Tuesday Watch

Evening Headlines 
Bloomberg:

• Malaysia Air Search Chaos Evokes Korean-Air Crash Cover-Up. The seizing of flight recorders from the downed Malaysian Airlines (MAS) jet by Russia-backed Ukrainian rebels has parallels with the Soviet response to the destruction of another civil airliner more than three decades ago. After Sukhoi Su-15 interceptors used air-to-air missiles to shoot down Korean Air Lines (003490) Flight 007 when the Boeing Co. (BA) 747 strayed into Soviet airspace in 1983, a security clampdown was immediately imposed at the crash site off Sakhalin Island, with the jet’s so-called black boxes spirited away from the scene. 

• Bank of Japan Majority Won’t Be Swayed by Kuroda Ideology. More than a year after securing support at the Bank of Japan for unprecedented monetary stimulus, Governor Haruhiko Kuroda has yet to persuade most board members that they have the power to achieve their inflation target. A majority of the nine members disagree with Kuroda’s view that flooding the economy with cash is sufficient to get stable 2 percent gains in consumer prices, according to people familiar with their thinking. Most conclude it cannot be done without government steps to raise Japan’s growth potential, they said, asking not to be named because the discussions are private. 

• Dubai Haven Status Frays as CDS Follow Iraq Higher: Arab Credit. Dubai is losing the trust of debt investors faster than any nation in the Middle East except Iraq as regional turmoil threatens its haven status. The cost of insuring the emirate’s bonds against non-repayment using credit-default swaps climbed to 165 basis points on July 20, the highest level since May 5, according to prices compiled by CMA. Swaps gained 30 basis points since June 9, compared with an increase of 93 basis points for Iraq, where militants from Islamic State, an al-Qaeda offshoot formerly known as ISIL, have taken control of parts of the country.

• Asia Stocks Gain With Oil Near 3-Week High; Soybeans Fall. Asian stocks rose as Japanese markets resumed after a holiday. Crude oil held near a three-week high and Indonesian rupiah forwards gained, while soybean futures extended declines into a fourth day. The MSCI Asia Pacific Index added 0.2 percent by 10:01 a.m. in Tokyo, rising a second day. Japan’s Topix index, which slid 0.8 percent when it last traded July 18, rose 0.5 percent.

Wall Street Journal: 

• Bodies From Malaysia Airlines Flight Begin Long Trip to Netherlands. Pro-Russian Rebels Agree to Hand Over Flight Data Recorders to Malaysian and Dutch Officials.

• U.S. Calls for Immediate Truce in Gaza as Death Toll Mounts. Palestinian Deaths Reach 571.

• Small-Cap Stocks Run Into Big Trouble. Small-company shares' summer swoon deepened Monday, underscoring investor concern about valuations. The Russell 2000 index of smaller companies, typically those with market values below $1 billion, dropped 0.4% Monday, outpacing a 0.3% decline in the Dow Jones Industrial Average and a 0.2% slide in the S&P 500. Monday's drop comes as...

• Hamas's Civilian Death Strategy. Gazans shelter terrorists and their weapons in their homes, right beside sofas and dirty diapers.

MarketWatch.com:

• Treasury yield curve again flattest in five years. 10-year yield hits lowest point since end of May.

• Johnson & Johnson(JNJ) sets $5 billion share buyback.

CNBC:

• Chipotle(CMG) tops Street forecasts; stock jumps. Fast-casual chain Chipotle Mexican Grill's net income and revenue easily beat Wall Street's expectations on Monday. 

• Which ‘swans’ are on markets’ radar this summer? (video)

Zero Hedge: 

• How RenTec Made More Than $34 Billion In Profits Since 1998: "Fictional Derivatives".

• France Defies US, British Demands To Kill Mistral Sale To Putin... For Now.

• Saxobank: "Be Warned" Of Delayed Market Reaction To "Escalation Of Global Turmoil". (graph)

• Netflix Meets EPS, Beats On International Subs, Guides To Lower Q3 EPS And Domestic Subs. (graph)

• With ISIS Now Controlling 35% Of Syria And Most Of Its Oil Fields, Iraq Issues An Ultimatum To The US.

• The New Scariest Chart In America. (graph)

• Spot The China Liquidity Crisis. (graph)

• Citi: "Asset Markets Are Ill-Prepared For Any Risk-Negative Shock".

Business Insider: 

• Why Putin's Officers Are Directly Responsible For Shooting Down MH17.

• China's Total Debt Surges To 251% Of GDP. (graph)

• BLACKROCK(BLK): 'Investors Should Buckle Up For More Volatility Ahead'.

Reuters:

• Texas Instruments(TXN) expects higher quarterly revenue, says markets OK. Texas Instruments Inc said it expects higher third-quarter revenue following recently improved demand for chips used in cars, industrial equipment and communications gear. 

• Rent-A-Center(RCII) sees weak demand, cuts forecast. Rent-to-own home furniture retailer Rent-A-Center Inc cut its full-year forecast for revenue and profit, saying it expected demand to remain weak, sending its shares down as much as 2 percent in extended trade. 

• Hedge fund exit requests drop to six-month low in July.

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

Telegraph: 

• French economy 'catastrophic’, says business federation. President of France’s equivalent of the CBI calls for an end to the 75pc tax rate and 35-hour working week.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.25% to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 104.0 +2.0 basis points.

• Asia Pacific Sovereign CDS Index 72.50 unch.

• FTSE-100 futures +.24%.

• S&P 500 futures +.09%.

• NASDAQ 100 futures  +.11%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (RF).21

• (LXK)/.93

• (LMT)/2.66

• (GCI)/.64

• (KMB)/1.50

• (STT)/1.26

• (CIT)/.84

• (DD)/1.17

• (VZ)/.90

• (TRV)/2.07

• (UTX)/1.70

• (CMCSA)/.72

• (HOG)/1.46

• (IR)/1.09

• (MO)/.66

• (KO)/.63

• (AMTD)/.34

• (MCD)/1.44

• (BTU)/-.29

• (MSFT)/.60

• (ISRG)/2.82

• (XLNX)/.61

• (JNPR)/.38

• (LLTC)/.56

• (VMW)/.79

• (AAPL)/1.23

• (BRCM)/.61

• (EA)/-.04

• (SCCO)/.43

• (HTZ)/.45

Economic Releases
8:30 am EST

• The CPI for June is estimated to rise +.3% versus a +.4% gain in May.

• The CPI Ex Food & Energy for June is estimated to rise +.2% versus a +.3% in May.

9:00 am EST

• The FHFA House Price Index for May is estimated to rise +.2% versus unch. in April.

10:00 am EST

• The Richmond Fed Manufacturing Index for July is estimated at 5.0 versus 3.0 in June.

• Existing Home Sales for June are estimated to rise to 4.99M versus 4.89M in May.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Euro Area Govt Debt report, Senate Corp Tax Hearing and the US weekly retail sales reports could impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and real estate 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.