Tuesday Watch

Evening Headlines 
Bloomberg:

• Japan’s Top Creditor Title at Risk as Surplus End Looms: Economy. Japan risks losing its position as the world’s top creditor nation, as dwindling savings become insufficient to finance growing public debt, a Bloomberg News survey of economists indicates. A run of current-account surpluses that drove Japan’s net asset position to the largest in the world starting in 1991 is set to reverse, according to 10 of 16 economists in a Bloomberg News survey, with nine projecting sustained deficits by the end of 2020. Japan had net assets of 325 trillion yen ($3.2 trillion) at the end of 2013, with China in second place with 208 trillion yen, according to Japan’s finance ministry. As an aging population draws down its savings, Japan will become more dependent on foreign creditors to finance its budget deficits and manage the world’s biggest debt burden.
• China Inflation Accelerates to Fastest Pace in 4 Months on Food. China’s inflation accelerated in May to the fastest pace in four months on food costs, while a decline in factory-gate prices moderated. Consumer prices rose 2.5 percent from a year earlier, the statistics bureau said today in Beijing. That exceeded the median 2.4 percent estimate in a Bloomberg News survey of economists. The producer-price index fell 1.4 percent after a 2 percent decline the previous month.
• Hackers Linked to China Seen Attacking U.S., European Industry. An additional hacking group linked to the People’s Liberation Army may have targeted U.S. defense and European satellite and aerospace industries since 2007, according to network security company CrowdStrike Inc. The group, known as Putter Panda, “is believed to hack into victim companies throughout the world in order to steal corporate trade secrets, primarily relating to the satellite, aerospace and communication industries,” according to an undated report from the company released on June 9. 
• Asian Stocks Pare Gain as Casinos Retreat in Hong Kong. Asian stocks pared their advance as Japanese shares fell on a stronger yen and casino operators slid in Hong Kong after Macau moved to restrict money flows from China. Oil was near the highest price since March before a report on American stockpiles, and corn extended drops. The MSCI Asia Pacific Index (MXAP) added 0.1 percent by 11:45 a.m. in Tokyo after closing at the highest since Oct. 22 yesterday.
• Three Strategists Share This Concern About Stocks. (video)

Wall Street Journal: 

• Banks Cut Credit to Chinese Metals Traders. Alleged Fraud Being Investigated. Some banks are becoming cautious about issuing financial guarantees to Chinese metals-trading firms amid an investigation into alleged fraud involving the use of commodities to obtain multiple loans. The operator of Qingdao port, on China's eastern coast, confirmed on Monday that Chinese authorities were conducting a probe into allegations of fraud relating to aluminum and copper products stored at the port.
• Big Auto Turns on Tesla(TSLA). Tesla has been fighting a running battle with car dealer groups around the country, many of whom have pushed against the company’s decision to sell its vehicles directly to customers through its own showrooms, rather than the traditional option of going through a dealer. In many states, the dealer groups have appealed to legislators claiming the company is breaching franchise laws that require cars to be sold through dealers, a claim Tesla rejects. 
• VA Halted Visits to Troubled Hospitals. Change Came as Growing Number of Facilities Had High Death Rates. The Department of Veterans Affairs stopped sending teams of turnaround experts to underperforming hospitals at the same time a growing number of VA facilities showed consistently high death and complication rates, internal agency records and interviews reveal. Starting in 2011, when the VA instituted a new system to track performance standards, five VA hospitals notched consistently poor scores on a range of critical-care outcomes,... 
• 'Dark Pools' Face New SEC Probe. Venue Operated by Barclays Is Among the Targets.
• GoDaddy Files for IPO. Internet Company GoDaddy Plans to Raise Up to $100 Million in IPO.
• Boko Haram Kidnaps More Girls in Nigeria. Abductions Near Town Where Students Were Grabbed Reflect Lack of Protection.
• The Latest Student-Loan Charade. Having induced $1 trillion in debt, Democrats now want to write it off. You can tell an election is coming, because President Obama is promising more student-loan relief to young people who are growing less enthralled with his economic record. The latest exercise unveiled Monday is also supposed to make these young people forget the loan burden that earlier free lunches supposedly provided. The taxpayer losses will come on some other President's watch. Specifically, Mr. Obama announced an expansion of the burgeoning disaster known as his Pay As You Earn program. This gift from taxpayers caps...

