Wednesday, April 01, 2020

Thursday Watch

Evening Headlines
Bloomberg:                
  • Asian Stocks Decline; U.S. Equity Futures Rise. Stocks in Asia fell, though losses were shallower than those on Wall Street overnight, as investors continue to gauge the impact of the stringent measures being used to contain the coronavirus. Japanese shares opened lower with more modest declines in South Korea, while the Sydney market lost more than 2%. Futures on the S&P 500 advanced about 1% after the index on Tuesday tumbled again. In the latest virus developments, France and Spain reported another increase in fatalities, while Italy and Germany moved to extend lockdown measures and Florida ordered people to stay home. New York Governor Andrew Cuomo said a model showed the Covid-19 outbreak may not peak in the state until the end of April. S&P 500 futures rose 1.1% as of 9:05 a.m. in Tokyo. The S&P 500 fell 4.4%. Japan’s Topix index lost 0.7%. South Korea’s Kospi index added 0.4%. Australia’s S&P/ASX 200 Index slid 2%.    
Wall Street Journal:
CNBC.com:    
Zero Hedge:
Night Trading 
  • Asian equity indices are -2.0% to -1.0% on average.
  • Asia Ex-Japan Investment Grade CDS Index 154.0 +15.25 basis points.
  • China Sovereign CDS 59.75 +6.75 basis points.
  • Bloomberg Emerging Markets Currency Index 57.87 -.11%.
  • Euro Stoxx 50 futures -1.25%.
  • S&P 500 futures +.59%.
  • NASDAQ 100 futures +.4%.
Morning Preview Links

Earnings of Note 
Company/Estimate
Before the Open:
  • (AYI)/1.90
  • (APOG)/.35
  • (KMX)/1.13
  • (CCL)/-1.27
  • (SCHN)/.24
  • (WBA)/1.46
After the Close:
  • (CHWY)/-.12
  • (PLAY)/.71
  • (RECN)/.08
Economic Releases 
7:30 am EST
  • Challenger Job Cuts YoY for March.
8:30 am EST
  • The Trade Balance for Feb. is estimated at -$40.0B versus -$45.3B in Jan.
  • Initial Jobless Claims for last week are estimated to rise to 3600K versus 3283K the prior week.
  • Continuing Claims are estimated to rise to 3600K versus 3283K prior.
10:00 am EST
  • Factory Orders for Feb. is estimated to rise +.2% versus a -.5% decline in Jan. 
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Eurozone PPI report, weekly Bloomberg Consumer Comfort Index report, weekly EIA natural gas inventory report and the (BMY) investor day could also impact trading today.
Market Hours
Normal:
  • 9:30 am - 4:00 pm EST
BOTTOM LINE: Asian indices are lower, weighed down by financial 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 25% net long heading into the day.

Stocks Falling Substantially Into Final Hour on Coronavirus Fears, European/Emerging Markets/US High-Yield Debt Angst, Global Reccesion Worries, Financial/Homebuilding Sector Weakness

 Broad Equity Market Tone:
  • Advance/Decline Line: Substantially Lower
  • Sector Performance: Almost Every Sector Declining
  • Volume: Heavy
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • Volatility(VIX) 56.1 +4.7%
  • Euro/Yen Carry Return Index 121.74 -1.3%
  • Emerging Markets Currency Volatility(VXY) 12.6 +2.7%
  • S&P 500 Implied Correlation 86.5 +10.8%
  • ISE Sentiment Index 75.0 +19.0 points
  • Total Put/Call 1.20 -.83%
  • NYSE Arms .86 -23.21%
Credit Investor Angst:
  • North American Investment Grade CDS Index 121.98 +8.56%
  • America Energy Sector High-Yield CDS Index 1,402.0 +1.03%
  • European Financial Sector CDS Index 125.40 +6.4%
  • Italian/German 10Y Yld Spread 196.75 -2.75 basis points
  • Asia Ex-Japan Investment Grade CDS Index 148.0 +5.2%
  • Emerging Market CDS Index 378.28 +7.21%
  • iBoxx Offshore RMB China Corporate High Yield Index 165.10 +.23%
  • 2-Year Swap Spread 25.0 -1.0 basis point
  • TED Spread 136.0 -5.0 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap 54.25 +10.75 basis points
  • MBS  5/10 Treasury Spread  137.0 +10.0 basis points
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 57.85 -1.21%
  • 3-Month T-Bill Yield .05% +2.0 basis points
  • Yield Curve .40 -6.0 basis points
  • China Iron Ore Spot 77.60 USD/Metric Tonne -5.3%
  • Citi US Economic Surprise Index 24.8 +27.8 points
  • Citi Eurozone Economic Surprise Index -41.60 +8.6 points
  • Citi Emerging Markets Economic Surprise Index 0.0 +6.6 points
  • 10-Year TIPS Spread .95 +8.0 basis points
  • n/a chance of no change at April 29th meeting, n/a chance of no change at June 10th meeting
Overseas Futures:
  • Nikkei 225 Futures: Indicating -140 open in Japan 
  • China A50 Futures: Indicating -233 open in China
  • DAX Futures: Indicating -147 open in Germany
Portfolio:
  • Slightly Higher: On gains in my consumer staple sector longs, index hedges and emerging market shorts
  • Disclosed Trades: None
  • Market Exposure: 25% Net Long

Bear Radar

Style Underperformer:
  • Small-Cap Value -6.5%
Sector Underperformers:
  • 1) Airlines -10.9% 2) REITs -7.3% 3) Homebuilders -7.3%
Stocks Falling on Unusual Volume: 
  • CACC, MGM, SUM, STT, BFAM, MAR, CAKE, UPLD, BILL, XRX, ZM, ARCC, FLT, MANH, HHC, OUT, USCR, RTN, FFC, MAIN, AVB, RNP, NCLH, USCR, MAIN, RH, PDI, AVLR, OXY, ACC, PING, BC, KSS, TREX, HASI, SAVE, ERI, GDDY, EPZM, MTX, COF, ABG, BA, Z, CMTL, AKRO, SLG, LW, JWN, LEVI, AAL, JACK, PLNT, RCL, VRNT, DRI, LYV, PENN, SPG, DAL, UAL, SWAV, CCL, PLAY, KTB, DIN, IMMU and BJRI
Stocks With Unusual Put Option Activity:
  • 1) MAS 2) XHB 3) F 4) ADM 5) OIH
Stocks With Most Negative News Mentions:
  • 1) AKRX 2) AAL 3) CCL 4) RRGB 5) JWN
Charts:

Bull Radar

Style Outperformer:
  • Large-Cap Growth -3.9%
Sector Outperformers:
  • 1) Gold & Silver +.8% 2) Shipping -1.3% 3) Video Gaming -2.2%
Stocks Rising on Unusual Volume:
  • CRNC, OSUR, NCR and HRC
Stocks With Unusual Call Option Activity:
  • 1) CHRW 2) X 3) APC 4) XME 5) TMUS
Stocks With Most Positive News Mentions:
  • 1) HWM 2) INSG 3) MKTX 4) PANW 5) VZ
Charts:

Mid-Day Market Internals

NYSE Composite Index: