Today's Headlines

Bloomberg:  

• Tsipras to Seize Public-Sector Funds to Keep Greece Afloat. Running out of options to keep his country afloat, Greek Prime Minister Alexis Tsipras ordered local governments to move their funds to the central bank. With negotiations over bailout aid deadlocked, Tsipras needs the cash for salaries, pensions and a repayment to the International Monetary Fund. Greek bonds fell after the move, pushing three-year yields to the highest since the nation’s debt restructuring in 2012. The order was questioned by local officials and slammed by the leading opposition party. 

• Greek Government Is Running Out of Options: S&P's Kraemer. (video)

• Grexit Fears Cause GDP Forecasts to Plummet. Economists have severely cut their forecasts for core Greek economic indicators. That reflects growing concern that the debt burden of the southern European country may force an exit from the euro as its creditors grow frustrated with the lack of a clear vision from Syriza party leader and Prime Minister Alexis Tsipras, and the absence of a compromise on bailout terms.

• BMW Cutting Production, Prices in China to Meet ‘New Normal’. BMW AG has reduced prices on some models in China and will cut production there to prevent a buildup of unsold cars in a sign that luxury demand in the world’s largest auto market is softening. BMW has scaled back manufacturing in the country to lower supply for its distributors and will cut output again in the second quarter, said Karsten Engel, BMW’s China chief, who declined to give specifics. 
• Putin Invites Saudi King to Russia as They Discuss Yemen Crisis.  Russian President Vladimir Putin invited Saudi King Salman Bin Abdulaziz to make the first-ever visit to his country by a leader of the Gulf nation during a phone call in which they discussed the conflict in Yemen. 

• Emerging Stocks Drop on China Curbs as Russia Stems Ruble Rally. Emerging-market stocks fell for a second day as regulatory efforts to curb speculative trading in China dragged the nation’s shares from a 2008 high. The ruble slid as the central bank raised the cost of borrowing dollars. China CNR Corp. and CSR Corp. plunged from records in Hong Kong and the Shanghai Composite Index declined the most in seven weeks. The ruble tumbled 2.6 percent against the dollar. The rupee posted its biggest drop this year as India’s trade deficit widened. Poland’s zloty rallied past 4 per euro after better-than-expected industrial output data. The MSCI Emerging Markets Index retreated 0.9 percent to 1,032.85 by 11:45 a.m. in New York.

• Europe Stocks Rebound From Weekly Drop as Miners Rally on China. European stocks rebounded from the year’s biggest weekly decline, with commodity shares leading gains after China’s central bank boosted stimulus measures. The Stoxx Europe 600 Index added 0.8 percent to 406.87 at the close of trading. 

• Russia Seen Maintaining Oil Output Even After Collapse in Prices. Russia will maintain oil output for at least two years as increased use of technology and tax breaks will counter falling prices, Oxford University researchers said. “Russian production may stay flat for the next few years and could even rise towards the end of the decade,” James Henderson, an analyst at the university’s Oxford Institute for Energy Studies, wrote in a report. That assumes fields that have yet to begin output are delayed for two years on spending cuts.

• The U.S. Economy Keeps Disappointing. (graph) U.S. indicators are continuing to undershoot analysts’ estimates, according to the Bloomberg Economic Surprise Index, which made fresh lows late last week.

• Mom-and-Pop Traders Went on a Buying Binge During Friday's Market Plunge. Apple Inc., Netflix Inc. and Facebook Inc. were involved in the most orders at Fidelity, with buys outnumbering sells by 2.6, 1.1 and 2.4 to 1 respectively, according to Colas. Retail investors were net buyers of the top 30 securities on the list and sellers of just two individual companies, Microsoft Corp. and Schlumberger Ltd.

ZeroHedge: 

• Did Greece Just Launch Capital Controls: "Mandatory Cash Transfer" Decreed Due To "Extremely Urgent Need".

• Fed Study Finds Fed Insolvency "Would Not Create Serious Problems".

