Friday Watch

Evening Headlines 
Bloomberg: 

• We Traveled Across China and Returned Terrified for the Economy. China’s steel and metals markets, a barometer of the world’s second-biggest economy, are “a lot worse than you think,” according to a Bloomberg Intelligence analyst who just completed a tour of the country. What he saw: idle cranes, empty construction sites and half-finished, abandoned buildings in several cities. Conversations with executives reinforced the “gloomy” outlook. “China’s metals demand is plummeting,” wrote Kenneth Hoffman, the metals analyst who spent a week traveling across the country, meeting with executives, traders, industry groups and analysts. “Demand is rapidly deteriorating as the government slows its infrastructure building and transforms into a consumer economy.”
• Global PC Shipments Decline as Corporate Spending Fades. Worldwide personal-computer shipments fell 5.2 percent in the first quarter as corporate spending that helped slow declines last year tailed off, market researcher Gartner Inc. reported. About 71.7 million units were shipped in the quarter, down from 75.7 million in the same period a year earlier, Gartner said Thursday in a report. Market researcher IDC reported a wider decline, finding that 68.5 million units were shipped, a 6.7 percent drop. IDC said it was the lowest number of PC shipments since the first quarter of 2009. 
• Hong Kong Chartist Seeing Unlucky Number Eight. In charting the meteoric rise of Hong Kong stocks, Thomas Schroeder says there’s nothing lucky about a number starting with eight. The relative strength index for the Hang Seng China Enterprises Index rose to 83.5 on Thursday, the highest since October 2010, according to data compiled by Bloomberg. Some traders consider readings above 70 as a sign to sell. The equity measure of Chinese firms trading in the former British colony surged 16 percent through yesterday since regulators eased access to the shares for mainland funds on March 27.
• Asia Shares Heading for Weekly Gain as Nikkei 225 Touches 20,000. Asian shares were poised for a weekly advance, after the measure closed Thursday at its highest in almost seven years, as Japan’s Nikkei 225 Stock Average touched 20,000 for the first time in 15 years. The MSCI Asia Pacific Index slid 0.2 percent to 151.60 as of 9:14 a.m. in Tokyo. The measure is headed for a 2.5 percent advance this week.

Wall Street Journal:

• Ayatollah Blasts Terms of Nuclear Framework. Iran’s supreme leader casts doubt on nuclear deal; White House plays down impact. Just a week after agreeing on a framework for a nuclear deal, Iran’s supreme leader and the Obama administration clashed over its core elements, rekindling doubts about whether Washington and Tehran can finalize an accord by a June 30 deadline. The supreme leader, Ayatollah Ali Khamenei, in his first public comments on the diplomacy, said on Thursday the U.S. and its negotiating partners must lift all sanctions... 
• GE(GE) Close to Selling Real-Estate Holdings. Talks under way with Blackstone, Wells Fargo for most of $30 billion portfolio.
• FAA Calls Out ‘Systemic’ Hazard at United. Repeated violations regarding pilot qualification, scheduling requirements prompt regulator to step up oversight.
• Corker’s Fickle Friends on Iran. Senate Democrats who once were hawkish about a nuclear deal have gone into hiding.

Fox News:

• Jabs at Pelosi latest sign of friction in Dem ranks. (video) With a leadership transition on the horizon on Capitol Hill and President Obama entering his final two years in office, cracks are beginning to show in the Democratic Party. Most recently, two House Democrats spoke out against their longtime and powerful leader, Nancy Pelosi. Massachusetts Democratic Rep. Stephen Lynch said on WGBH’s Greater Boston that it’s time for the House Democratic leader to step aside. "Nancy Pelosi is not going to lead the Democrats back into the majority," Lynch said.

Zero Hedge:

• When You Think The Financial World Can’t Get Any Crazier… This Happens.
• Wall Street's Biggest Banks May Have To Make Good On $26 Billion In Oil Hedges. (graph)
• "Do Not Worry! Do Not Panic!" Warns Hong Kong Exchange CEO Ahead Of Today's Market Open.
• Can't Wait To Read Bernanke's Memoirs? Here Are All The Timeless Statements By The Former Fed Chairman.
• "I’m The First To Say: I Can’t Do It" - The Energy Junk-Bond Implosion Just Claimed Its First Victim.
• "Saudi Arabia Is Going For it" - Why The Saudis Just Boosted Oil Production To A Record High. (graph)
• 19 Signs That American Families Are Being Economically Destroyed.
• Spelling Out The Big Reset.

Business Insider:

• China has 41 brand new billionaires thanks to a surge in share prices.

Reuters:

• Dealers expect first Fed rate hike in September - NY Fed survey. U.S. primary dealers now expect the Federal Reserve to begin raising rates in September, rather than in June, according to the New York Fed's latest regular survey. The survey, taken as U.S. central bankers prepared for their March 17-18 policy-setting meeting and published Thursday, also found that economists at the top banks see a receding chance that the Fed will need to reverse course soon after it begins to raise interest rates.
• U.S.-based European stock funds attract $1.5 bln, most in 7 weeks - Lipper.
• Russian net capital outflow $32.6 billion in Q1 - central bank.

Financial Times:

• US warns of ‘increasingly unbalanced’ global economy. The US Treasury has stepped up calls for big economies, including the euro area and Japan, to boost demand as it warned the global economy was becoming “increasingly unbalanced”. In a semi-annual report to Congress, the Treasury urged euro area governments and Tokyo not to rely solely on monetary policy to lift growth, while pressing South Korea to reduce interventions in currency markets and let the won rise.

Xinhua News Agency:

• Chinese Investors Should Be in Awe of Stock Market. Stock market won't always rise and isn't an ATM machine, the official Xinhua News Agency says in an article on Thursday. A healthy bull market won't neglect fundamentals of companies.

Evening Recommendations 

• None of note

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 104.0 -1.0 basis point.

• Asia Pacific Sovereign CDS Index 58.25 +.5 basis point.

• S&P 500 futures -.07%.

• NASDAQ 100 futures -.05%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (DCO)/.29

Economic Releases
8:30 am EST

• The Import Price Index for March is estimated to fall -.4% versus a +.4% gain in February.
  

2:00 pm EST

• The Monthly Budget Deficit for March is estimated at -$43.4B versus -$36.9B in February.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Kocherlakota speaking, Fed's Lacker speaking and the UK industrial production report could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by real estate 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.