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Tuesday Watch

Late-Night Headlines
Bloomberg:

- Medicare cuts will halve earnings growth over the next decade for UnitedHealth Group Inc.(UNH), the largest U.S. insurer, and wipe them out completely for Humana Inc.(HUM) if the health-care bill approved by a Senate panel last week becomes law, a Goldman Sachs Group Inc. analysis said. Cigna Inc. will be least affected among the five largest insurers, given its low numbers in Medicare and commercial policies where profit margins are likely to drop, said Matthew Borsch, a Goldman analyst, in a note to clients today. Overall, the three companies, along with WellPoint Inc. and Aetna Inc. will see earnings growth cut in half, to 5 percent, under the plan passed by the Senate Finance Committee Oct. 14, he said. Insurer shares, measured by the Standard & Poor’s index of managed-care companies, have dropped 15 percent since committee Chairman Max Baucus, a Montana Democrat, introduced the bill Sept. 16. The bill doesn’t include a government-run insurer to compete with the private sector, a goal of President Barack Obama and other Democrats. Goldman’s analysis assumes that doesn’t change. The finance bill would halve profit margins on individual and small-business policies to about 3 percent over 10 years, while doubling enrollment in those groups to 20 million, Borsch said. Lawmakers also plan to cut funding for insurer- administered Medicare Advantage plans by more than $100 billion. Those categories will account for 79 percent of earnings this year for Louisville, Kentucky-based Humana a third for Minnetonka, Minnesota-based UnitedHealth and only 2 percent for Cigna, Borsch said. Under Baucus’s bill, Humana will see earnings per share fall 2 percent a year over the next decade, compared with an 11- percent annual increase if Congress does nothing, Borsch said.

- Migrating U.S. taxpayers expanded income bases in Florida, Texas and North Carolina last year, while draining those in New York, California and Michigan, according to Bank of America Merrill Lynch research. New YorkFlorida gained $4.4 billion from 31 others, according to the report today from Phil Fischer, municipal strategist in New York. Texas, whose tax base grew by $2.8 billion, gained funds from 43 of its peers, while Michigan lost $2.4 billion to the rest of the country, the report shows. Losing states were typically those with “high tax” burdens such as New York, California and New Jersey or “economically distressed,” such as Michigan, Ohio and Rhode Island, Fischer said.New York and New Jersey sustained net losses to their tax bases each year since 1993, and California’s only positive year during that span was the dot-com boom of 2001, according to the IRS data. Texas, which weakened around 2003, strengthened since then and now gains from more other states than Florida and Nevada, Merrill said. lost $3.9 billion in income base to 42 other jurisdictions, while

- Royal Dutch Shell Plc gained conditional approval from the U.S. Interior Department’s Minerals Management Service of a plan to explore for oil and gas in Alaska’s Beaufort Sea. The plan calls for Shell to drill exploration wells in two areas in the sea north of Alaska, the agency said in an e-mailed statement today. Shell is required to halt activities during a seasonal hunt of bowhead whales by native Alaskans. The company also must get a permit to drill.

- Brazil will impose taxes on purchases by foreign investors of real-denominated, fixed-income securities and on purchases of stocks, Finance Minister Guido Mantega said. The measures are being taken “to avoid an excess speculation in the stock market and in capital markets,” Mantega told reporters in Sao Paulo. The real has gained 35 percent since the beginning of the year, the best performer amid the 16 most traded currencies tracked by Bloomberg. The currency has gained 5.3 percent in the past month. The central bank started purchasing dollars on May 8 in a bid to temper the real gains. The currency weakened 0.5 percent to 1.7177 per U.S. dollar at 4:28 p.m. New York time. Earlier today, the Brazilian real was cut to “underweight” from “overweight” in RBC Capital Markets’ model portfolio on concern the government would impose new taxes.

- Google Inc.’s(GOOG) YouTube, the world’s most popular video-sharing site, will stream a live U2 concert on Oct. 25 from the Rose Bowl in Pasadena, California. The concert will be the first full-length concert shown on YouTube live, Chris Maxcy, director of partner development, said on a conference call with journalists. The concert, which can be accessed at youtube.com/u2, will be available in 16 countries, including the U.S., France and Canada.

- European Central Bank President Jean-Claude Trichet said officials in the euro area take seriously the U.S. commitment to prevent the dollar from depreciating too much. “We all note with considerable attention the statements made by American authorities as regards their support in favor of a strong dollar,” Trichet told reporters in Luxembourg late yesterday after a meeting of European finance ministers. He also echoed the Group of Seven statement that “excessive volatility and disorganized developments in the exchange market was bad for economic development.” The euro has gained almost 20 percent against the dollar since February, making the region’s exports more expensive to overseas buyers and threatening the recovery from the worst recession since World War II.

- Invesco Ltd., manager of the Aim and PowerShares funds, agreed to buy Morgan Stanley’s retail investment management business, including the Van Kampen unit, for $1.5 billion in stock and cash. Invesco will gain about $119 billion in client money, bringing its assets under management to about $536 billion, the Atlanta-based firm said today in a statement. The purchase price includes $500 million in cash and $1 billion in stock, which will make Morgan Stanley Invesco’s largest shareholder with a 9.4 percent stake.

- Texas Instruments Inc.(TXN), the second- largest U.S. chipmaker, forecast fourth-quarter profit and sales that beat analysts’ estimates, indicating demand for electronic components is recovering further.52 at 4 p.m. on the New York Stock Exchange. Earnings will be 42 cents to 50 cents a share this quarter on sales of $2.78 billion to $3.02 billion, the Dallas-based company said today in a statement. Analysts predicted profit of 40 cents a share on revenue of $2.79 billion, based on the average of estimates compiled by Bloomberg. Texas Instruments gained 3.9 percent to $24.43 in extended trading after rising 77 cents to $23.

Wall Street Journal:

- Health care data company IMS Health Inc.(RX) is in advanced discussions with private-equity firms to sell itself, said people familiar with the matter, the latest sign that the leveraged-buyout business is waking from a two-year slumber. The Norwalk, Conn., company, which compiles such information as the value of prescriptions filled, received bids late last week and its board of directors must determine if the offers justify taking the 55-year-old firm private, these people said. The offers are expected to give IMS stockholders a 30% premium on their shares, said these people, valuing the company at about $3.5 billion.

- Book critics may be digging R. Crumb’s illustrated tome “The Book of Genesis,” which was released today, but several religious organizations have unsurprisingly taken offense to the comic artist’s titillating take on the Bible. (The cover of Crumb’s literal interpretation of the good book — primarily a mash-up of the Robert Alter and King James versions of the bible — states “adult supervision recommended for minors.”) According to the Telegraph, even the Church of England has weighed in, with a spokesperson noting: “I haven’t seen the book but I think trying to sell something by emphasizing the sexual nature of some of the scenes doesn’t seem to be a good way to pass on the message of the Bible.”

- A new electronic book reader is expected Tuesday from book seller Barnes & Noble Inc.(BKS) that will challenge readers from Amazon.com Inc. and Sony Corp. with a color touch-screen and $259 price, according to a planned ad for the device.

- Hedge-fund giant Galleon Group, facing heavy investor withdrawal requests after Friday's arrest of co-founder Raj Rajaratnam, moved to unload some of its technology stocks and other holdings to raise cash. Investors have sought to withdraw about $1.3 billion of the $3.7 billion in assets Galleon manages, traders say. Moreover, two of the brokerage firms Galleon normally deals with, Bank of America Merrill Lynch and Barclays PLC, have told Galleon they will no longer trade securities positions with the fund firm, according to a person close to the situation. Traders at Galleon said they believed competitors were seeking to profit from its troubles by selling stocks in the companies that Galleon also holds, believing they will decline as the hedge fund firm sells them. A blog posting on Friday listed what it said were Galleon's top holdings. The fund's largest, most easily traded stocks, including Apple Inc. and Google Inc., weren't hurt in Monday's rising stock market.Colgate University, and so-called funds-of-funds, which place money in various hedge funds. Most of Galleon's hedge funds allow investors to withdraw money only quarterly, although the technology fund run by Mr. Rajaratnam allows monthly redemptions. There is a 45-day notice period, so Galleon doesn't need to hand back any money until Jan. 1. Galleon's investors include university endowments, such as

