Today's Headlines

Bloomberg:

- Fewer Americans filed claims for jobless benefits last week, another sign the economy is pulling out of the worst recession since the 1930s. The total number of people collecting unemployment insurance fell to the lowest level since April. The jobless claims report showed the four-week moving average of initial applications, a less volatile measure, dropped to 566,250 last week from 571,000. The unemployment rate among people eligible for benefits, which tends to track the jobless rate, fell to 4.6 percent in the week ended Aug. 15, from 4.7 percent the prior week.

- Oil fell below $70 a barrel and gasoline declined on signs U.S. demand will be slow to rebound after a report yesterday showed crude supplies unexpectedly rose in the world’s largest energy-consuming country. “We’re not seeing anything to suggest demand is recovering, so there’s nothing on the fundamental side that would suggest prices would be this high,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. Oil’s inability to break through technical resistance at $75 a barrel is also pressuring the market, he said. U.S. total daily fuel use averaged 19.2 million barrels in the past four weeks, down 0.9 percent from a year earlier, the Energy Department said. U.S. travel during the Labor Day weekend will decline 13 percent from last year because the holiday falls later than usual, AAA said yesterday.

- TomTom NV and Garmin Ltd., the largest makers of car-navigation devices, expect a rebound next year after the industry’s first-ever contraction in 2009. “In the summer period, we’ve seen quite a good development in demand,” TomTom Chief Executive Officer Harold Goddijn said in an interview at his Amsterdam office. “We’re becoming more optimistic.”

- Boeing Co.(BA) jumped the most since December in New York trading after saying it still expects the 787 Dreamliner program to be profitable following a $2.5 billion third-quarter charge for the delayed plane. Boeing rose $4.28, or 9 percent, to $52.10 at 12:46 p.m. in New York Stock Exchange composite trading. The shares earlier rose as much as 9.5 percent, the biggest intraday percentage gain since Dec. 8.

- The following table ranks companies listed in the S&P 500 Index that have more than 10 percent of their shares available for trading sold short by investors as of the Aug. 14 settlement date.

- Spending on items that US consumers can do without or put off buying has slumped so badly that it’s bound to bounce back, according to Tobias Levovich, Citigroup’s(C) chief US equity strategist. Discretionary goods and services accounted for a smaller percentage of consumer outlays last quarter than at any other time since 1959. The proportion dropped about .3 percentage point, the sixth decline in seven quarters, to 15.6%. Consumer behavior is likely to revert to “the ‘Old’ Normal” – spending more closely tied to income, rather than borrowing – that prevailed during the 1950s through the 1970s, Levkovich wrote. “Some reasonable bounce is to be expected” in discretionary spending as that occurs, the report said.

Wall Street Journal:

- The debate over how to curb carbon-dioxide emissions and other gases linked to global climate change is splitting some prominent political families in both parties. Interior Secretary Ken Salazar is one of the Obama administration's leading advocates of strong action on climate change. His older brother John, a Democratic congressman from Colorado, voted with many House Republicans against a bill to cap U.S. greenhouse-gas emissions. John Salazar said the House climate bill would be "unfair" to Colorado and lead to "dramatically" higher electricity bills for his constituents.

- The War on Terror is Over.

- A U.S. service member died Thursday in a militant attack involving a roadside bomb and gunfire, a death that pushed August into a tie with July as the deadliest months of the eight-year war. The death brings to 44 the number of U.S. troops who have died in Afghanistan this month. But with four days left in the month, August could set a new record.

- Obama Targets Medicare Advantage. Seniors would lose with health 'reform,' and seniors vote.

CNBC:

- JP Morgan Chase(JPM) is lending a hand to the nation's worst credit risk. California State Treasurer Bill Lockyer announced that the banking giant is lending the state $1.5 billion to help it pay off IOUs. The terms are very favorable to California, as the loan carries a 3 percent annual interest rate, lower than the 3.75 percent rate the state is paying on the IOUs.

- Despite a seemingly endless flow of US government debt into the markets, foreign investors continue to gobble up Treasurys and keep yields relatively low.

NY Times:

- In an alliance that signals potential new directions in consumer electronics marketing, Sony and Best Buy(BBY) have unveiled a range of audio products — including iPod speaker docks and a Blu-ray theater system — that are the result of two years’ collaboration. With the new line, called Altus, “we’re breaking new ground in the consumer electronics industry,” said Mike Fasulo, Sony’s chief marketing officer, in a statement. The gear will be sold through Sony’s online store, at Best Buy locations and elsewhere..

MarketWatch:
- Microsoft Corp.(MSFT) has cut the price of its top-end Xbox 360 gaming console by $100, matching a similar move by arch-rival Sony Corp. just last week.

