Stocks Rising into Final Hour on Housing Optimism, Short-Covering, Technical Buying

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Technology longs, Medical longs and Financial longs. I have not traded today, 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 slightly below average. Investor anxiety is very high. Today’s overall market action is bullish. The VIX is rising +.88% and is high at 23.06. The ISE Sentiment Index is around average at 150.0 and the total put/call is above average at .93. Finally, the NYSE Arms has been running about average most of the day, hitting .96 at its intraday peak, and is currently .93. The Euro Financial Sector Credit Default Swap Index is falling -2.89% today to 65.48 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 -.89% to 98.0 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is up +1 basis point to 22 basis points. The TED spread is now down 442 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is down -.76% to 32.63 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 +2 basis points to 2.23%, which is down -42 basis points since July 7th. The 3-month T-Bill is yielding .05%, which is down -1 basis point today. Market leading stocks are strongly outperforming again today. As well, the Transports are sharply outperforming, rising 1.74%. (XHB) has traded very well throughout the day and is boosting the entire market as it breaks back above its 50-day moving-average. Today’s gains are better than the major averages suggest, with a number of sectors posting 1%+ gains. The market ran into some technical resistance this morning after the S&P 500 penetrated the 1,100 level, however the bears have once again been unable to gain any meaningful traction. I expect the S&P 500 to break convincingly higher through this short-term resistance by week’s end. Nikkei futures indicate an +70 open in Japan and DAX futures indicate an +6 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, earnings optimism, investment manager performance anxiety, technical buying and stable long-term rates.

Today's Headlines

Bloomberg:

- The European Union may seek to impose the same pay restrictions on hedge-fund managers and private-equity firms that it proposed for bankers, Sweden’s financial-markets minister said. The EU added the pay rules to alternative investment fund legislation that is being reviewed in the European Council and European Parliament, Mats Odell, Sweden’s financial markets minister, said at a conference in Stockholm today. The proposals “will be very close” to rules on bankers’ pay, he said.

- Imports of refined copper and copper products by China, the world’s largest user, tumbled 34 percent in October from the previous month as stockpiles built up. Purchases declined to 263,109 metric tons last month, the customs office said today. That’s the lowest monthly total since January’s 232,700 tons, according to data compiled by Bloomberg.

- Google Inc.(GOOG) Chief Executive Officer Eric Schmidt said his company’s $750 million purchase of AdMob Inc. will expand sales of ads that appear in applications on smart phones such as the iPhone. “AdMob is clearly the best of its ilk for applications monetization,” Schmidt said yesterday in an interview at Google’s headquarters in Mountain View, California. “We think that’s as strategic as search monetization, which, of course, we’re very good at.” Together, AdMob and Google will be the largest mobile- advertising company, with about 30 percent to 40 percent of the market, according to Karsten Weide, an analyst with researcher IDC in San Mateo, California. The purchase will allow advertisers to get their brands in front of consumers who use games, personal-finance tools and music programs on the iPhone and devices using Google’s Android software, Schmidt said.

- Emerson Electric Co.(EMR) Chief Executive Officer David Farr said the U.S. government is hurting manufacturers with regulation and taxes and his company will continue to focus on growth overseas. “Washington is doing everything in their manpower, capability, to destroy U.S. manufacturing,” Farr said today in Chicago at a Baird Industrial Outlook conference. “Cap and trade, medical reform, labor rules.” Farr, in his presentation, also said manufacturers are being hurt by taxes and regulation. He said companies will create jobs in India and China, “places where people want the products and where the governments welcome you to actually do something.” Emerson has shed more than 20,000 jobs since the end of 2008 to lower expenses. “What do you think I am going to do?” Farr asked. “I’m not going to hire anybody in the United States. I’m moving. They are doing everything possible to destroy jobs.”

- Toll Brothers Inc.(TOL), the largest U.S. luxury homebuilder, gained as much as 14 percent in New York after orders surged 42 percent in the fiscal fourth quarter, cancellations slowed and revenue beat analysts’ estimates. Net contracts climbed to 765 in the three months through October from 539 a year earlier and the cancellation rate dropped to 6.9 percent from 30.2 percent, Horsham, Pennsylvania- based Toll said in a statement yesterday. The shares jumped $2.23 to $20.62 at 9:52 a.m., the biggest gain since Aug. 12. “The surprise was more on the upside,” said David Goldberg, an analyst with UBS Securities LLC in New York. “They did better than we thought.”

