Bull Radar

Style Outperformer:

• Mid-Cap Value -.32%

Sector Outperformers:

• 1) Utilities +.33% 2) Gaming +.29% 3) Telecom +.18%

Stocks Rising on Unusual Volume:

• SNAK, CYMI, ASML, CALL, WWW and VFC
  

Stocks With Unusual Call Option Activity:

• 1) MAKO 2) OCZ 3) NIHD 4) KFT 5) BPAX
  

Stocks With Most Positive News Mentions:

• 1) KLAC 2) LMT 3) SWN 4) AMD 5) BA
  

Charts:

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

Tuesday Watch

Evening Headlines
Bloomberg:

• EU to Speed Spanish Bank Aid. European governments will jump-start as much as 100 billion euros ($123 billion) in loans to shore up Spain’s banks and may move the costs off the Spanish government’s balance sheet in an effort to shield the euro region’s fourth-largest economy from the fiscal crisis. Thirty billion euros will be lent by the end of July with the goal of eventually using the euro-area bailout fund to recapitalize banks directly instead of saddling the Spanish government with the debts, Luxembourg Prime Minister Jean-Claude Juncker said. The initial cash will “be mobilized as a contingency in case of urgent needs in the Spanish banking sector,” Juncker told reporters early today in Brussels after chairing a nine- hour meeting of euro-region finance ministers. The program “will succeed in addressing the remaining weakness in the Spanish banking sector.”
• Merkel Winning Euro-Bond Clash as German Bunds Gain: Euro Credit. Investors are declaring German Chancellor Angela Merkel the winner in her battle against euro-region bonds as a way of easing the debt crisis. Since Merkel conceded to demands of relief for Spain and Italy at a EU summit on June 29 while opposing the sale of the bonds, the debt of the euro area's remaining AAA nations have outperformed U.S. Treasuries. Yields on 19-year debt from Germany, Finland and the Netherlands, whose credit-worthiness may be diluted by common borrowing with the likes of Spain, fell by an average 34 basis points since the EU meeting. "When you look at bund yields, the current levels are a strong signal that the market isn't really buying into this euro bond story otherwise we would have seen a massive pullback in yields across the AAA countries," said Michael Leister, a rates strategist at DZ Bank AG in Frankfurt. "Demand for safety and core products is still very strong."
  
