Morning Market Internals

NYSE Composite Index:

• Volume Running +2.5% 100-Day Average
• 3 Sectors Rising, 7 Sectors Declining
• 48.5% of Issues Advancing, 48.2% Declining
• 45 New 52-Week Highs, 2 New Lows
• 54.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 47.5%
• Vix 13.8 +.7%
• Total Put/Call .81 -3.6%
• TRIN/Arms 1.49 +54.9%

Friday Watch

Evening Headlines
Bloomberg:

• China's Worst Stocks Are Winning. (video)
• IMF Says Greek Debt Numbers Don't Add Up as EU Defends Its Plan. The International Monetary Fund raised doubts about Greece’s ability to keep up repayments under a plan being negotiated with its European creditors, who insisted they’ve already provided plenty of debt relief. “Currently, as envisaged, the debt is not sustainable and what is required is a debt operation,” IMF Managing Director Christine Lagarde said Thursday in Washington, where finance ministers and central bankers are attending the fund’s spring meetings. 
• Apple(AAPL) Supplier TSMC Sees Demand Waning for Phones Above $500. Taiwan Semiconductor Manufacturing Co., one of the biggest suppliers of chips to Apple Inc., forecast second-quarter revenue well below analysts’ estimates as demand for smartphones priced above $500 peters out. The world’s largest contract chipmaker, expected by analysts to supply processors for the iPhone 7, predicted China and other emerging markets will drive the popularity of cheaper devices, helping mitigate a global mobile industry downturn. 
• Japan Drives Asian Stock Retreat Before China Data; Oil Declines. Asian equities snapped their longest rally in a year, as Japanese stocks retreated following the country’s strongest earthquake since the 2011 disaster. Most industrial metals declined with oil ahead of a swathe of Chinese economic data. Consumer and health-care stocks led the regional stock gauge to its first drop in eight days, with Japan’s Topix index falling from its highest level this month, even as the yen extended losses. Nickel halted a five-day climb and aluminum also fell ahead of reports on gross domestic product, retail sales and factory output in China, the world’s top consumer of base metals. U.S. crude fell a third day amid concern any agreement among major producers in Doha on Sunday will have a limited impact on global oil supplies. The MSCI Asia Pacific Index declined 0.4 percent as of 9:54 a.m.
• Oil Freeze: Everything You Need to Know About the Doha Summit. Nations representing about half the world’s crude production will gather in Doha on April 17 to discuss freezing their output at January levels in an effort to stabilize prices. Russia, Saudi Arabia, Qatar and Venezuela already made a preliminary deal in February and are seeking to add more producers and extend the current price recovery.
• Rio Tinto CEO Says Iron Ore's 55% Rally Is About to Fizzle Out. Iron ore’s rally from a record low isn’t sustainable as output is set to increase, according to Rio Tinto Group, the second-biggest exporter. Prices may fall in the second half as the new supply offsets improving demand from China, Chief Executive Officer Sam Walsh said. “I’ve said all along that we expect the iron ore prices will be volatile. That’s what we’re seeing,” Walsh told reporters after the company’s annual shareholder meeting in London. Walsh’s skepticism that iron ore’s gains may prove to be temporary is shared by some forecasters. RBC Capital Markets said April 12 that global oversupply would continue to weigh on prices while lower steel production in China hurts demand. Capital Economics Ltd. has said it expects a large surplus this year. Demand in China this year may have been “front-end loaded and will taper off,” Liberum Capital Ltd. analysts wrote in an April 13 note, forecasting prices will fall below $40 before the second half. Iron ore may retreat to $44 in the fourth quarter, according to the median of 10 forecasts compiled by Bloomberg.
• Steel Gloom Deepens for EU Mills That Reacted Too Slowly to Glut. The fate of some huge blast-furnaces in the Belgian city of Liege a few years ago may offer clues to where the rest of Europe’s beleaguered steel-making industry is headed -- more doom and gloom. Known for its bike race and meatballs, Liege was home to a steel mill owned by ArcelorMittal, the world’s top producer. While the city had been a metal-making hub since the end of Napoleonic Wars, the aging plant was too far from raw materials and spread out along miles of the Meuse River, making it uncompetitive after the global financial crisis sapped demand. In 2013, ArcelorMittal tired of losses and shut much of the facility.
• Valeant(VRX) Working With Banks to Review Options: Reuters. Valeant Pharmaceuticals International Inc. is working with investment banks to review options after receiving interest in a number of its businesses, Reuters reported Thursday. The drugmaker has previously said that it might dispose of certain “non-core” assets as it seeks to pay down some of its $32 billion in debt and return to stable footing after a disastrous eight-month run that has seen its stock lose almost 90 percent of its value. Reuters cited people familiar with the matter, without saying where they got the information. Valeant shares were up 1.5 percent to $32.85 at 6:56 p.m. in New York, after the market closed. Laval, Quebec-based Valeant hasn’t decided on selling any businesses so far, Reuters said.
• Bats Investors to Sell $250 Million in IPO, Exceeding Plan. Bats Global Markets Inc. investors will sell a stake of as much as $253 million in the stock exchange operator in its initial public offering, some $40 million more than originally planned. The company, which is the second-biggest exchange for U.S. stocks, will sell 13.3 million shares at $17 to $19 apiece, according to an updated filing on Thursday. It had planned to sell 11.2 million. The shares will price after the markets close on Thursday, and begin trading the next day.

Wall Street Journal: 

• Brooklyn Democratic Debate: Live Coverage.
• Japan’s Negative-Rate Experiment Is Floundering. Trading withers in money markets, yen goes on a tear; ‘every day is like being Alice in Wonderland’.
• Microsoft(MSFT) Sues Justice Department Over Secret Customer Data Searches. Suit challenges government’s authority to secretly access information in cloud computing era. Microsoft Corp. sued the Justice Department on Thursday, alleging it’s unconstitutional for the government to bar tech companies from telling customers when federal agents have examined their data.

Barron's:

• Ixia(XXIA) Plunges 14% on Warning of North America Telco Weakness. Shares of network test equipment provider Ixia (XXIA) are down $1.70, or 14%, at $10.50, in late trading, after the company this afternoon warned that its Q1 revenue will miss its own forecast owning to “a market slowdown in network test spending from our North America network equipment manufacturer customers in March.”

Fox News:

• Ex-'Apprentice' contestants to Donald Trump: We hope you're fired! (video) A handful of former contestants from Donald Trump’s reality show “The Apprentice” say the Republican front-runner should not be president. Half a dozen past hopefuls of the hit show, including Season 4 winner Randal Pinkett and Season 1 runner-up Kwame Jackson, are planning a press conference Friday in New York to denounce the GOP front-runner’s bid ahead of the state’s April 19 primary. In statements, the contestants slammed Trump’s rhetoric as divisive and accused him of running a “campaign of sexism, xenophobia, racism, violence and hate.”

CNBC:

• Most Americans think economy is 'getting worse'. (video) Consumers have been the missing link in the U.S. economic recovery and are likely to remain so absent a major change in sentiment. Despite the seemingly endless stream of Wall Street economists who believe the U.S. is about to snap out of its malaise, most Americans think the economy is bad and getting worse, according to several recent surveys. 

Zero Hedge:

• Former Fed Advisor Asks "Has The Fed Bankrupted The Nation".
• US Judge Rules Sandy Hook Victims Can Sue "Military-Style" Gun-Maker.
• Let Them Eat... Out. (graph)
• Why For Japanese Traders "Every Day Is Like Being Alice In Wonderland". (graph)
• The Curious Story Of The Chinese Tycoon Found "Chopped Up Into 100 Pieces" In A Vancouver Mansion.
• 'They' Have Decided "We Can't Handle The Truth". (graph) 
• Guess Which Major Bank Loses The Most From Brexit?
• Hillary Will Win New York, Because It's Running A Banana Republic Primary.
• "Someone Is Going To Be Very Wrong". (graph)
• Iran's Massive Oil Fleet Begins To Move: 29 Million Barrels Depart Iran In Past 2 Weeks.
• Stock Short-Squeeze Party Ends After Wells Worries & Crude Crunch.

Business Insider:

• 'I question her judgment': Bernie Sanders and Hillary Clinton trade blows in the opening moments of the big Democratic debate. (video)
• Venture funding for startups just suffered the biggest crash since the dot-com bust.
• The CIA secretly invested in two of Silicon Valley's hottest startups.
• Investors have yanked out more than $1 billion from Paul Tudor Jones' hedge fund.
• JOHN MAULDIN: The Fed robbed the poor and made the top 25% wealthier.
• The Clinton-Sanders race is taking a bitter turn.
• Paul Ryan says he can see why Trump's comments rattle Middle Eastern allies.

Reuters:

• Dick's(DKS), Academy Sports eye Sports Authority assets: sources. Academy Sports + Outdoors and Dick's Sporting Goods Inc have expressed interest in buying the assets of rival U.S. retailer Sports Authority Inc that are on sale in a bankruptcy auction, according to people familiar with the matter. The auction will determine whether Sports Authority, which opened its first store in Florida in 1987 and expanded nationwide, will be sold off in pieces, or its creditors will hold on to it and try to find a buyer for its entirety.
• U.S.-based stock funds post $4.8 bln outflows despite equity rise -Lipper.

O Estado de S. Paulo:

• Brazil Impeachment Tally 2 Votes Shy of Threshold to Pass. Number of lawmakers who would vote for the impeachment of President Dilma Rousseff rises to 340. 127 lawmakers would vote against impeachment. 29 declined to answer how they'd vote, while 17 said they are undecided.

Night Trading 

• Asian equity indices are -.25% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 138.50 -1.0 basis point. 
• Asia Pacific Sovereign CDS Index 55.75 -.75 basis point. 
• Bloomberg Emerging Markets Currency Index 72.74 +.04%. 
• S&P 500 futures +.01%. 
• NASDAQ 100 futures +.06%.

Morning Preview Links

Earnings of Note
Company/Estimate 

• (SCHW)/.29
• (C)/1.05
• (INFY)/15.23
• (RF)/.19 

Economic Releases  
8:30 am EST

• Empire Manufacturing for April is estimated to rise to 2.0 versus .62 in March.  
  

9:15 am EST

• Industrial Production MoM for March is estimated to fall -.1% versus a -.5% decline in February.
• Capacity Utilization for March is estimated to fall to 75.3% versus 76.7% in February.
• Manufacturing (SIC) Production for March is estimated to rise +.1% versus a +.2% gain in February.

10:00 am EST

• Preliminary Univ. of Michigan Sentiment for April is estimated to rise to 92.0 versus 91.0 in March.

4:00 pm EST

• Total Net TIC Flows for February.
  

Upcoming Splits 

• None of note

Other Potential Market Movers

• The Fed's Evans speaking, Eurozone Trade Balance and the IMF Meeting could also impact trading today.

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

Stocks Sighltly Higher into Final Hour on Less European/Emerging Markets Debt Angst, Diminished Global Growth Fears, Technical Buying, Transport/Financial Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Slightly Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 13.80 -.29%

• Euro/Yen Carry Return Index 128.64 -.13%

• Emerging Markets Currency Volatility(VXY) 11.35 +.18%

• S&P 500 Implied Correlation 56.46 +1.18%

• ISE Sentiment Index 81.0 -19.8%

• Total Put/Call .86 +43.33%

• NYSE Arms .86 -14.57% 

Credit Investor Angst:

• North American Investment Grade CDS Index 78.39 -.78%
  

• America Energy Sector High-Yield CDS Index 1,255.0 -12.34%

• European Financial Sector CDS Index 88.46 -5.8%

• Western Europe Sovereign Debt CDS Index 26.61 -3.53%

• Asia Pacific Sovereign Debt CDS Index 55.84 -1.08%

• Emerging Market CDS Index 281.49 -1.66%
  

• iBoxx Offshore RMB China Corporate High Yield Index 127.31 +.01%

• 2-Year Swap Spread 12.0 unch.
  

• TED Spread 40.50 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -22.50 +1.5 basis points
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.74 -.04%
• 3-Month T-Bill Yield .22% unch.
  

• Yield Curve 102.0 unch.
  

• China Import Iron Ore Spot $59.38/Metric Tonne -1.82%

• Citi US Economic Surprise Index -8.20 -3.4 points

• Citi Eurozone Economic Surprise Index -26.30 +.8 point

• Citi Emerging Markets Economic Surprise Index 13.7 unch.

• 10-Year TIPS Spread 1.57% unch.
  
• 17.3% chance of Fed rate hike at June 15 meeting, 28.4% chance at July 27 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -46 open in Japan 
• China A50 Futures: Indicating +25 open in China

• DAX Futures: Indicating +9 open in Germany

Portfolio: 

• Slightly Lower: On losses in my tech/retail sector longs
  

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Value -.3%

Sector Underperformers:

• 1) Coal -5.8% 2) Gold & Silver -4.5% 3) Disk Drives -4.2%

Stocks Falling on Unusual Volume:

• STX, LPL, BOFI, YY, CIR, DDC, WDC, UIHC, CORR, CAVM, KOF, DIN, INGN, BP, VRX, SLW, PGR, IHG, AGU, TSM, ATHN, CPSI, CWEI, SIX and SA

Stocks With Unusual Put Option Activity:

• 1) RAD 2) TXN 3) STX 4) COF 5) HYG

Stocks With Most Negative News Mentions:

• 1) VRX 2) MOS 3) AGU 4) STX 5) CPSI

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer: 

• Large-Cap Growth +.1%

Sector Outperformers:

• 1) Banks +1.2% 2) Hospitals +.9% 3) Internet +.8% 

Stocks Rising on Unusual Volume: 

• SYNA, DDD, CCC, ARGS, SSYS, FRC and OLED

Stocks With Unusual Call Option Activity: 

• 1) KATE 2) KEY 3) CYH 4) LC 5) SIG

Stocks With Most Positive News Mentions: 

• 1) DDD 2) CMG 3) AMAT 4) DAL 5) BLK

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Morning Market Internals

NYSE Composite Index:

• Volume Running -3.3% Below 100-Day Average
• 4 Sectors Rising, 6 Sectors Declining
• 41.3% of Issues Advancing, 54.8% Declining
• 63 New 52-Week Highs, 0 New Lows
• 54.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.9%
• Vix 13.6 -1.7%
• Total Put/Call .80 +33.3%
• TRIN/Arms .77 -23.1%