BETWEEN THE HEDGES: Today's Headlines

Bloomberg:

Smaller Companies Feel the Chill of China's Great Deleveraging. As China’s great deleveraging kicks in, smaller companies appear to be already feeling the squeeze, judging by the latest factory gauge. The manufacturing purchasing managers index pulled back slightly to 51.4 in July, propped up by improved sentiment among large firms. That masked a marked deterioration among small companies, with a sub gauge for them slumping to 48.9 from 50.1 in June, and a drop in mid-sized firms back below 50. Numbers under 50 indicate conditions are deteriorating.

Potential U.S. Oil Sanctions Increase Risk of Venezuelan Default. (video) The specter of tighter U.S. sanctions is pushing up the perception that Venezuela is getting closer to defaulting on its bonds. Venezuela is awaiting possible further restrictions from the U.S., its largest trading partner, after President Nicolas Maduro held elections Sunday for a new assembly that will rewrite the constitution. The implied probability of Venezuela missing a payment over the next 12 months rose to 62 percent Monday, according to credit-default swaps data compiled by Bloomberg. That’s the highest level since March 2016. The odds of a credit event over the next five years increased to 95 percent.

Investors Are Ditching Tech Stocks at the Fastest Pace Since November 2007. (video) Pigs get fat, hogs get slaughtered. Such a risk-averse adage appears to be front of mind for investors, who fled high-flying technology names at the fastest pace in nearly a decade last week. Outflows from PowerShares QQQ Trust Series 1, which tracks the Nasdaq 100 Index topped $3.7 billion for the five sessions ending July 28, the most since early November 2007.

Discovery(DISCA) Buys Scripps for $11.9 Billion to Form Cable Giant. (video)

Wall Street Journal:

Pentagon Offers Plan to Arm Ukraine. U.S. officials say proposal, which needs White House approval, is meant to deter Moscow aggression.

The Regime Change Solution in Korea. The CIA director talks about separating Kim from his missiles.

Late Credit-Card Payments Stoke Fears for Banks. Average net charge-off rate for large U.S. card issuers increased to 3.29% in the second quarter, its highest level in four years.

Supermarkets Face a Growing Problem: Too Much Space. A massive retail build-out has taken a toll on earnings, leaving the industry vulnerable to closures; ‘There’s only so much food we can buy’.