Bull Radar

Style Outperformer:

• Mid-Cap Growth +.28%

Sector Outperformers:

• Banks +1.31% 2) Biotech +.96% 3) Defense +.89%
  

Stocks Rising on Unusual Volume:

• JASO and CLDX

Stocks With Unusual Call Option Activity:

• 1) EUO 2) JBLU 3) SSYS 4) BPI 5) OPTR
  

Stocks With Most Positive News Mentions:

• 1) BWLD 2) APA 3) ZTS 4) DSX 5) NWSA
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Friday Watch

Evening Headlines 
Bloomberg: 

• China Suspends PMI Details in New Hurdle for Analysis: Economy. China suspended the release of industry-specific data from a monthly survey of manufacturing purchasing managers, with an official saying there’s limited time to analyze the large volume of responses. “We now have 3,000 samples in the survey, and from a technical point of view, time is very limited -- there are many industries, you know,” Cai Jin, vice president of the China Federation of Logistics & Purchasing, which compiles the data with the National Bureau of Statistics, told reporters yesterday in Beijing. The disappearance of data on industries including steel adds to issues hampering analysis of the world’s second-biggest economy, after fake invoices inflated trade numbers this year. Neither the federation’s nor the statistics bureau’s statement on the manufacturing Purchasing Managers’ Index this week gave readings on export orders, imports and finished-goods inventories or an explanation for the omissions. “Suspension of the monthly data, without prior notice, makes the research work difficult for us,” Xu Xiangchun, a steel researcher and chief analyst at Mysteel.com, said by phone from Beijing. “The random absence of official data is disorienting.”    

• China Enters Nomura Danger Zone as Fed Tapers: Cutting Research. China, Hong Kong and India are in a “high-risk danger zone” because their monetary policies have stayed too loose over the past four years, according to Nomura Holdings Inc. A June 28 report by the bank’s economists and strategists showed the average ratio of domestic private debt to gross domestic product across Asia had ballooned to 167 percent in 2012 and most of the region’s property markets are “frothy.” The debt ratio has increased by over 50 percentage points in Hong Kong and Singapore and between 30 and 40 points in Malaysia, South Korea, China and Thailand. A measure of monetary policy based on output gaps and inflation shows that interest rates have also been persistently below what economic models suggest, and even more so if the financial cycle is accounted for, the report said. That leaves countries financially vulnerable. Indonesia is at the lower end of the high-risk zone, while South Korea, Malaysia, Singapore and Thailand are in the middle-risk range, ahead of Japan. The Philippines and Taiwan seem the least prone to any economic crisis. Hong Kong is a Special Administration Region of China although it pegs its currency to the dollar.

• PBOC to Extend Cash Crunch as Zhou Discovers Flaws: China Credit. China’s finance companies predict central bank Governor Zhou Xiaochuan will extend a cash crunch, albeit without June’s dramatic swings, as he calls for the market to “discover and correct” excessive lending. The seven-day repurchase rate, which measures interbank funding availability, may average 4 percent in the third quarter, compared with 3.62 percent in the past year, according to the median estimate in a Bloomberg survey of eight analysts. The rate surged to a record 10.8 percent on June 20, and averaged 4.49 percent last quarter, the highest since the National Interbank Funding Center started compiling the data in 2003. “While inflation remains controlled, the central bank may want to keep money-market rates elevated to reduce banks’ off-balance-sheet assets,” said Huang Wentao, a bond analyst at China Securities Co. in Beijing, the country’s second-biggest brokerage underwriter of bonds. “We probably won’t see a return of the extreme tightness in June, but a 4 percent repo rate is still very high.” 

• One-Third of China Shipyards Face Closure as Orders Slump. China, the world’s biggest shipbuilding nation, may see a third of its yards shut down in about five years as they struggle to win orders amid a global vessel glut, an industry group said. The yards in peril of closure have failed to get any orders “for a very long period of time,” Wang Jinlian, secretary general of the China Association of National Shipbuilding Industry, said in an interview yesterday. They may end operations in three to five years if the “gloomy market persists.” The nation has more than 1,600 shipyards. 

• China Probes 60 Drugmakers in Effort to Curb Drug Prices. China’s top economic planning agency is investigating the costs and prices of drugmakers including GlaxoSmithKline Plc (GSK), Merck & Co., Novartis AG (NOVN) and Baxter International Inc. (BAX) to improve the pricing system for medicines.

• Hong Kong Builders Seen Slowing Home Sales to Control Prices. Hong Kong builders will put the brakes on home sales for the rest of the year after government curbs to rein in prices sapped demand, according to Bocom International Holdings Co. and Centaline Property Agency Ltd.

• Christmas Candy Stockpiled in July as Aussie Slump Looms. The weakening Aussie, which on July 3 fell below 91 U.S. cents for the first time since 2010, will push up import costs about five percent even if it ends the year at 96 U.S. cents, according to Bank of America Corp.’s Merrill Lynch unit. Retailers must choose whether to swallow higher prices and lose profits, or try to pass them on to customers and risk sales amid weak consumer confidence, the bank said. “A fall in the dollar can make it pretty expensive” for retailers, Tim Samway, managing director of Hyperion Asset Management Ltd., said by phone from Sydney. “The effect is reasonably predictable: import costs go through the roof.” 

• Asian Stocks Climb With Dollar Before U.S. Jobs Data. Asian stocks rose, poised for a second weekly gain, and the dollar strengthened before data that may show the U.S. jobs market improved and after European policy makers signaled borrowing costs will be kept low. Asian bond risk slid, while copper and silver fell. The MSCI Asia Pacific Index climbed 0.7 percent to 131.60 as of 12:49 p.m. in Tokyo, taking its weekly gain to 0.8 percent. The Dollar Index, which tracks the currency against six major peers, rose 0.8 percent, the most since June 19. Standard & Poor’s 500 Index (SPX) futures jumped 0.9 percent after U.S. markets were closed yesterday for Independence Day. The Markit iTraxx Asia index, which measures the cost of insuring bonds against default, sank 5 basis points. Copper futures lost 1.2 percent and silver dropped 1 percent.

• Italy’s Economic Recovery Still Faces Headwinds, IMF Review Says. Italian prime Minister Enrico Letta still faces an uphill battle in helping his country exit its longest recession in more than two decades, the International Monetary Fund said. “Growth prospects remain weak, unemployment is unacceptably high, and market sentiment is still fragile.” The IMF downgraded its growth outlook for Italy this year, saying gross domestic product will shrink 1.8 percent, compared with its April forecast of 1.5 percent.

Wall Street Journal: 

• Egypt Crisis: Live.  

• ECB, BOE Signal Low Rates to Remain. Low Interest Rates Promised as Crisis in Europe Rekindles.

• BOJ Will Discuss China Risk to Japan's Recovery in Meeting. The Bank of Japan is worried it still may not be strong enough to withstand sudden shocks from overseas, citing people familiar with the BOJ's thinking. Concern over whether China can achieve a soft landing likely put it near the top of the agenda of next week's BOJ policy-board meeting, the people said.

• Economies Face Oil and Rate Headwinds.

CNBC: 

• Second Wind for Regulators Leaves Banks Feeling Bruised. The past fortnight has been a potentially expensive one for banks on both sides of the Atlantic. This week, the Federal Reserve unveiled details of the U.S. implementation of the international Basel III rule book on capital. Two weeks ago, the top eight UK banks were told how much additional capital they must find over the coming months.

Zero Hedge: 

• Kyle Bass Hunkers Down: "We Dramatically Reduce Portfolio Risk".

• Clashes Between Foes, Supporters Of Mursi In Cairo Caught On Tape. (video)

• The Diminishing Effects Of QE Programs.

• The World Reacts To Egypt's Coup.

• What The ECB's "Unprecedented" Forward Guidance Means.

• The Risk Of European Centralization.

Business Insider: 

• Thousands Demonstrated Against Government Spying On July 4th.

• A Huge Chunk Of Egypt Is Angry That Their Democratically-Elected President Was Overthrown.

• BASHAR ASSAD: IT'S OVER, I WIN.

• DEAR AMERICA: Here's Why We Need To Stop PRISM.

• The Commodities Supercycle Is Over — Here's What's Next.

• LIVE FROM CAIRO: Egyptians Denounce Obama For Supporting Morsi.

• The Latest Delay Is A Bad Omen For Obamacare.

AP:

• Samsung estimates disappointing Q2 profit. Even after setting a record high profit, Samsung Electronics disappointed investors who increasingly doubt its mainstay smartphone business can maintain rapid growth.

Reuters: 

• Moody's fears Brazil economic weakness could extend into 2014. Brazil's current economic weakness could extend into 2014, hurting investor and consumer confidence and eventually the country's tight jobs market, Moody's analyst Mauro Leos said on Thursday. An extended period of poor economic performance would raise questions about Brazil's growth potential and its ability to keep reducing debt ratios, said Leos, adding that Moody's intends to decide whether to remove its positive outlook on Brazil's credit rating by the end of the year. Moody's, Standard & Poor's and Fitch currently rate Brazil at the second-lowest investment grade rating, but Moody's is the only one with a positive outlook on that rating. S&P last month revised its Brazil rating outlook to negative, saying there was a one-in-three chance of a downgrade in the next two years.

• U.S. stimulus curbs may spark European property price falls. European commercial property prices may fall as much as 5 percent in response to last month's signals that the U.S. Federal Reserve is likely to rein in its support for the economy later this year, real estate experts said. Fed chief Ben Bernanke's declaration that it could end its programme of bond-buying next year was a watershed moment for financial markets grown used to a steady drip of support from central banks. For European property markets it will slow what was already a patchy recovery as the sovereign debt crisis continues to depress business sentiment and tenant demand. "Property is priced for sustained stimulus," said Jefferies analyst Mike Prew, who downgraded six British property stocks including British Land, Hammerson and Land Securities on Wednesday for this reason. "Ending QE is like passing the baton to the last runner in an Olympic relay race and in this case it will be dropped."

The Guardian: 

• France 'runs vast electronic spying operation using NSA-style methods'. Intelligence agency has spied on French public's phone calls, emails and internet activity, says Le Monde newspaper.

Handelsblatt:

• ECB Policy Results Lack Legitimacy, Buch Says. Many measures takes by ECB have had asymmetric results on euro-region members, causing redistribution of wealth, Claudia Buch, head of IWH economic institute and member of German govt's council of economic advisers, says. The ECB isn't mandated for such redistribution, she said. Buch sees danger that Europe faces situation like Japan, where "zombie banks" have financed "zombie companies".

El Confidencial: 

• Spain Banks Hold $73.4b of Portugal Debt. Spanish banks' exposure to Portuguese sovereign debt represents 52% of total European banks' exposure, citing Bank For International Settlement Data.

Liquidity crunch a catalyst for big China slowdown – analysts The mini liquidity crunch is the early warning sign of a substantial economic correction long overdue, amid rising leverage and a broken growth model, say bearish analysts.


While we want you to share, we ask you use the functions on-site rather than copy/paste. See T's & C's for details. http://www.euromoney.com/Article/3222433/Liquidity-crunch-a-catalyst-for-big-China-slowdownanalysts.html?copyrightInfo=true

China Securities Journal:

• Some Chinese companies awaiting IPOs may obtain regulatory permission at end-July or early-August, citing investment bankers and company officials.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are +.25% to +1.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 158.50 +6.0 basis points.

• Asia Pacific Sovereign CDS Index 118.75 +9.0 basis points.

• FTSE-100 futures +.23%.

• S&P 500 futures +.98%.

• NASDAQ 100 futures +1.02%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (TECD)/1.02

Economic Releases
8:30 am EST

• The Change in Non-Farm Payrolls for June is estimated to fall to 165K versus 175K in May.

• The Unemployment Rate for June is estimated to fall to 7.5% versus 7.6% in May.

• Average Hourly Earnings for June are estimated to rise +.2% versus unch. in May.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed deadline for stress test results, Japan Leading Indicators and the German Factory Orders report could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by automaker and technology shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon. The Portfolio is 50% net long heading into the day.

Stocks Slightly Higher on Central Bank Hopes, Short-Covering, Tech/Precious Metals Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Light

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 16.57 +.79%

• Euro/Yen Carry Return Index 135.38 -.59%

• Emerging Markets Currency Volatility(VXY) 11.08 +2.88%

• S&P 500 Implied Correlation 56.75 +1.32%

• ISE Sentiment Index 97.0 +34.72%

• Total Put/Call 1.05 +2.94%

• NYSE Arms .80 -17.65% 

Credit Investor Angst:

• North American Investment Grade CDS Index 85.69 -.47%

• European Financial Sector CDS Index 169.88 +4.03%

• Western Europe Sovereign Debt CDS Index 103.12 +10.3%

• Emerging Market CDS Index 334.63 +1.76%

• 2-Year Swap Spread 18.0 +.5 bp

• TED Spread 24.0 -1.25 bps

• 3-Month EUR/USD Cross-Currency Basis Swap -11.0 -1.25 bps

Economic Gauges:

• 3-Month T-Bill Yield .04% +2.0 bps

• Yield Curve 213.0 +1 bp

• China Import Iron Ore Spot $120.50/Metric Tonne +1.0%

• Citi US Economic Surprise Index -13.20 -11.4 points

• Citi Emerging Markets Economic Surprise Index -34.80 +.8 point

• 10-Year TIPS Spread 2.04 -1 bp

Overseas Futures:

• Nikkei Futures: Indicating -12 open in Japan

• DAX Futures: Indicating unch. open in Germany

Portfolio: 

• Higher: On gains in my tech sector longs and emerging markets shorts

• Disclosed Trades: None

• Market Exposure: 25% Net Long

Bear Radar

Style Underperformer:

• Mid-Cap Value -.60%

Sector Underperformers:

• 1) Hospitals -2.42% 2) Coal -2.06% 3) REITs -1.70%

Stocks Falling on Unusual Volume:

• LINE, VNR, BSBR, DB, AMT, CVC, DLLR, MXWL, NQ, BBRY, SAP, ARP, BBEP, MJN, LINE, NVR, QRE, LNCO, ALDW, TS, RHI, KYE, VC, REG, KMF, CVRR, OSTK, TW, THC, PSX, X, WNR, HCA, APA, BUD, UHS, NTI, HCA, CYNO, QRE, X, SCO, RHI and ATLS

Stocks With Unusual Put Option Activity:

• 1) DELL 2) APA 3) SKS 4) TSO 5) DKS
  

Stocks With Most Negative News Mentions:

• 1) LULU 2) AA 3) MJN 4) COP 5) BTU
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Growth -.20%

Sector Outperformers:

• Gold & Silver +1.49% 2) Computer Services +.59% 3) Networking +.58%
  

Stocks Rising on Unusual Volume:

• LEAP, FTNT and QLGC

Stocks With Unusual Call Option Activity:

• 1) FTNT 2) DELL 3) SVU 4) MJN 5) SNTA
  

Stocks With Most Positive News Mentions:

• 1) AN 2) PEG 3) BEAT 4) VLO 5) APA
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Wednesday Watch

Evening Headlines 
Bloomberg: 

• Zhou Pulling China Punch Bowl Set to Shape PBOC Legacy: Economy. Zhou Xiaochuan earned distinction as the G-20’s longest-serving central bank chief helping keep China out of a financial crisis the past decade. In the wake of June’s record liquidity squeeze, his legacy hangs in the balance. Zhou and his colleagues at the People’s Bank of China left investors, bankers and market participants in the dark for four days after the overnight lending rate between banks hit a record 11.7 percent June 20 before releasing a week-old statement as the central bank’s first word on its objectives. Zhou himself kept mum until he reiterated a pledge to maintain market stability on June 28. 

• Glaxo, Danone Probed as China Scrutinizes Foreign Firms. China’s probes of GlaxoSmithKline Plc (GSK) and Danone highlight challenges for foreign companies in a market where they may be a bigger “prize” for regulators seeking to allay concerns that medicines and foods are unsafe. The U.K. drugmaker is being probed for alleged bribery, while Danone, along with Nestle SA’s (NESN) Wyeth brand, Mead Johnson Nutrition Co. (MJN) and Abbott Laboratories (ABT), are under investigation for pricing that may have violated anti-monopoly laws. 

• Expanding Aluminum Glut Signals Price Declines: Chart of the Day. Aluminum prices, which have fallen for three straight quarters, may be poised for further declines as new production in China and the Middle East increases global output even as Alcoa Inc.(AA) trims capacity. Production has gained 5.1% since the end of 2011, helping drive prices down 9.3%, according to data from the Intl Aluminum Institute. Output will reach a record near 50 million metric tons this year, up from 45 million in 2012, Harbor Intelligence forecasts. 

• China Hongqiao Adding Aluminum Output as Global Smelters Cut. China Hongqiao Group Ltd. (1378), the nation’s largest non-state aluminum producer, and competitors are boosting or maintaining output as the government seeks to trim capacity amid a global glut. China Hongqiao’s production will rise about 10 percent to 2 million metric tons this year, said Christine Wong, executive director secretary and head of investor relations. Xinfa Group and East Hope Group said they aren’t planning cuts. The companies are three of China’s five biggest aluminum makers. Their stance may hamper curtailment efforts by top global producers including Aluminum Corp. of China Ltd., United Co. Rusal and Alcoa Inc. (AA) who are cutting output to ease worldwide over supply.

• Chinese Stocks Slump on Growth Concern as Banks, Developers Fall. China’s stocks fell for the first time in four days, led by financial and industrial companies, as growth in services industries slowed and investors speculated initial public offerings will resume this quarter. Industrial & Commercial Bank of China Ltd., the nation’s biggest lender, slid 2.2 percent and developer Gemdale Corp. sank 4.5 percent. Sany Heavy Industry Co., the largest machinery maker, tumbled 3.6 percent to its lowest level in almost three years as oil surged in New York. The non-manufacturing purchasing managers’ index fell to 53.9 in June, an official report showed, while Credit Suisse Group AG said regulators may allow share sales by October. The Shanghai Composite Index (SHCOMP) slumped 2 percent to 1,966.30 at 11:06 a.m. local time, heading for the biggest loss since June 24 and snapping a three-day, 2.9 percent rally. The CSI 300 Index declined 2.3 percent to 2,170.59. The Hang Seng China Enterprises Index slumped 3.1 percent, taking its loss this year to 22 percent. “Leading indicators like PMI suggest the economy is still weak,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “Uncertainty over when IPOs will be resumed also weighs on sentiment. The earlier rebound isn’t sustainable.” The Shanghai Composite has tumbled 19 percent from its recent peak on Feb. 6 as data from industrial production to exports pointed to a sustained slowdown in the world’s second-largest economy. Stocks also slumped as overnight money-market rates surged to record highs.

• Oil Climbs on Egypt as Asian Stocks Decline; Won Weakens. Crude oil rallied above $100 a barrel for the first time in nine months on political turmoil in Egypt and shrinking U.S. stockpiles. Asian stocks snapped a five-day gain, as South Korea’s won and Australia’s dollar fell. West Texas Intermediate Crude surged 2.4 percent to $101.92 a barrel by 12:08 p.m. in Tokyo, set to close at a 14-month high. The MSCI Asia Pacific Index of equities slid 1.2 percent, ending the longest run of gains since April. The won lost 0.6 percent after the yen breached the 100 per dollar mark for the first time in a month, as the Aussie weakened 0.4 percent. Standard & Poor’s 500 Index (SPX) futures slipped 0.2 percent, while the Shanghai Composite Index dropped 1.9 percent as a gauge of services declined in June. 

• U.S. Gears to Impose Stricter Rules on 8 Largest Banks. JPMorgan Chase & Co. (JPM), Wells Fargo & Co. (WFC) and Goldman Sachs Group Inc. are among eight U.S. banks facing new domestic rules on capital and debt that would be even stricter than global standards approved yesterday. Lenders will be forced to maintain a ratio of capital to assets that exceeds the 3 percent floor set by the Basel Committee on Banking Supervision, Federal Reserve Governor Daniel Tarullo said yesterday. Another measure would compel banks to hold a minimum amount of equity and long-term debt to help authorities dismantle failing lenders, Tarullo said. The remarks show U.S. regulators plan to ratchet up demands for bigger buffers against losses to prevent a repeat of the 2008 credit crisis, ignoring bankers who say lending and profit will suffer. The measures would come on top of toughened global standards known as Basel III that Fed governors approved unanimously, even as Tarullo said parts remain too weak. “We’re in the first few chapters of a horror story for the big banks, with the worst to come,” said Coryann Stefansson, a managing director at PricewaterhouseCoopers LLP. “It’s clear that the U.S. is willing to push for stronger capital.”

Fox News: 

• Egypt teeters on brink of overthrow, 23 reported killed in Tuesday clashes. Egypt teetered on the brink of overthrow late Tuesday after a defiant Egyptian President Mohammed Morsi rejected an ultimatum issued by the military and at least 23 people were reported killed in clashes between his supporters and opponents. Defense officials have pledged to intervene if the government does not address public demands and end the political turmoil engulfing Cairo. In a speech to the nation broadcast live late Tuesday, Morsi said he would not step down and would protect his "constitutional legitimacy" with his life. The deadly clashes came just one day before the deadline set by the military for Morsi and his opponents to work out their differences. The Associated Press reported that at least 23 people were killed in Cairo Tuesday and more than 200 injured, according to hospital and security officials who spoke on condition of anonymity because they were not authorized to talk to the media.

• Administration delays key ObamaCare insurance mandate. The Obama administration announced Tuesday that it is delaying a major provision in the health care overhaul, putting off until 2015 a requirement that many employers offer health insurance. The announcement was made late Tuesday by the Treasury Department, at the beginning of the holiday week while Congress was on recess. It comes amid reports that the administration is running into roadblocks as it prepares to implement ObamaCare. The change in the employer mandate is arguably the most significant concession the administration has made to date. Sen. John Barrasso, R-Wyo., a critic of the law, seized on the delay as a "clear admission" that the law is "unaffordable, unworkable and unpopular." "It's also a cynical political ploy to delay the coming train wreck associated with ObamaCare until after the 2014 elections," he said. 

MarketWatch.com: 

• China services data show sluggish growth in June. A pair of surveys monitoring China's services sector released Wednesday showed weak growth for June. The government-sponsored version of China's services Purchasing Managers' Index fell to 53.9 for June from May's 54.3. 

• UnitedHealth(UNH) to cease individual health coverage in California.

CNBC: 

• S&P Cuts Ratings of Credit Suisse, Barclays, Deutsche Bank. Standard & Poor's announced Tuesday that it is cutting the credit ratings of three major European banks: Credit Suisse, Barclays and Deutsche Bank. The downgrades, to A from A+, are because of higher risk, the company said in a statement, citing greater regulation and "uncertain market conditions."

• Portugal Throws New Curve Ball in Euro Debt Crisis. Portugal faced a full-blown crisis on Tuesday after Foreign Minister Paulo Portas became the second minister to resign from the center-right government in a 24-hour period. Portugal's Prime Minister Pedro Passos Coelho, speaking live on TV to the nation on Tuesday night said he had not accepted Portas' resignation and would speak to his coalition partner. The leader of the opposition Socialist party speaking to the nation on TV on Tuesday night called for fresh elections and said the government had lost the confidence of the people.

Zero Hedge: 

• Crude Cracks $102 As Egyptian Army "Ready To Die" - Live Feed.

• The Fed Is Paying Banks Not To Lend. 

• Our Energy Slaves Are In Recession. (graphs)

• With German Elections Looming, Merkel Will Need A Coalition To Govern.

• What Happened The Last Time Gold Traded Here? (graph)

Reuters: 

• Aussie dlr reverses gains, slides to 3-yr low on RBA chief's comments. The Australian dollar's tentative recovery unraveled on Wednesday as it skidded to a fresh 3-year low after the head of the country's central bank said it stands ready to support an economy shifting to a new source of growth as its long-run mining investment boom cools.

• EMERGING MARKETS-Brazil stocks plunge in broad sell-off.

StraitsTimes: 

• Singapore debt levels 'among highest in Asia'. Singapore households are among the most indebted in Asia relative to what they earn, according to a Standard Chartered report this week. Households had borrowings worth 151 per cent of their annual income last year, second in the region only to Malaysia, with debt at 182 per cent of income. This is mainly because consumers here take on large dollops of property debt, amounting to 111 per cent of household income - the highest level in the region, Stanchart said.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are -1.75% to -.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 152.50 +4.0 basis points.

• Asia Pacific Sovereign CDS Index 109.75 -1.0 basis point.

• FTSE-100 futures -.54%.

• S&P 500 futures -.18%.

• NASDAQ 100 futures -.19%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (ISCA)/.48

Economic Releases
8:15 am EST

• The ADP Employment Change for June is estimated to rise to 160K versus 135K in May.

8:30 am EST

• The Trade Deficit for May is estimated at -$40.1B versus -$40.3B in April.

• Initial Jobless Claims are estimated to fall to 345K versus 346K the prior week.

• Continuing Claims are estimated to fall to 2958K versus 2965K prior.
  

10:00 am EST

• The ISM Non-Manufacturing Composite for June is estimated to rise to 54.0 versus 53.7 in May.
  

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,250,000 barrels versus an +18,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +700,000 barrels versus a +3,653,000 barrel gain the prior week. Distillate inventories are estimated to rise by +1,000,000 barrels versus a +1,567,000 barrel gain the prior week.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone Services PMI/Retail Sales reports, Japan 30Y bond auction, BoJ's Kuroda speaking, weekly MBA Mortgage Applications report, Challenger Job Cuts for June, RBC Consumer Outlook Index for July and the weekly Bloomberg Consumer Comfort Index could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down 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.