- Banks in the 16-nation euro zone did little to boost lending in July, despite the provision of massive amounts of liquidity by the European Central Bank, according to data released Thursday. The Frankfurt-based ECB said M3 money supply grew at an annual rate of just 3%, down from 3.6% in June and marking the 15th straight month of slowing growth. Annual private-sector lending growth slowed to a record low of 0.6% from 1.5% in June, the ECB said.

NY Post:

- Hedge-fund hotshot John Paulson has been quietly snapping up shares of beleaguered Citigroup(C) in recent weeks, sources tell The Post. Paulson was said to have acquired a roughly 2 percent stake in Citi -- below the 5 percent threshold that would require him to disclose his investment stake in a securities filing, according to one source. Although it's unclear what the hedge-fund master's rationale is for buying shares of the nation's most troubled bank, of which Uncle Sam holds a 34 percent stake, sources think that Paulson believes Citi's assets are undervalued.

- Blackstone(BX) boss Steve Schwarzman has quietly moved to the head of the class when it comes to the lucrative business of compiling and managing hedge-fund portfolios for investors. As rivals like HSBC and Man Investments suffered double-digit drops in their respective units through the end of June, Blackstone's grew 25 percent to $25 billion, according to London-based research group Hedge Fund Journal. That pushes the New York firm -- known primarily for its private-equity investments -- to the unexpected position of top dog when it comes to the profitable dealings in hedge fund portfolios, also known as funds of hedge funds. In the process, Blackstone has rolled over former kingpins. HSBC's assets dropped nearly 52 percent to $22.2 billion, while Man's assets fell more than 46 percent to $23 billion. Switzerland's Union Bancaire Privée's dough declined almost 28 percent to $23.8 billion. In all, an eye-popping $200 billion has been pulled from the top 50 players since last September, the report said. The only firm ahead of Blackstone is UBS, with $31.4 billion, according to the report.

LA Times:

- While Californians are still feeling the sting of income and sales tax hikes signed into law earlier this year, now comes news that state tax authorities plan to take a little more from their pockets. For only the second time in 30 years, the tax board is lowering the point where each tax bracket begins, bumping many people into a higher category. At the same time, officials are cutting back some deductions. Everyone will pay more, even people whose bracket or income doesn't change. The extra sums will total as much as $140 per family, on top of the increases previously enacted.

- Scammers from Eastern Europe typically install malware and pull money out in increments, a financial industry group says. One Texas firm lost $1.2 million, and a school district had $700,000 stolen. Organized cyber-gangs in Eastern Europe are increasingly preying on small and mid-size companies in the United States, setting off a multimillion-dollar online crime wave that has begun to worry the nation's largest financial institutions. A task force representing the financial industry sent out an alert last week outlining the problem and urging its members to implement many of the precautions now used to detect consumer bank and credit card fraud.

paidContent.org:

- Trying to find a way to bring more ad dollars to its AdSense members amid slowing revenue growth, Google (GOOG) is opening up its system to ad networks for the first time. In a letter sent around to members tonight, Google told members they’ll soon be able to allow multiple ad nets access to their pages. The access won’t be open-ended, however, as Google will select the networks that can participate.

Rassmussen:

- Forty-nine percent (49%) of U.S. voters disagree with the Justice Department’s decision to investigate the treatment and possible torture of terrorists during the Bush administration, according to a new Rasmussen Reports national telephone survey. Thirty-six percent (36%) agree with Attorney General Eric Holder’s naming of a veteran prosecutor to probe the CIA’s handling of terrorists under the previous administration. Fifteen percent (15%) are undecided.

Politico:

- Sen. John McCain (R-Ariz.) said Wednesday night that the raucous town hall crowds opposing the Democratic push for a health care overhaul are proof that the beginnings of a “revolution” are bubbling up. McCain told Fox News’s Sean Hannity during an interview that he has “never” seen anything like the “peaceful revolution taking place” in opposition to President Barack Obama’s push for health care reform. “There is a grass-roots uprising the likes of which I have never seen,” he said. “There’s anger; there’s concern about the future. There’s concern about the generational theft that we’ve committed by running up unconscionable and unsustainable deficits.”

The Business Insider:

- We've called General Electric(GE) "a great bet on big government," as it has monster lobbying clout, and it's both blue collar and high tech at the same time. If there was any doubt that GE is a great bet on government, it should be washed away with today's story in the D.C. Examiner by Tim Carney, who gives us more evidence to support the theory. Carney highlights a leaked email from GE’s vice chairman bragging about how the company shapes government policy to its benefit:

Miami Herald:

- A Goldman Sachs(GS) analyst on Thursday upgraded his sector rating for midsized brokerages, saying an expected resurgence of corporate mergers and acquisitions as well as initial public offerings should lift the firms.

USA Today:

- The federal government sent about 3,900 economic stimulus payments of $250 each this spring to people who were in no position to use the money to help stimulate the economy: prison inmates.

- More than two dozen firms that have surfaced in a broad corruption investigation of public pension funds gave at least $1.97 million in campaign contributions to officials with potential influence over the funds' investments, a USA TODAY analysis shows. The givers included private-equity giants such as the Blackstone Group, the Carlyle Group and the Quadrangle Group, the firm founded by Steven Rattner, who in July resigned as the White House point man for the auto industry rescue. The contributions are legal, and the firms haven't been accused of wrongdoing related to the giving.

Reuters:
- The U.S. economy appears to have stabilized and may not need all the stimulus the central bank had planned to offer, Richmond Federal Reserve Bank President Jeffrey Lacker said on Thursday. "The economy appears to have leveled out and I believe we can look forward to better times ahead," Lacker told a business group.

- Bank of China, the country's biggest foreign-exchange lender, expects to scale back lending in the coming months as Beijing moves to stem a break-neck increase in liquidity fuelled by a massive economic stimulus program. Bank of China President Li Lihui said the pace of lending was likely to be slowed in the second half of the year "by a relatively big amount," after a surge in loans helped second-quarter earnings beat analysts' forecasts.

- AIG to Hank: All is forgiven, we need your help! That is the message from Robert Benmosche, the new CEO of American International Group Inc (AIG), to Maurice "Hank" Greenberg -- the man who built the company into what was the largest insurer in the world but was then ousted, and has since been embroiled with the company in a bitter legal struggle.

- Ford Motor Co(F) said on Thursday it is adding shifts at its truck plants in Michigan and Missouri in response to increased demand for its F-150 pickup trucks and Escape SUVs. Ford's Dearborn, Michigan, truck plant will return to a three-shift operation in September from two shifts, a move that will boost production of F-150 pickup trucks by about 10,000 this year, the company said. Ford is also adding a third shift at its Kansas City assembly plant in Missouri in October, which will increase production of Ford Escape and Mercury Mariner SUVs by 2,400 by the end of October.

- Second-largest U.S. cable operator Time Warner Cable Inc and Verizon Communications Inc said on Thursday they have joined a trial with major media companies to offer television shows on the Web to paying subscribers. Networks participating in Time Warner Cable's 'TV Everywhere' trial include General Electric Co's NBC Universal-owned Syfy channel, Time Warner Inc's TNT, HBO and TBS; Cablevision Systems Corp's AMC, IFC and Sundance Channel and BBC America. Other companies involved in the trial are CBS Corp and Discovery Communications Inc.

- Vital signs for healthcare stocks are improving at the expense of what is shaping up to be a watered down government health reform initiative. But the sector, which is heavily weighted to U.S. healthcare companies, is still struggling to regain its footing with more investor cash leaving the group than is coming in while the reform debate rages across the United States. Data show investors have pulled nearly $2 billion, or roughly 10 percent, out of funds investing only in healthcare stocks year-to-date, even as the benchmark S&P500 index has recovered 50 percent from 12 year lows seen in March this year. "When you look at year-to-date performance healthcare has really been passed over by the rest of the market... This certainly catches your attention especially in such a bullish market," said Jeff Tjornehoj, U.S. and Canada research manager at Lipper Inc.

Ottawa Citizen:

- Canadian doctors probing the worst cases of swine flu in Canada have made a striking finding: 40-year-olds, many previously healthy, appear most at risk of developing severe H1N1 disease. The finding is based on global reports of illness and case reports from critically ill patients in intensive care units across the country. The investigation confirms the virus behind the first flu pandemic of the 21st century does not fit the typical patterns of influenza. Significant, doctors say, is its ability to cause serious disease in previously healthy people.

Calgary Sun:

- Alberta health-care workers will be offered voluntary early retirement as part of a plan to attack a $1.3-billion budget deficit, Alberta Health Services (AHS) president Stephen Duckett announced yesterday. That's a key part of a two-phase plan that will see $965 million trimmed from the $10.9-billion AHS budget while still improving health care, Duckett told a news conference. "We've got a huge task ahead of us," said Duckett. "About 70% of our spending is on salaries. We've actually got to trend that down. "Our current spending is not sustainable," he said. "In order to meet our access and quality improvement targets over the next three years, including the reduction of wait times in emergency departments and for some high-demand surgeries, we must control our costs and reduce spending elsewhere in the health system." The health boss said $650 million in cuts are now underway or will be implemented in two months, while $315 million in savings will come from Phase 2 of the exercise. Liberal Opposition health-care critic MLA Kevin Taft said he was "deeply sceptical" the cuts could be achieved while still improving service. "If it walks like a duck and talks like a duck, it's a duck," said Taft. "It's likely to become more difficult to get the care you need." Friends of Medicare executive director David Eggen didn't buy it either. "Reducing health-care workers is reducing health care," said Eggen." The double talk is astounding that you'd reduce your work force and wind up with better care."

Bear Radar

Style Underperformer:
Small-Cap Value (-.44%)

Sector Underperformers:
Airlines (-1.64%), Coal (-1.44%) and Homebuilders (-1.04%)

Stocks Falling on Unusual Volume:
DEO, ANW, SIGM, ITWO, CONN, ENER, STAR, GFA, DY and DOM

Stocks With Unusual Put Option Activity:
1) ARNA 2) WFT 3) WYE 4) MEE 5) AMD

Bull Radar

Style Outperformer:
Large-Cap Value (-.88%)

Sector Outperformers:
Defense (+1.04%), Education (+.83%) and Disk Drives (+.72%)

Stocks Rising on Unusual Volume:
AIG, STX, PCP, IRE, BA, WL, CLNE, ISLE, STX, LEAP, JAS, GES, RY, RTI, PCP, BA, OSK, GCO and OLN

Stocks With Unusual Call Option Activity:
1) AET 2) VMW 3) OSK 4) STX 5) DRI

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Thursday Watch

Late-Night Headlines
Bloomberg:

- The Federal Reserve asked a judge to delay enforcement of her decision requiring the central bank to identify companies in its emergency lending programs. Chief U.S. District Judge Loretta Preska in Manhattan said on Aug. 24 that the Fed had until Aug. 31 to disclose daily reports on borrowing by banks and other financial institutions. The central bank wants Preska to stay her order, made in a Freedom of Information Act lawsuit, until the U.S. Court of Appeals in New York can act on an appeal that the Fed said it intends to file. The Fed and U.S. banks would suffer irreparable harm if details of the loan programs were made public, according to the central bank’s senior counsel, Yvonne Mizusawa. The Fed has refused to name the financial firms it lent to or disclose the amounts or the assets put up as collateral under 11 programs, saying that doing so might set off a run by depositors and unsettle shareholders. Bloomberg LP, the New York-based company that’s majority- owned by Mayor Michael Bloomberg, sued on Nov. 7 on behalf of its Bloomberg News unit. Bloomberg News opposes the Fed’s request for a stay.

- A federal court rejected an attempt by two Ohio residents to use the so-called TurboTax defense that Timothy Geithner relied on to help win Senate confirmation as U.S. Treasury Secretary. The U.S. Tax Court in Washington rejected an appeal of accuracy-based penalties assessed by the Internal Revenue Service on Kenneth and Linda Hopson, who claimed they relied on tax-return preparation software that failed to detect income they had omitted from their 2006 federal tax returns. “Petitioners were not permitted to bury their heads in the sand and ignore their obligation to ensure that their tax return accurately reflected their income,” the court said in an opinion issued yesterday. “In the end, reliance on tax return preparation software does not excuse petitioners’ failure to review their 2006 tax return.” Geithner, who now oversees the IRS, testified during his confirmation hearing in January that he prepared his own returns when he worked at the International Monetary Fund in 2001 and 2002, using TurboTax, an Intuit Inc. product. He said his failure to pay taxes owed on some income during those years was not flagged by the software.

- President Barack Obama will create a federal task force to oversee restoration of the Louisiana and Mississippi coastlines, replacing the U.S. Army Corps of Engineers as the agency in charge. The move will overhaul decades of federal management of the Gulf Coast by the Corps, which has been criticized by lawmakers and New Orleans residents for building levees that couldn’t withstand the force of Hurricane Katrina four years ago. The new interagency effort will be led by the Obama administration’s budget and environmental offices, said Nancy Sutley, head of the White House Council on Environmental Quality, in an interview today.

- SAP AG(SAP), the world’s biggest maker of business-management software, must pay $138.6 million to Versata Software Inc. for violating its patents, a federal jury decided.

- TiVo Inc.(TIVO), the pioneer in digital video recording services, sued Verizon Communications Inc. and AT&T Inc. claiming infringement of patents used in their DVR systems.

- China’s banking regulators are “tweaking” lending policies to remove “froth” from the system while growth remains the top priority for policymakers, according to the Royal Bank of Scotland Group Plc. The goal is to manager risk exposure among banks and asset quality by checking lending from going into A-shares traded on the mainland and properties, Wendy Liu, Hong Kong-based head of China research at RBS ABN Amro, said in a report. China plans to tighten capital requirements for banks, threatening to curb the record lending that’s fueled a rally in the stock market this year, three people familiar with the matter said.

Wall Street Journal:

- A prominent fund-raiser for President Barack Obama, Hillary Rodham Clinton and other top Democrats left jail Wednesday for his $20 million New York City apartment, where he will remain under house arrest. Investment banker Hassan Nemazee, 59, left U.S. District Court in Manhattan shortly after noon. He spent one night at the Metropolitan Correctional Center next to the courthouse after his Tuesday arrest on a bank fraud charge.

