Bear Radar

Style Underperformer:

• Large-Cap Value (+.84%)

Sector Underperformers:

• 1) Education +.02% 2) Banks +.15% 3) Medical Equipment +.25%

Stocks Falling on Unusual Volume:

• IGTE, ADTN, THOR, ACOR, LLTC, JOE and CSH
  

Stocks With Unusual Put Option Activity:

• 1) WMB 2) GAP 3) XLU 4) NVS 5) AMAG
  

Stocks With Most Negative News Mentions:

• 1) JPM 2) TASR 3) HAL 4) HOS 5) WWE
  

Bull Radar

Style Outperformer:

• Small-Cap Growth (+.88%)

Sector Outperformers:

• 1) Road & Rail +2.79% 2) Gold +2.14% 3) Homebuilding +1.65%

Stocks Rising on Unusual Volume:

• AIXG, VECO, PHG, SNP, PVTB, TKC, SWC, BBL, TOT, SCVL, BID, PBY, CRI, SIGA, JOBS, MYGN, WATG, ASML, PAAS, SSRI, QGEN, HCSG, TNDM, OCLR, MLNX, BIDU, SCVL, DECK, PRGS, SHPGY, INFY, ZNH, WMB, CSX and SRX
  

Stocks With Unusual Call Option Activity:

• 1) DLTR 2) WMB 3) CSX 4) VCI 5) HRB
  

Stocks With Most Positive News Mentions:

• 1) AAPL 2) GOOG 3) INTC 4) CSX 5) QCOM

Wednesday Watch

Evening Headlines
Bloomberg:

• Japan's Machinery Orders Unexpectedly Gained in August. Japanese machinery orders unexpectedly advanced in August, a sign that a recovery in earnings may encourage companies to spend on plant and equipment even as the yen surges. Factory orders rose 10.1 percent from July, when they increased 8.8 percent, the Cabinet Office said today in Tokyo. The median forecast of 28 economists surveyed by Bloomberg News was for a 3.9 percent decline.
• Stimulus of $1 Trillion Adds Nothing to Deficit: Frank Aquila. Imagine if American companies could add more than $1 trillion to their domestic coffers in an instant without selling a subsidiary, issuing a single share or incurring a penny of debt. While every company would no doubt use this cash differently, the windfall could fund a return of capital to shareholders through increased dividends and share buybacks. Or it could be used to repay debt, fund capital expenditures or make strategic acquisitions. How the companies would deploy the money doesn’t matter. The important thing is that the cash would be put to work. So why hasn’t this already happened? The answer is clear: U.S. tax policies penalize the repatriation of so-called foreign-source income, essentially the profits earned by foreign subsidiaries of American corporations. This cash pile isn’t being hoarded or held on the sidelines, as many pundits have suggested; rather, it is being kept offshore by our own tax structure.
• CFTC to Scrutinize Algorithmic Trading After May Market Plunge. The top U.S. commodity regulator will review algorithmic trading and other practices such as “spoofing” and “quote stuffing” as part of the largest rewrite of Wall Street rules since the 1930s. “Weekly we hear concerns about high frequency traders and how they are affecting the markets, positively and negatively,” Commissioner Michael Dunn said at a meeting in Washington today. “Phrases like ‘quote stuffing’ and ‘spoofing’ are bantered about as ways that algorithmic traders are gaming the marketplace.”
• Nobel Winner Liu, Quiet Literary Critic, Terrifies Beijing: George Walden. Two steps forward, one back. That’s the pattern with modern China, and today looks like a “one back” moment. First Chinese leaders pursue a beggar-my-neighbor currency policy. Next they denounce as “obscene” the Norwegian Nobel Committee’s award of the Peace Prize to Liu Xiaobo, a literary critic and former professor locked up for 11 years for saying what he thinks. When the world objects, they put his wife under house arrest. For good measure, this nation of 1.3 billion souls threatens to retaliate against the 5 million good folk of Norway. And who provoked this loathing? An author whose books include “The Fog of Metaphysics,” a review of Western philosophies. Whatever the qualities of the Chinese leadership, oversensitivity to world opinion isn’t among them. The coincidence of the Nobel controversy with the currency war will make many people stop to ask where the new China is going. The answer: in two directions at once.

Wall Street Journal:

• Fed Chief Gets Set to Apply Lessons of Japan's History. Mr. Bernanke is preparing for a potentially important policy speech Friday, when he could detail his thinking on the Fed's next steps at a conference sponsored by the Federal Reserve Bank of Boston on monetary policy in a low-inflation environment. The conference is a reprise of a 1999 conference at which Mr. Bernanke and other academics took Japanese officials to task for failing to get their economy moving. Buried in Mr. Bernanke's earlier writings on Japan are hints of how he is shaping the Fed's responses to today's slow recovery.
• First Miner is Rescued in Chile. Florencio Avalos, the first of 33 miners to be rescued, surfaces after 69 days underground. A rescue worker rode a specially designed capsule into a mine where 33 men have been trapped half a mile underground for 69 days, reaching them about 15 minutes later in the first phase of a complex operation to bring the miners to the surface. Cheers and clapping broke out at San Jose mine as rescuer Manuel Gonzalez entered the capsule.
• Iraq Oil is 'Game Changer'. Production Revival Will Challenge Big Suppliers Like Saudis, IEA Chief Says. The revival in Iraqi oil production will be a "game-changer" for global oil supplies and a challenge for other big oil producers like Saudi Arabia, the International Energy Agency said Tuesday. Fatih Birol, the IEA's chief economist, said in an interview that 20 years from now, Iraq could be pumping two to three times more than the 2.5 million barrels a day it currently produces—"comforting" oil markets worried about shrinking supplies, and possibly buffering against price spikes.
• NFL Braces for a Costly Labor Fight. As Sponsors Get Jittery, League Says it May Lose $1 Billion Even If Next Season Is Saved. Even as the NFL romps through a season of record television ratings, the owners, and some of the league's key sponsors and corporate partners, are bracing for what could be an expensive and debilitating player lockout next spring.
• Using the iPad to Connect. Parents, Therapists Use Apple Tablet to Communicate With Special Needs Kids.
• J.P. Morgan(JPM), BofA(BAC), Wells Fargo(WFC) Tops in Foreclosed Home Loans. The banks with the largest dollar amounts of foreclosed home loans on their books are J.P. Morgan Chase & Co., Corp. and Bank of AmericaWells Fargo & Co., according to analyst firm SNL Financial. Several large banks, including J.P. Morgan and Bank of America, have instituted widespread foreclosure halts because of worries about documentation problems. The halts come at a time when many of the biggest lenders are struggling to work through the nonperforming assets still weighing on their books. J.P. Morgan has $19.5 billion, or 7.5% of its 1- to 4-family mortgage loans, in foreclosure, according to data from SNL. Bank of America has $18.7 billion, or 4.39%, and Wells Fargo has $17.5 billion, or 4.74%. The three big mortgage lenders have billions of dollars more in servicing rights on loans in foreclosure. Bank of America has $88 billion of loans it services for other lenders where the properties are in foreclosure; J.P. Morgan has $54.5 billion and Wells Fargo has $36.4 billion. The data are as of June 30.
• CDS Aren't Always Sound Indicators of Credit Risk - Fitch. Credit default swaps, derivatives that compensate investors when a company defaults on its debt, are commonly used to assess the relative riskiness of senior corporate bonds, but are not always an accurate predictor of future defaults, according to a new report from Fitch Ratings. That's because the behavior of CDS market participants can distort the perception of a company's risks, the ratings agency said. "It is important to realize there are other factors that can move CDS pricing that are separate from the reference entity's creditworthiness," Robert Grossman, group managing director at Fitch Ratings, said.
• More Ethanol to Be Allowed in Cars. The Obama administration plans to allow higher levels of ethanol for gasoline used by newer cars, a step that would benefit corn growers but which has been strongly opposed by auto makers, livestock ranchers, oil refiners and some public-health advocates. As early as Wednesday, the Environmental Protection Agency plans to announce it will allow ethanol levels in gasoline blends to be as high as 15% for vehicles made since 2007, up from 10% currently, according to two people familiar with the matter. For cars made between 2001 and 2006, the agency will say it is awaiting the outcome of additional research and not ready to announce a decision. The agency's move is likely to be strongly challenged by livestock ranchers, auto makers and oil refiners.

CNBC:

• US 30-Year Mortgage Rates Fall Again: Zillow. Interest rates on 30-year fixed-rate mortgages fell for a fourth straight week, real estate website Zillow.com said on Tuesday. Mortgage rates on 30-year fixed mortgages, the most widely used loan, were 4.13 percent Tuesday afternoon, down from 4.16 percent at the same time last week, according to Zillow Mortgage Marketplace.

Business Insider:

• Germany's Top Central Banker Ambushes the ECB in New York, Decries Bond Buying. Germany's top central banker Axel Weber has staged an ambush at Economics21's Shadow Open Market Committee conference in New York. He's thrown a surprise punch at the European Central Bank, and perhaps its head Mr. Jean-Claude Trichet as well, for buying the government bonds of nations such as Spain and Greece in a bid to support credit markets. He thinks that ECB bond purchases "should now be phased out permanently" since it "risks blurring the different responsibilities between fiscal and monetary policy," and "there is no evidence that asset purchases have had any significant impact" on sovereign bond yields, according to the Wall Street Journal. Inflation is a huge threat that Europe shouldn't play games with -- "I think that if a central bank signals it wants higher inflation, they usually get it. That's a concern, not a reassurance."
• Bill Ackman: The Only Ingredient Missing From This Market is Confidence. Bill Ackman is remarkably optimistic about the market going forward. He can't even find any short ideas apparently. It's that good.
• Forget About Owning a Chinese Property, Now Even Renting is Out of Reach For Many.
• The SEC Has No Clue What It's Doing With High Frequency Trading.
• Still Wondering if the Foreclosure Freeze Will Hurt the Housing Market? Ask the NAR.
  

Zero Hedge:

• 3.5 Million on the Streets and Rising: As French Strikes Escalate, Just How Serious is the Situation?
• Park Avenue Bank CEO Charles Antonucci Admits to Stealing $11 Million from TARP, And to Being Too Small Too Succeed.
  

New York Post:

• Broken Promises. ObamaCare's First Victims. This month, McDonald's warned that the health-care reform law passed in March could force it to drop health coverage for some 30,000 workers. A few days later, 3M announced that starting in 2013 it will no longer provide health-insurance coverage to its retirees. That came on the heels of a decision by Harvard Pilgrim, Massachusetts' second-largest insurer, to drop its Medicare Advantage health-insurance program at year's end, forcing 22,000 senior citizens in Massachusetts, New Hampshire and Maine back into traditional Medicare. Then there's the Principal Financial Group, which recently decided it was getting out of the health-insurance business. Roughly 840,000 people will likely lose their insurance as a result. This is just the tip of the iceberg.

IBD:

• Travelers Use Smart Phones to Book Hotels - After They Arrive. Smaller phones and more portable and powerful PCs are changing the definition of last minute in the travel industry. Just ask Priceline.com (PCLN).

CNNMoney.com:

• Mexican Investigator in Falcon Lake Case is Beheaded, Officials Say. The lead Mexican investigator in the Falcon Lake case, Rolando Armando Flores Villegas, has been killed, his severed head delivered Tuesday in a suitcase to the Mexican military, officials told CNN. "His head was delivered to the army garrison this morning in a suitcase after he failed to report back home last night," Zapata County, Texas, Sheriff Sigifredo Gonzalez Jr. said.

Forbes:

• Deepwater Drilling Ban Lifted, Malaise Remains Intact. So the Obama administration has lifted the deepwater drilling moratorium. Unfortunately for the President, it’s going to be too late to regenerate many offshore jobs before election day, but we’ll take it. Before the Deepwater Horizon disaster there were 33 floating drilling rigs at work in the gulf. Today that’s down to just 6, with half of those doing plugging and abandonment work. Many of the rigs have been sent on long-term contracts (at rates ranging from $225,000 to $400,000 per day) to Brazil and west Africa. It’ll take years for them to come back.

Politico:

• Mixed White House Signals on Stimulus. President Barack Obama appears to be backing away from an election-season push for a second stimulus of $50 billion in transportation projects, according to transportation industry officials and congressional leaders who say the signs are unmistakable. One clear signal: The president never mentioned his stimulus plan at a White House event Monday with governors, mayors and transportation leaders that was supposed to be dedicated to the $50 billion proposal. Instead, the president emphasized a longer-term effort to pass a $450 billion, six-year infrastructure plan.
• Global Ban Ordered on 'Don't Ask'. A federal judge has ordered a worldwide halt to enforcement of the Defense Department’s "don't ask, don't tell" policy regarding gays in the military. U.S. District Court Judge Virginia Phillips issued the injunction Tuesday after finding last month that the policy – made law by Congress in 1993 – violates the Constitutional rights of service members. She acted on a lawsuit brought by the Log Cabin Republicans, a political organization of gay conservatives.

Reuters:

• Intel's(INTC) Q4 Outlook Sets Upbeat Tone for Tech Earnings. Intel Corp forecast upbeat fourth-quarter sales and margins as resilient demand from emerging markets and corporations offset weak consumer spending, raising hopes that the technology sector could end 2010 on a strong note. Shares of Intel and rival Advanced Micro Devices Inc (AMD), which have warned about weak consumer demand for computers, climbed 1 percent in after-hours trade.
• US Mortgage Bonds Steady Despite Foreclosure Flap.
• US Corporate Credit Improvement May Be Nearing End - Moody's. Improvement in U.S. corporate credit quality may be nearing an end as companies use debt to boost share valuations and large impending debt maturities risk sparking a resurgence of defaults by risky borrowers, Moody's Investors Service said on Tuesday.
• Investors Earmark $281 Billion for Global Property in 2011 - Report. An estimated $280.6 billion of capital will be available to invest in global commercial real estate in 2011, with the U.S. market drawing the most buyer interest as it bottoms out, a report said on Wednesday.
• CSX(CSX) Profit Tops Street View; Shares Rise. CSX Corp reported a stronger-than-expected quarterly profit on Tuesday, citing rising freight volumes in nearly all its markets. Shares in CSX, which operates a 21,000-mile network across 23 U.S. states and two Canadian provinces, rose 1.7 percent in post-market electronic trading.

Financial Times:

• Fears of Global Currency War Rise. Thailand is introducing a tax on foreign holdings of bonds, the latest in a string of attempts by emerging economies to curb destabilising capital inflows amid fears of a global currency war.

The Guardian:

• Brussels Plans Stirct New Controls for Offshore Oil Drilling. The European commission is to reveal plans for tougher controls on offshore oil and gas drilling tomorrow. It would force national governments to abide by rules set in Brussels and extend liability for oil companies in the event of a disaster, The Guardian has learned. The commission will also call for a moratorium on "complex" drilling projects in Europe until the lessons of the Deepwater Horizon disaster in the Gulf of Mexico have been digested – a move that has been rejected by Britain. If the commission proposals became European law they would have far-reaching effects on the UK oil industry. More than half the offshore rigs in the EU are in British waters.

The Standard:

• Bank Regulator Hits Out at Speculators. China Banking Regulatory Commission chief Liu Mingkang said intervention is necessary to curb speculation in the mainland property market. And instituting financial policies and imposing property taxes to curb speculation does not amount to suppressing the property industry in the mainland, the regulator told CCTV. The mainland property market heated up once again in August and September, after cooling somewhat in May to July, according to the CBRC's observation. That signaled the resurfacing of property speculation in the secondary market during the period, with the majority of transactions focused on mid- and high- end houses. "Such big transactions prove that buyers are only purchasing flats to sell and they are not end-users," Liu said. "It is wrong to use property as an investment tool to make a profit as it does not comply with the government's policy." During the first week of October, house transactions in Shanghai jumped 41.9 percent from a month earlier to 425,700 square meters, according to Caing.com. Meanwhile, average selling prices in Beijing, Shanghai, Guangzhou and Shenzhen in August rose 10.6 percent, 9.54 percent, 7 percent and 6.9 percent, respectively, from a month ago, data from property agencies showed.

South China Morning Post:

• A group of former Chinese officials has called on the government to end media censorship in an open letter published online. The letter said the lack of free speech in Ch9ina is a "scandal." Signatories of the letter include Li Rui, former deputy head of the Chinese Communist Party's organization department and an ex-secretary for Mao Zedong; and Hu Jiwei, former editor-in-chief of the People's Daily.

China Securities Journal:

• China will become "extremely cautious" in raising interest rates in order to prevent hot money inflows and to control the pace of yuan appreciation, Zhang Monan, a researcher with the State Information Center, wrote in a commentary published today. China may be forced to abandon its independent interest rate policy stance as it faces a slew of challenges such as inflation, rapidly rising asset prices and capital inflows, Zhang wrote. Excess liquidity resulting from quantitative monetary easing in major economies is set to pose an increasingly grimmer challenge to China's economy in the next few years, Zhang wrote.

Shanghai Securities News:

• China aims to cut energy use per unit of gross domestic product by 17% from this year over the next five years, citing a person involved in the drafting of a government plan.

Evening Recommendations
Morgan Stanley:

• Reiterated Overweight on (VMW), target $90.

Keybanc:

• Rated (ATK) Buy, target $93.
• Rated (FLIR) Buy, target $35.
• Rated (ORB) Buy, target $20.
• Rated (AVAV) Buy, target $31.

Wells Fargo:

• Rated (CA) and (CHKP) Outperform.

RBC Capital:

• Rated (ALL) Outperform, target $38.
• Rated (PGR) Outperform, target $24.
  

Night Trading

• Asian equity indices are -.25% to +1.0% on average.
• Asia Ex-Japan Investment Grade CDS Index 102.0 +2.0 basis points.
  
• Asia Pacific Sovereign CDS Index 97.0 +2.75 basis points.
  
• S&P 500 futures +.13%.
  
• NASDAQ 100 futures +.09%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (HST)/.11
• (ADTN)/.43
• (JPM)/.88
• (APOL)/1.29
• (IGTE)/.21
  

Economic Releases
8:30 am EST

• The Import Price Index for September is estimated to fall -.2% versus a +.6% gain in August.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Bernanke speaking, Fed's Lacker speaking, $21 Billion 10-Year Treasury Notes Auction, (CHK) analyst meeting, (WMT) annual meeting and the weekly MBA Mortgage Applications report could also impact trading today.
  

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

Stocks Reversing Higher into Final Hour on Rising QE2 Expectations, Tax Policy/Election Optimism, Falling Sovereign Debt Angst, Buyout Speculation

Broad Market Tone:

• Advance/Decline Line: Slightly Higher
  
• Sector Performance: Mixed
  
• Volume: Below Average
  
• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• VIX 18.88 -.42%
  
• ISE Sentiment Index 124.0 -2.36%
  
• Total Put/Call 1.20 +46.34%
  
• NYSE Arms .73 -46.23%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 96.76 bps +1.0%
  
• European Financial Sector CDS Index 98.08 bps -2.65%
  
• Western Europe Sovereign Debt CDS Index 143.67 bps -3.15%
  
• Emerging Market CDS Index 196.15 bps -1.14%
  
• 2-Year Swap Spread 17.0 unch.
  
• TED Spread 17.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .11% unch.
  
• Yield Curve 205.0 +1 bp
  
• China Import Iron Ore Spot $147.90/Metric Tonne +1.56%
  
• Citi US Economic Surprise Index +2.20 +1.0 point
  
• 10-Year TIPS Spread 1.98% unch.
  

Overseas Futures:

• Nikkei Futures: Indicating +87 open in Japan
• DAX Futures: Indicating +21 open in Germany

Portfolio:

• Higher: On gains in my Tech, Ag and Biotech long positions
  
• Disclosed Trades: None
  
• Market Exposure: 100% Net Long

BOTTOM LINE: Today's overall market action is bullish as the S&P 500 trades near session highs despite morning weakness and recent gains. On the positive side, Airline, Restaurant, Bank, Disk Drive, Semi, Computer and Oil Service shares are especially strong, rising 1.0%+. Small-caps are outperforming. (XLF)/(IYR) have traded well throughout the day. The S&P GSCI Ag Spot index is jumping again, rising +2.12% today and lumber is gaining +4.27%. China Import Iron Ore Spot has risen +6.22% in 5 days. Gold is pulling back -.29%. The 10-year yield is rising +2 bps to 2.41%. The ongoing collapse in the Euro Financial Sector CDS Index is a major positive. As well, other key cds indices remain in their recent downtrends. On the negative side, Road & Rail, Coal and Oil Tanker shares are under mild pressure, falling more than 1.0%. Cyclicals are underperforming today. Weekly retail sales rose +2.5% versus a +2.6% gain the prior week and down from a +3.0% gain the first week of September. The CBOE total put/call opened this morning at an elevated 1.89, which was the highest since June 24th, right before the market made an important low on July 1. I suspect the DJIA may make a serious attempt to take out its high for the year at 11,258 before the election. I expect US stocks to trade modestly higher into the close from current levels on short-covering, falling sovereign debt angst, buyout speculation, rising QE2 expectations, tech sector strength, technical buying, investor performance angst and tax policy/election optimism.

Today's Headlines

Bloomberg:

• Fed Officials Were Prepared to Ease 'Before Long,' Minutes Say. Federal Reserve policy makers last month were prepared to ease monetary policy “before long” and focused on purchases of Treasury securities and boosting inflation expectations as ways to add stimulus. Policy makers “wanted to consider further the most effective framework for calibrating and communicating any additional steps to provide such stimulus,” the Fed said in minutes of the Sept. 21 session, released today in Washington. The Fed also said for the first time that it was considering targeting a path for the level of nominal gross domestic product as a way to increase price expectations. The report provides more clarity on the timing and components of potential easing actions without giving the amount of any additional asset purchases by the Fed. Since the meeting, weaker-than-forecast job growth in September and comments by policy makers, including New York Fed President William Dudley, have fueled speculation that the central bank will soon start a second wave of unconventional easing.
• S&P 500 Stocks With Highest P/Es Poised to Win, UBS's Golub Says. Investors should purchase stocks with the highest price-to-earnings ratios because their valuation premium to the cheapest shares is too low, according to Jonathan Golub at UBS AG. The gap between the Standard & Poor’s 500 Index industries with the highest and lowest P/Es narrowed to 3.6 last month from 9.6 in 2006, according to UBS, which used projected earnings for its valuations. The disparity suggests purchasing expensive stocks may boost returns during the next 12 to 24 months, the UBS strategist said. The three industries with the highest multiples in the S&P 500 are industrials, consumer discretionary and consumer staples, according to UBS. “This is akin to purchasing a Picasso when high-priced artwork is out of favor,” Golub, the New York-based chief U.S. market strategist, said in a telephone interview yesterday. “On a relative basis, cheap stocks are overvalued because they are much closer to the market average. It’s not that I want to overpay for companies, but rather traditionally high P/E stocks are cheaper than they should be.”
• Pfizer(PFE) Acquires Pain Drug Maker King(KG) for $3.6 Billion. Pfizer Inc. agreed to pay $3.6 billion in cash to buy King Pharmaceuticals Inc., expanding its range of pain treatments to include tamper-resistant medicines. Pfizer, the world’s largest drugmaker, will pay $14.25 a share, a premium of 40 percent over King’s closing share price yesterday, the New York-based company said today in a statement.
• Ex-Goldman Sachs(GS) Traders Raise $1.5 Billion for New Hedge Funds. Eric Mandelblatt expects to have raised at least $500 million when his Soroban Capital Partners LLC begins trading stocks next month, according to two people with direct knowledge of the New York-based hedge-fund firm. At least two other managers, Mark Carhart and Pierre-Henri Flamand, are slated to open in coming months with half a billion dollars or more each, said the people, who asked not to be named because the firms are private.
• Corn, Soybeans Rise for Fourth Session as Tighter U.S. Supply Spurs Demand. Corn and soybeans rose for the fourth straight session on speculation that processors will buy more inventory after the U.S. government said last week that production will be smaller than forecast in September.
• Obama Loses Support in Poll as Joblessness Prompts Growing U.S. Discontent. Hope has turned to doubt and disenchantment for almost half of President Barack Obama’s supporters. More than 4 of 10 likely voters who say they once considered themselves Obama backers now are either less supportive or say they no longer support him at all, according to a Bloomberg National Poll conducted Oct. 7-10. Three weeks before the Nov. 2 congressional elections that Republicans are trying to make a referendum on Obama, fewer than half of likely voters approve of the president’s job performance. Likely voters are more apt to say Obama’s policies have harmed rather than helped the economy. Among those who say they are most enthusiastic about voting this year, 6 of 10 say the Democrat has damaged the economy. “He’s made compromises that have hurt the middle class,” says poll respondent Alan Graham, 55, a surgeon in London, Kentucky, who supported Obama in 2008 and now is on the fence about the president.
• Philadelphia, Chicago and Boston Are University Study's Worst-Off Pensions. Philadelphia will run out of money by 2015 to pay pension obligations with existing assets, and Chicago and Boston by 2019, a study by economists at Northwestern University and the University of Rochester forecasts. The report, “The Crisis in Local Government Pensions in the United States,” warns that mounting liabilities threaten “the ability of state and local governments to operate.” The study examines 77 of the largest municipal defined pension plans, covering 2 million public employees and retirees, roughly two-thirds of the nation’s total. The estimated liability of all municipal retirement funds is $574 billion, according to economists Joshua Rauh of the Kellogg School of Management at Northwestern University and Robert Novy-Marx of the University of Rochester.
• India Industrial Production Growth Slows to 5.6%, Less Than Analysts' Estimates. India’s industrial production growth slowed to a 15-month low in August, adding to evidence that inflation and the impact of five interest-rate increases this year are prompting companies to curb output. Factory, utilities and mines output rose 5.6 percent from a year earlier after a revised 15.2 percent increase in July, the statistics office said in a statement in New Delhi today. The median estimate of 25 economists in a Bloomberg News survey was for a 9.5 percent gain in August.
• Further Fed Easing Could Alarm 'Bond Market Hawks,' Historian Meltzer Says. The Federal Reserve’s efforts to boost the economy by expanding its balance sheet probably won’t succeed while increasing the chances of higher long-term inflation, said Allan Meltzer, a historian of the central bank. “Sooner or later the bond market hawks are going to say, ‘How are they going to get rid of that $2 trillion of excess reserves?’ and the answer is they don’t know,” Meltzer, a professor at Carnegie Mellon University in Pittsburgh, said today in an interview on Bloomberg Television’s “In the Loop with Betty Liu.” “They can’t do much about the near term but they can do a lot about the longer term. But they ignore that,” said Meltzer, author of a history of the Fed. Meltzer said he opposes any move by the Fed to increase the amount of reserves in the banking system. “We don’t have a monetary problem, we have 1 trillion or more in excess reserves so it’s literally stupid to say we’re going to add another trillion to that,” Meltzer said last month.
• Weber Says ECB Should Phase Out Bond Purchases 'Now'. European Central Bank Governing Council member Axel Weber said the ECB should stop its bond- purchase program and signaled that it’s time for officials to show how they will withdraw other emergency measures. “As the risks associated with the Securities Markets Program outweigh its benefits, these securities purchases should now be phased out permanently,” Weber said, according to the text of a speech delivered in New York today. “As regards the two dimensions of exit consisting of phasing-out non-standard liquidity measures and normalizing our clearly expansionary monetary policy, there are risks both in exiting too early and in exiting too late,” Weber said. “I believe the latter are greater than the former.” Weber’s comments are the strongest so far from any of the ECB’s 22-member Governing Council advocating a withdrawal of emergency measures.
• GE(GE) Expands Solar Business as Immelt Seeks to Mirror Wind Growth. General Electric Co., which has become the world’s second-biggest wind turbine maker in less than a decade, is expanding production of two thin-film solar products to increase its renewable-energy business. GE will work with Japan’s Showa Shell Sekiyu KK’s Solar Frontier unit to make thin-film panels coated with a copper- indium-gallium-selenide compound, or CIGS, according to a statement today. GE’s PrimeStar Solar plant will make cadmium telluride-based thin film panels. Chief Executive Officer Jeffrey Immelt has spent more than $1 billion on research and development of renewable power since acquiring Enron Corp.’s wind division out of bankruptcy in 2002.
• Federal Reserve Sued by Minnesota Bank Over Limits on Credit Card Fees. TCF Financial Corp., a Minnesota bank, sued the Federal Reserve to block a U.S. law that limits the fees charged to retailers on debit-card transactions. The provision of the Dodd-Frank Act known as the Durbin Amendment puts the biggest U.S. banks at a competitive disadvantage as it forces them to provide debit-card services below cost and exempts smaller banks, the Wayzata-based company said in a lawsuit filed today in Sioux Falls, South Dakota, federal court. The law is akin to Congress telling Burger King “you can only charge for the hamburger and the bun,” TCF Chief Executive Officer William A. Cooper said in a telephone interview. “Ignore all the costs of the overhead and the cooks and the advertising and the interest expense.” The bank claims that the law unconstitutionally takes away its property in the form of legitimate fees and violates its constitutional right to equal protection by favoring smaller banks.
• Dell(DELL) CEO May Buy the PC Maker or Pay 'Huge' Special Dividend, Ainslie Says.
  

Wall Street Journal:

• Google's(GOOG) Share of US Search Advertising Market Up 2 Points in 3Q. Google Inc.'s (GOOG) share of the U.S. search advertising market grew more than two percentage points to 77.9% in the third quarter, making it the "early winner" as rivals Microsoft Corp. (MSFT) and Yahoo Inc. (YHOO) began to integrate their search operations, according to a report to be released on Tuesday.
• Reliance Communications, Tata Teleservices In Talks With Apple(AAPL) on CDMA iPhone - Sources. Two Indian telecom operators are in talks with Apple Inc. (AAPL) to launch an iPhone in India based on the code division multiple access technology in a bid to tap the growing smartphone market in one of the world's fastest-growing mobile markets, people familiar with the matter said.
• China Warns Governments About Support for Liu. China warned foreign politicians not to interfere in its internal affairs, as the U.S. urged Beijing to lift restrictions on the movements of the wife of Liu Xiaobo, the jailed Chinese dissident awarded the Nobel Peace Prize last week. Chinese authorities continued to prevent his wife, Liu Xia, from meeting friends and journalists Tuesday, and only allowed her to leave her apartment in Beijing with a police escort, according to a friend who spoke directly with her.

CNBC:

• Senior Citizens Brace for Social Security Freeze.
• Emerging Markets are 'Yesterday's Story': Bernstein. Investing in emerging markets has lost its appeal and investors should get behind the next growth area, Richard Bernstein, CEO of Richard Bernstein Advisors, told CNBC Tuesday. "People tend to chase yesterday's story," Bernstein said. "They're doing it now with emerging market stocks, rushing into emerging market stocks after they've been outperforming for twelve years. The question is what's the next story coming up?" Bernstein thinks the next big investment opportunity is small companies in the United States because they're "starved for capital."
• More Fed Easing is Unlikely to Help Economy: Hoenig. Kansas City Federal Reserve President Thomas Hoenig, who all year has steadfastly opposed the Fed's super-easy monetary policy, fleshed out his stance against further easing on Tuesday, saying it would do little to aid the recovery and could spark inflation.

Business Insider:

• California Stimulus Pays for $152 Million Rose Bowl Upgrade. The Pasadena City Council approved a $152 million renovation to the Rose Bowl Stadium on Monday, the AP reported. The 88-year-old stadium will get 2,000 more luxury seats, a new scoreboard, more bathrooms, and more concession stands.
  

MarketWatch.com:

• Apple(AAPL) Affirmed Overweight at Barclays Capital; Target $385.

New York Times:

• Investors Flock to Greek Bond Sale. With an austerity program well underway, Greece held a successful bond sale Tuesday amid a growing debate about whether the country should be given more time to repay the international bailout loans that saved it from bankruptcy.

TechCrunch:

• U.S. Online Advertising Rises 11.3% in First Half of 2010.

Washington Post:

• After Mortgage Meltdown, Barney Frank Gets Another Chance to Remake Housing Finance. Rep. Barney Frank, the disheveled, fast-talking Democrat from Massachusetts, had long been known more for his acerbic tongue than for the cause that has captivated him since he was a young aide in the Boston mayor's office. Frank had championed housing for America's poor for four decades, but he gained the chance to leave his biggest mark in 2007 when he became chairman of the House Financial Services Committee. He dreamed of tapping into the riches of Fannie Mae and Freddie Mac - at the time, both fabulously successful mortgage finance companies - to help pay for the construction of thousands of affordable apartments. It was too good to be true. Fannie and Freddie would soon melt down, requiring a federal bailout so far costing more than $160 billion. Frank's critics have alleged that his aspirations blinded him to the danger. Now Frank is poised to play a pivotal role on Capitol Hill as the Obama administration prepares to tackle the future of Fannie and Freddie and to overhaul how millions of Americans are housed.

NY Post:

• No Sale for NYC Tax. Retailers fear customers will flee. Is the other shoe about to drop? That's what some New York City retailers fear, as savvy consumers ratchet up spending online, because of the new sales tax and bargain-hunt in neighboring states for cheaper clothes and a pair of loafers. New York state, which lifted the sales tax exemption of 4.375 percent on clothing and shoes under $110 -- its plan is to raise $330 million this year to help balance the state budget -- is inadvertently encouraging online and out-of-state spending, brick-and-mortar retailers warn.
• First the Stimulus, Now the Hangover. Last week's dismal jobs figures tell us exactly what the President Obama's stimulus did: It temporarily saved jobs in state and local government -- thereby slowing our recovery. Friday's job scorecard for September -- the last before Election Day -- didn't carry even a hint of an imminent boom. Unemployment stayed at 9.6 percent, with private companies adding 64,000 jobs. And 64,000 jobs is nothing. The economy must create nearly five times that to keep up with population growth and replace 7.6 million jobs lost since 2007. Worse, the new hires were down a third from August -- and the positions were low-paying, in bars, restaurants and retail.

Pew Research:

• 36% - Tattooed Gen Nexters. Gen Nexters, Americans in the 18-25 age bracket, are not afraid to express themselves through their appearance and tattoos are the most popular form of self-expression -- more than one-in-three (36%) now has one. Tattoos, however, are at least as prevalent among the preceding generation of Gen Xers -- 40% of them have a tattoo. Other nontraditional appearance-altering practices are also prevalent among Gen Nexters: About half (54%) have done one or more of the following: gotten a tattoo, dyed their hair an untraditional color, or had a body piercing in a place other than their ear lobe.

Politico:

• President Obama to End Deep-Water-Drilling Ban.

Rasmussen Reports:

• Most Voters Fear Health Care Law Will Cause Some Companies to Drop Employee Coverage. Nearly three-out-of-four voters (73%) believe it is at least somewhat likely that the new health care law will cause some companies to drop health insurance coverage for their employees, including 47% who say it is Very Likely. A new Rasmussen Reports national telephone survey of Likely U.S. Voters finds that just 19% think that’s unlikely.

Reuters:

• Maverick's Ainslie Says Tech Stocks "Cheap". Technology stocks are at their cheapest in 20 years and the weaker dollar will likely benefit the entire sector, hedge fund industry pioneer Lee Ainslie said on Tuesday.

China Central Television:

• The China Banking Regulatory Commission's Shanghai branch will strictly check non-compliant lending and curb loans to property developers, citing Yan Qingmin, head of the regulator's Shanghai branch.