Morning Note

*As I add to my morning note I'll try to update this post up until about 10 mins before the market so refresh or check back. 

July 21, 2011

Equity futures are now near fair value having initially followed European indices and the euro lower, after Eurogroup's Juncker said that selective default for Greece was a possibilty and after it was reported the draft EU statement for Greece proposed lowering the EFSF lending rate for Greece to 3.5% and public sector support for Greece extended for a minimum of 15 years. It was also reported that Germany and France have ruled out a bank tax as part of a deal on Greece.

HSBC July Flash China PMI 48.9 vs 50.1 sequentially.

Japan recorded an unexpected trade surplus in June, the first in three months.

In M&A, Express Scripts (ESRX) confirms purchase of Medco Health (MHS) for $71.36/sh in cash and stock.

Spanish Bond auction

Sells €1.81B of 2021 bond vs €2.50B at previous auction, bond bid-to-cover 1.9 vs 1.8 at previous auction, average yield 5.896% vs 5.395% at previous auction. Sells €814M of 2026 bond vs €1.51B at previous auctions, average yield 6.191% vs 6.027% at previous auction, bid-to-cover 2.1 vs 2.6 at previous auction.

Libor fixings 

Overnight Libor: Dollar: 0.123% vs prior 0.122% ; Sterling: 0.564% vs prior 0.564%; Euro: 0.991% vs prior 1.098%

1-month Libor: Dollar: 0.187% vs prior 0.187% ; Sterling: 0.632% vs prior 0.631%; Euro: 1.392% vs prior 1.393%

3-month Libor: Dollar: 0.253% vs prior 0.253% ; Sterling: 0.833% vs prior 0.830%; Euro: 1.551% vs prior 1.548%

Asian Markets

Asian markets were mixed today on weak economic data from China, with sluggish post-earnings performances by Intel (INTC) and Seagate Technology (STX) weighing on the region. Oil plays rose in Australia on higher prices, but gains were trimmed after the Chinese data was released. Banks rose on morning reports that Germany and France had agreed how to help bail Greece out. Taiwan finished flat. Japan traded in a narrow range all day and finished flat, although breadth was negative, with high-tech stocks falling on Intel and Seagate’s earnings. Exporters recovered initially on the promise of more aid for Greece, though a stronger yen eventually reeled them back. Megabanks rose on dissipating fears about Greece’s sovereign debt. China-related plays dragged Hong Kong to a flat finish, giving up roughly 2% after the Chinese economic data came out. China fell on data showing its factory sector shrank this month, compounded by worries about eurozone debt and a money-market liquidity squeeze. China July HSBC Flash PMI 48.9 vs 50.1 seq, Japan June trade balance ¥70.7B vs cons (¥148.6B). Japan June supermarket comps (0.7%) y/y. The yen is trading at 78.85 to the US dollar.

European Markets

European equity markets were initially buoyed by reports that German Chancellor Merkel and French President Sarkozy had reached a 'joint position' on a Greek bailout which they will present to EU leaders at the summit later today, before turning mixed. Peripheral markets outperformed and generally remain in positive territory, whilst other major indices have reversed the early gains as disappointing PMI data in China and across Europe as well as results from LM Ericsson (ERICB.SS) down (10%) that failed to match expectations, weighed. Peripheral bonds advanced on the Greek deal optimism. Declining sectors lead advancers 16-3. Technology (2.4%), autos (2.0%) and basic resources (1.6%) lead fallers whilst banks +0.7%, insurance +0.2% and telecom +0.1% are the only gainers. Banks benefited from reports that as part of the German-French agreement on Greece, French President had dropped his bank tax proposal to help fund part of the bailout. Eurozone Jul preliminary Manufactruing PMI 50.4 vs consensus 51.5 and prior 52.0. Eurozone Jul preliminary Services PMI 51.4 vs consensus 53.0 and prior 53.7. Eurozone Jul preliminary Composite PMI 50.8 vs consensus 52.6 and prior 53.3. France July preliminary Manufacturing PMI 50.1 vs consensus 52.0 and prior 52.5. France July preliminary Services PMI 54.2 vs consensus 55.5 and prior 56.1 France July preliminary Composite PMI 52.8 and prior 54.9. Germany Jul preliminary Manufacturing PMI 52.1 vs consensus 54.0 and prior 54.6. Germany Jul preliminary Services PMI 52.9 vs consensus 56.0 and prior 56.7.

Today's Economic Releases (Eastern Time)

08:30 US Initial Jobless Claims (16-Jul); consensus 405K

08:30 US Continuing Claims (09-Jul); consensus 3700K

09:45 US Bloomberg Consumer Comfort (17-Jul); consensus n/a

10:00 US FHFA House Price Index (May); consensus n/a

10:00 US Leading Indicators (Jun); consensus +0.3%

10:00 US Philadelphia Fed Index (Jul); consensus +1.4

10:30 US EIA Natural Gas Inventories (15-Jul); consensus n/a

Today's Key Events (Eastern Time)

08:00 Randstad Holding to acquire SFN Group: 718.354.1226 / UK +44(0)208 817 9301 / NETH or +31 (0) 20 7965 213

08:30 Fed's Evans speaks on economy

08:30 Parkervision sues Qualcomm for patent infringement: 877.561.2750 or 763.416.8565

10:00 Bernanke testifies in Senate on financial reform

13:00 Treasury Auction of 10-yr TIPS

—:— FDA Panel: Gastrointestinal Drugs Advisory Committee panel considers Johnson & Johnson's Remicade for ulcerative colitis

—:— FOSE Conference and Expo

Company Specific News

Earnings

CLB (Core Labs reports Q2 EPS $0.90 vs Reuters $0.88)

EBAY (eBay reports Q2 EPS $0.48 ex-items vs Reuters $0.46)

ESRX (Express Scripts reports Q2 EPS $0.71 ex-items vs Reuters $0.71)

FITB (Fifth Third reports Q2 EPS $0.35 vs Reuters $0.27)

HNI (HNI Corp reports Q2 non-GAAP EPS $0.11 vs Reuters $0.10. Reports Q2:

Revenues $432.8M vs Reuters $437.5M)

IEX (IDEX Corp reports Q2 EPS $0.62 ex-items vs Reuters $0.60)

IR (Ingersoll-Rand reports Q2 EPS $0.88 vs Reuters $0.93. Reports Q2:

Revenues $3.89B vs Reuters $3.87B)

LHO (LaSalle Hotel reports Q2 FFO $0.55 ex-items vs Reuters $0.56)

LLY (Eli Lilly reports Q2 EPS $1.18 ex-items vs Reuters $1.18)

MHS (Medco Health reports Q2 EPS $0.96 vs Reuters $0.94)

NFX (Newfield Exploration reports Q2 EPS $1.02 ex-items vs Reuters $1.06)

NOK (Nokia reports Q2 EPS €0.06 ex-items vs Reuters €0.01 and year-ago €0.11)

PENN (Penn National Gaming reports Q2 EPS $0.55 ex-items vs Reuters $0.47. Revenues $687.9M vs Reuters $685.9M)

PEP (PepsiCo reports Q2 EPS $1.21 ex-items vs Reuters $1.21. Reports Q2:

Revenues $16.83B vs Reuters $16.40B)

QCOM (Qualcomm reports Q3 EPS $0.73 ex-items vs Reuters $0.71)

RHI (Robert Half reports Q2 EPS $0.25 vs Reuters $0.22)

SCHL (Scholastic Corp reports Q4 EPS $0.82 cont ops vs Reuters $0.76. Reports Q4: Revenues $545.8M vs Reuters $511.0M)

SCSS (Select Comfort reports Q2 EPS $0.20 vs Reuters $0.17)

VFC (VF Corp reports Q2 EPS $1.19 ex-items vs Reuters $1.03. Reports Q2:

Revenues were $1.84B vs Reuters $1.74)

M&A

ESRX (Express Scripts confirms purchase of Medco Health (MHS) for $71.36/sh in cash and stock)

SFN (Randstad Holding to acquire SFN Group through a cash tender offer at $14 per share)

Offerings

EGAS (Gas Natural Inc files 700K share secondary offering for Chairman and CEO Richard Osborne through Janney Montgomery Scott)

MTGE (American Capital Mortgage files amended S-11; to offer 17.5M shares at $20/sh through Citi, Deutsche, UBS, and Wells Fargo. The new information is the number of shares, prospective price and the addition of Deutsche, UBS, and Wells Fargo as underwriters.)

MU (Micron prices offering of $300M 1.5% convertible notes and $300M of 1.875% convertible notes, both due 2031. The initial conversion price is approximately $9.50/share)

SXC (SunCoke Energy 11.6M share IPO priced at $16/sh through Credit Suisse, BofA Merrill Lynch, Goldman Sachs. IPO priced in the middle of the expected $15-17 range and will trade on the NYSE under the symbol SXC)

Other News

DO (Diamond Offshore declares special cash dividend of $0.75 per share, unchanged from prior quarter)

Newspaper Articles / Headlines

Barron's

- Barron's Weekday Trader is positive on Lifepoint Hospitals. Barron's is positive on LPTN citing health care reform possibly leading to more insured hospital visitors, the company's ability to cut costs, focus on acquisition and a solid balance sheet relative to others in the industry. In addition, the article notes the stock has seen a 12% drop since mid May highs and is currently trading around 5.8x enterprise value to estimated 2012 EBITDA.

Digitimes

- Apple may sell 15M MacBooks this year. Sources from Apple's upstream supply chain tell DigiTimes that that 13-14M is a given, and 15M is within reach. They say that shipments of 3G MacBook Airs from the supply chain -- 400-500K units in June -- should remain strong through August.

Financial Times

- News Corp subsidiary referred to FBI over different hacking probe. The FT reports that: A case that had been settled between News Corp's subsidiary and a marketing company that alleged its rival had hacked its computer system to gain business in 2003 and 2004, was passed to the FBI by Democratic senator Frank Lautenberg. The case was settled in 2009 for $29M and News Corp bought the company soon after for an undisclosed sum.

- Wal-Mart to open 300 stores in areas where low-income Americans have no easy access to groceries. The FT reports that the move, backed by Michelle Obama, was announced yesterday and gives the company a political boost as well as potential growth for the flat sales growth of its USstores.

- FT discusses potential consolidation in the tank industry. The FT reports that: The sector is more fragmented than the aerospace sector as the costs are lower so less consolidation and joint purchasing. Cutting of defense budgets in Europe and a wind-down in Afghanistan and Iraq means harder times ahead leading to probable consolidation.

- Electricite de France postpones nuclear project by two years and raises cost estimates. The FT reports that the delay is a result of the need for more safety tests after the disaster in Japan earlier this year. The expected costs had risen to €9B from €3.3B.

Handelsblatt

- Greek government send a penalty notice to Siemens, seeking $200M in fines for bribery. Citing Bloomberg, the newspaper reports, Siemens has asked a Munich court for a declaration confirming that Greece has no valid claims. The newsapaper adds that Siemens in the past few months has been negotiating with the Greek government on a solution and may have been willing to pay €150M on the condition Greece retracts its claims.

Independent

- Banco Santander likely to delay listing of UK business to H1/12. A source familiar with the situation tells the Independent that the problem comes from a lack of definition of what the ringfence separating retail and investment banking wil be. A Santander spokesman says the bank still intends to list by the end of the year, if the markets are favorable.

Kommersant

- Rosneft negotiating purchase of Chernomorneftegaz for $200-400M. Sources familiar with the negotations tell Kommersant that the parties hope to finalize a deal by early fall.

Les Echos

- French Strategic Fund rejects offer for Eutelsat by Abertis (ABE.SM). The newspaper reports that Abertis which owns 32% of Eutelsat has made an offer for the company that has been rejected by France's Strategic Investment Fund. The newspaper notes the the Fund owns 26% of Eutelsat and 38% of the remaining shares trade on the market.

New York Post

- Bidding group competing with David Einhorn meets with New York Mets again to discuss buying stake in team. The Mets say talks with Einhorn remain exclusive, but sources tell the NY Post that Ray Bartoszek and Anthony Lanza met with the team yesterday. The Post says the meeting may have been set up to gain negotiating strength with Einhorn, and that Bartoszek is only interested in the stake in the team if he also gets a stake in SportsNet New York.

New York Times

- NYT discusses upcoming union contract negotiations. The NYT reports that

this year may be politically contentious as the automakers are coming out of bailouts and bankruptcy and the UAW has also benefited from federal intervention. The unions will be looking for better profit-sharing formulas, job guarantees and wage increases for entry-level workers head of the UAW, Bob King will fight any attempt to cut benefits again the automakers want to cut the labor cost gap with non-union employees and not reopen plants that have no new products on the way the no-strike clauses and arbitration requirements at General Motors (GM) and Chrysler (F.IM) could complicate issues as Ford (F) may strike a deal which doesn't hold up at arbitration at the other companies.

- NYT discusses budget deal. The NYT reports that President Obama might be willing to accept a short-term increase in the debt-ceiling if a deal for a deficit-reduction plan was in sight. Although Obama met with Republican and Democrat leaders, no real progress was made and the main question is whether House Republicans are willing to negotiate a package which could be seen as raising taxes. The gang of six plan is criticised by some Republicans as relying on revenus to cut the deficits which may not materialize. Opposition is also growing to the McConnell/Reid deal which would allow the ceiling to be raised without Republican support.

- NYT discusses latest Greek plan. The NYT reports that the statement to be presented at the Thursday summit of EU leaders by France andGermany includes participation by Europe's banking sector with no details

According to an official briefed on the negotiations, the European Commission is arguing for a plan that would mean private creditors swapping Greek bonds maturing before 2019 into new 30-year bonds, triggering a selective default the plan would imply a 20% reduction in value of Greek bonds, which would help raise tens of billions of euros to be directed to to support the bailout other countries in the euro area and the IMF would contribute €71B to the rescue plan by 2014. A tax on banks of 0.025% of assets would raise around €50B over five years and finance a buyback of Greek bonds via the EFSF, reducing Greek debt by around 20% of GDP

officials are unsure whether the plan will be accepted by Germany even though the plan is supposed to appeal to Germany as they are insisting on private-sector participation.

Nikkei

- Mizuho Financial Group negotiating to buy 15% of Vietcombank from Vietnamese government for about ¥50B. Without citing sources, the Nikkei reports that Mizuho hopes to reach a deal by the end of August.

Wall Street Journal

- HSBC Holdings to cut private-banking services to offshore Americans. The FT reports that according to a bank spokeswoman the bank is asking US clients to deal with onshore advisers according to a person familiar with the situation, this affects hundreds of clients with accounts totalling as much as $100M.

- Express Scripts (ESRX) to buy Medco Health for $29B. The WSJ reports

that a deal was signed very early this morning. Express Scripts is expected to pay $71.36/share in cash and stock.

- Mitchells & Butlers denies takeover speculation. The WSJ, citing interim CEO jeremy Blood telling Dow Jones, reports that when asked if there was any takeover in the offing, replied "I don't think so, no." "The report I think was racecourse chatter, post-Ascot. Parade-ring gossip. The fact that we have not made an announcement shows that there is nothing to say,"

- WSJ is positive on CNOOC's purchase of OPTI Canada (OPC.CN). A "Heard on the Street" column says that CNOOC is buying reserves that are unconventional, but much cheaper than its existing reserves. The column also notes that given CNOOC's foreign-production-ratio target and cash, more purchases are likely to come.

Women's Wear Daily

- JW Childs to license rather than sell JA Apparel. The NY Post reported 30-Jun that Iconix (ICON) had offered more than $90M for JA Apparel in May.

Research

Bank of America Merrill Lynch: upgraded DCT, EGP

Benchmark: downgraded SABA

BMO Capital: upgraded NUVA

Citi: downgraded FGP, NRGY, SPH, TOL, NLC

Credit Suisse: downgraded ECL

Deutsche Bank: upgraded FE

Janney Capital: downgraded NLC

Jefferies: downgraded PRXL

JP Morgan: upgraded SFN; downgraded NLC

Nomura Securities: downgraded INTC

RBC Capital: downgraded CLX

RW Baird: upgraded RHI

Ticonderoga Securities: downgraded AMR

Wunderlich: upgraded RVBD

Options

The VIX is 19.09 down .12 on the session. July VIX futures expired yesterday with the new “front month” August future falling .40 to settle at 19.35. VIX options were active yesterday, trading 1.32x the typical daily volume with calls accounting for 86.1% of the volume, evidence of a bias toward long volatility positioning. We believe the 8.87% decline in the VIX over the last 2 days is a case of “too much, too soon”. For investors looking for cheap, effective hedges consider: Buying the VIX Aug 22.5/30 call spread for $.70 or  buying the TZA (3x short Russell 2k) 35-40 call spread for $1 (requires an approx -2.6% move in the Russell 2k to break even) .

There were some very large index and etf option blocks trading yesterday, in a similar vein to the first idea above, yesterday someone bought the VIX Sep 25/32.50 1x2 call spread 50,000x100,000x for $.075. XLF call volume surged in the final minutes of the trading day to 5.6x its ADV with 150k of the Aug 16 calls were purchased for $.07 (in addition to 100k purchased near the open for $.05) and 100k of the Sep 16 calls were purchased for $.16. This late day XLF call buying pushed Aug implied vol higher and caused skew to flatten. Conversely, bearish put positions were rolled to a higher strike in XOP (S&P Oil & Gas ETF). We saw 3 big prints where an investor appeared to liquidate 52k Sep 47 puts and 27k Jan 35 puts to purchase10k of the Sep 59 puts for the $1.63 asking price. At .89x 30-day realized vol, 30-day implied in XOP (Aug maturity) looks cheap. For protection, consider a purchase of the Aug 62 puts for $1.57 or the Aug 62-57 put spread for $1.11.

Earnings Calendar Heat Map

See the attached report, Max created a helpful earnings ‘heat-map’ showing each ETF’s aggregate member weighting that reports on each day through August expiration.  Double-digit weighting report dates are highlighted in red. July 28th is a particularly “earnings-heavy” date with > 10% of the IYR, SPY, XHB, XLB, XLE, XLI, XLU, XLV and XME reporting.

A Budget to Benefit our Benefactor

With some signs from Washington that they may be breaking the budget ceiling impasse, we turn our attention to the largest beneficiary of a potentially successful outcome to the negotiations - China. Why are we bullish on China? 1) Unparalleled growth for its size. On 7/13, China, the world’s second largest economic power, reported second quarter y/y GDP growth of 9.5% from a year earlier 2) Aggressive inflation control. The central bank has raised interest rates five times (with 1 more expected) and bank reserve requirements nine times since last October as the inflation threat has grown. 3) Lagging Performance. Despite its strong growth and bright prospects, year-to-date Chinese equities have lagged those of other developed nations.

Looking at the options market, note the skew across the term structure in FXI has flattened dramatically and is now trading at its lowest level in the past 3 years. This looks like a very bullish indicator for the Chinese ETF as the market is indicating nearly symmetrical upside vs downside risk over the next 6 months. 

For investors looking for long exposure to China, look at leveraging the flat skew structure in November options by buying the Nov 43-50 call spread for $1.50.

Hot Stocks: Express Scripts (ESRX) and Medco Health Solutions (MHS) entered into a definitive merger agreement. Medco shareholders will receive $71.36 per share in cash and stock, or $29.1B...Intel (INTC) says corporate PC market healthy, consumer PC market mixed. Intel sees PC unit growth 8%-10% in FY11. Intel sees strength in enterprise and emerging markets in 2H11...SFN Group (SFN) announced it entered into a definitive agreement to be acquired by Randstad Holding for $14.00 per common share through a cash tender offer, which values the company's equity at about $770M...Pilgrim's Pride (PPC) announced it is voluntarily recalling two products from foodservice distributors due to potential contamination from Listeria Monocytogenes...Wells Fargo (WFC) announced an agreement with the Board of Governors of the Federal Reserve that resolves allegations arising from an investigation into internal controls at its former Wells Fargo Financial unit...Noble Corporation (NE) reported backlog of approximately $13B as of June 30...ACS, A Xerox (XRX) company, is expanding its services in the higher-education market with the acquisition of Education Sales and Marketing, a leading contact center firm dedicated to school enrollment...Nordson (NDSN) agreed to acquire Value Plastics for $250M...Edwards Lifesciences (EW) announced that an FDA Advisory Panel voted to recommend approval of the Edwards SAPIEN transcatheter heart valve for the treatment of certain inoperable patients...AstraZeneca's (AZN) BRILINTA approved by FDA for use in the U.S.

WHAT TO WATCH: Euro-region leaders meet in Brussels for a special summit; they are considering a guarantee of Greek bonds in the event of any default, people familiar said. Merkel and Sarkozy will outline a joint position to solve Greece�s debt crisis. Juncker said Greece may not be able to avoid default. The index of U.S. leading indicators probably rose 0.2 percent in June, economists said, 10 a.m. South Africa�s central bank will probably keep its key interest rate unchanged, economists said, 9 a.m. The IMF pressed for gains in the Chinese yuan.


MARKETS: Spain sold 1.81 billion euros of 5.5 percent bonds maturing in April 2021 at an average yield of 5.896 percent. The yuan rose to a 17-year high.

CONOMICS: Fed�s Evans, 8:30 a.m. Initial jobless claims, 8:30 a.m. House price index, 10 a.m. Philadelphia Fed index, 10 a.m. Bernanke, 10 a.m. Turkey�s central bank left interest rates at a historic low. 


July 21 (Bloomberg) -- McMoRan may screen on more takeover
lists after recent �fat price� energy deals involving large-
scale development projects (MRO/Hilcorp, BHP/HK), Susquehanna�s
Duane Grubert writes in note.
Large player like CVX may find appeal in MMR�s focus on cost-advantaged gas supply w/ multi-decade project outlook: Susquehanna
Susquehanna rates MMR positive w/ PT $26
MMR has 7 buys, 2 holds, 1 sell; avg PT $22


� QCOM: ASP�s Drive Slight Upside
� INTC: Raising the Bar again
� XLNX: Temporary Margin Hiccup
� HDD�s: STX�s Stumble and implications for Nidec & TDK
� YHOO: A Temporary pain in Display
� Hynix: still too soon
� China Telecom: 3G growth
� BIDU: EPS preview: strong growth continues
� CTRP: 2Q likely to be weak
� Tong-Tai: CNC tool manufacturer supplying unibody manufacturers
� IT Services: TPI sees a slowdown
� Rakuten: building upon success
� Tidbits: ACER S/W buy, OCI & Poly prices, @ clsa

GLOBAL NEWS
? GREECE�
1. MAY UNDERGOE A DEFAULT AS PART OF A SECOND BAILOUT !
2. German Chancellor Merkel  and French President Sarkozy will outline a joint position to solve Greece�s debt crisis when they arrive in Brussels.
3. Euro-region governments are considering a guarantee of Greek bonds in the event of any default.
4. Euro Leaders Start Talks as Juncker Says Greek Default Possible
5. European leaders may disappoint investors looking for a solution to the region�s debt woes by taking baby steps instead of a giant leap to tackle the crisis.
6. Greek 10yr bond yields fall 70bps to 16.64%
? EURO BOND�
1. Merkel, Sarkozy Reach Joint Position on Greek Debt Situation
2. France sees little room for a common euro bond without closer integration of Europe�s fiscal and budgetary regimes.
3. German Chancellor Merkel  may need to surrender her opposition to issuing common bonds in order to stop a debt crisis that is threatening to splinter the euro region.
4. German Deputy Minister Hoyer Doesn�t Rule Out Euro Bonds Forever
? U.S.A.�
1. For all the obstacles to a grand bargain in the U.S. debt talks, negotiators have opened a path to a potential compromise that could reduce the deficit through new revenue combined with spending cuts.
2. Space Shuttle Atlantis Lands Safely, Ending 30-Year Program
? CHINA�
1. concern that factory output in China may have contracted in July.
2. China connected to the electricity grid an experimental nuclear reactor that produces less radioactive waste than current designs.
3. Investors are starting to doubt profit estimates for China�s solar manufacturers as concerns about accounting practices first spotted at a forestry company spread nationwide.
? U.K.�
1. U.K. Budget Deficit Narrowed to 14 Billion Pounds in June
2. U.K. June retail sales rise 0.7% vs 0.6% est. Retail Sales Rise as Stores Cut Prices to Lure Shoppers
? AUSTRALIA� Basel May Be �More Onerous� for Australia Banks
? SYRIA� Syria Steps Up Arrests While Promoting �Dialogue�
? RICE� The price of rice, the staple food for half the world, may jump to a three-year high after U.S. farmers slashed the amount of land sown with the grain by the most in more than a quarter century.
? HURRICANES-- Dora, a major hurricane in the eastern Pacific, may  strengthen off Mexico today. In the Atlantic, Tropical Storm Cindy intensified  while Bret weakened @ bove

? FRANK-DODD� Less than a month after the FED approved Dodd-Frank Act rules capping debit-card swipe fees, the limits on so-called interchange are looking like a compromise that displeases almost everyone.
? MS-- Morgan Stanley Second Quarter Loss Per Shr 38c, Est. Loss 61c
? MERGER & DEAL NEWS�
1. Express Scripts to Buy Medco for $29.1B
2. Exxon Seeking Shale-Gas Acquisitions as Texas Wells Pump Profits
3. Walter Energy CEO Resigning Signals 60% Takeover Gain
4. Randstad to acquire SFN Group for $770m
5. Acer agrees to purchase IGware for $320m
? COMMODITIES�
1. Oil Declines From Near Highest in Week
2.  Copper Falls for Second Day
3.  Gold May Fall From Near Record on Agreement on Greece
4.  Wheat Falls
5.  Cocoa Falls for a Third Day
6. Sugar Advances
7.  Soybean Crop in India Seen at Record for Second Year
8.  Palm Oil Drops After Rally to Four-Week High
? INTC� Intel Forecasts Sales That Top Estimates on Corporate Demand
? HYNIX� Hynix Profit Drops as Demand Slump Drives Down Chip Prices
? AXP� Amercan Express 2Q EPS Cont Ops, Rev. Beat Est.
? LLY� Eli Lilly Raises 2011 Earnings Forecast on Revenue Growth
? ROCHE� Roche Raises Forecast; Sees 2011 EPS Up 10% on Cost Cuts
? PEP� PepsiCo Net Income Rises 18% as Frito-Lay Snack Sales Increase
? MCD� McDonald�s Frozen Lemonade Boosts Profit as Food Costs Increase
? LPL� LG Display�s Profit Plunges 96% Amid Decline in Panel Demand
? QCOM� Qualcomm Boosts Year EPS Forecast
? NOK-- Nokia Reports Second-Quarter Net Loss as Handset Sales Decline
? ERIC-- Ericsson Second-Quarter Net Income Rises to 3.12 Billion Kronor
? T-- AT&T Second-Quarter EPS Matches Est. AT&T Sales Top Estimates as IPhone Discounts Fend Off Verizon
? UAL-- United Continental Second-Quarter Oper EPS Beats Est.
? FUTURES--
? NEW HIGHS: 167. ISRG, AAPL, AMZN, ATRI, CRR, CF, TNH, FOSL, VMW, MCD, ENR, IDCC, DV, LULU, DDS, TJX, HAL, JWN, SWN, WDFC, DOX, KIM, KEG, DELL, IMMR.
? NEW LOWS: 32. RIMM, LL, CTP, MTG.
? OVERBOUGHT: 124.
? OVERSOLD: 150.

Freeport McMoRan reports Q2 EPS $1.43 vs. consensus $1.37 - Repor
ts Q2 revenue $5.81B vs. consensus $5.76B.
Freeport McMoRan reports Q2 EPS $1.43 vs. consensus $1.37 - Reports Q2 revenue $
5.81B vs. consensus $5.76B.

Freeport McMoRan reports Q2 EPS $1.43 vs. consensus $1.37 - Reports Q2
revenue $5.81B vs. consensus $5.76B.


Here's the link to today's MrTopStep Global Insights Report (PDF) for July 21, 2011:
http://docs.mrtopstep.com/gir/vol2/MrTopStepGlobalInsightsReport2-139.pdf

Apple may save $3-$10/handset in
cross-licensing, patent portfolio deal with InterDigital,
Jefferies says.
NOTE: IDCC jumped 28% July 19 after saying it was considering sale, story: {NSN LOL8MV1A74E9<GO>}; Google, Apple among those weighing bids, Bloomberg reported yesterday, citing person familiar, story: {NSN LONAU66JTSED<GO>}
IDCC portfolio may be worth $3b-$10b to AAPL; AAPL could force more conservative Android pricing through litigation, licensing: Jefferies
NOTE: IDCC, Nortel, Eastman Kodak all selling patent portfolios that may help would-be owners defend vs infringement allegations
AAPL rated buy with PT $500 at Jefferies vs Bloomberg avg. PT $500
AAPL up 20% YTD, GOOG up 0.2%, S&P 500 Info Tech (S5INFT) up 5%
Link to Company News:{AAPL US <Equity> CN <GO>}

East Coast Asset Management Sees Heightened & Prolonged Inflation Ahead

U.S. INITIAL JOBLESS CLAIMS ROSE 10,000 TO 418,000 LAST WEEK

Cramer Bullish HLS, CMG

WLT takeover - http://www.businessweek.com/news/2011-07-20/walter-energy-ceo-resigning-signals-60-takeover-gain-real-m-a.html

http://seaofopportunity.blogspot.com/


 *Special thanks to Option Radar, BMO Capital, MEB Options, LiveVolPro, CBOE, Option Monster, T.O.P. group, and all of the options desks and traders we work with to provide the option flow!


 No position at this time. Position declarations are believed to be accurate at time of writing but may change at any time and without notice.