Today's Headlines

Bloomberg:

- FedEx Corp.(FDX) rose to an 11-month high in New York trading after the second-largest U.S. package- shipping company said first-quarter profit topped its forecast. Earnings for the quarter ended Aug. 31 will be 58 cents a share, the Memphis, Tennessee-based company said today in posting preliminary results. FedEx had forecast 30 cents to 45 cents, and the average of 15 analyst estimates compiled by Bloomberg was for 45 cents. FedEx’s announcement suggests shipping demand is starting to pick up, particularly for higher-priced international service. FedEx and larger rival United Parcel Service Inc. are considered proxies for the U.S. economy because they handle almost 80 percent of domestic package shipments.

- Bank of America Corp.(BAC) and Deutsche Bank AG(DB) led institutions offering $1.34 billion of high-yield, high-risk loans this week as the new-issue market shows signs of reviving from a slump that began more than two years ago. JPMorgan Chase & Co. and Barclays Capital are among lenders announcing an additional $4.75 billion of loans for junk-rated companies, a sign that the freeze that set in when investors balked at financing leveraged buyouts may be abating. Banks are marketing the debt as the S&P/LSTA 100 Leveraged Loan index rose 43 percent this year after a record 28 percent drop in 2008.

- Poul Nyrup Rasmussen, the Socialist Party president who led a two-year campaign to introduce the first European Union regulation of the hedge fund industry, said he will next press firms to reduce their fees. Funds should cut the 2 percent of assets and 20 percent of profits many of them charge investors, Rasmussen told a meeting of 300 hedge fund and private equity executives at London’s Guildhall today. Firms could charge half a percent of assets and 15 percent of profit, he said. During the two-hour meeting, he repeatedly described himself as the industry’s “bogeyman.” “We’re in a new phase, guys, I wouldn’t say ‘friends,’” Rasmussen said. “Two plus 20 is not a state of nature. We need to go and review it,” he added. “You will not die of hunger.”

- The cost to protect against U.S. corporate bond defaults using a benchmark derivatives index declined for the fifth day and approached a 14-month low reached in August as demand for higher-yielding assets endured. Credit-default swaps on the Markit CDX North America Investment-Grade Index, used to speculate on the creditworthiness of 125 companies in the U.S. and Canada or to protect against losses on their debt, fell 3 basis points to a mid-price of 108 basis points as of 8:38 a.m. in New York, according to broker Phoenix Partners Group. The index, which has dropped about 16 basis points since Sept. 2, typically falls as investor confidence improves. The influx of investor cash into corporate bond funds that led to the biggest credit-market rally on record is likely to continue, though abated, as the Federal Reserve keeps its interest-rate target near zero, Bank of America Merrill Lynch strategists led by Jeffrey Rosenberg wrote in a note to clients yesterday. “Liquidity -- the ability to refinance debt -- stands as the largest determinant behind the improvements in credit markets,” the analysts wrote. With central banks unlikely to end their efforts to spur the economy anytime soon, “the liquidity trends supporting continued tightening in spreads, albeit at a much slower pace than those experienced to date, likely remain.”

- Investments in commodity products advanced to $2.63 billion last month, at least double the amount recorded for any August, with investors favoring Europe over the U.S., Barclays Capital said. Exchange-traded products got $1.74 billion and commodity- linked mutual funds took in $472 million, the bank said in a report late yesterday. The monthly figure includes structured products. European ETPs got more than their U.S. equivalents, the second time that’s ever happened, Barclays said. “Continued statements (although imprecise) from the CFTC suggesting a series of regulatory actions resulted in market participants preferring to reduce their exposure to U.S. commodity markets,” Barclays said. “This manifested itself through flows into European ETPs being higher than their U.S. counterparts for the first time in a year.” Investors also bought U.S. products perceived to have the least regulatory risk, Barclays said. Industrial-metal products got record inflows of $107 million, the bank said.

- Crude oil fell the most in four weeks after failing to break through $72.90, this month’s high, a signal for traders to sell futures. “The market failed to sustain the move higher,” said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. “Oil took out the highs of the last two days, got up to $72.90, and ran out of steam. It then quickly retreated below the last two days’ lows.” Crude oil also dropped because of rising U.S. fuel stockpiles. Gasoline inventories rose for the first time in seven weeks and supplies of distillate fuels, including heating oil and diesel, climbed to the highest level in 26 years, a government report showed yesterday. “We may be seeing a delayed reaction to the ongoing accumulation in distillate supplies to the highest level since 1983,” said Tim Evans, an energy analyst with Citi Futures Perspective in New York. “Our tendency recently has been to react for 45 minutes to the data and then trade on other factors for the remainder of the week. This may be changing, which may signal that a correction is about to occur.”

- The U.S. corn crop will be 1.5 percent larger than forecast a month ago, the government said, as cool, wet Midwest weather in July and August raised prospects for record yields. Output will total 12.954 billion bushels, more than the 12.761 billion forecast last month and up 7 percent from last year's crop of 12.101 billion bushels, the U.S. Department of Agriculture said today in a report. Analysts surveyed by Bloomberg News expected 12.911 billion bushels, on average. Farmers collected a record 13.038 billion bushels in 2007.

- Confidence among U.S. consumers rose more than forecast in September as the pace of job losses slowed and the economy showed signs of pulling out of the recession. The Reuters/University of Michigan preliminary index of consumer sentiment increased to 70.2 this month from 65.7 in August. The index was forecast to rise to 67.5, according to a Bloomberg survey of economists. A government report today showed inventories at U.S. wholesalers fell in July as higher sales helped distributors reduce excess supply.

- Senator Jack Reed, a Democrat on the Armed Services Committee, said the U.S. shouldn’t set a timeframe for withdrawing U.S. troops from Afghanistan and more U.S. trainers should be sent immediately. “If we’re going to make the Afghan army very rapidly an effective force, we have to have more trainers,” the Rhode Island Democrat and former Army Ranger said in an interview with Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend. How many more U.S. combat forces are needed “is still in my view is subject to detailed analysis,” he said.

- Microsoft Corp.(MSFT) and Yahoo! Inc.(YHOO) have been asked by the U.S. Justice Department for more details on a proposed Internet-search partnership, expanding the agency’s review of the agreement. The request means regulators will do a more extensive examination, rather than approve the deal immediately.

- President Barack Obama vowed before a national television audience on Sept. 9 that his $900 billion proposal to overhaul health care wouldn’t add “one dime” to the federal deficit. So far, White House officials have offered few details on how they intend to pay for the plan. Instead, they’ve deferred to Congress on the issue, saying they’ll consider all options. With Obama this week declaring ownership of the plan to enact the most extensive changes in health care in more than four decades, the White House’s reluctance to break down how it would finance the measure is rankling some lawmakers. “He needs to put together a blisteringly specific plan that can be analyzed by the nonpartisan Congressional Budget Office or embrace legislation that is already being considered,” said Representative Mark Kirk, an Illinois Republican and member of the House Appropriations Committee. “Otherwise, all we have is non-specific assertions with no credible support.” Administration officials say two-thirds of the legislation will be financed by savings in the Medicare and Medicaid programs, and the elimination of “waste, fraud and abuse” in the health-care system. The remainder will come from revenue- raising measures, some of which have stirred opposition in Congress. As a result, some lawmakers and experts say Obama’s plans lack the clarity his aides promised before his speech.

- Credit Suisse Group AG, Switzerland’s second-largest bank, is among a “handful” of banks in Europe with sufficient capital to boost its dividend, analysts at Morgan Stanley said. Credit Suisse rose as much as 2.6 percent in Swiss trading after the analysts, including London-based Huw van Steenis, said it may pay a dividend of 2.50 francs ($2.41) a share for this year and 3 francs for 2010.

- The U.S. budget deficit was little changed last month from a year earlier and narrower than economists predicted as tax receipts and spending declined. The excess of spending over revenue totaled $111.4 billion in August, compared with $111.9 billion a year earlier, the Treasury reported in Washington. The shortfall totaled a record $1.38 trillion in the first 11 months of the fiscal year that ends Sept. 30.

- U.S. sales of new and existing homes may increase to an annual pace of 5.1 million in the current quarter, the highest in two years, according to a forecast by Freddie Mac, the government-run mortgage buyer. That would be an 11 percent gain from the second quarter’s annual pace of 4.61 million sales, the McLean, Virginia-based company said in a report today.

Wall Street Journal:

- Vowing to never falter in the pursuit of al Qaeda and its allies, President Barack Obama placed a wreath under rainy skies at the Pentagon in memory of the victims of 9/11 on the eighth anniversary of the terrorist attacks. "Let us renew our resolve against those who perpetrated this barbaric act and who plot against us still," Mr. Obama said. "In defense of our nation, we will never waver." Skies were also gray in New York City, and at the crash site of United Airlines Flight 93 in a Shanksville, Pa., field, where now-familiar ceremonies honored the nearly 3,000 people who were lost in the Sept. 11 attacks.

- Senate Finance Chairman Max Baucus said Friday a bipartisan negotiating group is "starting to reach closure" on health-care legislation, indicating he would end negotiations and move forward on a bill as soon as Monday.

- The thing about the bully pulpit is that Presidents can make the most fantastic claims and it takes days to sort the reality from the myths. So as a public service, let's try to navigate the, er, remarkable Medicare discussion that President Obama delivered on Wednesday. It isn't easy.

- New Federal Communications Commission chief Julius Genachowski says he wants to promote diversity in media ownership, but his recent decision to hire Mark Lloyd, a civil-rights attorney critical of corporate-owned media, to help with that effort has riled some talk-radio hosts who fear the agency is planning to go after them. The criticism comes as another Obama administration appointee, environmental jobs adviser Van Jones, resigned over the weekend following an outcry over things he said before joining the government. Mr. Lloyd was named in July to the new FCC post of chief diversity officer as part of what agency Chairman Julius Genachowski called an effort to "expand opportunities for women, minorities and small businesses to participate in the communications marketplace." Mr. Lloyd in the past has criticized corporate ownership of media outlets, saying it has led to conservative dominance of talk radio, among other things. He has called for a broader range of voices in the media and advocated taxing station owners to subsidize public broadcasters and local media. "If we as a nation...fully funded a broadcaster like the British citizens fund BBC, we might have an impact on what they cover and have more power to demand that they cover everything," Mr. Lloyd said at a 2008 media conference. In 2007, while a senior fellow at the Center for American Progress, a Democratic think tank with close ties to the Obama administration, Mr. Lloyd co-authored a report that proposed ways the FCC could change the balance of conservatives to progressives on talk radio by imposing new rules on the radio industry, such as more frequent license renewals and a national radio-ownership cap. His past statements have fueled an outcry among conservative commentators and lawmakers concerned that Mr. Lloyd's hiring signals the FCC will change rules to make it easier for interest groups unhappy with a local station's programming to threaten its license.

- Federal prosecutors, capping an 18-month investigation, are preparing to impanel a grand jury in Brooklyn, N.Y., to consider an indictment of a former senior American International Group Inc. executive, according to people familiar with the matter. The Justice Department and the Securities and Exchange Commission have been investigating whether Joseph Cassano, whose AIG Financial Products unit nearly brought down the insurer a year ago, committed securities fraud in allegedly misleading investors by overstating the value of mortgage-related contracts and failing to disclose material facts about them to AIG's outside auditor, the people said.

- Procter & Gamble Co.'s(PG) chief executive on Thursday laid out measures to address lackluster profits and sagging market share, including price cuts, overseas expansion and plans to reposition the Cheer brand as a low-price detergent.

- Worldwide semiconductor capital-equipment spending will rebound 47% in the second half of the year from the dour first part of 2009. Looking further ahead, Gartner sees a continued sales rebound, with 34% growth in 2010 and even stronger gains of 40% in 2011. "Capacity will begin to ramp in the second half of 2010 as businesses and consumers begin to open up their pocket books to purchase electronic goods, and more consistent semiconductor growth should be occurring worldwide," said Gartner analyst Dean Freeman. Most equipment purchases through the first half of 2010 will be technology, he added.

- James Gorman was chosen as future chief executive of Morgan Stanley (MS) for his management skills and his strategic expertise, rather than to signal a shift away from the brokerage's trading business. Several research analysts expressed concerns about his lack of experience in investment banking. But Gorman told employees in a town hall meeting Friday, according to an employee who attended: "The heart, the DNA, the fabric of this place has always been the institutional securities business and frankly should always be the institutional securities business."

- Further consolidation in the pharmacy benefits management business is only a matter of time, CVS Caremark Corp. (CVS) Chief Financial Officer David Rickard (CVS) said Friday. Speaking at Thomas Weisel Partners Healthcare Conference in Boston, Rickard didn't indicate whether CVS would be interested in making acquisitions of other pharmacy benefit management companies.

- The European Union's draft rules on regulation of the hedge fund and private equity industry need major surgery and are anti-competitive, U.K. City Minister Paul Myners told a conference Friday. Repeating earlier comments that regulation of alternative investments was necessary, Myners said the focus on hedge funds and private equity wasn't justified, the proposed rules should discriminate between fund types and investor protection shouldn't result in driving away foreign investment.

MarketWatch.com:
- China Mobile Ltd.(CHL) Chairman Wang Jianzhou said Friday the company is still in talks with Apple Inc. (AAPL) over selling iPhones in China. The deal between competitor China Unicom (Hong Kong) Ltd.(CHU) and Apple to sell iPhones in China is "absolutely not exclusive," and China Mobile still hopes to offer iPhones in China, Wang said on the sidelines of the World Economic Forum in the northeastern coastal city of Dalian. He also said China Mobile hopes to eventually sell Ophones, which run on Google Inc.'s (GOOG) open-source Android operating system, at prices as low as CNY1,000 (US$146.40) in China. Other smartphone models sell for CNY2,000-CNY5,000 in the country.

NY Times:

- Foreign Minister Sergey V. Lavrov on Thursday all but ruled out imposing new sanctions against Iran over its nuclear program, brushing aside growing Western concerns that Iran had made significant progress in recent months in a bid for nuclear weapons. Mr. Lavrov said he believed that a new set of proposals that Iran gave to European nations on Wednesday offered a viable basis for negotiations to end the dispute. He said he did not believe that the United Nations Security Council would approve new sanctions against Iran, which could ban Iran from exporting oil or importing gasoline. Mr. Lavrov’s comments underscored the challenge facing the Obama administration as it plans its next move in the United States’ longstanding struggle to prevent Iran from producing nuclear weapons. On Thursday, Ali Asghar Soltanieh, Iran’s ambassador to the International Atomic Energy Agency, the United Nations’ nuclear watchdog, said Iran would not negotiate further with the major powers about its nuclear program, Iranian news services reported.

Mlive.com:
- State police at the Corunna post have confirmed a well-known anti-abortion activist was shot multiple times and killed this morning in front of Owosso High School.

Vanity Fair:

- 100 to Blame: Jim Cramer, Credit-Default Swaps, and More.

