How bad is Covid-19 (a.k.a the coronavirus)?  It’s becoming less clear.  Apparently, China’s President Xi Jinping knew and talked about the virus weeks before it was made public.  The fast response to contain the virus spread was not so fast after all.  Popular Chinese social media bloggers posting initial virus stories vanished back in January, silencing virus information from the communist country.  The death count is now approaching 1900 with over 72K known cases.  China is looking to postpone their largest auto show and possibly their annual congress.

Apple (AAPL) issued a warning they would not meet fourth quarter expectations due to the Chinese government shutting down their factories.

Amazon (AMZN) resellers are starting to feel the virus impact as many Chinese exports have stopped.

Pier 1 Imports (PIR) is the latest retailer to fall on hard times.  They filed Chapter 11 bankruptcy on Monday.

Earnings include WMT, MDT, GRPN, HLF, TIVO, LZB, and AAP.

The economic calendar includes Empire State @ 8:30am ET and NAHB @ 10:00am ET.  The Fed’s Kashkari speaks @ 2:00pm ET.

Expect volatility to contract as the market pushes higher.  Given the long 3-day weekend, light economic calendar, and fresh coronavirus concerns, there is potential for the ESH20 to move this morning.

Size bias is short into the US cash session open.

A Fed rate course reversal???  St. Louis Fed President James Bullard said yesterday that a “darkened” global trade narrative could slow the growth of the US economy, followed by a “downward policy rate adjustment may be warranted soon.”  The bulls sent US stocks up into yesterday’s cash close.

Markets will be watching Fed speak closely this morning: John Williams @ 8:30am EST and Chair Jerome Powell @ 9:55am EST.  CME futures predict a 50% chance of a rate cut in July with 2 more before 2020.  That would be quite a reversal in Fed policy…

FAANG companies are in US lawmakers’ crosshairs.  A House Judiciary committee announced a top-to-bottom review of US tech companies and the DOJ and FTC announced they would tackle large monopolistic companies such as Alphabet, Apple, Amazon, and Facebook.

Dem David Cicilline of RI said “The growth of monopoly power across our economy is one of the most pressing economic and political challenges we face today…  market power in digital markets presents a whole new set of dangers.”

In the same vein, Apple announced they will be killing iTunes and instead split music, podcasts, and TV into separate apps.  Earnings today include CRM, AMBA, GWRE, CBRL, GME, TIF, LE, HQY, and NAV.

The economic calendar is light with Factory Orders and Constructions Spending @ 10:00am EST.  Volatility continues to tick up and if Powell hints at decreasing rates, the ES could move today.  Size bias is a divergent short into Bullard’s 8:30am talk.

US and global stock markets are a little rattled by Trump comments concerning a scheduled June 12 Singapore meeting with North Korea and US trade war progress with China.  The US and South Korea held a joint military exercise last week and now Trump is saying there’s a good chance the North Korean meeting will not take place on June 12, but still a good chance it will at some point in the future.  About the trade negotiations with China, Trump said it’s “a start” but he was “not pleased” with the progress.  US retailers Target and Lowes missed earnings estimates while jeweler Tiffany & Co. crushed their expectations.  The economic calendar focus is Oil @ 10:30am and Fed minutes @ 2:00pm EST.  Before the main events, we have PMI Composite Flash @ 9:45am EST and New Home Sales @ 10:00am EST.  The ES has pulled back enough where upside volatility should not be hindered as we’ve experienced over the last week.  Volatility continues to contract, but there’s more room to expand now.  Size bias is short on increased Globex volume into the US session open.