Morning Market Internals

NYSE Composite Index:

• Volume Running +9.4% Above 100-Day Average
• 2 Sectors Rising, 8 Sectors Declining
• 24.3% of Issues Advancing, 72.2% Declining
• 25 New 52-Week Highs, 32 New Lows
• 53.9% of Issues Above 200-day Moving Average
• Average 14-Day RSI 35.8%
• Vix 14.3 +10.2%
• Total Put/Call 2.09 +72.73%
• TRIN/Arms .97 -16.4%

Monday Watch

Today's Headlines

Bloomberg:

• Trump Said to Issue Far-Reaching Reversal of Obama Climate Push. President Donald Trump is set to sign a sweeping executive order on Tuesday aimed at promoting domestic oil, coal and natural gas by reversing much of his predecessor’s efforts to address climate change. The document lays out a broad blueprint for the Trump administration to dismantle the architecture that former President Barack Obama built to combat the phenomenon, according to details shared with Bloomberg News. Some of the changes would happen immediately, while others would take years to complete. The order will compel federal agencies to quickly identify any actions that could burden the production or use of domestic energy resources, including nuclear power, and then work to suspend, revise or rescind the policies unless they are legally mandated, are necessary for the public interest or promote development.

• Momentum Builds for Yen to Break 110. The most oversold Group-of-10 currency since the U.S. election is making a comeback. A reassessment on the likelihood of pro-growth policies in the U.S. and a series of domestic and technical factors have combined to reignite buying interest in the yen, and analysts see more upside. Rising Japanese real interest rates, the yen’s haven status from global political uncertainty and technical signals monitored by foreign exchange traders have helped the currency rebound 7 percent from December lows against the dollar. Momentum is building and a further 2 percent rise to 108 yen per dollar is possible by June, according to market participants.

• Dollar, S&P 500 Futures Drop. The dollar and U.S. equity futures built on Friday’s declines and gold climbed as investors shunned risk assets amid increased skepticism of U.S. President Donald Trump’s ability to implement his economic agenda after last week’s failed U.S. health-care deal. The yen rose 0.8 percent to 110.51 per dollar. The Bloomberg Dollar Spot Index fell 0.3 percent. Japan’s Topix lost 0.9 percent and Australia’s S&P/ASX 200 Index retreated 0.5 percent, led by a slide in materials producers.

Wall Street Journal:

• White House Opens Door to Democrats in Wake of Health-Bill Failure. Move signals Trump administration is fed up with many factions in House Republican conference.

• Republicans’ Tax Overhaul Could Face Its Own Slings and Arrows. Rewriting the U.S. tax code may appear easier than tackling health care, but there may be other squabbles, hurdles and difficult trade-offs. 

• How Democrats Aided in the Demise of the GOP’s Health Bill. Supporters of Obamacare launched an all-out campaign for its survival.

• Iraq Military Contradicts Claim U.S.-Led Coalition Airstrike Killed Civilians, Blames Islamic State. Statement says blast triggered by a militant booby trap, not a coalition airstrike, killed scores of civilians in Mosul.

• Powering America’s Manufacturing Renaissance: Foreign Robots. The U.S. is being beaten by European and Japanese firms in the race to supply cutting-edge production machinery behind the new automated factory floor.

• Chinese Conglomerate HNA to Buy Stake in U.S. Asset Manager. HNA Capital US to pay about $446 million for share in Old Mutual unit OM Asset Management.

• Iran Slaps Sanctions on 15 U.S. Companies as Animosity Grows. Raytheon, Magnum Research among the companies affected by sanctions from Tehran.

Fox News: 

• Cincinnati nightclub shooting: 1 dead, 15 people injured. (video)

• Priebus on ObamaCare overhaul: It’s time for GOP to 'start governing’. (video)

• Freedom Caucus' Jordan: End ObamaCare blaming, ‘Let’s get to work’. (video)

CNBC:

• China finds a new source of cutting-edge military technology: US startups.

• France's Le Pen says euro exit 'wouldn't be chaos'.

Zero Hedge:

• "Much Worse Then Watergate", Former CIA Officer Admits Trump 'Wiretapping' Likely True. (video)

• This Is The Nightmare Scenario For The GOP: A $2 Trillion Funding "Hole".

• "They're Baaack! And Why You Should Be Worried – Very Worried".

• America's March To Default. (graph)

• Mnuchin "Not Worried" About Robotization Of America's Workforce Despite Shocking New Report.

• On The Edge Of An "Uncontrollable Liquidity Event": The Definitive Guide To China's Financial System.

• Bond Bears Panic, Cover Shorts At Fastest Pace Since Brexit; But Rate-Hike Bets Top $3 Trillion. (graph)

• Condo Flippers In Miami-Dade Left Twisting In The Wind.

• One Dead, 14 Injured After Ohio Nightclub Shooting; Shooter At Large.

• OPEC, Non-OPEC Oil Producers Recommend Extending Production Cuts By Six Months.

Business Insider:

• The UK is about to formally trigger the Brexit process — here's what that means.

• More homebuyers are turning to the risky mortgages that were popular before the housing crash.

Night Trading

• Asian indices are -1.0% to unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 95.75 unch.

• Asia Pacific Sovereign CDS Index 21.0 -4.25 basis points.

• Bloomberg Emerging Markets Currency Index 72.57 +.08%.

• S&P 500 futures -.67%.

• NASDAQ 100 futures -.69%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (CALM)/.23

• (GIII)/-.12

• (RHT)/.61

Economic Releases
10:30 am EST

• Dallas Fed Manufacturing Activity for March is estimated to fall to 22.0 versus 24.5 in February.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Evans speaking, Fed's Kaplan speaking, 2Y T-Note auction, Germany IFO Index and the China Industrial Production report could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and industrial shares in the region. I expect US stocks to open modestly lower and to maintain losses  into the afternoon. The Portfolio is 25% net long heading into the week.

Weekly Outlook

• 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 European/Emerging Markets/US High-Yield debt angst, tax reform/deregulation/infrastructure spending worries, commodity weakness, yen strength, less economic optimism 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:

• U.S. Stocks Post Worst Week Since Election as Health Bill Fails. The Trump Trade just took a big hit. U.S. stocks fell the most since the week leading up to the U.S. election as President Donald Trump suffered a major setback when he was forced to pull his health-care bill from a vote amid dissent among congressional Republicans. Investors also turned to bonds as U.S. Treasuries rallied for the second week. Both conservatives and moderates opposed the bill even after Trump met personally with scores of lawmakers and traveled to Capitol Hill on Tuesday to address House Republicans. The setback also cast doubt on the president’s ability to shepherd other parts of his agenda, including promised tax cuts and regulatory reform, through Congress. The S&P 500 lost 1.4 percent to end at 2,343.98, its second weekly decline this month. While the benchmark for American equities hasn’t posted a daily 1-percent gain in more than three weeks, it’s down just 2.2 percent from its record high. The Dow Jones Industrial Average lost 1.5 percent to 20,596.72 as small-cap stocks in the Russell 200 Index erased 2.7 percent.

• Mexico Will Hedge Oil Export Prices for Next Year, Rubio Says. Mexico plans “without a doubt" to protect the country against low crude prices for next year, Deputy Finance Minister Vanessa Rubio said in an interview, in a continuation of what’s become the world’s largest commodities hedging program. The amount of Mexico’s export basket to be protected through market operations, versus through its stabilization fund, has yet to be determined, Rubio said in an interview on the sidelines of a banking conference in Acapulco. All options are open to reduce volatility of the peso, which is undervalued when economic fundamentals are taken into account, Rubio added. Mexico, the world’s 11th-largest oil producer, spent $1 billion last year to buy put options that lock in an average price for its exports this year, and set aside close to $1 billion more from its budget stabilization fund to effectively guarantee oil revenue of $42 a barrel. West Texas Intermediate crude for May delivery closed Friday at $47.97 a barrel.

• Uber to Suspend Autonomous Tests After Arizona Accident. Uber Technologies Inc. is suspending its self-driving car program after one of its autonomous vehicles was involved in a high-impact crash in Tempe, Arizona, the latest incident for a company reeling from multiple crises.

• America’s 100 Richest Places.

Wall Street Journal:

• With GOP Plan Dead, Trump Weighs Other Ways to Reshape Health Care. Republicans have ability to make changes to Affordable Care Act but do so at their own risk.

• Google’s(GOOGL) YouTube Has Continued Showing Brands’ Ads With Racist and Other Objectionable Videos. PepsiCo, Wal-Mart, Dish Network say they are suspending Google non-search ads.

Barron's:

• Had bullish commentary on (VIAB), (GM) and (YHOO).

• Had bearish commentary on (SPG).

Fox News:

• Divided GOP makes dismantling ObamaCare little more than campaign promise. (video)

CNBC:

• Fate of OPEC's output cut will depend on how market responds, Iraq's oil minister says.

• World looks to China for growth but it has its own problems at home.

• Robots, artificial intelligence boom may cost US, UK at least 1/3 of their jobs: Study.

• Oil could collapse into the $30s if OPEC doesn't keep its act together.

Zero Hedge:

• "They're Like The Praetorian Guard" - Whistleblower Confirms NSA Targeted Congress, The Supreme Court, & Trump.

• "Policy Error" Is Back: Deutsche Warns Two Things Can Derail The Market's "Most Crowded Trades".

• Goldman: "The Boost From Lower Taxes Will Now Be Smaller, Occur Later Than Expected".

• New Hedge Fund Fee Structures Reveal Traditional Model On Verge Of Collapse.

• Trump On What Happens Next: "Obamacare Will Explode". (video)

• In Blow To Trump, Obamacare Repeal Fails: Republicans Withdraw Healthcare Bill.

• OPEC Out Of Moves As Goldman Sachs Expects Another Oil Glut In 2018.

• Nunes Calls Comey, Rogers For "Closed Session" After Finding "Concerning Info" In Intel Reports.

• McCain: "The New World Order Is Under Enormous Strain".

• Self-Driving Uber With Passenger Involved In Arizona Collision.

• Over Half Of American Cities Are Now Dominated By Renters.

• Retail Flows Are Finished: RBC Warns "New Regime" For Stocks About 'Hard' Data & Earnings. (graph)

• Wall Street Explains What Today's Failure To Repeal Obamacare Means For Markets.

• Weekend Reading: Lack Of Perspective.

• VIX Spikes To 2017 Highs, Stocks Suffer Worst Week In 6 Months As GOP Pulls Vote. (graph)

Business Insider:

• This map explains the roots of France’s growing nationalism.

• 'You will never prevail' — BBC broadcaster delivers stirring message against terrorists.

The Telegraph:

• Cracks on show at EU 'unity' summit in Rome.

Market Week in Review

• S&P 500 2,337.99 -1.13%*

The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 2,337.99 -1.13%

• DJIA 20,549.30 -1.30%

• NASDAQ 5,817.91 -.99%

• Russell 2000 1,349.17 -2.32%

• S&P 500 High Beta 36.30 -2.09%

• Goldman 50 Most Shorted 117.22 -1.38%

• Wilshire 5000 24,231.50 -1.38%

• Russell 1000 Growth 1,130.69 -.77%

• Russell 1000 Value 1,119.75 -1.63%

• S&P 500 Consumer Staples 561.45 -.61%

• Vanda Cyclicals-Defensives 1.2859 -1.46%
  

• Morgan Stanley Technology 1,360.72 -.46%

• Transports 8,905.66 -2.19%

• Utilities 704.91 +1.41%

• Bloomberg European Bank/Financial Services 95.88 -.88%

• MSCI Emerging Markets 39.66 +.47%

• HFRX Equity Hedge 1,181.20 -.69%

• HFRX Equity Market Neutral 1,000.86 +.11%

Sentiment/Internals

• NYSE Cumulative A/D Line 280,808 -.18%

• Bloomberg New Highs-Lows Index 125 -587

• Bloomberg Crude Oil % Bulls 25.0 -57.6%

• CFTC Oil Net Speculative Position 433,800 -14.69%

• CFTC Oil Total Open Interest 2,240.261 +4.81%

• Total Put/Call 1.24 +32.99%

• OEX Put/Call 1.35 -65.29%

• ISE Sentiment 101.0 +46.38%

• NYSE Arms 1.43 -31.25%

• Volatility(VIX) 13.28 +14.6%

• S&P 500 Implied Correlation 48.29 +5.48%

• G7 Currency Volatility (VXY) 9.11 +5.82%

• Emerging Markets Currency Volatility (EM-VXY) 9.11 +3.85%

• Smart Money Flow Index 19,514.02 -1.19%

• ICI Money Mkt Mutual Fund Assets $2.654 Trillion -.87%

• ICI US Equity Weekly Net New Cash Flow -$2.866 Billion

• AAII % Bulls 35.3 +13.2%

• AAII % Bears 30.5 -21.2%

Futures Spot Prices

• CRB Index 183.43 -.67%

• Crude Oil 47.97 -1.97%

• Reformulated Gasoline 160.48 +.10%

• Natural Gas 3.07 +3.68%

• Heating Oil 149.90 -1.25%

• Gold 1,248.40 +1.58%

• Bloomberg Base Metals Index 178.67 -.69%

• Copper 263.50 -2.30%

• US No. 1 Heavy Melt Scrap Steel 277.0 USD/Ton unch.

• China Iron Ore Spot 85.06 USD/Ton -7.88%

• Lumber 376.60 +3.97%

• UBS-Bloomberg Agriculture 1,114.60 -2.32%

Economy

• Atlanta Fed GDPNow Forecast +1.0% +10.0 basis points
• ECRI Weekly Leading Economic Index Growth Rate +9.0% -60.0 basis points
  

• Philly Fed ADS Real-Time Business Conditions Index -.1395 +2.04%

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 133.35 +.23%

• Citi US Economic Surprise Index 54.10 -2.0 points

• Citi Eurozone Economic Surprise Index 69.80 +21.7 points

• Citi Emerging Markets Economic Surprise Index 45.0 -8.3 points

• Fed Fund Futures imply 86.7% chance of no change 13.3% chance of 25 basis point hike on 5/3

• US Dollar Index 99.64 -.71%
• MSCI Emerging Markets Currency Index 1,581.65 +.42%

• Euro/Yen Carry Return Index 125.15 -.99%

• Yield Curve 115.0 -3.0 basis points

• 10-Year US Treasury Yield 2.40% -10.0 basis points

• Federal Reserve's Balance Sheet $4.439 Trillion +.18%

• U.S. Sovereign Debt Credit Default Swap 24.60 -3.69%

• Illinois Municipal Debt Credit Default Swap 395.0 +1.47%

• Western Europe Sovereign Debt Credit Default Swap Index 12.30 -17.14% (new series)

• Asia Pacific Sovereign Debt Credit Default Swap Index 21.04 -17.0%
  

• Emerging Markets Sovereign Debt CDS Index 48.16 -21.78%
  

• Israel Sovereign Debt Credit Default Swap 71.09 +16.82%

• Iraq Sovereign Debt Credit Default Swap 525.32 +.02%

• Russia Sovereign Debt Credit Default Swap 175.84 +8.26%

• iBoxx Offshore RMB China Corporate High Yield Index 136.22 +.23%

• 10-Year TIPS Spread 1.99% -3.0 basis points
  

• TED Spread 39.0 -3.25 basis points

• 2-Year Swap Spread 37.0 +3.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -24.5 -4.75 basis points

• N. America Investment Grade Credit Default Swap Index 67.24 +9.39%

• America Energy Sector High-Yield Credit Default Swap Index 408.0 +6.66%

• European Financial Sector Credit Default Swap Index 89.24 +4.74%
  

• Emerging Markets Credit Default Swap Index 213.53 +4.34%
  

• CMBS AAA Super Senior 10-Year Treasury Spread to Swaps 142.50 +1.0 basis point
  

• M1 Money Supply $3.453 Trillion +2.17%

• Commercial Paper Outstanding 965.70 +.40%

• 4-Week Moving Average of Jobless Claims 240,000 +2,750

• Continuing Claims Unemployment Rate 1.4% -10.0 basis points

• Average 30-Year Mortgage Rate 4.23% -7.0 basis points

• Weekly Mortgage Applications 406.80 -2.7%

• Bloomberg Consumer Comfort 51.3 +.3 point

• Weekly Retail Sales +1.20% +10.0 basis points

• Nationwide Gas $2.29/gallon unch.

• Baltic Dry Index 1,172.0 unch.

• China (Export) Containerized Freight Index 778.15 -1.64%

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 25.0 -9.09%

• Rail Freight Carloads 248,816 -3.17%

Best Performing Style

•  Large-Cap Growth -.8%

Worst Performing Style

•  Small-Cap Value -2.8%

Leading Sectors

• Gold & Silver +2.0%

• Utilities +1.4%

• Coal +1.3%

• Disk Drives +1.2%

• Restaurants +1.1%

Lagging Sectors

• Gaming -3.1% 

• Retail -3.2%

• I-Banks -4.0%

• Banks -4.7%

• Steel -7.3%

Weekly High-Volume Stock Gainers (11)

• NKTR, ESPR, FLXN, DLTH, XBIT, CTMX, FEYE, PENN, OSUR, FIVE and CTAS

Weekly High-Volume Stock Losers (35)

• TOWN, ATH, COLB, CHCO, CPF, HBAN, ALLY, MMSI, CBU, ATU, CHFC, PTC, MOFG, PPBI, APTI, AMGN, UCBI, UBSI, MG, WAL, FIBK, INTL, GBCI, SIVB, PJT, PERY, CACC, TCB, PFBC, SFBS, VRTV, FSLR, CAL, AFSI and EDIT

Weekly Charts

ETFs

• High-Volume Gainers

• High-Volume Losers

Stocks

• High-Volume Gainers

• High-Volume Losers

*5-Day Change