Monday Watch

Today's Headlines

Bloomberg: 

• Putin’s Saber Rattling Against Kiev Exposes Risks to Bond Rally. A resurgence in tensions in Crimea has brought political risk back to the table for holders of Russian debt. The cost of buying default insurance on the government’s bonds has increased 21 basis points to 231, the most worldwide, since President Vladimir Putin promised on Aug. 10 to respond to what he called Ukraine’s “terror” tactics in Crimea. Amundi Asset Management and Aberdeen Asset Management are ready to sell Russian bonds if the conflict intensifies or leads to a widening of sanctions.
• Japan’s Economic Growth Slows as Business Spending Slumps. Japan’s economy grew less than forecast in the three months through June 30 as business spending contracted for a second-straight quarter and exporters struggled with the resurgent yen. 
• Singaporeans Are Gloomiest Since 2009 on Jobs, Pay: Chart.
• Asian Stocks Decline as Japanese Shares Retreat After GDP Report. Asian stocks fell, retreating from a one-year high, after U.S. shares pulled back from records and as a report showed Japan’s economy expanded at a slower pace than forecast. The MSCI Asia Pacific Index dropped 0.4 percent to 139.40 as of 9:07 a.m. in Tokyo.
• Mid-America Nears $4 Billion Post Properties(PPS) Deal, WSJ Says. Mid-America Apartment Communities Inc., a real-estate investment trust, is close to a deal to buy Post Properties Inc. for about $4 billion as demand for rental properties booms, The Wall Street Journal reported.

Wall Street Journal:

• Economic Slump Sends Big Ships to Scrap Heap. Cargo-vessel recycling surges amid overcapacity and tumbling freight rates.
• Hillary Clinton’s Free College-Tuition Plan Coming Up Short on Specifics. Details on Democratic presidential candidate’s proposal, put forth during negotiations with party rival Bernie Sanders, hard to come by.
• Clinton Abandons the Middle on Education. Most rank-and-file Democrats disagree with the party platform.
• California’s Cow Police. Progressives find a new climate-change villain to regulate. First they came after the oil producers, then manufacturers, and now they’re coming for the cows. Having mandated emissions reductions from fossil fuels, California’s relentless progressives are seeking to curb the natural gas emanating from dairy farms.

Fox News:

• Milwaukee officials plead for calm after police shooting sparks violence. (video) Wisconsin Gov. Scott Walker activated the National Guard on Sunday afternoon, hours after a gas station was set on fire and other businesses were torched by demonstrators protesting a controversial shooting by police. Walker said he took the step after receiving a request from Milwaukee County Sheriff David Clarke and talking with Mayor Tom Barrett and the Guard's leader. The Guard will be in position to help "upon request," according to Walker's announcement. Walker also praised citizens who showed up Sunday to clean up the north-side neighborhood where the violence took place. He called for "continued peace and prayer." The clashes and rioting erupted after a Milwaukee police officer shot and killed an armed suspect Saturday night during a foot chase on the city’s north side.
• Pence urges federal probe into whether Clinton granted political favors to foundation donors. (video) Republican vice-presidential nominee Gov. Mike Pence on Sunday suggested a federal investigation into whether Hillary Clinton, during her tenure as secretary of state, provided political favors to foreign donors to her family’s Clinton Foundation, saying “the American people have a right to know.” The Indiana governor argued that emails made public last week suggested such a connection between State Department officials and major foreign donors to the foundation but acknowledged that Clinton’s involvement remains unclear.
• Congress could get record of FBI's Clinton interview over emails by this week. (video) Some of the FBI files on the agency’s investigation into Hillary Clinton’s use of a private server system while secretary of state could be given to a House oversight committee as early as this week, a congressional source confirmed with Fox News on Sunday.

CNBC: 

• Tim Cook addresses Apple's(AAPL) US taxes, says no repatriation without 'fair rate'.