- Human rights “interfere” with President Obama’s campaign against climate change.

- Health Costs and History.

CNBC.com:

- Apple(AAPL) shares leaped to an all-time high in late trading Monday as the company reported a profit and sales that rose from last year and blew past analysts' forecasts. Apple's sales of the iPhone and Mac hit quarterly records. Sales of Apple's Mac computers jumped 17 percent from a year earlier to 3.05 million in the September quarter, above analysts' average forecast of roughly 2.8 million. Apple sold 7.4 million iPhones, up from 6.9 million a year ago, and just shy of expectations of 7.5 million units. Some analysts had thought the company was having a tough time making enough iPhones to meet demand. "These are huge numbers tonight. Apple is probably the best growth story in tech, maybe one of the best growth stocks in the market. I bet this stock can go to $250 in six to nine months," said Jane Snorek, analyst at First American Funds. "Usually Christmas and back-to-school are correlated and Apple usually has a gigantic Christmas quarter. This makes me think Apple will have a great Christmas." "This isn't just a one-quarter phenomenon, there's something bigger going on. There's a paradigm shift from a cell phone, a computer in your pocket. Apple's going to run away with that and ultimately, the numbers are going to be inching up as we go forward into 2010," Gene Munster, senior research analyst at Piper Jaffray, told CNBC. "These are phenomenal results—and use that word. You know, it proves that even in a challenging economy people are willing to pay for what they perceive to be high quality product and a good value product," said Cross Research Analyst Shannon Cross. "It's fantastic earnings for this economy, actually, it's great number for any economy. It just shows the strength of Apple. It reaffirms that Apple is the leading consumer electronics company." "While we knew they were gaining share in those categories—PCs and phones—it's still surprising to see this degree of outperformance,'' said Daniel Ernst, an analyst with Hudson Square Research. "But that's just part of the Apple story: they're gaining share with premium-priced products.''

- The Federal Reserve Bank of New York said on Monday that it is testing one of its tools for withdrawing cash from the banking system, but stressed this should not be taken to mean that it is about to use it.

IBD:

- "It's who can produce the lowest cost to move a pound or kilo of freight from Hong Kong to L.A. It's as simple as that," said William J. Flynn, chief executive of Atlas Air Worldwide (AAWW).

FINalternatives:

- The son of hedge fund manager Douglas Kass has settled charges that he made unauthorized trades while working at Circle T Partners. Ethan Kass agreed to pay $50,000 to make the Securities and Exchange Commission allegations go away. The son of the Seabreeze Partners Management chief did not admit or deny the charges. According to the SEC, Kass, then a processing clerk at the hedge fund run by the late Seth Tobias, made at least 24 unauthorized trades that cost Circle T $8.5 million. The younger Kass hid the trading by leaving it out of the hedge fund’s handwritten trade blotter and deleting or altering the entries from the firm’s portfolio management system. Kass was fired when the trades came to light.

