Bull Radar

Style Outperformer:
Small-Cap Value (+.78%)

Sector Outperformers:
Semis (+1.58%), Homebuilders (+1.53%) and Construction (+1.26%)

Stocks Rising on Unusual Volume:
IRE, TLEO, ITT, UBS, MFE, AIXG, WTFC, BBV, ING, LAD, ABG, HNP, STO, ABAX, OFIX, AMED, POWI, LHCG, GTIV, IRBT, FUQI, GXDX, VSEA, SIRO, RADS, MGLN, ASML, MSTR, BMRN, FORM, SONO, AFAM, SGY, BEC, SNA, WSH, SWM, DW and LAD

Stocks With Unusual Call Option Activity:
1) UTHR 2) ZMH 3) HUM 4) SYNA 5) CHKP

Links of Interest

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In Play
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Friday Watch

Late-Night Headlines
Bloomberg:

- A Senate panel seeking evidence of fraud tied to last year’s mortgage crisis has issued subpoenas to financial companies including Goldman Sachs Group Inc.(GS) and JPMorgan Chase & Co.(JPM), said U.S. Senator Tom Coburn, a Republican from Oklahoma.

- A panel of British lawmakers said Gordon Brown’s government should do more to tighten financial oversight, saying regulators should consider a ban on proprietary trading by deposit-taking banks. “It would be intolerable if banks took advantage of the implicit government guarantee for deposits to take risky bets on proprietary trading,” said John McFall, a member of Brown’s Labour Party who leads Treasury Committee. “This has to stop.”

- Japan’s consumer prices fell at a record pace in June, adding to signs that deflation may hamper a rebound from the nation’s worst postwar recession. Prices excluding fresh food declined 1.7 percent from a year earlier after sliding 1.1 percent in May, the statistics bureau said today in Tokyo. The decrease, the sharpest since the survey began in 1971, matched the estimate of economists. Bank of Japan board members say price declines will probably accelerate in coming months, signaling the central bank will maintain its extraordinary policy of keeping interest rates near zero.

- China may cut new loans by half in the last six months of this year on concern a rally in the nation’s stocks has grown too fast, according to former Morgan Stanley chief Asian economist Andy Xie. “The government is worried that this bubble is becoming too big so they’re going to cut credit growth by probably half in the second half,” said Xie, now an independent economist, in a Bloomberg Television interview in Hong Kong today. “I think the property and stock markets will come under pressure probably around October time.” China’s banking regulator said yesterday it plans to tighten rules on work capital loans, seeking to prevent misuse of funds. It’s “undeniable” that a portion of this year’s new lending entered the nation’s stock and property markets, Cheng Siwei, former vice chairman of the standing committee of the National People’s Congress, China’s parliament, said in June. An estimated 1.16 trillion yuan of loans were invested in the stock market in the first five months of this year, China Business News reported on June 29, citing Wei Jianing , a deputy director at the Development and Research Center under the State Council, China’s cabinet.

Wall Street Journal:

- Global ad Omnicom Group Inc. and Publicis Groupe SA reported significant declines in revenue and profit but indicated a bottom may be at hand in the global advertising downturn. "We don't see a recovery, but we feel we've hit the troughs," said John Wren, chief executive of Omnicom. He added that it will take a couple of quarters to cycle through the current downturn, and a couple more before growth comes. "We believe the worst is behind us," said Publicis Chief Executive Maurice Lévy.

- For the past few months, we’ve been watching as energy companies report increasing natural gas production in the U.S. without any visible signs that demand is picking up. This has raised an awkward question: where’s it all going to go? It’s filling up underground storage fast. Apparently, it’s also getting packed into pipelines. In other words, there’s so much natural gas it’s getting crammed in anywhere it can fit. Says Chesapeake Energy(CHK): “The company also expects that rising pipeline and gathering system pressures during the next few months will likely result in involuntary natural gas production curtailments across the industry.” In other words, the system is reaching the point where not much gas can be added to the pipelines, which are backing up as storage fills up.

- Despite public anger and political pressure, U.S. banks have been busy raising a variety of fees charged to customers. "All depositories are trying to raise any little fee, whether on loans, deposits or transaction accounts," said Mike Moebs, founder of Moebs Services Inc., which collects data on fees from nearly every U.S. bank and credit union. "The era of low fees is over."

- A proposed tax on generous health-insurance packages presents a challenge to President Barack Obama, who promised during his campaign not to raise taxes on the middle class. A plan under debate in Congress would impose a new tax on insurers or employers who provide so-called gold-plated health-care plans. Many economists say a significant part of the cost would eventually be passed to employees, through higher insurance payments or slower wage growth. That could conflict with Mr. Obama's often-repeated promise not to raise taxes on middle-class families. The challenge for the White House was underscored Wednesday, when John Sweeney, president of labor confederation AFL-CIO, issued a statement citing "real concerns" about the proposed tax, which Mr. Obama has said he is willing to entertain.

- As everyone else’s taxes rise, one favored outfit may not have to pay federal taxes for years: General Motors. In another sweet deal from its benefactors on Pennsylvania Avenue, the government-owned car company is set to profit from billions of dollars in tax breaks not available to other businesses in the same predicament. The new GM will be allowed to claim a tax benefit from some $16 billion of net operating losses carried over from the old company, allowing it to avoid paying taxes on future profits, perhaps for years.

- White House officials and lawmakers were studying late Thursday how to keep alive the government's cash-for-clunkers incentive program because of concerns the program's $1 billion budget may have been exhausted after just one week. Obama administration officials warned congressional leaders Thursday it planned to suspend the program at midnight. But the White House released a statement late Thursday saying that completed deals would be honored and the program is still under review.

- America's retailers are responding to the recession with Christmas in July. A number of retailers and toy makers launched Christmas sales and promotions this month, hoping to boost sagging sales and help cash-strapped consumers stretch out their holiday spending.

- As high frequency trading continues to proliferate, the head of the powerful electronic trading desk at Goldman Sachs Group Inc. (GS) says it may be time to rethink regulation in this new trading landscape. In the wake of a collapsed stock market in 2008 that drastically cut the pocketbooks of all investors and traders, high frequency trading, the use of computers or complex algorithms to trade at lightning speed, is making up roughly half of the daily activity. At the same time, Goldman Sachs has been one of the largest beneficiaries of this new landscape in trading, with its electronic trading desks remaining one of the market's leaders.

- Chances that Congress will vote on a union-organizing bill this year are dimming as lawmakers make health care and appropriations the top priorities. Some Democratic senators have been trying for months to find a way around the bill's most contentious provision, the "card check" rule that would let workers to unionize by simply signing up rather than running a secret-ballot vote. While attempts at a compromise have made headway, less progress has been made on the bill's other divisive element: imposing a government-appointed arbitrator to set contract terms -- including wages and benefits -- if companies and newly formed unions can't agree within 120 days of bargaining. The legislation, known as Employee Free Choice Act, also would increase penalties on employers that violate labor laws during organizing periods.

MarketWatch.com:
- There is no way Google(GOOG) will not be the primary beneficiary of the Microsoft-Yahoo search deal. With a market share for search at almost 79%, you can be sure it will go up, not down, after the pact unveiled this week takes effect.

CNBC.com:
- A hot July for stocks has set the stage for a rally that should run right into August. "The market is overbought, but it's a good overbought," said Andrew Burkly, technical analyst at Brown Brothers Harriman. The Dow is up 8.4 percent for the month, and is on track, at this level, to close out its best monthly performance since October, 2002 and the best July since 1989. The S&P 500 is up 7.3 percent, its best July since 1997. The five-month rally that started in March is setting records of its own. The S&P is up 34 percent, its biggest five-month streak since 1938. The Nasdaq, up 8.1 percent in July, has gained 44 percent for its best five months since the tech rally of 2000. Most of the time, July is good for stocks. Since 1896, the Dow has been up 61 percent of the time with an average gain of 4.5 percent. And when July is a positive month for stocks, most of the time August is also higher. For the Dow, August was higher 64 percent of the time following a positive July, but the gains were more tempered, averaging just 1.6 percent.

