Tuesday Watch

Evening Headlines

Bloomberg:      

• Biden’s Latest Taiwan Gaffe Hikes Suspicion, Tensions in Beijing.  
• Asia Manufacturers Say the Pandemic-Driven Trade Boom Is Fading.
• What Is the ‘Quad’ and Should China Fear It?
• US Futures Sink as Snap Warning Hits Social Firms: Markets Wrap.
• Oil Little Changed as EU Stalemate on Russian Embargo Deepens.
  
• Activision Union Gets Legal Recognition in Gaming First.
  
• Fed Rate-Hike Pause in September May ‘Make Sense,’ Bostic Says.  
• A Hot, Deadly Summer Is Coming With Frequent Blackouts.  
• California Governor Threatens Water Use Cuts Due to Drought.  
• Traffic at NYC-Area Bridges and Tunnels Hits Pre-Pandemic Levels.  
• Hedging in High Demand as Wall Street Questions S&P 500’s Bounce.  
• Farmers Still Seen Making Money Despite Soaring Fuel, Fertilizer.

Wall Street Journal:

• Ukraine’s Forces Sink Russian River Crossings, Inflicting Heavy Damage.
• Latest Updates: Russian Diplomat Resigns Over War.
• Broadcom Weighs Paying $60 Billion for VMware.
• Egypt’s Bread Crisis Awakens Old Fears of Political Unrest.
• The Pronoun Police Come for Middle Schoolers. A Wisconsin school district opened a Title IX sexual-harassment investigation against 8th graders for calling a student ‘her’ instead of ‘them.’ 
• The Top 50 Richest People Have Lost More Than Half a Trillion Dollars This Year.

Fox News:

• Details surrounding the mysterious deaths of 3 Americans at Bahamas resort reportedly determined.
• Socialist candidate calls for one million people to break into empty homes.

CNBC.com:

• Bitcoin could fall to $8,000, a more than 70% plunge, Guggenheim’s Minerd says.
• SpaceX president backs Elon Musk over sex misconduct claims: ‘I believe the allegations to be false’.
• Airbnb is closing its domestic business in China, sources say.  
  

MarketWatch:       

• Opinion: ‘I feel like I am reliving the summer of 2008.’ Strategist David Rosenberg sees bear market sinking the S&P 500 to 3,300.
  
• Zoom stock walks back initial surge following earnings beat, improved profit forecast.  
• U.S. earnings revisions could knock stocks down another 5% to 10%, warns Morgan Stanley.  
• The Great Resistance is here. Companies and employees are in a battle of wills over returning to the office.

Zero Hedge: 

• Posobiec Gives Details Of Davos Detention.
• What It Means That 'Hillary Clinton Did It'.
• NYC Parents Want In-Person Meeting With Mayor Over Toddler Mask Mandate: "Our Calls Have Gone Unanswered".
• US Army Mulls Letting Soldiers Switch Bases If Local Laws Discriminate Against Gender Identity.
• White House Press Secretary Says There’s No Timeline for When Baby Formula Shortage Ends.
• It's Not Just The USA: The Economic Instability Is Global.
• Bird Flu Outbreak Plunges US Egg Production To 7-Year-Low.
• CDC Now Recommends COVID Testing For All Domestic Air Travel, Including The Vaccinated.
• Newsquawk Asia-Pac Market Open - US stocks rebounded after the recent streak of weekly losses.
• Google And Facebook Targeted By Bipartisan Lawmakers Over Advertising Dominance.
• Monkeypox Outbreak Primarily Spreading Via Sexual Contact: WHO Officials.
• Snap Shares Crater After Company Unexpectedly Slashes Guidance.
• UN Food Head Warns Conditions "Worse" Than Arab Spring As Inflation Riots Spread.
• Zelensky Says If Ukraine Falls, American Lives Will Be At Risk.
• Newsquawk US Market Wrap: Stocks rally in wake of China commentary, Fed speak, M&A activity; hawkish Lagarde supports Euro.
• 'Dimon'-Hands Lift Stocks; Bonds, Bitcoin, & Dollar Dumped.

