BETWEEN THE HEDGES

Wednesday, July 18, 2012

Thursday Watch

Posted by Gary .....at 11:38 PM

Night Trading

Asian equity indices are +.25% to +1.5% on average.
Asia Ex-Japan Investment Grade CDS Index 163.0 -4.0 basis points.
Asia Pacific Sovereign CDS Index 135.0 -.5 basis point.
FTSE-100 futures +.34%.
S&P 500 futures +.29%.
NASDAQ 100 futures +.50%.

Morning Preview Links

Earnings of Note
Company/Estimate

(FCS)/.16
(DO)/.91
(BBT)/.70
(KEY)/.18
(GPC)/1.07
(TRV)/1.32
(ADS)/1.91
(DGX)/1.17
(AN)/.59
(UNH)/1.20
(DHR)/.80
(LUV)/.32
(FITB)/.35
(PM)/1.35
(VFC)/.94
(JCI)/.66
(BAX)/1.11
(MS)/.29
(VZ)/.64
(UNP)/1.97
(FCX)/.74
(SHW)/2.12
(BX)/.11
(PPG)/2.36
(SWY)/.49
(NUE)/.48
(CMG)/2.30
(SNDK)/.18
(ETFC)/.11
(ISRG)/3.57
(MSFT)/.62
(GOOG)/10.15
(NCR)/.57
(AMD)/.07
(CY)/.18

Economic Releases
8:30 am EST

Initial Jobless Claims are estimated to rise to 365K versus 350K the prior week.
Continuing Claims are estimated to fall to 3300K versus 3304K prior.

10:00 am EST

Philly Fed for July is estimated to rise to -8.0 versus -16.6 in June.
Existing Home Sales for June are estimated to rise to 4.62M versus 4.55M in May.
Leading Indicators for June are estimated to fall -.1% versus a +.3% gain in May.

Upcoming Splits

None of note

Other Potential Market Movers

The Bloomberg weekly Consumer Comfort Index and the Bloomberg Economic Expectations Index for July could also impact trading today.

BOTTOM LINE: Asian indices are 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 mixed. The Portfolio is 50% net long heading into the day.

Stocks Rising into Final Hour on Global Central Bank Stimulus Hopes, Tech Sector Strength, Short-Covering, Technical Buying

Posted by Gary .....at 4:12 PM

Broad Market Tone:

Advance/Decline Line: Slightly Higher
Sector Performance: Most Sectors Rising
Volume: Below Average
Market Leading Stocks: Underperforming

Equity Investor Angst:

VIX 15.97 -3.09%
ISE Sentiment Index 77.0 -36.79%
Total Put/Call .90 +7.14%
NYSE Arms 1.05 +34.01%

Credit Investor Angst:

North American Investment Grade CDS Index 108.77 -2.11%
European Financial Sector CDS Index 268.94 bps -3.01%
Western Europe Sovereign Debt CDS Index 263.12 +.38%
Emerging Market CDS Index 254.93 +2.08%
2-Year Swap Spread 23.75 +.5 basis point
TED Spread 36.75 +1.0 basis point
3-Month EUR/USD Cross-Currency Basis Swap -45.75 +1.5 basis points

Economic Gauges:

3-Month T-Bill Yield .09% -1 basis point
Yield Curve 127.0 +2 basis point
China Import Iron Ore Spot $128.30/Metric Tonne -.85%
Citi US Economic Surprise Index -61.10 +1.2 points
10-Year TIPS Spread 2.08 unch.

Overseas Futures:

Nikkei Futures: Indicating +44 open in Japan
DAX Futures: Indicating +3 open in Germany

Portfolio:

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

BOTTOM LINE: Today's overall market action is bullish as the S&P 500 trades near session highs, despite rising eurozone debt angst, financial/homebuilding sector weakness, rising food/energy prices, US "fiscal cliff" worries, earnings concerns and rising global growth fears. On the positive side, Oil Tanker, Oil Service, Software, Computer, Semi, Disk Drive, Networking and Computer Service shares are especially strong, rising more than +1.0%. Cyclical and tech shares have traded well throughout the day. Gold is falling -.35% and Copper is gaining +.5%. Major European indices are higher, boosted by a +1.8% gain in France. Spain and Italy are not participating in the recent equity rally, falling -3.2% and -1.9%, respectively, over the last week. The Bloomberg European Bank/Financial Services Index is rising +.9% today, but is -1.9% lower over the last 5 days. Brazil is gaining +.9%. The European Investment Grade CDS Index is down -2.3% to 162.4 bps. On the negative side, Telecom, Bank, I-Banking, Homebuilding, REIT, Education and Airline shares are under mild pressure, falling more than -.5%. Financial and Homebuilding shares have traded heavy throughout the day. Oil is up +.85%, Lumber is falling -.6% and the UBS-Bloomberg Ag Spot Index is surging another +1.1%. The UBS-Bloomerg Ag Spot Index is up +26.0% in about 6 weeks. The 10Y T-Note Yld is falling another -2 bps to 1.49%. Major Asian indices were mostly lower last night, led down by a -1.5% decline in South Korea. The Shanghai Property Stock Index fell -3.3% overnight and is down -7.0% in 9 days despite China stimulus hopes. The China benchmark Iron/Ore Spot Price Index has broken down again technically, falling -14.1% since April 13th. As well, the China Hot Rolled Steel Sheet Spot Index is also picking up downside steam, falling -19.1% since Sept. 14 of last year. The Germany sovereign cds is rising +.8% to 75.16 bps, the France soverein cds is jumping 4.8% to 168.91 bps, the Spain sovereign cds is up +2.1% to 576.67 bps, the Italy sovereign cds is gaining +1.3% to 511.33 bps, the UK sovereign cds is gaining +2.2% and the Israeli sovereign cds is jumping +5.0% to 159.0 bps. Moreover, the Italian/German 10Y Yld Spread is rising +1.3% to 487.45 bps and the Spain 10Y Yld is rising +2.0% to 6.96%. US weekly retail sales have decelerated to a sluggish rate at +2.0%, which is the slowest since the week of April 5th of last year. US Trucking Traffic continues to soften. Moreover, the Citi US Economic Surprise Index has fallen back to late-Aug. levels. Lumber is -4.0% 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 -29.0% since Sept. 7th of last year. Shanghai Copper Inventories have risen +165.0% 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 down -18.8% since May 2nd of last year despite the recent surge in food prices. Spanish and Italian yields are back in the danger zone. Copper, lumber and the euro currency remain in intermediate-term downtrends. Oil is trading better of late, however given today's equity rally, global central bank stimulus hopes and a spike in Mid-East violence, today's gains were rather muted. The 10Y T-Note continues to trade too well, which remains a big red flag. I still believe the level of complacency among US investors regarding the rapidly deteriorating situation in Europe is fairly high. The European Investment Grade CDS Index, European Financial Sector CDS Index, Spain sovereign cds and Italian cds, among others, have given back little of their April/May gains and appear to be consolidating before another push higher. The Citi Eurozone Economic Surprise Index is at -68.90 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. 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. If the Fed embarks on another misguided round of QE, which seems to be what investors expect, the Ag Spot Index should push through its Aug. 31, 2011 all-time high. This would likely also lead to another surge in energy prices as it would spur another bout of rioting in the Middle-East. As well, it would greatly curtail any emerging markets stimulus plans, in my opinion. Uncertainty surrounding the effects on business of Obamacare, the "US fiscal cliff " and the election outcome uncertainty will likely become more and more of a focus for investors as the year progresses. The major averages continue to power higher off their recent lows, however the rally remains poor in quality. Volume, breadth, leadership, big volume/gainers are all lacking. Some stocks that reported disappointing results are rising today, which is a noteworthy change. There is a growing disconnect between US equity action and the deteriorating macro environment that is eerily similar to last July, in my opinion. The macro likely must begin improving very soon for equities to avoid a similar fate into the fall. 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 rising eurozone debt angst, earnings worries, rising food/energy prices, rising global growth fears, more shorting, financial/homebuilding sector weakness and US "fiscal cliff" concerns.

Today's Headlines

Posted by Gary .....at 3:05 PM

Bloomberg:

IMF Calls on Euro Authorities to Stand Behind Deposit Insurance. The International Monetary Fund called on the European Central Bank and euro-area authorities to stand behind deposit insurance within the currency area to help a common backstop take effect and forestall bank runs. European leaders should make banking union their immediate priority in the efforts to fight the debt crisis, the IMF said in staff reports today related to its annual review of the euro area. The Washington-based lender called for a rapid announcement of a timetable toward common deposit insurance, initially supported by the ECB or some other joint resource until it could eventually be funded by the banks. Existing bank backstops are nationally based and don’t go far enough to reassure customers that their money is safe, the IMF staff said. Cross-border deposit insurance, preferably accompanied by a centralized bank resolution agency, would keep weaker nations from running up against insolvency if their largest lenders run into difficulties.
Merkel Adviser Calls Political Union Unrealistic, FAZ Says. A political union in Europe that allows for the joint issue of bonds is unrealistic, Claudia Buch, a member of Chancellor Angela Merkel’s council of economic advisers, told Frankfurter Allgemeine Zeitung. “Euro bonds in the framework of a political union, with joint control and a surrendering of fiscal powers, would be theoretically an alternative in the long term,” Buch told the newspaper. “But this way seems politically unrealistic.” Buch, an economist at the University of Tuebingen who replaced Beatrice Weder di Mauro on the panel earlier this year, promoted the debt-redemption fund as an alternative to European Central Bank monetization of sovereign debt, FAZ said.
Credit Suisse Plans $15.6 Billion Capital Increase. Credit Suisse Group AG (CSGN) Chief Executive Officer Brady Dougan succumbed to pressure from the central bank and senior executives within his firm to increase capital by 15.3 billion francs ($15.6 billion). The lender will also cut an additional 1 billion francs in costs by the end of 2013, the Zurich-based bank said in a statement today. Second-quarter net income rose 2.6 percent to 788 million francs from a year earlier, the company said. Credit Suisse shares rose as much as 6.8 percent.
Ibrahimovic’s Paris Saint-Germain Salary to Trigger 75% Tax. “These sums are astronomic and unreasonable,” Fourneyron told journalists after a meeting of the French cabinet in Paris. “They’re among the things that we can deplore today in football, the complete lack of regulation.”
Corn Seen Rallying to Record $8.50 as Drought Kills Crops. Corn may rally to a record $8.50 a bushel as the worst U.S. drought in decades cuts production in the world’s biggest exporter, driving global stockpiles lower, according to broker Newedge USA LLC.
BofA(BAC) to Cut Another $3 Billion in Expenses. Bank of America Corp., the second- biggest U.S. lender, plans to trim $3 billion in annual expenses from investment banking, trading and wealth-management units. The cuts, which are expected to be completed by the middle of 2015, represent 11 percent of expenses in the targeted areas, the Charlotte, North Carolina-based bank said today in a presentation on its website. The initiatives have already begun, the lender said, without specifying the number of job cuts, which are part of a larger effort to reduce costs by $8 billion.
Bernanke Says Fed Will 'Take Away The Punch Bowl' When Needed. Federal Reserve Chairman Ben S. Bernanke said U.S. central bankers are capable of removing record stimulus from the financial system and raising interest rates when needed to avoid triggering inflation. “It will be a similar pattern to what we’ve seen in previous episodes where the Fed cut rates, provided support for the recovery, and when the recovery reached a point of takeoff where it could support itself on its own, then the Fed pulled back, took away the punch bowl,” Bernanke told the House Financial Service Committee today in Washington as part of his semi-annual testimony to Congress.
Home Starts in U.S. Rise to Highest Level Since 2008: Economy. Housing starts rose 6.9 percent to a 760,000 annual pace after a revised 711,000 rate in May that was faster than initially estimated, the Commerce Department reported today in Washington. The median forecast of 79 economists surveyed by Bloomberg News called for a 745,000 rate.
Temporary Work Demand Rises as Companies Avoid Commitments: Jobs. Create-A-Pack is among a growing number of businesses turning to staffing companies for temporary workers, reflecting employer concern about the U.S. economic outlook. The number of people on the payrolls of temp-staffing businesses grew 10.7 percent in June to 2.5 million from a year earlier, the biggest increase since May 2011, based on data from the Labor Department. Demand for temporary employees is gaining momentum as companies seek more flexible staffing arrangements, according to Tobey Sommer, director of equity research in Nashville at SunTrust Robinson Humphrey Inc. This has helped create a shift within the labor force, as a “not-easily-forgotten recession” has made many executives cautious about hiring, he said.

Wall Street Journal:

India’s Economic Data Losing Credibility. Can India’s economic data be trusted? Economists and investors say they are finding it increasingly hard. “Market participants are not able to decide what to make of this data,” said Brinda Jagirdar, economist at the State Bank of India. Frequent and sharp revisions in inflation and factory output data—key determinants of monetary policy—have confounded experts in recent months.
Staples vs. Solyndra. Mitt Romney needs to make a better argument for Bain capitalism.

MarketWatch:

Palo Alto Networks raises IPO price range.

CNBC.com:

Greek Leaders Push Back Decision on Austerity Cuts.
Are Spain’s Banks, Bailouts and Bonds Breaking Europe? Opposition to Spain’s bailout from Holland and Finland, continued German resistance to Eurobonds, the possibilities of fiscal union out of sight and arguments growing over who owns Spain’s debt are a signal that the recent EU summit has resolved nothing, senior economists told CNBC.
Forcing the Rich to Bail Out Europe. To many in Europe, the Continent has two big economic problems: Huge debt, and high inequality between the rich and the rest. Now some politicians are advocating a plan to solve both.

Business Insider:

Zero Hedge:

Reuters:

Syrian army helicopters bombard districts in Damascus. Syrian army helicopters fired machineguns and in some cases rockets at several residential districts of Damascus as President Bashar al-Assad's forces fought rebels across the capital on Wednesday, residents and activists said.
World Bank chief warns no region immune to European crisis. World Bank President Jim Yong Kim on Wednesday warned that most regions of the world will be hurt by the debt crisis enveloping the euro zone and said it was vital to protect the strong economic gains of the past decade in the developing world.
U.S. money fund lending to euro zone fell faster in June. U.S. money market funds pulled money out of the euro zone at a faster pace in June as concerns about the region's debt crisis accelerated, with banks that contribute to the scandal plagued Libor rate in the region among the hardest hit, Credit Suisse said in a report.

Financial Times:

Prepare for an Even Bigger U-Turn From Ms. Merkel. With Mr Hollande, the risk of France herself becoming a bailout candidate is rapidly growing. While Germany has extended the retirement age to 67, Mr Hollande has started reducing it from 62 to 60. Though France’s youth unemployment rate is four times higher than Germany’s, Mr Hollande has raised the minimum wage to a record level. Last year, the French budget deficit ratio was more than three times as high as Germany’s. There is to be no austerity programme to speak of in France. More and more Germans are discovering that Europe may speak German, but that it acts French. Since Ms Merkel’s U-turn in agreeing to a special bailout arrangement for Spanish banks, the mood in her country has changed. Two hundred economists protested in an open letter to German citizens. Even the German constitutional court believes that enough is enough. In an unprecedented move, the judges publicly asked Germany’s president to withhold his signature under the ESM. Should the court rule that further shifts of power to Brussels are subject to a referendum or should Finland opt to leave the euro, Ms Merkel might face her second “Fukushima”. Remember that after the tsunami hit Japan, it took Ms Merkel just a few days to abandon her energy policy and announce a departure from nuclear energy altogether. When opinion polls showed support for nuclear energy had plunged, she executed the fastest policy change in recent German history. Despite her usual European rhetoric, she didn’t even consult with the French, although they were severely affected by her unilateral action. If a German referendum on Europe became one on the euro instead, she might face similar pressure. That could result in another spectacular policy U-turn, this time on the euro.

Telegraph:

Germany’s twin euro-martyrs tell Merkel to put up or break up.
IMF urges action as eurozone enters 'critical' phase. The eurozone is in “critical” danger and the European Central Bank must do more to drag it from the depths of the crisis, the International Monetary Fund has warned.
Germany could derail eurozone bailout fund, warns ECB's Joerg Asmussen. A senior European Central Bank official has expressed concern that Germany's top court could derail the eurozone's new bailout fund.

De Telegraaf:

The Netherlands is studying the possibility of getting a collateral deal with Spain in the bailout of banks following Finland's example, citing a spokesman of the Dutch Finance Ministry.

The Prodigal Greek:

A Tragic Common Fate Looms for Greece, Portugal and Spain.

O Globo:

Brazilian public-servant strikes are the main concern of the government's economic team as meeting workers' demands could put at risk the target to expand above 2% this year.

Bear Radar

Posted by Gary .....at 1:39 PM

Style Underperformer:

Large-Cap Value +.38%

Sector Underperformers:

1) I-Banking -1.10% 2) REITs -.80% 3) Homebuilding -.73%

Stocks Falling on Unusual Volume:

DLR, AUQ, GG, BAC, HBC, QSII, SN, AMT, LLL, DLB, MDRX, ABB, ROVI, SSNC, SUSS, AGNC, IBKR, MBFI, ACHC, INTX, JOBS, LBTYK, BPOP, NTRS, EQIX, ACIW, ARNA, STJ, NRP, KCG, URI, SBH, MD and SN

Stocks With Unusual Put Option Activity:

1) DHR 2) PNC 3) URI 4) BRK/B 5) FXA

Stocks With Most Negative News Mentions:

1) ROVI 2) IBKR 3) STT 4) BAC 5) COF

Charts:

Bull Radar

Posted by Gary .....at 11:16 AM

Style Outperformer:

Small-Cap Growth +.93%

Sector Outperformers:

1) Semis +2.87% 2) Networking +2.36% 3) Computer Hardware +2.33%

Stocks Rising on Unusual Volume:

AIR, CHKP, HON, IPHI, BV, VVUS, SEIC, ALKS, FTNT, ASML, APH, VMW, GWW, LVLT, FFIV, FRAN, SWK and UNG

Stocks With Unusual Call Option Activity:

1) IMAX 2) VIAB 3) CROX 4) EDU 5) AVP

Stocks With Most Positive News Mentions:

1) CHRW 2) HRS 3) ITRI 4) CSX 5) MS

Charts:

Wednesday Watch

Posted by Gary .....at 12:26 AM

Evening Headlines
Bloomberg:

Europe Profit Estimates Cut Most Since ’09 as Crisis Hits Danone. Analysts are cutting European profit forecasts at the fastest rate since 2009 as the region heads for a recession and growth in China slows for a sixth quarter. Euro Stoxx 50 Index (SX5E) companies will earn 240 euros a share in 2012, 6.8 percent more than in 2011, according to more than 12,000 estimates compiled by Bloomberg. That compares with a 19 percent gain predicted at the start of the year. The reduction is the biggest since 2009, when analysts trimmed by 42 percentage points. ASML Holding NV (ASML) starts the European earnings season with its results today. While Bloomberg data show analysts lowered projections for 32 members of the Euro Stoxx 50 this month, there may be more cuts to come. Corporations from French dairy producer Danone SA (BN) to SKF (SKFB) AB, the world’s largest maker of ball bearings, have reduced their forecasts and strategists at Macquarie Group Ltd. and Morgan Stanley, who base their predictions on the economy rather than individual companies, say earnings will drop as much as 10 percent this year.
Generali Among Italy Insurers Downgraded by Moody’s. Assicurazioni Generali SpA (G) was among three Italian insurers downgraded by Moody’s Investors Service, which cited the nation’s “weakening” creditworthiness. Generali, the country’s largest insurer, had its senior debt cut to Baa2 from A2, Moody’s said yesterday in a statement on the Trieste-based company. “Generali’s ability to share further asset losses with policyholders diminishes with increasing investment losses across the portfolio,” and the insurer’s domestic-life business may be hurt by Italy’s weakening economy, Moody’s said. Moody’s has lowered bank ratings this week, saying the Italian state faces “increased risk” of being unable to support firms in distress. The company cut Italy last week to Baa2 from A3, and said further downgrades are possible as weak growth and elevated unemployment threaten the government’s plan to cut the budget deficit and rein in bond yields.
Euro Leaders Sleepless Summits Seen Prone to Mistakes. If the leaders of the 17 euro-area countries really want to solve the debt crisis shadowing their currency, they may want to sleep on it.
Luxury Loses as China Slowdown Reinforces Regime Change. Rolex watches and bars of gold are often handed out by those seeking favors from business associates in China. Now the gift-givers are cutting back, and the luxury industry is holding its breath. Vivian So, a 38-year-old owner of beauty salons in Shanghai, said she had been giving Rolex watches to business contacts and is shifting to wallets. William Li, manager at Hong Kong’s King’s Watch Co., who used to see mainland customers buy HK$100,000 ($12,900) watches for official gifts, said many are picking brands that cost 40 percent less.
Wynn Misses Est.on Weaker Macau, Nevada. Wynn Resorts Ltd. (WYNN), the casino company run by billionaire Steve Wynn, reported second-quarter results that missed analysts’ estimates because of lower winnings in Macau and Nevada. Excluding items, profit totaled $1.38 a share, Las Vegas- based Wynn said today in a statement. That missed the $1.50 a share average of 23 analysts’ estimates compiled by Bloomberg. Revenue fell 8.3 percent to $1.25 billion, shy of estimates of $1.33 billion.
Dell(DELL) CEO Sees Slowing Growth in China, Establishes Fund. Dell Inc. (DELL) Chief Executive Officer Michael Dell said the computer maker is seeing a slowdown in China, adding to the list of companies dealing with slackening growth in the world’s most populous country. “There are some challenges in China right now,” Dell said today at a conference in Aspen, Colorado. He and the company’s board plan to visit the country in early September. Asked whether sales were slowing there, Dell said, “that would be an accurate statement.”
Lockheed(LMT) May Fire 10,000 Under Budget Cuts, Stevens Says. Lockheed Martin Corp. (LMT) may have to dismiss about 10,000 of its 120,000 employees if Congress doesn’t avert $1.2 trillion in across-the-board cuts to federal spending, according to Robert Stevens, the company’s chief. The “seat of the pants” estimate is based on expected budget cuts of about 10 percent in defense and 8 percent in other government programs, according to testimony that Stevens, chairman and chief executive officer of the world’s largest defense contractor, plans to deliver to the House Armed Services Committee tomorrow.
Ford(F) Escape Probed by U.S. After Arizona Crash. Ford Motor Co.’s Escape sport- utility vehicles are under investigation by U.S. auto-safety regulators for possible unintended acceleration after a January crash that killed a 17-year-old girl in Arizona.
BHP(BHP) Iron Ore Output Rises 15% to Beat Analyst Estimate. BHP Billiton Ltd. (RIO)’s fourth-quarter iron ore production gained 15 percent as the world’s largest mining company expands operations in Australia’s Pilbara region, setting a 12th consecutive annual record. Output was 40.9 million metric tons in the three months ended June 30, from 35.5 million tons a year earlier, Melbourne- based BHP said today in a statement. That beat the 37.3 million ton median estimate of five analysts surveyed by Bloomberg. BHP, which is planning to more than double iron-ore production capacity, said today it set full-year output records across 10 operations amid a “challenging environment.” Smaller rival Fortescue Metals Group Ltd. (FMG) yesterday reported record iron ore production and said it expected a gradual rebound in China’s economy, the biggest importer of the steelmaking material.

Wall Street Journal:

Trading Firm CEO: I Spent It. Note From Peregrine Founder Says Millions Went to Cover Losses, Pay Fines. Peregrine Financial Group Inc.'s founder said he spent most of the money allegedly embezzled from customers to cushion his trading firm's capital, fund a new corporate headquarters—and even to pay regulatory fines and fees, according to previously undisclosed parts of letters left when he attempted suicide.
Fighting Escalates in Syrian Capital. Syrian forces and rebel soldiers moved reinforcements into Damascus as fighting intensified in the Syrian capital, where residents reported heavy shelling and street fighting for the third day in President Bashar al-Assad's seat of power.
WSJ, FX Trader Launch Dollar Index. The Wall Street Journal and DJ FX Trader are launching The Wall Street Journal Dollar Index on Wednesday morning.
'You Didn't Build That'. On the President's burst of ideological candor. The Presidential election has a long way to go, but the line of the year so far is President Obama's on Friday: "You didn't build that." Rarely do politicians so clearly reveal their core beliefs. This burst of ideological candor is already resonating like nothing else Mr. Obama's said in years. The Internet is awash with images of the President telling the Wright Brothers, Thomas Edison, Henry Ford, Steve Jobs and other innovators they didn't build that. Kevin Costner's famous line in "Field of Dreams," as adapted for Mr. Obama: "If you build it, we'll still say you didn't really build it." Beneath the satire is the serious point that Mr. Obama's homily is the soul of his campaign message. The President who says he wants to be transformational may be succeeding—and subordinating to government the individual enterprise and risk-taking that underlies prosperity. The question is whether this is the America that most Americans want to build.

MarketWatch:

VMware(VMW), EMC(EMC) shares up; changes confirmed. Both firms preannounce revenues; Maritz to take new role at EMC.

Business Insider:

NSA Whistleblower Says The Feds Are Gathering Data On Nearly Every US Citizen. The U.S. government has been collecting data on nearly every U.S. citizen and assembling webs of their relationships, National Security Agency whistleblower William Binney told the Hackers On Planet Earth (HOPE) conference last week.
Here's All You Need To Know About China's Fragile $2.2 Trillion Shadow Banking System.
CONFIRMED: The Spanish Are Leaving Their Country In Droves.

