Tuesday Watch

Night Trading 

• Asian equity indices are unch. to +.5% on average.
• Asia Ex-Japan Investment Grade CDS Index 73.25 -1.75 basis points. 
• Asia Pacific Sovereign CDS Index 12.0 -.5 basis point
• Bloomberg Emerging Markets Currency Index 73.28 unch.
• FTSE 100 futures -.15%.
• S&P 500 futures +.15%.
• NASDAQ 100 futures +.13%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AET)/3.01
• (AGCO)/.12
• (ADM)/.52
• (AN)/1.00
• (BP)/.11
• (EAT)/1.03
• (CMI)/2.94
• (DISH)/.69
• (EMR)/.72
• (FDP)/.91
• (HBI)/.24
• (HCA)/2.07
• (JCI)/.52
• (LLL)/2.01
• (LL)/-.04
• (MLM)/.37
• (MRK)/1.00
• (PFE)/.74
• (RDC)/-.80
• (SMG)/3.31
• (STX)/1.33
• (UAA)/-.05
• (ALL)/2.60
• (APC)/.41
• (AAPL)/2.68
• (CHRW)/1.00
• (COHR)/3.49
• (CXO)/.77
• (GILD)/1.67
• (JNPR)/.25
• (MDLZ)/.61
• (NBR)/-.29
• (TRUP)/-.04
• (ZEN)/-.03

Economic Releases

10:00 am EST

• Construction Spending MoM for March is estimated to rise +.5% versus a +.1% gain in February. 
• ISM Manufacturing for April is estimated to fall to 58.4 versus 59.3 in March.
• ISM Prices Paid for April is estimated to rise to 78.5 versus 78.1 in March.
  

Afternoon: 

• Wards Total Vehicle Sales for April is estimated to fall to 17.1M versus 17.4M in March.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Australia Central Bank decision, weekly US retail sales reports, (CE) investor day and the Steel/Aluminum tariff exclusions for certain countries expiring could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by consumer and commodity shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 50% net long heading into the day.

Stocks Reversing Lower into Final Hour on Geopolitical Fears, Earnings Outlook Worries, Emerging Markets Debt Angst, Telecom/Homebuilding Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 15.7 +2.1%

• Euro/Yen Carry Return Index 137.45 -.21%

• Emerging Markets Currency Volatility(VXY) 8.30 -.12%

• S&P 500 Implied Correlation 42.81 +.59%

• ISE Sentiment Index 80.0 -8.05%
  

• Total Put/Call .88 +1.15%

• NYSE Arms 1.12 +1.87%

Credit Investor Angst:

• North American Investment Grade CDS Index 60.76 +1.11%
  

• America Energy Sector High-Yield CDS Index 399.0 -1.40%

• European Financial Sector CDS Index 57.0 +.97%

• Italian/German 10Y Yld Spread 122.50 +5.5 basis points
  

• Asia Pacific Sovereign Debt CDS Index 12.04 +.84%

• Emerging Market CDS Index 142.39 +1.29%
  

• iBoxx Offshore RMB China Corporate High Yield Index 149.39 -.03%

• 2-Year Swap Spread 25.75 +.75 basis point

• TED Spread 55.0 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -10.5 -1.5 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.28 -.42%
• 3-Month T-Bill Yield 1.8% -1.0 basis point
  

• Yield Curve 45.5 -2.5 basis points

• China Iron Ore Spot 65.63 USD/Metric Tonne unch.

• Citi US Economic Surprise Index 41.8 -4.2 points

• Citi Eurozone Economic Surprise Index -77.50 +5.9 points

• Citi Emerging Markets Economic Surprise Index 3.2 -5.5 points

• 10-Year TIPS Spread 2.18 +1.0 basis point
  
• 92.7% chance of Fed rate hike at June 13 meeting, 93.2% chance at August 1 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +11  open in Japan 
• China A50 Futures: Indicating +90 open in China

• DAX Futures: Indicating -42 open in Germany

Portfolio: 

• Slightly Lower: On losses in my retail/medical/biotech/industrial sector longs

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Value -.2%

Sector Underperformers:

• 1) Telecom -1.8% 2) Homebuilders -1.7% 3) Biotech -1.2%

Stocks Falling on Unusual Volume: 

• VAC, ANDX, MPC, ARNC, TMUS, CTB, KPTI, FSLR, INT and MCY

Stocks With Unusual Put Option Activity:

• 1) ADM 2) TMUS 3) ANDV 4) MPC 5) DISH

Stocks With Most Negative News Mentions:

• 1) W 2) GSUM 3) CL 4) CTV 5) OC

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Value +.2%

Sector Outperformers:

• 1) Coal +3.7% 2) Restaurants +1.5% 3) Gaming +.8%

Stocks Rising on Unusual Volume:

• FNGN, CHEK, DCT, ANDV, ILG, BWP, FDC, MCD, DOVA, CHTR, WPP, USCR, AKAO, IMMU, AQ, FCN, EQGP, CIFS, NSP, TRNO, FR, KMPR, CHGG, ANIK and WUBA

Stocks With Unusual Call Option Activity:

• 1) FDC 2) ILG 3) CPB 4) HBI 5) P

Stocks With Most Positive News Mentions:

• 1) MCD 2) NYT 3) FIT 4) EVIO 5) EPD

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Morning Market Internals

NYSE Composite Index:

• Volume Running -1.0% Below 100-Day Average
• 9 Sectors Rising, 2 Sectors Declining
• 56.3% of Issues Advancing, 40.0% Declining
• 46 New 52-Week Highs, 21 New Lows
• 43.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 49.0%
• Vix 15.4 -.4%
• Total Put/Call .90 +3.5%
• TRIN/Arms .97 -.11%

Monday Watch

Today's Headlines

Bloomberg:

• China Factory Gauge Holds Up as Services Beat Forecast. A gauge of activity at China’s manufacturers remained robust as services strengthened for a second month, signaling that the economic expansion is intact. The manufacturing purchasing managers index stood at 51.4 in April versus the 51.3 estimate in a Bloomberg survey and 51.5 last month. The non-manufacturing PMI, covering services and construction, rose to 54.8 the statistics bureau said Monday, beating estimates. Levels above 50 indicate improvement.

• Ross Says U.S. to Extend Duty Relief to Some Allies, But Not All.  
• Asia Stocks Open Mixed; Korean Shares, Won Climb: Markets Wrap. (video) Equities in Seoul advanced with the won after North Korea pledged denuclearization on Friday ahead of the upcoming summit between Kim Jong Un and U.S. President Donald Trump. Australian shares gained with Hong Kong equity futures. Results from tech giants Microsoft Corp., Intel Corp. and Amazon.com Inc. boosted U.S. shares at the end of last week. Yields on 10-year Treasuries retreated further from the highest since 2014, hit earlier in the week. The Kospi index gained 0.4 percent asof 9:31 a.m. in Seoul. Australia’s S&P/ASX 200 Index rose 0.3 percent. Futures on Hong Kong’s Hang Seng Index climbed 0.4 percent.S&P 500 futures were up 0.1 percent. The underlying gauge climbed 0.1 percent on Friday. The MSCI Asia Pacific Index gained 0.1 percent.

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

• The ‘Father of ETFs’ Warns About the Dangers of Leveraged Funds.

Wall Street Journal:

• Fed Rate Plans Come Under Pressure.

• North Korea to Shut Its Nuclear Test Site in May, Seoul Says.

• Central American ‘Caravan’ Migrants to Seek Asylum at U.S.-Mexico Border.

• Pompeo Rails Against Iran During Visit to Saudi Arabia.

• Junk Bonds Withstand Headwinds.

MarketWatch.com:

• Here’s the No. 1 tech stock in money flows after a flood of earnings reports. 

• Apple(AAPL) earnings: iPhone expectations are down, but anxiety is still high.

Fox News:

• Trump blasts White House Correspondents' Dinner 'so-called' comic after she delivered vulgar routine.

CNBC:

• A veteran investor changes his tune on tech stocks, saying fundamentals are 'as good as I’ve seen'. 

• The 10-year yield at 3 percent is here to stay — and an analyst says it’s nothing to worry about.

• This robot can assemble IKEA furniture in 20 minutes. (video)

Zero Hedge:

• Trump: If Dems Win Midterms, They'll Impeach Me; Stocks Could Be Up 60% But "I Have To Do Things".  

• Watch: Chaos Erupts As "Caravan" Of Illegals Scales US Border Fence, Cheering "Gracias Mexico".

• Foxconn Uses Loophole To Drain 7 Million Gallons Of Water Per Day From Lake Michigan.

• Michelle Wolf's Attack On Sarah Sanders Stuns Press, Enrages Conservatives.

• Comey Rages Against House Intel Report, Calls Trump Liar With "Serious Credibility Problems".

• Goldman's Clients Are Getting Concerned About Rising Oil Prices.

• Pompeo Lands In Saudi, Immediately Calls For New Iran Sanctions.

• North Korea Vows To Shut Reportedly Destroyed Nuclear Test Site.

• Early Facebook(FB) Investor And Zuckerberg Mentor: "I Feel My Baby Has Turned Out To Be Something Horrible".

Business Insider:

• BREMMER: Globalism lifted me out of poverty — but now, it's clear why everyone is so angry.

Night Trading

• Asian indices are unch. to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 74.25 -.75 basis point.

• Asia Pacific Sovereign CDS Index 12.0 -.5 basis point.

• Bloomberg Emerging Markets Currency Index 73.63 +.05%.

• FTSE 100 futures +.10%.

• S&P 500 futures +.11%.

• NASDAQ 100 futures +.26%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (AMG)/3.89

• (AKS)/.03

• (DO)/-.19

• (L)/.78

• (MCD)/1.67

• (AKAM)/.70

• (CGNX)/.20

• (MTZ)/.21

• (RCII)/.13

• (THC)/-.04

• (RIG)/-.37

• (VNO)/.52

Economic Releases
8:30 am EST

• Personal Income for March is estimated to rise +.4% versus a +.4% gain in February.

• Personal Spending for March is estimated to rise +.4% versus a +.2% gain in February. 

• Real Personal Spending for March is estimated to rise +.5% versus unch. in February. 

• The PCE Core MoM for March is estimated +.2% versus a +.2% gain in February.

9:45 am EST

• The Chicago Purchasing Manager for April is estimated to rise to 58.0 versus 57.4 in March.
  

10:00 am EST

• Pending Home Sales MoM for March are estimated to rise +.5% versus a +3.1% gain in February.
  

10:30 am EST

• The Dallas Fed Manufacturing Activity Index for April is estimated to rise to 25.0 versus 21.4 in March.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The China Manufacturing PMI report and the Eurozone CPI 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 mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 75% net long heading into the week.