Stocks Surging into Final Hour on Technical Buying, Lower Long-Term Rates, Short-Covering, Diminishing Healthcare Reform Fears

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Technology longs, Biotech longs and Medical longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is higher, most sectors are rising and volume is heavy. Investor anxiety is very high. Today’s overall market action is bullish. The VIX is falling 2.67% and is high at 23.67. The ISE Sentiment Index is below average at 136.0 and the total put/call is above average at .91. Finally, the NYSE Arms has been running above average most of the day, hitting 1.51 at its intraday peak, and is currently .80. The Euro Financial Sector Credit Default Swap Index is falling 2.87% today to 77.33 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 falling 2.11% to 112.21 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is falling .63% to 16 basis points. The TED spread is now down 447 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is falling 1.92% to 32.0 basis points. The Libor-OIS spread is falling 2.81% to 13 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is falling 7 basis points to 1.77%, which is down 90 basis points since July 7th. The 3-month T-Bill is yielding .14%, which is unch. today. Cyclical shares are especially strong today. The Transports are jumping 2.1%. Oil Service, Oil Tanker, Gold, Internet, Networking, Hospital, HMO and Airline stocks are also outperforming substantially, rising 2%+. The (XLF) opened lower and had been a drag on the averages earlier in the day, however it is trading at session highs and looks poised to regain upside traction. The AAII % Bulls fell to 37.0% this week, while the % Bears jumped to 44.0%, which is a large positive considering the major averages are at their highs for the year. The S&P 500 is currently trading almost 7 points above the 1,035 level that had been meaningful technical resistance over the last few weeks. A close above this level should lead to further near-term gains. One of my longs, (DISCA), is jumping 4% today to an ALL-TIME high. I still see more upside in the shares over both the near-term and long-term. Nikkei futures indicate an +57 open in Japan and DAX futures indicate an +13 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on diminishing economic fear, declining healthcare reform worries, short-covering, technical buying, falling long-term rates and investment manager performance anxiety.

Today's Headlines

Bloomberg:

- U.S. Treasury Secretary Timothy Geithner said the government is moving to withdraw some of its support for financial markets and cautioned that the recovery will have “more than the usual ups and downs.” “As we enter this new phase we must begin winding down some of the extraordinary support we put in place for the financial system,” Geithner said in testimony to the Congressional Oversight Panel that monitors the $700 billion financial-rescue program. “We are now in a position to evolve our strategy as we move from crisis response to recovery, from rescuing the economy to repairing and rebuilding the foundation for future growth.”

- Yields on Fannie Mae and Freddie Mac mortgage securities declined to the lowest in more than three months, signaling that interest rates on new-home loans will retreat further and bolster the U.S. housing market. Yields on Washington-based Fannie Mae’s current-coupon 30- year fixed-rate mortgage bonds fell 0.11 percentage point to 4.29 percent as of 1:15 p.m. in New York, the lowest since May 26, according to data compiled by Bloomberg. The drop tracked a decline in benchmark Treasury yields after stronger-than- forecast demand at the last of three government debt auctions this week. The average rate on a typical 30-year fixed-rate mortgage dropped to 5.07 percent in the latest week, McLean, Virginia- based Freddie Mac said today in a statement. That’s down from as high as 5.59 percent in June, and up from the record low of 4.78 percent in April.

- The U.S. Commodity Futures Trading Commission should “act quickly” to adopt rules that would limit speculative trading in energy markets, require over-the- counter contracts to clear through a regulated exchange and impose more reporting requirements, lawmakers said.

- Health insurers said President Barack Obama’s proposal to tax the most expensive benefit plans and create a public alternative to private coverage fails to tackle the causes of escalating medical expenses. The public insurance option ignores the “central issue” of slowing the growth of health-care costs in the country, said Ronald A. Williams, chief executive officer of Aetna Inc., the third-largest U.S. health insurer. Obama “stopped short of addressing health-care reform,” said Kristin Binns, a spokeswoman for WellPoint Inc., the second-largest by sales.

