Monday Watch

Today's Headlines

Bloomberg:

• Mnuchin ‘Hopeful’ Truce Can Be Reached With China on Trade. (video) U.S. Treasury Secretary Steven Mnuchin said he’s optimistic that the U.S. can reach a agreement with China that will forestall the need to impose the tariffs that President Donald Trump has ordered on a least $50 billion of goods from that country. “We’re having very productive conversations with them,” Mnuchin said on “Fox News Sunday,” when discussing talks with China. “I’m cautiously hopeful we reach an agreement.”

• U.S. and South Korea Reach Agreement on Trade, Steel Tariffs. The U.S. and South Korea reached an agreement on revising the allies’s six-year-old bilateral trade deal and President Donald Trump’s plan to impose tariffs on imported steel, Treasury Secretary Steven Mnuchin said. Mnuchin said U.S. Trade Representative Robert Lighthizer reached “a very productive understanding” with South Korea on the tariffs to reduce imports and the existing trade deal known as Korus.

• PBOC's Yi Pledges More Open Financial Sector. People’s Bank of China Governor Yi Gang said the nation will further ease access to its financial sector and coordinate the opening with currency reforms. China will open the capital account in an “orderly” way and improve the yuan’s convertibility, the newly-appointed central bank governor said Sunday in Beijing. Yi also said that monetary policy will remain “prudent and neutral,” repeating the central bank’s recent stance, and pledged to continue work on defusing financial risks and enhancing regulatory capabilities. 

• China Wants Its Own Brains Behind 30 Million Self-Driving Cars.

• U.K. to Order Facebook, Google to Redo Data Policies, Times Says.

• Asia Stocks Signal More Losses Amid Trade Tensions. The sell-off that sent global markets into a tailspin last week stretched into Monday, with stock futures in Asia signaling further declines amid concern that global growth may be hurt by American protectionist policies. U.S. equity futures offered some hope of stabilization. Global stocks put in their worst week since the rout in early February and erased all of the subsequent recovery, with losses deepening into the close of Friday trading in the U.S. Crude posted its biggest weekly gain since July and the yen rose to the strongest in more than 16 months against the dollar. U.S. stock futures were little changed in early trading Monday. Futures on Japan’s Nikkei 225 Stock Average dropped 1 percent in most recent Singapore trading. Futures on Australia’s S&P/ASX 200 Index slid 0.9 percent. New Zealand’s S&P/NZX 50 Index retreated 1 percent.

• Five Things You Need to Know to Start Your Day.

• China Is About to Shake Up the Oil Futures Market. (video)

• JPMorgan Sees Market Overcoming Stock Rout, But Beware Trade War. Despite a harrowing week for U.S. stocks, market conditions are looking favorable heading into the second quarter, according to JPMorgan Chase & Co. Conditions for stability will probably come together in the second quarter, and asset allocations should remain oriented toward growth, JPMorgan strategists led by John Normand wrote in a note Friday after the S&P 500 closed down 6 percent for the week. They also suggested, however, that a potential trade war is a threat to economic growth.

Wall Street Journal: 

• Trump, Tariffs and the Protectionist Temptation. The trade balance doesn’t matter for U.S. prosperity. But America could benefit from updating and enforcing its trade deals, especially with China.

• Health-Insurance Premiums Loom as Election Issue. Lawmakers, at an impasse, omitted from spending bill an effort to restore payments to insurers. Now they’re rushing to assign blame for expected rate increases. 

• Split Over Keeping Bankers Out of Trouble. Ten years after the financial crisis, Washington’s bank regulators don’t agree on best way to examine financial firms.

Fox News:

• Fox News Poll: Gap narrows on 2018 vote preference. (video)

• Bolton Responds After Tim Kaine Questions Security Clearance Over Russia Gun Video. (video)

CNBC: 

• Trump defends $1.3 trillion spending plan, points to military gains.

• China will steadily advance financial reforms, open sector: Central bank governor.

• Trump's concerns about China are 'legitimate,' says former Obama trade official.

• Facebook(FB) saves extensive call, text data made by Android users: Ars Technica.

• Wells Fargo(WFC) thinks its time to buy into the sell-off, even with fears over trade wars and rate hikes.

Zero Hedge:

• American Adults Have Never Been Fatter.

• China Launches Massive Military Drills "In Preparation For War".

• Coulter On War Path After Trump Caves On Omnibus: "We Thought We Were Getting A Negotiator".

• Jamie Dimon Makes His Average Employee's Annual Salary In One Day.

• Julian Assange Reminds Us What Mark Zuckerberg Thinks Of Facebook Users.

• German Police Arrest Former Catalan Leader Puigdemont.

• The Good, The Bad, And The Ugly From The Market's Retest Of The February Low. (graph)

Business Insider:

• Mark Zuckerberg takes out full-page newspaper ads to say 'sorry'.

• Walmart(WMT) reveals why it has robots roaming the aisles in 50 of its stores.

• Crypto projects that raised hundreds of millions of dollars are being 'intentionally non-transparent'.

• Tim Cook speaks out on the Cambridge Analytica scandal, says Facebook's collection of user data 'shouldn't exist'.

• 13 incredible stories of American servicemen who won the Medal of Honor — the military's highest honor.

Night Trading

• Asian indices are -1.0% to -.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 81.0 +1.75 basis points.

• Asia Pacific Sovereign CDS Index 13.5 +.5 basis point.

• Bloomberg Emerging Markets Currency Index 75.11 +.06%. 

• FTSE 100 futures -.51%.

• S&P 500 futures +.53%.

• NASDAQ 100 futures +.67%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (PAYX)/.60

• (RHT)/.81

Economic Releases
8:30 am EST

• The Chicago Fed National Activity Index for February.

10:30 am EST

• The Dallas Fed Manufacturing Activity Index for March is estimated to fall to 33.5 versus 37.2 in February.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Dudley speaking, Fed's Mester speaking, Eurozone 4Q GDP report and the $30B 2Y T-Note auction could also impact trading today.

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

Weekly Outlook

• Weekly Market Outlook by Yahoo. (video)
• Stocks to Watch Next Week by Seeking Alpha.
• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly higher on oil gains, economic optimism, less US High-Yield/European/Emerging Markets debt angst, yen weakness, bargain-hunting and technical buying. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.

Today's Headlines

Bloomberg:

• Currency and Credit Markets Take Trade Tensions Mostly in Stride. (video) Global equity markets freaked out as the Trump administration ratcheted up protectionist rhetoric this week. Currencies and credit had more nuanced reactions. Treasuries had a measured response to the tariff talk between the U.S. and China, while corporate credit mirrored the roiling equity picture. In foreign exchange, emerging-market currencies have actually gained of late. Some developed-market currencies enjoyed a brief boost as investors looked for a sanctuary, but volatility held steady. Here’s a rundown of the markets as a tumultuous week comes to a close.
• Inside the Secret Plot to Reverse Brexit.
• Spain's Rating Lifted by S&P With Prospect of Further Upgrade.
• Finland Ready to Arrest Catalan Separatist Leader. The former president of Catalonia, Carles Puigdemont, left Finland before authorities there could act on a request from Spain to arrest him, his lawyer said, in connection with the independence drive last year. Jaume Alonso-Cuevillas, the lawyer, confirmed his departure by text message Saturday. Puigdemont will remain at the disposal of the authorities in Belgium, where he now lives, Spanish broadcaster LaSexta reported, citing Alonso-Cuevillas. Finland received an extradition request on Friday from Spain, which also delivered additional documents to support an arrest, Kai Mykkanen, the country’s interior minister, said by phone on Saturday. An arrest warrant has been issued for Puigdemont, whose whereabouts are unknown.
• U.S. Metal-Tariffs Showdown at WTO to Shake World Trade Order. (video)
• Apple's(AAPL) Tim Cook Calls for More Regulations on Data Privacy.

Wall Street Journal:

• Thousands Join ‘March for Our Lives’ Protests Against Gun Violence.
• Airlines Conquer Challenges of Long-Haul Flights. Now Can Passengers? Qantas, other carriers experiment with lighting, cabin temperature and the menu to help travelers ward off jet lag.
• The U.K. Is Doing Just Fine, Thanks. Despite all the dire Brexit forecasts, the U.K. has had a strikingly good year. Leaving the EU may well boil down to far less, economically, than anyone thought.

Barron's:

• Had bullish commentary on (FB) and (LZB).

MarketWatch.com:

• Here’s all the stuff the U.S. imports from China that’s causing a huge trade deficit.

Fox News:

• Trump, GOP leaders face backlash over $1.3 trillion spending package. (video)

CNBC:

• The economy looks weak in the first quarter, but better days are coming.
• Trump security pick John Bolton likely to turn up heat on Iran and boost oil prices. (video)
• Here's how much the stock market is still up since Donald Trump took office.
• Facebook's(FB) privacy flap isn't just a Facebook problem, and users might be surprised by how much data is shared. (video)
• China warns US it will defend own trade interests.
• Apple's(AAPL) Tim Cook calls for calm heads on China, US trade.
• How to surf the web anonymously and keep Chrome from tracking you.
• San Francisco Fed’s John Williams is leading candidate for New York Fed President position: Wall Street Journal.
• How to download a copy of everything Facebook knows about you. (video)
• Conservatives rip Trump for signing massive spending bill that ignores many of their priorities. (video)

Zero Hedge:

• Trump To Expel "Dozens Of Russian Diplomats" In Response To Skripal Poisoning.
• "We're Going To Start A Revolution": 500,000 People Storm Washington To Protest Guns.
• BofA Flips: "The Risk Is That Global Growth Slows A Lot More Than Consensus Believes". (graph)
• The 2017 Stock-Market Rally Minted 700,000 New American Millionaires.
• Drudge, Coulter Trash Trump Over "Fake Veto" As Base Rages.
• John Bolton Expected To "Clean House" At The NSC. 
• Tolerance Cuts Both Ways: Freedom For The Speech We Hate.
• Zuckerberg Scrambles To Calm Facebook Employees.
• Elon Musk Deletes Spacex, Tesla Facebook Pages.
• Wall Street Journal Admits "China Started The Trade War, Not Trump".
• Raytheon's Laser-Dune-Buggy Blasts Drone-Swarm Out Of The Sky.
• Carnage... Everywhere. (graph)

Business Insider:

• China's 'Great Firewall' is taller than ever under 'president-for-life' Xi Jinping.
• China's growing submarine force is 'armed to the teeth' — and the rest of the Pacific is racing to keep up.

Weekly Scoreboard*

S&P 500 2,602.78 -5.26%*

The Weekly Wrap by Briefing.com.

 
Indices

• DJIA 23,671.40 -4.93%

• NASDAQ 7,049.91 -5.60%

• Russell 2000 1,521.75 -4.03%

• S&P 500 High Beta 42.04 -5.93%

• Goldman 50 Most Shorted 141.41 -3.61%

• Wilshire 5000 27,086.50 -4.95%

• Russell 1000 Growth 1,354.48 -5.45%

• Russell 1000 Value 1,159.70 -4.79%

• S&P 500 Consumer Staples 526.55 -4.03%

• Vanda Cyclicals-Defensives 1.6112 -1.4%
  

• NYSE Technology 1,810.44 -6.58%

• Transports 10,249.80 -4.06%

• Utilities 676.50 -2.25%

• Bloomberg European Bank/Financial Services 93.76 -4.7%

• MSCI Emerging Markets 47.80 -3.13%

• HFRX Equity Hedge 1,301.26 -9.8%

• HFRX Equity Market Neutral 1,021.37 +.54%

Sentiment/Internals

• NYSE Cumulative A/D Line 312,092 -.79%

• Bloomberg New Highs-Lows Index -149 -125

• Bloomberg Crude Oil % Bulls 44.0 +32.0%

• CFTC Oil Net Speculative Position 668,533 n/a

• CFTC Oil Total Open Interest 2,403,162 n/a

• Total Put/Call 1.50 +58.3%

• OEX Put/Call .50 -54.55%

• ISE Sentiment 68.0 -16.25%

• NYSE Arms .89 +9.4%

• Volatility(VIX) 24.29 +49.5%

• S&P 500 Implied Correlation 48.30 +9.23%

• G7 Currency Volatility (VXY) 7.75 -.90% 

• Emerging Markets Currency Volatility (EM-VXY) 7.80 -.76%

• Smart Money Flow Index 17,975.59 -3.26%

• ICI Money Mkt Mutual Fund Assets $2.825 Trillion +.18%

• ICI Domestic Equity Mutual Fund/ETFs Weekly Flows +$19.080 Billion

• AAII % Bulls 33.2 -9.8%

• AAII % Bears 28.5 +33.6%

Futures Spot Prices

• CRB Index 196.26 +.93%

• Crude Oil 65.96 +5.85%

• Reformulated Gasoline 203.32 +4.64%

• Natural Gas 2.59 -3.82%

• Heating Oil 201.71 +5.60%

• Gold 1,348.20 +2.62%

• Bloomberg Base Metals Index 200.24 -2.75%

• Copper 299.40 -3.82%

• US No. 1 Heavy Melt Scrap Steel 338.33 USD/Metric Tonne +3.05%

• China Iron Ore Spot 64.40 USD/Metric Tonne +1.10%

• Lumber 489.50 +.35%

• UBS-Bloomberg Agriculture 1,029.60 -.70%

Economy

• Atlanta Fed GDPNow Forecast +1.8% unch.

• ECRI Weekly Leading Economic Index Growth Rate 5.5% -10.0 basis points
  

• Philly Fed ADS Real-Time Business Conditions Index .1368 -5.5% 

• US Economic Policy Uncertainty Index 10.92 -86.4%

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 160.73 +.23%

• Citi US Economic Surprise Index 46.30 +.5 point

• Citi Eurozone Economic Surprise Index -57.9 -26.2 points

• Citi Emerging Markets Economic Surprise Index 35.40 -3.9 points

• Fed Fund Futures imply 72.2% chance of no change, 27.8% chance of 25 basis point hike on 5/2

• US Dollar Index 89.46 -.8%

• MSCI Emerging Markets Currency Index 1,717.59 +.02%

• Bitcoin/USD 8,631.19 +1.36%

• Euro/Yen Carry Return Index 135.11 -.42%

• Yield Curve 56.5 +1.25 basis points
  

• 10-Year US Treasury Yield 2.83% -2.0 basis points

• Federal Reserve's Balance Sheet $4.361 Trillion -.13%

• U.S. Sovereign Debt Credit Default Swap 22.76 +4.28%

• Illinois Municipal Debt Credit Default Swap 254.19 +.69%

• Italian/German 10Y Yld Spread 145.75 -5.5 basis points

• Asia Pacific Sovereign Debt Credit Default Swap Index 13.51 +18.71% (new series)
  

• Emerging Markets Sovereign Debt CDS Index 31.80 -6.91%
  

• Israel Sovereign Debt Credit Default Swap 52.64 +7.8%

• South Korea Sovereign Debt Credit Default Swap 55.65 +22.43%

• Russia Sovereign Debt Credit Default Swap 121.93 +12.75%

• iBoxx Offshore RMB China Corporate High Yield Index 148.56 +.10%

• 10-Year TIPS Spread 2.08% unch.

• TED Spread 40.75 +15.75 basis points

• 2-Year Swap Spread 33.25 +1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -10.0 +12.5 basis points

• N. America Investment Grade Credit Default Swap Index 66.25 +22.0%

• America Energy Sector High-Yield Credit Default Swap Index 398.0 +9.15%

• European Financial Sector Credit Default Swap Index 67.94 +30.19%
  

• Emerging Markets Credit Default Swap Index 142.50 +19.34%
  

• CMBS AAA Super Senior 10-Year Treasury Spread to Swaps 168.0 +1.0 basis point
  

• M1 Money Supply $3.688 Trillion +.31%

• Commercial Paper Outstanding 1,065.30 -1.40%

• 4-Week Moving Average of Jobless Claims 221,500 +2,250

• Continuing Claims Unemployment Rate 1.3% unch.
  

• Average 30-Year Mortgage Rate 4.45% +1.0 basis point

• Weekly Mortgage Applications 383.0 -1.14%

• Bloomberg Consumer Comfort 56.8 +.6 point

• Weekly Retail Sales +3.0% +10.0 basis points

• Nationwide Gas $2.59/gallon +.06/gallon

• Baltic Dry Index 1,117.0 -1.67%

• China (Export) Containerized Freight Index 788.74 -2.59%

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 20.0 +21.21%

• Rail Freight Carloads 273,986 -1.52%

Best Performing Style

• Small-Cap Growth -3.1%

Worst Performing Style

• Large-Cap Growth -4.8%

Leading Sectors

• Gold & Silver +4.3%

• Energy +1.7%

• Oil Service +.9%

• Paper -.5%

• Defense -.9%

Lagging Sectors

• Gaming -5.5% 

• Banks -6.1%

• Disk Drives -6.1%

• Social Media -6.7%

• Computer Hardware -7.5%

Weekly High-Volume Stock Gainers (20)

• LFIN, OMER, GES, LE, CTRN, MULE, DXPE, ARNA, HRTX, TRHC, ZUMZ, TDW, HQY, SRI, STC, MNLO, DNLI, SNNA, SHEN and CTWS

Weekly High-Volume Stock Losers (20)

• GAIA, STML, DLTH, ASH, CISN, TTWO, CARA, CARB, OMI, TIF, GIII, FSCT, GPI, FB, ARMO, MIK, TORC, ORCL, ODT and GDEN

Weekly Charts

ETFs

• High-Volume Gainers

• High-Volume Losers

Stocks

• High-Volume Gainers

• High-Volume Losers

*5-Day Change