Bull Radar

Style Outperformer:

• Large-Cap Growth (+1.21%)

Sector Outperformers:

• 1) Gold & Silver +3.01% 2) Gaming +2.21% 3) Medical Equipment +2.19%

Stocks Rising on Unusual Volume:

• AAPL, NGD, NBL, REXX, JAZZ, THRX, OPTR, CELG, GLNG, WPRT, DXCM, ARMH, PCLN, IPXL, CBST, TKF, CUK, JEF, CCL, FDS, WPI, RCL, MTN, NEM, TBI, UAN and TJX
  

Stocks With Unusual Call Option Activity:

• 1) BBBY 2) GR 3) V 4) CCL 5) AMR
  

Stocks With Most Positive News Mentions:

• 1) MGM 2) PHM 3) JEC 4) RL 5) RDC
  

Charts:

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

Tuesday Watch

Evening Headlines

Bloomberg:

• Italy Debt Rating Lowered by S&P on Weaker Growth Outlook. Italy's credit rating was cut by Standard & Poor's on concern that weakening economic growth and a "fragile" government mean the nation won't be able to reduce the euro-region's second-largest debt burden. The rating was lowered to A from A+, with a negative outlook, S&P said in a statement. S&P said Italy's net general government debt is the highest among A-rated sovereigns, and the company now expects it to peak later and at a higher level than it previously anticipated. The decision sent the euro sliding for a third day against the dollar as investor concern rises that European policy makers will fail to contain the debt crisis. Greece's government plans another call with its main creditors today as it seeks to stave off default, while U.S. Treasury Timothy F. Geithner urged the region to adopt additional tools. "It's a reminder that we've had the market in control but policy makers have been slow to think in any forward-looking context," said Adrian Foster, head of financial-market research for Asia at Rabobank Groep NV in Hong Kong. "Policy makers across the euro-zone have been well and truly asleep at the wheel for quite a while now and are only taking measures when the market pushes them to it." S&P said it lowered its outlook for Italy's growth to a 0.7 percent annual average for 2011 to 2014, from a prior projection of 1.3 percent. "We believe the reduced pace of Italy's economic activity to date will make the government's revised fiscal targets difficult to achieve," it said. "We expect that Italy's fragile governing coalition and policy differences within parliament will continue to limit the government's ability to respond decisively to domestic and external macroeconomic challenges," S&P said. Italy's downgrade may aggravate a volatile political situation -- Berlusconi faces four trials -- after a decade with virtually no economic growth that has undermined debt reduction. Its government debt was 119 percent of gross domestic product last year, more than any euro country after Greece. With austerity in the pipeline, "we now expect the economy to contract in 2012 and 2013," Ben May, an economist at Capital Economics Ltd. in London, said in a Sept. 9 note. Berlusconi pushed through two packages of deficit cuts since mid-July totaling about 100 billion euros. Measures included raising the value-added tax by one percentage point to 21 percent and a levy on incomes of more than 300,000 euros to balance the budget by 2013. The yield on 10-year notes was at 5.6 percent yesterday, pushing the difference investors demand to hold Italian bonds instead of benchmark German bunds to 379 basis points. The cost of insuring Italian debt against default was 488 basis points compared with 240 on Dec. 31, 2010.
  
