Tuesday Watch

Evening Headlines 
Bloomberg: 

• China's Local Debt Problem Goes Global. A very local problem in China is being exported at an alarming rate. Debt from special-purpose vehicles linked to municipal and provincial governments -- leverage that central authorities are trying (unsuccessfully) to extinguish -- is becoming more common in overseas markets. What's worse, lately it's been the weakest cities and provinces panhandling to international investors.
• Venezuela Nears Constitutional Crisis as Opposition Changes Tack. Venezuela is heading toward a constitutional crisis to add to its economic collapse after the opposition-controlled National Assembly challenged the power of the Supreme Court that backs President Nicolas Maduro. The National Assembly last week voted to strip 13 of 32 Supreme Court judges of their powers and said any decisions the justices participated in would be invalid. Congress now is studying the appointment of its own judges, according to congressional President Henry Ramos Allup.
• Most Asian Stocks Advance as Weaker Yen Boosts Japan’s Topix. Most Asian stocks climbed after a weaker yen boosted Japanese shares and investors weighed the prospects for added stimulus from global central banks. The MSCI Asia Pacific Index was little changed at 133.90 as of 9:17 a.m. in Tokyo, with 278 shares rising and 214 declining.
• Rio Second-Quarter Iron Ore Output Rises 7% as Prices Gain. Rio Tinto Group’s second-quarter iron ore production rose 7 percent as the No. 2 shipper continues to boost the world’s lowest-cost supply amid a rebound in prices this year. Total global output rose to 85.3 million metric tons in the three months to June 30, London-based Rio said Tuesday in a statement. That compared with 79.7 million tons a year earlier and missed the 88 million ton median estimate of seven analysts surveyed by Bloomberg.

Wall Street Journal:

• The Better Angels of Our Nature. What’s at stake in Cleveland is the identity of the GOP, not the next president.

Fox News:

• Afghan refugee shot dead after slashing attack on German train. Multiple people were injured after a teenage Afghan refugee went on a slashing spree armed with an axe and knife on a train in southern Germany on Monday night before he was shot to death by police, officials said. Wuerzburg police said on their Facebook page that three of the victims suffered serious injuries and one was slightly injured. Another 14 people were being treated for shock.
• Republican officials approve convention rules, triggering uproar. (video) Republican officials hastily adopted a set of much-contested convention rules Monday, setting off an unruly protest from anti-Donald Trump delegates on the first day of the Republican National Convention in Cleveland. Those anti-Trump forces had hoped to challenge the rules that bind delegates to vote for the presumptive GOP nominee, as part of a last-ditch bid to at least disrupt his march to the nomination. But the convention's presiding officer, Arkansas GOP Rep. Steve Womack, abruptly put the rules to a vote -- twice -- and declared them approved by voice. 
• GOP Convention: Live Blog.

Zero Hedge:

• Axe-Wielding Afgan Man Shot Dead After Slashing At Least 20 People On German Train Screaming "Allahu Akbar".
• Millennials Face An Existential Crisis: "It Won't Be A Short Period Of Difficulty".
• After Eight Years Of "Hope And Change", Voters Are Angry.
• The Hamptons Housing Market Has Crashed: Luxury Home Sales Drop By Half As Prices Plunge.
• Citi Is Stunned How Quick The "Extraordinary Political Backdrop" Is Deteriorating.
• Celebrity Lives Matter... More.
• Republican Platform Unexpectedly Calls For A Return To Glass-Steagall.
• IBM(IBM) "Beats" Despite 17th Straight Revenue Decline; Margin Miss; Spike In Net Debt. (graph)
• Netflix(NFLX) Plummets As Growth Story Comes To A Halt: Company Says "We Are Not Growing As Fast As We Would Lke".
• Failed 'Coup' Sparks Yen-Driven Buying Spree In US Stocks. (graph)

Business Insider:

• Police unveil 'chilling' evidence displaying how Baton Rouge shooter targeted police.
• The world is 'addicted to debt'.
• Asia's central banks are 'losing their punch'.
• Mother of Benghazi victim addresses Republican convention: 'Hillary for prison. She deserves to be in stripes'.
• After the Nice attack, France is reconsidering its approach to multiculturalism.

Night Trading 

• Asian equity indices are -.25% to unch. on average.
• Asia Ex-Japan Investment Grade CDS Index 119.25 -.5 basis point.
• Asia Pacific Sovereign CDS Index 47.5 +.5 basis point.
• Bloomberg Emerging Markets Currency Index 73.81 -.07%. 
• S&P 500 futures -.06%. 
• NASDAQ 100 futures -.06%.

Morning Preview Links

Earnings of Note
Company/Estimate 

• (BDC)/1.26
• (CMA)/.69
• (GPC)/1.29
• (GS)/3.05
• (GWW)/3.17
• (JNJ)/1.68
• (KSU)/1.03
• (LMT)/2.93
• (PM)/1.19
• (RF)/.20
• (AMTD)/.38
• (UNH)/1.89
• (WIT)/8.93
• (CTAS)/1.01
• (DFS)/1.39
• (IBKR)/.34
• (ISRG)/4.99
• (MRVL)/.09
• (MSFT)/.58

Economic Releases  
8:30 am EST

• Housing Starts for June are estimated to rise to 1165K versus 1164K in May.
• Building Permits for June are estimated to rise to 1150K versus 1138K in May.     

Upcoming Splits 

• None of note

Other Potential Market Movers

• The German ZEW Economic Survey, UK CPI report and the weekly US retail sales reports could also impact trading today.

BOTTOM LINE:  Asian indices are mostly lower, weighed down by technology 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 50% net long heading into the day.