Tuesday Watch

Evening Headlines 
Bloomberg: 

• Soviet-Era Survival Kicks in for Ukrainians in Rebel Wasteland. Life inside Ukraine’s pro-Russian breakaway republics hinges on a shadow economy flourishing amid the cease-fires, embargoes and severed supply lines of a yearlong war. The shortages underscore the difficulties rebels and their backers in the Kremlin face in establishing a semblance of normality as they seek to cement their rule. They also highlight the mounting costs of the war as the government in Kiev starts debt-restructuring talks.  
• China’s Bond Market May Face Second Default. (video)
• Samsung Profit Beats Estimates With Demand Rising for Its Chips and Displays. Samsung Electronics Co. posted profit that beat analysts’ estimates as rising demand for memory chips and displays more than offset a slump in smartphones. Operating income fell 31 percent to 5.9 trillion won ($5.4 billion) in the three months ended March, the Suwon, South Korea-based company said in a filing Tuesday. That compares with the 5.5 trillion won average of 36 analyst estimates compiled by Bloomberg. The shares rose. 
• FedEx(FDX) Said to Be in Talks to Buy TNT to Expand Europe Deliveries. FedEx Corp. is in discussions to acquire financially struggling Dutch logistics company TNT Express NV to expand package deliveries in Europe, people familiar with the matter said. An agreement may be announced this week, said one of the people, who asked not to be identified because the details are private. Talks are continuing, and it’s still possible no accord may be reached, the people said. TNT’s market value as of April 2 was 3.29 billion euros ($3.6 billion).
• Dollar’s Drop Is Cue to Start Buying for World’s Best Forecaster. It’s time for investors who bailed on the dollar in the past few weeks to get back in, says the most-accurate currencies forecaster. The greenback has tumbled 4.4 percent versus the euro since touching a 12-year high last month amid speculation the Federal Reserve will delay raising interest rates, in part because the dollar’s strength is hurting U.S. economic growth. That concern is overblown, according to ING Groep NV, which topped Bloomberg’s rankings of foreign-exchange analysts for the second quarter in a row.   
• Aussie Within a Cent of Six-Year Low as Yield Falls on Rate Bets. Australia’s dollar traded within a cent of an almost six-year low amid speculation the central bank will cut its key interest rate to an unprecedented low on Tuesday. Three-year government bond yields dropped to a record as swaps traders priced in a better than 70 percent chance the Reserve Bank of Australia will reduce the overnight cash rate target by a quarter percentage point to 2 percent. Economists are less convinced: 17 of 30 surveyed by Bloomberg News predict that the central will keep rates unchanged. The Aussie rose Tuesday after a report showed that February retail sales climbed more than expected.
• Asia Stocks Follow U.S. Rally as Tech, Consumer Companies Gain. Asian stocks rose, following a rally in U.S. equities, after comments by a Federal Reserve official fueled optimism that policy makers in the world’s largest economy will hold interest rates lower for longer. The MSCI Asia Pacific Index advanced 0.2 percent to 149.02 as of 9:03 a.m. in Tokyo. 
• Gold Bust Means Less Mine Spending. The biggest gold bust in three decades is about to end a six-year expansion in mine output. From Russia to South Africa to North America, the biggest producers saw profits turn to losses as prices plunged, forcing them to cut spending on mines in half over three years. While bullion output will probably reach a record in 2015, the increase will be the smallest in at least six years, before production drops 1 percent in 2016, according to Barclays Plc.
• Fed’s Lockhart Favors July-Sept. Liftoff on Weak Jobs Report. Federal Reserve Bank of Atlanta President Dennis Lockhart said while recent economic weakness probably won’t persist, he favors pushing out the central bank’s first rate increase beyond the next two meetings. “I would probably be biased toward the July or September dates as opposed to June,” Lockhart, who votes on monetary policy this year, said in an interview Monday. “We will have more data and we will give the economy a little more time to prove out the thesis that I laid out, that the first quarter was anomalous again, just like a year ago.”
• United(UNH), Humana(HUM) Get Surprise Medicare Revenue Boost From U.S. Health insurers such as UnitedHealth Group Inc. and Humana Inc. will see revenue for commercial Medicare policies increase 1.25 percent next year, reversing an earlier U.S. government proposal that would have cut payments. The announcement was a surprise, since the U.S. has been reducing payments to insurers as it seeks to bring the cost of privately managed Medicare coverage in line with the government-run version of the program for the elderly and disabled. Payments are already falling 4 percent this year, and in February the U.S. proposed an 0.9 percent reduction for 2016.

