Tuesday Watch

Evening Headlines 
Bloomberg:

• Ukraine Fighting Batters Truce Before Gas Talks Begin. Fighting shook the east of Ukraine a day before its government begins three-way talks with Russian and European Union officials in Brussels to negotiate the resumption of natural-gas deliveries which were halted in June. The cease-fire in Ukraine’s easternmost regions, sealed Sept. 5, was broken several times during the past 24 hours, with two soldiers and 14 rebels killed, the military said yesterday. Ukraine’s state energy company NAK Naftogaz Ukrainy said the government in Kiev and the European Commission reached a “consensus” before the talks today. German Chancellor Angela Merkel said she wants the gas deal clinched and that a bridge loan for Ukraine may be needed to end the spat. 

• CDC Urges Stricter Ebola Protections for Health Workers. Health workers caring for Ebola patients shouldn’t have any skin exposed, must undergo rigorous training and be supervised by a qualified monitor, the Centers for Disease Control and Prevention said. Separately, the agency also is revising its recommendations about how to track the health of people who have been exposed to the Ebola virus and when they should be allowed to travel to prevent the spread of the disease.

• Hong Kong Court Bans Street Occupations as Police Warn of ‘Riot'. Hong Kong’s High Court issued an interim injunction banning protesters from occupying a road in Mong Kok district as the police said assembly at the site may veer into “a riot.” 

• Triple Whammy Looms for China’s Oil Refiners as Crude Plunges. Crude oil’s steepest crash in almost six years is throwing up a new challenge for China’s refiners -- a plunge in the value of their stockpiles.

• RBA Says Aussie Still High as Period of Rate Stability Repeated. Australia’s central bank repeated that the nation’s currency is still too strong to help rebalance the economy and discussed the need for banks to maintain high lending standards. The RBA noted that while the currency had declined against the U.S. dollar, it remained around levels seen earlier in the year. The bank said borrowing costs have fallen further as competition increased and “members discussed the importance of lenders maintaining strong lending standards.”

• Asia Stocks Fall as Investors Weigh Earning Before Data. Asian stocks fell, paring gains after yesterday rising the most in two years, as investors awaited a slew of Chinese economic data and weighed U.S. corporate earnings. The MSCI Asia Pacific Index (MXAP) slid 0.1 percent to 136.49 as of 10:06 a.m. in Tokyo.

Wall Street Journal:

• Ebola Study Projects Spread of Virus. Up to 3 Infected People Could Fly Overseas Every Month From Most-Affected African Nations. Up to three Ebola-infected people could embark on overseas flights every month from the three most-affected African countries, according to a new study that projected travel patterns based on infection rates and recent flight schedules. The findings, published Monday in the journal Lancet, suggest that Ebola cases could be spread overseas by unwitting travelers from the worst-hit countries—Guinea, Liberia and Sierra Leone.

• SEC Is Steering More Trials to Judges It Appoints. Unpublished Figures Show ‘Win’ Rate for Cases Heard by Administrative Law Judges. The Securities and Exchange Commission is increasingly steering cases to hearings in front of the agency’s appointed administrative judges, who found in its favor in every verdict for the 12 months through September, rather than taking them to federal court. The winning streak comes amid a marked shift at the agency toward trying cases that are more complex before its administrative law judges. Historically, the SEC had more often turned to these judges for relatively straightforward legal actions, such as barring...

• Misery Widespread at Hedge Funds. Market Turmoil Inflicts Losses in Industry’s Worst Period Since 2011. 

• Fed to Banks: Shape Up or Risk Breakup. Closed-Door Event Included Executives, Law-Enforcement Officials. Federal Reserve officials sent a warning shot across Wall Street on Monday, telling bank executives they must do more to curb excessive risk-taking and improve employee behavior at their firms or face stiff repercussions, including being broken into smaller pieces.

CNBC:

• The ugly number in Apple's(AAPL) earnings. (video) Despite beating expectations in its fourth quarter and impressive iPhones sales, the company is still struggling to sell iPads.

Zero Hedge:

• Obama's Latest Speech About The Economic "Recovery" Results In Mass Audience Exodus.

• The Crocodile Jaws Spring Open Again, Preparing To Bite. (graph)

• The Fed's Comfort Zone (In 1 Simple Chart). (graph)

• Apple(AAPL) Beats Top And Bottom Line, Repurchases Record $45 Billion In Stock In Fiscal 2014. (graph)

• Going Into Q3, Hedge Funds Have Never Been More Bullish. (graph)

• Do You Believe In Chinese Miracles? GDP, Industrial Production Beat; Retail Sales Miss. (graph)

• Top Scientist Warns This Version Of Ebola Looks Like "A Very Different Bug".

Business Insider:

• Sweden’s Submarine Hunt Is An Ominous Sign Of Growing Tension Between Russia And Northern Europe.

• Separatist 'Prime Minister': The Ceasefire In Ukraine Is Over.

• CEO Of French Oil Giant Total Dies In Moscow Plane Accident.

Reuters:

• China-backed hackers may have infiltrated Apple's iCloud -blog. Apple Inc's iCloud storage and backup service in China was attacked by hackers trying to steal user credentials and other information, a cybersecurity blog charged on Monday, saying it believes the country's government is behind the campaign. 

• Chipotle(CMG) stock dips as sales growth forecasts come down. Chipotle Mexican Grill Inc on Monday reported another acceleration in quarterly restaurant sales growth, but shares in the popular burrito seller tumbled almost 5 percent after it signaled that such momentum can't last forever. 

• Hedge fund manager Chanos says betting against Petrobras at conference.

China Business News:

• China May Set Lower GDP Growth Target for 2015. Improvement in employment outlook provides room for China to set a lower GDP growth target for next year, citing people close to authorities. China may set a lower target to achieve long-term growth, the report says.

Evening Recommendations

• None of note

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 118.0 +1.0 basis point.

• Asia Pacific Sovereign CDS Index 73.25 -.5 basis point.

• FTSE-100 futures +.02%.

• S&P 500 futures -.33%.

• NASDAQ 100 futures  -.19%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (KMB)/1.54

• (APOL)/.27

• (MAN)/1.50

• (RF)/.21

• (LXK)/.91

• (OMC)/.90

• (UTX)/1.81

• (HOG)/.59

• (LMT)/2.72

• (KO)/.53

• (MCD)/1.37

• (EAT)/.50

• (TRV)/2.26

• (VZ)/.90

• (WAT)/1.29

• (ITW)/1.23

• (CREE)/.34

• (RHI)/.58

• (ETFC)/.22

• (SONC)/.33

• (YHOO)/.30

• (BRCM)/.84

• (ISRG)/3.81

• (VMW)/.83

Economic Releases
10:00 am EST

• Existing Home Sales for September are estimated to rise to 5.1M versus 5.05M in August.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Australian CPI, (UNFI) analyst day and weekly US retail sales reports could also impact trading today.

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