Thursday Watch

Evening Headlines

Bloomberg:    

• Macron Says He Thinks Trump Will Pull Out of Iran Nuclear Deal.   

• The Euro May Fly Below the Yen as Central Bankers Meet.  

• Investors Want to Know Whether Draghi Is Worried About Economic Momentum.  

• South Korea Economy Rebounds in 1st Quarter After Contraction.

• Asian Stocks Climb as Tech Rises; Dollar Steadies. South Korean shares led gains across the region after earnings at Samsung Electronics Co. topped estimates on booming exports of memory chips. Better-than-expected sales at Facebook Inc. lifted its shares in after-hours trading and gave a boost to U.S. stock futures. The euro edged higher ahead of Thursday’s European Central Bank rate decision. The 10-year U.S. Treasury yield dipped to 3.02 percent. The MSCI Asia Pacific Index advanced 0.3 percent as of 10:20 a.m. in Tokyo. Japan’s Topix index gained 0.2 percent. Futures on the S&P 500 Index added 0.3 percent after the cash market shut 0.2 percent higher on Wednesday. Nasdaq 100 futures rose 0.8 percent. Australia’s S&P/ASX 200 Index gained 0.2 percent and Taiwan’s Taiex added 0.6 percent. Kospi index climbs 1 percent. Hong Kong’s Hang Seng advanced 0.2 percent. 

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

Wall Street Journal:

• Sonos Prepares for IPO as Soon as June.

• NBC Bet $69 Million on Megyn Kelly—Then Viewers Vanished.

• Trump Lawyers Seek to Determine Whether Mueller Has ‘Open Mind’ .

• Comcast Sets Up Battle With Fox. 

• Samsung’s Earnings Hot Streak Continues.

• How Popular Is ‘Fortnite?’ Headset Sales Nearly Doubled in March.

• Migrants Gather in Mexico, Prepare to Seek U.S. Asylum.

Fox News:

• 'Adversaries' jamming US Air Force gunships in Syria, Special Ops general reveals.

CNBC: 

• Chipotle(CMG) shares jump 10% as menu price hikes fuel earnings beat.

• Ford(F) reports first-quarter earnings top estimates, plans to drop some slow-selling sedans.

• Qualcomm(QCOM) gains on earnings beat.

• The US dollar is breaking out this week, boosted by trade talks and higher rates. 

• After-hours buzz: FB, T, CMG & more.

• Visa(V) gains 2% after earnings beat.

• AMD(AMD) stock jumps after chipmaker's earnings top estimates.

Zero Hedge: 

• Kanye Fires Manager, Tweets His Way Through "Meltdown" As Trump Thanks For "Dragon Energy" Tweet.

• The Great Exodus From America's 'Blue' Cities Accelerates.

• Trader: The US Has A "Grotesque" Debt Problem.

• Facebook(FB) Surges After Blowout Earnings, Buyback Boost: "Nothing That Was Feared, Happened"

• How Far Down The Big Data/'Psychographic Micro-Targeting' Rabbit Hole Do You Want To Go?

• North Korean Nuclear Test Site Has Collapsed, Explaining Kim's "Suspension" Of Further Tests.

• Boeing Bounce Saves Stocks But Bond Bloodbath Continues .

Business Insider:

• Ratings agency Moody's affirms US' top-notch credit rating.

Night Trading 

• Asian equity indices are -.5% to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 76.25 -.75 basis point. 

• Asia Pacific Sovereign CDS Index 12.75+.75 basis point

• Bloomberg Emerging Markets Currency Index 73.42 +.01%.

• FTSE 100 futures +.29%.

• S&P 500 futures +.26%.

• NASDAQ 100 futures +.69%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AAN)/.93

• (ABBV)/1.79

• (AB)/.66

• (MO)/.91

• (AAL)/.71

• (BAX)/.62

• (BLMN)/.58

• (BMY)/.85

• (BC)/.94

• (COP)/.74

• (DPZ)/1.77

• (DHI)/.86

• (FCAU)/.70

• (GM)/1.27

• (HLT)/.51

• (ITW)/1.86

• (IP)/.89

• (LEA)/4.91

• (MGM)/.30

• (NEM)/.33

• (PEP)/.93

• (RCL)/.97

• (LUV)/.74

• (TWX)/1.74

• (TSCO)/.57

• (UPS)/1.54

• (VLO)/.93

• (VC)/1.79

• (ZBH)/1.89

• (AMZN)/1.22

• (BIDU)/1.71

• (FSLR)/-.09

• (INTC)/.72

• (KLAC)/1.99

• (MSFT)/.85

• (MHK)/3.00

• (SBUX)/.53

• (X)/.30

• (WDC)/3.31

Economic Releases

8:30 am EST

• Initial Jobless Claims for last week are estimated to fall to 230K versus 232K the prior week.

