Stocks Lower into Afternoon on Global Bank Contagion Fears, US Policy-Induced Stagflation Worries, Technical Selling, Financial/Alt Energy 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) 25.2 +9.4%
• DJIA Intraday % Swing 1.45%
  
• Bloomberg Global Risk On/Risk Off Index 42.5 -12.0%

• Euro/Yen Carry Return Index 147.2 -.6%

• Emerging Markets Currency Volatility(VXY) 12.0 -.1%

• CBOE S&P 500 Implied Correlation Index 41.9 +9.0% 

• ISE Sentiment Index 83.0 -8.0 points
  

• Total Put/Call 1.04 +7.2%

• NYSE Arms 1.53 +71.9%

Credit Investor Angst:

• North American Investment Grade CDS Index 86.4 +3.1%
  

• US Energy High-Yield OAS 448.77 +7.4%
• Bloomberg TRACE # Distressed Bonds Traded 448.0 +8
  

• European Financial Sector CDS Index 132.4 +10.2% 
• Credit Suisse Subordinated 5Y Credit Default Swap 1,051.5 +5.2%
  

• Italian/German 10Y Yld Spread 195.0 basis basis points +5.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 136.8 -2.8%
  

• Emerging Market CDS Index 262.2 +2.1%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 27.0 +.6%

• 2-Year Swap Spread 26.75 basis points -1.0 basis point
  

• TED Spread 51.5 basis points +25.0 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -30.25 -4.5 basis points
  
• MBS  5/10 Treasury Spread  157.0 -5.0 basis points
  
• Bloomberg CMBS Investment Grade Bbb Average OAS 634.0 +6.0 basis points
  
• Avg. Auto ABS OAS 72.0 +4.0 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 47.2 +.04%
• 3-Month T-Bill Yield 4.37% -28.0 basis points
  

• China Iron Ore Spot 130.0 USD/Metric Tonne -.64%
• Dutch TTF Nat Gas(European benchmark) 42.9 euros/megawatt-hour -3.4%

• Citi US Economic Surprise Index 50.7 -7.4 points

• Citi Eurozone Economic Surprise Index 48.4 -.8 point
  

• Citi Emerging Markets Economic Surprise Index 20.8 -.6 point
  
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 225.83 +.53:  Growth Rate +1.5% +.2 percentage point, P/E 17.3 -.2
  
• S&P 500 Current Year Estimated Profit Margin 12.36% -2.0 basis points
  
• Bloomberg US Financial Conditions Index -.76 +14.0 basis points
  
• Yield Curve -53.5 basis points (2s/10s) +5.25 basis points
• US Atlanta Fed 1Q GDPNow Forecast +3.25% unch.
  

• Cleveland Fed Inflation Nowcast Core PCE YoY +4.73% unch.: CPI YoY +5.22% unch.
  
• 10-Year TIPS Spread 2.14 -9.0 basis points
  
• Highest target rate probability for May 3rd FOMC meeting: 56.6%(+16.9 percentage points) chance of 4.75%-5.0%. Highest target rate probability for June 14th meeting: 42.5%(+23.4 percentage points) chance of 4.5%-4.75%.
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -529 open in Japan 
• China A50 Futures: Indicating -30 open in China

• DAX Futures: Indicating +185 open in Germany

Portfolio:

• Lower:  On losses in my industrial/utility/medical sector longs
  

• Disclosed Trades:  Added to my (IWM)/(QQQ) hedges, then covered some
  

• Market Exposure: Moved to 50% Net Long
  

Bear Radar

Style Underperformer:

• Small-Cap Value -2.6%
  

Sector Underperformers:

• 1) Banks -4.8% 2) Alt Energy -3.5% 3) Airlines -2.8%

Stocks Falling on Unusual Volume: 

• ARE, PDCE, AUB, OZK, FFIN, ALL, RDN, UBS, FITB, MTB, STWD, COOP, EFC, UTZ, FBRT, OPI, ING, SCHW, JBGS, BOWL, TFC, BXP, HALO, DEI, ZION, UMBF, GRI, HBAN, RCKT, SEDG, EWBC, CRS, CMA, KEY, SNV, USB, SNV, KMT, KW, BKU, VNO, RUN, SLG, NOVA, WAL, SRPT and FRC
  

Stocks With Unusual Put Option Activity:

• 1) RWM 2) FRC 3) ARI 4) ACRE 5) DPST
  

Stocks With Most Negative News Mentions:

• 1) WAL 2) EBS 3) SRPT 4) PACW 5) LNC
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth -.5%
  

Sector Outperformers:

• Gold & Silver +4.0% 2) Software +.3% 3) Steel unch.

Stocks Rising on Unusual Volume:

• MSTR, COIN, FDX, BIDU, BLFS, GFI, ACIW, AU, FNV, NEM, AEM, IE, WPM, OR, GOLD, COCO and ACLX
  

Stocks With Unusual Call Option Activity:

• 1) PACW 2) FRC 3) KRE 4) ACAD 5) SCHW

Stocks With Most Positive News Mentions:

• 1) ENZ 2) FDX 3) MSTR 4) RIOT 5) NEM
  

Charts:

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

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

Earnings of Note 
Company/Estimate 

Before the Open: 

• (FL)/.50
• (PDD)/7.48
  

After the Close: 

• None of note
  

Economic Releases

• None of note
  

Upcoming Splits

• (MRBK) 2-for-1
  

Other Potential Market Movers

• The PBOC rate decision, Piper Sandler Energy Conference, BofA Virtual Electronic Payments Symposium and the (FL) investor day could also impact global trading on Monday.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Morning Market Internals

NYSE Composite Index:

• Volume Running +49.0% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 2.7 -4.0
  
• 11 Sectors Declining, 0 Sectors Rising
• 13.3% of Issues Advancing, 84.6% Declining
• 8 New 52-Week Highs, 124 New Lows
• 37.8%(-6.0%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 29.0 +1.0
  
• Bloomberg Global Risk-On/Risk-Off Index 41.8 -13.3%
  
• Russell 1000: Growth/Value 16,012.3 +1.2%
  
• Vix 24.8 +7.7%
• Total Put/Call 1.01 +4.1%
• TRIN/Arms 2.01 +125.8%
  

Friday Watch

Evening Headlines

Bloomberg:        

• Xi Tightens Communist Party Grip Over China in Major Revamp.
• Turmoil Means ECB Will Finally Set Rates One Meeting at a Time.
•  Global Banking Turmoil Threatens to Topple Mexico’s ‘Super Peso’.
• ‘Seek-and-Destroy’ Markets Pile Pressure on Global Central Banks.
• Asia Stocks Rise on Bank Rescue, Bond Yields Climb: Markets Wrap.
• Microsoft to Bring OpenAI’s Chatbot Technology to Office Apps.
• A Fast and Furious Year by the Fed That Blindsided Everyone.
• Banks Borrow $164.8 Billion From Fed in Rush to Backstop Liquidity.
• Money Market Funds Get Biggest Cash Inflow Since Early 2020.
• Schwab Clients Pull $8.8 Billion From Prime Funds This Week.

Wall Street Journal:

• Bank’s Executives Sold $12 Million in Stock in Months Before Crash.
• Streetwise: A Cost to Moral Hazard. 
• Credit Suisse Shares Rebound After Bank Secures Loan.
• TikTok CEO Says Sale Won’t Protect U.S. Data.
• Global Supply of Cocaine Hits Record Level, U.N. Says.
• Heard on the Street: Banks’ Plan Won’t Solve Bigger Problems.
• Why Washington Chose to Rescue SVB Depositors.
• Tiger Global Writes Down Venture Funds’ Bets by 33%.
• Why Is the Maternity Mortality Rate So High in the U.S.?
• Wave of Stealthy China Cyberattacks Hits U.S.
• More Students Are Turning Toward Apprenticeships.
• Did ESG Help Sink SVB? One entrepreneur says the bank was offering ‘basically subprime business loans.’

Fox News:

• Dem-run city becomes the latest to crack down on gas appliances as part of liberal climate agenda.

CNBC.com:

• Wall Street rides to the rescue as 11 banks pledge First Republic $30 billion in deposits.
• One year after the first rate hike, the Fed stands at policy crossroads.
• Banks take advantage of Fed crisis lending programs.

MarketWatch:   

• First Republic gets $30 billion in deposits from 11 major U.S. banks including JPMorgan Chase, BofA and Wells Farg.
• U.S. stocks set for wild swings as trillions in options contracts set to expire Friday.
• YouTube TV hikes prices to $72.99 a month, citing high content costs.

Zero Hedge:

• The Trump, DeSantis, Tucker Effect: New Polls Show Republicans Increasingly Done With Ukraine.
• Biden DOJ Stands Accused Of Hiding This Evidence Of Biden-China Corruption: Sperry.
• Target Shutters Downtown Philly Location Citing "Declining Performance".
• 'An All-Out Assault On The Second Amendment': Gun Rights Groups Respond To Biden’s New Executive Order.
• Get Woke, Go Broke? It's Time To Talk About SVB's Ties To The World Economic Forum.
• Watch: Border Patrol Chief Testifies Border Is Not Secure, Wall Needed.
• Big Banks Agree To Historic $30 Billion Unsecured Deposit Injection In First Republic Bank
• The Tyrants Are Passing State Laws To Push CBDCs.
• James O’Keefe Announces New Project After Project Veritas Ouster.
• The Liquidity Phase Of The Bank Crisis Is Over... But The Solvency Phase Is Getting Worse.
• FedEx Soars After Boosting Earnings Forecast Amid Aggressive Cost-Cutting.
• Pornhub Acquired By Canadian Private Equity Firm 'Ethical Capital Partners'.
• As Bank Crisis Looms, Biden's Aggressive Focus On Firearms Is Suspicious.
• Americans Value Truck-Parking Facilities, But Not In Their Backyards.
• Risk appetite recovers on distressed bank lifelines - Newsquawk Asia-Pac Market Open.
• Fed Balance Sheet Explodes By $300BN As Bank Bailouts Lead To Record Discount Window Surge.
• Stocks bought and bonds sold as distressed banks are offered a lifeline - Newsquawk US Market Wrap.
• Stocks Soar As Big-Banks' Depo-Reacharound Rescues Regionals; Bonds Dumped.

Newsmax:      

• Rep. Comer: Bank Records Show Hallie Biden Got China Cash.
• Rep. Turner to Newsmax: Biden Family's Business Links 'Lead to China'.
• Kimberly Guilfoyle: SVB's 'Woke' Actions 'Disturbing'.
• Comer: Bank Records Show Hallie Biden Got China Cash.

TheGatewayPundit.com:

• UPDATE: Contracts Released For CDC Purchasing Of Phone Data To Track Americans’ Compliance With COVID Lockdowns.
• BREAKING: House Oversight Committee Shows Bidens Received $1 Million after China Wired $3 Million to Biden Associate.
• “I Was Severely Injured by the Moderna Vaccine” – Former Pussycat Dolls Member Shares Her Vaccine Injury Story (VIDEO).
• The Great Reset: Journalist Discovers Greta Thunberg’s Ties to Klaus Schwab’s World Economic Forum.
• ALL IN THE FAMILY: House Oversight Shows Daughter-in-Law Hallie Biden Got China Cash in 2017 While Sleeping with Her Dead Husband’s Brother Hunter.
• Top Executives at First Republic Bank Sold Millions of Dollars in Company Stock Before Shares Plummeted – And No SEC Filing!
• Treasury Secretary Janet Yellen Admits Joe Biden’s Inflation Crisis is Linked to the Banking Crisis (VIDEO).
• McCarthy’s Approval Surges After Release Of Jan 6th Tapes, Trump Praise – Far Higher Than RINO Paul Ryan’s At Similar Point.
• Rasmussen Poll Shows a Majority of ALL Voters Believe Trump’s 2020 Campaign Was Sabotaged by GOP D.C. Politicians.

The Epoch Times: 

• Demand Plunges in China, Contradicting CCP’s Official Narrative About Economy.
• China Ramping Up Intelligence Collection Efforts Against US: Expert.
• UK Bans TikTok From Government Phones.

 

Twitter: 

• @backtolife_2000 - Only ONE member of failed SVB's board had a career in investment banking - and the rest were Obama, Clinton mega-donors who 'grieved' when Trump won including one who went to Shinto shrine 'to pray'.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 942,034 Reports(+3,859 from prior week) Through March 3rd, 2023.
  

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.

Night Trading 

• Asian equity indices are unch. to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 135.0 -2.25 basis points. 

• China Sovereign CDS 76.0 -4.0 basis points. 
• China Iron Ore Spot 129.0 USD/Metric Tonne -.12%.

• Bloomberg Emerging Markets Currency Index 47.2 +.04%.
• Bloomberg Global Risk-On/Risk Off Index  48.6 +.9%. 
• Bloomberg US Financial Conditions Index -.76 +13.0 basis points.
  
• Volatility Index(VIX) futures 23.9 +1.3%.
• Euro Stoxx 50 futures +.39%.

• S&P 500 futures -.14%.

• NASDAQ 100 futures -.07%.  

Morning Preview Links

BOTTOM LINE: Asian indices are modestly higher, boosted by financial and technology shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 75% net long heading into the day.