Stocks Slightly Lower into Afternoon on Coronavirus Fears, Global Growth Worries, Technical Selling, Commodity/Transport Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 14.4 +1.4%

• Euro/Yen Carry Return Index 123.48 -.03%

• Emerging Markets Currency Volatility(VXY) 6.63 -1.49%

• S&P 500 Implied Correlation 38.0 +5.2%

• ISE Sentiment Index 82.0 +6
  

• Total Put/Call .76 -6.2%

• NYSE Arms 1.45 +11.0%

Credit Investor Angst:

• North American Investment Grade CDS Index 44.17 +.87%
  

• America Energy Sector High-Yield CDS Index 623.0 +.87%

• European Financial Sector CDS Index 47.22 -1.15%

• Italian/German 10Y Yld Spread 132.25 +3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 49.18 -1.12%
  

• Emerging Market CDS Index 189.66 -2.32%
  

• iBoxx Offshore RMB China Corporate High Yield Index 170.11 +.08%

• 2-Year Swap Spread 2.75 -.5 basis point

• TED Spread 12.0 -1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -8.5 -.5 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 65.06 +.1%
• 3-Month T-Bill Yield 1.57% -1.0 basis point

• Yield Curve .17 -1.0 basis point

• China Iron Ore Spot 85.45 USD/Metric Tonne -.72%

• Citi US Economic Surprise Index 45.30 +.2 point

• Citi Eurozone Economic Surprise Index -22.3 -2.9 points

• Citi Emerging Markets Economic Surprise Index 22.1 -.5 point

• 10-Year TIPS Spread 1.67 unch.
• 28.4% chance of Fed April 29th meeting, 45.8% chance of cut at June 10th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -182 open in Japan 
• China A50 Futures: Indicating -94 open in China

• DAX Futures: Indicating -25 open in Germany

Portfolio:

• Higher: On gains in my tech/medical/biotech sector longs and emerging market shorts

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my emerging market shorts

• Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -.5%

Sector Underperformers:

• 1) Oil Service -1.3% 2) Gaming -1.3% 3) Networking -1.3%

Stocks Falling on Unusual Volume: 

• WLK, MOS, AIG, PRPL, MAT, BFAM, EPRT, FCX, KHC, BWA, LYFT, DDOG, TEX, MRO, GT, CNXM, VC, ESPR, KPTI, CARS, YETI, IRWD, APLT, DCPH, SPXC, ANET, MRC, XBIT, SXT, TLND, YELP, NTLA, SWAV, R, TRUP, CAL, SDC, CARG and LPSN

Stocks With Unusual Put Option Activity:

• 1) NWL 2) YELP 3) EL 4) EXPE 5) X

Stocks With Most Negative News Mentions:

• 1) CCL 2) CRY 3) KFT 4) CF 5) TRUP

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth +.4%

Sector Outperformers:

• 1) Video Gaming +1.9% 2) Utilities +.7% 3) REITs +.7%

Stocks Rising on Unusual Volume:

• BTAI, CC, TNET, SVMK, SPCE, DXCM, EXPE, BE, VECO, GDDY, AYX, NVDA, AMN, BL, APPN and WORK

Stocks With Unusual Call Option Activity:

• 1) DXC 2) GDDY 3) SEAS 4) YELP 5) NWL

Stocks With Most Positive News Mentions:

• 1) EXPD 2) NWL 3) IMGN 4) AYX 5)DXCM

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -1.2% Below 100-Day Average
• 4 Sectors Rising, 7 Sectors Declining
• 51.4% of Issues Advancing, 45.3% Declining
• 200 New 52-Week Highs, 35 New Lows
• 65.3% of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.7%
• Vix 13.9 -1.6%
• Total Put/Call .70 -13.6%
• TRIN/Arms 1.51 +15.3%

Friday Watch

Evening Headlines

Bloomberg: 

• U.S. Raises China Criticism; Details on New Cases: Virus Update.

• 'I Knocked on Hell's Door': This Is What It Feels Like to Catch the Coronavirus.  

• China Navigates the Latest Threat to Its Debt-Fueled Boom.  

• The Death of a Doctor Poses the Greatest Threat to China’s Xi Yet .

• Japan’s Economy Set for Biggest Hit Since 2014 Ahead of Virus.