• Multibillion Hedge Fund Manager: "Ultimately QE Will Fail; US And China Might Enter Recession At The Same Time".

• These Are The Biggest "Pain Trades" Right Now. (table)

• Oil Slips On Saudi Record Production Promise, Specs Pile In But Blackstone Skeptical.

• Chinese Developer Kaisa Officially Defaults, Restructures Debt. (graph)

Business Insider:

• US warships are reportedly heading to Yemeni waters to intercept an Iranian arms shipment.

• The risk of a market shock causing spillovers is worse today than it was before the financial crisis.

• China may have just cleared the way for a 'black swan' event.

New York Post:

• 426 Children Killed in Syria Gas Attack: Report. The devastating gas attack on Syrian civilians that took place in August 2013 killed more than 1,400 people — including 426 children, it was revealed Sunday.

Reuters:

• Exclusive - Naimi says Saudi oil production near record high in April. Oil Minister Ali al-Naimi says Saudi Arabia is producing near record levels of crude in April, underscoring the kingdom's willingness to defend market share at a time when oil markets have staged a fragile recovery. There are worries that growing production from Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries (OPEC) could snuff out a recent rebound in oil prices, particularly with economic growth in key oil consumer China the slowest in six years in the first quarter.

Financial Times: 

• Jaguar Land Rover says it cannot act on ‘copycat’ claim. Jaguar Land Rover cannot take any legal action in its dispute with an alleged Chinese “copycat”, the UK carmaker’s chief executive admitted on Monday — but he warned that a “copy-paste” approach to production would harm China’s industrial image.

Bear Radar

Style Underperformer:

• Mid-Cap Value +.55%

Sector Underperformers:

• 1) Homebuilders -.91% 2) Agriculture -.64% 3) Paper -.22%

Stocks Falling on Unusual Volume:

• FARO, ICON, RCL, NVIV, CZR, NHTC, SJT, TRIL, LII, WUBA, UNFI, JUNO, CALA, BIN, USLV, BSET, MYRG, KITE, CUK, CE, NFLX, UBSH, INFY, LGND, ONCE and CLDN

Stocks With Unusual Put Option Activity:

• 1) OIL 2) GGP 3) RCL 4) HOG 5) EWG
  

Stocks With Most Negative News Mentions:

• 1) FARO 2) KORS 3) LULU 4) RCL 5) AMD
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Value +1.04%

Sector Outperformers:

• 1) Road & Rail +2.23% 2) Gaming +2.15% 3) Utilities +1.86%
  

Stocks Rising on Unusual Volume:

• VIMC, HAS, CHKP, RDN, CSX, TASR, CHL, ROVI and CSX

Stocks With Unusual Call Option Activity:

• 1) CSX 2) VZ 3) SE 4) RCL 5) OVAS
  

Stocks With Most Positive News Mentions:

• 1) QCOM 2) TMO 3) ISIL 4) HAL 5) MS
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Morning Market Internals

NYSE Composite Index:

• Volume Running 12.1% Below 100-day average

• 10 Sectors Rising, 0 Sectors Declining

• 72.5% of Issues Advancing, 24.5% Declining

• 36 New 52-Week Highs, 9 New Lows

• 56.7% of Issues Above 200-day Moving Average (yesterday's close)

• Average 14-Day RSI 44.6 (yesterday's close)

• TRIN/Arms 1.16

Monday Watch

Weekend Headlines 
Bloomberg: 

• Iranian Commander Rejects Nuclear Inspections at Military Bases. International inspectors won’t be allowed access to military bases in a deal with world powers to curb Tehran’s nuclear program, a top Iranian commander said. “They will not even be permitted to inspect the most normal military site in their dreams,” said Brigadier General Hossein Salami, deputy head of Iran’s Revolutionary Guard Corps, according to the state-run Press TV news channel. “Visiting a military base by a foreign inspector would mean the occupation of our land because all our defense secrets are there,” Salami said. “Even talking about the subject means national humiliation.”   

• Draghi Warning Unheeded as Euro’s Best Streak in a Year Stalls. European Central Bank President Mario Draghi is warning investors not to bet against the euro. They don’t seem to have gotten the message. The euro’s longest winning streak in a year stalled Monday as regional leaders wrangled with a defiant Greece over how to avoid a default. Draghi said in Washington Saturday that while the situation is “urgent,” it’s premature to speculate about a Greek exit from the currency union. Bets by hedge funds and other large speculators for the euro to decline against the dollar remained near a record high in the latest data from the Washington-based Commodity Futures Trading Commission.

• Fed Crisis-Liquidity Function Reviewed for Potential Use by IMF. IMF member nations are discussing how to expand the lender’s mandate to include keeping markets liquid during a financial crisis, a role played by a group of major central banks led by the Federal Reserve in 2008. The International Monetary Fund’s main committee of central bank governors and finance ministers is working on ways for the fund to provide a better financial “safety net” during a crisis, said Singapore Finance Minister Tharman Shanmugaratnam, who last month finished a four-year term as chairman of the panel. Singapore remains a member of the International Monetary and Financial Committee.

• World Braces for Taper Tantrum II Even as Yellen Soothes Nerves. The world economy is about to discover if to be forewarned by the Federal Reserve is to be forearmed. Two years since the Fed triggered a selloff of their assets in the so-called “taper tantrum,” the finance chiefs of emerging markets left Washington meetings of the International Monetary Fund praising Chair Janet Yellen for the way she is signaling plans to raise U.S. interest rates. 

• Metals, Aussie Rise on China Stimulus as Stocks Swing; Oil Gains. Industrial metals rallied with commodity-producers’ currencies, while Chinese money-market rates fell to a two-year low after the central bank cut the amount of reserves banks need by the most since the global financial crisis. Oil climbed with U.S. index futures. Copper and zinc futures rose at least 0.7 percent by 12:03 p.m. in Tokyo, as the currencies of Australia, New Zealand and Canada strengthened at least 0.3 percent versus the dollar. Chinese interest-rate swaps slid to the lowest level since 2012, while the Shanghai Composite Index fluctuated after advancing more than 6 percent last week.

• Nigeria, Algeria See Oil Prices Staying Low for a Long Time. Oil prices are likely to stay low for a long time after falling more than 40 percent in the past year, said officials from two OPEC nations. Nigeria and Algeria both warned that oil prices, currently at around $60 a barrel, probably won’t recover to the 2011-2013 level of more than $100 a barrel. “You forecast at your own risk, but it seems to me that we should be regarding this as a permanent shock,” Ngozi Okonjo-Iweala, the Nigerian finance minister, said on a panel discussion Sunday in Washington near the end of the International Monetary Fund’s spring meetings. “We should prepare our economies for that eventuality.”

• Copper Bulls Backing Away as China Woes Trump Supply Concerns. Investors are backing away from copper after the biggest two-month rally since 2012. The problem is that demand is slowing in China, which accounts for about half of global copper use. Producers including Freeport-McMoRan Inc. say Chinese buying hasn’t picked up as it normally does at this time of year, and Goldman Sachs Group Inc. and Societe Generale SA are among banks predicting lower prices.

Wall Street Journal: 

• Republican Presidential Candidates Spar Over Party’s Future. New Hampshire gathering exposes split over whether to broaden GOP’s appeal or rally the base. The biggest gathering yet of Republican presidential hopefuls this past weekend sharpened divisions in the broad field of candidates over the path to return the GOP to the White House, making the 2016 primary race a moment for the party to define its national identity.

• Investors Grow Wary of Emerging-Market Debt. Fear of defaults grows as developing economies slow and dollar has climbed. Emerging-market bonds are being submerged in investors’ worries. Facing rising corporate defaults from Brazil to China to Ukraine, some portfolio managers are selling debt issued by emerging-market companies.

• Whatever the Ayatollah Wants. President Obama keeps giving and giving and giving. Give Ayatollah Ali Khamenei credit for knowing his opposition. Two weeks ago the Supreme Leader declared that Western sanctions had to be lifted immediately as a condition of a nuclear deal. And sure enough, on Friday President Obama said Iran would get significant sanctions relief immediately upon signing a deal. The Ayatollah knows that Mr. Obama wants an agreement with Iran so much that there’s almost no concession the President...

• The ObamaCare Effect: Hospital Monopolies. Last year saw 95 hospital mergers and acquisitions, a frenzy encouraged by the Affordable Care Act.

Fox News: 

• White House condemns ISIS video that purportedly shows killing of Ethiopian Christians in Libya. The White House Sunday evening condemned a video purportedly showing a mass execution of Ethiopian Christians in Libya by terrorists affiliated with Islamic State. "We express our condolences to the families of the victims and our support to the Ethiopian government and people as they grieve for their fellow citizens," National Security Council spokesperson Bernadette Meehan said in a statement. "That these terrorists killed these men solely because of their faith lays bare the terrorists' vicious, senseless brutality."

CNBC: 

• China cracks down on golf, the 'sport for millionaires'. President Xi Jinping's crackdown on vice and corruption in China has gone after drugs, gambling, prostitution, ill-gotten wealth and overflowing banquet tables. Now it has turned to a less obvious target: golf.

• These iron ore producers may get shafted: Goldman(GS). (video) Iron ore's price plunge is likely to start claiming corporate casualties among the industry's smaller players, Goldman Sachs said. 

• If nobody likes bonds, who’s buying?

Zero Hedge:

• One Last Look At The Real Economy Before It Implodes - Part 5.

• Is The Student Debt Bubble About To Witness Its 2007 Moment? 

• 300 US Paratroopers Arrive In Ukraine After Russia Says Its Missiles Will Target NATO Member States.

• Japan's "Over 65" Rise To Record 33 Million, More Than Double Number Of Children. (graph)

• Congress Is Trying To Reauthorize Key Patriot Act Provisions by Sneaking it Into 'USA Freedom Act'.

• 5 Things To Ponder: Aircraft Erudition. (graph)

• China's Bursting Bubble + Grexit Trouble = Dow Rubble. (graph)

• Well That's Never Happened Before - Exhibit 1. (graph)

• The Greek "White Knight" Emerges: Putin To Give Athens €5 Billion For Advance Gas Pipeline Fees. (graph)

• Has The Fed Already Lost? (graph)

• China Sees Largest Capital Outflow In Three Years Amid Currency Conundrum. 

• This Technical Signaled The Last Two Market Crashes And It Just Happened. (graph)

• More Hillary Cronyism Revealed: Cisco(CSCO) Used Clinton Foundation To Cover-up Human Rights Abuse In China.

• What Bernanke's New Employer Had To Say About Him Just 2 Years Ago.

• "More Than Half Of All Global Government Bonds Are Yielding 1% Or Less". (graph)

• Why The Record Drop In Chinese House Prices Suggests Beijing Is Already In A Recession. (graph)

• The Global Liquidity Squeeze Has Begun.

• 2007 All Over Again? Let Us Count The Ways (And Remember What Happened Then). (graph)

• Well That Hasn't Happened Before - Exhibit 2.

• China Cuts Reserve Ratio Most Since 2008 In Scramble To Preserve Equity Bubble, Boost Economy. (graph)

• Despite Urges And Threats, Greece Remains Defiant, Won't "Budge On Red Lines" Even As Russia Denies Gas Deal.

• Well That Hasn't Happened Before - Exhibit 3. (graph) We have never, ever, seen a larger Fed-fueled, mal-investment boom in private construction...

• Central Bankers Next Test Of Omnipotence May Be Coming.

• Student Debt Accounts For Nearly Half Of US Government "Assets". (graph)

• Draghi Tells Euro Shorts To "Make His Day", Again. (graph)

• Bond/Utility Divergence Flashes Warning Sign For S&P 500. (graph)

• Is The Credibility Bubble Bursting?

Business Insider:

• Australia arrests 5 men on terror plot charges.

• Iran wants OPEC to to make room for it to enter the market.

• Europe is publicly endorsing renewable energy, but it's quietly moving towards fracking.

• Greece's nightmare is here.

• How teens are spending money, what they like, and where they shop.

• Finance officials are warning of big risks tied to the global economic recovery.

• ISIS shot and beheaded 30 Christians in Libya.

• Hillary Clinton is reworking her positions to appeal to progressive Democrats.

• An Iran nuclear deal could cause problems for the US with its Sunni allies in the Gulf.

• People don't believe China's growth figures, and the truth about the economy could be far worse.

• Greek finance minister: If Greece leaves Eurozone, others could follow.

• The IMF has a warning on volatility in global markets that's 'not for the faint-hearted'.

• Almost 4 years after MF Global failed, Jon Corzine is reportedly getting ready for a comeback.

Reuters:

• U.S. regulators may recommend testing food for glyphosate residues. U.S. regulators may start testing food products for residues of the world's most widely used herbicide, the Environmental Protection Agency told Reuters on Friday, as public concern rises over possible links to disease. Glyphosate, the active ingredient in Roundup herbicide, has come under intense scrutiny since a research unit of the World Health Organization reported last month it was classifying glyphosate as "probably carcinogenic to humans." The herbicide is considered safe by the EPA, as well as many foreign regulatory agencies, including in the European Union.

• DoubleLine's Gundlach says U.S. high-yield credit could face crisis. The U.S. high-yield credit market, which has benefited from massive flows in the last few years from investors looking for higher returns, could unravel in about two years after the Federal Reserve starts raising interest rates, DoubleLine Capital chief executive Jeffrey Gundlach said on Sunday. "I think that's the next bond market crisis," Gundlach told TV program Wall Street Week.

Telegraph: 

• How sleepy Finland could tear apart the euro project. Europe's biggest cheerleader for austerity is heading to the polls, and its stance on Greece threatens to catalyse a break-up of the union.

• Caveat creditor as IMF chiefs mull unpayable debts. The Fund's Spring meeting has been dominated by the dangers of a toxic mix of sky-high debt ratios and old-age populations. The message? Something is badly out of kilter in the world.

• Europe ready for Grexit contagion as Athens gets closer to Russian cash. Mario Draghi sends warning shot that Greek threats to unleash mayhem will not give way to leniencey.

Xinhua:

• PBOC's Zhou Says Slower Growth More Sustainable. Slowdown in China's GDP growth to 7% in first quarter leaves more room for structural adjustments and shift in growth mode, citing People's Bank of China Governor Zhou Xiaochuan who made comments in Washington. Slower expansion can help nation achieve more balanced, more sustained growth, Zhou says

Night Trading

• Asian indices are -.75% to unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 109.5 +5.5 basis points.

• Asia Pacific Sovereign CDS Index 61.75 +2.5 basis points.

• S&P 500 futures +.40%.

• NASDAQ 100 futures +.25%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (STI)/.72

• (HAL)/.36

• (MTB)/1.76

• (RCL)/.14

• (HAS)/.07

• (MS)/.78

• (IBM)/2.81

• (BXS)/.33

• (SANM)/.53

• (BRO)/.40

• (LRCX)/1.30

• (STLD)/.14

• (BMI)/.42

Economic Releases
8:30 am EST

• The Chicago Fed National Activity Index for March is estimated to rise to .1 versus -.11 in February.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone construction report 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 modestly lower. The Portfolio is 25% net long heading into the week.

Weekly Outlook

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 modestly lower on Fed rate hike worries, global growth fears, European/Emerging Markets debt angst, technical selling, yen strength and earnings concerns. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 25% net long heading into the week.