Today's Headlines

Bloomberg:
- Man Group Plc, the largest publicly traded hedge-fund manager, fell the most in London trading since it went public in 1994 after saying that assets under management declined almost 13 percent since September.

- Farallon Capital Management LLC's biggest hedge fund fell 23.8 percent this year through October, according to two people familiar with the matter, all but ensuring its first annual loss since opening 22 years ago. The firm, which oversees $30 billion, has been selling stocks to meet expected clients withdrawals and invest in distressed debt, said the people, who asked not to be identified because the information is private. The flagship Farallon Capital Partners LP fund increased its cash holdings by 30 percentage points.

- Citigroup’s chief US equity strategist favors financial, retail stocks and would avoid commodities. (video)

- Crude oil fell to a 19-month low on signs that fuel demand will contract as the global economy slows.

- The euro fell against the dollar, yen and pound after European Central Bank President Jean-Claude Trichet said the economy ``weakened significantly'' and the International Monetary Fund cut growth forecasts for the region.

- European Central Bank President Jean- Claude Trichet said he can't rule out a further reduction in interest rates after today's half-point cut because the global financial crisis may lead to an extended economic slump.

Wall Street Journal:

- The weak economy, congressional races that empowered moderates and President-elect Barack Obama's choice of business-friendly advisers suggest Democrats will go slow on controversial labor and regulatory issues. A bill that would make it easier for unions to organize workers, efforts to regulate greenhouse-gas emissions, and a slew of contemplated taxes will likely take a back seat to broader economic issues for now, Democratic operatives say.

- For more than a decade, Mr. Obama has cultivated ties with a growing circle of black power brokers who are poised -- and eager -- to wield greater national influence. Some of these insiders stand to gain new status in an Obama administration, and many more in law firms, big corporations and on Wall Street.

- Swing Voters Don’t Want Big Government. Survey results Barack Obama and the GOP would be wise to heed. Barack Obama and congressional Democrats won big on Tuesday night, but they should not mistake their victory for a big-government mandate. The evidence tells a very different story.

CNBC.com:

- Hedge fund results seen going from bad to worse.

NY Times:
- I.B.M.’s(IBM) chief executive, Samuel J. Palmisano, is proposing a technology-fueled economic recovery plan that calls for public and private investment in more efficient systems for utility grids, traffic management, food distribution, water conservation and health care.

- Small-Business Owners Lobby to Cut Credit Card Fees.

FINalternatives:

- Hedge Funds Hone In On Islamic Investors. Faced with increasingly wary Western investors, hedge funds are setting their sights on untapped capital pools in the Middle East. Wealthy families from the region—as well as sovereign wealth funds flush with petrodollars—are looking for sources of investment returns outside the region, and are growing more receptive to alternative investments like hedge funds.

Medpage Today:
- Eggs and high-fat dairy products are on the menu for eventual heart failure and whole-grain cereals may help ward it off, found a large observational cohort study. Whole-grain foods included oatmeal or grits, whole-grain cold cereal, and whole-grain or dark bread.

Reuters:
- The first touch-screen BlackBerry smartphone will go on sale in Britain on Nov. 14, and thousands of customers have already pre-ordered the device, exclusive UK sales partner Vodafone (VOD) said on Thursday.

Globe and Mail:
- Canadian Prime Minister Stephen Harper is proposing a climate-change pact with US President-elect Barack Obama that would protect Alberta’s oil sands projects from potential new US rules. A deal between the two nations would adopt common emissions standards while promoting the oil sands. Obama has condemned US reliance on so-called “dirty oil,” while his advisers have specifically mentioned the oil sands.

Toronto Star:

- Toronto Home Sale Slump 35% in October.

Bear Radar

Style Underperformer:
Mid-cap Growth (-5.17%)

Sector Underperformers:
Coal (-14.44%), Construction (-10.48%) and Gaming (-10.17%)

Stocks Falling on Unusual Volume:
DB, WFC, OZRK, HURC, CRMT, DRYS, FCN, CRL, SRX, DOX, CXW, TM, GLP and CVC

Stocks With Unusual Put Option Activity:
1) SJM 2) ONXX 3) LVS 4) TM 5) CYPB

Bull Radar

Style Outperformer:
Small-cap Value (-1.42%)

Sector Outperformers:
Hospitals (+.18%), Airlines (-.13%) and Retail (-.55%)

Stocks Rising on Unusual Volume:
WFMI, CEDC, ICFI, CVTX, VOLC, VTIV, CHSI, ANSS, CPLA, IPGP, AFAM, RSTI, YHOO, SHOO, LMIA, NOVN, COST, TWGP, ATVI, OSIR, TKG, WAL and BKE

Stocks With Unusual Call Option Activity:
1) SJM 2) NVDA 3) DIS 4) WFMI 5) PCLN

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Thursday Watch

Late-Night Headlines
Bloomberg:
- Clarium Capital Management LLC, the hedge-fund firm run by PayPal co-founder Peter Thiel, slumped 18% in October, its biggest monthly decline, because of losses on bonds. The firm’s Clarium LP fund reported a year-to-date loss of about 4%, wiping out the 58% gain it made in the first half, according to estimates given to investors. Clarium had 81% of its money in positions used by investors when they expect a widening spread, or gap, between bond yields, such as for 10-year Treasury notes and 30-year bonds. Instead, yield spreads narrowed in October. Clarium borrowed $4.40 for ever $1 in equity capital invested as of Oct. 31, compared with $3.90 for every $1 a week earlier.

- Investors pulled a record 14.3 billion reais from Brazilian hedge funds in October as the worst month for the country’s stocks in a decade stalled returns. That brings withdrawals from hedge funds to $48.9 billion reais this year.

- Prices for power-station coal may fall further because of potential over-supply and as rates return to being driven by demand, currency and cost factors rather than by speculative investors, The McCloskey Group said. Record prices seen earlier this year were driven by ``speculative play by the banks and hedge funds'' rather than by the fundamentals, which are ``weak,'' Gerard McCloskey, founder of the consulting firm, said today in a presentation released in advance of a conference in Sydney. Prices for thermal coal exported from Australia's Newcastle port, the world's biggest export harbor for the fuel, were at $100.83 a ton in the week ended Oct. 31, down from a record $194.79 in July, according to the globalCOAL NEWC Index. The International Monetary Fund predicts the world's advanced economies will grow next year at the slowest pace since 1982.

- Russian President Dmitry Medvedev wasted little time in laying down his first challenge to Barack Obama. Hours after Obama won the U.S. presidential election, Medvedev said yesterday he'd put short-range Iskander missiles in Kaliningrad, a region wedged between Poland and Lithuania, to ``neutralize'' a planned U.S. missile-defense system. A radio- jamming installation there will also be aimed at elements of the U.S. system in Poland and the Czech Republic, he said.

- Cisco Systems Inc.(CSCO), the world's largest maker of networking equipment, said first-quarter sales rose at the slowest pace in three years and revenue this quarter will drop as the slumping economy crimps customers' budgets. Second-quarter sales will decline as much as 10 percent from a year earlier, Chief Executive Officer John Chambers said today on a conference call. The shares sank 5.6% in late trading.

- Wells Fargo & Co.(WFC), the biggest bank on the U.S. West Coast, plans to sell $10 billion in stock to fund the purchase of Wachovia Corp. and said losses from the acquisition will be less than previously expected.

- News Corp.(NWS/a), the media company controlled by Rupert Murdoch, cut its fiscal 2009 forecast, saying profit will decline at least 13 percent because of tumbling advertising sales.

- Whole Foods Market Inc.(WFMI), the largest U.S. natural-foods grocer, received a $425 million equity investment from Leonard Green & Partners LP after reporting its eighth straight drop in profit and lowering its 2009 sales forecast. The shares surged 22 percent in late U.S. trading after the Austin, Texas-based retailer said it will sell preferred stock equal to a 17 percent stake in the company. The initial conversion price of $14.50 a share is 41 percent more than where the stock closed today.

