Weekly Outlook

• Week Ahead by Bloomberg.
• 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 terrorism worries, rising European/Emerging Markets/US High-Yield debt angst, Fed rate-hike fears, global growth concerns, commodity weakness and technical selling. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.

Today's Headlines

Bloomberg:      

• Brussels Terror Suspect Charged Amid Fears of More Attacks. Federal prosecutors in Brussels charged a suspect in the March 22 suicide bombings that left more than 30 people dead as counter-terrorism investigations in several European countries advanced amid fears of further assaults. The suspect, identified as Faycal C. and apprehended Thursday evening in the Belgian capital, was charged with terrorist murder and being part of a terrorist group, federal prosecutors said on Saturday. Two other suspects also were charged with terrorism offenses, they said. Faycal C. may have been the man in a cream-colored jacket seen on security cameras at the Brussels airport at the time of the Tuesday bombing that killed 11 people in the departures hall, according to Le Soir newspaper. He was one of three suspects taken into custody outside the prosecutor’s office on Thursday.

Wall Street Journal:

• Turbulent Presidential Campaign Reaches Paul Ryan’s Door. Donald Trump rally in Janesville, Wis., thrusts speaker further into debate on Republican Party’s future. The Republicans’ presidential campaign has moved into House Speaker Paul Ryan’s backyard, thrusting him further into the vortex of a GOP debate about what kind of party it wants to be.

Barron's:

• Had bullish commentary on (AAL), (IPG), (KEY), (TLMR) and (ZBH).

MarketWatch.com:

• Most U.S. companies won’t be able to do business in Cuba for years.

Fox News: 

• Sanders projected to win Washington, Alaska Democratic presidential caucuses. (video) Sen. Bernie Sanders was projected to win the Alaska and Washington Democratic presidential caucuses -- victories he hopes will spark a Western states comeback and help him cut into frontrunner Hillary Clinton’s substantial lead. The Associated Press projected Sanders the winner of both contests. The results of Saturday’s third presidential contest, the Hawaii Democratic Caucus, will not be announced until at least midnight.
• Americans confirmed dead in Brussels attacks, family, employers say. (video) An American couple, missing since Tuesday's terror attacks in Brussels, has been identified as victims of the bombings at the Brussels airport, the Associated Press reported Saturday evening. Justin Shults, 30, and his wife Stephanie Shults, 29, had not been seen since Tuesday.

CNBC:

• BofA warns ''slowly tightening' Fed may hit earnings. (video) The S&P 500 may have surged 10 percent since its Feb. 11 low, but a Bank of America-Merrill Lynch strategist is warning the bounce is on very shaky ground. Publicly traded companies have seen negative earnings growth two quarters in a row and there are no fundamental underpinnings for the rally, Savita Subramanian, BofAML's head of U.S. equity and quantitative strategy, said on CNBC's "Fast Money" this week.

Zero Hedge:

• Visualizing Why Manufacturing Jobs Aren't Coming Back. (graph)
• Krugman Goes To Japan, Scolds Abe For Worrying About Quadrillion Yen Debt Pile, Leaves.
• Hugh Hendry: "If China Devalues By 20% The World Is Over, Everything Hits A Wall".
• Belgian Media Explains What To Do During A Nuclear Disaster.
• Europe Is Paying A Heavy Price For Complacency As Existential Crisis Deepens.
• Another Volcker Moment? Guessing The Future Without Say's Law.
• Thunder CLOuds Arrive: 6 CLOs Hit Triggers, Fail Tests. (graph)
• "Satanic Cocktail" Of Nails And Acetone Used In Devilish Brussels Bomb Design.
• It's Not The Economy, Stupid; Barron's Admits "It's A Bullard Market". (graph)
• Was This The Worst Economist Forecast Of All Time. (graph)
• Chairman Of Insolvent Chinese Steel Company Hangs Himself Day Before Bond Maturity. (graph) 
• China "Disappears" A Dozen People For Plotting Coup: "There's No Excuse For Taking Away My Parents And Brother".
• Healthcare Is About To Surpass Housing As The Biggest Source Of American "Growth".
• In New Video, North Korea Threatens To "Slap" America With Giant Nuclear Strike On Lincoln Memorial.
• Japan's Finance Minister Accidentally Reveals How It All Ends: "War".

Business Insider:

• 'What momentum is about': Bernie Sanders wins 2 more primary contests.
• 'Like a block of cheese': US authorities busted another huge drug-smuggling tunnel under US-Mexico border.

The Telegraph:

• City wary of Chinese approaches as deals flounder. The wave of Chinese money seeking refuge in the West is provoking unease in the City as the country’s entrepreneurs and businessmen come under increased regulatory scrutiny in the UK. A series of potential deals with Chinese investors around the world have collapsed or been blocked in recent months amid growing doubts over their ability to see through a deal.

Nikkei Asian Review: 

• Abe to propose stimulus package ahead of G-7 summit. Japanese Prime Minister Shinzo Abe plans to put forward an economic stimulus package in a bid to boost consumption ahead of the Group of Seven summit meeting, to be hosted by Japan on May 26 and 27. By pledging stimulus measures before the summit, Abe apparently hopes to promote international cooperation with public money. The government hopes to submit a supplementary budget to back the package during an extraordinary Diet session to be held sometime between the upper house election in July and the fall. Also, depending on the course of the economy, Abe may consider postponing the consumption tax hike, now planned for April 2017. It would be the second time for the increase to be put off. Abe will hold a press conference on Tuesday to announce the package. That same day, the 96.7 trillion yen ($854 billion) fiscal 2016 budget through next March is to be passed into law. The new package will also include measures to help reduce the number of children on nursery school waiting lists.

Today's Headlines

Bloomberg:     

• Brussels Suspect Shot in Terror Raid With Child Near Scene. Belgian special police forces shot a suspect in the Brussels terrorist blasts and coaxed a small girl away from the scene, on a frantic day of house raids amid fears of further attacks. The man shown with a leg wound on amateur videos was among nine people taken into custody late Thursday and Friday in a city on edge after the murder of 31 people on Tuesday. Prosecutors said DNA analysis confirmed that the second suicide bomber in the Brussels airport departure hall was Najim Laachraoui, who was also sought in connection with the Paris attacks in November. His DNA also was found on an explosive vest used at the Bataclan concert hall and on an explosive device at the Stade de France, prosecutors said. Anti-terror probes unfolded in Belgium and France as security officials warned that Islamic State is poised to strike again in European cities to revenge losses inflicted in its home territories in Syria and Iraq.
• Shanghai Tightens Non-Local Homebuyer Rules as Prices Surge. Shanghai unveiled a package of measures designed to stem a surge in property prices in the metropolis, underscoring how regulators in top-tier cities are shifting gears in an economy where housing has been a brake on growth in recent years. The local government will tighten approval criteria for non-resident homebuyers, raise down-payment requirements for some second homes and ban unregulated lending, Gu Jinshan, chief of the city housing management commission, said at a press conference Friday. Shanghai, where new home prices soared 21 percent in February from a year earlier, becomes the first large city to tighten residence-buying requirements. It is taking advantage of greater freedom from the central government for local authorities to deal with divergent property markets across the country. In first-tier cities, stimulus intended to boost sluggish real-estate investment led to a home-buying frenzy. Finance-center Shanghai has seen “panic buying” and phony divorces that can double a couple’s buying power, Gu said. The local market has also been affected by a inflow of funds from other regions, and from the stock market, which plummeted in mid-2015.
• Nomura Said to Plan Cutting About 20% of North America Staff. Nomura Holdings Inc. may dismiss about 20 percent of its workforce in North America, according to people with knowledge of the situation, joining a growing number of competitors shrinking Wall Street operations amid a trading slump. Decisions aren’t final, and the ultimate number could still differ, said the people, who asked not to be identified discussing internal deliberations. One senior manager said reductions could be expanded to affect as much as 30 percent of the region’s staff. Japan’s biggest brokerage has about 2,500 employees in the Americas, most of whom work in the U.S. and Canada. 
• Coal Suffering Bleak Year in China on Weakening Industrial Use. China’s coal use is forecast to fall a third year as industrial output slows, adding force to President Xi Jinping’s drive to cut overcapacity and dimming the hopes of global miners for an uptick in demand by the world’s biggest consumer. Demand will slide 2 percent this year and prices will remain at a low level, according to the state-run Xinhua News Agency, citing Xu Liang, deputy secretary general of the China Coal Industry Association. Output by the world’s largest producer will also fall by 2 percent. Consumption has weakened amid a push to use cleaner fuels and shift a slowing economy away from heavy industry. Demand for coal, which accounted for 64 percent of the country’s total energy use last year, contracted 3.7 percent last year, following a 2.9 percent decline in 2014, according to the National Bureau of Statistics.“This year’s coal situation is equally bleak,” Xinhua quoted Xu as saying.
• Commodity Rout Bleeds $8.6 Billion From Japan's Trading Houses. Japan’s biggest trading companies, stalwarts of the nation’s economy, expect to book combined writedowns of at least 970 billion yen ($8.6 billion) as ill-timed investments in commodities ranging from shale gas to copper mines erode profitability. The writedowns for the year ending March underscore the predicament Japan’s “sogo shosha,” or general trading houses, find themselves in after investing heavily in metals and energy at the height of the commodities boom, only to see prices tumble. The Bloomberg Commodity Index, a measure of returns from 22 raw materials, has dropped about 40 percent the last two years, and earlier this year touched the lowest level since 1991. “These writedowns are significant,” Tom O’Sullivan, founder of Mathyos, a Tokyo-based energy consultant. “They will review strategy and need to further diversify as margins in the intermediary businesses, which has been their traditional strength, are compressing.”
• Behind U.S. GDP Data Is Reason for Recession Worry: Weak Profits. On the face of it, the latest government update on how the U.S. economy performed in the fourth quarter looked a bit more encouraging. Growth was revised to a 1.4 percent annualized pace from a previously estimated 1 percent, and the adjustment to gross domestic product was for a good reason -- consumer spending rose more than previously thought. Yet beyond the headline number, there is a reason for some concern. Corporate profits plunged 11.5 percent in the fourth quarter from the year-ago period, the biggest drop since a 31 percent collapse at the end of 2008 during the height of the financial crisis. For 2015 as a whole, pretax earnings fell 3.1 percent, the most in seven years, according to the Commerce Department. That’s “bad news,” said Nariman Behravesh, chief economist for IHS Inc. in Lexington, Massachusetts. History shows that when earnings fall, the economy often follows them downward into recession as profit-starved companies cut back on hiring and investment.
• Ohio, Pa. Senate Races Move to ‘Toss Ups’: Cook Political Report. Decision to move Ohio, Pa. races from “lean Republican” is mainly due to overall political environment, Cook analyst Jennifer Duffy says on website. Says incumbent Sens. Rob Portman of Ohio and Pat Toomey of Pa. won their seats in a “very good” Republican year in 2010; now they face re-election in a presidential year in states that President Barack Obama carried in 2008 and 2012. Says both could be hurt if Donald Trump wins GOP presidential nomination. “If Trump proves to be a serious drag on the ticket, there isn’t much that either incumbent can do to rescue their re-election bids".
• Hedge Funds Pumped Up Silicon Valley. Now They're Pulling Out. In recent months, venture capital firms and mutual funds have become choosier about which technology startups they’re prepared to back. Now hedge funds, after helping push valuations to dot-com-era heights, are getting more picky, too. Last month, hedge funds participated in the fewest number of venture capital rounds in U.S. tech companies since 2013, inking just two deals, according to research firm PitchBook Data Inc. Even Tiger Global Management LLC, an early backer of Facebook and LinkedIn with $20 billion under management, has pulled back. Smaller firms are getting out altogether. Like VCs, hedge funds are more circumspect because some startups have failed to live up to their billing. Plus, in the wake of several disappointing tech IPOs, many of the most promising firms are choosing to stay private longer, meaning it takes longer to cash out. Investors’ stinginess is forcing startups to cut costs, fire workers and accept more stringent terms when raising money.
• Gilead(GILD) Must Pay Merck $200 Million for Hepatitis C Patents. Gilead Sciences Inc. was ordered by a jury to pay Merck & Co. $200 million for patent infringement over a drug compound that cures hepatitis C, a tenth of what Merck sought. The verdict announced Thursday follows an earlier finding by the jury embracing Merck’s claims that its scientists were responsible for early breakthroughs that led to the development of the Sovaldi and Harvoni medicines which helped Gilead become the world’s largest biotechnology firm by market value. After siding with Merck on all the patent claims, jurors rejected Merck’s bid for a 10 percent royalty on the $20.7 billion revenue that Gilead’s hepatitis C drugs generated from 2013 through 2015. 
• Microsoft(MSFT) Apologizes After Twitter Chat Bot Experiment Goes Awry. Microsoft Corp. apologized after Twitter users exploited its artificial-intelligence chat bot Tay, teaching it to spew racist, sexist and offensive remarks in what the company called a “coordinated attack” that took advantage of a “critical oversight.” “We are deeply sorry for the unintended offensive and hurtful tweets from Tay, which do not represent who we are or what we stand for, nor how we designed Tay,” Peter Lee, corporate vice president at Microsoft Research, said in a blog post Friday.

Wall Street Journal: 

• Solar-Panel Installers Face Clouded Future. Solar-power incentives for homeowners shrink as local utilities pressure state regulators.

Fox News:

• US announces ISIS paymaster killed as France, Belgium dismantle terror cell. (video) The West struck back hard against ISIS in the wake of the Brussels terror attacks, with the U.S. announcing it took out the Islamist group’s paymaster in a raid in Syria even as authorities in Belgium and France continued to roll up the cell behind this week’s carnage as well as the deadly November attacks in Paris.
• Chelsea Clinton laments 'crushing' health care costs despite ObamaCare. Chelsea Clinton, in an implicit swipe at the impact of President Obama's health care law, recently told voters that many Americans still are facing "crushing costs" from health insurance even under the Affordable Care Act.  The comments were captured in a video posted this week. In her remarks, Clinton said her mother -- presidential candidate Hillary Clinton -- could use executive action to curb those costs.

CNBC: 

• Netflix(NFLX) admits to downgrading video quality on wireless networks: WSJ. Netflix Inc. has been lowering the quality of its videos for customers on most wireless networks across the globe for more than five years, The Wall Street Journal reported on Thursday. This includes U.S. networks AT&T and Verizon Communications, the report said.

Zero Hedge:

• U.S. GDP Rose 1.4% In Final Estimate Of Q4 Growth As Corporate Profits Plunged. (graph)
• "There Is No Word To Describe This" - The Energy Forward P/E Multipe Is Now Off The Charts. (graph)
• The Threat Continues: Yuan Weakens For 6th Straight Day - Longest Losing Streak In 2 Years. (graph)
• Deutsche Bank's Dire Warning On Global Trade: "The Currency War Is Futile".
• The "Restaurant Recovery" Is Over: Casual Dining Sales Tumble For Fourth Straight Month. (graph)
• Foreigners Dumped More Japanese Stocks This Week Than Ever Before. (graph)
• Presenting The Complete Global Currency Swirlogram.
• Holiday Market Summary.
• Thanks Obamacare: This Is What Americans Spent Most Money On In 2015. (graph)
• For The Average American, Owning A Home Is Increasingly Unaffordable. (graph)
• It's 1790 All Over Again - The World Is Sunk By Central Banker Conceit.
• The Biggest Short.
• Jihad In Brussels.
• When Does The U.S. Stock Bubble Burst: The Best Hedge Fund Of 2016 Has A Surprising Answer. (graph)
• Countdown To Insolvency Begins For Chicago Pensions As State Supreme Court Rejects Reform Bid.
• The Broadest US Equity Index Is Hitting Resistance. (graph)
• 3 Things: 80% Or Bust, Mind The Gap, It’s A Bunny. (graph)
• The Streak Is Over - Stocks Suffer Down Week 'Despite' Bombings, Hawks, & Dismal Data. (graph)

Business Insider:

• TED CRUZ: 'Donald, you're a sniveling coward ...' (video)
• France arrests man in 'advanced stages' of attack plot.
• Trump is the best thing that has happened to Clinton this election.
• Bill Ackman's hedge fund is cooperating with an investigation into prescription drug pricing.
• GameStop shares are collapsing after the company said it expects sales to fall this quarter.
• Why oil prices aren't done falling yet.

Financial News:

• China Banks' Bad Loans May Continue to Rise. Chinese banks face challenges of slowing profit growth, intensified industry competition and interest rate liberalization, citing China Construction Bank Chairman Wang Hongzhang as saying.

Market Week in Review

• S&P 500 2,035.94 -.23%*

The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 2,035.94 -.23%

• DJIA 17,515.73 +.20%

• NASDAQ 4,773.50 -.03%

• Russell 2000 1,079.54 -1.07%

• S&P 500 High Beta 28.43 -2.37%

• Goldman 50 Most Shorted 95.40 -2.55% 

• Wilshire 5000 20,882.81 -.31%

• Russell 1000 Growth 987.36 +.07%

• Russell 1000 Value 964.76 -.60%

• S&P 500 Consumer Staples 536.28 -.89%

• Solactive US Cyclical 128.86 -.43%

• Morgan Stanley Technology 1,038.19 +.38%

• Transports 7,726.02 -.43%

• Utilities 660.20 -.45%

• Bloomberg European Bank/Financial Services 78.89 -4.22%

• MSCI Emerging Markets 33.36 -1.45%

• HFRX Equity Hedge 1,112.31 +1.09%

• HFRX Equity Market Neutral 1,007.86 -.05%

Sentiment/Internals

• NYSE Cumulative A/D Line 235,907 +.38%

• Bloomberg New Highs-Lows Index -384 -471

• Bloomberg Crude Oil % Bulls 25.0 -44.1%

• CFTC Oil Net Speculative Position 269,85 n/a

• CFTC Oil Total Open Interest 1,782,857 n/a

• Total Put/Call 1.04 +56.72%

• OEX Put/Call 7.46 +969.67%

• ISE Sentiment 105.0 +43.84%

• NYSE Arms .86 -8.57%

• Volatility(VIX) 15.14 +7.41%

• S&P 500 Implied Correlation 56.58 -1.05%

• G7 Currency Volatility (VXY) 11.18 +9.07%

• Emerging Markets Currency Volatility (EM-VXY) 11.74 +1.65%

• Smart Money Flow Index 18,984.48 +.92%

• ICI Money Mkt Mutual Fund Assets $2.752 Trillion -.53%

• ICI US Equity Weekly Net New Cash Flow -$1.528 Billion

• AAII % Bulls 33.8 +12.8%

• AAII % Bears 23.7 -11.7%

Futures Spot Prices

• CRB Index 172.18 -3.08%

• Crude Oil 39.61 -1.81%

• Reformulated Gasoline 146.85 +2.15%

• Natural Gas 1.81 -6.56%

• Heating Oil 119.90 -4.01%

• Gold 1,219.10 -3.0%

• Bloomberg Base Metals Index 142.50 -1.6%

• Copper 223.70 -2.34%

• US No. 1 Heavy Melt Scrap Steel 170.67 USD/Ton unch.

• China Iron Ore Spot 56.37 USD/Ton -1.97%

• Lumber 299.0 -1.10%

• UBS-Bloomberg Agriculture 1,072.04 +.4%

Economy

• ECRI Weekly Leading Economic Index Growth Rate -.7% +160.0 basis points

• Philly Fed ADS Real-Time Business Conditions Index -.1753 +5.45%

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 123.02 -.12%

• Citi US Economic Surprise Index -10.70 -10.5 points

• Citi Eurozone Economic Surprise Index -32.90 +13.0 points

• Citi Emerging Markets Economic Surprise Index -16.40 +2.3 points

• Fed Fund Futures imply 92.0% chance of no change, 8.0% chance of 25 basis point hike on 4/27

• US Dollar Index 96.14 +1.45%
• MSCI Emerging Markets Currency Index 1,491.25 unch.

• Euro/Yen Carry Return Index 131.75 +.02%

• Yield Curve 103.0 -1.0 basis point

• 10-Year US Treasury Yield 1.90% +3.0 basis points

• Federal Reserve's Balance Sheet $4.448 Trillion n/a

• U.S. Sovereign Debt Credit Default Swap 20.62 +8.48%

• Illinois Municipal Debt Credit Default Swap 345.0 -.03%

• Western Europe Sovereign Debt Credit Default Swap Index 27.15 -1.80%

• Asia Pacific Sovereign Debt Credit Default Swap Index 58.14 -6.03%
  

• Emerging Markets Sovereign Debt CDS Index 151.05 -6.20%
  

• Israel Sovereign Debt Credit Default Swap 75.50 -5.78%

• Iraq Sovereign Debt Credit Default Swap 963.41 -9.39% 

• Russia Sovereign Debt Credit Default Swap 295.56 +6.38%

• iBoxx Offshore RMB China Corporates High Yield Index 126.41 +.39%

• 10-Year TIPS Spread 1.58% -4.0 basis points

• TED Spread 33.50 -2.5 basis points

• 2-Year Swap Spread 11.0 +3.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -22.0 -2.0 basis points

• N. America Investment Grade Credit Default Swap Index 83.12 -1.20%

• America Energy Sector High-Yield Credit Default Swap Index 1,447.0 -23.69%

• European Financial Sector Credit Default Swap Index 93.85 +15.27%
  

• Emerging Markets Credit Default Swap Index 297.50 -2.36%
  

• CMBS AAA Super Senior 10-Year Treasury Spread  to Swaps 170.0 unch.

• M1 Money Supply $3.083 Trillion n/a

• Commercial Paper Outstanding 1,089.80 -.70%

• 4-Week Moving Average of Jobless Claims 259,750 -8,250

• Continuing Claims Unemployment Rate 1.6% unch.

• Average 30-Year Mortgage Rate 3.71% -2.0 basis points

• Weekly Mortgage Applications 465.20 -3.28%

• Bloomberg Consumer Comfort 43.6 -.6 point

• Weekly Retail Sales +.70% +10.0 basis points

• Nationwide Gas $2.01/gallon +.04/gallon

• Baltic Dry Index 401.0 +2.30%

• China (Export) Containerized Freight Index 670.11 n/a

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 35.0 -30.0%

• Rail Freight Carloads 248,073 +.88%

Best Performing Style

• Large-Cap Growth -.1%

Worst Performing Style

• Small-Cap Value -1.8%

Leading Sectors

• Hospitals 4.5%

• Biotech +2.7%

• HMOs +2.5%

• Drugs +.5%

• Computer Services +.5%

Lagging Sectors

• Energy -3.1% 

• Alt Energy -4.1%

• Oil Service -5.2%

• Gold & Silver -5.3%

• Oil Tankers -7.7%

Weekly High-Volume Stock Gainers (19)

• RSTI, SRPT, VAL, AKRX, LOXO, VA, STCK, CLC, TGH, IHS, SCVL, CPGX, HOT, MIK, CNC, AFFX, GEF, BXLT and KBAL

Weekly High-Volume Stock Losers (9)

• HMTV, GMED, KKD, CAMP, NHC, SAGE, GES, JBL and GIII

Weekly Charts

ETFs

• High-Volume Gainers

• High-Volume Losers

Stocks

• High-Volume Gainers

• High-Volume Losers

*5-Day Change