- A year before the next U.S. congressional elections, just 52 percent of registered voters want their representatives to Congress to be re-elected, a poll found. That figure is similar to numbers recorded in 2006 and 1994, the last two elections in which control of both houses of Congress changed political parties, according to the survey by the Pew Research Center for the People & the Press. In October 2006, 50 percent said they wanted their representatives re-elected, Pew said, and a month later Democrats captured the House and Senate. The number was 49 percent in October 1994, a month before Republicans took over both houses.

Wall Street Journal:

- Face.com is opening its photo-tagging system, based on facial-recognition technology, to Facebook members Wednesday. Photo Tagger, which launched to a limited group of users in July, scans a user’s photo albums on the social-networking site, then lets him tag faces it identifies. It groups multiple shots of each person, making it easy to tag large albums, and users can also adjust or remove incorrectly tagged pictures. Once a member has been identified, the app prompts him or her to approve the tag — a crucial privacy step, since he or she may not want to be labeled in a photo. It also works with a member’s current photo-privacy settings on Facebook.

- Top executives and directors have been scooping up shares of PrivateBancorp Inc.(PVTB) even as the stock cratered, suggesting that insiders may think the stock is primed for recovery.

- In a ruling unveiled on Tuesday (link not yet available), a federal judge ruled unconstitutional a Christian “I Believe” vehicle license tag with the image of a cross authorized last year by the South Carolina general assembly.

- Black Friday has gone from a one-day event to a month-long parade of promotions this year, as retailers are making a dash for early holiday cash.

- There’s a new sign Windows 7 is off to a strong start: Web surfers have started moving to the operating system much more quickly than they did its troubled predecessor, Windows Vista. A new research report says Windows 7 on Saturday surpassed 4 percent of all devices visiting Web sites that day, a little over two weeks after the commercial launch of the product. It took Windows Vista, in contrast, about seven months to pass 4 percent after it was introduced to businesses in November 2006, according to the report from Net Applications, a firm that tracks online usage.

- Unions are pushing state lawmakers to pass legislation that would make organizing workers easier, as efforts to rewrite federal organizing laws remain stalled in Congress.

- The Obama administration said Tuesday that its mortgage-modification program has enrolled one in five eligible homeowners, a sign the effort is gathering momentum after a slow start. But so far few of those trial modifications are turning into permanent fixes.

CNBC:

- General Motors could be hurt by pay restrictions on senior executives set by the U.S. government, the automaker's chairman said Tuesday, urging an overhaul of the salary caps.

- Funny Business reader Rick Ambrose has been "divinely inspired" to rewrite the Lord's Prayer as the 'Lloyd's Prayer': Our Chairman, Who Art At Goldman, Blankfein Be Thy Name. The Rally's Come. God's Work Be Done, We Have No Fear Of Correction. Give Us This Day Our Daily Gains, And Bankrupt Our Nearest Competitors, Just As You Taught Lehman And Bear A Lesson. And Bring Us Not Under Indictment. For Thine Is The Treasury, The House And The Senate Forever And Ever. Goldman.

NYPost:
- As Clear Channel Communications sets the stage to launch its fourth debt restructuring plan, some of the company's biggest lenders are trying to seize control of the company's outdoor unit in order to further squeeze the radio and billboard giant. According to sources familiar with the matter, Leon Black's Apollo Management and Blackstone Group's GSO Capital are quietly buying up shares in Clear Channel Outdoor(CCO), the financially struggling company's publicly traded outdoor unit, in order to crimp the parent company's ability to keep using the outdoor unit as its personal ATM.

- Hearst Corp., is sitting on a $1 billion war chest, insiders say -- one reason it has tapped an investment banker as its new chief financial officer. Mitchell Scherzer, it was announced Monday, will replace retiring Senior Vice President Ronald Doerfler. The move is seen to signal a more aggressive acquisition strategy by company Chairman and CEO Frank Bennack, who wants to fulfill the Hearst family mandate to find new revenue streams in digital and non-traditional media.

The Business Insider:

- Investors have been pouring into Exchange Traded Funds (ETFs) this year. $108 billion flowed into ETFs year to date, $24 billion of which came during the last three months. Yet while investors have been pouring into commodity, fixed income, and global equity ETFs, one very important category has remained a complete pariah -- U.S. Stocks. Despite the stock market rally we've witnessed during the last three months, money has continued to flow out of U.S. equity ETFs. Thus while some might be able to argue that the crowd has jumped into commodities, fixed income, and global equities, it's pretty hard to say that investors are in love with stocks again.

- The Boston Globe finds that the number of jobs allegedly being created or saved by the stimulus is being massively inflated:

- Foreign-Currency Buyers Making Huge, Bulk Purchases Of Distressed Florida Condos.

LA Times:

- A state blue-ribbon panel unanimously approved landmark fishing restrictions Tuesday for Southern California, creating a patchwork of havens for marine life designed to replenish the seas while leaving some waters open for anglers. The plan, approved 5 to 0 during a meeting at which emotions boiled over briefly into shouting and shoving, was a compromise intended to sustain the 250-mile coastline's environmental as well as economic health -- forged during a year of contentious negotiations between conservationists and fishing interests. any move to close waters to fishermen has been strongly resisted by both the fishing industry and recreational boaters. On Tuesday, representatives of both groups, many of them wearing black T-shirts, turned out at the panel's meeting and predicted job losses and business closures.

Lloyd’s List:

- The number of ships being ordered in China dropped 63% in October, citing data from the country’s Ministry of Industry and Information Technology.

Rassmussen:

- Sixty percent (60%) of likely voters nationwide say last week's shootings at Fort Hood should be investigated by military authorities as a terrorist act. The latest Rasmussen Reports national telephone survey finds that just 27% want the incident investigated by civilian authorities as a criminal act.

- After being knocked out of first place last month for the first time in nearly two years, the economy is back as the issue voters view as most important. The latest Rasmussen Reports national telephone survey shows that 85% of voters consider the issue of the economy as very important, topping a list of 10 key electoral issues regularly tracked by Rasmussen Reports.

Politico:

- The sudden spasm of intense debate over abortion on Capitol Hill this week threatens not only to stall the passage of health care legislation, but also to shatter the delicate cease-fire that has governed the abortion issue during the Obama era. After months of dodging high-profile confrontations over abortion, Democrats — including President Barack Obama — find themselves faced with a stark set of alternatives: Support a bill that imposes limits on access to abortion or demand one that might, however indirectly, fund the procedure with taxpayer money. It's the kind of decision point the White House and Democratic leaders have consistently attempted to avoid.

iPhone J.D.:

- The Am Law Tech Survey 2009 was just released, and I was curious how the iPhone would rank on the list. In the 2008, only 5% of the firms reported having attorneys using an iPhone. While that percentage was low, I cannot say that it was surprising. Although the iPhone was released back in 2007, it wasn't until the iPhone 3G was released in mid-2008 with support for Microsoft Exchange and third party apps that most larger companies, including law firms, started to adopt the iPhone. Thus, at the time that the Am Law Tech Survey 2008 was being conducted, successful law firms were just starting to look at iPhones. The 2008 survey revealed that virtually all of the law firms had attorneys using a Blackberry (98%) while a good number of law firms had attorneys using Windows Mobile (30%) and Palm OS (14%). The 2009 survey reports a huge jump in iPhone use. Whereas 5% of the Am Law 200 law firms reported attorneys using iPhones in 2008, 55% were supporting iPhone use in 2009.

Reuters:

- United Parcel Service Inc (UPS), the world's largest package delivery service, expects growth in its volumes next year as the global economy gradually recovers, its chief said on Wednesday. UPS CEO Scott Davis told Reuters the company will hike shipping rates for 2010, which follows a similar move by rival Fedex (FDX), and it will announce the size of the hike later this month. "I think we will go back to see positive volumes next year as the economy improves," Scott said in an interview, ahead of a meeting of Asia-Pacific corporate and political leaders in Singapore. Davis told a business luncheon earlier on Wednesday that a global economic recovery will happen in a gradual manner. "I believe the recovery is real, but it is gradual. It is sustainable but vulnerable." He said this will lead the U.S. holiday season to be slightly better than expected. "Most people, the consensus, are saying it is going to be a pretty flat holiday in the U.S. I think it will be slightly better than that," he added.

- Graphics chipmaker Nvidia Corp (NVDA) is seeing strong demand for its products, helped by a recovery in the global economy, its chief executive said on Wednesday. "We have supply constraints across board," Jen-Hsun Huang told reporters in the Indian city of Bangalore. "And the reason for that is demand just spiked up very, very quickly and we are seeing robust demand across the board." He said the company was seeing recovery from all geographies, including U.S. and Europe. Nvidia last week forecast fourth quarter revenue to be up about 2 percent from the third quarter, well above Wall Street expectations, and said its new server and mobile chips were gaining momentum.

