Monday Watch

Weekend Headlines 
Bloomberg:

• Malaysia Air Crash Killed 80 Children, Dutch Prime Minister Says. As many as 80 children died in the Malaysian Air jet crash in eastern Ukraine, according to Dutch Prime Minister Mark Rutte, who called the fatalities “too awful for words.” Twenty-three of those children were younger than 12 years old and three were infants, Rutte said at a press conference in The Hague yesterday. The Netherlands lost 193 citizens in the crash, the largest group by nationality among the 298 victims. Identification of bodies has been held up as investigators struggle to access the Ukrainian crash site, which is occupied by pro-Russia insurgents who have been blamed for shooting down the plane.

• EU Struggles to Turn Outrage Into Action After Plane Shootdown. European leaders vented their outrage at the shooting down of a passenger jet over territory held by Ukraine’s rebels and at Russian President Vladimir Putin for frustrating the investigation. Translating that anger into action is another matter. The killing of all 298 passengers and crew of Malaysia Air MH17, desecrated bodies strewn about grain fields with rebels hampering the work of international rescue workers, and denunciations of Putin for sowing Ukraine’s underlying chaos don’t alter the economic links and energy dependence that make the European Union more reluctant than the U.S. to punish Russia.

• Russian Billionaires ‘in Horror’ as Putin Risks Isolation. Russia’s richest businessmen are increasingly frantic that President Vladimir Putin’s policies in Ukraine will lead to crippling sanctions and are too scared of reprisal to say so publicly, billionaires and analysts said. “The economic and business elite is just in horror,” said Igor Bunin, who heads the Center for Political Technology in Moscow. Nobody will speak out because of the implicit threat of retribution, Bunin said by phone yesterday. “Any sign of rebellion and they’ll be brought to their knees.”  

• Gaza Sees Deadliest Day as Israel Expands Ground Attack. Israel’s ground offensive in Gaza entered its bloodiest phase yet as militants killed 13 soldiers and fighting in one neighborhood claimed the lives of at least sixty Palestinians. Gunmen ambushed the Israeli soldiers in a southern part of the coastal strip, shot them and took their weapons, Hamas’ military wing said in text messages sent to reporters. At least 60 Palestinians, including women and children, were killed In the Shuja’iya area of Gaza City today, where residents reported heavy artillery and tank fire.

• Capital Squeeze Forces China Brokers to IPOs Amid Slump. Chinese brokerages, undeterred by the worst performance among the world’s major stock markets, are seeking to raise more than $6.2 billion from initial public offerings as capital constraints squeeze their operations. Guotai Junan Securities Co., China’s third-largest brokerage by revenue, is among six securities firms awaiting approval to sell shares for the first time, according to filings posted on the regulator’s website. They’ll be competing with about 600 companies seeking capital in a market where equities are trading near record-low valuations.

• China's First Mortgage Debt Since Crisis Shows Li Concern. China will revive mortgage-backed debt sales this week after a six-year hiatus, as the government extends help to homebuyers in a flagging property market. Postal Savings Bank of China Co., which has 39,000 branches in the country, plans to sell 6.8 billion yuan ($1.1 billion) of the notes backed by residential mortgages tomorrow, according to a July 15 statement on the website of Chinabond. The last such security in the nation was sold by China Construction Bank Co. in 2007, Bloomberg-compiled data show. Premier Li Keqiang is seeking to avert a collapse of the real-estate market after data last week showed new home prices dropped in a record number of cities in the world’s second-largest economy. The central bank in May called on the nation’s biggest lenders to accelerate the granting of mortgages to first-home buyers, and cities including Nanning, Hohhot and Jinan eased property restrictions.

• Asian Stocks Advance With Rupiah; Corn at Four-Year Low. Asian stocks rose, joining a global rebound after the downing of a passenger jet in Ukraine and Israel’s invasion of Gaza roiled markets. Emerging-market currencies climbed while corn fell to the lowest since 2010. The MSCI Asia Pacific excluding Japan Index advanced 0.3 percent as of 10:50 a.m. in Hong Kong, with three stocks rising for every two that fell.

• Speculators Cutting Bullish Oil Bets. Net longs for WTI slipped by 45,107 to 259,259 futures and options, the lowest level since the seven days ended Jan. 21. Long positions fell 10 percent 304,462, the least since January. Shorts climbed 38 percent, to 45,203, the highest level since January.

• Fox Said to Mull Using Sky Sale to Boost Time Warner Bid. Rupert Murdoch’s 21st Century Fox Inc. (FOXA) is considering using proceeds from the sale of its Italian and German pay-TV assets to boost its offer for Time Warner Inc. (TWX), according to two people familiar with the matter.

Wall Street Journal:

• West Raises Pressure on Russia in Downing of Malaysia Airlines Flight 17. U.S. Charges Moscow With Supplying Rocket, Hiding Evidence.

• Gaza Battle Deadliest in Conflict. Fighting Over Tunnels Kills 13 Israelis, Dozens of Palestinians.

• Barclays Dark Pool Drew Early Alarms. Trading firms and employees raised concerns about high-speed traders at Barclays PLC's dark pool months before the New York attorney general alleged in June that the firm lied to clients about the extent of predatory trading activity on the electronic trading venue, according to people familiar with the firms. Some big trading outfits noticed their orders weren't getting the best treatment on the dark pool, said people familiar with... 

• Boko Haram Captures Nigerian Town. More Than 100 Residents of Damboa Believed to Have Been Killed.

• Four Years of Dodd-Frank Damage. The financial law has restricted credit and let regulators create even more too-big-to-fail companies.

Zero Hedge:

• 5 Things To Ponder: Yellen Talk.

• Chinese Commodity Contagion Leads To First Letter Of Credit Settlement Failure. (graph)

• This Is Not Your Grandma's Business Cycle. (graph)

• Russian Sanctions Retaliation Escalates: Dumps Intel/AMD And Now Foreign Cars.

• On Janet "Pump-And-Regulate, Baby" Yellen's Acting Skills.

• Where The Real Inflation Is. (graph)

• World GDP Hopes Are Collapsing. (graph)

• Goldman(GS) Slams Abenomics; Questions "Validity Of BoJ's Target".

• Listed At "Only" HK$1.94 Million, This Is What Hong Kong's Cheapest "Home" Looks Like.

• BRICS Plan To Become "Political Alliance" To Reform The International Financial System.

• First Detroit, Now Flint Warns Bankruptcy "Train Is Headed For The Cliff".

• 14 Reasons The White House's "The World Is More Stable & Less Violent Than Ever" Meme Is A Lie.

• What Recovery? US Macro Suffers Longest Streak Of Weakness Since Lehman. (graph)

• What Disposable Income Looks Like: With And Without Government Handouts. (graph)

• IMF's Christine Lagarde Joins The Chorus, Warns Market Is "Too Upbeat".

• The 2 Charts That Have BofA Worried About A "Greater Correction" In Stocks.

• A "Tone-Deaf" Obama Mocked By The NYT For Vacationing While The World Burns.

• Market Madness: Geopolitical Chaos Sparks Biggest "Dash-For-Trash" In 17 Months.

• Three Charts Of The Week: Money Printing Is Not Bringing Prosperity To Main Street. (graph)

• White House 'Quietly' Exempts 4.5 Million People In 5 "Territories" From Obamacare.

Business Insider:

• PENTAGON: Russia Likely Helped Whoever Shot Down The Plane.

• In Turkey, Anti-Semitism Is Spiking And Rapprochement With Israel Is Deader Than Its Ever Been.

• The More People Are Exposed To Socialism, The Worse They Behave.

• There's A Mountain Of Evidence Linking Russia To The Downing Of The Malaysia Airliner.

• Jury Says RJ Reynolds Has To Pay $23 Billion To Widow Of Longtime Smoker.

• LACY HUNT: Debt Is Too High And Savings Is Too Low And It's Showing Up In GDP.

• Turkish Prime Minister Accuses Israel Of Having 'Surpassed Hitler In Barbarism'.

• Anti-Israel Riots Break Out In Paris.

• Dubai Stocks Crash. (graph)

• Obama Is Now Boxed In By The Iranian Nuclear Negotiations.

• DEUTSCHE BANK: Here's The Worst-Case Scenario For The Russia-Ukraine Conflict.

• The Fed's Tapering Has Now Evolved Into Tightening.

• The Rebels Who Shot Down MH17 Are Tightly Controlled By Russia's Security Services.

• KERRY: 'Drunken' Separatists Are Piling Bodies At Ukraine Crash Site.

• Here Are The Countries That Would Be Most Affected By A Russia Gas Disruption.

NY Times:

• In a Subprime Bubble for Used Cars, Borrowers Pay Sky-High Rates. 

Reuters:

• Angry Australia PM says Ukraine crash probe resembles 'garden clean-up'. Australia's prime minister voiced deep concern on Monday that Russian-backed rebels remained in control of the crash site of a Malaysian airliner shot down over Ukraine, saying the site looked more like a "garden clean-up" than a forensic investigation. 

• UK fraud office to launch currency trading probe - Sunday Times. Britain's Serious Fraud Office is poised to begin its first criminal investigation of alleged rigging by traders in the foreign exchange market, the Sunday Times reported.

Financial Times:

• Hedge funds braced for some of their worst returns since 2008. Nearly two-thirds of hedge fund managers are anticipating full year returns of 6 per cent or less, according to Preqin, the data provider, which surveyed 150 hedge funds collectively managing $380bn of assets. Of these, 44 per cent expect a full-year return of 5 per cent or less. 

• Emerging market debt issuance hits record high. Emerging and frontier market countries have borrowed a record amount of money in capital markets in the first half of this year, even as central bankers warn that “debt market euphoria” could be storing up trouble for the future. International sovereign bond sales by emerging markets reached $69.47bn in the first six months of the year, a jump of 54 per cent on the same period in 2013.

National Post:

• Robert Fulford: As the world burns, America shrugs. The slow American withdrawal from world affairs has been apparent for a long time, but has never been so glaringly evident as this week in the Middle East. Hamas is at war with Israel, the brutal struggle in Syria frustrates the world, the terrorists of ISIS are making serious progress in Iraq — and now another attempt to deprive Iran of nuclear weapons has, so far, been thwarted. The United States has a position of sorts in each of these arenas, but it’s not powerful in any of them. American influence has faded.

Shanghai Securities News:

• China Growth May Stabilize at 6% as Investment Cools. China's economic growth may stabilize at about 6% in the future after investment growth falls to a normal level, citing Liu Shijin, vice head of Development Research Center of the State Council. High growth of property investment may fall in the next 1-2 years, Liu said. China home demand may peak this year at 12m-13m units, Liu said.

Al-Arabiya:

• ISIS burns 1,800-year-old church in Mosul. Militants from the radical jihadist group the Islamic State of Iraq and Syria have set fire to a 1,800-year-old church in Iraq’s second largest city of Mosul, a photo released Saturday shows. The burning of the church is the latest in a series of destruction of Christian property in Mosul, which was taken by the Islamist rebels last month, along with other swathes of Iraqi territory.

Night Trading

• Asian indices are unch. to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 105.50 +3.5 basis points.

• Asia Pacific Sovereign CDS Index 71.50 -1.0 basis point.

• FTSE-100 futures +.21%.

• S&P 500 futures -.04%.

• NASDAQ 100 futures -.04%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (BBT)/.75

• (STI)/.77

• (HAS)/.36

• (HAL)/.91

• (NVR)/14.96

• (WERN)/.35

• (GPC)/1.26

• (MAN)/1.33

• (AGN)/1.44

• (CMG)/3.10

• (NFLX)/1.15

• (TXN)/.59

• (STLD)/.30

• (CDNS)/.20

• (BXS)/.33

• (BRO)/.41

Economic Releases
8:30 am EST

• Chicago Fed Nat Activity Index for June is estimated to fall to .18 versus .21 in May.

Upcoming Splits

• None of note

Other Potential Market Movers

• The German PPI and (CPB) analyst meeting could also impact trading today.

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

Weekly Outlook

Week Ahead by Bloomberg. 
Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week mixed as rising Mideast turmoil/Ukraine-Russia tensions, rising European/emerging markets debt angst and escalating Fed rate hike concerns offset earnings optimism, short-covering and buyout speculation. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.

Market Week in Review

• S&P 500 1,978.22 +.54%*

 The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 1,978.22 +.54%

• DJIA 17,100.10 +.92%

• NASDAQ 4,432.14 +.38%

• Russell 2000 1,151.61 -.72%

• S&P 500 High Beta 33.23 -.15%

• Wilshire 5000 20,635.8 +.39%

• Russell 1000 Growth 915.43 +.20%

• Russell 1000 Value 1,000.65 +.79%

• S&P 500 Consumer Staples 464.44 -.23%

• Solactive US Cyclical 137.26 +.46%

• Morgan Stanley Technology 972.64 +.94%

• Transports 8,385.40 +1.60%

• Utilities 559.13 -.05%

• Bloomberg European Bank/Financial Services 104.80 +1.2%

• MSCI Emerging Markets 44.05 +.61%

• HFRX Equity Hedge 1,176.43 +.10%

• HFRX Equity Market Neutral 968.17 +.08%

Sentiment/Internals

• NYSE Cumulative A/D Line 226,645 -.63%

• Bloomberg New Highs-Lows Index -49 +21

• Bloomberg Crude Oil % Bulls 48.7 +13.7%

• CFTC Oil Net Speculative Position 399,603 -5.95%

• CFTC Oil Total Open Interest 1,721,704 -1.2%

• Total Put/Call .90 +2.27%

• OEX Put/Call .93 -70.10%

• ISE Sentiment 94.0 -13.76%

• NYSE Arms .98 -6.67%

• Volatility(VIX) 12.06 +.5%

• S&P 500 Implied Correlation 49.90 -.95%

• G7 Currency Volatility (VXY) 5.34 +.19%

• Emerging Markets Currency Volatility (EM-VXY) 5.96 +2.41%

• Smart Money Flow Index 11,550.27 -1.02%

• ICI Money Mkt Mutual Fund Assets $2.565 Trillion -.4%

• ICI US Equity Weekly Net New Cash Flow -$1.072 Billion

• AAII % Bulls 32.4 -14.0%

• AAII % Bears 28.5 -.6%

Futures Spot Prices

• CRB Index 297.42 +.11%

• Crude Oil 103.01 +2.5%

• Reformulated Gasoline 286.68 -1.79%

• Natural Gas 3.95 -4.56%

• Heating Oil 285.05 -.71%

• Gold 1,311.40 -2.2%

• Bloomberg Base Metals Index 200.83 -.5%

• Copper 318.85 -2.58%

• US No. 1 Heavy Melt Scrap Steel 356.83 USD/Ton -.05%

• China Iron Ore Spot 96.60 USD/Ton -.31%

• Lumber 325.90 -2.42%

• UBS-Bloomberg Agriculture 1,324.43 -.38%

Economy

• ECRI Weekly Leading Economic Index Growth Rate 4.4% +10 basis points

• Philly Fed ADS Real-Time Business Conditions Index .1732 -4.42%

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 126.31 +.51%

• Citi US Economic Surprise Index -18.0 -4.9 points

• Citi Emerging Markets Economic Surprise Index -4.80 -.4 point

• Fed Fund Futures imply 38.0% chance of no change, 62.0% chance of 25 basis point cut on 7/30

• US Dollar Index 80.54 +.44%

• Euro/Yen Carry Return Index 143.08 -.51%

• Yield Curve 200.0 -7.0 basis points

• 10-Year US Treasury Yield 2.48% -4.0 basis points

• Federal Reserve's Balance Sheet $4.355 Trillion +.34%

• U.S. Sovereign Debt Credit Default Swap 16.17 -1.46%

• Illinois Municipal Debt Credit Default Swap 162.0 -4.79%

• Western Europe Sovereign Debt Credit Default Swap Index 35.20 -4.58%

• Asia Pacific Sovereign Debt Credit Default Swap Index 71.64 +.60%
  

• Emerging Markets Sovereign Debt CDS Index 199.50 +7.2%
  

• Israel Sovereign Debt Credit Default Swap 87.0 +1.2%

• Iraq Sovereign Debt Credit Default Swap 351.74 +.5%

• Russia Sovereign Debt Credit Default Swap 206.60 +19.5%

• China Blended Corporate Spread Index 307.60 +1.4%

• 10-Year TIPS Spread 2.22% -4.0 basis points

• TED Spread 22.25 +.5 basis point

• 2-Year Swap Spread 19.25 +2.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -10.0 +1.5 basis points

• N. America Investment Grade Credit Default Swap Index 58.82 +1.48%
  

• European Financial Sector Credit Default Swap Index 69.11 -3.33%
  

• Emerging Markets Credit Default Swap Index 237.44 +5.3%
  

• CMBS AAA Super Senior 10-Year Treasury Spread  to Swaps 83.0 +1 basis point

• M1 Money Supply $2.809 Trillion -1.33%

• Commercial Paper Outstanding 1,028.30 -1.3%

• 4-Week Moving Average of Jobless Claims 309,000 -2,500

• Continuing Claims Unemployment Rate 1.9% -10 basis points

• Average 30-Year Mortgage Rate 4.13% -2 basis points

• Weekly Mortgage Applications 341.10 -3.62%

• Bloomberg Consumer Comfort 37.5 -.1 point

• Weekly Retail Sales +4.10% +30 basis points

• Nationwide Gas $3.59/gallon -.04/gallon

• Baltic Dry Index 738.0 -9.34%

• China (Export) Containerized Freight Index 1,088.14 -.36%

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 27.50 unch.

• Rail Freight Carloads 256,256 +12.84%

Best Performing Style

• Large-Cap Value +.8%

Worst Performing Style

• Small-Cap Growth -1.1%

Leading Sectors

• Hospitals +7.1%

• HMOs +2.9%

• Software +2.8%

• Construction +2.3%

• Steel +1.9%

Lagging Sectors

• Restaurants -1.9% 

• Gold & Silver -2.0%

• Coal -2.5%

• Biotech -2.6%

• 3D Printing -2.8%

Weekly High-Volume Stock Gainers (10)

• TWX, PHX, URS, DRC, ROC, ACM, IGT, WLL, JOY and KOG

Weekly High-Volume Stock Losers (15)

• BNFT, EAT, FOX, FAST, WWW, MAT, RAI, FOXA, SNDK, LBY, FRC, RCII, CHUY, AAN and ININ

Weekly Charts
ETFs

• High-Volume Gainers

• High-Volume Losers

Stocks

• High-Volume Gainers

• High-Volume Losers

*5-Day Change

Stocks Rising into Final Hour on Muted Global Response to Russia, Earnings Optimism, Short-Covering, Yen Weakness, Biotech/Tech 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) 12.29 -15.47%

• Euro/Yen Carry Return Index 143.14 +.19%

• Emerging Markets Currency Volatility(VXY) 5.96 -3.09%

• S&P 500 Implied Correlation 49.47 -8.64%

• ISE Sentiment Index 84.0 -9.68%

• Total Put/Call .92 -7.07%

• NYSE Arms 1.07 -19.12% 

Credit Investor Angst:

• North American Investment Grade CDS Index 58.25 -3.79%

• European Financial Sector CDS Index 69.30 -2.57%

• Western Europe Sovereign Debt CDS Index 36.39 +3.38%

• Asia Pacific Sovereign Debt CDS Index 73.89 +2.06%

• Emerging Market CDS Index 237.92 -3.31%

• China Blended Corporate Spread Index 307.60 +1.45%

• 2-Year Swap Spread 19.25 unch.

• TED Spread 22.25 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -10.0 +1.0 basis point

Economic Gauges:

• 3-Month T-Bill Yield .01% unch.

• Yield Curve 200.0 -1.0 basis point

• China Import Iron Ore Spot $96.60/Metric Tonne -.92%

• Citi US Economic Surprise Index -18.0 -1.3 points

• Citi Emerging Markets Economic Surprise Index -4.80 -.3 point

• 10-Year TIPS Spread 2.22 unch.

Overseas Futures:

• Nikkei Futures: Indicating +139 open in Japan

• DAX Futures: Indicating +19 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 50% Net Long

Today's Headlines

Bloomberg: 

• Obama Says Missile That Hit Jet Was Fired From Rebel Area. President Barack Obama said the U.S. has concluded that a surface-to-air missile launched from insurgent-held territory in eastern Ukraine brought down a Malaysia Air jetliner, killing all 298 people on board. “Their deaths are an outrage of unspeakable proportions,” Obama said today at the White House. Russia continues to refuse to de-escalate the conflict, he said, calling for an immediate cease-fire in Ukraine. The U.S. is raising pressure on Russia to end support for the rebels as the United Nations Security Council held an emergency meeting over the catastrophe. Russia’s ambassador to the UN, Vitaly Churkin, told the 15-member council today in New York that the U.S. is pushing Ukraine to escalate tensions and Russia “places all blame on Kiev.” 

• Netanyahu Orders Military to Get Ready for Wider Gaza Incursion. Israeli Prime Minister Benjamin Netanyahu said he ordered the military to prepare to widen a ground operation against Palestinian militants in the Gaza Strip which began after days of aerial bombardment. Israeli soldiers, backed by tanks, heavy artillery, aircraft and warships, moved into the Hamas-controlled enclave late yesterday after 2,100 air strikes over 10 days failed to quash barrages of rockets fired from Gaza at Israel. Gaza fighters also infiltrated Israel by sea and through what Israel says is a network of tunnels dug under the border.

• PBOC Seen Tightening as Citi Lifts GDP Outlook: China Credit. Signs that China's economic recovery is fueled by an escalation in the world's biggest corporate debt load are prompting swap traders to bet on tighter central bank monetary policy. The cost of one-year swaps, the fixed payment needed to receive the seven-day repurchase rate, has risen 39 basis points from July 11 to 4.12% and is set for the steepest five-day jump since June 21, 2013.

• Most European Stocks Drop as Ukraine Conflict Deepens. Most European stocks fell, even as the benchmark index completed a weekly advance, amid concern that the conflict between Ukraine and Russia is deepening. Volvo (VOLVB) AB and Schibsted ASA dropped at least 5.4 percent each after posting second-quarter profit that missed analysts’ estimates. Air France-KLM and Ryanair Holdings Plc led a retreat among European travel stocks. Shire Plc rose 4 percent after AbbVie Inc. agreed to buy the drugmaker for 52.48 pounds ($89.80) a share. Ericsson AB posted the biggest rally since April 2011 after reporting a profit margin that beat forecasts. The Stoxx Europe 600 Index lost less than 0.1 percent to 339.66 at the close in London as three stocks fell for every two that climbed.

• Crude Set for First Weekly Gain in a Month on Ukraine. WTI for August delivery dropped 24 cents to $102.95 a barrel at 12:26 p.m. on the New York Mercantile Exchange. Futures touched $103.94, the highest intraday level since July 8. The volume of all futures traded was 47 percent above the 100-day average for the time of day. Futures are up 2.1 percent this week.

• In Bond Market Musical Chairs, Be Ready for Bids Halting. It’s hard to blame bond investors for being nervous. They accelerated withdrawals from the riskiest debt in the past week, yanking $2.3 billion from high-yield bond funds, the biggest outflow since June 2013, according to a Wells Fargo & Co. (WFC) report. Wall Street’s largest bond dealers cut their net junk-bond holdings to $4.8 billion in the week ended July 9, the lowest level since the Federal Reserve began reporting the data in April 2013. While credit still shows signs of froth -- with new funds to buy junk-rated loans popping up left and right -- investors are increasingly anxious about when the market will turn. Their quickness to dump high-risk securities for the safest ones around shows a lack of faith that easy-money policies from central banks around the world are fueling sufficient economic growth to keep this rally going. Aside from lackluster growth, there’s also concern that markets will unravel as the Fed tries to withdraw its stimulus. Fed Chair Janet Yellen herself has said she sees signs of excessive risk-taking, particularly in the markets for bonds and loans rated below investment grade. “My nervousness about what is going on in the high-yield market is escalating,” Peter Tchir, head of macro strategy at Brean Capital LLC in New York said in a July 17 e-mailed note. “It is a bit like musical chairs. Everyone walking in a circle pretending not to be eyeing the chair, but scared that when the music stops, they won’t have a chair -- or, in this case, a bid.”

• Four Cases of Life-Threatening Plague Found in Colorado. Three more cases of plague were found in Colorado after a man was reported to have the deadliest form of the disease last week. 

Wall Street Journal:

• Malaysia Airlines Crash in Ukraine: Streaming Coverage.

• Bank of Italy Slashes 2014 Economic Growth Forecast. Central Bank Said Growth in Next Two Years Would Be Modest. The Bank of Italy dealt another blow to hopes of a convincing recovery in the country this year as it slashed its economic growth forecast and warned of "downside risk." The Bank of Italy said economic growth in the next two years would be modest, something the Italian government is hoping it can change. The central bank slashed its projection of Italy's gross domestic product growth rate for 2014 to 0.2% from its January forecast of a 0.7% rise, while it raised its 2015 forecast to an increase of 1.3% versus an earlier estimate of 1.0% growth.

MarketWatch.com:

• Stocks are ignoring reality of MH17. Opinion: Fallout may soon become too great for investors hide from.

CNBC: 

• Bigger worry than geopolitics? The Fed, of course.

• Real traders more worried about Gaza than plane crash.

ZeroHedge:

• The Cancer Death-Panel App Is Here.

• Stocks Ramp As Shorts "Squeezed" Most In A Month. (graph)

• US Treasury Admits Collateral Problem In Bond Market; Considers Issuing Ultra Long-Dated Bonds.

• Consumer Confidence Slumps To 4 Month Lows, Biggest Miss Since Dec 2012. (graph)

• Chinese Home Prices Decline In Record Number Of Cities, Average Sale Price Has Biggest Drop Since Lehman. (graph)

• Holding Company Of Portugal's 2nd Largest Bank Just Filed For Bankruptcy Protection.

• Why One Big Bank Is "Worried That The Market Is Stretched And Could Correct Rapidly".

Business Insider:

• Ukraine Could Soon Get Much Worse.

• Witness At The Crash Site In Ukraine: 'There Are Bodies Scattered Everywhere'.

• This Is The Former Russian Military Officer Who Might Be Behind The Shooting Of MH17.

• Yahoo's(YHOO) Share Of The Search Market Fell Below 10% For The First Time Ever.

• FedEx(FDX) Indicted For Allegedly Shipping Illegal Pharmacy Meds.

• Bacon Prices Are Going Bananas. (graph)

Reuters:

• Exclusive: Morgan Stanley rebuilds in commodities trading. After more than a year of scaling back in commodities, Morgan Stanley (MS.N) is ready to expand. The Wall Street bank plans to hire about a dozen traders, sales staff and other professionals in the United States. It's building up commodities trading and financing businesses that can profit despite tougher regulations, people familiar with the matter told Reuters.

• VF Corp(VFC) 2nd-qtr profit beats, but forecast misses Street. The company's shares fell as much as 2.4 percent on Friday.

• Further sanctions would have "chilling effect" on Russia -IIF. Further sanctions on Russia would have a "broader chilling effect" on the country and its companies that are already largely excluded from raising foreign capital, a lobbying group representing 500 world financial institutions and major banks warned on Friday.