Stocks Higher into Final Hour on Peak Coronavirus Hopes, Global Stimulus, Short-Covering, Airline/Gaming Sector Strength

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Heavy

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 44.6 -1.3%

• Euro/Yen Carry Return Index 123.22 +.75%

• Emerging Markets Currency Volatility(VXY) 12.3 -2.5%

• S&P 500 Implied Correlation 74.8 +4.1%

• ISE Sentiment Index 101.0 +32.0 points
  

• Total Put/Call .87 -9.4%

• NYSE Arms .80 +9.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 112.26 -5.1%
  

• America Energy Sector High-Yield CDS Index 1,417.0 +8.0%

• European Financial Sector CDS Index 111.64 -5.51%

• Italian/German 10Y Yld Spread 192.5 +1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 136.96 -5.1%
  

• Emerging Market CDS Index 341.16 -6.74%
  

• iBoxx Offshore RMB China Corporate High Yield Index 155.62 -.33%

• 2-Year Swap Spread 25.0 +2.25 basis points

• TED Spread 128.0 -5.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap 47.0 -7.5 basis points
• MBS  5/10 Treasury Spread  117.0 -5.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 58.62 +1.16%
• 3-Month T-Bill Yield .10% +2.0 basis points

• Yield Curve .46 +6.0 basis points

• China Iron Ore Spot 79.53 USD/Metric Tonne -.23%

• Citi US Economic Surprise Index -42.9 +1.4 points

• Citi Eurozone Economic Surprise Index -67.60 +5.1 points

• Citi Emerging Markets Economic Surprise Index .4 +2.3 points

• 10-Year TIPS Spread 1.17 +14.0 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 +395 open in Japan 
• China A50 Futures: Indicating -138 open in China

• DAX Futures: Indicating -61 open in Germany

Portfolio:

• Higher: On gains in my consumer staple/industrial/tech/medical sector long

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

• Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth +1.7%

Sector Underperformers:

• 1) Coal -7.3% 2) Paper -.6% 3) Biotech unch.

Stocks Falling on Unusual Volume: 

• TXG, WORK, OTIS, BIG, SILK, GILD, HAE, AXSM, DXCM, EHTH, APOG, BLKB, NXTC, QDEL, ZM, TDOC, SSYS, RNG, OSUR, PETS and VIR

Stocks With Unusual Put Option Activity:

• 1) UCO 2) KSS 3) RF 4) CSX 5) CY

Stocks With Most Negative News Mentions:

• 1) XOM 2) SDC 3) CLR 4) PSX 5) F

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Value +4.6%

Sector Outperformers:

• 1) Airlines +12.1% 2) Gaming +8.4% 3) Homebuilding +5.6%

Stocks Rising on Unusual Volume:

• KSS, CNK, CAR, THC, RCL, PVH, AAL, CCL, SAVE, WD, GBX, VAC, ERI, EAT, JWN, STWD, NCLH, SIX, DRI, PLCE, URBN, PLNT, WING, CHEF, WYNN, MGM, BXMT, LASR, DKS, LUV, IAA, NMIH, PLAY, UAL, WYND, DIN, HOG, MAR, MBUU, ELY, LVGO, OXY, MXL, HHC, MCS, PENN, W, SPR, DAL, FUN, ABM, RTX and BOOM

Stocks With Unusual Call Option Activity:

• 1) WPX 2) DUK 3) RUN 4) WMB 5) APC

Stocks With Most Positive News Mentions:

• 1) CCL 2) WING 3) STZ 4) ANGO 5) NIO

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +93.6% Above 100-Day Average
• 11 Sectors Rising, 0 Sectors Declining
• 82.7% of Issues Advancing, 16.0% Declining
• 6 New 52-Week Highs, 4 New Lows
• 5.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 42.3%
• Vix 45.5 +.6%
• Total Put/Call .83 -13.5%
• TRIN/Arms .64 -12.3%

Tuesday Watch

Evening Headlines

Bloomberg:              

• Cuomo Says New York Deaths Signal Possible Plateau in Outbreak.

• U.K.’s Johnson Moved to Intensive Care as Covid-19 Worsens.

• Brazilian Minister Says China Has Been Profiting From Pandemic.  

• Welcome to the $1.5 Trillion Minefield of Defaulted Chinese Debt.  

• Christine Lagarde’s $810 Billion Coronavirus U-Turn Came in Just Four Weeks.

• U.S. Deaths Top 10,000; Some Signs of Easing Toll: Virus Update.

• Asian Stocks to Build on Rally as Virus Toll Eases. Asian stocks looked set to build on a U.S. rally after the reported death tolls in some of the world’s coronavirus hot spots continued to show signs of easing. The yen maintained losses and Treasuries fell. S&P 500 futures fluctuated in early Asian trading Tuesday after the index finished up 7%, closing at its highest since March 13. Futures in Japan pointed to a strong open with Prime Minister Shinzo Abe expected to announce a month-long state of emergency as soon as Tuesday and details of a record stimulus package to combat the spread of the virus. Australian stocks and Hong Kong futures also rose. S&P 500 futures rose 0.2% as of 8:28 a.m. in Tokyo. The S&P 500 Index increased 7% in New York. Nikkei 225 futures were up 1.8%. Australia’s S&P/ASX 200 Index contracts climbed 2.4%. Hong Kong’s Hang Seng Index futures rose 1%.

