Thursday Watch

Late-Night Headlines
Bloomberg:

- Undeterred by Republican election triumphs in Virginia and New Jersey, Democratic leaders put the U.S. House on a path to vote as early as Saturday on the most sweeping overhaul of health-care policy in four decades. The election of Republican governors in New Jersey and Virginia won’t affect how the House proceeds on legislation to extend insurance to 36 million people and create a government- run program to compete with private insurers, lawmakers said. Party leaders signaled they’re ready for the House to begin debating the legislation and vote on its final passage by filing a 42-page amendment that made last-minute changes to the bill. The filing last night triggered a 72-hour waiting period that Democrats pledged to give Republicans before a vote. “We are on the verge of doing something great,” House Speaker Nancy Pelosi told reporters today after meeting with lawmakers in Washington. “From my perspective, we won last night,” she said, pointing to Democratic wins in two House races to fill vacancies in California and New York.

- Cisco Systems Inc.(CSCO), the biggest maker of networking equipment, topped analysts’ profit estimates after curtailing hiring, shuttering offices and cutting travel. Cisco also said it would expand its stock buyback plan by $10 billion. Cisco, based in San Jose, California, rose 87 cents, or 3.7 percent, to $24.16 in late trading after the results were released.

- News Corp.(NWS/A), owner of the Twentieth Century Fox film studio, raised its full-year forecast after reporting first-quarter profit gained 11 percent, driven by box- office gains from films including “Ice Age.” Net income increased to $571 million, or 22 cents a share, from $515 million, or 20 cents, a year earlier, the New York- based company said today in a statement. That beat the 18 cents projected by analysts, the average of 15 estimates compiled by Bloomberg. Fox News, the Big Ten Network and News Corp.’s regional sports networks on cable all took in higher affiliate fees. “The economies in which we do business are clearly in better shape than they were a year ago,” Murdoch said in the statement. “We have further positioned our operations to take advantage of the improvements we are seeing globally.”

- China should withdraw its monetary stimulus to correct “imbalances” in the economy and avoid bad loans from surging among the nation’s banks, said Aberdeen Asset Management Co., which manages $40 billion in Asian equities. “The government is stimulating the economy through the banks,” Nicholas Yeo, head of Hong Kong and China equities, said in an interview at Bloomberg headquarters in New York. “When the government exits its stimulus program, you may see more nonperforming loans. It may take three to five years. I think they should withdraw stimulus but they won’t because they need to keep the economy going.” The World Bank said yesterday China’s policy makers must avert stock and property market bubbles after lending swelled to a record $1.27 trillion this year. Aberdeen has a “strong underweight” in mainland stocks, Hong-Kong based Yeo said. “I’m uncomfortable with state-owned enterprises like the banks,” he said.

- New laws for the derivatives industry would cost the U.S. government $872 million to implement as regulators increase oversight as part of expanded powers to police the market, the Congressional Budget Office said. Legislation to create stricter rules for derivatives that is making its way through Congress would cost the Securities and Exchange Commission $581 million for fiscal 2010-2014, and the Commodity Futures Trading Commission $291 million, the CBO said in an estimate dated yesterday.

- Passengers on Boston subways, the oldest public transit system in the U.S., and regional commuter trains face the potential for serious injury because the state agency in charge lacks funds for repairs, a report today said. The Massachusetts Bay Transportation Authority, known as the T, operates “under a mountain of red ink,” with 51 separate safety projects unfunded, the report said. Those fixes, estimated at $543 million, are needed for problems that “demonstrate imminent danger to life or limb of passengers and/or employees,” the report said. In some places, track fasteners are corroding and the tracks are shifting out of alignment with “the possibility of train derailment,” said the report, written by a panel led by David F. D’Alessandro, former chief executive of John Hancock Financial Services. Along one stretch of the subway’s Red Line in Cambridge, water leaks damaged a system of slabs and disks used to absorb train vibrations. It requires replacement to prevent derailment, the report said. “Yes, people could die,” said Charles Chieppo, a Boston consultant not involved in the report who served on a state panel that studied overhauling MBTA funding in 2000.

- Store rents in Manhattan fell in the third quarter in seven of 10 districts as unemployment and the recession cut spending. Fifth Avenue from 42nd to 49th streets in Midtown was the hardest hit with rents falling 30 percent from the second quarter to $441 a square foot, broker CB Richard Ellis Group Inc. the broker said today in a statement. Retail rents on Fifth Avenue from 49th Street to Central Park, among the world’s most expensive shopping areas, fell 4.1 percent to $1,643 a foot.

Wall Street Journal:

- Many hedge funds have bounced back from a rough 2008 and, for the most part, managers are projected to pay employees as if that troubled year never happened. According to a report conducted by executive search firm Glocap Search LLC, some portions of which were reviewed by Dow Jones Newswires, pay for hedge-fund employees who survived last year's hedge-fund culling is expected to rise slightly over compensation in 2008. Pay still remains lower than in 2007, when the average hedge fund was up double digits. "Our numbers show that [2009] is being treated in isolation," said Adam Zoia, chief executive of Glocap and head of the company's hedge-fund practice. Zoia said the estimates for 2009 are through Oct. 1, and will be correct as long as there's no "material" change in hedge-fund performance between now and the end of the year. The report is based on information gathered by Glocap recruiters, fund managers and industry professionals. The report, which breaks down hedge-fund firms by their 2009 performance, shows that total average compensation this year at funds that have performed well relative to their industry peers are projected to be about 2% higher than in 2008. More importantly, employees at those funds are expected to make only about 5.3% less in 2009 than they made in 2007, not that big a disparity considering the average hedge fund's performance was down about 20% last year and many other funds were closed. "What happened last year was the owners of the hedge funds - the partners - took a large paycut so employees would not have to take as large a paycut," Zoia said.

- Merck & Co.(MRK) Chief Executive Richard Clark said the drug maker is "actively looking" to buy biotechnology companies in the "single-digit" billions of dollars, but another major takeover of the size of Schering-Plough is "off the table right now." In an interview, Mr. Clark said Merck is interested in either acquiring outright biotech companies with promising therapies or technologies, or opportunities to partner with them or license rights from them.

- Incentive pay on Wall Street is set to rise by about 40% as stronger financial markets collide with the political backlash over bonuses, according to a closely watched survey set to be released Thursday. Johnson Associates, a compensation consulting firm in New York, projects that the biggest increases in year-end cash bonuses and equity awards will go to employees in rebounding businesses such as fixed income and equities. Those incentive-based payouts likely will surge by as much as 60% from last year, the survey found.

- TD Bank, a unit of Canadian banking giant TD Bank Financial Group, is facing accusations from customers that the bank allowed their accounts to be emptied without their approval. Investors allege the bank's actions may have helped Florida attorney Scott Rothstein carry out a possible fraud.

- Two House Republicans warned that growing losses at the Federal Housing Administration could lead to a taxpayer-funded bailout and have asked the Department of Housing and Urban Development for data backing up the FHA’s assertion that it won’t need to ask Congress for any taxpayer money. “Congress and HUD must take whatever steps are necessary to ensure that this program operates in a manner that does not expose the taxpayer to yet another bailout,” wrote Republicans Darrell Issa of California and Spencer Bachus of Alabama in a letter, dated Monday, to HUD Secretary Shaun Donovan. The letter was released on Wednesday, hours after FHA Commissioner David Stevens and Mr. Donovan abruptly postponed the public release of the FHA’s annual actuarial review. The release of the report, which will show that the projected value of the agency’s reserves have fallen below a federally mandated level, was delayed after the FHA raised questions about one of the report’s findings.

- This week, Verizon is rolling out a device that finally gives it a more credible alternative. This new $200 phone is the Motorola Droid and it's the first Verizon model to run Google's Android smart-phone operating system. I've been testing the Droid, and while it has some significant drawbacks, I regard it as a success overall. It's the best super-smart phone Verizon offers, the best Motorola phone I've tested and the best hardware so far to run Android. I can recommend the Droid to Verizon loyalists who have lusted for a better smart phone, but don't want to switch networks.

- The Senate on Wednesday passed legislation that would give tax breaks to big companies hit by the recession and expand a credit for homebuyers, while raising other corporate levies, particularly for multinationals. The proposed tax increases are aimed at offsetting the cost to the government of the breaks, making the exact impact on individual businesses and industries difficult to judge. But business leaders worry that the measure could be a sign of more taxes to come, as lawmakers seek ways to pay for new measures without adding to the gaping federal deficit. "We clearly are going to have tax increases going forward," said Bruce Josten, executive vice president of the U.S. Chamber of Commerce. The latest changes to business taxes are contained in a measure that would extend unemployment benefits by as much as 20 weeks from the current 79 weeks.

- A key Senate lawmaker is readying legislation that would dramatically redraw how the financial system is regulated, setting the chamber on a collision course with both the House of Representatives and the Obama administration, which have championed markedly different approaches. The bill, which is being readied by Senate Banking Committee Chairman Christopher Dodd (D., Conn.), would strip almost all bank-supervision powers from the Federal Reserve and Federal Deposit Insurance Corp., according to people familiar with the matter. In their place, the bill would create a new agency in charge of supervising all banks and bank-holding companies, even the country's largest and most complex institutions. Mr. Dodd's proposal also would create a powerful council of regulators, overseen by an independent White House appointee, charged with monitoring risks to the financial system.

- Pending legislation aimed at tightening regulation of financial services would give state authorities significant clout in overseeing hedge funds, a move some regulators fear could undermine Congress's goal. The House Financial Services Committee passed a bill Wednesday that gives states power to regulate all investment advisers, including hedge funds, that manage less than $100 million. The Securities and Exchange Commission would oversee larger advisers.

- Elections this week left Democrats scrambling to renew the coalition that elected President Barack Obama after independent voters, whose power to determine U.S. elections is rising with their numbers, broke heavily toward Republicans.

- The departing director of the United Nations' nuclear watchdog agency declared Wednesday that efforts to curb nuclear proliferation were in "tatters," but he held out hope that current talks over Iran's nuclear program could open "a new era" between the West and Tehran.Mohamed ElBaradei, who leaves Dec. 1 after 12 years as director of the International Atomic Energy Agency, told the Council on Foreign Relations that 50 years of mistrust threatens the proposed deal for Iran to ship most of its low-enriched uranium to Russia and France for processing into medical isotopes.

- Tuesday's elections should put a scare into red state Democrats—and a few blue state ones, too.

CNBC.com:

- Hyatt Hotels priced its initial public offering of 38 million shares at $25 per share on Wednesday, within its expected range.

- Wireless chip supplier Qualcomm(QCOM) on Wednesday forecast weaker than expected full- year results, but its extension of a key deal with Korea's Samsung Electronics helped offset the disappointment for some investors.

IBD:

- Supplement manufacturer and retailer NBTY (NTY) is acting as industry consolidator. It has made 28 acquisitions in the last 20 years. This has added a large portfolio of brands to its core Nature's Bounty line, including Rexall, Good 'N Natural, Met-Rx, Flex-a-min and Ester-C.

Business Week:
- A trio of senators with differing political views is working behind-the-scenes to rescue troubled climate legislation. Sen. John Kerry, D-Mass., together with Sen. Lindsey Graham, R-S.C., and Sen. Joe Lieberman, I-Conn., said Wednesday they would work in conjunction with the White House to patch together a bill that could pass the U.S. Senate. The three senators met individually with Energy Secretary Steven Chu, Interior Secretary Ken Salazar and Carol Browner, the president's assistant for energy and climate change. "Our effort is to try to reach out to broaden the base of support ... ," Kerry said at an afternoon news conference. "The key here is to really negotiate once, in a sense." Graham, who has come under fire in his home state for his support of action on climate change, said working on legislation was a "once in a lifetime opportunity" to solve two problems: heat-trapping carbon dioxide pollution and the country's dependence on foreign sources of fuel.

Lloyd’s List:

- MAERSK Line chief executive Eivind Kolding has warned that state bailouts of shipping lines could delay a very necessary restructuring of the container shipping industry. Mr Kolding told Lloyd’s List that opposition to state bailouts for shipping lines was a matter of principle.

Politico:

- Fox News was the clear winner in the cable ratings last night, averaging 4.04 million total viewers during prime-time, with 1.13 million in the 25-54 demo alone. Fox beat the other three networks combined. MSNBC came in second (974K, 308K), according to Nielsen, with HLN taking third (842K, 341K). CNN, which won the 2008 election night, continues to struggle in prime-time. The network placed fourth for the month of October, and claimed the same spot last night, with 826,000 total viewers and 227,000 in the demo. Amidst falling numbers, CNN executives have long maintained that the network is still the go-to choice for major events. But on this off-year election night, it clearly wasn't.

- On much of Obama’s presidency, there is a surprising bipartisan consensus on what has worked well and what has not. POLITICO spoke to a dozen political insiders and pulled together this list of Obama's ten best, and ten worst, moves of the year.

Rasmussen:

- The Rasmussen Reports daily Presidential Tracking Poll for Wednesday shows that 28% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. Forty-one percent (41%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -13. That’s just one point above the lowest Approval Index rating yet recorded for this President (see trends).

The Business Insider:

- It's time for BlackBerry maker Research In Motion (RIMM) to find a buyer -- before it's too late.

USA Today.com:

- The federal government and some states are plugging into the future of electric cars with subsidies to develop charging stations. But their plans are generating opposition. The U.S. Department of Energy awarded $2.4 billion in stimulus money in August to build electric vehicles and support them with charging stations. The goal is to promote clean energy and reduce U.S. dependence on oil, says David Sandalow, assistant secretary of Energy for policy and international affairs.

- Used car prices are up 16% from a year ago, better than three times the usual 4.6% annual increase, Edmunds.com reports. The reason is simple supply and demand. With fewer new cars being sold, dealers are getting fewer trade-ins. Also, rental car and government fleets have dramatically reduced their new car purchases, a prime source of fresh used cars when they are cast out after a year or two of service. But it appears that cash for clunkers may also have played a role in boosting prices out of reach of many Americans who need cheap, reliable transportation to weather high unemployment and a weak economy. The government cash-for-clunkers program's provision that all the 678,024 gas guzzlers brought in to be traded for new vehicles be destroyed could be another key factor. Edmunds notes that the highest used car price appreciation has come in some of the cars that were the biggest targets of the clunkers program -- pickups, up 26.2%, and midsize SUVs, up 25.4%. Even the prices of used minivans -- a segment that many believe is out of fashion now that there are so many crossover choices -- were up 27.1%. It already has been an expensive outing for taxpayers: The program, which cost nearly $3 billion in taxpayer funds, gave incentives of up to $4,500 for people who traded in old, inefficient vehicles for gas-thrifty new ones. Used car dealers predicted just this scenario when they were griping over the summer about the provision of the law that required cars turned in to be destroyed, many with relatively low miles on the odometer. "It's going to drive prices up of some of the most affordable vehicles we have on the road," said Kelley Blue Book analyst Alec Gutierrez at the time. And that hurts the families most desperate for cheap, reliable transportation. "Those are the cars that lower-income families need," says Geoff Smartt, owner of Smartt Cars in Caldwell, Idaho, when we interviewed him in August.

Reuters:

- The Federal Reserve will continue to foster a U.S. dollar-funded carry trade with its near-zero interest rate policy, Mohamed El-Erian, chief executive of Pacific Investment Management Inc., said on Wednesday. The so-called carry trade refers to borrowing at low short-term rates -- in this case, in the U.S. dollar -- to buy high-yielding, long-dated securities in other markets. The intention is to profit from the rate differential, although rising short-term rates make this strategy riskier and less profitable. Investors worldwide will keep borrowing dollars to buy assets including equities and commodities, fueling the risk of huge bubbles, given the Fed's stance, El-Erian told Reuters.

- The U.S. Securities and Exchange Commission is exploring reforms that could provide companies with more information about the identity of their shareholders, a top agency official said on Wednesday. Companies usually have little information about stockholders due to long-standing practices about shareholder anonymity, and many would like better ways to contact them.Brett Breheny, deputy director of legal and regulatory policy in the SEC's Division of Corporation Finance, said on Wednesday that the SEC has been discussing changes.

- Option traders on Wednesday appeared to be betting that the dollar will recover as they aggressively scooped up call options in an exchange-traded fund tied to the U.S. dollar index.

Financial Times:

- Less than a fortnight ago, Christophe de Margerie, the chief executive of Total, beseeched politicians to discuss energy security, not only the environment, at the Copenhagen climate-change summit in December. One of the industry’s most plain-spoken ambassadors, he said: “Don’t go to Copenhagen only with your concern about the environment. We also have a concern over energy access. If you take only one [concern with you], we are dead and we don’t want to die.” His linking of the two issues has been underscored by the findings of the International Energy Agency, the rich countries’ watchdog. In an unauthorized draft of the World Energy Outlook, its annual report, it concludes that the world’s dependence on natural gas would drop dramatically if environmental policies were enacted to limit carbon emissions. The IEA would not comment on the findings before the report’s launch next Tuesday. If environmental policies are put in place to stabilize greenhouse gases at levels that scientists believe will give the world a good chance of avoiding a sharp rise in temperatures, they will have a significant effect on gas demand, the IEA believes. Increases in energy efficiency and faster growth in renewables such as windpower and nuclear energy would reduce gas consumption by 5 per cent by 2015 and 17 per cent by 2030 compared with the business-as-usual scenario. Russia holds a quarter of the world’s gas reserves, but before 2015 no significant increases are expected from any regions except for the Yamal peninsula. In the US, the situation is slightly different, says the IEA, largely because of its large reserves of natural gas trapped in shale rocks. New technology that allows companies to break the rock and drill horizontally has opened up vast new areas of supply, helping to nearly eradicate the need for liquefied natural gas imports from abroad. “The looming glut in gas-export capacity essentially results from factors on the supply and demand sides: an ongoing surge in LNG capacity coming on line and a dramatic improvement in the prospects for unconventional production in North America . . . and the unexpected slump in demand,” the IEA said. “In the short term at least, trade will not grow as quickly as most investors in new LNG and pipeline capacity originally expected.” North America has 12 LNG terminals with a capacity of 145bcm a year and five more under construction, plus one being extended. This will bring its import capacity to 214bcm.

Late Buy/Sell Recommendations
Citigroup:

- Reiterated Buy on (ADP), target $45.

Night Trading
Asian Indices are -1.25% to unch. on average.

Asia Ex-Japan Inv Grade CDS Index 116.50 -4.0 basis points.
S&P 500 futures -.40%.
NASDAQ 100 futures -.41%.

Morning Preview

BNO Breaking Global News of Note

Google Top Stories

Bloomberg Breaking News

Yahoo Most Popular Biz Stories

MarketWatch News Viewer

Asian Financial News

European Financial News

Latin American Financial News

MarketWatch Pre-market Commentary

U.S. Equity Preview

TradeTheNews Morning Report

Briefing.com In Play

SeekingAlpha Market Currents

Briefing.com Bond Ticker

US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Stock Quote/Chart
WSJ Intl Markets Performance
Commodity Futures
IBD New America
Economic Preview/Calendar
Earnings Calendar

Conference Calendar

Who’s Speaking?
Upgrades/Downgrades

Politico Headlines
Rasmussen Reports Polling

Earnings of Note
Company/EPS Estimate
- (WEN)/.06

- (SMG)/-.33

- (CVS)/.64

- (MGM)/-.07

- (CAH)/.43

- (DPS)/.49

- (CI)/1.03

- (IRF)/-.37

- (NVDA)/.10

- (CSTR)/.25

- (ASEI)/.87

- (IPI)/.15

- (SBUX)/.21

- (ENOC)/.77

- (CBS)/.22

- (IGT)/.16

- (SLE)/.18

- (DTV)/.39

- (PSA)/1.24

Economic Releases

8:30 am EST

- Preliminary 3Q Non-Farm Productivity is estimated to rise +6.5% versus a +6.6% gain in 2Q.

- Preliminary 3Q Unit Labor Costs are estimated to fall -4.2% versus a -5.9% decline in 2Q.

- Initial Jobless Claims for last week are estimated to fall to 522K versus 530K the prior week.

- Continuing Claims are estimated to fall to 5750K versus 5797K prior.

Upcoming Splits
- None of Note

Other Potential Market Movers
- The BoE rate decision, ECB rate decision, weekly EIA natural gas inventory report, ICSC retail monthly same-store-sales, (ATHR) analyst day, (SCHW) business update, (EHTH) analyst day, SunTrust Robinson Humphrey Business/Government Services Conference, Goldman Sachs Industrial Conference, Keefe Bruyette Woods Brokerage & Market Structure Conference and the Lazard Tech/Media Day could also impact trading today.

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

Stocks Finish at Session Lows, Weighed Down by REIT, Hospital, Bank and Disk Drive Shares

Evening Review
BNO Breaking Global News of Note

Google Top Stories

Bloomberg Breaking News

Yahoo Most Popular Biz Stories

MarketWatch News Viewer

Briefing.com In Play

SeekingAlpha Market Currents

WSJ Today’s Markets
Today’s Movers
StockCharts Market Performance Summary
WSJ Data Center
Sector Performance
ETF Performance
Morningstar Style Performance
Commodity Futures
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Timely Economic Charts
Most Recent Guru Stock Picks
CNN PM Market Call
After-hours Stock Commentary
After-hours Movers
After-hours Stock Quote
After-hours Stock Chart

Stocks Mostly Lower into Final Hour on Higher Energy Prices, Rising Long-Term Rates, More Shorting

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Biotech longs, Medical longs, Retail longs and Technology longs. I added (IWM)/(QQQQ) hedges today, thus leaving the Portfolio 75% net long. The tone of the market is mildly positive as the advance/decline line is about even, sector performance is mostly positive and volume is about average. Investor anxiety is very high. Today’s overall market action is mildly bullish. The VIX is falling -5.59% and is very high at 27.21. The ISE Sentiment Index is below average at 111.0 and the total put/call is around average at .78. Finally, the NYSE Arms has been running around average most of the day, hitting 1.25 at its intraday peak, and is currently 1.04. The Euro Financial Sector Credit Default Swap Index is falling -1.48% today to 67.33 basis points. This index is down from its record March 10th high of 208.75. The North American Investment Grade Credit Default Swap Index is falling -3.76% to 104.03 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is unch. at 23 basis points. The TED spread is now down 441 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is falling -1.04% to 35.75 basis points. The Libor-OIS spread is unch. at 13 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is up +7 basis points to 2.12%, which is down 53 basis points since July 7th. The 3-month T-Bill is yielding .04%, which is unch. today. The market’s reaction to today’s news is disappointing. Economically sensitive stocks are substantially underperforming. (XLF) has been heavy since its morning high. Bank, Education, Hospital, Disk Drive, Oil Service, Alt Energy and REIT shares are especially weak falling -1.0%+. On the positive side, a number of sectors are posting meaningful gains. Homebuilding, HMO, Steel and Paper stocks are surging 2%+. A number of market leaders are substantially outperforming, as well. Today’s overall action likely indicates more mixed-to-negative broad market performance near-term. Nikkei futures indicate an +50 open in Japan and DAX futures indicate a -19 open in Germany tomorrow. I expect US stocks to trade mixed-to-lower into the close from current levels on more shorting, rising long-term rates, rising energy prices and financial sector pessimism.

Today's Headlines

Bloomberg:

- JPMorgan Chase & Co.(JPM) agreed to pay $75 million and forfeit another $647 million in interest-rate swap termination fees to settle a U.S. Securities and Exchange Commission probe into the sale of derivatives that helped push Alabama’s most populous county to the brink of bankruptcy.

- The Federal Reserve restated its intention to keep interest rates “exceptionally low” for “an extended period” and said the U.S. economy is picking up. “Businesses are still cutting back on fixed investment and staffing, though at a slower pace,” the Federal Open Market Committee said in a statement today after meeting in Washington. “Activity in the housing sector has increased over recent months.”

- Treasuries fell for a third day after Federal Reserve officials said they’re more optimistic about the economic outlook at the conclusion of today’s policy meeting.

Yields on 10-year notes rose even as central bankers repeated their pledge to leave the target rate for overnight loans between banks in a range of zero to 0.25 percent for an “extended period.” The Treasury said earlier it will sell a record $81 billion in notes and bonds next week.

Wall Street Journal:

- A Republican sweep in Virginia and New Jersey on Tuesday shifted the political terrain against President Barack Obama only a year after his historic election. In New Jersey, Republican former U.S. Attorney Christopher J. Christie ousted incumbent Democrat Jon S. Corzine with a surprisingly strong showing. Virginia voters elected Republican former Attorney General Bob McDonnell as their commonwealth's next governor, handing the state back to the GOP after eight years of Democratic rule.

- Chinese steel mills are offering a growing market for eastern U.S. coal producers. A projected more-than-quadrupling of metallurgical-coal imports by the world's largest steel producer has Appalachian mining companies taking the hitherto rare step of shipping directly to China. U.S. producers benefit from new customers, and rising global prices for the metallurgical, or met, coal that can come from the spillover effect of Chinese demand.

- Iraq is expected to award its giant West Qurna-1 oil field in southern Iraq to a consortium comprising Exxon Mobil Corp.(XOM) and Royal Dutch Shell PLC, a senior Iraqi oil official said. West Qurna-1, with estimated proven oil reserves of 8.6 billion barrels, was one of eight oil and gas fields up for auction in June this year. However, only one oil field was successfully awarded -- Rumaila, Iraq's largest producing oil field. The successful bidder, a group made of BP PLC and China National Petroleum Corp. signed a final $15 billon deal Tuesday to develop the field. Exxon Mobil and Shell proposed in June to raise production from the field to 2.325 million barrels a day in seven years from the current 270,000 barrels a day.

- Israeli officials said Wednesday that naval commandos seized a cargo ship carrying about 500 tons of weapons bound for Hezbollah 100 miles off Israel's Mediterranean coast.

- The pace of layoffs eased in October, but progress in the labor markets remains painfully slow. Private-sector jobs in the U.S. fell 203,000 last month, according to a national employment report published Wednesday by payroll giant Automatic Data Processing Inc. and consultancy Macroeconomic Advisers. Separately, U.S. service sector growth slowed in October, amid more lost ground in hiring.

- U.S. health officials expressed frustration Wednesday with the nation's struggles to produce vaccines against the H1N1 flu strain and told lawmakers they cannot guarantee that supply problems won't resurface. The new flu strain is spreading faster than the U.S. can make vaccines against it. Equipment problems and the slow pace in growing the new flu strain in laboratories for vaccines scuttled plans to have 161 million vaccines available by October. Today, just 32.3 million doses are available, far less than the 159 million needed to cover all those at highest risk from the H1N1 flu, Centers for Disease Control and Prevention Director Thomas Frieden said at a House Appropriations subcommittee briefing Wednesday.

- Economists expect a decline in the rate of acceleration of China's economic growth as the initial impact of the massive government stimulus plan fades, according to a new poll by The Wall Street Journal.

- Retailers are reporting some encouraging trends from October as they head into the holiday shopping season. Sales during the month, traditionally a time of fall clearance, were better than expected for many retailers, according to analysts' estimates. Although October sales patterns typically don't predict holiday sales trends, retail executives point to signs of pent-up demand and a gradual return of shoppers. "There's generally momentum in the business," said Leslie Wexner, chief executive of Limited Brands Inc., which operates Victoria's Secret and Bath & Body Works.

CNBC:

- U.S. mortgage applications rose for the first time in four weeks, reflecting a jump in demand for home refinancing loans as interest rates on 30-year loans dropped below 5 percent, data from an industry group showed on Wednesday. The Mortgage Bankers Association said rates on 30-year fixed-rate mortgages, the most widely used loan, fell below 5 percent for the first time in four weeks.

NY Times:

- Despite reports of a surge in new hedge funds in 2009, those seeking to hang up their own shingle may be disappointed by a report that says institutional investors plan to allocate 44 percent less in seed capital for the rest of the year. After surveying 50 top global institutional hedge fund seeding firms, Acceleration Capital Group found that the amount of seed capital allocated for the third and fourth quarter was $1.32 billion, compared with $2.35 billion available in the first half of 2009. The survey also says that 52 percent of hedge fund seeders preferred investing in distressed and global macro strategies.

- Following the lead of foreign regulators, New York’s attorney general, Andrew M. Cuomo, filed a federal antitrust lawsuit Wednesday against Intel, the world’s largest chip maker.

- The Securities and Exchange Commission is likely to bring charges against additional defendants in its wide-ranging insider-trading case against Raj Rajaratnam, left, and his hedge fund firm, the Galleon Group, an agency lawyer said at a court hearing on Wednesday. Valerie Szczepanik, the S.E.C. lawyer, would not say when additional defendants might be charged in the case, but Judge Jed S. Rakoff, who is presiding over the civil case in Federal District Court in New York, set Dec. 15 as the deadline to add additional parties in the matter.

NYPost:
- An owner of Harrah's Entertainment, America's biggest casino chain, is doubling down. Private-equity firm Apollo Management is buying bonds in the debt-swamped business so it has more power in the event of a debt restructuring, even if its large equity stake is wiped out.

New York Magazine:

- When the inimitable CNBC reporter Charlie Gasparino announced the title of his new crisis epic, The Sellout: How Three Decades of Wall Street Greed and Government Mismanagement Destroyed the Global Financial System, to his friend Teddy Forstmann, the financier was skeptical. "So what you're saying," Ted said, "is that somewhere along the line, Wall Street as an institution had some principles to sell out?" He had a point. Crisis-book connoisseur Moe Tkacik caught up with Gasparino as he obsessively checked his Amazon rankings today to find out more.

The Business Insider:

- The 20 Most Unemployed Cities In America.

- Goldman: India Has Been A Horrible Gold Trader.

zerohedge:

- The Goldman(GS) 10-Q is out, providing numerous interesting datapoints for those willing to scour through them. The key one: Goldman lost money on just one trading day in Q3, making money on all the other 64. As a reminder, even in Q2 Goldman lost money on two trading days. The statistical probability distribution of 1 out of 65 is something that not the SEC, but Richard Feynman should be looking into, as Goldman Sachs, after rewriting the laws of risk/return, is now set to redefine normal distributions and other Statistics 101 concepts. And an indication of just how much of a hedge fund Goldman has become instead of a client servicer, the firm's Equities Commissions revenue for the quarter dropped to $930 million from $1.2 billion YoY, while prop Equities Trading skyrocketed from $354 million to $1.8 billion YoY! And just in case you were wondering someone, somewhere was motivated to destroy Fixed Income powerhouse Lehman and Bear, look no further than Goldman's Fixed Income, Currency and Commodities which did a gentle jump from $1.6 billion in Q3 2008 to $6 billion last quarter. And that explains all you need to know about motivations and backstops.

ocregister:

- Carly Fiorina: Why I’m running for Senate. Our most pressing problems today are too few jobs for Americans and too much spending in Washington.

Gawker:

- The Spitzer Files: How the New York times and the Press Serviced Client No. 9.

Canalys:

- Global smart phone shipments in Q3 2009 rose 4% year on year, slower than the 13% annual growth seen last quarter, and held back primarily by a 6% fall in EMEA. Shipments in North America were up 5%, but the APAC region saw a remarkable 26% rise after several flat quarters. Nokia retained its worldwide smart phone lead, with a share of 40% – slightly up on its year-ago position, but down almost 5% sequentially. RIM held onto second place with a largely unchanged (compared to Q2) share of 21%, while Apple reached a new high of 18% share in third, significantly up from the 14% it held in Q2 as supply of the iPhone 3GS improved in many countries. HTC retained its fourth-place position with 5% share. Looking at the market by operating system, Symbian’s overall lead shrank as its share fell to 46%, ahead of RIM and Apple. Microsoft remained in fourth with its share dipping slightly below last quarter’s previous low point of 9%. The proportion of smart phones running Google’s Android OS climbed to almost 4%, from just under 3% in Q2. Notable performers in Q3 included Apple and RIM, which both saw a new record volume of devices shipped in the quarter. “Demand for the iPhone 3GS far outstripped supply,” Cunningham added. “And we expect to see continued growth for Apple, especially with new operators coming on board, for example in the UK with the end of O2’s exclusivity on the device. Our end-user research indicates growing demand for touchscreen products and Apple’s satisfaction ratings in our surveys are consistently the highest of any vendor. Furthermore, the iPhone’s appeal is not limited to the consumer market, in our October study of 600 European decision makers in medium and large enterprises, more than 20% said they expect the iPhone to be the dominant smart phone platform for running business applications in their organization within the next 3 to 5 years. In France, the iPhone was ahead of Windows Mobile and RIM in this regard – a remarkable result.”

Politico:

- Eager to drain the 2009 elections of drama and import, White House press secretary Robert Gibbs claimed Tuesday night that President Barack Obama was “not watching returns.” You can be sure that he is studying them closely now: The off-year elections were, in two big races, an unmistakable rebuke of Democrats, reshuffling Obama’s political circumstances in ways likely to have severe near-term consequences for his policy agenda and larger governing strategy. Independents took flight from Democrats. They suffered humiliating gubernatorial losses in traditionally Democratic New Jersey, where Obama lent his prestige in a pair of eleventh-hour campaign rallies Sunday, and in Virginia, which had been trending leftward and just last year was held up as an example of how Obama was redrawing the political map in his favor. Tuesday night’s trends were emphatically not in Obama’s favor. Among those paying closest attention are dozens of Democrats who won formerly Republican congressional districts in 2006 and 2008 and are up for reelection in 2010. Many of these pickups that powered the Democrats’ recapture of Congress came in Southern and border states, or in the Ohio River Valley, where political conditions are similar to those in Virginia.

Hedge Funds Review:

- A significant gap in understanding between quants and their supervisors has been revealed in a survey of almost 400 active quants and risk professionals. The majority (86.3%) of quant and risk management supervisors do not fully understand the work that their teams do, according to the survey conducted by Certificate in Quantitative Finance (CQF). The survey asked respondents about the relationship between quants and their managers. A majority (64%) of quants said they believe their supervisors either do not understand at all or only understand a bit about the job of a quant. A clear majority (70%) of quants said the level of understanding of the role of quants within their institutions had decreased or had not changed at all from a year ago. Quants and risk managers have been pointed to by many economists as one of the principle reasons the global financial crisis escalated so precipitously. "These numbers are alarming," said Paul Wilmott, course director for CQF. "They indicate that even with the events of the past year, financial institutions are still not taking the importance of financial education seriously, especially as it pertains to improving relationships and understanding between quants and their managers," he added.

USA Today:

- The government is sending millions of dollars in stimulus aid to communities and housing agencies that federal watchdogs have concluded are unable to spend it appropriately, increasing the risk that the money will be wasted. Since July, auditors working for the Department of Housing and Urban Development's inspector general have scrutinized at least 22 cities, counties and housing authorities in 15 states and Puerto Rico to measure whether they can handle stimulus funds effectively. Only six, they found, could do so. The rest — in line to receive more than $220 million in stimulus aid — had shortcomings ranging from poor management to inadequate staffing that threatened their ability to spend the money quickly and appropriately, a series of audit reports show. The reviews provide one of the first windows, albeit a narrow one, into the vast network of local agencies that ultimately will be responsible for spending more than $8 billion to repair deteriorated public housing, fund homelessness programs, and cope with the foreclosure crisis. The money is part of the Obama administration's $787 billion stimulus package.

Reuters:

- The chairman of the U.S. House Financial Services Committee is seeking changes to draft legislation for the $450 trillion privately-traded derivatives markets, with the intent of making it harder for banks to avoid trading the contracts on exchanges. Barney Frank said in a letter released on Wednesday that he plans to introduce amendments that would give regulators the Commodity Futures Trading Commission and the Securities and Exchange Commission the decision over what contracts are eligible for central clearing, and thus required to be traded on exchanges. He is also seeking to tighten language over what companies may be exempt from centrally clearing their contracts, "to prevent speculators from masquerading as end-users." Critics say that banks want to protect the large margins they earn from trading derivatives, which benefit from opacity in the markets.

Financial Times:

- Gold Oil, an exploration group focused on Latin America, is seeking partners to help fund the development of what could be a large oil discovery off the coast of Peru. The Aim-listed company has started discussions with sovereign wealth funds based in the Middle East about taking an interest in Block Z34, which lies west of four of the largest developed oil fields in northern Peru. These fields have already produced a total of 1.6bn barrels of oil. Gold Oil has analyzed seismic data and identified six drilling leads it believes could have significant commercial potential. Some of these are in 200ft-300ft of water, although the most promising lies in much deeper water.

- Americans are still willing to pay for cable TV, broadband and cinema tickets in spite of weak consumer spending, according to the first crop of third-quarter results from US media companies. Among the media companies that have raised expectations for the second half of the year, Time Warner lifted its profit outlook for 2009 on the back of better-than-expected results at its cable and films division. Viacom on Tuesday reported a similar lift in earnings of 15 per cent in the third quarter from ticket sales of the GI Joe and Transformers films and its MTV Networks cable channels.

ABC Rural:

- Australia’s Victoria is set to harvest its most grain in a decade. The Department of Primary Industries has forecast the state will harvest three times more grain than last year.

Digitimes:

- An overstock of LCD monitor panels is easing, as makers have decreased output for the segment, according to industry sources. Panel makers expect the upcoming holiday shopping lasting till the Lunar New Year holiday in early 2010 will help further digest monitor panel inventory.

Haaretz.com:

- The U.S. House of Representatives on Tuesday condemned a UN report that accuses Israeli forces and Palestinian militants of committing war crimes in Gaza early this year as irredeemably biased and unworthy of further consideration or legitimacy. With a 344-36 vote, the House passed a nonbinding resolution that urged President Barack Obama and Secretary of State Hillary Rodham Clinton to oppose unequivocally any endorsement of the report. Twenty-two representatives voted present. The report, commissioned by the UN Human Rights Council, accuses both Israel and the Palestinian Hamas group of war crimes.

Bear Radar

Style Underperformer:
Small-Cap Value (+.10%)

Sector Underperformers:
Oil Service (-.69%), Gold (-.69%) and Hospitals (-.62%)

Stocks Falling on Unusual Volume:
PEGA, CNW, AIG, AEM, HIG, JNY, AU, TRLG, GRMN, STEC, HSIC, MXWL, JAKK, CRL, TAP, SGA and DLB

Stocks With Unusual Put Option Activity:
1) DRIV 2) ALL 3) DE 4) ACL 5) STEC

Bull Radar

Style Outperformer:
Large-Cap Growth (+1.41%)

Sector Outperformers:
HMOs (+5.87%), Steel (+3.62%) and Construction (+3.0%)

Stocks Rising on Unusual Volume:
SGY, SFY, CCI, CCJ, BCS, IMO, PTR, WBMD, BGFV, NETL, DRIV, TNDM, MORN, BBBB, CHSI, TESO, AAWW, LOPE, PENN, SPWRB, TKLC, DISCA, FWLT, NCIT, VRTX, TTES, HUBG, RHB, WHI, BCA, DVA, SWM, HLS, ING, IRE, INT and TSU

Stocks With Unusual Call Option Activity:
1) ABK 2) SPLS 3) AET 4) SLAB 5) JBHT