DOW HIGH – The Dow swung in and out of negative territory July 31st, but was up more than 100 at its session high, setting a fresh intraday record of 15,634.32. The S&P 500 and the Nasdaq held their modest gains. Earlier, the Nasdaq hit its best level since October 2000. All three major averages are on track to recording their best July performances since 2010. Consumer discretionary and energy sectors led the gainers, while utilities slid.

ECONOMY GROWS – U.S. economic growth accelerated in the April-June quarter to a seasonally adjusted annual rate of 1.7%, as businesses spent more and the federal government cut less. The Commerce Department says growth improved from a sluggish 1.1% rate in the January-March quarter. Economists are hopeful that growth could improve to around 2.5% in the third and fourth quarters.

HOME PRICES SOARING – The S&P/Case-Shiller home price index was up 12.2% in May, compared to a year ago, the biggest year-over-year jump in prices since March 2006, near the peak of the housing bubble.

OR MAYBE IT DIDN’T GROW – The Commerce Department has made changes to how it calculates gross domestic product, designed to have the data better reflect the so-called knowledge economy. The U.S. government adjusted data all the way back to 1929, and other countries have or are about to make similar changes to their data. At the same time, the government also went back and revised data for the past five years, to reflect more complete as well as additional statistics from a variety of sources, such as the IRS and the Department of Agriculture. What’s the upshot? The level of output is higher…$559.8 billion larger, with $526 billion of that amount due to definitional changes.

THE CASE FOR SPENDING MORE – Clearly something has to be done to revive the economy. Robert Kuttner, author of the new book, Debtors’ Prison: The Politics of Austerity Versus Possibility, says the solution lies in more government stimulus, not less, as the champions of austerity would have. “Let me take you back to 1940, the economy was growing but the unemployment rate was stuck above 12% and along came Pearl Harbor. And as a consequence of that we got the greatest unintended recovery of all time.” Kuttner is not advocating that the U.S. go to war but create a new stimulus program instead. It “would work even better” as an economic boost than war, says Kuttner, because “we wouldn’t be blowing half of it up.” He suggests the funds be used to build “basic public infrastructure” and provide aid to state and local governments.

PRINTING TO CONTINUE – Interest rates will hold near zero and the Fed will continue buying $85 billion in bonds every month while the economy continues to improve at a “modest” pace, says the central bank. No changes are imminent to interest rates, but the $85 billion monthly money-printing program known as quantitative easing will be trimmed back only if the data points, particularly on unemployment, continue to improve.

SUMMERS VS YELLEN – Markets hiccupped last week when the White House allegedly leaked the suggestion that Larry Summers and not Janet Yellen is the front runner to replace Ben Bernanke as the head of the Federal Reserve. The reaction was quick and unanimous: No one on either side of the aisle wants Summers. The bond market in particular was appalled by the idea. Summers has been a noted skeptic of the Fed’s quantitative easing measures. The possibility that he would immediately pull the plug on the buying program introduced even more uncertainty into a situation with plenty of it already.

THE NIGHT OF THE LIVING FED – According to a former economist at the Fed, the economy is solid and “zombie inflation” is lurking outside. “Friday’s jobs number could easily be above 200,000. Then I think the Fed is going to get very, very antsy. At that point, we’re going to have ‘Night of the Living Fed,’ where they start tapering and everybody freaks out. I think that may well be September when it starts.”

TOO BIG TO FAIL – The Financial Stability Board (FSB), the G20s regulatory task force, just published list of insurers coming under the scope of the new “too big to fail” rules and are “systematically important.” Here they are:

* Allianz SE
* American International Group Inc
* Assicurazioni Generali S.p.A.
* Aviva plc
* Axa S.A.
* MetLife Inc
* Ping An Insurance (Group) Company of China Ltd
* Prudential Financial Inc
* Prudential plc

Prudential Financial, however, has challenged its “SIFI” designation at a hearing last month in front of the Financial Stability Oversight Board.

EMINENT DOMAIN FORECLOSURES – Richmond (that would be California) city leaders were moving ahead with a plan to head off a foreclosure crisis. The city has offered to buy more than 600 underwater mortgages at below the homes’ current values. “If they (lenders) are unwilling to negotiate a sale of the loans, which we want them to do, then we will consider using eminent domain as another option to purchase these loans at fair market value.” Richmond is the first city in the country to take the controversial step of threatening to use eminent domain, the power to take private property for public use.

COMING TO A CITY NEAR YOU? – With larger cities such as Detroit and Stockton, CA filing for bankruptcy, the pension debt assumed by many municipal governments is increasing being highlighted. According to this article, there are four possible solutions: (1) close existing defined benefit plans to new hires and move employees to defined contribution plans, (2) terminate the plans, (3) require increased employee contributions, and (4) adjust cost-of-living provisions and end use of accumulated vacation/sick leave to “spike” pension benefits.

OOPS, US TOO? – As President Obama barnstorms the country promoting his health care law, one audience very close to home is growing increasingly anxious about the financial implications of the new coverage: members of Congress and their personal staffs. Members of Congress and thousands of their aides are required to get their coverage through new state-based markets known as insurance exchanges. But the law does not provide any obvious way for the federal government to continue paying its share of the premiums for the comprehensive coverage. If the government cannot do so, it could mean an additional expense of $5,000 a year for individuals and $11,000 for families under some of the most popular plans.