Friday Watch

Evening Headlines

Bloomberg:

• May to Urge G-20 to Coordinate on Tracking Terrorist Finances. Theresa May will use the Group of 20 summit in Hamburg to call for international coordination to track even small sums of money being transferred between terrorist groups. The British prime minister will argue that new technology is needed to monitor such transactions, as they can provide clues to coming attacks. She’ll say that parts of the international finance system act as “safe spaces” for Islamic State and related groups, and suggest partnerships between police and banks to spot suspicious activity.

• Police Break Up Hamburg Protest on Eve of G-20 With Water Cannons. (video) Hamburg police deployed a water cannon and pepper spray on Thursday against thousands protesting the Group of 20 summit, breaking up the march on the eve of the global gathering in Germany’s second-largest city. As authorities tried to separate about 1,000 people belonging to a masked group and let the protest move forward, demonstrators tossed projectiles and set off fireworks. The already tense situation -- with the crowd shouting: "all of Hamburg hates the police" -- then turned chaotic as police responded with water and pepper spray.

• Samsung Rides Surging Chip Demand to Record Quarterly Profit. Samsung Electronics Co. topped analyst estimates with its best-ever operating profit as global demand for semiconductors remained strong and the new Galaxy S8 flagship smartphone won over customers. Operating income rose to 14 trillion won ($12 billion) in the three months ended June, the Suwon, South Korea-based company said in preliminary results released Friday. That compares with the 13 trillion-won average of analysts’ estimates compiled by Bloomberg. Revenue rose to 60 trillion won, compared with the 58.4 trillion won projected.

• Bond Rout Deepens as Asia Stocks Set to Join Drop. Asian equity markets look poised to join a global selloff amid a rout in bonds with investors on edge as central bankers step up talk of tighter policy conditions. Bonds in Australia will likely join declines seen in Treasuries after German yields climbed to the highest level in 18 months following weaker-than-expected demand in a French debt auction. Futures on stock indexes in Japan, Australia and Hong Kong all retreated after a decline in the S&P 500 Index dragged the gauge below its average level over the past 50 days. The dollar weakened. Contracts on the Nikkei 225 Stock Average fell 0.5 percent in Singapore trading, while futures on Australia’s S&P/ASX 200 Index lost 0.4 percent, as did Hang Seng Index contracts.

• Iron Will Slump Back Below $50 on Supply, Top Exporter Says. (video)

• Fed's Fischer Says Fiscal-Policy Uncertainty Denting Investment. Uncertainty surrounding U.S. government policy may be holding back economic growth because of its negative impact on business investment, Federal Reserve Vice Chairman Stanley Fischer said. A “cautious approach to investment” by U.S. companies “may in part reflect the uncertainty about the policy environment,” Fischer said Thursday in remarks prepared for a speech in Vineyard Haven, Massachusetts. “Mitigating the damping effect of uncertainty by providing more clarity on the future direction of government policy is highly desirable.”

• Qualcomm(QCOM) Seeks Limited Ban on iPhone Shipments, Sues on Patents. Qualcomm Inc. is suing Apple Inc. for patent infringement, the latest volley in an increasingly bitter legal battle over whether Apple should pay for Qualcomm technology used in the iPhone.

• Goldman(GS) Economists See Drug Epidemic Taking Toll on U.S. Economy. “Use of both legal prescription pain relievers and illegal drugs is part of the story of declining prime-age participation, especially for men,” Goldman economists wrote in the study released Wednesday.

Wall Street Journal:

• Trump Says West Must Defend Its Civilization. U.S. president speaks to thousands of Poles during his second trip to Europe.

• Ships Exporting Iranian Oil Go Dark, Raising Sanctions Red Flags. Analysis reveals type of behavior U.S. officials say could be used to evade sanctions.

• Buffett’s Berkshire Nears Deal to Buy Electric-Grid Giant Oncor for More Than $17.5 Billion. Deal would cement electricity as one of the conglomerate’s largest businesses.

Fox News:

• Trump chides Russia ahead of Putin meeting, though not enough for Dem critics. (video)

CNBC:

• June job growth is expected to be strong, but the focus will be on whether wages are rising. (video)

• Global food prices set two-year high in June as meat, dairy and wheat climb.

• Amazon(AMZN) and Dish Network(DISH) could be exploring potential wireless partnership, according to a report. (video)

Zero Hedge:

• If You Want To Get A New Job, Don't Do This On Social Media.

• CNN's Ratings Collapse As Primetime Shows Draw Less Viewers Than Re-Runs Of "Yogi Bear".

• 14 Facts That Show America's System Of Public Education Deserves An 'F' Grade.

• "They're Selling Everything" - Bonds, Stocks, Oil, Gold, & Dollar All Tumble. (graph)

Business Insider:

• WHO warns of imminent spread of untreatable superbug gonorrhoea.

Night Trading 

• Asian equity indices are -.75% to -.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 88.25 +.5 basis point. 

• Asia Pacific Sovereign CDS Index 22.5 +.25 basis point.

• Bloomberg Emerging Markets Currency Index 72.35 -.02%.

• S&P 500 futures +.05%.

• NASDAQ 100 futures +.13%.

Morning Preview Links

Earnings of Note
Company/Estimate

• None of note

Economic Releases 
8:30 am EST

• The Change in Non-Farm Payrolls for June is estimated to rise to 178K versus 138K in May.

• The Unemployment Rate for June is estimated at 4.3% versus 4.3% in May.

• Average Hourly Earnings MoM for June is estimated to rise +.3% versus a +.2% gain in May.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The G-20 Conference, German Industrial Production report and the UK Industrial Production report could also impact trading today.

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