Bull Radar

Style Outperformer:

• Small-Cap Value +.56%

Sector Outperformers:

• 1) Airlines +2.31% 2) Gaming +1.76% 3) Semis +1.34%
  

Stocks Rising on Unusual Volume:

• PKT, TPLM, BFR, SBGI, FIVE, SHLD, IGT. TUES, CZR, BCC, SFUN, SCTY, ETFC, NFLX, MYL, PII, DAL and MU

Stocks With Unusual Call Option Activity:

• 1) IGT 2) XLI 3) AMTD 4) CLR 5) PANW
  

Stocks With Most Positive News Mentions:

• 1) AXP 2) WAG 3) WMT 4) FIVE 5) FRX
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Tuesday Watch

Evening Headlines 
Bloomberg:

• Russia Seizes on Kerry Comment on Syria Giving Up Weapons. Russia seized on a casual comment by U.S. Secretary of State John Kerry to urge that Syria turn over its arsenal of chemical weapons to international control to avert an American military strike. “If the establishment of international control of chemical weapons in the country will help avoid military strikes, we will immediately start working with Damascus,” Russian Foreign Minister Sergei Lavrov said after meeting with his Syrian counterpart in Moscow. Syria’s government said it welcomed the idea. Russia jumped on a hypothetical comment by Kerry, who told reporters in London that Syrian President Bashar al-Assad could avert a threatened U.S. attack by turning over “every single bit of his chemical weapons to the international community in the next week.” While Kerry added immediately that Assad “isn’t about to do it, and it can’t be done, obviously,” the idea took on a life of its own.

• Cows on Runways Show Indonesia Growth Challenge: Southeast Asia. Jakarta’s Soekarno-Hatta airport, Southeast Asia’s busiest, couldn’t offer Lion Group the space it needed to build a new airplane maintenance facility. Instead, the company ended up picking a site near Singapore.

• Asian Stocks to Baht Climb Before China Data as Oil Slips. Asian stocks rose, extending the longest rally in the benchmark equity gauge this year, and the Thai baht and Malaysian ringgit climbed before Chinese factory output and retail sales data expected to show growth in August. Crude oil slipped for a second day and credit risk fell. The MSCI Asia Pacific Index rose 0.9 percent at 12:20 p.m. in Tokyo, advancing for a ninth day in its longest winning streak since December.

• Rubber Drops Most in 3 Weeks With Oil on Easing Syria Concerns. Rubber declined the most in three weeks as oil prices dropped, cutting the appetite for the commodity used in tires, amid speculation that the U.S. Congress won’t endorse a strike against Syria. Rubber for delivery in February lost as much as 2.1 percent, the biggest drop for a most-active contract since Aug. 20, to 280 yen a kilogram ($2,812 a metric ton) on the Tokyo Commodity Exchange. Futures traded at 280.4 yen by 12:05 p.m. local time, down 7.3 percent this year. 

• Rebar Falls From One-Week High as Steel Mills Boost Production. Steel reinforcement-bar futures in Shanghai retreated from a one-week high as Chinese steel mills increased production of the building material. Rebar for delivery in January on the Shanghai Futures Exchange declined as much as 0.5 percent to 3,735 yuan ($610) a metric ton before trading at 3,736 yuan at 10:43 a.m. local time. The contract closed at 3,752 yuan yesterday, the highest level since Sept. 2.

• Banks Seen at Risk Five Years After Lehman Collapse. While the amount of capital at the six largest U.S. lenders has almost doubled since 2008, policy makers and some Wall Street veterans say that’s not enough. They see a system still too leveraged, complicated and interconnected to withstand a panic, and regulators ill-equipped to head one off -- the same conditions that led to the last crisis.

• Verizon(VZ) Said to Plan Up to Eight-Part Bond Sale This Week. Verizon Communications Inc. (VZ) plans to finance its purchase of Vodafone Group Plc (VOD)’s stake in their mobile phone unit with an offering of as many as eight parts that may exceed Apple Inc.’s record issue in April. 

• Apple(AAPL) to Unveil IPhones Seeking End to Year of Struggles. Apple Inc. (AAPL)’s introduction of new iPhones is a chance for the company to turn the page on a dour year that included no big new gadgets, a falling stock and stepped-up competition. Apple will update its flagship product, adding more colors and a less-expensive model, at an event at its Cupertino, California, headquarters today, a person with knowledge of the plans said last month. Apple, which will hold a viewing of the presentation in Beijing for the first time, is also close to securing deals with China Mobile Ltd. (941) and Japan’s NTT DoCoMo Inc. (9437) to sell iPhones in Asia’s biggest markets.

