FDIC: "Problem Bank List" declines....

As per the FDIC the second quarter “Problem Bank List” declined for the first time since 2006. Because of the lower number of expected bank failures, the FDIC deposit insurance fund was positive for the first time in two years.

Net income at the country’s bank rose 38% to $28.8 billion from a year earlier, the eighth consecutive quarterly improvement as results were boosted by a seventh consecutive drop in provisions for loan loss reserves. Charge offs declined by 42%.

The significance behind this data is huge.

In order to have a recovery, the banking system must recover first. The regulatory environment is extraordinary harsh, where the mantra is find any and all issues and force banks to reserve or charge it off.

10:00 am update....

Markets are strengthening...

Dow +114
Nas +32
S&P +11

Bank of America continues Freefall....

The stock is down another 30 cents to $6.12 this morning.



General Dynamics wins contract...

General Dynamics Corp. (GD). The company has won a U.S. Air Force contract worth up to $900 million to supply a worldwide military broadcast service with new hardware, the Defense Department said on Monday.

Today's Upgrades and Downgrades...

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street research calls this Tuesday morning.


Aetna Inc. (NYSE: AET) Raised to Buy at Jefferies.
AMR Corp. (NYSE: AMR) Raised to Neutral at BofA/ML.
Archer Daniels Midland Company (NYSE: ADM) Started as Equal-Weight at Barclays.
Arcelor Mittal (NYSE: MT) Cut to UNderperform at BNP Paribas.
Bunge Limited (NYSE: BG) STarted as Overweight at Barclays.
Cincinnati Financial Corporation (NASDAQ: CINF) Maintained Underperform as Bear of the Day at Zacks.
Coach Inc. (NYSE: COH) Raised to Buy at Jefferies.
Expedia Inc. (NASDAQ: EXPE) Started as Neutral at Credit Suisse.
Fastenal Company (NASDAQ: FAST) Raised to Outperform as Bull of the Day at Zacks.
Human Genome Sciences Inc. (NASDAQ: HGSI) Started as Buy at Brean Murray.
Insight Enterprises, Inc. (NASDAQ: NSIT) Reiterated Buy as Value at Zacks.
Juniper Networks, Inc. (NYSE: JNPR) Raised to Outperform at Morgan Keegan.
Kimberly-Clark Corporation (NYSE: KMB) Raised to Equal-Weight at Barclays.
Priceline.com Incorporated (NASDAQ: PCLN) Started as Outperform with $720 target at Credit Suisse.
Ryland Group Inc. (NYSE: RYL) Raised to Neutral at Credit Suisse.
US Airways Group, Inc. (NYSE: LCC) Raised to Buy at BofA/ML.
Sanderson Farms, Inc. (NASDAQ: SAFM) Raised to Neutral at JPMorgan.
Walgreen Co. (NYSE: WAG) Cut to Underweight at Barclays.

Apple starts manufacturing cheaper iPhone....

Apple Inc. (AAPL). Asian suppliers to Apple have begun manufacturing a lower-priced version of its hot-selling iPhone 4 with a smaller 8 gigabyte flash drive, according to two people with knowledge of the matter.

Stocks open higher....

Dow +37
Nasdaq +10
S&P +3

Futures were indicating a much higher open.  Obviously traders are selling into any strength.

Gold ETF is now larger than S&P Spiders...

OK....if this isn't a red flag.  The value of the Gold ETF (GLD) has just surpassed the value of the S&P ETF (SPY).

S&P replaces president after U.S. downgrade...

Standard & Poor's said its president is stepping down, capping two weeks of controversy following the rating agency’s downgrade of U.S. government debt on Aug. 5 that sparked a row with the Treasury.

So...is S&P going to reinstate the AAA rating???

China now the largest PC Market....

According to IDC, China surpassed the U.S. as the world's largest PC market in Q2. Strong PC demand in emerging markets has buoyed Intel (INTC) and Microsoft (MSFT) this year, helping offset weakness in the U.S. and Europe. Though in Microsoft's case, widespread piracy limits the profitability of the Chinese market.

Premarket Movers....

Premarket gainers: PMC +38%. PANL +28%. MPEL +10%. OCR +9%. LLYG +7%. ERIC +4%. ARMH +4%. UBS +3%. SNY +3%. GSK +3%. SODA +3%. SINA +3%. ALU +3%. AMR +3%. NVS +3%.


Losers: TSL -7%. GSS -5%. GFI -4%.

Crude rises...

Crude rises amid resistance from government loyalists in Tripoli against the rebel forces, characterized by the public appearance of Muammar Gaddafi's son Saif al-Islam, whom the insurgents said they had captured. Brent crude +0.2% to $108.60 and WTI +1% to $85.30.

Today's Upgrades and Downgrades....

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street research calls this Monday morning.


Agrium Inc. (NYSE: AGU) Cut to Underperform at BofA/ML.
Intrepid Potash, Inc. (NYSE: IPI) Cut to Neutral at BofA/ML.
Newmont Mining Corp. (NYSE: NEM) Raised to Buy at Citigroup.
OmniVision Technologies (NASDAQ: OVTI) Reiterated Buy with $38 target at Canaccord Genuity.
PMI Group, Inc. (NYSE: PMI) named as Bear of the Day at Zacks.
Seattle Genetics Inc. (NASDAQ: SGEN) Reiterated Sell with $10 target at Canaccord Genuity.
SLM Corporation (NYSE: SLM) Raised to Outperform at Credit Suisse.
SunPower Corporation (NASDAQ: SPWRA) Raised to Hold at Auriga.
Toyota Motor Corporation (NYSE: TM) Raised to Outperform as Bull of the Day at Zacks.
Under Armour, Inc. (NYSE: UA) Started as Buy at Canaccord Genuity.
Yingli Green Energy Holding Co. Ltd. (NYSE: YGE) Raised to Overweight at Piper Jaffray.

Perrigo Holds up Well....

Shares of Perrigo (PRGO) continue to hold up well in an awful market.  The stock is currently up $1.13 to $86.30 and seems to have strong support at the $85 level.  This would be a good one to own if / when the market rebounds.

Bank of America continues to slide....

The slide in Bank of America (BAC -6.1%) continues, now trading at $6.55. Low print in this bear market: $6.31. Low close: $6.51. Other banking shares have given up sharp early gains, but remain slightly higher to moderately lower.

Market trades back down after strong open....

After the Dow gapping up nearly 170 points, we are now back to unchanged on the day....My guess is Margin calls are putting pressure on the market.  Typical Margin call deadlines are 11:45 am and 2:30 pm.

If we can get past 2:30 pm today with a gain, that at least prevets further margin call pressure tomorrow.

Gold Move Parabolic....

These kind of panic moves usually end badly for those who "invest" in them.  Let's keep an eye on this chart. 

Morning Movers.....

Accretive Health Inc. (AH) declined 2.1 percent to $28. The Chicago-based company that helps hospitals collect medical bills from patients reported second-quarter earnings minus some items of 12 cents a share, beating the average estimate of five analysts of 10 cents a share, according to Bloomberg data.

Capital One Financial Corp. (COF) rallied 3.1 percent to $42.10. The McLean, Virginia-based lender that acquired ING Direct USA in June, agreed buy HSBC Holdings Plc’s U.S. credit card division for about $32.7 billion. Capital One said the deal will add to earnings in 2013.

Cree Inc. (CREE) jumped 10 percent to $32.52. The maker of energy-efficient lighting posted fourth-quarter adjusted earnings that exceeded the average analyst projection, data compiled by Bloomberg show.

Macy’s Inc. (M) gained 4.2 percent to $26.50. The second-biggest U.S. department-store chain reported quarterly earnings that beat analysts’ estimates and boosted its full-year profit forecast as sales increased faster than the retailer expected.

OpenTable Inc. (OPEN) gained 5 percent to $63.35. The online restaurant-reservation service was raised to “buy” from “hold” at Citigroup Inc. analyst Mark S. Mahaney, who cited an attractive valuation and the company’s prospects for growth and profitability.

Pegasystems Inc. (PEGA) : The developer of customer relationship management software reported second-quarter earnings that exceeded the average analyst projection, data compiled by Bloomberg show.

Polo Ralph Lauren Corp. (RL) climbed 10 percent to $132.26. The clothing retailer reported first-quarter earnings of $1.90 a share, exceeding analysts’ estimate of $1.47 on average.

SunPower Corp. (SPWRA) : The second-largest U.S. solar panel said third-quarter earnings and sales will be lower than the average analyst estimate.

Walt Disney Co. (DIS) slid 4.3 percent to $33.20. The world’s biggest theme-park operator posted third-quarter studio revenue of $1.62 billion, compared with the average analyst estimate of $1.83 billion.

Disney Beats, but uncertain on Outlook....

Walt Disney Co. (DIS). The company’s quarterly results surpassed cautious Wall Street expectations on Tuesday, but the media and entertainment giant now has to grapple with an uncertain outlook for consumer spending. Disney posted net income of $1.48 billion or 77 cents per share, versus $1.33 billion or 67 cents a year earlier.

Good Morning....Futures Lower....

at 9:15 am

Dow Futures -256
Nasdaq -48
S&P -27