Wednesday Watch

Evening Headlines

Bloomberg:

• U.K.'s May Says She'd Rip Up Human Rights Law to Beat Terrorists. Prime Minister Theresa May said she’d be willing to tear up human rights legislation in the battle against terrorists, as security continued to dominate the final days of the U.K. election campaign. Speaking to supporters at a campaign event in Slough, west of London, the premier said she wanted to make it easier for the authorities to deport foreign terror suspects and to limit the freedoms of individuals who pose a threat but who can’t be prosecuted in court. 

• ECB Still Way Behind the Fed Even With Euro Area Outpacing U.S. The euro-area economy had a great start to the year, growing faster than the U.S. -- but that says more about the currency bloc’s late recovery than American weakness. The euro is trading at the strongest in more than six months against the dollar as prospects for the region’s expansion continue to improve. Yet the world’s two largest economies are also at very different stages.

• China Missiles Able to Send Nukes to Western Pacific, U.S. Says. China deployed new ballistic missiles last year capable of delivering nuclear warheads to ground targets in the Western Pacific, the Pentagon said. The intermediate-range Dongfeng-26 rockets could also be used for conventional strikes against ships in the region, the U.S. Department of Defense said in its annual report on China’s military. The deployment has been anticipated since at least September, when the missiles were displayed during a military parade hosted by President Xi Jinping.

• Australia First-Quarter GDP Expands 0.3 on Quarter. 

• Robot Ghost Ships to Extend Miner's Technology Drive to Seas. BHP Billiton Ltd., the world’s biggest mining company, is studying the introduction of giant, automated cargo ships to carry everything from iron ore to coal as part of a strategic shift that may disrupt the $334 billion global shipping industry.

• Investors Remain Cautious Ahead of ECB, U.K. Vote. Investors adopted a cautious stance ahead of a barrage of events due in the next 48 hours. There’s a reluctance to add to risk positions ahead of testimony Thursday from former FBI Director James Comey, the ECB’s policy decision and the U.K. election. Treasuries steadied after climbing on news that China is prepared to buy more of the notes. The Bloomberg Dollar Spot Index traded near an eight-month low. Stocks in Japan and South Korea retreated after the S&P 500 Index fell the most since mid-May. Gold remained near a seven-month high. Japan’s Topix index fell 0.2 percent. Australia’s S&P/ASX 200 Index retreated 0.2 percent and South Korea’s Kospi index lost 0.3 percent.

• Five Things You Need to Know to Start Your Day.

Wall Street Journal:

• GOP Senators’ Medicaid Clash Jeopardizes Health Deal. Phaseout of funding in House bill divides lawmakers in upper chamber.

• The Senate’s Medicaid Moment. The states are proving they can reform this program for the poor.

• Apple’s(AAPL) New Big Bet: Augmented Reality. ARKit platform puts it in a race with Facebook, Alphabet and Snap and fuels industry beliefs that it will eventually develop glasses.

Fox News:

• James Comey hearing: What you need to know. (video)

CNBC:

• Elon Musk just gave a whole bunch of information about the Tesla(TSLA) semi truck and Model Y.

• US oil output poised to hit 10 million barrels a day next year, breaking 1970 record, EIA says. (video)

• Anthem(ANTH) will drop out of Ohio's Obamacare market; 18 counties could be left with no ACA plan. (video)

• If investors treated Apple the same as the rest of the market, the shares would be a lot higher. (video)

Zero Hedge:

• Saudi Arabia Gives Qatar 24 Hour Ultimatum As Analysts Warn Of "Military Confrontation".

• The ECB Has Almost Run Out Of German Bonds To Buy. (graph)

• Comey Won't Accuse Trump Of Obstructing Justice: Report.

• Alabama Sees 85% Drop In Food Stamp Participation After Work Requirements Reinstated.

• Elderly Americans Are Taking Their Grandkids' Summer Jobs. (graph)

• WTI/RBOB Drop After Biggest Gasoline Build In 5 Months. (graph)

• Despite Near Certainty Of June Rate-Hike, Millions Of Eurodollar 'Bets' Are Set To Expire Worthless.

• FANG Flop Sparks D(own)-Day For Stocks As Dollar Dumps To 8-Month Lows. (graph)

Business Insider:

• Amazon's(AMZN) and Walmart's(WMT) latest moves confirm the death of the middle class as we know it.

• Sears(SHLD) is closing 72 stores — here's the full list.

• The robots are already here — and your job might be at risk.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 88.0 +.25 basis point. 

• Asia Pacific Sovereign CDS Index 18.75 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 73.45 -.04%.

• S&P 500 futures +.05%.

• NASDAQ 100 futures +.09%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (BF/B)/.40

• (NAV)/-.02

• (ABM)/.42

Economic Releases 
10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -3,085,710 barrels versus a -6,428,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -157,140 barrels versus a -2,858,000 barrel decline the prior week.
  

3:00 pm EST

• Consumer Credit for April is estimated to fall to $15.0B versus $16.431B in March.
  

Upcoming Splits

• (DST) 2-for-1

Other Potential Market Movers

• The Eurozone GDP report, Japan GDP report, German Factory Orders report, weekly MBA Mortgage Applications report, (RJF) Analyst Day, Deutsche Bank Industrials/Materials Summit and the (PSMT) monthly sales report could also impact trading today.

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