Tuesday, April 08, 2025

Stocks Reversing Lower into Final Hour on China's Trade War Escalation, Global Growth Fears, Higher Long-Term Rates, Consumer Discretionary/Energy Sector Weakness

  Broad Equity Market Tone:

  • Advance/Decline Line: Lower
  • Sector Performance: Mixed
  • Volume: Heavy
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • Volatility(VIX) 49.8 +6.1%
  • S&P 500 Intraday % Swing 2.3 -73.4%
  • Bloomberg Global Risk On/Risk Off Index 39.5 +.7%
  • Euro/Yen Carry Return Index 179.5 -.7%
  • Emerging Markets Currency Volatility(VXY) 9.8 -.5%
  • CBOE S&P 500 Implied Correlation Index 46.4 +6.4% 
  • ISE Sentiment Index 118.0 -7.0 points
  • Total Put/Call 1.17 -4.1%
  • NYSE Arms 1.66 +253.1%
  • NYSE Non-Block Money Flow -$165.0M 
Credit Investor Angst:
  • North American Investment Grade CDS Index 77.1 +.6%
  • US Energy High-Yield OAS 535.6 +1.9%
  • Bloomberg TRACE # Distressed Bonds Traded 343.0 +34.0
  • European Financial Sector CDS Index 83.3 -3.9%
  • Deutsche Bank Subordinated 5Y Credit Default Swap 197.1 -5.3%
  • Italian/German 10Y Yld Spread 120.0 basis points -6.0 basis points
  • Asia Ex-Japan Investment Grade CDS Index 114.2 -4.0%
  • Emerging Market CDS Index 223.0 -.3%
  • Israel Sovereign CDS 112.77 -1.1%
  • China Corp. High-Yield Bond USD ETF(KHYB) 23.1 -.4%
  • 2-Year SOFR Swap Spread -28.75 basis points -6.0 basis points
  • 3M T-Bill Treasury Repo Spread -2.5 basis points +7.75 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -1.25 +3.25 basis points
  • MBS  5/10 Treasury Spread 158.0 +4.0 basis points
  • Bloomberg CMBS Investment Grade Bbb Average OAS 637.0 +11.0 basis points
  • Avg. Auto ABS OAS 64.0 +3.0 basis points
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 37.34 -.21%
  • 3-Month T-Bill Yield 4.29% +3.0 basis points
  • China Iron Ore Spot 93.9 USD/Metric Tonne -1.0%
  • Dutch TTF Nat Gas(European benchmark) 36.2 euros/megawatt-hour -2.1%
  • Citi US Economic Surprise Index -6.7 -1.1 points
  • Citi Eurozone Economic Surprise Index 12.2 -.6 point
  • Citi Emerging Markets Economic Surprise Index 1.8 -.6 point
  • S&P 500 Current Quarter EPS Growth Rate YoY(19 of 500 reporting) +4.1% -3.4 percentage points
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 278.0 -.43:  Growth Rate +13.2% -.2 percentage point, P/E 18.6 +.6
  • S&P 500 Current Year Estimated Profit Margin 13.54% -3.0 basis points
  • NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
  • NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 418.52 -.54: Growth Rate +21.0% -.2 percentage point, P/E 26.0 +1.3
  • Bloomberg US Financial Conditions Index -1.08 +6.0 basis points
  • Bloomberg Euro-Zone Financial Conditions Index .14 -57.0 basis points
  • US Yield Curve 51.5 basis points (2s/10s) +10.5 basis points
  • US Atlanta Fed GDPNow Q1 Forecast -2.8% unch.
  • US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 42.7% -5.1 percentage points
  • Cleveland Fed Inflation Nowcast Core PCE YoY +2.68% unch.: CPI YoY +2.49% unch.
  • 10-Year TIPS Spread 2.23 +4.0 basis points
  • Highest target rate probability for June 18th FOMC meeting: 50.0% (-11.2 percentage points) chance of 4.0%-4.25%. Highest target rate probability for July 30th meeting: 49.8%(-7.9 percentage points) chance of 3.75%-4.0%. (current target rate is 4.25-4.5%)
Overseas Futures:
  • Nikkei 225 Futures: Indicating -250 open in Japan 
  • China A50 Futures: Indicating -385 open in China
  • DAX Futures: Indicating -192 open in Germany
Portfolio:
  • Higher: On gains in my tech/financial/industrial sector longs, index hedges and emerging market shorts
  • Disclosed Trades: Added to my (IWM)/(QQQ) hedges, took profits in my financial sector longs
  • Market Exposure: Moved to Market Neutral

Bear Radar

Style Underperformer:

  • Small-Cap Growth -.3%
Sector Underperformers:
  • 1) Oil Service -2.6% 2) Alt Energy -2.4% 3) Biotech -1.4%
Stocks Falling on Unusual Volume: 
  • SOBO, VIPS, PDD, NE, GNK, LGIH, TX, SLNO, INGM, DNTH, AA, PCVX, ONON, PCVX, VTLE, AR, BABA, LEVI, VAL, ZTO, LMND, SQM, PRAA, BZ, RPM, GBX, SOC, IMAX, LI, MUR, RKT, RH, IRON, SBLK, W, JKS, ALB, MNSO, KALV and DQ
Stocks With Unusual Put Option Activity:
  • 1) AR 2) GPN 3) LEVI 4) LQD 5) KC
Stocks With Most Negative News Mentions:
  • 1) AA 2) GERN 3) CVRX4) SMTC 5) VIRT
Sector ETFs With Most Negative Money Flow:
  • 1) XLP 2) XLE 3) XLY 4) XLC 5) XLU

Bull Radar

Style Outperformer:

  • Large-Cap Growth +2.4%
Sector Outperformers:
  • 1) Healthcare Providers +3.4% 2) Defense +3.4% 3) Insurance +2.9%
Stocks Rising on Unusual Volume:
  • PCRX, CNR, CVNA, LOCO, BTU, ALHC, HUM, RYTM, HNRG, HCC, LOAR, PDI, TBBK, PDI, CVS, BWXT, AVGO, PCN, CCL, MRVL, CYBR, CUK, SATS, UNH, APP, PLTR, ANET, EIC, SATS, ARM, MELI, DB, RIVN, BA, SRAD, ARLP, PLMR, RBRK, REVG, BSTZ, NCLH, GOF, NVDA, PDO, NBXG, AMAT, SMFG, PAXS, SUPV, ANGI, SBGI, ETY, MRX, AAMI, LNG, IOT, JHG, PANW, GE, CSQ, BBAR, RA, DRVN, MUFG, BGB, PTY, GHY and ECAT
Stocks With Unusual Call Option Activity:
  • 1) LVS 2) HOG 3) PRMW 4) PRMW 5) GPN
Stocks With Most Positive News Mentions:
  • 1) AGL 2) CRMD 3) PCRX 4) HUM 5) RYTM
Sector ETFs With Most Positive Money Flow:
  • 1) IGV 2) XLF 3) SOXX 4) XRT 5) XOP
Charts:

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

Earnings of Note 
Company/Estimate 

Before the Open:
  • (DAL)/.38
  • (NEOG)/-.02
  • (SMPL)/.40
After the Close: 
  • (STZ)/2.28
  • (PSMT)/1.44
Economic Releases

10:00 am EST

  • Wholesale Inventories MoM for Feb. is estimated to rise +.4% versus a +.3% gain in Jan.
  • Wholesale Trade Sales MoM for Feb. is estimated to rise +.8% versus a -1.3% decline in Jan.

10:30 am EST

  • Bloomberg consensus estimates call for a weekly crude oil inventory gain of +1,748,570 barrels versus a +6,165,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -1,082,290 barrels versus a -1,551,000 barrel decline the prior week. Distillate inventories are estimated to rise by +248,430 barrels versus a +264,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise +.63% versus a -1.0% decline prior.

2:00 pm EST

  • March 19 FOMC Meeting Minutes.

Upcoming Splits

  • None of note
Other Potential Market Movers
  • The Fed's Barkin speaking, USTR's Jamieson Greer's testimony to House, 10Y T-Note auction, weekly MBA Mortgage Applications report, Thomson Reuters IPSOS PCSI for April, (SNPS) annual meeting and the (WMT) investment community meeting 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 +39.7% Above 100-Day Average 
  • Nasdaq/NYSE Volume Ratio 12.0 +3.4
  • 0 Sectors Declining, 11 Sectors Rising
  • 90.4% of Issues Advancing, 8.8% Declining 
  • TRIN/Arms 1.01 +114.8%
  • Non-Block Money Flow +$314.0M
  • 1 New 52-Week Highs, 40 New Lows
  • 20.4% (+17.1%) of Issues Above 200-day Moving Average
  • Average 14-Day RSI 33.5 +13.1
Other:
  • Bloomberg Global Risk-On/Risk-Off Index 49.5 +25.8%
  • Bloomberg Cyclicals/Defensives Index 226.3 +1.3%
  • Russell 1000: Growth/Value 19,517.7 +1.3%
  • CNN Fear & Greed Index 8.0 (EXTREME FEAR) +4.0
  • 1-Day Vix 39.1 -41.3%
  • Vix 37.7 -19.7%
  • Total Put/Call 1.11 -9.0%

Monday, April 07, 2025

Tuesday Watch

Evening Headlines

Bloomberg: 

Zerohedge: 

The Wall Stree Journal:
CNBC:
Fox News:
TheGatewayPundit.com:

The Epoch Times:

Around X:
  • @elonmusk
  • @WallStreetApes
  • Kevin O'Leary EXPERTLY educates a liberal reporter on Tariffs. This is the most educational and well put together explanation of what Donald Trump is doing with tariffs I’ve seen. If you have any questions on tariffs, watch this discussion, you’ll be an expert: (video)
  • This post got 38k+ Likes in under 48 hours. There is OVERWHELMING demand for politicians to be held accountable for laundering our money. Elon Musk “For fake NGOs, I think there needs to be a number of arrests in that regard as well, because these are fake charities where mostly Democrats. — I want to be clear, there's sometimes a little bit of Republican in there, because they sometimes throw the Republicans a bone to say, hey, be quiet about this. So that's where you start getting the uniparty thing going on. But it is overwhelmingly to Democrats, and they give these billions of dollars to NGOs run by Democrats that then go through a whole network of additional NGOs. It's a giant money laundering scheme. Really, at this point, I think the word NGO and money laundering are almost synonymous.”
  • @DC_Draino  
  • @KanekoaTheGreat
  • SHOCKING: Senator @ChuckSchumer passionately advocates for a 27.5% tariff on China in 2005! "It says to the Chinese that their unfair trade policies have got to end. The Chinese have enjoyed a yuge trade surplus with the U.S. Every year it gets larger and larger." "Much of that trade surplus is because the Chinese don't play fair. They don't let our goods into their country. I can tell you company after company in New York who cannot sell goods in China or can only sell them under impossible conditions." "The Chinese make no effort to prevent the ripping off of our intellectual property. These are our crown jewels. The thinking. The great creativity. The great entrepreneurialness of the American business community is just taken, and they shrug their shoulders." (video)
  • @NicoleShanahan
  • @MarioNawful
  • UKRAINE IS BUILDING A $1.5 BILLION SKI RESORT IN THE MOUNTAINS?! Ukraine is building a giant ski and vacation resort called GORO in the Lviv region — and it’s going to cost $1.5 billion. The project will include Ukraine’s first-ever gondola lift (2.8 km long), the country’s longest ski slope (3.8 km), and 25 hotels with 5,500 rooms. OKKO Group, the gas station company behind it, is paying $500 million and plans to raise another $1 billion from investors. Construction was delayed by the war, but the first part of the resort should be finished by 2028. (video)
  • ASIA CREDIT DEFAULT SWAPS BLOW OUT TO 2020 LEVELS. Credit-default swaps across Asia widened at the fastest pace since the March 2020 Covid crash. The spike follows Trump’s tariff escalation and China’s retaliation, triggering a deepening selloff in risk assets. Markets are pricing in elevated credit risk as fears of a global economic slowdown surge.
  • @kylenabecker 
  • @nicksortor
  • @APompliano
  • Stanley Druckenmiller thinks tariffs are the lesser of two evils. We have to do something given the current situation the United States finds itself in. Listen to the GOAT explain. (video)
  • @JimFergusonUK
  • @WCdispatch_
  • REPORT: The Trump tariffs have set off endless speculation and market turmoil, but no one is talking about the real target in this agenda: China. An analysis shows that nearly all of the countries on the tariff list hit with high tariffs are part of the Chinese Belt and Road Initiative (BRI). The tariffs escalate the U.S.-China economic rivalry, with China retaliating with a 34% tariff on U.S. goods, contributing to a $5 trillion global market loss. By targeting BRI countries like Indonesia and Pakistan, the U.S. aims to weaken China’s $2.9 trillion trade network, potentially forcing nations to choose between Chinese investment and U.S. market access, signaling a broader economic warfare strategy to undermine China’s BRI and global economic dominance. (pic)
  • @Breaking911
  • @anish_koka
  • Jaw dropping numbers : CEO of the American Heart Association makes $4million annually. Annual revenue: $ 972 million. Annual Employee compensation: $435 million. (pic)
Night Trading 
  • Asian equity indices are +2.0% to +3.0% on average.
  • Asia Ex-Japan Investment Grade CDS Index 107.25 +10.0 basis points.
  • China Sovereign CDS 73.5 +4.5 basis points.
  • China Iron Ore Spot 97.5 USD/Metric Tonne -.11%
  • Bloomberg Emerging Markets Currency Index 36.4 +.02%.
  • Bloomberg Global Risk-On/Risk Off Index 39.3 +.2%.
  • Volatility Index(VIX) futures 27.4 -2.8%.
  • Euro Stoxx 50 futures +1.6%.
  • S&P 500 futures +.81%.
  • NASDAQ 100 futures +.75%.  
Morning Preview Links

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