Bloomberg:

• ISM U.S. Manufacturing Index Decreased to 54.4 in September. Manufacturing expanded in September at the slowest pace in 10 months, underscoring the Federal Reserve’s forecast of “modest” U.S. growth in coming months. The Institute for Supply Management’s factory index dropped to 54.4 from 56.3 in August, the Tempe, Arizona-based group said today. Measures of orders and production fell to the lowest level since June 2009. Growth in European manufacturing slowed. A gauge of manufacturing in the 16-nation euro region declined to 53.7 in September from 55.1 the previous month, London-based Markit Economics said today. The ISM’s U.S. new orders measure declined to 51.1 from 53.1, while the production index dropped to 56.5 from 59.9. The employment gauge fell to 56.5 in September, the lowest in six months, from 60.4, and the index of export orders dropped to 54.5, the lowest this year. The measure of orders waiting to be filled fell to 46.5 from 51.5 and the index of prices paid jumped to 70.5 from 61.5. The inventory index increased to 55.6 in September, the highest since July 1984, while a gauge of customer stockpiles dropped to 42.5.
• Irish 'Groundhog Day' Leaves Lenihan Battling Biggest Deficit. It must feel like deja vu for taxpayers and investors in Ireland. Finance Minister Brian Lenihan said yesterday he cleaned up the mess left by “reckless” bankers. Now he has to turn back to tackling the largest budget deficit in the history of the euro region after the premium bondholders demand to buy Irish debt climbed to a record this week. “It’s a bit like groundhog day, like you’ve been on the wrong road and have to come back and start all over again,” said Alan McQuaid, chief economist at Bloxham Stockbrokers in Dublin. “It’s a long way home.”
• European Manufacturing Cools, Unemployment Stays at 12-Year High. Growth in Europe’s manufacturing industry slowed and unemployment held at a 12-year high as a cooling global recovery restrained demand. A gauge of manufacturing in the 16-nation euro region declined to 53.7 in September from 55.1 the previous month, London-based Markit Economics said today. A separate report showed that the region’s jobless rate stayed at 10.1 percent in August, the highest since June 1998.
• Corporate Bond Market Suffers 'Indigestion' in Europe After Spreads Widen. Corporate bond sales fell 51 percent in Europe this week after issues from power group Alstom SA and voucher company Edenred lost value as investors demanded higher rewards. Renault SA pulled a note issue by the second-biggest French carmaker’s financing unit as the yield investors seek to hold investment-grade company debt rose. Alstom’s 2018 notes issued Sept. 28 fell 8.6 euros per 1,000-euro ($1,400) face amount, to a bid price of 98.873, according to Bloomberg composite prices. The all-in yield buyers want to hold company bonds jumped 8 basis points to 3.264 percent this week, according to Bank of America Merrill Lynch index data. Sales slowed to 5.3 billion euros as investors became more selective after a flood of 51 billion euros of supply in the first three weeks of September. “We have been seeing some signs of indigestion in the market as the primary deals have simply not performed in secondary trading,” said Harpreet Parhar, a credit strategist at Credit Agricole SA in London.
• Barclays Capital 'Quant' Index Helps Fuel Growth in Computer-Driven Notes. Barclays Capital plans to sell notes based on a proprietary index that allocates investments according to a computer model, as the number of so-called quantitative benchmarks grows. The Multi-Alpha Equal Risk Allocation Index, or Era, is the second quantitative index released by Barclays in the past month, joining a growing list of products based on strategies where mathematical models are used to determine where to allocate assets. Era uses an algorithm developed by the London-based bank to measure historical volatility and determine how to invest across four asset classes including stocks, commodities, interest rates and currencies, according to Barclays Capital.
• Corn Futures Plunge Most Since April, Extending Slump, on U.S. Supply Gain. Corn plunged the most since April after the U.S. said supplies left from last year’s crop climbed to the highest level since 2006. Inventories on Sept. 1 rose 2 percent to 1.708 billion bushels from a year earlier, the Department of Agriculture said yesterday. That was 322 million bushels above the agency’s Sept. 10 estimate. Corn surged 33 percent in the third quarter, the most for that period since 1974, as hedge funds increased bets on higher prices to a record.
• India Insider Selling Stocks at Fastest Pace Since Sensex Peak. India’s company executives are selling shares at the fastest pace since prices peaked 2 1/2 years ago, just as foreign investors pour record amounts of money into the best-performing major emerging market. Insiders of Bombay Stock Exchange Sensitive Index companies made at least 110 stock sales last quarter for a combined $21 million, according to exchange data compiled by Bloomberg. The last time the number of sales was this high, in the fourth quarter of 2007, the Sensex sank 23 percent in three months.
• Fed's Dudley Says Further Easing Probably Warranted. Federal Reserve Bank of New York President William Dudley said the outlook for U.S. job growth and inflation is “unacceptable” and that the Fed will probably need to take action to spur the recovery and avert deflation. “We have tools that can provide additional stimulus at costs that do not appear to be prohibitive,” Dudley, who serves as vice chairman of the Fed’s policy-setting Open Market Committee, said today in a speech to business journalists in New York. “Further action is likely to be warranted unless the economic outlook evolves in a way that makes me more confident that we will see better outcomes for both employment and inflation before too long.”
• U.S. Postal Service Had $6 Billion Loss in 2010.
• Foreclosure Errors Cloud Homeownership With 'Blighted Titles'. U.S. courts are clogged with a record number of foreclosures. Next, they may be jammed with suits contesting property rights as procedural mistakes in those cases cloud titles establishing ownership. “Defective documentation has created millions of blighted titles that will plague the nation for the next decade,” said Richard Kessler, an attorney in Sarasota, Florida, who conducted a study that found errors in about three-fourths of court filings related to home repossessions.
• Ford(F) Sept. Sales Up 46%, Est. Up 40%.
  

Business Insider:

• CNN's Rick Sanchez Calls Jon Stewart a Bigot and Suggests That Jews Control the Media.
• 20 Key Charts From the Flash Crash Report.
• Chart of the Day: Americans Just Added More Money to Emerging Markets Than from 1995-2005.
  

Zero Hedge:

• SEC Releases Final Flash Crash Report - Waddell and Reed Blamed as Selling Catalyst. 100+ pages of garbage, and yes, Waddell and Reed, and their destructive hedging trade of 75,000 e-minis is the culprit that apparently set everything off: "At 2:32 p.m., against this backdrop of unusually high volatility and thinning liquidity, a large fundamental trader (a mutual fund complex) [ZH: Waddell and Reed] initiated a sell program to sell a total of 75,000 E-Mini contracts (valued at approximately $4.1 billion) as a hedge to an existing equity position."
• Questioning the Competency of the SEC Report's Authors.
  

New York Times:

• Fiorina Calls for More Hedge Fund Transparency. Carly Fiorina, campaigning to be California’s first Republican senator elected in two decades, said hedge funds should be subject to greater transparency requirements and the financial regulatory overhaul known as the Dodd-Frank Act doesn’t go far enough, Bloomberg News reported. The lightly regulated businesses that engaged in some of the riskiest activities, the so-called shadow financial system targeted by the legislation, still exist, the former Hewlett-Packard chief executive officer told Bloomberg in an interview. The Dodd-Frank Act “punishes hedge funds, but it’s not clear to me we’ve created transparency in hedge funds,” Ms. Fiorina said.

ABC News:

• Big Banks Face Even Stricter Capital Rules: Sources. Banks considered too big to fail could soon be held to even stricter capital requirements than those in the global Basel III package, sources told Reuters on Friday. As part of new rules mooted by central bank governors and regulators, large international lenders would have to retain an equity buffer of up to 3 percentage points above the minimum rates agreed last month, regulatory and financial sources said. Disagreement remains over which banks would plunge global markets into turbulence if they folded and should therefore set aside more equity capital and the plans are at an early stage. While the inclusion of Germany's biggest lender Deutsche Bank is all but certain there are doubts whether the country's No.2, Commerzbank , would fit the criteria, sources in Germany said. A main concern is that the fewer institutions that fall under the stricter rules, the bigger the risk of putting them at a competitive disadvantage against smaller rivals.

Reason.com:

• How ObamaCare's Exchanges Undermine Quality Health Care.

NY Post:

• D.E. Shaw Drops Off Fund List. After laying off 10 percent of its staff this week, D.E. Shaw suffered another black eye yesterday when it was bumped from AR Magazine's top 10 list of the biggest hedge funds. The previous list, which surveyed assets as of 2009, put D.E. Shaw in fifth place, with $23.6 billion of assets. In the first half of 2010, D.E. Shaw dropped out of the top 10 entirely after its assets fell to $17.8 billion.

Politico:

• What to Watch as Rahm Emanuel Leaves.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Friday shows that 28% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-six percent (46%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -18 (see trends).
• For Second Straight Month, Number of Democrats in U.S. Falls to Record Low.
  

Reuters:

• India Has Access to BlackBerry Messenger Service - Govt. The Indian government has manual access to Canadian Research in Motion's(RIMM) BlackBerry messenger services and is hopeful of getting automated access from January 1, a top official said on Friday. India, which along with several other countries has expressed concerns that BlackBerry services could be used to stir political or social instability, had threatened RIM with a ban if it were denied access to data. "We have manual access to the messenger services. We want automated access and we are hopeful of getting that from January 1," G.K. Pillai, home secretary, told Reuters.

Financial Times:

• Almost half of Britain's main commercial property companies expect no market improvement in the next six months and more than a quarter foresee a further drop, citing research by Lloyds Banking Group Plc.

Telegraph:

• UK Manufacturing Recovery Fades as Export Orders Fall for First Time in 14 Months. (graph) Britain's manufacturing recovery faded further in September with export orders falling for the first time in more than a year as global demand weakened.

Sky News:

• Exclusive: Goldman(GS) Partners' Secret Shares Windfall. Goldman Sachs has secretly handed its top London-based employees tens of millions of pounds-worth of free shares following a decision to cap their pay in the wake of this year's Labour Government tax on bank bonuses. I have learned that Goldman made the share awards to its London-based partners towards the end of August.

Xinhua:

• Foxconn Hikes Salaries Again in South China Factory After Suicides. Foxconn, the world's largest electronics contractor, which has been plagued by a string of worker suicides, has again raised monthly salaries for employees in a south China factory. The rise, which will start from October, is the second this year for Foxconn workers at its production base in Shenzhen. Assembly workers would get a pay rise of about 66 percent to bring salaries to 2,000 yuan (298.5 U.S. dollars) per month, said company spokesman Liu Kun. In June, Foxconn increased salaries by 30 percent, from 900 yuan to 1,200 yuan, for its Shenzhen employees. "I cannot believe the company will raise salaries for a second time within a year. It means my monthly salary will double," said Wang Xuchu, a Foxconn worker from the central Henan Province, Friday.

Bear Radar

Style Underperformer:

• Small-Cap Growth (-.11%)

Sector Underperformers:

• 1) Road & Rail -1.20% 2) HMOs -1.18% 3) Semis -.79%

Stocks Falling on Unusual Volume:

• FNF, FAF, HPQ, CSIQ, CRUS, AMZN, MO, JDAS, RRC, GMCR, WCRX, NFLX, SYNA, BIDU, CALM, QLIK, LLTC, REGN, SNIC, PLCN, XLNX, ACOR, NTAP, SLXP, EXPE, QCOM, SCHN, BSI, AZZ, HTZ and XRM
  

Stocks With Unusual Put Option Activity:

• 1) PCBC 2) STI 3) JWN 4) TOL 5) MCK
  

Stocks With Most Negative News Mentions:

• 1) CAT 2) TIF 3) BMC 4) COP 5) KR
  

Bull Radar

Style Outperformer:

• Large-Cap Value (+.23%)

Sector Outperformers:

• 1) Coal +1.84% 2) Gold +1.22% 3) Computer Service +1.11%

Stocks Rising on Unusual Volume:

• REP, VRNT, ROSE, OXY, INFY, GYMB, DMAN, ACTG, IMAX, PLCE and ACN
  

Stocks With Unusual Call Option Activity:

• 1) HUM 2) IDCC 3) ACN 4) RDN 5) WCRX
  

Stocks With Most Positive News Mentions:

• 1) HPQ 2) GOOG 3) BA 4) AAPL 5) INTC

Friday Watch

Evening Headlines
Bloomberg:

• BankUnited's CEO Kansas Says U.S. May Lose a Third of Its Banks. The U.S. may lose about a third of its banks as the weakening economy weeds out the least healthy institutions, said John Kanas, chief executive officer of BankUnited.
  
• Cigna, Restaurants Seek Low-Wage Health-Plan Waivers. U.S. restaurants have asked the federal government to waive health overhaul rules that may force companies to abandon low-cost “mini-med” plans that insure 1.4 million minimum-wage and part-time employees. Cigna Corp., the Philadelphia-based health insurer, has also asked for a waiver on behalf of its “limited-benefit” customers, and expects to hear back soon from federal officials, Gloria Barone Rosario, a spokeswoman, said today in an e-mail.
• Why Debtholders Need to Get Ready for a Haircut: Peter Coy. There is no end in sight to Ireland’s debt crisis, but here’s one thing we know: The Irish will not get kicked out of their own country. No matter how many multiples of the nation’s gross domestic product are owed to German and U.K. banks, sovereign foreclosure isn’t an option. In most other respects, though, the state of Ireland is similar to the predicament that one in five American homeowners with mortgages find themselves in -- owing more than their property is worth, so burdened with debt that the economy is stalled by their inability to borrow and spend as they used to.
• Post-Enron Audit Watchdog Shows Consumer Bureau What to Avoid, Turner Says. In 2002, Congress sought to make sure publicly traded companies couldn’t deceive investors the way Enron Corp. did. So it created a watchdog to monitor the accountants that audit the corporations and gave it a gawky name: the Public Company Accounting Oversight Board. In eight years the board has brought 32 disciplinary cases, only one of which was against one of the so-called big four accounting firms. It has also approved six standards governing how auditors must do their work. Eight others adopted in August await Securities and Exchange Commission sign-off. Some of the board’s advocates find that slender record underwhelming, Bloomberg Businessweek reports in its Oct. 4 issue. “They need to be more forceful in setting the audit standards, and even more importantly, they need to be more forceful in enforcement,” says Edward Ketz, an accounting professor at Pennsylvania State University. “It just doesn’t seem they are doing enough.”
• Arahura in Funding Talks for $964 Million Rare Earths Project. Arafura Resources Ltd. is in talks to raise funds for its A$1 billion ($964 million) rare earth project in Australia after China capped exports of the metals used in hybrid cars and laptops this year and prices soared. “With the outlook of the market, the robustness of the project, we have every chance of raising the money,” Chief Executive Officer Steve Ward said in an interview in Perth. “The money will come from a combination of sources from all over the globe. It will come from debt, equity, maybe some financial instruments, and maybe some involvement with some customers and some raw-material suppliers.” China, which controls more than 90 percent of the global market of the metallic elements, in July reduced export quotas for the rest of the year by 72 percent, sending prices up as much as ninefold.
• Geithner Says No Threat of China Trade War or Currency Wars. U.S. Treasury Secretary Timothy F. Geithner today said he was confident tensions over China’s currency, the yuan, won’t lead to escalating trade sanctions or feed into a broader global currency conflict. “We’re not going to have a trade war,” Geithner said in remarks to a Washington conference hosted by The Atlantic magazine and the Aspen Institute.
• Mexico Files Support of U.S. Court Order Blocking Arizona Illegal Immigration Law. Mexico said it supports a U.S. court ruling that blocks the central provisions of an Arizona law requiring police to determine the immigration status of people stopped for questioning. Lawyers for Mexico told the U.S. Court of Appeals in San Francisco in a court filing today that the law interferes with its relations with the U.S. and encourages “an imminent threat of state-sanctioned bias or discrimination.” Nine Latin American countries including Argentina, Brazil, Bolivia, Costa Rica, Nicaragua and Peru asked for permission to join Mexico’s request that the appeals court uphold the lower- court’s ruling that Arizona can’t require police to try to determine if someone is legally in the U.S. and then detain that person if they suspect he isn’t. “Mexico seeks to ensure that its citizens present in the U.S. are accorded the human and civil rights granted under the U.S. Constitution,” Mexico said in its filing. For the almost 20 million Mexican workers, tourists and students admitted to the U.S. and those already in the country, the Arizona law “adversely impacts U.S.-Mexico bilateral relations, Mexican citizens and other people of Latin-American descent present in Arizona,” according to the filing.
• Correa Claims Ecuador Coup Attempt After Scuffling With Police. Ecuador declared a state of emergency as hundreds of police protesting wage cuts blocked roads, shut the airport for several hours and sprayed teargas on President Rafael Correa.
• Roubini Says 2008 Bank Mergers Created 'Too Bigger to Fail' Risk for U.S. “The ‘too big to fail’ problem has become an even too bigger to fail” problem, Roubini said today at the Bloomberg Dealmakers Summit in New York. “That is what happens when you do mergers that don’t make any sense.” The federal government rescued institutions whose potential collapse could have disrupted the financial system in 2008, including mortgage lender Fannie Mae and insurer American International Group Inc. JPMorgan Chase & Co. acquired the brokerage Bear Stearns Cos. and assets of Washington Mutual Inc. in 2008 after the two companies suffered market routs and regulators stepped in. Bank of America Corp. bought brokerage Merrill Lynch & Co. and mortgage lender Countrywide Financial Corp.
• California Man Charged in $225 Million 'Scratch and Dent' Property Scheme. A California businessman was charged with fraud and money laundering in what prosecutors said was a $225 million Ponzi scheme that solicited investments in rehabilitated “scratch and dent” real estate. Bruce Fred Friedman, 60, the owner of Sherman Oaks, California-based Diversified Lending Group Inc., was arrested Sept. 13 in Cannes, France, U.S. Attorney Andre Birotte Jr. in Los Angeles said today in a statement. He faces a prison sentence of as long as 360 years if convicted on all 23 counts that he’s charged with, according to the statement.

Wall Street Journal:

• Irish Crisis Shakes Europe. Dublin to Spend Billions More to Shore Up Lenders; Jitters Over Euro's Future. Ireland scrambled to contain its financial crisis—and convince investors it won't need an emergency bailout by its European peers—by promising to pump billions more into its hardest-hit lenders. The move, coming after efforts two years ago to rescue the troubled banks, underscores Ireland's new and unwanted status as the center of Europe's continuing financial turmoil. The convulsions in Dublin are adding to concerns that Ireland and other stricken nations may need to tap a rescue mechanism for euro-zone members that was cobbled together to save Greece this spring. The Irish government said Thursday that the total cost of fixing its banks, battered by an epic housing bust, could in the worst case total as much as €50 billion ($68 billion), or about a third of the country's economic output last year. That's much higher than the government's previous commitment of a total of €33 billion for the bailout. As a result of its bank rescues, Ireland's budget deficit will rise to 32% of its economic output this year—roughly 10 times the European Union limit and the biggest in the euro zone's 11-year history. Ireland is betting it can show that it has fully absorbed its banks' problems and that the worst is over. But more trouble may loom. The government has already mounted one of the toughest budget-cutting programs in Europe, but it will now likely make even deeper cuts in its new budget in November. If the new cuts further stifle the economy, concern will build that Ireland—like Greece—will one day need to seek financial assistance from the rescue fund established earlier this year by the EU and the International Monetary Fund. Similar fears are building in Spain and Portugal, where concerns about government debt are mounting. Investors are also nervous about Portugal, fearing that political wrangling there could prevent the country from cutting its own debts. On Thursday, ratings company Moody's Investors Service downgraded Spain's top-notch triple-A rating to Aa1, citing its weak growth prospects and deteriorating finances. Ireland's lingering woes offer a cautionary tale of how difficult it will be for Europe's weaker economies to cut their debts while coping with economic stagnation and high unemployment. Following weeks of relative calm in Europe, the flaring of Ireland's crisis has put European officials back on the defensive, renewing questions about the long-term viability of the 16-nation euro zone. Ireland's troubles also highlight the difficulty the European Central Bank faces in setting a single monetary policy for a region of starkly different economic fortunes. Ireland, Portugal, Spain and Greece appear to be slipping deeper into economic malaise, while Germany and other northern European countries are recovering. If this divide continues to grow, as a number of economists predict, ECB officials will face uncomfortable questions about whose interests they are putting first. Making things worse, Ireland's economy unexpectedly shrank almost 5%, on an annualized basis, in the second quarter, after emerging from recession earlier this year. A weak economy—or worse, a "double-dip" recession— will make it harder to generate tax revenue and pay down debt.
• Icahn Gains Leverage to Press Merger of MGM, Lions Gate. Billionaire investor Carl Icahn bought a significant chunk of Metro-Goldwyn-Mayer Inc.'s debt and is pushing the beleaguered film studio to merge with rival Lions Gate Entertainment Corp., said people familiar with the matter.
• Gymboree(GYMB) Solicits Potential Buyers. Children's clothing retailer Gymboree Corp. is exploring the possibility of a sale to private equity firms, people familiar with the matter said.
• Massey Bashes Mine Regulator. Massey Energy Co. said federal mine safety officials insisted on ventilation changes that cut the flow of fresh air in half at its Upper Big Branch mine in the days leading up to the April 5 explosion that killed 29 workers. In a 12-page letter posted on its website, Massey said its engineers resisted the change but were pressured by the Mine Safety and Health Administration, the federal agency charged with policing mines. Massey also repeated its calls for the agency to conduct its hearings into the accident in public.
• Microsoft(MSFT), AT&T(T) to Unveil New Smartphones. Microsoft Corp. will formally unveil a lineup of smartphones using the revamped version of its mobile operating system on Oct. 11, and AT&T Inc. will begin offering them four weeks later, according to people familiar with the launch plans.

CNBC:

• Fed's Bernanke, Pianalto Say Recovery Disappointing. The U.S. economic recovery remains disappointingly slow with unemployment too high, two top Federal Reserve officials said on Thursday, as they discussed the role of the U.S. central bank in spurring a stronger economy. Federal Reserve Chairman Ben Bernanke, in remarks at a town hall event held by the Fed, commented on the pain still felt by many Americans, but spoke only in generalities about the Fed's commitment to stimulate growth. The president of the Cleveland Fed, Sandra Pianalto, said growth is currently too slow to significantly reduce the "stubbornly high" unemployment rate. She said she is currently assessing the effectiveness of the tools that the central bank could employ if the Fed were to decide the economic recovery needs an extra boost.

IBD:

• Medical Waste Disposal Industry Defies The Recession. Unfazed by housing downturns, terrorist attacks, recessions, oil spills and like misfortune, Stericycle (SRCL) keeps on growing.

Business Insider:

• HP(HPQ) Stock Tanks After It Hires No-Name CEO. After HP named Apotheker CEO, its stock is down 4% in after hours trading, which means he's already destroyed $4.45 billion in shareholder value!
• Warning: With All These Bank Failing, Know Your FDIC Status.
• This is What a Housing Boom Gone Bust and an Economy Gone Terribly Wrong Looks Like. (video) This video from WSJ.com does a fantastic job at displaying the complexities of what it going on in Spain.
  

Zero Hedge:

• Guest Post:Algorithms Should Be Monitored On A Daily Basis. Leading derivative expert, author and regular contributor at the Econotwist’s, Espen Gaarder Haug, says algorithms have many weaknesses and should be monitored on a daily basis by people with extensive market knowledge and experience.
• This Has to be a Joke: SEC About to Blame Entire Flash Crash on Waddell and Reed's E-Mini Trades.
• Federal Reserve Balance Sheet Update. We believe that within one week the Fed will surpass Japan as the second largest holder of Treasurys, and China, the current top holder, in just over a month.

Forbes:

• The Heavy Hand of Kathleen Sebelius. Writing in the Wall Street Journal she warns, “we will review large premium increases and identify those that are unreasonable.” This is one way ObamaCare imposes price controls. The legislation requires lots of new health insurance benefits—benefits that come with a cost. But Democrats sold it by telling people they would get more and pay less. It was a lie, and now Sebelius has to fain shock at the price increases.

CNNMoney.com:

• Rising Medicaid Costs to Blow Hole in State Budgets. (graph) States will have to dig deeper into their already empty coffers next year in order to pay for rising Medicaid costs. Next fiscal year states will spend 7.4% more on the health care coverage -- which is already one of their biggest expenses -- according to a report released Thursday by the Kaiser Family Foundation.

NY Post:

• Hedgies Nip and Tuck Fees to Please Clients.

The American Spectator:

• No, You Can't Keep Your Current Health Coverage. The law is only just beginning to take effect, and already insurers are dropping coverage for tens of thousands of Americans because of its burdensome mandates. There will be a lot more of this as additional Obamacare regulations become active. And yet the president still claims that the law won't make you change your coverage or your doctor. Is it any wonder he doesn't want Americans to get their information from news outlets that will check his claims?

Rasmussen Reports:

• Wisconsin Senate: Johnson (R) Jumps to Largest Lead Yet Over Feingold (D). Republican Ron Johnson now leads incumbent Democrat Russ Feingold by 12 points in Wisconsin’s race for the U.S. Senate. The latest Rasmussen Reports statewide telephone survey of Likely Voters shows Johnson picking up 54% support, while Feingold, who is running for his fourth term in the Senate, gets 42% of the vote with leaners included.

Politico:

• Democrats Defend Agenda as They Exit Hill. Hours after adjourning a week early and punting on tax cuts and appropriations bills, House Democratic leaders offered a broad defense of their agenda, framing their accomplishments as historic while casting Republicans as obstructionists not worthy of the public trust. Speaking in a studio in the Capitol Visitors Center, House Speaker Nancy Pelosi (D-Calif.), Majority Leader Steny Hoyer (D-Md.), Majority Whip Jim Clyburn (D-S.C.) and Democratic Congressional Campaign Committee Chairman Chris Van Hollen (D-Md.) touted their health-care reform legislation, Wall Street regulatory reform, the deeply unpopular stimulus bill and support for the military.

Reuters:

• Health Reform to Worsen Doctor Shortage: Group. The U.S. healthcare reform law will worsen a shortage of physicians as millions of newly insured patients seek care, the Association of American Medical Colleges said on Thursday. The group's Center for Workforce Studies released new estimates that showed shortages would be 50 percent worse in 2015 than forecast. "While previous projections showed a baseline shortage of 39,600 doctors in 2015, current estimates bring that number closer to 63,000, with a worsening of shortages through 2025," the group said in a statement. "The United States already was struggling with a critical physician shortage and the problem will only be exacerbated as 32 million Americans acquire health care coverage, and an additional 36 million people enter Medicare." The U.S. healthcare reform plan signed into law by President Barack Obama in March is designed to provide insurance to 32 million Americans who now lack it. The AAMC projected a shortage of 33,100 physicians in specialties such as cardiology, oncology and emergency medicine in 2015.
• Currency Tensions Rising Ahead of IMF Meeting. Fears some countries may resort to currency depreciation to boost exports will be one of the hottest issues at the International Monetary Fund's annual meeting next week.
• Christopher & Banks(CBK) Posts Wider-Than-Expected Q2 Loss. Women's apparel retailer Christopher & Banks Corp (CBK) reported a wider second-quarter loss than expected, hurt by weak sales towards the end of the quarter, sending its shares down 8 percent after the bell.
• Pre-Crisis Jobs Level Regained Only in 2015 - ILO. Global employment will not recover to pre-crisis levels until 2015 if current policies are pursued, fuelling social tension, the International Labour Organisation said on Friday. For the United States -- where persistent unemployment has become one of the main issues in this November's elections -- the number of jobs still needed to regain pre-crisis levels is 6.9 million, ILO economist Steven Tobin said. The extended loss of employment and growing perceptions of unfairness risked increasing social tension, the ILO said.
  

Telegraph:

• Hedge Funds Hold Ireland to Ransom Over Anglo Irish Bank Bail-Out. Hedge funds are holding the Irish government to ransom over its €30bn (£26bn) bail-out of one of the country's biggest lenders, Anglo Irish Bank. The investors are attempting to force the Irish authorities to pay them more for the debt they hold in Anglo Irish Bank and say if their demands are not met they could trigger a default crisis. The London and US-based hedge funds are fighting moves to pay them no more than current market prices for their holdings of junior debt in Anglo and are understood to be prepared to take the Irish government to court. Anglo junior debt is trading in a range of 23 to 25 cents in the euro and the investors are thought to be looking for a payout of 35 to 40 cents. However, the authorities are unwilling to offer a premium to the market price, according to a source close to the Irish government. The hedge funds in turn argue that the government has no legal right to force them to accept a haircut on the value of their holdings.

Wirtschaftswoche:

• European Central Bank Governing Council member Ewald Nowotny said that the ECB will continue buying government bonds as long as there are inefficiencies in the markets.

Nikkei English News:

• Former Federal Reserve Vice Chairman Donald Kohn, who retired Sept.1, said U.S. inflation could remain sluggish for a number of years, citing an interview.

Evening Recommendations
Citigroup:

• Reiterated Buy on (MMC), target $27.

Night Trading

• Asian equity indices are -.25% to +.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 117.0 +.5 basis point.
  
• Asia Pacific Sovereign CDS Index 110.0 -1.0 basis point.
  
• S&P 500 futures +.23%.
  
• NASDAQ 100 futures +.34%.

Morning Preview Links

Earnings of Note
Company/Estimate

• None of note
  

Economic Releases
8:30 am EST

• Personal Income for August is estimated to rise +.3% versus a +.2% gain in July.
• Personal Spending for August is estimated to rise +.3% versus a +.4% gain in July.
• The PCE Core for August is estimated to rise +.1% versus a +.1% gain in July.
  

9:55 am EST

• Final Univ. of Mich. Consumer Confidence for September is estimated to rise to 67.0 versus a prior estimate of 66.6.

10:00 am EST

• ISM Manufacturing for September is estimated to fall to 54.5 versus a reading of 56.3 in August.
• ISM Prices Paid for September is estimated to fall to 59.0 versus a reading of 61.5 in August.
• Construction Spending for August is estimated to fall -.4% versus a -1.0% decline in July.
  

Afternoon

• Total Vehicle Sales for September are estimated to rise to 11.5M versus 11.46M in August.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Dudley speaking, Fed's Evans speaking and the Fed's Fisher speaking could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and financial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly modestly lower. The Portfolio is 75% net long heading into the day.

Stocks Slightly Lower into Final Hour on Profit-Taking, More Shorting, Diminishing QE2 Expectations

Broad Market Tone:

• Advance/Decline Line: Lower
  
• Sector Performance: Mixed
  
• Volume: Above Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 23.68 +1.85%
  
• ISE Sentiment Index 77.0 -46.53%
  
• Total Put/Call .85 +7.59%
  
• NYSE Arms .91 -31.80%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 106.88 bps -.84%
  
• European Financial Sector CDS Index 125.37 bps -4.14%
  
• Western Europe Sovereign Debt CDS Index 156.0 bps -1.89%
  
• Emerging Market CDS Index 224.58 bps -.43%
  
• 2-Year Swap Spread 18.0 +2 bps
  
• TED Spread 14.0 +1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .15% unch.
  
• Yield Curve 208.0 +2 bps
  
• China Import Iron Ore Spot $141.10/Metric Tonne +.21%
  
• Citi US Economic Surprise Index -7.90 +7 points.
  
• 10-Year TIPS Spread 1.81% unch.
  

Overseas Futures:

• Nikkei Futures: Indicating +65 open in Japan
• DAX Futures: Indicating +22 open in Germany

Portfolio:

• Slightly Higher: On gains in my Retail, Biotech and Medical long positions
  
• Disclosed Trades: Added to my (IWM)/(QQQQ) hedges, then covered them
  
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is mildly bearish as the S&P 500 trades slightly lower despite gains in commodities, less sovereign debt angst and better economic data. On the positive side, Education and Homebuilding shares are especially strong, rising 1.0%+. The Portugal sovereign cds is dropping 6.22% to 406.67 bps and the UK sovereign cds is dropping -6.58% to 65.73 bps. On the negative side, Oil Tanker, Ag, Gold, Computer, Disk Drive, Semi, Computer Service, Drug and Oil Service shares are under pressure, falling more than .75%. Cyclicals are underperforming. DRAM prices continue to weaken, falling another -5.71% this week. The S&P GSCI Ag Spot Index, which led the recent stock rally, is declining -1.69% today and may be rolling over technically. Despite better economic data and recent declines, the 10-year yield is flat on the day at 2.51%. If tomorrow's economic data comes in better than estimates, I would expect to see a meaningful ratcheting down in QE2 expectations, which should boost the dollar. This could pressure stocks later in the day after an initial bump higher. Weak economic data tomorrow would likely have a muted impact. I expect US stocks to trade mixed-to-lower into the close from current levels on profit-taking, more shorting, diminishing QE2 expectations and China worries.

Today's Headlines

Bloomberg:

Wall Street Journal:






Bloomberg Businessweek:




MarketWatch:




CNBC.com:




Business Insider:




Zero Hedge:


New York Post:




New York Times:





U.S. News:




Washington Post:





Detroit Free Press:



ABC News:




LA Times:




MSNBC.com:




Real Clear Politics:




Rasmussen Reports:




Politico:




Reuters:



USA Today:




Le Temps:




Der Spiegel:




Sueddeutsche Zeitung:




Frankfurter Allgemeine Zeitung:




Kathimerini:




Cinco Dias:


Berlingske Tidende:




El Pais:



DigiTimes:



Xinhua:

• Inflationary pressure is likely to increase in China on rising food prices, citing a report by the APEC Business Advisory Council. The government may further cut lending quotas and increase interest rates and bank reserve requirements to rein in inflation, according to the report.
• Central China County Sees Surging Sales of "apartments up in the air" Despite Warning of Financial Risks. Despite the central government's efforts to control soaring housing prices and speculation, residents in a small county in central China's Henan Province are rushing to purchase, even if the apartments are still "up in the air". Realtors in Guangshan County in Xinyang City sell houses with just apartment layout plans. Some properties are even sold with old buildings on the foundations. A resident surnamed with Zhou, who paid 50 percent as a down payment last May for an apartment in the property project "Xianchengshuyuan", has not seen any construction signs on the lot. However, he is very optimistic about his potential apartment's value. "Although I haven't seen a brick, the price has almost doubled," he said.

Market News International:

• China may further tighten the money supply even after January inflation was below market expectations, citing two people close to the National Development and Reform Commission. The government is "facing growing inflation pressure in the coming months," one of the people said.

Netease.com:

• BYD Co.'s January vehicle sales fell 15% from a year ago to 52,0454 units, citing the company.

Iranian Press TV: