Stocks Rising into Final Hour on Healthcare/Tax Reform Hopes, Earnings Optimism, Yen Weakness, Homebuilder/Retail Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Above Average

• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• Volatility(VIX) 10.50 -2.42%

• Euro/Yen Carry Return Index 126.69 -.06%

• Emerging Markets Currency Volatility(VXY) 8.77 +1.86%

• S&P 500 Implied Correlation 41.76 +.14%

• ISE Sentiment Index 103.0 +9.57%
  

• Total Put/Call .72 -11.11%

• NYSE Arms 1.06 +16.19%

Credit Investor Angst:

• North American Investment Grade CDS Index 62.86 -.61%
  

• America Energy Sector High-Yield CDS Index 371.0 -1.32%

• European Financial Sector CDS Index 74.0 -.64%

• Western Europe Sovereign Debt CDS Index 9.60 +3.90%

• Asia Pacific Sovereign Debt CDS Index 22.57 -1.27%

• Emerging Market CDS Index 201.12 +1.80%
  

• iBoxx Offshore RMB China Corporate High Yield Index 137.13 unch.

• 2-Year Swap Spread 31.25 -1.75 basis points

• TED Spread 35.50 -1.0 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -27.75 -1.5 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 72.24 -.59%
• 3-Month T-Bill Yield .81% unch.
  

• Yield Curve 104.0 -2.0 basis points
  

• China Import Iron Ore Spot $66.62/Metric Tonne +.83%

• Citi US Economic Surprise Index 7.10 -.2 point

• Citi Eurozone Economic Surprise Index 50.30 -.6 point

• Citi Emerging Markets Economic Surprise Index 38.9 +.3 point

• 10-Year TIPS Spread 1.92 unch.
  
• 69.7% chance of Fed rate hike at June 14 meeting, 72.6% chance at July 26 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -4 open in Japan 
• China A50 Futures: Indicating +3 open in China

• DAX Futures: Indicating +5 open in Germany

Portfolio: 

• Higher: On gains in my biotech/retail/medical sector longs 

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

• Market Exposure: Moved to 100% Net Long

Today's Headlines

Bloomberg:

• White House Unveils Trump’s Opening Tax-Cut Bid. (video) The White House made its opening bid for what officials called the “biggest tax cut” in U.S. history -- with cuts that would benefit businesses, the middle class and certain high-earning individuals -- but left unanswered questions about whether the plan would be paid for, or how.
• European Stocks Rise as Kering, Credit Suisse Climb on Earnings. (video) European stocks extended their winning streak into a sixth day, boosted by strong earnings from companies including Kering SA and Credit Suisse Group AG. The Stoxx Europe 600 Index added 0.5 percent at the close. The benchmark index is up 2.8 percent this week in the biggest three-day gain of the year amid a rally sparked by optimism over the first-round results of the French presidential election.
• This $30 Billion Pension Pot Is Keeping Faith With Hedge Funds.
• Climate Evangelists Are Taking Over Your Local Weather Forecast. Sunny with a scientific certainty of climate change. More at 11.

Fox News:

• Ann Coulter cancels Berkeley event amid protests. (video)

CNBC:

• Commerce Secretary Ross to announce plan to probe imported aluminum: Source.
• The market has only done this four times in 36 years, and it could be ‘very bullish’. (video)
• These companies have the most to gain from Trump's tax-cut plan. (video)

Zero Hedge:

• The Main Highlights In Trump's Sweeping Tax Reform Proposal.
• Canada's Housing Bubble Explodes As Its Biggest Mortgage Lender Crashes Most In History.
• Trump Individual Tax Plan To Have 3 Brackets: 35%, 25%, & 10%.
• Peso Plunges As White House Plans NAFTA Withdrawal Executive Order. (graph)
• Fannie Introduces "Innovative Solutions" Allowing Student-Debt-Laden Millennials To Buy A Home.
• WTI/RBOB Jump On Largest Crude Draw In 2017 Offset By Major Product Build, Rising Production. (graph)

Bear Radar

Style Underperformer:

• Mid-Cap Value +.3%

Sector Underperformers:

• 1) Disk Drives -2.7% 2) Steel -1.8% 3) Gold & Silver +1.-%

Stocks Falling on Unusual Volume: 

• MTSI, CREE, STX, BABY, DDR, X, NUVA, FLXN, VNTV, CHRW, DPS, IPHI, ATI, OSK, HIBB and DDR

Stocks With Unusual Put Option Activity:

• 1) MRK 2) HRB 3) AAP 4) ANET 5) CMG

Stocks With Most Negative News Mentions:

• 1) ALGT 2) NUS 3) FBK 4) CCLP 5) X

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +1.3%

Sector Outperformers:

• 1) Gaming +2.9% 2) Coal +1.5% 3) Retail +1.3%

Stocks Rising on Unusual Volume:

• AKBA, IRBT, JNPR, LOGI, ARI, TWTR, CMG, WYN, MHO, FOE, CLGX, TSS, EW, MSA, ISLE, PRGO, GCO, MDSO, BOKF, ESRX, PBF, NTB, IRTC, FCAU, HSTM, CONN, ERI, WYNN, BLMN, KMT, FSLR, SIX, TMO, IART, ANTM, TRN, DECK, ILG, TKR, GCO, BAX, AI, BIG, STRP and CZR

Stocks With Unusual Call Option Activity:

• 1) JNPR 2) ST 3) UPS 4) MRK 5) UTX

Stocks With Most Positive News Mentions:

• 1) WYNN 2) COST 3) DNOW 4) DYN 5) EAT

Charts:

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

Morning Market Internals

NYSE Composite Index:

• Volume Running +22.0% Above 100-Day Average
• 8 Sectors Rising, 2 Sectors Declining
• 64.8% of Issues Advancing, 31.6% Declining
• 172 New 52-Week Highs, 7 New Lows
• 58.0% of Issues Above 200-day Moving Average
• Average 14-Day RSI 42.8%
• Vix 10.62 -1.3%
• Total Put/Call .64 -21.0%
• TRIN/Arms .88 -3.01%

Wednesday Watch

Night Trading 

• Asian equity indices are +.25% to +1.0% on average.
• Asia Ex-Japan Investment Grade CDS Index 93.25 -2.0 basis points. 
• Asia Pacific Sovereign CDS Index 22.75 -.25 basis point.
• Bloomberg Emerging Markets Currency Index 72.68 +.02%.
• S&P 500 futures +.03%. 
• NASDAQ 100 futures +.07%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (ALK)/1.04
• (BAX)/.51
• (BA)/1.91
• (DPS)/.97
• (GD)/2.32
• (HES)/-1.07
• (IR)/.53
• (NSC)/1.36
• (NOC)/2.92
• (OC)/.61
• (PEP)/.92
• (PG)/.94
• (STX)/1.07
• (STT)/1.10
• (SUP)/.37
• (TWTR)/.01
• (UTX)/1.39
• (WYN)/1.10
• (BWLD)/1.67
• (FFIV)/1.97
• (GG)/.09
• (LVS)/.62
• (ORLY)/2.88
• (TER)/.38
• (TSCO)/.46
• (XLNX)/.54

Economic Releases  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,135,910 barrels versus a -1,034,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +140,450 barrels versus a +1,542,000 barrel gain the prior week. Distillate supplies are estimated to fall by -1,278,180 barrels versus a -1,955,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.11% versus a +1.9% gain the prior week.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Australia CPI report, President Trump's tax reform plan outline, FCC Chair speaking on internet regs, $34B 5Y T-Note auction, weekly MBA mortgage applications report, (BAC) annual meeting and the (AMD) annual meeting could also impact trading today.

BOTTOM LINE:  Asian indices are higher, boosted by commodity 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.