Friday Watch

Late-Night Headlines
Bloomberg:
- Countrywide Financial(CFC), the biggest US mortgage lender, said it has “significant” sources of short-term funding after the slump in demand for loans pushed some rivals toward bankruptcy.
- Bond insurers, including Radian Asset Assurance and ACA Capital Holdings, have enough capital to protect their credit ratings against a “highly stressed” scenario for subprime mortgages originated in 2006, Standard & Poor’s credit analysts said in a research report.
- One measure of the US money supply rose by $8.1 billion in the week that ended July 23, according to Federal Reserve statistics released in Washington. That left M2 growing at an annual rate of 6.1% for the past 52 weeks.
- China, which may surpass the US to become the second-largest gold producer this year, mined 15% more of the precious metal in the first half as higher prices prompted companies to boost output.
- The yen headed for a weekly decline versus the US dollar as investors resumed purchase of riskier assets funded by loans in the currency.
- Japanese exporter shares advanced after better-than-forecast earnings in the US lifted indexes there and eased investor concern that the subprime loan problem will derail growth in Japan’s largest export market.
- Toyota Motor’s(TM) plug-in electric car may have less than half the range of a competing vehicle planned by General Motors(GM), people with knowledge of both companies’ development programs said.

Wall Street Journal:
- MRU Holdings(UNCL), also known as MyRichUncle, is using the student-loan industry’s conflict of interest scandal to set itself apart and increase business.

NY Times:
- Ford Motor(F) wants to sell its Jaguar and Land Rover brands by Sept. 30 and its Volvo unit by year’s end.
- Is the Dance Over? Citigroup Is Upbeat.

Reuters:
- Fed’s Kroszner: Broader economy unhurt by subprime.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (EXPE), target raised to $32.
- Downgraded (TLB) to Sell, target $16.
- Reiterated Buy on (CVS), target $43.
- Reiterated Buy on (GME), target $46.
- Reiterated Buy on (ADBL), target $13.

Morgan Stanley:
- UAL Corp.(UAUA), the owner of United Airlines, is a potential takeover target for rival carriers or a private equity firm. The company can earn about $4 billion in free cash flow over the next four years, making it attractive to private equity, citing Credit Suisse analyst Daniel McKenzie. .

Night Trading
Asian Indices are unch. to +1.0% on average.
S&P 500 futures -.16%.
NASDAQ 100 futures -.14%.

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Earnings of Note
Company/EPS Estimate
- (PG)/.66
- (WY)/.39

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- The Change in Non-farm Payrolls for July is estimated at 127K versus 312K in June.
- The Unemployment Rate for July is estimated at 4.5% versus 4.5% in June.
- Average Hourly Earnings for July are estimated to rise by .3% versus a .3% gain in June.

10:00 am EST
- The ISM Non-Manufacturing for July is estimated at 59.0 versus 60.7 in June.

Other Potential Market Movers
- None of note

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and automaker stocks in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.