Stocks Falling Slightly into Final Hour on Rising Global Growth Fears, Eurozone Debt Angst, Fed Commentary, More Trading "Glitches"

Broad Market Tone:

• Advance/Decline Line: Lower
  
• Sector Performance: Mixed
  
• Volume: Around Average
  
• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• VIX 18.22 -3.75%
  
• ISE Sentiment Index 121.0 -19.87%
  
• Total Put/Call 1.0 +23.46%
  
• NYSE Arms 1.14 +17.92%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 104.86 bps -2.46%
  
• European Financial Sector CDS Index 247.24 bps -4.38%
  
• Western Europe Sovereign Debt CDS Index 257.13 +.58%
  
• Emerging Market CDS Index 247.47 -1.07%
  
• 2-Year Swap Spread 20.0 -.25 basis point
  
• TED Spread 35.0 +1.0 basis point
  
• 3-Month EUR/USD Cross-Currency Basis Swap -43.75 -1.75 basis points
  

Economic Gauges:

• 3-Month T-Bill Yield .09% -1 basis point
  
• Yield Curve 129.0 +3 basis points
  
• China Import Iron Ore Spot $117.40/Metric Tonne +.34%
  
• Citi US Economic Surprise Index -40.60 +1.3 points
  
• 10-Year TIPS Spread 2.13 +2 basis points
  

Overseas Futures:

• Nikkei Futures: Indicating +23 open in Japan
• DAX Futures: Indicating -3 open in Germany
  

Portfolio:

• Slightly Lower: On losses in my Biotech and Retail sector longs
  
• Disclosed Trades: None
  
• Market Exposure: 50% Net Long

Today's Headlines

Bloomberg:

• Monti Says Rescue Fund Will Win Bank License to Tap ECB. Italy’s Prime Minister Mario Monti said the permanent rescue fund should have access to European Central Bank liquidity via a bank license, challenging German policy makers to back more actions to tame the euro-area crisis. “I think this would help, I think this will in due course occur,” Monti said today in Helsinki at a news conference with Finnish Prime Minister Jyrki Katainen. Monti’s assertion was a rebuff to Chancellor Angela Merkel’s Cabinet after ministers meeting in Berlin earlier today hardened their opposition to granting the planned bailout fund access to the ECB’s resources. Monti is prodding colleagues across Europe to back his fight to lower the borrowing costs that investors are imposing on Italy and Spain. In travels from Paris to Helsinki and on to Madrid tomorrow, where he’ll meet with Spanish Prime Minister Mariano Rajoy, Monti is seeking to bridge a north-south divide on crisis fighting and capitalize on a pledge by ECB President Mario Draghi to do whatever it takes to defend the euro. Monti and Katainen both declined to say what they wanted to hear from Draghi after a meeting of ECB policy makers tomorrow. The Italian premier instead urged central bankers to show equal respect for ECB independence, after Bundesbank President Jens Weidmann said the ECB shouldn’t exceed its inflation-fighting mandate and stressed Germany’s importance in setting common strategy in the 17-nation euro area, according to an interview conducted in June and posted on the Bundesbank’s website today.
• U.K. Manufacturing Slump Deepens as Export Orders Fall: Economy. U.K. manufacturing shrank the most in more than three years in July as export orders slumped, indicating the economy’s recession continued to deepen at the start of the third quarter. A factory-output gauge fell to 45.4 from a revised 48.4 in June, London-based Markit Economics said today. The reading was weaker than any of the 30 forecasts in a Bloomberg News survey. The decline was led by weaker demand in the euro area, where a separate index showed manufacturing shrank for a 12th month.
• SocGen Profit Misses Estimates With 42% Slide on Writedowns. Societe Generale SA (GLE), France’s second- largest bank, posted a bigger-than-expected 42 percent drop in second-quarter profit after taking writedowns on its Russian unit and U.S. asset manager TCW Group.
• Fed Signals More Steps to Spur Economy Amid Slower Growth. The Federal Reserve said the economy has slowed and foreshadowed new steps to boost the weakening expansion. “Economic activity decelerated somewhat over the first half of this year,” the Federal Open Market Committee said today at the conclusion of a two-day meeting in Washington. “The committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.”
• Knight(KCG) Market-Making Unit Says It Had 'Technical Issue'. Knight Capital Group Inc. (KCG) told some clients of its market-making unit that a “technical issue” was affecting its systems and advised them to route orders elsewhere as dozens of U.S. stocks swung more than 10 percent today. Knight, which helps execute billions of dollars in equity transactions every day, said the issue was confined to market making and other operations were unaffected. Its stock plunged as much as 26 percent as investors speculated on its role in the incident, which spurred concern that computers had distorted trading for the second time in two weeks. The incident, occurring after three Dow Jones Industrial Average stocks fluctuated in regular hourly patterns for a full trading day on July 19, may embolden critics of American market structure who say the computers that dominate trading have become too complex to control.
• U.S. Manufacturing Unexpectedly Shrinks for Second Month. American manufacturing unexpectedly contracted in July for a second month, reflecting a drop in orders that threatens to undercut a mainstay of the recovery. The Institute for Supply Management’s factory index was 49.8 last month, little changed from a three-year low of 49.7 reached in June, the Tempe, Arizona-based group said today. Economists surveyed by Bloomberg News projected a reading of 50.2, according to the median estimate, just above the 50 mark that separates expansions and contractions. The report showed bookings dropped for a second month, indicating Europe’s debt crisis and the looming U.S. government spending cuts and tax increases that constitute the so-called fiscal cliff are taking a toll on customers globally. Federal Reserve policy makers are meeting today to determine if the world’s largest economy needs another dose of stimulus as companies such as Cummins Inc. (CMI) lower sales forecasts. “We’ve seen slower growth in emerging markets, the recession in Europe -- all of that is still ever-present,” said Sam Bullard, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “Firms are holding pat right now.” Another report showed companies added more workers than projected in July. Payrolls climbed by 163,000 workers after a 172,000 gain the prior month, Roseland, New Jersey-based ADP Employer Services said. The median estimate of 38 economists surveyed by Bloomberg News called for an advance of 120,000.
• China’s Xi Warns Communists Not to Fall Into Abyss of Corruption. Chinese Vice President Xi Jinping, in line to take over leadership of the 82 million-member Communist Party later this year, warned in a speech that personal extravagances and corruption by cadres could undermine the party’s hold on power. “The ancients said that if history is any guide, for any country or household, austerity breeds success while luxury leads to failure,” Xi said in a June 28 speech published today in the party magazine Qiushi. “We Communists should heed this warning.”
• Metro Atlanta Voters Defeat Transportation Tax. Voters have rejected a penny sales tax referendum to pay for transportation projects in nine of 12 regions in Georgia, including in metro Atlanta, unofficial returns show. With 94 percent of precincts reporting, 63 percent of metro Atlanta voters rejected the tax, compared to 37 percent in favor. The penny sales tax to pay for billions in transportation projects over the next decade was a draw for many voters in Tuesday's primary election. The issue was on the primary ballot in 12 districts around the state, with voters in each region deciding whether to levy the tax to pay for road and transit projects in their communities. Statewide approval was not required. The Atlanta region stood the most to gain. Critics derided the proposal as an unfair tax on the poor that wouldn't deal with the problems of sprawl. Tuesday's vote "shows the power of the people," said Debbie Dooley, Georgia Tea Party Patriots state coordinator and an outspoken opponent of the measure. "They ran a top-down, PR campaign, whereas we ran a bottom-up, true grassroots political campaign," Dooley said Tuesday. "The people are sending a message, and elected officials would do well to take heed: You aren't getting any more of our tax dollars until you can show you're responsible and can be trusted with the money you have now."
• Police Chief's $204,000 Pension Shows How Cities Crashed. Stockton, California, Police Chief Tom Morris was supposed to bring stability to law enforcement when he was appointed to the job four years ago. He lasted eight months and left the now-bankrupt city at age 52 with an annual pension that pays more than $204,000 -- the third of four chiefs who stayed in the position for less than three years and retired with an average of 92 percent of their final salaries.
• Facebook(FB) Plunge Continues as Growth Concerns Persist. Facebook Inc. (FB) dropped as much as 3.9 percent to a record low, the fourth straight day of declines after the world’s largest social-networking service reported second-quarter results that showed slowing growth.

Wall Street Journal:

• Genetically Modified Tires. High yielding, genetically modified crops have transformed the economics of U.S. farming. But they also pack an unexpected punch: Their tougher stalks are puncturing tires and stranding farm equipment in the field.

MarketWatch:

• How to keep the young unemployed. Commentary: Government is doing everything it can.

CNBC.com:

• GM(GM) Sales Drop 6%; Ford(F) Sales Down 4%. All three U.S. automakers reported lower-than-expected July auto sales on Wednesday as high U.S. unemployment and weak consumer confidence kept would-be buyers on the sidelines.
• Where Are the Move-Up Home Buyers? Housing has never been more affordable, and yet home ownership is still falling and more Americans are renting.
• Latest Market Glitch Shows 'Trading Out of Control'. Wednesday morning's stock snafu had a familiar ring to it — mysterious volume in trades that simply could not have been made by a human comes surging out of nowhere, causing brief but acute market mayhem.

Business Insider:

• 50 Stocks That Hedge Funds Are Shorting Like Crazy.
• How The Global Economy Changed In One Month.
• The Asian Economy's 'Canary In The Coal Mine' Just Got Crushed. South Korean July exports plunged 8.8 percent from a year ago. Economists surveyed by Bloomberg were looking for a decline of 3.7 percent.
• Is Germany Preparing For A Spanish Default?

Zero Hedge:

• Beyond The BLS BS: New Online Help Wanted Ads Plunge The Most Since January 2009. (graph)
  
• Dan Loeb Lets Loose On Barack Obama.
• US Manufacturing Sector Contracts For Second Month In A Row, Misses Expectations Of Expansion. (graph)
• Investing Legend Louis Bacon Has Had Enough Of Algos And Central Planners, Calls It Quits.
• The PIIGS Are Rapidly Losing Their Leverage Over Germany.

Reuters:

• Fitch: Italy payment holidays default rate hits 10 pct.

Financial Times:

• Insurers Group Warns Against 'Too Big To Fail' Plan. International regulators' plans to treat global insurers as "too big to fail" might destabilize the financial system, according to the Geneva Association, a policy review group funded by the insurance business. Proposed rules might persuade insurers to cut their holdings of government bonds and bank-issued securities, to manage their "systemic risk" ranking; that would make it more difficult for banks and governments to refinance, citing the association.
• Bundesbank urges ECB to keep within remit. The head of Germany’s Bundesbank has warned the European Central Bank against straying beyond its remit and reminded the bloc’s monetary guardians of the importance of keeping Germany’s central bank onside.

Telegraph:

• Global manufacturing slows as euro crisis dents demand. Manufacturing contracted in China and Europe and slowed in the United States and Canada in July as the eurozone debt crisis dented global and domestic demand.

ORF Radio:

• Former ECB Chief Economist Juergen Stark said granting the European Stability Mechanism a banking license would violate European law, according to an interview. "This is a clear violation of European law because it means unlimited and indirect state funding by the European Central Bank," Stark said. "This has to be prevented."

Bundesbank Magazine:

• Weidmann Says ECB Mustn't Overstep Its Mandate. Interview with Jens Weidmann, President of the Deutsche Bundesbank, and Helmut Schlesinger, former Bundesbank President, published in the staff magazine of the Bundesbank on 27 July 2012.

Bild-Zeitung:

• Sixty-one percent of respondents in a survey commissioned by Bild-Zeitung agree with Economy Minister Philipp Roesler that a Greek exit from the euro area has "lost its terror." A majority also favor opposition parties.
  

La Tribune:

• Renault SA French new car registrations fell 16% in July, while those at PSA Peugeot Citroen slid 14.5%, citing official figures. French new car registrations as a whole fell 12% in July.
  

Bear Radar

Style Underperformer:

• Small-Cap Growth -.92%

Sector Underperformers:

• 1) Oil Tankers -3.10% 2) Airlines -2.60% 3) I-Banks -2.02%

Stocks Falling on Unusual Volume:

• KCG, TTMI, CNW, ABFS, NICE, JCP, HMC, GEOY, IVN, CLMT, TIVO, DRIV, FARO, TRLG, MGRC, CHEF, FIRE, ASCA, BBRG, SAVE, MAPP, BBOX, ININ, VRSK, DWA, TUDO, BMC, CRAY, SSYS, DTG, DVN, HOG, QEP, WXS, NRP, BRKR, DNB, DGI, BECN, ENR, KRA and PPO
  

Stocks With Unusual Put Option Activity:

• 1) GRMN 2) NYX 3) ALL 4) BBBY 5) HOG
  

Stocks With Most Negative News Mentions:

• 1) ALGT 2) BMC 3) SKYW 4) BA 5) AVP
  

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume
  

Bull Radar

Style Outperformer:

• Large-Cap Value +.18%

Sector Outperformers:

• 1) Telecom +1.17% 2) REITs +.84% 3) Tobacco +.59%

Stocks Rising on Unusual Volume:

• SBGI, HSP, AGN, CMCSA, CBG, SHPG, WWWW, CTRX, RATE, CODE, ALL, HBI, PXD, NCR, TROX and LH
  

Stocks With Unusual Call Option Activity:

• 1) RSH 2) HOG 3) AGN 4) NEON 5) HLF
  

Stocks With Most Positive News Mentions:

• 1) LPX 2) ALL 3) COP 4) COST 5) MCD
  

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Wednesday Watch

Evening Headlines
Bloomberg:

• Spain Introduces Regional Debt Ceilings to Achieve Budget Goals. Spain’s 17 semi-autonomous regions will have to comply with debt ceilings starting this year as Prime Minister Mariano Rajoy seeks to convince investors the nation can avoid a second bailout amid surging borrowing costs. “We are all going to comply with deficit targets,” Budget Minister Cristobal Montoro said late yesterday during a news conference following a meeting with regional finance chiefs in Madrid. Several regional representatives told reporters the new rules will force them to deepen budget cuts. Rajoy is trying to avoid a broader bailout after securing 100 billion euros ($123 billion) in European loans for Spain’s banks. The yield on its 10-year debt rose to a euro-era high of 7.75 percent on July 25 even as Rajoy announced his fourth austerity package since Dec. 30. It then fell after European Central Bank President Mario Draghi said last week he would do whatever is needed to protect the single currency, regaining 14 basis points yesterday to close at 6.75 percent.
  
• Draghi Reshapes ECB Crisis Pragmatism as Trichet’s Dogma Fades. Mario Draghi defied his own staff at his first meeting as European Central Bank president and voted to cut interest rates. As the crisis rages on nine months later, he is shaping the institution more and more in his own image. Last week Draghi signaled he is willing to take the ECB further than his predecessor, Jean-Claude Trichet, in building a firewall around Spain and Italy. Earlier last month, he jettisoned Trichet’s mantra that senior bondholders at crippled banks shouldn’t suffer losses. “The ECB has become more pragmatic under Draghi, many taboos have been shed and precedents set,” said Christian Schulz, a former ECB economist now working for Berenberg in London. “There are a number of reasons for that: the crisis has escalated to the level that the tools devised under Trichet are just not sufficient anymore, and a less dogmatic board also helps.”
• Europe Puts at 19-Month Low on Bets Draghi Will Deliver: Options. Bearish options on European stocks fell to the cheapest levels compared with bullish ones in 19 months as traders bet that European Central Bank President Mario Draghi will deliver on his promise to save the euro. Puts with an exercise price 10% below the iShares MSCI EAFE Index Fund cost 10.39 points more than calls betting on a 10% rally, according to data on one-month options complied by Bloomberg. That was the lowest level for the price relationship known as skew since December 2010.
  
• French Buck Giving Powers to EU Like Germany Lost in 1945 Defeat. To policy makers in Berlin, who have been the target of global pressure to do more to douse Europe’s financial crisis, France poses the bigger obstacle. French President Francois Hollande is resisting Germany’s call to give up more sovereignty in steps toward the political union that German leaders, including Chancellor Angela Merkel and Bundesbank President Jens Weidmann, say is key to putting the 17-nation currency bloc on sound footing.
• Protecting Bank Debt Would Cost EU Taxpayers, Report Says. Protecting senior unsecured bank debt may cost “more than EU taxpayers can bear” and investors should be liable for their decisions, a committee of advisers to the European Systemic Risk Board said in a report today. “The examples of Ireland and Spain suggest, already at the national level, that the full protection of all senior creditors may exceed the government’s fiscal capacity,” the Advisory Scientific Committee said in the report on its website. The committee also is “concerned” about the recapitalization of Spanish banks without determining the actual losses of the banks first. “Adding capital without knowing what the assets are actually worth and how much capital is really needed entails a serious risk that the funds may simply be lost as the necessary resolution of the banks is delayed further,” according to the report. The committee supported the creation of a European bank supervisor and a European Resolution Authority to deal with failing lenders. The authority should be financed primarily by a levy on banks, the committee said.
• Corn Extends Biggest Monthly Gain in 24 Years on U.S. Drought. Corn gained, extending the biggest monthly rally in more than two decades as the worst U.S. drought in half a century persists, threatening global supply. December-delivery corn gained as much as 1% to $8.13 a bushel on the Chicago Board of Trade after jumping to a record $8.205 yesterday. Futures, which surged 27% last month, the biggest monthly gain since 1988, traded at $8.115 at 8:11 am Singapore time.
• Netanyahu Says Israel Still Considering Attack on Iran. Israeli Prime Minister Benjamin Netanyahu said he’s still debating with government advisers whether to strike Iranian nuclear facilities. The premier spoke in an interview with Channel 2 television broadcast as U.S. Secretary of Defense Leon Panetta arrived in Israel from Cairo to meet him, Defense Minister Ehud Barak and other officials tomorrow. “I haven’t decided yet whether to attack,” Netanyahu said. “However, I see the commitment of this regime of ayatollahs to develop nuclear bombs that are meant to destroy us, and I won’t let that happen.”
• Komatsu Falls on Report Profit Declined on China. Komatsu Ltd. (6301), the world’s second- biggest maker of construction equipment, fell after a Nikkei newspaper report said the company’s first-quarter operating profit declined for the first time in 10 quarters. The stock fell as much as 3.8 percent to 1,696 yen and traded 3.2 percent lower at 9:33 a.m. in Tokyo trading, extending its loss this year to 5.2 percent. Komatsu’s operating profit probably fell about 20 percent to 56 billion yen ($714 million) in the April-to-June quarter after sales of construction equipment in China halved due to lower public works spending.
• Singh Answers Sought as Worst Power Crisis May Hurt Growth. Keeping the lights on has emerged as Indian Prime Minister Manmohan Singh’s most immediate challenge. The economy growing at its slowest pace in nearly a decade, the prospect of a drought, and having his government battered by 18 months of policy reversals and corruption allegations were bad enough. Two power-grid collapses in 36 hours have left 600 million people sweating through a failing monsoon, heaping more pressure on a prime minister whose legacy as an economic manager is coming under increasing scrutiny. “This looks even worse than it would normally because there’s an impression that India’s economy is falling apart right now,” said Surjit Singh Bhalla, chairman of New Delhi- based Oxus Fund Management, of this week’s power network failures.
• Sands China Says Macau Government Probes Data Transfer. Sands China Ltd. (1928), the Asian unit of Sheldon Adelson’s Las Vegas company, said its Venetian Macau Ltd. subsidiary is being investigated by the Macau government in connection with the transfer of some data to the U.S. The probe is related to the case of Steve Jacobs, the former Sands China chief executive officer who is suing the company, said company spokeswoman Melina Leong. The Macau government’s Office for Personal Data Protection notified the company of the probe, Sands China said in a statement to Hong Kong’s stock exchange today.
• China Home Prices Rise in Market ‘Turning Point,’ SouFun Says. China’s new home prices posted the biggest gain in more than a year, signaling a turning point for the nation’s property market, according to SouFun Holdings Ltd., the country’s biggest real estate website owner. Home prices rose 0.3 percent from June to 8,717 yuan ($1,369) per square meter (10.76 square feet), SouFun said in a statement today, based on its survey of 100 cities. That was the second monthly gain and the biggest rise since June 2011. China’s Premier Wen Jiabao said China will “unswervingly” implement property controls and prevent home prices from rebounding, the official Xinhua News Agency reported yesterday, citing a government meeting held on July 26. Home prices had been declining after the government placed restrictions on the number of properties people could buy in about 40 cities and raised down-payment requirements. “It is very clear that China’s property market is coming back,” said Vincent Mo, Chairman of SouFun, told Bloomberg Television today. The back-to-back monthly gain “showed the turning-point of China’s property prices,” he said. “It’s very difficult to expect the government’s policies to ease while home prices keep rising,” said Jack Gong, a Hong Kong-based property analyst at Jefferies Group Inc. “The policies in general are still tight, but there’s a lot of uncertainty in the fourth quarter.”

Wall Street Journal:

• Showdown Looms for ECB, Germans. The European Central Bank is primed for a debate this week over whether to use its printing press to save the euro, with Germany's conservative central bank positioned to determine the course of Europe's escalating debt crisis. The showdown pits ECB President Mario Draghi, a veteran Italian central banker who has headed the ECB since November, against Jens Weidmann, the 44-year-old Bundesbank president. Last week, Mr. Draghi said the ECB would "do whatever it takes to preserve the euro." The comments were viewed by investors as a signal that the central bank was poised to prop up government debt markets
• Group Gets U.S. License to Fund Syria Rebels. The U.S. has given a Washington-based group clearance to provide direct financial assistance to the Free Syrian Army, a new bid by the Obama administration to support Syria's opposition. The Treasury Department's Office of Foreign Assets Control approved a license last week allowing the Syrian Support Group "to engage in otherwise prohibited financial activities with the Free Syrian Army," Treasury spokesman John Sullivan said Tuesday. The license doesn't permit the group to ship military equipment or hardware, but it does authorize it to send financial aid.
• Jim DeMint: No Internet Taxation Without Representation. Subjecting online retailers to 10,000 local tax jurisdictions is a terrible idea.
• Payroll Tax Cut on Track to Quietly Expire. White House Isn't Pushing for an Extension and Both Parties Suggest They Would Go Along as Part of Bigger Tax Deal.
• Tehran Builds on Outreach to Taliban. Iran has allowed the Taliban to open an office in eastern Iran and discussed providing them with surface-to-air missiles, ramping up the potential for cooperation with the insurgents, according to senior Afghan and Western officials. Iran's shift came after the U.S. and Afghanistan sealed a long-term partnership agreement in May, and in an effort to expand its options for retaliation should its nuclear facilities be attacked, the officials said.
  

Business Insider:

• Thousands Of Companies Around The World Reveal The Truth About The Economy.
• GRANTHAM: One Of The Twin Pillars Of The Markets Is Looking Shaky.
• OUCH: South Korea PMI Sinks To 47.2, Production And New Orders Fall Sharply. (graph)
• How Taxmageddon Will Crush The American Family [Infographic].
• Study Debunks The Fundamental Idea Behind Universal Healthcare.
• What Millions Of Young People In Spain Really Think.
• Tour The Grand Streets Of China's Most Famous Ghost City.

Zero Hedge:

• Why Another Major China Stimulus Package Is Not Coming.
• China PMI Misses And Prints Lowest In 8 Months With 10 Of 11 Sub-Indices Contracting. (graph)
  
• The European Tinder Box.

IBD:

• The Subprime President. Obama also nationalized student loans, a subprime category of its own, given that all student buyers are untested. This move drove private lenders who relied on market standards out of the business and gave government a monopoly over subprime students. Educational financing since then has evolved into a bubble, and universities have read that as an incentive to raise tuition rates. As a result, education is no longer about balancing risk with potential reward but, like housing, about "giving everyone a college education" regardless if everyone would benefit. All this undercuts a market of customers who have saved money, built wealth and acquired the means to repay. It flips the meaning of "success" and creates an upside-down economy built not on value, but on dictated results that in the end are unsustainable.
• Thoratec's(THOR) Pump Keeps Hearts Beating Longer.

Forbes:

• Where's The Outrage From Young Americans About Obama's Health Reforms? by Scott W. Atlas, M.D.
  

MSN Money:

• US housing mess: It's not the worst. You've heard that all real estate is local, but the bubble has been global -- though certainly not uniform. Take a look at how other countries have fared.

AP:

• US judge strikes down EPA water rules for mines. The Environmental Protection Agency overstepped its powers by setting up water-quality criteria for coal mining operations in Appalachia, a federal judge ruled Tuesday. U.S. District Judge Reggie B. Walton in Washington ruled that the EPA infringed on the authority given to state regulators by federal clean- water and surface-mining laws. A coal mining industry coalition sued the EPA and Administrator Lisa Jackson, and the lawsuit was joined by West Virginia and Kentucky. The ruling represents the latest setback to the Obama administration's attempts to crack down on mountaintop removal coal mining.

Reuters:

• Oakland leaders urge broad battle with Goldman Sachs(GS). Oakland leaders took their financial troubles to the doorstep of Goldman Sachs on Tuesday, urging other cities to join them in fighting a bank that has become a lightning rod for criticism of the U.S. financial system. Oakland is trying to get out of a Goldman-brokered interest rate swap that is costing the cash-starved city some $4 million a year. The swap, entered into 15 years ago as part of a bond sale to hedge against rising interest rates, has turned sour for Oakland now that interest rates are near zero.
• LabCorp(LH) target of massive private equity buyout -report. A private equity consortium is aiming to scoop-up lab-testing company, Laboratory Corporation of America Holdings in a huge leveraged buyout and take it private, Mergermarket reported, quoting sources familiar with the situation.
• US office building sales rebound hits a speed bump. The rebound in U.S. office building sales hit a speed bump in the second quarter as weak demand for office space made it more difficult for prospective buyers to predict the income from their investments.
• BMC Software(BMC) misses estimates on lower bookings. BMC Software Inc posted quarterly results below analysts' expectations as a strong dollar and economic headwinds dragged down enterprise business software bookings, sending its shares down more than 3 percent in extended trade.

Financial Times:

• Fears grow for rise in food prices. The increase in grain prices is already being felt around the world. In Indonesia, the tofu industry has threatened to strike over rising soyabean prices; in Mexico, the cost of corn tortillas is on the rise; and Iran last week witnessed a rare protest over the cost of chicken. But the economic effects of the sharp rise in agricultural commodities have barely begun. A jump of 30-50 per cent in benchmark corn, wheat and soyabean prices has revived memories of the world’s last food crisis in 2007-08, and large consumers from Egypt and Morocco to South Korea and Taiwan are bracing for a renewed bout of food inflation.

Telegraph:

• UBS(UBS) to sue Nasdaq(NDAQ) over Facebook(FB) IPO. UBS is threatening to sue Nasdaq after technical problems at the exchange cost it nearly £230m on the Facebook IPO.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -1.0% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 160.0 +1.0 basis point.
  
• Asia Pacific Sovereign CDS Index 128.25 -1.75 basis points.
  
• FTSE-100 futures -.41%.
  
• S&P 500 futures -.07%.
  
• NASDAQ 100 futures +.04%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (TWX)/.58
• (MRO)/.59
• (AVP)/.22
• (OC)/.64
• (HOG)/1.05
• (BKW)/.13
• (ENR)/1.31
• (DTG)/1.24
• (ADP)/.53
• (CMCSA)/.47
• (H)/.22
• (OSG)/-1.34
• (AMT)/.77
• (CAR)/.70
• (FSLR)/.93
• (IPI)/.25
• (RGR)/.80
• (GGP)/.21
• (MET)/1.24
• (WMB)/.25
• (TSO)/2.29
• (GMCR)/.49
• (PRU)/1.54
• (D)/.60
• (SPW)/.74
• (ICE)/1.93
• (MA)/5.58
  

Economic Releases
8:15 am EST

• The ADP Employment Change for July is estimated to fall to 120K versus 176K in June.

10:00 am EST

• ISM Manufacturing for July is estimated to rise to 50.2 versus 49.7 in June.
• ISM Prices Paid for July is estimated to rise to 40.0
  
• Construction Spending for June is estimated to rise +.4% versus a +.9% gain in May.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,000,000 barrels versus a +2,717,000 barrel gain the prior week. Distillate supplies are estimated to rise by +1,100,000 barrels versus a +1,708,000 barrel gain the prior week. Gasoline inventories are estimated to rise by +800,000 barrels versus a +4,134,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.5% versus a +1.0% gain the prior week.
  

2:15 am EST

• The FOMC is expected to keep the benchmark fed funds rate at .25%.

Afternoon

• Total Vehicle Sales for July are estimated to fall to 14.0M versus 14.05M in June.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Eurozone Manufacturing PMI data, Final Markit US PMI for July and the weekly MBA mortgage applications report could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and financial 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.