Friday Watch

Evening Headlines 
Bloomberg: 

• BOJ Refrains From More Stimulus as Business Confidence Rises. The Bank of Japan refrained from adding to unprecedented monetary stimulus after business confidence surged and Prime Minister Shinzo Abe decided the economy was strong enough to weather a sales-tax increase. Governor Haruhiko Kuroda’s board retained a goal of expanding the monetary base by 60 trillion to 70 trillion yen ($720 billion) a year, the central bank said in Tokyo today. Thirty-five of 36 economists in a Bloomberg News survey forecast no change in policy, while one predicted more purchases of real-estate investment trusts.

• Asia Stocks Fall as Treasury Warns of U.S. Impasse Impact. Asian stocks fell, with the regional index heading for its first weekly loss in more than a month, as concern grew that the U.S. political impasse could lead to the government defaulting on its debt. Blumont Group Ltd. slumped 56 percent in Singapore before trading was suspended after it agreed to buy an unnamed overseas coal producer. Digital Garage Inc. (4819) lost 6 percent after a Twitter Inc. filing failed to mention the Tokyo-based company as a shareholder. GS Yuasa Corp. (6674), a Japanese battery producer, slumped 4.8 percent as its rating was cut at Mitsubishi UFJ Morgan Stanley Securities Co. The MSCI Asia Pacific Index lost 0.3 percent to 139.09 at 12:18 p.m. in Tokyo as all but one of the 10 industry groups on the gauge fell.

• Rubber Set for Worst Week Since May as U.S. Impasse Boosts Yen. Rubber headed for the biggest weekly loss since May as concern that the U.S. political impasse could lead to a recession boosted the Japanese currency and cut the appeal of yen-denominated futures. The contract for March delivery on the Tokyo Commodity Exchange fell as much as 1.2 percent to 253.9 yen a kilogram ($2,615 a metric ton), the lowest level since Aug. 8. Futures traded at 254.5 yen at 10:07 a.m. and lost 5.8 percent this week, the worst performance since the five days through May 24. 

• Gold Swings Above $1,300 as Investors Assess U.S. Economy, Debt. Gold fluctuated above $1,300 an ounce, heading for a weekly loss, as investors weighed the prospect of slower U.S. economic growth as a partial government shutdown entered a fourth day and lawmakers wrangled over the debt limit. Bullion for immediate delivery traded little changed at $1,315.41 an ounce at 11:25 a.m. in Singapore after rising 0.5 percent and losing 0.2 percent. Bullion declined to an eight-week low of $1,277.15 on Oct. 2 before rebounding as investors assessed the government closure and its impact on the outlook for monetary stimulus from the U.S. Federal Reserve.

• Twitter Said to Plan to Make S-1 Public Today. (video) Twitter plans to make its S-1 regulatory filing for its initial offering public today, said people with knowledge of the process. Cory Johnson and Jon Erlichman report on Bloomberg Television's "Street Smart."

• Harvard Won’t Divest From Fossil Fuels, Faust Says. Harvard University, the world’s richest school, won’t sell its investments in fossil-fuel companies amid pressure from students, President Drew Faust said in a letter released today. “I do not believe, nor do my colleagues on the Corporation, that university divestment from the fossil fuel industry is warranted or wise,” Faust said in the letter, referring to Harvard Corporation, the school’s governing board. “The endowment is a resource, not an instrument to impel social or political change.” 

Wall Street Journal: 

• GOP Begins Search for Broad Deal on Budget. Senior Republicans in Congress, frustrated over their inability to strike a deal to reopen the government, began shifting from their drive to undercut the 2010 health-care law, which has been the central element of the dispute, toward a broader budget deal.

• Budget Battle: Streaming Coverage.

• Noonan: To Lead Is to Negotiate. A veteran of shutdowns and divided government reflects on today's Washington.

Fox News:

• Fox News Poll: Voters support delaying Obamacare, but oppose defunding it. While voters oppose defunding the health care law, they say implementation should be delayed, and a majority wants all or part of the law repealed.

• Veterans Affairs accused of 'double-speaking' on impact of budget impasse. As the partial government shutdown drags on, the Department of Veterans Affairs may be changing its tune about the severity of the cutbacks.

CNBC:

• Here's how much stock Twitter execs own.

• What happened to a weak yen?

Zero Hedge: 

• Jamie Dimon No Longer Chairman Of JPM's Primary Banking Subsidiary. 

• What Will Happen To The US Credit Rating?