• Oil Posts Largest Decline in 2 Weeks Ahead of Producers Meeting.  

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

• In the Big OPEC++ Output Deal, Who’s In and Who’s Out?   

• Demand for Gasoline Is Plummeting All Over the World.

• Pelosi Says Next Stimulus Round Will Be $1 Trillion or More.  

• Boeing Halts All Jet Assembly With Closing of Last 787 Plant.  

• Barrack Gives Up on Rescue, Says ‘We’re Fighting Politics’.

Wall Street Journal:

• Scientists Rush to Find Coronavirus Cure—but It Still Isn’t Fast Enough.

• Congress’s Small-Business Ventilator.

• The Fed’s New Mission to Save the Economy

• For Doctors Who Care For Pets, It’s Also a Trying Time.

• Coronavirus Hits Meat Plants.

• Credit Markets Show Signs of Stabilizing After Fed Intervention.

• Kroger Limits Shoppers.

• Airbnb Raises $1 Billion From Silver Lake, Sixth Street Partners.

• Container Shipping Lines Cancel Sailings to Weather Virus Storm.

• Coronavirus Cases Among World’s Elite Stoke Class Tensions.

CNBC.com: 

• Dow soars 1,600 points as growth rate of new coronavirus cases appears to slow.

• The bullish case for stocks with major averages already up more than 20% from the lows.

• Coronavirus: Trump says there’s light at the end of the tunnel with vaccine and treatment research.

• After a frenzied rush to file for small business loans, entrepreneurs wait it out.

• Wisconsin primary is on again for now as state Supreme Court blocks order to delay voting.

• Coronavirus live updates: Starbucks baristas to wear face masks, US cases now number 364,000.

• Trump and 3M agree to bring 166.5 million masks to US in three months to help coronavirus response.

• Gold is back above $1,700. Charts suggest an even bigger rally.

• Stocks making the biggest moves after hours: Gannett, Kraft Heinz, Boeing & more.

Fox News:

• British PM moved to ICU as coronavirus symptoms get worse.

• WATCH LIVE: Coronavirus task force gives updates on nationwide spread.

MarketWatch.com:        

• Individual investors have $1.5 trillion of cash on the sidelines, J.P. Morgan says. What next? 

• ‘The worst is behind us’ — with the most attractive risk-reward in years, it is time to buy stocks, Morgan Stanley says.  

• Investors should prepare for a coronavirus-induced ‘vicious spiral’ more than twice as bad as the financial crisis, says J.P. Morgan.

Zero Hedge:

• UCL Professor Warns Johnson Will "Very Likely" Be Placed On A Ventilator.

• Bailing-Out The Bailed-Out.

• Some Bad News From JPM: This Is What Happens After We Pass The Virus Peak.

• US Army Colonel (Ret.): "Yes, The COVID-19 Pandemic Could Have Originated In A Chinese Lab...".

• US Hospitals Face 'Severe' Shortages Of Tests And Protective Equipment: Inspector General.

• Morton's Parent Scrambles To Reopen Frozen Loan Market With Record-Yielding 15% Secured Paper.

• Gold Futures Extend Gains To 8 Year Highs After Pelosi's Trillion-Dollar Promise.

• Realtors Resort To Virtual Reality To Sell Homes During Lockdown.

• Food-Banks Warn They'll Soon Run Out Of Food As Economic Suffering Explodes All Over America.

• Yellen Blames "Enormous Debt And Buybacks" For Coming Default Wave; Morgan Stanley Says It's All The Fed's Fault.

• The Fraud That Is ESG Strikes Again: Six Of Top 10 ESG Funds Underperform The S&P500.

• US Total Passes 350k As Tri-State Area Cases, Deaths Surge: Live Updates.

• Netanyahu Announces Full Lockdown Of Israel Ahead Of Passover.

• Gold Soars To 8-Year Highs As Stocks Melt-Up On Massive Short-Squeeze.

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 +1.5% to +2.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 140.75 -8.75 basis points.

• China Sovereign CDS 54.50 -9.0 basis points.

• Bloomberg Emerging Markets Currency Index 57.98 +.06%.

• Euro Stoxx 50 futures +1.19%.

• S&P 500 futures +.38%.

• NASDAQ 100 futures +.13%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (ANGO)/-.03

• (FLR)/.13

• (GBX)/.26

• (LNN)/.47

• (REV)/-1.07

After the Close:

• (LEVI)/.35

Economic Releases
10:00 am EST

• JOLTS Job Openings for Feb. is estimated to fall to 6,500 versus 6,963 in Jan. 
  

3:00 pm EST

• Consumer Credit for Feb. is estimated at $14.0B versus $12.021B in Jan.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Japan Machine Orders report, weekly US retail sales reports, $25B 10Y T-Note auction, Wells Fargo Biotech Virtual Conference and the (JCP) analyst day could also impact trading today.

Market Hours
Normal:

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are higher, boosted by consumer discretionary and transport shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.