Today's Headlines

Bloomberg:
- States Double Down on Hedge Funds as Returns Slide. Public pension funds in the U.S. are increasing bets on high-risk hedge funds and real estate in an attempt to fill deficits in retirement plans and make up for their worst performance in six years. New York Comptroller Thomas DiNapoli is asking lawmakers to increase a cap limiting the amount of so-called alternative investments in the state's Common Retirement Fund, the third- biggest U.S. public pension at $153.9 billion. South Carolina's retirement system adopted a plan in February to invest as much as 45 percent of its $29 billion in hedge funds, private equity, real estate and other alternatives, from nothing 18 months ago. Alternative investments typically include private equity, hedge funds, real estate and commodities. That category is expanding to include timber and infrastructure. Commodity prices in July fell 10 percent, the biggest decline since March 1980, as measured by the Reuters/Jefferies CRB Index. The index has plunged 19 percent from its July 3 peak. ``Chasing performance, especially in a public fund, can be a dangerous thing,'' said Stan Rupnik, the chief investment officer at the Teachers' Retirement System of the State of Illinois.
- The euro dropped to a 5 1/2-month low against the dollar after crude oil fell and a report showed Europe's economy contracted for the first time since the 15- nation currency was introduced almost a decade ago. Europe's currency has declined 7.6 percent since touching a record high in July as traders reduced speculation that the European Central Bank will raise interest rates and oil tumbled. The pound fell to the lowest level in 22 months against the dollar on concern Britain's economy is falling into a recession. ``Not only is the European economy weakening, but the growth outlook is to remain weak,'' said Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon, the world's largest custodial bank, with more than $23 trillion in assets. ``A further move down in crude oil will be a bullish sign for the dollar.''
- Jumbo mortgage borrowers may pay lower interest rates after a trade group loosened restrictions on a market for Fannie Mae(FNM) and Freddie Mac(FRE) mortgage bonds to combat the housing slump. The Securities Industry and Financial Markets Association will permit the larger loans that Fannie and Freddie will be financing to be accepted into the main market for mortgage bonds in limited amounts. That may boost rates on loans of less than $417,000 and cut the costs of some larger, or ``jumbo,'' loans. Revised guidelines for the so-called To Be Announced market will permit securities composed of as much as 10 percent of the bigger loans, New York-based Sifma said in a statement today.
- The cost of protecting Russian bonds from default rose to the highest in four months after Georgian officials said Moscow had stalled its withdrawal from the region, two days after the countries agreed a peace plan. Credit-default swaps on Russian government debt climbed 9 basis points to 123, highest since April 16, according to CMA Datavision prices at 3 p.m. in London.
- Wal-Mart Stores Inc.(WMT) said second- quarter profit rose 17 percent as consumers spent more on lower-priced medicine and food.
- OAO Mechel(MTL), attacked by Vladimir Putin for inflating Russian coking-coal prices, was ordered to cut tariffs for domestic steelmakers ``considerably'' after an antitrust probe found the company violated competition law. The company faces a fine at the ``lower end'' of a 1-to-15 percent range of the previous year's coking-coal sales, Igor Artemyev, head of the Federal Antimonopoly Service, told reporters in Moscow today.
- Soybeans Plunge as Reports Show Slowing Demand. In the week ended Aug. 7, exporters canceled 49,700 metric tons of previously purchased soybeans for delivery before Sept. 1, the U.S. Department of Agriculture said today. China, the biggest buyer, canceled 56,300 tons. Demand for soybeans by makers of animal feed and vegetable oil fell 6.7 percent in July from a year earlier, the National Oilseed Processor Association said today.
- The U.S. highway death rate fell last year to the lowest since recordkeeping began in 1975 as automakers built safer cars and motorists started cutting back on driving. The death toll decreased 4 percent to 41,059, the lowest since 1994. Fatalities still rose for motorcycle riders.
- Billionaire Nelson Peltz and his Trian hedge-fund group sold its stake in Starbucks Corp.(SBUX) added shares of Hansen Natural Corp.(HANS), sending the Monster Energy drink maker up as much as 13 percent in Nasdaq trading. Peltz picked up shares of Hansen and retailer Target Corp.(TGT) as of June 30, according to filings today by Peltz's funds with the U.S. Securities and Exchange Commission. He also added shares of tobacco companies UST Inc., Philip Morris International Inc. and Lorillard Inc.
- India's inflation soared to a 16- year high and may accelerate further after the government approved wage increases for civil servants. Wholesale prices rose 12.44 percent in the week to Aug. 2, after increasing 12.01 percent in the previous week, the commerce ministry said in New Delhi today.
- Europe's economy contracted for the first time since the introduction of the euro almost a decade ago as faltering sales undermined investment by companies and soaring costs eroded consumer spending power. Gross domestic product fell 0.2 percent in the second quarter from the first, when it increased 0.7 percent, the European Union statistics office in Luxembourg said today.
- The world's coal, grain and ore shippers, after the longest losing streak since 2005, may face another two years of declines as the fleet expands and slower global economic growth curbs demand for raw materials.

Wall Street Journal:
- Senator John McCain called on the U.S. and its allies to pressure Russia to permanently withdraw from Georgia and said international monitors should be sent to the country to avert a humanitarian disaster. The North Atlantic Treaty Organization should grant Georgia and Ukraine membership, McCain added in a commentary published in today's Wall Street Journal. He also called for countries to review their relationships with Russia and demand that Russian leaders promote stability and peace in the region.
- Russia may have targeted key pipelines in Georgia carrying oil and gas to the Mediterranean as a warning to the West, citing Georgian officials. A line of 45 bomb craters were seen close to the buried Baku-Tbilisi-Ceyhan pipeline in a remote field in Georgia 15 miles south of the capital; Russia denied attempting to bomb the pipelines and the Journal said based on the evidence, there had either been an attempt to destroy it or a deliberate near-miss intended as a warning. The BTC, operated by BP Plc, carries 850,000 barrels of crude oil a day from Azerbaijan to Turkey, equal to 1% of global demand.
- US Commodity-Based ETFs Gain Traction With Investors.
- John McCain will unveil a technology agenda that bundles previously announced pro-business proposals with continued support for a hands-off approach to regulation. The plan, dubbed "John McCain and American Innovation," is set to be released Thursday on the Republican presidential candidate's campaign Web site. It will call for a 10% tax credit on wages paid to all research-and-development employees. At the same time, it will reiterate Sen. McCain's opposition to Internet taxes and new laws guaranteeing net neutrality, the idea that Internet providers must treat all legal Internet traffic equally. The goal of the plan, said McCain spokesman Taylor Griffin, is to create "good, high-paying, innovation-oriented 21st-century jobs." Several CEOs have signed on to support Sen. McCain, including Ms. Whitman, Cisco Systems Inc.'s John Chambers and former Hewlett-Packard Co. CEO Carly Fiorina.

NY Times:
- Demand for Home Geothermal Heat Pumps Grows in US.
- Ron Insana made a big name for himself reporting and interviewing Wall Street hotshots as an anchor on CNBC. But so far, his foray into the hedge fund world hasn’t been such a hit. Nevertheless, Mr. Insana has reportedly landed a new position at one of the hedge-fund industry’s most prominent firms: SAC Capital.

The Detroit News:
- Detroit home sales improve. Purchases go up 20%, foreclosures drop 17% in four-county area in July from last year. In the four-county region of Wayne, Oakland, Macomb and Livingston, 4,245 homes were sold in July, a 20 percent gain over the 3,538 sold in the same month last year, according to data from RealComp, the Farmington Hills-based multiple listing service. The number of pending home sales -- where an offer has been accepted but the deal isn't yet closed -- was up as well, to 5,971, a 34.1 percent increase from last July. It was the seventh month in a row that Metro Detroit home sales were up year over year. All told, year-to-date sales in Metro Detroit are up 13.38 percent over the January-July period of last year. "It seems that we're on an upward trend this year," said Don Grimes, senior research economist at the University of Michigan. "This is good news, especially for a state like Michigan." According to data from RealtyTrac, an online marketplace for foreclosed properties, Michigan's foreclosure rate of one in every 389 properties with a filing still ranked seventh in the country, but was down 17 percent from a year ago.

EETimes:
- The rumors were flying at the Flash Memory Summit here. The big rumor is that Seagate Technology Inc.(STX) is interested in buying all or part of SanDisk Corp.(SNDK), according to sources in the industry.

AP:
- Oil prices pulled back Thursday, erasing most of the gains from the previous day's rally, as waning U.S. demand for energy overshadowed supply threats from the conflict in Georgia. the pump, retail gas prices slid further. A gallon of regular fell about a penny overnight to a new national average of $3.778, according to auto club AAA, the Oil Price Information Service and Wright Express. "It's just a market that has all the feeling of continuing to work lower until we get some definitive evidence that demand is going to improve because of lower pump prices, and that seems a long ways off," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill. "According to our calculations, the exchange rate development has contributed $12.30 per barrel to the decline in oil prices since mid-July, when the US dollar hit a low of 1.6 against the euro," said Vienna's JBC Energy in a research note. "Since then the greenback has improved by 6.9 percent."

VentureBeat:
- Over the past few days, we’ve gotten multiple confirmations from reliable sources that the first phone built on Google’s Android platform will launch in the next several weeks. It will be an HTC phone, likely the HTC Dream, and will be launched internationally on the T-Mobile network. A window of between Oct 15 and Nov 30 is most likely, according to these sources.

USA Today:
- It may be Barack Obama's party, but that may not prevent an emotional show of support for former rival Hillary Rodham Clinton at the Democratic National Convention later this month. Aides to Obama, who will formally accept the Democratic nomination in Denver on Aug. 28, are girding for the possibility that Clinton's backers will force a roll call vote that would demonstrate the extent of support for the New York senator.

Reuters:
- Precisely targeted radiation therapy can eradicate tumors that have spread to other parts of the body, offering more months or years of life to patients who have no other options, U.S. researchers reported on Wednesday.
- Texas oil billionaire T. Boone Pickens said on Thursday crude prices may soon fall as low as $110 a barrel amid falling gasoline demand, but should not sink below $100 because the United States depends heavily on oil imports. Pickens' hedge fund BP Capital, which manages about $7 billion in assets, sank about 35 percent in July, according to a report this week in the New York Post.
- ImClone Systems(IMCL) hired JPMorgan Chase(JPM) to help it review alternatives. NY-based ImClone hired the securities firm to evaluate options including Bristol-Myers Squibb’s $5.2 billion offer or a split of the company.

Daily Telegraph:
- The UK's financial industry watchdog, the Financial Services Authority, has been blamed for soaring oil prices by an American economics professor. Professor Michael Greenberger, a former official at US regulator the Commodity Futures Trading Commission (CFTC), said the FSA had "let the British people down" because it failed to clamp down on speculation in the market. In an interview for BBC Radio 4's The Investigation - to be broadcast tonight - Prof Greenberger, former director of the CFTC's trading and markets division, said: "The FSA has let the British people down. If the FSA adopted limits on speculation, you would see the price of gasoline drop in the United Kingdom."

Reforma:
- Mexico will gradually increase gasoline prices until they equal those in the US. The goal is to bring local price of gasoline, which is currently $2.73/gallon, in line with that of the US, which is $3.82/gallon, citing Energy Minister Georgina Kessel.