Friday Watch

Evening Headlines

Bloomberg:

• China's `Stable, Solid' Yuan Faces Five Key Threats This Year. Chinese policy makers made it clear this week that they don’t want any surprises when it comes to the yuan. Three-month implied volatility on the currency is the lowest among emerging markets, as capital controls quell demand for foreign exchange. While Premier Li Keqiang hinted at an increased tolerance for bigger yuan moves at the start of the National People’s Congress, officials are sticking to their mantra. Deputy governor Yi Gang said on three separate occasions the yuan is “stable,” and his colleague Pan Gongsheng emphasized the currency market is “solid.”

• China Stock Bulls Turn Wary. Optimism over China’s economy has driven gains in the world’s second-largest equity market this year. But that budding recovery could also be investors’ undoing. Some money managers are turning cautious on Chinese shares on concern the economic rebound will gather enough momentum that the central bank has to tighten monetary policy further. While the People’s Bank of China has emphasized its neutral course in 2017 and steered clear of boosting benchmark interest rates so far, mainland markets have started to price in a “major hawkish shift” from the PBOC, according to Goldman Sachs Group Inc.

• Yen Drops as Global Bond Rout Deepens Before Jobs. The Topix index climbed 0.8 percent. Australia’s S&P/ASX 200 Index rose 0.4 percent and New Zealand’s S&P/NZX 50 Index added 0.2 percent. Futures on Hong Kong’s Hang Seng slid 0.2 percent.

Wall Street Journal:

• America Can’t Escape the Debt Vortex. Total obligations in the U.S. have hit 370% of GDP—and Trump seems intent on making matters worse.

• Oil Glut Worries Resurface, Triggering Market Tumble. Crude price falls below $50 for first time this year, in biggest two-day selloff since June.

CNBC:

• Trump told Mnuchin he wants deregulation done in six months, sources say. (video)

• Ulta(ULTA) blows past Wall Street forecasts, but shares drop on soft outlook.

Zero Hedge:

• The Fed Has Not Been This Far "Behind The Curve" In 40 Years. (graph)

• 31% Of College Students Spend Their Loans On Spring Break.

• OPEC Panics, Warns US Shale Not To "Assume" Production Cut Extension. (graph)

• Bond Blooodbath - Treasuries Haven't Seen A Longer Losing-Streak Than This In 43 Years.

• Fewer Corporate Insiders Are Buying Their Own Stocks Than At Any Point In 29 Years. (graph)

• Japan's Demographic Time Bomb Keeps Ticking.

• Chart Of The Day: Democrats Now Like The CIA More Than Republicans. (graph)

• Bearish Sentiment Spikes To 1-Year Highs (But It's Not What You Think). (graph)

• Five Injured After Axe Attackers Go On Rampage At Dusseldorf Train Station.

• Defiant Iran Conducts More Ballistic Missile Tests; This Time From Naval Vessel.

• 3 Key Risk On/Off Barometers Turning Down?

• It Took $4 In New Debt To Create $1 In GDP. (graph)

Business Insider: 

• Technology will destroy millions of American jobs.

• 'They'll tunnel anywhere they want': Go inside the underground passages smugglers burrow under the US border.

Night Trading 

• Asian equity indices are -.25% to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 98.5 +3.25 basis points.

• Asia Pacific Sovereign CDS Index 28.50 +1.0 basis point

• Bloomberg Emerging Markets Currency Index 70.53 +.03%. 

• S&P 500 futures +.24%. 

• NASDAQ 100 futures +.22%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (BKE)/.79

• (CTRN)/.36

• (HIBB)/.54

Economic Releases 
8:30 am EST

• The Change in Non-Farm Payrolls for February is estimated at 200K versus 227K in January.

• The Unemployment Rate for February is estimated to fall to 4.7% versus 4.8% in January.   

• Average Hourly Earnings MoM for February is estimated to rise +.3% versus a +.1% gain in January. 

2:00 pm EST 

• The Monthly Budget Deficit for February is estimated at -$190.0B versus $51.3B in January.

Upcoming Splits

• None of note

Other Potential Market Movers

• The China Money Supply report, (MRVL) investor day, (ON) analyst day and the (UTX) analyst meeting could also impact trading today.

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