Friday Watch

Late-Night Headlines
Bloomberg:

- The dollar rose against the yen for the first time in five days after Federal Reserve Chairman Ben S. Bernanke said the U.S. central bank is ready to “tighten” monetary policy, increasing the appeal of U.S. assets. “Bernanke is shifting to a hawkish tone in terms of the timing of exit strategy following moves by other central banks, especially the Reserve Bank of Australia,” said Takeshi Tokita, vice president of foreign exchange sales at Mizuho Corporate Bank Ltd. in Tokyo. “That’s benefiting the dollar.”

- Following is a comparison of the top political donors from the 1989-2010 election cycle to political party as compiled by the Center for Responsive Politics. The last column is the difference in a firm’s average percentage of donations to Democrats from the 1989 to 2010 cycles compared to its 2010 cycle only donation. For example, Goldman Sachs(GS) has increased its percentage of donations from 64 percent to democrats to 75 percent in the latest cycle only.

- White House economic adviser Lawrence Summers repeated the administration’s commitment to a strong dollar, citing recent comments by U.S. Treasury Secretary Timothy Geithner. “He made it very clear that our commitment is to a strong dollar based on strong fundamentals,” Summers said today at a forum in New York organized by Bloomberg LP, the parent of Bloomberg News.

- Billionaire James Simons, founder of hedge-fund firm Renaissance Technologies Corp., plans to retire as chief executive officer by the end of the year. Bob Mercer and Peter Brown, the current co-presidents of the East Setauket, New York-based firm, will take over as co- CEOs on Jan. 1, 2010, according to a letter sent to investors today. Simons, 71, will stay on as non-executive chairman. Simons’s Renaissance Institutional Equities Fund, known as RIEF, fell 9.5 percent this year through September, while his Renaissance Institutional Futures Fund, or RIFF, gained 1.6 percent, the person said.

- Crude oil dropped in New York, paring a 3 percent gain yesterday as the dollar climbed against the euro, fueling skepticism about the pace of recovery in the biggest energy consuming nation. Oil fell as the U.S. currency rose against the yen and euro after Federal Reserve Chairman Ben S. Bernanke said the central bank will be prepared to tighten monetary policy once the economic outlook has improved “sufficiently.”

- General Motors Co., Toyota Motor Corp. and other automakers want to sell consumers electric cars powered by hydrogen within six years. Their plans clash with the U.S. government’s infrastructure priorities.

- BP Plc, Europe’s second-largest oil company, may invest as much as $20 billion with partners in Iraq as it seeks to boost crude output at the Rumaila deposit. BP may spend between $10 billion and $20 billion on the southern Iraqi field after signing a preliminary contract today with Iraq and China National Petroleum Corp., Chief Executive Officer Tony Hayward told reporters today in Buenos Aires. Iraqi Oil Minister Hussain al-Shahristani wants output from Rumaila to triple in the next six years as the country seeks partners to develop its crude deposits. BP and CNPC, the only winners in an auction of oilfield service contracts in June, will have to boost production to 2.85 million barrels a day from the current 950,000 barrels, the Iraqi government said July 22. “The number I have talked about is between 15 and 20 percent,” Hayward said of potential returns on the project.

- Rising industrial production and a rebound in U.S. employment will push stocks higher around the world, according to Absolute Strategy Research Ltd., the London- based firm that told clients to buy shares in March.

- The U.S. House gave final approval to legislation adding gays to the list of groups covered by federal hate-crime laws in the biggest expansion of such protection in decades. The expansion was part of a defense policy measure that passed the chamber 281 to 146. The bill would give the Justice Department authority to prosecute crimes based on prejudice against a victim’s sexual orientation, gender or gender identity when local law enforcement authorities don’t act.

- The 27-nation European Union is trying to replace the Kyoto Protocol global warming agreement at United Nations global warming negotiations in Bangkok, Saudi Arabian and Sudanese delegates said.Saudi Arabia’s lead negotiator, said in an interview today in Bangkok. Envoys from the EU, a party to the 1997 climate-protection agreement, are giving up on renewing it during the climate talks.

Wall Street Journal:

- Treasury Secretary Timothy Geithner has kept frequent contact with an exclusive group of Wall Street executives since taking the helm at Treasury, speaking most often with top officials from Goldman Sachs Group, Inc., JPMorgan Chase & Co., Citigroup Inc. and Blackrock Inc. Calendars released by the Treasury Department in response to a Wall Street Journal Freedom of Information Act request show more than 80 contacts between Mr. Geithner and financial titans such as Lloyd Blankfein of Goldman Sachs, James Dimon of JPMorgan, Citigroup Chairman Richard Parsons and Laurence Fink of Blackrock from January through July. Although it's to be expected that a Treasury secretary would talk to bankers frequently amid a financial crisis, the disclosure of Mr. Geithner's contact with top bankers could prove tricky for an administration that has tried to distance itself from the industry. Mr. Geithner has a reputation among some as Wall Street's man in Washington. "I don't mind that he's talking to Wall Street. The problem is that he appears to be listening," said Rep. Brad Sherman (D., Calif.), a critic of the administration's proposed overhaul of financial rules. The Wall Street name that pops up most frequently on Mr. Geithner's calendar is that of Goldman's Mr. Blankfein, whose bank repaid $10 billion in bailout funds this summer. (JPMorgan has also repaid its bailout funds.) Mr. Blankfein's name appears 22 times on the calendar, including two in-person meetings and, on May 1, three phone calls. That was around the time the government was preparing to announce results of its so-called stress tests of banks' financial strength. The two men know each other from Mr. Geithner's days as president of the Federal Reserve Bank of New York.

- Nearly two years after she became one of the highest-profile early casualties of the credit crisis, Zoe Cruz is working on plans to launch a hedge-fund firm, according to people familiar with the situation. The 54-year-old former Morgan Stanley co-president has begun recruiting employees to join a firm she plans to call Voras Capital Management, these people said.

- Washington spent the week waiting for the Congressional Budget Office to roll in with its new cost estimates of the Senate health-care bill, and what a carnival. Behold: a new $829 billion entitlement that will subsidize insurance for tens of millions of people—and reduce deficits by $81 billion at the same time. In the next tent, see the mermaid and a two-headed cow.

- Chevron Corp.(CVX) is employing new technologies in hopes of extending the life of one of the world's oldest and most prolific oil fields, a process that is being replicated elsewhere to help the energy industry squeeze more out of aging oil basins. The Kern River field has produced more than 2 billion barrels of oil in its 110-year history, but Chevron estimates it still holds another 1.5 billion barrels. Chevron is using the Kern River field as a real-world laboratory, testing enhanced recovery techniques and bringing in engineers from around the world to learn them.

- U.S. airlines and their unions have joined forces to push the Federal Aviation Administration to let pilots do what was once unthinkable: sleep on the job. Though the practice of nodding off midflight in the cockpit is now strictly forbidden by the FAA, U.S. airlines and pilot unions say there is reputable research supporting the notion that so-called controlled napping can enhance safety by making crews more alert during critical, often hectic descents and landings.

- A Senate panel backed a new version of counterterrorism measures, but the closer-than-expected 11-8 vote highlighted troubles that the Obama administration faces in trying to notch a rare bipartisan win in Congress. The Senate Judiciary Committee voted Thursday to extend to 2013 three provisions of the USA Patriot Act, but with modifications that supporters said would improve privacy protections for Americans.

- The request for troops sent to President Barack Obama by the top U.S. commander in Afghanistan includes three different options, with the largest alternative including a request for more than 60,000 troops, according to a U.S. official familiar with the document. Although the top option is more than the 40,000 soldiers previously understood to be the top troop total sought by Gen. Stanley McChrystal, the top U.S. officer in Kabul, 40,000 remains the primary choice of senior military brass, including Gen. McChrystal, the official said.

CNBC.com:
- The Obama Posse is hellbent-for-leather on a misguided crusade to rein in the one clear growth engine of the American manufacturing economy: high-tech. There's no other way to explain the news today that IBM is in the cross-hairs of Justice Department anti-trust cops, who are suspicious of the grip it holds over a dinosaur business: mainframe computers.

NY Times:

- Fissures are developing among policy makers at the Federal Reserve as they debate how and when to start raising the benchmark interest rate from its current level just above zero. With Fed officials forecasting that unemployment will average 9.8 percent in 2010, nobody appears to be arguing that monetary policy should be tightened anytime soon. The central bank’s official mantra continues to be that the overnight federal funds rate will remain “exceptionally low” for “an extended period.” But Fed officials have hinted at new disagreement in recent weeks. The arguments go beyond the traditional split between hawks, who worry that easy money will stoke inflation, and doves, who contend that unemployment is the top problem.

- The Department of the Interior has frozen oil and gas development on 60 of 77 contested drilling sites in Utah, saying the process of leasing the land was rushed and badly flawed. The 77 government-owned parcels, covering some 100,000 acres in eastern and southern Utah, were leased in the last weeks of the Bush administration. But the leases were immediately challenged by conservation groups, and in January a federal judge blocked drilling on the ground that the Interior Department had failed to follow its own procedures for reviewing the appropriateness of lands designated for oil and gas extraction.

IBD:

- As electronics products get smaller, business for Tessera Technologies (TSRA) gets bigger. San Jose, Calif.-based Tessera plays a key role in the miniaturization of electronics.

Washington Post:

- The latest Washington Post poll of the Virginia gubernatorial race represents more than bad news for Democratic nominee R. Creigh Deeds. The findings paint a portrait of the electorate that, if replicated elsewhere, stands as a warning sign for President Obama and Democrats who will be running in next year's midterm elections. The poll shows a lack of enthusiasm among many of the voters who propelled Obama and his party to victory last November, raising troubling questions for the Democrats: Were many of Obama's 2008 energetic supporters one-time participants in the political process who care little about other races? Is Obama's current agenda turning off some voters who backed him last year but now might be looking elsewhere?

Politico:

- In his trademark gravelly New York brogue, Charlie Rangel has been known to say: “I’ll be with you ‘til I can’t be with you.” Now, even some Democrats who have stuck with him through his messy financial problems are beginning to wonder if they can’t stick with him anymore. The House ethics committee expanded a sprawling investigation into Rangel Thursday, digging into allegations stemming from an August restatement of his personal finances, in which he under reported hundreds of thousands of dollars in assets. The ethics committee action – which was unanimous — came a day after House Democrats turned back a Republican attempt to force Rangel from his Ways and Means chairmanship while the investigation, now in its second year, is completed. “There’s growing concern at the piling up here of issues,” said one Democratic lawmaker who asked not to be identified talking about Rangel. “People are willing to give some time to the process, but not an infinite amount of time. There will come a time, if this goes unresolved, when the drip, drip, drip will become a torrent.”

- House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid emerged from the White House Tuesday with broad, bicameral smiles — until Reid put his arm around Pelosi to announce that “everyone” would support “whatever” Afghanistan policy the president produces. Pelosi doesn’t agree with that — not at all — and the TV cameras captured the California Democrat rolling her eyes and slightly recoiling from Reid’s grasp as he spoke. Back at the Capitol, Pelosi made it clear to staff that she was angry about Reid's unilateral offer of unequivocal support, a person familiar with the situation said.

Philly Business Journal:

- Four financial institutions accused of assisting now-defunct payday lender American Business Financial Services in perpetuating a Ponzi scheme agreed to pay $100 million late Wednesday to settle the case. The agreement between ABFS’s bankruptcy trustee, George Miller, and financial service firms J.P. Morgan, Bear Stearns(now part of J.P. Morgan), Credit Suisse and Morgan Stanley in Philadelphia’s Common Pleas Court is the latest in a series of agreements.

Reuters:

- Shares of Wynn Macau (1128.HK), the Asia unit of U.S. casino giant Wynn Resorts (WYNN), rose 13 percent in their trading debut, defying expectations, as Hong Kong feted its first IPO of a top global brand in years.

- The Federal Reserve will keep interest rates very low as the recovery gathers steam, but must raise them once the economy is back on solid ground, a top Fed official said on Thursday.

Financial Times:

- Asian central banks intervened heavily in the currency markets on Thursday to stem the appreciation of their currencies against the US dollar amid fears that their exports could be losing ground against China. The mainly south-east Asian countries have been spurred to defend the competitiveness of their currencies by China’s decision to in effect re-peg the renminbi to the dollar since July last year. Simon Derrick, at Bank of New York Mellon in London, said: “Other Asian central banks outside China are naturally looking to aggressively defend their competitive edge against undesirable currency strength as the dollar weakens.” ean-Claude Trichet, European Central Bank president, issued a warning about the euro’s strength on Thursday and said that authorities on both sides of the Atlantic would “co-operate as appropriate”.Marco Annunziata, chief economist at Unicredit, said: “He clearly tried to signal as convincingly as possible that the eurozone and the US are united in the desire to limit the rise in the euro versus the dollar – but the market is calling his bluff.”

- Leading Democrats made a renewed drive on Thursday for a “public option” as a Senate panel scheduled a key vote on its pivotal $829bn reform plan next Tuesday. Nancy Pelosi, the Democratic speaker of the House of Representatives, also floated the idea of a windfall tax on health insurers on Thursday, sparking a drop in the share prices of companies in the sector. “Let me say that I believe that all of the participants, whether it’s the insurance companies or the pharmaceutical industries, have much more they can put on the table to help reduce cost and take us in a downward direction, in terms of spending on this healthcare bill,” she added. Chuck Schumer, senator for New York and a senior member of the finance committee, which has drafted a key moderate bill, said he would push for a compromise public option – a government-controlled health insurance scheme – to be included when the debate eventually moved to the Senate floor.

Late Buy/Sell Recommendations
Citigroup:

- Reiterated Buy on (MAR), target $29.

- Reiterated Buy on (COH), target raised to $39.

- Reiterated Buy on (JCP), target $43.

Night Trading
Asian Indices are -.25% to +1.25% on average.

Asia Ex-Japan Inv Grade CDS Index 103.5 -4.0 basis points.
S&P 500 futures -.13%.
NASDAQ 100 futures -.36%.

Morning Preview

BNO Breaking Global News of Note

Google Top Stories

Bloomberg Breaking News

Yahoo Most Popular Biz Stories

MarketWatch News Viewer

Asian Financial News

European Financial News

Latin American Financial News

MarketWatch Pre-market Commentary

U.S. Equity Preview

TradeTheNews Morning Report

Briefing.com In Play

SeekingAlpha Market Currents

Briefing.com Bond Ticker

US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Stock Quote/Chart
WSJ Intl Markets Performance
Commodity Futures
IBD New America
Economic Preview/Calendar
Earnings Calendar

Conference Calendar

Who’s Speaking?
Upgrades/Downgrades

Politico Headlines
Rasmussen Reports Polling

Earnings of Note
Company/EPS Estimate
- (INFY)/.50

Economic Releases

8:30 pm EST

- The Trade Deficit for August is estimated to widen to -$33.0B versus -$32.0B in July.

Upcoming Splits
- None of note

Other Potential Market Movers
- The Fed’s Kohn speaking, Fed’s Lockhart speaking, USDA crop report could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and automaker shares 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.