Bear Radar

Style Underperformer:

• Large-Cap Value (-.11%)

Sector Underperformers:

• 1) Education -4.01% 2) Networking -1.31% 3) Disk Drives -1.30%

Stocks Falling on Unusual Volume:

• BMC, VPHM, MANT, ABC, OSK, RCL, TWC, AEM, GG, SU, XOM, CCL, ASPS, BABY, WIRE, AKAM, IFSIA, OSTK, AIXG, ITRI, NATI, CNQR, LIFE, COHR, PSSI, ORLY, SRCL, STRA, ASMI, IPG, CPO, VCI, HGR, VAR, HSC, GTI, HSC, MUR, UAL, PNM, CRR, DAN, JAH, WM, ITRI, LIFE, GT, WLL, GGG, OI, CBG and MWW
  

Stocks With Unusual Put Option Activity:

• 1) CLWR 2) RCL 3) ATPG 4) ECA 5) WM
  

Stocks With Most Negative News Mentions:

• 1) TSL 2) AGU 3) HES 4) JPM 5) AKS
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth (+.98%)

Sector Outperformers:

• 1) Homebuilding +2.38% 2) Biotech +2.09% 3) I-Banking +1.92%

Stocks Rising on Unusual Volume:

• USMO, EQIX, UTHR, SYMC, SHPGY, ECYT, CROX, GMCR, RNOW, ILMN, ARRS, SODA, JVA, CELG, RGR, STC, SKX, TBI, RNOW, HPY, GNC, BWA, USMO, BDC, COG, MCP, MJN, HLS, CRS, CAM, SPN, BC, AMP, CAB, NOR, MSI, DHI, DLX, CRI, TWI, RYL, PCP, ASH, TRI, LLL, AET and EQT
  

Stocks With Unusual Call Option Activity:

• 1) SKX 2) ATPG 3) CLWR 4) MSI 5) SLM
  

Stocks With Most Positive News Mentions:

• 1) SYMC 2) SYMC 3) GOOG 4) FTNT 5) BSX
  

Charts:

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

Thursday Watch

Evening Headlines

Bloomberg:

• Asia Faces Rising Price Pressures: ADB. Asian policy makers need to tackle rising inflationary pressures in their economies even as global growth weakens, the Asian Development Bank said. The region can use monetary and fiscal policies as well as exchange rates to ease price pressure, the Manila-based lender said in its Asia Economic Monitor report today. Asian economies also face the risk of increased financial market volatility and destabilizing capital flows, the ADB said. “With robust growth moderating only slightly, many emerging East Asian economies face the challenge of controlling inflation and managing capital inflows in a difficult external environment,” the ADB said. “Inflationary pressures are rising in the region on strong domestic demand and high commodity prices, fueled by continuing capital inflows.” The lender’s forecast for growth of 7.9 percent this year in emerging East Asian economies may be revised lower, according to the report today, which was prepared by the ADB’s Office of Regional Economic Integration. “With the region’s economies recovering strongly in 2010 and continuing robust growth in 2011, output gaps have narrowed significantly or closed in many economies, thus contributing to rising inflation,” the lender said. “Elevated food and commodity prices and robust domestic demand could push inflation higher yet.” “Authorities are expected to keep tightening monetary policy and rolling back fiscal stimulus to counter rising inflation and economic overheating,” the ADB said. “But the weak external environment and tighter monetary stance is expected to help growth moderate to more sustainable levels in the months ahead.”
• Crude Oil Falls for a Second Day on U.S. Economy, Rising Crude Stockpiles. Oil declined for a second day in New York as investors bet that rising crude supplies and signs of a slowing economy in the U.S. indicate fuel demand may falter in the world’s biggest consumer of the commodity. Futures slid as much as 0.9 percent today after falling to the lowest in more than a week yesterday. U.S. crude stockpiles climbed 2.3 million barrels to 354 million last week, a Department of Energy report showed. A 2 million-barrel drop was forecast in a Bloomberg News survey. Crude for September delivery fell as much as 89 cents to $96.51 a barrel in electronic trading on the New York Mercantile Exchange, and was at $96.93 at 11:36 a.m. Sydney time. The contract yesterday slid $2.19 to $97.40, the lowest close since July 18. Prices are 26 percent higher the past year.
• Container-Vessel Rates Plunge, Signaling Slowdown in U.S.: Freight Markets. Plunging rates for chartering container vessels that carry sneakers, furniture and flat-screen TVs may signal a U.S. consumer slowdown and losses for shipping lines in what is traditionally their busiest time of the year. Fees for hiring vessels have fallen 9.3 percent since the end of April, according to the Howe Robinson Container Index, which tracks charter rates for a range of vessels. Last year, the index surged 56 percent in the period, as lines added ships on demand from U.S. and European retailers restocking for the back-to-school and holiday shopping periods. “The troubling part is that charter rates are falling in the peak season,” said Johnson Leung, head of regional transport at Jefferies Group Inc. in Hong Kong. “Sentiment among consumers and retailers isn’t very strong.”
• UBS(UBSN) Sued by Regulator Over $4.5 Billion Mortgage-Backed Securities Sale. UBS AG was sued by the U.S. over $4.5 billion in residential mortgage-backed securities sold to Fannie Mae and Freddie Mac as regulators went to court for the first time to recoup losses caused by the investments. The Federal Housing Finance Agency, which regulates the two mortgage companies operating under government control, sued the Swiss bank and several executives of UBS’s Mortgage Asset Securities Transactions unit in federal court in Manhattan today, claiming they misstated the securities’ risks. “Defendants falsely represented that the underlying mortgage loans complied with certain underwriting guidelines and standards, including representations that significantly overstated the borrowers’ capacity to repay their mortgage loans,” the FHFA said in its complaint.
• Radiation Concern Prompts Aeon to Test Beef. Concern that nuclear radiation fallout is contaminating meat prompted Aeon Co., owner of Japan’s biggest supermarket chain, to start testing beef for cancer-causing substances. Aeon will start selling beef today in Tokyo stores tested by an independent laboratory to be within safe limits for radioactive cesium, it said in a statement. The heightened surveillance may boost confidence in the safety of beef after agriculture officials said July 26 that 2,906 cattle ate tainted feed, potentially leading to contaminated meat.
• No Fear in China Options as Prices Drop. Traders betting on gains in China’s biggest companies are pushing options prices to the most bullish level in almost two years on speculation higher interest rates won’t curb the world’s second-largest economy. The premium investors pay for puts to sell the iShares FTSE China 25 Index versus calls to buy has tumbled to 15 percent from 31 percent on June 22, according to data on three-month options compiled by Bloomberg, and fell as low as 13 percent this week. That compares with the average of 20 percent since the start of 2005 for the U.S.-traded fund tracking Chinese companies listed in Hong Kong. “It’s almost like there’s no fear in China,” Jonathan Masse, a money manager at Walnut Creek, California-based Baochuan Capital Management LLC, which invests in Chinese stocks and options, said in an interview.
• Credit Suisse Plans to Cut About 2,000 Jobs. Credit Suisse Group AG (CSGN), the second- biggest Swiss bank, plans to cut about 2,000 jobs after second- quarter profit fell 52 percent on lower earnings from trading.

Wall Street Journal:

• Live Blog: The U.S. Debt Battle.
  
• Study Sees No Cellphone-Cancer Ties. A European study involving nearly 1,000 participants has found no link between cellular-phone use and brain tumors in children and adolescents, a group that may be particularly sensitive to phone emissions. The study, published in the Journal of the National Cancer Institute, was prompted by concerns that the brains of younger users may be more vulnerable to adverse health effects—such as cancer—from cellphones.
• Not All Chinese ADRs Created Equal. Recent accounting blowups have forced everyone from day traders to hedge-fund manager John Paulson to rethink Chinese stocks. But there is another risk hiding in plain sight: poor disclosure. Over the last several years, many Chinese firms have dropped anchor in the Cayman Islands, where they create shell companies that control businesses in China. The Cayman companies can issue American depositary receipts, or ADRs, that trade in New York, but aren't subject to some U.S. laws because the Securities and Exchange Commission and New York Stock Exchange often defer to a home country's rules.
• Citrix(CTXS) Net Surges 72% On Across-The-Board Revenue Growth. Citrix Systems Inc.'s (CTXS) second-quarter profit surged 72% as the virtualization and infrastructure software company reported across-the-board revenue growth, led by online and technical services, while margins jumped. Shares fell 6.1% to $66.60 in after-hours trading, as the per-share outlook for the current quarter narrowly missed Wall Street's expectations.
• When Greek CDS Don't Do the Job. Banks and investors relying on credit-default swaps to protect themselves against a European government reneging on its debt payments are finding that the insurance isn't such a sure thing after all. European leaders went to great lengths to ensure their planned Greek restructuring doesn't constitute a default that would trigger CDS payouts, even though holders of Greek bonds are likely to lose money on their investments. That is leading some to question the effectiveness of CDS in protecting against a sovereign default.
• China's Banned Churches Defy Regime. On a recent Sunday at the Beijing Zion Church, Pastor Jin Mingri laid out a vision for Christians in China that contrasts starkly with the ruling Communist Party's tight reins on religion.
• Juniper(JNPR) Sends Grim Signal. Tech Bellwether Warns on Sales, Suggesting Economic Stalling; Stock Drops 21%. As a key player in the Internet networking business, Juniper and larger rival Cisco Systems Inc. are regarded as bellwethers of how companies and governments invest in new technology and workers. By Juniper's often-lofty standards, the numbers were grim.
• The Road to a Downgrade. A short history of the entitlement state.
  

MarketWatch:

• China's CICC Warns on Local-Government Bonds. Recent fluctuations in urban investment bond prices are a reflection of mounting risks emanating from local government financing platforms, said China International Capital Corp. (CICC) in a recent research report.

