Friday Watch

Late-Night Headlines
Bloomberg:
- Countrywide Financial(CFC), the nation’s biggest residential lender, led shares of mortgage companies and homebuilders higher as the US government announced a freeze on some subprime rates.
- Subprime rate freeze is good for mortgage bonds, Moody’s says.
- The yen headed for a second weekly decline against the US dollar and the euro as concerns eased that credit-market losses will spread, encouraging purchases of higher-yielding assets funded in Japan.
- Japan’s third-quarter expansion was slower than the government initially reported, and growth may lose more steam because of a slump in domestic housing construction and waning US demand. The world’s second-largest economy grew an annualized 1.5% in the third quarter. The US economy grew 4.9% during the same three month period.
- JetBlue Airways(JBLU) will begin offering free in-flight e-mail and instant-message services next week through a partnership with Yahoo!(YHOO) and Research In Motion(RIMM).

Wall Street Journal:
- AT&T(T) expects a revenue increase of at least 20% next year in the Asian-Pacific region, citing expansion by clients in countries such as China and India.
- News Corp.(NWS/A) Duo Set To Lead Dow Jones As Zannino Resigns.

MarketWatch.com:
- MarketWatch CEO of the Year 2007: McDonald’s(MCD) Jim Skinner.
- Another bear growls at China. Hutchinson sees big debt, and big problems, ahead for Beijing. Is a China crash coming? The top-performing China letter continues cautious.
- Google(GOOG) is forging ahead on a second spectrum-related initiative, by filing its own testing results for so-called “white spaces” wireless technology with the Federal Communications Commission.
- Will ‘Golden Compass’ controversy hurt the box office? New Line film is subject of protest from Catholic group for atheist themes.

BusinessWeek.com:
- After months of betting on an increase in oil prices, some speculators now see a new downward trend.

CNNMoney.com:
- Lilly projects seven new blockbusters for 2008.

CNBC.com:
- 10 Top Investing Blunders.

washingtonpost.com:
- Highlights of Mortgage Plan.
- Details on the House Energy Bill.

Barron’s:
- Carlos Slim May Trade CompUSA for Circuit City.

USA Today.com:
- Airport face-lifts smooth out wrinkles for fliers.

Reuters:
- Short interest on the NYSE rose 3.31% in late November, the exchange said on Thursday, suggesting an increase in bearish sentiment in the stock market. Moreover, short interest rose 87.2% in shares of Freddie Mac(FRE), 83.9% in shares of Nordstrom(JWN), 82.2% in shares of Discover Financial Services(DFS) and over 100% in shares of Fannie Mae(FNM).

DigiTimes:
- The dynamic random access memory market may improve next year as the increase in global output slows, citing Powerchip Semiconductor Corp. Chairman Frank Huang. Inventories in the distribution network “aren’t high,” Huang said. Powerchip is Taiwan’s biggest maker of DRAMs.

Late Buy/Sell Recommendations
Citigroup:
- RIMM continues to be our top pick in North America handsets. Our analysis shows only 14% of the subscriber base is in financial services. According to the Wall Street Journal JetBlue Airways will begin a trial Tues Dec. 11^th to provide free in-flight email and messaging via a WiFi connection on a specially equipped A320. JetBlue said it may install the service across its entire fleet if passenger response is positive. The in-flight WiFi service will be available to WiFi laptops and WiFi-enabled BlackBerries. We view this as an incremental positive for RIMM. Maintain Buy, target $140.
- Reiterated Buy on (HON), target $68.

Night Trading
Asian Indices are +.50% to +.1.25% on average.
S&P 500 futures -.22%.
NASDAQ 100 futures -.20%.

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
- (HITK)/-.05
- (KWD)/.13

Upcoming Splits
- (FLIR) 2-for-1
- (GRC) 5-for-4
- (ROL) 3-for-2

Economic Releases
8:30 am EST
- The Change in Non-farm Payrolls for November is estimated at 80K versus 166K in October.
- The Unemployment Rate for November is estimated at 4.8% versus 4.7% in October.
- Average Hourly Earnings for November are estimated to rise .3% versus a .2% gain in October.

10:00 am EST
- Preliminary Univ. of Mich. Consumer Confidence for December is estimated at 75.0 versus 76.1 in November.

3:00 pm EST
- Consumer Credit for October is estimated to rise to $5.0 billion versus $3.7 billion in September.

Other Potential Market Movers
- The Lehman Brothers Technology Conference, (SON) analysts’ meeting, (HSC) analysts conference, (RRGB) analyst meeting and (NVO) analyst meeting could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by automaker 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.

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

Stocks Ripping Higher into Final Hour on Less Economic Pessimism, Short-Covering

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Medical longs, Semi longs, Computer longs, Internet longs, Biotech longs and Software longs. I took some more profits in my (TLT) long and a trading long and then finished adding (OMCL) long today, thus leaving the Portfolio 100% net long. The overall tone of the market is very positive today as the advance/decline line is substantially higher, almost every sector is rising and volume is around average. Investor anxiety is around average. Today’s overall market action is very bullish. Notwithstanding many pundits’ attempts to paint retail sales as bleak, the ICSC reported today that November retail sales rose 3.5% versus estimates of a 2.4% increase. WMT, ANF, ARO, ANN, BJ, BONT, DDS, JOSB, GPS, KSS, ROST, BKE, COST, M, JWN and SKS all beat estimates, as well. The 50-month average of ICSC retail sales increases is 3.5%. I continue to believe overall retail sales will exceed estimates for the entire holiday shopping season. The average 30-year mortgage rate plunged again this week to 5.96% from 6.1% the prior week. This is now down 78 basis points from June highs. As mortgage rates continue to fall, refis should help take some pressure off the overall housing situation as troubled homeowners move from arms to fixed-rates mortgages. The JPMorgan Emerging Market Bond Index is .94% higher over the last week, while the Bear Stearns High-Yield Index is .68% higher over that period. Fitch said that the subprime mortgage plan may stabilize mortgage defaults. Whether you agree with the government’s plan or not, investors are very pleased with it based on the action in the financials. The (XLF) is 11% higher in less than two-weeks. (ISRG) hit another new all-time high today. The stock is up 269% year-to-date and remains my third largest long position, behind Google(GOOG) and (AAPL). I expect US stocks to trade mixed-to-higher into the close from current levels on less economic pessimism, bargain-hunting and short-covering.

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.