Thursday Watch

Late-Night Headlines
Bloomberg:

- Limited Brands Inc.(LTD), the owner of the Victoria’s Secret chain, unexpectedly reported a third- quarter profit and boosted its annual earnings forecast.

- Wind turbines, solar panels and hydropower stations won’t be built fast enough to keep pace with global electricity demand through 2030, the International Energy Agency forecast. The CHART OF THE DAY shows a widening gap between power generated with renewable fuels and total consumption. That means coal-fired plants, which are cheaper and more polluting, will increase their share in the energy mix, discharging extra heat- trapping emissions that threaten to raise the planet’s temperature, the IEA said. To supply ballooning consumption in developing nations such as China and India, new generators will be needed that can produce more than four times the total electricity potential now in the U.S., the IEA said. That will cost $13.7 trillion, the Paris-based adviser to oil-consuming nations said, basing its scenario on existing state policies for fossil-fuel use. “We should expect coal to still be the primary generation choice in the future,” said Jose Garcia, senior associate at the consultant Brattle Group in Madrid. “It’s logical to assume that the least-expensive technology alternatives should become the likely choices for new generation capacity.” Burning coal will contribute 44 percent of power by 2030 compared with about 41 percent now, the IEA said. A ton of coal may cost $109 in 2030, less than $120 in 2008, the adviser said.

- The Delaware River Port Authority, operator of four toll bridges and a commuter rail line between Philadelphia and southern New Jersey, today agreed to borrow as much as $585 million to manage an interest-rate swap that will cost $111 million to cancel. The derivative, agreed with the New York unit of Zurich- based UBS AG in 2001, takes effect Jan. 1 and involves $403 million in outstanding debt. The board has paid $48 million since December, 2008, to cancel two other swaps, and won’t consider them in the future, Chief Financial Officer John Hanson said today.

- Federal Reserve regional bank presidents and U.S. lawmakers intensified a clash over giving Congress a greater say in appointing the central bank officials, who are now named in part by private-sector banks. St. Louis Fed President James Bullard today said proposed legislation to subject some officials to Senate confirmation is a “blatant politicization” of the Fed. Separately, seven House Democrats called for an “exploration of possible changes” in how the Fed is governed, saying there’s an “inherent conflict” in the way presidents are named. Proposed legislation in the Senate risks higher inflation if there’s too much political pressure on the Fed to keep interest rates low while the economy rebounds, some former Fed officials say. Lawmakers say private-sector banks have too much influence at the Fed, and that the regional Fed bank presidents focus too much on inflation at the expense of job growth. “This is going to be a big battle,” said former Fed Governor Lyle Gramley, now a senior economic adviser to New York-based Soleil Securities Corp. “The danger is the new arrangement will politicize the Fed to the point that they don’t do what’s necessary” when the central bank needs to raise interest rates, he said.

- Chrysler Group LLC may have to terminate as many as 145 more U.S. dealers unless the retailers can find lenders to finance their new-vehicle inventory.

- Brazil will begin taxing the issuance of depositary receipts in international markets in a bid to prevent companies from selling shares abroad rather than locally, the Finance Ministry said. A tax of 1.5 percent will be levied starting tomorrow on the creation of depositary receipts by companies or investors converting local shares, Economic Policy Secretary Nelson Barbosa told reporters in Brasilia.

Wall Street Journal:

- Senate Majority Leader Harry Reid, propelling action on President Barack Obama's top domestic priority, unveiled Wednesday a ten-year $849 billion bill that would overhaul the nation's health-care system and extend insurance to 31 million Americans without coverage. The 2,074-page legislation represents the Nevada Democrat's first attempt to build consensus among Senate Democratic liberals and centrists, as well as the two independents allied with the party. One swing Democrat, Sen. Ben Nelson of Nebraska, said he still has a range of concerns but suggested he might at least be willing to begin debate. "If you don't like the bill, then why would you block your own opportunity to amend it?" he said. Two other Democrats on the fence, Sen. Mary Landrieu of Louisiana and Sen. Blanche Lincoln of Arkansas, remained noncommittal Wednesday evening.

- General Electric Co. (GE) is the latest to issue a consumer loan-backed deal that is not eligible for a Federal Reserve program to boost this market. GE's $400 million deal is backed by credit card debt and was done as a result of reverse enquiry, according to Jim Harrington, a senior portfolio manager at Ryan Labs Asset Management. The bond, dubbed GEMNT 2009-4, has launched at 140 basis points over a benchmark.

- The Government Accountability Office, the congressional watchdog, will testify at a House oversight committee hearing Thursday that there are "significant issues to be addressed" in the accuracy of reports about the number of jobs credited to the federal stimulus program because of errors in forms filed by recipients of the money. Separately, the agency tasked with overseeing the program announced Wednesday evening that it had corrected reports by recipients who appeared to be in non-existent congressional districts, after being asked to do so by the White House. Discrepancies in the administration's count of jobs "created or saved" by the $787 billion stimulus program are causing headaches among Congressional Democrats who are trying to craft a new jobs program in the face of the highest unemployment rate in 26 years. Rep. David Obey (D., Wis.), who as chairman of the House Appropriations Committee will have a major role in any new jobs package, released a statement earlier this week calling inaccuracies in the stimulus recipient reports "outrageous."

- AOL has hired a pair of New York investment bankers, Morgan Stanley and Allen & Co., to manage the sale of its ICQ instant-messaging unit. Sources familiar with the situation said interest in buying the asset from two major non-U.S. companies prompted execs at the online service to put a process in place for a deal that will likely occur after AOL becomes an independent company in December.

- CHICAGO -- Hedge-fund titan Kenneth Griffin lost $8 billion of his clients' money last year. Now, he is trying to persuade investors to trust him with more. "We showed a level of human fallibility," he told his staff at a late-September lunch in Manhattan. The price of fallibility: a 55% loss in the big hedge funds at his firm, Citadel Investment Group. His funds' declines far outstripped the 19%, on average, that hedge funds lost as a whole, according to Hedge Fund Research Inc. For the past year, Citadel prevented investors from withdrawing money they wanted to take out from his two main funds, Kensington and Wellington. Mr. Griffin is looking for the next big opportunity even though the hangover from the last one is fresh in clients' minds. He is launching four new funds and expanding in investment banking -- hoping to fill the profitable hole left by the collapse of Lehman Brothers. Before his disastrous 2008, Mr. Griffin charted years of strong performance. Still, many investors are dubious about his recovery plans.

- Attorney General Eric Holder directly responded for the first time to critics of his decision to try the alleged 9/11 plotters in a civilian court, saying he was confident they would be convicted. At a Senate Judiciary Committee hearing Wednesday, some relatives of people killed in the Sept. 11, 2001, attacks weren't convinced. They applauded when a Republican senator mocked Mr. Holder over his assertion that the men were more likely be convicted in civilian rather than military trials. In an encounter after the hearing, Alice Hoagland, whose son died in the crash of United Airlines Flight 93 in Pennsylvania, told Mr. Holder that she opposed his decision. Ms. Hoagland said he gave "short shrift" to military commissions. Mr. Holder set off a bitter debate last week when he said the U.S. would try Khalid Sheikh Mohammed and four other accused plotters in federal district court in New York. Many Republicans, and some New Yorkers, have criticized the move as a costly threat to the city.

- Mortgage restructuring for strapped homeowners has emerged as a rare growth area in the economy as companies in the field keep hiring. Four of the largest mortgages servicers -- Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co. and Wells Fargo & Co. -- have collectively hired almost 17,000 people this year, mostly to work with financially ailing homeowners. With the number of defaults rising, many are planning to keep adding staff.

- Condé Nast Publications Inc. and Adobe Systems Inc.(ADBE) are building a digital version of Condé Nast’s Wired magazine for electronic reading devices. The Wired e-reader application will be available by the middle of next year and will kick off similar efforts across Condé Nast’s magazines, which include Vogue, Vanity Fair and the New Yorker.

- A government panel's decision to toss out long-time guidelines for breast cancer screening is causing an uproar, and well it should. This episode is an all-too-instructive preview of the coming political decisions about cost-control and medical treatment that are at the heart of ObamaCare. As recently as 2002, the U.S. Preventative Services Task Force affirmed its recommendation that women 40 and older undergo annual mammograms to check for breast cancer. Since regular mammography became standard practice in the early 1990s, mortality from breast cancer—the second leading cause of cancer death among American women—has dropped by about 30%, after remaining constant for the prior half-century. But this week the 16-member task force ruled that patients under 50 or over 75 without special risk factors no longer need screening. So what changed? Nothing substantial in the clinical evidence. But the panel—which includes no oncologists and radiologists, who best know the medical literature—did decide to re-analyze the data with health-care spending as a core concern.

MarketWatch:

- NetApp Inc.(NTAP) on Wednesday reported a fiscal second-quarter profit that more-than-doubled from the same period a year ago on results that were led by strong sales of the company's storage-area-networking products. In after-hours trading, NetApp shares rose 3% to $30.43.

NY Times:

- John Paulson, the hedge fund manager who gained fame betting on the mortgage crisis, sees big opportunities to wager on price discrepancies in banking stocks, according to his most recent letter to investors. Mr. Paulson and his team follow 70 banks internationally and have analyzed whether they need to raise additional capital by forecasting earnings and aggregating estimated losses. The 139 percent surge in financial sector stocks since March 9 has led to “inefficient valuations creating what we believe are opportunities on both the long and short side,” he said in his third-quarter letter. The Paulson fund’s largest position continues to be Bank of America(BAC), which it believes can post annual returns of 34 percent for the funds through 2011 as the bank returns to profitability. (See a related article from Bloomberg News.) The New York firm has recently taken a large stake in Citigroup(C) and shed its stake in Goldman Sachs(GS).

Business Week:
- Detroit Mayor Dave Bing is struggling to save his city from fiscal calamity. Unemployment is at a record 28% and rising, while home prices have plunged 39% since 2007. The 66-year-old Bing, a former NBA all-star with the Detroit Pistons who took office 10 months ago, faces a $300 million budget deficit—and few ways to make up the difference. Against that bleak backdrop, Wall Street is squeezing one of America's weakest cities for every penny it can. A few years ago, Detroit struck a derivatives deal with UBS (UBS) and other banks that allowed it to save more than $2 million a year in interest on $800 million worth of bonds. But the fine print carried a potentially devastating condition. If the city's credit rating dropped, the banks could opt out of the deal and demand a sizable breakup fee. That's precisely what happened in January: After years of fiscal trouble, Detroit saw its credit rating slashed to junk. Suddenly the sputtering Motor City was on the hook for a $400 million tab. Detroit isn't suffering alone. Across the nation, local governments and related public entities, already reeling from the recession, face another fiscal crisis: billions of dollars in fees owed to UBS, Goldman Sachs (GS), and other financial giants on investment deals gone wrong.

CNNMoney.com:

- The federal government made $98 billion in improper payments in fiscal 2009, and President Barack Obama will issue an executive order in coming days to combat the problem, his budget director announced Tuesday. The 2009 total for improper payments -- from outright fraud to misdirected reimbursements due to factors such as an illegible doctor's signature -- was a 37.5% increase over the $72 billion in 2008, according to figures provided by Peter Orszag, director of the White House Office of Management and Budget.

Forbes:

- Window Into The Wireless Future.

npr:

- Two years ago, a top psychiatrist at Walter Reed Army Medical Center was so concerned about what he saw as Nidal Hasan's incompetence and reckless behavior that he put those concerns in writing. NPR has obtained a copy of the memo, the first evaluation that has surfaced from Hasan's file. Officials at Walter Reed sent that memo to Fort Hood this year when Hasan was transferred there. Nevertheless, commanders still assigned Hasan — accused of killing 13 people in a mass shooting at Fort Hood on Nov. 5 — to work with some of the Army's most troubled and vulnerable soldiers. On May 17, 2007, Hasan's supervisor at Walter Reed sent the memo to the Walter Reed credentials committee. It reads, "Memorandum for: Credentials Committee. Subject: CPT Nidal Hasan." More than a page long, the document warns that: "The Faculty has serious concerns about CPT Hasan's professionalism and work ethic. ... He demonstrates a pattern of poor judgment and a lack of professionalism." It is signed by the chief of psychiatric residents at Walter Reed, Maj. Scott Moran. When shown the memo, two leading psychiatrists said it was so damning, it might have sunk Hasan's career if he had applied for a job outside the Army. "Even if we were desperate for a psychiatrist, we would not even get him to the point where we would invite him for an interview," says Dr. Steven Sharfstein, who runs Sheppard Pratt's psychiatric medical center, based just outside Baltimore.

MultichannelNews:

- The Consumer Electronics Association said it was "extremely disappointed" by the California Energy Commission's decision to set new energy efficiency standards for TV sets sold in the state. The five-member California Energy Commission voted unanimously Wednesday to require new TV sets with screen sizes 58 inches and smaller to reduce electricity consumption 33% by 2011 and 49% by 2013. "Simply put, this is bad policy -- dangerous for the California economy, dangerous for technology innovation and dangerous for consumer freedom," CEA's senior vice president of industry affairs Jason Oxman said in a statement. "Instead of allowing customers to choose the products they want, the commission has decided to impose arbitrary standards that will hamper innovation and limit consumer choice. It will result in higher prices for consumers, job losses for Californians, and lost tax revenue for the state." According to the CEA, the California Energy Commission has "repeatedly rebuffed" attempts from the consumer-electronics industry to provide input on the regulations. CEA claimed that "energy efficiency is a shared concern for all parties" but that said that "rather than build on these efforts, the CEC chose to create a new regulatory regime and micromanage the design and development of future televisions."

Politico:

- Sen. Joe Lieberman (I-Conn.) said the Senate can't sit back for the Obama administration to investigate the shootings at Ft. Hood, so he’s pushing ahead with a Homeland Security Committee hearing to look into what went wrong before the massacre. There’s been some tension between members of Congress who want a thorough investigation into the Ft. Hood shootings, but the Obama administration has been hesitant about letting key government officials testify before congressional panels. Lieberman is holding a hearing Thursday on the issue. "We want to know what the federal government knew and what it did concerning Maj. [Nidal Malik] Hasan and whether action should have been taken based on information available to federal employees," Lieberman said. "We also will investigate how this incident affects our understanding of and defenses against the threat posed by violent Islamic extremism and homegrown terrorism."

- President Barack Obama says he is angry about leaks from his deliberations on more troops for Afghanistan, and said he considers such disclosures a firing offense.

The Business Insider:

- Vevo, the music video startup backed by Sony and Universal, with Google's(GOOG) YouTube support, is launching December 8th. Rio Careff, Vevo's CEO, promised us last week that Vevo would be a great experience with high quality sound and video. He says he wants to restore a "premium luster" to music video sites, while still preserving choice.

- Lloyd Blankfein Should Resign! By Charlie Gasparino.

USA Today.com:

- Cellphone handset maker Sony Ericsson will move its North American headquarters from North Carolina to Atlanta and close a half-dozen sites worldwide as it retrenches against what it expects will be a tighter market and cuts about 1,600 jobs globally. The joint venture between Sweden's LM Ericsson and Japan's Sony will consolidate product development operations by closing sites in Research Triangle Park; Seattle; Miami; San Diego; Kista, Sweden; and Chennai, India, spokeswoman Stacy Doster said. Atlanta was chosen in part because of its proximity to AT&T, one of the company's largest customers, Doster said. The city also is desirable as a "gateway into Latin America" because of its international connections through Hartsfield-Jackson Atlanta International Airport, she said.

AP:

- President Barack Obama's choice for a top job in the Treasury Department did not disclose all of her late tax payments until she was repeatedly prodded by Senate investigators, a congressional report issued Wednesday said. Obama's nominee for undersecretary of the Treasury for international affairs, Lael Brainard, is the fifth presidential nominee to reveal tax issues during the congressional vetting process. Brainard was late in paying real estate taxes in 2005, 2006 and 2007 on property in Northern Virginia, according to the report by the Senate Finance Committee staff. The report also challenges the accuracy of a deduction Brainard claimed for running an office from her home. The challenge led Brainard to reduce the deduction on her 2008 return, though she declined to adjust returns for 2005, 2006 and 2007, telling committee staff she used a reasonable method to calculate the deductions.

Reuters:

- Donaldson Co Inc (DCI.) reported first-quarter results above analysts' expectations, helped by improvement in end markets, and raised its forecast for 2010, sending the air and liquid filtration maker's shares up 8 percent in after-hours trade.

- Riverbed Technology Inc (RVBD) is not interested in being acquired, its chief executive said, dousing speculation that the network equipment maker may be the next in a series of deals in the sector.

- Global LCD TV shipments jumped 38 percent to a record 37.5 million units in July-September, driven by government stimulus in China and Japan, as well as continued price erosion, research firm DisplaySearch said. It expects LCD TV shipments to reach 140 million units in 2009, up from its previous estimate of 130 million.

- The hotel industry, battered by the drop in corporate spending this year, is expected to see improved demand in 2010, which could fuel more deals in the sector, Jones Lang LaSalle Hotels said on Wednesday. The consulting firm expects low interest rates, greater clarity about the demand for hotels and improving debt markets in 2010 will help spur hotel sales and transactions. "We do expect to see hotels potentially rebound first among property types and for 2010, we see some slightly positive demand trends," Josh Gelormini, director of capital markets research for the Americas, told a news briefing.

Financial Times:

- A large bubble is forming in China’s property market as a result of Beijing’s credit-driven stimulus program, one of the country’s most prominent real estate developers warned. Zhang Xin, chief executive of Soho China, one of the country’s most successful privately owned property developers, told the Financial Times the asset bubble was leading to rampant wasteful investment in the sector, undermining the country’s long-term growth prospects. “Real estate prices should only go up because people want to actually use the space, but at the moment we can see more and more empty buildings across the whole country and in every real estate segment,” Ms Zhang said. “The rising prices are a direct result of so much money coming from the banks and the Chinese banks should be very worried.” Ms Zhang’s assessment was echoed by Fan Gang, a member of the central bank’s monetary policy committee, who warned on Wednesday that real estate in cities such as Beijing, Shanghai and Shenzhen was expensive and there was a growing risk of asset price bubbles. Ms Zhang said the current speculation should be a serious warning for the industry and the general economy. “In Manhattan, they have vacancy rates of 10-15 per cent and they feel like the sky is falling, but in Pudong [the central business district in Shanghai] vacancy rates are as high as 50 per cent and they are still building new skyscrapers,” she said. “If you look at GDP growth, then China looks like a new engine driving the global economy, but if you look at how growth is being created here by so much wasteful investment you wouldn’t be so optimistic.”

Late Buy/Sell Recommendations
Citigroup:

- Reiterated Buy on (PVH), target $52.

Night Trading
Asian Indices are -.50% to +1.0% on average.

Asia Ex-Japan Inv Grade CDS Index 105.0 +1.0 basis point.
S&P 500 futures -.36%.
NASDAQ 100 futures -.32%.

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
- (PDCO)/.40

- (SHLD)/-1.09

- (WSM)/.05

- (DKS)/.09

- (GME)/.30

- (KLIC)/.05

- (PLCE)/1.38

- (ROST)/.84

- (DBRN)/.33

- (GPS)/.44

- (DELL)/.27

- (FL)/.12

- (INTU)/-.15

Economic Releases

8:30 am EST

- Initial Jobless Claims for last week are estimated to rise to 504K versus 502K the prior week.

- Continuing Claims are estimated to fall to 5598K versus 5631K prior.

10:00 am EST

- Leading Indicators for October are estimated to rise +.4% versus a +1.0% gain in September.

- Philly Fed for November is estimated to rise to 12.2 versus a reading of 11.5 in October.

Upcoming Splits
- None of Note

Other Potential Market Movers
- The Fed’s Fisher speaking, 3Q mortgage delinquencies, EIA weekly natural gas inventory report, BoJ rate decision, Morgan Stanley Consumer/Retail Conference, Morgan Stanley TMT Conference, Citi Healthcare Conference, (SLF) investor day, Keybanc Engineering/Construction Conference, Citi Small/Mid Conference, (ETH) investor conference, RBC Energy Conference, (AMSC) analyst meeting, (VRSN) analyst day, (MRO) analyst meeting and the (SNN) analyst conference could also impact trading today.

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