Friday Watch

Evening Headlines

Bloomberg:

• China Readies for State-Enterprise Ownership Reforms. (video)

• Bond Yields Shrug Off Commodity Slide Before Jobs. Australian bond yields rose, tracking US. Treasuries in shrugging off declines in oil and other commodities that raised questions about global reflation, while the nation’s stocks retreated. Better-than-forecast earnings at Macquarie Group Ltd. initially buoyed Australian stocks, which are headed for a losing week amid a sell-off in industrial metals including iron ore and copper. West Texas Intermediate crude steadied after tumbling almost 5 percent to below $46 a barrel -- a drop that took the Bloomberg Commodities Index to an eight-month low. Japan and South Korea are closed for a holiday. Australia’s S&P/ASX 200 Index was down 0.2 percent, while futures on the Hang Seng dropped 0.2 percent. New Zealand’s S&P/NZX 50 Index was little changed.

• Trump Tax Cuts Could Fuel Animal Spirits in Corporate Bonds. President Donald Trump’s tax reform proposals have the potential to unleash a short-term wave of enthusiasm in the corporate bond market. A lowering of the corporate tax rate and a one-time repatriation for overseas cash holdings of U.S. companies may tighten credit spreads. However, any initial boost might be unsustainable, said Morgan Stanley analyst Adam Richmond.

• Buffett Sells a Third of Berkshire's IBM(IBM) Holding, CNBC Reports. Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., sold about a third of his company’s investment in computer-services giant IBM, CNBC reported. The sales came in the first and second quarters, CNBC said, citing Buffett. Berkshire started building its International Business Machines Corp. stake in 2011, eventually becoming the company’s largest shareholder, with an investment valued at almost $13 billion. IBM’s shares gained about 21 percent in 2016 after a run of three straight annual declines, and are still more than 25 percent lower than the company’s 10-year peak in 2013. The shares have lagged behind both technology peers and the S&P 500 Index in 2017. “I don’t value IBM the same way that I did six years ago when I started buying,” Buffett told CNBC. “I’ve revalued it somewhat downward.”

Wall Street Journal: 

• Iraq Launches Fresh Push on Islamic State in Mosul. Forces advance from northern outskirts on militants trying to hold territory in the Old City.

• How a Hedge-Fund Ace Chased Silicon Valley Riches—and Embarrassed Himself. Wellington’s Nick Adams made his career in bank stocks before pouring money into tech startups, leading to an apology, refunds and a vow to get back to basics.

• House Panel Approves Plan to Undo Parts of Dodd-Frank Financial Law. Financial Choice Act includes easing regulations and some capital requirements for healthy firms and restructuring the Consumer Financial Protection Bureau.

• GOP Approves Bill to Replace Most of Affordable Care Act. (video) Bill faces uncertain prospects in the Senate. House Republicans repealed most of President Barack Obama’s signature health-insurance law Thursday in a tight vote, handing President Donald Trump his first legislative victory and vindicating GOP leaders who failed twice before to pass a bill.

• Ending ObamaCare, Part One. House Republicans take a giant step toward better health care.

Fox News:

• Pentagon eyes Iran-North Korea military connection. (video)

CNBC: 

• Jeff Bezos just sold $941 million worth of Amazon stock, his most lucrative sale ever.

Zero Hedge: 

• This Has Never Happened Before... (graph)

• Senate To Write Its Own Obamacare Repeal Bill.

• April Payrolls Preview: "It Better Be Good".

• US Vs Canada: The Numbers Behind the World’s Closest Trade Relationship.

• President Obama Sought NSA Intel On 1000s Of Americans During The 2016 Election.

• The Chart That's Keeping Goldman Up At Night.

• War Of Words Escalates: China Blasts "Hyper-Aggressive" North Korea's "Irrational Logic".

• Stocks Shrug As Obamacare Ouster Trumps Commodity Crash, Crude Carnage. (graph)

Business Insider:

• Ivanka Trump and EPA chief set to meet over the Paris climate agreement.

• British manufacturers are shaking off Brexit and reporting rapid growth.

• A top strategist says stocks look good despite a slow first quarter.

Telegraph:

• The European Union's antics serve as a reminder of why Britain voted to leave.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 92.75 +.5 basis point. 

• Asia Pacific Sovereign CDS Index 21.25 -.5 basis point.

• Bloomberg Emerging Markets Currency Index 71.98 -.03%.

• S&P 500 futures +.01%. 

• NASDAQ 100 futures -.03%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AXL)/.88

• (CI)/2.46

• (JLL)/.39

• (MCO)/1.24

Economic Releases  
8:30 am EST

• The Change in Non-Farm Payrolls for April is estimated to rise to 190K versus 98K in March.

• The Unemployment Rate for April is estimated to rise to 4.6% versus 4.5% in March.

• Average Hourly Earnings MoM for April are estimated to rise +.3% versus a +.2% gain in March.

3:00 pm EST

• Consumer Credit for March is estimated to fall to $14.0B versus $15.206B in February.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Yellen speaking, Fed's Fischer speaking, Fed's Williams speaking, Eurozone Retail Sales report, (PSMT) monthly sales report and the (AUY) investor day could also impact trading today.

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