Friday Watch

Evening Headlines

Bloomberg:

• China Stocks Are Tumbling Again. Unlike 2015, World Doesn't Care. Global investors are still shaking off a rout that’s erased more than $560 billion from the value of Chinese equities, making them the world’s worst performers since mid-April. Below are four charts showing just how deep the pain has spread in China’s mainland. Outside of the nation’s borders, investors are indifferent to the weakness in the second-largest equity market after the U.S. The MSCI All-Country World Index is near a record and the VIX Index, the so-called fear gauge for U.S. stocks, is close to its lowest level since 1993.

• Asia Stocks Fall on Consumer Woes, Bonds Hold Gain. Asian stocks declined on concern about the appetite of U.S. consumers to keep spending, while bonds and gold held gains. Weakness in U.S. shares followed through to Japan, Australia and South Korea. Disappointing results from Macy’s Inc. and Kohl’s Corp. added to concerns that Americans continue to hold back from buying goods in the world’s largest economy, dragging the S&P 500 Index lower. Gold held gains as Australian government bonds tracked gains in Treasuries. Oil held close to $48 a barrel. Japan’s Topix index fell 0.3 percent. Australia’s S&P/ASX 200 Index retreated 0.2 percent and South Korea’s Kospi index dropped 0.2 percent. Futures on Hong Kong’s Hang Seng Index fell 0.5 percent.

• In Its Fight Against U.S. Shale Oil, OPEC Risks Lower for Longer. When Khalid Al-Falih arrived at Davos in late January, the Saudi oil minister was exultant. The output cuts he’d painstakingly arranged with fellow OPEC states and Russia were working so well, he said, they could probably be phased out by June. Almost five months later, U.S. production is rising faster than anyone predicted and his plan has been shredded. In a series of phone calls and WhatsApp messages late last week, Al-Falih told his fellow ministers more was needed, according to people briefed on the talks, asking not to be named because the conversations are private. In their battle to revive the global oil market, OPEC and its allies are digging in for a long war of attrition against shale.

Wall Street Journal:

• Donald Trump Planned Firing of James Comey Before Aide’s Letter. President contradicts previous White House account that he acted on advice of Justice Department officials.

Fox News:

• Trump says he wants Russia investigation 'done properly,' was going to fire Comey 'regardless of recommendation'. (video)

MarketWatch:

• Morgan Stanley(MS) says risk of a recession has decreased to 1-in-4 odds.

CNBC:

• Obamacare's crushing cost to some families: 49 percent price hike since 2014, premiums of $14,300. (video)

• From coding to cancer: How AI is changing medicine. (video)

• Nordstrom's(JWN) earnings, revenue top estimates; shares fall on same-store sales miss.

• Buyout firms sitting on record cash are ready to make some deals this year before it's too late.

• Saudis reportedly plan to invest $40 billion in US infrastructure.

Zero Hedge:

• Why Tesla's(TSLA) Solar Roof Is Just Another Giant Taxpayer Gift To Elon Musk.

• Is A Chinese Recession Imminent? Yield Curve Inverts For First Time Ever. (graph)

• NBC Releases Extended Trump Interview: "No Collusion Between Me And The Russians". (video)

• Spot The Odd One Out. (graph)

• Bonds Bid, Stocks Skid But VIX Breaks Another Record. (graph)

Night Trading 

• Asian equity indices are -.5% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 88.75 +.25 basis point. 

• Asia Pacific Sovereign CDS Index 20.5 unch.

• Bloomberg Emerging Markets Currency Index 72.28 +.05%.

• S&P 500 futures -.16%. 

• NASDAQ 100 futures -.16%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (MT)/.27

• (JCP)/-.24

Economic Releases  
8:30 am EST

• The CPI MoM for April is estimated to rise +.2% versus a -.3% decline in March. 

• The CPI Ex Food and Energy MoM for April is estimated to rise +.2% versus a -.1% decline in March.

• Real Avg. Weekly Earnings for April.

• Retail Sales Advance MoM for April are estimated to rise +.6% versus a -.2% decline in March.

• Retail Sales Ex Autos and Gas for April are estimated to rise +.4% versus a +.1% gain in March.

10:00 am EST

• Preliminary Univ. of Mich. Consumer Sentiment for May is estimated at 97.0 versus 97.0 in April.  

• Business Inventories for March are estimated to rise +.1% versus a +.3% gain in February
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Harker speaking, Fed's Evans speaking, (CF) general meeting and the (AET) investor meeting could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by consumer and financial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.