Tuesday Watch

Evening Headlines 
Bloomberg:

• Russia Continues Trying to Destabilize Ukraine, U.S. Says. Russia’s “policy of destabilization” in eastern Ukraine includes providing more heavy weapons to pro-Russia rebels and deploying additional Russian forces near the border with Ukraine, according to the U.S. State Department. The statement issued today, which amounts to an indictment of the actions of Russian President Vladimir Putin, comes as the U.S. and European Union nations are weighing whether to impose substantial new economic sanctions on Russia. The U.S. said Russia is acting in ways that undermine the peace efforts by new Ukrainian President Petro Poroshenko, whose plan includes a promise of amnesty for separatists who lay down their arms voluntarily and are not guilty of capital crimes, decentralization of powers within Ukraine, and protection of the Russian language.

• Ukraine Sees Russia Hand in Downed Plane as Talks Begin. Ukraine’s government said Russian forces may have shot down one of its airplanes to bolster the Kremlin-backed insurgency amid a European push for peace talks that Germany expects to inch forward today. An An-26 transport plane was shot down in eastern Ukraine yesterday by a “powerful weapon” not previously used by the separatists, probably from inside Russia, Defense Minister Valeriy Geletey told President Petro Poroshenko, according to the president’s website. The plane was hit at 6,500 meters, an altitude shoulder-fired missiles can’t reach, he said.

• Israel to Weigh Egypt Plan for Cease-Fire in Gaza. Israeli leaders are set to discuss an Egyptian proposal for a cease-fire to end the week-long conflict in Gaza, as U.S. Secretary of State John Kerry heads for Cairo amid growing international peace efforts. Israel’s security cabinet will consider the plan at a meeting early today, a senior official said, speaking on condition of anonymity to discuss the matter. Prime Minister Benjamin Netanyahu is in favor of accepting, Israeli newspaper Haaretz reported, citing unidentified officials. Hamas hasn’t received any proposals, spokesman Sami Abu Zuhri said, according to Al-Mayadeen television. 

• Sydney Set for Biggest Hotel Boom Since Olympics in 2000. Fourteen years after the last major hotel opened in Sydney’s center, 42 developers are competing to turn two 100-year-old government office buildings into accommodations as demand soars. Elsewhere in the city, developers including China’s Greenland Holding Group Co. and Singapore-based M&L Hospitality Trusts plan to add more than 5,300 rooms over the next five years. If they are completed, the city’s supply of rooms will rise by about 20 percent by the end of the decade, the most since Australia’s largest city hosted the Olympics in 2000, according to broker CBRE Group Inc.’s hotels division.

• Asian Stocks Climb Before BOJ as Brent Declines With Corn. Asian stocks rose, with the regional index headed for a one-week high before the Bank of Japan reports on monetary policy and the head of the Federal Reserve addresses U.S. lawmakers. Corn futures and Brent crude oil resumed declines as South Korea’s won weakened. The MSCI Asia Pacific Index gained 0.6 percent by 10:42 a.m. in Tokyo, as Japan’s Topix Index rose a second day, climbing 0.9 percent.

• Microsoft(MSFT) Said to Announce Job Cuts as Soon as This Week. Microsoft Corp. (MSFT) is planning its biggest round of job cuts in five years, as the software maker looks to slim down and integrate Nokia Oyj’s handset unit, people with knowledge of the company’s plans said.

Wall Street Journal:

• Syria's Allies Are Stretched by Widening War. Lebanon's Hezbollah and Other Shiite Fighters Are Drawn Away by Sunni Rebellion in Iraq, Palestinians' Clash With Israel.

Fox News:

• Forty illegal immigrants returned to Honduras amid massive influx. Some 40 illegal immigrants, including both adults and children, were returned to Honduras from a U.S. detention facility in New Mexico on Monday, Homeland Security officials confirmed to FoxNews.com.

Zero Hedge:

• Global PMIs: France Worst, UK First. (graph)

• Feeling Poorer Through The Power Of Inflation. (graph)

• Phoenix Housing Market Hit By Unprecedented Plunge In Demand.

• David Stockman Sees "Signs Of The Bubble's Last Days". (graph)

• Bubbles Everywhere: Krugman Wrong Again; Austrians And The BIS Are Correct.

• Full-Time Pain: Mort Zuckerman Says Most Americans "Wouldn't Call This A Recovery".

• Michael Pettis Warns China Bulls: "Bad Debt Cannot Simply Be 'Socialized'".

• Japanese GDP "Guesses" Are Collapsing; Here's The 3rd Arrow That Will 'Save' It. (graph)

• "Boring", "Absolutely Dead" Market Leaves World's Largest Trading Floor "Virtually Empty".

Business Insider:

• The Most Extreme Faction Of Al Qaeda Is Winning, And It’s Leading To The Destruction Of Iraq.

Reuters:

• Valero(VLO) sees second-quarter profit below expectations. U.S. refining company Valero Energy Corp on Monday said second-quarter income will be higher than a year ago but profit will fall short of Wall Street estimates on seasonal weakness in its biggest Gulf Coast market. 

• Putin seeks BRICS moves to protect against US "sanction attacks". Russia will press other BRICS emerging market nations to agree measures to prevent "sanction attacks" by the United States to "harass" countries opposing its policies, President Vladimir Putin said. Putin said he would urge Brazil, China, India and South Africa to draw "substantive conclusions" from sanctions imposed on Russia over its role in the Ukraine crisis during a two-day BRICS summit in Brazil starting on Tuesday.

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:

• With mansion taxes, another housing bust becomes inevitable. The only solution to the boom is to let everyone do what they want with their property.

China Securities Journal:

• China PBOC May Hold Monetary Policy Steady in 2H. People's Bank of China may hold monetary policy steady in 2H as there are signs that economic outlook isn't "too pessimistic," according to a front-page commentary, written by reporter Ren Xiao.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 102.0 -.5 basis point.

• Asia Pacific Sovereign CDS Index 71.0 -1.0 basis point.

• FTSE-100 futures -.10%.

• S&P 500 futures +.08%.

• NASDAQ 100 futures  +.15%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (JNJ)/1.55

• (CMA)/.76

• (WWW)/.27

• (JPM)/1.31

• (GS)/3.09

• (IBKR)/.29

• (CSX)/.52

• (CTAS)/.75

• (YHOO)/.38

• (INTC)/.52

• (ADTN)/.29

• (JBHT)/.79

Economic Releases
8:30 am EST

• Empire Manufacturing for July is estimated to fall to 17.0 versus 19.28 in June.

• Retail Sales Advance for June are estimated to rise +.6% versus a +.3% gain in May.

• Retail Sales Ex Autos and Gas for June are estimated to rise +.5% versus unch. in May.

• The Import Price Index for June is estimated to rise +.4% versus a +.1% gain in May.

• Business Inventories for May are estimated to rise +.6% versus a +.6% gain in May.
  

Upcoming Splits

• (AAON) 3-for-2

• (SFBS) 3-for-1

Other Potential Market Movers

• The German ZEW index 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 maintain gains into the afternoon. The Portfolio is 75% net long heading into the day.