Today's Headlines

Bloomberg:

• APEC Ministers See Downside Growth Risks, Draft Statement Shows. Asia-Pacific Economic Cooperation finance ministers gathering in the Philippines this week are wary of risks to growth from financial-market turmoil, underscoring the faltering outlook that has led to economic forecasts being cut by ratings companies and analysts. “Disruptions in the financial markets and weaker long-term growth prospects are key challenges,” APEC finance ministers meeting in Cebu this week said in the draft of a statement obtained by Bloomberg News. Growth remains moderate and uneven, while risks remain on the downside “amidst uncertainties and financial market volatility,” the ministers said.  

• Signs of Contagion From China’s Slowdown. (video)   

• China’s Economic Data Causing Concern. (video)

• Trina(TSL) Says Delays in China Solar Subsidy Payments Hurt Industry. Trina Solar Ltd., the world’s biggest supplier of photovoltaic panels, said it’s suffering delays in subsidy payments from facilities it operates in China and that it’s concerned the issue will damage the industry.

• Brazil Returns to Junk as Bonanza Ends and Crisis Traps Levy. (video) “The single largest accomplishment of the last 10 years was getting that investment grade,” said Wilbur Matthews, chief executive officer of Vaquero Global Investment LP in San Antonio, Texas, who oversees emerging-market debt. “You would have thought they would have fought harder” to keep it.

• Hedge-Fund Bets Against Emerging Currencies Get Crowded. Hedge funds are piling into bets that the dollar will strengthen against emerging-market currencies, especially those vulnerable to falling commodity prices, according to a money manager who invests in the funds. The popularity of the trade will fuel volatility in those currencies should such funds adjust their positions, said Sam Diedrich, a director at Pacific Alternative Asset Management Co., which oversees about $9.5 billion in hedge-fund investments. “It’s become a crowded trade,” Diedrich, who is based in Irvine, California, said in a telephone interview. “Long term, I still think the trade works, but you could see some large swings.” A gauge of emerging-market currencies slumped to a record this week as China’s shock devaluation of the yuan on Aug. 11 triggered a rout in stocks around the world, sapping demand for higher-yielding assets. The currencies of developing nations -- from Malaysia to South Africa to Brazil -- were the worst performers against the greenback in the past month.

• Dollar Bulls Have Reason to Smile Whether or Not Rout Deters Fed. All roads lead to a stronger dollar. That’s the view of Stephen Jen, co-founder of hedge fund SLJ Macro Partners LLP, who spent 13 years at Morgan Stanley where he helped develop a theory known as the “dollar smile.” He’s predicting gains versus emerging-market currencies in particular, whether or not the Federal Reserve succeeds in raising interest rates without sparking market turbulence. “What we have now is a very strange situation where the U.S. economy continues to grow but there’s elevated risk of a financial selloff, and it’s actually the most positive environment for the dollar,” London-based Jen said by phone Sept. 9. “The dollar should be supported in multiple scenarios.”

• Japan Stocks Are Now Wilder Than Shanghai's. For the first time this year, Japan’s stock market is wilder than China’s. As the Topix index plunged 16 percent from mid-August through Tuesday, short-term volatility jumped to the highest since the aftermath of the 2011 earthquake. 

• Europe Stocks Snap Three Days of Gains Amid Rate Rise Concern. European shares fell for the first time this week amid renewed investor concern that the global economy isn’t strong enough to withstand higher U.S. interest rates. The Stoxx Europe 600 Index slipped 1.2 percent to 359.34 at the close of trading.

• Iran Said to Cut Pricing for All October Crude to Asia. Iran cut pricing for all its oil grades for sale to Asia next month, according to two people with knowledge of the decision, trimming the premium on its main Light crude over the comparable Saudi blend to the narrowest since the end of 2012.

• An Energy Firm's Collapse Casts Ominous Sign Over Mortgage Bonds. A pair of office towers in Tulsa, Oklahoma, is giving commercial real estate investors more reason to worry that the collapse in oil prices is starting to infect their market. The biggest tenant, oil and gas producer Samson Resources Corp., vacated one of the more than a dozen floors it occupied, according to a report from the firm that services a $45 million mortgage on the buildings known as the Williams Center Towers. Samson, which is cutting its workforce as it prepares to file for bankruptcy protection this month, has indicated it will abandon another floor next year, and its lease gives it the right to withdraw from more space after that, according to the report.

• Food Prices Drop Most in 7 Years on Grain Glut, China Rout. Gluts in foods from grains to milk and concern that China’s slowing economy will curb demand sent global prices down the most in almost seven years. An index of 73 food prices fell 5.2 percent in August, the most since December 2008, to 155.7, the United Nations’ Food & Agriculture Organization wrote in a report Thursday. The slide will cut the food bill for importers such as Egypt, said Abdolreza Abbassian, a senior economist at the FAO. Years of surplus production and record grain harvests swelled global food reserves and reduced prices by 35 percent since a record in 2011. “This is a deflationary period from a food point of view,” Abbassian said by phone from Rome. “In real terms, we’re not much higher than we were at the start of the century. Quite a striking divergence from what people were expecting a few years ago.” 

• Fed Liftoff Has Futures and Economists at Odds for Next Week. Many economists are sticking to predictions the Federal Reserve will lift interest rates next week. Money-market derivative traders still need convincing. Thirty-eight of 78 economists surveyed by Bloomberg predict the central bank will increase its target when policy makers gather on Sept. 16-17, after holding it close to zero since 2008 to support the economy. Yet the probability of such a move as gauged by federal funds futures contracts, a bellwether for traders for decades, is 28 percent, signaling fewer people in that market are buying the argument that a tightening is just days away.

• Spy Chief Warns About Hackers Disrupting Financial Markets. Hacking attacks designed to alter electronic data, rather than steal it, may grow more common as terrorists and criminals seek to undermine financial markets, the head of U.S. intelligence warned lawmakers. “I believe we’ll see more cyber operations that will change or manipulate electronic information to compromise its integrity,” Director of National Intelligence James Clapper said at a House intelligence committee hearing Thursday in Washington. Clapper’s warning is one of the starkest to date about a new and potentially debilitating form of hacking. U.S. authorities in August broke up an alleged insider trading ring that relied on hackers to steal corporate press announcements, which were then used to trade stocks on the information before it became public.

• Lululemon(LULU) Falls After Forecast Trails Estimates.

 Wall Street Journal:

• OPEC Sees Weak Oil Prices Through 2015. Lowered expectations won’t change producer group’s strategy. The Organization of the Petroleum Exporting Countries has become more pessimistic about the future of oil prices this year amid plentiful supplies and softening demand from China, the group’s members said this week.

• Obama Seeks Admission for 10,000 More Syrian Refugees. U.S. has accepted 1,500 Syrian refugees since 2011.

• Is Iran Another ObamaCare? Obama’s nuclear deal with Iran could sink Democratic election campaigns—again. 

Fox News: 

• Russian troops reportedly join Syria fight, ‘prop up’ Assad. (video)

• Trump under fire for Fiorina comments, as Jindal launches broadside. (video

Dow Jones:

• OPEC Could Increase Production Ceiling When Indonesia Joins. Could bring target close to 31m b/d, citing people familiar with the matter.

Zero Hedge:

• US Imports Biggest "Disinflationary Impulse" In 6 Years At Worst Possible Time. (graph)

• Fortress Europe Under Threat.

• Cultish Fervor - Japan Is In QE10 And Is Going Nowhere. (graph)

• Paul Krugman Is "Really, Really Worried" That He Might Have Screwed Up Japan.

• Record Gap Between US Inventories And Sales Screams Recession. (graph)

• "Junked" Brazil Is Falling Apart At The Seams; Cancels Bond Auction. (graph)

• Why The Keynesian Chorus Is Cackling Like Chicken Little.

• The Tepper Top: Appaloosa Founder's Bullishness Fizzles. (video)

• Yuan Soars Most On Record In Offshore Market As PBoC Intervenes. (graph)

Business Insider:

• The world's largest stock-focused hedge fund might have to refund its investors.

• Former CIA director under Obama: 'Someone needs to lose their job' if reports about ISIS intelligence are true.

Telegraph:

• Why Catalonia’s bid for independence is Europe’s next headache. Separatist parties could win Catalonia's election - but can the province survive as an independent state?

Bear Radar

Style Underperformer:

• Large-Cap Value +.37%

Sector Underperformers:

• 1) Gaming -2.42% 2) Coal -1.46% 3) Homebuilders -.92%

Stocks Falling on Unusual Volume:

• USAC, KKD, BSFT, LULU, XPO, VTAE, LJPC, MTH, NEP, MBLY, VRNS, ONCE, CONN, BOX, EFOI, WYNN, NGVC, MW, NTT, LE, BRS, CVT, LNG, FLT, AYI, SBAC, LE, BRS, MTH and LJPC

Stocks With Unusual Put Option Activity:

• 1) ASNA 2) ESRX 3) JNK 4) XLU 5) EWZ
  

Stocks With Most Negative News Mentions:

• 1) PBR 2) WMB 3) DLTR 4) LULU 5) AVP
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Growth +.49%

Sector Outperformers:

• 1) Computer Hardware +1.59% 2) Biotech +1.48% 3) Steel +1.16%
  

Stocks Rising on Unusual Volume:

• CNW, ZSPH, BKS, PANW, NBIX, CLVS, TSEM, NTES and VNDA

Stocks With Unusual Call Option Activity:

• 1) CONN 2) ALTR 3) CLR 4) CVC 5) PANW
  

Stocks With Most Positive News Mentions:

• 1) PANW 2) WCG 3) RATE 4) GPRO 5) CELG
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Morning Market Internals

NYSE Composite Index:

• Volume Running 8.8% Above 100-Day Average
• 5 Sectors Rising, 5 Sectors Declining
• 53.9% of Issues Advancing, 42.7% Declining
• 7 New 52-Week Highs, 89 New Lows
• 21.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 37.0
• Vix 26.1
• Total Put/Call 1.17
• TRIN/Arms 1.11

Thursday Watch

Evening Headlines 

Bloomberg: 

• Brazil Credit Rating Cut to Junk by S&P Amid Budget Strain. Brazil’s sovereign rating was cut to junk by Standard & Poor’s, eliminating the investment grade the country enjoyed for seven years, as President Dilma Rousseff’s struggles to shore up fiscal accounts amid a faltering economy. The country’s rating was reduced one step to BB+, with a negative outlook, S&P said in a statement. The ratings company first increased Brazil’s classification to investment grade in April 2008. The downgrade puts pressure on the economic team led by Finance Minister Joaquim Levy to win passage of measures that would shore up the country’s fiscal situation by cutting spending or raising taxes. Rousseff has struggled to win support for her initiatives amid an investigation into corruption at the state-controlled oil company that allegedly occurred while she was its chairman, sending her popularity to a record low and generating calls for her impeachment. 

• Rio de Janeiro's Bursting Real-Estate Bubble. While real-estate markets are faltering all across this recession-plagued country, nowhere is the toll from a sweeping national corruption scandal and commodities collapse more apparent than in Rio. To make matters worse, a flood of new units that were planned during the boom years of the past decade are now hitting the market, pushing Rio’s vacancies to the highest in Latin America. Rents that were once on par with New York and Paris are tumbling. “Rio is going through a very delicate moment,” said Ricardo Raoul, a managing director at Paladin Realty Partners LLC, a property fund with about 12 billion reais ($3.2 billion) in projects in Brazil. “There’s an increase of inventories together with a lack of demand.”

• Aluminum Tycoon Deripaska Warns of Debt Crisis Risk. (video) Oleg Deripaska, United Co. Rusal's president, discusses aluminum prices and production and the risk of a debt crisis with Bloomberg's Stephen Engle at the World Economic Forum in Dalian.

• CITI: China to Drag Down Global Economy. (video)

• What Japan's Next Stimulus May Look Like as Abe Runs on Fumes. Japan’s anemic economy is prompting calls for another fiscal boost. If history -- and the government’s strained finances -- are any guide, any package is likely to redirect cash already on the books. With 1.6 trillion yen ($13 billion) leftover from last year and rising tax revenue bolstering the public coffers, the Ministry of Finance has leeway to fund stimulus without adding to the world’s heaviest debt load. As much as 3.5 trillion yen is needed to jump start growth, an adviser to Prime Minister Shinzo Abe said after data showed the world’s third-biggest economy contracted last quarter. 

• Kiwi Drops More Than 2% After RBNZ Signals Further Rate Cuts. New Zealand’s dollar declined more than 2 percent against the U.S. currency after the central bank signaled more interest rate cuts may be needed to boost inflation as economic growth slows. The kiwi tumbled against all its major peers, approaching a six-year low reached last month versus the greenback, after Reserve Bank of New Zealand Governor Graeme Wheeler cut the official cash rate a quarter percentage point to 2.75 percent Thursday and said “further easing in the OCR seems likely.” All 17 economists surveyed by Bloomberg correctly predicted the decision and swaps indicated a more than 90 percent chance of a reduction. 

• Ringgit Declines to New 1998 Low on Heightened Risk Aversion. Malaysia’s ringgit led losses early in Asia as a renewed decline in stocks and a downgrade in Brazil’s credit rating reignited concerns capital will flow out of emerging markets as the U.S. prepares to raise interest rates. The currency fell 1.1 percent to 4.3770 a dollar as of 8:13 a.m. in Kuala Lumpur, the lowest level since January 1998, according to prices from local banks compiled by Bloomberg. 

• China's Stocks Decline as Producer Prices Sink Most Since 2009. China’s stocks dropped for the first time in three days after producers prices tumbled the most in six years. The Shanghai Composite Index slid 1.1 percent to 3,206.16 at 9:35 a.m. local time, snapping a 5.3 percent, two-day advance. About 10 stocks fell for each that rose. The producer-price index declined 5.9 percent in August, extending declines to 42 straight months, while consumer prices increased 2 percent, the fastest pace in a year.Factory deflation is pushing up real borrowing costs for the industrial sector, compounding challenges as the growth outlook dims. The Hang Seng Index slumped 2.3 percent in Hong Kong, with the Hang Seng China Enterprises Index retreated 2.7 percent. The CSI 300 Index fell 1.1 percent, led by technology and industrial companies.

• Asian Stocks Follow U.S. Lower as Jobs Data Fuel Rate-Rise Bets. Asian stocks dropped, after the regional benchmark index surged by the most in six years on Wednesday, as data on American job openings bolstered the case for higher U.S. interest rates. The MSCI Asia Pacific Index sank 1.2 percent to 127.87 as of 9:05 a.m. in Tokyo after jumping 4.2 percent on Wednesday. Japan’s Topix index lost 2.7 percent as the yen halted three days of declines.

• Copper Gets the Blues, Trades Near Six-Year Low. (video)

• Seven Reasons the Fed Won't Raise Rates Next Week: Deutsche Bank. Joseph LaVorgna, Deutsche Bank AG’s chief U.S. economist, has had a change of heart about the Federal Reserve. In a report Wednesday, he pushed out his forecast for the Fed’s first interest-rate increase in nearly a decade until October. That’s a change from two weeks ago, when he and his team predicted that steady growth in the economy would lead the Fed to raise rates this month. International market turmoil and persistently low inflation have led bond futures traders and strategists to trim bets on a September rate rise.  "I’m totally convinced they don’t need to move" this month, he said in a phone interview. "October seems to work really well." Here are the seven reasons LaVorgna gives for changing his view:

Wall Street Journal:

• EU Presents Plan to Distribute Refugees Across Europe. German Chancellor Angela Merkel calls proposal a good first step, but says it doesn’t go far enough. Faced with the largest migration of displaced people since the end of World War II, the European Union proposed to redistribute 160,000 refugees across the bloc, in a move bound to challenge countries with scant experience of accommodating newcomers. 

• GOP Lawmakers Are Divided on Iran Vote. The jockeying reflects their struggle with how to stop a deal that looks almost certain to be implemented. Republicans united in their opposition to President Barack Obama’s nuclear accord with Iran fractured Wednesday about how to cast their votes.

• Fed Wavers on September Rate Rise. While some officials are ready to move, China slowdown, market turbulence make others pause. Federal Reserve officials aren’t near an agreement to begin raising short-term interest rates heading into a crucial week of private discussions before their Sept. 16-17 policy meeting, according to their recent comments.

• The Rewards of the Obama Doctrine. Offering a helping hand to America’s enemies in Iran, Russia and Cuba will ruin lives and many more will die. A quick glance at the latest headlines suggests a jarring disconnect from the stream of foreign-policy successes touted by the Obama White House and its allies. President Obama has been hailed by many as a peacemaker for eschewing the use of military force and for signing accords with several of America’s worst enemies. The idea that things will work out better if the U.S. declines to act in the world also obeys Mr. Obama’s keen

• Hillary’s Email Defense Demands Proof. She says a private server was ‘allowed’—but by whom? Produce the lawyers who signed off. On Tuesday Hillary Clinton finally admitted to ABC World News Tonight anchor David Muir that using a private server for her emails as secretary of state “was a mistake.” The rest of us have known that since the story broke in March.

Fox News:

• Russian military build-up in Syria ‘unprecedented,’ officials say. U.S. officials are expressing growing concern about Russia's military build-up in Assad-controlled Syria, calling it "unprecedented" -- with one telling Fox News it compares in scope to Vladimir Putin's incursion into Crimea. "It's beginning to look like Crimyria," the official told Fox News. Two U.S. officials who have reviewed the latest intelligence told Fox News that satellite imagery reveals more flights of massive Russian An-124 "condor" military cargo planes landing in Syria. They are offloading troops, including just under 50 Russian marines, and armored vehicles. U.S. officials said the Russian activity in Syria is unlike any they've seen since the start of the Syrian civil war four years ago. "This is definitely a build-up straight out of Russia's military doctrine," said one official. 

• Exclusive photos appear to show grisly effect of ISIS’ mustard gas attacks on Kurds. (video) Kurdish forces battling ISIS in Iraq are suffering severe health effects and pleading with the international community for help after being attacked with chemical weapons including mustard gas, according to a western military expert embedded with them who provided gruesome photos backing the charges.

MarketWatch.com:

• Yet another measure of risk in junk-bond market flashing red. Yet another measure of risk in the U.S. junk-bond market is flashing an alarming signal. Moody’s Investors Service said its Covenant Quality Index deteriorated to its worst level on record in August from July, blowing past the previous record low set in November 2014. The index measures the degree of protection afforded to holders of junk, or high-yield, bonds sold by North American issuers. The index rose to 4.53 in August from 4.37 in July and 4.42 in November 2014. It is now a full 116 basis points weaker than its best-ever score of 3.37 set in April 2011. “Single-month record weak scores in June and July drove the CQI to 4.53 in August for its worst score to date,” Moody’s analysts wrote in a report.

CNBC:

• Al-Qaeda calls for assassination of US business figures. Al-Qaeda called for lone wolf-style attacks on several prominent U.S. business and economic figures on Wednesday. The terror group did so in the latest issue of Inspire, its in-house, English-language magazine, the same magazine that reportedly inspired Dzhokhar Tsarnaev and his brother, Tamerlan, to conduct the deadly attack at the 2013 Boston Marathon.

• Another death cross forms, and it's a doozy. The Shanghai Composite, the epicenter of the plunge in global markets over the last month, flashed a death cross Wednesday when its shorter-term moving average fell below its longer-term moving average.

Zero Hedge:

• AsiaPac Stocks, FX Tumble As China Devalues Yuan Most In 4 Weeks, Sees "No Need For Massive Economic Stimulus". (graph)

• Guess Who Was Buying Stocks (Again)? (graph)

• Brazil Cut To Junk By S&P, ETF Falls 5% Post-Mkt. (graph)

• David Stockman Sums It All Up In 3 Minutes. (video)

• Stocks, Commodities, Bond Yields Plunge As "Rally Fueled By Hope" Crushed. (graph)

• Martin Armstrong: "Hillary's Dream Is Evaporating Rapidly".

• Economy In Pictures: Is It Strong Enough? (graph)

• Russia Sends More Tank Landing Ships, Military Aircraft To Syria.

• "Where Is Everyone Going?" Presenting Goldman's Immigration Flow Chart.

Business Insider:

• House Republicans just won a major, unexpected victory in a battle with Obama. Republicans in the US House of Representatives have standing to proceed with a lawsuit against US President Barack Obama's administration over his signature healthcare law, a federal judge said Wednesday, handing them a significant and somewhat unexpected victory in the ongoing legal battle.

• It looks like the S&P 500 is going to fall another 26%. (graph)

• Apple's(AAPL) new iPad Pro feels enormous.

• Hacked New York health insurer exposes over 10 million members' private data.

• Siri is always listening. Are you OK with that? The virtual assistant will always have an ear open, listening for users to summon it, ever ready to answer questions or to assist with certain tasks. This always-on, passive-listening technology has also raised alarms among privacy watchdogs. 

• Trump has done an atrocious job of telling the truth during the campaign so far.

• China has an unsettling nuclear deterrence strategy.

Reuters:

• Palo Alto(PANW) revenue jumps as companies boost cyber security spending.

Telegraph:

• Europe faces political war on two fronts as backlash builds. The EU's Eastern states shocked to lose their sovereignty over borders, just as southern Europe lost economic sovereignty by joining the euro. 

• Juncker: EU will not keep Greece in the euro at all costs. European Commission president urges new Greek government to stick to its bail-out terms as 'the bell tolls' for crisis-hit continent. 

Financial News:

• China Doesn't Need Massive Economic Stimulus. China should cut lending costs instead amid low economic growth, Li Daokui, former PBOC adviser, said at the World Economic Forum in Dalian yesterday.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are -2.25% to -.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 137.75 +1.5 basis points.

• Asia Pacific Sovereign CDS Index 83.5 -1.0 basis point.

• S&P 500 futures -.13%.

• NASDAQ 100 futures -.19%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (CBK)/-.04

• (LULU)/.33

• (FNSR)/.26

• (RH)/.84

• (ZUMZ)/.12 

Economic Releases

8:30 am EST

• Import Price Index for August is estimated to fall -1.6% versus a -.9% decline in July.

• Initial Jobless Claims are estimated to fall to 275K versus 282K the prior week.

• Continuing Claims are estimated to fall to 2253K versus 2257K prior.
  

10:00 am EST

• Wholesale Inventories for July are estimated to rise +.3% versus a +.9% gain in June.

• Wholesale Trade Sales for July are estimated to rise +.1% versus a +.1% gain in June.
  

11:00 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +872,730 barrels versus a +4,667,000 barrel increase the prior week. Gasoline supplies are estimated to fall by -259,270 barrels versus a -271,000 barrel decline the prior week. Distillate inventories are estimated to rise by +881,910 barrels versus a +115,000 barrel gain prior. Finally, Refinery Utilization is estimated to fall by -.34% versus a -1.7% decline prior.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The BoE rate, $21B 30Y T-Note auction, weekly Bloomberg Consumer Comfort index, weekly EIA natural gas inventory report, BMO Education conference, DA Davidson Construction conference, CL King Best Ideas conference and the (CLI) analyst day could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down by industrial and commodity shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

Stocks Reversing Lower into Afternoon on Fed Rate Hike Fears, Oil Decline, Technical Selling, Commodity/Biotech Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 24.55 -1.29%

• Euro/Yen Carry Return Index 140.99 +.56%

• Emerging Markets Currency Volatility(VXY) 12.37 -.55%

• S&P 500 Implied Correlation 64.54 +1.78%

• ISE Sentiment Index 72.0 +4.0%

• Total Put/Call .94 +1.08%

• NYSE Arms 1.53 +300.77% 

Credit Investor Angst:

• North American Investment Grade CDS Index 80.33 +1.32%

• America Energy Sector High-Yield CDS Index 1,908.0 -.83%

• European Financial Sector CDS Index 79.55 -3.51%

• Western Europe Sovereign Debt CDS Index 20.85 -4.66%

• Asia Pacific Sovereign Debt CDS Index 82.50 -2.50%

• Emerging Market CDS Index 351.0 -.45%
  

• iBoxx Offshore RMB China Corporates High Yield Index 116.94 +.19%

• 2-Year Swap Spread 11.75 -1.0 basis point

• TED Spread 28.25 -2.0 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -24.0 unch.

Economic Gauges:

• 3-Month T-Bill Yield .02% -1.0 basis point

• Yield Curve 144.0 -1.0 basis point

• China Import Iron Ore Spot $58.18/Metric Tonne +1.32%

• Citi US Economic Surprise Index -16.9 -.3 point

• Citi Eurozone Economic Surprise Index 22.7 -.1 point

• Citi Emerging Markets Economic Surprise Index -25.6 unch.

• 10-Year TIPS Spread 1.55 +2.0 basis points
• # of Months to 1st Fed Rate Hike(Morgan Stanley) 4.04 -.28

Overseas Futures:

• Nikkei 225 Futures: Indicating -380 open in Japan 
• China A50 Futures: Indicating -339 open in China

• DAX Futures: Indicating -61 open in Germany

Portfolio: 

• Slightly Higher: On gains in my index hedges

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges 

• Market Exposure: Moved to 25% Net Long