Bull Radar

Style Outperformer:
Small-cap Value (+2.41%)

Sector Outperformers:
Alt Energy (+4.62%), Hospitals (+4.42%) and Gaming (+3.50%)

Stocks Rising on Unusual Volume:
VIP, ORCL, CHA, DB, SNP, AVAV, CTCM, MYRG, CHDX, CRMT, RBCN, PETM, AAUK, SHPGY, HMIN, RYAAY, HIBB, APOG, PALM, CSIQ, STEC, UEIC, ELS and GNI

Stocks With Unusual Call Option Activity:
1) WYN 2) TSM 3) ESI 4) AMT 5) ZMH

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Wednesday Watch

Late-Night Headlines
Bloomberg:

- General Motors Corp., seeking to become a more nimble automaker when it emerges from bankruptcy, plans to eliminate about 4,000 U.S. salaried jobs by Oct. 1. The company began notifying U.S. salaried workers today that it will offer retirement and buyout incentives, Tom Wilkinson, a GM spokesman, said in an interview. If the company doesn’t receive enough volunteers by early August, it will make involuntary cuts, he said.

- China may begin a “crackdown” on speculation in domestic commodity markets after suggestions that companies are stockpiling raw materials beyond their needs in the hope of selling them later at higher prices, UBS AG said. The premium on Shanghai copper prices, adjusted for local tax, over London Metal Exchange rates disappeared after rising to a record in April. At the same time, stockpiles rose to an almost two-year high, suggesting the State Reserve Bureau is selling or lending metal to curb prices. “We have heard anecdotal evidence that Chinese companies with no need or use for copper have bought and stockpiled the metal,” John Reade, UBS’s chief metals strategist in London, wrote in a note. “The actions of the SRB in copper, if true, could represent the first signs of a government crackdown on physical commodity speculation.”

- Oracle Corp.(ORCL), the world’s second- largest software maker, reported fourth-quarter profit that topped analysts’ estimates after customers renewed contracts for product updates and support. Oracle climbed 63 cents, or 3.2 percent, to $20.50 in late trading. The stock, up 12 percent this year, closed at $19.87 today on the Nasdaq Stock Market.

- Bjorn Moller, chief executive officer of shipowner Teekay Corp., expects rates to transport oil to be weak until the Organization of Petroleum Exporting Countries, which pumps about 40 percent of the world’s crude, increases output as the recession eases. “2009 is going to be tough,” Moller, 51, said in an interview in New York today. “We’ve had a significant event, with OPEC cutting 7 or 8 percent of seaborne oil.” Shipping rates have tumbled as the recession cut global demand for crude and oil-based fuels. Rates for the benchmark Persian Gulf-to-Japan supertanker route have fallen 76 percent in the past year, according to the London-based Baltic Exchange.

- Crude oil dropped more than 1 percent after an industry report showed an increase in gasoline inventories and a small drop in crude stockpiles. Gasoline supplies increased by 3.7 million barrels last week, the industry-funded American Petroleum Institute said today.

- Japan’s export slump deepened in May, casting doubt on the nation’s growth prospects as the economy struggles to emerge from its worst postwar recession. Shipments abroad dropped 40.9 percent from a year earlier, more than April’s 39.1 percent decline, the Finance Ministry said today in Tokyo.

Wall Street Journal:

- Next week, Iraqi officials plan a welcome-back party for Big Oil. The government intends to auction off oil contracts to foreign companies for the first time since Iraq nationalized its oil industry more than three decades ago. If all goes according to plan in the first round, foreign oil companies will move in to help Iraq revive production at six developed fields that have suffered from years of war and neglect. Mr. Shahristani's oil deals are crucial to this war-torn country's economy. Iraq is thought to have one of the world's largest supplies of crude oil, with 115 billion barrels in proven reserves. But foreign know-how is key to its plans to boost oil output to four million barrels a day within four to five years, from 2.4 million barrels currently. Despite security risks, Western oil companies are clamoring to get in. Iraq is still relatively unexplored, offering big companies a potentially easy-to-tap source of growth. Some are touting Iraq as the most important opening of petroleum fields since the discovery in 2000 of the giant Kashagan field in the Caspian Sea. Some 120 companies expressed interest in bidding for the contracts at the June 29 and 30 auction, according to the oil ministry. Thirty-five companies qualified to bid, including Exxon Mobil Corp., Royal Dutch Shell PLC, Italy's Eni SpA, Russia's Lukoil and China Petroleum & Chemical Corp., or Sinopec. The six oil fields at stake are believed to hold reserves of more than 43 billion barrels. Just over 20 of Iraq's roughly 80 known oil fields have been fully or partially developed, and most of its production comes from just three giants, North and South Rumaila and Kirkuk. Because lots of the black gold is considered relatively easy to extract, oil experts estimate that exploration and development in Iraq costs $1.50 to $2.25 a barrel, compared with about $5 in Malaysia or $20 in Canada. "We're talking about a huge volume of crude flowing through their system for the companies who win the bids," says Samuel Ciszuk, IHS Global Insight's Middle East Energy analyst. "On the other side, Iraq desperately needs technology, and these companies can bring it."

- Iran's top election-review board ruled out an annulment of June 12 presidential election results -- the latest in a series of moves by the Islamic Republic to try to put the contested polls and their violent aftermath behind it. Authorities appear to be conducting a two-front assault on supporters of the election's opposition candidates. They have increased efforts to boost the legitimacy of the vote, while simultaneously cracking down on street protesters and on journalists.

- The pursuit of cheap stocks has drawn a flood of investors to the Russian equities market this year, but the novelty seems to have worn off. With weaker commodities prices and gloomy economic data weighing on sentiment, additional upside for Russian stocks seems unlikely in the near term, analysts say. "It's hard to get excited about the market," Citigroup strategist Andrew Howell said. "The downside may be less than it was (earlier this year), but it's going to be challenging to move higher from here, barring a surge in oil prices." Russia's benchmark Micex index is down more than 24% from its 2009 peak on June 1, effectively putting it in a bear market. A drop of 20% or more is typically defined as a bear market.

- When markets tanked late last year, many hedge-fund managers barred or limited frantic investors from withdrawing money. Yet now that there has been a rebound, a lot of those restrictions are still in place -- pressuring funds to explain why they aren't returning money to investors. The market rebound means many assets are now easier to sell, and investors say they are increasingly demanding their money back. Among funds that continue to tie up investor money are Chicago's Citadel Investment Group LLC and New York's Harbinger Capital Partners LLC, as well as London-based GLG Partners LP and Polygon Investment Partners LLP. These funds plan to release at least some investor money over the coming months, people familiar with the matter say. "There is a feeling that some managers are sitting on restrictions in order to sustain their business" as opposed to acting in the best interests of their clients, says Stephen Oxley, the European head of Pacific Alternative Asset Management Co., an Irvine, Calif., fund-of-hedge-funds manager.

- House Speaker Nancy Pelosi has scheduled a vote Friday on a sprawling climate-change bill, signaling the Democratic leadership's confidence that it can overcome objections from Farm Belt Democrats. Opponents and supporters of landmark climate legislation are ramping up their public-relations campaigns ahead of the planned vote. The Obama administration is pushing the measure as a job-creator, while critics, including many Republicans, are portraying the bill as an energy tax that could slow the economy. The legislation, co-sponsored by House Energy and Commerce Committee Chairman Henry A. Waxman (D., Calif.) and Rep. Edward Markey (D., Mass.), had stalled last week because of opposition from Farm Belt Democrats concerned their states will face heavier costs under the proposed law to curb greenhouse-gas emissions. The bill aims to cap greenhouse-gas emissions at 17% of 2005 levels by 2020 and at roughly 80% by 2050, creating a market for companies to buy and sell the right to emit carbon dioxide and other gases. It also mandates a new renewable electricity standard and establishes new national building codes.

- Best Buy Co.(BBY) , which began testing the sale of used videogames in some of its Canadian stores a year ago, is expanding the effort to the U.S. The largest U.S. consumer electronics retailer by sales is testing a kiosk-based model in several of its Dallas and Austin, Texas, stores starting this week, Chief Marketing Officer Barry Judge said Tuesday. The kiosk scans used games to make sure they work, then immediately issues a voucher redeemable for a Best Buy gift card that can be used for anything in the store, Mr. Judge said in a posting on his blog.

MarketWatch.com:
- Worsening unemployment is putting pressure on President Barack Obama to make more progress in improving the economy. Polls show that dissatisfaction with his $787 billion stimulus plan -- which was always considerable -- is growing. In the latest Washington Post-ABC News poll, the percentage of Americans who think the stimulus will help the economy has dropped to 52% from 59% in April. Nearly as many, 46%, say the stimulus will not help. The honeymoon is over. The unemployment rate has shot up from 7.6% when Obama took office to 9.4% in May. More than 2 million people have lost their jobs, seemingly at odds with his promise to create or save 3.5 million jobs in the next two years.

