Stocks Finish Lower on US Policy-Induced Stagflation Fears, Sector Rotation, Technical Selling, Tech/Alt Energy Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 14.7 +8.9%
• DJIA Intraday % Swing .64 +7.9%
  
• Bloomberg Global Risk On/Risk Off Index 67.8 -3.6%

• Euro/Yen Carry Return Index 176.1 -.43%

• Emerging Markets Currency Volatility(VXY) 6.2 -.32%

• CBOE S&P 500 Implied Correlation Index 15.7 +8.6% 

• ISE Sentiment Index 115.0 -45.0
  

• Total Put/Call 1.03 +21.2%

• NYSE Arms .88 unch.
  
• NYSE Non-Block Money Flow -$395.1M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 52.2 +2.1%
  

• US Energy High-Yield OAS 306.3 +2.8%
• Bloomberg TRACE # Distressed Bonds Traded 278 -4
  

• European Financial Sector CDS Index 64.0 +.23% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 211.4 +.5%
  

• Italian/German 10Y Yld Spread 139.0 basis points -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 101.7 +3.4%
  

• Emerging Market CDS Index 168.3 +2.8%
• Israel Sovereign CDS 121.8 +.6%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.6 -.3%

• 2-Year SOFR Swap Spread -9.25 basis points +.5 basis point
  

• Treasury Repo 3M T-Bill Spread 6.5 basis points -1.0 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -5.0 -.5 basis point
  
• MBS  5/10 Treasury Spread 154.0 -2.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 823.0 +3.0 basis points
  
• Avg. Auto ABS OAS 63.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 40.2 +.06%
• 3-Month T-Bill Yield 5.36% -1.0 basis point
  

• China Iron Ore Spot 114.0 USD/Metric Tonne -.34%
• Dutch TTF Nat Gas(European benchmark) 27.5 euros/megawatt-hour +2.2%

• Citi US Economic Surprise Index 27.6 -6.6 points

• Citi Eurozone Economic Surprise Index 54.8 +1.5 points

• Citi Emerging Markets Economic Surprise Index 12.9 -1.3 points
• S&P 500 Current Quarter EPS Growth Rate YoY(491 of 500 reporting) +7.8% unch.
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 247.38 +n/a:  Growth Rate +11.0% +n/a, P/E 20.6 +n/a
  
• S&P 500 Current Year Estimated Profit Margin 12.83% unch.
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(9 of 10 reporting) +57.3% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 315.51 +n/a: Growth Rate +30.9% +n/a, P/E 30.9 +n/a
  
• Bloomberg US Financial Conditions Index 1.10 -1.0 basis point
  
• Bloomberg Euro-Zone Financial Conditions Index .98 +3.0 basis points
  
• US Yield Curve -42.0 basis points (2s/10s) -3.0 basis points
  
• US Atlanta Fed 1Q GDPNow Forecast +2.1% unch.
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 56.2% +.3 percentage point
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.72% unch.: CPI YoY +3.12% unch.
  
• 10-Year TIPS Spread 2.33 -1.0 basis point
  
• Highest target rate probability for May 1st FOMC meeting: 75.8%(-3.4 percentage points) chance of 5.25%-5.5%. Highest target rate probability for June 12th meeting: 55.0%(+2.3 percentage points) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -247 open in Japan 
• China A50 Futures: Indicating -39 open in China

• DAX Futures: Indicating +21 open in Germany

Portfolio:

• Lower:  On losses in my consumer discretionary/industrial/tech/transport/biotch sector longs
  

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

• Market Exposure: Moved to 50% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Growth -2.1%
  

Sector Underperformers:

• 1) Software -3.7% 2) Electric Vehicles -2.9% 3) Cyber Security -2.9%

Stocks Falling on Unusual Volume: 

• BL, HIMS, MKTX, XEL, ALKT, XMTR, TBBK, INTA, ACIC, ELF, COIN, HLNE, ZS, DELL, SNOW, TWLO, NARI, CRWD, CLSK, DUOL, MP, IOT, BBIO, POWL, ROOT, ACMR, TNDM, ALB, MSTR, SEMR and GTLB
  

Stocks With Unusual Put Option Activity:

• 1) GTLB 2) JETS 3) JWN 4) TGT 5) INDA
  

Stocks With Most Negative News Mentions:

• 1) ALB 2) AS 3) NOVA 4) JOAN 5) CART
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.3%
  

Sector Outperformers:

• 1) Regional Banks +4.3% 2) Banks +1.7% 3) Energy +1.0%

Stocks Rising on Unusual Volume:

• APGE, AVAV, RGNX, TGT, PHUN, FMS, VIAV, SYRE, HOG, KRYS, CRGY, DVA, NFE, CHH, MGEE, NRG, HPE, IMNM, EGO, BHVN, TS, SAIA, VST, JANX, CCOI, AL and FA
  

Stocks With Unusual Call Option Activity:

• 1) ELAN 2) SOVO 3) AXP 4) TGT 5) OCEA

Stocks With Most Positive News Mentions:

• 1) AISP 2) DAVE 3) APGE 4) DTSS 5) AVAV
  

Charts:

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

Tomorrow's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open:

• (ANF)/2.83
• (BF/B)/.56
• (CPB)/.77
• (FL)/.32
• (JD)/4.81
• (KFY)/.99
• (THO)/.67
• (UNFI)/-.02
  

After the Close: 

• (VSCO)/2.46
  

Economic Releases

8:15 am EST

• The ADP Employment Change for Feb. is estimated to rise to 150K versus 107K in Jan.
  

10:00 am EST

• The JOLTS Job Openings for Jan. is estimated to fall to 8850K versus 9026K in Dec.
• Wholesale Trade Sales MoM for Jan. is estimated to rise +.3% versus a +.7% gain in Dec.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +1,720,250 barrels versus a +4,199,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -1,059,750 barrels versus a -2,832,000 barrel decline the prior week. Distillate inventories are estimated to fall by -331,500 barrels versus a -510,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +1.0% versus a +.9% gain prior.
  

2:00 pm EST

• The Fed's Beige Book report.

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Fed's Daly speaking, Fed's Powell speaking, weekly MBA Mortgage Applications report, BofA Power/Utilities/Clean Energy Conference, Cowen Health Care Conference, KeyBanc Emerging Tech Summit, RBC Financial Institutions Conference, (TDG) annual meeting and the Morgan Stanley Tech/Media/Telecom Conference could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +20.4% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 11.3 +3.2
  
• 6 Sectors Declining, 5 Sectors Rising
• 51.9% of Issues Advancing, 46.1% Declining 
• TRIN/Arms .99 +12.5%
  
• Non-Block Money Flow -$174.9M
  
• 129 New 52-Week Highs, 28 New Lows
• 60.3% (-.3%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 68.0 -2.0
  

Other:

• Bloomberg Global Risk-On/Risk-Off Index 68.4 -2.8%
• Bloomberg Cyclicals/Defensives Pair Index 143.0 +.2%
  
• Russell 1000: Growth/Value 19,031.3 -1.5%
• CNN Fear & Greed Index 75.0 (Extreme Greed) -1.0
• 1-Day Vix 10.4 +22.3%
  
• Vix 14.3 +5.6%
  
• Total Put/Call 1.05 +23.5%

Tuesday Watch

Night Trading 

• Asian equity indices are -.5% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 100.25 +2.5 basis points.

• China Sovereign CDS 65.75 +.5 basis point.
  
• China Iron Ore Spot 115.0 USD/Metric Tonne -.5%.

• Bloomberg Emerging Markets Currency Index 40.04 -.02%.
• Bloomberg Global Risk-On/Risk Off Index 70.9 +.8%.
• Volatility Index(VIX) futures 15.1 +.33%.
• Euro Stoxx 50 futures -.14%

• S&P 500 futures -.15%.

• NASDAQ 100 futures -.27%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly lower, weighed down by financial and commodity shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 75% net long heading into the day.