Friday Watch

Evening Headlines
Bloomberg:

• Goldman Sachs Sees 25% to 30% Chance of U.S. Falling Back Into Recession. Goldman Sachs(GS) said there is a 25 to 30% chance that the U.S. economy will fall back into recession, in a note e-mailed to clients. "As signs of slower U.S. growth have multiplied, market participants have become worried about the possibility of a double-dip recession," wrote analysts including Ed McKelvey, Goldman Sachs's senior U.S. economist. "We think the probability is unusually high - between 25% and 30% - but we do not see double dip as the base case."
• KKR, Bain Companies Repay Leveraged Loans as Economy Sours: Credit Markets. Speculative-grade companies are doubling the rate at which they’re repaying leveraged loans as they try to curb the likelihood of rising defaults amid signs the U.S. economy is slowing. Rite Aid Corp., the third-biggest pharmacy retailer, KKR & Co.’s First Data Corp. and Toys “R” Us Inc., part-owned by Bain Capital LLC, sold or marketed $27.9 billion of high-risk, high-yield bonds and loans in August, with 25 percent of proceeds slated to refinance bank debt, according to data compiled by Bloomberg and Standard & Poor’s Leveraged Commentary and Data. Borrowers with $482.7 billion in loans due in coming years are trying to extend debt maturities as the Federal Reserve forecasts the pace of economic recovery is likely to be “more modest in the near term” than anticipated. Bond sales surged to $20.9 billion in the first two weeks of August, exceeding the $16.7 billion for all of July, Bloomberg data show. “It’s the marginal issuer who has access in this type of environment who may not have had access under tougher market conditions that swings the needle,” said John Fenn, a credit market analyst at Citigroup Inc. in New York. “What we need is a steady run rate of $15 billion to $20 billion of bonds and loans every month until 2012 to make a considerable dent in the maturity wall.”
• China Bank Clampdown May Trigger 'Flood' of Bond Sales by Property Firms. China’s order for banks to transfer off-balance-sheet loans may lead to a “flood” of bond issuance from real-estate companies, CLSA Asia-Pacific Markets said. The China Banking Regulatory Commission said assets linked to wealth management products provided by trust companies must be shifted on to banks’ balance sheets by the end of 2011. The “important tightening measure” put a funding squeeze on local governments’ special-purpose vehicles and the property industry, CLSA strategist Christopher Wood said. “Property developers and local government-backed infrastructure projects were important beneficiaries of such funding,” Wood wrote in his Greed & Fear report yesterday. “These are precisely the areas the CBRC has been trying to curb lending to.” The slowdown in the Chinese economy reduces the possibility of further tightening measures while beneficiaries of the nation’s growth such as the “commodity complex” are vulnerable in coming months, CLSA’s Wood wrote.
• Two New Jersey Men Charged in $200 Million Fraud Targeting Orthodox Jews. Two New Jersey men were charged for their role in a $200 million Ponzi scheme that targeted Orthodox Jews, according to the Federal Bureau of Investigation and U.S. prosecutors. Eliyahu Weinstein, 35, was charged with orchestrating a real-estate investment fraud to dupe fellow Orthodox Jews in New Jersey, New York, Florida, California and abroad, U.S. Attorney Paul Fishman said today in a statement. Vladimir Siforov, 43, also was charged in the scheme. By using “lies, threats, deliberate misrepresentations and even counterfeit checks,” Weinstein and Siforov “exploited the close community ties of the Orthodox Jewish community for one goal: to steal money through an elaborate real estate and Ponzi scheme,” Michael B. Ward, special agent in charge of the FBI’s office in Newark, New Jersey, said in a statement.
• Nvidia(NVDA) Said to Be Planning Direct Challenge on Intel(INTC) in Tablet Processors. Nvidia Corp., the maker of chips for computer graphics cards, is working on a microprocessor for tablet devices that would directly compete with Intel Corp. products, two people familiar with the matter said.
• Oracle(ORCL) Says Google's(GOOG) Android Operating System Infringes Its Java Patents.
• U.S. Saudi Sale, With Helicopters, Said to Approach $60 Billion. A proposed U.S. weapons sale to Saudi Arabia of Boeing Co. F-15 fighter jets also includes as many as 132 Boeing Apache attack helicopters and United Technologies Corp. UH-60 Black Hawk helicopters that bring the total value of the package to around $60 billion, according to a government official familiar with the plan. “I think it would be the largest ever,” said William Hartung, director of the New York City-based New America Foundation’s Arms and Security Initiative. “Other deals that used to be considered large,” like the $9 billion sale of 72 F-15s to the Saudis in 1992-93 or the kingdom’s $9 billion acquisition of U.S. AWACS surveillance aircraft in 1981, “aren’t even in the ballpark, even allowing for inflation,” Hartung said. The package includes 84 F-15s at a cost of $30 billion and helicopter sales totaling about $30 billion that include spare parts, training simulators, long-term logistics support and some munitions. The Saudis would buy about 72 UH-60 Black Hawk helicopters and as many as 60 AH-64D Longbow Apaches, the official said. The Longbow is the U.S. Army’s premier anti-tank helicopter, capable of firing laser-guided or all-weather air-to-ground missiles.

Wall Street Journal:

• Cable Firms Eye Tablet Space. More TV shows and movies may be coming to tablet computers like Apple Inc.'s iPad—for those who pay to watch. At least seven of the ten largest subscription-TV providers in the U.S. are building new tablet-computer applications that offer select TV shows and movies to their existing subscribers, often for little or no additional fee.
• Pakistan Fight Stalls for U.S. The U.S. military has stopped lobbying Pakistan to help root out one of the biggest militant threats to coalition forces in Afghanistan, U.S. officials say, acknowledging that the failure to win better help from Islamabad threatens to damage a linchpin of their Afghan strategy. Until recently, the U.S. had been pressing Islamabad to launch major operations against the Haqqani network, a militant group connected to al Qaeda that controls a key border region where U.S. defense and intelligence officials believe Osama bin Laden has hidden.
• Treasury's New Idea for Laggard Banks: We'll Sit in at Your Meeting. The U.S. wants to send Treasury employees to observe board meetings at banks that have consistently missed dividend or interest payments related to the government's financial-sector bailout.
• Investigators Question Attendant's Tale. Investigators probing the circumstances surrounding a JetBlue flight attendant's outburst and exit from a plane at Kennedy Airport are beginning to question the narrative that he was provoked by an injury suffered during a confrontation with an unruly passenger, according to Port Authority officials with knowledge of the investigation.
• Pentagon Slams WikiLeaks' Plan to Post More War Logs. U.S. defense officials on Thursday responded angrily to WikiLeaks' plan to post additional Afghan war logs, with Defense Secretary Robert Gates suggesting that the move could further endanger the lives of Afghans who helped the U.S. war effort. WikiLeaks founder Julian Assange, speaking to a group in London by video link on Thursday, said his group had gone through 7,000 of the 15,000 documents the group has so far withheld from publishing.
• Lehman: Och-Ziff Helped Spread Rumors. One of the world's largest hedge funds participated in spreading false rumors that helped bring down Lehman Brothers Holdings Inc., according to allegations filed in court papers in a Manhattan bankruptcy court. Och-Ziff Capital Management LLC "likely disseminated and/or was the recipient" of an inaccurate rumor that Lehman had spun off debt to two Lehman-controlled hedge funds to reduce the investment bank's leverage, according to the filing. Investors were focused on Lehman's debt levels in the months before its failure. The rumor was one of many "lies" spread by unscrupulous market participants looking to profit from shorting the troubled investment bank's stock, alleged the filing, made on Wednesday by lawyers investigating Wall Street firms on behalf of Lehman's bankruptcy estate.

CNBC:

• Foreclosure Math: Shadow Inventory Adds Up.

Business Insider:

• Look How Much Federal Spending is Funneled Through The States. (graph)

The Daily Caller:

• Obama Approval Rating Falls into New Danger Zone, Weighed Down by Growing Economic Fears. President Obama’s approval rating has crossed into a new danger zone over the last month, as fresh concerns over the economy have pushed his positives and negatives into upside down territory, a development that will cause political winds to blow even harder against Democrats this fall. One month ago on July 12, Obama’s approval and disapproval both stood at 47 percent in the Real Clear Politics poll average. On Tuesday, the president’s approval had fallen to 44.4 percent. Disapproval had jumped to 50.4 percent. The graph illustrating the movement is stark. After muddling through the past year in parallel lines, the black line for approval has taken a nose dive and the red line for disapproval has shot up.

Politico:

• California Democrat Blasts HUD for Happy Talk. Rep. Dennis Cardoza doesn’t think that Housing and Urban Development Department Secretary Shaun Donovan has any right to tout the administration’s successes at preventing home foreclosures in California. The California Democrat has fired off a heated letter to President Barack Obama after reading an op-ed piece from Donovan in the Fresno Bee, highlighting the falling foreclosure rate in California’s Central Valley as evidence that HUD’s efforts to tackle the housing crisis are yielding results. “I’m incredibly disappointed in the lack of professionalism and lack of understanding shown by this agency. They don’t get it,” Cardoza told POLITICO. “For him to try to convince my folks, who are suffering on a daily basis, that he’s right because he’s read some statistics in Washington when he doesn’t get it, it’s really just absurd,” Cardoza continued.
• Judge OK's Same-Sex Marriages to Begin Next Week. A federal judge in California accelerated the battle over same-sex marriage Thursday by giving the green light for such marriages to begin in that state next week unless a higher court steps in. The new order from U.S. District Court Judge Vaughn Walker said such marriages may begin Aug. 18 under the landmark ruling he issued last week holding California’s voter-approved ban on same-sex marriages to be unconstitutional.
  

USA Today:

• Consumer Spending Was Tepid in July, MasterCard Says. Shoppers dug in their heels in July, bad news for the stalling economy and worse for struggling retailers. Excluding gasoline and autos, U.S. retail sales rose a meager 0.1% last month from June, according to figures released Thursday by MasterCard Advisors' SpendingPulse, which estimates spending in all forms including cash. Excluding autos, sales fell — 0.9%.

Reuters:

• India to Target Google(GOOG), Skype Messaging Next - FT. India may shut down Google (GOOG) and Skype Internet-based messaging services over security concerns, the Financial Times reported on Friday, as the government threatened a similar crackdown on BlackBerry services.
• Kohl's(KSS), Nordstrom(JWN) Cautious on 2010, Shares Fall. Department stores Kohl's Corp (KSS) and Nordstrom Inc (JWN) disappointed investors with conservative profit outlooks, while Kohl's said the cost to adapt to new consumer credit card laws would bite into profit. Kohl's, which caters to a cost-conscious customer, lowered its 2010 profit view, while Nordstrom stood by a previously-issued earnings forecast but did not raise it. The outlooks signaled both companies' uncertainty over consumer spending in the highly-competitive retail apparel market.
• July U.S. Video Game Sales Down 1% - NPD. Retail sales of video game software and equipment fell 1 percent in July, industry tracker NPD said on Thursday, as the sector showed some signs of improvement. Game software sales fell 8 percent to $403.3 million, while hardware sales rose 12 percent to $313.8 million. Sales of video game accessories, slipped 2 percent to $129.3 million.

Financial Times:

• US Probes Corruption in Big Pharma. The US Department of Justice is scrutinising payments by leading pharmaceuticals companies for hospitality, consultants, licensing agreements and charitable donations in markets around the world as part of a wide-ranging corruption probe. GlaxoSmithKline(GSK), Pfizer(PFE), Bristol-Myers Squibb(BMY) and Eli Lilly(LLY), among others, have disclosed being contacted by the DoJ and Securities and Exchange Commission in connection with the investigation. Merck(MRK), the US drugs group, announced last week that it had also been contacted and was co-operating with investigators. An industry attorney familiar with the probe said that the DoJ was looking at whether pharma companies had ignored a “systematic risk” inherent in the global drugs business and ignored obligations under local and US anti-bribery law. The highly regulated nature of the business, combined with the fact that healthcare officials in many non-US markets were government funded, made the industry a natural target for such a probe, the person added. The investigation is at a relatively early stage but is considered a priority for the DoJ.

Telegraph:

• The Stunning Decline of Barack Obama: 10 Key Reasons Why The Obama Presidency is in Meltdown.
• US Bank Bail-Out 'Helped Foreign Banks'. The US Treasury has been accused of mishandling taxpayers money after a Congressional panel found that the $700bn (£449bn) bail-out of the banking industry at the height of the financial crisis helped foreign banks far more than overseas bail-outs helped American banks.

Alibaba.com:

• China Should Raise Ceiling on Deposit Rates - Economist. China should target a rise in banks' deposit interest rate ceiling, rather than hiking the benchmark interest rates, to pull real deposit rates out of negative territory, a senior government economist said in remarks published on Friday. Since February, the country's consumer inflation has been higher than the official one-year deposit rate, now at 2.25 percent. Consumer inflation in July reached 3.3 percent. "We must give the market a signal that we are pulling it (the real deposit rate) to a positive level," Xia Bin, an adviser to the cabinet and the central bank, told the official People's Daily overseas edition. "But to avoid the unnecessary negative impact from a one-off interest rate rise amid the economic slowdown, we should rather push ahead with the market-oriented interest rate reform and allow the deposit rate to float appropriately," he added.

Shanghai Securities News:

• Former Chinese central bank adviser Fan Gang said the pace of growth for the nation's money supply is "overly high."

Evening Recommendations
Citigroup:

• Reiterated Buy on (KSS), target $68.

Needham:

• Rated (N) Buy, target $20.
• Rated (SFSF) Buy, target $25.
• Rated (TLEO) Buy, target $27.
• Rated (CTCT) Buy, target $30.
  

Night Trading

• Asian equity indices are +.25% to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 122.0 -4.0 basis points.
  
• Asia Pacific Sovereign CDS Index 121.75 +3.75 basis points.
  
• S&P 500 futures +.54%.
  
• NASDAQ 100 futures +.53%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (JCP)/.05

Economic Releases
8:30 am EST

• The Consumer Price Index for July is estimated to rise +.2% versus a -.1% decline in June.
• The CPI Ex Food & Energy for July is estimated to rise +.1% versus a +.2% increase in June.
• Advance Retail Sales for July are estimated to rise +.5% versus a -.5% decline in June.
• Retail Sales Less Autos for July are estimated to rise +.3% versus a -.1% decline in June.
• Retail Sales Ex Autos & Gas for July are estimated to rise +.1% versus a +.1% gain in June.

9:55 am EST

• The Preliminary Univ. of Mich. Consumer Confidence reading for August is estimated to rise to 69.0 versus a reading of 67.8 in July.

10:00 am EST

• Business Inventories for June are estimated to rise +.2% versus a +.1% increase in May.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Hoenig speaking and the BofA Merrill Specialty Pharma Conference could also impact trading today.
  

BOTTOM LINE: Asian indices are higher, boosted by technology and commodity shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 50% net long heading into the day.

Stocks Lower into Final Hour on Rising Economic Fear, Tech Sector Worries, China Concerns

Broad Market Tone:

• Advance/Decline Line: Lower
  
• Sector Performance: Most Sectors Declining
  
• Volume: Slightly Above Average
  
• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• VIX 25.53 +.55%
  
• ISE Sentiment Index 117.0 -12.03%
  
• Total Put/Call 1.02 -4.57%
  
• NYSE Arms 1.14 -80.18%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 110.62 bps +1.94%
  
• European Financial Sector CDS Index 119.22 bps +4.04%
  
• Western Europe Sovereign Debt CDS Index 136.33 bps +1.0%
  
• Emerging Market CDS Index 226.08 bps +2.45%
  
• 2-Year Swap Spread 19.0 +2 bps
  
• TED Spread 23.0 -1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .14% unch.
  
• Yield Curve 219.0 +1 bp
  
• China Import Iron Ore Spot $148.30/Metric Tonne +.47%
  
• Citi US Economic Surprise Index -56.1 -1.1 points
  
• 10-Year TIPS Spread 1.68% -8 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -17 open in Japan
• DAX Futures: Indicating +8 open in Germany

Portfolio:

• Higher: On gains in my Biotech and Ag long positions
  
• Disclosed Trades: Covered some of my (IWM)/(QQQQ) hedges and then added them back
  
• Market Exposure: 50% Net Long

BOTTOM LINE: Today's overall market action is just mildly bearish as the S&P 500 is trading near session highs despite more disappointing economic data, a weaker euro and tech sector worries. On the positive side, Airline, Gaming, Drug, Biotech, Telecom, Paper, Gold, Ag, Oil Tanker and Coal stocks are especially strong, rising .75%+. Despite today's disappointing jobs data, the 10-year yield is rising +6 bps to session highs and copper is rising +.8%. Moreover, the S&P GSCI Ag Spot Index is jumping another +3.02%. The Spain sovereign cds is falling -5.46% to 200.95 bps. On the negative side, Networking, Disk Drive, Computer and Internet shares are especially weak, falling 2.25%+. (IYR) has also underperformed throughout the day. The ongoing rise in eurozone credit default swaps is a major negative. Moreover, the action in the tech sector is very poor. I will closely monitor the bond market's reaction to tomorrow's likely weaker-than-expected consumer confidence reading before further shifting market exposure. I expect US stocks to trade mixed-to-lower into the close from current levels on more shorting, tech sector concerns, rising economic fear and China worries.

Bloomberg:

• Jobless Claims in U.S. Unexpectedly Climbed Last Week. More Americans than forecast filed applications for unemployment benefits last week, signaling firings stepped up as the economy slowed. Initial jobless claims rose by 2,000 to 484,000 in the week ended Aug. 7, the highest level since mid February, Labor Department figures showed today in Washington. Companies may be losing confidence in the recovery and are hesitant to hire, raising the risk of further erosion in consumer spending, the biggest part of the economy. Economists forecast claims would fall to 465,000, according to the median of 42 projections in a Bloomberg News survey. The four-week moving average of claims climbed to 473,500 from 459,250, today’s report showed.
  
• Sovereign Debt Risk Surges as Slowdown May Deepen Deficit Woes. A gauge of government bond risk rose to the highest level in five weeks on concern Europe’s deficit crisis will worsen as slowing economic growth exacerbates bank bailout costs. The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments rose for a seventh day, climbing 4 basis points to 140, according to data provider CMA. The gauge is the highest since July 7 and up from a three-month low of 109.5 on Aug. 3. Swaps on Ireland climbed to a 17-month high on speculation the $32 billion bailout bill for Anglo Irish Bank Corp. will add to the country’s fiscal deficit. The cost of the Anglo bailout may trigger a surge in Ireland’s budget deficit to 25 percent of GDP this year, before dropping to 10 percent in 2011, analysts at Dublin-based Davy Research wrote in a note today. The European Union limit for members of the euro area is 3 percent. Default swaps on Ireland climbed 15 basis points to 286, the highest since March 2009, CMA prices show. Contracts on Anglo Irish jumped 17.5 to 551.5, Allied Irish Banks Plc increased 17.5 to 441 and Irish Life & Permanent Group Holdings Plc rose 14.5 to 337. Germany may also have to absorb the holdings of two so- called bad banks, raising the nation’s debt to 90 percent of gross domestic product, Die Zeit reported. Contracts on Germany increased 3 basis points to 47, the highest since June 29. Swaps on Greece jumped 17.5 basis points to 809.5 as the wage-cuts and tax increases that aim to trim the European Union’s second-biggest budget deficit deepened a recession. Contracts on Portugal climbed 8.5 basis points to 277, Italy rose 10 to 182 and Spain was 7 higher at 221. The cost of insuring corporate debt against default also rose with the Markit iTraxx Crossover Index of swaps linked to 50 companies with mostly high-yield credit ratings increasing 16 basis points to 520, according to JPMorgan Chase & Co., the highest in three weeks. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings climbed 4.25 basis points to 116.25, and the Markit iTraxx Financial Index of 25 banks and insurers rose 5.5 to 137.5, JPMorgan prices show.
• Wheat, Corn Stockpiles Dwindle After Russia's Drought. The world’s appetite for meat, flour and ethanol is expanding faster than the supply of the crops needed to produce them, eroding inventories and increasing the chance of accelerating food prices. Wheat stockpiles may slip to a two-year low as demand rises and a drought damages the crop in Russia, whose exports will plunge 84 percent, the U.S. Department of Agriculture said today. Inventories of corn, used to feed livestock and make fuel, will be little changed from a year earlier, even as output rises to a record, the USDA said.
• Crude Oil Falls a Third Day as U.S. Jobless Claims Increase. Crude oil declined for a third day after U.S. jobless claims increased, bolstering concern that economic growth will slow and fuel demand will drop. Oil decreased as much as 2.5 percent as initial jobless claims rose by 2,000 to 484,000 last week, the highest level since February. Yesterday, a government report showed that U.S. gasoline supplies climbed for a seventh week and stockpiles of distillate fuel, a category that includes heating oil and diesel, advanced to the highest level since January 1983. U.S. gasoline supplies rose 409,000 barrels to 223.4 million, according to an Energy Department report yesterday. The gain left stockpiles 8.6 percent higher than the five-year average for the week. Inventories of distillate fuel climbed 3.46 million barrels to 173.1 million, 27 percent higher than the five-year average. Crude oil supplies declined 2.99 million barrels to 355 million in the week ended Aug. 6, the report showed. Stockpiles were 8.1 percent higher than the five-year average for the period, the department said. The Organization of Petroleum Exporting Countries will reduce shipments this month as refineries close for maintenance, according to tanker-tracker Oil Movements. “There is a developing argument that Eastern demand isn’t particularly strong,” Roy Mason, Oil Movements founder, said today by phone from Halifax, England.
• Shanghai's July New Mortgage Loans Slump 98% on Curbs. Shanghai’s new mortgage loans plunged 98 percent in July from a year earlier as a government crackdown on property speculation deterred investors from buying homes in China’s richest city. Loans dropped by 11.4 billion yuan ($1.68 billion) to 270 million yuan, the lowest in at least a year, the Shanghai branch of the People’s Bank of China said in an e-mailed statement today. The amount was 91 percent lower than the previous month. Real estate prices stalled nationwide in July and transaction volumes slumped 29 percent from a month earlier, a government survey showed on Aug. 10. New home sales in Shanghai fell 11 percent in the week ended Aug. 8 from the previous seven days to 137,000 square meters, according to property consultant Shanghai UWin Real Estate Information Services Co. Choi sees home prices declining a further 20 percent by the end of the year as China maintains its tightening measures on the property market.
• Market Fragmentation Shows High-Frequency Hazard. The May 6 crash shows how the fragmentation of U.S. stock trading across 50 venues dominated by computerized traders is hurting investors, executives from Invesco Ltd. and TD Ameritrade Holding Corp. said.
• GM's Whitacre Says Akerson Will Take Over as CEO. General Motors Co. Chief Executive Officer Ed Whitacre, who led the largest U.S. automaker from bankruptcy to two straight profitable quarters, will step down as CEO on Sept. 1 and be replaced by director Dan Akerson. Akerson, 61, also will take over the 68-year-old Whitacre’s role as chairman at the end of the year, Detroit-based GM said today.

Wall Street Journal:

• Food Makers Chew Over Prices. Nestlé SA has joined a growing list of global food makers warning about higher prices for key commodities like tea and cocoa, which could pinch margins and ripple through the grocery store in the remainder of the year.
• Blagojevich Jurors Agree on Just Two Counts. Jurors in the corruption trial of former Illinois Gov. Rod Blagojevich and his brother have reached agreement on just two of the 28 combined counts against the pair after 12 days of deliberation.
• Economists Want Policy Makers to Back Off. Economists are getting more pessimistic about the strength of the recovery, but they don't think policy makers should do anything more to support it, according to the latest Wall Street Journal forecasting survey.
• The Blame Bush Strategy Won't Work.
  

CNBC:

• Bank Repossessions Drive Up US Foreclosures. More Americans fell into foreclosure in July as a sour job market kept them from making payments, and banks took over homes at a near record pace.

NY Times:

• Debts Rise, and Go Unpaid, as Bust Erodes Home Equity. During the great housing boom, homeowners nationwide borrowed a trillion dollars from banks, using the soaring value of their houses as security. Now the money has been spent and struggling borrowers are unable or unwilling to pay it back. The delinquency rate on home equity loans is higher than all other types of consumer loans, including auto loans, boat loans, personal loans and even bank cards like Visa and MasterCard, according to the American Bankers Association. Lenders say they are trying to recover some of that money but their success has been limited, in part because so many borrowers threaten bankruptcy and because the value of the homes, the collateral backing the loans, has often disappeared. The result is one of the paradoxes of the recession: the more money you borrowed, the less likely you will have to pay up.
• Chinese Hospitals Are Battlegrounds of Discontent. Forget the calls by many Chinese patients for more honest, better-qualified doctors. What this city’s 27 public hospitals really needed, officials decided last month, was police officers. And not just at the entrance, but as deputy administrators. The goal: to keep disgruntled patients and their relatives from attacking the doctors.

Business Insider:

• Government Bails Out Bank CEO After He Expenses Mansion, Jaguar, And Porsche. Inside the Maxine Waters' ethics trial case comes the story of the government bailing out a corrupt Boston bank that Waters' husband owned stock in and sat on the board of. When Kevin Cohee, the CEO and Chairman of OneUnited, asked the government to loan the bank $50 million in TARP funds, it was discovered that Cohee had expensed quite a lifestyle to the bank's account.

Zero Hedge:

• 14th Sequential Week of Equity Outflows. We have now had over a quarter of non-stop redemptions by mutual funds, which of course means, by end-retail investors.

Forbes:

• Environmental Groups Call for Drilling Ban in Michigan Constitution.
• Wall Street Plays Uncle Same Like a Fiddle In Matters of Finance. Congress does the bidding of some of its biggest patrons, the titans of Wall Street. Don't expect real reform.

Washington Post:

• SEC Enforcement Division Granted Permanent Subpoena Powers. The Securities and Exchange Commission on Wednesday quietly made permanent a vast expansion of the power of its enforcement division's ability to subpoena documents and compel testimony. The move should ensure that investigators can move swiftly to pursue cases of financial wrongdoing. But some securities lawyers warn that it could lead to excessive costs as well as unfair treatment for the executives and companies that are targets of SEC probes.

AppleInsider:

• iPhone 4 Remains Sold Out at Half of Apple's(AAPL) US Retail Stores. The iPhone 4 remains in limited stock at Apple's U.S. retail stores seven weeks after its launch, suggesting that "antennagate" has done little to slow sales.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows that 25% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-five percent (45%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -20 (see trends).

Reuters:

• Russia may not have grain available for export after a ban on outbound shipments ends Dec. 31, citing data from the Agriculture Ministry.
• ICE(ICE) Cuts Staff at Chicago Climate Exchange -Sources. Market operator Intercontinental Exchange Inc. (ICE) is laying off staff at newly acquired U.S. environmental bourse the Chicago Climate Exchange (CCX), industry sources told Reuters, citing a lack of U.S. action on climate change. They said the first round of layoffs began on July 23 and, although the total number of jobs to be cut was unknown, one said around 25 employees, or roughly half CCX's headcount at the time of ICE's acquisition, had already been or were being let go.
• Mortgage Rates Hit Fresh Lows on Soft U.S. Economy. Home loan rates set new lows in the latest week on more evidence of a soft U.S. economy and high unemployment, home funding company Freddie Mac said on Thursday. The average 30-year mortgage rate fell to 4.44 percent in the week ended Aug. 12, the lowest since Freddie Mac records began in 1971. The prior record low was 4.49 percent a week ago, which was well below 5.29 percent a year ago.

Telegraph:

• 'Flash Crash' Curbs Under Discussion by US Regulators. The so-called "flash crash" that saw the Dow Jones index plunge almost 1,000-points in 45 minutes could see US regulators restrict the range shares can move in a single day.

Xinhua:

• China Mobile Ltd. and the Xinhua News Agency signed a framework agreement today to establish a search engine joint venture.

Beijing Times:

• BYD Co. sales fell 6.5% to 33,046 vehicles in July from June, citing a person from the company. Sales in July rose 4% year-on-year, the report said.

Bear Radar

Style Underperformer:

• Large-Cap Growth (-1.22%)

Sector Underperformers:

• 1) Disk Drives -4.26% 2) Networking -3.79% 3) Computer Hardware -3.26%

Stocks Falling on Unusual Volume:

• CSCO, JNPR, VIP, KSS, CAVM, NETL, FFIV, NTAP, FNSR, PLCM, OCLR, JDSU, XLNX, ALTR and BRCM
  

Stocks With Unusual Put Option Activity:

• 1) SPWRA 2) CSCO 3) FNSR 4) VMED 5) IP
  

Stocks With Most Negative News Mentions:

• 1) JBLU 2) WEN 3) RIMM 4) PBR 5) WWE
  

Bull Radar

Style Outperformer:

• Large-Cap Value (-.22%)

Sector Outperformers:

• 1) Gold +2.12% 2) Coal +1.30% 3) Airlines +1.06%

Stocks Rising on Unusual Volume:

• AAP, BVN, PRGO, ALXN, BKS, IAG, CHL, COLB, CAGC, SOLF, MERU, RDEN, AVGO, NFLX, ATPG, EAT, NJ and THI
  

Stocks With Unusual Call Option Activity:

• 1) TSM 2) M 3) SCHW 4) CSCO 5) OVTI
  

Stocks With Most Positive News Mentions:

• 1) THI 2) KSS 3) AAPL 4) GOOG 5) BA