Wednesday Watch

Late-Night Headlines
Bloomberg:

- Intel Corp.(INTC), the world’s biggest chipmaker, forecast sales and profitability that topped estimates, indicating that computer demand is returning to pre- recession levels. The shares jumped as much as 6.9 percent. For the fourth quarter, Intel forecast sales of $9.7 billion to $10.5 billion, compared with the $9.5 billion average estimate in a Bloomberg survey.

- Paulson & Co., the hedge fund that bet against subprime mortgages before the housing crisis, agreed to increase its stake in life insurer Conseco Inc.(CNO) by buying $77.9 million in stock and warrants.78 at 5:41 p.m. in late New York trading. Paulson will own 9.9 percent of the common stock after the private share sale, the Carmel, Indiana-based insurer said in a statement. Paulson’s warrants will also convert to common stock at $6.50 a share. Conseco rose 79 cents, or 16 percent, to $5.

- Codelco, the world’s largest copper producer, predicts demand will weaken and producers will restart mines closed during the economic crisis last year. Global output will exceed worldwide demand this year and next, Codelco Executive President and Chief Executive Officer Jose Pablo Arellano saidLondon. Demand will be “not that strong” compared with previous quarters, he said. Rising prices for the metal used in plumbing and wiring will prompt companies to restart shuttered mines and attract more scrap metal to the marketplace, he said. World copper production will exceed demand by 370,000 metric tons this year, because of fewer purchases of the metal outside of China, said the Lisbon-based International Copper Study Group, which is financed by producers. The surplus may widen to 540,000 tons next year, the ICSG said. “We are not going back to the prices of the ‘80s and ‘90s,” Arellano said. Prices on the London Metal Exchange averaged $2,241 a metric ton during the 1990s, less than half the average price for the past five years. today in an interview in

- McGraw-Hill Cos.(MHP), the textbook publisher and owner of the Standard & Poor’s ratings unit, agreed to sell BusinessWeek to Bloomberg LP. The acquisition will strengthen online, television and mobile products, Bloomberg Chairman Peter Grauer said today in a statement. The purchase includes the print magazine and the BusinessWeek.com Web site. Terms weren’t disclosed. The transaction is scheduled to close Dec. 1, Bloomberg President Daniel Doctoroff said in an interview.

- Japan’s producer prices fell for a ninth month as oil traded lower than last year’s levels and demand for materials waned. The costs companies pay for energy and unfinished goods declined 7.9 percent in September from a year earlier after sliding a record 8.5 percent, the Bank of Japan said today in Tokyo.

- China’s exports declined at the slowest pace in nine months, helping government efforts to sustain the recovery in the world’s third-biggest economy. Shipments dropped 15.2 percent in September from a year earlier, the customs bureau said on its Web site today. That compared with a 23.4 percent slide in August. Imports fell 3.5 percent last month from a year earlier.

- China, the world’s largest steel producer, is working on plans to curb excess capacity as the nation faces “severe oversupply,” according to the nation’s third-largest mill.

Wall Street Journal:

- The Senate Finance Committee advanced President Barack Obama's health-care agenda Tuesday, with a lone Republican vote helping centrist Democrats set a benchmark for the final stage of congressional negotiations. The committee voted 14-9 in favor of a 10-year, $829 billion package, with Sen. Olympia Snowe of Maine joining the panel's 13 Democrats -- the first time a Republican backed any of the Democrat-led health-care bills in circulation.

- With U.S. debt set to exceed 100% of GDP in 2011, it's no wonder people are looking for alternative ways to preserve wealth. Unprecedented spending, unending fiscal deficits, unconscionable accumulations of government debt: These are the trends that are shaping America's financial future. And since loose monetary policy and a weak U.S. dollar are part of the mix, apparently, it's no wonder people around the world are searching for an alternative form of money in which to calculate and preserve their own wealth. It may be too soon to dismiss the dollar as an utterly debauched currency. It still is the most used for international transactions and constitutes over 60% of other countries' official foreign-exchange reserves. But the reputation of our nation's money is being severely compromised.

- A public clash over proposals for financial-services regulation is intensifying between the White House and the nation's largest business lobby as a House committee begins considering legislation Wednesday. The U.S. Chamber of Commerce on Tuesday rejected a new version of an Obama administration proposal to create a federal regulator for consumer financial products. The House Financial Services Committee begins considering legislation Wednesday to create the new Consumer Financial Protection Agency, the first step in enacting the administration's proposed overhaul.

- Senior U.S. airport executives said Tuesday that financial pressures will likely expedite moves to privatize the management of publicly owned facilities. Airports across the country face declining revenue as airlines cut service, particularly to small- and medium-sized cities, in the wake of a broad business slowdown and industry losses.

- A former Citadel Investment Group senior manager is launching a new hedge fund with three other ex-employees of the Chicago firm, a move that reunites a veteran trading team and adds to an expanding field of startups. Ervin Shindell is starting a Chicago-based firm called RoundKeep Capital Advisors with investment managers Joseph Rotter, Robert Doherty and Robert Donath, each of whom spent between five and 10 years at Citadel, according to a marketing document for the new firm reviewed by The Wall Street Journal.

- Major U.S. banks and securities firms are on pace to pay their employees about $140 billion this year -- a record high that shows compensation is rebounding despite regulatory scrutiny of Wall Street's pay culture. Workers at 23 top investment banks, hedge funds, asset managers and stock and commodities exchanges can expect to earn even more than they did in 2007, according to an analysis of securities filings for the first half of 2009 and revenue estimates through year end by The Wall Street Journal.

CNBC.com:
- Hedge funds have rallied from last year's stunning losses, yet hundreds of managers remain deep in the hole and face some tough decisions in the coming weeks. Credit Suisse research determined that about 45 percent of the funds we looked at were at or above their high water marks going into September. Another 20 percent were down by 10 percent, or within striking distance in a reasonable period. But a quarter of all funds were 20 to 30 percent down. At the low end of that range managers needed to rally 43 percent just to break even.

NY Times:

- Saudi Arabia is trying to enlist other oil-producing countries to support a provocative idea: if wealthy countries reduce their oil consumption to combat global warming, they should pay compensation to oil producers. The oil-rich kingdom has pushed this position for years in earlier climate-treaty negotiations. While it has not succeeded, its efforts have sometimes delayed or disrupted discussions. The kingdom is once again gearing up to take a hard line on the issue at international negotiations scheduled for Copenhagen in December. The chief Saudi negotiator, Mohammad al-Sabban, described the position as a “make or break” provision for the Saudis, as nations stake out their stance ahead of the global climate summit scheduled for the end of the year. “Assisting us as oil-exporting countries in achieving economic diversification is very crucial for us through foreign direct investments, technology transfer, insurance and funding,” Mr. Sabban said in an e-mail message.

IBD:

- So what are K-Cups? And how is it that they have propelled shares of Diedrich Coffee (DDRX) from a close at 31 cents on March 16 to a recent price of nearly 25 a share? K-Cups are single-serve packets of coffee designed for Keurig single-cup coffee brewers. The brewers are made by Green Mountain Coffee Roasters (GMCR) of Waterbury, Vt. Irvine, Calif.-based Diedrich is one of four Green Mountain licensees that make the disposable K-Cups for the brewers.

CNNMoney.com:

- Best Jobs in America: Top 10 for job growth.

Politico:

- The Senate appears ready to drop about $20 billion for two pieces of economic stimulus that no one wants to label “stimulus,” in the form of additional jobless benefits for unemployed workers and an extended, expanded tax credit for homebuyers.

- A major Senate climate change bill is written and ready to be debated before the Environment and Public Works committee, the chairwoman of the panel said Tuesday. Sen. Barbara Boxer’s legislation would distribution of tens of billions of dollars of pollution allowances to power plants, manufacturing, and other industries. It will mirror cap and trade legislation passed by the House in late June with, she noted, “a few tweaks.” The legislation has been sent to the Environmental Protection Agency for analysis, which should be completed by the end of the month.

- Without committing himself to specific troop increases, Senate Appropriations Committee Chairman Daniel Inouye returned Tuesday from Afghanistan, seeming to fully embrace Gen. Stanley McChrystal’s counterinsurgency strategy that would demand more American resources and manpower. “I believe Gen. McChrystal’s assessment of the current situation and his conclusions, including his assessment that coalition forces must have more daily contact with the people of Afghanistan, is correct,” said the Hawaii Democrat, “and is what is needed if we are to achieve security and stability in Afghanistan."

zerohedge:

- Zero Hedge is starting to run a series of profiles of one of the most influential living people in the world. The man in question is former Secretary of the Treasury, and the man who made Goldman Sachs into the hedge fund quasar and uber-prop trading desk (rhymes with Hedge Fund Tsar, a position Barack Obama may or may not be contemplating) that it is now, Robert Rubin. Rubin redefined the term risk arbitrage (or as some would say, riskless arbitrage, thanks to the helpful nudge here and there of whoever may have been in a position of "puppet" power at any given moment) by being among the first to discover (and definitely the first to repeatedly bet the farm, making boatloads when successful, and somehow not losing when not) the amazing synergies provided by Goldman Sachs' numerous relationships as they may pertain to the firm acting in proprietary trading capacity. If one were to claim that Goldman Sachs is a cephalopod of some nature, than Robert Rubin is the beating heart (and soul) of such an animal. A mere listing of the people the were Rubin's proteges while at Goldman should be enough to send shivers up the spine of any University of Chicago efficient market hypothesis fan. The names of Rubin's most well-known underlings include (and this is not a comprehensive list):

The Business Insider:

- Chart Of The Day: The Government Debt Explosion.

- We suspect we're merely at the beginning of a big avalanche of lawsuits against leveraged and short ETFs, which aren't designed to be bought and held. The SEC may be slow on regulating these, but there's no reason for money-hungry lawyers to wait. The following was launched by Bernstein Libhard today against UYG.

USA Today.com:

- Demand for oil in richer countries has probably peaked and won't exceed pre-recession levels, given high rates of vehicle ownership in those countries, improving mileage standards and new technologies.China, says a report from IHS Cambridge Energy Research Associates. While IHS doesn't forecast the end of the oil age for the U.S. or other developed countries, it shows that "the long-term growth pattern" for increased oil demand in those countries "appears to be over," says Aaron Brady, IHS research director. "Our economy will be less oil-intensive over time. And so oil price spikes, while you can't discount them, will be less dangerous to the economy," he says. But global demand for oil will expand — up almost 14% from 2010 through 2020 — largely because of developing countries, including

UPI:

- A French anti-terrorism judge says there's evidence an atomic research scientist has been in contact with a North African group with links to al-Qaida. Judge Christophe Teissier of the French government's anti-terrorist branch has charged Adlene Hicheur, 32, a French scientist of Algerian origin, with maintaining Internet contacts with al-Qaeda in the Islamic Maghreb, The Times of London reported Tuesday.

Reuters:

- New investors swoop on battered US housing market.

Financial Times:

- AIG’s(AIG) “retention bonuses” went to hundreds of employees in the insurer’s troubled financial products unit, including a kitchen assistant who received $7,700 in March, a US government report will reveal on Wednesday. News that support staff shared $168m-plus (£105m-plus) worth of retention awards could undermine AIG’s insistence the bonuses were needed to persuade key employees to stay on and unwind the derivatives trades that almost brought down the insurer last year. The report, by Neil Barofsky, special inspector-general for the US government’s $700bn troubled assets relief programme, could reignite political controversy over pay at the sate- controlled insurer. Employees of AIG’s financial products unit were scheduled to receive another $198m in retention awards in March next year. Mr Barofsky said about 400 employees of AIG’s Financial Products arm shared the more than $168m in retention awards in December 2008 and March 2009, after AIG had been bailed out with hundred of billions of dollars in taxpayer funds. The recipients included the kitchen assistant, who was handed a cash retention bonus of $7,700, and a “file administrator”, who received $700, as well as more senior executives who were paid bonuses of up to $4m. “It is odd for a kitchen assistant to receive a retention award,” said Charles Elson, a corporate governance professor at the University of Delaware. “If everyone receives a retention bonus, it makes you wonder what the point of the program is.”

- Iraq has given a consortium led by Eni, the Italian oil group, the right to develop its giant Zubair field, in a deal that signals the country’s desire to attract more of the world’s biggest oil companies 40 years after nationalizing its oil industry. Tuesday’s breakthrough, which needs cabinet approval, came after Iraq sweetened its terms following the failure of a June auction. It could lead to further foreign investment in a country with the world’s third-largest oil reserves. As part of the agreement, the Iraqi government told the Eni consortium to drop Sinopec, the Chinese state-owned oil company, as a partner. Baghdad has vowed to block Sinopec from its oil resources because of its entry into Kurdistan, the oil-rich semi-autonomous region in northern Iraq.

EFE:
- The Alba bloc of South American nations, led by Venezuela and its president, Hugo Chavez, plans to approve a new currency this week to replace the US dollar in trade, citing Huascar Ajata, Bolivia’s vice minister of exports. Ajata said the currency, call the sucre, will at first be used for international transactions and may eventually become a common currency like the European Union’s euro. Finance ministers from across the bloc, which also includes Bolivia, Cuba, Ecuador and Nicaragua, will meet Oct. 16 in Cochabamba, Bolivia, to approve the measure. Members are also planning cooperation in military training and other areas.

The Economic Times:

- MUMBAI: There is a dire need to revive the country's export sector as falling exports not only hamper India's growth directly, but also affect a large population dependent on labor-intensive export units, Credit Analysis & Research Ltd (CARE) said in its Eco Alert report here. Exports have shown a declining trend since October 2008, accompanied by downturn in import mainly due to lower oil import bill. Trade balance deficit, as a result narrowed to $25.98-billion during Q1 FY 10 compared to $314- billion during Q1 FY 09. Despite of net invisibles surplus of $20.2-billion, India's current account deficit stood at $5.8-billion for Q1 FY 10, the report said. India's export continued to taper for the eleventh consecutive month.

- NEW DELHI: A surge in imports of low-priced steel from China has India’s steel manufacturers, among the most profitable in the world, up in arms demanding protectionist measures. Steel imports jumped 9% to 8,000,000 tons in August from the year-ago period, showed data published by the steel ministry. Steel prices in China, the largest producer and consumer of steel, have tumbled by a fifth to around $500/ton level at the end of September from their August peak, making cheaper imports replacing Indian products a possibility.

Economic Daily News:

- Taiwan Semiconductor Manufacturing Co. aims for 2010 revenue to rise by at least 20%.

Arabianbusiness.com:

- Rental values for apartments in Dubai continued to fall faster than in any other part of the UAE during the third quarter of 2009, new research has showed. Three-bed homes were worst hit as they plummeted 13 percent between July and September, a report by property services company Asteco said. Average prices for the largest apartments fell to AED139,000 compared to average prices of AED173,000 in Abu Dhabi for the same type of property. The rent fell by just one percent in Q3 in the UAE capital, statistics from Asteco revealed.

Late Buy/Sell Recommendations
Citigroup:

- Reiterated Buy on (URBN), boosted estimates, raised target to $38.

- Reiterated Buy on (HGSI), raised target to $30.

Night Trading
Asian Indices are +.75% to +1.50% on average.

Asia Ex-Japan Inv Grade CDS Index 103.0 -1.0 basis point.
S&P 500 futures +.92%.
NASDAQ 100 futures +1.03%.

Morning Preview

BNO Breaking Global News of Note

Google Top Stories

Bloomberg Breaking News

Yahoo Most Popular Biz Stories

MarketWatch News Viewer

Asian Financial News

European Financial News

Latin American Financial News

MarketWatch Pre-market Commentary

U.S. Equity Preview

TradeTheNews Morning Report

Briefing.com In Play

SeekingAlpha Market Currents

Briefing.com Bond Ticker

US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Stock Quote/Chart
WSJ Intl Markets Performance
Commodity Futures
IBD New America
Economic Preview/Calendar
Earnings Calendar

Conference Calendar

Who’s Speaking?
Upgrades/Downgrades

Politico Headlines
Rasmussen Reports Polling

Earnings of Note
Company/EPS Estimate
- (ABT)/.90

- (PGR)/.32

- (JPM)/.51

- (LSTR)/.38

- (CCK)/.80

- (ADTN)/.32

- (XLNX)/.22

Economic Releases

8:30 am EST

- The Import Price Index for September is estimated to rise +.2% versus a +2.0% increase in August.

- Advance Retail Sales for September are estimated to fall -2.1% versus a +2.7% gain in August.

- Retail Sales Ex Autos for September are estimated to rise +.2% versus a +1.1% gain in August.

10:00 am EST

- Business Inventories for August are estimated to fall -1.0% versus a -1.0% decline in July.

2:00 pm EST

- Minutes of Sept. 23 FOMC Meeting.

Upcoming Splits
- None of note

Other Potential Market Movers
- The Fed’s Tarullo speaking, weekly MBA Mortgage Applications report, Bloomberg Global Confidence Index, (CHK) analyst, (SAI) investor conference and the API energy inventory report day could also impact trading today.

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