POWERSHARES QQQ T QQQQ

Mindless, numbing churn.

Down 200 points, then 2 days later up 200 points, then 4 days later down 150 points, then 3 days later up 150 points.

The McCain Veep choice is going to get plenty of attention in the next few days. The selection is also a possible market mover in the future.

I think that we could see a woman. Kay Bailey Hutchison is a possibility but McCain does not need Texas, he already has it. Yet don’t rule her out. I think that Carly Fiorina formerly of Hewlett-Packard (HPQ) or Meg Whitman of Ebay (EBAY) fame both have a shot but it is more likely that their lack of political experience leaves them as possible cabinet appointments should the GOP win.  Wall Street would like that, especially in techland.

Be careful how you define “neglected.”

The most common adage amongst investing commentators and pundits is to go “against the crowd” or be “contrarian” with your investments. On the surface, this is great advice. To produce truly outstanding investment results, you need to invest in a particular investment or sector before that idea catches on. And if your reason for buying something is because it’s already up triple digits… you’re probably too late.

• Fed Minutes show weak outlook, split on inflation. Minutes released yesterday from the August 5 FOMC meeting show the Fed expects weak economic growth and moderating inflation through to the end of the year, and committee members marked down their forecast for growth in the second half of this year and 2009. The central bank's interest-rate target remained unchanged at 2%, and though committee members expect to raise interest rates at some point, the timing of such a move is unclear since most committee members believe the interest rate is not too low given the current economic situation. Fed officials appeared divided on exactly how great a threat inflation poses and to what extent financial stress is weighing down the economy.
• FDIC: IndyMac failure more expensive than expected. The FDIC reported that IndyMac's July failure will be costlier than originally expected. The FDIC has revised its estimate upwards to $8.9B, from a previously estimated $4-8B, and hopes to start marketing IndyMac's assets in the third quarter. IndyMac is one of nine U.S. banks to fail this year and the third-largest U.S. bank failure ever.
After you finish reading Wall Street BreakfastSeeking Alpha's Market Currentswill keep you current all day long.
• FDIC may replenish funds with Treasury loan. Increased bank failures have pushed the FDIC's reserve ratio to 1.01% ($45.2B), low by historical standards, forcing the FDIC to develop a restoration plan to replenish the fund. Risks remain high, with 117 banks on the FDIC's "problem" list compared to 90 in Q1. Chairman Sheila Bair said Treasury borrowing could be needed to cover short-term cash-flow pressures created from reimbursing depositors immediately after a bank failure. The loan would be repaid once the failed bank's assets had been sold. Washington regulators are concerned that the FDIC is turning to the Treasury after only nine bank failures, a move that underscores the weakness of the U.S. banking system in the wake of the credit crisis.
• Fannie, Freddie post biggest profits in a decade. Fannie Mae (FNM) and Freddie Mac (FRE) post the biggest profits on new investments since at least 1998. The current-coupon mortgage bonds Fannie and Freddie buy yield about 40 basis points more than what they pay to borrow by selling benchmark bonds. The gap is allowing the two companies to offset some of their credit losses and is reducing the pressure on the government to bailout the mortgage-lenders. Moshe Orenbuch, an analyst at Credit Suisse, says their interest margin is likely to continue to widen.
• Lehman asks P-E firms to remain in bid. Lehman (LEH) is still deciding whether to sell its asset management unit, but has asked private-equity firms Kohlberg Kravis Roberts, Hellman & Friedman and Bain Capital to remain in the bidding. All three firms have been told by Lehman that their bids are high enough to go forward. Blackstone and Carlyle have been eliminated from the informal auction. Analysts say the indecision at Lehman reflects its uncertainty over the size of its writedowns.
• NY AG probes Fidelity-Goldman ties. The New York attorney general's office is examining the relationship between Fidelity Investments and Goldman Sachs (GS) as part of an investigation into Fidelity's sale of auction-rate securities [ARS] to individual investors. Investigators are trying to determine whether Fidelity had an incentive to sell ARS in return for certain financial services provided by Goldman. The probe was initiated after it was discovered that most of the ARS sold by Fidelity were underwritten by Goldman.
• Pimco seeks $5B to buy debt on the cheap. Pimco is looking to raise $5B for a fund to buy distressed senior and super-senior mortgage-backed debt. "There's a handful of firms out there, Pimco being one of them, that are well-positioned to deal with this credit crisis and the fire sales going on in mortgage-backed securities," mutual-fund consultant Geoff Bobroff says. Others include BlackRock (BLK) and TCW.
• Lilly, Amylin, FDA discuss Byetta warning after new deaths. Eli Lilly (LLY) and Amylin (AMLN) are in talks with the FDA and may have to add tougher warnings to the prescription instructions after four more patients died from pancreatitis while taking the diabetes drug Byetta, bringing the total to six deaths. No definite relationship has been established between Byetta and the deaths but sales of the drug could fall 5% this week on the news and even further if the FDA requires stronger warning labels. The new deaths could jeopardize the long-acting version of the drug that Lilly and Amylin plan to submit within nine months for U.S. approval. Byetta is Amylin's leading product, with global sales of $194.7M in Q2.
• TiVo hopes to expand reach through magazine partnership. TiVo (TIVO) plans to announce today an agreement with Entertainment Weekly, a Time Warner (TWX) magazine, that will allow TiVo users to automatically record shows recommended by the magazine's staff. The partnership is part of TiVo's efforts to distinguish itself from other DVRs that are seeing their market share grow even without TiVo's advanced features. Scott Donaton, publisher of Entertainment Weekly, said that 60% of the magazine's 1.8M readers use DVRs. TiVo, which pioneered DVRs a decade ago, has only 1.7M subscribers in the existing U.S. market of 26M devices.
• U.S. consumer confidence hits near-record low. ABC's weekly Consumer Comfort Index shows American consumer confidence fell to a near-record low as gasoline prices remained high, and inflation and unemployment continued to weigh down the economy. The index was down to -50 in the week to Aug. 24, one point lower than the previous week, and dangerously close to the all-time low of -51, reached in May.
• Richmond Fed Mfg Index holds steady. Richmond Fed's Manufacturing Index held steady at -16. Among the index's components, shipments were +10 to -13, new orders were -5 to -22, and jobs were -7 to -12.
• S&P/Case-Shiller see housing decline moderating. S&P/Case-Shiller says broad-based declines in U.S. home prices continue. Q2 prices fell a record 15.4% vs. a year ago. It does see the decline moderating, and a possible bottom in some regions.
• Ofheo expects positive growth by Q4. Ofheo notes the rate of home price declines slowed in Q2. Prices fell 1.4% from Q1 - less steep than the prior quarter's -1.7% - and fell 4.8% from last year. Director James Lockhart expects positive growth by Q4.
• Redbook sales fall in August. Redbook reports U.S. retail sales fell 1.8% in the first three weeks of August vs. July but rose 1.5% vs. a year ago.
• ICSC sales up slightly in August. ICSC reports retail sales were up 0.2% wk/wk and 2.3% from the same week last year. Falling gas prices continue to help prop up discretionary spending.
• July home sales up on revised June numbers. New home sales rose 2.4% in July on the previous month, but only after the Census Bureau revised the previous month's numbers sharply down. July sales came in at a seasonally adjusted annual rate of 515,000 units. June's figure was revised to 503K from 530K.
• China Mobile continues to dominate. China Mobile (CHL) posted record profits of ¥30.8B ($4.5B) - 51% higher than a year ago and better than the ¥28.3B analysts expected. Sales rose 16% to ¥103.4B. In February the government asked CHL and China's number-two mobile carrier China Unicom (CHU) to cut prices of long-distance domestic calls by about 50%; fixed-line long-distance calls dropped by 20% as a result. "China Mobile is benefiting from the rapid growth in the mobile market and a lack of competition, Credit Suisse's Jeffrey Tan says, noting this may change after the government-enforced industry restructuring. CHL says it's shopping for "quality telecommunications assets as investment opportunities." Shares gain 3.9% in Hong Kong.

Earnings: Tuesday After Close

• J Crew Group (JCG): Q2 EPS of $0.28 misses by $0.04. Revenue of $336M (+10.3%) vs. $338M. [PR]
• Dycom Industries (DY): FQ4 EPS of $0.23 beats by $0.02. Revenue of $322M (+1.5%) vs. $319M. [PR]
• Borders Group (BGP): Q2 EPS of -$0.18 beats by $0.11. Revenue of $749M (-6.9%) vs. $783M. [PR]

Earnings: Wednesday Before Open

• China Mobile (CHL) posts record profits of ¥30.8B ($4.5B) - 51% higher than a year ago and better than the ¥28.3B analysts expected. Sales rose 16% to ¥103.4B. CHL says it's shopping for "quality telecommunications assets as investment opportunities." +3.9% in Hong Kong.
• PetroChina (PTR): H1 profit falls 35% to ¥53.6B ($7.8B) on receding margins and advancing taxes - in line with estimates. PTR and ExxonMobil (XOM) duel for title of the world's biggest company, with XOM being the current champ.
• Cnooc (CEO): Oil and gas sales gain 63.9% to ¥54.46B. Net profit of ¥27.54B was up 89.3%. Cnooc is number-three to PetroChina (PTR) and Sinopec (SNP).

Today's Markets

• Asia markets closed mostly down. Nikkei -0.2% to 12,753. Hang Seng +1.9% to 21,465. Shanghai -0.3% to 2,342. BSE -1.3% to 14,297.
• In Europe at midday, London -0.2%. Paris -1.0%. Frankfurt -0.8%.
• U.S. futures at 7:00 AM: Dow -0.25%. S&P -0.35%. Nasdaq -0.34%. Crude +1.06% to $117.50. Gold +1.36% to $839.30.

Wednesday's Economic Calendar

• 7:00 MBA Mortgage Applications
  8:30 Durable Goods Orders
  10:35 EIA Petroleum Status Report

 

I’ll be the first to admit that in the last couple of weeks my technical analysis has been all over the map in terms of near-term market direction. My long-term is solid, the markets look good after Labor Day and in the coming months. But today put a little shiver in me, even with the ultra low volume. We are at the precipice of a major breakdown in the markets. I’m not saying we will break down, I’m saying we’re peering over the edge.

My most recent analysis from Sunday evening (August 24) pointed to an uptrend was likely, particularly with Apple (AAPL) and the Nasdaq (QQQQ), but Monday a confluence of market nasties has nearly wiped clean that optimism. So in times like these I revert to my mantra, my time honored and trusted philosophy:

Investors were nervous Tuesday about the prospect of a hurricane to close out the month. That sent energy prices higher and forced end-of-month tape painters to slow down long enough to tape their windows while still managing a “stick save” into the close.

Merriam-Webster defines “inflation” as a "continuing rise in the general price level usually attributed to an increase in the volume of money and credit relative to available goods and services."

As prices are not increasing due to increases in the volume of money and credit, I have good news – there is no threat of inflation. 

In assessing the outlook for the financial markets, it may be wise to follow the rule of Presidential politics and wait until after Labor Day to undertake a thorough evaluation. In recent weeks, the markets have given us a great deal of volatility with no clear trend, and a particularly mixed bag of technical and sentiment indicators.

Last week, the Dow lost a mere 0.3% after moving over 100 points in three of five sessions, and crude oil finished 89 cents higher after gaining $6 on Thursday and losing $6 on Friday. Technically, U.S. stocks remain in a halting recovery pattern following the July 15 low, and there has been some constructive leadership from the technology sector and small-caps, but the advance overall has hardly been dynamic and most key indexes remain in longer-term downtrends. Sentiment indicators are similarly mixed. There are certainly examples of extreme pessimism (e.g. surveys of consumer sentiment are at 27-year lows!), which is positive from a contrary opinion standpoint, but there are signs of near-term investor complacency as well (e.g. the demand for protective equity put options is currently near the lowest level of the year).

• Freddie sells $2B in debt, eases bailout worries. Freddie Mac (FRE) easily sold $2B in short-term debt on Monday, providing welcome reassurance to investors worried about Freddie Mac and Fannie Mae's (FNM) ability to fund operations without government help. Freddie's stock jumped 17% to $3.29, and Fannie gained a more modest 3.8% to $5.19. Both companies currently meet regulatory capital requirements and are rolling over their debt on schedule, and Fannie Mae is due to sell $2B in bills tomorrow.
• Rio H1 profit more than doubles. H1 profit more than doubled at Rio Tinto (RTP) on increased aluminum production and record high iron ore prices. Net income rose to $6.91B from $3.25B the previous year. Underlying earnings reached $5.47B, beating estimates of $5.15B. The company is fighting a $142B unsolicited takeover bid from BHP Billiton (BHP) and says it is better able to expand its output of commodities independently.
After you finish reading Wall Street BreakfastSeeking Alpha's Market Currentswill keep you current all day long.
• Regulators put more banks on probation. Federal regulators have put more struggling banks on "probation," forcing them to fix their problems and try to avoid costly failures. More so-called memorandums of understanding have been issued this year to date than in all of 2007. The memorandums can force banks into agreements that include taking steps to raise capital, cutting back on risky loans and suspending dividend payments. The FDIC had 90 "problem" banks on its list at the end of March, but there have been five bank failures since then and many more considered at risk. A revised list will be released Tuesday.
• Troubled economy weighs on Obama's ambitious agenda. With the Democratic National Convention underway, Obama is finding his ambitious economic agenda threatened by economic reality, WSJ says. Obama is calling for a government healthcare plan to cover millions without insurance; a system of tradeable pollution permits to reduce emissions; and higher income-tax rates and capital-gains tax rates. His top priorities would cost hundreds of billions of dollars a year, not counting a stimulus plan he is considering with a price tag of $115B.
• Anadarko plans $5B stock buyback. Anadarko Petroleum (APC) plans to repurchase $5B of its own stock, representing 18% of its outstanding shares at Monday's stock price. Shares rose 2.4% in after-hours trading.
• JPMorgan loses $600M on Fannie/Freddie. JPMorgan (JPM) reported the market value of its Fannie Mae (FNM) and Freddie Mac (FRE) preferred stock holdings was cut in half this quarter, to $600M. In regulatory filings, the bank said the loss could affect its Q3 earnings, but the fluctuations in Fannie/Freddie share price make the exact loss hard to calculate. Other financial institutions, especially smaller regional banks, could also take losses on their GSE preferred stock holdings.
• Teva's Azilect slows progression of Parkinson's. Shares of Teva Pharmaceutical (TEVA) gained 1.1% in Tel Aviv after it said a phase-III trial of its Parkison's drug Azilect showed patients who began taking the drug immediately demonstrated a significant improvement compared to those who initiated treatment nine months later. The 1mg dose met all three primary endpoints, as well as the secondary endpoint, with statistical significance.
• Gulf investors kick Hummer's tires. Two separate investors from the Arab Gulf region have approached GM (GM) about a possible sale of its Hummer brand. GM's Middle East Managing Director Terry Johnson says such solutions "could be very realistic," but noted keeping the division was also a possibility.
• Delta taps $1B credit line. Delta Air Lines (DAL) tapped a $1B loan ahead of its merger with Northwest Airlines (NWA). The money is part of a credit line made available to Delta after its exit from bankruptcy protection last year, and the company said it is now comfortable with its liquidity level through the end of the year. Delta also renegotiated agreements with credit-card processors to make sure sales revenue continues to be turned over promptly.
• MGM turns to Goldman for capital "enhancements." MGM (SNE, CMCSA) is in the process of arranging a $500M credit line to produce some franchise films, including The Hobbit and Pink Panther, but the company seems to want even more for its turnaround effort. Company execs say MGM's existing financing arrangement is sufficient to meet its needs but has retained Goldman Sachs (GS) to "explore enhancements to MGM's long-term capital structure."
• U.S. home sales rise 3.1% in July. Home sales rose 3.1% in July, their highest level since February, as falling home prices attracted buyers. The number of homes and apartments for sale rose 3.9% in July, adding to the supply glut and further depressing home values. Home prices were down 7.1% in July over the previous year, and at least a third of July's property sales involved foreclosed homes sold at discounted prices or by owners with no alternative.
• German weakness pressures euro. Q2 GDP fell 0.5% in Germany, the first contraction for Europe's biggest economy in almost four years. Q2 building investment fell 3.5%, while consumer spending was down 0.7%. Economists say they see no signs of a broad-based recovery in 2009. German business confidence fell to 94.8 in August - the lowest level since mid-2005 - from 97.5 in July. Economists expected a milder drop to 97.2. The euro is down 1.11% to $1.4575.

Earnings: Monday After Close

• Winn-Dixie (WINN): FQ1 EPS of -$0.10 misses by $0.01. Revenue of $1.69B (+0.8%) in-line. Shares -2.7%. [Briefing.com]

Earnings: Tuesday Before Open

• Big Lots (BIG): Q2 EPS of $0.32 beats by $0.05. Revenue of $1.11B (+1.9%) in-line. [PR]
• Smithfield Foods (SFD): FQ1 EPS of -$0.02 beats by $0.02. Revenue of $3.14B (+20.1%) vs. $2.87B. [PR]

Today's Markets

• Asia markets closed mostly down. Nikkei -0.8% to 12,778. Hang Seng -0.2% to 21,056. Shanghai -2.6% to 2,350. BSE +0.3% to 14,493.
• In Europe at midday: London -1.9%. Paris -0.7%. Frankfurt -0.4%.
• U.S. equity futures are up slightly. Dow +0.14%. S&P +0.14%. Nasdaq +0.11%. Crude -1.57% to $113.30. Gold -1.47% to $813.60.

Tuesday's Economic Calendar

• 7:45 ICSC Retail Store Sales
  8:55 Redbook Chain Store Sales
  9:00 S&P/Case-Shiller Home Price Index
  10:00 Consumer Confidence
  10:00 Ofheo House Price Index
  10:00 Richmond Fed's Manufacturing Index
  10:00 New Home Sales
  2:00 PM FOMC Minutes
  5:00 PM ABC Consumer Confidence Index


• Notable earnings before Tuesday's open: AEO, BIG, CHS, COCO, SFD      
• Notable earnings after Tuesday's close: JCG

Seeking Alpha editor Eli Hoffmann contributed to this post.

There are several top tier releases scheduled on today's economic calendar. The day starts with the German IFO business climate index at 04:00. The next two releases are from the U.S. at 10:00 and consist of consumer confidence and new home sales. For the grand finale, the Federal Open Market Committee will be releasing the meeting minutes at 14:00.

The German IFO business climate index is an assessment of current business situations and expectations for the next six months and is expected to come in at 97.1. This report is a way for institutions to gauge sentiment in the business sector of the economy.

Rainy Days and Mondays

It’s another occasion to post Thomas Lorimer’s print that reflects current conditions. Without a firm buyout/bailout of Lehman (LEH) or any concrete rescue proposals for Freddie Mac (FRE) and Fannie Mae (FNM), despite a successful debt sale, stocks quickly gave back all Friday’s gains and then some. So the financials-induced cloud over the market from Thursday dumped rain yesterday on extraordinarily light late summer volume. Breadth was as poor as you might expect.

click to enlarge

Friday’s post, VIX Slips Below 19, appears to have raised some interest in VIX futures premiums (or “premia” for the more scholarly inclined).

Looking three months out, the VIX November 2008 futures contract [VIX/X8] has been open since November 2007 and reached a settlement high of 26.25 on March 14, 2008, just before the bottom of the equities market. By contrast, the all-time settlement low for the VIX November futures contract was 21.35 on May 2, 2008, a month and a half after the markets moved off of the March bottom and about two weeks before the markets topped. These VIX futures peaks and valleys just happened to precede important intermediate-term market tops and bottoms and may have hinted that a reversal was coming soon, in a manner similar to that of the VIX:VXV ratio.

All five trading days last week ranked among the ten lowest volume days for the NYSE in 2008.  Thursday and Friday were the two lowest days, with Friday taking top honors for the slowest trading day of the year. 

With even more days off expected on Wall Street this week leading up to the Labor Day holiday, more 2008 low-volume records should be broken.  For those that are trading this week, check the spreads before placing market orders.  Your normal bids and asks may be sipping margaritas at the beach!

Jim Surowiecki has a great line this week, in his column on stock-market volatility:

For now we're stuck in a Yeatsian market: The best lack all conviction, while the worst are full of passionate intensity.

Computer models and stock screens should generate fresh ideas.  We are often surprised by the rankings from our TCA-ETF model, which combines attention to Trend, recognition of Cycles, and a touch of Anticipation.  While the factors are technical, it is always interesting to compare the results with fundamental metrics and prevailing analyst viewpoints.  (For new readers, there is a further explanation of our approach at the end of the article.)

Despite the general weakness in the market, some sectors have performed well and even gained strength in the rankings.  There have also been dramatic collapses, including the dollar weakness plays like gold.  These ETFs led the rankings only a few weeks ago.

• Credit crunch: More to come. Debt markets indicate bankers still have grave concerns, and are avoiding all but the most liquid assets. Last week, the premium banks charge each other for lending short-term cash climbed to 0.77% more than the Fed's anticipated effective target rate over the coming three months; it's up from just 0.24% in January, and looks set to climb to 0.85% by mid-December - when banks have to refinance about $88B in debt. "The suspicion is that banks are still hiding losses. The banking system relies on trust and at the minute there quite simply isn't any," money manager Stuart Thomson says. In June, Fed chief Bernanke said narrowing the spread to 0.25% would be a sign markets had returned to normal.
• Sinopec hit hard on crude costs, government caps. China Petroleum & Chemical Corp [Sinopec] (SNP), Asia's biggest oil refiner, recorded an 87% drop in Q2 profit as government caps on fuel prices prevented Sinopec from passing on record high crude oil costs to consumers. Net income fell to $320M from last year's $2.45B. The company warned that profit in the first three quarters may fall by more than 50%. Analysts expect the second half of the year to be slightly kinder to the oil refiner, as crude oil costs level off, and the Chinese government may allow an increase in fuel prices.
After you finish reading Wall Street BreakfastSeeking Alpha's Market Currentswill keep you current all day long.
• Precision Drilling to buy Grey Wolf for $2B. Canadian oil and natural-gas driller Precision Drilling Trust (PDS) will buy U.S. drilling company Grey Wolf (GW) for about $2B in cash and stock. The deal comes several weeks after Grey Wolf shareholders voted against a merger with Basic Energy Services (BAS) and after Precision made a series of unsolicited bids for Grey Wolf. Precision's latest offer, which sources say both company boards have approved, values Grey Wolf at $9.02 per share, a 5% premium over Friday's closing price. The deal is expected to be announced on Monday before the markets open.
• Big Three auto makers ask Washington for more money. Ford (F), General Motors (GM), and Chrysler are set to receive $25B from Washington in government-backed loans. With high gas prices and weakened earnings, the Big Three are now asking for more. The companies themselves have not yet cited specific figures, but various reports put the new total between $40-50B. David Cole, president of the Center of Automotive Research, says, "This is not really a bailout. This is actually more like the government acting like a banker as it begins to look at the major consequences of a major failure in the auto industry." Ok, so what's a bailout?
• Bernanke suggests need for new regulatory approach. Fed Chairman Ben Bernanke suggests that financial supervision should be revamped to take into account how the system as a whole is functioning. "Supervisors often focus on institutions in isolation," Bernanke says, but an alternative, system-wide approach would take into account "consideration of potential systemic risks and weaknesses as well." The suggestion could bring benefits, but might be a difficult concept to execute on a practical level, and broader authority could endanger the Fed's political independence. Any regulatory overhaul is unlikely to take place before the next President is inaugurated in January.
• Lenders stand in line to underwrite IPOs. With the IPO market all but frozen, banks are jostling to underwrite the few that remain. "Ten years ago, the question was who was going to be at the top of the list," one IPO-watcher says. Today even small IPOs can attract as many as four managing underwriters.
• Sickly healthcare ETFs terminated. XShares will close 15 of its 19 healthcare sector ETFs, another sign ETF issuers may have expanded too rapidly. The 15 drew only $50M in assets, leading XShares to conclude the "didn't resonate" with investors. "We believe that dividing health care, which is a $2T sector of American GDP into subsectors still makes sense, and should be attractive investment opportunities for a wide range of investors. Obviously, the market thought otherwise." Morningstar now tracks 726 ETFs with about $593B in assets.
• KDB unlikely to make near-term bid for Lehman. Lehman Brothers' (LEH) share price jumped as much as 16% on Friday on news that Korea Development Bank [KDB] was interested in acquiring the struggling investment bank. A KDB spokesman on Friday had said the state-run bank is "open to all possibilities, which could include [buying] Lehman." However, KDB later back-pedaled and played down the likelihood of any immediate action on Lehman. News that KDB was only exploring its expansion options caused Lehman stock to lose its early gains, closing the day up 5%.
• Union rejects Boeing's wage offer. In ongoing strike-prevention talks with its largest workers' union, Boeing (BA) offered to raise pay 2.5% in the first year and 2% in each of the following two years, and to expand workers' benefits. Union leaders called the offer inadequate and said they were seeking a gain of 9-13% spread out over the term of the contract. The union workers will vote on September 3 whether to accept the new contract or to go on strike. A strike would shut down Boeing's aircraft production lines and could seriously delay the already-late 787 Dreamliner.
• Euro-zone factory orders fall in June. June Euro-zone factory orders fell at the fastest rate since December 2001 and for the second month in a row in the face of steep drops in demand for textiles and transportation equipment. New industrial orders fell 7.4% in June on the previous year, compared to economists' expectations of a 6.7% drop. In a separate announcement, the ECB said exports rose in June, indicating that the euro zone's primary economic weakness is coming from slowing domestic demand.

Earnings: Monday Before Open

• China Netcom (CN): H1 net income fell 5.2% to Â¥6.38B ($932M) vs. Â¥6.73B a year ago. Analysts expected Â¥5.99B. Revenue was Â¥41.13B, down 1% from Â¥41.54B. [MW]
• China Life Insurance Company (LFC): H1 net profit fell 32% to Â¥15.84B ($2.48 billion), beating consensus estimates of Â¥10.42B. "In the first half, the deep downturn of the capital market put huge pressure on the company's investment," it said. [Reuters]
• China Unicom (CHU): Q2 net profit of Â¥2.4B ($351M) beats Â¥2.16B consensus. H1 net profit of Â¥4.42B vs. Â¥4.18B. H1 revenue rose 4.1% to Â¥35.14B. [AP]
• LDK Solar (LDK): Sees 2009 revenue of $2.8-3B vs. consensus of $2.43B. [PR]

Today's Markets

• Asia markets closed higher Monday. Nikkei +1.68% to 12,879. Hang Seng +3.5% to 21,104. Shanghai +0.34% to 2,413. BSE Sensex +0.34% to 14,450.
• In Europe at midday, London is closed. Paris -0.4%. Frankfurt -0.2%.
• U.S. futures are lower. Dow -0.16%. S&P -0.27%. Nasdaq -0.21%. Crude +0.77% to $115.45. Gold -0.58% to $828.70.

Monday's Economic Calendar

• 8:30 The Chicago Fed National Activity Index
  10:00 Existing Home Sales
• Notable earnings before Monday's open: APWR, SNP

Seeking Alpha editor Eli Hoffmann contributed to this post.

Click to enlarge:

Stocks turned in a repeat, ho-hum performance last week; the Dow, up two days to gain 310 points and down three days to give all but 30 points back, closed at 11628. The S&P 500 wasn’t much different, nor the NASDAQ Composite. In fact, the stock market’s gain or loss is in almost a perfect inverse relationship with the price of oil.

Here are the worldwide stock market stats, and with the exception of London, which advanced about 1% last week, all worldwide stock markets were down.

The fall of the euro from the heights does not mean that traders have resigned from recent currency history. Even after its unprecedented fall, the united currency has only now returned to the middle of its rising trend against the dollar that has prevailed for six and a half years, since early 2002. Very little in the Eurozone economic situation or world economic history had warranted the euro’s presence north of 1.5500.

But nothing in the United States' present economic condition indicates that it has broken its long term disability against the euro. The Eurozone economies were never as immune to the sub prime contagion as dollar detractors proclaimed. And they have proven equally susceptible, if not more, to economic damage from high energy prices.