“The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street.” – Jesse Livermore

1. N.Korea Suspends Nuclear, Missile Tests — North Korea has suspended its long-range missile tests and plans to close its nuclear test site ahead of talks between the two Koreas, and the U.S. in May or June. Kim Jong-un said he would make the move as “the weaponization of nuclear weapons has been verified.” It will also create an “optimal international environment” to build his country’s economy. Also, in a historic summit scheduled for April 27th, 2018, North Korean leader Kim Jong-un and South Korean President Moon Jae-in agreed to end a seven-decade war and pursue the “complete denuclearization” of the peninsula. Beyond the geopolitics, many investors are paying attention to the talks. South Korea is critical to the global supply chain and many manufacturers are located close to the border.
2. Amazon Secretly Working on Domestic Robots — according to Bloomberg, Amazon is working on robots for the home and has recently ramped up hiring for the secret project code-named “Vesta.” The effort is being overseen by Gregg Zehr, who runs Amazon’s (NASDAQ:AMZN) Lab126 hardware research. Sources say the robots could be in employee homes by year’s end and with consumers as early as 2019.
3. Treasury Secretary Mnuchin Will Head to China for Trade Talks — Treasury Secretary Steven Mnuchin is headed to China in “a few days” to resolve the ongoing trade dispute between the world’s two largest economies. “They trade with us [but] we can’t trade with them,” President Trump declared. Both countries have proposed tariffs on the other, after the Trump administration’s “Section 301” investigation into China’s business practices.
4. 10-year Treasury Yields Rises Above 3% — Stocks stumbled last week as the benchmark 10-year Treasury yield hit 3% for the first time in four years, sparking concerns over higher borrowing costs for companies already facing rising commodity prices.
5. EU Closely Watching Aluminum Imports — the European Union has begun monitoring aluminum imports to determine whether U.S. tariffs have led to a surge in shipments into Europe. The EU official journal already found that aluminum product imports increased by 28% between 2013 and 2017, while prices of such imports fell by 5%. Only 16 smelters are still in operation across the bloc, compared with 26 in 2008.
6. S&P500 (SPX) Index Displays Descending Triangle Formation — the chart of the SPX below shows a wedge chart formation, with the SPX bumping up against the downtrend line three times. Typically on the fourth attempt the SPX usually breaks above said downtrend line.

The week ahead — Economic data from Econoday.com:

“Twenty years from now, you will be more disappointed by the things that you didn’t do than by the ones you did do, so throw off the bowlines, sail away from safe harbor, catch the trade winds in your sails. Explore, Dream, Discover.” – Mark Twain

1. NAFTA Deal Seen Within Weeks — On the sidelines of the Summit of the Americas, Mexican President Enrique Pena Nieto, U.S. Vice President Mike Pence and Canadian Prime Minister Justin Trudeau said they thought a renegotiated NAFTA deal could be reached before Mexican elections on July 1, although they cautioned no deadlines had been set. Pence also revealed that the topic of funding for President Trump’s proposed border wall did not come up at the conference.
2. China Reports GDP Growth of 6.8% in Q1 — China’s economy grew 6.8% in the first quarter of 2018, despite widespread concerns about financial risks amid a government-led economic restructuring. “The U.S.-China trade friction can’t beat the Chinese economy,” added Xing Zhihong, a spokesman at the National Bureau of Statistics, as China slapped a hefty temporary deposit on imports of U.S. sorghum.
3. Investors Wary of Potential for Inverted Yield Curve — the yield curve from five to 30 years continued to flatten last week to as little as 29 basis points, the narrowest spread since 2007, and the gap between the two-year yield and the 10-year yield touched 41 basis points, also the smallest since before the financial crisis. A truly inverted curve “is a powerful signal of recessions” that historically has occurred “when the Fed is in a tightening cycle, and markets lose confidence in the economic outlook,” John Williams, the next president of the New York Fed, said this week, although he maintained that is not the case now. The tightening yield spread is raising concerns among investors and Fed officials, as the phenomenon has sometimes indicated a weakening longer-term outlook for U.S. economic growth and inflation.
4. EpiPen Shortage Plagues Canada – amid a growing shortage that has spared the U.S., Canada is working with the FDA to access supplies of Mylan’s (NASDAQ:MYL) EpiPen. The allergy antidote is made at a single Pfizer (NYSE:PFE) unit near St. Louis, Missouri, but it has been recently hit by manufacturing problems. According to Health Canada, four companies have authorization to sell epinephrine auto-injectors, but none are currently marketing them in the country.
5. U.S. Mulls Emergency Law on Chinese Investment — the U.S. Treasury Department is considering using an emergency law to curb Chinese investments in sensitive technologies as the Trump administration looks to punish China for what it sees as violations of American intellectual property rights. A law may be used known as the International Emergency Economic Powers Act, passed in 1977, which could affect foreign investment in industries like semiconductors and 5G.

