Today's Headlines

Bloomberg:
- Google Inc.(GOOG) said customers are starting to use its new multimedia advertising formats at a faster rate than expected.
- Sharper Image Corp., the retailer of massage chairs and air purifiers, jumped the most in more than eight years after top company executives bought shares.
- General Motors(GM) posted a 4% gain in quarterly global sales, bolstering its bid to hold off Toyota Motor and extend a 76-year reign as the world’s largest automaker.
- The global economy is weathering the impact of the US subprime mortgage market turmoil, a European G-7 official said.
- Crude oil rose above $89 a barrel in NY for the first time after the US dollar declined to a record low against the euro.
- Copper dropped to the lowest in four weeks as rising inventories signaled easing demand for the metal used in wires and pipes.

Wall Street Journal:
- The bundling of political donations once was an innocuous play in the game book of Washington political operatives. Now, the fund-raising practice has grown so widespread, and some of its practitioners so brazen, that bundling has become the chief source of abuse in the American campaign-finance system.

USAToday.com:
- Technology makes porn easier to access at work.

Reuters:
- Nike Inc.(NKE) is behind a takeover approach for Umbro Plc, the maker of soccer uniforms for England’s national team.

Initial Jobless Claims Rise, Leading Indicators Rebound

- Initial Jobless Claims rose to 337K last week versus estimates of 312K and 309K the prior week.

- Continuing Claims rose to 2534K versus estimates of 2525K and 2515K prior.

- Leading Indicators for September rose .3% versus estimates of a .3% gain and a downwardly revised .8% decline in August.

BOTTOM LINE: The number of Americans filing first-time claims for unemployment benefits increased more than forecast last week, Bloomberg reported. The four-week moving average of claims rose to 316,500 from 310,500 the prior week. The unemployment rate among those eligible to collect benefits, which tracks the US unemployment rate, held steady at a historically low 1.9%. I continue to expect the job market to remain healthy over the intermediate-term without generating substantial unit labor cost increases.

The index of leading US economic indicators rose in September as stock prices climbed and job cuts fell, Bloomberg reported. US stocks turned in the best September showing since 1998, which boosted the indicator. As well, jobless claims fell during the month. I still expect US GDP growth to average around 2-2.5% over the intermediate-term. However, the third quarter will likely come in around 2.5-3% growth.

Links of Interest

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Thursday Watch

Late-Night Headlines
Bloomberg:
- Massachusetts Senator John Kerry and Illinois Representative Rahm Emanuel said they plan to introduce legislation to tax the deferred compensation that hedge-fund managers place in offshore accounts.
- Farmers in India, the world’s third-biggest wheat importer last year, may plant the crop on a record area to take advantage of higher prices after supplies dwindled and demand increased.
- Lead fell to a two-week low after inventories tracked by the London Metal Exchange jumped 15%. Copper and nickel also declined.
- Chinese stocks trading in the US rose the most in more than six years after Beijing regulators said they may allow arbitrage between shares traded on the mainland and in Hong Kong.
- Turkey’s rage over a US congressional resolution accusing it of genocide against Armenians nearly a century ago is being felt in quarters far removed from Washington: its own Jewish community.

Wall Street Journal:
- Why Consolidation Storm Is Brewing in Beer Industry.

New York Times:
- Silicon Valley Start-Ups Awash in Dollars, Again.

CNNMoney.com:
- Facebook CEO hints that deal to sell stake is near.
- Americans turn off the TV in droves.

CNBC.com:
- Most S&P Companies Topping Earnings Estimates.

IBD:
- Slow RFID Market Gets Microsoft Push.

Reuters:
- Fed’s Hoenig says “wait and see” on rates.

USA Today.com:
- WiMax rides wave of surfing technology.
- Free TV shows may air on cellphones.

Financial Times:
- JPMorgan Chase(JPM) withstood the credit market turmoil better than its rival Citigroup, reporting record third-quarter earnings of $3.4 billion, up 2% on last year.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (UTX), target $86.
- Reiterated Buy on (PCLN), target raised to $111.

Night Trading
Asian Indices are -.25% to +.50% on average.
S&P 500 futures -.09%.
NASDAQ 100 futures -.16%.

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Earnings of Note
Company/EPS Estimate
- (ASD)/.69
- (BAC)/1.06
- (BAX)/.65
- (BBT)/.84
- (LLY)/.88
- (FCS)/.20
- (MHP)/1.24
- (NUE)/1.15
- (PH)/1.23
- (PFE)/.52
- (PNC)/1.35
- (RS)/1.34
- (LUV)/.21
- (STI)/1.29
- (UNP)/1.77
- (UNH)/.92
- (WYE)/.89
- (BK)/.61
- (CAL)/2.18
- (STJ)/.45
- (RHI)/.46
- (COF)/-.28
- (GILD)/.41
- (AMD)/-.62
- (CERN)/.45
- (GOOG)/3.77
- (ISRG)/.79
- (SNDK)/.31
- (XLNX)/.28
- (HCA)/.82
- (HSY)/.71
- (MHK)/1.64
- (MEL)/.60
- (PPG)/1.37
- (SPWR)/.28

Upcoming Splits
- (DKS) 2-for-1

Economic Releases
8:30 am EST
- Initial Jobless Claims for last week are estimated to rise to 312K versus 308K the prior week.
- Continuing Claims are estimated to rise to 2525K versus 2521K prior.

10:00 am EST
- Leading Indicators for September are estimated to rise .3% versus a .6% decline in August.

12:00 pm EST
- The Philly Fed for October is estimated to fall 7.0 versus 10.9 in September.

Other Potential Market Movers
- The Fed’s Bernanke speaking, Fed’s Pianalto speaking, Fed’s Plosser speaking, weekly EIA natural gas inventory report, (GM) Q3 Global Sales Conference Call, Wachovia Consumer Growth Conference, Needham Shareholder Conference and the Bear Stearns Retail Investor Outing could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by financial stocks in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.

Stocks Finish Mostly Higher on Strength in Technology Shares

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Stocks Mixed into Final Hour as Positive Earnings Offset Economic Worries

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Restaurant longs and Computer longs. I have not traded today, thus leaving the Portfolio 100% net long. The overall tone of the market is mildly negative today as the advance/decline line is slightly lower, sector performance is mixed and volume is above average. Energy shares are lower, even when oil was rising earlier in the day, which could be routine profit-taking or investors anticipating a significant top in the commodity, similar to the ones seen during prior Mid-east conflict fear-spikes. The Fed's Beige Book report was more dovish than I had expected. Fed fund futures now imply a 58% chance for a cut at the upcoming meeting, up from 38% yesterday. The 10-year yield is at session lows, falling 10 basis points to 4.55%. Stocks are rebounding a bit. Market leaders are gaining some upside traction. I expect US stocks to trade modestly higher into the close from current levels on bargain-hunting, rising fed rate cut odds and short-covering.