Monday Watch

Weekend Headlines 
Bloomberg:

• Syria Vote in Skeptical Congress Puts Obama’s Agenda at Risk. President Barack Obama enters one of the most pivotal weeks of his presidency, as he makes a final push to persuade a skeptical Congress and a reluctant American public to support air strikes against Syria. With U.S. lawmakers increasingly lining up against the president, the looming congressional vote threatens to undermine Obama’s domestic agenda and weaken his clout internationally. Bashar al-Assad disputed U.S. allegations he used chemical weapons against civilians, according to CBS News correspondent Charlie Rose who interviewed the Syrian president in Damascus. A failure in Congress could reverberate through Obama’s second-term agenda, heightening the difficulty he’ll face in winning congressional support for domestic initiatives and hampering his foreign policy agenda during his final three years in office. “The president’s asking a lot for Republicans to support him on Syria,” Tom Davis, a former Republican representative from Virginia who was head of his party’s campaign operation, said in an interview on Bloomberg Television. “To go back again on immigration or on the budget is going to be very tough.”  

• Japan Boosts GDP Estimate as Abe Weighs Sales-Tax Increase. Japan’s economy grew faster than previously estimated in the second quarter, aiding Prime Minister Shinzo Abe’s reflation campaign as he considers whether the nation can withstand a sales-tax increase. Gross domestic product expanded an annualized 3.8 percent from the first quarter, higher than an initial estimate of 2.6 percent, reflecting stronger private capital investment, the Cabinet Office said in Tokyo today. The median forecast of 23 economists surveyed by Bloomberg News was for a 3.9 percent increase. The economy grew 4.1 percent in the first quarter.

• BlackRock(BLK) Predicts Deeper Emerging-Markets Rout: Credit Markets. Wall Street's biggest firms are predicting intensifying bond losses in emerging markets, where borrowing costs have already soared to the highest in more than four years versus U.S. corporate debt, as the Federal Reserve considers curtailing record stimulus. "We're not yet convinced that we've seen the worst in terms of flows out of emerging markets," Jeffrey Rosenberg, the chief investment strategist in fixed-income at NY-based BlackRock Inc., the world's largest asset manager, said in a telephone interview. "We see a lot of valuation change but we see the potential for even more valuation change." Investors have yanked $22.1 billion from emerging-market bond funds since the end of April, almost five times the amount pulled from U.S. corporate credit, according to EPFR Global.

• China May Cut 2014 Growth Target to 7%, State Economist Fan Says. The drop would be in line with the goal set in the country’s 2011-2015 five-year plan for annual average expansion of 7 percent, Fan, who works at the State Information Center under the National Development and Reform Commission, said in an interview in Shanghai on Sept. 7. “It’s hard to find good reasons to be optimistic” about a recovery in China’s growth, Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong, said in a Sept. 6 interview. “The economy has been pretty much supported by investment, especially property and infrastructure, but it’s hard to see how the momentum can continue.” Zhang, who sees “moderate upside risks” to his third-quarter growth estimate of 7.4 percent after better-than-expected economic data, said he’s maintaining his 2014 forecast of 6.9 percent as the current recovery is unsustainable. 

• Chinese Zombies Emerging After Years of Solar Subsidies. Only five solar-power vendors remain in a space built for 170 at a sprawling complex of offices stacked three stories high outside Xinyu city in China’s southeast. Locked doors and empty offices are what’s left of the government’s audacious plan to dominate the global solar industry. What happened in Xinyu is being replicated across China, which used subsidies and $47.5 billion of credit to wrest supremacy from Germany, Japan and the U.S., saddling an industry with losses for at least two years. “There is definitely a slew of smaller zombie companies out there that are going to continue to fall one by one,” said Angelo Zino, an analyst at S&P Capital IQ in New York. “You’ll see 10 to 12 names here when it all shakes out. The remaining names will either go bankrupt or be consolidated.”

