Friday Watch

Evening Headlines
Bloomberg:

• Italy’s Bond Rating Cut by Moody’s on Contagion, Funding Risks. Italy’s bond rating was cut and its negative outlook reiterated by Moody’s Investors Service as the euro area’s third-biggest economy faces higher funding costs and contagion risk from Greece and Spain. The ratings company lowered Italy’s government bond rating by two steps to Baa2 from A3, citing a greater risk of a Greek exit from the euro and the Spanish banking system experiencing greater credit losses, according to a statement released in Frankfurt today. That makes Italy’s rating the same as those of Kazakhstan, Bulgaria and Brazil, according to data compiled by Bloomberg. “Italy’s near-term economic outlook has deteriorated, as manifest in both weaker growth and higher unemployment, which creates risk of failure to meet fiscal consolidation targets,” Moody’s said. “Failure to meet fiscal targets in turn could weaken market confidence further, raising the risk of a sudden stop in market funding.”
• Italy Exits Before Greece in BofA Game Theory: Cutting Research. Italy and Ireland have more incentive to quit the euro than Greece, while Germany may have limited room to prevent departures from the currency union, according to Bank of America Merrill Lynch. Using cost-benefit analysis and game theory, BofA Merrill Lynch foreign exchange strategists David Woo and Athanasios Vamvakidis concluded in a July 10 report that investors “may be underpricing the voluntary exit of one or more countries” from the bloc. “Our analysis produces a few surprising results that even readers who may disagree with our conclusion are likely to find interesting,” the strategists wrote. Italy, the euro area’s third-largest economy, would enjoy a higher chance of achieving an orderly exit than others and would stand to benefit from improvements in competitiveness, economic growth and balance sheets, they said.
• Spain Threatens Deficit-Troubled Regions, Offers Help. Spain’s government threatened regions that are having trouble meeting deficit goals while offering to help them regain access to bond markets at a time when the nation is trying to restore investor confidence. Several Spanish regions risk missing their budget-deficit target of 1.5 percent of gross domestic product this year and have been given one week to take corrective measures, Budget Minister Cristobal Montoro said in Madrid late yesterday after a meeting with regional finance chiefs. The Cabinet will examine today a mechanism to provide exceptional assistance with bond redemptions to regional governments that are shut out of markets, he said. The aid will be conditional on additional budget cuts.
• Hollande’s Pledge to Block Firings Defied by Peugeot’s Reality. PSA Peugeot Citroen (UG)’s plan to close a factory in France for the first time in two decades represents the biggest challenge to Socialist President Francois Hollande’s promise to prevent a wave of job cuts. For Hollande, who pledged during his campaign to block what he called an expected “parade of firings,” the cuts by France's largest carmaker leave him squeezed between businesses seeking measures to spur growth and demands of his union supporters. Peugeot, whose announcement yesterday brought its job cuts to 14,000, is hardly alone.
• China Economic Data Questioned as Electricity Use Slows. The figures that go into China’s gross domestic product are “man-made” and “for reference only,” Li Keqiang, then a regional Communist Party head, said in 2007. The comments by Li, now a vice premier who’s expected to become premier next spring, were revealed in a diplomatic cable published by WikiLeaks in late 2010. Li’s remarks are especially relevant as China announced today that the economy expanded 7.6 percent last quarter from a year earlier, the slowest pace in three years.
• Most Chinese Stocks Drop as Second-Quarter Economic Growth Slows. Most Chinese stocks fell after a government report today showed the nation’s economy grew at the slowest quarterly pace in three years in the second quarter. Jiangxi Copper Co. (600362) led declines for commodity companies after a statistics bureau report showed the economy expanded 7.6 percent, trailing analysts’ estimate for 7.7 percent. China Shenhua Energy Co., the biggest coal producer, slid 1.2 percent after Sanford C. Bernstein cut its 2013 price forecast for thermal coal. Industrial & Commercial Bank of China Ltd. and China Minsheng Banking Corp. advanced after new lending exceeded estimates last month.
• Singapore GDP Unexpectedly Shrinks as Europe Crimps Exports. Singapore’s economy unexpectedly contracted last quarter as manufacturing fell, adding to signs of a deepening slowdown in Asian expansion as Europe’s debt crisis curbs demand for the region’s goods. Gross domestic product fell an annualized 1.1 percent in the three months through June from the previous quarter, when it climbed a revised 9.4 percent, the Trade Ministry said in an e- mailed statement today. The median of 14 estimates in a Bloomberg News survey was for a 0.6 percent gain. The economy expanded 1.9 percent from a year earlier. “The outlook on the growth side looks dim,” said Chua Hak Bin, a Singapore-based economist at Bank of America, who accurately predicted today’s GDP contraction. “If a technical recession does occur, chances are the Monetary Authority of Singapore may have to ease policy come October.”
• Copper Traders Most Bearish in Six Weeks on Demand: Commodities. Copper traders are the most bearish in six weeks on concern demand will slow in China, Europe and the U.S. at a time when hedge funds are betting on lower prices. Thirteen analysts surveyed by Bloomberg said they expect prices to drop next week and nine were bullish. A further six were neutral, making the proportion of bears the highest since June 1. Speculators have been wagering on a price drop since May and held a net-short position of 1,749 contacts on July 3, U.S. Commodity Futures Trading Commission data show. More than $1.2 trillion has been wiped from the value of global equities since early July amid concern growth is stalling.
• Fed’s Williams Sees 8% Unemployment Into 2013. Federal Reserve Bank of San Francisco President John Williams said he expects the unemployment rate to remain at or above 8 percent into next year as the economy enters a period of slower job growth.“Progress on bringing down the unemployment rate has probably slowed to a snail’s pace and perhaps even stalled,” Williams said today in the text of a speech in Portland, Oregon.
• Goldman Sachs(GS) Said to Hire Former Geithner Aide Williams. Goldman Sachs Group Inc. (GS), the fifth- biggest U.S. bank by assets, hired Andrew Williams, a former U.S. Treasury Department spokesman, for its corporate communications unit, said two people familiar with the matter.

Wall Street Journal:

• Spaniards Feel Sting of Big Budget Cuts. When Spain's government announced €65 billion ($79.7 billion) in planned budget cuts on Wednesday, it didn't take long for local Mazda salesman Sergio Junquera to feel the impact.
• U.S. Concerned as Syria Moves Chemical Stockpile. Syria has begun moving parts of its vast arsenal of chemical weapons out of storage facilities, U.S. officials said, in a development that has alarmed many in Washington. The country's undeclared stockpiles of sarin nerve agent, mustard gas and cyanide have long worried U.S. officials and their allies in the region, who have watched anxiously amid the conflict in Syria for any change in the status or location of the weapons. American officials are divided on the meaning of the latest moves by members of President Bashar al-Assad's regime.
• At J.P. Morgan(JPM), Whale & Co. Go. Three London-based employees at the center of J.P. Morgan Chase & Co.'s multibillion-dollar trading blunder, including one known as the "London whale," have left the bank, according to people familiar with the company. Achilles Macris, Javier Martin-Artajo and Bruno Iksil are the latest casualties of an episode that already has cost the bank $25 billion in market value and tarred the reputation of Chief Executive James Dimon as Wall Street's savviest risk manager.

Barron's:

• Odds Are Macau Gambling Estimates Too High. Sterne, Agee trimmed back on Las Vegas Sands, Wynn and Melco. Sterne, Agee & Leach. We believe second-quarter consensus is too high in the wake of earnings season for Macau names, potentially delaying more positive sentiment for individual securities with exposure to the Island/the Macau sector in general.

Business Insider:

• Here's Jeff Gundlach's New Epic Presentation On 'Financial Expressionism' And The State of The Economy.
• Here Are 4 Triggers That Could Cause A Meltdown In China's Enormous Shadow Banking System.
• The London Olympics Security Situation Is Looking Like A Complete Disaster.

Zero Hedge:

• Clarifying The Entirely Unremarkable Shift In ECB Deposits.
• Moody's Downgrades Italy's To Baa2 From A3, Negative Outlook - Full Text.
• Forget China's Goal-Seeked GDP Tonight; This Is The Chart That Keeps The PBOC Up At Night.

CNBC:

• China Logs Slowest Quarterly Growth Since 2009.
• Pew! Pew! US Videogame Sales Fall for 7th Month.
• Banks’ Libor Costs May Hit $22 Billion. Twelve global banks that have been publicly linked to the Libor rate-rigging scandal face as much as $22bn in combined regulatory penalties and damages to investors and counterparties, according to Morgan Stanley estimates.
• 'Bad News' for Commodities Regardless of China GDP: Trader.

Time Moneyland:

• Is Subprime Lending Fueling the Auto Surge? New research shows that lenders are loosening their standards for auto loans for people with damaged credit, but this is better news for lenders than it is for borrowers — or auto companies. In a quarterly study, credit scoring company FICO found that just over half of lenders say the biggest increase in subprime lending will be for car loans, a jump that comes as the new-car market regains its bearings and picks up steam again.
  

Washington Post:

• Geithner drawn into Libor scandal. While president of the Federal Reserve Bank of New York, Timothy F. Geithner pressed British regulators to reform the way it calculated a critical global benchmark called the London interbank offered rate, or Libor, according to a June 1, 2008 e-mail obtained by The Washington Post. Writing to the head of the Bank of England, among others, Geithner made six recommendations, which included eliminating incentives that could encourage banks to manipulate the rate and to establish a “credible reporting procedure.”

Forbes:

• California Cities Go Bankrupt, But Bullet Train Barrels On.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows Mitt Romney attracting 46% of the vote, while President Obama earns support from 45%. Five percent (5%) prefer some other candidate, and three percent (3%) are undecided.

Reuters:

• Syrian govt forces kill over 200 in village attack: activists. More than 200 people, mostly civilians, were massacred in a Syrian army and militia onslaught on a village in the rebellious province of Hama on Thursday, opposition activists said.
• San Bernardino under investigation, mulls bankruptcy move. Authorities are investigating financially troubled San Bernardino, California, where the city council voted this week to approve a bankruptcy filing amid a claim by the city attorney that fraudulent accounting may have contributed to the city's problems.
• FBI probes China's ZTE over Iran tech deals-report. The FBI has opened a criminal investigation into Chinese telecoms gear maker ZTE Corp's sale of banned U.S. computer equipment to Iran and its alleged attempts to cover it up and obstruct a Department of Commerce probe, the Smoking Gun website reported.
• Lexmark(LXK) slashes 2nd-qtr outlook on weak European demand. Printer maker Lexmark International Inc cut its second quarter outlook, hurt by the impact of exchange rates and weaker-than-expected demand in Europe, sending shares down nearly 10 percent in after market trading. The company expects second quarter adjusted earnings in the range of 87 cents to 89 cents per share, lower than the previous guidance of 95 cents to $1.05 per share. Lexmark said sales for the current quarter would decline 12 percent, compared with a drop of 7 to 9 percent anticipated earlier. "Looking ahead, the company expects these same factors to impact the second half of 2012," Lexmark said in a statement.
• Institutional investors exit equity funds - Lipper.

Financial Times:

• Honeywell(HON) chief warns on debt gridlock. A prominent US chief executive has urged business leaders to press politicians to agree on a solution to the country’s debt problems as concern rises that gridlock in Washington is damaging the economy.

Telegraph:

• Euro tumbles as Asian funds shun EU chaos. The euro has plunged to multi-year lows against a range of currencies on fears of a deepening slump in Italy and Spain, and ugly disputes between eurozone leaders.
• France’s story of failure should drive our success. A car industry shedding jobs in the thousands after a chronic loss of competitiveness undermined by the dead hand of state aid. Sound familiar?
• Greek unemployment rate at new record of 22%. Greek unemployment hit a record 22.5pc in April and may keep edging higher, with even the key tourism sector unlikely to provide more than fleeting support over the summer as visitors stay away from the recession-hit country.

Chosun Ilbo:

• South Korea may resume purchase of Iran crude as Iran govt offers $1b worth of insurance coverage to tankers carrying crude to South Korea.

Economic Information Daily:

• Large Number of Chinese IPOs in 2H May Hurt Stock Market. The value of IPOs in China in 2H may be around 3 times as much as in 1H, citing a survey of private equity funds by www.simuwang.com.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.25% to +.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 168.0 +5.0 basis points.
  
• Asia Pacific Sovereign CDS Index 138.0 +1.5 basis points.
  
• FTSE-100 futures +.35%.
  
• S&P 500 futures +.36%.
  
• NASDAQ 100 futures +.48%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (JPM)/.76
• (WFC)/.81
• (WBS)/.44
• (IGTE)/.30
  

Economic Releases
8:30 am EST

• The Producer Price Index for June is estimated to fall -.5% versus a -1.0% decline in May.
• The PPI Ex Food & Energy for June is estimated to rise +.2% versus a +.2% gain in May.
  

9:55 am EST

• Preliminary Univ. of Mich. Consumer Confidence for July is estimated to rise to 73.5 versus 73.2 in June.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Lockhart speaking and BOJ Monthly Report could also impact trading today.
  

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

Stocks Falling into Final Hour on Rising Global Growth Ffears, Eurozone Debt Angst, Earnings Worries, US Fiscal Cliff Concerns

Broad Market Tone:

• Advance/Decline Line: Lower
  
• Sector Performance: Most Sectors Declining
  
• Volume: Below Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 18.12 +.98%
  
• ISE Sentiment Index 102.0 +61.90%
  
• Total Put/Call .99 +2.06%
  
• NYSE Arms 1.41 +41.09%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 113.10 +1.40%
  
• European Financial Sector CDS Index 278.38 -.45%
  
• Western Europe Sovereign Debt CDS Index 274.70 +.72%
  
• Emerging Market CDS Index 266.31 -.13%
  
• 2-Year Swap Spread 21.75 -1.75 basis points
  
• TED Spread 35.75 -.75 basis point
  
• 3-Month EUR/USD Cross-Currency Basis Swap -51.0 +3.5 basis points
  

Economic Gauges:

• 3-Month T-Bill Yield .10% +1 basis point
  
• Yield Curve 121.0 -4 basis points
  
• China Import Iron Ore Spot $133.70/Metric Tonne -.22%
  
• Citi US Economic Surprise Index -61.40 +3.1 points
  
• 10-Year TIPS Spread 2.05 -3 basis points
  

Overseas Futures:

• Nikkei Futures: Indicating -5 open in Japan
• DAX Futures: Indicating +23 open in Germany
  

Portfolio:

• Slightly Higher: On gains in my biotech sector longs, index hedges and emerging markets shorts
  
• 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 mildly bearish as the S&P 500 trades off session lows, after testing its 50-day moving average, on eurozone debt angst, tech/financial sector weakness, US "fiscal cliff" worries, earnings concerns and rising global growth fears. On the positive side, Coal, Biotech, Homebuilding and Restaurant shares are especially strong, rising more than +.75%. Lumber is rising +1.4%. The Germany sovereign cds is falling -1.8% to 89.88 bps, the Portugal sovereign cds is down -1.8% to 826.11 bps and the Brazil sovereign cds is down -1.6% to 147.89 bps. On the negative side, Oil Tanker, Computer, Semi, Disk Drive, Networking, Bank, I-Banking, Gaming, Education and Airline shares are under pressure, falling more than -1.25%. Cyclicals are underperforming again. Tech and financial shares are heavy. Copper is down -.5%. The 10Y T-Note Yld is falling another -4 bps to 1.48%. The Citi Latin America Economic Surprise Index is falling another -1.5 points today to -35.20, which is the lowest since early-Aug. of last year. Major Asian indices fell around -1.5% overnight, led down by a -2.24% decline in South Korea(-4.8% in 5 days). Major European indices fell around -1.25%, led down by a -2.6% decline in Spain(-4.7% in 5 days). The Bloomberg European Bank/Financial Services Index fell -1.8%. The Spain sovereign cds is up +1.7% to 568.47 bps, the Italy sovereign cds is gaining +1.4% to 503.43 bps and the China sovereign cds is gaining +1.1% to 114.37 bps. Moreover, the Italian/German 10Y Yld Spread is rising +2.7% to 466.26 bps. 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 -26.0% since Sept. 7th of last year. Shanghai Copper Inventories have risen +134.0% 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 -21.2% since May 2nd of last year. Spanish and Italian yields are back in the danger zone. Copper, oil and the euro currency continue to trade poorly and remain in intermediate-term downtrends. The 10Y T-Note continues to trade too well, which remains a big red flag. The AAII % Bulls fell to 30.2 this week, while the % Bears rose to 34.7. 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 -74.0 points, which is near 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. 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. It appears to me that European officials are finally trying actively to devalue their currency now and I don't believe the negative implications of this have been priced into commodities/emerging markets. Today's rally off the lows was likely driven by investor expectations that China economic data will beat lowered estimates tonight and US housing optimism on Buffett's comments. I continue to believe housing has just stabilized after the crash and prices will make new lows during the next recession. 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-lower into the close from current levels on eurozone debt angst, earnings worries, rising global growth fears, more shorting, tech/financial sector weakness and US "fiscal cliff" concerns.

Today's Headlines

Bloomberg:

• Preusser Says Italy Was Loser at Euro Summit, Boersen Reports. Ralf Preusser, who heads European rates research at Bank of America Merrill Lynch, said Italy was “the big loser” at the euro summit last month, Boersen-Zeitung reported, citing an interview. Italy’s main difficulty is its debt burden, at 120 percent of gross domestic product, not its banking system, as in Spain, the newspaper cited Preusser as saying. He said the European Union’s decision on a banking union therefore benefits Italy little and the country’s goal of joint euro-area bonds didn’t materialize, Boersen reported.
• German Referendum Needed to Fix Euro, Bofinger Tell Standard. Peter Bofinger, an economic adviser to German Chancellor Angela Merkel, said Germany will probably need a referendum before politicians fix the structural defects of Europe’s currency, Vienna’s Der Standard newspaper reported, citing an interview. While the German judicial system weighs the legality of the European Stability Mechanism “the best way in Germany would be to hold a referendum,” he told the newspaper. “The problem we have now is not a problem of constitutional politics but that, for two years now, small-scale solutions have been tried to solve a systemic crisis,” Bofinger said.
• Italian Investors Feud Over Biggest Builder Impregilo. The fate of Impregilo SpA (IPG), Italy’s biggest construction contractor with projects from Brazilian highways to the Panama Canal, was postponed until July 17 after the company’s two biggest investors clashed at a shareholder meeting today.
• Peugeot To Shut Plant To Raise Job Cuts To 14,000 Posts. PSA Peugeot Citroen (UG), Europe’s second-biggest carmaker, will shut the first auto factory in France in 20 years and reduce its workforce by 6.7 percent in an effort to stem widening operating losses. The automaker will cut a total of 14,000 jobs, with 8,000 additional positions being eliminated on top of the 6,000 posts already announced last year, Chief Executive Officer Philippe Varin said today at a press conference in Paris.
• ECB Says Overnight Deposits Fall to Lowest in Seven Months. The European Central Bank said overnight deposits from financial institutions dropped by more than half to the lowest level in almost seven months after policy makers stopped paying interest for the funds. Banks in the 17-nation euro region parked 324.9 billion euros ($397.2 billion) at the ECB yesterday, down from 808.5 billion euros the previous day, the Frankfurt-based institution said. That’s the least since Dec. 21.
• Sany Heavy Cut Excavator Sales Goal on Weak China Demand. Sany Heavy Industry Co. (600031), China’s biggest maker of excavators, lowered annual unit-sales forecast as slowing economic growth and government’s curbs on property market sap demand. Excavator sales may increase 10 percent this year, slower than a previous target of 40 percent, Vice Chairman Xiang Wenbo said in a July 11 interview in Changsha, Hunan province, where the company is based. Sany will still outperform the industry that may see a contraction in demand, he said. “At the beginning of this year, we estimated the whole market to grow slightly. Now it seems we were too optimistic,” Xiang said. Nationwide excavator sales plunged about 38 percent in the first six months, according to data from consultancy China Construction Machinery Business Online. Komatsu Ltd. (6301)’s sales of excavators in the country fell more than half in the quarter ended in June from a year earlier, its Chief Executive Officer Kunio Noji said last week. Domestic and overseas suppliers of mining equipment may have accumulated inventories of more than six months, he said.
• Americans in Poll Say Obama’s Health-Care Law Amounts to Tax. A majority of U.S. voters consider Barack Obama’s health-care law to be a tax increase, leaving the president to defend an election-year vow not to raise levies on the middle class, according to a Quinnipiac University poll. By a margin of 55 percent to 36 percent, respondents said the Patient Protection and Affordable Care Act amounts to a tax increase. Participants were less sure of what they thought about the future of the law, saying 48 percent to 45 percent that the U.S. Supreme Court was right to uphold it, while also saying 49 percent to 43 percent that Congress should repeal it. Voters’ view of the law as a tax might pose a problem for Obama as he takes on former Massachusetts Governor Mitt Romney in the November presidential election, said Peter Brown, assistant director of the Hamden, Connecticut-based Quinnipiac University Polling Institute. “Obama has worked mightily to avoid the ‘T’ word,” Brown said in an e-mailed statement accompanying the poll, conducted July 1-8. The main question is whether Republicans can convince voters that the health-care law “breaks his promise not to raise taxes on those who make less than $250,000,” Brown said.
• An "overall stagnating economic recovery" is likely to slow the US housing market during the second half of the year, Corelogic Chief Economist Market Fleming said.
• Consumer Comfort In U.S. Stagnates Amid Unemployment. Consumer confidence stagnated last week as scant improvement in the labor market left Americans more discouraged about the economy. The Bloomberg Consumer Comfort Index held at minus 37.5 in the week ended July 8. Some 86 percent of those surveyed said the economy was in bad shape, 21 percentage points higher than the average since 1985. “Consumers remain generally downbeat about the economy and expectations for the future,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “Given slower job growth and the recent stabilization of oil and gasoline prices near current levels, there is little impetus to support an improvement in overall sentiment in the near term.”
• Jobless Claims in U.S. Drop on Fewer Auto Shutdowns. Fewer Americans than forecast filed first-time claims for unemployment insurance payments last week, reflecting the volatility of applications during the annual auto-plant retooling period. Applications for jobless benefits decreased by 26,000 in the week ended July 7 to 350,000, the fewest since March 2008, Labor Department figures showed today. Economists forecast 372,000 claims, according to the median estimate in a Bloomberg News survey. Last week’s distortion is likely to unwind slowly over coming weeks, a Labor Department spokesman said as the data was released to the press.
• JPMorgan(JPM) Puts Cheapest in Two Years After Shares Plunge: Options. Bearish options on JPMorgan are the cheapest in two years on speculation the shares already reflect the bank's multibillion-dollar trading loss. Puts protecting against a 10% drop in the NY-based lender cost 1.15 times more than calls betting on a 10% gain, according to data on 30-day options compiled by Bloomberg. The price relationship known as skew is at the lowest level since January 2010.
• Bank of America(BAC) Cuts Earnings Forecast for S&P 500 in 2012, 2013. Bank of America Corp. cut its earnings estimates for the Standard & Poor’s 500 Index for 2012 and 2013, citing concern that lower commodity prices and slower global growth will weigh on corporate profits. Strategists for the Charlotte, North Carolina-based bank reduced earnings forecasts for S&P 500 (SPX) companies by 1.4 percent for this year and next year. Strategists Dan Suzuki, Savita Subramanian and Jill Carey now project income of $102 per share for 2012 and $109 for 2013, implying growth of 4 percent and 7 percent, respectively, according to a note to clients today. “Although the bottom-up consensus forecasts have continued to drift lower since last summer, they still appear too optimistic,” the strategists wrote in a note today. “The recent weakness in earnings revision and guidance trends may be a sign that consensus expectations are in the early stages of being reset lower.”
• Wells Fargo(WFC) Said to Settle Loan Probe for $125 Million. Wells Fargo & Co. (WFC), the largest U.S. mortgage lender, will pay $125 million to settle federal claims it violated fair-lending laws, according to a person with direct knowledge of the agreement. The case relates to independent mortgage brokers who worked with the bank, said a person with knowledge of the inquiry who requested anonymity because the accord hasn’t been made public. The deal may be announced as early as today.

Wall Street Journal:

• Cartier CEO Sees Slowdown in Chinese Demand. Cartier, the luxury watch and jewelry brand owned by Cia. Financière Richemont SA, is seeing slowing demand for its high-end watches in China, the driver behind the recent boom in luxury watches, its chief executive said Wednesday. "After a phenomenal year last year, there's been a bit of a slowdown in mainland China," Cartier CEO Bernard Fornas said in an interview at the company's factory at La Chaux-De-Fonds.
• Chinese Luxury Appetite Wanes. Chow Tai Fook, Burberry See Slower Growth as Affluent Buy Fewer Watches, Handbags. China's voracious appetite for luxury goods is starting to wane as wealthy buyers succumb to nervousness about the country's slowing economy and the government cracks down on corruption that often takes the form of pricey gifts. Sales of everything from gold watches to leather handbags are declining, although they are still robust by global standards. Nevertheless, the downturn is a blow to the world's luxury-brand companies, who once considered the Chinese market to be immune to the economic malaise afflicting their business in Europe and the U.S.
• India Considers 21% Import Tax on Some Power Gear. India is considering a 21% import tax on power generating equipment for large projects to protect local manufacturers from cheaper equipment from China, two senior government officials said Thursday.
  

Dow Jones:

• ECB Knot: Nothing to Stop ECB Cutting Rates Below 0.75% - Report.

MarketWatch:

• Defensive stocks trade near 52-week highs. Investors took shelter in defensive stock sectors Thursday, boosting some stocks near or past their 52-week highs, as the broader market risked heading toward a sixth day of losses.
• China Slams the Brakes on GM's(GM) Accelerating Car Sales. New government rules could put a damper on the General's success.

CNBC.com:

• Home Prices May Hit Roadblock Soon. The recent growth in U.S. home prices may hit a roadblock in the coming months, thanks to a new supply of distressed properties hitting the market. Banks are moving more delinquent loans through the pipeline at a faster pace, according to a new report released Thursday by foreclosure sale website RealtyTrac. The number of homes starting the foreclosure process for the first time grew for the second month in a row on an annual basis.
• Investors Warn EU Hedge Fund Rules Could Hit Other Funds. Leading fund management firms have warned the European Commission's head of financial regulation that new rules aimed at tightening practice at hedge funds could damage the rest of the industry's ability to operate effectively. Twenty investors, including Allianz, BlackRock, Fidelity and Schroders, have written to Michel Barnier, the Commissioner in charge of financial regulation, stating proposed reforms risk hampering Europe's single market in investment funds.
• Debate Rages Over Benefits of Fiscal Austerity. The Spanish government’s new package of tax increases and spending cuts throws a spotlight on an increasingly contentious debate about whether fiscal austerity in Europe is further damaging the patient’s health rather than leading to recovery.
• Poll: The Rich Deserve Their Wealth. A new survey from GlobeScan shows that 58 percent of Americans agree with the statement that “the rich deserve their wealth.” That’s actually higher than it was in 2008, before the economic crisis, Wall Street bailouts and the Occupy movement. Americans remain among the most wealth-friendly in the world, ranking third when it comes to their votes on the deserving rich (only Australia and Canada are higher). An earlier Gallup poll showed that the number of Americans who want inequality to be “fixed” has declined since 1998. In 1998, 52 percent of Americans wanted the gap between rich and poor to be fixed. Today 48 percent say so.

Business Insider:

• Here's The Chart That Will Get Obama Fired...
• UH-OH! Warren Buffett Seems More Bearish Than Usual.
• More Cracks Appear In The Chinese Banking System.

Zero Hedge:

• Euro Strength? A Mystery No More.
• Europe's Equities Catch-Down To Credit.
• Five Things I’ve Learned On The Ground In Portugal.
• NYSE Short Interest Plunges By Most Since January, As Equity Outflows Hit One Month High. (graphs)
• US June Deficit: $60 Billion, $17 Billion Worse Than Prior Year. (graph)
• Here Come The Libor Liability Estimates.
  

New York Times:

• Orders at Air Show Decline for Top Aircraft Companies. Boeing and Airbus announced a final flurry of orders at a major aerospace trade show here Thursday, but the world’s two biggest aircraft manufacturers are heading home with around $54 billion in deals — just over half what they drew last year.
  

Reuters:

• Copper slips ahead of China GDP data, growth concerns.
• U.S. expands sanctions on Iran, blacklists firms and persons. The United States ratcheted up its sanctions against Iran on Thursday, blacklisting a number of firms and individuals for contributing to what it says is an effort to acquire nuclear weapons. The U.S. Treasury said it was also identifying a number of "front companies and banks" linked to nuclear proliferation, an attempt to make it harder to evade existing sanctions.

Telegraph:

• Italy statisticians 'too squeezed to track recession'. Italy's official statisticians are threatening to down calculators and stop reporting on its stricken economy – as they fall victim to the recession they are paid to track.

Xinhua:

• Rising medical costs caused by smoking and Chin's aging population may "cripple" the nation's social-security system in two decades, citing Liang Xiaofeng, deputy director of the Chinese Center for Disease Control and Prevention. Tobacco-related deaths in China have been increasing over the past decade and will peak between 2025 and 2030. China will overtake Japan as the world's most-aged society at the same time, the report said.

Securities Daily:

• China will launch its first trading platform for rare earths on August 8, citing Zhang Rihui, the board secretary of Baotou Steel Rare-Earth Hi-Tech Co., one of the creators of the platform.

Bear Radar

Style Underperformer:

• Small-Cap Value -1.22%

Sector Underperformers:

• 1) Computer Hardware -2.01% 2) I-Banking -1.84% 3) Steel -1.83%

Stocks Falling on Unusual Volume:

• INFY, TSU, TI, IVN, BSFT, GNC, AVP, GSK, IMGN, MAPP, ADTN, HCII, AEIS, ADES, EZCH, ASML, RUSHA, NILE, ASPS, TRAK, VRSN, WAFD, DISCK, FMCN, MCRS, HTHT, SYNT, IRF, KR, POST, PGR, HOT, MAR and SWY
  

Stocks With Unusual Put Option Activity:

• 1) DISH 2) UUP 3) SNE 4) MAR 5) RVBD
  

Stocks With Most Negative News Mentions:

• 1) FDX 2) AGU 3) GS 4) F 5) BAC
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value -1.01%

Sector Outperformers:

• 1) Homebuilders +.46% 2) Restaurants +.09% 3) Drugs -.13%

Stocks Rising on Unusual Volume:

• TXI, PG, SSH, AFFY, FAST, VHC, MBI, PSSI, AZO and MRK
  

Stocks With Unusual Call Option Activity:

• 1) SVU 2) GDXJ 3) FAST 4) GCI 5) CTL
  

Stocks With Most Positive News Mentions:

• 1) CVX 2) LMT 3) WAG 4) PGR 5) FAST
  

Charts:

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

Thursday Watch

Evening Headlines
Bloomberg:

• EU Trials New Crisis Model in Spain Trading Budget Cuts for Time. European leaders are testing the latest version of their debt crisis strategy in Spain, granting Prime Minister Mariano Rajoy more time to reduce the budget deficit in exchange for deeper spending cuts. Rajoy yesterday announced 65 billion euros ($80 billion) of austerity measures in a renewed effort to meet European Union budget targets after he was granted a one-year extension on the deadline to meet EU limits. Europe’s concession to recession-wracked Spain has raised expectations in Ireland and Portugal that they can win more time to rein in their budget deficits after Germany’s hardball tactics in Greece spurred a rebellion against bailout politics there.
• Germany May Turn to Labor Programs as Crisis Worsens, Union Says. Germany’s industrial workforce is bracing for a global slowdown by mulling some measures last used during the financial crisis to save jobs, said Berthold Huber, chairman of Europe’s largest manufacturing union. “The experience from 2008 has taught us that an economy can slump within the shortest period of time and as a union, we need to be prepared for that,” Huber, chairman of IG Metall, said in an interview in Frankfurt on July 4. “For such an event, we need crisis measures. Germany won’t be able to fully decouple from an economic downward trend in Europe.”
• Spain Targets First Cash From Renewables With Energy Tax. Mariano Rajoy’s pledge to tax utilities and power consumers signals Spain is planning to raise cash from renewable energy for the first time, a blow to an industry already struggling with subsidy cuts. The prime minister told Parliament yesterday he’d impose a levy to spread the expense of closing a gap between costs and revenue in the country’s electricity business, which has racked up debts of 25 billion euros ($31 billion). Details may be announced as early as tomorrow after the weekly Cabinet meeting.
• Singapore GDP Growth Probably Slowed as Europe Crisis Hurt Asia. Singapore’s economic growth probably slowed last quarter as the European debt crisis constrained exports while elevated inflation prompted the central bank to tighten policy. Gross domestic product rose an annualized 1 percent in the three months through June from the previous quarter, less than the 10 percent pace in the period through March, according to the median of 14 estimates in a Bloomberg News survey. The report is due tomorrow.
• Bank of Korea Unexpectedly Cuts Benchmark Interest Rate. The Bank of Korea unexpectedly cut borrowing costs for the first time in more than three years, joining an international push for monetary stimulus as Europe’s debt crisis threatens to undermine global growth. Governor Kim Choong Soo and his board lowered the benchmark seven-day repurchase rate to 3 percent, the first cut since February 2009, the central bank said in a statement in Seoul today. Two of 16 economists surveyed by Bloomberg News predicted the move while the rest forecast no change. “What we’re seeing is a global policy response from Europe to China and now Korea to stave off a deep recession,” said Kong Dong Rak, a fixed-income analyst at Taurus Investment & Securities Co. in Seoul. “Bond market players are shocked by the sudden reversal of the monetary policy stance.”
• Australian Employers Reduce Payrolls in June, Jobless Rate Rises. Australian employers unexpectedly cut payrolls in June, the first reduction in four months, and the unemployment rate rose as evidence mounts that Europe’s turmoil is discouraging hiring. The local currency fell. The number of people employed fell by 27,000, almost erasing a revised 27,800 gain in May, the statistics bureau said in Sydney today. That compares with the median estimate for no change in employment in a Bloomberg News survey of 25 economists. The jobless rate rose for a second month, to 5.2 percent from 5.1 percent.
• China’s Economy Needs Spending Power, Not Steel Factories. China has produced a tattoo beat of disquieting news since March, when Premier Wen Jiabao lowered the government’s growth target for 2012 to 7.5 percent, down from the 8 percent target in place since 2005. Real estate prices, trade growth, construction and luxury watch sales are all declining. The government has issued stern edicts for officials to cut back on flashy cars, banquets and other perks.
• Infosys Net Income Misses Estimates as Clients Curb Spending. Infosys Ltd. (INFO), India’s second-largest software exporter, reported first-quarter profit that missed analysts’ estimates as customers cut information-technology spending amid economic uncertainty. Net income rose to 22.9 billion rupees ($412 million), or 40.06 rupees a share, in the three months ended in June, from 17.2 billion rupees, or 30.14 rupees, a year earlier, Bangalore- based Infosys said today. That compares with the 24.2 billion rupee median of 31 analyst estimates compiled by Bloomberg.
• Syria Faces UN Sanctions Push as Ally Russia Resists. Syria would face United Nations sanctions under a Security Council resolution drafted by Western powers seeking to overcome Russian resistance to measures that would hasten the fall of President Bashar al-Assad. The move came after Kofi Annan, the UN’s special envoy to Syria, yesterday asked the UN’s decision-making body via video link from Geneva to “send a message to all that there will be consequences for noncompliance” with his peace efforts.
• Telefonica(TEF) Latin America Luster Fades on Brazil Slowdown. Telefonica SA (TEF)’s days of guaranteed earnings expansion in Latin America may be over, leaving Chief Executive Officer Cesar Alierta with few growth markets as he tries to sell a stake in the assets to repay debt. Revenue growth from the 15 countries including Brazil and Peru is poised to slow to 2.7 percent in 2013 from 12 percent last year, according to an estimate by Sanford C. Bernstein. Telefonica Brasil SA, which made almost half of Telefonica’s 29 billion euros ($35.5 billion) in Latin American sales last year, may see its 2012 profit margins drop to the lowest level since at least 2004, Banco de Sabadell analysts predict.
• Peregrine Customers’ Claims Priced at 25 Cents on Dollar. Customers’ claims on Peregrine Financial Group Inc., whose founder “misappropriated” more than $200 million of their money according to regulators, may fetch less than a quarter of their value in the wake of the firm’s bankruptcy, a trader said. Quotes of 22 cents on the dollar to 25 cents were given today to half a dozen Peregrine customers who called CRT Capital Group LLC, which buys and sells distressed debt, said Joseph Sarachek, managing director of claims trading.

Wall Street Journal:

• Egyptian Leader's Visit Sends Signal to Saudis. Egypt's Mohammed Morsi made the first foreign visit of his presidency to Saudi Arabia in what political observers called an apparent effort to offer assurances about his aims as the most visible symbol of the rise of political Islam in the region. The visit by Mr. Morsi, who won the presidency as the candidate of Egypt's Muslim Brotherhood, takes him to a security-minded monarchy wary that homegrown Islamist movements will take encouragement from the political rise of Islamist blocs in countries transformed by Arab Spring uprisings.
• President Presses Democrats to Support Tax-Hike Plan. President Barack Obama used a White House meeting Wednesday to rally Democratic leaders behind his proposal to raise taxes on families with adjusted gross income above $250,000, an issue that people in both parties see as working to their advantage. Still, a coming Senate vote puts political pressure on vulnerable Democrats who have been wary about the proposal's reach.
• Europe's Woes Slow Renault. Renault SA lowered its sales-growth target for 2012 as the sputtering European economy offset growth elsewhere. Renault said it sold 1.33 million cars and light commercial vehicles in the first half of the year, down 3.3% from the same period last year. Sales in Europe fell 15% as the economic turmoil sapped demand, even as sales outside the region rose 14%. As a result, Renault said it no longer expects 3% to 4% growth in automobile sales in 2012, and may not be able to match its 2011 sales.
• GOP House Moves to Repeal Health Law in Symbolic Vote. The House voted on Wednesday to repeal President Barack Obama's health-care law, a symbolic act in the wake of the Supreme Court's recent ruling upholding the legislation. The 244-185 vote was largely along party lines, with five Democrats joining all Republicans in voting to undo Mr. Obama's much-debated program.
• Italy Faces 'War' in Economic Revamp, Monti Warns. Prime Minister Mario Monti said Italy faced a "war" at home and abroad as his government pushes to revamp the euro-zone's third-biggest economy and extricate it from the region's debt crisis. The premiere's remarks at a banking conference in Rome came as allies of the premier's predecessor, Silvio Berlusconi, began clamoring for the controversial billionaire to run for office in the next election. That prospect is likely to unnerve investors and EU authorities who pushed for Mr. Berlusconi's ouster in November.
• Deeper Slowdown Suspected in China. Official data due this week are expected to show growth in China slowing to its lowest rate since the global financial crisis. But some economists say they are turning up evidence that the true picture could be even worse.

MarketWatch:

• Hong Kong stocks fall sharply ahead of data.

Business Insider:

• Too Bad We Didn't Learn From MF Global, Because It's Happening Again.
• Anti-Austerity Protests In Spain Got So Bad Today That Police Had To Begin Firing Rubber Bullets.
• A Whole Bunch Of Cities And Counties Are Now Seeing Their Finances Collapse.

Zero Hedge:

• "The Use Of Temps Is Outpacing Outright New Hirings By A 10-To-1 Ratio".
• US Attorneys General Jump On The Lieborgate Bandwagon; 900,000+ Lawsuits To Follow, And What Happens Next.

CNBC:

• New York Fed to Release Libor Documents Friday, Official Says.

NY Times:

• JPMorgan(JPM) Pushed Sales of Its Funds Even at Clients’ Expense, Brokers Say. Regulators are examining JPMorgan Chase’s sales tactics, after claims that the nation’s largest bank pushed its own mutual funds over competitors’ investments. Authorities are responding to current and former JPMorgan financial advisers who said they had felt pressure to sell the bank’s products even when cheaper or better performing options were available.Several brokers told The New York Times that they had been encouraged to favor JPMorgan funds, and they described a broader culture that emphasized sales over client needs.
• Shake-Up at New York Fed Is Said to Cloud View of JPMorgan’s Risk. After the financial crisis, regulators vowed to overhaul supervision of the nation’s largest banks. As part of that effort, the Federal Reserve Bank of New York in mid-2011 replaced virtually all of its roughly 40 examiners at JPMorgan Chase to bolster the team’s expertise and prevent regulators from forming cozy ties with executives, according to several current and former government officials who spoke on the condition of anonymity. But those changes left the New York Fed’s front-line examiners without deep knowledge of JPMorgan’s operations for a brief yet critical time, said those people, who spoke on the condition of anonymity because there is a federal investigation of the bank.
• Fear of Year-End Fiscal Stalemate May Be Having Effect Now. With the economy having slowed in recent weeks, business leaders and policy makers are growing concerned that the tax increases and government spending cuts set to take effect at year’s end have already begun to cause companies to hold back on hiring and investments.

CNN:

• Investor flight out of stocks continues. Investors continued to flee the stock market last week, as they digested a deal by eurozone political leaders to stabilize credit markets and strengthen the region's banking system, and received further evidence of a U.S. economic slowdown. U.S. stock mutual funds lost $3.1 billion during the week ended July 3, according to the Investment Company Institute. Investors have now withdrawn money from the stock market for 19 of the past 20 weeks.

Financial Review:

• Fed's Man in Dallas Says 'No' to QE3. A US Federal Reserve president has warned against a third round of quantitative easing, suggesting it will encourage riskier investment, allow Congress to dodge the hard decisions on America’s gaping budget deficit and produce more financial ­disruption when the central bank eventually tries to take the cash back. Richard Fisher, the president of the Federal Reserve Bank of Dallas, said the challenge was to generate jobs from the money already created by $US2.7 trillion of Fed bond purchases. The Fed’s Open Market Committee, which sets US monetary ­policy, meets next on July 31.

Reuters:

• Supervalu(SVU) Profit Falls, Suspends Dividend. Grocery store operator Supervalu Inc suspended its dividend and took other measures to fund aggressive price cuts to try to win back customers, while also launching a reviewing strategic alternatives. The company, which has seen customers flee in recent years for lower prices at Wal-Mart Stores Inc, also on Wednesday said that profit fell 45 percent in the quarter ended June 16. Supervalu shares fell 24.3 percent to $4 in extended trading Wednesday afternoon.
• Brazil cuts rate for 8th time as recovery falters. Brazil cut its benchmark interest rate to a record-low 8 percent on Wednesday as policymakers scramble to revive an economy that has failed for nearly a year to respond to a barrage of stimulus measures. The central bank's monetary policy board, known as Copom, unanimously decided to lower the so-called Selic rate by half a percentage point, as expected. It was the eighth consecutive cut since last August, when the Selic stood at 12.5 percent.
• Marriott(MAR) sees weakness in international markets. Hotel operator Marriott International Inc reported a higher quarterly profit but said it was seeing weakness in some international markets. The company, which owns the Ritz-Carlton, Residence Inn and Courtyard by Marriott brands, slightly lowered its fee revenue outlook for the full year citing weak overseas demand. Marriott also cut its forecast for revenue per available room (revPAR) from the international markets but raised its full-year earnings forecast.
• Callaway Golf(ELY) to cut workforce by 12%. Callaway Golf Co, grappling with weak demand for golf equipment, plans to cut 12 percent of its workforce to reduce costs. Callaway said the job cuts would impact all regions and levels of organization and that the cost-cutting initiative would sharpen its focus on its core brands, Callaway and Odyssey.
• Global PC shipments flat in 2nd qtr - Gartner. Global PC shipments were flat in the second quarter, as economic uncertainty and a booming market for smartphones and tablets constrained growth, research firm Gartner Inc said. Worldwide PC shipments totaled 87.5 million units in the second quarter, down 0.1 percent from a year earlier, the industry research firm said. Gartner estimates Hewlett-Packard Co's shipments fell 12.1 percent, while those of Dell Inc slipped 11.5 percent in the quarter.

Financial Times:

• Banks face swaps threat after cut ratings. Sovereigns, banks, deals – the whole financial system relies on ratings provided by Moody’s, Standard & Poor’s and Fitch. So when Moody’s downgraded 15 of the world’s biggest banks last month, many financial institutions and investors were focused on the wider impact a rating drop would have on the derivatives swaps agreements at the heart of many structured finance deals.
• Global miners stage ‘retreat to the core'. Global mining groups, such as BHP Billiton, Vale and Anglo American, are pruning their expansive portfolios, as calls from shareholders for greater focus and spending discipline prompt them to shed non-core assets.

Telegraph:

• Proud Spain again humbles itself to the euro’s demands. With one in four Spanish workers out of a job, output contracting by the day and Asturian miners marching through the capital, the Spanish prime minister, Mariano Rajoy, has determined to push through a further €65bn (£51bn) of austerity measures, as if deliberately set on a strategy of economic death by a thousand cuts.

Market News Intl:

• China Has Little Room for Rate, Reserve Cuts, Yu Bin Says. China has relatively little room to cut interest rates and the reserve requirement ratio, citing government economist Yu Bin. Deflation is unlikely this year, he said. 2Q economic data isn't "very ugly," Yu said. China doesn't need a massive stimulus as 1H GDP is within the expected range, he said.
  

Economic Information Daily:

• China 2Q employment demand fell "a little" from 1Q, citing the Ministry of Human Resources and Social Security. Pressure on employment during the second half of the year may increase, citing analysts.

China News Service:

• The southern Chinese province of Guangdong has experienced larger-than-expected downward pressure on its economy this year, citing governor Zhu Xiaodan. Downward pressure hasn't eased in the second half of the year, Zhu said.

Evening Recommendations
Piper Jaffray:

• Rated (DNKN) Overweight, target $39.

Night Trading

• Asian equity indices are -1.5% to -.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 163.0 -5.5 basis points.
  
• Asia Pacific Sovereign CDS Index 136.5 -2.75 basis points.
  
• FTSE-100 futures -.31%.
  
• S&P 500 futures -.27%.
  
• NASDAQ 100 futures -.19%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (FAST)/.37
• (OZRK)/.52
• (CBSH)/.72
• (PGR)/.72
• (RECN)/.15
  

Economic Releases
8:30 am EST

• The Import Price Index for June is estimated to fall -1.8% versus a -1.0% decline in May.
• Initial Jobless Claims are estimated to fall to 370K versus 374K the prior week.
• Continuing Claims are estimated to fall to 3300K versus 3306K prior.
  

2:00 pm EST

• The Monthly Budget Deficit for June is estimated to widen to -$60.0B versus -$43.1B in May.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Williams speaking, 30Y T-Bond auction, China Industrial Production/Fixed Asset Investment reports, China GDP, Greece Unemployment Rate, UK 10Y Bond auction, Australia Unemployment Rate, weekly EIA natural gas inventory report, weekly Bloomberg Consumer Comfort Index and the JMP Securities Healthcare Conference could also impact trading today.
  

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