- The U.S. Energy Department said today it has set the interim rules for how automakers can apply for as much as $25 billion in federal loans to help cover the costs of producing more energy-efficient vehicles.

- The euro fell for a second day against the dollar on speculation the European Central Bank will follow an expected interest-rate cut today with further reductions to revive the region's shrinking economy.

- One day after a narrow majority of Californians voted to outlaw gay marriages, the cities of San Francisco and Los Angeles and the American Civil Liberties Union asked the state's high court to invalidate the ballot measure. California's Proposition 8, which won in yesterday's election with 52 percent of the vote, amends the state constitution to allow marriage only between a man and a woman. About 18,000 same-sex couples have married since June.

- Former Senator Tom Daschle and Kansas Governor Kathleen Sebelius are contenders for U.S. health secretary under Barack Obama. Their names were cited by people in contact with the president-elect's health-care advisers. Obama has promised to cut medical costs and make affordable insurance available to everyone. The chief of the Health and Human Services Department may play a key role in overhauling the health-care system.

Wall Street Journal:
- Congressional Democrats signaled plans to use their momentum from Tuesday's electoral victory to quickly pursue big plans to tackle economic woes, including doubling planned aid to U.S. auto makers and redrawing the regulation of financial companies.

- Organized labor sees a historic opportunity with Tuesday's election and is counting on the incoming Obama administration to back its agenda in what promises to be a landmark battle with business.

FINalternatives:
- Barack Obama, who enjoyed the substantial financial backing of the hedge fund industry and many of its top players, has taken a bellicose tone with the industry on the campaign trail.

Reuters:

- Goldman Sachs Group Inc (GS) notified roughly 3,200 employees this week that they have been laid off, part of previously reported plans to slash 10 percent of the firm's global work force amid slumping markets, people familiar with the situation said Wednesday.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (WW), target $57.

- Upgraded (SOV) to Buy, target $4.70.

Night Trading
Asian Indices are -5.75% to -2.0% on average.
S&P 500 futures -.87%.
NASDAQ 100 futures -1.89%.

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Earnings of Note
Company/EPS Estimate
- (GBE)/.04

- (MIC)/.48

- (WMB)/.63

- (WRC)/.74

- (DYN)/.12

- (WEN)/.05

- (FTO)/.70

- (QCOM)/.57

- (DIS)/.49

- (VRSN)/.26

- (IRF)/-.05

- (CBG)/.23

- (GNW)/.53

- (FLR)/.91

- (BBI)/-.15

- (AN)/.28

- (CXW)/.31

- (CVC)/.12

- (ONXX)/.02

- (NVDA)/.11

- (PSA)/1.28

- (BUD)/1.06

- (BRL)/.71

- (BX)/.05

- (PCLN)/2.09

- (EP)/.34

- (DTV)/.34

- (BE)/-.12

- (CEG)/.90

Economic Releases
8:30 am EST

- Preliminary 3Q Non-farm Productivity is estimated to rise .7% versus a 4.3% gain in 2Q.

- Preliminary 3Q Unit Labor Costs are estimated to rise 3.0% versus a -.5% decline in 2Q.

- Initial Jobless Claims for last week are estimated to fall to 477K versus 479K the prior week.

- Continuing Claims are estimated to rise to 3743K versus 3715K prior.

Upcoming Splits
- None of note

Other Potential Market Movers
- The Fed’s Warsh speaking, ICSC Chain Store Sales, weekly EIA natural gas inventory report, (CTV) financial analyst conference, (ILMN) analyst day and (SRP) analyst meeting could also impact trading today.

BOTTOM LINE: Asian indices are sharply lower, weighed down by commodity and financial stocks in the region. I expect US equities to open modestly lower and to maintain losses into the afternoon. The Portfolio is 75% net long heading into the day.

Stocks Finish Substantially Lower, Weighed Down by Commodity, REIT, Construction and Financial Shares

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