Stocks Falling Substantially into Final Hour on China Bubble-Bursting Fears, Surging European/Emerging Markets/US High-Yield Debt Angst, Fed Rate-Hike Worries, Biotech/Commodity Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Every Sector Declining
  

• Volume: Above Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 27.67 +17.15%

• Euro/Yen Carry Return Index 140.50 -.33%

• Emerging Markets Currency Volatility(VXY) 12.90 +.08%

• S&P 500 Implied Correlation 66.85 +3.64%

• ISE Sentiment Index 39.0 -11.0%

• Total Put/Call 1.41 +9.30%

• NYSE Arms 2.49 +143.87% 

Credit Investor Angst:

• North American Investment Grade CDS Index 92.63 +5.42%

• America Energy Sector High-Yield CDS Index 1,101 +6.44%

• European Financial Sector CDS Index 96.63 +7.35%

• Western Europe Sovereign Debt CDS Index 21.39 -.63%

• Asia Pacific Sovereign Debt CDS Index 90.47 +4.79%

• Emerging Market CDS Index 400.06 +4.86%
  

• iBoxx Offshore RMB China Corporates High Yield Index 119.81 +.11%

• 2-Year Swap Spread 9.75 -.25 basis point

• TED Spread 33.75 -1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -21.0 +1.25 basis points

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 70.19 -.53%
• 3-Month T-Bill Yield -.01% +1.0 basis point

• Yield Curve 143.0 -4.0 basis points

• China Import Iron Ore Spot $56.86/Metric Tonne -.21%

• Citi US Economic Surprise Index -23.80 +1.2 points

• Citi Eurozone Economic Surprise Index 21.20 +5.3 points

• Citi Emerging Markets Economic Surprise Index -25.3 -.6 point

• 10-Year TIPS Spread 1.39 -8.0 basis points
• # of Months to 1st Fed Rate Hike(Morgan Stanley) 5.42 -.28

Overseas Futures:

• Nikkei 225 Futures: Indicating -220 open in Japan 
• China A50 Futures: Indicating -232 open in China

• DAX Futures: Indicating -42 open in Germany

Portfolio: 

• Slightly Higher: On gains in my index hedges and emerging markets shorts

• Disclosed Trades: None

• Market Exposure: 25% Net Long

Today's Headlines

Bloomberg: 

• Emerging Stocks Drop on China Concern as Real, Ringgit Slump. Emerging-market stocks slid to a three-week low and currencies weakened amid signs that China’s economic slowdown is deepening, hurting profit outlooks for mining companies and other exporters. The Bloomberg Commodity Index slumped 1.3 percent, ending a two-day gain after a report showed profits for China’s industrial companies fell the most in at least four years. Equities in Brazil, which sends about 20 percent of its exports to China, fell to the lowest since 2009 as the real weakened for a second day. The ringgit tumbled to a 17-year low amid allegations against a Malaysian state investment company. Zambia’s kwacha slid to the lowest on record after Moody’s Investors Service downgraded the country’s credit rating.

• Ibovespa Posts Longest Losing Streak Since 2012 as China Weighs. The Ibovespa headed toward its longest losing streak since 2012 as analysts turned more pessimistic on Brazil’s economy amid signs of a slump in China, its biggest trading partner. Brazil’s benchmark equity gauge slumped for an eighth straight day, reaching the lowest since 2009, after economists covering Brazil forecast that the country’s gross domestic product will shrink 2.8 percent this year. That’s a more gloomy view than in the previous weekly poll by the central bank, which projected a decline of 2.7 percent. The Ibovespa has plunged 42 percent this year in dollar terms, among the worst performances in the world, as Brazil heads toward its longest recession since the 1930s amid above-target inflation and a political stalemate that has frustrated the government’s efforts at shoring up the budget. Sentiment worsened Monday after data showed industrial profits in China declined the most since 2011, dimming the outlook for Brazil’s raw-materials exporters. "Everywhere you look, there’s reason for concern," Alvaro Bandeira, an economist at Banco Modal, said from Rio de Janeiro. "And no hope of an improvement any time soon." 

• Kobe Steel Cuts Profit Target by 58% on China Excavator Sales. Kobe Steel Ltd. more than halved its full-year profit target after China’s slowing economy hurt sales at its construction machinery unit and a power outage at its Kakogawa steelworks pushed up costs. The steelmaker now forecasts net income at 25 billion yen ($207 million) for the year to March 2016, 58 percent lower than its July forecast of 60 billion yen, the Kobe-based company said Monday in a statement to the Tokyo Stock Exchange. Kobe Steel had a profit of 86.5 billion yen in the year to March 2015.

• Glencore Roils Credit Markets as Traders Treat Company Like Junk. Credit traders are treating Glencore Plc as if it’s already junk, sending the cost of insuring the commodities giant’s debt to the highest level since the global financial crisis. Derivatives traders started demanding upfront payments to protect against a default by the company, the first time that’s happened since 2009, according to data provider CMA. The cost of five-year credit-default swaps jumped so high that they effectively were pricing in 54 percent odds that the company defaults, CMA data show.
• Fed's Dudley Says U.S. on Track for 2015 Interest-Rate Increase. (video) The Federal Reserve will probably raise interest rates later this year and tighten policy gradually thereafter, New York Fed President William C. Dudley said, echoing the sentiment of Chair Janet Yellen that an uncertain global outlook won’t postpone liftoff into 2016. “The economy is doing pretty well,” Dudley said Monday at an event hosted by the Wall Street Journal in New York. “My expectation is that we probably will raise interest rates later this year.” Dudley said he expected growth in the second half will be a little bit weaker than in the first half, when the U.S. grew around 2.25 percent on an annualized basis.

• What's Driving Weakness in Emerging Markets Currencies? (video)

• Here's Why We Are Heading Towards Deflation. (video)

• Treasuries Advance as a Junk-Bond Rout Pushes Yields Beyond 8%. Treasuries gained, extending this month’s advance, as stocks declined with European commodity producers heading for their lowest level since 2009. Damped demand for energy companies spurred a rout in junk bonds pushing the yield on an index of U.S. high-yield corporate debt to more than 8 percent. U.S. government securities rose Monday as Glencore Plc, the miner and commodity trader, plunged to a record and oil prices fell for the first time in three days. The yield of 8.01 percent reached on Sept. 25 on the junk-bond index was only surpassed once previously, in August, during the past four years, based on Bloomberg World Bond Indexes. A gauge tracking the debt has fallen 1.4 percent in September, while Treasuries returned 0.4 percent.
• European Stocks Drop Amid China Data as Glencore Tumbles 29%. The optimism that sent European stocks rallying on Friday was short-lived. The Stoxx Europe 600 Index lost 2.2 percent today as growth concerns resurfaced after Chinese industrial companies reported profits fell the most in at least four years. Commodity producers slumped to their lowest levels since 2009, with a record plunge by Glencore Plc. Automakers, which had their worst week since 2011, fell a further 3.6 percent.

• Morgan Stanley(MS) Has Given Up on Energy Stocks. Towards the beginning of 2015, with crude oil prices in free-fall, Morgan Stanley's equity strategy team made a bold call, upgrading the energy sector to overweight. But there's been no reprieve for those stocks this year, with the S&P 500 energy sector index losing nearly one quarter of its value year-to-date:

• Iron Ore Seen Below $40 by Citi as Roy Hill `Whale' Starts. New supply from Gina Rinehart’s Roy Hill iron ore mine will contribute to a slump below $40 a metric ton next year, according to Citigroup Inc., which said lower steel output in China would also hurt the commodity. The project in Australia’s ore-rich Pilbara is poised to start shipments in October, and its expansion toward annual output of 55 million tons will probably have a large impact on prices, analysts including Ivan Szpakowski said in a report. Surging production will combine with steel-output cuts in China to push prices below $40 in the first half, Citigroup said.

• Flat Commodity Prices Could Wipe Out Glencore, Anglo. (video)

• Valeant(VRX) Plummets After Democrats Seek Subpoena on Drug Price Hikes. Valeant Pharmaceuticals International Inc. shares fell as much as 20 percent after Democrats in the U.S. House asked to subpoena the company for documents relating to drug price increases, the latest move by politicians seeking to curb price hikes on acquired drugs. “We believe it is critical to hold drug companies to account" when they buy old drugs and raise their prices, 18 Democratic representatives wrote in a letter to Jason Chaffetz, the chairman of the House’s committee on oversight and government reform. They highlighted Valeant’s heart drugs Nitropress and Isuprel, whose prices increased by 212 percent and 525 percent the day that Valeant acquired the rights to sell them.

• S&P 500 Shows Pattern Similar to Start of Last Two Bear Markets. A pattern that accompanied the start of the last two bear markets is showing up in U.S. stocks. Driven by a retreat since mid-August, the Standard & Poor’s 500 Index has seen its average price over 12 months fall for two straight months, data compiled by Bloomberg and MKM Partners LLC show. In the past two decades, declines in the average measure lasting two months or longer had only occurred twice, in the dot-com crash and the 2007-2009 bear market. 

• Goldman(GS): Get Ready for Another Bumpy Ride This Earnings Season. It's going to be a busy third-quarter reporting period.  

• How Government Bureaucracy Drives Up Student Debt. A confusing loan repayment system isn't just annoying; it could be contributing to defaults.

Wall Street Journal:

• Investors Pull Back From Junk Bonds. A decline in investors’ appetite for high-yield bonds poses a threat to the merger boom.

MarketWatch.com:

• Biotech fund on track for worst single-day drop in 4 years. The session's slide in biotech puts exchange-traded fund (ETF) the iShares Nasdaq Biotechnology ETF (IBB), -6.65% on track for its worst single-day loss in more than four years.

• Whole Foods(WFM) to cut 1,500 jobs over next 2 months.

CNBC:

• Icahn warns of potential looming catastrophe. (video) Lower interest rates have caused bubbles in art, real estate and high-yield bonds and the fall-out for the markets could be dramatic.

• Whatever happened to the bond market bubble? The $1.2 trillion high-yield debt market could face a double whammy as spreads tighten and investors use the corporate earnings season starting in the second week of October as an excuse to take even more profits. "I think there's a huge story in high yield that's been brewing for some time. Even in the non-commodities sectors of high yield," said Michael Contopoulos, head of high-yield strategy at Bank of America Merrill Lynch. "Spreads are too tight. Yields are too rich, and the market is beginning to wake up to the fact that you need to be compensated by more than 500 basis points. That's about 200 basis points lower than where it was in 2011." The BofA Merrill Lynch high-yield index is trading at roughly 600 basis points versus government bonds, but if energy, metals and mining is excluded, it's about 80 basis points less in terms of spread. The spread has ranged from a low of 427 to a current high of 614 over the past year. The yield of the overall U.S. high-yield market is about 7.5 percent. The yield excluding commodities is about 6.7 percent. Recent signals from Washington, D.C., also point to more selling pressure in the high-yield sector.

• Emerging market ETFs bleed $19 billion so far this year. Fears about deteriorating economic conditions in China, Brazil and Russia have led to a massive retreat from emerging market exchange traded funds. So far this year investors have pulled $19 billion from emerging market ETFs but experts suggest these vehicles are vulnerable to much more selling pressure. 

• RBC slashes S&P 500 call, but loves stocks (huh?) (video)

Zero Hedge:

• Confusion-nado - 2015 Rate-Hike Odds Plunge To Record Lows After Fed's Evans Dovish Comments. (graph)

• And The Market Breaks...

• The Next Looming "Commodity" Failure: Social Media. (graph)

• Ackman Loses $700 Million Instantly After Valeant(VRX) Gets Drug Pricing Subpoena. 

• The Echo Bubble In Housing Is About To Pop. (graph)

• Currency Warfare: Ruble Plunges As Putin Speech Ends. (graph)

• Glencore Implodes: Stock Plunges Most Ever, CDS Blow Out To Record Up On Equity Wipeout Fears. (graph)

• Glencore Default Risk Surges Above 50%. (graph)

• Biotechs Battered For 7th Straight Day - Longest Losing Streak In 7 Years. (graph)

• Dallas Fed Manufacturing Contracts For 9th Month In A Row As Jobs, Workweek, & CapEx Collapse. (graph)

• President Obama Explains To The UN Why The World's Chaos Is Not His Fault - Live Feed. (video)

• Pending Home Sales Miss Fourth Month In A Row, As Northeast Weighs On Index. (graph)

• Nasdaq "Death Crosses" For First Time Since 2012. (graph)

• With $19 Billion In Derivative Liabilties, Some Observations On Glencore's "Counterparty Risk".

• This Is When Junk Bonds Go Kaboom! (graph)

• Personal Income Rises At Slowest Pace In 5 Months As Savings Rate Drop. (graph)

• Commodity Carnage Continues Amid Fears Of Glencore Liquidation. (graph)

Business Insider: 

• Here's Donald Trump's full tax plan.

Reuters:

• Kuwait Oil Minister Says Global Crude Oil Oversuppy 1.8m Bpd. Kuwait. Kuwait Oil Minister Ali al-Omair says global  crude oversupply now at 1.8m bpd. Doesn't expect oil summit before OPEC's next meeting on Dec. 4. Says non-OPEC producers not committed to price stability.

Bear Radar

Style Underperformer:

• Small-Cap Growth -3.84%

Sector Underperformers:

• 1) Coal -7.39% 2) Hospitals -7.01% 3) Biotech -5.72%

Stocks Falling on Unusual Volume:

• MDP, CXRX, NMFC, HUN, VRX, LBTYK, MNK, HRTX, HQL, LBTYA, IBB, TSRO, ETE, KRA, RXDX, BIB, CSTE, CALM, BPMC, GLNG, SOXX, EPZM, AGN, SQBK, MCRB, STE, MTGE, ILMN, OLN, WMC, IHS, GILD, GDDY, NRZ, LH, MAIN, ZTS, XPO, ALNY, CLNY, XPO, BURL, MRTX, DMND, MB, HCA, BX, MDP, CYH, TMH, INSY, THC, SAGE, AGN, BMRN, REGN, NRF, INSM, ADPT, BLUE, RTRX, WMB, KND, WPZ, PCRX, ITCI, INCY, AHS, RSO, DPLO, NBIX, IPXL, ADXS, TSRO, XON, VTAE, NLNK and HUN

Stocks With Unusual Put Option Activity:

• 1) LL 2) RH 3) VRX 4) XME 5) XBI
  

Stocks With Most Negative News Mentions:

• 1) SYK 2) CMI 3) FCAU 4) WMB 5) VRX
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Value -1.76%

Sector Outperformers:

• 1) Utilities -.54% 2) Road & Rail -.81% 3) Tobacco -1.62%
  

Stocks Rising on Unusual Volume:

• MEG, BIS and KN

Stocks With Unusual Call Option Activity:

• 1) EUO 2) BKD 3) HZNP 4) SKX 5) NEM
  

Stocks With Most Positive News Mentions:

• 1) KN 2) AA 3) INTC 4) MNRK 5) JACK
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Morning Market Internals

NYSE Composite Index:

• Volume Running 10.0% Above 100-Day Average
• 1 Sector Rising, 9 Sectors Declining
• 13.1% of Issues Advancing, 84.7% Declining
• 4 New 52-Week Highs, 320 New Lows
• 21.4% of Issues Above 200-day Moving Average
• Average 14-Day RSI 36.3
• Vix 25.8
• Total Put/Call 1.28
• TRIN/Arms 1.45

Monday Watch

Today's Headlines 

Bloomberg:

• China Industrial Profits Fall Most Since 2011 as Economy Slumps. Chinese industrial companies’ profits declined the most in at least four years, the latest sign that the nation’s old growth drivers are faltering. Industrial profits tumbled 8.8 percent in August from a year earlier, the National Bureau of Statistics said Monday in Beijing. It was the biggest drop since the government began releasing monthly data October 2011, according to data compiled by Bloomberg. Profits in coal mining plunged 64.9 percent, while oil and gas profits tumbled 67.3 percent, according to the report. The drop was attributed to falling product prices, lower investment returns and foreign exchange losses contributed, He Ping, an official at the National Bureau of Statistics, said in an analysis on the agency’s website.

• Worst Quarter in Four Years for Global Stocks. (video)

• Catalan Separatism Refuses to Die as Mas Claims Mandate With 48%. Artur Mas refuses to quit. The Catalan president has already ruptured his party in his bid to secede from Spain. On Sunday, voters in the region narrowly rejected his plan to build an independent state and left him needing a deal with an anti-capitalist party that rejects the rule of law if he wants to govern. He’s still not giving up. Before the vote, Mas had said the regional ballot was effectively a referendum on independence. Afterwards, he said 48 percent support is enough. “We have a strong mandate to push ahead with this project,” Mas said, declaring victory at a post-election rally in Barcelona.

• Zero Inflation Looms Again for ECB as Oil Drop Counters Stimulus. If the euro area is about to run out of inflation -- again -- it won’t shock Mario Draghi. The European Central Bank president said more than three weeks ago that the inflation rate could turn negative this year because of the renewed decline in oil prices. The 19-nation region is set to take a step in that direction on Wednesday, when data will show consumer prices stagnated in September for the first time in five months, according to a Bloomberg survey of economists.

• China Stocks Fall to Two-Week Low on Slumping Industrial Profits. China’s benchmark stock index fell for a second day after a report showing industrial companies’ profits dropped the most in at least four years added to concern the economic slowdown is deepening. The Shanghai Composite Index slid 1 percent to 3,060.74 at 9:49 a.m. local time, heading for the lowest level since Sept. 15. Industrial companies’ profits plunged 8.8 percent in August from a year earlier, compared with a 2.9 percent drop in July. China Shipbuilding Industry Co. tumbled 4 percent to lead declines for industrial shares.“The industrial profit figure was well below the market consensus figure and is likely to add some downward pressure to today’s session,” said Gerry Alfonso, a sales trader at Shenwan Hongyuan Group Co. in Shanghai.

• Asian Stocks Swing Before China Data; Japanese Shares Retreat. Asian stocks fluctuated, with the regional benchmark index on course for its worst quarter in four years, as investors awaited data on Chinese industrial profits. Shares in Japan slid. The MSCI Asia Pacific Index added less than 0.1 percent to 125.08 as of 9:04 a.m. in Tokyo after slipping as much as 0.1 percent.

• China's Baoshan Steel Starts Zhanjiang Mill Amid Falling Prices. Baoshan Iron & Steel Co. started production at its new project in China’s southern port city of Zhanjiang even as steel prices plunge amid sluggish demand in the country, which is facing its slowest pace of economic growth in 25 years. The No. 1 blast furnace of the project, designed to have an annual capacity of 4.1 million metric tons of melted iron, was ignited Sept. 25, the company, China’s biggest publicly traded steelmaker, said in a filing to the Shanghai Stock Exchange on Sunday. The project will be fully operational a year later with an expected annual crude steel production of 8.75 million tons, it said. It usually takes three to six months of trial production before a new steel mill begins commercial operation. Chinese mills face declining domestic demand for the first time in a generation amid a property slump, which crushed prices in the nation that produces more than half of world output. Steel reinforced bar, which is used in construction, almost halved in the past two years on the Shanghai Futures Exchange while hot-rolled coil, used in automobile and machinery, dropped 42 percent since its debut in March 2014.

• Profit Pessimism Rivaling Crisis Days as Stocks Support Erodes. (graph) Any hopes that investors had of earnings growth salvaging what is poised to be the first down year for stocks worldwide since 2011 are quickly fading. Cuts to profit estimates outnumber increases by the most in three years, and the pessimism could reach levels last seen during the financial crisis, based on an index tracking the changes compiled by Citigroup Inc. China’s slowdown, a fragile recovery in Europe, and disappointing U.S. economic reports are combining to jeopardize one of the key drivers of a bull market that saw stocks rise as much as 156 percent since 2009. “Fundamentals aren’t great anywhere,” said Peter Dixon, a global equities economist at Commerzbank AG in London, who recommends trimming allocation to stocks. “It has become a fairly difficult background for corporates to operate. Valuations will start looking more stretched, and a lot of people are beginning to wonder whether we’re nearing a wider correction.”

Wall Street Journal:

• Deal With Iraq to Fight Islamic State Extends Russia’s Reach in Middle East. Kremlin rivals U.S. for influence in region. Iraq joined Russia, Iran and Syria in a new agreement to strengthen cooperation against extremist group Islamic State, extending the Kremlin’s reach in the Middle East as it rivals Washington for influence.

• Legendary Investor Richard Rainwater Dies. Master deal maker helped turn Bass brothers of Texas into billionaires. Richard Rainwater was a legendary deal maker who helped turn the Bass brothers of Texas into billionaires and later became one himself, while serving as a mentor to a new generation of investment wizards.

• The Obama-Xi Cyber Mirage. A digital arms deal that is full of promises but no enforcement.

Zero Hedge:

• Chinese GDP Propaganda Full Frontal: Plunge In Key Data Points Pitched As Bullish.

• "Nothing's Safe" Passport's Burbank Warns "The Liquidity Of Everything Is Being Taken Down".

• Wholesale Money Markets Are Broken: Ignore "Perverted" Swap Spreads At Your Own Peril. (graph)

• The Fed's Troubling Clarity Of Confusion.

• What Recovery? 9.4 Million More Americans Below Poverty Line Than Pre-Crisis.

• Dear Janet Yellen, Here Is All You Need To Know About The US Economy: True Unemployment Is Over 12%. (graph)

• The Bull/Bear 'High Stakes Poker' Game Is Down To The Final Table. (graph)

• Catalan Separatists Win Close To 50% Of Votes: Exit Poll.

• US On The Ropes: China To Join Russian Military In Syria While Iraq Strikes Intel Deal With Moscow, Tehran.

• The "Hard-Landing" Has Arrived: Chinese Coal Company Fires 100,000.

• Reflexivity Wrecks Fed Credibility, Crushes 2016 Rate Hike Hopes.

• Hillarinochio 2.0 - More Clinton Lies Exposed As Hidden Petraeus Emails Come To Light.

• "Risky Business": Companies Are Now Funding Share Buybacks By Selling Bonds To Other Companies. (graph)

• China Cannot Let This Happen.

• As A Very "Grim" Earnings Season Unfolds, All Eyes Will Be On This Company.

Business Insider:

• Barron's: Volkswagen's stock could tank even further.

• Russia and Iran are declaring victory over the West in Syria.

• Hillary Clinton just had her toughest grilling yet. Former Secretary of State Hillary Clinton's Sunday "Meet the Press" interview featured question after question on her email use at the State Department. Host Chuck Todd asked the Democratic presidential front-runner roughly a dozen inquiries about the controversy — before moving on to questions about her sinking poll numbers and policy flip-flops over the years. Todd began the interview by playing a seven-year-old clip of Clinton saying she wants "a much more transparent government."

• Donald Trump's front-runner status has virtually evaporated.

• GOLDMAN SACHS: 'Peak coal' is coming. Goldman Sachs released a September 22 research note that predicted that coal will decline and never come back. “Peak coal is coming sooner than expected,” the investment bank concluded. “The industry does not require new investment given the ability of existing assets to satisfy flat demand, so prices will remain under pressure as the deflationary cycle continues.”

• Facebook(FB) is losing its grip on teens as visual social networks gain popularity.

• The next big China worry on Wall Street.

Reuters:

• Asset managers slap health warnings on China funds in risk rethink. Fund managers are adding new warnings to China investment products in a bid to reduce their legal liability if regulators repeat the heavy-handed intervention in financial markets that rattled investors globally.

Les Echos: 

• IMF Set to Cut Global Growth Forecasts, Lagarde Says. A growth rate of 3.3% for this year is no longer realistic, nor is 3.8% next year, IMF Chief Christine Lagarde said.

Night Trading

• Asian indices are -1.25% to -.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 151.25 -.5 basis point.

• Asia Pacific Sovereign CDS Index 86.25 +.5 basis point.

• S&P 500 futures -.40%.

• NASDAQ 100 futures -.42%.

Morning Preview Links

Earnings of Note

Company/Estimate 

• (CALM)/3.14

• (MTN)/-1.82

• (CMTL)/.37

• (SNX)/1.44

Economic Releases
8:30 am EST

• Personal Income for August is estimated to rise +.4% versus a +.4% gain in July.

• Personal Spending for August is estimated to rise +.3% versus a +.3% gain in July. 

• PCE Core for August is estimated to rise +.1% versus a +.1% gain in July.

10:00 am EST

• Pending Home Sales for August are estimated to rise +.4% versus a +.5% gain in July.

10:30 am EST

• Dallas Fed Manufacturing Activity for September is estimated to rise to -10.0 versus -15.8 in August.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Dudley speaking, Fed's Evans speaking, Fed's Williams speaking, German retail sales report, Johnson Rice Energy Conference and the (DTE) investor day could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and industrial shares in the region. I expect US stocks to open modestly lower and to maintain losses into the afternoon. The Portfolio is 25% net long heading into the week.