Bear Radar

Style Underperformer:

• Mid-Cap Value (+.17%)

Sector Underperformers:

• 1) I-Banks -.57% 2) Utilities -.29% 3) Insurance -.03%

Stocks Falling on Unusual Volume:

• CPWM, TRS, ACOM, GNI and GRR
  

Stocks With Unusual Put Option Activity:

• 1) AVP 2) IP 3) CDE 4) MCP 5) XLE
  

Stocks With Most Negative News Mentions:

• 1) WSBC 2) DTE 3) DUK 4) TWC 5) MRVL
  

Bull Radar

Style Outperformer:

• Large-Cap Growth (+.29%)

Sector Outperformers:

• 1) Oil Service +1.45% 2) Agriculture +1.24% 3) Airline +1.13%

Stocks Rising on Unusual Volume:

• ATPG, NBR, CCJ, ELP, CPL, RNOW, AMRS, AGNC, SHLD, CAGC, CRNT, TSLA, ROVI, LULU, BJ, NBL, IM, MTR, ABV, AXR and MIM
  

Stocks With Unusual Call Option Activity:

• 1) EWJ 2) AMD 3) KEY 4) GPS 5) AGU
  

Stocks With Most Positive News Mentions:

• 1) OSIS 2) RTN 3) BJ 4) NE 5) ASEI
  

Wednesday Watch

Evening Headlines
Bloomberg:

• Hedge Funds More Optimistic About U.S. Stocks, Survey Shows. Hedge funds have become more optimistic about U.S. stocks, with the percentage of managers saying they’re upbeat rising to the highest level in at least seven months, according to TrimTabs Investment Research and BarclayHedge Ltd. About 46 percent of the 92 hedge-fund managers surveyed in the past week were bullish on the Standard & Poor’s 500 Index, compared with 31 percent in November, the firms said today in a report. The share of managers who said they were pessimistic about U.S. stocks fell to 19 percent from 39 percent, and both readings were the most extreme for the survey that began in May. “An inflationary growth consensus has emerged heading into 2011,” said Vincent Deluard, global equity strategist in New York for Sausalito, California-based TrimTabs. “Managers are betting aggressively on the economic recovery.” The funds, with worldwide assets of about $1.8 trillion, gained an average of 5 percent this year through November, according to Bloomberg’s aggregate index, compared with a 7.9 percent rally in the S&P 500, including dividends. A majority of managers said precious metals were the most “overbought” asset, meaning they could be poised for a decline, according to the report.
• U.S. Loans Make Comeback as New Issuance Doubles. Leveraged-loan issuance in the U.S. more than doubled this year, as private-equity firms sought funds for buyouts and borrowers refinanced debt amid a rebound from the worst financial crisis since the Great Depression.
• Chavez Says He's Ready for U.S. to Expel Venezuela Ambassador, Break Ties. President Hugo Chavez said he’s ready for the U.S. to expel his ambassador and break off diplomatic ties in retaliation for Venezuela’s five-month refusal to welcome the Obama administration’s choice to be its next envoy to Caracas. “If the U.S. government is going to expel our ambassador there, then do it. If the U.S. government is going to break off diplomatic relations -- do it,” Chavez said in comments carried on state television yesterday. “It’s not my fault. It’s theirs for naming an ambassador who immediately goes to the press to rant against the country where he is going as ambassador.” State Department spokesman Philip J. Crowley said Dec. 20 “there will be consequences” to Venezuela’s decision to protest President Barack Obama’s nomination of diplomat Larry Palmer as the next American ambassador to Caracas.
• Passenger Outrage Rises as Winter Storm Snarls U.S. Air Travel. Anger mounted over passengers stranded on airport tarmacs and in terminals as flight delays threatened to stretch into the weekend following the worst December snowstorm to hit New York City in six decades.

Wall Street Journal:

• China Squeezes Foreigners for Share of Global Riches. Foreign companies have been teaming up with Chinese ones for years to gain access to the giant Chinese market. Now some of the world's biggest companies are taking a risky but potentially rewarding second step—folding pieces of their world-wide operations into partnerships with Chinese companies to do business around the globe. General Electric Co. is finalizing plans for a 50-50 joint venture with a Chinese military-jet maker to produce avionics, the electronic brains of aircraft. The deal with Aviation Industry Corp. of China would give GE access to a Chinese government project aimed at challenging Boeing Co. and Airbus in the civilian-aircraft market.
• Death Panels Revisited. At a stroke, Medicare chief Donald Berwick has revived the "death panel" debate from two summers ago. Allow us to referee, because this topic has been badly distorted by the political process—and in a rational world, it wouldn't be a political question at all. On Sunday, Robert Pear reported in the New York Times that Medicare will now pay for voluntary end-of-life counseling as part of seniors' annual physicals. A similar provision was originally included in ObamaCare, but Democrats stripped it out amid the death panel furor. Now Medicare will enact the same policy through regulation. We hadn't heard about this development until Mr. Pear's story, but evidently Medicare tried to prevent the change from becoming public knowledge.

CNBC:

• Citigroup(C) to Exceed New Rules, Shrink Bad Assets: CEO. Citigroup is on track to exceed expected regulatory requirements and shrink its worst assets to less than 20 percent of its balance sheet, Chief Executive Vikram Pandit told employees in an end-of-year internal memo on Monday.
• Europe's Economic Pain Re-Opens Debate on Currency. A noisy band of dissenters, many of them economists from outside the Continent, issued a warning: the euro was doomed to struggle, they proclaimed, maybe not immediately but certainly before long. Different countries would pursue such different economic policies, they argued, that it would ultimately place an unbearable strain on the currency and some of its members.

Business Insider:

• Glenview's Larry Robbins Sets The World's Most Bullish Target: DOW 20,000. He predicts P/E multiples will expand by 45% by the end of 2013. This means the Dow Jones Industrial Average (DJIA) will surpass 20000 level in three years, assuming earnings will grow by a modest 5% per year.
• Groupon Prepares To Raise As Much As $950 Million. Groupon just filed a certificate to authorize an astounding $950 million fundraise at a $6.4 billion valuation, VC Experts reports.
  

IBD:

• Defense Work Is The Big Revenue Generator For This Chipmaker. In his first remarks after his chip company's earnings report in mid-November, Microsemi (MSCC) CEO Jim Peterson expressed his appreciation to the country's troops.

Forbes:

• 2011 Will Be The Year of M&A. Companies sitting on piles of cash will look to leap-frog competitors with strategic acquisitions.

CNN Money:

• Bull vs. Bear: How High Will Oil Go in 2011? The already fragile economic recovery would be vulnerable to rising oil prices. Where will the price of a barrel go in 2011? Analysts argue both sides.
• $50 Billion So You Can Watch YouTube. Wireless carriers are spending $50 billion a year to improve their networks to deal with rising data demands from smartphones and tablets. Here's a look at what they're spending that on.

USA Today:

• Top Chinese Blogger's Magazine Shut Down. One of China's most popular bloggers announced Tuesday he was forced to shut down his freewheeling print magazine after just one issue because government officials appear to have blocked the printing of any new editions. Han Han, a novelist and race car driver, has amassed a huge readership with his sly online critiques of China's social problems and hoped to tap that audience with an arts and literature magazine, Party. Han wrote in a blog post that it appeared that the government was behind the closure, but he's unsure which department and why it objected to the magazine.

Reuters:

• "Big Push" Could Be Over for California Solar. After record solar-plant approval in 2010, the California Energy Commission believes its "big push" in solar-thermal projects is over. Because so many developers were rushing to meet a Dec. 31 deadline for federal incentives, CEC staff are expecting a slower year in 2011. In hindsight, the rush was overdone, given that Congress has now extended that deadline for federal funding by another year.
• China Says Undecided on 2011 Rare Earth Export Quotas. China has not decided full-year rare earth export quotas for 2011, the Ministry of Commerce said in a short statement, in an apparent move to soothe market concerns.

21st Century Business Herald:

• Some luxury cosmetics may raise retail prices in China by as much as 20% from Jan. 1, citing market rumors.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are unch. to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 104.0 -1.0 basis point.
  
• Asia Pacific Sovereign CDS Index 102.5 -1.0 basis point.
  
• S&P 500 futures +.06%
  
• NASDAQ 100 futures +.15%.

Morning Preview Links

Earnings of Note
Company/Estimate

• None of note
  

Economic Releases

• None of note

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The $29 Billion 7-Year Treasury Notes Auction could also impact trading today.
  

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

Stocks Rising Slightly Into Final Hour on Seasonal Strength, Short-Covering, Investor Performance Angst

Broad Market Tone:

• Advance/Decline Line: Slightly Lower
  
• Sector Performance: Mixed
  
• Volume: Light
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 17.88 +1.19%
  
• ISE Sentiment Index 162.0 +33.88%
  
• Total Put/Call .78 +1.30%
  
• NYSE Arms .81 -16.80%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 85.68 -.37%
  
• European Financial Sector CDS Index 152.41 bps -.04%
  
• Western Europe Sovereign Debt CDS Index 192.75 bps -1.74%
  
• Emerging Market CDS Index 206.51 +.14%
  
• 2-Year Swap Spread 19.0 -3 bps
  
• TED Spread 16.0 -2 bps
  

Economic Gauges:

• 3-Month T-Bill Yield .14% +2 bps
  
• Yield Curve 273.0 +5 bps
  
• China Import Iron Ore Spot $170.70/Metric Tonne unch.
  
• Citi US Economic Surprise Index +6.50 -5.4 points
  
• 10-Year TIPS Spread 2.31% +2 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +48 open in Japan
• DAX Futures: Indicating +19 open in Germany

Portfolio:

• Slightly Higher: On gains in my Medical, Tech, Retail and Ag long positions
  
• Disclosed Trades: None
  
• Market Exposure: 100% Net Long

BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 trades slightly higher despite recent stock gains, China inflation worries, soaring long-term rates and some disappointing economic data. On the positive side, Bank, Energy, I-Banking, Medical Equipment and Drug shares are especially strong, rising more than .5%. (IYR) is trading very well again today. Copper is climbing +.99% despite the Chinese rate hike, some weaker economic data and declining euro. Moreover, the S&P GSCI Ag Spot Index is rising another +1.25% to another new record high. The TED and 2-year swap spreads have been trending lower over the last week, which is a big positive. On the negative side, Education, Oil Tanker, Homebuilding, Hospital, Gaming, Disk Drive and Steel shares are under mild pressure, falling more than .5%. The Greece sovereign cds is climbing +1.69% to 1,053.52 bps and the Emerging Markets Sovereign CDS Index is jumping +3.07% to 198.l20 bps. The Euro Financial Sector CDS Index remains at the highest level since mid-June and the Western Europe Sovereign CDS Index remains very near its record high set last month, which is also a big negative. Gold is surging +1.64% and the 10-year yield is soaring +14 bps to 3.47%. The Shanghai Composite continues to trade poorly, breaking down through its 200-day moving average overnight. The broad market continues to display exceptional resiliency as most negatives are ignored. Today's broad market action is another healthy consolidation of recent gains. I expect US stocks to trade mixed-to-higher into the close from current levels on seasonal strength, short-covering, technical buying, buyout speculation and investment manager performance angst.

Today's Headlines

Bloomberg:

• Out of Lehman's Ashes Wall Street Gets Most of What it Wants. Wall Street’s biggest banks, whose missteps caused a global financial crisis and economic slowdown two years ago, were more agile when it came to countering the political and regulatory response. The U.S. government, promising to make the system safer, buckled under many of the financial industry’s protests. Lawmakers spurned changes that would wall off deposit-taking banks from riskier trading. They declined to limit the size of lenders or ban any form of derivatives. Higher capital and liquidity requirements agreed to by regulators worldwide have been delayed for years to aid economic recovery. “We continue to listen to the same people whose errors in judgment were central to the problem,” said John Reed, 71, a former co-chief executive officer of Citigroup Inc., who estimated only 25 percent of needed changes have been enacted. “I’m astounded because we basically dropped the world’s biggest economy because of an error in bank management.” The last two years have been the best ever for combined investment-banking and trading revenue at Bank of America Corp., JPMorgan Chase & Co., Citigroup, Goldman Sachs Group Inc. and Morgan Stanley, according to data compiled by Bloomberg. Goldman Sachs CEO Lloyd Blankfein, 56, and his top deputies are in line to collect more than $100 million in delayed 2007 bonuses -- six months after paying $550 million to settle a fraud lawsuit related to the firm’s behavior that year. Citigroup, the bank that needed more taxpayer support than any other, has a balance sheet 14 percent bigger than it was four years ago.
  
