Thursday, July 22, 2010

Thursday Watch


Evening Headlines

Bloomberg:

  • China's Car Dealers Cut Prices, Hand Out iPods as Sales Slow. China’s appetite for cars has slowed and Zhu Dongwei, an auto salesman in the central Chinese city of Zhengzhou, is doing all he can to whet it. Customers at Zhu’s General Motors Co. dealership get a 14 percent discount, a refund of sales tax and a chance to win a free iPod if they buy a 41,800 yuan ($6,170) Matiz compact car. “This is our biggest promotion this year,” Zhu said. “Without discounts, many people would wait, not buy.” Demand in the world’s largest vehicle market may drop from year-earlier levels in the second half of this year, triggering price wars as dealers compete to clear inventories, according to Credit Suisse Group AG and IHS Automotive. Wholesale passenger-car deliveries in June gained at the slowest pace in 15 months as inflation reduced buyers’ purchasing power. “Some dealers and automakers may panic and offer the largest discounts they can,” said Yale Zhang, a Shanghai- based analyst at IHS Automotive. “If prices of daily necessities keep soaring, people’s expectations of their future financial security will be undermined, reducing their desire to buy a car.” “The uncertainty of the macro-economy will influence people’s confidence, leading to a slowdown in auto sales growth,” said Xu Minfeng, an analyst at Central China Securities in Shanghai. Average prices of China’s locally made passenger cars fell by 2.08 percent in June from a year earlier, the biggest decline this year, according to National Development and Reform Commission. Even as car demand may stall, automakers including GM, Volkswagen AG, Honda Motor Co. and Nissan Motor Co. are rushing to boost capacity and introduce new models as they compete for bigger market share. Nissan, the largest Japanese carmaker in China by sales, aims to expand production capacity in the nation 68 percent to 900,000 vehicles a year by 2012 and plans further increases after that, CEO Carlos Ghosn said in April. GM’s venture SAIC-GM-Wuling Automotive Co. said last month it plans to boost capacity by 47 percent to 1.31 million vehicles annually by 2012. Domestic auto output exceeded sales by 1.29 million vehicles in the first half of this year, the China Automotive Technology & Research Center said on July 5. The average stockpile period, a measure of the time between car production and registration, was 55 days in June, compared with 41 days in February, the center said. “Automakers should reduce supply rather than getting into a price war,” said Zhao Hang, president of the center.
  • PIMCO Says Extreme Events to Drive Returns as 'Great Moderation' Is Over. Investors will make money based on their ability to anticipate extreme events after the end of the period of stability known as the “Great Moderation,” said Richard Clarida of Pacific Investment Management Co. The Great Moderation, an era from 1987 to 2007 of “predictable policy, low inflation, and modest business cycles,” allowed investors to make money using debt to magnify profits on bets that actual outcomes would match the average of a range of possibilities, Clarida wrote in an article today on the Web site of Pimco, which manages $1.1 trillion. “We are in a New Normal world in which the distribution of outcomes is flatter and the tails are fatter,” said Clarida, global strategic adviser for Newport Beach, California-based Pimco. “Investors had 25 years to get comfortable with the Great Moderation. The sooner they recognize those days are over, the better.” The financial crisis and its aftermath mean historical correlations are probably irrelevant or misleading, Clarida said. Investors have less confidence the distribution of events they anticipate is correct. With more returns or losses tied to extreme events and less on the average, money managers will probably adjust their portfolios more often, creating “risk- on” and “risk-off” trading days, he said.
  • EU Banks May Disclose Sovereign-Debt Holdings With Stress Tests. Europe’s largest banks may give breakdowns of their sovereign-debt holdings when they release stress-test results, according to a document from the Committee of European Banking Supervisors. European regulators asked the region’s biggest banks to publish a list of each lender’s gross and net exposure to central and local governments in 30 countries in the region, including Greece, Spain, Ireland, Italy and Portugal, according to a confidential draft template obtained by Bloomberg News. Banks will be asked to provide details of whether they booked their sovereign-debt holdings in the banking or trading book, according to the template, which was dated July 15. The document will show debt holdings for the 27 EU members as well as Liechtenstein, Norway and Iceland.
