Tuesday Watch

Evening Headlines 
Bloomberg:  

• Chinese Developers Seen Facing More Challenges on Oversupply. Chinese developers will probably face more challenges this year because of an oversupply of housing in smaller cities, according to a Bloomberg News survey. Sourcing of financing, including from non-banks, will narrow, according to 26 economists and analysts surveyed from March 24 to 31. Developers in regions where the housing market slowed and access to financing shrunk face rising default risks, Standard & Poor’s Ratings Services said in a Jan. 17 report. “Oversupply remains the top concern of the real estate sector,” Qinwei Wang, London-based economist at Capital Economics Ltd., wrote in the survey. “Inventories have continued to rise, with the situation vulnerable in some third cities. Looking ahead, the increase of demand for new properties will probably be far weaker than over the last decade.”

• Sina Tumbles on Concern Weibo’s IPO to Shrink Valuations. Sina Corp. (SINA) sank to the lowest level since June on concern the initial public offering of its Twitter-like unit will shrink its valuation. Shares of Shanghai-based Sina fell 4.9 percent to $53.59 today in New York, extending its three-day decline to 13 percent.

• Asia Stocks Fall Second Day, Tracking U.S. Shares Lower. Asian stocks fell for a second day, following the biggest three-day rout in U.S. shares in more than two months, as investors await the conclusion of a Bank of Japan policy meeting. SoftBank Corp. declined 2.6 percent in Tokyo and Yahoo Japan Corp. fell 4.3 percent as telecommunications and technology shares extended yesterday’s losses. Samsung Electronics Co. slid 1.1 percent in Seoul after the world’s biggest maker of smartphones posted its second straight decline in quarterly profit. Australian Agricultural Co., a cattle producer, climbed 5.3 percent after Japan and Australia agreed on trade deal that will lower tariffs on beef. The MSCI Asia Pacific Index declined 0.6 percent to 137.69 as of 9:41 a.m. in Tokyo as all 10 industry groups on the gauge retreated, before markets open in Hong Kong and China.

Wall Street Journal: 

• Ukrainian Leaders Slam Russia for Attempt to 'Tear Country Apart'. U.S. White House Backs Charge of Outside Meddling as East Ukraine Rocked by Protests, Spurring New Kerry Mission. 

• Crisis in Ukraine. Streaming Coverage:

• Few Rush To Hedge Against JGB Decline. For the first time in more than a decade, Japan’s bond investors have a way to hedge some risk associated with holding some of the nation’s longest government debt. The only problem? Few people are buying.

• Citi(C) Is Bracing to Miss a Profit Target. Citigroup Says Its Return-on-Tangible-Common-Equity Goal May Be Out of Reach.

• How Climate Change Conquered the American Campus. The top-paying job for grads last year: petroleum engineer, at $97,000. Yet most colleges seem oddly uninterested.

Zero Hedge:

• Hot Air Hisses Out Of Housing Bubble 2.0: Even Two Middle-Class Incomes Aren’t Enough Anymore To Buy A Median Home.

• The Father Of High Speed Trading Speaks: "The Market We Created Is A Casino; A Complete Mess; A Rigged Game".

• This Is What Employment In America Really Looks Like... (graph)

• SPX Index EBITDA . (graph)

• This Time Better Be Different.

• Stocks Turn Red For The Year While Nasdaq Smashed Most Since October 2011. (graph)

• Asian Stocks Tumble After China, Japan Disappoint On Additional Stimulus. (graph)

• The Global Origins of China's Domestic Conflicts.

Business Insider: 

• This Jim Chanos Chart Will Convince You We're At The Peak Of A Spectacular, Fed-Fueled Bubble.

• Brokerages Make Millions Selling Orders To High Frequency Trading Firms.

• Venezuela's Street Protests Are More Terrifying Than Ever [PHOTOS].

NY Times:

• Tech Firms May Find No-Poaching Pacts Costly. It is the talk of the Valley. A high-stakes negotiation is taking place in Silicon Valley among some of the biggest names in the industry — Apple and Google among them — over accusations that they were involved in a decade-long collusion to prevent their employees from being hired at rival companies. The employees filed a class-action suit, contending that the illegal hiring practices cost employees $9 billion in lost wages. Now the companies are locked in mediation sessions, hoping to settle the case in the next several weeks.

Reuters:

• U.S. warns China over currency depreciation. The United States warned Beijing on Monday that the recent depreciation of the Chinese currency could raise "serious concerns" if it signaled a policy shift away from allowing market-determined exchange rates.

Obama takes on coal with first-ever carbon limits
Read more at http://www.philly.com/philly/news/politics/20130919_ap_0f857b20e0c144a5a1e1b9dddc9f9d72.html#YRThyDOhArykUeYy.99

AP: 

• Fed Gives Banks 2 More Years on Risky Securities. The Federal Reserve is giving U.S. banks that have certain complex securities two more years to ensure their holdings don't put them afoul of the new Volcker Rule.

Financial Times: 

• Alternative lenders ramp up risky home loans. Hedge funds, private equity houses and other alternative lenders are making big bets on the UK housing market by backing home purchasers and developers with relatively risky short-term finance.

• Weaker renminbi could be China’s subprime. Further fall would hit strategies based on view of ever-rising currency It is the talk of the Valley. A high-stakes negotiation is taking place in Silicon Valley among some of the biggest names in the industry — Apple and Google among them — over accusations that they were involved in a decade-long collusion to prevent their employees from being hired at rival companies. The employees filed a class-action suit, contending that the illegal hiring practices cost employees $9 billion in lost wages. Now the companies are locked in mediation sessions, hoping to settle the case in the next several weeks. 

Telegraph:

• Central banks are incubating a crisis the IMF is disinclined to see.

Xinhua:

• China Won't Rely on Stimulus to Boost Economy. China won't rely on a large stimulus like the one following the 2008 global financial crisis to boost its economy after a "string of lukewarm economic indicators," according to a commentary from Xinhua News written by Zhang Zhengfu. Talk about an incoming stimulus is "misleading" and those anticipating a package will likely be "disappointed," the commentary says.

Evening Recommendations
Janney:

• Rated (TWTR) Buy, target $55.

Bernstein:

• Raised (EL) to Outperform, target $79.

Night Trading

• Asian equity indices are -1.0% to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 126.0 +2.0 basis points.

• Asia Pacific Sovereign CDS Index 89.0 -.5 basis points.

• FTSE-100 futures -.20%.

• S&P 500 futures +.18%.

• NASDAQ 100 futures  +.18%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (WDFC)/.68

• (AA)/.05

Economic Releases
7:30 am EST

• The NFIB Small Business Optimism Index for March is estimated to rise to 92.5 versus 91.4 in February.

10:00 am EST

• JOLTs Job Openings for February are estimated to rise to 4020 versus 3974 in January.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Plosser speaking, Fed's Kocherlakota speaking, UK Industrial Production, UK GDP, $30B 3Y T-Note auction, weekly retail sales reports, Needham Healthcare Conference and the (IHS) investor day could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.