North American Investment Grade CDS Index 92.71 bps -.55%
European Financial Sector CDS Index 101.67 bps +6.17%
Western Europe Sovereign Debt CDS Index 159.67 bps +1.48%
Emerging Market CDS Index 197.07 bps -2.56%
2-Year Swap Spread 16.0 unch.
TED Spread 17.0 unch.
Economic Gauges:
3-Month T-Bill Yield .12% +1 bp
Yield Curve 228.0 +4 bps
China Import Iron Ore Spot $150.20/Metric Tonne unch.
Citi US Economic Surprise Index +12.70 +2.7 points
10-Year TIPS Spread 2.19% +2 bps
Overseas Futures:
Nikkei Futures: Indicating +130 open in Japan
DAX Futures: Indicating +32 open in Germany
Portfolio:
Higher: On gains in my Tech, Retail and Medical long positions
Disclosed Trades: Added to my (SXCI) long, took profits in another long
Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is bullish as the S&P 500 trades near session highs despite recent equity gains, fears over a possible "sell the news" reaction to the election/Fed announcement and euro sovereign debt concerns. On the positive side, Bank, Steel, Paper, Internet, Semi, Disk Drive, Networking, Gaming, Road & Rail and Airline shares are especially strong, rising 1.0%+. (XLF) has been relatively strong throughout the day. Cyclicals are outperforming. Lumber is rising +.6% and Gold is falling -1.15%. Oil Tanker rates are soaring another +18.75% and have risen +58.33% in 5 days. The Citi US Economic Surprise Index is now at the best level since early June. The 10-year yield is rising +3 basis points to 2.62% and the yield curve continues to steepen. On the negative side, Homebuilding, Education and Coal shares are under pressure, falling more than 1.0%. The Portugal sovereign cds is gaining +3.49% to 415.14 bps, the Ireland sovereign cds is gaining +6.24% to 545.72 bps and the Greece sovereign cds is gaining +2.4% to 870.75 bps. The bears inability to gain any traction on an expected "sell the news" reaction to today's developments is a bit surprising and shows the market's ongoing resilience. If an equity sell-off does not materialize very soon, I suspect that another push higher in the major averages will commence on short-covering as hedge funds remain poorly positioned for equity strength. I expect US stocks to trade mixed-to-higher into the close from current levels on tax policy/election optimism, less economic fear, buyout speculation, investment manager performance angst, diminishing financial sector pessimism, short-covering and earnings optimism.
Fed to Buy Extra $600 Billion of Treasuries to Boost Growth. The Federal Reserve will buy an additional $600 billion of Treasuries through June, expanding record stimulus and risking its credibility in a bid to reduce unemployment and avert deflation. Policy makers, who said new purchases will be about $75 billion a month, “will adjust the program as needed to best foster maximum employment and price stability,” the Fed’s Open Market Committee said in a statement in Washington. The central bank kept its pledge to keep interest rates low for an “extended period.” He’s risking a strategy that may either fail or fuel inflation and asset bubbles, said Scott Pardee, a former New York Fed official who now teaches at Middlebury College in Vermont. “Currently, the unemployment rate is elevated, and measures of underlying inflation are somewhat low, relative to levels that the committee judges to be consistent, over the longer run, with its dual mandate,” the FOMC said. “Progress toward its objectives has been disappointingly slow.” The dollar weakened and stocks fluctuated in the minutes after the announcement. Treasury notes were lower. Including Treasury purchases from reinvesting proceeds of mortgage payments, the Fed will buy a total of $850 billion to $900 billion of securities through June, or about $110 billion per month, the New York Fed said in accompanying statement. The panel kept its benchmark interest rate at zero to 0.25 percent, where it has been since December 2008. The one of the five who has a vote this year, Kansas City Fed President Thomas Hoenig, today cast his seventh straight dissent, the most at consecutive regular policy sessions since 1955. “The risks of additional securities purchases outweighed the benefits,” and the “continued high level of monetary accommodation” may eventually “destabilize the economy,” the statement said of Hoenig’s opposition.
Washington State Rejects Income Tax on Wealthiest Residents. Washington state voters rejected a ballot measure to impose an income tax on the wealthiest residents that pitted Bill Gates Sr. against Microsoft Corp., the company co-founded by his son. The income-tax measure, Initiative 1098, failed 65 percent to 35 percent, with 59 percent of precincts counted, according to the Associated Press.
California Voters Reject Legalization of Marijuana for Recreational Use. California voters rejected a ballot measure that would have legalized marijuana for recreational use, blocking efforts to expand the industry beyond medical purposes in the most populous U.S. state. Proposition 19 was failing 54 percent to 46 percent, with 78 percent of precincts counted, according to the Associated Press. Supporters included billionaire investor George Soros, who contributed $1 million to support the effort.
Billionaire Ken Fisher Sees 16% S&P 500 Rally After Elections. The Standard & Poor’s 500 Index may rally as much as 16 percent in the next six months because yesterday’s election will stymie legislative initiatives in Congress, billionaire investor Kenneth Fisher said. Equities have surged since July as odds that Republicans would take control of the U.S. House of Representatives increased. Fisher’s optimism is based in part on history. Stocks average gains of 11 percent in the third year of U.S. presidencies and haven’t fallen since 1939 when the Dow Jones Industrial Average lost 2.9 percent, according to data since 1833 compiled by the Stock Trader’s Almanac. The fourth year, when elections are held in November, is second-best, with an average advance of 5.8 percent.
ADP Estimates U.S. Companies Added 43,000 Workers to Payrolls. Companies in the U.S. boosted payrolls by more than forecast in October, data from a private report showed today. Employment increased by 43,000 after a revised 2,000 drop in September, according to figures from ADP Employer Services. The median estimate of 38 economists surveyed by Bloomberg News called for a 20,000 gain. Forecasts ranged from a decline of 10,000 to a 50,000 increase.
U.S. Service Economy Expanded More Than Forecast in October. Services in the U.S. expanded in October at the fastest pace in three months, indicating the recovery is gaining strength even as central bankers are poised to loosen monetary policy. The Institute for Supply Management’s index of non- manufacturing businesses, which covers about 90 percent of the economy, rose to 54.3 from 53.2 in September. The Commerce Department said factory orders in September rose 2.1 percent. The figures also signaled spending on equipment and software, which helped the U.S. rebound from recession, may cool less than previously estimated. The ISM non-manufacturing employment gauge rose to 50.9 in October, matching the July level that was the highest since the recession started in December 2007. The measure of new orders increased to a three-month high.
Ireland Debt Swaps at Record High as Allied Signals 63% Chance of Default. The cost of insuring Irish sovereign debt surged to a record as credit-default swaps on Allied Irish Banks Plc subordinated debt signaled a 62 percent probability of default within five years. Contracts insuring 10 million euros ($14 million) of Allied Irish’s junior bonds cost about 3.25 million euros upfront and 500,000 euros annually, according to data provider CMA. That’s up from 400,000 euros a year in April. Swaps on the government’s debt jumped 27 basis points to 545. Swaps on Allied Irish’s senior debt increased 25.5 basis points to a record 706, CMA prices show. Ireland problems weighed on Europe’s indebted peripheral nations, with swaps on Portugal climbing 9.5 basis points to 418 and Spain up 3.5 at 228.5. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments rose 3 to a five-week high of 161. The cost of insuring corporate bonds was little changed, with the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings increasing 3 basis points to 451, according to JPMorgan Chase & Co. The Markit iTraxx Europe index of 125 investment-grade companies was unchanged at 96.75 and the Markit iTraxx Financial Index linked to the senior debt of 25 banks and insurers rose 3.5 to 128.5.
World Bank Says China Needs to Raise Rates Further. The World Bank said China should raise interest rates and allow a stronger yuan to damp inflation, along with guarding against a surfeit of capital inflows. “Further normalization of the macroeconomic stance is needed to guard against macro risks,” the World Bank said in a periodic report on the Chinese economy released today, citing asset-price gains, bad loans and “strained” local-government finances. “Interest rates will need to rise further.”
Fed Easing May Spur Deflation in Europe, Mundell Says. Federal Reserve debt purchases to stimulate the U.S. economy may send the euro rising against the dollar, sparking deflation in Europe, said Nobel Prize-winning economist Robert Mundell.
Wall Street Journal:
Doubts Cloud Gold's Bright Future.Demand Has Overwhelmed Fundamentals; Supplies Up, Jewelry Sales Down. The outlook for gold prices is tarnished by the erosion of several longstanding factors that have proven supportive for the yellow metal in the past.
Solar-Panel Maker to Close a Factory and Delay Expansion. Solyndra, a Silicon Valley solar-panel maker that won half a billion dollars in federal aid to build a state-of-the-art robotic factory, plans to announce on Wednesday that it will shut down an older plant and lay off workers. The cost-cutting move, which will reduce the company’s previously announced production capacity, is a sign of the notable shift in the prospects for cutting-edge American solar companies, which now face intense price competition from Chinese manufacturers that use more established photovoltaic technologies.
LA Times:
San Francisco Bans Happy Meals. The city's board of supervisors votes to forbid restaurants from giving away toys with meals that have high levels of calories, sugar and fat.
InvestorsOffshore:
Fund Managers Downbeat On US Equities. Hedge fund managers remain downbeat on US equities according to the TrimTabs/BarclayHedge Survey of Hedge Fund Managers for October. About 39% of the 102 hedge fund managers the firms surveyed in the past two weeks are bearish on the S&P 500, up from 37% in September. “The lean toward bearishness surprises us a bit because extreme caution in September produced substantial underperformance,” said Sol Waksman, CEO of BarclayHedge. “We suspect managers will invest much more aggressively in the current quarter. Stock prices keep grinding higher, and hedge funds hauled in USD18.8bn in the past three months. Managers have to put that fresh cash to work.” About 32% of managers cite currency wars as the biggest threat to global financial stability, and 36% feel world leaders should focus on the problem of too-big-to-fail institutions at the November 11-12 G-20 Summit in Seoul. About 28% of hedge fund managers are bearish on the 10-year US Treasury note, the largest share since the inception of the survey in May. In contrast, 32% of managers are bullish on the US dollar index, the largest share since June. Only 9% of managers aim to decrease leverage in the coming weeks, while 19% plan to increase it.
National Real Estate Investor:
Quantitative Easing: Are the Consequences Worth the Benefits? The next round in the Federal Reserve Bank’s risky plan to stimulate growth by suppressing long-term interest rates — Quantitative Easing 2 — will strengthen the bottom line for many commercial real estate investors, experts say. But inflationary side effects may do more harm than good to the U.S. economy, and the plan is unlikely to generate the job growth landlords need to drive absorption. “We’re trying to cure the problem with the hair of the dog that bit us,” observes Robert Bach, chief economist at real estate services provider Grubb & Ellis. In this case, the dog in question was excess money and credit, which fueled overspending by consumers and investors alike. As the Fed buys Treasury bonds with newly printed money in the coming months, it will add hundreds of billions in additional dollars to the monetary system. “The Fed is trying to flood the economy with even more liquidity,” says Bach. “The fear is that all of this money sloshing around the financial system has nowhere to go, no way to express itself, except in terms of higher inflation.”
Politico:
Oklahoma Bans Sharia Law. Oklahoma on Tuesday approved a ballot measure blocking judges from considering Islamic or international law when making a ruling. Nearly 70 percent of voters in the state cast ballots approving the measure.
White House Aide: President Obama Will Heed Election Message. A top aide to President Barack Obama said not to look for a change in his “fundamental principles, but certainly there were messages that have to be heeded, and we will.” “If you believe in democracy, we were swept in by a big wave, so you have to pay attention to these results and what people are saying,” the aide said. “They want us to work together, to focus on the economy – for jobs and growth — and we’re going to do that.” The tone was more humble than is customary for this White House, and the aide promised a period of introspection. The aide also mentioned deficits as an area that the parties can do a better job of working together. “There are lessons for us, and there are lessons for [Republicans], as well,” the aide said. “This wasn’t a vote for more partisanship, for more ideology. … This wasn't a vote to refight the old battles, or re-empower the special interests. This was a vote for cooperation and pragmatism.” “And [voters] want responsible, open, accountable government, including real steps to discipline the budget deficits,” the aide added. “We ran to bring that to Washington and they're telling us we have to do better."
Inside White House, Calls for Shake-Up. Some of the calls for a White House shake-up are now coming from inside the building. Frustrated current and former West Wing staffers, speaking on condition of anonymity, told POLITICO they hoped Tuesday night’s humbling losses would persuade President Barack Obama to pursue a much more sweeping fix than just the “natural” post-election churn of personnel his administration has insisted will take place.
Senator Reid Says Willing to "Tweak" Healthcare Law. Senate Majority Leader Harry Reid on Wednesday said he is willing to make changes to the landmark healthcare reform legislation passed earlier this year. "If there's some tweaking we need to do with the healthcare bill, I'm ready for some tweaking," Reid, a Democrat, said in an interview on CNN, after Republicans captured the U.S. House of Representatives in Tuesday's midterm elections.
Ford(F) Shares Hit One-Year High on Strong October Sales. Ford Motor Co (F.N) shares hit their highest level in nearly six years on Wednesday, after the company reported stronger-than-expected October sales and showed evidence that it is seizing market share. So far this year, Ford is No. 2 in the U.S. market, overtaking Toyota Motor Corp (7203.T) and following General Motors Co GM.UL. Shares of Ford rose as high as $14.84 Wednesday. The last time shares traded at that level was December 2004. So far this year, Ford shares are up about 47 percent, while the S&P 500 .SPX is up 6.7 percent.
U.S. Election Results Could Speed Foreclosure Deal. Half of the state attorneys general heading a nationwide probe into U.S. home foreclosures will not be in their jobs next year, a development lenders hope could help speed a resolution, industry lawyers said on Wednesday.
QE2 is Risky and Should be Limited by Martin Feldstein. The Federal Reserve’s proposed policy of quantitative easing is a dangerous gamble with only a small potential upside benefit and substantial risks of creating asset bubbles that could destabilise the global economy. Although the US economy is weak and the outlook uncertain, QE is not the right remedy. Under the label of QE, the Fed will buy long-term government bonds, perhaps one trillion dollars or more, adding an equal amount of cash to the economy and to banks’ excess reserves. Expectation of this has lowered long-term interest rates, depressed the dollar’s international value, bid up the price of commodities and farm land and raised share prices. Like all bubbles, these exaggerated increases can rapidly reverse when interest rates return to normal levels. The greatest danger will then be to leveraged investors, including individuals who bought these assets with borrowed money and banks that hold long-term securities. These risks should be clear after the recent crisis driven by the bursting of asset price bubbles. Although the specific asset prices that are now rising are different from last time, the possibility of damaging declines when bubbles burst is worryingly similar. The problem now extends to emerging markets, a group not directly affected in the last crisis. The lower US interest rates are causing a substantial capital flow to those economies, creating currency volatility. The economies hurt by the increasing value of their currencies are responding with measures to protect their exports and limit their imports, measures that could lead to trade conflict. Ahead, when the US economy does begin to grow, the increased cash on banks’ balance sheets will make the Fed’s exit strategy harder. It was previously “cautiously optimistic” it would be able to contain the inflationary pressures that could be unleashed by banks with a trillion dollars of excess reserves. This will be harder if the amount of excess reserves is doubled. This could lead to much higher interest rates to restrain demand or to an unwanted rise in inflation. Although its real focus is on reducing unemployment, much of the rhetoric of Ben Bernanke, the Fed chairman, is about preventing deflation because some members of the Fed’s open market committee think the Fed should focus exclusively on price stability. But there is no deflation. Core consumer prices are rising and inflation is expected to average 2 per cent over the next 10 years. The truth is there is little more that the Fed can do to raise economic activity. What is required is action by the president and Congress: to help homeowners with negative equity and businesses that cannot get credit, to remove the threat of higher tax rates, and reduce the out-year fiscal deficits. Any QE should be limited and temporary.
Vedomosti:
PhosAgro Considers Rival Bid for Potash Corp. OAO PhosAgro, Russia's largest maker of phosphate fertilizers, is considering a bid for Potash Corp.(POT), citing a company document. PhosAgro Chairman Vladimir Litvinenko wrote to Russian Prime Minister Vladimir Putin on Oct. 20 asking for state credits to make the acquisition, the Moscow-based daily said, citing the letter. Putin forwarded the request to Deputy Prime Minister Igor Sechin, who contacted relevant ministries and state banks, said Vedomosti, without citing anyone. One possibility is a merger of PhosAgro and Potash Corp., it cited a person close to PhosAgro as saying. Canadian Industry Minister Tony Clement plans to announce his decision on whether to approve BHP Billiton Ltd.’s $40 billion bid for Potash Corp. today after markets close in New York, said an official familiar with the announcement.
Irish Examiner:
Irish Finance Minister Brian Lenihan will disclose the scale of the government's 2011 budget deficit reduction plan tomorrow. The full budget will be unveiled on Dec. 7.
DigiTimes:
LED TV Panel Demand to Increase Significantly in January-February 2011, Says Lextar President. Demand for LED-backlit LCD TV panels will increase significantly in January-February 2011 as TV vendors are planning to launch new models in March, according to David Su, president of Taiwan-based LED epitaxial wafer and chipmaker Lextar Electronics, a subsidiary of AU Optronics (AUO).
Haaretz.com:
Outgoing Intel Chief: Iran Can Already Produce Nuclear Bomb. Iran is busy setting up two new nuclear installations, according to the head of Military Intelligence, Major General Amos Yadlin. Speaking before the Knesset Foreign Affairs and Defense Committee, Yadlin said that MI has indications that work has began on the installations, but did not comment on the sources. Yadlin also told the MKs that Iran has sufficient enriched uranium to manufacture a single nuclear device and may soon have enough for making another bomb.
Republican Victory in U.S. Midterm Elections May Keep Bull Market Alive. The midterm elections that ended Democrats’ control of the U.S. House of Representatives are likely to sustain the bull market that began in March 2009 at the depths of the financial crisis. U.S. stocks will continue their ascent because victorious Republicans probably will block Democrats’ plans to raise taxes and impose stricter regulations on businesses, according to money managers interviewed before the vote. “The near-term issue of importance to investors is the Bush-era tax cuts,” said Robert Doll, chief equity strategist at New York-based BlackRock Inc., the world’s largest fund manager with $3.45 trillion in client assets. The new Republican majority in the House may force President Barack Obama to back off efforts to let tax cuts enacted under President George W. Bush expire and to raise rates on dividends and capital gains. That would boost optimism among investors and company executives, driving improvements in financial markets and the economy, according to Barclays Capital in New York.
U.S. Labor Unions Face 'Huge Sinkhole' for New Agenda as Republicans Win. Organized labor’s window of opportunity in Congress slammed shut last night. “The election profoundly reshapes labor’s agenda,” said Harley Shaiken, a professor of labor relations at University of California at Berkeley, in an interview. “The Republican pickup of seats in the House is going to be a huge sinkhole for labor.”
Mortgage Bond Returns Accelerate as Fed Moves Toward QE2: Credit Markets. Relative returns on government-backed mortgage bonds are showing debt investors have little confidence the Federal Reserve’s efforts to contain interest rates will break the gridlock in homeowner refinancing. U.S. agency mortgage bonds returned 0.92 percentage point more than similar government debt in October, the second-best performance on record, and the most since April 2008, the month after the central bank calmed markets with its rescue of Bear Stearns Cos., Barclays Capital index data show.
Credit-Default Swaps Fall to Six-Month Low While Fed Decides. The cost of protecting U.S. corporate bonds from default fell to the lowest since May as investors awaited a Federal Reserve decision on whether the central bank would act to boost the economy and election results that may divide Congress. The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, fell 2 basis points to a mid- price of 92.4 as of 4:56 p.m. in New York, according to index administrator Markit Group Ltd. Swaps on Wells Fargo & Co. dropped for the first time in five days. The cost to protect debt issued by Wells Fargo fell 6.9 basis points to 114.7 and contracts on JPMorgan Chase & Co. dropped 3.9 basis points to 91.5, according to CMA. Swaps on Goldman Sachs Group Inc. eased 5.1 basis points to 127.3, and those on Citigroup fell 6.5 basis points to 144.3, CMA data show.
Oil Rises to a Six-Month High on U.S. Stimulus Bets, Fuel Supply Forecast. Crude oil surged to its highest level in six months as the dollar weakened against major currencies on speculation the Federal Reserve will take measures to stimulate the economy. Crude rose 1.2 percent as the dollar’s decline boosted the appeal of commodities as an alternative investment. The Fed will probably start a fresh round of stimulus tomorrow, announcing a plan to purchase at least $500 billion of long-term securities, according to economists surveyed by Bloomberg News. “It’s the weaker dollar and expectations for the stimulus package,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. “Half a trillion dollars was supposedly priced in since we rallied from September to October, but people are already anticipating that it could be larger.” Crude for December delivery rose 95 cents to $83.90 a barrel on the New York Mercantile Exchange, the highest settlement price since May 3.
Greece Halts Foreign Mail Service on Athens Blasts, Merkel. Greece suspended mail deliveries to foreign destinations after parcel bombs exploded at the Swiss and Russian embassies in Athens and German Chancellor Angela Merkel was sent a package mailed from the country. Overseas mail will be halted for 48 hours, Greek’s Civil Aviation Authority said in a statement today. The move came after police defused two makeshift explosive devices at Athens International Airport and at least three other packages around the city.
Wall Street Journal:
Republicans Poised to Recapture House. Republicans claimed a slew of victories that put them on the verge of taking control of the House of Representatives late Tuesday, as voters dealt a rebuke to President Barack Obama and the Democratic Party.
CFTC Probing Trading Activity in Natural Gas Market - Sources. The Commodity Futures Trading Commission is probing a wide range of natural gas derivatives-trading activity spanning parts of 2008, according to people familiar with the matter. The CFTC's enforcement division sent out subpoenas broadly across the industry to hedge funds and other large natural gas traders last month seeking information about trading that was discussed in emails, voice recordings, instant messages and other documents.
Pride International(PDE) Weighs Strategic Options. Offshore driller Pride International Inc. is evaluating strategic options that could include a possible sale of the company after recent merger interest from rivals, people familiar with the matter said.
BP(BP) Dividend Takes Back Seat to Growth. BP PLC will likely pay a much smaller dividend and spend more on oil exploration as it remakes itself into a leaner, more growth-oriented company following the Gulf of Mexico oil spill, its new chief executive said Tuesday.
High Rollers at the Fed. The Federal Reserve's Open Market Committee seems poised today to make a historic decision to expand its balance sheet by as much as $1 trillion or more to boost inflation and reduce unemployment. We've said before that we think this is a monetary mistake, but the public and Congress should also be aware that it increasingly carries fiscal risks.
CNBC:
Banks Go Toe to Toe as Wall Street Woos Hedge Funds. The battle to be the top dog in the lucrative business of clearing trades and lending money to hedge funds is heating up as a handful of U.S. and European banks are intensifying their push into the space.
House Switch Imminent as Republican Wave Crashes on Democrats. Republicans made deep inroads into the Democratic House majority and racked up a series of big-ticket Senate wins Tuesday evening, appearing on their way to capturing at least one chamber of Congress in a powerful electoral wave. The Democrats’ House losses quickly grew to alarming proportions. The GOP claimed the seats of several highly endangered Democrats, including Florida Reps. Suzanne Kosmas and Alan Grayson and New Hampshire Rep. Carol Shea-Porter. But the insurgent conservative party also knocked off entrenched incumbents like Texas Rep. Chet Edwards, who had long survived in a challenging district and Virginia Rep. Rick Boucher, a coal-country centrist who had been expected to prevail against Republican state Del. Morgan Griffith.
Exit Polls: Voters Sour on Economy. Voters may not love Republicans, but they trust Democrats even less to turn around the sputtering economy. That’s the message emerging from exit polls amid the GOP’s growing gains in congressional and governor’s races.
Reuters:
Republican Leader Vows to Repeal US Health Care Reform. U.S. Representative Eric Cantor, who is likely to become majority leader in the new Republican-led House of Representatives, vowed on Tuesday to repeal healthcare reform and cut federal spending. "We will repeal the trillion-dollar health care bill that threatens to bankrupt ... this country," he said, according to prepared remarks. "We will get to work right away to reduce the deficit by cutting federal spending next year down to 2008 levels. That will save $100 billion in the first year alone," he said.
Wynn(WYNN) Meets 3rd - Quarter Estimates, Sets $8 Dividend. Casino operator Wynn Resorts Ltd's (WYNN) quarterly profit met Wall Street estimates as revenue in Macau rose 50 percent and it made money on nightclubs in Las Vegas. The company also said it would pay a cash dividend of $8 per share on Dec. 7. Its shares, which have nearly doubled so far this year, fell about 1.8 percent.
Discovery(DISCA) Profit Nearly Doubles; Advertising Surges. Discovery Communications Inc's (DISCA) quarterly profit nearly doubled and the media company raised its outlook for 2010 revenue, reaping the rewards of bigger audiences and stronger advertising at its roster of cable networks.
OpenTable(OPEN) Q3 Profit Beats Street View; Shares Rise. OpenTable Inc, the restaurant reservation platform, reported a higher third-quarter profit that topped Wall Street estimates as more restaurants used its services, sending its shares up 11 percent in extended trade. The San Francisco-based company reported a net profit of $3.8 million, or 16 cents a share, compared with $896,000, or 4 cents a share, a year ago. Excluding items, the company earned 23 cents a share. Revenue rose 44 percent to $24.5 million. Analysts had expected a profit of 15 cents a share, excluding exceptionals, on revenue of $23.2 million, according to Thomson Reuters I/B/E/S. The company's installed restaurant base as of Sept. 30 was up 31 percent at 15,246, and seated diners jumped 54 percent to 15.9 million. OpenTable stock, which has more than doubled in value this year, rose to $68.21 Tuesday in trading after the bell. The stock closed at $61.40 on Nasdaq.
GM Can Avoid Federal Taxes on $50 Billion of Profits - WSJ. General Motors Co [GM.UL] will not have to pay U.S. federal taxes on up to $50 billion of profits for as long as 20 years, The Wall Street Journal reported on Tuesday, citing people familiar with the matter. With the standard federal corporate tax rate at 35 percent, that tax break could save GM $17.5 billion, not factoring in tax deductions, the Journal reported. Under the Troubled Asset Relief Program, $50 billion of losses that GM racked up before its government-funded bankruptcy can be used to offset its future tax liabilities, the Journal reported.
The Standard:
Flat Costs Reflect Tale of Two Cities. Prices fell in Beijing but rose in Shanghai in October - the first month since the initiatives. Those in the capital declined 6.6 percent month-on-month to 19,160 yuan (HK$22,223) per square meter. It was the first time this year that prices in Beijing fell below 20,000 yuan psm.Transactions fell 36 percent from September, after advancing for four months running. It is a tale of two cities regarding property prices after the central government launched a second round of tightening to squash speculation.
Evening Recommendations Citigroup:
Reiterated Buy on (OPEN), boosted target to $80.
Reiterated Buy on (ENR), target $86.
Reiterated Buy on (ABC), target $38.
Reiterated Buy on (ADM), target $38.
Night Trading
Asian equity indices are unch. to +1.25% on average.
Asia Ex-Japan Investment Grade CDS Index 103.0 -1.0 basis point.
Asia Pacific Sovereign CDS Index 97.25 -.25 basis point.
The ADP Employment Change for October is estimated at +20K versus -39K in September.
10:00 am EST
ISM Non-Manufacturing for October is estimated to rise to 53.5 versus 53.2 in September.
Factory Orders for September are estimated to rise +1.6% versus a -.5% decline in August.
10:30 am EST
Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,500,000 barrels versus a +5,007,000 barrel gain the prior week. Gasoline supplies are estimated unch. versus a -4,387,000 barrel decline the prior week. Distillate supplies are estimated to fall by -1,000,000 barrels versus a -1,613,000 barrel decline the prior week. Finally, Refinery Utilization is expected to rise by +.3% versus a +1.2% gain the prior week.
2:15 pm EST
The FOMC is expected to leave the benchmark fed funds rate at .25%.
Afternoon
Total Vehicle Sales for October are estimated to rise to 11.8M versus 11.73M in September.
Upcoming Splits
None of note
Other Potential Market Movers
The Challenger Job Cuts report for October, weekly MBA mortgage applications report, Oppenheimer Healthcare Conference, Goldman Sachs Industrials Conference and the (PMTC) investor day could also impact trading today.
BOTTOM LINE: Asian indices are higher, boosted by financial and commodity shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.
