Bear Radar

Style Underperformer:

Mid-cap Value (+1.51%)

Sector Underperformers:

Airlines (-.84%), Restaurants (-.69%) and Hospitals (+.15%)

Stocks Falling on Unusual Volume:

FMD, CMCSA, CLNE, TWC and SONC

Productivity Soars, Unit Labor Costs Decline, Factory Orders Surge, ISM Non-Manufacturing Decelerates

- Final 3Q Non-farm Productivity rose 6.3% versus estimates of a 5.9% gain and a prior estimate of a 4.9% increase.

- Final 3Q Unit Labor Costs fell 2.0% versus estimates of a 1.2% decline and a prior estimate of a .2% decrease.

- Factory Orders for October rose .5% versus estimates of unch. and a .3% gain in September.

- ISM Non-Manufacturing for November fell to 54.1 versus estimates of 55.0 and a reading of 55.8 in October.

BOTTOM LINE: Worker productivity in the US accelerated sharply in the third quarter, causing labor costs to drop by the most since 2003, Bloomberg reported. A separate report from ADP Employer Services said companies added 189,000 jobs in November, more than triple the forecast. As well, Challenger reported a 4.7% decline in job cuts for November. The 3Q increase in productivity reflected the surge in economic activity. US GDP jumped 4.9% last quarter, the most in four years. Moreover, productivity has risen by 2.7% over the last year, the most since the second quarter of 2004. The drop in Unit Labor Costs, the main component of inflation, is a big positive and has likely contributed to the recent decline in the 10-year yield. I continue to expect the job market to remain healthy over the intermediate-term without generating substantial unit labor cost increases.

Orders at US factories unexpectedly rose in October by the most since July, Bloomberg reported. The increase in factory orders was lead by a 1.3% gain in non-durable goods. Demand for plastics, beverages, chemicals and petroleum climbed. Manufacturers had enough goods on hand to last 1.23 months versus 1.24 months worth in September. I continue to expect manufacturing to help boost overall US economic growth as companies gain confidence in the sustainability of the current expansion and rebuild depleted inventories as exports boom.

US services industries continued to expand in November, Bloomberg reported. The New Orders component of the index fell to 51.1 from 55.7 the prior month. The Employment component of the index fell to 50.8 versus 51.8 the prior month. However, the Backlog component jumped to 48.5 from 43.5 the prior month. The Prices Paid component rose to 76.5 from 63.5 the prior month. I expect ISM Non-manufacturing to continue to show expansion over the intermediate-term as consumer spending remains only modestly below long-term average rates.

Bull Radar

Style Outperformer:

Small-cap Growth (+1.74%)

Sector Outperformers:

Disk Drives (+4.05%), Homebuilders (+3.48%) and Steel (+3.09%)

Stocks Rising on Unusual Volume:

GDP, FIS, BTH, PDA, PSS, GES, CTV, SOLF, IDCC, SYNO, ARTC, GLBC, CPRT, AVAV, COCO, UNTD, TESO, NWEC, PTNR, AIXG, TSRA, ESLR, PWRD, ININ, DDUP, CFSG, STEC, KTC, CCOI, NVDA, BBBB, TXRH, TVL, FRE and XMSR

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
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
Option Dragon
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Intraday Chart/Quote
Dow Jones Hedge Fund Indexes

Wednesday Watch

Late-Night Headlines
Bloomberg:
- Powerchip Semiconductor rose the most in three years in Taipei trading, leading gains in memory-chip makers, after a report said industry prices were recovering. Powerchip, Taiwan’s biggest maker of DRAMs climbed by the daily 6.9% limit, its largest gain since October 2004. Nanya Technology, Taiwan’s second-largest memory-chip maker, and Elpida Memory, the biggest in Japan, also advanced. “A probable price rebound has finally appeared,” Dramexchange, Asia’s largest spot market for memory chips, wrote in a report.
- Moore Capital Management’s Canadian hedge-fund unit, run by former Amaranth Advisors LLC traders, lost 15% in November on stock and convertible-bond bets, two people with knowledge of the firm said.
- Credit Suisse Group plans to launch a product to replicate hedge fund performance with more liquid securities by the first half of 2008, said Oliver Schupp, a managing director in the firm’s alternative investments business.
- Federal regulators and US lenders are focusing on five years as the duration of an interest-rate freeze on subprime mortgages.
- US Senate Banking Committee Chairman Christopher Dodd called on Treasury Secretary Henry Paulson to answer questions about Goldman Sachs Group Inc.’s role in the collapse of the subprime mortgage market.
- The yen is falling against 13 of the world’s 16 most-actively traded currencies on speculation Japanese investors will use their year-end bonuses to buy higher-yielding assets abroad.

NY Times:
- Activision’s(ATVI) Chief Looks for Gaming’s Next Moves.

MarketWatch.com:
- The Stockpickers: Fidelity growth-stock fund manager rides Google(GOOG), Research in Motion(RIMM), Cisco(CSCO).
- Once a bear market begins, it’s too late for ‘bear’ funds to help. Proof of the stock market’s ugliness in November started arriving in my email box a week ago. That’s when a slew of investors started asking about which bear-market funds to buy now so that they can make a fast buck during the downturn.

BusinessWeek.com:
- China’s iPhone Fans Find a Way. As Beijing consumers snap up hacked versions of the popular phone, Apple bides its time in striking a deal with authorized cellular operators.

CNNMoney.com:
- Bill Miller’s simple plan for Citi.
- Saudis may Bigfoot OPEC and hike output. Analysts say the cartel may confound expectations and not boost production when it meets Wednesday, but more oil may flow to world markets anyway.
- RIP Facebook?

CNBC.com:
- Commentary: Why Sovereign Funds Help Global Economy.

USA Today.com:
- Daimler sees high demand for new Smart micro car in US.

Financial Times:
- China is to extend a clampdown on new bank lending into next year because of fears that rising inflation could become unmanageable, according to bankers, officials and economists.

China Daily:
- China’s government introduced new measures to combat land hoarding by developers and increase the supply of housing.

Late Buy/Sell Recommendations
- None of note

Night Trading
Asian Indices are -.25% to +.50% on average.
S&P 500 futures +.35%.
NASDAQ 100 futures +.24%.

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
Macro Calls
Upgrades/Downgrades
Rasmussen Business/Economy Polling
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
- (DSW)/.35
- (NOVL)/.04
- (CMTL)/.50
- (BTH)/.12
- (AZPN)/.11
- (CVI)/.13

Upcoming Splits
- (CAM) 2-for-1

Economic Releases
8:30 am EST
- Final 3Q Non-farm Productivity is estimated to rise 5.9% versus a prior estimate of a 4.9% gain.
- Final 3Q Unit Labor Costs are estimated to fall 1.2% versus a prior estimate of a .2% decline.

10:00 am EST
- Factory Orders for October are estimated unch. versus a .2% gain in September.
- ISM Non-Manufacturing for November is estimated at 55.0 versus 55.8 in October.

Other Potential Market Movers
- The ADP Employment report, Challenger Job Cut report, weekly EIA energy inventory report, weekly MBA Mortgage Applications report, (XLNX) Mid-Quarter Update, BOE Policy Meeting, (BMY) investment meeting, (OREX) analyst luncheon, (ATO) analyst meeting, (XEL) investor meeting, (FTE) investor day, ThinkEquity Alternative Energy Forum, Wachovia Global Real Estate Conference, Lehman Brothers Global Tech Conference, BMO Capital Markets Healthcare Conference, Citigroup Basic Material Conference and UBS Global Media Conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and mining stocks in the region. I expect US equities to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.

Stocks Finish Lower, Led Down by Financials and Homebuilders

Evening Review
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 Stock Quote
In Play