Tuesday Watch

Today's Headlines

Bloomberg: 

• Italy Heads for Fresh Elections, and Europe’s the Faultline. 

• The Six Essential Questions About Italy's Political Crisis, Answered.

• ECB Rate Hike 'Far Away Still,' Danske Bank's Olsen Says. (video)

• China's $10 Trillion Shadow Bank Crackdown Has a Long Way to Go.  

• Brazil Takes Stock of a Week-Long Strike and It's Not Pretty.

• Asian Stocks Set for Lower Open; Oil Declines: Markets Wrap. Nikkei 225 futures fell 0.3 percent in Singapore. S&P/ASX 200 fell 0.2 percent. The Stoxx Europe 600 Index dipped 0.3 percent. Italy’s FTSE MIB Index fell 2.1 percent. Futures on the S&P 500 Index rose 0.2 percent.  

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

• Russia Loses Its Edge as Oil Drop Spurs Worst ETF Flows in Year.  

• Goldman Stays Oil Bull, Undaunted by Saudi-Russia Crude Plan.

• Traders Look for Clues About the Emerging-Market Currency Bounce.

Wall Street Journal:

• U.S., North Korea Meet to Try to Salvage Summit.

• As Global Growth Loses Steam, U.S. Investors Find There’s No Place Like Home.

• Fresh Elections in Sight for Italy After Political Crisis.

• Democrats Look to Shift Blame on Health-Care Costs to GOP.

• Trump Talks Tough on Trade but Often Settles for Less.

MarketWatch.com:

• Floodwaters tear through town near Baltimore, while Deep South braces for Alberto.

Fox News:

• MICHAEL GOODWIN: Trump rollercoaster better than Clinton chaos.

• Trump administration holds off on new North Korea sanctions amid talks for potential summit: report.

CNBC:

• The U.S. needs 50,000 truck drivers to avoid a shipping squeeze.

• Traders are worried this could be the 'big unwinding' of Italian bond markets.

• 10 entry-level jobs that new graduates can do from home.

• Italy's president refuses to certify minister, denying prime minister's ability to form a government. 

Zero Hedge:     

• Key Events This Week: Payrolls, PCE And Politics.

• Caged Migrant Children Photo Goes Viral As Left Rages At Trump; Except It Happened Under Obama.

• Scottish "Crypto Clinic" Now Treating Bitcoin Trading Addicts.

• In The UK... You're Not Allowed To Talk About It. About What? Don't Ask!

• Italian Bonds, Stocks Crash In Furious Reversal As Political Drama Explodes.

• Russia Unveils Soldier Of The Future Equipped With "Predator" Gun And Electrified Shield.

• Turkish Lira Soars After Central Bank Changes Monetary Policy, But Reserves Emerge As Biggest Concern.

• As New Privacy Rules Hit Europe, Google And Facebook Hit With $8.8 Billion In Lawsuits.

• Crude Capitulation Continues: WTI Hits 6-Week Lows After Russia, Saudi Comments.

• How Identity Politics Is Changing Universities.

• Trump All But Confirms Historic Summit With Kim Is Back On As US Officials Enter North Korea.

Business Insider:

• 'Truly just devastating stories': The bleak outlook from inside Venezuela's deepening crises.

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 75.5 -.5 basis point.

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

• Bloomberg Emerging Markets Currency Index 71.10 +.01%.

• FTSE 100 futures n/a.

• S&P 500 futures +.17%.

• NASDAQ 100 futures +.48%.

Morning Preview Links

Earnings of Note

Company/Estimate
Before the Open:

• (AMWD)/1.20

• (BAH)/.46

After the Close:

• (HPQ)/.48

• (CRM)/.46 

Economic Releases
9:00 am EST

• S&P CoreLogic CS 20-City Home Price Index MoM for March is estimated to rise +.7% versus a +.83% gain in February.
  

10:00 am EST

• The Conference Board Consumer Confidence Index for May is estimated to fall to 128.0 versus 128.7 in April.
  

10:30 am EST

• Dallas Fed Manufacturing Activity for May is estimated to rise to 24.5 versus 21.8 in April.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Bullard speaking, Japan Retail Sales report, Deutsche Bank Financial Services Conference, KeyBanc Industrials/Basic Materials Conference and the Craig-Hallum Institutional Investor Conference could also impact trading today.

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

Weekly Outlook

• Wall St. Week Ahead by Reuters. 

• Weekly Market Outlook by Yahoo. (video)

• Week Ahead by TheStreet.

• 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 less less trade war rhetoric, diminishing geopolitical tensions and lower long-term rates offset European/Emerging Markets/US High-Yield debt angst, lower energy prices and yen strength. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 75% net long heading into the week.

Today's Headlines

Bloomberg:

• Saudi-Russia Oil Policy Shift Sets Stage for Tense OPEC Meeting.

• Cheap Pork Means More Ribs on U.S. Grills.

• Italy May Be Cut by Moody's on Concerns Over New Government.

• S&P 500 ‘Pressure Gauge’ Suggests Relief Rally Still Going.

Wall Street Journal:

• Cheers! Coca-Cola Launches Its First Alcoholic Drink.

• China Set to Approve Qualcomm-NXP Deal, a Sign of Easing Trade Tensions.

• Kim Jong Un Reaffirms Korean Denuclearization Push. 

• Turkish Press Pay a Price for Independence.

Barron's:

• Had bullish commentary on (XLF), (CIT), (ZION), (CFG), (SMLF), (VFMO), (EES), (KHC), (QCOM), (MRK), (SBUX), (LULU) and (KO).

Fox News:

• Trump meets with Utah man who's finally back in US after long captivity in Venezuela.

CNBC: 

• Google(GOOGL) employees are spending heavily to elect Democrats in California and to flip the House.

• These drones can haul a 20-pound load for 500 miles and land on a moving target.

• China’s secret goal is to crush Silicon Valley.

Zero Hedge:  

• Kim Jong-Un Holds Surprise Second Summit With South Korea President Moon.

• "Massacre" As Caribbean Pirate Attacks Up 160%.

• Visualizing U.S. Energy Consumption In One Chart.

• The Story Behind $17 Billion Booty Found In 300-Year-Old "Holy Grail Of Shipwrecks".

• Nebraska Troopers Seize Enough Fentanyl To Kill 26 Million Americans.

• 20 Years Of Socialist Utopia In Venezuela Summed Up In 20 Dramatic Seconds.

• Mother And Daughter Shot In Oklahoma Restaurant, Suspect Killed By "Good Guy" With A Gun.

• Erdogan Urges Turks To Stick With Collapsing Lira, Warns Financial Speculators "Will Pay A Heavy Price".

• Socialism Is No Longer A Dirty Word.

• This Is How Amazon's Alexa Records And Shares Private Conversations Without Your Permission.

• Moody's Puts Italy On Downgrade Review, Junk Rating Possible. 

• Weekend Reading: Everyone Is Passive Until The Selling Begins.  

Business Insider:

• The US banking system is increasingly exposed to toxic risk. 

• North Korea is committed to a summit with Trump and 'complete denuclearization,' South Korea's president says.

Weekly Scoreboard*

S&P 500 2,717.85 +.28%

The Weekly Wrap by Briefing.com.

