Tuesday, January 12, 2010

Today's Headlines

Bloomberg:

- A China Investment Corp. official said the Asian nation may raise benchmark interest rates before the U.S. because it faces a greater risk of an asset bubble, Market News International reported today. The U.S. dollar is unlikely to fall further this year, and the outlook for the yen isn’t promising, Peng Junming, an official in the asset allocation and strategic research department of China’s $300 billion sovereign wealth fund also was quoted as saying. Peng said his comments were his personal views in a speech in Beijing today, Market News reported. “If China waits for the U.S. to act first, they’ll be giving a green light to further growth of asset bubbles and eventually we’ll have a hard landing because China has to pull the trigger,” said Kevin Lai, an economist at Daiwa Institute of Research in Hong Kong. “They have a window of opportunity now to execute a soft landing.”

- China unexpectedly raised the proportion of deposits that banks must set aside as reserves to cool the world’s fastest-growing major economy as a credit boom threatens to stoke inflation and create asset bubbles. Reserve requirements will increase by 50 basis points starting Jan. 18, the central bank said on its Web site this evening. The existing level for big banks is 15.5 percent. The move wasn’t anticipated until at least April, according to the median of 11 forecasts in a Bloomberg News survey four days ago. The decision indicates increasing concern in Premier Wen Jiabao’s government that a continuation of the record 9.21 trillion yuan ($1.3 trillion) of loans in the first 11 months of 2009 will create a bubble in property and stock prices. It also follows two bill auctions by the central bank in the past week where officials guided yields higher, auguring higher borrowing costs. “This series of moves by the central bank provides a clear sign that policy makers are following through on their pledge to guide credit in order to pre-empt rising inflation and avoid asset price bubbles,” said Jing Ulrich, chairwoman of China equities and commodities at JPMorgan Chase & Co. in Hong Kong.

- Union leaders opposed to a Senate plan to tax the most expensive employer-provided health benefits said Democrats face losses in this year’s U.S. congressional elections if they fail to support labor’s agenda. “This is a moment that cries out for political courage, but it is not much in evidence,” Richard Trumka, head of the 11 million-member AFL-CIO labor federation, said yesterday in a speech before he and other union leaders met with President Barack Obama, who supports the tax. Trumka warned of a repeat of 1994, when Democrats lost control of Congress, if lawmakers back a health-care overhaul without heeding labor’s concerns. Harold Schaitberger, president of the International Association of Fire Fighters, said Obama “will be held accountable” if he continues to push for the excise tax on the insurance plans, which is intended to help fund the overhaul. “The president’s support for the excise tax is a huge disappointment and cannot be ignored,” he said yesterday in a statement about the levy, which would be imposed on insurance plans worth more than $23,000 a year for families.

- President Barack Obama’s push to halt Iran’s suspected nuclear-weapons program with tougher sanctions is likely to fail, if history is a guide. Financial and trade restrictions imposed by the United Nations, the U.S. and the European Union haven’t stopped Iran from enriching uranium or building a secret nuclear facility -- any more than sanctions on countries including Cuba and Myanmar have changed their policies. Unity on new penalties will be tough. Major economies such as China rely on Iran’s crude oil, and many non-U.S. energy companies including Royal Dutch Shell Plc are invested in Iran, which has the world’s second-biggest natural-gas and oil reserves.

- U.S. life insurers, a group led by MetLife Inc.(MET) and Prudential Financial Inc.(PRU), will sidestep losses on investments tied to commercial mortgages, said Eric Berg, an analyst with Barclays Plc. “Life insurers stand to lose little, if anything” even if commercial property values continue to fall, Berg said today in a research report. “The reason: the substantial subordination, or protection against loss, that the insurers enjoy” on commercial mortgage-backed securities, he said.

- Corn prices plunged the maximum permitted by the Chicago Board of Trade after the U.S. forecast a record crop. Soybeans and wheat prices also dropped. Corn futures for March delivery fell 30 cents, the CBOT’s daily limit, or 7.1 percent, to $3.925 a bushel at 9:36 a.m. in Chicago. Soybean futures for March delivery fell 37.5 cents, or 3.7 percent, to $9.73 a bushel, and wheat futures for March delivery slipped 35.5 cents, or 6.2 percent, to $5.37 a bushel.

- Tiffany & Co.(TIF), the world’s second- largest luxury-jewelry retailer, raised its annual earnings forecast and said holiday sales rose after wealthy consumers started spending more. Revenue from Nov. 1 to Dec. 31 rose 17 percent to $799.1 million, New York-based Tiffany said in a statement distributed on Business Wire today. Sales at U.S. stores open at least a year climbed 12 percent, with gains of 16 percent in November and 10 percent in December.

- Las Vegas Strip gambling revenue rose 8.3 percent in November, the first increase in almost two years for the largest U.S. casino market. Proceeds on the Strip rose to $473.8 million, Nevada’s Gaming Control Board said today in a statement on its Web site. Revenue for all of Clark County, including downtown Las Vegas, gained 6.9 percent to $750.8 million, the board said.


Wall Street Journal:

- Senate Banking Committee Chairman Chris Dodd said today that Ben Bernanke cannot remain as chairman of the Federal Reserve if the Senate does not confirm him by January 31 when his four-year term expires. In an interview on CNBC, Dodd said Fed Vice Chairman Donald Kohn would take over as chairman. Sen. Judd Gregg (R., N.H.) made the same point. The comments generated some confusion on Wall Street, but the situation isn’t clear-cut. This much is clear: A Fed chairman cannot automatically stay in his position after his four-year term as chairman expires. Members of the Fed board, in contrast, can remain in office as governors until their expired term has been filled. The Federal Reserve Act says that the Fed vice chairman acts as chair in the “absence” of the chairman. But “absence” is not defined.

- Dendreon Corp. (DNDN) said it expects the cash it raised in December to accelerate the completion of its manufacturing facilities and that the cash has given it leverage in finding a European marketing partner for its experimental prostate-cancer treatment.

- Could all those populist pitchforks currently pointed at Washington be turned toward Wall Street instead? That's the question that ought to worry Wall Street executives as they prepare to pay themselves nice bonuses this month, hard on the heels of a government bailout of the financial system, and amid continuing job losses around the rest of the country. Financial firms know they're in for heat on bonuses; they've already been chastised on national TV by President Barack Obama's chief economist. The more searing heat, though, might come not from Washington's corridors of power but from the streets, where disjointed populist armies are starting to organize in the so-called tea-party movement. Other hints of unrest can be seen on the political left and the right. On the left, Arianna Huffington, who runs one of the Internet's hottest political sites, has just suggested that people take their money out of the kinds of big financial institutions that benefited from Washington's rescue, and move it to community banks. And on the right, Republican Rep. Darrell Issa has begun a crusade to figure out whether Treasury Secretary Timothy Geithner, while chairman of the Federal Reserve Bank of New York, was part of a plan to hide from taxpayers the fact that rescue money doled out to insurance giant American International Group Inc. was simply going out the backdoor to rescue banks owed money by AIG. It's easy in Washington and on Wall Street to dismiss the tea-party movement as a disorganized fringe force. It's worth remembering, though, that in a Wall Street Journal/NBC News poll late last year, the tea-party movement won a higher favorability rating among Americans than did either major party.

- Sen. Lisa Murkowski on Tuesday left open the possibility that she would seek a vote next week on stopping the U.S. Environmental Protection Agency from going forward with regulations to limit greenhouse-gas emissions. "I do not believe and I don't believe that most of my colleagues in the Senate believe that the EPA is the entity that is the best suited to develop climate-change policy for this country," Ms. Murkowski (R., Alaska) told reporters. "I'm trying to get a time-out. I'm trying to allow the legislative process to proceed. I'm hopeful that we'll be able to have a vote that will allow for that discussion."


MarketWatch.com:

- The U.S. markets have started 2010 on the upswing, with each of the three major benchmarks notching 15-month highs. Underlying the upturn, the Nasdaq's strength has been statistically unusual, effectively laying the groundwork for what are likely to be further first-quarter gains.


CNBC:

- Gary Shapiro: US and China on the Brink of a Trade War.

- The sentiment of U.S. small business owners stalled in December, hurt by weak sales and worries about government policies, according to a survey released on Tuesday. The National Federation of Independent Business said its small business optimism index fell for the second straight month, dropping 0.3 point to 88.0 in December. "Continued weak sales and threatening domestic policies from Washington have left small business owners with little to be optimistic about in the coming year," said the federation's chief economist, William Dunkelberg, in a statement.


NY Times:

- The technology industry is going retro — moving away from remote controls, mice and joysticks to something that arrives without batteries, wires or a user manual. It’s called a hand. In the coming months, the likes of Microsoft, Hitachi and major PC makers will begin selling devices that will allow people to flip channels on the TV or move documents on a computer monitor with simple hand gestures. The technology, one of the most significant changes to human-device interfaces since the mouse appeared next to computers in the early 1980s, was being shown in private sessions during the immense Consumer Electronics Show here last week.


The Business Insider:

- Shareholders: Reject Big Bonuses, And Penalize Executives’ Permanent Value-Destroying Behavior.

- Venezuelans really have their priorities straight. After Chavez devalued the currency, fears mounted that retailers would increase prices significantly to make up the difference. So people rushed out to buy flat screen TVs and video games en masse before it's too late. And retailers are caught in a Catch 22 of their own. If they raise prices, Chavez says he'll order the military to seize businesses that do so. If they don't, profits will suffer greatly. Welcome to the joys of a centrally planned economy.
- Oil Discovery Under Shallow Gulf Waters Estimated To Be Biggest In Decades.


InformationWeek:

- According to a report from The Korea Times, Apple is set to introduce the "iPhone 4G" no later than April, with the device hitting store shelves around the globe by June. The report includes some interesting specs on the unannounced product. Let's take a look. The iPhone 4G -- as it is currently being called -- would sport an OLED display, a dual-core processor and a better graphics chip. Other features being reported include a removable battery (!!!), dual cameras to support video calling, and possibly mobile TV services.


EarthTimes:

- With the 2010 earnings season in full swing, tightening spreads for JP Morgan Chase & Co. and Merrill Lynch & Co. Inc. indicate that the markets are keeping a close eye on upcoming reports from both financial institutions, according to Fitch Solutions in its latest update on Global CDS Spreads/Liquidity Scores for companies scheduled to come out with earnings announcements in the coming week. Both financial institutions have outperformed the broader financials sector over the past 3 months, with JP Morgan spreads tightening 32% and Merrill spreads coming in 26%. Trends for both companies are emblematic of broader sector tightening, with CDS spreads on the financials industry firming up on average 20%. 'There has been systematic CDS spread tightening across all sectors, with Financials leading the way' said Managing Director Jonathan di Giambattista. 'The fact that liquidity on Merrill Lynch has dramatically reduced in recent months signals that the market expects a return to stability for the financial sector.'


TGDaily:

- An interesting rumor reached the ever alert ears of TG Daily's hacks on the CES showroom floor last week, with word that Apple(AAPL) has snapped up all available supply of 10.1-inch multi-touch display LCD and OLED screens for its upcoming tablet. "We were designing a product for a customer and we needed 10 inch screens, but we've been trying for months and can't get one from any of the Asian suppliers," an anonymous designer for a firm wishing to remain nameless told TG Daily.


LATimes:

- Imports at the nation's trade gateways -- including the ports of Los Angeles and Long Beach -- appear to have ended their long decline and are poised for a strong recovery, according to preliminary data released Monday. Cargo volume at ports on the Atlantic, Pacific and Gulf coasts were higher in December than a year earlier, the first such gain in 28 months, according to the National Retail Federation and consulting firm Hackett Associates.


Rassmussen:

- Thirty-one percent (31%) of U.S. voters rate the government response to the attempted terrorist bombing of a U.S. airliner on Christmas Day as good or excellent, according to a new Rasmussen Reports national telephone survey. Thirty-eight percent (38%) say the government’s response has been poor. Just 24% now have a favorable opinion of Homeland Security Secretary Janet Napolitano, while 47% view her unfavorably.


Politico:

- Chamber of Commerce President Tom Donohue gave a scathing assessment of the Obama administration’s business agenda on Tuesday — and delivered a clear threat to Democrats running for election in 2010. “We are not in presidential politics,” said Donohue. “But we’re going to be in a lot of politics in the House and the Senate and the judicial politics in this country.” Donohue criticized proposals to reform health care, overhaul the financial system and cap the amount of greenhouse gases in the atmosphere, saying the Democratic agenda will undermine private industry and eliminate jobs. “Congress, the administration and the states must recognize that our weak economy simply could not sustain all the new taxes, regulations and mandates now under consideration,’ said Donohue. “It’s a sure-fire recipe for double-dip recession, or worse.” The Chamber plans to dramatically expand its $100 million campaign for free enterprise — a lobbying effort that was harshly criticized by the administration. And it plans to organize the largest, most aggressive election campaign in its history. “The Chamber will highlight lawmakers and candidates who support a pro-jobs agenda and hold accountable those who don’t,” said Donohue.

- Back home, nervous Democrats sound squishy on health care reform. Some will return to Washington this week demanding changes. A few will almost certainly threaten to withhold their votes. But through it all — and through what is expected to be multiple near-death experiences for the health care bill in coming weeks — White House and congressional leaders plan to beat back the temptation of “no” with a hardball argument: Democrats already voted “yes.” And it would be politically disastrous to flip-flop now.

- Harry situation: Inside the Reid eruption.


MarketFolly:

- Hedge Fund Short Positions: High Operating Leverage the Common Theme.


NYMagazine:

- A candidate whose aides were prepared to block him from becoming president. A wife whose virtuous image was a mirage. A mistress with a video camera. In an excerpt from the new book Game Change—their sweeping account of the 2008 campaign—the authors reveal that, inside the Edwards triangle, nothing was too crazy to be true.


HedgeWeek:

- Managed accounts are here to stay. An important question currently being asked among hedge fund managers and investors is whether the current shift toward use of managed accounts will make them a permanent feature of the industry landscape, perhaps one day replacing pooled funds as the default option for investment, or whether some of the impetus will slip away as memories of the liquidity problems of the past two years start to fade.


SeekingAlpha:

- Hedge funds averaged a return of 18 percent in 2009 as they finished their best year of the decade with positive performance in December, according to the Credit Suisse/Tremont Hedge Fund Index. This compares with a 27 percent gain in the MSCI World Index. The best performing strategy was Convertible Arbitrage with a 47 percent gain, while the worst was Dedicated Short Bias with a loss of 25 percent.


Reuters:

- It could take until November 2018 to get the full story behind the U.S. bailout of insurance giant American International Group (AIG) because of an action taken last year by the Securities and Exchange Commission. In May, the SEC approved a request by AIG to keep secret an exhibit to a year-old regulatory filing that includes some of the details on the most controversial aspect of the AIG bailout: the funneling of tens of billions of dollars to big banks like Societe Generale, Goldman Sachs (GS), Deutsche Bank(DB) and Merrill Lynch. The Fed's bailout of AIG long has been controversial because the banks that sold CDOs to Maiden Lane III were paid 100 percent of face value, even though many of the securities were worth substantially less at the time of the government bailout. Last Thursday the furor over the Maiden Lane transaction was reignited after Rep. Darrell Issa, a California Republican, released copies of emails detailing discussions between the New York Fed and AIG over how much information to disclose. Issa, in a prepared statement, said "as much information as possible should be made available to Congress to review the details and decisions" regarding the payments.

- U.S. residential mortgage originations are expected to plummet 40 percent in 2010 to their lowest level in a decade, eclipsing a forecast drop made just one month ago, the industry's main trade group said on Tuesday. Lenders will underwrite $1.28 trillion in home loans this year, down from $2.11 trillion in 2009, the Mortgage Bankers Association said in its latest forecast. That would be the lowest since $1.14 trillion in 2000. The forecast was downgraded from December, when the MBA predicted originations would fall about 24 percent.

- U.S. regulators should investigate whether laws were violated when the New York Federal Reserve Bank under Timothy Geithner urged insurer AIG to limit discussions about payments to banks, a Republican lawmaker said on Tuesday.


Telegraph:

- Google(GOOG) Street View ‘to carry real-time ads’. Google Street View could start carrying adverts which will appear on buildings and billboards, having been granted a new patent.

Bear Radar

Style Underperformer:
Mid-Cap Growth (-1.80%)

Sector Underperformers:
Semis (-4.21%), Gold (-4.02%) and Agriculture (-2.82%)

Stocks Falling on Unusual Volume:

AA, SGY, FORM, TIE, CSIQ, HES, DTSI, MFLX, ERTS, MYGN, LEAP, CAGC, HMIN, IMAX, OSIS, AMAT, KONG, CAAS, SYNA, TLP, AEC, MIM, GAP and SHI


Stocks With Unusual Put Option Activity:
1) LEAP 2) ERTS 3) YRCW 4) MNTA 5) ATI

Bull Radar

Style Outperformer:
Large-Cap Value (-.58%)

Sector Outperformers:
Computer Service (+.91%), Insurance (+.47%) and Gaming (+.38%)

Stocks Rising on Unusual Volume:
HMC, TM, EFII, FMX, AVP, PEP, SCSC, QLGC, FEIC, NBL, MMR, ASBC, AMAG, SORL, CAKE, INFY, LIFE, XRTX, MDRX, HELE, OSIP, SVVS, WGOV, MSTR, PRGO, JDAS, CTSH, WYNN, LFUS, ELX, HGR, HIG, SVU, DPZ, BWS and FMX


Stocks With Unusual Call Option Activity:
1) HIG 2) ALL 3) GLW 4) SPG 5) LLTC

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Tuesday Watch

Late-Night Headlines
Bloomberg:

- Alcoa Inc.(AA), the largest U.S. aluminum producer, reported fourth-quarter profit that trailed analysts’ estimates as the company faced higher energy and currency costs. Profit excluding certain items was 1 cent a share, trailing analysts’ average estimate for earnings of 6 cents. The net loss of $277 million, or 28 cents a share, narrowed from a loss of $1.19 billion, or $1.49, a year earlier, Alcoa said today in a statement. Sales fell 4.5 percent to $5.43 billion. Profit was hurt by higher energy prices and the dollar’s decline against the euro and the Brazilian real, Deutsche Bank AG analyst Jorge Beristain said.

- Hedge fund and other investors have made record bets on higher crude and fuel prices as freezing weather boosts consumption. The total net number of long positions held by so-called large speculators in NY crude, heating oil and gasoline futures is at an all-time high. "The CFTC data is showing large speculators are behind the current oil rally from $70 a barrel," said Olivier Jakob, managing director of Petromatrix GmbH in Zug, Switzerland. "Large speculators are now holding all time record net length in WTI, record net length in gasoline, record net length in heating oil."

- The U.S. Securities and Exchange Commission should investigate whether employees of the Federal Reserve Bank of New York violated laws on corporate disclosure when they asked American International Group Inc. to withhold information from public filings, a Republican lawmaker said. “I urge you to investigate the apparent violations of the securities laws regarding AIG disclosures,” including the actions of New York Fed staff, U.S. Senator Jim Bunning of Kentucky wrote in a letter today to SEC Chairman Mary Schapiro.

- China’s central bank guided its benchmark one-year bill yield higher for the first time in 20 weeks to curb lending, causing banking stocks to decline. “The central bank may be seeking a stronger tightening policy than expected,” said Jiang Chao, a fixed-income analyst in Shanghai at Guotai Junan Securities Co., the nation’s largest brokerage by revenue. “We expect the central bank will raise the reserve-requirement ratio one time in March.”


Wall Street Journal:

- Hyatt Hotels Corp., fresh off its November debut as a public company, will scout for acquisition opportunities as it seeks to expand its comparatively limited reach. In particular, Hyatt wants to add hotels—either by buying properties or gaining new management contracts—in major cities where it now has a limited presence.

- Democrats Weigh New Tax on Investment Income. Health-Bill Negotiators Consider Extending Medicare Levy as They Face Pressure to East Proposed Hit on Generous Insurance Plans. House and Senate negotiators are considering applying for the first time the Medicare payroll tax to investment income as part of a compromise to pay for a health overhaul. The extra Medicare tax would apply only to the wealthy and could allow congressional Democrats to reduce the sting of a tax on high-cost insurance plans, said Democratic aides and others briefed on the negotiations. Labor leaders complained directly to President Barack Obama on Monday about the tax on high-value plans, which would hit some union members who have negotiated generous health benefits. At least one union is threatening to oppose the underlying legislation if the tax remains, and the president of the AFL-CIO suggested in a speech that Democrats who took unions for granted risked losing support in congressional elections later this year. "Politicians who think that working people have it too good ... are inviting a repeat of 1994," when Republicans took control of the House after decades in the minority, said AFL-CIO chief Richard Trumka.

- When Greed Is Not Good by Alan S. Blinder. Wall Street has quickly rediscovered the virtues of mammoth paychecks. Why hasn't there been more financial reform?

- New Breast Screening Limits Face Reversal.

- California Cap-and-Trade Revolt. A ballot measure would suspend the law until joblessness falls. Could Californians finally be serious about turning around their sputtering economy? One hopeful sign is a ballot initiative that would repeal the Golden State's version of a cap-and-trade carbon tax.


CNBC.com:
- Key U.S. senators are considering the creation of a special bankruptcy court for troubled financial services firms, a person familiar with the plans said on Monday.

IBD:
- The name AmerisourceBergen (ABC) may not roll easily off the tongue, but chances are the products it distributes have been part of your life and well-being.

NY Times:

- In Leno Fiasco, a Window to the Midlife Crisis of NBC.


PCMag.com:

- How 3D Video Will Impact Storage.


Crain's Detroit Business:

- Michigan state revenue is expected to grow marginally in the next fiscal year, but not enough to overtake the loss of federal stimulus money and spending pressures that could contribute to a budget shortfall of more than $1.7 billion, based on state economists’ projections Monday.


Business Insider:

- The Case Against Tim Geithner by Dylan Ratigan.

- Chart of the Day: How Fox Conquered Cable News.


Politico:

- Sen. Russ Feingold (D-Wisc.) has told a Milwaukee-area TV station he's not sure whether to heed GOP calls for Harry Reid's resignation -- or stick with the nearly unanimous chorus of Democrats who say he should stay. "I'm thinking about that and we're going to be getting together as a caucus next week and the topic will come up. I have not decided whether these comments merit that or not. They're very unfortunate. They should have never been said. So, I need to think about it," Feingold said.

- A new book is out with a highly critical but unsourced portrait of Hillary Clinton. This familiar occurrence — it’s happened too many times to count over the years — has usually been greeted with an equally familiar response: A fast and furious counterattack from the Clinton inner circle. What’s notable about the highly publicized release of “Game Change,” however, is the virtual silence from the Clinton camp. The lack of public outrage seems to mark the sputtering end of what was once known as the Clinton political machine and underlines a fact that onetime Clinton loyalists acknowledge: The book’s primary sources about the former candidate and current secretary of state are her own former staffers and intimates. As a result, there is no campaign of veteran Clintonites spinning the press corps and trying to pre-emptively discredit the book’s scathing depiction of Hillary Clinton as a rudderless candidate and a cheerleader for vicious tactics against eventual winner Barack Obama. There is no team of Clinton proxies going on cable television to denounce authors Mark Halperin and John Heilemann as scurrilous and unworthy of belief.


LA Times:

- There is a major flaw in the business plan for the $42.6-billion state high-speed rail network that would run from San Diego to San Francisco, according to the legislature’s nonpartisan fiscal watchdog. Among the concerns expressed in a new report by the Legislative Analyst’s Office is that the state High-Speed Rail Authority failed to adequately consider what happens if few people ride the new trains, opening a potentially huge funding gap. Eric Thronson, a fiscal and policy analyst for the office, called the business plan “incomplete and inappropriate for a project of this magnitude.’’ Thronson warned that there is no backup plan to keep the rail system solvent if it fails to draw 41 million people yearly.


24/7 Wall St.:

- The 24/7 Wall Street Corporate Power Rankings of the 32 most important companies in America.


InformationWeek SMB:

- According to reported statements by a French telecom executive and to newspaper sources, the long-awaited Apple(AAPL) "iSlate" will be an advanced videophone and will enable gesture control of productivity applications. These two capabilities, if true, could make the device a much more attractive business tool.


Market News International:

- The US dollar is unlikely to fall further this year, citing Peng Junming, an official at China Investment Corp., the nation's sovereign wealth fund. The outlook for the yen isn't promising, said Peng, who works in the asset allocation and strategic research department of CIC.


Reuters:

- McDonald's Corp (MCD) plans to offer free Wi-Fi service at most of its U.S. restaurants, starting on Jan. 15, a spokeswoman said on Monday.

- The top executives of two of the largest U.S. auto dealership groups said on Monday that Ford Motor Co's (F) turnaround was gaining momentum after three full years under former Boeing executive Alan Mulally. "It shows you the difference that one individual can make," AutoNation Inc (AN) Chief Executive Mike Jackson told Reuters on Monday. Jackson's comments came just hours after a panel of about 50 U.S. and Canadian automotive journalists named the Ford Fusion Hybrid the car of the year and the Ford Transit Connect the truck of the year at the Detroit auto show.

- Goldman Sachs (GS) told an activist group that it will seek permission to bar a proposed proxy vote that urges detailed disclosure and defense of its pay practices. The Nathan Cummings Foundation in New York, which owns a stake in the giant New York bank, was told by a Goldman executive on Friday it would seek a "no action" letter from the Securities and Exchange Commission that would allow it to omit the proposed pay review from its upcoming proxy.

- Former AIG (AIG) chief Maurice "Hank" Greenberg is campaigning for the U.S. government to cut its stake in the insurer to less than 20 percent, saying this would attract new capital to AIG and help taxpayers fully recoup bailout money it received, a source said on Monday.

- Storage networking company Emulex Corp (ELX) expects second-quarter results to come in higher than its prior estimate and top analysts' expectations, sending its shares up 9 percent. The company said the results were driven by strong demand for its products, that are used to connect computers to remote storage equipment and servers to fiber channel networks.


Financial Times:

- Big banks seeking to make windfall profits by making “outrageously unreasonable” claims against Lehman Brothers’ US business will be forced to prove their case in public courts, the executive leading the unwinding of the failed bank has warned. Bryan Marsal, the chief executive of Lehman Brothers Holdings, who is responsible for maximizing recoveries to all its creditors, said he was planning to make an example of big banks seeking to claim more than they should on billions of dollars of losses linked to trades in derivatives.

- The cost of assembling personal computers will rise this year for the first time in six years because of shortages in some key components, industry analysts have forecast. The cost of semiconductor components in computers has fallen by an annual average of 7.8 per cent since 2000, but they are set to rise this year by 2.8 per cent, according to data from Gartner research consultancy. This is almost entirely attributable to a 23 per cent increase in the price of D-Ram memory chips. Those chips, needed in every computer, make up about 10 per cent of a PC’s overall cost.

- The Obama administration is planning to impose a new levy on top US banks, to pay for the financial bail-out as part of the budget to be presented in February. The surcharge will aim to recoup the full cost of the Tarp bail-out fund, which the administration estimates at $120bn, although officials expect the ultimate cost will be less than $100bn.


Evening Recommendations

Citigroup:

- Reiterated Buy on (OMX), Added to Top Picks Live list, target $17.

- Reiterated Buy on (SPLS), (WSM) and (BBBY) .

- Reiterated Buy on (PVH), Added to Top Picks Live list, raised target to $55.

- Reiterated Buy on (FL), (WWW), (VFC) and (NKE).

- Reiterated Buy on (HUM), target $56.

- Reiterated Buy on (VZ), target $34.

- Upgraded (AMAG) to Buy, target $60.

- Reiterated Buy on (ENDP), target $27.


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

Asia Ex-Japan Inv Grade CDS Index 85.5 -.5 basis points.
S&P 500 futures -.23%.
NASDAQ 100 futures -.19%.


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Earnings of Note
Company/Estimate
- (SVU)/.40

- (KBH)/-.64

- (FUL)/.42

- (LLTC)/.29


Economic Releases

8:30 am EST

- The Trade Deficit for November is estimated to widen to -$34.6B versus -$32.9B in October.


Upcoming Splits

- None of not


Other Potential Market Movers
- The Fed's Fisher speaking, Fed's Plosser speaking, NFIB Small Business Optimism Index, Detroit Auto Show, ABC consumer confidence reading, weekly retail sales reports, IBD/TIPP Economic Optimism Index, Treasury's 3-Year Note auction, API weekly energy inventory report, Cowen Consumer Conference, Needham Growth Conference, Kaufman Tech Trends Conference, Goldman Energy Conference, JPMorgan Healthcare Conference and the (PCS) analyst day
could also impact trading today.


BOTTOM LINE: Asian indices are slightly higher, boosted by automaker and technology 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.