Tuesday Watch

Evening Headlines 
Bloomberg: 

• Soviet-Era Survival Kicks in for Ukrainians in Rebel Wasteland. Life inside Ukraine’s pro-Russian breakaway republics hinges on a shadow economy flourishing amid the cease-fires, embargoes and severed supply lines of a yearlong war. The shortages underscore the difficulties rebels and their backers in the Kremlin face in establishing a semblance of normality as they seek to cement their rule. They also highlight the mounting costs of the war as the government in Kiev starts debt-restructuring talks.  
• China’s Bond Market May Face Second Default. (video)
• Samsung Profit Beats Estimates With Demand Rising for Its Chips and Displays. Samsung Electronics Co. posted profit that beat analysts’ estimates as rising demand for memory chips and displays more than offset a slump in smartphones. Operating income fell 31 percent to 5.9 trillion won ($5.4 billion) in the three months ended March, the Suwon, South Korea-based company said in a filing Tuesday. That compares with the 5.5 trillion won average of 36 analyst estimates compiled by Bloomberg. The shares rose. 
• FedEx(FDX) Said to Be in Talks to Buy TNT to Expand Europe Deliveries. FedEx Corp. is in discussions to acquire financially struggling Dutch logistics company TNT Express NV to expand package deliveries in Europe, people familiar with the matter said. An agreement may be announced this week, said one of the people, who asked not to be identified because the details are private. Talks are continuing, and it’s still possible no accord may be reached, the people said. TNT’s market value as of April 2 was 3.29 billion euros ($3.6 billion).
• Dollar’s Drop Is Cue to Start Buying for World’s Best Forecaster. It’s time for investors who bailed on the dollar in the past few weeks to get back in, says the most-accurate currencies forecaster. The greenback has tumbled 4.4 percent versus the euro since touching a 12-year high last month amid speculation the Federal Reserve will delay raising interest rates, in part because the dollar’s strength is hurting U.S. economic growth. That concern is overblown, according to ING Groep NV, which topped Bloomberg’s rankings of foreign-exchange analysts for the second quarter in a row.   
• Aussie Within a Cent of Six-Year Low as Yield Falls on Rate Bets. Australia’s dollar traded within a cent of an almost six-year low amid speculation the central bank will cut its key interest rate to an unprecedented low on Tuesday. Three-year government bond yields dropped to a record as swaps traders priced in a better than 70 percent chance the Reserve Bank of Australia will reduce the overnight cash rate target by a quarter percentage point to 2 percent. Economists are less convinced: 17 of 30 surveyed by Bloomberg News predict that the central will keep rates unchanged. The Aussie rose Tuesday after a report showed that February retail sales climbed more than expected.
• Asia Stocks Follow U.S. Rally as Tech, Consumer Companies Gain. Asian stocks rose, following a rally in U.S. equities, after comments by a Federal Reserve official fueled optimism that policy makers in the world’s largest economy will hold interest rates lower for longer. The MSCI Asia Pacific Index advanced 0.2 percent to 149.02 as of 9:03 a.m. in Tokyo. 
• Gold Bust Means Less Mine Spending. The biggest gold bust in three decades is about to end a six-year expansion in mine output. From Russia to South Africa to North America, the biggest producers saw profits turn to losses as prices plunged, forcing them to cut spending on mines in half over three years. While bullion output will probably reach a record in 2015, the increase will be the smallest in at least six years, before production drops 1 percent in 2016, according to Barclays Plc.
• Fed’s Lockhart Favors July-Sept. Liftoff on Weak Jobs Report. Federal Reserve Bank of Atlanta President Dennis Lockhart said while recent economic weakness probably won’t persist, he favors pushing out the central bank’s first rate increase beyond the next two meetings. “I would probably be biased toward the July or September dates as opposed to June,” Lockhart, who votes on monetary policy this year, said in an interview Monday. “We will have more data and we will give the economy a little more time to prove out the thesis that I laid out, that the first quarter was anomalous again, just like a year ago.”
• United(UNH), Humana(HUM) Get Surprise Medicare Revenue Boost From U.S. Health insurers such as UnitedHealth Group Inc. and Humana Inc. will see revenue for commercial Medicare policies increase 1.25 percent next year, reversing an earlier U.S. government proposal that would have cut payments. The announcement was a surprise, since the U.S. has been reducing payments to insurers as it seeks to bring the cost of privately managed Medicare coverage in line with the government-run version of the program for the elderly and disabled. Payments are already falling 4 percent this year, and in February the U.S. proposed an 0.9 percent reduction for 2016.

Wall Street Journal:

• Israel, U.S. Lawmakers Press Case Against Iran Deal. Moves signal fresh domestic and international pressure on negotiations leading up to a summer deadline. Israeli officials and congressional Republicans on Monday set high bars with exacting conditions for a nuclear accord with Iran, signaling fresh domestic and international pressure on negotiations leading up to a summer deadline. Leading Arab governments, including Saudi Arabia, cautiously accepted the landmark diplomacy with Iran, in their most detailed reactions yet. But Saudi officials said they...
• Skin Cancer Removal With Miniaturized Radiation. Many patients prefer the new X-ray treatment to surgical procedures.
• Oil Shipments by Rail Take Slow Track. Safety concerns, low crude prices depress train traffic.

Fox News:

• Obama administration claims Iran deal a ‘forever agreement,’ despite expiration dates. (video) The Obama administration mounted a new argument Monday for why skeptical lawmakers and U.S. allies should back the preliminary nuclear agreement with Iran, calling it a “forever agreement” that would block all pathways to a nuclear weapon and set up tough international inspections with no end date.

MarketWatch.com:

• OPEC has lost its swagger — and may never get it back.
• 6 reasons to sell stocks now and go to cash. 
• Should you follow Mohamed El-Erian and move your investments to cash? The former PIMCO chief says central banks have pushed asset prices to ‘very elevated levels’

Zero Hedge:

• Hedge Fund Legend Julian Robertson Warns Of A "Complete Explosion" Unless Fed Contains "Boiling, Bubble" Market.
• John Hussman Explains Why QE Has Done Nothing To Help You.
• 28 Ways 'They' Rig The Market.
• Dismal Data Sparks Biggest Stock Ramp In 5 Months. (graph)
• The Warning Sign One Permabull Is Concerned About Is Now Flashing "Record" Red. (graph)
• Bonds Are Right! DoubleLine's Gundlach Warns Fed "Has Been Wrong For So Long... Offers No Value". (graph)
• Who Is Smarter: Credit Or Equity Investors? (graph)
• When Will Muslims Outnumber Christians? (graph)
• As US Seeks To "Contain" Iran Nuclear Plans, Russia & China Expand Theirs.

Business Insider:

• Vancouver's real estate bubble is getting bigger.
• Biotech company Ocular Therapeutix is imploding after announcing disappointing trial results.
• As Bill Gates promised, Microsoft(MSFT) will soon have its own Apple Pay alternative.
• Viacom(VIA/B) announces layoffs and a massive $785 million charge as part of a 'strategic realignment'.
• Here's how health apps could expose all sorts of new information about you.
• A Carson Block short has been frozen by the Chinese government, and the stock hasn't traded at all today.
• Greece puts a figure on World War II reparation claims from Germany. 
• THE DRONES REPORT: Market forecasts, regulatory barriers, top vendors, and leading commercial applications.

Telegraph: 

• Markets will be caught unaware by a ‘Grexident’. (graph) Fears investors are under-pricing the costs of an accidental Greek exit from the eurozone as Athens remains on a collision course with creditors.

Economic Information Daily:

• China LGFV Private-Public Fund Raising May Be Risky. Some local govt funding vehicles are improperly raising funds under the name of public-private partnership which may bring risks, citing people familiar with the matter. LGFVs have been banned participating in PPP projects as private companies, report says. Some LGFVs have participated in PPP projects through joint ventures, report says, citing people from LGFVs.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are +.25% to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 110.0 unch.

• Asia Pacific Sovereign CDS Index 58.25 -.26 basis point.

• S&P 500 futures -.11%.

• NASDAQ 100 futures -.07%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (GBX)/1.20
• (ISCA)/.29
• (SCHN)/-.10
• (PLAY)/.28
• (TISI)/.11

Economic Releases
10:00 am EST

• The IBD/TIPP Economic Optimism Index for April is estimated to fall to 49.0 versus 49.1 in March.
• JOLTS Job Openings for February are estimated to rise to 5003 versus 4998 in January.
  

3:00 pm EST

• Consumer Credit for February is estimated to rise to $12.250B versus $11.562B in January.
  

Upcoming Splits

• (SBUX) 2-for-1

Other Potential Market Movers

• The Fed's Kocherlakota speaking, Eurozone Services PMI, Eurozone PPI, $24B 3-Year Treasury auction and the weekly US retail sales reports could also impact trading today.

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