• Stocks Slip After China Reports More Virus Cases. U.S. equity futures slipped along with stocks in Tokyo and Seoul, though moves were modest, after the Chinese province at the center of the coronavirus outbreak reported more deaths. The yen was steady. On just the second day since the Hubei region changed its methods for counting infections, investors are mulling the spread of the virus in addition to news that the Federal Reserve will dial back its liquidity injections. The coronavirus death toll rose in China as Hubei reported 116 more fatalities on Thursday. Treasury yields dipped along with S&P 500 futures. Japan’s Topix index fell 0.6% as of 9:06 a.m. in Tokyo. South Korea’s Kospi index slid 0.3%. Futures on the S&P 500 dipped 0.1%. The gauge dipped 0.2% on Thursday. Australia’s S&P/ASX 200 Index rose 0.1%.

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

• China Woes Go Global, Japan’s Slump, U.K. in Disarray: Eco Day. 

• Coronavirus Will Hit Oil Hard. That’s Where the Consensus Ends.

Wall Street Journal:

• U.S. Charges Chinese Tech Giant Huawei With Racketeering.

• Sharp Rise in Coronavirus Cases Raises Questions About Outbreak’s Peak.

Fox News:

• High school girls sue over competition from transgender athletes.

MarketWatch.com:  

• Berkshire Hathaway’s Charlie Munger warns of ‘wretched excess,’ says Tesla’s Elon Musk ‘may overestimate himself’.

• Nvidia’s(NVDA) server sales spike, stock jumps in late trading.

CNBC:

• Coronavirus live updates: China’s Hubei province reports 116 more deaths, 4,823 new cases.

• Judge temporarily blocks Microsoft Pentagon cloud contract after Amazon suit.

• Roku predicts half of US homes will have cut the cord and dropped cable by 2024.

• Stocks making the biggest moves after hours: Roku, Nvidia, Expedia & more.

• ‘Dean of valuation’ says Tesla would need VW-like sales and Apple-like margins to justify stock.

Zero Hedge:

• Hubei Reports 116 New Coronavirus Deaths, 4,823 Cases As Sydney Quarantines Cruise Ship.

• China Vows To Put An End To "Lab Leakage Of Pathogenic Samples".

• China Has Ground To A Halt: "On The Ground" Indicators Confirm Worst-Case Scenario.

• Here Is What Dan Loeb's Third Point Bought And Sold In The Fourth Quarter.

• Foreign Aid Just Empowers Corrupt Regimes. End It!

• Experts Say North Korea "Clearly Lying" About Coronavirus Outbreak - "They Don't Want To Show Any Weakness".

• The Coronavirus Threat Is Greatest In Cities.

• 'The Most Expensive Home In LA' - Bezos Buys $165 Million Bachelor Pad .

• US Navy Intercepts Advanced Iranian Weapons Bound For Yemen In Arabian Sea.

• Fed Liquidity Drain Spoils Virus-Surge-Inspired Stock Buying-Panic.

Business Insider:

• The SEC is looking into Tesla's finances.

• Home Depot and Lowe's are gearing up to hire 133,000 employees for the springtime rush.

John Hopkins University:

• Coronavirus Global Cases. (map)

Night Trading 

• Asian equity indices are -.75% to unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 49.5 unch.

• China Sovereign CDS 33.25 -.5 basis point.

• Bloomberg Emerging Markets Currency Index  65.0 -.02%.

• FTSE 100 futures n/a.

• S&P 500 futures -.03%.

• NASDAQ 100 futures +.05%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (AXL)/.00

• (AZN)/.99

• (NWL)/.37

After the Close:

• None of note

Economic Releases 
8:30 am EST

• The Import Price Index MoM for Jan. is estimated to fall by -.2% versus a +.3% gain in Dec. 

• The Export Prices Index MoM for Jan. is estimated to fall by -.1% versus a -.2% decline in Dec.

• Retail Sales Advance MoM for Jan. is estimated to rise +.3% versus a +.3% gain in Dec.

9:15 am EST

• Industrial Production MoM for Jan. is estimated to fall by -.2% versus a -.3% decline in Dec.

• Capacity Utilization for Jan. is estimated to fall to 76.8% versus 77.0% in Dec.

• Manufacturing Production for Jan. is estimated to fall by -.1% versus a +.2% gain in Dec.
  

10:00 am EST

• Business Inventories for Dec. is estimated to rise +.1% versus a -.2% decline in Nov.

• Preliminary Univ. of Mich. Consumer Confidence for Feb. is estimated to fall to 99.4 versus 99.8 in Jan.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone GDP report and the Bloomberg US Economic Survey for Feb. 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 technology and industrial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.