- The Federal Reserve may keep interest rates low for “many years” to help U.S. consumers and companies as they pare back debt, according to economists at Goldman Sachs Group Inc. Sluggish spending as households reduce debt could lop as much as 2 percentage points from U.S. economic growth over the next three years, New York-based economists Peter Berezin and Alex Kelston wrote in a report released late yesterday. While not enough to threaten a long-term recovery, it may require the Fed to offset the weakness by keeping its benchmark rate unchanged through 2010, they said. “It is hard to escape the conclusion that the Fed may need to maintain fairly low interest rates over a period of many years,” wrote Berezin and Kelston. “If you want to bring down leverage, you should keep monetary policy sufficiently accommodative to forestall a collapse in spending and a deflationary spiral.”

- Bank of China Ltd., which led the nation’s $1.1 trillion lending spree in the first half, said ample liquidity has caused “bubbles” in stocks, commodities and real estate. “The potential risk is that a lot of liquidity goes to the asset market,” Vice President Zhu Min said in an interview in Dalian today. “So you see asset bubbles in commodities, stocks and real estate, not only in China, but everywhere.”

- China “strongly opposes” a ruling by the U.S. Commerce Department to impose duties of as much as 31 percent on steel pipes, the Ministry of Commerce said today. The U.S. decision doesn’t comply with rules set by the World Trade Organization, the ministry said on its Web site.

- The number of Americans filing first-time claims for jobless benefits dropped last week to the lowest level since July, a sign the labor market is deteriorating at a slower pace. Applications fell by 26,000 to 550,000 in the week ended Sept. 5, lower than economists forecast, from a revised 576,000 the week before, Labor Department data showed today in Washington. The total number of people collecting unemployment insurance declined to the lowest level since April. Employment may be starting to stabilize after 20 straight months of job losses, economists said. A return to job growth, meanwhile, is likely months away as companies delay hiring new workers. The latest Bloomberg News monthly survey showed the unemployment rate will reach 10 percent by early next year. 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. 29 from 4.7 percent the prior week.

- Hostile takeover battles are set for a “sharp resurgence” as financing markets and equity markets recover from the credit crisis, according to Citigroup Inc. “Market conditions may be more conducive to hostile acquisitions today than after past market downturns,” Citigroup analysts including New-York based Carsten Stendevad wrote in a note released today. “In today’s market environment, we find that many firms exhibit the financial attributes of likely targets.”

- The SEC is “rigorously” investigating whether traders are using technology to manipulate markets, the agency’s enforcement and inspections chiefs said today.

Wall Street Journal:

- Democrats have wanted President Obama to drop some of his cool and fight for their health-care agenda, and last night they weren't disappointed. The President gave away very little on the substance of what Congressional leaders are proposing, even as he offered a rhetorical bow or two to the idea of compromise. The main message of his speech to Congress is that he is doubling down on his health-care bets and counting on the sheer inertia of Democratic and health industry self-interest in Washington to drive a bill into law. The speech was especially notable for its use of one of Mr. Obama's favorite rhetorical devices: Noting in the first instance that his opponents have a good point, and entirely legitimate concerns, only to reject their ideas in toto when it comes to policy. Thus he endorsed the public's concern about the competence of government to manage one-sixth of the economy, only to finish with a soaring oration about the moral necessity of letting government do so.

- Alcatel-Lucent (ALU) Chief Executive Ben Verwaayen said Thursday his company is on track to meet its profit targets through 2011, and declined to comment on a report of an alliance with China's Huawei Technologies Co. Verwaayen, who was speaking to Dow Jones Newswires on the sidelines of the World Economic Forum in Dalian, reiterated the Franco-U.S. telecommunications equipment company plans to break even this year, make a small profit next year and return to stronger profitability in 2011. "We are still on track to meet those targets," he said.

- Staffing levels in corporate accounting and finance departments are expected to stay largely stable through the end of the year, according to a recent survey of chief financial officers.

- A Boeing Co. (BA) executive said Thursday the decline in global air passenger traffic is leveling off as the world begins to come out of a long economic recession.

- Corning Inc.(GLW) expects liquid-crystal-display glass output to be better than its reduced expectations as the disruption caused by an earthquake near a Japanese plant was less serious than anticipated.

MarketWatch.com:
- Top tech letter says recovery is real.

The Business Insider:

- Google (GOOG) held a conference call today to remind Wall Street about its search business. Sounds like it was mostly a snooze except for the bit about some new ad formats. We could see those driving per-click revenue up fast. JP Morgan's Imran Khan summarized the call:

NY Times:

- On one proposal for health care reform at least, there is a rare bipartisan consensus: the push to computerize patient records. The goal of moving paper medical records into the digital age has been championed for years by health care policy makers across the political spectrum, from Hillary Rodham Clinton to Newt Gingrich. As a presidential candidate, Barack Obama, too, was an advocate, and the economic crisis opened the door for an ambitious step — $19 billion put into the recovery package to encourage doctors and hospitals to install and use electronic health records. So even as the Obama administration and Congress struggle with broad health policy legislation, the technology industry is pursuing the opportunity in digital health records as never before. Although most of the government money will not start flowing until next year, the companies hoping to get their share include technology giants like General Electric, I.B.M. and the big telecommunications company, Verizon. Also in the hunt are smaller health technology specialists like Athenahealth, eClinicalWorks and Practice Fusion.

paidContent.org:
- Already facing a larger-than-usual number of local TV blackouts, the National Football League is offering fans in those markets an option play: delayed full-game videos for free starting at midnight the day of a game and running for 72 hours.

DesMoinsesRegister:

- Agriculture Secretary Tom Vilsack today accused the media of worsening the downturn in the pork industry by calling the H1N1 virus the swine flu. “This is not swine flu. Every time that is said consumers get confused,” Vilsack said on a conference call with news reporters.

TVNewser:

- John Stossel, the longtime ABC News correspondent and co-anchor of "20/20," is leaving ABC to join Fox News Channel and Fox Business Network. TVNewser has learned Stossel will host a weekly, one-hour program for the 2-year-old business channel. He's expected to signed a multi-year deal with Fox which will include regular appearances on Fox News Channel during daytime and primetime. He'll also host four, hour-long specials on Fox News, much like the business/consumer specials he'd hosted for years on ABC.

Washington Post:

- The Obama administration's vision for revamping the nation's financial regulatory system could face significant revisions in the Senate, where proposed reform legislation departs from the White House proposal on several key points, according to staff members, lobbyists and a lawmaker briefed on the plans. A bill taking shape in the Senate Banking Committee could give the Federal Reserve far less authority than the administration sought in the reform proposal it unveiled in June. Senators on both sides of the aisle have expressed a lack of confidence in the Fed in the wake of the financial crisis, challenging everything from the central bank's transparency to its ability to protect consumers. Some lawmakers oppose giving the Fed responsibility for monitoring systemic risk in the economy, as proposed by the administration, favoring instead vesting that authority with a council of regulators. "We really do take what the administration did as advisory. We have our own ideas," said one Democratic staff member familiar with the legislation who was not authorized to speak on the record.

Vanity Fair:

- 100 to Blame: The Community Reinvestment Act, Corporate Skyboxes, and More.

Bond Buyer:

- Michigan Governor Jennifer Granholm released a two-year budget proposal that would raise taxes to generate $1 billion of extra revenue, cut expenditure by $2 billion and take up $2 billion of federal stimulus funds.

Wealth Bulletin:

- Assets held in exchange-traded funds hit a new all-time high at the end of August, according to new figures, prompting one of the industry's most respected figures to revisit an earlier prediction that they will account for $1 trillion (€688bn) of assets by the end of the year.

Rassmussen:

- Views of the health care plan proposed by President Obama and congressional Democrats remain largely unchanged since late July. A Rasmussen Reports national telephone survey conducted Tuesday and Wednesday nights finds that 44% favor the plan while 53% are opposed. These numbers are little different than those in late August.

Politico:

- House Majority Leader Steny Hoyer was telling reporters Tuesday night that a health care bill might survive without a public option when Nancy Pelosi bounded to the microphones to cut him off. “In order to pass a bill in the House, it must have a public option,” the speaker said. Pelosi’s message wasn’t lost on anyone who heard it: In this House, I’m the boss. Pelosi and Hoyer, longtime rivals and often effective allies, have chafed against each other during the tense, tiring negotiations over health care reform, with Pelosi voicing the concerns of progressives and Hoyer publicly adopting a more conciliatory tone in his role as ambassador to the fiscally conservative Blue Dogs.

Bookseller.com:

- Authors have seen their advances drop over the past year, with some facing cuts of as much as 50% on new book deals. But deals for bestselling authors are "bigger than ever".

ConnPost.com:

- Hedge funds -- Southwest Connecticut's native industry -- are beginning to hire again as the economy and the stock market show glimpses of recovery, according to Sandy Gross, founder and managing partner of Pinetum Partners LLC. "It's been picking up in the last month," she said, adding that she expects the job market in the hedge fund industry to improve slowly next year before doing well in 2011. "I think the worst is over, but I think it's going to lag a little longer."

USA Today:

- Almost three-quarters (73%) of American colleges and universities are reporting cases of influenza-like illnesses among students, with the highest rates in the Southeast and Midwest, the American College Health Association says.

Reuters:
- China’s lead production will exceed consumption by 270,000 metric tons this year and the surplus will widen in 2010, citing Feng Juncong, an analyst at Antaike.

- Atlanta Federal Reserve Bank President Dennis Lockhart said on Thursday the U.S. economic recovery has started and made a plea for central bank independence to assure global markets the U.S. will pursue responsible monetary policies. "Overall, the U.S. economy is improving but still fragile," Lockhart told the World Affairs Council of Jacksonville. "Stabilization is proceeding, and the first stages of recovery are under way."

- U.S. Treasury debt prices jumped on Thursday, with the 30-year bond gaining two points in price after robust demand at a $12 billion reopening of a prior 30-year bond issue. There have been lingering concerns the burgeoning federal budget gap will hurt the United States' long-term creditworthiness and foreign appetite for Treasuries. New borrowing will approach $2 trillion this fiscal year. But the final of this week's auctions signaled there is persistent demand for U.S. government debt.

Financial Times:
- Motorola on Thursday unveiled its first Google(GOOG) Android-powered smartphone – a touch screen device designed to compete with Apple’s iPhone that will target consumers who use social media sites such as Facebook, MySpace and Twitter extensively. The new 3G and Wi-Fi enabled handset – called the Motorola Cliq in the US and the Motorola Dext elsewhere – is the first of a raft of new devices aimed at reviving the struggling US mobile maker’s fortunes.

Il Sole 24 Ore:

- Paul Volcker, the former Federal Reserve chairman who’s an adviser to President Obama, said that his country’s government should end its role in the auto industry as soon as possible.

Digitimes:

- The supply of CMOS image sensors (CIS) from OmniVision(OVTI) will remain tight in September as well as in the fourth quarter of 2009 as demand from OEM notebook makers and terminal device makers is stronger than expected, according to industry sources. OmniVision has recently notified some customers that it may not be able to meet their demand for October, the sources indicated. Supply from its rival Aptina is also tight, especially for the 1.3-megapixel product A380, the sources added.

Haaretz.com:

- Prime Minister Benjamin Netanyahu's trip to Moscow on Monday was part of quiet diplomacy between Russia and Israel over Russia's plan to supply S-300 anti-aircraft missiles to Iran, Haaretz has learned. A senior government source in Jerusalem confirmed yesterday that Netanyahu was in Russia for talks on security issues, particularly the sale of Russian weapons to Iran. The missiles could help Iran protect its nuclear facilities from attack.

Bear Radar

Style Underperformer:
Large-Cap Value (+.63%)

Sector Underperformers:
Foods (-.25%), Restaurants (-.22%) and Banks (-.09%)

Stocks Falling on Unusual Volume:
MON, DLM, CPO, CSTR, AMAG, ASCA, PVG, MW, SHE and SNH

Stocks With Unusual Put Option Activity:
1) NCS 2) MON 3) SHW 4) UAUA 5) VVUS

Bull Radar

Style Outperformer:
Small-Cap Value (+.65%)

Sector Outperformers:
Airlines (+6.91%), Networking (+1.67%) and Disk Drives (+1.67%)

Stocks Rising on Unusual Volume:
RDEN, ATPG, SFY, PG, DCM, SU, TWX, FCE/A, BAK, MED, DB, ROC, VVUS, SWKS, NWSB, ICLR, NVEC, LULU, KONG, GOLD, BMRN, YHOO, CRESY, LAYN, HWAY, QGEN, PODD, THRX, UEPS, PAAS, ASA, AMN and TKS

Stocks With Unusual Call Option Activity:
1) SUN 2) NCS 3) CMCSK 4) MON 5) PG

Trading Links

BNO Breaking Global News of Note

Google Top Stories

Bloomberg Breaking News

Yahoo Most Popular Biz Stories

MarketWatch News Viewer

Briefing.com In Play

SeekingAlpha Market Currents

WSJ Today’s Markets

Briefing.com Stock Market Update

Stocks On The Move
Upgrades/Downgrades

WSJ Data Center

Markit CDS Market Summary

Commodity Futures

StockCharts Market Performance Summary

Morningstar Style Performance
Sector Performance
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
Option Dragon
NASDAQ 100 Heatmap
Chart Toppers
CNBC Real-Time Intraday Quote/Chart
HFR Global Hedge Fund Indices

Thursday Watch

Late-Night Headlines
Bloomberg:

- Li & Fung Ltd., the biggest supplier of clothes and toys to Wal-Mart(WMT) and Target Corp.(TGT),is seeing a “more positive buzz” in the U.S. economy and has been getting “pretty strong” re-orders from retailers.“We’re starting to see a little bit of a creep-up in spending,” President Bruce Rockowitz said in a Bloomberg Television interview today. “Definitely, the mid-tier retailers and the discount retailers are performing pretty well.” Li & Fung the Hang Seng's best performer in the past month, rose as much as 7.8 percent to HK$31 in Hong Kong trading. The company is also seeking potential acquisitions in the U.S. and Europe and is “in a position to buy,” Rockowitz said, without identifying any targets. “The pipeline is pretty full. We see a lot of great opportunity in the United States,” he said.

- Australia, the world’s fourth- largest wheat exporter, will have “significant” quantities of the grain available for export, Agriculture Minister Tony Burke said in an interview. “At the moment we are tracking fairly well still, some parts of the country are doing exceptionally well, some have hit some periods of difficulty,” Burke said by phone from Canberra. “You’d be looking at significant availability for the export market if we are able to keep this together.” Increased supply from Australia may weigh further on prices that slumped to a two-year low in anticipation of the second- biggest global harvest on record. Farmers in Australia, which planted the fourth-biggest area to winter crops in 14 years, may produce the biggest crop in four years. “The momentum for prices unfortunately is still largely down,” Wayne Gordon, a senior analyst at Rabobank Groep NV, said by phone from Sydney. A bigger Australian crop “can only be bearish for prices,” he said.

- The U.S. Commerce Department decided to impose duties of as much as 31 percent on steel pipe from China, agreeing with American producers led by U.S. Steel Corp. that the imports were supported by unfair subsidies. The average duties on $2.8 billion in annual imports of the pipe, used in oil and gas wells, will be 21.3 percent, the Commerce Department said in an e-mailed statement today announcing the preliminary decision. The tariffs may help U.S. Steel and other domestic producers weather a drop in demand for the pipe following the collapse in oil prices last year. It also may be a precursor for a number of trade complaints against China. President Barack Obama must decide a separate case on imported Chinese tires by Sept. 17.

- Texas Instruments Inc.(TXN), the second- largest U.S. chipmaker, raised third-quarter sales and profit forecasts because of improving demand for chips used in some industrial applications, computers and consumer electronics. Profit will be 37 cents to 41 cents a share on sales of $2.73 billion to $2.87 billion, the Dallas-based company said today in a statement. Analysts had projected profit of 35 cents a share and revenue of $2.68 billion on average, according to a Bloomberg survey. Demand is beginning to recover for so-called analog chips -- semiconductors used in devices such as electronic utility meters, computer disk drives and consumer electronics. “I’m very encouraged about some of the signs we’re seeing in the chip industry,” said Tore Svanberg, an analyst at San Francisco-based Thomas Weisel Partners. He has an “overweight” rating on Texas Instruments shares, which he owns. “There is actually some true demand that is driving it.” The company also said it’s less concerned about a glut of inventory and is adding to its stockpiles. That shows increased confidence that orders are growing, Svanberg said. “Demand has continued solid to this point in the third quarter,” Vice President Ron Slaymaker said on a conference call. “We’re not aware that there’s an inventory buildup taking place.”

- Chinese thermal-coal prices, up 1.3% in August, are likely to renew this year’s decline on record inventories of the fuel and sluggish power output, according to Nomura Holdings Inc. “Spot coal prices may resume their drop,” Ivan Lee, a Hong Kong-based analyst at Nomura, wrote in a report. China’s coal stockpiles are at a record, small mines are set to reopen, while power output and prices in Australia are “weak,” he said. China, the world’s biggest coal consumer and producer, is opening mines shut in the wake of workers’ deaths in a bid to bolster economic growth. Huadian Power Intl Corp said last month it expected the largest coal-mining province, Shanxi, to boost output by 60% in the second half. China’s power production fell 4.7% in the first seven months of the year compared with a year earlier, according to data from China Economic Information Net.
- OPEC said it will keep oil production quotas unchanged, banking on a recovery in the world economy to maintain prices near today’s $71 a barrel. The Organization of Petroleum Exporting Countries agreed to maintain total production quotas at 24.845 million barrels a day, and will urge members to adhere to their targets, OPEC Secretary-General Abdalla El-Badri in a press briefing. It’s the third time this year group has met without revising the figure.

Wall Street Journal:

- The Department of Energy isn't fully prepared to successfully manage $38 billion in Recovery Act funding, despite restructuring its protocols, the agency's inspector general said Wednesday. In a special report, Inspector General Gregory Friedman said the agency's efforts to develop and apply a control structure to oversee spending of an unprecedented amount of funding were proactive and positive. But, the inspector general said, "additional work is necessary if the department is to successfully manage Recovery Act-related risks." Chief among the criticisms, the inspector general said the agency couldn't determine if its systems would be able to handle the expected increased workload caused by the funding, and the agency couldn't ensure award recipients were able to accurately report required accounting and performance standards.

- Millions of Americans watched President Barack Obama's speech last night to a joint session of Congress. Much of it was familiar, having been delivered in at least 111 speeches, town halls, radio addresses and other appearances on health care. But his most revealing remarks on the topic came on Monday, at a Labor Day union picnic in Cincinnati. There Mr. Obama accused critics of his health reforms of spreading "lies" and said opponents want "to do nothing." These false charges do not reveal a spirit of bipartisanship nor do they create a foundation for dialogue. It is more like what you'd say if you are planning to jam through a bill without compromise. Which is exactly what Mr. Obama is about to attempt.

- Google(GOOG), which is often in the crosshairs of newspaper publishers, thinks it can help newspaper companies get paid for their work. The search giant is planning to upgrade its existing Google Checkout payment service to handle a broad suite of billing and subscription services targeted at premium content creators like newspapers, according to a memo the company recently submitted to the Newspaper Association of America.

- Foreign banks that entered oil-derivative contracts with some Chinese airlines and shippers could find they have little recourse if the companies make good on threats to default on obligations. This week, China's State-Owned Assets Supervision and Administration Commission offered encouragement to some Chinese companies to challenge losses stemming from derivatives used to protect against sudden spikes in the price of fuel. Some of China's biggest airlines and shippers lost hundreds of millions of dollars last year on derivative trades when the price of oil plunged. They are now seeking to claw back those losses.

- The cost to protect against defaults on U.S. corporate bonds using a benchmark derivatives index fell to the lowest in four weeks. Credit-default swaps on the Markit CDX North America Investment-Grade Index, used to speculate on the creditworthiness of 125 companies in the U.S. and Canada or to protect against losses on their debt, declined 2.5 basis points to 113.5 basis points as of 5:15 p.m. in New York, according to CMA DataVision. The index has dropped about 11 basis points the past week and is trading at the lowest level since Aug. 11, according to CMA DataVision prices.

- Even more so now than way back in 1992: It's still the economy, stupid.

- Among its many features, Apple's iPhone is equipped with GPS and includes manual, written driving directions built into its standard Maps application. But that function doesn't automatically bring up each turn sequentially, and it lacks voice prompts. Now, a number of companies have launched, or will soon launch, iPhone apps that do offer voice-prompted, automated, turn-by-turn navigation.

- Iran rejected any compromise with the West over its nuclear program Wednesday, as blunt comments from the Obama administration over Tehran's bomb-making capability suggested that the two sides were headed toward a renewed diplomatic crisis. Iran offered Western officials a long-awaited package of proposals to restart negotiations over its nuclear program. But diplomats who viewed the offer Wednesday said the document of fewer than 10 pages essentially ignored questions over Iran's production of nuclear fuel and instead focused broadly on other international issues. It made no mention of Tehran's willingness to suspend its uranium-enrichment activities or to enter into substantive talks about the future of its nuclear program, they said. Meanwhile, the U.S. envoy to the International Atomic Energy Agency made the Obama administration's strongest comments yet on Iran's nuclear threat. Speaking at the board meeting of the IAEA in Vienna, Glyn Davies warned on Wednesday that Iran has enough fissile material to produce a nuclear bomb, if Tehran enriches the uranium to weapons-grade level. "Ongoing enrichment activity...moves Iran closer to a dangerous and destabilizing possible breakout capacity," he said. Iran denied the U.S. allegations.

MarketWatch.com:
- A rally last month in bank stocks such as Bank of America Corp. boosted returns of some hedge funds, including funds run by Paulson & Co. Managers focused on financial-services stocks returned 4.29% on average in August, according to industry consultant Hennessee Group LLC. That was the best performance of any strategy last month. These types of hedge funds are now up 22.77%, on average, so far this year, the fifth-best strategy, Hennessee's data show.

NY Times:

- Apple’s(AAPL) chief executive, Steven P. Jobs, discussed his health and Apple’s new product line in an interview Wednesday with David Pogue, the personal technology columnist for The New York Times. Here are excerpts from their exchange:

- The number of children dying before their fifth birthdays each year has fallen below nine million for the first time on record, a significant milestone in the global effort to improve children’s chances of survival, particularly in the developing world, according to data that Unicef will release on Thursday. The child mortality rate has declined by more than a quarter in the last two decades — to 65 per 1,000 live births last year from 90 in 1990 — in large part because of the widening distribution of relatively inexpensive technologies, like measles vaccines and anti-malaria mosquito nets. Other simple practices have helped, public health experts say, including a rise in breast-feeding alone for the first six months of life, which protects children from diarrhea caused by dirty water. Wealthy nations, international agencies and philanthropists like Bill and Melinda Gates have committed billions of dollars to the effort. Schoolchildren and church groups have also pitched in, paying for mosquito nets and feeding programs. Taken together, they have helped cut the number of children under 5 who died last year to 8.8 million — the lowest since records were first kept in 1960, Unicef said — from 12.5 million in 1990. “That’s 10,000 less children dying per day,” said Unicef’s executive director, Ann M. Veneman.

Politico:

- President Barack Obama tried to regain the offensive Wednesday night with an aggressive pushback against opponents of health care reform – yet he stopped short of a mandatory prescription for a government-run insurance option. The tightrope walk on the signature issue of his presidency had two goals – soothing the divided Democrats gathered to hear him in the House chamber, while offering clarity to an American public that is skeptical and confused about what health care reform means for them.

- Rep. Charles Boustany pounded back in the GOP response to President Barack Obama’s health care speech Wednesday evening, sharply rebuking Obama for what he characterized as a sweeping package steep in costs and short on benefits for families and small businesses. Boustany, a Louisiana Republican who has worked as a doctor for more than 20 years, reserved his sharpest criticism for Obama’s refusal to strike down a public option. “The president had a chance tonight to take government-run health care off the table,” said Boustany. “Unfortunately, he didn't do it.”

Rasmussen:

- Seventy-eight percent (78%) of U.S. voters say every American should be allowed to purchase the same health insurance plan that members of Congress use. A new Rasmussen Reports national telephone survey finds that only seven percent (7%) of voters disagree and 15% are not sure.

Reuters:

- U.S. labor markets could take years to recover from the setbacks of the current recession, which have pushed the unemployment rate to a 26-year high, top Federal Reserve policy-makers said on Wednesday. But the officials said the Fed may need to end its ultra-accommodative policy stance long before the jobless rate starts to plummet if inflation starts to rise. For now, though, that seems some way off given the tentative nature of the economic recovery.

- These are the best-performing analysts covering Goldman Sachs Group (GS), Morgan Stanley, Bank of America (BAC) and Citigroup (C) in 2008 and so far this year:

Financial Times:

- Al Gore, the former US vice-president turned environmental evangelist, has taken a stake in Ocado’s latest fundraising as the retailer gears up for a possible flotation. Alongside the almost 1 per cent stake taken by Mr Gore’s Generation Investment Management, Fidelity International, one of the biggest UK investment groups, has also taken an up to 2 per cent stake as part of a £50m ($83m) fundraising by Ocado.

- Bank of China is planning to launch a fund to invest in hedge funds, the latest sign of keen interest in the alternative investment industry from the world’s third-largest economy. The new fund of funds will be launched next year, according to people familiar with the situation, and will be offered via Bank of China Suisse, the Geneva-based private banking operation established by BoC in November last year.

- The private equity real estate fund group of Goldman Sachs(GS) has made its first European debt investment since the beginning of the slump, marking the start of a new push into the distressed property market. Goldman Sachs’ Whitehall fund group, one of the largest investors in property debt over the past two decades, has acquired almost 900 non-performing and sub-performing loans backed by Italian residential property, which had an original value of about €120m ($174m).

- Brazil’s prospects of becoming a leading oil producer increased on Wednesday when it emerged that a giant offshore field could be double the size of BP’s discovery last week in the Gulf of Mexico. Petrobras, the national oil company, reported that the Guará field contained the equivalent of 1.1bn to 2bn barrels of recoverable oil and gas. BP’s Tiber field, which BP called a “giant” discovery last week, is unofficially estimated to contain 500m-1bn recoverable barrels.

Nikkei English News:

- Sony Corp. intends to cease production of floppy-disk drives at the end of this month. Sony manufactured more than 5 million floppy-disk drives in 2008.

Late Buy/Sell Recommendations
Citigroup:

- Reiterated Buy on (JWN), target $36.

- Upgraded (TLB) to Buy, target $9.50.

- Reiterated Buy on (CMCSA), target $20.

- Reiterated Buy on (TWC), target raised to $45.

Morgan Stanley:

- Reiterated Overweight on (SWKS), boosted target to $15.

Oppenheimer:

- Rated (ATW) Outperform, target $41.

- Rated (DO) Outperform, target $120.

- Rated (PDE) Outperform, target $38.

Night Trading
Asian Indices are +.50% to +1.50% on average.

Asia Ex-Japan Inv Grade CDS Index 124.0 -5.50 basis points.
S&P 500 futures +.26%.
NASDAQ 100 futures +.30%.

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
- (NSM)/.09

Economic Releases

8:30 am EST

- The Trade Deficit for July is estimated to widen to -$27.3 Billion versus -$27.0 Billion in June.

- Initial Jobless Claims for last week are estimated to fall to 560K versus 570K the prior week.

- Continuing Claims are estimated to fall to 6200K versus 6234K prior.

10:30 am EST

- Natural gas supplies are estimated to rise by 72 bcf versus a 65 bcf injection the prior week.

11:00 am EST

- Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,850,000 barrels versus a -372,000 barrel decline the prior week. Gasoline supplies are expected to fall by -1,500,000 barrels versus a -2,969,000 barrel drawdown the prior week. Distillate inventories are estimated to rise by +1,000,000 barrels versus a +1,179,000 increase the prior week. Refinery Utilization is expected to fall by -.38% versus a +3.06% gain the prior week.

Upcoming Splits
- None of note

Other Potential Market Movers
- The Fed’s Lockhart speaking, Treasury’s Geithner testifying before TARP Oversight Paenel, the Fed’s Kohn speaking, Treasury’s 30-year bond auction, BoE rate decision and the BoC rate decision could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by financial and technology shares in the region. I expect US equities to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.