Links of Interest

Market Snapshot Commentary
Market Performance Summary
Style Performance
Sector Performance
WSJ Data Center
Top 20 Biz Stories
IBD Breaking News
Movers & Shakers
Upgrades/Downgrades
In Play
Exchange Volume vs. Average
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
Option Dragon
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Real-Time Intraday Quote/Chart
Dow Jones Hedge Fund Indexes

Tuesday Watch

Late-Night Headlines
Bloomberg:

- Texas Instruments Inc.(TXN), the second- largest U.S. chipmaker, topped fourth-quarter profit estimates and announced plans to cut 12 percent of jobs as it copes with a slowdown in orders. The shares rose 5.1 percent in after-hours trading.

- Netflix Inc.(NFLX), the largest U.S. mail- order movie service, gained 7.3 percent in late U.S. trading after the company’s first-quarter and full-year revenue forecasts topped analysts’ estimates and it announced a plan to buy back as much as $175 million in stock.

- SL Green Realty Corp.(SLG), New York's biggest office landlord, said profit fell 29 percent on investment losses in a commercial property financing firm. SL Green issued today's earnings report after the close of New York Stock Exchange composite trading. The shares rose 32 cents, or 2.1 percent, to $15.46 at 4:25 p.m.

- Amgen Inc.(AMGN), the world’s largest biotechnology company, reported fourth-quarter sales of its core products to treat anemia were lower than analysts expected, driving the shares down 1.9% in extended trading. Net income climbed 15 percent to $961 million, or 91 cents a share, from $835 million, or 76 cents a share, a year earlier, the Thousand Oaks, California-based company said today in a statement.

- American Express Co.(AXP), the biggest U.S. credit-card company by purchases, rose as much as 7.2 percent in late New York trading after posting a fourth-quarter profit that was better than the most pessimistic forecasts.

- Putting patients’ health records on computer systems instead of handwritten paper charts reduces medical complications, deaths and costs, according to a study of 41 Texas hospitals. The study, published today in the Archives of Internal Medicine, was the first to look at multiple hospitals and to track how doctors used the technology, said David Bates, a Harvard University health policy researcher who was not involved in the study.

- The government wouldn’t be able to spend at least one-fourth of a proposed $825 billion economic stimulus plan until after 2010, according to a new report that suggests it may take longer than expected to boost the economy. A Congressional Budget Office analysis of President Barack Obama’s plan found that most of the approximately $355 billion in proposed discretionary spending on highways, renewable energy and other initiatives wouldn’t be spent before 2011. The government would spend about $26 billion of the money this year and $110 billion more next year, the report said. About $103 billion would be spent in 2011, while $53 billion would be spent in 2012 and $63 billion between 2013 and 2019, the report said. Republicans said the analysis showed that the plan, unveiled last week by House Democrats, won’t get money into the economy quickly enough. “We have serious concerns that the bulk of this spending won’t have an immediate or short-term positive effect on the economic crisis,” said Jennifer Hing, a spokeswoman for Representative Jerry Lewis of California, the top Republican on the House Appropriations Committee. “This is especially troubling given the massive size of the package and the enormous burden of debt it is placing on the taxpayers.”

- The outlook for emerging-market government debt has deteriorated because of the credit crisis, slump in commodity prices and global recession, Fitch Ratings said. “The economic and credit outlook for emerging-market economies has worsened dramatically as the credit crunch that originated in the so-called advanced economies contaminates the developing and emerging world,” Fitch analysts led by Sam Fox wrote in a report. Emerging-market sovereign creditworthiness is more “at risk” than in developed economics because of foreign-currency denominated bank liabilities, currency “mismatches” in the private sector and central banks’ focus on exchange-rate stability, the analysts wrote. “The risk of multiple economic and financial crises across emerging markets is now greater than at any time since the Asian Crisis of 1997-1998,” they wrote. In Latin America, countries with weak credit and reliance on commodity exports are “especially vulnerable,” the analysts wrote. Investors pulled $355 million out of funds that invest in developing-nation debt in the week ended Jan. 21, the biggest weekly outflow since Dec. 10, ING Financial Bank NV said in a report, citing data published by EPFR Global, a Cambridge, Massachusetts-based research company.

