BETWEEN THE HEDGES

Monday, September 13, 2010

Tuesday Watch

Posted by Gary .....at 11:32 PM

Evening Headlines
Bloomberg:

Obama Said to Appoint Elizabeth Warren as Interim Head of Consumer Bureau. President Barack Obama plans to appoint Elizabeth Warren as the interim head of the new Consumer Financial Protection Bureau as early as this week, according to a person familiar with the matter. The consumer bureau is one of the biggest regulatory consequences of a Wall Street overhaul Obama signed into law in July. The bureau will have a $400 million budget and the power to impose federal rules on mortgages, credit cards, layaway plans and other consumer credit products.
Asian Stocks Set for 'Zero' Return, May Turn Negative, Deutsche Bank Says. Asian stocks are set for “zero percent” returns over the next 12 months as corporate earnings growth falters, according to Deutsche Bank AG. The brokerage is “underweight” in Taiwan, India and China, “neutral” on South Korea, Thailand and Indonesia, and “overweight” in the Philippines, Hong Kong, Malaysia and Singapore, strategists led by Ajay Kapur wrote in a report yesterday. “We could end up on the negative side of that zero expected return,” Kapur wrote, citing “impending earnings-per- share disappointments, high relative valuations in Asia, the probability of a stronger U.S. dollar, diminished pricing power, falling terms of trade and deteriorating free liquidity.”
Hedge-Fund Lobbying Group Opposes New U.S. Rules for High-Frequency Trades. The U.S. hedge-fund industry’s biggest lobbying group urged regulators against cracking down on high-frequency trading, saying new rules would increase costs for all investors and make markets less liquid.
SEC Questions Trading Crusade as Market Makers Disappear. The U.S. Securities and Exchange Commission has spent 15 years remaking the stock market into 11 competing exchanges and hundreds of computer-driven traders. In the process it has virtually eliminated the traditional market makers who bought and sold stocks when no one else would. Now the SEC is concerned the revolution has gone too far, leaving markets vulnerable when selling starts to snowball.

Wall Street Journal:

Kohl's(KSS) Looking at Prospect of Dividend, Share Buybacks.
U.S. Expects to Sue Over Deepwater Horizon Disaster. The U.S. Justice Department said Monday that it expects to file a civil suit in relation to the Deepwater Horizon disaster, asking the court handling hundreds of private cases to give government and state plaintiffs special consideration. In a court filing, the department said the U.S. government had "potential civil claims arising from the spill," citing several statutes under which the federal government could bring suits and claim damages, including the Clean Water Act and the Oil Pollution Act. "At this juncture, the United States expects that it may file a civil complaint related to the Deepwater Horizon disaster under these provisions and possibly others," the Justice Department said in its filing.
Ad Targets McDonald's(MCD). Group Seeks to Link Chain to Heart-Disease Deaths in D.C.
The 1099 Insurrection. The White House fights an effort to ease a burden on small business. You might not have seen it reported, but the Senate will vote this morning on whether to repeal part of ObamaCare that it passed only months ago. The White House is opposed, but this fight is likely to be the first of many as Americans discover—as Nancy Pelosi once famously predicted—what's in the bill. The Senate will vote on amendments to the White House small business bill that would rescind an ObamaCare mandate that companies track and submit to the IRS all business-to-business transactions over $600 annually. Democrats tucked the 1099 reporting footnote into the bill to raise an estimated $17.1 billion, part of the effort to claim that ObamaCare reduces the deficit by $100 billion or so.
'Bridge Building' and the WTC Mosque. Feisal Abdul Rauf has suggested Americans could find themselves "under attack" if he doesn't get his way.

Business Insider:

Rasmussen Reports:

Generic Congressional Ballot: Republicans 47%, Democrats 38%.

Politico:

Tea Party to GOP: Defund Health Care. A major tea party group is asking Republican congressional leaders to include cutting funds to implement the new health care law in a contract the GOP plans to roll out later this month.
Hill Battles Over Bush Tax Cuts. With their backs to the wall, Democrats want two things from Congress this fall: a fast break and a political bank shot — melding small-business relief with a fight over Bush-era tax cuts for the wealthy.

Reuters:

House Lawmakers Urge Action on China Currency. Ninety-three U.S. lawmakers have signed a letter urging Democratic leaders in the House of Representatives to schedule a vote on a bill to get tough with China over its currency exchange rate practices, a lawmaker's office said on Monday. Many members of Congress believe China undervalues its currency by as much as 40 percent to give Chinese companies an unfair price advantage in world trade.

Financial Times:

Saudi Reveals Large Unconventional Gas Reserves. Saudi Arabia has large reserves of unconventional gas that could help the kingdom to meet soaring domestic energy needs and leave more crude oil available for export, the head of its national oil company has said. Khalid al-Falih, chief executive of Saudi Aramco, the world’s biggest oil company, told the Financial Times that the kingdom could hold hundreds of trillions of cubic feet of unconventional resources such as shale gas, more than doubling its proved reserves of 280,000bn cubic feet.
Bankers Fear Race to Surpass Basel III. Top bankers in the UK, US and Switzerland are braced for their national regulators to impose tougher capital requirements than those required by Sunday’s landmark global agreement, even as investors bid up bank shares on relief that the standards were not more rigorous.
US, Eyeing Iran, Moves on $60 Billion Saudi Arms Deal. The Obama administration will soon notify Congress of an arms sale to Saudi Arabia worth up to $60 billion, U.S. officials said on Monday, a potentially record-breaking deal that may help counter Iran's growing regional muscle.

South China Morning Post:

Chinese Develloers' High-Yielding Bonds May Carry Sting. The good news first: people who invested in bonds issued by newly listed mainland developers are getting record high interest rates. But the bad news is that the risk of losses on these bonds is mounting as the housing market shows signs of slowing.

Evening Recommendations
Citigroup:

Reiterated Buy on (MGA), target $98.

Night Trading

Asian equity indices are -.25% to +.50% on average.
Asia Ex-Japan Investment Grade CDS Index 114.0 -3.0 basis points.
Asia Pacific Sovereign CDS Index 110.0 -6.0 basis points.
S&P 500 futures +.02%.
NASDAQ 100 futures -.03%.

Morning Preview Links

Earnings of Note
Company/Estimate

(CBRL)/1.11
(KR)/.36
(BBY)/.44
(PLL)/.64

Economic Releases
8:30 am EST

Advance Retail Sales for August are estimated to rise +.3% versus a +.4% gain in July.
Retail Sales Less Autos for August are estimated to rise +.3% versus a +.2% gain in July.
Retail Sales Ex Auto & Gas for August are estimated to rise +.4% versus a -.1% decline in July.

10:00 am EST

Business Inventories for July are estimated to rise +.7% versus a +.3% gain in June.

Upcoming Splits

None of note

Other Potential Market Movers

The NFIB Small Business Optimism Index, IBD/TIPP Economic Optimism Index, weekly retail sales reports, ABC Consumer Confidence report, (TLEO) Analyst Day, (SLE) Analyst Day, (NUVA) Investor Day, (CSCO) Analyst Conference, (VAR) Investor Meeting, Barclays Financial Services Conference, Robert W. Baird Health Care Conference, Deutsche Bank Technology Conference, BofA Merrill Investment Conference and the Wedbush Morgan Clean Tech Conference could also impact trading today.

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

Stocks Surging into Final Hour on Less Financial Sector Pessimism, Short-Covering, Diminished Terrorism Fears, Buyout Speculation

Posted by Gary .....at 3:49 PM

Broad Market Tone:

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

Equity Investor Angst:

VIX 21.57 -1.96%
ISE Sentiment Index 111.0 +15.63%
Total Put/Call .81 -36.22%
NYSE Arms .65 -18.65%

Credit Investor Angst:

North American Investment Grade CDS Index 102.14 bps -1.08%
European Financial Sector CDS Index 107.17 bps -4.62%
Western Europe Sovereign Debt CDS Index 148.96 bps -1.85%
Emerging Market CDS Index 243.56 bps -2.59%
2-Year Swap Spread 20.0 unch.
TED Spread 16.0 unch.