Newsmax:   

•  Report: Putin Arms Belarus With Nuke-Capable Missiles

TheGatewayPundit.com: 

• WOW! Joe Biden Admits It’s ALL On Purpose: “When It Comes to Gas Prices, We’re Going Through INCREDIBLE TRANSITION – God Willing, We’ll Be Less Reliant on Fossil Fuels” (VIDEO).
• Psychotherapist Who Conducts Transgender “Therapy” Encourages Teens to Distrust Their “Bigoted, Misinformed Parents” – Especially if They’re “Religious” (VIDEO).
• Mayor Eric Adams Declares NYC State of Emergency Over Infant Formula Shortage to Prevent Price Gouging.
• Male High School Teacher Writes About How Good it Feels to Wear Women’s Panties to School and Coming out as ‘Non-Binary’ to His Students.
• LIBERAL MEDIA FREAKOUT After President Trump Shares Response to El Salvador President’s Tweet on “Enemy from Within” Destroying America and Pushing Country to Civil War.
• Like a Creepy Neighbor: State Farm Donating Transgender Books for Kindergarteners to Schools in Florida.
• Georgia Governor Kemp and Secretary of State Raffensperger – Examples of Dereliction of Duty in Addressing Election Fraud to the Point of Being Complicit.
• Journalist and Twitter Star Jack Posobiec and Film Crew Detained by Armed Police in Davos.
• Gas Prices Reach 12th Straight All-Time Record High at $4.596/ Gallon on Monday — First Time in History of 12 Straight Days of Record Gas Prices.

The Epoch Times:

• Biden Says US Considering Removing Tariffs on China.
• Gen. Milley Warns West Point Graduates of Likelihood of War With Russia, China.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 817,537 Reports(+4,517 from prior week) Through May 13th, 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 -.5% to unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 127.75 -4.25 basis points. 

• China Sovereign CDS  79.25 -5.0 basis points.
  

• Bloomberg Emerging Markets Currency Index 52.52 -.06%.  
• Bloomberg Global Risk-On/Risk Off Index 4,002.0 -6.0 points.
• Volatility Index(VIX) futures 29.7 +2.0%.
• Euro Stoxx 50 futures n/a.

• S&P 500 futures -.8%.

• NASDAQ 100 futures -1.4%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (ANF)/.09
• (AZO)/26.06
• (BBY)/1.56
• (FRO)/-.01
• (NTES)/7.03
• (WOOF)/.15
• (RL)/.41
  

After the Close:

• (A)/1.12
• (INTU)/7.58
• (JWN)/-.04
• (TOL)/1.63
• (URBN)/.42
  

Economic Releases

9:45 am EST

• The S&P Global US Manufacturing PMI for May is estimated to fall to 57.7 versus 59.2 in April.
• The S&P Global US Services PMI for May is estimated to fall to 55.2 versus 55.6 in April.

10:00 am EST

• The Richmond Fed Manufacturing Index for May is estimated to fall to 10 versus 14 in April.
• New Home Sales for April is estimated to fall to 750K versus 763K in March.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Powell speaking, 2Y T-Note auction, Eurozone PMI report, weekly US retail sales reports, RBC Datacenter/Cloud/Broadband Infrastructure Conference, Wolfe Transport/Industrials Conference, (AVID) investor day and the (NVS) investor event could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are modestly lower, weighed down by consumer and technology shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.

Stocks Higher into Final Hour on Technical Buying, US Dollar Weakness, Bargain-Hunting, Financial/Commodity Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance:  Most Sectors Rising
  

• Volume:  Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 28.4 -3.5%
• Bloomberg Global Risk On/Risk Off Index 4,018.0 +140.0 points

• Euro/Yen Carry Return Index 140.61 +1.17%

• Emerging Markets Currency Volatility(VXY) 12.34 -3.0%

• CBOE S&P 500 Implied Correlation Index 49.2 +2.2% 

• ISE Sentiment Index 101.0 +21.0 points
  

• Total Put/Call .95 -22.1%

• NYSE Arms .97 +3.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 88.73 -2.0%
  

• US Energy High-Yield OAS 439.41 -1.7%

• European Financial Sector CDS Index 106.26 -3.8%

• Italian/German 10Y Yld Spread 202.0 basis points -4.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 128.96 -1.6%
  

• Emerging Market CDS Index 288.58 -5.2%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 28.94 +.8%
  
• Russia Sovereign Debt Credit Default Swap 10,244.40 +1.2%
  

• 2-Year Swap Spread 29.5 basis points +.25 basis point
  

• TED Spread 49.75 basis points -.25 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -18.25 basis points +.5 basis point
  
• MBS  5/10 Treasury Spread  120.0 -2.0 basis points
  
• iShares CMBS ETF 48.38 -.56%
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 52.57 +.74%
• 3-Month T-Bill Yield 1.0% -1.0 basis point
  

• Yield Curve 22.75 basis points (2s/10s) +1.5 basis points
  

• China Iron Ore Spot 133.7 USD/Metric Tonne +.5%

• Citi US Economic Surprise Index -20.8 -6.0 points

• Citi Eurozone Economic Surprise Index 18.5 -1.3 points
  

• Citi Emerging Markets Economic Surprise Index 12.0 +2.0 points

• 10-Year TIPS Spread 2.63 +4.0 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:

• 224 new infections/100K people(last 7 days total). 13.0%(unch.) of 1/14 peak +5/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -85.0%(-.1 percentage point) from peak 7-day avg. of 1/9/21 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +89 open in Japan 
• China A50 Futures: Indicating +17 open in China

• DAX Futures: Indicating -25 open in Germany

Portfolio:

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

• Disclosed Trades:  Covered some of my (IWM)/(QQQ) hedges
  

• Market Exposure:  Moved to 75% Net Long
  

Bear Radar

Style Underperformer:

• Mid-Cap Growth +.2%

Sector Underperformers:

• 1) Gambling -2.0% 2) Homebuilding -1.2% 3) Social Media -1.0%

Stocks Falling on Unusual Volume: 

• PGNY, PENN, RL, YOU, PLCE, WOOF, ANF, BILL, W, QS, URBN, ZIP, RVNC, ZUO, CZR, AVGO, RIVN, SNAP, ADSK, GPS, RBLX, ENV, FRG, CLAR, PWSC, SIGA, CLM, CDNA, CVNA and NOTV
  

Stocks With Unusual Put Option Activity:

• 1) HBI 2) ANF 3) BBY 4) WSM 5) GPS
  

Stocks With Most Negative News Mentions:

• 1) NOTV 2) ATHX 3) ADSK 4) ENSV 5) HON
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value +1.4%

Sector Outperformers:

• 1) Banks +4.6% 2) Oil Service +3.5% 3) Steel +3.4%

Stocks Rising on Unusual Volume:

• VMW, THS, GNK, ROST, EBS, DE, NATI, NTNX, TTWO and BGXX
  

Stocks With Unusual Call Option Activity:

• 1) VICI 2) BBY 3) RF 4) INO 5) CMRX

Stocks With Most Positive News Mentions:

• 1) VMW 2) ETTX 3) THS 4) ROST 5) EBS
  

Charts:

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

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -6.8% Below 100-Day Average 
• 1 Sector Declining, 10 Sectors Rising
• 66.3% of Issues Advancing, 30.7% Declining
• 22 New 52-Week Highs, 105 New Lows
• 24.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 39.4% 
• Bloomberg Global Risk-On/Risk-Off Index 3,990.0 +111.0 points
• Russell 1000: Growth/Value 14,653.0 -.38%
  
• Vix 28.6 -2.7%
• Total Put/Call .95 -22.1%
• TRIN/Arms 1.04 +10.6%

Monday Watch

Today's Headlines

Bloomberg:            

