Steel companies around the world were out w/neg. earnings/outlooks today

Big themes today: 1) Steel - Steel companies around the world were out w/neg. earnings/outlooks today - JFE started things off in Japan and this morning X/AKS in the US were disappointing; Wed morning we get MT and CLF is Wed night. Recall that it was the uptick in steel prices (esp. in China) that was one of the big drivers of the broader macro rally over the last 2 weeks. Given the neg. headlines and the poor trading in steel equities, the relatively flattish trading in the broader tape is impressive; 2) Transports – the TRAN pulled back ~1% today in trading after the ATA revealed that truck tonnage fell again in June (the first time the index has showed back-to-back declines since Mar/Apr ’09); however, keep in mind that the TRANs have had a big run (inc. trading up 2.5% Mon after FDX) and today’s weakness was just some slight profit taking); 3) European financials closed up 4.2% today due to three items (the UBS/DB earnings; the Basel capital rules; continued optimism coming away from the bank stress tests); not only did the Euro fin equities surge, but their CDS have tightened dramatically; 4) European sov CDS has tightened dramatically – using Greece as an example, it has done from ~1008bp on 6/25 to 714 on Tues; the rising optimism around EU financials, coupled w/a bunch of successful EU bond debt sales and some decent eco readings, have all contributed (also today – reports that Portugal was going to start two-way collateral arrangements helped contribute to the tightening as the thinking is dealers won’t have to buy CDS to hedge risk if this happens); 5) good earnings met w/selling pressure (PCAR, ODP, VECO); 5) gold weakness (see below for the full update on Gold).