Bear Radar

Style Underperformer:

• Large-Cap Value (-.51%)

Sector Underperformers:

• 1) Disk Drives -5.01% 2) HMOs -4.51% 3) Gold & Silver -1.71%

Stocks Falling on Unusual Volume:

• DDD, USMO, AMAG, SLF, MFC, SSYS, NEM, CLMT, DISH, MRK, HES, BMY, VPRT, IPCM, STEC, DRIV, CTCT, NXPI, ABAX, TNAV, ACOM, NTGR, COLM, AGNC, BMC, QLGC, CSTR, SSYS, VECO, IBKC, HSIC, EZCH, VCI, VE, CMO, HTS, BHE, MOH, CNC, CMP, SWN, VSI, CVH, GTY, WCG, NTGR, CTCT, BSFT, RLD and DRIV
  

Stocks With Unusual Put Option Activity:

• 1) STI 2) CX 3) SUN 4) UNH 5) NTAP
  

Stocks With Most Negative News Mentions:

• 1) EGLE 2) VPRT 3) NWL 4) EWP 5) CNX
  

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth (+.09%)

Sector Outperformers:

• 1) Homebuilding +1.46% 2) Hospitals +1.29% 3) Defense +.77%

Stocks Rising on Unusual Volume:

• MXWL, IM, BMRN, VRTX, VOD, TI, MET, OMCL, FFBC, GBCI, SREV, ZOLL, TRLG, NTRI, JAZZ, DECK, SIMO, EXPE, VOD, WMGI, LPNT, QLIK, GPOR, CERN, N, RGC, NWL, AXL, EVEP, CYH, MSCC, QLIK, BMRN, CDNS, MDP, HRC, CHK and WLL
  

Stocks With Unusual Call Option Activity:

• 1) NXPI 2) PWER 3) HLF 4) NLY 5) AGNC
  

Stocks With Most Positive News Mentions:

• 1) SBUX 2) AAPL 3) GOOG 4) HOT 5) CERN
  

Charts:

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

Friday Watch

Evening Headlines

Bloomberg:

• Obama and Geithner May Regret Threats of Default: Caroline Baum. For Washington’s part, the short-term focus on raising the $14.3 trillion debt limit by the Treasury’s Aug. 2 deadline has become a diversion from the nation’s long-term fiscal problems. The federal government has to rein in the growth of its debt so that it becomes manageable in relation to the size of the economy. You wouldn’t know it from listening to the lecturer in chief Monday night. In his address to the nation, President Barack Obama resorted to many of his favorite divide-and-conquer techniques, more suited to warfare than politics, in an attempt to demonstrate he is rising above the fray.
  
• Greek Investors May Shun Bailout as Losses Top 21%: Euro Credit. Greek bondholders may resist pressure to reinvest in the nation's securities as part of a bailout agreement as potential losses exceed the 21 percent estimated by the Institute of International Finance. JPMorgan Chase & Co. calculates the bonds may lose as much as 34 percent of their value, while Rabobank International anticipates losses of as much as 50 percent. That may be high enough to deter money managers from aiding the rescue, leaving European leaders to either foot a bigger share of the bill or compel private investors to chip in to meet a 90 percent participation goal. "Our view is that IIF yield assumption in calculating this is too low," said Pavan Wadhwa, JPMorgan's global head of interest-rate strategy in London. "As the market stands right now, the haircut banks will take if they sign up to the IIF proposal would be much higher than 21 percent. The plan might fail as it's going to be difficult to achieve the required 90 percent rollover rate that the IIF is hoping for."
  
• China Regulator's Bad Loan Provision Inadequate. China’s banking regulator told lenders they haven’t set aside sufficient funds to cover losses on loans to local governments and ordered them to accelerate debt collection, a person with knowledge of the matter said. The lenders were told this month that they are lagging behind the China Banking Regulatory Commission’s schedule for revising the loan agreements on infrastructure projects, the person said, declining to be named because the information is confidential. The agency had asked banks to collect two repayments a year after construction is completed. The comments reflect persistent concerns that $1.7 trillion of lending to local governments may spur a wave of bad debts that could lead to the nation’s third banking bailout in less than two decades. As much of 30 percent of the credit may sour, Standard & Poor’s estimates, after a surge in lending that powered China’s recovery from the global financial crisis. “Concerns over China’s local government financing vehicle loans have resurfaced in recent weeks,” analysts at UOB Kayhian Investment Co. led by Sheng Nan in Shanghai, wrote to clients July 25. “There have also been talks of local governments overvaluing the land used as collateral for their LGFV loans.” Loans to local government financing vehicles, set up mainly to fund infrastructure projects such as roads and airports, may sour and become the biggest contributor to banks’ bad debts, Liao Qiang, a Beijing-based director of financial institution ratings for S&P, said in April. Standard Chartered Plc, which gets more than half its income from Asia, estimates that at least 4 trillion yuan of the loans -- and possibly much more -- will ultimately not be repaid by cash flows generated by the infrastructure projects, according to a June 29 report.
• Crude Oil Falls, Heads for Weekly Decline, on U.S. Debt Ceiling Dispute. Oil fell, headed for the first weekly decline in five, on concern a failure to reach a deal on raising the U.S. debt limit may cause the nation to default, threatening the economy of the world’s biggest crude consumer. “We did see a build in inventories. If it becomes more of a trend rather than a one-off, that’s a worry.” Crude for September delivery fell as much as 50 cents to $96.94 a barrel in electronic trading on the New York Mercantile Exchange, and was at $97.08 at 11:35 a.m. Sydney time.
• Bank of America(BAC) Sued by BlackRock(BLK), Calpers Over Countrywide Fraud Claims. Bank of America Corp. (BAC), the biggest U.S. lender, faces a new securities-fraud lawsuit filed by former Countrywide Financial Corp. investors including BlackRock Inc. that opted out of a $624 million settlement last year. Countrywide, acquired by Bank of America in 2008, misled shareholders about its finances and lending practices, according to the complaint filed today in federal court in Los Angeles. Plaintiffs including the California Public Employees’ Retirement System and funds managed by BlackRock, T. Rowe Price Group Inc. and TIAA-CREF are the largest group of those who rejected the deal, saying the terms were inadequate. “These prominent institutional investors made every effort to amicably resolve their claims for recovery of damages caused by the massive and pervasive fraud at Countrywide without filing formal litigation, but were unsuccessful,” their attorney, Blair Nicholas, a partner at Bernstein Litowitz Berger & Grossmann LLP, said in an e-mail. The investors hope to “maximize” their returns in a jury trial, he said.
• Golden Era of Rock Star Traders Concludes. Over the past four decades no one has made more of a spectacle of risk than George Soros, whose Quantum fund famously bet $10 billion that the Bank of England would be forced to devalue the pound. Soros earned $1 billion on that trade and incalculable legend points. Now, Soros is going to stop risking other people’s money. By the end of this year, his Soros Fund Management LLC will have no outside customers for the first time in 42 years. The shift concludes a process that began in 2000, when Soros stopped accepting new investments, Bloomberg Businessweek reports in its Aug. 1 issue. Four years later he turned management of the company over to his sons Robert and Jonathan. On July 26, after months of debate, the three men decided to return the less than $1 billion of outsiders’ money Quantum still oversees and convert the firm into a family office to manage almost $25 billion for George, his family, and foundations. There’s a two-word explanation for closing what was once one of the world’s biggest hedge funds and consistently one of the best-performing --- with returns of about 30 percent annually in its first 30 years: Dodd-Frank. The law requires hedge funds to register with the Securities and Exchange Commission and provide information about customers, employees and assets. By returning outsiders’ money, Soros Fund Management escapes that rule and the loss of privacy that goes with it.
• Libya Rebel Military Chief Younis, Qaddafi Defector, Is Killed, Jalil Says. Libyan rebel military chief Abdel Fattah Younis was shot and killed yesterday along with two of his aides, rebel president Mustafa Abdel Jalil said. Speaking in the rebel stronghold of Benghazi, Jalil told reporters in a televised news conference that a suspect had been arrested and an investigation is under way. He provided few details in a statement that left unclear whether the killings were the work of the Qaddafi regime or the result of a rift among the rebels. Earlier yesterday, rebel security had arrested Younis and two of his aides and brought them back from the front lines to Benghazi to be questioned about suspicions his family still had ties to Libyan leader Muammar Qaddafi, the Associated Press reported. Younis and his two aides, both colonels, were shot before they arrived for questioning, Jalil said, according to AP. Younis, Qaddafi’s former security minister, defected to the rebels in February and was leading the rebels’ military efforts.
• Black Swan Crash Draws China Growth Questions: William Pesek. Here are five things Saturday’s tragedy says about China:
• Perth's Falling Home Prices Outpace Australia. Property prices in Perth, the center of Australia’s mining boom, may fall further this year after slumping the most out of any state capital in the past 12 months, an Australian Property Monitors economist said. Perth home prices fell 5.8 percent in the 12 months to June to a median A$535,617 ($588,750), compared with the 2.4 percent national decline to A$546,121, Wilson said in a report yesterday. The city’s home prices fell 1.5 percent in the three months to June, compared with the national average of a 0.6 percent decline. Unit prices in the city have fallen 6.1 percent in the past 12 months. Perth property prices have stalled after doubling between 2004 and 2007 even as the economy booms on the back of the resource-rich Pilbara region.
• Japan Industrial Output Rose Less Than Expected. Japan’s industrial production rose less than expected as companies from Nissan Motor Co. to Toyota Motor Corp. warned that a yen close to a post World War II high threatens to drag down exports. Factory output increased 3.9 percent in June from May, when it rose 6.2 percent, the biggest gain since 1953, the Trade Ministry said in Tokyo today. The median estimate of 31 economists surveyed by Bloomberg News was for a 4.5 percent gain.
• Groupon May Cause 'Digestive Problems' at SEC, Ex-Official Says. Groupon Inc.’s approach to accounting may be “causing digestive problems” with the U.S. Securities and Exchange Commission, possibly delaying the initial public offering by one month, said Richard Sauer, a former official at the government agency. “It does sound like it’s getting some resistance and it sounds like it’s because of the pro forma number that the company is pushing so hard,” Sauer, who served as assistant director at the SEC from 1990 to 2003, said yesterday in a televised interview with “Bloomberg West.”
• Debt Plan 'Triggers' Have History of Failure. As they struggle to reach an agreement over how to extend the nation’s debt limit and trim budget deficits, Republicans and Democrats are turning to an enforcement tool, called a “trigger,” with a history of failure.

Wall Street Journal:

• Live Blog: The U.S. Debt Battle.
• Boehner's Moment of Truth.
  

CNBC:

• Starbucks(SBUX) Beats Expectations, Raises Outlook. Starbucks raised its fiscal year forecast above analysts' estimates as customers visited stores more often and shook off price increases in the latest quarter.
• Investors Lift Equities, Shun Euro Zone. Investors raised their exposure to equities for the second month in a row in July, taking on some risk in their portfolios despite worries about both euro zone and U.S. debt stability, Reuters polls showed on Thursday. They also showed, however, that appetite for equities in the euro zone fell to levels not seen for at least a year, with Britain and Asia being the main beneficiaries. Surveys of 57 leading investment firms in the United States, Europe excluding the UK, Japan and Britain showed an average balanced portfolio holding 52.1 percent in stocks, up from 51.5 percent in June.

Business Insider:

• Goldman Sachs(GS) Traders Quitting The Bank In Droves.
• Corporate Tax Hikes Are Driving Businesses Out of Illinois.
  

Zero Hedge:

• Stop The Presses: The Fed Can Fund The Treasury With Over Half A Trillion In Emergency Capital.
  

IBD:

• MedQuist Holdings(MEDH) Gets Fresh Start.

Washington Post:

• The Great Divide by Charles Krauthammer. Obama faces two massive problems — jobs and debt. They’re both the result of his spectacularly failed Keynesian gamble: massive spending that left us a stagnant economy with high and chronic unemployment — and a staggering debt burden. Obama is desperate to share ownership of this failure. Economic dislocation from a debt-ceiling crisis nicely serves that purpose — if the Republicans play along. The perfect out: Those crazy Tea Partyers ruined the recovery!

House Energy & Commerce Committee:

• Lawmakers Introduce Bipartisan Legislation to Prevent U.S. Cement Plant Shutdowns and Job Losses. To protect thousands of American jobs and preserve domestic cement manufacturing, bipartisan members of the U.S. House of Representatives today introduced H.R. 2681, the Cement Sector Regulatory Relief Act of 2011. The proposal directs EPA to develop achievable and workable standards for the nation’s cement manufacturing facilities, replacing a series of complex rules affecting the sector that are projected to impose significant costs, and force plant shutdowns and job losses.

The Blaze:

• Fox Host Varney On Soros: 'I Do Not Like Billionaire Socialists Who Hate America And Try To Make Money Out Of Our Ruin'. (video)

Reuters:

• Senator Shelby Says Soros Hypocrite for Reforms Dodge. Prominent Republican Senator Richard Shelby accused billionaire investor George Soros of hypocrisy on Wednesday for evading new hedge fund regulations he once publicly backed. Soros recently said he would return money to outsider investors and only manage his own family's funds to escape the Securities and Exchange Commission's new hedge fund adviser registration rules. "It appears that Mr. Soros talked up financial reform only to sell it short," Shelby told Reuters in a statement. "Don't be surprised to see his fellow Wall Street financiers follow suit. They'll use their political clout and legal muscle to sidestep Dodd-Frank, while their smaller competitors and businesses take the hit." The exemption allows family offices not only to avoid the registration requirements, but also to dodge a greater disclosure burden that requires big fund managers to turn over confidential data to help the SEC police systemic risk. Soros has been a staunch Democratic Party supporter who was among the earliest big-name supporters of President Barack Obama's presidential bid. Shelby's statement on Wednesday referred specifically to testimony Soros provided to Congress in November 2008 in which he said: "The entire regulatory framework needs to be reconsidered, and hedge funds need to be regulated within that framework." When pressed for details by lawmakers, Soros said he believed some hedge funds pose systemic risk and should be required to report additional information to regulators.
• Samsung Profit Outlook Weakens on Chips, Mobiles Strong. Samsung Electronics Co is relying on the smartphone market to boost group profits after its flat screen unit reported a second quarter of losses and the mainstay chip business struggled. The South Korean technology conglomerate joins a host of global companies in warning that fragile consumer demand is hurting sales of TVs, flat screens, computers and semiconductors.
  
• Nintendo Shares Dive on Crumbling Profit Outlook. Nintendo Co Ltd's shares plunged on Friday, wiping off as much as $5 billion of the videogame maker's market value, after it slashed its full-year profit forecast to the lowest level in 27 years.
  
• Vistaprint(VPRT) Sees F12 Below Estimates, Shares Fall. Vistaprint NV forecast 2012 profit below market expectations citing higher investment expenses, sending the online design company's shares down about 30 percent in after-market trade.
• Cerner(CERN) Q2 Profit Beats on Record Bookings. Health information technology company Cerner Corp posted a second-quarter profit that narrowly beat expectations, helped by strong bookings, and raised its full-year outlook.

Telegraph:

• Global Slump Warnings if US Triggers 'Insane' Default. (US CDS Graph) A chorus of global banks has warned that Washington risks triggering a global slump and may suffer permanent loss of credibility by flirting with default on America's $14.3 trillion (£8.8 trillion) federal debt. "Default would be an act of collective insanity," said Willem Buiter, Cititgroup's chief economist. "Even if a default were cured promptly, it would severely dent the credibility of the US as a global financial player and the provider of the world's leading reserve currency. There would be an immediate repricing of the dollar and an increase in medium and long-term nominal and real interest rates. Asset, credit, and funding markets in the US and the world as a whole would likely suffer and a global recession would likely result, centred in the US, but not restricted to it." Mr Buiter said brinkmanship on the US debt ceiling had reached a point where tail risk had "morphed" into a serious possibility, with a 5pc likelihood that Washington will pull the trigger on a technical default.
• China's Economic Miracle May Be About To Come Off The Rails by Jeremy Warner.
  

CCTV:

• China Banking Regulatory Commission Chairman Liu Minkang said banks can take a 30% to 50% decline in property prices, according to a report on the Sina.com website.

21st Century Business Herald:

• China's railway ministry plans to withdraw from regional rail investments partly because of heavy debt, citing three people familiar with the situation. The ministry had a debt-to-equity ratio of 58.24 percent as of the first quarter of the year, compared with 46% in 2008. Tight credit and the removal of preferential interest rate loans may also cause the ministry to pull out of investments.

China Daily:

• Adidas, Nike and Louis Vuitton were the biggest victims of trademark infringement among foreign brands in China based on a crackdown on intellectual property violations from October to mid-June, China Daily cited Fu Shuangjian, deputy director of the China's State Administration for Industry and Commerce, as saying. Trademark infringement at home and abroad has continued unabated after the nation's largest crackdown on intellectual property violations, citing the administration.

Evening Recommendations
Citigroup:

• Reiterated Buy on (IM), target $24.

CSFB:

• Reiterated Outperform on (POT), raised estimates, boosted target to $74.
  

Night Trading

• Asian equity indices are -1.0% to -.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 116.50 -1.5 basis points.
  
• Asia Pacific Sovereign CDS Index 117.50 -.5 basis point.
  
• S&P 500 futures -.56%.
  
• NASDAQ 100 futures -.45%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AMGN)/1.28
• (NEM)/1.00
• (MRK)/.95
• (WY)/.08
• (ACI)/.58
• (AB)/.40
• (B)/.36
• (NWL)/.42
• (ITT)/1.16
• (HMSY)/.40
• (AXL)/.44
• (CVH)/.76
• (PPC)/-.21

Economic Releases
8:30 am EST

• Advance 2Q GDP is estimated to rise +1.8% versus a +1.9% gain in 1Q.
• Advance 2Q Personal Consumption is estimated to rise +.8% versus a +2.2% gain in 1Q.
• Advance 2Q GDP Price Index is estimated to rise +2.0% versus a +2.0% gain in 1Q.
• Advance 2Q Core PCE is estimated to rise +2.3% versus a +1.6% gain in 1Q.
• The 2Q Employment Cost Index is estimated to rise +.5% versus a +.6% gain in 1Q.
  

9:45 am EST

• The Chicago Purchasing Manager for July is estimated to fall to 60.0 versus 61.1 in June.

9:55 am EST

• Final Univ. of Mich. Consumer Confidence for July is estimated to rise to 64.0 versus 63.8 in June.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Lockhart speaking, NAPM-Milwaukee report and the (CA) investor day could also impact trading today.
  

BOTTOM LINE: Asian indices are lower, weighed down by technology and industrial shares in the region. I expect US stocks to open modestly lower and to maintain losses into the afternoon. The Portfolio is 50% net long heading into the day.

Stocks Slightly Lower into Final Hour on Rising Eurozone Debt Angst, US Debt Ceiling Concerns, Global Growth Worries, Emerging Markets Inflation Fears

Broad Market Tone:

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

Equity Investor Angst:

• VIX 22.67 -1.35%
  
• ISE Sentiment Index 111.0 +2.78%
  
• Total Put/Call .90 -19.19%
  
• NYSE Arms .92 -35.35%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 94.44 -.68%
  
• European Financial Sector CDS Index 157.24 +7.49%
  
• Western Europe Sovereign Debt CDS Index 285.83 +.82%
  
• Emerging Market CDS Index 211.96 -1.71%
  
• 2-Year Swap Spread 22.0 +1 bp
  
• TED Spread 18.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .07% unch.
  
• Yield Curve 253.0 -1 bp
  
• China Import Iron Ore Spot $175.40/Metric Tonne +.23%
  
• Citi US Economic Surprise Index -86.20 +3.0 points
  
• 10-Year TIPS Spread 2.45% +1 bp
  

Overseas Futures:

• Nikkei Futures: Indicating +24 open in Japan
• DAX Futures: Indicating -11 open in Germany

Portfolio:

• Slightly Higher: On gains in my Technology, Retail and Biotech sector longs
  
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and then added them back
  
• Market Exposure: 50% Net Long

BOTTOM LINE: Today's overall market action is bearish as the S&P 500 is trading at session lows, hovering below its 50-day moving average, despite better US economic data, recent equity losses, lower food prices and less financial sector pessimism. On the positive side, I-Banking, Tobacco, Road & Rail, Software and Oil Service shares are especially strong, rising .75%+. Oil is falling -.2%, copper is rising +.58% and the UBS-Bloomberg Ag Spot Index is down -1.51%. The Portugal sovereign cds is falling -4.68% to 912.82 bps and the Ireland sovereign cds is falling -7.42% to 776.31 bps. On the negative side, Airline, Education, Construction, Telecom, Networking, Disk Drive and Homebuilding shares are under pressure, falling more than -.75%. Cyclicals are underperforming again. The industrials(ETF:XLI), after breaking down through their 200-day moving average on volume yesterday, are under pressure again today. The Networking Sub-Index is down -22.4% from its April 27th high. Rice is falling -2.4% today, but is still near a multi-year high, soaring about +27.0% in less than 3 weeks. The US price for a gallon of gas is +.01/gallon today to $3.71/gallon. It is up .57/gallon in less than 5 months. The Italy sovereign cds is jumping +4.67% to 298.88 bps, the France sovereign cds is rising +2.11% to 118.47 bps, the Belgium sovereign cds is rising +3.07% to 190.69 bps and the US sovereign cds is gaining +1.9% to 63.67 bps. The Italy sovereign cds has soared +84 bps in 5 days. The German, Spain and French sovereign cds are also near record highs. The Eurozone Financial Sector CDS Index is approaching record highs, as well. India's Sensex continues to trade very poorly, falling another -1.21% last night and is now down -11.21% ytd. German and French stocks fell -.86% and -.57%, respectively today, despite US stocks rallying hard off the open. The AAII % Bulls fell to 37.84, while the % bears rose to 31.42 this week, which is a negative considering current headwinds. The tone of the market is poor again today as volume picks up after the breach of key technical levels yesterday. Some US politicians efforts to spook the equity and bond markets continue to have some success, however I still suspect that a larger portion of recent stock losses are the result of ongoing European debt concerns, lowered forward earnings guidance and emerging market growth/inflation worries than most investors perceive. I expect US stocks to trade mixed-to-lower into the close from current levels on rising eurozone debt angst, global growth worries, US debt ceiling concerns, earnings worries and emerging markets inflation fears.

Today's Headlines

Bloomberg:

• Italian Bonds Decline After Borrowing Costs Rise at Nation's Debt Sale. Italian bonds fell for a second day, increasing the yield spread over German bunds, after the nation’s borrowing costs rose at a sale of 10-year debt and Standard & Poor’s said Greece risks further defaults. Italy’s 10-year yield surged to the most in more than a week amid speculation a probe into a former aide of Finance Minister Giulio Tremonti may force him to step down. Italian 10-year bond yields rose eight basis points to 5.84 percent as of 4:16 p.m. in London. The 4.75 percent security due September 2021 fell 0.540, or 5.4 euros per 1,000-euro ($1,4308) face amount, to 92.390. That drove the difference in yield, or spread, over 10-year German bonds nine basis points wider to 320. It earlier reached 337 points, the most since July 18. Italy sold 2.7 billion euros of its 10-year benchmark security, less than the maximum target of 3 billion euros. The debt was priced to yield 5.77 percent, higher than 4.94 percent the last time the securities were sold on June 28, and drew bids for 1.38 times the securities on offer, compared with 1.33 times. In six sales of 10-year bonds this year, the average bid- to-cover ratio was 1.42 and the average yield was 4.81 percent. “With Italy investors have recognised that the debt ratio is 120 percent” of gross domestic product, said Julian Callow, chief European economist at Barclays Capital in London. “That’s very high. Any country really above 80 ought to be getting concerned and looking at ways of bringing down that ratio. When you’re above 100, that’s flashing red signals. As well, in Italy you’ve had very weak economic growth.” The 10-year euro swap spread, which shows the difference between the 10-year swap rate and the yield on benchmark German bunds, used as a measure of perceived risk, rose to 54 basis points, the most since January 2009.
• Advisers Tell Investors Not To Sell as Debt Deadline Nears. “It’s kind of like you’re standing on a cliff, and as long as you don’t fall off the cliff you’re fine,” said Rainbolt, who lives in Dallas and works in real estate. “If you do fall off the cliff, it doesn’t matter what you do.” Rainbolt is among investors whose financial advisers are telling them not to sell their stocks or bonds as time runs out for Congress to pass a deal to raise the U.S. debt ceiling.
• Lacker Says Fed Stimulus Could Lift Inflation, Not Growth. Federal Reserve Bank of Richmond President Jeffrey Lacker said additional monetary stimulus would likely raise inflation further while not providing a substantial lift to economic growth. “Given current inflation trends, additional monetary stimulus at this juncture seems likely to raise inflation to undesirably high levels and do little to spur real growth,” Lacker said in a speech before the Dulles Regional Chamber of Commerce in Chantilly, Virginia. “When coming out of a recession, real GDP has typically grown several percentage points faster than the 3 percent long- run trend rate,” Lacker said. “This time, real GDP has risen at a 2.75 percent annual rate since the end of the recession.”
• Jobless Claims in U.S. Fall to 3-Month Low. Applications for unemployment benefits fell more than forecast last week to the lowest level since April, a sign the weakness in the labor market is fading. Jobless claims dropped by 24,000 to 398,000 in the week ended July 23, Labor Department figures showed today in Washington. The median estimate of economists in a Bloomberg News survey called for a drop to 415,000. Another report showed the number of contracts to buy previously owned homes unexpectedly rose in June.
• U.S. Consumer Confidence Fell Last Week. Consumer confidence dropped last week as Americans’ views of the economy plunged to the lowest level since the recession. The Bloomberg Consumer Comfort Index was minus 46.8 in the period to July 24, the lowest since May, compared with minus 43.3 the prior week. Six percent of those surveyed said the economy was in good shape, the fewest since April 2009. Seniors and the unemployed were among those showing the most negative readings, a sign that partisan wrangling over the nation’s budget deficit was jarring those likely to be affected by cuts in spending. Unemployment above 9 percent, falling home prices and a rebound in gasoline costs may be weighing on sentiment overall, posing a risk for consumer spending.
• India 10-Year Bond Yield at 34-Month High After Rate Increase. India’s 10-year bond yield rose to its highest level in 34 months after the central bank boosted interest rates this week for the fifth time in 2011 to damp inflation. The Reserve Bank of India raised the repurchase rate by 50 basis points to 8 percent on July 26, double the increase forecast by most economists in a Bloomberg survey. Finance Minister Pranab Mukherjee said yesterday he couldn’t say if the central bank has reached the end of the rate-rise cycle. The yield on the 7.8 percent government debt due April 2021 rose two basis points, or 0.02 percentage point, to 8.47 percent, the highest level since Sept. 29, 2008, as of the 5 p.m. close in Mumbai, according to central bank data. Inflation has held above 8 percent every month since the beginning of 2010. Wholesale prices rose 9.44 percent in June from a year earlier after climbing 9.06 percent the previous month, according to the latest government data issued on July 14.
• Exxon(XOM) Misses Estimates on Lower Refining Profits. Exxon Mobil Corp. (XOM) reported lower- than-estimated second-quarter profit as production growth lagged analysts’ forecasts and refining earnings outside the U.S. declined. Per-share profit was 16 cents lower than the $2.34 a share forecast, based on the average estimate of 18 analysts in a Bloomberg survey.
• Goldman Sachsd(GS), Citigroup(C) Scrap $1.5 Billion CMBS Sale That S&P Won't Rate.
• U.S. Banks Urge Congress to Close Deal on Debt-Limit Debate. Bankers including Goldman Sachs Group Inc. (GS) Chairman and Chief Executive Officer Lloyd Blankfein and JPMorgan Chase & Co. (JPM) chief Jamie Dimon called on President Barack Obama and Congress to raise the federal debt limit to steer the U.S. government away from the threat of default.

Wall Street Journal:

• Live Blog: U.S. Debt Battle.
• U.S. Accuses Iran of Pact With Al Qaeda. The U.S. for the first time formally accused Iran of forging an agreement with al Qaeda, helping operatives move money, arms and fighters through Iranian territory to the terrorist group's bases in Pakistan and Afghanistan.
• Taiwan's Ma Sees Weaker Global Economy. Taiwan President Ma Ying-jeou said that the changing relationship between the U.S. and China will make it increasingly difficult for Taiwan to purchase weapons from the U.S., even as he pressed again for Washington to sell the island advanced fighter jets. In a wide-ranging interview with The Wall Street Journal, Mr. Ma also said Thursday that debt problems in the U.S. and Europe could slow global economic growth in the second half of this year and may impact Taiwan's export-reliant economy.

Fox Business:

• New Al Qaeda Chief Praises Syrian Protesters. Al Qaeda's new leader praised Syrian protesters seeking to topple the regime of President Bashar Assad while trying to portray the uprising as an Islamic battle against American and Israeli interests.

CNBC.com:

• Health Tab to Hit $4.6 Trillion in 2020: Government. The nation's health care tab is on track to hit $4.6 trillion in 2020, accounting for about $1 of every $5 in the economy, government number crunchers estimate in a report out Thursday. How much is that? Including government and private money, health care spending in 2020 will average $13,710 for every man, woman and child, says Medicare's Office of the Actuary.By comparison, U.S. health care spending this year is projected to top $2.7 trillion, or about $8,650 per capita, roughly $1 of $6 in the economy. The analysis found that President Barack Obama's health care overhaul would only be a modest contributor to growing costs, even though an additional 30 million people who would be otherwise uninsured stand to gain coverage.
• 'The Global Recovery Is Over': Siemens CEO. Siemens, the German engineering and power giant, on Thursday posted third-quarter earnings that missed analyst forecasts blaming a slowdown in the global economy for the drop in profits.

Business Insider:

• LIVE COVERAGE: Boehner: "Let's Pass This Bill and End The Crisis," Reid: "But It Will Be Defeated."
  
• The Debt Ceiling Debacle Is Only The Beginning of a Major Fiscal Crisis. If you think the current debt ceiling circus is bad, just wait for the real debt crisis. Peter Coy at Businessweek writes today that the debate over raising the debt limit ignores just how ailing the nation's fiscal health really is. Here are the highlights from his piece:
• Ken Langone Flips Out on Obama, Accusing Him of Long Lasting "Destruction". Ken Langone, the former director of the NYSE and a veteran of Wall Street banking, had some harsh words for President Obama. Langone lambasted Obama's leadership during the debt ceiling crisis to CNBC, saying it has been "unpresidential." Langone opined:
• And The Crisis Is Now Officially Back On In Italy.
  

Chicago Tribune:

• Amazon(AMZN) Quietly Launches Deals in Chicago.

ABCNews:

• APNewsbreak: Arctic Scientist Under Investigation for Drowned Polar Bear Claims. A federal wildlife biologist whose observation in 2004 of presumably drowned polar bears in the Arctic helped to galvanize the global warming movement has been placed on administrative leave and is being investigated for scientific misconduct, possibly over the veracity of that article. Charles Monnett, an Anchorage-based scientist with the U.S. Bureau of Ocean Energy Management, Regulation and Enforcement, or BOEMRE, was told July 18 that he was being put on leave, pending results of an investigation into "integrity issues."

New York Daily News:

• You Think the Debt Crisis is Bad Now? Wait Until Obamacare Takes Its Toll. One of the main reasons for enacting Obamacare was to bring down health care costs - so said the President, then-House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid. But since its passage, the sweeping overhaul of one-sixth of our economy has done just the opposite. If you think the debt debate on Capitol Hill has revealed that this nation is on the road to fiscal ruin, just wait until health care reform really kicks in.

Forbes:

• New NASA Data Blow Gaping Hole In Global Warming Alarmism. NASA satellite data from the years 2000 through 2011 show the Earth’s atmosphere is allowing far more heat to be released into space than alarmist computer models have predicted, reports a new study in the peer-reviewed science journal Remote Sensing. The study indicates far less future global warming will occur than United Nations computer models have predicted, and supports prior studies indicating increases in atmospheric carbon dioxide trap far less heat than alarmists have claimed.

CNN Money:

• Official: Bomb Materials Found in Soldier's Room Near Fort Hood. FBI agents discovered a bevy of potential bomb-making materials in the hotel room of a missing Muslim American soldier who was arrested near Fort Hood, Texas, the military base where a 2009 shooting spree killed 13 people, an FBI spokesman said Thursday. Pfc. Naser Jason Abdo, a Muslim American who refused to deploy to Iraq and later went AWOL after facing child pornography charges, was arrested at a traffic stop Wednesday by police in Killeen, Texas, just outside Fort Hood, said the FBI spokesman, Erik Vasys. He is expected to face federal charges, possibly as early as Thursday afternoon, a federal law enforcement official said.

InvestmentNews:

• With Registration Looming, Many Hedge Funds Say They'll Follow Soros. With registration requirements looming, more hedge fund managers are likely to follow George Soros in opting for the family office structure over the red tape of running a hedge fund. According to a sentiment survey of 40 hedge fund managers, released today from research firm Infovest21 LLC, 56% of managers said they expect more hedge funds to start returning clients' money in order to run family offices.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows that 25% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-three percent (43%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -18 (see trends).

Reuters:

• GM(GM) Invests in Solar Energy Systems Maker.
• CME(CME) Tax Situation 'Untenable,' May Exit State - CEO. CME Group Inc is evaluating whether to move some operations to other states from Chicago to reduce its taxes, but it has not decided on an exact timeline, CEO Craig Donohue said Thursday.

Telegraph:

• Cyprus, Iceland, and German Bail-Out Fatigue. Credit default swaps (CDS) on Cyprus debt have jumped to 674 basis points, the sort of level that preceded the EU rescues of Greece, Ireland, and Portugal. The CDS were trading in the 300s earlier this month, according to Markit.

Al Jazeera:

• Libya Opposition 'Arrests Senior Leader'. There have been unconfirmed reports that General Abdel Fatah Younis, the chief of staff of the rebel forces in Libya, has been arrested by the National Transition Council. He is being held at an undisclosed military garrison in Benghazi, the reports said. Al Jazeera's Tony Birtley, reporting from Benghazi, quoted unconfirmed reports as saying the former minister of interior was arrested for dealing with and smuggling arms to Gaddafi loyalists.

Bear Radar

Style Underperformer:

• Large-Cap Value (-.11%)

Sector Underperformers:

• 1) Education -4.01% 2) Networking -1.31% 3) Disk Drives -1.30%

Stocks Falling on Unusual Volume:

• BMC, VPHM, MANT, ABC, OSK, RCL, TWC, AEM, GG, SU, XOM, CCL, ASPS, BABY, WIRE, AKAM, IFSIA, OSTK, AIXG, ITRI, NATI, CNQR, LIFE, COHR, PSSI, ORLY, SRCL, STRA, ASMI, IPG, CPO, VCI, HGR, VAR, HSC, GTI, HSC, MUR, UAL, PNM, CRR, DAN, JAH, WM, ITRI, LIFE, GT, WLL, GGG, OI, CBG and MWW
  

Stocks With Unusual Put Option Activity:

• 1) CLWR 2) RCL 3) ATPG 4) ECA 5) WM
  

Stocks With Most Negative News Mentions:

• 1) TSL 2) AGU 3) HES 4) JPM 5) AKS
  

Charts:

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