Tuesday Watch

Late-Night Headlines
Bloomberg:

- The steepest rally in the Standard & Poor’s 500 Index sine the 1930s is restoring Byron Wien’s reputation as a stock picker. Wien, hired by Blackstone Group LP last month, said he’s keeping his January forecast for a 33% annual gain in the benchmark index for US equities, implying a 13% advance from yesterday’s close. More than six months ago, the S&P 500 needed to rise 77% to reach Wien’s year-end prediction of 1,200. Wien says an economic recovery and earnings that exceed analysts’ forecasts will spur the stock market during the next three months. “To some extent it’s overbought, but I still think it has further to go,” he said. “You have to say that if investors were very pessimistic in March, they are much more optimistic now, but not at extreme levels. I don’t think we’ll have a 10% correction before the end of the year.” “T do think that M&A will be strong over the next few months,” Wien said. “Investors are confident and businessmen are confident, too. They see some attractive companies out there at attractive prices. And they’re willing to buy them.

- Copper fell in New York to the lowest price in more than five weeks as an increase in inventories sparked mounting concern that demand is dwindling. Stockpiles in warehouses monitored by the London Metal Exchange rose 1.1 percent to 344,350 metric tons, the highest since May 19. They have climbed 15 percent in September. Copper prices are heading for the first monthly decline this year. “Inventories keep rising, and it’s taking a toll on copper,” said Gijsbert Groenewegen, a partner at Gold Arrow Capital Management in New York. “People are getting more and more worried about the demand situation. Copper is looking tired.”

- The photographs commemorate atrocity, depicting men and women clinging to babies and bundles of clothes as they flee Iraq along the rugged trails of the Zagros Mountains into Iran. The visual record I found at the Halabja Memorial in Kurdish Iraq bears witness to the events of March 16, 1988, when Saddam Hussein unleashed a genocidal chemical attack of sarin, mustard and other gases on the town. It was part of Anfal, the Iraqi president’s campaign against the Kurdish rebellion that arose during the Iran-Iraq War. As many as 180,000 Kurds were killed. My guide Mahmud Mahmud, 44, a victim of the 1988 assault, led me through a room filled with massacre vignettes using mannequins and based on the photos.

- Falling prices for flat-screen televisions may spur holiday sales this year, said Dennis May, chief executive officer of electronics retailer Hhgregg Inc. The Indianapolis-based company, which runs 118 stores in the Southeast and Midwest, is adding more small-screen flat- panel TVs, netbook computers, GPS navigational devices and digital cameras to attract holiday shoppers, May, 41, said in an interview. The company will also put more microwave ovens and Blu-ray players on the sales floor to spur traffic, he said. “Flat panels will lead the bunch,” May said by telephone Sept. 25. “You’ll see 32-inch flat-panel TVs for $299. You’ve got high-tech products that everybody wants at a price that everyone can afford.” On average, an LCD flat-panel TV cost $680 in the first eight months of 2009, compared with $928, or 27 percent more, in the same period in 2007, according to NPD Group Inc., a market research firm based in Port Washington, New York. Lower prices helped boost sales to 10.6 million flat-panel TVs this year through August compared with 6.7 million units two years ago, NPD said.

- Sequenom Inc.(SQNM) dismissed its chief executive officer and a senior research executive after finding the company mishandled development of a prenatal test for Down syndrome. The disclosures pushed the shares down by almost half.

Wall Street Journal:

- Big Wall Street firms from Vanguard Group Inc. to Goldman Sachs Group Inc.(GS) are lining up against new rules to restrict short-selling under consideration by the Securities and Exchange Commission. In several letters filed last week with the SEC over the proposed restrictions, the firms raised objections to a number of proposed limits on short-selling, in which investors borrow a stock to sell it, often hoping to profit from a decline. Charles Schwab, founder of Charles Schwab Corp., in a December 2008 editorial in The Wall Street Journal called for reinstatement of the uptick rule "to avoid a needless future repeat of a bad situation." Baltimore money manager T. Rowe Price Group Inc. also supports a new uptick rule, arguing in a letter to the SEC that short sellers have used the strategy "to manipulate stock prices in an abusive manner and has negatively impacted investor confidence." Under pressure from politicians as well as angry investors on Main Street, the SEC proposed several new rules to curb short-selling activities earlier this year. More recently, the agency requested comments on a modified uptick rule. This week, the SEC is hosting a roundtable discussion on other issues surrounding short selling. The new uptick rule would allow traders to sell a stock short only at a price higher than the lowest price at which investors are willing to buy a stock. Essentially, stock would need to rise before it could be sold short. Large trading firms say the new rule would introduce harmful frictions into the regular trading by investors. John Nagel, a managing director at Citadel Investment Group, wrote that a new uptick rule would "lead to greater disruption of legitimate trading activity and even greater market costs." A number of high-frequency trading companies, including Getco and Hudson River Trading, also voiced objections to a new uptick rule.