- Motorola Inc(MOT) is in the early stages of looking into a potential sale of its $4.5 billion television set-top box and network equipment business, two sources said on Wednesday.

Financial Times:

- Another slew of Chinese data, another load of raised eyebrows. Evidence of accelerating retail sales or fixed-asset investment might be taken at face value elsewhere, but these are two of China’s least reliable indicators. Seasoned China-watchers accept that not everything adds up in the data-gathering business. The total of first-half gross domestic product figures released individually by China’s 31 provinces and municipalities, for example, was almost 10 per cent higher than the national figure put out by the National Bureau of Statistics. But some inputs to those sums are flakier than others. A 33.1 per cent year-on-year rise in urban fixed-asset investment, as reported by the NBS on Wednesday, does not necessarily mean that investment rose by 33.1 per cent. As John Makin of the American Enterprise Institute think-tank points out, “investment” by central-government planners is counted on the basis of funds disbursed for projects, regardless of whether those funds have actually been spent. Similarly, retail sales figures – up 16.2 per cent – are not a useful proxy for household consumption as they basically track shipments to retailers, lumping in all kinds of government and corporate spending.

- Hedgebay’s Secondary Market Indicator shows the average premium or discount (below 100 - the Net Asset Value) paid for hedge funds that trade in the secondary market. It’s basically a sentiment indicator for hedge fund investors, but it can also be interpreted as an an indicator of the cost of liquidity (the liquidity premium, or how much investors will demand in exchange for going into a fund which presumably has some sort of lock-up).

Bear Radar

Style Underperformer:
Mid-Cap Growth (+.07%)

Sector Underperformers:
Retail (-.27%), Utilities (-.25%) and Education (-.23%)

Stocks Falling on Unusual Volume:
WATG, SIGM, PCLN, ADBE, LOGI, FLO and WTW

Stocks With Unusual Put Option Activity:
1) PCS 2) TOL 3) M 4) RRI 5) OSK

Bull Radar

Style Outperformer:
Small-Cap Value (+.94%)

Sector Outperformers:
Homebuilders (+3.93%), Banks (+1.76%) and Semis (+1.57%)

Stocks Rising on Unusual Volume:
OFG, PVTB, SUPX, OXPS, CLF, WFC, BAC, PGR, FPL, CMS, CBEY, REGN, ZOLL, CAAS, CAVM, AIXG, COLM, ASBC, NTRI, MRCY, LMIA, GMCR, ALNY, PLCM, TTES, VRTX, BUCY, SHOO, ODFL and JRCC

Stocks With Unusual Call Option Activity:
1) SAP 2) PWRD 3) TOL 4) DRYS 5) CMG

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Wednesday Watch

Late-Night Headlines
Bloomberg:

- Toll Brothers Inc.(TOLL), the nation’s largest luxury homebuilder, announced fourth quarter revenue that beat analysts’ estimates. The shares gained. “We have definitely progressed from one year ago,” Chairman and Chief Executive Officer Robert Toll said in today’s statement. The average price of a Toll Brothers home climbed to $535,000 from $495,000 a year earlier. Net contracts totaled 765 and the company reported a 6.9 percent cancellation rate, which it said was in line with pre- recession rates. Results were announced after the close of regular U.S. trading. The shares gained $1.35, or 7.3 percent, to $19.74 at 5:45 p.m.

- Federal Reserve Bank of Dallas President Richard Fisher said U.S. economic growth and inflation may persist below ideal levels into 2011, making the central bank’s current interest-rate stance “appropriate.” “Looking into 2010 and perhaps to 2011, the most likely outcome is for growth to be suboptimal, unemployment to remain a vexing problem and inflation to remain subdued,” Fisher said in a speech today in Austin, Texas. “Our current policy is appropriate.” Responding to audience questions, he said the dollar is undergoing a “rather orderly depreciation.”

- Former Bear Stearns Cos. hedge-fund managers Ralph Cioffi and Matthew Tannin were found not guilty of misleading investors who lost $1.6 billion, the first major test of a U.S. effort to obtain convictions tied to the subprime mortgage crisis and subsequent recession. A jury of eight women and four men deliberated less than a day before reaching a verdict today. Cioffi, 53, the portfolio manager for the hedge funds, and Tannin, 48, their chief operating officer, went on trial Oct. 13 in federal court in Brooklyn, New York, on charges of conspiracy, securities and wire fraud. Each faced as many as 20 years in prison if convicted. When the verdicts were read, the two men didn’t visibly react. Their wives burst into tears.

- Western society “is facing an impasse” because of its tradition of Christianity, said Ichiro Ozawa, a lawmaker with the ruling Democratic Party of Japan, according to Kyodo news service. Christianity is an “exclusive and self-righteous religion,” Ozawa, Secretary General of the DPJ, told reporters after meeting a Buddhist leader in western Wakayama prefecture, Kyodo said last night. Ozawa added that while Islam was better, it too was exclusive. Ozawa, 67, his party’s second-ranked official, engineered the DPJ’s landslide victory in August’s lower-house election in which the DPJ ended five decades of almost uninterrupted rule by the Liberal Democratic Party.

- U.S. Senate Banking Committee Chairman Christopher Dodd’s plan to revamp financial regulation may do little to rein in Wall Street compensation as Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co.’s investment bank prepare to pay record bonuses. A bill introduced today by the Connecticut Democrat would rewrite financial-industry rules. It includes a non-binding shareholder vote on executive pay, gives investors more power to elect directors and requires that publicly traded companies allow pay to be clawed back, or recouped, if it was based on inaccurate financial statements. “For the most part it’s pretty hollow, a toothless tiger,” said Paul Dorf, managing director of Compensation Resources Inc., a pay consultant based in Upper Saddle River, New Jersey.

- Ten-year Treasury Inflation Protected Securities may be “overbought” and poised to drop, according to a technical indicator used by traders to predict changes in securities prices. The relative-strength index on the 10-year TIPS breakeven rate, the yield gap between the securities and conventional Treasuries of the same maturity, is near the highest level since May, indicating TIPS prices may fall. The 14-day RSI was 73 today, after touching a five-month high of 77 yesterday. Readings above 70 indicate a drop is likely. The RSI is measured on a scale of 0 to 100. “Right now it’s overbought, and it’s been overbought and rising for four days,” said John Spinello, chief technical strategist in New York at Jefferies Group Inc., one of 18 primary dealers that trade with the Federal Reserve. “It’s telling you it’s vulnerable to a piece of information that could reverse it.” Bollinger bands, another technical indicator, show that the 10-year TIPS breakeven is more than two standard deviations from the norm, another signal showing TIPS prices may be poised to fall, Spinello said.

- Prudential Financial Inc.(PRU), the second-largest U.S. life insurer, increased its annual dividend 21 percent after posting its third straight quarterly profit. “Businesses that are more sensitive to market conditions, annuities and asset management, are fundamentally sound and are positioned to benefit from improving market conditions,” Chief Executive Officer John Strangfeld said in a conference call last week.

- In Washington, the conversation between Israeli Premier Benjamin Netanyahu and President Barack Obama was about reviving peace talks. Back home, Netanyahu’s Palestinian partner for the negotiations may soon be gone. Palestinian Authority President Mahmoud Abbas said on Nov. 5 that he may not run for re-election in January, a step his advisers said could lead to the collapse of his administration. Aides warned of possible violence as a result of the stalemate with Israel. “The Palestinian Authority was established to achieve a goal, and that was the two-state solution, an independent Palestinian state,” chief negotiator Saeb Erakat said in an interview yesterday. “If the Israelis have not reached the defining moment of wanting a two-state solution, who needs the Palestinian Authority?” Netanyahu’s trip to Washington follows remarks by Secretary of State Hillary Clinton praising his proposal to limit West BankIsrael must end all settlement building in the West Bank as a precondition to talks. The announcement by Abbas, who has staked his career on negotiating peace, may be a tactic aimed at pressing Obama to exert more pressure on Netanyahu to freeze West Bank building, said Moshe Maoz, a professor of Islamic and Middle Eastern studies at Hebrew University in Jerusalem. settlement expansion. The comments angered Palestinian officials, who have repeatedly said that

- Canadian Health Minister Leona Aglukkaq said the decision to vaccinate Taliban detainees in Afghanistan against the swine flu before most Canadians have been inoculated is “outrageous” and she will review it. The Canadian Press reported today that detainees held by Canadian troops will start receiving the swine-flu vaccine tomorrow because the Geneva Convention says prisoners and captors must receive the same medical care.

- China’s lending growth slowed in October as officials considered more steps to tighten credit standards and avert asset-price bubbles. The slowdown in credit follows a warning by the World Bank this month that China faces the danger of a surge in asset prices that could destabilize the economy. Policy makers may “soon” issue measures to limit the use of debt in real-estate purchases as a way to rein in price gains, Fang Xinghai, head of Shanghai’s financial services office, said this week. “To prevent a boom-bust episode in asset prices, China will need to tighten monetary conditions next year,” said Lu Ting, an economist with Bank of America-Merrill Lynch in Hong Kong. “We expect China to adopt a tighter policy bias toward the spring of 2010 as the recovery matures.”

- Orders for Japanese machinery rose more than twice the pace economists estimated in September, signaling that a recovery in the world’s second-largest economy may be sustained. Orders, an indicator of business investment in three to six months, climbed 10.5 percent from a month earlier, the Cabinet Office said today in Tokyo. The median estimate of 25 economists surveyed by Bloomberg was for a 4.1 percent gain.

Wall Street Journal:

- Banks are moving quickly to restructure commercial mortgages under new U.S. guidelines that are more forgiving of battered property values and can help banks avoid bigger losses. Citigroup Inc., regional bank Whitney Holding Corp. and other lenders around the country are planning to review loans now considered nonperforming to determine if they can be reclassified under the guidelines announced Oct. 30 by bank, thrift and credit-union regulators, according to bank executives and people familiar with the matter. The moves could help the banks absorb fewer losses on troubled real-estate loans and preserve capital. "It's a positive all the way around," said James Smith, chief credit officer for National Bank of South Carolina, a unit of Synovus Financial Corp.
- The venture-capital industry is undergoing some tough times, with returns scarce and new money hard to raise in the recession. But a new survey by law firm Fenwick & West shows some optimism is emerging as venture capitalists mark up the valuations of their start-up investments. According to the Fenwick & West survey, which covers the third quarter, 41% of new venture financings in that period were for up rounds, which means a company was given a higher valuation when it received venture money. That compares to 36% down rounds and 23% flat rounds. It was the first quarter this year where up rounds exceeded down rounds, said the survey.

- Last spring Tennessee Republican Rep. Marsha Blackburn asked Al Gore during a House hearing if his investments in green energy meant he would benefit personally from cap and trade. "If you believe that the reason I have been working on this issue for 30 years is because of greed, you don't know me," Mr. Gore responded (and, yes, according to two reporters present, he sighed). Mr. Gore is quite right that his arguments should be judged on their merits, not on his investments. He's wrong to think his investments are irrelevant, and, even more, that sincerity is dispositive of anything. Sincerity is no substitute for disinterestedness. Here are a couple questions: When so much of his position and prestige are invested in a predicted climate crisis, is Mr. Gore likely to be open to contrary evidence? Is he likely to be particularly fastidious about whether proposed steps will actually have an effect on global warming if they also happen to benefit his investments? Ms. Blackburn's challenge was in a sense late. Mr. Gore long ago jumped over to the side where salesmanship, by whatever means, was the trumping priority. As far back as 1989, he insisted there was "no dispute worthy of recognition" about the danger of manmade climate change. By now, he titularly heads a vast establishment with a stake in one side of the argument. Notice, for instance, after a decade in which the earth appears to have stopped warming and even cooled, that global warming advocates have rushed to embrace a computer simulation that predicts this cooling (in retrospect, of course) and allows for indefinite future cooling, even while assuring that the world is destined to face disastrous warming anyway. Isn't this what forecasters of doom have done since time immemorial when their deadlines for doom haven't been met?

- South Korea's sovereign ratings could be hurt if tensions with North Korea worsen, a Standard & Poor's Ratings Service analyst said, hours after a naval clash between the two neighbors.

- Morgan Stanley(MS) Smith Barney is raising its recruiting deal for top-producing financial advisers, according to people familiar with the situation. The retail brokerage joint venture will offer top-tier advisers from its competitors up to 330% of their annual production to join the firm, an increase from a previous offer of 230% to 250%.

- The Obama administration said Tuesday it will streamline the application process for $7.2 billion in broadband stimulus grants in response to criticism from applicants and lawmakers that the program isn't getting money out quickly enough. Officials at the Commerce and Agriculture Departments outlined plans to consolidate into a single round a grant process originally projected to go for two more rounds. The first round of grants is scheduled to be made in December.

- The U.S. dollar's dominance isn't over--at least not yet, a new report from the Center for Strategic & International Studies argues. While the past year has been marked by calls for a shift away from the dollar as the world's reserve currency by countries including China--the U.S's largest creditor--the CSIS doesn't expect the greenback will lose its clout in the near future. "It would be a mistake to conclude that China is ready to ditch the dollar anytime soon, let alone seek to replace the dollar with the renminbi as a reserve currency," researchers Melissa Murphy and Wen Jin Yuan wrote. They say Chinese talk of shifting from the dollar is simply rhetoric aimed at putting the world on notice that China plans to use its growing economic clout to strengthen its role in the global economy. "Given its vast holdings and limited investment options, Beijing has little choice but to continue to support the U.S. dollar," they wrote. The CSIS estimates China has accumulated about $1.4 trillion in U.S. dollar reserves, underscoring its desire not to see a drop in the value of the dollar and its own dollar-denominated holdings. "Beijing doesn't want to shoot itself in the foot," Murphy said in a panel discussion Tuesday.

- A Financial Crisis Investigation Scorecard.

- Robert Benmosche has told the board of American International Group Inc.(AIG) that he is considering stepping down as chief executive of the government-controlled insurer, just three months after taking the job, according to people familiar with the matter. At a board meeting last week, the strong-willed industry executive told fellow AIG directors that he was "done" but agreed to think it over after other board members reacted with shock, according to the people. The executive is chafing under constraints imposed by AIG's government overseers, particularly a recent compensation review by the Obama administration's pay czar, Kenneth Feinberg.

- President Obama heads for Asia this week to talk about U.S. economic recovery and reform, and one theme that we expect he'll hear from Asian leaders is this: America is leaving itself behind as the rest of the world tries to liberalize trade. The numbers tell the story. At least 266 bilateral or regional trade deals are in force, according to the World Trade Organization, and there are roughly 100 more of which the WTO has not yet been formally informed. The U.S. is a party to only five of the 64 trade pacts that have taken effect since 2005—with Australia, Morocco, Bahrain, Oman and Peru.

CNBC.com:

- Three Things the US Can Do To Stop the Dollar’s Decliine.

NY Times:

- At a time when other categories of advertising dollars are shrinking, video ads are booming. News sites are adding more video inventory to keep pace with the demands of advertisers, and benefiting from the higher cost-per-thousands, or C.P.M.’s, that ads on those videos command.

IBD:

- Japan, the world's second-largest economy, took one step closer this fall to green-lighting the sale of surgical robots, satisfying its craving for medical devices. The news bodes well for Intuitive Surgical (ISRG), which had a disappointing quarter overseas. The company has a lock on the robotic surgery market with its flagship da Vinci system.

CNNMoney.com:

- Tech gadget gifts for $299 or less.

Forbes:

- Grab-Em-While-You-Can Gadgets.

The Hollywood Reporter:

- Comcast and GE have agreed to make NBC Universal CEO Jeff Zucker the head of their proposed joint venture, but the structure of a new board is still being negotiated, sources familiar with the matter said. The two sides have been in talks to reach a deal that would give Comcast a 51% stake in the NBC Universal venture, which would also house the cable networks now belonging to Comcast. They recently agreed to value NBC Universal at about $30 billion, sources previously told Reuters. Under the terms being discussed, Zucker will lead the new entity, with no clauses for him to leave after a specific period, the sources said Tuesday.

Politico:

- Democrats who thought a vote against the sweeping health care package would inoculate them from political attack are facing serious blowback from angry constituents and interest groups on the left—fierce opposition that could prove as consequential as anything Republicans could have thrown at them. For some of 39 House Democrats who opposed the bill, there are protests outside their offices and promises of retribution. For others, there are attempts to shut off their campaign money spigot. Still more are about to get drilled in a television ad campaign paid for by Democratic donors. What they’ve all discovered is that there’s no safe harbor when it comes to the $1.2 trillion measure that the House passed Saturday. Darcy Burner, executive director of the American Progressive Caucus Policy Foundation, said that the anger over the vote was a natural outgrowth of the value liberals have placed on the health care push. “I think, for the most part, the Democrats who voted ‘no’ on the health bill and who are getting heat deserve it,” said Burner.

Rasmussen:

- Republican candidates have stretched their lead over Democrats to six points in the Generic Congressional Ballot. The latest Rasmussen Reports national telephone survey shows that 43% would vote for their district’s Republican congressional candidate while 37% would opt for his or her Democratic opponent. Republicans have held the lead for over four months now. Voters not affiliated with either party continue to heavily favor Republicans, 43% to 20%.

The Business Insider:

- Chart of the Day: The Las Vegas Strip Is Making A Huge Comeback.

- Gold Investors Beware The Hyperdeflationary Black Swan.

Reuters:

- Google(GOOG) eyes China as Baidu(BIDU) fumbles.

Financial Times:

- Goldman Sachs(GS) pays its employees more than other financial groups because its employees are more productive, declared Lloyd Blankfein, Goldman chief executive, at an industry conference on Tuesday. Mr Blankfein offered a wide-ranging defence of his company on Tuesday to an audience of banking analysts at a conference sponsored by Bank of America. His comments came as public debate continues over Goldman’s power and bonuses, prompting the comedy programme Saturday Night Live to ask the bank: “Can you not read how mad people are at you?”.

TimesOnline:

- President Obama is to ask members of Nato to provide up to 4,000 more troops to help to break the deadlock in Afghanistan. Mr Obama is poised to confirm a surge of more than 30,000 US combat troops, according to senior military sources. He will also urge the rest of Nato to provide thousands of soldiers to train new recruits to the Afghan National Army (ANA). His appeal is set to be largely ignored, however. At present only two Nato members have offered more troops — Britain and Turkey — and no other country is expected to come up with any, according to alliance sources. Such a response would threaten the credibility of the alliance in Afghanistan and represent a considerable snub for Mr Obama, who was viewed as a welcome change after the administration of President Bush.

- The woman who chairs one of the most powerful political committees in the European Parliament will propose next week that caps on hedge fund borrowings should be dumped, The Times has learnt. Sharon Bowles, whose Economic and Monetary Affairs Committee is responsible for handling the proposed legislation governing hedge funds, private equity and other asset managers, plans to suggest in a speech in Frankfurt that central banks should monitor borrowing levels in their own countries, within a range set by Brussels. The Liberal Democrat MEP hopes that her suggestion will trigger a debate among regulators, central banks and fund managers about the feasibility of such a move. It would mark a significant victory for London’s hedge funds, which are anxious that Brussels will cap their leveraging levels and force them to apply to Europe when they want to increase borrowing.

- A looming glut in supplies of natural gas will trigger sliding prices and weaken Russia’s grip over Europe’s energy supplies, the International Energy Agency (IEA) said yesterday. In its 2009 World Energy Outlook, the IEA said that the surplus in global supplies could hit 200 billion cubic metres per year by 2015 — equivalent to more than three years’ annual gas production from Britain’s part of the North Sea.

South China Morning Post:

- Cathay Pacific Airways Ltd. said holiday demand has boosted cargo volumes as US retailers stock up on clothing and electronics, citing the company’s cargo general manager for China and Hong Kong. Business has returned to what the company regards as normal levels and rates have climbed.

Late Buy/Sell Recommendations
Citigroup:

- Reiterated Buy on (TYC), raised estimates, boosted target to $42.

- Upgraded (FPL) to Buy, target $58.

- Reiterated Buy on (HEW), raised target to $46.

Night Trading
Asian Indices are -.25% to +.75% on average.

Asia Ex-Japan Inv Grade CDS Index 107.50 +3.0 basis points.
S&P 500 futures +.14%.
NASDAQ 100 futures +.07%.

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
- (FLO)/.34

- (M)/-.07

- (CSC)/1.38

- (AAP)/.66

- (GMCR)/.33

- (AMAT)/.03

Economic Releases

- None of note

Upcoming Splits
- None of Note

Other Potential Market Movers
- The Bloomberg Global Confidence Index, (AMD) analyst day, CSFB Healthcare Conference, Goldman Sachs Data Center Conference, (K) analyst day, (SMOD) analyst event, (KEME) analyst meeting, (LOGI) analyst day, (STZ) institutional investor meeting, DA Davidson Housing Conference, (MON) pipeline presentation, (MJN) investor day, Citi Industrial Manufacturing/Transportation Conference, Robert Baird Industrial Conference, Janney Montgomery Software/Services Conference, Piper Internet Summit, (NUVA) investor luncheon, (EGN) investor day and the BofA Merrill Banking/Financial Services conference could also impact trading today.

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