Today's Headlines

Bloomberg:

• Monti Says ECB Plan Reduces Stigma as Rajoy Stalls on Aid. Italian Prime Minister Mario Monti said the European Central Bank’s bond-buying plan reduced the stigma of asking for aid, as he followed Spanish counterpart Mariano Rajoy in resisting tapping the bailout program. “The drama in the word ‘help’ has been reduced,” Monti said at a press conference yesterday in Rome. “Now, there are ways in the European Union, which must be used under careful conditionality and in the interest of all, to confront” unreasonable increases in borrowing costs, he said.
• Jobless Greeks Resolved to Work Clean Toilets in Sweden. Karachalios, who left behind his 6-year-old daughter to be raised by his parents, is one of thousands fleeing Greece’s record 24 percent unemployment and austerity measures that threaten to undermine growth. The number of Greeks seeking permission to settle in Sweden, where there are more jobs and a stable economy, almost doubled to 1,093 last year from 2010, and is on pace to increase again this year. “I’m trying to survive,” Karachalios said in an interview in Stockholm. “It’s difficult here, very difficult. I would prefer to stay in Greece. But we don’t have jobs.”
• Payrolls in U.S. Increased Less Than Forecast in August. Payrolls rose less than projected in August and the unemployment rate was unexpectedly driven down by Americans leaving the labor force, boosting the odds of additional Federal Reserve easing to spur a faltering recovery. The economy added 96,000 workers after a revised 141,000 increase in July that was smaller than initially estimated, Labor Department figures showed today in Washington. The median estimate of 92 economists surveyed by Bloomberg called for a gain of 130,000. The jobless rate fell to 8.1 percent. Treasuries and gold rose on bets the figures make it more likely Fed policy makers will expand record monetary stimulus next week after Chairman Ben S. Bernanke called unemployment a “grave concern.” The report also dealt a blow to President Barack Obama one day after he accepted the Democratic Party’s nomination for a second term. “This is definitely a setback for the labor market and the economy,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York and former economist for the Fed. “This clearly validates Bernanke’s concern. We have Europe, the fiscal cliff, and it is a generally cautious business environment.” Bloomberg survey estimates ranged from increases of 70,000 to 185,000. Revisions to prior reports subtracted a total of 41,000 jobs from payrolls in the previous two months. Factory employment fell by the most in two years, temporary-help companies eliminated positions for the first time in five months, and the share of the working-age population in the labor force slumped to the lowest since 1981. The jobless rate fell from 8.3 percent as 368,000 Americans left the labor force. Average hourly earnings were little changed, and up 1.7 percent from August 2011, today’s report showed. The 12-month change matched the smallest gain since record-keeping began in 2007. The participation rate, which indicates the share of working-age people in the labor force, fell to 63.5 percent, the lowest since September 1981, from 63.7 percent. The unemployment rate, derived from a separate Labor Department survey of households, has exceeded 8 percent since February 2009, the longest stretch in monthly records going back to 1948.
• August Jobs Report 'Warning' For Housing: Trulia's Kolko. The August jobs report shows falling employment among 25-34 yr olds, prime age group for housing demand, Trulia Chief Economist Jed Kolko said. 74.3% of 25-34 yr olds employed in Aug. vs 74.5% in July, 75.2% in April. The jobs recovery for this age group "has stalled," he said. The share of job in construction, 4.1%, is the lowest since 1946.
• Jobs Data Show U.S. Factories Bearing Brunt of Slowdown. The biggest decline in factory jobs in two years reported today by the U.S. Labor Department adds to signs that manufacturing is bearing the brunt of the slowdown in global growth. Factory payrolls declined by 15,000 workers last month, according to the figures issued today in Washington. The workweek shrank and the share of industries hiring plunged to the lowest level in almost three years. Combined with earlier data showing less demand for capital equipment and growing pessimism among purchasing managers, today’s figures show manufacturing, which helped lead the U.S. out of the worst recession in the post-World War II era, is pulling back. Companies such as Intel Corp. (INTC) are among those cutting forecasts as business investment cools and economies from Europe to Asia slow. “There is a clear loss of momentum in manufacturing,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.
• Intel(INTC) Cuts Third-Quarter Sales Forecast Amid Weak Demand. Intel Corp. (INTC), the world’s largest semiconductor maker, slashed its third-quarter sales prediction amid declining demand for personal computers from corporate customers in a weakening economy. Sales will be $12.9 billion to $13.5 billion, down from a prior projection of $13.8 billion to $14.8 billion, the Santa Clara, California-based company said in a statement today. Analysts on average had estimated sales of $14.2 billion, according to data (INTC) compiled by Bloomberg. PC makers are reducing orders for Intel’s chips at a time of the year when they normally buy more to build products for the holiday shopping season. Intel said demand for chips used in business machines and orders in emerging markets are worse than expected, compounding concern that the PC market may not grow this year as consumers flock to smartphones and tablets. “It’s worse than everyone expected,” said Patrick Wang, a New York-based analyst for Evercore Partners Inc. (EVR) “Their consumer PC business is getting whacked.”
• Obama Delays Report to Congress on Automatic Cuts to Next Week. The Obama administration will send to Congress next week a report spelling out how billions of dollars in automatic spending cuts will be carried out beginning Jan. 2, missing a deadline set by lawmakers. White House press secretary Jay Carney today told reporters traveling with President Barack Obama to a campaign event that the report will be sent to the Capitol “late next week,” without being specific. He cited “a lot of complicating factors” in detailing the cuts.
• Oil Rises on Poor U.S. Jobs Report, Stimulus Speculation. Oil advanced for a third day as U.S. payrolls increased less than expected in August, raising speculation that the Federal Reserve will boost stimulus measures to spur economic growth. Prices gained as much as 1.1 percent on expectations that the Fed will ease monetary policy at a meeting next week after the Labor Department reported the U.S. economy added 96,000 workers last month, less than the 130,000 median estimate in a Bloomberg survey of economists. Crude for October delivery rose 69 cents, or 0.7 percent, to $96.22 a barrel at 12:09 p.m. on the New York Mercantile Exchange. Futures are down 0.3 percent this week and 2.6 percent this year. They have risen 25 percent from the year’s low of $77.28 a barrel on June 28. Brent oil for October settlement increased 51 cents, or 0.4 percent, to $114 a barrel on the London-based ICE Futures Europe exchange.
• ICRC Says Syria Conflict Worsening, More Aid Is Needed. The Syrian conflict is “rapidly deteriorating” as wounded people die because medical aid is lacking, International Committee of the Red Cross President Peter Maurer said following a three-day trip to the country. “I was shocked by the immense destruction of infrastructure and homes in several areas I visited,” Maurer said in an e-mailed statement from Geneva today. “Health workers face tremendous difficulties in performing their duties. Many men, women and children who could be saved are dying on a daily basis because they lack access to medical care.”

MarketWatch:

• Stubborn politicians threaten ECB-inspired rally. Spain’s Rajoy under pressure to apply for rescue.

CNBC.com:

• Wealthy Work to Avoid Health-Care Law's 'Mini-Cliff'. Tax planners are developing ways to help well-to-do U.S. clients avoid the full impact of taxes set to take effect next year under President Barack Obama's health-care overhaul.
• Germany Cannot Be ‘Leader of the World’: Italy’s Prodi. Germany must accept shared leadership of the European Union if the region is to prosper, ex-European Commission President Romano Prodi, told CNBC on Friday.
• Citi(C) Analyst Predicts ‘Worst 3Q Ever in PC History’.

Business Insider:

• MORGAN STANLEY(MS): The ECB's New Plan Is 'Quite Likely' To Deepen Europe's Recession.
• 4 Reasons To Be Skeptical About China's New Stimulus.
• Americans Are Buying Expired Food At Auctions To Save Money.
• Obama's Speech Gets Panned.
• Why Expat Businessmen Are Leaving China.
• CHART: Obama Said That Unemployment Would Be Much, Much Lower By Now.
• The Scariest Jobs Chart Ever.
• MORGAN STANLEY(MS): The Jobs Report Was All Bad, And Hiring Activity Could Be Ugly For Months.

Zero Hedge:

• The Reason Why The Unemployment Rate Dropped: The Labor Participation Rate Is At Fresh 31 Year Lows. (graph)
• Chart Of The Day: 25,792,000 Unemployed And Underemployed.
• Spot The Housing Recovery: Building Construction Workers At One Year Lows. (graph)
• Where The Jobs Are: Low Wage Sectors Add Most Jobs In The Past Year.
• German State Of Saxony Supports Legal Action Against ECB.
• Real Unemployment Rate Hits 11.7% As Spread Between Reported And Propaganda Data Hits Record. (graph)
  

New York Times:

• Bond Plan Lowers Debt Costs, but Germany Grumbles. Analysts warned that while Thursday’s announcement from the European Central Bank of an unlimited bond-buying plan should have a positive impact on market perception, familiar political and technical problems still lay ahead for the 17-nation euro zone.
• French President Must Cut Deficit, but How? President François Hollande was preparing to cut €33 billion, or $42 billion, from the budget to keep the euro crisis from infecting France, the headlines read. How would the French withstand it, demanded Mr. Chaffar, a plumber whose business has slowed, when the economy was already stagnant and unemployment was at a 10-year high? “When Hollande places austerity on us,” Mr. Chaffar said angrily, “things will get worse.”
• Move by E.C.B. Puts Pressure on Monti Government.

Nasdaq.com:

• Gold prices rising in anticipation of further quantitative easing. Ben Bernanke's Jackson Hole speech has generally been interpreted to mean another round of quantitative easing (QE3) aka 'printing money' is coming. This would devalue the dollar, and given the inverse relationship between gold prices and currency prices, QE3 means higher gold prices.

Reuters:

• Hedge funds edge up in August, helping yearly performance. Hedge fund returns inched up in August, recording a 0.7 percent gain for the month as the U.S stock market continued its third-quarter rally, according to industry tracker eVestment|HFN. It was the third consecutive month of positive performance for the more than $2 trillion hedge fund industry, and last month's gains helped to push average yearly returns to 4.1 percent, data released on Thursday showed. Still, hedge funds on average trailed the broader stock market, which gained 2.25 percent last month. The S&P 500 stock index rallied 13.5 percent through Aug. 31.
• France, Britain, Germany urge more EU Iran sanctions. European Union heavyweights Britain, France and Germany called on their EU partners on Friday to impose new sanctions against Iran over its nuclear programme. As Israel continued to threaten military action against Iran, German Foreign Minister Guido Westerwelle said Tehran's failure to meet international demands to scale back its nuclear work meant the EU should discuss new sanctions within weeks.
• Minority militias stir fears of sectarian war in Damascus. For months, most of Syria's minority sects stood warily on the sidelines of the revolt by the Sunni Muslim majority against President Bashar al-Assad's Alawite-dominated rule. But in Damascus, neighbourhood vigilante groups are arming themselves in Christian, Druze and Shi'ite Muslim areas, throwing up sectarian borders across Syria's capital in alliance with Assad's forces.

Telegraph:

• Nationalist backlash in Italy and Spain to test Mario Draghi bond plan. The European Central Bank's ground-breaking plan for mass purchases of Spanish and Italian bonds is fraught with political risk and may soon be overwhelmed by nationalist anger in the crisis states, leading economists and statesmen warned at a gathering of the European policy elites in Italy.

ynet:

• EU Mulling Ban On Settlement Products. Greek diplomat says European Union is considering complete import ban and labeling of settlement products; adds Athens believes settlements 'illegal'.

Bear Radar

Style Underperformer:

• Small-Cap Growth -.07%

Sector Underperformers:

• 1) Semis -1.45% 2) Software -1.0% 3) Drugs -.55%

Stocks Falling on Unusual Volume:

• MLNX, KFT, MU, CPN, NRG, GSK, HA, PVG, Z, P, GWRE, BLOX, FRAN, KR, INTC, TNGO, ABMD, SBH, SIX, ADTN, ASML, JIVE, WLK, SRDX, CAH, OPEN, NVDA, AIG, UTEK, DDD and TNGO
  

Stocks With Unusual Put Option Activity:

• 1) PHM 2) TXN 3) LULU 4) TOL 5) CE
  

Stocks With Most Negative News Mentions:

• 1) AMD 2) WWW 3) APOL 4) SKX 5) DRI
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value +.89%

Sector Outperformers:

• 1) Gold & Silver +3.18% 2) Airlines +1.78% 3) Oil Service +1.63%

Stocks Rising on Unusual Volume:

• SWHC, GMCR, CLF, BCS, FCX, DB, LULU, CCOI, COO, ULTA, CMG, STI, VALE, TCK, RIO, CS, YOKU, X, BTU, WLT, JOY, MTW, GORO, BID, TRN and JDSU
  

Stocks With Unusual Call Option Activity:

• 1) CCL 2) RDN 3) XLU 4) SWHC 5) GFI
  

Stocks With Most Positive News Mentions:

• 1) DELL 2) PTEN 3) DNR 4) CF 5) QCOR
  

Charts:

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

Friday Watch

Evening Headlines
Bloomberg:

• Draghi Buying Risks Backfiring on Debt Profile: Chart of the Day. European Central Bank President Mario Draghi's pledge to buy unlimited quantities of short-dated government bonds risks tying him to an increasing debt burden. Italy and Spain have 846 billion euros of securities due between 2013 and 2015, about 37% of the nations' outstanding debt, according to data compiled by Bloomberg. With Draghi saying yesterday that the ECB will target bonds with maturities of one to three years, the percentage may increase, said Mohit Kumar, the head of European fixed-income strategy at Deutsche Bank AG in London. "There is a risk of shortening the maturity profile for Italy and Spain," he said. "The redemptions will come round more quickly. Investors will be more than happy to buy at the shorter-end because they know they can sell to the ECB if yields start rising."
• Economist Sinn Rattles Merkel Laboring to Save Euro. Dressed in his customary gray three- piece suit at a conference in Frankfurt on June 15, Hans-Werner Sinn folds his hands and listens without expression as a series of speakers criticize his economic theories. Willem Buiter, chief economist at Citigroup Inc., goes so far as to decry them as “nonsense.” Taking his turn at the microphone shortly afterward, the 64-year-old president of the Munich-based Ifo Institute for Economic Research says he regrets it when investment bankers such as Buiter “lose their composure.” He then lays out once more his argument that Germany is paying more than it thinks for Greece’s fiscal recklessness and that the struggling southern European nation should long ago have left the euro zone, Bloomberg Markets magazine reports in its October special issue on the 50 Most Influential people in global finance.
• Obama Exaggerates Deficit Savings in Budget Plan: Reality Check. President Barack Obama and Vice President Joe Biden made a number of factual assertions in their acceptance speeches last night at the Democratic National Convention in Charlotte, North Carolina. How did they square with reality?
• Fitch May Lower Ratings on 15% of U.S. Prime Mortgage Securities. Fitch Ratings said that it may lower about 15 percent of its credit grades on securities backed by U.S. prime mortgages, typically those too large for government- tied programs when they were issued. More than 90 percent of the bonds under review were created in 2005 or earlier, the New York-based ratings firm said today in a statement. In a report earlier today, Fitch said that such debt is being made riskier by “adverse selection” after better-quality borrowers refinanced their portion of the underlying loans.
• China Gets Worst Ranking in Global Poll Since 2010. Global investors are losing faith in China, giving the country’s markets their worst rating in more than two years in the latest Bloomberg poll. About a quarter of those surveyed say they expect Chinese markets to be among the worst performers over the next year. That’s the highest negative reading that the country has received in the quarterly Bloomberg Global Poll since January 2010 and was second only to the 45 percent rating that the European Union received in the Sept. 4 survey. China “will suffer disproportionately from a global slowdown in growth,” said Benjamin Dunn, a poll participant and chief operating officer in Crested Butte, Colorado, for portfolio management company Alpha Theory, in an e-mail. It “will be unable to prevent a hard landing” of its economy.
• China Price War Draining Jobs in Germany’s Solar Valley: Energy. When Thomas Behling returned to his home state of Saxony-Anhalt in 2006, he was drawn by a job in the solar industry and the chance to participate in Germany’s renewable energy boom. He was fired in July. Behling’s employer, Sovello GmbH, produced its last solar panel on Aug. 26, sending 1,000 workers home after attempts to find an investor to save the seven-year-old company failed. Next door, Q-Cells SE (QCE), once the world’s largest solar-cell maker, is being acquired by Hanwha Group of South Korea as soaring debt brought it to the brink of bankruptcy. At least 12 German solar companies filed for protection from creditors in the past year.
• Eighty Percent of U.S. Asia Policy Is Just Showing Up. With China throwing its weight around the South China Sea, and snapping at Japan for its plans to buy disputed islands, the waters of the Pacific are looking a little choppy these days. Time for a little high-level diplomacy, you might think -- something that not only eases tensions but also refocuses the nations of the Asia-Pacific on the enormous economic stakes they have in regional peace and stability. If the administration of President Barack Obama is taking seriously this week’s meetings of the Asia-Pacific Economic Cooperation bloc, however, it has a funny way of showing it. Granted, President Obama has a good excuse for not attending the APEC leaders meeting in Vladivostok, Russia. But why did Treasury Secretary Timothy Geithner not attend the earlier meeting of his fellow finance ministers in Moscow? More egregiously, why did U.S. Trade Representative Ron Kirk, the ostensible point person for the administration’s lofty goal of doubling U.S. exports by 2015, skip both the APEC meeting and the latest Trans-Pacific Partnership trade talks to attend the Democratic National Convention in his “personal capacity.” His choice fails the crucial Woody Allen test for effective job performance -- the one that says “80 percent of life is just showing up.”
• Canada's Harper Seeks More Gains From China in Exchange for Oil. Canadian Prime Minister Stephen Harper said his government will seek to correct trade imbalances with China as he manages a wave of takeover spending from the Asian country. Harper, speaking at the Bloomberg Canada-Asia Conference in Vancouver, said Canada needs to diversify trade to Asia because of sluggish growth in much of the rest of the world, adding that the relationship also needs to become reciprocal.

Wall Street Journal:

• Obama Presses Plan for U.S. Resurgence. Goals Are Scaled Back From Sweeping Proposals in 2008. President Barack Obama portrayed himself as a stout defender of the middle class and a leader with a plan to create jobs across the U.S. economy in a speech accepting the Democratic nomination for re-election. In an attempt to show he is offering more specifics about how he would govern than is his Republican foe, he laid out a set of goals for a second term designed to show that he has started rebuilding a ravaged economy and has a strategy for going further. The goals, most of which echo those previously set by Mr. Obama, provided a message aimed to ease the economic anxieties of Americans during the last stretch of the campaign.
• Democrats Party on Corporations' Tab. Obama Won't Take Lobbyists' Donations, but Business Underwrites Good Times in Charlotte; Oil Sponsors Night at a Pub. Democrats went to great lengths to make their convention appear free of corporate influence. And then came the parties. The 2,500-person "Light Up The Night" welcoming concert Monday with singer John Legend was paid for by Duke Energy Corp. and the Washington lobbying arms of the nuclear, natural gas and electricity industries. On Tuesday, hip-hop artist Common rocked the house at an invitation-only event sponsored by a handful of corporate lobbies, including those representing the recording industry, drug companies and News Corp., owner of The Wall Street Journal.
• Maverick Capital Partner to Leave.
• Report Cites $750 Billion in Annual Health-Care Waste.
• Transformers 2. Obama was honest when he said he wanted to remake America.

MarketWatch:

• Videogame sales fall in August as consoles slump. Videogame sales saw another month of declines in August, with sales of game software in the U.S. falling 9% from the same month last year, according to data from NPD Group released Thursday afternoon. Sales of game hardware sunk by 39% for the month, as demand fell for all major home consoles including the Xbox 360 from Microsoft (MSFT) , the PlaySation 3 from Sony (SNE) and the Wii from Nintendo.

Business Insider:

• Apple(AAPL) Wants To Launch A Pandora(P)-Killer.
• Here's The Trailer For 'Atlas Shrugged Part II'.

Zero Hedge:

• "Spain Requests Bailout On September 14" - Goldman's Definitive Post-Mortem On Europe's Third Bond Buying Attempt.
• The Post Globalized World Part 2: Why The PIGS Are (Still) Out Of Luck.
• Chart Of The Day: Smith & Wesson Sales.

CNBC:

• Long Luxury Boom Slows in China. The cost of living large in China is slowing – possibly a sign of the broader slowdown in China and slowing spending of the Chinese rich.
• Apple(AAPL) Cuts Chip Order to Samsung for New iPhone: Report.

Kentucky.com:

• Joy Global(JOY) Laying Off 45 More. Joy Global, a mining equipment manufacturer, plans to lay off 45 more employees at its Lebanon plant. The Milwaukee-based company disclosed the actions, which are expected to be taken by Oct. 26, in a filing that government officials require before large layoffs. In July, the company announced it would lay off 37 of its 176 employees at the time later that month. In its most recent filing, the company noted it now has 137 employees before the layoff of 45 more. In the filing, Joy Global human resources manager Mary Cambron noted the company is "experiencing a temporary decrease in customer orders." "Joy is unclear as to the length of this down market, but we will continue working to bring as many products into our plant as possible to negate the effect this will have on our workforce and the community," she wrote.
  
  Read more here: http://www.kentucky.com/2012/09/06/2325633/lebanon-mining-equipment-maker.html#storylink=cpy
  
  Read more here: http://www.kentucky.com/2012/09/06/2325633/lebanon-mining-equipment-maker.html#storylink=cpy

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows Mitt Romney attracting support from 47% of voters nationwide, while President Obama earns 44% of the vote. Four percent (4%) prefer some other candidate, and six percent (6%) are undecided.

Reuters:

• FERC takes aim at Deutsche Bank(DB) over power market manipulation. Federal energy regulators have asked Deutsche Bank Energy Trading LLC to provide proof that it did not manipulate California energy markets or face a $1.5 million fine, the regulator said in an order issued on Wednesday.
• U.S. congressman confirms high-level U.S.-Israel spat over Iran. Israeli Prime Minister Benjamin Netanyahu blew up at the U.S. ambassador last month because he was "at wits' end" over what he sees as the Obama administration's lack of clarity on Iran's nuclear program, a U.S. congressman who was at the meeting said. "Right now the Israelis don't believe that this administration is serious when they say all options are on the table, and more importantly neither do the Iranians. That's why the program is progressing," Rogers said.
• Canada's Harper urges U.S. to take fiscal situation in hand. Concerns about a so-called "fiscal cliff" in the United States are warranted but they should not overshadow the need for America to "get a grip" on its longer-term fiscal situation, Canadian Prime Minister Stephen Harper said on Thursday. "The United States fiscal situation is very bad, the trajectory is very bad," Harper said at a Bloomberg conference in Vancouver when asked about the fiscal woes of Canada's biggest trading partner. "And regardless of what happens in the next three or four months, in the next few years that trajectory still has to be resolved," he said.
• Toys R Us second quarter net loss widens, sales decline. Toys R Us Inc, the world's largest specialty toy retailer, reported a wider loss for its second quarter and a decline in net sales of 3.6 percent. The company said on Thursday that it had a net loss in the quarter that ended July 28 of $36 million compared with a net loss of $34 million in the prior year. Net sales fell to $2.6 billion, while sales at stores open at least a year were down 3.4 percent domestically and 4.4 percent internationally. Within the international segment, the largest decline was in Europe, which is reeling from an economic crisis. The company also blamed lackluster demand for electronics, video game hardware and software for lower sales.
• Ulta Beauty(ULTA) profit lifted by pricier brands, new stores. Beauty retailer Ulta Beauty reported a higher-than-expected profit for the ninth straight quarter and forecast strong earnings for the current quarter as it benefits from opening new stores and selling more high-priced products. The company's shares were up 9 percent at $104.30 after the bell.

Financial Times:

• Investment banks eye Europe job cuts. Big investment banks in Europe, including Nomura, Credit Suisse and UBS, are stepping up plans to cut jobs as they seek to adapt to a drastic slowdown in revenues and tighter regulation. Bank executives, headhunters and analysts say that the cuts are shaping up as the deepest since the start of the financial crisis after a disappointing summer dashed hopes of a business revival.
• NYSE and CME plan futures ‘kill switches’. Two of the world’s largest derivatives exchanges have signed on to a service with a “kill switch” to limit damage from errant trading by algorithms, as futures bourses look to bolster investor confidence in their markets. CME, operator of the world’s biggest futures exchange, and NYSE Liffe, one of the Europe’s dominant futures and options markets, will use a service that allows futures commissions merchants to halt or limit trading activity at high speed if a computer begins to malfunction or a customer breaches risk limits.

Telegraph:

• Mario Draghi promised a bazooka but produces a pea-shooter. Mario Draghi has promised to do whatever it takes to save the euro. Was the bond-buying initiative the European Central Bank president announced today enough?

Evening Recommendations
CSFB:

• Upgraded (CAB) to Outperform, target $58.
• Rated (FL) Outperform, target $43.
• Downgraded (BGFV) to Underperform, target $7.50.
  

Night Trading

• Asian equity indices are +.75% to +2.0% on average.
• Asia Ex-Japan Investment Grade CDS Index 141.50 -7.5 basis points.
• Asia Pacific Sovereign CDS Index 121.0 -1.0 basis piont.
  
• FTSE-100 futures +.09%.
  
• S&P 500 futures +.06%.
  
• NASDAQ 100 futures +.04%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (LULU)/.31
• (KR)/.49
• (CMVT)/.08
• (BRC)/.52

Economic Releases
8:30 am EST

• The Change in Non-farm Payrolls for August is estimated to fall to 130K versus 163K in July.
• The Unemployment Rate for August is estimated at 8.3% versus 8.3% in July.
• Average Hourly Earnings for August is estimated to rise +.2% versus a +.1% gain in July.

Upcoming Splits

• (ODFL) 3-for-2
  

Other Potential Market Movers

• The Germany Industrial Production report, Eurozone trade data, UK Inflation data, Basel Committee Meeting, (KFT) investor day and the (MFC) investor day could also impact trading today.
  

BOTTOM LINE: Asian indices are higher, boosted by financial and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.

Stocks Surging into Final Hour on Global Central Bank Action/Stimulus Hopes, Less Eurozone Debt Angst, Short-Covering, Investor Performance Angst

Broad Market Tone:

• Advance/Decline Line: Substantially Higher
  
• Sector Performance: Every Sector Rising
  
• Volume: Below Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 15.93 -10.20%
  
• ISE Sentiment Index 115.0 -21.77%
  
• Total Put/Call .85 -6.59%
  
• NYSE Arms .33 -61.56%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 95.35 bps -5.1%
  
• European Financial Sector CDS Index 215.91 bps -7.21%
  
• Western Europe Sovereign Debt CDS Index 210.86 -3.98%
  
• Emerging Market CDS Index 223.53 -5.11%
  
• 2-Year Swap Spread 16.5 unch.
  
• TED Spread 30.25 -.5 basis point
  
• 3-Month EUR/USD Cross-Currency Basis Swap -26.5 +4.0 basis points
  

Economic Gauges:

• 3-Month T-Bill Yield .11% +1 basis point
  
• Yield Curve 141.0 +6 basis points
  
• China Import Iron Ore Spot $87.0/Metric Tonne +.35%
  
• Citi US Economic Surprise Index 5.50 +7.5 points
  
• 10-Year TIPS Spread 2.32 +2 basis points
  

Overseas Futures:

• Nikkei Futures: Indicating +161 open in Japan
• DAX Futures: Indicating -9 open in Germany
  

Portfolio:

• Higher: On gains in my Retail/Medical/Tech/Biotech sector longs
  
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my (EEM) short, then added them back
  
• Market Exposure: 50% Net Long

Today's Headlines

Bloomberg:

• Draghi Says Officials Agree on ECB Unlimited Bond-Buying. European Central Bank President Mario Draghi said policy makers agreed to an unlimited bond- purchase program to regain control of interest rates in the euro area and fight speculation of a currency breakup. The program “will enable us to address severe distortions in government bond markets which originate from, in particular, unfounded fears on the part of investors of the reversibility of the euro,” Draghi said at a press conference in Frankfurt after the ECB held its benchmark rate at a record low of 0.75 percent. “Under appropriate conditions, we will have a fully effective backstop to avoid destructive scenarios with potentially severe challenges for price stability in the euro area.” “Governments must stand ready to activate the EFSF/ESM in the bond market when exceptional financial-market circumstances and risks to financial stability exist -- with strict and effective conditionality,” Draghi said. The ECB reserves the right to terminate bond purchases if governments don’t fulfil their part of the bargain, he added.
• Weidmann Says ECB Bond Plan 'Tantamount' to State Financing. Bundesbank President Jens Weidmann criticized the European Central Bank’s bond-buying plan, saying it is “tantamount to financing governments by printing banknotes.” “Monetary policy risks being subjugated to fiscal policy,” Weidmann said in a statement issued by the Frankfurt- based Bundesbank today. “The intervention purchases must not be permitted to jeopardize the capability of monetary policy to safeguard price stability in the euro area.” While Weidmann represents Germany, the euro area’s largest economy, he was the only objector on the ECB’s 23-member council, where each national central bank governor has one vote. The Bundesbank, which is required to carry out ECB policy decisions, didn’t say it would stand in the way of bond purchases. “If the adopted bond-purchasing program leads to member states postponing the necessary reforms, this will further undermine confidence in the political leaders’ crisis-resolution capability,” Weidmann said. “The announced interventions in the government bond market carry the additional danger that the central bank may ultimately redistribute considerable risks among various countries’ taxpayers,” Weidmann said. “Such risk-sharing, however, can be legitimately authorized solely by democratically elected parliaments and governments.”
• CSU's Michelbach Says ECB Is Buying Potential Future Inflation. The ECB's main task of ensuring price stability is increasingly taking a back seat, Hans Michelbach, a lawmaker from Merkel coalition partner CSU said. The ECB shouldn't become a bad bank for indebted nations, he said. The pressure on indebted nations will only ease if reforms lead to the consolidation of national finances.
• Euro Region’s Contraction Led by Consumers, Investment: Economy. Europe’s economy was pushed into a contraction in the second quarter as consumers cut spending and corporate investment slumped. Gross domestic product in the 17-member euro area fell 0.2 percent from the first quarter, the European Union’s statistics office said, confirming an initial estimate published on Aug. 14. Gross fixed capital formation dropped 0.8 percent from the previous three months, when it fell 1.3 percent, while consumer spending was down 0.2 percent. Government-spending growth slowed to 0.1 percent from 0.2 percent. The Organization for Economic Cooperation and Development called today on officials to do more to tackle the region’s debt crisis, which will continue to weigh on growth and confidence. “The slowdown will persist if leaders fail to address the main cause of this deterioration, which is the continuing crisis in the euro area,” said OECD Chief Economist Pier Carlo Padoan. “Resolving the euro area’s banking, fiscal and competitiveness problems is still the key to recovery.”
• French Unemployment Jumps, Increasing Pressure For Growth Push. French unemployment rose to a 13-year high in the second quarter as companies cut staff to cope with a stalled economy, adding pressure on President Francois Hollande to fulfil a campaign pledge to revive growth. The jobless rate based on International Labor Organization standards climbed to 10.2 percent of the population from 10 percent in the previous three months, national statistics office Insee in Paris said today. With neighboring Spain and Italy in recession, the French economy has failed to expand for three quarters, and companies from PSA Peugeot Citroen (UG) to Air France-KLM Group are eliminating thousands of jobs. Labor Minister Michel Sapin said this week that jobless claims have already surpassed 3 million, a level last reached in August 1999, and will increase further. “The increase in unemployment in France since the spring of 2011 is very worrying,” Natixis economists Patrick Artus and Jean-Christophe Caffet said in a note to clients before the release of the latest numbers. “The labor market hasn’t stopped deteriorating.”
• China’s Goal of 10% Trade Growth Drifts Out of Reach. Chinese toy merchant Pan Junping says this is usually among his busiest times as customers in the U.S. and Europe load up on orders for Christmas. This year, he’s quieter than ever. “The situation is possibly worse than 2009, and confidence is zero,” said Pan, 39, who’s frozen salaries and expects a 30 percent decline in annual sales for his trading company in Yiwu city, in the eastern province of Zhejiang. “It’s not busy at all.” A report due Sept. 10 may show a 2.9 percent gain in exports in August from a year earlier, down from an average 18 percent growth over the past two years, based on the median estimate in a Bloomberg News survey.
• Volume Seen Falling Most Since 1988 After August Slump: Options. U.S. options trading is poised for the biggest annual drop since 1988 as easing monetary policies worldwide reduced demand for protection against stock losses. The number of option contracts changing hands fell 13% to 2.7 billion during the first eight months of 2012, including a 43% slump in August, according to data compiled by Chicago-based Options Clearing Corp. Should the pace continue, that would end nine consecutive years of rising volume and mark the second-biggest drop since OCC data began in 1973. "There are few participants who believe downside protection in any great magnitude is needed right now," Randy Frederick, managing director for active trading and derivatives at Charles Schwab in Austin, said in a phone interview.
  
• Oil Surges on Bigger-Than-Expected Supply Drop. Oil futures maintained gains after a U.S. government report showed a bigger-than-expected decline in inventories. Supplies fell 7.43 million barrels to 357.1 million barrels last week, the Energy Department said today. Inventories were forecast to decline 4.95 million barrels, according to the median of 12 analyst estimates in a Bloomberg survey. Crude oil for October delivery advanced $1.76, or 1.8 percent, to $97.12 a barrel at 11:06 a.m. on the New York Mercantile Exchange.
• Services In U.S. Expanded More Than Forecast In August. Service industries in the U.S. expanded in August at a faster pace than forecast, offering support to an economy that lost momentum in the first half of the year. The Institute for Supply Management’s non-manufacturing index climbed to a three-month high of 53.7 from 52.6 in July, the Tempe, Arizona-based group said today. Readings above 50 signal expansion, and economists projected 52.5 for August, according to the median estimate in a Bloomberg survey.
• Consumer Comfort Gauge Signal Severe Discontent For Fifth Consecutive Week. Consumer confidence in the U.S. was little changed last week, hovering near an eight-month low, as Americans struggled with rising gasoline prices and elevated unemployment. The Bloomberg Consumer Comfort Index was at minus 46.5 in the period ended Sept. 2 compared with minus 47.3 in the prior week. It was the fifth consecutive week the index has registered a reading lower than minus 40, a level typically associated with severe economic discontent. A ninth consecutive weekly advance brought gasoline prices to the highest level in four months, giving households reason to be concerned about their finances. The dreary views are prompting retailers and manufacturers such as General Motors Co. (GM) to use promotions to entice customers. “Despite very aggressive discounting from retailers and General Motors that have bolstered retail sales, households remain quite pessimistic on the state of the economy and their own personal finances,” said Joseph Brusuelas, a senior economist with Bloomberg LP in New York. The personal finances gauge dropped to minus 13.5 last week from minus 12.7. The number of consumers who say their budgets were in “poor” shape, the most negative rating, climbed to 23 percent, its highest since November. The average cost of a gallon of regular gasoline climbed to $3.83 last week, up 50 cents since July 1 and the highest since late April, according to figures from AAA, the largest U.S. auto group. The Comfort Index for Women fell to -50.7, while the Comfort Index for Men rose to -43.7.
• Women Failing to Get Hired in U.S. Cost-conscious households are one reason employment in the childcare industry has dropped 1.8 percent since the recession ended June 2009, even as total U.S. payrolls increased 2.1 percent. Jobs in the sector hover at levels of five years ago as unemployed parents watch their children at home, states cut childcare subsidies and the birth rate is at a 12-year low. The industry’s challenges reflect those facing the U.S. labor market, which has seen 42 consecutive months of unemployment above 8 percent and disproportionate joblessness among women. As of June 2012, men have regained 46.2 percent of the jobs they lost since the start of the recession, compared to 38.7 percent for women, according to the Institute for Women’s Policy Research, in Washington D.C., which analyzes payroll data.
• ADP Says U.S. Companies Added 201,000 Workers in August. The 201,000 increase in employment, the biggest gain in five months, followed July’s revised 173,000 rise, Roseland, New Jersey-based ADP Employer Services said today. The median forecast of 41 economists surveyed by Bloomberg called for an advance of 140,000.
• Gold Rises to Highest Since March as Euro Advances on ECB. Gold futures rose to the highest since March as European Central Bank President Mario Draghi said policy makers agreed to an unlimited bond-purchase program to help stabilize the region, boosting demand for the metal as a store of value. Gold futures for December delivery gained 0.6 percent to $1,703.50 an ounce at 9:59 a.m. on the Comex in New York, after earlier jumping to $1,716.90, the highest for a most-active contract since March 12. Gold will be at $1,840 by the end of 2012, Jeffrey Currie, head of commodities research at Goldman Sachs Group Inc., said in a Bloomberg Television interview today.
• JPMorgan(JPM) Said to Face Escalating Senate Probe of CIO Loss. JPMorgan Chase & Co.’s (JPM) wrong-way bets on derivatives are the focus of an escalating probe by a U.S. Senate panel led by Carl Levin that has grilled executives from banks including Goldman Sachs Group Inc. and HSBC Holdings Plc, three people briefed on the inquiry said. Levin’s Permanent Subcommittee on Investigations is seeking testimony from people who worked in or helped lead JPMorgan’s chief investment office, according to the people, who declined to be identified because the inquiry isn’t public. The unit’s London staff lost at least $5.8 billion this year on the botched bets, which were large enough to shift markets.

Wall Street Journal:

• Democrats Hint at Showdown With GOP After Election. Top White House and Senate officials at the Democratic National Convention in Charlotte, N.C., offered new clues Thursday about their strategy heading into the lame-duck session of Congress after the November election, suggesting they plan on a showdown with Republicans over tax and spending policy.
• The President's Fountain of Youth Is Drying Up. In 2008 young voters chose Obama over McCain by 66% to 32%. Today he leads Romney by 49% to 41%.

CNBC.com:

• Amazon(AMZN) Introduces New Kindle And Bigger Version of the Fire.

Business Insider:

• Germany's Press Goes Berzerk With Headlines After Draghi.
• Here's How Angela Merkel Is Being Greeted In Spain.
• BofA(BAC): More Bad Than Good Came Out Of Today's ECB Announcement.

Zero Hedge:

• Bundesbank Replies To The ECB.
• Spiegel: "It's Time To Ask The People What They Think".
• Santelli And Grant Explain The ECB Reality.
• A Gentle Reminder Of The Effectiveness Of Prior ECB Bond Buying. (graph)
  

TheStreet.com:

• US Auto Sales on Road to Next Subprime Bubble. Experian Automotive, a unit of Experian, the credit-rating firm, reported Tuesday that "loans in the nonprime, subprime and deep-subprime risk tiers accounted for more than one in four new-vehicle loans in [the second quarter] of 2012." That was a 14% increase from the same period a year earlier, and it actually exceeded the rate in the second quarter of 2007, before the financial crisis made lenders tighten their standards.

Reuters:

• Copper ends lower as market digests ECB plan.
• Monetary tools can't solve fiscal crisis-German FinMin. The euro zone must avoid using monetary policy to tackle its fiscal problems, German Finance Minister Wolfgang Schaeuble said on Thursday, shortly after the European Central Bank announced plans to buy the debt of struggling governments. "If we start wanting to resolve the problems of financial policy through the more convenient means of monetary policy, we will have a problem," Schaeuble said at an award ceremony in honour of ECB president Mario Draghi. "Central banks are autonomous so that the more convenient path of printing money is barred to politicians," he added.
• Football blitzes Bill Clinton speech in TV match-up. Some 21 million Americans watched the National Football League's season kickoff game on NBC between the Dallas Cowboys and the New York Giants on Wednesday night, dwarfing the 7.5 million who watched Clinton's lengthy, humorous and detail-heavy address on the ABC and CBS networks, according to Nielsen data.
• Spain's Rajoy plays waiting game on bailout. Spain's Prime Minister Mariano Rajoy showed no rush on Thursday to seek a bailout that would come with bitter conditions for his recession-gripped country under a new European Central Bank plan to bring relief to struggling euro zone members.
• UK tells banks to cut exposure to euro breakup risk. Britain's top banks have tens of billions of euros in exposure to the risk of countries leaving the euro or the currency union breaking up entirely, despite intense pressure from the UK financial regulator to tackle the problem. This "redenomination risk" is evident at Santander UK, Royal Bank of Scotland and Barclays, although much of it has been hedged, according to data published by the banks in response to the regulator's demands.

Telegraph:

• Cheap ECB cash could prove to be the worst form of bailout.

POP TV:

• Slovenian Banks' Bad Loans Soar to $3.4 Billion. Bad loans at two of Slovenia's biggest banks, Nova Ljubljanska Banka d.d. and Nova Kreditna Banka Maribor d.d. soared to 2.7 billion euros ($3.4 billion), citing a leaked a report by the country's central bank.