CNBC.com:
- After all those losses and bailouts, rank-and-file employees of Citigroup are getting some good news: their salaries are going up. The troubled banking giant, which to many symbolizes the troubles in the nation’s financial industry, intends to raise workers’ base salaries by as much as 50 percent this year to offset smaller annual bonuses, according to people with direct knowledge of the plan. The shift means that most Citigroup employees will make as much money as they did in 2008, although some might earn more and others less. The company also plans to award millions of new stock options to employees in an effort to retain workers and neutralize a precipitous drop in the value of their stock holdings. The Citigroup proposals, discussed internally this week, present a crucial test for the Obama administration, which has vowed to rein in runaway compensation at companies that have received large taxpayer-financed bailouts. Citigroup has gotten not one but two rescues from Washington. This month, the government assumed a 34 percent stake in the company, whose share price has plunged nearly 84 percent in the last year.

NY Times:

- Contrary to the popular assumption that the new swine flu pandemic arose on factory farms in Mexico, federal agriculture officials now believe that it most likely emerged in pigs in Asia, but then traveled to North America in a human.

- China has begun a concerted effort to keep its export economy humming, even as demand for its goods has plummeted with the global downturn. Risking the ire of the United States and other trading partners, the Chinese government has quietly started adopting policies aimed at encouraging exports while curbing imports, even though China, as one of the world’s largest exporters, has aggressively criticized protectionism in other countries. The government has sharply expanded three programs to help exporters, giving them larger tax rebates, more generous loans from state-owned banks to finance trade, and more government-paid travel to promote themselves at trade shows around the world. At the same time, Beijing has banned all local, provincial and national government agencies from buying imported goods except in cases where no local substitute exists.

- Like newspaper owners, media moguls are looking for new ways to protect their investment from the ravages of the Internet. And, as with the newspaper industry, the answer remains elusive. What is at stake is perhaps the last remaining pillar of the old media business that has not been severely affected by the Internet: cable television.

- Documents gathered by lawyers for the families of Sept. 11 victims provide new evidence of extensive financial support for Al Qaeda and other extremist groups by members of the Saudi royal family, but the material may never find its way into court because of legal and diplomatic obstacles. The case has put the Obama administration in the middle of a political and legal dispute, with the Justice Department siding with the Saudis in court last month in seeking to kill further legal action. Adding to the intrigue, classified American intelligence documents related to Saudi finances were leaked anonymously to lawyers for the families. The Justice Department had the lawyers’ copies destroyed and now wants to prevent a judge from even looking at the material. The Saudis and their defenders in Washington have long denied links to terrorists, and they have mounted an aggressive and, so far, successful campaign to beat back the allegations in federal court based on a claim of sovereign immunity.

- Methodist University Hospital in Memphis acknowledged Tuesday that it had performed a liver transplant on Steven P. Jobs, the chief executive of Apple(AAPL). In a statement posted on its Web site, the hospital said Mr. Jobs had received the organ because he had the most urgent need for a new liver when one became available. “Mr. Jobs is now recovering well and has an excellent prognosis,” Dr. James D. Eason, the hospital’s chief of transplantation, said in the statement.

IBD:

- The medical lab test business was rocked by a billing fraud scandal in the 1990s. The result was a massive industry shake-up that left Quest Diagnostics (DGX) and LabCorp (LH) as the two giants. Somewhat smaller, but often nimble enough to outflank its larger rivals, is Bio-Reference Laboratories (BRLI).

Business Week:
- Can Tesla Become a Real Automaker? Even with $465 million of freshly minted taxpayer funds, the spunky US startup faces a steep road to develop and market its electric cars. Once again, the federal government is handing billions of dollars to auto companies. The last round of loans raised the question, can General Motors and Chrysler shake off their creaky ways and survive to pay the money back? This time, the question is: Can Tesla Motors become enough like one of those old car companies? The latest round of handouts is coming from U.S. Energy Dept. funds to boost development of greener vehicles. The department issued $8 billion in loans on June 23, granting Ford Motor (F) $6 billion, Nissan Motor (NSANY) $1.6 billion, and tiny electric-car startup Tesla $465 million. While it's fair to say that Ford and Nissan have staying power, Tesla is a riskier bet.

- Eager to place itself at the forefront of technology considered crucial to transportation's future, Big Blue is throwing its weight behind batteries. On June 23, IBM announced a multiyear effort to increase the performance of rechargeable batteries by a factor of 10. The aim is to design batteries that will make it possible for electric vehicles to travel 300 to 500 miles on a single charge, up from 50 to 100 miles currently.

CNNMoney.com:

- The number of mass layoffs by U.S. employers rose last month to tie a record set in March, according to government data released Tuesday that suggested the labor market has yet to stabilize. The Labor Department said the number of mass layoff actions - defined as job cuts involving at least 50 people from a single employer - increased to 2,933 in May from 2,712 in April, resulting in the loss of 312,880 jobs. It was the largest loss of jobs connected to mass layoffs on records dating to 1995.

TheDeal.com:

- As if Google weren't menace enough, newspaper companies are finding themselves undermined by another modern innovation: the credit default swap. In the cover story for the The Deal magazine published Monday, Richard Morgan tells about the dire situation Gannett Co. (NYSE:GCI) finds itself in after nearly three-quarters of bondholders, hedged with credit default swaps, declined an exchange offer that expired May 5. Thanks to the CDSs, they stand to get a better payoff if Gannett defaults.

USA Today.com:

- The nation's foreclosure crisis — once largely confined to only a few corners of the country — is spreading to new areas as the economy teeters. The foreclosure rates in 40 of the nation's counties that have the most households have already doubled from last year, a USA TODAY analysis of data from the listing firm RealtyTrac shows. Most were in areas far removed from the avalanche of bad mortgages and lost homes that have hammered the U.S. housing market. Among the new areas: Boise and Green Bay, Wis. "The ripple effect is just broadening out to cover a lot more places," says Susan Wachter, who studies real estate and finance at the University of Pennsylvania's Wharton School.

Reuters:

- JPMorgan(JPM) tops a list of the world's strongest banks, while Royal Bank of Scotland suffered the biggest loss of any lender last year, according to new industry rankings on Wednesday.

- The outspoken head of a U.S. Congressional watchdog panel will strongly urge lawmakers on Wednesday to set up a new government agency to protect consumers from "tricks and traps" set by banks. "We can help fix the broken credit market. And I can sum it up in four words: Consumer Financial Protection Agency," said Elizabeth Warren, chairman of the Congressional Oversight Panel of the Troubled Asset Relief Program, in prepared remarks.

- The Federal Reserve began a two-day meeting on Tuesday at which it is expected to dampen expectations for interest rate hikes this year, while holding steady on its plans for asset purchases. A Fed official said the meeting got under way at around 1 p.m. A statement announcing the policy decision is expected at about 2:15 p.m. on Wednesday.

- ABC News on Tuesday released its weekly index on consumer confidence in the United States. The Consumer Comfort Index fell in the latest report to -53 from -49 the prior week. The index is now just one point above its all-time low of -54, which was reached in the week ended Jan. 25, 2009.

TimesOnline:

- Drax, the operator of Britain’s biggest power station, said that there had been no sign of a recovery in demand for electrical power in Britain, despite talk of “green shoots” and an early return to economic growth. Tony Quinlan, Drax’s finance director, said that electricity demand was still 6 per cent below a year ago.

Late Buy/Sell Recommendations
Citigroup:

- Reiterated Buy on (HEW), target $45.

- Reiterated Buy on (ORCL), target $24.

Night Trading
Asian Indices are -.50% to +.50% on average.

Asia Ex-Japan Inv Grade CDS Index -1.82%.
S&P 500 futures -.17%.
NASDAQ 100 futures -.16%.

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Company/EPS Estimate
- (AM)/.20

- (MON)/1.18

- (NKE)/.96

- (PAYX)/.33

- (RHAT)/.14

- (CKR)/.25

- (BBBY)/.25

Economic Releases

8:30 am EST

- Durable Goods Orders for May are estimated to fall .9% versus a 1.9% gain in April.

- Durables Ex Transportation for May are estimated to fall .5% versus a .8% gain in April.

10:00 am EST

- New Home Sales for May are estimated to rise to 360K versus 352K in April.

10:30 am EST

- Bloomberg consensus estimates call for a weekly crude oil inventory decline of -950,000 barrels versus a -3,874,000 barrel decline the prior week. Gasoline supplies are expected to rise by +1,000,000 barrels versus a +3,385,000 barrel increase the prior week. Distillate inventories are estimated to rise by +850,000 barrels versus a +308,000 barrel increase the prior week. Finally, Refinery Utilization is expected to rise by +.05% versus a +.05% gain the prior week.

2:15 pm EST

- The FOMC is expected to keep the fed funds rate at .25%.

Upcoming Splits
- None of note

Other Potential Market Movers
- The weekly MBA mortgage applications report, (POL) Investor Day, Bernanke testimony on BAC/MER Deal, $27 billion 7-year Treasury Note Auction, (FSLR) investor meeting and the Wachovia Equity Conference could also impact trading today.

BOTTOM LINE: Asian indices are mixed, as gains in technology stocks are being offset by losses in financial shares in the region. I expect US equities to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.

Stocks Finish Mostly Lower, Weighed Down by Healthcare, Defense, Airline, Retail and Gaming Shares

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In Play

Stocks Slightly Higher into Final Hour on Falling Long-Term Rates, Short-Covering, Less Financial Sector Pessimism

BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Technology longs and Defense longs. I have not traded today, thus leaving the Portfolio 75% net long. The tone of the market is mildly negative as the advance/decline line is lower, sector performance is mixed and volume is about average. Investor anxiety is high. Today’s overall market action is mildly bearish. The VIX is falling 1.99% and is very high at 30.55. The ISE Sentiment Index is low at 103.0 and the total put/call is above average at .97. Finally, the NYSE Arms has been running around average most of the day, hitting 1.15 at its intraday peak, and is currently .62. The Euro Financial Sector Credit Default Swap Index is rising 3.15% today to 120.0 basis points. This index is down from its record March 10th high of 208.75. The North American Investment Grade Credit Default Swap Index is rising .77% to 146.81 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is falling 2.72% to 42 basis points. The TED spread is now down 422 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is rising .82% to 45.94 basis points. The Libor-OIS spread is falling 1.2% to 37 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is falling 2 basis points to 1.83%, which is down 81 basis points since July 7th. The 3-month T-Bill is yielding .19%, which is unch. today. Despite the slight gain in the S&P 500, breadth is relatively weak today. Small-caps are especially weak. The Euro Financial Sector Credit Default Swap Index is up again today and has risen 9 out of the last 10 days, which is a big negative. Moreover, weekly retail sales declined for the fifth consecutive week last week. On the positive side, long-term interest rates are down for the third consecutive day and inflation expectations are down again despite the jump in commodity prices today. Nikkei futures indicate an +56 open in Japan and DAX futures indicate an +13 open in Germany tomorrow. I expect US stocks to trade mixed-to-lower into the close from current levels on more shorting, healthcare reform worries and rising energy prices.

Today's Headlines

Bloomberg:

- U.S. home prices fell 6.8 percent in April from a year earlier as rising unemployment and record foreclosures kept buyers out of the market. Measured monthly, the average price fell 0.1 percent from March, the Federal Housing Finance Agency in Washington said today. The number was projected to drop 0.4 percent in April, according to the median forecast of 15 economists in a Bloomberg survey. The housing slump has reduced the median price of an existing home 26 percent from the July 2006 peak, pushing affordability to near record levels. Prospective buyers are now being constrained by rising mortgage rates, the highest unemployment since 1983 and concern the housing rebound will be anemic.

- Developing-nation stocks fell for a second day, sending the MSCI Emerging-Markets Index down more than 10 percent from its 2009 high, amid concern the global recession will persist. The 22-country benchmark index dropped 1.6 percent to 724.67 as of 12:36 p.m. in New York. It slid as much as 2.4 percent earlier, bringing its losses since June 1 to 10 percent and marking the first so-called correction since emerging-market stocks began rallying almost four months ago. Dubai’s Financial Market General Index sank 5.9 percent. In Latin America, Mexico’s Bolsa Index slid 0.9 percent, while Brazil’s Bovespa dropped 0.2 percent.

- The European Union and the U.S. complained at the World Trade Organization about Chinese export restrictions on raw materials such as magnesium, their third joint complaint against the Asian nation. The EU and the U.S. said they filed a request for consultations at the WTO in Geneva today, setting off a period of discussions with China aimed at resolving the dispute. If talks fail, WTO judges can be asked to rule on the issue. “We are most troubled that it appears this is a conscious policy to subsidize Chinese industry,” U.S. Trade Representative Ron Kirk told journalists in Washington. “China is a leading global producer and exporter of the raw materials in question, and access to these materials is critical for U.S. industrial manufacturers.”

- Treasuries gained for a third day as the government’s sale of $40 billion of two-year securities, the first of three auctions this week of a record $104 billion in notes, drew stronger demand than forecast. The sale drew a yield of 1.151 percent, and a ratio indicating demand was the highest since September 2007. A bidder class that includes foreign central banks took the biggest share of the securities in at least six years.

- A young woman who was shot through the heart and died on the streets of Tehran has become the face of the opposition movement in Iran. Neda Agha Soltan was killed by a Basij militiaman during a protest march on June 20, according to people who said they were eyewitnesses and posted videos of her death on the Internet. The videos on Facebook and YouTube show her collapsing, losing consciousness and dying. Her death has resounded worldwide and become a symbol of the crackdown by Iranian authorities against demonstrations over President Mahmoud Ahmadinejad’s disputed June 12 re-election. Police used tear gas and batons to disperse about 1,000 people who had gathered in Haft-e Tir Square in central Tehran yesterday to mourn the university student. “The violence of the regime has intensified. They are trying to create a regime of terror,” said Mohammad-Reza Djalili, an Iran expert at the Graduate Institute of International and Development Studies in Geneva in a telephone interview. “The future will be marked by this horrible chain of events,” he said of Soltan’s killing.

- Crude oil rose more than $1 a barrel and gasoline climbed for the first time in five days as a weaker dollar bolstered the appeal of commodity futures as an alternative investment.

- U.S. Defense Secretary Robert Gates urged Persian Gulf states to support Iraq as a way to strengthen regional security and as a buffer against Iran. “The embrace of Iraq by its fellow Gulf states will help contain the ambitions of Iran,” Gates told a Washington conference of top defense officials from 11 countries in the energy-rich region.

Wall Street Journal:

- Netflix Inc.(NFLX) is a standout in the recession. The DVD-rental company added more subscribers than ever during the first three months of the year. Its stock has more than doubled since October. But Netflix's chief executive officer, Reed Hastings, thinks his core business is doomed. As soon as four years from now, he predicts, the business that generates most of Netflix's revenue today will begin to decline, as DVDs delivered by mail steadily lose ground to movies sent straight over the Internet. So Mr. Hastings, who co-founded the company, is quickly trying to shift Netflix's business -- seeking to make more videos available online and cutting deals with electronics makers so consumers can play those movies on television sets. His position offers a rare look at how a CEO manages a still-hot business as its time runs out.

- Harvard's endowment, scalded in the financial crisis, is shying from some riskier bets even as markets had been improving -- and losing talent in the process. Marc Seidner, the head of domestic bond investing for Harvard Management Co., the company that manages the nation's largest endowment, is leaving along with a colleague, Michael Llodra. The endowment lately turned away from investing in a strategy that they wished to pursue -- buying distressed assets such as bonds backed by mortgages. Mr. Seidner is the second-highest paid employee there, paid $6.3 million in the last fiscal year, behind Stephen Blyth, managing director for international fixed income, at $6.4 million. Harvard is also making other moves to maintain its cash cushion, even as it puts some money to work. "Harvard is actively managing its mix of cash and investments with an eye toward the future," said Jane Mendillo, the endowment's investment chief, in an email. "We see some enticing investment opportunities today, and have put money back into several of our target markets, but we are holding some cash for even better opportunities down the road."

- Citigroup Inc. (C) is in the market with a repackaged commercial mortgage bond, due to be sold next week, according to a person familiar with the matter. The $87 million deal, dubbed CGCMT 2009-RR1, is a re-REMIC, or resecuritization of real estate mortgage investment conduit. Since last week, Morgan Stanley (MS), Bank of America Corp. (BAC), Barclays Capital and Citigroup have all been repackaging bonds backed by commercial mortgages on office buildings, malls and hotels, and selling them.

- President Barack Obama for the first time cast doubt on his administration's willingness to directly engage Iranian President Mahmoud Ahmadinejad, sharply raising his criticism of Tehran's recent election and its crackdown on reformist leaders. After days of criticism from Republicans, Mr. Obama opened a White House press conference saying he was "appalled and outraged" by the threats and confrontations in the streets of the Iranian capital. "In 2009, no iron fist is strong enough to shut off the world from bearing witness to the peaceful pursuit of justice," the president said. Mr. Obama's comments could mark a significant shift in the White House's broader Middle East strategy, which has largely been framed upon a willingness to hold direct, high-level negotiations with Tehran over its nuclear program and support for militant groups.

- The insurance industry Tuesday laid down a marker on health care, warning in stark terms that a proposed government insurance plan would dismantle the employer coverage Americans have relied on for a half century and overtake the system. In a joint letter to senators, the two largest industry groups also said they don't believe it's possible to design a government plan that can compete fairly with private companies in a revamped health care market. That particular statement seemed to be aimed at lawmakers of both parties who are seeking a compromise on the contentious issue. Release of the letter from America's Health Insurance Plans and the Blue Cross Blue Shield Association came as House Democrats pushed forward with a partisan health care bill. "A government-run plan no matter how it is initially structured would dismantle employer-based coverage, significantly increase costs for those who remain in private coverage, and add additional liabilities to the federal budget," said the letter from AHIP chief Karen Ignagni and Scott Serota, the head of Blue Cross. "We do not believe that it is possible to create a government plan that could operate on a level playing field. Regardless of how it is initially structured, a government plan would use its built-in advantages to take over the health insurance market," added the industry letter. Looming large is the question of cost. Initial estimates had Senate plans topping $1.6 trillion over 10 years, and senators are working to scale back. Curbs on Medicare and Medicaid spending are assured, and a range of taxes are under consideration, along with the possibility of fees on employers who don't cover their employees.

- Dear President Barack Obama and Members of Congress: I understand that you have undertaken the Herculean task of repairing the health-care system in the United States. As a physician who has practiced medicine for the past 19 years, I think you would benefit from hearing about my experience. I am a board-certified internist with a specialty in endocrinology who currently practices in Washington, D.C. I also provide primary care to many of my patients.

- Regulators appear to be turning a critical eye to sales of leveraged and inverse exchange-traded funds, complex instruments that can magnify not only investors' returns but their risks as well. The Financial Industry Regulatory Authority has reminded brokers and registered investment advisers about their fiduciary duties when selling ETFs that offer leverage, are designed to perform inversely to the index or benchmark they track, or both. In a notice posted to its Web site earlier this month, Finra reminded the brokers and advisers that these instruments are complex and typically unsuitable for retail investors who plan to hold them longer than one trading session. Scott Burns, director of ETF analysis at investment-research firm Morningstar Inc., applauded the Finra notice, which was reported by Index Universe. Mr. Burns has been calling for increased oversight of leveraged and inverse funds. "This is a huge step forward toward protecting individual investors from having exposure to these products unwittingly inserted into their portfolios," Mr. Burns said.

Rassmussen:

- Congress now has sent its “Cash for Clunkers” bill to President Obama to sign into law, but most Americans oppose the plan to encourage people to trade in old cars for new, more fuel-efficient models. Few adults plan to take advantage of the program at this time. A new Rasmussen Reports national telephone survey shows that 54% oppose the “Cash for Clunkers” proposal. Thirty-five percent (35%) favor the plan, and 12% are undecided.

- Eighty-one percent (81%) of U.S. voters agree with Israeli President Benjamin Netanhyahu that Palestinian leaders must recognize Israel’s right to exist as part of a Middle Eastern peace agreement. A new Rasmussen Reports national telephone survey finds that just seven percent (7%) disagree and say this should not be a requirement for a peace agreement. Twelve percent (12%) are not sure.

Politico:

- House Minority Whip Eric Cantor — who thinks President Obama needs to get tougher on Tehran — is steamed that the repressive regime's diplos are still being invited to U.S.-sponsored July 4 parties. “This is just the latest example of an Administration so desperate to keep a campaign promise that it will celebrate our own Independence Day with the agents of a regime that supports terror and brutalizes its own people,” says Cantor spokesman Brad Dayspring.

The Washington Times:

- Family members of the victims of the Sept. 11 attacks say they have been blindsided by the Obama administration's opposition to their lawsuit seeking damages from top members of the Saudi Arabian government over suspected financial links to the 9/11 attackers. A series of closed-door meetings between the relatives' groups and Justice Department officials, arranged as an update on Mr. Obama's plan to close the detention facility at the U.S. Naval Base Guantanamo Bay, Cuba, turned instead into a sharp clash over the Saudi legal action, The Washington Times has learned.

Reuters:
- Boeing Co(BA) on Tuesday postponed the first test flight of its 787 Dreamliner for a fifth time, citing a structural problem that marked the latest blow to the credibility of the No. 2 planemaker and sent its shares tumbling 9 percent.

- U.S. chief executives took a slightly less grim view of the economy in the second quarter, but still plan to cut jobs and capital spending, according to a Business Roundtable survey released on Tuesday. The quarterly CEO Economic Outlook Index rebounded to 18.5 in the second quarter from a record low of negative 5 in the first quarter. But it was still the third-lowest reading in the survey's six-year history. A reading below 50 means CEOs expect economic contraction rather than growth.

Financial Times:
- Byron Trott, the former Goldman Sachs banker and frequent financial adviser to Warren Buffett, has raised more than $2bn in capital for his fledging investment firm. The early fundraising successes come as many of the biggest private equity firms struggle to lure as much investment capital as planned, and highlight the cachet that has accompanied Mr Trott’s role as Mr Buffett’s favorite investment banker.

- An economic recovery in the eurozone is only inching forward, according to a closely-watched survey that has highlighted the fragility of recent turnaround in growth prospects. June’s purchasing managers’ indices for the 16-country region rose to a nine-month high, indicating that the worst recession to hit continental Europe since the second world war was continuing to lose its ferocity. But the rate of improvement was less than expected, dragged down by a weaker performance in the service sector, and the indices still pointed to a substantial contraction in second quarter economic activity. The weaker-than-expected results will damp hopes that the eurozone could return to growth this year, even if the worst of the recession is clearly over, but were consistent with the view of many forecasters, including at the European Commission and European Central Bank that the economy will start expanding again in 2010. Chris Williamson, chief economist at Markit, which produces the purchasing managers’ indices, said June’s readings pointed to a contraction of about 0.5 per cent or 0.6 per cent in eurozone GDP in the second quarter. The rate of easing had “lost considerable momentum towards the end of the quarter,” he said, especially in the service sector, where demand appeared to have been hit by rising unemployment. Dominic Bryant at BNP Paribas ruled out a robust recovery “anytime soon”, and said he expected the economy to be “more or less flat for the next four quarters”. That lacklustre performance compared with the US and UK would reflect, he said, “the less aggressive action of policy makers in the eurozone in the areas of monetary policy, fiscal policy and banking sector support.”

The Telegraph:

- Traders are using software developed by US-based technology StreamBase to monitor "tweets" for price sensitive information. The software plugs into Algorithm-based automated trading platforms that have been used by traders for years. But rather than searching Reuters or Bloomberg the software now scans Twitter.com. The company, whose investors include Inqtel, Central Intelligence Agency's venture capital arm, claims it could give traders an edge when deciding whether to trade on breaking news, like terrorist attacks and natural disasters, rather than waiting for the information to be filtered through providers like Reuters Thomson or Bloomberg.

Financial Post:

- The amount of unused Canadian office space business put on the sublease market grew by almost 75% last quarter from a year ago, a further indication of the crumbling economy. CB Richard Ellis Ltd. said more than 7.7 million square feet of office space came back into the market across the country, an increase from the more than 4.4 million that hit the market in the same quarter a year ago. The sheer size of the increasing sublease market drove the national vacancy rate to 8.3% from 6.4% a year ago.

China Daily:

- China will not back away from its July 1 launch date for the controversial anti-pornography computer filter Green Dam Youth Escort, a Ministry of Industry and Information Technology (MIIT) source said. The assertion followed criticism from the US embassy in Beijing about the software's potential impact on trade and about technical issues that called into question the program's efficacy. The Chinese government is calling for Green Dam software, which limits access to violent and pornographic websites, to be included with all computers sold on the Chinese mainland starting July 1. "The US government is concerned about Green Dam, both in terms of its potential impact on trade and the serious technical issues raised by use of the software," a US embassy spokesperson said yesterday. Representatives from the US embassy, the MIIT and the Ministry of Commerce held a meeting on the subject on Friday but details of the discussion are unknown. The US embassy spokesperson said the US government also viewed with concern any attempt to restrict the free flow of information. Such steps were incompatible with China's aspirations to build a modern, information-based economy and society, the spokesperson said.

The Jerusalem Post:
- Jewish neighborhoods in east Jerusalem are included in the US demand that Israel halt "settlement" construction, including for natural growth, State Department spokesman Ian Kelly told The Jerusalem Post during a press briefing on Monday. "We're talking about all settlement activity, yes, in the area across the line," he said, referring to neighborhoods in Jerusalem over the Green Line, or pre-1967 armistice line, in response to a question on where America's calls to halt construction in the settlements would be applied.

Emirates Business 24/7:
- United Arab Emirates banks face $540 million in delinquent credit card loans, citing banking officials. UAE banks have 20 billion dirhams in outstanding loans on credit cards, and 8% to 10% of that could be distressed or delinquent.