Market Week in Review

S&P 500 1,691.42 -1.07%*




The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 1,691.42 -1.07%

• DJIA 15,425.50 -1.49%

• NASDAQ 3,660.10 -.80%

• Russell 2000 1,048.40 -1.08%

• S&P 500 High Beta 26.66 -.71%

• Value Line Geometric(broad market) 446.54 -1.10%

• Russell 1000 Growth 773.75 -.91%

• Russell 1000 Value 864.22 -1.17%

• Morgan Stanley Consumer 1,041.97 -.88%

• Morgan Stanley Cyclical 1,279.28 -1.11%

• Morgan Stanley Technology 798.33 +.10%

• Transports 6,479.63 -2.59%

• Utilities 503.04 -1.07%

• Bloomberg European Bank/Financial Services 101.08 +1.39%

• MSCI Emerging Markets 39.28 -.56%

• HFRX Equity Hedge 1,129.41 -.06%

• HFRX Equity Market Neutral 944.02 -.22%

Sentiment/Internals

• NYSE Cumulative A/D Line 190,048 -1.25%

• Bloomberg New Highs-Lows Index 283 -612

• Bloomberg Crude Oil % Bulls 25.6 -43.59%

• CFTC Oil Net Speculative Position 357,526 -1.49%

• CFTC Oil Total Open Interest 1,879,218 +2.25%

• Total Put/Call .90 +2.27%

• OEX Put/Call 2.23 -9.35%

• ISE Sentiment 87.0 -35.07%

• NYSE Arms .89 -10.1%

• Volatility(VIX) 13.41 +11.93%

• S&P 500 Implied Correlation 50.98 +8.95%

• G7 Currency Volatility (VXY) 9.12 -5.3%

• Emerging Markets Currency Volatility (EM-VXY) 8.99 -6.16%

• Smart Money Flow Index 11,560.43 +.21%

• Money Mkt Mutual Fund Assets $2.620 Trillion +.29%

• AAII % Bulls 39.5 +10.9%

• AAII % Bears 26.7 +6.6%

Futures Spot Prices

• CRB Index 285.38 +.57%

• Crude Oil 105.97 -.82%

• Reformulated Gasoline 290.82 -2.72%

• Natural Gas 3.23 -3.15%

• Heating Oil 299.35 -2.49%

• Gold 1,312.30 -.02%

• Bloomberg Base Metals Index 192.37 +2.96%

• Copper 330.65 +4.42%

• US No. 1 Heavy Melt Scrap Steel 324.33 USD/Ton unch.

• China Iron Ore Spot 133.10 USD/Ton +2.46%

• Lumber 308.50 +.49%

• UBS-Bloomberg Agriculture 1,382.72 -.11%

Economy

• ECRI Weekly Leading Economic Index Growth Rate 5.3% +40 basis points

• Philly Fed ADS Real-Time Business Conditions Index .0556 unch.

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 117.29 +.09%

• Citi US Economic Surprise Index 36.90 +26.0 points

• Citi Emerging Markets Economic Surprise Index -29.80 +1.0 point

• Fed Fund Futures imply 42.0% chance of no change, 58.0% chance of 25 basis point cut on 9/18

• US Dollar Index 81.13 -.98%

• Euro/Yen Carry Return Index 133.86 -2.31%

• Yield Curve 227.0 -3 basis points

• 10-Year US Treasury Yield 2.58% -2 basis points

• Federal Reserve's Balance Sheet $3.542 Trillion +.38%

• U.S. Sovereign Debt Credit Default Swap 21.62 -.95%

• Illinois Municipal Debt Credit Default Swap 169.0 +.37%

• Western Europe Sovereign Debt Credit Default Swap Index 83.24 -.41%
  

• Emerging Markets Sovereign Debt CDS Index 231.0 +1.0%
  

• Israel Sovereign Debt Credit Default Swap 115.0 +2.68%

• Egypt Sovereign Debt Credit Default Swap 765.0 -3.77%

• China Blended Corporate Spread Index 384.0 -1 basis point

• 10-Year TIPS Spread 2.26% +6 basis points

• TED Spread 21.50 -2.0 basis points

• 2-Year Swap Spread 17.5 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -8.5 +.25 basis point

• N. America Investment Grade Credit Default Swap Index 76.05 +3.48%
  

• European Financial Sector Credit Default Swap Index 136.65 +1.23%
  

• Emerging Markets Credit Default Swap Index 296.69 +.26%
  

• CMBS AAA Super Senior 10-Year Treasury Spread  to Swaps 110.0 -5 basis points

• M1 Money Supply $2.574 Trillion +.15%

• Commercial Paper Outstanding 988.2 +.3%

• 4-Week Moving Average of Jobless Claims 335,500 -5,800

• Continuing Claims Unemployment Rate 2.3% unch.

• Average 30-Year Mortgage Rate 4.40% +1 basis point

• Weekly Mortgage Applications 495.40 +.2%

• Bloomberg Consumer Comfort -23.50 +3.5 points

• Weekly Retail Sales +3.20% +20 basis points

• Nationwide Gas $3.58/gallon -.05/gallon

• Baltic Dry Index 1,001 -6.0%

• China (Export) Containerized Freight Index 1,102.31 +9.7%

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 22.50 unch.

• Rail Freight Carloads 255,024 -.53%

Best Performing Style

• Mid-Cap Growth -.9%

Worst Performing Style

• Large-Cap Value -1.2%

Leading Sectors

• Steel +7.9%

• Coal +6.3%

• Gold & Silver +3.7%

• Computer Hardware +2.9%

• HMOs +1.9%

Lagging Sectors

• Semis -2.4% 

• Retail -2.4%

• Biotech -2.8%

• Airlines -3.7%

• Homebuilders -5.3%

Weekly High-Volume Stock Gainers (16)

• DGIT, OWW, GRPN, SAPE, VCRA, SMCI, FSYS, LYV, TSN, POWR, ELLI, Z, ININ, QLYS, FOSL and CSC

Weekly High-Volume Stock Losers (31)

• RHP, MOVE, ALSN, AMCX, EBIX, ADVS, PRA, EXPR, GEOS, HTWR, BLT, SREV, YELP, WMGI, SBGI, TG, JCP, XPO, EXH, ARO, SSP, TUMI, TREX, ACM, AEO, IMPV, BIOS, RDEN, WD, FIO and SGI

Weekly Charts
ETFs

• High-Volume Gainers

• High-Volume Losers

Stocks

• High-Volume Gainers

• High-Volume Losers

*5-Day Change

Today's Headlines

Bloomberg: 

• Japan’s Debt Exceeds 1 Quadrillion Yen as Abe Mulls Tax Rise. Japan’s national debt exceeded 1,000 trillion yen for the first time, underscoring the case for Prime Minister Shinzo Abe to proceed with a sales-tax increase to shore up government finances. The country’s outstanding public debt including borrowings reached a record 1,008.6 trillion yen ($10.46 trillion) as of June 30, up 1.7 percent from three months earlier, the finance ministry said in Tokyo today. Larger than the economies of Germany, France and the U.K. combined, the amount includes 830.5 trillion yen in government bonds. The world’s heaviest debt burden will weigh on Abe when he decides next month whether to implement a two-step plan to double the tax on consumers in a nation with ballooning welfare costs. While boosting the levy would drag on growth, Moody’s Investors Service yesterday warned that a worsening of finances would erode confidence in government bonds.
• China’s Credit Expansion Slows as Li Curbs Shadow Banking. China’s broadest measure of new credit fell to a 21-month low as Premier Li Keqiang extended a campaign to curb a record expansion of lending that’s added dangers to the nation’s financial system. Aggregate financing was 808.8 billion yuan ($132 billion), the People’s Bank of China said in Beijing yesterday, compared with the 925 billion yuan median estimate of analysts surveyed by Bloomberg News. New yuan loans exceeded forecasts and accounted for about 87 percent of the total, the most since September 2011. M2 money supply growth unexpectedly accelerated to 14.5 percent.
• China H-Shares to Drop 30% in 2013, Societe Generale Says. Chinese companies traded on the Hong Kong stock market will slide the most in five years in 2013 as an economic slowdown weighs on profits and banks curtail credit, according to Societe Generale SA. The Hang Seng China Enterprises Index will drop to 8,000 by year-end, said Guy Stear, Hong Kong-based head of Asia research at Societe Generale. That’s 16 percent below yesterday’s close and would extend the gauge’s 2013 decline to 30 percent, the biggest tumble since 2008. China’s manufacturing will contract this year, while bad loans will keep rising until late 2014, Stear said. “Short-term cyclical declines and credit pressures are the two factors which make us negative about Chinese equities,” Stear said in an interview on Aug. 7. “When non-performing loans start to go up that’s going to be something that weighs quite seriously on the equity market.”    
• China Factories Turn to Undocumented Labor as Local Wages Jump. China’s embrace of higher wages to help bolster consumer spending has sparked a jump in factories along the east-coast export corridor bringing in undocumented and lower-paid workers from Myanmar and Vietnam. Border police found 59 illegal immigrants from Vietnam in a bus heading for the Pearl River Delta on July 29, the official Xinhua news agency reported on Aug. 6. “Thousands” of workers from Vietnam and Myanmar were discovered working illegally in Shenzhen between 2010 and 2012, the state-run China News Service reported, citing a local prosecutor.
• Mexican Industrial Production Unexpectedly Contracted in June. Mexican industrial production unexpectedly fell in June from the year earlier, posting the second-biggest decline since November 2009, led by a drop in construction. Output slid 2.4 percent, the national statistics institute said on its website today, missing economists’ estimates for a fifth month and worse than all 16 forecasts in a Bloomberg survey. Production was expected to expand 0.1 percent, according to the median forecast. Construction tumbled 6 percent and manufacturing dropped 1.2 percent. 
• Russian Economy Unexpectedly Slows as Recession Specter Returns. Russia’s economy unexpectedly slowed in the second quarter to extend a slide that’s stoking concern the world’s biggest energy exporter may be entering a recession. Gross domestic product expanded 1.2 percent from a year earlier, the Federal Statistics Service in Moscow said today in an e-mailed report. That was below all 19 forecasts in a Bloomberg survey, which had a median estimate of 2 percent. The Economy Ministry had projected that output expanded 1.9 percent in the period.
• French Industrial Output Unexpectedly Drops. French industrial production unexpectedly dropped in June, underscoring the government’s struggle to revive growth. Industrial production fell 1.4 percent from the previous month, state statistical institute Insee said today. The drop was worse than any of the predictions made by 22 economists in a Bloomberg survey, whose estimates ranged from a 0.5 percent decline to a 0.5 percent increase. The median forecast was for a 0.3 percent gain. 
• European Stocks Rise to 10-Week High as KPN Jumps on Bid. European stocks advanced to their highest level since May as mining companies rallied after a report showed Chinese industrial production increased at a faster-than-expected pace. A gauge of commodity producers posted its biggest increase in almost 11 months. Royal KPN NV soared the most in 15 months after billionaire Carlos Slim’s America Movil SAB offered to take over the Dutch phone company. Nestle SA fell for a third day, for the largest drag on the Stoxx Europe 600 Index. The Stoxx 600 added 0.6 percent to 305.92 at the close of trading, extending its advance this week to 0.6 percent.
• Oil Rises First Time in 6 Days on China Industrial Output. West Texas Intermediate crude climbed for the first time in six days after industrial production advanced more than forecast in China, the second-biggest oil-consuming country. Futures rose as much as 2.4 percent in New York, trimming a weekly loss.
• IEA Trims Estimate for 2014 Global Oil Demand Growth on Economy. The International Energy Agency trimmed forecasts for global oil demand growth in 2014 amid slowing expansion in China and a struggle to secure a recovery in the U.S. and Europe. Global consumption will increase by 1.1 million barrels a day, or 1.2 percent, to 92 million next year, the Paris-based adviser to energy-consuming nations said today in its monthly market report. The expansion is 100,000 barrels a day less than last month, when the estimate for 2014 was first introduced. Refinery operating rates will ease after a record surge in July, the IEA said.
• Wholesale Inventories in U.S. Unexpectedly Fall for Third Month. Inventories at U.S. wholesalers unexpectedly declined in June for the third month, the longest string in almost four years, as demand grew. The 0.2 percent decrease in stockpiles at distributors followed a 0.6 percent drop in May that was larger than previously reported, the Commerce Department said today in Washington. The median forecast in a Bloomberg survey of 28 economists projected a 0.4 percent increase. Sales climbed 0.4 percent.
• Americans Giving Up Passports Jump Sixfold as Tougher Rules Loom. Americans renouncing U.S. citizenship surged sixfold in the second quarter from a year earlier as the government prepares to introduce tougher asset-disclosure rules. Expatriates giving up their nationality at U.S. embassies climbed to 1,131 in the three months through June from 189 in the year-earlier period, according to Federal Register figures published today. That brought the first-half total to 1,810 compared with 235 for the whole of 2008.

Wall Street Journal: 

• PC Makers's Forecasts Dim as Mobile Pressure Weighs on Profitability. PC makers' hopes for a second-half rebound are fading as demand for touchscreen notebooks remains weak and the companies struggle to compete in the mobile sector. Global notebook PC shipments will likely fall about 11% in 2013 from a year earlier based on supplier checks, said Helen Chiang, a Taipei-based research director at tech-industry research firm IDC. IDC's previous forecast, released in May, was for decline of 6.7%.

MarketWatch: 

• OPEC's oil output hits lowest level since March. Oil production by the Organization of the Petroleum Exporting Countries fell to its lowest level since March in July as supply disruptions in Libya and Iraq dented the group's output, OPEC said Friday, warning of risks of further supply disruptions. According to secondary sources cited by OPEC in its monthly oil market report, the producer group's output fell by 100,000 barrels a day in July to 30.3 million barrels a day. Significant declines in Libya and Iraq offset an increase in Saudi Arabia's production of nearly 100,000 barrels a day.

CNBC: 

• Obama's mortgage plan under fire from left and right.
• Art Cashin: The market 'check engine light' is still on. (video)
• Mortgage rate spike finally hits housing. A sharp jump in mortgage rates from May to June are now beginning to weigh on the housing recovery. The two-month delay can be attributed to several factors—first and foremost that most potential home buyers lock in mortgage rates early, and sale closings can take up to two months to be finalized. Second, there may also have been a surge in homebuying because of the rise, as those on the fence suddenly jumped in, fearing rates would continue going up and they would be priced out of the market. Those factors have now expired.

Zero Hedge:

• Stock Market Bubbles And Record Margin Debt: A (Repeating) History Of Ignoring All Warnings. (graph) 
• France: From The Sublime To The Ridiculous.
• The Definitive Fund Flows Heatmap: 10 Years Of Capital Flows.

Business Insider:

• Despite All Of The Stimulus, The Economy Is Still Slogging.
• The Government Is About To Put JP Morgan Through The Ringer Like You've Never Seen Before.
• CHART OF THE DAY: If Only The Rest Of America Could Create Jobs As Fast As The Energy Sector.
• Eliot Spitzer's Opponent Totally Wailed On Him In A Debate.
• Detroit Fight Shows Why Public Pensions Are Bound For Problems.
• REPORT: Bill Ackman Says He'll Sell His JCPenney(JCP) Stake If The Board Won't Let Him Replace The CEO.

Examiner:

• Washington fixes Obamacare --- for Washington only! After intense and, sadly, bipartisan lobbying and scheming in Washington, the Obama administration announced that it is creating out of thin air a special rule to ease the pain of Obamacare -- for Washington only. You see, a specific provision of the Obamacare law says that all Members of Congress and their staffs have to procure their health care coverage on the Obamacare Exchange, just like tens of millions of Americans. This was causing mounting fear and loathing in Washington because it threatened real disruption and significantly increased expenses. No problem, the new administration rule fixes that and ensures that a huge, special taxpayer-funded subsidy will follow the ruling class to the Obamacare Exchange to take any sting out.

Reuters: 

• Obama, tech executives met to discuss surveillance. U.S. President Barack Obama met with the CEOs of Apple Inc, AT&T Inc as well as other technology and privacy representatives on Thursday to discuss government surveillance in the wake of revelations about the programs, the White House confirmed on Friday. 
• Copper sees strongest weekly gain since Sept on China data. With four straight days of gains, copper jumped 3.8 percent this week, chalking up its biggest weekly rise since September 2012.

Telegraph:

• The wheels are already coming off Carney's "forward guidance".

Bull Radar

Style Outperformer:

• Mid-Cap Growth -.24%

Sector Outperformers:

• Coal +3.39% 2) Steel +2.96% 3) REITs +.64%
  

Stocks Rising on Unusual Volume:

• CLF, ERF, DTLK, BITA, OLED, UBNT, NOAH, AMED, NPSP, AIRM, HAR, PCLN, RAX, ABFS, IRE, ERF, GTIV, DATA, FSS, NKTR, FRGI, WLT, ECPG, CZR, REGI and EPAM

Stocks With Unusual Call Option Activity:

• 1) M 2) MWE 3) RAX 4) EXPD 5) PCLN
  

Stocks With Most Positive News Mentions:

• 1) AMTD 2) MNST 3) IHS 4)  5) MDLZ
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Friday Watch

Evening Headlines 
Bloomberg: 

• China Builds All It Buys for Changsha From Rail to Biggest Tower. In this city of seven million people, where Mao Zedong went to college, China’s model of investment-driven growth funded by bank lending, bond issuance and land sales remains in force, even as Premier Li Keqiang tries to craft a new blueprint for expansion powered by consumption and private enterprise. Underscoring financial risks that prompted Li to order an urgent nationwide government debt audit, a local financing company raising money for Changsha’s tunnel says its ability to generate revenue is low.

• RBA Lowers Growth Outlook as Economy Transitions From Mining. The Reserve Bank of Australia lowered its growth outlook as the economy transitions from mining investment, a process that may be aided by the currency falling further from its still “high level.” “The forecast for Australian GDP continues to embody a transition in the drivers of growth from mining investment to other parts of domestic demand, and to exports,” the RBA said in its quarterly monetary policy statement released in Sydney today. “There remains considerable uncertainty about how this transition will proceed.”   

• Asiana Airlines Loss Widens as Korea Travel Demand Slumps. Asiana Airlines Inc. (020560), the South Korean carrier that suffered a fatal jet crash in San Francisco last month, reported a second-quarter loss bigger than analysts estimated as travel demand waned. 

• India’s Fear of Growth.

• Asia Stocks Set to Snap Longest Winning Streak Since Jan. Asia’s benchmark stock index is on course to snap its longest weekly winning streak since January after Nikon Corp. (7731) cut its profit forecast and investors await Chinese industrial production data. Nikon, a Japanese camera maker, slumped 12 percent, dragging consumer shares lower. BHP Billiton Ltd. (BHP), the world’s largest mining company, climbed 1.8 percent in Sydney, leading raw-materials firms to the largest advance among the 10 industry groups of the Asia-Pacific benchmark gauge. SoftBank Corp. climbed 1.6 percent in Tokyo after a report it will refinance a loan for its Sprint Corp. deal. The MSCI Asia Pacific Index slid 0.1 percent to 133.67 as of 10:46 a.m. in Toyko, with five stocks rising for every four that rose.

• Copper Pares Weekly Gain Ahead of China Industrial Output Data. Copper pared a weekly advance as investors weighed China’s smaller-than-expected inflation rate and ahead of industrial output data due today. Copper for delivery in three months on the London Metal Exchange fell 0.6 percent to $7,141.25 a metric ton at 11:25 a.m. in Shanghai. The metal has climbed 2 percent this week.

• Fed Officials Signal Tapering Is Possible at September Meeting. Four Federal Reserve officials with varied voting records on monetary stimulus indicated greater willingness this week to begin tapering the central bank’s bond-buying program, citing confidence the economy is accelerating. “I would clearly not rule” out a decision to start dialing back the purchases at the Sept. 17-18 gathering of the Federal Open Market Committee, Chicago Fed President Charles Evans said two days ago in Chicago. “We’ve seen good improvement in the labor market, there’s no question in my mind about that,” and “I’m still wanting to see greater evidence that it’s a sustainable improvement.”

• Cleveland Fed’s Pianalto to Retire Early in 2014, Bank Says. Federal Reserve Bank of Cleveland President Sandra Pianalto will retire from the district bank early next year, according to an e-mailed statement. Pianalto, 59, is the longest serving of the Fed’s 12 regional presidents, having become leader of her district bank in 2003. During her 10-year tenure at the Fed, Pianalto was a reliable supporter of Fed Chairman Ben S. Bernanke, never dissenting from a decision of the Federal Open Market Committee.

• JPMorgan Nears Settlement With SEC on London Whale Loss. JPMorgan Chase & Co. (JPM) is negotiating final terms of a deal with U.S. securities regulators to end a yearlong probe of derivatives bets that led to the bank’s largest trading loss ever, two people briefed on the talks said.

• Berlusconi Adds $1.5 Billion to Fortune Amid Court Losses. Silvio Berlusconi’s fortune has increased by $1.5 billion this year even as the former Italian prime minister lost four criminal-court judgments since January.

Wall Street Journal:

• China's Gleaming Ghost Cities Draw Neither Jobs Nor People. When this small city in northeastern China launched a plan to build a satellite city six miles down the road, it got off to a promising start. Urban planners spent millions of yuan to clean up surrounding marshland that had become a dumping ground for the city's untreated sewage. A pristine environment, they hoped, would help attract the businesses that would raise incomes and swell the population. Four years later, Tieling New City is virtually a ghost town.

• Anti-U.S. Hostility Ramps Up in Egypt. Media Outlets Blast American Policies, Further Straining Ties. A headline in a major Egyptian state newspaper this week referred to the proposed U.S. envoy to Egypt as the "Ambassador of Death." Posters in Cairo's Tahrir Square, a center of pro-government rallies, depict President Barack Obama with a beard and turban, exclaiming his "support for terrorism." Another large Egyptian newspaper alleged Sen. John McCain, who traveled to Cairo this week in an effort to break a deadlock betweenthe government and its Islamist rivals, has chosen sides by employing Muslim Brotherhood staffers in his office.

• Al Qaeda Yemen Branch Plan Prompted U.S. Terror Alert. The terror plot that has temporarily shut down 19 U.S. diplomatic posts wasn't ordered by al Qaeda's leader Ayman al Zawahiri, but proposed by al Qaeda's Yemeni branch and approved by the global Qaeda chief, a senior U.S. official said Thursday in a more specific description of the plot's origin.

• Stocks Start to Look Overvalued. Stocks in S&P 500 Are at Highest Price/Earnings Ratio in Nearly Four Years. Stocks in the S&P 500 are at their highest price/earnings ratio in nearly four years, and above their average multiple of the past 10 years. That has some investors becoming more cautious.

• Daniel Yergin: China's Big Commodity Chill. With the end of the supercycle, copper prices have dropped 30% from their 2011 peak, and iron ore is down 32%.

• Noonan: How Obama Wooed the Middle Class. It took both painstaking research and a ruthless attitude.

Fox News:

• Fox News Poll: Majority calls implementation of ObamaCare 'a joke'. Majorities of Americans think the new health care law is going to increase their medical costs and their taxes -- and add to the federal deficit as well. Those are some of the reasons why voters say -- by a two-to-one margin -- that Congress should keep working on the law. A Fox News national poll released Thursday also asks voters about how they think Obamacare is being carried out: 31 percent say “it’s going fine,” yet a 57-percent majority feels “it’s a joke.” Republicans are more than three times as likely to say it’s a joke (87 percent vs. 25 percent). Still, a quarter of Democrats agree. Nine times as many Democrats as Republicans say implementation of Obamacare is going fine (63 percent vs. 7 percent). Overall, 63 percent of voters think the 2010 health care law needs to be changed and Congress should keep at it. That’s up from 58 percent who felt that way in July 2012. On the other hand, 31 percent say the law is the law and Congress should “move on” to other issues. The poll finds that 65 percent of independents think Congress should keep working on the law, up from 53 percent last year. It’s noteworthy that 41 percent of Democrats now feel the law needs more work, up from 35 percent. The number of Republicans who thinks the law needs to be changed -- 84 percent -- held steady.

MarketWatch.com:

• 5 signs Wall Street’s zombie apocalypse is at hand.  3. According to the U.S. Federal Reserve, U.S. households in the first quarter of 2008, at the peak of the bubble, collectively owed $13.8 trillion in mortgages and consumer credit. In the first quarter of this year, the figure was—drum roll, please—$12.8 trillion. That’s right. After five brutal years of financial crises and bailouts, bankruptcies and foreclosures and economic recession and write-offs, while the federal government has piled on the national debt to keep the wheels rolling while the private sector “repaired” its balance sheet, the great American household has managed to reduce its debt levels by just 7%. (Yippee!) Debts today are still at the same level as they were at the end of 2006. 4. U.S. business debt just surpassed household debt for the first time in living memory. U.S. (nonfinancial) businesses today owe about $12.9 trillion, compared with just $9.9 trillion at the start of 2007. Zombies like to point to the large amount of cash that corporations hold in their bank accounts, although quite a chunk of this is being held offshore to avoid taxes. Zombies rarely point out the other side of the equation—the spiraling debts. In total, U.S. nonfinancial corporations today have debts equal to 50% of their net worth, says the Federal Reserve. As recently as 2006 that figure was 40%. The average since the Second World War: 37%. 

• Wall Street will cut 15% of its jobs over 18 months: Meredith Whitney.

CNBC:

• China's factories remain in deflation, producer prices show. China's consumer inflation accelerated in July, largely in line with forecasts, but producer prices dipped in the month, showing that the factories in the country remained entrenched in deflation. China's consumer price index (CPI) rose 2.7 percent in July from a year earlier, official data showed on Friday, unchanged from June and slightly lower than a Reuters forecast of 2.8 percent. But the producer price index (PPI) fell 2.3 percent in the month from the year before, slightly worse than the 2.2 percent drop markets were expecting, but better than the 2.7 percent drop in June. 

• Blame the Fed for the floundering dollar. This was supposed to be a summer when the U.S. dollar would stand tall, pumped up by higher interest rates and the prospect of an improving economy.

Zero Hedge: 

• 40 Years Of 'The Unbearable Heaviness Of Being' An American Taxpayer.

• Multiple Expansion Is Not Sustainable; Guggenheim Warns. (graph)

• BNP Warns Japanese Bonds Have Lost Their Ability To Price Risk.

• David Stockman: Hedge Funds, Prime Brokers, And The Whirligig of Wall Street Finance.

• Why the Shrinking Trade Deficit Will Choke U.S. Corporate Profits.

Business Insider:

• The NSA Intends To Fire 90% Of Their System Administrators To Eliminate Future Leaks.

• The Rest Of JC Penney Board Blasts Bill Ackman: Firing Our CEO Is 'Disruptive And Counterproductive'.

• Professor Keeps His Job After It's Revealed That He Shot And Killed His Family At Age 15.

New York Times:

• After Going All In During Mining Boom, BHP(BHP) Cuts Its Ambitions. BHP Billiton, the world’s largest mining company, was willing to spend big in early 2012. It was building new mines and upgrading old ones, at a cost of $18 billion. It considered a potential expansion of its copper and uranium mine, Olympic Dam, which could have cost as much as $20 billion. It proposed a deepwater extension of Port Hedland, its iron ore port, an estimated $10 billion or more.

Reuters:

• Financial crisis could disrupt Philadelphia school openings. Philadelphia's cash-strapped public schools may not open on time in September unless they get $50 million from the city to rehire some of the 3,800 teachers and staffers laid off because of the district's financial crisis. 

• Nvidia(NVDA) forecasts revenue below estimates on sluggish demand. Graphic chipmaker Nvidia Corp forecast current-quarter revenue below analysts' estimates as it continues to struggle with high competition in a slowing PC market. Nvidia, which gets majority of its sales from PCs, has been a late entrant in the market for smartphone chips. 

• U.S. Fed balance sheet grew in latest week. The U.S. Federal Reserve's balance sheet grew in the latest week as the Fed's holdings of U.S. Treasuries increased, Fed data released on Thursday showed. The Fed's balance sheet liabilities, which are a broad gauge of its lending to the financial system, stood at $3.542 trillion on Aug. 7, compared with $3.529 trillion on July 31.The Fed's holdings of Treasuries rose to $1.993 trillion as of Wednesday, Aug. 7, up from $1.982 trillion the previous week. 

• Brazil won't rule out retaliation if U.S. cotton payments end. Brazil's foreign minister, Antonio Patriota, said on Thursday he could not rule out retaliation if the United States stopped paying Brazil monthly compensation for controversial cotton subsidies. The dispute flared up days before the arrival of U.S. Secretary of State John Kerry, who is to plan an October state visit to Washington by President Dilma Rousseff.

• U.S. slowly opening up commercial drone industry. The Federal Aviation Administration's recent certification of two expensive unmanned aircraft for commercial use further opens up the U.S. market for drones, but cheaper unmanned aerial vehicles (UAVs) will still have to operate in regulatory limbo. The drone industry was heartened by the FAA's decision in late July to greenlight Boeing Co's Insitu ScanEagle and AeroVironment Inc's Puma, in the first such U.S. certification of drones for commercial use.

• Report says Keystone pipeline would not up U.S. greenhouse gas emissions. A new study has backed an earlier finding by the U.S. State Department that the proposed Keystone XL pipeline will have "no material impact" on U.S. greenhouse gas emissions, a crucial factor the White House is expected to weigh when it decides whether to approve the project. 

• Priceline(PCLN), Orbitz profits top estimates on travel demand. Online travel agencies Priceline.com and Orbitz Worldwide Inc posted higher-than-expected quarterly profits on Thursday, pointing to solid demand for travel. Rising reservations for rental cars and hotels bolstered Priceline, which has the highest market capitalization among online travel agencies, while Orbitz benefited from an increase in bookings of higher-margin hotel and vacation packages.

Financial Times:

• Growth in crude oil shipped by rail slows. Rail shipments of crude oil in the US – one of the major trends to emerge from the shale drilling boom, are hitting the buffers. As the price differential between inland and coastal oil markets narrows, railways and logistics companies are reporting falling traffic on the lines connecting oilfields to refineries.

Economic Information Daily:

• China 1H Solar Photovoltaic Exports Fall 31% to $6.52b. China's exports of solar photovoltaic cells and modules fell 31% to $6.52b, citing China Chamber of Commerce for Import and Export of Machinery and Electronic Products.

Standard:

• Emperor Director Sees H.K. Home Prices Diving 40%. Prices in the city almost doubled over the past 3 years, citing co.'s Donald Cheung. Home prices will drop up to 15% and land prices to fall up to 25% over next 12 months, he said.
  

China Securities Journal:

• China May Expand Property Tax Trial to 6 New Cities. China may expand a property tax trial to as many as 6 cities including Hangzhou and Nanjing, citing Yang Hongxu, deputy head of E-House China R&D Institute. Eastern, central and western cities may be included, Yang said. Expansion of a property tax nationwide may take 3-5 years, Yang said. Local Chinese governments are not enthusiastic about property tax trials as it slows economic growth, citing Yang.

Shanghai Securities News:

• China May Do More to Curb Property Speculation. China may further introduce detailed differentiated home loan policy in 2H in order to curb speculative home purchases, Yi Xianrong, a researcher at Chinese Academy of Social Sciences, writes in a commentary.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are -.50% to unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 145.50 unch.

• Asia Pacific Sovereign CDS Index 110.75 -.25 basis point.

• FTSE-100 futures +.28%.

• S&P 500 futures -.05%.

• NASDAQ 100 futures +.01%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (ABFS)/.19

• (FSS)/.14

• (MGA)/1.64

• (ZEUS)/.36

Economic Releases
10:00 am EST

• Wholesale Inventories for June are estimated to rise +.4% versus a -.5% decline in May.

• Wholesale Sales for June are estimated to rise +.7% versus a +1.6% gain in May.

Upcoming Splits

• None of note

Other Potential Market Movers

• The China Retail Sales/Industrial Production data and the (MU) analyst conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and real estate shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.

Stocks Higher into Final Hour on Diminishing Global Growth Fears, Stable Rates, Short-Covering, Commodity/Tech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 12.68 -2.31%

• Euro/Yen Carry Return Index 134.85 +.64%

• Emerging Markets Currency Volatility(VXY) 9.19 -1.29%

• S&P 500 Implied Correlation 47.77 -1.34%

• ISE Sentiment Index 111.0 -16.54%

• Total Put/Call .74 -23.71%

• NYSE Arms .67 -31.40% 

Credit Investor Angst:

• North American Investment Grade CDS Index 75.32 -1.33%

• European Financial Sector CDS Index 135.87 -1.68%

• Western Europe Sovereign Debt CDS Index 82.0 -1.80%

• Emerging Market CDS Index 304.48 -2.70%

• 2-Year Swap Spread 17.5 unch.

• TED Spread 22.0 -.5 bp

• 3-Month EUR/USD Cross-Currency Basis Swap -8.0 unch.

Economic Gauges:

• 3-Month T-Bill Yield .05% +1 bp

• Yield Curve 228.0 -1 bp

• China Import Iron Ore Spot $133.10/Metric Tonne n/a

• Citi US Economic Surprise Index 36.90 +.2 point

• Citi Emerging Markets Economic Surprise Index -26.10 +1.5 points

• 10-Year TIPS Spread 2.26 unch.

Overseas Futures:

• Nikkei Futures: Indicating +95 open in Japan

• DAX Futures: Indicating +23 open in Germany

Portfolio: 

• Slightly Higher: On gains in my retail/medical/tech sector longs

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my (EEM) short

• Market Exposure: Moved to 75% Net Long