• The cost of protecting Malaysian and Thailand bonds from default shows that traders consider debt of those countries safer investments than AAA-rated France, whose banks are most exposed to a potential default by Greece. Credit default swaps for Malaysia and Thailand are priced at 133 basis points and 157 basis points, respectively, compared with France's 165.
• Euro Declines for Third Day Versus Dollar After S&P Lowers Italy's Ratings. The euro fell for a third day against the dollar after Standard & Poor’s cut Italy’s credit rating, adding to concern Europe’s worsening debt crisis will raise borrowing costs for countries in the region. The 17-nation euro extended declines versus the yen into a third day before Greece resumes discussions with its creditors over the next installment of rescue funds. The dollar gained versus most major peers before the Federal Reserve’s policy meeting today. Australia’s dollar held losses even after the Reserve Bank said it was “well placed” to respond to economic risks. South Korea’s won dropped to its weakest this year as a slump in Asian stocks curbed demand for emerging-market assets. “We’re going to see the euro continue to come under pressure,” said Chris Weston, an institutional trader at IG Markets in Melbourne. “One of the big things we’re very concerned with is what’s going to happen with Italian borrowing costs and this could see some further selling of bonds.”
• OPEC's $1 Trillion Cash Quiets Poor On Longest Ever $100 Oil. Saudi Arabia will spend $43 billion on its poorer citizens and religious institutions. Kuwaitis are getting free food for a year. Civil servants in Algeria received a 34 percent pay rise. Desert cities in the United Arab Emirates may soon enjoy uninterrupted electricity. Organization of Petroleum Exporting Countries members are poised to earn an unprecedented $1 trillion this year, according to the U.S. Energy Department, as the group’s benchmark oil measure exceeded $100 a barrel for the longest period ever. They are promising to plow record amounts into public and social programs after pro-democracy movements overthrew rulers in Tunisia, Egypt and Libya and spread to Yemen and Syria.
• Electric Vehicles Fail to Connect Consumers. Klaus Doerrzapf, who has solar panels on his home, has no plans for an emission-free car in his garage. He’s one of the reasons why automakers like Nissan Motor Co. won’t recoup investments in electric vehicles anytime soon. “It’s too early,” the 50-year-old manager at an electrics company said at the International Motor Show in Frankfurt. “Range and price are a problem. Battery life and charging times are also concerns,” Doerrzapf said, while looking at an electric-powered Focus from Ford Motor Co. (F)
• Obama Courts Wealthy New York Donors After Tax Boost Pitch. President Barack Obama met with wealthy New York donors, including investment bankers, at a campaign fundraiser tonight, hours after calling for new taxes on top earners to help narrow the budget deficit. Speaking to about 60 contributors at a $35,800-per-ticket event at the New York home of Ralph Schlosstein and Jane Hartley, Obama defended his economic record and appealed for help to win “the hearts and minds of America.”
• Short-Term Stimulus Won't Help U.S. in Long Run: Glenn Hubbard. Joblessness and sluggish growth are hampering the economic recovery and Barack Obama’s political standing. Raising taxes on the rich, as the president called for yesterday, isn’t going to turn things around. To get a sense of how severe the situation is, consider this: Bringing the unemployment rate back to pre-financial- crisis levels by end of the president’s second term (or his opponent’s first term) would require real Gross Domestic Product growth of 4 percent a year over that period -- a rate we have not reached in more than a decade. What sort of fiscal policy can turn things around?
• Strong Countries, Not Greece, Should Ditch the Euro: Ramesh Ponnuru. Europeans can’t say they weren’t warned. For a decade before the euro was launched, critics -- and many economists -- argued that one currency wouldn’t fit all, or even most, of the nations of the European Union. The unfolding euro-area crisis is proof that the critics were right. Now it’s up to the strongest member countries to put an end to this failed experiment.
• Food Inflation to Remain a Concern for Governments, FAO Says. Food-price inflation will remain a concern for governments even as wheat prices stay below their peak this year and rice declines, the United Nations said. It will take another year of bumper harvests for wheat and rice and a surplus in corn to bring stockpiles to “healthy” levels and ease inflation concerns, Abdolreza Abbassian, senior economist at the UN Food & Agriculture Organization, said in an interview in Singapore today.
• 8 Offshore Banks Under Investigation: U.S. Eight offshore banks are under federal grand jury investigation for facilitating tax evasion by U.S. citizens as part of a probe the Justice Department said has dealt “fabled Swiss bank secrecy a devastating blow.”

Wall Street Journal:

• Partner in Merkel Bloc Sticks by Euro Criticism. Germany's Free Democratic Party, junior partner in Chancellor Angela Merkel's government, vowed to maintain its recently adopted euro-skeptic tone, despite a weekend drubbing in regional elections in Berlin. The pro-business FDP made clear Monday that it will continue to express many ordinary Germans' growing doubts about the bailout of Greece, in defiance of Chancellor Merkel's attempts to keep her coalition partner in line. The FDP's loss of popularity since Germany's last elections in 2009 is making Ms. Merkel's task of governing harder, since her struggling coalition partner is becoming less obedient—particularly on the chancellor's handling of the euro-zone debt crisis.
  
• Greek Crisis Exacts the Cruelest Toll. Two years into Greece's debt crisis, its citizens are reeling from austerity measures imposed to prevent a government debt default that could cause havoc throughout Europe. The economic pain is the price Greece and Europe are paying to defend the euro, the centerpiece of 60 years of efforts to unite the Continent. But as Greece's economy shrinks, its society is fraying, raising questions about how long Greeks will be able to take the strain. Gross domestic product in the second quarter was down more than 7% from a year before, amid government spending cuts and tax increases that, combined, will add up to about 20% of GDP. Unemployment is over 16%. Crime, homelessness, emigration and personal bankruptcies are on the rise. The most dramatic sign of Greece's pain, however, is a surge in suicides. Recorded suicides have roughly doubled since before the crisis to about six per 100,000 residents annually, according to the Greek health ministry and a charitable organization called Klimaka. About 40% more Greeks killed themselves in the first five months of this year than in the same period last year, the health ministry says.
• U.S. Probes Rating-Cut Trades. Securities regulators have sent subpoenas to hedge funds, specialized trading shops and other firms as they probe possible insider trading before the U.S. government's long-term credit rating was cut last month, people familiar with the matter said.
  
• Seagate(STX) CFO Sees 'Drastic' Changes Coming To Its Customer Base. Seagate Technology Inc. (STX) expects its customer base to "change in a drastic, drastic manner" over the next five years as the maker of hard-disk drives deals with the decline of computers--its core market--and the rise of more competition.

CNBC:

• New Fees in Obama Plan Won't Just Hit Millionaires. It's not just millionaires who'd pay more under President Barack Obama's latest plan to combat the deficit. Air travelers, federal workers, military retirees, wealthier Medicare beneficiaries and people taking out new mortgages are among those who would pay more than $130 billion in new government revenues raised through new or increased fees. These fees are advertised as "savings" in administration budget documents. Airline passengers, for instance, would see their federal security fees double from $5 to $10 for a nonstop round-trip and triple to $15 by 2017, raising $25 billion over the coming decade. Federal employees would contribute $21 billion more to their pensions over the same period. Military retirees would pay a $200 fee upon turning 65 to have the government pay their out-of-pocket Medicare expenses. They'd also pay more for non-generic prescription drugs. And it'll cost corporate jet owners a new $100 fee for each flight.
• China Bank Stops Some FX Trades With European Banks. A big market-making state bank in China's onshore foreign exchange market has stopped foreign exchange forwards and swaps trading with several European banks due to the unfolding debt crisis in Europe, two sources told Reuters on Tuesday. The European banks include French lenders Societe Generale, Credit Agricole and BNP Paribas. "Apart from spot trading, all swaps and forwards trading (with the European banks) have been stopped," one source who is familiar with the matter told Reuters. The Chinese state bank, a primary player in China's onshore foreign exchange market, has also stopped trading with UBS in the wake of that bank's $2.3 billion loss from a rogue trading scandal.
• US to Announce Major China Trade Enforcement Action. U.S. trade officials will announce a major trade enforcement action against China on Tuesday, according to an advisory from the U.S. Trade Representative's office. The advisory, which was obtained from a business group, said U.S. Trade Representative Ron Kirk "will hold a press conference to announce a major trade enforcement action against China." It gave no other details. One possible action could target China's export restrictions on rare earths, which are crucial for global electronics production and the defense and renewable energy industries. They are also used in a wide range of consumer products from iPhones to electric car motors.

Business Insider:

• The Completely Outrageous Cost of Living in Brazil.
• A Little Bit of Math on the "Buffett Tax". Unfortunately, $410 billion is "only" about 7% of the deficit we expect to incur over the next ten years. That is not an inconsequential portion but considering the debate surrounding hiking tax rates by any amount, let alone generating an increase sufficient see a seven percentage point increase in taxes paid, as well as the negative consequences such a sharp adjustment would engender, this hardly seems to be the “only” place to go to achieve debt reduction.
• Meet The Hardcore Porn Star Getting A $53,000 Per Annum Pension From The Italian Senate.
  

Zero Hedge:

• UBS's Andy Lees Kills The Argument of Endless Debt-Funded Stimulus.
• Why Was Congress Forced to Subpoena to Head of Obama's Budget Office to Get Info On Solyndra?
  

IBD:

• CVR Partners(UAN) Enjoy High Prices For Its Fertilizers.

NY Times:

• ConAgra(CAG) Withdraws $5.2 Billion bid for Ralcorp(RAH). ConAgra Foods said on Monday that it was dropping its $94-a-share cash offer for Ralcorp Holdings. “This follows Ralcorp’s failure to enter into a constructive dialogue with ConAgra Foods,” the company said in a statement. Earlier on Monday, Ralcorp said that it still considered ConAgra’s $5.2 billion takeover offer insufficient. That all but ensured that the offer will expire without deal talks beginning.
• Greece Nears the Precipice, Raising Fear. Slower economic growth throughout Europe, and probably in the United States. Huge losses by major European banks. Declining stock markets worldwide. A tightening of credit, making it harder for many borrowers to get loans. As concerns grow that Greece may default on its government debt, economists are starting to map out possible outcomes. While no one knows for certain what will happen, it’s a given that financial crises always have unexpected consequences, and many predict there will be collateral damage.

The Blaze:

• U.S. In 'Damage Control' Mode as Palestinian Leader Says Nothing Can Stop Statehood Bid. (video)

Politico:

• Obama Deficit Reduction Plan Embraces The Left. President Barack Obama finally gave his liberal critics exactly what they wanted. His tough opening bid on deficit reduction and his feisty, defiant speech from the White House Monday were greeted with almost incredulous joy by progressives who have urged Obama to take this kind of hard line with Republicans since the day he was elected.

Reuters:

• CDS Collateral Quality Might Pose Hidden Risk. (video) CDS exposure to euro zone peripheral countries should be safely collateralized, but collateral quality might still represent an issue, says Reuters Fixed Income analyst Vincenzo Albano.
• FACTBOX - What's on Obama's Tax List, With "Buffett Rule"?
  

Financial Times:

• Siemens shelters up to €6bn at ECB. Siemens AG withdrew more than $684 million in cash deposits from a large French bank two weeks ago and transferred it to the European Central Bank, citing a person with direct knowledge of the matter. In total, Siemens has deposited between 4 billion euros and 6 billion euros, mostly through one-week deposits, with the ECB, citing the person. It isn't clear from which bank Siemens withdrew its deposits.

Kathimerini:

• Greece May Hold Referendum on Euro Zone Membership. Greek Prime Minister George Papandreou is considering holding a referendum on whether his nation should remain or exit from the euro common currency. Papandreou hopes to use the vote to give his government a mandate for austerity measures asked for by international lenders. A bill to set up a referendum on the euro may be submitted to parliament and discussed in coming days.

Commercial Times:

• TSMC to Cut Capex by 19% in 2012. Taiwan Semiconductor Manufacturing Co. plans lower capital spending by 19% to $6 billion in 2010, from $7.4 billion budgeted this year.

21st Century Business Herald:

• China's non-performing loans to local government financial vehicles may exceed 1 trillion yuan in two years, citing a report from China Orient Asset Management. The non-performing loan ratio for financing vehicles may reach as high as 15%. The ratio for high-speed rail construction is "very likely" to hit 11.65%. Bad loan risk at banks will mainly come from local financing vehicles, high-speed rail construction, renewable energy and steel industries, according to 72.54% of respondents of the China Orient Asset Management Survey.

Evening Recommendations
Citigroup:

• Reiterated Buy on (APEI), target $55.

Night Trading

• Asian equity indices are -2.0% to +.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 205.0 (new series).
  
• Asia Pacific Sovereign CDS Index 154.50 +.5 basis point.
• FTSE-100 futures n/a.
  
• S&P 500 futures -.70%.
  
• NASDAQ 100 futures -.47%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (FDS)/.95
• (AZO)/6.98
• (CAG)/.31
• (JEF)/.20
• (CCL)/1.63
• (ADBE)/.54
• (CPRT)/.59
• (ALOG)/.62
• (ORCL)/.47

Economic Releases
8:30 am EST

• Housing Starts for August are estimated to fall to 590K versus 604K in July.
• Building Permits for August are estimated to fall to 590K versus 597K in July.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The weekly retail sales reports, RBC Industrials Conference, BofA Merrill Power Conference, Goldman Sachs Communicopia Conference and the JPMorgan Investment Conference could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly lower, weighed down by financial and industrial shares in the region. I expect US stocks to open modestly lower and to maintain losses into the afternoon. The Portfolio is 75% net long heading into the day.

Stocks Falling into Final Hour on Rising Eurozone Debt Angst, US Tax Hike Fears, Financial Sector Pessimism, Global Growth Worries

Broad Market Tone:

• Advance/Decline Line: Substantially Lower
  
• Sector Performance: Almost Every Sector Declining
  
• Volume: Below Average
  
• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• VIX 34.02 +9.88%
  
• ISE Sentiment Index 55.0 -11.29%
  
• Total Put/Call .91 -5.83%
  
• NYSE Arms 1.94 +144.67%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 128.13 +2.38%
  
• European Financial Sector CDS Index 270.17 +10.85%
  
• Western Europe Sovereign Debt CDS Index 340.60 +5.12%
  
• Emerging Market CDS Index 304.88 +4.84%
  
• 2-Year Swap Spread 32.0 unch.
  
• TED Spread 35.0 -1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .00% unch.
  
• Yield Curve 179.0 -11 bps
  
• China Import Iron Ore Spot $177.50/Metric Tonne -.22%
  
• Citi US Economic Surprise Index -42.20 +.9 point
  
• 10-Year TIPS Spread 1.89 -8 basis points
  

Overseas Futures:

• Nikkei Futures: Indicating -185 open in Japan
• DAX Futures: Indicating +28 open in Germany

Portfolio:

• Slightly Lower: On losses in my Tech and Medical sector longs
  
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges, added to my EEM short and then covered some of them
  
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is bearish, as the S&P 500 is rolling over at its downward-sloping 50-day moving average on rising Eurozone debt angst, increasing financial sector pessimism, US tax hike concerns, some more disappointing economic data, emerging markets inflation fears and global growth worries. On the positive side, Restaurant shares are higher on the day. Oil is falling -2.76%, Gold is down -1.85% and the UBS-Bloomberg Ag Spot Index is down -.6%. On the negative side, Road & Rail, Education, Construction, Insurance, I-Banking, Bank, Oil Service and Coal shares are under significant pressure, falling more than -3.0%. Cyclicals and small-caps are substantially underperforming. Copper is falling -3.72%. Rice is still very near its multi-year high, rising +33.5% in about 11 weeks. The average US price for a gallon of gas is -.02/gallon today to $3.59/gallon. It is up .45/gallon in about 7 months. The Germany sovereign cds is gaining +8.3% to 90.17 bps, France sovereign cds is surging +8.05% to 181.50 bps, the Italy sovereign cds is rising +6.2% to 472.50 bps, the Russia sovereign cds is gaining +6.1% to 229.33 bps, the Belgium sovereign cds is gaining +6.9% to 266.50 bps, , the Brazil sovereign cds is gaining +6.1% to 168.79 bps, the Portugal sovereign cds is rising +5.62% to 1,114.67 bps and the Spain sovereign cds is jumping +9.6% to 406.83 bps. The Germany sovereign cds is now only about 3 basis points away from its record high reached on Feb. 24, 2009. The France and Italy sovereign cds are still near their record highs. The Russia sovereign cds is close to breaking out of a multi-year trading range. The Western Europe Sovereign CDS Index and European Financial Sector CDS Index are still near their all-time highs. The 2-Year Euro Swap Spread is very close to a multi-year high, rising +4.07 bps to 98.81 bps. The 3-Month Euro Basis Swap is falling -4.90 bps to -92.03 bps. The TED spread is still at the highest level since July 2010 despite Europe's recent efforts. The Emerging Markets Currency VIX is surging 8.2% to 14.6, which is the highest since June 2010. Hong Kong stocks fell -2.8% overnight, and are now down -17.9% ytd, which places them back near their recent lows. The major European stock indices fell around -3% today and continue to trade poorly. Select growth stock leaders, such as (AAPL), remain on fire, which is masking broad-based weakness. The Naz is flat on the day, however breadth is -1,363. Volume is also lackluster on today's surge off the lows. The 10-year yield is falling too much again, declining -10 bps to 1.95%. Various credit gauges are indicating rising global recession fears. However, it appears to me equity investors expect stagnant growth, rather than true recession, which is likely the main reason a handful of true growth stocks are seeing huge outperformance and multiple expansion. I expect US stocks to trade mixed to lower into the close from current levels on profit-taking, rising Eurzone debt angst, increasing financial sector pessimism, global growth worries, emerging markets inflation fears, US tax hike worries and more shorting.

Today's Headlines

Bloomberg:

• Spain Riskier Than Bulgaria Signals Rating 'Wrong': Euro Credit. Spanish debt is more expensive to insure than Baa2-rated Bulgaria, signaling the euro region's fourth-biggest economy may not warrant its Aa2 credit status. Moody's Investors Service rates Spain two levels below AAA as does Standard & Poor's at AA. Fitch has Spain at AA+, one from the top, even after the European Central Bank stepped in to buy its bonds to bring yields down from euro-era records. While Spain is ranked the same as Slovenia by Moody's and S&P, costs to insure its debt against default are twice as much. "The rating agencies have got their head in the sand," Harvinder Sian, a strategist at Royal Bank of Scotland Group Plc in London. "Any country where you need the central bank in there supporting the bond market, and a AA rating, suggests something is very badly wrong with the ratings process." Spain's borrowing costs have soared as the government struggles to rein in the euro region's largest budget deficit after Greece and Ireland, which has pushed the debt to almost twice the level of four years ago. The surge in the 10-year yield to 6.46 percent led the ECB to start propping up Spanish bonds on Aug. 8, and has knocked 120 basis points off that high. The cost of insuring Spanish debt against default rose to 390, CMA prices showed today, compared with 329 for Bulgaria. Spain's 10-year bond yields 5.33 percent, about 160 basis points more than similar maturity bonds of Thailand, which Moody's rates five levels less than Spain at Baa1.
• Europe Bank Bonds Doubt Dollar Lending Success: Credit Markets. European bank bonds signal that investors remain skeptical that a move by central bankers around the world to provide dollars to financial institutions in need will solve the region's funding crisis. While the extra yield investors demand to hold bank bonds in euros instead of benchmark government debt shrank 15 basis points to 352 basis points after the Sept. 15 announcement, the spread remains within 18 basis points of the 2 1/2-year high reached earlier in the week, according to Bank of America Merrill Lynch index data. Euro-region banks' usual sources of dollar funding dried up on concern they'll be forced to take losses on bonds sold by Greece and the rest of Europe's most-indebted countries. In response, the European Central Bank and its counterparts in the U.K., Switzerland, Japan and the U.S. agreed to provide unlimited money to lenders until year-end. "It significantly reduces the possibility of a disorderly unwind of positions which certain banks may have had," said Roger Doig, a London-based analyst at Schroders Plc, which manages the equivalent of about $58 billion in fixed-income assets. "It doesn't change the fact that access to short-term wholesale dollar funding for certain banks is disappearing, and will be gone by the end of the year."
• Sovereign Default Risk Surges as Greek Woes Put Paid to Rally. The cost of insuring European sovereign debt rose, reversing a four-day rally, on concern a default by Greece is becoming more likely after the region's leaders failed to agree on new measures to halt the crisis. The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments rose 14 basis points to 339 at 3 p.m. in London, approaching the record 354 set Sept. 12. Greece's economy will shrink 5.5 percent this year and will contract "notably" next year, Finance Minister Venizelos said at a conference in Athens today. Contracts on the Markit iTraxx Crossover Index of 40 companies with mostly high-yield credit ratings increased 41 basis points to 756, according to JPMorgan Chase & Co. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose 12.5 basis points to 188.5. The Markit iTraxx Financial Index of swaps on the senior debt of 25 banks and insurers increased 27 basis points to 292, while the subordinated index was up 34 basis points to 499.
• Euribor-OIS Spread Widens as Greece Concerns Boost Lending Costs. A gauge of banks' reluctance to lend to each other in Europe rose for the first time in a week amid renewed concern Greece is headed for a default. The Euribor-OIS spread, the difference between the three- month euro interbank offered rate and overnight index swaps, was at 79.1 basis points as of 4:18 p.m. in London, from 75.3 at the end of last week, according to data compiled by Bloomberg. That's within six basis points of the highest level since March 2009, reached Sept. 12.
• Europe Always Does Too Little, Too Late, Summers Writes in FT. European authorities, in the past two years, have repeatedly done just enough to avoid an imminent collapse, while never doing enough to establish a basis for renewed confidence, said Lawrence Summers, a former U.S. Treasury Secretary and now a professor at Harvard. Writing in the Financial Times, Summers said that authorities who assert, in the face of all the evidence, that Greece can service all its debts on time will enjoy little credibility when they claim that the fundamentals are sound in Spain and Italy. After European bank stress tests that treat assets as risk- free when credit default swaps exceed 500 basis points, markets can hardly be blamed when they ignore regulators’ assertions about financial institutions’ solvency, he said. It’s clear that market discipline within European monetary union isn’t powerful and credible enough to guarantee sound finance; there now has to be a simultaneous increase in the central authorities’ commitment to the financial stability of member-states and a reduction in the latter’s autonomy, if the euro is to survive, Summers said.
• The crude oil tanker market is failing to adjust vessel supply through slower speeds, ship-demolitions or idling, Goldman Sachs International analyst Edouard Baldini in London said today.
• Euro to Fall After Bounce, Citigroup(C) Says: Technical Analysis. The euro’s gain last week against the dollar won’t last and the currency may depreciate to a level last reached in January, said Citigroup Inc., citing technical indicators.
• Commodities Fall, Copper Drops to 9-Month Low on Europe Concerns. Commodities fell, led by copper’s drop to a nine-month low, on speculation that demand for raw materials will decline as European policymakers prepare to assess whether Greece can meet conditions of a rescue loan. Industrial users of metals and energy and companies that use agriculture commodities to make food may slow purchases, waiting on a solution to the euro crisis. The Standard & Poor’s GSCI Spot Index dropped 2.4 percent by 3:23 p.m. London time, the biggest drop on a closing basis since Aug. 18. Copper for three-month delivery declined 4.1 percent to $8,336 a metric ton on the London Metal Exchange, the lowest price since Nov. 30. Crude oil for November delivery declined 3.4 percent to $84.99 a barrel in New York.
• Solyndra Flop Doesn't Slow Push to Wind, Solar. The Obama administration, defying congressional Republicans after the failure of solar-panel maker Solyndra LLC, is working to award as much as $9.2 billion in government financing to renewable energy companies before a Sept. 30 deadline. Loan guarantees for 14 companies will close by month’s end if the projects meet government lending rules, Damien LaVera, a Department of Energy spokesman, said in an interview. “We want to get as many of these done in a way that responsibly protects the taxpayers’ interest,” he said. “If they meet conditions set out in the agreement, then they’ll close.” Solyndra filed for bankruptcy protection on Sept. 6, after receiving $535 million in loan guarantees from the administration, and the Federal Bureau of Investigation raided its Fremont, California, headquarters two days later. Republicans have called Solyndra a “poster child” for the failure of clean-energy subsidies awarded by the Department of Energy under President Barack Obama. “I am very concerned about where the $10 billion DOE has left to spend before the September 30 deadline is going,” Representative Cliff Stearns, a Florida Republican, said at the Sept. 14 hearing of a House oversight panel he heads. “Taxpayers would be better served by not risking even more of their money, instead using it to reduce our mounting national deficit.” Obama’s stimulus program, passed by Congress in 2009, set the Sept. 30 deadline for loan guarantees for most alternative energy projects. Programs to invest in advanced-technology vehicles and nuclear power plants will continue.
• China's JinkoSolar Drops Most Ever After Idling Factory on Pollution. JinkoSolar Holding Co. fell the most ever in New York, leading other Chinese solar companies down, after idling a factory that environmental regulators say may have polluted a river. JinkoSolar’s American depositary receipts sank as much as $2.24, or 25 percent, to $6.80 in New York Stock Exchange composite trading and was down $2.08 at 12:03 p.m. That’s the biggest intraday decline since the company began trading in May 2010. They have dropped 66 percent this year. Other Chinese solar companies fell as analysts said that margins are contracting and demand for panels will be less than expected this year. Yingli Green Energy Holding Co., LDK Solar Co. and Suntech Power Holdings Co. all dropped as much as 10 percent and the Bloomberg Industries Large Solar Energy Index declines as much as 6.2 percent. “It’s more of the same, unfortunately, with many of these companies seeing shipments growth with no margin,” said Aaron Chew, analyst at Maxim Group in New York. “I think these stocks don’t really go anywhere until next year.” Goldman Sachs Group Inc. revised its global forecast for solar shipments, according to a research note published today. The company now expects total shipments of 15,697 megawatts of panels in the second half of the year, 18 percent lower than its previous estimate.
• Tyco's(TYC) Split Creates Takeover Targets: Analysts. Tyco International Ltd. (TYC) plans to break itself into three publicly traded companies that may prove more attractive to potential suitors on their own than as pieces of a conglomerate. The separation, ending a decade in which Chief Executive Officer Ed Breen transformed the scandal-plagued conglomerate into a Standard & Poor’s 500 Index outperformer, will create standalone companies from ADT’s North American residential security, flow-control and the world’s biggest commercial security and fire-systems division.
• Homebuilders Targeted by U.S. Along With Hotels Over Pay Abuses. The Obama administration, 11 states and the Internal Revenue Service will join in an effort to crack down on companies such as homebuilders, hotels and restaurants that classify employees as independent contractors to avoid paying overtime. The agencies and states agreed to share wage information filed by the companies to help the Labor Department find and prosecute companies that misidentify workers in order to skirt paying unemployment benefits or federal taxes, according to Mike Wald, a department spokesman.

Wall Street Journal:

• Obama Presses for New Taxes. President Barack Obama on Monday offered a plan to reduce the nation's deficit by $3.6 trillion, almost half of which would come from tax increases, including a new tax on millionaires. Republicans were quick to denounce the president's plan. "Pitting one group of Americans against another is not leadership," House Speaker John Boehner (R., Ohio) said in a statement. "This administration's insistence on raising taxes on job creators and its reluctance to take the steps necessary to strengthen our entitlement programs are the reasons the president and I were not able to reach an agreement previously,'' Mr. Boehner said. "And it is evident today that these barriers remain."
• Netflix(NFLX) Separates DVD and Streaming Services. Netflix Inc. Chief Executive Reed Hastings said in a blog post the company is separating its movie-streaming business and its DVD-by-mail service, to be renamed Qwikster, a move he said was the undisclosed impetus for a recent price increase that outraged customers and sent the company's stock price plummeting. "I messed up," Mr. Hastings wrote in opening his lengthy, apologetic missive posted late Sunday night on Netflix's website. "I owe everyone an explanation."
• EU Banks Stress Tests Weren't Tough Enough, Document Says. The European Union's bank stress tests used out-of-date macroeconomic assumptions that didn't reflect the severe turmoil wracking sovereign debt markets when the tests were completed, according to a confidential document prepared by senior EU finance officials. One way they could be improved, the document says, would be to use a more up-to-date scenario "to avoid that it is taken over by events and therefore becomes obsolete, as was the case for instance, for the scenario of a relatively mild shock in banking books, a scenario which was clearly taken over by events as months passed by." Banks mainly hold sovereign debt in their "banking books," which is where they park bonds that they plan to hold until they mature. The tests required banks to make relatively limited provisions for losses on sovereign bonds in the banking book, even though Greek 10-year bonds, for example, were trading at around 50 cents on the euro when the tests were published.

CNBC.com:

• Management Shakeup at Soros Hedge Fund. Soros Fund Management, the $25 billion hedge fund co-founded by legendary investor George Soros, has named Scott Bessent as its new CIO, according to an investor letter obtained by CNBC.
• Fannie and Freddie's Boss Speaks Out on Obama's Refi Plan. Barely two weeks after President Obama proposed expanding a government mortgage refinance program in order to make millions more borrowers eligible, the man who would have to guide such a program announced yet another barrier to entry. The President's plan would work through Fannie Mae and Freddie Mac and their existing Home Affordable Refinance Program (HARP), by potentially eliminating loan-to-value ratios and lowering fees. But fees at Fannie and Freddie are about to go up, according to their conservator, the Federal Housing Finance Agency (FHFA).

Zero Hedge:

• Hugh Hendry Fund Soars 40% YTD as China Sinks. As everyone else was complaining about their performance (and P&L) collapsing, blaming it on everything from the weather, to Bernanke's diet, to fundmanetals and technicals, Hugh Hendry was raking it in and is now up 38.65% YTD, with a stunning +22.5% in August alone (or pretty much mirroring the collapse at Paulson & Co) and another 11% in September!

NY Post:

• How the 'Buffett Tax' Will Kill Jobs by Charles Gasparino. So President Obama is about to come out for another “millionaires tax,” one White House insiders are calling “the Buffett tax.” The sad thing is, even if he could get it, it would just be another jobs-killer. With many economists worried that we’re heading toward a double-dip recession, our fearless leader is still playing politics. The new tax would presumably go to pay for some of the government spending he still says will spur the economy, despite the evidence of his first three years in office. Aspects of the new plan remain scant, but what we do know isn’t good.

Rasmussen Reports:

• 56% Favor Repeal of Health Care Law, 52% Says Law Is Bad for the Country.

Reuters:

• Amid China Boom, Job Search for Many Grads Goes Bust. Yan Minglong, one of millions of recent Chinese college graduates, is not impressed with the doors opened by higher education. "Jobs? What jobs?" the 23-year-old said, whiling away his Saturday afternoon in a billiards hall in Shigezhuang, a gritty neighborhood on Beijing's northern outskirts where cheap rent is the main draw for some of China's white-collar hopefuls. Students from the country's largest-ever college graduating class, 6.6 million, have gone from hitting the books to hitting the streets in search of work this summer. But pouring that many graduates into an economy long known as the world's workshop has fueled worries about the market's capacity to absorb them and the potential for political unrest.
• Italy to Cut 2011, 2012 Growth Forecasts - Sources. A government forecasting document to be published in the next few days following the austerity plan approved by parliament last week will cut the 2011 growth forecast to 0.7 percent from 1.1 percent and lower the 2012 forecast to "1 percent or below" from 1.3 percent, the sources said. Many analysts expect Italy to post growth of below 0.5 percent next year, and several believe the economy will actually contract as the austerity plan bites.
  
• Home Builder Sentiment Dips in September: NAHB. The NAHB/Wells Fargo Housing Market index slipped 1 point to 14 from 15 the month before, the group said in a statement. That was shy of expectations for 15, according to a Reuters poll of economists.
• U.S. SEC Veteran to Depart for Sidley Austin.
• Expulsion of Troubled Euro States Sends Bad Message - Merkel. It would send a disastrous political message if euro zone member states could be thrown out of the currency bloc because they faced difficulties, German Chancellor Angela Merkel said on Monday. The euro zone should consider however whether it is fully equipped to make member states follow fiscal rules, Merkel added, speaking at a regional conference of her conservative Christian Democrat (CDU) party.

USA Today:

• Anti-Virus Firms Push Security Software for Mobile Devices. The prospect of consumers and employees physically losing information-packed mobile devices, or getting them hacked, is driving a red-hot sector of the tech industry: supplying mobile security.

Telegraph:

• Alliance Trust Chief Katherine Garrett-Cox Compares European Debt Crisis With Botox. Katherine Garrett-Cox, chief executive of Alliance Trust, has dismissed Europe's attempts to solve its debt crisis as "economic cosmetic surgery", warning there is "more pain" to come over the next few months.
• Debt Crisis: Live.
  

Bear Radar

Style Underperformer:

• Large-Cap Value (-2.41%)

Sector Underperformers:

• 1) Construction -4.03% 2) Road & Rail -3.85% 3) I-Banks -3.61%

Stocks Falling on Unusual Volume:

• BCS, UBS, IVN, SCX, EMM, JKL, TRH, CH, TXT, COL, MNTA, NFLX, PPDI, KIOR, CTCM, RLOC, TRS, POWI, BSFT, SNDA, LRCX, SUSS, SIMO, ZBRA, FSLR, PWRD, EBAY, GLPW, RGLD and PPDI
  

Stocks With Unusual Put Option Activity:

• 1) TYC 2) TSL 3) FMCN 4) ADBE 5) TXT
  

Stocks With Most Negative News Mentions:

• 1) CAT 2) AMAT 3) LDK 4) JKS 5) LRCX
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth (-1.21%)

Sector Outperformers:

• 1) Restaurants +.09% 2) Gold & Silver -.22% 3) Biotech -.33%

Stocks Rising on Unusual Volume:

• CMG, SSRI, CCOI, WMGI, NFLX, ATHN, OPTR, REGN, ULTA, MAKO, GR and TYC
  

Stocks With Unusual Call Option Activity:

• 1) SH 2) CMCSK 3) SPLS 4) SYMC 5) DHI
  

Stocks With Most Positive News Mentions:

• 1) BMY 2) MCK 3) MU 4) DMND 5) ULTA
  

Charts:

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