Today's Headlines

Bloomberg:

- Mortgage rates for 30-year fixed loans fell this week to the lowest level since May, reducing borrowing costs for hesitant buyers as signs show the recession- plagued U.S. housing market may be bottoming. The average 30-year rate fell to 5.12 percent from 5.29 percent, mortgage buyer Freddie Mac of McLean, Virginia, said today in a statement. The 15-year rate was 4.56 percent. A buyer with a $400,000 mortgage would save about $344 a month under the 30-year fixed rate Freddie Mac announced today compared with the cost a year ago with the rate was 6.47 percent.

- Tech Data Corp. (TECD US) advanced 9.3 percent to $37.27 and gained 11 percent earlier, the most intraday since May 21. The world’s second-biggest distributor of computer products reported second-quarter profit of 70 cents a share, 59 percent more than the average analyst estimate.

- Manufacturing in the Philadelphia region unexpectedly expanded in August for the first time in almost a year, a sign the economy is pulling out of the recession. The Federal Reserve Bank of Philadelphia’s general economic index climbed to 4.2, the highest level since November 2007, from minus 7.5 in July, the bank said today. It was the first positive reading, signaling expansion, since September. Manufacturing may contribute to a recovery in coming months as factories speed assembly lines after cutting inventories at a record pace in the first half of 2009. “As manufacturing firms reduce inventories to more comfortable levels, they will start to look at increasing output and employment in the next several months,” said Zach Pandl, an economist at Nomura Securities International Inc. in New York. “We’re moving towards growth in the third quarter.” Economists projected the Philadelphia index would improve to minus 2, according to the median of 52 forecasts in a Bloomberg News survey. The index of new orders climbed to 4.2 from minus 2.2 and the shipments index increased to 0.6 from minus 9.5. The inventory measure jumped to 0.3 from minus 15.4. The report showed the employment index improved to minus 12.9, the highest level in 11 months, compared with minus 25.3. Manufacturers were more upbeat about the future, today’s report showed. Expectations for the next six months climbed to 56.8 from 51.9.

- Google Inc.(GOOG), the owner of the most popular Internet search engine, climbed as much as 2.6 percent after Goldman Sachs Group Inc. added it to the “conviction buy” list on expectations for growth in Europe and higher display revenue, as consumers increase their spending. Online travel bookings and e-commerce may improve European search spending, while companies’ back-to-school and Christmas search advertising may rise in September, the analysts led by James Mitchell wrote in a note yesterday. Display revenue, which includes YouTube, could grow 40 percent in 2010 from this year, adding as much as 2 percent to overall sales, they said. The six-month share-price target was also raised to $560 from $510. “Google’s international and U.S. revenue may recover simultaneously, given recent results from other Internet companies showing surprisingly buoyant Europe revenue trends,” the analysts wrote. “We expect structurally more search spending in Europe and increased display share, plus ‘usual suspects’ of seasonality and easing comparisons, to drive revenue re-acceleration.”

- Dennis Gartman, an economist and the editor of the Gartman Letter, said he is creating his first hedge fund to speculate on assets including global equities and commodities. The River Crescent Fund, created Aug. 17, seeks to raise $200 million over the first year, Gartman said today in an interview from Suffolk, Virginia.

- JPMorgan Chase & Co.(JPM) and Goldman Sachs Group Inc.(GS) topped a list of the biggest credit-default swaps dealers in a Fitch Ratings survey. Barclays Plc, the U.K.’s second-largest lender, ranked third. Deutsche Bank AG and Morgan Stanley, both of which had been either first or second in the reports from 2004 through 2006, dropped to fourth and fifth in the survey of 26 banks. The top 10 banks made up an estimated 67 percent of trading among those surveyed by Fitch that are operating in the credit- swaps market, up from 62 percent in the last published survey in 2006.

- The cost of protecting corporate bonds from default fell as a U.S. gauge of leading economic indicators increased for a fourth consecutive month, signaling the recession is almost over. Contracts on the Markit CDX North America Investment-Grade Index, linked to 125 companies in the U.S. and Canada, were off 3 basis points to a mid-price of 121 basis points as of 10:02 a.m. in New York after earlier declining as much as 4.5 basis points, according to broker Phoenix Partners Group.

- Natural gas futures fell below $3 per million British thermal units for the first time in more than seven years after a government report showed rising supplies of the industrial and power-plant fuel. U.S. inventories of the fuel rose 52 billion cubic feet to 3.204 trillion in the week ended Aug. 14, the Energy Department said today in a weekly report. Supplies were 19 percent higher than the five-year average. “We have such a storage overhang staring you in the face,” said Cameron Horwitz, an analyst at SunTrust Robinson Humphrey Inc. in Houston. “If you think storage is going to bump up against physical limitations, then there’s really no place for the price to go but downward,” Horwitz said. Demand from factories, steel mills and chemical plants tumbled 13 percent in the first five months of 2009 because of the recession, department figures show. Industrial users account for about 29 percent of gas demand. U.S. storage capacity is about 3.95 trillion cubic feet, King said. Should weekly storage increases match the five-year average between now and the end of October, inventories would reach about 3.88 trillion cubic feet, according to Energy Department data.

- The index of U.S. leading economic indicators rose in July for a fourth consecutive month, another sign the worst recession in seven decades is almost over. The Conference Board’s gauge of the economic outlook for the next three to six months rose 0.6 percent, less than forecast, after a revised 0.8 percent increase in June, the New York-based group said today. The coincident indicators index, a gauge of current economic activity, was unchanged after falling every month since October. The biggest lift came from a positive spread between long- and short-term interest rates, followed by drops in jobless claims, a longer factory workweek, rising industrial supplier deliveries, stock prices and orders for capital goods. Weaker consumer expectations, declining money supply and falling building permits pulled it down. A gauge of new orders for consumer goods and materials held steady.

- The U.S. Commodities Futures Trading Commission and the U.K. Financial Services Authority said they are boosting cooperation in their supervision of energy markets. Each agency will also be able to conduct on-site visits of exchanges in the other’s jurisdiction as well as coordinate “emergency action” under the terms of the agreement, which covers U.S.-linked energy futures contracts.

Wall Street Journal:

- Second time lucky? Hedge funds have nearly doubled bearish bets on Volkswagen AG since the middle of last month, a repeat of wagers that blew up in the industry's face last year when Porsche Automobil Holding SE disclosed that it had amassed a majority stake in VW. Short sellers appear to be betting that, if the proposed merger between VW and Porsche fails, VW's shares will suffer, said short-selling analysts Dataexplorers.

- Macquarie Group is in serious discussions about a takeover of Fox-Pitt Kelton, a small financial services firm partly owned by private equity firm J.C. Flowers, according to people familiar with the talks. While no deal has been finalized and there are many hurdles that could block a sale, Fox-Pitt could fetch a price in the $150 million range, one of these people said. That would be a price more than double what Mr. Flowers paid for the bank back in 2006, said one person briefed on the deal.

- Sporadic bombs and rocket attacks, rumors of suicide squads and reports of fraud weighed heavily on turnout in Afghanistan's presidential election Thursday, potentially casting a shadow over the government's ability to hold the country together once the votes are tallied.

- Scotland released Thursday the Libyan agent convicted in the 1988 Lockerbie bombing on "compassionate grounds," defying both the U.S. government and the wishes of many victims' families. Scottish Justice Secretary Kenny MacAskill said he had decided to free the convicted bomber, Abdel Baset Ali Mohmet al-Megrahi, on the basis that Mr. al-Megrahi is terminally ill with prostate cancer. Mr. al-Megrahi was sentenced in 2001 to a minimum of 27 years in prison for his involvement in blowing up a New York-bound Pan Am airliner in December 1988 as it flew over the Scottish town of Lockerbie, killing all 259 people on board and 11 people on the ground. On the flight were 189 U.S. citizens, many traveling home for the holidays.

- Between documenting expenses and processing credit cards from just about anywhere in the U.S., smartphone applications have changed the way many small businesses operate. Now, more firms are turning to these apps to enhance the way customers interact with their products and services — and even boost their bottom lines.

CNBC:

- A government-funded “public option” in health insurance “is the minimum” Congress should offer in reforming the system, AFL-CIO Secretary-Treasurer Richard Trumka told CNBC. Trumka warned lawmakers in coming campaigns that their support of a government-funded plan was pivotal to the union. “If you don’t, don’t expect us to support you,” he said.

AppleInsider:

- A new market analysis predicts that an update or overhaul to the Apple TV could arrive soon, perhaps with iTunes TV show subscriptions and DVR capabilities. Gene Munster, senior research analyst with Piper Jaffray, said in a note Thursday that he believes a new Apple TV will arrive in the next several months. Beyond that, he believes the company will launch a "connected television" in 2011. Munster suggests a new Apple TV would bolster iTunes video purchases with a subscription model. He cites the popularity of Hulu and Netflix Watch Instantly as a reason Apple should offer iTunes video subscriptions. "Apple could leverage its deep library of content with many network and cable channel content owners to provide unlimited access to a sub-library of its TV shows for a standard monthly fee ($30 or $40 per month)," Munster writes. "Such a product would effectively replace a consumer's monthly cable bill (~$85/month) and offer access to current and older episodes of select shows on select channels." Munster goes on to say that he believes the timing could be impacted by the negotiations Apple would need to conduct in order to have the rights to offer a subscription model. However, he predicts that when a deal is finalized, Apple would simultaneously release the offering with a new Apple TV, or updated Apple TV software, within the next year. He predicts that Apple will become more aggressive in the living room, citing a number of factors, including:

SeekingAlpha:

- Why Do We Listen to Nouriel Roubini? During the height of the most recent economic crisis, the media offered the center-stage spotlight to NYU Economics Professor Nouriel Roubini to comfort us with his soma. At the peak of the crash, Roubini was as ubiquitous as Coca-Cola and cellphones. He was the go-to guy because his PR team branded him as “The Prophet of Doom.” A perfect fit when you need someone to call at an overwhelmingly bullish place like Wall Street. Roubini has disingenuously promoted himself as nailing the crisis, when truthfully he was wrong until other hard working analysts fixed his broken crystal ball. As we can see, in March 2005 Roubini started by predicting a crisis caused by Foreign Central Banks diversifying out of U.S. Dollars. (See: ‘Does Overseas Appetite for Bonds Put the U.S. Economy at Risk?’) In February 2006, Roubini still solely focused on foreigners diversifying out of U.S. Treasury debt and further incorrectly predicted that “our current patterns of spending above our incomes” would cause a crisis by 2013. (See: ‘Taste of the Future‘.) Given that the credit markets (which Roubini never mentions until others show him the light) imploded recently, I think we can conclude that “spending above our incomes” doesn’t have to do the crisis perp walk. During the same month as The Washington Post article, Roubini’s press releases peppered the New Yorker with his message:

- Louis Bacon’s Moore Capital Management bought up equities over the second quarter of 2009, according to the most recent portfolio holdings of the global macro orientated growth investor. Overall, the hedge fund manager’s exposure to US traded equities rose to $1,158 million as of 6/30/2009 from just $510 million as of 3/31/2009. Moore Capital’s portfolio heavily favored financial stocks, which represented over 41% of the firm’s portfolio. The second largest purchase over the quarter was a new $264.7mm / 20,050,000 share position in Bank of America (BAC). The other top financial sector holdings in the hedge fund’s portfolio included:

Boston Globe:

- Vice President Joe Biden today announced that $1.2 billion in grants are available from the economic stimulus package for projects to accelerate the use of electronic health records -- an area where Massachusetts is at the forefront.

PRNewswire:

- New-vehicle retail sales in August are forecasted to cross the 1-million-unit mark for the first time in the past 12 months, according to J.D. Power and Associates. Based on the first 13 selling days of the month, new-vehicle retail sales for the month of August are expected to come in at slightly more than 1 million units, up nearly 2 percent from one year ago. This marks the first increase in retail sales volume since June 2007.

Detroit Free Press:

- Ford Motor Co.(F) is pushing the UAW for additional modifications to its labor contract, but one item that few are expecting is additional job cuts. The Dearborn automaker has aggressively cut hourly and salaried jobs over the past four years, but the pace has slowed dramatically this year and there are no longer any major job reduction programs in the works.

- An eight-month layoff for workers at U.S. Steel Corp.'s Great Lakes Works plant in Ecorse might end soon. Great Lakes Works was temporarily idled in January because of declining demand. Under normal market conditions, it employs about 2,400 workers. Now, efforts to restart the plant have begun. Several hundred workers have been recalled to help prepare the plant to be restarted, said Marc Barragan, president of United Steelworkers Local 1299. "The future looks a lot brighter," Barragan said, "But it's not all the way there yet."