Wall Street Journal:

• Israel, U.S. Lawmakers Press Case Against Iran Deal. Moves signal fresh domestic and international pressure on negotiations leading up to a summer deadline. Israeli officials and congressional Republicans on Monday set high bars with exacting conditions for a nuclear accord with Iran, signaling fresh domestic and international pressure on negotiations leading up to a summer deadline. Leading Arab governments, including Saudi Arabia, cautiously accepted the landmark diplomacy with Iran, in their most detailed reactions yet. But Saudi officials said they...
• Skin Cancer Removal With Miniaturized Radiation. Many patients prefer the new X-ray treatment to surgical procedures.
• Oil Shipments by Rail Take Slow Track. Safety concerns, low crude prices depress train traffic.

Fox News:

• Obama administration claims Iran deal a ‘forever agreement,’ despite expiration dates. (video) The Obama administration mounted a new argument Monday for why skeptical lawmakers and U.S. allies should back the preliminary nuclear agreement with Iran, calling it a “forever agreement” that would block all pathways to a nuclear weapon and set up tough international inspections with no end date.

MarketWatch.com:

• OPEC has lost its swagger — and may never get it back.
• 6 reasons to sell stocks now and go to cash. 
• Should you follow Mohamed El-Erian and move your investments to cash? The former PIMCO chief says central banks have pushed asset prices to ‘very elevated levels’

Zero Hedge:

• Hedge Fund Legend Julian Robertson Warns Of A "Complete Explosion" Unless Fed Contains "Boiling, Bubble" Market.
• John Hussman Explains Why QE Has Done Nothing To Help You.
• 28 Ways 'They' Rig The Market.
• Dismal Data Sparks Biggest Stock Ramp In 5 Months. (graph)
• The Warning Sign One Permabull Is Concerned About Is Now Flashing "Record" Red. (graph)
• Bonds Are Right! DoubleLine's Gundlach Warns Fed "Has Been Wrong For So Long... Offers No Value". (graph)
• Who Is Smarter: Credit Or Equity Investors? (graph)
• When Will Muslims Outnumber Christians? (graph)
• As US Seeks To "Contain" Iran Nuclear Plans, Russia & China Expand Theirs.

Business Insider:

• Vancouver's real estate bubble is getting bigger.
• Biotech company Ocular Therapeutix is imploding after announcing disappointing trial results.
• As Bill Gates promised, Microsoft(MSFT) will soon have its own Apple Pay alternative.
• Viacom(VIA/B) announces layoffs and a massive $785 million charge as part of a 'strategic realignment'.
• Here's how health apps could expose all sorts of new information about you.
• A Carson Block short has been frozen by the Chinese government, and the stock hasn't traded at all today.
• Greece puts a figure on World War II reparation claims from Germany. 
• THE DRONES REPORT: Market forecasts, regulatory barriers, top vendors, and leading commercial applications.

Telegraph: 

• Markets will be caught unaware by a ‘Grexident’. (graph) Fears investors are under-pricing the costs of an accidental Greek exit from the eurozone as Athens remains on a collision course with creditors.

Economic Information Daily:

• China LGFV Private-Public Fund Raising May Be Risky. Some local govt funding vehicles are improperly raising funds under the name of public-private partnership which may bring risks, citing people familiar with the matter. LGFVs have been banned participating in PPP projects as private companies, report says. Some LGFVs have participated in PPP projects through joint ventures, report says, citing people from LGFVs.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are +.25% to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 110.0 unch.

• Asia Pacific Sovereign CDS Index 58.25 -.26 basis point.

• S&P 500 futures -.11%.

• NASDAQ 100 futures -.07%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (GBX)/1.20
• (ISCA)/.29
• (SCHN)/-.10
• (PLAY)/.28
• (TISI)/.11

Economic Releases
10:00 am EST

• The IBD/TIPP Economic Optimism Index for April is estimated to fall to 49.0 versus 49.1 in March.
• JOLTS Job Openings for February are estimated to rise to 5003 versus 4998 in January.
  

3:00 pm EST

• Consumer Credit for February is estimated to rise to $12.250B versus $11.562B in January.
  

Upcoming Splits

• (SBUX) 2-for-1

Other Potential Market Movers

• The Fed's Kocherlakota speaking, Eurozone Services PMI, Eurozone PPI, $24B 3-Year Treasury auction and the weekly US retail sales reports could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by technology 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 Surging into Final Hour on Central Bank Hopes, Euro/Oil Bounce, Short-Covering, Metals & Mining/Energy Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Light

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 14.46 -1.43%

• Euro/Yen Carry Return Index 136.82 +.33%

• Emerging Markets Currency Volatility(VXY) 9.85 -2.48%

• S&P 500 Implied Correlation 63.07 -1.65%

• ISE Sentiment Index 112.0 +64.71%

• Total Put/Call .88 -21.43%

• NYSE Arms .61 +18.03% 

Credit Investor Angst:

• North American Investment Grade CDS Index 61.41 -2.37%

• America Energy Sector High-Yield CDS Index 1,112.0 -.54%

• European Financial Sector CDS Index 68.43 n/a

• Western Europe Sovereign Debt CDS Index 22.34 -.53%

• Asia Pacific Sovereign Debt CDS Index 58.21 -.63%

• Emerging Market CDS Index 298.57 -4.0%
  

• iBoxx Offshore RMB China Corporates High Yield Index 114.67 +.06%

• 2-Year Swap Spread 26.25 unch.

• TED Spread 26.25 +1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -22.75 +.5 basis point

Economic Gauges:

• 3-Month T-Bill Yield .01% unch.

• Yield Curve 141.0 +4.0 basis points

• China Import Iron Ore Spot $47.08/Metric Tonne n/a

• Citi US Economic Surprise Index -56.5 -9.2 points

• Citi Eurozone Economic Surprise Index 63.70 +.6 point

• Citi Emerging Markets Economic Surprise Index 4.5 -.4 point

• 10-Year TIPS Spread 1.85 +4.0 basis points

Overseas Futures:

• Nikkei Futures: Indicating +219 open in Japan

• DAX Futures: Indicating +12 open in Germany

Portfolio: 

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value +.34%

Sector Underperformers:

• 1) Coal -.64% 2) Homebuilders -.52% 3) Airlines -.47%

Stocks Falling on Unusual Volume:

• CBMG, DM, OVAS, MTB, MYRG, USAK, FIX, ABTL, ALTR, RCPT, MSI, GCI, HCHC, YRCW, APOL, KMX, YDLE, SPB, SSP, NNI, BIDU, LNN, SAFM, UAL and AGCO
  

Stocks With Unusual Put Option Activity:

• 1) COP 2) HYG 3) EMR 4) BBBY 5) EWW
  

Stocks With Most Negative News Mentions:

• 1) SKYW 2) JNJ 3) CNX 4) AGCO 5) GRMN
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Growth +.52%

Sector Outperformers:

• 1) Gold & Silver +3.33% 2) Oil Service +1.55% 3) Utilities +1.41%
  

Stocks Rising on Unusual Volume:

• QURE, EPAM, CWCO, TSLA, CLDN, CHMT, MAT, MTDR and EVEP

Stocks With Unusual Call Option Activity:

• 1) SLCA 2) MTG 3) WWAV 4) GRPN 5) MAT
  

Stocks With Most Positive News Mentions:

• 1) MAT 2) LL 3) VMW 4) L 5) VTR
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Monday Watch

Weekend Headlines 
Bloomberg: 

• Netanyahu: More Sanctions Would Get Better Iran Nuke Deal. Israeli Prime Minister Benjamin Netanyahu said the U.S. and world powers should increase sanctions on Iran to negotiate a better deal on Tehran’s nuclear program, advice quickly rejected by the White House. Netanyahu used appearances on three U.S. Sunday television talk shows to drive home his opposition to what he called a bad deal with Iran that would leave the Persian Gulf nation able to produce “many nuclear bombs” within years. Unless the agreement is changed, he said, “This deal is a dream deal for Iran and a nightmare deal for the world.”

• Ukrainian Truce Challenged as Car Blasts Kill Government Troops. Six Ukrainian soldiers were killed and two wounded in a pair of car explosions on Sunday after President Petro Poroshenko vowed to push for international peacekeepers to help secure a truce in the rebel-controlled east. “If peacekeepers help to come to a political resolution and reintegration of these occupied territories into Ukraine, we have to go this way,” Poroshenko said in an interview with Channel 5 TV on Saturday, according to a transcript from his office. Foreign ministers of Russia, Ukraine, Germany and France may meet soon to discuss details and timing of the proposed peacekeeping mission, he said.

• Russia Said to Plan No Aid to Greece, May Ease Curbs on Food. Russia isn’t considering any financial assistance for Greece as Prime Minister Alexis Tsipras plans to visit Moscow next week, according to three Russian government officials with knowledge of the discussions. Even so, Russia is ready to discuss easing restrictions on Greek food products, which were imposed as as part of the retaliation for European Union sanctions levied over the conflict in Ukraine, said two of the three officials, who asked not to be identified because the information is confidential.

• China Approves 30 New IPOs for April. (video)

• Saudis Raise Crude Oil Pricing to Asia on Signs of Demand Growth. Saudi Arabia, the world’s largest crude exporter, raised pricing for all May sales to Asia, after the country’s oil minister said global demand was improving. State-owned Saudi Arabian Oil Co. narrowed the discount for its Arab Light grade to Asia to the least since December, setting the crude at a discount of 60 cents a barrel to the regional benchmark, the company said in an e-mailed statement. The May pricing is 30 cents higher than in April. The company known as Saudi Aramco also increased the pricing of the other four grades it ships to Asia.

Wall Street Journal:

• As Tensions With West Rise, Russia Increasingly Rattles Nuclear Saber. Bellicose rhetoric has soared since start of Ukraine conflict to rival Cold War levels. It wasn’t an ordinary Valentine’s Day for the students from across Russia arriving at a military institute outside Moscow. Their date was with a Topol, the intercontinental ballistic missile at the heart of the country’s nuclear arsenal....

• Political Battle Ramps Up Over Iran. President Obama must overcome skeptical Republicans as well as some Democrats in Congress. President Barack Obama’s bet on a diplomatic agreement to deter Iran from acquiring a nuclear weapon faces an immediate test at home, where he must overcome the politics of skeptical Republicans as well as some Democrats in Congress. The political struggle—part of the most complex battle of Mr. Obama’s presidency...

• California’s Green Drought. How bad policies are compounding the state’s water shortage.

Fox News:

• Netanyahu urges US to seek better deal with Iran over its nuclear program. Israeli Prime Minister Benjamin Netanyahu urged the U.S. to seek a better deal with Iran Sunday over its nuclear program and said that he’s "not trying to kill any deal,” just a “bad deal.” “It could be a historic bad deal because it leaves the preeminent terrorist state of our time a vast nuclear infrastructure,” Netanyahu said on NBC’s “Meet the Press.” “Thousands of centrifuges will be left, not a singular facility, including underground facilities will be shut down.” Netanyahu added that the deal leaves Iran with “the capacity to produce material for many nuclear bombs.” Netanyahu also warned on ABC’s “This Week” that the deal could “spark a nuclear arms race among the Sunni countries in the middle east.”

CNBC:

• Jobs shocker may show that economy is in real trouble. (video) In the wake of March's tepid jobs creation, it may be time to take a harder look at this soft patch.

Zero Hedge:

• March Payrolls Huge Miss: Only 126,000 Jobs Added, Worst Since December 2013. (graph)

• No Country For Young Workers: Only Americans 55 And Older Found Jobs In March. (graph)

• Americans Not In The Labor Force Soar To Record 93.2 Million As Participation Rate Drops To February 1978 Levels. (graph)

• Dow Futures Close Down 200; S&P Ends Week Negative Year-To-Date.

• What If An Oil Rebound Never Comes?

• Wien's World: Another Billionaire Detached From Society. (graph)

• Ahoy! Oil Tankers Form Four-Mile Line In Persian Gulf As Iran Talks Stoke Supply Glut Fears.

• Here We Go: Goldman Declares That "The Right Policy Would Be To Put Hikes On Hold For Now".

• Europe's Currency Manipulation.

• Is The Stage Set For A High Yield Meltdown? (graph)

• Japan Admits Fabricating 2014 Wage Growth Data. (graph)

• How Liquidity Drives The US Stock Market. (graph)

• German Bank Sets Precedent: Sues The ECB.

• Arming for Riots Across America? Homeland Stockpiling “Less Lethal Specialty Munitions”.

• Meet The New Recession Cycle - It's Triggered By Bursting Bubbles, Not Surging Inflation. (graph)

• Germany Generously Offers To Freeze The Bank Accounts Of Wealthy Greeks.

• Peak Keynesian Faith, Hope, & Insanity. (graph)

• Treasurys Held In Custody At The Fed Jump By Record $63 Billion In One Week. (graph)

• Subprime Nation: Risky Loans Are In The "Driver's" Seat. (graph)

• 5 Things To Ponder: Weather, Recession, Liquidation, Gluts, & Enigmas.

• Bubble Confirmed: From Sock Puppets To Action Heroes.

• Saudi Arabia's Kingdom Tower - The Pointless Hubris Of A Decadent Tyranny. (pic)

• If Anyone Doubts We Are In A Stock Market Bubble, Show Them This. (graph)

• Cypriot President Throws Greeks Under The Bus: "Planning To Deal With Grexit". (graph)

• Facing A Housing Hard-Landing, Chinese Propaganda Goes All-In: "Set Positive Agenda; Boost Market Confidence". (graph)

• Running Out Of Accounting Gimmicks: EPS Addbacks Surge Most Since Lehman. (graph)

• Saudi Stocks Are Plunging Following Rejection Of Russian Embargo Proposal; Death Toll Mounts.

• Here Comes Solyndra 2.0: Obama To Hire 75,000 Solar Workers.

Business Insider:

• 4 reasons Nike's(NKE) business will dominate.

• Russian soldiers have given up pretending they are not fighting in Ukraine.

• China targets the dollar. Now even Israel – joined at the hip to the US though the relationship has run into rough waters – has applied to become a founding member of the China-led Asian Infrastructure Investment Bank. Despite US gyrations to keep them from it, over 40 countries, including bosom buddies Australia, Britain, and Germany, have signed up to join. Japan is still wavering politely.

• Photos of a ruined Iraqi city prove that liberation from ISIS comes at a heavy price.

• Ukraine's 'frozen conflict' has gone on for one year.

• The US and Iran are closer in Iraq than people realize — and things are getting ugly. The Obama administration is no longer hiding the fact that the US is serving as the air force for Iran-backed Shia militias fighting ISIS in Iraq. As Iraq forces connect the US with Iran, the Obama administration is placed squarely on the Shia side of the emerging and increasingly brutal sectarian war.

• Iraqi prime minister: Foreigners are taking over ISIS as the terror army keeps growing.

• The very first human trial of a new approach to cancer treatment has scientists excited.

• 70% of people on anti-depressants aren't clinically depressed.

• 6% of China's newest stock market investors can't read.

• Israeli expert: There are 6 gaping areas of disagreement in the US-Iran nuclear talks.

• AT&T(T) will charge customers to keep their browsing data private.

• Warren Buffett's mobile home empire preys on the poor.

• Former top CIA official: Here's Iran's grand strategy.

• Greek officials reportedly have a plan that would 'cause a furor in the markets'.

• An Iran deal could make the US look weak and embolden rogue regimes.

• ROLLING STONE: 'We would like to apologize to our readers and to all of those who were damaged by our story'.

Reuters:

• Japan's wary manufacturers resist Abe's urge to splurge. Even as output recovers, Japanese companies remain cautious about new capital investment in factories and equipment. The trend is especially pronounced for smaller firms down the supply chain.

Financial Times:

• Frustrated officials want Greek premier to ditch Syriza far left. Eurozone authorities’ frustration with Greece has grown so intense that a change in the current Athens government’s make-up, however far-fetched, has become a frequent topic of conversation on the sidelines of bailout talks. Many officials — up to and including some eurozone finance ministers — have suggested privately that only a decision by Alexis Tsipras, Greek prime minister, to jettison the far left of his governing Syriza party can make a bailout agreement possible.

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 110.0 -.5 basis point.

• Asia Pacific Sovereign CDS Index 58.50 -1.0 basis point.

• S&P 500 futures -.68%.

• NASDAQ 100 futures -.66%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (SHLM)/.39

Economic Releases
9:45 am EST

• The Final Markit US Services PMI for March is estimated at 58.6 versus a prior estimate of 58.6.

10:00 am EST

• The ISM Non-Manufacturing Composite for March is estimated to fall to 56.5 versus 56.9 in February.

Upcoming Splits

• (SBUX) 2-for-1

Other Potential Market Movers

• The RBA rate decision, Labor Market Conditions Index for March and Medicare Advantage rate announcements could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by consumer and technology shares in the region. I expect US stocks to open lower and to maintain losses into the afternoon. The Portfolio is 50% net long heading into the week.

Weekly Outlook

Wall St. Week Ahead by Reuters.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly lower on Fed rate hike worries, global growth fears, European/Emerging Markets/US High-Yield debt angst, technical selling, yen strength and earnings concerns. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.