Wednesday Watch

Evening Headlines 
Bloomberg:

• Israel Strikes Gaza by Air and Sea to Halt Rocket Attacks. Israel struck 150 targets in the Hamas-controlled Gaza Strip and authorized the call-up of 40,000 reservists as it weighed a possible ground operation to quell weeks of Palestinian rocket fire into its territory. Gaza emergency services chief Ashraf al-Qedra said 16 people, including five children, were killed today as Israel’s offensive expanded. Militants raised the stakes by firing rockets in the Tel Aviv and Jerusalem areas for the first time during the latest round of violence. They also infiltrated Israel by sea and battled troops near an army base. 

• Snuffing Out Shisha Alienates Iraqis Bemoaning Islamic Clampdown. Iraqi laboratory technician Younes was smoking a shisha water pipe and playing cards with his friends in the Iraqi city of Mosul last week when a dozen men with Kalashnikov rifles over their shoulders showed up. “They told the cafe owner that allowing such forms of entertainment was sinful and they didn’t leave until he pledged to ban it,” said Younes, 30, who was too scared of reprisals to give his full name. “We’re hurtling fast toward the unknown.”

• Asian Stocks Drop as Corn Extends Slide; Copper Advances. Asian stocks fell, with the regional index declining a second day, extending a global retreat in equities amid concern valuations are too high. The yen held gains as copper climbed while corn futures continued their longest slump since November. The MSCI Asia Pacific Index lost 0.4 percent by 10:06 a.m. in Tokyo, set for the steepest one-day drop in 2 1/2 weeks as Japan’s Topix index slipped 0.5 percent in a third day of declines.

• Republican Bill Seeks Monetary Policy Rule for Fed. House Republicans proposed legislation to limit how the Federal Reserve makes monetary policy, a week before Chair Janet Yellen is scheduled to deliver her semiannual testimony to lawmakers. “It’s broadly consistent with Republicans’ continued anger with the Fed and seems to reflect a continuing concern that it’s time for the Fed to get further down the exit path and start raising rates,” said Sarah Binder, a senior fellow in governance studies at the Brookings Institution in Washington who specializes in studying Congress’s relationship with the central bank.

Wall Street Journal:

• Israel, Hamas Escalate Violence. Gaza Launches Barrage of Rockets, Airstrikes Send Palestinian Death Toll Up. Palestinian militants in the Gaza Strip unleashed their most far-reaching rocket attack ever on major Israeli population centers, as Israel said it was launching a protracted assault on the territory's Islamist rulers. Warplanes hit 150 purported militant sites on Tuesday alone and the Israeli government authorized the call-up some 40,000 army reservists, mobilizing for the third large-scale military operation against Gaza in... 

• Syria Is Breeding Western Terrorists, U.S. Warns. Attorney General Cites 'Global Crisis' of Foreign 'Violent Extremists' in Syria's Civil War.

Fox News:

• Making of an immigration crisis: Obama slammed for missing border mess. (video) The Obama administration, scrambling for billions in emergency funding to address the surge on the U.S.-Mexico border, is facing yet another accusation that it was asleep as a crisis evolved -- this time, the influx of illegal immigrant minors.

MarketWatch.com:

• Citi(C) near multi-billion dollar deal to resolve mortgage probe. The Justice Department and Citigroup Inc. are close to a multibillion-dollar deal to settle allegations the bank sold shoddy mortgages in the run-up to the financial crisis, according to people familiar with the matter. 

CNBC:

• Alcoa(AA) earnings easily beat Street estimates. Alcoa reported quarterly earnings and revenue that handily beat analysts' expectations on Tuesday.

Zero Hedge:

• Is The Fed Going To Attempt A Controlled Collapse?

• Saxo Bank Warns "This Is Not 'Different Times'".

• "Don't Worry, Be Happy" Fed Financial Stress Index At Record Low For 3rd Week. (graph)

• Stock Buyback Shocker: Companies Using Secured Bank Loans To Repurchase Stock. (graph)

• The Immigration Scandal For Dummies.

• Debt: Eight Reasons This Time Is Different. (graph)

• What "Rosy" Job Numbers? Wal-Mart CEO Slams Recovery Mirage. (video)

Business Insider:

• 10 States Where Home Values Have Surged Past Their Housing Bubble Peaks.

• CARSON BLOCK: China's Fake GDP Is Over-Inflated By 25%.

Reuters:

• ICE CEO calls for market-wide purge of order types. In a perfect world, stock exchanges would collectively agree to ban order types that critics allege create complexity and may give certain traders unfair advantages, Intercontinental Exchange Group chief executive Jeffrey Sprecher told lawmakers on Tuesday. 

• Hedge funds attract $72.2 bln in first five months of year -data. Investors poured $72.2 billion into hedge funds worldwide in the first five months of 2014, marking their strongest five-month start to a year since 2007 partly on fears of a downturn in stock and bond prices, data from a survey showed on Tuesday. 

• KLA-Tencor(KLAC) says June quarter booking above expectations. Chip gear maker KLA-Tencor Corp said on Tuesday its bookings in the fiscal fourth quarter were close to $895 million or $900 million, higher than expected and helped by demand from contract chip manufacturers.

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

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -1.0% to -.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 102.50 +2.5 basis points.

• Asia Pacific Sovereign CDS Index 70.75 +.5 basis point.

• FTSE-100 futures -.04%.

• S&P 500 futures +.02%.

• NASDAQ 100 futures  -.04%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (WDFC)/.72

• (GY)/.09

Economic Releases
10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,744,440 barrels versus a -3,155,000 barrel decline the prior week. Gasoline inventories are estimated to fall by -522,220 barrels versus a -1,235,000 barrel decline the prior week. Distillate supplies are estimated to rise by +877,780 barrels versus a +975,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.14% versus a +2.9% gain the prior week.
  

2:00 pm EST

• Fed Minutes from June 17-18 meeting.
  

Upcoming Splits

• (ALK) 2-for-1

• (ACIW) 3-for-1

Other Potential Market Movers

• The China CPI, BoE rate decision, Australia unemployment report, China Trade Balance, 10Y $21B T-Note auction, weekly MBA mortgage applications report and the (SLXP) investor day could impact trading today.

BOTTOM LINE: Asian indices are 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 25% net long heading into the day.

Stocks Falling into Afternoon on Rising Eurozone Debt Angst, Rate Worries, Rising Mideast Unrest/Russia-Ukraine Tensions, Tech/Biotech Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Slightly Above Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 12.0 +5.91%

• Euro/Yen Carry Return Index 144.29 -.27%

• Emerging Markets Currency Volatility(VXY) 5.87 -.68%

• S&P 500 Implied Correlation 49.95 +2.52%

• ISE Sentiment Index 80.0 -21.57

• Total Put/Call .89 -11.88

• NYSE Arms 1.48 +3.64% 

Credit Investor Angst:

• North American Investment Grade CDS Index 57.37 +2.56%

• European Financial Sector CDS Index 66.96 +7.22%

• Western Europe Sovereign Debt CDS Index 32.89 +3.79%
• Asia Pacific Sovereign Debt CDS Index 70.86 +.88%

• Emerging Market CDS Index 232.20 -.19%

• China Blended Corporate Spread Index 297.67 +.06%
• 2-Year Swap Spread 14.0 -.75 basis point

• TED Spread 21.25 -1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -11.25 unch.

Economic Gauges:

• 3-Month T-Bill Yield .012% +1 basis point

• Yield Curve 206.0 -4.0 basis points

• China Import Iron Ore Spot $96.50/Metric Tonne +.63%

• Citi US Economic Surprise Index -13.60 -2.4 points

• Citi Emerging Markets Economic Surprise Index -6.30 +1.3 points

• 10-Year TIPS Spread 2.24 -1.0 basis point

Overseas Futures:

• Nikkei Futures: Indicating -54 open in Japan

• DAX Futures: Indicating +9 open in Germany

Portfolio: 

• Slightly Higher: On gains in my index hedges and emerging markets shorts

• Disclosed Trades: None

• Market Exposure: 25% Net Long

Today's Headlines

Bloomberg:

• EU Mulls More Russia Sanctions as Ukraine Rebels Fight on. Ukrainian rebels seized a town in the Luhansk region today after a retreat from eastern strongholds as European Union states considered expanding a list of Russians facing sanctions as soon as tomorrow. Several hundred rebels seized Popasnaya, a city of 20,000 people, news service Interfax reported, citing the separatists. After the militants shifted thousands of fighters to the provincial capital of Donetsk last week, Ukrainian forces continued to press their campaign, according to Ukrainian Deputy Foreign Minister Danylo Lubkivsky, who said the separatists wouldn’t agree to peace talks.
• Russia Threatens Response If Sectoral Sanctions Imposed. Russia will respond against the U.S. and its European allies if measures targeting entire industries are levied over the crisis in Ukraine, according to Deputy Finance Minister Sergey Storchak. “If the situation continues to develop and sectoral sanctions are imposed, it will be necessary to prepare more serious countermeasures,” Storchak said on the ministry’s Facebook page today. “In particular, there may be difficulties with money transfers if sanctions are applied to big banks and the financial sector.”
• Israel Strikes Gaza by Air, Sea to Halt Rocket Attacks. Israel struck 150 targets in the Hamas-controlled Gaza Strip and authorized the call-up of 40,000 reservists as it weighed a possible ground operation to quell weeks of Palestinian rocket fire into its territory. Gaza emergency services chief Ashraf al-Qedra said 14 people, including three children, were killed today as Israel’s offensive expanded. Targets included senior Hamas operatives as well as militant facilities, the military said. 
• Brazil Inflation Really at 8% Without Rouseff Fiddling. Brazilian President Dilma Rousseff has been fighting inflation by holding down government-regulated prices. The bill will come due next year. The winner of this October’s presidential election will suffer the consequences of policies that have repressed electricity prices by 30 percent, urban bus fares by 20 percent and gasoline prices by 15 percent since 2011, according to data from Rio de Janeiro-based firm Modal Asset Management. Lifting controls will unleash pressures that will keep inflation above the mid-point of the target for a sixth straight year. Consumer prices as measured by the benchmark IPCA index rose 0.4 percent in June, pushing annual inflation to 6.52 percent, the national statistics agency said today. Prices would be rising by almost 8 percent if it weren’t for controls, according to estimates by Alberto Ramos, chief Latin America economist at Goldman Sachs Group Inc., who spoke by phone from New York.
• Commerzbank Said Next to Face Penalties in U.S. Probe. Commerzbank AG (CBK), Germany’s second-largest lender, will probably be the next bank to resolve alleged U.S. sanctions violations, a person with knowledge of the matter said. The Frankfurt-based firm may incur penalties of at least $500 million as part of a deferred-prosecution agreement with authorities as soon as summer in the U.S., the person said, asking not to be identified because the talks are confidential. Such agreements spare companies a felony conviction.
• European Stocks Decline as Air France Warns on Earnings. European stocks fell the most in almost three months, led by travel and leisure companies, after Air France-KLM (AF) Group cut its full-year profit forecast. Air France-KLM slumped the most since October 2011 after saying earnings will be hurt amid overcapacity on North American and Asian routes, poor demand for freight and the fallout from a dispute with Venezuela. Commerzbank AG fell to its lowest price since December after a person with knowledge of the matter said it will probably be the next bank to resolve alleged U.S. sanctions violations. The Stoxx 600 slipped 1.4 percent to 339.99 at the close of trading, for its third day of declines.
• Complacency Breeds $2 Trillion of Junk as Sewage Funded. “It definitely feels like investors are getting overexuberant, and you can stay in overexuberant conditions for a while,” said Fred H. Senft Jr., director of fixed income and equity research for Key Private Bank in Cleveland. “But when it turns it will turn quickly and it will turn very ugly.” Halfway through a sixth year of near-zero interest rates by the Federal Reserve and unprecedented central-bank stimulus from Brussels to Tokyo, almost any borrower is able to raise debt with few questions asked even as the World Bank cuts its outlook for global economic growth. These are boom times for complacency. To gauge just how comfortable the world of debt has gotten, consider:
• Office REITs in U.S. Plan the Most Construction in Decade. Office REITs, led by Boston Properties Inc. (BXP), Vornado Realty Trust (VNO) and Kilroy Realty Corp. (KRC), are planning to plow almost $11 billion into new projects, triple the amount just two years ago and the most in data going back to 2004, according to research firm Green Street Advisors Inc. Much of that is focused on the coasts, including San Francisco and New York, the areas with the most demand from both tenants and investors.
• Jefferies CEO Warns of ‘Bad Behaviors’ Returning. Bankers and investors need to ensure they don’t repeat “bad behaviors” that contributed to the credit crisis as the financial-services industry embraces greater risk, said Richard Handler, chief executive officer of Jefferies Group LLC. “People who take short cuts, are political, prioritize themselves above others, take excessive risks for personal gain, don’t value capital, or are unethical are outright cancers,” Handler, 53, also CEO of Jefferies’s parent company, Leucadia National Corp. (LUK), said in his quarterly letter to clients. “These types of people will not only flourish in the next crisis, but most probably they will cause it.”
• Central Banks Seeking to Spur Supply Side Miracle Come Up Short. Central bankers’ experiment with zero interest rates is falling short on the supply side of their economies. Productivity and labor-force growth are failing to accelerate despite policies Bank of England GovernorMark Carney said should deliver the economic growth needed to generate “supply-side improvement.” “Weaker supply-side performance may dampen the enthusiasm of developed-market central banks to experiment with their growth/inflation trade-off to elicit strong supply,” JPMorgan Chase & Co. economists led by Bruce Kasman said in a July 4 report.
• Option Skew at 2 1/2-Year Low Signals Treasuries Rise, BofA Says. Long-term Treasuries are poised to rally as the skew in option volatility reached the lowest since 2011, signaling wagers for higher yields have become overdone, according to Bank of America Corp.

Wall Street Journal:

• Currency Reserves Swell in Asia. Central-Bank Policy Makers Fight Tide of Cheap Global Capital.

MarketWatch.com:

• Say hello to U.S. economy’s newest bubble.
• This M&A boom is going to end badly.
• Is Germany leading the euro zone toward the no-growth cliff? (graph)

CNBC: 

• Watch out for asset bubbles developing: Sternlicht. (video)

ZeroHedge: 

• Israel Escalates Gaza Assault By Air, Sea; Threatens "Lengthy" Ground Operation.
• How Recession-Proof Is Your Job Sector? (graph)
• European Stocks Plunge Most In 6 Months; Banks Battered. (graph)
• White House Dictates: $3.8 Billion Needed To Stem The Surge Of Immigrants.
• Momo Massacre 2.0 - The Post-Jobs-Report Crash.
• Job Hiring Far Below Pre-Lehman Levels As Yellen's Favorite Labor Metric Redlining. (graph)
• NFIB Small Business Optimism Fades; Outlook For Economy Plunges. (graph)

Business Insider:

• FED PRESIDENT LACKER: Inflation Has Bottomed.
• As ISIS Routs The Iraqi Army, Here's A Look At What The Jihadists Have In Their Arsenal.
• We Are Now In The Fourth And Final Phase Of The Bull Market.
• STRATEGIST: Market At Risk Of 10-12% Plunge.

Reuters:

• China c.bank reinforces interbank lending limits -sources. China's central bank has reinforced the country's controls on interbank lending by instructing the headquarters of banks to keep close tabs on this area, according to two sources with knowledge of the matter. Interbank loans, which are a part of China's fast-growing and sometimes wayward shadow banking market, have come under increased scrutiny on fears that some may sour as the maturing Chinese economy cools.
• Sensex falls over 500 points, marks biggest single-day fall since Sept. The BSE Sensex and Nifty slumped more than 2 percent on Tuesday, marking their biggest single-day fall in over 10 months and retreating from record highs hit earlier in the session, after the railway budget raised worries the government would slash spending.

Financial Times:

• Short selling drops to lowest level since Lehman. Hedge funds have sharply scaled back their bearish bets that the value of stocks is about to fall, with the proportion of shares earmarked for short selling at its lowest level since before the financial crisis despite warnings of renewed market exuberance.

Bear Radar

Style Underperformer:

• Small-Cap Growth -2.06%

Sector Underperformers:

• 1) Social Media -4.37% 2) Gaming -3.23% 3) Alt Energy -3.20%

Stocks Falling on Unusual Volume:

• CBSO, ANAC, BOFI, EUFN, SNAK, CBS, BECN, KS, DAL, SHPG, IIF, FTNT, SDRL, SOCL, SYT, OAK, TFM, GLOG, ADHD, RARE, SRPT, FSLR, GWPH, BITA, BIND, JBLU, LVS, AMRI, FRGI, BDSI, ZLTQ, TNGO, VECO, ANAC, ARUN, PODD, PANW, HGT, SPWR, KS, CAMP, INVN, ACRX, PCRX, TWTR, WDAY, CLDX, SSYS, LCI, SPLK, SRPT, SGMO, OMER, ZU and KPTI

Stocks With Unusual Put Option Activity:

• 1) IGT 2) WDAY 3) KRE 4) HYG 5) TXN
  

Stocks With Most Negative News Mentions:

• 1) F 2) BA 3) TWTR 4) JKS 5) WFM
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Value -.64%

Sector Outperformers:

• 1) Utilities +.39% 2) REITs +.15% 3) Foods -.11%
  

Stocks Rising on Unusual Volume:

• MIC and PHH

Stocks With Unusual Call Option Activity:

• 1) HIG 2) KR 3) INSM 4) DNDN 5) QID

Stocks With Most Positive News Mentions:

• 1) MRD 2) RRC 3) WDR 4) GES 5) PETM
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Tuesday Watch

Evening Headlines 
Bloomberg:

• Gaza Rockets Barrage Israel Readying for Possible Escalation. Gaza Strip militants bombarded southern Israel with dozens of rockets, sending Israel closer to escalating its battle against them as it stepped up air strikes and mobilized reserves. About 80 rockets hit Israel from Hamas-controlled Gaza yesterday, reaching as deep as 25 miles (40 kilometers) inside Israeli territory, the military said. The army is reinforcing regular paratrooper and infantry forces on the Gaza border with as many as 1,500 reservists, spokesman Lieutenant-Colonel Peter Lerner said in a phone briefing.

• Beheading #WorldCup Shows Islamic State’s Online Savvy. “This is our ball,” said a tweet accompanying a photo of the decapitated head. “It’s made of skin #WorldCup.” The World Cup hashtag ensured it would pop up on news feeds of the tournament’s followers until Twitter Inc. could take down the posting.

• Ukraine Moves to Destroy Rebel Bases in East, Ruling Out Cease-Fire. Ukraine’s government accused pro-Russian rebels of destroying bridges after the army recaptured territory in the east of the country from the insurgents. The rebels have blown up seven bridges, three of them yesterday, the Ukrainian cabinet said on its website. The insurgents are also laying mines as they retreat, posing a risk to civilians, the Defense Ministry said in a statement.

• Samsung Profit Misses Estimates as Cheap Phones Struggle. Samsung Electronics Co. (005930) posted second-quarter profit that missed analysts’ estimates as the world’s biggest smartphone maker loses market share and a stronger won crimps the value of overseas sales. Operating profit was 7.2 trillion won ($7.1 billion) in the three months ended June, the Suwon, South Korea-based company said in a filing today. That compares with the 8.1 trillion-won average of 34 analyst estimates compiled by Bloomberg.

• Tesla(TSLA) Sued in China for Trademark Infringement. Tesla Motors Inc. (TSLA), the electric carmarker led by Elon Musk, was sued in China for trademark infringement in the latest example of the difficulties foreign companies face doing business in the country. Zhan Baosheng, who registered the rights to the name before the U.S. carmaker entered China, is requesting that Tesla shut its showrooms, service centers and supercharging facilities there; stop all sales and marketing activities in the country; and pay him 23.9 million yuan ($3.9 million) in compensation, according to a lawsuit filed July 3 in Beijing and seen by Bloomberg News.

• China Developers Slow to Pay Realtors Amid Rout, Centaline Says. Chinese developers, hit by tighter liquidity and a widespread anti-graft campaign, are delaying paying fees to realtors who help them sell new projects, according to the nation’s biggest real estate brokerage. Centaline Group, which owns Centaline Property Agency Ltd., has about 1 billion yuan ($161 million) of uncollected receivables due, group founder Shih Wing Ching said in an interview. Developers pay the fees only after they they get the sales proceeds, he said.

• Asian Stocks Slip on Yen Gains. Asian stocks fell, with the regional index slipping from a six-year high, as the yen extended gains amid speculation over the outlook for U.S. interest rates. Crop futures rebounded while precious metals dropped with oil. The MSCI Asia Pacific Index lost 0.4 percent by 10 a.m. in Tokyo, dropping for the first time in three days as Japan’s Topix gauge slid 0.8 percent, headed for its lowest close this month.

• Greece Resists Troika on Third Bailout as Draghi Protests Delays. Greece fought off calls to consider a third bailout as European Central Bank President Mario Draghi warned that the pace of economic fixes is slowing, officials said after euro-area finance ministers met yesterday.

Wall Street Journal: 

• Ukraine Advances, Putin Stays Silent. Interior Ministry Adviser Says Armed Rebel Fighters Unable to Leave City. As Ukraine laid plans for a siege of pro-Russia separatists' remaining bastions Monday, Russian President Vladimir Putin faced a critical decision on whether to answer rebel pleas for military help—a move that could determine what he gains or loses following a monthslong conflict that has roiled global powers. Russia has encouraged and supported the separatists during their insurgency, but has been unusually quiet since the Ukrainian... 

• From Mountains, Island, Secret Town, China's Electronic Spy Shop Watches. Military Organization 3PLA Is Tasked With Monitoring Worldwide Electronic Information. From mountains near Beijing, China's version of the U.S. National Security Agency monitors Russia and tracks missiles. Its military experts analyze Internet phone calls on an island dubbed China's Hawaii, and and it eavesdrops on Europe from a secret town hidden behind an array of residential towers. Using Chinese government websites, academic databases and foreign security expertise, The Wall Street Journal assembled an overview of some secret operations of China's global monitoring organization, the Third Department of... 

• Banks' Cuts Fall Short as Growth Stays Tepid. Rising Pay, Regulatory Costs Offset Recent Efforts.

• James Gorman on the Future of Finance: Big Banks Will Get Bigger. But the Morgan Stanley CEO Also Expects Most Bank Branches to Disappear—and Cash to Become a Museum Piece. 

• Hard-Hit Macro Hedge Funds Stage Nascent Turnaround. Gains Come After Three Consecutive Years of Losses. Global macro hedge funds are showing signs of life after weathering a difficult period.

Fox News: 

• Border crisis could provide cover to ISIS operatives, say experts. The border crisis could be the perfect opportunity for Islamic terrorists looking to sneak sleeper cells into the U.S., say experts. Patrols on the Mexican border have been stretched to the breaking point in recent weeks by a tidal wave of immigrants from Central America. Among the estimated 60,000 people who have streamed across is a small percentage of what agents term "Special Interest Aliens," or SIAs. Terrorism experts say airport security is effective at keeping dangerous jihadists out, but the border breakdown could be America's Achilles heel - providing an entry point for groups like ISIS.

MarketWatch.com:

• Does Facebook(FB) break up marriages? New research suggests a link between social networking and divorce. Facebook users, beware. You may be one “like” away from divorce court.

CNBC: 

• Central banks ending era of clear promises, return to 'artful' policy. The world's major central banks are returning to a more opaque and artful approach to policymaking, ending a crisis-era experiment with explicit promises that they found risked their credibility and did not substitute for action.

Zero Hedge: 

• "This Is The Worst Of All Possible Worlds," The Fed "Is Borrowing Returns From The Future".

• Minimum Wage Consequences? iPhone 6 Will Be Made By "FoxBots".

• Free Lunch Over? Regulators Pressure Banks To Admit Balance Sheets Aren't Riskless. (graph)

• Meet The $1 Billion Company With Zero Revenues.

• Chart Of The Day: The "Weather-Apologist Economist"'s Worst Nightmare.

• Krugman’s Bathtub Economics.

• Why You Feel Poorer. (graph)

• Peak Abenomics. (graph)

Business Insider:

• WAL-MART(WMT) CEO: Things Aren't Getting Better For America's Middle Class.

• This New Tax Law Undercuts National Sovereignty And Undermines The Rights Of US Citizens Abroad.

• Why The Super Typhoon Heading Toward Japan Could Be So Dangerous.

• Warren Buffett's 'Single Best Measure' Of Stock Market Value Is Higher Today Than It Was During The Credit Bubble. (graph)

Reuters:

• Brazil carmakers slash forecasts as June output plunges. Carmakers in Brazil are forecasting the worst drop in production in 16 years after plunging June output highlighted a severe industry slump despite ongoing government stimulus. Production of cars, trucks and buses is expected to fall 10.0 percent in 2014 as sales retreat 5.4 percent, national automakers association Anfavea said on Monday. Brazil's auto output fell 23.3 percent in June from May and plunged 33.3 percent from a year earlier, Anfavea said. Production in the first half of the year was 16.8 percent lower than the first six months of 2013. If output tumbles as much as carmakers now expect, it will be the steepest annual drop since a 23.2 percent plunge in 1998.

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

China Securities Journal:

• China May Grant IPO Permits to 15 Cos. Each Month. About 15 companies are expected to get IPO approval notifications each month from July to Dec., citing an unidentified person from the industry.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.25% to unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 100.0 +1.0 basis point.

• Asia Pacific Sovereign CDS Index 70.25 -.25 basis point.

• FTSE-100 futures +.03%.

• S&P 500 futures -.09%.

• NASDAQ 100 futures  -.03%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (BOBE)/.41

• (AA)/.12

• (AVAV)/.22

• (TCS)/-.06

• (HTZ)/.08

Economic Releases
7:30 am EST

• The NFIB Small  Business Optimism Index for June is estimated to rise to 978.0 versus 96.6 in May.

10:00 am EST

• JOLTs Job Openings for May are estimated to fall to 4350 versus 4455 in April.

3:00 pm EST

• Consumer Credit for May is estimated to fall to $20.0B versus $26.847B in April.
  

Upcoming Splits

• (ALK) 2-for-1

• (ACIW) 3-for-1

Other Potential Market Movers

• The Fed's Kocherlakota speaking, Fed's Lacker speaking, China CPI, 3Y $27B T-Note auction, German trade figures, US weekly retail sales, (KLAC) analyst briefing and the (LRCX) analyst meeting could 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 mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.