Bear Radar

Style Underperformer:
Large-cap Value (-.41%)

Sector Underperformers:
I-Banks (-1.09%), Utilities (-.84%) and Airlines (-.83%)

Stocks Falling on Unusual Volume:
BMRN, NOK, WDR, RECN, SGMS, LEAP, SKY and MAR

Stocks With Unusual Put Option Activity:
1) HGSI 2) CIT 3) STEC 4) XLNX 5) JCP

Bull Radar

Style Outperformer:
Large-cap Growth (-.03%)

Sector Outperformers:
Defense (+.82%), Medical Equipment (+.77%) and Gaming (+.42%)

Stocks Rising on Unusual Volume:
MOS, PPG, VNDA, MMSI, BAX, NVS, PLCM, CBSH, MBFI, ADTN, SWS, UFPI, STEC, SNDK, CSIQ, ARST, MMSI, JRCC, BIDU, VPRT, PTNR, BUCY, HUBG, FUQI, CPNO, ZEUS, STLD, CHE, HOG, CCK, ESL, WHR and SON

Stocks With Unusual Call Option Activity:
1) CA 2) WHR 3) STEC 4) AMR 5) SNDK

Links of Interest

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Thursday Watch

Late-Night Headlines
Bloomberg:

- Global personal-computer shipments fell about half as much as expected in the second quarter as consumers snapped up netbooks and other low-priced machines, research firms Gartner Inc. and IDC said today. Shipments fell 5 percent to 68.1 million units, rather than the anticipated 9.8 percent drop, Gartner said. IDC reported a 3.1 decline, compared with a prediction of 6.3 percent.

- U.S. auto sales probably will rise to an annual rate of more than 10 million in this year’s second half as companies that held off purchases replace their aging fleets, helping to revive production, analysts said. “There will be a more normal replacement cycle that is going to allow commercial fleets, government and rental-car companies to swap out existing fleets,” said Maryann Keller, an auto-industry consultant and a director of Dollar Thrifty Automotive Group Inc., in an interview yesterday. “Purchases in the first half were abnormally low by historical standards.” Fleet purchases, along with the government’s “cash for clunkers” program to encourage people to replace older, less fuel-efficient vehicles, may push the annual rate to more than 9.9 million, the highest in any month so far this year.

- HSBC Holdings Plc(HBC) and a Cayman Islands-based hedge fund were sued by the trustee liquidating Bernard Madoff’s business over claims they withdrew $578 million in “fake” profit from the con man’s firm before it collapsed. The lawsuit, filed yesterday by trustee Irving Picard in U.S. Bankruptcy Court in Manhattan, claims London-based HSBC withdrew most of the money on behalf of its client, Herald Fund Spc, less than 90 days before Madoff’s firm began liquidating. Picard says such transfers are recoverable under U.S. bankruptcy law.

- Senator Charles Schumer said the nation’s health insurers should pay at least $75 billion to $100 billion over 10 years to help finance the overhaul of the U.S. health-care system. Schumer, a New York Democrat and a member of the Senate Finance Committee, said private insurers should “pay their fair share.” He said panel members today discussed assessing a fee on insurers to help offset the cost of the overhaul, which may cost $1 trillion over a decade, and that the proposal likely will be included in legislation. “We need the insurance companies to step up to the plate to be part of the solution,” he said at a news conference in Washington where he was joined by three other Democratic members of the committee. Insurers such as UnitedHealth Group Inc. and WellPoint Inc. are the latest target as the finance panel works on a plan to overhaul the health-care system and meet President Barack Obama’s goal of signing legislation this year. America’s Health Insurance Plans, a group that represents insurers, said the industry already is doing its part and will oppose any new fees on it. “As families and small businesses struggle during the current economic slowdown, now is not the time to impose new fees on health-care coverage that will make coverage less affordable,” Robert Zirkelbach, a spokesman for the group, said in an e-mailed statement. WellPoint, the No. 1 health insurer by enrollment, also shot down the idea, saying it would “further exacerbate” cost shifting. “This proposal is another way of taxing health benefits for all Americans with private coverage,” the Indianapolis-based company said in a statement today.

- China’s economy rebounded from its weakest growth in almost a decade as record lending and surging investment countered a slump in exports. Gross domestic product expanded 7.9 percent in the second quarter from a year earlier after a 6.1 percent gain in the previous three months, the statistics bureau said in Beijing today. That was more than the 7.8 percent median estimate of 20 economists surveyed by Bloomberg News.