• U.S. Retailers' Holiday Sales Increase 5.5%, Most Since 2005. U.S. retailers’ 2010 holiday sales jumped 5.5 percent for the best performance in five years as shoppers snapped up clothing and jewelry at Macy’s Inc., Tiffany & Co. and other stores. Retail sales, excluding autos, rose to $584 billion from Nov. 5 through Dec. 24, said MasterCard Advisors’ SpendingPulse, which measures retail sales by all payment forms. That compared with a 4.1 percent gain a year earlier. The numbers include sales made over the Web.
• China Cuts First-Round Rare Earth Export Quotas by 11%. China cut its export quotas for rare earths by 11 percent in the first round of permits for 2011, threatening to extend a global shortage of the minerals needed for smartphones, hybrid cars and guided missiles.
• Sugar Extends Rally to 30-Year High as Worldwide Demand Outpaces Supplies. Sugar futures extended a rally to a 30-year high on mounting concern that dry weather in Brazil, the world’s biggest producer, and record rainfall in Australia will slash worldwide supplies.
• Muslim Group Claims Attacks on Two Nigerian Cities That Killed 86 People. A Muslim group in Nigeria identifying itself as Jama’atu Ahlus-Sunnah Lidda’Awati Wal Jihad said it carried out Christmas Eve attacks on the cities of Jos and Maiduguri that killed at least 86 people. The group is “avenging the atrocities committed against Muslims in those areas, and the country in general,” according to a statement on its website. “Therefore we will continue with our attacks on disbelievers and their allies and all those who help them.” Multiple bomb blasts in Jos, capital of the central state of Plateau, targeted public places, including a Catholic church, killing at least 80 people, according to Nigeria’s National Emergency Management Agency. Two churches were also attacked by gunmen on the same day in Maiduguri, capital of Borno state in northeast Nigeria, killing six people, said Mohammed Abubakar, the commissioner of police.
• Home Prices in U.S. Decrease More Than Forecast. Home prices dropped more than forecast in October, a sign housing will remain a weak link as the U.S. recovery accelerates into the new year. The S&P/Case-Shiller index of property values fell 0.8 percent from October 2009, the biggest year-over-year decline since December 2009, the group said today in New York. The decrease exceeded the 0.2 percent drop projected by the median forecast of economists surveyed by Bloomberg News.
• Petrobras(PBR) Jumps to Six-Week High on Record Brazil Production, Rising Oil. Petroleo Brasileiro SA, Brazil’s state-controlled oil company, advanced to a six-week high after the country’s oil output climbed to a record in November and crude traded near a two-year high. Brazil’s production of oil rose to a record 2.089 million barrels a day last month, the agency known as ANP said on its website yesterday. Petrobras’ total November oil and gas production was 2.6 million barrels a day, of which 2.03 million barrels was in Brazil, according to an e-mailed statement.
• Wagers Against S&P 500 Drop to Lowest Level in 12 Months as Optimism Gains. Wagers against the Standard & Poor’s 500 Index fell to a one-year low as short sellers slashed bets that phone and consumer discretionary stocks, including Qwest Communications Inc. and Abercrombie & Fitch Co., will retreat. Short interest on the S&P 500 dropped to 7.29 billion shares, or 4.15 percent of shares available for trading, as of Dec. 15, down 2.9 percent from two weeks earlier, according to data compiled by U.S. exchanges and Bloomberg. For phone companies, it slid 12 percent to 440.9 million, and fell 8.7 percent to 1.2 billion shares for consumer discretionary stocks.
• Allstate(ALL) Sues Countrywide Over $700 Million Investment. Allstate Corp. sued Bank of America Corp. and its Countrywide mortgage unit over $700 million in residential mortgage-backed securities the insurer purchased, claiming Countrywide misrepresented the investments. “Countrywide was singularly focused on increasing its market share, offloading the risk onto Allstate and other institutional investors that purchased securities backed by pools of Countrywide’s mortgages,” Allstate said in a complaint filed in federal court in Manhattan yesterday.
• Gramley Says Plosser, Fisher May Dissent From Fed Ease Plan. Federal Reserve Bank of Philadelphia President Charles Plosser and Dallas Fed President Richard Fisher may dissent from Fed Chairman Ben S. Bernanke’s plan to purchase $600 billion in Treasuries, former Fed governor Lyle Gramley said. “I think Charles Plosser of Philadelphia and Richard Fisher of Dallas probably will dissent from time to time,” Gramley said today in an interview on Bloomberg Television’s “Fast Forward” with Peter Cook. “It probably isn’t going to affect the outcome of monetary policy decisions. Ben Bernanke still has control of the committee.”

Wall Street Journal:

• Firms Enlist More Recruiters. As Demand in Hiring Slowly Increases, Companies Fill Headhunter Positions.
• Police Fatalities Are Up 37% in 2010. So-called cluster killings helped make 2010 a particularly deadly year for law enforcement, with deaths in the line of duty jumping 37% to about 160 from 117 the year before, according to numbers as of Tuesday compiled by the National Law Enforcement Officers Memorial Fund.
• Obama's Presidency Joins the Fray. Americans prefer a leader who does not stand aloof from the weight and the lessons of our history.

CNBC:

• Consumer Confidence Shows Surprise Drop in December.
• Treasurys Accelerate Slide After Weak Five-Year Auction.
  

Business Insider:

• In 2010 Fox News Had More Total Viewers Than MSNBC, CNN and HLN COMBINED. That dominance came primarily at the expense of CNN which lost 29% of its total viewership in 2010 and 34% of its prime time viewers. Yes, you read that right.
• A Personal Investigation Into One of China's Ghost Cities.
  

Forbes:

• Research In Motion(RIMM): PlayBook Battery Life Too Short?

24/7 Wall St.:

• Short Sellers Make Big Push into Telecom, Tech.

Adweek:

• Sources: Netflix(NFLX) Thinking World Domination. Online video and DVD distributor Netflix is talking with several advertising and media agencies about potential international assignments, according to sources. Currently, Netflix provides service in the U.S. and Canada. But the company is poised for overseas expansion, according to Netflix CEO Reed Hastings, who recently told The Hollywood Reporter that Europe, Latin America and Asia are markets the company would consider entering as soon as the recently launched Canadian operation gets its bearings.

cnet:

• Rumor: Apple(AAPL) Prepping Three iPad 2 Versions.

Real Clear Politics:

• 'Shall' D.C. Decide for Patients & Doctors? The text of Obamacare is dry and legalistic, except when it summons the majesty of the King James Bible to intone imperiously, "the secretary shall . . ." The secretary in question is the secretary of health and human services, Kathleen Sebelius, who "shall" and "may" do all manner of things to complete the great unfinished canvas that is Obamacare. As George W. Bush might say, Sebelius is "the decider." Because of the discretion she's granted to remake American health care, she rivals Nancy Pelosi, Hillary Clinton, and Oprah Winfrey as the most powerful woman in America.

Reuters:

• Institutional Investor Confidence Rises in December. Confidence among global institutional investors rose in December, as improved sentiment toward the United States outweighed continued concerns about Europe, State Street Corp said on Tuesday.

Financial Times:

• Consumption Growth Could Power US in 2011. The answer to one simple question is enough to give a good idea of what will happen to US growth in 2011: how much of their income will US consumers spend and how much of it will they save? Economists – including some noted pessimists – are starting to believe that they will spend quite a lot. As a result, there is hope that 2011 will be the year when recovery from the Great Recession truly begins with growth as high as 4 per cent.

Der Spiegel:

• Opposition to the Euro Grows in Germany. Surveys show that many Germans are worried about the future of the euro, but the country's political parties are not taking their fears seriously. The number of grassroots initiatives against the common currency is increasing, and political observers say a Tea Party-style anti-euro movement could do well.

Rheinische Post:

• Passengers at German airports should be divided into risk groups for purposes of security checks, the future president of the ADV association of German airports said. So-called profiling, in effect at airports in Israel and announced for the U.K., would allow security services to adapt the intensity of searches to the security risk, Chritoph Blume, president of the ADV from Jan. 1, said.

Imerisia:

• Greek sales in the holiday season decreased 25% on average, with clothing and restaurants the hardest hit, citing the National Federation of Commerce. Sales in overall clothing retail and at restaurants fell by 40%.
  

China National Radio:

• China's Vice Premier Li Keqiang said the country will place more emphasis on inflation controls.

Economic Observer:

• About one third of foreign direct investments in China entered the country's property market this year, citing an official from the Ministry of Commerce.

Financial News:

• China may raise interest rates when inflationary pressure escalates in the first half of 2011, citing Ba Shusong, a researcher at the State Council's Development Research Center.

Caixin:

• China needs to "moderately" raise capital requirements on the nation's biggest banks to counter cyclical risks and take into account big lenders' systemic importance, Liu Mingkang, Chairman of the China Banking Regulatory Commission said in an interview.

Bear Radar

Style Underperformer:

• Small-Cap Growth (-.31%)

Sector Underperformers:

• 1) Education -1.09% 2) Gaming -.71% 3) Oil Tankers -.68%

Stocks Falling on Unusual Volume:

• GNI, VCI and DSX
  

Stocks With Unusual Put Option Activity:

• 1) CCE 2) MCP 3) AKS 4) DNDN 5) GM
  

Stocks With Most Negative News Mentions:

• 1) DNBK 2) DIOD 3) CALM 4) NST 5) RCRC
  

Bull Radar

Style Outperformer:

• Large-Cap Value (+.09%)

Sector Outperformers:

• 1) Gold +1.94% 2) Coal +.57% 3) REITs +.30%

Stocks Rising on Unusual Volume:

• HL, TIE, SSL, EPAY, PBR, SEED, ZINC, ATNI, ASMI, PMTI, VOCS, TPL, CPY and HIT
  

Stocks With Unusual Call Option Activity:

• 1) CCE 2) PFE 3) INTU 4) CTXS 5) JCP
  

Stocks With Most Positive News Mentions:

• 1) KBR 2) AIG 3) NOC 4) AEP 5) VMI
  

Tuesday Watch

Evening Headlines
Bloomberg:

• S&P Bond Upgrades Top Downgrades as Cash Swells. More U.S. companies had their credit ratings boosted by Standard & Poor’s this year than saw them cut for the first time since 1997 as borrowers increased profits and stockpiled cash. Ford Motor Co., the world’s most profitable automaker, and San Jose, California-based EBay Inc. were upgraded by S&P along with 756 others, compared with 722 downgrades, according to data compiled by Bloomberg. In 2009, S&P slashed corporate debt grades more than three times as often as it raised them, the data show. Companies held $1.17 trillion of cash, the most on record compared with the value of their assets, as the U.S. recovered from the worst recession in more than 70 years. Rising confidence in the ability of borrowers to meet debt payments led investors to push relative yields down to the lowest since 2007. “Corporate fundamentals are about as strong as we’ve ever seen them,” said Edward Marrinan, a credit strategist at Royal Bank of Scotland Group Plc in Stamford, Connecticut. The creditworthiness of borrowers will continue to rise even as they are tempted to accelerate mergers and acquisitions and repurchase stock, according to Marrinan. S&P boosted grades for non-financial companies 1.5 times as often as it cut them, while Moody’s Investors Service issued 1.9 upgrades across those sectors for every downgrade, the companies said.
• Hedge Funds Bet Natural Gas Will Decline in Warm New Year: Energy Markets. Hedge funds raised bearish natural gas bets by the most since October on forecasts that higher- than-normal temperatures in the first weeks of the New Year will reduce demand for the heating fuel. The funds and other large speculators cut net-long positions, or wagers on rising prices, by 35 percent in the seven days ended Dec. 21, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report. It was the largest drop since Oct. 12.
• Gold Advances for a Third Day as Declining Dollar Boosts Investment Appeal. Gold advanced for a third day on speculation that the dollar’s retreat may boost demand for the precious metal as an alternative investment. Immediate-delivery gold added as much as 0.2 percent to $1,387.10 an ounce and was at $1,385.75 at 10:19 a.m. in Tokyo.

Wall Street Journal:

• Blizzard Strands Travelers Across U.S. Airline flight cancellations mounted into the thousands Monday as fallout from a powerful East Coast blizzard rippled across the country.
• As Irelanad Flails, Europe Lurches Across the Rubicon.
• 10 Trends in Mobile Technology.
• China's Real Estate Frenzy. Rising property prices and a torrid pace of lending are signals of an inflationary bubble.

CNBC:

• Japan Industrial Output Rises For First Time in 6 Months.

Business Insider:

• The Next 5 Apple(AAPL) Gadgets to Waste Time Obsessing About.
• Deutsche Bank: The Rally in Profits Could Send U.S. Companies on a Hiring Spree. (graph)
• Volatility Alert: Crude is Rising, But Not Because of Demand.
• As Hot Money Rushes into China, The Smart Money is Getting the Hell Out.
  

New York Times:

• Retail Sales Rebound, Beating Forecasts. Shoppers spent more money this holiday season than even before the recession, according to preliminary retail data released on Monday.

Forbes:

• Beijing Takes on the Vatican.

insidermonkey:

• Ken Griffin's Citadel Returned 10% in 2010; Loeb's Is Triple That. Ken Griffin’s Citadel returned about 10 percent in 2010, according to a person who has seen the numbers but wasn’t authorized to share them publicly. Citadel’s flagship Wellington and Kensington funds gained around 10 percent, but still below their high water mark achieved at the end of 2007. Citadel lost 55% in 2008. To reverse that, it needed to have returned more than 122%. It gained 62% in 2009. After this year’s 10%, Citadel still needs to deliver another 25 percent return to surpass its high water mark.

engadget:

• Apple(AAPL) Confirms It's Sold One Million New Apple TVs. Apple said last week that it expected its new Apple TV to cross the one million mark in sales before Christmas, and it's now quietly confirmed that it's managed to do just that.

AppleInsider:

• Apple(AAPL) Targeting iPad at Corporate Buyers with Verizon(VZ). Apple is working with carrier business teams at Verizon Wireless to "drive adoption of iPad in enterprise accounts," following an initial push aimed at consumers. While the majority of the company's iPad marketing is focused on consumer uses, Apple is now actively selling its new tablet to business customers.

The Orage Country Register:

• Global Warming Expanations Made Up as They Go Along. You may have heard the fascinating explanation for the cold weather sweeping the globe. Yeah, some say that global warming is making the earth cold. There’s, of course, better explanations, but don’t expect to hear them from the global warming alarmists.

