Tuesday Watch

Evening Headlines

Bloomberg:

• China Unveils 'Revolutionary' Plan to Give Communist Party Even More Power. China unveiled a “revolutionary” government restructuring plan that consolidates Communist Party authority, giving President Xi Jinping more direct control over the levers of money and power. The plan put before China’s rubber-stamp parliament Tuesday -- some of which had been reported by Bloomberg -- calls for merging several ministries and agencies including the regulators that oversee the country’s $43 trillion banking and insurance sectors. The proposed “CPC leadership system” would also clarify the party’s policy-making authority over state agencies.

• China Creates Super Regulator for $43 Trillion Finance Industry. (video) China is giving its central bank greater regulatory powers while merging the watchdogs responsible for banking and insurance, a key move in the nation’s campaign to curb risks in its financial sector.

• Larry Kudlow Emerges as Trump Favorite to Replace Cohn, Sources Say. CNBC personality Larry Kudlow has emerged as President Donald Trump’s favorite to replace Gary Cohn, the outgoing director of the White House National Economic Council, two people familiar with the matter said. Trump may name Kudlow as his top economic adviser within a day or so, one of the people said. In addition to his duties at CNBC, where he is a senior contributor, Kudlow is a radio host, syndicated columnist and entrepreneur. He was an economist for Bear Stearns & Co. Inc. and served in President Ronald Reagan’s administration.

• Tillerson Says Substance Used in Ex-Spy Poisoning Is From Russia.

• Asian Stocks Mixed Ahead of U.S. Data; Yen Higher. (video) Japanese and Hong Kong equities drifted, while Australian shares fell and South Korea and Shanghai stocks were little changed. The S&P 500 Index slipped overnight following its biggest rally in five weeks that was spurred by a better-than-expected jobs report. The yen continued to climb as political clouds gathered around Japanese Finance Minister Taro Aso. The U.S. 10-year yield held at 2.87 percent after Monday’s Treasury auction was broadly in line with expectations. Japan’s Topix index slid 0.1 percent as of 10:41 a.m. in Tokyo. South Korea’s Kospi index was flat. Australia’s S&P/ASX 200 Index declined 0.6 percent. Hong Kong’s Hang Seng Index fell 0.1 percent and the Shanghai Composite Index fluctuated. S&P 500 Index futures were little changed. The underlying measure lost 0.1 percent.

• Five Things You Need to Know to Start Your Day. (video)

Wall Street Journal: 

• U.K.’s May Says It Is ‘Highly Likely’ Russia Was Behind Skripal Poisoning. Prime minister says military-grade nerve agent developed in Russia was used in attack; responses under consideration.

• Goldman Sachs(GS) Puts David Solomon in Line to Be Next CEO. Solomon’s status rises at firm after fellow president, Harvey Schwartz, announces plans to retire in April.

• Hedge Funds Bet on Volatility. Bullish wagers on VIX outnumber bearish ones for first time since 2016.

MarketWatch.com:

• Stock rally showing internal signs of strength.

• Micron(MU), Nvidia(NVDA), Broadcom(BRCM) lead booming chip sector to seventh straight day of gains.

• The stock market’s technical indicators are improving.

• Bitcoin investors have reason to worry.

CNBC:

• Apple(AAPL) hits a new all-time high and briefly climbs above a $925 billion market cap.

• 'This bull market is only halfway through'. (video)

• Cramer introduces tech's hottest new stock group: the 'cloud kings'. (video)

• Stocks making the biggest moves after hours: Stitch Fix, US Steel, Tilly's & Myriad Genetics.

• Republican senator puts forward bill to quash Trump's new tariffs.

Zero Hedge:  

• Krieger: "Foreign Government Lobbying Is An Abomination, Should Be Eradicated Immediately" - Part 2.

• House Intel Committee Ending Russia Probe, Says No Collusion Found; Schiff Responds.

• Man Cited As Trump's "Russian Link" Actually Works For The FBI.

• February Budget Deficit Surges As Interest On US Debt Hits All Time High.

• VIX Spikes Most In 7 Days As Tech Jumps, Dow Dumps. (graph)

• Internet Inventor Warns "Regulate Tech Firms Now Or Risk A Weaponized Web".

Business Insider: 

• President Trump blocks the $117 billion Broadcom takeover of Qualcomm on national security grounds.

Night Trading 

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

• Asia Ex-Japan Investment Grade CDS Index 64.5 -1.5 basis points. 

• Asia Pacific Sovereign CDS Index 11.0 -.75 basis point.

• Bloomberg Emerging Markets Currency Index 75.42 +.03%.

• FTSE 100 futures -.18%.

• S&P 500 futures -.04%.

• NASDAQ 100 futures -.16%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (DKS)/1.20

• (DSW)/.27

• (HDS)/.44

Economic Releases

6:00 am EST

• The NFIB Small Business Optimism Index for February is estimated to rise to 107.1 versus 106.9 in January.
  

8:30 am EST

• The CPI MoM for February is estimated to rise +.2% versus a +.5% gain in January.

• The CPI Ex Food and Energy MoM for February is estimated to rise +.2% versus a +.5% gain in January.

• Real Avg. Weekly Earnings YoY for February. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The Japan Machine Orders report, weekly retail sales reports, $13B 30Y T-Bond auction, Barclays Healthcare Conference, Susquehanna Semi/Storage/Tech conference, BofA Merrill Consumer/Retail Tech conference, JPMorgan Aviation/Transport/Industrials Conference and the (CRM) investor meeting could also impact trading today.

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