Tuesday Watch

Evening Headlines
Bloomberg: 

• China Stock Analysts Were Among World's Worst Amid Surprise Rout. China’s stock market was the world’s second-worst over the past year. Analysts covering it didn’t do much better. The rout in the Shanghai Composite Index, which has lost more than a third of its value since the end of April 2015, followed one of the benchmark’s best rallies ever and shocked global markets as indicated by how badly the analysts covering Chinese equities performed. Their predictions were off by bigger margins than those of analysts researching stocks in the rest of the world’s 20 largest markets. Had they been right, the gauge would be 43 percent higher than last week’s 2,938 close on the Shanghai Composite, according to data compiled by Bloomberg, which uses weighting metrics to convert consensus price targets for companies to index forecasts reflecting analysts’ collective wisdom.
• Should Investors Be Shorting Australian Banks? (video)
• Asian Stocks Rebound With Japan Shut While Yen Dominates Dollar. Asian stocks climbed with markets from Hong Kong set to China to start trading for the week and Japan closed for holidays. The dollar extended declines at a one-year low, while Australia’s currency rose ahead of an interest-rate review and a private index of Chinese manufacturing. A gauge of regional equities excluding Japan, where markets are shut until Friday, climbed for the first time in five days following the strongest rebound in two weeks for U.S. shares. The Bloomberg Dollar Spot Index slipped for a fourth session, while the Aussie advanced with the government to unveil its budget just hours after the central bank’s policy announcement. The yen extended gains at its strongest level in more than 18 months. Most industrial metals opened lower in London, as U.S. crude oil lingered below $45 a barrel. The MSCI Asia Pacific excluding Japan Index added 0.3 percent as of 9:32 a.m. Tokyo time, climbing from its lowest level since April 12.
• Oil Price Rally Isn't as Deep Rooted as It Looks at First Glance. At first glance, oil prices have rallied -- a lot. Look closer, however, and the market is still pricing the "lower-for-longer" mantra, much as it did at the beginning of the year. Front-month futures for West Texas Intermediate, the U.S. benchmark, have risen 21 percent this year, but the recovery looks very different if you focus on the longer term. The five-year-forward WTI contract fell 2.6 percent over the same period, reflecting the view that shale oil production could rebound as prices recover, capping any rally.

Wall Street Journal:

• Aeropostale(ARO) Preparing to File for Bankruptcy This Week. Teen-apparel retailer, in talks for bankruptcy loan, plans to close more than 100 stores. Aéropostale Inc. is preparing to file for bankruptcy protection this week and close more than 100 stores, according to people familiar with the matter, as the teen-apparel retailer contends with mounting losses and falling sales.
• Salesforce’s(CRM) Marc Benioff Has Kicked Off New Era of Corporate Social Activism. On social issues such as gay rights, Mr. Benioff is pushing companies to speak out, drawing brickbats from local lawmakers; ‘a corporate bully’.

Zero Hedge:

• America's Plunging Worker Productivity Explained (In 1 Depressing Chart).
• Bank of Japan: The Limits Of Monetary Tinkering. (graph)
• "It Has Been A While Since We’ve Had A Profitable Quarter To Report" - Einhorn's First Quarter Letter.
• Yentertainment Tonight - Kuroda Kollapse Kontinues As USDJPY Nears 105 Handle. (graph)
• Debt: The Key Factor Connecting Energy & The Economy.
• Every Time This Has Happened, A Recession Followed. (graph)
• Visa(V) Unveils Plan To Burden Millennials With Billions In Debt. (graph)
• The Last Time This Happened, Stocks Tumbled 20%. (graph) 
• Why The Obamacare Gold Rush Is Bankrupting America.
• "Debt Is The Cause, Not The Cure"- Why $19 Trillion In Debt 'Is' A Problem. (graph)
• The Energy Junk Bond Default Rate Just Hit An All Time High. (graph)
• 6 Charts That Show the Global Demographic Crisis Is Unfolding.
• Dis-May-Day - Bonds Down, Dollar Down, Oil Down, Gold Down, Economy Down... Stocks Up. (graph)

Business Insider:

• Unless consumers start spending, we're in for another recession. 
• A Senate candidate just gave a brutal preview of how Democrats are going to use Donald Trump all over the ballot.

Financial Times:

• Worries mount over China’s bond market. Two-plus years of a near-unbroken rally and a market may perhaps be forgiven for a pullback — unless that market is in China, where the sharpest monthly jump in bond yields since the rally began has prompted worries another mainland boom looks to be on borrowed time. Concerns about a rise in defaults, excess leverage and doubts about the likelihood of more monetary easing has sapped investor appetite and overshadowed China’s massive bond market. 
• China financial regulator clamps down on shadow banking. China’s banking regulator is cracking down on financial engineering that Chinese banks have used to disguise trillions of dollars in risky loans as investment products. The clampdown, which will force banks to make provisions they previously avoided by disguising loans as investments, is designed to deflate one of the fastest-growing areas of the vast shadow banking apparatus, where bad debts are increasing.

Night Trading 

• Asian equity indices are -% to . on average.
• Asia Ex-Japan Investment Grade CDS Index 141.75 +1.0 basis point. 
• Asia Pacific Sovereign CDS Index 54.25 unch. 
• Bloomberg Emerging Markets Currency Index 73.57 +.02%. 
• S&P 500 futures -.04%. 
• NASDAQ 100 futures -.03%.

Morning Preview Links

Earnings of Note
Company/Estimate 

• (ADM)/.45
• (ARW)/1.40
• (BCO)/.48
• (CLX)/1.10
• (CMI)/1.78
• (CVS)/1.16
• (DUK)/1.14
• (EMR)/.63
• (EL)/.61
• (FSS)./16
• (FDP)/.84
• (HAL)/.01
• (HCA)/1.49
• (TAP)/.43
• (MYL)/.76
• (PFE)/.55
• (HOT)/.59
• (S)/-.13
• (VLO)/.65
• (VSH)/.16
• (VMC)/.07
• (WWW)/.22
• (AGU)/-.06
• (CAR)/-.06
• (CBS)/.94
• (DVN)/-.62
• (ILMN)/.74
• (PZZA)/.63
• (ZG)/-.10

Economic Releases  
9:45 am EST

• ISM New York for April.

10:00 am EST

• The IBD/TIPP Economic Optimism Index for May is estimated to rise to 46.5 versus 46.3 in April.

Afternoon:

• Wards Total Vehicles Sales for April are estimated to rise to 17.4M versus 16.46M in March.

Upcoming Splits 

• None of note

Other Potential Market Movers

• The Fed's Lockhart speaking, Fed's Mester speaking, Eurozone PPI report, US weekly retail sales reports, (TSCO) annual meeting and the (BMY) annual meeting could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and consumer shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.