Thursday, March 30, 2023

Stocks Higher into Final Hour on US Economic Soft-Landing Hopes, Less European/Emerging Markets/US High-Yield Debt Angst, Dollar Weakness, Tech/Alt Energy Sector Strength

Broad Equity Market Tone:

  • Advance/Decline Line: Slightly Higher
  • Sector Performance: Most Sectors Rising
  • Volume:  Around Average
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • Volatility(VIX) 19.4 +1.3%
  • DJIA Intraday % Swing .68%
  • Bloomberg Global Risk On/Risk Off Index 54.3 +2.5%
  • Euro/Yen Carry Return Index 150.6 +.22%
  • Emerging Markets Currency Volatility(VXY) 12.1 +.08%
  • CBOE S&P 500 Implied Correlation Index 34.8 +.17% 
  • ISE Sentiment Index 112.0 +30.0 points
  • Total Put/Call .96 -2.0%
  • NYSE Arms 1.08 +77.1%
Credit Investor Angst:
  • North American Investment Grade CDS Index 78.7 -2.7%
  • US Energy High-Yield OAS 405.3 -1.84%
  • Bloomberg TRACE # Distressed Bonds Traded 458.0 -15
  • European Financial Sector CDS Index 103.11 -3.2% 
  • Deutsche Bank Subordinated 5Y Credit Default Swap 365.978 -23.0%
  • Italian/German 10Y Yld Spread 186.0 basis basis points +4.0 basis points
  • Asia Ex-Japan Investment Grade CDS Index 133.0 -5.0%
  • Emerging Market CDS Index 235.30 -2.2%
  • China Corp. High-Yield Bond USD ETF(KHYB) 26.69 +.58%
  • 2-Year Swap Spread 34.0 basis points +.75 basis point
  • TED Spread 39.75 basis points -8.5 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -19.75 +2.0 basis points
  • MBS  5/10 Treasury Spread  155.0 -2.0 basis points
  • Bloomberg CMBS Investment Grade Bbb Average OAS 670.0 +4.0 basis points
  • Avg. Auto ABS OAS 91.0 unch.
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 47.9 +.18%
  • 3-Month T-Bill Yield 4.74% +1.0 basis point
  • China Iron Ore Spot 124.75 USD/Metric Tonne -.46%
  • Dutch TTF Nat Gas(European benchmark) 43.6 euros/megawatt-hour +1.9%
  • Citi US Economic Surprise Index 59.2 -1.6 points
  • Citi Eurozone Economic Surprise Index 54.2 -5.8 points
  • Citi Emerging Markets Economic Surprise Index 21.8 -.7 point
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 226.11 -.18:  Growth Rate +1.7% -.1 percentage point, P/E 17.9 +.3
  • S&P 500 Current Year Estimated Profit Margin 12.31% -2.0 basis points
  • Bloomberg US Financial Conditions Index -.32 +8.0 basis points
  • Bloomberg Euro-Zone Financial Conditions Index -4.05 +10.0 basis points
  • US Yield Curve -55.25 basis points (2s/10s) -4.5 basis points
  • US Atlanta Fed 1Q GDPNow Forecast +3.19% unch.
  • Cleveland Fed Inflation Nowcast Core PCE YoY +4.73% unch.: CPI YoY +5.22% unch.
  • 10-Year TIPS Spread 2.34 +1.0 basis point
  • Highest target rate probability for June 14th FOMC meeting: 49.0%(-9.5 percentage points) chance of 4.75%-5.0%. Highest target rate probability for July 26th meeting: 48.6%(+2.3 percentage points) chance of 4.75%-5.0%.
Overseas Futures:
  • Nikkei 225 Futures: Indicating +188 open in Japan 
  • China A50 Futures: Indicating +70 open in China
  • DAX Futures: Indicating +139 open in Germany
Portfolio:
  • Higher:  On gains in my tech/medical/industrial/utility sector longs
  • Disclosed Trades:  Covered some of my (IWM)/(QQQ) hedges
  • Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

  • Small-Cap Value -.6%
Sector Underperformers:
  • 1) Regional Banks -1.9% 2) Oil Service -1.1% 3) Biotech -.8%
Stocks Falling on Unusual Volume: 
  • PRCT, ROKU, NEP, RH, FRC, LOVE, NEOG, SCHW, AMLX, ACLX, AKRO, VRNT, SJT, AGL, TRMD, RNA, SMTC and MCB
Stocks With Unusual Put Option Activity:
  • 1) JETS 2) RL 3) VOYA 4) HAS 5) RH
Stocks With Most Negative News Mentions:
  • 1) SMTC 2) ANGO 3) SCHW 4) BBBY 5) SNDA
Charts:

Bull Radar

Style Outperformer:

  • Large-Cap Growth +.2%
Sector Outperformers:
  • Alt Energy +1.6% 2) Airlines +1.7% 3) Semis +1.2%
Stocks Rising on Unusual Volume:
  • CXM, FLNC, EBS, VKTX, OSH, RMBS, KSS and IOT
Stocks With Unusual Call Option Activity:
  • 1) SMTC 2) BTG 3) XRX 4) AGI 5) PWR
Stocks With Most Positive News Mentions:
  • 1) EVGO 2) RMTI 3) CXM 4) KSS 5) SWAG

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

Earnings of Note 
Company/Estimate 

Before the Open: 
  • None of note
After the Close: 
  • None of note

Economic Releases

8:30 am EST
  • Personal Income for Feb. is estimated to rise +.2% versus a +.6% gain in Jan.
  • Personal Spending for Feb. is estimated to rise +.3% versus a +1.8% gain in Jan.
  • The PCE Core MoM for Feb. is estimated to rise +.4% versus a +.6% gain in Jan.
9:45 am EST
  • The MNI Chicago PMI for March is estimated to fall to 43.0 versus 43.6 in Feb.
10:00 am EST
  • Univ. of Mich. Consumer Sentiment revisions. 
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Cook speaking, Fed's Williams speaking, Fed's Waller speaking and the China Non-Manufacturing PMI report could also impact global trading tomorrow.
US Equity Market Hours
  • 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

  • Volume Running +3.4% Above 100-Day Average 
  • Nasdaq/NYSE Volume Ratio 9.1 +.7
  • 2 Sectors Declining, 9 Sectors Rising
  • 84.7% of Issues Advancing, 12.7% Declining
  • 31 New 52-Week Highs, 4 New Lows
  • 43.9%(+3.3%) of Issues Above 200-day Moving Average
  • Average 14-Day RSI 52.0 +3.0
  • Bloomberg Global Risk-On/Risk-Off Index 54.3 +2.4%
  • Russell 1000: Growth/Value 15,979.2 +.2%
  • Vix 19.3 +.7%
  • Total Put/Call .89 -9.2%
  • TRIN/Arms 1.11 +82.0%

Wednesday, March 29, 2023

Thursday Watch

Night Trading 

  • Asian equity indices are -.25% to +.75% on average.
  • Asia Ex-Japan Investment Grade CDS Index 134.75 -7.25 basis points. 
  • China Sovereign CDS 77.0 -6.0 basis points. 
  • China Iron Ore Spot 122.8 USD/Metric Tonne -.08%.
  • Bloomberg Emerging Markets Currency Index 47.8 -.06%.
  • Bloomberg Global Risk-On/Risk Off Index  53.8 +1.5%. 
  • Bloomberg US Financial Conditions Index -.45 -6.0 basis points.
  • Volatility Index(VIX) futures 21.1 +.8%.
  • Euro Stoxx 50 futures +.19%.
  • S&P 500 futures -.05%.
  • NASDAQ 100 futures -.17%.  
Morning Preview Links

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