- The difference between two-year Treasuries notes and the fed funds target will be wider this year than the last time the Federal Reserve began increasing borrowing costs, according to UBS AG. “As we go through 2009, people are likely to foresee an end to the monetary stimulus, and therefore they will start to cheapen up or demand a higher yield on two-year notes even before the Fed has raised rates,” said William O’Donnell, head of U.S. government bond strategy at UBS, one of the 17 primary dealers required to participate in Treasury auctions. “The market’s anticipating that every day we are getting closer to the end of the monetary stimulus.” The spread between the two-year note’s yield and the fed funds target will increase to between 200 and 225 basis points by year-end, UBS said in a research note today. The difference widened to 193 basis points in June 2004, three weeks before the Fed began increasing borrowing costs after a series of cuts.

- The cost of protecting corporate bonds from default fell in Australia after an industry report showed business sentiment improved. The Markit iTraxx Australia index declined nine basis points to 325 as of 12:30 pm in Sydney, according to Westpac Banking Corp.

- A New York businessman sought by U.S. authorities in connection with an alleged $380 million Ponzi scheme was arrested and charged with one count of mail fraud. Nicholas Cosmo, founder of Agape World Inc. in Hauppauge, New York, surrendered at the Long Island Railroad train station in Hicksville, New York. He is suspected of defrauding thousands of investors through his firm, which purports to provide bridge loans, said a person who wasn’t authorized to speak about the case. He was brought in handcuffs to the U.S. Postal Inspection Service in Hicksville at about 7:30 p.m.

- Mark Ernst, who left the top job at tax preparer H&R Block Inc. after more than $1 billion in losses tied to subprime mortgages, was named a deputy commissioner at the Internal Revenue Service. Ernst, 50, will oversee operations support, according to an IRS statement distributed today.

- President Barack Obama, already overhauling automakers through a U.S. bailout, gains a stronger grip on their future with his move toward letting California set emission standards for the nation. General Motors Corp., Ford Motor Co. and Chrysler LLC. would have to shift their product mix to more cars and smaller trucks to meet California’s proposed standards, said Brian Johnson, an analyst for Barclays Capital, in a note today to investors. Obama directed the Environmental Protection Agency today to consider approving California’s request for a state program aimed at cutting auto emissions tied to global warming by 30 percent by 2016. Automakers have said permitting California’s standards would add billions of dollars in costs to an industry struggling after auto sales plunged to 13.2 million in 2008 from the average of about 16 million annually in the past decade.

- The yen weakened for a second day against the Australian dollar as gains in Asian stocks reduced demand for the currency as a haven from the financial crisis. Japan’s currency also fell against the Brazilian real and the South African rand as equities rose after Barclays Plc said it doesn’t need to increase capital further.

Wall Street Journal:

- The impeachment trial of Illinois Gov. Rod Blagojevich kicked off Monday without the state's leader, as he continued a national media blitz lambasting his accusers. As the proceedings began, Illinois Supreme Court Justice Thomas Fitzgerald asked if the governor or his legal counsel was present. Several seconds of silence followed. The seat for the defense was empty; Mr. Blagojevich had decided to make his case on national TV instead.

- The Senate confirmed Timothy Geithner as President Barack Obama's Treasury secretary by a 60-34 vote, paving the way for the new administration to usher in its financial-rescue plan. With Mr. Geithner now officially on board, the Obama administration is expected to detail shortly efforts to shore up the financial sector.

MarketWatch.com:
- When bad news is good news. Commentary: High unemployment doesn’t have to be bad for stocks. Over the last six decades, it turns out, the stock market on average has performed better when the nation's unemployment rate was higher than when it was lower. It's quite a marked difference, in fact. Consider a study conducted by Ned Davis Research, the quantitative research firm, in which the performance of the Standard & Poor's 500 index (SPX) since 1948 was correlated with different levels of the unemployment rate. According to the firm, the S&P 500 produced an average annualized gain of 13.5% when the unemployment rate was above 6%, in contrast to just 2.1% when it was at or below 4.3%. When the unemployment rate was in between 4.3% and 6%, the S&P 500 produced an average annualized gain of 5.2%.

NY Times:

- Medicare, with little public debate, has expanded its coverage of drugs for cancer treatments not approved by the Food and Drug Administration. Cancer doctors had clamored for the changes, saying that some of these treatments, known as off-label uses, were essential if patients were to receive the most up-to-date care. But for many such uses there is scant clinical evidence that the drugs are effective, despite costing as much as $10,000 a month. Because the drugs may represent a patient’s last hope, though, doctors are often willing to try them.

- Digital harassment has gotten to be such a problem that it’s now the focus of a campaign from the Advertising Council.

CNNMoney.com:
- 25 top-paying companies.

IBD:

- MasTec (MTZ) certainly intends to do better this time around. About three-quarters of its business comes from installing telecom infrastructure. So after its client base went south in 2001, MasTec endured four straight years of shrinking revenue and red ink along with a federal probe into its accounting practices.

Politico:

- President Barack Obama presented a humble and conciliatory face of America to the Islamic world Monday in the first formal interview since he assumed office, stressing his own Muslim ties and hopes for a Palestinian state, and avoiding a belligerent tone — even when asked if America could "live with" an Iranian nuclear weapon. The interview with the Dubai-based Al-Arabiya Network was a dramatic piece of public diplomacy aimed at capitalizing on the new American president's international popularity, though it balanced America's traditional commitment to Israel, whose security Obama called "paramount.' "I have Muslim members of my family. I have lived in Muslim countries," Obama said, according to a White House transcript. "My job to the Muslim world is to communicate that the Americans are not your enemy."

Washington Post:

- Fannie Mae and Freddie Mac could tap the government for up to $51 billion in coming weeks, exceeding some Wall Street estimates, so they can continue to operate as the largest providers of funding for U.S. residential mortgages.

Silicon Alley Insider:

- There are fresh signs Google(GOOG) may be making online storage a more formal product: Google-watcher Alex Chitu notes there's new programming changes to Google Apps that strongly hint a Google webdrive is coming soon.

AP:

- President Barack Obama's enthusiasm for alternative energy is being buffeted by two political forces on opposite sides of plans to build the nation's first offshore wind farm off Cape Cod. A leading foe of the $1 billion project is Sen. Edward Kennedy, D-Mass., an early and influential backer of Obama's presidential bid. A strong proponent is Massachusetts Gov. Deval Patrick, a close friend of Obama and a source for some of his best campaign speech lines. Kennedy has fought the Cape Wind project for eight years, arguing it would kill birds and endanger sea life while imperiling the scenic area's tourism and fishing industries. The turbines would stand 440 feet above sea level when the tallest blades are pointing straight up. The Kennedy family's oceanside Hyannis Port, Mass., compound would have a clear view of the project to be located 4.7 miles offshore, but Kennedy says it is not why he opposes the project. Patrick has championed the wind farm, embracing it as part of a push to make his state a leader in alternative energy.

- The chairman of the House Judiciary Committee has subpoenaed former White House adviser Karl Rove to testify about the Bush administration's firing of U.S. attorneys. The subpoena Monday by Michigan Democratic Rep. John Conyers continues a long-running legal battle.

Financial Times:
- Paulson & Co, one of the world’s biggest hedge funds, has made a profit of at least £270m betting on a fall in the share price of Royal Bank of Scotland over the past four months. New York-based Paulson, run by billionaire John Paulson, covered its “short” position in RBS on Friday, according to a regulatory filing, dropping below the 0.25 per cent disclosure limit. The scale of the profit is likely to reinvigorate the debate over short selling, which has seen archbishops and politicians criticize the practice and the Financial Services Authority ban additional shorting of banks for months.

- William Dudley is to succeed Tim Geithner as president of the Federal Reserve Bank of New York, people familiar with the process have told the Financial Times. Mr Geithner was on Monday night confirmed as US Treasury secretary by a full vote of the Senate, following delays caused by revelations that he had underpaid taxes early this decade.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (STLD), target $18.

- Reiterated Buy on (BEAT), target $30.

- We look at fundamentals of the chip industry and conclude that the potential that a bottom in semiconductor fundamentals is in place(although the slope of any recovery is apt to be muted). This potential, in our opinion, supports the case for rally in semiconductor names from their bottoms. In our analysis we note: 1) chipmakers are under-shipping end-demand by a wide margin 4Q08/1Q09 2) production increases going in this cycle was less than 2000, but in production cuts were greater 3) end-market inventories have been quickly brought under control 4) chip EPS estimates already reflect -71% y/y and earnings capitulation has been achieved. From a stock perspective, we favor quality balance sheets, strong competitive position, and nimble product portfolios(typically fables companies: NVDA, QCOM, ALTR, INTC).

Night Trading
Asian Indices are +.75% to +3.25% on average.
S&P 500 futures +1.19%.
NASDAQ 100 futures +1.04%.

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
Upgrades/Downgrades
Rasmussen Business/Economy Polling

Earnings of Note
Company/EPS Estimate
- (JEC)/.90

- (ENR)/1.73

- (FPL)/.90

- (NUE)/.12

- (TRV)/1.45

- (DAL)/-.32

- (BMY)/.41

- (VLO)/.91

- (EMC)/.23

- (MHP)/.38

- (LXK)/.73

- (GLW)/.18

- (BJS)/.47

- (WAT)/.95

- (HSY)/.54

- (BTU)/.73

- (X)/.75

- (DD)/-.24

- (STJ)/.58

- (VZ)/.61

- (AKS)/-.03

- (SYK)/.74

- (GILD)/.56

- (ALTR)/.27

- (JAVA)/-.08

- (DV)/.59

- (YHOO)/.12

- (ETFC)/-.23

- (NSC)/1.18

Economic Releases

10:00 am EST

- Consumer Confidence for January is estimated to rise to 39.0 versus 38.0 in December.

Upcoming Splits
- None of note

Other Potential Market Movers
- The S&P/CS Home Price Index, Richmond Fed Manufacturing Index, weekly retail sales reports, Citi Financial Services Conference, (SNX) analyst meeting, (DMND) analyst meeting, (GMR) analyst meeting, (GNK) analyst meeting, (ANW) analyst meeting and (PBR) analyst meeting could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by financial and automaker stocks in the region. I expect US equities to open modestly higher and to rally into the afternoon, finishing higher. The Portfolio is 100% net long heading into the day.

Stocks Finish Higher, Boosted by Oil Service, Utility, Computer Service, Telecom and Homebuilding Shares

Evening Review
Market Summary
Top 20 Biz Stories
Today’s Movers
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 Real-Time Stock Bid/Ask
After-hours Stock Quote
After-hours Stock Chart
In Play

Stocks Higher into Final Hour on Less Severe Economic Pessimism, Falling Credit Market Angst, Bargain-Hunting

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Retail longs, Technology longs and Medical longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is mildly positive as the advance/decline line is higher, most sectors are rising and volume is about average. Investor anxiety is above average. Today’s overall market action is mildly bullish. The VIX is falling 4.21% and is elevated at 45.23. The ISE Sentiment Index is below average at 112.0 and the total put/call is below average at .76. Finally, the NYSE Arms has been running high most of the day, hitting 1.96 at its intraday peak, and is currently 1.19. The Euro Financial Sector Credit Default Swap Index is falling 5.86% today to 112.67 basis points. This index is up from a low of 52.66 on May 5^th, but down from 157.81 on Sept. 16^th. The North American Investment Grade Credit Default Swap Index is falling 4.27% to 204.09 basis points. The TED spread is rising .87% to 108 basis points. The TED spread is now down 358 basis points in over three months. The 2-year swap spread is rising 1.13% to 67.0 basis points. The Libor-OIS spread is rising 3.10% to 94 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is up 5 basis points to .77%, which is down 193 basis points in over six months and near the lowest level since Bloomberg record-keeping began in August 1998. The 10-year TIPS spread bottomed at .65% in October 1998 during the Asian financial crisis and at 1.24% in October 2001 during the technology bubble-bursting meltdown. The 3-month T-Bill is yielding .10%, which is unch. today. Considering the news today, I am surprised the major averages aren’t up more, which is a negative. (AFL) and (USB) are weighing on the (XLF), however the bears have been unable to gain downside traction. Considering recent OPEC comments, the rise in the euro and today’s better economic data, oil is trading poorly. The decline in home inventories, reported today, is a large positive. The Citi US economic surprise index is now up to -68.50, while the eurozone index is now -126.80. It is also a large positive to see the various credit default swap indices begin to roll over. Nikkei futures indicate an +248 open in Japan and DAX futures indicate a -16 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, diminishing economic pessimism, bargain-hunting and declining credit market angst.

Today's Headlines

Bloomberg:

- Sales of previously owned homes in the U.S. unexpectedly rose in December. Purchases rose 6.5 percent to an annual rate of 4.74 million from 4.45 million in November that was less than previously estimated, the National Association of Realtors said today in Washington. The number of previously owned unsold homes on the market at the end of December represented 9.3 months’ worth at the current sales pace, down from 11.2 months’ at the end of the prior month.

- The index of leading U.S. economic indicators unexpectedly increased in December as the money supply expanded, masking signs of a worsening recession. The Conference Board’s gauge rose 0.3 percent, the first gain in six months, after a 0.4 percent drop in November, the New York-based group said today. Also contributing to the index’s rise were interest rate spreads, manufacturers’ new orders for consumer goods and new orders for non-defense capital goods.

- The cost of protecting European corporate bonds from default fell, extending a decline, according to traders of credit-default swaps. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-risk, high-yield credit ratings dropped 30 basis points to 1,070, according to JPMorgan Chase & Co. prices at 2:15 p.m. in London. The Markit iTraxx Europe index of 125 companies with investment-grade ratings fell 6 basis points to 166, JPMorgan prices show. The Markit iTraxx Financial index of 25 European banks and insurers slipped 9 basis points to 120.

- Pfizer Inc.(PFE), the world’s biggest drugmaker, will buy Wyeth(WYE) for about $68 billion after failing to reduce its dependence on the cholesterol pill Lipitor with new drugs from its own research labs. The deal, the largest pharmaceutical acquisition in almost a decade, is a cash-and-stock transaction valued at $50.19 a share, 29 percent more than Wyeth’s closing price on Jan. 22, the day before talks were reported, the companies said today in a statement.

- Former Merrill Lynch & Co.(MER) Chief Executive Officer John Thain, ousted last week after his firm posted an unexpectedly large fourth-quarter loss, apologized for paying $1.2 million last year to renovate his office and said he will repay the costs. “They were a mistake in the light of the world we live in today,” Thain said in a memo to top executives dated yesterday. “I will therefore reimburse the company for all of the costs incurred.”

- Barclays Plc(BCS) jumped the most in at least two decades in London trading after saying it won’t need funding from the government because revenue increased last year. Barclays’s investment bank and the Lehman Brothers Holdings Inc. assets acquired last year are driving profit and “record revenue,” cushioning the London-based company against about 8 billion pounds ($11 billion) of credit-related writedowns in 2008, it said today in a statement. Barclays rose 73 percent after saying it exceeds regulators’ capital requirement by 17 billion pounds.

- The World Trade Organization said China must destroy counterfeit software of movies that are confiscated by authorities and provide more legal protection to foreign products, in a ruling on a complaint brought by the U.S. The WTO panel of judges sided with the U.S. in two of the three arguments in the complaint, while deciding that China doesn’t need to alter its laws that exempt small-scale counterfeiters from criminal prosecution. “Having achieved this significant legal ruling, we will engage vigorously with China on appropriate corrective actions to ensure that U.S. rights holders obtain the benefits of this decision,” Peter Allgeier, acting U.S. Trade Representative, said in a statement.

- Investors should maintain short “exposure” to the Canadian dollar, according to Citigroup Inc. analysts Michael Hart and Todd Elmer. The country’s budget may be rejected in parliament and lead to early elections, which will probably prompt investors to sell the Canadian dollar, Citigroup said today.

- Russia’s ruble may weaken as much as 25 percent, breaking the central bank’s widened trading range within two months, as lower oil prices weaken the economy, Citigroup Inc. said.

Wall Street Journal:

- Verizon Wireless and Research In Motion Ltd.(RIMM) have high hopes for the BlackBerry Storm, which they spent nearly two years developing as their big response to Apple Inc.'s(AAPL) iPhone. But despite a marketing campaign that cost more than $100 million, the smart phone has gotten off to a bumpy start.

NY Times:

- President Obama will direct federal regulators on Monday to move swiftly on an application by California and 13 other states to set strict automobile emission and fuel efficiency standards, two administration officials said Sunday. Once they act, automobile manufacturers will quickly have to retool to begin producing and selling cars and trucks that get higher mileage than the national standard, and on a faster phase-in schedule. The auto companies have lobbied hard against the regulations and challenged them in court.

NY Post:

- As the merger of Bank of America(BAC) and Merrill Lynch disintegrates into one of Wall Street's most dysfunctional marriages, the so-called "thundering herd" is on the verge of a massive employee exodus. Sources tell The Post that Merrill and BofA's 16,800-strong broker army is being enticed by big bucks from rivals big and small. Among those reportedly in the hunt are UBS and Morgan Stanley as well as several boutique shops, sources said, adding that some are dangling pay packages that are nearly triple what brokers are being offered in-house.

Washington Post:

- A new study from Italy adds to a mountain of evidence that a mercury-based preservative once used in many vaccines doesn't hurt children, offering more reassurance to parents.

Financial Times:
- Sales of Chinese bank shares by overseas investors are expected to continue this year as western financial institutions divest stakes to help bolster balance sheets. Over the past few weeks, UBS and Royal Bank of Scotland have given up their holdings in Bank of China, raising a combined $3.2bn, while Bank of America pocketed $2.8bn by selling a chunk of its stake in the China Construction Bank.

recast to "

Folha de S. Paulo:

- Brazil’s retail industry jobs cuts may rise by about 40% in the first quarter, citing Roque Pellizzaro Junior, president of the National Confederation of Shop Managers. Shop inventories have risen by about 50%, Pellizzaro said.

O Pais:

- OPEC will hold an extraordinary meeting before a scheduled gathering in March should oil prices “fall abruptly” below $40 a barrel, citing OPEC President Jose Maria Botelho de Vasconcelos. De Vasconcelos said not all of OPEC’s members are complying with a reduction in production quotas and this would be addressed in March.

Bear Radar

Style Underperformer:
Large-cap Value (+.51%)

Sector Underperformers:
Education (-4.58%), Banks (-2.39%) and Insurance (-1.60%)

Stocks Falling on Unusual Volume:
ROH, ESI, CAT, COCO, DOW, USB, PVTB, CRXL, PFE, MTR, FUN and AFL

Stocks With Unusual Put Option Activity:
1) CCI 2) PFE 3) CHRW 4) JOYG 5) YUM