• Luxembourg’s Mersch Appointed to ECB Six-Member Executive Board. Luxembourg’s Yves Mersch, the euro region’s longest-serving central banker, was named to the European Central Bank’s Executive Board in a victory for German- style monetary rigor. Mersch, 62, was appointed by euro-area finance ministers at a meeting in Brussels yesterday, Guy Schuller, a spokesman for Luxembourg Prime Minister Jean-Claude Juncker, told Bloomberg News. He will move into the slot vacated by Spain’s Jose Manuel Gonzalez-Paramo, stripping Spain of its claim to a permanent seat on the Frankfurt-based central bank’s six-member Executive Board. Juncker chairs meetings of euro finance chiefs. After five months of wrangling, Mersch defeated a Spanish nominee, Antonio Sainz de Vicuna, head of legal services at the ECB, as well as Mitja Gaspari, former head of Slovenia’s central bank. As Luxembourg’s representative on the ECB’s wider policy- setting Governing Council, Mersch has earned a reputation as an inflation hawk. He is the only central banker in office continuously since the euro debuted in 1999. “Mersch will do his bit to reinforce the reputation of the ECB as an inflation fighter,” said Christian Schulz, senior economist at Berenberg Bank in London. “That could make markets nervous at times.”
• Tucker’s Libor Testimony May Stoke Concerns About BOE Powers. Bank of England Deputy Governor Paul Tucker’s account of his involvement in the Libor scandal stoked new criticism of the bank’s oversight failures as he struggles to stay in contention for its top job next year. Tucker told lawmakers on Parliament’s Treasury Committee yesterday that he didn’t follow up concerns about Libor rates in 2007 because it looked at the time like a “dysfunctional” market, not a “dishonest” one. Barclays Plc (BARC) was fined a record amount last month for manipulating Libor from as early as 2005. “My concern is that the BOE clearly couldn’t see the wood for the trees,” committee member Andrew Leadsom said in an interview after Tucker’s testimony in London. “The amount of talk there was about Libor, it’s slightly incredible that a central banker didn’t see it as something to investigate.”
• China’s Import Growth Misses Estimates for June. China’s imports rose less than anticipated in June while export growth slowed, adding pressure on the government to support expansion after inflation data yesterday showed demand softening. Inbound shipments increased 6.3 percent from a year earlier, the customs bureau said in a statement today in Beijing, compared with the 11 percent median estimate in a Bloomberg News survey of 32 economists. Overseas sales gained 11.3 percent. The trade surplus rose to a three-year high of $31.7 billion. The increase in exports compared with a 15.3 percent gain in May.
• Most Chinese Stocks Fall After Trade Report; Poly Real Declines. Most Chinese stocks fell after a government report showed imports rose less than anticipated in June while export growth slowed. Poly Real Estate Group Co. (600048), the nation’s second-biggest developer, declined 3.1 percent after forecasting lower first- half profits. China Southern Airlines Co. led gains for carriers after the nation’s economic planning agency said the government will lower fuel prices tomorrow. The Shanghai Composite Index (SHCOMP) slipped 0.3 percent to 2,165.40 at 10:18 a.m. local time, with seven stocks falling for every two gaining. “The macro-economy figures won’t surprise the market and will continue to be ugly due to weak demand at home and abroad,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “Worries about the strength of the economy will weigh on the market and continue to drive stocks down.”
• Oil Declines From Two-Day High as Norway Orders End to Strike. Oil dropped from the highest close in two days after Norway ended a strike by energy workers that had threatened to halt production by western Europe’s largest crude exporter. Futures slipped as much as 1.1 percent in New York after the Norwegian government ordered compulsory arbitration in the dispute, preventing a lockout of platform workers that was scheduled to start at midnight yesterday. Norway pumped 1.63 million barrels of oil a day in May, or about 1.8 percent of global consumption, data from the Norwegian Petroleum Directorate show. “Traders are probably taking the premium out of oil now that they think the strike will be settled,” said David Lennox, an analyst at Fat Prophets in Sydney. “It was looking like the strike was going to deteriorate further. That risk premium is certainly coming out of crude.”
• Paulson Funds Fell in June as Rally Undercut Euro Wager. John Paulson, the billionaire hedge- fund manager seeking to reverse record losses in 2011, posted declines in all his funds last month as rising stock markets undermined his wager that Europe’s sovereign debt crisis will worsen. The losses were led by a 7.9 percent drop in his Advantage Plus Fund, according to an update to investors obtained by Bloomberg News. That leaves the fund, which seeks to profit from corporate events such as takeovers and bankruptcies and uses leverage to amplify returns, down 16 percent this year.
• RIM(RIMM) Customers Working on Contingency Plans. Research In Motion Ltd. (RIM) customers from GoDaddy Group Inc. to asset manager Thames River Capital UK Ltd. are preparing for the worst: the loss of the BlackBerry service their employees depend on to communicate. RIM’s stock has slumped more than 70 percent in the past year, and tumbled 19 percent on June 29 after the company posted a quarterly loss and delayed the BlackBerry 10 operating system, increasing the pressure on RIM to find a buyer or sell assets. While RIM has built infrastructure to ensure continued service, some customers are devising backup plans as RIM prepares to face shareholders at its annual meeting tomorrow.
• Komatsu Has No Plans to Buy Joy Global(JOYG) After Study, CEO Says. Komatsu Ltd. (6301), the world’s second- biggest maker of dump trucks, has no plans to bid for Joy Global Inc. (JOY) after studying the U.S. company as there are few synergies to aid its foray into underground mining equipment.
• Shipping Rally Ending as China Hoards Record Coal Heaps: Freight. Record coal stocks at power plants in China, the biggest consumer of the fuel, are threatening to reverse the rally in rates for commodity carriers and diminish returns for ship owners to the lowest in more than a decade. The utilities have 91 million metric tons in reserve and stockpiles at the largest ports come to more than 90 percent of capacity, according to the China Coal Transport & Distribution Association and SteelHome, a Shanghai-based research company. Panamax rates will drop 48 percent to an average of $5,000 a day this quarter, said Steve Rodley, managing director at Global Maritime Investments Ltd., which operates 64 ships. He correctly predicted a slump in earnings for larger Capesizes in March.

Wall Street Journal:

• Mayor Cuts Workers' Pay to Minimum Wage. Unions representing city workers in Scranton, Pa., plan to ask a county judge to hold the mayor in contempt of court after he cut the pay of almost 400 municipal employees—including himself—to the state's minimum wage, saying the city can't pay the full salaries.
• Political Spending by Unions Far Exceeds Direct Donations. Organized labor spends about four times as much on politics and lobbying as generally thought, according to a Wall Street Journal analysis, a finding that shines a light on an aspect of labor's political activity that has often been overlooked. Previous estimates have focused on labor unions' filings with federal election officials, which chronicle contributions made directly to federal candidates and union spending in support of candidates for Congress and the White House.
• Obama Intensifies Tax Fight. Obama is launching a push to extend tax cuts for the middle class, as he seeks to shift the election-year economic debate away from the dismal jobs market.
• Big Dealers Sweat as Swaps Face Reckoning. In a potential setback for large financial firms, regulators are expected to vote Tuesday on a rule requiring banks with more than $10 billion in assets to trade swaps through a central clearinghouse, according to a person familiar with the rule. The vote will be accompanied by a separate ruling on the precise definition of swaps, the financial contracts at the heart of the 2008 credit crisis. That definition will set in motion a series of other rules affecting trillions of dollars of financial contracts.
• Alcoa(AA) Pinched by Low Prices. Alcoa Inc. sank to a slight loss in the second quarter as aluminum prices fell to their lowest levels in more than two years. The Pittsburgh-based concern, viewed as a bellwether because it is typically the first major U.S. company to report quarterly results, kicked off what is expected to be a painful earnings season on Wall Street, as other companies feel the effects of global economic weakness. Already, at least 42 companies have issued profit warnings for the latest quarter.
• What's Wrong With the Federal Reserve? Business investment is held back by uncertainty about taxes and regulation. Printing dollars won't help.

MarketWatch:

• Australia business confidence weakens. Aggressive interest rate cuts by the Reserve Bank of Australia in May and June have so far failed to spark much of recovery for business, with confidence weaker in June and overall trading conditions only marginally better. National Australia Bank's business confidence index fell to -3 in June from -2 in May, while its business conditions index rose to -1 from -4 in the same period.

Business Insider:

• Police Obtain A Ridiculous Amount Of Information On Innocent Americans.

Zero Hedge:

• The Ultimate Krugman Take-Down.
• Earnings Season Preview: +9.7% 2012 EPS Growth Still Too High.
• Futures Brokerage PFG Best Freezes Accounts Following Discovery Of Accounting Irregularity.
• PFG Is Now MFG(lobal) Part 2 As $220 Million In Segregated Client Money Has Just Vaporized.

CNBC:

• As Foreclosures Ramp Up, New Roadblocks Ahead.

NY Times:

• Consumer Bureau Proposes New Mortgage Disclosure Rules. As part of a continuing overhaul of the home mortgage market, the Consumer Financial Protection Bureau on Monday issued proposed rules to bolster fairness and clarity in residential lending, including requiring a good-faith estimate of costs for homebuyers. The proposed rules have two central elements — the loan estimate and the closing disclosure — that would provide would-be homebuyers with a simple accounting of likely payments and fees to prevent costly surprises.

Washington Examiner:

• Obama has outraised Romney in the Hamptons by 38.6%. You’ll hear plenty this week about Mitt Romney raising money in the Hamptons, and so I thought it was worth putting things in perspective. According to data from the Center for Responsive Politics, Romney has reported $119,550 from the 13 zip codes that count as The Hamptons according to Wikipedia. Obama has raised $165,867.

Washington Post:

• Obama's Record on Outsourcing Jobs Draws Criticism From the Left. While White House officials say they have been waiting on Congress to act, Obama’s critics, primarily on the political left, say he has repeatedly failed in other ways to protect American jobs from being moved overseas. They point to a range of actions they say he should have taken: confronting China, reining in unfettered trade and reworking a U.S. visa program that critics say ends up sending high-tech jobs abroad.

CNN:

• Closer to a bailout? FHA's mortgage delinquencies soar. Increasingly, FHA-insured loans are falling into foreclosure or serious delinquency. And taxpayers could ultimately be on the hook for FHA's growing number of troubled mortgages. The agency's finances are already on shaky ground, and additional losses from loans going sour could prompt the need for a federal bailout, experts said. "We can't escape this one," said Joseph Gyourko, a real estate professor at the University of Pennsylvania's Wharton School. "This is an arm of the U.S. government."

Boston Herald:

• Texas Rejects 2 Pillars of Federal Health Care Overhaul. Texas turned down an expansion of Medicaid coverage and said it will not create a state-run health care insurance exchange, joining the chorus of states that are rejecting two key parts of the Obama administration’s health care overhaul.

Reuters:

• Intel(INTC) bankrolls next-gen chipmaking, buys into ASML for $4.1 billion. Intel Corp will spend more than $4 billion to buy up to 15 percent of ASML and bankroll the Dutch company's research into costly next-generation chipmaking technology, a major vote of confidence in the European firm that sent its U.S. shares soaring 6 percent.
• AMD(AMD) warns of 11 pct decline in revenue; shares slide. Chipmaker Advanced Micro Devices warned on Monday that its second-quarter revenue would be down about 11 percent from the prior quarter due to softer-than-expected sales in China and Europe and a weak consumer-buying environment, knocking its shares down 6 percent. The company had previously forecast second-quarter revenue would increase 3 percent from the first quarter, plus or minus 3 percentage points.
• Patriot Coal(PCX) files for bankruptcy protection. Patriot Coal Corp filed for bankruptcy on Monday, the first U.S. coal producer to seek court protection since prices began to plummet as electricity producers turned to cheaper natural gas. The company and nearly 100 affiliates were part of the Chapter 11 filing in the U.S. bankruptcy court in Manhattan. Patriot said it had $3.57 billion of assets and $3.07 billion of debts, and has arranged for $802 million of financing to help it continue mining and shipments during the reorganization. Coal producers' shares have plummeted as natural gas prices tumbled to the lowest in a decade this year, and the U.S. Environmental Protection Agency proposed new rules that would make it nearly impossible to build coal-fired power plants.
• WD-40(WDFC) 3rd-qtr results miss estimates. Cleaning products maker WD-40 Company's quarterly results missed Wall Street estimates, hurt by lower sales in its American segment. The company also said it expects its full-year results to be at the lower end of its outlook owing to continued uncertainty in Europe and oil price volatility. WD-40 forecast full-year earnings of $2.33 to $2.45 per share on net sales of $353.0 million to $370.0 million. "We expect Europe to come in flat at best for the full year as compared to the prior fiscal year," the company said. The company's American segment, which contributes about 50 percent of total sales, reported a 5 percent drop.
• US consumer watchdog to ban some fees for high-cost mortgages. The U.S. consumer finance watchdog proposed banning some fees and creating other new protections for people who take out high-cost mortgages. The Consumer Financial Protection Bureau said on Monday its new rule would attack abusive practices surrounding mortgages with high interest rates or high fees by blocking "balloon payments," or lump sum amounts usually due at the end of a loan, capping fees lenders can charge for late payments, and banning fees to modify loans.

Telegraph:

• ECB pledges action as southern Europe buckles. The European Central Bank has vowed to do whatever it takes to hold the euro together after the North-South gap in borrowing costs reached fresh extremes, pushing the two halves of monetary union closer to breaking point.

Economic Information Daily:

• Non-performing loans of financial institutions in the eastern Chinese province of Zhejiang are rising, citing a person from a state-owned bank.

21st Century Business Herald:

• China's Power Use Growth Slowed to About 4% in June. Growth of electricity use in China slowed to about 4% in June, from about 5% in May, citing preliminary data from local energy agencies.
• China Housing Ministry to Increase Local Accountability. China's housing ministry plans to hold local governments more accountable for easing property market curbs, citing a person close to the ministry. The government should tighten home purchase restrictions and ask local authorities to implement curbs more strictly, citing Yang Hongxu, deputy head of E-House China R&D Institute.
  

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.75% to unch. on average.
• Asia Ex-Japan Investment Grade CDS Index 173.50 +1.5 basis points.
  
• Asia Pacific Sovereign CDS Index 139.75 +.75 basis piont.
  
• FTSE-100 futures +.06%.
  
• S&P 500 futures -.42%.
  
• NASDAQ 100 futures -.35%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (HITK)/.77
• (WWW)/.44
• (SHAW)/.58

Economic Releases
7:30 am EST

• The NFIB Small Business Optimism Index for June is estimated to fall to 93.3 versus 94.4 in May.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The EU Finance Ministers Meeting, German High Court ruling on ESM Agreement, Fed's Bullard speaking, weekly retail sales reports, IBD/TIPP Economic Optimism Index for July, JOLTs Job Openings report for May, 3Y T-Note auction, China Trade Balance and the (GIS) Investor Meeting could also impact trading today.
  

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

Stocks Slightly Lower into Final Hour on US "Fiscal Cliff" Worries, Rising Food/Energy Prices, Earnings Concerns, Rising Global Growth Fears

Broad Market Tone:

• Advance/Decline Line: Lower
  
• Sector Performance: Almost Every Sector Declining
  
• Volume: Light
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 18.21 +6.49%
  
• ISE Sentiment Index 103.0 -5.5%
  
• Total Put/Call .99 -9.17%
  
• NYSE Arms 1.66 -19.60%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 111.95 -.63%
  
• European Financial Sector CDS Index 282.36 -.18%
  
• Western Europe Sovereign Debt CDS Index 284.99 +.50%
  
• Emerging Market CDS Index 279.98 +.29%
  
• 2-Year Swap Spread 26.0 +.75 basis point
  
• TED Spread 38.75 unch.
  
• 3-Month EUR/USD Cross-Currency Basis Swap -58.75 +.25 basis point
  

Economic Gauges:

• 3-Month T-Bill Yield .07% unch.
  
• Yield Curve 125.0 -2 basis points
  
• China Import Iron Ore Spot $135.50/Metric Tonne +.30%
  
• Citi US Economic Surprise Index -62.60 -.1 point
  
• 10-Year TIPS Spread 2.07 unch.
  

Overseas Futures:

• Nikkei Futures: Indicating +3 open in Japan
• DAX Futures: Indicating +13 open in Germany
  

Portfolio:

• Slightly Higher: On gains in my medical/biotech sector longs and index hedges
  
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short, then covered some of them
  
• Market Exposure: 50% Net Long

BOTTOM LINE: Today's overall market action is just mildly bearish as the S&P 500 trades slightly lower on rising eurozone debt angst, tech/commodity sector weakness, US "fiscal cliff" worries, rising food/energy prices, earnings concerns and rising global growth fears. On the positive side, Medical, Biotech, HMO and Drug shares are flat-to-higher on the day. Lumber is gaining +1.2% and Copper is gaining +.8%. On the negative side, Coal, Alt Energy, Semi, Disk Drive, Networking, I-Banking, Education and Airline shares are under meaningful pressure, falling more than -1.5%. Cyclicals are underperforming. Tech shares are especially heavy again. The UBS Bloomberg Ag Spot Index is jumping another +2.8%(this index has surged +21.8% in less than six weeks, which is a large negative for several key emerging market economies that still have inflation problems), Oil is rising +2.0% and Gold is up +.3%. The 10Y Yld is falling -4 bps to 1.51%. The Citi Latin America Economic Surprise Index is falling another -3.5 points today to -21.4, which is the lowest since early-Aug. of last year. Major Asian indices fell around -1.25% overnight, led down by a -2.4% decline in Chinese shares. The Shanghai Composite is the worst-performing Asian index year-to-date, falling -1.3%. The index is also testing its early Jan. lows and is down -2.5% in 5 days despite rising stimulus hopes and some better economic data, which is a big red flag. It appears as though investors are more focused on whether or not the Chinese let their real estate bubble begin to further inflate rather than other forms of stimulus. Major European indices are mostly lower, led down by a -.7% decline in Spain. Spanish equities are down -6.0% in 5 days and down -21.9% ytd. The Bloomberg European Bank/Financial Services Index is falling -.33%. The Germany sovereign cds is rising +.7% to 99.74 bps, the Italy sovereign cds is gaining +1.33% to 521.99 bps(+11.5% in 5 days), the Spain sovereign cds is up +1.59% to 587.5 bps(+15.3% in 5 days), the China sovereign cds is up +2.7% to 119.51 bps and the Brazil sovereign cds is gaining +1.8% to 155.83 bps. The Italian/German 10Y Yld Spread is rising +1.8% to 478.38 bps(+13.5% in 5 days). Moreover, the European Investment Grade CDS Index is gaining +.5% to 172.55 bps(+6.5% in 5 days). US weekly retail sales have decelerated to a sluggish rate at +2.2%, which is the slowest since the week of April 5th of last year. US Trucking Traffic continues to soften. The Philly Fed ADS Real-Time Business Conditions Index continues to trend lower from its late-December peak. Moreover, the Citi US Economic Surprise Index has fallen back to late-Aug. levels. Lumber is -3.0% since its March 1st high despite improving sentiment towards homebuilders and the broad equity rally ytd. Moreover, the weekly MBA Home Purchase Applications Index has been around the same level since May 2010 despite expectations for a strong spring home selling season. The Baltic Dry Index has plunged around -50.0% from its Oct. 14th high and is now down around -35.0% ytd. China Iron Ore Spot has plunged -25.0% since Sept. 7th of last year. Shanghai Copper Inventories have risen +138.0% ytd. Oil tanker rates have plunged recently, with the benchmark Middle East-to-US voyage down to 25.0 industry-standard worldscale points, which is the lowest since Oct. 2009. The CRB Commodities Index is now technically in a bear market, having declined -20.5% since May 2nd of last year. Spanish and Italian yields are back in the danger zone. Copper, oil and the euro are seeing mild bounces today on global central bank stimulus hopes and Iran saber-rattling/Norway oi production concerns/Saudi social unrest. Despite the rise in the CRB Index today, commodity equities are weak. As well, the 10Y continues to trade too well, which remains a red flag. I still believe the level of complacency among US investors regarding the rapidly deteriorating situation in Europe is fairly high. Key gauges of credit angst remain technically strong. The Citi Eurozone Economic Surprise Index is at -74.10 points, which is the lowest since mid-Sept. of last year. Massive tax hikes and spending cuts are still yet to hit in several key eurozone countries that are already in recession. A lack of competitiveness remains unaddressed. Moreover, the “solutions” for the European debt crisis I still hear being bandied about are only bigger kick-the-cans that if implemented will eventually lead to an even bigger catastrophe as Germany is engulfed, in my opinion. The European debt crisis is also really beginning to bite emerging market economies now, which will further pressure exports from the region and further raise the odds of more sovereign/bank downgrades. I continue to believe the bar for additional QE is likely higher than the Fed is letting on. QE was a huge mistake, in my opinion, as it played a large role in the current global slowdown by helping to jack up commodity prices, thus creating significant inflation problems in key emerging market economies. Officials in these economies slammed on the brakes, which cut demand for goods and services from the Eurozone right when they needed that demand the most. Uncertainty surrounding the effects on business of Obamacare, the "US fiscal cliff " and election outcome uncertainty will likely become more and more of a focus for investors as the year progresses. Finally, the upcoming earnings season could prove more challenging than usual for big multi-nationals given US dollar strength and the precipitous declines in some key parts of the global economy during the quarter. Stocks that miss earnings estimates are being severely punished despite the obvious headwinds. I still believe there is too much uncertainty on the horizon to conclude a durable stock market low is in place. For this year's equity advance to regain traction, I would expect to see a resumption in European credit gauge improvement, a subsiding of hard-landing fears in key emerging markets, a rising 10-year yield, better volume, stable-to-lower energy prices, a US "fiscal cliff" solution and higher-quality stock market leadership. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, global central bank stimulus hopes, strength in shares of market-leader (AAPL), a bounce in the euro currency and bargain-hunting. Long AAPL

Today's Headlines

Bloomberg:

• Schaeuble Dismisses Quick Bank Union, Limiting Euro Aid Tools. Germany dismissed a rapid move toward direct bank recapitalization by the European rescue fund, limiting the tools for shoring up Spain’s banks as the euro-area debt crisis simmers. Finance Minister Wolfgang Schaeuble dismissed “false expectations” raised by euro leaders last month that the economically troubled euro zone would act quickly to unify the oversight of its banking system. “It will take time, it’s complicated, it isn’t easy to do,” Schaeuble told reporters before a meeting of euro finance ministers in Brussels today. “Everyone knows that the setup of European bank supervision isn’t a trivial matter, but a huge job.” Germany’s go-slow approach reflected mounting public opposition to bailouts in northern Europe just as southern countries such as Spain and Italy clamor for official assistance to tame an increase in borrowing costs. A four-day slump in Spanish and Italian bonds puts euro- area governments under pressure to act, especially after the European Central Bank showed no signs of restarting its bond- buying program.
• Spanish Yields Show Summit Shortfall, El-Erian Says: Tom Keene. Spanish bond yields at levels that have prompted bailouts signal last month’s European summit wasn’t enough to stem the region’s debt crisis, according to Pacific Investment Management Co.’s Mohamed El-Erian. Yields on Spanish debt due in 10 years rose to more than 7 percent today, corresponding to interest rates that spurred Greece, Portugal and Ireland to seek emergency loans. The difference in yield between the securities and similar-maturity German bunds climbed 10 basis points to 573 basis points, within 16 basis points of the record level set June 18.
• Roesler Says Debt Crisis Threatens German Growth, Bild Reports. German Economy Minister Philipp Roesler said the European debt crisis may affect the economic development in Germany, Bild reported today, citing Roesler. While the government’s 0.7 percent growth projection still stands, it will evaluate this in the fall, Roesler said, according to the German newspaper.
• VIX Falls to Cheapest Since '08 Before Earnings Reports. The biggest June rally in U.S. stocks since 1999 has pushed options prices to the lowest level before any earnings season in almost four years even as analysts predict profits will fall. The Chicago Board Options Exchange Volatility Index, which tracks the cost of contracts on the Standard & Poor’s 500 Index, has lost 36 percent since its 2012 peak last month. It slipped 6.8 percent below the S&P 500’s 20-day historical volatility, a measure of actual swings, on July 6, data compiled by Bloomberg show. That’s the cheapest contracts have been one trading day before Alcoa Inc. (AA) reports profit since October 2008.
• Fed’s Lacker Sees ‘Tepid’ U.S. Growth, Not Recession Risk. Federal Reserve Bank of Richmond President Jeffrey Lacker said that “some of the slowdown is real” for the U.S. economy though the reduction in growth isn’t severe enough to tip the economy back into a recession. “The numbers have been pretty tepid, we’re definitely experiencing a slowdown,” Lacker said today in a Bloomberg radio interview on “The Hays Advantage” with Kathleen Hays and Vonnie Quinn. “I don’t think this is fatal. I don’t think this is pushing us back into a recession right now.”
• Mitsubishi UFJ Suspends Two London Traders on Libor Probe. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest publicly traded bank, suspended two London-based traders as investigators probe the suspected manipulation of benchmark interest rates, a person briefed on the matter said.

Wall Street Journal:

• OECD Leading Indicators Point to Slowdown in Major Economies. Growth in most major economies is set to slow down in coming months, with only Brazil expected to experience a pickup, according to the Organization for Economic Cooperation and Development's composite leading indicators. The indicators, which have proved reliable in the past, will come as a blow to any lingering hopes among policy makers around the world for a quick emergence from a period of sluggish activity that stretches back to the end of last year.
• Draghi Signals ECB Ready to Do More. The European Central Bank is willing to do more if needed to support the euro bloc's struggling economy and banks, ECB President Mario Draghi signaled on Monday, days after officials lowered interest rates to record lows. "The ECB will keep the liquidity lines open to all solvent banks," Mr. Draghi said in testimony to the European Parliament. The central bank "retains full capacity to act in a firm and timely manner" to ensure price stability, he said.
• Price of Plastic Going Up? Merchants May Get Surcharge Rights. Merchants may soon begin to impose a surcharge each time a customer pays with a credit card, a practice Visa Inc. and MasterCard Inc. currently prohibit. Retailers have long pushed for the right to charge extra to customers who pay with plastic versus cash, saying the practice would help defray their costs for accepting credit and debit cards. Merchants pay transaction fees on each card swipe.
• WellPoint(WLP) to Buy Amerigroup(AGP). Managed-care company WellPoint Inc. said it plans to buy Medicaid-focused insurer Amerigroup Corp. for $4.46 billion to capitalize on a fast-growing market for the government-based health plan for the poor.
• Egypt Court Rejects Plan to Restore Parliament. Egypt's constitutional court affirmed Monday that an earlier decision that led to the dismissal of Parliament was final, rejecting a challenge by the new president and moving the country another step closer to a constitutional crisis.
  

MarketWatch:

• Oil rises 2% as Norway lockout looks likely.
• Fed’s Williams sounds alarm on outlook. ‘Essential’ that Fed provide sufficient policy accommodation.

CNBC.com:

• China's Christmas Exports Are Already Tumbling. Christmas comes but once a year. For Leo Ho, who runs a factory that makes plastic Christmas trees in Yiwu, China's export capital for novelty knick-knacks, it comes in July, when tree orders start rolling in. But early signs point to a lean Christmas for low-cost exporters like Ho, who told Reuters his sales were down 20 percent year-on-year in 2012.
• Euro Zone Fragmenting Faster Than EU Can Act. Signs are growing that Europe's economic and monetary union may be fragmenting faster than policymakers can repair it.

Business Insider:

• More Than Half Of Voters Think Obama Has Changed America...For The Worse.
• OBAMA: We'll Deal With The Fiscal Cliff 'After The Election'.
• Shocking Footage Shows Execution of Afghan Woman for Adultery.
• WOLFGANG MUNCHAU: The Euro Crisis Won't Be Resolved For 20 Years, If At All.
• A Quote From An Anonymous European Official Is Undermining The Entire EU Summit.

Zero Hedge:

• Italy's Version Of Austerity: 3 Months Of Vacation.
• Between A German Rock And A Global Hard-Place.
• Mapping The EU Summit Political Maneuvers.
• The Perfect Storm - Santelli Meets Farage.

MoneyNews:

• RealClearMarkets' Tamny: US Pursues Weak Dollar Policy at its Peril. The Treasury and Federal Reserve are pursuing a weak dollar policy, as John Tamny, editor of RealClearMarkets.com sees it. And the economy will continue to suffer if they don’t change course, he says.

4-Traders:

• Towers Watson & Co.: Top 100 Alternative Investment Managers Exceed US$3 Trillion Assets Under Management.

FINalternatives:

• Quants Burned by Euro Whipsaw. It seems quantitative hedge fund managers are going to have to go back to school, thanks to the European debt crisis. Commodity trading advisers in June suffered their worst month in seven, losing 3.1% on the month, according to the Newedge CTA Index. Much of the pain came on the last trading day of the month, Friday the 29th.

Reuters:

• UBS downgrades Visa(V), MasterCard(MA) on weak consumer spending. UBS Investment Research downgraded payment processors Visa Inc and MasterCard Inc to "sell" from "neutral," citing slower consumer spending in the United States and sluggish global economic growth. "We believe both companies' exposure to a slowing consumer spending backdrop makes a slowdown in key metrics simply unavoidable," UBS analyst John Williams wrote in a note and cut his price target on both the stocks. Williams is rated five stars for the accuracy of his earnings estimates on Mastercard according to Thomson Reuters StarMine data.
• Russian budget banks on firm oil prices.
• Spain faces budget risks despite looser target-document. Looser budget deficit targets for Spain may still prove difficult to reach, according to an EU document that demands the country be subjected to three-monthly checks, a move that will tighten supervision of the euro zone's fourth-largest economy.
• Greek economy heading for 7 percent tumble. Greece's crippled economy will fall a steeper-than-expected 6.9 percent this year, a think-tank formerly run by the new finance minister said on Monday, a tumble that will hamper efforts to cut the deficit and bring yet more pain to Greeks. Such a decline would mean Greece's economy has shrink by a fifth since the end of 2007.

Politico:

• John Boehner Dimisses Obama Tax Plan. Speaker John Boehner rebuffed President Barack Obama’s offer to cut taxes for the majority of Americans, decrying the move as “quixotic.” “In the wake of another weak jobs report, the president is doubling down on his quixotic call for the same small businesses tax hikes that have been routinely rejected by the House and Senate,” Boehner said in a statement. “How will these small business tax hikes create jobs? Even Democratic congressional leaders and former President Clinton have turned their back on this proposal.”
  

Telegraph:

• China heads for a deflationary shock.

Xinhua:

• China Bans Government Purchase of Luxury Goods. China will prohibit government agencies from buying luxury goods starting Oct. 1, part of an effort to reduce corruption as the Communist Party celebrates the People's Republic's founding. New rules to reduce administrative costs of government and public institutions include tightening the use of public funds for receptions, vehicles and overseas trips, the official news agency said.

Bear Radar

Style Underperformer:

• Mid-Cap Value -.92%

Sector Underperformers:

• 1) Education -2.4% 2) Disk Drives -1.9% 3) I-Banks -1.81%

Stocks Falling on Unusual Volume:

• SIMO, CVLT, MCP, PEGA, NAV, IVN, BKH, LMNX, ADTN, MFRM, PAAS, ALLT, APKT, KIRK, PRSC, PCYC, FIRE, CHKP, CROX, TIBX, SPLK, AFFY, ANSS, CTXS, VAR, ATR, FCN, CFX, SWI, KRO and BPI
  

Stocks With Unusual Put Option Activity:

• 1) RCL 2) CHKP 3) EA 4) XLNX 5) APKT
  

Stocks With Most Negative News Mentions:

• 1) AMTD 2) VAR 3) F 4) RIMM 5) WFC
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth -.20%

Sector Outperformers:

• 1) HMOs +9.2% 2) Drugs +.28% 3) Hospitals +.04%

Stocks Rising on Unusual Volume:

• AGP, CNC, OSUR, QCOR, AKRX, SYNC, WCG, MOH and HNT
  

Stocks With Unusual Call Option Activity:

• 1) WMB 2) SHAW 3) EA 4) FTNT 5) MAKO
  

Stocks With Most Positive News Mentions:

• 1) RTN 2) AGP 3) BA 4) NAV 5) PEP
  

Charts:

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