Monday Watch

Today's Headlines

Bloomberg:

• China’s Diverging Property Market Raises Bubble Risk: Chart.
• Iraq Starts Offensive to Retake Mosul From Islamic State. The Iraqi army backed by Shiite militias and the U.S.-led coalition has begun a long-awaited offensive in a bid to retake Mosul, the country’s second-largest city, from Islamic State. “We will soon meet at Mosul to celebrate the victory and will all stand together to punish Islamic State,” Prime Minister Haidar al-Abadi said early Monday in a speech broadcast on state television. “We will restore order and stability in Mosul."
• Big Central Bank Assets Jump Fastest in 5 Years to $21 Trillion. The world’s biggest central banks are bulking up their balance sheets this year at the fastest pace since 2011’s European debt crisis to boost lackluster economic recoveries with asset purchases that are supporting stock and bond prices. The 10 largest lenders now own assets totaling $21.4 trillion, a 10 percent increase from the end of last year, data collected by Bloomberg show. Their combined holdings grew by 3 percent or less in both 2015 and 2014.
• Asian Bonds Decline on Fed Concerns as Dollar Maintains Gains. Asian bonds dropped and the dollar extended gains against the pound as the case for a U.S. interest-rate increase this year solidifies. Regional stocks gained and oil declined. Benchmark bond yields in Australia and New Zealand increased by at least three basis points following a retreat in U.S. Treasuries on Friday. The Bloomberg Dollar Spot Index held near a seven-month high, with futures indicating a 66 percent chance that the Federal Reserve will hike borrowing costs by December. The MSCI Asia Pacific Index rose 0.2 percent following its biggest weekly loss in a month, while crude was headed for its lowest close in a week.
• Asian Stocks Rise as Investors Mull U.S. Interest-Rate Outlook. Asian stocks rose for a second day as investors weighed the outlook for U.S. interest rates amid signs the world’s biggest economy is strengthening. Japanese shares advanced as the yen weakened. The MSCI Asia Pacific Index gained 0.1 percent to 138.25 as of 9:05 a.m. in Tokyo, after sliding the most in a month last week. Japan’s Topix index rose 0.2 percent as the yen traded at 104.11 against the U.S. dollar.
• Oil Extends Decline as U.S. Producers Boost Drilling Amid Glut. Futures lost as much as 0.7 percent in New York after slipping 0.2 percent Friday. Rigs targeting crude rose for a seventh consecutive week to the highest level since February, Baker Hughes Inc. said on its website. Output from OPEC member Libya has expanded to 560,000 barrels a day, according to an official at National Oil Corp. This compares with a reported production rate of 540,000 a barrels a day last week.
• Russia's OPEC Bear Hug Probably Won't Last.

Zero Hedge: 

• Latest Wiki Dump Reveals Heavy Press Collusion Over Hillary's "Excellent Health" Medical Statement.
• Where The Stimulus Is Hiding: China's Fiscal Push Is Now Bigger Than After The Global Meltdown. (graph)
• "Pounded" - How Not To Manage A Fiat Currency.
•  Is Obama Juicing Government Spending To Get Hillary Elected?
•  Saudi Bank Stocks Tumble As Bailout Fails To Stem Liquidity Stress. (graph)
• "The System Simply Isn't Working" - Hugh Hendry Warns Of 1930s-Style "Dramatic Fulcrum Point" In Europe.
• The End Of Growth's "Fake Elixir".
• The (Dollar) Straw That Breaks The Camel's Back Of Political Correctness.
• Protectionism Returns: Germany Seeks To End "Unwanted Foreign Takeovers" Of Local Companies.

Business Insider: 

• 'Nazi Republicans leave town or else': North Carolina county's GOP headquarters graffitied, firebombed.
• Freight rail traffic is collapsing.
• Saudi Arabia won't stick to the oil deal as long as economics says not to.
  

Night Trading

• Asian indices are -.75% to unch. on average.
• Asia Ex-Japan Investment Grade CDS Index 116.75 +3.0 basis points.
• Asia Pacific Sovereign CDS Index 34.0 -.5 basis point.
• Bloomberg Emerging Markets Currency Index 71.93 -.14%.
• S&P 500 futures -.41%.
• NASDAQ 100 futures -.42%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (BAC)/.34
• (SCHW)/.33
• (HAS)/1.74
• (JBHT)/1.02
• (CE)/1.61
• (IBM)/3.23
• (IEX)/.92
• (NFLX)/.05
• (UAL)/3.05

Economic Releases
8:30 am EST

• Empire Manufacturing for October is estimated to rise to .75 versus -1.99 in September.

9:15 am EST

• Industrial Production MoM for September is estimated to rise +.2% versus a -.4% decline in August. 
• Capacity Utilization for September is estimated to rise to 75.6% versus 75.5% in August. 
• Manufacturing Production for September is estimated to rise +.2% versus a -.4% decline in August.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Fischer speaking, RBA meeting and the Eurozone CPI report could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and financial shares in the region. I expect US stocks to open modestly lower and to maintain losses into the afternoon. The Portfolio is 25% net long heading into the week.