Late-Night Headlines
Bloomberg:
Clarium Capital Management LLC, the hedge-fund firm run by PayPal co-founder Peter Thiel, slumped 18% in October, its biggest monthly decline, because of losses on bonds. The firm’s Clarium LP fund reported a year-to-date loss of about 4%, wiping out the 58% gain it made in the first half, according to estimates given to investors. Clarium had 81% of its money in positions used by investors when they expect a widening spread, or gap, between bond yields, such as for 10-year Treasury notes and 30-year bonds. Instead, yield spreads narrowed in October. Clarium borrowed $4.40 for ever $1 in equity capital invested as of Oct. 31, compared with $3.90 for every $1 a week earlier.
- Investors pulled a record 14.3 billion reais from Brazilian hedge funds in October as the worst month for the country’s stocks in a decade stalled returns. That brings withdrawals from hedge funds to $48.9 billion reais this year.
- Prices for power-station coal may fall further because of potential over-supply and as rates return to being driven by demand, currency and cost factors rather than by speculative investors, The McCloskey Group said. Record prices seen earlier this year were driven by ``speculative play by the banks and hedge funds'' rather than by the fundamentals, which are ``weak,'' Gerard McCloskey, founder of the consulting firm, said today in a presentation released in advance of a conference in Sydney. Prices for thermal coal exported from Australia's Newcastle port, the world's biggest export harbor for the fuel, were at $100.83 a ton in the week ended Oct. 31, down from a record $194.79 in July, according to the globalCOAL NEWC Index. The International Monetary Fund predicts the world's advanced economies will grow next year at the slowest pace since 1982.
- Russian President Dmitry Medvedev wasted little time in laying down his first challenge to Barack Obama. Hours after Obama won the U.S. presidential election, Medvedev said yesterday he'd put short-range Iskander missiles in Kaliningrad, a region wedged between Poland and Lithuania, to ``neutralize'' a planned U.S. missile-defense system. A radio- jamming installation there will also be aimed at elements of the U.S. system in Poland and the Czech Republic, he said.
- Cisco Systems Inc.(CSCO), the world's largest maker of networking equipment, said first-quarter sales rose at the slowest pace in three years and revenue this quarter will drop as the slumping economy crimps customers' budgets. Second-quarter sales will decline as much as 10 percent from a year earlier, Chief Executive Officer John Chambers said today on a conference call. The shares sank 5.6% in late trading.
- Wells Fargo & Co.(WFC), the biggest bank on the U.S. West Coast, plans to sell $10 billion in stock to fund the purchase of Wachovia Corp. and said losses from the acquisition will be less than previously expected.
- News Corp.(NWS/a), the media company controlled by Rupert Murdoch, cut its fiscal 2009 forecast, saying profit will decline at least 13 percent because of tumbling advertising sales.
- Whole Foods Market Inc.(WFMI), the largest U.S. natural-foods grocer, received a $425 million equity investment from Leonard Green & Partners LP after reporting its eighth straight drop in profit and lowering its 2009 sales forecast. The shares surged 22 percent in late U.S. trading after the Austin, Texas-based retailer said it will sell preferred stock equal to a 17 percent stake in the company. The initial conversion price of $14.50 a share is 41 percent more than where the stock closed today.
- The U.S. Energy Department said today it has set the interim rules for how automakers can apply for as much as $25 billion in federal loans to help cover the costs of producing more energy-efficient vehicles.
- The euro fell for a second day against the dollar on speculation the European Central Bank will follow an expected interest-rate cut today with further reductions to revive the region's shrinking economy.
- One day after a narrow majority of Californians voted to outlaw gay marriages, the cities of San Francisco and Los Angeles and the American Civil Liberties Union asked the state's high court to invalidate the ballot measure. California's Proposition 8, which won in yesterday's election with 52 percent of the vote, amends the state constitution to allow marriage only between a man and a woman. About 18,000 same-sex couples have married since June.
- Former Senator Tom Daschle and Kansas Governor Kathleen Sebelius are contenders for U.S. health secretary under Barack Obama. Their names were cited by people in contact with the president-elect's health-care advisers. Obama has promised to cut medical costs and make affordable insurance available to everyone. The chief of the Health and Human Services Department may play a key role in overhauling the health-care system.
Wall Street Journal: Congressional Democrats signaled plans to use their momentum from Tuesday's electoral victory to quickly pursue big plans to tackle economic woes, including doubling planned aid to U.S. auto makers and redrawing the regulation of financial companies.
- Organized labor sees a historic opportunity with Tuesday's election and is counting on the incoming Obama administration to back its agenda in what promises to be a landmark battle with business.
FINalternatives: Barack Obama, who enjoyed the substantial financial backing of the hedge fund industry and many of its top players, has taken a bellicose tone with the industry on the campaign trail.
Reuters:
- Goldman Sachs Group Inc (GS) notified roughly 3,200 employees this week that they have been laid off, part of previously reported plans to slash 10 percent of the firm's global work force amid slumping markets, people familiar with the situation said Wednesday.
Late Buy/Sell Recommendations
Citigroup:
- Upgraded (SOV) to Buy, target $4.70.
Night Trading
Morning Preview
US AM Market Call NASDAQ 100 Pre-Market Indicator/Heat Map Pre-market Commentary Pre-market Stock Quote/Chart Before the Bell CNBC Video Global Commentary WSJ Intl Markets Performance Commodity Movers Top 25 Stories Top 20 Business Stories Today in IBD In Play Bond Ticker Economic Preview/Calendar Daily Stock Events Upgrades/Downgrades Rasmussen Business/Economy Polling
Earnings of Note
Company/EPS Estimate
- (MIC)/.48
- (WMB)/.63
- (WRC)/.74
- (DYN)/.12
- (WEN)/.05
- (FTO)/.70
- (QCOM)/.57
- (DIS)/.49
- (VRSN)/.26
- (IRF)/-.05
- (CBG)/.23
- (GNW)/.53
- (FLR)/.91
- (BBI)/-.15
- (AN)/.28
- (CXW)/.31
- (CVC)/.12
- (ONXX)/.02
- (NVDA)/.11
- (PSA)/1.28
- (BUD)/1.06
- (BRL)/.71
- (BX)/.05
- (PCLN)/2.09
- (EP)/.34
- (DTV)/.34
- (BE)/-.12
- (CEG)/.90
Economic Releases
8:30 am EST
- Preliminary 3Q Non-farm Productivity is estimated to rise .7% versus a 4.3% gain in 2Q.
- Preliminary 3Q Unit Labor Costs are estimated to rise 3.0% versus a -.5% decline in 2Q.
- Initial Jobless Claims for last week are estimated to fall to 477K versus 479K the prior week.
- Continuing Claims are estimated to rise to 3743K versus 3715K prior.
Upcoming Splits
Other Potential Market Movers
BOTTOM LINE: Asian indices are sharply lower, weighed down by commodity and financial stocks in the region. I expect US equities to open modestly lower and to maintain losses into the afternoon. The Portfolio is 75% net long heading into the day.
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