Wednesday Watch

Late-Night Headlines
Bloomberg:
- US stocks offer “good value” even though the economy is in a recession, Goldman Sachs Group Inc.’s(GS) Abby Joseph Cohen said. Companies in the S&P 500 trade for about 13 times next year’s estimated earnings, compared with a historical average of 18 times. The fourth quarter of this year will be the worst during the contraction, according to Cohen. “We do not think that there is a massive global recession out there,” she said. “We will start to see economic activity, particularly in the US, looking better in the second half of 2009” because of government stimulus.

- The cost of protecting Japanese and Australian corporate bonds from default declined, according to traders of credit default swaps. The Markit iTraxx Australia index was quoted 40 basis points lower at 290 as of 11:52 am in Sydney, Westpac Banking data show. The Markit iTraxx Japan index declined 20 basis points to 275, according to prices from Morgan Stanley.

- Boeing Co.(BA) machinists will vote Nov. 1 on a contract proposal to end an eight-week strike that's shuttered the second-largest planemaker's factories and pushed the 787 Dreamliner further behind schedule.

- Google Inc.(GOOG) will pay $125 million to settle two copyright lawsuits by publishers and authors over its book-scanning project, a ``historic'' deal that the company said will make millions of books searchable and printable online. The owner of the most popular Internet search engine said the agreement will expand the Google Book program to let online readers search for and buy copyrighted and out-of-print books in whole or page-by-page, and provide U.S. libraries with free access to the database. ``The tremendous wealth of knowledge that lies within the books of the world will now be at their fingertips,'' Google co- founder Sergey Brin said today in a statement, calling the accord ``historic.''

- Stephen Schwarzman, chairman of Blackstone Group LP, said private-equity firms that buy companies during the credit crisis may see ``phenomenal'' profits once global economic growth resumes. ``In periods like this, people get scared out of their minds,'' Schwarzman said in a speech at the North American Venture Capital Summit in Quebec City today. ``This kind of environment is tailor-made for making absolute fortunes in the private-equity business.''

- Money-market rates may decline in Asia for the first time this week after financing costs fell in Europe and the U.S. as cash injections by central banks showed signs of easing the paralysis among lenders. The London interbank offered rate, or Libor, that banks charge each other for three-month loans in dollars, dropped 4 basis points to 3.47 percent yesterday, its 12th straight decline, according to the British Bankers' Association.

- Sales of longer-term commercial paper soared 10-fold after the Federal Reserve began buying the corporate IOUs, a sign that the central bank's efforts toward unlocking the market may be working. Companies yesterday sold 1,511 issues totaling a record $67.1 billion of the debt due in more than 80 days, compared with a daily average of 340 issues valued at $6.7 billion last week, according to Fed data. The central bank probably absorbed about $60 billion of the total, said Adolfo Laurenti, a senior economist at Mesirow Financial Inc. ``That's the very first really good news in quite some time,'' said Laurenti, who is based in Chicago.

- China and Hong Kong regulators may review short selling of stocks in the two markets to stem a slump in equities, newspapers said.

- Brazil's central bank may halt six months of interest-rate increases as drying credit slows the economy, trumping concern that inflation will quicken after a two-month, 25 percent slide in the local currency.

Wall Street Journal:
- Motorola Inc.'s(MOT) new cellphone chief is moving quickly to overhaul the struggling division, simplifying the way it makes devices and slashing additional jobs. Sanjay Jha, who became Motorola's co-chief executive in August, has decided to focus on Google Inc.'s(GOOG) Android software as the operating system for many of Motorola's new phones, according to people familiar with the matter.

- Treasury Department officials and the banking industry are mulling ways to expand the government's financial rescue plan to include non-publicly-traded banks, potentially opening up the program to thousands of new institutions.

- Rising gas prices have dramatically increased Americans' interest in tailoring their driving styles to save fuel. Now auto makers are rushing to help out. On Wednesday Ford Motor Co. will unveil a new dashboard system that is supposed to help people modify the way they drive to get every last mile out of a gallon of gas.

- Game Makers Push ‘Family’ Fare.

CNNMoney.com:
- Gasoline prices fell overnight, settling Tuesday to approach the lowest level in roughly three years, according to the American Automobile Association. The national average price for a gallon of regular gas fell to $2.629, down 3.9 cents from the day before, according to AAA's Daily Fuel Gauge Report. The last time gas was this low was Oct. 24, 2005 at $2.6237 a gallon.

- These are the days that bring out the power shopper in Larry Ellison. With so much chaos in the markets and panic in the boardrooms, the Oracle(ORCL) CEO sees right now as a fine time to stroll through Silicon Valley and buy pretty much whatever he wants.

