Bear Radar

Style Underperformer:

• Large-Cap Value (-.19%)

Sector Underperformers:

• 1) Tobacco -1.27% 2) Medical Equipment -1.19% 3) Defense -1.09%

Stocks Falling on Unusual Volume:

• BCR, OLN, MMSI, CAT, BAS, CSTR, BIG, AVID, EZPW, HGSI, HWAY, BJRI, GPN, ACO, EW, MOH, SFG, COL, NRGY, RAI, CALX and USG
  

Stocks With Unusual Put Option Activity:

• 1) ERTS 2) CX 3) ESRX 4) MHS 5) ONTY
  

Stocks With Most Negative News Mentions:

• 1) SATC 2) AF 3) DSX 4) THC 5) TXI
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth (+.62%)

Sector Outperformers:

• 1) Disk Drives +3.01% 2) Computer Hardware +2.01% 3) Restaurants +1.50%

Stocks Rising on Unusual Volume:

• SWKS, SNDK, WDC, CPX, UDRL, MCD, CMG, HEES, VRUS, AIXG, DOV, ATHN, CPHD, RYAAY, CYMI, TZOO, APKT, ACTG, CVV, ESRX, INFA, IDXX, PLCM, VSAT, RPXC, STX, CAVM, UTEK, HAS, IIT, RRR, ACTG, NCR, SLB, MHS, CB, FFIV, RMBS, ZINC, MOS, RVBD, GDI and CPX
  

Stocks With Unusual Call Option Activity:

• 1) ESRX 2) DHI 3) MCD 4) SWKS 5) ALU
  

Stocks With Most Positive News Mentions:

• 1) SNDK 2) AAPL 3) GOOG 4) WMT 5) BA
  

Charts:

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

Friday Watch

Evening Headlines

Bloomberg:

