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DOW + 208 = 18,034
SPX + 19 = 2100
NAS + 62 = 4994
10 YR YLD + .05 = 1.90%
OIL + .76 = 56.50
GOLD + 1.20 = 1194.90
SILV + .02 = 15.91

No major economic data published today. The global markets have been focused on China and Greece. China is changing regulations and adding stimulus to try and prop up the economy, even as some of their big real estate development companies are staring down defaults. The problem with Greece is that they are ready to default; payments are due at the end of the week and they are scrambling for cash. Perhaps more importantly, earnings season will kick into high gear this week.

Maybe all that will take a backseat to a facedown off the shore of Yemen. The US Navy has sent an aircraft carrier and a guided-missile cruiser into the waters near Yemen to conduct maritime security operations, and not to intercept Iranian arms shipments. It’s believed there are 9 US ships in the region, including cruisers and destroyers. It is further believed the Iranian Navy has sent up to 5 ships full of weapons bound for Houthi rebels in Yemen. Yea, what could go wrong?

Following soft GDP data last week, China’s central bank cut the reserve requirement ratio for all banks by 100 basis points to 18.5% yesterday, adding about $200 billion in liquidity for banks to lend. Last Friday, China curbed margin trading requirements and also eased rules on short trading. China’s GDP is still expected to fall to a quarter-century low of around 7% this year from 7.4% in 2014, even with the additional stimulus. Asian shares moved lower on the news. Stocks in Hong Kong posted their biggest percentage decline in 4 months.

Kaisa Group Holdings became China’s first real estate company to default on its dollar debt; struggling to service about $10.5 billion in debt, and they are the subject of a government crackdown on graft. Credit rating agency S&P issued a report on Friday saying the earnings and profitability of some Chinese property developers may deteriorate further in 2015 and more defaults can’t be ruled out.

ECB president Mario Draghi said Saturday that Europe is rooting for Greece to resolve its problems, but Greece has to save itself. Ongoing talks between Athens and its creditors have been going painfully slow. The Greek government issued a decree that forces local governments to transfer all cash balances held in local banks to the central bank, as debt to the International Monetary Fund and month-end salary payments come due. The action could raise about $2 billion. The decree effectively confiscates cash reserves, currently held in commercial banks, and transfers them to the Bank of Greece. Without the seizure of public-sector funds Greece would not have been able to pay salaries and pensions at the end of this month. And it might not be enough. S&P recently cut its credit rating on Greece and the outlook is negative. The yield on 3-year Greek bonds is up around 27%. The cost of insuring Greek debt against a default has also spiked sharply amid the negotiation standoff. Prices for credit default swaps, known as CDS, imply a 77% probability of a government default in the next five years. Today’s seizure of excess cash reserves sounds a lot like the start of capital controls, and it is proof positive that the government in Athens is out of cash.

There really isn’t much more the Greeks can do; they have already imposed spending cuts and tax hikes equivalent that, if imposed on the United States, would amount to $3 trillion. There were also wage cuts; average wages are down 25%. No surprise, the austerity did not produce a recovery.

Meanwhile, an interesting morality play is taking place in the Mediterranean, where broken down ships full of refugees from Libya have capsized. The European Union proposed doubling the size of its Mediterranean search and rescue operations, as the first bodies were brought ashore of some 900 people feared killed in the deadliest shipwreck while trying to reach Europe. This year’s death toll in the Mediterranean Sea is thought to have already surpassed 1,500 victims, a drastic spike from the same period last year. The mass deaths have caused shock in Europe, where a decision to scale back naval operations last year seems to have increased the risks for migrants without reducing their numbers.

This week 140 S&P 500 companies report earnings, including 12 Dow components. Of the 11% of S&P 500 companies that have already reported earnings, an above-average number of companies have reported earnings-per-share above the Wall Street consensus, 77% versus the five-year average of 73%. This is all part of the game that stock analysts play; they lower expectations and then companies are rewarded when they can step over a very low bar.

This morning, Wall Street investment bank Morgan Stanley (MS) reported its most profitable quarter since the financial crisis; net income came in at $2.3 billion, up from $1.4 billion a year ago. Make some, spend some. It was also announced that Morgan Stanley is in discussions to pay $500 million to settle an investigation by New York’s attorney general into whether the Wall Street bank misled investors in taking mortgage bonds that lost value during the financial crisis.

So, the big banks have now, pretty much, reported; they were expected to perform, and they did. The sector that has had Wall Street traders concerned is the energy sector. We all know that oil prices crashed, and earnings expectations in the oil patch were ratcheted sharply lower, but even as we look at last quarter’s earnings, the market is really looking forward. Oil prices eased from early highs this morning after Saudi Arabia’s Oil Minister said production in the world’s biggest crude exporter would stay near record peaks of around 10 million barrels per day in April. Normally, that would be a bearish signal for oil prices, but all those Navy ships over near Yemen not intercepting Iranian ships make traders a bit nervous, plus oil is in rally mode. Most industry analysts are predicting oil prices will recover over the next year; nobody knows for sure, but the thinking is that the cutbacks jobs and exploration activity will result in lower output. Or maybe somebody will blow up somebody else’s ship.

This week the earnings focus shifts from the big banks to tech companies, with earnings reports due from Facebook, Amazon, Microsoft, and Google – just to name a few.

A quick rundown of earnings today:
Halliburton (HAL) reported a loss in the first quarter as the oil-field services provider continues to feel the impact from lower oil prices.

Royal Caribbean Cruises (RCL) cut its 2015 outlook and issued second-quarter guidance below expectations; the cruise ship company was hurt by a strong dollar and higher fuel prices.

IBM first quarter earnings rose 9% and beat estimates even as revenue dropped 12%. Guidance remained unchanged. Following third quarter disappointment, IBM has been flat in investors’ eyes, despite a very big buyback program.

A little bit of M&A action today:
In one of the largest real-estate deals so far this year, warehouse and distribution center owner Prologis (PLD) has agreed to buy industrial-property owner KTR Capital Partners for $5.9 billion. The 60 million square foot operating portfolio of KTR Capital is spread over 322 properties.

Raytheon (RTN) has agreed to acquire Websense from P-E firm Vista Equity Partners, in a deal that values the network security company at $1.9 billion, including debt. The new company will be 80% owned by Raytheon and Vista will keep a 20% stake. Websense makes software that blocks websites and lets companies inspect network traffic and filter emails for security and hacking threats.

Comcast (CCV) and Time Warner Cable (TWC) will meet with Justice Department officials Wednesday in hopes of smoothing over objections to their $45 billion merger. Staff attorneys at the DoJ are reportedly leaning toward blocking the deal.

WhatsApp has surpassed 800 million monthly active users three months after reaching 700 million. Given the pace of growth, the world’s most popular mobile messaging platform has a good shot of reaching 1 billion before year’s end. The disclosure comes 3 weeks after WhatsApp began supporting Voice-over-Internet-Protocol calls on its Android app, a move that makes it an even bigger headache for telecom carriers who have seen the messaging platform eat into their cash cow.

Google (GOOG) is about to make major changes to its mobile search algorithm that will change the order in which websites are ranked when users search for something from their phone. The new algorithms will favor mobile friendly sites and they will have higher rankings. Google announced the changes in February, so people have had time to make their sites mobile-friendly; still, this will catch a lot of people unaware.

It just keeps getting hotter. March was the hottest month on record, and the past three months were the warmest start to a year on record, according to new data released by the National Oceanic and Atmospheric Administration. It’s a continuation of trends that made 2014 the hottest year, according to records going back to 1880.

As part of efforts to reduce pollution in China, Toyota says it will launch two hybrid cars in China in the second half of this year.

Meanwhile, Shanghai GM, a joint venture between General Motors (GM) and China’s SAIC Motor, plans to spend $16 billion over the next five years developing new vehicles; those new cars are expected to be either all-electric or plug-in hybrids. With the investment, the automaker expects to seize at least 10% of the Chinese market by creating around 10 new or upgraded models a year through 2020.