Bull Radar

Style Outperformer:

• Mid-Cap Growth +.34%

Sector Outperformers:

• 1) Biotech +1.86% 2) Airlines +1.49% 3) HMOs +.89%
  

Stocks Rising on Unusual Volume:

• GLOB, OLN, BMRN, KRFT, CCL, SWKS, RCL, ESPR, RCPT, SCMP, KITE, NCLH and AXLL

Stocks With Unusual Call Option Activity:

• 1) CCL 2) MAT 3) OHRP 4) BMRN 5) SE
  

Stocks With Most Positive News Mentions:

• 1) SLI 2) CONN 3) SHLM 4) DOW 5) CCL
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Friday Watch

Evening Headlines 
Bloomberg:

• Monday Deadline for Greece. (video)

• Japan's Inflation Gauge Halts at Zero in February. The Bank of Japan’s key inflation gauge ground to a halt as consumer spending slumped, highlighting weakness in the nation’s recovery from recession. Consumer prices excluding fresh food rose 2 percent in February from a year earlier, less than a median estimate of 2.1 percent. The central bank’s measure that strips out last year’s sales-tax increase showed inflation at zero. 

• Banks Slash Dividends as Loans Sour From Beijing To Pearl River. China’s biggest banks are accelerating cuts to their dividend payouts as bad debts pile up from struggling exporters in the Pearl River Delta, coal companies in the nation’s west and manufacturers in the Bohai Rim near Beijing. Three of the nation’s four largest banks, including Industrial & Commercial Bank of China Ltd., this week cut their payment ratios for 2014 by the most in three years. ICBC’s fell to 33 percent from 35 percent a year earlier. The smaller China Citic Bank Corp. last week eliminated its payment altogether.

• Co-Pilot Focus in Crash Probe Intensifies Hunt for Data Recorder. Crash investigators are rushing to find the onboard data recorder from Germanwings Flight 9525 to confirm prosecutors’ suspicions that the co-pilot steered the jet into a mountain after locking the captain out of the cockpit. Audio files from the flight deck revealed that the co-pilot began descending after the captain stepped into the cabin, then denied him re-entry, prosecutor Brice Robin said in Marseille, France. Except for his breathing, the co-pilot stayed silent until the plane slammed into a slope at full speed, Robin said.  

• TSMC Drops as Weakening Smartphone Market Threatens Chip Demand. Taiwan Semiconductor Manufacturing Co. fell for a fifth day in Taipei trading, its longest losing streak in two years, after at least four analysts published reports saying a stronger U.S. dollar may weaken smartphone chip demand. The shares dropped 1 percent to NT$144 as of 10:58 a.m. in Taipei, widening the decline this week to 6.5 percent. Taiwan’s benchmark Taiex, of which TSMC is the largest member, fell 0.8 percent.

• Asian Stocks Decline for Second Day to Head for Weekly Retreat. Asian stocks fell for a second day, adding to the biggest daily drop in almost two months, as industrial shares led declines and most Japanese equities went ex-dividend. The MSCI Asia Pacific Index lost 0.2 percent to 147.10 as of 9:05 a.m. in Tokyo. The measure headed for a 0.3 percent decline this week after sliding 1.1 percent on Thursday.

• Oil Prices Will Drift Back Lower: Luschini. (video)

• North American Railroads Caught by Speed of Crude-Oil Collapse. The slowdown that North American railroad companies had been bracing for in crude oil shipments has turned into a rout, with volumes falling faster than executives had predicted. With energy companies scaling back drilling after prices for the commodity fell about 50 percent since July, industry executives and analysts anticipated that demand for hauling crude and extraction materials such as frac sand and pipes would slow after a four-year surge. They didn’t expect it to slow this much this fast.

Wall Street Journal:

• Obama Struggles With a Messy Middle East. Latest fighting in Yemen complicates relations with Iran as ties with allies are strained. The Middle East has descended into a state of disarray unusual even for that troubled region, imperiling President Barack Obama’s policy dreams and leaving him with limited ability to control events. The latest complication has erupted in Yemen, where rebel forces backed by Iran have driven out the country’s president and are expanding their control southward across the country. The prospect that those Shiite rebels might succeed in taking over a neighboring...

• Obama’s Mideast Vacuum. The Saudis invade Yemen as the Sunni-Shiite war escalates. An abiding goal of President Obama’s foreign policy has been to reduce America’s role in the Middle East, in the belief that it would lead to greater stability and serve U.S. interests. Has a policy ever been so thoroughly repudiated in so short a time? Mr. Obama has succeeded in his retreat, but the vacuum he’s left has produced a region on fire that is becoming a broad Sunni-Shiite war.

• The Campus Climate Crusade. Liberal groups are out to sully the names of conservative professors and shut down programs funded by the Koch foundation. Conservative thought on campus these days is rare, though for some it’s still not rare enough. Witness the growing campaign by politicians, unions and environmentalists to intimidate into silence any academic or program that might challenge liberal ideology.

MarketWatch.com:

• China stocks may be in serious bubble. As market volumes explode, even teenagers are buying. Some say that when the average “mom-and-pop” retail investors get back into the stock market, it could be time to get out. But what about when even teenagers start buying? China has entered a new stock frenzy, like something out of America in the Roaring 20s or the dottiest days of the dot-com bubble, with trading volumes continuing to push to new record highs.

Zero Hedge:

• Another Oligarch Preaches To The Peasants: Charlie Munger Says "Prepare For Harder World".

• China Hard Landing: Blame The Smog. (graph)

• Japanese Government Bonds Are Crashing - Biggest Surge in Yields In 2 Years. (graph)

• Did Saudi Arabia Just Suffer Its Largest Foreign Capital Flight In 15 Years? (graph)

• China's Demographic Destiny Disaster (In 2 Simple Charts).

• Treasury Collateral Shortage Crosses The Atlantic, Makes European Landfall. (graph)

• The US Housing Bubble In One Chart: Home Prices Outpace Wage Growth 13:1. (graph) 

• China's Stock Bubble Leaves BNP Speechless: "What Happens Next Is An Unknown-Unknown". (graph)

• Why Is Russia Building Massive Underground Bomb Shelters?

• 3 Things: No Money, Wall Street's Big Scam, Bottom 80%. (graph)

• That Ain't No Margin Debt: THIS Is Margin Debt. (graph)

Business Insider:

• Saudi Arabia's new coalition has already shifted the tide in the Middle East.

• How the tech boom could end.

• Yahoo(YHOO) adds $2 billion to its share buyback program.

• GameStop shares are getting whacked after earnings miss expectations.

• What just happened in Yemen is 'a nightmare' for the US military.

Evening Recommendations 
Morgan Stanley:

• Rated (YHOO) Overweight, target $55.

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 113.0 unch.

• Asia Pacific Sovereign CDS Index 61.25 -.5 basis point.

• S&P 500 futures +.39%.

• NASDAQ 100 futures +.38%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (BBRY)/-.05

• (CCL)/.10

• (FINL)/.85

Economic Releases
8:30 am EST

• 4Q GDP is estimated to rise +2.4% versus a +2.2% prior estimate.

• 4Q Personal Consumption is estimated to rise +4.4% versus a prior estimate of a +4.2% gain.

• 4Q GDP Price Index is estimated to rise +.1% versus a +.1% prior estimate.

• 4Q Core PCE is estimated to rise +1.1% versus a prior estimate of a +1.1% gain.

10:00 am EST

• Final Univ. of Mich Consumer Sentiment for March is estimated at 92.0 versus a prior estimate of 91.2.

 Upcoming Splits

• (GIL) 2-for-1

Other Potential Market Movers

• The Fed's Yellen speaking, Fed's Fischer speaking and the China industrial profits report could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by real estate and commodity 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 day.

Stocks Finish Modestly Lower on Fed Rate Hike Worries, Earnings Concerns, Euro Weakness, Tech/Transport Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 15.8 +7.0%

• Euro/Yen Carry Return Index 135.44 -.04%

• Emerging Markets Currency Volatility(VXY) 10.57 +1.93%

• S&P 500 Implied Correlation 63.71 -1.34%

• ISE Sentiment Index 66.0 -8.33%

• Total Put/Call .97 -.3%

• NYSE Arms 1.25 +13.84% 

Credit Investor Angst:

• North American Investment Grade CDS Index 64.49 +.29%
• America Energy Sector High-Yield CDS Index 1,014.0 -.20%

• European Financial Sector CDS Index 67.09 -.57%

• Western Europe Sovereign Debt CDS Index 22.90 +1.64%
• Asia Pacific Sovereign Debt CDS Index 61.31 -.01%

• Emerging Market CDS Index 317.73 +.79%
  

• iBoxx Offshore RMB China Corporates High Yield Index 114.19 +.08%
• 2-Year Swap Spread 24.0 -2.25 basis points

• TED Spread 25.0 +1.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -23.25 +.5 basis point

Economic Gauges:

• 3-Month T-Bill Yield .03% unch.

• Yield Curve 138.0 +6.0 basis points

• China Import Iron Ore Spot $55.36/Metric Tonne -.39%

• Citi US Economic Surprise Index -60.0 +1.9 points
• Citi Eurozone Economic Surprise Index 52.30 -.8 point

• Citi Emerging Markets Economic Surprise Index -3.2 +.4 point

• 10-Year TIPS Spread 1.81 +1.0 basis point

Overseas Futures:

• Nikkei Futures: Indicating -101 open in Japan

• DAX Futures: Indicating +33 open in Germany

Portfolio: 

• Slightly Lower: On losses in my medical/tech sector longs

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

• Market Exposure: Moved to 25% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth -.62%

Sector Underperformers:

• 1) Coal -3.65% 2) Semis -2.73% 3) Road & Rail -1.33%

Stocks Falling on Unusual Volume:

• SCMP, WGO, SNDK, ASML, FRSH, WRLD, IBB, SGNT, CLDN, BIB, ENVA, SWKS, NEWT, CBMG, LRCX, SOXX, ZSPH, KITE, SWAY, MTSI, NXPI, CSH, JMEI, TSU, PTCT, UVE, ACAD, TGTX, ISIS, CSH, SWFT, SRNE, PTCT, DVAX, EPZM, SWKS, FRGI, CLDN, AFFX, ZLTQ, EXAS, INSM, MTSI, BDSI, RARE, AAVL and ENVA
  

Stocks With Unusual Put Option Activity:

• 1) AMD 2) CCL 3) SNDK 4) DHI 5) DAL
  

Stocks With Most Negative News Mentions:

• 1) UNP 2) APOL 3) X 4) UPS 5) PBR
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Growth -.32%

Sector Outperformers:

• 1) Gold & Silver +1.28% 2) Computer Services +.59% 3) Oil Service +.33%
  

Stocks Rising on Unusual Volume:

• DPLO, FIVE, RHT, ACN and ROVI

Stocks With Unusual Call Option Activity:

• 1) FIVE 2) SGYP 3) IDCC 4) DG 5) QRVO
  

Stocks With Most Positive News Mentions:

• 1) RHT 2) CBI 3) SCHW 4) GRPO 5) DPS
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Thursday Watch

Evening Headlines 
Bloomberg:

• Saudi Arabia, Gulf Allies Starts Bombing Houthi Targets in Yemen. Saudi Arabia and its Gulf Arab allies started bombing Shiite Houthi targets in Yemen Thursday, the Saudi ambassador to Washington said. The allies launched “the military operations in support of the people of Yemen and their legitimate government,” Ambassador Adel al-Jubair said in a statement. The military strikes were started after an “appeal” from Yemen’s President Abdurabuh Mansur Hadi. Saudi Arabia’s King Salman ordered the airstrikes at midnight local time, Saudi-owned Al-Arabiya television reported. The bombing campaign comes after forces loyal to the rebel group marched on Aden, the stronghold of the internationally recognized President Abdurabuh Mansur Hadi in the southern port city of Aden. Hadi has left his residence in the city, Mohammed Hadi, an aide, said. Saudi Arabia, the world’s top oil exporter, has accused Iran of fomenting unrest in Yemen. 

• Yemen Government’s Fall Is Another Blow to Obama’s War on Terror. Escalating chaos in Yemen threatens the Obama administration’s ability to combat the al-Qaeda affiliate that’s most intent on attacking the U.S. and its allies. It was only last June that President Barack Obama singled out Yemen as a model for U.S. efforts to fight terrorism by relying on training allied forces rather than risk American lives. Now the fall of the government and the turmoil there further imperil his signature antiterrorist strategies, which also are facing difficulties in Afghanistan, Iraq, Syria, Libya and elsewhere. “This is bad for counterterrorism,” said Daniel Benjamin, a former State Department antiterrorism adviser. “There’s no question there will be an effect on intelligence-gathering -- and a significant one.”  

• A Murky, Sloppy Muddle: How Greece’s Exit From Euro Could Happen. With the fight to keep Greece in the euro now in its sixth year, everyone is running out of patience. More importantly, Prime Minister Alexis Tsipras’s government in Athens is running out of money. While bond yields suggest investors expect Greece to stay in the euro, economists such as UniCredit Bank AG’s Erik Nielsen say it may be just a matter of time before he’s forced to print a new currency. Adopting the euro was always supposed to be a one-way ticket, so there is no legal precedent or political roadmap for an exit. If you’re waiting for a formal announcement of a clear resolution, you may be waiting a long time.  

• China Bulls Adopt Price-to-Whatever Ratio as Equities Surge. The signs of a Chinese equity bubble are visible just about everywhere Hao Hong looks. The chief China strategist at Bocom International Holdings Co. points to soaring price-to-earnings ratios, the shrinking yield advantage that stocks offer over bonds and the fact that mainland-listed equities now trade at a 34 percent premium over nearly identical shares in Hong Kong. So what’s Hong’s advice to investors? Keep buying, of course.

• Currency War Is Now a Dud as Windfall From Devaluations Vanishes. Currency wars, it turns out, may not be worth fighting right now. While weaker exchange rates have at times throughout history helped stoke economic growth by making countries’ exports cheaper, the benefits are becoming hard to find. Nowhere is this more apparent than in developing nations, where currencies have slumped 24 percent on average against the dollar since 2011. Yet despite this, their annual export growth rate has actually slowed to 4 percent in the past four years from 8 percent during the previous decade, according to the CPB Netherlands Bureau for Economic Policy Analysis. In Brazil, the real’s 48 percent plunge since 2011 has done little to revive an economy heading for its worst performance in 25 years.  

• Tech Stock Selloff Continues in Asia; Oil Jumps on Yemen. Asian shares dropped the most in eight weeks, led by technology shares after the Nasdaq Composite Index tumbled in the U.S. Oil advanced after Saudi Arabia and its Gulf Arab allies started bombing targets in Yemen. The MSCI Asia Pacific Index sank 1.2 percent by 11 a.m. in Tokyo, as Taiwan Semiconductor Manufacturing Co. and Apple Inc. supplier AAC Technologies Holdings Inc. tumbled at least 3 percent. Japan’s Topix gauge fell the most since Jan. 6. 

• Oil Rises on Mideast Disruption Risk as Saudi Arabia Bombs Yemen. Oil erased losses to rise for a fifth day in New York as Saudi Arabia said it started bombing rebel targets in Yemen with its allies. Futures gained as much as 1.4 percent to trade near $50 a barrel, the highest intraday price since March 10. King Salman ordered the airstrikes against Shiite Houthi positions after an “appeal” from Yemen’s President Abdurabuh Mansur Hadi, Saudi Ambassador Adel al-Jubair said in Washington. Prices slid earlier on Thursday after a U.S. government report showed crude inventories and production swelling further last week to the most in more than three decades.

• The Fed Still Needs to Figure Out How to Raise Rates. For all the talk about when Federal Reserve policy makers are going to raise interest rates, they haven’t quite figured out how to do it. The central bank has had trouble controlling near-term borrowing costs since the 2008 financial crisis and has been experimenting with ways to do so. While its main new tool has enabled the Fed to exert more influence over money-market rates in the past year, strategists from Barclays Plc to Goldman Sachs Group Inc. say the program is too small to prevent rates from falling when officials want them to climb. At issue is the Fed’s balance sheet, which has ballooned through its bond buying, leaving over $2 trillion in excess reserves in the banking system that may prove to be more difficult to siphon off than in the past. New methods are needed because the federal funds rate, long the central bank’s primary policy instrument, has ceased to be an effective means to guide short-term market rates.

• Apple(AAPL) Plans China IPhone Trade-In Program With Foxconn. Apple Inc. plans to introduce a trade-in program for iPhones in China, people familiar with the effort said, after a similar program bolstered sales in the U.S.

Wall Street Journal: 

• Saudi Arabia Launches Military Operations in Yemen. Saudi ambassador to U.S. says 10 countries participating in operations. Saudi Arabia and other Gulf nations launched airstrikes against Houthi rebels in the Yemeni capital San’a in defense of what the Riyadh government called the country’s legitimate government. The airstrikes began hours after the country’s president, Abed Rabbo Mansour Hadi, was forced to flee the southern port city of Aden by boat after...

• Iran Stalls U.N. Probe Into Its Atomic Past. Talks over Iran’s nuclear program have hit a stumbling block because Tehran has failed to cooperate with a United Nations probe into whether it tried to build atomic weapons in the past. Talks over Iran’s nuclear program have hit a stumbling block a week before a key deadline because Tehran has failed to cooperate with a United Nations probe into whether it tried to build atomic weapons in the past, say people close to the negotiations. In response, these people say, the U.S. and its diplomatic partners are revising their demands on Iran to address these concerns before they agree to finalize a...

• Buyout Firms Feel Pinch From Lending Crackdown. Regulatory guidance that seeks to limit the use of borrowed money in takeovers has hampered the business of debt-laden acquisitions. An effort by regulators to deter banks from financing takeovers with high levels of debt has dealt a blow to the private-equity industry. After resisting at first, banks have lately been falling in line with guidance regulators set in 2013, which sought to limit how much debt banks could extend for corporate takeovers. The shift is now stinging private-equity firms, whose bread-and-butter business is debt-laden buyouts.

• The Bergdahl Desertion. Obama wanted to ‘whittle away’ the killers at Guantanamo. The United States Army intends to charge Sgt. Bowe Bergdahl with desertion and misbehavior before the enemy. That was Wednesday’s news, but the bigger story is the extravagant price the U.S. has paid because President Obama wanted to score political points.

• Obama’s Mideast Realignment. His new doctrine: Downgrade ties to Israel and the Saudis while letting Iran fill the vacuum left by U.S. retreat. Let’s connect the dots. Data point No. 1: President Obama withdrew U.S. forces from Iraq in 2011 and is preparing to leave Afghanistan by the end of 2016, even while keeping a few more troops there this year and next than originally planned. Point No. 2: The Obama administration keeps largely silent about Iran’s power grab in...

Fox News:

• Bergdahl charged with desertion, could face life in prison. (video) Army Sgt. Bowe Bergdahl, who was captured by the Taliban after abandoning his post in Afghanistan and then freed five years later in a controversial trade for five Guantanamo detainees, was charged Wednesday with desertion. U.S. Army Forces Command announced the decision at Fort Bragg in North Carolina.

MarketWatch.com:

• Why more U.S. colleges will go under in the next few years.

CNBC: 

• Biotechs could be the early warning for stocks. Traders are watching small caps and the biotech sector Thursday to see whether they continue to melt down, as the harbinger of a deeper selloff in the broader market.

• Things that will happen if Venezuela implodes. An economic implosion is becoming increasingly likely in Venezuela, and the country's debtholders, trade partners and neighbors are bracing for the fallout.

Zero Hedge:

• BofA's Modest Proposal For Greece: "A Negative Shock May Be Necessary".

• Biotech Bloodbath Sparks Selling Scramble In Stocks. (graph)

• Soldier Exchanged By Obama For 5 Taliban Captives Charged With Desertion.

• Pay Attention To The Warning Signs. (graph)

• Don't Show Janet Yellen These 3 Charts. (graph)

• Brazil Confidence Plummets To Record Low As Central Bank Admits Currency War Defeat. (graph)

• Japanese Stocks Could See Repeat Of 2013 Plunge. (graph)

• "Danger, Will Robinson!" (graph)

• Fortescue Has An Idea For Arresting Iron Ore Price Slide: Start A Cartel. 

• Bank Of Japan's 10 Trillion Equity Portfolio "Not Large" Says Bank Of Japan.

• Montreal Students Clash With Riot Police In Austerity Protests. (pic)

• The Fed's Artificial Steepening Of The Yield Curve. (graph)

Business Insider:

• In 6 years, Mexico's auto production will make up more than 25% of the North American market.

• Everyone at the Secret Service wants to know who's leaking damaging stories to the Washington Post. 

• Hillary Clinton's brother linked to alleged political favors.

• Senior military official: A pilot on the Germanwings flight that crashed was locked out of the cockpit.

• HOWARD MARKS: Liquidity is not how easily you can sell something, but what price you get when you're forced to.

LA Times:

• Iran-backed rebels in Yemen loot secret files about U.S. spy operations. Secret intelligence files held by Yemeni security forces and containing details of American intelligence operations in the country have been looted by Iran-backed militia leaders, exposing names of informants and plans for U.S.-backed counter-terrorism operations, U.S. officials say.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are -1.0% to unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 113.0 +1.0 basis point.

• Asia Pacific Sovereign CDS Index 61.75 +1.25 basis points.

• S&P 500 futures +.04%.

• NASDAQ 100 futures unch.

Morning Preview Links

Earnings of Note
Company/Estimate

• (ACN)/1.07

• (CMC)/.19

• (CAG)/.52

• (FRED)/.01

• (LULU)/.73

• (SCHL)/-.56

• (SIG)/3.03

• (WGO)/.38

• (AIR)/.37

• (GME)/2.17

• (OXM)1.02

• (RH)/1.01 

Economic Releases
8:30 am EST

• Initial Jobless Claims are estimated to fall to 290K versus 291K the prior week. 

• Continuing Claims are estimated to fall to 2400K versus 2417K prior.

9:45 am EST

• Preliminary Markit US Services PMI for March is estimated to fall to 57.0 versus 57.1 in February.

11:00 am EST

• Kansas City Fed Manufacturing Activity for March is estimated at 1.0 versus 1.0 in February.

 Upcoming Splits

• (MGA) 2-for-1

Other Potential Market Movers

• The Fed's Bullard speaking, Fed's Lockhart speaking, German GFK data, Japan CPI, $29B 7Y T-Note auction, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, CIBC Retail/Consumer Conference, (CIEN) annual meeting, Johnson Rice Oilfield Services Conference, (SRE) analyst conference and the (PLAB) investor day could also impact trading today.

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