“The secret to being successful from a trading perspective is to have an indefatigable and an undying and unquenchable thirst for information and knowledge.” — Paul Tudor Jones

1. China Launches Foreign Chipmaker Probe — Chinese regulators are investigating Micron Technology (NASDAQ:MU), Samsung Electronics (OTC:SSNLF) and SK Hynix (OTC:HXSCL) as the country tries to reduce dependency on foreign chips, WSJ reported. Some speculate the probe concerns the rising cost of DRAM chips – the three companies are dominant suppliers – or it might be seeking to use the current DRAM pricing environment to gain leverage for a technology transfer. Also, ZTE has signed an agreement in principle that would lift a U.S. Commerce Department ban on buying from American suppliers, sources told Reuters. The preliminary deal includes a $1B fine, plus $361 from an earlier settlement and $400M in escrow to cover any future violations
2. Primaries Shape Battle for Congress In Mid-Term Election — the battle for control of Congress is on the radar as voters across eight states choose nominees in a slew of hotly contested primaries. The California races have garnered the most attention because of that state’s open primary system, in which the top two vote-getters advance regardless of party affiliation. An oversupply of Democratic candidates could result in a splintered electorate, allowing two Republicans to advance to November’s midterm election.
3. U.S.-China Trade Developments Progress — China has offered to purchase nearly $70B of U.S. farm, manufacturing and energy products if the Trump administration abandons its threat for $50B in duties on China-made products. The White House, which is looking to reduce its trade deficit with China by $200B, has said it plans to move ahead with the tariffs shortly after June 15 as a way to pressure Beijing to make more sweeping changes in its economy.
4. EU Prepares tariffs against U.S. in July — the EU “expects to conclude the relevant procedure in coordination with member states before the end of June,” European Commission Vice-President Maros Sefcovic told a news briefing. From blue jeans to motorbikes and whiskey, the hit list of U.S. products targeted for tariffs reads like a catalog of emblematic American exports.
5. The Pentagon’s Hypersonic Weapons Project — Hypersonic weapons are among the technologies emphasized in the Senate’s newly released $716B defense authorization bill for FY 2019. But as Russia and China continue their march toward fielding hypersonics, the Pentagon and its largest weapons supplier have shared limited details about their own efforts. Lockheed (NYSE:LMT) will be responsible for designing, engineering, integration and logistical support on the $928M U.S. hypersonic project.

The week ahead — Economic data from Econoday.com:

“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: