Bull Radar

Style Outperformer: 

• Mid-Cap Growth +.3%

Sector Outperformers:

• 1) Gaming +3.7% 2) REITs +1.3% 3) Utilities +1.1% 

Stocks Rising on Unusual Volume: 

• OPWR, SRPT and GNC

Stocks With Unusual Call Option Activity: 

• 1) KHC 2) GD 3) DOW 4) MXIM 5) EEP

Stocks With Most Positive News Mentions: 

• 1) SRPT 2) MNST 3) JCP 4) SYY 5) COG

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running -6.4% Below 100-Day Average
• 4 Sectors Rising, 6 Sectors Declining
• 54.3% of Issues Advancing, 43.1% Declining
• 112 New 52-Week Highs, 6 New Lows
• 57.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 44.5%
• Vix 15.4 -1.9%
• Total Put/Call .99 -14.7%
• TRIN/Arms 1.67 +50.7%

Monday Watch

Today's Headlines

Bloomberg: 

• Yen Seen Climbing for JPMorgan as U.S. Puts Japan on Watch List. As if the yen’s surge to an 18-month high wasn’t causing Japanese officials enough trouble, they now have to contend with the nation being on a U.S. watch list for its currency practices. JPMorgan Chase & Co.’s Tohru Sasaki says friction with the U.S. will probably strengthen the yen more.The dollar-yen market is orderly and it’s important for countries to keep their Group-of-Seven and Group-of-20 currency commitments, the U.S. Treasury said Friday. The yen’s 13 percent surge this year has prompted comments from Japan’s Finance Minister Taro Aso that authorities would act if moves were one-sided. The movements are “extremely concerning” and the U.S. report puts no constraint on action, the Nikkei reported Aso as saying Saturday. Germany, China, South Korea and Taiwan were also included as countries to be monitored.
  
• Yen Under Pressure to Extend World-Beating Rally Against Dollar. The yen’s world-beating rally against the dollar looks to be gathering momentum, as central bank inaction on both sides of the Pacific Ocean leaves inflation expectations to drive the exchange rate. Japan’s currency surged to an 18-month high on Friday after Bank of Japan Governor Haruhiko Kuroda refrained from adding to stimulus the day before. That took its gain this year to 13 percent, the most among its developed-market peers. The BOJ’s decision came just hours after Federal Reserve Chair Janet Yellen frustrated dollar bulls by reiterating she’s in no rush to cool the economy by raising interest rates.
• Iraq Oil Exports Near Record as Baghdad Protests Intensify. Iraq’s oil exports approached a record high in April, adding barrels to a worldwide supply glut, even as protests against public corruption threatened to paralyze the government of OPEC’s second-largest producer. Shipments rose to 3.36 million barrels a day, or 100.92 million barrels for the month, Asim Jihad, a spokesman at the oil ministry, said by text message Sunday. The figures don’t include Kurdistan Regional Government exports. The exports rose from 3.29 million barrels a day in March and were close to the November all-time high of 3.365 million barrels a day, according to oil ministry figures. Oil shipments and production were not affected Sunday after protesters stormed parliament in Baghdad, Falah Al-Amri, chairman of Iraq’s State Oil Marketing Organization, said by Facebook message. Government forces are struggling in the fight against Islamic State militants as a plunge in oil prices of more than 50 percent in the last two years has battered its finances.
• Westpac(WBK) First-Half Profit Misses Estimates as Bad Debts Rise. Westpac Banking Corp. first-half profit narrowly missed estimates as charges for soured loans soared to the highest in six years. Shares fell the most in more than a month. Cash profit, which excludes one-time items, was A$3.9 billion ($3 billion) in the six months ended March 31, compared with A$3.78 billion, a year earlier, the Sydney-based lender said in a statement Monday. That missed the A$4.025 billion average estimate of four analysts surveyed by Bloomberg.
• Asian Stocks Slide After Yen Caps Biggest Gain Since 2008 Crisis. Asian stocks fell after the yen strengthened past 107 per dollar, weighing on the earnings outlook for Japanese exporters, while data in China suggested the country’s central bank may have less need to loosen monetary policy. The MSCI Asia Pacific Index lost 1.2 percent to 129.64 as of 9:08 a.m. in Tokyo.
• Puerto Rico's Governor Says Island Will Default on Bond Payment. Puerto Rico won’t make a bond payment for its Government Development Bank, sending its clearest signal yet to investors and U.S. officials that it doesn’t have enough money to keep paying its obligations. Governor Alejandro Garcia Padilla announced the default Sunday during a recorded televised address to the commonwealth. The island had until the end of day Monday to make the payment.
• Ultra Petroleum(UPL) Files for Bankruptcy, Citing $3.9 Billion Debt. Ultra Petroleum Corp. filed for bankruptcy protection, the latest oil and gas explorer to fall victim to the prolonged slump in energy prices. Ultra listed $1.3 billion in assets and $3.9 billion in debt in court papers filed in Houston on Friday. The Houston-based company has 159 employees and its main assets are gas-producing properties in Wyoming, as well as some assets in Pennsylvania and crude oil properties in Utah, according to court papers.
• Bernie Sanders Vows Contested Convention, Makes Case for Superdelegate Flips. The Vermont senator continued to argue that he could still win the Democratic nomination. Bernie Sanders on Sunday marked the one-year anniversary of his bid for the White House by vowing that the Democratic convention will be "contested," despite Hillary Clinton's wide lead in pledged and overall delegates. "It's virtually impossible for Secretary Clinton to reach the majority of convention delegates by June 14 with pledged delegates alone," the Vermont senator told reporters at the National Press Club in Washington. The convention will be held in Philadelphia in July, after the final nominating contest in Washington, D.C., on June 14.

Wall Street Journal:

• Why So Many Chinese Students Come to the U.S.
• On Close Inspection, India’s Sharp Growth Picture Gets Fuzzy. World-beating GDP figure is based on infrequent surveys, rough estimates of tiny, cash-based enterprises. 

Fox News:

• Cruz determined to win Indiana and more; Sanders now eyes contested convention. (video) Sens. Bernie Sanders and Ted Cruz significantly trail the front-runners in their respective Democratic and Republican presidential primaries, but both said Sunday they will stay in their races until the end, even amid bad news about the Indiana primary on Tuesday. “We intend to fight for every vote and every delegate remaining,” Sanders said at a press conference in Washington, D.C., before heading to campaign events in Indiana. The Vermont senator said Democratic front-runner Hillary Clinton winning enough pledged delegates in the remaining state contests to secure the nomination before the July convention would be “virtually impossible.” So his only path to the nomination will be to flip superdelegates, the party insiders who can back either candidate and are overwhelmingly behind Clinton. “In other words, the convention will be a contested contest,” Sanders said.

CNBC:

• Why the Fed will never get what it wants: Strategist. (video) The Federal Reserve surprised few last week when it keep interest rates unchanged, noting that it "continues to closely monitor inflation indicators and global economic and financial developments." However, one market watcher has a blunt message for Fed chair Janet Yellen: You're placing your hope in a fairy tale.

MarketWatch:

• Stock pickers beware, this unwelcome pattern is driving markets again. (graph) HSBC risk-on-risk-off index spikes to highest level since 2010. Sorry stock pickers, but the herd-like trading pattern that dominated financial markets in the aftermath of the financial crisis appears to be back in force. In a note earlier this week, HSBC’s multi-asset quant research team said the so-called risk-off-risk-on theme is, once again, the “single most important driver of asset markets.”

Zero Hedge:

• Consensus Forming: China Heading Back Into Financial Crisis. (graph)
• This Won't End Well. (graph)
• Seymour Hersh Says Hillary Approved Sending Libya's Sarin To Syrian Rebels.
• Leaked Docs Reveal TTIP Trade Deal In Jeopardy As "Irreconcilable Differences" Emerge.
• Why Socialism Will Always Fail.
• Deutsche Bank Has Systemic Money Laundering, Terrorist Financing And Sanctions Problems: UK Regulator.
• Why So Worried? (graph)
• Was The Fed Just Given The Launch Codes? (graph)
• "Only The Dumb Save" - ECB Pens Incoherent Response To Germany's Criticisms.
• Puerto Rico Default "Virtually Certain" As Bond Prices Crash To Record Low. (graph)
• Schwab(SCHW) Is Forcing Cash Out Of Money Market Funds And Into Treasuries.
• 10 Stats About The Last 10 Years. 
• "If This Goes Well, I'll Use It At Goldman Sachs Next Year" - Obama Mocks Everyone At His Final "Nerd Prom". (video)
• CSX(CSX) Freight Train Derails In Washington D.C., 9 Cars Overturned, Hazardous Material Leaking.

Business Insider:

• The market's $1 trillion bubble is unprecedented. Junk bonds are living up to their name right now. As we have noted in the past, the lowest-rated junk bonds may have inflated a $1 trillion bubble at the bottom of the debt market. The thing is, it never should have gotten that way.
• Something's really wrong with jobs in China.
• Halliburton's(HAL) mega-merger with Baker Hughes is going to be called off.
• US senator warns of ‘spying billboards’ that turn cellphones into 'James Bond-like personal tracking devices’.
• China is carrying $1 trillion in bad debt and 'unless this vicious cycle is broken, financial crisis or at least a sharp slowdown is an inevitable ultimate outcome'.
• 'Very troubling': Analysts question the way Apple describes its data.
•  China manufacturing PMI misses in April.

Reuters:

• Ambitious new bankruptcy code may take years to clean up India's debt mess. A long-awaited Indian bankruptcy code may soon win parliamentary approval, but struggling creditors - above all state banks trying to recover $100 billion in bad loans - shouldn't start celebrating just yet.

Financial Times:

• US banks sound caution on commercial property loans. Executives say they are tightening lending standards amid concerns of bubbles forming. Top US bankers have sounded caution over commercial real estate lending as concerns rise that bubbles are forming in parts of the country’s property market. Lenders have helped fund a boom in recent years in cities such as New York and Miami, where luxury high rises have sprung up across the skyline. But executives at several banks signalled during results season that they were tightening up standards for CRE lending, which includes mortgages secured against big apartment and office developments.
• Abenomics is failing, warns Japanese opposition leader. Democratic party makes renewed effort to end the ruling LDP’s dominance of Japanese politics.

Telegraph:

• Everyone’s lining up against Brexit, but voters aren’t fooled.

Night Trading

• Asian indices are -1.75% to -.5% on average.
• Asia Ex-Japan Investment Grade CDS Index 140.75 -.5 basis point.
• Asia Pacific Sovereign CDS Index 54.25 -2.25 basis points.
• Bloomberg Emerging Markets Currency Index 73.65 +.01%.
• S&P 500 futures -.04%.
• NASDAQ 100 futures -.18%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (DO)/.29
• (L)/.52
• (SYY)/.41
• (AIG)/1.00
• (APC)/-1.18
• (RGR)/.96
• (THC)/.33
• (VNO)/1.22

Economic Releases 

9:45 am EST

• Final Markit US Manufacturing PMI for April is estimated at 50.8 versus a prior estimate of 50.8. 

10:00 am EST

• ISM Manufacturing for April is estimated to fall to 51.5 versus 51.8 in March.
• ISM Prices Paid for April is estimated to rise to 51.8 versus 51.5 in March.
• Construction Spending MoM for March is estimated to rise +.5% versus a -.5% decline in February. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Williams speaking, Eurozone Manufacturing PMI and the RBA meeting 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 week.

Weekly Outlook

• Week Ahead by Bloomberg.
• Wall St. Week Ahead by Reuters.
• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly lower on rising European/Emerging Markets/US High-Yield debt angst, global growth concerns, commodity weakness, yen strength, earnings outlook worries and technical selling. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 25% net long heading into the week.

