Friday Watch

Evening Headlines 
Bloomberg:

• Kerry Finds U.S. Vision a Hard Sell Amid Mideast Turmoil. Secretary of State John Kerry’s Mideast trip this week has been a lesson in the limits of U.S. power and the difficulty of telling friend from foe in a land where alliances can shift as readily as desert sands. Shortly after Kerry tried to promote cooperation among Iraq’s Sunni and Shiite politicians in Baghdad, Prime Minister Nouri al-Maliki, who’s long enjoyed American support, rejected calls to step aside and clear a path toward a more inclusive government. A day before he met Kerry, the president of Iraq’s semi-autonomous Kurdistan region, Massoud Barzani, told CNN that the time may have come for the region to break with Baghdad and pursue independence. In their talks, Barzani was noncommittal in response to Kerry’s urging that he desist, according to a U.S. official who spoke anonymously because the discussions were private. The U.S. has “very little leverage” with key figures in Iraq, including Maliki, said Faysal Itani, a resident fellow at the Atlantic Council’s Rafik Hariri Center for the Middle East in Washington. “It is not just a question of credibility, it’s a question of commitment.” The lack of leverage was evident elsewhere, as well. Less than 24 hours after Kerry appealed to Egyptian President Abdel-Fattah El-Sisi to relax his crackdown on civil liberties, an Egyptian court sentenced three Al Jazeera English journalists to at least seven years in prison for endangering national security by reporting on the Muslim Brotherhood. Then El-Sisi rebuffed U.S. calls to pardon the journalists. 

• Shanghai Developer Said to Suspend Project on Funding Shortage. A closely held Shanghai developer is said to have suspended construction at a property project due to a lack of funds, two government officials familiar with the matter said. Construction at Shanghai Yuehe Real Estate Co.’s mixed-use project, including residential, office and retail space, in the city was halted this month and the project was frozen by a court, according to the people, who asked not to be identified because they aren’t authorized to speak publicly about the matter. Shanghai Pudong Development Bank Co. (600000), a medium-sized Chinese bank, loaned about 240 million yuan ($39 million) to the 220,000 square meter (2.4 million square foot) development in suburban Jiading district, they said.

• Italian Debt Swells to Rival Germany as Bonds Rally: Euro Credit. As Italy’s borrowing costs fall to new lows, its debt is rising to the most ever. The country owed 5 percent more in April compared with a year earlier, with debt reaching 2.15 trillion euros ($2.9 trillion), Bank of Italy figures show. That matches the outstanding borrowing of Germany, the largest economy in Europe and the most of any country on the continent, at the end of last year, according statistics office Eurostat.

• Asian Stocks Swing as Fed Official Says Rates May Rise. Asian stocks swung between gains and losses, with the regional benchmark index trading near a six-year high, as a Federal Reserve official said the U.S. may raise interest rates by March. Oracle Corp. Japan declined 4.2 percent, leading losses among information technology shares. Ono Pharmaceutical Co. jumped 5.7 percent in Tokyo, leading health-care shares higher, on a report its melanoma drug will be approved. Samsung Electronics Co., South Korea’s largest exporter of consumer electronics, was the biggest drag on the regional index, falling 1.1 percent. The MSCI Asia Pacific Index (MXAP) was little changed at 145.49 as of 9:53 a.m. in Tokyo after dropping as much as 0.2 percent.

• Obama’s Economic Rebound Doesn’t Boost Democratic Allies. Sluggish improvement in living standards among Democrats’ core voters threatens to hurt the party’s candidates in this year’s congressional elections. Median household income among all Americans is still lower than before the recession, which ended five years ago, according to economic consultant Sentier Research. Key Democratic constituents -- blacks, Hispanics, single women and young people -- have been especially hard-hit, and analysts say that could make them less energized about going to the polls. The economic reality is “dampening enthusiasm among some of the voter groups Democrats need most,” said Charlie Cook, publisher of the nonpartisan Cook Political Report.

• Nike Profit Tops Estimates as North American Sales Gain. Nike Inc. (NKE), the world’s largest sporting-goods maker, posted fourth-quarter profit that topped analysts’ estimates as running and basketball gear drove sales in North America. Net income in the quarter ended May 31 rose 5.4 percent to $698 million, or 78 cents a share, from $662 million, or 73 cents, a year ago, the Beaverton, Oregon-based company said today in a statement. The average of 26 analysts’ estimates compiled by Bloomberg was 75 cents. Nike is benefiting from consumers increasingly buying athletic apparel and gear for everyday wear, not just when working out or playing sports.

