Friday Watch

Evening Headlines
Bloomberg:

• What Europe Wants Out of the Brexit Talks. (video)
• Japan’s Prices Keep Falling in Challenge to Abe, Kuroda. With a little more than a week until Japan goes to the polls for an upper-house election, a batch of economic data released Friday underscores the challenge Prime Minister Shinzo Abe faces in convincing voters that his policies are working. Consumer prices excluding fresh food fell for a third straight month and household spending declined, undermining efforts to revitalize the world’s third-largest economy. While corporate confidence and unemployment were unchanged, there is still little pressure for higher wages.
• China's Yuan Heads for Worst Quarter on Record. (video)
• Asian Stocks Head for Best Week Since April on Stimulus Optimism. Asian stocks climbed, with the regional benchmark index heading for its biggest weekly advance since April, as policy makers signaled looser monetary policies to buffer the impact of Britain’s decision to leave the European Union. The MSCI Asia Pacific Index rose 0.3 percent to 129.23 as of 9:07 a.m. in Tokyo, heading for a 3.2 percent gain over the past five days as the region’s equities rebounded from losses caused by the U.K.’s shock decision on Europe.
• Gold Gains for Fifth Week as Central Banks Poised for Easing. Gold headed for a fifth weekly gain as investors speculate central banks will have to continue supporting the global economy in the wake of Britain’s vote to quit the European Union. Bullion for immediate delivery was flat at $1,322.07 an ounce at 8.11 a.m. in Singapore, according to Bloomberg generic pricing. The metal is on course to end the week 0.5 percent higher and is on its longest weekly winning streak in two years.

Wall Street Journal:

• Former Soviet Republics Are Fertile Ground for ISIS Recruiting. Istanbul attackers said to be from Uzbekistan, Kyrgyzstan and Russia’s north Caucasus region.
• Former London Mayor Boris Johnson Says He Isn’t Seeking to Replace British Prime Minister David Cameron. Boris Johnson bows out unexpectedly. Theresa May and Michael Gove among those vying for Conservative Party leadership.
• Snack Giant Mondelez Makes $23 Billion Takeover Bid for Hershey. Hershey rebuffs bid aimed at creating the world’s biggest candy company.
• Hillary’s Strange Security Adviser. How did a big-money Clinton donor get on an expert panel next to nuclear scientists?

Fox News:

• Trump trouble in the burbs? (video) America’s suburbs: They’re sprawling, replete with shopping centers and bike paths – and they’re often where presidential elections are won or lost. But in a potential problem for the presumptive Republican nominee, Donald Trump has not fared so well in the ‘burbs so far this cycle.

MarketWatch:

• This economist thinks China is headed for a 1929-style depression. Andy Xie is among the loudest voices warning of an inevitable implosion.

CNBC:

• China official June manufacturing PMI 50.0 vs 50.1 in May. Chinese factories, once lauded as the country's primary growth driver, saw activity tick down in June, according to official data. The official manufacturing Purchasing Managers' Index (PMI), a survey that tracks the health of large and state-owned companies, came in at 50.0 for last month, versus 50.1 logged in May and April. June's report was in line with Reuters' estimates for a 50.0 reading, which marked a four-month low.
• The European Union is 'doomed to fail,' says 'Black Swan' author Nassim Taleb. (video)

Zero Hedge:

• Italy Granted "Extraordinary " €150BN Bank Bailout Program To Prevent "Panic, Run On Deposits".
• Judicial Watch Demands DOJ Inspector General Probe Into "Scandalous" Lynch-Clinton Meeting.
• "Off The Grid" Indicators Reveal True State Of U.S. Economy. (graph)
• The New Narrative For Earnings: Blame Brexit.
• Geert Wilders Warns "Dangerously Blind" Western Governments: "Beware Islamization, Stand For Freedom!". (video)
• Tesla Tumbles After Fatal "Auto Pilot" Car Crash. (graph)
• Silver Surges To 21-Month Highs, Gold-Ratio Crashes. (graph)
• Bad Earnings, Balance Sheet Rot, & The "Brelief" Rally. (graph)
• The Curse Of "Wealth Effects" Central Banking.
• The TARGET2 Chart Shows A Breakdown Of The Central Bank Narrative.
• Rent Affordability In Just One Chart. (graph)
• Stocks Bounce, Bonds Bid, But Gold Soars To Best Year Since 1980. (graph)

Business Insider:

• Zenefits resets value at $2 billion, down from $4.5 billion, in stunning deal to prevent investor lawsuits.
• Reporters grill White House press secretary over unusual Loretta Lynch-Bill Clinton meeting.
• Hongkongers' sense of Chinese national pride is at an all time low.
• The Clinton-Trump race's big winners: Hatred, prejudice, and voter disgust.
• Legendary investors are loading up on safer investments.

Night Trading 

• Asian equity indices are unch. to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 139.5 -1.75 basis points.
• Asia Pacific Sovereign CDS Index 53.25 +2.5 basis points.
• Bloomberg Emerging Markets Currency Index 72.60 +.07%. 
• S&P 500 futures -.12%. 
• NASDAQ 100 futures -.15%.

Morning Preview Links

Earnings of Note
Company/Estimate 

• None of note

Economic Releases  
10:00 am EST

• The ISM Manufacturing for June is estimated at 51.3 versus 51.3 in May.   
• The ISM Prices Paid for June is estimated at 63.5 versus 63.5 in May.
• Construction Spending MoM for May is estimated to rise +.6% versus a -1.8% decline in April.

Afternoon:

• Total Vehicle Sales for June are estimated to fall to 17.29M versus 17.37M in May.

Upcoming Splits 

• None of note

Other Potential Market Movers

• The Fed's Mester speaking, Eurozone Manufacturing PMI, UK Manufacturing PMI and the (F) sales conference call could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by commodity 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.