Stocks Falling Substantially into Final Hour on Coronavirus Fears, European/Emerging Markets/US High-Yield Debt Angst, Oil Decline, Healthcare/Energy Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Every Sector Declining
  

• Volume: Heavy

• Market Leading Stocks: Underperforming 

Equity Investor Angst:

• Volatility(VIX) 24.3 +42.1%

• Euro/Yen Carry Return Index 124.58 -.82%

• Emerging Markets Currency Volatility(VXY) 7.2 +4.2%

• S&P 500 Implied Correlation 46.4 +20.0%

• ISE Sentiment Index 83.0 -5
  

• Total Put/Call 1.07 -1.83%

• NYSE Arms 1.38 +23.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 52.69 +13.65%
  

• America Energy Sector High-Yield CDS Index 658.0 +3.80%

• European Financial Sector CDS Index 56.0 +14.2%

• Italian/German 10Y Yld Spread 145.0 +10.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 52.12 +7.8%
  

• Emerging Market CDS Index 204.24 +5.13%
  

• iBoxx Offshore RMB China Corporate High Yield Index 170.99 +.11%

• 2-Year Swap Spread 1.25 -.5 basis point

• TED Spread 13.25 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -11.0 -2.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 64.12 -.5%
• 3-Month T-Bill Yield 1.53% -2.0 basis points

• Yield Curve .12 unch.

• China Iron Ore Spot 87.35 USD/Metric Tonne -1.92%

• Citi US Economic Surprise Index 46.60 -4.1 points

• Citi Eurozone Economic Surprise Index -3.10 +2.6 points

• Citi Emerging Markets Economic Surprise Index 21.9 +1.0 point

• 10-Year TIPS Spread 1.59 -3.0 basis points
• 46.2% chance of 25.0 basis point Fed rate cut at April 29th meeting, 45.1% chance of 25.0 basis point cut at June 10th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -121 open in Japan 
• China A50 Futures: Indicating -282 open in China

• DAX Futures: Indicating -11 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 25% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth -3.3%

Sector Underperformers:

• 1) Oil Service -6.8% 2) Airlines -6.3% 3) Healthcare Providers -4.7%

Stocks Falling on Unusual Volume: 

• DBX, DRH, WIFI, HYT, CODI, CSQ, MSFT, DIS, WES, BWA, VIAC, FLS, FUN, APPN, SABR, MTDR, MS, VOYA, SONO, ETFC, NET, NVDA, SNBR, DAL, UNH, RCL, W, IGT, SE, CCL, Z, NCLH, STMP, ZG, SAVE, AAL, FSLY, GPK, CRI, H, BKNG and FTAI

Stocks With Unusual Put Option Activity:

• 1) DISH 2) IWF 3) XLK 4) EWY 5) SOXX

Stocks With Most Negative News Mentions:

• 1) GPK 2) TLRY 3) CCL 4) COMM 5) MGM

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Value -2.8%

Sector Outperformers:

• 1) Gold & Silver +.2% 2) Utilities -.9% 3) Telecom -1.0%

Stocks Rising on Unusual Volume:

• VIR, NGM, UTHR, MAG, ZYXI, TVTY, CTB, REGN, GILD and VSLR

Stocks With Unusual Call Option Activity:

• 1) AFL 2) EQT 3) TUR 4) RSX 5) PANW

Stocks With Most Positive News Mentions:

• 1) GILD 2) CTB 3) NGM 4) DIN 5) PEP

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +43.8% Above 100-Day Average
• 0 Sectors Rising, 11 Sectors Declining
• 10.2% of Issues Advancing, 88.7% Declining
• 79 New 52-Week Highs, 224 New Lows
• 62.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.3%
• Vix 24.8 +45.4%
• Total Put/Call 1.12 +2.75%
• TRIN/Arms 1.30 +17.1%

Monday Watch

Today's Headlines

Bloomberg:

• As Pandemic Looms, World’s Top Disease Fighter Engages Xi.  

• China Pushes Factories to Reopen, Risking Renewed Virus Spread.

• Korea Confirms 161 New Cases as Outbreak Spreads: Virus Update.  

• South Korea Companies Prepare for Worst After Samsung Virus Case.   

• Won, Stocks Drop After Korea Says Disease Alert Level Highest.

• Coronavirus Hits Israel, Raising Concern About Election Impact.  

• Hong Kong Companies Have No Safety Net in Fight for Survival.

• Dazed Italy Bickers as It Seeks Answers for Coronavirus Spread.

• Peter Navarro Says Coronavirus Shows U.S. Offshored Too Much.

• World-Changing Virus, Climate Threats Dominate G-20 Gathering.

• Stocks Slide as Virus Case Rise Heightens Concern. U.S. equity futures sank with Asian shares and gold surged after the number of coronavirus cases outside of China increased and concern grew that global economic growth could take a more sustained hit. Seoul and Sydney saw the brunt of losses, down more than 2%, with declines more muted in Hong Kong and Shanghai. Weakness in S&P 500 Index and Euro Stoxx 50 futures also reflected the caution from traders to news over the weekend that finance chiefs and central bankers from the world’s largest economies see downside risks to the global economy persisting. The Australian dollar chalked up a fresh 11-year low and the offshore yuan extended its recent slide. Crude oil tumbled almost 3%. Japan is shut for a holiday. Futures on the S&P 500 slid 1.2% as of 9:25 a.m. in Hong Kong. The underlying gauge fell 1.1% on Friday. South Korea’s Kospi index dropped 2.6%. Australia’s S&P/ASX 200 Index declined 2.1%. Hong Kong’s Hang Seng Index declined 1%. The Shanghai Composite Index lost 0.4%. Euro Stoxx 50 futures retreated 1.4%.  

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

• G-20’s Growth, Korea on High Alert, Digital Yuan Worry: Eco Day.

• Oil Slumps Most in Two Weeks as Global Virus Spread Quickens.  

• With Gold Surging, Miners Face Payouts Versus Production Dilemma.

Wall Street Journal:

• Nevada Win Gives Sanders the Inside Track

• Boeing Offers More Support for 737 MAX Suppliers

• AI Is the Next Workplace Disrupter—and It’s Coming for High-Skilled Jobs

• Falling Fuel Costs Buoy U.S. Consumers

• Tapping Trump’s Anger About 2016 Surveillance, White House Seeks Overhaul of Spying Law.

MarketWatch.com:

• Intuit eyes Credit Karma in what would be its biggest-ever acquisition.

• IMF lowers global economic growth forecast, warns of ‘more dire scenarios’.

• MSNBC’s Chris Matthews compares Bernie Sanders’ victory in Nevada to Nazi invasion — now people want him fired.

Fox News:

• Briefer may have overstated Russian efforts aimed at helping Trump win election, official says.

• Candace Owens 'cannot look away' from party chaos with front-runner Sanders.

CNBC:

• Coronavirus live updates: Turkey closes Iran border, South Korea on high alert.

• Op-Ed: Bernie Sanders is the front-runner because of how we raised our kids.

• Biden, Buttigieg and Bloomberg take shots at projected Nevada caucus winner Bernie Sanders.

• Economic impact of coronavirus will be clearer in ‘three or four weeks,’ Mnuchin says.

Zero Hedge:   

• Futures Plunge, Gold Soars As Covid-19 Contagion Craters Complacency.

• Coronavirus Panic Goes Global: S.Korea Warns Of "Watershed Moment" As Italy Confirms 3rd Death, Cancels Venice Carnival: Live Updates.

• "Big Hit" – Xi Warns Of Economic Fallout From Covid-19 Outbreak.

• 10-Year Treasury Yield Plunges To Just 1 Basis Point Away From Recession "Tipping Point".

• World's Biggest Oil Hedge Fund Plunges 8% In January Following Two Years Of Losses.

• China's 'Fake' Coronavirus Numbers Exposed: Doctor In Hunan Confirms 50 New Cases, Only One Reported.

• Obama DHS Whistleblower Found Dead On Side Of California Highway, Police Rule Suicide.

• "A Piece Of Propaganda": Baltimore Republicans Outraged After High School History Lesson Compares Trump To Nazis, Communists.

• Chinese Scientists Find Coronavirus Did Not Originate In Wuhan Seafood Market.

• Supply Chain Disruptions Impact On Global Growth: $570 Billion & Growing...

• "It Will Be Really, Really Bad": China Faces Financial Armageddon With 85% Of Businesses Set To Run Out Of Cash In 3 Months.

• Iran's Hardliners Win Landslide Victory In Low Turn-Out Parliamentary Elections.

• iMask? Companies Race To Build Next-Gen Facewear To Block Germs

• Smearing Bernie Sanders.

• Key Takeaways From Nevada Democratic Caucuses.

• "Crazy Amount Of Requests:" Private Jet Demand Soars As Elites Flee Asia Amid Pandemic.

• South Korea Reports 123 New Coronavirus Cases; Italy Declares State Of Emergency: Virus Updates.

• It Begins: Samsung Shutters Smartphone Factory In South Korea After Virus Outbreak.

• Behold The "Green" Scam: Here Are The Most Popular ESG Fund Holdings.

• Researchers Find 61.5% Of Coronavirus Patients With Severe Pneumonia Won't Survive.

• 401(k) Millionaires Surge To Record Level Under Trump.

Business Insider:

• Bernie Sanders' Nevada win cements his frontrunner status.

• Huawei is downplaying coronavirus impact on its smartphone sales, but experts say it will suffer more than Apple.

• The coronavirus outbreak could cost Vietnam $4 billion in lost tourism in just 3 months, according to the country's department of tourism.

John Hopkins University:

• Coronavirus Global Cases. (map)

BNO News:

• Tracking coronavirus: Map, data and timeline.

Night Trading

• Asian indices are -2.25% to -1.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 50.75 +3.0 basis points.

• China Sovereign CDS 36.75 +2.0 basis points.

• Bloomberg Emerging Markets Currency Index 64.39 -.09%.

• FTSE 100 futures -1.03%.

• S&P 500 futures -1.23%.

• NASDAQ 100 futures -1.64%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• (AWI)/.86

• (CRI)/2.89

• (CTB)/.67

• (DDS)/2.85

After the Close:

• (HTZ)/-.27

• (HPQ)/.54

• (INTU)/1.02

• (ITRI)/.55

• (GH)/-.30

• (PANW)/1.12

• (RCII)/.57

• (SHAK)/-.01

• (THC)/.98

• (TREX)/.51

Economic Releases
8:30 am EST

• The Chicago Fed National Activity Index for Jan. is estimated to rise to -.16 versus -.35 in Dec.

10:30 am EST

• The Dallas Fed Manufacturing Activity Index for Feb. is estimated to rise to 0.0 versus -.2 in Jan.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The German IFO Business Climate Index, JMP Securities Tech Conference, JPMorgan High Yield Conference, Citi Asset Mangers/Broker Dealers Conference, Wolfe Research Auto/Auto Tech Conference, BofA Merrill Animal Health Conference and the Mobile World Congress could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST

BOTTOM LINE: Asian indices are sharply lower, weighed down by technology and commodity shares in the region. I expect US stocks to open lower and to maintain losses into the afternoon.  The Portfolio is 25% net long heading into the week.