- A statewide corruption investigation that has entangled dozens of New Jersey politicians had its origins a decade ago inside a dingy trailer office in Monmouth County, where federal agents overheard talk about bribes to local officials, some involving real-estate deals. The wiretaps of phones in the trailer eventually led to the arrests and convictions of a half-dozen public officials and sparked two other probes that have since ensnared nearly 80 politicians, fixers, businessmen and others. The key figure in last month's dramatic arrests of 44 people, real-estate developer Solomon Dwek, first came to investigators' attention through his connections with officials ultimately convicted in Monmouth County, according to a person in law enforcement familiar with the case.

- Tax deadbeats are finding someone actually reads their MySpace and Facebook postings: the taxman. State revenue agents have begun nabbing scofflaws by mining information posted on social-networking Web sites, from relocation announcements to professional profiles to financial boasts. In Minnesota, authorities were able to levy back taxes on the wages of a long-sought tax evader after he announced on MySpace that he would be returning to his home town to work as a real-estate broker and gave his employer's name.

- The Obama administration's pay czar is expected to formally approve the $10.5 million pay package for American International Group Inc.'s new chief executive as early as next week, according to people familiar with the matter. AIG had received "approval in principle" from Kenneth Feinberg, the Treasury Department's special master for compensation, to pay AIG CEO Robert Benmosche an annual salary of $7 million and as much as $3.5 million in incentive pay. But Mr. Benmosche wanted formal written assurance that his pay would be honored and had been pushing for a speedy sign-off on his compensation. Mr. Feinberg is expected to approve Mr. Benmosche's pay ahead of making any other rulings about pay at AIG or any of the other companies under his purview. Mr. Feinberg is reviewing compensation packages for the top 25 highest-paid employees at AIG and six other firms receiving significant amounts of government aid. Earlier this month, a person close to Mr. Benmosche said the CEO was "ready to walk" if the pay issue wasn't resolved. Mr. Benmosche, a former CEO of insurer MetLife Inc., was pressing for a quick resolution in large part to energize AIG employees and show them that AIG employees could be well-compensated, according to people familiar with the matter. A furor earlier this year over bonus payments made to some AIG employees demoralized some employees and prompted some to quit.

- Apple Inc.(AAPL) is getting closer to clearing the hurdles to start selling iPhones in China, one of the last major phone markets Apple has yet to tap. The release of the iPhone in China could turbocharge overseas growth for what is already Apple's fastest-growing product. China is the world's largest mobile market by subscribers, with some 687 million subscribers. That compares with more than 270 million subscribers in the U.S. Toni Sacconaghi, an analyst with Sanford C. Bernstein & Co., calculates Apple can sell 2.9 million iPhones in China by the end of 2011. "Ultimately, it will probably be the fastest-growing overseas market," he said. Apple's iPhone, which launched two years ago, has so far sold more than 26 million units world-wide in more than 80 countries, but the majority of its sales have come from the U.S. According to research firm IDC, only 7% of total iPhone sales in the second quarter, ended in June, came from the Asia Pacific, where it is sold in countries like Australia, Hong Kong and India, compared with 49% from the U.S. and 25% from Western Europe. Apple must still complete negotiations with state-owned wireless operator China Unicom (Hong Kong) Ltd., which is expected to carry the iPhone, but analysts say those talks are nearing conclusion. Beijing-based research firm BDA China Ltd. said in a report this month that the iPhone is "now finally set to make its official debut in China in October," citing interviews with companies including Unicom. Competing products are already in the works in China, adding urgency to the iPhone's launch. China Mobile Ltd., the country's largest carrier by subscribers, plans to start selling smart phones with similar functions to the iPhone this year based on Google Inc.'s Android operating system. On Monday, Taiwanese phone maker HTC Corp. announced it plans to launch seven third-generation phones, including at least one Android phone, with China Mobile by next year.

- One of the biggest players in the hot area of high-frequency trading is one of the least known. Getco LLC, a private company with fewer than 250 employees, often accounts for 10% to 20% of the daily trading volume of many U.S. stocks, the company has said, including highly traded names such as General Electric Co., Oracle Corp. and Google Inc. Since its founding a decade ago, the firm has risen to become one of the five biggest traders measured by volume in stocks and other instruments that trade electronically on exchanges, such as Treasury bonds and currency futures, according to the firm and other people in the industry. "They are probably the biggest market maker in the U.S. stock market," said Justin Schack, a vice president at Rosenblatt Securities Inc. who closely tracks high-frequency trading. The Securities and Exchange Commission has increased its scrutiny of high-frequency trading, even as exchanges rush to attract the high volumes the trading firms bring. In turn, Getco has increased its contact with the SEC and others as it seeks to influence policy decisions on matters such as rules governing options markets. One day last October, Getco juggled about two billion shares, representing more than 10% of the volume in U.S. equities, according to a person familiar with the firm. All this has been profitable for Getco, which earned about $400 million in 2008, trading mostly with its own money, people familiar with its finances say. Getco depends on the success of its proprietary complex algorithms to help it make money on the transactions more often than not. It also can pick up tiny rebates that some exchanges offer to firms willing to take the other side of trading orders.

CNBC.com:
- Northern Trust(NTRS) said on Wednesday it repurchased warrants issued to the U.S. Treasury for $87 million, becoming the latest bank to free itself from the government bailout program.

NY Times:

- For solar shoppers these days, the price is right. Panel prices have fallen about 40 percent since the middle of last year, driven down partly by an increase in the supply of a crucial ingredient for panels, according to analysts at the investment bank Piper Jaffray.

IBD:

- Sourcefire (FIRE) has become the new darling of Wall Street — and the U.S. government. During its second-quarter conference call July 30, Sourcefire said sales of its cybersecurity software to the feds jumped 233% over the prior year to $6.9 million. And there should be more where that came from, says CEO John Burris.

Forbes:

- Google(GOOG) hasn't yet finished previewing its new Wave collaboration tool, let alone given consumers full-blown access to it. But on Wednesday, Lars Rasmussen--one of the principle engineers behind Wave--hinted at how Google might monetize the tool.

Politico:

- “Let’s win one for Teddy” became the new health care reform rallying cry Wednesday, as Democrats hoped an emotional outpouring over Sen. Ted Kennedy’s death would give reform efforts a badly needed boost. But the political reality is more stark – as insiders predict the impact of Kennedy’s death is likely to be felt most in the legislative math. Democrats no longer have the 60 votes they need to pass a reform bill. And without the 60-vote margin, Democrats are hard-pressed to move legislation without picking up at least one Republican, diminishing their power to negotiate a bill that includes the coverage-for-all that Kennedy long championed. Even before Kennedy’s death, Democrats would have had a hard time wrestling their 60 members together to pass reform, which is why Senate Democratic leadership has toyed with the idea of passing chunks of the reform measures by using a procedural move that only requires 51 votes. It’s an idea that’s likely to get more attention now.

Rasmussen:

- For the second straight week, just one-third (34%) of likely voters believe the United States is heading in the right direction, according to the latest Rasmussen Reports national telephone survey.

gdgt:

- You know I like to keep my ear close to the ground when it comes to new gadgets, and I just got the scoop via a very reliable source about a new portable digital TV that Qualcomm(QCOM) is going to be introducing soon. Called the FLO TV Personal Television, or PTV, this thing will be an iPhone-sized device for tuning into broadcasts on Qualcomm's FLO TV terrestrial digital TV service.

USA Today.com:

- The USA TODAY/IHS Global Insight economic outlook index predicts GDP growth starting in September, the first increase since July 2008. Helping fuel the growth was improvement in financial indicators, such as the stock market, and increases in non-capital goods orders and light-vehicle sales. The rate of decline in the number of hours worked continued to stabilize. Seven of the eleven leading indicators in the Economic Outlook Index were positive contributors in August: hours worked, building permits, real non-defense capital goods orders, stock prices, ISM export orders, light-vehicle sales and the corporate bond spread. Four indicators had a negative effect on the index, including the money supply, crude oil prices, the real federal funds rate and the interest rate yield curve.

Reuters:

- Medco Health Solutions Inc (MHS) is seen as the lead bidder for Aetna Inc's pharmacy benefit manager in an auction that has drawn scant interest, sources familiar with the situation said on Wednesday. Aetna (AET) hired Bank of America Corp (BAC) and Credit Suisse Group AG to run the sale of the business, sources previously told Reuters.

- Massachusetts' top securities regulator said on Wednesday his office is demanding information from Goldman Sachs Group Inc (GS) on how the investment bank passes on analysts' short-term trading tips to top clients. William Galvin, Massachusetts' Secretary of State, said the subpoenas were sent recently and that Goldman has until around Sept. 7 to respond. "We thought we solved this problem with the preferred customers years ago when we settled with Goldman Sachs on Wall Street research, but now we don't know," Galvin said.

- Jo-Ann Stores Inc (JAS) posted a narrower-than-expected quarterly loss as cost cuts boosted margins and improved merchandise attracted shoppers to its stores, and raised its outlook for the year, sending its shares up 8 percent. The fabric and crafts retailer also said it expects the improvement in gross margins to continue in the third quarter.

Financial Times:

- Toyota(TM) is poised to slash production by as much as 580,000 vehicles – nearly 6 per cent of global capacity – in an effort to stem losses amid the sharp downturn in vehicle sales. The world’s largest carmaker, which is forecasting its second consecutive net loss this year, said it would shut a production line in western Japan from next spring through to the second half of 2011, reducing output by 220,000 vehicles. The Japanese company is also looking to pull out of Nummi, its manufacturing joint venture with General Motors in California, where it produced 359,000 vehicles last year.

- Two energy traders have been charged with breaking United Nations sanctions against Saddam Hussein’s Iraq in the long-awaited first prosecutions of individuals over the so-called “oil-for-food” scandal. Aftab al-Hassan, a businessman based in London, is due to appear in court on Thursday to face allegations he funneled about $1.6m of payments into Middle Eastern accounts controlled by Iraq’s state oil marketing body. The case – along with a similar prosecution launched this month against another man, Riad el-Taher – is one of the first public signs of movement in an epic Serious Fraud Office probe that has pulled in several leading multinational companies. The SFO declined to give further details about either case. The SFO launched its Iraq investigation after a committee headed by Paul Volcker, a former US Federal Reserve chairman, alleged in 2005 that more than 2,000 companies were involved in paying $1.8bn of illicit surcharges and kickbacks around a UN program set up to allow the sanctions-hit country to exchange its oil for food.

- The head of Britain’s City watchdog supports the idea of new global taxes on financial transactions, warning that a “swollen” financial sector paying excessive salaries has grown too big for society. Adair Turner, chairman of the Financial Services Authority, says the debate on bankers’ bonuses has become a “populist diversion” and that more drastic measures may be needed to cut the financial sector down to size. He also says the FSA should “be very, very wary of seeing the competitiveness of London as a major aim”, claiming the City has become a destabilising factor in the British economy. His comments, floated in an interview in Prospect magazine published on Thursday, may be read in other financial centres, including New York, as a sign that Britain is becoming increasingly sceptical about the perceived advantages of being a leading financial centre. Lord Turner’s suggestion that a “Tobin tax” – named after the economist James Tobin – should be considered for financial transactions is also likely to reverberate around the world. The proposed tax, which has previously been championed by development economists and the French government as a means of funding the developing world, has been fiercely opposed by the finance industry. “If you want to stop excessive pay in a swollen financial sector you have to reduce the size of that sector or apply special taxes to its pre-remuneration profit,” he says. Lord Turner says higher capital requirements will be the FSA’s main tool to eliminate excessive activity and profit, but that a tax on transactions on a global level may be an additional option. The FSA chairman also claims that parts of the financial services sector had grown “beyond a socially reasonable size”, including derivatives and hedging and aspects of the asset management industry and equity trading.

- Half of the planned assistance pledged by the US to Pakistan is likely to be wastefully spent on administrative costs, Islamabad’s most senior finance official has said. Shaukat Tarin, Pakistan’s finance minister, has urged the US to channel its assistance through Pakistani agencies instead to save on high intermediation costs incurred by US counterparts. Pakistan has become one of the largest recipients of US aid as Washington seeks to help stabilise the country threatened by a Taliban insurgency. US President Barack Obama plans to raise economic assistance to about $1.5bn a year, or $7.5bn over the next five years. “Whatever aid [the US is] giving must have full impact on the ground which is why they should route as much of this aid through our agencies than their own agencies,” Mr Tarin said in an interview with the Financial Times. “Frankly, we only receive almost 50-55 per cent of the aid, 40-45 per cent becomes expenses [because of intermediation costs by the US].” Mr Tarin added that Pakistan would resist any linkage of financial assistance to the country’s nuclear programme or confidence-building measures with arch-rival India. he said aid would be “unacceptable” if it was tied to greater monitoring of the country’s nuclear arsenal. US aid is intended to win public goodwill across Pakistan where anti-Americanism is widespread. US administrations have in the past been viewed as generous with military support, but stinting on civilian partnership.

- General Motors and Chrysler sales under the US “cash-for-clunkers” car scrappage incentives fell well below the two Detroit carmakers’ recent market shares, according to the government’s final summary of the scheme, which ended earlier this week. Underscoring the challenges facing the two companies in the wake of their recent bankruptcy restructurings, the transportation department said that GM models made up 17.6 per cent of the 690,100 vehicles sold under the scheme, while Chrysler accounted for 6.6 per cent of sales. By contrast, GM’s market share in the first seven months of 2009 was 19.6 per cent, and Chrysler’s 9.6 per cent, according to Autodata, a market-research company. Toyota was the biggest beneficiary of the subsidies, with a 19.4 per cent market share. Chrysler ended in seventh place behind Nissan and South Korea’s Hyundai. Erich Merkle, an analyst who runs the autoconomy.com website, said that “regardless of the cash-for-clunkers programme, Chrysler was going to lose market share and will continue to lose market share”. GM and Chrysler offer relatively few of the small models that were most in demand among cash-for-clunkers buyers. Jeremy Anwyl, chief executive of Edmunds.com, an online car-pricing service, said that “cash-for-clunkers distorted the market in a way that benefited the industry for four weeks. Now the payback begins”. Edmunds estimates that, based on visits to its websites, “purchase intent” is down 11 per cent from the average in June, before the cash-for-clunkers programme began. A sizeable number of “cash-for-clunkers” participants already have buyers’ remorse as they contemplate hefty payments on their new car loans, according to CNW, an Oregon-based market research company. Those payments “could negatively impact the total family budget more than expected prior to buying the new vehicle”, CNW reported.

TimesOnline:

- GM Europe, the owner of Vauxhall and Opel, has sought professional insolvency advice to prepare for the possibility that it may not attract a firm buyer in time to rescue the carmaker, The Times has learnt. Vauxhall executives believe that if a firm offer for GM Europe is not made within days, the carmaker faces three scenarios, one of them bankruptcy. There are also doubts over whether the White House would sanction General Motors (GM) keeping its European business, because such a move could flout the spirit of a US taxpayer bailout agreement in February.

Sydney Morning Herald:

- REAL damage is being done to the political capital of the charismatic American President, and the latest damage is being caused by the fraught moral issue of torture. While Barack Obama remains personally popular, his approval rating with the public is tipping rapidly towards negative territory for the first time since he swept into office on a wave of euphoria 10 months ago. Until a few months ago the President enjoyed a two-to-one approval rating, but that is eroding rapidly. The latest blow came on Monday when the US Attorney-General, Eric Holder, announced that a special prosecutor had been appointed to investigate the interrogation methods used by agents or contractors working for the Central Intelligence Agency in Iraq and Afghanistan during the previous Bush administration. The special prosecutor, John Durham, a senior Justice Department lawyer, will respond to a recommendation by the Justice Department's ethics watchdog that prosecution be considered for CIA employees or contractors who exceeded the guidelines of the US Army's field manual, which preclude torture. The decision has also opened a wound, and an issue the American public believed had already been investigated. Even Obama's director of the CIA, Leon Panetta, has expressed unease about the process. Obama's problem is that he is closely linked to his suddenly politically hot Attorney-General. They are friends, and Holder was the President's personal choice for the job. Both are the first African-Americans to hold their respective posts. Obama's reputation is thus linked to Holder, who is now in the eye of a domestic political storm. The President himself has said it was time to look forward and improve the CIA's performance, rather than engage in litigation that could damage the capabilities of the intelligence community. That is exactly the prospect now in store, and the American public has a right to be concerned.

Late Buy/Sell Recommendations
Citigroup:

- Rated (BBBY) Buy, target $44.

- Rated (WSM) Buy, target $21.

CSFB:

- Upgraded (AMG) to Outperform, target $69.

Night Trading
Asian Indices are -.75% to +.25% on average.

Asia Ex-Japan Inv Grade CDS Index 133.0 -.5 basis points.
S&P 500 futures -.26%.
NASDAQ 100 futures -.27%.

Morning Preview

BNO Breaking Global News of Note

Google Top Stories

Bloomberg Breaking News

Yahoo Most Popular Biz Stories

MarketWatch News Viewer

Asian Financial News

European Financial News

Latin American Financial News

MarketWatch Pre-market Commentary

U.S. Equity Preview

TradeTheNews Morning Report

Briefing.com In Play

SeekingAlpha Market Currents

Briefing.com Bond Ticker

US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Stock Quote/Chart
WSJ Intl Markets Performance
Commodity Futures
IBD New America
Economic Preview/Calendar
Earnings Calendar

Conference Calendar

Who’s Speaking?
Upgrades/Downgrades

Politico Headlines
Rasmussen Reports Polling

Earnings of Note
Company/EPS Estimate
- (TOL)/-1.27

- (ENER)/-.07

- (FRED)/.13

- (AEO)/.14

- (DELL)/.22

- (NOVL)/.07

- (MCRS)/.32

- (JCG)/.16

- (OVTI)/-.12

- (ARUN)/.02

Economic Releases

8:30 am EST

- Preliminary 2Q GDP is estimated at -1.5% versus a prior estimate of -1.0%.

- Preliminary 2Q Personal Consumption is estimated at -1.3% versus a prior estimate of -1.2%.

- Preliminary 2Q GDP Price Index is estimated at .2% versus a prior estimate of a .2%.

- Preliminary 2Q Core PCE is estimated at 2.0% versus a prior estimate of 2.0%.

- Initial Jobless Claims for last week are estimated to fall to 565K versus 576K the prior week.

- Continuing Claims are estimated to rise to 6242K versus 6241K prior.

Upcoming Splits
- None of note

Other Potential Market Movers
- The Fed’s Lacker speaking, Fed’s Bullard speaking, (ATPG) analyst breakfast, $28 bln 7-year Treasury Note Auction, (MDT) annual meeting and the weekly EIA natural gas inventory report could also impact trading today.

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