Rassmussen:

- Forty percent (40%) of U.S. voters now say cutting the federal deficit in half by the end of his first term should be President Obama’s number one priority. That’s up three points from a month ago. A new Rasmussen Reports national telephone survey shows that, of the four priorities outlined by the President earlier this year, 21% rate health care reform as the most important. Eighteen percent (18%) say ensuring that every child has access to a complete and competitive education should be the priority, and 15% put the emphasis on development of new sources of energy.

Lloyd’s List:

- US import container volumes set to rise.

Reuters:
- The U.S. Federal Deposit Insurance Corp will meet next week to vote on a proposed policy that would force private equity groups to maintain high capital levels and put a large amount of their own money at stake when investing in failed banks. The FDIC provoked a backlash when it proposed the guidelines in July and is expected to soften the policy when it meets August 26.

- Robert Benmosche, the newly appointed chief executive officer of American International Group Inc, says he expects the bailed-out insurer to be able to repay its federal debts and to boost value for shareholders, according to a report by Bloomberg News. Shares rose strongly after the report, rising as much as 31 percent on the New York Stock Exchange.

- The U.S. commercial paper market expanded in the latest week, suggesting the economy may be growing again after the longest recession in decades as the two-year-old global credit crisis slowly eases, analysts said. It was only the second time since April that the overall size of the market had expanded on a weekly basis; the first time being earlier this month. For the week ended Aug. 19, the size of the U.S. commercial paper market, a vital source of short-term funding for routine operations at many companies, rose by $35.8 billion, the biggest jump in at least four months, to $1.111 trillion outstanding, from $1.075 trillion the previous week, Federal Reserve data showed on Thursday. In two years of credit market turmoil, the market's size has halved, from about $2.2 trillion outstanding in August 2007 when the crisis first erupted. Now, however, "it appears that the freefall we saw in commercial paper may be ending," said Ray Stone, an economist with Stone & McCarthy Research Associates in Princeton, New Jersey. Because companies use commercial paper to fund activities such as restocking shelves and meeting payroll costs, higher issuance typically signals companies are responding to an upturn in demand as the economy gains momentum. "It appears from the commercial paper data that the inventory liquidation cycle is bottoming and with that the inventory drag on gross domestic product will be diminished in the third quarter, probably leading to a smartly positive number of about three percent growth," Stone said.

TimesOnline:

- OPEC’s greed will herald the end of the oil age. If producers keep prices high even when demand is slack, the world will be surprisingly quick to wean itself off fossil fuels. Given how bleak the world looked as this year began, it feels remarkable to be seeing growth again so soon. But it is even more remarkable that the world is emerging from such a severe financial shock and slump with its most basic fuel, crude oil, priced at close to $70 a barrel, seven times its price of a little over a decade ago and double the level it was as recently as March. So this must mean the rebound is even stronger than we think, with demand for oil soaring again? Not at all. Admittedly, this is a pretty opaque market, with many countries treating oil stocks as an official secret. Still, analysts at Banc of America Securities-Merrill Lynch reckon that global oil demand has been three million barrels a day lower in the second quarter of this year than in early 2008. They don’t expect it to get back above that until 2011 at the earliest. No, the explanation for this potentially recovery-sapping (and certainly wallet-threatening) resurgence in the price of oil, and thus petrol at the pump, lies on the supply side. This point in the analysis is where the planetary gloomsters start citing a concept called “peak oil” (or, to the real oil nerds, “Hubbert’s peak”). This is the idea that the planet’s oil reserves are nearing (or, in some eyes, are past) a time at which the output from oilfields starts to decline. Don’t pay them any attention. The world is not running out of oil. The oil producers’ cartel has deliberately cut production by nearly five million barrels a day, which is more than the drop in global demand, to keep prices high. Opec members account for only about 35 per cent of world supply, but Russia, a non-member, accounts for a further 11.5 per cent and is co-operating with their efforts. In the early years of this decade the kingpins of Opec, Saudi Arabia, used to say that their ideal price range for crude oil was $20-25 a barrel. Now, they say that it is $70-75. Crucially, the nationalists in Opec and the extortionists in Russia have blocked the big Western oil companies from investing as much in developing their oil reserves as they would have liked, driving them into higher-cost fields elsewhere. That will change over the next decade or so, if prices stay high. Brazil has discovered a huge new offshore oilfield and Angola has shown just how quickly development can occur. In seven years it has trebled its oil output, joined Opec and is now challenging Nigeria for its status as sub-Saharan Africa’s biggest oil producer — and hence as the leading oil-rich basket case. Yet by the time non-Opec oil supply has been boosted, something even more important will have occurred, if Opec continues to overplay its hand and support painfully high prices. In the 1970s, the rather quotable Saudi Oil Minister, Sheikh Zaki Yamani, had a nice saying: “The Stone Age did not end because the world ran out of stones. Nor will the oil age end because we have run out of oil.” It will end when oil consumers run out of patience with greedy oil producers, and develop substitutes instead. They should remember this. When the 1970s oil shocks gave Japan a second whammy after a sharp revaluation of the yen had given it a first, its Government and industry set about transforming themselves from cheap clunker-producers into the world’s leading makers of semiconductors, consumer electronics and fuel-efficient cars — all within ten years. This time around, there are scientists and engineers all over the globe dying to bring about just that sort of transformation — but nowhere more so than in China, the world’s second-biggest oil consumer, whose policymakers fully expect their currency to have to be revalued, hitting cheap energy-guzzling producers, and where the need to clean up the environment is urgent. The usual forecasts, based on extrapolation of past trends, do not see electric cars or non-fossil fuel power plants having a really big impact for another 20-30 years. Imagine, though, the effect on innovation of oil at $100-200 a barrel, of hundreds of thousands of Chinese (and Japanese, European and America) engineers trying to do for solar power and for car batteries what has been done in the past decade for mobile phones and computers. Then, the usual forecasts will turn out to be wrong — as usual. The oil age, which began in earnest a century ago in America, will be at an end.

Bear Radar

Style Underperformer:
Mid-cap Growth (+.65%)

Sector Underperformers:
Papers (-.44%), Computer Hardware (-.38%) and Utilities (+.05%)

Stocks Falling on Unusual Volume:
TWGP, SHLD, BCSI, NTAP, PETM, CTRN, CYBX, PLCE, GME, BKS, SXE and BKE

Stocks With Unusual Put Option Activity:
1) ALTH 2) SHLD 3) GYMB 4) AIG 5) SLW

Bull Radar

Style Outperformer:
Small-Cap Value (+1.12%)

Sector Outperformers:
Banks (+2.67%), REITs (+2.51%) and Airlines (+2.26%)

Stocks Rising on Unusual Volume:
AIG, OFG, UBS, KB, CHU, EQIX, SNP, PTR, HAR, TECD, GYMB, LANC, HURN, PDCO, HIBB, CSKI, CISG, KONG, AGNC, AIRM, GOOG, ROST, GMCR, HMIN, JACK, NDSN, FSLR, QCOM, DKS, NX, TTC, SXI, HNZ, PVH and RGS

Stocks With Unusual Call Option Activity:
1) APOL 2) GME 3) AEO 4) CMG 5) ELN

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Thursday Watch

Late-Night Headlines
Bloomberg:

- The Obama administration is considering elevating Ron Bloom, head of the government's auto task force, to a job that would set U.S. manufacturing policy more broadly, people familiar with the matter said. Bloom, a former United Steelworkers union adviser and Lazard Ltd. investment banker, helped guide General Motors Co. and Chrysler Group LLC through bankruptcy as part of the government's rescue of the auto industry. The task force will continue, and it hasn't been decided whether Bloom will remain its leader while taking on the new role, the people said. Bloom became head of the Treasury Department's auto task force in July when Steven Rattner stepped down. The government controls about 61 percent of Detroit-based GM and 10 percent of Chrysler in exchange for loans that kept the automakers from liquidating.

Wall Street Journal:

- The White House and Senate Democratic leaders, seeing little chance of bipartisan support for their health-care overhaul, are considering a strategy shift that would break the legislation into two parts and pass the most expensive provisions solely with Democratic votes. The idea is the latest effort by Democrats to escape the morass caused by delays in Congress, as well as voter discontent crystallized in angry town-hall meetings. Polls suggest the public is losing support for the overhaul plans. Democrats hope a split-the-bill plan would speed up a vote and help President Barack Obama meet his goal of getting a final measure by year's end. Most legislation in the Senate requires 60 votes to overcome a filibuster, but certain budget-related measures can pass with 51 votes through a piece of parliamentary sleight-of-hand called reconciliation. In recent days, Democratic leaders have concluded they can pack more of their health overhaul plans under this procedure, congressional aides said. They might even be able to include a public insurance plan to compete with private insurers, a key demand of the party's liberal wing, but that remains uncertain. "We will not make a decision to pursue reconciliation until we have exhausted efforts to produce a bipartisan bill," said Jim Manley, a spokesman for Mr. Reid. "However, patience is not unlimited, and we are determined to get something done this year by any legislative means necessary." Privately, those involved in the talks now say there is a 60% chance the split-bill tactic will be used. Sen. Mike Enzi (R., Wyo.) said the Democrats would be making a mistake by forging ahead on their own. "We need to get a bill that 75 or 80 Senators can support," he said. "If the Democrats choose to shut out Republicans and moderate Democrats, their plan will fail because the American people will have no confidence in it." Democrats must also deal with intraparty differences even if they abandon hope of Republican support for a comprehensive bill. Some Democrats in the Senate oppose using reconciliation. And Democrats can't agree whether a public insurance option is essential, as liberals say, a "preferred option" -- the White House's stance -- or a bad idea, as some on the Finance Committee believe. "From day one, the White House has taken a go-it-alone approach on health care," said House Minority Leader John Boehner (R, Ohio). "The administration rejected our efforts to work together, choosing instead to craft a costly government takeover of health care."

- Chrysler Group LLC next month will begin production of right-hand drive diesel minivans for export at its plant in Windsor, Ontario, according to people familiar with the plans. This is the first time the right-hand drive diesel minivans will be produced at the Canadian plant, the people said, and production is slated for the middle of September. Chrysler added a third shift at its Windsor plant earlier this month where it makes the Dodge Grand Caravan, Chrysler Town & Country and Volkswagen Routan.

- The Securities and Exchange Commission says it is taking a close look at flash quotes, high-frequency trading and other dark corners of the stock markets. But by many accounts, the agency is outmatched by the traders and market venues with technology that is remaking the trading world. The agency lacks its own traders with knowledge about cutting-edge strategies and how the markets operate. It long ago ceded the daily surveillance of trading to self-regulatory organizations, like NYSE Regulation and the Financial Industry Regulatory Authority. And it takes a lawyerly approach to regulation and rule making that rarely employs deep analyses.

- In the depths of the recession, the tiniest private firms accounted for a disproportionate share of the job losses, the Labor Department said Wednesday. Companies that employed fewer than five workers -- where 5.1% of the private-sector work force is employed -- accounted for 14.5% of the job losses in the fourth quarter of 2008. They also were responsible for 16.8% of the job gains. The department reported a net loss of 1.8 million private-sector jobs in the quarter, as 6.7 million private-sector jobs were created and 8.5 million were lost. The only industries that posted net job growth were health and education and utilities.

- China is making its presence felt by the hedge-fund industry, replacing London as the most popular base for Asia-focused managers and replacing Japan as the focus for Asian hedge funds. Data provider Hedge Fund Research said in a report Tuesday on the $68.2 billion Asian hedge-fund industry that 24% of Asia-focused hedge funds now are located in China, a rise of more than 5% from a year ago.

- Over the past week, President Obama has held three town-halls to make the case for his health-care plan. While he didn't say much that he hasn't said a thousand times before, his remarks did offer another explanation for the public's skepticism of ObamaCare. Namely, the President contradicts himself every other breath. Consider:

- Appliance manufacturers are counting on a "cash for clunkers"-type rebate program to revive slumping sales of refrigerators, washing machines and dishwashers. Beginning late this fall, federal rebates will be available for purchasers of high-efficiency household appliances, furnaces and air-conditioning systems. Congress authorized $300 million for the program earlier this year as part of the federal economic-stimulus bill.

- A series of car bombings and explosions rocked the capital on Wednesday morning, killing at least 95 people and directly challenging the effectiveness of Iraqi security services amid a U.S. pullback. The blasts, the worst episode of coordinated violence since American forces withdrew from Iraqi cities on June 30, injured at least 563 people, according to Iraqi officials. Another person was killed in Kirkuk in what appeared to be the deadliest day in Iraq in more than a year. The attacks underscored the calculated risk that American officials took with the withdrawal, and they came as the U.S. strategy in Afghanistan also is coming under stress from insurgent violence. U.S. officials say they are closely monitoring the reaction of the Iraqi government, saying there is increasing anxiety that such high death tolls could tip Iraq back into a cycle of sectarian fighting.

MarketWatch.com:
- The fallout from an agreement to give U.S. tax authorities information on thousands of Americans with Swiss bank accounts is likely to hit financial advisers who enabled clients to hide money overseas in an attempt to evade taxes.

CNBC.com:
- The Swiss government will convert its $1.67 billion stake in UBS and sell the shares to investors, it said Wednesday.

NY Times:

- Of all the hedge fund managers on Wall Street, the thoughts of Paul E. Singer are some of the most revered. In his latest confidential letter to clients, Mr. Singer, the founder of Elliott Management, a $14 billion hedge fund firm, shares his views on a wide range of topics from the auto industry bailouts to new financial regulation:

CNNMoney.com:

- The National Automobile Dealers Association is urging the federal government to begin shutting down the Cash for Clunkers program immediately.

Politico:

- Passing a Democratic-only overhaul plan is getting a serious look from a beleaguered White House - but for President Barack Obama, corralling his own fractious party to pass health legislation will be a lot harder than it sounds. Aides to Obama made clear Wednesday that they will move ahead with health care legislation in the fall with or without Republican support - though later in the day, seemed to soften on that stance a bit and leave open room for negotiations for Republicans. No matter which way they go, the White House and congressional Democrats face long odds, and no guarantee of a bill at the end of the process.

MSN:

- A commodity investment unit of Deutsche Bank and another fund group have been stripped of their exemption from speculative limits in key agricultural futures including corn and wheat. The move by the Commodity Futures Trading Commission reflects the US regulator's growing skepticism towards commodity index investing and its concerns over the role of speculators in raw material markets. Both the Deutsche Bank unit that operates two exchange-traded funds holding the agricultural futures contracts and New York-based commodity manager Gresham Investment Management will lose so-called "no-action letters" that let them surpass federal caps on holdings. They were the only two such letters issued in these crop markets. The CFTC has been considering federal limits on traders' positions in US energy futures markets, where the job of setting caps is currently delegated to exchanges. In selected agricultural products the agency already controls limits and exemptions from them. The Senate Permanent Sub-committee on Investigations in a June report concluded commodity index traders artificially pumped up US wheat markets.

Reuters:

- Northrop Grumman Corp (NOC) has hired two investment banks to sell a unit that advises government military agencies in a deal that could fetch up to $2 billion, a source familiar with the matter told Reuters. The defense contractor has hired Goldman Sachs (GS) and Credit Suisse(CS) to shop its TASC unit, said the source, who requested anonymity because the auction is not public yet. The source also said that a sales prospectus for the business had not yet been sent out to potential buyers, but added that private equity firms are expected to bid for the business.

- Limited Brands Inc (LTD) posted a better-than-expected quarterly profit on Wednesday, sending shares of the operator of the Victoria's Secret and Bath & Body Works chains up nearly 3 percent.

- Fidelity Investments' assets under administration increased to $2.9 trillion in the first seven months of the year despite a choppy time for the industry, company President Rodger Lawson said on Wednesday. Total assets under administration rose from $2.6 trillion at the start of the year, and for the year through June 30 Fidelity recorded $74 billion of net inflows into its products and those it sells for other companies, he said. "In spite of all the stresses and strains (of the financial crisis) we are coming out of this strong," Lawson said in a rare interview at the company's headquarters in Boston's financial district.

- U.S. regulators plan to gauge how severe of a hit banks will take from an accounting change that will force them to bring more than $1 trillion of assets back on their books. Next week regulators expect to propose a rule that seeks input on whether banks need more time to build capital cushions against the assets that were once held by off-balance-sheet trusts. Banks will still have to move the assets back on to their books on Jan. 1, 2010, but regulators want feedback on the impact of the accounting change and whether it might be prudent to phase in the risk-weighted capital that must be held against the assets.

- China's Benchmark stock index opened up on Thursday, led by Yangtze Power, after state media said the stock regulator had approved several mutual funds this week in quiet support to the market, which has dropped 20 percent over the past two weeks.

Financial Times:

- A coalition of large US state pension funds has backed the private equity industry's opposition to new rules on takeovers of troubled lenders, saying the plan would have a chilling effect on attempts to revive the country's banking system. The warning by funds from states including New York, New Jersey and Oregon, which manage billions of dollars on behalf of public workers and are big investors in private equity, will strengthen the buy-out industrys lobbying against the proposed measures.

- A hedge fund has made a large bet that natural gas prices will triple by winter just as the price of the commodity slides to a seven-year low. Traders took notice last week when the fund, as yet undisclosed, spent millions for the right to buy US natural gas at $10 (£6.03) per million British thermal units in January and February, up from Wednesday's spot level just above $3 per mBtu. This is the first bullish play I've seen in quite a while, said Raymond Carbone, president of Paramount Options on the New York Mercantile Exchange floor. It caught the eyes of people in the [options] ring.

TimesOnline:

- Colonel Muammar Gaddafi will send his private jet to collect the Lockerbie bomber and take him home to Libya if, as expected, he is released from jail today on compassionate grounds.

Excelsior:
- The Mexican economy has touched bottom and businesses should invest to create jobs, billionaire Carlos Slim said.

South China Morning Post:

- A majority of the building sites in 12 Chinese mainland cities that were sold at exceptionally high prices during the feverish market peak in 2007 remain idle today because the cost of the land has made it difficult for developers to turn a profit, according to a survey.

Late Buy/Sell Recommendations
Citigroup:

- Reiterated Buy on (DE), target $52.

- Reiterated Buy on (GLW), target $20.50.

- Reiterated Buy on (PVH), target $43.

- Reiterated Buy on (SMTC), target raised to $25.

Night Trading
Asian Indices are -.25% to +1.25% on average.

Asia Ex-Japan Inv Grade CDS Index 146.0 +6 basis points.
S&P 500 futures unch.
NASDAQ 100 futures -.03%.

Morning Preview

BNO Breaking Global News of Note

Google Top Stories

Bloomberg Breaking News

Yahoo Most Popular Biz Stories

MarketWatch News Viewer

Asian Financial News

European Financial News

Latin American Financial News

MarketWatch Pre-market Commentary

TradeTheNews Morning Report

Briefing.com In Play

SeekingAlpha Market Currents

Briefing.com Bond Ticker

US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Stock Quote/Chart
WSJ Intl Markets Performance
Commodity Futures
IBD New America
Economic Preview/Calendar
Earnings Calendar

Conference Calendar

Who’s Speaking?
Upgrades/Downgrades

Politico Headlines
Rasmussen Reports Polling

Earnings of Note
Company/EPS Estimate
- (PDCO)/.37

- (GME)/.28

- (HNZ)/.62

- (SHLD)/.35

- (TECD)/.44

- (HRL)/.53

- (DKS)/.31

- (SSI)/.23

- (TTC)/.49

- (ROST)/.81

- (GPS)/.32

- (CRM)/.15

- (ARO)/.55

- (INTU)/-.12

- (HIBB)/.10

- (BRCD)/.11

- (BKS)/.10

- (FL)/.06

- (PLCE)/-.44

Economic Releases

8:30 am EST

- Initial Jobless Claims for last week are estimated to fall to 550K versus 558K the prior week.

- Continuing Claims are estimated to rise to 6215K versus 6202K prior.

10:00 am EST

- Leading Indicators for July are estimated to rise .7% versus a .7% gain in June.

- Philly Fed. for August is estimated to rise to -2.0 versus -7.5 in July.

- 2Q Mortgage Delinquencies(9.12% in 1Q)

Upcoming Splits
- None of note

Other Potential Market Movers
- The weekly EIA natural gas inventory report, (TLEO) analyst meeting and the (VSEA) investor day could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by financial and commodity 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 Energy, Oil Service, Medical, Biotech and Drug Shares

Evening Review
BNO Breaking Global News of Note

Google Top Stories

Bloomberg Breaking News

Yahoo Most Popular Biz Stories

MarketWatch News Viewer

Briefing.com In Play

SeekingAlpha Market Currents

WSJ Today’s Markets
Today’s Movers
StockCharts Market Performance Summary
WSJ Data Center
Sector Performance
ETF Performance
Morningstar Style Performance
Commodity Futures
S&P 500 Gallery View
Timely Economic Charts
Most Recent Guru Stock Picks
CNN PM Market Call
After-hours Stock Commentary
After-hours Movers
After-hours Stock Quote
After-hours Stock Chart