BETWEEN THE HEDGES

Late-Night Headlines
Bloomberg:

- Temperatures in northern China may fall to the lowest in half a century today as the Chinese capital recovers from the heaviest snowfall in almost six decades. Beijing temperatures are forecast to drop to as low as minus 16 degrees Celsius (3.2 degrees Fahrenheit) tonight, according to the China Meteorological Administration. Northern China may have 50-year low temperatures today, China Central Television reported yesterday. The Chinese capital was hit by the heaviest daily snowfall since 1951 on Jan. 3, the official Xinhua News Agency reported.

- Dubai renamed the world’s tallest building in honor of the ruler of Abu Dhabi less than a month after receiving a $10 billion lifeline from the neighboring emirate that defused a financial crisis. The 200-story Burj Khalifa, or Khalifa Tower, was known until yesterday as Burj Dubai. Sheikh Khalifa Bin Zayed Al Nahyan, who has ruled Abu Dhabi since 2004, is also president of the United Arab Emirates.

Wall Street Journal:

- Even for the ETF industry's dominant player, maintaining a big lead on rivals isn't easy when the field is growing. But that is exactly what iShares did in 2009. This exchange-traded-fund brand—which was sold to BlackRock Inc. by Barclays PLC last year—not only maintained but also increased its market share in the ETF business in 2009, the first time it has done so since 2006. At year-end, iShares ETFs held about $373 billion, or about 50.1% of the assets in all U.S. ETFs, according to fund researcher Morningstar Inc. In 2008, iShares had 47.7% of ETF assets in 2008.

- Kia Motors America and Microsoft Corp.(MSFT) are partnering to provide a new system that will allow drivers and passengers to make phone calls and control a car's audio system through voice commands. Called UVO, the hands-free system will be offered in several Kia vehicles by the end of the year.

- Looking to build on the momentum of its iPhone and iPod, Apple Inc.(AAPL) will unveil a new multimedia tablet device later this month, but isn't planning to ship the product until March, say people briefed by the company. While the device's ship date hasn't been finalized and could still change, people briefed on the matter said the new product will come with a 10 to 11-inch touch screen—which would make it closer in size to Apple's line of MacBook laptops than its smart phone. The tablet is expected to be a multimedia device that will let people watch movies and television shows, play games, surf the Internet and read electronic books and newspapers. Though companies like Toshiba Corp. and Hewlett-Packard Co. have introduced Windows-based tablet computers before and Amazon.com Inc. and others sell similarly-sized digital-book readers, people briefed by Apple say the company intends to carve out a new product category. With the new device, Apple wants to change the way consumers interact with a variety of content, these people said. Textbooks and newspapers, for example, could be presented differently through color screens, a touch interface, and the integration of live up-to-the-minute information from multiple sources. As Apple readies a tablet device, the company has also been working on revamping its iTunes service so it can offer people more ways to access and manage their content. Apple acquired music-streaming service La La Media Inc. in December, and it has been in talks with TV networks regarding a monthly subscription service for shows. Though Apple has historically preferred to unveil products when they are ready to ship, analysts believe it wants to show a tablet early before related key patents become public and so it can generate the excitement necessary to convince TV networks to commit to licensing deals. Apple took a similar strategy with the original iPhone when it announced it six months earlier than its ship date in June 2007.

- Less than three weeks after "Avatar" hit theaters, the high-tech science fiction epic is already the most successful movie ever in Russia, with $55.5 million in box-office receipts. In France, the movie has raked in $85.6 million—more money than in any country besides the U.S—while Germans have bought $56.1 million worth of "Avatar" tickets. The movie's resonance with audiences abroad is a crucial propellant behind "Avatar's" ascent to the box-office stratosphere, where it topped the $1 billion mark in ticket sales this past weekend. Two thirds of the total box-office receipts so far have been generated abroad. "Avatar" sold $352.1 million worth of tickets in the U.S. and Canada after 17 days, while its international haul stood at $670.2 million as of the weekend, according to Hollywood.com. Foreign audiences routinely flock to Hollywood "event" movies like the "Harry Potter" series, "The Lord of the Rings" trilogy and the "Pirates of the Caribbean" franchise. Those films also took in about two-thirds of their revenue overseas—underscoring the growing importance of foreign audiences for American studios that have seen their revenue from DVD sales dwindle. In France, "Avatar" is the second-most successful American-made movie in history, right behind 1997's "Titanic"—Mr. Cameron's previous movie. (Four French-made movies have done better than both.) Some moviegoers abroad are drawn to what they see as an anti-capitalist message in the film's plot. In the movie, the villains work for a corporation intent on mining a mineral on a far-off planet, dislocating a population of nature-loving humanoids in the process. The movie's hero, a former Marine, eventually changes sides to lead the inhabitants' fight against the destructive, capitalist Earthlings. The plot line has drawn complaints from some conservative U.S. moviegoers, while the left-leaning French daily Liberation praised Mr. Cameron, the director, as the "galaxy's eco warrior." Francois Eygun, a 19-year-old student in Paris, saw in the film's plot a message about U.S. foreign policy: "With what is happening in Iraq and Afghanistan it is quite relevant."

- Apple(AAPL) is set to announce that it has acquired Quattro Wireless for $275 million, several sources confirmed. The announcement might come as soon as tomorrow, upping the ante in the mobile advertising business significantly. Google (GOOG) recently forked over an astonishing $750 million for AdMob, a Quattro competitor, which Apple (AAPL) had also made a bid to acquire.

- An Arctic blast swept across a large swath of the U.S. on Monday, sending temperatures plunging from Minnesota to Florida and bringing a bone-chilling start to the first workweek of the year. Growers in Florida kept a close eye on citrus groves, concerned that further cold could damage their crops, while icy roads gave children in Arkansas an extra day of winter break.

- The Obama Administration continues to negotiate with the Russians over a new Strategic Arms Reduction Treaty (Start), but one big question is whether it can get the result through the U.S. Senate. A group of Senators is telling the White House that it will have little or no chance of success unless it also moves ahead with nuclear-warhead modernization.

CNBC.com:
- The U.S. Federal Reserve sees a moderate economic recovery continuing in 2010, but needs to keep interest rates "exceptionally low" for an "extended period" to foster job growth, a Fed policymaker said on Monday.

Forbes:

- What's Next For the Virtual Economy.

- Semiconductor Mega-Trends In 2010. Entertainment and communications, energy and health care will be key growth areas for the chip sector.

Washington Post:

- The suicide bomber who killed seven CIA operatives in Afghanistan last week was a Jordanian informant who lured intelligence officers into a trap by promising new information about al-Qaeda's top leadership, former U.S. government officials said Monday. The attacker, a physician-turned-mole, had been recruited to infiltrate al-Qaeda's senior circles and had gained the trust of his CIA and Jordanian handlers with a stream of useful intelligence leads, according to two former senior officials briefed on the agency's internal investigation. His track record as an informant apparently allowed him to enter a key CIA post without a thorough search, the sources said. The bomber, identified as Humam Khalil Abu-Mulal al-Balawi, was standing just outside an agency building on the base on Wednesday when he exploded a bomb hidden under his clothes, killing the seven Americans along with a Jordanian officer who had been assigned to work with him. Six CIA operatives were wounded. The agency has declined to publicly identify the victims, a mix of career officers and contractors with backgrounds ranging from law enforcement to military Special Forces. Details about the suicide bomber's identity provided jarring insight into how a vital intelligence post in eastern Afghanistan was penetrated in the deadliest attack on the CIA in more than 25 years.

CNNMoney.com:

- Google(GOOG) is expected to take a giant leap forward into the smartphone arena Tuesday, with the much-anticipated unveiling of the Nexus One, the first smartphone completely designed by the search leader.

- Small business lending begins to rebound. Small businesses are still struggling to find financing, but for those seeking government-backed loans, the worst may be over. The Small Business Administration's flagship lending program backed 37% more loans in its latest quarter than it did a year ago, at the height of the financial crisis. In the three months ended Dec. 31, the SBA's 7(a) lending program processed 12,393 loans totaling $3.8 billion, according to preliminary data released Monday by the agency. That's a sharp increase from the 9,070 loans, totaling $1.9 billion, processed in the year-earlier quarter.

Business Insider:

- Dow Jones is combining two of its business units: Its consumer media group -- which includes The Wall Street Journal, Barron's and MarketWatch -- and its research tools and news wire services. In a top-management shake-up, Todd Larsen, the former head of consumer business, was named president of the company. Stephen Daintith, Dow Jones' chief financial officer, will take on the additional job of chief operating officer.

- Google's(GOOG) Eric Schmidt has been on Twitter for about a month, and he's yet to take a real liking to it. He's only blasted out eight tweets. So, on the rare occasion that he does send out an update to his 20,993 followers, we like to see what he's talking about. Today he sent out two tweets, one a link to the Op-Ed column from Ross Douthat at the NYT, another to a story that Douthat cited. Douthat's column deals with America's rise through the nineties, its stagnation in the last decade, and its prospects for this decade. Douthat isn't particularly optimistic about what the government is doing:

- Just when it looked like healthcare reform was a sure thing without anything standing in its way... Suddenly the special election in Massachusetts to replace Ted Kennedy is drawing interest among Republicans. There's no facts to suggest that the race is close, but the GOP is definitely motivated, and now David Weigel confirms that Rasmussen will conduct its first poll to see whether challenger Scott Brown can beat Attorney General Martha Coakley. If it's close and it looks like Brown can win it means the 60th vote is in jeopardy, meaning both the GOP and the Democrats will pull out all the stops on this one.

Business Week:

- Emerging-market equity and bond funds closed 2009 with record annual inflows as a recovery from the global financial crisis boosted demand for riskier assets, EPFR Global said. Emerging-market equity funds received $64.5 billion while those investing in developing-nation bonds drew more than $8 billion, also an all-time high, EPFR said, citing initial figures from funds reporting daily and weekly.

- Stockpickers are making bets on which parts of the market could be hot in the coming year. Some corners of tech and health care have caught their attention.

Politico:

- The populist angst aimed at Wall Street banks is already spilling into Senate deliberations on regulatory reform, and a powerful new sentiment — big is bad — is being echoed by liberals and conservatives alike. The anger at the nation’s financial behemoths is taking shape in a variety of ways, most notably in a bill from Sens. Maria Cantwell (D-Wash.) and John McCain (R-Ariz.), who are targeting big financial institutions such as JPMorgan Chase and Citigroup. The bipartisan duo’s bill would reinstate the Depression-era law that built a wall between commercial banking and the riskier activities of investment banking. The separation — originally set up in the Glass-Steagall Act — was repealed in 1999. But reinstating Glass-Steagall has become something of a rallying cry among progressives, as well as some conservatives. They believe that allowing banks to provide all services to all people creates the very sort of “too big to fail” institutions that threatened the stability of the global financial order in 2008. In other words, big is bad. The idea has some powerful backers, including former Federal Reserve Chairman Paul Volcker — a giant in the financial world and also an outside economic adviser to President Obama — who literally has been traveling the world arguing in favor of returning to Glass-Steagall-type restrictions on what trading activities banks can engage in, though not a full return to the Depression-era restrictions.

- The health care debate resumes in earnest on Tuesday after more than a week of quiet following Senate passage of its landmark bill on Christmas Eve. The four relevant House chairmen will meet with Speaker Nancy Pelosi and her leadership team at 1 o'clock in the speaker's Capitol office to start setting the parameters for negotiations with the Senate. Then, Pelosi and House Majority Leader Steny Hoyer (D-Nev.) will head to the White House for an early-evening meeting with President Barack Obama to discuss the final bill, according to Democratic officials. Senate Majority Leader Harry Reid (D-Nev.) and party Whip Dick Durbin (D-Ill.) will participate in the meeting via conference call because neither has returned to Washington from the holiday break.

Rasmussen Reports:

- Voters feel more strongly than ever that Congress is performing poorly and that most of its members are in it for themselves. Fifty-eight percent (58%) of U.S. voters now say Congress is doing a poor job. That’s the highest negative finding since Rasmussen Reports began surveying on the question in November 2006. A new Rasmussen Reports national telephone survey finds that just 12% of voters believe Congress is doing a good or excellent job.

LA Times:

- For car buyers, four words mean the difference between going home in a new sedan or their old clunker: Your loan is approved. They are being uttered more often these days. Consumers are paying less to borrow. Interest rates have been at record lows since last December. Financial firms wrote 5.5 percent more car loans in the third quarter compared with the prior three months, Experian Automotive says. Fourth-quarter figures aren't yet available, but Jesse Toprak, vice president of the auto pricing tracker TrueCar Inc., says December saw an uptick in auto loan approvals for consumers with average or above-average credit as auto finance companies tried to clear out inventory. Paul Taylor, chief economist for the National Auto Dealers Association, said used-car prices also have stabilized due to limited supply, making used-car loans more attractive to banks. The proportion of loans — auto and other — requiring TALF support has declined steadily over the past several months and should continue to fall early this year as the market for securitized loans continues to improve, says Tom Deutsch, deputy executive director of the American Securitization Forum, an industry group that represents those who turn debt into bonds. "It should be relatively easy to wean off TALF," he says. In the meantime, the easier lending market has helped car buyers like Marissa Corbitt, who last month bought her first-ever car with a loan from Nissan's financing arm, NMAC. Corbitt, a 24-year-old accountant from Chattanooga, Tenn., was able to negotiate the cost of her 2010 Rogue down several thousand dollars to about $20,500 after some incentives. She said she was then pleasantly surprised by the interest rate NMAC offered her for the crossover. "Nissan was offering a 2.9 percent APR, so I got that," said Corbitt, whose top-tier credit score helped her case. "It's a good interest rate." George Pipas, Ford Motor Co.'s top U.S. sales analyst, says the industry appears to have passed through its lowest point and is trending toward a slow recovery.

Crain's Chicago Business:

- Citing enormous potential harm to local jobs and industry, Illinois will fight other states that want an immediate shutdown of Chicago-area shipping to keep the voracious Asian carp from invading the Great Lakes. The state is working closely with industry groups and the Illinois Chamber of Commerce to bolster its response, due Tuesday, to lawsuits filed by Michigan, environmental groups and other states seeking an emergency order from the U.S. Supreme Court to close locks on the Chicago Sanitary and Ship Canal.

ScienceDaily:

- An experimental drug currently being tested against breast and lung cancer shows promise in fighting the brain cancer glioblastoma and prostate cancer, researchers at UT Southwestern Medical Center have found in two preclinical studies.

USAToday:

- Property owners at four struggling and bankrupt resorts in Idaho, Montana, Nevada and the Bahamas have filed a $24 billion federal lawsuit against Credit Suisse Group, saying the banking giant gave predatory loans to the resorts' investors as part of a scheme to take over the properties. Property owners at Idaho's Tamarack Resort, the Yellowstone Club in Montana, Nevada's Lake Las Vegas resort and the Ginn Sur Mer Resort in the Bahamas contend that Credit Suisse set up a branch in the Cayman Islands to skirt U.S. federal bank regulations and appraised the resorts at artificially inflated values as part of a plan to foreclose.

Reuters:

- U.S. regional bank SunTrust Banks Inc (STI) is trying to sell RidgeWorth Investments, its multi-boutique asset management business, amid losses due to the financial crisis, people familiar with the matter said on Monday.

- Chinese banks must carefully pace their lending this year because heavy issuance of loans amid industrial overcapacity has created growing credit risks, China's central bank governor Zhou Xiaochuan said in comments seen on Tuesday. Zhou also said that the experience of the international financial crisis showed that it was not enough to simply focus on inflation and that the People's Bank of China considered a wider range of issues in determining its monetary policy, including international balance of payments.

- Speculators increased bets the U.S. currency has room to rise by going long the dollar for a second straight week, according to Commodity Futures Trading Commission data released on Monday.

Financial Times:

- There is an inexorable drive on both sides of the Atlantic to finalise new rules, regulations and laws to place the financial system on a sounder footing. But in their zeal to act, politicians and regulators are looking through the wrong end of the telescope. Too much attention is being paid to maintaining a status quo that allows banks to continue engaging in the full range of activities to which they have become accustomed – admittedly under a number of regulatory constraints – without dealing with the fundamental causes of today’s critical difficulties. Policymakers are intent on announcing all manner of new capital requirements, leverage ratios, “living wills” and directives on risk management, while brushing aside warnings by both Mervyn King, the governor of the Bank of England, and former US Federal Reserve chairman Paul Volcker that our banking system is unsound. Mr King and Mr Volcker are not alone in their concern that we may now miss a unique opportunity to secure core reforms.

- Tiaa-Cref has become the first large US asset manager to sell stakes in four Asian oil groups over concerns about human rights abuses in Sudan, a move that will increase pressure on other investors to sever ties with those companies. Tiaa-Cref, which has more than $400bn (£248bn, €279bn) under management, said on Monday that it had divested holdings in PetroChina, CNPC Hong Kong and Sinopec – three state-controlled Chinese oil companies, and India’s Oil and Natural Gas Corporation.

Telegraph:

- Britain told American intelligence agents more than a year ago that the Detroit bomber had links to extremists, Downing Street has announced. Umar Farouk Abdulmutallab was named in a file of people based in Britain who had made contact with radical Muslim preachers. The file was sent to the US authorities in 2008. The disclosure will embarrass President Barack Obama, who is already under pressure after failures by US intelligence to identify the bomber. It will also add to concern over the state of the “special relationship” between Downing Street and the White House following last year’s dispute over the early release of the Lockerbie bomber. It is extremely unusual for the Prime Minister’s office to comment on intelligence matters. The move could be seen as an attempt to rebuff criticism from senior American figures who claimed that Britain had nurtured Islamic extremism. At first it was thought that MI5 gathered only limited information on Abdulmutallab and had therefore not alerted the US. However, in an official briefing, the Prime Minister’s spokesman said that British intelligence was shared with the Americans. He said: “Clearly there was security information about this individual’s activities and that was information that was shared with the US authorities. That is the key point.”

Evening Recommendations

Citigroup:

- Reiterated Buy on (GLW), raised estimates, boosted target to $24.

- Rated (LEA) Buy, target $85.

Morgan Stanley:

- Rated (QCOM) Overweight, target $57.

- Rated (PALM) Overweight, target $14.

- Rated (MOT) Underweight, target $8.75.

- Rated (RIMM) Overweight, target $90.

Night Trading
Asian indices are +.25% to +1.25% on avg.

Asia Ex-Japan Inv Grade CDS Index 91.50 -3.0 basis points.
S&P 500 futures -.11%.
NASDAQ 100 futures -.08%.

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/Estimate
- (MOS)/.37

- (SONC)/.13

Economic Releases

10:00 am EST

- Factory Orders for November are estimated to rise by +.5% versus a +.6% gain in October.

- Pending Home Sales for November are estimated to fall by -2.0% versus a +3.7% gain in October.

Afternoon:

- Total Vehicle Sales for December are estimated to rise to 11.0M versus 10.92M in November.

Upcoming Splits

- (EBIX) 3-for-1

Other Potential Market Movers
- The Fed's Hoenig speaking, weekly retail sales reports, API energy inventory report, Google "Android Press Gathering" and the ABC Consumer Confidence reading could also impact trading today.

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

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Financial longs, Biotech longs, Retail long, Technology longs, Defense longs and Medical longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is very positive as the advance/decline line is substantially higher, almost every sector is rising and volume is below average. Investor anxiety is high. Today’s overall market action is bullish. The VIX is falling -6.92% and is high at 20.17. The ISE Sentiment Index is above average at 161.0 and the total put/call is below average at .66. Finally, the NYSE Arms has been running below average most of the day, hitting .43 at its intraday trough, and is currently .61. The Euro Financial Sector Credit Default Swap Index is rising +3.12% to 64.11 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 rising -3.32% to 82.76 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is down -1 basis point to 20 basis points. The TED spread is now down 443 basis points since its all-time high of 463 basis points on October 10^th, 2008. The 2-year swap spread is falling -2.18% to 27.88 basis points. The Libor-OIS spread is unch. at 9 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is unch. at 2.41%, which is down -24 basis points since July 7^th, 2008. The 3-month T-Bill is yielding .05%, which is unch. today. Today’s gains are broad-based. Gaming, HMO, Disk Drive, Steel, Gold, Oil Service, Energy, Oil Tanker, Coal and I-Banking shares are especially strong, rising 2.75%+. (XLF) is trading better today. On the negative side, (IYR) has been a bit heavy throughout the day and market volume is lackluster. (IYR) has been trending lower over the last week. It needs to begin to participate for the market to build meaningfully on recent gains. Nikkei futures indicate an +216 open in Japan and DAX futures indicate an unch. open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, less economic fear, technical buying, stable long-term rates, buyout speculation and less financial sector pessimism.

BETWEEN THE HEDGES

Top Menu

Tuesday, January 05, 2010

Bear Radar

Bull Radar

Trading Links

Tuesday Watch

Monday, January 04, 2010

Stocks Finish Sharply Higher, Boosted by Commodity, Gaming, HMO, I-Banking and Disk Drive Shares

Stocks Sharply Higher into Final Hour on Less Economic Fear, Diminishing Financial Sector Pessimism, Short-Covering, Technical Buying