Monday’s Market Prepper

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Monday's Market Prepper


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Will corporate earnings keep the fire under the most recent stock rally? This week we will hear results from Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB) and Tesla (NASDAQ:TSLA), as well as Merck (NYSE:MRK), Pfizer (NYSE:PFE), ConocoPhillips (NYSE:COP) and BP. According to Thomson Reuters, the average estimate for EPS growth this year of S&P 500 companies has risen to 11.3% from 10.9% at the start of April, a trend that should continue to blunt concerns about lofty growth valuations.

Economy

At a weekend rally in Pennsylvania, President Trump touted the achievements of his administration and proclaimed he had delivered "100 days of action." Among those listed: Neil Gorsuch's confirmation, a roll back of Obama-era regulations, steps to protect American manufacturing, boosting security and a stock market surge. He also renewed promises to build a border wall, institute healthcare and tax overhauls, and negotiate more favorable trade deals.

Congressional negotiators reached a pact late Sunday on around $1T in federal funding that would avert a government shutdown later this week. The full House of Representatives and Senate must still approve the bipartisan pact, which would be the first major legislation to clear Congress since Trump became president on Jan. 20.

Cash-strapped Puerto Rico has until tonight to reach a restructuring accord with its investors, otherwise a legal stay that shields the island from creditor lawsuits expires. The commonwealth is seeking to reduce its $70B debt load after years of economic decline and overspending.

Growth in China's manufacturing sector slowed in April, with the government's official PMI falling to a six-month low of 51.2, while the gauge in the services sector dipped to 54.0. The first official economic indicator for the second quarter suggests an expansion may be poised to decelerate this year after unexpectedly picking up to 6.9% in Q1.

"North Korea disrespected the wishes of China & its highly respected President when it launched, though unsuccessfully, a missile today. Bad!" President Trump tweeted on Saturday. Separately, Seoul said it's working on downsizing its trade surplus with the U.S., while the latter reaffirmed it would shoulder the cost of deploying the THAAD anti-missile system across South Korea.

Responding to protests and an economic crisis, Venezuela's Nicolas Maduro has raised the nation's minimum wage by another 60%. It's the third pay hike he's ordered this year and the 15th since he became president in 2013. Still, none of the increases will come close to keeping up with the nation's inflation, which is expected to rise by more than 1,600% in 2017.

Marine Le Pen and Emmanuel Macron have kicked off the final week of the French presidential campaign with major rallies as markets close across Europe for the May Day holiday. In a bid to gain additional voter support, Le Pen said she would name nationalist politician Nicolas Dupont-Aignan prime minister and signaled no rush for a French euro exit.

Former premier Matteo Renzi has regained the Democratic Party leadership in Italy, putting him back at the forefront of politics ahead of national elections slated for spring 2018. "The alternative to populism isn't the elite," he told supporters after unofficial primary results indicated he got more than 70% of the vote. "It's people who aren't afraid of democracy."

EU leaders on Saturday threw down the gauntlet to the U.K., listing demands Theresa May must satisfy before discussing a trade deal and warned the prime minister over her "completely unreal" expectations. The U.K. responded by saying it's bracing for a confrontation and May will walk from talks if she doesn't like what's on the menu.

Stocks

Seeking to outdo Sinclair Broadcasting (NASDAQ:SBGI) - the nation's No. 1 owner of local TV stations - 21st Century Fox (FOX, FOXA) and Blackstone (NYSE:BX) are teaming up to make a bid for Tribune Media (NYSE:TRCO). The report comes less than two weeks after the FCC voted to reverse a 2016 decision that limits the number of television stations some broadcasters can own.

Twitter has found its first partner for its push into round-the-clock streaming television: Bloomberg. The Twitter (NYSE:TWTR) channel, which has yet to be named, is expected to begin operating this fall. "It's going to be broader in focus than our existing network," said Bloomberg Media CEO Justin Smith.

Over the weekend, a hacker group called "thedarkoverlord" posted most of the upcoming episodes of Orange Is the New Black online after Netflix (NASDAQ:NFLX) refused to meet a ransom demand. The breach appears to have occurred at a postproduction company called Larson Studios. Content from ABC (NYSE:DIS), Fox (NASDAQ:FOX), National Geographic and IFC (NASDAQ:AMCX) were also reportedly stolen.

The Lower East Side is about to get its first Target (NYSE:TGT). The retailer has signed a lease to open a 22,500 square-foot store at the 1.9M-square-foot development stretching across several Manhattan blocks called Essex Crossing. Target, which had 32 small format locations at the end of 2016, expects to have more than 130 in cities and dense areas by the end of 2019.

Healthcare Trust of America is acquiring all of the medical office building assets of Duke Realty (NYSE:DRE) for $2.75B in cash, net of credits for development completions. "This transaction solidifies HTA as the dominant owner and operator of medical office buildings located in key, gateway markets in the U.S.," CEO Scott Peters declared. "This acquisition will be accretive financially."

A union representing 1,200 U.S. air maintenance workers at UPS turned up pressure on the company on Sunday to settle a three-year contract dispute, saying it would seek clearance to strike. It's taking its grievances directly to UPS shareholders, running as an open letter advertisement to CEO David Abney, ahead of a shareholders meeting on Thursday.

In the latest airline episode captured on video, Delta (NYSE:DAL) has reinstated a pilot after an investigation revealed that his actions, including grabbing and smacking a woman, de-escalated an altercation between passengers. Congress will also learn about air travel and overbookings this week, with hearings scheduled in the House Transportation Committee and Senate Commerce subcommittee on aviation operations.

The launch of a spy satellite aboard a SpaceX (Private:SPACE) Falcon 9 rocket was postponed for 24 hours Sunday morning after the company detected an issue with a first stage sensor. Competitive bidding? It marks the first time SpaceX is doing business with the Department of Defense, which had previously only worked with United Launch Alliance, a joint venture between Boeing (NYSE:BA) and Lockheed Martin (NYSE:LMT).

Tesla needs to complete fixing its Model S sedan emergency braking system to regain the top safety rating of Consumer Reports, which noted that a recent update by the automaker wasn't enough as it only operates up to 28 mph. However, the magazine cited a statement from Tesla (TSLA) that said "over the next several weeks" it would increase the speed limit "until it's the most capable of any vehicle in the world."

Apple is urging California regulators to make changes in the state's proposed policies on self-driving cars, the latest sign the company is pursuing driverless car technology. Tesla (TSLA), Waymo (GOOG, GOOGL), Ford (NYSE:F), Toyota (NYSE:TM) and UBER also filed comments suggesting changes. While it has never openly acknowledged it's looking into building a car, Apple (AAPL) secured a permit earlier this month to test autonomous vehicles in California.

Weekend Reads
PRO Weekly Digest: All About Banks With Harvard Winters

Marketplace Roundtable: Getting Finances In Order

Today's Markets
In Asia, Japan +0.6%. Hong Kong closed. China closed. India closed.
In Europe, at midday, London closed. Paris closed. Frankfurt closed.
Futures at 6:20, Dow +0.2%. S&P +0.2%. Nasdaq +0.3%. Crude -0.3% to $49.19. Gold -0.3% to $1264.
Ten-year Treasury Yield +2 bps to 2.3%

Today's Economic Calendar
Auto Sales
8:30 Personal Income and Outlays
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
2:00 PM Gallup US Consumer Spending Measure

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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