Today's Headlines

Bloomberg:

• Medvedev in Crimea as Ukraine Rejects Russia Proposal. Prime Minister Dmitry Medvedev arrived in Crimea in the first visit by a top official since Russia annexed the peninsula, as Ukraine rejected the Kremlin’s demands that it grant its regions greater powers. Medvedev’s trip today came just hours after U.S. Secretary of State John Kerry demanded Russia pull its forces back from Ukraine’s border at talks in Paris with Russian Foreign Minister Sergei Lavrov, saying they are “creating a climate of fear and intimidation in Ukraine.” Lavrov demanded that Ukraine should devolve power to give its regions more autonomy and ensure the rights of Russian speakers. 
• IMF Says European Banks Had Up to $300 Billion Subsidy. Large banks in the euro area benefited from as much as $300 billion in implicit public subsidies four years after the global financial crisis because of investors’ expectations that governments would not let them fail, according to the International Monetary Fund.
• European Stocks Climb After Weekly Gain as Novartis Rises. European advanced, after the biggest weekly gain in more than a month, as investors awaited economic data out of Europe and America later this week. Novartis AG climbed 3.5 percent after the Swiss drugmaker said the last phase of a clinical trial showed a treatment for chronic heart failure helped patients live longer. Banca Monte dei Paschi di Siena SpA jumped to a 14-month high after its biggest investor said it is selling an additional stake. RWE AG lost 1.3 percent after UBS AG recommended avoiding the stock. The Stoxx Europe 600 Index added 0.2 percent to 334.31 at the close of trading in London.
• Hedge Fund Letters to Tell of Favorite Trades Unraveling. Pity the poor folks who have to write letters to investors on behalf of equity-focused hedge funds this month. Various measures of performance indicate the alternative investment vehicles may have a lot of explaining to do in March. The Global X Guru Index ETF (GURU), which aims to mimic returns of the top hedge-fund stock holdings, has lost 2 percent this month for its worst performance versus the Standard & Poor’s 500 Index since it was created in 2012.

Wall Street Journal:

• South Korea Fires Back at North Amid Pyongyang's Drills. Shells From Both Countries Fell in the Sea, South Korean Official Says. North Korea fired artillery across its maritime border with South Korea in the Yellow Sea on Monday as part of a military drill, prompting South Korea to return fire in the latest reminder of the unstable security situation on the Korean peninsula. The latest provocation from Pyongyang came just as the U.S. and South Korea conducted a large-scale joint military exercise focused on amphibious operations in South Korea. 
• WSJ's Hilsenrath: Yellen Sees Slack in Economy. Federal Reserve Chairwoman Offers Defense of Central Bank's Easy-Money Policies.

Fox News:

• Ukraine braces for Crimean refugees after Russia annexes peninsula. Thousands of refugees from the newly-annexed Crimea have begun pouring into mainland Ukraine following Russia’s invasion of the peninsula last month, headed for hastily-assembled shelters and the homes of countrymen.

ZeroHedge:

• London Real Estate Prices Soar 68% In Five Years: Here's Why In 1 Chart. (graph)
• European Inflation Slides To Lowest Since 2009. (graph)
• Chicago PMI Plunges To 7-Month Lows, Misses By Most In A Year. (graph)
• Stocks Surge As Yellen Goes Uber-Dovish, Says "Fed Short Of Reaching Employment And Inflation Goals".
• Russian Platoon Withdrawing From Ukrainian Border, Russian Defense Ministry Says.
• Japan Gives Residents All Clear To Return To Fukushima Disaster "Hot Zone".
• "The Market Is Rigged" - Michael Lewis Explains How HFTs "Screw" Investors Every Day. (video)

Business Insider:

• Russia Has Perfected The Art Of Provocation.
• One Of The World's Smartest Investors Thinks Anonymous Apps Like Whisper And Secret Are Fads That Won't Make Money.
• One Of The World's Smartest Investors Thinks Anonymous Apps Like Whisper And Secret Are Fads That Won't Make Money.
• Corporate America Continues To Be Super-Negative About Earnings Guidance. (graph)
• NYSE Margin Debt Levels Have Hit New Highs. (graph)
• How Much Should People Worry About The 'Unprecedented' Ebola Outbreak In Guinea?
• Putin Has Already Successfully Moved The Goalposts On Crimea.
• PANASONIC: We Haven't Yet Committed To Elon Musk's Gigafactory.
• BRICS Support For Russia's Invasion Of Crimea Signals A New International Era.
• Retail Stores Are Dying. (graph)

Telegraph:

• France way behind on budget targets, Francois Hollande prepares shake-up. Official figures put France's public deficit at 4.3pc of output last year, compared with a target of 4.1pc.

Bear Radar

Style Underperformer:

• Large-Cap Value +.62%

Sector Underperformers:

• 1) Gold & Silver -1.90% 2) Oil Service -.31% 3) Energy -.22%

Stocks Falling on Unusual Volume:

• OCIP, MNTA, UTIW, BIS, OCRX, MX, MEOH, GY, MZOR, SSTK, HAWK, SNN, UFS, PBYI, CHMI, PGTI, CXW, FIVE, CLVS, CGIX, GSK, MYL, CACI and HDS

Stocks With Unusual Put Option Activity:

• 1) NUAN 2) XLU 3) XLP 4) MRO 5) KRE
  

Stocks With Most Negative News Mentions:

• 1) GM 2) BBRY 3) TSLA 4) TWTR 5) BA
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.32%

Sector Outperformers:

• 1) Gaming +2.62% 2) Airlines +1.98% 3) Biotech +1.96%
  

Stocks Rising on Unusual Volume:

• NDZ, ACAS, EXAS, TEVA, NVS, EW, ECHO and COMM

Stocks With Unusual Call Option Activity:

• 1) ACAS 2) COP 3) CI 4) FDO 5) CHRW

Stocks With Most Positive News Mentions:

• 1) T 2) COP 3) JNJ 4) MU 5) CMI
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Monday Watch

Weekend Headlines 
Bloomberg: 

• Russia’s Sovereign Bond Rating May Be Cut, Moody’s Says. Russia’s government bond rating was put on review for downgrade by Moody’s Investors Service, which cited a weakening economy amid the conflict with Ukraine. The ratings company said if the review leads to a downgrade, the most likely outcome would be a one-level adjustment. Russia’s Baa1 rating is the third-lowest investment grade.

• McCain Looks to U.S. Companies in Russia If Putin Pushes. The U.S. should consider forcing major American companies such as General Electric (GE:US) and Exxon Mobil to suspend business in or pull out of Russia if President Vladimir Putin attempts to take more territory from Ukraine or other neighboring nations, said Senator John McCain of Arizona. 

• Abe Bliss Broken as Foreigners Flee Topix in Biggest Drop. In just one quarter, the developed world’s biggest stock rally has given way to its worst slump. Japan’s Topix index, up 51 percent last year, has fallen 8.9 percent in the three months since, almost twice as much as the next-worst market, Hong Kong. The retreat is emboldening short sellers, whose trades made up as much as 36 percent of daily Tokyo Stock Exchange volume this month. Foreign investors sold 975 billion yen ($9.5 billion) of Japanese shares in one week in March, the most since the crash of 1987. 

• Japan Industrial Output Unexpectedly Drops as Tax Hike Looms. Japan’s industrial production fell in February, undershooting all forecasts by economists surveyed by Bloomberg News, as the first sales-tax increase since 1997 risks stalling recovery in the world’s third-biggest economy. Output fell 2.3 percent from the previous month, the steepest drop in eight months, the trade ministry said in Tokyo today. The median estimate of 28 economists was for a 0.3 percent gain. A separate gauge of manufacturing fell in March for a second straight month.

• China Defaults Sow Property Cash Crunch Concern: Distressed Debt. The specter of default in China's trust loans market is deepening the distress of property developers that also borrowed in dollars. Eighteen companies owning $15.2 billion, from behemoth China Vanke Co. to junk-rated Glorious Property Holdings Ltd., have "material exposure" in excess of 10% to trust financing, a form of non-bank lending that's helped homebuilders proliferate in China, Moody's Investors Service said. This year alone, the number of bonds from Chinese developers considered distressed based on their yields has almost doubled to 18. Part of China's $7.5 trillion shadow-banking system, trust financing has been key to fueling the nation's 10% annual growth rate in the past decade by providing easy credit to companies considered too risky by banks. After trust loans to the property, solar, coal and other industries tripled in the past three years to 10.9 trillion yuan($1.8 trillion).

• Taiwan Protest Draws More Than 100,000 Against China Trade Deal. More than 100,000 Taiwanese marched in Taipei to protest a trade deal with China, challenging President Ma Ying-jeou’s plan to improve economic relations between the political rivals. As many as 350,000 people joined the rally yesterday in a turnout that was “more than we expected,” said Chen Wei-ting, a leader of students against the pact. The National Police Agency estimated there were 116,000 demonstrators. Protesters gathered outside the presidential office a day after Ma rejected demands to withdraw an agreement to open Taiwan’s service industries to competitors from China. 

• China’s Stocks Fall to Extend Biggest Quarterly Loss Since June. China’s stocks fell, extending the benchmark index’s bigest quarterly loss since June, before tomorrow’s official manufacturing report and as China Minsheng Bank Corp.’s profit disappointed investors. Minsheng Bank dropped more than 3 percent in Shanghai and Hong Kong. BesTV New Media Co., which formed a game console venture with Microsoft Corp. in Shanghai’s free-trade zone, plunged 6.7 percent after resuming trade. Poly Real Estate Group Co. slumped 2.6 percent as a measure of real-estate companies fell the most among industry groups. The Shanghai Composite Index (SHCOMP) slid 0.4 percent to 2,032.67 at 10:55 a.m. local time.

• Asia Stocks Rise 4th Day as Consumer Shares Lead Gain. Asian stocks rose, with the regional benchmark heading for its fourth straight daily gain, as consumer shares led advances. The MSCI Asia Pacific Index climbed 0.4 percent to 137.22 as of 10:54 a.m. in Tokyo. Japan’s Topix (TPX) index added 0.3 percent as the yen held last week’s losses versus the dollar and even as data showed industrial production unexpectedly fell 2.3 percent in February from January. A three percentage-point sales-tax increase takes effect in Japan tomorrow. 

• Copper Set for Biggest Quarterly Drop Since June on China. Copper fell, extending a quarterly loss on concern that an economic slowdown in China, the biggest metals consumer, will lower demand. The metal for delivery in three months on the London Metal Exchange retreated 0.5 percent to $6,640 a metric ton by 10:05 a.m. in Hong Kong. Prices are down 9.8 percent since the start of the year, poised for the biggest quarterly drop since June.

• Flight 370 Search Gains Vessel With Black Box-Detector. Australian ship Ocean Shield will join the hunt for the missing Malaysian jet after being fitted with equipment to detect the black-box recorder, as Prime Minister Tony Abbott said there was no time limit on the search.

• Latin America More Vulnerable Than Pre-2008 Crisis, IDB Says. Latin America’s vulnerability to external shocks is greater today than before the 2008 financial crisis because governments have increased spending and companies have taken on more foreign debt to fuel growth, the Inter-American Development Bank said. “History teaches that exits from extremely low U.S. interest rates may be smooth or bumpy,” the IDB said in a report released today at its annual meeting in Costa do Sauipe, Brazil. “Changes to the expected path of short-term U.S. interest rates could affect capital inflows that have strong and persistent effects on growth in some countries.”

• Ebola Death Toll in Guinea Rises to 70 as Senegal Closes Border. The deadliest outbreak of the Ebola virus in seven years has killed 70 people and infected as many as 111 in Guinea, causing neighboring Senegal to close its border with the country.

• Obama Changes to Health Law Illegal, McMorris Rodgers Says. President Barack Obama is “picking and choosing” how the 2010 health-care law will be implemented and “doesn’t have the flexibility” legally to do so, Representative Cathy McMorris Rodgers said. Asked if she was saying such changes to the law are illegal, McMorris Rodgers, a Republican from Washington State, replied, “Yes, I am.” 

• GM(GM) Widens Ignition Recall by 971,000 to 2.59 Million Cars. General Motors Co. (GM) is expanding the recall of small-car ignition switches by 971,000 vehicles worldwide to cover 2008 to 2011 vehicles that were built with safe parts yet may have received faulty replacements. It also increased the death toll linked to the switches.

• High-Speed Traders Rip Investors Off, Michael Lewis Says. The U.S. stock market is a rigged game where high-frequency traders with advanced computers make tens of billions of dollars by jumping in front of investors, according to author Michael Lewis, who spent the past year researching the topic for his new book “Flash Boys.”

Wall Street Journal: 

• Crisis in Ukraine. Streaming Coverage:

• Regulators Twice Failed to Open GM Probes. Internal Email at Agency Asked Why Airbags Weren't Deploying. 

• Investors Breathe Life Into European Banks' Bad Loans. Lack of Restructuring in U.S. Has Driven Up Demand. Hedge funds and private-equity investors are bidding up prices of some troubled assets in Europe, sparking a surge in sales by banks seeking to rid themselves of soured corporate loans.

Fox News:

• Rogers: Troop movement, 'covert operation' suggests Putin not finished in Ukraine. Russian President Vladimir Putin is showing telltale signs that he intends to extend his control over Ukraine and perhaps elsewhere in Eastern Europe, House Intelligence Committee Chairman Rep. Mike Rogers said Sunday. Beyond assembling military armor and tens of thousands of troops along the Russia-Ukraine border, Putin is moving troops in northern Georgia and planting intelligence officers in Ukraine, the Michigan Republican told “Fox News Sunday.” He said Russian troops in the northern region of Georgia, known as South Ossetia, are on the move, perhaps to go into Armenia or toward the Baltic Sea. “There’s no way I’d take this as any other way than [Putin] is working for a land bridge,” Rogers said.

CNBC:

• Investors beware: The hidden risks of Chinese IPOs.

Zero Hedge:

• Putin Calls Obama To "Draw Attention To Ukraine Extremists", Obama Replies With Request For Putin To Pull Out.

• Rick Santelli Exposes The Real Enemy (And It's Not Deflation).

• The Government Inflation Scam.

• Ukraine Shocks Population With Staggered 100% Heating Price Increase While Restricting Cash Use.

• 5 Things To Ponder: Words Of Caution.

• Small Caps Plunge To Worst Week In 22 Months. (graph)

• You Can't Make This Up: MF Global Sues PWC, Blames It For Its Collapse.

• Meanwhile, Tens Of Thousands Of Russian Troops Continue Piling Up At Ukraine's Borders - The Full Update.

• Russia's Military Begins Massive Nuclear War Drill.

• Janet Yellen Is Caught Between A Rock And A Hard Place.

• "They Never Learn" - Russia's Take On The "West" And The Shifting Geopolitical Balance Of Power.

• 2014: A Brave New Dystopian "1984" World.

• Hedge Funds Slammed: "Smart Money" Has One Of Worst Weekly Losses Since 2001. (graph)

• The Obamacare Comedy Of Errors... In Cartoons.

• China Confiscates Billions In "Ugliest Corruption Scandal" In History.

 ValueWalk:

• Michael Lewis 60 Minutes Interview On HFT [VIDEO]. Stock market rigged, says Michael Lewis in new book and in an interview on 60 Minutes

Business Insider:

• The White House And Kremlin Had Comically Different Accounts Of The Big Call Between Putin And Obama.

• Unlike America, Japan Has Been A Giant Capital Destruction Machine [CHARTS].

• Ukrainians Are Paralyzed By Fear With No Clear Way Forward.

• China’s Bills Are Coming Due. (graph)

• Why You Shouldn't Believe Vladimir Putin When He Says He Doesn't Want To Invade Eastern Ukraine.

• This Is The Best Chart We've Seen On The Chinese Debt Problem.

• Chinese Hospitals Have Seen A Wave Of Stabbings And Violent Confrontations. 

• Former CIA Deputy Director Says Russian Troops Could Now Take 'A Third Of Ukraine' If Putin Wanted To.

• In Less Than Two Days, Japan Will Walk Headfirst Into An Economic Buzzsaw.

• Top NATO Commander Cuts Short US Visit With Eyes On Russian Troops.

Reuters:

• U.S. judge rules banks must face lawsuit over alleged rate rigging. A federal judge in Manhattan has ruled that a group of international banks must face complaints that they violated the U.S. Commodity Exchange Act by manipulating yen-denominated interest rate benchmarks between 2006 and 2010.

Financial Times: 

• Bad loan writedowns soar at China banks. The five biggest Chinese banks, which account for more than half of all loans in the country, removed Rmb59bn ($9.5bn) from their books in debts that could not be collected, according to their 2013 results. That was up 127 per cent from 2012, and the highest since the banks were rescued from insolvency, recapitalised and publicly listed over the past decade. The sharp acceleration in write-offs is the latest indication of the turbulence now buffeting China’s financial system.

Telegraph:

• Global banks issue alerts on China carry trade as Fed tightens, yuan falls. Citigroup tells clients to brace for second phase of the "taper tantrum" that rocked emerging markets last year, but this time with China at the eye of the storm.

Svenska Dagbladet:

• Putin Wants to Regain Baltics, Finland, Former Adviser Says. Baltics, Finland "not of Putin's agenda today or tomorrow, but it no one stops him, the issue will come up sooner or later," Andrei Illarionov, former adviser to Russian President Vladimir Putin, is quoted as saying. Putin will say "Bolsheviks committed treason against Russian national interests in 1917 by granting independence to Finland."

Korea Central News Agency:

• North Korea Says It Doesn't Rule Out 'New Form' of Nuclear Test. North Korea will "utilize" its nuclear deterrent in its military exercises in response to U.S. drills, its foreign ministry says in statement. The test may take place in "a new form", the statement said.

Financial News:

• Cutting RRR Would Delay China's Deleveraging Process. Using reserve ratio tool will cause markets to get the wrong signal that monetary policy is starting to be loosened, which is not in line with the goal of controlling liquidity, according to a commentary on page 2 of today's Financial News written by Xu Shaofeng. China's monetary authority currently appears to lean toward using reform for liquidity control, such as the standing lending facility trial that started in January and the re-lending quota in March, the commentary said. Cutting banks reserve ratio will delay the deleveraging process of financial institutions and enterprises considering that the nation's economy still relies on investment and debt, the commentary said.

Caixin:

• Minister Says China Faces Downward Economic Pressure. Industry Minister Miao Wei said China still faces strong downward economic pressure in an interview with Caixin's New Century magazine. Some reforms will be good in the long term while they may affect current economic growth, Miao said.

Night Trading

• Asian indices are -.25%. to +.50% on average.

• Asia Ex-Japan Investment Grade CDS Index 128.0 -2.0 basis points.

• Asia Pacific Sovereign CDS Index 92.5 -.25 basis point.

• FTSE-100 futures +.21%.

• S&P 500 futures +.38%.

• NASDAQ 100 futures +.45%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CALM)/1.59

• (VRNT)/.84

Economic Releases 
9:00 am EST

• The ISM Milwaukee for March is estimated to rise to 51.0 versus 48.59 in February.

9:45 am EST

• The Chicago Purchasing Manager for March is estimated to fall to 59.5 versus 59.8 in February.

10:30 am EST

• The Dallas Fed Manufacturing Activity Index for March is estimated to rise to 2.5 versus .3 in February.
  

Upcoming Splits

• (EOG) 2-for-1

• (PEGA) 2-for-1

Other Potential Market Movers

• The Fed's Yellen speaking, France GDP, Eurozone CPI, USDA Crop report, China Manufacturing PMI, Reserve Bank of Australia decision and the (ING) investor day 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 higher and to maintain gains into the afternoon. The Portfolio is 50% net long heading into the week.

Weekly Outlook

U.S. Week Ahead by MarketWatch (audio). 
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 mixed as Russia/Ukraine tensions, global growth fears and increasing emerging markets/European debt angst offset central bank hopes, short-covering and bargain-hunting. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.

Market Week in Review

S&P 500 1,857.62 -.48%*







The Weekly Wrap by Briefing.com.

*5-Day Change