Politico:

• President Obama Under Pressure to Deliver on Climate. Jan. 2 isn’t just your ordinary Sunday. It’s the day the Obama administration will officially start regulating greenhouse gas emissions, and critics have issued dire predictions of economic destruction. With all the fiery rhetoric about how damaging the regulations could be, the White House is under pressure to fulfill its pledge to tackle climate change while avoiding the appearance that it’s hindering job growth.

Rasmussen Reports:

• Support for Health Care Repeal at 60%. For the second time this month, 60% of Likely Voters at least somewhat favor repeal of the national health care law, while the number who expect health care costs to increase is at its highest level since August. The latest Rasmussen Reports national telephone survey shows that 49% Strongly Favor repeal of the plan. Thirty-eight percent (38%) oppose the law’s repeal, including 29% who Strongly Oppose repeal.

USA Today:

• SUV Trade-In Values Plunge as Gas Prices Keep Climbing. The run-up in gas prices past $3 a gallon has been running down the value of used SUVs, causing prices to plummet below levels listed in well-known buying guides. And it is forcing dealers to tread carefully with customers when they offer less than expected for their SUV trade-in. The average used SUV was selling for nearly 20% below the price listed last month in used car pricing publications such as Kelley Blue Book, CNW Marketing reports.

Reuters:

• NYSE Short Interest Falls in Early December.
• Nasdaq Short Interest Falls in Early December.
• Speculators Trim US Dollar Shorts - CFTC.

Financial Times:

• Non-US Banks Gain From Fed Crisis Fund. Some of the world’s strongest banks have profited from an emergency credit facility set up by the US Federal Reserve to shore up confidence in the global financial system, according to a Financial Times analysis of data released by the Fed. More than half of lending under the Fed’s term auction facility – the largest of its crisis programmes – went to foreign banks. Details of the varied uses to which they put it may add to political criticism of the Fed.

21st Century Business Herald:

• China central bank adviser Li Daokui said more adjustments in China's deposit rate, lending rate, and reserve requirement ratio are "very necessary" in 2011, especially in the first half, citing an interview.
• China's consumer price increases may exceed 5% in 2011, citing Liu Yuhui, a researcher with the Chinese Academy of Social Sciences.
  

Oriental Morning Post:

• About 40% of the additional dollars issued by the Federal Reserve through its purchases of U.S. Treasuries, or quantitative easing, may have flown into China, increasing inflationary pressure for the nation, citing Zheng Xinli, deputy director of China Center for International Economic Exchanges.

Evening Recommendations
Citigroup:

• Rated (GM) Buy, target $45.

Night Trading

• Asian equity indices are -.50% to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 105.0 +1.0 basis point.
  
• Asia Pacific Sovereign CDS Index 103.5 -.5 basis point.
  
• S&P 500 futures +.07%
  
• NASDAQ 100 futures +.13%.

Morning Preview Links

Earnings of Note
Company/Estimate

• None of note
  

Economic Releases
9:00 am EST

• The S&P/CS 20 City MoM% SA for October is estimated to fall -.6% versus a -.8% decline in September.
  

10:00 am EST

• Consumer Confidence for December is estimated to rise to 56.4 versus a reading of 54.1 in November.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The $35 Billion 5-Year Treasury Notes Auction, weekly retail sales reports, weekly ABC consumer confidence reading and the Richmond Fed Manufacturing Index could also impact trading today.
  

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

Stocks Slightly Higher into Final Hour on Less Financial Sector Pessimism, Seasonal Strength, Short-Covering, Technical Buying

Broad Market Tone:

• Advance/Decline Line: Higher
  
• Sector Performance: Most Sectors Rising
  
• Volume: Light
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 17.88 +8.56%
  
• ISE Sentiment Index 121.0 unch.
  
• Total Put/Call .94 +4.44%
  
• NYSE Arms 1.10 -31.56%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 86.0 +.55%
  
• European Financial Sector CDS Index 152.54 bps +2.01%
  
• Western Europe Sovereign Debt CDS Index 196.17 bps -.84%
  
• Emerging Market CDS Index 206.10 unch.
  
• 2-Year Swap Spread 22.0 -3 bps
  
• TED Spread 18.0 +1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .12% -1 bp
  
• Yield Curve 268.0 -5 bps
  
• China Import Iron Ore Spot $170.70/Metric Tonne unch.
  
• Citi US Economic Surprise Index +11.90 -2.4 points
  
• 10-Year TIPS Spread 2.29% -3 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +5 open in Japan
• DAX Futures: Indicating +21 open in Germany

Portfolio:

• Slightly Higher: On gains in my Biotech, Tech and Ag long positions
  
• Disclosed Trades: None
  
• Market Exposure: 100% Net Long

BOTTOM LINE: Today's overall market action is bullish as the S&P 500 trades slightly higher despite recent stock gains, China inflation worries and weakness in most overseas equities. On the positive side, REIT, Homebuilding, Bank and Disk Drive shares are especially strong, rising more than 1.0%. Small-caps are outperforming. (XLF)/(IYR) are also trading very well again today. Copper is climbing +.67% despite the Chinese rate hike. Lumber is also rising +1.91%. The 10-year yield is falling -4 bps to 3.35%. On the negative side, Education, Oil Service and Oil Tanker shares are under pressure, falling more than 1.0%. The Belgium sovereign cds is climbing +2.02% to 220.83 bps. The Euro Financial Sector CDS Index remains at the highest level since mid-June and the Western Europe Sovereign CDS Index remains very near its record high set last month, which is also a big negative. The broad market continues to display exceptional resiliency as negatives are ignored. I continue to believe another short-term spike higher in equities is a distinct possibility. I expect US stocks to trade mixed-to-higher into the close from current levels on seasonal strength, less economic fear, short-covering, technical buying, buyout speculation and investment manager performance angst.

Bear Radar

Style Underperformer:

• Mid-Cap Growth (-.07%)

Sector Underperformers:

• 1) Oil Service -1.32% 2) Education -.89% 3) Oil Tankers -.85%

Stocks Falling on Unusual Volume:

• LOGI, TSLA, ALIM, CALM, MOTR, HRB, CCH and ENI
  

Stocks With Unusual Put Option Activity:

• 1) TOT 2) DRYS 3) DTV 4) EK 5) GOLD
  

Stocks With Most Negative News Mentions:

• 1) RIG 2) DF 3) FDP 4) TSLA 5) TCBI
  

Bull Radar

Style Outperformer:

• Large-Cap Value (-.05%)

Sector Outperformers:

• 1) Banks +.68% 2) Homebuilders +.68% 3) REITs +.49%

Stocks Rising on Unusual Volume:

• AIG, SWIR, AGM, MA, ELON, TPCG, BBOX, KIRK, ITMN, STU, AM, YPF, MHO, TOD and GNI
  

Stocks With Unusual Call Option Activity:

• 1) ACAS 2) PBR 3) ABC 4) ITW 5) CSX
  

Stocks With Most Positive News Mentions:

• 1) SNE 2) MRK 3) SCHW 4) KEM 5) AAPL
  

Monday Watch

Night Trading

• Asian indices are -.25% to +.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 104.0 +1 basis point.
• Asia Pacific Sovereign CDS Index 104.0 +.5 basis point.
• S&P 500 futures -.18%.
• NASDAQ 100 futures -.11%.

Morning Preview Links

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

Weekly Outlook

U.S. Week Ahead by MarketWatch (video).
Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week mixed as diminishing economic fear, seasonal strength, buyout speculation, investment manager performance anxiety and short-covering offsets profit-taking, rising sovereign debt angst and China inflation worries. My intermediate-term trading indicators are giving mostly bullish signals and the Portfolio is 100% net long heading into the week.

Market Week in Review

S&P 500 1,256.77 +1.12%*



The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 1,256.77 +1.12%
  
• DJIA 11,573.49 +.65%
  
• NASDAQ 2,665.60 +1.07%
  
• Russell 2000 788.96 +1.60%
  
• Wilshire 5000 13,127.21 +1.06%
  
• Russell 1000 Growth 575.09 +.76%
  
• Russell 1000 Value 637.82 +1.60%
  
• Morgan Stanley Consumer 753.33 +.81%
  
• Morgan Stanley Cyclical 1,037.78 +1.05%
• Morgan Stanley Technology 663.85 +1.07%
  
• Transports 5,078.92 -.16%
  
• Utilities 405.73 +1.30%
  
• MSCI Emerging Markets 46.65 +.59%
  
• Lyxor L/S Equity Long Bias Index 1,032.09 +.41%
  
• Lyxor L/S Equity Variable Bias Index 870.49 +.31%
  
• Lyxor L/S Equity Short Bias Index 704.46 -1.77%
  

Sentiment/Internals

• NYSE Cumulative A/D Line +110,102 +1.87%
  
• Bloomberg New Highs-Lows Index +261 -140
  
• Bloomberg Crude Oil % Bulls 53.0 +103.85%
  
• CFTC Oil Net Speculative Position n/a
  
• CFTC Oil Total Open Interest n/a
  
• Total Put/Call .90 +8.43%
  
• OEX Put/Call 1.22 -.81%
  
• ISE Sentiment 121.0 -29.65%
  
• NYSE Arms 1.60 +92.77%
  
• Volatility(VIX) 16.47 -5.29%
• G7 Currency Volatility (VXY) 12.21 -1.05%
  
• Smart Money Flow Index 9,815.19 +.43%
  
• Money Mkt Mutual Fund Assets $2.788 Trillion -.30%
  
• AAII % Bulls 63.30 +26.02%
  
• AAII % Bears 16.40 -39.59%
  

Futures Spot Prices

• CRB Index 329.38 +3.79%
  
• Crude Oil 91.51 +3.09%
  
• Reformulated Gasoline 244.26 +5.19%
  
• Natural Gas 4.08 +.66%
  
• Heating Oil 254.08 +2.68%
  
• Gold 1,380.50 +.35%
  
• Bloomberg Base Metals 251.99 +2.50%
  
• Copper 425.85 +2.10%
  
• US No. 1 Heavy Melt Scrap Steel 342.83 USD/Ton unch.
  
• China Hot Rolled Domestic Steel Sheet 4,567 Yuan/Ton +1.53%
• S&P GSCI Agriculture 508.74 +5.19%
  

Economy

• ECRI Weekly Leading Economic Index 128.0 +.55%
  
• Citi US Economic Surprise Index +12.50 -5.2 points
  
• Fed Fund Futures imply 74.0% chance of no change, 26.0% chance of 25 basis point cut on 1/26
• US Dollar Index 80.47 +.13%
  
• Yield Curve 274.0 +2 basis points
  
• 10-Year US Treasury Yield 3.39% +6 basis points
  
• Federal Reserve's Balance Sheet $2.410 Trillion +1.79%
  
• U.S. Sovereign Debt Credit Default Swap 41.44 +2.43%
• California Municipal Debt Credit Default Swap 292.50 +.22%
  
• Western Europe Sovereign Debt Credit Default Swap Index 1197.83 +5.98%
  
• 10-Year TIPS Spread 2.32% +3 basis points
  
• TED Spread 17.0 -3 basis points
  
• N. America Investment Grade Credit Default Swap Index 85.53 -1.87%
  
• Euro Financial Sector Credit Default Swap Index 149.53 +3.73%
  
• Emerging Markets Credit Default Swap Index 206.66 -1.35%
  
• CMBS Super Senior AAA 10-Year Treasury Spread 252.0 unch.
  
• M1 Money Supply $1.810 Trillion -.47%
  
• Business Loans 609.30 +.31%
  
• 4-Week Moving Average of Jobless Claims 426,000 +.60%
  
• Continuing Claims Unemployment Rate 3.2% -10 basis points
  
• Average 30-Year Mortgage Rate 4.81% -2 basis points
  
• Weekly Mortgage Applications 479.90 -18.62%
  
• ABC Consumer Confidence -41 +2 points
  
• Weekly Retail Sales +3.3% +20 basis points
  
• Nationwide Gas $3.03/gallon +.05/gallon
  
• U.S. Heating Demand Next 7 Days 5.0% above normal
• Baltic Dry Index 1,773 -11.31%
  
• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 40.0 +14.29%
  
• Rail Freight Carloads 220,187 -5.88%
  
• Iraqi 2028 Government Bonds 91.79 +1.0%
  

Best Performing Style

• Mid-Cap Value +1.99%

Worst Performing Style

• Large-Cap Growth +.76%

Leading Sectors

• Coal +5.97%
• Education +4.31%
• REITs +3.40%
• Banks +3.37%
• I-Banks +2.76%

Lagging Sectors

• Networking -.10%
• Restaurants -.32%
• Road & Rail -.37%
  
• Drugs -.54%
• Airlines -.56%

One-Week High-Volume Gainers

One-Week High-Volume Losers

*5-Day Change

Stocks Slightly Lower into Final Hour on Profit-Taking, Rising Euro Debt Angst, Surging Commodity Prices

Broad Market Tone:

• Advance/Decline Line: Slightly Lower
  
• Sector Performance: Most Sectors Declining
  
• Volume: Light
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 16.83 +8.93%
  
• ISE Sentiment Index 121.0 -7.63%
  
• Total Put/Call .90 +9.76%
  
• NYSE Arms 1.50 +40.78%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 85.65 +.84%
  
• European Financial Sector CDS Index 160.44 bps +6.14%
  
• Western Europe Sovereign Debt CDS Index 196.83 bps +1.20%
  
• Emerging Market CDS Index 207.0 bps +.35%
  
• 2-Year Swap Spread 26.0 +3 bps
  
• TED Spread 17.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .13% unch.
  
• Yield Curve 273.0 unch.
  
• China Import Iron Ore Spot $170.70/Metric Tonne -.18%
  
• Citi US Economic Surprise Index +14.30 -3.3 points
  
• 10-Year TIPS Spread 2.32% +1 bp
  

Overseas Futures:

• Nikkei Futures: Indicating -36 open in Japan
• DAX Futures: Indicating +16 open in Germany

Portfolio:

• Slightly Higher: On gains in my Medical, Biotech and Ag long positions
  
• Disclosed Trades: None
  
• Market Exposure: 100% Net Long

BOTTOM LINE: Today's overall market action is mildly bearish as the S&P 500 trades just slightly lower despite recent stock gains, Korean peninsula concerns, surging commodity prices and rising eurozone sovereign debt angst. On the positive side, Coal, Ag, Gold, Drug and Education shares are especially strong, rising more than .5%. The S&P GSCI Ag Spot Index is rising another +.5% and is making a new record high. Lumber is also rising +1.2%. The 10-year yield is stable again. The Citi Asia-Pacific Economic Surprise Index is rising +4.1 points to +15.4, which is the best level since Oct. 26th. On the negative side, Airline and Homebuliding shares are under pressure, falling more than 1.0%. The Greece sovereign cds is climbing +5.62% to 1,053.70 bps and the Italy sovereign cds is rising +3.26% to 232.62 bps. The Euro Financial Sector CDS Index remains at the highest level since mid-June and the Western Europe Sovereign CDS Index remains very near its record high set last month, which is also a big negative. The broad market continues to display exceptional resiliency as negatives continue to be ignored. The NYSE Arms has been high throughout the day, yet equity losses are minimal. I still believe the slow grind higher in the major averages to new 52-week highs could result in a short-term spike higher in stocks before any meaningful pullback commences as shorts throw in the towel and underperforming longs come in to finish out the year. I expect US stocks to trade mixed-to-higher into the close from current levels on seasonal strength, less economic fear, short-covering, technical buying, buyout speculation and investment manager performance angst.

Today's Headlines

Bloomberg:

• Demand for U.S. Capital Goods Rebounds as Spending Holds Up. Orders for U.S. capital equipment rebounded in November, signaling a slowdown in business investment may be less pronounced than some economists projected. Bookings for goods like computers and communications gear climbed 2.6 percent after a 3.6 percent decline in October that was smaller than previously estimated, figures from the Commerce Department showed today in Washington. “There is still some equipment spending going on,” said Brian Bethune, chief U.S. financial economist at IHS Global Insight in Lexington, Massachusetts. “It’s going to be a positive contributor to growth.” Orders for non-defense capital goods excluding aircraft are considered a proxy for future business investment. The revised drop in October compared with a previously estimated 4.5 percent decrease. Over the past three months, bookings climbed at a 7.1 percent annual pace, down from an 11 percent advance in October. Demand for computers and electronic equipment climbed 5.8 percent last month, the biggest gain since February 2009. Shipments of non-defense capital goods excluding aircraft, used in calculating gross domestic product, increased 1 percent after a 1.2 percent drop in October. Corporate profits increased 1.6 percent during the third quarter and were up 26 percent from the same three months last year.
• Oil Trades Near Two-Year High as U.S. Inventories Decline, Economy Expands. Crude oil rose to the highest level in more than two years as confidence among U.S. consumers advanced to a six-month high, signaling that fuel demand will increase in the biggest oil-consuming country. Oil jumped as much as 0.9 percent after the Thomson Reuters/University of Michigan final index of consumer sentiment for December climbed to 74.5 from 71.6 in November. First-time filings for jobless benefits declined by 3,000 to 420,000 in the week ended Dec. 18, Labor Department figures showed. “Today’s data supports the economy and is boosting the oil market,” said Peter Beutel, president of Cameron Hanover Inc., a trading-advisory company in New Canaan, Connecticut. “All week we’ve wanted to move higher, either because of the rising stock market or the improving economic outlook.”
• Jo-Ann Stores(JAS) to Be Acquired by Leonard Green Unit. Jo-Ann Stores Inc. agreed to be acquired by an affiliate of Leonard Green & Partners LP for $1.6 billion to accelerate expansion of the largest U.S. fabric retailer. The cash offer of $61 a share was 34 percent higher than yesterday’s closing price of $45.63, Hudson, Ohio-based Jo-Ann Stores said today in a statement.
• Census Crimping California's Political Clout Shocks State Used to Success. California, facing $28 billion in deficits, may see its congressional clout wane as slowing population growth deprives it of a new seat in the U.S. House of Representatives for the first time in its 160-year history.
• Greek Health System Betrays Crippled Domestic Economy. “It’s the usual problems of Greece: bureaucracy, corruption and so on,” said Ioannis Datseris, director of nuclear medicine at To find out what’s gone wrong with the Greek economy, just look at the health-care system, according to a top medic at the country’s largest hospital.Evangelismos Hospital in Athens and vice president of a group of doctors, medical schools and unions advising the government. “The hospitals and the health service are part of this political system.”
• Jobless Claims in U.S. Declined 3,000 Last Week in Sign Labor Market Heals. Initial U.S. jobless claims fell last week and the number of people on unemployment benefit rolls dropped to a two-year low, reinforcing evidence the labor market is improving. First-time filings for jobless insurance declined by 3,000 to 420,000 in the week ended Dec. 18, matching the median forecast in a Bloomberg News survey, Labor Department figures showed today in Washington. Those already collecting benefits fell in the previous week to 4.06 million. The four-week moving average, a less volatile measure than the weekly claims figures, rose to 426,000 last week from 423,500, today’s data showed. The unemployment rate among people eligible for benefits, which tends to track the jobless rate, fell to 3.2 percent in the week ended Dec. 11, the lowest since Nov. 22, 2008, from 3.3 percent in the prior week, today’s report showed. Forty-three states and territories reported a decline in claims, while 10 reported an increase.
• Obama Said Ready to Renominate Diamond to Fed Board. President Barack Obama will re- nominate Peter Diamond to the Federal Reserve Board after the Nobel laureate economist failed to gain U.S. Senate approval, a White House official said.
• IBM(IBM) Expects to See Holographic Phone Calls, Air-Powered Batteries by 2015. By 2015, your mobile phone will project a 3-D image of anyone who calls and your laptop will be powered by kinetic energy. At least that’s what International Business Machines Corp. sees in its crystal ball.

Wall Street Journal:

• Dive Into Mobile: The Full Interview Video of Google(GOOG) Ad Head Susan Wojcicki.
• PolitiFicition. True 'Lies' About ObamaCare.
• Taxes and the Top Percentile Myth. A 2008 OECD study of leading economies found that 'taxation is most progressively distributed in the United States.' More so than Sweden or France.
• Rovi(ROVI) to Acquire Sonic Solutions(SNIC) for $720 Million.
  
  Rovi Corp. is buying Sonic Solutions in a cash-and-stock deal valued at $720 million to enhance its digital entertainment offerings.
  

Business Insider:

• FCC Looks to Place Conditions On Comcast(CMCSA)-NBC Deal.

Zero Hedge:

• Load the Boat With Tech Stocks.

New York Times:

• Alabama Town's Failed Pension Is a Warning. This struggling small city on the outskirts of Mobile was warned for years that if it did nothing, its pension fund would run out of money by 2009. Right on schedule, its fund ran dry. Then Prichard did something that pension experts say they have never seen before: it stopped sending monthly pension checks to its 150 retired workers, breaking a state law requiring it to pay its promised retirement benefits in full.
• Computers That Trade on the News. Math-loving traders are using powerful computers to speed-read news reports, editorials, company Web sites, blog posts and even Twitter messages — and then letting the machines decide what it all means for the markets.

Washington Post:

• Rush to Foreclose by Fannie, Freddie Helped Feed Problems With Legal Paperwork. As the housing market came crashing down in 2008, the giant mortgage company Fannie Mae took an unprecedented step to help tackle the rising tide of foreclosures. It named an exclusive group of law firms that would help rapidly carry out the unsavory task of filing legal paperwork to remove homeowners from their homes. Today, problems with documents handled by firms on Fannie's list - and a similar one created by its smaller rival Freddie Mac - are at the heart of federal and state probes over faulty foreclosure practices that now threaten to further undermine the housing market.

Dallas Morning News:

• Dallas Hedge Fund Suing Over 'Flash Crash' Losses. A small Dallas hedge fund firm is suing three Chicago-based trading companies, including hedge fund giant Citadel, for losses sustained during the "flash crash" on May 6. GovPlus Master Fund LP and GovPlus Fund AI LP, which are managed by Dallas-based financial firm NorCap, say the Chicago funds should give back $3.15 million that the GovPlus funds paid for put options. The trades occurred as financial markets were going haywire, with many prices plunging and then recovering in a brief period of afternoon trading. The prices the GovPlus funds paid were probably based on "some form of computer glitch" that led to erroneous prices, the lawsuit said. The suit was filed this week in state court in Illinois against Citadel, Wolverine Trading LLC and Chicago Trading Co.

Houston Chronicle:

• EPA Takes Over Texas Pollution Permits. The U.S. Environmental Protection Agency today officially took away from state regulators the permitting process for air quality on major industrial facilities. The move was praised by environmentalists, but, criticized by industry and Gov. Rick Perry's office. EPA Regional Administrator Al Armendariz in a letter to industry said that as of Jan. 2, 2011, all greenhouse gas air quality permits that are pending at the Texas Commission on Environmental Quality or may be filed in the near future will now be reviewed and issued by the EPA. Armendariz said the TCEQ has estimated that 167 projects in Texas will be affected.

Commentary Magazine:

• The Democrats and Health Care. The passage of Barack Obama’s health-care legislation in the spring of 2010 proved profoundly injurious to the president and his party in the November midterm elections. Studies conducted at Stanford University and the University of Minnesota agree that at least one-third of the 63-seat Democratic loss in the House of Representatives can be attributed to the electorate’s negative reaction to the health-care bill—which suggests that the legislation was responsible for taking a bad election and turning it into a historic disaster. Many Democrats are sure to keep telling themselves, as President Obama has, that “the outcome was a good one.” That conviction should comfort them as they continue to deal with the consequences arising from the intensity of the electorate’s rejection. The Pyrrhic victory Democrats secured for themselves in March 2010 may prove not to have been a victory at all but rather an ever-roiling, ongoing, and recurring act of political and ideological self-destruction.

Reuters:

• Fitch Cuts Portugal Rating One Notch to A-Plus. In the latest blow to the euro zone, Fitch Ratings on Thursday downgraded Portugal, citing burgeoning debt levels and a tough financing environment. Fitch downgraded Portugal's long-term and local currency ratings by one notch to A-plus, with a negative outlook, adding to a drumbeat of negative news on sovereign debt in Europe.
• Informatica(INFA), BMC(BMC) Seen Atop Oracle(ORCL) Wish List.
  
• US Leading Economic Growth Gauge Rises to 32-Week High-ECRI. The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index rose to 128.0 in the week ending Dec. 10 from a revised 127.3 the previous week. The previous week was originally reported at 127.4. That was the highest since May 7, when it stood at 131.9. The index's annualized growth rate rose to 0.8 percent from minus 0.1 percent a week earlier. That was the highest since May 21, 2010, when it was 4.9 percent.

Xinhua:

• China to Carry Out New House Price Calculation Scheme in 2011. China's statistics bureau will change the way it calculates housing sales prices next year, citing Ma Jiantang, the head of the agency. The bureau released a draft plan in September for the system which said prices, floor areas and sales of new housing in 35 major cities will be based on data from local real-estate departments not independent research.

DigiTimes:

• China LED Makers to Install More MOCVD Equipment in 2011. China's LED industry is expected to install 700-800 units of MOCVD equipment in 2011 compared to 330 units installed in 2010, a trend which is likely to enable China's LED industry to catch up with Taiwan in terms of MOCVD production capacity, according to industry sources. One China-based LED maker has reportedly even given an order for a total of 400-500 MOCVD machines to Germany-based Aixtron(AIXG), pushing the delivery lead time for shipments of MOCVD equipment in the China market to the third quarter of 2011, the sources added. However, the threat of China-based LED chip companies, with the exception of Sanan Optoelectronics, to their rivals in Taiwan will be limited in the short-term due to insufficient supply of LED epitaxial wafers in China, the sources commented. Sanan Optoelectronics, currently the largest LED chipmaker in China, will have a total of 40 MOCVD machines by the end of 2010 and will expand the lineup to 100 units in 2011, a capacity which will be equivalent to the installed capacity of Taiwan-based Formosa Epitaxy, the sources noted. Number two maker Xiamen Changelight will increase the number of its MOCVD equipment from nine to 26, while the third-ranked maker Inspur Huaguang Optoelectronics will add another 16 MOCVD machines into its current lineup of 14, the sources indicated.

Bear Radar

Style Underperformer:

• Mid-Cap Value (-.35%)

Sector Underperformers:

• 1) Homebuilders -1.67% 2) Banks -.96% 3) Airlines -.90%

Stocks Falling on Unusual Volume:

• HBHC, ROVI, CROX, TSLA, PVD, MSB, MIM and KND
  

Stocks With Unusual Put Option Activity:

• 1) EXC 2) HES 3) CROX 4) GM 5) EOG
  

Stocks With Most Negative News Mentions:

• 1) EBAY 2) SIVB 3) PVTB 4) EWBC 5) PNY