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Bearish Signs in Financial Newsletters

With the euro relatively stable against the dollar and the yen (though weaker late in the morning), most European indices are up 2 to 3 percent.

This may be partly due to comments from the Organization for Economic Cooperation and Development (OECD), which raised its growth forecast for this year and 2011.

Emerging market growth can make up for any slack in the developed world, they say, and that German and French banks have sufficient assets to deal with losses from Greece.

The OECD has 31 member countries; it was founded in 1961, and is supposedly a forum for countries that are both democratic and committed to a market economy.

Elsewhere:

1) Even though the 30-year fixed rate mortgage remains firmly anchored in the 5 percent range, the MBA said mortgage applications to buy a home fell another 3.3 percent last week. There has been a clear decline in applications in May compared to April, when the homebuyer tax credit expired; in fact, it is now at the lowest level since April 1997.

Applications for refinancing, at least, are improving.

New home sales will be out at 10am ET.

2) Bearishness rising: financial newsletter writers are getting more bearish — they rose to 29.2 from 24.7 percent, the highest since July 2009, according to Investors Intelligence. Bulls fell to 39.3 from 43.8 percent.

3) Toll Brothers rises 4 percent after reporting a slightly bigger-than-expected Q2 loss (loss of $0.24 vs. loss of $0.23 consensus). While the homebuilder's cancellation rate dropped to 5 percent from 22 percent in the year-ago quarter, deliveries were down 16 percent.

But demand is improving; backlog rose for the first time in 4 years, and incoming CEO Doug Yearley said that activity along much of the East Coast is "doing better" while sections of California and North Carolina are also seeing "notable improvement."

For the full year, the builder raises the low end of its home delivery guidance to 2,200-2,750 and sees prices averaging between $540,000 and $560,000 in the second half.

4) American Eagle falls 6 percent as Q2 guidance disappointed the Street. Although Q1 earnings were inline with estimates as comps grew 5 percent, earnings of $0.12-$0.16 are forecasted — sharply below the consensus estimate of $0.21.

The problem: unlike the teen retailer's first quarter's margins which rose slightly due to fewer markdowns, the company sees margins under pressure in the current quarter due to "weaker business trends early in the quarter."

5) Boeing up 2 percent on a Morgan Stanley upgrade (from under-weight to equal weight), noting that the price decline from the mid-70s a month ago to low 60s today made the bull/bear case "arguably more balanced."

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