Today's Headlines
Bloomberg:
- Greece Poised for Troika Talks Amid Bourse Shutdown. Greece’s cash-strapped government is set to begin talks with creditors on a new bailout agreement, as capital controls and the shutdown of the country’s financial markets enter a fifth week. Technical experts from the European Central Bank, the International Monetary Fund and the European Commission are due to begin negotiations with their Greek counterparts by Tuesday on the many policies Greece needs to implement over the next three years, in return for emergency loans of as much as 86 billion euros ($94 billion).
- Hong Kong Is Feeling China's Pain. A slowing Chinese economy and the mainland's anti-corruption and austerity campaigns are keeping tourists and shoppers away. For Hong Kong, it's been one thing after another. A series of anti-China and pro-democracy protests last year prompted stores to close and mainland tour groups to cancel bookings. Meanwhile, a slowing Chinese economy and President Xi Jinping's anti-corruption and austerity campaigns have also made the Chinese more wary of buying pricey cognac and Gucci bags in the city.
- Weak China Demand Weighs on Metals. (video)
- Japan’s Economy Shrank Last Quarter, Top Forecaster Says. The Japanese economy likely contracted last quarter, dragged down by weak consumer spending and a slump in exports, according to a top forecaster. The world’s third-biggest economy may have shrank as much as an annualized 2.5 percent, said Yoshiki Shinke, at Dai-ichi Life Research Institute. The median estimate of 25 economists surveyed July 9-22 by Bloomberg is for 0.8 percent growth after the 3.9 percent expansion in the first quarter.
- Mumbai Is Overflowing with Garbage. (pic) Which global city uses prime real estate nearly the size of New York’s Central Park simply to dump trash on? Mumbai. The land-starved peninsula currently discards 11,000 metric tons of refuse every day in three dump yards that together occupy more than 740 acres. At going market rates, that land would be worth as much as $4.4 billion if it were sold and used for housing. Meanwhile, 6.5 million people, or half of Mumbai’s population, live in slums without basic sanitation and safe drinking water.
- Deep-Sea Plan Fails, Leaving Korean Shipyards Struggling. Struggling with technology and a plunge in oil prices that has discouraged exploration, Korean vessel makers are racking up debt and could show billions of dollars in losses when they report earnings starting Monday. It’s the latest example of difficulties for the global shipbuilding industry, after a glut of vessels and low freight rates have spelled financial trouble for Chinese yards in recent years, prompting them to seek government aid.
- What Does Australia Have in Common With Colombia and Russia? Excluding the brief fall at the worst point of the global financial crisis, this is the lowest level for the Aussie since 2007.
- Chinese Stocks Decline for Second Day Amid Signs of Weak Growth. China’s stocks fell for a second day, led by technology and energy shares, as a drop in profits for the nation’s industrial companies deepened concern the economy is weakening. The Shanghai Composite Index retreated 1.3 percent to 4,017.44 at 10:10 a.m., extending Friday’s 1.3 percent decline.
- Global Share Slump Continues in Asia as Commodities Extend Drop. Asian stocks fell, following the worst week for global equities this year, and a selloff in commodities deepened as a report showed China’s industrial profits declined. The dollar slipped after gaining for five straight weeks. The MSCI Asia Pacific Index retreated 0.8 percent by 11:06 a.m. in Hong Kong as Chinese stocks tumbled.
- Oil Bulls Flee at Fastest Pace in Three Years as Glut Expands. Speculators’ conviction that oil will rally weakened at the fastest pace in three years, just before futures tumbled into a bear market. The net-long position in West Texas Intermediate contracted 28 percent in the seven days ended July 21, U.S. Commodity Futures Trading Commission data show. Long positions dropped to a two-year low while short holdings climbed 25 percent.
Wall Street Journal:
- Lawmakers Say Iran Unlikely to Address Suspicions of Secret Weapons Program. U.S. administration says full disclosure about program’s history isn’t critical to verify future commitments. An Obama administration assessment of the Iran nuclear deal provided to Congress has led a number of lawmakers to conclude the U.S. and world powers will never get to the bottom of the country’s alleged efforts to build an atomic weapon, and that Tehran won’t be pressed to fully explain its past.
- Weak Euro Masks Lingering Woes at LVMH, Kering. Luxury giants face uncertainty over Louis Vuitton and Gucci brands, slowdown in China.
- Fed Officials May Offer More Clarity on Rates. New hints on timing of rate increase could come this week after policy meeting.
- Sudden Drop in Crude-Oil Prices Roils U.S. Energy Firms’ Rebound. More job cuts, asset sales are expected; layoffs extend to engineers and scientists.
- Hillary’s Capital ‘Lock In’. She proposes the highest tax rate since the mid-20th century. Hillary Clinton’s march to the left continues, hitting a new milestone on Friday when she proposed to nearly double the top tax rate on long-term capital gains to 43.4% from 23.8%—or the highest rate in decades. Mrs. Clinton says she wants to overthrow “quarterly capitalism,” the supposed tendency of companies to be preoccupied with earnings reports and stock prices at the expense of...
- The Lawless Underpinnings of the Iran Nuclear Deal. The Obama end-run around the Constitution could yet be blocked if states exercise their own sanctions regimes. The Iranian nuclear agreement announced on July 14 is unconstitutional, violates international law and features commitments that President Obama could not lawfully make. However, because of the way the deal was pushed through, the states may be able to derail it by enacting their own Iran sanctions legislation.
Fox News:
- Paul to try to block Planned Parenthood funding during rare Sunday voting session. (video) Kentucky Sen. Rand Paul, a Republican presidential candidate, said Sunday that he’ll try this afternoon on Capitol Hill to force a vote to block federal funding for Planned Parenthood, following the release of videos showing group officials discussing how they provide aborted fetal organs for research. "I think the time is now to discuss whether taxpayer dollars should be going to such a gruesome procedure," Paul told “Fox News Sunday.” "I really think that time has come in our country to debate -- do people want their taxpayer dollars going to this kind of procedure?"
MarketWatch.com:
- Upcoming French vote could send shock waves across Europe. The political backlash creates an opening for the anti-euro, anti-EU National Front under Marine Le Pen, who continues to surge in polls as a leading contender for president in 2017. Le Pen, the daughter of National Front founder Jean-Marie Le Pen, announced this month that she will put her electability to the test this December in regional elections as she heads the party’s campaign in the depressed Nord-Picardy region in northern France.
Zero Hedge:
- Should You Buy A House? (graph)
- Deflation Is Winning - Beware! (graph)
Business Insider:
- Hillary Clinton is trailing the 3 strongest Republican candidates in 3 key swing states. Walker leads Clinton 47-38 in Colorado; 45-37 in Iowa; and 43-40 in Virginia. Rubio leads Clinton 46-38 in Colorado; 44-36 in Iowa; and 43-41 in Virginia.
New York Times Magazine:
- Is This the End of Christianity in the Middle East? ISIS and other extremist movements across the region are enslaving, killing and uprooting Christians, with no aid in sight.
- Debt conundrum to keep Greek banks in months-long freeze. Greek banks are set to keep broad cash controls in place for months, until fresh money arrives from Europe and with it a sweeping restructuring, officials believe. Rehabilitating the country's banks poses a difficult question. Should the euro zone take a stake in the lenders, first requiring bondholders and even big depositors to shoulder a loss, or should the bill for fixing the banks instead be added to Greece's debt mountain? Answering this could hold up agreement on a third bailout deal for Greece that negotiators want to conclude within weeks.
- China car market braces for abnormal era of flat sales. Bleak outlook hovers over an industry that has been a cash cow for carmakers. On the eve of China’s largest car show in April, executives and analysts braced themselves for a “new normal”: single-digit sales growth after two fat years. Yet some are beginning to wonder if the world’s largest car market is actually entering an abnormal era of flat or even falling sales.
- Questions over budget surplus dim Brazil’s prospects. Brazil’s economy may be in freefall but until recently its hard-pressed citizens could at least count on the unwavering commitment of their famously hawkish finance minister to limit the damage.
- Greece bailout monitors question access to ministries. Negotiators from Greece’s bailout monitors will fly to Athens on Monday to formally begin talks on a €86bn rescue after days of delays over whether the Greek government would allow creditors to have full access to staff and facilities. Despite an agreement that gives teams from the EU and the International Monetary Fund access to some ministries and data, officials said only middle-ranking technical teams — and not mission chiefs — would participate for now.
Telegraph:
- Europe braces itself for a revolutionary Leftist backlash after Greece. Athens' ritual humiliation was a cautionary tale for Leftists in the Mediterranean but it won't be enough to kill them off just yet.
- Grexit would still be best for the survival of the eurozone. Andrew Lilico sees the plan to bail out Greece for a third time as a recipe for even more dangerous instability.
Night Trading
- Asian indices are -2.25% to -.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 111.0 +3.0 basis points.
- Asia Pacific Sovereign CDS Index 61.5 +2.0 basis points.
- S&P 500 futures +.01%.
- NASDAQ 100 futures -.01%.
Earnings of Note
Company/Estimate
- (NSC)/1.42
- (SOHU)/-.77
- (AVB)/1.85
- (BIDU)/1.84
- (RE)/5.65
- (HIG)/.77
- (MSTR)/1.51
- (PRE)/2.31
- (PCL)/.08
- (RCII)/.49
- (SWN)/.06
- (SWFT)/.37
Economic Releases
8:30 am EST
8:30 am EST
- Durable Goods Orders for June are estimated to rise +3.2% versus a -1.8% decline in May.
- Durables Ex Transports for June are estimated to rise +.5% versus a +.5% gain in May.
- Cap Goods Orders Non-Defense Ex-Air for June are estimated to rise +.5% versus a +.4% gain in May.
- Dallas Fed Manufacturing Activity for July is estimated to rise to -3.0 versus -7.0 in June.
Upcoming Splits
- None of note
Other Potential Market Movers
- The German IFO survey, (KMX) analyst day and the (CPHD) analyst event could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and industrial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finished modestly lower. The Portfolio is 25% net long heading into the week.
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