currency Volatility(VXY) 6.79 +1.34%

• S&P 500 Implied Correlation 44.0 +7.5%

• ISE Sentiment Index 73.0 -3
  

• Total Put/Call 1.09 +28.2%

• NYSE Arms 1.62 +74.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 49.93 +4.75%
  

• America Energy Sector High-Yield CDS Index 627.0 +2.0%

• European Financial Sector CDS Index 54.18 +.64%

• Italian/German 10Y Yld Spread 137.0 +2.25 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 58.19 +.81%
  

• Emerging Market CDS Index 197.21 +2.33%
  

• iBoxx Offshore RMB China Corporate High Yield Index 169.91 +.01%

• 2-Year Swap Spread 6.5 +.75 basis point

• TED Spread 21.75 +.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -6.25 -1.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.18 -.31%
• 3-Month T-Bill Yield 1.55% -1.0 basis point

• Yield Curve .18 +1.0 basis point

• China Iron Ore Spot 80.33 USD/Metric Tonne -2.17%

• Citi US Economic Surprise Index 7.60 -.6 point

• Citi Eurozone Economic Surprise Index 21.10 -22.7 points

• Citi Emerging Markets Economic Surprise Index 20.8 +7.5 points

• 10-Year TIPS Spread 1.63 -1.0 basis point
• 40.7% chance of Fed April 29th meeting, 59.8% chance of cut at June 10th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -495 open in Japan 
• China A50 Futures: Indicating -1,101 open in China

• DAX Futures: Indicating -61 open in Germany

Portfolio:

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

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 25% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Growth -2.1%

Sector Underperformers:

• 1) Retail -2.7% 2) I-Banks -2.7% 3) Steel -2.7%

Stocks Falling on Unusual Volume: 

• FCX, FB, WCC, TSCO, UPS, BEN, ON, POL, RMD, KRO, IDXX, PSX, GNTX, V, XOM, SMTC, VLO, GFF, DOV, GBT, OLED, GWW, AAWW, LRCX, BGR, AA, QRVO, MRNA, CMI, PKG, COHR, SSYS, DOW, MUSA, OMER, SLAB, HUN, HGV, EA, LPLA, HQY, PH, AIMT, SUM, FLWS, TPTX, BERY, NVST, CRUS, SKYW, KEX, WY, KRNY, OLN, ROKU, EPAY, AMGN, CE, W and WWE

Stocks With Unusual Put Option Activity:

• 1) BKLN 2) HPE 3) PAGP 4) IEF 5) LQD

Stocks With Most Negative News Mentions:

• 1) WWE 2) BZH 3) AMGN 4) LK 5) KEX

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth -1.3%

Sector Outperformers:

• 1) Gold & Silver +.9% 2) Computer Services +.4% 3) Restaurants -.4%

Stocks Rising on Unusual Volume:

• NAV, RETA, DECK, AMZN, VIR, CL, CHTR and IBM

Stocks With Unusual Call Option Activity:

• 1) KKR 2) CL 3) BERY 4) ADNT 5) WWE

Stocks With Most Positive News Mentions:

• 1) NAV 2) AMZN 3) CHD 4) CL 5) ESPR

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Morning Market Internals

NYSE Composite Index:

• Volume Running +7.3% Above 100-Day Average
• 2 Sectors Rising, 9 Sectors Declining
• 27.5% of Issues Advancing, 69.6% Declining
• 125 New 52-Week Highs, 69 New Lows
• 61.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.3%
• Vix 18.0 +16.2%
• Total Put/Call .97 +14.1%
• TRIN/Arms 1.81 +94.6%

Friday Watch

Evening Headlines

Bloomberg:  

• Global Cases Surpass SARS; WHO Declares Emergency: Virus Update.    

• China Death Toll at 80, More Cases Emerge Globally: Virus Update.

• Asian Stocks Push Higher After Late U.S. Rally: Markets Wrap. Asian stocks opened higher Friday, after a late-session rally in U.S. shares, as investors continued to gauge the implications of the spreading coronavirus. Stocks climbed in Japan, South Korea and Australia, with a regional Asian benchmark on track for its first gains in seven sessions. The S&P 500 Index, after a slide of nearly 1%, closed higher Thursday after the World Health Organization declared a global health emergency, while saying travel and trade restrictions weren’t necessary. Treasuries traded flat, while China's yuan is stronger than 7 per dollar after briefly weakening past the level Thursday. Japan’s Topix Index rose 0.9% as of 9:05 a.m in Tokyo. S&P/ASX 200 climbed 0.4%. Kospi Index rose 0.4%. Futures on the S&P 500 Index were little changed after the gauge advanced 0.3% Thursday. FTSE China A50 futures climbed 1.6% earlier.    

