Stocks Finish Mostly Lower on Coronavirus Fears, European/Emerging Markets/US High Yield Debt Angst, Oil Decline, Energy/Transport Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Heavy

• Market Leading Stocks: Underperforming 

Equity Investor Angst:

• Volatility(VIX) 28.3 +1.5%

• Euro/Yen Carry Return Index 124.63 +.18%

• Emerging Markets Currency Volatility(VXY) 7.21 +.84%

• S&P 500 Implied Correlation 52.7 -5.19%

• ISE Sentiment Index 86.0 +7
  

• Total Put/Call 1.14 -14.9%

• NYSE Arms 1.42 +24.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 57.23 +4.17%
  

• America Energy Sector High-Yield CDS Index 732.0 +4.56%

• European Financial Sector CDS Index 59.44 +1.47%

• Italian/German 10Y Yld Spread 150.0 unch.
  

• Asia Ex-Japan Investment Grade CDS Index 54.50 +3.18%
  

• Emerging Market CDS Index 214.04 +1.27%
  

• iBoxx Offshore RMB China Corporate High Yield Index 171.0 -.02%

• 2-Year Swap Spread 4.5 +3.0 basis points

• TED Spread 12.5 -.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -10.0 -1.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 64.05 -.26%
• 3-Month T-Bill Yield 1.51% -2.0 basis points

• Yield Curve .15 +3.0 basis points

• China Iron Ore Spot 85.0 USD/Metric Tonne -.25%

• Citi US Economic Surprise Index 49.30 +4.5 points

• Citi Eurozone Economic Surprise Index -3.60 -1.3 point

• Citi Emerging Markets Economic Surprise Index 17.4 +1.2 points

• 10-Year TIPS Spread 1.54 +1.0 basis point
• 52.0% chance of 25.0 basis point Fed rate cut at April 29th meeting, 40.7% chance of 25.0 basis point cut at June 10th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -176 open in Japan 
• China A50 Futures: Indicating -31 open in China

• DAX Futures: Indicating -159 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 25% Net Long

Morning Market Internals

NYSE Composite Index:

• Volume Running +40.0% Above 100-Day Average
• 11 Sectors Rising, 0 Sectors Declining
• 70.4% of Issues Advancing, 26.6% Declining
• 17 New 52-Week Highs, 137 New Lows
• 44.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 36.6%
• Vix 25.4 -8.8%
• Total Put/Call 1.16 -13.4%
• TRIN/Arms .95 -16.7%

Wednesday Watch

Night Trading 

• Asian equity indices are -2.0% to -1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 53.5 +1.25 basis points.

• China Sovereign CDS 40.5 +2.25 basis points.

• Bloomberg Emerging Markets Currency Index  64.01 -.1%.
• FTSE 100 futures -.9%.

• S&P 500 futures +.31%.

• NASDAQ 100 futures +.42%.

Morning Preview Links

Earnings of Note 

Company/Estimate

Before the Open:

• (CARS)/.37
• (CK)/-.06
• (CM)/3.00
• (EV)/.85
• (FOSL)/.77
• (SJM)/2.24
• (LOW)/.91
• (ODP)/.08
• (PZZA)/.32
• (SINA)/.64
• (TJX)/.77
• (UTHR)/3.47
• (WB)/.72
• (WEN)/.09 

After the Close:

• (APA)/-.05
• (CVNA)/-.63
• (CCI)/1.45
• (LB)/1.85
• (MAR)/1.47
• (NTES)/24.86
• (SQ)/.21
• (STAA)/.10
• (TDOC)/-.32
• (UHS)/2.57

Economic Releases 

10:00 am EST

• New Home Sales for Jan. is estimated to rise to 715K versus 694K in Dec.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +1,815,330 barrels versus a +415,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -2,085,670 barrels versus a -1,971,000 barrel decline prior. Distillate supplies are estimated to fall by -1,586,220 barrels versus a -635,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.53% versus a +1.4% gain prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone Retail Sales reports, $41B 5Y T-Note auction, weekly MBA mortgage applications report, BofA Merrill Ag/Materials Conference and the CSFB Financial Services Forum could also impact trading today.

Market Hours

Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are lower, weighed down by technology and industrial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

Stocks Falling Substantially into Final Hour on Coronavirus Fears, European/Emerging Markets/US High-Yield Debt Angst, Oil Decline, Energy/Transport 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) 28.9 +15.7%

• Euro/Yen Carry Return Index 124.28 -.32%

• Emerging Markets Currency Volatility(VXY) 7.2 -.14%

• S&P 500 Implied Correlation 52.19 +6.62%

• ISE Sentiment Index 79.0 -4
  

• Total Put/Call 1.12 +4.7%

• NYSE Arms .92 -44.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 56.69 +8.53%
  

• America Energy Sector High-Yield CDS Index 704.0 +7.34%

• European Financial Sector CDS Index 58.58 +4.58%

• Italian/German 10Y Yld Spread 150.0 +5.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 52.95 +.99%
  

• Emerging Market CDS Index 212.14 +3.65%
  

• iBoxx Offshore RMB China Corporate High Yield Index 171.0 +.01%

• 2-Year Swap Spread 1.5 +.25 basis point

• TED Spread 13.25 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -8.75 +2.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 64.05 -.12%
• 3-Month T-Bill Yield 1.51% -2.0 basis points

• Yield Curve .12 unch.

• China Iron Ore Spot 88.29 USD/Metric Tonne +1.02%

• Citi US Economic Surprise Index 44.80 -1.8 points

• Citi Eurozone Economic Surprise Index -2.30 -.8 point

• Citi Emerging Markets Economic Surprise Index 16.2 -5.7 points

• 10-Year TIPS Spread 1.53 -6.0 basis points
• 47.3% chance of 25.0 basis point Fed rate cut at April 29th meeting, 44.8% chance of 25.0 basis point cut at June 10th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -670 open in Japan 
• China A50 Futures: Indicating -282 open in China

• DAX Futures: Indicating -175 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 25% Net Long

Morning Market Internals

NYSE Composite Index:

• Volume Running +44.8% Above 100-Day Average
• 0 Sectors Rising, 11 Sectors Declining
• 18.4% of Issues Advancing, 79.2% Declining
• 42 New 52-Week Highs, 235 New Lows
• 54.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 42.6%
• Vix 25.0 unch.
• Total Put/Call 1.28 +19.6%
• TRIN/Arms .82 -50.6%