Zero Hedge: 

• George Soros Hacked, Over 2,500 Internal Docs Released Online.
• Dumb & Dumber: The Economist vs. The WEF On "Biggest Threats" To The Global Economy. 
• Head Of "World's Most Bearish Hedge Fund" Explains Why The VIX Is Now Broken. (graph)
• How Long Can Economic Reality Be Ignored?
• The Bank of Japan Will Be The Top Shareholder Of 55 Companies By The End Of 2017.
• Fact Or Fiction? Obama Clears 2,000 Square Miles Of U.S. Airspace For New Free-Range Drone Preserve.
• Captured ISIS Terrorist Confirms He Has "Jihadist Brothers" In Mexico; Obama Administration Denies It.
• How Global Elites Forsake Their Countrymen (Or Why 'The Top' Believes 'The Bottom' Needs Managing).
• Chicago Records Deadliest Day In 13 Years As City Spirals Out Of Control.
• Shocking Report Finds U.S. Military Consistently "Distorted, Suppressed, Or Substantially Altered" ISIS-Related Intel.
• Here's Why Wages Have Stagnated (And Will Continue To Stagnate). (graph)
• Currency Wars Escalate As Fed Treasuries In Custody Tumble To 2012 Lows. (graph)
• Obama's Job Recovery Is Not Only Slower Than Past Recessions, It's Completely Nonexistent. (graph)
• US Olympic Gold Medalist Ryan Lochte Reportedly Held At Gunpoint At Rio Party.
• As Everyone Now Sees "Bubbles In Credit", Debt Investors Quietly Exit Stage Left. (graph)
• Something's Gotta Give: From TTID To TINA To TNSTH. (graph)
• Violent Protesters Riot, Burn Cars, Loot Buildings In Milwaukee After Police Kill Armed Suspect. (video)

Business Insider:

• Democrats are running an experimental campaign to turn a deep red state blue.
• There's something that could crush OPEC's output freeze plans.
• US police officer killed in Georgia responding to emergency call.
• Major US renting markets are starting to crumble.
• Scott Walker activates National Guard to help if needed after riots rock Milwaukee.

Night Trading

• Asian indices are -.25% to unch. on average.
• Asia Ex-Japan Investment Grade CDS Index 115.0 +.25 basis point.
• Asia Pacific Sovereign CDS Index 43.75 +.5 basis point.
• Bloomberg Emerging Markets Currency Index 73.37 -.05%.
• S&P 500 futures +.08%.
• NASDAQ 100 futures +.05%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (SYY)/.61 

Economic Releases

8:30 am EST

• Empire Manufacturing for August is estimated to rise to 2.0 versus .55 in July.

10:00 am EST

• The NAHB Housing Market Index for August is estimated to rise to 60 versus 59 in July.

4:00 pm EST

• Net Long-Term TIC Flows for June.   

Upcoming Splits

• None of note

Other Potential Market Movers

• The Reserve Bank of Australia minutes could also impact trading today.

BOTTOM LINE: Asian indices are slightly lower, weighed down by industrial 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 week.

Weekly Outlook

• Week Ahead by Bloomberg.
• Wall St. Week Ahead by Reuters.
• Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week mixed as yen strength, global growth worries and profit-taking offset investor performance angst, short covering and central bank hopes. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.

Today's Headlines

Bloomberg:

• S&P 500 Resists Bearish Tug to Post Sixth Advance in Seven Weeks. The steady march higher for U.S. stocks may have slowed to a crawl, but the S&P 500 Index’s sixth advance in seven weeks still managed to defy a chorus of bears warning valuations have become too rich. The benchmark for American equity edged higher by 1.2 points to 2,184.05, two points shy of a record. Energy shares paced gains as crude notched its best week since April, while results from the largest department stores bolstered confidence in the retailing industry. Mixed economic data lowered the odds of an interest-rate hike this year, sending bank shares lower. The rally in U.S. stocks amid a fifth consecutive quarter of declining earnings has inflated valuations to levels last seen in the dot-com era, a warning for some. For bulls, fresh evidence of the American economy’s steady expansion at a pace that isn’t forcing the Federal Reserve to tighten can keep pushing equity prices higher.
• World Powers Call for Calm as Putin Bolsters Crimea Defense. World powers urged Russia and Ukraine to refrain from ratcheting up a confrontation over Crimea as President Vladimir Putin bolstered the disputed peninsula’s military with some of his army’s most advanced air-defense missile systems. The European Union said there was no independent confirmation of claims that Ukrainian agents had killed two Russian servicemen in Crimea. Putin pledged a “very serious” response as he blamed Kiev for pursuing “terror” activities. The 28-member bloc called on both sides to refrain from intensifying what has led to the worst diplomatic standoff between the two countries since a 2015 truce eased hostilities in Ukraine’s separatist conflict. Germany said that Foreign Minister Frank-Walter Steinmeier will meet his Russian counterpart, Sergei Lavrov, next week in Russia.
• High-Risk ‘Shadow’ Credit in China Put at $2.9 Trillion by IMF. International Monetary Fund staff said that 19 trillion yuan ($2.9 trillion) of Chinese “shadow” credit products are high-risk compared with corporate loans and highlighted the danger that defaults could lead to liquidity shocks. The investment products are structured by the likes of trust and securities companies and based on equities or on debt -- typically loans -- that isn’t traded, staff members John Caparusso and Kai Yan said in a report released Friday. The commentary highlighted the potential for risks bigger to the nation’s financial stability than from companies’ loan defaults. While loan losses can be realized gradually, defaults on the shadow products could trigger risk aversion that’s harder to manage, the report said.
• Fear of Military Rule Grows in Benghazi as Elected Mayor Ousted. The army in eastern Libyan replaced the mayor of the North African country’s second-biggest city with a senior intelligence chief, a move criticized by activists as illegal and a prelude to military rule in the region. Colonel Ahmed Laraibi was named mayor of Benghazi on Thursday, the Albayda-based news agency LANA reported. The appointment was made without consulting local legislators, while Benghazi’s municipal council was also suspended, LANA said.
• A Number of Companies Are Warning About High Consumer Uncertainty. A lot of uncertainty. Consumer balance sheets have strengthened since the financial crisis, but their confidence is still lagging far, far behind. There are a number of things for U.S. consumers to worry about, even if personal finances are fairly strong. An upcoming election in the U.S. and unrest overseas has started to show up in economic data measuring consumer sentiment, which hasn't seen much of an uptick over the past two years despite the stock market's march higher.

Wall Street Journal:

• ObamaCare Sicker Shock. Why average premiums are soaring 18% to 23% across the country.
• Imam of New York City Mosque Fatally Shot, Associate Wounded. No motive yet determined.
• Hacker Reveals Personal Information for Almost 200 Democrats. Guccifer 2.0 says records stolen as part of breach of Democratic Congressional Campaign Committee.

Barron's:

• Had bullish commentary on (MON), (TJX), (SSP), (BKD), (GE) and (DE).
• Had bearish commentary on (IBM).

MarketWatch.com:

• These top investing minds see stormy seas ahead over the next year.

Fox News:

• Police hunt gunman after North Carolina mall shooting. (video)
• Bill Clinton calls response to email scandal 'bull'; GOP congressman accuses him of 'spin'. (video)

CNBC:

• Silicon Valley housing market is 'looney-tunes,' real estate broker says. (video)

Zero Hedge:

• Is Trump Deliberately Throwing The Election To Clinton?
• Most-Hated Rally? Options Traders Have Never, Ever, Been More Bullish Stocks.
• Obama's Operation Choke Point Is "Unbridled Abuse Of Executive Power, Completely Outside The Rule Of Law".
• 2 Men, 3 Women, & 6-Year-Old Kid Burned, Stabbed By 27-Year-Old Attacker On Swiss Train.
• German President Booed, Attacked; Claims "The People Are The Problem, Not The Elites".
• A Stunning Admission From Deutsche Bank Why A Shock Is Needed To Collapse The Market, And Force A Real Panic.
• Insanity, Oddities, And Dark Clouds In Credit-Land.
• Merkel Urges German CEOs To Hire Refugees.
• Farmland Bubble Bursts As Ag Credit Conditions Crumble.
• North American Life Insurers "Accidentally" Pile Up Massive Distressed Debt Holdings.
• FBI Mutiny? Feds Said To Launch Clinton Foundation Corruption Probe Despite DoJ Objections.
• Connect Just Two Dots, See All The Rest.
• David Tepper Catches Bearish Billionaire Bug: Cuts Long Exposure By A Third; Liquidates All SPY, QQQ Calls.
• Review Of Q2 Earnings Calls Reveals Cautious Consumer, Margin Contraction And Brexit Fears.
• Fed's Bullard: "We Don't See Recession Risk Likely In Near Term".... Just Like In August 2008.
• CNN Admits "We Couldn't Help [Hillary] Any More Than We Have". (video)
• Weekend Reading: Willful Blindness.
• Stocks Extend Winning Streak To Longest In 4 Years Despite Deluge Of Dismal Data. (graph)

Business Insider:

• Tesla(TSLA) has big plans to build 3 electric vehicles that nobody wants.
• 'An unsettled world': The CEOs of America's largest companies are worried about the economy.
• A man with a knife injured 6 passengers on a Swiss train.
• Trump campaign leans into 'rigged election' claims, urges people to volunteer as 'election observers'.
• Canada is nearing 'peak crazy in the housing market'.
• ISIS has kidnapped 2,000 civilians to use as 'human shields'.

The Telegraph:

• There’s already another dotcom bubble - we just haven’t noticed.

Market Week in Review

• S&P 500 2,182.08 -.03%*

The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 2,182.08 -.03%

• DJIA 18,564.40 +.13%

• NASDAQ 5,228.55 +.16%

• Russell 2000 1,228.30 -.24%

• S&P 500 High Beta 31.57 +.13%

• Goldman 50 Most Shorted 120.26 +1.90% 

• Wilshire 5000 22,537.20 -.03%

• Russell 1000 Growth 1,057.12 +.03%

• Russell 1000 Value 1,041.85 -.08%

• S&P 500 Consumer Staples 563.14 +.69%

• Solactive US Cyclical 139.54 -.86%

• Morgan Stanley Technology 1,166.68 +.57%

• Transports 7,810.14 -.46%

• Utilities 692.60 +.17%

• Bloomberg European Bank/Financial Services 74.07 +3.51%

• MSCI Emerging Markets 37.35 +2.71%

• HFRX Equity Hedge 1,130.94 +.20%

• HFRX Equity Market Neutral 1,000.23 -.12%

Sentiment/Internals

• NYSE Cumulative A/D Line 268,374 +.87%

• Bloomberg New Highs-Lows Index 559 +413

• Bloomberg Crude Oil % Bulls 25.0 -48.6%

• CFTC Oil Net Speculative Position 267,192 -2.23%

• CFTC Oil Total Open Interest 1,792,640 +4.33%

• Total Put/Call .68 -23.91%

• OEX Put/Call 2.40 +617.39%

• ISE Sentiment 166.0 +52.52%

• NYSE Arms 1.06 -15.3%

• Volatility(VIX) 11.78 -.79%

• S&P 500 Implied Correlation 45.22 -1.14%

• G7 Currency Volatility (VXY) 9.74 +2.96%

• Emerging Markets Currency Volatility (EM-VXY) 190.10 +6.65%

• Smart Money Flow Index 19,601.17 +.03%

• ICI Money Mkt Mutual Fund Assets $2.745 Trillion +.22%

• ICI US Equity Weekly Net New Cash Flow -$7.430 Billion

• AAII % Bulls 31.3 +5.0%

• AAII % Bears 26.8 unch.

Futures Spot Prices

• CRB Index 182.09 +.66%

• Crude Oil 44.15 +5.84%

• Reformulated Gasoline 136.40 -1.29%

• Natural Gas 2.58 -5.22%

• Heating Oil 139.79 +5.95%

• Gold 1,339.80 +1.27%

• Bloomberg Base Metals Index 150.18 -.58%

• Copper 214.0 -.42%

• US No. 1 Heavy Melt Scrap Steel 206.0 USD/Ton unch.

• China Iron Ore Spot 60.37 USD/Ton -.61%

• Lumber 322.60 +.06%

• UBS-Bloomberg Agriculture 1,134.96 -1.19%

Economy

• Atlanta Fed GDPNow Forecast +3.5% -30.0 basis points
• ECRI Weekly Leading Economic Index Growth Rate +8.4% +20.0 basis points

• Philly Fed ADS Real-Time Business Conditions Index .1291 -4.22%

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 126.69 +.06%

• Citi US Economic Surprise Index 10.9 -10.0 points

• Citi Eurozone Economic Surprise Index 28.6 +.4 point

• Citi Emerging Markets Economic Surprise Index 3.0 +2.9 points

• Fed Fund Futures imply 84.0% chance of no change, 16.0% chance of 25 basis point hike on 9/21

• US Dollar Index 95.65 -.67%
• MSCI Emerging Markets Currency Index 1,558.28 +1.02%

• Euro/Yen Carry Return Index 118.03 -.01%

• Yield Curve 81.0 -5.0 basis points

• 10-Year US Treasury Yield 1.51% -6.0 basis points

• Federal Reserve's Balance Sheet $4.429 Trillion +.05%

• U.S. Sovereign Debt Credit Default Swap 31.75 +66.3%

• Illinois Municipal Debt Credit Default Swap 356.0 -.06%

• Western Europe Sovereign Debt Credit Default Swap Index 23.26 -6.16%

• Asia Pacific Sovereign Debt Credit Default Swap Index 43.91 -3.45%
  

• Emerging Markets Sovereign Debt CDS Index 116.24 -4.05%
  

• Israel Sovereign Debt Credit Default Swap 76.30 +.47%

• Iraq Sovereign Debt Credit Default Swap 857.0 -.01%

• Russia Sovereign Debt Credit Default Swap 230.87 +5.26%

• iBoxx Offshore RMB China Corporate High Yield Index 131.75 +.24%

• 10-Year TIPS Spread 1.45% -6.0 basis points
  

• TED Spread 54.0 +2.0 basis points

• 2-Year Swap Spread 25.0 -1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -40.0 +3.75 basis points

• N. America Investment Grade Credit Default Swap Index 71.60 -.63%

• America Energy Sector High-Yield Credit Default Swap Index 714.0 -4.85%

• European Financial Sector Credit Default Swap Index 88.29 -1.1%
  

• Emerging Markets Credit Default Swap Index 243.58 -4.68%
  

• CMBS AAA Super Senior 10-Year Treasury Spread to Swaps 147.50 unch.
  

• M1 Money Supply $3.207 Trillion -1.13%

• Commercial Paper Outstanding 1,023.30 +.1%

• 4-Week Moving Average of Jobless Claims 262,750 +2,500

• Continuing Claims Unemployment Rate 1.6% unch.

• Average 30-Year Mortgage Rate 3.45% +2.0 basis points

• Weekly Mortgage Applications 564.0 +7.06%

• Bloomberg Consumer Comfort 41.8 -1.2 points

• Weekly Retail Sales +.5% unch.

• Nationwide Gas $2.13/gallon +.01/gallon

• Baltic Dry Index 653.0 +2.67%

• China (Export) Containerized Freight Index 702.87 +.09%

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 25.0 +11.11%

• Rail Freight Carloads 263,589 +.39%

Best Performing Style

• Mid-Cap Growth +.2%

Worst Performing Style

• Small-Cap Value -.01%

Leading Sectors

• Gold & Silver +3.6%

• Gaming +2.3%

• Energy +1.7%

• Retail +1.4%

• HMOs +1.2%

Lagging Sectors

• Road & Rail -1.8% 

• Biotech -2.0%

• Steel -3.9%

• Coal -7.1%

• Hospitals -10.7%

Weekly High-Volume Stock Gainers (38)

• MFRM, DXPE, AOSL, FRPT, BID, WING, COTV, IPHI, NVRO, M, HCKT, DTSI, AMBR, DCO, YELP, EAT, LDR, VRTV, RL, CTRL, KSS, RAX, BREW, SM, VRX, MRK, CVG, MTN, FOSL, VRNS, DIOD, WMC, ZLTQ, HRTX, UNVR, DMRC, WTS and CPS

Weekly High-Volume Stock Losers (34)

• BGS, MDRX, RYAM, NUAN, DVA, FOXF, WBMD, WEB, DY, KLAC, OLED, TUBE, VRTU, PMC, OA, FLO, AMAG, ECOM, ECPG, EDIT, VSTO, MODN, AHS, ROG, MXL, BMY, W, SHLM, APEI, SPWR, SHEN, CPSI, IPXL and MYGN

Weekly Charts

ETFs

• High-Volume Gainers

• High-Volume Losers

Stocks

• High-Volume Gainers

• High-Volume Losers

*5-Day Change