• Continuing Claims are estimated to fall to 1850K versus 1863K prior.

• Preliminary Wholesale Inventories MoM for March are estimated to rise +.7% versus a +1.0% gain in February.

• Preliminary Durable Goods Orders for March are estimated to rise +1.6% versus a +3.0% gain in February.

• Preliminary Durables Ex Transports for March are estimated to rise +.5% versus a +1.0% gain in February.

• Preliminary Cap Goods Orders Non-Defense Ex-Air for March are estimated to rise +.5% versus a +1.4% gain in February.
  

11:00 am EST

• The Kansas City Fed Manufacturing Activity Index for April is estimated at 17.0 versus 17.0 in March.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The ECB rate decision, ECB press conference, Japan Industrial Production/CPI reports, weekly Bloomberg Consumer Comfort Index and the $29B 7Y T-Note auction could also impact trading today.

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

Stocks Reversing Slightly Higher into Final Hour on Technical Buying, Earnings Optimism, Yen Weakness, Energy/Road & Rail Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 18.5 +2.9%

• Euro/Yen Carry Return Index 138.63 +.02%

• Emerging Markets Currency Volatility(VXY) 8.67 +2.9%

• S&P 500 Implied Correlation 42.0 -.6%

• ISE Sentiment Index 89.0 +8.5%
  

• Total Put/Call .96 -6.8%

• NYSE Arms .91 -.4%

Credit Investor Angst:

• North American Investment Grade CDS Index 62.56 +.79%
  

• America Energy Sector High-Yield CDS Index 414.0 -.09%

• European Financial Sector CDS Index 57.43 +.87%

• Italian/German 10Y Yld Spread 114.25 +.75 basis point
  

• Asia Pacific Sovereign Debt CDS Index 12.69 +5.3%

• Emerging Market CDS Index 143.66 +1.14%
  

• iBoxx Offshore RMB China Corporate High Yield Index 149.24 -.06%

• 2-Year Swap Spread 27.25 +.25 basis point

• TED Spread 51.0 +.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -7.75 +.25 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 73.38 -.6%
• 3-Month T-Bill Yield 1.85% +1.0 basis point
  

• Yield Curve 54.0 +1.5 basis points

• China Iron Ore Spot 66.72 USD/Metric Tonne -.40%

• Citi US Economic Surprise Index 41.70 -.1 point

• Citi Eurozone Economic Surprise Index -84.60 +1.2 points

• Citi Emerging Markets Economic Surprise Index 8.7 +.3 point

• 10-Year TIPS Spread 2.18 +1.0 basis point
  
• 92.0% chance of Fed rate hike at June 13 meeting, 92.5% chance at August 1 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +60  open in Japan 
• China A50 Futures: Indicating unch. open in China

• DAX Futures: Indicating +18 open in Germany

Portfolio: 

• Higher: On gains in my tech/industrial/retail sector longs and emerging market shorts

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth -.1%

Sector Underperformers:

• 1) Gaming -2.2% 2) Social Media -1.5% 3) Robotics -1.0%

Stocks Falling on Unusual Volume: 

• MRCY, CHEK, TER, HF, BEDU, CHKP, OC, TWTR, DLB, SAIL, SOHU, COF, RES, NYCB, IPHI and SNAP

Stocks With Unusual Put Option Activity:

• 1) HRB 2) TRIP 3) OCLR 4) ANDV 5) SHPG

Stocks With Most Negative News Mentions:

• 1) IPHI 2) LITE 3) LC 4) MRCY 5) NPTN

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth unch.

Sector Outperformers:

• 1) Road & Rail +1.5% 2) Oil Service +1.5% 3) Homebuilders +1.4%

Stocks Rising on Unusual Volume:

• VICR, ANTX, CBI, USNA, SIX, LRN, MAS, RHI, IART, WWE, ROK, CSL, CVE, CIT, NSC, SVU, SLGN, STM, TRCO, ABMD, CR, CVNA, IR, TUP, TXN, CRAY and GRA

Stocks With Unusual Call Option Activity:

• 1) JCI 2) IP 3) MDR 4) PCAR 5) HOG

Stocks With Most Positive News Mentions:

• 1) TUP 2) TXN 3) LH 4) BSX 5) BIIB

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +10.5% Above 100-Day Average
• 5 Sectors Rising, 6 Sectors Declining
• 32.9% of Issues Advancing, 64.0% Declining
• 14 New 52-Week Highs, 109 New Lows
• 41.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 46.8%
• Vix 18.6 +3.4%
• Total Put/Call 1.06 +2.9%
• TRIN/Arms .83 -9.8%

Wednesday Watch

Evening Headlines

Bloomberg:     

• North Korea Would Benefit Most, by Far, From Peace on Peninsula.  

• Euro Area's Growth Picture Shows Why ECB Unfazed by Slowdown.

• The $7 Trillion Debt Pile Looming Large Over Chinese Households.

• Asia Stocks Follow U.S. Lower; Bonds Pare Losses: Markets Wrap. Asian stocks followed their U.S. counterparts lower with industrial shares leading the decline. The 10-year Treasury yield pared gains after piercing the 3 percent level for the first time in four years. Shares in Japan and Korea opened lower. The S&P 500 closed down 1.3 percent weighed by stocks including industrial bellwether Caterpillar Inc. and the Nasdaq 100 Index fell 2.1 percent. The dollar steadied after coming off its highest since January, while crude climbed back toward $68 a barrel. Australian equity and bond markets are shut for a holiday. The MSCI Asia Pacific fell 0.2 percent as of 9:43 a.m. Tokyo time. Topix Index fell 0.5 percent. Kospi Index dropped 0.7 percent.  

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

• Treasuries’ March Above 3% Faces Challenge From Slumping Stocks. (video)

• Texas Instruments(TXN) Gives Rosy Sales Forecast; Shares Jump.

Wall Street Journal:

• Ontario Man Charged With 10 Murder Counts in Van Attack.

• Caterpillar, Industrial Shares Slump as Investors Weigh Rising Costs.

• Trump Warns Iran on Nuclear Deal, but Will Weigh Beefed-Up Accord.

MarketWatch.com:

• Get ready to pay more for wine, as global production hits 60-year low.

• ‘OK, I’ll say it: Bitcoin is a scam,’ says former CEO of PayPal and Intuit.    

• 7 reasons stocks are better than real estate.

Fox News:

• Golden State movement to secede from US cleared to gather signatures.

CNBC:  

• After-hours buzz: TXN, WYNN, EW & more. 

• Treasury Secretary Mnuchin to visit China in 'a few days,' Trump says.

Zero Hedge:       

•  "Very Pissed Off" Obama DOJ Made "Dramatic" Call To McCabe To Quash Clinton Probe.

• Censorship And Suppression Of Free Speech Online Is A "War Against Ideas".

• China Prepares To Mass Produce Hypersonic Vehicles.

• Democrats Slapped With Demand To Preserve Evidence As Roger Stone Goes After DNC Servers.

• The Fed Is Wrong: "There Is Everything Unusual About The Current Treasury Curve".

• Finland Abandons Universal Basic Income Experiment After Two Years.

• WTI/RBOB Extend Losses After Surprise Crude Build.

• Tech Wrecked, Banks Battered, & CAT Crushed As Rates Rout Spooks Stocks. (graph)

Night Trading 

• Asian equity indices are -.75% to -.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 77.0 unch. 

• Asia Pacific Sovereign CDS Index 12.0 -.25 basis point.

• Bloomberg Emerging Markets Currency Index 73.79 -.04%.

• FTSE 100 futures -.57%.

• S&P 500 futures +.03%.

• NASDAQ 100 futures -.02%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (BA)/2.59

• (BSX)/.32

• (CHKP)/1.28

• (CMCSA)/.59

• (DPS)/1.06

• (FLIR)/.42

• (GD)/2.48

• (GT)/.46

• (HES)/-.51

• (IR)/.62

• (LH)/2.63

• (NSC)/1.77

• (NOC)/3.62

• (SOHU)/-2.36

• (TUP)/.89

• (TWTR)/.11

• (VIAB)/.79

• (AMD)/.09

• (AFL)/.97

• (T)/.88

• (BGG)/.82

• (CAKE)/.68

• (CMG)/1.56

• (EBAY)/.53

• (FFIV)/2.27

• (FB)/1.38

• (F)/.41

• (KNX)/.40

• (LVS)/.85

• (OII)/-.33

• (PYPL)/.54

• (QCOM)/.71

• (RJF)/1.63

• (VAR)/1.04

• (V)/1.01

• (XLNX)/.71

Economic Releases

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,544,500 barrels versus a -1,071,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -1,417,900 barrels versus a -2,968,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,241,300 barrels versus a -3,107,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.01% versus a -1.1% decline the prior week.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The $35B 5Y T-Note auction, Japan Bond Purchases, weekly MBA Mortgage Applications report, (ACN) analyst conference and the (ANF) investor day 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 mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 25% net long heading into the day.