Today's Headlines

Bloomberg:
- Citigroup Inc.(C) Chief Executive Officer Vikram Pandit told employees he doesn't plan to break up the company, aiming to reassure workers as the stock resumed a skid that has erased more than half its value in three days.

- Wal-Mart Stores Inc.(WMT), the world’s largest retailer, unexpectedly announced the retirement of Chief Executive Officer H. Lee Scott after almost nine years at the helm, replacing him with overseas chief Mike Duke.

- President-Elect Barack Obama's transition team is exploring a swift, prepackaged bankruptcy for automakers as a possible solution to the industry's financial crisis, according to a person familiar with the matter.

- The U.S. has a duty to continue with plans to plans to install elements of a missile-defense system in Poland even after a presidential change, the east European country's defense minister said. ``The elections in the United States and the change in administration there shouldn't have any affect on contracts that have already been signed,'' Minister Bogdan Klich told daily Rzeczpospolita in remarks confirmed by the ministry. ``Nothing has changed as far as the missile shield goes.''

- Sandra Manzke, an investor in hedge funds for more than 20 years, wants her peers to band together to stop what she calls “outrageous” behavior in the $1.5 trillion industry. Manzke, 60, who founded Rye, New York-based Tremont Capital Management Inc. in 1985, sent an e-mail this week to 500 wealthy individuals, money managers and fund of funds calling on them to fight high fees and practices such as limiting or suspending client withdrawals. Her e-mail was forwarded to so many people that she’s gotten more than 500 responses, she said. All of them have been positive.

- Hedge funds cut stock holdings by almost two thirds from a year ago, signaling that they are less willing to take risks amid tighter credit and almost $1 trillion in writedowns and losses, Goldman Sachs Group Inc. said. Net holdings of equities decreased to 17 percent from 47 percent a year ago, David Kostin, who leads Goldman's New York- based portfolio strategy team, wrote in a note. ``Hedge funds may have returned closer to their roots as `hedged' investors, less dependent on market direction to produce returns, and migrated away from the levered long strategies that many funds pursued during the upward-trending market of 2002 to 2006,'' the New York-based strategist said. Goldman's 19-stock gauge of companies most-owned by hedge funds tumbled 60 percent this year before today, led by drops of about 90 percent for MGIC Investment Corp. and AK Steel Holding Corp. All but three companies in the gauge retreated more than 40 percent. Hedge funds now own 3.5 percent of U.S. stocks, down from 4.5 percent in the third quarter, he said. Hedge funds' biggest positions are in financial companies, with $85 billion in long positions and $109 billion in short sales, Kostin said.

- Developing nations' borrowing costs rose the most in a month this week, hampering the ability of governments to refinance $1.2 trillion of short-term debt and hastening appeals for international bailouts. The extra yield investors demand to own emerging-market government bonds instead of U.S. Treasuries climbed for an eighth day, to 7.76 percentage points from 6.7 percentage points last week, according to JPMorgan Chase & Co.'s EMBI+ index.

Wall Street Journal:

- An unexpected drop in U.S. electricity consumption has utility companies worried that the trend isn't a byproduct of the economic downturn, and could reflect a permanent shift in consumption that will require sweeping change in their industry. Numbers are trickling in from several large utilities that show shrinking power use by households and businesses in pockets across the country.

MarketWatch.com:

- The Securities and Exchange Commission plans to host a Monday meeting with international regulators to examine whether new regulations in the U.S. and other countries seeking to stop abusive short-selling practices have been effective.

Detroit Free Press:

- The UAW is negotiating the possible elimination of its controversial jobs bank and is considering other concessions to help Detroit's automakers win low-cost loans from Congress, people familiar with negotiations said late Thursday. Union officers from several locals said they did not know if the concession had been made but expected the jobs bank to be ended as part of a package of shared sacrifice when the automakers and UAW President Ron Gettelfinger return to Congress early next month. The jobs bank pays laid-off workers, sometimes for years.

Reuters:
- Intel Corp's (INTC) cut in its fourth-quarter revenue outlook earlier this month was the final revision by the world's top computer chip maker, which is grappling with weakening demand, Chairman Craig Barrett said on Friday. "We've made our forecast for the fourth quarter and are not revising it further," he told reporters on the sidelines of a conference in Lisbon.

Bear Radar

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

Sector Underperformers:
Banks (-7.82%), Homebuilders (-6.73%) and Biotech (-5.11%)

Stocks Falling on Unusual Volume:
STI, WFC, JPM, ADSK, EPD, GPRO, PTRY, SIVB, ATHN, ONXX, ALXN, CELG, BGH, ALX, MTR, NHI, TPL, KSP, FIS and SXL

Stocks With Unusual Put Option Activity:
1) MPEL 2) FL 3) GENZ 4) X 5) AU

Bull Radar

Style Outperformer:
Large-cap Growth (+.81%)

Sector Outperformers:
Energy (+1.58%), Semis (+.87%) and Airlines (+.66%)

Stocks Rising on Unusual Volume:
AU, EW, HUGH, PHLY, GOLD, CME, BMRN, AKAM, INTU, EXPD, AMZN, INFY, DECK, LRCX, HAYN, SIAL, KBW and LII

Stocks With Unusual Call Option Activity:
1) BIIB 2) ADI 3) OTEX 4) TXN 5) WNR

Links of Interest

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Friday Watch

Late-Night Headlines
Bloomberg:
- Fannie Mae and Freddie Mac, the mortgage-finance companies seized by the U.S. government, will suspend foreclosures and evictions over the holidays. The six-week halt will begin Nov. 26, a day before the U.S. Thanksgiving holiday, and last through Jan. 9, the companies said in separate statements today. The hiatus is designed to give servicers more time to implement a streamlined loan modification program for struggling borrowers. “It’s a giant time out,” Paul Miller, an analyst at FBR Capital Markets in Arlington, Virginia, said today in a Bloomberg Television interview. “I wouldn’t be surprised to see this across the board.”

- Emerging market corporate profits will probably decline in 2009 as the global economy slips into recession and lower commodities prices hurt earnings in the region, UBS AG said, citing a survey of UBS analysts' forecasts. UBS analysts now expect earnings of emerging-market companies to drop 6 percent in 2009, compared with a previous estimate of 13 percent growth.

- The Markit iTraxx Japan index traded 54 basis points higher at 380, according to prices from Credit Suisse Group AG. The Markit iTraxx Australia index was quoted 40 basis points higher at 395 in Sydney, Citigroup Inc. data show.

- Komatsu Ltd., the world's second- largest maker of earthmoving equipment, dropped in Tokyo trading after Nomura Securities Co. said demand is ``slightly weaker'' than the company's estimate on a slowdown in emerging nations. Middle East customers ``it appears'' have been cancelling some orders due to financial difficulties, analyst Katsushi Saitou at Nomura said in a report dated yesterday. Falling prices for crude oil and iron ore and other resources might have further slowed demand, he said.

- Powerchip Semiconductor Corp., Taiwan’s largest maker of computer-memory chips, forecast industry supply of DRAM chips will fall as much as 30% in the next two months amid production cuts.

- Dell Inc.(DELL) posted profit that beat analysts' estimates, overcoming a decline in revenue as the computer maker cut jobs and switched to cheaper production methods.

- Gap Inc.(GPS), the largest U.S. clothing retailer, said third-quarter profit climbed 3.4 percent as the retailer reduced markdowns of sweaters, jeans and khaki pants.

- Argentina’s stock market is fading as the state seizure of the nation’s biggest shareholders undermines investor confidence and threatens an equity sell-off. The Argentine Senate last night approved President Cristina Fernandez de Kirchner’s plan to nationalize about $24 billion in private pensions, a move opposition parties called a cash grab and the government said is a way to protect retirees from the worst financial crisis since the Great Depression.

- The Federal Reserve has limited room to cut its target interest rate and may shift the focus of monetary policy more to increasing liquidity, said James Bullard, president of the Federal Reserve Bank of St. Louis. ``At least over the near term, any additional influence through interest rate reductions will be limited, and the focus of monetary policy may turn to quantity measures,'' Bullard said today in a speech in Evansville, Indiana.

Wall Street Journal:

- As the economic signs grow ever more grim, the opportunities for the Obama administration to drive through its agenda actually are getting better. The thing about a crisis -- and crisis doesn't seem too strong a word for the economic mess right now -- is that it creates a sense of urgency. Actions that once appeared optional suddenly seem essential. Moves that might have been made at a leisurely pace are desired instantly. This opportunity isn't lost on the new president and his team. "You never want a serious crisis to go to waste," Rahm Emanuel, Mr. Obama's new chief of staff, told a Wall Street Journal conference of top corporate chief executives this week. He elaborated: "Things that we had postponed for too long, that were long-term, are now immediate and must be dealt with. This crisis provides the opportunity for us to do things that you could not do before."

- The Big Three are on their own for now. Congressional efforts to rescue Detroit's auto makers collapsed Thursday, with lawmakers saying the industry lacked credible plans to return to profitability.

MarketWatch.com:
- Treasury Secretary Henry Paulson on Thursday said he wants to see more hedge fund regulation as part of his proposal for creation of a new systemic risk regulator.