CNBC: 

• 4 in 10 millennials overwhelmed by debt: Study. Four in 10 millennials are overwhelmed by debt, with almost half spending at least 50 percent of their monthly paycheck paying off debt, a new study by Wells Fargo found. More than half—56 percent—reported living paycheck to paycheck.

Zero Hedge:

• Jobs Friday: What The Bubblevision Revelers Missed. 
• Risk Analysis In The Golden Age Of The Central Banker.
• Obama Unveils Student Loan Debt Bubble Bailout.
• The Great Insanity In Context (200 Years Of European Bonds). (graph)
• Little By Little, We Went Insane.
• Bronze Swan Lands: Goldman Explains How The China Commodity Unwind Will Happen.
• How Is This Not A Massive Conflict Of Interest?

Business Insider:

• PayPal President David Marcus Is Stepping Down To Join Facebook(FB).
• Indiana Sheriff Justifies Military Surplus Purchases By Saying America 'Has Become A War Zone'.

Reuters:

• Fund managers fret about valuations in wake of ECB rate cut. When the European Central Bank put its economy-boosting stimulus plan into high gear last week, it sent European stock prices to six-year highs. But mutual fund managers who might be expected to like that are instead voicing a new worry: The policy leaves them without enough reasonably priced stocks to buy.

Obama takes on coal with first-ever carbon limits
Read more at http://www.philly.com/philly/news/politics/20130919_ap_0f857b20e0c144a5a1e1b9dddc9f9d72.html#YRThyDOhArykUeYy.99

Telegraph: 

• Europe is jealous as Britain resurrects the Laffer Curve. By next year, Britain will have the equal lowest headline rate of corporation tax in the G20.

China Securities Journal:

• China to Cap Energy Consumption for Local Govts. China will cap local government coal consumption and other energy use to meet 2011-2015 emission reduction targets, citing NDRC Vice Chairman Xie Zhenhua as saying. China will also stop new heavy-polluting projects for local governments that don't meet emission reduction targets, Xie is cited as saying.

Evening Recommendations
Jefferies:

• Rated (PEP) Buy, target $102. 
• Rated (MNST) Buy, target $82.

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 99.50 -.5 basis point.

• Asia Pacific Sovereign CDS Index 75.0 unch.

• FTSE-100 futures -.21%.

• S&P 500 futures -.17%.

• NASDAQ 100 futures  -.15%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CBK)/.02
• (ULTA)/.74
• (UNFI)/.73

Economic Releases
7:30 am EST

• The NFIB Small Business Optimism Index for May is estimated to rise to 95.5 versus 95.2 in April.
  

10:00 am EST

• JOLTs Job Openings for April are estimated to rise to 4038 versus 4014 in March.
• Wholesale Inventories for April are estimated to rise +.5% versus a +1.1% gain in March.
• Wholesale Sales for April are estimated to rise +.9% versus a +1.4% gain in March.
  

Upcoming Splits

• (SXL) 2-for-1

Other Potential Market Movers

• The China inflation data, UK industrial production, $28B 3Y T-Note auction, weekly US retail sales reports, Piper Jaffray Consumer Conference, William Blair Growth Stock Conference, Morgan Stanley Financials Conference, Goldman Sachs Healthcare Conference, (DDD) analyst meeting and the (MET) investor conference could impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and industrial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Rising Slightly into Final Hour on Less Eurozone Debt Angst, Buyout Speculation, Short-Covering, Biotech/Homebuilding Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 11.44 +6.62%

• Euro/Yen Carry Return Index 145.40 -.37%

• Emerging Markets Currency Volatility(VXY) 6.58 +.15%

• S&P 500 Implied Correlation 52.83 +9.39%

• ISE Sentiment Index 107.0 -18.94%

• Total Put/Call .83 -9.78%

• NYSE Arms .98 -13.10% 

Credit Investor Angst:

• North American Investment Grade CDS Index 57.20 -.20%

• European Financial Sector CDS Index 57.62 -3.81%

• Western Europe Sovereign Debt CDS Index 27.86 -8.66%
• Asia Pacific Sovereign Debt CDS Index 75.05 +.03%

• Emerging Market CDS Index 235.11unch.

• China Blended Corporate Spread Index 315.15 -.03%
• 2-Year Swap Spread 14.5 +.25 basis point

• TED Spread 20.0 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -8.25 +.25 basis point

Economic Gauges:

• 3-Month T-Bill Yield .03% unch.

• Yield Curve 219.0 unch.

• China Import Iron Ore Spot $94.30/Metric Tonne -.21%

• Citi US Economic Surprise Index -13.20 -.3 point

• Citi Emerging Markets Economic Surprise Index -13.20 +3.3 points

• 10-Year TIPS Spread 2.20 +1.0 basis point

Overseas Futures:

• Nikkei Futures: Indicating +26 open in Japan

• DAX Futures: Indicating -1 open in Germany

Portfolio: 

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

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Today's Headlines

Bloomberg:

• More Than 57,000 U.S. Veterans Waiting to See a Doctor. More than 57,400 U.S. veterans have been waiting at least 90 days for a first appointment at government hospitals, said a report that broadens the scope of failings in one of the largest federal agencies. An internal review of 731 veterans’ medical facilities released today also showed that an additional 63,900 veterans who enrolled in the VA health system during the past 10 years haven’t received appointments. “This data shows the extent of the systemic problems we face, problems that demand immediate actions,” Sloan Gibson, acting Department of Veterans Affairs secretary, said today in a statement. “As of today, VA has contacted 50,000 veterans across the country to get them off of wait lists and into clinics.” 
• China Home Prices to Fall 5% on Supply Pressures, S&P Forecasts. China home prices will fall this year as developers cut prices to meet sales targets amid a cooling property market, Standard & Poor’s said.
• Macau Further Restricts UnionPay Card Use at Casinos: SJM. The Macau Monetary Authority plans to further restrict the use of China UnionPay Co.’s cards at casinos, curbing money flow to the world’s largest gambling hub, according to the head of the city’s biggest casino operator. 
• European Stocks Advance Amid Growing Economic Optimism. European stocks advanced, extending a six-year high, amid optimism the global economic recovery remains on track. Germany’s DAX Index closed above 10,000 for the first time ever. Banco Popular Espanol SA rose 4.6 percent after JPMorgan Chase & Co. advised investors to buy shares in the Spanish lender. Gecina SA dropped 2.9 percent after Metrovacesa SA offered to sell a 27 percent stake in the French real estate company. Lloyds Banking Group Plc slipped 1.7 percent after its consumer-lending unit set a price range below its book value for its initial public offering. The Stoxx Europe 600 Index added 0.4 percent to 348.61 at the close in London, its highest level since January 2008.
• Copper Caps Longest Slump Since March on China Imports. Copper fell for a fifth session in New York, the longest slump in more than three months, as demand concerns mounted amid slumping imports of the metal into China, the world’s biggest user. Unwrought-copper shipments fell 16 percent in May from April, while ore and concentrate imports were the lowest in almost a year, customs data showed yesterday. Money managers cut bullish bets by the most in a month, and copper is the only “net short” industrial metal on the London Metal Exchange, according to Marex Spectron Group. “Declining imports show China’s demand for copper is slowing,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “There’s going to be continued oversupply.”
• Analog Devices(ADI) to Buy Chipmaker Hittite for $2 Billion. Analog Devices Inc. (ADI), a maker of semiconductors used in wireless-phone systems, will acquire Hittite (HITT) Microwave Corp. for about $2 billion to gain chips used by automakers and the military.

MarketWatch.com:

• China’s real-estate market sees land sales plunge. Amid ongoing central government curbs, China’s property market is cooling off dramatically despite the onset of the sector’s traditionally “hot season,” as both land sales and transaction values plunged in May across 300 major Chinese cities.
  
  Total land sales fell to 1,767 transactions in May in 300 Chinese cities, down 45% from a year ago and 19% lower than in the previous month, according to a survey published Friday on China’s leading real estate website Soufun.com. In the same month, the total transaction value for land sales dropped 38% year-on-year, marking a 30% drop from April, to 13.75 billion yuan ($2.2 billion).

CNBC: 

• Fed's Rosengren: Favors rate increase when full employment, 2% inflation achieved. Boston Fed President Eric Rosengren stressed the U.S. central bank needed to be aware of financial risks like future housing-market bubbles as it plots how to raise interest rates and reduce its balance sheet, which stands at $4.3 trillion and counting.

ZeroHedge: 

• Meanwhile In Brazil, Three Days Before The World Cup Kick-Off...
• "That Was Then, This Is Now".
• What Is Driving The Market Right Now According To Mainstream Media.
• Deutsche Warns Markets Have Left The "Complacency" Phase, Have Entered Full Blown "Mania". (graph)
• Federal Reserve "Shouldn't Be Intervening All The Time" In Markets, Fed President Admits.
• McDonalds(MCD) Has Longest Stretch Without Rising US Sales In History. (graph)
• Thanks Draghi: Spanish 10 Year Yield Slides Below US. (graph)
• More Signs Of Bullish Excess. (graph)

Business Insider:

• China's Most Famous Ghost City Got Even Worse In The Last 4 Years. 
• Google(GOOG) Glass Is Going To Be Huge, And Most People Have No Idea Why.
• Hillary Clinton's Book Is Being Destroyed By Critics.

Reuters:

• Merck & Co(MRK) to buy Idenix to boost hepatitis C drugs portfolio. Merck & Co Inc said it would buy Idenix Pharmaceuticals Inc in a deal valued at about $3.85 billion to strengthen its hepatitis C drugs portfolio. The deal comes as drugmakers look to beef up their hepatitis C drug offerings to better compete with Gilead Sciences Inc, which has captured the hepatitis C drugs market with its treatment, Sovaldi.
• Trading scandals, legal fines may ramp up U.S. banks' capital needs. Large U.S. banks are finding the billions of dollars they paid in recent years to settle lawsuits and fix broken businesses are coming back to haunt them in another place: their capital requirements.

Telegraph:

• Identity politics is 'sowing seeds of European destruction'. The Single Market is under threat as a ‘very destructive process’ is underway in Europe, warns Business Secretary Vince Cable. 

Interfax:

• Russia Says NATO Buildup Near Borders Won't Go Unanswered. Deployment of fores by military alliance near Russian borders shows "hostile intentions," citing interview with First Deputy Foreign Minister Vladimir Titov. Russia will take "all necessary political and military-technical measures" to ensure its security.

Bear Radar

Style Underperformer:

• Mid-Cap Value -.04%

Sector Underperformers:

• 1) Gaming -2.52% 2) REITs -1.14% 3) Utilities -.90%

Stocks Falling on Unusual Volume:

• ATHM, CNSI, NSR, GNRC, TSN, DMND, REI, MMS, MPEL, GMCR, AWAY, TUES, PPC, COO, GILD, BURL, OIS, LVS, SAFM, COO, WYNN, TCAP, ERF, MYCC and GULF

Stocks With Unusual Put Option Activity:

• 1) XLI 2) XLK 3) KOG 4) VHC 5) WY
  

Stocks With Most Negative News Mentions:

• 1) F 2) GILD 3) WMT 4) CRUS 5) MMS
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Growth +.73%

Sector Outperformers:

• 1) Homebuilders +1.25% 2) Biotech +1.09% 3) Banks +1.7%
  

Stocks Rising on Unusual Volume:

• HITT, IDIX, HSH, FDO, DG, NRP, ADI, XRS, ICPT, MGNX, PCYC, VSAR, BNNY, ANIK, VNCE, HSH and NKTR

Stocks With Unusual Call Option Activity:

• 1) USG 2) BDSI 3) FDO 4) KRFT 5) UUP

Stocks With Most Positive News Mentions:

• 1) COF 2) AAPL 3) FDO 4) IDIX 5) ADI
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Monday Watch

Weekend Headlines 
Bloomberg:

• Ukrainian Leader Says Eastern Violence Must End This Week. Ukraine’s new leader, Petro Poroshenko, said the violence that’s rocked the former Soviet republic’s easternmost regions must end this week as peace talks began involving an envoy of Russian President Vladimir Putin. Poroshenko, who took the oath of office June 7, said negotiations should be held on a daily basis. Yesterday’s three-way talks in Kiev included Ukrainian ambassador to Germany Pavlo Klimkin, Russian ambassador to Ukraine Mikhail Zurabov and Heidi Tagliavini, a special representative of the Organization for Security and Cooperation in Europe.

• Shanghai Island Shows Property Boom Promise as Debt Perils Lurk. Property prices are booming in an island town of 60,000 people near Shanghai while the market slumps elsewhere. It comes at a cost: swelling borrowing that’s threatening local-government finances. Tang Chunmei, a 43-year-old real estate agent in Chenjia Town, 45 kilometers (28 miles) from China’s financial hub, said average apartment prices may rise 35 percent in seven years. That contrasts with cooling nationwide, as home prices fell 0.3 percent in May in the first monthly drop since June 2012. Chenjia financed its expansion in part with a 800 million yuan ($128 million) bond sold through a financing unit last year, exceeding the town’s 120 million yuan of fiscal revenue, to build affordable apartments for farmers as rice fields are turned into tourist attractions. 

• Asian Stocks Gain With Ringgit on Outlook as Copper Rises. Asian stocks rose, with the regional index headed for a more than seven-month high, while emerging-market currencies gained and the yen weakened after faster-than-estimated Japanese growth data fueled optimism over the global economy. Copper and nickel rebounded as wheat jumped. The MSCI Asia Pacific Index climbed 0.2 percent by 9:56 a.m. in Tokyo, rising a third day.

• Copper Bets Cut Most in Month as Metal Leads Losers: Commodities. Hedge funds cut bullish copper bets by the most in a month on concern that a supply surplus will return as demand growth slackens in Europe and China. Money managers trimmed their net-long position by 24 percent to a four-week low. A probe into inventories in China spurred speculation that imports by the biggest consuming nation will drop, while the European Central Bank took unprecedented steps to combat deflation. Barclays Plc anticipates that global supply will outpace demand from the fourth quarter. Prices retreated 10 percent this year, the most among the 24 commodities tracked by the Standard & Poor’s GSCI Spot Index.

• World Needs Record Saudi Oil Supply as OPEC Convenes. OPEC ministers say they will almost certainly leave their oil-production ceiling unchanged when the group meets this week. What really matters for global markets is whether Saudi Arabia will respond to global supply shortfalls by pumping a record amount of crude.

• Bridgewater Gains in May With Hedge Funds Climbing 1.2%. Hedge funds run by firms including Ray Dalio’s Bridgewater Associates LP posted gains last month as Paul Tudor Jones’s main strategy at Tudor Investment Corp. fell. Hedge funds on average rose 1.2 percent in May, according to Chicago-based Hedge Fund Research Inc., underperforming the 2.1 percent gain for the Standard & Poor’s 500 Index, which rallied to a record from an April 11 low amid optimism for economic growth. Equity, event-driven and macro hedge funds posted advances, according to HFR. The May gains bring hedge-fund returns on average to 2 percent for the year’s first five months, compared with 4.1 percent for the S&P 500.

Wall Street Journal:

• The Soul of a Hedge Fund 'Machine'. The Bridgewater founder talks about how his firm measures employees and economies to steer its $160 billion in investments.

• China's Central Bank Prevails in Policy Battles Over Economic Future. China's central bank is turning into a policy heavyweight in a battle among the country's top economic authorities over how to fuel growth without piling on excessive debt. The government has sought to portray a united front on its "mini-stimulus" measures, or small adjustments to monetary policy to bolster growth. Behind the scenes, however, China's biggest economic agencies—the People's Bank of China, the...

• Plaintiffs' Lawyers Take Aim at GM(GM) for Recall. Attorneys Known for Large Civil Settlements Line Up to Sue Over Company's Handling of Defective Ignition Switches. 

• Sex, Drugs and GDP: the Challenge of Measuring the Shadow Economy. Some Questioning the Value, Accuracy of European Nations' Move to Tally Illicit Doings.

Barron's:

• Hedge Fund Holdings: Herd on the Street. Falling back in love with tech, and making the leap of faith en masse.

Fox News:

• Sen. Feinstein questions White House claims on Bergdahl's health, death threat. The chairman of the Senate Intelligence Committee raised questions Sunday about the Obama administration argument that Congress wasn’t informed about the prisoner swap for Army Sgt. Bowe Bergdahl because he might have been killed if the deal was made public. The California Democrat told CBS’ “Face the Nation” that she and the committee’s top Republican, Georgia Sen. Saxby Chambliss, had been briefed previously about the operation and kept that information confidential.

CNBC: 

• Uber a risky ride for passengers, states warn. Uber is under siege. It's not from a rival company, such as Lyft or Sidecar, because they may be in the same boat. It's from states that are warning passengers they may not be covered by insurance if the driver has an accident.

• U.S. pensions ‘cash negative’ by 2016: Analyst. America's sprawling 401(k) pension system will turn cash flow negative in 2016, threatening disruption for asset managers and selling of equities, according to analysis by Cerulli Associates, a research house.

Zero Hedge:

• 5 Things To Ponder: The Central Bank Edition.

• The Fed Won't Let the Economy Heal.

• Giant Sucking Sound: Russian Money Yanked From US Banks.

• What's Wrong With This Picture? (graph)

• Draghi's Horrible Threat: "Are We Finished? The Answer is No"!

• The Last Minute VIX Murder.

• Famous "Big Tobacco" Lawyer Launches Class Action Lawsuit Against HFT.

• China May Build "Artificial Island" Military Base In South China Sea.

• The US Housing Market's Darkening Data. (graph)

• Western Banks Scramble As China's "Rehypothecation Evaporation" Goes Global.

• 90% Of Gazprom Clients Have "De-Dollarized", Will Transact In Euro & Renminbi.

• Clothing Naked Experts.

• US Workers In The Prime 25-54 Age Group Are Still 2.6 Million Short Of Recovering Post-Crisis Job Losses. (graph)

• Japan’s Population Problem In Five Charts. (graph)

• Europe's Good, Bad, & Ugly Reality (In 3 Simple Charts).

• The Only Chart You Need To See To Trade Japan's GDP "Beat". (graph)

• PBOC Hits Panic Button: Strengthens Currency By Most In 20 Months. (graph)

Business Insider:

• Here's Putin's Latest Savvy Chess Move On Ukraine.

• Wall Street Traders Are About To Be In A World Of Pain.

• Sheryl Sandberg Sold $18 Million Of Facebook(FB) Stock On Thursday.

• FROM 'THE MILITARY'S ONION': Obama Trades Seoul To North Korea For Return Of USS Pueblo.

• South Korea Is Giving The Philippine Navy A Free Ship As Tensions Rise With China.

• How The Eurozone Could Still Die.

• A Peek Inside The Ruthless And Camera-Shy World Of Hedge Funds.

Reuters:

• UAE c.bank warns Dubai property bubble may be forming. Low residential rental yields in Dubai and Abu Dhabi may indicate growing imbalances and overheating in the real estate sector, the United Arab Emirates central bank said on Sunday, in the first official warning about soaring property prices.

Financial Times:

• U.K. Homebuyers Il-Prepared for Interest Rate Rises. U.K. homebuyers are complacent about their ability to repay mortgages if interest rates rise, citing research from Experian. Generation of homeowners who have lived only in low interest rate environment are "severely" under-prepared, citing Experian.

• ‘Masterly’ Russian operations in Ukraine leave Nato one step behind. The running theme of Nato’s criticism of Russia is that when it comes to Ukraine, the Kremlin has slipped back into a cold war mentality. But while Russia’s strategic thinking might recall the ruthless geopolitics of the past century, its tactics for military analysts have been a model of warfare in the 21st, employing everything from small groups of unidentifiable specialist personnel to cyber warfare.

Handelsblatt:

• ECB Money Won't Resolve Euro Risk, Fratzscher Says. President of the German Institute for Economic Research Marcel Fratzscher tells Handelsblatt that large and not unlikely risk remains that euro zone economies may fall into stagnation and deflation from which it may be difficult to exit. ECB measures won't solve the fundamental problems of the banking system and lack of structural reforms. More expansionary fiscal policy may be helpful in short term but won't resolve fundamental problems, including excessive national debt. DekaBank economist Ulrich Kater also said that politically generated economic upswing may collapse into sluggish economy and higher debt when it expires, warns against implementing large scale, debt-financed spending programs.

Folha de Sao Paulo:

• Brazil's Rousseff Prioritizing Inflation Over Growth. President Dilma Rousseff's administration to prioritize keeping inflation below 6.5% rather than spurring economic growth, citing presidential advisers. Not much that can be done to reverse an economic slowdown this year, they said. Govt officials' worst-case scenario sees GDP expanding 1% this year, while best-case scenario contemplates close to 2% growth.

Night Trading

• Asian indices are unch. to +.50% on average.

• Asia Ex-Japan Investment Grade CDS Index 100.0 -3.0 basis points.

• Asia Pacific Sovereign CDS Index 75.0 -3.5 basis points.

• FTSE-100 futures +.34%.

• S&P 500 futures -.01%.

• NASDAQ 100 futures -.01%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CASY)/.53

Economic Releases

• None of note

Upcoming Splits

• (AAPL) 7-for-1

• (UNP) 2-for-1

• (SXL) 2-for-1

Other Potential Market Movers

• The Fed's Rosengren speaking and the Fed's Bullard speaking could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and financial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the week.