Monday Watch

Today's Headlines

Bloomberg:

• Central Banks Fret Trade War More Deflationary Than Inflationary. Global central bankers sounded the alert that a trade war would leave them worrying more about the economic fallout than any boost tariffs would give to inflation. As President Donald Trump threatens to impose levies on imported steel and aluminum and duties on as much as $150 billion of Chinese goods, uncertainty over global commerce is casting a pall over an otherwise strong outlook. The tensions were a key theme at the IMF meetings in Washington, with policy makers on Saturday warning of challenges in a communique. Colombia’s central bank president said a trade war would be "catastrophic," his Paraguayan peer said it would be "bad for everyone," while Japan’s chief described protectionism as "very undesirable."    

• What Global Finance Chiefs Are Saying About the Global Economy.  

• Three Alternative Gauges Advise Not to Fret on Global Trade, Yet.    

• Citigroup Warns Mexico of Deficit, Price Surges if Obrador Wins.

• China Is Bolstering Lenders Before New Assault on Shadow Banking.  

• Asia Stocks Open Mixed; Yen Slips as Bonds Decline: Markets Wrap. Japan’s Topix index rose 0.3 percent as of 9:14 a.m. in Tokyo. Australia’s S&P/ASX 200 Index rose 0.2 percent. Futures on Hong Kong’s Hang Seng Index slid 0.3 percent. Futures on the S&P 500 Index gained 0.2 percent.  

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

• Libya’s Oil Output Slumps After Fire at Pipeline to Key Port..

Wall Street Journal:

• Oil Prices Are Fast Approaching $70. Is The Economy Ready?

• It’s a Scary Time to Be Trading Wall Street’s Fear Index. 

• Amazon(AMZN) Trades Like a Tech Stock But Pays Like a Warehouse.

• Flattening Yield Curve Isn’t Just the Fed’s Problem.

• Boomers Embrace Luxury Van Life.

MarketWatch.com:

• Global oil supply surplus may soon become a shortage.

• Netflix(NFLX) is growing at a stunning rate — and so is its profit.

Fox News: 

• Waffle House shooting leaves 4 dead, several injured; gunman sought. (video)

CNBC:

• Employers don't understand the 'black box' behind rising drug prices, and are fed up.

• These bionic vests give factory workers super strength and help prevent injuries. (video)

• China could end up hurting itself with trade action against US farmers. Here's how.

• Average price of US gas jumps 9 cents, to $2.83 a gallon.

Zero Hedge:

• Government Accidentally Releases Documents On Remote Mind-Control.

• WikiLeaks To Countersue Democrats; "Discovery Is Going To Be Amazing Fun".

• Beijing Welcomes Mnuchin Visit As US Hints At China Trade-War Truce.

• In Surprise Twist, Europe Now Pushing Trump Administration To Ease Russian Sanctions.

• Hedge Funds Have Never Been More Bullish Oil, But The "Ghost Of 2008" Looms.

• Canadians Just Set A New Record For Borrowing Against Their Homes.

• No Official Intel Used To Launch Russia Probe According To Controversial DOJ Document: Nunes. 

Business Insider:

• Forget the iPhone X — Apple could launch a new iPhone with a bigger screen this year for as little as $550.

• 29-year-old customer who stopped the nude Waffle House shooter by wrestling away his rifle is hailed as a hero.

• China is boosting its undersea-warfare capabilities — and stealing US technology to do so, a US admiral says. 

• China is getting increasingly aggressive with Taiwan — but war would be disastrous for both sides.

Night Trading

• Asian indices are -.25% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 75.5 +2.0 basis points.

• Asia Pacific Sovereign CDS Index 12.0 unch.

• Bloomberg Emerging Markets Currency Index 74.33 unch.

• FTSE 100 futures +.17%.

• S&P 500 futures +.25%.

• NASDAQ 100 futures +.33%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (ALK)/.12

• (HAL)/.40

• (HAS)/.34

• (KMB)/1.69

• (GOOG)/9.29

• (ABX)/.14

• (BRO)/.30

• (OI)/.58

• (AMTD)/.74

• (WHR)/2.98 

Economic Releases
8:30 am EST

• The Chicago Fed National Activity Index for March is estimated to fall to .25 versus .88 in February.

9:45 am EST

• The Preliminary Markit US Manufacturing PMI for April is estimated to fall to 55.1 versus 55.6 in March.

• The Preliminary Markit US Services PMI for April is estimated to rise to 54.1 versu 54.0 in March.
  

10:00 am EST

• Existing Home Sales for March are estimated to rise to 5.55M versus 5.54M in February.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Eurozone Manufacturing PMI report could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and healthcare shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 75% net long heading into the week.

Weekly Outlook

• Wall St. Week Ahead by Reuters. 
• 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 mixed as yen weakness, less trade war rhetoric and earnings optimism offset higher long-term rates, European/Emerging Markets/US High-Yield debt angst and technical selling. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 75% net long heading into the week.

Today's Headlines

Bloomberg:  

• U.S. Hints at a China Truce as World Warns of Trade-War Threat. Mnuchin said he’s “cautiously optimistic” of reaching an agreement with China that bridges their differences over trade. “A trip is under consideration,” Mnuchin told reporters on Saturday in Washington at the IMF’s spring meetings. “I’m not going to make a comment on timing, nor do I have anything confirmed.”    

• EU Reiterates Demand for U.S. Tariffs Waiver as Clock Ticks Down.

• Treasury 10-Year Yield Sets 2018 High, Traders Focus on 3%.   

• AT&T(T), Verizon(VZ) Face U.S. Probe Over Mobile Technology.  

• Trade, Debt Seen as Threats to Global Growth in IMF Communique.

Wall Street Journal:

• Inside White House, Fears of Rosenstein Dismissal Are Easing.

• White House Backs Funding Increase for World Bank.

Barron's:

• Had bullish commentary on (TPR), (AMLP), (CCL), (RCL), (DAL), (NAVI), (LNC) and (GIS).

CNBC:  

• Oppenheimer sees stocks showing ‘remarkable resilience,' boosted by blockbuster earnings.

• Why tech companies are racing each other to make their own custom A.I. chips.

• Carl Icahn has taken a 'medium'-sized stake in VMware, sources say.

• Here's how to see which apps have access to your Google info — and cut them off.

Zero Hedge:

• Trump Erupts On "Crooked H Flunkie" Maggie Haberman And "Drugged Up Loser" Sam Nunberg.

• Trump To "Counter" DNC Lawsuit; Seeks Servers, Clinton Emails And "Pakistani Mystery Man".

• Harvard Teens Raise $1M For Crypto Fund Despite "Not Knowing A Lot".

• Visualizing The Multi-Billion Dollar Industry That Makes Its Living From Your Data.

• Facebook(FB) Moves 1.5 Billion Users' Data Out Of Europe To Circumvent New Privacy Law.

• Broward Sheriff Israel To Face No-Confidence Vote For "Suspected Malfeasance".

• 1 In 4 Millennials Rely On Their Parents To Pay Some Bills - Even While Working Full Time.

• China's Monetary Shell Game.

• Democratic Party Sues Russia, Trump, Wikileaks For Conspiring To Hurt Hillary In 2016 Election.

• Weekend Reading: The Return Of Stagflation.

• Fistfuls Of Dollars And The Good (Bitcoin), Bad (Bonds), & Ugly (Semis) Markets.

• The Pain Continues: Here Are The Best And Worst Performering Hedge Funds Of 2018.

Stocks Lower into Afternoon on Trade War Fears, Rising Long-Term Rates, Emerging Markets Debt Angst, Transport/Retail Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Around Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 16.7 +4.9%

• Euro/Yen Carry Return Index 137.69 -.23%

• Emerging Markets Currency Volatility(VXY) 8.18 +1.61%

• S&P 500 Implied Correlation 38.42 +.29%

• ISE Sentiment Index 89.0 -4.3%
  

• Total Put/Call 1.01 +4.1%

• NYSE Arms .72 +4.6%

Credit Investor Angst:

• North American Investment Grade CDS Index 60.26 +.56%
  

• America Energy Sector High-Yield CDS Index 413.0 +1.18%

• European Financial Sector CDS Index 57.03 -.03%

• Italian/German 10Y Yld Spread 118.75 +.75 basis point
  

• Asia Pacific Sovereign Debt CDS Index 11.94 +.67%

• Emerging Market CDS Index 140.20 +2.1%
  

• iBoxx Offshore RMB China Corporate High Yield Index 149.14 -.1%

• 2-Year Swap Spread 28.50 unch.

• TED Spread 55.5 -.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -7.75 -4.0 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 74.40 -.48%
• 3-Month T-Bill Yield 1.80% -1.0 basis point
  

• Yield Curve 49.75 +5.75 basis points

• China Iron Ore Spot 67.39 USD/Metric Tonne +.61%

• Citi US Economic Surprise Index 29.20 -.2 point

• Citi Eurozone Economic Surprise Index -90.90 +.6 point

• Citi Emerging Markets Economic Surprise Index 6.1 -.1 point

• 10-Year TIPS Spread 2.18 +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 -38 open in Japan 
• China A50 Futures: Indicating -58 open in China

• DAX Futures: Indicating +12 open in Germany

Portfolio: 

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

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and then covered some of them

• Market Exposure: 75% Net Long