Zero Hedge:

CNBC:

Hendry - 'Bad Things are Going to Happen'. Hugh Hendry is lying low. The Glaswegian founder of $800m hedge fund Eclectica stepped out of the limelight last year after a series of feisty television appearances made him Britain’s best-known hedge fund manager.
China's Rate Cuts Fall Flat as Small Firms Bypass Banks. China's bid to energize a stuttering economy by cutting interest rates twice in a month and making it more attractive for banks to take risks on private sector borrowers is falling flat with the country's most dynamic job generators — smaller firms. Red tape and tough collateral requirements mean business owners prefer to borrow from family and friends to expand in good times and, with the economy in its worst downtrend in three years, the inclination to take on bank debt is close to zero. "Business this year has fallen by two-thirds compared to last year," said a bed linen seller surnamed He, who last took a bank loan in 2009 for 400,000 yuan ($63,500).
FedEx's(FDX) $1 Billion Post Office Contract at Risk.

IBD:

DaVita(DVA) Finds New Blood To Pump Growth In Health Care.

BGR:

Google(GOOG) Declares War On Free Clicks.

Rasmussen Reports:

Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Tuesday shows Mitt Romney attracting 47% of the vote, while President Obama earns 44%. Four percent (4%) prefer some other candidate, and five percent (5%) more are undecided.

Reuters:

Intel(INTC) forecast portends weak PC sales. Top chipmaker Intel Corp (INTC.O) reduced its growth forecast, reinforcing fears that a wavering global economy and a lack of consumer interest are dampening personal computer sales. Shaky economies in Europe and the United States and a growing consumer preference for Apple Inc's iPad tablets have been taking a toll on the PC industry. The world's leading chipmaker on Tuesday cut its 2012 revenue growth forecast to between 3 and 5 percent, down from a prior forecast of "high single-digit growth."
Private equity-owned firm alleges U.S. government discrimination. A shipping company owned by the world's largest private equity firm filed a lawsuit against the U.S. Department of Transportation on Tuesday alleging its application for financing support was being held up on purpose due to its ownership. American Petroleum Tankers LLC (APT), which transports refined petroleum products between ports in the United States and is controlled by The Blackstone Group LP(BX), claims it is being discriminated against because of its private equity ownership.
CSX(CSX) profit up as autos, intermodal offset coal. CSX Corp reported higher quarterly profit and said revenue and volume were little changed from a year ago as increases in consumer goods segments helped offset a drop in utility coal shipping. Higher automobile, export coal and intermodal shipments partially made up for the dip in domestic coal shipments.
Rovi estimates second-quarter below Street, cuts outlook. Digital media services provider Rovi Corp (ROVI.O) estimated second-quarter results below analysts' expectations and cut its full-year forecast, sending its shares down 26 percent after the bell.
Bank of America(BAC), Syncora settle mortgage fraud lawsuit. Bank of America Corp has agreed to pay $375 million to settle a case brought by bond insurer Syncora Guarantee over toxic mortgage-backed securities at the center of the 2008 financial crisis.
Air China says H1 net profit to more than halve. Air China, the country's flagship air carrier, expects first-half net profit to more than halve due to a slowdown in airline industry growth and high prices for jet fuel, it said on Tuesday. Air China's announcement came days after Chinese airlines such as China Eastern Airlines and China Southern Airlines Co Ltd issued similar profit warnings.

Financial Times:

Hollande scraps tax breaks on overtime. France’s socialist government is tearing up one of the key labour market measures introduced by former centre-right president Nicolas Sarkozy under his once-winning slogan: “Work more to earn more”.

Telegraph:

The euro graph of doom. Graphics can often tell a story better than words. For those who think the euro already doomed, the following graphic, drawn from the International Monetary Fund's latest Global Financial Stability Report, tells it all.
Fund managers expect more trouble in Germany. Fund managers from across the world have begun to doubt Germany’s ability to withstand further shocks from the region’s debt crisis, registering a stark change in view since the late spring.

Xinhua:

China Starts Formation of City on Disputed Islands. China on Tuesday set up an organizing committee for the legislative body of Sansha, officially beginning the formation of the government of the newly established city in the South China Sea. The committee was set up by the Standing Committee of the Hainan Provincial People's Congress on Tuesday morning in Haikou, capital of China's southernmost island province, according to the Standing Committee.

China Securities Journal:

China 3Q Export, Import Growth May Be 'Low'. China's export situation is not "optimistic" for the second half of this year, Xiao Xinyan and Liu Jianying, researchers at a research institute under the Ministry of Commerce, wrote in an article.

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