Concern that President Trump's reform agenda could be slowed down is weighing on markets, with traders worried that political noise will morph into economic risk. Fears of obstruction of justice charges (with regards to Comey-Flynn) and the possible discussion of classified information with Russia are in the spotlight. Along with a sagging dollar, U.S. stock index futures are down 0.5%, while safe havens climb, with gold up 1% to $1248/ounce.

Economy

"It sounds to me like it [NAFTA negotiations] is going to be trilateral unless there's problems that come up with that sort of machinery, then of course they would do it bilaterally," announced Republican Senator Charles Grassley. He made the comments after leaving a Senate Finance Committee meeting with Commerce Secretary Wilbur Ross and new U.S. Trade Representative Robert Lighthizer.

Inflation in the eurozone rebounded to 1.9% in April, in line with the ECB's target of close to, but below, 2% inflation. Higher transport, package holiday and heating oil costs were the biggest drivers of the increase. The euro ticked higher against the dollar following the figures, with the currency climbing above $1.11, its highest level since Nov. 9.

President Tayyip Erdogan touted "outstanding" American relations on Tuesday, but emphasized Turkey will not accept Syrian Kurdish fighters in the region, while stopping short of directly criticizing a U.S. decision to arm them. "We've had a great relationship and we will make it even better," President Trump said in a joint appearance, calling Erdogan a strong ally in the fight against terrorism.

Australia's AAA credit rating is safe for now, as the last of the three major agencies reaffirmed the nation's top investment status following last week's release of the federal budget. S&P's decision had been hotly anticipated in financial markets, because it's the only one to have the rating on a negative watch, meaning it sees a possible downgrade over the next couple of years.

In another step to open up China's capital markets, Hong Kong and Chinese regulators have formally approved a long-awaited scheme to connect China's $9.5T bond market with overseas investors. The so-called Bond Connect program has been in the works since Beijing launched a similar scheme connecting Hong Kong and Shanghai stock markets in 2014.

"The reality is that there is a high possibility of a military conflict at the NLL (Northern Limit Line) and military demarcation line," declared South Korea's newly-elected President Moon Jae-in. He also said Pyongyang's nuclear and missile capabilities seem to have advanced rapidly recently, but Seoul was ready and capable of striking back should the North attack.

Stocks

Amazon is hiring a business lead to figure out how the company can break into the multibillion-dollar pharmacy market, CNBC reports. For the last few years, Amazon (NASDAQ:AMZN) has held at least one annual meeting to discuss whether it should enter the business, but with the rise of high-deductible plans and the trend towards consumers paying for healthcare, it's ready to get more serious. Related tickers: CVS, RAD, WBA, ESRX, UNH

Colgate-Palmolive CEO Ian Cook recently signaled he would be open to selling the company, which has grappled with sluggish demand for its toothpaste, deodorants and food products, for $100 a share. According to the NY Post, the $88B price tag surfaced at a meeting with institutional investors that took place in recent weeks. Among the possible suitors: UL, PG, JNJ and 3G Capital. CL +3.5% premarket.

It's a symbolic step for the country's recovering banking sector. Britain has sold its last remaining stake in Lloyds (NYSE:LYG), making the lender the first to exit state-ownership after the financial crisis of 2007-09. Lloyds said the government will make a profit of about £900M from the bailout, having spent more than £20B rescuing the bank.

The New York Stock Exchange has gotten the green light to introduce a "speed bump" to all trades on NYSE MKT (NYSE:ICE), one of the Big Board's smaller sisters. That will make it the second U.S. exchange to include an artificial delay. Rival IEX Group, made famous by Michael Lewis's 2014 book Flash Boys, pioneered the speed bump as a way to foil high-frequency traders.

Meanwhile, the SEC is putting a recent decision on hold to approve the first quadruple-leveraged ETF. The earlier approval - given by the SEC's staff, not the politically appointed commissioners - has been reconsidered and doesn't allow Intercontinental Exchange's (ICE) ForceShares Daily 4X US Market Futures Long Fund and Short Fund to begin trading.

Twitter climbed 1.4% yesterday, but has given back the gains premarket, on word that co-founder Biz Stone is rejoining the company on a full-time basis. Stone created Twitter (NYSE:TWTR) along with Jack Dorsey, Evan Williams and Noah Glass. "There's something about the personality of a company that comes from the folks who start it," he said in a blog post. "Jack coming back was a big step forward. And now, it's my turn."