• China’s Wang Yi Says US’s Indo-Pacific Strategy ‘Doomed to Fail’.  
• Ukraine Latest: Poland Wants Fast EU Candidate Status for Kyiv.
• Fuel Poverty Looms For Many as UK Wavers on Windfall Tax Plan.    
• After $5 Trillion Rout, Emerging Markets Seek Turnaround Signal.
• Saudi Wealth Fund Takes $1.5 Billion Stake in Alwaleed’s Firm.
• US Futures Rise, Caution in Asia on Growth Woes: Markets Wrap.
• Oil Steadies as Traders Weigh Tight Gasoline Market, Weak Growth.
• Biden Urges Hyundai, Samsung to Embrace Union Workers.
• After Meltdown, Tech-Bottom Signals Have Yet to Scream ‘Buy Now’. 
• Consumers Defy Inflation to Support Economy. For How Long?
• Dangerous DIY Baby Formula Recipes Go Viral as Parents Get Desperate.
• Stock Selloff to Intensify as Fresh 10% Plunge Looms, Survey Finds.

Wall Street Journal:

• Small Businesses Lose Confidence in U.S. Economy
• Latest Updates From the War
• Poland’s President Addresses Ukraine’s Parliament, Calls for Removal of All Russian Troops
• Rising Risk of Recession Creates New Headache for Biden.
• Stock Market Bottom Remains Elusive Despite Deepening Decline. 
• Who Rigged the Census? Under-counts may have cost Florida and Texas another House seat.
• Why Is the FDA Seizing Baby Formula During a Baby Formula Shortage? With trusted sellers shut down, parents are being driven to untested suppliers.

Fox News: 

• President Biden sounds alarm on monkeypox outbreak, says 'everybody' should be concerned.
• Trump reacts to bombshell testimony that Clinton OK'd spreading Russia lie. 
• President Biden 'on the verge' of making significant 'blunder' with China, warns columnist.
• Stacey Abrams has harsh take on state she wants to elect her.
• George Soros throws $1M behind Stacey Abrams' second run for the governor's mansion.

CNBC:

• Stocks head for another potentially treacherous week, as a slew of retailers report earnings.
• McKinsey & Co. worked with Russian weapons maker even as it advised the Pentagon.
• More people are dying on U.S. roads, even as cars get safer. Here’s why that’s a hard problem to fix.
• Goodbye, American soft power: McDonald’s exiting Russia after 32 years is the end of an era. 
• Oxfam slams billionaire pandemic ‘bonanza’ as millions face extreme poverty. 
• SpaceX looks to raise $1.7 billion in new funding, boosting its valuation to $127 billion. 

Zero Hedge:

• 'Imagine The Compliance': Pfizer CEO Pitches Davos Elites On WiFi Microchip Pills.
• China Launches Military Exercises In South China Sea As Biden Arrives In Asia.
• Central Bankers' Narratives Are Falling Apart.
• "Extremely Tense" Beer Bottle Shortage Emerges Ahead Of Germany's Oktoberfest.
• These Are The Most-Downloaded Apps So Far In 2022.
• Monkeypox: Truth Versus Fearporn.
• Belgium Begins Monkeypox Quarantines, Biden Warns "Everybody Should Be Concerned".
• Bloated Inventories Hit Walmart, Target And Other Retailers' Profits, Trucking Demand.
• 2022 Has Been The Worst Year Ever For Hedge Funds, Who Are Now Massively Shorting To Chase Stocks Lower.
• Cracks Appear As Subprime Borrowers Miss Loan Payments Amid Recession Threats.
• How Did Mueller's $40 Million Trump-Russia Investigation 'Miss' Hillary's Hoax? 
• Hedge Fund CIO: If We Can't Bounce After Being Down 7 Weeks In A Row, Something Is Seriously Wrong.
• Goldman Trader: After A Brutal Week, Here Is The "Cat And Mouse" Question That Needs To Be Answered.
• Profits And Margins Plunge In Q1: Expect More Margin Contraction As Fed Squeezes Inflation.
• Ray Dalio: Gold Reduces Risks, Enhances Returns, Belongs In Your Savings.
• "The Fed Has No Idea How Bad It Is Out There" So Here's Some Context...
• Rubio Accuses Google Of Election Bias, Censoring Campaign Emails.
• Did The Biden Administration Just Give A Boost To The Hunter Biden Defense?
• U.S. Automakers Forced To Hike Prices Due To Rising Raw Material Costs.
• DOJ Announces Hate Crimes And 'Bias-Related' Initiatives Including Reporting Hotline.
• Newsquawk Asia-Pac Market Open - Weekend News Round Up.
• "We Have No Idea How This Will Be Used" - AI Gun Detection Gaining Popularity In US.
• "No Quick Fix" - Severe Pilot Shortage Reduces Flights, Sends Ticket Prices Soaring.
• Clinton Supporter Who Led Disinformation Board Until Resignation Says She Wasn’t A Partisan Actor.
• Fed Mission Accomplished: Real-Time Indicators Show The Labor Market Just Cratered.

MarketWatch.com:         

• Elon Musk called ESG a scam — did the Tesla chief do investors a favor?

NewsMax:    

• Pummeled by Russian Offensive, Ukraine Rules Out Ceasefire.
• Fate of 2,500 Ukrainian POWs from Steel Plant Stirs Concern.

TheGatewayPundit.com:

• Antifa Terrorist Convicted of 4 Counts of Attempted Manslaughter for Shooting at Driver Trying to Flee Rioters — Gets NO Prison Time — Shot and Injured 2 Fellow Protesters.
• “We Are Literally Experimenting on Children – There’s Going to Be Problems” – Bill Maher Takes on Dangers of the Radical Trans Movement (VIDEO).
• Jair Bolsonaro Says Brazil Will NOT Sign Globalist WHO Pandemic Treaty.
• Democrat Gubernatorial Candidate Stacey Abrams Says Georgia is “the Worst State in the Country to Live” (AUDIO).
• More Evidence Suggests “Global Warming Ran Out of Steam” Years Ago – Experts Argue Global Temps Have Remained Flat For 20 Years.
• 30-Year-Old Brooklyn Half Marathon Runner Collapses and Dies After Crossing Finish Line – Possibly Suffers from Cardiac Arrest.
• VoterGA to Hold Press Conference on Monday Disclosing Legal Actions to Over 100 Counties Missing Drop Box Videos. 
• Analyst Warns World Has Only 10 Weeks of Wheat Supplies Left in Storage.

The Epoch Times:

• Shanghai’s Economy Plunged 61.5 Percent in April, Lockdown Caused Lack of Confidence in Industries: Expert.
  

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 817,537 Reports(+4,517 from prior week) Through May 13th, 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). 
• COVID Money Tracker. Tracking the Covid response.
  

Night Trading

• Asian indices are +.25% to +1.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 130.0 -2.0 basis points.
• China Sovereign CDS 84.25 -1.0 basis point.
• Bloomberg Emerging Markets Currency Index 52.21 +.04%.
• Bloomberg Global Risk-On/Risk Off Index 3,880.0 +1.0 point.
• Volatility Index(VIX) futures 28.8 -2.3%. 
• Euro Stoxx 50 futures +1.15%.
• S&P 500 futures +1.05%.
• NASDAQ 100 futures +1.15%.

Morning Preview Links

Earnings of Note

Company/Estimate

Before the Open:

• None of note
  

After the Close:

• (AAP)/3.55
• (ZM)/.88
• (NDSN)/2.29
  

Economic Releases

8:30 am EST

• The Chicago Fed National Activity Index for April.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's George speaking, Germany IFO Guidance report, JPMorgan Tech/Media/Communications Conference, Berenberg Conference, (JPM) investor day, HC Wainwright Life Sciences Conference, UBS Healthcare Conference, HC Wainwright Investment Conference and the (VSTO) investor day could also impact trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

BOTTOM LINE: Asian indices are modestly higher, boosted by industrial and technology shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon.  The Portfolio is 50% net long heading into the week.