Oil prices sold off on Monday as traders looked for bullish factors upon which to base a continuation of last week’s advance – in vain. The DJIA was lackluster through Monday’s trading session, and investors were in a wait-and-see mode as the earnings “season” (for the second quarter) got under way. Alcoa, the first to release its quarterly figures, did not give the market anything to react to until very late in the day. It announced a profit, in contrast to the weak deand and poor prices of a year ago. Its earnings beat expectations by a penny on reportedly strong revenues. The DJIA ended the session up 18.24 to 10,216.27. Oil prices did not have much positive guidance from equities and finished in negative territory. - Cameron Hanover

The storm in a teacup that has been Apple's little fiasco with the antenna issue on the new iPhone is becoming sufficiently threatening that more people are starting to pay attention. After Apple flatly denied empirical evidence that the phone's antenna system was corrupt, and insinuated that it was really just a software glitch which could be fixed with a simple software upgrade, today's news that Consumer Reports has confirmed that a hardware flaw is creating a reception problem, and as a
result, saying it has decided not to recommend the
phone, is a huge slap in the face for Steve Jobs and the iFad team, which have now been publicly outed as liars. Obviously the issue is not about the antenna - Apple's fans, like all good lab animals, will habituate to holding the phone with tweezers, chopsticks and a heat glove if it means they get to look cool in public. However the public response by Apple to being outed that even the greatest fad creating company in the world could create a new product failure, has been a royal gaffe. Has Jobs lost enough credibility to it being material to the stock? Probably not, although fans of fads are known to turn from docile lambs to vicious hyenas once a tipping point is reached, and it suddenly becomes cooler to actually hate Apple. Today's development may have just tipped the scales just a little in the wrong direction.

For those computers that buy and sell stocks on a little more than just headline news, they may be interested to note just how Alcoa really feels about its business prospects. While the CEO of a company will always tout its prospects no matter what, after all just like CNBC, and bankers, they are only paid if growth continues, for a true glimpse of how the company is evaluating the future always look at its capex line: nothing else will provide as much information about a firm's view on organic growth IRR opportunities. And a firm that is retrenching, and thus conserving cash, is skeptical about the future, to say the least. Which is why one look at the Alcoa CapEx chart of the past 4 years shows nothing good: Q2 2010's CapEx number of $213 million was the second lowest number in many years, only higher than the $208 million in Capex spent during December 2009. In addition to CapEx, the chart below also shows Cash from operations. We will leave it up to the reader to decide if a business with $5 billion in quarterly revenue, and a market cap of $11 billion is justified in generating just $300 million in Cash from Operations.

AA reports $0.13 EPS versus expectations of $0.11. A month ago EPS expectations for AA were $0.16 per Bloomberg. Q2 revenue was $5.19 billion on consensus of $5.02 billion. A month ago this number was $5.140 billion. The company projects an increase from 10 to 12% in global aluminum consumption on "improved end-market demand." Such as vacant cities in China and rolling over in auto SAARs

Earlier today we demonstrated the first instance of AUDJPY decoupling. Well, sure enough the spread closed within minutes of our observation. Luckily the market is so broken now, that it is allowing all participants another freebie in the form of another major decoupling as stocks once again spike on absolutely nothing, except a few misplaced 1 and 0's here and there. If you missed the earlier decoupling, here is your opportunity to jump in on a trade that has successfully recoupled on 18 out of 18 past observations. For those who already made money on it earlier, double down time is here. Please enjoy spanking those busted robots.

Following up on our earlier observations on the Spiegel article about Germany change in posture vis-a-vis the European Stability Fund, here are some additional summary thoughts from Thermidor.

The US government is another $35 billion in the debt sink hole. The cost of this marginal addition to our existing debt load ($10 trillion? $100 trillion? who cares) was just 1.055%, which was gobbled up briskly at a 3.20 Bid To Cover. The bulk of the buying came from Primary Dealers who took down the highest portion of the auction, or 45.1%, since May of 2009, when PDs were responsible for 56.6% of the takedown. Indirect bidders, coming in at 40.6%, was the lowest indirect take down since January, when they were responsible for just 38%. The balance of 14.3% was left to the Direct Bidders. The Bid To Cover at 3.20 came in well above the LTM average of 3.03%.