The week ahead — Economic data from Econoday.com:

“During major sustained advances in stock prices, which usually occupy from five to seven years of each decade, the investor can complacently hold a list of stocks which are currently unpredictable. He doesn’t worry about the top because he knows he is never going to sell at the top. He knows that the chances are overwhelming in favor of the assumption that he will get far better prices by waiting until after the top is passed and a probable reversal in trend can be identified than he will ever get by attempting to anticipate the top, and get out on the nose. In my own experience the largest profits we have ever taken have come from stocks purchased while they were making a new high in a market which was also momentarily expecting the top.
As I have already pointed out the absolute price of a stock is unimportant. It is the direction of the price movement that counts. It is always probable, but never certain, that the direction of the price movement will continue. Soon after it reverses is time enough to sell. You should sell when you wish you had sold sooner, never when you think the top has arrived. That way you will never get the very best price—by hindsight your individual transactions will never look daring. But some of your profits will be large; and your losses should be quite small. That is all that is necessary for a satisfactory, enriching investment performance.” — Edgar S. Genstein

1. Nine West Files for Bankruptcy — Nine West Holdings filed for Chapter 11, listing debts of more than $1B. The company will use the bankruptcy to sell the Nine West and Bandolino businesses to Authentic Brands Group, while reorganizing around other brands including Anne Klein.
2. Venezuela Stops Paying Bond Holder — Venezuela stopped paying bondholders in September, according to central bank data, contradicting statements by President Maduro that the country would continue to honor its debts while negotiating a creditor restructuring. The debt crisis could hit another fresh low today as a $650M bond from Electricidad de Caracas matures with little hope it will get paid.
3. Google and AMA Team for Fostering Data Sharing — Google and other big tech companies are looking to partner with established industry players to promote innovation. Google (GOOG, GOOGL) is now teaming up with the American Medical Association, a physician lobbying group, on a plan to get startups to come up with the “best new ideas for fostering data sharing from health monitoring devices.”
4. Airlines Warned on Strikes Over Mediterranean Over Syria — Airlines have been warned to steer clear of the eastern Mediterranean over the weekend due to possible air strikes on Syria. The Trump administration reportedly won the support of France, the U.K. and Saudi Arabia and hit selected sites in Syria late Friday night.
5. AAII Weekly Sentiment — in this this latest weekly bullish sentiment, the bulls dropped from 31.9% down to 26.09%. This marked the fourth straight week of declining bullish sentiment and took the percentage of bulls to the lowest level since last August.

Also, In this week’s survey, bearish sentiment surged from 36.6% up to 42.75%. Bearish sentiment has now increased by more than 20 percentage points in the last four weeks and is at its highest level since last March.

6. GE Explores Hybrid Deals & Spinoffs — General Electric (NYSE:GE) is exploring a public offering for one of its divisions and is discussing hybrid deals with public companies to combine assets in a way that avoids a big tax bill, WSJ reports. Such moves would give GE and its shareholders a chance to participate in the turnaround of struggling businesses rather than risk selling at inopportune times.
7. Russia Weighs Sanctions on the U.S. — Russian lawmakers have drafted legislation in response to new U.S. sanctions. It would ban American food and agricultural products, tech equipment and software, medical products, and tobacco and alcohol. The draft also proposes barring cooperation on atomic energy and aerospace, and stopping U.S. firms from taking part in Russian privatization deals.
The week ahead — Economic data from Econoday.com:

“There is only one side of the market and it is not the bull side or the bear side, but the right side.” ― Jesse Livermore

1. China Hits U.S. with Tariffs on 128 Products — In response to the Trump administration’s recently implemented tariffs on steel and aluminum, China has retaliated with tariffs on imports of 128 American-made products. The tariffs, which are hitting such products as wine and frozen pork, are as high as 25% and go into effect Apr 9. “We hope that the United States will rescind its measures that violate World Trade Organization rules as quickly as possible” said the Chinese Ministry of Commerce in an online statement. Furthermore, The Trump administration has imposed another $50B worth of 25% tariffs on China imports, to which China has responded with 25% tariffs on another 106 American products. The newest U.S. tariffs will impact some 1,300 Chinese products, including medical devices, batteries and machine tools, as well as some consumer products like television sets.
2. GM No Longer Report Monthly U.S. Auto Sales — General Motors stated in its latest report that it will do away with monthly U.S. vehicle sales reports – an industry standard – and switch to quarterly reporting. “Thirty days is not enough time to separate real sales trends from short-term fluctuations in a very dynamic, highly competitive market,” said Kurt McNeil, U.S. vice president, Sales Operations, in a GM press release.
3. First Quarter 2018 ETFs Asset Class Performance — courtesy of BIG, the S&P 500 (SPY), Dow 30 (DIA), and Nasdaq 100 (QQQ) all fell quite significantly in March, which was enough to drag both the S&P 500 and Dow 30 into negative territory for the quarter. Looking at S&P 500 sectors, the worst-performing areas in March were Financials, Materials, and Technology, while Energy and Utilities were actually up nicely. For the full first quarter, though, Technology and Consumer Discretionary were the only two sectors in the black.

4. Cyberattack On Four Gas Pipeline Companies — Bloomberg reported cyberattack that hit the operations of at least four gas pipeline companies in recent days also was felt in the utility industry. Duke Energy (NYSE:DUK) said it first learned of the attack on March 30 because it shares consumer data with third-party electricity and gas providers in Ohio through an electronic system run by Energy Services Group, the data firm that was hacked.
5. Trump Announced New Tariff Threat — President Trump has instructed the U.S. trade representative to look at $100B more in tariffs against China. “In light of China’s unfair retaliation, I have instructed the USTR to consider whether $100B of additional tariffs would be appropriate under section 301 and, if so, to identify the products upon which to impose such tariffs,” Trump said.

The week ahead — Economic data from Econoday.com:

“All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.” – Arthur Schopenhauer

1. U.S., South Korea Revise Trade Deal — South Korea is next to escape President Trump’s metal tariffs after revising its six-year-old bilateral trade deal with the U.S. It will see Seoul double its import quota for American-made cars and reduce the amount of steel it sends into the United States. South Korea will also allow the U.S. to keep its 25% tariffs on pickup trucks in place for 20 more years.
2. Remington Seeks Bankruptcy Protection — America’s oldest gunmaker has filed for Chapter 11 bankruptcy protection after reporting negative operating cash flow as of March 25 of $7.4M. Like other gun manufacturers, Remington Outdoor saw sharp sales declines following the 2016 presidential election, as customers apparently saw less urgency to stockpile firearms under President Trump.
3. North, South Korea to Meet April 27 — North and South Korea will hold their first summit in more than a decade on April 27 after Kim Jong-un pledged his commitment to denuclearization. The meeting will take place on the southern side of the Demilitarized Zone. Japan has also sounded out the North Korean government about a bilateral summit, while Kim is scheduled to meet President Trump some time in May.
4. Walmart to Reduce Emissions in China — With President Xi Jinping vowing to slash pollution and prioritize living standards, Walmart (NYSE:WMT) has committed to cutting 50M metric tons of carbon emissions from its Chinese operations by 2030. That’s the equivalent of annual electricity consumption for 40M Chinese households. The plan involves retrofitting factories with energy-efficient facilities and lighting, and working with suppliers to switch to renewable energy.

The week ahead — Economic data from Econoday.com: