GNW: -0.37 to $12.99 ( -2.77% , 38.63% overall)– bought at $9.37
IAU: -0.03 to $12.85 ( -0.23% , -2.21% overall)– bought at $13.14
NNVC: -0.07 to $0.87 ( -7.45% , 85.11% overall)– bought at $0.47
YHOO: 0.04 to $28.09 ( 0.14% , 16.31% overall)– bought at $24.15

OVERALL: -0.39%

So far this week, the S&P 500 has been stuck between 1681 and 1693. I suspect we will finish today outside of that range. It all depends on “Old Ben” Bernanke, who is our only hope (Star Wars reference intended)…

The S&P 500 levels to watch today:

UPSIDE: 1688 (10 day moving average), 1690-1693 (8 data points), 1697-1698 (3 data points and the all-time high), and 1721 (top of the Bollinger Bands).
LAST CLOSE: 1685.
DOWNSIDE: 1680-1684 (10 data points), 1676-1677 (4 data points), 1671-1672 (2 data points), 1670 (20 day moving average), 1657 (2 data points), 1654 (July 9th’s high and June’s high), 1647 (July 10th’s low), 1645 (50 day moving average), 1644 (July 8th’s high), 1642 (July 9th’s low), 1634 (July 8th’s low), 1632 (July 5th’s high), 1622-1626 (9 data points), 1619 (bottom of the Bollinger Bands), 1618 (July 3rd’s high), 1614 (July 5th’s low), 1606-1610 (2 data points), 1604 (July 3rd’s low), 1597 (April’s high), 1581 (May’s low), 1572 (March’s high), 1560 (June’s low), 1536 (April’s low), and 1533 (200 day moving average).

Bloomberg: Economy in U.S. Probably Grew at Slower Pace in Second Quarter

The U.S. economy probably grew in the second quarter at a slower pace, held back by the effects of federal budget cutbacks and higher taxes, economists said before a report today.

Gross domestic product, the value of all goods and services produced in the U.S., rose at a 1 percent annualized rate after a 1.8 percent gain in the previous three months, according to the median forecast of 84 economists surveyed by Bloomberg. Consumer spending, the biggest part of the economy, probably also cooled.

…The Commerce Department will release the GDP figures at 8:30 a.m. in Washington. Economists’ estimates ranged from a 0.1 percent drop to a 1.8 percent increase.

Bloomberg: Summers at Fed Prompts Questions From Concerned Senators

The Senate’s second-ranking Democrat said he would “have a lot of questions” if former Treasury Secretary Lawrence Summers is chosen to replace Federal Reserve Chairman Ben S. Bernanke.

Senator Richard Durbin’s comments in an interview at the Capitol reflect anxiety within the Senate that President Barack Obama may nominate Summers. Durbin is among 19 Democratic senators and one independent who signed a July 26 letter to the White House praising Federal Reserve Vice Chairman Janet Yellen and urging Obama to nominate her to lead the central bank.

I am not a fan of either Yellen or Summers. If I had to pick one, as an investor, I suppose I would lean towards Yellen as the most positive for markets. Other than that, I see Yellen as a more dovish version of Bernanke, and I think that is bad for the country in the long run.

Bloomberg: Ebbing Market Risk Gives Fed the Option to Delay Tapering

Wishful thinking:

Federal Reserve policy makers have wrung out some risk in financial markets by signaling plans to wind down $85 billion in monthly bond purchases, buying time to press on with record stimulus should the economy need it.

A range of market risk measures have fallen since May 22, when Chairman Ben S. Bernanke said the Fed may consider tapering purchases “in the next few meetings” if the labor market shows signs of sustainable gains. The value of the largest leveraged loans has fallen 0.6 percent, and speculative-grade debt sold by companies has dropped by more than half since the start of June, compared with the prior two-month period.

Reduced risk-taking has probably eased concerns on the Federal Open Market Committee that bond buying known as quantitative easing may trigger financial-market instability, said Julia Coronado, chief economist for North America at BNP Paribas in New York.

Signs of investor caution will “quiet some of the discomfort with QE, and make some people on the FOMC more patient” about the timing of a reduction in purchases, said Coronado, a former economist at the Fed’s Division of Research and Statistics. San Francisco Fed President John Williams voiced relief last month that bond market “froth” was receding.

