Today's Headlines

Bloomberg:

- Apple Inc.(AAPL) founder and Chief Executive Officer Steve Jobs is prone to fits of passion, table pounding and screaming. Tim Cook, who will oversee the company while Jobs takes medical leave, never raises his voice. Still, Cook’s management style won’t be a shift for employees. He’s been quietly running the company for several years, said Mike Janes, who worked with the executive for five years at Apple. “Steve is the public face of Apple and nothing beats when he goes out and says, ‘Ta-da,’” said Janes, who ran Apple’s online store. “But at the end of the day, someone has to take all those amazing product designs and turn them into that big pile of cash you see in the company’s bank account. That’s Tim.”

- Russia may have a $124 billion budget deficit this year if the price of Urals crude averages $32 a barrel and the average exchange rate is 34 rubles to the dollar. With $32 oil, budget revenue would be 5.6 trillion rubles and inflation would rise to 15% for the year, citing people “close to the government.”

- Russia plans to spend about $124 billion to rearm the military through 2011, citing Prime Minister Vladimir Putin.

- Jan de Laat, global head of energy, trade and commodity at Rabobank Internatinoal, says oil may fall below $30 a barrel. (video)

- The Organization of Petroleum Exporting Countries, supplier of more than 40 percent of the world’s oil, said demand for its crude will fall 4.2 percent this year as the deepening recession reduces spending on fuels. Consumption of OPEC’s crude will shrink 1.4 million barrels a day to 29.5 million barrels a day, according to a monthly report from the producer group today. That level of demand is 720,000 barrels less than it predicted last month. OPEC also shaved its world oil demand estimate for 2009 to 85.66 million barrels a day.

- A group led by Paul Volcker, an adviser to President-elect Barack Obama, called for a regulatory crackdown that would curtail risk-taking by systemically important financial institutions and limit their share of deposits.

- Federal Deposit Insurance Corp. Chairman Sheila Bair said today said she would be “very surprised” if the government took over any large U.S. banks. “I’d be very surprised if that happened,” Bair told reporters in New York, responding to a question about whether the agency would have to nationalize any large banks.

- President-elect Barack Obama’s administration will use $50 billion to $100 billion in financial-rescue funds to ease the mortgage-foreclosure crisis, his top economic adviser said.

- Attorney General-designate Eric Holder called waterboarding a form of illegal torture and promised to restore the credibility of a Justice Department he described as “badly shaken” by “improper political interference.” At Senate confirmation hearings, Holder signaled that President-elect Barack Obama will suspend military tribunals used to try suspected war criminals at Guantanamo Bay, Cuba. The tribunals must be “substantially revamped” to provide defendants with more due process and ensure fair treatment for suspects, he said. Holder also pledged to the Senate Judiciary Committee that he would “protect the American people from terrorism” while adhering to “the letter and the spirit of the Constitution.”

Wall Street Journal:

- International Business Machines Corp.(IBM) said it plans to open a new remote computer-services center in Dubuque, Iowa, that will employ up to 1,300 people by the end of 2010. IBM, which has been criticized in the past for moving jobs to India and other offshore locations, said the Dubuque site would be its biggest new U.S. facility in 10 years.

CNBC.com:
- President-elect Barack Obama should cut all taxes on savings by the US middle class to help recharge the investment pool, former Republican presidential candidate Mitt Romney said.

USA Today:

- Tired of forms? IRS expands free online filing program.

LA Times:

- After buying Washington Mutual Bank last fall in a government-backed deal, JPMorgan Chase & Co.(JPM) intends to discard the giant thrift's brand name in the spring and to add branches in California this year despite the ailing economy. New York-based JPMorgan, which currently has no retail presence in California, will rebrand the 708 WaMu branches in California with Chase's octagonal blue logo on March 30, JPMorgan Chief Executive Jamie Dimon said in Los Angeles on Wednesday.

Fox Business:

- Bank of America (BAC) will receive $15 billion in additional bailout money from the U.S. government to help complete its merger with Merrill Lynch, a source told FOX Business on Thursday.

Vedomosti:

- Russia cut its 2009 oil forecast to $40/bbl.

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Etemaad:

- Iran’s former President Mohammad Khatami, said Mahmoud Ahmadinejad’s government has made mistakes and should acknowledge them. “If current officials want to participate in the coming elections and get the people’s vote it’s to their benefit to admit the path they took was wrong,” Khatami said. The rise of oil prices in past years hasn’t resulted in increased production or decreased poverty, said Khatami, who has indicated he may run himself in the June 12^th race.

Bear Radar

Style Underperformer:
Small-cap Value (-3.32%)

Sector Underperformers:
Banks (-8.1%), Coal (-4.43%) and Hospitals (-3.34%)

Stocks Falling on Unusual Volume:
WFC, ZION, CMA, USB, APA, TRMB, LEAP, PWRD, ADSK, ALGT, AAPL, SEPR, ATHR, PPDI, MA, CVH, HBC, ISH and RWT

Stocks With Unusual Put Option Activity:
1) ADSK 2) UBS 3) SHW 4) DKS 5) TWX

Bull Radar

Style Outperformer:
Large-cap Growth (-2.06%)

Sector Outperformers:
Computer Services (-.41%), Retail (-.58%) and Computer Hardware (-.61%)

Stocks Rising on Unusual Volume:
RAI, HRB, STO, OZRK, WYE, JPM, BRLI, ASEI, AVAV, ASML, DLTR, AXYS, ECL, APH, CLC and FRX

Stocks With Unusual Call Option Activity:
1) SQNM 2) EMR 3) JNPR 4) CRM 5) CX

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Thursday Watch

Late-Night Headlines
Bloomberg:

- Hedge-fund assets fell 48 percent in 2008 because of investment losses and client defections, lowering fees earned by most managers, according to TrimTabs Investment Research and BarclayHedge. Assets slumped to $998.4 billion at the end of December from $1.92 trillion a year earlier and were at their lowest level since July 2004, when they stood at $976.7 billion, the firms said in a statement today. Hedge-fund investors withdrew a record $148.8 billion in December. “Approximately two-thirds of industry revenue comes from performance fees and we estimate that 81 percent of hedge funds were under water last year,” Charles Biderman, chief executive officer of Sausalito, California-based TrimTabs said in the statement.

- Nortel’s Bankruptcy is ‘Blow to the Canadian Psyche,’ Investors Say.

- Foreign direct investment in China, the world’s fastest-growing major economy, fell 5.7 percent to $5.98 billion in December from a year earlier. The CSI 300 stock index has tumbled 66 percent in the past year, house prices in the nation’s 70 major cities fell for the first time on record in December, and exports are waning because of recessions in the U.S. and Europe. “Multinationals will become even more cautious in expanding,” said Ma Yu, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation in Beijing. “A lot of the foreign investment that rushed to China over the past few years to gain from a stock and property boom is leaving.” The number of new companies set up by U.S. investors in China fell 32 percent in the first 11 months of last year, according to government data. For European investors, the decline was 23 percent.

- Hedge-fund assets fell a record 36 percent to $1.84 trillion in 2008 as tumbling global markets prompted investor withdrawals and fund liquidations, according to industry researcher HedgeFund.net. Hedge funds lost $512 billion through withdrawals and fund closures, while performance losses totaled $535 billion, the New York-based unit of Channel Capital Group Inc. said in an e-mailed statement. Assets managed by the funds plunged from a peak of $2.97 trillion in the second quarter of the year, said HedgeFund.net, whose database includes more than 8,200 hedge funds, fund of funds and managers that trade futures, known as commodity trading advisers or CTAs. Withdrawals and liquidations totaled $221 billion in December.

- Israeli officials head to Cairo today to consult on an Egyptian cease-fire proposal that could end a military operation against Hamas in the Gaza Strip that has reached its 20th day.

- Bank of America Corp.(BAC), the biggest U.S. bank by assets, may get more aid from the U.S. government to help absorb losses tied to this month’s purchase of Merrill Lynch & Co., three people familiar with the matter said.

- Apple Inc.(AAPL) Chief Executive Officer Steve Jobs, who said this month that he is being treated for a nutritional ailment, will take a medical leave of absence through the end of June. The shares fell 6.4 percent. Chief Operating Officer Tim Cook, who filled in during Jobs’s 2004 medical leave, has taken over Apple’s day-to-day operations, the Cupertino, California-based company said today in a statement. Jobs said he will remain involved in major strategic decisions. “During the past week I have learned that my health- related issues are more complex than I originally thought,” Jobs said in the statement. “In order to take myself out of the limelight and focus on my health, and to allow everyone at Apple to focus on delivering extraordinary products, I have decided to take a medical leave of absence.” Apple fell $5.48 to $79.85 in extended trading after closing at $85.33 on the Nasdaq Stock Market.

- An Indian economic recovery may be delayed as alleged fraud at Satyam Computer Services Ltd. undermines investment, one of two key growth drivers. “The financial irregularities at Satyam will deal a further blow to investor sentiment at a time when global and domestic risk appetite is already depressed,” said Tehmina Khan, an economist at Capital Economics Ltd. in London. “Overseas investors will be even more wary of returning to India.” The loss of confidence may make it harder for Indian companies to secure borrowings from overseas to fund investment, which accounted for about one third of economic growth in the quarter to Sept. 30. Some foreigners are already heading for the door. Overseas funds have sold 18.77 billion rupees ($384 million) of local shares since Satyam’s Raju admitted to the fraud, compared with purchases worth 9.75 billion rupees between Jan. 1 and Jan. 6, according to data from the Securities & Exchange Board of India.

- Two New Mexico pension funds lost $90 million investing in toxic debt sold by a firm whose employees and spouses contributed at least $15,100 to Governor Bill Richardson’s presidential campaign, according to a whistleblower suit unsealed today. Frank Foy, the former chief investment officer of New Mexico’s public schoolteachers’ fund, alleges that he was pressured by a Richardson appointee to purchase $50 million in collateralized debt obligations from Chicago-based Vanderbilt Capital Advisors LLC, according to a suit filed in State District Court in Santa Fe. New Mexico’s State Investment Council bought $40 million of the securities. The suit seeks to recover $300 million for New Mexico taxpayers. The investments proved “worthless,” the suit said. “The defendants sold the state of New Mexico a worthless combination of liars’ loans, lethal leverage and toxic waste,” the complaint, filed July 14, said. “The pressure to invest in Vanderbilt was motivated by illegal and improper inducements -- kickbacks or bribes in the form of campaign contributions.” Richardson, a Democrat, withdrew from consideration as President-elect Barack Obama’s commerce secretary on Jan. 4, citing a pending investigation of a bond advisory company that won $1.5 million in state work.

- The number of codes for medical billing will grow to more than 155,000 from 17,000, creating a “nightmare” for hospitals and doctors seeking reimbursement. Leavitt, who leaves office next week when President-elect Barack Obama takes office, pushed electronic record-keeping as a way to make health care more efficient and less expensive. Obama and his chief health official, Thomas Daschle, also have championed digital technology and urged increased federal spending to encourage broader use in medicine. Doctors and insurers say it will be expensive for them to follow the new billing rule and may lead to improper payments.

- St. Jude Medical Inc.’s(STJ) blood-flow meter cut the need for stents in patients with clogged arteries by a third and boosted their survival rate, a study found. The probe, which measures the severity of blockages, also cut the cost of care by an average of $675 a patient, according to the study, published online today in the New England Journal of Medicine. Heart attacks and deaths were trimmed 35 percent, the research found.

- Japanese machinery orders fell by a record 16.2 percent in November, twice as much as economists estimated, as businesses cut spending amid a deepening global recession. The drop in orders, an indicator of capital spending in the next three to six months, was the biggest decline since the current survey began in 1987.

- Rates to hire capsize vessels to haul iron ore have probably peaked after a rally this year, according to Rikard Vabo, a shipping analyst at Fearnley Fonds ASA. Capesizes, which carry loads of as much as 200,000 metric tons, cost about 3.8 times more to hire each day than smaller panamax vessels. The historical average is 2 to 2.1 times, Vabo said. “There is downside on cape rates in the short term,” he wrote in a research note.

Wall Street Journal:

- Harsh winter weather and frugal consumer spending may have cast a pall on most retail sales, but one product is proving recession-resistant: the snowblower. Across the country, manufacturers and retailers report robust sales -- and in some cases shortages -- of the do-it-yourself machines, many of which aren't inexpensive, running from a few hundred dollars to upward of $2,000. At Home Depot Inc., sales of the machines are up "high double digits" over last year, particularly among the heavier-duty big-ticket models. December storms were widespread and powerful enough that Lowe's Cos. for the first time shipped truckloads of snowblowers to the state of Washington the same day it sent them to Michigan and Maine. One major manufacturer, Ariens Co. of Brillion, Wis., was hamstrung by broader economic woes when its main engine supplier halted production in mid-December; while Ariens had already increased production 25%, demand has skyrocketed 50%.

- When President-elect Barack Obama nominated Mary Schapiro to lead the Securities and Exchange Commission, he criticized regulators for having "dropped the ball" in a "failure of oversight" in the markets meltdown and the Bernard Madoff scandal. But a close examination of Ms. Schapiro's record as a regulator shows she has infrequently pursued tough action against big Wall Street firms.

- New Yahoo Inc. (YHOO) Chief Executive Carol Bartz told employees on Wednesday that she needs to better understand the pros and cons of selling the struggling Internet giant's search business, but her gut instinct was not to.

- A federal judge denied another bid by prosecutors to jail disgraced financier Bernard Madoff pending trial. At a hearing Wednesday, U.S. District Judge Lawrence M. McKenna in Manhattan declined to overturn a magistrate judge's ruling on Monday extending bail for Mr. Madoff. The government had appealed that order. Prosecutors had sought to jail Mr. Madoff, the founder of Bernard L. Madoff Investment Securities LLC, after he mailed more than $1 million in watches, diamond jewelry and other valuables to relatives and others late last month.

MarketWatch.com:
- While emphasizing that they never "pre-commit" to a policy move, ECB officials usually offer relatively easy-to-read signals on future rate moves. Not this time.

ECB President Jean-Claude Trichet and fellow members of the central bank's rate-setting Governing Council meet in Frankfurt this week under a cloud of uncertainty. After slashing the ECB's key lending rate by an unprecedented 75 basis points, or three-quarters of a percentage point, to 2.5% in December, Trichet signaled that the ECB might be content to stand pat in January to reflect on the impact of 175 basis points worth of cumulative rate cuts since October. An unrelenting stream of dire economic data, however, likely won't afford the ECB the luxury of caution, most economists say. A majority expect the ECB to cut its key rate by a further 50 basis points to 2%, surveys show.

NY Times:

- President Hugo Chávez, buffeted by falling oil prices that threaten to damage his efforts to establish a Socialist-inspired state, is quietly courting Western oil companies once again. Until recently, Mr. Chávez had pushed foreign oil companies here into a corner by nationalizing their oil fields, raiding their offices with tax authorities and imposing a series of royalties increases. But faced with the plunge in prices and a decline in domestic production, senior officials have begun soliciting bids from some of the largest Western oil companies in recent weeks — including Chevron, Royal Dutch/Shell and Total of France — promising them access to some of the world’s largest petroleum reserves, according to energy executives and industry consultants here.

Forbes:

- The 21 Youngest CEOs at the Nation’s Biggest Companies.

Lloyd’s List:

- Global container traffic growth may slow to 2.8% this year as the worldwide recession curbs consumer demand, citing a report from Drewry Shipping consultants. Shipments from Asia to the US may drop 3.2% in 2009, while those on the Asia to Europe route may shrink by 4.1%, the report said.

Commercial Times:

- Intel Corp.(INTC) plans to cut computer-chip prices by as much as 25% from Jan. 18 to boost sales and clear inventory. The chipmaker intends to reduce prices by 10% to 25% on six models in January, before its usual twice-yearly adjustments in April and October.

The Economic Times:

- India’s government is unlikely to bail out Satyam Compute Services Ltd. as it will set a bad precedent, citing a person at the Prime Minister’s office. A bailout may also make the government liable to pay damages arising out of lawsuits against Satyam.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Sell on (DIS), target $20.

Night Trading
Asian Indices are -4.75% to -1.50% on average.
S&P 500 futures -.90%.
NASDAQ 100 futures -1.52%.

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Economic Releases

8:30 am EST

- The Producer Price Index for December is estimated to fall 2.0% versus a 2.2% decline in November.

- The PPI Ex Food & Energy for December is estimated to rise .1% versus a .1% gain in November.

- Initial Jobless Claims for last week are estimated to rise to 503K versus 467K the prior week.

- Continuing Claims are estimated to rise to 4620K versus 4611K prior.

- Empire Manufacturing for January is estimated to rise to -25.0 versus a reading of -25.76 in December.

10:00 am EST

- Philly Fed for January is estimated to rise to -35.0 versus a reading of -36.1 in December.

Upcoming Splits
- None of note

Other Potential Market Movers
- The Fed’s Lockhart speaking, Fed’s Evans speaking, weekly EIA natural gas inventory data, (MTW) Analyst Day, (MON) Pipeline Review, (AYI) Annual Meeting, Needham Growth Conference, Goldman Sachs Healthcare Conference, Citi Entertainment/Media/Telecom Conference and JPMorgan Tech Forum could also impact trading today.

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

Stocks Finish Sharply Lower, Weighed Down by Commodity, Gaming, Homebuilding and Banking Shares

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