Reuters:
- The 700,000 cars sold in the cash-for-clunkers program prompted U.S. automakers to boost 2009 production after a long period of inventory cuts, spurring North American steelmakers to restart idled mills. Now that the clunkers program has wound down, the steel industry is unsure whether demand will stay high enough to absorb the additional output. So far, analysts are not seeing a U.S. economic recovery robust enough to sustain the pick-up in steel demand.

- In obscure corners of the U.S. stock market -- where "flash orders," "dark pools" and other controversial practices thrive -- regulators are trying to shine a light to guard against unfair dealing. But a crackdown by the U.S. Securities and Exchange Commission, sought in recent months by some top lawmakers in Washington, won't come quickly and may not be as comprehensive as some desire.

- A weekly gauge of future U.S. economic growth hit a year-high in the latest week, sending its yearly growth rate to an all-time high that points to a more vigorous recovery than consensus has shown. The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index rose to 125.4 in the week to Sept. 4 from a revised 124.6 the prior week, which was originally reported at 124.7. It was the highest WLI reading since Sept. 5, 2008, when it stood at 126.0. The index's annualized growth rate surged to a record high of 21.3 percent from 20.8 the previous week. "The rise in WLI growth to a record high reinforces our earlier forecast that at least the early stage of the current economic recovery will be more vigorous than the last two," said ECRI Managing Director Lakshman Achuthan. Achuthan recently told Reuters that a double-dip recession is highly unlikely, and that the United States is poised for a far stronger recovery than many are projecting. "We expect non-manufacturing employment -- which is where 91 percent of us work -- to be positive by year end," Achuthan said. "We are talking about recovery that includes jobs growth in the non-manufacturing sector, and we are talking about a recovery that includes increases in consumer spending. So, in spite of the fact that many people look at this recession as being unprecedented and unlike any other, what we're seeing in our indexes is that there are a lot of similarities to previous recessions and recoveries," he added.

AFP:

- China may see tens of millions of people infected with the H1N1 flu in coming months and deaths will be “unavoidable,” citing an official at the nation’s Ministry of Health. The spread of H1N1 in China has accelerated, citing Liang Wannian, deputy director of the ministry’s health emergency office.

Bear Radar

Style Underperformer:
Small-Cap Value (+.53%)

Sector Underperformers:
Education (-2.16%), Semis (-1.75%) and Homebuilders (-1.62%)

Stocks Falling on Unusual Volume:
ATPG, TDW, TSL, SI, CREE, VVUS, HITK, UEPS, VNDA, STLD, CTRP, BRC and AAP

Stocks With Unusual Put Option Activity:
1) HBAN 2) KEY 3) MGM 4) CLF 5) RF

Bull Radar

Style Outperformer:
Mid-Cap Growth (+.58%)

Sector Outperformers:
Airlines (+2.0%), Oil Service (+1.87%) and Steel (+1.51%)

Stocks Rising on Unusual Volume:
CLF, SGY, ROSE, CPX, IRE, SLB, EGO, CDE, TIE, QDEL, ARTC, CSTR, CNQR, INFA, CRXL, GOLD, ROSE, TTWO, AAWW, RYAAY, SBAC, LIHR, ATLS, CWEI, CISG, GRMN, RGLD, PAAS, FUQI, JBHT, RTI, CNP, FDX, ECA and CNK

Stocks With Unusual Call Option Activity:
1) OSIP 2) NSM 3) FDX 4) CBI 5) MGM

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Friday Watch

Late-Night Headlines
Bloomberg:

- Israeli Prime Minister Benjamin Netanyahu said that while he is ready to make sacrifices for the sake of peace with the Palestinians and Arabs, his government will “stand up” for the interests of the country. “We have proven again and again we are ready to compromise for peace,” Netanyahu said tonight in a speech in the Tel Aviv headquarters of his Likud party broadcast on Israeli television’s Channel 1 news. “But we will not delude ourselves -- we are not ready to be suckers.”

- John Mack, Morgan Stanley’s chairman and chief executive officer for more than four years, will hand off his CEO duties at the end of the year to Co- President James Gorman. The change will take effect on Jan. 1, the New York-based firm said in a statement. Walid Chammah, co-president of the firm with Gorman, will give up that role and remain chairman of Morgan Stanley International in London. Mack said he told the board 18 months ago that he would like to step down as CEO after he turns 65 in November and remain as chairman.

- Increasing taxes on oil and natural gas companies would have an “insignificant” effect on prices for consumers, the Treasury Department’s chief economist said. The government is looking to eliminate at least six industry tax credits that Krueger says add up to $30.6 billion for the next 10 fiscal years. President Barack Obama proposed doing away with the tax benefits in his budget plans for 2010. “The proposals are aimed at crippling our industry,” Larry Nichols, chief executive officer of Oklahoma City-based Devon Energy Corp. and chairman of the American Petroleum Institute, told the committee. “It will mean less jobs, less exploration, fewer wells and higher costs for the consumer.” The Senate could consider tax changes for the oil and gas industry as part of a broader energy and climate package, Senator Jeff Bingaman, a New Mexico Democrat and chairman of the subcommittee, said after the hearing. Repealing the tax provisions would result in lower U.S. production, said Kevin Book, a managing director of research at ClearView Energy Partners LLC in Washington. “Rescinding intangible drilling cost deductions and percentage depletion exemptions could have the effect of diminishing the working capital available to fund new and continuing domestic investment in oil and gas production,” Book told the subcommittee in prepared testimony.

- United Airlines parent UAL Corp. and US Airways Group Inc. led an index of U.S. carriers to the highest in more than seven months after a JPMorgan Chase & Co. analyst said travel and industry revenue may start rising. Demand may “bounce along until about January, at which time we do assume gradual improvement begins,” JPMorgan’s Jamie Baker wrote today in a note to clients. Revenue in July and August was “modestly ahead of initial forecasts,” he said. Baker boosted his rating on Chicago-based UAL to “overweight” from “underweight,” and on US Airways to “neutral” from “underweight.” United is the third-largest U.S. airline by traffic, and US Airways is No. 6. UAL jumped $1.15, or 18 percent, to $7.60 at 4 p.m. New York time in Nasdaq Stock Market composite trading for the biggest increase in five weeks, and Tempe, Arizona-based US Airways climbed 44 cents, or 12 percent, to $4.02 on the New York Stock Exchange.

- National Semiconductor Corp.(NSM), whose chips control power in electronic devices, reported a 63 percent drop in profit last quarter as the recession crimped orders. The company predicted a rebound in the current period, saying industrial demand for its chips is beginning to pick up. Yesterday, Texas Instruments Inc. raised its forecast for third-quarter sales and profit, also citing orders from industrial customers. Second-quarter revenue will grow as much as 8 percent from the current period to between $325 million and $340 million, the company said. Analysts in a Bloomberg survey had projected $317 million. “Demand was better than we expected, especially for our power management products going into broad industrial applications,” Chief Executive Officer Brian Halla said in the statement.
- Global stimulus measures to revive the worldwide economy may result in asset bubbles, according to the Conference Board. The risk of asset bubbles in Asia are greater than risks to growth, Gail Fosler, president of the Conference Board, said in a speech in Singapore today.

- China’s new lending unexpectedly increased in August and money supply rose by a record, fueling the nation’s recovery from the slowest economic expansion in almost a decade. Banks extended 410.4 billion yuan ($60.1 billion) of local- currency loans, up from 355.9 billion yuan in July and 271.54 billion yuan a year ago, the People’s Bank of China said today on its Web site. M2, the broadest measure of money supply, rose 28.53 percent, the bank also said. Today’s figures may pose a dilemma for policy makers seeking to sustain the economic pick-up without stoking asset- price inflation, and follow a warning yesterday by Bank of China Ltd. Vice President Zhu Min about the danger of “bubbles” in stocks and real estate.

- China’s industrial production grew at a faster pace in August, signaling a strengthening recovery in the world’s third-biggest economy. Output gained 12.3 percent from a year earlier, after climbing 10.8 percent in July, the statistics bureau said at a briefing in Beijing today. That compared with the 11.8 percent median estimate of 15 economists surveyed by Bloomberg News.

- China’s exports fell for a 10th straight month in August, weighing on the government’s efforts to spur growth in the world’s third-largest economy. The $103.7 billion figure for overseas shipments released by the customs bureau on its Web site today indicated a decline of about 23 percent from the previously published figure for a year earlier. The $88 billion of imports indicated a fall of about 17 percent and a trade surplus of about $15.7 billion.

Wall Street Journal:

- The uproar over former White House adviser Van Jones has heightened attention on the ranks of nonconfirmed policy "czars" within the Obama administration. The use of special White House advisers and the czar moniker itself go back decades, but government watchers say President Barack Obama has appointed an unusual number of senior coordinators, especially for a president so early in his administration. They have responsibilities ranging from health care and climate change to Afghanistan and the auto sector. Some Republicans, fanned by conservative commentators' warnings that these advisers constitute a shadow government, have seized on the czar issue to criticize Mr. Obama for trying to push policy initiatives outside normal bureaucratic channels. Republicans, including Tennessee Sen. Lamar Alexander and California Rep. Darrell Issa, say that the use of these special advisers has run amok, and that their powers should be curbed. The issue flared in recent weeks at dozens of congressional town-hall meetings. One concern about czars centers on the fact that many of these appointments aren't subject to confirmation by Congress. To have them running the government, rather than simply assisting the president, "is an affront to the Constitution," Mr. Alexander said. West Virginia Democratic Sen. Robert Byrd warned earlier this year that the growth of czars could sap congressional authority. The Obama administration has broadened the ranks of special advisers, in some cases giving large portfolios to officials who might have faced difficulties in a Senate confirmation process. Some Obama supporters acknowledge that a Senate vetting process would likely have uncovered earlier Mr. Jones's controversial past. Mr. Jones, who advised the White House on "green jobs," resigned Saturday amid a brewing backlash over inflammatory statements he made in previous speeches. Mr. Obama's choice of Carol Browner, a former Environmental Protection Agency chief, as his main White House energy adviser has in particular aroused suspicions from Republicans, who question whether her access to the president will mean she ends up usurping power from other agencies. Ms. Browner helped broker a fuel-standards deal between the administration and auto makers earlier this year, and has been a conspicuous presence in climate negotiations with Congress. Energy Secretary Steven Chu, meanwhile, has been largely tied up administering billions of dollars in stimulus projects. Other appointees are coming under fire from conservative commentators for positions they have taken in the past. Mark Lloyd, who hold the midlevel position of chief diversity officer at the Federal Communications Commission, has been critical of corporate-owned media. Cass Sunstein, a former Harvard Law professor picked to oversee government regulations within the Office of Management and Budget, won Senate confirmation Thursday after a months-long tussle. Mr. Sunstein has made the case for granting legal rights to domestic animals and clamping down on hunting. Messrs. Lloyd and Sunstein, through their offices, declined to comment. Political scholars say it's too early to tell whether the expansion in the ranks of government advisers is a temporary anomaly as the administration wrestles with a large array of challenges -- or represents a disturbing growth in executive-branch power. "We still need time to see which way this breaks," said Gary Bass, director of the nonpartisan OMB Watch. "If these advisers turn out to be highly controlling and unaccountable, that would be very troubling. But in a government that is so large, they could also play a key coordinating role, and that would be good."

- Auto dealers and the U.S. Chamber of Commerce have gone to federal court challenging the Environmental Protection Agency's decision to let California and other states regulate automobile greenhouse-gas emissions. The two industry groups fear that the EPA's decision will set a precedent for California to set stricter emission standards for a raft of different emitting sectors. Near failure and seeking billions of dollars in federal stimulus funding to stay afloat, auto manufacturers earlier this year agreed to not fight against a national emission standard the Obama administration vowed to implement. To set precedent and preserve California's ability to apply for tougher new auto-emission standards than the administration is currently drafting once they expire in 2017, the EPA granted California the right to move ahead on its own. With what is known as the California waiver, more than a dozen other states were ready to move ahead with identical standards. Auto companies are concerned both about the stricter standards that would make manufacturing more expensive and about having two different standards across the U.S. The petition for review in the D.C. federal court of appeals targets the Clean Air Act provision that allows California to appeal for a waiver to set its own environmental standards when there are compelling and extraordinary circumstances. The lawyers argue that the provision is only allowed to address local or regional concerns, but greenhouse-gas emissions are an international concern.

- On Wednesday the president told Congress "I will not stand by while the special interests use the same old tactics to keep things exactly the way they are." In fact, the administration is standing by to allow its most special, special interest to drive this debate. What the tort bar wants, the tort bar gets. Health insurers should be so lucky. The legal question has become the starkest symbol of a broken health discussion, and offers insight into this presidency. For Republicans, legal reform has become a litmus test, proof that Democrats have no interest in a deal, and therefore a reason to step back. For many Americans, legal reform has become proof that President Obama is more interested in an ideological triumph than his stated goal of lowering health costs. Tort reform is a policy no-brainer. Experts on left and right agree that defensive medicine—ordering tests and procedures solely to protect against Joe Lawyer—adds enormously to health costs. The estimated dollar benefits of reform range from a conservative $65 billion a year to perhaps $200 billion. In context, Mr. Obama's plan would cost about $100 billion annually. That the president won't embrace even modest change that would do so much, so quickly, to lower costs, has left Americans suspicious of his real ambitions.

- Looking for a hit device that can revive its struggling cellphone business, Motorola Inc.(MOT) unveiled its first handset powered by Google Inc.'s(GOOG) Android operating system. Motorola said its new Cliq, which has a touch screen and slide-out keyboard, will come with software that will aggregate contact information from various social networks and email accounts.

- President Barack Obama's nominee for the top international post at the Treasury Department has been sidetracked by a Senate committee's investigation into her personal tax returns. Lael Brainard, nominated in March as Under Secretary for International Affairs, is the latest Obama appointee to be tripped up by the Senate Finance Committee. Of particular concern is Ms. Brainard's use of a home-office tax deduction, according to people familiar with the inquiry. The delay in considering her nomination has left empty a treasury position responsible for negotiating with foreign governments as the U.S. gears up for the Group of 20 summit later this month, a meeting expected to focus heavily on financial regulation and economic stimulus programs. It is also reviving questions about whether a rigorous vetting process has gone too far and hobbled the administration. "We're into September and with no confirmed under secretary it seems to me that's a serious disadvantage," said John B. Taylor, a Stanford University professor who served in the post from 2001 to 2005.

- Russian Foreign Minister Sergei Lavrov made it clear Thursday that Moscow wouldn't back any new rounds of tough sanctions against Iran in the United Nations Security Council, and he dismissed a U.S. timetable for securing progress from Iran on ending its nuclear-fuel program. Mr. Lavrov's comments in Moscow cast doubt over the ability of the U.S. to succeed in an effort to secure international backing for new sanctions. They also appeared to end any hopes that the Obama administration's "reset" of troubled relations with Russia would lead to Moscow's support for one of the top U.S. foreign policy priorities. Just a day after U.S. officials warned that Iran may already have enough enriched uranium to make a bomb if processed further, Mr. Lavrov said negotiations should begin without any imposed timetable. He also said that even if Iran tried to make weapons-grade fuel it would be detected and there would be time to respond.

- President Barack Obama's insistence that a health-care overhaul wouldn't insure illegal immigrants was greeted by a shout of "You lie!" from Republican Rep. Joe Wilson of South Carolina. But the White House and Democrats in Congress don't agree on how the plan should exclude illegal immigrants, suggesting the truth of the matter is more complicated than indicated by either man. Democratic and Republican leaders both say illegal immigrants shouldn't receive government-funded insurance in any new health legislation, just as they are banned from receiving Medicare or nonemergency Medicaid. But lawmakers and the White House disagree on how to ensure that doesn't happen. According to an analysis last month by the Congressional Research Service, Congress's nonpartisan research body, the House version of an overhaul that was passed over the summer excludes illegal immigrants from a requirement that most uninsured people either purchase insurance or pay a tax.

MarketWatch.com:
- Treasury Secretary Timothy Geithner late Thursday responded to criticism of the Obama administration's bank bailout endeavors, addressing public frustration about billions in taxpayer dollars going to bankers. At the town hall, Geithner fielded questions from audience, some of whom expressed concern about bank executive and employee compensation, automotive bailouts and worries that China may stop buying Treasurys in response to rising U.S. deficits created, in part, by the financial rescue plan.

CNBC.com:
- Major investors are starting to question whether Beijing is telling the truth. "I think the story is getting harder and harder to believe," says widely followed billionaire investor and hedge fund manager Jim Chanos. "And I'm not the only guy crying about the data coming out of China. You are seeing a lot more articles being written about it, a lot more skeptical voices being heard about just how accurate some of this data showing this Chinese miracle. And the fact of the matter is I don't think it’s very accurate at all."

IBD:

- When you sell low, you better sell plenty. And sell smart. That could be the mantra for Owens & Minor (OMI), a supplier of basic consumable supplies to hospitals, surgical centers and clinics. The firm sells the unglamorous stuff, like sterile shower caps nurses and doctors wear in the operating room. Or three types of gloves, or gauze and biohazard waste bags.

Forbes:

- Dump FINRA And The SEC. Have they outlived their usefulness?

Fox News:

- The Senate on Wednesday voted to confirm President Obama's nominee for "regulatory czar," overcoming months of delay due to Republican concerns that he would push a radical animal rights agenda. Senators voted 57-40 to approve Harvard professor Cass Sunstein as the administrator of the Office of Information and Regulatory Affairs at the Office of Budget and Management. As regulatory czar, Sunstein will review and provide guidance for draft federal regulations at different federal agencies. It is a wide-ranging and largely unrestrained position in the executive branch. That's a large part of the reason Sunstein's positions on animal rights have become worrisome to his critics. Despite his assurances to the contrary, Sunstein has spoken stridently in favor of allowing people the right to bring suit on behalf of animals in animal cruelty cases and to restrict what he calls the more horrific practices associated with industrial breeding and processing of animals for food.

Politico:

- The communications director for the National Endowment for the Arts is no longer in his job amid a flap over suggestions he suggested artists work to further President Obama's legislative agenda. A conservative artist writing on the site Big Hollywood first complained that the official, later identified as Yosi Sargent, had been on a conference call with artists aimed at furthering President Obama's legislative agenda -- a bit of a no-no for the agency, which does its best to stay apolitical.

Reuters:

- U.S. President Barack Obama will give a speech about the financial crisis on Monday in New York, marking the anniversary of the collapse of Lehman Brothers, the White House said on Thursday. The fall of Lehman last year triggered a worldwide financial crisis and accelerated Obama's race to the presidency as the Democrat's cool reaction to the country's economic problems contrasted with a more scattered response from his Republican opponent, Senator John McCain.

- Contrite U.S. Securities and Exchange Commission officials apologized for bungling five probes that should have uncovered Bernard Madoff's $65 billion fraud and pledged to overhaul the way the agency operates. A scathing report issued last week by SEC Inspector General David Kotz found that the agency missed numerous red flags, did not properly follow up on leads and dismissed tips and complaints that might have uncovered Madoff's investment sham. At a congressional hearing to examine the SEC's shortcomings, top SEC officials said that in the Madoff case the agency failed in its "fundamental mission to protect investors." "It is a sobering and humbling experience," said the SEC's director of enforcement Robert Khuzami and John Walsh, the agency's acting director of exams and compliance, in joint testimony to Congress. "We deeply regret our failure to detect the Madoff fraud and pledge to continue to fix the problems that contributed to this failure," said Khuzami and Walsh, both of whom described reforms underway.

Financial Times:

- Gorgon, one of the world’s most ambitious and costly natural gas projects, will next week be given the official go-ahead when Chevron approves an investment of about A$42bn in the project off western Australia. The decision by the US’s second biggest energy group to develop the globally significant reserves contained in the Gorgon fields will refocus the liquefied natural gas industry on the Asia-Pacific region. It also heralds a shift in the hierarchy of Asia’s consumers of cleaner gas that will see China overtake Japan as the region’s dominant LNG buyer, a strategic position giving the country massive influence to negotiate gas prices and back new LNG projects. The competitive threat posed by Gorgon and other Asian projects may also force Qatar, the world’s biggest LNG supplier, to step up its expansion plans. The fruit of years of negotiations, Gorgon will also revolutionize the politics of energy in Asia, helping China and Japan loosen their dependence on coal, while catapulting Australia to the top ranks of the global LNG producers. That deal comes only weeks after ExxonMobil, which like Royal Dutch Shell owns 25 per cent of Gorgon, agreed to sell A$50bn worth of Gorgon LNG to PetroChina, at the time hailed as Australia’s largest trade deal. Customers in China, Japan, India and South Korea, all keen to secure their long-term energy needs, have now reached agreements to buy well over half of the 15m tons a year of LNG that Gorgon will produce by 2016. Chevron said it would sign further sales agreements in the “coming months”.

- In coming up with solutions that address the immediate crisis but fail to tackle dangerous systemic issues, the Group of 20’s emerging ideas on the banking industry bear a striking resemblance to the Americans’ response to the dotcom crash of 2001-02. Back then, the burst bubble exposed biased research and stock price manipulation on Wall Street and dubious accounting practices in US companies. Out came a new set of rules cleaning up the links between research analysts and investment bankers and laying a heavy hand on corporate chief executives.These measures extinguished the fire but neglected more fundamental problems. By the time the regulations were in place, the investment banks and elements of the corporate sector were already deeply involved in new and even more dangerous practices. We speak, of course, of the derivatives-based leverage of banks’ balance sheets that brought down a range of previously sound institutions, dragged the global economy into recession and ripped up accepted economic theories. We see exactly the same mistakes being made this time around. If effectively implemented (not the only possible outcome), the G20 finance ministers’ steer towards more and better capital, constraints on leverage and contingency plans for banking failures would help to avoid a repetition of the current crisis. But they are barely sufficient to give the financial services system the kind of radical overhaul it needs. That would entail tackling a defective business model. Banks are allowed to mix plain vanilla deposit-taking and lending with high-risk investment banking. They are allowed to act for clients on both sides of a trade and take a proprietary turn out of the middle. In capital markets transactions they are able to act for those seeking capital and those providing it. Conflict of interest is embedded and this is unfair on other market users. It is “heads we win, tails you lose” as the banks make off like bandits in the good times and become pious onlookers as the taxpayer foots the bill when it all goes wrong. Fixing the system requires this business model to be broken up and we would go beyond conventional Glass-Steagall type solutions.

Shanghai Securities News:

- Investor Jim Rogers said he’s holding back from further purchases of commodities after prices soared. Investors should wait for commodity prices to drop to buy for the long term, Rogers said at a forum in Guangzhou, Guangdong province. Rogers said he won’t buy properties in China now because they are too expensive, though rural real estates should yield “great returns” in the next 20 years.

Yonhap News:

- North Korea appears to have 10 nuclear weapons, although it is not clear if all are ready for military use, a report said Thursday.

Late Buy/Sell Recommendations
Citigroup:

- Reiterated Buy on (PCLN), target $185.

- Reiterated Buy on (CAG), added to Top Picks Live list, target $25.

- Reiterated Buy on (STLD), boosted target to $22.

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

- Reiterated Buy on (EQIX), target $105.

- Reiterated Buy on (HSY), target $48

- Reiterated Buy on (GS), raised estimates, boosted target to $215.

Crowell, Weedon:

- Rated (CMG) Buy, target $120.

- Rated (AAPL) Buy, target $205

Oppenheimer:

- Rated (BRCD) Outperform, target $10.

Night Trading
Asian Indices are +.25% to +1.0% on average.

Asia Ex-Japan Inv Grade CDS Index 121.50 -2.50 basis points.
S&P 500 futures -.06%.
NASDAQ 100 futures -.04%.

Morning Preview

BNO Breaking Global News of Note

Google Top Stories

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MarketWatch News Viewer

Asian Financial News

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MarketWatch Pre-market Commentary

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TradeTheNews Morning Report

Briefing.com In Play

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Briefing.com Bond Ticker

US AM Market Call
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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
- (BRC)/.41

- (CPB)/.26

Economic Releases

8:30 am EST

- The Import Price Index for August is estimated to rise +1.0% versus a -.7% decline in July.

10:00 am EST

-.Wholesale Inventories for July are estimated to fall -1.0% versus a -1.7% decline in June.

- Preliminary Univ. of Mich. Consumer Confidence for September is estimated to rise to 67.5 versus 65.7 in August.

2:00 pm EST

- The Monthly Budget Deficit for August is estimated to widen to -$139.5B versus -$111.9B in July.

Upcoming Splits
- None of note

Other Potential Market Movers
- The Fed’s Evans speaking, Treasury’s Geithner speaking at town hall event, Thomas Weisel Healthcare Conference, BMO Capital Markets Real Estate Conference, Kaufman Brothers Investment Conference, Sidoti Investor Forum and the (HBC) analyst meeting could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and technology 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 at Session Highs, Boosted by Airline, HMO, Hospital, Networking and Gold Shares

Evening Review
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