Tuesday Watch

Evening Headlines 
Bloomberg: 

• Greece and Germany Head for a Showdown. (video)
• Yuan Usage Is Losing Momentum Outside Asia, HSBC Survey Suggests. The yuan’s rise in global trade is losing momentum and adoption outside of Asia-Pacific remains limited as complex rules deter companies, according to an annual survey by HSBC Holdings Plc. The report highlights the challenge for China as it seeks to internationalize its currency and open up its capital markets. Premier Li Keqiang is pushing for the yuan to be added to the International Monetary Fund’s basket of four reserve currencies, aiding the nation’s attempts to contest the dollar’s dominance in global trade and finance.
• Most Asian Stocks Retreat as Investors Await China Factory Data. Most Asian stocks fell, following a drop in U.S. equities, as industrial companies declined and investors awaited manufacturing data from China. About three shares dropped for every two that rose on the MSCI Asia Pacific Index, which traded little changed at 148.77 as of 9:03 a.m. in Tokyo.
• Iron Ore Cut 28% at Morgan Stanley on China’s Loss of Confidence. Morgan Stanley, which began the year saying the worst was probably over for iron ore prices, cut forecasts for the raw material through 2017, citing weak conditions in China and a seaborne surplus that’ll more than double. The steel-making commodity will average $57 a metric ton in 2015, 28 percent less than a previous forecast, analysts Tom Price and Joel Crane wrote in a quarterly report on Tuesday. The 2016 outlook was cut 13 percent to $65 and the 2017 forecast was reduced 5 percent to $71 a ton, according to the report. 
• Fed’s Rate Path Post-Liftoff Won’t Be Smooth, Fischer Says. Federal Reserve Vice Chairman Stanley Fischer wants investors to fasten their seatbelts. Fischer said on Monday in New York that raising interest rates “likely will be warranted before the end of the year” and cautioned policy wouldn’t be uniform or predictable. 
• Buyback Blackout Leaves U.S. Stocks on Their Own Before Earnings. U.S. stocks are entering part of the year when one of their biggest support systems goes away. Buybacks, which reached a monthly record in February and have surged so much they make up about 2 percent of daily volume, are customarily suspended during the five weeks before companies report quarterly results, according to Goldman Sachs Group Inc. With the busiest part of first-quarter earnings seasons beginning in April, the blackout is getting started now.

Wall Street Journal:

• U.S. Car-Making Boom? Not for Auto-Industry Workers. U.S. auto-industry wages have declined despite rise in output due to competition from foreign parts makers. U.S. auto production is nearing all-time highs on the back of strong domestic demand and steady export increases. But American-made cars and trucks are increasingly loaded with parts imported from Mexico, China and other nations.
• Fed’s Williams: Midyear Will Be Time to Start Rate Increase Debate. Federal Reserve Bank of San Francisco President John Williams reiterated on Monday his belief that central bankers should consider raising rates some time this summer.
• The Rising Menace From Disintegrating Yemen. The U.S. suffers a major setback in the war on terror as a proxy war between Iran and Saudi Arabia looms. The evacuation of U.S. Special Forces from their base in southern Yemen on Friday because al Qaeda had taken over the nearby city of al-Houta is hard to spin as anything but a major setback for the war on terror. All the more so since last month the few remaining U.S. diplomats in Yemen had flown out of San’a, the capital, because of the threat from Houthi rebels. The American ambassador to Yemen now operates from the Saudi port city of Jeddah.

Fox News:

• Terror triumvirate: ISIS, Al Qaeda, Boko Haram training together in Mauritania: analyst. (video) The world’s three most infamous terrorist organizations are working together at Al-Qaeda-run training camps in the Sahara Desert in Mauritania, where dozens of recruits from the U.S., Canada and Europe are being indoctrinated into violent jihad and training for attacks that could expand the so-called caliphate across North and West Africa, according to analysts.

Zero Hedge:

• How Much Time Do Americans Spend Plugged Into The Matrix Every Day?
• US "Loses" $500 Million In Weapons Given To Yemen, Now In Al-Qaeda Hands.
• Dollar-Dump, Biotech-Bruising , & Rail-Rout, Ruins Record Run In Stocks.
• The Moment When The San Francisco Fed Finally Figures Out What "Debt" Is.
• There Goes The Shale M&A Bid - Whiting Petroleum Finds 'No Buyer', Forced To Issue Massive Secondary. (graph)
• Paul Krugman Is Wrong About The UK And Borrowing.
• China Lands Hard: Rail Volume Plunges, PMI Tumbles Into Contraction, Employment Worst Since Lehman. (graph)
• Fortescue Explains Why Failed Refinancing Didn't Really Fail. (graph)
• The Real Reason The American Dream In Unraveling. (graph)
• Copper Baumgartner'd As China Opens. (graph)

Business Insider:

• Here's what Wall Street is losing from the oil crash: fees.

Financial Times: 

• Raise rates or face ‘devastating’ bubbles, says Fed official. The US risks inflating asset price bubbles with “devastating consequences” if it leaves interest rates at zero, according to a senior Federal Reserve official. James Bullard, head of the Reserve Bank of St Louis, told the Financial Times on Monday the Fed “should get on with normalisation” as soon as possible so that it does not have to raise rates more aggressively later causing significant market volatility.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are -.75% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 112.75 -.25 basis point.

• Asia Pacific Sovereign CDS Index 60.25 -.25 basis point.

• S&P 500 futures unch.

• NASDAQ 100 futures +.03%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (GIII)/.83
• (HDS)/.10
• (IHS)/1.36
• (MKC)/.64
• (CBK)/-.10
• (SONC)/.12
• (SCS)/.20

Economic Releases
8:30 am EST

• The CPI for February is estimated to rise +.2% versus a -.7% decline in January.
• The CPI  Ex Food & Energy for February is estimated to rise +.1% versus a +.2% gain in January.

9:00 am EST

• The FHFA House Price Index for January is estimated to rise +.5% versus a +.8% gain in December.

9:45 am EST

• Preliminary US Markit Manufacturing PMI for March is estimated to fall to 54.6 versus 55.1 in February.

10:00 am EST

• New Home Sales for February are estimated to fall to 464K versus 481K in January. 
• Richmond Fed Manufacturing Index for March is estimated to rise to 3.0 versus 0.0 in February. 

Upcoming Splits

• (MGA) 2-for-1

Other Potential Market Movers

• The Fed's Bullard speaking, Eurozone PMI, UK CPI, 2Y T-Note auction, weekly US retail sales reports and the BB&T Industrials conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and real estate 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 day.