Friday Watch

Evening Headlines 
Bloomberg:

• Russia Tried to Disrupt Ukraine Vote, Senate Panel Told. Russia launched a major cyberattack on the main database of Ukraine’s Central Election Commission shortly before the country’s May 25 elections, according to a former U.S. lawmaker and ambassador. A U.S. State Department official said Ukraine’s Security Service announced hackers using servers in Russia orchestrated a distributed denial-of-service attack against the election commission website and posted false results. The official, who wasn’t authorized to speak on the record and requested anonymity, said hackers also jammed phone lines to prevent regional election data from reaching the central facility. 

• Abenomics Spurs Most Misery Since ’81 as Senior Scrimps: Economy. Mieko Tatsunami finds Prime Minister Shinzo Abe’s drive to reflate Japan’s economy hard to digest. “The price of everything we eat on a daily basis is going up,” Tatsunami, 70, a retired kimono dresser, said while shopping in Tokyo’s Sugamo area. “I’m making do by halving the amount of meat I serve and adding more vegetables.” Tatsunami’s concerns stem from the price of food soaring at the fastest pace in 23 years after April’s sales-tax increase. Rising prices helped push the nation’s misery index to the highest level since 1981, while wages adjusted for inflation fell the most in more than four years. 

• China's Property Developers Face Record Wave of Maturing Debt. Chinese property developers will need to tackle an eight-fold increase in maturing debt next year, adding financial pressure on firms amid a deflating real-estate bubble.

• Chinese Slowdown Threatens Global Luxury Boom: Chart of the Day. The slowdown in spending by China’s rich is threatening to end a rally in luxury companies that sent shares to all-time highs.

• Vietnam Says China Still Ramming Boats, Airs Sinking Video. Vietnam accused China of continuing to ram its boats in disputed waters of the South China Sea and aired video it said showed a Chinese vessel plowing into one of its fishing boats before it sank on May 26. Chinese ships have damaged 24 Vietnamese boats since Vietnam vessels began challenging China’s installation of an oil rig in waters near the Paracel Islands on May 2, and 12 Vietnamese fisheries officers have been hurt, officials said. In one of the most recent incidents, a Vietnamese Coast Guard boat suffered four holes after being hit on June 1, Ngo Ngoc Thu, vice commander of Vietnam’s Coast Guard, said at a press conference yesterday in Hanoi. 

• Asian Stocks Climb With Ringgit, Nickel Before Payrolls. Asian stocks rose, with the regional index headed for its highest close since October, while emerging-market currencies climbed after new European Central Bank stimulus burnished the global outlook. Nickel rose and gold traded near a one-week high before U.S. payrolls data. The MSCI Asia Pacific Index added 0.2 percent by 9:59 a.m. in Tokyo, set for a fourth straight weekly gain.

Wall Street Journal: 

• Credit Unions Ramp Up Risk. Lenders Loosen Lending Standards, Increase Exposure to Longer-Term Assets. Credit unions in search of higher returns are loosening lending standards and piling into longer-term assets, exposing the firms to potentially significant losses if interest rates rise and worrying regulators in the process. Such moves are raising concerns at the National Credit Union Administration, the sector's regulator, which said a rise in interest rates could make loans and investments unprofitable. Some analysts also said credit unions likely are unaware of the risk they are taking on because they... 

• Canada Aims to Sell Its Oil Beyond U.S. Producers Want to Diversify but Are Stymied by Poor Access to Ocean Ports.

• BofA(BAC) in Talks to Pay At Least $12 Billion to Settle Probes. At Least $5 Billion Expected to Go to Consumer Relief. Bank of America Corp. is in talks to pay at least $12 billion to settle civil probes by the Justice Department and a number of states into the bank's alleged handling of shoddy mortgages, an amount that could raise the government tab for the bank's precrisis conduct to more than $18 billion, according to people familiar with the negotiations. At least $5 billion of that amount is expected to go toward consumer relief—consisting of help for homeowners in reducing principal amounts, reducing monthly payments and paying for...
  

Fox News: 

• EXCLUSIVE: Bergdahl declared jihad in captivity, secret documents show. U.S. Army Sgt. Bowe Bergdahl at one point during his captivity converted to Islam, fraternized openly with his captors and declared himself a "mujahid," or warrior for Islam, according to secret documents prepared on the basis of a purported eyewitness account and obtained by Fox News. The reports indicate that Bergdahl's relations with his Haqqani captors morphed over time, from periods of hostility, where he was treated very much like a hostage, to periods where, as one source told Fox News, "he became much more of an accepted fellow" than is popularly understood. He even reportedly was allowed to carry a gun at times.

Zero Hedge:

• Fed President Defends Blowing Bubbles: It's In The Best Interest Of "Irrational Investors".

• A Decade Of Jobs - How The Recession Reshaped The US Economy (In 8 Charts).

• "We Have Nothing To Fear But The Lack Of Fear Itself". (graph)

• Bubble, Bubble, Toil, And Monetary Policy Trouble.

• SocGen 10-Year Outlook: 100% Chance Of Recession; S&P To 4,000 Or... 500. (graph)

• What Mario Draghi Did Today: Goldman Sachs Explains.

• Previewing Tomorrow's Payroll Number.

• NIRP Has Arrived: Europe Officially Enters The "Monetary Twilight Zone".

• "Stress Test" Reviewed: Tim Geithner Is "A Grifter, A Petty Con Artist".

Business Insider: 

• An Overwhelming Number Of Troops Want Bergdahl Prosecuted If He's Found To Be A Deserter.

• Even Democrats Are Running Away From Obama's Deal To Free Bowe Bergdahl.

• Investors Are Not Going To Like What The Bond Market Is Telling Them.

NY Post:

• New Hedge Funds Explode in Number, Still Trail the Big Boys.

Reuters:

• VeriFone(PAY) results beat as retailers upgrade card swipe machines. VeriFone Systems Inc, a maker of credit card swipe machines, reported better-than-expected results for the second quarter, mainly helped by customers in Australia and retailers upgrading equipment with new security features. VeriFone's shares rose about 4 percent in extended trading.

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

South China Morning Post:

• Japan can choose to be ally or threat, says China's ex-foreign minister. A veteran Chinese diplomat called on Tokyo to think carefully about whether it regarded China as a friend or a threat as he took part in a meeting in Japan intended to improve badly frayed ties.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.25% to +.50% on average.

• Asia Ex-Japan Investment Grade CDS Index 103.0 -2.75 basis points.

• Asia Pacific Sovereign CDS Index 78.5 -.75 basis point.

• FTSE-100 futures +.31%.

• S&P 500 futures +.17%.

• NASDAQ 100 futures  +.21%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (JOSB)/.40

• (XXIA)/.19

Economic Releases
8:30 am EST

• The Change in Non-Farm Payrolls for May is estimated to fall to 215K versus 288K in April.

• The Unemployment Rate for May is estimated to rise to 6.4% versus 6.3% in April.

• Average Hourly Earnings for May are estimated to rise +.2% versus unch. in April.
  

3:00 pm EST

• Consumer Credit for April is estimated to fall to $15.0B versus $17.529B in March.
  

Upcoming Splits

• (AAPL) 7-for-1

Other Potential Market Movers

• The Fed's Powell speaking, German Trade Balance and the (TRV) Investor Day could impact trading today.

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