Stocks Finish Lower on Coronavirus Fears, Earnings Jitters, Global Growth Worries, Transport/Financial Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 14.8 +8.0%

• Euro/Yen Carry Return Index 123.06 -.39%

• Emerging Markets Currency Volatility(VXY) 6.52 +1.4%

• S&P 500 Implied Correlation 37.89 +6.10%

• ISE Sentiment Index 113.0 +31
  

• Total Put/Call .79 -3.7%

• NYSE Arms 1.17 -18.18%

Credit Investor Angst:

• North American Investment Grade CDS Index 44.6 +.83%
  

• America Energy Sector High-Yield CDS Index 634.0 +.44%

• European Financial Sector CDS Index 47.13 +1.04%

• 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 170.48 +.06%

• 2-Year Swap Spread 2.25 -.5 basis point

• TED Spread 12.75 +.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -10.75 -2.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 64.79 -.37%
• 3-Month T-Bill Yield 1.57% unch.

• Yield Curve .15 -2.0 basis points

• China Iron Ore Spot 86.22 USD/Metric Tonne +1.32%

• Citi US Economic Surprise Index 44.80 -.5 point

• Citi Eurozone Economic Surprise Index -29.9 -7.6 points

• Citi Emerging Markets Economic Surprise Index 20.7 -1.4 points

• 10-Year TIPS Spread 1.67 unch.
• 28.4% chance of Fed April 29th meeting, 49.4% chance of cut at June 10th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +6 open in Japan 
• China A50 Futures: Indicating -79 open in China

• DAX Futures: Indicating -21 open in Germany

Portfolio:

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

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Morning Market Internals

NYSE Composite Index:

• Volume Running +11.8% Above 100-Day Average
• 3 Sectors Rising, 8 Sectors Declining
• 43.3% of Issues Advancing, 53.7% Declining
• 182 New 52-Week Highs, 41 New Lows
• 64.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.6%
• Vix 14.6 +6.4%
• Total Put/Call .55 -32.9%
• TRIN/Arms .94 -31.5%

Tuesday Watch

Today's Headlines

Bloomberg:

• China’s Fiscal Coffers Are Depleted Just as Virus Spurs Spending.
• China, Asia Bulk Up Economy Defenses Against Virus Ahead of G-20.     
• Most Economists See Virus Pushing Japan Into Recession: Survey.
• Rare Release of Xi’s Speech on Virus Puzzles Top China Watchers.  
• Pelosi Warns Europe That Huawei Represents Chinese State Police.
• Wuhan Sharply Tightens Quarantines on Residents: Virus Update. 
• U.S. Evacuates Infected Citizens; Deaths Hit 1,775: Virus Update.
• Japan’s Economy Contracts Most Since 2014 on Tax Hike. Stocks, Bond Yields Decline After Apple Warning. Asian stocks fell with U.S. futures and bond yields after Apple Inc. said quarterly sales would miss forecasts, illustrating the blow to corporate earnings and economic growth from the deadly coronavirus. Equity benchmarks in Tokyo, Seoul and Hong Kong saw declines of over 1%. Sydney and Shanghai saw more modest drops. Apple suppliers including TDK Corp. and Tokyo Electron Ltd. slumped after the iPhone maker warned on both production and sales disruptions due to the epidemic. Ten-year Treasury yields slumped as trading restarted following a U.S. holiday Monday. Australia’s dollar dropped after the central bank said it had discussed cutting interest rates two weeks ago. Nasdaq 100 futures were down 0.6% compared with Friday’s close, as of 11:52 a.m. Tokyo time. Futures on the S&P 500 Index were down 0.3%. Topix index fell 1.2%. Australia’s S&P/ASX 200 Index fell 0.3%. Kospi index fell 1.4%. Shanghai Composite Index dropped 0.4%. Hang Seng Index fell 1.3%.
• Five Things You Need to Know to Start Your Day.    
• China Policy Pace, Bundesbank Warning, Sweden Challenge: Eco Day.
• Oil Snaps Five-Day Rally While Investors Assess Virus Measures.

Wall Street Journal:

• TikTok Wants to Grow Up, but Finds It Tough to Keep Kids Out.

• Japan’s VAT Blunder.

• New Help for Dementia Patients, Delivered Via Games and Puzzles.

• Biden’s Black Support Shows Signs of Strain.

MarketWatch.com:

• Mark Zuckerberg again calls for Big Tech to be regulated, even if it’s bad for business.

• Here are vulnerable parts of the U.S. economy that coronavirus may infect.

• Here’s the segment of the economy that may benefit from fears of coronavirus, analysts say.

Fox News:

• NYC subway thief thanks Democrats after his 139th arrest, release.

• Trump campaign fires back after Obama claims credit for economic boom.

CNBC:

• Pier 1 files for Ch. 11 bankruptcy as talks with potential buyers continue.

• Stocks expected to rise even as virus creates volatility: ‘The market thinks the worst is over’.

• Singapore’s economy grew 1% in the fourth quarter — better than estimates.

• Japan’s economy shrinks at fastest pace in 6 years, as coronavirus outbreak clouds outlook.

• Dairy Farmers of America agrees to buy Dean Foods, America’s biggest milk producer, for $425 million.

• Coronavirus live updates: Macao casinos set to reopen, but Tokyo closes its marathon.

• Apple(AAPL) cuts revenue guidance due to iPhone delays in China caused by coronavirus.

Zero Hedge: 

• Senator Cotton: China Refusing To Hand Over Evidence About Wuhan BioLab.

• "More Than A Disgrace" - The WHO's "Industrially-Necessary" Doctor Tedros Should Go!

• Wuhan Hospital Boss Dies, Beijing Finally Accepts American Infectious-Disease Experts.

• "The Situation Is Evolving" - AAPL Cuts Guidance Due To Virus Disruptions.

• Rabobank: China's Stimulus Will Struggle In The Face Of What Is Needed To Contain The Spread Of The Virus.

• Cable Sinks To Session Lows As UK Slams "Absurd" EU Trade Rules, Expects "Open & Fair" Competition.

• China's Latest Data Fabrication: Home Prices "Increased" Even As Largest Home Developer Offers 25% Discounts.

• This Is What Hedge Funds Bought And Sold In Q4: Complete 13F Summary.

• Democratic Senators Secretly Met Iranian Top Diplomat: Report.

• Blain: Evidence Of Cracking Global Supply Chains Is Fast Emerging.

• Jeff Bezos Launches $10 Billion "Bezos Earth Fund" To Fight Climate Change.

• China Stocks Surge, S&P Futs Hit All Time High On Latest Chinese Monetary Stimulus.

• US Firms In China Suffering "Severe Shortages Of Workers," Warn Virus Impact Hitting Supply Chains.

• China Central Bank Orders Lenders To "Tolerate" Higher Bad Debt Levels To Avoid Financial Cataclysm.

• Virginia Governor's 'Assault Weapons' Ban Fails After Democrats Balk.

• The Death Of Free Speech: Zuckerberg Asks Governments For Instructions On "What Discourse Should Be Allowed".

• White House Plans To Cut Off Sales Of American Chip Technology To China.
• China Adopts 'Cultural Revolution-Style' Social Controls To Crush Outbreak As Death Toll Nears 2,000.

• 24 Killed In Brutal Terror Attack On Burkina Faso Church; Local Pastor Targeted.

• Q4 Earnings Shocker: Excluding The FAAMGs, Net Income Is Down 7.5%.

• Beijing Crashes The Party: Chinese Media Warns Austerity Is Coming After FinMin Says "Proactive Fiscal Policy" No Longer Feasible.

• Record Highs And Raging Risks - The Mother Of All Head-Scratchers,

• President Xi Insists He Gave Orders To Contain Coronavirus Outbreak Weeks Before It Went Global,

• Hedge Fund CIO: Guys Text Me All Day, The Dumbest Of The Dumb Are Making Hundreds Of Thousands Daytrading Tesla Right Now.

• China's Coronavirus Numbers Don't Add Up, And The White House Doesn't Believe Them.

• Bye, Bye, Buybacks!

• Hedge Funds Have Never Been More Levered Or More Invested In The Same Handful Of Stocks,

• Watch Klobuchar & Steyer Get Stumped When Simply Asked To Name Mexico's President,

• Smoking Gun? Chinese Scientist Finds "Killer Coronavirus Probably Originated From A Laboratory In Wuhan".

Business Insider:

• China will start destroying cash collected in areas with high exposure to the coronavirus.

• Warren Buffett sold more than $800 million worth of Apple stock last quarter .

• Take a look at what technologies retailers are introducing to revamp the in-store experience.

John Hopkins University:

• Coronavirus Global Cases. (map)

Night Trading

• Asian indices are -1.25% to -.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 48.5 -1.0 basis point.

• China Sovereign CDS 34.25 +1.0 basis point.

• Bloomberg Emerging Markets Currency Index 64.96 -.11%.

• FTSE 100 futures -.57%.

• S&P 500 futures -.31%.

• NASDAQ 100 futures -.58%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• (AAP)/1.35

• (BLMN)/.35

• (EXPD)/.80

• (FLR)/.23

• (LDOS)/1.35

• (MDT)/1.38

• (VMC)/1.17

• (WMT)/1.44

After the Close:

• (A)/.81

• (AMED)/.93

• (CXO)/.80

• (HLF)/.64

• (LZB)/.64

• (SGMS)/.25

• (VNO)/1.57

Economic Releases
8:30 am EST

• Empire Manufacturing for Feb. is estimated to rise to 5.0 versus 4.8 in Jan.

10:00 am EST

• The NAHB Housing Market Index for Feb. is estimated at 75.0 versus 75.0 in Jan.

4:00 pm EST

• Net Long-Term TIC Flows for Dec.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Eurozone ZEW Index, Japan Trade Balance report and the (WMT) community meeting 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 commodity shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 50% net long heading into the week.

Weekly Outlook

• Wall St. Week Ahead by Reuters.

• Global Economy Week by Bloomberg. 

• The Week Ahead by Yahoo. (video)

• Stocks to Watch Next Week by Seeking Alpha.

• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly lower on coronavirus fears, global growth concerns, oil weakness, European/Emerging Markets/US High-Yield debt angst, profit-taking and technical selling. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.

Today's Headlines

Bloomberg: 

• China Vows More Fiscal Support as Virus Roils a Slowing Economy.

• Taiwan Taxi Driver Dies; Cruise Ship Cases Soar: Virus Update.  

• Ships Are Skipping China and It’s Causing Turmoil for Trade.  

• Hong Kong Facing ‘Tsunami-Like’ Shocks, Finance Chief Says.  

• Virus Overshadows All as Traders Brace for 2020 Fed Rate Cuts.

• There’s a Wall of Cash Eager to Buy Treasuries on Any Price Dip. 

• Dollar Defies Detractors With Its Strongest Start in Five Years.  

• Mideast Markets Are Mixed With Earnings in Spotlight: Inside EM.  

• OPEC Underestimates China Virus.

Wall Street Journal:

• Democrats Weigh Whether to Seek New Probes as Election Looms.

• The Agony of the Democrats.

• Church Shootings Survivors Run as Gun-Rights Candidates.

• Dealerships Give Car Buyers Some Advice: Stop Paying Your Loan.

CNBC:

• Coronavirus updates: China says confirmed cases at 68,500, death toll hits 1,665.

• Pelosi warns US allies: ‘Don’t go near Huawei’.

• White House considering tax incentive for more Americans to buy stocks, sources say.

• Here’s what Greenlight’s David Einhorn still believes in after trimming stocks.

• By connecting everything around us, 5G will usher in an era of true mobility.

• US health officials will check patients with flu-like symptoms for coronavirus.

• Nearly 20% of S&P 500 companies have already warned investors about virus impact.

• Coronavirus impact spreads to European auto plant and could hit GM truck production.

• Investors are flocking to the largest US growth stocks as concerns rise over the global economy.

• Trump administration may stop exporting engines co-manufactured by GE to China, WSJ says.

• Buy these cyclical stocks ‘in the shadows,’ says Jefferies.

Barron's:

• Had bullish commentary on (SAM), (COG) and (LNG).

MarketWatch.com:  

• Opinion: If you could buy only one stock for 5G and artificial intelligence, this would be it.

• Opinion: These 9 stocks will profit from Trump’s fatter budget for military technology.

Fox News:

• Biden had this to say when pressed on Obama-era record of putting kids in 'cages'.

• Biden rips Sanders after team accused of ‘viciously’ attacking culinary union.

Zero Hedge: 

• Hubei Doctors Warn Of Even-Deadlier Coronavirus Reinfection Causing Sudden Heart Attacks.

• Bloomberg Considers Hillary For Running Mate .

• Bill Gates Warns "10 Million Lives" At Risk As Virus Spreads To Africa And Taiwan Reports First Death.

• Hubei Doctors Warn Of Even-Deadlier Coronavirus Reinfection Causing Sudden Heart Attacks.

• "Tankers, Tankers. Everywhere!" - Virus Causes Historic' Traffic Jam' Across Asian Supply Lines.

• Using '1984'-Style Propaganda, Communist Party Claims President Xi Acted To Suppress Virus Earlier Than Previously Believed.

• Cambridge Academic Says Human Race Must Become Extinct To Save The Planet.

• Wuhan's Hastily-Constructed 1,000-Bed Coronavirus Hospital Is Already Falling Apart.

• China Is Disintegrating: Steel Demand, Property Sales, Traffic All Approaching Zero.

• Hubei Reports 139 New Deaths As New Governor Imposes 'War Time Conditions'.

• Roger Stone Demands New Trial After Anti-Trump Juror Outs Herself Over Social Media.

• How China Is Censoring Coronavirus Critics In The US.

• Red Scare: Love Is Never Having To Say You're Socialist.

• Shocking Video Shows People On The Street Being Rounded Up As Wuhan Begins 'Wartime' Measures.

• Bonds, Bitcoin, & Bullion Bid As 'Quarantative Easing' Hopes Send Stocks Soaring.

Business Insider:  

• Tokyo Olympics organizers says there is no 'Plan B' for 2020 summer games amid coronavirus fears. 

• Look inside Home Depot's(HD) massive new distribution center, which can hold up to 75 flatbed trucks.

• The coronavirus could cripple China's economy for longer than Wall Street wants to believe.

John Hopkins University:

• Coronavirus Global Cases. (map)