Stocks Finish Lower, Weighed Down by Bank, Telecom and Gold Shares

Evening Review
Market Summary
Top 20 Biz Stories
Today’s Movers
Market Performance Summary
WSJ Data Center
Sector Performance
ETF Performance
Style Performance
Commodity Movers
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Commentary
After-hours Movers
After-hours Real-Time Stock Bid/Ask
After-hours Stock Quote
After-hours Stock Chart
In Play

Stocks Lower into Final Hour on Profit-taking, New Shorting

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Computer longs, Retail longs, Internet longs and Medical longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is neutral as the advance/decline line is slightly higher, sector performance is mixed and volume is below average. Investor anxiety is above average. Today’s overall market action is mildly bullish. The VIX is rising .05% and is very high at 39.24. The ISE Sentiment Index is below average at 121.0 and the total put/call is slightly below average at .83. Finally, the NYSE Arms has been running high most of the day, hitting 1.88 at its intraday peak, and is currently 1.28. The Euro Financial Sector Credit Default Swap Index is falling 5.73% today to 106.10 basis points. This index is up from a low of 52.66 on May 5^th, but down from 157.81 on Sept. 16^th. The North American Investment Grade Credit Default Swap Index is rising .33% to 200.67 basis points. The TED spread is up .66% to 134 basis points. The TED spread is now down 332 basis points in about three months. The 2-year swap spread is up 2.98% to 77.75 basis points. The Libor-OIS spread is rising .22% to 123 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is unch. at .13%, which is down 248 basis points in about six months and at the lowest level since Bloomberg record-keeping began in August 1998. The 10-year TIPS spread bottomed at .65% in October 1998 during the Asian financial crisis and at 1.24% in October 2001 during the technology bubble-bursting meltdown. The 3-month T-Bill is yielding .08%, which is unch. today. The broad market is performing better today than the major averages suggest. Market leading stocks are especially strong with many posting 2%+ gains. As well, despite more weak economic data, the most economically sensitive shares are top-performers again. The homebuilders are notably very strong, rising 6.4% today. The sell-off in long-term Treasuries remains a positive development. The US dollar continues to trade very well and looks poised for further gains despite being extended short-term. The AAII % Bulls plunged to 24.0%, with the % Bears surging to 54.67% last week, which bodes well for an extension of recent US stock gains after a brief period of consolidation. Nikkei futures indicate an +200 open in Japan and DAX futures indicate an +6 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on bargain-hunting, less economic pessimism, seasonal strength, less forced selling and short-covering.

Today's Headlines

Bloomberg:

- Byron Wien, the investment strategist who predicted a recession would drive U.S. stocks lower last year, says the Standard & Poor’s 500 Index will rebound 33 percent in 2009 as the economy recovers. “In anticipation of a second-half recovery in the U.S. economy, the market improves from a base of investor despondency and hedge fund and mutual fund withdrawals,” Wien wrote. “The mantra changes from ‘fortunes have been lost’ to ‘fortunes can still be made.’”

- Gold declined in London for a third day as the dollar strengthened, reducing the metal’s appeal as an alternative investment to the U.S. currency. Silver and platinum also declined. Bullion, which typically moves in the opposite direction to the U.S. currency, has lost 3.2 percent this year, while the dollar added 2.9 percent against the euro. The metal will trade at $800 an ounce in one and three months from now, UBS AG analyst John Reade said today in a note. “Unless the dollar remains weak, gold could succumb to some profit taking,” he said. “We are seeing no jewelry demand at the moment and while safe haven buying of coin and bars continues, this may not be enough to drive gold higher.”

- Crude oil rose for a third day on speculation that the conflict in the Gaza Strip may spread and disrupt oil supplies from other parts of the Middle East, and on signs that OPEC production cuts are being implemented.

- Codelco, the world’s biggest copper producer, agreed to further reduce a China sales surcharge as demand slows, after earlier cutting it to a six-year low, two executives said. “Chinese buyers are reluctant to enter into as many long-term contracts as before as they are concerned about demand,” Yang Changhua, an analyst at Beijing Antaike Information Development Co., said by phone today.

- The U.S. Securities and Exchange Commission may come under fire from lawmakers today for failing to quash Bernard Madoff’s alleged $50 billion Ponzi scheme after an investor alerted the agency to the suspected fraud. The House Financial Services Committee is scheduled to hear from one of Madoff’s alleged victims, securities law experts and the SEC’s inspector general, David Kotz, who’s probing the agency’s handling of the matter. Harry Markopolos, the former money manager who says regulators didn’t act on his tips about Madoff, canceled his appearance. “The SEC will have to defend its existence,” said Donald Langevoort, a former agency attorney who teaches securities law at Georgetown University in Washington.

- The cost of borrowing in dollars in London for three months stayed near the lowest level since June 2004 as central banks injected cash into money markets and financial companies to combat the credit squeeze.

- GE Capital Corp., the lending arm of Fairfield, Connecticut-based General Electric Co., plans to raise $10 billion in the biggest offering of debt backed by the Federal Deposit Insurance Corp. since the program began.

Wall Street Journal:

- The man who helped John Paulson pull off one of the greatest trades of this decade is leaving his side. Paolo Pellegrini, who played a crucial role in helping to implement bets against subprime mortgages that netted Paulson & Co. about $15 billion in 2007, resigned from the $36 billion hedge-fund firm Dec. 31. While Mr. Paulson is the visionary within the firm who drives its general direction, Mr. Pellegrini and a few others helped find the riskiest subprime-mortgage securities to bet against, and figured out the best way to capitalize on their expected falls in value.

- A multibillion-dollar hedge fund run by Renaissance Technologies LLC's James Simons has waived all its management fees for 2009, a rare move suggesting fund managers' pay will come under greater pressure in the year ahead. Mr. Simons recently told investors in his year-old futures fund, Renaissance Institutional Futures, that he was waiving the 1% fixed management fee this year following poor performance in 2008. That 12-month fee break equates to about a $30 million price cut from what investors in the $3 billion fund would have paid.

- Bernard L. Madoff Investment Securities LLC was examined at least eight times in 16 years by the Securities and Exchange Commission and other regulators, who often came armed with suspicions. SEC officials followed up on emails from a New York hedge fund that described Bernard Madoff's business practices as "highly unusual." The Financial Industry Regulatory Authority, the industry-run watchdog for brokerage firms, reported in 2007 that parts of the firm appeared to have no customers. Mr. Madoff was interviewed at least twice by the SEC. But regulators never came close to uncovering the alleged $50 billion Ponzi scheme that investigators now believe began in the 1970s.

- Support for property-tax rollbacks is building from Arizona to New York, fueled by angry homeowners in some locales who are seeing rising tax bills despite plunging home prices. Legislatures in New York, Georgia, Oklahoma and Wyoming are considering taking up proposals to curb property taxes in their 2009 sessions. In Indiana, a cap on property taxes enacted last year became effective Jan. 1, and lawmakers are planning to vote this year on whether to put before voters a constitutional amendment that would cap taxes permanently at 1% of a property's value.

- Illinois U.S. Senate appointee Roland Burris is leaving for Washington on Monday afternoon for a high-stakes showdown on Capitol Hill about whether he'll succeed President-elect Barack Obama in Congress. Mr. Burris, appointed by embattled Gov. Rod Blagojevich, was leaving a day after dozens of black leaders and ministers organized by Rep. Bobby Rush gave him a rousing send-off at New Covenant Church on Chicago's South Side.

CNBC.com:
- The Day the Apple(AAPL) Shorts Have Dreaded. First of all, good health and best wishes, Mr. Jobs. Second, Apple and Steve Jobs did this morning what they should've done months ago: quiet the rumors with a simple release indicating that he's OK.

MarketWatch:
- The New York Times(NYT), seeking more ways to generate revenue during a severe industry downturn, on Monday broke with longstanding policy and placed its first front page ad, with media giant CBS taking advantage of the new opportunity.

NY Times:

- LG Electronics, the third-largest television manufacturer in terms of United States sales, will announce on Monday a line of televisions that can directly receive Internet video in addition to satellite and cable signals.

- The Federal Reserve Bank of New York said Monday that it had begun purchasing mortgage-backed securities in an effort to bolster the battered housing market. The program, initially announced Nov. 25, allows the Fed to spend $500 billion to buy mortgage-backed securities guaranteed by mortgage giants Fannie Mae and Freddie Mac and another $100 billion to directly purchase mortgages held by Fannie, Freddie and the Federal Home Loan Banks. The program is aimed at driving down the price of mortgages and making home loans more available.

Washington Post:

- In his first meeting of a recent day, Vivek Kundra stood in front of a large monitor, grilling employees about the status of projects to revamp technology in Washington's schools, police cars, jails and health clinics. His ideas have caught the eye of President-elect Barack Obama's transition team and landed him a role as a tech policy adviser to the new administration. His approach could serve as a model for how a federal chief technology officer, a new position Obama has pledged to appoint, might operate. Kundra has been mentioned as a possible candidate for the job.

LA Times:

- For nearly a decade, television makers have been asking consumers to step into high definition. This week, they'll be asking buyers to step into three dimensions. At the Consumer Electronics Show in Las Vegas, companies such as Panasonic Corp., Samsung and Texas Instruments Inc. will show off TV technology capable of displaying 3-D-like pictures. The industry is billing it as the next big leap in TV technology.

The Big Money:

- Google(GOOG) Blog Outs New Product. Given Google's notorious secrecy, this doesn't happen too often: Over at Google's rarely noticed student blog, where the company hypes its internship programs, a blog editor accidentally divulged that Google was developing a major new enterprise search product for companies.

Reuters:
- Core OPEC oil producers in the Gulf would ignore Iran's call for Islamic countries to cut supplies to supporters of Israel in response to the Israeli offensive in Gaza, an OPEC source said on Monday. "There are no plans to do this and I think it is very unlikely," the source told Reuters.

- An investment arm of Australia's Macquarie Group Ltd has slashed prices by about a third from levels quoted nine months ago for one of its top-end Shanghai properties, underlining the difficulties investors face exiting China's cooling real estate market.

Handelsblatt:

- Germany’s coalition government agreed on the goalposts for a second stimulus program to tackle the recession, citing unnamed government officials. Senior Christian Democrats and Social Democrats agreed on additional infrastructure investment, aid to carmakers and lower taxes and social security contributions. The package will be worth $35 billion for this year.

recast to "

El Mercurio:

- Chilean energy demand in the most populated area of the country dropped .75% last year, the first decline since 1982.

Arabian Business:
- Villa prices at Nakheel PJSC’s Jumeirah Park and Jumeirah Island in Dubai have declined as much as 45% as speculators sell properties, citing Imran Aslam, an agent at property broker AAA.

Gulf News:

- Banks in the UAE and Kuwait have the highest exposure to the real-estate industry among Middle East lenders while those in Saudi Arabia have the least, citing a report by Credit Suisse Group AG. About 35% of UAE bank loans are exposed to the property industry as a significant portion of corporate and personal loans has been invested in real estate, citing Credit Suisse analysts Mohammad Hawa and Digvijay Singh. Kuwait banks’ exposure to the property industry is about 31%, while for Saudi Arabian lenders it averages 7.5%, the report said.

Bear Radar

Style Underperformer:
Large-cap Value (-.80%)

Sector Underperformers:
Gold (-1.86%), Medical Equipment (-1.65%) and Drugs (-1.44%)

Stocks Falling on Unusual Volume:
ENDP, VZ, KNDL, GEOY, GOLD, DB, CNMD, ALGT, NTES and VOLC

Stocks With Unusual Put Option Activity:
1) EK 2) YUM 3) AGU 4) LVS 5) SUN

Bull Radar

Style Outperformer:
Mid-cap Growth (+.50%)

Sector Outperformers:
Oil Service (+3.60%), Homebuilders (+2.57%) and Steel (+2.52%)

Stocks Rising on Unusual Volume:
MWE, EVEP, SU, NGS, PCZ, WLL, RIO, CMC, AAPL, MBT, EQIX, VPHM, SGP, MRK, WAG, APA, DRYS, MFLX, SQNM, AVAV, NTRI, RMBS, LEAP, HURC, CWEI, TBSI, SNDK, AEIS, EZCH, VCO, IRM and PXQ

Stocks With Unusual Call Option Activity:
1) ITMN 2) JASO 3) ARO 4) WYE 5) SYMC

Links of Interest

Market Snapshot Commentary
Market Performance Summary
Style Performance
Sector Performance
WSJ Data Center
Top 20 Biz Stories
IBD Breaking News
Movers & Shakers
Upgrades/Downgrades
In Play
Exchange Volume vs. Average
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
Option Dragon
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Real-Time Intraday Quote/Chart
Dow Jones Hedge Fund Indexes

Monday Watch

Weekend Headlines
Bloomberg:

- Treasury 10-year notes and 30-year bonds fell the most in three months as stocks and the dollar rose, signifying a growing appetite for risk among investors, and the U.S. prepared to sell more debt next week. Yields increased as the gap between what the government and banks pay to borrow money for three months, a gauge of banks’ reluctance to lend known as the TED spread, shrank to the narrowest since before Lehman Brothers Holdings Inc. collapsed. Rates on three- and one-month bills rose the most since October. Stocks soared, and the dollar strengthened versus the yen. “We have seen some improvement in the credit markets, and we saw equities rise,” said Colin Lundgren, head of institutional fixed income for RiverSource Institutional Advisors in Minneapolis, which manages about $85 billion in bonds. “It partly explains the lessening of fear in the market and the take-away of the quality premium in Treasuries.”

- Wall Street’s biggest bond firms say Treasuries will fall for the first time in a decade as efforts to spur the economy gain traction and the flight to safety that drove the best returns in government debt since 1995 wanes. Benchmark 10-year notes may lose 3.1% this year, the first loss since declining 8.3% in 1999, based on the median forecast of the 17 primary government security dealers that trade with the Federal Reserve. “We could start to see stability sooner than the market would otherwise expect,” said William O’Donnell, a US government bond strategist at UBS Securities. This year, 10-year notes will rise to 2.95% after ending at 2.21% in 2008, according to the survey.

- Global cotton consumption will fall more than forecast in December as textile mills in China, the biggest consumer, buy less fiber to weave into clothing and bedding, the International Cotton Advisory Committee said. Worldwide use will drop 7.1 percent in the year ending July 31 to 24.5 million metric tons from a year earlier on lower use in China, India and Pakistan, the three largest consumers, the committee said today in a report. That was down from 24.9 million tons projected last month. Chinese consumption may fall 10 percent to 9.8 million tons this year, the group said. Exports will drop 17 percent to 6.9 million tons, the lowest in six seasons, the committee said. Last month, global exports were forecast at 7.3 million. Chinese imports will tumble 40 percent to 1.5 million tons, the group said.

- Ron Burkle and his Yucaipa Cos. private-equity firm reported an 8.3 percent stake in Barnes & Noble Inc.(BKS), the world’s largest bookseller, and may seek talks with the company.

- China is putting greater emphasis on vocational education in rural areas this year to ensure migrant workers who have lost their jobs in cities have access to practical skills-training programs when they return home. China aims to provide as many as 90 million continuing training courses for adults, many of them related to rural skills transfers and techniques, the education ministry said today in a statement on China’s central government Web site. A cooling economy is forcing companies to cut jobs and as many as 20 million rural residents who had moved to cities to work may have return home this year, economists estimate.

- European Central Bank Vice President Lucas Papademos said an economic recovery may not begin until next year and that policy makers have the scope to cut interest rates if inflation slows further. “The economic outlook is unusually uncertain,” Papademos said in an interview with Germany’s WirtschaftsWoche magazine published today. “It is quite possible that the recovery will not start until the beginning of 2010.” Having reduced their key interest rate by 175 basis points since early October to 2.5 percent, ECB policy makers enter the new year under pressure to cut more deeply amid Europe’s first recession in 15 years. The economy may be even weaker in 2009 than the ECB’s prediction of last month for a contraction of about 0.5 percent, Papademos said. The Frankfurt-based central bank will “act appropriately” and has room to do so if the slowdown threatens price stability, which the ECB defines as inflation just below 2 percent in the medium term, he said. “If, in our assessment, the risks to price stability change further in the coming months, monetary policy could be eased further and we will act appropriately,” Papademos said. Although deflation, a sustained period of falling prices, isn’t likely in the euro-area, inflation may “fall considerably” in the middle of 2009 before accelerating toward levels consistent with price stability by the end of the year, Papademos said. Papademos said the ECB had “absolutely not” lagged behind counterparts such as the Federal Reserve in combating the economic fallout from the financial crisis. The Fed last month cut its main interest rate to as low as zero for the first time.

- China’s total trade growth may slow for “quite some time” and will likely expand less than 5 percent for the full year because of the economic situation at home and abroad, the nation’s customs agency said.

- The cost of protecting investors from defaults on Asia-Pacific corporate and government bonds declined, according to traders of credit-default swaps. The Markit iTraxx Japan index of credit-default swaps fell 10 basis points at 276 at 9:50 a.m. in Tokyo, BNP Paribas SA prices show. The Markit iTraxx Australia index was down 10 basis points at 325 as of 11:52 a.m. in Sydney, Citigroup Inc. prices show.

Wall Street Journal:

- President-elect Barack Obama and congressional Democrats are crafting a plan to offer about $300 billion in tax cuts to individuals and businesses, a move aimed at attracting Republican support for an economic-stimulus package and prodding companies to create jobs. The size of the proposed tax cuts -- which would account for about 40% of a stimulus package that could reach $775 billion over two years -- is greater than many on both sides of the aisle in Congress had anticipated, and may make it easier to win over Republicans who have stressed that any initiative should rely relatively heavily on tax cuts rather than spending. The largest piece of the overall tax relief would involve cuts for people who pay income taxes or who claim the earned-income credit. It would serve as a down payment on the "Making Work Pay" proposal Mr. Obama outlined during his election campaign, providing a credit to offset Social Security and Medicare payroll taxes of $500 per individual or $1,000 per family. As for the business tax package, a key provision would allow companies to write off huge losses incurred last year, as well as any losses from 2009, to retroactively reduce tax bills dating back five years. In effect, this would entitle companies to receive cash from the government that they otherwise couldn't have claimed. A second provision would entice firms to plow that money back into new investment. The investment write-offs would be retroactive to expenditures made as of Jan. 1, 2009, to ensure that companies don't sit on their money until after Congress passes the measure. A separate element would offer a one-year tax credit for companies that make new hires or reverse layoffs, which could be worth $40 billion to $50 billion. And the Obama plan also would allow small businesses to write off a broad range expenditures worth up to $250,000 in 2009 and 2010. Currently, the limit is $175,000.

- 2009 Could Be Better Than You Think. Five reasons why you can be financially optimistic when looking forward to the coming year.

- After suffering through 2008, some big pension funds are having second thoughts about their exposure to private-equity firms, hedge funds and other nontraditional investments. Across the U.S., pension-fund managers and investment officers have been scrutinizing their asset allocations, especially toward alternative investments. In addition to wilted returns, pension funds are leery because some hedge funds have made it hard to cash out, including by postponing redemption requests from investors. It is doubtful that retirement behemoths with billions in assets will retreat completely from alternative investments, partly because returns should improve once the economy pulls out of the recession. Still, some pension funds are likely to reduce their positions or put the brakes on plans to invest more.

- Israeli tanks and troops pushed deep into the Gaza Strip Sunday, committing to a large-scale ground invasion that risks significant casualties on both sides, but also departs sharply from the playbook used in Israel's largely unsuccessful war against Hezbollah in Lebanon two years ago.

- New Mexico Gov. Bill Richardson withdrew his nomination as President-elect Barack Obama's commerce secretary Sunday, citing a federal grand-jury investigation into a "pay to play" scheme in his home state, Obama transition officials said. Just days ago, Republican Senate aides said they didn't believe the investigation of CDR Financial Products would be a major impediment to Mr. Richardson's confirmation. But the probe appears to be heating up. Mr. Richardson hired a personal lawyer last month and in mid-December, the grand jury began taking testimony from a slew of witnesses.

- Illinois Gov. Rod Blagojevich's pick to fill President-elect Barack Obama's Senate seat battled Friday to win certification amid doubts over whether he will take office when Congress convenes Tuesday. Roland Burris on Friday filed an emergency request urging the Illinois Supreme Court to demand that Illinois Secretary of State Jesse White certify Mr. Blagojevich's appointment.

- Struggling Big Three auto makers, accustomed to intense competition from their Japanese rivals, face a new challenge from European auto makers. Sensing opportunity in Detroit's weakness, Volkswagen AG and BMW AG of Germany are gearing up to expand market share in the U.S. in the next few years. VW is investing in its first U.S. factory in two decades and expects to triple U.S. sales to one million vehicles by 2018. BMW is introducing a new small car and expanding its distribution network. "The U.S. will be the growth engine of the future," Jim O'Donnell, BMW's U.S. chief, said in a recent interview. "This is where we will continue to focus our efforts."

Barron’s:

- Many hedge funds won't survive 2009. But there could be some good investment opportunities for those still standing later this year.

MarketWatch.com:

- While most investors panicked or were forced to sell, Berkshire Hathaway Chairman Warren Buffett put more than $20 billion to work last year, positioning his insurance-focused conglomerate to profit if the economy and markets recover in coming years.

- Although the euro is now 10 years old, it is about to face its biggest challenge as Europe's economy weakens, the Harvard University economist Martin Feldstein said on Saturday. "In my judgment, the next few years will clearly be an important testing time for the [European economic and monetary union] and the euro," Feldstein told a panel at the American Economics Association meeting here.

Since 1992, Feldstein has been consistently skeptical about the need for a unified currency in Europe. He has said that the euro was motivated by politics and not economics and has predicted that the disadvantages would eventually outweigh the advantages. In its first decade, the euro has seen only relatively good economic times, Feldstein said. "But that may be about to change," as conditions in Europe are deteriorating rapidly, Feldstein said.

CNBC.com:
- A consortium of private equity and hedge fund firms, including J.C. Flowers and Dune Capital Management, has agreed to buy the assets of failed mortgage lender IndyMac, the Federal Deposit Insurance said Friday.

- Microsoft(MSFT) will embark on a significant cost-cutting initiative in 2009, which might begin as early as this month, to offset a global slowdown in sales. However, sources tell me the cuts will largely be handled through attrition and the non-renewal of contract employees, rather than through a rumored, sweeping layoff.

- The Federal Reserve will use all of its tools, including unconventional policy measures, to support the U.S. economy and financial markets, Janet Yellen, president of the San Francisco Federal Reserve Bank, said on Sunday. In a bookend to an earlier speech in which Yellen threw her support behind a huge fiscal stimulus package to boost economic growth, the policy-maker said the Fed was far from out of ammunition on the monetary side.

- China's manufacturing sector contracted for the third month in a row in December, but the pace of deterioration slowed as output and new orders improved slightly, an official survey showed on Sunday. The official purchasing managers' index (PMI) rose to 41.2 in December from the record low of 38.8 plumbed in November, the China Federation of Logistics and Purchasing (CFLP) said. Yu Song with Goldman Sachs in Hong Kong said in a research note that the official PMI reading suggested annual industrial output growth could slow to around 3 percent in December, down from November's record low of 5.4 percent. That would add pressure on authorities to take further steps to stem a rise in factory layoffs.

NY Times:

- On April 21, 2008, Representative Charles B. Rangel met with officials of the American International Group, the now-troubled insurance giant, to ask for a donation to a school of public service that City College of New York was building in his honor. Mr. Rangel had already helped secure a $5 million pledge for the project from a foundation controlled by Maurice R. Greenberg, one of the company’s largest shareholders and its former chief executive. And C.C.N.Y. officials, according to the school’s own records, had high hopes for A.I.G. — a donation of perhaps as much as $10 million. The company has never made a contribution. But less than a month after Mr. Rangel met with its officials, the company turned to the congressman for help: A senior A.I.G. executive who had attended the fund-raising meeting wrote a letter directly to Mr. Rangel, chairman of the powerful House Ways and Means Committee, urging him to support a provision of a tax bill that would save A.I.G. millions of dollars a year, according to Joseph M. Norton, a company spokesman.

- An upstate New York developer donated $100,000 to former President Bill Clinton’s foundation in November 2004, around the same time that Senator Hillary Rodham Clinton helped secure millions of dollars in federal assistance for the businessman’s mall project. Mrs. Clinton helped enact legislation allowing the developer, Robert J. Congel, to use tax-exempt bonds to help finance the construction of the Destiny USA entertainment and shopping complex, an expansion of the Carousel Center in Syracuse. Mrs. Clinton also helped secure a provision in a highway bill that set aside $5 million for Destiny USA roadway construction.

