Bull Radar

Style Outperformer:

• Large-Cap Growth -.75%

Sector Outperformers:

• Drugs +.13% 2) REITs -.18% 3) Gaming -.29%
  

Stocks Rising on Unusual Volume:

• FOSL, TAP, SGY, SPEX, STXS, VCRA, MKTG, VOLC, EXPD, MGM and AKRX

Stocks With Unusual Call Option Activity:

• 1) GTAT 2) FOSL 3) FIO 4) MDR 5) HCA
  

Stocks With Most Positive News Mentions:

• 1) T 2) VZ 3) MGM 4) TSN 5) TAP
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Tuesday Watch

Evening Headlines 
Bloomberg:

• China’s Debt Surge Pressures Xi-Li to Avert Lost Decade. A Chinese lending spree of the magnitude that tipped Asian nations into crisis in the late 1990s and preceded Japan’s lost decades is putting pressure on top leaders to map out a strategy to tackle the threat. Half of the economists in a Bloomberg News survey say non-performing local-government and corporate debt will probably have a “significant impact” on China’s credit and economic growth. The central government will deal with bad loans at local governments in the next 18 months by expanding the municipal-bond market and letting localities refinance with direct bond sales, respondents said. Avoiding a fate akin to Japan’s growth collapse of the 1990s hinges on Chinese officials’ ability to reduce debt and shift policy, JPMorgan Chase & Co. says. President Xi Jinping and Premier Li Keqiang, developing a reform strategy due at a Communist Party meeting later this year, may get input from a State Council-ordered audit of government borrowings and a World Bank-assisted study on urbanization. “The debt ratio is absolutely dangerous, there is no question,” said Yao Wei, China economist at Societe Generale SA in Hong Kong, ranked by Bloomberg as the most accurate forecaster of the nation’s gross domestic product. “There is a high risk that this debt issue will have significant downside pressure on Chinese growth in the next few years.” Local-government debt may have surged by as much as 50 percent since the end of 2010.

• Fonterra Tainted Items Add to Woes of Consumers in China. Fonterra Cooperative Group Ltd.’s warnings of tainted ingredients in some products of the world’s largest dairy exporter is the latest blow to baby formula sellers amid Chinese consumers’ concerns about food safety.

• China’s Stocks Fall Most in Week as Property, Coal Shares Slump. China’s stocks fell for the first time in six days, led by property developers and coal producers, after the nation’s economic planning agency signaled the government would maintain property curbs and concern grew the slowing economy will reduce demand for energy.

• Asian Stocks Drop on Concern Fed Will Reduce Stimulus. Asian stocks fell for a second day as stronger growth in U.S. service industries fueled speculation the Federal Reserve will soon be able to reduce economic stimulus. HSBC Holdings Plc (5) slumped 4.5 percent in Hong Kong after earnings at Europe’s biggest bank missed analysts’ estimates. Sony Corp. (6758) sank 5.5 percent in Tokyo after its board rejected billionaire Daniel Loeb’s call to sell a portion of its entertainment business, saying 100 percent ownership is crucial to the company’s success. Fonterra Shareholders Fund climbed 2.6 percent in New Zealand, recouping some of yesterday’s record decline after Russia and China halted imports of milk powder amid concern about tainted ingredients in some products from Fonterra Cooperative Group Ltd., the world’s largest dairy exporter. The MSCI Asia Pacific Index sank 0.7 percent to 134.33 as of 11:03 a.m. in Hong Kong, with four stocks falling for each that rose.

• Rubber Futures Drop for Second Day as Stronger Yen Cuts Appeal. Rubber declined for a second day as a strengthening Japanese currency reduced the appeal of yen-based contracts and amid speculation the Federal Reserve will soon be able to cut stimulus. The contract for delivery in January dropped as much as 1 percent to 243.4 yen a kilogram ($2,484 a metric ton) on the Tokyo Commodity Exchange, before trading at 244.4 yen at 11:28 a.m. Futures have fallen 19 percent this year.

• French Cross Rhine for Work to Escape 10% Unemployment. With unemployment in Alsace at about 10 percent and the jobless rate in the German state of Baden-Wuerttemberg where Kehl is located at about 4 percent, an increasing number of French people are crossing the border for work. Their commutes highlight how the euro region has one currency -- and 17 different labor markets.

• Obama Assertion of Vanquished Al-Qaeda Undercut by Terror Threat. The latest attack threat from an al-Qaeda offshoot creates a political challenge for President Barack Obama, as Republicans accuse him of hyping claims to have terrorists on the run and privacy advocates say the warning may be used to justify greater government surveillance. While Obama’s critics applauded the administration’s decision to temporarily shut down 22 U.S. embassies and consulates in predominantly Muslim countries based on threats in intercepted communications, White House press secretary Jay Carney today was forced to defend the president’s past statements that al-Qaeda is “on the ropes.”

• Tanker-Rate Slump Signals Retreat in U.S. Oil Imports: Freight. The biggest slump in tanker rates since January is signaling weaker U.S. oil imports and spurring analysts to predict a 15-year low for shares of Frontline Ltd. (FRO), whose ships haul almost enough crude to meet daily world demand. Rates for the biggest crude carriers tumbled 68 percent in the past two weeks, more than reversing their advance since the end of June, according to Clarkson Plc. Earnings had risen after oil cargoes to the U.S., the second-biggest source of demand for supertankers, expanded for three months. Shares of Hamilton, Bermuda-based Frontline will plunge 43 percent in a year, the average of 13 analyst estimates compiled by Bloomberg showed.

• Coal at Risk as Global Lenders Drop Financing on Climate. The world’s richest nations, moving to combat global warming, are cutting government support for new coal-burning power plants in developing countries, dealing a blow to the world’s dominant source of electricity. First it was President Barack Obama pledging in June that the government would no longer finance overseas coal plants through the U.S. Export-Import Bank. Next it was the World Bank, then the European Investment Bank, dropping support for coal projects. Those banks have pumped more than $10 billion into such initiatives in the past five years.

• IBM(IBM) Furloughs U.S. Hardware Employees to Reduce Costs. International Business Machines Corp. (IBM) said it’s requiring the majority of U.S. employees in its hardware division to take a week off with reduced pay, cutting costs as demand slows for products such as servers. U.S. hardware employees, including those involved in development and procurement, will take a furlough week with one-third pay starting either Aug. 24 or 31, said Jay Cadmus, a spokesman for the Systems and Technology Group. Executives in the division will take no pay during the week.

• Family Offices Chasing Wealthy’s $46 Trillion in Assets.

Wall Street Journal: 

• Bezos Buys Washington Post(WPO) for $250 Million. Amazon(AMZN) Chief's Deal Doesn't Involve Online Retailer but Shows Media Power Shift. Amazon.com Inc. Chief Executive Jeff Bezos is buying the Washington Post for $250 million in an out-of-the-blue deal that captures the newspaper industry's economic decline and the shift of power from old-media to Silicon Valley. 

• FBI Finds Holes in System Protecting Economic Data. FBI finds 'operational vulnerabilities' involving 'black boxes' used to control the release of sensitive economic data. The Federal Bureau of Investigation has discovered vulnerabilities in the government's system for preventing market-moving economic reports from leaking to traders before public release. Law-enforcement officials found "a number of operational vulnerabilities" involving "black boxes" used by several departments to control the release of sensitive economic data such as the monthly unemployment rate, according to a report by the inspector general at the Commerce Department. The report said it was possible to subvert the system, which was designed to prevent media companies from sending economic data to traders early.

• Private-Equity Payout Debt Surges. Private-equity firms are adding debt to companies they own to fund payouts to themselves at a record pace, as fears mount that the window for these deals will close if interest rates rise. So far this year, $47.4 billion of new loans and bonds have been sold by companies to pay dividends to the private-equity firms that own them, according to data provider S&P Capital IQ LCD. That is 62% more than the same period last year, which wound up being the biggest year on record, with $64.2 billion sold to fund private-equity payouts.

• IBM(IBM) Gets Allies to Chip Away at Intel(INTC). Google(GOOG), Others Join Effort to Break Big Blue's Power Designs Out of a Niche. 

• Bradley Smith: The IRS Attack on Political Speech. The targeting of conservative groups is part of the long-time assault by campaign-finance scolds on the First Amendment.

• Larry Schweikart and Burton Folsom: Obama's False History of Public Investment. Entrepreneurs built our roads, rails and canals far better than government did.

Zero Hedge:

• "Blue-Sky" Index Is Flashing Red. (graph)

• US Retail Investors (Alone) 'Rotate' All-In. (graphs) 

• HFT Quote Churn "Spam" Soars To Record As Volume Plummets. (graphs)  

• Santelli Rants "All Roads Lead To The Fed". (video)

• Beware The Rise In International Monetary Policy Tensions.

• El-Erian Warns "Don't Be Fooled" By Europe's Tranquility.

• Another Looming Credit Crunch? (graph)

Business Insider: 

• Is Flying Nude The Only Response To New Al Qaeda 'Clothing Bomb'?

• GARY SHILLING: The 'Grand Disconnect' Will Close And These Investment Themes Will Prevent You From Getting 'Whipsawed'.

Reuters:

• Nikkei falls for 2nd day on exporters; Sony sags after rejecting fund plan.

• Output in emerging market economies contract in July- HSBC. Business activity across emerging economies contracted for the first time in over four years in July, driven mainly by a drop in manufacturing while services activity stagnated, a survey showed on Tuesday. It highlighted the growing divergence between activity in the developed world and emerging economies and cast doubt on prospects for a sustained global economic recovery from the financial crisis. The composite HSBC Emerging Markets index for services and manufacturing fell to 49.4 in July from 50.6 in June and below the 50 mark that separates growth from contraction. It was the first sub-50 reading since April 2009. 

• American Eagle(AEO) not happy with quarter, shares sink. American Eagle Outfitters Inc, which makes clothes for teenagers and young adults, said on Monday its second-quarter profit will likely be less than half of what Wall Street was expecting, citing weak sales and lower margins, sending its shares down 15 percent. "We are not at all happy with our second quarter results," Chief Executive Robert Hanson said in a statement, adding that poor sales of women's items and weak traffic were largely to blame. American Eagle's shares fell to $16.95 in after-hours trading. They closed at $19.97 on the New York Stock Exchange on Monday.

Financial Times:

• Regulation pushes banks on to a riskier path. Some bankers are said to be complacent about liquidity buffers. Can regulation make banks less safe? What has happened in the past week certainly seems to suggest so. Three large European banks – Barclays, Deutsche Bank and Société Générale – moved to partly dismantle one of their main bulwarks against another liquidity crisis: their massive cash reserves.

Telegraph:

• IMF sees no end to French jobless crisis this decade. France’s economic reforms do not go deep enough to halt long-term decline and may not cut unemployment from double-digit levels by the end of this decade, the International Monetary Fund has warned.

Liquidity crunch a catalyst for big China slowdown – analysts The mini liquidity crunch is the early warning sign of a substantial economic correction long overdue, amid rising leverage and a broken growth model, say bearish analysts.


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Evening Recommendations 
William Blair:

• Cut (DE) to Underperform, target $75.

• Cut (TITN) to Underperform, target $15.

Night Trading

• Asian equity indices are -1.25% to -.50% on average.

• Asia Ex-Japan Investment Grade CDS Index 142.0 -1.0 basis point.

• Asia Pacific Sovereign CDS Index 109.75 -3.5 basis points.

• FTSE-100 futures -.38%.

• S&P 500 futures -.21%.

• NASDAQ 100 futures -.13%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (TAP)/1.39

• (D)/.65

• (PH)/1.96

• (ZTS)/.36

• (THC)/.71

• (DBD)/.27

• (CVS)/.96

• (ICE)/2.14

• (RDC)/.55

• (ADM)/.44

• (DNR)/.36

• (MGM)/.01

• (EMR)/.98

• (SMG)/2.43

• (REGN)/1.74

• (FOSL)/.93

• (LPX)/.34

• (TDW)/.76

• (CHRW)/.74

• (DIS)/1.01

• (CSC)/.67

• (CAR)/.51

• (FSLR)/.53

• (Z)/-.11

• (MRO)/.71

• (CF)/7.61

• (BID)/1.37

• (WMS)/.31 

Economic Releases
8:30 am EST

• The Trade Deficit for June is estimated at -$43.5B versus -$45.0B in May.

10:00 am EST

• The IBD/TIPP Economic Optimism Index for August is estimated to rise to 47.5 versus 47.1 in July. 

• JOLTs Job Openings for June are estimated to rise to 3895 versus 3828 in May.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Evans speaking, RBA rate decision, 3Y T-Note auction, UK 10Y bond auction, weekly retail sales reports, Needham Software & Services Conference and the (VPRT) investor day could also impact trading today.

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

Stocks Slightly Lower into Final Hour on Rising Long-Term Rates, Technical Selling, Global Growth Worries, Homebuilding/Transport Sector Weakness

Click Here for Today's Market Take.

Broad Equity Market Tone:

• Advance/Decline Line: Slightly Higher
  

• Sector Performance: Mixed
  

• Volume: Light

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 11.96 -.17%

• Euro/Yen Carry Return Index 135.87 -.84%

• Emerging Markets Currency Volatility(VXY) 9.30 -2.92%

• S&P 500 Implied Correlation 46.05 -1.58%

• ISE Sentiment Index 95.0 -29.10%

• Total Put/Call .87 -1.14%

• NYSE Arms .79 -20.27% 

Credit Investor Angst:

• North American Investment Grade CDS Index 72.74 +.01%

• European Financial Sector CDS Index 134.29 -.52%

• Western Europe Sovereign Debt CDS Index 83.13 -.54%

• Emerging Market CDS Index 300.96 +1.70%

• 2-Year Swap Spread 17.75 +.75 bp

• TED Spread 23.0 -.5 bp

• 3-Month EUR/USD Cross-Currency Basis Swap -8.75 +.25 bp

Economic Gauges:

• 3-Month T-Bill Yield .03% unch.

• Yield Curve 234.0 +4 bps

• China Import Iron Ore Spot $130.20/Metric Tonne +.08%

• Citi US Economic Surprise Index 18.80 +7.9 points

• Citi Emerging Markets Economic Surprise Index -28.10 -2.7 points

• 10-Year TIPS Spread 2.23 +3 bps

Overseas Futures:

• Nikkei Futures: Indicating +39 open in Japan

• DAX Futures: Indicating +4 open in Germany

Portfolio: 

• Higher: On gains in my tech sector longs and emerging markets shorts

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short

• Market Exposure: Moved to 50% Net Long

Today's Headlines

Bloomberg:

• Junk Yield Premiums Surge as Downgrades Flag Risk: China Credit. The extra borrowing cost for China's riskiest companies is climbing at the fastest pace in 18 months as record credit-rating downgrades heighten concern the nation will experience its first bond default. The yield gap on three-year AA- notes over AAA debt jumped 16 basis points last month to 143 on July 31, the most since January 2012, Chinabond indexes show.   

• Goldman(GS) Loses Top Brazil Executives as Growth Plan Halted. Goldman Sachs Group Inc. (GS), the U.S. bank that announced plans in April to hire 50 people in Brazil, has reversed course after the economy expanded less than analysts estimated and top executives left the company. “The outlook for the economy and equity and merger-and-acquisition deal volumes are worse than we expected,” Michael DuVally, a spokesman for the New York-based bank, said in an interview on Aug. 2. 

• Euro-Area July Services Output Contracts Less Than Estimated. An index of activity in the services industry based on a survey of purchasing managers rose to 49.8 from 48.3 in June, London-based Markit Economics said in a report today. That’s above an initial estimate of 49.6 on July 24.

• HSBC Falls After Earnings as Gulliver Says Markets Slow. HSBC Holdings Plc (HSBA), Europe’s largest bank, slid in London trading after its earnings missed analysts’ estimates and Chief Executive Officer Stuart Gulliver said the lender’s fast-growing emerging markets are slowing. The shares fell 4.3 percent, the steepest daily decline since November 2011. HSBC, which operates in about 80 countries, said the mainland Chinese market slowed unexpectedly in the first quarter of 2013, while Latin American growth eased in the first half on weak consumer consumption. HSBC also faces a potentially “highly damaging impact” from planned European Union restrictions on bonuses, the bank said today. 

• EU Bank Calculations of Capital Vary Widely, EBA Says. The European Union’s top banking regulator said it found inconsistencies in the way lenders calculate how much capital to hold on their balance sheets against potential losses, adding to the clamor from global supervisors to increase transparency.

• European Stocks Rise for Sixth Day as Lloyds Climbs. European stocks rose for a sixth day, the longest winning streak this year, as services output shrank at a slower pace than initially forecast, outweighing worse-than-estimated earnings from HSBC Holdings Plc. Lloyds Banking Group Plc climbed 2.7 percent on a report it will pay as much as 70 percent of profit as dividend. Thomas Cook Group Plc, Mediaset SpA and Drax (DRX) Group Plc advanced more than 2.5 percent as analysts upgraded the shares. HSBC, Europe’s largest bank, sank the most in 20 months. PostNL NV, the biggest Dutch postal operator, plunged the most in six months after sales missed estimates. The Stoxx Europe 600 Index rose 0.2 percent to 304.74 at the close, paring an earlier gain of as much as 0.6 percent.

• Fed Should Reverse Commodity Policy, CFTC’s Chilton Says. The Federal Reserve should reverse a decade-old ruling that lets banks trade physical commodities, Commodity Futures Trading Commission member Bart Chilton said. “I don’t want a bank owning an electric service, or cotton, corn or feedlots,” Chilton, a Democrat, said in remarks prepared for delivery today at a conference of U.S. cotton growers in Lake Tahoe, California. “I don’t want banks owning warehouses, whether they have aluminum, gold, silver or anything else in them.” The Fed “can and should reverse” the policy, he said.

• Commodities Revenue of Top 10 Banks Fell 25% in First Half. Commodities revenue at the 10 largest investment banks fell 25 percent in the first half, putting those units on pace for the worst annual performance in more than five years, according to analytics company Coalition Ltd. Revenue fell to about $2.7 billion in the first six months from $3.6 billion in the same period of 2012, Coalition said today in an e-mail. Last year’s total of $6 billion was down 24 percent from 2011 and was less than half that of 2008, when oil prices climbed to a record.

• Copper Falls as Chinese Service Stagnation Fuels Demand Concern. Copper fell in New York after three sessions of gains as a stagnant index of service industries in China stoked concern about the outlook for demand in the world’s largest consumer of the metal. A measure of Chinese service industries released today by HSBC Holdings Plc and Markit Economics was unchanged in July. A manufacturing index for the nation published Aug. 1 by HSBC and Markit fell from June. Factory shutdowns for summer holidays curbed demand, according to RBC Capital Markets Ltd. “Base metals are mixed and directionless as the painful reality of the August slowdown is upon us,” RBC said. Copper for delivery in September slid 0.6 percent to $3.153 a pound by 7:51 a.m. on the Comex in New York. Copper for delivery in three months fell 0.6 percent to $6,962 a metric ton on the London Metal Exchange.

• Port Hedland Iron Ore Exports Drop as Shipments to China Decline. Iron ore shipments from Australia's Port Hedland, the world's biggest bulk terminal, declined for a second month in July as exports to China fell. Exports totaled 26.6 million metric tons from 27.7 million tons in June, data on the Port Hedland Port Authority's website showed. Shipments to China, the biggest buyer, were 20.4 million tons from 22.9 million tons in June, according to Bloomberg calculations. Total shipments averaged 858,482 tons a day last month compared with 924,823 tons a day in June, according to Bloomberg calculations.

• Assad Says Syria Crisis Will Be Resolved on the Battlefield. Syria’s President Bashar al-Assad said the nation’s two-year civil war that has claimed more than 100,000 lives can only be decided on the battlefield. “All routes have been tried and there is only one option left, which is to defend ourselves and our country with our own hands, and in this case everybody looks naturally to the armed forces,” Assad said yesterday at a banquet with social and political figures, according to official news agency Sana.

• Trillions of Smart Sensors Will Change Life as Apps Have.

Wall Street Journal:

• Iran Seen Trying New Path to a Bomb. U.S., European Officials Say Tehran Could Start Making Weapons-Grade Plutonium by Next Summer.

• IMF Urges Japan to Bring Red Ink Under Control. Fund Hardens Rhetoric, Saying It's Crucial to Move Ahead With Consumption Tax.

Fox News:

• Army won’t suspend contracts with Al Qaeda-tied companies, citing 'due process rights'. In a scathing passage of his latest report to Congress, Special Inspector General John Sopko said his office has urged the Army to suspend or debar 43 contractors over concerns about ties to the Afghanistan insurgency, "including supporters of the Taliban, the Haqqani network and al Qaeda." Sopko wrote that the Army "rejected" every single case. 

• GOP leader threatens to cut CNN, NBC from primary debates over Clinton specials. The head of the Republican Party threatened Monday to cut out CNN and NBC from the GOP presidential primary debates if the networks do not shelve their plans to air lengthy features on Hillary Clinton -- who is widely expected to be a Democratic candidate in the 2016 election. Republican National Committee Chairman Reince Priebus accused both networks of trying to put "a thumb on the scales" of the 2016 race with programming he claimed would be tantamount to an "in-kind donation" to the Clinton campaign. Last month, CNN Films announced it was producing a documentary on Clinton to premiere next year, first in theaters and then on CNN. NBC also announced a four-hour "Hillary" miniseries starring Diane Lane, on the life of the former secretary of state and first lady. Priebus' statement on Monday marked the most aggressive challenge yet to those plans.   

MarketWatch:

• IDC cuts forecast for global IT spending for 2013. Market-research firm International Data Corp. cut its global information-technology-spending growth forecast for this year due to the economic slowdown in China. IDC expects global IT spending to grow 4.6% to $2 trillion this year, down from its previous forecast for an increase of 4.9% and below growth of 5.6% for 2012. Including telecom services, IT spending is forecast to increase 3.8% to $3.6 trillion.

CNBC:

• US self-reported spending flat since May: Gallup. U.S. consumer spending has remained largely flat for the last three months, Gallup reported on Monday, despite other indicators that suggest consumers keep spending at a brisk clip. The polling agency found that "self-reported" daily consumer spending was $89 in July, unchanged from the $90 of June and May. Based on a series of tracking interviews with more than 14,000 Americans during July, Gallup said that flat spending was perceptible across income levels.

Zero Hedge:

• China Bails Out Its Shipping Industry, Blows Latest Capital Misallocation Bubble. (video)

• Non-Manufacturing ISM Follows Manufacturing Surge Higher: Biggest One Month Move Since April 2009. (graph)

• Fisher Warns Feral Hogs: "Don't Rely On Fed Put".

• Dallas Fed's Fisher: "We Own A Significant Slice Of Critical Markets. This Is Something Of A Gordian Knot".

• Japan Finally Admits The Truth: "Right Now, We Have An Emergency At Fukushima".

Business Insider:

• Scientists Are Scary Close To Controlling Our Memories And Brains With Computers.

CNN:

• Your TV Might Be Watching You. Today's high-end televisions are almost all equipped with "smart" PC-like features, including Internet connectivity, apps, microphones and cameras. But a recently discovered security hole in some Samsung Smart TVs shows that many of those bells and whistles aren't ready for prime time. The flaws in Samsung Smart TVs, which have now been patched, enabled hackers to remotely turn on the TVs' built-in cameras without leaving any trace of it on the screen. While you're watching TV, a hacker anywhere around the world could have been watching you. Hackers also could have easily rerouted an unsuspecting user to a malicious website to steal bank account information.

National Affairs:

• Taming the Megabanks by James Pethokoukis.

Reuters:

• Exclusive: U.S. directs agents to cover up program used to investigate Americans. A secretive U.S. Drug Enforcement Administration unit is funneling information from intelligence intercepts, wiretaps, informants and a massive database of telephone records to authorities across the nation to help them launch criminal investigations of Americans. Although these cases rarely involve national security issues, documents reviewed by Reuters show that law enforcement agents have been directed to conceal how such investigations truly begin - not only from defense lawyers but also sometimes from prosecutors and judges. The undated documents show that federal agents are trained to "recreate" the investigative trail to effectively cover up where the information originated, a practice that some experts say violates a defendant's Constitutional right to a fair trial. If defendants don't know how an investigation began, they cannot know to ask to review potential sources of exculpatory evidence - information that could reveal entrapment, mistakes or biased witnesses.

• Ackman's Pershing Square lost 2.2 pct in July -source. It was a tough July for hedge fund manager William Ackman, whose $12 billion Pershing Square Capital Management lost 2.2 percent during the month, according to an investor. The fund got hit hard by its short position in nutritional supplements company Herbalife Ltd, which saw its share price rise more than 40 percent last month. Ackman's fund has invested $1 billion on a bearish bet that Herbalife will be unmasked by regulators as a pyramid scheme. A long position in retailer J.C. Penney Co Inc also hurt the fund as the stock slid about 17 percent in July. Pershing Square remains up 3.8 percent year to date, according to the investor.

• Debt-fuelled consumers and expensive houses drive British recovery. Britain's economic recovery is gaining pace, but its apparent reliance on consumer borrowing and expectations of higher house prices may offer a shaky foundation for lasting growth. 

• Economists trim Brazil 2013 GDP growth view to 2.24 pct.

• Euro zone retail sales back in decline in June. Retail sales in the euro zone fell across the board for the first time in three months in June, official data showed on Monday, highlighting the drag of depressed household spending on the bloc's fragile recovery. For the bloc as a whole the volume of retail trade fell broadly in line with expectations by 0.5 percent on the month. Shoppers in the euro zone spent more on automotive fuel in June, but it was not enough to offset a 0.6 percent drop in spending on food, drinks and tobacco and a 0.2 percent decrease in purchases of non-food items such as electronics, clothing and else.

Echoing fears that European policymakers remain in a state of cognitive dissonance – recognizing the need for root-and-branch overhaul of peripheral banks, but backtracking on joint liability plans – Christopher Flowers, the legendary FIG investor who now runs the £2.3 billion ($3.5 billion) private equity group JC Flowers, sounded the alarm over the negative sovereign-bank feedback loop. In a shot across the bows of market bulls, who cite the return of capital flows to weaker eurozone states, Flowers issued a stark warning: "There is a scenario where we have a Lehman-type event: we wake up some Thursday and a big country is in trouble. "And the ECB will have to decide to support banks x, y, z. And then the ECB will, in fact, decide to own bank x, y, z.


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Il Messaggero:

• Bank of Italy governor is concerned govt turmoil may raise borrowing costs and make it harder to enact legislation to stimulate economy.

Bear Radar

Style Underperformer:

• Large-Cap Value -.52%

Sector Underperformers:

• 1) Homebuilders -1.85% 2) Airlines -1.34% 3) Papers -1.16%

Stocks Falling on Unusual Volume:

• HBC, CHTR, RBS, CLMT, ZINC, GTS, UAM, MXWL, SSP, BAH, YELP, HTS, FOSL, IDCC, RP, CNH, DTLK, XPO, POR, ANIK, UAN, PVR, OPEN, SFLY, WC, OSIR, CHUY, MHK, GTS, TG, CBOE and IMGN

Stocks With Unusual Put Option Activity:

• 1) SD 2) ADM 3) COG 4) Z 5) GPS
  

Stocks With Most Negative News Mentions:

• 1) AGU 2) JEC 3) CBOE 4) GS 5) GM
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Growth +.29%

Sector Outperformers:

• Tobacco +1.44% 2) Education +1.28% 3) HMOs +.72%
  

Stocks Rising on Unusual Volume:

• SNCR, CLF, SCTY, YY, TEAR, CSIQ, TRLA and Z

Stocks With Unusual Call Option Activity:

• 1) BBY 2) BZH 3) P 4) AOL 5) ZIOP
  

Stocks With Most Positive News Mentions:

• 1) RVBD 2) SHOO 3) WFM 4) TSN 5) JAZZ
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume