Bull Radar

Style Outperformer:

• Large-Cap Growth (+.37%)

Sector Outperformers:

• 1) Airlines +2.29% 2) Disk Drives +1.69% 3) Education +1.42%

Stocks Rising on Unusual Volume:

• YOKU, JVA, SYNA, MDCO, JNY, NDN, ALX, ARO, FIO and WDC
  

Stocks With Unusual Call Option Activity:

• 1) BRCD 2) WIN 3) LLY 4) SPN 5) GNW
  

Stocks With Most Positive News Mentions:

• 1) GIS 2) PAYX 3) ARO 4) EXPE 5) SYNA
  

Charts:

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

Tuesday Watch

Evening Headlines

Bloomberg:

• Euro Chiefs Push Back Debt Crisis Summit Amid Tension Over Greek Writedown. European leaders pushed back a debt- crisis summit amid opposition to German Chancellor Angela Merkel’s drive for deeper-than-planned writedowns of Greek bonds. The Oct. 18 meeting was postponed to Oct. 23 as Europe gropes toward a master plan for dealing with Greece’s oversized debt, insulating the Spanish and Italian markets, and shielding banks from the fallout. Europe needs a strategy for shoring up banks before unstitching a July accord to cut Greek bond values by an average of 21 percent, Belgian Prime Minister Yves Leterme said. “It is a very sensitive item,” Leterme said in a Bloomberg Television interview at his Brussels residence yesterday. “You can’t at every European Council change the percentages and bring supplementary problems to banks.” Germany and France, Europe’s dominant tandem, this week pledged a crisis-management breakthrough in time for a Nov. 3 meeting of Group of 20 leaders, the informal steering committee for the world economy. Opposition to bigger Greek debt writedowns is coming from the European Central Bank, which is against any backsliding from the July 21 accord on a second Greek bailout, a central bank official said yesterday. An appeal to “fully implement all aspects” of the July roadmap was inserted into last week’s monthly policy statement as a warning to Germany, the official said under condition of anonymity.
  
• ECB Backs Guarantee Option for Rescue Fund. The European Central Bank says the firepower of Europe’s bailout fund should be magnified by using government guarantees rather than the central bank’s money market operations. The ECB says governments should use the 440-billion-euro ($603 billion) European Financial Stability Facility to insure a portion of new bonds issued by debt-strapped nations. That would leverage the amount available to protect member states from the region’s debt crisis. EFSF resources “should be dedicated to enhance sovereign debt new issuance of securities, thus multiplying their effect,” ECB Vice President Vitor Constancio said in a speech in Milan yesterday. Policy makers are trying to build a “firewall” around large European countries like Italy and Spain whose size would make them difficult to rescue if their debt became unsustainable. ECB President Jean-Claude Trichet opposes suggestions that the central bank should lend to the EFSF to boost its capacity, saying such a move would not be “appropriate.” The Frankfurt-based central bank maintains any such arrangement would constitute monetary financing of governments. A guarantee program would allow countries to access more capital without the EFSF exhausting its finite capital reserves.
• Rate Swap Spreads Rise With Europe Plan Elusive: Credit Markets. A gauge of stress in credit markets reached its highest level in 16 months even as stocks rally, showing short-term funding concerns persist as European leaders rush to recapitalize the region's banks. The two-year interest-rate swap spread, which measures perceived credit risk, climbed 5.75 basis points last week, the biggest jump since June, to 39 basis points. The gap expanded 9 basis points in the two weeks ended Oct. 7 as the MSCI World Index of global stocks climbed 2.85%.
  
• Economists Call for Crop-Trading Limits to Curb Volatility. Hundreds of economists including scholars from Oxford University and the University of California, Berkeley, are asking the Group of 20 nations to impose limits on speculative positions in food commodities to curb volatility in crop prices. “With around 1 billion people enduring chronic hunger worldwide, action is urgently needed to curb excessive speculation and its effects on global food prices,” according to a letter signed by 461 economists and sent to finance ministers from the G-20, which includes the world’s richest nations. The letter, dated today, was posted on Oxfam America’s website. Research sponsored by the United Nations, International Monetary Fund and other global organizations suggest speculation in crop futures by index funds and large banks may cause price spikes that can put grocery costs out of reach for poorer people.
  
• Societe Generale SA, France's 2nd largest bank, may reduce its lending in Asia because of market volatility, according to 4 people with knowledge of the matter. Units in Asia that provide financing for aircraft, shipping and commercial real estate are under review, said the people.
• IBM(IBM) Advances to Record Price as Investors Consider 'Safer' Bet. International Business Machines Corp., the world’s largest computer-services company, rose to a record, surpassing the mark set in July. IBM rose 2.3 percent to $186.62 at the close in New York, giving it a market value of $222.9 billion. The price topped the $185.21 it reached July 19. “It’s attractive as a safer, less volatile investment in tech in very turbulent times,” said Ed Maguire, an analyst at Credit Agricole Securities USA in New York who rates the shares “outperform.” IBM, which went public in 1915, has gained 27 percent this year, making it the best performer of the Dow Jones Industrial Average.
• Most Supertankers Idled Since '80s Won't Buoy Charter Rates: Freight. Owners of supertankers, losing money for a sixth consecutive quarter, will probably idle the most ships in more than two decades as they contend with a glut that drove charter rates to the lowest in at least 14 years. The combination of too many ships and slowing demand growth for oil means that about 6 percent of the fleet will be anchored in a year from almost none now, according to the median in a Bloomberg survey of eight brokers and analysts. That may not be enough to end the slump. Forward freight agreements, traded by brokers and used to bet on transport costs, anticipate rates no higher than $13,819 a day through 2013. Frontline Ltd., the biggest operator of the vessels, says it needs $29,800 to break even. The Hamilton, Bermuda-based company will report its biggest annual loss in 12 years in 2011, analysts’ estimates compiled by Bloomberg show. While owners can cut operating costs to as little as $2,000 a day from $12,000 by anchoring ships, it also means no income, said Andreas Sohmen- Pao, chief executive officer of the oil and gas shipping unit of BW Group Ltd., which is idling three vessels.

Wall Street Journal:

• Cantor Fitzgerald Bets On Expanding Private-Stock Market. Cantor Fitzgerald is looking to cash in on a growing secondary market for shares in hot private companies such as Facebook Inc. and Twitter Inc. The financial-services firm is creating a private-markets group to afford clients opportunities to invest in private-company stock along with private real estate investment trusts and private-equity and hedge-fund interests.
• Schapiro to Stay at SEC Through Next Fall.
• Longacre to Wind Down Main Hedge Funds. Longacre Fund Management LLC told investors Monday that it will wind down its main hedge funds, after losses and redemptions for the end of this year took a greater toll than the firm's managers expected. The high-profile firm was started 13 years ago by former Bear Stearns distressed-debt traders John Brecker, Vladimir Jelisavcic and Steven Weissman. As of February, Longacre had $835 million in assets, according to fund documents. Longacre executives told clients and others close to the matter that clients' withdrawal requests for the end of 2011 overwhelmed the firm, making the closure of its main funds the best course of action, the people said.

MarketWatch:

• China Selloff Reflects Lower Credibility: Analysts. China's sovereign-wealth fund stepped in Monday to buy shares of the country's battered banks, which have been caught in a selloff that analysts say partly reflects a loss of trust in the integrity of government statistics and corporate earnings. The skepticism of investors comes as China has become increasingly exposed to global markets, largely through stock listings of its state-owned enterprises and other companies, but more recently through its currency and bonds, which are now traded in Hong Kong.

Business Insider:

• AHEM: Wall Street "Protester" Says He's Getting Paid $22 An Hour (Plus Overtime) To "Protest".

Zero Hedge:

• Who Is 'Latour Trading' And How Dare They Upstage Goldman(GS)?

CNBC:

• Nervous Asia Has Good Reasons to Fear Euro Zone Crisis. Over recent weeks, Asia’s largely dispassionate observation of the economic slowdown in Europe has given way to fears that the eurozone’s sovereign debt woes could trigger deep problems for the broader Asian economy and its financial centers. Singapore and neighboring Southeast Asian nations are among the most vulnerable to direct disruption, because so much of their economic activity depends on international trade. Even the least bearish bankers are braced for at least a repeat of the 2008 hit to Asia’s economy — and its banks — when the first flush of the global financial crisis led to two quarters of negative growth in the region. The old idea of Asia, or many other emerging markets for that matter, being a safe haven from troubles in developed markets, has been discredited. As 2008 showed, there is no such thing as a decoupled economy in a globalized world.Asia today faces two waves of pain.
• China Shares Rise After State Props Up Bank Shares. Chinese shares rose nearly 2 percent in early trade on Tuesday, boosted by a unit of the country's sovereign wealth fund increasing its stakes in the "Big Four" lenders in a sign of government support for the languishing stock market.

NY Times:

• Wall St. Banks Help Hedge Funds Recruit. Wall Street banks often boast that they hire the best and the brightest. Now, scrambling to bolster profits, they have become full-time headhunters for some of their biggest hedge fund clients, a role that is rife with potential conflicts.

Forbes:

• ObamaCare Budgeting Could Turn The U.S. Into Greece. Heard of the Community Living Assistance Services and Supports program, or CLASS for short? It is a new government program that offers long-term care insurance. It was buried in the Affordable Care Act that was signed a year and a half ago (aka ObamaCare). If you haven’t heard of CLASS you’ve done your sanity a favor. But while re-reporting and re-fighting the health reform debate is perilous, and potentially boring, the fiasco around CLASS is worth outlining to show how Washington-style budgeting really works.
• Blink And You Missed It: Anonymous Attacks NYSE.
• Economic Policy In The E.U.: More Bailouts, More Debt, More Crises.
  

Chicago Tribune:

• Paulson Faces Big Test as Clients Mull Future. Hedge fund manager John Paulson, long lionized for his successful bets on the collapse of the subprime mortgage market and the surge in gold prices, is now facing the toughest challenge of his career. With one of Paulson's largest funds down nearly 50 percent for the year and several others also posting big losses, the big question is whether the manager's large and wealthy fan base will scurry for the exits and seek to redeem billions of dollars by year's end. "There will be a lot of internal discussion at big and small investors alike about the allocation to John Paulson and whether to redeem it or to keep it," said Professor Jim Liew, who teaches hedge fund strategies at New York University's Stern School of Business.
  

Reuters:

• Irish Banks Noncore Assets Must Fall in 2011 - Govt. Ireland's three remaining banks should dispose of almost half of their noncore assets under a targeted deleveraging program this year, Ireland's finance department said. Bank of Ireland (BKIR.I), Allied Irish Banks (ALBK.I) and Irish Life & Permanent (IPM.I) need to shrink their balance sheets by 70 billion euros by 2013, 34 billion of which are to be achieved through asset disposals. Some 46 percent of those disposals are expected to be accomplished during 2011, the finance ministry said in a half-year review of Irish banks to end-September that it published on its website on Monday.
• Carlyle-Blackstone(BX), THL Finalists for Morgan Keegan. Thomas H. Lee Partners and a consortium that includes Blackstone Group (BX.N) and Carlyle Group [CYL.UL] are the finalists for Regions Financial Corp's (RF.N) Morgan Keegan brokerage unit, sources familiar with the matter said.
• 25 States Urge Court to Make US EPA Delay Power Plant Rule. Adding pressure on the U.S. Environmental Protection Agency to relax air pollution rules, 25 states urged a federal court on Monday to require the agency to delay a rule on mercury emissions and other pollutants from power plants by at least a year, saying the measure is too costly. "In the past, EPA has designed its regulations pretty carefully to make sure that they wouldn't be forcing any facilities to shut down," Jeff Holmstead, the former EPA assistant administrator for air and radiation under President George W. Bush, said about the brief, filed electronically on Monday with the U.S. District Court for the District of Columbia. "But now, it looks like there are senior folks at EPA whose main goal is to shut down as many coal-fired power plants as possible."
• Congress Watchdog Probes Solar Loans After Solyndra. A top Republican congressional watchdog wants the Energy Department to turn over documents and emails about $4.7 billion in loan guarantees for four solar projects approved right before a Sept 30 deadline. The last-minute approvals of the projects raise fears that "the evaluation of loan guarantees may have been rushed in order to meet a deadline," said Darrell Issa, chairman of the House Oversight Committee, in a letter to Energy Secretary Steven Chu.

Financial Times:

• Netherlands Finance Minister Jan de Jager wants harsh enforcement measures for violations of budget agreements as part of any new pact to save the eurozone, citing an interview. Netherlands wants reforms from any country that seeks help from the European financial stability facility. Some measures Netherlands wants may require renegotiating European treaties.
• PrimeX Indices Suggest Mortgage Concerns are Spreading. (video) They are indices few have ever heard of outside the more arcane corners of the credit world. But they, nevertheless, are starting to flash warning signs, suggesting concerns about the mortgage market are spreading from subprime to better quality home loans.

Telegraph:

• Germany Push for Greek Default Risks EMU-Wide 'Snowball'. Germany is pushing behind the scenes for a "hard" default in Greece with losses of up to 60pc for banks and pension funds, risking a chain-reaction across southern Europe unless credible defences are established first. Officials in Berlin told The Telegraph it is "more likely than not" that investors will suffer fresh losses on holdings of Greek debt, beyond the 21pc haircut agreed in July. The exact level will depend on findings by the EU-IMF "Troika" in Athens. "A lot has happened since July. Greece has fallen back on its commitments, so we have to assume that the 21pc cut is no longer enough," said one source. Finance minister Wolfgang Schäuble told the Frankfurter Allgemeine that the original haircuts were "probably" too low, saying banks must have "sufficient capital" to cover greater losses if need be. Estimates near 60pc have been circulating in Berlin. The shift in German policy has ominous echoes of last year when Chancellor Angela Merkel first called for bondholder haircuts, setting off investor flight from Ireland and a fresh spasm in the EU debt crisis. "This could set off a snowball effect," said Andrew Roberts, credit chief at RBS. "The markets will instantly switch attention to Portugal, where two-year yields are already 17pc".
• Banque de France Turns a Blind Eye to European Financial Crisis. Crisis? What crisis? To judge by a speech in Tokyo last week from Christian Noyer, Governor of the Banque de France, you would never have guessed there was an almighty financial implosion going on at the heart of the eurozone.

Guardian:

• Spain Unlikely to Meet Deficit Target. Alarm is sounded over the country's borrowing, with the chance of the public deficit being cut from 9% to 6% said to be slim. Alarm bells are being rung over Spain's ability to hit its public deficit target this year without taking further dramatic steps to raise extra income or cut spending. Figures released last week by the national statistics institute (INE) show that the deficit level remained virtually unchanged during the first half of this year, according to one of the country's leading analysts. Angel Laborda, of the savings banks federation Funcas, said the figures on the overall borrowing needs of Spain's public administration meant the chances of bringing the deficit down from 9% to 6% this year were slim. The deficit could now head for between 7.5 and 8%of GDP – well off the target agreed by the socialist government of prime minister José Luis Rodríguez Zapatero and the European Union and much worse than previous analysts' estimates. "Most of the year has already gone so I think it is impossible to meet 6%," Laborda said. "I'd say it will be closer to 8%." He blamed the problem on the regional governments, who account for a third of public spending. Many had only seriously begun to cut spending after May elections, he said. Lower-than-expected growth was also a handicap. Separate figures show that central government has brought down its part of the deficit, suggesting that regional governments may have actually grown their deficits during the first half of the year, he said.

Sky News:

• Ratings Boss: Eurozone Crisis 'Getting Worse'. (video) "The eurozone crisis keeps on getting worse," he said on Jeff Randall Live. "It's now become a systemic crisis - not just in terms of spreading the contagion to Italy, which is deeply worrying - but it's now become a systemic banking crisis." His comments follow Fitch's downgrade of both Spanish and Italian government debt on Friday. But Mr Riley stressed there was "broad recognition" of what needs to be done to help the region. He said the solution includes dealing with Greece's debt, putting more money into banks and supporting weaker countries like Spain and Italy, which he described as "solvent but potentially illiquid". But when pressed by Randall on whether Germany would bankroll these measures, he admitted this was a problem. "It's not that they don't know the potential solution, it's that they don't want to put that one in place," he said. "That's one of the reasons why they've been behind the market, because where the market is wanting to take them... Germany in particular doesn't want to go there." He added:"(Prime Minister) David Cameron said they have weeks to do it, but I think this crisis could go on for months, not weeks."

Vietnam News:

• Floods in Vietnam's Mekong Delta had killed 24 people as of Oct. 9 and inundated 22,920 hectares of the autumn-winter rice crop, citing the National Steering Committee for Flood and Storm Prevention and Control.

Shanghai Daily:

• Dent in Shanghai Consumer Confidence. HIGH inflation, a weak stock market and concerns over tightening measures put a dent in the confidence of Shanghai's consumers who were pessimistic in the third quarter this year, the first time their confidence has dipped since the first quarter of 2009, according to a survey yesterday. The consumer confidence index dropped to 99 in July to September, down 7.7 points from the same period a year ago, the Shanghai University of Finance and Economics said in a report yesterday, quoting a quarterly index on consumer tendency in the city. A reading above 100 signals consumers are optimistic about the economy while one below indicates pessimism.

Shanghai Securities News:

• The Chinese Academy of Social Sciences expects China's 2011 CPI to Be 5.5%. CASS suggests that the country should continue to curb inflation and stabilize prices this year and early next year.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are +.75% to +2.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 222.50 -7.0 basis points.
  
• Asia Pacific Sovereign CDS Index 156.50 -10.0 basis points.
• FTSE-100 futures +.04%.
  
• S&P 500 futures -.25%.
  
• NASDAQ 100 futures -.27%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AA)/.23

Economic Releases
7:30 am EST

• The NFIB Small Business Optimism Index for September is estimated to rise to 88.8 versus 88.1 in August.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Slovakia EFSF vote, FDIC's Volcker rule vote, weekly retail sales reports, 3-Year Treasury Note auction, IDB/TIPP Economic Optimism Index for October, (FISV) investor conference and the (CVX) Interim 3Q Update could also impact trading today.
  

BOTTOM LINE: Asian indices are higher, boosted by financial and technology shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.

Stocks Surging into Afternoon on Declining Eurozone Debt Angst, Less Financial Sector Pessimism, Short-Covering, Technical Buying

Broad Market Tone:

• Advance/Decline Line: Substantially Higher
  
• Sector Performance: Every Sector Rising
  
• Volume: Light
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 34.17 -5.61%
  
• ISE Sentiment Index 123.0 +86.36%
  
• Total Put/Call 1.25 +12.61%
  
• NYSE Arms .78 -52.43%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 137.30 -.73%
  
• European Financial Sector CDS Index 221.01 -7.28%
  
• Western Europe Sovereign Debt CDS Index 333.83 -1.83%
  
• Emerging Market CDS Index 343.16 -.84%
  
• 2-Year Swap Spread 38.0 -2 bps
  
• TED Spread 39.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .00% unch.
  
• Yield Curve 178.0 unch.
  
• China Import Iron Ore Spot $166.50/Metric Tonne -2.06%
  
• Citi US Economic Surprise Index -3.10 +4.4 points
  
• 10-Year TIPS Spread 1.94 unch.
  

Overseas Futures:

• Nikkei Futures: Indicating +178 open in Japan
• DAX Futures: Indicating +19 open in Germany

Portfolio:

• Higher: On gains in my Tech, Retail, Biotech and Medical sector longs
  
• Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and some of my (EEM) short
  
• Market Exposure: Moved to 100% Net Long

BOTTOM LINE: Today's overall market action is bullish, as the S&P 500 breaks above its downward sloping 50-day moving average on less Eurozone debt angst, less financial sector pessimism, diminishing global growth worries, short-covering and bargain-hunting. On the positive side, Coal, Oil Tanker, Energy, Oil Service, Steel, Bank, Homebuilding and Gaming shares are especially strong, rising more than +4.0%. Cyclical and Small-cap shares have outperformed throughout the day. As well, (XLF) is trading well. Copper is rising +3.09% and Lumber is rising +2.77%. The Germany sovereign cds is falling -4.3% to 94.17 bps, the Ireland sovereign cds is falling -3.36% to 678.33 bps, the Russia sovereign cds is declining -3.16% to 278.94 bps and the Israel sovereign cds is falling -4.2% to 174.91 bps. Major European equity indices surged 2-3% today. On the negative side, Education, Telecom and Utility shares are underperforming, rising less than 2.0%. Oil is gaining +3.5%, the UBS-Bloomberg Ag Spot Index is gaining +1.97% and Gold is rising +2.24%. Rice is still close to its multi-year high, rising +24.0% in about 13 weeks. The Belgium sovereign cds is rising +.28% to 284.50 bps and the Brazil sovereign cds is rising +.89% to 179.97 bps. The Libor-OIS Spread is unch. at 31.0 bps, which is the highest since July 2010. The FRA/OIS Spread is unch. at 54.0 bps, which is also the highest since July 2010. As well, the TED spread hasn't come in at all, which is also noteworthy considering the recent strong equity advance. The Western Europe Sovereign CDS Index, the European Financial Sector CDS Index and the Asia-Pacific Sovereign CDS Index are still near their records and trending higher despite the recent pullbacks. The Shanghai Composite, which was closed during last week's global rally, re-opened and declined -.6% overnight. It is down -16.5% ytd. Asia still appears to be more of a problem than investors currently perceive. As well, I still believe stocks have gotten a bit ahead of themselves with respect to the prospects for a "solution" in Europe. Moreover, even if another "kick the can" solution is imminent, the economies in the region will likely continue to deteriorate as the massive tax hikes and spending cuts intensify, which will further exacerbate their debt issues over the longer-term. However, in the short-term, given high levels of investor pessimism and the S&P 500's technical improvement, more gains are likely. I expect US stocks to trade mixed-to-lower into the close from current levels on profit-taking, emerging markets inflation fears, rising food/energy prices, more shorting and global debt angst.

Today's Headlines

Bloomberg:

• Stoxx Eruope 600 Index Posts Biggest Four-Day Jump Since 2008 on Bank Plan. European stocks advanced, with the Stoxx Europe 600 Index posting its biggest four-day rally since November 2008, as the leaders of Germany and France gave themselves three weeks to create a plan to recapitalize banks. The benchmark Stoxx 600 advanced 1.7 percent to 235.94 at the 4:30 p.m. close in London, extending the gauge’s rally over the last four days to 8.5 percent. National benchmark indexes rose in 15 of the 18 western European markets. The U.K.’s FTSE 100 Index gained 1.8 percent. France’s CAC 40 Index climbed 2.1 percent and Germany’s DAX Index jumped 3 percent. All three gauges posted their biggest four-day rallies since 2008.
  
• Sovereign, Corporate Credit-Default Swap Indexes Fall in Europe. The cost of insuring against default on European sovereign and corporate debt fell, according to traders of credit-default swaps. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments dropped seven basis points to 324 at 3:30 p.m. in London. A decline signals improvement in perceptions of credit quality. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings decreased 32.5 basis points to 781, according to JPMorgan Chase & Co. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings fell 9.75 basis points to 179.5 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers decreased 11.5 basis points to 240.5 and the subordinated index dropped 19 to 483.
• Euro Chiefs Push Back Debt Crisis Summit Amid Tension Over Greek Writedown. European leaders pushed back a debt- crisis summit amid tensions between Germany, France and the European Central Bank over possible deeper-than-planned writedowns of Greek bonds. The planned Oct. 18 meeting was postponed to Oct. 23 as Europe gropes toward dealing with Greece’s oversized debt, insulating the Spanish and Italian markets, and shielding banks from the fallout. “Further elements are needed to address the situation in Greece, the bank recapitalization and the enhanced efficiency of stabilization tools,” European Union President Herman Van Rompuy said in an e-mailed statement in Brussels today. “This timing will allow to finalize our comprehensive strategy.” Germany and France yesterday set an end-of-month deadline for a breakthrough in handling the crisis, which has pushed Greece to the brink of default, roiled global markets and spurred speculation that the 17-nation euro region might not survive in its current form. German Chancellor Angela Merkel and French President Nicolas Sarkozy put recapitalization of Europe’s banks at the top of the priority list in a joint declaration in Berlin yesterday. Sarkozy said they would deliver a plan by the Nov. 3 Group of 20 meeting.
• Greek Public-Health Tragedy Looms, Academics Write in Lancet. The financial catastrophe in Greece is damaging public health and wellbeing, according to six medical academics including Alexander Kentikelenis and David Stuckler of Cambridge University and Martin McKee of the London School of Hygiene and Tropical Medicine. In a letter published in the Lancet, a medical journal with offices in London, New York and Beijing, they analyzed European Union statistics based on replies by 12,346 and 15,045 Greeks in 2007 and 2009, respectively. The group said 2009 saw significant increases in the number of people reporting that they didn’t see a doctor or dentist despite feeling it was necessary to do so, and in those reporting that their health was “bad” or “very bad.” Since Greece’s public health-care system entitles citizens to visit general practitioners free of charge and to attend hospital outpatient clinics at low cost, the reduced access probably reflected the fact that there were cuts of about 40 percent in hospital budgets, understaffing, occasional shortages of medical supplies, and bribery of medical staff to jump queues at overcrowded hospitals, the group wrote. The number of suicides was 17 percent higher in 2009 than in 2007, unofficial figures cited in parliament mentioned a 25 percent increase in 2010 compared with 2009, and the minister of health reported a 40 percent rise in the first half of 2011 compared with the year-earlier period, according to the letter.
• Morgan Stanley(MS) Leads Financials Higher. Morgan Stanley (MS) and Citigroup Inc. (C) led U.S. banks higher in New York trading after European leaders pledged to deliver a plan to stem the debt crisis that has led to concerns about global lenders’ balance sheets. Morgan Stanley climbed $1, or 7 percent, to $15.24 at 11:11 a.m. in New York Stock Exchange composite trading, bringing its increase during the last week to 22 percent. Citigroup jumped 6.2 percent and Bank of America Corp. (BAC) rose 5.8 percent, helping to lead the 81-company Standard & Poor’s 500 Financials Index to a 3.9 percent gain. The S&P 500 has rebounded about 8 percent from a 13-month low on Oct. 3 amid optimism that European leaders will succeed in taming the debt crisis.
• China's Stocks Drop to Two-Year Low After Banks, Property Developers Slump. China’s stocks fell, driving the benchmark index to the lowest level since March 2009, as housing sales slumped during a week-long holiday and energy producers declined after the government cut fuel prices. China Vanke Co. and Poly Real Estate Group Co., the nation’s biggest developers, plunged more than 3 percent after industry sales dropped last week and Shanghai Securities News reported high inflation signals tight monetary policies will remain in place. PetroChina Co., the country’s largest oil producer, retreated the most in two weeks as the first reduction in fuel prices this year spurred concerns about earnings. “Tight liquidity has hurt some small companies with anything related to monetary policy dragging banks and the market lower,” said Tu Jun, a strategist at Shanghai Securities Co. “Market sentiment is very weak at the moment and investors are more sensitive to bad news than good.” The Shanghai Composite Index slipped 0.6 percent to 2,344.79 at the close in Shanghai, the lowest since March 25, 2009. The CSI 300 Index (SHSZ300) lost 0.9 percent to 2,557.08. The Shanghai Composite sank 15 percent last quarter, the biggest loss since the three months to June 2010. The index has tumbled 17 percent this year as the government raised interest rates and reserve-requirement ratios for banks to cool inflation that’s at the highest level in almost three years.
• Oil Rises to Two-Week High. Crude oil climbed to the highest level in two weeks as the leaders of Germany and France pledged to stem the European sovereign-debt crisis. Futures rose as much as 3.8 percent after German Chancellor Angela Merkel and French President Nicholas Sarkozy said yesterday they will deliver a plan to recapitalize the region’s banks and address the Greek crisis by Nov. 3.
• U.S. Corporate Profit Rebound Loses Steam. This year’s rebound in corporate earnings is losing steam as slower economic growth and greater strain on consumers threaten sales and profit margins at companies from Texas Instruments Inc. (TXN) to Google Inc. (GOOG) Earnings per share for the Standard & Poor’s 500, excluding financial companies, rose 14 percent in the third quarter, the smallest gain since the end of 2009, analysts’ estimates compiled by Bloomberg show. That compares with 19 percent in the second quarter and 20 percent in the first. Analysts have begun reducing forecasts for the current quarter and beyond.
• Egypt on Alert AFter Deadly Clashes. Egyptian security forces were deployed outside government buildings in central Cairo after a night of clashes between Coptic Christian protesters and security forces that left at least 25 dead. Authorities ordered a fact-finding committee to investigate the violence, which began when several hundred Egyptian Christians protesting a recent attack on a church came under assault by people in plain clothes and were later confronted by security forces, witnesses said. Following the clashes, the army imposed a curfew until 7 a.m. in the center of the capital.
  

Wall Street Journal:

• Moody's: Portugal Fiscal Slippage Credit Negative For The Sovereign. Signs of fiscal slippage in Portugal are credit negative for the sovereign, and will make it harder for the government to achieve its deficit reduction targets for 2011 and 2012, Moody's Investors Service said in a report Monday.
• Tea Party Attacks Put GE(GE) on Defense. General Electric Co., where Ronald Reagan honed his communication skills as a company spokesman, is struggling to fend off attacks from conservatives over its relationship with the Obama administration and ventures in China, raising concerns inside GE that the controversy could damage its brand. Former Republican Alaska Gov. Sarah Palin last month slammed GE for being "the poster child of corporate welfare and crony capitalism." Presidential candidate Newt Gingrich used GE as an applause line during the Republican debate sponsored by the tea party in September. And Fox News television personality Bill O'Reilly has derided the conglomerate and Chief Executive Jeff Immelt almost weekly. The company's critics will get another opening this week. Mr. Immelt is to appear with President Barack Obama at a meeting of the president's jobs council in Pittsburgh on Tuesday, the same day that the Republican presidential contenders square off in a debate at Dartmouth College. The tea party and its allies are taking aim at GE for a number of alleged sins, including the company's paltry 2010 federal tax payment, an aviation joint-venture in China, moving jobs overseas and taking federal stimulus dollars for green-energy projects.

CNBC.com:

• Need Work? US Has 3.2 Million Unfilled Job Openings. Want to add about $100 billion more annually to the US economy and lower the unemployment rate by more than a percentage point—all without spending a dime of taxpayer money? Fill America’s more than 3.2 million open jobs. That’s the hidden story of America’s lousy jobs picture. Though there are more than 14 million unemployed, there are also 3.2 million job openings in America.

Business Insider:

• Why You Should Be Worried About Wal-Mart's(WMT) 'Green Pork' Incident In China.
• Forget Dexia: Here Are Other European Banks Praying For The PIIGS To Get Saved.
• A Key ISM Measure Points To Contraction. (graphs)
• John Hussman: Here Are 4 Things That Every Wall Street Protester Should Know.
  

Zero Hedge:

• 11th Hour Decision To Milliseconds Before Midnight As Slovakia Fails To Reach EFSF Decision.

24/7 Wall St.:

• E.U. Bailout Promise Poses "AAA" Ratings Question for France & Germany.

Reuters:

• OECD Indicators Paint Dark Picture of Global Economy. The outlook for the world's major economies is continuing to darken according to the latest data from the OECD published on Monday, which showed sharp falls in leading indicators for all countries except Japan. The Paris-based Organization for Economic Cooperation and Development said its composite leading indicator (CLI) for its 33 member countries dropped for a fifth straight month in August, hitting 100.8 after 101.4 in July and signaling a slowdown in economic activity. Individual country readings fell across the board, including for non-OECD member countries, with most seeing their CLIs drop below their long-term average of 100. "For all other major economies, except Japan, the CLIs are now pointing strongly to a slowdown in economic activity below long-term trend," the OECD said. The OECD CLIs are designed to anticipate turning points in economic activity relative to trend - a turnaround in an indicator tends to precede turning points in economic activity by around six months. The consensus at the moment is that many major western economies are teetering on the brink of recession, as they struggle to repay inflated levels of debt. The OECD's reading for the Group of Seven major economies -- France, Germany, Italy, Japan, the United Kingdom and the United States -- slumped to 101.1 in August from 101.7 in July, while the reading for the euro area fell 9 points, to 99.8 from 100.7.
• Bank Recaps Not An Answer To Crisis - French Bank Assoc. European states must restore confidence in their ability to reduce debt and public deficits, and a long-term solution for Greece must be implemented quickly in order to resolve the euro zone crisis, the French Banking Federation (FBF) said on Monday. The FBF said reinforcing the capital of European banks would not solve the crisis, adding that market worries were based on the public finances of certain euro zone countries and not on concerns about Europe's banks. "Certain states must regain investor confidence to continue to borrow on the markets under satisfactory conditions," the FBF said in a statement. The FBF added that euro zone governance also needed to be improved.

Frankfurter Allgemeine Zeitung:

• German Chancellor Angela Merkel's government is lobbying for an extensive haircut on Greek debt, citing government officials. Germany's government considers a Greek insolvency unavoidable in the long run.

Xinhua:

• China's Resources Tax Extended Nationwide From Sept. 1. Tax on crude oil, natural gas to be extended to entire country, citing the State Council.

Bear Radar

Style Underperformer:

• Large-Cap Value (+2.79%)

Sector Underperformers:

• 1) Foods +1.34% 2) Tobacco +1.35% 3) Telecom +1.49%

Stocks Falling on Unusual Volume:

• SNP, VRTX, HGSI, HRBN, SPN, SMG and BMC
  

Stocks With Unusual Put Option Activity:

• 1) LO 2) PXP 3) EWC 4) JEF 5) TSO
  

Stocks With Most Negative News Mentions:

• 1) S 2) PCLN 3) SMG 4) TIE 5) CF
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth (+3.19%)

Sector Outperformers:

• 1) Oil Tankers +5.97% 2) Gaming +5.09% 3) Oil Service +5.07%

Stocks Rising on Unusual Volume:

• TEO, E, SIMO, NFLX, PTEN, WYNN, AVGO, ILMN, CPX, PXJ, EWL, EWI, SNN, RES, PRX, PKI, CJES, BAS, BYI, KEG, SFLY and KCG
  

Stocks With Unusual Call Option Activity:

• 1) LYB 2) ROST 3) GME 4) ZMH 5) CELG
  

Stocks With Most Positive News Mentions:

• 1) ACN 2) MU 3) BYI 4) STJ 5) INSU
  

Charts:

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