Friday Watch

Late-Night Headlines
Bloomberg:

- Samsung Electronics Co., Asia’s biggest maker of chips, flat screens and mobile phones, said profit tripled to a quarterly record as the global economic recovery spurred a rebound in prices. “The company will continue posting solid earnings next year, and the semiconductor business will be the key driver,” said Lee Jin Woo, a fund manager at KTB Asset Management Co. in Seoul, which oversees $8.4 billion in assets. “As Intel and other chipmakers forecast, I see strong PC demand.” The stock rose 1.7 percent to 730,000 won at 10:42 a.m. on the Korea Exchange, while the benchmark Kospi stock index gained 0.6 percent.

- The housing industry contributed to U.S. economic growth for the first time in four years last quarter as federal tax credits sparked demand for homes and energy-efficient renovations. Residential investment accounted for 0.53 percent of growth, a bigger chunk than national defense, at 0.45 percent, and spending on non-durable goods, such as food and clothing, which accounted for 0.31 percent. Samsung forecast a “solid” fourth quarter, echoing comments by No. 1 chipmaker Intel Corp., and said it plans to boost capital spending on semiconductors and displays next year to more than 8.5 trillion won.

- Exxon Mobil Corp.(XOM), PetroChina Co. and Royal Dutch Shell Plc are battling slumping fuel demand as oil majors seek to rebuild profits battered by the global fallout from the worst U.S. downturn since the Great Depression. Exxon Mobil’s U.S. refineries lost about $2.3 million a day last quarter as gasoline and diesel prices fell. Shell, whose refining earnings declined 47 percent, said the plunge in demand will keep profit margins narrow in “the short and medium term” and a quick recovery in energy usage and prices is unlikely.

- In Washington and on Main Street, politicians and voters are railing against Wall Street’s multi- million-dollar pay packages. In the financial world, most executives expect their bonuses to match or exceed last year’s, with 1 in 10 predicting their best-ever payout. Having shaken off the biggest economic decline since the 1930s, almost three in five traders, analysts and fund managers believe their 2009 bonuses will either increase or won’t change, according to a quarterly poll of Bloomberg customers. Only one in four see a decline.

- New York has withstood the worst economic crisis in seven decades and remains the leading global financial center, followed by Singapore, which topped London as investors’ preferred place for doing business, according to Bloomberg Global Poll. Twenty-nine percent of respondents in the quarterly poll of investors, traders and analysts who subscribe to the Bloomberg terminal say New York will be the best place for financial services two years from now. Singapore is chosen by 17 percent of respondents and London is the pick of 16 percent. Shanghai has 11 percent, while Tokyo, once considered a global hub, gets the nod from only 1 percent.

Wall Street Journal:

- The idea of talking to the Taliban -- a strategy advocated by Afghan officials -- has become increasingly seductive as the Western death toll in the conflict mounts. Obama administration officials openly ponder an outreach to the leadership of Islamist militants, something that has been long advocated by European allies.

- The biggest threat to America right now is not government spending, huge deficits, foreign ownership of our debt, world terrorism, two wars, potential epidemics or nuts with nukes. The biggest long-term threat is that people are becoming and have become disheartened, that this condition is reaching critical mass, and that it afflicts most broadly and deeply those members of the American leadership class who are not in Washington, most especially those in business.

- The Earth Cools, and Fight Over Warming Heats Up. Two years ago, a United Nations scientific panel won the Nobel Peace Prize after concluding that global warming is "unequivocal" and is "very likely" caused by man.Then came a development unforeseen by the U.N.'s Intergovernmental Panel on Climate Change, or IPCC: Data suggested that Earth's temperature was beginning to drop. The renewed discussion of inherent shortcomings in climate models comes on the cusp of potentially big financial commitments. In five weeks, diplomats from around the world will meet in Copenhagen to try to hash out a new agreement to curb global greenhouse-gas emissions. The science continues to evolve. Though often overlooked in the debate about man-made warming, natural factors have contributed to record high temperatures. The year 1998, for example, was widely noted as the hottest year on record, intensifying concerns about global warming and people's role in it. But one reason that 1998 set a record is that a strong shift in ocean temperature known as El Niño occurred that year. "1998 was a very hot year because it was an El Niño year," says Mr. Dessler. Scientists who have long questioned man-made global warming cite the temperature drop that began in 2006 as more evidence the models are wrong. "They were predicting warming," says Richard Lindzen, a climate scientist at the Massachusetts Institute of Technology. Mr. Lindzen's work, regarded as leading the research challenging man-made warming, suggests that natural factors such as clouds generally inhibit, rather than intensify, greenhouse-gas warming. He wrote in a recent article that the study from the U.K. admits that the kind of climate model cited in the U.N.'s IPCC report "did not appropriately deal with natural internal variability, thus demolishing the basis for the IPCC's iconic attribution" linking greenhouse-gas emissions to climate change. He added that "even when all models agree, they can all be wrong."

- And if it doesn't fly, well, is that so bad? Mr. Reid can still say he gave it the varsity try. He'll get it to the floor and let those swing-state Democrats amend the public option away. Not his fault! What he also knows, even if the press doesn't, is that for all the big talk of his liberal members, they are the more likely to give way. Even without a public option, this bill is a big step toward a single-payer system. And it isn't as if any of them risk losing their seats by voting "only" for a $1 trillion health expansion. Better yet, by turning the public option into the big, bad bogeyman, he makes it more likely he'll snag those swing-state votes in the end. Nebraska's Mr. Nelson, Arkansas's Blanche Lincoln, Indiana's Evan Bayh—they can all claim victory for stripping the bill of a national insurance plan, then feel comfortable voting for all the tax hikes and Medicare cuts that remain. Speaking of tax hikes, premium jumps and Medicare cuts, notice how nobody is today talking about them? Mr. Reid surely has. The public option might be controversial in D.C., but the majority leader knows most of the country doesn't understand it, or assumes it doesn't apply to them. Most Americans already have health care that they like, and polls show their real fear is that this experiment will leave them paying more for less. This, not the public option, is ObamaCare's exposed jugular.

CNBC.com:

- Comcast(CMCSA) and General Electric(GE) are struggling to iron out a few critical issues that are holding up a joint venture deal for NBC Universal, people familiar with the matter said.

- Japanese core consumer prices fell 2.3 percent in the year to September, with increasing signs that weak demand is weighing on prices.

NY Times:

- Plan to Drill on Colorado Plateau Meets Resistance.

Business Week:
- MBAs Confront a Savage Job Market.

CNNMoney.com:

- Clunkers: Taxpayers paid $24,000 per car. Auto sales analysts at Edmunds.com say the pricey program resulted in relatively few additional car sales. A total of 690,000 new vehicles were sold under the Cash for Clunkers program last summer, but only 125,000 of those were vehicles that would not have been sold anyway, according to an analysis released Wednesday by the automotive Web site Edmunds.com. A total of $3 billion was allotted for those rebates. The average rebate was $4,000. But the overwhelming majority of sales would have taken place anyway at some time in the last half of 2009, according to Edmunds.com. That means the government ended up spending about $24,000 each for those 125,000 additional vehicle sales.

Business Pundit:

- 10 Fatcats Who Profiteered from the Credit Crunch.

BigGovernment.com:

- One of the last people you’d expect to be a catalyst for the near collapse of history’s most advanced financial system is the secretary of Housing and Urban Development. Though not the masterminds of the nation’s economic woes, Andrew Cuomo and Mel Martinez were willing musclemen for the Congressional and White House driven mandates that housing be made more affordable to all through government subsidy. Those mandates, policy stemming back to the 1960s, were driven by compassion, but have turned out to be the chief cause for the current rampant rates of default, foreclosure, and economic pain striking particularly hard at low-income families. Such is the story Charlie Gasparino tells in his new book, The Sellout: How Three Decades of Wall Street Greed and Government Mismanagement Destroyed the Global Financial System.

Crain’s NY Business:

- The New York state pension fund is plowing money back into hedge funds, with plans to invest more than $1 billion by year's end. This after the hedge fund industry experienced its worst year in recent memory, with most funds losing an average of 28% over 2008. The state workers fund just closed a $50 million investment in Stamford, Conn.-based Diamondback Capital, and has several more hedge-fund deals expected to close by 2010, a spokesman for state Comptroller Thomas DiNapoli said Thursday. The New York Common Retirement fund took a beating in 2008, dropping to about $110 billion from more than $150 billion.

Politico:

- It runs more pages than War and Peace, has nearly five times as many words as the Torah, and its tables of contents alone run far longer than this story. The House health care bill unveiled Thursday clocks in at 1,990 pages and about 400,000 words. With an estimated 10-year cost of $894 billion, that comes out to about $2.24 million per word. And for some members, that may not be enough. A “robust” public option can’t be found in the bill. Neither can the word “doctor” – save for a few references to degrees. No “cost curve” is bent. No “blue pill” is dispensed. “Death” and “taxes” are both in there, but “death panel” is not. The text defines dozens of words and phrases, including “family” (“an individual and . . . the individual’s dependents”), “health insurance coverage,” “exchange-eligible individual” and “Indian.” And for those who cry “read the bill,” beware. There are plenty of paragraphs like this one: “(a) Outpatient Hospitals – (1) In General – Section 1833(t)(3)(C)(iv) of the Social Security Act (42 U.S.C. 1395(t)(3)(C)(iv)) is amended – (A) in the first sentence – (i) by inserting “(which is subject to the productivity adjustment described in subclause (II) of such section)” after “1886(b)(3)(B)(iii); and (ii) by inserting “(but not below 0)” after “reduced”; and (B) in the second sentence, by inserting “and which is subject, beginning with 2010 to the productivity adjustment described in section 1886(b)(3)(B)(iii)(II)”. The section deals with “incorporating productivity improvements into market basket updates that do not already incorporate such improvements,” if that helps.

Washington Post:

- House ethics investigators have scrutinized the activities of more than 30 lawmakers and several aides in inquiries about issues including defense lobbying and corporate influence peddling, according to a confidential House ethics committee report prepared in July. The report, disclosed on a publicly accessible computer network, was made available to The Washington Post by a source familiar with such networks. The ethics committee is one of the most secretive panels in Congress, and its members and staff members sign oaths not to disclose any activities related to its past or present investigations. Watchdog groups have accused the committee of not actively pursuing inquiries; the newly disclosed document indicates the panel is conducting far more investigations than it had revealed.

USA Today.com:

- A turnaround in business spending is offering the first hint that the private sector may be prepared to drive economic growth when the government winds down its efforts to spur consumption. After six consecutive quarters in retreat, businesses in the third quarter increased spending on new computers and software at an annual rate of 1.1%. That marked an about-face from the first quarter's annualized 36.4% plunge.

Reuters:

- The Obama administration's new proposal for tackling financial risk in the U.S. economy, unveiled just two days ago, came under attack on Thursday from Congress and regulators, with questions raised about its funding and scope. U.S. Treasury Secretary Timothy Geithner scrambled in a congressional hearing to defend the plan against critics who said it would give too much power to regulators and enshrine government bailouts for troubled financial firms in law.

- The global cellphone market is set to grow in the holiday sales-fuelled October-to-December quarter, after four quarters of falls, research firm Strategy Analytics said on Friday. "We forecast handset shipments to grow 3 percent annually in Q4 2009, signaling an end to the recession," analyst Neil Mawston said in a statement.

- Investor appetite for U.S. junk bond mutual funds hit fresh record highs this week as a recovering economy and easy monetary policy kept investors comfortable with risk. Cashing in on a relentless rally, investors poured a net $207 million into junk bond funds in the week ended Wednesday, pushing year-to-date inflows to $27.8 billion, the most ever, AMG Data Services reported on Thursday. The previous inflow record was $26.96 billion for the full year 2003, according to AMG. The avalanche of money pouring into junk funds is creating a virtuous cycle: As cash pours in, shaky companies are able to refinance debt by selling new bonds, heading off defaults and adding fuel to the junk bond rally.

- Global car sales are expected to grow about 6 percent to 65 million vehicles in 2010 as a financial crisis ends, helping demand revive, Hyundai Motor Group's research body said on Friday.

Financial Times:

- US financial groups with operations in London are increasingly concerned that British regulators’ tough stance on pay could create a two-tier system in which UK bankers’ bonuses are smaller and spread over a longer period than those of American colleagues. Wall Street executives say the line taken by the UK’s Financial Services Authority contrasts with the more flexible approach of the Federal Reserve and could lead to uneven pay scales for bankers in similar jobs on opposite sides of the Atlantic.

- Concerns about the business practices of Galleon hedge fund founder Raj Rajaratnam and his associates were raised inside JPMorgan Chase(JPM) as far back as 2001, according to an internal company document seen by the Financial Times. Mr Rajaratnam and five others – including former employees of Bear Stearns, now part of JPMorgan – were charged this month in an alleged insider trading scheme that US prosecutors called the biggest ever involving hedge funds. The JPMorgan note alleges that the principals of Galleon “liked to operate in the ‘grey areas’” of the markets. “If these allegations are true, there are some serious issues about business conduct,” the memo said.

- Iran on Thursday night indicated it wanted to make significant changes to a draft agreement with the US and other world powers over its nuclear program, in a move that may scupper the chances of any final accord being reached. Almost two weeks after starting negotiations with the US, France and Russia over the draft, Iran finally delivered its response to the International Atomic Energy Agency in Vienna. The agency said last night it was negotiating with Iran and other parties over the accord, but western diplomats suggested Tehran’s demands were unacceptable. “They are trying to turn this into a negotiation,” said a European diplomat with knowledge of Iran’s response to the agency. “But it makes no sense to do it in this way. Their response is unacceptable.” However, Washington responded cautiously to Tehran’s move, noting that it awaited ”clarification of Iran’s response” rather than threatening sanctions or condemning the Islamic Republic for its failure to sign up to the draft deal.

Shanghai Securities News:

- China will probably raise retail fuel prices by 300 yuan a ton in the first few days of November. Diesel price may rise by .25 yuan a liter and gasoline by .22 yuan a liter, citing CBI China Co.

- China’s gold production gained 14.5% in the first nine months to 228.199 metric tons, citing Ministry of Finance statistics.

Late Buy/Sell Recommendations
Citigroup:

- Upgraded (TOL) to Buy, target $23.

- Reiterated Buy on (AGN), raised estimates, boosted target to $66.

- Reiterated Buy on (MXIM), target $25.

Crowell, Weedon:

- Reiterated Buy on (AAPL), raised estimates, boosted target to $240.

Night Trading
Asian Indices are +.75% to +2.25% on average.

Asia Ex-Japan Inv Grade CDS Index 107.0 -14.50 basis points.
S&P 500 futures -.03%.
NASDAQ 100 futures -.03%.

Morning Preview

BNO Breaking Global News of Note

Google Top Stories

Bloomberg Breaking News

Yahoo Most Popular Biz Stories

MarketWatch News Viewer

Asian Financial News

European Financial News

Latin American Financial News

MarketWatch Pre-market Commentary

U.S. Equity Preview

TradeTheNews Morning Report

Briefing.com In Play

SeekingAlpha Market Currents

Briefing.com Bond Ticker

US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Stock Quote/Chart
WSJ Intl Markets Performance
Commodity Futures
IBD New America
Economic Preview/Calendar
Earnings Calendar

Conference Calendar

Who’s Speaking?
Upgrades/Downgrades

Politico Headlines
Rasmussen Reports Polling

Earnings of Note
Company/EPS Estimate
- (NYX)/.46

- (WY)/-.44

- (HMSY)/.28

- (CPN)/.34

- (B)/.21

- (CVX)/1.47

- (CMI)/.37

- (D)/.90

- (EL)/.34

- (SNE)/-.37

- (SPG)/1.33

- (QSII)/.41

Economic Releases

8:30 am EST

- Personal Income for September is estimated unch. versus a +.2% gain in August.

- Personal Spending for September is estimated to fall -.5% versus a -.5% decline in August.

- The PCE Core for September is estimated to rise +.2% versus a +.1% gain in August.

- The 3Q Employment Cost Index is estimated to rise +.4% versus a +.4% gain in 2Q.

9:45 am EST

- Chicago Purchasing Manager for October is estimated to rise to 49.0 versus a reading of 46.1 in September.

10:00 am EST

- Final Univ. of Mich. Consumer Confidence for October is estimated to rise to 70.0 versus 69.4 in September.

Upcoming Splits
- None of Note

Other Potential Market Movers
- The NAPM-Milwaukee report, (JCP) analyst meeting and the (CPN) investor update could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by financial and commodity shares in the region. I expect US equities to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.