Today's Headlines

Bloomberg: 

• Raw Sewage Floods Newark Bay After Sandy Cripples Key Plant. As much as 500 million gallons of raw sewage a day is flowing into Newark Bay after superstorm Sandy disabled the nation’s fifth-largest wastewater treatment plant. Larry Hajna, a spokesman for the New Jersey Department of Environmental Protection, said it wasn’t clear when the facility, operated by the Passaic Valley Sewerage Commission, can resume operations. “We’re advising people to avoid direct contact with the water, and avoid fishing or crabbing or other recreational activities,” Hajna said. Between 300 million and 500 million gallons of untreated sewage is flowing each day into the bay, which feeds Arthur Kill, a tidal estuary, and Raritan Bay en route to the Atlantic Ocean. 
• Hotels Face Perfect Storm as Evacuees Run Into Marathoners. New York City hotels are struggling with space shortages as runners traveling into town for this weekend’s marathon compete for lodging with locals renting rooms after their homes were damaged by Atlantic storm Sandy. “Those marathon rooms were booked months ago,” said Karen Yam, a desk clerk at the DoubleTree by Hilton Hotel Metropolitan on Lexington Avenue in midtown Manhattan. About 60 to 70 of the property’s 775 rooms will be occupied by people in town for the race, she said. “It’s been very difficult and frustrating to turn people down from downtown and the suburbs.”
• Tempers Flare Over Gasoline Lines, Power Restoration Pace. Tempers flared over days of power outages and mile-long lines to buy gasoline in New Jersey and New York as utilities faced pressure from state officials and residents to restore service faster. About 1.5 million customers in New Jersey, more than a third of homes and businesses, remained without electricity as of today. Sandy’s destruction has left 13 Jerseyans dead. At least three were related to the use of portable generators, said Mary Goepfert, spokeswoman for the Office of Emergency Management.
• Orders for U.S. Equipment Stall as Companies Curb Spending. Orders for U.S. equipment such as computers and electrical gear barely rose in September, pointing to a slowdown in business investment that will weigh on growth. Bookings for non-defense capital goods excluding aircraft, a proxy for future spending, rose 0.2 percent after advancing 0.3 percent in August and dropping 5.6 percent in July, Commerce Department data showed today in Washington. 
• Honda to Nissan Extend China Sales Plunge on Islands Dispute. Honda Motor Co. (7267) and Nissan Motor Co. (7201) joined Toyota Motor Corp. (7203) in reporting a plunge in China deliveries for a second month as Chinese consumers shun their cars even after anti-Japan protests have subsided. Honda’s October sales in the country fell 53.5 percent from a year earlier to 24,115 units, the Tokyo-based company said in an e-mail today. That’s worse than the 41 percent drop in September, when rioters smashed cars and torched dealerships in China during demonstrations against Japan. Nissan said deliveries fell 41 percent last month after reporting a 35 percent decline for September.
• Rochdale Said to Seek Capital Lifeline After Trading Error. Rochdale Securities LLC, the 37-year- old brokerage that employs bank analyst Dick Bove, is seeking a capital injection after a trading error, said three people with knowledge of the firm’s situation. Executives at Rochdale are telling employees and potential investors that a trader at the firm made an unauthorized purchase of Apple Inc. (AAPL) shares, which has eroded the capital of closely held Rochdale, said one of the people, who declined to be identified because the overtures have been private.

Wall Street Journal: 

• Live Updates: Hurricane Sandy.
• Election 2012.
• Noonan: How Far Obama Has Fallen. From historic figure to beleaguered incumbent in less than four years.
• Iran Hides Behind Exotic Flags to Help Syria. Iran is shipping oil to Syria by hiding vessels behind front companies and exotic flags to evade international sanctions and aid its isolated ally, according to sanctions experts and people in the shipping industry. Iran sent an oil tanker loaded with refined products from its Persian Gulf port of Bandar Abbas to Syria's Mediterranean terminal at Baniyas last week, according to ship-tracking website Marine Traffic, which follows radio signals emitted by vessels, and a shipping official working at the Syrian oil port.
  

CNBC: 

• More Hedge Funds Close Up Shop as Returns Fizzle. Generating strong returns is getting so tough for hedge fund managers, supposedly the high-earning masters of any market, that some are shutting up shop and more look poised to follow.
• Short-Sellers of Europe Set to Be Unmasked. Short-sellers around the globe will be unmasked starting on Friday as new European rules come into effect.
• Bush vs. Gore II? Legal Sharks Circle Before Election. Legions of lawyers are ready to enter the fray in case Election Day turns on a legal challenge. One nightmare scenario would be for the results in a battleground state like Florida or Ohio to be too close to call, with thousands of absentee or provisional ballots yet to be counted.
• Oh, No! Another Messy Storm Headed for East Coast.

