3 squabbling companies must cooperate to plug well

NEW ORLEANS – On shore, BP, Halliburton and Transocean are engaging in a billion-dollar blame game over the blown-out oil well in the Gulf of Mexico. At sea, they're depending on each other to finally plug up the environmental disaster.

Workers say the companies' adversarial relationship before Congress, in public statements and maybe one day in the courts isn't a distraction at the site of the April 20 rig explosion, where Transocean equipment rented by BP is drilling relief wells that Halliburton will pump cement through to permanently choke the oil well.

"Simply, we are all too professional to allow disagreements between BP and any other organization to affect our behaviors," Ryan Urik, a BP well safety adviser working on the Development Driller II, which is drilling a backup relief well, said in an e-mail last week.

But at least one expert said government probes and potential for lawsuits can't help but chill communication between the companies.

Urik's rig was in a holding pattern Saturday, awaiting progress by its sister rig, the Development Driller III, which is drilling the primary relief well and ran into a minor snag while preparing for a procedure known as a static kill that will make it easier to stop the gusher for good.

The DDIII is clearing out debris that fell in the bottom of the relief well when crews had to evacuate the site last week because of Tropical Storm Bonnie.

Once the debris is cleared, engineers plan to start as early as Monday on the static kill, which involves pumping mud and possibly cement into the blown-out well through the temporary cap. If it works, it will take less time to complete another procedure known as a bottom kill, the last step to permanently sealing the well by pumping mud and then cement in from the bottom, which could happen by mid- to late August.

Workers know all about the clashes among their respective employers, "but the crews have done an excellent job of focusing on getting these relief wells finished safely," Dennis Barber, a Transocean senior toolpusher aboard the DDII, said last week in an e-mail from the rig.

The roles of the three companies in the relief kill effort are much the same as they were on the Deepwater Horizon, the exploratory rig that blew up soon after a temporary cement cap was placed on its well, killing 11 workers. The conflicts began almost as soon as oil started flowing.

"Transocean's blowout preventer failed to operate," BP executive Lamar McKay said in Senate testimony in May, referring to the massive safety device atop the well that was supposed to bottle up the oil in an emergency.

Transocean CEO Steven Newman shifted blame in the same hearing, saying "all offshore oil and gas production projects begin and end with the operator, in this case BP." He also noted that Halliburton was responsible for encasing the well in cement, while Halliburton executive Tim Probert said his company's work was completed 20 hours before the rig went up in flames.

President Obama called the finger-pointing testimony a "ridiculous spectacle quick pay day loan."

The Justice Department has opened civil and criminal investigations into the spill. Attorney General Eric Holder has indicated that BP isn't the only company that could be held liable.

Kenneth Green, a resident scholar at the American Enterprise Institute for Public Policy Research think tank, said the investigations may have stifled communications between the government and companies — and between the companies themselves.

"The problem is you've chilled communications with the very people you need to solve the problem," he said. "Once the Justice Department got involved, the lawyers were basically immediately in charge of the show."

BP is trying to move forward from the disaster that sent anywhere from 94 million to 184 million gallons of oil spewing into the Gulf, announcing once the cap was finally in place that its vilified chief executive, Tony Hayward, will be leaving in October.

He will be replaced by American Bob Dudley, who told reporters in Biloxi, Miss., on Friday that it's "not too soon for a scaleback" in the cleanup, and in areas where there is no oil, "you probably don't need to see people in hazmat suits on the beach."

Relatively little oil remains on the surface of the Gulf, leaving less for thousands of oil skimmers to do, though Plaquemines Parish President Billy Nungesser on Saturday offered to prove to Dudley that there's still plenty of oil off the coast of Louisiana.

"Let me take him water-skiing out here and see if he comes up black," Nungesser said as he took a small group of reporters on a boat tour of an inlet at St. Mary's Point, about an hour south of New Orleans. Fresh globs of thick oil saturated the marshes and brownish tar balls were visible in the water.

Even in areas where no oil was visible on the surface, workers were pulling up heavily stained boom that had been placed there in recent days.

Hundreds of lawsuits already have been filed in the aftermath of the explosion and spill. Rig workers are suing their employers. Idled fishermen, coastal property owners and tourism-dependent businesses are suing the companies. Environmental lawyers are suing government regulators.

So far, the companies haven't sued each other. Christopher Ruppel, an energy expert and managing director of capital markets for the Execution Noble investment banking group, said the companies are probably waiting to get a full tally for the cleanup costs and a better read on the government probes.

Meanwhile, he added, the companies are acting like "porcupines working together."

"Everyone is going to move very slowly and carefully," he said.

___

Henry reported from Atlanta. Associated Press Writers Harry R. Weber in Port Sulphur, La., and Greg Bluestein in New Orleans contributed to this report.

3 squabbling companies must cooperate to plug well

Crews work to keep oil spill from Lake Michigan

BATTLE CREEK, Mich. – Federal officials believe an oil spill that has contaminated a major Michigan river was larger than first estimated, and the governor is warning of a "tragedy of historic proportions" should the oil reach Lake Michigan some 80 miles away, and the vacation communities that depend on it.

The Environmental Protection Agency, which has taken control of efforts to contain and clean up the Kalamazoo River spill, said late Wednesday that it believes more than 1 million gallons of oil leaked from a pipeline into Talmadge Creek, which feeds the river. Enbridge Inc., the Canadian company that oversees the pipeline, had estimated that 819,000 gallons spilled Monday before they could stop the leak.

By late Wednesday, the oil had traveled at least 35 miles downstream from where it leaked in Calhoun County's Marshall Township, killing fish, coating other wildlife and emitting a strong, unpleasant odor. It had passed through Battle Creek, a city of 52,000 residents about 110 miles west of Detroit, and was headed toward Morrow Lake, a key point near a Superfund site upstream of Kalamazoo, the largest city in the region.

State and company officials had said earlier this week they didn't believe the oil would spread past a dam at the lake, and that they would be able to contain it there.

But Tom Sands, the deputy state director for emergency management and homeland security, said during a conference call with Granholm on Wednesday that he had seen oil that had made it past the dam while he was flying over the area.

On Thursday, EPA spokesman Mick Hans said its incident commander was in the same plane as Sands and wasn't convinced oil had passed the dam. Hans said the EPA, however, wasn't trying to take issue with the report.

"We're all working together," Hans said. "Sometimes you get different technical interpretations."

The company's latest update statement Wednesday said oil was about seven miles short of the opening to Morrow Lake.

Granholm on Wednesday called on the federal government for more help, saying resources being marshaled by the EPA and Enbridge were "wholly inadequate."

The Calgary, Alberta-based company said Wednesday and Thursday that it was ramping up its efforts to contain and clean up the mess. Chief executive Patrick D. Daniel said the company had made "significant progress," though he had no update on a possible cause, cost or timeframe for the cleanup.

Workers and contractors were using vacuum trucks and absorbent booms to contain and clean the spill, and the company was bringing in more help, Enbridge spokeswoman Lorraine Grymala said Thursday.

"We're getting them here as quickly as we can," Grymala said.

The overall work force on the spill Wednesday was likely more than 400 people on line pay day loans. EPA officials said they're ramping up efforts with air and water testing. Local officials said they weren't concerned about municipal water supplies.

The spill has killed fish and coated wildlife. Both company and EPA officials have said oil is no longer leaking, but the spill's size was considerable. An 800,000 gallon spill would be enough to fill 1-gallon jugs lined side by side for nearly 70 miles. It also could fill a walled-in football field, including the end zones, with just under 2 feet of oil.

Granholm has declared a state of disaster for some areas along the river, and President Barack Obama called Granholm to offer federal support.

Anil Kulkarni, a mechanical engineering professor at Penn State University, said a quick response was vital to the river's ecology. Snails, frogs, muskrats and even birds eat, live and nest on or near the riverbank.

"The river banks are nearby. It has more potential to inflict damage because of the proximity to land. Anything that comes in contact with oil is going to be affected badly. It prevents the natural life of species, whether it's collecting food or anything else."

Enbridge-related companies have been cited several times in recent years for violations in the Great Lakes region.

Houston-based Enbridge Energy Co., spilled almost 19,000 gallons of crude oil onto Wisconsin's Nemadji River in 2003. Another 189,000 gallons of oil spilled at the company's terminal two miles from Lake Superior, though most was contained.

In 2007, two spills released about 200,000 gallons of crude in northern Wisconsin as Enbridge was expanding a 320-mile pipeline. The company also was accused of violating Wisconsin permits designed to protect water quality during work in and around wetlands, rivers and streams, the Wisconsin Department of Natural Resources said. The violations came during construction of a 321-mile, $2 billion oil pipeline across that state. Enbridge agreed to pay $1.1 million in 2009.

The Michigan leak came from a 30-inch pipeline, which was built in 1969 and carries about 8 million gallons of oil daily from Griffith, Ind., to Sarnia, Ontario.

An 80-mile segment of the river that begins at Morrow Lake and five miles of a tributary, Portage Creek, have unsafe levels of PCBs and were placed on the federal Superfund list of high-priority hazardous waste sites in 1990. The Kalamazoo site also includes four landfills and several defunct paper mills.

___

Associated Press writers David Runk and Corey Williams in Detroit contributed to this report.

Crews work to keep oil spill from Lake Michigan

Yahoo Japan Teams With Google on Search

TOKYO — Yahoo Japan announced Tuesday that it would use Google technology to power its Internet search engine and search-advertising platform. The deal puts Yahoo Japan on a path sharply divergent from that of its American cousin, Yahoo, which will use Microsoft’s Bing search technology by the end of 2010 under an agreement announced last year.

Yahoo holds 34.8 percent of Yahoo Japan, while Softbank, the Japanese cell phone and Web giant, owns 38.6 percent.

The partnership announced Tuesday would create a powerhouse that combines Google’s search technology with Yahoo Japan’s popular content and services. Financial terms of the deal were not disclosed.

Google’s share of Web searches in Japan has been growing, but it still trails Yahoo Japan, the market leader. According to Net Ratings, a research firm, Yahoo Japan grabs 53.2 percent of Web queries in Japan, followed by Google at 37.3 percent. Microsoft’s MSN and Bing searches garnered just 2.6 percent.

Globally, though, Google dominates — the company had 85 percent of Internet queries, compared with 6.2 percent for Yahoo brand searches in June, according to the analysis arm of Net Applications, a Web services company.

Yahoo Japan’s adoption of Google’s search technology would mean that about 90 percent of Web queries in Japan would be powered by the company. Yahoo Japan used Google technology for its search engine between 2001 and 2004, but then switched back to Yahoo’s system.

Masahiro Inoue, chief executive of Yahoo Japan, said that after a year of careful analysis, the company had concluded that it would ultimately benefit more from Google’s search engine than from Microsoft’s because of Google’s record in Japanese-language queries. Google has had a presence in Japan since 2001.

“At the present time, we feel there are quite a few areas where Microsoft is not yet ready,” Mr. Inoue said Tuesday at a news conference in Tokyo. “Google is one step ahead in Japanese-language services.”

Mr. Inoue said Yahoo Japan would pay to use Google’s search technology, while Google would receive up-to-the-minute content updates from Yahoo Japan, something he said would help Google search results stay timely. He did not offer financial details.

Still, by building its content on top of Google search results, Yahoo Japan will continue to compete with Google, Mr. Inoue said. The chief executive raised eyebrows when he told Nikkei Business Magazine in January that Google services, like Street View and Book Search, were “nothing impressive.”

“We’re switching engines to Google, but what we build on top of that will be exclusive to Yahoo,” Mr. Inoue said Tuesday. “That will continue to give Yahoo the edge online pay day loans.”

Yahoo Japan’s deal seems to mirror Yahoo’s overall goals, at least: to focus on the company’s strengths as a creator of Web content and as a marketer and leader in online display advertising, while tapping outside Web search technology.

Yahoo Japan’s dominance in Japan has been the product of its universe of content, spanning everything from online shopping and auction sites to pages devoted to news and stock market data. Unlike Google Japan’s simple landing page, the Yahoo Japan portal contains a vast array of icons and links.

Microsoft’s Bing search, which tries to put search results in better context than its rivals do, has won favorable reviews. But as has happened elsewhere in the world, it has failed to gain much of a foothold in Japan.

Microsoft and Google have been vying for alliances with Yahoo for years.

In the spring of 2008, Microsoft made a $47.5 billion hostile offer to buy Yahoo after on-and-off talks about a merger had led nowhere. Google sought to torpedo the merger and began talks with Yahoo on an advertising partnership. They reached an agreement, but it was abandoned amid antitrust concerns in the United States.

Microsoft ultimately walked away from its offer for Yahoo, and in June 2009 the two sides agreed on the search partnership.

Akira Kajikawa, chief financial officer of Yahoo Japan, said Yahoo backed the Google deal announced Tuesday, and that there would be no changes to Yahoo Japan’s relationship with Yahoo. Jerry Yang, Yahoo’s co-founder and former chief executive, will keep his seat on Yahoo Japan’s board, Mr. Kajikawa said.

In a blog post, Daniel Alegre, Google’s vice president for Asia Pacific and Japan, described the deal as one that would bring benefits to both sides. Mr. Alegre also said the partnership highlighted a lesser-known part of Google’s business: the licensing of Google technology to rival search engines.

Yahoo Japan will “be able to customize Google search to provide its own search service, one that fits its own users,” Mr. Alegre said.

It is unclear what Yahoo Japan’s move might mean for the Yahoo brand in other countries. Softbank also owns shares in Alibaba Group, which operates the Yahoo portal in China.

Google was engaged in a lengthy confrontation with Chinese regulators this year over censorship issues and alleged hacking. The government recently renewed Google’s license to operate its www.google.cn Web site, although the company is now largely pointing users in mainland China to its site in Hong Kong, which is not censored.

Yahoo Japan Teams With Google on Search

As BP Lays Out Future, It Will Not Include Tony Hayward

Tony Hayward, the embattled chief executive of BP, has agreed to step down and be replaced by Robert Dudley, the company’s most senior American executive who is now in charge of BP’s operations in the Gulf of Mexico, according to a person close to the company’s board.

The change in leadership will be discussed by the board of directors on Monday and may be announced Tuesday if the board ratifies the decision. Mr. Hayward would probably be replaced in the fall, the person said, but a decision has already been made by mutual agreement between Mr. Hayward and senior BP management.

“It is in the best interest of the company to go forward with fresh leadership,” the person said.

Mr. Hayward, who has been running BP since 2007, is the first senior executive at BP to pay the price for the largest oil spill in the United States, after the Deepwater Horizon blew up on April 20. His handling of the crisis has infuriated Gulf Coast residents and government officials alike, especially after a series of public gaffes forced him to retreat from the spotlight.

A great deal is at stake for BP, which remains under considerable pressure even though the oil has stopped gushing from its well underneath the Gulf of Mexico. A tropical storm over the weekend briefly forced BP to suspend operations to permanently plug the doomed well. Some members of Congress want to ban BP from running new offshore ventures. The Senate, meanwhile, is expected to vote on legislation this week that would hold “BP accountable,” said Senator Harry Reid, the Democratic majority leader.

And the company continues to lurch from one public relations embarrassment to another. Last week, BP admitted it posted doctored pictures of its spill operations on its corporate Web site.

And on Saturday, Kenneth Feinberg, the administrator managing the $20 billion claims fund BP set up under pressure from the White House, accused the company of holding up compensation payments to spill victims.

