Morning Market Internals

NYSE Composite Index:

• Volume 11.5% Above 100-day average

• 0 Sectors Rising, 10 Sectors Declining

• 14.4% of Issues Advancing, 82.8% Declining

• 17 New 52-Week Highs, 11 New Lows

• 59.9% of Issues Above 200-day Moving Average (yesterday's close)

• Average 14-Day RSI 47.7 (yesterday's close)

• TRIN/Arms .81

Friday Watch

Evening Headlines 
Bloomberg: 

• Greece Will Have to Exit the Euro Zone: Tchir. (video) 
• Kaisa Keeps Creditors Guessing as China Dollar Default Looms. Kaisa Group Holdings Ltd. has until Monday to find $52 million for missed payments on two of its dollar bonds as it seeks to avoid default.
• Nielsen: Why I'm Worried About Emerging Markets. (video)
• Most Asian Stocks Fall as Regional Gauge Poised for Weekly Gain. Most Asian stocks fell after the regional benchmark index closed Thursday at a seven-year high. Japanese shares slid to pare a third weekly advance. Two shares dropped for each that rose on the dollar-denominated MSCI Asia Pacific Index, which was little changed at 154.44 as of 9:05 a.m. in Tokyo. The measure closed at its highest level since January 2008 on Thursday, and is poised to end the week 1.4 percent higher. Japan’s Topix index lost 0.4 percent and Australia’s S&P/ASX 200 Index slid 0.1 percent.
• Schlumberger(SLB) Cuts More Jobs as Oil Industry Braces for Next Wave. Schlumberger Ltd., the world’s largest oilfield services provider, will eliminate an additional 11,000 positions in a sign the industry will undergo another round of job cuts as a result of tumbling crude prices. The latest announced reductions bring the company’s total to 20,000, making its workforce about 15 percent smaller than it was during the third quarter of 2014. Schlumberger had announced plans in January to eliminate 9,000 positions, in what was then the single largest cut in the industry.
• Virtu’s Shareholders Said to Include Industry Critic T. Rowe. T. Rowe Price Group Inc., one of the biggest critics of high-frequency trading, now finds itself in a seemingly surprising spot: It acquired shares of HFT firm Virtu Financial Inc., a key player in reshaping how everything from stocks to currencies are bought and sold. The money manager purchased shares in Virtu’s initial public offering Wednesday, according to people familiar with the matter who asked not to be identified because the information is private.

Wall Street Journal:

• U.S. Says Ramadi at Risk of Falling to Islamic State. Anbar residents flee provincial capital as Islamist forces advance. U.S. defense officials said a provincial capital in Iraq could soon fall to Islamic State, while America’s top military officer sought to minimize the strategic importance of the city. At a Pentagon news conference, Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, suggested that maintaining control of Ramadi, the capital of Anbar province, isn’t central to the U.S. and Iraqi aims of defeating Islamic State forces.
• Fed Shies Away From June Rate Hike. Weak economic data causing some officials to rethink timing of first increase in more than 6 years. A patch of soft economic data has created uncertainty inside the Federal Reserve about when to start raising short-term interest rates, dimming the chances of a move as early as June. Recent reports showed a slowdown in U.S. hiring in March, tepid growth in consumer spending at retail stores, a big drop in industrial output and softer-than-expected home.
• How Citadel and the Fed Crossed Paths Before the Hedge Fund Hired Ben Bernanke. The news that former Federal Reserve Chairman Ben Bernanke will become a senior adviser to Citadel, the Chicago-based hedge fund, has renewed attention on the tendency of former regulators and economic policy makers to move to financial institutions once leaving office.
• The Nuclear Deal With Iran Needs Work—Lots of It by James A. Baker III. If Iran demands the removal of all sanctions once a final deal is signed, there shouldn’t be a final agreement. Within days of the April 2 announcement of the tentative agreement to curb Iran’s nuclear-weapons program, it was apparent that there are substantial misunderstandings about a deal the administration has hailed as “an historic understanding.” Clearly, much work must be done if there is to be a final agreement by the June 30 deadline.

Fox News: 

• Nothing sacred: ISIS destroys Christian grave sites in Mosul. Even Iraq's dead Christians aren’t safe from ISIS. The Islamic State's campaign of terror across the war-torn nation, which has already seen countless beheadings, destruction of priceless art and religious artifacts and insistence that Christians submit or die, now includes mass desecration of graves. Photos of the black-clad, extremist ghouls smashing headstones in cemeteries in the key northern city of Mosul were posted Thursday online under the title "Leveling Graves and Erasing Pagan Symbols."

Zero Hedge:

• A World Of Bubbles. (graph)
• If QE Is So Great, Why Stop Printing Now?
• So You Want Bridgewater To Manage Your Money? There Is One Small Condition.
• 3 Things: Retail Sales, Real Unemployment, Optimism. (graph)
• Sex-Partying, Teen-Hooker-Funding DEA Agents Get Slap On Wrist, None Fired.
• Fed-Speaker Confusion Sparks Dollar Slump, Stocks Pump'n'Dump. (graph)
• Conspiracy Theorists, Bloggers Compared To ISIS During Congressional Hearing.
• Signs That 'The Elites' Are Feverishly Preparing For Something Big.
• Hong Kong Insanity Launches Exchange Operator's Shares Into Orbit. (graph)

Business Insider:

• Slack CEO: 'It's a wonderful, crazy environment to raise capital'.
• Nearly half the drones approved to fly in US airspace are from this Chinese company.
• Germany's finance minister is worried about China's debt and shadow banking.

Reuters:

• AmEx revenue misses on strong dollar, loss of co-branded tie-ups. American Express Co, the world's largest credit card issuer, reported quarterly revenue that fell short of analysts' estimates, hurt by a stronger dollar and the loss of several co-branded tie-ups. AmEx's shares fell 1.4 percent to $79.80 after the bell on Thursday.

Telegraph: 

• Grexit dangers mount as Greece's Yanis Varoufakis warns of 'liquidity asphyxiation'. The Greek finance minister said his country would not continue deception of 'Ponzi austerity' even if this means a showdown with creditors.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are -.75% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 104.0 -1.75 basis points.

• Asia Pacific Sovereign CDS Index 59.25 unch.

• S&P 500 futures -.07%.

• NASDAQ 100 futures -.06%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CMA)/.73
• (GE)/.30
• (HON)/1.39
• (RAI)/.80
• (STX)/1.04

Economic Releases
8:30 am EST

• The CPI for March is estimated to rise +.3% versus a +.2% gain in February.
• The CPI Ex Food & Energy for March is estimated to rise +.2% versus a +.2% gain in February.

10:00 am EST

• Preliminary Univ. of Mich. Consumer Sentiment for April is estimated to rise to 94.0 versus 93.0 in March.
• The Leading Index for March is estimated to rise +.3% versus a +.2% gain in February. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The UK Jobless Claims report, (THOR) investor meeting and (SYMC) financial analyst day could also impact trading today.

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

Stocks Slightly Lower into Final Hour on Surging Eurozone Debt Angst, Global Growth Fears, Yen Strength, Homebuilding/Metals & Mining Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Slightly Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 12.6 -1.87%

• Euro/Yen Carry Return Index 134.04 +.80%

• Emerging Markets Currency Volatility(VXY) 9.77 unch.

• S&P 500 Implied Correlation 67.18 +1.59%

• ISE Sentiment Index 174.0 +53.98%

• Total Put/Call .84 +7.69%

• NYSE Arms 1.06 +16.16% 

Credit Investor Angst:

• North American Investment Grade CDS Index 61.44 +1.48%

• America Energy Sector High-Yield CDS Index 1,111.0 -1.77%

• European Financial Sector CDS Index 70.78 +8.32%

• Western Europe Sovereign Debt CDS Index 24.71 +7.27%

• Asia Pacific Sovereign Debt CDS Index 59.21 +.05%

• Emerging Market CDS Index 297.94 -.01%
  

• iBoxx Offshore RMB China Corporates High Yield Index 116.23 +.06%

• 2-Year Swap Spread 26.5 unch.

• TED Spread 26.50 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -23.25 unch.

Economic Gauges:

• 3-Month T-Bill Yield .01% unch.