- Eliminating defensive medicine could save upwards of $200 billion in health-care costs annually, according to estimates by the American Medical Association and others. The cure is a reliable medical malpractice system that patients, doctors and the general public can trust. But this is the one reform Washington will not seriously consider. That's because the trial lawyers, among the largest contributors to the Democratic Party, thrive on the unreliable justice system we have now. Almost all the other groups with a stake in health reform—including patient safety experts, physicians, the AARP, the Chamber of Commerce, schools of public health—support pilot projects such as special health courts that would move beyond today's hyper-adversarial malpractice lawsuit system to a court that would quickly and reliably distinguish between good and bad care. The support for some kind of reform reflects a growing awareness among these groups that managing health care sensibly, including containing costs, is almost impossible when doctors go through the day thinking about how to protect themselves from lawsuits. The American public also favors legal overhaul. A recent Common Good/Committee for Economic Development poll found that 83% of Americans believe that "as part of any health care reform plan, Congress needs to change the medical malpractice system." Congress now realizes it can't completely stonewall legal reform. But what has unfolded so far is a series of vague pronouncements and token proposals—all of which assiduously avoid any specific ideas that might offend the trial bar. Here are some examples:

- Guillermo Loaiza, a loan officer for a unit of J.P. Morgan Chase & Co.(JPM) in Phoenix, has resigned from the board of Acorn Housing, a spokesman for J.P. Morgan said. Acorn Housing is an affiliate of the community-organizing group Acorn, the full name of which is the Association of Community Organizations for Reform Now. Both Acorn and Acorn Housing have been under fire since the recent release of secretly recorded videos that depicted Acorn employees offering advice on evading taxes, setting up brothels and smuggling illegal immigrants.

- Arab and Western officials worry that al Qaeda is securing a stronghold in Yemen, where the government's focus on quelling a tribal insurgency is allowing the terror group to strengthen its ability to destabilize neighbors in East Africa and the Mideast. Yemen's government, which has long struggled to assert control over the country's far-flung tribes and Islamic militant groups, launched a new offensive this summer against a rebellious tribe living near its northern border with Saudi Arabia. Escalating battles have killed dozens of soldiers on each side as well as hundreds of civilians. The fighting, now in its seventh week, has shaken a fragile humanitarian situation. United Nations officials warned recently that food aid in the region is running low. A report released this month by the Carnegie Endowment for International Peace warned that Yemen is facing "unprecedented" levels of instability. The ancestral homeland of Osama bin Laden, Yemen has long been a top U.S. security concern. For years, al Qaeda militants—including at least one Saudi released from U.S. custody in Guantanamo Bay, Cuba—have taken refuge here. One complication surrounding the closing of the U.S. military prison at Guantanamo is what to do with the more than 200 Yemeni detainees there. U.S. intelligence officials say they have little confidence in the Yemeni government's ability to keep them in prison back in their home country. Since the 2000 al Qaeda attack on the USS Cole in the Yemeni port of Aden, U.S. officials have reported mixed results from the Yemeni government in the fight against terrorism. President Ali Abdullah Saleh established a rehabilitation program for jailed Islamic militants, but hasn't curbed the growing network of al Qaeda fighters who have flocked to lawless parts of Yemen and are using the country as a launching pad for attacks.

- Thousands of students defied threats by security officials and demonstrated against Iran's government at Tehran University on Monday, the first day of the academic year, signaling the opening of a new front in the opposition's battle against the government. With pressure increasing both at home and abroad, President Mahmoud Ahmadinejad's government, concerned about the university's influence and reach, has been systematically cracking down on students. Security officials have called in hundreds of students across Iran for interrogation in the past month and warned them they would be banned from higher education if they brought the opposition movement of Mir Hossein Mousavi and Mehdi Karroubi to school.