“I have a concern that BP is stalling claims,” Mr. Feinberg told reporters. “I doubt they are stalling for money. It’s not that. I just don’t think they know the answers to the questions” by the claimants.

This uncertainty about BP’s future business, its ultimate liabilities and its public relations debacle continue to weigh on the company’s share price, which is down about 40 percent since the spill started.

“The key issue now is whether investors and BP’s board think Tony Hayward is the right person to move the company forward,” said Matthew J. Slaughter, a professor at Dartmouth College’s Tuck School of Business. “Is this a BP problem or is this a Tony Hayward problem?”

Regardless of who leads the company, BP’s top executives have a lot to tackle. They need to convince the company’s constituents — its shareholders, regulators and government officials in the United States and other countries where BP has operations — that BP can pay all costs related to the spill, clean up the Gulf Coast, and still manage to grow its business around the world, analysts said.

In recent weeks, BP has taken steps to put the oil spill behind it no fax cash advances. It has been busy negotiating the sale of some of its assets in Texas, Egypt and Canada to the Apache Corporation, raising $7 billion. Mr. Hayward personally sought to reassure key officials in Russia and Azerbaijan, where BP has large operations, that the company was still a reliable and safe partner.

BP also recently announced that it had won new concessions to drill offshore Egypt; alongside Chevron, it reportedly bid for an offshore exploration block in the South China Sea; and this month, it spent nearly $100 million to buy a cellulosic biofuel business.

In the gulf, there was positive news when BP finally managed to stem the flow of oil with a new cap. The company hopes to permanently shut the well within the next few weeks.

Bruce Lanni, an energy portfolio strategist at Nollenberger Capital Partners, said the fact that no more oil was spilling the gulf was “an inflection point” for BP.

“There are a lot of good things now going in BP’s favor,” Mr. Lanni said. “There has been an overreaction to the cost of the spill. BP has the opportunity to emerge as a stronger company. I think this is where investors are missing a window of opportunity.”

Some investors, however, are still concerned about the ultimate price tag for the spill. Uncertainty over BP’s liabilities is keeping its shares under considerable pressure, although they rebounded somewhat in recent weeks. BP stock closed at $36.86 on Friday, valuing the company at $115 billion.

“Right now the market is just guessing what the liability might be for BP,” Jay Singhania, a vice president at Westwood Management. “If BP could help outline exactly what the costs would be, then investors could gain more confidence.”

The final bill will depend, in part, on whether the investigation determines that BP was negligent and responsible for the blowout at its Macondo oil well. The explosion on the Deepwater Horizon drilling rig on April 20 killed 11 workers.

So far, BP said it has spent $3.95 billion on its containment and clean up efforts. The company warned in a statement, “It is too early to quantify other potential costs and liabilities associated with the incident.”

Investors and analysts also insisted that BP must rapidly tackle its safety record head-on. “It is very clear BP will need to show that its management practices will improve and instill an greater safety discipline within the organization,” said Catharina Milostan, an energy analyst at Morningstar.

Mr. Hayward, a geologist who began his career at BP and became chief executive in 2007, inherited a company with a poor safety record that resulted in a string of deadly accidents and spills in the United States. He sought to change the “top-down” style of management while trying to simplify its structure. Last year, he said it would take five years to change BP’s culture and adopt a single, companywide operating system.

Julia Werdigier contributed reporting.

As BP Lays Out Future, It Will Not Include Tony Hayward

Ford bullish on Japan with new Asian investments

TOKYO – Ford hopes its investments in Asia will dramatically boost sales in Japan — a market so dominated by local makers like Toyota and Honda that the U.S. automaker has long struggled to maintain a toehold.

Tim Tucker, chief executive of Ford Motor Co.'s Japan operations, said Friday he was bullish about the potential for Japan, although he declined to give a sales target or specific product plans.

Last year, Ford sold just 2,200 vehicles in Japan — a tiny fraction of a market where new car sales last year totaled about 3 million vehicles.

But Tucker, who oversaw Ford's India business before taking his new post last month, was optimistic about potential growth, noting that Ford sold 30,000 vehicles in India last year and expects to sell 130,000 this year.

"We know we are going to grow our business," he said at a Tokyo event to unveil the Kuga sport-utility vehicle, one of five models Ford plans to introduce in Japan through 2012.

He declined to say whether Ford would bring a hybrid model to Japan, despite several questions from reporters.

Ford, based in Dearborn, Michigan, has a successful hybrid program in the U.S. exemplified in its Fusion hybrid. But it will face stiff competition in Japan, home to strong hybrid makers Toyota Motor Corp no teletrack payday loan. and Honda Motor Co.

This week, Ford introduced in the U.S. the 2011 gas-electric hybrid Lincoln MKZ sedan for about $35,000, the same price as the gasoline-engine version.

Usually hybrids cost a couple of thousand dollars more than the equivalent regular model because of the ecological technology.

"All I can say is wait," he said on Ford's Japan possible hybrid rollout. "You will be pleasantly surprised."

Tucker acknowledged Ford has lagged in Japan but stressed Ford is now on an ambitious drive to attract Japanese who have never stepped into a Ford showroom before.

Ford's new strategy to invest in manufacturing in places like India, Thailand and China is a huge opportunity to boost sales in Japan, as well as other Asian nations, according to Tucker.

Ford is better able to respond to the recent shift in small cars in Japan and the Asian region, and it can bring down costs with higher production volumes, he said.

"We are very excited about the product plan we have in place," said Tucker.

Ford bullish on Japan with new Asian investments

Morgan Stanley shares rally on standout quarter

NEW YORK (MarketWatch) -- Morgan Stanley shares surged as much as 10% Wednesday after the bank said that it swung to a second-quarter profit with rising revenue across its business, bucking an industry trend.

Amid lackluster Wall Street bank reports this earnings season so far, Morgan Stanley touted a shallower fall in investment banking and trading revenues, while posting a rise in advisory fees.

"Looks like a good quarter relative to expectations that have been reset lower following the money center bank and Goldman Sachs earnings," Deutsche Bank analysts said in a note to investors. Read about how the firm topped Goldman in trading here.

The financial-services company said net income attributable to common shareholders came in at $1.58 billion, or $1.09 a share, compared with a loss of $1.26 billion, or $1.10 a share, in the second quarter of 2009. On an adjusted basis, the company said profit in the latest quarter was $1.44 billion, or 80 cents a share.

Investors see glass as half empty

Though companies are reporting strong profits and have solid balance sheets, investors remain focused on the economy's stalled recovery, reports Barrons.com's Bob O'Brien.

Revenue rose 53% to $7.95 billion from the year-ago period.

On average, analysts polled by FactSet Research expected earnings of 57 cents a share on $8.11 billion in revenue.

Despite the positive results, Chief Executive James Gorman sounded a cautious note on a conference call with analysts Wednesday morning.

"We've made progress this quarter, but still have a long way to go," said Gorman. "The second quarter was a very difficult environment for the businesses we operate in, and within the quarter, the second half was more challenging than the first." Read "At Morgan Stanley, it's not just the comparables."

'Pushed out'

Some analysts on the call noted outflows from the firm's wealth management business, which houses the largest stock broking force in the world. Morgan Stanley is integrating a huge stock-broking business it bought from Citigroup in 2009 and has set profitability targets related to this effort.

"On the Wealth Management, it seems like your target for profit margins in net new assets could be at risk for this year and next year given $5 billion outflows this quarter, client assets down," Mike Mayo, an analyst at CLSA, said.

Morgan Stanley Chief Financial Officer Ruth Porat said progress depends a lot on the market. After the stocks plunged in the so-called flash crash in May, retail investors stopped trading as much, she explained.

"It is going to take time to come back," she added. "And so I think it is fair to assume that some of those targets get pushed out."

Charge

During the quarter, the bank incurred a $361 million charge related to the U.K. bank payroll tax, and gained $514 million after tax from the sale of Van Kampen Investments to Invesco Ltd. .

Morgan Stanley stock closed at $26.73 a share, paring earlier advances but held on to gain 6% on the day. The stock is down 6.5% in 2010 and up a fraction in the past 12 months.

Following the results, Standard & Poor's Equity Research analyst Matthew Albrecht raised his 2010 earnings estimate by 28 cents to $3.08 a share, citing cost controls and expanding margins as the firm integrates the Smith Barney brokerage unit it got from Citi. He maintained a hold rating and $30 target price on the bank's stock.

Investment banking fees steady

"Investment banking revenues bucked the industry downtrend to be flat in the quarter," said analysts at Sandler O'Neill & Partners in a note following the announcement guaranteed high risk personal loans.

Morgan Stanley's institutional securities unit generated net revenue of $4.5 billion in the second quarter, up from $2.96 billion a year earlier. That includes a top-line contribution from debt-valuation adjustments of $750 million compared with a loss of $2.3 billion in the year-ago period.

Fees generated from underwriting dropped 30% to $597 million, partially offset by a 7% increase in advisory revenue.

Despite the slowdown, the firm led its peers in year-to-date global initial public offerings, underwriting 6.3% of the value of the deals, according to independent research firm Dealogic.

"The pipeline is healthy, but the issue is moving deals through the pipeline to announcement," said Porat on the call. Looking ahead, she added that IPOs "look good in the second half, with large offerings in Asia and the U.S."

S&P 500 (1 YEAR)

• Market Snapshot: U.S. stocks in focus • Today's biggest advancing, declining stocks • Sign up for free, breaking-news email alerts | Earnings, updates, warnings | Industries • Tech Stocks | Energy Stocks | Retail Stocks • Financials | Airline Stocks | Pharma and Biotech • Bonds | Oil news | Gold news • Currencies | Market Data | Economic Calendar • See all the latest markets video

In the trading segment, Porat said the firm gained market share in the cash equities business, but so far the third quarter has been "quite muted in institutional and retail" activity.

Analysts at Ticonderoga Securities said Morgan Stanley's equity trading revenues were $1.4 billion, flat from the first quarter. Fees from fixed-income, commodities and currencies trading were down 14% from the prior quarter, to $2.3 billion. The analysts said this was the "smallest sequential decline in the peer group."

On Tuesday, rival Goldman Sachs Group Inc. said revenue from its investment-banking unit declined 36% from a year ago. Last week, J.P. Morgan Chase & Co. said equity underwriting fees fell 68% and debt underwriting fees dropped 6%.

"Trading held up in a tough environment. Considering peer results, this was not a bad quarter for Morgan Stanley," the analysts added in a note.

Wealth and asset management improve

Morgan Stanley's wealth-management business generated $3.07 billion in revenue during the second quarter, compared with $1.92 billion a year ago. The bank said revenue contributions after closing the Morgan Stanley Smith Barney transaction were partially offset by weaker market conditions.

As of June 30, total clients assets reached $1.5 trillion under 18,087 global representatives in the division.

While revenue in the asset-management business rose to $410 million from $358 million, the unit still saw a pretax loss of $86 million, an improvement from the $210 million loss in the second quarter of 2009.

Assets under management amounted to $251 billion at quarter-end, from $242 billion at the same point last year.

Going into the second half of 2010, Porat said she remained "cautiously optimistic" as the global economic outlook continued to be the firm's "key concern after the economic, political, and seemingly random events" of the past half-year. "Although the economy is fragile, fears of a double dip are overstated," she added.

Morgan Stanley shares rally on standout quarter

Economic Report: U.S. home builders index falls to 15-month low

WASHINGTON (MarketWatch) -- U.S. home builders are turning increasingly pessimistic about their business after home sales dried up when a federal subsidy expired, according to the latest survey by the National Association of Home Builders.

The NAHB/Wells Fargo housing market index fell two points to 14 in July, down from a downwardly revised 16 in June. It's the lowest since April 2009, the NAHB said Monday.

At 14, the index shows that about one in seven builders has a favorable view of the housing market. And builders' views on prospective sales were the gloomiest since March 2009.

Fears of New Oil Leak

A revival for BP shares after the placing of a cap on its ruptured well has ended amid fears that oil may be seeping from the sea bed. Video courtesy of Reuters.

"The pause in sales following expiration of the home buyer tax credits is turning out to be longer than anticipated due to the sluggish pace of improvement in the rest of the economy," said David Crowe, chief economist for the builders' advocacy and lobbying group.

The decline in the builders' index in July "reflects a number of underlying market conditions that builders are seeing, including hesitant home buyers, tight consumer credit, and continuing competition from foreclosed and distressed properties that are priced below the cost of construction," Crowe said.

Still, Crowe said he expects sales to rise about 10% this year, citing low mortgage rates, affordable prices and favorable demographic trends. Read the full release on the NAHB's Web site.

Economists had been looking for a two-point drop in the builders' index, down to 15 from June's original reading of 17, according to a survey conducted by MarketWatch instant credit report. See our complete economic calendar.

The index, which peaked at 72 more than six years ago, has been below the breakeven point of 50 for 51 consecutive months and it bottomed at a record-low 8 in January 2009.

After more than two years of government support to buyers, the federal tax credit recently expired. Buyers needed to have signed a contract on a home by the end of April and now have until the end of September to close the deal.

Sales of new homes fell 30% in May after the tax credit expired, U.S. data showed. Housing starts fell 10%.

Over time, the NAHB index is correlated with changes in the government's data on housing starts, which will be released for June on Tuesday. Economists are expecting a 3% decline in starts to a seasonally adjusted annual rate of 575,000 in June, which would be down about 75% from the peak in 2006.

Details

All three components of the NAHB's index fell in July: The index for current sales dropped two points to 15; the index for future sales edged down one point to 21; and the index for buyers' traffic came in at 10, down three points.

Builder sentiment deteriorated in two of four regions.

It fell five points to 9 in the West, the lowest since April 2009. It also dropped five points in the South, to 14, the lowest since March 2009.

Sentiment rose one point in the Midwest to 15, and it increased seven points in the Northeast to 23.

Economic Report: U.S. home builders' index falls to 15-month low

Stocks to Watch: Stocks to watch Monday: TI, Halliburton, Hasbro

SAN FRANCISCO (MarketWatch) -- Among the companies whose shares are expected to see active trade in Monday's session are Texas Instruments Inc., Halliburton Co. and Hasbro Inc.

Texas Instruments Inc. is expected to report earnings of 62 cents per share and revenues of $3.51 billion on Monday for the second quarter of 2010, according to FactSet.

U.S. week ahead: Deluge of earnings reports

Some 139 companies will post results, giving a broader view of the economy. On Wednesday, President Obama is expected to sign into law the most comprehensive reform of bank regulation since the Great Depression. Christopher Hinton reports.

Halliburton Co. is expected to report earnings of 36 cents per share and revenues of $4.08 billion for the second quarter of 2010.

Hasbro Inc. is expected to report earnings of 25 cents per share and revenues of $751 million for the second quarter of 2010.

Delta Airlines Inc. is expected to report earnings of 63 cents per share and revenues of $8.25 billion for the second quarter of 2010.

McMoran Exploration Co. is expected to report a loss of 19 cents per share and revenues of $108 million for the second quarter of 2010.

Tupperware Corp. is expected to report earnings of 97 cents per share and revenues of $578.6 million for the second quarter of 2010 credit report.

After the closing bell Friday, Ryder System Inc. said its board raised the quarterly dividend to 27 cents a share from 25 cents. The dividend is payable Sept. 17 to shareholders of record as of Aug. 23.

Apple Inc. addressed the growing complaints about the reception of its iPhone 4 on Friday, saying it will give a free case to all buyers of the device through the end of September. See full story.

Shares of RealD Inc., which started trading on the market Friday, fell 0.8% in after-hours trading after a strong debut. RealD sold 12.5 million shares at a price of $16 each and surged 22% to close at $19.51.

Qlik Technologies , another debutant, saw shares rise 0.1% in late trade after closing up 28% at $12.80. The business intelligence software developer offered 11.2 million shares at a price of $10 a share.

Citigroup Inc. shares rose 0.8% after the closing bell Friday, after shedding more than 6% during the session. Citi earlier reported second-quarter profit of $2.7 billion, or 9 cents a share, compared with $4.3 billion, or 49 cents a share, in the year-ago period.

Stocks to Watch: Stocks to watch Monday: TI, Halliburton, Hasbro

Insider Buying at Monsanto

This week, Monsanto's (NYSE: MON - News) Chairman and CEO Hugh Grant and its CFO Carl Casale both filed SEC Form 4s to record purchases of stock. Grant bought 37,500 shares and Casale bought 30,000. With shares north of $50 a piece, the combined investment of more than $3.5 billion is pretty substantial even for well-paid executives. Money doesn't grow on corn stalks, you know.

Why now? And should you follow their example?

The answer to the first one seems clear enough. Grant and Casale must think Monsanto has hit bottom. The stock has fallen 60% from its high in 2008, much farther than the S&P 500 that's off by just 20% over that timeframe.

Part of that fall is due to slipping earnings, which are expected to fall this year for the first time in years. Roundup, the company's cash cow, was hit with massive generic competition that caused sales to collapse.

But the herbicide is only a part of Monsanto's business. Its future growth lies squarely in its biotech seed trait business. The company has been stacking traits on top of one another to create super seeds capable of offering farmers better yields -- at higher costs of course. The company thinks earnings can grow in the mid-teens annually from here thanks to the growth of its seeds.

Clearly Grant and Casale are putting their money where their mouths are. Of course you don't have to follow their lead if you aren't as bullish on Monsanto. You could invest in direct competitors like DuPont (NYSE: DD - News), Dow Chemical (NYSE: DOW - News), or Syngenta (NYSE: SYT - News) paydayloans. If you want to broaden your exposure to the sector, other agricultural stocks like fertilizer producers Mosaic (NYSE: MOS - News) and PotashCorp (NYSE: POT - News), or even equipment manufacture Deere (NYSE: DE - News), are worth a look. All are down at least 20% over the same time period as Monsanto, with Mosaic having an incredible 72% shaved off its value.

Is Monsanto a worthy investment? Yes, but in moderation, considering the risk in a turnaround candidate. Grant and Casale's buying shouldn't be a reason in and of itself to buy shares. But if you were on the fence about making a purchase, executive insider purchasing should give you a little more added confidence that management is aligned with shareholders.

A tip of the Fool's cap to the Motley Fool Inside Value team for alerting me to the insider buying. The stock has been recommended by the newsletter, and Motley Fool Options has recommended a synthetic long position on Monsanto. Syngenta is a Motley Fool Global Gains selection. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.

Insider Buying at Monsanto

China to invest $10B in Argentinas railways

BEIJING – Argentina and China signed a deal for Beijing to invest $10 billion in the South American nation's railways during a visit by the Argentine president but there was no sign of progress in a dispute over soy imports.

The agreements announced Tuesday during the visit by President Cristina Fernandez come as Beijing expands its role in Latin America through investments in oil and other industries and closer financial ties with the region's governments.

The railway deals include a $2.5 billion project to upgrade the rail system of Argentina's capital, Buenos Aires, Chinese news reports said. They said projects would include the purchase of Chinese railway technology.

China is promoting exports of railway equipment and is trying to develop its own high-speed rail technology. A Chinese railway official said in March that state-owned companies are building high-speed lines in Venezuela and Turkey.

There was no sign of progress in a dispute over China's ban on imports of Argentine soy, a key export for Fernandez's nation. The Chinese government played down the ban, calling it a normal trade dispute.

The soy dispute is the most pressing issue for Fernandez, who was on the first trip to China by an Argentine president since 2004.

The railway deals were among a dozen agreements announced Tuesday.

Others included a memorandum of cooperation state-owned China Petroleum & Chemical Corp., also known as Sinopec, and state-owned Energia Argentina SA, or Enersa. No details were released cash advance to savings account.

There was no word on a possible Chinese purchase of BP plc's stake in Argentina's Pan American Energy, an oil and gas producer. News reports say BP might sell its 60 percent share to state-owned China National Offshore Oil Corp., which owns 20 percent of Pan American and wants to expand abroad.

Argentine exports of soy oil to China totaled $1.4 billion last year, accounting for a sizable chunk of two-way trade that strongly favored Beijing.

China imposed the soy ban April 1, after saying it found shipments containing excessive levels of hexane, a potentially cancerous chemical used in soy processing. The restrictions also came after Argentina last year imposed antidumping measures on some Chinese goods.

China has denied the soy ban is a retaliatory measure, while Argentina has said its soy products are not contaminated.

When asked Tuesday by reporters about the soy dispute, a Chinese Foreign Ministry spokesman called Argentina an important partner in Latin America and said the problem should be resolved.

"Regarding the import of soybean oil to China, it's just a normal problem that comes with the development of trade and economic relations," said the spokesman, Qin Gang. "I believe as long as the two countries follow the spirit of cooperation and mutual benefit and through friendly consultation, a proper resolution will be found."

China to invest $10B in Argentina's railways

Asian stocks lifted by Wall Street, China trade

TOKYO – Asian stock markets rose Monday, lifted by robust Chinese trade figures that eased worries the global recovery is losing momentum.

In Japan, a weaker yen offset concerns about the country's economy after the ruling party's defeat in upper house elections Sunday.

The Nikkei 225 stock average reversed early losses and finished the morning session up 9,592.11 points, or 0.1 percent, at 9,592.11.

Hong Kong's Hang Seng added 0.6 percent to 20,503.80 and the Shanghai Composite index advanced 1.1 percent to 2,497.88. Miners helped push Australia's S&P/ASX 200 up 0.4 percent to 4,413.90.

Benchmarks in South Korea, Taiwan, Singapore and New Zealand also rose.

Regional markets were boosted by gains Friday on Wall Street and the trade figures from China, which were stronger than expected.

China's customs agency on Saturday said exports were up 35 percent in June from a year earlier despite concerns Europe's debt crisis could hurt trade. Exports to Europe rose 36 percent.

"Data for June shows China's trade account continuing to defy gravity, with exports strong despite mounting evidence of a faltering global recovery, and imports strong despite expectations of slowing domestic investment growth," Tom Orlik, an analyst in Beijing for Stone & McCarthy Research Associates, said in a research note business cards.

In Tokyo trade, exporters benefited as the dollar climbed above the 89-yen level. Sony Corp. jumped 3.6 percent, and Honda Motor Co. rose 2.8 percent.

Japanese voters handed a stinging electoral defeat to Prime Minister Naoto Kan's party Sunday, which lost its slim majority in the upper house. The results reflect voters' rejection of Kan's proposal to raise taxes to lower the country's ballooning debt and points toward policy uncertainty in the months ahead.

In New York on Friday, the Dow Jones industrial average rose 0.6 percent 10,198.03. The finish marked its best week in a a year as investors placed their last bets before the start of second-quarter earnings reports.

Sentiment also got a lift from news that China renewed Google's license to operate in the country.

In currencies, the dollar rose to 89.06 yen from 88.56 yen late Friday. The euro fell to $1.2596 from $1.2641.

Benchmark crude for August delivery was down 4 cents at $76.05 a barrel in electronic trading on the New York Mercantile Exchange.

Asian stocks lifted by Wall Street, China trade

Worst of debt crisis is over, says ECBs Stark

FRANKFURT (MarketWatch) -- The worst of the recent financial-market turmoil tied to Europe's sovereign-debt crisis appears to have passed, a top European Central Bank official said Friday.