• Five Things You Need to Know to Start Your Day.

• Global Contagion Risk, Germany Stutters, Scotch Trade: Eco Day.  

• Oil Pares Monthly Drop as WHO Steps Up Efforts to Combat Virus.

• The Inverting Yield Curve Is About More Than Recession This Time.

• Jeff Bezos Adds $13.2 Billion to His Fortune in Just Minutes.

• Third Point Gains 17% in 2019 After Betting on Soup and Sony.

Wall Street Journal:

• Wrapping Up Impeachment.

• Life Expectancy Rises in U.S.

• China Lavishes Funds on U.S. Academics, Who Often Don’t Disclose It. 

• U.S. Economy Heads Into 2020 With Steady Growth. 

• Luxury Brands Fear Coronavirus Sales Hit. 

• Gun-Control Bills Move Forward in Virginia.

Fox News:

• FOLLOW LIVE: Schiff explains why he opposes calling Joe Biden as impeachment witness.

MarketWatch.com: 

• Mortgage rates plunge to second lowest level in three years amid coronavirus concerns.

• Reynolds Consumer is taking its portfolio of everyday goods public in $1 billion-plus IPO.

CNBC:

• Coronavirus live updates: China says death toll hits 213, confirmed cases rise to 9,692.

• Amazon soars after huge earnings beat.

• IBM CEO Ginni Rometty is stepping down, Arvind Krishna to take over.

• It’s too early to tell whether the coronavirus will cause recession, Cramer says. 

• AWS generated revenue of $9.95 billion in Q4, up 34% from a year ago.

• Apple’s new and improved maps that cost ‘billions’ are now out across the U.S.

• Stocks making the biggest moves after hours: Amazon, Visa, Navistar and more.

• CDC confirms first human-to-human transmission of coronavirus in US.

Zero Hedge:

• Nordstrom Starts Selling Used Clothes To Broke Americans.

• Another 43 Coronavirus Deaths Reported In Hubei; 100,000 Chinese 'Under Observation'.

• Men More Prone To Coronavirus Infection Than Women, Study Finds.

• Chicago Police Are Using A Facial Recognition Program That Scans Billions Of Facebook Photos.

• In The Past 30 Years, The "Top 1%" Has Bought $1.2 Trillion In Stocks; The "Bottom 99%" Has Sold $1 Trillion.

• Carter Page Sues DNC Over Steele Dossier In "Opening Salvo".

• Tennessee State Rep. Files Bill To Officially Designate CNN As 'Fake News'.

• Stocks Panic-Bid, Bonds Dumped After WHO Doublespeak Over "Global Pandemic".

Business Insider:

• IBM SHAKEUP: Ginni Rometty out as CEO, cloud boss to replace her.

John Hopkins University:

• Wuhan Coronavirus Global Cases. (map)

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 57.0 +1.25 basis points.

• China Sovereign CDS 40.25  +.5 basis point.

• Bloomberg Emerging Markets Currency Index  65.40 +.02%.

• FTSE 100 futures +.83%.

• S&P 500 futures +.20%.

• NASDAQ 100 futures +.30%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (BAH)/.75

• (CAT)/2.38

• (CHTR)/2.22

• (CVX)/1.46 

• (CHD)/.55

• (CL)/.73

• (XOM)/.45

• (GNTX)/.37

• (HON)/2.04

• (IDXX)/.90

• (ITW)/1.86

• (JCI)/.38

• (LYB)/2.25

• (MAN)/2.04

• (PSX)/1.64

• (SOHU)/-.40

• (WY)/.06

After the Close:

• None of note

Economic Releases 
8:30 am EST

• Personal Income for Dec. is estimated to rise +.3% versus a +.5% gain in Nov.

• Personal Spending for Dec. is estimated to rise +.3% versus a +.4% gain in Nov.

• The PCE  Core MoM for Dec. is estimated to rise +.1% versus a +.1% gain in Nov.

• The 4Q Employment Cost Index is estimated to rise +.7% versus a +.7% gain in 3Q.

9:45 am EST

• The MNI Chicago PMI for Jan. is estimated to rise to 49.0 versus 48.9 in Dec. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The UK Brexit vote and the Eurozone GDP report could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are modestly higher, boosted by technology and industrial 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.