Stocks Higher into Final Hour on Less Extreme Economic Fear, Short-Covering, Bargain-Hunting

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Medical longs, Biotech longs, Retail longs, Financial longs, Internet longs and Computer longs. I covered all my (IWM)/(QQQQ) hedges and some of my (EEM) short this morning, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is higher, most sectors are rising and volume is heavy. Investor anxiety is above average. Today’s overall market action is very bullish. The VIX is falling -1.25% and is very high at 43.30. The ISE Sentiment Index is above average at 171.0 and the total put/call is below average at .77. Finally, the NYSE Arms has been running above average most of the day, hitting 3.34 at its intraday peak, and is currently .59. The Euro Financial Sector Credit Default Swap Index is falling 1.43% today to 114.0 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 rising 2.1% to 198.0 basis points. The TED spread is rising 2.42% to 97 basis points. The TED spread is now down 369 basis points in under four months. The 2-year swap spread is falling 2.23% to 65.75 basis points. The Libor-OIS spread is falling .67% to 97 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is falling 5 basis points to 1.10%, which is down 160 basis points in under seven months. 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 .27%, which is down 2 basis points today. Considering today’s news the broad market reversal higher on very healthy volume is a big positive. “Growth” stocks are again substantially outperforming “value” shares. Market-leading stocks are also much stronger than the broad market. The US sovereign debt credit default swap is plunging 14.1% today to 70.30, which is also a big positive. One negative I see today is the weakness in the REIT sector. The AAII % Bulls fell to 24.63%, while the % Bears fell to 44.0% this week, which remains a positive. Nikkei futures indicate a +240 open in Japan and DAX futures indicate an +46 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on short-covering, bargain-hunting and less extreme economic pessimism.

Today's Headlines

Bloomberg:

- Deutsche Bank AG(DB) Chief Executive Officer Josef Ackermann said revenue at Germany’s largest bank rose “significantly” in January from the previous year, giving him “confidence” for 2009.

- MasterCard Inc.(MA), the world’s second- largest credit-card network, rose the most in three months of New York trading after beating analysts’ profit estimates by raising the price of processing international purchases. Revenue rose 14 percent to $1.2 billion, MasterCard said, and price increases tied mostly to cross-border transactions made up more than half of the rise. The network climbed $19.19, or 14 percent, to $159.34 at 1:50 p.m. in New York Stock Exchange composite trading.

- Oil prices may fall to $25 a barrel in the second quarter of 2009 before rebounding slowing in the second half of the year, Morgan Stanley said. Slowing demand from China and Latin America and a “recent slew of dismal economic and trade data” were cited by analyst Hussein Allidina in a note to clients as the reasons behind the lower outlook.

- The U.S. options market is shrinking for the first time in at least seven years as investors curb the use of borrowed money, making it more expensive to insure stocks against losses. The number of outstanding calls and puts sank as much as 46 percent in January to 153 million, the lowest total in three years, according to data compiled by Options Clearing Corp.

- Zinc fell on the London Metal Exchange, ending a three-day winning streak, as inventories at almost a three-year high revived speculation about falling demand for the metal used to galvanize steel in cars. Aluminum also slid. The LME index of industrial metals had climbed 7.1 percent this week at yesterday’s close on speculation government spending on bridges and other infrastructure will spur demand. Zinc inventories in LME warehouses jumped 2,350 metric tons to 348,975 tons today, the most since Feb. 16, 2006.

- Orange-juice futures plunged the most in almost five months on speculation that frigid temperatures earlier today didn’t last long enough to hurt the crop in Florida, the world’s second-biggest orange producer. Temperatures fell below 30 degrees Fahrenheit (minus 1 Celsius) for about two hours before sunrise in Polk County, Florida’s biggest orange-producing area, according to the National Weather Service. Temperatures below 28 degrees for four to six hours can damage crops.

- European Central Bank President Jean- Claude Trichet signaled policy makers may cut their benchmark interest rate by half a percentage point to a record low of 1.5 percent next month as a recession in the euro region deepens. “I don’t exclude that we could reduce interest rates at our next decision,” Trichet said at a press conference in Frankfurt after leaving the key rate at 2 percent today. When asked whether the ECB will cut by a half or a quarter point, Trichet noted market expectations “would probably more be the first figure.”

- U.S. Supreme Court Justice Ruth Bader Ginsburg had surgery today for “apparently early stage” pancreatic cancer, the court said in a statement.

