Stocks Modestly Higher into Afternoon on Central Bank Hopes, Technical Buying, Bargain-Hunting, Homebuilder/Restaurant Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 13.33 -2.06%

• Euro/Yen Carry Return Index 144.70 -.09%

• Emerging Markets Currency Volatility(VXY) 11.1 -4.56%

• S&P 500 Implied Correlation 55.38 -.47%

• ISE Sentiment Index 80.0 +63.27%

• Total Put/Call .89 -14.42%

• NYSE Arms 1.23 +58.25% 

Credit Investor Angst:

• North American Investment Grade CDS Index 76.15 +.21%

• America Energy Sector High-Yield CDS Index 1,905.0 +.96%

• European Financial Sector CDS Index 75.95 -3.75%

• Western Europe Sovereign Debt CDS Index 23.07 +1.32%

• Asia Pacific Sovereign Debt CDS Index 68.43 -3.17%

• Emerging Market CDS Index 341.88 +1.94%
  

• iBoxx Offshore RMB China Corporates High Yield Index 119.91 -.75%

• 2-Year Swap Spread 24.25 -.75 basis point

• TED Spread 21.25 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -19.75 +.25 basis point

Economic Gauges:

• 3-Month T-Bill Yield .08% -2.0 basis points

• Yield Curve 148.0 unch.

• China Import Iron Ore Spot $57.02/Metric Tonne +1.26%

• Citi US Economic Surprise Index -5.4 -1.3 points

• Citi Eurozone Economic Surprise Index 12.2 +.2 point

• Citi Emerging Markets Economic Surprise Index -7.4 +.3 point

• 10-Year TIPS Spread 1.63 -1.0 basis point
• # of Months to 1st Fed Rate Hike(Morgan Stanley) 5.13 +.33

Overseas Futures:

• Nikkei 225 Futures: Indicating +28 open in Japan 
• China A50 Futures: Indicating -50 open in China

• DAX Futures: Indicating +11 open in Germany

Portfolio: 

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

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

• Market Exposure: Moved to 75% Net Long

Today's Headlines

Bloomberg: 

• The Yuan Drop Just Added $14 Billion to Asia Inc.’s Debt Burden. The record devaluation of the yuan has dragged down almost every currency in Asia. As they drop, the foreign debt bills of the region’s companies are rising. Almost $1.6 trillion of bonds and loans denominated in dollars and euros across Asia outside Japan and China has just become $14 billion more expensive for companies that service the debt in their home currency, Bloomberg-compiled data show. While many borrowers have hedged their exposure, the cost of doing that and repaying interest and principal is going up. The People’s Bank of China cut its daily yuan reference rate by a record on Tuesday, triggering the currency’s biggest two-day loss since China unified official and market exchange rates in 1994. The move accelerated a selloff in other parts of Asia, pushing the Indonesian rupiah and the Malaysian ringgit back to 1998 lows and the Thai baht to a six-year trough. “The impact on the rest of dollar Asia is pretty negative,” said Tim Jagger, a Singapore-based portfolio manager at Aviva Investors Global Services Ltd., which managed some $386 billion as of March 31. “My worry in times like these is that some unintended consequences come out of this type of action.” 

• Has China Admitted It Has a Growth Problem? (video)

• German Exporters Face 'New Normal' From China. (video)

• Who’s Crazy Now? Yuan Bears Vindicated by Tumble See More Pain. Sue Trinh had to defend her sanity. Albert Edwards almost got kicked out of meetings. Kevin Lai was ignored by clients for an entire year. Once ridiculed for their bearish forecasts on China’s currency, the analysts who predicted this week’s devaluation don’t look so crazy now. As investors around the world ask what happens next, the forecasters who got it right say the yuan has further to fall. “Some investors told me I was crazy,” Trinh, the senior currency strategist at Royal Bank of Canada in Hong Kong who predicted a yuan retreat in June, when most of her peers were forecasting a stable or stronger exchange rate. “The renminbi was misaligned with fundamentals.”

• Europe Stocks Brush Off China Woes as Nestle Gains on Earnings. The biggest decline in European equities since October was put aside on Thursday as Nestle SA and TUI AG rallied after reporting earnings. Shares of the world’s largest food company climbed 2.7 percent, the most since January, after it reported that first-half sales increased more than analysts had estimated. TUI rallied 6.6 percent after the tour operator said profit growth will be at the upper end of its forecast. “Markets can move on from scares like China very quickly,” said Daniel Murray, London-based head of research at EFG Asset Management. “There’s still some attractive features of the European market, with a much better growth environment and with corporate profits finally picking up. The European selloff was just part of a broader, risk-aversion reaction.” The Stoxx Europe 600 Index gained 1 percent to 386.69 at the close of trading in London, with about 80 percent of its members advancing.

• September Fed Rate Rise Still Seen as Economists Shrug Off Yuan. Economists are standing by their projections for a September Federal Reserve interest-rate increase, despite a surprise devaluation in China’s currency that has heightened uncertainty in the international outlook. Seventy-seven percent of forecasters in a Bloomberg survey taken Aug. 7-12 said that the Fed will raise its main policy rate next month for the first time since 2006, up from 76 percent in July. All respondents were given the opportunity to revise their forecasts following the yuan news. Eleven percent projected a December rate move in this survey, while 8 percent expect an increase at the October meeting, which isn’t followed by a press conference.

• Oil Majors’ $60 Billion Cuts Don’t Go Far Enough as Crude Slides. The world's energy giants need to make tough decisions to keep investors happy. The $60 billion of oil-industry spending cuts this year aren't likely to be enough to meet sacrosanct dividend commitments as crude languishes near a six-year low. The world’s biggest producers will need to trim investments by a further $26 billion, according to Jefferies Group LLC. Capital spending will have to fall 10 percent next year, Banco Santander SA says.

• Kohl’s(KSS) Drops After Saying 2015 Profit Will Be Low End of Range. Kohl’s Corp. fell the most in almost three months after posting second-quarter profit that trailed analysts’ estimates and saying earnings this year will be at the low end of its forecast. Profit in the quarter ended Aug. 1 was $1.07 a share, excluding some items, the Menomonee Falls, Wisconsin-based company said Thursday in a statement. Analysts estimated $1.16. Sales rose 0.6 percent to $4.27 billion, trailing analysts’ $4.31 billion projection.

• Inside Tesla's(TSLA) 2.1 Million Shares Stock Offering. (video)

Fox News:

• Official: Clinton ‘inner circle’ may have stripped email classification markings. (video) The latest revelations about top secret information traversing Hillary Clinton's private email server have triggered accusations that someone in her "inner circle" likely stripped the classification markings, illegally.

Zero Hedge:

• Apocalyptic Footage From Tianjin Explosion Captured By Drone. (video)

• Which States Will Suffer The Most From China's Devaluation?

• Business Inventories Surge Most In 29 Months, Sales Ratio Signals Recession Imminent. (graph)

• Retail Sales Meets Expectations, Leaves Door Open For September Rate Hike. (graph)

• Initial Jobless Claims Average Hits New 42 Year Low - What Happens Next? (graph)

• WTI Crude Tumbles Back To $42 Handle. (graph)

• Both ECB And BOJ Warn More QE May Be Response To Chinese Currency War.

• "Project Omega" - Why HFTs Never Lose Money: The Criminal Fraud Explained.

• Mind The JOLTS - There's A Bearish Warning In There.

• If You're Buying Energy Stocks, Ignore These 3 Charts. (graph)

• One Trader Warns "Market Realities Were Starkly Exposed This Week".

• Even The Fed Admits Recession Looms: Q3 GDP Forecast Slashed To Just 0.7%. (graph)

Business Insider:

• Donald Trump mentioned 'terrific' Warren Buffett when he was asked about potential cabinet picks. Trump also told Hannity on Wednesday that Buffett had said the "nicest things" about him, though he noted that the billionaire investor is a supporter of former Secretary of State Hillary Clinton, the Democratic front-runner in 2016. "Warren Buffett said the nicest things about me the other day," he said. "I have great respect for Warren Buffett. But he said, 'Trump is here to stay.' I was impressed because I think he's supporting perhaps Hillary or something."

• Senior US military official: Turkey 'needed a hook' and tricked us on ISIS.

• 19 US stocks with the most exposure to China.

• Winter is coming for oil.

Reuters:

• Islamic State claims huge truck bomb attack in Baghdad's Sadr City. At least 76 people were killed and 212 wounded on Thursday in a blast claimed by Islamic State in Baghdad's Sadr City, police and medical sources said, one of the biggest attacks on the capital since Haider al-Abadi became prime minister a year ago. "A refrigerator truck packed with explosives blew up inside Jamila market at around 6 a.m. (0300 GMT)," police officer Muhsin al-Saedi said. "Many people were killed and body parts were thrown on top of nearby buildings."

Bear Radar

Style Underperformer:

• Mid-Cap Value -.53%

Sector Underperformers:

• 1) Coal -8.41% 2) Gold & Silver -3.76% 3) Oil Service -3.28%

Stocks Falling on Unusual Volume:

• CTRE, SHAK, CPA, RLYP, KSS, LDRH, MIDD, PAH, RMTI, IMDZ, PODD, ASND, PNRA, VIA, CYNO, IOC, ICPT, FANG, VRTV, SSI, NEOG, NHI, EGRX, GMCR, ENV and NTRA

Stocks With Unusual Put Option Activity:

• 1) KSS 2) XLK 3) JNK 4) GM 5) CAT
  

Stocks With Most Negative News Mentions:

• 1) OKE 2) ATW 3) UNP 4) GMCR 5) DF
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Growth +.02%

Sector Outperformers:

• 1) Homebuilders +1.49% 2) Restaurants +1.09% 3) Internet +.79%
  

Stocks Rising on Unusual Volume:

• BGG, W, FLO, SUNE, GWPH, BERY, AAP, ITEK, AQXP, NWSA, COTY, ADXS, GPRE and MNST

Stocks With Unusual Call Option Activity:

• 1) MDCO 2) ASNA 3) JCI 4) HIG 5) KSS
  

Stocks With Most Positive News Mentions:

• 1) FLO 2) CSCO 3) COTY 4) MNST 5) HIG
  

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
• 1 Sector Rising, 9 Sector Declining
• 29.3% of Issues Advancing, 67.6% Declining
• 45 New 52-Week Highs, 194 New Lows
• 38.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 40.7
• Vix 14.3
• Total Put/Call 1.08
• TRIN/Arms 1.21

Thursday Watch

Evening Headlines 

Bloomberg: 

• Yuan Drops for Third Day After PBOC Reference Rate Declines 1.1%. China’s yuan fell in a third day of losses since Tuesday’s devaluation as the central bank’s reference rate dropped 1.1 percent. The onshore spot rate weakened 0.5 percent to 6.42 per dollar as of 9:35 a.m. in Shanghai, after a two-day loss of 2.8 percent. The freely traded offshore yuan rebounded 0.6 percent on Thursday after losing at least 2 percent on each of the last two days. The onshore spot rate is allowed to diverge a maximum 2 percent from the reference rate, which was set at 6.4010. The yuan fell Wednesday to as much as 1.9 percent weaker than the official rate, near the limit of its permitted trading range, before paring losses as the PBOC intervened to support the currency via state-owned banks. 

• China Black Swans Not So Rare Anymore as PBOC Shocks Markets. Investors should prepare for more surprises out of China after the yuan’s devaluation became the country’s latest unexpected policy move to roil global markets. That’s the advice from Fraser Howie, co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.” He says Chinese policy decisions are becoming “erratic” as authorities struggle to combat the nation’s deepest economic slowdown in more than two decades. “This complete lack of signaling has investors, both foreign and domestic, completely spooked about what’s going on,” Howie, a former managing director at CLSA Asia-Pacific Markets, said in a phone interview from Singapore. “China has a huge influence globally and markets don’t like shocks.”

• Global Chinese Consumer Leaves No Winners in Luxury Stocks Rout. The rout in European luxury-goods makers is sparing nobody -- regardless of how much they sell in China. Burberry Group Plc and Hugo Boss AG plunged more than 7 percent in two days after China devalued its currency, even though the companies have some of the smallest sales exposure to the yuan among luxury makers, according to Credit Suisse Group AG. That’s because when taking into account purchases by Chinese travelers abroad, most of the companies are just as reliant on the nation, Sanford C. Bernstein says. “It’s at these times that you understand the extent to which the market of luxury goods is exposed to China and how much it depends on the decisions of the Chinese government,” said Mario Ortelli, an analyst at Bernstein in London. 

• Yuan Devaluation Sustains Euro Advance as Carry Trade Unwinds. The euro held a six-day gain versus the dollar amid speculation China’s devaluation caused investors to unwind trades that used the single currency to buy the yuan. The 19-nation euro was the best performer over the past week among major currencies as it overtook the greenback as the refuge of choice on concern Chinese policy imperils the timing of rate increases from the Federal Reserve. The dollars of Australia, New Zealand and Canada rallied Wednesday after the People’s Bank of China intervened to stem the yuan’s rout.

• Tianjin, China, Blast Affects Port Handling Coal, Metal Ore, Oil. China’s Tianjin port, where multiple explosions late Wednesday killed at least 13 people and injured hundreds, is the biggest port in the northern part of the country, handling shipments of metal ore, coal, automobiles and crude oil. The port, located about 160 kilometers southeast of Beijing in Tianjin municipality, has a container terminal and is near China National Offshore Oil Corp.’s Tianjin FLNG, China’s first floating liquefied natural-gas terminal. The LNG plant has a capacity of 1.059 trillion cubic feet a year, according to Bloomberg data. Total throughput at Tianjin rose 10 percent in 2014 to 445.8 million metric tons, according to Hong Kong-listed Tianjin Port Development Holdings Ltd. The port handled 110.5 million tons of metal ore, 88.9 million tons of coal and 18.7 million tons of crude oil, the equivalent of 375,000 barrels a day.

• Yuan-Spurred Drop in Chinese Junk Debt Not a Buy for Nikko Yet. Chinese junk dollar bonds haven’t fallen far enough to make them a buy after the nation’s currency slumped this week by the most in two decades, according to Nikko Asset Management Co. The extra premium over Treasuries investors demand to own such securities climbed four basis points to 755 basis points, a Bank of America Merrill Lynch index shows, after the central bank allowed the yuan to depreciate by a record. Yields on notes sold by Agile Property Holdings Ltd. and Evergrande Real Estate Group Ltd. climbed more than 25 basis points Wednesday as the currency recorded its steepest two-day loss since 1994.  

• Lenovo Hits 18-Month Low as Slowing Sales Highlight Weaker China. Lenovo Group Ltd. fell to an 18-month low in Hong Kong after posting first-quarter sales that trailed analyst estimates amid concern about growth in China. Shares declined as much as 5.4 percent to HK$8.01, the lowest since February 2014. The shares are down 21 percent this year. Revenue for the quarter was $10.7 billion, compared with the $11.5 billion average of analyst estimates. Lenovo is cutting 5 percent of its workforce and reducing its reliance on China as the world’s second-biggest economy slows. The company is trying to turn around its mobile phones and servers after $5 billion of acquisitions last year, while battling a shrinking market for the personal computers that generate 68 percent of its sales.

• Deflation Ice Age Looms After Yuan Move, Albert Edwards Says. China’s currency devaluation took Albert Edwards a step closer to realizing his doomsday prediction: deflation spreading from Asia to the U.S. and Europe and sending economies crashing. Tumbling emerging-market currencies will now accelerate their declines, curbing import costs in developed nations and triggering a broad drop in prices that will undermine economic growth, according to Edwards, the top-ranked global strategist at Societe Generale SA.

• Singapore Dollar Pays Liquidity Price as Yuan Move Shocks Asia. Singapore’s dollar is paying the price for being easy to sell. It’s tumbling at the fastest pace since 2001 following China’s shock devaluation as traders use it as a proxy for less-liquid currencies such as Thailand’s baht and Indonesia’s rupiah. The island state’s dollar dropped below the S$1.39 year-end estimate in a Bloomberg survey, leaving banks including Commerzbank AG, the most-accurate forecaster, and HSBC Holdings Plc rushing to review predictions. There are domestic concerns, too, as investors speculate whether Singapore will ease policy after China’s shock move, just as it did in January when the Swiss National Bank scrapped its exchange-rate peg. The Monetary Authority of Singapore issued a statement Wednesday saying it stands ready to curb excessive volatility in the city-state’s currency. 

• Asian Stocks Fall for a Third Day as Investors Weigh Yuan Impact. Asian stocks fell for a third day, with the regional benchmark index extending a seven-month low, as investors continued to weigh the impact of China’s shock currency devaluation. The MSCI Asia Pacific Index dropped 0.2 percent to 138.05 as of 9:02 a.m. in Tokyo.

• Emerging-Markets Veteran Sees Oil Falling to $30 by December. Robert Lloyd George, who at one time oversaw $17.7 billion in Asia emerging-markets assets, sees oil falling as much as another 30 percent this year and hitting $30 per barrel by December. Oil will stay down as last month’s deal curbing Iran’s nuclear program in return for easing sanctions could expand supplies by as much as two million barrels a day at a time demand from China is slowing, Lloyd George said in an interview in Hong Kong. West Texas Intermediate for September delivery traded at around $43 a barrel on the New York Mercantile Exchange on Wednesday.

• China’s Gargantuan Aluminum Exports Poised to Get Even Bigger. China’s ballooning exports of aluminum will probably get even bigger because of the surprise yuan devaluation. The country is the world’s biggest producer of the metal, which is used in everything from beverage cans to airplanes. Many Chinese producers haven’t cut output even amid slumping prices, partly because of government subsidies, according to Goldman Sachs Group Inc. Domestic demand has weakened at the same time, spurring a flood of aluminum to the global market.

Wall Street Journal:

• Yuan Devaluation Boosts Investors Betting Against Asia. Malaysian ringgit, Singapore dollar and Indonesian rupiah are hammered. China’s currency devaluation is delivering a windfall to investors that anticipated a slowdown in the second-largest economy and then bet against the free-floating currencies of China’s regional trading partners.

• Warehouse Explosions Kill at Least 17 in Tianjin, China. Fiery explosions in port city injure more than 300 as debris rains down. Explosions at a warehouse rocked the northern Chinese port city of Tianjin late Wednesday, killing at least 17 people and injuring more than 300 others, local authorities and state media said.

• Surge in Commercial Real-Estate Prices Stirs Bubble Worries. Soaring demand for commercial property has drawn comparisons to delirious boom of the mid-2000s. Investors are pushing commercial real-estate prices to record levels in cities around the world, fueling concerns that the global property market is overheating. The valuations of office buildings sold in London, Hong Kong, Osaka and Chicago hit record highs in the second quarter of this year, on a price per square foot basis, and reached post-2009 highs in New York, Los Angeles, Berlin and Sydney, according to industry tracker Real...

• Obama’s Climate Plan and Poverty. The EPA’s new anticarbon rule is full of redistribution to offset its harm to the poor. President Obama says that critics of his plan to decarbonize the economy are “the special interests and their allies in Congress” repeating “the same stale arguments” about “killing jobs and businesses and freedom.” He adds that “even more cynical, we’ve got critics of this plan who are actually claiming that this will harm minority and low-income communities.”

• Hillary Plays Dirty as Her Numbers Drop. The candidate has taken to maligning opponents’ motives—but 57% of voters don’t trust her. President Obama came into office promising to unify America, but he has made political discourse meaner and more cynical. Whenever Mr. Obama is playing a weak hand, he questions the motivations of those who disagree with him and mangles the truth to undermine any criticism. Take the president’s recent statement that Republican opponents of his nuclear deal with...

• Joe Biden Is Sounding Out Allies About a 2016 Bid. Some Democrats press the vice president to run as an alternative to Hillary Clinton. Vice President Joe Biden is using part of his vacation in South Carolina this week to sound out friends and family about a presidential bid, as some Democrats press him to enter the race and give the party another option in the face of lingering controversies involving Hillary Clinton. From his vacation spot on Kiawah Island, Mr. Biden is giving the strongest signal yet that... 

CNBC:

• Market indicating Fed won't raise rates in September. (video) A week ago, the CME Group FedWatch tool had assigned a better than 50 percent chance of a rate hike next month. However, the latest wagering has the probability down to 39 percent, with the strongest chance of liftoff in 2015 not coming until December, which now has a 66 percent chance.

Zero Hedge:

• Chinese Devaluation Extends To 3rd Day - Yuan Hits 4 Year Low, Japan Escalates Currency Race-To-The-Bottom Rhetoric.

• Mysterious Dip Buyer Found - Goldman Buyback Desk Has Busiest Day Since 2011.

• Why More Conflict Is Inevitable In The Middle East.

• Why Credit Market Moves Are Now "Hyperbolic," Citi Explains.

• 12 Signs That An Imminent Global Financial Crash Has Become Even More Likely.

• "Severe Correction Or Cyclical Bear" Ahead: Leuthold Major Trend Index Turns Negative. (graph)

• Understanding Why The Clinton Emails Matter.

• Asset-Price Inflation Enters Its Dangerous Late Phase.

• Solyndra 2.0 Nears Bankruptcy As Bonds Collapse To Record Lows.

• Schizo Stocks Shrug Off China, Europe Fears As Dow Roundtrips 700 Points In Giant Stop Hunt. (graph)

Business Insider:

• At least 17 killed after huge explosion rocks a major city in China.

• This housing bubble is ready to pop.

• Natural gas companies are tumbling, and taking private equity firms with them.

• The race to the bottom. (graph)

• One of the world's largest buyers of stocks could be forced into selling.

• ISIS is ramping up its state-building project in its Libyan 'capital'.

• Cisco(CSCO) beats, stock ticks up.

• China's next move could tie its own hands behind its back.

• Emerging markets are in trouble. (graph)

• Illinois just passed a sweeping police reform law aimed at curbing excessive force.

Reuters:

• China lets yuan fall further, fuels fears of "currency war". China's currency fell to a four-year low on Wednesday, slumping for a second day, after a central bank devaluation on Tuesday, and government sources believe the yuan may be allowed to slide even further to help the country's exporters. 

• U.S. warns states against defunding Planned Parenthood.

• U.S. steelmakers, politicians denounce China steel price cuts. Moves by Chinese steel exporters Wednesday to cut prices provoked cries of foul from the U.S. steel industry, and gave politicians skeptical of the pending Trans Pacific Partnership trade agreement new ammunition. 

• Brazil fertilizer sales expected to fall in 2015 -Mosaic(MOS). Fertilizer sales in Brazil will likely be between 30 million and 31 million tonnes in 2015, down from 32.2 million tonnes in 2014 due to market uncertainty, the head of U.S. fertilizer company Mosaic Co in Brazil, Floris Bielders, said on Wednesday. Bielders said farmers were not booking sales as far in advance as usual, which could result in a crunch at Brazilian ports when the imported products finally arrive, potentially resulting in delayed delivery.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are unch. to +1.0% on average.

• Asia Ex-Japan Investment Grade CDS Index 115.75 -3.0 basis points.

• Asia Pacific Sovereign CDS Index 70.75 +2.0 basis points.

• S&P 500 futures +.11%.

• NASDAQ 100 futures +.16%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (AAP)/2.25

• (DDS)/.72

• (KSS)/1.16

• (AMAT)/.33

• (JWN)/.90

• (SINA)/.07

Economic Releases

8:30 am EST

• Retail Sales Advance for July are estimated to rise +.6% versus a -.3% decline in June.

• Retail Sales Ex Autos for July are estimated to rise +.4% versus a -.1% decline in June.

• Retail Sales Ex Autos and Gas for July are estimated to rise +.4% versus a -.2% decline in June.

• Import Price Index for July is estimated to fall -1.2% versus a -.1% decline in June.

• Initial Jobless Claims are estimated at 270K versus 270K the prior week. 

• Continuing Claims are estimated to fall to 2245K versus 2255K prior.

10:00 am EST

• Business Inventories for June are estimated to rise +.3% versus a +.3% gain in May.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone CPI, ECB Meeting minutes, $16B 30Y T-Bond auction, weekly Bloomberg Consumer Comfort Index, Bloomberg US Economic Survey for August, weekly EIA natural gas inventory report, Canaccord Growth Conference, (GWW) July sales and the (TTM) annual meeting could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and technology shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon. The Portfolio is 50% net long heading into the day.