Sunday, November 15, 2009

Monday Watch

Weekend Headlines
Bloomberg:

- Selling retailers on this season’s must-have toy, robotic hamsters called Zhu Zhu Pets, was like gambling millions in blackjack, said creator Russell Hornsby. “This is a Christmas where a lot of people didn’t want to take big risks,” Hornsby, 56, founder and chief executive officer of closely held Cepia LLC, said in a telephone interview. “You’re gambling because you’re selling to kids. That’s a pretty fickle group.” The bet is paying off. U.S. and U.K. retailers, such as Wal-Mart Stores Inc., Target Corp., Toys “R” Us Inc. and Tesco Plc, can’t keep them in stock. Target is limiting them to four per customer. Some parents are resorting to Amazon.com, where the critters sell for at least twice the $8-to-$10 price. “It’s the hottest toy I’ve seen since I’ve been at Toys ‘R’ Us, and old-timers tell me this is one of the hottest toys in history,” said CEO Jerry Storch, 53. He has been at Toys “R” Us for almost four years. A must-have toy may spur more foot traffic and purchases at retailers, and Zhu Zhu Pets is the first since Mattel Inc.’s 10th anniversary Tickle Me Elmo in 2006 to spark as much buzz, said Gerrick Johnson, an analyst at BMO Capital Markets in New York. He projects sales of $50 million this year.

- John Paulson disclosed that his hedge-fund group acquired 300 million shares of Citigroup Inc. during the third quarter, while selling its entire stake of Goldman Sachs Group Inc. The Citigroup(C) holding, listed by New York-based Paulson & Co. yesterday in a regulatory filing, marks his second billion- dollar-plus investment in a bank that received government bailout funds during the credit crunch. Paulson’s group bought 168 million shares of Charlotte, North Carolina-based Bank of America Corp.(BAC) in the second quarter.

- Federal Deposit Insurance Corp. Chairman Sheila Bair said using the Troubled Asset Relief Program to pump capital into banks was “not a good idea” and helped erode confidence in the regulatory system. “I just see all the problems it’s created now, the horrible public outcry,” Bair said on PBS’s “The NewsHour with Jim Lehrer” yesterday. “It’s had a terrible, terrible impact on public attitudes toward the financial systems, toward the regulatory community.” Given the urgency at the time, no one should be held accountable “for not thinking all this through,” Bair said. “I think it was not a good idea.” A decision by New York-based insurer American International Group Inc.(AIG) to pay $165 million in bonuses after a bailout valued at $182.3 billion sparked public outrage and legislation in Congress to limit compensation at taxpayer-funded firms. “We share her view that government capital should be replaced by private capital so that taxpayers are repaid as soon as possible,” Treasury spokesman Andrew Williams said. “We are working with the regulators toward that end.” “If any individual institution gets into trouble again and a conventional bankruptcy process would pose collateral damage to us, the rest of us, it should be put into a special resolution process just as we do with banks now,” Bair said. “It should be broken up and sold off.”

- The decline of the dollar and decisions in the U.S. not to raise interest rates have caused “huge” speculation in foreign exchange trading and seriously affected global asset prices, said Liu Mingkang, chairman of the China Banking Regulatory Commission. “The continuous depreciation in the dollar, and the U.S. government’s indication, that in order to resume growth and maintain public confidence, it basically won’t raise interest rates for the coming 12 to 18 months, has led to massive dollar arbitrage speculation,” he told reporters in Beijing today at the International Finance Forum. Liu said this has “seriously affected global asset prices, fuelled speculation in stock and property markets, and created new, real and insurmountable risks to the recovery of the global economy, especially emerging-market economies.” His view echoes that of Donald Tsang, the chief executive of Hong Kong, who said the Federal Reserve’s policy of keeping interest rates near zero is fueling a wave of speculative capital that may cause the next global crisis.

- Asia-Pacific leaders conceded a binding global-warming accord at next month’s climate summit in Copenhagen is out of reach and aimed to strike a political deal that will push a more comprehensive deal down the road. U.S. President Barack Obama and other leaders gathered for the Asia Pacific Economic Cooperation forum in Singapore agreed on a two-step approach to negotiating a replacement for the Kyoto Protocol presented by Danish Prime Minister Lars Loekke Rasmussen, who is leading the group overseeing the United Nations-sponsored climate talks. “Even if we may not hammer out the last dots of a legally binding instrument, I do believe a political binding agreement with specific commitment to mitigation and finance provides a strong basis for immediate action in the years to come,” Rasmussen said.
- President Barack Obama flew to Shanghai from an Asia-Pacific summit where leaders questioned his commitment to free trade, endorsed China’s stance on fighting protectionism and declined to back U.S. calls for a stronger yuan. The 21-member Asia-Pacific Economic Cooperation group, representing 54 percent of the global economy, pledged in a statement yesterday to “refrain from raising new barriers” to investment and trade. They didn’t mention currency distortions, which U.S. companies say give China unfair trade advantages. “The challenge Obama is facing is that the influence of the U.S. is rapidly waning and that he has little credibility” on trade issues, said Marc Faber, who manages about $300 million in Asian shares at Hong Kong-based Marc Faber Ltd. “Obama talked about free trade, but recently the U.S. slapped tariffs on Chinese-made tire imports.” Obama needs to show the same commitment to free trade as his predecessor, George W. Bush, Malaysian Prime Minister Najib Razak said during a Nov. 13 panel discussion in Singapore.

- Raising good cholesterol can curb cancer risk, an added benefit of HDL, already known to help flush fatty deposits from arteries that can cause heart attacks and strokes, new research shows. Patients had a 21 percent reduction in the rate of developing cancer for every 10 point increase in levels of HDL cholesterol, according to a report released today at the American Heart Association meeting in Orlando, Florida.

- The Obama administration’s decision to try five Sept. 11 suspects in federal court in Manhattan is a “mistake” that’s inappropriate for combating terrorism, former New York City Mayor Rudy Giuliani said. Giuliani said moving Khalid Sheikh Mohammed, the self- proclaimed mastermind of the Sept. 11, 2001, attacks, and four others from Guantanamo Bay, Cuba, to New York for civilian trials will create additional costs and security concerns for the city. The White House plan is politically motivated, said Giuliani, New York’s mayor during the attacks, in interviews on “Fox News Sunday” and CNN’s “State of the Union.” The decision of the Obama White House shows that “both in substance and reality, the war on terror in their point of view is over,” Giuliani told Fox. “There seems to be an over- concern with the rights of terrorists and a lack of concern with the rights of the public.” The Sept. 11 attacks killed almost 3,000 people in New York, at the Pentagon outside Washington and in the crash of one airliner in Pennsylvania. To be tried along with Mohammed are his alleged co-conspirators: Walid Bin Attash, Ali Abdul Aziz Ali, Ramzi Binalshibh and Mustafa al-Hawsawi.

- U.K. Prime Minister Gordon Brown’s government will this week announce plans to make some bankers’ bonuses illegal as it tries to clamp down on the risk-taking that helped stoke the financial crisis. Regulators will be given “powers if necessary to tear up contracts that would result in payments being made that would cause instability,” Chancellor of the Exchequer Alistair Darling told the Sunday Telegraph in an article published yesterday. City Minister Paul Myners told Sky News that “if those contracts are written, they will be voided under law.”

- Japan’s economy expanded at the fastest pace in more than two years in the third quarter, led by a rebound in domestic demand that may ease concern of a return to recession next year. Gross domestic product rose at an annual 4.8 percent pace, more than the forecasts of all 20 economists in a Bloomberg News survey, after a 2.7 percent gain in the second quarter, Cabinet Office figures showed today in Tokyo. It was the second straight advance after the nation’s deepest postwar recession.


