Tuesday Watch

Late-Night Headlines
Bloomberg:
- Berkshire Hathaway Inc.(BRK/A), the insurance and investment firm run by billionaire Warren Buffett, will disclose more in financial reports in response to a government request, according to regulatory filings.
- A unit of hedge-fund manager Man Group Plc shut down because of losses from US hedge fund Amaranth Advisors LLC’s collapse. Man Alternative Investments Ltd., which owns about 13% of Amaranth’s shares, lost about 20% of this year’s gains because of Amaranth’s collapse in September.
- The SEC will propose raising asset requirements for investing in hedge funds at a Dec. 4 public meeting. The agency will also consider new anti-fraud rules that would prohibit hedge fund managers from making false or misleading statements to individuals who invest in funds.
- Billionaire investor Carl Icahn and Harry Macklowe disclosed that they own an 8% stake in Reckson Associates Realty Corp.(RA), the real estate investment trust they are seeking to buy for $4.26 billion.
- Iran will stand by its neighbor Iraq to help the country boost security and achieve peace, President Mahmoud Ahmadinejad said during a visit to Tehran by his Iraqi counterpart Jalal Talabani.
- Nintendo sold more than 600,000 Wii video-game consoles in the Americas during the product’s first eight days on the market as the company battled to take sales from Sony Corp.’s(SNE) PlayStation 3.
- Japan’s retail sales unexpectedly fell for a second month, undermining the central bank’s case that the economy is strong enough to withstand another interest rate increase.

Financial Times:
- French President Jacques Chirac wants Iran to contribute to the group of countries and multinational institutions co-coordinating NATO’s peace-keeping mission in Afghanistan.

Reuters:
- IAC/InterActiveCorp(IACI) will merge its Ask.com, CitySearch and functions from other sites to provide local search services.

Yonhap News:
- North Korea’s nuclear negotiator Kim Kye Gwan said his country is ready to rejoin six-nation talks on its nuclear weapons “at any time.”

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (HLT), target $39.
- Downgraded (NYT) to Sell, target $17.
- Boosted estimates for (GS) and (MS).

Night Trading
Asian Indices are -1.25% to -.50% on average.
S&P 500 indicated +.01%.
NASDAQ 100 indicated -.01%.

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Earnings of Note
Company/EPS Estimate
- (AMWD)/.58
- (CHS)/.23
- (DG)/.15
- (DBRN)/.36
- (JTX)/-.38

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- Durable Goods Orders for October are estimated to fall 5.0% versus a 8.3% rise in September.
- Durables Ex Transportation for October are estimated to rise .2% versus a .5% gain in September.

10:00 am EST
- Consumer Confidence for November is estimated to rise to 106.0 versus a reading of 105.4 in October.
- Existing Home Sales for October are estimated to fall to 6.14M versus 6.18M in September.

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

Stocks Finish Near Session Lows on Profit-taking and Higher Energy Prices

Indices
S&P 500 1,381.91 -1.36%
DJIA 12,121.71 -1.29%
NASDAQ 2,405.92 -2.21%
Russell 2000 772.10 -2.55%
Wilshire 5000 13,868.82 -1.51%
S&P Barra Growth 641.92 -1.38%
S&P Barra Value 737.77 -1.34%
Morgan Stanley Consumer 667.23 -1.26%
Morgan Stanley Cyclical 874.79 -1.82%
Morgan Stanley Technology 567.50 -2.74%
Transports 4,789.15 -1.16%
Utilities 446.84 -.83%
Put/Call 1.28 +26.73%
NYSE Arms 1.73 +13.83%
Volatility(VIX) 12.30 +14.63%
ISE Sentiment 119.0 +12.26%
US Dollar 83.51 -.18%
CRB 313.01 +1.31%

Futures Spot Prices
Crude Oil 60.36 +1.89%
Unleaded Gasoline 159.0 +.08%
Natural Gas 7.99 +3.63%
Heating Oil 170.55 +2.34%
Gold 647.40 +.05%
Base Metals 243.27 +.10%
Copper 321.0 -.17%
10-year US Treasury Yield 4.53% -.43%

Leading Sectors
Gold & Silver +.57%
Energy -.40%
Drugs -.51%

Lagging Sectors
I-Banks -3.57%
Disk Drives -4.04%
Airlines -4.62%

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Afternoon Recommendations
CSFB:
- Rated (DE) Outperform.

Afternoon/Evening Headlines
Bloomberg:
- Cholesterol-lowering drugs such as Pfizer’s(PFE) Lipitor, taken by millions of Americans in danger of heart attacks and strokes, also slash the risk of those afflictions among the healthy.
- Palm Inc.(PALM) cut its second-quarter forecast, saying it is taking longer than anticipated to make its latest Treo device compatible with US wireless networks. The shares fell 7.3% after-hours.
- The US Supreme Court refused to block federal prosecutors from reviewing the phone records of two NY Times(NYT) reporters who allegedly tipped off the targets of a terrorist fundraising probe.
- NYSE short interest fell .7% to 9.65 billion shares as of mid-November, just off all-time highs set in October.
- US crude-oil inventories probably rose as higher imports helped meet demand from refineries returning to service after being shut for maintenance, a Bloomberg survey showed.
- ConocoPhillips(COP) and Anadarko Petroleum announced the start up of a second Alpine satellite oil field on Alaska’s North Slope.

