Bull Radar

Style Outperformer:

• Large-Cap Growth -.70%

Sector Outperformers:

• 1) Retail +.52% 2) Banks +.27% 3) Internet -.05%
  

Stocks Rising on Unusual Volume:

• TNET, CNVR, ULTA, VNET, XPO, IPI and NDLS

Stocks With Unusual Call Option Activity:

• 1) ULTA 2) ACAD 3) TAP 4) AVNR 5) ACT

Stocks With Most Positive News Mentions:

• 1) BID 2) ECN 3) LULU 4) YHOO 5) SCTY
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Friday Watch

Evening Headlines 
Bloomberg:

• U.S. Joining EU on Russian Curbs Sets Stage for Reprisal. The U.S. will join the European Union in stiffening sanctions on Russia over Ukraine, prompting the government in Moscow to threaten retaliation. The U.S. will “deepen and broaden” measures against Russia’s financial, energy, and defense industries, President Barack Obama said in a statement yesterday, hours after an announcement by the EU. The latest round of economic restrictions from both the U.S. and the EU will take effect today. European companies and taxpayers “will have to pick up the costs” for the penalties, Dmitry Peskov, a spokesman for Russian President Vladimir Putin, told Interfax.

• China Credit Gauge Misses Estimates as Growth Risks Escalate. China’s broadest measure of new credit trailed analyst estimates in August, adding to the government’s challenge to meet its economic growth target amid a slumping property market and a pullback in manufacturing. Aggregate financing was 957.4 billion yuan ($156 billion), the People’s Bank of China said today in Beijing, compared with the 1.135 trillion yuan median estimate of economists surveyed by Bloomberg. New local-currency loans were 702.5 billion yuan, and M2 money supply grew 12.8 percent from a year earlier. 

• Will Currencies Undermine Calm in Markets? by Mohamed A. El-Erian.

• Most Asian Stocks Retreat on China Lending; Dollar Gains. Most Asian stocks slipped with gold after Chinese lending data as wheat dropped a fifth day. The dollar headed for its biggest weekly gain versus major peers since November as investors assessed the U.S.-rates outlook before the Federal Reserve meets next week. The MSCI Asia Pacific Index (MXAP) lost 0.2 percent by 11:20 a.m. in Tokyo and is set for its longest losing streak in four years.

• Treasury Is Weighing Action on Hedge-Fund Tax ‘Loophole’. The U.S. Treasury Department said it’s considering ways to end a “loophole” that allows hedge-fund managers to avoid taxes by routing their investments through an insurance company in low-tax countries like Bermuda. The Treasury, in an Aug. 9 letter obtained by Bloomberg News today, told Senate Finance Committee Chairman Ron Wyden that it’s concerned about such arrangements and is weighing legislative and administrative responses. Among the hedge-fund managers who have set up Bermuda insurance vehicles in recent years are John Paulson’s Paulson & Co. and Steven A. Cohen’s SAC Capital Advisors LP. Cohen has since cut ties with his insurer.

• Investors Pull $766 Million From Junk-Bond Funds, Lipper Says. Investors withdrew $766 million from U.S. funds that buy high-yield bonds in the past week, the second straight outflow, according to data provider Lipper. The pullback brings net outflows for the funds to $9.7 billion this year, the data show. Investors also pulled $342 million from U.S. leveraged loan funds, the ninth straight weekly outflow, according to Lipper.

Wall Street Journal:

• Sanctions Over Ukraine Put Exxon(XOM) at Risk. Deal With Russia's Rosneft to Drill in Arctic Is Crucial to Oil Company.

• Treasury Monitoring Swaps Loopholes at U.S. Banks. Some U.S. Banks Are Shifting Some Trading Operations Overseas to Avoid U.S. Swaps Rules. 

• The Genocide of Mideastern Christians. Americans haven't suddenly turned interventionist. They're moved by the Islamic State's particular evil.  

• Doctoring in the Age of ObamaCare. Endlessly entering data or calling for permission to prescribe or trying to avoid Medicare penalties—when should I see patients? 

Fox News:

• Two years after Benghazi, US Attorney's Office wants more time to prosecute suspect. (video)

• Obama authorizes military strikes against ISIS leadership. (video) President Obama has authorized the Pentagon to target and kill leaders of the Islamic State militant group, with the organization’s head Abu Bakr al-Baghdadi being at the top of the administration’s list.

CNBC:

• Amid Alibaba fever, reasons for caution in IPO market. The highly anticipated debut of Alibaba Group Holding, the Chinese e-commerce group, will come amid the busiest year for initial public offerings since the technology bubble burst in 2000.

• Iron ore glut: Are shutdowns the only way out? Spot iron ore prices are at their lowest level since September 2009 amid a flood of excess inventory and waning demand from China, the world's largest iron ore consumer, and experts say small mine closures may be the only catalyst for higher prices.

Zero Hedge:

• Meet The Puppetmasters: Here Are The 25 Most Politically Influential Billionaires In The US.

• Why US Interest Rates Can Never Rise (In 1 Chilling CBO Chart). (graph)

• Majority Of Chinese Say War With Japan Is Just A Matter Of Time.

• Martin Armstrong Warns "Spain Is Moving Towards Civil War".

• "Million-Dollar Parking Spots" – Peak Stupidity Has Arrived In Manhattan.

Business Insider:

• The Assad Regime Saw A Clear Opening In Obama's ISIS Speech.

NY Times:

• Stressed Borrowers Rattle Resurgent Subprime Lending Industry. Subprime lenders have surprised everyone in recent years by churning out billions of dollars in loans that have not led to a pileup of bad debts. But this month, some signs have appeared that suggest subprime lenders are pushing this spree to the limit. The problems are occurring when they extend credit to particularly risky borrowers or make loans that are harder to repay. The latest indicators are a reminder of the constraint that has always dogged subprime lending: The number of stressed borrowers who can take on debt and repay it with relative ease is often smaller than lenders believe. “We’re five years into the new cycle, so you’ve got to imagine that there are excesses cropping up,” said William Ryan, of Portales Partners, a research firm.

Reuters:

• U.S.-based stock funds attract $982 mln over week -Lipper.

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

AP:

• CIA: Islamic State group has up to 31,500 fighters. A CIA spokesman says a new intelligence assessment estimates that the Islamic State group can muster between 20,000 and 31,500 fighters across Iraq and Syria, up from a previous figure of 10,000.

Financial Times:

• International Energy Agency notes ‘remarkable’ oil demand growth fall. The world’s appetite for crude oil slowed at a “remarkable” pace during the second quarter because of weak economic growth in Europe and China, prompting the International Energy Agency to revise lower its demand forecasts for 2014 and 2015.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.50% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 91.0 +1.0 basis point.

• Asia Pacific Sovereign CDS Index 63.50 unch.

• FTSE-100 futures +.27%.

• S&P 500 futures +.03%.

• NASDAQ 100 futures  +.04%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (DRI)/.32 

Economic Releases
8:30 am EST

• Retail Sales Advance for August are estimated to rise +.6% versus unch. in July.

• Retail Sales Ex Autos for August are estimated to rise +.3% versus a +.1% gain in July.

• Retail Sales Ex Autos and Gas for August are estimated to rise +.5% versus a +.1% gain in July.

• The Import Price Index for August is estimated to fall -1.0% versus a -.2% decline in July.

9:55 am EST

• Preliminary Univ. of Mich. Consumer Confidence for September is estimated to rise to 83.3 versus 82.5 in August.

10:00 am EST

• Business Inventories for July are estimated to rise +.4% versus a +.4% gain in June.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone Industrial Production data and (STX) analyst meeting could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and industrial 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 day.

Stocks Slightly Lower into Final Hour on New Russia Sanctions, Scotland Independence Jitters, Global Growth Fears, Energy/Biotech Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Slightly Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 12.91 +.23%

• Euro/Yen Carry Return Index 144.43 +.22%

• Emerging Markets Currency Volatility(VXY) 6.98 -1.69%

• S&P 500 Implied Correlation 48.02 -1.58%

• ISE Sentiment Index 108.0 +12.5%

• Total Put/Call .96 +2.13%

• NYSE Arms .68 -24.91% 

Credit Investor Angst:

• North American Investment Grade CDS Index 59.10 +.80%

• European Financial Sector CDS Index 59.0 -.85%

• Western Europe Sovereign Debt CDS Index 28.80 +.81%
• Asia Pacific Sovereign Debt CDS Index 63.63 +.16%

• Emerging Market CDS Index 248.19 +.89%

• China Blended Corporate Spread Index 305.27 -.95%
• 2-Year Swap Spread 23.5 +.75 basis point

• TED Spread 22.0 +.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -15.55 -.25 basis point

Economic Gauges:

• 3-Month T-Bill Yield .01% -1.0 basis point

• Yield Curve 198.0 +1.0 basis point

• China Import Iron Ore Spot $81.90/Metric Tonne -.36%

• Citi US Economic Surprise Index 35.50 -2.9 points

• Citi Emerging Markets Economic Surprise Index -11.70 +.9 basis point

• 10-Year TIPS Spread 2.13 +2.0 basis points

Overseas Futures:

• Nikkei Futures: Indicating -50 open in Japan

• DAX Futures: Indicating -6 open in Germany

Portfolio: 

• Higher: On gains in my retail sector longs and emerging markets shorts

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Today's Headlines

Bloomberg:

• Obama Says U.S. to Join EU in Tightening Russia Sanctions. The U.S. joined the European Union in stiffening sanctions on Russia over Ukraine, as the 28-member bloc offered to ease the restrictions once the Kremlin makes a good-faith effort to end the conflict. The U.S. will “deepen and broaden” measures against Russia’s financial, energy, and defense industries, President Barack Obama said in a statement today, adding that the sanctions will take effect tomorrow and details will be released then. The EU said it would also enact its latest round of economic restrictions tomorrow. Europe is acting against a peaceful solution in Ukraine, the Russian Foreign Ministry said. 
• China Auto Sales Grow at Slowest Pace in Five Months. Passenger-vehicle sales in China rose at the slowest pace since March as the economy slows and the government steps up anti-monopoly probes into foreign carmakers in the world’s biggest auto market. 
• Most European Stocks Decline as Investors Weigh Earnings. Most European stocks fell for a fifth day as investors weighed mixed earnings from companies including Ocado (OCDO) Group Plc and Next Plc, while the European Union said that new sanctions against Russia will be enacted tomorrow. Next slid the most since April after posting first-half profit that missed analyst predictions. Ocado gained after third-quarter sales grew more than analysts had estimated. Air France-KLM Group added 1.9 percent after saying it plans to increase earnings by as much as 10 percent a year between 2013 and 2017. The Stoxx Europe 600 Index fell 0.1 percent to 344.27 at the close of trading, paring earlier losses of as much as 0.6 percent.
• Commodities Fall to 5-Year Low With Plenty of Supplies. Commodities fell to a five-year low on speculation abundant supplies and slowing economic growth outside of the U.S. will curb demand for raw materials. The Bloomberg Commodity Index declined 1.2 percent by 5:06 p.m. in London to the lowest since July 2009. Brent oil traded at the cheapest since 2012, wheat, corn and soybeans retreated to four-year lows and gold slumped to a seven-month low.
• Auto-Loan Boom in U.S. Bringing More Bad Debt: Chart of the Day. Auto loans are in the midst of a U.S. boom that is coming to “the end of the road,” according to Pierre Lapointe, head of global strategy and research at Pavilion Global Markets. The amount borrowed has climbed for 15 consecutive quarters, the longest streak since 2005. The second quarter’s increase, 9.2 percent, was the biggest since 2002. “Credit quality is now deteriorating” as historically low interest rates and competition among lenders spur borrowing for car and truck purchases, Lapointe and a colleague, Alex Bellefleur, wrote in a report yesterday.
• Junk Blitz Making September Busiest Since 2008: Credit Markets. The riskiest borrowers are leading the busiest September in at least six years for speculative-grade bond sales in the U.S. as Moody’s Investors Service warns that protections in the debt are declining. J.C. Penney Co. (JCP), the retailer whose liquidity Goldman Sachs Group Inc. warned a year ago was under strain, is among issuers that have sold or are planning more than $17.5 billion in bonds this month, data compiled by Bloomberg show. AK Steel Holding Corp., which hasn’t posted an annual profit since 2008, is selling $430 million of notes. Clear Channel Communications Inc., the most leveraged U.S. broadcaster, raised $750 million. 

Wall Street Journal:

• Wilbur Ross: Deflation, Not Inflation, Is the Bigger Concern. He argued that governments–which have seen financing costs decline–have been the biggest beneficiary of QE, and not the private sector. Central banks have tended to be more focused on the dangers of inflation, he said, but with globalization, technology and a glut of government debt, “maybe deflation is what we should be fearing the most and combating the most.”

CNBC:

• A higher-ed bubble even bigger than student loans. (graph)

ZeroHedge:

• BofA(BAC) Warns "Everyone Should Pay Attention To Treasury Vol". (graph)
• Russia Responds To The Latest European Sanctions: "You Leave Us No Choice".
• Initial Jobless Claims Surge Most Since June. (graph)
• Ruble Plunges To Record Low As US Stocks Give Up Scotland "No" Poll Gains; Bond Yields Sliding. (graph)
• Ukraine Admits Resurgent Separatists Extend Control All The Way To Sea Of Azov.
• Obama's Broad Coalition Cracks - UK, Germany Won't Support Airstrikes In Syria.

Business Insider:

• Deutsche Bank Just Released A 104-Page Report On What May Be The World's Last Mega-Bubble.
• Yazidi Girl Tells Of Horrific Ordeal As An ISIS Sex Slave.
• Obama Now Owns A War He Helped Create.
• The Commodity Currencies Are Rolling Over Again. (graph)
• The New Map Of The Ukraine Conflict Is Alarming.

Reuters:

• Special Report: Scots warm to the power of Yes. In late August, Gordon Brown and Alistair Darling shared the stage as part of the push to keep Scotland in the United Kingdom. The two Scotsmen, Britain’s prime minister and finance minister between 2007 and 2010, often fought each other in office. Darling once described his old boss as “brutal and volcanic.” Brown reportedly wanted to sack Darling during the financial crisis. But now here was Brown waxing lyrical about Darling, who heads the “Better Together” campaign that is trying to convince Scots to reject independence.

Bear Radar

Style Underperformer:

• Large-Cap Growth -.50%

Sector Underperformers:

• 1) Biotech -1.51% 2) Gold & Silver -1.12% 3) Airlines -.94%

Stocks Falling on Unusual Volume:

• EOPN, INVE, VNET, MW, BRC, RH, PEIX, CROX, MBUU, GPRE, TRUE, BITA, USLA, SDRL, CCIH, MDVN, APD, REX, CBPX, ADS, CMRX, GPRO, MTDR, LEJU and MEP

Stocks With Unusual Put Option Activity:

• 1) NFX 2) S 3) RH 4) ULTA 5) IYR
  

Stocks With Most Negative News Mentions:

• 1) TSLA 2) VALE 3) ESRX 4) TIF 5) CROX
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Mid-Cap Value -.13%

Sector Outperformers:

• 1) Hospitals +1.67% 2) Gaming +1.36% 3) Retail +.57%
  

Stocks Rising on Unusual Volume:

• LULU, JDSU, WB, FNSR, AUXL, TIVO, GOGO, DGLY and LE

Stocks With Unusual Call Option Activity:

• 1) ADSK 2) KR 3) TIVO 4) OREX 5) IP

Stocks With Most Positive News Mentions:

• 1) LULU 2) BBRY 3) FB 4) HOG 5) JLL
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume