Morning Market Internals

NYSE Composite Index:

• Volume Running +40.0% Above 100-Day Average
• 11 Sectors Rising, 0 Sectors Declining
• 70.4% of Issues Advancing, 26.6% Declining
• 17 New 52-Week Highs, 137 New Lows
• 44.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 36.6%
• Vix 25.4 -8.8%
• Total Put/Call 1.16 -13.4%
• TRIN/Arms .95 -16.7%

Wednesday Watch

Night Trading 

• Asian equity indices are -2.0% to -1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 53.5 +1.25 basis points.

• China Sovereign CDS 40.5 +2.25 basis points.

• Bloomberg Emerging Markets Currency Index  64.01 -.1%.
• FTSE 100 futures -.9%.

• S&P 500 futures +.31%.

• NASDAQ 100 futures +.42%.

Morning Preview Links

Earnings of Note 

Company/Estimate

Before the Open:

• (CARS)/.37
• (CK)/-.06
• (CM)/3.00
• (EV)/.85
• (FOSL)/.77
• (SJM)/2.24
• (LOW)/.91
• (ODP)/.08
• (PZZA)/.32
• (SINA)/.64
• (TJX)/.77
• (UTHR)/3.47
• (WB)/.72
• (WEN)/.09 

After the Close:

• (APA)/-.05
• (CVNA)/-.63
• (CCI)/1.45
• (LB)/1.85
• (MAR)/1.47
• (NTES)/24.86
• (SQ)/.21
• (STAA)/.10
• (TDOC)/-.32
• (UHS)/2.57

Economic Releases 

10:00 am EST

• New Home Sales for Jan. is estimated to rise to 715K versus 694K in Dec.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +1,815,330 barrels versus a +415,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -2,085,670 barrels versus a -1,971,000 barrel decline prior. Distillate supplies are estimated to fall by -1,586,220 barrels versus a -635,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.53% versus a +1.4% gain prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone Retail Sales reports, $41B 5Y T-Note auction, weekly MBA mortgage applications report, BofA Merrill Ag/Materials Conference and the CSFB Financial Services Forum 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 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.

Stocks Falling Substantially into Final Hour on Coronavirus Fears, European/Emerging Markets/US High-Yield Debt Angst, Oil Decline, Energy/Transport Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Every Sector Declining
  

• Volume: Heavy

• Market Leading Stocks: Underperforming 

Equity Investor Angst:

• Volatility(VIX) 28.9 +15.7%

• Euro/Yen Carry Return Index 124.28 -.32%

• Emerging Markets Currency Volatility(VXY) 7.2 -.14%

• S&P 500 Implied Correlation 52.19 +6.62%

• ISE Sentiment Index 79.0 -4
  

• Total Put/Call 1.12 +4.7%

• NYSE Arms .92 -44.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 56.69 +8.53%
  

• America Energy Sector High-Yield CDS Index 704.0 +7.34%

• European Financial Sector CDS Index 58.58 +4.58%

• Italian/German 10Y Yld Spread 150.0 +5.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 52.95 +.99%
  

• Emerging Market CDS Index 212.14 +3.65%
  

• iBoxx Offshore RMB China Corporate High Yield Index 171.0 +.01%

• 2-Year Swap Spread 1.5 +.25 basis point

• TED Spread 13.25 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -8.75 +2.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 64.05 -.12%
• 3-Month T-Bill Yield 1.51% -2.0 basis points

• Yield Curve .12 unch.

• China Iron Ore Spot 88.29 USD/Metric Tonne +1.02%

• Citi US Economic Surprise Index 44.80 -1.8 points

• Citi Eurozone Economic Surprise Index -2.30 -.8 point

• Citi Emerging Markets Economic Surprise Index 16.2 -5.7 points

• 10-Year TIPS Spread 1.53 -6.0 basis points
• 47.3% chance of 25.0 basis point Fed rate cut at April 29th meeting, 44.8% chance of 25.0 basis point cut at June 10th meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -670 open in Japan 
• China A50 Futures: Indicating -282 open in China

• DAX Futures: Indicating -175 open in Germany

Portfolio:

• Slightly Higher: On gains in my index hedges and emerging market shorts

• Disclosed Trades: None

• Market Exposure: 25% Net Long

Morning Market Internals

NYSE Composite Index:

• Volume Running +44.8% Above 100-Day Average
• 0 Sectors Rising, 11 Sectors Declining
• 18.4% of Issues Advancing, 79.2% Declining
• 42 New 52-Week Highs, 235 New Lows
• 54.8% of Issues Above 200-day Moving Average
• Average 14-Day RSI 42.6%
• Vix 25.0 unch.
• Total Put/Call 1.28 +19.6%
• TRIN/Arms .82 -50.6%

Tuesday Watch

Evening Headlines

Bloomberg:    

• U.S. Considers Expelling Chinese Journalists After Americans Barred.

• China Uses Surveillance State Tactics to Fight Rapid Spread of Coronavirus.

• Xi’s Response to Virus Foreshadows an Even Tighter Grip on China.

• Apple’s(AAPL) China iPhone Sales Dropped in January as Virus Emerged.

• Cases Spike Outside China; More Deaths in Italy: Virus Update.

• Japan Plunges, U.S. Futures Rise, Treasuries Slip. A sell-off that wiped out global stock gains for the year continued in Asia Tuesday amid concerns authorities around the world are struggling to keep the coronavirus from spreading. Havens including Treasuries and the yen held onto losses. Japan opened lower after a holiday, while Australia and South Korea also fell. Futures in Hong Kong pointed to a weaker start. U.S. futures edged higher after U.S. stock benchmarks slumped more than 3%, with the S&P 500 Index dropping the most since February 2018. European stocks also tumbled. Asia set the tone for the sell-off Monday, but the risk-off mood doesn’t look set to ease as the epidemic spread to more than 30 countries, with Afghanistan, Bahrain and Kuwait reporting their first cases. The yield on 10-year Treasuries approached the 2016 record low. The yen held gains after jumping almost 1% and oil was steady after it slumped. S&P 500 futures rose 0.4% as of 9 a.m. in Tokyo. The S&P 500 Index sank 3.4% to the lowest in more than three weeks. Topix index fell 3.9%. Australia’s S&P/ASX 200 Index fell 2.1%. Kospi index was little changed. Hong Kong’s Hang Seng Index futures fell 0.8% earlier. The MSCI All-Country World Index sank 3%. The Stoxx Europe 600 Index sank 3.8%, the largest tumble in almost four years.  

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

• Global Rate Cuts, Japan’s Tax Pains, China Back to Work: Eco Day.  

• Oil Holds Biggest Loss in Seven Weeks on Worsening Virus Outlook.

• Five Views on How Hard It Was to Trade Stock in Monday's Meltdown.

• Bernie Sanders Picks Up 24 Delegates From Nevada, Establishing Lead.  

• Exxon(XOM) Drops to 15-Year Low Ahead of Annual Strategy Presentation.

Wall Street Journal:

• Dow Falls 1,032 Points as Virus Spreads.

• Austin, Nashville Rank at Top of Hottest Job Markets. 

• Coronavirus’s Global Spread May Not Be Contained, WHO Says.  

• Drugmaker Ships First Experimental Coronavirus Vaccine for Human Tests. 

• Juul Pitches Locked E-Cigarette in Bid to Stay on U.S. Market.  

• HP to Buy Back $15 Billion in Stock to Battle Xerox Takeover Bid.

Fox News:

• Trump administration to ask Congress for millions to fight dangerous virus outbreak, official reveals.

MarketWatch.com:     

• Spread of coronavirus lifts odds for Fed rate cut, as inaction would be ‘tone-deaf'.

• Opinion: If the coronavirus isn’t contained, a severe global recession is almost certain .

• Investors unable to access brokerage accounts as stocks fall — what you should know for your retirement accounts.  

• UnitedHealth(UNH) stock plunges toward worst day in nearly 9 years as Sanders’ Nevada win stokes investor fear.

CNBC:

• Coronavirus live updates: Japan markets plunge 4% as virus fears spill over.

• Jim Cramer reveals stand-out sectors after the market tanks on coronavirus fears.

• Jim Cramer: Five things investors must consider after a major market sell-off.

• Democrats hammer front-runner Bernie Sanders over his Fidel Castro defense.

• Mastercard shares drop after company warns coronavirus may hit 2020 revenue.

• Stocks making the biggest moves after hours: Shake Shack, HP, Moderna and more.

• Coronavirus fears cause mortgage rates to plunge to 8-year low.

Zero Hedge:

• Most Americans Are Not Taking This Coronavirus Outbreak Seriously, And That Is Potentially Very Dangerous.

• Are We Seriously Debating Capitalism Vs. Socialism Again?

• China Mobile Phone Sales Crash Most On Record.

• 8,000 Californians Put Under "Self-Imposed Quarantine", CDC Warns Against Travel To South Korea: Virus Updates.

• United Airlines Abandons Full Year Guidance Due To Virus Uncertainty.

• If CDC Believes US Coronavirus Outbreak Is "Imminent", Why Have Only 400 People Been Tested?

• India Rolls Out MAGA Red Carpet For Trump As He's Greeted By Hundreds Of Thousands.

• Covid-19 Contagion Sparks Carnage As Stocks Wipe Out All 2020 Gains.

Business Insider:  

• How the 'failed' quarantine of the Diamond Princess cruise ship started with 10 coronavirus cases and ended with more than 690. 

• Photos show what Italy is like under lockdown as the country becomes Europe's epicenter of the coronavirus with more than 200 cases reported in 3 days.

John Hopkins University:

• Coronavirus Global Cases. (map)

BNO News:

• Tracking Coronavirus: Map, data and timeline.

Night Trading 

• Asian equity indices are -1.5% to -.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 52.25 +1.5 basis points.

• China Sovereign CDS 38.25 +1.25 basis points.

• Bloomberg Emerging Markets Currency Index  64.21 +.13%.

• FTSE 100 futures +.7%.

• S&P 500 futures +.97%.

• NASDAQ 100 futures +1.27%.

Morning Preview Links

Earnings of Note 
Company/Estimate

Before the Open:

• (AMT)/1.90

• (AMWD)/1.45

• (CBRL)/2.55

• (FLR)/.22

• (HD)/2.11

• (LL)/.21

• (M)/1.96

• (TUP)/.48

• (WWW)/.59

After the Close:

• (BGS)/.30

• (PODD)/.12

• (JAZZ)/3.68

• (PLNT)/.41

• (RRGB)/-.12

• (CRM)/.56

• (TOL)/.46

Economic Releases 
9:00 am EST

• The 4Q House Price Purchase Index.

• The FHFA House Price Index MoM for Dec. is estimated to rise +.4% versus a +.2% gain in Nov.

• The S&P CoreLogic CS 20-City YoY for Dec. is estimated to rise +2.8% versus a +2.55% gain in Nov.

10:00 am EST

• The Conference Board Consumer Confidence Index for Feb. is estimated to rise to 132.0 versus 131.6 in Jan. 

• The Richmond Fed Manufacturing Index for Feb. is estimated to fall to 10.0 versus 20.0 in Jan.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Clairda speaking, Eurozone GDP report, weekly US retail sales reports, $40B 2Y T-Note auction, Mobile World Congress, Leerink Healthcare Conference, (DLX) analyst day and (JPM) investor day 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 25% net long heading into the day.