Business Insider:

• Spanish Bank Puts Cristiano Ronaldo Up As Collateral For ECB Loans. Spanish bank Bankia is seeking loans from the European Central Bank -- and putting Real Madrid football star and most-expensive-player-in-the-world Cristiano Ronaldo up as collateral.
• Will Fast and Furious Cost Obama's Attorney General His Job? Investigations into a gunrunning sting gone haywire are creeping closer to the top of the U.S. Justice Department and its head, U.S. Attorney General Eric H. Holder, Jr. A congressional report released yesterday reveals that top DOJ officials had knowledge of the sting, known as Operation Fast and Furious, in which U.S. Bureau of Alcohol, Tobacco, and Firearms (ATF) agents allowed more than 2,000 firearms to “walk” across the U.S. border to Mexico and into the hands of Mexico’s brutal drug cartels. As many as 1,700 of those weapons have since been lost. More than 100 have been linked to crimes on both sides of the border, including the murder of a U.S. Border Patrol agent last December.
• Pictures: Huge Protest Hits Madrid After Allegations of Police Violence.
• MSNBC Contributor Goldie Taylor Says Corporate America Is "Literally Raping" Minorities. (video)
  

IBD:

• Modest Growth Seen For Back-To-School Season.

NY Times:

• President On Sidelines in Critical Battle Over Debt Ceiling. For an hour on Wednesday the White House press secretary, Jay Carney, fielded questions about what, if anything, President Obama was doing to help end the impasse in Congress over the imminent need to raise the nation’s borrowing limit.

ABC News:

• U.S. Default: Robert Reich Calls S&P Warning About U.S. Credit 'Height of Hubris'. It's the "height of hubris" for ratings agency Standard & Poor's to suggest it may cut the credit rating of the U.S. even if the debt crisis is solved, says Robert Reich, former labor secretary in the Clinton administration. "No credit rating agency has gone as far as S&P," he told ABC News today. "That's a highly political move. I'm surprised they are doing it." Reich, who is a professor of public policy at the University of California, Berkeley and has also worked under Presidents Carter and Obama, called the credit rating agency's latest reports "irresponsible."

NJ.com:

• Christie Calls for Compromise On Debt Ceiling Talks, Criticizes Obama For Not Putting Plan in Writing.

The Blaze:

• US Congresswoman in Iran Says U.S. Government Responsible for Assassinations, Most Violent On Planet. (video)

Politico:

• Grover Norquist Backs John Boehner's Debt Bill. House Republicans should back Speaker John Boehner’s debt ceiling bill, says Grover Norquist, a key figure in the conservative movement.
  

Rasmussen Reports:

• 17% Say U.S. Heading In Right Direction. Just 17% of Likely U.S. Voters now say the country is heading in the right direction, according to a new Rasmussen Reports national telephone survey taken the week ending Sunday, July 24. That finding is the lowest measured since January 11, 2009.

Reuters:

• Blackstone(BX) in Talks to Buy Emdeon(EM) - Source. Private equity and real estate firm Blackstone Group (BX.N) is in talks to buy healthcare IT company Emdeon Inc (EM.N), a source familiar with the situation said on Wednesday. A deal for Emdeon could be valued at about $3 billion, the source said. That number would include debt.
• Newer Brands to Brew More Growth for Green Mountain Coffee(GMCR). Green Mountain Coffee Roasters Inc forecast strong earnings for next year, and the company will double its capital spending as the popularity of newer brands boosts the already robust demand for its coffee machines and refills. Shares of the company, which had nearly tripled this year, soared 18 percent after the bell.
• Whole Foods(WFM) Boosts 2011 View, Shares Up. Upscale grocer Whole Foods Market Inc's quarterly profit rose a larger-than-expected 35 percent and it raised its full-year profit forecast, fueled by robust sales and snatching market share from other supermarkets. Shares of the biggest U.S. seller of organic and natural food products rose 3.4 percent in after-hours trade.
• Akamai(AKAM) Q2 Profit Misses as Pricing Pressures Linger. Internet delivery company Akamai Technologies Inc's second-quarter profit narrowly missed expectations hurt by a sequential drop in revenue at its biggest segment amid a difficult pricing environment. Shares of the company fell 4 percent at $28.39 in extended trading, after closing at $29.48 on Wednesday on Nasdaq.
• Cliffs Natural Resources(CLF) Q2 Profit Below Estimates. Mining company Cliffs Natural Resources Inc posted a 56 percent increase in second-quarter profit that fell short of expectations as its expenses rose sharply, sending its stock down 6 percent.
• BMC Software(BMC) Reports Soft Q1 Revenue, Shares Fall. BMC Software Inc reported weaker-than-expected first-quarter revenue as it failed to show bookings growth at its enterprise services management (ESM) unit, which accounts for about two-thirds of the business software maker's sales. Shares of the Houston-based company fell about 7 percent to $45.70 in post-market trading, after closing at $48.89 on Wednesday on Nasdaq.

Financial Times:

• IMF Warned Against Putting Large Sums Into Greek Loan. The IMF has been warned by emerging-market countries against putting large sums into a new Greek rescue. Paulo Nogueira Batista, Brazil's executive director at the IMF, who also represents eight other countries, said the Greek austerity program is too stringent, while the restructuring of Greek debt held by European banks is too small. Arvind Virmani, India's executive director at the IMF, said the proposal leaves Greece with a large sovereign debt stock that threatens future defaults.
• Fed Under Fire Over Default Talks. Wall Street bankers, from senior executives to traders, are complaining that the Federal Reserve is refusing to engage in scenario planning for a US downgrade or default.
• Chinese Media Defy Censors to Attack Government on Train Crash. Chinese censors are struggling to contain public and media reaction to the high-speed train crash that claimed at least 39 lives in Wenzhou last weekend and wrecked the image of China’s high-speed rail network. On Wednesday the Beijing News posed three direct questions across an entire page challenging the government’s handling of the tragedy, disregarding a blunt official directive that their reporting of the tragedy should not “question”, “elaborate” or “associate”.

Telegraph:

• Greek Bail-Out Was a One-Off, Says German Finance Minister Wolfgang Schaeuble. The German finance minister has warned that he will not bail out every troubled eurozone country in a move that rattled confidence in Europe's response to the debt crisis.

Bild-Zeitung:

• Europe is not heading toward becoming a "debt union," following last week's agreement on a second bailout for Greece and measures to strengthen the region's bailout mechanism, Klaus Regling, chief executive officer of the European Financial Stability Facility, said.

Kyodo News:

• Japan plans to ban shipments of beef cattle from Miyagi prefecture after cesium was found in beef sourced from the area.

Herald Sun:

• Rates Must Go Up and They Will. THE Reserve Bank of Australia really has no choice. It must lift its official cash rate next Tuesday; and it will. But don't blame RBA governor Glenn Stevens. Blame Julia Gillard and Wayne Swan for strangling the productivity we need to sustain strong growth in the economy without inflation pressures. Now a rate rise will come absent only some form of global financial meltdown before Tuesday. And the warring politicians in the US still failing to agree to lift their debt ceiling would NOT of itself constitute such an event.

Xinhua:

• The Chinese high-speed rail train crash shows that safety management in the railway bureau is "not up to par" and safety fundamentals are still "relatively weak" such as with equipment quality, personnel and on-site controls, citing Au Lusheng, head of the Shanghai Railway Bureau.
• China's fatal high-speed train crash on July 23 was caused in part by design flaws in the railway signal equipment, citing An Lusheng, head of the Shanghai Railway Bureau.
  

China Securities Journal:

• U.S. dollar weakness may continue, supporting commodities prices and suggesting inflation risk will remain for the global economy, China Securities Journal wrote in a front-page editorial today. Emerging countries, already hurt by inflation, will face "more complicated" challenge of balancing policies in terms of how to fight inflation and at the same time maintain stable economic growth, according to the editorial.

Guangzhou Daily:

• China Banking Regulatory Commission ordered more than 20 trust companies to stop financing real estate projects.

People's Daily:

• China needs development "but not stained with blood," People's Daily said today in a front-page commentary about the high-speed rail train crash that killed at least 39 people. China shouldn't sacrifice safety and quality issues while chasing fast growth, the Communist party-run paper said. Construction on projects with safety concerns must be suspended "decisively," the newspaper said.

Evening Recommendations
Citigroup:

• Reiterated Buy on (JAH), boosted target to $53.
• Reiterated Buy on (SXCI), boosted target to $75.

Night Trading

• Asian equity indices are -1.75% to -.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 118.0 +2.5 basis points.
  
• Asia Pacific Sovereign CDS Index 118.0 +1.0 basis point.
  
• S&P 500 futures +.15%.
  
• NASDAQ 100 futures +.19%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (QSII)/.62
• (XOM)/-.14
• (CPO)/1.13
• (GT)/.26
• (BSX)/.08
• (IP)/.67
• (DHI)/.06
• (AVP)/.49
• (ARG)/.96
• (STRA)/2.38
• (LLL)/2.12
• (CME)/4.17
• (PHM)/-.04
• (AGCO)/1.15
• (MWW)/.09
• (DD)/1.34
• (BG)/1.41
• (CL)/1.25
• (S)/-.12
• (ABC)/.59
• (RTN)/1.15
• (BMY)/.55
• (D)/.59
• (PCP)/1.95
• (BWA)/.98
• (K)/.91
• (CAM)/.64
• (MCK)/1.14
• (DECK)/-.23
• (ACOM)/.30
• (KLAC)/1.38
• (SBUX)/.34
• (VECO)/1.35
• (DRIV)/.15
• (CERN)/.43
• (MET)/1.11
• (SPF)/.00
• (CHK)/.72
• (FII)/.40
• (EXPE)/.49
• (CRR)/1.29
• (NLY)/.64
  

Economic Releases
8:30 am EST

• Initial Jobless Claims for this week are estimated to fall to 415K versus 418K the prior week.
• Continuing Claims are estimated to rise to 3700K versus 3698K prior.
  

10:00 am EST

• Pending Home Sales for June are estimated to fall -2.0% versus a +8.2% gain in May.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Lacker speaking, Fed's Williams speaking, 7-Year Treasury Note Auction, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, Fed's weekly balance sheet report and the M1/M2 Reports could also impact trading today.
  

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

Stocks Falling Into Final Hour on Rising Eurozone Debt Angst, US Debt Ceiling Concerns, Global Growth Worries, Tech Sector Weakness

Broad Market Tone:

• Advance/Decline Line: Substantially Lower
  
• Sector Performance: Every Sector Declining
  
• Volume: Above Average
  
• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• VIX 22.54 +11.52%
  
• ISE Sentiment Index 106.0 -19.08%
  
• Total Put/Call 1.02 +29.11%
  
• NYSE Arms 1.24 +50.13%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 95.09 +1.14%
  
• European Financial Sector CDS Index 150.53 +6.80%
  
• Western Europe Sovereign Debt CDS Index 283.50 -.70%
  
• Emerging Market CDS Index 215.65 +.92%
  
• 2-Year Swap Spread 21.0 -2 bps
  
• TED Spread 18.0 -2 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .07% +2 bps
  
• Yield Curve 254.0 -2 bps
  
• China Import Iron Ore Spot $175.30/Metric Tonne unch.
  
• Citi US Economic Surprise Index -86.20 -2.6 points
  
• 10-Year TIPS Spread 2.44% +4 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -92 open in Japan
• DAX Futures: Indicating -24 open in Germany

Portfolio:

• Slightly Lower: On losses in my Technology and Biotech sector longs
  
• Disclosed Trades: Added to my (IWM)/(QQQQ) hedges and added to my (EEM) short
  
• Market Exposure: Moved to 50% Net Long

BOTTOM LINE: Today's overall market action is very bearish as the S&P 500 is breaking below its 50-day moving average on decent volume on rising eurozone debt angst, some earnings disappointments, US debt ceiling concerns, emerging markets inflation fears, more negative US economic data and global growth worries. On the positive side, Utility, Telecom, Gaming and Tobacco shares are holding up relatively well. Oil is falling -2.1% and gold is down -.3%. The Spain sovereign cds is falling -7.39% to 280.38 bps and the Ireland sovereign cds is falling -4.42% to 837.24 bps. On the negative side, Airline, Homebuilding, Construction, HMO, Hospital, Biotech, I-Banking, Networking, Semi, Software, Alt Energy, Coal and Defense shares are under significant pressure, falling more than -3.0%. Cyclicals and small-caps are underperforming again. Tech shares have been very heavy throughout the day as the MS Tech Index rolls over again after a failure at its 200-day moving average. The Networking Sub-Index is plunging -7.2% today and is down -20.4% from its April 27th high. The UBS-Bloomberg Ag Spot Index is rising +.21%, copper is down -.98% and lumber is falling -.90%. Rice is hovering near a multi-year high, and has soared about +30.0% in less than 3 weeks. The fact that food prices are rising today with severe equity weakness and a stronger US dollar is a large negative. The US price for a gallon of gas is +.01/gallon today to $3.70/gallon. It is up .56/gallon in less than 5 months. The Italy sovereign cds is jumping +5.1% to 285.63 bps, the Greece sovereign cds is gaining +2.4% to 1,698.35 bps, the Belgium sovereign cds is rising +4.2% to 185.0 bps and the US sovereign cds is gaining +8.0% to 62.47 bps. The Italy sovereign cds has soared +70 bps in 4 days. India's Sensex fell another -.46% last night and is now down -10.1% ytd. As well, Brazil's Bovespa continues to be one of the world's worst performers, falling another -1.6% today into bear market territory, and is down -15.74% ytd. Spanish and Italian equities, down -1.9% and -2.8% respectively today, have given back most of their post-Greece debt solution bounce. The tone of the market is very poor today as volume picks up into the breach of key technical levels. Some US politicians attempts to spook the equity and bond markets are having some success today, however I suspect that a larger portion of today's losses are the result of more poor US economic data, ongoing European debt concerns, lowered forward earnings guidance and emerging market growth/inflation worries than most investors perceive. I continue to believe US debt ceiling political posturing will likely continue through at least week's end. I expect US stocks to trade mixed-to-lower into the close from current levels on rising eurozone debt angst, global growth worries, US debt ceiling concerns, earnings worries, rising food prices and emerging markets inflation fears.

Today's Headlines

Bloomberg:

• Italian, Spanish Bonds Slump on Concern European Aid May Not Be Sufficient. Italian and Spanish government bonds declined, increasing the yield relative to benchmark German bunds, on speculation Europe’s aid package may not be sufficient to prevent contagion. German bonds rose for a fourth day and European bank stocks slid as Finance Minister Wolfgang Schaeuble said the government is against a “blank check” for the European Financial Stability Facility to buy bonds of troubled euro members in the secondary market. “If you look into the details of the EU summit decision, it doesn’t take you long to get to where the weak points are,” said Marius Daheim, a senior fixed-income strategist at Bayerische Landesbank in Munich. “You still have two countries that are too big to save and are not effectively protected from negative market sentiment." Italian 10-year bonds yields rose 14 basis points to 5.76 percent as of 4:12 p.m. in London. The difference in yield between Italian and Spanish bonds and their German counterparts widened. The Italian 10-year security yielded 311 basis points more than similar-maturity bunds, up from 289 basis points yesterday, while the Spanish- German spread rose to 334 basis points from 322. The cost of insuring against default on Italian government debt rose 16 basis points to 291 and Spain increased 14 to 337, according to CMA prices for credit- default swaps. “The mandate of the EFSF has been extended but the size hasn’t been increased accordingly,” said Daheim. “You get the impression that there are too many things the EFSF is supposed to be doing. The weak points justify spreads between Spain and Italy and bunds not having narrowed more since the summit.” The risk of bank writedowns and more contagion from the debt crisis helped to drag the Stoxx 600 Banks Index down 1.8 percent, led by Italian lenders. UniCredit SpA slid 3.9 percent while Intesa Sanpaolo SpA dropped 4.2 percent.
  
• Greece Will Default on Debt After EU Plan: S&P. Greece will partially default on its debt once European officials push through a plan that will see bondholders foot part of the bill of a second bailout agreed to last week in Brussels, Standard & Poor’s said. The rating company also cut its ranking for Greece to CC, two steps above default, from CCC, according to a statement published in London today. The outlook on the debt is negative. “The proposed restructuring of Greek government debt would amount to a selective default under our rating methodology,” S&P said. “We view the proposed restructuring as a ‘distressed exchange’ because, based on public statements by European policymakers, it is likely to result in losses for commercial creditors.” The cost of insuring against a default by Greece was at 1,695 basis points today, implying a 76 percent chance the government will fail to pay its debts within five years.
• Schaeuble Says European Union Must Prevent Uncontrolled Euro Member Exits. German Finance Minister Wolfgang Schaeuble said European governments must prevent a breakup of the euro region as well as an “uncontrolled” exit of one of its members.
• U.S. Could Lose AAA Rating Even With Budget Deal, BlackRock, Loomis Sayles, Templeton Say. Investors are warning a cut is likely as President Barack Obama and House Speaker John Boehner argue over how to increase the debt ceiling, while also trying to curb borrowing. “Addressing the debt ceiling is of course very important, but addressing it alone doesn’t avert a downgrade,” Barbara Novick, a co-founder and vice chairman at BlackRock, the world’s biggest money manager with $3.66 trillion in assets, said in an interview. “Without a credible plan to cut the deficit, that’s a real issue.”
• Orders for U.S. Durable Goods Fell in June. Orders for U.S. durable goods unexpectedly dropped in June, raising the risk that a slowdown in business investment will weigh on the world’s largest economy in the second half of the year. Bookings for goods meant to last at least three years fell 2.1 percent after a 1.9 percent gain the prior month that was smaller than last reported, the Commerce Department said today in Washington. Demand for business equipment, including machinery and computers, also dropped. Manufacturers face a slowdown in consumer spending just as they are poised to rebound from the parts shortages caused by Japan’s earthquake, indicating production may keep cooling. Companies are also cutting back on hiring, which may further temper household demand. Orders for non-defense capital goods excluding aircraft, a proxy for business investment in items like computers, engines and communications gear, decreased 0.4 percent after rising 1.7 percent the prior month. The drop signals companies scaled back investment plans. Demand for machinery dropped 2.3 percent, the most since January. Computer bookings fell 0.8 percent and those for automobiles decreased 1.4 percent. Shipments of non-defense capital goods excluding aircraft, used in calculating gross domestic product, increased 1 percent after rising 1.7 percent. The positive news from shipments was countered by a slowdown in stockpiling. Inventories climbed 0.4 percent in June, the smallest gain since March 2010.
• Inflation Drives Brazil Stocks to Bear Market. Brazilian stocks approached a bear market, with the benchmark index down 20 percent from a November high, as quickening inflation fueled concern earnings growth will flag in the world’s second-largest emerging economy. The Bovespa fell 1.6 percent in Sao Paulo to 58,398.49 at 11 a.m. New York time, extending the worst performance this year among major equity markets. A close at this level would indicate a bear market, typically defined as a drop of at least 20 percent from the preceding bull-market peak. The real tumbled 1.8 percent to 1.5665 per dollar today after the government said it will levy a tax on some investments in currency derivatives. “These measures reinforce the negative sentiment that foreign investors already had on Brazil,” said Eduardo Favrin, who helps manage $3.2 billion as head of equities at HSBC Global Asset Management’s Brazil unit in Sao Paulo. The Bovespa would be the first benchmark index in the world’s 10 biggest stock markets by capitalization to fall into a bear market since Japan’s Nikkei-225 Stock Average sank more than 20 percent below its 2011 high on March 15 following the earthquake that damaged nuclear power plants. “The combination of inflation plus currency strength is creating some real issues,” John Lomax, an emerging-markets strategist at HSBC Holdings Plc, said in a phone interview from London. “If they try to find ways to bring the currency down, these non-conventional approaches, that also ends up being bad for equities.”
• Spain's Biggest-Deficit Region Rules Out Tax Increases to Tame Shortfall. Castilla-La Mancha, which has Spain’s biggest regional deficit, aims to cut the shortfall fivefold this year without raising taxes as it stays shut out of debt markets, President Maria Dolores de Cospedal said. Cospedal said in an interview today she will seek to shrink a deficit that reached 6.5 percent of regional gross domestic product last year to meet a goal of 1.3 percent in 2011. Her government there currently has enough cash to pay wages through September, she said. “Of course we are going to try to meet the target, it’s our obligation,” Cospedal, who is also deputy leader of the opposition People’s Party, said at the party’s headquarters in Madrid. “We rule out raising taxes, it’s against what we want and believe. Spain has never emerged from an economic crisis by raising taxes.”
• N.Y. Crude Oil Falls on Durable Goods Orders, Unexpected Inventory Gain. Crude oil fell after U.S. supplies unexpectedly increased and orders for durable goods dropped in June, bolstering concern that the economic growth is slowing. Futures dropped as much as 2.3 percent after Energy Department said supplies gained 2.3 million barrels to 354 million last week. A 2 million-barrel decline was forecast, according to the median of 13 analyst estimates in a Bloomberg News survey. Bookings for goods meant to last three years or more fell 2.1 percent, the Commerce Department said. “We had a surprise build and the market dropped,” said Todd Horwitz, chief strategist at Adam Mesh Trading Group in New York. “The economic news is horrible.” Crude oil for September delivery fell $1.50, or 1.5 percent, to $98.09 a barrel at 12:15 p.m. on the New York Mercantile Exchange. Prices have climbed 27 percent in the past year. Refineries operated at 88.3 percent of capacity, down 2 percentage points from the prior week and the biggest decline since the week ended April 8.
• Kandahar Mayor Is Killed in Suicide Bombing While Mediating Land Dispute. The mayor of the southern Afghan city of Kandahar was killed in a suicide bombing at his office today, two weeks after the region’s most powerful politician, President Hamid Karzai’s half brother, was assassinated.

Wall Street Journal:

• Live Blog: The U.S. Debt Battle.
• CEOs in Their Own Words: Don't Plan on Much Hiring. The CEOs are speaking. And the message isn't encouraging: Don't expect many new U.S. jobs anytime soon. The Wall Street Journal scoured more than 100 earnings conference calls through July 21, looking to find what executives were saying about the struggling U.S. labor market. Culling transcripts available via Capital IQ and FactSet Research Systems, the Journal searched for any mention of key words such as "jobs," "employment" and "head count."
• Southern Copper Aims to Double Copper Output by 2015. Southern Copper Corp. plans to double its copper production by 2015 through the start-up of new mine projects and expansions at current operations in Mexico and Peru, Chief Executive Oscar González Rocha said.
• Financial News: Nasdaq(NDAQ) Echoes LSE Concerns On NYSE-Boerse Deal.
• Ford(F) to Build Its Second India Factory. Ford Motor Co. plans to invest about $900 million to build its second factory in India, as the auto maker prepares to introduce more cars and sport-utility vehicles in the country to gain a bigger foothold in its growing automobile market.
• IMF Seeks to Limit Greece Exposure. The International Monetary Fund, concerned about its enormous long-term exposure to the euro zone, is likely to contribute a smaller share of official financing in the new Greek aid package than it did for the Portuguese and Irish rescue programs, according to people familiar with the situation. The IMF has pledged to lend €78.5 billion ($113.91 billion) to Greece, Ireland and Portugal through 2014. That amount is many times the IMF shareholding of these three countries, a growing source of worry to fund officials. Following the first Greek aid package in May 2010, the fund said it would contribute one euro for every two pledged by the euro zone for rescue loans to other euro-zone countries that might need them. Euro-zone officials assumed in negotiations over the new Greek aid package that the IMF would again contribute a third of the financing. But the IMF has indicated that it is unlikely to follow that formula in the new aid package, these people said. "It certainly won't be one-third," one of them said. Greece's debt sustainability is still a particular concern to fund officials despite the new aid package, which will provide nearly €160 billion in new financing for Greece over the next three years. The IMF's commitment to Ireland is nearly 18 times the country's IMF shareholding, and the commitment to Portugal is 25 times its shareholding.
• SAC to Close Flagship Fund to New Investors. SAC Capital Advisors LLP, one of the nation's most prominent hedge funds, is closing its flagship fund to new investors starting Aug. 1, a person familiar with the situation said Wednesday.

MarketWatch:

• Juniper(JNPR) Slump Hits Techs, Networking Shares. Shares of Juniper Networks fell sharply Wednesday, leading a broad tech retreat that highlighted what analysts portrayed as a momentary pause in the networking gear market. Juniper JNPR -20.93% sank 20%, a day after shocking Wall Street with disappointing results and a weak outlook that also sent shares of other networking gear makers, including Cisco Systems Inc. CSCO -3.67% , tumbling.

CNBC.com:

• Hedge Fund Regulation Is Backfiring: SAC Capital Edition. This is another example of hedge fund regulation backfiring. Instead of providing more transparency, Dodd-Frank is driving hedge funds deeper into the shadows. It's unintended consequences gone wild.

Business Insider:

• Beige Book: Economy Slows in 8 Out of 12 Districts. Just out from The Fed, the latest Beige Book. The economy has slowed in 8 out of 12 distrcits. 4 continue to grow "modestly". The full report can be downloaded here.
• The SEC is Investigating Groupon's Weird Accounting Metrics.
• A Tour of the Luxurious Prison Norway Killer May Be Sent To.
• A Look at NYSE Margin Debt and The S&P 500.
• Here Is Your Chinese Riot Video Of The Day.
  

Zero Hedge:

• Bad News for Bank of America(BAC) Imminent? Attorney General Says Completing BofA Fraud Analysis.

Politico:

• Clinton Tries to Stop House Bill That Slashes Payments to UN and Limits Aid to Egypt, Pakistan and Palestinian Authority.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Wednesday shows that 25% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-two percent (42%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -17 (see trends).
• Consumer Confidence Falls to a New Two-Year Low.
  

Reuters:

• SEC Builds New Tips Machine to Catch the Next Madoff.
• US 5-Year Debt Auction Lackluster But No Disaster.
• Free-Wheeling Texas Lures California Companies.
• Italy Assets Close Sharply Lower on Contagion Fears. Italian assets fell strongly on Wednesday on renewed fears of euro crisis contagion, with shares in leading banks down more than 4 percent and benchmark bond yields sharply higher. Milan's bank-heavy FTSE MIB share index closed down 2.81 percent. The drop came as the yield premium on 10-year Italian BTP bonds over German Bunds widened to 313 basis points from 290 basis points on Thursday on worries that the euro zone crisis could widen to Italy. The 10-year BTP fell almost a full point in price, pushing its yield up to 5.76 percent. That is not far from the 6 percent psychological threshold it broke this month for the first time since 1997. Italy borrowing costs are expected to soar on Thursday when it sells up to 8.5 billion euros of bonds. Jitters about its debt pile are seen pushing the yield on the 10-year bond to an 11-year high.
• S&P Does Not Think U.S. Will Default On Its Debt.
  

Telegraph:

• Hedge Funds Wade in to US Debt Debate. Hedge fund billionaire Dan Loeb has joined the ranks of angry Americans seething about President Barack Obama failure to get agreement on the country’s $14.3 trillion (£8 trillion) debt ceiling. Mr Leob, a registered Democrat and who supported Obama in his 2008 presidential bid, turned on the President in an letter sent to investors, where he also told them he was considering curtailing investment - or at least would be “conservative” in investing - due to the uncertain economic climate in the US. He took the President to task for calling for the repealing of corporate tax breaks to generate revenue as part of an agreement with republicans to allow spending cuts in get their vote to raise the debt ceiling. n a letter to his investors, he wrote: “It is increasingly difficult to avoid the conclusion that while Washington burns, President Obama is fiddling away by insisting that the only solution to the nation’s problems — whether unemployment, the debt ceiling or deficit reductions — lies in redistribution of wealth.”
• Eurozone Debt Crisis Resurfaces as Markets Punish Italy and Spain for Merkel Delay on Bailout Package. Spain and Italy's borrowing costs marched back towards euro-era highs on Wednesday, as markets renewed their eurozone fears less than seven days after ministers agreed a €159bn (£140bn) second bail-out for Greece. Yields on Spanish ten-year government bonds climbed to 6.08pc on Wednesday morning, slightly below the highs of 6.337pc seen before Greece's new bail-out package was announced last Thursday. Italian bonds climbed to 5.793pc, just 20 basis points below its highs of 6.008pc. Concerns are now mounting that yields could reach the 7pc 'point of no return' mark that prompted smaller euro partners Greece and Portugal to seek bailouts.

Tijd:

• The Greek bailout will add 2.8 billion euros to Belgian debt.

CNBC-TV18:

• India's economic growth in the financial year that began April 1 will be "certainly less" than the previous 12-month period, Montek Singh Ahluwalia, deputy chairman of the nation's Planning Commission, said in an interview.

Economic Information Daily:

• A report produced by a research team from the Chinese Academy of Social Sciences and the Ministry of Finance has endorsed keeping China's use of U.S. debt short-term. The short-term use of U.S. debt would help China prevent "big losses" that could arise if the U.S. diluted its debt through currency devaluation or other methods, citing the report.

Bear Radar

Style Underperformer:

• Small-Cap Growth (-2.51%)

Sector Underperformers:

• 1) Networking -6.81% 2) Alt Energy -3.50% 3) HMOs -3.11%

Stocks Falling on Unusual Volume:

• JNPR, WBSN, ARUN, EMR, STD, JDAS, DOV, HES, PFCB, ILMN, SSYS, PNRA, CCMP, MMSI, CHRW, IBKC, EZCH, OFIX, CVGI, IRBT, LLTC, DEST, CAVM, NEOG, SONO, ERTS, IWZ, PEJ, KNM, TRN, TUP, SPH, CHE, JKI, PXQ, FMS, VMED, WAT, ETFC, MMSI, CYMI, HUM, MCO, FIRE, UAN, AEIS, TEX, SCOR, PH, PVTB, ICON, MTW, JLL, MLI, MOD, WLP, KMT, ACW, RVBD, PCX, GLW, VDSI, QEP, RSH, CIE, NETL, BGS, DDD, CIEN, ALR, TUP, IPHI and SSYS
  

Stocks With Unusual Put Option Activity:

• 1) JNPR 2) CBS 3) CAM 4) XLI 5) GGB
  

Stocks With Most Negative News Mentions:

• 1) IR 2) MF 3) PFCB 4) VSH 5) ECBE
  

Charts:

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