- China Cosco Holdings Co., the world’s largest operator of dry-bulk ships, canceled a $299 million order for eight vessels as the global recession and overcapacity saps rates. The shipping line will also delay delivery of three other vessels to be built by affiliate Cosco Corp. Singapore Ltd., according to statements last night from the companies, both members of China’s largest shipping group. All of the vessels have a capacity of 57,000 deadweight tons.

- North Korea has begun making a series of documentaries praising the life of leader Kim Jong Il, whose gaunt appearance at a July 8 ceremony reinforced speculation he’s suffering from a terminal illness.

- The U.S. Treasury proposed requiring hedge funds to register with the Securities and Exchange Commission, part of the Obama administration’s plan to tighten oversight of the financial-services industry. The legislation would require firms for the first time to report their assets, leverage, off-balance sheet holdings and investments to regulators on a confidential basis, the department said today in a statement. The law would apply to hedge funds, private-equity firms and venture capital managers with more than $30 million in assets.

- A top official at the U.S. Securities and Exchange Commission said options for regulating hedge funds may include restricting investments by the firms. Andrew Donohue, who heads the SEC Division of Investment Management, told members of Congress today the funds could be made subject to the Investment Company Act, which regulates mutual funds. The law restricts what firms may buy, trading strategies and how much money funds can borrow to maximize profits. Through such regulation “the commission could impose, as appropriate, investment restrictions or diversification requirements designed to protect investors,” Donohue said at a hearing by a subcommittee of the Senate Banking Committee.

- A U.S. antitrust probe of the credit-default swaps market includes efforts to guarantee contracts through clearinghouses, according to a Justice Department spokeswoman. “The Antitrust Division is investigating the possibility of anticompetitive practices in the credit derivatives clearing, trading and information services industries,” Laura Sweeney, a Justice Department spokeswoman in Washington, said today in an e-mail. People familiar with the investigation said earlier this week that the government wanted to determine if the bank owners of London-based Markit Group Ltd. had unfair access to price information.

- The Obama administration has concluded that at least 60 of the remaining prisoners at Guantanamo Bay, Cuba, are eligible to be transferred overseas, according to an administration official familiar with the matter.

- President Barack Obama “strongly opposes” an effort in Congress to require General Motors Corp. and Chrysler LLC to restore relationships shed during bankruptcy proceedings, while stopping short of a veto threat. The administration said today in a statement that “the decision by Chrysler and GM to rationalize their dealer networks was a critical part of their overall restructuring to achieve long-term viability in order to save jobs in the long run.” The statement also said it would set a “dangerous precedent” to “intervene into a closed judicial bankruptcy proceeding on behalf of one particular group at this point.” The House of Representatives is slated to vote tomorrow on a bill that would require the automakers to restore their franchise agreements as a condition of receiving federal aid. The plan, opposed by both GM and Chrysler, comes amid complaints from lawmakers that the carmakers terminated dealerships with little notice or explanation. GM plans to shutter about 2,400 dealerships, said spokesman Greg Martin, Chrysler officials have said 789 dealerships were targeted for closing.

- Malaysia’s economy may shrink more than previously forecast this year as the global recession reduces exports and household spending, the Malaysian Institute of Economic Research said. Southeast Asia’s third-largest economy will probably contract 4.2 percent in 2009, the institute said in a report released in Kuala Lumpur today, cutting its forecast from an April prediction for a 2.2 percent decline in gross domestic product. It lowered the 2010 growth forecast to 2.8 percent from 3.3 percent.

Wall Street Journal:

- U.K. Prime Minister Gordon Brown's government reiterated its support for former leader Tony Blair to become the first president of the European Union.

- Why We Endorsed Warrantless Wiretaps. The inspectors general report ignores history and plays politics with the law.

- Some big banks that have received government bailouts in the U.S. and Britain are offering handsome pay packages to lure stars and reverse last year's steep losses. Bank of America Corp. recently hired a top bond salesman with a guaranteed two-year deal valued at about $6 million for the first year, people familiar with the matter say. Citigroup Inc. offered nearly $2 million in an attempt to recruit a top brokerage executive.