Wall Street Journal:

- The financial crisis hasn't been kind to General Electric Co.(GE) Its stock has lost almost half its value, the government has stepped in to prop up its enormous financial arm, and sales have slumped in core industrial businesses. But Chief Executive Jeffrey Immelt now has his eye on a huge new pool of potential revenue: Uncle Sam's stimulus dollars. Mr. Immelt, a registered Republican, quips about the shift in thinking in the nation's corner offices: "We're all Democrats now." GE has high hopes for the strategy. It says that over the next three years or so it could bring in as much as $192 billion from projects funded by governments around the globe, such as electric-grid modernization, renewable-energy generation and health-care technology upgrades. The company is just starting to see a payoff. Last month, for example, President Barack Obama announced $3.4 billion in government-stimulus grants for power-grid projects. About one-third of the recipients are GE customers. GE expects them to use a good chunk of that money to buy its equipment. The government has taken on a giant role in the U.S. economy over the past year, penetrating further into the private sector than anytime since the 1930s. Some companies are treating the government's growing reach -- and ample purse -- as a giant opportunity, and are tailoring their strategies accordingly. For GE, once a symbol of boom-time capitalism, the changed landscape has left it trawling for government dollars on four continents. A close look at GE's campaign to harvest stimulus money shows Mr. Immelt to be its driving force. The 53-year-old executive supported the presidential campaign of Sen. John McCain, yet scored an invitation onto the President's Economic Recovery Advisory Board, led by former Federal Reserve Chairman Paul Volcker. Inside GE, he pushed his managers hard to devise plans for capturing government money. As part of that effort, GE has promoted policy proposals such as a government-backed power-grid modernization, and pressed the government to increase the size of stimulus grants for that purpose. It also has helped customers design projects and apply for government money, with the expectation that those customers will then buy GE equipment. "I think we will do better than most on the stimulus," Mr. Immelt told analysts in April. The strategy is not without risks, say two GE executives who have been critical of the plan. Government policy could change. Mr. Immelt's push to corral federal money began even before Mr. Obama took office. In December, with the economy in a skid, Mr. Immelt was under fire from shareholders. Advisers to Ecomagination, the company's green-technology-development initiative, gathered at GE's boardroom in midtown Manhattan. Among other things, the group discussed how an Obama stimulus plan might shape the nation's energy future. Mr. Immelt concluded that the company needed to capitalize on the surge in government spending. According to two people present at the meeting, Mr. Immelt told the group that business people needed to support the Democrats' stimulus package. By January, Mr. Immelt had become a leading corporate voice in favor of the $787 billion stimulus bill, supporting it in op-ed pieces and speeches. Reporters who called the Obama administration for information on renewable-energy provisions in the legislation were directed to GE. As the bill worked its way through Congress, GE lobbyists pressed for grants, tax cuts or rebates aimed at businesses GE is engaged in, including provisions worth more than $80 billion for energy projects, appliances, health-care information systems and wind farms. When the stimulus package was rolled out, Mr. Immelt instructed executives leading the company's major business units "to put together swat teams to get stimulus money, and [identify] who to fire if they don't get the money," says a person who heard him issue the instructions. In February, a few days after President Obama signed the stimulus plan, GE lawyers, lobbyists and executives crowded into a conference room at GE's Washington office to figure out how to parlay billions of dollars in spending provisions into GE contracts. Staffers from coal, renewable-energy, health-care and other business units broke into small groups to figure out "how to help companies" -- its customers, in particular -- "get those funds," according to one person who attended. Separately, Mr. Immelt got an invitation to serve on the President's Economic Recovery Advisory Board, which would afford him access to the president's economic inner circle. At the board's first public meeting in May, Mr. Immelt and fellow board member John Doerr, a Silicon Valley venture capitalist and prominent Democrat, led a discussion of the advantages to business of a proposal to make companies pay for greenhouse-gas emissions. The board voted to adopt that position. One plank of the stimulus bill provides for energy grants for the development of "smart grids" -- sophisticated transmission systems in which power consumption and demand is carefully monitored to conserve energy. GE says it, along with others, urged the Department of Energy to increase its maximum energy grant 10-fold, to $200 million. Then GE helped some 100 customers, mostly power providers such as Florida Power & Light, to apply for money. Of the 100 smart-grid grant recipients Mr. Obama announced last month, one-third were GE clients. GE declines to say what portion of the $3.4 billion in government money went to its customers. Its executives have told analysts that GE stands to reap up to $500 million in contracts from every smart-grid project built in a city with a population of more than one million. GE has said that the state of FloridaMiami, we ought to be able to do this in 100 more large cities across the country," Steve Fludder, vice president of GE's Ecomagination green-technology initiative, told analysts at a conference in May. GE has said that its goal is to increase its Ecomagination revenues to $25 billion by 2010, from $18 billion in 2008. GE spent $7.55 million lobbying in the second quarter, a 34% increase from the year-earlier period and more than any other single company, according to federal data compiled by the Center for Responsive Politics. The effort could be hampered if Congress or the administration, anxious about rising unemployment and a growing deficit, decides to cut back on stimulus programs or redirect money toward job-creating measures less beneficial to GE, such as employer-tax credits. and partners plan to invest $800 million by 2014 to upgrade its power grid, and that the bulk of the equipment would come from GE. "If we can do this in

- Computer-monitor maker Innolux Display Corp. agreed to acquire Chi Mei Optoelectronics Corp. in a 172 billion New Taiwan dollar ($5.3 billion) all-stock deal that extends the reach of Taiwanese technology manufacturing tycoon Terry Gou. The purchase of Chi Mei, announced Saturday, marks the second acquisition in less than two months for Innolux, which leads the world in shipments of flat-panel computer monitors. The deal, a 26% premium to Chi Mei's market value based on Friday's closing prices, reflects intensifying competition among Asia's major producers of liquid-crystal-display panels used in TV sets and flat-screen monitors.

- As usual, the most dangerous parts of ObamaCare aren't receiving the scrutiny they deserve—and one of the least examined is a new commission to tell Congress how to control health spending. Democrats are quietly attempting to impose a "global budget" on Medicare, with radical implications for U.S. medicine. Like most of Europe, the various health bills stipulate that Congress will arbitrarily decide how much to spend on health care for seniors every year—and then invest an unelected board with extraordinary powers to dictate what is covered and how it will be paid for. White House budget director Peter Orszag calls this Medicare commission "critical to our fiscal future" and "one of the most potent reforms." On that last score, he's right. Prominent health economist Alain Enthoven has likened a global budget to "bombing from 35,000 feet, where you don't see the faces of the people you kill."

- Melanie Kirkpatrick Reviews Sarah Palin’s ‘Going Rogue’

- The hedge-fund industry may be on track to deliver its best annual returns in years, but many managers still aren't in a position to collect performance fees. Most hedge-fund fortunes were earned through the collection of performance fees, typically 20% of any profit. The fee structure gives managers an incentive to outperform and provides some protection for their investors. But in the third quarter, roughly two-thirds of funds globally still hadn't recovered from the steep declines of 2008, estimates Chicago data tracker Hedge Fund Research Inc., or HFR.


MarketWatch.com:

- Any investor who followed the old market adage to "Sell in May and go away" is probably feeling left behind, with the benchmark Standard & Poor's 500-stock index up 25% since the end of April. No regrets; there may be more where that came from. The period from November through April historically has been the best six months of the year for U.S. stocks, and even better for the market's most cyclical sectors. "Whether you look back to 1990, 1970, 1945 or 1929, the S&P 500's performance from November through April substantially outperformed the market's typical price change from May through October," Sam Stovall, chief investment strategist at Standard & Poor's Equity Research, wrote in a recent report to clients. Moreover, the S&P 500's cyclical, economically sensitive sectors have been the warmest places to invest through the winter. During this timeframe, the Industrials, Materials, Financials, Consumer Discretionary and Information Technology sectors traditionally recorded their strongest price gains and frequencies of beating the market.

Forbes:

- SanDisk(SNDK) Is Your Best Bet In Memory Chips.

IBD:
- At the same time, data centers are consolidating into fewer but more-massive server farms. All this change makes managing internal network traffic more important. Enter Seattle-based F5 Networks (FFIV).

NY Times:

- The Obama administration will insist on measures to give legal status to an estimated 12 million illegal immigrants as it pushes early next year for legislation to overhaul the immigration system, Homeland Security Secretary Janet Napolitano said on Friday. In her first major speech on the overhaul, Ms. Napolitano dispelled any suggestion that the administration — with health care, energy and other major issues crowding its agenda — would postpone the most contentious piece of immigration legislation until after midterm elections next November. Laying out the administration’s bottom line, Ms. Napolitano said officials would argue for a “three-legged stool” that includes tougher enforcement laws against illegal immigrants and employers who hire them and a streamlined system for legal immigration, as well as a “tough and fair pathway to earned legal status.” With unemployment surging over 10 percent and Congress still wrangling over health care, advocates on all sides of the immigration debate had begun to doubt that President Obama would keep his pledge to tackle the divisive illegal immigration issue in the first months of 2010. Speaking at the Center for American Progress, a liberal policy group in Washington, Ms. Napolitano unveiled a double-barrel argument for a legalization program, saying it would enhance national security and, as the economy climbs out of recession, protect American workers from unfair competition from lower-paid, easily exploited illegal immigrants.

- On many nights this fall, it has been possible to tune in to broadcast network television during prime time and hear a character call someone else a “douche.” In just the last several weeks, it has happened on CBS’s “The New Adventures of Old Christine” and the CW’s “The Vampire Diaries,” which are broadcast at 8 p.m., during what used to be known as the family hour. It has been heard this fall on Fox’s new series “The Cleveland Show,” which begins at 8:30, and on ABC’s “Grey’s Anatomy.” On NBC, its use has spanned the old and the new, blurted out on the freshman comedy “Community” and the seasoned drama “Law & Order: Special Victims Unit.” In total, the word has surfaced at least 76 times already this year on 26 prime-time network series, according to research by the Parents Television Council, which compiled the statistics at the request of The New York Times. That is up from 30 uses on 15 shows in all of 2007 and just six instances on four programs in 2005. Ever since George Carlin laid out the “Seven Words You Can Never Say on Television” in 1972, television writers and broadcasters have been digging more deeply into the thesaurus, seizing on new ways to titillate, if not offend. And while the word “douche” is neither obscene nor profane — although this usage is certainly offensive to many people — it seems to represent the latest of broadcast television’s continuing efforts to expand the boundaries of taste, in part to stem the tide of defections by its audience to largely unregulated cable television. As a result, words that previously were rarely heard on television suddenly turn up everywhere, while once unspeakable slurs become passé from overuse. The use of the word, “bitch,” for example, tripled in the last decade alone, growing to 1,277 uses on 685 shows in 2007 from 431 uses on 103 prime-time episodes in 1998. Technically, there has not been a “family hour” since 1976, when the United States Supreme Court struck down the imposition of such a policy by the Federal Communications Commission. But broadcast networks observed the practice long after that. No more, it seems. At a symposium sponsored last summer by a group of 40 national advertisers known as the Alliance for Family Entertainment, the heads of the major networks said the idea of a family hour was antiquated and did not fit how families consume television today. Nina Tassler, the president of CBS Entertainment, commented that shows like her network’s “Old Christine” “merely reflect a different family dynamic.” That dynamic includes the frequent use of profanities — broadly defined as anything from sexual and excretory words to milder words like “hell.” Ms. Kaye and Mr. Sapolsky found that their use on broadcast prime-time television jumped from a rate of 5.5 times an hour in 1990 to 7.6 in 2001 and 9.8 in 2005.

The Business Insider:
- This is why we want to throw up every time we hear some newspaper mogul whining about how the world is going to hell in a handbasket. Bloomberg is not wringing its hands about the demise of journalism. Bloomberg is not begging Congress for bailouts or moaning about the parasites at Google News. Bloomberg is not trying to put the fear of God in everybody about what will happen when an ancient business model (newspapers) finally goes bust. Bloomberg is just growing steadily, pumping out cash, and hiring more and more journalists. And it's on its way to becoming the most influential news organization in the world. The New York Times has written an excellent overview of the company and its ambitions. Here's a fun starter fact for you: Bloomberg already has more journalists (2,200) than the New York Times Company (1,250) and Dow Jones (1,900). Bloomberg!

NY Post:

- After getting a taste of life in the hedge-fund big leagues, Harbinger Capital Management's Phil Falcone is scrambling to return to his former glory. Sources tell The Post that Falcone, whose assets now total roughly $9 billion compared to a high last year of $25 billion, has been aggressively rebuilding his troubled empire, raising new money, launching new funds and poaching talent from big-name hedge funds like Ken Griffin's Citadel Investment Group. According to people familiar with Harbinger, Falcone over the past few months has hired a new chief operating officer, Peter Jenson, from Citadel, and a director of investments, Omar Asali, from Goldman Sachs. Over the summer, he snagged Robin Roger of Duff Capital as chief counsel.

- After losing its ratings lead and falling to last in primetime, the once-dominant CNN stands to lose the last piece of top-shelf value still attached to its business side: premium pricing. Time Warner-owned CNN, while getting beaten handily in the ratings race and having fallen to fourth place in rankings, still commands higher ad rates than rivals -- in some cases double those of Fox News and MSNBC. But perhaps not for long.

CNNMoney.com:

- McDonald's(MCD) plans to open 1,000 new restaurants next year and renovate 2,300 existing locations.


Business Week:
- The Most Intriguing Startups.

- China and US Energy Giants Team Up for ‘Clean Coal’


The Post Chronicle:

- The critical role of the Catholic Church in passing national health care reform legislation is coming under serious media scrutiny. But the story has taken a strange turn. It has now been revealed that George Soros, the billionaire hedge fund operator and well-known atheist, has been pouring hundreds of thousands of dollars into "progressive" Catholic groups that are significant players in the national debates over health care and immigration. On the surface, it would appear that Soros would be opposed to many positions of the Catholic Church. A major financial backer of the ACLU, Soros supports such causes as drug legalization, the rights of "sex workers" and felons, euthanasia, radical feminism, abortion rights, and homosexual rights. He does all of this in the name of promoting an "open society." But a review of the records of his Open Society Institute finds that a group calling itself Catholics in Alliance for the Common Good (CACG) has received $200,000 from them over the last several years. James Todd of Pewsitter.com, which represents traditional Catholics, calls such groups "CINOs," or Catholics In Name Only. He explains, "This group and several others have sprung up recently-I suspect purposely organized and funded-to counterbalance the growing influence of the faithful Catholics AND to try to deceive and mislead the middle of the road Catholics that have determined the last 13 Presidential elections."


Detroit Free Press:

- The hundreds of millions of dollars the federal government spent to buy thousands of vehicles from metro Detroit's three automakers under the $787-billion federal stimulus act didn't retain or keep a single job, a Free Press analysis shows.


USA Today:

- Home prices are expected to grow modestly next year and sales will keep rising as the housing market continues to recover from the worst downturn since the Great Depression, the National Association of Realtors said Friday. Home resales are projected to total 5.7 million next year, up from an estimated 5 million this year. Prices will climb about 4% after a projected decline of 13% this year, according to Lawrence Yun, chief economist for the trade association. "Going into 2010, I anticipate that prices will also begin stabilizing or begin to modestly improve," Yun told the audience at the association's annual conference and expo in San Diego. That should help ease buyers' anxiety. "I don't think the fear factor will be at play in 2010," Yun said.

- Okay, so the government's "cash for clunkers" program has come and gone. But the studies about whether it was a good deal for taxpayers and auto buyers alike continue. The latest study shows once again that the summer program that consumed $3 billion in U.S. taxpayer funds was fabulous for Japan's Big 3 automakers, Toyota, Honda and Nissan. Maybe not so good for the U.S. The Japanese trio accounted for only 8% of trade-ins, but 41% of new car purchases, finds the new study by the University of Michigan's Transportation Research Institute. By contrast, Detroit's Three -- General Motors, Ford and Chrysler -- made up for 85% of the trade-ins, and 39% of new purchases. As for buyer loyalty:


Politico:

- By teeing up a public battle over abortion in the health care bill now before the Senate, congressional Democrats could be risking more than just the fate of the legislation. Hanging in the balance are millions of Catholic swing voters who moved decisively to the Democrats in 2008 and who could shift away just as readily in 2010. According to exit polls, President Barack Obama won the support of 53 percent of Catholic voters, a seven-point increase over the showing of the Democrats’ 2004 nominee, Sen. John Kerry (D-Mass.), a Catholic. Among Latino Catholics, who are often more conservative than their white counterparts on social issues, Obama did even better, winning more than two-thirds of their support, a 14-point improvement over Kerry’s totals, according to an analysis by the Pew Research Center. Those gains will be at risk if a polarizing abortion fight takes place in the Senate.


Rasmussen Reports:

- The Rasmussen Reports daily Presidential Tracking Poll for Sunday shows that 29% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. Thirty-nine percent (39%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -10 (see trends).

AP:

- President Barack Obama on Saturday urged Congress to hold off on any investigation of the Fort Hood rampage until federal law enforcement and military authorities have completed their probes into the shootings at the Texas Army post, which left 13 people dead. Several members of Congress, particularly Michigan Rep. Peter Hoekstra, the top Republican on the House Intelligence Committee, have also called for a full examination of what agencies knew about Hasan's contacts with a radical Muslim cleric in Yemen and others of concern to the U.S. Hoekstra confirmed this week that government officials knew of about 10 to 20 e-mails between Hasan and the radical imam, beginning in December 2008. A joint terrorism task force overseen by the FBI learned late last year of Hasan's repeated contact with the cleric, who encouraged Muslims to kill U.S. troops in Iraq. The FBI said the task force did not refer early information about Hasan to superiors because it concluded he wasn't linked to terrorism. Lawmakers, however, already have announced they want their own investigations and were frustrated with what they view as a less-than-forthcoming administration. In the Senate, Sen. Joe Lieberman, a Connecticut independent, said his Homeland Security Committee was opening an investigation. Obama said he was not opposed to hearings — eventually. But he strongly pressed lawmakers to hold off until the probes now under way are completed.

- The Obama administration may buy a near-empty prison in rural northwestern Illinois to house detainees from Guantanamo Bay along with federal inmates, a White House official said Saturday. The maximum-security Thomson Correctional Facility, about 150 miles west of Chicago, was one of several evaluated by the Federal Bureau of Prisons, and emerged as a leading option to house the detainees, the official told The Associated Press on condition of anonymity because a decision has not been made. Illinois Sen. Dick Durbin, the Senate's second-highest-ranking Democrat, said in a statement Saturday he would support the plan. Some lawmakers opposed the idea of terrorism suspects being brought to Illinois. U.S. Rep. Mark Kirk, a Northbrook Republican running for Obama's old Senate seat, circulated a letter among elected officials asking them to write to Obama opposing the plan, saying bringing Guantanamo prisoners to the state would make it a target for terrorist attacks. U.S. Rep. Don Manzullo, whose district includes Thomson, said he adamantly opposed the proposal and that he has consistently joined with a majority of his colleagues "in fighting efforts to bring these terrorists onto our shores ... where they could one day be released into our communities." Guantanamo Bay "is set up to house these dangerous terrorists, and they should stay there," said Manzullo, an Egan Republican who serves on the House Foreign Affairs Subcommittee on Terrorism, Nonproliferation and Trade.


Reuters:

- Citigroup Inc(C) said on Sunday it has agreed to sell its stake in Japanese telemarketer Bellsystem24 to U.S. private equity firm Bain Capital for 93.5 billion yen ($1 billion).

- Bank of America Corp's search for a new chief executive has been hurt by federal pay limits that played a major role in the senior vice chairman of PNC Financial Services Group Inc spurning feelers from the company, the Wall Street Journal reported on Saturday. PNC's William Demchak rejected a feeler from a recruiter for Bank of America last week, and the required approval of U.S. government pay czar Kenneth Feinberg for any compensation package was a major factor in the decision, the paper said, citing a person familiar with the situation.


TimesOnline:
-
Less than half the population believes that human activity is to blame for global warming, according to an exclusive poll for The Times. The revelation that ministers have failed in their campaign to persuade the public that the greenhouse effect is a serious threat requiring urgent action will make uncomfortable reading for the Government as it prepares for next month’s climate change summit in Copenhagen. Only 41 per cent accept as an established scientific fact that global warming is taking place and is largely man-made. Almost a third (32 per cent) believe that the link is not yet proved; 8 per cent say that it is environmentalist propaganda to blame man and 15 per cent say that the world is not warming. Tory voters are more likely to doubt the scientific evidence that man is to blame. Only 38 per cent accept it, compared with 45 per cent of Labour supporters and 47 per cent of Liberal Democrat voters. The high level of skepticism underlines the difficulty the Government will have in persuading the public to accept higher green taxes to help to meet Britain’s legally binding targets to cut carbon emissions by 34 per cent by 2020 and 80 per cent by 2050. The recession appears to have made tackling climate change less of a priority for many people. “Being confronted with the possibility of higher energy bills, wind farms down the road and new nuclear power stations encourages people to question everything about climate change,” she said. “There is a resistance to change and some people see the problem being used as an excuse to charge them more taxes.”

- FedEx(FDX), UPS(UPS) and DHL have warned of their intention to increase rates in what is seen as efforts to restore profit margins ravaged by the recession. Parcel groups are seeing signs of demand returning, giving them the confidence to ask higher prices. On Friday, DHL gave a benign forecast for the peak end-of-year trading season. Hermann Ude, chief executive of DHL’s forwarding and freight business, said that he expected a normal peak season and predicted that the company’s prices would increase by at least 20 per cent, depending on the route. His comments echoed the optimism of UPS, which said last week that it would increase rates in 2010, alongside an expected increase in freight volumes. Scott Davis, chief executive of UPS, said that he expected buoyant holiday traffic: “We talked to our customers in recent months, mainly our retail and technology customers, and many of them are quite bullish on this Christmas season.”


Wirtschaftswoche:

- The German government wills tick to plans to cut taxes as part of lat month’s agreement between the two ruling coalition parties, citing Finance Minister Wolfgang Schaeuble.

- SAP AG plans to raise fees it charges customers to service software. The fees will be increased to 22% of the licensing costs by 2015 from 17%.


SonntagsZeitung:

- Credit Suisse Group AG Chairman Hans-Ulrich Doerig said most of the financial crisis is over and he expects “low” growth in the coming years. Doerig also said he never wants government assistance for Credit Suisse.


Maeil Business Newspaper:

- Samsung Electronics Co. raised its flat-panel television shipment target for this year by 15%, citing industry officials.


Yediot Ahronot:

- French Foreign Minister Bernard Kouchner said that Iran has effectively rejected a deal offered by international negotiators seeking to prevent it from building a nuclear weapon, citing an interview. None of the attempts to reach a deal with Iran has gone well, Kouchner said.


Weekend Recommendations
Barron's:
- Made positive comments on (GMCR), (MON), (WFMI), (BBY), (FDX), (XOM), (FMC), (COH), (GPS) and (WYN).


Citigroup:

- Reiterated Buy on (TOL), raised target to $25.

- Reiterated Buy on (CVG), target $14.

- Reiterated Buy on (CIEN), target $17.50.


Night Trading
Asian indices are +.50% to +1.50% on avg.

Asia Ex-Japan Inv Grade CDS Index 104.0 -6.5 basis points.
S&P 500 futures +.63%.
NASDAQ 100 futures +.50%.


Morning Preview
BNO Breaking Global News of Note

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Yahoo Most Popular Biz Stories

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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/Estimate
- (LOW)/.24


Upcoming Splits

- (SKBI) 2-for-1


Economic Releases

8:30 am EST

- Advance Retail Sales for October are estimated to rise +.9% versus a -1.5% decline in September.

- Retail Sales Less Autos for October are estimated to rise +.4% versus a +.5% gain in September.

- Empire Manufacturing for November is estimated to fall to 30.0 versus a reading of 34.57 in October.


10:00 am EST

- Business Inventories for September are estimated to fall -.7% versus a -1.5% decline in August.


Other Potential Market Movers
- The Fed’s Bernanke speaking, Fed’s Fisher speaking, Fed’s Kohn speaking, (KO) Investor Day, (WIT) Analyst Day, (TGH) Investor Event, (IART) Analyst Forum, Treasury Bill Auctions, Deutsche Bank Gaming Forum and the (RAI) Investor Day
could also impact trading today.


BOTTOM LINE: Asian indices are higher, boosted by technology and commodity stocks 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 week.

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