Monday Watch

Today's Headlines

Bloomberg:

• Hammond Shifts Brexit Tone as He Dodges Questions on May. Chancellor of the Exchequer Philip Hammond said Britain should aim for a gentle departure from the European Union, an explicit challenge to the confrontational strategy adopted by the now weakened Prime Minister Theresa May. British officials travel to Brussels Monday to formally start the EU departure negotiations, amid confusion over whether the government is going to change its priorities after failing to win voter endorsement in the June 8 election. At home, May is struggling to stay in office as her Conservative Party questions both her election strategy and her handling of a London tower block fire that has left scores dead.

• Portugal in Mourning After Raging Forest Fire Kills Scores.

• Italy, EU Race to Find Solution for Two Troubled Banks. Italian finance officials and the European Commission are racing to find a solution for two troubled banks in the northern Veneto region that have weighed on the nation’s financial system. Finance Minister Pier Carlo Padoan said Sunday the matter of Veneto Banca SpA and Banca Popolare di Vicenza is being worked on “actively,” without offering details. European Commission Vice President Valdis Dombrovskis told a news conference Friday in Luxembourg that he was in close contact with the Italian authorities but declined to comment further.

• Japan Has Surprise Deficit as Import Growth Overpowers Exports. Japan’s trade has seen a sustained pickup since the start of the year, with five consecutive months of growth in both exports and imports. It’s indicative of an increasingly healthy global economy and a relatively competitive yen. The Bank of Japan has expressed optimism that private consumption will join exports in helping drive Japan’s economic recovery.

• Charts Show Potholes in Road as Asia Stocks Rally Most Since '09.

• Australia's Haunted Housing Market.

• Asian Stocks Gain as Yen Falls, Kiwi Nudges Higher. Stocks in Asia rose, with a weaker yen supporting Japanese equities, while South Korean and Australian shares also pushed higher. The euro gave up early gains despite indications French president Emmanuel Macron’s party is poised to win the biggest majority in 15 years. The voter turnout was only about 44 percent. The pound slipped with formal negotiations on the U.K.’s exit from the European Union due to start. The kiwi climbed as a gauge of the services industry expanded at a faster pace. Oil edged lower. Japan’s Topix index jumped 0.6 percent, and Australia’s S&P/ASX 200 Index rose 0.5 percent. South Korea’s Kospi index also gained 0.5 percent. Futures on the Hang Seng Index futures lost 0.2 percent.

• Five Things You Need to Know to Start Your Day.

Wall Street Journal: 

• Zuckerberg’s Opiate for the Masses. If we get ‘universal basic income,’ the millennials will never leave our basements.

• French President Macron Set for Convincing Victory in Parliamentary Elections. Macron’s La République en Marche and centrist ally projected to win 361 of 577 seats at France's National Assembly.

MarketWatch.com:

• 5 ways the Amazon(AMZN)-Whole Foods(WFM) deal could change the way we shop.

Fox News:

• Megyn Kelly and Alex Jones: NBC News under fire for 'botched' rollout of Kelly on eve of interview. (video)

CNBC:

• Liquidity is the liquid of life for the rally, BMO's Jack Ablin says. (video)

Zero Hedge: 

• U.S-Led Coalition Shoots Down Syrian Warplane.

• Iran Launches Missile Strikes Against "Terror Bases" In Eastern Syria.

• "Major Deflationary Disruption" Looms After Amazon Purchase Of Whole Foods(WFM).

• Van Slams Into Pedestrians Near London Mosque Leaving "Number Of Casualties", Driver Arrested.

• Mueller Has "Not Yet" Decided Whether To Investigate Trump: ABC.

• Silicon Valley Reaches "Upper Bounds Of Hype & Craziness" - Job Growth Worst Since Lehman.

• China's "Ghost Collateral" Arrives In Canada, "Heralding A Crisis".

• Hedge Funds Have Never Been This Bullish About Small-Cap Stocks. (graph)

• Trump Lawyer: "The President Is Not Under Investigation For Obstruction".

• Republicans Demand Loretta Lynch Testify Over Clinton "Obstruction Of Justice".

• Hedge Fund CIO: "Why The Hell Did The Fed Hike This Week?".

• Iran, China Conduct Joint Naval Drills.

Business Insider:

• The bodies of missing US Navy sailors have been found inside destroyer damaged from collision.

• Suspected jihadists attacked a tourist resort in Mali's capital.

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 84.0 +.5 basis point.

• Asia Pacific Sovereign CDS Index 17.25 unch.

• Bloomberg Emerging Markets Currency Index 73.21 +.02%.

• S&P 500 futures +.22%.

• NASDAQ 100 futures +.38%.

Morning Preview Links

Earnings of Note

Company/Estimate

• None of note

Economic Releases

• None of note

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Evans speaking, Fed's Dudley speaking, BIO International Convention, China Property Price report, (LLY) Business Update, (HAE) analyst meeting and the (ADBE) annual meeting could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by industrial and technology shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon. The Portfolio is 100% net long heading into the week.

Weekly Outlook

• Wall St. Week Ahead by Reuters.
• Week Ahead by TheStreet. 
• Stocks to Watch Next Week by Seeking Alpha.
• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly higher on yen weakness, an oil bounce, less European/Emerging Markets/US High-Yield debt angst, technical buying, buyout speculation and more economic optimism. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 100% net long heading into the week.

Today's Headlines

Bloomberg:

• U.K. to Extend Parliament, Build `Broadest Consensus' for Brexit. Britain’s Parliament will sit for two years instead of the typical one to prepare for the nation’s departure from the European Union in early 2019, indicating the government may be ready to moderate its position in order to get the legislation through. Prime Minister Theresa May’s minority administration is making the rare extension as lawmakers consider which of the thousands of EU rules it will incorporate into British law -- known as the Great Repeal Bill -- as well as overseeing the nation’s domestic agenda, her office said in a statement. The legislation for Brexit will be confirmed next week.

• London Tower Fire Toll at 58 as Criticism of Premier Grows.

Wall Street Journal:

• Amazon(AMZN) Is Leading Tech’s Takeover of America. The tentacles of a handful of tech giants are reaching into industries no one ever expected them to, reshaping our world in their image.

• Rep. Steve Scalise Upgraded to Serious Condition. Hospital says Republican congressman is more responsive, speaking with family.

• Tehran, No Longer an Island.

Barron's:

• Had bullish commentary on (AAPL), (FB), (GOOGL), (NFLX), (AMZN), (GE), (DLR), (GWR), (GIS) and (JPM).

• Had bearish commentary on .

MarketWatch.com:

• Amazon(AMZN) may have launched a bidding war for Whole Foods(WFM).

Fox News:

• Judicial Watch seeking documents ‘unlawfully removed’ by Comey. (video)

CNBC:

• Everyone keeps talking about AI—here's what it really is and why it's so hot now.

• In relief rally, bitcoin jumps more than 20% from June low.

• There's a reason the grocery industry is panicking about Amazon's purchase of Whole Foods(WFM).

• The five big tech companies are worth almost $3 trillion, so they must pursue huge deals to keep growing.

Zero Hedge:

• "Someone's Going To Jail" Gingrich Warns Mueller's Russia 'Witch Hunt' Too Big To Fail Now.

• Republicans Go On Offensive Against Mueller; Call For 'Special Counsel' To Investigate AG Lynch.

• Illinois State Official: "We Are In Massive Crisis Mode, This Is Not A False Alarm". (graph)

• Seven Sailors Missing After US Navy Destroyer Collides With Merchant Vessel Off Japan.

• Why Some Hedge Funds Believe The Shale Boom Is Coming To An End (Again). (graph)

• High Schools Drop "Valedictorian" Distinction Fearing Lower-Ranked Kids May Feel 'Triggered'.

• Exposing Terry McAuliffe's Fuzzy Math On Gun Homicides.

• Netflix Now Has More Subscribers Than Cable.

• The Treasonous Secession Of Climate Confederacy States.

• "Robots, Drones" Mean Mass Layoffs For Whole Foods Employees. (graph)

• 59% Of Brits Agree With Marxist Corbyn: Empty Luxury London Flats Should Be Used To House Homeless.

• The Pin To Pop This Mother Of All Bubbles?

• Deutsche Bank: The Market's Current "Metastability" Will Lead To "Cataclysmic Events".

• Weekend Reading: Charged With Obstruction.

• 'Bricks & Slaughter' - Amazon Deal Slams Stocks As Yield Curve Crashes. (graph)

Business Insider:

• Judge declares a mistrial in Bill Cosby's sexual assault trial, jury says it's 'hopelessly deadlocked'.

• Iraq dethrones Saudi Arabia as India's No. 1 oil supplier.

CNN:

• Senate Democrats weigh blockade to protest GOP health care plan.

The Telegraph:

• If we are to end austerity, we must first learn to live within our means.

Market Week in Review

• S&P 500 2,429.45 -.21%*

The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 2,429.45 -.21%

• DJIA 21,361.30 +.41%

• NASDAQ 6,154.74 -1.04%

• Russell 2000 1,402.69 -1.55%

• S&P 500 High Beta 36.70 -1.37%

• Goldman 50 Most Shorted 129.78 -.86%

• Wilshire 5000 25,149.0 -.24%

• Russell 1000 Growth 1,195.89 -.41%

• Russell 1000 Value 1,141.85 -.02%

• S&P 500 Consumer Staples 576.42 -.97%

• Vanda Cyclicals-Defensives 1.3189 -.40%
  

• Morgan Stanley Technology 1,465.12 -.84%

• Transports 9,392.83 +.70%

• Utilities 737.30 +1.61%

• Bloomberg European Bank/Financial Services 99.93 +2.12%

• MSCI Emerging Markets 41.13 -1.45%

• HFRX Equity Hedge 1,194.62 -.17%

• HFRX Equity Market Neutral 991.52 -.34%

Sentiment/Internals

• NYSE Cumulative A/D Line 292,380 +.34%

• Bloomberg New Highs-Lows Index -41 -377

• Bloomberg Crude Oil % Bulls 48.72 +21.8%

• CFTC Oil Net Speculative Position 373,755 +.21%

• CFTC Oil Total Open Interest 2,198,081 -.59%

• Total Put/Call 1.04 -5.66%

• OEX Put/Call 2.12 +432.1%

• ISE Sentiment 54.0 -45.78%

• NYSE Arms 1.33 +40.96%

• Volatility(VIX) 10.83 +3.46%

• S&P 500 Implied Correlation 38.29 -.26%

• G7 Currency Volatility (VXY) 7.26 +.14%

• Emerging Markets Currency Volatility (EM-VXY) 7.63 -2.04%

• Smart Money Flow Index 19,833.12 +.93%

• ICI Money Mkt Mutual Fund Assets $2.659 Trillion +.21%

• ICI US Equity Weekly Net New Cash Flow -$3.168 Billion

• AAII % Bulls 35.4 +31.6%

• AAII % Bears 29.5 -6.4%

Futures Spot Prices

• CRB Index 172.82 -2.24%

• Crude Oil 44.67 -2.77%

• Reformulated Gasoline 145.30 -3.67%

• Natural Gas 3.04 unch.

• Heating Oil 142.55 -.73%

• Gold 1,255.80 -.91%

• Bloomberg Base Metals Index 170.41 -.9%

• Copper 256.45 -3.1%

• US No. 1 Heavy Melt Scrap Steel 266.67 USD/Ton unch.

