***Economic Data***
- (IR) Ireland May Trade Balance: €4.1B €2.9B prior
- (CA) Canada Jun Consumer Price Index M/M: -0.1% v 0.0%e; Y/Y: 1.0% v 1.0%e
- (CA) Canada Jun CPI Core M/M -0.1% v 0.1%e; Y/Y: 1.7% v 1.9%e
- (BE) Belgium Jul Business Confidence: v -8.0e
- (MX) Mexico Jun Preliminary Trade Balance: -$340.5M v $100.0Me
- (MX) Mexico Jun Unemployment Rate: 5.1% v 5.1%

- The EU bank stress tests and some poor corporate earnings reports are keeping risk appetite subdued in the US morning. The focus is very much on Europe, where analysts and commentators are reiterating rumors about which banks may have failed the tests. Analyst expectations are that around 10 of the 91 banks tested will "fail," although the real question is where the laggards are located. Note that there were vague rumors that a French bank had not met the test's threshold. An ECB draft document stated that the stress test were limited to banks trading book losses, rather than all bonds they hold to maturity, with the testing scenario based on a double-dip recession and a 20% decline in equities. Front-month crude is trading in a tight range, more or less even with yesterday's highs, just short of $79. Gold is at the bottom of the range for the session, off approx $5 on the day to trade at $1,190. Copper prices continue to hover near two-month highs above $3.15. US Treasury prices remained under a little pressure in the early going sending the 10-year yield back to 3% briefly. Prices were bid up though after the first look at the official stress test parameters sending the US benchmark rate back below 2.95%.

- Dow components American Express, McDonalds and Verizon reported decent results, although there was little in the reports to inspire investors. AmEx beat expectations and showed more big declines in loss provisions, although its US card services revenue was down notably from last year. McDonalds barely exceeded expectations, although profits were up more than 11% sequentially. Verizon actually missed revenue expectations, and certain subscriber net additions declined from last quarter, disappointing analysts. Although AmEx warned the firm remains cautious on the economy, it is seeing broad-based growth in consumer spending. Shares of VZ are up 4% in mid morning trading, AXP is up less than 1% and MCD is down 2%.

- Results from a brace of industrial names provide a positive picture of the manufacturing sector. Ford crushed expectations, beating top- and bottom-line expectations by healthy margins. CEO Mullaly said the company continues to take market share in the US, and said Ford's 2011 results would be "even better" than 2010. Ingersoll Rand topped earnings estimates, although its raised full-year outlook did not meet expectations. Johnson Controls missed bottom-line expectations by a penny and missed 2010 earnings targets. Honeywell was somewhat ahead of expectations. Honeywell's CEO said the company believes the recovery is happening, given better demand in both the firm's short- and long-cycle businesses. Shares of Ford are up a solid 4%, HON is up 2%, shares of IR are well off their worst level, but still only flat on the day. JCI is down 6%.

- Both earnings and revenue in Microsoft's Q4 results beat the Street, and the firm hiked its operating margin noticeably. Microsoft's CFO made headlines when he said he "still believes in the PC refresh cycle." Amazon shocked markets by missing EPS expectations (revenue was in line), citing higher operating expenses due to higher infrastructure costs. Earnings from memory maker Sandisk were way ahead of the consensus view. Electronics manufacturer Flextronics was in line with analysts' expectations. MSFT is in the red this morning, while AMZN, SNDK and FLEX are all down around 6%.

- Oil services leader Schlumberger met expectations. The firm also provided a wide-rangeing update on the industry and said it is not planning for any resumption of drilling activity this year in deepwater Gulf of Mexico. Schlumberger insisted The recovery in world demand for oil has been reasonably robust and said the coming year would see slowly increasing levels of exploration and production activity. In other energy sector news, Murphy Oil announced that it would exit the refining business and sell off its downstream assets after continued losses in the business.

- The greenback has managed to climb back from sessions lows against the European pairs as the release of the EU stress test results approached. The rumors about a French bank missing the threshold weighed on euro sentiment and EUR/USD traded below the 1.29 level in New York trading.

***Looking Ahead***
- 12:30 (EU) EU Regulator CEBS to release 'summary of the 91 bank-by-bank results, sorted by country'
- 13:00 (EU) EU Regulator CEBS press conference and Q&A
- 15:00 (AR) Argentina Jun Trade Balance: $1.5Be v $1.9B prior
- (CO) Colombia Central Bank Interest rate Decision: Unanimous analyst expectations is for the Overnight Lending Rate to remain steady at 3.00%
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