• Asian Stocks Gain as Yen Drops on Olympics; Metals Rise. Asian stocks rose, with Japan’s benchmark index reaching a one-month high, and the yen weakened after Tokyo was selected to host the 2020 Olympics. Metals rallied and the won gained on improving Chinese exports and easing concerns over a reduction in U.S. stimulus. The MSCI Asia Pacific Index climbed 0.8 percent by 11:06 a.m. in Hong Kong, rising for an eighth day.

• WTI Crude Drops From Two-Year High as China’s Crude Imports Slip. West Texas Intermediate fell from the highest price in more than two years. Hedge funds reduced their bullish bets last week and China’s net crude imports shrank in August from a record high. Futures slid as much as 0.7 percent in New York after two days of gains. 

• Gold Declines as Investors Expect Fed to Press On With Tapering. Gold fell, extending two weeks of losses, as investors weighed the prospects of reduced stimulus in the U.S. against signs of increased demand. Gold for immediate delivery dropped as much as 0.5 percent to $1,385.50 an ounce, and traded at $1,389.71 at 9:11 a.m. in Singapore.

• Rebar Rises First Time in Five Days as Traders’ Inventory Falls. Steel reinforcement-bar futures in Shanghai rose for the first time in five days as traders’ inventory fell to the lowest in more than seven months. Rebar for January delivery on the Shanghai Futures Exchange gained as much as 1.1 percent to 3,762 yuan ($615) a metric ton, before trading at 3,758 yuan at 10:45 a.m. local time. The contract fell to the lowest close in almost a month on Sept. 6.

• Merkel Says Danger SPD May Break Vow and Ally With Left Party. German Chancellor Angela Merkel said there’s a danger that the opposition Social Democrats and the Greens may break an election pledge not to ally with the anti-capitalist Left Party in a bid to take power. Merkel said the vote “will be very close” in a speech at a rally in Dusseldorf yesterday, marking the start of the final two weeks of campaigning before Sept. 22 elections.

• Treasuries Drop as Weak Jobs Growth Can’t Derail Fed Taper View. Treasuries fell for the first time in three weeks, pushing 10-year note yields to a two-year high, on speculation economic growth has improved enough to make the Federal Reserve comfortable slowing bond purchases this month. Benchmark yields breached 3 percent yesterday for the first time since July 2011 before a lower-than-forecast jobs report sent them plunging the most on an intraday basis since November. Fed policy makers are debating whether the pace of economic growth merits reducing the asset purchases they have made to support the economy and keep borrowing costs low. The Treasury Department sale of $63 billion in notes and bonds next week includes the smallest auction of three-year debt in four years. 

• Russia to Brazil Intervention Adds to U.S. Debt Woes Amid Losses. Investors suffering the worst losses in Treasuries since at least 1978 can add dollar sales by emerging-market central banks to their list of challenges. Speculation that the Federal Reserve, the biggest buyer of Treasuries, will reduce its purchases sent U.S. debt down 4.1 percent this year and boosted the dollar against developing-nation currencies for four straight months, matching the longest streak since 2001, according to Bloomberg data. India, Brazil, Russia and Indonesia have intervened in foreign-exchange markets, and dollar sales mean liquidating Treasuries, according to bond traders at Scotiabank and Bank of America Corp.

Wall Street Journal:

• Obama Hones Pitch on Syria As Opposition Rises at Home. In a week poised to define his second term, President Barack Obama will mount an intensive campaign to promote a U.S. military strike on Syria as opposition rises in both Congress and across the country. Mr. Obama will make his case repeatedly in coming days to Americans wary of opening a new military front in the Middle East, including in a battery of interviews set for Monday and a nationally televised address Tuesday evening. He also is sending aides to hold closed-door intelligence briefings for members of Congress about the alleged gassing deaths of more than 1,400 Syrian civilians by the forces of President Bashar al-Assad.

• Hedge Funds Cut Back on Fees. Pressure From Disappointed Investors Changes '2 and 20' Model. Pressure from disappointed investors is forcing hedge funds to roll back their fees, putting the standard charge of 2% of assets under management and 20% of investment profits on the endangered list. Until a few years ago, most funds were like upscale New York restaurants: Some succeeded, others failed, but almost none cut prices. This pricing power was a product of the tens of billions of dollars that flowed into the industry after the tech meltdown of 2000, when savvy investments by some hedge funds shielded their investors from the drubbing suffered by holders of broad stock funds.

• Obama's Successful Foreign Failure. The president may look incompetent on Syria. But his behavior fits his strategy to weaken America abroad.

Fox News:

• Benghazi anniversary hurts White House push to win Syria support. The Obama administration’s effort Sunday to win support for a punitive military strike on Syria is facing opposition and criticism in part because of its handling of the fatal Benghazi terror attacks, which occurred one year ago Wednesday. Federal prosecutors last month filed the first criminal charges related to the Sept. 11, 2012, attacks on the U.S. outpost in Benghazi, Libya, in which four Americans were killed.

Zero Hedge:

• Goldman's(GS) Quick Answers To Tough EM Questions. 

• The Fed's Birthday Party Trick: A Market Of Monetary-Punch-Drunk Liquidityholics.

• Is Forward Guidance Already Dead?

• Tokyo To Host 2020 Summer Olympics.

• Labor Force Participation Crisis? Don't Blame Demographics! (graphs)

• IBM(IBM) Terminates Company-Sponsored Retiree Health Plan Due To Soaring Costs.

• The Market Implications Of Middle East Turmoil.

• UK Government Admits It Allowed 2 Firms To Sell 'Poison Gas'-Making Chemicals To Syria.

• NSA Has Full "Back Door" Access To iPhone, BlackBerry And Android Smartphones, Documents Reveal.

• Households On Foodstamps Rise To New Record High: More Americans Live In Poverty Than The Population Of Spain. (graphs)

• Will Berlusconi Be Responsible For Another European Crisis?

• Why Europe (Not The Fed) Is Crushing Emerging Market Economies.

Business Insider:

• Obama Is Going On A Furious Media Push To Sell A Syria Strike.

• It's Sad How Bearish Economists Are Getting On Latin America. (graph)

• Australia's New Prime Minister Wants To Immediately Dismantle His Country's Fight Against Climate Change.

• Here's The Best Explanation We've Seen Of Why The Fed Will Reduce QE Even Though The Job Market Is Crap.

• Sorry, But It's Clear That The US Job Market Is Dead In The Water.

• Obama's Stance On Syria Is One Contradiction Too Many. First, the Middle East. For the last six years, Obama has told Americans that the United States needs to extricate itself from the region. He proclaimed a "pivot to Asia" — the region, he said, that was far more important to America's economic future than the Middle East. Iraq and then Afghanistan were countries that the United States should get out of,Obama declared. And never look back. For two years, this same message was conveyed about Syria. Now, Obama is telling Americans that acting in Syria is vital. Voters respond with a simple question: Why now?

• MORGAN STANLEY(MS): Many Of Our Clients Are Preparing For An Imminent Loss Of Central Bank Control.

• Pensions Are Still Making Ludicrous Assumptions About Future Returns.

Wall Street All-Stars:

• Indicator Update: What does the Syrian Crisis Mean for Stocks?

Telegraph:

• Brussels fears European 'industrial massacre' sparked by energy costs. Europe's industry is being ravaged by exorbitant energy costs and an over-valued euro, blighting efforts to reverse years of global manufacturing decline. 

• China to dictate tough terms on BRICS rescue fund. A top Chinese official has dashed hopes for imminent use of a new $100bn BRICS fund to rescue emerging market currencies in crisis, warning that China will not deploy its reserves unless tough terms are imposed. 

dna:

• India is reeling under crisis of confidence: Yashwant Sinha. India's top economic minds like Yashwant Sinha, Pratip Chaudhary, Meera Sanyal, and Brinda Jagirdar lament the fact that the fundamental structure of the economy has become weak during the UPA-II regime. Speaking at Bharat Bhagya Vidhata 'India Ka Agenda' show to be aired tonight @ Zee News at 10 pm, they identified elevated twin deficits, low growth rate, and high inflation as three key factors that had weakened the pillars of the economy.

Weekend Recommendations

Barron's:

• Bullish commentary on (MSFT), (AET), (CAT), (GE), (JOY), (BOBE) and (TXT).

• Bearish commentary on (MCD). 

Night Trading

• Asian indices are +.50% to +1.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 143.0 -12.0 basis points.

• Asia Pacific Sovereign CDS Index 122.50 -3.25 basis points.

• FTSE-100 futures +.11%.

• S&P 500 futures +.29%.

• NASDAQ 100 futures +.38%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (HOV)/.06

• (JW/A)/.42

• (CASY)/1.26

• (HDS)/.18

• (PANW)/.06

• (FIVE)/.09

• (PVH)/1.37

Economic Releases
3:00 pm EST

• Consumer Credit for July is estimated to fall to $12.3B versus $13.81B in June.
  

Upcoming Splits

• (DVA) 2-for-1

Other Potential Market Movers

• The Fed's Williams speaking, BoJ minutes, Barclays Financial Services Conference, KeyBanc Basic Materials/Packaging Conference and the (NS) analyst meeting could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by automaker and real estate shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon. The Portfolio is 50% net long heading into the week.

Weekly Outlook

U.S. Week Ahead by MarketWatch (video). 
Wall St. Week Ahead by Reuters.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week mixed as rising energy prices, rising long-term rates and Syria intervention worries offset subsiding global growth fears, technical buying and short-covering. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.

Market Week in Review

S&P 500 1,655.17 +1.04%*




The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 1,655.17 +1.04%

• DJIA 14,922.50 +.55%

• NASDAQ 3,660.01 +1.10%

• Russell 2000 1,029.55 +.25%

• S&P 500 High Beta 26.47 +2.44%

• Value Line Geometric(broad market) n/a

• Russell 1000 Growth 764.49 +1.06%

• Russell 1000 Value 839.55 +.94%

• Morgan Stanley Consumer 1,003.47 +1.14%

• Morgan Stanley Cyclical 1,260.44 +1.97%

• Morgan Stanley Technology 797.92 +3.09%

• Transports 6,371.11 +.78%

• Utilities 473.37 -.93%

• Bloomberg European Bank/Financial Services 100.22 +4.08%

• MSCI Emerging Markets 39.63 +4.26%

• HFRX Equity Hedge 1,113.20 +.66%

• HFRX Equity Market Neutral 933.47 unch.

Sentiment/Internals

• NYSE Cumulative A/D Line 186,295 +1.0%

• Bloomberg New Highs-Lows Index 75 +103

• Bloomberg Crude Oil % Bulls 44.44 +2.78%

• CFTC Oil Net Speculative Position 339,348 -1.68%

• CFTC Oil Total Open Interest 1,856,725 +.08%

• Total Put/Call .88 -21.43%

• OEX Put/Call 1.09 -54.58%

• ISE Sentiment 97.0 +15.48%

• NYSE Arms .88 -15.38%

• Volatility(VIX) 15.85 -5.71%

• S&P 500 Implied Correlation 50.48 -8.84%

• G7 Currency Volatility (VXY) 9.62 -5.22%

• Emerging Markets Currency Volatility (EM-VXY) 11.39 -2.98%

• Smart Money Flow Index 11,209.09 +.27%

• Money Mkt Mutual Fund Assets $2.644 Trillion +.24%

• AAII % Bulls 35.5 +5.9%

• AAII % Bears 31.3 +1.6%

Futures Spot Prices

• CRB Index 293.34 -.16%

• Crude Oil 110.53 +2.15%

• Reformulated Gasoline 285.37 -2.24%

• Natural Gas 3.53 -2.51%

• Heating Oil 316.37 -.29%

• Gold 1,386.20 -1.46%

• Bloomberg Base Metals Index 190.58 +.99%

• Copper 326.15 +.83%

• US No. 1 Heavy Melt Scrap Steel 342.67 USD/Ton +1.22%

• China Iron Ore Spot 134.10 USD/Ton -2.61%

• Lumber 331.90 +4.20%

• UBS-Bloomberg Agriculture 1,435.05 +.04%

Economy

• ECRI Weekly Leading Economic Index Growth Rate 3.9% -30 basis points

• Philly Fed ADS Real-Time Business Conditions Index -.0562 +14.33%

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 118.14 +.21%

• Citi US Economic Surprise Index 56.50 +25.7 points

• Citi Emerging Markets Economic Surprise Index -15.0 +2.9 points

• Fed Fund Futures imply 38.0% chance of no change, 62.0% chance of 25 basis point cut on 9/18

• US Dollar Index 82.15 +.14%

• Euro/Yen Carry Return Index 136.20 +.62%

• Yield Curve 248.0 +10 basis points

• 10-Year US Treasury Yield 2.93% +15 basis points

• Federal Reserve's Balance Sheet $3.611 Trillion +.26%

• U.S. Sovereign Debt Credit Default Swap 22.0 -1.0%

• Illinois Municipal Debt Credit Default Swap 182.0 -1.35%

• Western Europe Sovereign Debt Credit Default Swap Index 91.0 +4.0%

• Asia Pacific Sovereign Debt Credit Default Swap Index 122.49 -6.50%
  

• Emerging Markets Sovereign Debt CDS Index 250.0 -1.96%
  

• Israel Sovereign Debt Credit Default Swap 146.32 +4.02%

• Egypt Sovereign Debt Credit Default Swap 713.81 -7.34%

• China Blended Corporate Spread Index 369.0 -16 basis points

• 10-Year TIPS Spread 2.08% -3 basis points

• TED Spread 24.0 +.25 basis point

• 2-Year Swap Spread 15.75 -1.25 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -10.25 -.5 basis point

• N. America Investment Grade Credit Default Swap Index 81.87 -1.75%
  

• European Financial Sector Credit Default Swap Index 146.05 -2.77%
  

• Emerging Markets Credit Default Swap Index 330.16 -5.55%
  

• CMBS AAA Super Senior 10-Year Treasury Spread  to Swaps 115.0 unch.

• M1 Money Supply $2.566 Trillion +1.12%

• Commercial Paper Outstanding 1,015.0 -.50%

• 4-Week Moving Average of Jobless Claims 328,500 -2,800

• Continuing Claims Unemployment Rate 2.3% unch.

• Average 30-Year Mortgage Rate 4.57% +6 basis points

• Weekly Mortgage Applications 445.0 +1.32%

• Bloomberg Consumer Comfort -32.30 -.6 point

• Weekly Retail Sales +3.90% +20 basis points

• Nationwide Gas $3.58/gallon -.01/gallon

• Baltic Dry Index 1,352 +19.43%

• China (Export) Containerized Freight Index 1,125.44 -.05%

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 22.50 +12.5%

• Rail Freight Carloads 259,672 +1.0%

Best Performing Style

• Mid-Cap Growth +1.2%

Worst Performing Style

• Small-Cap Value -.1%

Leading Sectors

• Coal +6.6%

• Steel +5.5%

• Networking +4.9%

• Alternative Energy +3.9%

• Airlines +3.5%

Lagging Sectors

• REITs -.2% 

• Homebuilders -.4%

• Utilities -.9%

• Software -1.5%

• Gold & Silver -1.7%

Weekly High-Volume Stock Gainers (24)

• KDN, CIEN, KFY, BLOX, ETFC, GIII, FNSR, LPX, TXTR, CKEC, STSA, JAH, TKR, VRNT, TBBK, IMKTA, AZZ, OMCL, CNMD, MUR, VVI, AN, ZUMZ and SPN

Weekly High-Volume Stock Losers (14)

• KKD, THG, GEF, CLVS, PANW, KMI, MTDR, ADES, CEVA, ESC, VVUS, MFRM, CONN and FRAN

Weekly Charts
ETFs

• High-Volume Gainers

• High-Volume Losers

Stocks

• High-Volume Gainers

• High-Volume Losers

*5-Day Change

Stocks Slightly Higher into Final Hour on Lower Long-Term Rates, Short-Covering, Homebuilding/REIT Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: About Even
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 15.31 -2.92%
• Euro/Yen Carry Return Index 136.20 -.55%
• Emerging Markets Currency Volatility(VXY) 11.39 -3.72%
• S&P 500 Implied Correlation 49.26 -1.83%

• ISE Sentiment Index 105.0 -10.26%

• Total Put/Call .86 +6.17%

• NYSE Arms .71 +23.62% 

Credit Investor Angst:

• North American Investment Grade CDS Index 81.72 -2.29%

• European Financial Sector CDS Index 146.05 -.65%

• Western Europe Sovereign Debt CDS Index 91.0 unch.

• Emerging Market CDS Index 329.83 -3.99%

• 2-Year Swap Spread 15.75 +.5 bp

• TED Spread 24.25 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -10.25 +.25 bp

Economic Gauges:

• 3-Month T-Bill Yield .02% unch.

• Yield Curve 247.0 unch.

• China Import Iron Ore Spot $134.10/Metric Tonne -2.19%

• Citi US Economic Surprise Index 56.50 +3.1 points
• Citi Emerging Markets Economic Surprise Index -15.0 +.8 point

• 10-Year TIPS Spread 2.08 unch.

Overseas Futures:

• Nikkei Futures: Indicating +45 open in Japan

• DAX Futures: Indicating -15 open in Germany

Portfolio: 

• Slightly Higher: On gains in my tech/medical sector longs
• Disclosed Trades: Added to my (IWM), (QQQ) hedges, then covered some of them
• Market Exposure: 50% Net Long

Today's Headlines

Bloomberg:

• Obama Plans Syria Speech as Agreement Eludes U.S. at G-20. President Barack Obama acknowledged domestic and international resistance to his call for a military strike against Syria and said he’ll make a more detailed case for action in an address to the nation next week. Obama left a summit of leaders from the Group of 20 nations in St. Petersburg, Russia, without gaining a clear, unified message of support from allies, even as he said there is “growing recognition” that the world can’t stand by and let the use of chemical weapons go unanswered. “Failing to respond to this breach of this international norm would send a signal to rogue nations, authoritarian regimes and terrorist organizations, that they can develop and use weapons of mass destruction and not pay a consequence,” Obama said during a news conference at the close of the G-20 summit.

• Russia, Turkey Readying for Syria War as Obama Seeks Support. Russia and Turkey stepped up preparations for an escalation of the 2 1/2-year civil war in Syria, in which they’re backing opposing sides. Russia, one of Syrian President Bashar al-Assad’s main international allies, sent an amphibious assault ship to join its forces off the Syrian coast in the east Mediterranean, Interfax news agency reported. The Nikolay Filchenkov, which departed Sevastopol today, is the latest reinforcement to the fleet. Two destroyers, a missile cruiser and other vessels were dispatched earlier. In Turkey, one of the most vocal supporters of the rebels fighting to oust Assad, the army has bolstered its deployment along the 900-kilometer (559-mile) border, where hilltop gun emplacements face Syria. The government set up a decontamination unit to disinfect cars arriving from Syria, on concern they may carry traces of chemical weapons, and said it may commandeer off-road vehicles for military use, Hurriyet newspaper said.

• Putin Overwhelms Obama at the Sulky Summit. When Russian President Vladimir Putin came out to welcome world leaders to this week's G-20 summit at the Constantine Palace in Strelna, a St. Petersburg suburb, many wondered how it would go between him and U.S. President Barack Obama. Through most of the first day Putin and Obama avoided each other. The organizers initially wanted to seat the G20 leaders according to the Russian alphabetical order of their countries, putting only King Abdullah of Saudi Arabia between Putin and Obama, but decided at the last moment to switch to the Latin alphabet. The Russian and U.S. presidents ended up separated by five people. They didn't exchange a meaningful word.

• Singh Fails to Convince S&P as Default Risk Surges. (video) India’s default risk is rising the most among emerging markets as Prime Minister Manmohan Singh’s government bucks a regional trend of budget tightening, raising the prospect of a junk debt rating as the rupee plunges. Diana Monteiro reports on Bloomberg Television's "On The Move Asia." 

• European Stocks Climb to Three-Week High. European stocks rose to a three-week high, completing their biggest weekly gain since April, as investors bet that any tapering of Federal Reserve stimulus will be more gradual than previously anticipated. RWE AG and E.ON SE rallied as a study by a German government adviser fueled speculation of higher electricity prices. Sonova Holding AG, the world’s biggest maker of hearing aids, and Enel SpA, Italy’s biggest utility, each rallied at least 3.5 percent after UBS AG upgraded the shares. ProSiebenSat.1 Media AG dropped 1.1 percent as Telegraaf Media Groep NV sold its stake in the German broadcaster. The Stoxx Europe 600 Index added 0.5 percent to 306.1 at the close of trading in London, after swinging between gains and losses at least 11 times.

• Gold Rises From 2-Week Low as Weak Job Gains Spur Stimulus Bets. Gold rebounded from a two-week low as weaker-than-forecast gains in U.S. payrolls revived prospects for an extension of economic stimulus by the Federal Reserve, stoking demand for the metal as a store of value. Gold futures for December delivery gained 0.8 percent to $1,383.40 an ounce at 9:37 a.m. on the Comex in New York. Earlier, prices dropped to $1,358.80, the lowest since Aug. 22.

• Crude Climbs to Two-Year High on Syria. West Texas Intermediate crude rose to a two-year high as Russian President Vladimir Putin said his nation will assist Syria if it’s attacked, raising concern that escalating tension will disrupt Middle East oil exports. WTI for October delivery gained $2.16 to $110.53 a barrel on the New York Mercantile Exchange, the highest settlement since May 3, 2011. Prices advanced 2.7 percent this week. Volume of all futures was 5.8 percent below 100-day average. 

Wall Street Journal:

• Confronting Syria: Streaming Coverage.

• Thain: 'Too Big to Fail' Issue Still Not Resolved. (video)

CNBC: 

• World leaders push big companies to pay more taxes. It's time to make Google(GOOG), Apple(AAPL), and other multinational companies pay more taxes. That's the message from President Barack Obama and the leaders of the world's leading economies at a summit ending Friday.

Zero Hedge:

• Santelli Blasts Bad-Jobs Bullish Market Response: "What Are We A Banana Republic?" (graphs)

• Real Unemployment Rate Rises To 11.4%, Difference Between Reported And Real Data Rises To Record. (graph)

• Quality Of August Jobs Added: Absolutely Abysmal.

• Russia Sends Third Marine Ship To Syria.

• How Many Treasurys Do Russia And China Own? Between the two of them, this much: $1,414 billion, or 25% of all foreign held US Treasury paper. 

• Goldman(GS) On Jobs Report: "Not Weak Enough To Delay Taper".

• "Will We Help Syria? We Will" - What Putin Really Said.

• "Overly Optimistic" Earnings Expectations Are In Jeopardy. (graphs)

Business Insider:

• Important Stock Important Stock Market Catalysts Are Now ReversingMarket Catalysts Are Now Reversing.

• The Labor Force Participation Rate Is Now At A 35-Year Low. (graph)

New York Times:

• Sequoia Capital Pulls Back From South America. Sequoia Capital has decided to manage its activities in South America from its headquarters in California after its lone partner here, David Velez, left to start his own venture, people with direct knowledge of the firm’s plans said. The move, which these people said had been in the works for several months, shows the difficulty the Silicon Valley venture capital firm has faced in finding attractive investments in the region, even as start-ups have proliferated in recent years.

Washington Post:

• A war the Pentagon doesn’t want.

CNN:

• IRS scandal: America needs the truth.

Reuters:

• American Tower(AMT) to buy Global Tower in $4.8 billion deal. American Tower Corp said it would buy privately held MIP Tower Holdings LLC, the parent of telecom tower operator Global Tower Partners, in a $4.8 billion deal to take advantage of the roll-out of 4G wireless network in the United States. 

• Arsenic levels in rice too low for short-term risk -FDA. The U.S. Food and Drug Administration said on Friday that after testing 1,300 samples of rice and rice products, it has determined that the amount of detectable arsenic is too low to cause immediate or short-term negative health effects. The next step, the agency said, will be to use new tools that provide greater specificity about different types of arsenic present in foods, to analyze the effect of long-term exposure to low levels of arsenic in rice.

• U.S. FDA okays Celgene's(CELG) Abraxane for pancreatic cancer. U.S. regulators on Friday approved use of Celgene Corp's Abraxane to treat patients with pancreatic cancer that has spread to other parts of the body, citing a trial that showed the drug significantly prolonged survival. The medicine is already approved in the United States to treat lung cancer and breast cancer. Celgene in January said Abraxane helped patients with advanced pancreatic cancer live an average of two months longer than those treated with chemotherapy, according to a late-stage study. Moreover, a significantly higher percentage of Abraxane users survived for up to two years. 

• Fed's George favors cutting bond buys to $70 bln/month in Sept. The Federal Reserve should begin reducing monthly bond purchases at a meeting later this month in order to set monetary policy on a course for "gradual and predictable" normalization, a top U.S. central banker said on Friday. Kansas City Fed President Esther George, a consistent hawk who has argued for a tapering in bond purchases all year, also said policymakers should consider enhancing communication over how quickly the Fed will start raising interest rates, currently held near zero. "An appropriate next step toward normalizing monetary policy could be to reduce the pace of purchases from $85 billion to something around $70 billion per month," George told a luncheon of business and community leaders. She also said that remaining Fed purchases should be split evenly between Treasuries and mortgage-backed securities. "A decision to reduce the Federal Reserve's monthly asset purchases would be appropriate at that (Sept. 17-18) meeting, as would clearer guidance about the path forward. It is time to begin a gradual - and predictable - normalization of policy," she said.

• Baghdad, Big Oil on alert for retaliation to a Syria strike. Baghdad and foreign oil companies at work in Iraq's giant oilfields are adopting extra security measures in anticipation of retaliatory attacks if the United States strikes neighbouring Syria, industry sources said on Friday. Car bombs and other attacks in recent weeks have led to the deaths of hundreds of Iraqis as the civil war in neighbouring Syria aggravates deep-rooted sectarian divisions.

• U.S. Fed can soon begin reducing stimulus, Evans says. The U.S. Federal Reserve can begin winding down its bond-buying stimulus later this year, Chicago Fed President Charles Evans said on Friday, adding he was still unsure about whether to start in September. A U.S. employment report earlier on Friday showing relatively weak job gains but a drop in the jobless rate in August was just mixed enough to leave uncertain the prospect of a reduction in the Fed's $85 billion monthly asset purchases. "This is a period where it's even more important to go into an FOMC meeting with an open mind," said Evans, referring to the central bank's policy-setting Federal Open Market Committee. "There's been cumulative progress on the economy. I can be persuaded that there has been enough improvement." 

• Stock funds worldwide have $8.7 billion outflow - Bank of America.

Bild:

• Europe to Decide in November on Third Greek Bailout. Decision on third bailout package for Greece may be made in November, citing its sources.

Vendomosti:

• Russia Becomes Europe's Largest Car Sales Market. Russian car sales exceeded 220,000 in August, excluding light commercial vehicles, citing local researcher Autostat.