Today's Headlines

Bloomberg:
- President Bush today announced a freeze on some subprime mortgage rates in an effort to stop a wave of foreclosures undoing the six-year expansion.
- Some ABX indexes rose, suggesting the perceived risk of subprime-mortgage bonds defaulting fell, before the scheduled release of a US plan to freeze interest rates of adjustable-rate loans.
- The Organization for Economic Cooperation and Development said the Federal Reserve and European Central Bank should avoid cutting interest rates, predicting the world economy will weather the fallout from the US housing slump.
- Repackaging “valued assets” that underlie collateralized debt obligations will become a “great opportunity” for Wall Street, said Howard Lutnick, chairman and CEO of Cantor Fitzgerald LP. (video)
- Crude oil is bouncing $1.90/bbl in NY after a government report showed that US supplies of natural gas, a competing fuel, fell the most since April.
- Lead is falling to a five-month low in London on speculation an Australian pit with the capacity to account for as much as 3% of world mine supply will restart production.

Wall Street Journal:
- The three banks assembling a “super fund” aimed at helping to ease the global credit crunch are scaling back its size due to a lack of interest from financial firms that are supposed to benefit from the plan.
- IBM(IBM) scientists described a “significant milestone” in speeding up computer processors by using optical signals on a chip instead of electronic signals.
- Michael Vranos blew it with one of his big hedge funds this year. Now, he may ask investors for a second chance.
- Watching What You See on the Web. New Gear Lets ISPs Track Users and Sell Targeted Ads; More Players, Privacy Fears.

VarietyAsiaOnline.com:
- China sets ban on Hollywood films.

NY Post:
- AQR Capital Management LLC’s flagship AQR Absolute Return fund fell 5.8% in November. The $4 billion fund’s return is down 11.9% for the year. AQR has about $36 billion under management in quantitative strategies that use computers to detect investment opportunities.
- NBC boss Jeff Zucker is expected to make big cuts on the newsgathering and operational side of the company’s news division, including eliminating an entire level of MSNBC’s management team.

Reuters:
- The United Arab Emirates will keep its dollar peg unchanged for the “foreseeable future,” citing the country’s central bank governor.

International Oil Daily:
- Oman will boost daily crude oil output by 50,000 barrels to about 800,000 barrels in 2008, citing the country’s Oil Minister Mohammed al-Rumhy.

Bear Radar

Style Underperformer:

Large-cap Growth (+.41%)

Sector Underperformers:

Utilities (-.96%), Drugs (-.22%) and Retail (-.11%)

Stocks Falling on Unusual Volume:

FMD, PAY, FDO, UTIW, ISSC, TRAK, CHNR, CMTL, ZUMZ, SYNO, RYAAY, EVVV, SVVS, TGT and SRP

Jobless Claims Fall, Unemployment Still Low

- Initial Jobless Claims fell to 338K versus estimates of 335K and 353K the prior week.

- Continuing Claims fell to 2599K versus estimates of 2620K and 2658K prior.

BOTTOM LINE: The number of Americans filing first-time claims for unemployment benefits fell last week, Bloomberg reported. The four-week moving-average of claims rose to 340,250 versus 335,500 the prior week. The unemployment rate among those eligible to collect benefits, which tracks the US unemployment rate, remained at a historically low 2%. The ADP Employer Services report yesterday showed private companies added 189,000 jobs in November, more than three times the number economists had projected, versus 106,000 the prior month. I expect non-farm payrolls for November, which are released tomorrow, to come in around estimates of 80,000. The unemployment rate should also come in around estimates of 4.8%. I continue to believe the job market will remain healthy over the intermediate-term without generating substantial unit labor cost increases.

Bull Radar

Style Outperformer:

Small-cap Value (+1.06%)

Sector Outperformers:

Homebuilders (+3.57%), Airlines (+1.92%) and Semis (+1.23%)

Stocks Rising on Unusual Volume:

FDG, FLS, TRB, GEF, GME, GTI, KFY, CAG, DSG, HOKU, PTIE, THRX, CLNE, RICK, ALOG, BEAV, ZEUS, CEPH, CRMT, CASY, CETV, FCSX, FSNM, HOFT, PWRD, CPRT, RSTI, SNPS, CFC, LFG, MBI, ENG, HES, PDLI, MEI and GMO

Links of Interest

Market Snapshot Commentary
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Sector Performance
WSJ Data Center
Top 20 Biz Stories
IBD Breaking News
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In Play
NYSE Unusual Volume
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Dow Jones Hedge Fund Indexes

Thursday Watch

Late-Night Headlines
Bloomberg:
- The US dollar traded near an almost two-month high versus the pound as traders increased bets the Bank of England will cut its benchmark interest rate today.
- BP Plc(BP), the world’s third-largest oil refiner, and Calgary-based Husky Energy agreed to form partnerships for production and processing of crude from Alberta’s oil sands.
- Prudential Financial(PRU) may have its credit rating upgraded by Moody’s Investors Service.
- Crude oil fell for a third day in NY, touching a six-week low, on worries over slowing global demand and a rally in the US dollar.
- Jeffrey Davis, chief investment officer at Lee Munder Capital Group, is ‘bearish’ on oil prices.
- The risk of companies and governments in the Asia-Pacific region defaulting on their debt declined the most this week after US regulators and banks agreed to freeze interest rates on subprime mortgages for five years.
- The yen declined for a second day against the dollar after US employment and factory reports signaled the world’s biggest economy may avoid recession.
- Elpida Memory, Japan’s largest maker of computer memory chips, rose the most in almost two years in Tokyo trading, leading Asian semiconductor shares higher, on optimism prices are recovering.
- General Motors(GM), the world’s largest automaker, plans to invest as much as $5 billion in China over the next five years to expand its share of the world’s fastest-growing major car market.

Wall Street Journal:
- Bush to Unveil Aid to Homeowners. ‘Starter’ Mortgage Rates Will Be Frozen for 5 Years.

NY Times:
- Ethanol Advocates Push for More in Regular Cars.

MarketWatch.com:
- In 2004, short sellers made money betting against the stock of Cal-Maine Foods, the largest US egg producer. Short sellers – those who bet a stock will fall, not rise – are looking for another pay off.

BusinessWeek.com:
- Ticketmaster’s Hail Mary Pass. Amid IAC’s breakup drama, the ticketing giant wants to be the NFL’s official reseller.
- Open Networks Could Spark a Gadget Boom. As wireless providers increasingly let outside devices run on their networks, a slew of new Web-enabled electronics could hit the market.

CNNMoney.com:
- Saudis may supply more oil on sly.

IBD:
- Unknown Alt Energy Field Heats Up.

USA Today.com:
- Thinking of switching to a Mac? Here’s why you might.
- Adobe’s(ADBE) new CEO zeroes in on Web.
- AT&T(T) flings cellphone network wide open. Starting immediately, AT&T customers can ditch their AT&T phones and use any wireless phone, device and software application from any maker – think smartphones, e-mail and music downloading. And they don’t have to sign a contract.
- A performance shift is underway in the stock market, where growth stocks that have what it takes to post steady streams of profits in tough times are posting better gains than value stocks for the first time in years. Many Wall Street strategists say the trend is likely to persist into the new year and beyond. Historically, when major shifts like this in the market occur, they tend to last three to seven years, says Jeffrey Kleintop, chief market strategist at LPL Financial Services.

Reuters:
- “Opportunistic” BlackRock thrives in credit turmoil.
- The SEC, which recently stepped up probes of hedge funds, is looking at whether banks and others are investing in hedge funds to share inside information, an SEC official and securities lawyers said on Wednesday.

Financial Times:
- The number of computer attacks from China – some of which use Chinese government websites to download malicious code – has risen sharply in recent months, say private cyber-security specialists.
- US pressure on Beijing to impose financial sanctions of Tehran over its nuclear program is showing signs of yielding results, with Iranians who import goods from China complaining about restrictions on trade.

South China Morning Post:
- Casino revenue in Macau increased 56% to a monthly record of $1.1 billion in October, helped by a surge in visitors from China, citing Macau Statistics.

Late Buy/Sell Recommendations
Citigroup:
- Maintain Buy on (WDC), target $33.
- Reiterated (GILD) Top Pick in large-cap biotech arena.
- Reiterated Buy on (EBAY) and raised estimates, target $49

Night Trading
Asian Indices are +.25% to +1.25% on average.
S&P 500 futures +.34%.
NASDAQ 100 futures +.44%.

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Earnings of Note
Company/EPS Estimate
- (UTIW)/.34
- (KFI)/.33
- (MOV)/.66
- (TOL)/-.70
- (TTC)/.14
- (NSM)/.31
- (SNPS)/.36
- (ESL)/.78
- (PAY)/.39

Upcoming Splits
- (CAM) 2-for-1

Economic Releases
8:30 am EST
- Initial Jobless Claims for this week are estimated to fall to 335K versus 352K the prior week.
- Continuing Claims are estimated to fall to 2620K versus 2665K prior.

10:00 am EST
- ICSC Chain Store Sales for November are estimated to rise 2.4% versus a 1.6% increase in October.

Other Potential Market Movers
- The BOE Policy Meeting, ECB Policy Meeting, 3Q Mortgage Delinquencies, weekly EIA natural gas inventory report, (PHG) analysts’ day, (FE) analyst meeting, (PRS) analyst meeting, (PH) investor day, (KNXA) analyst meeting, (SCUR) investor day, (SVVS) analyst meeting, (SFI) investor day, Deutsche Bank Healthcare Tech Day, Stifel Nicolaus Financial Institutions Conference, CIBC Communications Software Conference, Citigroup ePayments Day, ThinkEquity Alternative Energy Forum and Lehman Brothers Global Tech Conference could also impact trading today.

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