• The Rise And Fall Of Monetary Policy Coordination.

• Wall Street Headhunter: "I Haven't Seen Morale This Bad Since The Titanic".

• Government Shutdown? 36 Facts Which Prove That Almost Everything Is Still Running.

• About The "Europe Is Recovering" Meme. (graph)

• Picturing The Dangers Of An All-Powerful Federal Reserve.

Business Insider: 

• Tropical Storm Karen Set To Hit Florida Gulf Coast.

Reuters: 

• Obama cancels visits to Indonesia, Brunei due to U.S. government shutdown.

• Adobe(ADBE) says customer data, source code accessed in cyber attack. Adobe Systems Inc said on Thursday it was the victim of sophisticated cyber attacks on its networks by hackers who accessed data belonging to millions of customers along with the source code to some of its popular software titles.

Korea Economic Daily:

• IMF to Cut South Korea Growth Forecast. Fund to cut forecast for 2014 to 3.7% from 3.9%, citing officials at investment banks and international institutions.

Evening Recommendations 

• None of note

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 153.0 +1.0 basis point.

• Asia Pacific Sovereign CDS Index 120.0 +1.0 basis point. 

• FTSE-100 futures -.04%.

• S&P 500 futures +.04%.

• NASDAQ 100 futures +.11%.

Morning Preview Links

Earnings of Note
Company/Estimate

• None of note

Economic Releases 

• None of note

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Kocherlakota speaking, Fed's Lacker speaking, Fed's Stein speaking, Fed's Dudley speaking, Fed's Fisher speaking, BoJ decision and the Eurozone inflation data could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and technology 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.

Stocks Falling into Final Hour on Global Growth Fears, US Debt Ceiling/Shutdown Worries, Technical Selling, Homebuilding/REIT Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Below Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 17.49 +5.36%

• Euro/Yen Carry Return Index 138.17 +.23%

• Emerging Markets Currency Volatility(VXY) 9.85 -.81%

• S&P 500 Implied Correlation 51.21 +5.13%

• ISE Sentiment Index 94.0 -22.96%

• Total Put/Call .96 +.28%

• NYSE Arms .94 +61.63% 

Credit Investor Angst:

• North American Investment Grade CDS Index 80.53 +1.05%

• European Financial Sector CDS Index 140.96 +.80%

• Western Europe Sovereign Debt CDS Index 82.31 +1.0%

• Emerging Market CDS Index 293.50 +.08%

• 2-Year Swap Spread 13.75 +.5 basis point

• TED Spread 22.25 -.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -5.75 -.25 basis point

Economic Gauges:

• 3-Month T-Bill Yield .02% unch.

• Yield Curve 229.0 -1 basis point

• China Import Iron Ore Spot $131.40/Metric Tonne unch.

• Citi US Economic Surprise Index 44.90 -6.9 points

• Citi Emerging Markets Economic Surprise Index -.90 -.8 point

• 10-Year TIPS Spread 2.20 -1 basis point

Overseas Futures:

• Nikkei Futures: Indicating +28 open in Japan

• DAX Futures: Indicating +28 open in Germany

Portfolio: 

• Lower: On losses in my tech, biotech, medical sector longs 

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges, then covered some of them

• Market Exposure: 50% Net Long

Today's Headlines

Bloomberg: 

• Bipartisan House Group Offers Compromise to End Shutdown Impasse. A bipartisan group of lawmakers is proposing to House Republican and Democratic leaders a compromise to end the government shutdown by repealing a medical device tax and maintaining across-the-board spending cuts. 

• European Stocks Decline Second Day on U.S. Shutdown, ISM. European stocks declined for a second day, as a shutdown of the U.S. government continued and a gauge of service-industry activity in the world’s biggest economy fell more than forecast. Gerresheimer AG lost 2 percent as Credit Suisse Group AG lowered its recommendation on the shares. Schneider Electric SA fell 3.2 percent. Aviva Plc advanced 1.4 percent as the insurer said it generated $2.6 billion from the sale of its U.S. business. BP Plc rose 1.1 percent after a U.S. appeals court ordered a reconsideration of key terms of a settlement in the 2010 Gulf of Mexico oil spill case. The Stoxx Europe 600 Index slipped 0.4 percent to 309.55 at the close of trading, the lowest level since Sept. 9.

• Copper Falls as U.S. Shutdown Fuels Demand Concerns. Copper futures have dropped 1.8 percent this week. Copper futures for December delivery slumped 1.4 percent to settle at $3.2685 a pound at 1:06 p.m. on the Comex in New York.

Wall Street Journal: 

• On Third Day, Finger-Pointing Continues on Shutdown. Republicans and Democrats remained locked for a third day in a battle over the terms for reopening the federal government, and both sides continued to blame the other for the lack of negotiations toward a solution. President Barack Obama, speaking at a Maryland construction company, urged House Republicans to move legislation to reopen the entire government. 

• Budget Battle: Streaming Coverage.

• Gensler to Step Down as CFTC Chairman. Exit Would Cap Tumultuous Tenure as Leader of Financial Regulator.

• Global Economy Headed for Code Red Crisis. The world is headed for yet another financial crisis, according to financial maven and author John Mauldin. In his new book, “Code Red: How to Protect Your Savings from the Coming Crisis,” Mr. Mauldin talks about the reasons why the crisis will happen and hints at some ways to avoid being sucked into the painful vortex. The book is slated to be released at the end of October. For Mr. Mauldin, the massive injection of monetary stimulus launched by central banks across the developed world are creating a pool of inflated assets as investors attempt to seek alternative investments in a low-yield world. While Mr. Mauldin won’t pinpoint the date of the impending economic disturbance, he warns that monetary accommodation must end one day, and when it does, he warns that the global economy will suffer greatly.

• How to Look Under a Hedge Fund's Hood. Seven questions investors should ask before investing.

Fox News: 

• Dr. Ben Carson says IRS targeted him for his anti-Obama comments.  

• US Capitol in lockdown, reports of shots fired outside. The U.S. Capitol is in lockdown, after sources say shots were fired outside. According to U.S. Capitol Police, officers are injured. One person could be seen being carried off in a stretcher. Sirens are going off in the Capitol, and people on the Hill are being told to "shelter in place."

CNBC: 

• Wall Street wonders if Obama wants a selloff. President Barack Obama's best friend could be Wall Street's worst nightmare. A little market crisis—not enough to crash the economy into recession but enough to stir public fear that would push Republicans to the negotiating table—could be just what settles the impasse in Washington and reopens the government, according to investing pros and market observers.

Zero Hedge:

• Meet The Monster Of The Housing Market: Presenting "Vampire REOs" Where Half Of Americans Live Mortgage-Free.

• Non-Manufacturing ISM Tumbles, Worst Print Since June, Employment Index Has Biggest Drop Since 2009. (graph)

• The 3 Rising Risks To The Markets. (graph)

• Is This The Reason For The Annual September Fake Economic Bounce?

• California Admits Obamacare Interest Was Inflated By Almost 8 Times.

• The Shutdown Political Game: Inflict Maximum Pain To Score Cheap Points.

Business Insider:

• Europe's Youth Unemployment Crisis In One Grim Map.

• RED OCTOBER ARRIVES: A Look At The Geopolitical Risks That Could Shake Markets.

• The New Head Of The SEC Is Thinking Of Putting A Major Leash On Stock Exchanges.

Reuters: 

• Fed's Fisher says he feels "angst" about Fed's balance sheet. When the time comes for the Federal Reserve to reduce its massive balance sheet, one of the big worries is the potential volatility and instability that paring those assets could bring to financial markets, a top Fed official said on Thursday. "When you are on the buy side things look great," Dallas Fed President Richard Fisher said at a conference on uncertainty at the regional Fed bank. "When you are on the sell side, when we get to that point, things look different." The Fed's bond-buying program has swollen the central bank's balance sheet to more than $3.5 trillion. Fisher, who has opposed the bond-buying, said that he and his colleagues feel "angst" at size of the balance sheet and the potential challenges when it comes time for the Fed to reduce it.

• Abusive trading patterns involve multiple exchanges, FINRA says. Wall Street's securities regulator said on Thursday more than two-fifths of the abusive trading patterns detected by its new cross-market surveillance system involved more than one exchange and multiple participants.

Echoing fears that European policymakers remain in a state of cognitive dissonance – recognizing the need for root-and-branch overhaul of peripheral banks, but backtracking on joint liability plans – Christopher Flowers, the legendary FIG investor who now runs the £2.3 billion ($3.5 billion) private equity group JC Flowers, sounded the alarm over the negative sovereign-bank feedback loop. In a shot across the bows of market bulls, who cite the return of capital flows to weaker eurozone states, Flowers issued a stark warning: "There is a scenario where we have a Lehman-type event: we wake up some Thursday and a big country is in trouble. "And the ECB will have to decide to support banks x, y, z. And then the ECB will, in fact, decide to own bank x, y, z.


While we want you to share, we ask you use the functions on-site rather than copy/paste. See T's & C's for details. http://www.euromoney.com/Article/3211790/CurrentIssue/88924/Restructuring-Flowers-slams-Europe-over-inaction.html?copyrightInfo=true

The Globe and Mail:

• 'Zero' Risk Weighting on Euro Zone Debt is a Charade. The rules encourage banks to load up on debt from the weakest sovereigns, which lets those governments spend beyond their means. The risk of overspending is universal, but most of them can introduce enough inflation to keep away nominal default. Euro zone members do not have that escape route. But the more euro zone debt banks hold, the more damage any government default will do to their balance sheets – and the greater the temptation will be for a euro zone bailout of troubled states and banks. It is an unsatisfactory arrangement.

Bear Radar

Style Underperformer:

• Small-Cap Growth -1.35%

Sector Underperformers:

• 1) Homebuilders -2.05% 2) Biotech -1.83% 3) I-Banks -1.70%

Stocks Falling on Unusual Volume:

• EQIX, HWAY, BFR, PRU, GTIV, MCP, BK, CVX, WSR, PRTA, CEVA, ANGI, TXI, SFUN, HAWK, ASH, TASR, LLY, ZLC, CYD, CLDX, NOAH, MAA, MGAM, CLNE, TSLA, DGI, HLF, CCG, HCP and RWT

Stocks With Unusual Put Option Activity:

• 1) LAMR 2) MDY 3) XLB 4) GLW 5) UNP
  

Stocks With Most Negative News Mentions:

• 1) TSLA 2) APC 3) ANGI 4) C 5) GM
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Value -1.12%

Sector Outperformers:

• 1) Hospitals +.85% 2) Airlines -.11%% 3) HMOs -.12%
  

Stocks Rising on Unusual Volume:

• ICGE, CAMP, VVUS, CHU, OMER, PVH, THC, AWAY, FIVE, SLCA, CREE, MLNX, CSIQ, SRPT, UNXL, NPSP, KKD and AEGR

Stocks With Unusual Call Option Activity:

• 1) LVLT 2) XOMA 3) ANGI 4) SLCA 5) GALE

Stocks With Most Positive News Mentions:

• 1) P 2) ADSK 3) JLL 4) AAPL 5) LLY
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Thursday Watch

Evening Headlines 
Bloomberg:  

• Boehner Says Obama Refused Budget Negotiations in Meeting. House Speaker John Boehner said President Barack Obama refused to negotiate in a meeting with top congressional leaders about the government shutdown, signaling a lack of progress on resolving the fiscal impasse. As he exited a meeting today at the White House, Boehner said Obama must recognize that the U.S. has a divided government. “The American people expect their leaders to come together and try to find ways to resolve their differences,” said Boehner, an Ohio Republican. 

• Goldman to Nomura Warn on Debt to Reserves Ratio: India Credit. Reserve Bank of India data showed the highest ratio of short-term external debt to currency reserves in more than a decade, raising alarm bells at Goldman Sachs Group Inc. and Nomura Holdings Inc. The $97 billion maturing in less than a year amounted to 34.3 percent of reserves as of June 30, the highest since at least March 2001, RBI figures released Sept. 30 show. The ratio was 146.5 percent during a balance-of-payments crisis in March 1991, according to the report’s partial data for the 1990s. Including longer-term debt, repayments due by June 2014 total $170 billion, or 60 percent of reserves. Indonesia’s comparable ratio is 55.8 percent. Asia’s third-largest economy faces significant risk as banks and companies seek to refinance global borrowings, even as the government acts to trim the current-account deficit, Goldman wrote in a Sept. 30 research note. Nomura said the slowest economic growth in a decade and a budget deadlock in the U.S. will damp inflows, further straining India’s finances.

• Tepco Finds New Tank Leak at Fukushima Dai-Ichi Atomic Station. Tokyo Electric Power Co. (9501) found a fresh leak at a storage tank holding contaminated water at the Fukushima station about six weeks after an earlier outflow prompted the government to intervene in the plant’s cleanup. Beta radiation levels of 200,000 becquerels per liter were found near the leak that was confirmed at 9:55 p.m. yesterday, the utility known as Tepco said in a statement early this morning. Beta radiation includes strontium-90, which safety rules require to be kept under 30 becquerels at atomic plants. Tepco didn’t know when the leak started or how much water has been discharged, Yusuke Kunikage, a spokesman, said in an interview before a press conference planned for 10 a.m. The company can’t rule out the possibility that some of the water flowed to the sea, according to the statement.

• Evidence Grows That North Korea Has Restarted Reactor. North Korea’s 5-megawatt reactor at Yongbyon is releasing hot water, a sign operations have resumed at the facility capable of producing enough plutonium to make one nuclear bomb a year, according to a U.S. research group. Satellite imagery taken Sept. 19 shows water being released into the Kuryong River from the reactor facility at North Korea’s main nuclear complex, according to the 38 North website, which is run by the U.S.-Korea Institute at Johns Hopkins University’s School of Advanced International Studies in Washington. “This release of hot water indicates that the reactor is in operation and the turbine powered electrical generators are producing power,” said Nick Hansen, who wrote the report. 

• IPad Prices Jumping 12% on Rupiah Show Inflation Pressure. The rupiah’s slump is fueling a surge in Indonesia’s costs of imported goods from iPads to soybeans, spurring Southeast Asia’s fastest inflation and increasing growth risks ahead of elections next year.

• Asia Stocks Rise on China Services; Investors Watch U.S. Asian stocks rose, led by material and energy shares, after a gauge of China’s services industries jumped and as investors watched for progress on ending a budget impasse that has shut down the U.S. government. Newcrest Mining Ltd., Australia’s biggest gold producer, added 3.2 percent as material shares gained the most among the 10 industry groups on the benchmark regional index. PetroChina Co. climbed 1.6 percent in Hong Kong. Leighton Holdings Ltd., an Australian developer, slumped 9.3 percent after saying it’s unaware of any new allegations or ethics breaches in a statement responding to newspaper reports. The MSCI Asia Pacific Index added 0.3 percent to 139.12 as of 11:46 a.m. in Tokyo, with nine of the 10 industry groups rising. 

• Rubber Gains From 7-Week Low as China Data Boosts Demand Outlook. Rubber climbed, snapping a four-day losing streak, as data showed improvement in China’s economy, boosting demand from the largest consumer. The contract for March delivery on the Tokyo Commodity Exchange gained as much as 1.9 percent to 261.4 yen a kilogram ($2,689 a metric ton), rebounding from the lowest settlement since Aug. 8. Futures traded at 260.3 yen at 10:56 a.m., paring losses to 14 percent this year for a most-active contract.

• Brazil Rating Outlook Lowered to Stable From Positive by Moody’s. Moody’s Investors Service lowered its outlook on Brazil’s sovereign rating to stable from positive, citing deteriorating debt and investment ratios and evidence the economy is going through a low-growth period. “Even though there are signs that the Brazilian economy may be starting to recover, Moody’s view is that, if and when the upturn materializes, it is unlikely that it will be strong enough to restore a positive trend in Brazil credit metrics,” Moody’s said in a statement dated Oct. 2. Moody’s affirmed Brazil’s Baa2 government bond rating. Latin America’s biggest economy expanded less than forecast by analysts in five of the past six quarters and the central bank trimmed its 2013 growth outlook to 2.5 percent from 2.7 percent this week. President Dilma Rousseff has begun rolling back some incentives amid flagging government revenue.

• Homebuilder Group Lowers Starts Forecast After Rate Jump. The National Association of Home Builders lowered its forecast for U.S. single-family home starts this year and next as higher interest rates slow the pace of growth in the housing market. Single-family home starts are expected to be 629,000 this year, lower than an April estimate of 672,000, the Washington-based group said in a report today. In 2014, the total is expected to be 826,000, compared with the prior forecast of 858,000. Work began on about 537,000 houses in 2012.

Wall Street Journal:

• No Movement in Shutdown Standoff. Obama, Congressional Leaders Meet, But Neither Side Backs Off Budget Stance. President Barack Obama and congressional leaders met Wednesday for the first time since the federal government shut down, emerging more than an hour later with no evidence of progress toward resolving their impasse over health care and government spending. With hundreds of thousands of federal workers on furlough for a second day, congressional officials of both parties left the White House meeting pessimistic about prospects for a speedy end to the deadlock. They made clear that neither side had made concessions.

• Cheaper Advice: Angie’s List(ANGI) Cuts Prices. Consumer-review site Angie’s List Inc. has slashed membership prices by roughly 75% in several key markets, in a bid to attract new members.

• Ackman Trims Risk on Herbalife(HLF) Bet. 

• Casey Mulligan: How ObamaCare Wrecks the Work Ethic. The health-care law, starting Jan. 1, will begin driving up marginal tax rates—well above 50% for many. A new wave of redistribution will arrive in America on Jan. 1, primarily thanks to the Affordable Care Act. The president's health-insurance plan forces those who hire, work and produce to pay full price for health care, while creating generous discounts for practically everyone else.

Fox News:

• ObamaCare reg on digital patient records raises security concerns. A provision in ObamaCare requiring medical providers to switch from paper patient charts to electronic records is intended to reduce costs and improve care. But privacy advocates fear the transition is too fast for security measures to keep pace. "The thing I worry about is not that we are doing it, but that we're doing it without the right safeguards," said Lee Tien, a senior staff attorney with the Electronic Frontier Foundation. "We have been giving (medical providers) incentives to move into the electronic-health-records era. But we haven't been giving them enough guidance on how they're supposed to do it."

CNBC:

• Italy prosecutors seek JPMorgan indictment:Report. Siena prosecutors requested that JPMorgan Chase & Co stand trial for obstructing regulators as part of a wider probe into Banca Monte dei Paschi di Siena SpA's purchase of Banca Antonveneta SpA, Bloomberg reported citing people familiar with the matter.

• Tesla(TSLA) Model S catches fire—in the wrong way. Video of a Tesla Model S on fire in Washington state is raising questions about what caused the electric car to go up in flames. The driver was able to get out of the car before the fire spread to engulf much of the front-end.

Zero Hedge:

• Obama "Prepared To Negotiate" (After Government Reopens), Says This Time "Wall Street Should Be Concerned".

• Treasury Warns Asset Manager "Herding" Threatens US Financial System.

• House Republicans Plan To Link Debt-Limit And Shutdown Into One Fiscal Fight.

• Obama Issues Statement, "Not Going To Negotiate" After All.

• Cognitive Dissonance Chart Of The Day (Year). (graph)

Washington Post: 

• CIA ramping up covert training program for moderate Syrian rebels. The CIA is expanding a clandestine effort to train opposition fighters in Syria amid concern that moderate, U.S.-backed militias are rapidly losing ground in the country’s civil war, U.S. officials said. But the CIA program is so minuscule that it is expected to produce only a few hundred trained fighters each month even after it is enlarged, a level that officials said will do little to bolster rebel forces that are being eclipsed by radical Islamists in the fight against the government of Syrian President Bashar al-Assad.

McClatchy:

• Al Qaida fighters resume attack on U.S.-backed rebels in northern Syria. Fighters loyal to al Qaida have opened up a new offensive against a U.S.-backed rebel group that once escorted U.S. Sen. John McCain into northern Syria, according to Internet postings and news accounts.
  
  
  Read more here: http://www.mcclatchydc.com/2013/10/02/204003/al-qaida-fighters-resume-attack.html#storylink=cpy
  
  Read more here: http://www.mcclatchydc.com/2013/10/02/204003/al-qaida-fighters-resume-attack.html#storylink=cpy

South China Morning Post:

• People want Hong Kong's property curbs to continue, poll finds. Lawmakers' calls to drop taxes aimed at fighting speculation fail to win public support, poll finds. Most people believe three taxes introduced to cool the property market should stay in place or be strengthened, a survey found, despite calls from lawmakers to make the measures "less spicy".

Evening Recommendations 

• None of note

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 152.0 +2.0 basis points.

• Asia Pacific Sovereign CDS Index 119.0 +.25 basis point. 

• FTSE-100 futures +.34%.

• S&P 500 futures -.12%.

• NASDAQ 100 futures -.03%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (STZ)/.88

• (ISCA)/-.01

Economic Releases 
8:30 am EST

• Initial Jobless Claims are estimated to rise to 315K versus 305K the prior week.

• Continuing Claims are estimated to fall to 2805K versus 2823K prior.

 10:00 am EST

• The ISM Non-Manufacturing Composite for Sept. is estimated to fall to 57.0 versus 58.6 in August.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Powell speaking, Fed's Fisher speaking, Fed's Lockhart speaking, Fed's Williams speaking, China HSBC Services PMI, Eurozone retail sales data, Eurozone Services PMI data, Challenger Job Cuts report for Sept., RBC Consumer Outlook for Oct., weekly EIA natural gas inventory report and the weekly Bloomberg Consumer Comfort Index could also impact trading today.

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