Wednesday Watch

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 115.0 -.5 basis point. 

• China Sovereign CDS 71.0 +1.0 basis point. 
• China Iron Ore Spot 124.8 USD/Metric Tonne +.57%.

• Bloomberg Emerging Markets Currency Index 47.5 +.06%.
• Bloomberg Global Risk-On/Risk Off Index  62.9 +.6%. 
• Bloomberg US Financial Conditions Index .20 +2.0 basis points.
  
• Volatility Index(VIX) futures 21.9 +.8%.
• Euro Stoxx 50 futures -.28%.

• S&P 500 futures -.20%.

• NASDAQ 100 futures -.3%.  

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by financial 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 Reversing Slightly Lower into Final Hour on US Policy-Induced Stagflation Fears, Earnings Outlook Worries, Dollar Strength, Energy/Healthcare Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume:  Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 20.2 -3.4%
• DJIA Intraday % Swing .59%
  
• Bloomberg Global Risk On/Risk Off Index 62.9 +.3%

• Euro/Yen Carry Return Index 149.9 -.3%

• Emerging Markets Currency Volatility(VXY) 10.6 -3.1%

• CBOE S&P 500 Implied Correlation Index 34.6 -2.8% 

• ISE Sentiment Index 103.0 -2.0 points
  

• Total Put/Call .97 -5.8%

• NYSE Arms 1.01 -28.9%

Credit Investor Angst:

• North American Investment Grade CDS Index 75.45 -.35%
  

• US Energy High-Yield OAS 359.72 -1.34%
• Bloomberg TRACE # Distressed Bonds Traded 294.0 +3
  

• European Financial Sector CDS Index 88.3 +.21% 
• Credit Suisse Subordinated 5Y Credit Default Swap 403.4 +.1%
  

• Italian/German 10Y Yld Spread 183.0 basis basis points -1.0 basis point
  

• Asia Ex-Japan Investment Grade CDS Index 115.8 -1.1%
  

• Emerging Market CDS Index 239.0 -.12%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 27.2 +.03%

• 2-Year Swap Spread 36.0 basis points +1.0 basis point
  

• TED Spread 16.5 basis points -.75 basis point
  

• 3-Month EUR/USD Cross-Currency Basis Swap -9.0 -.25 basis point
  
• MBS  5/10 Treasury Spread  148.0 +1.0 basis point
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 525.0 +9.0 basis points
  
• Avg. Auto ABS OAS 60.0 +2.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.4 -.09%
• 3-Month T-Bill Yield 4.80% +3.0 basis points
  

• China Iron Ore Spot 124.6 USD/Metric Tonne +.4%
• Dutch TTF Nat Gas(European benchmark) 46.7 euros/megawatt-hour -1.6%

• Citi US Economic Surprise Index 38.6 -1.8 points

• Citi Eurozone Economic Surprise Index 61.8 +1.3 points
  

• Citi Emerging Markets Economic Surprise Index 2.4 +.2 point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 224.8 +.73:  Growth Rate +1.1% +.4 percentage point, P/E 17.7 -.1
• S&P 500 Current Year Estimated Profit Margin 12.37% -1.0 basis point
  
• Bloomberg US Financial Conditions Index .19 -2.0 basis points
  
• Yield Curve -88.25 basis points (2s/10s) -1.5 basis points
• US Atlanta Fed 1Q GDPNow Forecast +2.80% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.72% unch.: CPI YoY +6.21% -2.0 basis points
  
• 10-Year TIPS Spread 2.42 +5.0 basis points
  
• Highest target rate probability for May 3rd FOMC meeting: 73.2%(+2.0 percentage points) chance of 5.0%-5.25%. Highest target rate probability for June 14th meeting: 59.6%(+3.1 percentage points) chance of 5.25%-5.5%.
  

US Covid-19:

• 84 new infections/100K people(last 7 days total). 4.8%(-0.0 percentage point) of 1/14/22 peak(1,740) -0/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -83.3%(+.1 percentage point) from peak 7-day avg. of 1/9/22 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -1 open in Japan 
• China A50 Futures: Indicating -4 open in China

• DAX Futures: Indicating +7 open in Germany

Portfolio:

• Slightly Higher:  On gains in my industrial/tech/medical sector longs and emerging market shorts
  

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

• Market Exposure: Moved to 25% Net Long
  

Bear Radar

Style Underperformer:

• Large-Cap Value +.1%
  

Sector Underperformers:

• 1) Energy -1.4% 2) Healthcare Providers -1.2% 3) Telecom -.6%

Stocks Falling on Unusual Volume: 

• HEI/A, PBR, DK, LYTS, BMRN, AVTA, ZETA, ALC, SGRY, BNS, EHC, OVV, DAR, TCPC, DISH, ACHC, EBS, UHS, AMRC, NCLH, TASK, NFE, NEWT, EVER, TWI, TPIC, OMI and AHCO
  

Stocks With Unusual Put Option Activity:

• 1) INVH 2) NRG 3) NATI 4) HPQ 5) DISH
  

Stocks With Most Negative News Mentions:

• 1) DISH 2) AHCO 3) NCLH 4) CVEO 5) APTX
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.9%

Sector Outperformers:

• Steel +1.6% 2) Gambling +1.6% 3) Gold & Silver +1.2%

Stocks Rising on Unusual Volume:

• PGNY, KTB, HIMS, CDNA, FOUR, RVMD, SKIN, ACAD, XRAY, RDNT, UVE, SKYT, PRIM, INSW, DUOL, KNTK, RELY, CIEN, TWLO, RETA, AAP, GRBK, ROCC and TGT
  

Stocks With Unusual Call Option Activity:

• 1) MRNS 2) RITM 3) NOV 4) WWE 5) CLNE

Stocks With Most Positive News Mentions:

• 1) CHS 2) VTNR 3) FOUR 4) HIMS 5) HY
  

Charts:

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

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

Earnings of Note 
Company/Estimate 

Before the Open: 

• (ANF)/.86
• (DLTR)/2.00
• (DCI)/.68
• (DY)/.14
• (FSS)/.56
• (HGV)/.77
• (JACK)/1.74
• (KSS)/.97
• (LOW)/2.21
• (RY)/2.93
• (TUP)/.29
• (WB)/.53
• (WEN)/.21
  

After the Close:

• (BOX)/.34
• (JAZZ)/1.12
• (OKTA)/.09
• (PLUG)/-.25
• (MDRX)/.28
• (AAN)/.01
• (SNOW)/.05
  
• (CRM)/1.36
• (SPLK)/1.15

Economic Releases 

10:00 am EST

• Construction Spending MoM for Jan. is estimated to rise +.2% versus a -.4% decline in Dec.
• ISM Manufacturing for Feb. is estimated to rise to 48.0 versus 47.4 in Dec.
• ISM Prices Paid for Feb. is estimated to rise to 45.0 versus 44.5 in Dec.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory  gain of +1,351,570 barrels versus a +7,647,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -207,140 barrels versus a -1,856,000 barrel decline the prior week. Distillate inventories are estimated to fall by -68,140 barrels versus a +2,698,000 barrel gain the prior week.  Finally, Refinery Utilization is estimated to fall by -.14% versus a -.6% decline prior.
  

Afternoon

• Wards Total Vehicle Sales for Feb. is estimated to fall to 14.7M versus 15.74M in Jan.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Kashkari speaking, China Services PMI report, weekly MBA mortgage applications report, (TSLA) investor day, Bernstein Tech/Media/Telecom/Consumer Conference, Citi Healthcare Services/Medtech/Tools/HCIT Conference and the BofA Ag/Materials Conference could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

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

Earnings of Note 
Company/Estimate 

Before the Open:

• (SIG)/1.49
• (TTC)/1.52

After the Close: 

• (DOCU)/.56
• (MTN)/8.81
  

Economic Releases  

8:30 am EST

• Initial Jobless Claims for last week are estimated to rise to 235K versus 232K the prior week.
• Continuing Claims are estimated to rise to 1802K versus 1795K prior.
  

10:00 am EST

• Wholesale Trade Sales MoM for April is estimated to rise +.2% versus a +.4% gain in March.

12:00 pm EST

• Household Change in Net Worth for 1Q.
  

Upcoming Splits 

• None of note
  

Other Potential Market Movers

• The Eurozone GDP report, weekly EIA natural gas inventory report, (TD) investor day and the (PYPL) management meeting could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST