BETWEEN THE HEDGES

Thursday, October 01, 2009

Friday Watch

Posted by Gary .....at 7:33 PM

Late-Night Headlines
Bloomberg:

- More than half of babies born today in rich nations will live for 100 years as earlier diagnoses and better treatment of illnesses such as heart disease extend lives, scientists estimate. Life expectancy increased by three decades or more over the 20th century in countries such as the U.S., U.K., France, Germany, Canada and Japan, and that trend will continue, according to a review published today in The Lancet medical journal. Without any further improvement in longevity, three- quarters of babies will mark their 75th birthdays, the Danish and German researchers wrote. “The linear increase in record life expectancy for more than 165 years does not suggest a looming limit to human lifespan,” wrote lead researcher Kaare Christensen, a professor at the University of Southern Denmark’s Danish Ageing Research Centre, in the review. Better health care for the elderly, particularly in the U.S., has extended lives by making illnesses like heart disease manageable over time and allowing earlier detection and intervention, the authors said. The aging of society has left nations struggling with how to fund programs for older citizens, the reviewers said. In Germany, the number of elderly for every 100 working-age people has risen from 16 in 1956 to 29 in 2006, and is forecast to reach 60 by 2056, the researchers said.

- Scientists, moving closer to a cure for AIDS, identified a way to find medicines that would help rid patients of the hardest-to-treat pockets of HIV. Current anti-HIV drugs reduce the virus to undetectable levels without eradicating it. The virus survives by lying dormant in immune-system cells, where the medicines don’t reach them. Scientists from Johns Hopkins University and the Howard Hughes Medical Institute reported yesterday that they developed a way of luring out these cells in laboratory experiments, an achievement they said may lead to a cure if repeated in humans.

- The Federal Reserve’s balance sheet contracted for the first time in eight weeks as lending to banks in the U.S. and abroad declined. The Fed’s assets shrank $17.6 billion, or 0.8 percent, to $2.14 trillion in the week ended yesterday, the central bank said today in Washington. Credit extended through the Term Auction Facility, which sells cash loans to commercial banks, fell $17.6 billion to $178.4 billion. Currency swaps to central banks outside the U.S. slipped $2.37 billion to $56.8 billion. While the Fed is completing purchases of housing debt and Treasuries, demand for some of the Fed’s emergency liquidity programs has waned. Fed Vice Chairman Donald Kohn said yesterday that when conditions are no longer “unusual and exigent,” some emergency lending programs “will be terminated.”

- One week after the G-20 anointed itself the world economy’s main policy forum, G-7 finance ministers and central bankers may break with tradition and choose not to release a statement on the global economy and currencies, said officials who declined to be identified. That would deprive traders of the commentary that policy makers frequently use to influence exchange rates.

- Accenture Plc(ACN), the world’s second- largest technology-services company, forecast revenue for this quarter and for fiscal 2010 that missed analysts’ estimates as the economic slump crimps consulting sales. Sales in the first quarter will be as much as $5.5 billion, Dublin-based Accenture said today in a statement. Analysts surveyed by Bloomberg projected $5.65 billion on average. For the fiscal year ending Aug. 31, revenue will be as much as $21.8 billion, short of the $22.2 billion average estimate.

- New York Attorney General Andrew Cuomo got a $10,000 campaign contribution from a Clinton Group Inc. executive he later said knew of alleged kickbacks made to win state pension-fund business, according to election records and two people familiar with the case. Hall hasn’t been charged. Hall, a hedge-fund manager who has contributed to other Democratic Party candidates, didn’t return calls for comment. His lawyer, Martin Perschetz, declined to comment on Hall’s status in Cuomo’s probe.

- The percentage of Americans who support abortion rights has slipped since last year and opinion on the issue is now evenly divided, according to a new survey by the Pew Research Center for the People & the Press. That’s a change from 2007 and 2008, when supporters of legal abortion “clearly outnumbered” opponents, according to a Pew press release. Four in 10 Americans now say they favor making it more difficult to obtain an abortion, up 6 points from 35 percent in 2007. Fifty percent oppose making it harder, down 6 points from the earlier survey.

- Yields on Fannie Mae and Freddie Mac mortgage securities tumbled to the lowest in more than four months, signaling that interest rates on new-home loans will retreat further and bolster the U.S. housing market. Yields on Washington-based Fannie Mae’s current-coupon 30- year fixed-rate mortgage bonds fell 0.15 percentage point to 4.08 percent as of 4:59 p.m. in New York, the lowest since May 21, according to data compiled by Bloomberg.

- Slovenia’s credit rating, the highest in eastern Europe, may be downgraded if the worst performing economy in the euro region deteriorates further, Fitch Ratings’ Chris Pryce said.

- San Francisco office rents fell 37 percent in the third quarter from a year earlier, the biggest decline since 2001, as financial and real estate firms cut jobs in the recession. Rents for the highest-quality offices in the most-desired locations of the city’s central business district, known as Class A space, dropped to an average of $34.81 a square foot per year. That was down from $55.65 in the third quarter of 2008, the peak of the current market cycle, according to preliminary data from the Colliers International brokerage. “We’ve lost about 5 percent of our job base year-over- year,” Ted Egan, chief economist for the city, said in an interview. “I can’t see any job growth in the office-using sectors.” Unemployment in San Francisco rose to 10.1 percent in August, the highest in at least 25 years, Egan said, citing California state employment data. About 19,000 people lost their jobs in the prior 12 months, with the biggest cuts among companies in finance, insurance, real estate, law, advertising, consulting and technology, he said. The third-quarter vacancy rate rose to 14.4 percent from 10.5 percent a year earlier, and it was the highest since the second quarter of 2005, according to Colliers.

- Developing nations’ foreign-exchange reserves surpassed their 2008 peak last quarter and central banks requiring more firepower to defend their currencies will want to keep adding “for years to come,” boosting the US dollar, BNP Paribas Investment Partners said. “The precautionary demand for foreign-exchange reserves has gone up” after the worst global financial crisis since the Great Depression spurred investors to flee developing-nation assets last year, said Gary Smith, the London-based head of central banks, supranationals and sovereign wealth funds at BNP. “The new number is higher, and it’s not a just a bit higher. It’s a quantum leap.” Demand for the greenback will increase as developing-nation central banks seek to purchase more US government bonds, which dominate their reserve holdings, according to Smith.

- Glorious Property Holdings Ltd. is the fifth straight Hong Kong initial public offering to fall in its debut on the city’s exchange. The stock dropped 18 percent to HK$3.61 as of 10:01 a.m.

- The cost of protecting Asia-Pacific bonds from default soared as worse-than-expected U.S. jobless claims and manufacturing data increased concern that the pace of recovery in the world’s largest economy is faltering. The Markit iTraxx Australia index of credit-default swaps advanced 9.5 basis points to 125.5 basis points as of 11:39 a.m. in Sydney, according to Citigroup Inc. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan jumped 11 basis points to 124 basis points as of 10:06 a.m. in Hong Kong, ICAP Plc prices show.

Wall Street Journal:

- During the boom, banks piled into asset management. Now many are trying to pile out. Good luck with that. It was a perfect boom-time business. Banks could use their extensive distribution networks to lure customers into paying high active-management fees for index-tracking performance, or quite often worse. Capital requirements were low, commissions high and the potential economies of scale huge. Asset management has now turned into an albatross around the necks of many banks.

- The Credit Crunch Continues by Meredith Whitney. Taxpayer dollars have supported institutions that are 'too big to fail.' Small business has been left out in the cold. Anyone counting on a meaningful economic recovery will be greatly disappointed. How do I know? I follow credit, and credit is contracting. Access to credit is being denied at an accelerating pace. Large, well-capitalized companies have no problem finding credit. Small businesses, on the other hand, have never had a harder time getting a loan.

- U.S. mutual-fund manager Invesco Ltd. has emerged as the front-runner to buy Morgan Stanley's Van Kampen fund business, according to people familiar with the matter. The deal, which is estimated to be worth $1 billion to $2 billion, would likely increase Invesco's assets under management to about $550 billion and leave Morgan Stanley with a minority stake in Atlanta-based Invesco.

- A court-appointed examiner investigating Lehman Brothers Holdings Inc.'s bankruptcy has been exploring whether the Federal Reserve improperly cut in front of other creditors owed money in the $613 billion bankruptcy case, records show. Billing records filed with the court show the examiner is investigating an issue that has angered many Lehman's creditors: how the Federal Reserve and the New York Fed -- which lent Lehman $46 billion in cash and securities before its bankruptcy filing last September -- were paid promptly and in full, while tens of billions of dollars in other debts were left to be sorted out in court. It remains unclear when and how much Lehman creditors will be repaid.

- A congressional battle is heating up over whether to subpoena records of Countrywide Financial Corp.'s controversial VIP mortgage program. Rep. Edolphus Towns, the Brooklyn Democrat who is chairman of the House Oversight and Government Reform Committee, reiterated in a Sept. 30 letter to other panel members his opposition to Republican calls to subpoena the VIP program's records. In the letter, Mr. Towns, who public mortgage documents indicate received two Countrywide VIP loans, likened the program to "a customer loyalty" initiative, "similar to airline frequent flier programs or supermarket discount cards." The letter followed a Sept. 29 letter from the panel's ranking Republican, Darrell Issa of Southern California, seeking support from committee members for subpoenaing the records from Bank of America Corp., which purchased Countrywide last year. Mr. Issa's letter asserted that the VIP program "engaged in a systematic campaign to buy influence" from public officials, and that the subpoena is needed to determine the extent of that effort. A spokesman for Mr. Issa said Thursday that the congressman was close to gaining majority support on the panel for a subpoena.

- U.S. auto sales fell 23% in September after the end of the federal government's "cash for clunkers" incentive program, with General Motors Co. and Chrysler Group LLC suffering the sharpest declines. Car makers sold 745,997 vehicles in September, compared with 964,783 in the same month last year, according to Autodata Corp. September's seasonally adjusted annualized selling rate came in at 9.2 million vehicles, Autodata said. That is a big drop from July and August, when clunkers rebates caused the sales pace to spike. The July annualized rate was 11.4 million and August's was 14.2 million. "Call it the 'cash-for-clunkers' hangover."

- Talks to merge Comcast Corp.'s cable networks and General Electric Co.'s NBC Universal are the latest sign of a big shift in television, with cable channels becoming more valuable than broadcast networks and companies rethinking their strategies for making and delivering content to consumers in a digital era.

- The U.S. has begun to ratchet up enforcement of existing sanctions on Iran, including cracking down on illegal exports of American products, even as it threatens fresh economic restrictions if Iran doesn't stop enriching nuclear material. Despite initial signs of progress in talks between Iran and members of the United Nations Security Council plus Germany in Geneva on Thursday, U.S. officials are expected to push for new U.N. or unilateral sanctions unless Tehran backs up its word with actions in coming weeks and months.

- From Geneva yesterday come all kinds of good diplomatic vibrations. Iran may allow U.N. inspectors into a recently unveiled uranium-enrichment plant "within two weeks." Another meeting will be held before month's end. A "freeze" on sanctions was bruited about. In an appearance at the White House, President Obama sounded sober but hopeful, calling the direct American talks with the Islamic Republic "a constructive beginning" toward "serious and meaningful engagement." Mahmoud Ahmadinejad was presumably in even better spirits at his remarkable change of fortune. A month ago, Iran's president was struggling to cement his grip on power after stealing an election and repressing nationwide protests. A week ago, the disclosure of the secret facility near Qom highlighted Iran's chronic prevarication and raised calls for more sanctions. By yesterday, all that had changed.

- It isn't often an energy company (of all things) gets to present itself as an environmental crusader, cozy up to Washington rulemakers, buy political protection, and pad its bottom line—all in one neat little announcement. So give Pacific Gas & Electric, PNM and Exelon credit for going for the gold. The three utility giants have made news recently by quitting the U.S. Chamber of Commerce. Their finer sensibilities, they explained, would no longer allow them to associate with an organization lacking in environmental fervor.

CNBC.com:
- For months you’ve heard that inflation is the big issue down the road. Countless market pundits have told you that in the wake of the stimulus, we're destined to see prices spiral higher and higher. Well Steve Cortes of Veracruz says hogwash! "Those fears are extremely misplaced," he says. How so? According to Cortes there’s both a fundamental argument and a technical argument for low inflation.

- Chrysler still plans to shutter eight North American plants according to its initial schedule, Chief Executive Sergio Marchionne said on Thursday, as he dismissed recent reports that a Detroit-area plant would get a reprieve.

IBD:

- Emergent BioSolutions (EBS) has one big product and one big customer. That's usually a dangerous business model. But in Emergent's case, the product, anthrax vaccine, is unique. And the customer, the U.S. government, depends on it to protect its military and civilian populations.

CNNMoney.com:

- Hottest holiday toys – kid tested.

- Ken Lewis doesn't have a golden parachute, but he's all set for a comfortable landing -- unlike his long-suffering shareholders. The Bank of America (BAC, Fortune 500) chief executive officer said Wednesday he'll step aside at year-end after eight years at the helm. Based on the company's most recent proxy statement, he will have $53 million in pension benefits waiting for him when he leaves. That should give him about $3.5 million a year in pension payouts for the rest of his life -- at a time when people who bought the stock when he took the reins in 2001 are underwater on their investments.

NYDailyNews.com:

- A con artist is in custody after trying to shake down David Letterman - threatening to expose the late night funnyman's affairs with several female staffers. The "Late Show" host, who married in March, revealed the stunning plot at the taping of Thursday night's show - and acknowledged that he had indeed slept with several women who work for him. "This morning, I did something I've never done in my life," he told his stunned audience. "I had to go downtown and testify before a grand jury." Letterman, 62, was a long time bachelor who finally married Lasko, his longtime girlfriend, in March, when he announced it on air. "They say, 'Well, why did it take you so long to get married?' and, of course, the answer honestly is we wanted to make sure we had the prenup just right," he joked. "I had avoided getting married pretty good for, like, 23 years," he said. "I secretly felt that men who were married admired me - like I was the last of the real gunslingers." Letterman and Lasko had dated since 1986.

Politico:

- President Barack Obama’s hometown allies have brought Chicago to the brink of landing the 2016 Olympic Games, but after Obama makes the city’s case before the International Olympic Committee Friday morning in Copenhagen, the president’s own legacy will become inextricably intertwined with the fate of Chicago’s bid. History has shown that’s not always a good thing.

Rasmussen:

- For nearly two years, economic issues have held the top spot in terms of importance among voters. But the latest national telephone survey shows that 83% now view government ethics and corruption as very important, placing it just ahead of the economy on a list of 10 key electoral issues regularly tracked by Rasmussen Reports.

TechCrunch:

- One of my favorite iPhone applications is BNO News — a lightweight app that lets you receive messages from the BNO Newswire. The service, which is best known for its extremely popular Twitter account, offers very timely, short snippets of news throughout the day, often before mainstream media catches wind of it. The iPhone app lets you receieve these messages as soon as they happen using push notifications.

The Business Insider:

- Chart of the Day: The Amazing Cash-For-Clunkers Cliff Dive.

Forbes:

- 10 Cities on the Rise.

Reuters:

- CIT Group Inc's(CIT) board approved a restructuring plan on Thursday, clearing the way for the commercial lender to launch a large debt exchange offer or to file for prepackaged bankruptcy if that failed, a person knowledgeable about the matter said.

- Treasury Secretary Timothy Geithner said on Thursday that a strong dollar was very important to the United States and the rest of the world needs to be convinced Americans will be more thrifty in future. "A strong dollar is very important to this country, I mean that, and it's very important that people recognize it," he told a news forum at the Newseum in downtown Washington. Speaking just before departing for Istanbul, Turkey, for a Group of Seven finance ministers' meeting, Geithner said the dollar's "exceptional" role in the global financial system invests the United States with extra responsibility. Questions have been raised about whether the world will be willing to keep financing huge American debts forever or whether they might seek an alternate reserve currency. Geithner made clear, in response to questions, that he was aware of the debate and of the importance of persuading others that the United States was willing to take measures to preserve the currency's value.

TimesOnline:

- Tony Blair is in line to be proclaimed Europe’s first president within weeks if the Irish vote “yes” in today’s referendum. Senior British sources have told The Times that President Sarkozy has decided that Mr Blair is the best candidate and that Angela Merkel has softened her opposition. The former Prime Minister could be ushered into the European Union’s top post at a summit on October 29. Ms Merkel, the German Chancellor, was opposed to Mr Blair because she believed that the post should go to a country that had adopted the euro but British sources said that she may now be “biddable” if Germany and France get plum posts in the new European Commission.

Guardian:

- Britain was served notice by the International Monetary Fund today that reforms to healthcare and pensions will be needed to repair the long-term damage to public finances caused by the global recession. Asked specifically about the UK's financial health, Blanchard warned that action would be needed once the crisis was over. "That means reforms of the retirement system; that means reforms of the healthcare system. These reforms have basically to be confronted. The idea of (just) introducing these fiscal rules and not doing these reforms is a joke." The comments will fuel an already highly charged political debate in Britain about which party has the best plans for tackling a budget deficit that the Fund predicts will hit more than 13% of GDP – about £200bn – next year.

Late Buy/Sell Recommendations

Sanford Bernstein:

- Rated (BAC) Outperform, target $25.

Keefe, Bruyette and Woods:

- Upgraded (USB) to Outperform, target $28.

- Downgraded (PNC) to Underperform.

- Upgraded (BBT) to Outperform..

Night Trading
Asian Indices are -2.75% to -1.0% on average.

Asia Ex-Japan Inv Grade CDS Index 124.50 +12.0 basis points.
S&P 500 futures -.28%.
NASDAQ 100 futures -.30%.

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

U.S. Equity Preview

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
- None of note

Economic Releases

8:30 am EST

-.The Change in Non-farm Payrolls for September is estimated at -175K versus -216K in August.

- The Unemployment Rate for September is estimated to rise to 9.8% versus 9.7% in August.

- Average Hourly Earnings for September are estimated to rise .2% versus a .3% gain in August.

10:00 am EST

- Factory Orders for August are estimated unch. versus a 1.3% gain in July.

Upcoming Splits
- (DEER) 2-for-1

Other Potential Market Movers
- The Fed’s Rosengren speaking, Treasury’s Geithner speaking at G-7 meeting, Fed’s Fisher speaking and the (WRC) investor meeting could also impact trading today.

BOTTOM LINE: Asian indices are sharply lower, weighed down by mining and automaker shares in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.