- Executives at Goldman Sachs Group Inc.(GS), JPMorgan Chase & Co.(JPM) and hundreds of financial institutions receiving federal aid aren’t likely to be affected by pay restrictions announced yesterday by President Barack Obama. The rules, created in response to growing public anger about the record bonuses the financial industry doled out last year, will apply only to top executives at companies that need “exceptional” assistance in the future. The limits aren’t retroactive, meaning firms that have already taken government money won’t be subject to the restrictions unless they have to come back for more.

- Fannie Mae, the mortgage-finance company under U.S. government control, will loosen rules for homeowners seeking to lower their loan payments by refinancing. Fannie Mae will drop some credit-score requirements, reduce income-documentation standards and waive the need for appraisals in some cases, according to a notice yesterday to lenders posted on the Washington-based company’s Web site.

Wall Street Journal:

- Foster Wheeler Ltd. (FWLT) and two other international firms have won contracts to boost Iraq's export capacity from its southern oil terminals on the Persian Gulf, an Iraqi Oil Industry source in Basra said Thursday.

- President Barack Obama launched his version of the faith-based initiative Thursday, expanding the mission to include abortion reduction and outreach to the Muslim world. He also is trying to avoid the thorniest constitutional issues that beset the program for years under his predecessor. Mr. Obama's approach reflects his search for common ground on contentious social issues – while softening some of the positions he took on the campaign trail.

- President Barack Obama's new proposals on banker pay were a striking reminder of just how the balance of power is changing on Wall Street -- away from the big banks reliant on federal aid and to foreign-based or boutique firms that haven't required any bailout money.

CNBC.com:
- U.S. senators working to craft a massive U.S. economic stimulus package said on Thursday they had agreed it should be close to the $800 billion wanted by President Barack Obama, and Senate leader Harry Reid said he believed he had the votes to pass it.

- The Obama administration has decided on a new package of aid measures for the financial services industry, including a bad bank component, and is expected to announce them next Monday, according to a source familiar with the planning.

NY Times:

- Representative Charles B. Rangel’s financial disclosure forms had at least 28 omissions in the past 30 years and failed to account for what became of more than $239,000 in assets, according to a report issued Wednesday by a private government-ethics group. Despite Congressional rules that require members to list the purchase or sale of any assets, Mr. Rangel accumulated from $239,026 to $831,000 in assets that were not listed in subsequent reports, according to the report by the Sunlight Foundation, a nonpartisan group that advocates greater transparency by elected officials.

Forbes:

- General Electric Co.'s(GE) chief executive warned Thursday that capping the salaries of bank executives whose companies take taxpayer bailout money undermines the government rescue effort. Jeff Immelt, who has run the financial services, media and infrastructure conglomerate since 2001, also said "Buy America" provisions in the nearly $1 trillion federal stimulus bill jeopardizes U.S. exports.

CarryQuote:

- CarryQuote Launches Mobile Market Scanner For Fund Managers. For the first time ever, fund managers and traders can access cost-effective, real-time financial market data from around the globe and professional-level analytics from their desktop or any smartphone. Mobile Market Scanner™ delivers real-time financial market information from more than 50 global data sources that cover a broad range of asset classes, including equities, bonds, foreign exchange, commodities, real estate and alternative investments. It also provides actionable, professional-grade analytics that organize, filter and rank investment opportunities – significantly reducing the time needed to manipulate and synthesize data for analysis. Charts are presented in a jukebox style format, allowing users to quickly flip through and scan hundreds of markets to identify relevant information. Mobile Market Scanner™ is available via a web-based application as well as on all smartphones including Blackberry, Windows, Nokia (Symbian) Android (Google) and iPhone.

Politico:

- Rep. Hilda L. Solis’ nomination vote has been delayed by the Senate committee in charge of vetting her for the secretary of labor position in President Barack Obama’s Cabinet. The delay was announced moments after USA Today reported that Solis’ husband had recently paid off $6,400 in tax liens on an auto shop he owns in Los Angeles.

Portfolio.com:

- Department of Jargon, Hedge Fund Edition.

AppleInsider:

- Apple may be working on more effective wireless battery management systems for personal electronic devices, with a Mac serving as the hub, according to newly discovered company filings. A trio of patent requests published by the United States Patent and Trademark Office this week describe intelligent, universal, and rechargeable batteries that would be capable of powering a plethora of devices like cell phones, wireless keyboards and mice, speakers, mp3 players, PDAs, laptop computers, microphones, headphones, and headsets.

hedgeweek:

- New York-based asset manager Van Eck Global has launched the Market Vectors Pre-Refunded Municipal Index ETF on NYSE Arca, which it says is the US's first ETF to focus on the pre-refunded segment of the municipal bond market.

Reuters:
- The La Nina weather anomaly will persist into the spring of 2009 but should gradually weaken during that period, the U.S. Climate Prediction Center said on Thursday. Scientists believe La Nina spurs hurricane formation in the Atlantic basin by hindering wind shear that breaks up storms as they form. CPC said the potential impact of La Nina during February to April 2009 include above average precipitation in the Ohio and Tennessee valleys and below average rainfall in the southwestern and southeastern United States. It said the other impacts are below average temperatures in the Pacific Northwest and above average temperatures in much of the southern United States.

- It might be possible to modify mark-to-market accounting rules for U.S. banks facing steep writedowns of troubled assets without abandoning the underlying accounting standard, a senior Senate Democrat said. Sen. Christopher Dodd, the Democratic chairman of the Senate Banking Committee, told reporters on Wednesday evening after a panel hearing that at least one former bank regulator was discussing how to approach the difficult issue without "walking away from" mark-to-market standards. The issue of how to value distressed assets held by U.S. banks has been one of the most difficult challenges in constructing a bank rescue plan, according to industry lobbyists and lawmakers.

Estrategia:

- Chile’s copper production will increase 3% this year because of mine expansions, citing an industry chamber.

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arabianBusiness.com:
- 52% of UAE’s construction projects suspended. Nearly 53 percent of the UAE’s development portfolio, worth a combined $582bn, has been suspended as the construction industry grapples with the country’s dramatic real estate crash. Some 180 projects have been suspended while projected cash flow, the marker of the industry’s health, is set to drop 43 percent in the first quarter of 2009, the report noted.

Bear Radar

Style Underperformer:
Large-cap Value (+1.16%)

Sector Underperformers:
REITs (-.60%), Papers (-.21%) and Education (-.19%)

Stocks Falling on Unusual Volume:
IX, ESS, HME, EDU, UN, CNQR, AGNC, DLTR, EXBD, ABMD, PAAS, CVLT, VARI, FLIR, IT, IEX, RBC, HAR, NCR and LTM

Stocks With Unusual Put Option Activity:
1) CNQR 2) DO 3) DLTR 4) ERTS 5) AKAM

Bull Radar

Style Outperformer:
Mid-cap Growth (+1.23%)

Sector Outperformers:
HMOs (+4.13%), I-Banks (+3.46%) and Semis (+3.38%)

Stocks Rising on Unusual Volume:
COHR, ATHR, TGT, BHP, KSS, BBL, PTR, BG, FLO, SLH, TV, USB, TNDM, BBBB, AKAM, PENN, JNPR, ROST, TWGP, PHIIK, OSIS, UFPI, CRXL, COHR, CONN, LMNX, NETL, CTRN, ROLL, THRX, CNMD, RVBD, DLB, CRR, NAL, IFF, BMC, MA and CI

Stocks With Unusual Call Option Activity:
1) HL 2) CTX 3) DLTR 4) CI 5) AKAM

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Thursday Watch

Late-Night Headlines
Bloomberg:

- Visa Inc.(V), the world’s largest electronic payments network, said profit rose 35 percent as more consumers outside the U.S. used credit and debit cards. Visa rose 7.9 percent to $53 in New York trading at 5:18 p.m. after the company affirmed previous profit targets.

- Cisco Systems Inc.(CSCO), the largest maker of networking equipment, expects sales to fall as much as 20 percent this quarter, more than analysts projected, as orders deteriorate. The shares lost 2.7 percent in late trading.

- OPEC oil supply cuts may not be enough to counter falling industrial demand, requiring reductions by non-OPEC producers to restore balance to the market, Goldman Sachs Group Inc. said today. January output must be curtailed by another 1.1 million barrels a day to reduce a surplus, commodity analysts Giovanni Serio and Jeffrey Currie said in a report. About 600,000 barrels a day will probably have to come from non-OPEC producers, with another 500,000 from the Organization of Petroleum Exporting Countries. “Prices will have to remain under pressure in the near term to force non-OPEC producers to cut supply,” they said.

- The International Energy Agency, an energy policy adviser to 28 nations, is likely to reduce its 2009 oil demand forecast again, following changes to International Monetary Fund economic predictions, Newedge USA LLC said. In its January report, the Paris-based IEA forecast world consumption will fall by 510,000 barrels a day in 2009 to 85.3 million barrels a day, revising December’s prediction of a 400,000 barrel-a-day increase. High oil prices earlier last year, coupled with a slowing world economy, have led consumers to use less fuel, such as gasoline and fuel oil. The 0.6 percent reduction currently predicted by the IEA would be the first back-to-back contraction in oil demand since 1983. Demand fell 0.3 percent in 2008, according to the IEA. Newedge analysts Halff and Veronique Lashinski said in their report, dated Feb. 3, that global oil demand “could contract by as much as 1.3 million barrels a day this year, versus our earlier forecast of a 600,000 barrel a day contraction.”

- Corn prices fell to a seven-week low, extending the longest slump since October, on speculation that the U.S. recession is slowing demand for grain used to make ethanol and feed livestock.

- Former U.S. Vice President Al Gore and his Alliance for Climate Protection say clean-coal technology is a fantasy. Peabody Energy Corp., the biggest U.S. coal producer, says another prominent Democrat has pledged to make the technology a reality: President Barack Obama. The Gore-Obama split illustrates a growing debate in the U.S. as the new president attempts to deliver on his promise to reduce carbon dioxide emissions in the country 80 percent by 2050. Depending on who’s speaking, coal is either the villain or part of the solution.

- New Jersey Governor Jon Corzine has fallen behind Republican challenger Christopher Christie in his quest for a second term, according to a Quinnipiac University poll released today. Christie, 46, a former U.S. attorney, leads Corzine 44 percent to 38 percent, reversing a 42 percent to 36 percent lead for the Democrat in a Nov. 19 Quinnipiac poll. Half of New Jersey voters surveyed disapprove of Corzine’s performance.

- Speculative trading in commodity markets has affected prices, President Barack Obama’s nominee to head the Commodity Futures Trading Commission told Congress, departing from the views of the agency’s prior chief. The effect of trading by speculators, who don’t produce or take actual delivery of a commodity, has been “demonstrated in the commodity futures markets during the past several years,” Gary Gensler said in a Jan. 26 letter to Senator Carl Levin, a Michigan Democrat. The letter was posted online today by Levin’s staff. Crude oil futures prices rose to a record $147.27 a barrel in July, prompting calls from Congress for limits on speculative trading. Participants in such trading include groups investing in the market through index funds, such as pension funds and endowments. The growth in commodity index funds was “a contributing factor” to the surge in commodity prices in the middle of last year, Gensler wrote. “The expanding number of hedge funds and other investors who were increasing asset allocations to commodities within their portfolios also put upward pressure on prices,” he states in the letter. Gensler said the CFTC’s “core functions” are to guard against excessive speculation and market manipulation.

- Congressional leaders, trying to quell a dispute over “Buy American” provisions in the stimulus package, are crafting a version that would apply only when they don’t violate trade rules, according to industry officials and a congressional aide.

- House Republicans formed a health team to counter the Democratic majority’s plans to expand government- run U.S. health-care programs. The task force, headed by Representative Roy Blunt of Missouri, will offer proposals that avoid creating a new “government-dominated health care bureaucracy,” House Republican leader John Boehner, of Ohio, said today in an e- mailed statement. “Republicans are committed to making health care more affordable, more accessible and offer more options to American families,” Blunt said in the statement. “Unfortunately, the only options we’ve seen so far from this Congress would push us to a one-size-fits-all government-run system.”

- Russia’s central bank is exacerbating the ruble’s 34 percent plunge since August, even as it struggles to defend the exchange rate, by providing loans to banks that speculate on the currency, say Alfa Bank and UniCredit SpA. Bank Rossii lent 7.7 trillion rubles ($214 billion) in overnight and seven-day loans secured with bonds or other collateral in the 16 trading days last month, about double the 4.8 trillion rubles provided in so-called repurchase auctions in December, central bank data show. Banks used “almost all” the money to bet against the ruble, said Natalia Orlova, chief economist at Alfa, Russia’s largest non-government bank. The ruble fell 18 percent against the dollar in January.

- The euro traded near a two-month low against the US dollar on speculation the economic slump in Eastern Europe will cause the 16-nation region’s recession to deepen. The currency may weaken for a second day versus the yen as traders added to bets the European Central Bank will cut interest rates further this year to spur growth, after probably leaving them unchanged at a meeting today. “Given growing concerns about turmoil in emerging markets such as Kazakhstan and Russia, the euro is a sell,” said Masafumi Yamamoto, head of foreign-exchange strategy for Japan at Royal Bank of Scotland in Tokyo and a former Bank of Japan currency trader.

Wall Street Journal:

- Republicans are exercising increasing influence over President Barack Obama's economic-stimulus plan in the Senate, with Maine Sen. Susan Collins emerging as a leader of efforts to trim the initiative and sharpen its focus on job creation. Sen. Collins, a centrist with allies in both parties, was called to the White House Wednesday to meet with Mr. Obama. She envisions holding the cost of the stimulus package to $700 billion or less, well below the $819 billion package of tax cuts and spending the House approved last week. The effort amounts to "rebuilding" the Obama package, according to an individual familiar with the talks. The package would include tax cuts and investments intended to create jobs, such as infrastructure projects, but it would step back from spending projects that don't immediately lift the sagging U.S. economy. After meeting with Mr. Obama, Sen. Collins expressed concern about a number of spending provisions, including $780 million for pandemic-flu preparedness. "I have no doubt that the president is willing to negotiate in good faith, that he wants to have a bipartisan bill," Sen. Collins said.

- The White House's nominee for Director of the Central Intelligence Agency, Leon Panetta, has earned more than $700,000 in speaking and consulting fees since the beginning of 2008, with some of the payments coming from troubled financial firms and from a firm that invests in contractors for federal national security agencies, according to financial disclosures released Wednesday.

CNBC.com:
- Oil is relatively cheap, supplies are more than ample (some analysts fear we're awash in crude), so why am I paying more at the gas pump than I was a month ago? Today the national average for regular unleaded gasoline hit $1.90 a gallon, the highest price we've seen since last November. Retail gasoline prices have risen more than 30 cents since the beginning of the year, up nearly 14 percent, while oil prices have fallen about 13 percent in that same time period. Due to the decline in demand, refiners have already planned to scale back operations during this traditional "turnaround" season a bit earlier and extend maintenance operations a bit longer. Many analysts, including Stephen Schork of the well-regarded industry newsletter The Schork Report, point to the refiners lack of production, particularly on the East Coast, as a major reason for the rally we've seen in gasoline futures over the past couple of days.

IBD:

- In the face of ugly markets, Edwards Lifesciences (EW) has been showing that investors still like innovation. Since December, its shares have risen 22% to 55, from a 12-month low of 45.

Washington Post:

- The Obama administration has told the Pentagon to pare its next budget request to the level it projected a year ago, down nearly $60 billion from a more recent Pentagon wish list, the White House budget office said on Wednesday. In doing so, the administration would be capping the fiscal 2010 Defense Department base budget at about $527 billion, excluding war costs in Iraq and Afghanistan, said Tom Gavin, a spokesman for the White House Office of Management and Budget. Douglas Harned, a defense industry analyst at Sanford C. Bernstein & Co., said on Wednesday that he continued to expect the 2010 "baseline" investment account to rise at least 2 percent to 3 percent from 2009. "This 'worst case' scenario would still be an attractive budget outlook for defense stocks," he wrote in a note to clients. Congress "will almost certainly want to add items that would raise the budget further," Harned wrote, referring to programs such as Lockheed's F-22 fighter jet and Boeing's C-17 military cargo aircraft. The Pentagon's top suppliers include Lockheed Martin Corp, Boeing Co, Northrop Grumman Corp, General Dynamics Corp, Raytheon Co, BAE Systems, L-3 Communications Holdings Inc and United Technologies Corp.

MSNBC.com:

- In its first action to overturn Bush administration policies on energy, the Obama administration on Wednesday said it will cancel oil drilling leases on more than 130,000 acres near two national parks and other protected areas in Utah. “This action will come as a disappointment to communities that were counting on these energy leases to generate high-wage jobs in these difficult economic times," Rep. Doc Hastings, R-Wash., said in a statement. "We hope today's decision does not signal the administration is returning to the failed policies of the past, leaving much of America's vast energy resources locked up while the nation's demand for energy continues to grow," added Jack Gerard, president of the American Petroleum Institute. "I see this announcement as a sign that after eight long years of rapacious greed and backdoor dealings, our government is returning a sense of balance to the way it manages our lands," actor and activist Robert Redford, a trustee with the Natural Resources Defense Council, said in a statement issued by groups that opposed the leases. Redford owns a home in Utah and hosts the annual Sundance Film Festival there.

Rasmussen:

- Support for the economic recovery plan working its way through Congress has fallen again this week. For the first time, a plurality of voters nationwide oppose the $800-billion-plus plan. The latest Rasmussen Reports national telephone survey found that 37% favor the legislation, 43% are opposed, and 20% are not sure. Two weeks ago, 45% supported the plan. Last week, 42% supported it. Opposition has grown from 34% two weeks ago to 39% last week and 43% today.

Reuters:

- Banks, automakers and other companies that have received U.S. bailout money spent $114 million on lobbying and campaign contributions last year, a watchdog group said on Wednesday. The Center for Responsive Politics said that amounted to a healthy return on investment for companies such as Bank of America and General Motors that were among those that received a total of $295 billion in federal support. "Even in the best economic times, you won't find an investment with a greater payoff than what these companies have been getting," executive director Sheila Krumholz said in a statement. Employees from 161 of those companies also gave a total of $37.5 million to federal candidates in 2007 and 2008, the group said. Top recipients included Connecticut Democratic Senator Christopher Dodd and Montana Democratic Senator Max Baucus, both of whom chair committees that oversee the financial services industry.

- U.S. auto parts suppliers are asking for up to $20.5 billion in federal aid to survive the worst industry downturn in decades, the Automotive News reported on Wednesday.

Financial Times:
- A senior adviser to Iran’s president says dialogue with the US will succeed only if the Obama administration accepts Tehran’s right to have a nuclear program. The launch of a homemade Iranian satellite on Tuesday further raised concerns among western powers that Iran was accelerating its development of ballistic missile technology. “If [US] policies change the two nations will get closer to each other, the two governments will get closer to each other and the chances for dialogue and co-operation will succeed,” said Mr Samareh. “The policy of [George W.] Bush was to use this [the nuclear issue] as an excuse to stand up against the Iranian nation. He also pointed to the Bush administration’s support for Israel during conflicts such as the offensive in Gaza against Hamas, which is supported by Iran, and the 2006 Israeli war against Hizbollah, another Iran-backed group. “Is the new US administration going to continue these policies? If it does, then nothing will change,” he said.

- Procter & Gamble(PG) is working with Goldman Sachs to identify potential buyers for its pharmaceuticals brands or find other ways to exit the business, people close to the matter said on Wednesday.

MoneyToday:

- The Bank of Korea cut its forecast for South Korea’s growth this year to .3%, citing the central bank and finance ministry. The central bank, which previously forecast a 2% expansion this year, plans to announce its new estimate in April.

China Daily:

- McDonald's(MCD) sales in China were poor last December, Jeff Schwartz, its China CEO, told China Daily. KFC said its sluggish growth in China had already hurt the share price of parent firm Yum Brands Inc.(YUM) With 2,300 outlets nationwide, the company reported only 1 percent growth in same-store sales in the fourth quarter of 2008, compared with 17 percent over the same period in 2007.

Late Buy/Sell Recommendations
Citigroup:
- Upgraded (AKAM) to Buy, target $22.

Night Trading
Asian Indices are unch. to +1.50% on average.
S&P 500 futures -.30%.
NASDAQ 100 futures -1.75%.

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Earnings of Note
Company/EPS Estimate
- (RX)/.50

- (NCR)/.55

- (BG)/-.89

- (DO)/2.35

- (CAH)/.89

- (EL)/.77

- (MA)/1.62

- (BKC)/.37

- (CI)/.42

- (DUK)/.25

- (K)/.50

- (NWSA)/.19

- (VRSN)/.28

- (RATE)/.34

- (HIG)/1.28

- (PBI)/.74

Economic Releases

8:30 am EST

- 4Q Non-farm Productivity is estimated to rise 1.5% versus a 1.3% increase in 3Q.

- 4Q Unit Labor Costs are estimated to rise 2.8% versus a 2.8% increase in 3Q.

- Initial Jobless Claims for last week are estimated to fall to 580K versus 588K the prior week.

- Continuing Claims are expected to rise to 44795K versus 4776k prior.

10:00 am EST

- Factory Orders for December are estimated to fall 3.1% versus a 4.6% decline in November.

Upcoming Splits
- None of note

Other Potential Market Movers
- The weekly EIA natural gas inventory report, ICSC chain store sales data, Cowen and Company Aerospace/Defense Conference, CSFB Energy Summit, CSFB Financial Services Conference, the Fed’s Plosser speaking, Fed’s Bullard speaking, Fed’s Stern speaking, (KMT) financial community meeting, (COV) at Dow Jones Global Ethics Summit, (TEG) World Money Show and (STT) analyst meeting could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by mining and shipping stocks in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.