Stocks Falling Substantially Into Final Hour on Coronavirus Fears, European/Emerging Markets/US High-Yield Debt Angst, Global Reccesion Worries, Financial/Homebuilding Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Heavy

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 56.1 +4.7%

• Euro/Yen Carry Return Index 121.74 -1.3%

• Emerging Markets Currency Volatility(VXY) 12.6 +2.7%

• S&P 500 Implied Correlation 86.5 +10.8%

• ISE Sentiment Index 75.0 +19.0 points
  

• Total Put/Call 1.20 -.83%

• NYSE Arms .86 -23.21%

Credit Investor Angst:

• North American Investment Grade CDS Index 121.98 +8.56%
  

• America Energy Sector High-Yield CDS Index 1,402.0 +1.03%

• European Financial Sector CDS Index 125.40 +6.4%

• Italian/German 10Y Yld Spread 196.75 -2.75 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 148.0 +5.2%
  

• Emerging Market CDS Index 378.28 +7.21%
  

• iBoxx Offshore RMB China Corporate High Yield Index 165.10 +.23%

• 2-Year Swap Spread 25.0 -1.0 basis point

• TED Spread 136.0 -5.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap 54.25 +10.75 basis points
• MBS  5/10 Treasury Spread  137.0 +10.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 57.85 -1.21%
• 3-Month T-Bill Yield .05% +2.0 basis points

• Yield Curve .40 -6.0 basis points

• China Iron Ore Spot 77.60 USD/Metric Tonne -5.3%

• Citi US Economic Surprise Index 24.8 +27.8 points

• Citi Eurozone Economic Surprise Index -41.60 +8.6 points

• Citi Emerging Markets Economic Surprise Index 0.0 +6.6 points

• 10-Year TIPS Spread .95 +8.0 basis points
• n/a chance of no change at April 29th meeting, n/a chance of no change at June 10th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -140 open in Japan 
• China A50 Futures: Indicating -233 open in China

• DAX Futures: Indicating -147 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 25% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -6.5%

Sector Underperformers:

• 1) Airlines -10.9% 2) REITs -7.3% 3) Homebuilders -7.3%

Stocks Falling on Unusual Volume: 

• CACC, MGM, SUM, STT, BFAM, MAR, CAKE, UPLD, BILL, XRX, ZM, ARCC, FLT, MANH, HHC, OUT, USCR, RTN, FFC, MAIN, AVB, RNP, NCLH, USCR, MAIN, RH, PDI, AVLR, OXY, ACC, PING, BC, KSS, TREX, HASI, SAVE, ERI, GDDY, EPZM, MTX, COF, ABG, BA, Z, CMTL, AKRO, SLG, LW, JWN, LEVI, AAL, JACK, PLNT, RCL, VRNT, DRI, LYV, PENN, SPG, DAL, UAL, SWAV, CCL, PLAY, KTB, DIN, IMMU and BJRI

Stocks With Unusual Put Option Activity:

• 1) MAS 2) XHB 3) F 4) ADM 5) OIH

Stocks With Most Negative News Mentions:

• 1) AKRX 2) AAL 3) CCL 4) RRGB 5) JWN

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth -3.9%

Sector Outperformers:

• 1) Gold & Silver +.8% 2) Shipping -1.3% 3) Video Gaming -2.2%

Stocks Rising on Unusual Volume:

• CRNC, OSUR, NCR and HRC

Stocks With Unusual Call Option Activity:

• 1) CHRW 2) X 3) APC 4) XME 5) TMUS

Stocks With Most Positive News Mentions:

• 1) HWM 2) INSG 3) MKTX 4) PANW 5) VZ

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +34.2% Above 100-Day Average
• 0 Sectors Rising, 11 Sectors Declining
• 7.2% of Issues Advancing, 92.1% Declining
• 3 New 52-Week Highs, 78 New Lows
• 5.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 40.3%
• Vix 54.9 +2.5%
• Total Put/Call 1.18 -2.5%
• TRIN/Arms .90 -19.6%

Wednesday Watch

Evening Headlines

Bloomberg:                 

• Chinese Shoppers Can Go Out Again. Online Buys Show They Won’t.

• Italy Relaxes Virus Rule, Allowing Kids to Go Out With a Parent.

• U.K. Scrambles to Catch Up in the Race to Test for Coronavirus.

• Trump Warns of Painful Weeks; Birx Projects Up to 200,000 Deaths.

• Social Distancing Shows Signs of Curbing Virus on West Coast.

• U.S. Futures Drop; Asian Stocks Set for Mixed Open: Markets Wrap. U.S. stock futures declined as investors assessed worsening American coronavirus figures as a new quarter begins. Asian shares looked set for a mixed start. Futures on the S&P 500 Index were about 1% lower as President Donald Trump warned of a “painful” two weeks ahead, with the country grappling to get the spread under control. Cases in New York state surged by 9,000, with more than 300 new deaths. Futures in Japan and Hong Kong retreated, while Australian shares opened higher. In China, a private reading on the country’s manufacturing sector that’s due Wednesday is expected to show a rebound for March. Treasuries edged higher. Futures on the S&P 500 slid 1% as of 8:10 a.m. in Tokyo. The gauge fell 1.6% on Tuesday. Futures on Japan’s Nikkei 225 slid 0.5%. Hang Seng Index futures dipped 0.7%. Australia’s S&P/ASX 200 Index rose 2.4%.   

• Oil Declines With More Turbulence Seen After Worst Quarter Ever.

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

• Fed Goes Global, No V-Shape Recovery, China Worst Over: Eco Day.

• U.S. Betting Furloughed Is Better Than Fired for 600,000 Workers. 

• Gundlach Says Stocks to Fall Beyond Lows Reached in March.   

• California to Release Up to 3,500 Inmates in Response to Virus.  

• There’s a Battle Brewing for Your $1,200 Government Relief Check.  

• Hospitals Tell Doctors They’ll Be Fired If They Speak Out About Lack of Gear.  

• A Lot Is Riding on Stock Bottom Calls That Worked in a Bull Market.

Wall Street Journal:

• U.S. Braces for Patient Surge as Virus Cases Climb.

• Huawei Warns U.S. of Retaliation by Beijing; Profit Growth Slows.

• Pain in the Oil Patch.

• Federal Prisons Heighten Restrictions to Stem Spread of Coronavirus.

• U.S. Stocks Turn In Worst Quarter Since 2008.

• Airlines Seeking Aid for Virus Losses Can’t Share Flights.

CNBC.com:  

• Netflix, others are market bright spots after S&P 500′s worst first quarter ever.

• With strikes and a ‘sick out,’ some grocery and delivery workers call for more pay, safety measures.

• Coronavirus updates: Virus expected to cripple US auto sales, NY cases jump to over 75,000. 

• Start-ups cut nearly 4,000 jobs in March as the coronavirus ripples through tech.

• The Fed’s Loretta Mester says to expect ‘some really bad economic numbers’ before things get better.

Fox News:

• These states threaten fines, jail for people who ignore self-isolation orders.

• McConnell says impeachment trial 'diverted' government's attention.

MarketWatch.com:       

• The Dow just booked the worst 1st quarter in 124 years — here’s how the stock market tends to perform after brutal quarters.

• Should all Americans be wearing face masks to protect against coronavirus? These scientists say yes.

• Trillions in coronavirus spending could explode deficits to World War II levels.

Zero Hedge:

• Trump Tells America "Get Ready For A Painful 2 Weeks" As Task Force Goes 'All-In' On Mitigation.

• "There Are Basically No Sales": U.S. Auto Industry Enters Total Collapse As A Result Of Nationwide Lockdown.

• As The Crisis Deepens, Keep An Eye On Illinois' Unpaid Bills.

• Supplies Are Starting To Get Really Tight Nationwide As Food Distribution Systems Break Down.

• FBI Report: Border Agents Stopped A Chinese Biologist Sneaking Viable SARS, MERS Viruses Into US Airport.

• 28 Spring-Breaker 'Covidiots' Test Positive In Texas After Group Trip To Cabo.

• Steve Cohen Doubts This Is The Bottom: "Markets Don't Come Back In A Straight Line".

• New York Reports Largest Daily Jump In Hospitalizations: Live Updates.

• Universities Panic As Dorms Sit Empty: Recruiting, Tuition, & Faculty Contracts In Limbo.

• After Worst Quarter Ever, WTI Extends Losses On Massive Crude & Gasoline Build.

• Stocks Suffer Worst Start To A Year Ever... As Trump Approval Reaches Record High.

Business Insider:   

• Passengers on Holland America's 2 stranded cruise ships, the Zaandam and Rotterdam, may be stuck at sea indefinitely as Florida officials fret over letting them dock.

• Iraq reportedly plans to join the global oil war with prices already near 18-year lows.

John Hopkins University:

• Coronavirus Global Cases. (map)

BNO News:

• Tracking Coronavirus: Map, data and timeline.

Google Docs:

• Coronavirus Testing by State.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 138.75 -5.5 basis points.

• China Sovereign CDS 53.0 -6.0 basis points.

• Bloomberg Emerging Markets Currency Index  58.53 -.04%.

• Euro Stoxx 50 futures n/a.

• S&P 500 futures -1.21%.

• NASDAQ 100 futures -.89%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (LW)/.92

• (UNF)/1.67 

After the Close:

• (PVH)

Economic Releases 
8:15 am EST

• The ADP Employment Change for March is estimated at -150K versus 183K in Feb.
  

10:00 am EST

• Construction Spending MoM for Feb. is estimated to rise +.6% versus a +1.8% gain in Jan.

• ISM Manufacturing for March is estimated to fall to 44.8 versus 50.1 in Feb.

• ISM Prices Paid for March is estimated to fall to 41.6 versus 45.9 in Feb.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +3,920,180 barrels versus a +1,623,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +1,086,550 barrels versus a -1,537,000 barrel decline the prior week. Distillate inventories are estimated to rise by +316,000 barrels versus a -678,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -1.33% versus a +.9% gain prior. 
  

Afternoon

• Wards Total Vehicle Sales for March is estimated to fall to 12.0m versus 16.83M in Feb.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone PMI report, weekly MBA Mortgage Applications report, (ANDE) investor day, (TECK) analyst day and the (OKTA) investor day could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly lower, weighed down by financial and technology 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 day.