Friday Watch

Evening Headlines 
Bloomberg:  

• Greeks Trapped in Financial Vise as Euro Region Turns the Screws. As Greek Prime Minister Alexis Tsipras follows an increasingly perilous financial path, his antagonists are just sitting tight. Finance ministers from the euro region discuss in Riga on Friday where to go from here as talks on more rescue money for Greece enter a fourth month. Frustrated after fruitless calls on Tsipras to tackle his country’s problems, creditors can only withhold the support that would allow him to shield Greeks from financial reality while keeping the country in the currency. “This is the next stage of the negotiation,” said James Nixon, chief European economist at Oxford Economics in London. “They’ll see how the political situation develops in Greece if they apply the thumbscrews.” 

• Putin’s Miracle Dissolves as Russian Middle Class Faces Crunch. The middle class -- defined by Russian researchers as people with higher education who earn above the average and don’t do manual labor -- has doubled to 40 percent of the 146 million-person population under Putin. While he pledged in 2008 to increase it to as high as 70 percent by 2020, Natalia Tikhonova of the Higher School of Economics in Moscow sees it shrinking to 30 percent in the next year or two.

• Nikkei Surge No Reflection of Economy, Opposition Chief Says. The Nikkei 225 Stock Average’s surge past 20,000 doesn’t indicate that Japan’s economy is strong, the country’s opposition leader said. “While stock prices are rising, not many people think that the economy has improved,” Democratic Party of Japan President Katsuya Okada said Thursday in an interview at his Tokyo office. “It’s incorrect to view stock prices as a measure of everything.” “Should stock prices become unstable, the mood will change a lot,” Okada said. “The government shouldn’t just be trying to raise stock prices, it should trying to raise the level of people’s livelihoods by improving the economy.”   

• China Is Rallying, but It Has Weak Legs: Padamadan. (video) 

• Kaisa Stirs Commodity Bears Eyeing China’s Property-Led Slowdown. Kaisa Group Holdings Ltd.’s bond default this week underlines how China’s faltering property sector is threatening to blunt any rebound in commodities prices. As much as half of the country’s copper consumption and about 35 percent of its steel use is related to housing and real estate, according to Goldman Sachs Group Inc. China’s new property starts slid 18 percent in the first three months of the year as a downturn in economic growth leaves a backlog of unsold homes and depressed prices. 

• Glorious Property Seen as Close to Default After Kaisa’s Tumble. After Kaisa Group Holdings Ltd. defaulted on its dollar bonds earlier this week, the market got to wondering, who could be next? They didn’t have to look very far. Attention has rapidly shifted to Glorious Property Holdings Ltd., whose controlling shareholder is billionaire Zhang Zhirong. It must repay $19.5 million of interest Monday on its $300 million of 13 percent notes due 2015. Moody’s Investors Service cut its senior unsecured rating to Ca, just one step from the lowest grade typically signaling default, on April 20 citing sliding sales.

• Asian Stocks Head for Fourth Weekly Gain; Nikkei Retreats on Yen. Asian stocks rose, with the regional benchmark index set to post a fourth straight weekly advance. Japanese shares retreated as the yen held gains amid weak U.S. economic data. The MSCI Asia Pacific Index added 0.3 percent to 155.65 as of 9:30 a.m. in Tokyo, poised for a 1.1 percent increase this week and the longest run of weekly advances since February.

• Deutsche Bank: Why The Fed Can't Ignore Treasury Market Illiquidity. An attempt at measuring liquidity in the Treasury market. On October 15, Wall Street let out a collective gasp as yields on U.S. government bonds veered wildly. For minutes, sellers appeared to simply step away from the market - leaving the yield on the benchmark 10-year Treasury to plunge 33 basis points before rising to settle at 2.13 percent. Concerns over liquidity in U.S. Treasuries have subsequently bubbled over with the International Monetary Fund, JPMorgan chief executive Jamie Dimon and plenty of others all sounding the alarm about the ability of the $12 trillion market to withstand a sell-off.

• Subprime Auto-Loan Bonds Skew Lender Incentives, Lawsky Says. Growing sales of bonds backed by subprime auto loans are creating “a disalignment of incentives” for lenders, fueling more and more debt for the riskiest borrowers, according to New York’s top banking regulator. Packaging loans to car buyers with spotty credit into bonds “scares me a bit,” Benjamin Lawsky, superintendent of the Department of Financial Services, told state senators Thursday in Albany during a hearing on lending practices. Increasing issuance of the loans and the securities they back are prompting lenders to “push loan after loan out,” he said.

• Ford to Lay Off 700 Workers at Plant Making Small Cars, Hybrids. Ford Motor Co. said it’s laying off a shift of 700 workers at a Michigan factory that builds small cars, hybrids and electric vehicles that are attracting fewer buyers. The plant in Wayne, a Detroit suburb, produces the Focus small car and C-Max hybrid, which had U.S. sales declines last month of 15 percent and 23 percent, respectively.

Wall Street Journal:

•  Is the Nasdaq in Another Bubble? (interactive graph)

• Comcast(CMCSA) to Drop Bid for Time Warner Cable. Cable operator, facing regulatory resistance, to walk away from $45.2 billion deal.

• Quid Pro Clinton. Democrats who expect Bill and Hillary to change are delusional. We’re not the first to make the comparison, but Bill and Hillary Clinton’s adventures in the uranium trade recall nothing as much as Tammany Hall’s concept of “honest graft.” Except maybe their never-ending use of power and status for personal and political gain requires a new special terminology. Dishonest graft? The New York Times reported Thursday on the foreign cash that flowed into the Clinton Foundation between 2009 and 2013 as subsidiaries of the Russian state nuclear energy agency Rosatom acquired control of a..

• The Climate-Change Religion. Earth Day provided a fresh opening for Obama to raise alarms about global warming based on beliefs, not science. 

Fox News:

• Tangled Clinton Web: Foundation received millions from investors as Russia acquired part of US uranium reserves. (video) The relationship between former President Bill Clinton and a group of wealthy Canadian mining investors who made significant contributions to the Clinton family's foundation has come under scrutiny after their uranium company ended up in the hands of the Russians. That deal, which gave the Russians access to part of the U.S. uranium reserves, all started with Bill Clinton's dealings with friend Frank Giustra.  

• Fox News Poll: Rubio jumps to head of 2016 GOP pack, (video) Clinton honesty questioned. The Bush dynasty is a negative for voters and Marco Rubio is seen as a leader of the future, as the Florida senator jumps to the head of the GOP pack.

CNBC:

• Companies gaming the system: Strategist. (video)

Zero Hedge:

• Largest Bank In America Joins War On Cash.

• China's "Animal Spirits" May Call For "Draconian" Measures To Curb Rally, UBS Says. (graph)

• Saxobank CIO Sees: "Zero Growth, Zero Inflation, & Zero Hope". (video)

• Dear CFTC: Presenting Today's E-Mini Market Manipulating "Spoofing". (graph)

• Worst Macro Data in 6 Years Sends Stocks Soaring To Record Highs. (graph)

• "Obsessive" Buybacks Could Be Big Mistake, "Serious" People Tell Unserious People. (graph)

• Norway's Giant Sovereign Wealth Fund Goes Full Tinfoil Fringe Blog.

• Chart Of The Day - Chinese New Share Accounts Edition!!!! (graph)

Business Insider:

• Greek Finance Minister: It's not complicated – we just have to convince our creditors we're right, and they have to realize they're wrong.

• Microsoft's(MSFT) two traditional cash cows, Windows and Office, are shrinking like crazy.

• Starbucks(SBUX) shares up 6% after earnings beat expectations.

• Expert: 'A terrorist with nation-state capabilities could absolutely crash our stock markets'.

• New York Times reporter has accused Bill Clinton of trying to deny meeting linked to 'Clinton Cash' scandals.

• Amazon(AMZN) beats, stock jumps, and its cloud business is quite profitable.

• Google(GOOG) whiffs on earnings, but the stock is up about 4% after-hours.

• Why it's ludicrous to think a kid in his basement could have caused the flash crash.

• Eric Schmidt just bought 20% of hedge fund DE Shaw for $500 million or so. It controls $32 billion.

• The White House won’t say whether Hillary Clinton broke the Obama Administration’s disclosure guidelines.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are -.50% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 106.50 +1.5 basis points.

• Asia Pacific Sovereign CDS Index 59.75 +.25 basis point.

• S&P 500 futures +.03%.

• NASDAQ 100 futures +.41%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AOS)/.62

• (AAL)/1.70

• (AZN)/1.07

• (B)/.52

• (BIIB)/3.91

• (BGG)/.75

• (COG)/.04

• (FLIR)/.32

• (INFY)/27.63

• (LEA)/2.19

• (LYB)/2.00

• (STT)/1.06

• (TYC)/.49

Economic Releases
8:30 AM EST

• Durable Goods Orders for March are estimated to rise +.6% versus a -1.4% decline in February.

• Durables Ex Transports for March are estimated to rise +.3% versus a -.4% decline in February.

• Cap Goods Orders Non-Defense Ex Air for March are estimated to rise +.3% versus a -1.4% decline in February.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Germany IFO index could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and industrial shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon. The Portfolio is 75% net long heading into the day.