Stocks Higher into Final Hour on Earnings Optimism, Diminished Geopolitical/Trade War Fears, Oil Gain, Commodity/Transport Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 15.6 +1.9%

• Euro/Yen Carry Return Index 138.23 +.28%

• Emerging Markets Currency Volatility(VXY) 8.02 -.74%

• S&P 500 Implied Correlation 38.26 -3.2%

• ISE Sentiment Index 108.0 +.93%
  

• Total Put/Call .98 +3.16%

• NYSE Arms .70 -20.94%

Credit Investor Angst:

• North American Investment Grade CDS Index 59.18 -.21%
  

• America Energy Sector High-Yield CDS Index 415.0 -.30%

• European Financial Sector CDS Index 56.40 +1.6%

• Italian/German 10Y Yld Spread 118.5 -7.25 basis points
  

• Asia Pacific Sovereign Debt CDS Index 11.83 -2.31%

• Emerging Market CDS Index 135.31 -1.75%
  

• iBoxx Offshore RMB China Corporate High Yield Index 149.47 +.05%

• 2-Year Swap Spread 28.50 -.5 basis point

• TED Spread 56.25 -2.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -3.75 +1.0 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 75.0 +.36%
• 3-Month T-Bill Yield 1.81% +3.0 basis points
  

• Yield Curve 44.0 +1.5 basis points

• China Iron Ore Spot 67.71 USD/Metric Tonne +2.40%

• Citi US Economic Surprise Index 29.40 unch.

• Citi Eurozone Economic Surprise Index -91.50 +.3 point

• Citi Emerging Markets Economic Surprise Index 6.2 +.3 point

• 10-Year TIPS Spread 2.16 +2.0 basis points
  
• 90.2% chance of Fed rate hike at June 13 meeting, 90.8% chance at August 1 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +37 open in Japan 
• China A50 Futures: Indicating +92 open in China

• DAX Futures: Indicating +5 open in Germany

Portfolio: 

• Higher: On gains in my industrial/tech/retail/medical/biotech sector longs

• Disclosed Trades: None

• Market Exposure: 100% Net Long

Today's Headlines

Bloomberg:

•  Fed Says Tariff Concerns Cloud Otherwise Solid Growth Outlook.

•  Bank Stocks Dumped in ‘Glass Half Empty’ Season; Bonds Disagree.

•  Metals Gripped by Turmoil as Rusal's Sanctions Fallout Spreads.

Wall Street Journal:

• Seoul Sees Path for Peace Deal to Formally End Korean War.

• Flattening Yield Curve Raises Warning Flag.

• Is the U.S. Shale Boom Hitting a Bottleneck?

MarketWatch.com:

• In one chart: The VIX says the stock-market low may be in. 

• Bitcoin whales dump $100 million of digital currency in 24 hours .

Fox News:

• Nearly a dozen GOP lawmakers demand criminal probes of Comey, McCabe, Lynch, Clinton.

CNBC:

• Roku(ROKU) plunges after Best Buy and Amazon partner to sell smart TVs.

• US targeting NAFTA deal in three weeks: Sources.

• Energy stocks are catching up to the oil rally – and a bigger breakout is coming.

• Goldman Sachs CEO Lloyd Blankfein: Economy looks 'awfully good' and should keep growing.

Zero Hedge:

• Barclays Summarizes 89-Page Tesla(TSLA)-Bashing Report To 5 Tweets For Dumb Americans And Tech Investors.

• Puerto Rico Hit With Island-Wide Blackout.

• IMF Sounds The Alarm On Global Debt, Warns "United States Stands Out".

• WTI/RBOB Surge After Across-The-Board Inventory Draws.

• Trump Confirms: "Mike Pompeo Met With Kim Jong Un".

• US Launches Anti-Dumping Probe Into Steel Wheels From China.

Bear Radar

Style Underperformer:

• Large-Cap Value +.4%

Sector Underperformers:

• 1) Computer Services -2.8% 2) Tobacco -2.1% 3) Banks -.6%

Stocks Falling on Unusual Volume: 

• LTXB, IBM, HCSG, HBHC, ROKU, ADTN, MTG, LRCX, RDN, ELY and ESNT

Stocks With Unusual Put Option Activity:

• 1) IBM 2) JNPR 3) SPWR 4) HLF 5) MOS

Stocks With Most Negative News Mentions:

• 1) DLNG 2) MO 3) JNPR 4) ELY 5) RIOT

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.9%

Sector Outperformers:

• 1) Steel +4.3% 2) Airlines +3.6% 3) Oil Service +3.3%

Stocks Rising on Unusual Volume:

• ISRG, LX, STO, TXT, BBBY, FSLR, MGRC, NVCR, CSX, PUMP, IIN, ALGT, WBT, TUR, CKH, KTOS, SP, SNE, ASIX, GPRK, MMLP, USLV, YNDX, DRQ, ZAYO, OAS, UAL, FSS and PACW

Stocks With Unusual Call Option Activity:

• 1) MAS 2) URI 3) NUE 4) UAL 5) OAS

Stocks With Most Positive News Mentions:

• 1) ISRG 2) CSX 3) BBY 4) AA 5) FSLR

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
• 8 Sectors Rising, 3 Sectors Declining
• 65.8% of Issues Advancing, 31.0% Declining
• 126 New 52-Week Highs, 37 New Lows
• 46.2% of Issues Above 200-day Moving Average
• Average 14-Day RSI 51.6%
• Vix 16.1 +5.4%
• Total Put/Call 1.06 +11.6%
• TRIN/Arms .65 -27.9%

Wednesday Watch

Night Trading 

• Asian equity indices are +.25% to +1.0% on average.
• Asia Ex-Japan Investment Grade CDS Index 73.0 -1.75 basis points. 
• Asia Pacific Sovereign CDS Index 12.25 -.25 basis point.
• Bloomberg Emerging Markets Currency Index 74.72 unch.
• FTSE 100 futures +.08%.
• S&P 500 futures +.15%.
• NASDAQ 100 futures +.19%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (ABT)/.58
• (ASML)/1.17
• (MS)/1.25
• (TXT)/.48
• (USB)/.95
• (AA)/.63
• (AXP)/1.71
• (CP)/2.69
• (CCI)/1.19
• (KMI)/.21
• (PIR)/.19
• (STLD)/.89
• (URI)/2.55
• (VMI)/1.86

Economic Releases

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory gain of +393,580 barrels versus a +3,306,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -103,500 barrels versus a +458,000 barrel gain the prior week. Distillate inventories are estimated to fall by -85,830 barrels versus a -1,044,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.16% versus a +.5% gain prior.
  

2:00 pm EST

• US Fed Beige Book report.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Dudley speaking, Fed's Brainard speaking, UK CPI report, Eurozone CPI report and the weekly MBA Mortgage Applications report could also impact trading today.

BOTTOM LINE:  Asian indices are higher, boosted by industrial and technology shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.