 
Indices

• DJIA 24,743.70 +.09%

• NASDAQ 7,433.18 +1.11%

• Russell 2000 1,625.13 +.07%

• S&P 500 High Beta 44.27 +.18%

• Goldman 50 Most Shorted 150.34 -.47%

• Wilshire 5000 28,269.0 +.21%

• Russell 1000 Growth 1,431.48 +.85%

• Russell 1000 Value 1,194.09 -.34%

• S&P 500 Consumer Staples 509.62 +.60%

• Vanda Cyclicals-Defensives 1.665.1 -.48%
  

• NYSE Technology 1,888.33 +1.94%

• Transports 10,908.60 +1.83%

• Utilities 689.59 +3.26%

• Bloomberg European Bank/Financial Services 93.12 -2.34%

• MSCI Emerging Markets 46.39 +.21%

• HFRX Equity Hedge 1,284.71 -.33%

• HFRX Equity Market Neutral 1,012.27 -.72%

Sentiment/Internals

• NYSE Cumulative A/D Line 320,459 +.25%

• Bloomberg New Highs-Lows Index 66 -204

• Bloomberg Crude Oil % Bulls 35.3 -33.0%

• CFTC Oil Net Speculative Position 644,444 -5.22%

• CFTC Oil Total Open Interest 2,706,454 +1.81%

• Total Put/Call .94 -4.0%

• OEX Put/Call .78 -10.39%

• ISE Sentiment 135.0 +44.4%

• NYSE Arms 1.76 +33.3%

• Volatility(VIX) 13.23 -2.98%

• S&P 500 Implied Correlation 35.65 -2.48%

• G7 Currency Volatility (VXY) 7.25 +1.12% 

• Emerging Markets Currency Volatility (EM-VXY) 9.06 -.88%

• Smart Money Flow Index 15,941.56 -5.69%

• ICI Money Mkt Mutual Fund Assets $2.825 Trillion +.03%

• ICI Domestic Equity Mutual Fund/ETFs Weekly Flows +$6.066 Billion

• AAII % Bulls 38.6 +5.1%

• AAII % Bears 25.2 +22.3%

Futures Spot Prices

• CRB Index 202.89 -.33%

• Crude Oil 67.76 -5.02%

• Reformulated Gasoline 217.51 -2.47%

• Natural Gas 2.92 +3.35%

• Heating Oil 221.10- -2.60%

• Gold 1,303.0 +.91%

• Bloomberg Base Metals Index 209.72 +.73%

• Copper 307.55 +.72%

• US No. 1 Heavy Melt Scrap Steel 340.33 USD/Metric Tonne -.93%

• China Iron Ore Spot 64.0 USD/Metric Tonne -1.69%

• Lumber 599.30 -3.96%

• UBS-Bloomberg Agriculture 1,054.48 +3.32%

Economy

• Atlanta Fed GDPNow Forecast +4.0% -10.0 basis points

• ECRI Weekly Leading Economic Index Growth Rate 3.5% -80.0 basis points
  

• Philly Fed ADS Real-Time Business Conditions Index .2704 -7.2% 

• US Economic Policy Uncertainty Index 239.17 +325.42%

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 165.92 +.40%

• Citi US Economic Surprise Index 12.0 -.3 point

• Citi Eurozone Economic Surprise Index -96.60 -4.9 points

• Citi Emerging Markets Economic Surprise Index -7.0 -2.2 points

• Fed Fund Futures imply 0.0% chance of no change, 100.0% chance of 25 basis point hike on 6/13

• US Dollar Index 94.18 +.51%

• MSCI Emerging Markets Currency Index 1,674.29 +.31%

• Bitcoin/USD 7,437.71 -8.9%

• Euro/Yen Carry Return Index 132.79 -2.18%

• Yield Curve 45.5 -6.25 basis points
  

• 10-Year US Treasury Yield 2.93% -14.0 basis points

• Federal Reserve's Balance Sheet $4.298 Trillion unch.

• U.S. Sovereign Debt Credit Default Swap 19.21 +1.48%

• Illinois Municipal Debt Credit Default Swap 223.57 -.04%

• Italian/German 10Y Yld Spread 205.50 +40.5 basis points

• Asia Pacific Sovereign Debt Credit Default Swap Index 12.23 -5.9%
  

• Emerging Markets Sovereign Debt CDS Index 59.14 -2.71%
  

• Israel Sovereign Debt Credit Default Swap 66.88 -.65%

• South Korea Sovereign Debt Credit Default Swap 44.94 +.59%

• Russia Sovereign Debt Credit Default Swap 127.98 -6.16%

• iBoxx Offshore RMB China Corporate High Yield Index 149.79 +.29%

• 10-Year TIPS Spread 2.11% -6.0 basis points

• TED Spread 43.25 -1.0 basis point

• 2-Year Swap Spread 22.75 -1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -15.75 -8.75 basis points

• N. America Investment Grade Credit Default Swap Index 63.10 +2.56%

• America Energy Sector High-Yield Credit Default Swap Index 368.0 +2.79%

• European Financial Sector Credit Default Swap Index 74.96 +16.19%
  

• Emerging Markets Credit Default Swap Index 162.44 -4.63%
  

• CMBS AAA Super Senior 10-Year Treasury Spread to Swaps 179.0 -1.0 basis point
  

• M1 Money Supply $3.651 Trillion +1.0%

• Commercial Paper Outstanding 1,091.70 +2.1%

• 4-Week Moving Average of Jobless Claims 219,750 +6,500

• Continuing Claims Unemployment Rate 1.2% unch.
  

• Average 30-Year Mortgage Rate 4.66% +5.0 basis points

• Weekly Mortgage Applications 366.70 -2.6%

• Bloomberg Consumer Comfort 55.20 +.6 point

• Weekly Retail Sales +4.0% -90.0 basis points

• Nationwide Gas $2.97/gallon +.06/gallon

• Baltic Dry Index 1,109.0 -12.88%

• China (Export) Containerized Freight Index 789.76 +.53%

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 20.0 +14.29%

• Rail Freight Carloads 285,142 +.82%

Best Performing Style

• Large-Cap Growth +.9%

Worst Performing Style

• Large-Cap Value -.3%

Leading Sectors

• Semis +3.3%

• Utilities +3.3%

• Airlines +2.7%

• REITs +2.2%

• Disk Drives +1.9%

Lagging Sectors

• Construction -1.5% 

• Telecom -2.1%

• Steel -3.7%

• Energy -5.4%

• Oil Service -8.2%

Weekly High-Volume Stock Gainers (10)

• SCVL, FL, QSII, CARA, MRTX, CAVM, ROKU, EOLS, UVV and DECK

Weekly High-Volume Stock Losers (19)

• IGT, XEC, NTNX, CPE, SAFM, DXC, FANG, MTDR, WLL, HES, HAL, REI, HCLP, ROST, FRAC, BAS, CRC, BRS and CBB

Weekly Charts

ETFs

• High-Volume Gainers

• High-Volume Losers

Stocks

• High-Volume Gainers

• High-Volume Losers

*5-Day Change