Today's Headlines

Bloomberg:

- China’s central bank sold three-month bills at a higher interest rate for the first time in 19 weeks after saying its focus for 2010 is controlling the record expansion in lending and curbing price increases. Stocks fell across Asia and oil declined on concern growth will slow in China, the engine of the world economy’s recovery from its worst recession since World War II. The People’s Bank of China offered 60 billion yuan ($8.8 billion) of bills at a yield of 1.3684 percent, four basis points higher than at last week’s sale, according to a statement. “It’s definitely a signal that the central bank is tightening liquidity,” said Jiang Chao, a fixed-income analyst in Shanghai at Guotai Junan Securities Co., the nation’s largest brokerage by revenue. “The rising yield is used to prevent excessive growth in bank lending.”

- Mortgage rates in the U.S. fell for the first time in five weeks, lowering borrowing costs and offering a boost to potential buyers. The rate for 30-year fixed U.S. home loans fell to 5.09 percent for the week ended today from 5.14 percent, mortgage finance company Freddie Mac said. Rates hit a record low 4.71 percent the week of Dec. 3. This week’s average 15-year rate was 4.50 percent, Freddie Mac said in today’s statement.

- The U.S. labor market is improving amid a recovery in domestic consumption and as the housing industry stabilizes, Federal Reserve Bank of St. Louis President James Bullard said. Stronger global growth, especially in Asia, is driving the improvement in the U.S. economy, Bullard, who votes on monetary policy decisions this year, said today in a speech in Shanghai. U.S. inflation uncertainties remain high even though prices are well contained for now, he said.

- Sears Holdings Corp.(SHLD), the largest U.S. department-store chain, reported a fourth-quarter profit forecast that exceeded analysts’ estimates as its Kmart division sold more toys, clothing and home goods. The shares rose. Earnings will range from $3.36 to $4.06 a share in the period ending Jan. 30, the Hoffman Estates, Illinois-based company said today in a statement. Six analysts surveyed by Bloomberg estimated profit of $2.71 on average. Sears rose 12 percent to $99.90 at 8:36 a.m. in New York, before the start of regular trading on the Nasdaq.

- Tax credits designed to revive the US housing industry are costing taxpayers as much as $80,000 for every additional home sold, according to Michael R. Widner, a Stifel Nicolaus & Co. analyst. The federal program is “an exceptionally inefficient use of tax dollars,” Widner wrote in a report. He estimated the total cost through last November at $17 billion, “a high price to us for relatively little benefit.”

Wall Street Journal:

- Texas Instruments Inc.(TXN) plans to announce Thursday that it is entering the e-reader market with new processors and software for manufacturers of the increasingly popular devices.

- After President Obama devoted much of 2009 to health care and global warming—two issues far down Americans' list of concerns—the White House says he will pivot to jobs and deficit reduction in his State of the Union speech in a few weeks. The White House is considering dramatic gestures, perhaps announcing a spending freeze or even a 2% or 3% reduction in nondefense spending. But Americans shouldn't be misled by the election year ploy: Mr. Obama rigged the game by giving himself plenty of room to look tough on spending. He did that by increasing discretionary domestic spending for the last half of fiscal year 2009 by 8% and then increasing it another 12% for fiscal year 2010. So discretionary domestic spending now stands at $536 billion, up nearly 24% from President George W. Bush's last full year budget in fiscal 2008 of $433.6 billion.

- Google Inc. (GOOG) will get "first dibs" at signing a search deal with AOL Inc. (AOL) when the two companies' current agreement expires at the end of this year, AOL Chief Executive Tim Armstrong said Thursday.

- Is the Obama Administration going to side with school reformers, or will it reward state and local teachers union affiliates that defend the status quo? This is a question states are asking as they prepare their applications for $4.35 billion in Race to the Top competitive grants. Some guidance from Education Secretary Arne Duncan would be helpful. Teachers unions in Minnesota and Florida are currently threatening to withhold support for their state Race to the Top applications, which are due later this month.

MarketWatch.com:

- Inventory control, coupled with last-minute shopping and post-holiday bargain hunting, drove U.S. retailers' best monthly sales in more than 20 months. Several -- from discounter Target Corp. to upscale retailer Nordstrom Inc. -- gave rosier profit outlooks.

- The correlations between asset classes and U.S. stocks fell dramatically in December, a bullish signal for near-term equity market performance, according to Nicholas Colas, chief market strategist at ConvergEx.

CNBC:

- Schork Oil Outlook: The Not-So Smart Money.

- Commercial Real Estate a Buy. Here are some numbers we reported yesterday from Trepp, a leading provider of CMBS and commercial mortgage information and analytics:

Barron’s:

- Shares of Apple (AAPL) are down 48 cents, a quarter percent, at $210.48 after Barclay’s Capital analyst Ben Reitzes this morning raised his price target on the stock to $260 from $235, writing that his “end of quarter checks” of retail and the supply chain indicate sales of Macs and iPhones are picking up. Reitzes has an “Overweight” rating on Apple.

NY Times:

- Starting in November 2008, the Federal Reserve Bank of New York under Timothy Geithner ordered American International Group(AIG), the huge insurer that the government had bailed out, to limit disclosure on payments made to banks at the height of the financial crisis, e-mail messages obtained by DealBook show. The e-mail exchange between the bailed-out insurance giant and its regulator portray a strange reversal of roles, with A.I.G. staff urging disclosure of certain details on payments for credit-default swaps to major banks, only to be discouraged by officials at, or representing, the Federal Reserve. In a draft of one regulatory filing, A.I.G. stated that it had paid banks — including Goldman Sachs Group(GS) and Societe Generale— the full value of C.D.O.s, or collateralized debt obligations, that they had bought from the company. In the response to that draft from the law firm Davis Polk and Wardwell, which represented the New York Fed, that crucial sentence was crossed out, and did not appear in the final version filed on Dec. 24, 2008. “It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information to the S.E.C.,” Representative Issa said in an e-mailed statement.

- Only foolhardy parents would allow their children to provide only the grades on their report cards that they were happy with. Yet hedge funds are given this luxury in reporting their performance to compilers of sectorwide performance indexes, Breakingviews says. One result is that, while a single fund’s track record is clear enough, hedge fund index returns still flatter the average fund in the industry, the publication says. Investors would be smart to call for a cleanup, Breakingviews argues.

The Business Insider:

- It might just be tough talk, but Interior Secretary Ken Salazar has warned the energy industry that expansion could be much harder than under the Bush administration. Americans should be amply rewarded when companies win exploration and production rights, but let's hope this doesn't mean that new exploration will be significantly restricted. Especially when it comes to natural gas, which could provide the U.S. with an enormous source of relatively cheap energy.

TheStreet.com:

- Cisco(CSCO) has vowed to push the video revolution into new areas, transforming the way that consumers access health care and education. "The next generation will be all about video literally changing lives in ways that we can't even imagine," said John Chambers, the Cisco CEO, during a press event organized by the networking giant. "It's to see an experience, to live it and share it."

clipsyndicate:

- S&P’s Schulz Says Ford(F) Has ‘Traction’ With Consumers. (video)

ZDNet Blog:

- Ford(F) announces MyFord Touch with dual 4.2” LCDs, Wi-Fi and improved voice recognition.

McClatchy:

- Riding high a year ago, Democrats now fear disaster ahead.

Rassmussen:

- A new Rasmussen Reports national telephone survey shows that 45% of likely U.S. voters now think a group of people selected at random from the phone book would do a better job addressing the nation’s problems than the current Congress. That’s up 12 points from October 2008, just before the last congressional elections. Thirty-six percent (36%) disagree.

Mother Jones:

- How Big Finance Bought Uncle Sam.

AP:

- Thousands clashed with police during a funeral procession Thursday for six of seven people killed in an attack on churchgoers leaving a midnight Mass for Coptic Christians, security officials said. Christians, mostly Copts, account for about 10 percent of Egypt's predominantly Muslim population of some 80 million people. Wednesday's attack, which happened on the holiest day in the Coptic calendar, was the worst known incident of sectarian violence in a decade. The bishop said the attack could have been motivated by revenge and blamed it on "Muslim radicals." "Suppose it is vengeance, where was the security?" he asked. "We are facing a religious war and lax security."

Reuters:

- Sony Corp said U.S. electronics sales are looking positive after the holiday season, and that it was optimistic about meeting its full-year target for PlayStation 3 video game console sales. The comments from Sony executives come after the Japanese conglomerate said on Wednesday that flat-screen televisions, electronic readers and Blu-ray video players had helped its U.S. holiday season sales top expectations.

Telegraph:

- Four directors at Paulson Europe, the London-based arm of one of the world's most successful hedge funds, took home more than £50m last year after successfully betting on the near-collapse of the UK banking sector.

National Post:

- As the United Nations' Copenhagen global warming catastrophe fades from memory, its emaciated remains quietly bulldozed into the freezing blue Danske harbour, public opinion had few places to go. And so it went nowhere. In fact, according to new tri-national polls released yesterday by Angus Read, the people of Canada, the Unites States and Britain are rapidly losing confidence in the whole enterprise. Perhaps the most stunning poll result is the general lack of any confidence or hope or belief that Copenhagen could or would ever produce a binding agreement that would force the world's countries to reduce carbon emissions. To the question "Do you think the Copenhagen Accord will become a legally binding treaty in the future?", only 19% of Americans, 16% of Britons and 12% of Canadians said "yes." Not that there was a whole lot of good feeling about Copenhagen going into last month's assembly. Under the auspices of the Intergovernmental Panel on Climate Change, Copenhagen opened with 170 nations clamoring for attention amid growing public doubts about the validity of global warming theory. Increasing uncertainty shows up in yesterday's poll numbers. Angus Reid surveyed people in all three countries in November and December, before and after Copenhagen. The drop off in public support for the idea that global warming is a fact mostly caused by human activity looks most pronounced in Canada. In November, 63% of Canadians supported global warming as a man-made phenomenon. By Dec. 23, that support had fallen 52%. Among Canadians, 13% are now not sure. A similar trend has been noted in the United States, where confidence in global warming theory has dropped to 46%, down from 49% in November -- and down from 51% in July last year. In Britain, only 43% believe man-made global warming is a fact, down from 47% in November and from 55% in July. There may be more going on in the public mind than emailfed skepticism. The emails, after all, received relatively little mainstream media attention, and they were only released in mid-November. The trend has been underway for months, even years, making it difficult if not impossible for politicians looking for a way out of the global warming policy swamp their governments helped create.

Xinhua:
- Another strong cold wave is expected to hit China's central, eastern and southern regions from Friday to next Tuesday, bringing snowstorms and temperature plummet to these areas, China's Central Meteorological Station (CMS) said Thursday. The cold snap would be much stronger than the previous one, which caused up to 18 degrees Celsius temperature fall in China's northern regions from last Saturday. The fresh one is expected to bring icy weather to the country's southern areas, the CMS said.

Bear Radar

Style Underperformer:
Small-Cap Growth (-.38%)

Sector Underperformers:
Disk Drives (-2.34%), Coal (-1.57%) and Steel (-1.34%)

Stocks Falling on Unusual Volume:

TIN, BEXP, TSU, ARD, TSRA, RECN, AMTD, NUVA, GME and ANF

Stocks With Unusual Put Option Activity:
1) GME 2) VOD 3) NRG 4) SHLD 5) DAL

Bull Radar

Style Outperformer:
Large-Cap Value (+.34%)

Sector Outperformers:
Homebuilders (+2.50%), Banks (+2.50%) and Airlines (+2.31%)

Stocks Rising on Unusual Volume:
HUM, BAC, ARUN, BCS, WLP, LOW, DOV, GE, SHW, SNCR, WBSN, TKC, NIHD, HES, SFY, INSP, ZUMZ, ULTA, BBBY, ICLR, ZSTN, ZION, SHLD, VVUS, DNDN, RADS, ICFI, CYMI, RDEA, ROST, ENER, PLCE, NICE, LEN, FUR, TXI, XHB, BKE, CIR and TJX

Stocks With Unusual Call Option Activity:
1) NVTL 2) ZION 3) STLD 4) SHAW 5) ANF

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Thursday Watch

Late-Night Headlines
Bloomberg:

- The International Monetary Fund will probably raise its forecast for global growth later this month as rich and poor countries contribute to the recovery from a recession, the institution’s No. 2 official said.

- New York City will incur costs of more than $200 million a year for security during the planned trial of five suspects in the September 2001 terror attacks, Mayor Michael Bloomberg said. In a letter to Peter Orszag, director of the U.S. Office of Management and Budget, Bloomberg said the city would have to pay about $216 million in the trial’s first year and $206 million annually thereafter for personnel and equipment. “I want to assure you that our estimates, while significant, are real and not the result of any expectation that we will receive a ‘blank check,’” Bloomberg wrote in the letter, released by his office. “As 9/11 was an attack on the entire nation, we need the federal government to shoulder the significant costs we will incur.” Bloomberg’s letter to Orszag represents the city’s first specific cost estimate associated with the planned trial. The projection is $141 million more than U.S. Senator Charles Schumer’s November request that the federal government provide $75 million in annual security costs related to the trials. President Barack Obama announced in November his administration’s intention to move Khalid Sheikh Mohammed, the accused mastermind of the 2001 attacks, and four fellow Guantanamo Bay detainees to New York to stand trial about a quarter-mile from where the World Trade Center towers stood. “Not a nickel of these costs should be borne by New York taxpayers, because terrorism is a federal responsibility and this is a federal trial,” Schumer, a New York Democrat, said in a release today.

- Bed Bath & Beyond Inc.(BBBY), the largest U.S. home-furnishings retailer, said full-year profit would be higher than it previously forecast and reported third-quarter earnings that beat estimates. The shares rose 7 percent in late trading. The Union, New Jersey-based company said today 2009 profit may be as high as $2.11 a share compared with its previous projection of $1.79. Analysts predict annual earnings of $1.92. Bed Bath & Beyond climbed $2.77 to $42 at 4:28 p.m. New York time after the close of regular Nasdaq Stock Market trading. The shares surged 52 percent last year.

- Florida citrus growers braced for more nights of freezing temperatures as snow blanketed southern England, closing airports and roads, and Beijing suffered the coldest weather in almost four decades. Frigid air sweeping across the Northern Hemisphere sent orange-juice futures up as much as 4.3 percent to a two-year high in intraday trading on fears Florida’s citrus crop may be reduced. Natural gas jumped to a 13-month high amid forecasts for temperatures as much as 25 degrees below average. “The cold weather is hitting a lot of the more-populated areas, such as western and northern Europe, a lot of the eastern U.S.,” Bob Tarr, a meteorologist at AccuWeather Inc., said today in a telephone interview. “It’s a rare pattern, and unusual to see this cold weather affecting a number of major population centers and persisting for about three weeks.” Temperatures in New York City are forecast to be as much as 13 degrees below average by Jan. 10, according to MDA Federal Inc.’s EarthSat Energy Weather of Rockville, Maryland. The U.S. Northeast is responsible for about four-fifths of the country’s heating oil use. Temperatures will be 25 degrees below average in Houston and St. Louis on Jan. 9, EarthSat said. About 72 percent of households in the Midwest use natural gas for heat. Florida’s two largest citrus-producing counties had reports of record-low temperatures early today, said Richard Rude, a National Weather Service meteorologist near Tampa. Lakeland, in Polk County, recorded a low of 28 Fahrenheit (minus-2 Celsius), while at Archbold, the mercury fell to 18. The cold front in China was forecast to move south today, lowering temperatures by as much as 8 degrees Celsius, the China Meteorological Administration said. Temperatures in Beijing dropped as low as minus 20 degrees Celsius overnight, the coldest for this time of year since 1971, the agency said. Natural gas demand in Beijing has climbed “dramatically,” the city government said yesterday. French electricity demand may reach a record next week as temperatures are expected to drop as much as 7.7 degrees Celsius below average, the grid operator Reseau de Transport d’Electricite said today on its Web site. Temperatures were at or below freezing across most of northern and central France, sinking as low as minus 4 degrees Celsius in Paris, according to the French forecaster Meteo- France.

- Senator Christopher Dodd’s retirement may offer Democrats their best chance to hold onto a seat in Congress they were in danger of losing. The party’s overall prospects this election year remain gloomy. The announcement by Dodd, a Connecticut Democrat trailing in the polls, opened the way for Richard Blumenthal, one of the state’s best-known Democratic officials, to declare his Senate candidacy. Still, it came a day after North Dakota Democrat Byron Dorgan said he would give up his seat, now likely to go to a Republican. That followed a string of retirement decisions by party lawmakers from vulnerable House districts, including John Tanner and Bart Gordon of Tennessee, Brian Baird of Washington and Dennis Moore of Kansas. And Alabama Representative Parker Griffith said last month he was defecting to the Republicans. “The key thing is the psychological element,” said Charlie Cook, publisher of the Cook Political Report. “It’s like a vicious cycle of bad news that feeds on itself,” he said. “It makes other wavering incumbent Democrats contemplating retirement look at it even more closely.”

- Hewlett-Packard Co.(HPQ), the world’s biggest personal-computer maker, is testing Qualcomm Inc.’s(QCOM Snapdragon chip for use in some of its machines, two people familiar with the matter said. The companies are expected to announce the collaboration later tonight at the Consumer Electronics Show in Las Vegas, said the people, who asked not to be identified because the information isn’t public.

Wall Street Journal:

- Pandora Inc. has struck a deal with electronics maker Pioneer Corp. that promises to make it easier for drivers to listen to its personalized radio service in cars—bringing Internet radio one step closer to snagging a built-in spot on dashboards. The development represents a direct challenge to broadcasters of satellite and traditional radio, who have long dreaded the arrival of Internet radio in cars.

- The "carried-interest" tax debate has re-emerged in Congress, threatening to more than double taxes on some of the country's wealthiest individuals—private-equity and hedge-fund managers. The issue flared in 2007, only to die when the financial crisis struck. This time around, amid soaring deficits and hostility over Wall Street pay, most fund managers have resigned themselves to higher tax bills. Still, they hope to delay or lessen the effect of proposed changes. Private-equity and hedge-fund lobbying groups are still girding for a fight. Lobbyists have issued statements aimed at heading off a tax increase, arguing that it would stifle risk-taking by shrinking potential rewards for fund managers. "Private equity will endure, but the draconian tax hike, if enacted, will unquestionably slow the flow of capital to companies struggling to get back on their feet during this very fragile economic recovery," said Doug Lowenstein, president of the Private Equity Council, a trade group. Adopting the change would hurt "the competitiveness of U.S. businesses, capital formation in the United States, and ultimately, U.S. job growth," Richard Baker, head of Washington, D.C.-based hedge-fund lobbying group Managed Funds Association, wrote to lawmakers. Defenders of the current law argue that carried interest should be treated as a capital gain, because it represents the distribution of proceeds from an investment that increases in value and is eventually sold for a profit. Certain oil-and-gas and real-estate partnerships also would be affected by the tax increase.

- As a threat to our nation's security, allowing imported drugs into our pharmacies ranks just below terrorism. Yet this idea refuses to die. Why is drug importation (and its twin the reimportation of American drugs from foreign countries) a bad idea? Aren't cheaper drugs good for low-income Americans? The Food and Drug Administration's response—reasserted last month by FDA Commissioner Margaret Hamburg—is that imported and reimported drugs can't be guaranteed to be safe. Studies have shown that a significant percentage of drugs thought to be American-made and reimported are actually counterfeit, ineffective or even toxic. In one sting in 2003, for example, FDA and Customs officials found that 88% of the imported drug packages they inspected did not meet FDA safety standards.

- There was much to celebrate in the providential combination of an incompetent terrorist and surpassingly brave passengers and crew who saved 288 people aboard Northwest Airlines flight 253 on Christmas Day. There is a lot less to applaud in the official reaction. Well-deserved mockery has already been heaped on the move-along-folks-nothing-to-see-here tone of the administration's initial pronouncements—from Janet Napolitano's "the system worked," to President Obama's statement that Umar Farouk Abdulmutallab was an "isolated extremist." This week brought little improvement.

MarketWatch.com:

- Samsung Electronics Co. , a global giant in memory chips and flat-screen TVs, said Thursday it expects to report it swung to an operating profit for the fourth quarter over the year-earlier period, with sales rising about 18% to a record high.

CNBC.com:
- You know a technology has truly arrived when you find it in the Central Hall at CES. And this year, that's where visitors will find the Mobile DTV TechZone, dedicated to all things mobile television. Research firm Futuresource estimates that by the year 2013, more than 1 billion people will own a smartphone. As a result, demand for all manner of content—your favorite team's game, last night's episode of a TV show—will grow exponentially.

IBD:
- Darrell Webb had his work cut out for him when he took the helm of Jo-Ann Stores (JAS) in July 2006.

CNNMoney.com:

- 10 of the year's coolest gadgets.

Business Insider:

- Menacing Russian oligarch Roman Abramovich threw the banging-est celebrity-filled NYE party in St. Bart's. We've read about the St. Bart's bash, but now we have pictures! All thanks to grim economist Nouriel Roubini, who despite our impending economic doom, partaayyyed. The party was lavish — about 250 celebrities and their hangers-on were flown, on private jets, to Abramovich's Caribbean winter palace, where they ate millions of dollars worth of gourmet snacks and enjoyed the musical stylings of Gwen Stefani, Beyoncé, and Prince.

- Warren Buffett Accused Of Purposefully Sinking Cadbury Shares.

Business Week:

- The White House was put on the defensive Wednesday after President Barack Obama pushed congressional leaders to fast-track health care legislation behind closed doors despite his campaign promises of an open process. "The president wants to get a bill to his desk as quickly as possible," Press Secretary Robert Gibbs said as reporters questioned him repeatedly about Obama's decision to go along with House and Senate leaders in bypassing the usual negotiations between the two chambers in the interest of speed. The decision was made in an Oval Office meeting Tuesday evening with House Speaker Nancy Pelosi and House Majority Leader Steny Hoyer. Senate Majority Leader Harry Reid and his No. 2, Sen. Dick Durbin, D-Ill., joined in by phone. Gibbs told reporters Wednesday to "ask the leaders in Congress" about the fast-track approach, even though Obama was involved in making the decision and the closed nature of the proceedings is at odds with a promise he made while campaigning for president. In a January 2008 debate, Obama said that his approach to health care talks would involve "bringing all parties together, and broadcasting those negotiations on C-SPAN so that the American people can see what the choices are." Republicans have jumped on the contradiction to accuse Obama and Democrats of operating in secret, an assertion Democrats dispute. "There has never been a more open process for any legislation in anyone who serves here's experience," Pelosi declared at a news conference Tuesday. Asked about Obama's campaign trail promise, Pelosi remarked, without elaboration, "There are a number of things he was for on the campaign trail."

- On Jan. 6, Qualcomm(QCOM) announced that accessories maker mophie has built an antenna to catch Qualcomm MediaFlo TV’s programming into its cases for the iPhone and iPod touch. The move will allow Qualcomm to sell its TV service while bypassing wireless service providers, which haven’t been as successful as hoped in pushing the service thus far.

Politico:

- Sen. Ben Nelson (D-Neb.) continued the long Washington tradition Tuesday of lawmakers returning to their home states for recess and making unusually blunt statements. In an interview with the Fremont Tribune, Nelson took a shot at President Barack Obama's priorities, saying the White House should not have put health care ahead of dealing more directly with jobs and the economy. “I think it was a mistake to take health care on as opposed to continuing to spend the time on the economy,” Nelson said. Then, he defended the so-called Cornhusker Kickback, which was the special Medicaid funding deal in which the federal government would forever pick up Nebraska's share of the Medicaid expansion. Nelson said it really was an attempt to provide the same treatment for other states down the road.

- California Gov. Arnold Schwarzenegger savaged congressional plans for health reform in his 2010 State of the State address on Wednesday, calling the legislation "health care to nowhere" that's infected with "bribes, deals and loopholes." With the nation's largest state enduring a fiscal crisis, Schwarzenegger said California's lawmakers should vote against the bill or push to get the Medicaid subsidies that were written into the Senate bill in order to secure Sen. Ben Nelson (D-Neb.) as the 60th and passing vote for that chamber's version of reform. The deal has been attacked as the "Cornhusker Kickback." "While I enthusiastically support health care reform, it is not reform to push more costs onto states that are already struggling while other states get sweetheart deals," Schwarzenegger said before a joint session of the California State Legislature. "Health care reform, which started as noble and needed legislation, has become a trough of bribes, deals and loopholes. You've heard of the bridge to nowhere. This is health care to nowhere. California's congressional delegation should either vote against this bill that is a disaster for California or get in there and fight for the same sweetheart deal Senator Nelson of Nebraska got for the Cornhusker State. He got the corn; we got the husk."

Forbes:

- Video Conferencing Is Within Your Reach.

Reuters:

- Sony Corp said its U.S. holiday season sales exceeded its expectations, fueled by sales of flat-screen televisions, digital cameras and Blu-ray video players.

- Skate and snow-boarding inspired retailer Zumiez Inc (ZUMZ) posted a surprise rise of 0.3 percent in December comparable store sales, and raised its fourth-quarter earnings outlook, sending its shares up 14 percent.

- South Dakota Democratic Senator Tim Johnson, a champion of community banks and credit card companies, is expected to take over the chairmanship of the influential U.S. Senate Banking Committee in 2011.

- Youth apparel retailer rue21 Inc (RUE) raised its fourth-quarter outlook, citing stronger-than-expected total sales and gross margin. Rue21, which went public in November 2009, expects earnings for the fourth quarter ending Jan. 30 to be between 28 cents and 30 cents a share, up from its previous range of 17 cents to 20 cents a share. The company's shares, which have risen about 23 percent since their debut on Nasdaq on Nov. 13, were trading up about 2 percent after the bell at $30.

Financial Times:

- The Bank for International Settlements will gather top central bankers and financiers for a meeting in Basel this weekend amid rising concern about a resurgence of the “excessive risk-taking” that sparked the financial crisis. In its invitation, the BIS cited concerns that “financial firms are returning to the aggressive behavior that prevailed during the pre-crisis period”. The BIS, known as the central banks’ bank, outlined in a restricted note to participants some specific proposals that it believes could create a healthier financial system. Those proposals including lowering return-on-equity targets for the banks as a way to discourage such risk taking. Private sector bank chiefs attending the meeting at the BIS in Basel include Larry Fink of BlackRock, Vikram Pandit of Citigroup, and John Stumpf of Wells Fargo. Lloyd Blankfein, Goldman Sachs chief executive, and Jamie Dimon, chief executive of JPMorgan Chase, were invited but are not planning to attend. “The concern here is that the prolonged assurance of very cheap and ample funding may encourage excessive risk-taking,” the BIS invitation note says. The note also expresses concern about deteriorating public finances and warned that doubt about fiscal prudence “could seriously disrupt bond markets if it triggered concerns about creditworthiness or inflation because of concerns with government incentives to inflate debt away.”

- US banks’ contributions to a multi-billion dollar fund that insures depositors’ savings could be linked to regulators’ assessment of bank pay plans, under preliminary discussions being held by top banking watchdogs. People familiar with the situation said that the talks were at an early stage and no decision had been made. One of the issues under consideration is whether regulators should seek information about lenders’ compensation policies; how they affect banks’ risk profiles and whether certain pay structures should be taken into account when assessing FDIC insurance fees, according to people briefed on the discussions. Any proposals are likely to be targeted to specific structures that are deemed to increase or reduce risk.

Economic Daily News:

- The flat panel industry will remain positive for the whole of 2010, citing Compal Electronics Inc. President Ray Chen, who is also a board director of Chunghwa Picture Tubes Ltd. There will be a shortage of laptop computer panels in March and April and there's already a lack of television panels currently.

Evening Recommendations

- None of note

Night Trading
Asian indices are -.25% to +.50% on avg.

Asia Ex-Japan Inv Grade CDS Index 86.50 -1.50 basis points.
S&P 500 futures -.14%.
NASDAQ 100 futures -.09%.

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Earnings of Note
Company/Estimate
- (STZ)/.52

- (TXI)/-.14

- (LEN)/-.74

- (GPN)/.61

- (APOL)/1.46

- (LWSN)/.09

- (SCHN)/.14

Economic Releases

8:30 am EST

- Initial Jobless Claims for last week are estimated to rise to 440K versus 432K the prior week.

- Continuing Claims are estimated to fall to 4975K versus 4981K prior.

Upcoming Splits

- None of note

Other Potential Market Movers
- The Fed's Bullard speaking, Fed's Hoenig speaking, JPMorgan Tech Forum, Citi Entertainment/Media/Telecom Conference, BoE interest rate decision, weekly EIA natural gas inventory report and the Las Vegas Consumer Electronics Show could also impact trading today.

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