Monday Watch

Today's Headlines

Bloomberg: 

• Brace for the World Economy’s Most Important Week of the Year. 

• Asia Stocks See Muted Start to Week; Dollar Drifts. Asian stocks are set for a slightly higher open Monday, with limited fallout from a tumultuous G-7 meeting. The dollar drifted and the yen steadied as President Donald Trump arrived in Singapore ahead of his summit with North Korea’s Kim Jong Un. The Canadian dollar fell most among its G-10 currency peers in the wake of the summit, which ended with deepening tensions over U.S. tariffs on imports from its allies and saw a dispute erupt between Trump and Prime Minister Justin Trudeau. U.S. equities closed in positive territory Friday, as the risk-off sentiment that gripped investors late in the week subsided. Treasury yields edged higher, while oil closed lower. Brazil’s real surged after the central bank pledged to support the currency, helping to reduce fears of emerging-market contagion. S&P 500 futures slipped early Monday. Nikkei 225 futures were up 0.1 percent in Singapore. Hang Seng futures rose 0.1 percent.

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

• Hedge Fund With 69% Return Sees More to Come From Oil Recovery.

Wall Street Journal:

• U.S.-Canada Trade Feud Escalates After Fraught G-7 Summit.

• Art of the Foreign-Policy Deal: Trump’s Tactics.

• A Year After Amazon Devoured Whole Foods, Rivals Are Pursuing Countermoves.

• KKR Nears Deal to Buy Envision Healthcare for About $5.5 Billion.

• Now the Fed Must Reckon With Long-Term Strategy.

Fox News:

• German chancellor calls Trump's G7 slams 'sobering,' 'depressing,' warns of new tariffs.

CNBC:

• The Fed has a surprise in store that could mean an early end to interest rate hikes.

• Trump refuses to back G-7 declaration, calls Trudeau 'weak' and threatens car tariffs.

Zero Hedge:

• Trump Top Advisors Lash Out At "Double-Crossing" Trudeau: "Special Place In Hell" For Him.

• People Outraged After Amazon Found To Secretly Profit From "Unethical And Illegal" Chinese Sweatshops.

• SEC Commissioner Blasts Insiders For Quietly Selling Into Stock Buybacks, Demands Rule Review.

• That Viral G-7 Photo As Seen From 'The Other Side'.

• The Deep State of Data Part One: The few control the many.

• Crypto Carnage Continues: Bitcoin Plunges Below $7,000 After Korean Exchange Hack.

• Trump At G-7 Closing Remarks: "We're The Piggy Bank That Everybody's Robbing".

• Striking UPS Workers Will Disrupt Business Nationwide With Largest US Walkout In Decades.

• The Gloves Are Off: State Department Goes Nuclear On Leakers After Wolfe Arrest.

• Lockheed Martin Awarded $929 Million Contract For Hypersonic Weapon To Counter Russia, China.

• The Gently Rotting Debt-Ridden EU.

• "Its' Crazy": Texas Roiled By Unprecedented Labor Shortage As Shale Industry Hires "Just About Anyone".

• DOJ Reneges On Commitment To Provide Trump Russia Docs To Congress.

• US Suicide Rate Surges 30% Since 1999.

• 15 Signs That America's Middle Class Is Being Systematically Destroyed.

• Zuck'd Again: Facebook Shared Sensitive User Info Via "Secretive" Data Deals.

• Weekend Reading: Social Insecurity.

• Thanks To Biggest Short Squeeze In 4 Months, US Stocks Shrug Off EM, EU Entropy.

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 79.0 +1.0 basis point.

• Asia Pacific Sovereign CDS Index 13.25 +.25 basis point.

• Bloomberg Emerging Markets Currency Index 71.11 +.05%.

• FTSE 100 futures +.14%

• S&P 500 futures -.11%.

• NASDAQ 100 futures -.13%.

Morning Preview Links

Earnings of Note

Company/Estimate
Before the Open:

• None of note

After the Close:

• (PLAY)/.92

• (RH)/1.02

Economic Releases

• None of note
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The US/North Korean Summit, UK Industrial Production report and the $32B 3Y T-Note auction could also impact trading today.

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

Weekly Outlook

• Wall St. Week Ahead by Reuters. 

• 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 modestly higher on diminishing geopolitical tensions, stable long-term rates, less European/Emerging Markets/US High-Yield debt angst, technical buying, economic optimism and yen weakness. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 75% net long heading into the week.

Stocks Slightly into Afternoon on Eurozone Debt Angst, Trade War Worries, Oil Decline, Energy/Airline Sector Weakness

 Broad Equity Market Tone:

• Advance/Decline Line: About Even
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 12.5 +3.3%

• Euro/Yen Carry Return Index 133.98 -.55%

• Emerging Markets Currency Volatility(VXY) 9.46 unch.

• S&P 500 Implied Correlation 34.49 +.2%

• ISE Sentiment Index 76.0 -15.5%
  

• Total Put/Call .94 +3.3%

• NYSE Arms .72 -27.8%

Credit Investor Angst:

• North American Investment Grade CDS Index 66.99 +1.24%
  

• America Energy Sector High-Yield CDS Index 375.0 +.23%

• European Financial Sector CDS Index 90.40 +4.37%

• Italian/German 10Y Yld Spread 267.75 +10.0 basis points
  

• Asia Pacific Sovereign Debt CDS Index 13.05 +1.4%

• Emerging Market CDS Index 178.60 +.99%
  

• iBoxx Offshore RMB China Corporate High Yield Index 149.79 +.15%

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

• TED Spread 40.0 +1.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -13.25 -2.75 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 70.92 +.01%
• 3-Month T-Bill Yield 1.92% unch.
  

• Yield Curve 43.25 -.5 basis point

• China Iron Ore Spot 65.10 USD/Metric Tonne +.20%

• Citi US Economic Surprise Index 10.20 -.3 point

• Citi Eurozone Economic Surprise Index -100.10 -4.6 points

• Citi Emerging Markets Economic Surprise Index -14.90 +.9 point

• 10-Year TIPS Spread 2.13 -1.0 basis point
  
• 100.0% chance of Fed rate hike at August 1 meeting, 100.0% chance at September 26 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -79 open in Japan 
• China A50 Futures: Indicating -61 open in China

• DAX Futures: Indicating +1 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 75% Net Long

Morning Market Internals

NYSE Composite Index:

• Volume Running -10.2% Below 100-Day Average
• 5 Sectors Rising, 6 Sectors Declining
• 49.1% of Issues Advancing, 46.0% Declining
• 64 New 52-Week Highs, 19 New Lows
• 51.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 51.1%
• Vix 12.8 +5.4%
• Total Put/Call .95 +4.4%
• TRIN/Arms .99 -1.4%

Friday Watch

Night Trading 

• Asian equity indices are -1.0% to -.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 78.0 +.75 basis point. 
• Asia Pacific Sovereign CDS Index 13.0 unch.
• Bloomberg Emerging Markets Currency Index 70.88 -.04%.
• FTSE 100 futures -.41%.
• S&P 500 futures -.10%.
• NASDAQ 100 futures -.25%.

Morning Preview Links

Earnings of Note
Company/Estimate

Before the Open:

• None of note

After the Close:

• None of note

Economic Releases

10:00 am EST

• Wholesale Trade Sales MoM for April.
  

Upcoming Splits

• (PFBI) 5-for-4

Other Potential Market Movers

• The China Trade Data report, the Bloomberg June US Economic Survey and the G-7 Meetings could also impact trading today.

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