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• The European DJ Stoxx 50 this morning is trading -0.49% as BMW abandoned its profit forecast saying "conditions for the automobile industry have deteriorated sharply." Also undercutting European stock prices this morning was the unexpected downward revision to the Jul Euro-Zone manufacturing PMI and the weaker-than-expected Jun German retail sales. Asia-Pacific stocks today closed mostly lower: Japan -2.11%, Hong Kong +0.58%, China +1.27%, Taiwan -0.31%, Australia -1.47%, Singapore -0.80%, South Korea -1.32%, Bombay +2.10%.
• US unemployment report – Today’s July unemployment report is expected to show continued weakness in the US labor market. The market is expecting the July payrolls report to show a decline of –75,000, adding to the –62,000 decline seen in June. Payrolls have now fallen for six consecutive months by a total of -438,000. The market is expecting the July unemployment rate to rise +0.1 point to 5.6%, thus edging to a new 4-year high. The US unemployment rate could easily rise above 6.0% in the current business cycle dip considering that the unemployment rate during the last major soft spot in the US economy in 2001-03 rose to a peak of 6.3%. The softening jobs market is likely to further depress consumer confidence and spending, particularly now that the federal stimulus program is wearing off.
• ISM manufacturing index – Today’s July ISM manufacturing index is expected to show a -1.2 point decline to 49.0, more than reversing the +0.6 point upward rebound to 50.2 seen in June. The national ISM index poked above 50 in June, but has been below 50 in five of the last seven months, suggesting that the national manufacturing sector is in a recession. Meanwhile, today’s July ISM prices-paid index is expected to fall –3.5 points to 88.0, reversing part of the +4.5 point surge to 91.5 seen in June. The market is carefully watching the ISM prices-paid index as a proxy for the upward pressure on materials input prices, which eventually translates into higher finished-goods prices and higher PPI and CPI figures.
• US vehicle sales – Today’s July total vehicle sales report is expected to be unchanged from June at 13.6 million units. The June vehicle sales level of 13.6 million was a 15-year low and illustrated the deeply depressed condition of the US auto market. US consumers at present are certainly not in the mood to buy a new car with the housing crisis, high gasoline prices, and the weakening economy. Moreover, automakers have yet to adjust to the structural shift in demand from consumers for smaller vehicles and better gasoline mileage.

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• September S&Ps this morning are trading -1.30 on weaker-than-expected earnings from GM and on lower global stock markets. The US stock market yesterday traded weak throughout the day and closed lower (Dow -1.78%, S&P 500 -1.31%, Nasdaq Composite -0.18%).
• Bearish factors for stock prices yesterday included (1) the unexpected rise in weekly unemployment claims to a 5-year high, (2) the weaker-than-expected Q2 GDP and the downward revision to Q4 2007 growth that ended in negative territory, (3) comments fromm former Fed Chairman Alan Greenspan that US home prices are "nowhere near the bottom" and the resulting market turmoil isn't showing signs of ending, and (4) comments from Merrill Lynch's chief investment strategist that US stocks will keep falling until consumer and business loans are more readily available as credit issues "aren't easing just yet." 
• Bullish factors for stock prices yesterday included (1) the unexpected gain in the Jul Chicago purchasing managers index, (2) the -$2.69 a barrel fall in crude oil prices, (3) the comments from Treasury Secretary Paulson that the government's stimulus package will ensure US growth in the second half of this year, (4) the 14% rally in International Paper as the world's largest maker of office paper said Q2 profit was 56 cents a share, handily beating analysts estimates of 41 cents a share, and (5) the 38% surge in Imclone after Bristol-Myers offered to buy the remaining portion of the company it doesn't already by offering $4.33 billion offer for the rest of Imclone, a 29% premium over Wednesday's closing price.
• Elan (ELN) plunged 43% and Biogen Idec (BIIB) plummeted 20% in after-hours trading yesterday after there were two confirmed cases of progressive multifocal leukoencephalopathy in patients taking the jointly made multiple sclerosis drug Tysabri.
• Investools (SWIM) rallied 15% in after-hours trading yesterday as the online brokerage and investor educator reported Q2 revenue of 28 cents, topping analysts' estimates of 17 cents and said they would buy back as many as 5 million shares.
• Sumitomo Mitsui, Japan's second-largest bank by market value, fell 7.7% as profit declined by half on lower fee income and burgeoning bad-loan costs.
• Lafarge SA is trading over 6% lower in Europe this morning and dragging other European construction companies lower after the world's largest cement producer said delays in Algeria, Iraq and the United Arab Emirates will affect 2.5 million tons of production and will take several months to resolve.
• Suncorp-Metway, Australia's third-largest insurer, sank 14% as profit dropped about 50% and its bad-debt charge tripled.
• Bayerische Motoren Werke AG (BMW) is trading 8% lower in Europe this morning as the world's largest luxury car maker reported Q2 income of 507 million euros, missing analysts' estimates of 703 million euros, with its CEO saying sales "deteriorated sharply over the past weeks," and abandoned its profit forecast as the dollar's decline, rising costs and a 10% sales drop in the US have all conspired to hurt BMW's bottom line.
• General Motors (GM) may open lower this morning after reporting Q2 loss of $15.5 billion or -$11.21 a share. Analysts had been expecting a loss of -$2.40 a share due to costs from labor disputes and plunging US sales. GM said Q2 sales fell 18% as the largest US automaker posted its fourth straight quarterly loss.

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• September 10-year T-notes this morning are trading +10.5 ticks on lower stock prices and on expected weakness in this morning's Jul payrolls report. September T-note prices yesterday shot higher and traded higher throughout the day before closing +23 ticks at a 2-week high. Bullish factors for T-note prices yesterday included (1) the unexpected climb in weekly initial unemployment claims to a 5-year high (+44,000 to 448,000 versus expectations of -13,000 to 393,000), (2) the weaker-than-expected US Q2 GDP (+1.9% versus expectations of +2.3%), and (3) a flight-to-quality as the stock market tumbled. Bearish factors for T-note prices yesterday included (1) the unexpected rise in the Jul Chicago purchasing managers index (+1.2 to 50.8 versus expectations of -0.6 to 49.0), and (2) comments from Treasury Secretary Paulson that he expects the government's fiscal stimulus plan to boost economic growth in the second half of this year.
• The dollar is slightly stronger this morning with dollar/yen -0.48 yen and the euro/dollar -0.35 cents. The dollar index yesterday closed with modest losses. Bearish factors for the dollar yesterday included (1) US economic concerns as US Q2 GDP came in weaker than expected and initial weekly unemployment claims rose to a 5-year high, and (2) strength in the euro after the Jul Euro-Zone CPI estimate came in at a 16-year high of +4.1% y/y. Bullish factors for the dollar yesterday included (1) the unexpected rise in the Jul Chicago purchasing managers index, and (2) the prediction by Morgan Stanley that Asian currencies have yet to feel the full force of the "oil shock" and will decline even if crude prices fall to $100 a barrel as fuel subsidies in Asian countries are delaying the effect of higher oil prices and these countries may not be able to continue these subsidies as fuel costs escalate. 
• September crude oil prices this morning are trading -59 cents a barrel and September gasoline is trading -1.09 cents a gallon. Crude oil prices are being undercut this morning as manufacturing in China, the world's second-biggest energy consumer, contracted below the 50 level for the first time since its survey of purchasing managers began in 2005 (-3.6 to 48.4 in Jul). September crude oil prices yesterday moved lower and closed -$2.69 a barrel and September gasoline closed -6.90 cents a gallon. Bearish factors for crude oil prices yesterday included (1) decreasing fuel demand as the US Energy Department said US fuel consumption averaged 20.7 million bbl a day in the past 12 months, the lowest level in three years, and (2) economic concerns as US Q2 GDP came in weaker than expected and initial weekly unemployment claims surged to a 5-year high. Bullish factors for crude oil prices yesterday included (1) Royal Dutch Shell saying that militant attacks have cut 220,000 bbl a day of crude production in Nigeria, and (2) the unexpected rise in the Jul Chicago purchasing managers index.

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Earnings reports (confirmed releases for companies with market caps above $10.0 bln listed by mkt cap): CVX-Chevron (BEST earnings consensus $3.05 per share), BRK-Berkshire Hathaway (1,424.00), FE-Firstenergy Corp. (0.96), PEG-Public Service Enterprise Group (0.62), PPL-PPL Corp. (0.55), NYX-NYSE Euronext (0.78), CI-Cigna (0.97), TT-Trane (0.87), AEE-Ameren (0.74), JAVA-Sun Micrpsystems (0.24), CLX-Clorox (1.10), EQT-Equitable Resources (0.45), GM-General Motors (-2.41), WPO-Washington Post (6.90), KBR-KBR (0.36), SCG-Scana (0.47), TDW-Tidewater (1.56), DRQ-Dril-Quip (0.67), HTV-Hearst-Argyle TV (0.20), OB-OneBeacon Insurance Group (0.41), REGN-Regeneron Pharmaceuticals (-0.30), HAE-Haemonetics (0.54), ALKS-Alkermes (0.14), OSK-Oshkosh (1.05), ALE-Allete (0.49), GMXR-GMX Resources (0.68), NTLS-NTELOS Holdings (0.22)

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