Gainesville Sun:
- The presidents of the University of Florida and Florida State are working together on a college football playoff system to replace the Bowl Championship Series.

BOTTOM LINE: The Portfolio finished lower today on losses in my Semi longs, Internet longs and Computer longs. I added (EEM), (IWM) and (QQQQ) hedges in the final hour, thus leaving the Portfolio 75% net long. The tone of the market was very negative today as the advance/decline line finished substantially lower, almost every sector fell and volume was about average. Measures of investor anxiety were higher into the close. Today's overall market action was bearish. The market's inability to bounce in any meaningful way, as I had expected, is not a good sign. However, volume was only average. Investor anxiety was elevated throughout the day. The last time the NYSE Arms closed this high was in July. Sellers seemed to lack conviction today even as buyers stepped away. I suspect losses in overseas markets tonight could lead to some more weakness tomorrow morning here. Overall, I view today’s sell-off as a healthy pullback after extraordinary gains.

Stocks Sharply Lower into Final Hour on Profit-taking and Higher Energy Prices

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Semi longs, Internet longs and Computer longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is very negative as the advance/decline line is substantially lower, almost every sector is falling and volume is below average. Copper is giving back some of this morning's gains after the Beijing-based Customs General Administration said that copper-concentrate imports plunged 46% in October from a year earlier and copper purchases fell 0.9%. Moreover, the OECD said it lowered U.S. growth estimates for next year to 2.4% from 3.1%, and for Japan from 2.2% to 2.1%. They boosted European growth estimates to 2.3% from 2.1%. The Case-Schiller US Housing futures are now projecting a 4.6% decline in the average home price over the next six months. This is up from a 5.2% decline projected a couple of months ago. I suspect the OECD should have left its forecast at 3.1% for US growth. An end to auto production cutbacks, lower inflation and a stabilizing housing market will result in average U.S. growth of around 3% next year, in my opinion. Considering today's headline losses, volume is only around average, and very few stocks are down meaningfully on above-average volume. I expect US stocks to trade higher into the close from current levels on short-covering, lower long-term rates and bargain-hunting.

Today's Headlines

Bloomberg:
- Christopher Hill, the chief US negotiator to six-nation talks on dismantling North Korea’s nuclear weapons program, arrives in Beijing today to meet with his Chinese counterpart, the US Embassy said.
- The Russian government’s growing intervention in key industries is a “step back” and may lead to slower economic growth, the Organization for Economic Cooperation and Development said.
- Wal-Mart(WMT) plans to set up a venture with Indian billionaire Sunil Mittal, gaining access to the second-most populous nation as the government considers tempering restrictions on overseas ownership.
- The US Supreme Court refused to revive a $10.1 billion award against Altria Group’s(MO) Philip Morris USA, rejecting an appeal from smokers who said they were misled about the health risks of “light” cigarettes.
- Oil is rising above $60 on forecasts that most of the US will be colder than normal next week and a report that Saudi Arabia’s oil minister said OPEC may cut output at a meeting next month.
- Brazil will likely double its output of ethanol to power cars in coming years as producers plant more sugarcane to meeting rising demand for the biofuel.
- Copper declined from morning highs as an import slowdown in China, the world’s largest user of the metal, renewed speculation that supplies may top consumption this year. Copper-concentrate imports plunged 46% in October from a year earlier, and copper purchases dropped .9%, the Chinese Customs General Administration said.

Wall Street Journal:
- US federal courts will require litigants to provide their opponents with electronically stored information under rules that took effect Friday.
- University of Southern California and other US schools of higher education are following the lead set by Massachusetts Institute of Technology and Stanford University in turning research projects into profitable business ventures.

NY Times:
- The New York State Legislature plans to provide a complete, public list of lawmarkers’ government-funded pet projects.
- Xerox Corp.(XRX) is trying to develop erasable paper for its copiers that would allow documents to be recycled an unlimited number of times.

AP:
- Bank of America(BAC) signed a five-year agreement with the Nascar auto-racing series to attract new business for the No. 2 US bank’s ATMs and branches.

NY Post:
- NYC will host a record 7.3 million tourists this year, many of them coming on shopping sprees.

Berlingske Tidende:
- Dong Energy A/S plans to increase the amount of oil it extracts from the Danish part of the North Sea by injecting carbon dioxide into oil extraction pipes, citing Dong CEO Eldrup.

Mlada Fronta Dnes:
- Czech appetite for learning English has led to classes being introduced for toddlers.

Panorama:
- Petroleos de Venezuela SA, South America’s largest oil company, said initial exploration shows that oil reserves in the Gulf of Venezuela might total at least 7 billion barrels.

Economic Releases

- None of note

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