Today's Headlines

Bloomberg:
- Merrill Lynch, Man Group Plc and Leon Black’s Apollo Management LLC transformed a discreet auction for failed Refco into a worldwide free-for-all.
- The European Commission plans to cut its 2006 growth estimate for the euro region and warn the 12-nation economy may perform even worse.
- The Dolan family withdrew its offer to take Cablevision Systems private and instead suggested the board declare a special dividend of $3 billion.
- Iraqis approved a new constitution that will establish a permanent government, the next step in the country’s transition to democracy after two decades of rule by Saddam Hussein’s dictatorship.
- McDonald’s will place nutrition information on most of its packaging to attract health-conscious consumers.
- Crude oil, gasoline, heating oil and natural gas are rising on speculation that US fuel consumption will increase with the end of the Atlantic hurricane season and the beginning of winter.
- The euro gained the most in more than two weeks against the dollar after business confidence in Germany rose to a five-year high.

Wall Street Journal:
- A group led by Comcast, Cox Communications and Time Warner is near an agreement with Sprint Nextel that would allow the cable operators to sell wireless phone service.
- Property development in the Florida Panhandle after eight hurricanes struck the state in the last 14 months has spurred a boom in real estate transactions.
- The US Congress is close to agreement on $101 billion in agricultural spending.
- The European Union, Brazil, China, India and other countries have called for an international agency to regulate the Internet and replace US control of the electronic information system.
- US automakers including General Motors have gone back to offering incentives to consumers to purchase their vehicles as sales remained weak.
- Some clinical trials suggest low-dose chemotherapy over extended periods may halt the spread of breast and ovarian cancers.

NY Times:
- Wal-Mart Stores plans to announce today a program to reduce energy consumption in its stores, double the fuel efficiency of its trucks and minimize packaging, citing CEO Scott.

Interfax:
- Russia will continue to assist Iran with its nuclear energy program after the completion of a plant at Bushehr in the Middle East nation.

London-based Times:
- Ben Bernanke, named by President Bush to succeed Alan Greenspan as chairman of the US Federal Reserve, forecast that the American economy will continue to grow without fiscal inflation even as energy prices rise.

Existing Home Sales Still Strong, Sentiment Remains Weak

- Existing Home Sales for September were 7.28M versus estimates of 7.2M and 7.28M in August.
- Consumer Confidence for October fell to 85.0 versus estimates of 88.0 and a reading of 87.5 in September.

BOTTOM LINE: US previously owned home sales were unchanged in September from a month earlier, matching the second-highest level on record and suggesting the recent rise in mortgage rates and waning consumer confidence has yet to slow demand, Bloomberg said. The median price of existing homes rose 13.4% year-over-year to $212,000. Sales rose 3.7% in the South and .8% in the Northeast. They fell 4.1% in the West and 3% in the Midwest. The supply of existing homes for sale held steady at 4.7 months’ worth. The Realtors group forecasts existing home sales to reach an all-time record this year of 7.1 million. The housing market continues to show signs of slowing, not plunging, which is a big positive for the overall US economy.
Consumer confidence unexpectedly fell to a two-year-low in October as high energy prices, bird flu fears, scandals and two devastating hurricanes left Americans feeling unsettled, Bloomberg reported. The gauge of optimism about consumers’ present situation fell to 108.2 from 110.4. The share of consumers that said jobs were hard to get rose to 25.3% this month from 25% last month. However, the percentage of consumers planning to buy a car rose to 6.1% from 5.8%. I continue to believe consumer sentiment will rebound into year-end as gas prices, which are already down 45% from peak levels in Sept., continue to fall and natural gas prices begin falling meaningfully next month.

Links of Interest

Market Snapshot
Detailed Market Summary
Market Internals
Economic Commentary
Movers & Shakers
IBD New America
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Real-time Intraday Chart/Quote

Tuesday Watch

Late-Night Headlines
Bloomberg:
- China’s government said an outbreak of avian influenza occurred in the eastern province of Anhui.
- Hurricane Wilma headed into the Atlantic Ocean after its path across southern Florida knocked down trees and power lines and flooded low-lying areas.
- Rosa Parks, the black woman whose 1955 arrest for saying “no” to an order to giver her bus seat to a white man served as a catalyst for the US civil-rights movement, died at the age of 92.

Wall Street Journal:
- Telefon AB LM Ericsson plans to buy Marconi’s telecommunications network-equipment unit for $2.12 billion.
- Wyeth asked the US to look into the sale and marketing of combinations of plan-based hormones to relieve menopause symptoms.

China Daily:
- Nokia Oyj plans to sell low-priced mobile phones in rural China to tap the country’s less-developed regions.

Japan Metal Daily:
- Chinese steelmakers such as Anshan Iron & Steel Group are cutting prices in Japan to try to sell more steel amid a slumping domestic market.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on RE and EBAY.
- Reiterated Underperform on TCO.

Night Trading
Asian Indices are +.25% to +1.0% on average.
S&P 500 indicated -.09%.
NASDAQ 100 indicated -.22%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
AMZN/.10
AMTD/.22
AV/.17
BLS/.46
EAT/.47
BNI/1.00
CKFR/.39
CME/2.21
CHIR/.45
CB/.44
COH/.25
CA/.24
ESV/.47
FFIV/.38
FLEX/.19
HCA/.61
LM/.96
LXK/.47
LMT/.90
NOC/.69
JOE/.57
SWK/.86

Upcoming Splits
- None of note

Economic Releases
10:00 am EST
- Existing Home Sales for September are estimated to fall to 7.20M versus 7.29M in August.
- Consumer Confidence for October is estimated to rise to 88.0 versus a reading of 86.6 in September.

BOTTOM LINE: Asian indices are higher, boosted by exporting companies in the region. I expect US equities to open mixed and to rise modestly later in the day. The Portfolio is 100% net long heading into the day.

Evening Review

Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play

Stocks Higher Mid-day on Choice of Bernanke as Next Fed Chairman

Indices
S&P 500 1,193.41 +1.17%
DJIA 10,331.35 +1.14%
NASDAQ 2,103.02 +1.0%
Russell 2000 642.23 +1.50%
DJ Wilshire 5000 11,915.14 +1.21%
S&P Barra Growth 573.84 +.95%
S&P Barra Value 615.44 +1.39%
Morgan Stanley Consumer 583.97 +1.10%
Morgan Stanley Cyclical 699.99 +1.92%
Morgan Stanley Technology 502.23 +.92%
Transports 3,715.24 +2.53%
Utilities 393.47 +1.76%
Put/Call .77 -23.0%
NYSE Arms .62 -52.18%
Volatility(VIX) 15.39 -4.59%
ISE Sentiment 206.00 +47.14%
US Dollar 89.94 -.41%
CRB 320.23 -.71%

Futures Spot Prices
Crude Oil 60.10 -.87%
Unleaded Gasoline 160.00 -2.43%
Natural Gas 12.90 +.22%
Heating Oil 181.75 -2.63%
Gold 468.60 -.09%
Base Metals 131.97 +.54%
Copper 177.80 -.84%
10-year US Treasury Yield 4.45% +1.59%

Leading Sectors %
Steel +4.18%
Coal +3.84%
Oil Tankers +3.43%

Lagging Sectors
Disk Drives +.26%
HMOs +.26%
Hospitals -1.04%

BOTTOM LINE: The Portfolio is substantially higher mid-day on gains in my Internet longs, Medical longs, Airline longs and Retail longs. I added to my NTES and BRCM longs and existing shorts this morning, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is substantially higher, sector performance is positive and volume is below average. Measures of investor anxiety are lower. Today’s overall market action is positive considering the rise in long-term rates. In my opinion, Ben Bernanke is the best choice for the position of next Fed Chairman. He is one of the few candidates that understands the extent of global deflationary forces on the US economy. I expect these forces to reassert themselves during the next economic slowdown. I expect US stocks to trade mixed from current levels into the close as short-covering offsets profit-taking.