Wednesday Watch

Evening Headlines
Bloomberg:   

• Cruz, Sanders Win Wisconsin Vote in Setback to Front-Runners. Texas Senator Ted Cruz beat real estate mogul Donald Trump in Wisconsin’s Republican presidential primary on Tuesday, boosting the odds of a contested national convention in July, while Bernie Sanders claimed a victory over Hillary Clinton in the Democratic contest. Cruz and Sanders were declared winners by NBC and Fox News based on early returns and exit polls. Both candidates went into the night leading in surveys of Wisconsin voters and were looking to slow the front-runners by taking the state. The outcome marked perhaps the most consequential loss for Trump since Cruz beat him in the Feb. 1 Iowa caucuses that started the nomination race. If Trump is only able to win a few of Wisconsin’s 42 delegates, it could seriously damage his prospects for surpassing the threshold to win the nomination outright -- 1,237 -- while also diminishing his pitch as the party’s consensus candidate. With 20 percent of precincts reporting, Cruz had 52 percent of the vote to Trump’s 31 percent. Ohio Governor John Kasich, the other Republican still in the race, had 15 percent. The Democratic race was closer with Sanders holding a lead of 53 percent to Clinton’s 47 percent with 21 percent of precincts reporting.
• China FX Losses up 13-Fold to $7.5B. (video)
• Asian Stocks Fluctuate as Crude Rebound Buoys Energy Producers. Asian stocks swung between gains and losses, after the regional benchmark index dropped to a one-month low, as energy companies surged with a rebound in oil while utilities slid. The MSCI Asia Pacific Index fell less than 0.1 percent to 124.34 as of 9:14 a.m. in Tokyo, after rising as much as 0.1 percent.
• The Coming Default Wave Is Shaping Up to Be Among Most Painful. When the next corporate default wave comes, it could hurt investors more than they expect. Losses on bonds from defaulted companies are likely to be higher than in previous cycles, because U.S. issuers have more debt relative to their assets, according to Bank of America Corp. strategists. Those high levels of borrowings mean that if a company liquidates, the proceeds have to cover more liabilities. "We’ve had more corporate debt than ever, and more leverage than ever, which increases the potential for greater pain," said Edwin Tai, a senior portfolio manager for distressed investments at Newfleet Asset Management. 

 Wall Street Journal: 

• Wisconsin Primary: Live Coverage.  
• Pfizer(PFE) to Walk Away From Allergan Deal. Dissolution to be announced Wednesday after Pfizer board voted to kill deal. Pfizer Inc. has decided to kill its planned $150 billion takeover of Allergan PLC, after the Obama administration took aim at a deal that would have moved the biggest drug company in the U.S. to Ireland to lower its taxes, according to people familiar with the matter.
• Trump, We Knew Ye. The Donald was never serious about the presidency in the Hillary sense. Donald Trump never wanted it enough. Though some will think it premature to write his presidential obituary while the Wisconsin results have yet to come in (thanks to our deadline) and while the GOP nomination contest is far from decided, in fact the obituary is overdue.

Fox News:

• Cruz, Sanders projected to win Wisconsin primary. (video) Republican Ted Cruz and Democrat Bernie Sanders were projected to win Wisconsin's presidential nominating contests Tuesday, disrupting Donald Trump and Hillary Clinton's hopes of wrapping up the race any time soon. On the Republican side, Fox News projects that Texas Sen. Cruz will defeat Trump in Tuesday's primary, slowing the GOP front-runner's momentum after a rough week on the campaign trail for the New York businessman. Vermont Sen. Sanders, in the Democratic race, was projected to notch his sixth victory of the last seven primaries and caucuses –  also giving him significant momentum in advance of the New York primary in two weeks. Early returns show Sanders with 57 percent to Clinton's 43 percent in the state.

MarketWatch:

• 10 U.S. companies that threw away money on buybacks.
• Cree(CREE) shares plunge after warning of revenue woes. Cree Inc. said fiscal third quarter revenue will be lower than expected due to product delays and other issues at its lighting business. Shares of the company dropped 18% in after-hours trading to $23.93.

CNBC:

• Bad news: Bond defaults are on the rise. (video) The default rate for high-yield bonds has risen to the highest level in six years, and a top bond analyst sees more bad news ahead for investors in so-called junk bonds. According to S&P's fixed income research team, 3.8 percent of companies with "speculative-grade" debt have defaulted over the past 12 months through March, which is the highest that rate has been since 2010. This as 12 companies with poor credit ratings (hence their "speculative" nature as well as their high yields) defaulted in March. 

Zero Hedge:

• Here Are Some Of The Americans In The "Panama Papers".
• BOJ's Kuroda Threatens More Easing, Stocks Tank, Absurdity Reigns.
• Who Are The Best Paid Bank CEO: The One Chart Summary.
• The ECB’s Monetary Policy Is Now Creating a Rush Into Derivatives.
• The Recovery-less Recovery. (graph)
• As Pfizer-Allergan Sinks, These "Inversion" Deals Could Be Next. (graph)
• California Gov. Signs Minimum Wage Hike: Admits It "Doesn’t Make Economic Sense" As Locals Flee For Texas.
• As Seen On One Billboard: The San Francisco Housing Bubble.
• Crude Spikes After Biggest Inventory Draw In 2016. (graph)
• How The U.S. Treasury Just Crushed 80 Hedge Funds.
• Inside The Biggest Short Squeeze Ever, A Surprise Emerges. (graph)
• What The Charts Say: Complacent, Complacent-er, Complacent-est. (graph)
• Bonds & Bullion Bid As More "Good" News Slams Stocks. (graph)

Business Insider: 

• It looks like China is about to squash a $7 billion luxury industry.
• The US government wants to stop 2 of the largest oil services companies from merging.
• A new poll found Ted Cruz pulling into a national dead heat with Donald Trump.

Telegraph:

• Greece remains a slow-motion car-crash - it should be allowed to go bankrupt.

Night Trading 

• Asian equity indices are -.50% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 148.0 +2.75 basis points. 
• Asia Pacific Sovereign CDS Index 61.25 +2.0 basis points. 
• Bloomberg Emerging Markets Currency Index 71.86 +.08%. 
• S&P 500 futures +.40%. 
• NASDAQ 100 futures +.45%.

Morning Preview Links

Earnings of Note
Company/Estimate 

• (AYI)/1.57
• (STZ)/1.14
• (GPN)/.67
• (MON)/2.42
• (MSM)/.78
• (SCHN)/-.26
• (APOG)/.64
• (APOL)/-.10
• (BBBY)/1.80
• (MRVL)/.09 

Economic Releases 
10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +2,965,000 barrels versus a +2,299,000 barrel increase the prior week. Gasoline supplies are estimated to fall by -1,295,400 barrels versus a -2,514,000 barrel decline the prior week. Distillate inventories are estimated to fall by -750,000 barrels versus a -1,075,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.26% versus a +2.0% gain prior.    

2:00 pm EST:

• Fed releases minutes from March 15-16 FOMC meeting. 

Upcoming Splits 

• None of note

Other Potential Market Movers

• The Fed's Kaplan speaking, Fed's Mester speaking, China Services Index, Eurozone Industrial Production report and the weekly MBA mortgage applications report could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and commodity shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 25% net long heading into the day.