Today's Headlines

Bloomberg:    

• ECB QE Boost Can't Save Euro Bonds From Worst Month Since August. The first month of the European Central Bank’s expanded stimulus program has done little to aid the region’s government bonds. Even as the ECB increased its asset-purchase program to 80 billion euros ($92 billion) in April, from 60 billion euros, sovereign securities headed for their biggest monthly decline since August, according to Bloomberg World Bond Indexes. “The whole notion of the ECB stepping up their purchases in April and May has already been front run,” said Martin van Vliet, senior interest-rate strategist at ING Groep NV in Amsterdam. “So people are starting to look at new drivers and what is important now is the steady ascent of oil prices and that is starting to feed through into inflation expectations.”
• Iraq Declares State of Emergency as Protesters Storm Parliament. Iraq declared a state of emergency in Baghdad after supporters of Shiite Muslim cleric Moqtada al-Sadr stormed parliament, the Interior Ministry said. Mobile-phone video footage broadcast on Iraqi news channel al-Sharqiya showed hundreds of al-Sadr’s supporters inside the legislature on Saturday. Al-Sadr earlier on Saturday accused lawmakers of sectarianism in their selection of ministers and ordered his bloc to withdraw from the parliament session where members were preparing to finish voting on a new cabinet.
• Dollar Takes Helm of Global Markets After Worst Week Since 2008. The dollar is plunging so far, so fast, its shockwaves are reverberating far beyond the $5.3-trillion-a-day foreign-exchange market. The greenback plunged the most this week since 2008 versus the yen after economic reports trailed forecasts, damping the outlook for growth as Federal Reserve policy makers await evidence needed to justify more interest-rate increases. The U.S. currency has eroded more than half its 9 percent surge last year, with one measure of dollar momentum approaching a level that indicates to some analysts that it is oversold and set to reverse direction.
• Oil Market Deja Vu Triggers Predictions of a Return to $30. (video) Oil’s climb above $45 a barrel is reassuring influential figures from BP Plc to the International Energy Agency that the industry is finally recovering from the worst slump in a generation. Others say the market is about to fall into the same trap as last year. There’s a sense of deja vu at Commerzbank AG, BNP Paribas SA and UBS Group AG, who say crude’s gain of about 70 percent from a 12-year low in January resembles the recovery that took hold this time last year -- only to sputter out by May as the supply glut endured. Prices will sink back towards $30 a barrel in the coming weeks, BNP and UBS warn.
• Exxon's(XOM) Worrying Lack of Worry.
• Icahn Is the Bear in Apple's China Shop.
• Donald Trump ‘Will Get Crushed in the Fall,’ John Kasich Says. "His best day is going to be the day he walks in, and from there his support will decline,’’ Kasich said of Trump.

Wall Street Journal:

• The Climate Police Escalate. A subpoena hits a think tank that resists progressive orthodoxy. Sometimes we wonder if we’re still living in the land of the free. Witness the subpoena from Claude Walker, attorney general of the U.S. Virgin Islands, demanding that the Competitive Enterprise Institute cough up a decade of emails and policy work, as well as a list of private donors.

Barron's:

• Had bullish commentary on (ENR), (FRGI), (JCP), (FFIV) and (MSG).

Fox News:

• Cruz team attacks Trump for touting Tyson endorsement, while in Indiana. (video) The campaign for Sen. Ted Cruz and one of its PACs are attacking rival Donald Trump for his allegiance to former pro boxing champion Mike Tyson, who was convicted of rape in Indiana, which holds a primary Tuesday. The Trusted Leadership PAC has released an online video pointing out that Trump said Tyson, a Trump supporter, was “railroaded” in the 1991 conviction. “One of the leaders in the effort to keep Tyson out of prison is Donald Trump,” a TV news-reader is heard saying in the 30-second video, over archived moving and still pictures of Trump, including one of him beside Tyson.

CNBC:

• For Trump, why Goldwater history will repeat itself in the fall. (video) Donald Trump supporters and some pundits like to fantasize that the real estate magnate will put blue states like New York, Massachusetts and California in play this fall against Hillary Clinton while also running strong in the industrial Midwest. Trump could win! It's not gonna happen. Trump, should he lock down the nomination next week by winning Indiana, will go into the fall campaign as the most toxic Republican nominee since Barry Goldwater in 1964.

Zero Hedge:

• Chart Of The Day: Speculative Frenzy '101'.
• Deutsche Bank Unveils The Next Step: "QE Has Run Its Course, It's Time To Tax Wealth".
• China Takes Drastic Measures To Save The Regime.
• What Are The Three Signs Of A "Disorderly" Currency Market: Richard Koo Explains.
• UPS(UPS) Braces For $3.8 Billion Charge As Treasury's Pension Benefit Decision Looms.
• Why The Hard-Sell For The "Self-Driving" Car?
• NIRP Has Officially Arrived: Interactive Brokers Starts Charging 0.25% On Yen Cash Balances.
• The Cult Of Central Banking Is Dead In The Water.
• The Real Story Behind The True Magnitude Of The New Home Sales Collapse. (graph)
• "We Want Them Dead" - ISIS Releases "Hit List" Of 3,600 New Yorkers.
•  Italy's Bank Bailout Fund Already One Third Empty After First Bank Rescue. 
• US Treasury Gives Explicit Warning To China, Germany And Japan Not To Devalue Their Currencies.
• In Latest US-China Escalation, Beijing Denies US Aircraft Carrier Access To Hong Kong Port. 
• Oil's Latest Casualty: Saudi Binladin Group Fires 50,000, A Quarter Of Its Workforce.
• The Woodstock Of Crony Capitalism.
• Russia And Saudi Arabia Locked In Relentless Fight Over China's Oil Market. 
• Weekend Reading: Yep... Still Looks Like A Trap. (graph)
• Stock-Drop-alypse Wow - Gold Soars As Kamikaze Kuroda Strikes Again. (graph)

Business Insider:

• The market's most crowded trades could be causing dangerous bubbles. The main culprit is the new reach for yield. With low returns in many asset classes and yields on many bonds in developed markets heading negative, there has been a need to push into risky, higher yielding assets to make up the difference. "People are hiding out in stocks that they think are safe, growing assets and that is looking like it's under pressure," said Bailer. This causes dislocations in the market as certain companies end up with much higher valuations than would be reasonable. Bailer mentioned both dividend paying defensive stocks and high growth names that have exploded higher recently (think FANGs) as areas he sees as particularly pressured.
• Bernie Sanders may care about Hillary's 'damn emails' after all.
• 2 clear signs the stock market 'endgame' is approaching.
• BUFFETT: This is the 'time bomb' in the markets.
• Warren Buffett's 'desert island' indicator of the economy is looking terrible.

The Telegraph:

• Dallas Fed cautions on fresh oil bubble as glut keeps building. The US Federal Reserve has warned that the world is awash with excess oil and starting to run out of places to store the glut, with no sustained recovery in sight for the oil industry until 2017 at the earliest. Robert Kaplan, head of the Dallas Fed, poured cold water over talk of a fresh oil boom this year and said the US shale industry has taken far longer to cut output than many expected. “As we sit here today, Dallas Fed economists estimate that global daily oil production exceeds daily consumption by more than 1m barrels per day,” he told the Official Monetary and Financial Institutions Forum in London. “Excess inventories in the OECD member countries now stand at approximately 440m barrels. This is a record level and has raised concerns about whether there is sufficient storage capacity in certain geographic areas,” he said.
• EU red tape is suffocating UK economy and Brexit can set us free. 

Independent:

• EU Referendum: Poll shows Britain split 50/50 - but higher turnout among older voters could tip country into Brexit. The over-65s are the age group most likely to vote - and most likely to vote to leave the EU. The British public is split 50/50 on whether to leave the EU but a higher turnout among the Outers could tip the balance in favour of Brexit, according to an opinion poll for The Independent. Given a straight choice, 50 per cent of people said Britain should leave and 50 per cent that it should remain. But when the findings were weighted to take account of people’s likelihood to vote, the result changed to 51 per cent for Leave and 49 per cent for Remain. The online survey of 2,000 people by ORB, conducted between Wednesday and Friday (29), suggests that Barack Obama’s intervention in the debate has not been the game-changer the In camp was hoping for. Although 23 per cent said his support for the UK remaining in the EU had made it more likely they would vote to stay in, 66 per cent said it had not. And 45 per cent said they had felt more inclined to vote to leave in the past seven days, while 43 per cent were more inclined to support remaining.

Market Week in Review

• S&P 500 2,059.83 -1.52%*

The Weekly Wrap by Briefing.com.

*5-Day Change