  • New York City Pension Funds Consider Making First Hedge-Fund Investments. New York City’s pension funds for police officers, firefighters and civil employees are seeking proposals from hedge fund consultants as they weigh whether to invest in the loosely regulated investment pools. One of five tax dollars collected by New York City, about $7.6 billion, will go into the pension funds this year.
  • Copper Drops for First Day in Four as Bernanke's Comments Damp Sentiment. Copper declined for the first time in four days in Asia as some investors deemed the climb to a seven-week high as excessive amid concerns that the economic recovery may falter. Copper for three-month delivery on the London Metal Exchange declined as much as 1.6 percent to $6,752 a metric ton before trading at $6,761.50 at 9:20 a.m. in Singapore. Federal Reserve Chairman Ben S. Bernanke said yesterday that the U.S. economic outlook “remains unusually uncertain,” without offering additional measures to stimulate growth. “Market sentiment today has been affected by Bernanke’s comments overnight,” Liu Xu, an analyst at China International Futures Co., said from Shenzhen. “It’s a good excuse to take profit.”
  • Goldman's(GS) V Shape Is Starting to Look Vulnerable: William Pesek. Journalists call it a buried lead. It’s when the real story is below the newspaper fold and drowned out by a tidbit that seems more sexy or appealing. Such is the case with the Asian Development Bank’s latest outlook. Markets moved on the headline: the ADB upgraded its 2010 forecast for 14 East Asian economies to 8.1 percent from 7.7 percent projected in April. Buried was the news that three major risks must break Asia’s way to keep prosperity alive: a double- dip global recession, destabilizing capital flows and the successful unwinding of stimulus measures.
  • Goldman Sachs(GS) Doubled Lobbying Expenses Amid Financial Revamp, SEC Probe. Goldman Sachs Group Inc. doubled its lobbying expenses as it focused on proposed financial regulations and faced U.S. Securities and Exchange Commission charges that it misled investors. New York-based Goldman, which paid $550 million last week to settle the SEC suit, spent $2.7 million to lobby during the first six months of 2010, more than double the $1.3 million it spent during the same period a year earlier, according to new congressional filings.
  • Myanmar Nuclear Weapon Program Claims Supported by Photos, Jane's Reports. Allegations by a Myanmar defector that the military-run country is pursuing a nuclear program are corroborated by newly available commercial satellite images, Jane’s Intelligence Review said in an article released yesterday. The photos of buildings and security fences near the country’s capital, Naypyidaw, confirm reports by Major Sai Thein Win of machine tool factories and other facilities alleged to be part of a nascent program to build nuclear weapons, the magazine reported from London. “They will not make a bomb with the technology they currently possess or the intellectual capability,” Jane’s analyst Allison Puccioni said in an interview. “The two factors do make it possible to have a route to one.” U.S. Secretary of State Hillary Clinton expressed concern about reports that North Korea and Myanmar are expanding military ties and sharing nuclear technology at a meeting of Southeast Asian foreign ministers in Thailand last year. While Myanmar is a signatory to international agreements to control nuclear weapons use, it hasn’t agreed to more recent changes in the treaties and therefore isn’t subject to international inspections, the magazine said. “With Myanmar’s current freedom from sanctions and relative economic prosperity, the junta may be able to outsource the technical know-how and tools to reach its goals far sooner than expected,” Christian Le Mière, editor of Jane’s Intelligence Review, said in a statement. “Someone had to be assisting them, that’s the frightening thing,” said David Kay, a former United Nations weapons inspector and now a fellow at the Potomac Institute for Policy Studies in Arlington, Virginia, in an interview.
  • Oil Refinery Profits in U.S. May Slide as Growth Sputters: Energy Markets. The profit from making gasoline may slide to the lowest level in 10 months as faltering U.S. consumer growth hurts refiners that have boosted production in anticipation of an economic rebound. Margins on gasoline, the difference between what producers pay for crude and how much they get for the refined fuel, are poised to drop as much as 75 percent in coming months, according to James Cordier, president of futures brokerage Liberty Trading Group in Tampa, Florida. Refiners have accelerated output by 11 percent since the end of March on forecasts of rising demand, driving stockpiles to a two-month high as of the week ended July 16, according to the Energy Department. Now the profit is being eroded by declining factory output and consumer confidence at the lowest level in a year. “Over-optimism has created an excess of output relative to demand and the economy is struggling under the weight of a continued stream of bad, disappointing news,” said Walter J. Zimmerman Jr., vice president of market analysis at United-ICAP in Jersey City, New Jersey. Refinery use, after dipping to a 16-month low of 77.7 percent on Jan. 29, reached 91.5 percent last week, the highest level since August 2007, Energy Department data shows. “If, as it appears, the pace of economic recovery is slowing significantly and demand continues to show weakness, the cracks are subject to significant declines,” said Tom Knight, vice president of trading and supply at Truman Arnold Cos. in Texarkana, Texas. “Refiners have to go back to low runs or else face collapsing margins,” said Sander Cohan, an analyst with Energy Security Analysis Inc. in Wakefield, Massachusetts.
  • Cameron Travels Commercial to Show Britons He Pinched Pennies on U.S. Trip. U.S. politicians may dream of one day sinking into the presidential bed aboard Air Force One. David Cameron, returning last night from his first trip to the U.S. as British prime minister, took a business-class seat on board a scheduled British Airways flight. Cameron, trying to cut Britain’s deficit, its largest since World War II, is scaling back on the chartered jets his predecessors used for overseas travel and told his staff to book him on regular flights. Yesterday he traveled to New York from Washington on Amtrak’s Acela train. “We have got a lot of money to save,” the prime minister told ABC News July 20. “We’ve got a very big budget deficit, so we can’t go spending money on executive planes, sadly.” While Cameron’s office estimates it is saving several hundred thousand pounds by forgoing chartered jets, that isn’t the only consideration. His party fought the May 6 general election arguing “We’re all in this together.”
  • Motorola(MOT) Accuses Huawei of Stealing Mobile-Phone Trade Secrets. Motorola Inc. , the U.S. maker of mobile phones and two-way radios, sued rival Huawei Technologies Co. for allegedly conspiring with former employees to steal trade secrets. Huawei began receiving the information as early as 2001, Schaumburg, Illinois-based Motorola claimed in an amended lawsuit filed July 16 in federal court in Chicago. In the amended complaint, Motorola claims a staff engineer shared information about a new transceiver and other Motorola technology with Ren Zhengfei, the founder of Shenzhen, China-based Huawei, which today called the complaint “groundless.” Motorola said it has recovered e- mail from the engineer’s computer showing transmission of Motorola product specification documents marked “confidential” to Huawei. “Huawei and its officers knew they were receiving stolen Motorola proprietary trade secrets and confidential information without Motorola’s authorization and consent,” according to the complaint.
  • Citigroup(C) Lowers China's 2010 Economic Growth Forecast by Most Since 2001. Global gross domestic product will increase by 3.7 percent this year and 3.3 percent in 2011, Citigroup said, cutting its previous forecasts by 0.1 percentage point each. The U.S. forecast was reduced by 0.4 percentage points, to 2.8, according to the report dated July 21. China’s GDP growth forecast was cut by 1 percentage point to 9.5 percent, Citigroup’s biggest one-month cut in the country’s outlook since late 2001, the report said. The bank said China would grow at an 8.8 percent rate next year, 0.5 percentage points lower than previously forecast.
Wall Street Journal:
  • Fight Over Consumer Agency Looms as Overhaul Is Signed.
  • Bush Tax Cuts Roil Democrats. Two more Senate Democrats called for extending tax cuts for all earners—including those with the highest incomes—in what appears to be a breakdown of the party's consensus on the how to handle the expiration of Bush-era tax cuts.
  • Apple(AAPL) Seeks Growth Beyond Consumers. Apple Inc. is boosting efforts to appeal to a new type of customer: small businesses. The consumer electronics giant responsible for the iPhone is seeking to hire engineers in as many as a dozen U.S. retail stores to put together Apple-based computer systems for small businesses, according to recent job postings on Apple's website. The employees would implement computer systems for clients and are expected to be proficient in networking hardware and server platforms. "Thousands of businesses run on Apple products," the posting reads. "Many more would like to, and that's where you come in." The new positions mark the latest development in Apple's evolving strategy, which has historically focused on the consumer market and niche businesses, like design and media firms. Now, Apple wants to leverage its popular iPhone and iPad devices, using their appeal as a selling point for more expensive products, including its line of Macintosh computers and servers.
  • Friendly Fire on Capitol Hill. Democrats are saying unkind things about the White House. Describing the White House last week, Congressional Democrats used words like "ineptness," "neglected" and "disconcerting," and phrases like "isn't aggressive enough." President Barack Obama has only himself to blame for these protests.
CNBC:
MarketWatch:
  • Payback Time for State Firms Tied to Payoffs. Dozens of Chinese state firms are in hot seat after U.S. admission of bribery. Many of these alleged bribe-takers have extra reason to worry: DOJ's detailed disclosure has given authorities in China clear evidence that could be used to press domestic criminal cases and step up the nation's battle against corruption.
NY Times:
  • Will Stress Tests Overcome Resistance to German Bank Reform? The debt crisis rattling Spain has finally allowed the central bank to override powerful local politicians and push through an overhaul of the very same institutions whose extravagant lending contributed to the country’s woes. In Germany, which also has a large, troubled banking sector with political patrons, forcing change has proven a lot more difficult. But the release of the results of bank stress tests on Friday could finally be a catalyst for a reordering of the landesbanks, several of which have a history of scandal and have already required billions of euros in government aid to survive the financial crisis. “Nearly all the landesbanks are in heavy trouble and have a lot of restructuring to do,” said Dirk Schiereck, a professor of banking at the Technical University of Darmstadt.
  • Morgan Stanley(MS) May Shift Derivatives Trading. Morgan Stanley could benefit considerably from exemptions included in the new financial regulations governing derivatives. The firm is considering moving its multibillion-dollar foreign-exchange and interest-rate derivatives trading units out of its separately capitalized broker-dealer and into its bank holding company, its chief financial officer, Ruth Porat, said Wednesday. The firm could win more business and increase its trading profits if these trading units were inside the government-backed bank holding company. The prospective move highlights some of the unintended consequences in allowing some derivatives to escape rules intended to separate trading risk from bank depositors. Trading derivatives under the umbrella of a bank holding company has some major advantages. Most notably, banks have access to the Fed discount window, giving them access to cheap funding. Banks also have an implicit government guarantee, so if something goes wrong and depositors’ money is at risk, a bank could get bailed out.
Business Insider:
CNNMoney:
CFTC:
  • CFTC Rulemakings. As a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFTC will write rules to regulate the over-the-counter derivatives marketplace. The CFTC has identified 30 areas where rules will be necessary. The public is encouraged to provide input on the rule-writing process. Information regarding each rule-writing area will be published as it becomes available.
Politico:
  • Senate Extends Jobless Benefits. A $34 billion bill restoring jobless benefits for millions of idled workers is poised to clear Congress after finally passing the Senate on a 59-39 vote Wednesday evening. Running past November’s elections, the six-month extension will be quickly approved by the House and sent on to President Barack Obama Thursday.
  • Senate Rejects Attempts to Kill Arizona Lawsuit. The Senate decided Wednesday it didn’t want to interfere with the Obama administration’s lawsuit challenging Arizona’s strict new immigration law.
  • Poll: Obama Approval Hits Low. President Barack Obama’s approval rating has dropped to its lowest point yet in a new Quinnipiac University poll out Wednesday. Only 44 percent of the 2,181 registered voters surveyed said they approve of the way Obama is handling his job. Forty-eight percent disapprove of the president’s performance. The president’s numbers are upside-down on many of the key issues on voters’ minds. On the economy, which consistently rates as voters’ top concern, 56 percent of those surveyed disapprove of Obama’s performance, compared with 39 percent who approve. Fifty-one percent disapprove of his handling of the Gulf Coast oil spill, and 58 percent said the same of the president’s job on immigration. Support for the war in Afghanistan too has hit a new low, with 48 percent saying it is the “right thing to do.” In April, 56 percent thought the war was the “right thing to do.” All of the bad polling data for the president is reflected in the fact that a plurality say they would vote for an unnamed Republican challenger over the president in 2012. Thirty-seven percent of those surveyed said they intend to vote for a Republican in the next presidential election, compared with 27 percent who said they plan to vote for Obama.
  • White House Keeps Obama Above Racial Fray. The White House struggled mightily Wednesday to make things right with an aggrieved Shirley Sherrod — but it is working nearly as hard to distance President Barack Obama and his top aides from the racially tinged firing fiasco. Administration officials unanimously leveled the finger of blame at Agriculture Secretary Tom Vilsack on Wednesday for sacking Sherrod on “insufficient evidence” — even as West Wing officials admitted they did nothing to stop Sherrod from being let go on the basis of a single, shabbily edited video clip.
AP:
  • New Provision on Credit Raters Could Chill Markets. Nestled in the 2,300 pages of the new law that reshapes the U.S. financial landscape is a change affecting credit rating agencies, which were accused of helping cause the 2008 crisis. That change could have an unintended consequence, some experts say: Chilling the markets for securities linked to mortgages, credit cards and auto loans. Those markets froze up during the crisis and have been struggling to revive. That's because the change will make it easier for investors to successfully sue credit rating agencies for assigning unrealistically high ratings. As a result, the three major agencies — Moody's Investors Service, Standard & Poor's and Fitch Ratings — say they'll no longer let bond issuers list their ratings in public sale documents. That could dampen the markets for asset-backed securities, because the agencies' ratings help set the prices that investors such as banks, mutual funds and local governments agree to pay. Most securities tied to consumer loans are required to include ratings in formal offering documents. But because their legal liability has potentially risen, the rating agencies "are going to be very reluctant" to have their ratings in offering documents, said Jesse Litvak, a managing director at Jefferies & Co. "It's like pouring gasoline on a fire," Litvak said. "That's going to clog up the ability for any deals to get done." The effect "is going to be extraordinarily negative," said Herb Kaufman, professor emeritus of finance at the W.P. Carey School of Business at Arizona State University. "Credit has just recovered to some degree, and this could put a damper on those securities." House lawmakers proposed making it easier to sue the agencies successfully. Their proposal deemed the ratings to be expert advice in public offering documents, not just an expression of opinion protected by the First Amendment. The House provision made it into the final legislation once the House and Senate versions were melded. Also under the new law, the agencies must explain more fully how they assign ratings. If an agency performs poorly over time, the SEC could cancel its registration.
Reuters:
  • Western Digital(WDC) Warns of Weak Q1, Shares Slide. Hard drive maker Western Digital Corp (WDC) gave a quarterly financial forecast that lagged analysts' expectations, citing concerns about slow back-to-school spending and debt worries in Europe.
  • Hynix Sees Q3 DRAM Shipments Up; Prices to Drop. Hynix Semiconductor Inc, the world's No. 2 memory chip maker, expects third-quarter DRAM shipments to grow by a mid-single digit percent from the previous three months, though prices are seen falling slightly.
  • Intuitive Surgical(ISRG) Profit Tops Street, Shares Fall. Intuitive Surgical Inc (ISRG) reported better-than-expected second-quarter earningson Wednesday on increased demand for its high priced da Vinci surgical robot systems and robotic procedures. Intuitive also raised its full-year revenue growth outlook to between 30 percent and 33 percent from its previous view of of 27 percent to 30 percent growth. But the company's shares, which tend to be extremely volatile around earnings reports, fell more than 6 percent in extended trading. Revenue for the quarter rose 34 percent to $351 million, exceeding Wall Street estimates of $334.9 million.Second quarter systems revenue was $168 million, up from $124 million a year earlier.The company sold 108 da Vinci systems in the quarter, up from 76 a year ago. Of the 108 sold, 89 were the newer da Vinci Si model. The newer da Vinci systems cost about $1.4 million each and also carry higher annual service fees.Twenty-two of the systems sold in the quarter were purchased outside of the United States, including 14 in Europe. Intuitive management said capital spending in Europe "continues to be challenging," although it is seeing solid procedure growth there. Instruments and accessories revenue increased 33 percent to $128 million, driven by 36 percent growth in da Vinci procedures.
Financial Times:
  • IMF Calls for More 'Stress-Test' Openness. Europe must ensure its stress tests are transparent to guarantee their credibility, according to staff at the International Monetary Fund . But some market participants have criticised the lack of information about the scenarios being tested, fuelling suspicions they are being engineered to produce a favourable outcome. Too many banks were still dependent on government support and were vulnerable to lapses in confidence, the IMF said. A staff report finalised on July 1 said: “To reduce aggregate uncertainty and induce a greater willingness to tackle troubled banks, [IMF] staff called for a more detailed disclosure of inputs and outcomes, possibly at the institution level.” But it reported resistance from eurozone authorities to the idea of more transparency. “Supervisors felt that disclosure of individual bank results could prove too market-sensitive and some national authorities noted legal impediments to publication,” the fund said.
Telegraph:
  • Double Dip in the Baltic. The raging dispute over the Baltic Dry Index is starting to feel like the Jansenists debate with the Ultramontanists, with the Big Media playing the enforcement role of Pope Innocent X against heretical bloggers such as Zero Hedge. Is the latest collapse in the BDI a leading indicator of a wilting souffle in China/US/world, or is it just the lagging effect of new ships flooding the market? Or both at once.
Globe and Mail:
  • Patient Wait Times Get Worse in Canada. And the worst record on timely access to primary care goes to … With all the money Ontario’s been throwing at its health-care system, a reasonable citizen might expect better. How satisfied are Canadians with the availability of quality health care? They’re more satisfied than dissatisfied but less satisfied than people in most other advanced industrial countries. In the country’s largest province, the Ontario Health Quality Council recently reported that only one-third of MRI scans are being done on time. In a classic (and understandable) case of triage, the council found that high-priority cases were being dealt on time in 88 per cent of CT cases and 70 per cent of MRI ones, but “wait times have gotten worse for patients at lower priorities.” The council found that “emergency department wait times are among the worst in the world.” It said “a majority of patients did not get to see a doctor within the time frame recommended by national experts.” A huge systemic problem is allocation of hospital beds. A chronic shortage of long-term-care beds exists, so frail individuals who can’t return home wait in hospital for space in a long-term-care institution. The council estimates that a staggering 16 per cent of hospital beds are occupied by those who don’t need to be there – that is, they need a long-term-care bed. And, of course, with those beds being occupied in hospitals, it sometimes becomes hard to free up space for someone who needs to be there. Cancer treatment is supposed to be a major area of improvement in Ontario, but the council reports that “only 53 per cent of urgent cancer cases are completed within the two-week target.” Then there’s the old bugbear: access to a family doctor. Arguably, this part of the health-care system influences attitudes toward it more than anything else. Reports the council: “Compared to 10 other countries, Ontario and Canada have the worst record on timely access to primary care.” Yikes. In a system that eats up so many taxpayer dollars?
Evening Recommendations
Citigroup:
  • Reiterated Buy on (EMC), target $25.
  • Reiterated Buy on (RHI), target $33.
Night Trading
  • Asian equity indices are -.75% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 126.50 -.5 basis point.
  • Asia Pacific Sovereign CDS Index 121.50 -3.0 basis points.
  • S&P 500 futures -.22%.
  • NASDAQ 100 futures -.08%.
Morning Preview Links

Earnings of Note
Company/Estimate
  • (BBT)/.33
  • (PNC)/1.27
  • (SHW)/1.64
  • (LH)/1.41
  • (DO)/1.75
  • (ESI)/2.68
  • (CAL)/1.53
  • (TRV)/1.50
  • (MMM)/1.47
  • (HOT)/.26
  • (DHR)/.53
  • (APD)/1.27
  • (FITB)/.02
  • (MHS)/.79
  • (STI)/-.35
  • (MO)/.97
  • (ZMH)/1.05
  • (KEY)/-.11
  • (CAT)/.84
  • (UPS)/.77
  • (T)/.57
  • (STJ)/.73
  • (MSFT)/.46
  • (CMG)/1.40
  • (COF)/.86
  • (CAKE)/.38
  • (SNDK)/.90
  • (BXS)/.18
  • (FII)/.39
  • (AXP)/.77
  • (CB)/1.40
  • (MOS)/.88
  • (AN)/.36
  • (BX)/.16
  • (LLY)/1.10
  • (VFC)/.77
  • (NUE)/.25
  • (UNP)/1.21
  • (PCP)/1.69
  • (BAX)/.92
  • (BMY)/.53
  • (HSY)/.46
  • (DECK)/.09
  • (AMZN)/.54
  • (RCL)/.19
Economic Releases
8:30 am EST
  • Initial Jobless Claims for last week are estimated to rise to 445K versus 429K the prior week.
  • Continuing Claims are estimated to fall to 4590K versus 4681K prior.
10:00 am EST
  • Existing Home Sales for June are estimated to fall to 5.1M versus 5.66M in May.
  • The House Price Index for May is estimated to fall -.3% versus a +.8% gain in April.
  • Leading Indicators for June are estimated to fall -.3% versus a +.4% gain in May.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Bernanke speaking before the Senate, Fed's Dudley speaking and the weekly EIA natural gas inventory report could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and commodity shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.

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