Bull Radar

Style Outperformer: 

• Small-Cap Growth +.6%

Sector Outperformers:

• 1) Oil Service +1.7% 2) Energy +1.5% 3) Agriculture +1.0% 

Stocks Rising on Unusual Volume: 

• CVT, HAS, BOFI, OLED and SRPT

Stocks With Unusual Call Option Activity: 

• 1) GSAT 2) TRIP 3) MPLX 4) DRII 5) KR

Stocks With Most Positive News Mentions: 

• 1) HAS 2) DIS 3) CNH 4) HPQ 5) TASR

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -13.6% Below 100-Day Average
• 7 Sectors Rising, 3 Sectors Declining
• 56.8% of Issues Advancing, 39.7% Declining
• 76 New 52-Week Highs, 3 New Lows
• 54.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 48.1%
• Vix 13.7 +.6%
• Total Put/Call 1.1 +39.2%
• TRIN/Arms 1.17 -.5%

Monday Watch

Today's Headlines

Bloomberg: 

• China Property Boost to GDP Risks Fading After Debt-Fueled Rise. China’s expansion may face stronger headwinds this year should the debt-fueled boost from real estate, a key driver of recent economic growth, prove unsustainable. The economy grew 1.1 percent in the first quarter from the prior quarter, the slowest quarter-to-quarter expansion in data since 2011, the National Bureau of Statistics said Saturday. Housing demand helped boost growth, with output of real-estate services adding 9.1 percent from a year earlier while construction activities rose 7.8 percent, NBS said. Saturday’s reports take some of the shine off of Friday’s data showing 6.7 percent growth from a year earlier and better-than-forecast strength in March across a range of indicators. While surging home sales and property investment have supported expansion, economists say it remains to be seen whether debt-aided growth can hold up, and more stimulus maybe needed to sustain the 6.5 percent to 7 percent government growth target. "Growth is still under pressure and the economy remains fundamentally weak," said Zhou Hao, an economist at Commerzbank AG in Singapore. 
• Rousseff Ally Concedes Defeat in Congress Impeachment Vote. President Dilma Rousseff has lost a key impeachment vote in the lower house but will fight back in court and in the Senate, a government leader in Congress said. "We can turn the game around in Brazil’s Senate," Jose Guimaraes, Rousseff’s leader in the lower house, told reporters as the vote was wrapping up. The "coup mongers" were stronger, he said. With 83 legislators left to vote, the opposition had garnered 316 votes in favor of impeachment. It needs at least 342 votes, or a two-thirds majority among 513 deputies, to send the motion to the Senate. Most analysts agree that if Rousseff were to lose Sunday, it would be very difficult for her to avoid being ousted in the Senate.
• Oil Plunges After Output Talks Fail Amid Saudi Demands Over Iran. Oil tumbled by the most in two months after output talks Sunday between the world’s biggest producers ended without any agreement on limiting supplies, a diplomatic failure that threatens to renew the rout in prices. Futures fell as much as 6.8 percent in New York, the biggest intraday drop since Feb. 1. The summit in the Qatari capital, which dragged on for more than ten hours beyond its initially scheduled conclusion, finished with no final accord. Discussions stumbled after Saudi Arabia and other Gulf nations wouldn’t agree to any deal unless all OPEC members joined including Iran, which wasn’t present at the meeting, Russian Energy Minister Alexander Novak told reporters. “The weekend talks are demonstration that the Saudi government, as the deputy crown prince has clearly stated, doesn’t want to cede market share,” said Ed Morse, head of global commodity research at Citigroup Inc. by phone. “They are fearful that the world may be in a weak or bearish market for a long period of time. In a bear market, as they learned from the 1980s, if they cede market share it is very difficult to get it back.”
• Saudis Won't Shed Any Tears Over Doha. Saudi Arabia's policy-makers will no doubt be relieved as the much-hyped OPEC/non-OPEC output freeze unravels. The last thing the kingdom wanted was the oil price rising to a level that allows high-cost projects to move forward. The meeting in Doha to formalize the freeze ended in failure with Saudi Arabia refusing to agree unless other nations, particularly Iran, joined from the beginning. Iran, the one country with the determination and ability to boost output this year, wasn't even at the gathering. 
• Singapore's Non-Oil Exports Plunge Most in Three Years in March. Singapore’s exports plunged the most in more than three years in March, providing more evidence of a weakening economy. Non-oil domestic exports dropped 15.6 percent in March from a year earlier, worse than the median estimate of a 12.3 percent decline in a Bloomberg survey of 15 economists, and compared with a revised 2 percent expansion in February, a government report showed on Monday. Electronics shipments contracted 9.1 percent in March.
• Won Declines With Korean Stocks as Oil Plunge Curbs Risk Taking. South Korea’s won weakened after the failure of talks to limit oil output spurred a plunge in crude, curbing demand for emerging-market assets. The Kospi index of local shares fell the most in almost two weeks as a meeting between the world’s biggest producers ended in Doha on Sunday without any agreement. The Bank of Korea will refrain from following India and Indonesia in easing monetary policy further on Tuesday, and keep its benchmark interest rate at a record-low 1.5 percent for the 10th straight month, according to 16 of 20 economists surveyed by Bloomberg. The rest see a 25 basis point cut. The won slipped 0.5 percent to 1,151.90 a dollar as of 10:56 a.m. in Seoul, taking its monthly loss to 0.7 percent, according to data compiled by Bloomberg.
• Asian Stocks Drop as Japan's Topix Tumbles With Commodity Shares. Asian stocks fell, with the regional benchmark index retreating from a four-month high, as crude plunged and Japanese shares tumbled on a stronger yen after oil talks ended without an agreement on limiting supplies. The MSCI Asia Pacific Index fell 1.1 percent to 130.75 as of 9:07 a.m. in Tokyo.
• Citigroup Says Iron Ore Rally Will Fade as Oversupply Kicks In. The global iron ore market faces increasingly severe oversupply, according to Citigroup Inc., which said the commodity’s gains will probably be reversed in the second half. Increases in production, including from miners that restarted output after this year’s rally, coupled with likely declines in steel prices, will combine to hurt iron ore, the bank said in a quarterly commodities report received Monday. While iron ore’s price declines may have been delayed, they’re still coming, analysts led by Ed Morse wrote. Iron ore surged 23 percent in the first quarter as Chinese mills ramped up output to take advantage of a rally in steel prices, and some supply was disrupted in Australia. Citigroup said that both of those supportive factors were likely to reverse, hurting the outlook for iron ore. Last week, Rio Tinto Group Chief Executive Officer Sam Walsh said that iron ore prices may fall in the second half as new production offsets improving demand in China.
• Trump Is Running 'Banana Republic' Campaign, Cruz Loyalist Says. (video) Donald Trump’s presidential campaign has adopted “banana republic” tactics because it’s getting “stomped” in the Republican ground game in states like Wyoming and Colorado, said the head of Ted Cruz’s delegate-hunting team. “When we win, Trump whines,” Ken Cuccinelli, the former Virginia attorney general, said on ABC’s “This Week” on Sunday. “We’re playing within the rules established years ago.” The war of words continues between the Trump and Cruz campaigns as each prepares his strategy for a contested Republican convention if neither candidate assembles the 1,237 delegates needed to automatically clinch the party’s nomination to compete in the November general election. “How about calling for riots in the street? How about threats: We’re going to go to the hotel rooms of delegates; death threats to the Colorado Republican chairman?” Cuccinelli said. “This is a banana republic approach by the Trump team because they’re getting beaten on the ground.”

Wall Street Journal:

• Moody’s Another Thorn in Oil Patch. The bond rater has deprived 19 energy companies of their investment grades this year. Moody’s Investors Service is emerging as a new scourge for energy firms. The bond rater has deprived 19 energy companies of their investment-grade ratings this year, dropping many several notches into the deeper reaches of high-yield, or junk, territory.

CNBC:

• China economy: Are traders overestimating its health? Strategists say it will only take another disappointing economic report from China for global investors to once again put the country at the top of their worry list. "With every statistic we see out of Asia, ex-China, whether it's Taiwan, whether it's Hong Kong and other Asian countries, they're suffering slowdowns from their sensitivity and exposure to China."
• Iran's central banker dismisses idea of output cut. Iran's top central banker is adding to growing doubts about an agreement to freeze output at a meeting of oil producers in Doha, Qatar on Sunday. Ahead of a pivotal meeting that may determine the near-term outlook for crude prices, Iran on Saturday announced that it would not participate in the conference. The country, still trying to recover from Western sanctions, is seen trying to preserve market share, and has steadfastly resisted any suggestions that Iran should freeze or curb output in order to prop up prices.

MarketWatch:

• No oil deal in Doha? No incentive for Saudis to let up.

Zero Hedge:

• Oil Futures Crash Most In 7 Months, Stocks Tumble. (graph)
• Goldman(GS) On Doha: "Bearish For Prices ", Expect "High Price Volatility"; Saudi Oil Production May Jump.
• Europe: Suicide by Jihad.
• Bundesbank Defies Elites: Warns That "Plans To Abolish, Criminalize Cash Out Of Line With Freedom".
• What Is The Worst-Case Outcome Of Helicopter Money: Deutsche Bank Explains.
• No Deal: Doha Talks End Without Agreement.
• The Real Reason Hillary Clinton Refuses To Release Her Wall Street Transcripts.
• A Nationwide Minimum Wage Is Even Worse Than State-Imposed Wages.
• Loonie Plunges Most In A Month Ahead Of Crude Open.
• Russian Fighter Jet Flies Within 50 Feet Of US Recon Plane Over Baltic Sea.
• Saudi Stocks Slide Most In 3 Weeks As Post-Doha Hangover Begins. (graph)
• Japan's Economy Grinds To A Halt After Earthquake Paralyzes Critical Supply Chains.
• Kyle Bass On The Resurgence Of Gold And The Looming "Run On Cash".

Business Insider:

• Debate turns vitriolic in Brazil as impeachment vote nears. 
• Here's how the oil crash will affect Canada in the long-term.
• Drug cartels have turned social-media sites like Facebook into one of their most potent weapons.
• The world's largest investor says negative rates are breeding a disaster for the economy.
• SAM ZELL: We're in the 9th inning of this cycle.

Reuters:

• New Doha oil deal draft says all OPEC members must join - sources. A new draft of a deal to freeze oil output that is to be agreed later on Sunday in Doha has a line saying all OPEC members should be part of the agreement, industry sources said. The change appears to be a major obstacle for clinching a binding deal, given that OPEC member Iran had decided not to send representatives to the meeting.

Financial Times:

• US Air Force commander warns on space launch ‘bubble’. The US Air Force’s most senior space commander, General John Hyten, has voiced concerns about the rush of new operators in commercial space launches, warning there could be a “bubble” in the sector.
• Global corporate defaults reach $65b. Corporate borrowers across the world have defaulted on $US50 billion ($65 billion) of debt so far this year as the number of delinquent companies rises at its fastest pace since the US emerged from the crisis in 2009. The number of defaults rose by five in the past week, including the first European company of the year, according to Standard & Poor's. Forty-six companies have defaulted since the year began.

Night Trading

• Asian indices are -1.50% to -.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 140.25 +1.75 basis points.
• Asia Pacific Sovereign CDS Index 56.575 +1.0 basis point.
• Bloomberg Emerging Markets Currency Index 72.42 -.18%.
• S&P 500 futures -.59%.
• NASDAQ 100 futures -.64%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (HAS)/.24
• (JBHT)/.85
• (MTB)/1.88
• (MS)/.47
• (PEP)/.81
• (BMI)/.41
• (BRO)/.42
• (IBM)/2.09
• (NFLX)/.03
• (RMBS)/.12
• (SANM)/.56 

Economic Releases 

10:00 am EST

• The NAHB Housing Market Index for April is estimated to rise to 59.0 versus 58.0 in March. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Kashkari speaking, Fed's Rosengren speaking and the RBA meeting could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down by industrial and technology shares in the region. I expect US stocks to open modestly lower and to maintain losses into the afternoon. The Portfolio is 25% net long heading into the week.

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 rising European/Emerging Markets/US High-Yield debt angst, global growth concerns, commodity weakness, yen strength, earnings outlook worries and technical selling. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 25% net long heading into the week.

Today's Headlines

Bloomberg:    

• Saudi Prince Says He Could Add a Million Barrels Immediately. Saudi Arabia could raise crude output by more than a million barrels a day immediately if there was demand for it, said the kingdom’s Deputy Crown Prince, as he reiterated the nation would only agree to freeze production if all major producers including Iran do the same. The world’s largest oil exporter could increase output to 11.5 million barrels a day immediately and go to 12.5 million in six to nine months "if we wanted to," Prince Mohammed bin Salman, who is also chairman of the Supreme Council of Saudi Arabian Oil Co., said in an interview Thursday. The country pumped 10.2 million barrels a day last month, according to data compiled by Bloomberg. If the kingdom chose to increase investment in its oil industry, total production capacity could be increased to 20 million barrels a day, the prince said at King Salman’s private farm in Diriyah, the original home of the Al Saud royal family. “I don’t suggest that we should produce more, but we can produce more,” said the prince, who is the king’s son, second in line to the throne and a leading force in the country’s economic policy. “We can produce 20 million barrels of oil per day if we invested in production capacity, but we can’t produce beyond 20 million.”
• Japan Gets Little G-20 Support for Possible Yen Intervention. Japan has won little sympathy from its Group of 20 counterparts for the pain being caused by a stronger yen, signaling opposition to shielding the country’s fragile economy via intervention to curb the currency’s strength. During a G-20 meeting in Washington on Thursday and Friday, Japanese Finance Minister Taro Aso said he re-confirmed with his counterparts, including U.S. Treasury Secretary Jack Lew, that disorderly currency movements aren’t desirable. But within 24 hours, Lew had bluntly said that Japan needs to focus on domestic demand and called foreign-exchange market moves “orderly” -- a clear warning that the U.S. doesn’t view yen intervention as warranted. “There’s a broad consensus that we should avert as a global financial system any kind of competitive devaluation cycle,” said Mexican Finance Minister Luis Videgaray. “So I don’t think that it is likely that would be a possibility in Japan or any other place,” he told Bloomberg in Washington.
• Rousseff Says Impeachment Would Put Brazil’s Democracy at Risk. Brazil’s President Dilma Rousseff said democracy and social programs are at risk as she made a last-ditch call on Brazilians to defend her before a crucial impeachment vote on Sunday. “What’s at stake is respect for the sovereign will of the people, what’s at stake are social achievements and Brazilians’ rights,” Rousseff said in a seven-minute video posted on the Internet. “I turn to you to ask that you keep defending democracy, that you keep mobilizing in schools, streets and on social networks.” Rousseff initially intended to address the nation on television and radio on Friday, but instead posted the video overnight after the opposition filed legal motions arguing she can’t make a nationally broadcast speech to defend herself.
• UnitedHealth(UNH) to Exit Michigan Obamacare Exchange, State Says. UnitedHealth Group Inc. plans to exit a third state Obamacare market as the insurer works to stem losses from its struggling Affordable Care Act business. The insurer won’t sell policies through Michigan’s ACA exchange for next year, according to Andrea Miller, a spokeswoman for the state’s Department of Insurance and Financial Services. Georgia and Arkansas said last week that UnitedHealth will quit their exchanges for 2017.

Wall Street Journal:

• Greece’s Creditors Weigh Extra Austerity Measures to Break Deadlock. Bid to bridge differences between Europe and IMF that threaten to unravel Greek bailout. Greece’s creditors are considering seeking extra austerity measures that would be triggered if Athens misses its fiscal targets, in a bid to bridge differences between Europe and the International Monetary Fund and break a deadlock threatening to unravel the Greek bailout.
• Brazil’s Rousseff Works to Sway Lawmakers on Eve of Impeachment Vote. President meets with officials at her residence while other lawmakers continue congressional session.
• Chinese Lender’s Woes Expose Its Global Tentacles. Problems at Shanghai Kuailu Investment underscore risks of a loosely regulated financing industry that relies on mom-and-pop investors. A crisis rocking a loosely regulated lending network is underlining the risks of a financing boom that has channeled Chinese household money into Hollywood movies and Wall Street deals.
• U.S. Releases Nine Guantanamo Prisoners, Sends Them to Saudi Arabia. Move is part of Obama administration’s effort to release detainees considered low-risk.
• Trump Can’t Break the Republican Party. Republicans may be split temporarily, but there is no deep Trumpist movement to push permanent schism.

Barron's:

• Had bullish commentary on (F), (SRPT), (AJRD), (XRS), (INTC), (SEE) and (GM).

MarketWatch.com:

• Central banks may do more harm than good, says head of India’s central bank. 

CNBC:

• EM rally a head fake? Risks to watch. Investors are dipping back into emerging markets, but some analysts warn the appearance of a recovery overlooks a number of potential risks in the battered asset class. EM equity funds reversed 17 weeks of net redemptions to end the first quarter with their longest run of inflows since the third quarter of 2014, according to EPFR's Global Fund Flows and Allocations Data.

Zero Hedge:

• "The Big Move" Is Coming. (graph)
• Saudi Arabia Threatens To Liquidate Its Treasury Holdings If Congress Probes Its Role In Sept 11 Attacks.
• Denmark, Belgium, Now The Netherlands: Negative Mortgage Rates Spread Across Europe.
• One Reader Tried To Get The Recording Of Yellen's "World-Saving Phone Call"; This Is What The Fed Replied.
• The Keynesian House Of Denial.
• The Fed Sends A Frightening Letter To JPMorgan, Corporate Media Yawns. 
• What Happens Next (In Europe)? (graph)
• Investigating Deutsche Bank’s €21 Trillion Derivative Casino In Wake Of Admission It Rigged Gold And Silver.
• Doug Casey: The Real Problem Is Government.
• China - A Reversal Of Urbanization? (graph)
• A Crisis In American Housing. (graph)
• Hillary Clinton To Nation: "Do Not Screw This Up For Me".

Business Insider:

• A bunch of hedge fund managers got together in a room and talked about how long China has. One investor told the entire room of hedge fund managers how long China has before it runs out of foreign exchange reserves. The country, said Anne Stevenson-Yang co-founder of J Capital Research, has 9 months before its currency "reserves are down to a perilous point." She calculated that reserves, this summer around $3.4 trillion, have dwindled down to $2.9 trillion. "In 12 months there will be a currency crisis of around 15%," she said. "There will be a banking crisis two years later."
• The Apple(AAPL) Watch has been a failure.
• Saudi Arabia is ramping up its oil production.

Reuters:

• Iran will not attend Doha oil freeze talks on Sunday -sources. Iran will not attend a meeting between OPEC and non-OPEC member countries about freezing oil output levels scheduled for Doha, Qatar, on Sunday, two sources familiar with the situation told Reuters. Tehran's oil minister had not been scheduled to attend, but the OPEC member country was due to send a representative.

The Telegraph:

• Can anything stop this global cycle of doom? The patient is in a critical condition. The International Monetary Fund is concerned that the global economic recovery has taken too long. Kaushik Basu, chief economist of the World Bank, says the financial crisis has left a “festering wound” that is “refusing to heal”.

FAS:

• Negative Interest Rates 'Insane' Experiment, El-Erian Tells FAS. ECB attempting "insane experiment" with negative interest rates as that means creidtors must pay for granting others privilege to borrow from them, Allianz chief economic adviser Mohamed El-Erian says in interview. Says negative interest rates upend the financial system; pension funds, banks, insurers need interest income.

IRNA:

• Iran's Crude Oil Production Surpassed 3.5m Barrels Per Day. Iran's gas condensate exports will increase by 10% in coming months, citing Deputy Oil Minister Rokneddin Javadi.

Zanganeh:

• Iran Won't Freeze Oil Production at Jan. '16 Levels. Iran didn't send representative to Doha meeting, supports decision for other OPEC and non-OPEC countries to freeze crude oil production, Oil Minister Bijan Namdar Zanganeh said in interview with Iranian state TV. Iran freezing crude output levels would amount to "a kind of self-imposed sanction," Zanganeh said.

Market Week in Review

• S&P 500 2,080.88 +1.63%*

The Weekly Wrap by Briefing.com.

*5-Day Change