Economic Gauges:

3-Month T-Bill Yield .13% unch.
Yield Curve 221.0 -2 bps
China Import Iron Ore Spot $139.30/Metric Tonne -.29%
Citi US Economic Surprise Index -15.50 +1.4 points
10-Year TIPS Spread 1.84% +2 bps

Overseas Futures:

Nikkei Futures: Indicating -16 open in Japan
DAX Futures: Indicating -6 open in Germany

Portfolio:

Higher: On gains in my Tech, Retail, Ag and Medical long positions
Disclosed Trades: Covered all of my (IWM)/(QQQQ) hedges and covered some of my (EEM) short
Market Exposure: Moved to 100% Net Long

BOTTOM LINE: Today's overall market action is bullish as the S&P 500 is trading near session highs on low volume and is now slightly above its 200-day moving average. On the positive side, Education, Homebuilding, Bank, Networking, Disk Drive, Semi, Computer, Internet, Steel and Oil Tanker shares are especially strong, rising 2.0%+. Small-cap and cyclicals are substantially outperforming. (XLF) has traded well throughout the day. Copper is jumping +2.4% and Lumber is rising +1.32%. The European Investment Grade CDS Index is falling -3.29% to 95.42 bps. Moreover, the Spain sovereign cds is dropping -3.54% to 219.08 bps and the Portugal sovereign cds is falling -3.13% to 320.52 bps. On the negative side, Hospital shares are down on the day and Restaurant, Drug, Biotech, Telecom and Utility shares are underperforming, rising less than .5%. The 10-Year Yield is falling -6 bps to 2.73%, which is negative. The Greece sovereign cds is rising +.64% to 917.45 bps, the Japan sovereign cds is rising +.4% to 66.21 bps and the US Muni CDS Index is rising +.88% to 230.50 bps. Breadth is good, but volume is lackluster again today. The S&P 500 is near a critical technical level and a convincing break above this level would likely lead to even further near-term upside. However, I am closely monitoring my technical gauges for any signs of developing weakness, given the trading range we have be trapped in for some time. I expect US stocks to trade mixed-to-higher into the close from current levels on less terrorism fear, diminishing financial sector pessimism, short-covering, buyout speculation and technical buying.

Today's Headlines

Posted by Gary .....at 3:09 PM

Bloomberg:

U.S. Corporate Credit Risk Benchmark Declines to the Lowest in Five Weeks. A benchmark indicator of corporate credit risk in the U.S. fell to the lowest since Aug. 4 after a surge in China’s industrial output boosted optimism in the global recovery and regulators gave banks as much as eight years to meet capital requirements. Credit-default swaps on the Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, fell 1.2 basis points to a mid-price of 101.6 basis points as of 8:23 a.m. in New York, according to index administrator Markit Group Ltd. The index, which typically falls as investor confidence improves and rises as it deteriorates, has fallen every day except one this month after reaching 114.5 on Aug. 31.
Corn Rises to 23-Month High as U.S. Reserves Shrink, Global Demand Climbs. Corn futures rose, extending a rally to a 23-month high, on speculation that increasing demand for food and livestock feed will tighten supplies in the U.S., the world’s biggest producer and exporter. U.S. inventories before the 2011 harvest as a percentage of use will fall to a 15-year low, the Department of Agriculture said on Sept. 10.
Chicago Losing AA Rating as Daley Deals Fail to Offset Deficits. Chicago’s next mayor will take over a city that is almost out of cash after Richard M. Daley spent most of the $3.5 billion gained from leasing parking meters, garages and a 7.8-mile elevated toll road. The third-biggest U.S. city by population projects a $654.7 million deficit in a $3.39 billion budget for 2011, a July 30 report shows. Daley balanced this year’s $3.12 billion budget partly with reserves. If he uses lease funds to fill the 2011 gap, Chicago will be left with $121 million, enough to run the municipality for two weeks, according to data compiled by Bloomberg. “It almost will disappear by the time the mayor leaves office,” said R. Eden Martin, president of the Commercial Club of Chicago, a civic group. “Cutting $600 million is going to be a catastrophe. It is going to be very, very painful.”
Brazil's Libra May Rival Tupi as Americas Largest Oil Discovery Since 1976. Brazil’s deepwater Libra field may hold as much as 8 billion barrels of oil, rivaling nearby Tupi as the Americas’ biggest crude discovery in three decades, according to an official of the country’s Energy Ministry. Initial estimates for the Santos Basin field off the coast of Brazil are between 7 billion and 8 billion barrels based on seismic and drilling data, Marco Antonio Almeida, head of oil and gas at the ministry, said today in Rio de Janeiro. That would rival the 5-billion-to-8-billion barrel estimate for Tupi. Brazil may possess more than 50 billion barrels of oil reserves in the so-called pre-salt region, which runs 800 kilometers along Brazil’s coast from Espirito Santo to Santa Catarina states, according to the national oil regulator.
'Mass Hysteria' Produced Flawed Financial-Reform Law, Bove Says: Tom Keene. Legislators who don’t understand the banking industry and a sense of “mass hysteria” led to the passage of a financial-reform law that will hurt U.S. consumers, said Richard Bove, an analyst at Rochdale Securities. “We went into a period of mass hysteria,” Lutz, Florida- based Bove said in a radio interview today with Tom Keene on “Bloomberg Surveillance.” “Every American will discover over the next 12 months that every service that he receives from banks in the United States now will cost more and there will be fewer services available.”

Wall Street Journal:

YouTube Launches Streaming Video Trial. Google Inc.'s(GOOG) YouTube has launched a public test of a new live-streaming video service, the site's most ambitious foray into live programming.
Apple(AAPL) Brings Its iPad to China.
Sebelius Has a List. 'As a consequence of us getting 30 million additional people health care, at the margins that's going to increase our costs—we knew that," President Obama said at his press conference Friday in response to a question about rising health spending. That wasn't how he sold the plan, but, anyway, that's a truism. Here's another: The White House was always going to blame insurance companies for any cost increases, even when its own policies cause them.

CNBC:

US Posts $90.53 Billion Budget Deficit in August.
Oil Should Be Half Its Current Price: Analyst. If the oil market focused on fundamentals, instead of equities and currencies, it would be half the price of what it is now, Peter Beutel, president of energy research firm Cameron Hanover, told CNBC.

Business Insider:

Mutual Fund Cash Levels Hit Record Lows. (graph)
Jeff Saut: Here's The Chart That's Crushing Hedge Funds, And Fundamentally Changing The Stock Market.
Spain's Dire Choice: Flee The Euro or Crush Its Own Wages.
Goldman's(GS) Jan Hatzius: The Recovery Was Artificial, And There's A "Sizable Risk" Of A Double Dip. Goldman's top economist is on CNBC this afternoon. He says there's a 25-30% chance of a double dip, though the most likely outcome is a sluggish, gradual recovery. The recovery has been artificial -- stimulus spending and inventory restocking -- and thus there's no reason to see a return to robust growth.
The 15 Top Tech Takeover Targets.

Zero Hedge:

New York Times:

F.C.C. Likely to Open Airwaves to Wireless. This month, the F.C.C. is likely to approve what could be an even bigger expansion of the unlicensed airwaves, opening the door to supercharged Wi-Fi networks that will do away with the need to find a wireless hot spot and will provide the scaffolding for new applications that are not yet imagined.

The Daily Beast:

Do Banks Still Play Us for Fools? by Charlie Gasparino. Even after reports that Robert Rubin and other Citigroup execs failed to disclose a risky mortgage portfolio, Charlie Gasparino reports Wall Street is repeating the same sneaky behavior. Citigroup, the most bailed out and dysfunctional of the big financial houses, has been acting extra-stupidly lately by barring an influential analyst who had the gall to question the bank’s accounting practices from meeting its senior executives.

Politico:

Dems Plan for a Future Without Pelosi. For House Democrats, planning for a future without Nancy Pelosi is neither pleasant nor easy. But as the polls worsen and a Republican-controlled House looks more and more possible, Democrats are beginning to realize they face a top to bottom leadership shakeup if the powerful speaker steps aside in a Democratic minority.

USA Today:

Public Was Misled About ObamaCare by George Pataki. Opposing view on medical inflation: Repeal and replace. This month, with support for ObamaCare continuing to erode, a Democrat-led group is ramping up a multimillion-dollar national ad campaign to rescue the new law. At the same time, Health and Human Services Secretary Kathleen Sebelius wrote the health insurers' national association demanding they stop using "misinformation and scare tactics" to blame 2011 premium increases on ObamaCare. The reality is that this is all part of an orchestrated, well-financed effort to mislead the American people as to the facts on ObamaCare. It's not surprising. The American people have been terribly misled about this bill since before it was passed.

Reuters:

Wipro, Infosys See Cautious Spending on IT. Two leading Indian IT outsourcing companies said customers were still spending on technology but the mood remained cautious and short-term as firms wait to see how the global recovery plays out.

Telegraph:

China Tells Foreign Businesses 'to stop complaining'. China has told foreign companies to stop complaining about the difficulties of doing business on the mainland, and to cease being so "emotional". In the past year, a number of foreign companies have accused the Chinese government of deliberately tilting the playing field against them in order to help Chinese firms. "I'm not sure they want any of us to be successful," said Jeffrey Immelt, the chief executive of General Electric, recently. In addition, foreign companies have been repeatedly blocked from making acquisitions and investments on the Chinese mainland. "The situation is still getting worse," said Jacques de Boisseson, the head of the European Chamber of Commerce and the chairman of Total, the French oil company, in China.

DigiTimes:

Apple(AAPL) to Switch to Qualcomm(QCOM) Chips, Says Paper. Apple reportedly is dropping Infineon solutions from its iPhone devices in favor of those made by Qualcomm, according to a recent report in the Chinese-language Commercial Times. Apple plans to move the fifth-generation iPhone to Qualcomm chips, the paper claimed.

Economic Observer:

China's economic growth will reach 9.5% this year and slow to 8% next year, citing Justin Lin, chief economist of the World Bank.

21st Century Business Herald:

China's consumer price index may reach 5% this year, citing Cheng Siwei, former vice chairman of the standing committee of the National People's Congress.

Pacific Epoch:

Source: CBRC Plans New Capital Reqs for 2011. China Banking Regulatory Commission (CBRC) plans to set new minimum levels for key banking measures and introduce new performance measures in 2011, China Business News reported on September 13 citing an unnamed source close to the regulator. Banks will have to ensure capital adequacy ratio (CAR) of 10% with a 6% minimum core tier-one capital ratio, and an 8% tier-one capital ratio, with the regulator free to impose an additional 0% to 5% "when necessary," the report said. Banks of "systemic significance" will be required to have a CAR of 11%, the report said. The CBRC also intends to introduce a leverage ratio requirement, with minimum core capital to be 4% above banks' total assets, according to the report.

Bear Radar

Posted by Gary .....at 2:09 PM

Style Underperformer:

Large-Cap Value (+.44%)

Sector Underperformers:

1) Hospitals -.53% 2) Drugs -.20% 3) Restaurants -.05%

Stocks Falling on Unusual Volume:

LH, SLE, MO, WOOF, NAL, NIHD, SGEN, HGSI and PCG

Stocks With Unusual Put Option Activity:

1) MJN 2) SCOK 3) EMC 4) ALTR 5) CBS

Stocks With Most Negative News Mentions:

1) IBM 2) VIA/B 3) HDI 4) EEP 5) PCG

Bull Radar

Posted by Gary .....at 11:34 AM

Style Outperformer:

Small-Cap Growth (+2.35%)

Sector Outperformers:

1) Semis +3.05% 2) Banks +2.96% 3) Networking +2.73%

Stocks Rising on Unusual Volume:

ZION, CHU, IVN, JPM, DB, PBR, ARST, CGNX, FMCN, CTCT, OPEN, LULU, SSRI, FTNT, SINA, OCLR, CIEN, RVBD, ALGN, DTG, HTZ, GNI and IBN

Stocks With Unusual Call Option Activity:

1) ALL 2) CB 3) TIN 4) CHS 5) STI

Stocks With Most Positive News Mentions:

1) AAPL 2) HPQ 3) GOOG 4) LMT 5) BA

Sunday, September 12, 2010

Monday Watch

Posted by Gary .....at 11:43 PM

Weekend Headlines
Bloomberg:

Basel Compromise Means Higher Capital Ratios, Time to Comply. The Regulators looking to rein in the sort of risk-taking that caused the last financial crisis reached a compromise in Switzerland yesterday that more than doubles capital requirements for the world’s banks while giving them as long as eight years to comply.Basel Committee on Banking Supervision will require lenders to have common equity equal to at least 7 percent of assets, weighted according to their risk, including a 2.5 percent buffer to withstand future stress. Banks that fail to meet the buffer would be unable to pay dividends, though not forced to raise cash. The definitions of what counts as capital and how risk is assessed have also been tightened.
Yields Fall to Eisenhower Low in Pimco-BofA View of Fed Easing. Bond investors are growing more convinced that Federal Reserve Chairman Ben. S. Bernanke will push Treasury yields down to the levels of the 1950s with another round of asset purchases. Goldman Sachs Group Inc. and Pacific Investment Management Co. project that the Fed will resume quantitative easing by purchasing U.S. government debt as soon as this year to prevent what they see as a 25 percent chance that the economy will slip back into a recession. Bank of America Corp. says the central bank will send the 10-year note yield to a record low of 1.75 percent in the first quarter of 2011.
Musharraf Plans to Form New Political Party, Return to Rule in Pakistan. Pervez Musharraf, the former president of Pakistan, said he plans to form a new political party and contest elections scheduled for 2013, before seeking to become prime minister or president. “A time has come in Pakistan where we need to introduce a new political culture, a culture which can take Pakistan forward on a correct democratic path, not an artificial, make-believe democratic path,” Musharraf, 67, said in an interview with the British Broadcasting Corp.
Euro Seen Dropping More Against Dollar Among Currencies Traders Like Least. The euro is losing out to the dollar as renewed concern over the solvency of nations from Portugal to Ireland points to another slump for the common European currency. Hedge funds and other large speculators have increased bets on a weakening of the euro to the highest level in almost two months, according to data from the Commodity Futures Trading Commission. Investors are paying close to the most in three months to insure against losses on Greek and Spanish bonds, while yields on Irish and Portuguese government debt surged to records relative to benchmark German bunds last week. TD Securities Inc., the most accurate foreign-exchange forecaster in the six quarters ended June 30, and Bank of America Corp. say the euro will drop versus the dollar even as the U.S. economic recovery slows. While a weaker currency would boost German exports, the predictions show that a $950 billion European bailout fund hasn’t been enough to shore up confidence amid credit downgrades of Portugal and Ireland.
Greece's Papandreou Says No New Austerity Measures Needed to Avoid Default. Greece’s Prime Minister George Papandreou pledged to press ahead with government attempts to ease the threat of default, saying no new austerity measures were needed if the country stayed the fiscal course. “I have every confidence that at the end of the year we will have reduced, in accordance with our commitments and decisions, the deficit by 40 percent,” Papandreou said in Thessaloniki, northern Greece, today. “As long as we are progressing well, there is no need for any new measures.”
Economic Docs Find Remedy Amid Bubble Rubble: Caroline Baum. Even the most casual observer of the events of the last five years -- the housing bubble, the bust and the digging-out process -- would be struck by the similarities between the policies that got us into this mess and the prescriptions for getting us out.

Wall Street Journal:

Waning Economic Recovery Fuels Global Uncertainty. The global recovery is still on track, but it's looking increasingly likely to be a long slog for much of the developed world. Just over a year after the recovery started, its initial vigor has abruptly subsided, thrusting the world into a new period of uncertainty. Hopes of a U.S.-led recovery have faded as American consumers retrench. Bursts of growth in Japan and Germany are waning or expected to do so. China and other big developing nations are still growing strongly, but at a slower rate than they were not long ago. "We were waiting for the second stage of the rocket, and it just fizzled out," says Ethan Harris, head of developed economics research at Bank of America Merrill Lynch in New York.
Tensions Still on Boil in Mosque Fight. As Florida Pastor Fades From Spotlight, the Passions He Inflamed Keep Burning on Weekend Marking 9/11 Anniversary.
H-P(HPQ) Nears ArcSight(ARST) Purchase. Hewlett-Packard Co. is closing in on a deal to acquire security-software maker ArcSight Inc. for around $1.5 billion, people familiar with the matter said, continuing a spending spree that began after Chief Executive Mark Hurd resigned last month. The price per share that H-P is willing to pay couldn't be learned. ArcSight was asking around $42 a share, other people familiar with the matter said. As of Friday, ArcSight's market capitalization was $1.2 billion, or $35.10 a share, in 4 p.m. trading on the Nasdaq.
China Has Done "Very, Very Little" on Exchange Rate: Geithner. Treasury Secretary Timothy Geithner said China has not done enough to allow its currency, the yuan, to rise. “China took the very important step in June of signaling that they’re going to let the exchange rate start to reflect market forces. But they’ve done very, very little, they’ve let it move very, very little in the interim,” Mr. Geithner said in an interview with The Wall Street Journal on Friday.
Hertz(HTZ), Dollar Thrifty(DTG) Agree to New $50-a-Share Price.
Worries Over Tax Hikes Coloring Business Decisions. The uncertainty over looming tax increases is starting to affect both investing and corporate decision-making. The economy remains the biggest factor in many investors' and businesses' decisions. But worries over whether Congress will extend some of the expiring Bush-era tax breaks are emerging as another important one. Stock prices of utilities, for example, recently have appeared to be factoring in the possibility of significantly higher dividend taxes next year, several analysts say.
Conservative Duo Tests Health Law. Whether President Barack Obama's health-care overhaul survives could depend on a yin-and-yang pair of conservative Washington, D.C., power lawyers who sued to stop it mere hours after the bill became law in March.
Lululemon(LULU) Grows Fast on a Slim Budget.
The Size of Government and the Choice This Fall by Arthur C. Brooks and Paul Ryan. In polls, Americans overwhelmingly prefer small government and low taxes to the alternative. Yet they've been given big government, one program at a time.

Bloomberg Businessweek:

Trading Eludes Dodd-Frank as No Investors See Inside Black Box. It took a Congressional inquiry this year to force Goldman Sachs Group Inc. to disclose how much it made in the mortgage market -- and that was only for 2007. Goldman Sachs hasn't revealed mortgage-trading revenue since then, leaving investors to guess how much it contributes to the fixed-income, currency and commodities division, or FICC, which also trades junk bonds, yen, oil and uranium, sells weather derivatives and operates power plants. The division brought in $23.3 billion last year, or 52 percent of the New York-based firm's total, and by itself would rank 90th by revenue in the Standard & Poor's 500 Index, just ahead of McDonald's Corp., according to data compiled by Bloomberg. The Dodd-Frank Act, designed to prevent future financial crises, does little to improve investors' ability to analyze results at the five biggest U.S. firms that trade securities, which together lost $38.6 billion as markets froze in the fourth quarter of 2008. Since taxpayers may have to bail out banks again, firms should be forced to disclose more, said Tanya Azarchs, former head of North American bank research at Standard & Poor's.
BofA's(BAC) Capital Ratios May Delay Dividend Increases, KBW Says. Bank of America Corp. is likely to have the weakest Tier 1 common equity capital ratio among the four largest U.S. banks as international regulators near agreement on standards to help prevent future financial crises, according to KBW Inc. and Morgan Stanley analysts. Lower capital ratios could prompt regulators from permitting the Charlotte, North Carolina-based bank to raise its dividend until 2012 or 2013, a year or more later than its biggest rivals, KBW Inc. analyst Frederick Cannon wrote yesterday in a report to clients. JPMorgan Chase & Co., the second-largest U.S. bank, and Wells Fargo & Co., the fourth- largest, are poised to boost dividends next year, he said.

CNBC:

NY Times:

Vacancies Strain White House's Goals for Economy. President Obama signaled on Friday that he was close to choosing a director for a new consumer bureau, but an array of top jobs that will be crucial to shaping economic policy and financial regulation for the rest of his term remain unfilled.

NY Post:

Isn't That Rich? More fissures were revealed yesterday in the once-solid Democratic opposition to extending the Bush tax cuts for the wealthiest Americans.
Goldman(GS) Has New Program. Call it the rise of the machines. Three years after the brainiacs in one of Goldman Sachs's hedge fund units imploded, the investment bank is aiming to restock its so-called quantitative investment group. The unit -- which resides within Goldman's asset management division and employs rocket scientists and supercomputers to make investment bets -- is on the hunt for at least two senior managers to work alongside quantitative investment strategies head Katinka Domotorffy, who is currently on maternity leave.

Business Insider:

Foreign Policy:

Green Light. Faezeh Hashemi Rafsanjani, daughter of Iran's powerful Ayatollah Akbar Hashemi Rafsanjani and a prominent advocate of the Green Movement, speaks to Foreign Policy about the future of Iran's opposition and her (low) opinion of President Mahmoud Ahmadinejad.

Rasmussen Reports:

48% Give Obama Poor Marks on The Economy.

Politico:

Obama Backing Off Strict Crime Policy. For years, it was one of the GOP’s most potent political epithets — labeling a Democrat “soft on crime.” But the Obama White House has taken the first steps in decades to move away from a strict lock-‘em-up mentality on crime — easing sentences for crack cocaine possession, launching a top-to-bottom review of sentencing policies and even sounding open to reviewing guidelines that call for lengthy prison terms for people convicted of child pornography offenses.

Financial Times:

Soros and Paulson Lead Hedge Fund Table. The top 10 hedge fund managers have earned more than $153bn for their investors since they were founded, a third of the 7,000-strong industry’s returns, latest research shows. Since they opened, George Soros’s Quantum fund and John Paulson’s Paulson & Co have together made more money than Walt Disney or McDonald’s. Paulson’s returns – $26.4bn – are only just short of the net income of Boeing since Mr Paulson opened the firm in 1994.

Focus:

Almost two-thirds of Germans favor a ban on full-body covering such as Islamic veils, according to a TNS Emnid survey. 61% would favor a ban on such garb, while 36% of Germans are against it.

Hellenic Shipping News:

Growth in Commodity Derivatives Set to Slow. After a period of explosive growth in the past decade, the market for commodity derivatives is starting to look increasing mature, and set to expand much more slowly in the next few years. It is unlikely futures and options markets for oil and gas, as well as industrial metals such as copper and aluminium, will experience significant growth in the next 2-3 years. Existing opportunities for expanding the use of derivatives as a tool for risk management and investment appear to have been fully exploited in oil and gas for the time being. Lack of volatility will limit interest in hedging and investment to existing market users among producers, consumers and pension funds, rather than favouring expansion to new participants. Environmental markets also face a period of hibernation. Prospects for a nationwide cap-and-trade system in the United States have essentially died after Congress declined to take them up this year, and will recede further if the Republican Party makes significant gains in November's midterm elections.

The Standard:

Top Chinese Central Banker Urges Hike in Deposit Rate as CPI Soars. A key mainland central banker has urged an increase in the nation's deposit rate after the consumer price index climbed to a 22-month high in August. David Li Daokui, a member of the People's Bank of China monetary policy committee, suggested the deposit rate could be raised or floated in order to help depositors stem the erosion in the value of their bank savings. A higher rate would also persuade depositors to keep their money in the bank rather investing it in the equity and property markets. "The main reason I am suggesting a rate hike is because this is a policy with long-term effects and modest short-term costs," Li told China Central Television on Saturday. Central bank governor Zhou Xiaochuan on Thursday said rate hikes at commercial banks would bode well for their operation.

United Daily News:

Taiwanese who support unification with China dropped to 14% this year from 29% in 2009, citing its own poll. Support for independence rose to 31% from 26%, while 51% favor maintaining the status quo, compared with 32% polled last year.

Weekend Recommendations
Barron's:

Made positive comments on (XRX) and (INTU).
Made negative comments on (VMW).

Citigroup:

Upgraded (OPEN) to Buy, target $70.
Rated (TSRX) Buy, target $8.