Stocks Lower into Afternoon on US Policy-Induced Stagflation Fears, Declining Fed Rate-Cut Odds, Earnings Outlook Jitters, Tech/Medical Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: About Even
  

• Sector Performance: Mixed
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 15.2 +5.6%
• DJIA Intraday % Swing .56 -27.0%
  
• Bloomberg Global Risk On/Risk Off Index 67.9 -1.7%

• Euro/Yen Carry Return Index 175.9 +.5%

• Emerging Markets Currency Volatility(VXY) 6.2 unch.

• CBOE S&P 500 Implied Correlation Index 13.6 +4.5% 

• ISE Sentiment Index 132.0 +15.0
  

• Total Put/Call .78 -16.1%

• NYSE Arms .89 -18.4%
  
• NYSE Non-Block Money Flow -$52.1M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 49.8 +1.5%
  

• US Energy High-Yield OAS 290.6 -.32%
• Bloomberg TRACE # Distressed Bonds Traded 262 -9
  

• European Financial Sector CDS Index 60.0 +.7% 
• Deutsche Bank Subordinated 5Y Credit Default Swap 179.7 +.55%
  

• Italian/German 10Y Yld Spread 126.0 basis points -2.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 99.9 +1.3%
  

• Emerging Market CDS Index 166.5 +1.5%
• Israel Sovereign CDS 115.4 -.35%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 24.6 -.2%

• 2-Year SOFR Swap Spread -11.0 basis points unch.
  

• Treasury Repo 3M T-Bill Spread 7.25 basis points -1.75 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -4.5 -.25 basis point
  
• MBS  5/10 Treasury Spread 150.0 +2.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 810.0 -4.0 basis points
  
• Avg. Auto ABS OAS 61.0 -1.0 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 39.9 -.20%
• 3-Month T-Bill Yield 5.37% -2.0 basis points
  

• China Iron Ore Spot 100.0 USD/Metric Tonne +.1%
• Dutch TTF Nat Gas(European benchmark) 27.0 euros/megawatt-hour +3.8%

• Citi US Economic Surprise Index 24.6 -4.6 points

• Citi Eurozone Economic Surprise Index 51.1 -.1 point

• Citi Emerging Markets Economic Surprise Index 20.6 +1.2 points
• S&P 500 Current Quarter EPS Growth Rate YoY(499 of 500 reporting) +7.9% unch.
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 248.45 +.23:  Growth Rate +11.3% +.1 percentage point, P/E 20.6 -.1
  
• S&P 500 Current Year Estimated Profit Margin 12.82% unch.
  
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(10 of 10 reporting) +55.2% unch.
  
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 316.81 +.16: Growth Rate +31.9% +.1 percentage point, P/E 31.7 -.3
  
• Bloomberg US Financial Conditions Index 1.15 -2.0 basis points
  
• Bloomberg Euro-Zone Financial Conditions Index 1.06 -6.0 basis points
  
• US Yield Curve -42.0 basis points (2s/10s) -2.5 basis points
  
• US Atlanta Fed 1Q GDPNow Forecast +2.3% unch.
  
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 56.5% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.78% unch.: CPI YoY +3.33% unch.
  
• 10-Year TIPS Spread 2.32 +2.0 basis points
  
• Highest target rate probability for May 1st FOMC meeting: 89.1%(-2.3 percentage points) chance of 5.25%-5.5%. Highest target rate probability for June 12th meeting: 50.4%(-4.2 percentage points) chance of 5.0%-5.25%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -60 open in Japan 
• China A50 Futures: Indicating +17 open in China

• DAX Futures: Indicating +290 open in Germany

Portfolio:

• Higher:  On gains in my industrial/consumer discretionary sector longs, index hedges and emerging market shorts
  

• Disclosed Trades: None
  

• Market Exposure: 25% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Growth -1.5%
  

Sector Underperformers:

• 1) Software -3.0% 2) Internet -1.4% 3) Cyber Security -1.3%

Stocks Falling on Unusual Volume: 

• NRDS, JAMF, STM, OPRA, BTU, TMDX, INTU, BRZE, BASE, FMS, AMR, GIII, NRIX, EURN, PGY, NUVL, PUBM, SLVM, S, ULTA, AORT, ABT, EXPI, AVAV, FLEX, DFH, HIBB, SANM, IOT, SMAR, PD, ZIP, SGML, ZG, Z, ADBE, JBL and GRPN
  

Stocks With Unusual Put Option Activity:

• 1) JBL 2) ULTA 3) DG 4) Z 5) CYTK
  

Stocks With Most Negative News Mentions:

• 1) ZG 2) ABT 3) AMPS 4) ADBE 5) JBL
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.3%
  

Sector Outperformers:

• 1) Homebuilding +1.1% 2) Regional Banks +.8% 3) Energy +.7%

Stocks Rising on Unusual Volume:

• CDLX, AVD, GCT, CRGX, DESP, MDGL, EH, ROOT, DK, ATXS, CSGP, ALTG, SCCO, PBF, ERO and BBW
  

Stocks With Unusual Call Option Activity:

• 1) GSM 2) FMX 3) AM 4) DKS 5) DB

Stocks With Most Positive News Mentions:

• 1) CDLX 2) GCT 3) DESP 4) TLS 5) GERN
  

Charts:

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

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

Earnings of Note 
Company/Estimate 

Before the Open:

• (SAIC)/1.47

After the Close: 

• (STNE)/1.44

Economic Releases

8:30 am EST

• NY Fed Services Business Activity for March.

10:00 am EST

• The NAHB Housing Market Index for March is estimated at 48.0 versus 48.0 in Feb.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The BofA Industrials Conference, (ISRG) business update and the BofA Electronic Payments Symposium could also impact global trading on Monday.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +26.8% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 5.6 -2.8
  
• 7 Sectors Declining, 4 Sectors Rising
• 58.0% of Issues Advancing, 38.6% Declining 
• TRIN/Arms .74 -33.0%
  
• Non-Block Money Flow -$12.1M
  
• 65 New 52-Week Highs, 39 New Lows
• 59.4% (+1.7%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 64.0 unch.
  

Other:

• Bloomberg Global Risk-On/Risk-Off Index 69.0 +1.8%
• Bloomberg Cyclicals/Defensives Pair Index 141.5 +.08%
  
• Russell 1000: Growth/Value 19,008.7 -1.0%
• CNN Fear & Greed Index 71.0 (Greed) -1.0
  
• 1-Day Vix 12.7 +7.1%
  
• Vix 14.7 +1.8%
  
• Total Put/Call .82 -11.8%

Friday Watch

Night Trading 

• Asian equity indices are -1.25% to -.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 99.75 -.75 basis point.

• China Sovereign CDS 68.25 +2.25 basis points.
  
• China Iron Ore Spot 101.6 USD/Metric Tonne -1.6%.

• Bloomberg Emerging Markets Currency Index 39.9 -.12%.
• Bloomberg Global Risk-On/Risk Off Index 70.0 +1.4%.
• Volatility Index(VIX) futures 15.4 -.4%.
• Euro Stoxx 50 futures -.06%

• S&P 500 futures unch.

• NASDAQ 100 futures -.04%.  

Morning Preview Links

BOTTOM LINE: Asian indices are modestly lower, weighed down by technology and industrial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 25% net long heading into the day.