“When you come to a fork in the road, take it!” – Yogi Bera

1. Marc Faber Calls For Ugly Stock Market Crash — the legendary bearish investor, Marc Faber, is forecasting a 50% crash in the S&P that would reverse all gains from the past five years. He’s unconvinced by the recent run-up in equities and warned central bank actions would increase volatility despite U.S. stock markets reaching fresh intraday highs and the Nasdaq just posting a new record close.
2. Wall Street Bonuses Expected To Decline — Wall Street bonuses are expected to decline this year for both bankers and traders as new regulations on trading and capital curb profits. Year-end compensation will be down 5-15% for investment bankers that advise on M&A, according to a widely followed report by Johnson Associates. Bankers who help companies raise equity and debt could see their compensation drop as much as 25%, while stock and bond traders could see a fall of as much as 15%.
3. Valeant (NYSE:VRX) Under Criminal Probe For Allegedly Defrauding Insurers Over Philidor — Federal prosecutors are investigating whether Valeant Pharmaceuticals (NYSE:VRX) defrauded insurers by shrouding its ties to the Philidor mail-order pharmacy that boosted sales of its drugs. The relationship between the two has been under scrutiny since last October; However, Dow Jones reports the new criminal probe is based on an unusual legal theory and could lead to criminal charges against former Philidor executives and Valeant as a company.
4. US Retail Sales Flat In July vs. 0.4% Increase Expected — the Commerce Department reported the unchanged reading last month followed an upwardly revised 0.8 percent increase in June. Retail sales in June were previously reported to have increased 0.6 percent. Sales rose 2.3 percent from a year ago. Excluding automobiles, gasoline, building materials and food services, retail sales were also unchanged last month after an unrevised 0.5 percent increase in June.
5. China Data Offers More Evidence Of Slowdown — a number of readings on China’s economy decelerated in July, offering further evidence of a slowdown in the mainland. Retail sales and industrial production rose but were below expectations, while fixed asset investment fell to its slowest rate in more than 16 years. The data sharpens the dilemma facing the nation’s policy makers – boost growth with cheap credit that risks undermining financial stability, or curb debt expansion even if that slows the economy.

The week ahead — Economic data from Econoday.com: