Tuesday Watch

Evening Headlines

Bloomberg:

• HSBC Currency Conspiracy May Have Involved 11 Others, U.S. Says. A foreign exchange front-running scheme at HSBC Holdings Plc may have involved at least 11 bank employees beyond the two executives who have been charged with crimes, a prosecutor said.

• Supplying Lithium for the Electric Revolution Is Getting Harder. Hidden within the salt flats high in the Andes mountains of South America are vast deposits of the lithium that Elon Musk may need for his electric-car revolution. But extracting the mineral from brine ponds created by Orocobre Ltd. has proved more difficult than expected. Bad weather and pump glitches meant production at the Olaroz facility in northern Argentina was 21 percent below Orocobre’s initial target in the year through June. While things are getting back on track, Chief Executive Officer Richard Seville says the company “either underestimated the complexity or overestimated our capability.”

• Asian Stocks Open Mixed After Thin U.S. Trading. (video) Asian stocks were mixed at the open after a lackluster U.S. session, as the yen snapped four days of gains. Bridgewater Associates’ Ray Dalio said he was reducing risk. Equity benchmarks fluctuated in Japan, and advanced in Australia and South Korea after the S&P 500 Index halted a two-day slide. Trading was about 15 percent below the 30-day average for the S&P 500 on a day highlighted by the first total solar eclipse to sweep the U.S. from coast to coast in 99 years. Oil bounced, while gold pulled back after nudging closer to $1,300 an ounce. Japan’s Topix index was down 0.1 percent, while the Kospi index gained 0.5 percent. Australia’s main gauge was up 0.2 percent. The MSCI Asia Pacific Index was down less than 0.1 percent.

• Five Things You Need to Know to Start Your Day.

Wall Street Journal:

• Trump Ups the Ante in Afghanistan Fight. President, heeding advisers, will add more troops and increase pressure on Pakistan.

• Booming Metals Rally Signals Optimism on Global Growth. Investors pile into industrial metals, pushing prices of copper, aluminum and zinc to multiyear high.

• U.S. Steps Up Actions on Chinese Firms Aiding North Korea. Federal prosecutors ready moves aimed at stemming funds that finance regime’s weapons program.

MarketWatch.com:

• ‘Bull market check list remains intact’ despite pullback, Morgan Stanley says.

Fox News:

• Trump approves sending 4,000 more troops to Afghanistan, senior official says. (video)

CNBC:

• There is one big silver lining that comes with Trump's troubles: Tax cut odds may be going UP. (video)

Zero Hedge:

• US Commanders To Issue "Rare Warning" To N.Korea As Kim Threatens "Merciless Revenge".

• Federal Judge Orders IRS To Release Names Of Specific Employees That Targeted Tea Party Groups.

• House Price Bubbles 2.0 In Pictures.

• US Workers' Wage Expectations Unexpectedly Collapse.

• 63 Shot, 8 Dead In Chicago's 2nd Most Violent Weekend Of 2017.

• Darkness Falls On Small Caps As Gold Eclipses Stocks Year-To-Date. (graph)

Night Trading 

• Asian equity indices are unch. to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 83.75 unch. 

• Asia Pacific Sovereign CDS Index 21.5 unch.

• Bloomberg Emerging Markets Currency Index 73.93 +.02%.

• S&P 500 futures +.19%.

• NASDAQ 100 futures +.35%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AMWD)/1.37

• (DSW)/.29

• (JASO)/.02

• (MDT)/1.08

• (TOL)/.68

• (CREE)/.04

• (INTU)/.17

• (LZB)/.29

• (CRM)/.32

Economic Releases 
9:00 am EST

• The FHFA House Price Index MoM for June is estimated to rise +.5% versus a +.4% gain in May.

• The 2Q House Price Purchase Index.

10:00 am EST

• The Richmond Fed Manufacturing Index for August is estimated to fall to 10.0 versus 14.0 in July.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The German ZEW Index and the weekly US retail sales reports could also impact trading today.

BOTTOM LINE:  Asian indices are mostly higher, boosted by industrial and technology shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon.  The Portfolio is 75% net long heading into the day.