MAJOR PAPERS:

• White House deputy chief of staff Karl Rove is expected to resign August 31, reported the Wall Street Journal.
• Quantitative fund managers, including Barclay's (NYSE: BCS) and Goldman Sachs (NYSE: GS), are expected to start providing information on their funds activity which were part of the roller coaster stock market the past weeks, according to the Wall Street Journal.
• According to the Wall Street Journal, the European Central Bank and the Bank of Japan have added liquidity to markets: The ECB added $65.28B at rates beginning at 4.06% and The Bank of Japan added $5.07B to markets.
• The Financial Times reported, citing a person "briefed on the situation," that Citigroup Inc (NYSE: C) has lost more than $700M in credit business in recent weeks, but this is not a serious problem for the company as it earned $20B last year.

• Lord Marland, the former Tory Party Treasurer, and the Reuben brothers may join together to make a joint offer for Orient-Express Hotels (NYSE: OEH), valued at $3B, reported the Telegraph.
• According to Kommersant, PepsiCo (NYSE: PEP) has reached an agreement to purchase over 70% of the stock of Lebedyansky, Russia's largest juice producer, for between $1.5B and $2B.

The credit spigot continues to flow into the market.

Earlier this morning, Central Bankers in Europe loaned 47.7 billion euros to banks, down from 61 billion euros on Friday, according to Bloomberg News. The Bank of Japan added 600 billion yen, the Wall Street Journal said. Investors are betting that the Federal Reserve will likely follow the European's lead which is why stocks are trading up in pre-market action. Plus, the Federal funds matched the Federal Reserve's target of 5.25 percent. Whether that gain can be sustained will depend on how the market reacts to several key economic reports.

First, the Commerce Department reported a modest rebound in retail sales in July compared with June when they fell. The Labor Department's Producer Price Index and Consumer Price Indexes are due to be released Wednesday.

The news wasn't all bad though.

Blackstone Group LP (NYSE: BX) today reported that its net income more than tripled.

Goldman Sachs Group Inc. (NYSE: GS) said that had gotten $3 billion in new capital for its Global Equity Opportunities Fund. The company's strategist Abby Joseph Cohen told clients that fundamental investors now see value.

President Bush's political guru Karl Rove plans to resign at the end of the month, according to media reports.

Dow Jones & Company Inc.'s (NYSE: DJ) Wall Street Journal (A.K.A, The Towel) occupies a unique spot in the media firmament. As I pointed out earlier in the year, it changed its footprint and now looks to me like a Holiday Inn bath towel. Towel Talk offers a perspective on its news and views.

This morning's Wall Street Journal [subscription required] previewed President Bush's State of the Union (SOTU) speech with the kind of "objective reporting" that makes me want to go back to the dictionary to look up "objective."

While Newsweek reports that Karl Rove is betting his colleagues $5 that President Bush will not raise taxes in his final two years in office, if the Towel is to be believed, Bush is planning to propose a tax increase in his SOTU tomorrow evening.

How so? Currently individuals who receive health insurance through their employers do not pay tax on the value of the health insurance benefit. And those who buy health insurance themselves do not get tax breaks on their premiums.

But under Bush's SOTU proposal, the Towel reports, families receiving health insurance through their employers would be required to count the benefits as income. For a family receiving $12,000 in annual health insurance benefits, this could amount to an effective tax increase of $3,360 for a family with a 28% tax rate.

But the Towel uses a tiny subset of the results of its latest poll not to highlight the President's Nixonian level of unpopularity (33% approve of him and two-thirds of Americans have given up on his presidency), but to show that he is responding to an issue that its poll says people care about. And while it touts the administration's estimates of how much the plan will save some families, the Towel neglects to estimate the magnitude of the tax increase.

If Karl Rove is going to keep from losing a lot of $5 bets, he'll need better control over the Towels' reporting.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm, and a Professor of Management at Babson College. He subscribes to the Wall Street Journal but doesn't have any financial interest in Dow Jones securities