Style Outperformer:
Small-Cap Value (+.50%)
Sector Outperformers:
Hospitals (+1.84%), Semis (+1.48%) and REITs (+1.14%)
Stocks Rising on Unusual Volume:
CMCSK, RMBS, FSLR, TM, BAC, HMC, NVS, PHG, TIN, APWR, HGSI, RYAAY, UTIW, ZUMZ, GIII, CBST, AMZN, OTEX, LRCX, URBN, CSIQ, TSCO, JST, KLAC, SNDA, PCLN, PSS, DEG, FGP, DLM and APU
Stocks With Unusual Call Option Activity:
1) SLE 2) MU 3) CMCSK 4) FDO 5) PSS
BNO Breaking Global News of Note
Yahoo Most Popular Biz Stories
Briefing.com Stock Market Update
Stocks On The Move
Upgrades/Downgrades
StockCharts Market Performance Summary
Late-Night Headlines
Bloomberg:
- Bank of America Corp.(BAC), the nation’s biggest lender, will repay $45 billion of U.S. government bailout funds, helping free the bank from curbs on executive pay that have hampered its search for a new leader. The bank will repay the Troubled Asset Relief Program using $26.2 billion of “excess liquidity” and $18.8 billion from the sale of securities, according to a statement. The firm plans to increase equity by $4 billion through asset sales, and will issue $1.7 billion of restricted stock instead of year-end bonuses to some employees.
Wall Street Journal:
- Wall Street firm Goldman Sachs Group Inc.(GS)—known for its outsize profits and unapologetically handsome pay packages to go with them—has begun meeting with major investors in an effort to ward off an investor backlash over its record compensation pool. The private discussions are a first for Goldman, several shareholders said, as the Wall Street firm finds its self on the defensive over its pay, where employees are on track to earn an average of more than $700,000 apiece this year. The meetings are expected to last several more weeks and come as shareholders are filing proposals aimed at restricting pay at Goldman. Winning shareholder support for its compensation-and-benefit pool is critical for Goldman executives. While the public uproar over pay has hurt the firm's reputation, shareholders are the actual owners of the firm and the only ones with voting power to change the compensation structure. As a result, Goldman executives have been extremely focused on shareholder feedback. During these meetings, Goldman also has been asking investors how they make voting decisions on shareholder proposals, according to people who heard the conversations. Some investors say the questions suggest Goldman is developing a strategy to navigate any shareholder proposals aimed at reining in pay.
- With DVD sales waning and digital distribution not taking hold, entrepreneurs are offering Hollywood studios alterative solutions. The latest is a Web site called Movieclips.com. Users of the site, launching Wednesday, can find clips from more than 1,200 films, ranging from classics like "The Wizard of Oz" to the latest "Twilight" sequel. The Movieclips site allows fans to rent or purchase films from retailers after browsing clips; it also offers ways to share clips on social networking sites like Twitter or Facebook. In a rare move, all six major Hollywood studios, including Viacom Inc.'s Paramount Pictures and Time Warner Inc.'s Warner Bros., have agreed to license content to the site, perhaps hoping to boost DVD sales by sharing promotional content like clips.
- The National Institutes of Health approved 13 human embryonic stem-cell lines for use in federally funded research, a move that cheered investors in the politically charged field. The NIH announcement follows President Barack Obama's decision in March to lift restrictions on federal funding for embryonic stem-cell research. President George W. Bush had allowed such funding but limited it to 21 stem-cell lines already in place as of August 2001, saying he didn't want a federal incentive for more embryos to be destroyed.
- Within hours of the announcement, a growing number of Democratic lawmakers and candidates began seeking to distance themselves from the president, denouncing the cost of sending more troops, the corruption of the Afghan government, and the lack of emphasis on attacking al Qaeda in Pakistan, rather than simply stabilizing Afghanistan. The liberal activist group MoveOn.org distributed an "emergency petition" Wednesday, saying that Congress "must push the Obama administration to outline firm benchmarks and a binding timeline to bring all of our troops home from Afghanistan as soon as possible."
IBD:
- They're cheering for the government's stimulus package at Cerner (CERN). The $19 billion in federal stimulus funds to motivate hospitals and doctors to convert to electronic medical record-keeping means more business for the developer and vendor of health care data-keeping software and systems.
The Detroit News:
- Michigan has lost $1.9 billion in economic activity and $2.5 billion in home equity value in three years because of population declines in 63 of its 83 counties, according to a Michigan State University study.
The Business Insider:
- Anderson Cooper is fading in the ratings. The respected CNN anchor has seen his numbers slip significantly through the past year. His 10 p.m. show, "Anderson Cooper 360," has declined 62% in total viewers and 70% in adults 25-54 from November 2008, according to Nielsen figures.
Financial Times:
- The number of European companies defaulting on their debts is set to continue to run at more than twice the historic average rate until 2011, with up to 75 companies with junk credit ratings at risk of default. Standard & Poor’s said on Wednesday that while the annual default rate is likely to have peaked at 13.1 per cent in the third quarter of 2009, the slow pace of economic recovery is likely to be insufficient to save many highly leveraged and poorly performing companies. They are forecasting the default rate to be between 8.7 to 11.1 per cent next year, with 55 to 75 western European companies with sub-investment grade credit ratings at risk of default in 2010. The forecast from Standard & Poor’s is the first time the rating agency has given such a precise projection for 2010. It would mark 2010 as the third worst year on record if these defaults materialized, behind 2009 and 2002.
- CME Group(CME), the world’s biggest futures exchange, is nearing a breakthrough deal with some of the world’s biggest banks to clear credit default swaps, according to people close to the negotiations. An agreement with some banks could be announced on Thursday, capping more than a year of discussions.
Globe and Mail:
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (WPI), target $48.
- Rated (BDX) Buy, target $85.
Night Trading
Asian Indices are -.50% to +1.0% on average.
Asia Ex-Japan Inv Grade CDS Index 110.50 unch.
S&P 500 futures +.24%.
NASDAQ 100 futures +.28%.
Morning Preview
BNO Breaking Global News of Note
Yahoo Most Popular Biz Stories
MarketWatch Pre-market Commentary
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
Who’s Speaking?
Upgrades/Downgrades
Politico Headlines
Rasmussen Reports Polling
Earnings of Note
Company/EPS Estimate
- (ARST)/.13
- (CPWM)/-1.09
- (NOVL)/.07
- (DLM)/.21
- (TOL)/-.44
Economic Releases
8:30 am EST
- Final 3Q Non-farm Productivity is estimated to rise +8.5% versus a prior estimate of a +9.5% gain.
- Final 3Q Unit Labor Costs are estimated to fall -4.1% versus a prior estimate of a -5.2% decline.
- Initial Jobless Claims for last week are estimated to rise to 480K versus 466K the prior week.
- Continuing Claims are estimated to fall to 5400K versus 5423K prior.
10:00 am EST
- ISM Non-Manufacturing for November is estimated to rise to 51.5 versus 50.6 in October.
Upcoming Splits
- None of note
Other Potential Market Movers
- Fed Chairman Bernanke's Senate confirmation hearings, Fed's Rosengren speaking, Treasury's Barr speaking, retail same-store-sales, ECB rate decision, weekly natural gas inventories, (FE) analyst meeting, (PRX) analyst meeting, (PFG) analyst conference, Jeffries Energy Summit, JPMorgan SMid Cap Conference, CSFB Aerospace/Defense Conference, (ATHN) analyst meeting, (GPRO) analyst meeting and the CSFB Tech Conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by automaker and technology shares in the region. I expect US equities to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.
Evening Review
BNO Breaking Global News of Note
Yahoo Most Popular Biz Stories
BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Technology longs, Medical longs and Biotech 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 gaining and volume is about average. Investor anxiety is very high. Today’s overall market action is mildly bullish. The VIX is falling -3.24% and is high at 21.21. The ISE Sentiment Index is low at 98.0 and the total put/call is slightly above average at .90. Finally, the NYSE Arms has been running high most of the day, hitting 1.58 at its intraday peak, and is currently 1.41. The Euro Financial Sector Credit Default Swap Index is falling -2.69% to 73.15 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 -1.15% 101.72 basis points. This index is also well below its Dec. 5th record high of 285.99. The TED spread is unch. at 22 basis points. The TED spread is now down 444 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is rising +4.68% to 34.94 basis points. The Libor-OIS spread is unch. at 11 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is unch. at 2.18%, which is down -47 basis points since July 7th. The 3-month T-Bill is yielding .04%, which is unch. today. Small-caps are outperforming today with the Russell 2000 rising +1.0%. Ag, Semi, Airline, Gold and Steel shares are especially strong, rising +1.5%. The bears have been unable to gain any traction from the morning slide and the S&P 500 is holding above technical support. Today’s action is indicative of another healthy consolidation day. One of my longs, (CREE), is hitting another new multi-year high today. While the shares are extended short-term, I don't think it is too late to purchase the stock on any pullback. Nikkei futures indicate an +85 open in Japan and DAX futures indicate a -2 open in Germany on tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, technical buying, less economic fear, investment manager performance angst and seasonal strength.
Bloomberg:
- The economy expanded or improved “modestly” across the U.S. from October to mid-November as consumer spending rose in a majority of Federal Reserve districts, the central bank said. Eight regions “indicated some pickup in activity or improvement in conditions,” while the other four said conditions were little changed or mixed, the Fed said today in its Beige Book business survey, published two weeks before officials meet to set monetary policy. The labor and commercial real estate markets remained “weak,” the report said.
- Australia’s Senate rejected the government’s climate-change bill, frustrating Labor Prime Minister Kevin Rudd’s ambition of taking landmark legislation to global warming talks with world leaders in Copenhagen. The government will send the legislation to the Senate for a third time when parliament resumes in February, Deputy Prime Minister Julia Gillard told reporters in Canberra today. Senators voted 41 to 33 against the bill, which included plans for a carbon trading system similar to one used in Europe. “There is no danger of this country rushing ahead, but as a result of the actions of the opposition, there is a risk this country is left behind,” Australian Climate Change Minister Penny Wong said during today’s Senate debate.
- Nokia Oyj said industrywide volumes will rise about 10% in 2010.
- Crude oil and gasoline tumbled after a government report showed that inventories climbed last week as consumption declined. Supplies of crude oil rose 2.09 million barrels to 339.9 million, the highest level since August, the Energy Department said today. Gasoline supplies surged 4 million barrels to 214.1 million. Fuel demand slipped 2.6 percent as refineries reduced operating rates for the fourth time in five weeks. “Prices should be much lower given how high inventories are,” said Chip Hodge, who oversees a $9 billion natural- resource bond portfolio as senior managing director at MFC Global Investment Management in Boston. “There’s certainly no lack of oil. If I were an oil producer, I would be very happy because the fundamentals don’t justify these prices.” “There’s going to be a lot of negativity any time you get big crude and gasoline numbers like we did today,” said Nicholas Pope, an analyst at Dahlman Rose & Co. in New York. “The big supply injections and lower refinery utilization rates should move prices lower.” Total petroleum inventories, which include crude oil and fuels, rose 5.94 million barrels to 1.82 billion in the week ended Nov. 27, the report showed. “These numbers are a bearish shock to the market,” said Tim Evans, an energy analyst at Citigroup Global Markets Inc. in New York. “Total petroleum stocks were up more than 5 million barrels last week while demand dropped 500,000 barrels. The report is bearish both in real terms and relative to expectations.” Total U.S. daily fuel demand averaged 18.5 million barrels in the four weeks ended Nov. 27, down 3.2 percent from a year earlier, the report showed. Consumption slipped by 497,000 barrels a day last week. Refineries operated at 79.7 percent of capacity, down 0.6 percentage point from the previous week, according to the report. Oil also dropped after a report showed that oil output in Russia, the world’s largest oil producer, remained at a post- Soviet high for a second month in November as OAO Rosneft continued to ramp up the Vankor field in northern Siberia. Rosneft said last week it plans to raise output at Vankor by as much as 50 percent to an average of 270,000 barrels a day next year. It anticipates peak production of more than 500,000 barrels a day from the field.
- A House panel approved legislation strengthening U.S. authority to police large, complex firms that pose risks to the economy, advancing the Obama administration’s effort to overhaul financial rules.
Wall Street Journal:
- President Barack Obama's top science adviser urged lawmakers to act to curb emissions of greenhouse gases, despite the uproar over emails in which some prominent climate scientists appeared to advocate squelching the views of researchers skeptical that human activity is driving a dangerous rise in global temperatures. Human activity is "beyond any reasonable doubt" the primary cause of warming temperatures, Mr. Holdren said. Mr. Holdren's comments drew a unanimously supportive response from Democrats and unanimous skepticism from Republicans, some of whom called for a congressional inquiry into the dispute over the integrity of climate science. Opponents of such caps said the foundations of the case for man-made global warming are in question because of the disclosures from thousands of emails from the University of East Anglia's Climate Research Unit. The emails suggest that prominent climate researchers sought to disguise important discrepancies in their data showing a trend of rising global temperatures and attack those who disagreed with their views. "However this controversy comes out, the result will not call into question the bulk of our understanding of how climate works or how humans affect it," said Mr. Holdren, director of the Office of Science, Technology and Policy. He agreed it is important to "get to the bottom of" the emails' meaning, but emphasized that the vast majority of scientists who have studied climate change agree that failure to act promptly to curb emissions of heat-trapping gases is "overwhelmingly likely" to lead to extreme and damaging impacts on the planet. His comments were challenged by Rep. James Sensenbrenner, a Wisconsin Republican who said the emails "at worst" suggest "a massive scientific international fraud." "We're being asked as a Congress to make major changes in American society in energy use," he said. "The scientists may be able to change their story and do more research, but once Congress passes a law, it will be as difficult to undo the consequences of that law as putting milk back in the cow."
- Infosys Technologies Ltd.(INFY) plans to nearly double its work force in the U.S. and remains on the lookout for acquisition targets in Germany, France and Japan, its chief executive said. India's second-largest software exporter by revenue after Tata Consultancy Services Ltd. is planning to hire 1,000 employees in the U.S., Chief Executive S. Gopalkrishnan said in an interview.
- Defense contractor L-3 Communications Holdings Inc. (LLL) is well-positioned to benefit from the surge in U.S. troops that President Obama plans to send to Afghanistan, the company's chief executive said Wednesday.
CNBC:
- U.S. mortgage applications nudged higher last week, data from an industry group reported on Wednesday, as consumers showed a subdued reaction to the lowest interest rates in six months. The Mortgage Bankers Association said interest rates on 30-year fixed-rate mortgages, the most widely used loan, fell for a sixth straight week, remaining below the 5 percent level, widely viewed as a psychological tipping point.
- According to analytics firm ComScore, spending on Cyber Monday, the first Monday after Thanksgiving, was up 5 percent from a year ago.
The Business Insider:
- Rupert Murdoch has budgeted $15 million to launch a New York edition of the Wall Street Journal, John Koblin at the New York Observer reports.
- Let the outrage continue! Yesterday we ran a feature 10 Amazingly Wasteful Stimulus Projects, which outlined a few of the more ridiculous projects being funded by government stimulus money. But that's just the tip of the iceberg. The government is infinitely good at wasting your money.
LATimes:
- California Medical Association to oppose healthcare bill under debate in Senate. The state’s largest doctors group is opposing healthcare legislation being debated in the Senate this week, saying it would increase local healthcare costs and restrict access to care for elderly and low-income patients. The California Medical Assn. represents more than 35,000 physicians statewide, making it the second-largest state medical association in the country after Texas. “The Senate bill came so short that we could not support it, even though we solidly support healthcare reform,” said Dr. Dev GnanaDev, medical director at Arrowhead Regional Medical Center in San Bernardino, who also serves on the association’s executive committee. Doctors who oppose the Senate bill are concerned that it would shift Medicare funding from urban to rural areas, move responsibility for Medicare oversight away from Congress by creating an Independent Medicare Commission and, ultimately, decrease Medicare reimbursement rates. Medicare reimbursements would decrease 40% in coming years under the Senate bill, LaMar said. California doctors already contend with some of the lowest MediCal reimbursement rates in the nation, and although those rates would not change under the Senate bill, the pool of people eligible for coverage would increase. Only about a third of California doctors currently accept MediCal, and GnanaDev said that would likely grow under the Senate plan. “If the doctors can’t see you, the only choice you have is the emergency room, which is a very bad way to get healthcare,” he said.
Rassmussen:
Politico:
TechCrunch:
- Financial information and analysis community Seeking Alpha announced that it has recently closed a Series B round of financing to the tune of $7 million, led by first-time investor DAG Ventures with participation from existing investors Benchmark Capital and Accel Partners. Seeking Alpha also inked a content partnership deal with Nasdaq.com, under which terms it will deliver opinion pieces from its now 3,272 contributors and timely news products like MarketCurrents and Wall Street Breakfast. You can see the integration in effect here and here.
Reuters:
- Computer maker Dell Inc (DELL) sees potential upswings in consumer and commercial demand in the coming year, as well as a "moderately good" holiday season, Dell Chief Financial Officer Brian Gladden said on Wednesday. "I think the consumer cycle has been surprisingly positive this year," Gladden said at the Credit Suisse Technology Conference. "It certainly surprised us how strong it was ... I think the holiday season will be moderately good ... I think we are seeing that play out over the past few weeks." On the commercial side, Gladden also said an "elongated cycle of refresh" was due, probably next year, for everything from "servers all the way through client products." "Their asset base has aged much beyond what they had expected," he said of corporate clients. "Our view is sometime next year you will start to see that happen. "We are surprised at how good demand has been over the last few weeks. The hypothesis of a corporate refresh is still alive," he added. "It's just a question of when does that happen and how long. I think you will see an elongated cycle of refresh."
Financial Times:
- Gilead(GILD), the US biotech company, is poised to benefit from new World Health Organization guidelines for HIV which call for earlier treatment using more up-to-date antiretroviral drugs for millions of extra patients around the world. The company is expecting to receive hundreds of millions of dollars in additional revenues each year from the new approach, with significant extra sales for Bristol-Myers Squibb(BMY) of the US, its partner on one drug combination treatment. A number of low-cost generic drug manufacturers including several based in India will suffer falling sales, with the phasing out of the older antiretroviral medicine stavudine (also called d4T), which is now judged as too toxic to justify continued use. The changes follow new international HIV treatment guidance issued this week by the World Health Organization, mirrored by similar advice in other influential national bodies including the Office of Aids Research Advisory Council in the US and the European Aids Clinical Society.
Middle East Online: