Wednesday Watch

Night Trading 

• Asian equity indices are +.25% to +1.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 126.0 -3.0 basis points. 

• China Sovereign CDS  79.0 -2.75 basis points.
  

• Bloomberg Emerging Markets Currency Index 51.8 -.15%  
• Bloomberg Global Risk-On/Risk Off Index 4,451.0 +50.0 points.
• Volatility Index(VIX) futures 27.5 -.14%.
• Euro Stoxx 50 futures +.59%.

• S&P 500 futures +.05%.

• NASDAQ 100 futures +.02%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (ADI)/2.12
• (LOW)/3.22
• (TGT)/3.07
• (TJX)/.60
  

After the Close:

• (CSCO)/.86
• (CPRT)/1.14
• (SNPS)/2.37
  

Economic Releases

8:30 am EST

• Housing Starts for April is estimated to fall to 1757K versus 1793K in March.
• Building Permits for April is estimated to fall to 1817K versus 1873K in March.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of 1,471,430 barrels versus a +8,487,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -500,000 barrels versus a -3,607,000 barrel decline the prior week. Distillate inventories are estimated to fall by -242, 860 barrels versus a -913,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.5% versus a +1.6% gain prior.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The UK CPI report, 20Y T-Bond auction, week MBA Mortgage Applications report, BMO Farm to Market Conference, Wells Fargo Financial Services Conference, (AKAM) analyst day, (TMO) investor day and the (SQ) investor day could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are modestly higher, boosted by commodity and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.

Stocks Higher into Afternoon on China Peak Virus Lockdown Optimism, Dollar Weakness, Short-Covering, Airlines/Alt Energy Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance:  Almost Every Sector Rising
  

• Volume:  Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 25.7 -6.5%
• Bloomberg Global Risk On/Risk Off Index 4,426.0 +361.0 points

• Euro/Yen Carry Return Index 140.15 +1.09%

• Emerging Markets Currency Volatility(VXY) 12.6 -1.3%

• CBOE S&P 500 Implied Correlation Index 46.4 -1.6% 

• ISE Sentiment Index 107.0 +11.0 points
  

• Total Put/Call 1.0 +2.0%

• NYSE Arms .66 -39.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 84.6 -1.8%
  

• US Energy High-Yield OAS 425.0 -2.4%

• European Financial Sector CDS Index 101.52 -1.8%

• Italian/German 10Y Yld Spread 192.0 basis points +1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 126.39 -2.4%
  

• Emerging Market CDS Index 292.43 -1.6%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 28.72 -.07%
  
• Russia Sovereign Debt Credit Default Swap 5,432.32 -2.5%
  

• 2-Year Swap Spread 28.75 basis points +.25 basis point
  

• TED Spread 41.75 basis points -9.75 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -18.0 basis points -2.25 basis points
  
• MBS  5/10 Treasury Spread  126.0 +4.0 basis points
  
• iShares CMBS ETF 48.2 -.82%
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 51.77 +.01%
• 3-Month T-Bill Yield 1.05% +5.0 basis points
  

• Yield Curve 26.5 basis points (2s/10s) -4.0 basis points
  

• China Iron Ore Spot 128.9 USD/Metric Tonne -.5%

• Citi US Economic Surprise Index .2 +3.5 points

• Citi Eurozone Economic Surprise Index 26.1 +3.6 points
  

• Citi Emerging Markets Economic Surprise Index 17.8 +3.7 points

• 10-Year TIPS Spread 2.75 +5.0 basis points
  
• 0.0%(unch.) chance of no change at July 27th FOMC meeting, 0.0%(unch.) chance of no change at September 21st meeting

US Covid-19:

• 206 new infections/100K people(last 7 days total). 12.0%(+1.0 percentage point) of 1/14 peak +22/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -87.5%(-.5 percentage point) from peak 7-day avg. of 1/9/21 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +49 open in Japan 
• China A50 Futures: Indicating -79 open in China

• DAX Futures: Indicating -7 open in Germany

Portfolio:

• Slightly Higher: On gains in my commodity/industrial/medical/tech sector longs
  

• Disclosed Trades:  Added to my (IWM)/(QQQ) hedges
  

• Market Exposure:  Moved to 25% Net Long
  

Bear Radar

 Style Underperformer:

• Large-Cap Value +1.5%

Sector Underperformers:

• 1) Foods -.5% 2) Restaurants +.2% 3) Utilities +.3%

Stocks Falling on Unusual Volume: 

• DUOL, KR, ACET, KDP, DDOG, FLR, WMT, HPK and ALBO
  

Stocks With Unusual Put Option Activity:

• 1) ALLY 2) XLY 3) WMT 4) PHM 5) KR
  

Stocks With Most Negative News Mentions:

• 1) AUTO 2) IMPP 3) WMT 4) ALLT 5) MAXR
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +2.7%

Sector Outperformers:

• 1) Airlines +5.4% 2) Alt Energy +5.3% 3) Semis +4.2%

Stocks Rising on Unusual Volume:

• JBI, QTWO, PARA, SG, SSYS, TTWO, KTOS, COIN, VERU, MAC, TDW, RPAY, PBT, CGEM, GSHD, BL and PHM
  

Stocks With Unusual Call Option Activity:

• 1) UAA 2) PPL 3) COF 4) REKR 5) AR

Stocks With Most Positive News Mentions:

• 1) MVST 2) JMIA 3) PARA 4) RSKD 5) NIO
  

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +5.5% Above 100-Day Average 
• 1 Sector Declining, 10 Sectors Rising
• 76.4% of Issues Advancing, 20.6% Declining
• 33 New 52-Week Highs, 100 New Lows
• 25.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 39.8% 
• Bloomberg Global Risk-On/Risk-Off Index 4,369.0 +306.0 points
• Russell 1000: Growth/Value 14,917.0 +.23%
  
• Vix 26.3 -4.4%
• Total Put/Call 1.05 +7.1%
• TRIN/Arms .76 -30.3%

Tuesday Watch

Evening Headlines

Bloomberg:             

• EU Braces for Storm as Ukraine Fallout Cascades in Economy.  
• Ukraine Latest: First Fighters Are Evacuated From Mariupol Plant. 
• One-Time Richest Singapore Tycoon Has Lost 80% of His Fortune.
• Asia Stocks Set for Cautious Open on Growth Worry: Markets Wrap.  
• OPEC+ Ministers Say Pumping More Oil Won’t Ease Gasoline Prices.
• Gasoline Metrics Are Flashing Red for a Tight, Costly US Summer. 
• Bitcoin’s Plunge Exposes Idea of Uncorrelated Asset as ‘Big Lie’.
• Musk Sees US as ‘Probably’ in Recession Lasting Up to 18 Months.
  
• Twitter Wipes Out All Gains Since Elon Musk Disclosed His Stake.
• Demand Is Up at Human Milk Banks Amid Baby Formula Crisis.
• Here’s How US Cities Rank on Baby Formula Shortages.  
• California Push to Seat More Women on Boards Ruled Unlawful.  
• US Set to Extend Covid-19 Public Health Emergency Past July.  
• Meet the Hedge-Fund Manager Who Warned of Terra’s $60 Billion Implosion.  
• Another Stablecoin Loses Peg as Algorithm Fails to Keep Pace.
  
• Is It Covid or Flu? New At-Home Test Spots Multiple Viruses.

Wall Street Journal:

• CBO Sounds a Warning of American Fiscal Ruin. As lawmakers defer the reckoning, stabilizing the federal debt gets more difficult each year. 
• China’s Economic Distress Deepens as Lockdowns Go On.
  
• Ukrainians in Occupied Village Learn to Live With the Enemy.
• Latest Updates: More Than 260 Azovstal Fighters Evacuated From Steel Plant. 
• Falling Markets Will Crush Government Budgets. Tax revenue from capital gains is about to dry up. Are federal and state officials ready for it? 
  

Fox News:

• Former Biden COVID advisor dismisses latest White House warning.
• Justice Clarence Thomas rips into his liberal media critics.

CNBC.com:

• How Carvana went from a Wall Street top pick to trading with meme stocks.
• White House hits back at Amazon’s Bezos after Biden inflation spat.   
  
• Rivian’s shares sink after a report says legal battle with a supplier could delay Amazon vans.

MarketWatch:     

• Economists conclude remote learning could hurt children’s future earnings and economic mobility, after crunching data from 2.1 million students in 10,000 schools .
  
• Odds of ‘hard landing’ jump as stock, bond investors worry about economic growth, says Morgan Stanley.
  
• Take-Two sales and forecast undershoot Wall Street’s expectations, but the stock is doing fine  
• PayPal borrows $3 billion to help fund debt buyback plan.  
• 15 stocks that have fallen at least 33% but by these measures are still standouts in their sectors.  
• Bitcoin will not become an alternative form of money, or a store of value, says Bernanke.

Zero Hedge: 

• Did Fauci Just Convince Swing-Voters To Pull For Trump?
• Twitter Deal Still Happening? Musk Says 'Not Out Of The Question' But At Lower Price.
• The Post-Roe World: A Reality Check On The Implications Of The Leaked Supreme Court Opinion.
• Lott: Guess How Many Violent Crimes Actually Involve Guns?
• Goya CEO Issues Dire Warning On Looming Food Crisis.
• Newsquawk Asia-Pac Market Open - Choppy mood on Wall St amid growth concerns.
• Oil Prices Surge Past $113 As Shanghai Signals End Of Lockdown.
• White House 'Near Deal' To Reopen Abbott Baby Formula Plant, Allow Imports.
• Newsquawk US Market Wrap: Stocks choppy and Treasuries supported on mounting growth concerns.
• Morgan Stanley Sees S&P Tumbling As Low As 3,400: "That's Where Valuation And Technical Support Lie".
• "Debt Piles Haven't Shrunk": SocGen Warns Bear Market Will Lead To Fresh Corp Leverage Concerns.
• Foreigners Sold The Most US Stocks On Record In March, China Dumps TSY Holdings To Lowest Since 2010.
• Growth Scare Sparks Stock Chaos; Bonds & Bullion Jump As Bitcoin & The Buck Dump.

Newsmax: 

• Turkey: No to Sweden, Finland Joining NATO.
• Gorka: Putin Will Not Stop With Ukraine.

TheGatewayPundit.com: 

• New Peer-Reviewed Study Finds Pfizer’s Covid-19 Vaccine Protection Against Omicron Wanes Just a Week After Receiving Second and Third Dose.
• Michigan Vote Investigators Reveal Mountain of New Evidence.
• Ignored by Fake News Media: Gas Prices Reach ALL-TIME RECORD HIGH for SEVENTH STRAIGHT DAY.
• WATCH: Peter Doocy Grills White House Spox: How Come Biden is Visiting Buffalo, But He Couldn’t Visit Waukesha?
• Surgeon General to Panicked Parents Looking for Baby Formula: “Check with Your Dr. To See if They Have Samples” (VIDEO).
• Authorities Say Gunman in SoCal Church Attack is Chinese Immigrant Motivated by Hate For Taiwanese.
• Get Woke, Go Broke: Sports Illustrated Puts Big Girl and 74-Year-Old on Cover of Swimsuit Issue.
• True the Vote Announces They Now Have Footage of the 2020 Green Bay Drop Boxes – Are Working with Law Enforcement in Wisconsin (VIDEO).

The Epoch Times:

• Something ‘Rotten’ With NIH Funding CCP-Controlled Labs: Natalie Winters.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 813,020 Reports(+2,363 from prior week) Through May 6th, 2022.
  

SKirsch.com:

• Using the MGH numbers with our own VAERS queries, we have 247 cases per million doses from the MGH study divided by 5.97 cases per million doses from VAERS. 247/5.97 = 41. This suggests that the VAERS under-reporting factor (URF) is 41X.

Covid-19(Data, Maps, Graphs):

• Our World in Data:  New Global Covid-19 Cases(7-day rolling average graphs). New US Covid Hospital Admissions/ICU Admissions/Deaths
  
• FT.com:  Fully Vaccinated by Country(graph). Global Lockdown Stringency Index(map).
• Bloomberg.com:  International Travel Restrictions.  Case Graphs by State.
  
• NYTimes.com:  County Trends and Clusters. Local ICU Occupancy.
  
• Brown School of Public Health:  Covid Severity by State/County(map).  US Hospital Capacity(region).
  
• CovidActNow:  Covid Severity/Infection Rate by Metro Area.
  
• KFF:  US Vaccinations by Race/Ethnicity.
  
• Carnegie Mellon: Covid-Like Symptoms in Community. Covid Symptom Searches on Google. Covid-Related Dr.Visits.  Restaurant Visits. Wearing Masks. (graphs)
  
• Safegraph.com:  Commerce Patterns(graphs).

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 129.0 -.25 basis point. 

• China Sovereign CDS  81.75 -.75 basis point.
  

• Bloomberg Emerging Markets Currency Index 51.8 +.01%  
• Bloomberg Global Risk-On/Risk Off Index 4,097.0 +32.0  points.
• Volatility Index(VIX) futures 28.1 -.02%.
• Euro Stoxx 50 futures n/a.

• S&P 500 futures -.01%.

• NASDAQ 100 futures +.11%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (HD)/3.69
• (JD)/1.64
• (ONON)/-.04
• (SE)/-1.22
• (WMT)/1.48
• (WB)/.46
  

After the Close:

• (DOCS)/.15
• (KEYS)/1.68
  

Economic Releases

8:30 am EST

• Retail Sales Advance MoM for April is estimated to rise +1.0% versus a +.5% gain in March.
• Retail Sales Ex Autos MoM for April is estimated to rise +.7% versus a +.2% gain in March.
• Retail Sales Ex Autos and Gas for April is estimated to rise +.7% versus a +.2% gain in March.
  

9:15 am EST

• Industrial Production MoM for April is estimated to rise +.5% versus a +.9% gain in March.
• Capacity Utilization for April is estimated to rise to 78.6% versus a 78.3% gain in March.
• Manufacturing Production for April is estimated to rise +.4% versus a +.9% gain in March.
  

10:00 am EST

• Business Inventories for March is estimated to rise +1.9% versus a +1.5% gain in Feb.
• The NAHB Housing Market Index for May is estimated to fall to 75.0 versus 77.0 in April.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Powell speaking, Fed's Mester speaking, Fed's Bullard speaking, China Industrial Production report, weekly US retail sales reports, BofA Metals/Mining/Steel Conference, Goldman Staples Forum, RBC Healthcare Conference, BofA Transport/Airlines/Industrials Conference, (MRNA) Science Day, Goldman Sachs Consumer Conference, (WING) investor day and the (CAT) investor day could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and consumer 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.