Thursday Watch

Evening Headlines 
Bloomberg:

• Ukraine Resumes Effort to Oust Separatists Amid Russian Warnings. Ukraine restarted an offensive against separatists in eastern cities, prompting Russia to call the move a crime and warn that it would protect its citizens in Ukrainian territory. Operations to clear militants from Kramatorsk, Slovyansk and other cities were under way yesterday, Ukraine’s First Deputy Prime Minister Vitali Yarema said. Russian Foreign Minister Sergei Lavrov said yesterday his country would respond if its “legitimate interests” are “attacked directly.” “Russian citizens being attacked is an attack against the Russian Federation,” Lavrov said in an interview with the state-run television broadcaster RT. “If we are attacked, we would certainly respond.”   

• MSCI Plan Mocked as China Seen Unready for Global Status. MSCI Inc. (MSCI)’s proposal to include mainland Chinese equities in its global indexes is getting a cold reception from investors. 

• China Stocks Fall to 3-Week Low; Trading Slumps Amid IPO Concern. China’s stocks fell to a three-week low, with trading volumes in the benchmark index plunging amid concern new share sales will divert funds. PetroChina Co. declined before reporting earnings later today, while China Petroleum & Chemical Corp. retreated 1 percent. Apple Inc. suppliers Suzhou Anjie Technology Co. (002635) and GoerTek Inc. climbed at least 0.9 percent after the U.S. company reported a surge in iPhone sales. The Shanghai Composite Index (SHCOMP) dropped 0.3 percent to 2,060.50 at 9:40 a.m., with trading volumes 36 percent below the 30-day average, according to data compiled by Bloomberg.

• Asian Stocks Fluctuate on U.S. Earnings, Home Sales Data. Asian stocks swung between gains and losses as investors weighed better-than-estimated earnings from Apple Inc. and Facebook Inc. and an unexpected drop in home sales in the world’s largest economy. Toyota Motor Corp., the world’s largest carmaker, slid 1.6 percent in Tokyo. Kansai Electric Power Co. sank 3.9 percent after saying it may take a “long time” to restart its nuclear reactors in Japan. Catcher Technology Co., which makes casings for iPhones, jumped 5.1 percent and Largan Precision Co., a supplier of lenses to Apple, rose 1.5 percent in Taipei. The MSCI Asia Pacific Index fell 0.2 percent 138.68 as of 11 a.m. in Tokyo, after rising less than 0.1 percent.

• ‘Flash Boys’ Resonates as Survey Finds High-Frequency Concerns. Call it the “Flash Boys” effect. Michael Lewis’s recent book painted a picture of a U.S. stock market where insiders including exchanges, broker-dealers and high-frequency traders are conspiring to cheat investors. His argument may be resonating. More than two-thirds of financial industry participants, 70 percent, say the U.S. equity markets aren’t fair for all, according to a survey conducted by ConvergEx Group LLC, which provides brokerage and trading-related services. Just over half, 51 percent, also said high-frequency trading is harmful or very harmful.

Wall Street Journal: 

• Tensions Escalate in Ukraine as Geneva Deal Frays. Russia warned on Wednesday that any attack on its citizens in Ukraine would be considered an attack on Russia itself, as the Ukrainian government said it had resumed its "antiterrorist" operation against pro-Russian militants in the eastern part of the country. The escalating rhetoric comes amid growing signs that the agreement reached last week in Geneva between the U.S., European Union, Russia and Ukraine, laying out steps to reduce tension, was headed for failure. Its collapse would escalate a race between... 

• Crisis in Ukraine. Streaming Coverage: 

• FCC to Propose New 'Net Neutrality' Rules. Proposal Would Allow Broadband Providers to Give Preferential Treatment to Some Traffic. 

• The Other Stealthy ObamaCare Menace. The Center for Medicare and Medicaid Innovation exists to impose price controls and limit payments to providers.

CNBC: 

• GE(GE) in talks to buy France's Alstom for $13 bln: Report. GE is in talks to buy France's Alstom for $13 billion, Bloomberg reported, citing sources familiar with the deal.  The deal could be announced as soon as next week and the ultimate price could still rise, the wire service said.

Zero Hedge:

• Where Facebook's(FB) User Growth And Revenue Generation Is. 

• Investors Are "Whistling Past The Graveyard" Over Global Geopolitics.

• The Gap Betweeen GAAP And Non-GAAP In Two Charts.

• The Middle Class In Canada Is Now Doing Better Than The Middle Class In America.

• 60% Of China's Water "Too Polluted To Drink".

ValueWalk: 

• Asness on the central paradox of efficient markets.

Business Insider:

• Two 10-Year-Olds Caught Selling Legal Pot At Colorado School.

• Facebook(FB) Sees A Big Beat On Profits But Desktop Business Is In Decline.

• Christian Movies Continue To Crush It At The Box Office.

• APPLE BEATS ON EARNINGS, ANNOUNCES STOCK SPLIT; STOCK EXPLODES HIGHER.

Reuters:

• White House considers bank experts for Fed board -sources. The White House is weighing candidates with community banking backgrounds to fill gaps on the Federal Reserve's powerful but depleted board, according to sources familiar with the efforts. Diana Preston, a lawyer who recently left a post at the American Bankers Association, which represents many small banks, is one of those under consideration, two sources said.

Financial Times:

• Federal Reserve on course for further $10bn taper. The US Federal Reserve is highly likely to slow its asset purchases by another $10bn next week as the economy shakes off its winter torpor. Retail sales, industrial production and payrolls growth were all robust in recent weeks, adding to evidence of accelerating growth, after a cold winter led to fears for the economic outlook.

Sankei:

• The Bank of Japan plans to cut growth projection for fiscal 2014, which is currently at 1.4%, in next economic outlook report on April 30. BOJ may say fiscal 2013 GDP growth was lower than current prediction of 2.7%. BOJ likely to predict 1.5% GDP growth for fiscal 2015.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.50% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 122.50 -1.0 basis point.

• Asia Pacific Sovereign CDS Index 87.5 +1.0 basis point.

• FTSE-100 futures +.27%.

• S&P 500 futures +.29%.

• NASDAQ 100 futures  +1.04%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (LLY)/.71

• (ABC)/1.00

• (UAL)/-1.36

• (SWK)/.96

• (RCL)/.26

• (DHI)/.34

• (AAL)/.49

• (NUE)/.38

• (TWC)/1.67

• (PHM)/.20

• (HSY)/1.14

• (RYL)/.45

• (DGX)/.88

• (CELG)/1.65

• (BTU)/.00

• (DO)/.65

• (GM)/.04

• (AET)/1.55

• (HOT)/.56

• (LUV)/.16

• (ALXN)/1.26

• (MO)/.57

• (RTN)/1.77

• (UA)/.05

• (VZ)/.87

• (MMM)/1.80

• (CAT)/1.23

• (ZMH)/1.47

• (UPS)/1.08

• (FCX)/.42

• (SPWR)/.32

• (ALTR)/.32

• (KLAC)/1.11

• (SBUX)/.56

• (MSFT)/.63

• (LVS)/.94

• (V)/2.18

• (CB)/1.56

• (BRCM)/.46

• (AMZN)/.23

• (CERN)/.37

• (CLF)/.23

• (NEM)/.19

• (DECK)/-.14

• (DV)/.75

Economic Releases
8:30 am EST

• Durable Goods Orders for March are estimated to rise +2.0% versus a +2.2% gain in February.

• Durables Ex Transports for March are estimated to rise +.6% versus a +.2% gain in February.

• Cap Goods Orders Non-Defense Ex Air for March are estimated to rise +1.4% versus a -1.3% decline in February.

• Initial Jobless Claims are estimated to rise to 315K versus 304K the prior week.

• Continuing Claims are estimated to rise to 2745K versus 2739K prior.
  

11:00 am EST

• The Kansas City Fed Manufacturing Activity Index for April is estimated to fall to 8.0 versus 10.0 in March. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The Japan CPI, German IFO, $29B 7Y T-Note auction, the weekly EIA natural gas inventory report, weekly Bloomberg Consumer Comfort Index and the (SCHW) business update could impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and financial 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 day.