Today's Headlines

Bloomberg:

- The group Congress set up to shine light on the Treasury’s handling of the $700 billion financial system bailout is facing internal criticism about its own secrecy. The Congressional Oversight Panel, headed by Harvard Law School professor Elizabeth Warren, has split along partisan lines over drafting a budget and releasing transcripts of its weekly meetings. The group’s two Republicans, whose demands for more public information have been rejected by the three Democratic appointees, say the panel needs to follow the same rules it demands of the Treasury. “This is not the Justice Department, where we’re talking about launching midnight raids,” said Representative Jeb Hensarling, a Texas Republican and panel member who has failed three times to get the transcripts released. “We ought to err on the side of full disclosure to the American people.”

- Childbearing is making a comeback in the world’s wealthy industrialized nations including the U.S., after fertility dropped in the late 20th century, a study suggests. From 1975 to 2005, fertility dipped in countries as economic development rose, then began to rise in places that reached the highest levels of development, according to a study in the journal Nature. The bounce back of fertility suggests that advanced development doesn’t have to mean a vanishing population as some had feared, the research found.

- Ford Motor Co.(F), General Motors Co. and Chrysler Group LLC are among the recipients of $2.4 billion in federal grants President Barack Obama announced today to encourage the development of hybrid and electric vehicles. The funds include $1.5 billion for makers of batteries and $500 million for companies making electric motors and drive components. An additional $400 million will be used to test a system for recharging electric-powered cars.

- American International Group Inc., the insurer bailed out by the U.S., gained 38 percent to a one- month high after Radian Group Inc. posted a profit, boosting shares of financial guarantors. AIG advanced $5.17 to $18.69 at 12:46 p.m. in New York Stock Exchange composite trading. The insurer has plunged 97 percent in the past 12 months after the U.S. was forced to save the company from insolvency with a bailout that swelled to $182.5 billion. Traders “are pointing to the Radian numbers that are taking all the financial guarantors higher,” said Robert Bolton, managing director for trading at Mendon Capital Advisors Corp. Radian gained 51 percent, the most since going public in 1992 after posting a second-quarter profit on lower provisions for mortgage defaults. MGIC Investment Group Inc., Ambac Financial Group Inc. and Triad Guaranty Inc. each surged more than 15 percent.

- President Barack Obama’s effort to revamp the U.S. health-care system is drawing increasing disapproval from Americans worried about higher deficits, a Quinnipiac University poll shows. The July 27-Aug. 3 poll found that 52 percent of American voters disapprove of the way Obama is handling the health-care issue and 39 percent approve. That’s a switch from the 46 percent who approved and 42 percent who disapproved in late June, the university’s polling institute said. Almost three-quarters of the respondents said they don’t believe Obama’s promise that Congress can pass a health-care measure without adding to the budget deficit. And 57 percent say the legislation should be dropped if it adds “significantly” to the deficit, Quinnipiac said. “It’s obviously a problem for the people who are trying to push health-care reform,” said Peter Brown, assistant director of the Hamden, Connecticut-based polling institute, in an interview with Bloomberg Television. “The White House and Democratic leadership are very concerned that the month of August not become the time when the plan died.” “The average voter out there is skeptical about government,” Brown told reporters in Washington today. A plurality of 39 percent of respondents said they don’t think proposed changes would affect their own care, while 36 percent said the legislation would hurt the quality of their care and 21 percent said they would expect an improvement. Almost three-fifths say Congress shouldn’t pass a health-care measure unless it receives at least some Republican support. A requirement that individuals obtain insurance drew fire from respondents, with 68 percent opposed and 26 percent in favor. All the plans so far have some sort of mandate on Americans to obtain coverage, with help for those with lower incomes. The poll included 2,409 registered voters nationwide and has a margin of error of plus or minus 2 percentage points.

- The global financial crisis has blown a hole in the ``efficient markets'' theory on which modern economics and modern finance have been based, said Richard Thaler, a professor of economics and behavioral science at the University of Chicago. Writing in the Financial Times, he said the theory assumes that everyone in the economy behaves rationally, which is like leaving friction out of account when doing physics.

- Crude Oil fell after a government report showed a bigger-than-projected supply increase and U.S. service industries contracted in July, signaling that demand will be slow to rebound in coming months. Stockpiles gained 1.67 million barrels to 349.5 million last week, the Energy Department said. A 600,000-barrel gain was forecast, according to a Bloomberg News survey. Supplies rose at Cushing, Oklahoma, where New York-traded West Texas Intermediate oil is stored. Crude oil supplies at Cushing rose 1.2 million barrels to 33.3 million barrels in the week ended July 31, leaving stockpiles the highest since March.

- Copper rose for a fifth day, touching a 10-month high, as reports signaling a global economic rebound boosted the demand outlook for industrial commodities.

Companies in the U.S. cut fewer jobs in July as the worst recession since the Great Depression eased, a report from payroll-servicer Automatic Data Processing Inc. showed today. Europe’s manufacturing and service industries contracted at the slowest pace in a year last month, Markit Economics said today. Copper has almost doubled in 2009 on signs of reviving demand. “Copper is rising on the continuation of the optimism for the economy,” said Donald Selkin, National Securities Corp.’s chief market strategist in New York. “There’s anticipation that demand will be higher.”

- Goldman Sachs Group Inc.(GS) made more than $100 million in trading revenue on a record 46 separate days during the second quarter, or 71 percent of the time, breaking the previous high of 34 days in the prior three months. “It’s very counterintuitive to think that they’d be able to generate this much profit and this much revenue in the middle of an ongoing recession,” said William Cohan, a former banker at JPMorgan Chase & Co. and Lazard Ltd. and author of “House of Cards” about the collapse of Bear Stearns Cos. “But the fact that so many of their competitors are out of business or severely wounded has put them in a very strong position.” Goldman Sachs’s trading results reflected the firm’s willingness to take on more risk during the period. Value-at- risk, an estimate of how much the firm could lose in any given day, rose to an average of $245 million in the second quarter from $240 million in the first quarter and $184 million in the second quarter of 2008. Most of the increase in the second quarter came from bets on equities, the company said.

- The U.S. Senate is poised to inject $2 billion into the “cash for clunkers” program, as Democrats secured enough support to pass the measure and Republicans said they won’t block a vote.

- Government added almost as many jobs as business during the past decade in California, according to the Bureau of Labor Statistics. California’s municipal governments together added 363,100 employees on a non-seasonally adjusted basis – an 18.8% increase – to create a 2,295,200-person workforce. The state’s private sector during the same period added 447,200 jobs – a 4% increase – for a total of 11,821,200 employees. “Over the last 10 years, California’s responsibilities grew rapidly,” Matt Fabian, a managing director with Municipal Market Advisors in Westport, Connecticut, said. In effect, what it means to be California is changing.”

- The U.S. Treasury plans to sell a record $75 billion in its quarterly auctions of debt next week and indicated plans to expand inflation-indexed securities next year as it finances unprecedented budget deficits. The Treasury plans to auction $37 billion in three-year notes on Aug. 11, $23 billion in 10-year notes Aug. 12 and $15 billion in 30-year bonds Aug. 13. The amounts matched the median forecast of analysts surveyed by Bloomberg News.

- Massachusetts’s state pension system plans to cut its investment in hedge funds after an overall record loss of 24 percent in the fiscal year ended June 30. The fund’s board of trustees voted today to lower the amount of money invested in hedge funds to 8 percent, or about $3 billion of the $37.7 billion it had under management at the end of June, from 12 percent, which is about $4.5 billion. The vote reverses a five-year effort by the pension system to boost returns by expanding exposure to such alternative investments.

Wall Street Journal:

- A former Enron trader who is one of the energy markets' largest speculators plans to make a surprising recommendation to commodities regulators: rein in the ability of traders like him to influence prices. John Arnold, head of the $5 billion hedge fund Centaurus Advisors, is expected to argue before the Commodity Futures Trading Commission on Wednesday that trading should be limited in the benchmark natural-gas futures contract at certain points on the New York Mercantile Exchange because in-and-out activity can distort the underlying or "physical" gas price. In other testimony, Michael Masters, a hedge-fund manager and commodity-speculation critic, will suggest broader restrictions on oil and gas investing -- including banning investors such as pension funds from trading in major oil and natural-gas futures. The testimony comes amid increasing criticism of speculation in the oil market, as the CFTC considers changes in the markets. In hearings, the CFTC is examining ways to prevent "excessive speculation." Investors from individuals to institutions could be curtailed in betting on commodities prices after a flood of new futures-related products introduced in recent years. Mr. Masters is expected to testify that "passive investors" with no physical stake in the underlying commodity should be banned from trading. Such passive investors hold and roll a position in a single commodity or in a vehicle designed to duplicate an index of multiple commodities, such as the S&P-Goldman Sachs Commodity Index. Passive investors compete with physical commodity consumers and make it harder for them to hedge, Mr. Masters plans to testify. Their activity, he argues, obscures the natural price. Goldman executives object to suggestions the index distorts prices.

- Over the August Congressional recess, warned Nancy Pelosi last week, Republicans and insurance companies will resort to “carpet bombing, slash and burn, shock and awe” to bring down ObamaCare. Which makes us wonder how the House Speaker would describe what Democrats are doing to each other. The Dresden fire-bombing? The real political news this month isn’t Republicans vs. Democrats, and certainly not insurance companies vs. Democrats. If anything, the health-care business lobbies are helping Democrats by keeping quiet and hoping their silence buys their survival as heavily regulated utilities. If the insurance companies were any quieter, they’d be Trappists. The news is how the political left and its lobbies are roughing up fellow Democrats who won’t get with President Obama’s government-run program. They’re treating the centrists who helped make them a majority as if they were Newt Gingrich without the social conscience.

- Mortgage applications filed last week rose a seasonally adjusted 4.4% from the week before, as rates on fixed-rate mortgages dropped, the Mortgage Bankers Association said Wednesday. Total application volume was up 18% for the week ended July 31, compared with the same week in 2008, according to the MBA's weekly survey, which covers about half of all U.S. retail residential mortgage applications. Refinance applications rose an unadjusted 7.2% last week, compared with the week before; refinance application volume has risen 35% since its recent low at the end of June, the MBA said. The volume of applications for mortgages to purchase a home was up a seasonally adjusted 0.9% last week; volume for purchase mortgages has changed little over the last three weeks, according to MBA data. The four-week moving average for all mortgages was up 1.2%. Rates on fixed-rate mortgages fell, according to the survey, with the 30-year fixed-rate mortgage averaging 5.17% last week, down from 5.36% the week before. Fifteen-year fixed-rate mortgages averaged 4.60% last week, down from 4.75% the week before.

- For North Korean dictator Kim Jong Il, Bill Clinton's one-day visit provided a respite from a difficult summer during which he's contended with increasing reports of unrest at home and growing pressure from abroad.

- John Mackey, the chief executive of upscale grocer Whole Foods Market Inc.(WFMI), is planning to reposition the struggling Austin, Texas, chain as a champion of healthy living in a return to its natural-foods roots.

- Goldman Sachs Group Inc.'s(GS) second-quarter results might have attracted some unwanted attention from the government. The investment bank said Wednesday in a regulatory filing that the government has launched investigations into pay practices and credit-derivatives trading. Goldman said it was cooperating with the request, but declined to give further details.

NY Times:

- A pair of nuclear-powered Russian attack submarines has been patrolling off the eastern seaboard of the United States in recent days, a rare mission that has raised concerns inside the Pentagon and intelligence agencies about a more assertive stance by the Russian military. The episode has echoes of the cold war era, when the United States and the Soviet Union regularly parked submarines off each other’s coasts to steal military secrets, track the movements of their underwater fleets — and be poised for war. But the collapse of the Soviet Union all but eliminated the ability of the Russian Navy to operate far from home ports, making the current submarine patrols thousands of miles from Russia more surprising for military officials and defense policy experts.

Rassmussen:

- Fifty-four percent (54%) of U.S. voters say tax cuts for the middle class are more important than new spending for health care reform, even as President Obama’s top economic advisers signal that tax hikes may be necessary. A new Rasmussen Reports national telephone survey, taken Monday and Tuesday nights, finds that 34% disagree and say new spending for health care reform is more important. Twelve percent (12%) are not sure.

Politico:

- The debate over health care reform has exposed divisions among Senate Democrats — including a divide between those elected in the anti-Bush referendum of 2006 and the Obama wave of 2008. Four Democrats in the Senate class of 2006 have emerged as outspoken advocates for a government-run public insurance option, and they seem nervous about the direction that the Finance Committee is moving in its closed-door, bipartisan health care talks. But nine members of the 2008 class are encouraging the talks, downplaying fears that the negotiators will jettison a public option and insisting that a bipartisan bill is the best way to go.

FINalternatives:

- Third Point is scrapping its restrictive lock-up and redemption policies in favor of some more investor-friendly rules. The New York-based activist hedge fund shop told investors that it was doing away with both its one-year hard lock-up period for new investments, as well as its annual redemption policy.

Unwiredview.com:

- RIM(RIMM) might have found a solution to the resistive or capacitive dilemma. At least for their high end Blackberry devices. Just merge the damn things, make a touchscreen display with both resistive and capacitive touch sensors/controllers. And they filed a patent app for that.

Reuters:
- James Lockhart, the regulator for Fannie Mae and Freddie Mac, will soon step down after more than three years as overseer for the mortgage finance companies, an administration official said.

- Research and development spending in the technology sector, a critical component in an industry where innovation is king, should hold up well this year despite slumping sales and deep cost-cuts. Technology corporations are choosing to slash spending on areas such as marketing or staff while keeping research expenditures fairly constant as a percentage of sales. Some have even bumped up spending, hoping to cash in once the U.S. economy emerges from its longest recession since the Great Depression. While R&D spending at many large U.S. technology companies is down from a year ago, as a percentage of sales it is generally remaining in line, recent earnings reports show -- a trend that analysts say is likely to continue.

- The world's largest commercial oil storage hub at Cushing, Oklahoma, has added tanks over recent months and now has capacity for nearly 50 million barrels, NYMEX said on Wednesday. As of March, Cushing held around 47.5 million barrels in storage capacity, New York Mercantile Exchange managing director for Energy Research Robert Levin said. Cushing capacity is "approaching" 50 million barrels, he said. "Cushing has significant excess capacity," Levin said in a web seminar.

China Tech News:

- U.S. electronics retailer Best Buy(BBY) has announced that it has reached a strategic cooperation with China Unicom to sell the latter's 3G products in its stores in China. These products will include China Unicom's 3G mobile phones, data cards, packages, and 3G Internet services.

Bear Radar

Style Underperformer:
Small-Cap Growth (-1.61%)

Sector Underperformers:
HMOs (-2.85%), Oil Service (-2.62%) and Tobacco (-2.11%)

Stocks Falling on Unusual Volume:
ONXX, CLMT, OSIS, FEIC, SLH, HCP, APEI, VCLK, ASCA, TKLC, ERTS, CTRP, MOLX, KIRK, HQH, CRL, SXE, KSP, MOH, FCN, LDR, ESE and DF

Stocks With Unusual Put Option Activity:
1) GRMN 2) DVA 3) DTG 4) RL 5) WFMI

Bull Radar

Style Outperformer:
Large-Cap Value (-.59%)

Sector Outperformers:
Banks (+.85%), REITs (+.36%) and Restaurants (+.03%)

Stocks Rising on Unusual Volume:
WFMI, UDR, MAC, MMC, BAC, BCS, AA, MASI, GRMN, FWLT, TRLG, CSTR, SHPGY, LINC, AAWW, CVLT, JACK, TTES, PZZA, AKAM, CEDC, IPSU, CHSI, KFRC, ODSY, TISI, EVR, TNS, WNS, SAM, KND and HLS

Stocks With Unusual Call Option Activity:
1) GRMN 2) FWLT 3) OC 4) WFMI 5) DTV

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Wednesday Watch

Late-Night Headlines
Bloomberg:

- U.S. farmland values declined last year for the first time since 1987 as the country suffered the worst housing crisis since the Great Depression. The value of all land and buildings on farms averaged $2,100 an acre at the start of this year, down 3.2 percent from a revised $2,170 a year earlier, the U.S. Department of Agriculture said today in an annual report.

- Venezuelan President Hugo Chavez said he may nationalize two coffee companies after taking temporary control of their processing plants yesterday and vowed to keep seizing monopolies as he works to construct a socialist economy. “We’ve intervened in these big companies,” Chavez said today on state television. “Now we are conducting a study to expropriate them. They will become property of the nation.”

- President Barack Obama and top U.S. military commanders are under pressure from senators and civilian advisers to double the size of Afghan security forces, a commitment that would cost billions of dollars. In private letters and face-to-face meetings, these supporters of mounting a stronger effort against the Taliban seek to boost the Afghan National Army and police to at least 400,000 personnel from the current 175,000. “Any further postponement” of a decision to support a surge in Afghan forces will hamper U.S. efforts to quell an insurgency in its eighth year, Senators Joseph Lieberman, chairman of the Homeland Security Committee, and Carl Levin, chairman of the Armed Services Committee, wrote to the White House in a July 21 letter obtained by Bloomberg News.

- The U.S. government is likely to decide within 18 months that Fannie Mae and Freddie Mac need to be wound down and replaced with a similar entity that would support U.S. housing, Moody’s Investors Service said. The government-chartered mortgage-finance companies, which were seized by regulators in September 2008 and since have used $85.7 billion of their capital lifelines, face mounting losses that will mean “it could take a decade or longer” before they are able to emerge from U.S. control as “viable standalone entities,” the New York-based ratings company said in a report. The increasing losses that will be caused in part by government efforts to use Washington-based Fannie Mae and Freddie Mac of McLean, Virginia as tools to stem the housing slump, as well as the probability it will be “politically untenable to resurrect” the firms, mean the U.S. will likely create a new organization that won’t be owned by shareholders to play a similar role in the economy, Moody’s said.

- Whole Foods Markets Inc.(WFMI), the largest natural-goods grocer in the U.S., reported third-quarter profit that topped some analysts’ estimates, sending the stock higher in late Nasdaq trading. Net income climbed 26 percent to $42.8 million, or 25 cents a share, in the period ended July 5, exceeding the average estimate of 20 cents in a survey of 13 analysts by Bloomberg. Whole Foods advanced $3.28, or 13 percent, to $28.10 at 6:51 p.m. after the close of regular trading on the Nasdaq Stock Market. The stock has more than doubled this year.

Wall Street Journal:

- In the largest wave of upward revisions of GDP forecasts since the financial crisis began, UBS AG is now predicting 2.5% growth in the third quarter, up from 2%, and 3% growth in the fourth quarter, up from 2.5%. Wells Fargo & Co. also revised its third-quarter forecast to 3% growth, up from 2.2%. For the fourth quarter, it is now predicting 2.0%, up from 1.6%. T. Rowe Price Group Inc. increased its third-quarter projection to 2.75% from 1.3%. Economists already had expected growth to rebound in coming months after companies drew down inventories in the first half of the year. A promising manufacturing report this week showed a jump in new orders and production, building on those expectations. "When you combine leaner inventories with more sales, that's the fundamental reason for being more optimistic about at least the second half of this year," said Mark Zandi, chief economist for Moody's Economy.com. The firm revised its third-quarter forecast to 1.6% from 1.1%, and its fourth-quarter outlook to 2.1% from 0.2%.

- Stimulus spending on infrastructure projects is moving slowly and many projects won't get started before the summer construction season ends, complicating the Obama administration's efforts to tout the impact of the $787 billion economic recovery act. The General Services Administration has decided how to spend $1 billion on federal building upgrades, but only about 1% of that money has been spent. The GSA will approve another $1 billion by year's end, but Anthony Costa, acting commissioner of the GSA's public buildings services, said it will take until 2011 before the agency picks projects for all of the $5.5 billion it was allocated for infrastructure work. The Federal Transit Administration has spent about $500 million of the $8.4 billion it received. The Coast Guard has decided to spend the majority of its $240 million on four bridges, but a spokesman said the money "won't transfer hands for a while." California's transportation department has decided how to spend $1.7 billion of the $2.6 billion it is getting for highway infrastructure projects, but the agency says its spending on such projects probably won't peak until next year. The gradual start means many projects won't get under way before the beginning of the fall, when many construction projects in the northern half of the country typically halt before the winter rain and snow. That is providing fodder to critics of the recovery act who say it was overhyped as a way to quickly boost the economy. It may also hamper any potential efforts to pass another stimulus bill later this year. The White House Recovery Office said Tuesday that government agencies have decided how to spend about $31 billion of the $73 billion going directly to construction projects, but it couldn't offer a figure on how much has actually been spent.

- Former President Bill Clinton won the release of two U.S. journalists held by North Korea in a diplomatic stroke fraught with promise and potential pitfalls for the Obama administration's drive to halt the proliferation of nuclear weapons.

- Few of President Obama’s 2008 campaign pledges were more definitive than his vow that anyone making less than $250,000 a year “will not see their taxes increase by a single dime” if he was elected. And he was right, very strictly speaking: It’s going to be many, many, many billions of dimes. Asked about raising taxes on the middle class on Sunday on CBS’s “Face the Nation,” White House economist Larry Summers wouldn’t repeat Mr. Obama’s pre-election promise. “It is never a good idea to absolutely rule things out no matter what,” Mr. Summers said—except, apparently, when his boss is running for office. Meanwhile, on ABC’s “This Week,” Treasury Secretary Timothy Geithner also slid around Mr. Obama’s vow and said, “We have to bring these deficits down very dramatically. And that’s going to require some very hard choices.” These aren’t even nondenial denials. The Obama advisers are laying the groundwork for taxing the middle class while claiming the deficit made them do it.

- Microsoft(MSFT) Needs More to Stall Google’s(GOOG) Engine.

MarketWatch.com:
- A possible U.S. regulatory clampdown on big energy speculators could also hit exchange-traded funds backed by commodities, making it harder for investors of all sizes to buy new shares and forcing fundamental changes to the way the funds do business. The Commodity Futures Trading Commission, which will hold its last of three hearings on commodities speculation Wednesday, is considering setting strict caps on the number of contracts financial investors can buy in energy futures. These position limits are designed to prevent single, large investors from exerting too much influence over the price of any one commodity. Big investment banks have drawn policymakers' ire over their role in helping financial speculators bet on oil, which some contend has helped drive up prices more than double from lows this year. But ETFs, heavily used by institutional investors such as hedge funds and banks like Goldman Sachs Group Inc.(GS) , as well as an increasingly popular tool for retail investors, have also come under scrutiny for contributing to wild swings in prices. Since the two biggest energy ETFs are also big buyers of energy futures, new position limits could make it harder for United States Oil Fund(USO) , United States Natural Gas Fund(UNG) , and their competitors, to keep growing, analysts say. Setting position limits in futures markets could "increase ETFs' expense, their tracking error, and ultimately, it makes them less transparent, makes them a worse product," said Matt Hougan, editor of the Exchange-Traded Funds Report. "Eventually they will run out of bullets in ways to provide accurate exposure to commodities." Citigroup(C) , Morgan Stanley(MS) and Goldman are among the biggest holders of USO and UNG, according to FactSet. Total holdings of USO, including futures contracts on the ICE and the Nymex, stand equivalent to 32.5 million barrels of oil.

CNBC.com:
- Citigroup plans to sell 20 businesses in consumer finance area, many of them located in Europe, its Chief Executive Vikram Pandit said in an interview with Singapore's Business Times.

NY Times:

- The Treasury Department said on Tuesday that only a small number of homeowners — 235,247, or 9 percent of those eligible — had been helped by the latest government program created to modify home loans and prevent foreclosures.

IBD:

- Soldiers are pulling out of Iraq, but DynCorp International's (DCP) work there is far from done.

Rasmussen:

- Support for Republican congressional candidates has risen to its highest level in recent years, giving the GOP a seven-point lead over Democrats in the latest Congressional Ballot and stretching the out-of-power party's lead to six weeks in a row. The latest Rasmussen Reports national telephone survey shows that 43% would vote for their district’s Republican congressional candidate while 38% would opt for his or her Democratic opponent.

Financial Times:

- Investor appetite for more complex over-the-counter derivatives could rebound next year, according to Tullett Prebon, as the inter-dealer broker on Tuesday reported better than expected pre-tax earnings. The financial crisis sparked a retreat across the board from riskier assets, including bespoke OTC derivatives, some of which were blamed for exacerbating the crisis. However Terry Smith, Tullett chief executive, predicted an eventual return of interest in many OTC derivatives. Asked how much of the market would return to around pre-crisis levels, Mr Smith said: “The balance of it I think will come back quite strongly, maybe next year.”

- The Global Times, controlled by the People’s Daily, the Chinese Communist party mouthpiece, reported that the public reacted with “banter and sarcasm” to NBS figures showing average urban wages in China rose 13 per cent in the first half to $2,142. It quoted an online poll showing 88 per cent of respondents doubted the official numbers. An editorial on Tuesday in the China Daily, the government’s English-language mouthpiece, quoted another survey that found 91 per cent of respondents skeptical of official data, up from 79 per cent in 2007. Economists abroad have also questioned the reliability of the data in recent months. “Despite starkly limited resources and a dynamic, complex economy, the state statistical bureau again needed only 15 days to survey the economic progress of 1.3bn people,” said Derek Scissors, of the Washington-based Heritage Foundation, referring to the time it took for the bureau to produce the figures after the end of the first half this year. “At worst, results are manufactured to suit the Communist party.” Some economists say provincial officials have enormous incentives to improve their career prospects by exaggerating local economic growth.

BBC:

- One third of Europeans have never used the net, according to an EU report. The study, which examined the region's digital landscape over the last five years, also revealed that more than one in four Europeans had never used a PC.

China Daily:

- Property sales across 30 cities in China fell 4 percent in July as prices soared and supplies dwindled with big cities feeling the pinch for the first time this year, analysts said. According to the UWIN property transaction system, the floor space of apartments sold in July dipped 5.37 percent over June to 1.04 million sq m. Statistics put out by the Beijing Real Estate Transaction website showed that sales of forward delivery housing in Beijing fell to 10,862 units last month, compared to 12,840 units in June. Property transactions in Guangzhou fell 36 percent over June. The figure is only half of that of May, said Guangzhou's official property website.

- GUANGZHOU: Workers here could have their wages cut under a new salary guideline designed to take pressure off businesses during the financial crisis. According to Guangdong's corporate salary guideline for 2009, the standard salary increase has been set at 7 percent this year, compared to 15 percent in 2008. The upper limit is 12 percent, compared with 21 percent for 2008. The lower limit is zero or even negative, compared with a 5.5 percent increase in 2008. The guideline did not specify by how much a wage could be reduced. This is the first time that the province has set the lower limit of salary increase at zero or below.

Late Buy/Sell Recommendations
Citigroup:

- Reiterated Buy on (KFT), boosted estimates, raised target to $33.

CSFB:

- Rated (RGA) Outperform, target $50.

- Reiterated Outperform on (REGN), boosted target to $25.

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

Asia Ex-Japan Inv Grade CDS Index unch.
S&P 500 futures -.13%.
NASDAQ 100 futures -.08%.

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Earnings of Note
Company/EPS Estimate
- (PG)/.78

- (MMC)/.33

- (OSG)/-.67

- (FWLT)/.62

- (XTO)/.82

- (PWR)/.17

- (DF)/.42

- (BHI)/.45

- (PCG)/.84

- (OC)/.07

- (DVN)/.58

- (BYD)/.12

- (RL)/.50

- (ASCA)/.37

- (NWSA)/.18

- (CSCO)/.28

- (ALL)/1.11

- (PRU)/1.20

- (MUR)/.66

- (ATHN)/.14

- (CECO)/.19

- (JCOM)/.44

Economic Releases

8:30 am EST

- The ADP Employment Change for July is estimated at -350K versus -473K in June.

10:00 am EST

- ISM Non-Manufacturing for July is estimated at 48.0 versus 47.0 in June.

- Factory Orders for June are estimated to fall .8% versus a 1.2% gain in May.

10:30 am EST

- Bloomberg consensus estimates call for a weekly crude oil inventory build of +600,000 barrels versus a +5,152,000 barrel increase the prior week. Gasoline supplies are expected to fall by -800,000 barrels versus a -2,315,000 barrel decline the prior week. Distillate inventories are estimated to rise by +1,225,000 barrels versus a +2,108,000 barrel increase the prior week. Finally, Refinery Utilization is expected to fall by -.2% versus a -1.27% decline the prior week.

Upcoming Splits
- None of note

Other Potential Market Movers
- The weekly MBA mortgage applications report, Challenger Job Cuts report, (AXP) financial community meeting and the BMO Capital Healthcare Conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and financial 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 Slightly Higher, Boosted by REIT, Airline, Gaming, Bank, Paper, Insurance and Homebuilding Shares

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After-hours Movers
After-hours Real-Time Stock Bid/Ask
After-hours Stock Quote
After-hours Stock Chart
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