Today's Headlines

Bloomberg:  

• World Leaders Discuss Ukraine as Worry Grows Over Russia. World leaders pledged further measures against Russia amid growing concern that it’s building up its forces on the border with Ukraine after annexing the Crimean peninsula. President Barack Obama and the other Group of Seven heads of government hold a meeting in The Hague tonight to decide what steps to take next in the crisis, including suspending Russia from the larger G-8 grouping in the worst standoff between the former Cold War enemies since the Soviet Union collapsed. Ukraine said today it deployed more troops to the frontier. 

• Russia Facing Recession as Sanctions Likely to Intensify. Sanctions imposed by the U.S. and the European Union are pushing Russia toward a recession as the intensity of their economic penalties increases after the annexation of Crimea earlier this month. Banks including state-run VTB Capital say the world’s ninth-biggest economy will shrink for at least two quarters as penalties for annexing Crimea rattle markets, curb investment and raise the cost of borrowing. Sanctions that have so far focused on individuals via visa bans and asset freezes may be expanded to target specific areas of the economy.

• China’s Urbanization Loses Momentum as Growth Slows. The pace of migration of rural Chinese to cities, a dynamic hailed by Premier Li Keqiang as key to the nation’s development, is set to slow by a third in coming years, deepening economic-growth concerns. A government report released this month projected a 6.3 percentage-point rise in the share of people living in cities from 2013 to 2020 -- down from a 9.4-point gain the previous seven years. Nomura Holdings Inc. estimates that slower urbanization will slice as much as half a percentage point from annual gross domestic product growth over the next half decade.

• China Money Rate Completes Longest Rising Streak in Eight Months. China’s benchmark money-market rate rose for an eighth day, the longest stretch since July, after a central bank official said the nation will make “substantial progress” in freeing up interest rates. “While much needed, the deposit-rate reform is likely to raise costs throughout the economy and will be a drag on growth,” said Dariusz Kowalczyk, a Credit Agricole CIB strategist in Hong Kong. Lou’s comments are positive for the long-term potential, but may temper market hopes for policy stimulus, he said.

• Turkey Threatens Syria With Further Action After Warplane Downed. Turkey told Syria that it was ready to act again in defense of its borders after the shooting down of a warplane said to have flown into its territory. Foreign Minister Ahmet Davutoglu said today that the incursion should not be repeated, as the military justified yesterday’s action by Turkish combat aircraft against a Syrian MiG-23 that had ignored four warnings and briefly penetrated 1 kilometer (0.6 mile) into Turkish airspace, according to a statement. A Syrian SA-5 surface-to-air missile system locked on a Turkish F-16 for more than four minutes during a border patrol yesterday, the military said, without elaborating. 

• Canada Consumer Sentiment Falls on Quebec Separation Talk. 

• European Stocks Decline Most in Two Weeks; KPN Retreats. European stocks fell, after posting their biggest weekly advance in more than a month, as world leaders pledged further measures against Russia, and manufacturing gauges slipped in China, Germany and the U.S. Royal KPN NV lost 4.2 percent after Citigroup Inc. downgraded the stock. Stada Arzneimittel AG slumped 15 percent after cutting its 2014 forecast. CEZ AS, the largest Czech utility, climbed 5.1 percent after the nation’s finance minister said the government is seeking a 100 percent dividend payout. The Stoxx Europe 600 Index fell 1.1 percent to 324.39 at the close of trading in London.

• Gold Drops Most in 13 Weeks; Palladium Extends Rally. Gold futures for June delivery fell 1.9 percent to settle at $1,311.10 an ounce at 1:45 p.m. on the Comex in New York, the biggest drop since Dec. 19. Earlier, the price touched $1,308.40, the lowest for a most-active contract since Feb. 20. Trading was 54 percent above the average for the past 100 days for this time, data compiled by Bloomberg showed.

• Record U.S. Small-Caps Rally Sends Valuation 26% Above 1990s. In one corner of the U.S. equity market, investor enthusiasm is exceeding the frenzy of the Internet bubble. Small-cap shares tracked by the Russell 2000 Index have rallied for seven straight quarters, the longest stretch ever, sending valuations 26 percent above levels at the height of the 1990s rally. Gains in stocks from LogMeIn (LOGM:US) Inc. to Athenahealth Inc. have pushed the gauge up 248 percent since the bull market began five years ago, leaving price-earnings ratios about three times as high as for shares in the Standard & Poor’s 500 Index.

• Banker Deaths Leave Industry Concerned as Coroners Probe. Coroners in London are preparing to investigate two apparent suicides as unexpected deaths by finance workers around the world have raised concerns about mental health and stress levels in the industry.

Wall Street Journal:

• Malaysian Airlines Flight 370: Streaming Coverage. 

• Cisco(CSCO)) Joins Race to Offer Cloud Services. Firm to Spend $1 Billion in Next Two Years to Enter Market.

Fox News:

• Malaysia PM says satellite data indicates missing jetliner went down in Indian Ocean. A new analysis of satellite data in the search for Malaysia Airlines Flight 370 indicates that the plane went down in the southern Indian Ocean, Malaysia Prime Minister Najib Razak said Monday.

MarketWatch:

• El-Erian: Markets should be worrying about Ukraine. Markets have been lulled to complacency by geopolitical tensions in recent years, says to Mohamed El-Erian, who’s still typing up a storm after his departure from Pimco. But, he says, beware of Ukraine.

CNBC: 

• Momentum names like Tesla, Netflix hit hard. (video) 

ZeroHedge:  

• Ukraine Leader In New Leaked Recording: 8 Million Russians In Ukraine "Must Be Killed With Nuclear Weapons". Just like that Putin has his provocation carte blanche, as the second something, anything happens to any ethnic Russian in east Ukraine, Putin can point to precisely this conversation as proof of how Ukraine's "government" feels toward the ethnic minorities in the east, and why "they deserve to be protected" the Russian bearhug. Which has been precisely Putin's plan all along.

• US PMI Tumbles From Record High, Biggest Miss In 13 Months. (graph)

• Furious Chinese Demand Money Back As Housing Bubble Pops.

• Russian Politician Suggests Dividing Ukraine Along Lines Of Nazi-Soviet Pact, Proposes West Ukraine Referendum.

• Carl Icahn's Next No-Brainer? "A Major Sell-Down Of Market Is Coming".

• Obama Demands Russia Leave G-8; June Summit Cancelled While Ukraine Deploys Army Along Borders.

Business Insider:

• Russian Economy Grinding To A Halt As Ukraine Crisis Takes Heavy Toll.

• GRANTHAM: 'The Next Bust Will Be Unlike Any Other'. 

• More Than 100 People Are Missing After Giant Mudslide In Washington.

• High-Beta Stocks Are Getting Smoked.

• Here's What Nuclear Weapons Have To Do With The Ukraine Crisis.

• Over 500 Muslim Brotherhood Members Sentenced To Death In Egypt.

Washington Post:

• Fed's Williams Sees QE's End in 2014, Rate Rise in 2H 2015.

Financial Times:

• Fed’s growing repo role risks backfiring. Don’t fight the Fed is an oft-quoted adage among investors. Now the dictum may extend to the “shadow banking” world as the US central bank muscles into the murky realm of funding and leveraging between established banks and other financial players.

Bear Radar

Style Underperformer:

• Small-Cap Growth -2.42%

Sector Underperformers:

• 1) Gold & Silver -4.51% 2) Biotech -3.72% 3) Alt Energy -3.57%

Stocks Falling on Unusual Volume:

• NFLX, SCTY, SKYY, QQEW, ARWR, BIB, UGLD, IBB, HQH, HAE, HQL, BCEI, DATA, KPTI, QRE, TKMR, BOFI, SHO, LCI, KONG, DQ, MRTX, PNQI, KWEB, SRNE, TRIB, CLDX, RGP, BBCN, ZIO, JAZZ, DISH, SHO, DRTX, FMI, TIF, PCLN, WDAY, FNSR, DXCM, KBH, ILMN, PCYC, QRE, UCTT, ALKS, GTAT, ALXN, SUSS, N, INCY, ENDP, DATA, ARRS, HAE, FEYE, KS, HZNP, NPSP, P, RCPT, LCI, SGMO, UBNT, SPLK, OHRP and ARWR

Stocks With Unusual Put Option Activity:

• 1) PBI 2) ADBE 3) GPS 4) WDC 5) MON
  

Stocks With Most Negative News Mentions:

• 1) FB 2) GM 3) INTC 4) NFLX 5) NTAP
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Value -.62%

Sector Outperformers:

• 1) Utilities -.08% 2) Computer Services -.12% 3) Ag -.13%
  

Stocks Rising on Unusual Volume:

• NUS, BIS and HLF

Stocks With Unusual Call Option Activity:

• 1) EA 2) NEE 3) CLDX 4) STSI 5) IDRA

Stocks With Most Positive News Mentions:

• 1) CMCSA 2) NUS 3) AAPL 4) WMT 5) YELP
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Monday Watch

Weekend Headlines 
Bloomberg:   

• Ukraine’s Top Diplomat Says Risk of War With Russia Grows. Ukraine’s foreign minister said the chances of war with Russia are increasing as thousands of Russian troops gather on his country’s border. “We are ready to respond,” Foreign Minister Andrii Deshchytsia said in an interview broadcast today on ABC-TV’s “This Week” program. “The Ukraine government is trying to use all the peaceful, diplomatic means and diplomatic means to stop Russians, but the people are also ready to defend their homeland,” he said.

• NATO Must Be Ready to Counter Russian Threat, Top Commander Says. U.S. Air Force General Philip Breedlove said the buildup of Russian troops on the country’s border with Ukraine means NATO forces need to reposition themselves and increase their readiness. Russian troops massing at the border are “very, very sizable and very, very credible,” Breedlove, the top NATO commander, said today at the German Marshall Fund conference in Brussels. “We need to think about our allies, the positioning of our forces in the alliance and our readiness of our forces in the alliance, such that we can be there to defend against them if required, especially in the Baltics and other places."

• China Manufacturing Gauge Unexpectedly Falls as Slowdown Deepens. A Chinese manufacturing index (SHCOMP) unexpectedly fell, underscoring the risk that leaders will need to add stimulus to meet this year’s economic-growth goal. The Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics dropped to 48.1 in March, the companies said today. The preliminary reading compares with the 48.7 median estimate of 22 analysts surveyed by Bloomberg News and the final number of 48.5 in February.

• Chinese Investors Call for More Transparency in Trust Products. Defaults in China’s $1.8 trillion trust industry are triggering protests and spurring calls from legal experts for clearer rules on sales of investment products.

• Turkey Shoots Down Syrian Warplane After Border Incursion. Turkey downed a Syrian warplane that crossed into its airspace yesterday, escalating already inflamed tensions with its neighbor as the Turkish government battles widening corruption allegations. The Turkish air force fired a missile yesterday at a Syrian MiG-23 that had ignored four warnings and briefly penetrated 1 kilometer (0.6 mile) into Turkish airspace, Turkey’s military said in a statement.

• Japan’s Plutonium Potential Stokes China Tensions on A-Bomb Risk. Japan is planning to start a $21 billion nuclear reprocessing plant, stoking concern in China the facility’s output could be diverted for use in an atomic bomb. The issue will be one of the flashpoints for a summit on nuclear security that Japan Prime Minister Shinzo Abe and China’s President Xi Jinping are due to attend in The Hague today. It’s adding to bitterness marked by territorial disputes and left over issues from World War II between Asia’s two largest economies. “Japan has stockpiled large volumes of sensitive nuclear materials, including not only plutonium but also uranium, and that’s far exceeding its normal needs,” Chinese Foreign Ministry spokesman Qin Gang told reporters on March 11.

• Asian Stocks Rise as Japan Reopens Before China Data. Asian stocks rose, with the regional benchmark index paring last week’s losses, as Japanese markets reopened ahead of a private gauge of factory production in China. Japan’s Topix (TPX) index gained 1.2 percent after a three-day weekend. Macquarie Group Ltd. gained 3.6 percent as Australia’s biggest investment bank said it expects full-year earnings to rise as much as 45 percent. Yamato Holdings Co., a parcel delivery company, surged 4.9 percent in Tokyo on a report it will form a tie with China Post Group. The MSCI Asia Pacific Index rose 0.5 percent to 133.43 as of 9:22 a.m. in Tokyo after declining 1.2 percent last week. The MSCI Asia Pacific excluding Japan Index gained 0.1 percent.

• Stein Says Fed Should Weigh Financial Risks of Loose Policy. Federal Reserve Governor Jeremy Stein said monetary policy should be less accommodative when bond markets are overheated even if it raises the risk of higher unemployment. The remarks suggest financial stability should receive strong consideration as the Fed pursues its two mandates -- stable prices and maximum employment -- because financial crises can do so much damage to jobs and growth. “All else being equal, monetary policy should be less accommodative -- by which I mean that it should be willing to tolerate a larger forecast shortfall of the path of the unemployment rate from its full-employment level -- when estimates of risk premiums in the bond market are abnormally low,” Stein said. He didn’t comment on the current stance of policy. 

• Zuckerberg Says Obama Moves on NSA Spying Don’t Go Far Enough. Facebook Inc.(FB) Chief Executive Officer Mark Zuckerberg left a meeting with President Barack Obama unsatisfied with administration assurances that the government can protect privacy while continuing surveillance. Zuckerberg and five other Internet and technology executives were invited to the White House yesterday to discuss National Security Agency spying following revelations the NSA may have infected millions of computers globally with malware to advance surveillance.

Wall Street Journal:

• Malaysia Airlines Flight 370: U.S., U.K. Deeply Involved in Sparking Indian Ocean Search. Intelligence Agencies Supplied Satellite Images, Analysis That Launched Effort.

• Apple(AAPL) in Talks With Comcast(CMCSA) About Streaming-TV Service. Companies Discuss Service That Would Try to Bypass Web Congestion.

• Inside Fed Statement Lurks Hint on Rates.

MarketWatch.com:

• Stock buybacks likely to peak with end of cheap debt. Corporate share buybacks, which have risen to record amounts along with market highs, may begin to lose their luster for investors as an earnings booster as the end of cheap debt nears and fundamental growth gets more scrutiny.

Fox News: 

• GOP, Democrats spar over Obama's foreign policy, amid new fears of Putin takeovers. Top Democrats and Republicans squared off Sunday over President Obama’s foreign policy, in the aftermath of Russia taking over part of Ukraine and amid new fears that Russian President Vladimir Putin is just getting started.

CNBC:

• Hollande allies trail in French local vote, far-right gains - polls. France's anti-immigrant National Front (FN) made strong gains in the first round of local elections on Sunday as President Francois Hollande's Socialists and his allies suffered losses, according to early exit polls.

Zero Hedge:

• James Montier: "The Market Is Overvalued By 50%-70%" And "Nothing At All" Is Attractively Valued.

• The Taming Of Deluded 'Conspiracy Theorists'.

• Citi Warns Bond Bulls "QE Is Dead... Long Live Normalization".

• 5 Things To Ponder: Yellin' About Yellen.

• Bursting Biotech Bubbles And Calendar Concerns Club Stocks/Bonds. (graph)

• Who Just Dumped $220 Million Nasdaq Futures In 1 Second?

• Japan's Self-Defeating Mercantilism. (graph)

• IMF's Property Tax Hike Proposal Comes True With UK Imposing "Mansion Tax" As Soon As This Year.

• Russian Forces Storm Crimean Military Base In Belbek - Live Webcast.

• The Most Important Company In Europe. (graph)

• Rick Santelli & Jim Grant On Hazlitt's Timeless Wisdom. (video)

• Puerto Rico Bonds Tumble On Possible Hedge Fund Pump-And-Dump Probe.

• China Takes Sides: Sues Ukraine For $3bn Loan Repayment.

• Feds Probe GM Over Ignition Problem Bankruptcy Fraud.

• Ukraine Official Warns "Chance Of War With Russia Growing" As Mike Rogers Calls For Sending Weapons To Ukraine.

• "Surely You Can't Be Serious", Mr. Chairwoman.

• China Affirms Yellen's "Six Month" Guidance, Says Not To Expect Any "Big Stimulus" Out Of Beijing.

• 89% Of Venetians Vote For Independence From Italy, Will Withhold Taxes To Rome.

• Spanish 'Anti-Austerity' Protesters "Sick Of This System They Call Democracy".

• Probably The Most Important Chart In The World. (graph)

Business Insider:

• Diplomacy And Security After Crimea: The New World Order.

• THE TRUTH ABOUT RUSSIA: 5 Charts That Show What A Disaster The Economy Is Under Putin.

• There's Been A Big Breach Of Patient Data In California.

• These Countries With Large Russian Populations Should Fear What Putin Might Do Next.

• Former Ukraine PM: 'We Must Be Ready For Putin To Cross The Red Line'.

• 'Ominous Mood' Descends On Crimean Town As Russia Takes Hold Of Air Base.

• This Depressing Chart Is The Best Picture Of Unemployment In America.

 Reuters:

• U.S. CFTC ratchets up probe of exchange-for-futures deals - FT. The U.S. Commodity Futures Trading Commission has stepped up a probe into more than a million energy, metals, foreign exchange and other swap transactions, the Financial Times reported on its website on Sunday, citing anonymous sources.

• China credit strains rise as Beijing embraces failure. Credit warning signs are flashing for heavily indebted Chinese semiconductor, software and commodities firms as the government cautiously steps aside to let market forces play a bigger role in deciding winners and losers.

Financial Times:

• European regulators warn as risky loans rise above bubble peak. Debt investors are abandoning normal creditor protections on European leveraged buyout loans as they snap up riskier securities at a faster rate and in greater proportions than at the peak of the credit bubble. Growing volumes of euro-denominated “covenant light” loans have now aroused the interest of European regulators, who are increasing their monitoring of lenders’ behaviour.

WirtschaftsWoche:

• EU May Start Tax-Haven Proceedings Against Countries. Task force has been created that is now asking Belgium, Ireland, Luxembourg and the Netherlands for comment of their corporate tax practices, citing EU antitrust chief Joaquin Almunia.

China Securities Journal:

• China Researcher  Sees 7% Economy Growth This Year. The Chinese economy may grow about 7% this year, and quarterly growth may trend lower in 2014, citing Wang Jian, a researcher under the National Development and Reform Commission. China may face an overcapacity crisis next year and a possible international financial crisis can't be ruled out, Wang is cited as saying.

Weekend Recommendations

Barron's:

• Bullish commentary on (AAPL), (TGT), (MDR), (VC), (ESRX) and (MTB).

• Bearish commentary on .

Night Trading

• Asian indices are unch. to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 134.0 -5.5 basis points.

• Asia Pacific Sovereign CDS Index 95.75 -1.0 basis point.

• FTSE-100 futures -.61%.

• S&P 500 futures -.01%.

• NASDAQ 100 futures -.01%.

Morning Preview Links

Earnings of Note
Company/Estimate

• None of note

Economic Releases 
8:30 am EST

• The Chicago Fed National Activity Index for February is estimated to rise to .1 versus -.39 for January.

 9:45 am EST

• The Preliminary Markit US Manufacturing PMI for March is estimated to fall to 56.5 versus 57.1 in February.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone Flash PMI 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 higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the week.

Weekly Outlook

Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly lower on Russia/Ukraine tensions, global growth fears, increasing emerging markets/European debt angst, technical selling, a stronger yen and profit-taking. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 25% net long heading into the week.

Market Week in Review

S&P 500 1,866.40 +1.37%*







The Weekly Wrap by Briefing.com.

*5-Day Change