BusinessWeek:

- The Iberian Giants of US Wind Energy. Backed by their parents’ capital, Iberdrola Renovables, from Spain, and Portugal’s EDP Renovaveis can exploit the downturn and snap up smaller rivals.

- Comcast’s(CMCSA) Revenues May Well Be in Good Shape. Analysts predict decent revenue growth for Comcast despite tighter household budgets, suggesting cable is no longer a discretionary item.

Editor & Publisher:
- CNN Courts Newspapers With New Wire Service. CNN is courting newspapers -- and possibly competing with The Associated Press -- with a new wire service the cable network plans to launch soon, with plans for an all-expenses-paid, three-day summit in December to show off its news gathering capabilities.

Financial Week:

- CME Group’s(CME) planned clearinghouse for credit default swaps will be ready to go at the end of this week—and can begin operating after it gets regulatory approvals and completes testing with trading firms, CME managing director Tim Doar said today. CME, the world’s largest derivatives exchange, has passed a series of internal tests aimed at gauging the system’s technical capability, financial safeguards and ability to conform to rule changes, Mr. Doar said in an interview.

Globe and Mail:

- Since many hedge fund managers like to drive Porsche roadsters, it's somehow appropriate that the German auto maker just ran them down. The European hedge fund community took a pounding Monday covering short positions in Volkswagen. Shares in the auto company doubled Monday on a short squeeze that came after Porsche announced it had used derivatives to build a 74 per cent stake in VW. That move brought a long-running takeover near the finish line, and also meant portfolio managers betting on a drop in Volkswagen shares had to cover positions. In their rush to cover shorts, often at massive losses, hedge funds pushed up the value of Volkswagen by 123 per cent on Monday, briefly making the auto maker the largest company on earth.

AFP:

- China is proposing that developed nations contribute 1% of their gross domestic product to help poor countries combat global warming, citing a Chinese government climate-policy official.

South China Morning Post:

- Rents for prime retail space in Hong Kong may fall 20% from their peak next year, citing property consultants. Colliers Intl. Property Consultants Inc. said the average retail rental in the city’s four main shopping districts – Mong Kok, Tsim Sha Tsui, Central and Causeway Bay – fell 4% quarter-on-quarter in the three months to September.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (HEW), target $50.

- Reiterated Buy on (ALB), target $30.

- Reiterated Buy on (FORM), target $28.

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

Night Trading
Asian Indices are +1.75% to +5.0% on average.
S&P 500 futures -.67%.
NASDAQ 100 futures -.99%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Pre-market Stock Quote/Chart
Before the Bell CNBC Video(bottom right)
Global Commentary
WSJ Intl Markets Performance
Commodity Movers
Top 25 Stories
Top 20 Business Stories
Today in IBD
In Play
Bond Ticker
Economic Preview/Calendar
Daily Stock Events
Upgrades/Downgrades
Rasmussen Business/Economy Polling

Earnings of Note
Company/EPS Estimate
- (GLW)/.43

- (ANR)/.98

- (AGN)/.65

- (CAH)/.70

- (PG)/1.00

- (SEE)/.39

- (NEM)/.43

- (MGM)/.32

- (PX)/1.07

- (SPW)/1.65

- (ODP)/.07

- (HES)/2.45

- (AG)/.78

- (MCO)/.41

- (CMCSA)/.22

- (AET)/1.12

- (KFT)/.43

- (Q)/.10

- (BWA)/.55

- (MXIM)/.27

- (CA)/.38

- (PRU)/.78

- (HIG)/-.91

- (MUR)/2.65

- (OI)/.85

- (V)/.56

- (CME)/3.95

- (FSLR)/1.00

- (ITRI)/.80

- (SYMC)/.35

- (JNY)/.33

- (K)/.81

- (TSO)/1.57

Economic Releases
8:30 am EST

- Durable Goods Orders for September are estimated to fall 1.1% versus a 4.8% decline in August.

- Durables Ex Transports for September are estimated to fall 1.5% versus a 3.3% decline in August.

10:23 am EST

- Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,550,000 barrels versus a +3,182,000 barrel increase the prior week. Gasoline supplies are estimated to rise by +1,500,000 barrels versus a +2,709,000 barrel increase the prior week. Distillate inventories are expected to rise by +1,050,000 barrels versus a +2,156,000 barrel build the prior week. Finally, Refinery Utilization is estimated to rise by +.5% versus a +2.51% increase the prior week.

2:15 pm EST

- The FOMC is expected to cut the benchmark Fed Funds rate to 1.0% from 1.5%.

Upcoming Splits
- (BKE) 3-for-2

Other Potential Market Movers
- The weekly MBA mortgage applications report, (KCI) analyst day, Sidoti Emerging Growth Forum and BIO Investor Forum could also impact trading today.

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