Wednesday Watch

Evening Headlines 
Bloomberg:

• Putin Lashes Out as Poland Cites Invasion Threat. Poland said that a renewed buildup of Russian troops on Ukraine’s border raises the specter of a possible invasion, as President Vladimir Putin ordered his government to prepare a response to U.S. and European sanctions. “Unfortunately, Russia has restored its combat-readiness on the Ukraine border with more than a dozen battalion-sized combat groups,” Polish Foreign Minister Radoslaw Sikorski, told TVN24 BiS television yesterday, while giving no indication that an invasion was imminent. “There’s a lot of equipment. This is the sort of thing one does to exert pressure or to invade.” Putin has showed no sign of backing down over Ukraine since the U.S. and the European Union tightened sanctions last week, with Russia massing forces on its neighbor’s border in the biggest military buildup since troops were withdrawn from the area in May.

• Bankers Called Up for Ukraine War as Rolls-Royce for Sale. “Everyone has two choices: to comply with Ukrainian law, go with your conscience and prepare for mobilization or avoid joining the army by relocating and risk three to five years in prison. I prefer the former.” 

• EU Airlines Could Suffer From Russian Airspace Sanctions. European airlines are confronting possible disruptions in service to northern Asia as Russia considers curbing flights across Siberia to retaliate for sanctions imposed because of the Ukraine crisis.

• Statist Strongmen Putin-Xi See History’s Capitalism Clash. Twenty-five years later, the global divide over how to organize an economy is back. Free-market U.S.-style capitalism, bloodied by the global financial crisis, is again being challenged by the apostles of a robust government economic role known as state capitalism. And this time, the tidy 20th century separation between rival economic blocs has been replaced with a confounding web of cross-border ties.

• China Default Storm Seen as Record Private Bonds Mature. The small companies that dominate China’s private market for high-yield bonds face rising default risks as their debt obligations soar to a record and economic growth slows to the lowest in more than two decades. Privately issued notes totaling 6.2 billion yuan ($1 billion) come due next quarter, the most since authorities first allowed such offerings from small- to medium-sized borrowers in 2012, according to China Merchants Securities Co. The guarantor of debentures sold by Xuzhou Zhongsen Tonghao New Board Co. stepped in to help after the building-materials producer based in the eastern province of Jiangsu missed a coupon payment in March. Three other issuers have also faced “payment crises” this year, China Merchants said.

• Killing of General in Afghanistan Renews U.S. Exit Angst. An insider attack against international and Afghan forces in Kabul that killed a U.S. general has renewed questions about the Obama administration’s exit strategy from Afghanistan and the country’s security.

• Asian Stocks Follow U.S. Rout as Ukraine Tensions Rise. Asian stocks fell, with the regional index extending yesterday’s losses, after U.S. equities dropped to a two-month low amid escalating tensions in Ukraine. SoftBank Corp., a Japanese mobile-phone operator, dropped 3.2 percent after Sprint Corp., controlled by SoftBank, ended talks to acquire T-Mobile US Inc., according to a person with knowledge of the matter. Daikin Industries Ltd., an air-conditioner maker, lost 5.6 percent in Tokyo after reporting results. Kubota Corp., a Japanese manufacturer of industrial machinery, jumped 7.6 percent after reporting operating profit rose. The MSCI Asia Pacific Index (MXAP) dropped 0.3 percent to 146.34 as of 9:17 a.m. in Tokyo after slumping 0.8 percent yesterday.

• Goldman(GS) Sees Iron Ore Rout Extending as Supply Growth Quickens. Iron ore will extend a drop through 2015 when an increase in seaborne supply that’s spurred a global glut is set to accelerate, said Goldman Sachs Group Inc. While the growth in supply will probably moderate in the second half of 2014, the trend rate of growth in seaborne supply exceeds demand by a ratio of three to one, the bank said in a report dated today. Goldman kept its forecast for the steelmaking ingredient at an average of $80 a metric ton in 2015 from $106 this year.

Wall Street Journal:

• U.S. Backs Sunni Plan to Fight Islamic State Jihadists in Iraq. The U.S. is holding talks with Sunni Muslim officials in Iraq who have requested help in organizing grass-roots fighting forces to counter an extremist militant group seizing territory across the country. The meetings follow an outreach by Iraqi governors of Sunni-dominant provinces, who sent letters to Secretary of State John Kerry in late June seeking U.S. support before the jihadist group, which calls itself the Islamic...

• Sprint Abandoning Pursuit of T-Mobile. Carrier Will Also Replace CEO Dan Hesse.

• Double Punch for 'Inversion' Deals. Walgreen Rules Out Tax-Avoiding Tactic as Treasury Gears Up to Challenge.

CNBC:

• Why an aggressive Russia scares markets most.

Zero Hedge:

• 4 Million Fewer Jobs: How The BLS Massively Overestimated US Job Creation.

• Fed Finally Finds The 230 Trillion Number: Blasts Banks' "Living Wills", Says Taxpayers Still On The Hook.

• Goldman's "Early Warning Signals". (graph)

• Must Read: Fear And Loathing On The Marketing Trail.

• Here Comes Snowden 2.0... And How The Government Determines If You Are A "Terrorist Threat".

• The Other Border Dispute Russia Is Involved In (That No One Is Talking About Yet).

• Why Student Loans Are Crushing The Housing Recovery In 1 Chart. (graph)

ValueWalk: 

• Trading Volume Sinks: Its Not Just Equities. 

Business Insider:

• Obama's Approval Rating Has Hit All-Time Low, And Confidence In The Future Of America Has Collapsed.

• 'THAT'S IT. GAME OVER' Insider Reveals Why Murdoch Pulled Time Warner Bid — And Says He's Not Coming Back.

• First Solar(FSLR) Is Tanking.

Reuters: 

• Groupon(GRPN) cuts 2014 outlook, shares slide 12 percent.

• NY attorney general probes Morgan Stanley(MS), Goldman(GS) 'dark pools' -Fox. U.S. banks Morgan Stanley and Goldman Sachs Group are being investigated by New York's attorney general as part of a probe into alternative trading systems known as "dark pools," according to Fox Business Network. 

• Morgan Stanley(MS) says California AG may sue over mortgage bonds. California's attorney general may sue Morgan Stanley over money-losing mortgage bonds that the state's biggest public pension fund purchased in a $1.3 billion deal before the financial crisis, the bank said in a securities filing 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

Financial Times: 

• BlackRock(BLK) sounds alarm over IPO quality. The world’s largest institutional investor has sounded the alarm over the quality of European IPOs as hedge funds increase their bets against private equity-backed flotations, after the market for companies going public was soured by a string of high-profile failures.

Telegraph:

• Federal Reserve tells banks: you're not prepared and you could cause another crisis. US central bank tells lenders, including Barclays, that they risk plunging world into a fresh financial crisis.

National Business Daily:

• China Warns 9 Cities of Noncompliant Land Financing. Chinese land regulator warned cities of noncompliant use of land as collateral for financing.

Evening Recommendations

• None of note

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 107.50 +.5 basis point.

• Asia Pacific Sovereign CDS Index 73.5 +.75 basis point.

• FTSE-100 futures -.45%.

• S&P 500 futures +.04%.

• NASDAQ 100 futures  +.03%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (DVN)/1.40

• (DBD)/.39

• (TWX)/.84

• (VIA/B)/1.43

• (RDC)/.22

• (DISH)/.51

• (CTSH)/.62

• (MDLZ)/.39

• (RL)/1.76

• (JACK)/.57

• (CF)/6.70

• (AOL)/.45

• (BID)/1.43

• (SKYW)/.01

Economic Releases 
8:30 am EST

• The Trade Deficit for June is estimated to widen to -$44.8B versus -$44.4B in May.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,530,000 barrels versus a -3,697,000 barrel decline the prior week. Gasoline supplies are estimated unch. versus a +365,000 barrel gain the prior week. Distillate inventories are estimated to rise by +630,000 barrels versus a +789,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.68% versus a -.3% decline the prior week.
  

Upcoming Splits

• (JOBS) 2-for-1

Other Potential Market Movers

• The Italy gdp report, Australia Unemployment report, weekly MBA mortgage applications report, (VPRT) analyst day and the (MU) analyst conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by financial and technology 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.