• Yield Curve 140.0 +1.0 basis point

• China Import Iron Ore Spot $49.78/Metric Tonne -1.09%

• Citi US Economic Surprise Index -56.70 -7.7 points

• Citi Eurozone Economic Surprise Index 54.40 -.9 point

• Citi Emerging Markets Economic Surprise Index -13.6 -.4 point

• 10-Year TIPS Spread 1.85 +2.0 basis points

Overseas Futures:

• Nikkei Futures: Indicating -55 open in Japan

• DAX Futures: Indicating +7 open in Germany

Portfolio: 

• Slightly Lower: On losses in my tech sector longs and emerging markets shorts

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

• Market Exposure: Moved to 50% Net Long

Today's Headlines

Bloomberg:    

• Lagarde Won’t Give Support to Greece Missing IMF Payment. (video) International Monetary Fund Managing Director Christine Lagarde warned that she wouldn’t let Greece skip a debt payment to the lender, shutting down a potential avenue to buy the Greek government some financial leeway. “We never had an advanced economy actually asking for that kind of thing, delayed payment,” Lagarde said in an interview Thursday in Washington with Bloomberg Television. “And I very much hope that this is not the case with Greece. I would certainly, for myself, not support it.”
• Greek Pressure Builds as Bond Yields Climb to Highest Since 2012. (video) Greece’s bonds tumbled, pushing 10-year yields to the highest in more than two years, as pressure mounted on the southern European nation to secure funding or risk a possible default. The price of Greece’s three-year notes dropped the most since February and Greek corporate bonds also slumped. Credit-default swaps suggested there was a 79 percent chance of the country being unable to repay its debt in five years.
• Putin Says People in Rebel Ukraine Areas Will Decide Their Fate. The future of rebel-held areas of eastern Ukraine will be decided by the people who live there, Russian President Vladimir Putin said. A peace agreement negotiated in Minsk, Belarus, to end the yearlong conflict offers a chance to rebuild relations between the government in Kiev and pro-Russian separatists in Ukraine’s Donbas region, Putin said. “In the end, of course, the right to have the final word on who, how and with whom they want to live, under what conditions, should belong to the people living on those territories,” Putin said at his annual televised call-in program in Moscow on Thursday. “To a great extent, this will depend on the flexibility and the political wisdom of the Kiev leadership.”
• ECB Rues Limits of Stimulus as IMF Gauges Rust in Economy. As European Central Bank policy makers vaunt the success of their stimulus measures so far, they remain as aware as ever of its limits. Fresh from their latest policy meeting in Frankfurt on Wednesday, euro-zone officials are now headed for Washington, where the International Monetary Fund singled out the currency bloc in an assessment last week on the depletion of growth potential across the world. The IMF and the ECB concur that decay from two recessions since 2008, one debt crisis and the lack of reforms to repair the damage risk acting as a brake on inflation that monetary stimulus can’t overcome.
• American-Made Junk CLOs Now Being Served in Yield-Starved Japan. Bankers have a proposition for Japanese investors: Why don’t you put your money into bundles of junk-rated U.S. loans? It’ll be a classic win-win, as the thinking goes. For Japanese institutions tired of decade after decade of paltry returns on Japanese government debt, they’ll earn higher yields; and for the riskiest U.S. companies, they’ll get access to a cheaper source of financing. What could possibly go wrong?
• European Stocks Fall as Germany, Italy, Portugal Lead Declines. European stocks fell the most in three weeks, with German, Italian and Portuguese gauges leading declines. The Stoxx Europe 600 Index slid 0.8 percent to 410.93 at the close of trading in London.
• Saudi Arabia Adds Half a Bakken to Oil Market in a Month. Saudi Arabia boosted crude production to the highest in three decades in March, with a surge equal to half the daily output of the Bakken formation in North Dakota. The kingdom boosted daily crude output by 658,800 barrels in March to an average of 10.294 million, according to data the country communicated to the Organization of Petroleum Exporting Countries’ secretariat in Vienna. The Bakken formation, among the fastest-growing shale oil regions in the U.S., pumped 1.1 million barrels a day in February, according to data from the North Dakota Industrial Commission.
• Bets on September Fed rate hike surge in latest economist survey. Most economists now expect the Federal Reserve's first rate hike in almost a decade to come at its late-summer meeting, in a ballroom-worthy swing from their outlook last month. The share of economists projecting the Fed will wait until September more than doubled to 71 percent in the latest Bloomberg survey, from 32 percent last month. Team June shrank to 12 percent from 45 percent in March. The camp calling for a July rate hike fell to 5 percent from 12 percent. 
• Etsy Doubles in Debut, Leading Gains Among Trio of New Listings. The U.S. IPO market got a shot in the arm Thursday after a high-frequency trader, a handicrafts marketplace, and a party-supply retailer all jumped in their trading debuts. Etsy Inc., the website for artisans, logged the biggest gain, surging 94 percent in its first trade after it raised $267 million in its initial public offering. Virtu Financial Inc. gained 21 percent as did retailer Party City Holdco Inc.

ZeroHedge:

• Meanwhile, In Greece — Live Feed. (video)
• Spot The Common Theme: Prostitution Scandals, Kickbacks And Money Laundering.
• Citadel Head Bond Trader (And TBAC Member) "Leaves" After Losing $1 Billion.
• Contagion Arrives: European Peripheral Bond Risk Soars. (graph)
• Virtu Explains Why It Lost Money On Just One Trading Day In 6 Years. (graph)
• 175,846,629,768 Reasons Why Ben Bernanke Joined Citadel. (graph)
• Fed's Fischer Says Fed Can't Be "On Hold For Ever", Spooks Bonds & Bullion. (graph)
• Philly Fed Limps Higher After "Weather" Crash, New Orders Tumble To 2 Year Lows. (graph)
• Housing Starts And Permits Miss Badly As "Warm Weather" Rebound Fails To Materialize. (graph)
• Goldman Reports Best Quarter In Four Years, "Average" Employee Paid $381,948. (graph)

Business Insider:

• Corporate bankruptcies are on the rise in America.
• The strongest BRIC is starting to crumble.
• It seems Hillary Clinton has already flip-flopped on 2 major issues. 

Reuters:

• TSMC sees Q2 sales dip after key client loses business. Taiwan Semiconductor Manufacturing Co Ltd (TSMC) (2330.TW) (TSM.N) on Thursday said revenue is likely to fall in the second quarter from the first, due in part to the loss of business at one of its key customers. The world's largest contract chip manufacturer expects a decline of 7 percent to 8 percent in April-June. In the three months prior, revenue was flat on quarter but grew 50 percent on year, pushing net profit beyond analyst estimates.

Handelsblatt:

• ECB QE Crowding Insurers Out, Munich Re CEO Says. Insurers, pension funds and other investors are being crowded out of the market by the ECB, Munich Re CEO Nikolaus von Bomhard says in an interview. Risk of collateral damage from ECB spending program outweighs possible positive effects, he said.

Bild:

• Merkel Ally Urges 'Open Discussion' on Greek Euro Exit. Euro region govts should have an "open discussion about a Plan B for Greece, be it Grexit, the introduction of a parallel currency or another way," Kurt Lauk, head of the economic council of Chancellor Angela Merkel's CDU party, says.

Bear Radar

Style Underperformer:

• Small-Cap Value -.32%

Sector Underperformers:

• 1) Homebuilders -2.32% 2) Hospitals -1.83% 3) Steel -1.22%

Stocks Falling on Unusual Volume:

• IMDZ, NHTC, CARB, PCRX, SNDK, HTWR, MTDR, ASML, CCOI, NVDQ, TEVA, WSO, GS, GLF, MHK, SHW, DXGE, PACW, AMAT, RDC, PSIX, DOOR, WBS, CLVS, MFRM and CCOI

Stocks With Unusual Put Option Activity:

• 1) WFM 2) XLF 3) HYG 4) SNDK 5) OCN
  

Stocks With Most Negative News Mentions:

• 1) SNDK 2) ESV 3) TIF 4) PBR 5) YELP
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Mid-Cap Growth -.12%

Sector Outperformers:

• 1) HMOs +2.43% 2) Tobacco +1.33% 3) Airlines +1.18%
  

Stocks Rising on Unusual Volume:

• INVE, TZOO, NFLX, PNRA, PM, KEP, ADXS, AGIO, SHAK, RCPT and FCS

Stocks With Unusual Call Option Activity:

• 1) HZNP 2) PM 3) MCP 4) FMSA 5) AVP
  

Stocks With Most Positive News Mentions:

• 1) PNRA 2) NFLX 3) COH 4) UNH 5) CCL
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume