Bull Radar

Style Outperformer:

• Large-Cap Growth +.32%

Sector Outperformers:

• 1) Restaurants +.97% 2) Gaming +.59% 3) Banks +.53%
  

Stocks Rising on Unusual Volume:

• VSLR, LII, SWI, ANTH, SCMP, HAS, GPRO, SCTY, HW and EBAY

Stocks With Unusual Call Option Activity:

• 1) SE 2) EXEL 3) GDXJ 4) JNUG 5) APOL
  

Stocks With Most Positive News Mentions:

• 1) HAS 2) ADT 3) AMZN 4) LMT 5) BMY
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Morning Market Internals

NYSE Composite Index:

• Volume Running 2.2% Below 100-day average
• 5 Sectors Rising, 5 Sectors Declining
• 28.6% of Issues Advancing, 67.9% Declining
• 68 New 52-Week Highs, 235 New Lows
• 43.7% of Issues Above 200-day Moving Average
• Average 14-Day RSI 41.2
• Vix 12.08
• Total Put/Call .84
• TRIN/Arms 1.03

Monday Watch

Today's Headlines 

Bloomberg:

• Greece’s Real Crisis Deadline Arrives With ECB Debt to Pay. Greece has reached the deadline it couldn’t afford to miss, for a bill it can finally afford to pay. Monday is the day the country must reimburse the European Central Bank 4.2 billion euros ($4.5 billion), including interest, as bonds bought during its last debt crisis mature. The impending reckoning may have been the factor that eventually forced Prime Minister Alexis Tsipras on July 13 to accept the austerity he and his electorate had previously rejected, in return for the funds needed to keep his nation from default. As Greece blew past multiple political and financial supposed end-dates over the past five months, July 20 always remained make-or-break. European Union law bans the ECB from financing governments, meaning a default would probably require it to pull support from Greek lenders, leaving an exit from the single currency all but assured.

• Greek Banks to Open Monday as Tsipras Prepares for Another Vote. Greek banks reopen Monday three weeks after they were shut down to prevent their collapse, as Prime Minister Alexis Tsipras prepares for a second parliamentary vote crucial to securing a bailout. Greeks will regain access to some basic bank services, including the ability to deposit checks and access safe deposit boxes. Although customers will continue to face restrictions on cash withdrawals, the daily limit of 60 euros ($65) will be replaced by a cumulative maximum of 420 euros a week.

• Merkel Holds Out Prospect of Limited Greek Debt Relief. German Chancellor Angela Merkel held out the prospect of limited debt relief for Greece if it follows through on the terms of a third bailout, while insisting that Greek membership in the euro precludes a debt writedown. Nations in the 19-member currency union will consider extending maturities and reducing interest rates on Greek bonds only after the first assessment of whether Greece is meeting pledges for more austerity and overhauling its labor market, the German leader said -- “not now, but then.”

• France’s Hollande Proposes Creation of Euro-Zone Government. French President Francois Hollande said that the 19 countries using the euro need their own government complete with a budget and parliament to cooperate better and overcome the Greek crisis. “Circumstances are leading us to accelerate,” Hollande said in an opinion piece published by the Journal du Dimanche on Sunday. “What threatens us is not too much Europe, but a lack of it.” 

• In Bailouts, China’s Bias for the Complex May Be Storing Up Risk. The second major bailout program from China’s leadership this year underscored its preference for relying on the banking system to shore up markets, a strategy that risks the need for further intervention over time. As details emerged last week on a stock-support plan valued at as much as $483 billion, investors became better acquainted with an agency called China Securities Finance Corp. that previously had a limited role in economic policy. The unit is now being deployed, with financing from state-owned banks, to buy up the nation’s depreciated equities. 

• China Regressing to a Frontier Market: Padamadan. (video)

• Volkswagen China Sales Decline for First Time Since 2005. Volkswagen AG, which counts China as its largest market, posted the first decline in first-half deliveries there in a decade as demand slowed with the economy. VW’s deliveries in China and Hong Kong fell 3.9 percent from a year earlier to 1.74 million units in the January to June period, the company said in a statement. First-half sales in China last fell in 2005, when deliveries slumped 14 percent. 

• Aussie Banks Must Set Aside More Capital for Mortgage Losses. Australia’s biggest lenders will have to set aside more capital against potential losses on home loans, the nation’s banking regulator said Monday in its latest move to bolster the financial system. Under rules coming into force on July 1, 2016, the average risk weight on residential mortgage exposures will rise to at least 25 percent from about 16 percent, the Australian Prudential Regulation Authority said in a statement. That will increase the capital requirements of the biggest four banks by about A$12 billion ($8.9 billion), according to Goldman Sachs Group Inc. and Morgan Stanley.

• Barclays May Lose 1 in 4 Jobs as Cost-Cutting Plans Carried Out. Barclays Plc may see its workforce shrink by about a fourth in coming years as the firm carries out existing programs to reduce costs, according to a person with knowledge of the projections. 

• Asian Stocks Decline, Paring Biggest Weekly Advance Since April. Asian stocks outside Japan dropped as materials and information technology shares led declines after a regional benchmark index posted the biggest weekly advance since April. The MSCI Asia Pacific Excluding Japan Index fell 0.1 percent to 463.99 as of 8:03 a.m. in Hong Kong.

• Gold Plunges 4.2% to Lowest Since March ’10 as Platinum Slides. Gold sank 4.2 percent to the lowest level in more than five years, dropping for a sixth day, on prospects for higher U.S. interest rates and after China said it held less metal in reserves than some analysts expected. Platinum extended its decline to the lowest since 2009.

• Saudi Arabia Crude Exports Fall to Five-Month Low on China. Saudi Arabia’s crude oil exports slumped to a five-month low in May as local refineries used more supplies and some plants in China closed for maintenance. The world’s biggest oil exporter shipped 6.94 million barrels a day in May, down from 7.74 million in April and the lowest since December, according to data published Sunday on the website of the Joint Organizations Data Initiative, or JODI. The drop in exports is more than Qatar produces in one month. New refineries in Saudi Arabia are leaving less crude available for overseas at a time when the market is in surplus. Chinese refineries had almost 1 million barrels a day of capacity offline in May, almost twice the total in April, according to London-based Energy Aspects. Brent crude futures declined for the past two months as U.S. drillers added more rigs and OPEC production exceeded its monthly output target for more than a year. “It’s very clear that if China sneezes, Saudi oil exports will get a cold,” Mohammed Ramady, professor of economics at King Fahad University for Petroleum and Minerals at Dhahran, Saudi Arabia, said by phone on Sunday. “The fall in Saudi crude exports in May illustrates the tight rope of opportunities facing major oil exporters with their dependence on a single market like China for sustaining their growth.”  

• Hedge Funds Dump Crude Oil as Iran Deal Threatens Prolonged Glut. Speculators cut bullish bets on oil to the lowest level since March because an agreement over Iran’s nuclear program threatens to prolong a global supply glut. Money managers reduced their net-long position in West Texas Intermediate crude by 15 percent in the week ended July 14, U.S. Commodity Futures Trading Commission data show. Longs dropped 7.9 percent and short wagers rose 4.2 percent.

• Fuel Feud Pits Saudis’ Secretive Ghawar Against Sprawling Bakken. How much crude the Saudis pump out of their largest field may determine the fate of some of America’s oilmen. Ghawar is the world’s oil spigot. It’s the biggest conventional field in the world’s biggest-producing country, Saudi Arabia. Statistics about Ghawar—a narrow, deep deposit in porous limestone—are a state secret. The best guess, according to Rasoul Sorkhabi, a geology professor at the University of Utah, is that the field accounts for about 60 percent of Saudi oil. As such, Ghawar is the country’s lever on oil prices. Too high, and the Saudis open the nozzle; too low, and they close it a bit. They’ve been pumping a lot of oil of late—the nation produced a record 10.6 million barrels a day in June, according to data the country provided to OPEC—in part to drive U.S. shale drillers out of business.

Wall Street Journal: 

• For Many Firms, China’s ‘New Normal’ Spells Doom. Industrial city’s struggle illustrates how slower economic growth is squeezing manufacturers. What Chinese leaders are welcoming as the “new normal”—an era of slower but better growth—translates for many businesses as a wrenching battle for survival. Tengzhou, an industrial city of 1.5 million in eastern Shandong province, grew fast during the years of cheap, abundant capital. But since China’s slowdown started, a number of its...

• After Five Years, Dodd-Frank Is a Failure. The law has crushed small banks, restricted access to credit, and planted the seeds of financial instability. Tuesday will mark five years since President Obama’s signing of the Dodd-Frank law, the most sweeping rewrite of the country’s financial laws since the New Deal. Mr. Obama told the country that the legislation would “lift our economy.” The statute itself declared that it would “end too big to fail” and “promote financial stability.” None of that has come to pass. Too-big-to-fail institutions have not disappeared. 

• A Not-So-Transparent Attempt to Cap Drug Prices. Forcing the disclosure of profits on high-cost drugs reflects a misunderstanding of how research works. 

• Trump and His Apologists. The conservative media who applaud him are hurting the cause.

Zero Hedge:

• Chinese "Bubble Trouble": Why UBS Thinks We're Only "Half Way Through". (graph)

• Portugal’s Debts Are (Also) Unsustainable.

• "The Streets Of Athens Will Fill With Tanks": Kathimerini Reveals Grexit "Black Book" Shocker.

• Lies, Damned Lies, & Inflation Statistics.

• Janet Yellen Was Half Right. (graph)

• How The Fed And Wall Street Are Eating Their Seed Corn.

Business Insider:

• Wall Street has stopped believing in the most important idea holding China together.

• The 'leveraged loan' time bomb just exploded. Millennium Health – biggest drug-testing lab in the US and biggest recipient of Medicare drug-testing payments, which account for one-third of its revenues – is Exhibit A of how a credit bubble allows companies and banks to put yield-desperate investors, blinded by a zero-interest-rate policy, through the wringer.

• China's corporate debt pile is a huge threat to its slowing economy.

• Greece's debt crisis has exposed growing rifts in the euro zone.

• The Iran deal is immediately going to face this huge problem.

• There's a chilling new trend among ISIS militants.

• Norway is so liberal a man who murdered 77 people was just accepted to the country's top college.

• More job losses are coming for the US shale industry.

Telegraph:

• France’s staggering debt levels are far more worrying than ours. Francois Hollande’s French administration has struggled to cope with a sluggish economy and uncertainty in the eurozone. 

• Commodities crash could turn Australia into a new Greece. The commodities boom made Australia the lucky country but rising debt and a slump in Chinese demand for resources signal tough times ahead Down Under. 

Weekend Recommendations

• None of note

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 104.5 -1.25 basis points.

• Asia Pacific Sovereign CDS Index 57.75 -1.25 basis points.

• S&P 500 futures +.03%.

• NASDAQ 100 futures +.02%.

Morning Preview Links

Earnings of Note

Company/Estimate 

• (GPC)/1.32

• (CALM)/1.04

• (HAL)/.29

• (HAS)/.29

• (MS)/.73

• (BMI)/.73

• (BXS)/.35

• (BRO)/.44

• (IBM)/3.79

• (SANM)/.49

• (RMBS)/.13

• (STLD)/.21

• (WERN)/.42

• (ZION)/.38

Economic Releases

• None of note

Upcoming Splits

• None of note

Other Potential Market Movers

• The RBA Minutes and the Fed Board Meeting to establish risk-based capital surcharges could also impact trading today.

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

Weekly Outlook

Week Ahead by Bloomberg. 

Wall St. Week Ahead by Reuters.

Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly lower on Fed rate hike worries, earnings outlook concerns, China bubble-bursting fears, oil weakness, emerging markets/US high-yield debt angst and technical selling. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.

Today's Headlines

Bloomberg:     

• Khamenei Says Iran’s Regional Alliances Intact After U.S. Deal. Iran’s Supreme Leader Ayatollah Ali Khamenei said the nuclear deal with the West won’t change the Islamic Republic’s relationship with the U.S. or its alliances in the region. In his first speech since the Joint Comprehensive Plan of Action (JCPoA) was announced in Vienna July 14, Khamenei thanked President Hassan Rouhani and Iran’s negotiators for their “hard work and efforts” and asked officials to carefully consider the text of the deal and allow it to run its course through the approval process without misunderstanding its content. “Whether this text is approved or not, we will not cease the support of our friends in the region,” Khamenei said in an address to hundreds of worshippers in Tehran that was broadcast live on state TV. “And our policy towards arrogant America will not change at all.” Iran will continue backing its allies in the Middle East -- where its policies “differ 180 degrees from America’s” -- including its support for Syria’s government, Hezbollah in Lebanon, the Yemeni people and Palestinians, Khamenei said.

• Greek Banks to Reopen as Tsipras’s New Cabinet Takes Over. Greek banks will reopen on Monday as Prime Minister Alexis Tsipras rebuilds his government to shore up support for a bailout agreed with the country’s creditors. The banks, which have remained closed since June 29, will open July 20, the government said on Saturday. Most capital controls concerning withdrawals and money transfers will remain, and while the daily limit was held at 60 euros ($65), a cumulative limit of 420 euros a week was set, it said. Lenders will reopen a week after Tsipras and creditors agreed to a bailout program and Greek lawmakers approved legislation needed to release funding for the country. Hours after the vote, the European Central Bank approved emergency financing for the country’s lenders and the European Union finalized a bridge loan on Friday to provide a stop-gap until a full three-year rescue program, worth as much as 86 billion euros, is settled.

• China tightens grip on online lenders after stocks plunge. China tightened control of online financing, saying it is looking to develop healthy industry growth amid criticism the platforms contributed to an equities plunge that wiped $US3 trillion off the market. All client funds must be parked at established banks and Internet finance firms will need approval from financial as well as cyberspace regulators, the People's Bank of China said in a statement on its website on Saturday. They must also provide sufficient disclosure and send risk reminders to clients.

• Brazil’s Political Crisis Grows as Top Rousseff Ally Rebels. The turmoil swirling around President Dilma Rousseff and Brazil’s other top politicians grew more intense as the head of the lower house announced an open rebellion against her. Lower house President Eduardo Cunha urged his party, the biggest in the country, to abandon the ruling coalition and identified himself a member of the opposition. Cunha made his announcement in a morning press conference Friday following allegations he received kickbacks in exchange for a contract with the state-run oil company. He denied wrongdoing.

• Emerging Markets Had Biggest Outflow Since 2009, JPMorgan Says. Capital outflows from developing countries reached $120 billion last quarter, the most since 2009, fueled by an exodus from China amid concern over the strength of the country’s economy, according to JPMorgan Chase & Co. It was a reversal from the first quarter when emerging markets had $80 billion of inflows, analysts led by Nikolaos Panigirtzoglou wrote in a note Friday. Investors pulled $142 billion from China between April and June. That extended the total outflow from the world’s second-largest economy over the past five quarters to $520 billion, wiping out all the inflows since 2011 when the country’s growth started to slow, the analysts said.

• Dollar Emerges Champion With Yellen Cementing Higher-Rates Path. The dollar recorded its best week in two months after Federal Reserve Chair Janet Yellen reaffirmed she expected the central bank to raise interest rates this year for the first time in almost a decade. The Bloomberg Dollar Spot Index climbed to a four-month high after a report showed annualized consumer prices rose for the first time in six months in June. The greenback, which was the best performer among a group of 10 developed-nation currencies in the past month, gained this week as investors shifted focus to the outlook for U.S. rates after concern over Greece and China receded. 

• Commodity Meltdown Deepens as Expanding Gluts Drag Down Shares. There are few places left to hide from the commodity meltdown that’s dragging down shares of miners and energy producers and sending gold prices to their lowest since 2010. The Bloomberg Commodity Index fell in a four-day selloff that’s the worst losing streak in three months. Brent oil capped the longest run of weekly declines since January, copper is languishing near its lowest since 2009 and wheat fell for a sixth session.

• Traders Align With Fed on Inflation as Rate-Hike Bets Intensify. After chiding the Federal Reserve earlier this year for having overly bullish inflation expectations, the Treasury market is starting to concede that consumer prices are set to move higher. Traders are gravitating toward Fed Chair Janet Yellen's stance that the rout in oil prices will fade, inflation will tick up and the U.S. economy will be able to withstand the first increase in interest rates in almost a decade.

Wall Street Journal:

• Chattanooga Shootings Spur Unity in Grief but Stir Concerns Over Faith. Some in largely Christian region express worries about Islam. The attacks on two military sites have not only stirred an outpouring of grief and patriotism in this city set amid the sylvan ridges and mountains of East Tennessee, but they have also cast in sharp relief tensions over non-Christian newcomers. On Saturday, a steady stream of hundreds of people came from Chattanooga and all over...

• Saudi Arabia Arrests 431 People With Suspected Islamic State Links. Interior ministry says it has also foiled six planned terror attacks.

Fox News: 

• As US energy output surges, Republicans lead effort to lift decades-old oil export ban. (video)

CNBC: 

• The Next Debt Crisis Could Be Much Worse than in 2013, GAO Warns. (video)

ZeroHedge: 

• Pension Shocker: Plans Face $2 Trillion Shortfall, Moody's Says.

• Varoufakis Slams Bailout #3 As "Greatest Macroeconomic Disaster In History" While Tsipras "Doesn't Eat Or Sleep".

• China Stock Rout "Rocks" Property Market: "Massive" Cancellations Expected.

• All Hail Our Banking Overlords!

• Peak "Reach For Yield". (graph)

• How Student Loans Create Demand For Useless Degrees.

• Putin Orders Formation Of New Military Reserve Force.

• The Greatest Collapse In The History Of The VIX Index. (graph)

• The Bankruptcy Of The Planet Accelerates - 24 Nations Are Currently Facing A Debt Crisis.

• The Fed Is Either Too Late Or Too Early; But Certainly Not Just Right. (graph)

• Bonds Are Back: "There Is Too Much Complacency".

• China's Three Bubbles And What Could Cause Them To Burst. (graph)

• Blankfein Joins The Billionaire Bankers' Club.

• When It Comes To Total Debt, Greece Is Not That Much Worse Than France (Or The USA). (graph)

Business Insider:

• There's a dead giveaway that China's growth numbers are fake.

• Donald Trump attacks John McCain: 'He's not a war hero'.

• Brace yourself for Obamacare 'sticker shock'.

Telegraph:

• Deeper eurozone integration would be 'huge mistake'. Anders Borg, Sweden's former finance minister, says eurozone crisis has created a climate where forcing countries to cede sovereignty could trigger a right-wing backlash across Europe.

BBC: 

• Greece debt crisis: Reforms 'will fail' - Varoufakis. Former Greek Finance Minister Yanis Varoufakis has told the BBC that economic reforms imposed on his country by creditors are "going to fail", ahead of talks on a huge bailout. Mr Varoufakis said Greece was subject to a programme that will "go down in history as the greatest disaster of macroeconomic management ever". 

• Iraq violence: Car bomb kills scores in mainly Shia town. A car bomb has killed 120 people and injured at least 130 at a busy market in an Iraqi town, officials have said. The attack happened in the predominantly Shia town of Khan Bani Saad, north of the capital Baghdad. Children were among those dead in the explosion, which came as people celebrated the end of the Muslim holy month of Ramadan. The Islamic State (IS) group, which control swathes of the country, has said it was behind the attack.

Sina:

• Shenzhen Exchange Warns of Risks in Structured Funds. Shenzhen Stock Exchange asked members to warn investors of risks in structured funds especially junior tranches amid big fluctuation in stock market recently, citing a circular from the bourse. Members should be prepared to prevent from investors' extreme actions or mass events and report any potential key risks to regulators.

Market Week in Review

• S&P 500 2,126.54 +2.41%*

The Weekly Wrap by Briefing.com.

*5-Day Change