NY Times:

- The top 1 percent of taxpayers paid 40.42 percent of total federal income taxes in 2007, according to the most recent data from the Internal Revenue Service. This represents the second year in a row that the richest 1 percent paid more in federal income taxes than the bottom 95 percent.

- The dozens of insurance companies that make up the American International Group show signs of considerable weakness even after their corporate parent got the biggest bailout in history, a review of state regulatory filings shows. Over time, the weaknesses could mean trouble for A.I.G.’s policyholders, and they raise difficult questions for regulators, who normally step in when an insurer gets into trouble. State commissioners are supposed to keep insurers from writing new policies if there is any doubt that they can cover their claims. But in A.I.G.’s case, regulators are eager for the insurers to keep writing new business, because they see it as the best hope of paying back taxpayers. In the months since A.I.G. received its $182 billion rescue from the Treasury and the Federal Reserve, state insurance regulators have said repeatedly that its core insurance operations were sound — that the financial disaster was caused primarily by a small unit that dealt in exotic derivatives. But state regulatory filings offer a different picture. They show that A.I.G.’s individual insurance companies have been doing an unusual volume of business with each other for many years — investing in each other’s stocks; borrowing from each other’s investment portfolios; and guaranteeing each other’s insurance policies, even when they have lacked the means to make good. Insurance examiners working for the states have occasionally flagged these activities, to little effect. More ominously, many of A.I.G.’s insurance companies have reduced their own exposure by sending their risks to other companies, often under the same A.I.G. umbrella.

Business Week:
- When Representative Virginia Foxx (R-N.C.) promoted proposed Republican health-care legislation July 28 by proclaiming it was "pro-life because it will not put seniors in a position of being put to death by their government," it stoked a small but passionate fire already burning over a seemingly obscure provision of a House health-care proposal that, proponents say, would help seniors make educated end-of-life plans but, to some, is an opening wedge into something more sinister. The provision in question is found on page 425 of the 1,000-plus-page H.R. 3200 bill currently being hashed out in Congress. It pertains to "advance care planning" for elderly or terminally ill Americans and calls for "an explanation by the practitioner of the continuum of end-of-life services and supports available, including palliative care and hospice," and allows Medicare to pay for such consultations every five years.

Politico:

- President Barack Obama’s highly anticipated “beer summit” with Harvard Professor Henry Louis Gates Jr. and Cambridge police Sgt. Jim Crowley came together Thursday night – with Obama declaring it a “positive lesson” on the nature of race in America and the two men saying they want to look forward, not back. A shaky, silent two minute video of the meeting was all the public got to see, but afterwards, Obama and the two men – who unexpectedly found themselves at the center of a racially-charged national controversy – declared the meeting worthwhile. Crowley even told reporters later that he and Gates had agreed to meet again – this time, not over a beer. He called the day “an effort not just to move the city of Cambridge or two individuals past this event, but the whole country beyond this and toward some meaningful discussion in the future.” After the event, Crowley characterized the discussion as “two gentlemen who agreed to disagree on a particular issue. We didn’t spend too much time dwelling on the past. We spent a lot of time discussing the future.” Asked if any apologies were exchanged or offered, Crowley said, “No.”

- A slew of recent polls showing President Barack Obama’s job approval ratings at essentially normal levels and a partisan divide reasserting itself suggest that the political landscape was not as dramatically transformed last November as Democrats had hoped. The question now is whether those numbers will impede the president’s ability to achieve the transformative goals he set out for himself, particularly in the area of health care, where members of Congress crucial to his success may feel they have to respond to shifting public opinion. After months of showing sky-high job approval ratings, polls from major newspapers and from the Pew and Gallup organizations this week gave Obama the lowest numbers of his presidency. He is less popular than either George W. Bush or George H.W. Bush at this point in their presidencies, though more popular than Bill Clinton was after seven months in office.

Hedge Fund Law Blog:

- SEC Approves New Exam for “Limited Representative” Investment Bankers.

AP:

- House Democrats have declined to subpoena available records that might reveal whether other members of Congress got discounted VIP mortgages from subprime lender Countrywide Financial Corp. similar to the sweetheart deals given Democratic Sens. Chris Dodd and Kent Conrad.

China Daily:

- China may become a major target of trade protectionism, especially from the US and India, this year, citing Zhou Xiaoyan, deputy director of the China Bureau of Fair Trade for Imports and Exports. The US is “abusing” trade protectionism as a tool to help its own industries amid an economic slowdown and the loss is “huge” huge for Chinese companies, citing Zhou.

Shanghai Securities News:

- China’s new loans in July may be less than 500 billion yuan.

China Business News:

- China has ordered the nation’s small and medium-sized banks to raise their capital adequacy ratios to 12% from 10%, citing a bank official.

Late Buy/Sell Recommendations
Citigroup:

- Reiterated Buy on (EXPE), target $25.

BMOCapital:

- Rated (PLCM) Outperform, target $28.

Night Trading
Asian Indices are +1.0% to +1.5% on average.

Asia Ex-Japan Inv Grade CDS Index unch.
S&P 500 futures +.19%.
NASDAQ 100 futures +.16%.

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Today in IBD
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Conference Calendar

Who’s Speaking?
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Rasmussen Business/Economy Polling

Earnings of Note
Company/EPS Estimate
- (AGN)/.67

- (AEP).61

- (AN)/.24

- (CVX)/.95

- (CEG)/.76

- (D)/.64

- (HMSY)/.24

- (ITT)/.80

- (MDC)/-.58

- (TOT)/1.00

- (UTHR)/.55

- (WY)/-.71

Economic Releases

8:30 am EST

- 2Q Advance GDP is estimated to fall 1.5% versus a 5.5% decline in 1Q.

- 2Q Advance Personal Consumption is estimated to fall .5% versus a 1.4% increase in 1Q.

- 2Q Advance GDP Price Index is estimated to rise 1.0% versus a 2.8% gain in 1Q.

- 2Q Advance Core PCE is estimated to rise 2.3% versus a 1.6% gain in 1Q.

- 2Q Advance Employment Cost Index is estimated to rise .3% versus a .3% increase in 1Q.

9:45 am EST

- Chicago Purchasing Manager for July is estimated to rise to 43.0 versus a reading of 39.9 in June.

Upcoming Splits
- None of note

Other Potential Market Movers
- The NAPM-Milwaukee, (PLCE) shareholders meeting and the (ANR) stockholders meeting could also impact trading today.

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

Stocks Finish Higher, Boosted by Gaming, REIT, Bank, Steel and Alt Energy Shares

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In Play

Stocks Jumping into Final Hour on Less Economic Pessimism, Falling Long-Term Rates, Short-Covering, More Earnings Optimism

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Medical longs, Biotech longs, Defense longs, Technology longs and Financial longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is very positive as the advance/decline line is substantially higher, almost every sector is rising and volume is above average. Investor anxiety is very high. Today’s overall market action is very bullish. The VIX is falling 1.99% and is very high at 25.10. The ISE Sentiment Index is below average at 106.0 and the total put/call is below average at .71. Finally, the NYSE Arms has been running extraordinarily high most of the day, hitting 2.5 at its intraday peak, and is currently 1.85. The Euro Financial Sector Credit Default Swap Index is plunging another 12.58% today to 71.90 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 3.55% to 111.88 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is falling .75% to 31 basis points. The TED spread is now down 435 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is rising 2.07% to 36.94 basis points. The Libor-OIS spread is rising .76% to 28 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is rising 5 basis points to 1.89%, which is down 75 basis points since July 7th. The 3-month T-Bill is yielding .18%, which is unch. today. The MS Cyclical Index is soaring 4.3% today. Gaming, REIT, Bank, Steel and Alt Energy shares are all jumping 3.5%+. (IYR) is seeing heavy retail put activity, despite recent gains, which bodes well for further advances in the key real estate ETF. As well, it is noteworthy that the NYSE Arms has been extraordinarily high today, given broad market gains, which is also a positive. The euro financial sector credit default swap index is continuing its recent collapse, falling today to its lowest level since June 18^th, 2008. Despite more economic optimism and huge bond supply, the 10-year yield is falling 3 basis points today, which is a large positive. The AAII % Bulls jumped to 47.67% this week, while the % Bears fell to 31.40%. Even if tomorrow’s 2 GDP report disappoints investors(which I don’t expect), I suspect any equity weakness will be relatively mild and short-lived in nature as investors are more focused on this quarter’s data. Nikkei futures indicate an +275 open in Japan and DAX futures indicate an +9 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, investment manager performance anxiety, less economic fear, lower long-term rates and more earnings optimism.

