Today's Headlines

Bloomberg:

• China Stocks Sink Again as Growth Concerns Spur Investor Exodus. China’s stocks slumped for a second day in thin turnover amid concern government measures to support the world’s second-largest equity market and economy are failing. The Shanghai Composite Index dropped 3.5 percent to 3,005.17 at the close, led by commodity producers and technology companies. About 14 stocks declined for each one that rose on the gauge, while volumes were 36 percent below the 30-day average. The index completed its biggest two-day loss in three weeks with a decline of 6.1 percent. Mainland Chinese equity funds lost 44 percent of their value at the end of last month compared with July, data showed Monday, as unprecedented state measures to stop a $5 trillion selloff failed to avert redemption. The CSI 300 Index declined 3.9 percent. Hong Kong’s Hang Seng China Enterprises Index slipped 0.3 percent, while the Hang Seng Index retreated 0.5 percent. The Shanghai index may fall to 2,700 as stocks are still expensive, said Francis Cheung, CLSA head of China and Hong Kong strategy, said in a briefing on Tuesday. Equities on mainland bourses traded at a median 45 times reported earnings last week. That’s the highest among the 10 largest markets and more than twice the 18 multiple for the Standard & Poor’s 500 Index. 

• China Braces for Second Onshore Bond Default by State Firm. China National Erzhong Group Co. may miss an interest payment later this month after one of its creditors filed a restructuring request, putting it at risk of becoming the second state-owned company to default in the nation’s onshore bond market. The smelting-equipment maker might not be able to pay a coupon that’s due Sept. 28 on its 1 billion yuan ($157 million) of 5.65 percent 2017 notes if a local court accepts the creditor’s restructuring application before that date, according to a statement posted on Chinamoney.com.cn. China National Erzhong, based in China’s western Sichuan province, issued the five-year securities in 2012 at par and the debentures are currently trading at 67.72 percent of that.

• German Investor Confidence Damped by Weaker Emerging Markets. German investor confidence fell for a sixth month in September, adding to signs that the slowdown in emerging markets threatens to drag on growth in Europe’s largest economy. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months ahead, slid to 12.1 from 25 in August. The reading compares with a median estimate of 18.3 in a Bloomberg survey of economists. A measure for the euro area also fell.

• Stock Market Rout Not Over for Canada as Bears Boost Positions. Pessimism remains acute over the outlook for Canada’s largest stocks, with derivatives traders raising their bets that August’s turmoil in global equity markets will continue. Short positions have more than quadrupled since the beginning of 2015 and the ratio of put to call options remains elevated in the C$9.5 billion ($7.2 billion) iShares Standard & Poor’s/TSX 60 exchange-traded fund, according to data compiled by Bloomberg. The largest ETF in Canada tracks the performance of the biggest and most liquid equities in the Toronto Stock Exchange, from Suncor Energy Inc. to Teck Resources Ltd. Commodity producers make up about 27 percent of the gauge, second only to financial services. 

• European Stocks Rebound as Oil Shares, Carmakers Rise Before Fed. European stocks climbed, led by gains in carmakers and energy producers, after worse-than-forecast data signaled weakness in the U.S. recovery ahead of a Federal Reserve rate decision. Equities are volatile amid concern for global growth before the central bank meeting. The Stoxx Europe 600 Index erased gains in the first hour of trading, and fell as much as 0.6 percent as investors weighed a slump in Chinese shares and declining German investor sentiment. Shares then rose as much as 1.1 percent after U.S. data on retail sales, industrial production and manufacturing in the New York region all missed estimates, two days before the Fed decides whether the U.S. economy is strong enough to withstand its first rate increase since 2006. The Stoxx 600 added 0.8 percent at the close of trading, up for the first time in four days.

• Shale Drillers Pump More Oil From Each Well as Rigs Mean Less. Shale producers in the U.S. have learned to do more with less. Last year’s price crash forced drillers to cut budgets, reducing the number of rigs in U.S. oil fields by 59 percent from the peak. Crude production, though, has fallen only about 5 percent.

• Glencore Slumps to Record Low, Erasing Gains Since Debt Plan. Shares of Glencore Plc slumped to a record low, erasing gains since announcing a $10 billion debt-reduction plan designed to reassure investors amid mounting concern about the commodity trader and miner’s borrowing load. The stock slumped as much as 7.7 percent to 118.1 pence in London trading and was 4 percent lower at 122.75 pence by 12:38 p.m.  

• Brazil Real Leads Losses as Goldman Sachs Doubts Political Will. (video) Brazil’s real led global losses as Goldman Sachs Group Inc. questioned the viability of government proposals to shore up its finances. The currency traded near a 12 year-low, extending this year’s rout to 31 percent and dropping the most among the world’s 16 major currencies. Most of the government measures proposed on Monday require approval from Congress, which could be difficult as President Dilma Rousseff struggles with record-low popularity and the longest recession since the 1930s, said Alberto Ramos, the chief Latin America economist for Goldman Sachs.

• Investors Brace for Defaults as Distressed Debt Swamps Market. Junk-bond investors are bracing for a surge in corporate defaults that would exceed the most pessimistic forecast from credit raters as the Federal Reserve contemplates its first interest-rate increase since 2006. A measure of distress in the market is suggesting investors have priced in a default rate of 4.8 percent during the next 12 months, according to Martin Fridson, a money manager at Lehmann Livian Fridson Advisors LLC. That’s almost two percentage points higher than the pace being projected for June next year by Standard & Poor’s, the world’s biggest credit rater, as concern mounts that energy companies that loaded up on cheap debt are going to struggle to refinance.

• Yellen's Former Aide Says a Rate Hike Would Be a Serious Error. There's labor supply out there that isn't measured by the jobless rate. The U.S. is probably about two years away from achieving full employment, no matter what the jobless rate suggests and Federal Reserve officials think. That's the view of  Andrew Levin, who served as a special adviser to former Fed Chairman Ben S. Bernanke and then-Vice Chair Janet Yellen from 2010 to 2012. "We're not even close to full employment,'' he said in an interview. 

• Fed Forgoing September Risks Spoiling Bond Market's Gradual Path. As the Federal Reserve prepares to raise interest rates for the first time since 2006, almost all the talk of a potential policy misstep has centered on the peril of hiking too soon. The bigger concern is if the Fed waits too long, say Thomas Lam at RHB Securities Singapore Pte. Ltd and David Glocke at Vanguard Group Inc. A decision to keep the overnight rate near zero on Sept. 17 may wind up jolting debt markets more than actually raising it, said Lam, who according to Bloomberg was the fourth-most accurate forecaster of the U.S. economy last quarter.

• Why the Fed Is Likely to Stand Pat This Week. Market turmoil means moving from the zero bound gets even trickier.

• What's Behind Hillary Clinton's Drop in the Polls? Clinton has become the most polarizing candidate for members of her own party. Eleven percent of Democrats polled in an August Quinnipiac University survey said they would never vote for her, the most for any Democratic candidate. Worse, “liar” was the first word that came to mind when respondents were asked what they thought of Clinton, according to the poll.

Wall Street Journal: 

• China Investigates Citic Securities President for Insider Trading. Cheng Boming is the latest top executive to be embroiled in a government crackdown on ‘securities violations’.

CNBC: 

• Hayman Capital's Bass: China's real problem is its banking sector. (video) 

• This might be the worst Fed option. Whatever the Fed does Thursday will surprise someone, but not taking action could result in the least favorable course for markets since it will prolong the uncertainty.

Zero Hedge:

• Analyst Who Said "Buy Lehman" 20 Days Before Its Collapse Is Now On The Financial Stability Oversight Council.

• "You Get A New Car; You Get A New House" - Saudi Prince Alwaleed Hands Out Bribes To Saudi Citizens.

• "The House Will Likely Win". (graph)

• Steen Jakobsen Sums Up In 1 Word What We've Learned In The 7 Years Since Lehman.

• North Korea Restarts Nuclear Complex, May Nuke US "At Any Time" For "Mischievous Behavior".

• Refugee Crises At Dangerous Tipping Point As Hungary Deploys Army, Germany Loses Patience.

• The Most Loved Stock Market Rally In History. (graph)

• Market "Ominously Hints Recession Imminent" BofA Warns Unless "Unambiguous Pessimism" Leads To Stock Rally. (graph)

• Business Inventories Grow At Slowest Pace Since Jan, Sales-Ratio Signals Recession Imminent. (graph)

• The Next Financial Crisis Won't Be Like The Last One.

• Industrial Production Plunges Most In 3 Years As Auto-Maker "Nightmare" Comes True. (graph)

• Stocks & Bond Yields Surge As Bad-News-Is-Good-News Madness Returns (For Now). (graph)

• Recession Looms As Empire Manufacturing Collapse Show No Signs Of A Bounce. (graph)

• Retail Sales Disappoints, Tests Recessionary Waters Ahead Of Fed Meeting. (graph)

Business Insider: 

• Russia could have a dark ulterior motive with its moves in Syria.

• This map shows the routes of Europe's refugee nightmare — and how it's getting worse.

Bear Radar

Style Underperformer:

• Small-Cap Value +.53%

Sector Underperformers:

• 1) Steel -.73% 2) Papers -.61% 3) Hospitals -.21%

Stocks Falling on Unusual Volume:

• VSAR, GSBD, SONC, BEAT, PEB, JNP, AIV, PHI, LULU, BLKB, TVIX, LHO, RIO, NTT, HST, AMAG, RLJ, ICPT, VOD, RLYP, PSXP, TLK, SAM and CONN

Stocks With Unusual Put Option Activity:

• 1) SWN 2) EWA 3) XLB 4) PHM 5) MMM
  

Stocks With Most Negative News Mentions:

• 1) CONN 2) PEB 3) MRVL 4) AEO 5) RPTP
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Value +.78%

Sector Outperformers:

• 1) Software +1.26% 2) Road & Rail +1.22% 3) Internet +1.11%
  

Stocks Rising on Unusual Volume:

• GWPH, TTPH, GTN, MYGN, OI, ADXS, GWR, BRS and TAP

Stocks With Unusual Call Option Activity:

• 1) TAP 2) CTXS 3) PNK 4) SD 5) SYY
  

Stocks With Most Positive News Mentions:

• 1) KMB 2) AA 3) WHR 4) MYL 5) EFX
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Morning Market Internals

NYSE Composite Index:

• Volume Running 11.2% Below 100-Day Average
• 10 Sectors Rising, 0 Sectors Declining
• 64.6% of Issues Advancing, 31.9% Declining
• 9 New 52-Week Highs, 56 New Lows
• 23.1% of Issues Above 200-day Moving Average
• Average 14-Day RSI 37.9
• Vix 22.8
• Total Put/Call .96
• TRIN/Arms .56

Tuesday Watch

Evening Headlines 

Bloomberg:

• Levy Pitches Budget Cuts and Tax Hikes to End Brazil Deficit. Finance Minister Joaquim Levy proposed a new round of spending cuts and tax increases that are designed to close the budget gap and protect Brazil from further credit downgrades. The government will reduce expenditures by 26 billion reais ($6.8 billion) next year in large part by capping salaries of civil servants and trimming social programs, Levy said Monday. Brazil also plans to raise 28 billion reais in revenue by boosting taxes, including a levy on financial transactions. 

• Yen Pares Loss as Bank of Japan Refrains From Adding to Stimulus. The yen pared losses after the Bank of Japan refrained from adding to already unprecedented stimulus at a policy meeting Tuesday. Demand for the yen increased after central bank Governor Haruhiko Kuroda kept a pledge to expand the monetary base at an annual pace of 80 trillion yen ($666 billion). All but two of the 35 economists surveyed by Bloomberg had predicted policy would be unchanged. Traders are shifting their focus to Kuroda’s briefing at 3:30 p.m. in Tokyo. “The market is placing a higher probability that the BOJ will ultimately add more stimulus via quantitative easing,” Prashant Newnaha, a rates strategist at TD Securities Inc. in Singapore, said before the BOJ decision. The yen was little changed at 120.16 per dollar as of 12:11 p.m. in Tokyo, after falling as much as 0.3 percent earlier. It traded at 136.01 against the euro from 136.07 on Monday.

• How Likely Is a Physical Conflict in the South China Sea? (video) 

• China Brokers Shut Out of Own Futures Market Try Singapore. Chinese brokerages ruing the collapse of futures trading in Shanghai are pitching clients similar contracts in Singapore. "Goodbye, China Financial Futures Exchange; Hello, FTSE A50!" reads an advertisement by a unit of Shenzhen-based Essence Securities Co. on the WeChat messaging service, referring to Singapore-traded futures on an index of the biggest mainland companies. China’s domestic equity futures market, ranked the world’s busiest as recently as July, has seen volumes plunge 99 percent since June as policy makers curbed leverage and position sizes and announced investigations into “malicious” short sellers. That’s left brokerages, which boosted staff numbers by 50 percent since 2011, turning to promoting contracts on the SGX FTSE China A50 Index as an alternative.

• RBA Says China Slowdown, Market Rout Raise Global Risks. The Reserve Bank of Australia said China’s slowdown and market volatility increased risks to global growth, highlighting the economic challenges confronting new Prime Minister Malcolm Turnbull. “International economic developments had increased the downside risks to the outlook,” the central bank said in minutes of its Sept. 1 meeting released Tuesday, in which it unusually gave global markets top billing. “But it was too early to assess the extent to which this would materially alter the forecast for GDP growth in Australia’s trading partners.”

• The U.S. Dollar Is Gaining Like It's the 1980s -- For Better or Worse. The dollar is in the midst of its strongest rally since 1984 and -- unlike then -- there may be little anyone can do to stop it. Thirty years ago this month, the U.S. was powerful enough to muscle its way out of a damaging trade imbalance when it took financial markets by surprise with the Plaza Accord. In that agreement, it persuaded Japan, Germany, France and the U.K. to join in coordinated action to help weaken the dollar.

• China Stocks Post Biggest Two-Day Loss in Three Weeks on Economy. China’s stocks fell for the steepest two-day loss in three weeks amid concern the economic slowdown is deepening as traders weighed state support for equities. The Shanghai Composite Index dropped 1.8 percent to 3,059.01 at 9:33 a.m. local time, led by material and technology shares. The benchmark gauge plunged 2.7 percent on Monday after weekend data showed industrial output missed economists’ forecasts and investment in the first eight months increased at the slowest pace since 2000.

• Asia Stocks Erase Gains as China Shares Slide; Yen Slips on BOJ. Asian stocks dropped as Shanghai shares fell, while Australia’s dollar snapped a six-day advance after the country’s central bank said volatility emanating from China has increased risks to global growth. The yen weakened amid speculation policy makers will signal more stimulus Tuesday. The Shanghai Composite Index headed for its biggest two-day slide in three weeks, while a measure of Chinese shares in Hong Kong was little changed. Australia’s S&P/ASX 200 Index deepened declines and the Aussie weakened after the Reserve Bank of Australia released minutes of its Sept. 1 meeting. The yen slipped 0.2 percent, boosting Japanese equities. U.S. oil held below $45 a barrel before data on American stockpiles, while corn climbed.

• Investors in Riskier Slice of CLOs Signal More Pain Ahead. Investors in funds that are the biggest buyers of leveraged loans are signaling concern that some managers may have taken on too much risk as the commodities slump persists. To own the BB rated portion of collateralized loan obligations in the secondary market, investors are demanding 7 percentage points to 9 percentage points more than a benchmark rate, according to Wells Fargo & Co. analyst Dave Preston. The gap probably hasn’t been that wide since the financial crisis, he said. The $411 billion U.S. CLO market’s exposure to commodities-related companies has risen this year, even as crude prices have dropped about 60 percent from last year’s high, increasing concerns about the potential for downgrades and defaults. Leveraged-loan prices fell last month to a more than three-year low, with some energy debt being particularly hard hit.

• Here's Why the Fed May Not Raise Rates This Week. (video)

• Get Used to Volatility, Says Hedge Fund That Called August Rout. Anthony Limbrick, whose hedge fund profited on bearish wagers during the August rout, says the recent turbulence in markets heralds a new era in increased volatility. One clear sign to Limbrick: U.S. stocks are expensive -- valuations for U.S. stocks when compared to earnings before interest, tax, depreciation and amortization hark back to the dot-com bubble era. Another: Emerging markets will continue to plague developed peers for years to come, mirroring the Asian financial crisis of the 1990s, he says. Limbrick’s firm, 36 South Capital Advisors, saw trouble brewing in developing economies back in 2013. And he says the Federal Reserve won’t do anything to calm equities after the twin concerns about China and a rate hike sent the VIX soaring 135 percent last month. “It may well be ‘sell the rumor, buy the fact’ into the Fed meeting,” with stocks initially rising, but “how long that relief rally lasts for is an important question,” said Limbrick, the head of quantitative research at 36 South in London. “Markets may have an upward bias for a while, but we’d expect to see another leg down.”

Wall Street Journal:

• Oil Patch Braces for Financial Reckoning. Smaller producers are girding for cuts to credit lines, as crude prices show little sign of rebounding. U.S. energy companies have defied financial gravity for more than a year, borrowing and spending billions of dollars to pump oil, even as crude prices plummeted. Until now. The oil patch is expected to finally face a financial reckoning, experts say, with carnage occurring as early as this month. One trigger: Smaller drillers are bracing for cuts to their credit lines in October as banks re-evaluate how much energy companies’ oil and... 

• Citic Securities Draws Beijing’s Ire After Meltdown. The brokerage arm of China’s most politically pedigreed financial firm has found a number of its executives entangled in a government inquiry. The brokerage arm of China’s most politically pedigreed financial firm entered the summer with big gains in profit. Now, Citic Securities Co. is contending with a near meltdown in markets and a government crackdown that has entangled a number of its top executives.

• Insiders Beat Market Before Event Disclosure: Study. Researchers from Columbia, Harvard find small but persistent edge.

• Hillary’s For-Profit Education. The company that paid Bill doesn’t do well on the Obama scorecard. Hillary Clinton has vowed to crack down on for-profit colleges. Very interesting. We wonder if she or her aides have looked at the new “college scorecard” that the Obama Administration released on the weekend.

Fox News:

• Cold War weaponry and modern military hardware: Inside the ISIS arsenal. In January the U.S. Central Command announced that U.S. and coalition airstrikes against Islamic State targets in Iraq and Syria destroyed some 184 Humvees, 58 tanks and nearly 700 other vehicles. The number of ISIS military vehicles destroyed may seem significant, but is really just a drop in the bucket compared to the militants' overall firepower. While specific numbers are difficult to come by, reports suggest that ISIS has a huge fleet of vehicles – including tanks - its possession. Last year, for example, the jihadists captured 2,300 Humvees from Iraqi forces when they captured the city of Mosul, some of which were then converted to armored vehicles.

• Obama’s revamped college evaluation site ripped as ‘misleading,’ unnecessary. (video) President Obama has launched a scaled-back college evaluation website that does not include what some in the higher-ed world had feared -- a government rating system of America’s roughly 7,000 colleges and universities.

CNBC:

• Ex-Fed official: Central Bank should bring more uncertainty. (video)

Zero Hedge:

• Barclays Slashes China GDP Projections After Weak Data.

• USDJPY Surges Ahead Of BoJ Statement, China Strengthens Yuan As Washington Folds On Cybersecurity Sanctions. (graph)

• Goldman Warns: VIX Is Not Going Back To Low-Teens, No Matter What Fed Does. (graph)

• A Panicked Brazil Promises Billions In Austerity, Does 180 On Budget After Downgrade.

• "Ineffective & Reckless" Fed Is An "Engine of Disaster". (graph)

• "The Danger Is That It Bursts Just Like In The US": Sweden Goes Full Krugman, Gets Massive Housing Bubble.

• Fourth Turning: Crisis Of Trust, Part 2. (graph)

• A Flock Of Black Swans.

• "There's Just No Cash" Oil Price Increase Will Not Come Fast Enough To Save Alberta. (graph)

• VIX Has Not Done This Since The USA Was Downgraded. (graph)

• It All Comes Down To This. (graph)

• The Fed Shouldn't Worry About Losing Credibility: It Already Lost It.

• China Churn & Fed Fears Spark Sleepy Stock Slippage. (graph)

Business Insider:

• A new global recession has begun.

• This number may be the biggest 'alarm siren' in Hillary Clinton's brutal summer.

• Why European leaders are lining up behind Assad.

• Global trade is slowing. (graph)

Reuters:

• Japan business mood sinks on China anxiety, weak demand -Reuters Tankan. Japanese manufacturers' confidence slumped the most in a year in September to an eight-month low and is forecast to worsen further as fears of a China-led global economic slowdown grow, a Reuters poll showed. Domestic demand also looks increasingly fragile as service companies reporting the weakest sentiment since March and predicted further deterioration in the coming three months.

Telegraph:

• Fitch warns of emerging market shock if Fed sticks to rate plan. Investors do not believe the US Federal Reserve will dare to take away the punch bowl. They may be in for a nasty surprise if it does.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are -1.25% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 133.5 -1.5 basis points.

• Asia Pacific Sovereign CDS Index 85.5 -.5 basis point.

• S&P 500 futures +.11%.

• NASDAQ 100 futures +.13%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (UNFI)/.72

Economic Releases

8:30 am EST

• Retail Sales Advance for August are estimated to rise +.3% versus a +.6% gain in July.

• Retail Sales Ex Autos for August are estimated to rise +.2% versus a +.4% gain in July.

• Retail Sales Ex Auto and Gas for August are estimated to rise +.4% versus a +.4% gain in July.

• Empire Manufacturing for September is estimated to rise to -.5 versus -14.92 in August.

9:15 am EST

• Industrial Production for August is estimated to fall -.2% versus a +.6% gain in July. 

• Capacity Utilization for August is estimated to fall to 77.8% versus 78.0% in July. 

• Manufacturing Production for August is estimated to fall -.3% versus a +.8% gain in July.
  

10:00 am EST

• Business Inventories for July are estimated to rise +.1% versus a +.8% gain in June.
  

Upcoming Splits

• (MDVN) 2-for-1

Other Potential Market Movers

• The Eurozone Trade Balance, German ZEW Index, UK CPI report, RBA minutes, US weekly retail sales reports, BMO Media/Telecom Conference, (HPQ) analyst meeting, (ARMH) investor day, (CRM) investor day and the (SYY) investor day could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and financial 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 Final Hour on China Bubble-Bursting Fears, Commodity Declines, US High-Yield Debt Angst, Homebuilding/Energy Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Light

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 24.36 +4.91%

• Euro/Yen Carry Return Index 141.87 -.64%

• Emerging Markets Currency Volatility(VXY) 12.66 -.16%

• S&P 500 Implied Correlation 65.31 +3.01%

• ISE Sentiment Index 81.0 -2.0%

• Total Put/Call .99 -17.5%

• NYSE Arms .99 +13.7% 

Credit Investor Angst:

• North American Investment Grade CDS Index 79.94 +.23%

• America Energy Sector High-Yield CDS Index 1,925.0 +1.07%

• European Financial Sector CDS Index 82.50 +.35%

• Western Europe Sovereign Debt CDS Index 21.97 +2.33%

• Asia Pacific Sovereign Debt CDS Index 86.43 +.34%

• Emerging Market CDS Index 354.51 +.04%
  

• iBoxx Offshore RMB China Corporates High Yield Index 118.21 +.30%

• 2-Year Swap Spread 13.5 -1.0 basis point

• TED Spread 31.25 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -25.25 -1.25 basis points

Economic Gauges:

• 3-Month T-Bill Yield .03% unch.

• Yield Curve 145.0 -3.0 basis points

• China Import Iron Ore Spot $58.1/Metric Tonne -1.54%

• Citi US Economic Surprise Index -20.3 +1.9 points

• Citi Eurozone Economic Surprise Index 24.5 -.1 point

• Citi Emerging Markets Economic Surprise Index -24.3 -1.5 points

• 10-Year TIPS Spread 1.56 -3.0 basis points
• # of Months to 1st Fed Rate Hike(Morgan Stanley) 3.94 -.01

Overseas Futures:

• Nikkei 225 Futures: Indicating -11 open in Japan 
• China A50 Futures: Indicating -496 open in China

• DAX Futures: Indicating +15 open in Germany

Portfolio: 

• Slightly Lower: On losses in my biotech/retail/medical sector longs

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

• Market Exposure: Moved to 25% Net Long