Tuesday Watch

Evening Headlines 
Bloomberg:

• Tsipras Seeks Greek Opposition Backing in Stalled Talks. Greek Prime Minister Alexis Tsipras sought to rally a consensus in parliament for his effort to secure bailout funds after his proposals to bolster the nation’s finances failed to satisfy his European creditors. “I want to address the political parties of the opposition: Will you back the national negotiating strategy to put an end to austerity?” Tsipras asked lawmakers in Athens on Monday, in an extraordinary debate to discuss the country’s stalled bailout review. Europe’s most-indebted state is locked in talks with euro-area countries and the International Monetary Fund over the terms attached to its 240 billion-euro ($260 billion) rescue. The standoff, which has left Greece dependent upon European Central Bank loans, risks leading to a default within weeks and its potential exit from the euro area.
• Debt Could Derail China's Ambitions. China's Xi Jinping made a lot of grand promises over the weekend, pledging a new order where China and Chinese-led institutions such as the new Asian Infrastructure Investment Bank would promote prosperity across the region. But he was on shaky ground -- literally. The Boao Forum where Xi spoke took place in Haikou, capital of China's island province of in Hainan, whose local government, it seems, may not be able to pay its debt this year.  
• China Rongsheng Reports Negative Sales on Order Cancellations. China Rongsheng Heavy Industries Group Holdings Ltd., once the country’s largest private shipbuilder and now quickly running out of cash, reported negative revenue last year as it prepares to sell its shipbuilding business and buyers cancel orders. Sales fell 3.8 billion yuan ($612 million) into the red last year, compared with a positive 1.3 billion yuan in revenue the previous year. Net losses narrowed to 7.75 billion yuan, down from 8.69 billion yuan in 2013.
• Asian Stocks Set for Best Quarter Since 2012; Oil Slumps. Asian stocks headed for their biggest quarterly advance since 2012 and the dollar strengthened against most peers amid speculation that central bank stimulus globally will continue to support asset prices. Crude oil fell for a third day. The MSCI Asia Pacific Index rose 0.5 percent by 11:16 a.m. in Tokyo. 
• Oil Set for Third Quarterly Drop as Deadline in Iran Talks Looms. Oil headed for a third quarterly loss as Iranian and Western diplomats worked toward a nuclear deal that may lead to the OPEC member increasing crude exports and worsening a global supply glut. Futures dropped as much as 1.7 percent in New York, falling for a third day. Russian Foreign Minister Sergei Lavrov left the talks in Switzerland and will only return if an agreement is in sight, signaling negotiations may continue into the final hours leading to Tuesday’s deadline. U.S. crude stockpiles probably expanded further from a record last week, a Bloomberg survey showed before government data Wednesday.  
• Cheap Oil Unlikely to Slow Growth of Renewables, Citigroup Says.
• Iron Ore Sinks to 10-Year Low as Rio Rebuts Fortescue’s Cap Call. Iron ore is headed for the biggest quarterly loss since at least 2009 as surging low-cost supplies from Australia and Brazil swamp the global market, spurring a glut as demand from China slows. Ore with 62 percent content at Qingdao, China, sank 26 percent since the start of the year, according to daily data from Metal Bulletin Ltd. The raw material retreated to $52.69 a dry metric ton on Monday. That’s the lowest since 2004-2005, based on data from Metal Bulletin and annual benchmarks compiled by Clarkson Plc, the world’s largest shipbroker.
• Fed’s Fischer Says Regulators Must Keep Watch on Shadow Banking. Regulators must better monitor and consider new rules for the growing proportion of lending being done by non-bank financial firms, the Federal Reserve’s second highest official said on Monday. “Non-bank firms and activities can pose the same key vulnerabilities as banks, including high leverage, excessive maturity transformation, and complexity, all of which can lead to financial instability,” Fed Vice Chairman Stanley Fischer said in the text of remarks prepared for delivery at a financial markets conference in Stone Mountain, Georgia.

Wall Street Journal: 

• As China Expands Its Navy, the U.S. Grows Wary. Washington is divided over whether Beijing should be viewed as naval partner or potential adversary.
• The Capitulationist. The Obama administration refuses to negotiate openly, lest the extent of its diplomatic surrender to Iran be prematurely and fatally exposed. 

Fox News: 

• Commencing jihad: ISIS tweets photos of military 'graduation'.

MarketWatch.com:

• Four things you need to know about ‘China’s World Bank'. 

Zero Hedge:

• Japan "Wakes Up," Joins China-led Development Bank (And Then Backs Out).
• Steve Keen: The Deliberate Blindness Of Our Central Planners. (video)
• Summing Up The Total Chaos That Reigns In Greek "Negotiations".
• Wages & Lowflation (Or Why Rick Santelli Is Right). (video)
• JP Morgan Has A "Problem" With Emerging Markets. (graph)
• The Fed's Startling Student Debt Numbers That Every Young Person Should See.
• Just One Chart. (graph)

Business Insider:

• Hedge funder Steve Cohen is starting a venture capital fund.

Evening Recommendations 

• None of note

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 110.5 -2.5 basis points.

• Asia Pacific Sovereign CDS Index 60.5 -.75 basis poi5nt.

• S&P 500 futures -.18%.

• NASDAQ 100 futures -.09%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CONN)/.64
• (MOV)/.20
• (DCO)/.29 

Economic Releases
9:00 am EST

• ISM Milwaukee for March is estimated to rise to 51.5 versus 50.32 in Febuary.
• S&P/CS 20 City MoM SA in January is estimated to rise +.65% versus a +.87% gain in December.

9:45 am EST

• The Chicago Purchasing Manager for March is estimated to rise to 51.8 versus 45.8 in February.

10:00 am EST

• Consumer Confidence for March is estimated at 96.4 versus 96.4 in February.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's George speaking, Fed's Lacker speaking, Fed's Mester speaking, German retail sales report, weekly US retail sales reports, (APD) investor day and the (MOS) analyst day could also impact trading today.

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

Stocks Surging into Final Hour on Central Bank Hopes, Buyout Speculation, Yen Weakness, Energy/Financial Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 14.4 -6.17%

• Euro/Yen Carry Return Index 135.82 +.21%

• Emerging Markets Currency Volatility(VXY) 10.56 -.58%

• S&P 500 Implied Correlation 64.06 -2.12%

• ISE Sentiment Index 94.0 +3.3%

• Total Put/Call .94 -11.32%

• NYSE Arms .53 -67.71% 

Credit Investor Angst:

• North American Investment Grade CDS Index 63.94 -.93%

• America Energy Sector High-Yield CDS Index 1,027.0 +2.01%

• European Financial Sector CDS Index 65.89 -.28%

• Western Europe Sovereign Debt CDS Index 21.60 -2.79%

• Asia Pacific Sovereign Debt CDS Index 60.70 -2.24%

• Emerging Market CDS Index 315.73 -.29%
  

• iBoxx Offshore RMB China Corporates High Yield Index 114.30 +.08%

• 2-Year Swap Spread 24.25 -.25 basis point

• TED Spread 24.0 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -23.5 +.25 basis point

Economic Gauges:

• 3-Month T-Bill Yield .02% -1.0 basis point

• Yield Curve 138.0 unch.

• China Import Iron Ore Spot $52.69/Metric Tonne -.85%

• Citi US Economic Surprise Index -60.8 +2.1 points

• Citi Eurozone Economic Surprise Index 64.90 +12.8 points

• Citi Emerging Markets Economic Surprise Index -.8 +.6 point

• 10-Year TIPS Spread 1.75 -3.0 basis points

Overseas Futures:

• Nikkei Futures: Indicating +260 open in Japan

• DAX Futures: Indicating +42 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 50% Net Long

Today's Headlines

Bloomberg:  

• Greek Plans to Unlock Aid Need Lots of Work, EU Aides Say. Greece’s proposed plans to bolster its finances in exchange for unlocking bailout funds still need lots of work, three European officials said. The 15-page draft, which was discussed Sunday in Brussels, requires more information and details and was a long way from serving as the basis of a deal, said one of the aides, who asked not to be named because the talks were private. Seeking a strategy that passes muster with European officials now withholding loans as the country’s cash crunch deepens, Greece’s government foresees a net increase of 3.7 billion euros ($4 billion) in receipts this year. The biggest chunk would be as much as 875 million euros from the “intensification of audits on lists of bank transfers and offshore entities,” according to the draft.
• Ukraine Faces 30% Risk of Messy Default as Creditor Talks Begin. As Ukraine prepares for debt restructuring talks, most analysts expect the nation to avoid a messy default. Finance Minister Natalie Jaresko last week urged Ukraine’s bondholders to back a debt overhaul in negotiations set to begin within days, or risk bigger losses later. The probability of a disorderly default -- one where there’s no agreement with investors -- is about 30 percent, according to the median of 21 analysts surveyed by Bloomberg on March 20-26. 
• Canadian Junk Market Freezes as Poloz Compounds Oil Collapse. If the Bank of Canada’s surprise interest rate cut was meant to spur companies to borrow, it’s not working in the nation’s high-yield bond market. Even after the central bank lowered borrowing costs on Jan. 21, the current quarter is the first in three years without a single company tapping Canada’s junk-bond market for funds, according to data compiled by Bloomberg. In contrast, U.S. junk bond issuance has already surged to the highest level in six months, the data show.   
• Europe Stocks Rise Most in Three Weeks on Central-Bank Optimism. European stocks rose the most in almost three weeks, poised for their best quarter since 2009, amid optimism central banks will continue to support global growth. The Stoxx Europe 600 Index rose 1.1 percent to 399.84 at the close of trading, extending gains after data showed pending sales of U.S. homes rose more than forecast in February.
• These Charts Show Clearly Why Oil Prices Crashed. (video) In 2014 U.S. oil expanded the most since at least 1900. 
• S&P 500 Profit Reversals Hard to Stop as Bad Quarters Add Up. Analysts predict Standard & Poor’s 500 Index profits are about to decrease for three straight quarters. Investors better hope they don’t. History shows that once earnings drop for that long, they almost always keep falling, and usually take the market with them. In fact, among 17 declines that got to nine months since the Great Depression, exactly one stopped there, in 1967. Any sign that U.S. earnings are about to collapse is enough to strike fear in money managers who have watched shares triple as profits rose almost every year since 2009. Even if analysts are right about the duration of the skid, earnings contractions of three quarters or more have triggered bear markets 82 percent of the time over the past eight decades.  
• UnitedHealth(UNH) Pays $12.8 Billion for Catamaran’s Drug Clients.
• Horizon to Buy Hyperion for $1.1 Billion, Gain Orphan Drugs.

ZeroHedge:

• SocGen Asks The $4.5 Trillion Question. (graph)
• Reuters Asks "Who Is More Of A Threat: Obama Or Putin", Surprised By The Answer.
• Dallas Fed Collapses At Fastest Pace Since Lehman, Lowest Since June 2011. (graph)
• Lynn Tilton Charged By SEC For CLO Fraud, As Warned Here Nearly Two Years Ago.
• Ben Bernanke Pens First Blog Post, Defends Fed, Says He "Was Concerned About Seniors".
• Despite Abysmal Weather, Feb Pending Homes Sales Surge By Most In 9 Months. (graph)
• Germanwings Co-Pilot Head Been Treated For "Suicidal Tendencies" In The Past.
• US Savings Rate Jumps To Highest Since 2012 As Spending Continues To Miss Expectations. (graph)

Business Insider: 

• Texas hasn't been this bad in 2 years.
• 4 charts that show China's stock market right now is total insanity. (graph)

Telegraph:

• Bank of England's new stress test to include China slowdown and eurozone crash. UK's biggest banks to face tough new stress test.

Bear Radar

Style Underperformer:

• Large-Cap Growth +.96%

Sector Underperformers:

• 1) Gold & Silver -2.03% 2) Education -.64% 3) Oil Service -.42%

Stocks Falling on Unusual Volume:

• ALTR, BDSI, WWE, LBIO, AIR, NEWT, OVAS, HWAY, SERV, WBAI, PLT, KRFT, MYL, ROLL, CBMG, CALA, EGL, LO, CALM, QUNR, INXN, STRA, JMEI, WLL, YOKU, EVEP and HWAY
  

Stocks With Unusual Put Option Activity:

• 1) EWJ 2) FEZ 3) MMM 4) KO 5) CIEN
  

Stocks With Most Negative News Mentions:

• 1) ROLL 2) LINE 3) JASO 4) WWE 5) ALTR
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Value +.97%

Sector Outperformers:

• 1) Homebuilders +1.36% 2) Energy +1.39% 3) Computer Services +1.26%
  

Stocks Rising on Unusual Volume:

• HPTX, ICEL, CTRX, ASPX, ADI, XON, MSG, HZNP, DYN, RTRX, THRM, DWA, GNC, FBHS, RCPT, ITG, MSG and SIVB

Stocks With Unusual Call Option Activity:

• 1) ALTR 2) HZNP 3) EA 4) XON 5) ZIOP
  

Stocks With Most Positive News Mentions:

• 1) LMT 2) ADI 3) FINL 4) UNH 5) SSP
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Monday Watch

Weekend Headlines 
Bloomberg: 

• Greek Markets Show All at Risk Should Mistake Trigger a Default. In Athens, the unspeakable is at risk of becoming the inevitable. Market metrics show Greece is in danger of sinking under the burden of its debt, putting repayments of about 500 billion euros ($546 billion) owed to European taxpayers, rescue funds, banks and bondholders in jeopardy. Prime Minister Alexis Tsipras is locked in talks with creditors over measures attached to Greece’s bailout loans and a government official said on Friday the country won’t service its debt if creditors don’t release the funds. The government has also floated a restructuring that would link some future payments to economic growth, reduce interest rates and allow more time for repayments. While their intention is to exclude private bondholders, the danger is that talks collapse and Greece leaves the euro, leaving all parties facing losses. 

• ECB Nerves Fray on Greece as Supervisors Rile Central Bankers. Inside the five-month-old union between monetary policy and financial oversight at the European Central Bank, nerves are beginning to fray. As officials seek to replace deposits fleeing Greek banks without blatantly financing the state, the efforts of the institution’s new Single Supervisory Mechanism to do its part are irking the old guard. Central bankers under ECB President Mario Draghi worry that overly-strict orders to lenders could worsen the Greek turmoil. After building an institutional pillar that has supervised the euro area’s largest banks since November, the ECB is now facing one of the worst flare-ups in six years of sovereign-debt crisis. Officials must work out how to align their two policy arms in a way that can find a path through the Greek turmoil and set a template for handling banking turbulence to come. 

• China’s Growth Fell `a Bit’ Too Much: PBOC’s Zhou. (video)

• Japan’s Industrial Output Drops, Adding to Signs of Weakness. Japan’s industrial production fell more than forecast in February, adding to pressure from a drop in consumer spending and faltering inflation. Output declined 3.4 percent from January, when it rose 3.7 percent, the trade ministry said in Tokyo on Monday. The median estimate of 28 economists surveyed by Bloomberg was for a decline of 1.9 percent. The data is the weakest since June last year and underscores the fragility of Japan’s recovery from a recession last year. 

• Asia Stocks Trim Best Quarter Since 2013 as Energy Shares Drop. Asian stocks fell for a third day, trimming the biggest quarterly advance for the regional benchmark index since 2013, as energy and material shares led declines. The MSCI Asia Pacific Index lost 0.3 percent to 146.2 as of 9:05 a.m. in Tokyo.

• Too much of everything spurs commodity exodus as price wars rage. Investors are bailing out of commodity funds at the fastest pace on record, and the exodus shows no signs of ending. Investors are bailing out of commodity funds at the fastest pace on record, and the exodus shows no signs of ending. U.S. exchange-traded funds linked to broad baskets of raw materials saw a net outflow of $1.23 billion over the first three months of the year, the most of any quarter since the securities were created in 2006, data compiled by Bloomberg show. Bank of America Corp. says ample supplies have unleashed price wars, and Goldman Sachs Group Inc. predicts a 20 percent drop for commodities already near a 13-year low. Morgan Stanley and Societe Generale SA also have cut forecasts for a whole range of items.

• Oil Drops for Second Day as Iran Nuclear Talks Remain Deadlocked. Oil fell for a second day as Iranian and Western diplomats worked toward a nuclear deal that may lead to the Islamic Republic boosting crude exports, exacerbating a global supply glut. Futures dropped as much as 1.9 percent in New York.

Wall Street Journal:

• Marco Rubio Makes Plans for 2016 Run. Florida Republican senator is tentatively set to announce his White House bid in Miami. Sen. Marco Rubio (R., Fla.) is laying plans to announce his presidential bid in two weeks, a step that, along with other recent activity among likely contenders, shows the early sparring and positioning in the 2016 race for the White House is about to accelerate.

• Obama Ramps Up Lobbying on Iran as Deadline Looms. White House has shown willingness to accept legislation that would give Congress some oversight over a nuclear deal.

• Uncertain of Obama, Arab States Gear Up for War. A pan-Arab coalition with a patchy record steps up as Yemen falls apart and U.S. policy remains unclear. Few organizations boast a reputation of dysfunction comparable to the Arab League’s. Over seven decades the Arab League has distinguished itself through infighting and fecklessness. But now, with the Obama administration seen as missing in action in the Middle East, the alliance of 22 countries is undergoing a renaissance. 

Fox News:

• Boehner expresses doubts about reaching nuke deal with Iran, vows sanctions if effort fails. (video) House Speaker John Boehner said on Sunday he has “serious doubts” on whether the Obama administration and five other world powers can reach an agreement with Iran to curtail that country’s nuclear program and that Congress will move to impose new sanctions on Tehran if no deal is reached.

MarketWatch.com:

• Profit warnings are piling up. Of S&P 500 companies providing first-quarter outlooks, 84% have been negative.

Zero Hedge:

• Santelli Stunned As Janet Yellen Admits "Cash Is Not A Store Of Value". (video)

• China's Banks Cut Dividends Amid Rising Bad Loans, Expectations Of Falling NIM. (graph)

• What Deflation? The Price Of Ground Beef Has Doubled Since The Last Financial Crisis.

• Why There Is No Wage Growth In America. (graph)

• Explaining US Stock And Bond Markets In 5 Easy Charts. (graphs)

• Dumb Money: 30% Of New Equity Investors In China Have Elementary Education Or Less, Bloomberg Says.

• Obama Administration Bullies Allies Over Iran Nuke Deal Dissent.

• 5 Things To Ponder: Random Musings. (graph)

• Crude Carnage & Hawkish Yellen Leave Dow In The Red For 2015. (graph)

• Greece Prepares To Leave.

• The Bubble Machine Is Complete: Soaring Stocks Push Investors Into Bonds Whose Issuers Buy More Stocks.

• It's Official: Americans Spent All Their "Gas Savings" On Obamacare.

• Finally The "Very Serious People" Get It: QE Will "Permanently Impair Living Standards For Generations To Come".

• Kyle Bass Warns "The Fed Is Backed Into A Corner... Equities Are My Biggest Liquidity Worry".

• How Do The Greeks Really Feel? (graph)

• Welfare Nation Alert: Disability Fund To Run Out Of Cash In Two Years. (graph)

• Both SEC And FINRA Admit That The Market Is Rigged (And They Are Powerless To Fix It).

• Greek Energy Minister Slams "Unscrupulous, Imperialist" Germany, Will Seek "Bold Alternatives" In Russia.

• Republicans Blast Hillary: "Not Even Nixon Destroyed The Tapes".

• Europe Pulls Rug From Under Greece, Says "Nein" To "Vague, Piecemeal" Proposals.

• First Europe, Now The Gulf's Leaders Agree To Form United Arab Military Force.

• What Bond Investors Are Most Concerned About.

• Complacency Reigns Supreme - "Nothing Can Possibly Go Wrong", Right. (graph)

• Australia To Start Taxing Bank Deposits.

• Big Brother Is Here: Facebook(FB) Reveals Its Master Plan - Control All News Flow.

• "The Risks Are Very High" Swiss Billionaire Warns "Global Financial Markets Have Never Been This Distorted Before".

• Here's Which Emerging Markets Are Most Vulnerable To "External Shock".

• Steve Keen Exclaims "The Fed Has Not Learnt Anything From The Crisis".

• Chances For Diplomatic Solution To Ukraine Conflict "Slim", Soc Gen Says.

• Did The Fed Just Whisper "Fire" In A Crowded Market?

Business Insider:

• Tesla(TSLA) is in trouble.

• Ellen Pao has lost her historic discrimination lawsuit against major VC firm Kleiner Perkins.

• Hillary Clinton deleted everything on her email server.

• The US is worried about Iran's elite Revolutionary Guard training Houthi rebels in Yemen.

• Europe's bond market is turning Japanese.

• Here's why Egypt is taking on the huge risk of getting involved in the war in Yemen.

• An anonymous administration official just gave an incoherent defense of Obama's Middle East policy.

• Iran is building a non-nuclear threat faster than experts 'would have ever imagined'. In just over two years, the Iranian government has managed to build up a sophisticated cyberarmy that experts now say is capable of crippling key global infrastructure. 

• A flaw in Facebook lets anyone create as many fake 'Likes' as they want without using a bot army.

• Banking behemoths are getting outmatched by Wall Street's underdogs.

• Israel: The emerging Iran deal 'bears out all of our fears'.

• It's time to start worrying about what Russia's been up to in Latin America.

Telegraph:

• Eurozone can't survive in current form, says PIMCO. Single currency area must become a "United States of Europe" in order to secure its future, says manager of world's largest bond fund.

Night Trading

• Asian indices are -.25% to +1.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 1113.0 unch.

• Asia Pacific Sovereign CDS Index 62.0 +.75 basis point.

• S&P 500 futures +.34%.

• NASDAQ 100 futures +.42%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AIR)/.37

• (CALM)/1.13

• (UTIW)/-.07

• (PWRD)/.37

Economic Releases
8:30 am EST

• Personal Income for February is estimated to rise +.3% versus a +.3% gain in January.

• Personal Spending for February is estimated to rise +.2% versus a -.2% decline in January.

• PCE Core for February is estimated to rise +1.3% versus a +1.3% gain in January.

10:00 am EST

• Pending Home Sales for February are estimated to rise +.4% versus a +1.7% gain in January.

10:30 am EST

• Dallas Fed Manufacturing Activity for March is estimated to rise to -9.0 versus -11.2 in February.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Fischer speaking and the Eurozone industrial production/CPI reports could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by real estate and industrial 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 week.