Bear Radar

Style Underperformer:

• Small-Cap Growth +.05%

Sector Underperformers:

• 1) Internet -.16% 2) Hospitals -.14% 3) Retail -.10%

Stocks Falling on Unusual Volume:

• HOTT, VRA, RL, BID, CLMT, TGA, VQ, EPB, SUI, CENT, UNFI, MTSI, SHFL, TIBX, CENTA, LRN, SON, GGP, TGH, COH, URBN, SBS, BSAC, VOC, HCII, RKT, COF, AMRN, ABAX, ABC, AAN, INWK, BCOV, FIVE and PANW
  

Stocks With Unusual Put Option Activity:

• 1) NAVB 2) UUP 3) CCL 4) MWW 5) DB
  

Stocks With Most Negative News Mentions:

• 1) TIBX 2) ABC 3) KWR 4) AIG 5) BAC
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value +.59%

Sector Outperformers:

• 1) Coal +2.78% 2) Steel +2.46% 3) Eduction +2.24%

Stocks Rising on Unusual Volume:

• BCS, DB, COG, QIHU, JAZZ, CLF, LM, FSLR, RRC and GCI
  

Stocks With Unusual Call Option Activity:

• 1) MTG 2) NAVB 3) TIBX 4) RDN 5) LNG
  

Stocks With Most Positive News Mentions:

• 1) MCD 2) HP 3) JAZZ 4) TXN 5) T
  

Charts:

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

Tuesday Watch

Evening Headlines
Bloomberg:

• China’s Stocks Drop Most This Month on Concerns About Economy. China’s stocks fell, dragging down the benchmark index by the most this month, on concern the economic slowdown is deepening after auto sales missed analysts’ estimates and Macquarie Group Ltd. (MQG) cut its growth estimates. Anhui Conch Cement Co. (600585) and Sany Heavy Industry Co. led declines for infrastructure-related companies on speculation the shares are overvalued after both companies rallied 16 percent in three days. FAW Car Co., which makes passenger cars in China with Volkswagen AG, sank 2.2 percent after passenger-vehicle sales trailed analysts’ estimates for a second month in August and the government increased gasoline and diesel prices for the second time in about a month. The Shanghai Composite Index (SHCOMP) dropped 0.9 percent to 2,115.39 at the 11:30 a.m. local-time break, heading for the biggest decline since Aug. 29.
• Euro Weakens From 3-Month High as Crisis Optimism Wanes. “We had a fairly sizable rally in the euro late last week,” Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York, said in a telephone interview. “There’s still significant event risk this week, and markets are understandably in a more cautious mode.”
• Billionaire Arnault’s Belgian Kerfuffle Boosts Hollande Tax Plan. The decision by France’s richest man, Bernard Arnault, to seek Belgian citizenship has created a media frenzy over tax exiles, giving the increasingly unpopular Socialist President Francois Hollande a chance to grandstand. Arnault, the chief executive officer of LVMH Moet Hennessy Louis Vuitton SA (MC), the world’s biggest luxury-goods company, said his “personal action” is not aimed at sending a political message or escaping Hollande’s 75 percent tax on earnings of more than 1 million euros ($1.28 million). Still, Liberation newspaper yesterday ran a front-page headline that said “Get lost, rich bastard,” and Hollande in a televised interview on Sept. 9 said it’s patriotic to pay taxes.
• Big Banks Hide Risk Changing Collateral for Traders. JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC) are helping clients find an extra $2.6 trillion to back derivatives trades amid signs that a shortage of quality collateral will erode efforts to safeguard the financial system. Starting next year, new rules designed to prevent another meltdown will force traders to post U.S. Treasury bonds or other top-rated holdings to guarantee more of their bets. The change takes effect as the $10.8 trillion market for Treasuries is already stretched thin by banks rebuilding balance sheets and investors seeking safety, leaving fewer bonds available to backstop the $648 trillion derivatives market. The solution: At least seven banks plan to let customers swap lower-rated securities that don’t meet standards in return for a loan of Treasuries or similar holdings that do qualify, a process dubbed “collateral transformation.” That’s raising concerns among investors, bank executives and academics that measures intended to avert risk are hiding it instead. “The dealers look after their own interests, and they won’t necessarily look after the systemic risks that are associated with this,” said Darrell Duffie, a finance professor at Stanford University who has studied the derivatives and securities-lending markets. “Regulators are probably going to become aware of it once the practice gets big enough.”
• Consumer Credit in U.S. Unexpectedly Falls $3.28 Billion. Consumer borrowing in the U.S. unexpectedly decreased in July for the first time in almost a year, restrained by a second straight decline in credit-card debt. The $3.28 billion drop followed a revised $9.8 billion jump the previous month that was bigger than first estimated, the Federal Reserve said today in Washington. Economists projected a $9.2 billion rise, according to the median forecast in a Bloomberg survey. Revolving credit, which includes credit card spending, decreased $4.82 billion, the most since April 2011. The drop in credit-card borrowing coincides with a slowdown in hiring this year and a rise in consumer pessimism that indicate households are wary of taking on debt. Employers added fewer workers to payrolls than forecast in August, while a gain in average hourly earnings from a year earlier matched the smallest increase since records began in 2007. “Households are definitely still in deleveraging mode, they’re hesitant to take on new debt,” said Ryan Wang, an economist at HSBC Securities USA Inc. in New York. “I think credit card debt is going to be flat to up slightly, and mortgage balances are still falling.”
• Harrisburg Plans to Skip Payment for Second Bond Default. Harrisburg, Pennsylvania’s insolvent capital, says it will miss general-obligation bond payments for the second time this year, preserving cash to cover workers’ salaries. The city will miss $3.4 million in payments due Sept. 15 on $51.5 million of bonds issued in 1997, William B. Lynch, Harrisburg’s receiver, said today by telephone. It skipped paying $5.27 million that was due March 15 on the same bonds. “We don’t have enough money to make the payment,” he said. “High finance.”
• Japan Banking Minister Matsushita Found Dead at His Home. Japanese Financial Services Minister Tadahiro Matsushita, who since taking the post in June led a crackdown on insider trading that triggered resignations of the top two executives at Nomura Holdings Inc. (8604), has died. He was 73.

Wall Street Journal:

• Before Scandal, Clash Over Control of Libor.
• Copper Surplus Presents Puzzle.

MarketWatch:

• U.S. to mark somber anniversary of 9/11. The nation will remember those killed by the Sept. 11, 2001, terrorist attacks on the World Trade Center and the Pentagon on Tuesday, an event never far from the minds of New Yorkers, Washingtonians and all Americans.

Business Insider:

• Mario Draghi's Blindness Makes Him A Danger To Europe.
• Defense Firms Warn Of Tens Of Thousands Of Job Cuts.
• The Chinese Leadership Crisis Looks Worse Than In 1989.
• The FBI's Nationwide Facial Recognition System Ends Anonymity As We Know It.

Zero Hedge:

• US August Budget Deficit Soars To $192 Billion, $1.17 Trillion In Fiscal 2012. (graphs)
• India's Second Largest Iron-Ore Miner Halts All Activity.
• The Great Recoupling.

CNBC:

• Ad Growth Slows Dramatically in Second Quarter. The ad market screeched and skidded in the second quarter — U.S. ad spending grew just .9 percent from April to June compared to a year earlier.
• Documents Show Former SEC Official Aided Former Targets. A former regional enforcement official at the Securities and Exchange Commission who was sanctioned in May over alleged conflicts of interest in the multi-billion dollar Allen Stanford Ponzi case has a history of such allegations, according to documents obtained by CNBC.
• No Need to Import OPEC Oil: Pickens. The U.S. has the natural resources to one day stop importing OPEC crude oil, Boone Pickens, founder of BP Capital, told CNBC’s "Street Signs" on Monday. “There are 30 U.S. states producing oil and gas, the highest we’ve ever had,” Pickens said. Interestingly, many of these are the very swing states that could help decide the upcoming presidential election, he noted.
• Kudlow: Fiscal Cliff Won’t Resolve for Months After Election. CNBC’s Larry Kudlow and his Washington colleagues are all hearing that lawmakers won’t attempt to seriously bridge this pressing issue until after the election.

NY Times:

• In Rush to Build, Property Stumbles. At least 10 percent of China’s gross domestic product comes directly from the construction and real estate sectors — far more when the industries that supply them and the consumption linked to the purchase of homes are taken into account, analysts at GK Dragonomics, a research firm in Beijing, wrote in a recent report. Internationally, they added, construction in China has accounted for more than 40 percent of the growth in global demand for steel and 10 percent for copper. No wonder, then, that any signs of weakness in the sector send shivers down the backs of analysts, industry executives and policy makers alike. “The property sector is a pillar industry for the Chinese economy,” said Li-Gang Liu, an economist in Hong Kong for Australia & New Zealand Banking Group. But now, he added, it is “the weakest link in the Chinese economy.”

Read more here: http://blogs.sacbee.com/capitolalertlatest/2012/08/fiscal-analyst-hundreds-of-millions-at-risk-from-facebook-slide.html#storylink=cpy

Reuters:

• Palo Alto Networks'(PANW) Q4 beats Street amid slower growth. Security software maker Palo Alto Networks, which went public in July, promised shareholders continued revenue growth after it beat fourth-quarter revenue and earnings estimates on rising demand for protection against network security attacks. Despite beating fourth-quarter expectations, company shares fell 6.7 percent in after-hours trading after they closed with a gain of 1.43 percent to $71.75 on Monday. Some analysts noted that while revenue growth was strong, the company had not doubled revenue as it had in the past quarters.
• U.S. burger chains aim to scoop up patrons with boozy milkshakes. Gourmet hamburger chains are spiking milkshakes with everything from beer to red wine in a bid to steal customers from "dry" rivals like McDonald's Corp . Red Robin Gourmet Burgers Inc on Tuesday will debut a Samuel Adams Octoberfest milkshake, made with vanilla ice cream, beer and caramel, at its roughly 460 restaurants around the country.

Financial Times:

• For True Stimulus, Fed Should Drop QE3. The first two rounds of quantitative easing fuelled a commodity bubble, increased income inequality and set a bad example for the rest of the world. During the 16 months of round one, up to March 2010, the CRB commodity price index rose 36 per cent, while food prices rose 20 per cent and oil prices surged 59 per cent. During round two, in the eight months up to June last year, the CRB rose 10 per cent, with food up 15 per cent, while oil prices rose a further 30 per cent.
• China in transition: Ascent of the bureaucrat. The incoming leadership appears more focused on factionalism than on much-needed reform.

Telegraph:

• Spanish PM Mariano Rajoy refuses to accept bailout that dictates cuts. Spain's Prime Minister Mariano Rajoy has said he would not accept an economic rescue that dictates spending cuts or touches old-age pensions.

Passauer Neue Presse:

• German Lawmaker Says ESM Brings Risks to German Budget. Peter Gauweiler, a conservative lawmaker from Merkel's CDU, calls for new deliberations of Germany's Federal Constitutional Court on the ESM, Europe's permanent rescue fund, citing Gauweiler.

Jerusalem Post:

• Lieberman to 'Post': Obama should define how to stop Iran. US Senator Joseph Lieberman encouraged President Barack Obama on Monday to clearly define America's red lines when it comes to dealing with Iran's nuclear program."I hope he can find a way to really spell out with just a little more detail" what the US is willing to do to prevent Iran from become a nuclear power, Lieberman told The Jerusalem Post following an appearance at a B'nai B'rith conference.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -1.0% to -.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 132.50 -1.0 basis point.
• Asia Pacific Sovereign CDS Index 108.50 -6.0 basis points.
  
• FTSE-100 futures -.60%.
  
• S&P 500 futures -.23%.
  
• NASDAQ 100 futures -.17%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (UNFI)/.51

Economic Releases
7:30 am EST

• The NFIB Small Business Optimism Index for August is estimated to rise to 91.4 versus 91.2 in July.

8:30 am EST

• The Trade deficit for July is estimated to widen to -$44.0B versus -$42.9B in June.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The weekly retail sales reports, JOLTs Job Openings report for July, 3Y T-Note auction, EU commissioner speaking on banking union, (TXN) Mid-Quarter Update, IBD/TIPP Economic Optimism Index for Sept, BofA Merrill Healthcare Conference, CSFB Chemical/Ag Science Conference, RBC Industrials Conference, BMO Media/Telecom Conference, Intel Developer Forum and the Deutsche Bank Tech Conference could also impact trading today.
  

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

Stocks Falling into Final Hour on Rising Global Growth Fears, Rising Eurozone Debt Angst, Tech Sector Weakness, US "Fiscal Cliff" Worries

Broad Market Tone:

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

Equity Investor Angst:

• VIX 15.22 +5.84%
  
• ISE Sentiment Index 129.0 -25.0%
  
• Total Put/Call .77 +5.48%
  
• NYSE Arms 1.14 +32.78%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 94.65 bps +1.73%
  
• European Financial Sector CDS Index 213.66 bps +4.48%
  
• Western Europe Sovereign Debt CDS Index 192.88 +2.39%
  
• Emerging Market CDS Index 218.52 +1.52%
  
• 2-Year Swap Spread 15.25 -.5 basis point
  
• TED Spread 30.75 unch.
  
• 3-Month EUR/USD Cross-Currency Basis Swap -24.75 +2.0 basis points
  

Economic Gauges:

• 3-Month T-Bill Yield .10% unch.
  
• Yield Curve 143.0 +2 basis points
  
• China Import Iron Ore Spot $95.0/Metric Tonne +6.74%
  
• Citi US Economic Surprise Index 18.50 +3.5 points
  
• 10-Year TIPS Spread 2.38 +2 basis points
  

Overseas Futures:

• Nikkei Futures: Indicating -41 open in Japan
• DAX Futures: Indicating -13 open in Germany
  

Portfolio:

• Slightly Lower: On losses in my Biotech/Tech sector longs
  
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges
  
• Market Exposure: Moved to 50% Net Long

BOTTOM LINE: Today's overall market action is bearish as the S&P 500 trades near session lows on eurozone debt angst, high food/energy prices, US "fiscal cliff" worries and rising global growth fears. On the positive side, Steel, Road & Rail, Construction and Airline shares are especially strong, rising more than +.5%. The Transports have outperformed throughout the day. Copper is gaining +.9%, the UBS-Bloomberg Ag Spot Index is down -.4% and Gold is falling -.6%. Major Asian indices were mostly higher overnight, led by a +.34% gain in China. The Shanghai Comp is up +3.7% in 5 days, but still down -2.93% ytd. On the negative side, Energy, Semi, Internet, Computer, Software, Disk Drive, Networking, Bank, I-Banking, Biotech, Hospital, HMO, Homebuilding, REIT and Education shares are especially weak, falling more than -.75%. Tech and Financial shares have traded poorly throughout the day. Major European indices are mostly lower, led down by a -.3% decline in Spain. The Bloomberg European Bank/Financial Services Index is +.17%. The Germany sovereign cds is gaining +1.4% to 53.66 bps, the France sovereign cds is rising +2.7% to 121.55 bps, the Spain sovereign cds is jumping +9.2% to 378.83 bps, the Italy sovereign cds is gaining +10.0% to 344.22 bps, the UK sovereign cds is gaining +2.6% to 46.84 bps and the Israeli sovereign cds is gaining +2.3% to 145.66 bps. Moreover, the Spain 10Y Yld is rising +1.3% to 5.7%, the European Investment Grade CDS Index is gaining +2.8% to 129.62 bps and the Italian/German 10Y Yld Spread is rising +2.75% to 363.60 bps. The UBS/Bloomberg Ag Spot Index is up +26.2% since 6/1. The benchmark China Iron/Ore Spot Index is down -47.5% since 9/7/11. The China Hot Rolled Steel Sheet Spot Index also continues to trend lower despite the recent bounce. As well, the euro, copper and lumber continue to trade poorly given equity investor perceptions that the Eurozone has successfully kicked-the-can, housing has hit a major bottom and global central bank stimuli will boost economic growth in the near future. US weekly retail sales have decelerated to a sluggish rate at +2.5%. US Trucking Traffic continues to soften. Moreover, the weekly MBA Home Purchase Applications Index has declined in 6 out of the last 7 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 -70.0% from its Oct. 14th high and is now down around -60.0% ytd. Shanghai Copper Inventories have risen +124% ytd. Oil tanker rates have plunged, with the benchmark Middle East-to-US voyage down to 25.0 industry-standard worldscale points, which is very near the lowest since May, 2009. The 10Y T-Note continues to trade too well. 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 or allow the ECB to monetize debt in a major way in an attempt to "save" the euro even as investors have been pricing this outcome into stocks. Massive tax hikes and spending cuts have still yet to hit in several key eurozone countries that are already in recession. A lack of economic competitiveness and growth incentives remain unaddressed problems. The European debt crisis is also really affecting emerging market economies now, which will further pressure exports from the region and further raise the odds of more sovereign/bank downgrades over the intermediate-term. I continue to believe that China's problems are much larger than commonly perceived and cannot be solved with another massive stimulus package given their real estate bubble, soaring food prices, massive overcapacity in certain key parts of the economy and growing bad loans problem. I continue to believe QE3 would be a major mistake given the recent surge in stock prices, rising inflation expectations, rising gas prices, worrisome food crisis headlines and less pessimistic US economic data. Little being discussed by global central bankers will actually boost global economic growth to an extent that overcomes the growing macro headwinds over the intermediate-term, 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 US investors into the fourth quarter. The Mid-east appears to be unraveling again at an alarming rate, as well. The quality of the stock rally off the June lows remains poor as breadth, volume, leadership, lack of big volume/gainers and copper/lumber/transports relative weakness all continue to be concerns. Thus, recent market p/e multiple expansion on global central bank stimulus/action hopes, is creating an unstable situation for equities, which could become a big problem this fall unless a significant macro catalyst materializes soon. Some market leaders, including (AAPL), are relatively weak today. This report from Bloomberg last Friday could be weighing on the shares. I remain long (AAPL), but have taken some profits recently for the first time in a long time. Long AAPL. For this year's equity advance to regain traction, I would expect to see further 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, a calming in Mid-east tensions and higher-quality stock market leadership. I expect US stocks to trade modestly lower into the close from current levels on rising eurozone debt angst, profit-taking, more shorting, high food/energy prices, US "fiscal cliff" concerns, growing Mid-east unrest and rising global growth fears.

Today's Headlines

Bloomberg:

• Euro Crisis Faces Tests in German Court, Greek Infighting. A German high court decision on bailout funding and Greek coalition infighting this week threaten to derail the European Central Bank’s bid to wrest control over the euro area’s three-year-old crisis. Germany’s Federal Constitutional Court in Karlsruhe will decide whether to suspend the 500 billion-euro ($639 billion) European Stability Mechanism on Sept. 12. In Athens, Prime Minister Antonis Samaras’s governing partners balked at budget cuts demanded by the country’s so-called troika of creditors. In a week of activity that may determine the course of the crisis, the court’s decision comes on the same day as Dutch voters decide whether to back parties questioning an expansion of European powers and as the European Commission issues a proposal for an integrated banking system. “The ECB is saying I’m here to support you but I can only build a bridge for you,” Mohamed El-Erian, chief executive officer and co-chief investment officer of Pacific Investment Management Co., said in a Sept. 7 Bloomberg Television interview. “You have to do your job as well.”
• Italian, Spanish Bonds Fall as ECB Aid Rules Concern Saps Demand. Italian 10-year bonds snapped a five-day advance, leading declines in Europe’s lower-rated debt, amid concern conditions imposed on nations seeking assistance may hamper requests for European Central Bank bond purchases. Germany’s 10-year bund yield rose after last week climbing the most in six after ECB President Mario Draghi announced details of an unlimited asset-purchase program to tame the region’s debt crisis. Spanish notes dropped before a German high court decision on bailout funding due Sept. 12 and after Greek Prime Minister Antonis Samaras yesterday failed to win agreement from his coalition partners on spending cuts required by lenders to his country to release funds. “Greece shows us how difficult life can be within a program and the ECB’s purchases are conditional,” John Wraith, a fixed-income strategist at Bank of America Merrill Lynch said in a Bloomberg Television interview with Mark Barton. “If the Spanish or Italian governments start to pull back on the prospect of entering any program, then that will give the market a scent of blood and there will be periods where the yields come under upward pressure.” The rate on Italian 10-year debt climbed 11 basis points, or 0.11 percentage point, to 5.17 percent at 4 p.m. London time. It jumped as much as 16 basis points, the biggest intraday gain since Aug. 2.
• Stagnant Incomes Signal Curbs on U.S. Consumer Spending: Economy. Wages are stagnating as the job market cools, restraining the consumer spending that is needed to sustain the U.S. economic recovery. Average hourly earnings were little changed in August from the prior month and up 1.7 percent from a year earlier, matching the smallest gain since records began in 2007, the Labor Department reported last week. Payroll growth slowed to 96,000 last month, while the unemployment rate fell as more people left the labor force.
• HP(HPQ) Says Expands Job Cuts From Reorganizing to 29,000. Hewlett-Packard Co. (HPQ), the world’s largest personal-computer maker, expanded the total job cuts under its reorganization plan announced in May to 29,000, more than it had originally disclosed. The cuts, exceeding the 27,000 estimated earlier, will take place through fiscal year 2014, Hewlett-Packard said today in a regulatory filing. The company said it will book reorganization expenses of about $3.7 billion during the period.
• Goldman Sachs(GS) Analysts Decide Bank Slowdown Isn’t Temporary. New bank regulations and capital requirements are “structural” changes to the industry that are more to blame for declining profits than the U.S. economic slump, Goldman Sachs Group Inc. (GS) analysts said. “The operating environment is unlikely to change any time soon, and we see shareholders of challenged banks becoming more demanding in asking management teams to lay out a path to unlocking value in the near term,” analysts led by Richard Ramsden in New York wrote in a report published today.

Wall Street Journal:

• Iran in Talks to Sell Oil to Egypt.
• Chinese Mystery: What Ails Xi Jinping? Xi Jinping, the man expected to start to take the reins as China's top leader within a few weeks, called off a meeting with Danish Prime Minister Helle Thorning-Schmidt, the latest in a series of canceled meetings, fueling widespread speculation about the health of the future Chinese president.

Fox News:

• Chicago teachers strike for first time in 25 years. Thousands of Chicago teachers walked off the job Monday for the first time in 25 years, after union leaders announced they were far from resolving a contract dispute with school district officials. The walkout in the nation's third-largest school district posed a tricky test for Mayor Rahm Emanuel, who said he would work to end the strike quickly.

CNBC.com:

• How the ‘Fiscal Cliff’ Could Hurt Married Couples.
• Euro Zone Will Pay ‘Terrible Price’: Jim Rogers. Rogers said: “These guys have been saying the same old garbage for a long time. It’s not a game-changer – it’s good for the market for maybe a month. The debt keeps going higher and higher and eventually we’ll all going to pay a terrible price.” He warned that the market rally, which many have seen as an opportunity to get back into riskier assets, would only be a short-term rebound.
• Youthful Pot Use Linked to Testicular Cancer.

Business Insider:

• If You Look At What Chicago Schoolteachers Are Striking Over, You Can See Why People Are Furious.
• More Grandparents Are Bankrolling Families Than Ever Before.

Zero Hedge:

• Goldman(GS) On The Fed: Perception Over Substance.
• Another Ex-Fed Governor Admits "Only So Much Fed Can Do".
• Why 'Tax The Rich' Doesn't Solve Anything: It's The Math, Stupid. (tables)
  
• Europe's Leaking. (graphs)
  

market folly:

• Bill Ackman on Why He Sold Citigroup (C).

Reuters:

• Insight: GM's(GM) Volt: The ugly math of low sales, high costs. n">General Motors Co sold a record number of Chevrolet Volt sedans in August — but that probably isn't a good thing for the automaker's bottom line. Nearly two years after the introduction of the path-breaking plug-in hybrid, GM is still losing as much as $49,000 on each Volt it builds, according to estimates provided to Reuters by industry analysts and manufacturing experts.
• Analysis: Hollande's growth goal gutted by deficit plans. French President Francois Hollande has set himself a deadline to turn around the economy by the end of 2014, but having hamstrung the effort with tax rises to meet deficit targets, economists doubt his growth goals will ever fly. Hollande in "battle mode" pledged to the nation on Sunday to reverse a relentless rise in unemployment and return the stalled economy to growth in two years, but a government spending freeze and looming tax rises in 2013 could stifle growth, much as they have elsewhere in Europe where deficit-cutting measures have been tried.
• Consumer credit falls unexpectedly in July. Consumer credit fell in July for the first time in nearly a year as Americans reduced credit card debt, a worrisome sign for the U.S. economy which has struggled to create jobs. Consumer credit shrank by $3.28 billion in July, the Federal Reserve said on Monday. That was well below the $9.1 billion advance Wall Street economists had forecast in a Reuters poll.

Telegraph:

• Debt crisis: ECB's Draghi Plan doused by rebellions in Germany and Greece. A delay to the highly anticipated German court decision on bail-out funding and a rebellion in the Greek government over austerity doused hopes that the European Central Bank will be able to stem the crisis after all.

Handelsblatt:

• ECB Bond Buys Need Full Conditions, Meister Says. Euro region countries that want bonds purchased by the ECB must also request a full aid program under the area's financial backstops, German lawmaker Michael Meister from Chancellor Angela Merkel's Christian Democratic Union said. Any aid program must be approved by the German lower house of parliament, Meister said.
  

Bear Radar

Style Underperformer:

• Large-Cap Growth -.43%

Sector Underperformers:

• 1) Education -2.80% 2) Semis -1.20% 3) Networking -.90%

Stocks Falling on Unusual Volume:

• MLNX, TEO, NXPI, PHG, XYL, AAPL, OMG, CYT, PBH, TITN, PXP, SPRD, BTI, GWRE, CL, ABAX, FNV, Z, ABMD, MMM, BA, INTC, RKT, UTHR, JIVE, RIG, TCAP, WPRT, BNNY, DDD, HSP and BLOX
  

Stocks With Unusual Put Option Activity:

• 1) TWX 2) PSX 3) YUM 4) PXP 5) PNC
  

Stocks With Most Negative News Mentions:

• 1) PKG 2) STX 3) RKT 4) TITN 5) WLP
  

Charts:

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