"It seems the worst is over," said Juergen Stark, a member of the central bank's executive board, in a news conference on the sidelines of a central-banking conference.

Stress tests key to easing Europe's uncertainty

Transparent European bank-stress tests can help ease the uncertainty that has plagued the markets this year, providing a worst-case scenario on which confidence can be rebuilt

Financial markets have "calmed down" and tensions have eased, as evidenced by the expiration last week of 442 billion euros of one-year, fixed-rate loans extended by the European Central Bank to euro-zone commercial banks without any major hitches, Stark said.

The European Central Bank no longer offers one-year refinancing operations. Banks used a six-month refinancing facility and a six-day bridging facility amid the expiration but rolled over around €200 billion less than the amount that was due to expire.

The resulting reduction in liquidity resulted in only a slight rise in money-market rates, however, signalling confidence in the euro area and the banking system, Stark said, noting the "enormous nervousness" in the markets about the expiration's potential impact.

Stark also had tough words for the International Monetary Fund, saying that criticism of the euro zone in its latest economic outlook report suggested the institution "has not caught up to reality."

The IMF said earlier this week that problems in the euro zone threatened to spill over to other regions and potentially derail growth. Read more about the IMF.

Stark also said so-called stress tests, to be administered to 91 instituting representing the bulk of the European banking system with the results to be published July 23, would be credible and dismissed worries heard in some quarters that the parameters of the tests may not be sufficiently stringent payday loan lenders. Read more about the stress tests.

"You shouldn't listen to some of those who always ask for more," Stark said, adding that banks "went through a test already -- a reality test," courtesy of the financial crisis.

In an earlier panel discussion, Stark downplayed the potential for deflation in the euro zone, but acknowledged that some countries may see a temporary period of negative inflation rates.

"Temporary negative inflation is not a big issue for the euro area," he said.

In a speech to the conference, ECB Vice President Vitor Constancio said debt problems in the euro zone could slow growth but wouldn't derail it.

"This new chapter of the financial crisis ... threatens to weaken -- but not kill -- the recovery," he said.

Costancio said efforts to stabilize the banking system and strengthen penalties for violating fiscal rules would ultimately result in a more robust monetary union.

He also rejected ideas that countries with large current-account surpluses should undertake policies designed to boost domestic consumption in order to offset cutbacks in domestic demand by countries running deficits.

Some commentators have argued that Germany should move to boost domestic demand to offset the drop seen in so-called peripheral countries of the euro zone.

"This type of argument can go too far," he said. "In some cases, there may be some room for maneuver, but even if it is ignored that the euro area is not a closed economy, so that all members have other markets to support their growth, it would not be right to ask countries to compromise unreasonably on their international competitiveness or to put the sustainability of their public finances at significant risk."

Worst of debt crisis is over, says ECB's Stark

Timeline: Gulf of Mexico oil spill

ABU DHABI/HOUSTON (Reuters) – Millions of gallons/liters of oil have spewed into the Gulf of Mexico since an April 20 explosion on a drilling rig triggered the worst spill in U.S. history.

Below is a timeline of the disaster and its impact.

April 20, 2010 - Explosion and fire on Transocean Ltd's drilling rig Deepwater Horizon licensed to BP Plc; 11 workers are killed. The rig was drilling in BP's Macondo project 42 miles southeast of Venice, Louisiana, beneath about 5,000 feet of water and 13,000 feet under the seabed.

April 22 - The Deepwater Horizon rig, valued at more than $560 million, sinks and a 5-mile oil slick forms.

April 25 - Efforts to activate the well's blowout preventer fail.

April 29 - U.S. President Barack Obama pledges "every single available resource," including the U.S. military, to contain the spreading spill and says BP is responsible for the clean-up.

April 30 - An Obama aide says no drilling will be allowed in new areas, as the president had recently proposed, until the cause of the Deepwater Horizon accident is known.

-- BP Chief Executive Tony Hayward says the company takes full responsibility and will pay all legitimate claims and the cost of the clean-up.

May 2 - Obama visits the Gulf Coast. U.S. officials close areas affected by the spill to fishing for 10 days. BP starts drilling a relief well alongside the failed well, a process that may take two to three months to complete.

May 7 - An attempt to place a containment dome over the spewing well fails when the device is rendered useless by frozen hydrocarbons that clogged it.

May 11/12 - Executives from BP, Transocean and Halliburton appear at congressional hearings in Washington. The executives blame each other's companies.

May 14 - Obama slams companies involved in the spill, criticizing them for a "ridiculous spectacle" of publicly trading blame in his sternest comments yet.

May 19 - The first heavy oil from the spill hits fragile Louisiana marshlands. Part of the slick enters a powerful current that could carry it to the Florida Keys and beyond.

May 28 - Obama tours the Louisiana coast, saying "I am the president and the buck stops with me."

-- BP's Hayward flies over the Gulf.

May 29 - BP says the complex "top kill" maneuver, started three days earlier to plug the well, has failed.

June 1 - BP shares plunge 17 percent in London trading, wiping $23 billion off its market value, on news the latest attempt to plug the well has failed.

-- U.S. Attorney General Eric Holder says the Justice Department has launched a criminal and civil investigation into the rig explosion and the spill.

June 2 - BP tries another capping strategy but has difficulty cutting off a leaking riser pipe.

-- U.S. authorities expand fishing restrictions to cover 37 percent of U.S. federal waters in the Gulf.

June 4 - Obama, on his third trip to the region, warns BP against skimping on compensation to residents and businesses.

June 8 - Obama says he wants to know "whose ass to kick" over the spill, adding to the pressure on BP.

-- U.S. weather forecasters give their first confirmation that some of the oil leaking has lingered beneath the surface rather than rising to the top.

June 9 - U.S. Interior Secretary Ken Salazar says BP must pay the salaries of thousands of workers laid off by a moratorium on drilling, at a congressional hearing.

June 10 - In his first comments, Prime Minister David Cameron says Britain is ready to help BP deal with the spill.

-- U.S. scientists double their estimates of the amount of oil gushing from the well, saying between 20,000 and 40,000 barrels (840,000 and 1.7 million gallons/3.2 million and 6.4 million liters) flowed out before June 3.

June 11 - Supportive comments from Britain lift BP's shares in London by 6 personal humidifier.4 percent. But the rise does not mend the damage done -- the company is worth 70 billion pounds ($102 billion) against more than 120 billion pounds in April.

June 14 - Obama, on his fourth trip to the Gulf, says he will press BP executives at a White House meeting on June 16 to deal "justly, fairly and promptly" with damage claims.

-- Two U.S. lawmakers release a letter to Hayward saying: "It appears that BP repeatedly chose risky procedures in order to reduce costs and save time and made minimal efforts to contain the added risk."

June 15 - Lawmakers summon top executives from Exxon Mobil, Chevron, ConocoPhillips, Royal Dutch Shell and BP.

-- Obama says in his first televised speech from the Oval Office: "But make no mistake: we will fight this spill with everything we've got for as long it takes. We will make BP pay for the damage their company has caused."

June 16 - BP agrees to set up a $20 billion fund for damage claims from the spill, suspends dividend payments to shareholders and says it will pay $100 million to workers idled by the six-month moratorium on deep-sea drilling.

June 17 - Hayward faces the wrath of U.S. lawmakers as he appears before a congressional hearing. He apologizes for the spill and says everything is being done to stop it. Members of Congress accuse BP of cutting corners for the sake of profit.

June 18 - Anadarko Petroleum, part owner of the gushing well, says BP's behavior before the blowout was "reckless" and likely represented "gross negligence or willful misconduct" that would affect obligations of the well owners under their operating agreement.

June 20 - Internal BP document released by U.S. congressman shows BP estimates that a worst-case scenario rate could be 100,000 barrels (4.2 million gallons/15.9 million liters) a day. This is far higher than the U.S. government estimate of 60,000 barrels (2.5 million gallons/9.5 million liters) a day.

June 22 - Hayward is handing day-to-day control of the spill operation to Bob Dudley -- a reflection, says BP, of the need for the CEO to return to other aspects of the business.

June 24 - A U.S. judge refuses to put on hold his decision to lift a ban on deepwater drilling imposed after the spill.

June 28 - BP is forced to defend its chief executive after Russia's deputy prime minister said he expected Hayward to resign soon.

June 30 - Hurricane Alex, later downgraded to a tropical storm, moved slowly in Gulf waters, disrupting the cleanup, and threatening to push more oily water onshore.

-- President Obama formally directs officials to draw up a long-term economic and environmental plan to help the Gulf Coast region get back on its feet after the oil spill.

July 1 - BP shares gain, with traders initially citing talk, quickly shot down, that it had capped the leaking well.

July 3 - A supertanker converted into a "super skimmer" begins tests. The vessel can remove up to 500,000 barrels (21 million gallons/79.5 million liters) of oil and water from the sea surface a day.

July 5 - BP says that the cost of the spill had reached $3.12 billion.

July 6 - Summer storms push oil from the Gulf of Mexico spill deeper into Louisiana's wetlands and temporarily slow efforts to contain damage.

-- The storms are also responsible for washing oil into Lake Pontchartrain, bordering New Orleans, further polluting Mississippi's beaches and halting tests on a supertanker adapted to skim large quantities of oil from the surface.

July 7 - Tests show tar balls washed up on the Texas coast are from the spill, meaning every U.S. Gulf state -- Louisiana, Mississippi, Alabama, Florida and now Texas -- has been soiled by the spill.

(Writing by David Cutler, London Editorial Reference Unit)

Timeline: Gulf of Mexico oil spill

David Weidners Writing on the Wall: Five burning questions for Wall Street

NEW YORK (MarketWatch) -- The rumbling you heard in the skies over the weekend wasn't the bottom falling out of the stock market -- they were, after all, closed -- more likely it was fireworks which means we've crossed the halfway point of 2010.

Given the rollercoaster of the first half, don't we owe it to ourselves to start with a clean slate?

Let's take a mulligan and try to have a good finish to what's been a underwhelming first half. Here are five issues to watch on Wall Street for the last six months. Keep your eye on these as they promise to be important to investors.

BP and the oil industry

BP PLC still hasn't been able to cap the spill at Deepwater Horizon. Now there are concerns that what's left of the underwater rig could be irreversibly damaged. Simply put, that could mean as much as 150,000 barrels a day gushing into the Gulf of Mexico in a worst-case scenario.

Until BP has capped the well, the liability and exposure from the disaster are unknown. Even if BP is able to contain the leak, the company and industry face many more unknowns: unpredictable currents and weather as well as shifting political winds in Washington.

7 reasons the S&P 500 should hit 1500

Despite a sea of pessimism, Wealth Adviser columnist James Altucher tells Dow Jones Newswires' Veronica Dagher seven reasons the S&P 500 should hit 1500 and why investors should be optimistic.

Investors who aren't playing with house money should definitely steer clear. And consumers should prepare themselves for higher oil and gas prices not only this summer, but for months and years ahead.

Prediction: This crisis well extend beyond August and BP will be forced to sell assets to pay for cleanup.

November elections

End of June estimates put 17 senate seats and 114 house seats in play in November's mid-term elections.

Many of the key players in finance reform are either on their way out or close to it. Sen. Chris Dodd (D.-Conn.) is retiring. Sen. Blanche Lincoln (D.-Ark.), a key player in derivatives reform is behind. Majority Leader Sen. Harry Reid (D.-Nev.) is in a tight race as is Rep. Bart Stupak (D.-Mich.).

Tea Party advocates are pushing for outsiders against incumbents and they probably will prevail.

Prediction: The Republicans will see the majority of gains, but their incumbents will be ousted too.

General Motors

There's been a lot of positive news out of General Motors since the government bailout. Sales in China now surpass those in the U.S. market, suggesting that GM is making inroads in emerging markets. The Volt, GM's ballyhooed electric car, will be rolled out. Ed Whitacre, the company's new chief executive has the confidence of the industry. Factories are running near full capacity.

But GM is facing headwinds: a slowing global economy, high unemployment at home and faltering consumer confidence air conditioner.

In that environment, GM may be better off waiting for its much-anticipated public offering -- the key capital-raiser to repay the U.S. government and taxpayers for their 61% stake.

Prediction: No IPO until late 2011 at the earliest.

European Debt Crisis

Despite the efforts of the International Monetary Fund and European Union leaders to quell the sovereign debt crisis on the continent, investors continue to believe a much bigger, sweeping bailout plan is necessary.

It's not just the PIIGS (Portugal, Ireland, Italy, Greece and Spain) that need attention. Spiraling deficits in the United Kingdom have put its ratings at risk. Looming brushfires -- such as the recent Hungarian crisis -- continue to threaten the fragile confidence.

Austerity measures threaten any hope of growth, and in the case of Ireland, which enacted the first government spending cuts, seemed to have restrained recovery.

Europe needs to enlist the U.S., China and other countries to bolster the IMF so that the fund will be prepared to aid countries -- buying bonds, lending money, stabilizing banks. In return, the IMF needs to be lenient in its terms so that it doesn't make the crises worse.

Prediction: The battle between "have" countries and "have not" countries will continue stalling progress on a sweeping package. Only until the crisis threatens the whole global economy will action be taken. Probably in 2011.

Financial Reform

Even with the latest delay, expect reform to be signed by President Obama this month. In the short-term, it's not going to mean much. Many of the provisions won't kick in for years. Some, such as the restrictions on proprietary trading, hedge funds and private equity for big banks such as Citigroup Inc. , J.P. Morgan Chase & Co. and Bank of America Corp. , won't arrive for as long as a decade.

But we could see many banks start to make adjustments. They'll start raising capital for their derivatives spin-offs. They'll raise capital for their balance sheets. They'll begin to charge higher fees to pay for the compliance.

What they won't be able to do is make a lot of money by taking big risks, not because of financial reform, but because trading is flat, mergers and acquisitions have slowed and underwriting is on hold.

Pay isn't dealt with directly by financial reform, but slow business may drive down some of the hefty bonus numbers. Revenue just isn't there.

Prediction: A lot of banking news to come, but unfortunately, earnings day won't bring good news.

David Weidner's Writing on the Wall: Five burning questions for Wall Street

European stocks edge upwards before US payrolls

LONDON (AFP) – Europe's main stock markets gained ground on Friday, recouping some of their recent heavy losses, but investors were cautious before key US payrolls data amid gloom over the global economy.

London's benchmark FTSE 100 index climbed 0.55 percent to 4,832.19 points in late morning deals, Frankfurt's DAX 30 won 0.29 percent to 5,874.50 points and in Paris the CAC 40 added 0.27 percent to 3,348.35.

The Stoxx 50 index of leading eurozone shares increased by 0.30 percent to 2,526.27 points.

"Overall, the market still looks decidedly unhealthy after the slides seen in the last couple of weeks," said IG Index analyst Anthony Grech in London.

"The risk remains that brief rallies will end up being just that -- and will be viewed as an opportunity to sell into strength rather than a sign of confidence returning."

In foreign exchange trading, the European single currency eased to 1.2503 dollars, down from 1.2524 dollars in New York late on Thursday.

The shared eurozone unit had breached 1.25 for the first time in more than a month on Thursday, lifted in part by a successful bond issue by Spain and disappointing US economic data.

However, hanging over markets was the likelihood of negative US unemployment data later on Friday, fuelling fears of a "double-dip" recession at the close of a week of bad news.

"The market goes into today's US non-farm payrolls report showing a distinct lack of confidence and sentiment towards risk assets, with participants balancing between fear and outright panic," said Lloyds Banking Group economist Kenneth Broux.

On Thursday the US Labor Department reported yet more people claimed unemployment benefits last week, when new jobless claims rose to 472,000, an increase of 13,000 from the week before home kerosene heaters.

Job growth is considered a key factor in getting the world's biggest economy on a sustainable growth path.

The blue-chip Dow Jones Industrial Average fell 0.42 percent Thursday, the sixth consecutive day of losses.

Asia-Pacific markets were sluggish on Friday with Sydney flat despite the easing of a major tax row and Tokyo slightly up, but US worries dampened overall sentiment.

Hong Kong fell 1.11 percent, dragged down by negative manufacturing data from the mainland this week and global economic worries.

On the upside, Tokyo rose 0.13 percent on bargain hunting after a five-day losing streak.

And Sydney added just 0.03 percent, following an early rally after Prime Minister Julia Gillard said she had reached a compromise with mining companies to replace her predecessor's proposed mining "super tax".

Stock markets in Europe and the United States had suffered sharp losses on Thursday as ominous downbeat economic data and renewed jitters over Spain's finances put investors in a selling mood.

China's Purchasing Managers Index fell to 52.1 in June from 53.9 in May, the China Federation of Logistics and Purchasing said.

And there was also news of a pronounced decline in pending home sales in the United States.

In addition, the US manufacturing sector expanded in June but at a slower pace than had been expected, an industry survey showed.

European stocks edge upwards before US payrolls

Volunteers ready but left out of oil spill cleanup

NEW ORLEANS – Many fishing boats signed up to skim oil sit idle in marinas. Some captains and deckhands say they have been just waiting around for instructions while drawing checks from BP of more than $1,000 a day per vessel. Thousands of offers to clean beaches and wetlands have gone unanswered.

BP and the Obama administration faced mounting complaints Thursday that they are ignoring foreign offers of badly needed equipment and making poor use of the fishing boats and volunteers available to help clean up what may now be the biggest spill ever in the Gulf of Mexico.

Based on some government estimates, more than 140 million gallons of crude have now spewed from the bottom of the sea since the April 20 explosion that killed 11 workers on the Deepwater Horizon oil platform, eclipsing the 1979-80 disaster off Mexico that had long stood as the worst in the Gulf.

In recent days and weeks, for reasons BP has never explained, many fishing boats hired for the cleanup have done a lot of waiting around. At the same time, there is mounting frustration over the time it has taken the government to approve offers of help from foreign countries and international organizations.

The Coast Guard said there have been 107 offers of help from 44 nations, ranging from technical advice to skimmer boats and booms. But many of those offers are weeks old, and only a small number have been accepted, with the vast majority still under review, according to a list kept by the State Department.

A report prepared by investigators with the House Committee on Oversight and Government Reform for Rep. Darrell Issa, R-Calif., detailed one case in which the Dutch government offered April 30 to provide four oil skimmers that collectively could process more than 6 million gallons of oily water a day. It took seven weeks for the U.S. to approve the offer.

White House spokesman Robert Gibbs on Thursday scorned the idea that "somehow it took the command 70 days to accept international help."

"That is a myth," he declared, "that has been debunked literally hundreds of times."

He said 24 foreign vessels were operating in the Gulf before this week. He did not specifically address the Dutch vessels.

More than 2,000 boats have signed up for oil-spill duty under BP's Vessel of Opportunity program. The company pays boat captains and their crews a flat fee based on the size of the vessel, ranging from $1,200 to $3,000 a day, plus a $200 fee for each crew member who works an eight-hour day.

Rocky Ditcharo, a shrimp dock owner in Buras, La., said many fishermen hired by BP have told him that they often park their boats on the shore while they wait for word on where to go.

"They just wait because there's no direction," Ditcharo said. He said he believes BP has hired many boat captains "to show numbers."

"But they're really not doing anything," he added. He also said he suspects the company is hiring out-of-work fishermen to placate them with paychecks.

Chris Mehlig, a fisherman from Louisiana's St. Bernard Parish, said he is getting eight days of work a month, laying down containment boom, running supplies to other boats or simply being on call dockside in case he is needed. "I wish I had more days than that, but that's the way things are," he said.

Billy Nungesser, president of Louisiana's hard-hit Plaquemines Parish, said BP and the Coast Guard provided a map of the exact locations of 140 skimmers that were supposedly cleaning up the oil. But he said that after he repeatedly asked to be flown over the area so he could see them at work, officials told him only 31 skimmers on the job.

"I'm trying to work with these guys," he said. "But everything they're giving me is a wish list, not what's actually out there."

A BP spokesman declined to comment.

Newly retired Coast Guard Adm. Thad Allen, the government's point man for the response effort, bristled at some of the accusations in Issa's report quartz infrared heaters.

"I think we've been pretty transparent throughout this," Allen said at the White House. He disputed any suggestion that there aren't enough skimmers being put on the water, saying the spill area is so big that there are bound to be areas with no vessels.

The Coast Guard said there are roughly 550 skimmers working in the Gulf, with 250 or so in Louisiana waters, 136 in Florida, 87 in Alabama and 76 in Mississippi, although stormy weather in recent days has kept the many of the vessels from working.

The frustration extends to the volunteers who have offered to clean beaches and wetlands. More than 20,000 volunteers have signed up to help in Florida, Alabama and Mississippi, yet fewer than one in six has received an assignment or the training required to take part in some chores, according to BP.

The executive director of the Alabama Coastal Foundation, Bethany Kraft, said many people who volunteered are frustrated and angry that no one has called on them for help.

"You see this unfolding before your eyes and you have this sense that you can't do anything," she said. "To watch this happen in our backyard and not be able to help is hard."

About 225 foundation volunteers have helped watch for oil and document coastal conditions, she said, but BP's rules require training for anyone touching oily material. And the company is using paid workers for nearly all such projects.

While the leak continued spewing crude into the Gulf, the remnants of Hurricane Alex more than 500 miles to the west were still being felt Thursday in the form of rough seas that slowed the cleanup, though some skimming had resumed.

Some government estimates put the amount of oil spilled at 160 million gallons. That calculation was arrived at by using the rate of 2.5 million gallons a day all the way back to the oil rig explosion. The AP, relying on scientists who advised the government on flow rate, bases its estimates on a lower rate of 2.1 million gallons a day up until June 3, when a cut to the well pipe increased flow.

By either estimate, the disaster would eclipse the Ixtoc disaster in the Gulf two decades ago and rank as the biggest offshore oil spill during peacetime. The bill spill in history happened in 1991 during the Persian Gulf War, when Iraqi forces opened valves at a terminal and dumped about 336 million gallons of oil.

The total in the Gulf disaster is significant because BP is likely to be fined per gallon spilled. Also, scientists say an accurate figure is needed to calculate how much oil may be hidden below the surface, doing damage to the deep-sea environment.

"It's a mind-boggling number any way you cut it," said Ed Overton, a Louisiana State University environmental studies professor. "It'll be well beyond Ixtoc by the time it's finished."

And passing Ixtoc just before the July Fourth weekend, a time of normally booming tourism, is bitter timing, he said.

In other developments:

• The House passed the first major bill related to explosion, voting to allow families of those killed and injured workers to be compensated far more generously than current law allows. The measure now goes to the Senate.

• An animal welfare group said in a lawsuit that BP's practice of incinerating the oil is probably burning endangered sea turtles alive. BP spokesman Mark Proegler replied: "I can't say for sure we've never burned any, but every effort is taken to avoid that."

• The Coast Guard and the Environmental Protection Agency are tightening up their oversight of BP and its contractors cleaning up the oily sand.

___

Associated Press writers Jay Reeves in Orange Beach, Ala., Michael Kunzelman in New Orleans, Harry R. Weber in Houston, and Seth Borenstein, Erica Werner and Eileen Sullivan in Washington contributed to this report.

Volunteers ready but left out of oil spill cleanup