- Europe's auto industry has weathered the worst downturn since World War II with help from government-backed scrapping incentives, but as these programs expire, the spotlight will shift back to a lingering issue that car makers failed to confront during the slump: overcapacity. The European car industry has about 35% more production capacity than it needs, depending on market cycles, analysts say. That means production lines aren't running at full steam and can even be idle. Incentives, which typically offer consumers discounts on new vehicles if they scrap aging gas guzzlers, have inflated demand during the recession and meant auto makers haven't been forced to address capacity, something observers say was necessary. "Scrappage schemes are significantly distorting the dynamics of the European market, in our view, helping to protect jobs and prevent insolvencies -- but at what cost?" said Credit Suisse Group analyst Stuart Pearson.

- Legislation moving forward in Congress would require nearly every American to carry health insurance. That could squeeze a group of middle-income earners who make too much to get the government's help buying insurance, but aren't so wealthy they can easily absorb the high cost of coverage. Under a proposal unveiled this week in the House, the subsidies would be available to individuals with incomes as high as $44,000 a year and families earning as much as $88,000 a year. Those who fail to comply would pay a penalty of 2.5% of their income, levied when they file their annual tax returns. Senate proposals differ in details but have the same basic structure. People with incomes just above the subsidy line could consider the mandate a burden. "They'll be put in this funny dilemma where they can't afford health care, but they have to pay a fine," said Richard Kirsch, national campaign manager for liberal advocacy group Health Care for America Now.

- U.S. Natural Gas Fund's failure so far to win regulatory approval to issue new shares has prevented the exchange-traded fund from buying new contracts, weighing on gas prices. On Wednesday, at the New York Mercantile Exchange, natural-gas prices dropped 4.3% to settle at $3.283 per million British thermal units. As of July 3, natural-gas inventories were 27.4% higher than a year ago, as demand was weighed down by the declining industrial activities and weaker air-conditioning use in the Northeast. "It's outright bearish," said Sid Perkins, managing partner at Ion Energy Group, a New York-based natural-gas brokerage.

NY Times:

- Retailers are flocking to India, thanks to an economy that is still growing and a young population eager to gobble up new brand names. But some Western brands — once they conquer the regulatory hurdles to getting into the market here — may get a sinking sense of familiarity. For instance, Timberland, the maker of hiking boots and other outdoor gear, identifiable by its tree logo and chunky, durable shoes, will find Woodland, which sells similar shoes and clothing, and has a tree logo. Pinkberry, the Los Angeles-based frozen yogurt chain, will encounter Cocoberry, a frozen yogurt retailer with a look-alike logo and a similar array of candy and fresh fruit toppings. And The Financial Times, Pearson’s newspaper published with a pink tint since 1893, is locked in a legal battle with Bennett, Coleman & Company, owners of India’s largest English-language newspaper: a pink-tinted supplement it calls The Financial Times, which it registered in India in 1984.

- A hospital that serves thousands of indigent Massachusetts residents sued the state on Wednesday, charging that its costly universal health care law is forcing the hospital to cover too much of the expense of caring for the poor. The hospital, Boston Medical Center, faces a $38 million deficit for the fiscal year ending in September, its first loss in five years. The suit says the hospital will lose more than $100 million next year because the state has lowered Medicaid reimbursement rates and stopped paying Boston Medical “reasonable costs” for treating other poor patients. The central charge in the suit is that the state has siphoned money away from Boston Medical to help pay the considerable cost of insuring all but a small percentage of residents. Rapidly rising costs and the battered economy have caused more problems than the state and supporters of the 2006 law — including Boston Medical — anticipated. The suit comes as Congress looks to Massachusetts as a potential model for overhauling the nation’s health care system. Even before the suit, the state’s fiscal crisis had cast doubts on the law’s sustainability. “The magnitude of the loss here can’t be solved on the program-cutting or expense-cutting side,” Mr. Traylor said. Professor Parmet said the hospital’s dissatisfaction with the new law should be a warning to Congress that “insurance alone doesn’t solve the problems” of the health care system. In fact, she said, it might exacerbate the financial problems of safety-net hospitals in the short term.

IBD:

- When it looked like the economic slump was about to get worse last fall, the crew at Universal Health Services (UHS) made sure they wouldn't get caught off guard.

Forbes:

- IBM's(IBM) massive and myriad technology businesses have meant that the IT giant has felt every constriction that's choked the tech industry for the last year and a half. But after four quarters of stalled and then sinking revenue, Big Blue may be preparing to put its first foot on the bottom.

Politico:

- The president of the United States usually waits for no one. But when it comes to health care reform, there’s an exception to the rule: the Senate Finance Committee. President Barack Obama did his best to personally jolt the process Wednesday — delivering Rose Garden marching orders, sitting for interviews with three TV networks and unleashing his political organization to run ads pressing moderate Democrats and Republicans to get on board.

Rasmussen:

- Thirty-two percent (32%) of likely voters believe the United States is heading in the right direction, according to the latest Rasmussen Reports national telephone survey. While that’s only down two points over the past week, it’s the lowest level found on the question since mid-February. Sixty-two percent (62%) of voters say the country is moving down the wrong track, up a point from last week and also the highest level since February.

Detroit Free Press:

- Michigan’s unemployment rate spiked higher in June, hitting 15.2%, the highest rate since mid-1983.

USA Today.com:

- Community groups and agencies could be overwhelmed as they receive millions of dollars from a $5 billion stimulus program to make low-income households more energy efficient, some state officials and members of Congress warn. Some of the groups have been faulted in the past for mismanaging thousands of dollars a year in federal aid. Those officials are worried about the massive increase for a program whose annual budget was $227 million last year. Auditors in five states have reported management and oversight problems in the past four years with weatherization programs, which provide energy-efficient heating or cooling systems and other improvements to lower utility bills. "When you throw 25 times as much money at this program, you're going to lose 20% to 30% of it to fraud," says Sen. Tom Coburn, R-Okla., a stimulus critic. Coburn points to Nevada, where a local housing authority has sued to block a $1.8 million stimulus award to Community Services Agency Development Corp., claiming the state did not fund the non-profit last year because of mismanagement. Lori Story, the non-profit's lawyer, denied the claim and said it simply decided not to apply for weatherization funds in 2008.

AP:

- North Korea is not ready to resume disarmament negotiations over its nuclear program because the U.S. and its allies do not respect the nation's sovereignty, said the country's No. 2 leader. Speaking at the Non-Aligned Movement summit of 118 nations, Kim Yong Nam, president of the Presidium of the Supreme People's Assembly and the country's second-highest official, blasted the U.S. for its "hostile actions," which had pushed the situation into a "serious confrontation." "For us there can be no dialogue, nor any negotiations where the principles of respect for sovereign rights and equality are denied," Kim said. "The (six-nation) talks ... came to a permanent end because the U.S. and the majority of the obedient parties to the talks abandoned this principle," he added. North Korea has threatened a "thousand-fold" military retaliation against the U.S. and its allies if provoked and has boasted of a "strong army that can impose merciless punishment against those who offend us.

Reuters:

- CIT Group Inc, a lender to hundreds of thousands of small and mid-sized U.S. businesses, said on Wednesday that bailout talks with the government had ended, a development that could ultimately drive the company into bankruptcy. The announcement followed last-ditch talks in which Treasury officials had expressed concern about a worsening liquidity crunch at the 101-year old lender and indications that government aid would not put it on a path to recovery. It also showed the possible limits of Washington's ability and willingness to rescue companies, after multiple bailouts engineered by Treasury, the Federal Reserve and the Federal Deposit Insurance Corp for larger companies such as American International Group Inc and Citigroup Inc.

- Massachusetts' top securities regulator has begun a probe into the sales practices of three firms that sold leveraged exchange-traded funds, a derivatives cocktail that can reap double or triple an assets' daily returns. Massachusetts' Secretary of State William Galvin said in a statement on Wednesday that he had sent letters to three firms heavily involved in structuring these funds: Rydex Investments, Direxion Funds and ProShares. The funds, which have exploded in growth, also have faced scrutiny in recent weeks by the Financial Industry Regulatory Authority, the industry's own watchdog. "Since 2006 these products have become increasingly popular. Yet, due to the daily nature of the leverage employed, there is no guarantee of amplified annual returns and they generally incur greater transactions costs than traditional exchange traded funds," Galvin said. Their enormous popularity, and the pummeling that stocks took after Lehman Brothers went bankrupt in September, has led some investors to question whether the leveraged ETFs contributed to the stock market's steep plunge from late September through March. They often use derivatives such as index options, index futures, total return swaps and equity swaps to increase or reduce market exposure. A May report by Barclays Global Investors said the daily rebalancing of levered ETFs exacerbated the volatility of underlying indexes and securities that comprise the indexes. The U.S. Securities and Exchange Commission received 221 letters critical of the leveraged ETFs after it recently sought comment on how to address short-selling.

- Rio Tinto Ltd/Plc has evacuated staff in China involved in research of the iron ore and steel industry in response to the detention of some of its iron ore traders by state authorities, the Australian Financial Review reported on Thursday. The unsourced report from Shanghai also said other foreign groups were moving employees out of China until conditions there become more certain.

- Slot-machine makers such as International Game Technology (IGT), Bally Technologies Inc (BYI.) and WMS Industries (WMS) may see a significant boost to their results over the next two years as two U.S. states bet on gaming to help bridge their budget deficits. Ohio and Illinois, facing billion-dollar-plus budget deficits and constrained by high unemployment levels, have recently passed new revenue-generating measures such as allowing slot machines in bars and race tracks. The combined legislative initiatives in the two states could add about 64,500 new slot machines to the gaming market over the next two to three years, Todd Eilers of Roth Capital Partners wrote in a note.

- California Governor Arnold Schwarzenegger said on Wednesday he was hopeful a deal with lawmakers to resolve the state's budget crisis by closing a $26.3 billion shortfall was near, perhaps even by the end of the day.

Financial Times:

- Citigroup(C) is close to a secret agreement with one of its main regulators that will increase scrutiny of the US bank and force it to fix financial, managerial and governance issues. People close to the situation said that the deal had been discussed in recent weeks amid increased pressure on Citi from the Federal Deposit Insurance Corporation, the regulator, and could be finalized soon. The proposed agreement requires, among other things, that Citi strengthens its board and governance, improves asset quality, better manages expenses and provides more information to regulators on its capital and liquidity, these people added. The regulator’s action highlights concern over Citi’s financial health, governance and the strength of its management team, led by Vikram Pandit, chief executive. The FDIC is known to be frustrated with the slow pace of Citi’s “toxic” assets sales, its losses and the lack of commercial banking experience at the top. An agreement would strengthen the FDIC’s position in its dealings with Citi and its demands for detailed financial information as it deliberates over whether to include it on its list of “problem banks”. Citi, which is about to cede a 34 per cent stake to the US government as part of its latest rescue, struck a similar agreement with another regulator late last year, industry executives say.

- China’s “whole steel industry has been bribed” by Rio Tinto, suggested a lead article in the China Daily newspaper on Wednesday that marks a sharp escalation in a dispute rocking the global steel and iron ore industries. The state-owned China Daily quoted an unnamed “industry insider” claiming Rio bribed each of the 16 Chinese steel companies involved in this year’s negotiations to set the benchmark iron ore price, a process that brings together steelmakers and suppliers of iron ore, steel’s key ingredient. Rio, according to Chinese press accounts, possessed information about the Chinese steel industry too sensitive to be obtained publicly. Rio computers seized in Shanghai this week, Chinese media reported, revealed data about Chinese steel companies so detailed, one unnamed source in the China Daily claimed, that even the presidents of those companies might not have known them. Such information could be used to boost Rio’s negotiating position in the iron ore pricing round with Chinese steelmakers. Rio officials say the company is supporting the Australian government’s efforts for a diplomatic solution and is chiefly concerned for the safety of its employees. But there is no indication yet that either the company or the Australian government understand the full extent of charges against the Rio employees. Wednesday’s report in the China Daily appeared as Kevin Rudd, Australia’s prime minister and a former diplomat in Beijing, toughened his stance on the detention of the Rio employees. Mr Rudd warned Beijing that the case was being watched by ”a range of foreign governments and corporations”.

China Daily:

- Apple Inc's(AAPL) iPhone may debut in China sooner than expected after the US tech firm yesterday was reported to have started manufacturing the Chinese edition of its popular smart phone. One of China's largest portal websites Neteast.com yesterday reported that Foxconn Technology Group, Apple's manufacturing partner, has started producing the iPhone specially designed for the Chinese market. The product, code-named "90" by Foxconn, eliminates the WiFi function as earlier reported but kept the support of 3G network, Bluetooth and other popular features, the report said, citing anonymous sources in Foxconn. It also said the negotiations between Apple and China Unicom is nearly over and the two firms will announce the details in the next few weeks. Although both Foxconn and Apple yesterday refused to comment on the report, there are signs that Apple may be just inches away from wooing the world's largest mobile population, where cellphone users reached 687 million by May, according to government figures. On Monday, the company was also reported to have applied for the network access license in China, which means that Apple could begin offering iPhone within six months, according to research firm Wedge Partners. According to OVUM, a British telecom consulting firm, there are currently about 1 million unlocked iPhones in China, most of which are smuggled from aboard.

Late Buy/Sell Recommendations
Citigroup:

- Upgraded (SENO) to Buy, target $6.

- Reiterated Buy on (STT), target $57.

- Reiterated Buy on (BK), target $33.

William Blair:

- Rated (CERN) Outperform.

JPMorgan:

- Raised (DPZ) to Outperform.

Jefferies:

- Raised (AXP) to Buy, target $33.

Fox-Pitt Kelton:

- Raised (MTG) to Outperform, target $9.

Night Trading
Asian Indices are +1.25% to +1.75% on average.

Asia Ex-Japan Inv Grade CDS Index +.72%.
S&P 500 futures -.44%.
NASDAQ 100 futures -.37%.

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Earnings of Note
Company/EPS Estimate
- (HOG)/.25

- (MAR)/.21

- (BIIB)/.68

- (FCS)/-.10

- (JPM)/.05

- (IBM)/2.02

- (PPG)/.75

- (CBSH)/.38

- (PII)/.48

- (BAX)/.94

- (GOOG)/5.08

- (CY)/-.09

- (GPC)/.63

- (APH)/.42

Economic Releases

8:30 am EST

- Initial Jobless Claims for last week are estimated to fall to 553K versus 565K the prior week.

- Continuing Claims are estimated to fall to 6850K versus 6883K prior.

9:00 am EST

- Net Long-term TIC Flows for May are estimated to rise to $16.5B versus $11.2B in April.

10:00 am EST

- Philly Fed for July is estimated to fall to -4.8 versus -2.2 in June.

1:00 pm EST

- The NAHB Housing Market Index for July is estimated to rise to 16.0 versus 15.0 in June.

Upcoming Splits
- None of note

Other Potential Market Movers
- Geithner Meeting French Finance Minister Lagarde, the weekly EIA natural gas inventory report and the (ELN) shareholders meeting could also impact trading today.

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

Stocks Finish at Session Highs, Boosted by Technology, Financial, Commodity, Airline, Gaming, Homebuilding and REIT Shares

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In Play

Stocks Soaring into Final Hour on Less Economic Fear, Diminishing Financial Sector Pessimism, Short-Covering, Bargain-Hunting

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Technology longs, Defense longs, Biotech longs, Financial longs and Medical longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is very positive as the advance/decline line is substantially higher, almost every sector is rising and volume is above average. Investor anxiety is very high. Today’s overall market action is very bullish. The VIX is rising 2.88% and is high at 25.74. The ISE Sentiment Index is low at 107.0 and the total put/call is slightly below average at .77. Finally, the NYSE Arms has been running low most of the day, hitting .43 at its intraday trough, and is currently .43. The Euro Financial Sector Credit Default Swap Index is plunging 7.51% today to 100.83 basis points. This index is down from its record March 10th high of 208.75. The North American Investment Grade Credit Default Swap Index is falling 5.4% to 132.45 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is rising .18% to 34 basis points. The TED spread is now down 432 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is falling 1.34% to 46.13 basis points. The Libor-OIS spread is falling .75% to 31 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is rising 12 basis points to 1.75%, which is down 89 basis points since July 7th. The 3-month T-Bill is yielding .17%, which is unch. today. Economically sensitive shares are substantially outperforming today, with the MS Cyclical Index jumping 5.2%. (XLF) is breaking convincingly above its 200-day moving average for the first time in over 2 years. The Euro Financial Sector CDS Index is plunging to the lower end of the trading range it has been in since mid-May and looks poised to break down, which is also a big positive. Despite the weakness in trucking stocks, the Transports are poised to close above the 200-day moving average for the first time since Sept. of last year. China’s GDP report, the Philly Fed Index, Initial Jobless Claims and the Housing Market Index will be market movers tomorrow. We are getting extended short-term, however I suspect stocks can build on recent gains after a brief pause. Nikkei futures indicate an +330 open in Japan and DAX futures indicate an +14 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on bargain-hunting, short-covering, investment manager performance anxiety, diminishing financial sector pessimism and less economic pessimism.