Stocks Slightly Higher into Final Hour on Central Bank Hopes, Less European/Emerging Markets Debt Angst, Yen Weakness, Retail/Homebuilding Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: About Even
  

• Sector Performance: Mixed
  

• Volume: Light

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 15.1 +2.37%

• Euro/Yen Carry Return Index 132.66 -.54%

• Emerging Markets Currency Volatility(VXY) 11.79 +.26%

• S&P 500 Implied Correlation 55.16 -1.25%

• ISE Sentiment Index 91.0 unch.

• Total Put/Call .82 -21.15%

• NYSE Arms 1.20 +43.40% 

Credit Investor Angst:

• North American Investment Grade CDS Index 82.63 -1.04%
  

• America Energy Sector High-Yield CDS Index 1,431.0 -4.65%

• European Financial Sector CDS Index 95.90 +.79%

• Western Europe Sovereign Debt CDS Index 27.06 -.79%

• Asia Pacific Sovereign Debt CDS Index 58.70 +.67%

• Emerging Market CDS Index 292.70 -1.62%
  

• iBoxx Offshore RMB China Corporate High Yield Index 126.51 +.06%

• 2-Year Swap Spread 9.25 -1.75 basis points
  

• TED Spread 34.75 +1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -21.50 +.5 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 71.44 +.31%
• 3-Month T-Bill Yield .27% -1.0 basis point
  

• Yield Curve 100.0 -3.0 basis points
  

• China Import Iron Ore Spot $55.75/Metric Tonne -1.08%

• Citi US Economic Surprise Index -4.90 +5.8 points

• Citi Eurozone Economic Surprise Index -32.90 unch.

• Citi Emerging Markets Economic Surprise Index -11.50 +4.9 points

• 10-Year TIPS Spread 1.56% -2.0 basis points
• 38.0% chance of Fed rate hike at June 15 meeting, 49.1% chance at July 27 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -154 open in Japan 
• China A50 Futures: Indicating +34 open in China

• DAX Futures: Indicating n/a open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Today's Headlines

Bloomberg: 

• Belgium Hunts Third Airport Bomber as Death Toll Increases. Belgian police, trying to identify a suspect seen with two suicide bombers at the Brussels airport, released video footage of the unknown man in an appeal for information about him as the death toll increased in last week’s terrorist attacks. Another suspect, whom Belgian media had reported may have been the third bomber at the airport, was released from custody on Monday, the federal prosecutors office in Brussels said. The clues that led to the arrest of this suspect -- identified as Faycal C. -- were not supported by further investigation, according to a statement. The surveillance-camera video posted on the website of the federal police on Monday shows a man in a white jacket and wearing a hat and glasses, pushing a luggage cart next to the two bombers who blew themselves up in the March 22 assaults. The video, about 30 seconds long, includes a slowed-down segment and close-ups of the man’s head. The other two airport attackers have been identified as Ibrahim El Bakraoui, who was deported from Turkey last year on suspicions of planning to cross to Syria, and Najim Laachraoui, who was also sought in connection with the Paris attacks in November. The suicide blasts ripped through the departures hall at the airport in Zaventem. Officials there are testing repair work and temporary arrangements before making a decision on when to re-open the terminal to passengers, even on a partial basis.
• China Stocks Fall as Property Curbs Overshadow Industrial Profit. China’s stocks fell as property developers slumped after some of the nation’s biggest cities introduced real-estate curbs, overshadowing a rebound for industrial companies’ profits. The Shanghai Composite Index slipped 0.7 percent, erasing a gain of as much as 1 percent. Poly Real Estate Group Co. and Gemdale Corp. led declines for developers. Shenzhen joined Shanghai in introducing measures late last week to tame soaring real-estate prices, including increasing down-payment requirements. Industrial profits broke a seven-month losing run to climb 4.8 percent in the January-February period. Property prices in the largest Chinese cities have begun to diverge severely from values in less-populated areas, spurring People’s Bank of China Governor Zhou Xiaochuan to warn lenders this month about increased credit risk from this trend. Shenzhen will also limit local residents to purchases of two homes, while Shanghai will tighten approval criteria for non-resident homebuyers and ban unregulated lending. “Developers are facing some headwinds as these measures are likely to cause immediate negative impact on the demand side,” said Wu Kan, a fund manager at JK Life Insurance in Shanghai. 
• Copper Processing Fees in China Tumble. (video)
• Red Meat, It's What's for Dinner Again as Beef Prices Tumble. Beef is making a comeback. After decades of diners shunning steaks and burgers for healthier protein options such as chicken and turkey, Americans will eat an estimated 54.3 pounds of the red meat this year -- the first increase since 2006 and almost half a pound more per person than in 2015, according to data from the U.S. Department of Agriculture. Cheaper prices are spurring discounts and new menu items at restaurant chains, including Chili’s and Wendy’s Co. Protein-centric diets such as the Paleolithic, or Paleo, and Autoimmune Protocol that eliminate grains and sugar also are fueling the shift. In February, a pound of uncooked ground beef retailed for $4.38, about 7 percent below a year ago, according to data from the Bureau of Labor Statistics.
• Valeant(VRX) CEO Pearson Subpoenaed to Testify at Senate Hearing.

Wall Street Journal:

• Starwood Gets Higher Offer From Anbang-led Group, Threatening Marriott Deal. Latest bid values hotelier at $14 billion; Marriott pact offers $13.6 billion in cash and stock.

Fox News:

• The women marked for death by Islamic fatwa face threats with fear, courage. (video) Twenty-seven years ago, Iran’s Ayatollah Khomeini called for the death of a British author, giving new fame to Salman Rushdie and infamy to the term “fatwa.” Rushdie, whose “The Satanic Verses” had been deemed offensive to Muslims, remains threatened by the Islamic decree, but six American women who lack the resources of a best-selling author also have been marked for death by Muslim leaders. Some have been driven from their homes and jobs and even forced to live the rest of their lives in hiding, with little hope that the fatwa will be lifted. “It is not safe, of course, not even in the West, for anyone who has a fatwa of death issued against them,” Nonie Darwish told FoxNews.com.

CNBC:

• Buyback fuel for the bull market is losing steam. (video) Stock buybacks, which have helped power the 7-year-old bull market, are showing their first signs of retreat in at least three years. Share repurchases decreased 3.4 percent in the fourth quarter from the previous three-month period and are tracking at a 21-month low in March, according to respective data from S&P Dow Jones Indices and TrimTabs.

Zero Hedge:

• YTD Corporate Default Jump To Highest Since 2009. (graph)
• Is This Fed President An Idiot? Read These Two Headlines And Decide.
• California Says To Hell With Economics, Will Hike Minimum Wage To $15/Hour. 
• WTF Chart Of The Day: Without "Pajama Traders", Stocks Have Gone Nowhere In 11 Years. (graph)
• Q1 GDP Crashes To 0.6%: Latest Atlanta Fed Estimate. (graph)
• If There Were Truly Growth, Home Builders Would Be Very Busy. (graph)
• Dallas Fed Respondent Sums It Up: "Anyone Saying We're Not In Recession Is Peddling Fiction". (graph)
• February Pending Home Sales Surge By Most On Record Amid Midwest Miracle. (graph)
• How Stupid Do You Have To Be To Let This Happen?
• One Third Of Q1 Economic Growth Was Just "Revised" Away.
• 23% Of Americans In Their Prime Working Years Are Unemployed.
• Fidel Castro Slams "Illustrious Visitor" Obama's "Honeyed Words", Cuba "Needs No Gifts From The Empire".
• January Spending Surge "Revised" Away, Pushing Savings Rate To Highest Since 2012; Personal Income Slides. (graph)
• These Are The Oil Producers That May (Or May Not) Attend Next Month's "Farcical" OPEC Meeting.
• China Beige Book Reveals Employment Plunges To 4-Year Low, Capex Worst In History. (graph)

Business Insider:

• Conservative radio host firebombs Donald Trump in brutal interview. Wisconsin radio host Charlie Sykes grilled GOP presidential frontrunner Donald Trump in a tough Monday-morning interview on Trump's treatment of Heidi Cruz and other instances of sexism.
• 147 FBI agents are reportedly involved in the Hillary Clinton email investigation — here's how the scandal took root.
• Fidel Castro writes 1,500-word letter ripping into Obama after historic visit.
• 'An incredible circumstance': Ted Cruz is suddenly consolidating the GOP establishment.
• Tensions are mounting between Russia, China, and Japan in the Pacific.
• North Carolina's transgender bathroom law is already being challenged in court.

The Telegraph:

• Can anything stop Japan from falling into the abyss? The country’s annual Spring time assault on wages seems to have passed with little more than a whimper this year despite being billed as one of the most anticipated economic events in Japan’s recent history. Translating as “spring wage offensive”, Shunto marks the annual Japanese ritual of wage bargaining between business groups and labour unions.