- President-elect Barack Obama and Congressional Democrats are considering major expansions of government-assisted health care insurance and unemployment compensation as they begin intensive work this week on a two-year economic recovery package. One proposal, as described by Democratic advisers, would extend unemployment compensation to part-time workers, an idea that Congressional Republicans have blocked in the past.

- Consumers love the large, bright color displays on smartphones, but not the power-hungry way the screens drain the batteries. Now Pixtronix, Qualcomm(QCOM) and other companies are developing technologies intended to conserve battery life on handhelds as people spend ever more time not just talking and texting on them, but also browsing the Web and watching TV.

- Should Congress Put a Cap on Executive Pay? One popular proposal would cap the chief executive’s pay at each company at 20 times its average worker’s salary. But while Congress may well have compelling reasons to limit executive pay in companies seeking bailout money, voter anger is not a good reason to extend pay caps more generally.

Washington Post:
- Hedge funds, the highflying darlings of the investment industry, have fallen to earth. These funds meant for sophisticated, rich investors just endured their worst year ever.

TheStreet.com:

- Top 2009 Biotech Stocks. (video)

Econbrowser:

- The oil shock and recession of 2008: part 2. In my previous post, I presented evidence that the oil price increase over 2007:H2-2008:H1 made a significant contribution to the slowdown in consumption spending in general and decline in spending on domestic automobiles in particular. Here I discuss why this should be regarded as a key development that turned the slowdown in growth into a recession.

Business Week:
- Mortgage rates are at historic lows and may be poised to go even lower next year. It's a great time to buy a home—if you can.

Baltimore Sun:

- One out of ten people browsing the Web in December were using a version of Mac OS X, according to the monthly statistics from Web services company Net Applications. Of greater concern to Microsoft might be the relatively small adoption rate of Windows Vista. More than 65 percent of Windows users are still on XP, with only 21.12 percent on Vista. The next version of Windows, Windows 7, is expected in early 2010, so many users may bypass Vista altogether. And if Microsoft chief Steve Ballmer wants yet something else to stew over, he can check the browser usage numbers. Internet Explorer, which had 84.11 percent share in June 2006, now has only 68.15 percent, a nearly 16 point fall; IE lost 1.62 percent just from November. Safari has taken some share, having risen from 3.19 percent in June 2006 to 7.93 percent in December 2008, but Firefox has emerged as a significant threat. As of December Firefox has a share of 21.34 percent, nearly twice the 10.77 percent it had in June 2006. Methinks the era of Microsoft hegemony is crumbling fast.

USA Today:

- Expert predictions: Stock market could be good in 2009.

Boston Globe:

- Here's an optimistic thought for the new year: Stocks might go up. So say a number of professional investors and economists, who argue that stock markets have probably hit bottom.

CNNMoney.com:

- Top 10 Macworld rumors for 2009.

International Herald Tribune:

- This was well before it became obvious that the risks taken by the largest banks and investment firms in the United States - and, indeed, in much of the Western world - were so foolhardy that they threatened to bring down the financial system itself. On the contrary: This was back when the major investment firms were assuring investors that all was well - assurances based in part on their fantastically complex mathematical models for measuring risk, models whose role in the crisis is now a matter of fierce debate. Some say those models abetted the meltdown by obscuring real, if rare, risks. Others say that Wall Street looked to them for more certainty than they were meant to give.

Reuters:

- Chrysler LLC on Friday received an initial $4 billion emergency loan from the U.S. government, two days after the government completed a parallel payout to its larger rival General Motors Corp. "This initial loan will allow the company to continue an orderly restructuring," Chrysler Chief Executive Bob Nardelli said in a statement.

- Bank of Japan Governor Masaaki Shirakawa said on Sunday that a rising yen would have a big negative impact on Japan short term, but he gave few clues on how he might mitigate the worsening effects of the global credit crunch.

- China's office workers are tightening their belts, cutting back spending on everything from clothes to fast food, despite government efforts to boost consumption to stave off the worst effects of a global recession. Websites and blogs popular among young Chinese professionals are extolling the virtues of frugality as the global financial crisis bites China's economy.

Financial Times:

- Pfizer Inc.(PFE) is “open” to mergers with “big, small and in-between” rivals to increase revenue, citing an interview with Jeff Kindler, the NY-based drugmaker’s CEO. Investors have said Pfizer could build on its extension into biological medicines by buying Amgen(AMGN), the largest listed, independent biotech group in the US, the report said.

- Pared down airlines plot course back to profitability. The unprecedented surge in oil prices, which peaked in July, gave carriers little choice but to retire dozens of older, less efficient aircraft. Ed Bastian, president of Delta Air Lines, predicted recently that 2009 industrywide domestic capacity will be 14 per cent below where it was last year. A stunning reversal in fuel costs, capacity cuts and a spate of new passenger fees are expected to return US airlines to profitability in 2009 even as the industry confronts what may be the steepest downturn in its history.

- Large companies in Europe and the US are having the terms of their credit facilities tightened more quickly and more severely than smaller companies – in contradiction of received wisdom. Possible reasons put forward for this shift in attitude include smaller companies enjoying a better relationship with their banks, and financial institutions shying away from making large loans and preferring to deal with local groups, rather than multinationals.

TimesOnline:
- New EU President: Climate Change Is a Myth. The European Union's new figurehead believes that climate change is a dangerous myth and has compared the union to a Communist state.

AFP:

- The first passenger flight from Europe in 18 years landed at Baghdad airport yesterday, when a Swedish charter aircraft touched down. The Nordic Leisure airliner carried 150 people, most of them Iraqis, resuming air links between Iraq and Europe for the first time since the UN imposed sanctions on Iraq after Saddam Hussein’s 1990 invasion of Kuwait. More international flights are expected in the next two days, including one from Hong Kong.

- Australia today formally declined a US request to help resettle former inmates of the Guantanamo Bay detention center on national security concerns, citing acting Prime Minister Julia Gillard.

Business Standard:

- ONGC Videsh Ltd (OVL), the overseas investment arm of India’s largest oil producer Oil and Natural Gas Corporation (ONGC), is planning to bid for a “few” of the 19 exploration blocks being offered under two bidding rounds by Iraq, which has the world’s third-largest oil reserves. Iraq opened the second round of bidding on December 31, 2008, under which it is offering 11 oil and gas exploration blocks to global oil companies. It had put on auction eight oil and gas fields in the middle of last year. Oil prices have tumbled over 70 per cent since Iraq had announced the first round of auctions.

China Securities Journal:
- China’s introduction of high-speed mobile-phone services may spurt telecommunications companies to spend as much as $293 billion over the next three years.

China Daily:

- Apple(AAPL) bites into China. Apple loyalists aren't interested in the best price or even what functions the gadgets have, they buy them because they're cool. A newfound passion for lifestyle products among many young Chinese executives and professionals has made Apple the most-recognizable American brand in China, according to marketing experts.

Sankei:

- Toyota Motor Corp. will freeze construction plans for new factories in Russia and Thailand amid slumping demand.

Weekend Recommendations
Barron's:
- Made positive comments on (TBT), (HYG), (F), (GE), (AMZN), (BIIB), (DO) and (C).

Night Trading
Asian indices are +1.0% to +2.50% on avg.
S&P 500 futures -.43%.
NASDAQ 100 futures -.42%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Pre-market Stock Quote/Chart
Before the Bell CNBC Video(bottom right)
Global Commentary
WSJ Intl Markets Performance
Commodity Movers
Top 25 Stories
Top 20 Business Stories
Today in IBD
In Play
Bond Ticker
Economic Preview/Calendar
Daily Stock Events
Upgrades/Downgrades
Rasmussen Business/Economy Polling

Earnings of Note
Company/Estimate
- (MOS)/1.52

Upcoming Splits

- None of note

Economic Releases

10:00 am EST

- Construction Spending for November is estimated to fall 1.4% versus a 1.2% decline in October.

- Total Vehicle Sales for December are estimated to fall to 10.0M versus 10.2M in November.

Other Potential Market Movers
- The Fed’s Yellen Speaking could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by technology 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 week.