• EU Leaders Offer $229 Billion in New Greek Aid. Euro-area leaders redoubled efforts to end the 21-month sovereign bond crisis as they erected a firewall around Spain and Italy and risked temporary default to lighten Greece’s debt burden. After eight hours of talks in Brussels, leaders announced 159 billion euro ($229 billion) in new aid for Greece late yesterday and cajoled bondholders into footing part of the bill. They also empowered their 440-billion euro rescue fund to buy debt across stressed euro nations after a market rout last week sparked concern the crisis was spreading. The fund can also aid troubled banks and offer credit-lines to repel speculators. The euro strengthened as officials drew concessions from Germany, the European Central Bank and investors for a twin- track strategy to support Greece and ensure its woes don’t spread.
• Spies in China Said to Be Behind IMF Hacking. Investigators probing the recent ransacking of International Monetary Fund computers have concluded the attack was carried out by cyber spies connected to China, according to two people close to the investigation. Evidence pointing to China includes an analysis of the attack methods, as well as the electronic trail left by hackers as they removed large quantities of documents from the IMF’s computers. The multistaged attack, which used U.S.-based servers as part of their equipment, ended on May 31, people involved in the investigation said on the condition they not be identified because they aren’t authorized to speak about it. Their conclusion is likely to be a major test for the new IMF chief, Christine Lagarde, who this month appointed Chinese economist Zhu Min as deputy managing director, giving China a much expanded role in the institution. “There are some very big questions about the role that China wants to play in the global economic system and what role it can play given some of its behavior,” said C. Fred Bergsten, who heads the Washington-based Peterson Institute for International Economics. The timing of the attack and China’s lobbying for more influence at the Fund appear to overlap, creating a potentially embarrassing situation for China among the IMF’s 186 other members, including the U.S. “As an intelligence professional, I stand back in absolute awe and wonderment at the Chinese espionage effort against the United States of America,” Gen. Michael Hayden, the former CIA director, said at cyber security conference last year. “It is magnificent in its breath, its depth and its efficiency.”
• Democrats Balk at Potential U.S. Debt-Limit Deal. Democrats reacted angrily to reports that the White House is cutting a deal with House Republicans to boost the U.S. debt ceiling and reduce deficits by about $3 trillion over 10 years without immediate revenue increases. The officials, who described outlines of the plan on condition of anonymity, said the leaders were told it would cut spending while calling for a future tax overhaul that could raise $1 trillion in additional revenue. Obama met with Democratic leaders from the House and Senate at the White House for about two hours. The administration and House Republicans remain divided over the fate of the cuts for top earners passed during President George W. Bush’s administration and how much revenue would be raised to trim the long-term federal deficit, said two Democratic officials familiar with the negotiations. Obama wants spending cuts to be gradual, with the fullest effects not felt until 2014 and beyond, to avoid shaking the still-fragile recovery, the officials said, briefing reporters on condition of anonymity to discuss the closed-door talks. While discretionary spending cuts could be immediate, changes in the tax code and entitlement programs would be worked out over the next year, the officials said.
• Qaddafi Increases Chances He Could Stay. The U.S., the U.K., Italy and France now say they’re willing to accept an outcome in Libya that would allow Muammar Qaddafi avoid exile or a trial on war crimes charges. After conducting four months of daily bombings, NATO-led allies are willing to let Qaddafi stay in Libya on the condition that he gives up power.
• Shrinking Cattle Herd Signals Beef Rising to Record, Higher Wendy's Costs. The U.S. cattle herd as of July 1 probably shrunk to the smallest on record, signaling tightening beef supplies and higher costs for shoppers and companies from Tyson Foods Inc. (TSN) to Wendy’s Co. Ranchers held 99.39 million head of cattle as of July 1, down 1.4 percent from a year earlier, according to the average estimate of nine analysts surveyed by Bloomberg News. That would be the smallest July herd since at least 1973, when the U.S. Department of Agriculture data begins. The government plans to release its semiannual report on the herd at 3 p.m. today in Washington. “If you’ve got fewer cattle, ultimately you’re going to have less beef,” Ron Plain, a livestock economist at the University of Missouri in Columbia, said yesterday in a telephone interview. “We’re going to have new record cattle and beef prices in 2012.”
• H-P(HPQ) Authorizes $10 Billion in New Stock Buyback. Hewlett-Packard Co. (HPQ), the world’s largest computer maker, plans to buy back $10 billion of its stock, part of an effort to buoy its languishing shares. The plan comes in addition to the an earlier buyback plan announced last year, Palo Alto, California-based Hewlett-Packard said today in a regulatory filing.
• Morgan Stanley(MS) Banking, Debt Trading Surpass Goldman First Time. Morgan Stanley (MS)’s second-quarter revenue from both investment banking and fixed-income trading beat Goldman Sachs Group Inc. (GS)’s for the first time on record. Fixed-income trading generated $2.09 billion for Morgan Stanley and investment banking brought in $1.47 billion, while Goldman Sachs reported $1.6 billion and $1.45 billion, respectively. New York-based Morgan Stanley has never outperformed its larger rival in both those businesses simultaneously in the 11 years it’s reported fixed-income trading results, company filings show.
• Goldman(GS) Model Championed by Blankfein Planted Seeds of Distress. Bungled public relations and a thirst to find a scapegoat for the worst U.S. economic crisis since the Great Depression may explain some of the shift in the firm’s reputation under Chairman and Chief Executive Officer Lloyd C. Blankfein. The mistrust and waning investor faith in the company’s prospects are rooted in something more fundamental: Blankfein’s reliance on trading and investing the bank’s own capital to reap profits, even if that meant sometimes competing with clients.
• Express Scripts's(ESRX) Bid for Medco(MHS) Will Get Close Scrutiny From Regulators. Express Scripts Inc.’s bid to buy Medco Health Solutions Inc. may undergo an extended antitrust review at the U.S. Federal Trade Commission, where close examination of companies that manage prescription-drug benefits stretches back more than a decade.
• Apple(AAPL) Said to Consider Making Bid for Hulu. Apple Inc. (AAPL), with $76.2 billion in cash and securities on its books, is considering making a bid for the Hulu online video service, two people with knowledge of the auction said. Apple, the world’s second-most-valuable company, is in early talks that may lead to an offer for Hulu, said the people, who weren’t authorized to speak publicly. Hulu would give Apple a new subscription service and represent a possible challenge to Netflix Inc. (NFLX) Hulu’s media- company owners, Walt Disney Co. (DIS), News Corp. (NWSA) and Comcast Corp. (CMCSA)’s NBC Universal, are offering suitors a five-year extension of program rights, including two years of exclusive access, people familiar with the matter said earlier this week. “Part of the ecosystem of Apple’s future is to include more video,” said Scott Sutherland, Wedbush Securities Inc. analyst in San Francisco who recommends buying the stock. “It’s something they are focused on.” Hulu’s price tag could exceed $2 billion, according to data compiled by Bloomberg and SNL Kagan.
• China One-Year Swap Jumps to Record as Maturing Debt Declines.
• NFL Owners Vote to End Four-Month Lockout, Pending Players' Ratification. National Football League owners voted 31-0 for a new 10-year labor agreement and now await players’ approval so the league can reopen for business next week after a four-month shutdown. The vote, taken today in Atlanta, moved the NFL closer toward ensuring that the regular season of the richest and most-watched U.S. sport will begin on time on Sept. 8.
• Emerging-market equity funds reported withdrawals of $1.1 billion in the week ended July 20, snapping three straight weeks of new inflows, Citigroup Inc.(C) said in a report today.
  

Wall Street Journal:

• Europe Launches a Massive Greek Bailout. Euro-zone leaders agreed Thursday on a new €109 billion ($157 billion) bailout for Greece and new steps to prevent its debt crisis from metastasizing across the Continent—in a plan expected to trigger the first debt default by a nation using the common currency. The meeting also produced a stark and open-ended declaration: The wider euro zone is committed to financing countries that take bailouts—thus far, Greece, Ireland and Portugal—for as along as it takes them to regain access to private lenders. The move is a bold bid by Europe's leaders to corral an 18-month-old debt crisis that is veering dangerously out of control. Still, it remains to be seen whether the tourniquet will hold. Even after the new plan, Greece will have a staggering load of debt.
• A Guide to the New Deal in Athens: How a 'Selective Default' Works.
  
• Uncle Sam Weighs Landlord Role to Ease Housing Slump. The Obama administration is examining ways to pull foreclosed properties off the market and rent them to help stabilize the housing market, according to people familiar with the matter. While the plans may not advance beyond the concept phase, they are under serious consideration by senior administration officials because rents are rising even as home prices in many hard-hit markets continue to fall due to high foreclosure levels.
• Justice Department Prepares Subpoenas in News Corp.(NWSA) Inquiry. The Federal Reserve Bank of New York again is facing scrutiny over stockholdings held by a senior official during the 2008 financial crisis. Then-New York Fed President Timothy Geithner issued a waiver that allowed William Dudley—executive vice president of the regional Fed bank's markets group—to work on the controversial bailout of American International Group Inc. even though he held shares in the company, according to a congressional audit report released Thursday.
• Google+ Pulls In 20 Million In 3 Weeks. When Google Inc.(GOOG) launched its Google+ social-networking site three weeks ago, executives handed out sailor hats to the hundreds of employees working on the project, symbolizing their year-long journey to that point. So far, the sailing has been mostly smooth. On Wednesday, Web-traffic watcher comScore Inc. estimated Google+ has had 20 million unique visitors since its launch, including five million visitors from the U.S. A Google spokeswoman declined comment.

CNBC:

• Microsoft(MSFT) Tops Forecasts But Soft PC Sales Hurt. Microsoft topped earnings forecasts, helped by sales of its Office software and Xbox game consoles, but profit from its core Windows fell on soft PC sales.

Business Insider:

• U.S. Agents Arrest Nearly 2,000 People Tied to Mexico's La Familia Drug Cartel.

Zero Hedge:

• The Fatal Flaw In Europe's Second "Bazooka" Bailout: 82 Million Soon To Be Very Angry Germans, Or How Euro Bailout #2 Could Cost Up To 56% Of German GDP.

Forbes:

• Here's A Real Stimulus Plan - Restoring Oil and Gas Production in the Gulf of Mexico Would Add 230,000 Jobs. In a report on the effects of the Obama Administration’s continuing non-moratorium on drilling in the Gulf of Mexico, energy consultancy IHS-CERA revealed today its findings that returning oil and gas activity to the pace that it was on before the BP oil spill would result in the creation of 230,000 new jobs in 2012 and add $44 billion to the U.S. economy.

CNNMoney:

• U.S. Loses $1.3 Billion in Exiting Chrysler. U.S. taxpayers likely lost $1.3 billion in the government bailout of Chrysler, the Treasury Department announced Thursday.

Hedge Fund Law Blog:

• Hedge Fund Registration Rules Finalized. In general the following are the registration requirements/exemptions for asset managers:
  

Neal Boortz:

• The Economy Stalled After Obamacare Passed. A few reasons as to why ObamaCare discourages employers from hiring: Businesses with fewer than 50 workers have a strong incentive to maintain this size, which allows them to avoid the mandate to provide government-approved health coverage or face a penalty; Businesses with more than 50 workers will see their costs for health coverage rise—they must purchase more expensive government-approved insurance or pay a penalty; and Employers face considerable uncertainty about what constitutes qualifying health coverage and what it will cost. They also do not know what the health care market or their health care costs will look like in four years. This makes planning for the future difficult.
  

The Blaze:

• Is The White House Programming A News Channel? Host Who Was Most Critical of Obama Says Head of MSNBC Removed Hm Because Washington Didn't Like His 'Tone'. (video)

Financial Times:

• European Banks Could Face $23 Billion Writedown on Greece.European banks would need to write down as much as $23 billion on holdings of Greek debt should they have to take a 20% haircut on the bonds, citing its own analysis of the 90 banks recently subjected to stress tests. Auditors have warned banks to make provisions for losses on Greek bonds in their second-quarter results, arguing lenders should absorb losses now because almost any proposals for dealing with Greek restructuring would lessen the value of their bondholdings.
• Bond Swap Plan Is For Greece and Greece Only. Private creditor participation in Greece’s latest rescue programme will be very strictly limited to the Greek crisis and will be specifically excluded as a model for any other eurozone country in financial difficulties.

Telegraph:

• European Deal Could Lead to Two-Speed Europe. European leaders thrashed out an agreement to save the stricken euro last night, with a major step towards a full economic union in which taxpayers in rich nations would cover the spending of poorer ones. The attempt to bail-out Greece and other struggling eurozone countries raised the prospect of a two-speed European Union with far closer ties between countries using the euro compared with those, such as Britain, that remained outside. Nicolas Sarkozy, the French president, said the deal had pulled the eurozone back from the brink of disaster and laid foundations for the creation of an EU “economic government”. He hailed it as “a historic moment” that would provide “bold and ambitious” plans for the creation of an embryonic EU treasury in the form of a European Monetary Fund. “By the end of the summer, Angela Merkel and I will be making joint proposals on economic government in the eurozone. Our ambition is to seize the Greek crisis to make a quantum leap in eurozone government,” he said. Even large euro countries such as Italy and Spain have seen their borrowing costs jump, raising fears of a financial crisis that could destroy the single currency. In response, eurozone leaders meeting in Brussels were drawing up a deal that would effectively use money from successful northern economies such as Germany to support the budgets of indebted nations in southern Europe. The agreement being discussed last night will hugely expand the role of a €440  billion (£389 billion) eurozone emergency bail-out fund, effectively creating a European Monetary Fund. The fund will be able to make “precautionary” loans to eurozone members, which they could use instead of borrowing money from the markets. It will also be able to make loans to recapitalise banks in the weaker economies and buy back government bonds from private investors. Angela Merkel, the German Chancellor, was forced to cave in to French demands to significantly extend the role of the EFSF, to which Germany provides more than a quarter of the funding. German officials said Mrs Merkel was braced for a major political row as taxpayers in Germany recoiled from a step that will redistribute their money to highly indebted Mediterranean countries.

Caixin:

• Bank of China Ltd. may be selected by the Basel Committee on Banking Supervision as one of the world's systemically important banks and face higher capital requirements, citing a person close to the Chinese lender.

South China Morning Post:

• SMEs Heading for Financial Collapse, Beijing Warned. A leading Chinese business lobby on the mainland has raised the alarm over the looming failure of the nation's small and medium-sized private enterprises, urging the central government to take concrete measures to help the ailing sector.

China Daily:

• China's export growth will "decelerate" in coming months which may cause some factories to close, citing Zhang Ji, director general of the Ministry of Commerce's mechanical, electronic and high-tech industries department. As domestic and global business conditions deteriorate, some manufacturers and exporters might struggle and some will go bankrupt, Zhang was quoted as saying. Factors including rising labor and raw material costs, yuan appreciation and tighter monetary policy will continue to hurt China's exports, the official said.

Evening Recommendations
Citigroup:

• Reiterated Buy on (GR), raised estimates, boosted target to $118.
• Reiterated Buy on (NUE), target $53.
• Reiterated Buy on (CBE), target $71.
  

Crowell, Weedon:

• Reiterated Buy on (CAKE), target $36.
  

Night Trading

• Asian equity indices are unch. to +1.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 115.0 -4.0 basis points.
  
• Asia Pacific Sovereign CDS Index 119.25 -3.75 basis points.
  
• S&P 500 futures +.25%.
  
• NASDAQ 100 futures +.13%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (MCD)/1.28
• (APD)/1.46
• (STI)/.31
• (IDXX)/.72
• (VZ)/.55
• (COL)/1.04
• (CAT)/1.74
• (FLIR)/.35
• (HON)/.98
• (SLB)/.85
• (GE)/.32
• (CKH)/.68

Economic Releases

• None of note

Upcoming Splits

• (CLH) 2-for-1
  

Other Potential Market Movers

• None of note

BOTTOM LINE: Asian indices are higher, boosted by commodity and financial shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.

Stocks Surging Into Final Hour on Plunging Eurozone Debt Angst, More US Debt Ceiling Optimism, Less Financial Sector Pessimism, Buyout Speculation

Broad Market Tone:

• Advance/Decline Line: Higher
  
• Sector Performance: Most Sectors Rising
  
• Volume: Above Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 17.66 -7.70%
  
• ISE Sentiment Index 135.0 -33.17%
  
• Total Put/Call .71 -10.13%
  
• NYSE Arms .79 -13.47%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 92.73 -1.91%
  
• European Financial Sector CDS Index 139.83 -2.90%
  
• Western Europe Sovereign Debt CDS Index 290.83 -1.91%
  
• Emerging Market CDS Index 220.11 -3.18%
  
• 2-Year Swap Spread 25.0 -2 bps
  
• TED Spread 22.0 -2 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .03% +1 bp
  
• Yield Curve 260.0 +3 bps
  
• China Import Iron Ore Spot $174.10/Metric Tonne +.58%
  
• Citi US Economic Surprise Index -93.80 +.6 point
  
• 10-Year TIPS Spread 2.38% +7 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +120 open in Japan
• DAX Futures: Indicating +38 open in Germany

Portfolio:

• Higher: On gains in my Tech, Biotech, Retail and Medical sector longs
  
• Disclosed Trades: None
  
• Market Exposure: 100% Net Long

BOTTOM LINE: Today's overall market action is bullish as the S&P 500 trades near session highs on plunging eurozone debt angst, more US debt ceiling optimism, financial sector strength, buyout speculation and earnings optimism. On the positive side, Road & Rail, Bank, I-Banking, Tobacco, Homebuilding, Construction, Paper, Steel, Defense, Energy, Semi and Biotech shares are especially strong, rising more than +2.0%. (XLF) has substantially outperformed throughout the day again. The Transports are also relatively strong. The France sovereign cds is dropping -2.91% to 100.0 bps, the Spain sovereign cds is down -9.30% to 309.34 bps, the Italy sovereign cds is down -12.05% to 252.50 bps, the Belgium sovereign cds is falling -19.72% to 152.77 bps, the Ireland sovereign cds is falling -13.89% to 912.76 bps, the Portugal sovereign cds is falling -13.37% to 946.27 bps, the Greece sovereign cds is falling -14.5% to 2,027.80 bps and the UK sovereign cds is declining -3.29% to 66.71 bps. Moreover, the Eurozone Investment Grade CDS Index is dropping -4.5% to 94.54 bps. Spanish and Italian equities surged around +3.0% today, finishing at session highs. Gold is falling -.81% and lumber is gaining +1.5%. On the negative side, Education, Networking, Disk Drive and Computer Hardware shares are lower on the day. Tech stocks, in general, are lagging badly today. Oil is rising +1.0% and copper is falling -1.13%. Rice is rising +.48%, hovering near a multi-year high, and has soared almost +30.0% in about 2 weeks. The US price for a gallon of gas is +.01/gallon today at $3.69/gallon. It is up .55/gallon in less than 5 months. Chinese and Indian equities were lower again overnight and have been unable to rally with the rest of the world over the past two days. The large decline in many key eurozone sovereign cds is a large positive even as the longer-term debt problems in the region loom as large as ever. US stock earnings have been surprisingly strong so far, notwithstanding the recent downtick in global economic activity. I suspect any US debt ceiling deal will occur next week at the earliest, notwithstanding today's NYT report. Any solution to this issue would provide another upside catalyst for stocks. However, I continue to believe the slowing growth and rising inflation in key emerging markets remains more of an issue than is currently perceived. Two of my longs, (SXCI) and (VRX) are making record highs today. I still see substantial upside for these shares over the longer-term. I expect US stocks to trade mixed-to-higher into the close from current levels on plunging eurozone debt angst, more US debt ceiling optimism, financial sector strength, short-covering, bargain-hunting, buyout speculation, earnings optimism and technical buying.

Today's Headlines

Bloomberg:

• Euro-Area Leaders May Accept Greek Default. Euro-area leaders may accept a temporary Greek default and widen the scope of their rescue fund as officials intensify efforts to resolve the region’s 21-month sovereign debt crisis. With Greece being charged about 35 percent to borrow for two years, government chiefs meeting in Brussels are devising a second aid package that could tip it into default for a few days. They may also cut interest rates on loans to Greece, Portugal and Ireland to about 3.5 percent and could double the repayment time to at least 15 years. Europe’s main rescue fund, boosted just last month to 440 billion euros ($632 billion), may be allowed to buy bonds directly from investors, help recapitalize banks and offer International Monetary Fund-style precautionary credit-lines to repel speculative attacks. The euro strengthened as officials worked on a twin-track strategy to help Greece and set up a bond-buying firewall to protect Spain and Italy. The summit is the latest attempt to fix a crisis that is now threatening to spread to the core of the euro region and this week drew calls for tougher action from U.S. President Barack Obama. “The challenges at hand have shown the need for more far- reaching measures,” the leaders said in a draft statement prepared for their summit. “We reaffirm our commitment to the euro and to do whatever is needed to ensure the financial stability of the euro area as a whole.”
• Euro Leaders May Avoid Swaps Trigger as They Weigh Default. European leaders meeting in Brussels to resolve the 21-month-old sovereign debt crisis may avoid triggering credit-default swaps on Greece if they agree to a plan that’s not binding on bondholders. A credit event enabling buyers of protection to seek compensation from swaps sellers wouldn’t occur if changes to the terms of Greece’s government bonds were voluntary, according to the International Swaps & Derivatives Association. The cost of insuring against a default by Greece plunged by the most ever as details of a draft plan started to emerge. Credit-default swaps on Greek bonds dropped 317 basis points to 2,000 as of 4:30 p.m. in London, the lowest level in more than two weeks, according to CMA. That still signals an 81 percent chance of default within five years. The record-high was 2,568 on July 18. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments fell 24 basis points to 257, down from a record 306 basis points July 18. Credit swaps protecting Irish debt fell 156 basis points to 909, while contracts tied to Portuguese bonds declined 155 to 945, dropping below the 1,000 basis-point mark for the first time in two weeks, CMA prices show. The cost of protecting European corporate bonds also fell, with the Markit iTraxx Crossover Index of swaps on 40 mostly junk-rated companies slumping 19 basis points to a two-week low of 420 basis points, according to JPMorgan Chase & Co. The Markit iTraxx Financial Index linked to the senior debt of 25 banks and insurers dropped 11 basis points to 164.
• Euro Rises to Two-Week High on Bets Greek Default May Contain Debt Crisis. The euro advanced to the highest in two weeks against the dollar as officials said European governments may expand the region’s bailout fund and accept a temporary Greek default, reducing contagion concern. “Whatever it is and any imperfections that are in it, we’ve got a deal,” said Greg Anderson, a senior currency strategist at Citigroup Inc. in New York. “The euro isn’t going to break apart this weekend, or anything like that. We’ve got a short-covering rally that removes the break-up premium from the euro.”
• U.S. Economic Indicators Post Meager Gain. The index of U.S. leading indicators rose in June, confirming the Federal Reserve’s forecast that the economy will pick up in the second half of the year. The Conference Board’s gauge of the outlook for the next three to six months climbed 0.3 percent after a 0.8 percent gain in May, the New York-based research group said today. Jobless claims rose more than forecast and consumer confidence stagnated last week, while manufacturing in the Philadelphia area rebounded this month, other reports showed. Cheaper fuel costs, an easing of supply bottlenecks after the Japan earthquake and better weather may combine to help give the recovery a boost. At the same time, a reluctance to ramp up hiring and limited income growth may restrain consumer purchases, the biggest part of the economy. The economy “is not falling apart but not showing any great signs of reacceleration either,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York. “We’re in the doldrums. It is consistent with sluggish growth.”
• Oil Rises to 1-Month High on Manufacturing Index, Europe Debt Optimism. Crude oil surged to a one-month high after manufacturing in the Philadelphia area rebounded and on reports European Union officials have come up with a plan for the region’s debt crisis, bolstering the euro. Crude for September delivery rose $1.23, or 1.3 percent, to $99.63 a barrel at 11:07 a.m. on the New York Mercantile Exchange.
• Morgan Stanley(MS) Shares Surge Most in Two Years. Morgan Stanley rose the most in more than two years in New York trading after reporting a second- quarter loss that was smaller than analysts estimated and the only gain in trading revenue among major U.S. banks. Morgan Stanley climbed as much as 9.1 percent after posting a net loss of 38 cents a share, smaller than the 61-cent average estimate of 18 analysts surveyed by Bloomberg.
• Exxon Mobil(XOM) Seeks More Shale-Gas Acquisitions as Texas Wells Pump Profits. Exxon Mobil Corp. (XOM), the largest U.S. natural-gas producer since last year’s purchase of XTO Energy Inc., is evaluating more acquisitions with an eye toward expanding its gas holdings. Exxon is assessing targets in more than a dozen gas-rich shale-rock formations worldwide, Jack Williams, president of the Irving, Texas-based company’s XTO unit, said yesterday in an interview. The company has spent almost $3 billion to amass shale leases in Texas, Pennsylvania, Arkansas and Louisiana since closing the $34.9 billion purchase of XTO in June 2010. The company’s desire for additional gas comes amid a series of multibillion-dollar shale transactions.

Wall Street Journal:

• Eurozone Moves Towards Greek Deal. European negotiators were homing in Thursday on ways to reduce Greece's debt burden while containing the possible knock-on effects to other weak economies in the 17-nation euro zone, after the way to a deal was paved by an accord Wednesday night in Berlin by the German and French leaders. However, euro-zone leaders appear unlikely to agree on the overall size of a new bailout package for Greece at their summit Thursday even as they discussed specific terms of the deal, according to a revised draft statement expected to be released after the summit.
• As Cotton Unravels, Clothing Makers Revisit Pricing. After hitting historic highs this spring, cotton prices are plunging, the result of higher production and lower demand. It's an about-face for clothing makers that spent the last year grappling with higher costs and how much, if any, could be passed along to consumers. Now, retailers are wondering if the lower cotton prices, off 53% since their March 4 peak, will last or if the rollercoaster ride will continue.
• LBO, Recession Singe Quiznos. Now the company finds itself on the brink of default, also thanks to sour relations with franchise owners, costly rents and stepped-up competition from rivals like Subway. The chain now has about 3,500 stores, down from nearly 5,000 before the recession.
• FEC: John Edward's Campaign Owes $2.3 Million. The Federal Election Commission said Thursday that John Edwards’s 2008 presidential campaign owes the U.S. Treasury $2.3 million. The FEC said the campaign, which received $12.9 million in federal funds for the 2008 Democratic primaries, understated its cash balance and overstated its expenses. The matter is separate from the felony charges against Mr. Edwards — some based on alleged violations of campaign finance law — involving the cover-up of an extramarital affair.
• Express Scripts(ESRX) to Buy Medco(MHS) for $29.1 Billion. Express Scripts Inc. agreed to buy Medco Health Solutions Inc. for $29.1 billion in cash and stock, a deal that combines two of the largest U.S. pharmacy-benefit managers at a time when health-care services companies are searching for new opportunities in the face of sweeping industry changes.
• China Banking Regulator Steps Up Risk Controls on Local Government Loans. China’s banking regulator said it will step up oversight of local government financing vehicle loans and property-related credit in the nation’s smaller cities in the second half of this year. Banks should control the risks of new loans tied to the financing vehicles through “strategic cooperation” with local governments, stronger management of land-backed lending and accurately assigning risk-weightings based on actual cash coverage of projects, the regulator said. The statement posted on the China Banking Regulatory Commission’s website yesterday cited a speech by Chairman Liu Mingkang.

MarketWatch:

• NYC Mayor Bloomberg Gives $50M to Fight Against Coal Plants.
• The Intermediate-Term is Trending Higher For Stocks, But Lack of Volume a Concern.
• N.Y. Times(NYT) Prompts Investment Questions.
  

Business Insider:

• Report: Obama and Boehner Near Major Deal - White House, Boehner Deny. The New York Times is reporting that President Barack Obama and Speaker of the House John Boehner (R-OH) are close to major budget deal, citing congressional leaders. As we reported earlier today, Obama and Boehner met at the White House last night to consider a "grand bargain" deficit reduction proposal. Both White House Press Secretary Jay Carney, and spokesmen for Boehner and Cantor have denied a deal is near.
• Trend Reversal: Young Americans Are Choosing Suburbs Over Cities.
• John Paulson Just Told Investors He's Now More Bearish And Shorting The Euro.
• Some of New York's Wealthiest Might Get Charged in the Wall Street Prostitution Ring.
• Here Are The Details of the Greek Bailout That's Causing World Markets to Surge.
  

Zero Hedge:

• GAO Audit Exposes Fed's Corruption Once Again. Today, in addition to the official launch of Europe's PPT, we get a reminder that our own version, the Federal Reserve, is as criminal and corrupt as always, especially when working in conjunction with that old standby, Goldman Sachs. Just like back in 2009 and 2010 it was discovered that former Goldman director and New York Fed Chairman Stephen Friedman had bought tens of thousands of shares of Goldman stock while the entire system was being bailed out by the very same Fed, so today we learn that another former Goldmanite and then Plunge Protection Head team (i.e., Brian Sack predecessor) Bill Dudley had held shares of AIG stock while the Fed was arranging the bailout of the doomed insurer. But it's all good: Dudley had a waiver.

Seeking Alpha:

• Stocks With High Exposure to the China Boom. The global growth engine that is China has experienced its own boom fueled by cheap and loose credit. We think market participants should be cautious as a slowdown in China could have far reaching implications given the significant demand for commodities.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows that 24% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-one percent (41%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -17 (see trends).

Reuters:

• Union Pacific(UNP) Profit Up, Sees Stronger Second Half. Union Pacific Corp (UNP.N), the largest publicly held U.S. railroad, reported higher quarterly earnings as freight volumes increased and it raised prices, and the company said it expected to perform even more strongly in the second half of the year. Union Pacific said on Thursday that operating income and cash from operations rose to a record-high in the second quarter despite severe flooding in the Midwest. "Looking to the second half of the year, we expect stronger performance despite some economic uncertainties and ongoing flood challenges," CEO Jim Young said in a statement.

Telegraph:

• Eurozone Debt Crisis Summit: Live.
• IEA to Stop Selling Emergency Oil Despite High Prices.
  

Economic Information Daily:

• China's economy is facing increasing risks of a hard landing because slowing growth in major economies may lead to global destocking, Ba Shusong, a researcher at the State Council's Development Research Center, said in an interview. Manufacturing industry's destocking risks are increasing in the short term as prices of resources drop, Ba said.

Bear Radar

Style Underperformer:

• Small-Cap Growth (+.61%)

Sector Underperformers:

• 1) Computer Hardware -1.98% 2) Education -.39% 3) Gold & Silver -.17%

Stocks Falling on Unusual Volume:

• STX, FFIV, SWY, WDC, PEP, ASIA, POOL, TZOO, VIVO, TSCO, SCSS, ZINC, CAKE, PLXS, CRUS, ERIC, WWWW, UTEK, APKT, ABC, WAG, IR, SHW, TEX, PRXL, MTOR, WHR, NRGY, N, EW, ESI and AF
  

Stocks With Unusual Put Option Activity:

• 1) MMI 2) MHS 3) PEP 4) SVU 5) TIVO
  

Stocks With Most Negative News Mentions:

• 1) NLC 2) YGE 3) STP 4) TOL 5) CLB
  

Charts:

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