Bear Radar

Style Outperformer: 

• Mid-Cap Growth +.3%

Sector Outperformers:

• 1) Retail +1.1% 2) Steel +1.1% 3) Homebuilders +1.1% 

Stocks Rising on Unusual Volume: 

• ALDR, ACAD, FINL, CALM and QLIK

Stocks With Unusual Call Option Activity: 

• 1) XLNX 2) AKRX 3) CHTR 4) ACAD 5) P

Stocks With Most Positive News Mentions: 

• 1) FINL 2) QLIK 3) EXP 4) FB 5) MAR

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Bull Radar

Style Outperformer: 

• Mid-Cap Growth +.3%

Sector Outperformers:

• 1) Retail +1.1% 2) Steel +1.1% 3) Homebuilders +1.1% 

Stocks Rising on Unusual Volume: 

• ALDR, ACAD, FINL, CALM and QLIK

Stocks With Unusual Call Option Activity: 

• 1) XLNX 2) AKRX 3) CHTR 4) ACAD 5) P

Stocks With Most Positive News Mentions: 

• 1) FINL 2) QLIK 3) EXP 4) FB 5) MAR

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Morning Market Internals

NYSE Composite Index:

• Volume Running -35.0% Below 100-Day Average
• 1 Sector Rising, 9 Sectors Declining
• 43.8% of Issues Advancing, 53.3% Declining
• 71 New 52-Week Highs, 6 New Lows
• 42.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 45.7%
• Vix 15.6 +5.6%
• Total Put/Call .56 -46.2%
• TRIN/Arms 1.48 +75.9%

Monday Watch

Today's Headlines
Bloomberg: 

• Saudi Stocks Lead Mideast Declines as Easter Weighs on Trading. Saudi stocks led Middle Eastern markets lower as oil languished near $40 a barrel and the Easter weekend holiday in Europe sapped volumes. Equities in Dubai extended the longest losing streak in more than two months. The Tadawul All Share Index sank for a fourth day, losing 1.5 percent to 6,256.68 at the close in Riyadh. About 4.8 billion riyals ($1.3 billion) of shares traded, or 17 percent less than the market’s daily average over the past year. Jabal Omar Development Co.’s 9.3 percent plunge was the biggest contributor to declines. The DFM General Index lost 1.2 percent on less than half the average daily turnover value over the past year. The Bloomberg GCC 200 Index, which tracks the biggest companies in the six-nation Gulf Cooperation Council, slid 1.2 percent.
• Japan Stocks Rise as Yen Weakens for Seventh Day After U.S. GDP. Japanese stocks rose as the yen fell for a seventh day after data showed the U.S. economy grew at a faster pace than previously estimated.The Topix index advanced 0.6 percent to 1,374.80 at 9:32 a.m. in Tokyo, extending last week’s 1.6 percent gain. All but four of the gauge’s 33 industry groups increased. The Nikkei 225 Stock Average added 0.7 percent to 17,120.37.
• Oil Enthusiasts Stay Out of Rally Led by Shrinking Bearish Bets. Oil enthusiasts haven’t been jumping on board the latest rally. As crude has soared 50 percent since Feb. 11, the number of bets on increased prices has barely budged. Instead, the upward pressure on prices appears to have come from traders cashing out of bearish wagers at an unprecedented pace. The liquidation of short positions during the last seven weeks covered by data from the U.S. Commodity Futures Trading Commission was the largest on record. "The rally has come from shorts getting scared out of their positions, and you’re not seeing a lot of money coming in on the long side," said John Kilduff, partner at Again Capital LLC, a New York hedge fund focused on energy. "It really calls into question the fortitude and staying power of the rally." Short positions on West Texas Intermediate crude, or bets that prices will fall, have dropped by 131,617 contracts since Feb. 2, the biggest liquidation in CFTC data going back a decade. To close out a bearish position, traders buy back futures and options, putting upward pressure on prices. In the same period, bullish wagers fell by 971.
• It Only Took a Month for Funds to Grow Wary of a Copper Rally. It’s been barely a month since investors first started betting on a copper rally, and they’re already on the retreat. Money managers cut their wagers on price gains for a second straight week, pulling back just before futures capped the worst slump in a month. Tuesday’s attacks in Brussels sapped confidence in the global growth outlook, while a recovery for the dollar weighed on demand for commodities as alternative assets. Money managers reduced their net-long holdings in copper by 4.4 percent to 23,011 U.S. futures and options in the week ended March 22, according to Commodity Futures Trading Commission data released three days later.
• Sanders Says He's Seized Momentum After Crushing Caucus Wins. Bernie Sanders said he’s seized the momentum in the race for the 2016 Democratic presidential nomination after trouncing Hillary Clinton in three caucuses. The Vermont senator won Saturday in landslides. He received 73 percent of the vote in Washington state, the day’s biggest prize in terms of delegates; 70 percent in Hawaii, and 82 percent in Alaska, the Associated Press reported. Those wins followed similarly lopsided results in Utah and Idaho on March 22. “We’ve won the last five out of six contests, all of them with landslide victories,” Sanders said Sunday on CNN’s “State of the Union.” “We’re heading to the west coast, which is the most progressive part of America. We think we’re going to do very well there.”

Wall Street Journal:

• Terror Network’s Web Sprawls Beyond Brussels and Paris. Multiple recent arrests suggest a wider Islamic State presence in Europe than previously thought. A pan-European effort to crack the Islamic State network behind the Paris and Brussels attacks is yielding an unsettling discovery—a web of interlocking terror cells whose dimensions authorities say they are still trying to grasp.
• Donald Trump’s Weakness in Big Suburbs Could Hurt Him in November. Republican front-runner has lost the primary in key counties of general-election battlegrounds. Donald Trump has dominated the Republican primaries so far despite a weakness that could prove damaging in a general election: He is losing many of the populous suburbs where the battle for the White House is often won and lost.

Fox News: 

• Blast in crowded Pakistan park kills at least 65. (video) An explosion ripped through a crowded Pakistan park where Christians were celebrating Easter on Sunday, killing at least 65 people, officials told the Associated Press. A Taliban faction, Jamaat-ul-Ahrar, claimed responsibility for the attack and said Christians were the target of the blast, Reuters reported. The mostly-Muslim country has a small Christian community, accounting for less than two percent of Pakistan's total population. About 300 people were injured when the bomb detonated in the parking area of Gulshan-e-Iqbal Park in the eastern city of Lahore.

CNBC:

• California legislators, unions reach deal to raise minimum wage to $15 an hour.

Zero Hedge:

• China Warns Officials: Allow Social Unrest, Lose Your Job.
• China Tries To "Suddenly" Pop Latest Housing Bubble While Reflating Stock, Car Bubbles. (graph)
• The World Has 6 Options To Avoid Japan's Fate, And According To HSBC, They Are All Very Depressing. (graph)
• Something Just Snapped In The VIX ETF Complex. (graph)
• Has The Biggest Of All Bubbles Popped: Central Bank Omnipotence?
• Bad - But Better Than What's Coming. (graph)
• "Worse Than 2008" World Trade Collapses To 10 Year Lows. (graph)
• Suicide Bomber Kills At Least 55, Injures 150 In Pakistan Public Park. (video)

Business Insider:

• Taliban kills at least 69, mostly women and children, in Pakistani park suicide bombing targeting Christians.
• Ted Cruz is closing in on Donald Trump in a crucial state. A new USC Dornsife/Los Angeles Times poll of likely Republican voters published on Sunday showed the Texas senator, with 35% support, just 1 point behind Trump's 36% in California.
• HARRY DENT: Civil unrest is coming to America.

Reuters:

• Chinese firms hiring less, capex hits five-year low: Beige Book private survey. Capital expenditure by Chinese companies fell to the lowest in at least five years in the first quarter, a private survey showed, highlighting persistent weakness in the economy even as the government ratchets up policy support to head off a sharper slowdown. The quarterly survey of over 2,200 firms by China Beige Book International (CBB) also showed less hiring by companies, marking the second consecutive quarter of downward pressure on employment as executives scale back borrowing and spending. Only 33 percent of firms reported capital expenditure growth in the first quarter, the lowest in the survey's five-year history. The share of firms reporting capex growth has fallen by over 40 percent since the second quarter of 2014.

 Financial Times:

• US high-street banks face $5bn hit from Fed’s more dovish stance. With only two rises on the cards this year, pain spreads among the more rate-sensitive lenders. 

Night Trading

• Asian indices are -.25% to +.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 153.75 +2.5 basis points.
• Asia Pacific Sovereign CDS Index 58.25 +.5 basis point.
• Bloomberg Emerging Markets Currency Index 71.21 -.02%.
• S&P 500 futures +.3%.
• NASDAQ 100 futures +.36%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CALM)/.99
• (MRVL)/.09 

Economic Releases 
8:30 am EST

• Personal Income for February is estimated to rise +.1% versus a +.5% gain in January.
• Personal Spending for February is estimated to rise +.1% versus a +.5% gain in January.
• Real Personal Spending for February is estimated unch. versus a +.4% gain in January.
• The PCE Core MoM for February is estimated to rise +.2% versus a +.3% gain in January.  

10:00 am EST

• Pending Home Sales MoM for February are estimated to rise +1.1% versus a -2.5% decline in January.

10:30 am EST

• Dallas Fed Manufacturing Activity for March is estimated to rise to -27.0 versus -31.8 in February.

Upcoming Splits

• None of note

Other Potential Market Movers

• The 2Y T-Note auction, Japan unemployment rate and the (SHPG) annual meting could also impact trading today.

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