Politico:

- Senator Majority Leader Harry Reid had assembled his leadership team for a quick strategy session at the Capitol last week when somebody noticed that Sen. Chuck Schumer was absent. “Where’s Chuck?” the person asked. “He’s probably out there talking about me,” Reid quipped. Reid’s remark — conveyed to POLITICO by a person who was in the room — was a reference to Schumer’s appearance the night before Rachel Maddow’s MSNBC show, where the New York Democrat pressured Reid to accept a Schumer-crafted health care proposal that would create a public option plan but allow states to opt out. Reid and Schumer quickly patched things up — “Harry wanted Chuck to be contrite, and Chuck was contrite,” a leadership aide told POLITICO — but the incident revealed the tension that’s now gripping the Senate’s Democratic leadership as it struggles for an endgame compromise on health care reform. The pressure is rising, and relationships are being tested, staffers and senators say.

genomeweb:

- Casework Genetics, a Stafford, Va.-based forensics-technology provider, is validating an array-based technique that it hopes will be adopted by law-enforcement labs seeking a more "precise" and "efficient" way to solve crimes, CEO Kevin McElfresh told BioArray News last week. McElfresh said that Casework hopes to commercialize the technique, which uses the Illumina(ILMN) HumanOmni1-Quad BeadChip, by year end in order to upgrade its own offering and to gain an advantage over rival firms that use older technology.

The Business Insider:

- Apple (AAPL) will begin selling iPhones in China at the end of this month, company executives said during today's Q3 earnings call. Confirming earlier reports, Apple will launch with China Unicom. New details:

- The New York Times (NYT) newsroom is reeling from today's announcement that the company plans to cut the staff by 100. We spoke with a Times reporter, who told us it was the timing of the layoffs that is hitting everyone the hardest. The layoffs will come at the start of December, meaning a jobless Christmas for lots of reporters.

- This post will explain why Steven Levitt and Stephen Dubner have been taking a brutal beating in the press for a chapter in their new book, Superfreakonomics, in which they discuss global warming, and possible engineering solutions to it. By engineering, we mean, the use of technology (like chemicals emitted into the air, or big carbom sinks) that could actually reduce the presence of greenhouse gasses in the atmosphere. But to understand it, first you have to realize why global warming is the perfect global malady from the perspective of the left. You see, global warming is a special problem, and it sits right at the sweet spot of all kinds of politically charged issues. By going after global warming, you're also going after the oil industry, cars, western nations, rural areas, industrialization, the meat industry and huge suburban homes. All those things happen to be politically charged, as it is, and the left has long had them (to varying degrees) in their sights.

Financial Times:

- Developed countries are preparing to relent on their demand that developing countries agree to long-term cuts in greenhouse gas emissions in a concession that could form the basis of a global deal on climate change. The demand was one of five key elements rich countries wanted for a deal at the international climate change summit in Copenhagen in December. But major emerging economies, led by China and India, refused to sign up to it, worrying it could be used to force large and so far unquantified emission cuts on them in the future. Todd Stern, Mr Obama’s special envoy for climate change, in London on Monday for talks with the world’s 17 biggest emitters, hinted at the softening stance: “Our view at the G8 in July was that there ought to be both a developed country number and a worldwide number – 80 per cent for developed countries, 50 per cent worldwide. We still think that.” But he added: “I don’t know whether that is going to be included or not.” Ed Miliband, the UKChina and India were taking to curb the growth of their emissions, and said these pledges for the next decade were paramount. The biggest remaining problem is over finance, which was the subject of Monday’s discussions in London. Poor countries want aid from rich nations if they are to quantify the actions they will take on emissions in a binding deal. Yvo de Boer, the UN’s top climate change official, told the Financial Times this was “a potential deal-breaker”. He encouraged rich countries to do more. “This has nothing to do with signing blank checks. It’s about building trust and showing that you are serious [about climate change].” secretary of state for climate change, also signaled that the 2050 goal was dispensable. He praised the actions developing countries such as

- Oil prices face further upward pressure as they near $80 a barrel because of heavy trading in options contracts ahead of the year end, brokers and analysts said. A large number of call options – contracts giving holders the right to buy crude oil at a predetermined price – have been struck above $80. If spot oil prices rose above that level, the sellers of the call options will be forced to buy futures to cover their positions, further lifting oil prices. “The options could accelerate prices and put fundamentals considerations to the side,” said Olivier Jakob, head of Swiss-based oil consultancy Petromatrix. Raymond Carbone, president of Paramount Options on the New York Mercantile Exchange floor, added that traders who sold the options, ranging from bearish speculators to Wall Street banks, would have to cover their positions if prices rose further, opening the door to an options-driven rally.

TimesOnline:

- Bob Diamond, the president of Barclays, has turned down the opportunity to try out for one of America’s biggest banking jobs, after he was approached by the board of Bank of America (BoA) to replace Kenneth Lewis, its retiring chief executive. Mr Diamond, 58, was shortlisted by BoA’s recruitment committee and was invited to attend an interview, a bank source said, but declined to take part.

Kyodo News:

- Nippon Oil Corp. and its partners may invest $8 billion in Iraq’s Nasiriyah oil field. The Japanese companies will build an oil plant capable of producing 300,000 barrels a day, citing an Iraqi official.

Nikkei:

- Orders for Advantest Corp.’s chip-testing devices exceeded the company’s forecast by rising about 21% to 14 billion yen ($154.5 million) in the three months ended in September. Advantest’s sales may have increased about 0% to 12 billion yen, besting its forecast.

Late Buy/Sell Recommendations
Citigroup:

- Reiterated Buy on (ETN), boosted estimates, raised target to $70.

- Reiterated Buy on (AAPL), estimates under review.

- Reiterated Buy on (BAC), raised target to $23.

- Reiterated Buy on (TXN), target $31.

RBC Capital:

- Rated (ATVI) Outperform, target $18.

- Rated (ERTS) Outperform, target $25.

BMO Capital:

- Rated (CRI) Outperform, target $33.

Night Trading
Asian Indices are +.25% to +1.0% on average.

Asia Ex-Japan Inv Grade CDS Index 97.0 -5.50 basis points.
S&P 500 futures +.38%.
NASDAQ 100 futures +.99%.

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Earnings of Note
Company/EPS Estimate
- (BIIB)/1.04

- (KO)/.81

- (RF)/-.26

- (UTX)/1.11

- (EAT)/.15

- (SHW)/1.35

- (LMT)/1.83

- (STT)/1.00

- (COH)/.39

- (FRX)/.86

- (PFE)/.48

- (CSL)/.68

- (UNH)/.76

- (LXK)/.45

- (DGX)/.96

- (BLK)/1.90

- (DD)/.33

- (BK)/.45

- (CAT)/.05

- (ITW)/.52

- (SYK)/.69

- (CREE)/.22

- (ISRG)/1.49

- (GILD)/.72

- (SNDK)/.26

- (MANH)/.16

- (PCP)/1.63

- (YHOO)/.13

- (BTU)/.22

- (UAUA)/-.99

Economic Releases

8:30 am EST

- The Producer Price Index for September is estimated unch. versus a +1.7% gain in August.

- The PPI Ex Food & Energy for September is estimated to rise +.1% versus a +.2% gain in August.

- Housing Starts for September are estimated to rise to 610K versus 598K in August.

- Building Permits for September are estimated to rise to 595K versus 579K in August.

Upcoming Splits
- None of note

Other Potential Market Movers
- The Fed’s Warsh speaking, Fed’s Plosser speaking, TAF results, weekly retail sales reports, API energy inventory data, (RIGL) analyst briefing, (NDSN) investor day, (HGSI) analyst meeting, (GE) healthcare analyst meeting and the ABC consumer confidence reading could also impact trading today.