- The Treasury has announced new "capital cushion" requirements for financial institutions to reduce excessive risk and prevent taxpayer bailouts. Seems sensible enough. Perhaps the Administration will even impose those safety and soundness standards on federal agencies. One place to start is the Federal Housing Administration, the nation's insurer of nearly $750 billion in outstanding mortgages. The agency acknowledged this month that a new but still undisclosed HUD audit has found that FHA's cash reserve fund is rapidly depleting and may drop below its Congressionally mandated 2% of insurance liabilities by the end of the year. At a 50 to 1 leverage ratio, the FHA will soon have a smaller capital cushion than did investment bank Bear Stearns on the eve of its crash. (See nearby table.) Its loan delinquency rate (more than 30 days late in payments) is now above 14%, or from two to three times higher than on conventional mortgages. Its cash reserve ratio has fallen by more than two-thirds in three years. The reason for this financial deterioration is that FHA is underwriting record numbers of high-risk mortgages. Between 2006 and the end of next year, FHA's insurance portfolio will have expanded to $1 trillion from $410 billion. Today nearly one in four new mortgages carries an FHA guarantee, up from one in 50 in 2006. Through FHA, the Veterans Administration, Fannie Mae and Freddie Mac, taxpayers now guarantee repayment on more than 80% of all U.S. mortgages.

MarketWatch.com:
- Looks like the gold bugs had reason to be wary when gold broke through $1000. But now it's back down, they're not particularly worried.

CNBC.com:
- Wall Street will quickly shift its focus to corporate earnings news once the books are closed on the third quarter this week. oe Quinlan, for one, thinks investors are in for some good news. "I'm encouraged that there's a skepticism about the earnings potential for third quarter. A lot of investors are underestimating how productive U.S. companies have become," said Quinlan, who is the chief market strategist at Bank of America Merrill Lynch. "I think final demand is picking up."

Business Week:
- MBA Pay: Riches for Some, Not All.

CNNMoney.com:

- With Wall Street continuing to recover, so are the prospects for this year's bonus season. As early as June, experts were speculating that incentive payments for U.S. banks and securities firms could rebound sharply given the resurgence in certain parts of their business. Now with analysts predicting impressive third-quarter numbers from some of the nation's largest financial firms, big bonuses for top Wall Street talent seems increasingly certain.

Chicago Sun-Times:

- On the heals of a congressional vote to de-fund ACORN, U.S. Rep. Mark Kirk (R-Ill.) is calling on the U.S. Census to sever all ties to Illinois' largest union, the Service Employees International Union, because that union, Kirk says, is too close to ACORN. Kirk also urged the firing of the National Intelligence Officer for the Middle East, who he blames for under-estimating Iran's nuclear capabilities. U.S. Rep. Peter Roskam (R-Ill.) and U.S. Rep. Patrick McHenry (R-Va.) joined Kirk in raising the red flags about SEIU because of what Kirk called, "the close inter-relationship in management, location, leadership, and financing between [ACORN and SEIU.] SEIU Local 880 used to boast it was founded by ACORN. ... I think the integrity of the Census is in danger if [SEIU] so closely linked to [ACORN] is still involved in the federal census." The Census Bureau uses SEIU to recruit people to go out and be census-takers, Kirk said.

Politico:

- President Barack Obama has decided it’s time to leverage his international popularity to try to bring home a global goodie: the 2016 Olympics for his hometown of Chicago. But now that he’s traveling to Copenhagen personally to make the pitch Friday, some experts say he better not come home empty-handed. The White House knows that the decision to go before the International Olympic Committee is fraught with political risk: The president could be embarrassed on a world stage if he doesn’t land the games. Plus, more than a few Americans are surely scratching their heads — with his inbox crowded with a troop request for Afghanistan, a new secret nuclear site in Iran, sky-high unemployment and a health care bill in Congress, does the president really have time for this?

Miami Herald:

- The Obama administration's task force has cleared a third of the Guantánamo detainees for release, and the military has posted notices in the camps in a bid to signal that, for some war-on-terror captives, an end of their days in Cuba may be on the horizon.

Forbes:

- Rich Bernstein’s Bullish Side. Inflation should be kept in check by China's overproduction of everything, and Treasuries are still a good bet too.

USA Today.com:

- The average retail price for gasoline dipped below $2.50 a gallon for the first time in two months Monday as swelling oil supplies and slumping demand overshadowed even a fire at a major U.S. refinery.

AP:

- Investigators have identified possible accomplices of an Afghan immigrant accused of plotting a terrorist attack on New York, a law enforcement official said Monday, but the whereabouts of the helpers or any bomb-making materials they procured are unclear.

Financial Times:

- UBS aims to cut its ties with the Swiss government by buying its way out of a "bad bank" deal and to return to health in a year, says Oswald Grübel, chief executive, who has likened its battering in the financial crisis to a "15-round boxing match".

- A Chinese state-owned oil company is in talks with Nigeria to buy large stakes in some of the world’s richest oil blocks in a deal that would eclipse Beijing’s previous efforts to secure crude overseas. The attempt could pitch the Chinese into competition with western oil groups, including Shell, Chevron, Total and ExxonMobil, which partly or wholly control and operate the 23 blocks under discussion. Sixteen licences are up for renewal. CNOOC, one of China’s three energy majors, is trying to buy 6bn barrels of oil, equivalent to one in every six barrels of the proven reserves in Nigeria, sub-Saharan Africa’s biggest crude producer and a major supplier to the US.

- Angela Merkel, the German chancellor, promised swift income tax cuts and a reform of corporate and inheritance tax on Monday but warned her Free Democratic partners in Germany’s next government not to expect a more radical shift towards free-market economic policies.

- GLG Partners, one of London’s largest hedge funds, has launched a new fund to invest in the debt of troubled UK and European companies. The fund will be one of the most significant launches in London so far this year, as a growing number of hedge fund managers and investors turn to so-called distressed strategies in pursuit of potentially huge returns.

- Unlike other markets, FX did not break down during the crisis. In fact, it kept working steadily, providing one of the essential cogs that kept the financial system going through one of its darkest periods. Yet regulatory initiatives in the US and elsewhere, designed to address problems in other corners of the trading world, are threatening to sweep up FX in ways that market watchers warn could change how a whole range of market participants do business. “We’ve really had to work to alert our clients,” says one banker. “Many customers didn’t understand that they were being lumped together with the AIGs and monoline insurers of this world and they’re only now seeing the risks.” The most immediate danger to the FX world comes from US legislative proposals to push all standardised derivatives through clearing systems. This would potentially require higher collateral for non-standard trades in an effort to dissuade participants from dealing outside the closely regulated exchange world.

Yonhap News:

- North Korea will respond to dialogue with the US while strengthening its nuclear deterrent if the US continues to impose sanctions, citing North Korean Vice Foreign Minister Pak Gil Yon. Pak made the comments in a keynote speech at the UN headquarters.

The Australian:

- A SPLIT has emerged in Coalition ranks over the risk of a climate change election, with Nationals leader Warren Truss declaring that outright rejection of an emissions trading scheme could prove a vote-winner. As the Liberal leadership continues attempts to cut a deal with the Nationals and avoid a potential double dissolution election trigger, Mr Truss again warned that any scheme would require radical change to win his support. Liberal frontbencher Ian Macfarlane warned the Nationals yesterday that Coalition-held coastal seats could be lost to Labor in the event of an early election fought on the issue of climate change.

Late Buy/Sell Recommendations
Citigroup:

- Our eps estimates for (DO), (ESV), (HERO) and (RDC) are lowered on reduced dayrate expectations for the US Gulf of Mexico. Recent contract signings by HERO and ESV suggest jack-up dayrates have or soon will approach breakeven. This is meaningfully below our prior expectations. A recovery is not yet foreseeable and dayrates are expected to remain depressed next year.

Oppenheimer:

- Rated (CPLA) Outperform, target $78.

- Rated (STRA) Outperform, target $250.

Night Trading
Asian Indices are +.25% to +2.0% on average.

Asia Ex-Japan Inv Grade CDS Index 115.50 +6.0 basis points.
S&P 500 futures +.05%.
NASDAQ 100 futures -.01%.

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- (WAG)/.39

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- (MU)/-.18

Economic Releases

10:00 am EST

- Consumer Confidence for September is estimated to rise to 57.0 versus 54.1 in August.

Upcoming Splits
- None of note

Other Potential Market Movers
- The Fed’s Fisher speaking, Fed’s Plosser speaking, S&P/CS Home Price Index, weekly retail sales reports, API Energy Inventories, Deutsche Bank Leveraged Finance Conference, Merrill Banking/Insurance Conference, (FISV) Investor Conference and the ABC Consumer Confidence reading could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by technology and energy shares in the region. I expect US equities to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.

Stocks Finish Higher, Boosted by REIT, Insurance, Hospital, Financial and Technology Shares

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Stocks Higher into Final Hour on Less Financial Sector Pessimism, Short-Covering, Window Dressing, Less Economic Fear

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Medical longs, Technology longs, Financial longs and Biotech longs. I covered all my (IWM)/(QQQQ) hedges this morning, thus leaving the Portfolio 100% net long. The tone of the market is very positive as the advance/decline line is substantially higher, almost every sector is rising and volume is slightly below average. Investor anxiety is very high. Today’s overall market action is bullish. The VIX is falling 2.19% and is very high at 25.05. The ISE Sentiment Index is below average at 123.0 and the total put/call is above average at .97. Finally, the NYSE Arms has been running below average most of the day, hitting .54 at its intraday trough, and is currently .74. The Euro Financial Sector Credit Default Swap Index is falling 2.11% today to 65.25 basis points. This index is down from its record March 10th high of 208.75. The North American Investment Grade Credit Default Swap Index is falling 1.53% to 96.50 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is unch. at 19 basis points. The TED spread is now down 444 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is rising 5.91% to 31.38 basis points. The Libor-OIS spread is rising 1 basis point to 12 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is unch. at 1.75%, which is down 92 basis points since July 7th. The 3-month T-Bill is yielding .09%, which is unch. today. Considering the meaningful losses in Asia overnight, some weaker US manufacturing data today and the Iranian missile tests, the market’s broad-based advance is more impressive. It is also very encouraging to see a rise in the US dollar, coupled with US stock strength. Cyclical and small-caps shares are especially strong today. REIT, Insurance, Hospital, I-Bank, Networking, Disk Drive, Internet and Coal stocks are all surging 2.75%+. Oil’s muted rise today is noteworthy, considering the strength in stocks and Iranian tensions. Oil fell 8.6% last week, despite a 36.6% surge in oil net speculative longs. Oil net spec longs are now at the highest level since the week of January 6^th. Oil is basically at the same price it was on May 29^th despite a 16.4% rise in the S&P 500 and a 3% decline in the US Dollar Index over that period. As well, there has been a major increase in Iranian tensions, huge ETF commodity inflows, rising hedge fund long speculation and v-shaped recovery talk over the last few weeks, yet oil is down about $9/bbl. in less than two months. Asian shares should recoup some of today’s losses tonight. Nikkei futures indicate an +231 open in Japan and DAX futures indicate an unch. open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, lower long-term rates, quarter-end window dressing, less financial sector pessimism, investment manager performance anxiety, diminishing economic fear and bargain-hunting.

Today's Headlines

Bloomberg:

- European Central Bank President Jean-Claude Trichet said a strong dollar is “extremely important” for the world economy and it’s too early for the ECB to unwind emergency stimulus measures. “In the present situation it is extremely important that we can have in the framework at the level of global finance and the global economy a strong dollar as the authorities in the U.S. are saying,” Trichet told lawmakers in Brussels today. “The solidity of the dollar is very important.” Trichet’s comments come after a 15 percent slide in the dollar against the euro since February that’s threatening to slow Europe’s recovery from the worst recession since World War II. With the Group of 20 nations pledging to rebalance the global economy, the risk for the ECB is that its economy feels the pain of further dollar adjustment.

- John Calamos Sr., whose mutual fund beat 99 percent of rivals over the past decade, said technology and energy exploration stocks that benefit from global economic growth will offer better returns than the banks that have driven this year’s market rebound. “We want to be in areas where we feel a bit of wind at our back,” Calamos, an Air Force combat pilot during the Vietnam War who started his company in 1977, said in a telephone interview from Naperville, Illinois. Financials “are being driven by hope more than economic fundamentals.”

- One of President Barack Obama’s biggest obstacles to closing the Guantanamo Bay detention center by the January deadline he imposed is determining where to send about 100 Yemenis, the largest single group of prisoners by nationality. The U.S. wants many of them to go to a rehabilitation program in Saudi Arabia, according to two Obama administration officials familiar with the matter who spoke on condition of anonymity. The Saudis refuse to accept them, the officials said, and Yemen’s president wants the detainees returned to their homeland.

- Xerox Corp.(XRX) agreed to buy Affiliated Computer Services Inc.(ACS) for $6.4 billion in its biggest purchase, shifting to computer services as sales of its printing equipment drop. The acquisition will help triple sales from services to about $10 billion, Xerox said today in a statement. The total price of the cash-and-stock deal is about 34 percent more than Dallas-based Affiliated Computer’s closing price Sept. 25.

- Gasoline prices face a potential “meltdown” should futures close below a pivotal correction point at $1.5823 a gallon in New York, according to technical analysis by PVM Oil Associates Ltd. Gasoline “has very much led the way lower with early negative signals,” PVM said today. “The real key is $1.15823. Below that, and we’re in meltdown.” PVM said a decline in gasoline may drag down other energy contracts, including crude oil. Crude may slide to $64.69 a barrel after breaching a correction point at $66.92, and a series of moving averages, the broker added. Crude is trading below it 5,8 and 13-day rolling averages.

- Climate envoys met today in Bangkok with a new sense of urgency, saying negotiators are racing against a December deadline to devise a global deal. “Time is not just pressing, it has almost run out,” said Yvo de Boer, executive secretary of the UN Framework Convention on Climate Change. “But in two weeks, real progress can be made toward the goals that world leaders have set for the negotiations, to break deadlocks, and to cooperate toward concrete progress.” Nations across the globe are at odds over the level of emissions cuts developed countries must take, potentially binding commitments that the developing world could undertake, and the level of aid from wealthier to poorer nations to help them adapt to global warming and develop clean-energy sources.

- Emerging-market countries face pressure on their credit ratings as the economic recovery remains sluggish and governments rack up deficits, Standard & Poor’s said. “Our forecasts also point to persistent ratings pressure,” said New York-based John Chambers, managing director of S&P’s sovereign ratings in a report today. “Economic conditions remain difficult. The fiscal positions of almost every government will be worse than that of the preceding five years.”

- The steepest rally in natural gas prices since 2006 is coming to an end as the 400 salt caverns, depleted oil fields and aquifers used to store the fuel in the U.S. reach capacity for the first time. Stockpiles may surpass the record of 3.545 trillion cubic feet by as much as 350 billion cubic feet this fall, Energy Department estimates show. Gulf South Pipeline Co. says its fields in Louisiana and Mississippi are so full that customers will have to pay penalties for exceeding their limits. With no place to go, producers will be forced to dump excess fuel on the market.

- The U.S. Northeast may have the coldest winter in a decade because of a weak El Nino, a warming current in the Pacific Ocean, according to Matt Rogers, a forecaster at Commodity Weather Group.

Wall Street Journal:

- The Obama administration is close to committing as much as $35 billion to help beleaguered state and local housing agencies continue to provide mortgages to low- and moderate-income families, according to administration officials. The move would further cement the government's role in propping up the housing market even as some lawmakers push to curb spending at a time of rising debt.

- Iran said it successfully completed two days of missile tests that included launching its longest-range missiles on Monday, weapons capable of carrying a warhead and striking Israel, U.S. military bases in the Middle East, and parts of Europe. State television said the Revolutionary Guard, which controls Iran's missile program, successfully tested upgraded versions of the medium-range Shahab-3 and Sajjil missiles, which can fly up to 1,200 miles. It was the third and final round of missile tests in two days of drills by the Guard.

- China's ambition to create "green cities" powered by huge wind farms comes with a dirty little secret: Dozens of new coal-fired power plants need to be installed as well. Part of the reason is that wind power depends on, well, the wind. To safeguard against blackouts when conditions are too calm, officials have turned to coal-fired power as a backup.

- After struggling to sell cutting-edge products to utilities, technology companies are sensing better times ahead with the influx of $4.5 billion in federal stimulus funds for so-called smart-grid projects. The federal grants are expected to speed transformation of the power grid from a largely electromechanical system into a digital network that gives utilities more efficient ways to send electricity to customers. That could help cut pollution and electric bills. Smart meters, one component of a smart grid, allow utilities to monitor usage almost in real time, letting them charge variable prices based on demand, for example. Corporate and residential customers would acquire tools to manage their energy use. Residential customers could be given an in-home meter to see how much power they are using and what it is costing them.

- Usually, franchisers don't want to gamble on young entrepreneurs—they prefer seasoned managers who have built up lots of savings to plow into the venture. Now a host of companies are rethinking that logic. They're aggressively recruiting twentysomethings through franchise brokers, marketing themselves in youth-friendly venues like Facebook, and in some cases offering financial lures to get young people on board—such as deep discounts on franchise fees, which many beginners can't afford.

- Wireless networks are not just for cellphones and laptops anymore. AT&T Inc. (T) and Verizon Wireless have also struck deals to supply Internet access for electronic book readers, spurred by Sprint Nextel Corp.'s (S) pioneering deal with Amazon.com Inc. (AMZN). And AT&T this month unveiled the industry's first-ever agreement to provide access for a satellite-navigation device. It's all part of a mounting effort by wireless carriers to tap fresh sources of growth as the number of Americans without mobile phones shrinks.

MarketWatch.com:
- Barclays Capital boosted its rating on Cisco Systems to overweight from equal weight Monday, citing "improved visibility" in the networking-gear maker's key markets. Shares of Cisco(CSCO) jumped 5% early Monday after analyst Jeff Kvaal issued the upgrade, saying, "We believe visibility into carrier capex [capital expenses] has improved, Europe is starting to uptick in certain regions, and U.S. networking demand is better."

CNBC:

- Sageworks has compiled a list of 10 facts about today’s consumer based on the analysis of sales in consumer-related private businesses over the past year. The data depicts a thriftier and do-it-yourself-friendly consumer who is unwilling to give up the simple pleasures of life despite job losses and budget cuts. Sageworks’ data shows that people are still shopping, but they are doing more shopping online.

CNNMoney.com:
- Steve Jobs likes to wait for nice round numbers before he announces his milestones, and on Monday Apple (AAPL) hit a big one: the 85,000 apps in the iPhone App Store have now been downloaded more than 2 billion times — a number Jobs described as "staggering." "The rate of App Store downloads continues to accelerate," he said in a prepared statement, pointing out that more than half a billion apps were downloaded in Apple's fourth fiscal quarter alone.

Washington Post:

- President Obama will travel to Denmark on Thursday to lend his weight to efforts to land the 2016 summer Olympics for his adopted hometown of Chicago, the White House said Monday. Obama will join first lady Michelle Obama, senior adviser Valerie Jarrett, Education Secretary Arne Duncan and a contingent of Chicagoans to make make a final effort to persuade the International Olympic Committee to award the games to Chicago. The committee is scheduled to announce its decision on Friday. Initially, Obama said he would not go to Copenhagen, saying he was too busy with his legislative initiatives, including the health care reform package taking shape in Congress.

Chicago Sun-Times:

- Four years ago, the Let's Talk, Let's Test Foundation helped persuade Illinois legislators to spend $3 million a year to fight the spread of AIDS in African-American communities. The Chicago not-for-profit organization -- founded by state Rep. Connie Howard (D-Chicago) -- went on to get $1.2 million in taxpayer money from that program, called the African American HIV/AIDS Response Fund. Now, state health department officials are questioning $523,545 in spending by Let's Talk, Let's Test. The expenses being scrutinized range from the purchase of a skybox at a college football game at Soldier Field to five-figure "bonus" payments to two staffers, state records show. Federal authorities also are looking into the foundation. "As of today, we can confirm that the U.S. attorney's office is investigating the LTLT matter," Kelly Jakubek, communications manager for the Illinois Department of Public Health, said Friday.

FINalternatives:

- A key U.S. self-regulatory agency hasn’t done a very good job of regulating its own risky investments. The Financial Industry Regulatory Authority has sharply curtailed its investments in hedge funds, private equity funds and other volatile investments after taking a bath on them last year. The regulator, formed two years ago by the merger of the National Association of Securities Dealers and NYSE Regulation, saw its $1.2 billion investment fund fall 27% last year. In response, FINRA sharply increased its fixed-income allocation to 50%, at the expense of some of the 10 hedge funds and 20 private equity firms that made up about half of FINRA’s money managers last year. Among the alternative investment firms that FINRA had money were Farallon Capital Management, Alinda Capital Partners and Siguler Guff & Co., The Wall Street Journal reports. FINRA said the losses “have in no way hindered our ability to fulfill our regulatory responsibilities.” But they’ve drawn a lawsuit from one member firm. Inglewood, Calif.-based Amerivet Securities has sued the regulator, alleging that it was “reckless in pursuing high-risk strategies inappropriate to preservation of capital.”

StreetInsider.com:

- Deutsche Bank reiterates a 'Buy' rating on Intuitive Surgical (ISRG), raises price target to $300 from $225. Deutsche analyst says, "Intuitive Surgical received notice from the Pharmaceutical and Medical Devices Agency (PMDA) of a favorable recommendation for approval of the da Vinci System. As a result, we expect regulatory approval in October. Japan, the second largest MedTech market globally, should account for 10% of the da Vinci installed base, representing 140 systems."

PCWorld:

- Apple's iPhone 3G smartphone will go on sale in China in October, operator China Unicom said on Monday. The iPhone 3G will go on sale in October for around 5,000 yuan (US$733), the operator said, without offering specific pricing for the two iPhone 3G models, which have storage capacity for 16GB and 32GB of data, respectively. Details of all eight pricing plans were not available, and it was not immediately clear if iPhone 3G customers would pay the full retail price with all of these plans.

Rassmussen:

- Just 41% of voters nationwide now favor the health care reform proposed by President Obama and congressional Democrats. That’s down two points from a week ago and the lowest level of support yet measured. The latest Rasmussen Reports national telephone survey finds that 56% are opposed to the plan. Senior citizens are less supportive of the plan than younger voters. In the latest survey, just 33% of seniors favor the plan while 59% are opposed. The intensity gap among seniors is significant. Only 16% of the over-65 crowd Strongly Favors the legislation while 46% are Strongly Opposed.

- The leaders of the world’s most powerful nations may have agreed late last week to work more closely together to control and protect the global economy, but Americans believe more than ever that the best solutions start at home. A new Rasmussen Reports national telephone survey finds that just 23% of Americans believe that decisions made by world leaders to help the global economy will do more to help the U.S. economy than decisions made by domestic business leaders. Fifty-eight percent (58%) say the American economy will be helped more by decisions made by U.S. business leaders to help their own businesses grow.

Politico:

- Wall Street has showered nearly $11 million on the Senate since the beginning of the year, and more than 15 percent of it has gone to a single senator: Democrat Chuck Schumer of New York. Schumer’s $1.65 million take from the financial services industry is nearly twice that of any other senator's — and more than five times what the industry gave to any single Republican senator. While the industry has scaled back its political spending in the wake of last year’s economic collapse, data from the Center for Responsive Politics show that it’s still investing heavily in the Senate, where it’s likely to have its best shot at stopping — or at least shaping — the crackdown on Wall Street that President Barack Obama has proposed. And it’s clearly looking to Democrats to do it.

KickingTires:

- It’s not just large auto brands like Toyota and Chevy and niche players such as Tesla announcing future plug-in hybrids. Today, Volvo announced it would start selling plug-ins by 2012 and showed off a V70 Plug-in Hybrid as an example of the technology at work.

Reuters:
- U.S. copper futures dipped to a 5-1/2-week low below $2.70 a lb Monday morning, under pressure from a steadier dollar, rising inventory levels, and worries about waning demand growth in China, the world's top copper consumer.

- The International Monetary Fund will increase its forecast for global growth next year in the next few days to account for a faster recovery in major economies, its deputy director said on Monday. The IMF will raise its forecast for 2010 global growth to about 3 percent from 2.5 percent, said Murilo Portugal, the fund's deputy managing director. The revised forecast could come as soon as Tuesday. "The recovery is stronger than initially forecast," Portugal, a former deputy finance minister in Brazil, told journalists on the sidelines of a business seminar.

Bild:

- Germany was threatened by the Taliban in a new video, in which a German-speaking fighter said attacks against the country are “attractive,” citing the recording.

Le Temps:

- Credit Suisse Group AG’s private bank plans to expand its onshore US business, Walter Berchtold, chief executive officer of the unit, said in an interview. The bank aims to create an organization of between 600 and 800 client advisers.

Bear Radar

Style Underperformer:
Large-Cap Value (+1.78%)

Sector Underperformers:
Oil Tankers (-.20%), Airlines (+.03%) and Computer Services (+.10%)

Stocks Falling on Unusual Volume:
IWA, CRXL, GNI, GGG and SNA

Stocks With Unusual Put Option Activity:
1) LINTA 2) SLE 3) EXC 4) SD 5) ABT