Monday Watch

Today's Headlines

Bloomberg:

• Mnuchin ‘Hopeful’ Truce Can Be Reached With China on Trade. (video) U.S. Treasury Secretary Steven Mnuchin said he’s optimistic that the U.S. can reach a agreement with China that will forestall the need to impose the tariffs that President Donald Trump has ordered on a least $50 billion of goods from that country. “We’re having very productive conversations with them,” Mnuchin said on “Fox News Sunday,” when discussing talks with China. “I’m cautiously hopeful we reach an agreement.”

• U.S. and South Korea Reach Agreement on Trade, Steel Tariffs. The U.S. and South Korea reached an agreement on revising the allies’s six-year-old bilateral trade deal and President Donald Trump’s plan to impose tariffs on imported steel, Treasury Secretary Steven Mnuchin said. Mnuchin said U.S. Trade Representative Robert Lighthizer reached “a very productive understanding” with South Korea on the tariffs to reduce imports and the existing trade deal known as Korus.

• PBOC's Yi Pledges More Open Financial Sector. People’s Bank of China Governor Yi Gang said the nation will further ease access to its financial sector and coordinate the opening with currency reforms. China will open the capital account in an “orderly” way and improve the yuan’s convertibility, the newly-appointed central bank governor said Sunday in Beijing. Yi also said that monetary policy will remain “prudent and neutral,” repeating the central bank’s recent stance, and pledged to continue work on defusing financial risks and enhancing regulatory capabilities. 

• China Wants Its Own Brains Behind 30 Million Self-Driving Cars.

• U.K. to Order Facebook, Google to Redo Data Policies, Times Says.

• Asia Stocks Signal More Losses Amid Trade Tensions. The sell-off that sent global markets into a tailspin last week stretched into Monday, with stock futures in Asia signaling further declines amid concern that global growth may be hurt by American protectionist policies. U.S. equity futures offered some hope of stabilization. Global stocks put in their worst week since the rout in early February and erased all of the subsequent recovery, with losses deepening into the close of Friday trading in the U.S. Crude posted its biggest weekly gain since July and the yen rose to the strongest in more than 16 months against the dollar. U.S. stock futures were little changed in early trading Monday. Futures on Japan’s Nikkei 225 Stock Average dropped 1 percent in most recent Singapore trading. Futures on Australia’s S&P/ASX 200 Index slid 0.9 percent. New Zealand’s S&P/NZX 50 Index retreated 1 percent.

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

• China Is About to Shake Up the Oil Futures Market. (video)

• JPMorgan Sees Market Overcoming Stock Rout, But Beware Trade War. Despite a harrowing week for U.S. stocks, market conditions are looking favorable heading into the second quarter, according to JPMorgan Chase & Co. Conditions for stability will probably come together in the second quarter, and asset allocations should remain oriented toward growth, JPMorgan strategists led by John Normand wrote in a note Friday after the S&P 500 closed down 6 percent for the week. They also suggested, however, that a potential trade war is a threat to economic growth.

Wall Street Journal: 

• Trump, Tariffs and the Protectionist Temptation. The trade balance doesn’t matter for U.S. prosperity. But America could benefit from updating and enforcing its trade deals, especially with China.

• Health-Insurance Premiums Loom as Election Issue. Lawmakers, at an impasse, omitted from spending bill an effort to restore payments to insurers. Now they’re rushing to assign blame for expected rate increases. 

• Split Over Keeping Bankers Out of Trouble. Ten years after the financial crisis, Washington’s bank regulators don’t agree on best way to examine financial firms.

Fox News:

• Fox News Poll: Gap narrows on 2018 vote preference. (video)

• Bolton Responds After Tim Kaine Questions Security Clearance Over Russia Gun Video. (video)

CNBC: 

• Trump defends $1.3 trillion spending plan, points to military gains.

• China will steadily advance financial reforms, open sector: Central bank governor.

• Trump's concerns about China are 'legitimate,' says former Obama trade official.

• Facebook(FB) saves extensive call, text data made by Android users: Ars Technica.

• Wells Fargo(WFC) thinks its time to buy into the sell-off, even with fears over trade wars and rate hikes.

Zero Hedge:

• American Adults Have Never Been Fatter.

• China Launches Massive Military Drills "In Preparation For War".

• Coulter On War Path After Trump Caves On Omnibus: "We Thought We Were Getting A Negotiator".

• Jamie Dimon Makes His Average Employee's Annual Salary In One Day.

• Julian Assange Reminds Us What Mark Zuckerberg Thinks Of Facebook Users.

• German Police Arrest Former Catalan Leader Puigdemont.

• The Good, The Bad, And The Ugly From The Market's Retest Of The February Low. (graph)

Business Insider:

• Mark Zuckerberg takes out full-page newspaper ads to say 'sorry'.

• Walmart(WMT) reveals why it has robots roaming the aisles in 50 of its stores.

• Crypto projects that raised hundreds of millions of dollars are being 'intentionally non-transparent'.

• Tim Cook speaks out on the Cambridge Analytica scandal, says Facebook's collection of user data 'shouldn't exist'.

• 13 incredible stories of American servicemen who won the Medal of Honor — the military's highest honor.

Night Trading

• Asian indices are -1.0% to -.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 81.0 +1.75 basis points.

• Asia Pacific Sovereign CDS Index 13.5 +.5 basis point.

• Bloomberg Emerging Markets Currency Index 75.11 +.06%. 

• FTSE 100 futures -.51%.

• S&P 500 futures +.53%.

• NASDAQ 100 futures +.67%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (PAYX)/.60

• (RHT)/.81

Economic Releases
8:30 am EST

• The Chicago Fed National Activity Index for February.

10:30 am EST

• The Dallas Fed Manufacturing Activity Index for March is estimated to fall to 33.5 versus 37.2 in February.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Dudley speaking, Fed's Mester speaking, Eurozone 4Q GDP report and the $30B 2Y T-Note auction could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down by financial and industrial shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 50% net long heading into the week.