Wall Street Journal:  

• Confronting Syria: Streaming Coverage.

• Mortgage Lenders, Home Buyers Feel Rate Squeeze. Wells Fargo, J.P. Morgan Warn of Slowdown. A rise in interest rates is slamming homeowners' demand for mortgages, prompting large and midsize banks to cut jobs and warn investors of declining profitability in the home-loan business. Wells Fargo & Co., the nation's largest mortgage company by loan value, on Monday told investors at a conference that it expects mortgage originations to drop nearly 30% in the third quarter to roughly $80 billion, down from $112 billion in the second quarter. Businesses Aim to Ride New Funding Wave. As Ban Is Set to End, Some Regulators Fret About Possible Scams.

• China Tightens Grip on Social Media. Chinese authorities said that social-media users who post comments considered to be slanderous could face prison if the posts attract wide attention—a ruling free-speech advocates criticized as an attempt to give legal backing to the suppression of online dissent.

• John B. Taylor: The Weak Recovery Explains Rising Inequality, Not Vice Versa. Obama blames tax cuts that began under Reagan for today's slow growth. The data don't back him up.
  Last year at this time a debate raged about whether economic growth and job creation has been abnormally slow compared with previous recoveries from recessions in the United States. Now that the growth rate has declined to 1.6% over the past year from 2.8%, the debate is no longer about whether. It's about why. The poor economic policies of the past few years is a reasonable explanation for today's weak economy.

Fox News:

• Obama backs off 'red line,' opens door to 'diplomatic track' on Syria. President Obama on Monday took a sharp turn away from his "red line" threat to Syria on the eve of taking his case to the American people, saying in an interview with Fox News that he's open to negotiations on an alternative plan that could avert a military strike. The president was responding to a proposal, formally put forward by the Russians, to have the Assad regime turn over its chemical weapons to international control. "We will pursue this diplomatic track," Obama told Fox News. "I fervently hope that this can be resolved in a non-military way." 

• Fox News Poll: Voters say US less respected since Obama took office. Nearly half of American voters -- 48 percent -- think the United States is less respected around the world today than it was five years ago.  That’s up from 37 percent who felt that way last year, according to a Fox News poll. The new poll, released Monday, finds 14 percent of voters think the U.S. is more respected today -- nearly five years into the Obama presidency -- and 36 percent say it’s unchanged.

CNBC:

• Bank of America(BAC) to cut 2,100 jobs as loan demand weakens. Bank of America plans to eliminate nearly 2,100 jobs and close 16 mortgage offices due to weak loan demand, Bloomberg reported Monday. Sources with direct knowledge of the plans said 1,500 of the employees process home loans and about 200 deal with overdue mortgages. 

• India's crisis a 'wake-up call': Stephen Roach. (video) Long-term India bull Stephen Roach told CNBC on Tuesday that he was turning bearish on Asia's third-largest economy, and warned that the country's currency crisis should prove a "wake-up call" for investors.

• Parity a mirage for the yen. (graph)

Zero Hedge:

• Goldman(GS) Pours Cold Water On The Exuberance Of European PMIs.

• As Popular Opposition To Syrian Attack Grows; Obama "Skeptical", Reid Delays Vote & Assad Likens Obama To Bush.

• JPMorgan Warns: Increasing Rates Have "Reduced The Remaining Refinance Opportunity By More Than 50%".

• US Equity Trading Volume Hits Fresh 15-Year Low. (graph)

• The Looming Shutdown Of Japan's Nuclear Power.

ValueWalk:

• Black Swan Risk Shifts to Emerging Markets: SocGen. SocGen is out with a lengthy report titled Global Economic Outlook: Looking under the hood of recovery. In the report there is an interesting tidbit on black swan risks. Below is an excerpt on that segment.

Reuters:

• RPT-INSIGHT-Killing the goose: Why Indian exports need more than a cheap rupee.

• AFL-CIO will not campaign against Summers for Fed - Trumka. The chief of the AFL-CIO said the largest U.S. federation of labor unions will not campaign against the nomination of Lawrence Summers to be the next Federal Reserve chairman.

The Economic Times:

• Banks expect no quick fix for NPA pain despite RBI warning. Despite the Reserve Bank of India's (RBI) hard talks against loan defaulters, banks are expecting more pain in terms of asset quality as the systemic gaps allow bad borrowers to divert funds and go scot-free under the garb of economic slowdown.

China Securities Journal:

• China Should Implement Strict Property Controls. China should maintain its "prudent" monetary policy and implement "relatively strict" property controls to prevent a rebound in consumer and property prices, a commentary by reporters Gu Xin says. Chinese consumer prices will face "relatively heavy" pressure to rise next year, the commentary said.

• Beware: Wall St. debt re-packaging machine is back. Wall Street's re-packaging of debt into an alphabet soup of complex, leveraged investments helped fell Lehman Brothers five years ago this month and brought other financial institutions like AIG to the government's door begging for bailouts. This slicing and dicing — known as securitization or structured finance — is on the rebound, and not much has changed in the way it is done. If it catches on in a big way again, the financial system could become fragile once more, experts say. "It's basically the same people doing the same things all over again, only more intensely," says Brian Reynolds, chief market strategist at Rosenblatt Securities. "In the long term we should be worried."

Evening Recommendations 
Wells Fargo:

• Rated (ILMN) Outperform. 

Night Trading

• Asian equity indices are +.50% to +1.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 135.0 -8.0 basis points.

• Asia Pacific Sovereign CDS Index 117.0 -5.5 basis points.

• FTSE-100 futures +.41%.

• S&P 500 futures +.07%.

• NASDAQ 100 futures +.16%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CBK)/-.02

• (OXM)/.98

• (RH)/.43 

Economic Releases
7:30 am EST

• The NFIB Small Business Optimism Index for August is estimated to rise to 95.0 versus 94.1 in July.

10:00 am EST

• JOLTs Job Openings for July are estimated to fall to 3900 versus 3936 in June.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Italian GDP report, China Industrial Production/Fixed Asset/Retail Sales reports, 3Y Note auction, weekly retail sales reports, Baird Healthcare Conference, RBC Industrials Conference, Goldman Sachs Retail Conference, (STX) analyst meeting, (TPX) investor day, (HAS) investor day and the (CGNX) analyst day could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by industrial and financial 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 Surging into Final Hour on Dimished Syria Intervention Worries, Global Growth Optimism, Lower Long-Term Rates, Homebuilding/Transport Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Below Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 15.47 -2.40%

• Euro/Yen Carry Return Index 137.68 +1.08%

• Emerging Markets Currency Volatility(VXY) 10.81 -5.09%

• S&P 500 Implied Correlation 48.49 -3.98%

• ISE Sentiment Index 129.0 +32.99%

• Total Put/Call .66 -25.0%

• NYSE Arms .62 -30.10% 

Credit Investor Angst:

• North American Investment Grade CDS Index 81.72 -2.98%

• European Financial Sector CDS Index 139.38 -4.57%

• Western Europe Sovereign Debt CDS Index 91.65 +.72%

• Emerging Market CDS Index 319.70 -3.17%

• 2-Year Swap Spread 15.5 -.25 bp

• TED Spread 24.55 +.25 bp

• 3-Month EUR/USD Cross-Currency Basis Swap -9.75 +.5 bp

Economic Gauges:

• 3-Month T-Bill Yield .01% -1 bp

• Yield Curve 247.0 unch.

• China Import Iron Ore Spot $134.80/Metric Tonne +.52%

• Citi US Economic Surprise Index 55.0 -1.5 points

• Citi Emerging Markets Economic Surprise Index -14.0 +1.0 point

• 10-Year TIPS Spread 2.07 -1 bp

Overseas Futures:

• Nikkei Futures: Indicating +125 open in Japan

• DAX Futures: Indicating +23 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 75% Net Long

Today's Headlines

Bloomberg:

• Obama Shrinking Second-Term Hastened by Syria Opposition. As Barack Obama seeks approval for a military strike in Syria, he finds the footprint of his historic presidency shrinking. It’s the fate of most second-term presidents as it becomes harder to keep public support and win legislative fights while their power wanes. For Obama, it’s arrived early.

• Italy Senate Panel Probably Will Delay Vote on Berlusconi Ouster. An Italian Senate panel that must decide whether to expel former Italian Prime Minister Silvio Berlusconi probably will delay a vote on the issue after its first review today. The 23-member panel is still discussing legal and procedural issues outlined in a report presented today in Rome by Senator Andrea Augello of Berlusconi’s People of Liberty Party. Senator Mario Giarruso of the Five-Star Movement told reporters that the first vote on the procedural matters raised by Augello may occur later today or tomorrow.

• European Stocks Little Changed on Chinese Export Data. European stocks were little changed after their biggest weekly advance since April, as Chinese exports rose more than expected and investors awaited a U.S. decision this week on possible air strikes against Syria. BG Group Plc retreated 5.1 percent as the U.K.’s third-largest oil and gas producer said output next year will fall short of its estimates. Vallourec (VK) SA climbed 3.6 percent after Kepler Cheuvreux upgraded the producer of steel pipes for the oil-and-gas industry. The Stoxx Europe 600 Index lost 0.1 percent to 305.84 at the close of trading.

• Japan Dispatches Fighters After China Bomber Flight Near Islands. Japan Defense Minister Itsunori Onodera described a flight by two Chinese bombers between southern Japanese islands as “unusual,” two days before the anniversary of the purchase of islands disputed with China. Japan dispatched fighter planes when the Chinese H-6 bombers flew between the main southern island of Okinawa and Miyakojima about 280 kilometers (174 miles) further southwest on Sunday, without entering Japanese airspace, the Defense Ministry said in a statement on its website. China said the flight was legal and that it would continue such maneuvers. 

• BlackRock(BLK) Predicts Deeper Emerging-Markets Rout: Credit Markets. Wall Street’s biggest firms are predicting intensifying bond losses in emerging markets, where borrowing costs have already soared to the highest in more than four years versus U.S. corporate debt, as the Federal Reserve considers curtailing record stimulus.

• Fed’s Williams Says Data Signal Gradually Improving Job Market. Federal Reserve Bank of San Francisco President John Williams, who has backed record stimulus, said recent economic data signal gradual job market improvement in line with his expectations. The “latest data” is “consistent with the forecast that I’ve had for the U.S. economy of gradual improvement and doesn’t change my particular views” on policy, Williams said to reporters today after a speech in San Francisco. “We are continuing to get closer to this marker of substantial improvement” in the labor market, said Williams, who doesn’t vote on policy this year.

Wall Street Journal:

• White House Wants 'Hard Look' at Syria Weapons Offer. Syria said it welcomed a Russian proposal that it hand over chemical weapons to be destroyed, without saying whether it would comply, as opponents of a military strike against Syria leapt at the chance for another delay to possible U.S. attack. The White House said it would take a "hard look" at the proposal from the Russian government to get Syrian President Bashar al-Assad to turn over his chemical-weapons stockpiles, but said it didn't have confidence that Mr. Assad would do so.

Fox News:

• Business Owners May Face $100-Per-Day Penalty Under ObamaCare. Small business owners who thought they were off the hook for ObamaCare regulations until 2015 may be in for an expensive wake-up call next month.

CNBC:

• Crisis warning? Fed 'playing with matches' again. (video)

• Government takes first steps to regulate high-speed trading.

Zero Hedge:

• Syria Strike To Be "Unbelievably Small" Kerry Promises, Leaves Everyone Puzzled. (video)

• Syria Welcomes, Would Comply With Russian Chemical Weapon Disarmament Initiative.

• Fed Uberdove Admits Policy Causes Asset Bubbles (And They're Here To Stay) - Full Speech.

Business Insider:

• Absolutely Brutal Poll For Obama Shows Public Opposition To Syria Bombing 'Surging'.

• US Home Affordability Is Plummeting And It Could Fall A Lot Further.

Automotive News:

• Tesla's(TSLA) State battles yield mixed results. A federal approach might be next. After mixed results in a flurry of state-level battles with dealers over its direct-selling model, Tesla Motors is pondering whether to take the fight to Washington. The rest of the auto industry intently awaits Tesla's decision. A federal challenge -- through legislation or a lawsuit -- may be a long shot. But some dealers say they fear for the future of the franchise system if Tesla succeeds.

Bear Radar

Style Underperformer:

• Large-Cap Value +.45%

Sector Underperformers:

• 1) Hospitals -1.23% 2) Gold & Silver -.65% 3) HMOs -.50%

Stocks Falling on Unusual Volume:

• THC, ESRX, CVI, SSNI, SCOR, KONG, KMR, SGNT, OMCL, SNTS, MGAM, UNXL, UTIW, NTI, CYH, HFC, YELP, SN, STMP, TSLA, EE, MTB and MPC

Stocks With Unusual Put Option Activity:

• 1) WBMD 2) INVN 3) VMW 4) JNK 5) NFX
  

Stocks With Most Negative News Mentions:

• 1) CYH 2) CKP 3) NOV 4) IACI 5) AIG
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.07%

Sector Outperformers:

• 1) Homebuilders +3.85% 2) Steel +2.85% 3) Airlines +2.23%
  

Stocks Rising on Unusual Volume:

• END, MHR, MOLX, RDA, TW, DAL, LQDT, ISIS, FIO, YY, POT, AMAP, AMBA, ACAD, IPI, MOS, GRPN and SWHC

Stocks With Unusual Call Option Activity:

• 1) SFD 2) TWX 3) BIOD 4) FIO 5) DRI
  

Stocks With Most Positive News Mentions:

• 1) MOLX 2) KMI 3) LMT 4) WDC 5) FIO
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume