Wednesday Watch

Evening Headlines 
Bloomberg:

• Putin Lashes Out as Poland Cites Invasion Threat. Poland said that a renewed buildup of Russian troops on Ukraine’s border raises the specter of a possible invasion, as President Vladimir Putin ordered his government to prepare a response to U.S. and European sanctions. “Unfortunately, Russia has restored its combat-readiness on the Ukraine border with more than a dozen battalion-sized combat groups,” Polish Foreign Minister Radoslaw Sikorski, told TVN24 BiS television yesterday, while giving no indication that an invasion was imminent. “There’s a lot of equipment. This is the sort of thing one does to exert pressure or to invade.” Putin has showed no sign of backing down over Ukraine since the U.S. and the European Union tightened sanctions last week, with Russia massing forces on its neighbor’s border in the biggest military buildup since troops were withdrawn from the area in May.

• Bankers Called Up for Ukraine War as Rolls-Royce for Sale. “Everyone has two choices: to comply with Ukrainian law, go with your conscience and prepare for mobilization or avoid joining the army by relocating and risk three to five years in prison. I prefer the former.” 

• EU Airlines Could Suffer From Russian Airspace Sanctions. European airlines are confronting possible disruptions in service to northern Asia as Russia considers curbing flights across Siberia to retaliate for sanctions imposed because of the Ukraine crisis.

• Statist Strongmen Putin-Xi See History’s Capitalism Clash. Twenty-five years later, the global divide over how to organize an economy is back. Free-market U.S.-style capitalism, bloodied by the global financial crisis, is again being challenged by the apostles of a robust government economic role known as state capitalism. And this time, the tidy 20th century separation between rival economic blocs has been replaced with a confounding web of cross-border ties.

• China Default Storm Seen as Record Private Bonds Mature. The small companies that dominate China’s private market for high-yield bonds face rising default risks as their debt obligations soar to a record and economic growth slows to the lowest in more than two decades. Privately issued notes totaling 6.2 billion yuan ($1 billion) come due next quarter, the most since authorities first allowed such offerings from small- to medium-sized borrowers in 2012, according to China Merchants Securities Co. The guarantor of debentures sold by Xuzhou Zhongsen Tonghao New Board Co. stepped in to help after the building-materials producer based in the eastern province of Jiangsu missed a coupon payment in March. Three other issuers have also faced “payment crises” this year, China Merchants said.

• Killing of General in Afghanistan Renews U.S. Exit Angst. An insider attack against international and Afghan forces in Kabul that killed a U.S. general has renewed questions about the Obama administration’s exit strategy from Afghanistan and the country’s security.

• Asian Stocks Follow U.S. Rout as Ukraine Tensions Rise. Asian stocks fell, with the regional index extending yesterday’s losses, after U.S. equities dropped to a two-month low amid escalating tensions in Ukraine. SoftBank Corp., a Japanese mobile-phone operator, dropped 3.2 percent after Sprint Corp., controlled by SoftBank, ended talks to acquire T-Mobile US Inc., according to a person with knowledge of the matter. Daikin Industries Ltd., an air-conditioner maker, lost 5.6 percent in Tokyo after reporting results. Kubota Corp., a Japanese manufacturer of industrial machinery, jumped 7.6 percent after reporting operating profit rose. The MSCI Asia Pacific Index (MXAP) dropped 0.3 percent to 146.34 as of 9:17 a.m. in Tokyo after slumping 0.8 percent yesterday.

• Goldman(GS) Sees Iron Ore Rout Extending as Supply Growth Quickens. Iron ore will extend a drop through 2015 when an increase in seaborne supply that’s spurred a global glut is set to accelerate, said Goldman Sachs Group Inc. While the growth in supply will probably moderate in the second half of 2014, the trend rate of growth in seaborne supply exceeds demand by a ratio of three to one, the bank said in a report dated today. Goldman kept its forecast for the steelmaking ingredient at an average of $80 a metric ton in 2015 from $106 this year.

Wall Street Journal:

• U.S. Backs Sunni Plan to Fight Islamic State Jihadists in Iraq. The U.S. is holding talks with Sunni Muslim officials in Iraq who have requested help in organizing grass-roots fighting forces to counter an extremist militant group seizing territory across the country. The meetings follow an outreach by Iraqi governors of Sunni-dominant provinces, who sent letters to Secretary of State John Kerry in late June seeking U.S. support before the jihadist group, which calls itself the Islamic...

• Sprint Abandoning Pursuit of T-Mobile. Carrier Will Also Replace CEO Dan Hesse.

• Double Punch for 'Inversion' Deals. Walgreen Rules Out Tax-Avoiding Tactic as Treasury Gears Up to Challenge.

CNBC:

• Why an aggressive Russia scares markets most.

Zero Hedge:

• 4 Million Fewer Jobs: How The BLS Massively Overestimated US Job Creation.

• Fed Finally Finds The 230 Trillion Number: Blasts Banks' "Living Wills", Says Taxpayers Still On The Hook.

• Goldman's "Early Warning Signals". (graph)

• Must Read: Fear And Loathing On The Marketing Trail.

• Here Comes Snowden 2.0... And How The Government Determines If You Are A "Terrorist Threat".

• The Other Border Dispute Russia Is Involved In (That No One Is Talking About Yet).

• Why Student Loans Are Crushing The Housing Recovery In 1 Chart. (graph)

ValueWalk: 

• Trading Volume Sinks: Its Not Just Equities. 

Business Insider:

• Obama's Approval Rating Has Hit All-Time Low, And Confidence In The Future Of America Has Collapsed.

• 'THAT'S IT. GAME OVER' Insider Reveals Why Murdoch Pulled Time Warner Bid — And Says He's Not Coming Back.

• First Solar(FSLR) Is Tanking.

Reuters: 

• Groupon(GRPN) cuts 2014 outlook, shares slide 12 percent.

• NY attorney general probes Morgan Stanley(MS), Goldman(GS) 'dark pools' -Fox. U.S. banks Morgan Stanley and Goldman Sachs Group are being investigated by New York's attorney general as part of a probe into alternative trading systems known as "dark pools," according to Fox Business Network. 

• Morgan Stanley(MS) says California AG may sue over mortgage bonds. California's attorney general may sue Morgan Stanley over money-losing mortgage bonds that the state's biggest public pension fund purchased in a $1.3 billion deal before the financial crisis, the bank said in a securities filing on Tuesday.

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

Financial Times: 

• BlackRock(BLK) sounds alarm over IPO quality. The world’s largest institutional investor has sounded the alarm over the quality of European IPOs as hedge funds increase their bets against private equity-backed flotations, after the market for companies going public was soured by a string of high-profile failures.

Telegraph:

• Federal Reserve tells banks: you're not prepared and you could cause another crisis. US central bank tells lenders, including Barclays, that they risk plunging world into a fresh financial crisis.

National Business Daily:

• China Warns 9 Cities of Noncompliant Land Financing. Chinese land regulator warned cities of noncompliant use of land as collateral for financing.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -1.0% to -.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 107.50 +.5 basis point.

• Asia Pacific Sovereign CDS Index 73.5 +.75 basis point.

• FTSE-100 futures -.45%.

• S&P 500 futures +.04%.

• NASDAQ 100 futures  +.03%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (DVN)/1.40

• (DBD)/.39

• (TWX)/.84

• (VIA/B)/1.43

• (RDC)/.22

• (DISH)/.51

• (CTSH)/.62

• (MDLZ)/.39

• (RL)/1.76

• (JACK)/.57

• (CF)/6.70

• (AOL)/.45

• (BID)/1.43

• (SKYW)/.01

Economic Releases 
8:30 am EST

• The Trade Deficit for June is estimated to widen to -$44.8B versus -$44.4B in May.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,530,000 barrels versus a -3,697,000 barrel decline the prior week. Gasoline supplies are estimated unch. versus a +365,000 barrel gain the prior week. Distillate inventories are estimated to rise by +630,000 barrels versus a +789,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.68% versus a -.3% decline the prior week.
  

Upcoming Splits

• (JOBS) 2-for-1

Other Potential Market Movers

• The Italy gdp report, Australia Unemployment report, weekly MBA mortgage applications report, (VPRT) analyst day and the (MU) analyst conference could also impact trading today.

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

Stocks Falling into Final Hour on Escalating Russia-Ukraine/Mideast Tensions, Surging Emerging Markets Debt Angst, Global Growth Fears, Energy/Tech Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Slightly Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 16.70 +10.45%

• Euro/Yen Carry Return Index 143.18 -.40%

• Emerging Markets Currency Volatility(VXY) 6.82 +3.18%

• S&P 500 Implied Correlation 61.23 +8.37%

• ISE Sentiment Index 106.0 +17.78%

• Total Put/Call 1.10 -5.17%

• NYSE Arms 1.32 +111.64% 

Credit Investor Angst:

• North American Investment Grade CDS Index 66.25 +3.77%

• European Financial Sector CDS Index 70.67 -2.42%

• Western Europe Sovereign Debt CDS Index 36.78 +1.27%

• Asia Pacific Sovereign Debt CDS Index 72.87 +.03%

• Emerging Market CDS Index 292.54 +5.73%

• China Blended Corporate Spread Index 312.48 +.49%

• 2-Year Swap Spread 22.25 +1.5 basis points

• TED Spread 21.75 -.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -10.75 -1.0 basis point

Economic Gauges:

• 3-Month T-Bill Yield .02% unch.

• Yield Curve 202.0 unch.

• China Import Iron Ore Spot $95.50/Metric Tonne +.1%

• Citi US Economic Surprise Index -6.20 +6.5 points

• Citi Emerging Markets Economic Surprise Index -.7 -2.1 points

• 10-Year TIPS Spread 2.23 unch.

Overseas Futures:

• Nikkei Futures: Indicating -125 open in Japan

• DAX Futures: Indicating -96 open in Germany

Portfolio: 

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

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short

• Market Exposure: Moved to 25% Net Long

Today's Headlines

Bloomberg:

• Putin Orders Retaliation as Russia Seeks Aid for Ukraine. President Vladimir Putin ordered the government to prepare a response to U.S. and European sanctions as Russia said eastern Ukraine neared a “humanitarian catastrophe” and required immediate international assistance. “Political instruments of pressure on the economy are unacceptable, they contradict all norms and rules,” Putin said today during a meeting with Alexey Gordeev, governor of the Voronezh region near Ukraine. Any retaliation “must be done extremely carefully to support producers and avoid harming consumers.” Putin is showing no sign of backing down over Ukraine since the U.S. and the European Union tightened sanctions last week, with Russia massing forces on its neighbor’s border in the biggest military buildup since troops were withdrawn from the area in May.
• Militants Target Second Iraqi Dam as Infrastructure Attacked. Islamic militants in Iraq are battling to seize two of the country’s largest dams as a breakaway al-Qaeda group seeks to consolidate control over the territory it took this year. Fighting between militants from the so-called Islamic State and Kurdish security forces raged for a third day near the Mosul dam, Iraq’s largest, Hisham al-Brefkani, member of the Nineveh provincial council, said in a phone interview. About 350 kilometers (200 miles) to the south, Iraqi forces engaged militants in the farmland and villages near the Haditha dam, Khalid al-Hadithi, a city council chairman, said in an interview.
• Bond Liquidity Falls 70% in Europe as Sales Soar: Credit Markets. Credit market liquidity has dropped by about 70 percent since the 2008 crisis and continues to decline even as soaring issuance boosts the total size of the market, according to Royal Bank of Scotland Group Plc. A European corporate bond issue now trades once a day on average, compared with almost five times a day a decade ago, according to RBS. It’s tougher to trade even though sales of corporate bonds have surged more than 25 percent to about 565 billion euros ($758 billion) this year from 447 billion euros in the same period of 2013, according to data compiled by Bloomberg. Historically low yields fueled by unprecedented central-bank stimulus are prompting concern that a bubble is being created in the bond market, drawing warnings from regulators and analysts of future instability. The European Central Bank and the Bank of England both cited lack of liquidity in bond markets as cause for concern in their latest financial stability reports this year. The risk is that when sentiment changes and bondholders want to sell, they’ll all try to do it at the same time. Managers should be hedging to offset the risk of taking losses on illiquid positions, said Kirk at Twentyfour Asset Management. “It’s going to be a challenge to exit, that’s the worry of every portfolio manager, and if it’s not, it should be,” he said. 
• Goldman(GS) Sees End to Narrowing Spreads in Europe Periphery. “We do not expect any further compression of spreads,” Goldman Sachs strategists Silvia Ardagna and Francesco Garzarelli wrote in an e-mailed note today in London. “We are more concerned about Italy where, over the past few months, economic activity data has continued to surprise on the downside and institutional and structural reforms have not yet been delivered.”
• Bank of New York-Managed Fund Loses 51% on Argentina Writedowns. Bank of New York Mellon Corp. said a Brazil-based investment fund lost 51 percent of its net asset value because of writedowns on investments linked to Argentine government debt. The Brasil Sovereign II Fundo de Investimento de Divida Externa FIDEX took a loss on Aug. 1 of 197.9 million reais ($87.2 million), according to a regulatory filing yesterday by BNY Mellon DTVM, the bank’s Brazilian fund manager. 
• Emerging Stocks Fall on China Growth Concern as Aeroflot Slides. Emerging-market stocks fell as Taiwan Semiconductor Manufacturing Co. led technology shares lower and China’s non-manufacturing industry declined. Russian equities dropped as OAO Aeroflot tumbled to the lowest level since March. Taiwan Semiconductor sank to a two-month low in Taipei. Aeroflot, Russia’s biggest air carrier, lost 6 percent after Vedomosti reported the government is considering European flight restrictions. The ruble fell as the nation pulled its third local bond sale in a row. Currencies in Malaysia, South Korea and Indonesia gained at least 0.4 percent. The rupee stayed stronger after India’s central bank held interest rates. The MSCI Emerging Markets Index decreased 0.5 percent to 1,063.57 at 11:46 a.m. in New York.
• European Stocks Climb as Credit Agricole Beats Forecasts. European stocks rose, rebounding from four days of losses, as companies including Credit Agricole SA and Deutsche Post AG reported better-than-expected earnings. Credit Agricole climbed 2.2 percent after also saying a key solvency measure improved in the second quarter. Deutsche Post gained 2.2 percent after reporting a 5.7 percent increase in quarterly profit. Telefonica SA fell 1.7 percent after saying it offered 6.7 billion euros ($9 billion) for a Vivendi SA unit. The Stoxx Europe 600 Index climbed 0.3 percent to 332.1 at the close of trading, paring earlier gains of as much as 0.8 percent.
• Copper Caps Biggest Loss in 8 Weeks as Dollar Gains. Copper futures for delivery in September fell 1.2 percent to settle at $3.2045 a pound at 1:14 p.m. on the Comex in New York, the biggest decline since June 6. 
• WTI Oil Falls on Forecasts That U.S. Refineries Cut Rates. WTI for September delivery dropped $1.06, or 1.1 percent, to $97.23 a barrel at 1:05 p.m. on the New York Mercantile Exchange. Futures touched $97.09 on Aug. 1, the lowest intraday level since Feb.
• Einhorn Says Hard to Find Investments Amid Market’s Climb. Hedge-fund manager David Einhorn is struggling to find value amid a five-year stock market rally. “We had a difficult time finding new investments this quarter,” he said today on a conference call discussing results at Greenlight Capital Re Ltd. (GLRE), the Cayman Islands-based reinsurer where he is chairman. “As the market continues to rise in the face of conflicting economic data, global unrest, and looming overdue Fed exit from quantitative easing we remain cautiously positioned.”

MarketWatch.com:

• Here is when Fed officials see liftoff in interest rates.

CNBC: 

• What junk bonds are saying about the stock market. Junk bonds have fallen about 3 percent since their peak in late June, and some traders expect the broader stock market, which traded flat since then, to follow suit—perhaps imminently. 
• What recovery? How poverty is moving to suburbs.
• Russia flexes military muscle along Ukraine border. Russia announced military exercises near the border with Ukraine on Monday in a show of strength as the Ukrainian army recaptured more territory from pro-Russian separatists in the east of the country. The Russian air force said more than 100 aircraft, including fighter jets and bombers, were taking part in the maneuvers this week in the central and western military districts.
  

ZeroHedge:

• Stocks Plunge On Russia Invasion Threat - Give Up All Post-Payrolls Gains. (graph) SIKORSKI: RUSSIAN UNITS POISED TO PRESSURE OR INVADE UKRAINE, SIKORSKI: RUSSIAN INCURSION WOULD BE HUGE ESCALATION OF CRISIS, SIKORSKI WARNS RUSSIA ON IMPACT OF CONVENTIONAL WAR IN EUROPE. 
• 438 Ukrainian Troops Seek Asylum In Russia; Government Passes "War Tax".
• Three Chart Alarm: The Fed Has Set-Up The Corporate Bond Market For A Big Fall. (graph)
• How Economies Collapse: Systemic Friction And Debt Are Self-Liquidating.
• No Fly Zone: Russia Plans Airspace Blockade For European Flyovers In Sanction Retaliation.
• Greek Bonds Tumble To 2-Month Lows As Troika Gives Up And Goldman Downgrades Periphery. (graph)
• Non-Manufacturing ISM Soars To 9-Year Highs Months After Hitting 4-Year Lows. (graph)

Telegraph:

• Vladimir Putin signs historic $20bn oil deal with Iran to bypass Western sanctions.
• Global economy one shock away from another crisis. Fathom Consulting warns that world is sliding towards its next "Minsky moment", with biggest risk stemming from China.

Caixin:

• Over 70b Yuan Risk Assets Reported in China Trust Sector. More than 50b yuan assets are classified as "high-risk" assets, citing people with knowledge of the matter. Citic Trust, Huarong Trust and New China Trust have "serious" risks because their risky assets exceed their net assets at certain points, according to the meeting. 11 other trust cos. have "large" risks. Heads of the trust cos. will be forced to step down if risks emerged from other projects out of the list.

Bear Radar

Style Underperformer:

• Large-Cap Value -1.12%

Sector Underperformers:

• 1) Oil Service -2.51% 2) Social Media -2.25% 3) Gaming -2.16%

Stocks Falling on Unusual Volume:

• ALLT, BLMN, CRR, ECOM, NVDQ, SC, AREX, KFRC, CZR, JMI, ACXM, CIE, ATHM, DWRE, THO, VSI, CVC, IRWD, ZBRA, TSU, ASPS, TGT, NE, PMC, WLK, SYRG, TGT, VNR, IFF, CRK, RP, HAIN, THO, WAIR, PXD, CRZO, ZBRA, EXPD, VSI, WG, CRR and SALE

Stocks With Unusual Put Option Activity:

• 1) HIG 2) OIH 3) XOP 4) TGT 5) MON
  

Stocks With Most Negative News Mentions:

• 1) TGT 2) SALE 3) RP 4) EXPD 5) BLMN
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Growth +.43%

Sector Outperformers:

• 1) Hospitals +2.27% 2) Alt Energy +1.34% 3) Biotech +.59%
  

Stocks Rising on Unusual Volume:

• JMBA, WFM, GTAT, NRF, TDS, COH, THC, AKRX, CAR, JKS, DMD, NLS, TTS, TNET, DRTX, IIVI, TSRA, NRF, ADM and IMPV

Stocks With Unusual Call Option Activity:

• 1) SVU 2) AIG 3) SALE 4) CMI 5) CAR
  

Stocks With Most Positive News Mentions:

• 1) COH 2) CVS 3) WAG 4) WFM 5) KORS
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Tuesday Watch

Evening Headlines 
Bloomberg:

• Israel, Palestinians Agree on Three-Day Truce in Gaza. Israel and the Palestinians have agreed to a 72-hour truce in the Gaza Strip to take effect today, the latest effort to end four weeks of fighting. Under the Egyptian-brokered accord, hostilities will cease at 8 a.m. local time with no conditions attached, Israel’s Channel 2 television station said. Hamas, the Islamist group that rules Gaza, has accepted the truce, spokesman Fawzi Barhoum said in an e-mail. While Israel hasn’t sent a delegation to the Egyptian capital, it will consider going if militants abide by the cease-fire, an official said on condition of anonymity because he wasn’t authorized to discuss the matter. If quiet is maintained throughout the 72 hours, the Israeli military won’t have to remain in Gaza, he said. 

• Iraq’s Biggest Dam at Risk as Islamists Fight Kurds for Control. Kurdish security forces clashed with a breakaway al-Qaeda group that’s trying to extend its control in northern Iraq by seizing the country’s largest dam. Fighting is raging near the Mosul dam, and it is a “no man’s land,” Sheikh Ahmed Al-Simmari, a resident of the nearby city of Rabia’ah, said in a phone interview. The Kurds retook the Rabia’ah border post with Syria and the nearby town of Sinjar from the militants after fierce fighting late yesterday, the Kurdistan Democratic Party, one of the groups that governs the largely autonomous region of Kurdish northern Iraq, said on its website.

• Asia's Next Crisis Is a Flood of Debt. Asia is still traumatized by the great financial crisis of 1997, when Thailand's devaluation of the baht set off a region-wide collapse in markets. Could it happen here again? The mere question will strike many as odd, given Asia's rapid growth and progress in strengthening financial systems, improving transparency and amassing trillions of dollars of currency reserves. But Asia now faces three risks that could quickly undo those gains: Federal Reserve tapering, a Chinese crash and an explosion of household debt. The danger of the Fed pulling too much liquidity out of markets has been well documented. So have China's rising vulnerabilities. Debt, though, deserves far more scrutiny. As economists survey the scene, Thailand once again tops the worry list. Debt there has risen rapidly, underwriting standards appear loose and nonperforming loans are rising.

• DeMark Says Sell China Stocks Now. The Shanghai Composite Index (SHCOMP) will probably end its world-beating rally within days and fall about 10 percent, said Tom DeMark, the developer of market-timing indicators who predicted the gauge’s peak last year.

• Weak Japan Exports, Output Said to Raise Concerns at BOJ. Bank of Japan officials are concerned about increasing signs of weakness in the economy following a sales-tax increase, according to people familiar with the central bank’s discussions. Governor Haruhiko Kuroda and his board will discuss this week if they should lower their assessment of the nation’s exports and also whether to express caution about a decline in industrial production, said the people, who asked not to be identified because talks are private. Economists from JPMorgan Chase & Co. and UBS AG cut their estimates for second-quarter gross domestic product after data showed exports unexpectedly declined, retail sales dropped more than forecast and output fell the most since the March 2011 earthquake.

• Asian Stocks Swing as Won Gains While Corn, Soybeans Fall. Asian stocks fluctuated, with the regional index swinging between gains and losses, while emerging-market currencies climbed before data on global service industries. Australian bonds rose as corn and soybeans fell. The MSCI Asia Pacific Index fell 0.1 percent by 9:58 a.m. in Tokyo, with Japan’s Topix (TPX) index steady while Korea’s Kospi sank 0.5 percent.

• Baconholics Undeterred by 30-Year High Pig Prices: Commodities. Declining supplies of pigs that resulted from a deadly virus that spread across 30 states since the outbreak began last year have pushed up retail-bacon prices 10 percent in 2014 to $6.106 a pound in June, the highest since at least 1980, government data show. Wholesale pork-belly costs doubled, reaching a record $2.0353 a pound in April, according to the U.S. Department of Agriculture.

• Gannett(GCI) Said to Agree to Buy Out Cars.com for $1.8 Billion. Gannett Co. (GCI), the owner of USA Today, has agreed to buy out the other companies that own Cars.com for $1.8 billion, according to a person familiar with the matter.

• AIG(AIG) Profit Rises 13% in Benmosoche’s Last Report as CEO. American International Group Inc. (AIG)’s second-quarter profit climbed 13 percent on a gain tied to the sale of an aircraft-leasing unit in the insurer’s final earnings report under Chief Executive Officer Robert Benmosche.

Wall Street Journal: 

• Hospitals Cash In on the Newly Insured. More Surgery, Maternity Care, ER Visits Boost Admissions—to Insurance Firms' Chagrin. A rush of newly insured patients using health services has boosted hospital operators' fortunes but has racked up costs that insurers didn't anticipate, corporate filings and interviews with executives show. People are getting more back surgeries, seeking maternity care and showing up at emergency rooms more frequently, executives say, boosting income for hospital operators. At Tenet Healthcare Corp., patient volumes rose 4%...
  

• Goldman(GS) Rethinks the Services It Provides Hedge Funds. Bank Dumps Some Less-Profitable Clients as New Capital Rules Take Their Toll. 

• J.P. Morgan(JPM) Said Possible Losses Related to Litigation Could Be $4.6 Billion. Bank Reported No Major Updates or Large New Cases in Monday SEC Filing. 

• Abandoning the Kurds. Our long-time allies in northern Iraq deserve U.S. military support. Another day, another Middle Eastern defeat. On Sunday the Islamic State in Iraq and al-Sham, or ISIS, ousted Kurdish forces from three towns in northern Iraq and laid siege to the country's largest dam. The question now is whether the Obama Administration will abandon our long-time Kurdish allies as they battle the jihadist army. Earlier this summer ISIS routed the Iraqi army in Mosul, and its success against the Kurdish peshmerga militia is another ominous turn. Kurdistan has been an island of relative peace and...
  

Fox News: 

• Islamic State militants fight for Iraq's two biggest dams. Militants from the Islamic State are battling ferociously to control one of Iraq's most vital resources: water. Fighters with the group launched a three-pronged attack over the weekend in a drive to capture Haditha Dam, in western Iraq, a complex with six power generators located alongside Iraq's second-largest reservoir. At the same time, they are fighting to capture Iraq's largest dam, Mosul Dam, in the north of the country.

MarketWatch.com:

• China using antitrust law to pressure foreign businesses. China is using its six-year-old antimonopoly law to put foreign businesses under increasing pressure, a development that experts say will intensify as Beijing seeks greater sway over the prices paid by Chinese companies and consumers.

Zero Hedge:

• The Bear Reawakens: Ukraine Claims Russia Has 33,000 Troops & 160 Tanks Near Border.

• Spot The "Data Dependent" Fed Policy. (graph)

• Flash Boys' Katsuyama Blasts Back At Ex-CFTC Chilton's "Incorrect Claims".

• 3 Things That Can't Stay Hidden Long: The Sun, The Moon, & The Truth. (graph)

• Deutsche Bank "Raises The Warning Flag": What The Most Important Chart For The Market Reveals. (graph)

• 25 Critical Facts About This Ebola Outbreak That Every American Needs To Know.

• China Services PMI Crashes To Record Low. (graph)

• "The US Is Bankrupt," Blasts Biderman, "We Now Await The Cramdown".

• China Warns "What We Do Or Don't Do [In The South China Sea] Is Up To Us, Noone Else".

Business Insider:

• This Has Been The Most Violent Week Of The Entire Syria War.

Reuters: 

• Tenet Healthcare(THC) raises outlook as patient admissions rise. Hospital operator Tenet Healthcare Corp on Monday posted a narrower quarterly net loss and raised its full-year outlook, saying patient admissions grew at a near-record pace. Patients with commercial insurance, inpatient admissions, outpatient visits, surgeries and emergency department visits all grew at near-record rates, Tenet said.

Xinhua:

• China Growth to Slow to 'Medium-High Speed'. China's economic growth will slow to "medium-high speed," from "high speed," as the country enters a new norm for growth characterized by improved quality of development, according to a front-page commentary. China must rid itself of focusing on speed while maintaining a bottom-line growth target, the commentary say.

Economic Information Daily:

• China Local Govts Check Home Loans Amid Mortgage Risks. Banking regulator at northern province of Inner Mongolia asks banks to report scales of overdue and non-performing property loans and plans to deal with such loans within this month. Overdue of property loans expands from developer lendings to home mortgages. Some borrowers would give up loan payment if home prices drop below outstanding mortgages, Shi Laiyin, assistant to president of Bank of Inner Mongolia said.

Evening Recommendations

• None of note

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 107.0 -2.0 basis points.

• Asia Pacific Sovereign CDS Index 72.75 -2.75 basis points.

• FTSE-100 futures +.10%.

• S&P 500 futures -.10%.

• NASDAQ 100 futures  -.10%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (ADM)/.76

• (MWW)/.09

• (CVS)/1.10

• (SMG)/2.26

• (ZTS)/.38

• (EMR)/1.06

• (ODP)/-.01

• (HCP)/.75

• (VMC)/.38

• (REGN)/2.30

• (CVC)/.17

• (COH)/.53

• (DIS)/1.16

• (PZZA)/.42

• (FSLR)/.33

• (ATVI)/.02

• (Z)/-.04

• (JAZZ)/1.92

• (TDW)/.93

Economic Releases 
9:45 am EST

• Final Markit US Services PMI for July is estimated to fall to 60.8 versus a 61.0 prior estimate.

10:00 am EST

• The ISM Non-Manufacturing Composite for July is estimated to rise to 56.5 versus 56.0 in June. 

• Factory Orders for June are estimated to rise +.6% versus a -.5% decline in May.

• IBD/TIPP Economic Optimism for August is estimated to rise to 47.3 versus 45.6 in July.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone retail sales reports, Eurozone Services PMI, weekly US retail sales reports, Needham Interconnect Conference and (NATI) investor conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by financial 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 75% net long heading into the day.