Stocks Rising into Afternoon on Lower Long-Term Rates, US Economic Data, Regional Bank Reversal Higher, Tech/Medical Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 14.3 -1.1%
• DJIA Intraday % Swing .45 -60.7%
  
• Bloomberg Global Risk On/Risk Off Index 65.9 -2.6%

• Euro/Yen Carry Return Index 176.2 -.1%

• Emerging Markets Currency Volatility(VXY) 6.2 -.16%

• CBOE S&P 500 Implied Correlation Index 14.3 -5.0% 

• ISE Sentiment Index 172.0 +55.0
  

• Total Put/Call .87 -16.4%

• NYSE Arms 1.14 +32.6%
  
• NYSE Non-Block Money Flow +$298.0M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 50.9 -1.34%
  

• US Energy High-Yield OAS 303.82 -.18%
• Bloomberg TRACE # Distressed Bonds Traded 281 +3
  

• European Financial Sector CDS Index 62.4 -2.5% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 207.2 -1.97%
  

• Italian/German 10Y Yld Spread 132.0 basis points -7.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 102.7 +1.0%
  

• Emerging Market CDS Index 165.0 -1.7%
• Israel Sovereign CDS 120.1 -1.4%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.6 +.02%

• 2-Year SOFR Swap Spread -9.25 basis points unch.
  

• Treasury Repo 3M T-Bill Spread 8.5 basis points +2.0 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -5.0 unch.
  
• MBS  5/10 Treasury Spread 151.0 -3.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 825.0 +2.0 basis points
  
• Avg. Auto ABS OAS 63.0 unch.
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 40.0 +.03%
• 3-Month T-Bill Yield 5.38% +2.0 basis points
  

• China Iron Ore Spot 115.9 USD/Metric Tonne +.5%
• Dutch TTF Nat Gas(European benchmark) 26.6 euros/megawatt-hour -3.3%

• Citi US Economic Surprise Index 25.4 -2.2 points

• Citi Eurozone Economic Surprise Index 57.1 +2.3 points

• Citi Emerging Markets Economic Surprise Index 14.2 +1.3 points
• S&P 500 Current Quarter EPS Growth Rate YoY(493 of 500 reporting) +7.2% -.6 percentage point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 247.53 +.15:  Growth Rate +11.0% unch., P/E 20.7 +.1
  
• S&P 500 Current Year Estimated Profit Margin 12.82% -1.0 basis point
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(9 of 10 reporting) +57.3% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 315.63 +.12: Growth Rate +30.9% unch., P/E 31.2 +.3
  
• Bloomberg US Financial Conditions Index 1.0 -10.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index .95 -3.0 basis points
  
• US Yield Curve -44.5 basis points (2s/10s) -2.5 basis points
  
• US Atlanta Fed 1Q GDPNow Forecast +2.5% +.4 percentage point
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 58.8% +2.6 percentage points
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.72% unch.: CPI YoY +3.12% unch.
  
• 10-Year TIPS Spread 2.30 -3.0 basis points
  
• Highest target rate probability for May 1st FOMC meeting: 78.7%(-1.5 percentage points) chance of 5.25%-5.5%. Highest target rate probability for June 12th meeting: 57.1%(-2.1 percentage points) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +210 open in Japan 
• China A50 Futures: Indicating +13 open in China

• DAX Futures: Indicating +12 open in Germany

Portfolio:

• Higher:  On gains in my industrial/tech/transport/biotech sector longs
  

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
  

• Market Exposure: Moved to 75% Net Long
  

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

Earnings of Note 
Company/Estimate 

Before the Open:

• (ABM)/.71
• (AEO)/.50
• (BJ)/1.06
• (BURL)/3.31
• (CIEN)/.48
• (KR)/1.13
• (TTC)/.66
  

After the Close: 

• (AVGO)/10.40
• (COST)/3.62
• (DOCU)/.65
• (LOCO)/.16
• (GPS)/.23
• (MDB)/46
• (SWBI)/.11
• (BIG)/-.23
• (MRVL)/.46
• (SSYS)/.02
  

Economic Releases

7:30 am EST

• Challenger Job Cuts YoY for Feb.
  

8:30 am EST

• The Trade Balance for Jan. is estimated to widen to -$63.5B versus -$62.2B in Dec.
• Initial Jobless Claims for last week are estimated to rise to 217K versus 215K the prior week.
• Continuing Claims are estimated to fall to 1880K versus 1905K prior.
  

12:00 pm EST

• 4Q Household Change in Net Worth.
  

3:00 pm EST

• Consumer Credit for Jan. is estimated to rise to $10.0B versus $1.561B in Dec.

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Fed's Powell testimony to Senate, Fed's Mester speaking, Atlanta Fed GDPNow 1Q update, State of the Union address, Fed's balance sheet report, ECB meeting, weekly EIA natural gas inventory report, (GE) investor day, (AMAT) general meeting, Morgan Stanley Tech/Media/Telecom Conference and the (CI) investor day 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 +22.3% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 8.9 -2.4
  
• 0 Sectors Declining, 11 Sectors Rising
• 75.3% of Issues Advancing, 22.8% Declining 
• TRIN/Arms 1.32 +52.3%
  
• Non-Block Money Flow +$349.1M
  
• 169 New 52-Week Highs, 25 New Lows
• 60.9% (+2.5%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 70.0 +2.0
  

Other:

• Bloomberg Global Risk-On/Risk-Off Index 65.9 -2.5%
• Bloomberg Cyclicals/Defensives Pair Index 142.6 -.3%
  
• Russell 1000: Growth/Value 19,118.2 +.15%
• CNN Fear & Greed Index 75.0 (Extreme Greed) unch.
  
• 1-Day Vix 10.0 -21.7%
  
• Vix 14.3 -.9%
  
• Total Put/Call .84 -19.2%

Wednesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 102.5 +1.75 basis points.

• China Sovereign CDS 67.5 +1.75 basis points.
  
• China Iron Ore Spot 113.2 USD/Metric Tonne -1.1%.

• Bloomberg Emerging Markets Currency Index 40.0 -.09%.
• Bloomberg Global Risk-On/Risk Off Index 67.6 +.1%.
• Volatility Index(VIX) futures 15.6 -.04%.
• Euro Stoxx 50 futures -.10%

• S&P 500 futures +.02%.

• NASDAQ 100 futures +.20%.  

Morning Preview Links

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

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