Today's Headlines

Bloomberg:

- The group Congress set up to shine light on the Treasury’s handling of the $700 billion financial system bailout is facing internal criticism about its own secrecy. The Congressional Oversight Panel, headed by Harvard Law School professor Elizabeth Warren, has split along partisan lines over drafting a budget and releasing transcripts of its weekly meetings. The group’s two Republicans, whose demands for more public information have been rejected by the three Democratic appointees, say the panel needs to follow the same rules it demands of the Treasury. “This is not the Justice Department, where we’re talking about launching midnight raids,” said Representative Jeb Hensarling, a Texas Republican and panel member who has failed three times to get the transcripts released. “We ought to err on the side of full disclosure to the American people.”

- Childbearing is making a comeback in the world’s wealthy industrialized nations including the U.S., after fertility dropped in the late 20th century, a study suggests. From 1975 to 2005, fertility dipped in countries as economic development rose, then began to rise in places that reached the highest levels of development, according to a study in the journal Nature. The bounce back of fertility suggests that advanced development doesn’t have to mean a vanishing population as some had feared, the research found.

- Ford Motor Co.(F), General Motors Co. and Chrysler Group LLC are among the recipients of $2.4 billion in federal grants President Barack Obama announced today to encourage the development of hybrid and electric vehicles. The funds include $1.5 billion for makers of batteries and $500 million for companies making electric motors and drive components. An additional $400 million will be used to test a system for recharging electric-powered cars.

- American International Group Inc., the insurer bailed out by the U.S., gained 38 percent to a one- month high after Radian Group Inc. posted a profit, boosting shares of financial guarantors. AIG advanced $5.17 to $18.69 at 12:46 p.m. in New York Stock Exchange composite trading. The insurer has plunged 97 percent in the past 12 months after the U.S. was forced to save the company from insolvency with a bailout that swelled to $182.5 billion. Traders “are pointing to the Radian numbers that are taking all the financial guarantors higher,” said Robert Bolton, managing director for trading at Mendon Capital Advisors Corp. Radian gained 51 percent, the most since going public in 1992 after posting a second-quarter profit on lower provisions for mortgage defaults. MGIC Investment Group Inc., Ambac Financial Group Inc. and Triad Guaranty Inc. each surged more than 15 percent.

- President Barack Obama’s effort to revamp the U.S. health-care system is drawing increasing disapproval from Americans worried about higher deficits, a Quinnipiac University poll shows. The July 27-Aug. 3 poll found that 52 percent of American voters disapprove of the way Obama is handling the health-care issue and 39 percent approve. That’s a switch from the 46 percent who approved and 42 percent who disapproved in late June, the university’s polling institute said. Almost three-quarters of the respondents said they don’t believe Obama’s promise that Congress can pass a health-care measure without adding to the budget deficit. And 57 percent say the legislation should be dropped if it adds “significantly” to the deficit, Quinnipiac said. “It’s obviously a problem for the people who are trying to push health-care reform,” said Peter Brown, assistant director of the Hamden, Connecticut-based polling institute, in an interview with Bloomberg Television. “The White House and Democratic leadership are very concerned that the month of August not become the time when the plan died.” “The average voter out there is skeptical about government,” Brown told reporters in Washington today. A plurality of 39 percent of respondents said they don’t think proposed changes would affect their own care, while 36 percent said the legislation would hurt the quality of their care and 21 percent said they would expect an improvement. Almost three-fifths say Congress shouldn’t pass a health-care measure unless it receives at least some Republican support. A requirement that individuals obtain insurance drew fire from respondents, with 68 percent opposed and 26 percent in favor. All the plans so far have some sort of mandate on Americans to obtain coverage, with help for those with lower incomes. The poll included 2,409 registered voters nationwide and has a margin of error of plus or minus 2 percentage points.

- The global financial crisis has blown a hole in the ``efficient markets'' theory on which modern economics and modern finance have been based, said Richard Thaler, a professor of economics and behavioral science at the University of Chicago. Writing in the Financial Times, he said the theory assumes that everyone in the economy behaves rationally, which is like leaving friction out of account when doing physics.

- Crude Oil fell after a government report showed a bigger-than-projected supply increase and U.S. service industries contracted in July, signaling that demand will be slow to rebound in coming months. Stockpiles gained 1.67 million barrels to 349.5 million last week, the Energy Department said. A 600,000-barrel gain was forecast, according to a Bloomberg News survey. Supplies rose at Cushing, Oklahoma, where New York-traded West Texas Intermediate oil is stored. Crude oil supplies at Cushing rose 1.2 million barrels to 33.3 million barrels in the week ended July 31, leaving stockpiles the highest since March.

- Copper rose for a fifth day, touching a 10-month high, as reports signaling a global economic rebound boosted the demand outlook for industrial commodities.

Companies in the U.S. cut fewer jobs in July as the worst recession since the Great Depression eased, a report from payroll-servicer Automatic Data Processing Inc. showed today. Europe’s manufacturing and service industries contracted at the slowest pace in a year last month, Markit Economics said today. Copper has almost doubled in 2009 on signs of reviving demand. “Copper is rising on the continuation of the optimism for the economy,” said Donald Selkin, National Securities Corp.’s chief market strategist in New York. “There’s anticipation that demand will be higher.”

- Goldman Sachs Group Inc.(GS) made more than $100 million in trading revenue on a record 46 separate days during the second quarter, or 71 percent of the time, breaking the previous high of 34 days in the prior three months. “It’s very counterintuitive to think that they’d be able to generate this much profit and this much revenue in the middle of an ongoing recession,” said William Cohan, a former banker at JPMorgan Chase & Co. and Lazard Ltd. and author of “House of Cards” about the collapse of Bear Stearns Cos. “But the fact that so many of their competitors are out of business or severely wounded has put them in a very strong position.” Goldman Sachs’s trading results reflected the firm’s willingness to take on more risk during the period. Value-at- risk, an estimate of how much the firm could lose in any given day, rose to an average of $245 million in the second quarter from $240 million in the first quarter and $184 million in the second quarter of 2008. Most of the increase in the second quarter came from bets on equities, the company said.

- The U.S. Senate is poised to inject $2 billion into the “cash for clunkers” program, as Democrats secured enough support to pass the measure and Republicans said they won’t block a vote.

- Government added almost as many jobs as business during the past decade in California, according to the Bureau of Labor Statistics. California’s municipal governments together added 363,100 employees on a non-seasonally adjusted basis – an 18.8% increase – to create a 2,295,200-person workforce. The state’s private sector during the same period added 447,200 jobs – a 4% increase – for a total of 11,821,200 employees. “Over the last 10 years, California’s responsibilities grew rapidly,” Matt Fabian, a managing director with Municipal Market Advisors in Westport, Connecticut, said. In effect, what it means to be California is changing.”

- The U.S. Treasury plans to sell a record $75 billion in its quarterly auctions of debt next week and indicated plans to expand inflation-indexed securities next year as it finances unprecedented budget deficits. The Treasury plans to auction $37 billion in three-year notes on Aug. 11, $23 billion in 10-year notes Aug. 12 and $15 billion in 30-year bonds Aug. 13. The amounts matched the median forecast of analysts surveyed by Bloomberg News.

- Massachusetts’s state pension system plans to cut its investment in hedge funds after an overall record loss of 24 percent in the fiscal year ended June 30. The fund’s board of trustees voted today to lower the amount of money invested in hedge funds to 8 percent, or about $3 billion of the $37.7 billion it had under management at the end of June, from 12 percent, which is about $4.5 billion. The vote reverses a five-year effort by the pension system to boost returns by expanding exposure to such alternative investments.

Wall Street Journal:

- A former Enron trader who is one of the energy markets' largest speculators plans to make a surprising recommendation to commodities regulators: rein in the ability of traders like him to influence prices. John Arnold, head of the $5 billion hedge fund Centaurus Advisors, is expected to argue before the Commodity Futures Trading Commission on Wednesday that trading should be limited in the benchmark natural-gas futures contract at certain points on the New York Mercantile Exchange because in-and-out activity can distort the underlying or "physical" gas price. In other testimony, Michael Masters, a hedge-fund manager and commodity-speculation critic, will suggest broader restrictions on oil and gas investing -- including banning investors such as pension funds from trading in major oil and natural-gas futures. The testimony comes amid increasing criticism of speculation in the oil market, as the CFTC considers changes in the markets. In hearings, the CFTC is examining ways to prevent "excessive speculation." Investors from individuals to institutions could be curtailed in betting on commodities prices after a flood of new futures-related products introduced in recent years. Mr. Masters is expected to testify that "passive investors" with no physical stake in the underlying commodity should be banned from trading. Such passive investors hold and roll a position in a single commodity or in a vehicle designed to duplicate an index of multiple commodities, such as the S&P-Goldman Sachs Commodity Index. Passive investors compete with physical commodity consumers and make it harder for them to hedge, Mr. Masters plans to testify. Their activity, he argues, obscures the natural price. Goldman executives object to suggestions the index distorts prices.

- Over the August Congressional recess, warned Nancy Pelosi last week, Republicans and insurance companies will resort to “carpet bombing, slash and burn, shock and awe” to bring down ObamaCare. Which makes us wonder how the House Speaker would describe what Democrats are doing to each other. The Dresden fire-bombing? The real political news this month isn’t Republicans vs. Democrats, and certainly not insurance companies vs. Democrats. If anything, the health-care business lobbies are helping Democrats by keeping quiet and hoping their silence buys their survival as heavily regulated utilities. If the insurance companies were any quieter, they’d be Trappists. The news is how the political left and its lobbies are roughing up fellow Democrats who won’t get with President Obama’s government-run program. They’re treating the centrists who helped make them a majority as if they were Newt Gingrich without the social conscience.

- Mortgage applications filed last week rose a seasonally adjusted 4.4% from the week before, as rates on fixed-rate mortgages dropped, the Mortgage Bankers Association said Wednesday. Total application volume was up 18% for the week ended July 31, compared with the same week in 2008, according to the MBA's weekly survey, which covers about half of all U.S. retail residential mortgage applications. Refinance applications rose an unadjusted 7.2% last week, compared with the week before; refinance application volume has risen 35% since its recent low at the end of June, the MBA said. The volume of applications for mortgages to purchase a home was up a seasonally adjusted 0.9% last week; volume for purchase mortgages has changed little over the last three weeks, according to MBA data. The four-week moving average for all mortgages was up 1.2%. Rates on fixed-rate mortgages fell, according to the survey, with the 30-year fixed-rate mortgage averaging 5.17% last week, down from 5.36% the week before. Fifteen-year fixed-rate mortgages averaged 4.60% last week, down from 4.75% the week before.

- For North Korean dictator Kim Jong Il, Bill Clinton's one-day visit provided a respite from a difficult summer during which he's contended with increasing reports of unrest at home and growing pressure from abroad.

- John Mackey, the chief executive of upscale grocer Whole Foods Market Inc.(WFMI), is planning to reposition the struggling Austin, Texas, chain as a champion of healthy living in a return to its natural-foods roots.

- Goldman Sachs Group Inc.'s(GS) second-quarter results might have attracted some unwanted attention from the government. The investment bank said Wednesday in a regulatory filing that the government has launched investigations into pay practices and credit-derivatives trading. Goldman said it was cooperating with the request, but declined to give further details.

NY Times:

- A pair of nuclear-powered Russian attack submarines has been patrolling off the eastern seaboard of the United States in recent days, a rare mission that has raised concerns inside the Pentagon and intelligence agencies about a more assertive stance by the Russian military. The episode has echoes of the cold war era, when the United States and the Soviet Union regularly parked submarines off each other’s coasts to steal military secrets, track the movements of their underwater fleets — and be poised for war. But the collapse of the Soviet Union all but eliminated the ability of the Russian Navy to operate far from home ports, making the current submarine patrols thousands of miles from Russia more surprising for military officials and defense policy experts.

Rassmussen:

- Fifty-four percent (54%) of U.S. voters say tax cuts for the middle class are more important than new spending for health care reform, even as President Obama’s top economic advisers signal that tax hikes may be necessary. A new Rasmussen Reports national telephone survey, taken Monday and Tuesday nights, finds that 34% disagree and say new spending for health care reform is more important. Twelve percent (12%) are not sure.

Politico:

- The debate over health care reform has exposed divisions among Senate Democrats — including a divide between those elected in the anti-Bush referendum of 2006 and the Obama wave of 2008. Four Democrats in the Senate class of 2006 have emerged as outspoken advocates for a government-run public insurance option, and they seem nervous about the direction that the Finance Committee is moving in its closed-door, bipartisan health care talks. But nine members of the 2008 class are encouraging the talks, downplaying fears that the negotiators will jettison a public option and insisting that a bipartisan bill is the best way to go.

FINalternatives:

- Third Point is scrapping its restrictive lock-up and redemption policies in favor of some more investor-friendly rules. The New York-based activist hedge fund shop told investors that it was doing away with both its one-year hard lock-up period for new investments, as well as its annual redemption policy.

Unwiredview.com:

- RIM(RIMM) might have found a solution to the resistive or capacitive dilemma. At least for their high end Blackberry devices. Just merge the damn things, make a touchscreen display with both resistive and capacitive touch sensors/controllers. And they filed a patent app for that.

Reuters:
- James Lockhart, the regulator for Fannie Mae and Freddie Mac, will soon step down after more than three years as overseer for the mortgage finance companies, an administration official said.

- Research and development spending in the technology sector, a critical component in an industry where innovation is king, should hold up well this year despite slumping sales and deep cost-cuts. Technology corporations are choosing to slash spending on areas such as marketing or staff while keeping research expenditures fairly constant as a percentage of sales. Some have even bumped up spending, hoping to cash in once the U.S. economy emerges from its longest recession since the Great Depression. While R&D spending at many large U.S. technology companies is down from a year ago, as a percentage of sales it is generally remaining in line, recent earnings reports show -- a trend that analysts say is likely to continue.

- The world's largest commercial oil storage hub at Cushing, Oklahoma, has added tanks over recent months and now has capacity for nearly 50 million barrels, NYMEX said on Wednesday. As of March, Cushing held around 47.5 million barrels in storage capacity, New York Mercantile Exchange managing director for Energy Research Robert Levin said. Cushing capacity is "approaching" 50 million barrels, he said. "Cushing has significant excess capacity," Levin said in a web seminar.

China Tech News:

- U.S. electronics retailer Best Buy(BBY) has announced that it has reached a strategic cooperation with China Unicom to sell the latter's 3G products in its stores in China. These products will include China Unicom's 3G mobile phones, data cards, packages, and 3G Internet services.