Zero Hedge:

• Starting Off With A Bang: In First Month Of Fiscal 2013, US Adds $195 Billion In Debt. (graph)
• Putting Today's Job Number In "Seasonally Adjusted" Context. (graph)
• Unemployment Rate Rises to 7.9%. (graph)
• And The Not So Pretty: Record Low Rise In Average Hourly Wages. (graph)

Business Insider:

• Marco Rubio On Benghazi: 'There's Classified Information That People Should Know'.
• This Depressing NBC Segment On Staten Island Could Change The Way The World Sees Hurricane Sandy. (video)
• Mitt Romney Just Gave His Big 'Closing Argument' To America — Here's What He's Saying. 
• CHART OF THE DAY: The Scariest Jobs Chart Ever. 
• NYC Is Using Massive Generators For The Marathon While Many Suffer Without Power. 
• The Entire World Will Once Again Be Watching An Insanely Close Greek Parliament Vote That Could Have Huge Ramifications. 
• Desperate French Government Threatens To 'Requisition' Vacant Buildings. 
• 49,000 New Yorkers Are Trapped In Public Housing Buildings Without Power [PHOTOS].

NY Times: 

• Euro Zone Manufacturing Declines. A European economic report Friday confirmed a continuing slowdown in the euro zone’s factories, even as Washington reported data indicating a moderate improvement in the American economy. Euro zone manufacturing declined for a 15th consecutive month in October, according to a survey of purchasing managers by Markit Economics, a research firm. The final Markit purchasing managers’ index fell to 45.4 in October from 46.1 in September.

Reuters:

• Scope of Sandy's devastation widens, tempers flare. Four days after superstorm Sandy smashed into the U.S. Northeast, rescuers on Friday were still discovering the extent of the death and devastation in New York and the New Jersey shore, and anger mounted over gasoline shortages, power outages and waits for relief supplies. The total killed in one of the biggest storms to hit the United States jumped by a third on Thursday, to 98. In New York City, 40 people have been found dead, half of them in Staten Island, which was overrun by a wall of water on Monday. Among the dead in Staten Island were two brothers, aged 2 and 4, who were swept from their mother's arms after her car stalled in rising flood waters. Their bodies were found near each other in a marshy area on Thursday. U.S. Secretary of Homeland Security Janet Napolitano and Federal Emergency Management Agency Deputy Administrator Richard Serino planned to visit Staten Island on Friday amid angry claims by some survivors that the borough had been ignored. Scenes of angry storm victims could complicate matters for politicians, from President Barack Obama just four days before the general election, to governors and mayors in the most heavily populated region in the United States.
• On Staten Island, cries for help replaced by a loss for words. On Hamden Ave, a storm-wrecked street on New York City's Staten Island, everyone was talking about the surge - a wall of water that came tearing down the street on Monday night. As families picked through mud-caked photo albums and couch cushions, and stared at ruined cars scattered across the neighborhood, they talked on Thursday about how a little bit of rain suddenly turned into pools of water. Then swelled and kept swelling until the water flooded the first floor of homes. "We heard this noise and it sounded like a train," said Dawn Rautenstrauch, speaking three days after Sandy, a vicious storm, tore across the East Coast, washing away houses, trees and bridges. "There was a 10-foot wave carrying cars."
• COLUMN-The consequences of Obama's debt. The large budget deficits and expansion of the national debt under President Barack Obama, unprecedented since World War II, have him set to bequeath an immensely costly legacy. Each of his deficits as a percentage of gross domestic product has been larger than the previous post-World War II record, for which Democrats excoriated President Ronald Reagan. Between the debt already racked up and what Obama's FY13 budget projects, each income-tax-paying family will owe more in Obama debt than a new mortgage on a median-priced home and four years of college costs. Yet more than three years into recovery from the recession, the president has not proposed a program to deal with the massive debt.
• Copper Falls on US Data, Weak Demand. 
• Italy car sales fall 12.39 percent in October from a year ago. New car sales in recessionary Italy plunged 12.39 percent in October from the same month a year ago to 116,875 vehicles, Italy's Transport Ministry said on Friday. In September, Italian car sales dropped 25.7 percent. Earlier on Friday, car sales in France and Spaindropped 7.8 percent and 21.7 percent in October, industry groups in those countries said.

Financial Times:

• The peripheral threat to France. Compétitivité is a big deal in France right now. The country’s loss of competitiveness is a serious issue, especially as its crisis-struck neighbours push on with wage cuts and labour reform.

Telegraph:

• Eurozone factory downturn deepens as core economies struggle. Eurozone manufacturing shrank for the 15th month running in October as output and new orders fell, a survey showed on Friday, likely fuelling expectations of further easing from the European Central Bank. 
• QE 'counterproductive', Charles Goodhart warns. More money printing may not just be ineffective but “counterproductive”, a former Bank of England ratesetter has warned ahead of next week’s key decision.

Berliner Zeitung:

• Germany's solar industry lost 30,000 jobs in the "past" months, citing Carsten Koernig, head of the BSW industry lobby. 

Bear Radar

Style Underperformer:

• Small-Cap Value -.95%

Sector Underperformers:

• 1) Gold & Silver -3.40% 2) Coal -2.60% 3) Networking -2.0%
  

Stocks Faling on Unusual Volume:

• IRDM, NEM, AEM, CNSL, EXC, COT, NGD, PWE, CVX, CHTR, GNW, LGCY, GMLP, PSEC, GMED, CATM, NCMI, BCOR, ADES, ECPG, PBI, VRTX, DRIV, RNR, MELI, GUID, DRC, FLR, RKT, WBC, LPNT, MRH, DTG, ACGL, AWAY, CB, ONXX, CF, BK, VRSK, AVD, SLV, DRC, QCOR, GES, RSG, AIG, IT, SFLY, HTSI, CHK and CAR

Stocks With Unusual Put Option Activity:

• 1) FLR 2) WM 3) HES 4) ASML 5) CHK
  

Stocks With Most Negative News Mentions:

• 1) BRY 2) ACGL 3) SPR 4) CHK 5) CVX
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.07%

Sector Outperformers:

• 1) Restaurants +2.55% 2) REITs +1.25% 3) Disk Drives +1.19%
  

Stocks Rising on Unusual Volume:

• BGFV, JOE, TRIP, FMCN, ABMD, DWA, SBUX, TRMB, HUN, PCLN, CTB, ROVI, MTZ, TPC, XEC, TXRH and EQIX

Stocks With Unusual Call Option Activity:

• 1) A 2) DTG 3) VRX 4) VAR 5) WFM
  

Stocks With Most Positive News Mentions:

• 1) WPI 2) AN 3) SFLY 4) COP 5) ROK

Charts:

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

Friday Watch

Evening Headlines 
Bloomberg: 

• Greece Must Help Itself to Fix Crisis, Bundesbank’s Dombret Says. Bundesbank board member Andreas Dombret said Greece is far behind in implementing its reform program and shouldn’t rely on international creditors like the European Union to solve its problems. “Politicians and the EU are willing to assist Greece, but Greece must, first and foremost, help itself,” Dombret said in a speech in New York today. “Announcing and passing laws is not enough if the administration and the general public undermine them. It is now the task of the troika to decide impartially whether Greece meets the conditions for further assistance.” Euro-area governments are pressing Greece, which faces a sixth year of recession, to make deeper spending cuts to unlock a 31-billion euro ($40 billion) aid payout in November. Luxembourg Prime Minister Jean-Claude Juncker urged Greek lawmakers yesterday to solve remaining issues before finance ministers gather in Brussels on Nov. 12. While Greece is “way behind the program goals due to the standstill in consolidation and basic structural reforms,” other countries are making progress, Dombret said. “My favorite example is Ireland, which shows that trust can be regained if the agreed measures are adopted and implemented.”
• Japan May Have Entered Recessionary Phase, Some BOJ Members Say. Japan’s economy, the world’s third biggest, may have entered a “recessionary phase,” according to some Bank of Japan board members. The possibility “could not be ruled out,” a few policy makers said at an Oct. 4-5 policy meeting, according to minutes released in Tokyo today. A Cabinet Office official at the meeting said the government and the central bank need to “deepen their dialogues,” the record showed. Economists at Nomura Securities Co. and Citigroup Inc. (C) revised down their forecasts for Japan’s third-quarter gross domestic product after industrial production fell the steepest in September since last year’s earthquake.
• Most Chinese Stocks Fall as Drugmakers Drop. Five stocks declined for every three that rose in the Shanghai Composite Index, which lost 0.1 percent to 2,102.98 as of 10:47 a.m. local time.
• Hong Kong Taxing Homebuyers in Bubble Fight: Mortgages. The Hong Kong government’s toughest efforts yet to curb a growing asset bubble in the city’s property market probably won’t be the last as record-low mortgage rates drive demand for the world’s priciest homes.
• Clinton Warned of Military Danger in China-Japan Dispute. The festering dispute between China and Japan over five uninhabited islands could spin out of control unless the countries improve their communication with each other, according to a confidential report submitted to Secretary of State Hillary Clinton this week by a delegation of former U.S. officials. The bipartisan four-person delegation met last week with Japan’s prime minister and China’s vice premier, who is expected to take over as prime minister, and both countries’ foreign ministers. The U.S. group warns Clinton in a written report that, while neither side wants a confrontation, a mistake or miscalculation could escalate into a dangerous military face- off.

Wall Street Journal: 

• Live Updates: Hurricane Sandy.
• Few Big FEMA Generators Humming. Before Sandy struck, Federal Emergency Management Agency officials said they had 400 industrial-size power generators ready to help the East Coast. Three days after Sandy landed, only a fraction of that equipment is actually providing power, despite the fact that millions are still without electricity.
• Fixing Greek Debt Remains Elusive Euro-Zone Target. In a string of meetings beginning next week, European leaders will again wrestle with how to keep Greece from running out of cash, but they almost certainly won't solve the far bigger question of how to cut down the growing pile of debt that is slowly suffocating the country. The consequences are stark. Greece must shoulder a frightful debt burden while suffering an epic recession. The euro zone, which had once hoped to patch Greece up and move along, now faces the prospect of dealing with its problems for years, or engineering a divorce.
• For Business, Vote Holds High Stakes. The outcome of Tuesday's presidential election carries enormous weight for executives of American businesses, big and small, influencing everything from the taxes they are required to pay to the attitudes of regulators who scrutinize them. Disappointed by President Barack Obama and in despair over dysfunction in Washington, business, for the most part, is investing in challenger Mitt Romney.
• CIA Takes Heat for Role in Libya.When the bodies of Ambassador Christopher Stevens and three other Americans killed in Benghazi, Libya, arrived at Andrews Air Force Base after the Sept. 11 attack, they were greeted by the president, the vice president and the secretaries of state and defense. Conspicuously absent was CIA Director David Petraeus.
• LinkedIn(LNKD) Swings to Profit.
• Obama and the Back-to-the-Future Campaign. If the president had practiced the bipartisanship he now promises, he might have been a shoo-in.
• The Romney Turnaround. The Republican has adapted as a candidate to offer genuine change that meets the political moment.

Fox News: 

• Exclusive: Classified cable warned consulate couldn't withstand 'coordinated attack'. The U.S. Mission in Benghazi convened an “emergency meeting” less than a month before the assault that killed Ambassador Chris Stevens and three other Americans, because Al Qaeda had training camps in Benghazi and the consulate could not defend against a “coordinated attack,” according to a classified cable reviewed by Fox News. Summarizing an Aug. 15 emergency meeting convened by the U.S. Mission in Benghazi, the Aug. 16 cable marked “SECRET” said that the State Department’s senior security officer, also known as the RSO, did not believe the consulate could be protected. “RSO (Regional Security Officer) expressed concerns with the ability to defend Post in the event of a coordinated attack due to limited manpower, security measures, weapons capabilities, host nation support, and the overall size of the compound,” the cable said. According to a review of the cable addressed to the Office of the Secretary of State Hillary Clinton, the Emergency Action Committee was also briefed "on the location of approximately ten Islamist militias and AQ training camps within Benghazi … these groups ran the spectrum from Islamist militias, such as the QRF Brigade and Ansar al-Sharia, to ‘Takfirist thugs.’” Each U.S. mission has a so-called Emergency Action Committee that is responsible for security measures and emergency planning. 
• Eco-Taxes? Study Financed by U.S. Treasury Will Link Tax Code to Carbon Emissions. Coming soon:  a green tax code for American businesses and individual taxpayers alike?  A major tax study currently being sponsored by the U.S. Treasury will give environmental activists a powerful new weapon in their campaign to alter the entire American economic and social landscape  in the name of halting “climate change”—including the possible levying of new carbon taxes. That campaign is bound to intensify in the aftermath of Nov. 6’s presidential election, regardless of who wins the race, as the nation faces the challenge of deficit reduction and tax reform that will be required to overhaul the country’s over-strained finances. Environmental advocates and others are likely to raise such innovative mechanisms as carbon taxes and major shifts in tax rates and incentives as part of the process—and the impending study may well provide them with important ammunition. Under the bland title of Effects of Provisions in the Internal Revenue Code on Greenhouse Gas Emissions, the $1.5 million study is being carried out under the auspices of the National Academy of Science (NAS).

MarketWatch.com: 

• Japan is in worse than a deflationary trap. Commentary: One-time powerhouse, it’s withdrawing from the stage.
• 14 tax issues to watch after the election. Bischoff: These personal tax matters could see changes in 2013, depending on who wins the White House.
• Priceline(PCLN) earnings jump on international bookings.

CNBC:

• Election Officials Scramble in Storm's Aftermath. The election of 2012 will be held on Tuesday, come hell or high water.

Zero Hedge:

• One Economist's Realistic Hurricane Post-Mortem.
• USA, Inc. - Part 2: If America Were A Corporation, It Would Be Broke-er.

Business Insider:

• What These Companies Did In The Wake Of Hurricane Sandy Will Restore Your Faith In Big Business.
• NYC Subway Riders May Be Dealing With The Effects Of Hurricane Sandy For Years.
• The People Endorsing Obama Just Ignored The Past Four Years.
• How A Republican Sweep Could Be The Most Bullish Catalyst For Stocks In 30 Years.

Washington Post:

• Obama escapes scrutiny on Libya. In case you thought there was a thorough investigation to get to the bottom of the Benghazi disaster, think again. It seems the key player in the episode — President Obama — is taking no part in the investigation.

Read more here: http://blogs.sacbee.com/capitolalertlatest/2012/08/fiscal-analyst-hundreds-of-millions-at-risk-from-facebook-slide.html#storylink=cpy

ABC News:  

• The Benghazi Drip-Drip-Drip. As he left his Marine One helicopter Wednesday evening and walked to the residence of the White House, President Obama did not respond to a question shouted out by ABC News’s Mary Bruce about when he would begin to provide answers to the numerous questions building up about what exactly what went wrong in Benghazi, Libya, on September 11, 2012. The president smiled and continued walking. Perhaps he couldn’t hear the question over the din of the chopper’s blades, but either way the smile and wave – almost Reagan-esque in style – underline the apparent strategy the president specifically and his administration in general have seemed to adopt when it comes to the myriad inquiries about the decisions that led to the deaths of four Americans, including U.S. Ambassador Chris Stevens: they are deferring detailed answers to the investigation and – critics say –running out the clock until Election Day.

Boston Herald:

• Romney's Edge With Independents May Be The Difference.

Examiner.com: 

• East Coast gasoline shortage result of government policies. President Obama has come and gone, the Governors, Mayors, Senators, Congressmen and a bevy of local politicians have all held their press conferences and now New Yorkers, New Jerseyans and Connecticutians are left to deal with the aftermath of the storm.

Real Clear Politics:  

• Game On: Pennsylvania in Play. Old Conventional Wisdom: Pennsylvania is a state Democrats have won five presidential elections in a row: in 2012, it’s safe for Obama and out of reach for Romney.
  New Conventional Wisdom: maybe not.

Rasmussen Reports:

• Election 2012: Colorado: Romney 50%, Obama 47%.

USA Today:  

• Pro-oil Canada fights U.S. environmental groups. Beneath the peat bogs and boreal forests in the northern part of this Canadian province are among the largest oil reserves in the world. Canadians have been getting it out of the prairies for over 100 years and piping much of it to the United States, which imports more oil from Canada than anywhere else. But President Obama's denial of a permit for a new oil pipeline from Canada to Texas that has been worked on for years has angered many here who claim that the U.S. environmental lobby is harming their livelihoods without scientific basis.

Reuters: 

• Starbucks(SBUX) raises 2013 forecast, defies industry trend.
• Las Vegas Sands(LVS) post lower-than-expected earnings.
• Fluor(FLR) falls short as mining work slows, awaits NuScale.
• OpenTable(OPEN) trims full-year revenue forecast, shares down.
• On balance, Sandy to have negative economic effect -Fed official. A top Federal Reserve official on Thursday said, on balance, the massive storm Sandy will have a negative effect on the U.S. economy. Eric Rosengren, president of the Federal Reserve Bank of Boston, cited both the immediate economic harm the storm would cause and the eventual economic boost from the clean-up. But he said the longer-term economic harm would not be "huge."

Financial Times:

• Storm over ‘Lagarde list’ intensifies. Greece’s parliament has been asked to investigate why two former finance ministers did not pursue possible tax evaders on the so-called “Lagarde list” of 2,000 Greeks with Swiss bank accounts. George Papaconstantinou and his successor Evangelos Venizelos, who held the finance portfolio from September 2009 until June this year, could face charges of criminal negligence if parliament referred them for trial, according to legal experts.

MailOnline: 

• Shocking images show desperate New Yorkers digging through dumpsters for food as downtown Manhattan embarks on fourth night without power. (pics) New Yorkers have resorted to digging through filthy dumpsters for food as they embark on their fourth night without power and for many, without water. Shocking images captured groups of residents sifting through garbage outside a Key Food supermarket at Avenue A and East 4th Street in the East Village today. Families, elderly people and young residents were seen climbing into the dumpster hunting for whatever they could find to eat.

Handelsblatt: 

• A second debt cut for Greece is almost unavoidable, Kurt Lauk, head of the business wing of Chancellor Angela Merkel's Christian Democratic Union, says in a commentary.

21st Century Business Herald:

• China Big 4 Banks New Loans Drop 40% M/M to Oct. 28. China's four biggest banks lent 125b yuan in new loans last month to Oct. 28, down from 160b yuan a month earlier, citing an official.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are -.50% to +1.0% on average.
• Asia Ex-Japan Investment Grade CDS Index 118.0 -1.0 basis point.
• Asia Pacific Sovereign CDS Index 93.75 unch.
• FTSE-100 futures -.10%.
• S&P 500 futures -.06%.
• NASDAQ 100 futures -.05%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (ALU)/-.04
• (ANR)/-.44
• (CVX)/2.91
• (FSS)/.07
• (IT)/.35
• (HES)/1.19
• (ITT)/.39
• (MHP)/1.30
• (RL)/2.16
• (SEE)/.31
• (TRI)/.48
• (VRX)/1.13

Economic Releases
8:30 am EST

• The Change in Non-farm Payrolls for October is estimated at 125K versus 114K in September.
• The Unemployment Rate for October is estimated to rise to 7.9% versus 7.8% in September.
• Average Hourly Earnings for October are estimated to rise +.2% versus a +.3% gain in September.

10:00 am EST

• Factory Orders for September are estimated to rise +4.6% versus a -5.2% decline in August. 

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Williams speaking, ISM New York for October and the Eurozone PMI data could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by automaker and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

Stocks Rising into Final Hour on Less Economic Pessimism, Short-Covering, Bargain-Hunting, Tech/Healthcare Sector Strength

 Broad Market Tone:

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

Equity Investor Angst:

• VIX 16.83 -9.52%
• ISE Sentiment Index 106.0 unch.
• Total Put/Call .92 +9.52%
• NYSE Arms .78 -21.14%

Credit Investor Angst:

• North American Investment Grade CDS Index 96.63 bps -3.11%
• European Financial Sector CDS Index 171.20 bps -1.89%
• Western Europe Sovereign Debt CDS Index 108.10 bps +.77%
• Emerging Market CDS Index 244.69 bps +3.1%
• 2-Year Swap Spread 9.5 -.25 basis point
• TED Spread 22.0 +2 basis points
• 3-Month EUR/USD Cross-Currency Basis Swap -24.75 -.75 basis point

Economic Gauges:

• 3-Month T-Bill Yield .09% -2 basis points
• Yield Curve 143.0 +3 basis points
• China Import Iron Ore Spot $120.30/Metric Tonne +.84%
• Citi US Economic Surprise Index 51.40 +3.3 points
• 10-Year TIPS Spread 2.52 +2 basis points

Overseas Futures:

• Nikkei Futures: Indicating +107 open in Japan
• DAX Futures: Indicating +7 open in Germany

Portfolio:

• Higher: On gains in my Medical/Retail/Biotech/Tech sector longs 
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back
• Market Exposure: 25% Net Long

Today's Headlines

Bloomberg:

• Greek Stocks Tumble Amid Concerns on Government Stability. Greek stocks dropped for a sixth day, headed for the biggest weekly retreat in four years, amid concern that the country’s coalition government will fail to enforce the austerity program demanded by the European Union. National Bank of Greece SA (ETE), the Mediterranean nation’s largest lender, plummeted 12 percent. Public Power Corp. tumbled 11 percent and Opap SA (OPAP) fell 4.5 percent. The ASE Index (ASE) sank 5 percent to 761.24 at the close of trading in Athens, extending the decline so far this week to 13 percent.
• Morgan Stanley(MS), AIG(AIG) Face Weeks Without Lower NYC Offices. In any kind of “normal” flood, water would never reach 80 Pine St., a 39-story tower two blocks inland from the lower Manhattan waterfront, landlord William Rudin said.
• New Jersey Drivers Wait for Fuel as Sandy Curbs Gasoline. New Jersey drivers waited in two- mile-long lines to buy gasoline as Hurricane Sandy’s devastation of the New York metropolitan area flooded fuel terminals, curbed deliveries and left many filling stations in the dark and unable to run their pumps.
• Sandy Batters New Jersey’s Struggling Housing Market.
• China Bad Loans to Increase, China Orient Asset Says. Chinese commercial banks may see an increase in non-performing loans from this quarter through the first half of next year, China Orient Asset Management Corp. said, citing a survey conducted. Bad debt may rise as much as 10 percent this year, taking the ratio of non-performing loans to 1 percent to 2 percent of the total by the end of 2012, China Orient said yesterday, citing a survey of commercial banks, asset management firms, investors and intermediaries done in June. The pace at which bad loans increase may accelerate if concerns about a rebound in inflation leads China to tighten monetary policy, said the company, which buys, manages and disposes of bad debt.
• Ore-Shipping Rates Fall Most in Five Days as Demand Seen Slowing. Returns for Capesize vessels that transport iron ore and coal declined the most in five sessions amid speculation that demand to charter the carriers is slowing. Rates for the ships hauling about 160,000 metric-ton cargoes slid 4.1% to $15,812 today, the lowest since Oct. 22. China, the biggest buyer of iron ore, imported the most cargoes in almost two years in September, according to customs data. There was "close to no activity" yesterday in terms of Capesize vessel charters, RS Platou Markets AS, an Oslo-based investment bank, said in a report today. Iron-Ore stock building had been the biggest cause of rates rising, Platou analysts led by Frode Morkedal said. 
• Commodities Retreat Most Since May in Dead Month for Investors. Slumping energy and metal prices sent commodities to their biggest monthly loss since May, lagging behind stocks, bonds and the dollar, as the global economy grew at the slowest pace since the 2009 recession. The Standard & Poor’s GSCI Total Return Index of 24 raw materials fell 4.1 percent, erasing gains for the year. The MSCI All-Country World Index of stocks slid 0.6 percent, including dividends, while the U.S. Dollar Index slid 0.02 percent. Bonds of all types gave positive returns, according to Bank of America Merrill Lynch’s Global Broad Market Index. Investor optimism dimmed as the International Monetary Fund cut its global growth forecast and the Federal Reserve said strains on the world economy present “significant downside risks.” China reported the seventh straight quarter of slowing growth, while services and manufacturing in the 17-nation euro area last month contracted more than economists forecast. “Europe is a complete and total disaster and doesn’t appear to be solved,” John Stephenson, who helps manage $2.7 billion at First Asset Investment Management Inc. in Toronto, said in a telephone interview. “China clearly seems to be slowing. You essentially have a situation where investors just have very little optimism.” The S&P GSCI Total Return Index fell for a second month, leaving the gauge down 0.7 percent for 2012. Commodities are headed for a second consecutive annual loss for the first time since 1998.
• Ships at 8-Year Low Seen Falling in Hyundai Price War: Freight. Prices for new ships have fallen to an eight-year low as shipyards sacrifice margins to win orders. Hyundai Heavy Industries Co., the world's largest shipbuilder, may be about to make the price war worse. The company could push prices down as much as 15% industrywide as it tries to replenish an order backlog that is near a five-year-low, according to E*Trade Securities Co. analyst Park Moo Hyun. The Ulsan, South Korea-based shipbuilder, which as as much capacity as the next two biggest years combined, has so far largely resisted price cuts even as global orders drop to the slowest since 1999. "Hyundai Heavy will have to aggressively go out there and win orders to fill up its docks,k" said Park. "That means it has to cut prices." The company only has about 18 months of work in hand for its shipyards because of the order slowdown and Chinese competition, and it has started its first early-retirement program. 
• Panasonic May Cut More Jobs as $9.6 Billion Loss Forecast. Panasonic Corp. (6752), Japan’s third- biggest employer, eliminated almost 39,000 jobs in the past year, and its chief financial officer said the TV maker doesn’t plan another round of cuts. Investors say it has to. Even after reducing its workforce by about 11 percent -- almost double the reductions at Sony Corp. (6758) and Sharp (6753) Corp. combined -- Panasonic will post a 765 billion-yen ($9.6 billion) loss in the year ending March 31, the company said yesterday. Panasonic plunged the most in at least 38 years in Tokyo trading today, making it the biggest percentage loser in the MSCI Asia- Pacific Index (MXAP), and Moody’s Investors Service said it will review the company’s debt for a potential downgrade. “They have to cut, cut, cut,” said Edwin Merner, president of Atlantis Investment Research Corp. in Tokyo, which manages about $300 million in assets. “They’re not doing it fast enough. You have to be lean and mean.”
• Sharp Says It Faces 'Material Doubt' on Survival. Sharp Corp. (6753), the world’s worst- performing major stock, said there was “material doubt” about its ability to survive after forecasting a record $5.6 billion full-year loss on falling demand for its display panels. The net loss will probably be 450 billion yen in the year ending March 31, the Osaka-based TV maker said in a statement yesterday, scrapping its earlier projection for a 250 billion- yen loss. The new forecast compares with the 296 billion-yen loss average of 17 analyst estimates compiled by Bloomberg. Sharp has failed to win a planned 67 billion-yen investment from Taiwan’s Foxconn Technology Group and has had difficulty selling commercial paper as it burns through cash. The company said its loss for the six months ended Sept. 30 was “huge,” stemming from falling prices for liquid-crystal-display panels, delays at an LCD factory and declining sales in Japan and China. The company’s warning echoes that made by chipmaker Elpida Memory Inc. before it filed for bankruptcy in February.
• Bill Gross Says Quantitative Easing Not Spurring Investments. Bill Gross, who runs the world’s biggest mutual fund at Pacific Investment Management Co., said there is no evidence that investment is being spurred by the Federal Reserve’s quantitative easing program. “All of the money being created and freed up is elevating asset prices, but those prices are not causing corporations to invest in future production,” Gross wrote in a monthly investment outlook posted on the Newport Beach, California-based company’s website today. Lower interest rates are being used “to consume as opposed to invest,” he said. Investors should recognize that asset and currency prices ultimately rest on the ability of the economy to grow, Gross wrote. If real growth is stunted in the U.S. and globally, then investors should also acknowledge “bite-sized” future returns and the growing risks of “misguided” monetary and fiscal policy that may disrupt financial markets at some point. The so- called fiscal cliff may be the first of a series of disruptions, though Gross expects some type of compromise on the possible tax increases and budget cuts. 
• GM Joins Chrysler Missing Sales Estimates. GM, the largest U.S. automaker, predicted a 14.4 million industry light-vehicle sales pace, which is adjusted for seasonal trends. Chrysler, which issued a similar outlook for the month, also joined GM, Toyota Motor Corp. (7203) and Ford Motor Co. (F) in reporting deliveries that trailed estimates for their respective results.

Wall Street Journal: 

• Live Updates: Hurricane Sandy. 
• Romney Touts Support From CEOs on Jobs Council. Mitt Romney’s White House bid comes down to business experience – i.e. he has it, the president doesn’t. To that end, the Romney campaign trotted out a roster of well-known business leaders Thursday who are backing the Republican presidential nominee. Supporters include Charles Schwab, Cisco Chief Executive John Chambers and Bernie Marcus, the co-founder of Home Depot. The newest name on the list belongs to Intel CEO Paul Otellini, a member of President Barack Obama’s Council on Jobs and Competitiveness.
• Manufacturing Expands, Construction Spending Rises. The ISM's manufacturing purchasing managers' index was little changed at 51.7 in October from 51.5 in September. A reading above 50 indicates expansion. Economists surveyed by Dow Jones Newswires expected the October PMI to come in at 51.0.
• Critics Say Ballots Cast By Email Are Vulnerable to Tampering. 
• Activists: Syrian Rebels Kill 28 Soldiers in North. Syrian rebels killed 28 soldiers in attacks on military checkpoints in northern Idlib province Thursday, just hours after a wave of bombings hit Damascus and its outskirts, activists said.
  
• Chinese Internet Firms Agree to Code of Conduct. China's Internet search companies and a government-sponsored trade group agreed to a code of conduct on Thursday to moderate tensions in the increasingly competitive search environment in the fast-growing market. The Internet Society of China said industry giant Baidu Inc., as well as upstart Qihoo 360 Technology Co. and a number of smaller search engines, agreed to "maintain fair competition [and a] fair and orderly market environment."
  

MarketWatch.com: 

• How Europe’s short CDS ban could hit the euro. “They may be right. But equally, traders and investors who want to bet against [Economic and Monetary Union] might just transfer their activity to another market that’s not subject to any restrictions—like the euro,” wrote Steve Barrow, currency and fixed-income strategist at Standard Bank in London.

Fox News: 

• Challenger: U.S.-Based Firms' Planned Job Cuts Jumped 41% in October from Prior Month. Layoffs planned by U.S.-based companies climbed 41% during October from the prior month, which had seen the second-lowest levels in nearly two years, according to data from consulting firm Challenger Gray & Christmas Inc. "The final three months of the year tend to see heavier downsizing activity as companies make year-end adjustments to meet earnings goals and to prepare for the new year," said Challenger Chief Executive John A. Challenger. "Certainly, the deluge of weak third-quarter earnings reports that resulted from declining sales here and abroad does not bode well for workers as 2013 approaches." U.S.-based employers in October said they planned to cut 47,724 jobs, an increase of 12% from a year earlier.

CNBC:

• What About an Election 'Cliff'? Here's What Could Happen. Most everyone has an opinion on who will win the presidential election next Tuesday, but in all the prognostication one question has gone mostly overlooked: What if no one wins?
• Why Market Euphoria Over China PMI Data Might be Overdone. 
• Greece Running Out of Cash; Government Under Threat. Greece’s downward spiral has come to the top of the euro zone agenda again, with economists and analysts warning that it is closer than ever to running out of cash, and that the survival of a coalition government brought in just five months ago is under threat.

Zero Hedge: 

• ADP "Jobs" Number Unsurprisingly Beats Post-Revision Expectation. (graph)
• The New Facebook(FB) Buttons: Promote, Despise, Abandon.
• GM(GM) Channel Stuffing Soars To Record. (graph) 
• Has Housing Bottomed?
• More Greek Drama: Coalition Member PASOK "In Turmoil As It Seeks To Quell Rebellion".

Business Insider: 

• The Coolest People In Tech Predict The Next Big Thing. 
• Four Signs That The Market Is Predicting A Romney Victory. 
• Con Ed Expects To Restore 'Vast Majority' Of Overhead Customers By Nov. 11 — Others Could Take Additional Week. 
• One Recent Shanghai Apartment Sale Shows How Ridiculous Prices Are Getting There. 
• The Euro Is Diving On New Headlines From A Greek Court. 
• Incredible 3-Day Footage Of Hurricane Sandy Wreaking Havoc On New York City. (video)
  

NY Times: 

• Wary of Future, Professionals Leave China in Record Numbers.

RasmussenReports:

• Election 2012: Iowa President. Romney 49%, Obama 48%.
• Election 2012: Wisconsin: Obama 49%, Romney 49%.

Reuters: 

• Investors skirt new shorting curbs to bet on EU woes. New rules to stop speculators making Europe's debt crisis worse by betting on government bond defaults are prompting investors to find alternative ways to insure against or profit from bad news in the region. In anticipation of the rules - aimed at increasing transparency and stamping out market manipulation - investors have pulled out of the $100 billion market in droves, with volumes already down about 40 percent from mid-2011 peaks. Instead, they are tentatively switching to buying corporate CDS, selling sovereign bonds or using the options market. "If you've restricted them from using sovereign CDS ... they will clearly look for some alternative that is out there," said Saul Doctor, credit strategist at JPMorgan. "The most obvious alternative is just to go and short the bonds outright or going short through the futures market."

Telegraph: 

• The euro is heading for a permanent state of depression. If the euro survives in its current form, then Mario Draghi, president of the European Central Bank, will surely have earned his place in the history books as one of the chief architects of its salvation. 
• Don't cry for me, François. French leader François Hollande is uncomfortably close to a collapse in credibility. His poll rating has sunk to 36pc. The speed of decline has been shocking. The latest broadside comes from ex-German chancellor Gerhard Schröder, supposedly his ally on the Left. "The election promises of the French president are going to shatter on the walls of economic reality," he said in Paris. The backsliding in the retirement age is indefensible and "cannot be financed". Two or three more blunders of this kind and "reality will catch up with out French friends".

RTHK:

• China's Shenzhen government passed legislation to outlaw additional births outside the mainland beyond the one-child policy. Parents will be fined three times the "social upbringing fee" for each illegal child. The law goes into effect Jan. 1, citing the city's legislature.