Stocks Declining into Final Hour on Rising Eurozone Debt Angst, Financial Sector Pessimism, Global Growth Fears, Profit-Taking

Broad Market Tone:

• Advance/Decline Line: Lower
  
• Sector Performance: Most Sectors Declining
  
• Volume: Around Average
  
• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• VIX 30.48 -.07%
  
• ISE Sentiment Index 97.0 -7.62%
  
• Total Put/Call 1.15 +7.48%
  
• NYSE Arms 1.10 +81.62%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 123.20 +.51%
  
• European Financial Sector CDS Index 228.46 +2.05%
  
• Western Europe Sovereign Debt CDS Index 334.33 +.47%
  
• Emerging Market CDS Index 282.02 +2.50%
  
• 2-Year Swap Spread 36.0 +2.0 bps
  
• TED Spread 44.0 +1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .00% unch.
  
• Yield Curve 181.0 -2 bps
  
• China Import Iron Ore Spot $122.90/Metric Tonne +.16%
  
• Citi US Economic Surprise Index 18.70 +5.1 points
  
• 10-Year TIPS Spread 2.12 +3 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -81 open in Japan
• DAX Futures: Indicating +19 open in Germany

Portfolio:

• Slightly Higher: On gains in my Tech/Retail sector longs, Index hedges and Emerging Markets shorts
  
• Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and some of my (EEM) short, then added some back
  
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is bearish, as the S&P 500 trades lower on rising Eurozone debt angst, rising global growth worries, financial sector pessimism and rising energy prices. On the positive side, Coal, Alt Energy, Steel, Computer, Semi, Disk Drive, HMO and Restaurant shares are higher on the day. Tech shares have outperformed throughout the day. Gold is falling -.4% and Lumber is rising +.4%. Major Asian equity indices rose 1-3% overnight. The China sovereign cds is falling -10.95% to 135.89 bps, the Japan sovereign cds is falling -5.2% to 110.12 bps and the Saudi sovereign cds is falling -3.0% to 110.0 bps. On the negative side, Networking, Bank, I-Banking, REIT, Construction, Insurance and Biotech shares are under pressure, falling more than -1.5%. (XLF) has traded poorly throughout the day. Oil is rising +.3%, copper is falling -.67% and the UBS-Bloomberg Ag Spot Index is flat. Major European equity indices fell 2.0-2.5% today. The Spain sovereign cds is jumping +4.65% to 388.33 bps, the Italy sovereign cds is rising +1.77% to 496.67 bps, the Portugal sovereign cds is rising +3.3% to 1,038.0 bps, the Belgium sovereign cds is gaining +2.04% to 282.0 bps, the Russia sovereign cds is climbing +2.26% to 211.33 bps and the Ireland sovereign cds is rising +2.42% to 719.33 bps. Rice is still close to its multi-year high, rising +26.8% in about 4 months. The Italian 10-year yield jumped +17 bps to 6.37% today. The Italian/German 10-Year Yield Spread is soaring +26.47 bps to 454.64 bps, which is another new all-time high. The TED spread continues to trend higher and is near the highest since June 2010. The Libor-OIS spread is still very near the widest since July 2010. The 2-Year Euro Swap spread is still very near cycle highs, which is also noteworthy considering the recent strong equity advance. China Iron Ore Spot has plunged -35.90% since February 16th and -32.0% since Sept. 7th. Despite this week's pullback, the broad US equity market still trades like it wants to move higher in the short-term on fund year-end performance-chasing, seasonality and better US economic data. However, the rapidly deteriorating fundamentals in Europe continue to get in the way. I still suspect one more meaningful push higher can occur before year-end, but that it will prove to be short-lived. I expect US stocks to trade mixed-to-lower into the close from current levels on rising financial sector pessimism, global growth fears, rising Eurozone debt angst, profit-taking, more shorting and technical selling.

Today's Headlines

Bloomberg:

• European Stocks Drop After G-20 Fails to Agree on IMF Funding. European stocks fell, capping the first weekly decline in six weeks, after the Group of 20 failed to agree on boosting the International Monetary Fund’s resources and German factory data fueled concern the region is slipping into recession. Alcatel-Lucent SA, France’s largest telecommunications equipment maker, slumped to the lowest price in more than two years as it cut its full-year profit margin forecast. Commerzbank AG (CBK) dropped 6.3 percent after reporting a bigger- than-estimated quarterly loss on Greek-debt writedowns. The benchmark Stoxx Europe 600 Index fell 1 percent to 239.76 at the close in London. The gauge has retreated 3.7 percent this week, the first weekly drop since Sept. 23, as Greek Prime Minister George Papandreou’s now-abandoned referendum call spurred concern the country may go into disorderly default. “Investors will certainly need to digest the latest developments in Greece and the outcome of the latest G-20 summit over the weekend,” said Jean-Maurice Ladure, head of investment strategy at Coutts & Co Ltd. in Zurich. “Hence, investors are likely to remain in ‘wait-and-see’ mode.” Global policy makers are awaiting more details of a week- old rescue package before they commit fresh cash to the IMF which could then lend to Europe’s bailout facility, German Chancellor Angela Merkel said at the end of a G-20 summit in Cannes, France. French President Nicolas Sarkozy said it may take until February for a deal.
  
• Greek Lawmakers Seek Route to National Government as Confidence Vote Nears. Greek politicians are trying to map out a plan to put in place a new government to ratify last week’s European Union bailout agreement as Prime Minister George Papandreou struggles to keep his majority in parliament. With Papandreou facing a confidence vote at midnight Athens time, opposition leader Antonis Samaras is refusing to share power with the premier. Samaras wants a caretaker government chosen by the president. Should Papandreou win the vote, his options this weekend include handing over power to a national unity government or fighting on. Papandreou’s Pasok party currently controls 152 seats in the 300-member legislature. “The issue is how to keep the country going and then evolve the current government into a broader government that takes on board other political forces,” Energy Minister George Papaconstantinou told Bloomberg Television’s Nicole Itano in an interview. “We need broader support and approval for the kind of measures that were taken.”
• ECB's Stark Says Economy May Not Expand at All in Fourth Quarter of 2011. European Central Bank Executive Board member Juergen Stark said the euro-area economy may not grow at all in the final three months of the year. “Possibly we will see, and I say this with all caution, a red zero in the fourth quarter,” Stark said in a speech in Frankfurt today. Growth will be “very weak” going into 2012 and “there are consequences for price and wage developments,” he said. Stark also said he assumes the ECB will end its bond purchases “as soon as possible” as they set the wrong incentives.
  
• European CEOs Prepare for Recession Risk Amid Greek Flipflopping on Euro. The squabbling over Greece’s future in the euro zone may push Europe’s economy into recession and reduce companies’ ability to compete internationally, according to executives of some of the region’s biggest corporations. “There are legitimate reasons to be worried,” Alexey Mordashov, chief executive officer of Russia’s second-biggest steelmaker OAO Severstal, said in an interview in Cannes, France, where leaders of the Group of 20 economic powers are meeting. “We expect it to undermine growth in Europe.”
• U.S. Payrolls Rose in October; Jobless Rate 9%. The U.S. jobless rate unexpectedly fell in October while employers added fewer workers than forecast, illustrating the “frustratingly slow” progress cited by Federal Reserve Chairman Ben S. Bernanke this week. The unemployment rate fell to a six-month low of 9 percent from 9.1 percent, even as the labor force grew. The 80,000 increase in payrolls followed gains in the prior two months that were revised up by 102,000, Labor Department figures showed today in Washington. Average hourly earnings rose 0.2 percent to $23.19, while the workweek held at 34.3 hours, today’s report showed. The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- dropped to 16.2 percent from 16.5 percent. The number of people jobless for 27 weeks or more fell to 42.4 percent as a share of all those without work from 44.6 percent. It was last lower in November 2010. The number of temporary workers increased 15,000 after rising 21,100 the prior month.
• Germany Worried About Libya Missile Proliferation, Bild Says. Germany’s Federal Bureau of Criminal Investigation is concerned about the spread of surface-to-air missiles from Libya that may fall into the hands of terrorists, Germany’s Bild-Zeitung newspaper reported. The bureau issued a warning to German customs authorities that Russian-made SA-7 missiles have been offered illegally in countries including Egypt, Bild reported, without saying where it got the information. Hundreds of shoulder-launched, heat-seeking missiles were probably stolen from Libyan stocks during the revolutionary turmoil, Bild cited the bureau as saying. Rainer Wendt, head of Germany’s union of police officers, called for tighter controls around German airports, Bild said.
• Baum: You Can't Fix a Burst Bubble With More Hot Air.
• Groupon(GRPN) Surges After Pricing IPO Above Range. Groupon Inc. jumped as much as 56 percent in its trading debut after the online-coupon company raised $700 million in an initial public offering that limited the amount of shares typically available to investors. The shares of the Chicago-based company, listed under the symbol GRPN, climbed $7.22, or 36 percent, to $27.22 at 12:07 p.m. New York time in Nasdaq Stock Market trading, after surging to $31.14. Yesterday, Groupon sold 35 million shares at $20 each, the biggest IPO by a U.S. Internet company since Google Inc. (GOOG) raised $1.9 billion in its 2004 initial offering.

Wall Street Journal:

• China Summons Internet Executives. Executives from China's top Internet companies have been summoned for an unusual policy-training session by the Communist Party's propaganda department, according to people familiar with the matter, the latest move in the government's campaign to increase oversight of the nation's fast-growing Internet sector. The executives are participating in a multiple-day policy-training event held on the outskirts of Beijing this week, similar to training sessions often held for government officials to review new regulations, the people said.
• ECRI Leading Index: Another Tick Higher. (graph) For the third week in a row, the Economic Cycle Research Institute’s weekly leading index has ticked a little bit higher, pushing its rolling growth rate up for the first time since July. The ECRI’s leading index edged up to 122.1 from 121.2 the prior week, and its rolling growth rate rose to -9.4% from -10.1%. That’s still a low growth rate, but hasn’t gotten worse in a couple of weeks now.

MarketWatch:

• Corzine's Ungraceful Exit. Commentary: Former CEO expresses ‘sadness’ but not regret.

CNBC.com:

• After Greece, Italy Could Be Next Focus for Markets. The eyes of the world have been trained on Greece for most of this week, but, as the Hellenic crisis approached breaking point, signs are that Italy will be the next focus. "The whole stability of Europe depends on whether Italy gets its act together," Commerzbank Chief Financial Officer Eric Strutz told analysts in a conference call on Friday.
• Greek Drama Not Over Yet: What May Happen Next.
  

Business Insider:

• Credit Derviatives and Leverage Sank Jon Corzine's MF Global(MF).

Zero Hedge:

• Back to European Sov Exposure: Moody's Will Downgrade Austria's Erste Over Attempt To Hide Billions In Sovereign CDS.
• Jefferies Releases Yet Another Set Of Numbers On Its European Exposure That Differ From 24 Hours Ago.
• Making Sense Of The Chaos: Europe's Calendar Of Events For The Rest Of November.
• Former Bundesbank President Weber Warns Germany Will Be On The European Bailout Hook For Up To 314% Of Its GDP With Levered EFSF.
  

NY Post:

• RenTec Fund Has Rebirth. Renaissance Technologies, the super-secretive $19 billion hedge fund started by math whiz Jim Simons, is doing just fine without its founder. Almost two years after Simons stepped back from day-to-day operations, the firm’s most troubled fund, the Renaissance Institutional Equities Fund, is staging a major comeback. RIEF, with assets of $6.1 billion, is up 31 percent this year, notching returns of nearly 5 percent last month, sources said. Ironically, the stellar returns finally place RIEF in the same rank as its older, more famous fund sibling, the Medallion fund, which is up 32 percent this year net of fees, one investor said.
  

FINalternatives:

• Index Has Hedge Funds Up 1.85% In Oct. Hedge funds bounced back last month with most posting positive returns. But they still have a ways to go if they're to end 2011 in anything but the red. The average fund rose 1.85% in October, the Dow Jones Credit Suisse Core Hedge Fund Index shows. But after a rough August and September—the benchmark fell more than 4% in the latter month—the index remains down 6.13% on the year, with just two months to go. Long/short equity hedge funds had the best month, rising 5.27% to cut their average year-to-date loss to 4.37%. Event-driven funds also did well, adding 2.66%, but they remain down an average of 11.01%. By contrast, managed futures funds had the worst October, dropping 5.07%, leaving the strategy down 5.18% on the year.

Reuters:

• Italy Govt Hangs by Thread as Coalition Crumbles. Italian Prime Minister Silvio Berlusconi refused to step down on Friday despite growing desertions from his crumbling centre-right coalition in protest over the ruling party's handling of an accelerating economic crisis. Berlusconi is widely believed to have already lost the numbers he needs to survive in parliament but he told reporters at a G20 summit in France: "We have a majority which I continue to believe is solid and so we will continue to govern."
• Bunds Rise on EFSF Worries, Italy Under Pressure. German Bund futures rose on Friday as worries over a lack of commitment from G20 countries to participate in Europe's bailout fund and heightened political tension in Italy forced investors towards perceived safer assets. Italian two-year government bond yields jumped and the spread of Italian 10-year yields over Bunds hit a new lifetime high after Prime Minister Silvio Berlusconi said he had refused an offer of financial support from the International Monetary Fund.

Financial Times:

• Pricing CDS on the EFSF. Dealers are shying away from offering quotes on credit default swaps referencing the European Financial Stability Fund, despite customer demand for the instruments. Five major dealers contacted by IFR all denied quoting CDS on Europe’s sovereign bailout fund, citing the potential political fallout of doing so.
• The epistemology of US banks’ European exposure. Can we really know anything about US banks exposure to Europe? A familiar epistemological question, which is being asked again in the wake of MF Global’s demise and Jefferies’ circuit-breaking slide. We’ve taken a depressingly long look at some of the data and if you don’t want to read the splurge below, in sum, we don’t think we can confidently say very much ex ante about the extent and form of US banks’ exposure to European sovereigns, banks and corporations.

Telegraph:

• Eurozone Trapped in 'Straitjacket', Says Rio Tinto(RTP) Chairman Jan du Plessis. The nations of the eurozone are trapped in a "straitjacket" of a shared currency with no way out, the chairman of mining giant Rio Tinto has warned.
• Debt Crisis: Live.
  

Imerisia:

• Greek net budget revenue in October fell 6.9% from the same month in 2010 to 4.22 billion euros. For the 10 months through Oct. 31, budget revenue declined 4.4% to 39.17 billion euros, implying Greece needs to find 12.4 billion euros in the last two months of the year to reach the revenue target for 2011 of 51.58 billion euros.

Ansa:

• Italy doesn't want to use a credit line from the IMF after having had contacts with the fund, citing European sources.

China Securities Journal:

• The bad-loan ratio for banks in China's Wenzhou city, a hub of smaller exporters, rose in September for the first time in ten years. Total outstanding bad loans for Wenzhou's banks may be 3.4 billion yuan at the end of September, based on total credit of 619.2 billion yuan. Non-performing loans may continue to increase after "some government agencies" asked lenders to be more tolerant of bad loans for smaller businesses, citing a person from the banking industry. Wenzhou banks reported declines in property lending, bank acceptance and consumer credit, reflecting cooling property purchases and weaker business activity and consumer demand, according to the report. Deposits by stock and futures investors plunged as some investors withdrew funds to repay borrowings from informal lending channels.
• Ninety percent of Chinese polysilicon makers may halt operations by the end of November because of declining spot prices.
  

Bear Radar

Style Underperformer:

• Large-Cap Value (-.81%)

Sector Underperformers:

• 1) Construction -3.31% 2) Networking -2.0% 3) Banks -1.30%

Stocks Falling on Unusual Volume:

• DLLR, PHG, GSVC, KEYN, SGEN, OPTR, DMND, SAPE, BRLI, CARB, DGII, LORL, VRUS, WCRX, JAZZ, WIN, ARTC, TWIN, UEIC, ALKS, NXTM, TZOO, MTZ, HCN, CHK, LUK and FLR
  

Stocks With Unusual Put Option Activity:

• 1) JEF 2) FNSR 3) CEDC 4) SBUX 5) AMR
  

Stocks With Most Negative News Mentions:

• 1) ANF 2) COH 3) JWN 4) SD 5) MDC
  

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume
  

Bull Radar

Style Outperformer:

• Small-cap Growth (-1.27%)

Sector Outperformers:

• 1) Restaurants +.77% 2) Semis -.44% 3) Tobacco -.60%

Stocks Rising on Unusual Volume:

• SBUX, RRGB, QSFT, SNP, MDRX, AIXG, SKUL, MDVN, MDAS, ACOR, SBUX, PANL, CREE, BRY and ACOR
  

Stocks With Unusual Call Option Activity:

• 1) SYY 2) CADX 3) MELA 4) XCO 5) SBUX
  

Stocks With Most Positive News Mentions:

• 1) ARO 2) SMRT 3) CVS 4) SBUX 5) AMD
  

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume
  

Friday Watch

Evening Headlines

Bloomberg:

• G-20 Urges EU to Quell Crisis as Greece Teeters. World leaders expressed impatience and irritation with Europe’s inability to defeat its two-year financial crisis as they urged swift resolution for the sake of the global economy. With Greece’s debt-ridden government at risk of collapsing as soon as today, Group of 20 chiefs meeting in Cannes, France, yesterday pushed European authorities to flesh out and enact a week-old rescue plan that has already shown signs of unraveling. “We are grappling with a lack of confidence in markets that leaders will act,” Australian Prime Minister Julia Gillard said in the French seaside resort. “It is therefore very important for leaders to act.” Such calls -- echoed by the U.S., Britain, China and Russia -- highlight international disappointment that Europe missed the G-20’s deadline of this week to deliver a fix for its fiscal woes. German Chancellor Angela Merkel and French President Nicolas Sarkozy sought to regain the initiative by keeping aid for Greece on ice and demanding Italy accelerate austerity. “The euro zone must absolutely send a message of credibility to the whole world,” Sarkozy told reporters. “When we take decisions they must be applied, when we set rules they must be respected.”
  
• Papandreou Struggles to Hold on To Power. Prime Minister George Papandreou struggled to hold on to power after Greece’s largest opposition party rebuffed his overtures to form a national government, raising the prospect of elections that could delay aid needed to prevent default. Opposition leader Antonis Samaras rejected sharing power with Papandreou and called on the premier to quit. Papandreou, 59, scrapped a referendum on an accord with the European Union to avert a split in his party before a confidence vote scheduled for midnight tonight. “I never excluded any topic from the discussion, not even my own position,” Papandreou told lawmakers in Parliament. “I am not tied to a particular post. I repeat I am not interested in being re-elected but just in saving the country.”
• U.S. Banks Guarantee More European Debt. As the European financial crisis worsened during the first half of 2011, U.S. banks increased sales of insurance against credit losses to holders of Greek, Portuguese, Irish, Spanish, and Italian debt. Guarantees provided by U.S. lenders on government, bank, and corporate debt in those countries rose by $80.7 billion, to $518 billion, according to the Bank for International Settlements. BIS doesn’t report which firms sold how much or to whom. Almost all of those guarantees are credit-default swaps, according to two people familiar with the numbers who asked not to be identified because they weren’t authorized to speak. Five banks—JPMorgan (JPM), Morgan Stanley (MS), Goldman Sachs (GS), Bank of America (BAC), and Citigroup (C) — write 97 percent of all credit-default swaps in the U.S., according to the Office of the Comptroller of the Currency.
• Don't Bet on the BRICs. Europe is turning to emerging economies to help solve its debt crisis. Too bad they can’t deliver. Despite such bold plans, however, the emerging giants are far from prepared to deliver on them. Notwithstanding their frequent shows of solidarity, the BRICs and their brethren have about as much unity as the cast of The Bachelor. Their economies have not produced the kind of innovation and competitiveness critical to long-term global growth. Western nations have amassed debt recklessly, but the new powers are about to confront massive economic problems of their own—challenges that could bring them down before they can realize their promise.
• Thai Rice Exports to Plunge on State Buying, Floods, Group Says. Rice shipments from Thailand, the largest exporter, will drop by half from November to January as a state-buying policy raises costs and flooding disrupts transport, according to the Thai Rice Exporters Association. Exports may slump to 500,000 metric tons per month from an average of 1 million tons in the first nine months as state purchases lift local prices and make Thai rice less competitive, Honorary President Chookiat Ophaswongse said by phone yesterday.
• BofA(BAC) May Swap Preferreds for $6 Billion in Shares, New Debt. Bank of America Corp., the lender whose stock lost about half its value this year, may bolster its balance sheet by exchanging preferred securities for a total of $6 billion of common shares and debt. The proposed transactions may lower interest and dividend costs and improve capital levels, the Charlotte, North Carolina- based lender said yesterday in a regulatory filing. The firm may seek to issue as much as 400 million common shares and $3 billion of senior notes in privately negotiated deals, taking advantage of lower prices for the bank’s existing securities.
• SEC Said to Review Possible Insider Trading in MF Global(MF) Bonds. The U.S. Securities and Exchange Commission is reviewing trades in MF Global Holdings Ltd. convertible bonds to determine whether some investors sold the debt based on confidential information before the firm’s demise, according to two people with direct knowledge of the matter.
• Groupon Raised $700M Pricing IPO Above Price Range. Groupon Inc. raised $700 million in its initial public offering, said two people with knowledge of the situation, 30 percent more than it sought and valuing the biggest online-coupon provider at about $12.7 billion. The Chicago-based company sold 35 million shares at $20 each, said the people, who declined to be identified because the information isn’t public. Groupon’s sale is the biggest IPO by a U.S. Internet company since Google Inc. (GOOG) raised $1.9 billion in its 2004 initial offering, according to data compiled by Bloomberg.
• Paulson's Main Hedge Fund Gained 2.4% in October, Paring Loss for the Year. John Paulson, the hedge-fund manager having the worst year of his career, rebounded 2.4 percent in his main fund in October and climbed in all his strategies, according to an investor update obtained by Bloomberg News. Paulson’s main fund, the Advantage Plus Fund, which seeks to profit from corporate events such as takeovers and bankruptcies and uses leverage to amplify returns, reduced its year-to-date loss to 44 percent. The gold share class advanced 3.3 percent last month and declined 27 percent this year. Paulson, 55, posted positive returns in all of his funds in October as stocks rallied. The Standard & Poor’s 500 Index of large U.S. companies jumped 11 percent last month on higher- than-estimated earnings and optimism that European leaders would take steps to contain the region’s debt crisis.

Wall Street Journal:

• Berlusconi Faces Key Party Defections. A rebellion is emerging within Italian Prime Minister Silvio Berlusconi's conservative party that could have enough force to threaten his governing majority in Parliament, said people familiar with the matter—exacerbating the premier's struggle to steer Italy through the euro-zone debt crisis. At least a half-dozen lawmakers in the lower house of Parliament, where Mr. Berlusconi has a slim majority, have forged a pact to defect from the premier's ranks in future votes, these people said. The move, in the wake of defections by two other party faithful this week, is the clearest sign yet that Mr. Berlusconi's majority is dwindling.
• Greece Blinks on Euro Threat. Greece's leadership struggled to restore political stability to the country and safeguard its membership in the euro zone, as global powers gathered in France looked for ways to halt the spiraling European debt crisis. Greek Prime Minister George Papandreou on Thursday agreed to shelve a controversial plan for a referendum on Athens's latest financial bailout. The turnabout followed a tumultuous few days that thrust Greece to the brink of political chaos, forcing euro-zone leaders to contemplate the possibility that Greece would exit from the single currency.
• MF Global(MF) Masked Debt Risks. For the past two years, MF Global Holdings Ltd. may have disguised its debt levels to investors by temporarily slashing the debt it was carrying before publicly reporting its finances each quarter, according to an analysis by The Wall Street Journal. The activity, referred to in the financial industry as "window dressing," suggests that the troubled financial firm was shouldering more risk and using more borrowed funds to facilitate its trading than investors could easily detect from the firm's regulatory filings.
• Google(GOOG) Ponders Pay-TV Business. Internet giant Google Inc. is considering a plan to offer paid cable-TV services to consumers, a move that could unleash a new wave of competition within the traditional TV business. Google has looked at ways to expand a previously announced project to build a high-speed Internet service in Kansas City, Mo., and Kansas City, Kan., adding video and phone service in a mirror of offerings from cable and telecom companies, according to people briefed on its plans. As a result, Google has discussed distributing major TV channels from companies like Walt Disney Co., Time Warner Inc. and Discovery Communications Inc.
• Slowpoke Traders Look to Gain Ground on Speedsters. In markets dominated by speed, a new idea is gaining traction: slowing down. Hedge funds, mutual funds and other big investors have been looking for ways to fight back against the powerful computer systems used by so-called high-frequency traders. Such lightening-fast systems, which use algorithms to buy and sell securities, now account for more than half of U.S. stock trading, according to market researchers.

Business Insider:

• Here's What To Look For During The Next 24 Hours In Greece.

Zero Hedge:

• Bank Of America(BAC) Posts Two $100MM+ Losses In Past Quarter. (graph)
  
• Hugh Hendry Channels Irony and Paradox In His Latest Financial Outlook.
• MF Bankruptcy(MF) Causes Biggest Foreign Bank Liquidity Scramble To 'Fed Safety' Ever, Harbinger Of Major Eurobank Stress. (graph)
  

CNBC:

• As Athens Debates Bailout, EU Weighs Greek Exit. While Greece's teetering government continued to debate whether to stay in the euro on Thursday, European leaders talked for the first time of a possible Greek exit to preserve the single currency.
  
• AMD(AMD) to Cut Workforce 10% by Next Year. Advanced Micro Devices unveiled a plan Thursday to save about $200 million of operating costs in 2012 by slashing its global workforce by 10 percent and streamlining internal business processes.
• Sony(SNE) Tumbles After Forecasting Big Annual Loss. Shares in Sony tumbled nearly 10 percent on Friday, the first day of trading after it warned of a fourth straight year of losses, with its television unit alone set to lose $2.2 billion on tumbling demand and a surging yen.
• Fresh Round of Job Cuts Hits Banks Across Asia. Banks embarked on another round of job cuts this week in Asia, laying off hordes of staff in fixed-income, derivatives and equities businesses, hit by weak trading revenues and a slowdown in dealmaking and new issues.

NY Times:

• As Regulators Pressed Changes, Corzine Pushed Back, and Won.

LA Times:

• U.S. Backs Away From Sanctions On Iran Central Bank. Despite vows to punish Iran for an alleged plot to kill the Saudi ambassador, U.S. officials have decided that such sanctions could disrupt oil markets and further damage the U.S. and world economies.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows that 20% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-two percent (42%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -22 (see trends).

Reuters:

• California Asks Fannie, Freddie Cut Mortgage Debt. The California attorney general on Thursday called on Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) to cut mortgage debt on the loans they own, a suggestion the government entities have long resisted. "It has become clear to me that the only way to keep distressed California homeowners in their homes is through meaningful principal reduction," attorney general Kamala Harris said in a statement. Harris faces pressure to extract a better deal for California homeowners in long-running multi-state talks to settle mortgage abuses by top banks. The majority of underwater mortgages in the United States are owned by Fannie and Freddie, which the proposed settlement is not expected to include. Harris said Fannie and Freddie's regulator, Edward DeMarco, should step down if he is unwilling to support principal reduction on the underwater mortgages it owns.
• Probability of Recession Over 50%: ECB's Mersch. The probability of a recession has risen to over 50 percent, European Central Bank Governing Council member Yves Mersch said on Thursday in a radio interview after the ECB announced a surprise interest rate cut of a quarter point. "What a few months ago we considered a probability of less than 10 per cent, namely that we could fall back into recession and have negative economic growth over more than one quarter, that probability has in the meantime risen to over 50 percent," he told Luxembourg-based radio station RTL. "We see that over the past weeks and months the economy is practically in free fall," said Mersch, who is also governor of Luxembourg's central bank. "The markets don't believe anyone anymore and the risk aversion has risen so much that no-one is buying government bonds anymore, this is a very big danger," he added in a separate interview with Luxembourg newspaper Tageblatt on Thursday, following the rate cut.
• Freddie Mac Loss Widens, Seeks $6 Billion From Treasury. Freddie Mac , the second-largest source of U.S. mortgage finance, said on Thursday it needed to borrow an extra $6 billion from the federal goverment as the shaky U.S. housing market resulted in its worst quarterly loss in more than a year. The government-owned company said it lost $4.4 billion in the third quarter, a big increase from a $2.5 billion loss in the year-ago period. Low sale prices on foreclosed homes in its inventory, low mortgage rates on its refinanced loans, and losses on derivative investments continued to drain cash from the lender that the government rescued in 2008. The company warned of further weakness ahead as the pace of foreclosure sales picks up.
• LinkedIn(LNKD) Lifts Outlook, Stock Plan Raises Concerns. Professional networking company LinkedIn posted quarterly results that beat estimates and raised its full-year outlook, but margin expectations and plans for a share offer drew scrutiny from investors.
• Obama Advisers Fret Over Energy Pipeline's Political Risks. Stung by months of protests, President Barack Obama's advisers are worried that administration approval for a planned oil pipeline from Canada could cost him political support from Democrats in 2012. Senior officials at the White House and Obama's Chicago campaign headquarters have fielded complaints from supporters who are unhappy about TransCanada Corp's plan to build a massive pipeline to transport crude from Alberta to Texas, sources familiar with the situation said. The State Department, which is overseeing the process, said this week a delay from its end-of-year target for the Keystone XL pipeline decision was possible as it evaluates the proposal. That would push the process into next year, just as the 2012 presidential election heats up. Obama's own re-election plans depend partially on his ability to energize his base of supporters, many of whom are disillusioned with his progress in fighting climate change and attaining other environmental goals. The pipeline has galvanized that discontent, leading to protests in Washington and across the country. More than 6,000 opponents have signed up to form a human ring around the White House on Sunday in what they hope will be a dramatic signal to Obama, according to environmental groups. Obama advisers fear a decision in favor of the project could dampen enthusiasm among volunteers needed for door-to-door campaigning in battleground states that are critical to Obama's re-election. "The potential that it's actually going to deflate their bodies on the ground in key states ... is kind of a new concern," said one environmental advocate close to the administration. He said officials were "very nervous" about the overlap between activists and potential political campaigners. That concern has grounding. The Sierra Club, a prominent environmental advocacy group, said approval of the pipeline would dampen enthusiasm among its 1.4 million members and supporters to fight for Obama next year.
• Fluor(FLR) Q3, Outlook Short of Estimates; Shares Drop. Fluor Corp , the largest publicly traded U.S. engineering company, posted third-quarter earnings short of estimates and gave an outlook for next year below what analysts expected, sending its shares down 4 percent.
• Starbucks(SBUX) Profit Up Despite Economic Jitters. Starbucks Corp's quarterly profit rose slightly more than expected after the summer's economic jitters failed to dilute the coffee habits of customers at the world's largest coffee chain. The stock, which closed at $41.40, rose 3 percent to $42.65 in after-hours trading.
• Investors Want "Secrecy" Lifted in BofA(BAC) MBS Deal. Investors want to lift the "shroud of secrecy" over the proposed $8.5 billion settlement of Bank of America Corp's mortgage-backed securities liability in the coming weeks, a lawyer said on Wednesday.

Telegraph:

• ECB's Teutonic Mario Chills Bond Rescue Hopes. Investors are slowly digesting the bittersweet message from Mario Draghi, the Teutonic Italian now at the helm of the European Central Bank (ECB). While he surprised and delighted markets with a quarter-point cut in interest rates to 1.25pc, reversing last July's ill-judged rise, he also dashed hopes for mass bond purchases to save Italy and for radical action to stop the crisis spiralling out of control. That matters far more. "What everybody wanted to know was whether the ECB would step up to the plate and do something grand and we didn't get that at all," said David Owen, of Jefferies Fixed Income. In a sombre debut, Mr Draghi warned that Euroland's economy is "heading towards mild recession by year-end" with mounting risks as the debt crisis drags on. He professed his "great admiration" for the hawkish traditions of the Bundesbank, seeking to allay fears in Germany that the ECB might drift away from orthodox monetarism. This was wise. One German tabloid said the job could not safely be entrusted to anyone from Italy, where inflation is as much a part of life as pasta – a crude variant of suspicions held from top to bottom of German society. To drive home the point, Mr Draghi issued a categoric warning that the ECB would not act as final guarantor of the system, or step in to rescue feckless states. "It would be pointless to think that sovereign bond rates can stably be brought down for a protracted period by outside intervention. The first and foremost responsibility lies with national economic policies. Put your public finances in order.
• ECB President Mario Draghi Cuts The Euro's Last Lifeline. Anyone thinking that the arrival of Mario Draghi as president of the European Central Bank might herald a change in approach to the eurozone debt crisis would have been sadly disappointed by his first public appearance in the new role on Thursday.

ARD:

• German Finance Minister Wolfgang Schaeuble wants the Greek public to decide whether they want to stay in the euro area, by referendum or elections, he said in an interview with television station ARD. Germany is willing to help, but Greece must implement the agreed measures, Schaeuble said. If Greece fails to do so, then something must be done to prevent contagion for the euro as a whole.

21st Century Business Herald:

• The Chinese cities of Beijing, Shanghai and Tianjin and provinces including Jiangsu and Zhejiang plan to limit coal use to curb pollution. Beijing will limit annual coal use to 20 million tons by 2015, down 7 million tons from 2010.

ShanghaiDaily.com:

• Housing Index Posts Decline. SHANGHAI'S existing housing index fell in October for the first time in 13 months, with the majority of home owners still reluctant to offer price discounts. The index, which monitors price fluctuations of the city's previously occupied homes, lost 3 points, or 0.12 percent, from a month earlier to 2,597, halting a rally since September 2010, the Shanghai Existing House Index Office said yesterday. "Though the index finally fell after gaining for 12 consecutive months, there are still no signs of notable price cuts at the moment despite an extremely sluggish sentiment," said Zhang Shu, an analyst at the index office. "Discounts of between 5 and 10 percent are offered by a limited number of local home sellers." The prices of existing homes in prime sites, including the four downtown districts in Puxi and Lujiazui in Pudong New Area, dipped 0.03 percent on average in October. The office said prices in 69 of 128 areas it tracked fell 0.24 percent on average last month while seven areas saw a gain of 0.28 percent on average. In the remaining 52 areas, prices were flat from September. A separate research released yesterday by Shanghai Centaline Property Consultants Ltd also showed a wide gulf between owners and buyers over future home prices, affecting sales last month. The nearly 300 branches of Centaline saw sale contracts involving existing homes drop 30 percent last month from September, with those costing between 2 million yuan and 3 million yuan (US$474,000) plunging the most at 50 percent from a month earlier. Song Huiyong, research director at Centaline Property, said: "Most home seekers are now expecting a discount of between 10 percent and 20 percent."

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are +.75% to +2.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 189.50 -14.0 basis points.
  
• Asia Pacific Sovereign CDS Index 152.0 -3.0 basis points.
• FTSE-100 futures -.13%.
  
• S&P 500 futures -.11%.
  
• NASDAQ 100 futures -.02%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (ALU)/.03
• (ZEUS)/.41
• (PXP)/.42
• (VIA/B)/1.03
• (TDS)/.42
  

Economic Releases
8:30 am EST

• The Change in Non-Farm Payrolls for October is estimated at 95K versus 103K in September.
• The Unemployment Rate for October is estimated at 9.1% versus 9.1% in September.
• Average Hourly Earnings for October are estimated to rise +.2% versus a +.2% gain in September.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Tarullo speaking and Papadreou's Confidence vote could also impact trading today.
  

BOTTOM LINE: Asian indices are higher, boosted by technology and industrial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.

Stocks Surging into Final Hour on Euro Bounce, Short-Covering, Less Tech Sector Pessimism, Technical Buying

Broad Market Tone:

• Advance/Decline Line: Higher
  
• Sector Performance: Every Sector Rising
  
• Volume: Around Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 30.95 -5.47%
  
• ISE Sentiment Index 93.0 -30.60%
  
• Total Put/Call 1.12 -3.45%
  
• NYSE Arms .77 +36.25%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 122.57 -1.68%
  
• European Financial Sector CDS Index 223.88 -2.13%
  
• Western Europe Sovereign Debt CDS Index 332.49 -1.39%
  
• Emerging Market CDS Index 276.88 -5.39%
  
• 2-Year Swap Spread 34.0 unch.
  
• TED Spread 43.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .00% unch.
  
• Yield Curve 183.0 +6 bps
  
• China Import Iron Ore Spot $122.70/Metric Tonne +1.91%
  
• Citi US Economic Surprise Index 13.60 -.4 point
  
• 10-Year TIPS Spread 2.09 -1 bp
  

Overseas Futures:

• Nikkei Futures: Indicating +140 open in Japan
• DAX Futures: Indicating +24 open in Germany

Portfolio:

• Higher: On gains in my Tech, Retail, Biotech and Medical sector longs
  
• Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and some of my (EEM) short, then added them back
  
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is bullish, as the S&P 500 trades near session highs despite Eurozone debt angst, rising global growth worries and rising food/energy prices. On the positive side, Defense, Coal, Disk Drive, Wireless, Construction and Education shares are especially strong, rising more than +3.0%. Small-caps are outperforming. Tech shares have traded well throughout the day. Major European equity indices rose 2-3% today. The 10-year yield is rising +8 bps to 2.06%. The France sovereign cds is falling -3.89% to 177.17 bps, the Portugal sovereign cds is falling -3.37% to 1,000.17 bps, the Ireland sovereign cds is down -3.62% to 702.0 bps, the Russia sovereign cds is down -4.78% to 206.0 bps and the Brazil sovereign cds is down -4.20% to 143.50 bps. On the negative side, Restaurant, Homebuilding and Insurance shares are undperforming, rising less than +.5%. (XLF) has underperformed throughout the day. Gold is rising +1.64%, lumber is falling -1.15%, copper is flat, the UBS-Bloomberg Ag Spot Index is gaining +1.22% and oil is jumping +1.91%. Hong Kong stocks fell -2.5% overnight are are down -16.5% ytd. The China sovereign cds is up +3.9% to 146.22 bps and the Israel sovereign cds is up +1.9% to 165.14 bps. Rice is still close to its multi-year high, rising +26.8% in about 4 months. Despite equity gains today, the Italian 10-year yield was flat at 6.19%. The TED spread continues to trend higher and is near the highest since June 2010. The Libor-OIS spread is still very near the widest since July 2010. The 2-Year Euro Swap spread is still very near cycle highs today. The 3-month Euro Basis Swap is dropping -2.67 bps to -107.72 bps. The 3-month Euribor-OIS spread is surging +11 bps to 98.0 bps, which is the highest since March 2009 and is also noteworthy considering the recent strong equity advance. China Iron Ore Spot has plunged -36.06% since February 16th and -32.20% since Sept. 7th. The US scrap steel benchmark fell -3.98% today, which is the largest decline in months. The AAII % Bulls fell to 40.18 this week, while the % Bears rose to 29.62, which is still a negative given the macro backdrop. Many gauges of Eurozone credit angst are not confirming the strong move higher in equities off the bounce in the euro currency. The ECB's Mersch said over the last hour that economic activity in the Eurozone was in "freefall" and that the odds of recession are above 50%, which would very likely result in multiple sovereign downgrades in the region. However, equities continue to ignore negative news, which is a large positive. I expect US stocks to trade mixed-to-higher into the close from current levels on a bounce in the euro, less tech sector pessimism, short-covering, technical buying and bargain-hunting.