GNW: 0.08 to $13.36 ( 0.60% , 42.58% overall)– bought at $9.37
IAU: -0.04 to $12.88 ( -0.31% , -1.98% overall)– bought at $13.14
NNVC: -0.02 to $0.94 ( -2.08% , 100.00% overall)– bought at $0.47
YHOO: 0.12 to $28.05 ( 0.43% , 16.15% overall)– bought at $24.15

OVERALL: -0.05%

Looking at the technicals, I see one of two possibilities: Either we are setting up for a big upside pop, or this is the beginning of a longer downward trend. I suspect tommorrow’s Federal Reserve announcement will give us the answer between the two choices.

The S&P 500 levels to watch today:

UPSIDE: 1687 (10 day moving average), 1690-1693 (7 data points), 1697-1698 (3 data points and the all-time high), and 1723 (top of the Bollinger Bands).
LAST CLOSE: 1685.
DOWNSIDE: 1680-1684 (9 data points), 1676-1677 (4 data points), 1671-1672 (2 data points), 1666 (20 day moving average), 1657 (2 data points), 1654 (July 9th’s high and June’s high), 1647 (July 10th’s low), 1645 (50 day moving average), 1644 (July 8th’s high), 1642 (July 9th’s low), 1634 (July 8th’s low), 1632 (July 5th’s high), 1622-1626 (9 data points), 1618 (July 3rd’s high), 1614 (July 5th’s low), 1606-1610 (2 data points and the bottom of the Bollinger Bands), 1604 (July 3rd’s low), 1597 (April’s high), 1581 (May’s low), 1572 (March’s high), 1560 (June’s low), 1536 (April’s low), and 1531 (200 day moving average).

The Guardian: China’s central bank injects 17bn yuan into markets

China’s central bank injected funds into the money markets on Tuesday for the first time since February, easing fears of a repeat of the panic in June when cash markets were squeezed.

The People’s Bank of China pumped 17bn yuan (£1.8bn) into markets through seven-day reverse bond repurchase agreements.

The bank made the liquidity injection after allowing a credit crunch to happen in late June as a warning against risky lending practices.

It set the reverse rate to be paid at 4.4%, much higher than the last official guidance of 3.35%.

Don’t confuse this with quantitative easing. While it does provide liquidity like a QE program, they are doing it at a higher rate to be repaid. Truth be told, I like this better than the “free-for-all buffet” style of the Federal Reserve’s QE programs.

Reuters: Obama to propose ‘grand bargain’ on corporate tax rate, infrastructure

President Barack Obama will propose a “grand bargain for middle-class jobs” on Tuesday that would cut the U.S. corporate tax rate and use billions in revenues generated by a business tax overhaul to fund projects aimed at creating jobs.

His goal, to be outlined in a speech at an Amazon.com Inc facility in Chattanooga, Tennessee, is to break through congressional gridlock by trying to find a formula that satisfies both Republicans and Democrats.

…Obama wants to cut the corporate tax rate of 35 percent down to 28 percent and give manufacturers a preferred rate of 25 percent. He also wants a minimum tax on foreign earnings as a tool against corporate tax evasion and increased use of tax havens.

The new twist is that in exchange for his support for a corporate tax reduction, he wants money generated by the tax overhaul to be used on a mix of proposals such as funding infrastructure projects like repairing roads and bridges, improving education at community colleges, and promoting manufacturing, senior administration officials said.

Obama’s proposal would generate a one-time source of revenue, for example, by reforming depreciation or putting a fee on accumulated foreign earnings.

While it is an interesting proposal, as always with politician’s ideas, the devil is in the details.

Financial Times: When gravity is no obstacle

Above is a fascinating article on space travel and the private sector businesses forming around it. It is definitely something to keep in mind for future investing opportunities.

Today’s portfolio results include Friday’s results:

GNW: -0.08 to $13.28 ( -0.60% , 41.73% overall)– bought at $9.37
IAU: -0.03 to $12.92 ( -0.23% , -1.67% overall)– bought at $13.14
NNVC: -0.01 to $0.96 ( -1.03% , 104.26% overall)– bought at $0.47
YHOO: -0.34 to $27.93 ( -1.20% , 15.65% overall)– bought at $24.15

OVERALL: -0.16%

If the Federal Reserve isn’t going to do anything this week at their meeting, why are the markets so tentative today? Futures are slightly down because, in my opinion, there is a danger of the Fed mentioning plans to taper in September, which is the general expectation. I expect markets will be a bit tentative until Wednesday.

As for the technicals, they aren’t showing any clear direction to me. To use a driving metaphor, there are open lanes in both directions.

The S&P 500 levels to watch today:

UPSIDE: 1697-1698 (3 data points and the all-time high), and 1724 (top of the Bollinger Bands).
LAST CLOSE: 1691, inside the 1690-1693 (6 data points) range.
DOWNSIDE: 1687 (10 day moving average), 1680-1684 (8 data points), 1676-1677 (4 data points), 1671-1672 (2 data points), 1663 (20 day moving average), 1657 (2 data points), 1654 (July 9th’s high and June’s high), 1647 (July 10th’s low), 1644 (July 8th’s high and the 50 day moving average), 1642 (July 9th’s low), 1634 (July 8th’s low), 1632 (July 5th’s high), 1622-1626 (9 data points), 1618 (July 3rd’s high), 1614 (July 5th’s low), 1606-1610 (2 data points), 1604 (July 3rd’s low), 1601 (bottom of the Bollinger Bands), 1597 (April’s high), 1581 (May’s low), 1572 (March’s high), 1560 (June’s low), 1536 (April’s low), 1530 (February’s high), and 1530 (200 day moving average).

Here is the monster list of events for the week ahead:

MONDAY: Pending Home Sales Index.
TUESDAY: Federal Reserve Open Market Committee (FOMC) meeting begins, S&P Case-Shiller Home Price Index, and these earnings reports: Pfizer (PFE) and Merck & Co. (MRK).
WEDNESDAY(month-end): FOMC Meeting Announcement, first guess at 2nd Quarter U.S. GDP, ADP Employment Report, and these earnings reports: Comcast (CMCSA) and Mastercard (MA).
THURSDAY(August 1st): Earnings reports: Exxon (XOM), Procter & Gamble (PG), ConocoPhillips (COP), and American International Group (AIG).
FRIDAY: U.S. Employment Report for June, and the Chevron (CVX) earnings report.

Bloomberg: New Wireless Upgrade Plans Could Boost IPhone Sales

U.S. wireless carriers are making it easier for customers to upgrade phones more often. That’s welcome news for consumers and could also provide a much-needed lift for Apple Inc. (AAPL) and Samsung Electronics Co.

Verizon Wireless is following AT&T Inc. (T) and T-Mobile US Inc. (TMUS), which earlier this month gave users an option to replace devices as often as every six months, rather than the typical two years in the U.S. Smartphone makers could use the help as they grapple with falling prices and a maturing market.

What you are seeing is a response to demand for older smartphone models. The wireless carriers know they can let their top customers upgrade, then turn around and sell their older smartphone models, which have seen increasing demand lately.

Bloomberg: Banks Poised to Lead S&P 500 as JPMorgan Beats Microsoft

Banks, brokers and insurance companies make up 16.8 percent of the S&P 500, almost double the level from 2009 and closing in on technology companies at 17.6 percent, according to data compiled by Bloomberg. Bank of America Corp. and Morgan Stanley are helping lead gains in the index this month after profits topped analyst estimates. Intel Corp. and Microsoft Corp. are among the worst after earnings trailed forecasts.

For bulls, the change signals banks will lead the economy even after the Federal Reserve begins to reduce stimulus. Bears say S&P 500 profits would be down this quarter if not for banks. They note that the last time financials were the biggest industry was in 2008 and the consequences were disastrous.

Caution is still advised:

Regulators are tightening rules to increase transparency and reduce risk in an effort to prevent another financial meltdown. They are requiring higher minimum capital requirements, a ban on proprietary trading and a mandate to push more swap trades through clearinghouses, which require upfront collateral.

We are still in the middle of the regulatory fallout from the last crisis. At the moment, the only bank I have on my watchlist is Wells Fargo (WFC), which is run quite differently than the other TBTF banks.

Fox News: White House doubles down on vow Obama won’t agree to more spending cuts

Let the sequester politics begin!

The Obama administration dug in Sunday on its vow to reject proposed spending cuts by congressional Republicans in upcoming budget talks but declined to say whether the president would veto their proposals or allow a government shutdown.

Treasury Secretary Jack Lew told “Fox News Sunday” that President Obama will neither sign government funding bills that slash domestic spending nor negotiate with Republicans over spending cuts to reduce the federal debt limit.

As we all know by now, both sides start the negotiations by playing to their respective bases. The silly thing about this statement is that no budget agreement could make it through both houses of Congress without Obama’s blessing.

Sorry for the delay, but here is your weekend open thread, where you can discuss any topic you like.