Today's Headlines

Bloomberg:

- Citigroup Inc.(C), Merrill Lynch & Co. and seven other U.S. banks paid $32.6 billion in bonuses in 2008 while receiving $175 billion in taxpayer funds under the Troubled Asset Relief Program, according to a report by New York Attorney General Andrew Cuomo. In the report, the state analyzed 2008 bonuses at nine banks that received TARP financing from the U.S. government. New York-based Citigroup and Merrill, since taken over by Bank of America Corp., received TARP funding totaling $55 billion, Cuomo said in his report. “When the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well,” Cuomo’s office said in the 22-page report. “When the banks did very poorly, they were bailed out by taxpayers and their employees were still paid well. Bonuses and overall compensation did not vary significantly as profits diminished.” The report, called “No Rhyme or Reason: The ‘Heads I Win, Tails You Lose’ Bank Bonus Culture,” comes as Congress and the Securities and Exchange Commission examine whether to limit the compensation paid to top corporate executives.

- A legislative outline of a new U.S. regulatory regime for the $592 trillion over-the-counter derivatives market leaves open for debate whether to ban so- called naked credit-default swaps. House Financial Services Committee Chairman Barney Frank and Agriculture Committee Chairman Collin Peterson said their plan is a “responsible” compromise for market regulation. A three-page summary shows lawmakers have yet to agree on whether to outlaw derivatives where the buyer doesn’t own the underlying asset, or to determine disclosure rules and trading limits. Lawmakers don’t want to ban any particular derivatives products or “even severely diminish them” as a financial risk tool, Frank said. Some lawmakers and regulators have said they are looking more closely into whether credit-default swaps were manipulated by short sellers to spread false rumors about financial companies such as Lehman last year to drive down stock prices. As much as 80 percent of the $26.4 trillion credit-default swap market is traded by investors who don’t own the underlying debt, according to Eric Dinallo, who stepped down this month as superintendent of the New York State Insurance Department.

- The cost to protect against defaults on U.S. corporate bonds using a benchmark credit-default swaps index fell to the lowest in more than 13 months. Credit swaps on the Markit CDX North America Investment- Grade Index, which is used to speculate on the creditworthiness of 125 companies in the U.S. and Canada or to protect against losses on their debt, dropped 4 basis points to 111 basis points as of 7:36 a.m. in New York, according to broker Phoenix Partners Group. The index has fallen about 20 basis points in July and is headed for its fifth monthly decline as investors speculate that the global recession may be easing.

- Crude oil rose more than $3 a barrel and gasoline surged the most in four months after better-than- expected corporate earnings and as jobless claims held below late-June levels.

- Exxon Mobil Corp.(XOM), the biggest U.S. oil company, said its crude and natural-gas production will accelerate in this year’s second half as new projects come online. Company spokesman David Rosenthal commented on production prospects today on a conference call with investors after Irving, Texas-based Exxon Mobil reported its lowest quarterly profit in more than five years. The company didn’t change its forecast for a 2 percent increase in full-year production after output fell 3.3 percent in the second quarter.

- Anyone taking up President Barack Obama on his pledge to disclose “every dime” spent from the economic stimulus package can find details on more than 22,000 contracts valued at $73 billion at recovery.org. The catch: That Web site is run by Onvia Inc., a Seattle company that tracks government spending. The administration’s stimulus site at a similar address -- recovery.gov -- lists 1,000 contracts so far, according to spokesman Ed Pound. Five months after Obama signed the $787 billion combination of tax breaks and government spending intended to revive the U.S. economy, the administration is still working to provide the transparency promised by the president, and Onvia is benefiting.

- European retail sales fell for a 14th month in July as job cuts hurt household spending, the Bloomberg purchasing managers index showed. The measure of euro-area sales declined to 47.3 from 47.5 in June when adjusted for seasonal swings. It has remained below the 50 mark, indicating contraction, since June of last year.

- Natural gas futures, which fell to a two-week low yesterday, will move lower as the price has dropped below the 10-day and 40-day moving averages, according to a technical analysis by MF Global Ltd. “It’s becoming increasingly harder with each passing day for the low of $3.155 to be challenging,” Michael Fitzpatrick, a vp for energy at MF Global in NY, said.

- Dow Chemical Co.(DOW), the largest U.S. chemical maker, posted second-quarter profit that topped analysts’ estimates as demand improved from earlier in the year, signaling the worst of the global recession has passed. “Business results improved sequentially, reflecting volume growth, our ability to hold price in the quarter, as well as the acceleration and realization of our cost reductions and synergies,” Liveris said in the statement. “The United States economy has found bottom but will be slow in recovering as unemployment continues to be a drag on consumer spending.”

- The Treasury yield curve is poised to flatten with 10-year notes set to rally after the Federal Reserve forecast inflation will be low for an extended period of time, according to RBS Securities Inc. “The momentum is up near oversold territory and looking like it’s running out of bearish gas,” wrote William O’Donnell, head of Treasury strategy at Stamford, Connecticut-based RBS, in a note today.

- Fannie Mae and Freddie Mac, the largest U.S. mortgage-finance companies, won’t be able to repay all of the $84.9 billion in federal aid they have received since being seized by the government last year, their regulator said. “Some assets and senior preferreds will have to be left behind as they come out of conservatorship, and that means some of those losses will never be repaid,” Federal Housing Finance Agency Director James Lockhart said at a speech in Washington today. “Their book is so large, it’s hard for me to see that they will be able to repay all of that.” Fannie Mae and Freddie Mac, which have posted $150 billion in losses going back to the third quarter of 2007, will continue losing money “for at least the next year or so,” and won’t return to “strong profits” for another two to three years, Lockhart told reporters after his speech. “It’s hard to predict at this point,” Lockhart said.

- Sanofi-Aventis SA agreed to buy Merck & Co.’s half of their Merial animal-health venture for $4 billion and said the two companies may again work together to form the world’s biggest maker of pet and livestock treatments. Sanofi will pay cash for the 50 percent it doesn’t own of Merial, which makes a bird flu vaccine for poultry and Frontline, the best-selling flea spray for pets. Sanofi can also combine Merial with the veterinary unit Merck gets when it buys Schering-Plough Corp., the companies said in a statement today.

Wall Street Journal:

- Ford Motor Co.(F) has slowed the bidding process for its Volvo unit in an effort to get a better price for the Swedish car brand, according to a person close to the U.S. company. The knowledgeable person said Ford has decided to wait for General Motors Co. to wrap up its sale of Adam Opel GmbH unit, and is hoping to invite a loser in that two-way bidding race to bid for Volvo.

- Investors have developed a voracious demand for short-term debt issued by U.S. and European banks, and an important global lending benchmark has fallen to an all-time low -- welcome signs that bank credit markets have improved. But beneath the demand for short-term bank debt, known as commercial paper, and a drop in the London interbank offered rate, or Libor, significant kinks remain lodged in the bank markets: Banks are using the fresh cash to repay existing debt, or simply hoarding it. That cash buildup is potentially stymieing efforts by regulators to circulate funds to borrowers and the most needy banks.

- China Investment Corp. has selected Morgan Stanley's(MS) asset-management unit and Blackstone Group LP(BX) to oversee hundreds of millions of dollars in allocations as it ventures into the U.S. hedge-fund business. China's $200 billion sovereign-wealth fund has finalized an allocation of $500 million to Blackstone Group's fund-of-funds unit, so called because it farms out clients' money to dozens of individual hedge funds, and also has earmarked additional money to be overseen by Morgan Stanley's asset-management unit, according to people familiar with the situation. CIC has shown a strong interest in so-called alternative investment firms, or firms that invest in hedge funds, private equity or other assets outside of publicly traded securities.

CNBC:

- Cities in the U.S. Sun Belt states of California, Florida, Nevada and Arizona dominated the record foreclosure spree in the first half of the year, but distress in other regions emerged as joblessness spread, RealtyTrac said on Thursday. Metro areas with populations of at least 200,000 in those four states accounted for 35 of the 50 highest foreclosure rates. Mortgages have failed the fastest in the areas with the greatest overbuilding, purchases by speculators and reliance on riskier loan products to improve affordability. But the source of the mortgage trouble has swung from lax lending standards to unemployment.

- The bond market got a bit of relief Thursday, as a $28 billion auction of seven-year notes went somewhat better than expected.

Rasmussen:
- The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows that 28% of the nation's voters now Strongly Approve of the way that Barack Obama is performing his role as President. Forty percent (40%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -12. That’s the lowest rating yet recorded for President Obama (see trends). Forty-nine percent (49%) now say that America’s best days have come and gone. Just 38% believe they are still to come. Thirty-four percent (34%) say the country is heading in the right direction. Seventy-five percent (75%) want the Federal Reserve to be audited.

- In an effort to defuse a national controversy, President Obama is hosting a black Harvard professor and the policeman who arrested him at the White House today, but just 30% of U.S. voters give the president good or excellent marks for his handling of the situation over the past week. A new Rasmussen Reports national telephone survey finds that 44% believe Obama has done a poor job dealing with the situation in recent days.

Politico:

- Senate Majority Leader Harry Reid is no longer promising that the Finance Committee will finish work on the health care reform bill before the start of the August recess, as the bipartisan committee negotiations have stalled. “We're trying to do some really crazy stuff on a really short time frame," Sen. Mike Enzi (R-Wyo.), a member of the Finance committee, said Thursday. "This is a train wreck.”

WashingtonTimes:

- Associate Attorney General Thomas J. Perrelli, the No. 3 official in the Obama Justice Department, was consulted and ultimately approved a decision in May to reverse course and drop a civil complaint accusing three members of the New Black Panther Party of intimidating voters in Philadelphia during November's election, according to interviews. The department's career lawyers in the Voting Section of the Civil Rights Division who pursued the complaint for five months had recommended that Justice seek sanctions against the party and three of its members after the government had already won a default judgment in federal court against the men. Front-line lawyers were in the final stages of completing that work when they were unexpectedly told by their superiors in late April to seek a delay after a meeting between political appointees and career supervisors, according to federal records and interviews.

NY Times:

- In May, Amazon(AMZN) introduced the electronic book reader Kindle DX, touted as a new way to read textbooks, newspapers and other large documents. This fall, six colleges and universities will test the technology in a pilot, which includes making the textbooks for certain courses available online. The Kindle DX (for “deluxe”) is searchable and portable, a plus for students accustomed to toting heavy backpacks. But there is another reason that some institutions jumped at the chance to try it out: the technology could substantially reduce their use of paper.

Lloyd’s List:

- Oil companies hired four very large crude carriers to store crude, citing Optima Shipbrokers Ltd. and London brokers it didn’t identify. Three more may be hired, citing a ship broker at Galbraith’s Ltd. There are now 27 supertankers storing crude.

- DP WORLD chief executive Mohammed Sharaf has described the first six months of 2009 as the “most challenging operating environment our industry has ever known”. The comments came as DP World reported a 10% fall in consolidated half year container volumes at its 49 terminals worldwide, which handled 12.3m teu in the six months to June. “The unpredictable trends in global trade we have seen in the first half of the year continue into the second half of the year.

USAToday:

- The USA TODAY/IHS Global Insight economic outlook index predicts GDP growth for October through December, the first increase since September 2008. Helping fuel the growth was improvement in financial indicators, such as the stock market, and increases in building permits. The rate of decline in the number of hours worked has also stabilized.

- A national campaign against first-time drunken-driving offenders is gaining ground as states and the federal government weigh mandatory use of devices requiring violators to prove their sobriety before their engines start. Three more states have enacted laws this year requiring all violators to install devices called alcohol ignition interlocks, bringing to 11 the number of states with such rules. The instrument blocks a vehicle engine from starting if it detects alcohol on the breath of drivers.

Reuters:
- U.S. financial regulators would gain the power to restrict holdings of over-the-counter derivatives under legislation to be considered this fall, the chairmen of two House committees said on Thursday. Chairmen Barney Frank of the Financial Services Committee and Collin Peterson of the Agriculture Committee said antispeculation provisions would be part of legislation to bring the $450 trillion OTC derivatives market under federal regulation. The bill also clamps down on a type of derivative called credit default swaps (CDS), which have been blamed for magnifying global economic distress by spreading losses from bets on risky mortgages and other debt.

- Ford Motor Co (F) has seen a sharp increase in sales over the past week since its

dealers began accepting trade-ins under the U.S. government's "cash for clunkers" incentive program, the automaker's U.S. sales chief said on Thursday. "We were having a strong month before (cash for clunkers) started," said Ken Czubay, who heads Ford's U.S. marketing and sales operations. "The pace of sales has picked up dramatically."

- United Therapeutics Corp (UTHR) said U.S. health regulators approved its inhaled drug to treat pulmonary hypertension, sending its shares soaring as much as 13 percent. The Food and Drug Administration approved Tyvaso inhalation solution for the treatment of pulmonary arterial hypertension (PAH) using the Tyvaso inhalation system, the company said.

- One hundred ninety-seven years, one month and 14 days after its founding, Citigroup Inc has given a roughly 34 percent stake to U.S. taxpayers. While a few technical details still remain, the bank has completed a months-long effort to convert preferred shares held by the U.S. government into common stock.

- Bank of America Corp (BAC) plans to set up a wholly owned subsidiary in China to expand in the world's fastest-growing major economy, people briefed on the plan said. The largest U.S. bank plans to expand its corporate and investment banking business, and offer wealth management services to tap rich Chinese consumers, according to the sources, who requested anonymity because they were not authorized to discuss the plan.

Financial Times:
- We’re not PhD quant-level statisticians here on FT Alphaville, so we won’t be able to explain exactly how they do it; but all those peculiarities in the USO and UNG ETFs do suddenly seem to make a lot of sense. This is especially so if you consider statistical arbitrageurs look for pairs of securities that consistently revert to mean, but offer large amounts of “relative-value” in the trading day. Relative-value would have been incrementally increased in commodity ETFs by the contango and the volatility stemming from a descending price. So yes, commodity ETFs were not responsible for upswings in the price in 2008! The increased flows they attracted counter-intuitively this year, meanwhile — in a descending market– may have had nothing to do with retail investors being keen to take a view on the underlying market. The flows may have stemmed from huge arbitrage opportunities presented to statistical arbitrage firms via the contango and price volatility. In which case, if the structurers of these ETFs are aware of the problem, marketing these securities forcefully to retail investors does indeed raise some important questions.

- Eurozone consumers increasingly expect prices to tumble in the year ahead even as the region’s economy recovers from its severe recession, according to a European Commission survey that could stoke fears of deflation. Expectations about trends in consumer prices in the next year were this month more skewed towards falls than at any point since comparable Commission data started in 1985. The results came ahead of official data on Friday that are expected to show eurozone annual inflation falling further into negative territory. The news suggested that even as the economy recovers, considerable slack remains. Headline inflation has dropped largely because of a plunge in energy costs, but evidence is mounting that price falls are becoming more widespread. The survey also indicated that consumers see little inflationary threat from the massive amounts of liquidity injected into the bank system by the European Central Bank.

TimesOnline:

- Organic food is no healthier than other produce, according to the UK Government’s food watchdog.

Aftenposten:

- Norwegian electric carmaker Think signed a letter of intent with Japan Post to equip one-fourth of the postal service’s 22,000 vehicles with battery-driven engines, citing Think spokesman James Andrew.

Xinhua:

- China will strengthen cooperation in financial supervision with the United States to promote global financial stability and economic recovery, Chairman of China Banking Regulatory Commission (CBRC) Liu Mingkang said on Wednesday.