Thursday Watch

Evening Headlines
Bloomberg:

• France's War on Terror Reaches Into the Countryside. Beauvais, population 55,000, is typical of provincial France. It has a Gothic cathedral, long-closed textile plants and multicultural housing projects from the 1960s ringing a historic center. Since last month’s terror attacks in Nice and rural Normandy, it’s been convulsed by anxiety and suspicion. “Fear is contagious,” Alain Giblin, a 68-year-old former teacher, said last week after a mass in the town where he’s lived his entire life. “I don’t want to live thinking everyone I see could be an enemy. But that’s the way we seem to be heading.” The unease in towns like Beauvais has grown as the terrorists’ reach has expanded, switching from the French capital in November to the south and then the north coast within less than two weeks in July. That shift in focus has unsettled the whole population, both provincial and metropolitan, as France’s summer of terror dominates the political debate eight months out from presidential elections.
• High Yield Rolls On Even After Wheels Come Off Energy Markets. The well-oiled machine that linked junk-bond indexes to energy prices may be sputtering. After moving in lockstep with oil markets for much of the last two years, high-yield bonds have posted modest gains in the past two months. That’s despite a renewed bear market in crude prices that’s casting doubt on the fate of oil drillers, producers and transporters, which make up the biggest portion of some high-yield indexes. The conundrum is whether the turmoil in energy markets will eventually start dragging down junk-bond valuations as defaults and bankruptcies pile up among issuers in the oil patch.
• Dead Calm: Global Market Turbulence Gives Way to an Uneasy Quiet. It’s quiet out there. Maybe too quiet. Even as U.S. stocks and bonds hit one high after another, and skeptics from Donald Trump on down warn trouble is coming, a preternatural sense of calm seems to have descended over financial markets. The turbulence unleashed less than two months ago when Britain voted to quit the European Union has dissipated. In its place has come -- well, nothing. By some measures, markets haven’t been this serene in years.
• Asian Stocks Rise After Posting Biggest Daily Drop in Five Weeks. Asian stocks rebounded after the worst decline in five weeks as Japanese shares climbed and material companies led gains on the regional benchmark gauge. The MSCI Asia Pacific Index rose 0.3 percent to 134.64 as of 9:02 a.m. in Tokyo after falling the most since June 24 on Wednesday. The measure is shaping up for its worst week since mid-June as Japanese shares slumped after additional stimulus failed to impress investors. Commodity producers and technology companies led gains on the regional gauge as nine of 10 industry groups advanced. The Bank of England is set to cut rates to a record later Thursday, according to almost all economists in a Bloomberg survey.

Wall Street Journal:

• New Jersey Backs Away From Hedge Funds. State’s target hedge-fund commitment will fall to 6% from 12.5%.
• One More Reason for Investors to Worry About ‘Earnings Before Bad Stuff’. Companies that report tailored results are more likely to encounter some kinds of accounting problems.
• Justice Department Officials Raised Objections on U.S. Cash Payment to Iran. Some officials worried about message being sent, but were overruled. Senior Justice Department officials objected to sending a plane loaded with cash to Tehran at the same time that Iran released four imprisoned Americans, but their objections were overruled by the State Department, according to people familiar with the discussions.
• Obama’s Cash for Iran’s Hostages. The payoffs encouraged the ayatollahs to grab more Americans. When is a payment for hostages not a ransom? When the Obama Administration says so. That’s how the State Department has tried to spin a $1.7 billion settlement the U.S. reached with Tehran in January, when the nuclear deal was finalized and Tehran released five American hostages, including Washington Post reporter Jason Rezaian. The Administration insists the payment merely settled a separate dispute related to the aborted sale of...

Fox News:

• Fox News Poll: Clinton leads Trump by 10 points, both seen as flawed. (video) Sixty-one percent of voters think Hillary Clinton is dishonest, yet she’s opened up a big lead over Donald Trump in the latest Fox News Poll. Here’s why: majorities think Clinton is nevertheless qualified to be president, and has the temperament and knowledge to serve effectively. It’s the opposite for Trump: over half feel he is not qualified, and lacks the temperament or knowledge to lead the country. And his 62 percent dishonesty rating tops hers. After the conventions, the Clinton-Kaine ticket leads the Trump-Pence ticket by 10 points (49-39 percent) in the race for the White House. Clinton’s advantage is outside the poll’s margin of error. A month ago, Clinton was up by six points (44-38 percent, June 26-28).
• SCOTUS: School can block transgender teen from boys' room. (video) A Virginia school board can block a transgender male from using the boys restroom when school starts next month, the U.S. Supreme Court ruled Wednesday. In a 5-3 decision, the high court put on hold a lower court ruling ordering the school board to allow Gavin Grimm to use the bathroom that matches his gender identity. The school board is expected to ask the justices to further intervene in the case later this month. Grimm, who was born female but identifies as male, argues that the school board's policy requiring students to use either the restroom that corresponds with their biological gender or a private, single-stall restroom violates Title IX, a federal law that bars sex discrimination in schools.

CNBC:

• Ackman’s Hedge Fund Sells Off Big Stake in Canadian Pacific(CP).
• Biogen(BIIB) is a risky $90 billion buyout target. 

Zero Hedge:

• An Angry White House Snaps Over Secret Iran "Hostage" Payment: "Why Is That Relevant".
• 1 Killed, 5 Injured In Central London Knife Attack; Terrorism Speculated.
• Goldman(GS) Finds The Treasury Market No Longer Reacts To Economic Data.
• Pompeo: Iran "Ransom" Payment Is Obama’s Iran-Contra Scandal.
• The Attack On The Second Amendment Is Not Finished.
• A Half Of Millennials Live Paycheck To Paycheck, Most Don't Think They Will Ever Be Millionaires.
• A Most Remarkable Market: In Week The S&P Hit Record High, Everyone Sold. (graph)
• "The Deals Are Collapsing" - Vancouver's Housing Bubble Has Burst.
• Tesla(TSLA) Misses, Burns Nearly Half A Billion, Warns It Has Hit Bank "Funding Limit": Stock Rises. (graph)
• Crude Oilgasm Rescues Dow From Longest Losing Streak In 5 Years. (graph)

Business Insider:

• This is the sentence all the Tesla shorts have been waiting for. 
• Tech dealmakers haven't earned this much money since the dotcom bust.
• 'A perfect storm' is making gold one of the hottest assets on the planet.
• These states are headed for a death spiral.
• The Iran deal 'is nothing but a series of bribes': GOP reacts to news US sent $400 million to Iran.
• Obama's Medicare expansion is costing much more than expected.

The Guardian: 

• Mass stabbing in central London leaves woman dead and up to six injured. Police explore possibility of ‘terrorism’ after man arrested following the incident in Russell Square in the centre of the city.

Night Trading 

• Asian equity indices are unch. to +.5% on average.
• Asia Ex-Japan Investment Grade CDS Index 121.5 +.25 basis point.
• Asia Pacific Sovereign CDS Index 47.75 -.25 basis point.
• Bloomberg Emerging Markets Currency Index 72.38 +.03%. 
• S&P 500 futures +.02%. 
• NASDAQ 100 futures -.04%.

Morning Preview Links

Earnings of Note
Company/Estimate 

• (AGCO)/.92
• (APA)/-.19
• (CHK)/-.10
• (CTB)/1.05
• (DUK)/1.01
• (IT)/.68
• (HAR)/1.52
• (ICPT)/-3.67
• (ITT)/.60
• (K)/.91
• (MGM)/.25
• (PH)/1.76
• (REGN)/2.65
• (SSYS)/.06
• (TK)/-.21
• (VIAB)/1.02
• (ATVI)/.42
• (LOCO)/.18
• (FLR)/.88
• (LNKD)/.78
• (MHK)/3.37
• (MNST)/1.04
• (PCLN)/12.66
• (SYMC)/.25
• (ZG)/-.04

Economic Releases 
7:30 am EST

• Challenger Job Cuts YoY for July. 

8:30 am EST

• Initial Jobless Claims are estimated to fall to 265K versus 266K the prior week.
• Continuing Claims are estimated to fall to 2130K versus 2139K prior.  

10:00 am EST

• Factory Orders for June are estimated to fall -1.9% versus a -1.0% decline in May. 
• Factory Orders Ex Transports for June are estimated to fall -.2% versus a +.1% gain in May.
  

Upcoming Splits 

• (BF/B) 2-for-1

Other Potential Market Movers

• The Fed's Kaplan speaking, BoE Rate decision, RBA rate decision, weekly EIA natural gas inventory report, weekly Bloomberg Consumer Comfort Index and the (LB) July sales call could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by financial and commodity shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.