"To ensure the market stability regulator can fulfill its role, large, systemically-important institutions, including hedge funds, should be required to have a charter that would permit some type of oversight," Paulson said.

CNBC.com:
- Senior officials at Citigroup(C) concede that they have to make a strategic change in the firm's direction, including finding a possible merger partner or raising cash in the coming days to arrest a sharp slide in the firm's stock price, senior officials told CNBC.

NY Times:
- Duff Capital Advisors has recently laid off dozens of its employees and is holding off on its plans to raise as much as $1.5 billion just eight months after the hedge fund firm began business, according to people briefed on the actions. The Greenwich, Conn.-based firm was started in March by Philip N. Duff, a former chief financial officer of Morgan Stanley, with $500 million of capital from the New York private equity firm Lindsay Goldberg. At the time, Duff Capital said then that it was in discussions with several financial institutions to provide seed money for its investment strategies, beginning in the past spring.

- Citigroup(C) urged the Securities and Exchange Commission to reinstate the agency’s expired ban on short selling of financial stocks, The Wall Street Journal and Bloomberg News report, citing people familiar with the matter. Citigroup also is urging lawmakers to reinstate the so-called uptick rule, The Journal reports. Earlier Thursday, a prominent corporate law firm, Wachtell, Lipton, Rosen & Katz, repeated its call for the reinstatement of the uptick rule.

- Google(GOOG) is set on Thursday to significantly change the way some people use its search engine. The company is introducing a new feature called SearchWiki that will allow people to modify and save their results for specific Google searches.

BusinessWeek:

- Facebook’s Land Grab in the Face of a Downturn. The social-networking site is moving aggressively to sign up more users around the world while much of Silicon Valley hunkers down.

Financial Week:

- Hobbled hedge funds fleeing trophy buildings.

IBD:

- DeVry(DV): For-Profit Education Company Works To Upgrade Its Offerings.

Reuters:

- Citigroup Inc (C) lost more than one-quarter of its market value on growing worries over whether it has enough capital to withstand billions of dollars of potential losses and despite new support from its largest individual investor. Saudi Prince Alwaleed bin Talal said he plans to increase his stake in Citigroup, the No. 2 U.S. bank by assets, to 5 percent from less than 4 percent, calling its shares "dramatically undervalued."

Financial Times:
- Support is building for an anti-foreclosure plan proposed by Sheila Bair, the head of the Federal Deposit Insurance Corporation, in spite of resistance from the Bush administration that appointed Ms Bair to office. Ms Bair told Reuters on Thursday she expects her agency to be able to "very quickly" obtain money from the $700bn troubled asset relief program (Tarp), although she was still in talks with Hank Paulson, Treasury secretary.

Folha de S. Paulo:

- Cia. Vale do Rio Doce(RIO), the world’s biggest iron-ore producer, laid off 400 workers because of a drop in purchases from Chinese customers. Vale cut the jobs at its copper unit in the state of Para, at its railway unit in Minas Gerais and at it pellet processor in Espirito Santo.

Hindustan Times:

- In a precursor to possible large-scale retrenchment in the construction sector, ACC Concrete Ltd, a subsidiary ACC Ltd, has laid off 190 of its permanent employees, 25 per cent of its total work force, across various locations in India. ACC Ltd, India’s largest cement maker, is a subsidiary of Switzerland’s Holcim, the world’s second-largest cement producer.

Late Buy/Sell Recommendations
Citigroup:
- Upgrading (MYGN) to Buy, target raised to $72.

- Upgrading (BMRN) to Buy, target $22.

- Reiterated Buy on (AMGN), target $66, added to Top Picks Live list.

- Upgraded (LTD) to Buy, target $9.50.

- Reiterated Buy on (LRCX), target $35.

- Upgraded (GPS) to Buy, target $12.

Night Trading
Asian Indices are -2.5% to +3.0% on average.
S&P 500 futures +2.11%.
NASDAQ 100 futures +1.88%.

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Earnings of Note
Company/EPS Estimate
- (ANN)/.01

- (CSIQ)/.54

- (HNZ)/.76

- (SJM)/1.01

Economic Releases
- None of note

Upcoming Splits
- None of note

Other Potential Market Movers
- The Fed’s Evans speaking, Fed’s Plosser speaking, Fed’s Lacker speaking, (DUK) Analyst Meeting, (MHS) Analyst Day, (NSTC) Analyst Day, (ALGN) Analyst Meeting and Bank of America Credit Conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and financial stocks in the region. I expect US equities to open modestly higher and to maintain gains into the afternoon. The Portfolio is 50% net long heading into the day.

Stocks Finish at Session Lows, Weighed Down by Commodity, Hospital, Financial, Insurance, HMO and Alternative Energy Shares

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