Tuesday Watch

Late-Night Headlines
Bloomberg:

- Stanley Works(SWK) agreed to buy Black & Decker Corp.(BDK) for about $3.5 billion, combining the two largest U.S. toolmakers in an all-stock transaction that would reduce costs by $350 million annually. Based on Stanley’s closing stock price, the offer values Towson, Maryland-based Black & Decker at $57.57 a share, or 22 percent above where it closed today. Fewer than 4,000 jobs, or less than 10 percent of total positions at the combined company, will be cut, Stanley Chairman and Chief Executive Officer John Lundgren, said in a telephone interview.

- Facing criticism from Arab leaders, Secretary of State Hillary Clinton tempered praise of Israel’s offer to restrict West Bank settlements and announced a trip to Egypt to confer with President Hosni Mubarak about the stalled Mideast peace process. Two days after hailing an “unprecedented” proposal from Israeli Prime Minister Benjamin Netanyahu to limit settlement expansion as a move to resume peace talks, Clinton yesterday said the offer “falls far short” of U.S. calls for a total settlement freeze. Steps to improve West Bank security by Palestinian Authority President Mahmoud Abbas and Prime Minister Salam Fayyad “are also unprecedented,” she said, and “Israel should reciprocate.”

- The International Monetary Fund said it is selling 200 metric tons of gold to the Reserve Bank of India for about $6.7 billion, its first sale of the precious metal in nine years. The sale accounts for almost half the 403.3 tons that the Washington-based lender in September agreed to sell as part of a plan to shore up its finances and lend at reduced rates to low- income countries.

- The Conservative Party candidate running for an open congressional seat in New York pulled 5 percentage points ahead of the Democrat after the Republican nominee dropped out of the race, a poll released today showed. Conservative Doug Hoffman led Democrat Bill Owens, 41 percent to 36 percent, with 18 percent undecided, according to the Siena College poll. The poll of 606 likely voters was conducted yesterday and has a margin of error of plus or minus 4 percentage points. The special election is being held tomorrow.

- Steel production in China, the world’s largest maker of the metal, may rise 10% this year, the China Iron & Steel Association said today. Output may reach 550 million metric tons.

Wall Street Journal:

- For decades, a rule of thumb in Washington has said that there should be popular support and a bipartisan majority before approving an initiative that significantly affects tens of millions of Americans. Health-care reform—ObamaCare—has neither, yet Democrats want to impose it anyway. If they succeed, the consequences could be devastating for the country and probably for the president and his party. The reasoning behind the rule is simple. Forcing drastic change on an unwilling public is likely to cause national disunity, stir angry protests, increase political polarization, and deepen distrust of Washington. But if popular opinion and both political parties support the change, discord will be minimal.

- House Democrats are wrestling with how their health-care bill will deal with abortion and immigration issues as they prepare to bring the bill to the floor as soon as Friday.

- Six ranking Republican U.S. senators Monday warned the head of the environment committee that pushing ahead with a vote on a landmark climate bill this week would "severely damage" the chances of passing the legislation. Environment and Public Works Chairwoman Sen. Barbara Boxer (D., Calif.) has said she's prepared to begin consideration of the climate bill Tuesday despite objections by GOP committee members who want a full economic analysis of the proposal.

- Mr. Karzai's election should put to rest the doubts about his "legitimacy" heard in America's liberal media and in whispers from the Administration, even if it won't. He won that legitimacy by agreeing to a second round, once the official electoral commission invalidated enough of his votes to deprive him of a majority, in accordance with Afghan law.

- Pleading with Iran will get the West nowhere.

CNBC.com:

- Ford Motor(F) said on Monday it would pay back in part and extend by two years $10.7 billion of secured debt and issue some $3 billion of stock and equity linked securities to improve its balance sheet.

- An interesting report today from the Mortgage Bankers Association shows business may be better than we think for their people.

Business Week:
- One of the most anticipated books of the global financial meltdown just got a bit of public relations problem. The book, The Greatest Trade Ever, written by Wall Street Journal writer Gregory Zuckerman, due to hit bookshelves tomorrow, details the story of hedge fund operator John Paulson’s now legendary trade against the housing market and how he made billions in the process betting against subprime mortgages. Although the book is based on extensive interviews with Paulson, Paulson is releasing a statement that disses the book, calling it a disappointment. The statement goes on: “It contains numerous inaccuracies and fails to capture the essence of the credit bubble. The writing style is indicative of a gossip tabloid rather than respected financial journalism. Unfortunately, the opportunity to create a meaningful documentation of an important time in financial history was lost.”

CNNMoney.com:

- IT departments are finally starting to buy Apple's smartphone, says a Deutsche Bank report. "There is growing evidence that the iPhone is making inroads into the Enterprise," writes Deutsche Bank research analyst Chris Whitmore in a report to clients Monday. According to his estimates, Apple (AAPL) by the end of the year will have shipped about 2 million iPhones into corporate accounts through various routes, including internal IT department purchases and formal reimbursement policies. That would give Apple about a 7% share of the enterprise smartphone market this year, up from 2% in 2008. IT departments were famously resistant to the iPhone when it was launched two years ago. That resistance has begun to melt, writes Whitmore, for several reasons:

- The bankruptcy of CIT means a $2.3 billion wipeout for Treasury. More losses are likely as other TARP recipients have missed dividend payments. CIT Group is the first big bailout loss for taxpayers, but it won't be the last.

- Stimulus may have created or saved 640,000 jobs so far, but many of those positions were never intended to last. The American Recovery and Reinvestment Act was designed to put millions of people to work, mainly for "shovel-ready" projects. By their very nature, most of those projects last only until the work is completed or the funding runs out. That means millions of workers hired with stimulus funding are left looking for a job after the stimulus-funded program is completed.

Forbes:

- Mapping the human genome produced far more hype than drugs. That's starting to change. Shares of Human Genome Sciences(HGSI) and Vertex Pharmaceuticals(VRTX), tiny drug developers that first gained during the hype fest that followed the mapping of the human genetic code a decade ago, are soaring Monday morning after positive clinical trial results.

TechCrunch:

- There is a perception that Google’s Chrome is a rounding error when it comes to browsers. And maybe it still is, but Google is now fighting that perception in a very public way. Today, it announced that the Chrome Team won a Founder’s Award for their achievements so far, and for the first time revealed how many people are using the Chrome browser: 30 million active users.

Intrade:

- The odds of Chris Christie winning New Jersey’s race for governor are rising 16.0 to 53%. The odds of John Corzine winning are falling 16.2 to 47%.

Rasmussen:

- Voter confidence in America’s conduct of the War on Terror has fallen to its lowest level since the first week of January in 2007. Voters are also much less optimistic about the course of the war in Iraq. New Rasmussen Reports national telephone polling finds that just 34% of voters say the United States and its allies are winning the War on Terror. That’s down nine points from a month ago and 21 points from when Barack Obama first took office.

The Business Insider:

- Commerce Secretary Gary Locke told Bloomberg TV today that a second economic stimulus is "being hotly discussed and very seriously considered within the administration as well as members of Congress." Not surprisingly, this news triggered a spasm of backtracking: Locke's spokesman now says he was being "imprecise."

- It's still early, but the results for Windows 7 are looking positive, says Kathryn Huberty of Morgan Stanley in a note released this afternoon. According to NPD, PC unit sales rose 40% year over year for the week ending October 24th, which included the first three days of Windows 7.

Reuters:

- CIT Group Inc (CIT) is looking for a quick exit from Chapter 11 protection but its long-term survival outside of bankruptcy depends in large part on what regulators will allow it to do with its various businesses. "CIT in general isn't out of the woods yet," said Jeffrey Knopman, principal of Profit Solutions Group Inc, which helps vendors deal with retailers. The bankruptcy financing gives the company a bit of a reprieve, he said, adding, "I think the jury's still out on the longer term." CIT hopes to move some of its best businesses, including vendor financing and factoring, to its bank, where it can fund them with deposits. But regulators may balk at this move.

Financial Times:

- Hedge fund launches are growing in size and number after months of subdued activity in the wake of the collapse of Lehman Brothers last year. The revival of fund start-ups is one of the clearest signs yet that the $1,400bn (£854bn) global hedge fund industry is starting to return to better times. "Where it was common to start with $300m at the height of the boom, $50m was the case earlier this year," said Patric de Gentile Williams, chief operating officer of FRM Capital Advisors, a provider of seed capital to hedge fund ventures. Chicago-based Hedge Fund Research estimates that the number of fund launches rose to 182 in the second quarter of 2009 from a low of 148 the previous quarter. The size of launches was also diminished. Data provider Eurohedge estimated that the entire volume of assets raised by all of Europe's launches in the first half was less than the single largest new fund in 2008, Brevan Howards' $2.5bn Multi-Strategy Fund.

- Signs of recovery after a torrid year reverberated around the world on Monday as manufacturers reported rising output and improved employment prospects in the US, Europe and Asia. From Seoul to San Francisco, manufacturing sentiment has recovered quickly from the sudden shock of the global recession last year, when world trade stopped dead and unsold stock piled up in warehouses across the world.

Late Buy/Sell Recommendations
Citigroup:

- Reiterated Buy on (ESRX), target $102.

- Reiterated Buy on (AOC), target $47.

Night Trading
Asian Indices are -.50% to +.25% on average.

Asia Ex-Japan Inv Grade CDS Index 117.50 -2.0 basis points.
S&P 500 futures +.19%.
NASDAQ 100 futures +.20%.

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
- (MHS)/.72

- (MRO)/.58

- (ICE)/1.15

- (RDC)/.51

- (DBD)/.41

- (EMR)/.60

- (ENR)/1.16

- (ABC)/.40

- (MA)/2.93

- (CVC)/.25

- (ADM)/.56

- (JOE)/-.05

- (RCL)/1.00

- (AMT)/.16

- (RL)/1.31

- (KFT)/.48

- (DISCA)/.27

- (DLB)/.34

- (PBI)/.54

- (PEGA)/.14

- (VNO)/1.16

- (PZZA)/.26

- (LPX)/-.18

- (KCP)/.03

- (OSK)/.18

- (ONXX)/.23

Economic Releases

10:00 am EST

- Factory Orders for September ate estimated to rise +.8% versus a -.8% decline in August.

Afternoon:

- Total Vehicle Sales for October are estimated to rise to 9.8M versus 9.2M in September.

Upcoming Splits
- None of Note

Other Potential Market Movers
- The weekly retail sales reports, API energy inventory data, ABC Consumer Confidence reading, Oppenheimer healthcare conference, Wedbush Morgan Clean Tech Conference, (GFI) investor day, (FFIV) analyst meeting, (FDO) analyst conference, (DD) investor meeting, (CSH) analyst day and the (PMTC) investor day could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by financial and shipping shares in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.