Bear Radar

Style Underperformer:

• Small-Cap Growth -.25%

Sector Underperformers:

• 1) Coal -2.45% 2) Networking -2.20% 3) Steel -1.75%

Stocks Falling on Unusual Volume:

• GRPN, IMPV, CIEN, JNPR, CVLT, DANG, IMOS, EMC, GOL, ANGI, TRS, MCRS, MIDD, STMP, FB, CSOD, BCOV, CHKP, PANL, XTXI, DKS, MWE, VAL, NCR and TW
  

Stocks With Unusual Put Option Activity:

• 1) SPLS 2) MRVL 3) LEN 4) DKS 5) AKS
  

Stocks With Most Negative News Mentions:

• 1) NCR 2) GM 3) WFC 4) CIEN 5) C
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.29%

Sector Outperformers:

• 1) Airlines +.59% 2) Homebuilders +.59% 3) Banks +.56%

Stocks Rising on Unusual Volume:

• SKYW, VELT, PWRD, MNST, CIE, EL, NSM, ISIS, HD and ULTA
  

Stocks With Unusual Call Option Activity:

• 1) ERIC 2) DKS 3) EL 4) NBR 5) SVNT
  

Stocks With Most Positive News Mentions:

• 1) UPS 2) NDSN 3) JEC 4) SKS 5) EL
  

Charts:

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

Tuesday Watch

Evening Headlines
Bloomberg:

• Italians Say Goodbye to Ferraris as La Dolce Vita Expires. A crackdown on luxury goods combined with budget cuts that have pushed Italy deeper into its fourth recession since 2001 are souring demand for sporty cars and other symbols of the country’s carefree lifestyle. The number of secondhand high- performance cars exported from Italy nearly tripled to 13,633 vehicles in the first five months of 2012, from 4,923 a year earlier, according to auto industry group Unrae.
• Draghi Bond Plan Fails to Entice Scottish Money Men: Euro Credit. European Central Bank President Mario Draghi's pledge to resume sovereign bond purchases has done little to convince Edinburgh's two biggest money managers that it's time to buy Italian and Spanish debt. "Once the dust settles it may be that what is announced by the ECB isn't the breakthrough that we would be looking for," said Jack Kelly, who's responsible for about 6 billion euros of government bonds as investment director at Standard Life Investments, the biggest money manager in the Scottish capital.
• China Stocks Drop for Third Day on Profit Concerns; Citic Slides. China’s stocks fell, sending the benchmark index lower for a third day, on concern the nation’s slowing economy is hurting corporate earnings. Citic Securities Co., the nation’s biggest listed brokerage, dropped 3 percent, adding to yesterday’s 9.1 percent slide, after the Securities Times reported the company denied speculation that it had “huge” losses on its overseas investments. China Merchants Securities Co. slid to the lowest since January after reporting lower first-half profit. Suning Appliance Co., the biggest home appliance retailer by market value, tumbled 8.4 percent after its board approved a bond sale. “The first-half earnings reports are showing companies are in the process of clearing inventories, which is the worst thing for corporate earnings,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. The Shanghai Composite Index (SHCOMP) dropped 0.6 percent to 2,122.80 at 10:44 a.m. local time, heading for the lowest level since Aug. 2.
• Rubber for January delivery declined 1.5% to 210.6 yen a kilogram on the Tokyo Commodity Exchange at 9:01 am local time, the lowest level since October 2009.
• Currency Flows Reversing China to Colombia as Trade Slows. Just three months after the biggest developing economies sold dollars to support their currencies, policy makers from Colombia to China are moving to weaken exchange rates and revive exports as the International Monetary Fund forecasts the slowest trade growth in three years. Colombian Finance Minister Juan Carlos Echeverry urged the central bank on Aug. 3 to boost minimum dollar purchases from $20 million a day, saying the country needs “more ammunition” to drive down the peso in the global “currency war.” The Philippines banned foreign funds from deposit accounts and unexpectedly cut interest rates in July as the peso hit a four- year high. In China, authorities lowered the yuan reference rate to the weakest since November, which according to Citigroup Inc. will create “headwinds” for other Asian currencies.
• Groupon(GRPN) Sales Miss Estimates as Online Deal Demand Dims. Groupon Inc. shares tumbled in late trading after the largest daily-deal website reported second- quarter revenue that missed estimates as economic weakness in Europe curbed international sales of online coupons. Groupon shares fell as much as 21 percent to $5.95 in extended trading following the report.
• California’s Revenue Falls 10.1% Below Forecast, Chiang Says. California tax revenue trailed forecasts in July by $475 million, or 10.1 percent below assumptions in Governor Jerry Brown’s budget, the state controller’s office said. Controller John Chiang, in a monthly update, attributed most of the shortfall to lower-than-expected sales-tax receipts. Sales levies in the most populous state were $295 million, or 33.5 percent below the forecast in Brown’s budget. “July’s sales-tax performance is harder to explain as it is unclear whether consumer activity has slowed or if this is an issue of timing,” Chiang’s office said in the update posted on the controller’s website.
• Obama Lawyers Urge High Court to Back Affirmative Action. The Obama administration urged the U.S. Supreme Court to reaffirm the legality of race-based college admissions, as the justices prepare to review the affirmative action programs that have become fixtures at the nation’s top universities. The high court will hear arguments Oct. 10 on a white woman’s contention that she suffered racial discrimination when the University of Texas rejected her application for admission. The case has broad implications for selective universities, almost all of which use race as an admissions factor to diversify their student bodies.
• Subbarao Says India Lacks Scope for Stimulus to Counter a Crisis. India has no space for economic stimulus to respond to a future crisis partly because it faces elevated inflation, central bank Governor Duvvuri Subbarao said. “Inflation is high, oil prices though they have come off $100 a barrel are at elevated levels, the external sector is under stress,” Subbarao said in a speech in the southern Indian state of Kerala yesterday. “There is just no space for fiscal or monetary response.”
• Peregrine Chief Russell Wasendorf Indicted on 31 Counts. Russell R. Wasendorf Sr., chief executive officer of the collapsed commodity firm Peregrine Financial Group Inc., was indicted by a federal grand jury on 31 counts of making false statements to regulators.

Wall Street Journal:

• Syria's Russian Connection. Regime Attempts to Sidestep Sanctions by Using Foreign Banks in Oil Sales.
• A Green Light for Car Loans. Banks, Finance Firms Boost Auto Lending; Fed Survey Finds Easier Standards. Banks and investors are still wary of lending to Americans purchasing houses and almost everything else, but they are lending people money to buy cars—even to borrowers who must stretch to make their payments.
• Trans-Atlantic Tensions Increase. The special relationship between financial authorities in the U.S. and U.K. is going through a rough patch. Trans-Atlantic regulatory sniping broke out last week for the second time in a month, after the New York State Department of Financial Services alleged that U.K. bank Standard Chartered PLC broke U.S. money-laundering laws. The allegations, which were denied by the bank, led the normally reserved Bank of England governor Mervyn King to chastise U.S. regulators. Settlement discussions between Standard Chartered, the New York Department of Financial Services and other U.S. regulators continued Monday.
• Germany's Wealth Grab. The impulse to soak the rich isn't exclusively French. François Hollande has earned his reputation as archenemy of Europe's wealthy, but don't imagine that the impulse to soak the rich is exclusively Gallic. Lawmakers in Germany's opposition parties are calling for a 1% tax on wealth and assets exceeding €2 million. The Social Democrat-Green proposal would add €11.5 billion to coffers annually, according to calculations by the influential German Institute for Economic Research, or DIW. If you think that's onerous, consider that last month the same think-tank published a report advocating a one-off levy of 10% on all wealth exceeding €250,000.
• The Solar-Painted Desert. Interior gives an environmental pass to its business friends. Who says President Obama isn't pro-business? The trick is being a business he likes. Several weeks ago in a remarkable but little-noticed policy directive, the Interior Department announced that it will allow construction permitting on 285,000 acres of public land in Arizona, California, Colorado, Nevada, New Mexico and Utah for solar energy projects. Even more remarkable, Interior said that energy firms can petition Interior to build solar installations "on approximately 19 million acres"—a larger land mass than Connecticut, Massachusetts, New Hampshire and Vermont combined.

MarketWatch:

• The only way out for China: Andy Xie. Problems only going to get worse as long as government interferes. China’s business conditions continue to deteriorate. Cement, coal and steel prices are still falling. Overcapacity is severe in most industries. Local governments pressure loss-making enterprises to continue production to sustain local gross domestic product. Hence, commodity prices are falling below total costs. Soon the prices may fall below variable costs.

Business Insider:

• Democrats Are Now Officially Freaking Out About Paul Ryan. In the first official sign that the Democratic Party is starting to worry about Paul Ryan's selection as vice president, the Democratic Congressional Campaign Committee sent out a fundraising email Monday urging donations in light of the supersized crowds, which reportedly reached as many as 15,000 in North Carolina. The email, from DCCC field director Brynne Craig, is entitled "disturbing report" and cites a Wall Street Journal piece of the crowd sizes (emphasis added):
• MORGAN STANLEY(MS): The Odds Of A Surprise Fed Move Are Like The Odds Of NASA Finding Extraterrestrial Life.
• The NOAA Is Shopping For 46,000 Rounds Of Ammunition.
• UBS: The Dollar Is Likely To Remain The World's Reserve Currency For The Next 50 Years.
• Why Global Macro Hedge Funds Are Getting Slammed These Days.

Zero Hedge:

• Deep Fried Black Swan Lands As China Admits It Has A Food Inflation Problem, Releases Corn, Rice From Reserves.
• Alan Simpson Confirms Reality: "All The Things You Love Will Not Come To Pass". (video) Conjuring images of Jack Nicholson in 'A Few Good Men', Alan Simpson laid out the sad and terrible truth that none of us or our politicians can handle in a very direct and sincere interview with Bloomberg TV's Deirdre Bolton. "Medicare costs stand to squeeze out the rest of domestic government spending," Simpson said, "it is on automatic pilot. It will use up every resource in the government." Simpson also said that the current path of debt, deficit and interest is “totally unsustainable” confirming once again the facade that his 18 years in Washington proved to him that he "never saw any projection of any economist ever come true."

CNBC:

• Why More States May See Gas Prices Above $4. Refining issues and higher crude prices have lit a fire under gasoline prices and could push them above $4 a gallon in more parts of the U.S. in the next few weeks.
• India's Inflation Likely Edged Higher in July. India is expected to report on Tuesday that headline wholesale price index inflation edged higher in July to an annual 7.37 percent from 7.25 percent in June, according to a Reuters poll of economists.
• Euro Zone Output Expected to Shrink in Second Quarter. Euro zone output is seen declining in the second quarter when the European Union releases data on Tuesday, as the debt crisis hurts confidence, making businesses reluctant to invest and consumers worried about spending. Gross domestic product (GDP) in the zone likely shrank 0.2 percent from the first quarter of the year, according to an average of estimates of 55 economists polled by Reuters. The most pessimistic forecast a contraction of 0.7 percent.

IBD:

• Cabela's(CAB) Sees Profit Boost Adding Retail Stores.

Forbes:

• Yes, Obamacare Cuts Medicare More Than A President Romney Would. You wouldn’t know it from listening to the Obama campaign, but there’s only one Presidential candidate in 2012 who has cut Medicare: Barack Obama, whose Affordable Care Act cuts Medicare by $716 billion from 2013-2022. Today, the Romney campaign reiterated its pledge to repeal Obamacare, and promised to “restore the funding to Medicare [and] ensure that no changes are made to the program for those 55 and older.”

CNN:

• Bank fees are on the rise. Watch out for rising bank fees. Checking accounts have been getting more expensive, as banks hike monthly costs, ATM charges and overdraft fees, according to a survey of more than 100 banks released Monday by bank comparison website MoneyRates.com.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Monday shows Mitt Romney attracting support from 47% of voters nationwide, while President Obama earns the vote from 44%. Four percent (4%) prefer some other candidate, and four percent (4%) are undecided.

Reuters:

• U.S. Treasury increases auto bailout cost estimate. The U.S. Treasury Department has said the auto industry bailout will cost taxpayers $3.4 billion more than previously thought. Treasury now estimates the 2009 bailout will eventually cost the government $25.1 billion, according to a report sent to Congress on Friday. That is up from the last quarterly estimate of $21.7 billion.

Telegraph:

• World shipping crisis threatens German dominance as Greeks win long game. Germany’s shipping industry faces a wave of bankruptcies over coming months as funding dries up and deepening economic woes across the world cause a sharp contraction in container trade.
• Time to stop the EU navel-gazing. Whilst the Coalition continues to maintain that its policies are sustaining the economy, but our GDP tumbles, this is the time to examine this inherent contradiction between claims and performance.

Macrobusiness.com:

• Australia's Sub Prime Mortgage Scandal Grows. Claims that Australia’s banking sector is conservative, safe and secure have taken a bath in recent days as evidence has emerged of Australia’s own sub-prime lending scandal.

Xinhua:

• China should focus investment in less developed central and western regions, Yi Xianrong, a researcher with the Institute of Finance and Banking under the Chinese Academy of Social Sciences, writes in a commentary. The investments may bring "huge" financial and bank risks as some local governments may seek to expand investment only out of self-interest, Yi writes.

Financial News:

• China Should Improve Risk Controls for Growth. Effectively preventing and solving financial risks will help the "stable and relatively fast" development of the economy, according to a front page commentary.

Shanghai Securities News:

• China's slowing econ0omy won't stall stricter property market controls. Stopping a home price rebound will be the government's main goal in 2H.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.50% to +.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 151.50 +2.0 basis points.
• Asia Pacific Sovereign CDS Index 125.75 +.75 basis point.
  
• FTSE-100 futures +.39%.
  
• S&P 500 futures +.07%.
  
• NASDAQ 100 futures +.23%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (HD)/.97
• (DKS)/.64
• (EL)/.16
• (SKS)/-.09
• (TJX)/.55
• (JDSU)/.12

Economic Releases
8:30 am EST

• The NFIB Small Business Optimism Index for July is estimated to rise to 91.6 versus 91.4 in June.
• The Producer Price Index for July is estimated to rise +.2% versus a +.1% gain in June.
• The PPI Ex Food & Energy for July is estimated to rise +.2% versus a +.2% gain in June.
• Advance Retail Sales for July are estimated to rise +.3% versus a -.5% decline in June.
  
• Retail Sales Less Autos for July are estimated to rise +.4% versus a -.4% decline in June.
• Retail Sales Ex Autos & Gas for July are estimated to rise +.5% versus a -.2% decline in June.

10:00 am EST

• Business Inventories for June are estimated to rise +.2% versus a +.3% gain in May.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Eurozone GDP report, Eurozone Industrial Production report, Germany ZEW Survey, UK Inflation report, IBD/TIPP Economic Optimism Index for August, weekly retail sales reports, Canaccord Genuity Growth Conference, Oppenheimer Tech/Internet/Communications Conference and the Raymond James Bank Conference could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and consumer staple 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 Slightly Lower into Final Hour on Eurozone Debt Angst, Rising Global Growth Fears, US Fiscal Cliff Concerns, High Food/Energy Prices

Broad Market Tone:

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

Equity Investor Angst:

• VIX 14.02 -4.88%
  
• ISE Sentiment Index 106.0 +9.28%
  
• Total Put/Call .75 -25.0%
  
• NYSE Arms 1.03 +53.96%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 102.63 bps +.20%
  
• European Financial Sector CDS Index 247.52 bps +.16%
  
• Western Europe Sovereign Debt CDS Index 247.38 +.05%
  
• Emerging Market CDS Index 249.11 -.30%
  
• 2-Year Swap Spread 20.0 -.5 basis point
  
• TED Spread 34.25 +.25 basis points
  
• 3-Month EUR/USD Cross-Currency Basis Swap -36.75 +.75 basis point
  

Economic Gauges:

• 3-Month T-Bill Yield .09% -1 basis point
  
• Yield Curve 139.0 unch.
  
• China Import Iron Ore Spot $112.9/Metric Tonne -.79%
  
• Citi US Economic Surprise Index -19.70 +1.2 points
  
• 10-Year TIPS Spread 2.25 -1 basis point
  

Overseas Futures:

• Nikkei Futures: Indicating +15 open in Japan
• DAX Futures: Indicating +17 open in Germany
  

Portfolio:

• Higher: On gains in my Medical and Tech sector longs, emerging markets shorts and index hedges
  
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and added 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 bounces off morning lows despite eurozone debt angst, high food/energy prices, US "fiscal cliff" worries, earnings concerns and rising global growth fears. On the positive side, Internet, Oil Tanker, Airline and Paper shares are higher on the day. Lumber is gaining +1.45%, Oil is falling -.7%, Gold is down -.62% and the UBS-Bloomberg Ag Spot Index is falling -1.9%. The Germany sovereign cds is falling -1.1% to 64.81 bps. On the negative side, Coal, Alt Energy, Energy Oil Service, Steel, Semi, Networking, HMO and Gaming shares are especially weak, falling more than -1.0%. Small-caps are underperforming. Copper is falling -1.2%. Major Asian indices were mostly lower overnight, led down by a -1.5% decline in China. Chinese stocks continue to sit out the global equity rally off the June lows, which remains a big red flag. Major European indices are mixed as a +.3% gain in Spain is being offset by a -.5% decline in German shares. The Bloomberg European Bank/Financial Services Index is falling -.1%. Brazilian equities are falling -.1%. The France sovereign cds is gaining +.93% to 148.0 bps, the Portugal sovereign cds is gaining +1.2% to 776.85 bps, the UK sovereign cds is rising +2.1% to 57.50 bps, the China sovereign cds is gaining +.65% to 105.75 bps, the Russia sovereign cds is jumping +1.5% to 173.53 bps(+10.0% in 5 days) and the Israel sovereign cds is surging +6.4% to 150.03 bps. Moreover, the Emerging Markets Sovereign CDS Index is gaining +1.3% to 245.31 bps(+8.0% in 5 days). The UBS/Bloomberg Ag Spot Index is up +23.1% since 6/1. The benchmark China Iron/Ore Spot Index is down -37.6% since 9/7/11. Moreover, the China Hot Rolled Steel Sheet Spot Index is also picking up downside steam. As well, despite their recent bounces off the lows, the euro, copper and lumber all continue to trade poorly given equity investor perceptions that global central bank stimuli will boost economic growth in the near future. US weekly retail sales have decelerated to a sluggish rate at +2.0%. US Trucking Traffic continues to soften. Lumber is -8.0% since its Sept. 9th high despite improving sentiment towards homebuilders and the broad equity rally ytd. Moreover, the weekly MBA Home Purchase Applications Index has declined for 4 straight weeks and has been around the same level since May 2010 despite investor perceptions of a big improvement in the nationwide housing market. The Baltic Dry Index has plunged around -65.0% from its Oct. 14th high and is now down around -55.0% ytd. Shanghai Copper Inventories have risen +71.0% ytd. Oil tanker rates have plunged recently, with the benchmark Middle East-to-US voyage down to 22.50 industry-standard worldscale points, which is the lowest since May, 2009. The CRB Commodities Index is now down -19.3% since May 2nd of last year despite the recent surge in food/energy prices. The 10Y T-Note continues to trade too well, despite recent weakness. There still appears to be a fairly high level of complacency among US investors regarding the deteriorating macro backdrop. It remains unclear to me whether or not Germany will destroy its own balance sheet in an attempt to "save" the euro even as investors have been pricing this outcome into stocks. Focus Magazine reported over the weekend a recent poll by TNS Emnid found that 52% of Germans don’t want European countries to share debt even if the EU takes control over budgets of individual countries, while 31% were in favor of this. The Citi Eurozone Economic Surprise Index is at -69.60 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 Italian yield curve is flattening too much again, with the spread down -60.0 bps in 6 days to 2.41%. 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. 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. Little if anything being discussed by global central bankers will actually boost global economic growth in any meaningful way over the intermediate-term, in my opinion. The odds of imminent QE3, which were already lower than perceived in my opinion, are likely plummeting with the recent surge in stock prices, inflation expectations, worrisome food crisis headlines and less pessimistic US economic data. As well, as I have been saying for several weeks, a new massive China stimulus round isn’t as likely as perceived as worries over their real estate bubble and soaring food prices intensify. Thus, recent market p/e multiple expansion on global central bank stimulus hopes, is creating an unstable situation for equities, which could become a big problem this fall unless a significant macro catalyst materializes soon. 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 food/energy prices, a US "fiscal cliff" solution and higher-quality stock market leadership. Apple(AAPL) is once again helping to boost the major averages off their morning lows on more iTV rumors and optimism over the new iPhone release. While Apple will likely consolidate this year’s gains awhile longer, I still expect the shares to outperform over the intermediate-term. Long AAPL. I expect US stocks to trade mixed-to-lower into the close from current levels on eurozone debt angst, profit-taking, more shorting, high food/energy prices, earnings worries, US "fiscal cliff" concerns and rising global growth fears.

Today's Headlines

Bloomberg:

• German Euro Critics Say Top Court Has to Await European Ruling. A group of German plaintiffs led by Professor Markus Kerber said it filed a complaint asking the country’s highest court to await a European Court of Justice ruling on the euro region’s future permanent financial backstop before issuing its own opinion. Irish lawmaker Thomas Pringle had challenged legislation on the backstop, the European Stability Mechanism, and was referred to the European Court of Justice after Ireland’s Supreme Court last month ruled that it can’t block the government from ratifying domestic legislation on the ESM. “As long as the European Court of Justice hasn’t taken a final decision on the incompatibility of these treaties, neither the Federal Constitutional Court nor the Federal President must take a decision,” the group led by Kerber said in a statement on its Internet site. Kerber, an economics professor at Berlin’s Free University, is founder of the euro-critical Europolis group.
• Greek Recession Making Bailout Targets Harder to Meet: Economy. Greece’s economy contracted for a ninth straight quarter, making it harder for the government to meet the budget-reduction targets required under the country’s international bailouts. Gross domestic product declined 6.2 percent in the second quarter from the same period last year after dropping 6.5 percent in the first, the Athens-based Hellenic Statistical Authority said in an e-mailed statement today. The median estimate of three economists in a Bloomberg News survey was for a contraction of 7 percent. The authority doesn’t publish seasonally adjusted data or quarter-on-quarter rates.
• German 10-Year Bunds Drop on Greek GDP as Italy Sells Bills. German 10-year bunds declined after a report showed that Greece’s economy contracted at a slower pace in the second quarter and Italy reached its 8 billion euros ($9.9 billion) maximum target at an auction of one-year bills. Two-year note yields rose the most in more than a week as data showed Greek gross domestic product shrank 6.2 percent from a year earlier, after dropping 6.5 percent in the previous three months. Italian bonds outperformed bunds as investors bid for 1.69 times the amount of bills sold, up from a so-called bid-to- cover ratio of 1.55 last month. Bunds pared declines after Handelsblatt newspaper reported a complaint filed with the Constitutional Court may delay its ruling on the euro region’s permanent financial backstop. “The Italian auction was slightly better in terms of bid to cover than the most recent,” said Marius Daheim, a senior fixed-income strategist at Bayerische Landesbank in Munich. “Both factors played a role, but the Greek GDP was the major driver. I suspect this down-move will be a short-lived.”
• China’s Stocks Drop Most in Month on Growth, Policy Concerns. China’s stocks fell by the most in almost a month after Bank of America Corp. cut its economic growth forecasts for China and on speculation the government won’t loosen monetary policy as property prices rebound. Anhui Conch Cement Co. (SHCOMP) led declines for construction material stocks after Bank of America joined Deutsche Bank AG and Barclays Plc in reducing growth forecasts for China. China Vanke Co. and Poly Real Estate Group Co. slid more than 4 percent after the Financial News said the central bank is being “cautious” in reducing banks’ reserve-requirement ratios to prevent home prices from rising further. Citic Securities Co. and Haitong Securities Co Ltd. (600837) plunged more than 8 percent on concern that a weak stock market will hurt brokerage earnings. “Investors lack confidence in the market,” said Xu Shengjun, an analyst at Jianghai Securities Co. in Shanghai. “With bad economic data last week and more bad earnings, the market is set to continue falling. People are disappointed there are no new stimulus measures and the chance of major measures are unlikely.” The Shanghai Composite Index fell 1.5 percent to 2,136.08 at the close, the biggest decline since July 16. The CSI 300 Index (SHSZ300) lost 2 percent to 2,351.93.
• America’s Energy Seen Adding 3.6 Million Jobs Along With 3% GDP. On the eastern bank of the Mississippi River, about an hour upstream from New Orleans, the outline of Nucor Corp. (NUE)’s new $750 million iron-processing plant is rising between fields of sugar cane and sweet gum trees.
• Google(GOOG) to Acquire Frommer’s Travel Assets From John Wiley. Google Inc. agreed to acquire all of John Wiley & Sons Inc. (JW/A)’s travel assets, including the Frommer’s brand, as the owner of the world’s largest Internet search engine expands local services.

Wall Street Journal:

• Romney Takes Medicare Message to Florida. Mitt Romney vowed that he and his new running mate would protect Medicare and revive the housing market, as the GOP candidate pivoted back to the issues. Mr. Romney used his first solo event since introducing Wisconsin Rep. Paul Ryan as his vice-presidential pick to try to ease concerns about the aggressive approach the duo would take to overhauling entitlements—a salient message in this retiree-rich state. "We want to make sure that we preserve and protect Medicare," Mr. Romney said of the federal health-care program for retirees.
• House Panel Sues for Release of Fast and Furious Documents. A House committee filed a civil suit Monday seeking to force Attorney General Eric Holder to turn over documents related to a bungled gun-trafficking probe called Fast and Furious.
• Italian Banks Seek to Revalue Stakes.
• Best Photos of the Olympics.
  

CNBC.com:

• China's Largest Broker Plunges on Rumors Over Losses. Shares of Shanghai-listed Citic Securities, China’s largest brokerage firm, fell by 9.1 percent on Monday after rumors the company had suffered a large 2.9 billion yuan ($460 million) loss on overseas trading.
• Motorola Set for Big Job Cuts as Google(GOOG) Reinvents It.
• Italy Public Debt Hits Record, Bailout Looms. Italy's public debt hit an all-time high in June of almost 2 trillion euros and the annual budget deficit was also bigger than a year before, due largely to Italy's share of bailouts for other euro zone states, the central bank said on Monday.
• Problems Riddle Moves to Collect Credit Card Debt. The same problems that plagued the foreclosure process — and prompted a multibillion-dollar settlement with big banks — are now emerging in the debt collection practices of credit card companies.

Business Insider:

• The US Government Is Buying $170 Million Of Pork, Lamb, Chicken And Catfish. The government will buy up to $170 million of pork, lamb, chicken and catfish to help drought-stricken farmers, the White House said Monday as President Barack Obama brought his re-election campaign to rural voters in Iowa.
• iPhone 5 Pre-Orders Said To Begin September 12.

Zero Hedge:

• Italy's Latest Record Debt Load: Bigger, Faster, More. (graph)
• Complacency At 5 Year Highs.
• LCH Hikes Spain, Italy Margins.
• High Yield Credit Diverging From Stocks. (graph)
  

Washington Post:

• Positive Views of Ryan Jump Higher Over Weekend. Overall, in interviews after his selection, 38 percent of all Americans express favorable views of Ryan, 33 percent negative ones. One of the largest movements on Ryan’s favorability numbers was the 21-point jump among conservative Republicans, but the initial movement was positive among independents as well, doubling from 19 to 39 percent.

Washington Examiner:

• Poll: Ryan boosts Romney to tie with Obama. Picking Rep. Paul Ryan as his GOP running mate is working for presidential candidate Mitt Romney. According to a new JZ Analytics poll conducted after Ryan was picked on Saturday and provided to Secrets, the race is now dead even, 46 percent to 46 percent. Only 8 percent of likely voters are undecided. According to Zogby the Ryan pick helped Romney with younger voters and independents, two key battleground constituencies. "Romney saw a bump in support among 18-29 year olds with 41 percent saying they would vote for the ticket of Romney and Ryan," said Zogby. "More importantly, Romney and Ryan led Obama and Biden among independent voters 45 percent to 40 percent." Added the pollsters: "If numbers like this hold, this could spell real trouble for the president who won with 66 percent of 18-29 year olds in 2008."

The Christian Science Monitor:

• Social Security: Surplus dwindling, huge shortfall looms. Social Security surplus is projected to run out in 2033, forcing a 25 percent cut in benefits. To fix Social Security, Congress would have to find $8.6 trillion.

Reuters:

• Copper extends losses.
• World powers weigh emergency meeting on food prices. Leading members of the Group of 20 nations are prepared to trigger an emergency meeting to tackle soaring grain prices caused by the worst U.S. drought in more than half a century and poor crops from the Black Sea bread basket.
• Spanish short-term yields rise as ECB doubts set in. Short-term Spanish government bond yields rose on Monday as investors reassessed the likelihood that the ECB would resume its bond-buying programme, taking the view that it may be too soon to expect intervention.
• After Olympics boost, Britons face austerity to 2020. After the party, the hangover looms: London's golden Olympics may soon be a distant memory as Britain returns to the reality of its economic mess and years of more belt tightening. The 2012 Games have lifted the nation's spirits, but the government has few alternatives to an austerity drive that may last for the rest of this decade - although some academics and economists believe yet more radical policies may be needed.

Telegraph:

• Olli Rehn warns of 'decisive juncture' in eurozone as he reveals 'economic and monetary union 2.0'. Olli Rehn, the vice-president of the European Commission, has warned that the eurozone is at a "decisive juncture" as he revealed his plans for "Economic and Monetary Union 2.0".

Der Spiegel:

• Investors Prepare for Euro Collapse. Banks, companies and investors are preparing themselves for a collapse of the euro. Cross-border bank lending is falling, asset managers are shunning Europe and money is flowing into German real estate and bonds. The euro remains stable against the dollar because America has debt problems too. But unlike the euro, the dollar's structure isn't in doubt.

Die Welt:

• German Banks Preparing for Potential Greece Euro Exit. Small- and medium-sized banks often lack a detailed response plan to Greece defaulting.
  

Beijing Times:

• China's property curbs have been affirmed in 16 provinces and cities by inspectors, citing the results of a nationwide inspection of property curbs' implementation.

Bear Radar

Style Underperformer:

• Small-Cap Growth -.82%

Sector Underperformers:

• 1) Coal -2.25% 2) Semis -1.51% 3) Steel -1.40%

Stocks Falling on Unusual Volume:

• VECO, IOC, TEO, MNST, PTR, YELP, MIPS, PDFS, TRIP, SYNT, CATM, PEGA, JOBS, HAIN, ABMD, EXCH, SCHN, VSAT, AAWW, HTHT, BANR, FARO, LAMR, DLTR and GHDX
  

Stocks With Unusual Put Option Activity:

• 1) GME 2) RRD 3) SHLD 4) EWY 5) NTAP
  

Stocks With Most Negative News Mentions:

• 1) CVS 2) BKS 3) D 4) YHOO 5) WFC
  

Charts:

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