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Thursday Watch

Late-Night Headlines
Bloomberg:

- Gold imports by India, the world’s biggest buyer, probably halved in June as higher prices and weak currency deterred jewelry buyers, a traders group said. Purchases were 8 to 10 metric tons in the first three weeks of this month, compared with 17 to 18 tons in a year-ago period, said Suresh Hundia, president of the Bombay Bullion Association Ltd., citing preliminary data. India’s bullion imports have fallen for nine straight months because of high prices and increased supply of scrap jewelry. “There has been no demand in the last four months and the main reason for that are the high prices,” Hundia said in a phone interview. “Although gold has corrected by as much as $75 an ounce from recent highs, we have seen very little demand from the jewelry industry over the past few weeks,” John Reade, UBS’s chief metals strategist in London, said in a note today. “The gold price is still too high to attract bargain hunters.”

- NYSE Euronext’s(NYX) control of U.S. stock trading is slipping away. Two-hundred seventeen years after the New York Stock Exchange was founded under a Wall Street buttonwood tree, its modern-day parent executed a record low 30.2 percent of May’s trades, data compiled by Bloomberg show. That’s down 2.8 points from February for the worst three months since June 2008. The beneficiary wasn’t Nasdaq OMX Group Inc., the Big Board’s main rival for 38 years. It was Direct Edge Holdings LLC and Bats Exchange Inc., which more than doubled their combined share since August to 22.8 percent.

- Nike Inc.(NKE), the world’s largest athletic-shoe maker, fell in late trading after it said orders declined 12 percent because of the global economic slump. Excluding the effect of currency exchange rates, worldwide orders for delivery from June through November fell 5 percent from a year earlier. Sara Hasan, an analyst with McAdams Wright Ragen Inc. in Seattle, projected orders would decline 2 percent at most, on that basis.

- Bed Bath & Beyond Inc.(BBBY) reported first-quarter profit rose 14 percent, beating analysts’ estimates, as the largest U.S. home-furnishings retailer lowered expenses to guard against the recession.

- Legg Mason Inc.(LM) rose 11 percent in New York trading after the Telegraph newspaper reported that billionaire Nelson Peltz acquired a stake in the fund manager and may push for a sale or breakup. Peltz bought 12 million to 13 million shares of Baltimore- based Legg Mason, or about 9 percent of the outstanding stock, the British newspaper said, citing “well-placed” sources it didn’t identify. Peltz held 745,846 shares, or 0.52 percent, as of March 31, according to data compiled by Bloomberg.

- Watson Pharmaceuticals Inc.(WAT) won U.S. approval to sell the first generic copy of Plan B, the emergency contraceptive made by Teva Pharmaceutical Industries Ltd. The Watson medicine will be available by prescription only to women ages 17 and younger, according to a notice posted today on the Food and Drug Administration’s Web site. Teva, of Petah Tikva, Israel, has exclusive rights to an over-the-counter version of the pill for women ages 18 and older until Aug. 24, the FDA said

- Goldman Sachs Group Inc.(GS) refused to grant the government’s auditor access to advisory work it did for the U.K. Treasury during the rescue of Northern Rock Plc, a panel of lawmakers in Parliament said. The Public Accounts Committee in the House of Commons said the U.S. bank withheld access to its work on Northern Rock from the National Audit Office. It also said the Treasury was poorly prepared to cope with the run on deposits at the Newcastle-based lender, which was nationalized in 2008. “Goldman Sachs refused the National Audit Office access to the financial modeling underpinning its analyses for the Treasury, even though this work had been paid for by the taxpayer,” the committee said in a report in London today.

- The euro may decline 7% to its weakest level since April as yields on German government bonds drop at a faster pace than those on Treasuries, reducing demand for the 16-nation currency, according to Deutsche Bank AG. “The recovery is stronger in the US than in Europe,” said Koji Fukaya, a senior currency strategist at the brokerage unit of Deutsche Bank in Tokyo.

- A credit market stress indicator returned to normal this week for the first time since the collapse of Lehman Brothers Holdings in September, according to analysts at Barclays Capital. The gap, called the skew, between the cost of default protection measured by the Markit iTraxx Europe index of investment-grade companies and the average price of buying credit-default swaps for each of the 125 index constituents turned positive this week and is trading at about 3 basis points, compared with a negative 60 basis points in December, according to Barclays data. “Systemic risk has been taken out and the massive dislocation we saw post-Lehman has normalized,” said Puneet Sharma, head of investment-grade credit strategy at Barclays in London.

- Google Inc.(GOOG), criticized by China for disseminating “vulgar content,” said it’s investigating whether its Google.com Web site is inaccessible in the country. “We have received reports that most users cannot access Google.com in China,” spokeswoman Marsha Wang said in an e-mail today. “We are investigating the matter and hope that the service will be restored soon.”

Wall Street Journal:

- Analog Devices Inc.(ADI) Chief Executive Jerald G. Fishman said the Norwood, Mass., chip maker is planning for an upturn in business in fiscal 2010, having concluded that "the bottom has been established."

- Best Buy Co.(BBY) is planning to open 40 standalone mobile-phone stores this fiscal year and now believes that it can quintuple its share of the U.S. mobile-phone market to 15%, the company's new chief executive said on Wednesday.

- In its latest effort to help cash-strapped entrepreneurs, the Small Business Administration on Wednesday permanently changed a key loan program so that businesses can refinance if they plan to expand or buy equipment. Previously, business owners could only take advantage of the SBA's 504 program when they sought new loans to buy real estate, upgrade machinery and make improvements. Now, borrowers can refinance their existing SBA-backed loans as long as the amount is 50% or less than the total cost of expansion. The change is designed to help business owners restructure debt under better terms and "improve their cash flow and enhance their viability so that they can grow and create jobs," said Hayley Matz, an SBA spokeswoman.

- GMAC LLC is suspending wholesale financing for certain Chrysler Group LLC dealers it considers to be too risky to lend to, both GMAC and Chrysler confirmed on Wednesday. The move could ultimately push some dealers out of business and hurt Chrysler's ability to sell cars.

- A breakdown of longstanding business models and the crisis in client confidence due to last year’s financial havoc mean a new reality for wealth-management firms. More than a quarter of high-net-worth individuals withdrew assets from their wealth-management firm or left their firm altogether in 2008, according to the 13th annual World Wealth Report. The report was compiled by Bank of America Corp.’s Merrill Lynch Global Wealth Management and Capgemini Group. The 15 largest firms surveyed saw the dollars they manage fall by almost a quarter in 2008, a sharp reversal from the 17% growth they saw in 2007, the report said.

- Seagate Technology Inc. (STX) boosted its fiscal fourth-quarter revenue guidance and projected first-quarter revenue above analysts' estimates, saying unit demand and pricing are tracking more favorably than it expected in April. The computer disk-drive maker also said improvements in operational efficiencies, product management, and a transition to new products have helped its margins.

- Jefferies Group Inc. (JEF) projected second-quarter results well above expectations, saying earnings will come in above $50 million amid record net revenue topping $500 million. The forecast - which many considered a strong sign that others on Wall Street will do well - sent Jefferies shares up 8.8% in late trading to $22.25. Analysts polled by Thomson Reuters had been expecting $25.8 million in earnings and $341.2 million in revenue. The strong guidance comes after Jefferies had been struggling with declining revenue for several quarters, but things started to turn around last quarter as the company ended its five-quarter losing streak and revenue nearly doubled.
- Clashes between security services and demonstrators erupted again late Wednesday in central Tehran, even as one unsuccessful presidential candidate protesting June 12 elections dropped his objections, dealing a significant blow to the opposition's so-far united front. Amid the domestic unrest -- the worst since the Iranian revolution 30 years ago -- Tehran scrambled to project its military might to the rest of the world.

- Back when the housing mania was taking off, Massachusetts Congressman Barney Frank famously said he wanted Fannie Mae and Freddie Mac to "roll the dice" in the name of affordable housing. That didn't turn out so well, but Mr. Frank has since only accumulated more power. And now he is returning to the scene of the calamity -- with your money. He and New York Representative Anthony Weiner have sent a letter to the heads of Fannie and Freddie exhorting them to lower lending standards for condo buyers. You read that right. After two years of telling us how lax lending standards drove up the market and led to loans that should never have been made, Mr. Frank wants Fannie and Freddie to take more risk in condo developments with high percentages of unsold units, high delinquency rates or high concentrations of ownership within the development.

- Rail-car maker Greenbrier Cos. has enlisted members of Congress in a dispute with General Electric Co.(GE) over a $1.2 billion contract, arguing that the conglomerate should maintain its commitment to buy cars because it benefits from government spending. Seventeen lawmakers, including Democratic Sen. Ron Wyden of Oregon, wrote to GE Chief Executive Jeffrey Immelt on June 12, calling it "disconcerting" that GE might delay or cancel some of the 11,900 rail cars covered by the eight-year pact.

NY Times:

- The recession in Russia will run deeper and longer than it appeared even a few months ago, the World Bank concluded in a report released Wednesday, underscoring the impression that Russia has been one of the countries hit hardest in the downturn. The Russian economy, which seesaws from boom to bust along with commodity prices in the best of times, has experienced the most extreme swing from growth to contraction of any large economy in the current downturn. The bank’s new projection showed that the Russian economy would contract by 7.9 percent this year and not recover to precrisis levels until at least 2012.

IBD:

- Colds and flus are rough on those unfortunate enough to catch them. But this past season was good for SXC Health Solutions (SXCI).

Business Week:
- From the outside, nearly everything about Apple's iPhone 3GS seems nearly identical to the iPhone 3G released last year. Even Apple's TV ads make light of this fact: The phone looks the same as before, the company says, but it does so much more. Still, all the new features in Apple's million-selling new phone have to come from somewhere, and there have been some important changes inside the new iPhone, according to an Apple iPhone 3GS teardown analysis by the market research firm iSuppli.

CNNMoney.com:

- It wasn't too long ago that the thought of buying a reliable car from Korea seemed laughable. Today, Korean vehicles are common fare and automakers from India are getting ready to invade the U.S. market. Experts say their vehicles are no joke. Plus, Detroit's turmoil could give Indian automakers a foot in the door here. With General Motors and Chrysler both looking to save money, in part by trimming their dealer ranks, hundreds of new-car dealers could be ready to sign up with new competitors like these.

- What’s next for Qualcomm(QCOM)? The company rakes in cash every time someone else builds a wireless device. No wonder CEO Paul Jacobs wants to put a phone in every conceivable gadget.

Politico:

- Sen. Chris Dodd conceded Wednesday that health care reform may not clear a key committee this week — the latest logistical speed bump in President Barack Obama’s push for new legislation addressing the country’s health care crisis. Dodd told reporters Wednesday that the Senate Health, Education, Labor and Pensions Committee still faced a raft of amendments to wade through, including those related to workforce, fraud and abuse, and long-term care.

- They still call it the Waxman-Markey climate-energy bill — but it’s Nancy’s bill now. By saying she would pass the massive — and massively controversial — cap-and-trade bill by the start of the July 4 recess, the House speaker took a big gamble, setting herself up for a daring political victory or the biggest defeat of her six months as President Barack Obama’s legislative ramrod. And on Monday, Pelosi doubled down, scheduling a Friday vote on the legislation, overriding the objections of farm staters and moderates who fear the vote could explode into a potentially lethal election issue next year as Republicans cast it as a one huge tax hike.

Rasmussen:

- Seventy-six percent (76%) of Americans say it is at least somewhat likely that a large amount of money in the $787-billion economic stimulus plan will be wasted due to inadequate government oversight. Nearly half (46%) say it is very likely, according to a new Rasmussen Reports national telephone survey.

Washington Post:

- The United States has sent a shipment of weapons and ammunition to the government of Somalia, according to a U.S. official who said the move signals the Obama administration's desire to thwart a takeover of the Horn of Africa nation by Islamist rebels with alleged ties to al-Qaeda. The shipment arrived in the capital, Mogadishu, this month, according to the official, who is helping craft a new U.S. policy on Somalia and spoke on the condition of anonymity because of the sensitivity of the matter. "A decision was made at the highest level to ensure the government does not fall and that everything is done to strengthen government security forces to counter the rebels," the official said. Still, the situation in the volatile nation continues to deteriorate. Somalia's government issued an urgent plea last weekend for foreign troops as the heaviest fighting in months has engulfed the capital and other regions, killing more than 200 people, including the minister for internal security and the police chief. Fighting since early May has displaced more than 120,000 people, with scores of legislators also fleeing the country, paralyzing parliament.

SanDiegoBusinessJournal:

- A Chula Vista man and two entities he controls were charged June 24 by the Securities and Exchange Commission with operating a Ponzi-like scheme through five hedge funds. The SEC alleges that Moises Pacheco, owner of Advanced Money Management and Business Development & Consulting, raised $14.7 million from 200 investors, telling them of a lucrative investment strategy based on the purchase and sale of covered call options. Pacheco claimed that the funds were generating annual profits between 30 percent and 48 percent, or between 2.5 percent and 4 percent a month, according to the complaint.

Reuters:

- Junk bonds are signaling that the worst of a U.S. default wave may be over in as little as three months, though for junk bond investors, a recent rally may be as good as it gets. After government repair work to the financial system encouraged risk-taking, junk, or high-yield bonds rallied hard in the first half, returning 28 percent through Tuesday and more than erasing last year's record losses, according to Bank of America Merrill Lynch data.

- The United States and Venezuela will soon reinstate ambassadors expelled in a diplomatic spat last year, a sign of warmer relations between President Hugo Chavez and what he calls the U.S. "empire." Leftist Chavez has toned down his strident criticism of U.S. foreign policy since Barack Obama took office in January, partly because the U.S. president is popular in Latin America in contrast to his predecessor George W. Bush. Obama, in turn, has pledged to engage with countries considered problematic by the United States. Venezuela, one of the United States' top crude oil suppliers, said its envoy would be back in Washington this week. A source at the U.S. State Department said Ambassador Patrick Duddy will return to Caracas, but did not say when. Along with his close friend Fidel Castro of Cuba and other Latin American leaders, Chavez often says he respects Obama. The Venezuelan joked earlier this month that Obama was more left-wing than he was for effectively nationalizing General Motors -- a reference to the large stake the U.S. government now owns as part of auto giant's bankruptcy. The announcement about the envoys came as leaders from Bolivia, Cuba, Ecuador and Nicaragua, who are all critical of the U.S. influence in Latin America, gathered in Venezuela for a summit of an alternative trade alliance started by Chavez. Despite the warmer tone and a handshake with Obama at a summit of countries in the Americas in April, Chavez is still committed to countering Washington's global influence and recently accused U.S. spies of plotting to kill him without Obama's knowledge. During Wednesday's summit in the Venezuela town of Maracay, Chavez said the CIA was behind recent post-electoral turmoil and protests in Iran. The easing of relations with Venezuela has hit some bumps. Chavez has bristled at some comments by Obama and in March called him an "ignoramus."

- Short interest rose slightly in early-June on both the New York Stock Exchange and the Nasdaq, the exchanges said on Wednesday, suggesting an increase in bearish sentiment in the stock market. Technology and pharmaceuticals were the most heavily represented sectors in the top five short position net increases on both the Nasdaq and NYSE. The following list shows some stocks in those sectors that saw increased interest from short sellers, who bet that a certain stock's price will fall, and key recent news events for those stocks.

- Long-term mutual funds saw overall buying, or inflows, for a 14th week, though inflows to stock funds slowed and the total amount hit a three-week low, according to the Investment Company Institute. Total estimated inflows were $11.1 billion in the week to June 17, down $1.5 billion or 12 percent from $12.61 billion the prior week, the data released on Wednesday showed. While the numbers represent a drop, inflows were still higher than a month ago. Mutual funds saw $9.72 billion in estimated inflows for the week ending May 20.

Late Buy/Sell Recommendations
Citigroup:

- Reiterated Buy on (BAC), target $18.

Night Trading
Asian Indices are +.50% to +1.50% on average.

Asia Ex-Japan Inv Grade CDS Index +.5%.
S&P 500 futures unch.
NASDAQ 100 futures -.10%.

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Earnings of Note
Company/EPS Estimate
- (LEN)/.-70

- (JTX)/1.69

- (MKC)/.41

- (CAG)/.41

- (PALM)/-.66

- (FINL)/.01

- (MU)/-.41

- (RBN)/.25

Economic Releases

8:30 am EST

- Final 1Q GDP is estimated to decline 5.7% versus a prior estimate of a 5.7% decline.

- Final 1Q Personal Consumption is estimated to rise 1.5% versus a prior estimate of a 1.5% gain.

- Final 1Q GDP Price Index is estimated to rise 2.8% versus a prior estimate of a 2.8% increase.

- Final 1Q Core PCE is estimated to gain 1.5% versus a prior estimate of a 1.5% increase.

- Initial Jobless Claims for last week are estimated to fall to 600K versus 608K the prior week.

- Continuing Claims are expected to rise to 6714K versus 6687K prior.

Upcoming Splits
- None of note

Other Potential Market Movers
- The Fed’s Fisher speaking, (CHS) analyst meeting and the weekly EIA natural gas inventory report could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by technology and mining 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 Tech, Gaming, Hospital, Alt Energy and Construction Shares

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In Play

Stocks Higher into Final Hour on Falling Energy Prices, Short-Covering, Less Economic Angst

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Technology longs, Medical longs and Biotech longs. I covered all my (IWM)/(QQQQ) hedges and some of my (EEM) short this morning, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is higher, most sectors are rising and volume is about average. Investor anxiety is high. Today’s overall market action is mildly bullish. The VIX is falling 3.99% and is high at 29.36. The ISE Sentiment Index is below average at 117.0 and the total put/call is about average at .86. Finally, the NYSE Arms has been running about average most of the day, hitting 1.34 at its intraday peak, and is currently 1.06. Nikkei futures indicate an +100 open in Japan and DAX futures indicate a -44 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on more lower energy prices, less economic angst, diminishing financial sector pessimism and investment manager performance anxiety.

Today's Headlines

Bloomberg:

- The Federal Reserve refrained from increasing its $1.75 trillion bond-purchase program, said the pace of economic contraction is slowing and predicted inflation will remain “subdued for some time.” “Substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time,” the Federal Open Market Committee said in a statement after a two-day meeting in Washington where it also kept the benchmark interest rate between zero and 0.25 percent. The rate will stay at “exceptionally low levels” for an “extended period.”

- Mortgage applications in the U.S. increased last week for the first time in a month as purchases climbed, adding to evidence the market is stabilizing. The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan rose 6.6 percent to 548.2 in the week ended June 19, from 514.4 the prior week. The group’s purchase index advanced to the highest level in two months, and its refinancing gauge improved for the first time in five weeks.

- The Baltic Dry Index fell to its lowest level in almost two weeks in London on speculation demand is weakening. Global trade will plunge 16% this year before expanding 2.1% in 2010, the Paris-based Organization for Economic Cooperation and Development said today. Iron Ore is the biggest single dry-bulk commodity hauled at sea and China its largest user. Chinese imports fell 6.2% last month. “We expect the physical market to decline further this week on the back of lower activity and weaker freight market sentiment,” Rikard Vabo and Lars Erich Nilsen, analysts at Oslo-based Fearnley Fonds ASA, a specialist investment bank, wrote today. The index dropped 123 points, or 3.2%, to 3,751 points on the Baltic Exchange.

- A benchmark gauge of corporate credit risk in the U.S. fell as a government report showing an increase in durable-goods orders bolstered speculation the recession is moderating. Credit-default swaps on the Markit CDX North America Investment-Grade Index Series 12, which is used to speculate on the creditworthiness of 125 companies in the U.S. and Canada or to protect against losses on their debt, fell 4.9 basis points to a mid-price of 140.4 basis points as of 12:40 p.m. in New York, according to CMA DataVision. Credit swaps on retailers including J.C. Penney Co. and Nordstrom Inc. declined. Swaps on Plano, Texas-based J.C. Penney fell 23 basis points to 239 basis points, according to CMA. Contracts on Nordstrom, a Seattle-based department store chain, dropped 18 basis points to 237 basis points. Contracts on Miami-based Ryder System Inc., the largest U.S. truck-leasing company, fell 17 basis points to 227 basis points, according to CMA.

- Wheat prices were inflated by index investors and the Commodity Futures Trading Commission should enforce limits on positions to curb speculation, a congressional investigation reported. Index traders pushed futures beyond levels justified by supply and demand, Senator Carl Levin said yesterday as he released a report by the Senate Subcommittee on Investigations into price movements in 2008 wheat trading. The Chicago Board of Trade needs to eliminate waivers that allow funds to hold more than 6,500 contracts at any one time, which would lower the influence of non-agricultural buyers, Levin said. Speculation “created unwarranted costs and risks for wheat farmers, grain merchants, grain processors and consumers,” Levin told reporters. Index traders “have undermined the futures market” and can sometimes force consumers to pay more for food and limit the ability of farmers to manage risk, said Levin.

- Metals prices may decline in the next three months as China, the world’s biggest user, begins to run down inventories that were built up earlier this year, according to Francisco Blanch at Merrill Lynch & Co. “China has been accumulating inventories of commodities for the last six months or so,” Blanch, head of global commodity research at Merrill, said today in an interview. “This accumulation of inventories now needs to be cleared off. End-user demand in China has not really picked up.” “Inventories in relation to demand will probably prove, in my opinion, to be a bit overdone in the short run, which is why we expect commodity prices to come off,” Blanch told Bloomberg Television. “Oil and the metals markets will start to suffer because of large inventory accumulation.” Stockpiles of copper monitored by the Shanghai Futures Exchange rose last week to the highest in 21 months, totaling 68,536 tons, nearly quadruple the level at the start of the year. The exchange’s tally does not include material held by the State Reserve Bureau. The stockpiling comes amid complaints lodged with the World Trade Organization by the European Union and the U.S. about Chinese export restrictions on magnesium, coke and zinc. China is unfairly using export taxes to keep materials costs lower for domestic steel and manufacturing companies, hurting overseas competitors, according to the U.S. and the EU. “The story in China in this particular case could obviously result in restrictions in other parts of the trading world,” Blanch said. An increase in protectionism may be “a key driver of a further downturn in trading, which could be quite negative,” he said.

Wall Street Journal:

- A major union this week called on Morgan Stanley(MS) -- which repaid $10 billion in government bailout funds last week -- to reverse recent salary increases for senior executives and other top earners. The raises, part of an effort to reduce the importance of annual bonuses, were awarded this year amid executive-pay restrictions associated with the aid. The raises "weakened the link between top executive pay and performance," wrote Gerald McEntee, international president of the American Federation of State, County and Municipal Employees in a letter to Morgan Stanley, also provided to The Wall Street Journal.

NY Times:

- Lawyers for President Obama are quietly drafting first-of-their kind guidelines barring workplace discrimination against transgender federal employees, officials said Tuesday. The guidelines will be in an updated federal handbook for managers and supervisors to be distributed and posted online in the next couple of months, and they could also be included in other materials for managers. They will list transgender people — those who identify their gender differently from the information on their birth certificates — as among several groups protected by antidiscrimination laws. Though transgender men and women are not believed to make up more than a fraction of a percent of the federal work force, their inclusion in the discrimination guidelines is seen as a breakthrough by transgender and gay rights advocates.

MarketWatch:
- All derivatives dealers should have capital and leverage limits, be subject to new fraud penalties, reporting and recordkeeping regulations, said a key regulator on Wednesday. "By fully regulating the institutions that trade or hold themselves out to the public as derivative dealers we ensure that all OTC products, both standardized and customized, are subject to robust oversight," Commodity Futures Trading Commission Chairman Gary Gensler told the Managed Funds Association in Chicago.

NY Post:

- After making billions off the backs of rich people, a growing number of hedge funds are betting they can strike gold by morphing into mutual funds and targeting the middle class. An example of the shift came this week when New York firm Bull Path Capital Management opened its doors to mutual fund investors after successfully converting one of its hedge funds into a mutual fund. AQR Capital, under Cliff Asness, launched a mutual fund using some of his firm's hedge-fund strategies, and more AQR mutual funds are on track to be launched later this year. One of the earliest adopters was Highbridge Capital, which began such offerings in 2005.

LA Times:

- For years, the powerful Service Employees International Union has played a lead role in the campaign for a landmark federal law that would allow workers to join a labor organization simply by signing petitions. Now, as part of a high-stakes battle in California, the union is urging federal officials to throw out petitions signed by tens of thousands of its own members who have asked to be represented by a rival upstart group. The David-vs.-Goliath face-off pits the SEIU, its $300-million annual budget and its legions of staffers, lobbyists and lawyers against a band of about 150 insurgents who are either volunteers or being paid from donations. Most have defected from the SEIU's 2-million-strong ranks. In lodging legal challenges to the roughly 80 petitions filed by its fledgling competitor, the SEIU has moved to block organizing elections at hospitals, clinics and nursing homes up and down the state. And it has used some of the same tactics that employers often use to thwart union drives.

Miami Herald:

- Addressing hundreds of the nation's sheriffs in Fort Lauderdale, Homeland Security Secretary Janet Napolitano said Tuesday that her department would work to secure the nation's border and enforce immigration laws. ''Make no mistake about it. We are a law enforcement department. We will enforce the nation's immigration laws.'' Napolitano said. As the keynote speaker at the National Sheriffs' Association annual conference on Tuesday, Napolitano discussed immigration and other issues facing law enforcement. Napolitano said she would take legal action against employers who make money from the labor of illegal immigrants, creating the demand for undocumented workers. Napolitano has been pushing for tougher national laws against such employers since she was governor of Arizona.

USA Today:

- Construction company CEO David Dominguez no longer worries about inadvertently hiring workers who are in this country illegally. That's because he uses E-Verify, the federal program that allows him to quickly check the legal status of potential employees. Dominguez, who builds residential interiors in Arizona and California, said that as word gets around about the program, job applicants without legal status avoid businesses such as his, Andrew Lauren Co., which use E-Verify. "The system works," Dominguez said. His San Diego-based company has been using E-Verify for several years in hiring office workers and laborers. The voluntary federal program has seen a rapid growth in use this year, Department of Homeland Security records show. More than 1,000 employers are signing up each week on average, and employment checks are approaching 200,000 a week.

Publico:

- Jose Manuel Gonzalez-Paramo, a member of the European Central Bank’s executive board, said the central bank will wait and see how its latest unconventional measures work, citing an interview. “We are going to wait and see how the latest measures work,” he said, when asked if there was room for further rate cuts and more unconventional measures. Policy makers haven’t decided if 1% is the lowest level for interest rates, he said. “We are no longer in free fall, but we are still falling,” he said.

China Knowledge Online:

- China Telecom Corp Ltd, the nation's largest fixed-line operator, is in talks with Canada's Research In Motion Ltd (RIMM) to introduce BlackBerry devices into the market China, said a senior executive from the Chinese operator, sources reported.

The National:
- In the normally staid and conservative world of Saudi Arabian business, controversy rarely comes to light. The rulers and the big families that dominate commercial life there usually ensure any “delicate” situations are dealt with, well, delicately. So the goings-on at the Al Gosaibi conglomerate and its vaguely related Saad Group have brought some unwelcome attention to the kingdom’s corporate culture and apparatus. Outside investors have not liked what they have heard so far. What began as a little local difficulty for The International Banking Corporation (TIBC) of Bahrain has had knock-on effects in the UAE and Oman, and could have even more serious consequences in other financial sectors, including the global banking giant HSBC.

Bear Radar

Style Underperformer:
Large-cap Value (+1.03%)

Sector Underperformers:
HMOs (-.36%), Defense (-.12%) and Restaurants (+.13%)

Stocks Falling on Unusual Volume:
BA, ROS, OSIR, SVU, WXS and AGP

Stocks With Unusual Put Option Activity:
1) RMBS 2) CBS 3) TEL 4) XCO 5) MON