Bull Radar

Style Outperformer:

• Large-Cap Value +.1%

Sector Outperformers:

• 1) Hospitals +2.4% 2) Oil Service +.9% 3) Homebuilders +.7%

Stocks Rising on Unusual Volume:

• GE, QIWI, NDRM, FOE, KNOP, HLT, USAC, SELB, EDU, CSU, WCN, LGND, BHLB, JKS, MZOR, SERV, UBA, SKT, GDI, ARLP, TSRO, RXN, DLNG, UAA, RDC, NTRI, HNI and BBBY

Stocks With Unusual Call Option Activity:

• 1) XLK 2) KEY 3) UPS 4) ADBE 5) BLUE

Stocks With Most Positive News Mentions:

• 1) CHDN 2) UPL 3) CACI 4) CVX 5) FCAU

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +30.5% Above 100-Day Average
• 5 Sectors Rising, 5 Sectors Declining
• 46.3% of Issues Advancing, 50.2% Declining
• 112 New 52-Week Highs, 6 New Lows
• 49.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 37.6%
• Vix 11.8 +10.7%
• Total Put/Call .94 -11.3%
• TRIN/Arms .66 -20.1%

Monday Watch

Today's Headlines

Bloomberg:

• Weakened May Forced to Give Jobs to Rivals in Bid to Cling On. Theresa May dramatically promoted one prominent pro-Brexit minister and reappointed a second to her cabinet as she prepared to face furious Tory lawmakers in a showdown that could end her premiership. May surprisingly named Michael Gove, who unsuccessfully ran against her for the party leadership last year and whom she then fired from the Ministry of Justice, as her new environment secretary. She also promoted another unsuccessful pro-Brexit leadership challenger, Andrea Leadsom, from the environment job to leader of the House of Commons, responsible for steering legislation through Parliament.

• Macron Set for Majority in Assembly After First-Round Vote. President Emmanuel Macron headed for a clear majority in the National Assembly after French voters rallied behind their new head of state in the first round of legislative elections Sunday. Macron’s year-old party, Republic on the Move, won about 33 percent of the vote, some 13 percentage points ahead of the Republicans, according to pollsters’ projections based on an early vote count. The result could give Macron’s party as many as 445 seats out of 577 in the lower house of parliament, according to projections by Elabe. The lowest estimate for his seat count was from Ipsos, which saw 390 to 430 seats.

• Gulf Mediator Says Qatar ‘Ready to Understand’ Region's Concerns. Gulf crisis mediator Kuwait said on Sunday that isolated Qatar was “ready to understand” the concerns of its neighbors and bolster stability in the region, in a sign that the week-old spat may be easing. Kuwaiti Foreign Minister Sheikh Sabah Al-Hamad Al-Sabah said his country would not abandon mediation efforts until the impasse was resolved, the state-run KUNA news agency reported. Qatari leaders are “willing to hold dialogue” to end the crisis, he said.

• China Holds Firm to Its $5 Trillion Anchor as Fed, ECB Seek Exit. Investors who fret about when and how global central banks will run down their crisis-era balance sheets can be relaxed about the biggest of them all -- China’s. Whereas the Federal Reserve’s $4.5 trillion asset pile is set to be shrunk and the European Central Bank’s should stop growing by the end of this year as the outlook brightens, China’s $5 trillion hoard is here to stay for the time being -- and could even still expand, according to the majority of respondents in a Bloomberg survey of People’s Bank of China watchers.

• Economists See a Strong Chance of Second Term for BOJ's Kuroda. Haruhiko Kuroda is considered a contender to get a second term as Bank of Japan governor by a majority of economists who offered an opinion on the matter ahead of a policy meeting this week. A third of them listed him as the only possible contender to lead the central bank after his current term ends in April 2018, according to a survey by Bloomberg.

• Pound Faces Fresh Headwinds as U.K. Political Limbo Is Prolonged. The pound looked set to be buffeted by fresh headwinds on Monday after U.K. Prime Minister Theresa May’s efforts of clinging to power through a loose political alliance suffered a setback.

• Russia, Saudis See Oil Inventories Falling After Price Drop. A deal among oil-producing countries to curb production and balance an oversupplied market will achieve its objective in the first quarter of next year, Russian Energy Minister Alexander Novak said, after prices tumbled on news of a build-up in U.S. inventories. His Saudi counterpart, Khalid Al-Falih, said at a joint news briefing in Astana, Kazakhstan, that inventories were declining worldwide and reductions would accelerate in the next three to four months. Inventories will settle to their five-year historical average -- OPEC’s target -- before the end of the year, though Saudi Arabia, the group’s biggest producer, may modify its policy if output cuts don’t have the desired effect, he said.

Wall Street Journal:

• When Currencies Fall, Export Growth Is Supposed to Follow—Until Now. The U.K. economy is providing a live test of whether globalization has blunted the textbook effect of currency depreciation.

• Before Repeal and Replace, Kentucky Is Dismantling Health Law. Gov. Bevin reverses course on state’s once-ambitious model, saying cuts will save essential programs.

• Fed’s Effort to Guide Markets Falls Short. Moves to rein in financial conditions appear to be having little impact.

Fox News:

• Lynch should testify in wake of Comey claims, Graham says. (video)

Zero Hedge: 

• Feinstein: "Congress Should Investigate If Lynch Pressured Comey To Cover For Hillary Clinton". (video)

• Central Banker's Real Legacy: Pension Funds Panic 'Reach' For Yield.

• Nomi Prins: Breaking Up The Banks Is Easier Than You Might Think.

• Iran Sends 2 Warships To Oman, Flies Food To Qatar.

• FX Week Ahead Preview: Focus Returns To The US Economy As Politics Run Riot Once Again.

• The Inconvenient Truth... Of Consumer Debt. (video)

• Restaurant Sales, Traffic Tumble: "The Industry Hasn't Reported A Positive Month Since February 2016".

• China's "Bubble Prophet" Sees Unprecedented Surge In Home Prices. (graph)

• Is Another Spanish Bank About To Bite The Dust?

• Uber Imploding: Chief Business Officer Resigns As Kalanick Plans "Leave Of Absence".

• Palladium Pandemonium - Short Squeeze Sends Precious Metal Spreads Parabolic. (graph)

• Trump: "Cowardly Comey" Leaks "Far More Prevalent Than Anyone Ever Thought Possible".

Business Insider:

• Nvidia(NVDA) looks similar to Intel before it went on one of the greatest runs in tech hist

Night Trading

• Asian indices are -.5% to unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 85.75 -.5 basis point.

• Asia Pacific Sovereign CDS Index 17.75 -.5 basis point.

• Bloomberg Emerging Markets Currency Index 73.39 +.%.

• S&P 500 futures -.08%.

• NASDAQ 100 futures -.13%.

Morning Preview Links

Earnings of Note

Company/Estimate

• None of note

Economic Releases
2:00 pm EST

• The Monthly Budget Deficit for May is estimated at -$87.0B versus -$52.5B in April.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Japan Machine Orders, $24B 3Y T-Note auction, $20B 10Y T-Note auction and the William Blair Growth Stock Conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and technology shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the week.

Weekly Outlook

• Wall St. Week Ahead by Reuters.

• Week Ahead by TheStreet.

• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week mixed as yen weakness, oil strength and less European/Emerging Markets/US High-Yield debt angst offsets profit-taking, Fed rate-hike worries 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:

• May Scrapes Together Government as Tory Backlash Begins. Embattled U.K. Prime Minister Theresa May scraped together a government by reaching a deal with a Northern Irish party, while one newspaper said Foreign Secretary Boris Johnson is preparing to vie for her job after the Conservative party’s disastrous election showing. Johnson plans to take advantage of May’s weakened state to launch a bid to become Prime Minister, the Mail on Sunday reported, citing a close ally of Johnson. The foreign secretary called the report “tripe” in a tweet and said he was supporting May.

• Qatar Assets Pile Up Losses as Tension With Arab Nations Swells. Investors in Qatari stocks, bonds and currency forwards were unexpectedly saddled with losses this week as the country was thrust into the epicenter of an unprecedented spat with its neighbors.

• Emerging-Market Debt's Frayed Edges. Investors are deepening their love affair with emerging-market debt at a time of profound complacency in stocks and bonds. As they do so, some buyers may be disregarding some fundamental facts.

• Google(GOOGL) Execs Hunker Down for Summer Fight With EU as Fines Loom. As European Union officials count the days before their annual vacation, Google’s lawyers and lobbyists are hunkering down in Brussels, preparing for what may be a record EU antitrust fine. A penalty in the shopping-search probe could come within weeks and many expect it to exceed a $1.2 billion fine on Intel Corp. in 2009.

Wall Street Journal:

• U.K. Conservatives Get Votes to Govern as Minority Administration. Theresa May’s party strikes so-called confidence-and-supply arrangement with Northern Irish lawmakers. 

• Boeing’s Sale of Up to 60 Commercial Jets to Iran Takes Next Step. Transaction still requires U.S. government approval; Boeing says it would help sustain 18,000 jobs.

• Trump Can Take Payments From Foreign Governments, U.S. Says. George Washington did it, so Donald Trump can, too. That’s the Justice Department’s take on why the 45th president isn’t violating the U.S. Constitution by accepting payments for goods and services from foreign governments without congressional approval.

Barron's:

• Had bullish commentary on (CVX), (ZION), (SIVB), (CMA), (LRCX), (EOG), (CNQ) and (NBL).

Fox News:

• House, Senate committees want Trump tapes, Comey memos. (video)

CNBC:

• Here’s the reason so much big money is on sidelines, says economist Diane Swonk. (video)

• The five biggest tech stocks lost nearly $100 billion in value on Friday. (video)

• Drivers Head Into Summer With a Gift at the Gas Pump.

• Intel(INTC) 1995-2000 vs. NVIDIA(NVDA) 2016-.

Zero Hedge:

• Infrastructure 'Stimulus' - Chinese Ghost Cities & The Big Money Drain.

• When Will The European Super-Bubble Pop?

• Russia Retaliates Against Obama Expulsions, Plans To Seize US Property In Moscow.

• The Value Of "Lunch With Warren Buffett" Plunges 22%.

• Meet The Three Headed Debt Monster That's Going To Ravage The Economy.

• Death Toll Rises In Taliban-Orchestrated Attack; 3 US Soldiers Died.

• Trump Hints He Has Comey Tapes, Tells Press: "You're Going To Be Very Disappointed, Don't Worry".

• Mall Tenants Seek Shorter Leases As America's Relics Of The 80's Teeter On The Brink.

• Pop Goes The Car Bubble... And It May Not Be a Bad Thing.

• Weekend Reading: The Everything Bump.

• FANGtastrophe Strikes Stocks As Growth Gamble Gives Up After VIX Hits 24-Year Lows. (graph)

The Telegraph:

• Economists urge May to accelerate Brexit plans.

Market Week in Review

• S&P 500 2,431.77 -.30%*

The Weekly Wrap by Briefing.com.

*5-Day Change