Wall Street Journal: 

• Iraq's Christian Minority Feels Militant Threat. Shrinking Baghdad Flock Prays Behind Blast Wall; Town of Holy Sites Flees Mortars. Surrounded by a blast wall topped with razor-sharp concertina wire, Our Lady of Salvation Church in downtown Baghdad resembles a fortress more than a sanctuary. Despite the fortifications, however, those who worship there are feeling more vulnerable than ever. An appeal for help in guarding the Syriac Catholic Church this month brought no volunteers. A ragtag trio of armed men protects the churchyard. At Mass, guards patted down worshipers and checked their belongings for concealed weapons and explosives. Only a...

• Credit-Card Lenders Pursue Riskier Borrowers. Cards Issued to Subprime Borrowers Rose 39% in First Quarter. Credit-card lenders are courting riskier borrowers more aggressively than they have since the financial crisis in a bid to jolt revenue in a period of sluggish growth and tight regulation. Banks and other lenders issued 3.7 million credit cards to so-called subprime borrowers during the first quarter, a 39% jump from a year earlier and the most... 

• Major Brokers Cut Ties to Barclays Dark Pool. Decision Follows Accusation of Fraud by New York Attorney General.

Fox News:

• Iran reportedly sent military advisers, head of Quds Force to Iraq. Iran reportedly has sent military advisers into Iraq and dispatched the head of its infamous Quds Force to help Baghdad strategize in its fight against Sunni militants, as the United States takes similar steps despite concern about Tehran's involvement.

• 'Suspicious': Experts, GOP lawmakers question Lerner's lost email explanation. Computer experts and Republican lawmakers are poking holes in IRS claims that the agency did all it could to retrieve embattled ex-official Lois Lerner's allegedly "lost" emails, which the agency blames on a 2011 hard-drive crash.

CNBC: 

• Amazon(AMZN) to launch new local takeout service: Report. Amazon is rolling out a new takeout food service to rival industry leaders GrubHub, Seamless and DeliveryHero, TechCrunch reported Thursday.

• GM(GM) recalls 29,019 Chevy Cruze vehicles: DJ. General Motors on Thursday afternoon recalled 29,019 2013-14 Chevrolet Cruze vehicles because of an airbag issue, Dow Jones reported. The move comes one day after the company asked North American dealers to stop selling the cars.

Zero Hedge: 

• Obama Asks For $500 Million To Equip Syrian Rebels As The ISIS Juggernaut In Iraq Spreads. 

• Abe's Worst Nightmare: Household Spending Collapses As Inflation Spikes. (graph)

• Why Financial Reporters Are Clueless: They Copy And Paste Keynesian/Wall Street Propaganda.

• The Great American Economic Growth Myth. (graph)

• This Has Never Happened Without The US Falling Into Recession. (graph)

• Hillary's Book Sales Crash After 1st Week; Reviews Disastrous.

• NIRP Strikes: Spain To Create Tax On Bank Deposits.

ValueWalk:

• Confidence In US Banks Remains Near Historic Low. (graph)

Business Insider:

• Hedge Funder Says Massive Heist May Have Been Macau's 'Lehman' Moment. 

• Some Of The Bravest People I've Ever Known Are Being Abandoned In Iraq And Afghanistan.

• 5 Reasons Why Excessively Low Rates May Be Harmful To The Economy.

Pensions & Investments:

• Under the hood of hedge fund leverage. One of the key differentiators between hedge funds and other investment vehicles is the use of leverage. Leverage can be your best friend one day, and your worst enemy the next.

Reuters:

• DuPont(DD) cuts profit forecast on slow sales in farm business. Chemicals maker DuPont (DD.N) cut its operating profit forecast for the second quarter and the full year, saying sales in its agriculture and performance chemicals units increased at a slower pace than it had expected. The company's shares fell about 4 percent in extended trading.

• U.S.-based stock funds attract $1.5 bln over week ended - Lipper.

Obama takes on coal with first-ever carbon limits
Read more at http://www.philly.com/philly/news/politics/20130919_ap_0f857b20e0c144a5a1e1b9dddc9f9d72.html#YRThyDOhArykUeYy.99

Telegraph: 

• The "Junckernaut" is driving Britain to inevitable separation. Britain’s marital breakdown with much of the rest of the European Union is fast moving beyond the point of no return, with all other member states bar Hungary expected publicly to snub David Cameron at the Ypes summit by appointing Jean-Claude Juncker as president of the European Commission.

Evening Recommendations

• None of note

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 101.25 -.75 basis point.

• Asia Pacific Sovereign CDS Index 73.75 +.5 basis point.

• FTSE-100 futures +.19%.

• S&P 500 futures -.15%.

• NASDAQ 100 futures  -.11%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AZZ)/.54

• (CMC)/.29

• (FINL)/.21

• (KBH)/.20

Economic Releases
9:55 am EST

• Final Univ. of Mich. Consumer Confidence for June is estimated to rise to 82.0 versus a prior estimate of 81.2.

Upcoming Splits

• None of note

Other Potential Market Movers

• The UK gdp report could impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and industrial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.