- The cost of protecting Japanese corporate bonds from default declined, according to traders of credit-default swaps. The Markit iTraxx Japan index fell 15 basis points to 205 as of 8:59 a.m. in Tokyo, according to prices from Morgan Stanley.
- Yields on Fannie Mae(FNM), Freddie Mac(FRE) and Ginnie Mae mortgage bonds tumbled to the lowest in almost two weeks relative to
- Scrap steel buyers in
Wall Street Journal:
- New data from the Depository Trust & Clearing Corp. speak volumes about trading activity in the vast credit-default-swap market. On Tuesday, the DTCC began publishing weekly numbers on its Web site that detail how much of these insurance-like contracts are tied to individual companies and countries. The information -- previously unavailable to the public -- showed that 10 debt issuers most widely referenced by the swaps include Turkey and Russia and Wall Street firms Morgan Stanley(MS) and Goldman Sachs Group Inc.(GS).
- Democrats appear certain to fall short in Tuesday's elections of obtaining a U.S. Senate majority big enough to clear Republican procedural hurdles that can kill legislation, senior party aides said. The aides said Democrats will likely gain at least six or seven seats, but not the nine needed to hit a "filibuster-proof majority" of 60 in the 100-member chamber.
- The fundamentals of the U.S. stock market have "improved radically" and declines in valuations to five-year lows are overblown, legendary investor and Vanguard Group founder John Bogle said on Tuesday. Bogle's comments, coming as U.S. stocks rose in their biggest Election Day rally, underlines an emerging streak of optimism on Wall Street over corporate earnings and the prospect of more measures to prevent the financial crisis from turning into a global recession. "It seems to me that people have lost sight of the fact that the fundamentals have improved radically," said Bogle. "The value of the U.S. stock market was $18 trillion a year ago. And now it's about $9.5 trillion or let's call it $10 trillion with today's rally. Anyone who believes that American business is worth $8 trillion less than it was a year ago I think is a fool," he told Reuters in a telephone interview.
- U.S. securities regulators will help speed efforts to create a central counterparty for the $55 trillion credit default swap market by temporarily exempting exchanges, dealers and other applicants from lengthy registration requirements, according to a document obtained by Reuters on Tuesday.
- The Treasury Department is exploring how best to expand its capital injection program to provide more liquidity to credit markets and is considering specialty finance firms in the process, a source familiar with the government's thinking said on Tuesday.
- Investment bank UBS(UBS)has slashed its commodities outlook for the second time in just a few weeks, predicting a slowdown in global growth in 2009 will eat deep into industrial raw material demand. The bank cut forecasts for commodity prices in 2009 by an average of 37 percent after its economists trimmed their forecasts for global growth next year to 1.3 percent from an earlier forecast of 2.2 percent. "This has a meaningful impact on commodity markets, pushing surpluses up further and, over the medium term, negating the positive effects of continued poor supply growth," the bank said in a note. "Key benchmark commodities oil and copper are forecast to average $60 a barrel and $1.30/lb ($2,866 a ton) respectively in 2009 and iron ore faces a 40 percent price decline for the next year's contract."
- The lucrative fees charged by hedge funds will have to fall in the wake of the dire returns posted by the $2,000bn industry this year, according to the industry's own trade body. Alexander Ineichen, a member of the investor steering committee of the Alternative Investment Management Association, said he also feared that 80 per cent of hedge funds with less than $100m under management would fold as a result of the current woes, with 30-40 per cent of mid-sized funds disappearing, although the biggest names could benefit from industry consolidation. Mr Ineichen said the standard "two and 20" model of a 2 per cent flat fee and a 20 per cent performance fee would not survive the bloodletting. The average fund has lost 21.6 per cent over the past 12 months, according to data from Hedge Fund Research.
Financial Times Deutschland:
- European Central Bank Executive Board member Juergen Stark said the bank is ready to fight the deepening financial crisis and its effects on the economy, citing an interview. “We’re ready to use all instruments at our disposal and the main instrument is interest rate policy as long as our mandate” to contain inflation “allows it,” Stark said. The inflation environment “dramatically changed” as “economic dynamics slowed so much that we hardly will see second-round effects in the coming quarters,” he said. Economic growth in the euro region will be “very low well into 2009” and the recovery will be sluggish, Stark said.
Late Buy/Sell Recommendations
- Reiterated Buy on (EXPD), target $44.
- Reiterated Buy on (MGA), target $55.
Asian Indices are +1.0% to +4.50% on average.
S&P 500 futures -.11%.
NASDAQ 100 futures +.07%.
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Stock Quote/Chart
Before the Bell CNBC Video(bottom right)
WSJ Intl Markets Performance
Top 25 Stories
Top 20 Business Stories
Today in IBD
Daily Stock Events
Rasmussen Business/Economy Polling
Earnings of Note
8:15 am EST
- The ADP Employment Change for October is estimated at -100K versus -8K in September.
10:00 am EST
- ISM Non-Manufacturing for October is estimated to fall to 47.0 versus 50.2 in September.
10:35 am EST
- Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,000,000 barrels versus a +493,000 barrel build the prior week. Gasoline supplies are estimated to fall by -650,000 barrels versus a -1,507,000 barrel decline the prior week. Distillate inventories are expected to rise by +1,550,000 barrels a +2,325,000 barrel increase the prior week. Finally, Refinery Utilization is estimated to rise by .2% versus a .59% increase the prior week.
- None of note
Other Potential Market Movers
- The weekly MBA mortgage applications report, Challenger Job Cuts report, (L) investor meeting, (SLE) analyst meeting, (CEPH) analyst day, Goldman Sachs Industrials Conference, Keefe Bruyette Woods Brokerage Conference and Goldman Sachs Software Conference could also impact trading today.
BOTTOM LINE: Asian indices are sharply higher, boosted by automaker and financial stocks in the region. I expect US equities to open higher and to maintain gains into the afternoon. The Portfolio is 100% net long heading into the day.