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

Stocks Finish Near Session Highs, Boosted By Technology, Commodity and REIT Shares

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Stocks Higher into Final Hour on Less Economic Pessimism, Lower Long-Term Rates, Short-Covering, Technical Buying

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Technology longs, Medical longs, Financial longs, Retail longs, Biotech longs and Defense longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is higher, almost every sector is rising and volume is slightly below average. Investor anxiety is very high. Today’s overall market action is very bullish. The VIX is falling -1.77% and is high at 21.05. The ISE Sentiment Index is below average at 125.0 and the total put/call is above average at .89. Finally, the NYSE Arms has been running above average most of the day, hitting 1.48 at its intraday peak, and is currently 1.07. The Euro Financial Sector Credit Default Swap Index is falling -2.37% today to 65.0 basis points. This index is down from its record March 10th high of 208.75. The North American Investment Grade Credit Default Swap Index is falling -2.74% to 96.32 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is falling 1 basis point to 22 basis points. The TED spread is now down 442 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is falling -5.12% to 37.06 basis points. The Libor-OIS spread is down -1 basis point to 11 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is rising 6 basis points to 2.04%, which is down 61 basis points since July 7th. The 3-month T-Bill is yielding .06%, which is unch. today. Economically-sensitive shares are outperforming again today, with the MS Cyclical Index jumping 2.1%. REIT, Hospital, Steel and Coal shares are especially strong, rising 2%+. Copper is on the verge of a technical breakout. On the negative side, Banks and Homebuilders are notably weak. One of my longs, (AAPL), reports after the close today. I suspect the shares may initially weaken after the report. However, I expect any weakness to be relatively mild and short-lived. I wouldn’t be surprised to see the stock higher by the end of trading tomorrow. I still see significant upside in the shares long-term. With the DJIA poised to close convincingly above 10,000, I expect further near-term gains, after a brief pause, on short-covering, technical buying, momentum chasing, performance anxiety, earnings optimism, less financial sector pessimism and better economic data. Nikkei futures indicate an +119 open in Japan and DAX futures indicate an unch. open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on diminishing economic fear, short-covering, takeover speculation, investment manager performance anxiety, lower long-term rates and earnings optimism.

Today's Headlines

Bloomberg:

- Yields on bonds backed by hotel, shopping-center and skyscraper loans narrowed relative to benchmarks as U.S. programs help drive demand even as late payments soar on the underlying commercial real estate debt, according to Barclays Capital. The gap, or spread, on top-ranked commercial-mortgage backed securities tightened 0.15 percentage point relative to benchmark swap rates to 6.25 percentage points for the week ended Oct. 15, Barclays data show. That compares with 10.15 percentage points in March, according to Barclays. Demand for the bonds swelled as rising stocks buoyed investor sentiment and government programs helped further prop up prices of the debt.

- The Federal Deposit Insurance Corp. failed to enforce its own guidelines to rein in excessive commercial real estate lending by at least 20 banks that later collapsed, reports by the agency’s watchdog show. The FDIC’s Office of Inspector General analyzed 23 lenders taken over by regulators from August 2008 to March and found that for 20, the agency’s examiners didn’t identify the issue early enough or should have taken stronger supervisory action after recognizing the banks had dangerously high levels of the loans before they failed.

Wall Street Journal:

- Major financial institutions that are too big to fail should be broken up, Greenlight Capital manager David Einhorn said Monday during a conference in New York. The hedge fund manager, who warned about Lehman Brothers Holdings Inc.'s(LEHMQ) frailty before it collapsed, criticized the financial-reform proposals of Treasury Secretary Timothy Geithner. He argued they provide a government back-stop to the largest institutions, entrenching them further. No institution should be too big to fail, Einhorn explained. "The real solution is to break up anything that fails that test," he said. "Lehman shouldn't have existed in any size to threaten the financial system." The same applies to Citigroup Inc. (C), Bear Stearns, American International Group Inc. (AIG) and "dozens" of other firms, Einhorn said. Separately, Einhorn said his hedge-fund firm is betting on the possibility of a major currency collapse and a surge in interest rates, citing ballooning government deficits in some of the world's most developed countries.

- A suicide bombing in Iran's restive southeast on Sunday killed at least 42 people -- including five senior Revolutionary Guard Corps officers -- and injured dozens of others, according to state media.

- The Iraqi government, backed by the Obama administration, kicks off its biggest post-Saddam investment roadshow Tuesday, to convince American businesses to join the country's reconstruction efforts. The conference has been trumpeted by senior White House officials, including Vice President Joe Biden. Iraq needs Western technology and cash in sectors such as oil, electricity and agriculture.

CNBC:

- Federal Reserve Chairman Ben Bernanke on Monday called for the United States to whittle down its record-high budget deficits and for countries like China to get their consumers to spend more, moves that would help combat skewed global trade and investment flows that contributed to the financial crisis.

Fox News:

- Pot-smoking patients or their sanctioned suppliers should not be targeted for federal prosecution in states that allow medical marijuana, prosecutors were told Monday in a new policy memo issued by the Justice Department.

Washington Times

- So you thought easy-money mortgages with little or no down payment for people with bad credit was a thing of the past? Think again. You can get just such a loan today - and it's guaranteed by the federal government. Loans insured by the Federal Housing Administration (FHA) have become "the new subprime," and these loans are exposing taxpayers to the same kinds of soaring default rates and losses that brought down Fannie Mae and Freddie Mac as well as destroyed many banks and the private market for mortgage loans.

Washington Post:

- In some classrooms, books are a thing of the past. Digital texts gaining favor, but critics question quality.

- Flow of terrorist recruits increasing. Westerners attending camps in Pakistan and Afghanistan despite successful U.S. strikes. Midway through a propaganda video released last month by a group calling itself the German Taliban, a surprise guest made an appearance: a cleanshaven, muscular gunman sporting the alias Abu Ibrahim the American. The gunman did not speak but wore military fatigues and waved his rifle as subtitles identified him as an American. The video contained a stream of threats against Germany if it did not withdraw its troops from the NATO-led mission in Afghanistan. Although the American's part in the film lasted only a few seconds, it has alarmed German and U.S. intelligence officials, who are still puzzling over his background, his real identity and how he became involved with the terrorist group.

HedgeFundBlogger.com:

- The hedge fund industry is gaining greater pull on capitol hill, an important development as the financial industry is facing more government regulation. Hedge funds have some powerful tools at their disposal: A former congressman willing to lobby on the industry's behalf, the potential return on campaign contributions and a strategy of shaping reform in a way that does not harm hedge funds too severely.

Chicago Tribune:

- As the loss of chiefs, fighters, money and ideological appeal weakens al-Qaida, the network's ability to attack in the West has diminished in recent years, according to Western anti-terrorism officials. The complex debate over U.S. policy in South Asia encompasses differing proposals for tactics, troop levels and strategies for contending with the Taliban. But the Obama administration says it is all driven by a top priority: defeating al-Qaida. That enemy is on the defensive. Al-Qaida has failed to strike the United States during the past eight years. The network last spilled blood in the West in 2005 when the London transit bombings killed 52 people. Global cooperation and aggressive infiltration by Western spy services have thwarted subsequent plots and sharpened a campaign of drone strikes that has killed veteran bosses. "Some pretty experienced individuals have been taken out of the equation," a senior British anti-terrorism official, who requested anonymity because of the sensitive topic, said in a recent interview.

SeekingAlpha:

- Goldman Sachs(GS): ‘A Hybrid Hedge Fund and Bookie’ Many of us didn’t like it — we thought banks like Goldman should have been recapitalized the right way, by wiping out shareholders and forcing subordinated creditors to eat their share of losses. But that ship has sailed. We socialized the risk while privatizing the profit because we were told we had no other choice: The government had to guarantee the biggest banks’ liabilities because they were too unstable to survive bankruptcy or FDIC receivership. If that’s true, why haven’t we seen any substantial reforms to reduce systemic risk? Congress is kicking around new resolution authority to help resolve failed systemically-important banks. But the goal should be reducing systemic risk to begin with. Yet serious reform of the derivatives market — something that would reduce its size significantly — is nowhere on the radar.

- Below is a table highlighting current credit default swap (CDS) prices for the sovereign debt of 38 countries.

DetroitFreePress:

- Even with a tentative agreement that is filled with product and job promises -- including a $1,000 per-worker bonus -- a deal reached between Ford Motor Co.(F) and the UAW faces widespread opposition, according to union workers and leaders. The agreement was recommended for approval by the UAW's top leadership last week, but must be ratified by union members to become official. Ford, in an effort to obtain the contract changes, has promised the UAW that it will continue to create more than 2,000 jobs across Ford's U.S. plants, add a new product to the lineups at several metro Detroit plants and provide the $1,000 onetime bonus.

SunSentinel.com:

- Florida health officials are drawing up guidelines that recommend barring patients with incurable cancer, end-stage multiple sclerosis and other conditions from being admitted to hospitals if the state is overwhelmed by flu cases. The plan, which would guide Florida hospitals on how to ration scarce medical care during a severe flu outbreak, also calls for doctors to remove patients with poor prognoses from ventilators to treat those who have better chances of surviving. That decision would be made by the hospital.

The Atlantic:

- The headline, if true, would be a news story indeed: the U.S. Chamber of Commerce, according to a press release e-mailed to journalists this morning, had decided to reverse its opposition to strong climate change legislation. But that's false. Some unknown group decided to punk the Chamber. And in the process, at least one news organization, Reuters, fell for it.

Politico:

- The White House and congressional Democrats are working to marginalize the Chamber of Commerce — the powerful business lobby opposed to many of President Barack Obama’s first-year priorities — by going around the group and dealing directly with the CEOs of major U.S. corporations. Since June, senior White House officials have met directly with executives from more than 55 companies, including Chamber members Pfizer, Eastman Kodak and IBM.

USAToday:

- Reported vehicle theft has fallen to a 20-year low even as the number of vehicles on the road has doubled, as manufacturers install sophisticated anti-theft technology in cars and police target organized car-theft rings. The FBI estimates 956,846 motor vehicles were stolen in 2008 — 315 cars for every 100,000 people. That's less than half the rate in 1991, when a high of 1.66 million vehicles were stolen — 659 for every 100,000 people. Data for 2009 are not yet available.

Financial Times:

- Middle East families and sovereign wealth funds are slashing their investments and demanding more favorable terms from private equity funds following the financial crisis. The region has been a significant source of capital for the private equity industry in recent years but many investors are still suffering from the collapse in liquidity that followed the collapse of Lehman Brothers. One private equity executive who recently finished raising a buy-out fund said: "The one area where we have not raised any money is the Middle East. The region shut down 12 months ago." Private bankers, who are important middlemen for wealthy private investors, said many of their regional clients were loath to make fresh commitments.

Novaya Gazeta:

- Former Soviet President Mikhail Gorbachev said the decision of three political parties to walk out of Russia’s parliament last week to protest alleged vote-rigging in Oct. 11 regional votes showed that elections had become a “mockery of the people.” “If such disciplined, cautious peoples so close to regime resorted to this sort of maneuver, it means that trust in this political institution, elections, has been completely lost,” Gorbachev said.

Khaleej Tiomes Online:
- DUBAI - Iran is holding out for big discounts on its purchases of gasoline for November, offering 25-30 percent less than market prices even though the risk of U.S. sanctions means sellers expect a premium, traders said. Industry sources said on Monday it was unrealistic for Tehran to seek the kind of low prices that might be negotiated by a favored buyer like Saudi Arabia. Tehran, which cut its October gasoline purchases by about 20 percent, compared with the previous month, to 102,120 barrels per day (bpd) or about 12 cargoes of gasoline, does not appear to have done any deals yet for next month, traders said. “It’s ridiculous what they are asking for, it’s almost as if they are not interested in buying...but I get the sense they are struggling with the premiums attached to cargoes sold into Iran,” said a Middle East based trader.