Weekly Scoreboard*

Indices

• S&P 500 1,176.80 +4.74%
  
• DJIA 11,284.51 +4.32%
  
• NASDAQ 2,479.85 +5.89%
  
• Russell 2000 691.79 +6.15%
  
• Wilshire 5000 12,211.30 +4.92%
  
• Russell 1000 Growth 550.07 +5.62%
  
• Russell 1000 Value 581.96 +4.04%
  
• Morgan Stanley Consumer 697.73 +3.26%
  
• Morgan Stanley Cyclical 837.64 +5.70%
• Morgan Stanley Technology 566.01 +5.96%
  
• Transports 4,460.19 +5.65%
  
• Utilities 423.68 +1.68%
  
• MSCI Emerging Markets 40.40 +.95%
  
• Lyxor L/S Equity Long Bias Index 953.92 -2.17%
  
• Lyxor L/S Equity Variable Bias Index 861.0 -.91%
  
• Lyxor L/S Equity Short Bias Index 651.36 +1.87%
  

Sentiment/Internals

• NYSE Cumulative A/D Line 117,744 -.19%
  
• Bloomberg New Highs-Lows Index -355 +614
  
• Bloomberg Crude Oil % Bulls 26.47 -8.72%
  
• CFTC Oil Net Speculative Position 136,340 +3.89%
  
• CFTC Oil Total Open Interest 1,465,256 -5.65%
  
• Total Put/Call 1.18 -9.92%
  
• OEX Put/Call 1.66 +100.0%
  
• ISE Sentiment 92.0 +33.3%
  
• NYSE Arms .54 -64.49%
  
• Volatility(VIX) 35.59 -17.33%
• G7 Currency Volatility (VXY) 12.45 -4.52%
  
• Smart Money Flow Index 9,727.43 -.41%
  
• Money Mkt Mutual Fund Assets $2.629 Trillion -.10%
  
• AAII % Bulls 36.44 +2.47%
  
• AAII % Bears 40.96 +2.86%

Futures Spot Prices

• CRB Index 335.25 +1.75%
  
• Crude Oil 85.37 +2.99%
  
• Reformulated Gasoline 293.46 +2.34%
  
• Natural Gas 3.93 -.02%
  
• Heating Oil 301.01 +2.86%
  
• Gold 1,797.30 -3.12%
  
• Bloomberg Base Metals 241.67 +2.48%
  
• Copper 411.75 +3.0%
  
• US No. 1 Heavy Melt Scrap Steel 419.67 USD/Ton -.08%
  
• China Hot Rolled Domestic Steel Sheet 4,837 Yuan/Ton +.02%
  
• UBS-Bloomberg Agriculture 1,807.14 +2.61%
  

Economy

• ECRI Weekly Leading Economic Index Growth Rate -2.10% -200 basis points
  
• S&P 500 EPS Estimates 1 Year Mean 96.38 -.08%
  
• Citi US Economic Surprise Index -67.80 +14.7 points
  
• Fed Fund Futures imply 32.0% chance of no change, 68.0% chance of 25 basis point cut on 9/21
• US Dollar Index 73.71 -.38%
  
• Yield Curve 200.0 +13 basis points
  
• 10-Year US Treasury Yield 2.19% +13 basis points
  
• Federal Reserve's Balance Sheet $2.843 Trillion +.05%
  
• U.S. Sovereign Debt Credit Default Swap 47.50 unch.
  
• Illinois Municipal Debt Credit Default Swap 254.0 +7.72%
  
• Western Europe Sovereign Debt Credit Default Swap Index 303.17 +2.36%
• Emerging Markets Sovereign Debt CDS Index 244.0 +9.25%
• Saudi Sovereign Debt Credit Default Swap 110.04 +4.60%
• Iraqi 2028 Government Bonds 89.03 -.40%
• China Blended Corporate Spread Index 628.0 +31 basis points
  
• 10-Year TIPS Spread 2.02% unch.
  
• TED Spread 33.0 +3 basis points
• 3-Month Euribor/OIS Spread 66.0 -2 basis points
  
• N. America Investment Grade Credit Default Swap Index 126.17 +6.30%
  
• Euro Financial Sector Credit Default Swap Index 240.22 +12.88%
  
• Emerging Markets Credit Default Swap Index 299.24 +8.53%
  
• CMBS Super Senior AAA 10-Year Treasury Spread 281.0 unch.
  
• M1 Money Supply $2.086 Trillion -.51%
  
• Business Loans 661.50 +.56%
  
• 4-Week Moving Average of Jobless Claims 407,500 +1.0%
  
• Continuing Claims Unemployment Rate 2.9% unch.
  
• Average 30-Year Mortgage Rate 4.22% +7 basis points
  
• Weekly Mortgage Applications 699.10 -2.41%
  
• Bloomberg Consumer Comfort -47.0 +1.3 points
  
• Weekly Retail Sales +4.40% -40 basis points
  
• Nationwide Gas $3.59/gallon +.01/gallon
  
• U.S. Cooling Demand Next 7 Days 20.0% above normal
• Baltic Dry Index 1,582 +11.88%
  
• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 35.0 unch.
  
• Rail Freight Carloads 238,680 +1.31%
  

Best Performing Style

• Small-Cap Growth +6.91%

Worst Performing Style

• Large-Cap Value +4.04%

Leading Sectors

• Coal +8.73%
  
• Computer Services +7.54%
• Banks +7.41%
  
• Construction +7.04%
• Internet +6.94%

Lagging Sectors

• Insurance +2.26%
• Airlines +1.81%
  
• Utilities +1.68%
• Food +1.54%
  
• Tobacco +1.14%

Weekly High-Volume Stock Gainers (3)

• PANL, PMC and TNC
  

Weekly High-Volume Stock Losers (2)

• RUE and UTHR
  

Weekly Charts
ETFs

• High-Volume Gainers
• High-Volume Losers

Stocks

• High-Volume Gainers
• High-Volume Losers
  

*5-Day Change

Stocks Rising into Final Hour on Tech Sector Strength, Short-Covering, Bargain Hunting, Euro Bounce

Broad Market Tone:

• Advance/Decline Line: Substantially Higher
  
• Sector Performance: Almost Every Sector Rising
  
• Volume: Slightly Below Average
  
• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• VIX 35.95 -9.58%
  
• ISE Sentiment Index 89.0 unch.
  
• Total Put/Call 1.24 -2.36%
  
• NYSE Arms .49 -56.98%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 126.17 +1.75%
  
• European Financial Sector CDS Index 236.32 -.63%
  
• Western Europe Sovereign Debt CDS Index 303.0 +.55%
  
• Emerging Market CDS Index 299.45 +.23%
  
• 2-Year Swap Spread 30.0 unch.
  
• TED Spread 33.0 +1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .00% unch.
  
• Yield Curve 200.0 -2 bps
  
• China Import Iron Ore Spot $178.30/Metric Tonne unch.
  
• Citi US Economic Surprise Index -67.80 +.9 point
  
• 10-Year TIPS Spread 2.02% -5 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -12 open in Japan
• DAX Futures: Indicating +26 open in Germany

Portfolio:

• Higher: On gains in my Tech, Medical, Biotech and Retail sector longs
  
• Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and some of my (EEM) short, then added them back
  
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is bullish, as the S&P 500 rallies despite rising Eurozone debt angst, global growth worries, rising food/energy prices, hurricane Irene concerns and some investors' disappointment with Bernanke's speech. On the positive side, Education, Gaming, Construction, HMO, Biotech, Computer Service, Networking, Disk Drive, Software, Internet, Oil Service and Alt Energy shares are especially strong, rising over +1.75% on the day. "Growth" shares substantially outperformed "value" today. Small-caps and cyclicals are substantially outperforming, as well. Tech shares have traded well throughout the day. Copper is gaining +.25% and Lumber is rising +3.45%. The Greece sovereign cds is down -2.62% to 2,237.11 bps and the Ireland sovereign cds is down -1.07% to 828.07 bps. On the negative side, Telecom and Utility shares are lower on the day. (XLF) is relatively weak. Gold is up +2.48%, Oil is rising +.67% and the UBS-Bloomberg Ag Spot Index is up +1.86%. Rice is still near a multi-year high, rising +28.0% in about 8 weeks. The US price for a gallon of gas is +.01/gallon today to $3.59/gallon. It is up .45/gallon in about 7 months. China sovereign cds is rising +2.64% to 119.80 bps, the Japan sovereign cds is rising +3.14% to 112.0 bps and the Brazil sovereign cds is increasing +2.09% to 164.19 bps. The Eurozone Financial Sector CDS Index is still very near it recent all-time high. The Citi Eurozone Economic Surprise Index has plunged -110.3 points in about 3 weeks to -104.20. The UBS-Bloomberg Ag Spot Index is at another new closing record high, which is a large negative. The Libor-OIS spread is now at the highest since July 2010. India equities fell another -1.84% overnight, taking out technical support, and are now down -22.7% ytd. European equities traded poorly again today. Ukraine shares plunged -3.8%, taking out technical support, and are now down -35.4% ytd. German, French and Italian stocks were all under pressure again, as well. Germany's DAX is now down -19.9% ytd. The ongoing rise in key cds remains a large negative. Volume was lackluster again on today's advance. Much of the gains were likely related to short-covering by hedge funds on Bernanke's speech given the recent large increase in short interest. I continue to believe any sustainable equity advance must be accompanied by a meaningful decline in Eurozone debt angst, which has yet to be seen. I expect US stocks to trade modestly higher into the close from current levels on short-covering, bargain-hunting, a bounce in the euro, technical buying and tech sector strength.

Today's Headlines

Bloomberg:

• Bernanke Doesn't Signal More Stimulus. Federal Reserve Chairman Ben S. Bernanke said the central bank still has tools to stimulate the economy without providing details or signaling when or whether policy makers might deploy them. “In addition to refining our forward guidance, the Federal Reserve has a range of tools that could be used to provide additional monetary stimulus,” Bernanke said in a speech today to central bankers and economists gathered at an annual forum in Jackson Hole, Wyoming. He said a second day has been added to the next policy meeting in September to “allow a fuller discussion” of the economy and the Fed’s possible response. While Bernanke sought to reassure investors and the public that U.S. growth is safe in the long run and that the Fed still has tools to aid the recovery if needed, he stopped short of indicating that the central bank will move ahead with a third round of government bond-buying. “Although important problems certainly exist, the growth fundamentals of the United States do not appear to have been permanently altered by the shocks of the past four years,” Bernanke said in prepared comments at the mountainside symposium hosted by the Kansas City Fed. “It may take some time, but we can reasonably expect to see a return to growth rates and employment levels consistent with those underlying fundamentals.”
• Irene May Cut Electricity for Days, U.S. Says. Hurricane Irene may cause power outages that last for “days or longer” on the U.S. East Coast and inland, along with flooding, high winds and downed trees, said Federal Emergency Management Agency Administrator Craig Fugate. “It’s so important for people to prepare,” Fugate said at a news conference with emergency officials in Washington today. “People need to leave early" if local officials advise them to evacuate, he said. "Travel a safe distance. Get somewhere safe.”
  
• Merkel: Markets Won't 'Blackmail' Euro Leaders. German Chancellor Angela Merkel said investors are trying to “blackmail” governments into helping debt-strapped European countries, underscoring the need for all euro-area governments to reduce debt. “After the states bailed out the banks, the financial markets are again trying to blackmail states and tell them, ‘You’ve made so much debt,’” Merkel said today at a rally of her Christian Democratic Union in the eastern city of Brandenburg, about 50 kilometers (30 miles) from Berlin. The solution is to press “countries that are highly indebted to really do their homework and get their debt down,” she said. “A Europe with a common currency requires common duties.” Merkel is underlining her stand on the euro region’s debt crisis in local election rallies in August before national lawmakers vote next month on a second aid package for Greece and an expansion of the powers of the European Union’s crisis fund. She stood firm in rejecting euro bonds, joint debt issuance by euro countries, which is supported by Germany’s two main opposition parties, the Social Democrats and Greens. “That’s where we have to put up a clear stop sign and say we won’t do that,” Merkel said. “Everybody has to do their homework. Responsibility has to be pointed out.”
• S&P 500 Trails 'Very Fair' Value After Losses. (chart) Stocks could recoup all of the past month’s losses before reaching “very fair” prices, according to David Bianco, chief U.S. equity strategist at Bank of America Merrill Lynch. The Standard & Poor’s 500 Index ought to be valued at 14 times to 16 times earnings because 10-year Treasury notes yield next to nothing after adjusting for inflation, Bianco wrote two days ago in a report. The index, which fell 13 percent in the last month, closed yesterday at about 12 times his profit projection for this year. The CHART OF THE DAY compares Bianco’s price-earnings range with annual ratios during the past half-century, as cited in his report. The figure for 2011 is an estimate, based on his projections that the index will end the year at 1,400 and S&P 500 companies will earn a combined $97 a share. “Low rates benefit P/E more” than slowing economic growth hurts the ratio, he wrote. Each one-percentage-point decline in the real yield on 10-year Treasuries increases the fair P/E by as much as 20 percent, by his calculations.
• U.S. Recovery Sputters, Consumer Confidence Sinks. The U.S. economy expanded less than previously estimated in the second quarter, underscoring the weakness that has prompted the Federal Reserve to mark down its growth forecasts. Gross domestic product climbed at a 1 percent annual rate from April through June, down from a 1.3 percent prior estimate, revised Commerce Department figures showed today in Washington.
• Fed's Plosser Says 2012 Outlook Hasn't Changed, Opposes More Asset Buying. Federal Reserve Bank of Philadelphia President Charles Plosser said his growth outlook for 2012 hasn’t changed much in recent weeks and that he opposes a third round of asset purchases by the Fed. “I am not sure it would be beneficial to the kind of problems we are facing,” Plosser said today in an interview with CNBC television in Jackson Hole, Wyoming. While first-half growth has been weaker than expected, he said his “forecasts for 2012 really haven’t changed very much.”
• China Broadens Reserve Requirements, BofA Says. China’s central bank extended lenders’ reserve requirements to cover their margin deposits to reduce liquidity, according to Bank of America Merrill Lynch. The measure will be phased in from Sept. 5 and take full effect on Feb. 15, economist Lu Ting wrote in an e-mailed note today, without saying where he got the information. The broader rules may drain 900 billion yuan ($140 billion) from the banking system, the equivalent of an increase of about 130 basis points in the reserve requirement ratio, he said. Reuters reported today that the central bank planned to widen the base for calculating reserve requirements, citing unnamed banking officials.
• Corn, Soybeans Gain as Crop Tour Shows U.S. Yields May Drop; Wheat Climbs. Corn futures rose to an 11-week high, and soybeans gained on signs that hot, dry weather in the U.S. Midwest is eroding crop yields. Wheat also advanced. “The markets are more and more focused on the supply side of the grains and the threats there, as highlighted by this week’s Pro Farmer tour,” Jim Gerlach, the president of A/C Trading Inc. in Fowler, Indiana, said in a telephone interview. “There’s a lot of nervousness as to what’s out in those fields.” Corn futures for December delivery climbed 6.25 cents, or 0.8 percent, to $7.4975 a bushel at 10:21 a.m. on the Chicago Board of Trade. Earlier, the price reached $7.50, the highest for a most-active contract since June 9. Before today, the commodity was up 11 percent this month. Soybean futures for November delivery rose 12.75 cents, or 0.9 percent, to $14.055 a bushel. Earlier, the oilseed touched $14.08, the highest since July 19. Wheat futures for December delivery gained 4.25 cents, or 0.5 percent, to $7.92 a bushel on the CBOT. The price is headed for a fifth straight weekly gain.
• Libyan Rebels Seek Aid as Qaddafi Invokes Jihad. Forces loyal to Muammar Qaddafi battled rebels in the Libyan capital, Tripoli, as the opposition National Transitional Council said the North African nation’s humanitarian aid needs are “urgent.” Security is “a top priority, but we cannot achieve such a goal without being able financially and economically to establish our power and the NTC rule,” the council’s prime minister, Mahmoud Jibril, told reporters today in Istanbul.
• Tiffany(TIF) Gains Most in Three Months After Raising Profit Forecast. Tiffany & Co., the world’s second- largest luxury jewelry retailer, rose the most in three months after raising its full-year earnings forecast, helped by price increases and sales in the Asia-Pacific region. Tiffany advanced $4.30, or 6.8 percent, to $67.41 at 10:02 a.m. in New York Stock Exchange composite trading, after earlier rising 7.4 percent, the biggest intraday gain since May 26. The shares had gained 50 percent in the 12 months before today.
• Sino-Forest Executives Ordered to Resign. The Ontario Securities Commission said it ordered five executives of Sino-Forest Corp. (TRE) including Chief Executive Officer Allen Chan to resign because the forestry operator may have misrepresented revenue and exaggerated its timber holdings.
• Explosion at UN Center in Nigerian Capital Kills 18, Injures More Than 30. At least 18 people were killed today in a suicide car-bomb attack on a United Nations office complex in Nigeria’s capital, Abuja, police said.
• BNY Mellon(BK) Said to Plan Sale of $17 Billion Alcentra Unit. Bank of New York Mellon Corp. is seeking buyers for its Alcentra unit, which manages $17 billion of loans and high-yield bonds, according to four people with direct knowledge of the plan. The world's biggest custody bank hired Credit Suisse Group AG to run the sale of the group that manages the majority of its assets in collateralized loan obligations in both the U.S. and Europe, said the people, who declined to be identified because the talks are private.

Wall Street Journal:

• Short Interest On Nasdaq, NYSE Climbs In 1st Half of August. Short interest in Nasdaq-listed stocks rose 4.1% in the first half of August from the prior two-week period, while short interest in stocks on the New York Stock Exchange increased 7.9%, the exchanges said Wednesday.
• Irene Closes In On North Caroline Coast. Irene churned toward the Outer Banks of North Carolina on Friday as a slightly weakened Category 2 hurricane, with winds of about 105 miles per hour, down from 115 mph on Thursday night. "All indications point to this being a historic hurricane," President Barack Obama said in a statement Friday from the Martha's Vineyard estate where he has been vacationing this week. "I cannot stress this highly enough: If you are in the projected path of this hurricane, you have to take precautions now," Mr. Obama said. He said he would leave Martha's Vineyard Friday night, instead of Saturday morning, to deal with the hurricane.
• Greek Banks' Liquidity Is Suffering As Nervous Clients Withdraw Savings. Greece's worsening slump is threatening to compound another risk for the country: the steady withdrawal of money from Greek banks. In the last 20 months, the country's banks have suffered an unprecedented withdrawal of customer deposits. Tens of thousands of Greeks—from the well-heeled to the less well-off—have moved their savings out of the country or stashed the cash in safe-deposit boxes or under a mattress, bankers say. The consequence for many Greek banks is a growing shortage of liquidity that is increasing their reliance on emergency funding from the European Central Bank and forcing them to further cut lending.
  

CNBC.com:

• BofA(BAC) Close to Selling Part of China Construction Stake. Just a day after revealing a landmark, $5 billion investment by Warren Buffett, Bank of America is close to another major deal, says a person familiar with the matter: the sale of at least half its 10 percent stake in China Construction Bank to a smattering of sovereign-wealth funds and institutions. BofA’s planned deal, which could close as early as Monday afternoon in Hong Kong, when a six-year lockup on the U.S. bank’s investment expires, could raise between $8.5 billion and $9 billion, depending on the exchange rate and CCB’s closing share price that day, this person says.

Business Insider:

• Obama Is Fleeing Martha's Vineyard To Escape Irene. President Barack Obama is cutting his Martha's Vineyard vacation a day short to get back to Washington, D.C., before Hurricane Irene hits. He will be back at the White House tonight. His family will stay in the Vineyard until tomorrow morning.
• Biden: We Need More Stimulus Now, And S&P Management Change Was Because of Their Stupid Downgrade.
• Map of the Day: Food Inflation Riots Around The World. Most of the inflation riots and protests are concentrated in the MENA (Middle East and North Africa) region, but as you can see on the Google map, they are starting to migrate into Europe, as well as China and India.

Boy Genius Report:

• Apple(AAPL) to Launch New MacBook Air Models in China.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Friday shows that 23% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-four percent (44%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -21 (see trends).

Welt:

• Richard Sulik, chairman of Freedom and Solidarity, one of Slovakia's four ruling parties, said he opposes any increase in the size of the European Financial Stability Faciility, citing an interview. "We're not saving the Greeks, but the profits of the German and French banks," Sulik said.

Xinhua:

• China and North Korea pledged to promote military ties during a meeting between Chinese defense minister Liang Guanglie and Jon Chang Bok, chief of the general logistics bureau of the North Korean armed forces department.
• China's energy bureau is studying introducing a control mechanism for energy consumption so as to curb rapid growth of energy-intensive industries, according to a report on the central government's website.
• China will "appropriately" raise resources taxes on oil, coal and natural gas, citing a report from the National Development and Reform Commission to the National People's Congress.
  

Bear Radar

Style Underperformer:

• Large-Cap Value (+1.31%)

Sector Underperformers:

• 1) Utilities +.01% 2) Telecom +.05% 3) Drugs +.71%

Stocks Falling on Unusual Volume:

• OVTI and TWGP
  

Stocks With Unusual Put Option Activity:

• 1) VMED 2) HERO 3) CIGX 4) SVM 5) JBLU
  

Stocks With Most Negative News Mentions:

• 1) SN 2) ENR 3) SWFT 4) REGN 5) S
  

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume
  

Bull Radar

Style Outperformer:

• Mid-Cap Growth (+1.90%)

Sector Outperformers:

• 1) Oil Service +2.80% 2) Networking +2.20% 3) Software +2.15%

Stocks Rising on Unusual Volume:

• ARUN, MCRS, DLLR, CIG, CPL, PANL, PNRA, MORN, ASMI, FWRD, MWIV, ULTI, SNDK, UTHR, COHR, EEFT, ACIW, MYL, JKHY, ERTS, RDEA, SNHY, JKH, TIF, NX, SIG, KUB, NVO, WSH, P, SPW, AOL, PSS and DY
  

Stocks With Unusual Call Option Activity:

• 1) CAG 2) KWK 3) XHB 4) BBT 5) AMT
  

Stocks With Most Positive News Mentions:

• 1) MCRS 2) KBR 3) MO 4) NE 5) ARUN
  

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume
  

Friday Watch

Evening Headlines

Bloomberg:

• Japan's Kan Poised to Resign as Bills Pass. Japan’s parliament passed two pieces of legislation that Prime Minister Naoto Kan said were conditions for him to resign as early today, setting up a succession battle that will play out by early next week.
  
• Airlines Scrub 180 Flights Before Hurricane Irene U.S. Landfall. American Airlines, JetBlue Airways Corp. and other large carriers scrubbed about 180 flights ahead of Hurricane Irene’s U.S. landfall and waived rebooking penalties to allow passengers to change flights. Cancellations totaled about 154 at AMR Corp.’s American and its American Eagle regional unit near the Caribbean and Bahamas, said Ed Martelle, a spokesman. JetBlue reported dropping a dozen flights, US Airways Group Inc. had eight, Delta Air Lines Inc. had four and United Continental Holdings Inc. had one.
  
• Syria Forces Kill 25 Protesters in Past Two Days. Syrian security forces have killed at least 25 protesters in the past two days as activists and opposition groups prepare for a conference aimed at presenting a united front against President Bashar al-Assad’s rule. At least 13 anti-government demonstrators were shot dead yesterday in the central city of Homs, the eastern town of Deir al-Zour and the suburbs of the capital, Damascus, Mahmoud Merhi, head of the Arab Organization for Human Rights, said by phone. At least 12 people were killed on Aug. 23 across the Hama governorate, Homs and the northern province of Idlib, he said.
• U.S. May Snap Up Qaddafi's Missiles in Mali Black Market to Soak Up Supply. The fall of Libyan dictator Muammar Qaddafi has touched off a race to secure his arsenal of portable, terror-ready weapons such as shoulder-fired anti- aircraft missiles, and part of the solution may be for the U.S. and allies to go out and buy them. There is evidence that a small number of Soviet-made SA-7 anti-aircraft missiles from Qaddafi’s arsenal have reached the black market in Mali, where al-Qaeda in the Islamic Maghreb is active, according to two U.S. government officials not authorized to speak on the record. The disintegration of Qaddafi’s four-decade dictatorship has created a business opportunity for looters trafficking in the war-stricken country’s missiles, which would enable terrorists to attack military or civilian aircraft.
• For Texas 'Miracle,' Cut the Cost of Business: Brian Barry. Unemployment is high across the U.S., but some states are better than others at creating jobs. Texas Governor Rick Perry cast a spotlight on this when he entered the presidential race. His fast-growing state accounts for as much as half of all net U.S. jobs since mid-2009. Texas is part of a broader pattern, from which all states can learn. Research shows that states keeping costs low for business have enjoyed better job growth during the past couple of decades. The low costs appear to be more important than other advantages often associated with higher spending, including infrastructure and an appealing quality of life. Those findings emerge in a recent paper by Jed Kolko and Marisol Cuellar Mejia of the Public Policy Institute of California, along with David Neumark of the University of California at Irvine. The researchers compared states by digging into almost a dozen indexes that rank business- climate attractiveness.
• UN Authorizes U.S. to Release $1.5 Billion to Libyan Rebels. The United Nations Security Council today authorized the Obama administration to release $1.5 billion in frozen Libya assets to help the rebels' National Transitional Council deliver aid and services. The action followed approval by South Africa, a Security Council member that held up the release out of concern that the decision would signify recognition of the NTC as the government of Libya.
• Fed Pledge Inflates Hong Kong's Misery With Currency Peg: Chart of the Day. A U.S. pledge to keep interest rates at record lows through mid-2013 is no boon for Hong Kong, where a “misery index” has climbed the most in the world because of inflation fueled by cheap funding. The gauge, which sums the jobless rate and the annual increase in consumer prices, jumped 570 basis points in the 12 months through July to the highest level in more than 15 years. It was the biggest gain of 56 countries tracked by Bloomberg. “Inflation in the city will continue to accelerate because of the Fed’s pledge to keep rates low,” said Raymond Yeung, a senior economist at Australia & New Zealand Banking Group Ltd. in Hong Kong. “This will only heighten politicians’ demands for a change to the currency peg.” Yeung says a faster pace of gains by the yuan will also fuel inflation in the city.
• Short Sellers May Spend Another Month on European Stock Market Sidelines. Investors may face another month of short-selling curbs in Europe after French, Italian and Spanish financial regulators extended temporary bans introduced this month in a bid to stem market volatility. Spain and Italy extended their bans through Sept. 30, regulators in both countries said in a statement. France’s Autorite des Marches Financiers said its ban could last as long as Nov. 11. The regulators all said they might lift the bans on short selling of financial stocks when the market stabilizes. The ban didn’t prevent an 8 percent drop in European bank stocks since it was imposed on Aug. 12 after shares of lenders including Societe Generale SA hit their lowest levels since the credit crisis of 2008.

Wall Street Journal:

• Bailout for Greece Falters Over Demand for Collateral. Euro-zone policy makers on Thursday appeared no nearer to settling a dispute over Finland's collateral demands in exchange for participating in a €110 billion ($158.6 billion) bailout for Greece, raising concerns that the Mediterranean nation may default. Markets have grown more worried about the potential for a Greek debt default amid an apparent lack of progress in resolving the collateral issue this week. Finland, meanwhile, shows no sign of backing down.
  
• At Least 53 Killed in Mexico Casino. In what Mexican officials have called an "act of terror," a half dozen gunmen burst into a casino in Mexico's industrial capital of Monterrey Thursday, sprayed the place with gasoline, and started a fire in the bingo section, killing at least 53 people. Speaking to Monterrey's leading newspaper El Norte, Nuevo León Gov. Rodrigo Medina said that at least 53 people had been killed in the attack, making it the bloodiest attack suffered by this prosperous city, which has been rocked by spiraling drug violence in the last year. Monterrey is the capital of Nuevo Leon state.

MarketWatch:

• CME(CME) Cuts Margin Requirements on Crude-Oil Futures.

CNBC:

• China's Hu Tells Sarkozy Concerned About Euro. China hopes that Europe will take steps to protect its investments there, President Hu Jintao told the French President Nicolas Sarkozy on Thursday, nonetheless voicing confidence in the euro and vowing to keep investing in it.
• Chance of Recession Is as High as 80%: Study. A plunge in recent economic data puts the probability of a double-dip recession above 80 percent, according to modeling by Bank of America Merrill Lynch released Wednesday.
• JPMorgan(JPM) to Pay $88 Million for Violating US Sanctions. JPMorgan Chase has agreed to pay $88.3 million to settle potential civil liability for apparent violations of a wide range of U.S. sanctions, the U.S. Treasury department announced Thursday.

Business Insider:

• Fed's Hoenig Says "Fed Can't Do It All, No Reason for Operation Twist to Work". Fed Chairman Ben Bernanke ought to listen to common sense from Kansas City President Thomas Hoenig who says Focus Should Shift to Fixing U.S. Fiscal Woes.
• The Steaming Pile of Assets That Could Take Down Bank of America(BAC) - Blodget Explains All. (podcast)
• Why Is The White House Defending The Banks From Investigations? Via Outside the Beltway, I see that the administration is pressing New York's attorney general to drop its investigation into dodgy foreclosure practices and settle with the banks. Doug Mataconis, who wrote the post, says, "I'm sure the large amount of donations coming from the financial sector into the coffers of the Democratic National Committee and Obama For America have nothing to do with this pressure. I also believe the guy who tells me he has a bridge in Brooklyn to sell me."

Zero Hedge:

• HFT Quote Stuffing Market Manipulation Caught In The Act.
• The European Dollar Funding Crunch Is Back: Fed Does Another $500 Million In USD Swaps This Time With The ECB.
  

IBD:

• Aircraft Parts Maker TransDigm Group(TDG) Takes Off On Wings Of Travel.

NY Times:

• Big Shoes at Apple(AAPL), But Maybe Not Unfillable.

Stormpulse:

• Hurricane Irene Tracking Map.

CNN:

• 9/11 Ceremony Won't Include Religious Leaders or Formal Prayers. As the city of New York prepares to remember the 10th anniversary of 9/11, religious leaders are raising concerns over the lack of clergy participating in the anniversary events. "Utterly disappointed and surprised," Fernado Cabrera a New York City councilman and the pastor of New Life Outreach International church in the Bronx, said over the decision not to include any clergy in the ceremony. "There's certain things that government cannot do, and answering questions of meaning of 'Why are we going through this?' and 'Where am I going to get strength from?' - those are existential questions that can only be answered from a spiritual aspect," Cabrera said. "I'm telling you I saw it first hand, the power of prayer," he added of his time at ground zero on September 11, 2001. Cabrera said he reached out to the mayor's office and was told there would be no prayer in this year's ceremony. He has started a petition on Facebook to change that.
• Halliburton(HAL) Adding 11,000 Jobs, Mostly in North Dakota.
  

MobileBeat:

• Tampa Bay Buccaneers Replace Playbooks with iPads.

CBSNews:

• Former Bush Spokeswoman: Rick Perry Should "distance himself" from George W. Bush. Dana Perino, who was White House Press Secretary under President George W. Bush, said on Fox News Thursday that Republican presidential candidate Rick Perry should "distance himself" from her former boss. "Rick Perry is smart to distance himself from George W. Bush if he wants to win the Republican nomination and, eventually, the presidency," Perino said.

Neal Boortz:

• Illinois Increases Taxes, Loses Jobs. How many times have I told you that taxes influence behavior? People want to keep more of what they earn. It’s as simple as that. So it doesn’t take a rocket scientist to figure this one out. Since the official start of the “recovery,” Illinois employers were moderately adding jobs for months. That all stopped in January 2011. Since January, Illinois started losing jobs. Big time. In fact, in July 2011, Illinois lost more jobs than any other state in the nation. It lost 24,900 non-farm payroll jobs in July as its unemployment rate climbed for the third straight month to 9.5%. So Illinois was steadily adding jobs and then .. bam! .. it is losing more jobs than any other state in the nation. What happened? Tax increases.

Politico:

• AFL-CIO Head: Labor to Ditch Democrats. The growing rift between labor and their Democratic allies was on full display Thursday, as AFL-CIO President Richard Trumka told reporters that labor groups are planning to scale back their involvement with the Democratic Party in advance of the 2012 elections. Going forward, Trumka said, the labor movement will build up its own political structures and organizations rather than contribute to and depend on the Democratic Party’s political operation.

Reuters:

• Spain Government, PP Agree to Deficit Limit in Constitution. The Spanish government said on Friday it had reached an agreement with the main opposition People's Party over plans to reform the constitution and establish limits for the public deficit and debt. The amendment to the constitution will be made by implementing a law which will include a cap on the country's deficit and debt. The law will have to be approved before June 30, 2012, the government said in a statement early on Friday morning.
• Brevan Howard Profits From Market Turmoil - FT. Brevan Howard, one of the Europe's biggest and most successful hedge fund managers, has made close to $1.5 billion over the past three weeks on the back of turmoil in the global markets, the Financial Times reported on Friday.
• Investors Return to US Equity Funds - Lipper.
• Pandora Media(P) Revenue Beats on Strong Ad Sales. Online radio service Pandora Media Inc reported results that beat expectations on strong advertising sales in its fiscal second quarter. Pandora shares rose 5.9 percent to $13.20 in after-hours trading following the earnings report on Thursday.
• Micros Systems(MCRS) Q4 Tops Street. Micros Systems Inc , which provides information systems to the hospitality industry, posted quarterly results ahead of market estimates, helped by double-digit revenue growth in its services business.Shares of the Columbia, Maryland-based company, which have lost 18 percent of their value over the last one month, were up 4 percent in trading after the bell.
• Bank of America(BAC) Gives Buffett a $3 Billion Gift. When Bank of America Corp agreed to sell $5 billion of preferred shares to Warren Buffett, it gave the Oracle of Omaha a $3 billion gift with the deal. The 700 million warrants attached to the preferred share sale were worth $3.17 billion when the deal was crafted, said Linus Wilson, an assistant professor of finance at the University of Louisiana at Lafayette.
• OmniVision(OVTI) Sees Q2 Below Estimates, Shares Dive. OmniVision Technologies Inc forecast second-quarter results well below estimates, hinting at a loss of market share in its key smartphone image sensor business, sending its shares down 25 percent in extended trade.

Telegraph:

• Greece Forced to Tap Emergency Fund. Greece has been forced to activate an obscure emergency fund for its banks because they are running short of collateral that is acceptable to the European Central Bank (ECB). In a move described as the "last stand for Greek banks", the embattled country's central bank activated Emergency Liquidity Assistance (ELA) for the first time on Wednesday night. Raoul Ruparel of Open Europe told The Telegraph: "The activation of the so-called ELA looks to be the last stand for Greek banks and suggests they are running alarmingly short of quality collateral usually used to obtain funding." He added: "This kicks off another huge round of nearly worthless assets being shifted from the books of private banks onto books backed by taxpayers. Combined with the purchases of Spanish and Italian bonds, the already questionable balance sheet of the euro system is looking increasingly risky.

Xinhua:

• The yuan is not ready for rapid appreciation because of the "immaturity" of the Chinese economy, citing Nobel laureate Myron Scholes in an interview. The Asian country still depends on exports as consumption is too low to support the economy, Scholes said.

Financial News:

• China should urge the U.S. government to reduce its fiscal deficit as part of measures to protect China's foreign-exchange reserves, citing Wang Tianlong, a researcher at the China Center For International Economic Exchanges. China should accelerate the resolution of local government debt risks to prevent "concentrated outbreaks" of such risks, the report said, citing Wang.

Evening Recommendations
Citigroup:

• Reiterated Buy on (P), target $25.

ThinkEquity:

• Rated (BRCM) Buy, target $40.
  

Night Trading

• Asian equity indices are -1.25% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 163.0 -2.0 basis points.
  
• Asia Pacific Sovereign CDS Index 152.75 -4.25 basis points.
• FTSE-100 futures +.11%.
  
• S&P 500 futures +.57%.
  
• NASDAQ 100 futures +.59%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (TIF)/.70

Economic Releases
8:30 am EST

• 2Q GDP is estimated to rise +1.1% versus a prior estimate of a +1.3% gain.
• 2Q Personal Consumption is estimated to rise +.2% versus a prior estimate of a +.1% gain.
• 2Q GDP Price Index is estimated to rise +2.3% versus a prior estimate of a +2,3% gain.
• 2Q Core PCE is estimated to rise +2.1% versus a prior estimate of a +2.1% increase.

9:55 am EST

• Final Univ. of Mich. Consumer Confidence for August is estimated to rise to 55.8 versus a prior estimated of 54.9.

Upcoming Splits

• (CLW) 2-for-1
  

Other Potential Market Movers

• Fed Chairman Bernanke's speech could also impact trading today.
  

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