Tuesday Watch

Evening Headlines 
Bloomberg:

• Ukraine Ends Truce With Rebels as Putin Seeks to Continue Talks. Ukrainian President Petro Poroshenko ended a cease-fire with separatists and pledged to retake the country’s easternmost regions as peace efforts faltered. Poroshenko refused to extend the truce a second time, citing more than 100 violations by pro-Russian rebels, according to a statement on his website today. “A unique chance for a peace plan failed because of the criminal acts of militants,” Poroshenko said in the statement. “We will attack and we will free our land. The protection of Ukraine’s territorial integrity and the safety of its people require not only defense, but also attack.”

• No Good Iraq Options for Obama as Russia, Iran Jump In. As Russia and Iran step in to bolster the government in Baghdad, U.S. President Barack Obama has no good options to help defeat the al-Qaeda splinter group that’s proclaimed an Islamic caliphate in Iraq and Syria. The White House has offered limited military assistance to Shiite Prime Minister Nouri al-Maliki and is pushing for a coalition government to unite Iraqis as Sunni fighters from the Islamic State in Iraq and the Levant and their allies pose what Secretary of State John Kerry calls“an existential threat” to Iraq.

• Israel Vows to Strike Hamas After Finding Slain Youths. Israel vowed retaliatory action at Hamas after finding the bodies of three teenagers in the West Bank it believes were kidnapped by members of the Palestinian militant group. ``All signs indicate that they are the bodies of our three abducted youths -- Eyal Yifrach, Gilad Shaar and Naftali Frankel,'' Israeli Prime Minister Benjamin Netanyahu said in a statement. ``Hamas is responsible -- Hamas will pay.'' 

• World’s Oldest Population Drives Asian Bonds in Yield Quest. Asian bonds are reaping the benefits of Japan’s aging population like never before. Record amounts of Japanese cash are flowing into the region’s fixed-income markets as the demands of the world’s oldest population force the nation’s pension funds to load up on higher-yielding assets overseas.

• Asia Stocks Head for Six-Year High on Tankan Survey. Asian stocks rose, with the regional index headed for a six-year high, as Japanese stocks rallied with investors weighing a survey of business sentiment. Daikin Industries Ltd., a Japanese maker of air conditioners, jumped 4.3 percent, leading gains in industrial shares. Epistar Corp., a Taiwanese maker of computer chips, soared 5 percent as it plans to acquire Formosa Epitaxy Inc. Square Enix Holdings Co., a maker of entertainment software, jumped 7.6 percent in Tokyo as it seeks partners in China. The MSCI Asia Pacific Index (MXAP) gained 0.4 percent to 146.25 as of 10:57 a.m. in Tokyo, heading for the highest close since June 9, 2008.

• ECB Easy Money Lost as Real Rates Rise: Chart of the Day.

Wall Street Journal:

• Supreme Court Makes Religious Exception to Health-Care Law. High Court Sides With Employers Who Said Providing Contraceptives Violated Their Beliefs.

• Obama Plans Executive Action to Bolster Border Security. President to Act After Declaring Immigration Legislation Dead for This Year.

CNBC:

• Japan ruling parties agree to plan to drop ban on collective self-defence-lawmaker.

Zero Hedge:

• The Riskiest Housing Markets In America. (graph)

• Here Are The 28.5 Million Cars Recalled By GM In The First Half Of 2014. (graph)

• Shorts Squeezed Most In 11 Months As Russell Surges But Outperformed By Gold In H1. (graph)

• The Stock Market's Seven-Year Itch. (graph)

• California Housing And The Bubble At Hand.

• Macro Miasma: China 6Mo Highs; Japan/South Korea 9Mo Lows. (graph)

Business Insider:

• Obama Sends 200 More US Troops Into Iraq.

• Cringe-Worthy Memos Show Blatant Fraud At BNP Paribas.

• ISIS Has Attacked A Flashpoint Capable Of Plunging Iraq Into Full-Blown Civil War.

• Salesforce.com(CRM) CEO Marc Benioff Has Suddenly Sold Over $23 Million In Stock This Month.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.25% to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 103.5 -.5 basis point.

• Asia Pacific Sovereign CDS Index 73.75 +.5 basis point.

• FTSE-100 futures unch.

• S&P 500 futures +.14%.

• NASDAQ 100 futures  +.19%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (GBX)/.74

• (STZ)/.93

• (SNX)/1.36

Economic Releases
9:45 am EST

• Final Markit US Manufacturing PMI for June is estimated at 57.5 versus a prior estimate of 57.5.

10:00 am EST

• ISM Manufacturing for June is estimated to rise to 55.9 versus 55.4 in May.

• ISM Prices Paid for June is estimated at 60.0 versus 60.0 in May.

• Construction Spending for May is estimated to rise +.5% versus a +.2% gain in April.

• The IBD/TIPP Economic Optimism Index for July is estimated to rise to 48.0 versus 47.7 in June.

Afternoon:

• Total Vehicle Sales for June are estimated to fall to 16.38M versus 16.7M in May.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone PMI, Eurozone Unemployment report and US weekly retail sales reports could impact trading today.

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