• China Iron Ore Spot 54.41 USD/Ton -5.85%

• Lumber 364.40 -.30%

• UBS-Bloomberg Agriculture 1,053.43  -1.28%

Economy

• Atlanta Fed GDPNow Forecast +3.4 unch.
• ECRI Weekly Leading Economic Index Growth Rate +4.2% -40.0 basis points
  

• Philly Fed ADS Real-Time Business Conditions Index .0819 +1.74% 
• US Economic Policy Uncertainty Index 67.25 -47.58%

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 137.32 +.20%

• Citi US Economic Surprise Index -43.40 -2.5 points

• Citi Eurozone Economic Surprise Index 39.10 -4.5 points

• Citi Emerging Markets Economic Surprise Index 6.90 -3.8 points

• Fed Fund Futures imply 0.0% chance of no change 100.0% chance of 25 basis point hike on 6/14

• US Dollar Index 97.19 -.16%
• MSCI Emerging Markets Currency Index 1,603.23 -.08%

• Euro/Yen Carry Return Index 129.48 +.36%

• Yield Curve 83.0 -4.0 basis points

• 10-Year US Treasury Yield 2.15% -6.0 basis points

• Federal Reserve's Balance Sheet $4.423 Trillion +.07%

• U.S. Sovereign Debt Credit Default Swap 22.75 +.6%

• Illinois Municipal Debt Credit Default Swap 392.0 -.07%

• Western Europe Sovereign Debt Credit Default Swap Index 6.65 -11.75%

• Asia Pacific Sovereign Debt Credit Default Swap Index 17.25 -3.54%
  

• Emerging Markets Sovereign Debt CDS Index 50.75 -1.12%
  

• Israel Sovereign Debt Credit Default Swap 65.1 -6.52%

• South Korea Sovereign Debt Credit Default Swap 50.93 -2.89%

• Russia Sovereign Debt Credit Default Swap 163.5 +3.77%

• iBoxx Offshore RMB China Corporate High Yield Index 138.86 -.14%

• 10-Year TIPS Spread 1.68% -13.0 basis points

• TED Spread 27.25 +4.5 basis points

• 2-Year Swap Spread 21.0 -.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -31.5 +2.25 basis points

• N. America Investment Grade Credit Default Swap Index 61.02 unch.

• America Energy Sector High-Yield Credit Default Swap Index 427.0 +1.79%

• European Financial Sector Credit Default Swap Index 61.50 -5.81%
  

• Emerging Markets Credit Default Swap Index 195.71 +.47%
  

• CMBS AAA Super Senior 10-Year Treasury Spread to Swaps 145.0 unch.
  

• M1 Money Supply $3.521 Trillion -.51%

• Commercial Paper Outstanding 996.90 +.3%

• 4-Week Moving Average of Jobless Claims 242,000 +4,000

• Continuing Claims Unemployment Rate 1.4% unch.
  

• Average 30-Year Mortgage Rate 3.89% -5.0 basis points

• Weekly Mortgage Applications 430.60 +7.06%

• Bloomberg Consumer Comfort 49.90 -1.3 points

• Weekly Retail Sales +2.5% +60.0 basis points

• Nationwide Gas $2.35/gallon -.03/gallon

• Baltic Dry Index 850.0 -7.41%

• China (Export) Containerized Freight Index 841.59 +.18%

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 25.0 unch.

• Rail Freight Carloads 247,339 -12.15%

Best Performing Style

•  Large-Cap Value unch.

Worst Performing Style

•  Small-Cap Value -1.7%

Leading Sectors

• Gaming +2.6%

• Hospitals +2.0%

• Utilities +1.6%

• Homebuilders +1.3%

• Papers +1.3%

Lagging Sectors

• Foods -2.6% 

• Retail -3.4%

• Coal -5.4%

• Gold & Silver -5.6%

• Steel -6.8%

Weekly High-Volume Stock Gainers (14)

• OMER, EPZM, SELB, CMCT, GDEN, DFT, HRB, DSKE, AVHI, CLPR, BKD, DFIN, WNEB and CARO

Weekly High-Volume Stock Losers (16)

• KW, YHOO, MPAA, GNMK, MAT, MPO, PDFS, CAKE, HNI, AEIS, HUBS, KMG, SYNA, KR, CLDR and CHRS

Weekly Charts

ETFs

• High-Volume Gainers

• High-Volume Losers

Stocks

• High-Volume Gainers

• High-Volume Losers

*5-Day Change