Get ready for Google I/O 2017! The annual developer conference starts today, with CEO Sundar Pichai taking the stage for a keynote address at 1 p.m. ET. It's not quite as predictable as Apple's (NASDAQ:AAPL), but it's getting there: There won't be a new phone, machine learning will get plenty of stage time, as well as the next version of Android (GOOG, GOOGL). Other topics could include Google Home and Assistant, and a new VR headset.

Apple will unveil new laptops during its annual developer conference, known as WWDC, next month, sources told Bloomberg. The MacBook Pro will get a new Kaby Lake processor from Intel (NASDAQ:INTC), while the 12-inch MacBook will feature faster Intel chips. Apple (AAPL) is also considering updating the 13-inch MacBook Air, but it isn't clear if the company plans to release it just yet.

It seems that Yum Brands' $130M investment in Pizza Hut (NYSE:YUM) couldn't have come at a better time for the struggling brand. For the last four years, Pizza Hut has been named the "best pizza chain brand of the year" by Harris Poll's EquiTrend study, which analyzes thee factors - familiarity, quality and purchase consideration. However, this year, the chain was usurped by rival Papa John's (NASDAQ:PZZA).

Sotheby's has sold the world's most expensive earrings for $57M, topping the $17.7M price of a pair sold by Christie's last year. The two pear-shaped stones are perfectly similar except for their color: one is pink while the other is blue. "Certainly people who own important colored diamonds are aware that the market is strong," said David Bennett, worldwide chairman of Sotheby's (NYSE:BID) International Jewelry division.

For the second time in a month, the DOJ has sued UnitedHealth (NYSE:UNH), accusing the nation's largest health insurer of obtaining over $1B from Medicare to which it was not entitled. The complaint points to "risk adjustment" payments (based on inaccurate data submissions) and follows a lawsuit brought by former UnitedHealth executive Benjamin Poehling, whose whistleblower case was filed under seal in 2011.

"This airplane will change the face of the single-aisle market," said Boeing (NYSE:BA) Commercial Airplanes CEO Kevin McAllister, following the delivery of the first 737 Max to Lion Mentari Airlines. The hand-off in Seattle was only one day later than first scheduled, after the planemaker quickly recovered from a possible engine manufacturing defect, which had grounded the fledgling Max fleet last week.

Dieselgate 2? After a complaint from the German government over its test results, Handelsblatt has revealed that the European Union will launch a legal action against Italy and, specifically, its transport department. It's frustrated at the lack of cooperation over defeat devices and for not vigilantly policing Fiat Chrysler's (NYSE:FCAU) emissions in the wake of the scandal that engulfed Volkswagen (OTCPK:VLKAY).

Diving into auto security after losing its smartphone dominance, BlackBerry (NASDAQ:BBRY) is working with carmakers to remotely scan vehicles for computer viruses and tell drivers to pull over if they are in critical danger. The service, which would also be able to install security patches to an idle car, could launch as early as next year and generate about $10/month per vehicle for BlackBerry.

Uber CEO Travis Kalanick rang up Tesla's (NASDAQ:TSLA) Elon Musk last summer to propose a partnership on self-driving cars, according to Wild Ride, a book by Fortune magazine's Adam Lashinsky scheduled for release next week. Musk reportedly refused to work with UBER, and a few days later unveiled his own effort to bring an autonomous car-sharing fleet to market in "Tesla MasterPlan Part 2."

Tuesday's Key Earnings

Home Depot (NYSE:HD) +0.6% beating estimates.
Jack in the Box (NASDAQ:JACK) +11.2% AH evaluating alternatives.
Staples (NASDAQ:SPLS) -3.5% on declining comp-sales.
Stratasys (NASDAQ:SSYS) +2.4% after in-line results.
TJX Companies (NYSE:TJX) -4.1% with weak profit guidance.
Urban Outfitters (NASDAQ:URBN) +1.7% AH boosted by online sales.

Today's Markets

In Asia, Japan -0.5%. Hong Kong -0.2%. China -0.3%. India +0.3%.
In Europe, at midday, London flat. Paris -0.4%. Frankfurt -0.3%.
Futures at 6:20, Dow -0.5%. S&P -0.5%. Nasdaq -0.5%. Crude +0.5% to $48.91. Gold +1% to $1248.
Ten-year Treasury Yield -3 bps to 2.29%

Today's Economic Calendar

7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories