Stocks Higher into Final Hour on Less Emerging Markets Debt Angst, Euro Bounce, Short-Covering, Gaming/Homebuilding Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 14.59 -3.44%

• Euro/Yen Carry Return Index 136.22 +1.18%

• Emerging Markets Currency Volatility(VXY) 10.22 -1.06%

• S&P 500 Implied Correlation 64.36 -1.27%

• ISE Sentiment Index 70.0 -32.04%

• Total Put/Call 1.15 +3.60%

• NYSE Arms .52 -46.73% 

Credit Investor Angst:

• North American Investment Grade CDS Index 62.33 -1.40%

• America Energy Sector High-Yield CDS Index 1,093.0 +2.08%

• European Financial Sector CDS Index 68.33 +1.54%

• Western Europe Sovereign Debt CDS Index 22.56 +2.15%

• Asia Pacific Sovereign Debt CDS Index 59.58 -.35%

• Emerging Market CDS Index 311.33 -.92%
  

• iBoxx Offshore RMB China Corporates High Yield Index 114.58 +.02%

• 2-Year Swap Spread 26.25 +.75 basis point

• TED Spread 25.0 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -23.25 +1.0 basis point

Economic Gauges:

• 3-Month T-Bill Yield .01% unch.

• Yield Curve 137.0 +4.0 basis points

• China Import Iron Ore Spot $47.08/Metric Tonne -4.95%

• Citi US Economic Surprise Index -47.3 +15.2 points

• Citi Eurozone Economic Surprise Index 63.10 +.6 point

• Citi Emerging Markets Economic Surprise Index 4.9 +1.6 points

• 10-Year TIPS Spread 1.81 unch.

Overseas Futures:

• Nikkei Futures: Indicating +72 open in Japan

• DAX Futures: Indicating +12 open in Germany

Portfolio: 

• Slightly Higher: On gains in my medical/retail sector longs

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back

• Market Exposure: 50% Net Long

Today's Headlines

Bloomberg:

• Iran Negotiators Reach Outline Nuclear Deal After Marathon Talks. Iran and world powers said they reached an outline accord that keeps them on track to end a decade-long nuclear dispute, allowing three more months to resolve differences that couldn’t be bridged in the past week’s diplomatic marathon. Iranian President Hassan Rouhani said on Twitter that solutions to the nuclear issue had been found and the process of drafting an accord can begin. Germany’s Foreign Ministry also said on Twitter that a framework solution has been reached. 

• Dijsselbloem Says ‘Still Long Way’ to Go on Greek Proposals. Eurogroup Chairman Jeroen Dijsselbloem said there’s a “long way to go” to strike a deal on Greece’s aid proposals even after the Athens government responded to demands for more detail on its bid to end the deadlock. “It’s continuously improving,” Dijsselbloem told reporters today in the Hague. “They deliver more and more proposals that are more and more detailed. On some parts, we will definitely reach an agreement.”

• Sanctions-Strapped Russia Outguns the U.S. in Information War. Moscow drowns out Voice of America, and facts are a casualty. The troubled U.S. agency responsible for delivering news around the world is being outgunned in Eastern Europe by Russian outlets unrestrained by notions of fact-based journalism. The unequal competition raises fears among U.S. officials that Moscow is winning the information war about events in Ukraine, even as the Russian economy staggers under economic sanctions imposed after the takeover of Crimea. “Russia has engaged in a rather remarkable period of the most overt and extensive propaganda exercise that I’ve seen since the very height of the Cold War,” Secretary of State John Kerry told a Senate subcommittee in late February. It’s “spending hugely on this vast propaganda machine,” he told another panel the same day, and it’s succeeding “because there’s nothing countering it.”

• Japan bubble alert found in drug stock rally that won't quit. This year's Japanese stock rally has a surprise leader: pharmaceutical companies, which tend to lag behind the market when it gains. Drugmakers soared 22 percent, the most among the 33 industry groups on the benchmark Topix index, compared with a 10 percent gain for the Topix itself. The Topix Pharmaceutical Index climbed to its highest on record on March 24, and earnings multiples are about twice the market average. The Topix has beaten pharmaceutical shares in 12 of the past 17 years it rose. "Valuations are ridiculous, and foreign investors are scratching their heads," said Richard Whittall, a fund manager at Alltus Capital (U.K.) in Singapore who's watched Japanese stocks for 25 years. "You've seen these underowned areas of the market just go up, up and up. Japanese institutions like buying these stocks. They feel safe." 

• European Stocks Retreat, Paring Weekly Advance as Miners Decline. European stocks slipped, paring a weekly gain, as miners and energy companies retreated. A gauge of commodity producers posted the biggest decline of the 19 industry groups on the Stoxx Europe 600 Index as Societe Generale SA said iron ore prices may extend losses. BHP Billiton Ltd. slid 2.6 percent. Royal Dutch Shell Plc and Total SA contributed the most to a drop in energy stocks, as oil prices fell. The Stoxx 600 declined 0.2 percent to 397.8 at the close of trading, paring its weekly gain to 0.6 percent.

• Iron Ore Seen Extending Slump Below $50 as BHP, Rio Decline. (video) Iron ore, which fell below $50 a metric ton on Wednesday, may extend losses as weakening producer currencies cut mining costs, reducing incentives for the supply cuts needed to balance the market, according to Societe Generale SA. Lower energy prices have lessened freight expenses and the inability of many high-cost Chinese miners to cut output means that iron ore will stay weak, Mark Keenan, Singapore-based head of commodities research for Asia, said on Thursday. The steel-making raw material will probably drop into the low $40s a ton in the coming weeks, IG Markets Ltd. said in an e-mailed note.

• Industrial Stocks Near Trend Break as Low U.S. Rates End Rallies. (graph) An exchange-traded fund of industrial stocks is nearing a technical support level as interest rates fall, signaling the ETF’s underperformance could continue. The Industrial Select Sector SPDR Fund has lagged behind the SPDR Standard & Poor’s 500 ETF by 3 percentage points since Nov. 25 as this stock price ratio has decreased each month this year. During the same time, the yield on 10-year Treasuries has fallen to 1.86 percent from 2.26 percent -- see chart.

• KKR-Backed Energy Hedge Fund Said to Triple Loss Amid Audit. BlackGold Capital Management, the energy-focused hedge fund partly owned by KKR & Co., told investors that losses amid the oil slump in December were almost triple its initial report after an auditor examined how it valued debt holdings, according to two people with knowledge of the matter. The $2 billion investment firm revised the loss to 17 percent last month from the 6 percent decline it previously reported, according to the people, who asked not to be identified as the information is private. The Houston-based fund cited difficulty in valuing some energy bonds at the height of the market’s turmoil, they said.

• Thanks to Obama, the New World of Campaign Finance Is Unlimited and Undisclosed. Potential presidential candidates this year–including Bush–are using outside groups to pay for traditional functions of an early campaign or political committee, including communications, policy development, and research.  Unlike a presidential campaign or the committees that politicians are supposed to use while they consider running for the White House, these groups have no legal limits on contributions, which worries watchdogs.

Wall Street Journal:

• Iran Nuclear Talks: Streaming Coverage.

• 5 Things to Watch in the March Jobs Report.

MarketWatch.com: 

• Orders for oil equipment plunge in February. 

Fox News: 

• More than 70 dead in Al-Shabaab attack on Kenyan college, as Christians reportedly held hostage. (video) More than 70 people have been killed in an attack Thursday by Al Qaeda-linked terror group Al-Shabaab on a Kenyan college, Interior Minister Joseph Nkaissery said.  Al-Shabaab says they are "holding many Christians alive" after claiming responsibility for the attack at Garissa University that left dozens more injured and hundreds of students unaccounted for.

• Two women arrested in alleged terrorist bomb plot targeting New York. (video) Two women suspected of being terrorist sympathizers were arrested Thursday for allegedly plotting to detonate pressure cooker bombs in New York, Fox News has learned. An FBI spokesperson confirmed the arrests, but circumstances surrounding the arrests or the alleged plot were not immediately clear. NYPD Deputy Commissioner John Miller said the arrests were part of a local and federal investigation.

ZeroHedge:

• Chart Of The Day: Is The US Already In A Recession?

• More Unofficial Capital Controls In The US: PFIC Rules.

• Chaos In Yemen: Chinese Troops Arrive As US-Armed Rebels Set Sights On Central Bank.

• Martin Armstrong: "Hillary Commits A Crime And They Defend Her". (video)

• Greece Faces D-Day On April 9, Will Default Within 30 Days Of Missed Payment, BofAML Says. (graph)

• The "Revolver Raid" Arrives: A Wave Of Shale Bankruptcies Has Just Been Unleashed.

• The U.S. Economy Slows To Stall Speed. (graph)

• US Imports Collapse Most Since Lehman. (graph)

• Initial Claims Slide Again; Trade Deficit Lowest Since 2009 Despite Soaring Dollar On Imports Plunge. (graph)

• Dear Texas, Welcome To The Recession. (graph)

Business Insider:

• Crude oil is tumbling. (graph)

• OPEC oil export revenues are down 11% from 2013.

Financial Times: 

• Emerging markets: The great unravelling. Developing economies are suffering their biggest capital outflows since the financial crisis.

Telegraph:

• Greek defiance mounts as Alexis Tsipras turns to Russia and China. Alexis Tspiras is playing an escalating game of brinkmanship, trying to force Europe to give ground or risk a chain-reaction that could cripple the EU. 

• Eurozone growth forecasts are too optimistic, ECB officials warn. As the European Central Bank has revised up its forecasts for growth and inflation, some members of its governing council have warned that its assessment may be too optimistic. 

Bear Radar

Style Underperformer:

• Small-Cap Growth +.09%

Sector Underperformers:

• 1) Airlines -.92% 2) Gold & Silver -.83% 3) Software -.61%

Stocks Falling on Unusual Volume:

• AXTA, TRIB, CARB, NUVA, TRUE, PRGS, ESPR, ANET, ODFL, SPB, URBN, SNX, XLRN, AYI, NLNK, RCPT, KRFT, LSTR, ECHO, AXLL, CNW, SMG, CBOE, SHPG and NDRM
  

Stocks With Unusual Put Option Activity:

• 1) KMX 2) EMR 3) XLP 4) M 5) CHK
  

Stocks With Most Negative News Mentions:

• 1) GRMN 2) NUVA 3) BABA 4) UTIW 5) SNDK
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Value +.59%

Sector Outperformers:

• 1) Gaming +2.17% 2) Oil Service +1.88% 3) Hospitals +1.31%
  

Stocks Rising on Unusual Volume:

• KMX, OVAS, WBAI, GSM, SGMS, LBIO, RPTP, TDW and CBM

Stocks With Unusual Call Option Activity:

• 1) KMX 2) OC 3) NTAP 4) RPTP 5) MVIS
  

Stocks With Most Positive News Mentions:

• 1) RAD 2) AN 3) RTN 4) SUNE 5) SPG
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Stocks Falling into Final Hour on Global Growth Fears, Iran Nuclear Deal Worries, Yen Strength, Biotech/Transport Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 15.67 +2.49%

• Euro/Yen Carry Return Index 134.44 -.16%

• Emerging Markets Currency Volatility(VXY) 10.35 -1.90%

• S&P 500 Implied Correlation 65.86 +.41%

• ISE Sentiment Index 111.0 +50.0%

• Total Put/Call 1.09 +3.81%

• NYSE Arms .85 -42.21% 

Credit Investor Angst:

• North American Investment Grade CDS Index 63.55 -.05%

• America Energy Sector High-Yield CDS Index 1,070.0 +2.18%

• European Financial Sector CDS Index 67.30 +1.64%

• Western Europe Sovereign Debt CDS Index 22.09 -.47%

• Asia Pacific Sovereign Debt CDS Index 59.80 -.33%

• Emerging Market CDS Index 313.66 -2.12%
  

• iBoxx Offshore RMB China Corporates High Yield Index 114.56 +.18%

• 2-Year Swap Spread 25.50 +.5 basis point

• TED Spread 25.25 +.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -24.25 +.75 basis point

Economic Gauges:

• 3-Month T-Bill Yield .02% unch.

• Yield Curve 133.0 -5.0 basis points

• China Import Iron Ore Spot $49.53/Metric Tonne -3.54%

• Citi US Economic Surprise Index -62.5 -3.9 points

• Citi Eurozone Economic Surprise Index 62.50 +4.8 points

• Citi Emerging Markets Economic Surprise Index 3.3 +3.0 points

• 10-Year TIPS Spread 1.81 +4.0 basis points

Overseas Futures:

• Nikkei Futures: Indicating +126 open in Japan

• DAX Futures: Indicating +44 open in Germany

Portfolio: 

• Slightly Lower: On losses in my medical/biotech/tech/retail sector longs and emerging markets shorts

• Disclosed Trades: None

• Market Exposure: 25% Net Long

Today's Headlines

Bloomberg: 

• Iran Nuclear Talks Grind On as Deal Deadline Recedes Into Past. (video) Iran and world powers pressed ahead with talks for an outline agreement to end the 12-year standoff over the Islamic Republic’s nuclear program, with diplomats saying major obstacles must be overcome before any announcement. Envoys to the negotiations are “working hard to finalize a deal, a good deal,” European Union foreign policy chief Federica Mogherini said on Twitter. U.K. Foreign Secretary Philip Hammond earlier said the sides had a “broad framework of understanding,” with some key issues still left to resolve.
• Greece Said to Make Progress on Euro-Area Officials’ Call. Greece and euro-area authorities pledged to press ahead with efforts to release aid payments after progress in recent days, according to a Greek Finance Ministry official with knowledge of a conference call held Wednesday. Two euro-area officials agreed that talks were making progress, recognizing the advances by Greece while insisting that more work needs to be done to reach a conclusion of this part of rescue. All three asked not to be named because the discussion was private.
• Record Borrowing for Stocks Shows Canada Debt Binge Grows. Canadians like Colpitts are borrowing to invest at the highest level since at least 2000, racking up more than C$19 billion ($15 billion) on margin in January. That’s helped fuel a 37 percent surge in mutual-fund assets in the past two years and a 41 percent rise in ETF assets. The figures illustrate Canada’s rock-bottom interest rates aren’t only fueling house prices and consumer debt to record highs, they’re enticing people to leverage in financial markets.
• Return of Goldilocks Has UBS Asking If It Gets Better Than This. Does it get any better than this? That’s the question Larry Hatheway, UBS Group AG’s chief economist, is asking about financial markets. His answer: Probably not. Now comes the warning about complacency. Hatheway says investors may be overlooking the chance that the Fed responds to employment growth by raising rates faster than is now anticipated. That could send the dollar soaring, undermining emerging markets. The Ukraine conflict, Greece’s debt woes and an uncertain U.K. election pose threats to Europe. Hatheway advises investors to guard against such trouble ahead. 
• European Stocks Rise With Banks After Best Quarter Since 2009. Banks led European stocks higher after equities completed the biggest quarterly advance since 2009. The Stoxx Europe 600 Index added 0.3 percent to 398.52 at the close of trading. It briefly erased almost all its gains after a report said Greece may seek to delay an April 9 deadline to repay loans to the International Monetary Fund. A Greek government official denied the report. The country’s ASE Index slid 1.3 percent for the worst performance among 18 western-European markets. European shares earlier reversed a drop of as much as 0.5 percent after a final Markit Economics update showed euro-area manufacturing grew more than initially estimated.
• Treasuries Rise as March Jobs Pace Fuels Economic Growth Concern. Treasuries rose as a private report showed the U.S. added fewer jobs than forecast in March, reinforcing concern about the strength of the economic recovery as the Federal Reserve moves closer to raising rates. Ten-year note yields dropped for the fourth day as the report raised questions about the momentum of the labor market, which has been the driver of the economy’s expansion that began almost six years ago. Demand for Treasuries was also boosted by their relative value, as U.S. yields are higher than 19 developed economies including the U.K., Norway and Spain.
• China’s Fuel Demand to Peak Sooner Than Oil Giants Expect. China’s biggest oil refiner is signaling the nation is headed to its peak in diesel and gasoline consumption far sooner than most Western energy companies and analysts are forecasting. If correct, the projections by China Petroleum & Chemical Corp., or Sinopec, a state-controlled enterprise with public shareholders in Hong Kong, pose a big challenge to the world’s largest oil companies. They’re counting on demand from China and other developing countries to keep their businesses growing as energy consumption falls in more advanced economies. “Plenty of people are talking about the peak in Chinese coal, but not many are talking about the peak in Chinese diesel demand, or Chinese oil generally,” said Mark C. Lewis, an analyst at Kepler Cheuvreux in Paris who has written on how oil companies should broaden their activities to produce all forms of energy. “It is shocking.” 
• Iraq Crude Oil Exports Rise 15% in March to Highest in 35 Years. Iraq’s crude shipments in March rose to the highest level in more than three decades as the government sought to compensate for a drop in exports earlier this year due to bad weather, Oil Ministry spokesman Asim Jihad said. OPEC’s second-largest producer shipped 92.4 million barrels in March, or 2.98 million barrels a day, Jihad said by phone from Baghdad. Monthly exports gained 15 percent from February, when foul weather at the country’s southern oil terminals limited shipments to 2.59 million barrels a day, according to the Oil Ministry.
• Reckoning Arrives for Cash-Strapped Oil Firms Amid Bank Squeeze. Lenders are preparing to cut the credit lines to a group of junk-rated shale oil companies by as much as 30 percent in the coming days, dealing another blow as they struggle with a slump in crude prices, according to people familiar with the matter. Sabine Oil & Gas Corp. became one of the first companies to warn investors that it faces a cash shortage from a reduced credit line, saying Tuesday that it raises “substantial doubt” about the company’s ability to continue as a going concern. About 10 firms are having trouble finding backup financing, said the people familiar with the matter, who asked not to be named because the information hasn’t been announced.
• Iron Ore Sinks Below $50 as Worldwide Glut Swells, China Slows. Iron ore slumped below $50 a metric ton on prospects for a widening global glut as the largest producers boost supply and Chinese demand growth weakens. Rio Tinto Group, BHP Billiton Ltd. and Vale SA fell. Ore with 62 percent content at Qingdao, China, retreated 3.5 percent to $49.53 a dry ton on Wednesday, according to Metal Bulletin Ltd. That’s the lowest level since 2004-2005, based on data from Metal Bulletin and annual benchmarks compiled by Clarkson Plc, the world’s largest shipbroker. Prices collapsed last year and extended losses in 2015 as Rio Tinto and BHP Billiton boosted low-cost output into a saturated market, betting higher volumes would protect their market share and cut unit costs while less competitive miners faced closure. Global iron ore demand will shrink this year for the first time since 2009, Deutsche Bank AG said in a report on Tuesday, forecasting that prices may drop below $40 as weaker currencies and lower energy prices eased producers’ costs. “Every quarter should see more supply than the quarter before, and that should continue for years,” Ivan Szpakowski, a Citigroup Inc. analyst in Hong Kong, said in an interview on Wednesday. “Every $10 is a psychological level but it doesn’t mean we can’t breach it,” said Szpakowski, who repeated a forecast on March 23 that the $50 level would be broken. 
• Monsanto(MON) Lowers Profit Forecast on Corn Drop, Dollar. Monsanto Co., the world’s largest seed company, lowered its forecast for fiscal 2015 earnings and said it will cut spending as farmers plant less corn while a strengthening U.S. dollar erodes foreign sales. Earnings before one-time items in the 12 months through August will now be at the low end of its previous projection of $5.75 to $6 a share, St. Louis-based Monsanto said Wednesday in a statement. The company also reported second-quarter profit and sales that trailed analysts’ estimates. The shares fell as much as 2.2 percent in premarket trading in New York.

Wall Street Journal:

• California Orders Unprecedented, Mandatory Water Cuts. Sierra Nevada snowpack levels fall to record low.

CNBC: 

• Janus Capital's Bill Gross: Markets 'hostile' to investors. As Bill Gross sees it, investors face a tough time ahead trying to pick places to put money in a world where basically everything is mispriced. Central banks that have kept rates low have helped boost asset prices, but the landscape will be different now that stimulus from the Federal Reserve and elsewhere is losing its impact, the Janus Funds portfolio manager said in his latest missive to clients. 
• Negative US bond yields? I wouldn't rule it out: Pro. (video)

ZeroHedge:

• It's Official: Fed Sees 0.0% GDP Growth In The First Quarter. (graph)
• Central Banking Refuted In One Blog - Thanks Ben!
• Hillary Clinton Caught In Another Lie.
• Losing Faith In The Fed? 2Y Yields Break Below Key Technical Level Amid Intraday Plunge. (graph)
• WTI Crude Tops $49.50 After Iran Talks Reportedly "Paused". (graph)
• Here Is The "Rate Hike Decision" Waterfall Analysis Goldman Gave To The Fed.
• Greek Fears, Weak Data Send Gold Surging Over $1200. (graph)
• ISM Manufacturing Tumbles To 22-Month Lows, Longest Losing Streak Since Lehman. (graph)
• Greece Hints At Default, Russian Pivot:"Will Not Respect IMF Deadline" - What Happens Next.
• Yemen On Verge Of "Total Collapse" As Civilian Casualties, Ground Invasion Calls Mount.
• The Best And Worst Performing Assets In March And Q1. (graph)
• ADP Employment Misses By Most In 4 Years, Lowest In 14 Months. (graph)
• The Bank Of Japan's Liquidity Crisis In One Chart. (graph)

Business Insider:

• Goldman Sachs(GS) on Microsoft(MSFT): Sell now.
• The Obama administration just opened a new 'weaponization of finance' front.
• A Russian 'Doctor of Military Sciences' says Moscow should just nuke Yellowstone if tensions boil over.
• ANALYST: China's economy just touched the government's chilling 'red line'.
• TED CRUZ: Hillary Clinton's mass email deletion could be 'criminal conduct'.
• Chinese President Xi Jinping sounds a lot like Putin in his New Yorker profile.

Reuters:

• U.S. auto sales demand begins to thaw in March. U.S. consumer demand for new vehicles began to thaw in March, especially for luxury cars and big trucks, but not every carmaker participated in the uptick. With most manufacturers reporting by midday on Wednesday, sales were up 0.7 percent from a year ago, with the industry on pace to sell 1,548,000 vehicles. Analysts polled by Reuters had estimated that sales in March, which had one fewer selling day than the year-ago month, would be slightly below last year's 1,537,288.

MNI:

• Fed's Mester Says June-Sept. Appropriate for Liftoff. 1Q slowdown in U.S. economy should prove to be "transitory," shouldn't delay Fed's decision to lift rates, Cleveland Fed Pres. Loretta Mester said in an interview with MNI on Tuesday from Stone Mountain, Ga. Liftoff "would be appropriate" sometime in June-Sept, she said. FOMC could consider rate increases at "all meetings" this year. Doesn't see threat to financial stability from long period of low rates. 

Telegraph:

• Greece makes fresh reform bid as minister threatens international default. Interior minister says Athens will not respect deadline for IMF loan repayment as government makes another attempt to submit reforms-for-cash plan.