Sunday, December 20, 2009

Monday Watch

Weekend Headlines

- CEOs Paying Record 56% Premium in M&A Shows Stocks May Be Cheap. This year, companies making acquisitions paid the biggest premiums on record, spending an average 56% more than their targets' share prices. The extra generosity of executives negotiating deals is a sign they're more bullish about profits and stocks. It also reflects how cheap stocks got earlier this year. (Graphic)

- The cost to protect against defaults on U.S. corporate bonds dropped for the third straight week, trading in a benchmark credit derivatives index shows. Credit-default swaps on the Markit CDX North America Investment-Grade Index Series 13, which is linked to 125 companies and used to speculate on creditworthiness or to hedge against losses, fell 5 basis points for the week to 88.5 basis points, according to CMA DataVision. A decrease in the index, which is trading at the lowest level since May 2, 2008 after declining 2.5 basis points today, signals improvement in investor confidence.

- The dollar traded near a three-month high against the euro as signs that the world’s largest economy is gaining traction and lingering credit concerns in Europe buoyed demand for the greenback. The U.S. currency may extend its biggest weekly rally since June against its major counterparts before reports this week forecast to show increasing sales of existing homes and new homes in the U.S. The 16-nation euro dropped for a fourth day against the Swiss franc after the European Central Bank raised its estimate for writedowns in nations using the single currency by 13 percent.

- UnitedHealth Group Inc.(UNH), WellPoint Inc.(WLP) and smaller U.S. insurers gained a year under Senate Democrats’ proposed health-care legislation before the start of a tax that industry lobbyists say will drive up premiums. The measure proposed yesterday by Senate Majority Leader Harry Reid would also exempt some nonprofit insurers from the tax, shifting more of the burden to the for-profit companies, said Elizabeth Hall, a vice president at Indianapolis-based WellPoint. Device makers won a postponement of a proposed levy, while drugmakers would see no change in their taxes. A possible tax on cosmetic surgery was abandoned. The insurer tax, amounting to about $70 billion over 10 years, was to start next year under a previous version of the Senate measure.

- The revelation that climate scientists at the University of East Anglia manipulated data and conspired to corrupt the peer-review process has been very bad news for those hoping to enact laws to limit greenhouse gas emissions. A December poll by CBS News and the New York Times found that only 37 percent of Americans now think global warming is a very serious problem and should be one of the highest priorities for government leaders, a whopping 15 percentage point drop since 2007. While the poll report attributes the drop to the economic decline during the intervening two years, it’s safe to assume the scandal known as Climategate contributed to the change in public perception. Such statistics surely are frustrating for climate scientists. The vast majority of them assert that the stolen e- mails did nothing to upend the balance of the literature, which still tilts heavily toward a consensus that warming is a big, man-made problem. The public’s skepticism toward the scientists is part of a bigger problem, one that threatens the fabric of our culture. Academe has been so politicized, and so radically disconnected from the population, that ordinary citizens no longer trust anything that it produces -- even science. The sad fact is that explicit or implicit political litmus tests are far more important than science at universities and so-called peer-reviewed journals. Universities may pay lip service to “diversity,” but diversity of thought is taboo. There are almost five times as many self-identified liberal radicals on our faculties, and more than three times as many Marxists as there are conservatives. Last I checked, Marxism has been utterly discredited. Yet there are still Marxists everywhere, poisoning the minds of our children. Small wonder that our academic system can no longer claim the authority necessary to drive policy. The distrust that the academic community has rightly earned is devastating for society. We have lost the only institution that could deliver the widely acknowledged facts upon which rational policy could be based. If Americans can no longer trust anything, even science, then it is time for radical reform.

- U.S. President Barack Obama called a climate change agreement with China and about 25 other nations an “unprecedented” move to slow global warming. Environmental groups and at least five developing nations called it a failure. The accord, which pushes off signing a treaty for at least a year, is “a first step,” Obama said yesterday before leaving Copenhagen, where he spent 14 hours cobbling together the agreement in meetings with world leaders, and addressing 8,000 envoys from 193 nations. Delegates from the countries failed to reach consensus on the accord today after discussing it through the night, agreeing instead to “take note” of the document, or recognize that it exists. The agreement seeks voluntary cuts in greenhouse-gas emissions that scientists blame for global warming without binding countries to take action. “The meeting was a disaster,” Lars-Erik Liljelund, the director general of Swedish Prime Minister Fredrik Reinfeldt’s office, said in an interview today. “The process needs to be changed because if we continue like this, we won’t be any further a year from now.”

- Carbon Capitalists. Wall Street wants a leading role in the new carbon-trading market being designed in Washington. First, executives like JPMorgan’s(JPM) Blythe Masters must convince skeptics this isn’t just a new trillion-dollar gamble on derivatives.

- Harvard Swaps Are So Toxic Even Summers Won't Explain. Anne Phillips Ogilby, a bond attorney at one of Boston’s oldest law firms, on Oct. 31 last year relayed an urgent message from Harvard University, her client and alma mater, to the head of a Massachusetts state agency that sells bonds. The oldest and richest academic institution in America needed help getting a loan right away. As vanishing credit spurred the government-led rescue of dozens of financial institutions, Harvard was so strapped for cash that it asked Massachusetts for fast-track approval to borrow $2.5 billion. Almost $500 million was used within days to exit agreements known as interest-rate swaps that Harvard had entered to finance expansion in Allston, across the Charles River from its main campus in Cambridge, Massachusetts. The swaps, which assumed that interest rates would rise, proved so toxic that the 373-year-old institution agreed to pay banks a total of almost $1 billion to terminate them. Most of the wrong-way bets were made in 2004, when Lawrence Summers, now President Barack Obama’s economic adviser, led the university. Cranes were recently removed from the construction site of a $1 billion science center that was to be the expansion’s centerpiece, a reminder of Summers’s ambition. The school said last week they will suspend work on the building early next year.

- The U.S. transferred 12 detainees from Guantanamo Bay, sending half the prisoners home to Yemen and the others to Afghanistan and the Somaliland region.

- The average price of regular gasoline at U.S. filling stations declined to $2.5964 a gallon as stockpiles of the motor fuel climbed and demand fell. Gasoline lost 3.89 cents in the two weeks ended Dec. 18, according to a survey ending on the same day of 5,000 filling stations nationwide by Trilby Lundberg, an independent gasoline analyst in Camarillo, California. “Over the past six weeks, the price has fallen close to 9 cents per gallon at retail,” Lundberg said today in an interview. “That makes sense with oversupply and weak demand.” Stockpiles of gasoline last week were the highest since April 17. Supplies have risen 3.9 percent in four weeks to 5 percent above revised figures from a year earlier and 4 percent higher than the period’s five-year average. Gasoline demand, based on what blenders and refiners supply to the wholesale market, fell 49,000 barrels to an average 8.96 million barrels a day.

Wall Street Journal:

- Change Nobody Believes In. A bill so reckless it has to be rammed through on a partisan vote on Christmas eve. And tidings of comfort and joy from Harry Reid too. The Senate Majority Leader has decided that the last few days before Christmas are the opportune moment for a narrow majority of Democrats to stuff ObamaCare through the Senate to meet an arbitrary White House deadline. Barring some extraordinary reversal, it now seems as if they have the 60 votes they need to jump off this cliff, with one-seventh of the economy in tow. Mr. Obama promised a new era of transparent good government, yet on Saturday morning Mr. Reid threw out the 2,100-page bill that the world's greatest deliberative body spent just 17 days debating and replaced it with a new "manager's amendment" that was stapled together in covert partisan negotiations. Democrats are barely even bothering to pretend to care what's in it, not that any Senator had the chance to digest it in the 38 hours before the first cloture vote at 1 a.m. this morning. After procedural motions that allow for no amendments, the final vote could come at 9 p.m. on December 24.

- Some mortgage insurers and lenders are beginning to relax their down-payment requirements, in a sign of increased confidence in the housing market. The changes, which are being done on a market-by-market basis, mean buyers in some parts of the country can now borrow 95% instead of 90% of a property's value. Until recently, mortgage companies had tighter standards for these markets because of falling home prices. "We are feeling better about the economic condition of the marketplace," said Michael Zimmerman, senior vice president of investor relations at mortgage insurer MGIC Insurance Corp.

- The European Central Bank won't bail out debt-stricken member states such as Greece, which must repair its public finances on its own, ECB governing council member Ewald Nowotny said.

- Indonesia could rejoin the Organization of the Petroleum Exporting Countries if its oil production were to exceed consumption again, Evita Legowo, director general of oil and gas at the Energy and Mineral Resources Ministry of Indonesia, said Sunday.

- Iran's opposition on Sunday seized upon the death of one of the Islamic republic's founding fathers -- a revered ayatollah who was also a fierce critic of the nation's leadership -- to take to the streets in mourning. Fearing that mourners could quickly turn into antigovernment protesters, Iranian authorities tightened security across the country. In Tehran, crowds held up pictures of the dead cleric and chanted, "This is the month of blood, the regime is coming down," according to eyewitnesses and videos posted on YouTube.

- The economy is primed for a stronger finish to 2009 than most forecasters and business executives expected just a few months ago, prompting tempered optimism that employers may resume hiring early in the next year. "Growth through October far outpaced our expectations," said Ben Herzon, an economist at Macroeconomic Advisers, a St. Louis forecasting firm that has been markedly optimistic. "It's not an aberration that is going to give way to contraction in 2010. It's the beginning of the recovery."

- With ethanol margins staging a recovery this year, it was only a matter of time before producers were encouraged to restart idled facilities and expand output to join the bonanza. The latest addition to the supply flow—Valero Energy, which announced last week that it will bring three facilities back online—adds to concerns that if too many people come to the party some of them will find the punch bowl emptying out fast.


- Big Opportunity in Four Banks. Shares of JPMorgan(JPM), Bank of America(BAC), Wells Fargo(WFC) and Citigroup(C) look attractive, with earnings poised to rise sharply in coming years.

- The Standard & Poor's 500 Index may gain about 12% in 2010, as companies spend cash, replenish inventories, take advantage of low interest rates and begin to hire again, money managers surveyed by Barron's said. The estimates from the 12 strategists and investment managers for the index range from a year-end low of 1,120 in 2010, predicted by Barry Knapp of Barclays Capital Inc., to a high of 1,350, forecast by James Paulsen of Wells Capital Management, Barron's reported. The money managers also said the US economy will grow at a pace of between 2.3% and 4%.
- Holiday sales strong over weekend except in snow-drenched Northeast.


- Reintroducing America's Most Promising Companies. Our new list of 20 young companies with big potential unearthed some gems - and they continue to shine.

- Investors Flock To Gold ETFs.

NY Times:

- Show Us the E-Mail by Eliot Spitzer, Frank Partnoy and William Black. WE end this extraordinary financial year with news that the Treasury is in discussions with American International Group about selling the taxpayers’ 80 percent ownership stake in that company. The government recently permitted several banks to break free of its potential oversight by repaying loans made during the rescue. But with respect to A.I.G., the Treasury should not move so fast. There is one job left to do. A.I.G. was at the center of the web of bad business judgments, opaque financial derivatives, failed economics and questionable political relationships that set off the economic cataclysm of the past two years. When A.I.G.’s financial products division collapsed — ultimately requiring a federal bailout of $180 billion — those who had been prospering from A.I.G.’s schemes scurried for taxpayer cover. Yet, more than a year after the rescue began, crucial questions remain unanswered. Who knew what, and when? Who benefited, and by exactly how much? Would A.I.G.’s counterparties have failed without taxpayer support?

- The hiring of temporary workers has surged, suggesting that the nation’s employers might soon take the next step, bringing on permanent workers, if they can just convince themselves that the upturn in the economy will be sustained.

The Business Insider:
- Top Goldman(GS) quant Bob Litterman is retiring. Litterman is considered one of the grandfathers of modern quant trading.

- The Harvard-Goldman(GS) Filter Keeps Too Big To Fail Banks Intact. Arnold Kling explains why our political leaders won't break up the Too Big To Fail banks: My answer to both relates to what I call the Harvard-Goldman filter. The Harvard-Goldman filter works like this.

- Blue-Ribbon Companies. Which companies were on the most Fortune lists - including the FORTUNE 500, Fastest-Growing and Best Companies to Work For - this year? Here are the top firms.

Business Week:
- Celent:
High-Frequency Trading to Grow Even With New Rules. The consultant says the high-speed trading favored by hedge funds and other firms will account for over half the U.S. market by next year, undeterred by planned regulation.

- Upbeat CEOs to Drive '10 M&A. Dealmakers expect worldwide M&A transaction volume to rise 20% to 30% next year if credit markets stay healthy. The pace of mergers and acquisitions declined this year, but the dollar volume of activity will likely bounce back to over $3 trillion next year, according to an informal survey of the market by IDD. Market participants believe that Wall Street investment banks will see an increase in fee income not only from M&A advisory work but various other engagements like raising money to finance these deals.

The Sacramento Bee:

- 'Cash for appliances' program will likely start in April. It didn't show up in time for Christmas, but a California "cash for appliances" program might get rolling around Easter time.

USA Today:

- Investors are yanking money out of money funds and moving to bond funds — but some are just cashing out. Investors pulled a net $490 billion from money funds this year through October, according to the Investment Company Institute, the funds' trade group. A record-shattering $313 billion went to bond funds. And $1.9 billion fled stock funds. "More money is flowing out of money funds than is going into bond funds — something that's only happened twice in 26 years," says Vincent Deluard, strategist at, which tracks fund flows. "It shows how deep the recession is: They may be taking money out to pay the bills or the mortgage."Normally, investors chase after stocks during periods of red-hot returns, and this year has produced rip-snorting returns for many stock funds. The average stock fund has soared 27.4% this year, according to Lipper, which tracks the funds. And 36 funds have soared 100% or more in 2009, led by the tiny Oceanstone fund, up 260%. But investors aren't chasing hot returns. And since the end of October, money fund assets have fallen an estimated $176 billion, the ICI says. An estimated $9.4 billion has fled stock funds. And $50 billion has poured into bond funds.


- An aide to Rep. Bart Stupak (D-Mich.) coordinated opposition to the Senate health bill’s abortion compromise this morning with the Republican Senate leadership, according to a chain of frantic emails obtained this morning by POLITICO. Stupak, in an interview with POLITICO, called the Senate bill’s abortion position "unacceptable" – but disavowed his staffer’s collaboration with Senate Minority Leader Mitch McConnell. “I never talked to McConnell about the health care bill,” said Stupak, adding that “I did not authorize the email [which] “was sent without my knowledge.” Stupak said that he has discussed the Senate’s abortion position with Democratic senators Ben Nelson (Neb.) and Robert Casey (Penn.), who both hold conservative views on abortion. Stupak's continued opposition to the Senate plan, despite those conversations and intense pressure from the White House, suggests that reconciling it with the House bill may prove politically challenging. The Senate language represented “a dramatic shift in federal policy,” said Stupak, adding that he remained hopeful that the differences could be resolved in conference. Nelson, though, said earlier Saturday that his support for the legislation was contingent on the abortion compromise remaining in it.

- Despite a last-minute weekend deal that put the Senate on the brink of passing health care reform this week, liberal and moderate Democrats remain on a collision course over the bill, as both sides dug in Sunday for the next phase of negotiations. President Barack Obama’s liberal base and powerful union leaders once hoped the expected House-Senate conference would partly undo a year of retreats and compromises, with Obama weighing in to nudge the moderate Senate bill to the left. But the titanic struggle to lock in Sen. Ben Nelson (D-Neb.) as the 60th senator for the first key test vote early Monday morning has changed all that. The need to hold Nelson and other moderates in line means major changes on the public option, abortion, taxes, Medicare and Medicaid are unlikely — and that the Senate’s vision of health reform is likely to prevail over the House’s in the final talks. “It is very clear that the bill — the final bill — to pass in the United States Senate is going to have to be very close to the bill that has been negotiated here,” Sen. Kent Conrad (D-N.D.) said on “Fox News Sunday.” “Otherwise, you will not get 60 votes in the United States Senate.” Nelson, who received assurances of a “limited conference” to secure his vote for the Senate bill, has already laid down at least two deal breakers in the House bill that he can’t support: the inclusion of a government insurance plan and an income tax increase on wealthy individuals.

Rasmussen Reports:

- The Rasmussen Reports daily Presidential Tracking Poll for Sunday shows that 26% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. Forty-one percent (41%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -15 (see trends).

- Fifty-seven percent (57%) of voters nationwide say that it would be better to pass no health care reform bill this year instead of passing the plan currently being considered by Congress. The latest Rasmussen Reports national telephone survey finds that just 34% think that passing that bill would be better. Middle-income voters are more likely than others to say that passing no legislation is the better option. One reason for this is that most Americans now believe they will be worse off if reform passes. Fifty-four percent (54%) hold that view while just 25% believe they would be better off. Senior citizens are more pessimistic than younger voters. Just 16% of seniors think they’ll be better off if the legislation passes while 59% have the opposite view.

Real Clear Politics:

- The farce in Copenhagen continues. As I have intimated before, I am not without hope for this "earth summit." I see more and more evidence that people -- "electorates" in all the western countries, where we do have elections, and can throw the bums out, which is about the only pleasure we have as "electors" -- have seen through this imposture completely. My column today cannot be the best one on this subject. For that, I must refer the same reader to the London Telegraph, and Gerald Warner's column from Friday. Rather than trying to improve upon it, let me quote his own "lead graf": "When your attempt at recreating the Congress of Vienna with a third-rate cast of extras turns into a shambles, when the data with which you have tried to terrify the world is daily exposed as ever more phoney, when the blatant greed and self-interest of the participants has become obvious to all beholders, when those pesky polar bears just keep increasing and multiplying -- what do you do?"


- According to the conventional wisdom, credit derivative contracts are a form of insurance. This view is held by academics, pundits, journalists, and government officials. This essay shows why they are wrong. While there is some superficial similarity between some kinds of credit derivative contracts and insurance contracts - both involve payments by a party holding a risk to another party in return for a promise to make the first party whole under certain future conditions - providing risk-sharing does not make a contract one of insurance. All contracts involve allocating risk between parties, and the lines between insurance contracts and other contracts cannot be sensibly drawn in the abstract. Moreover, the primary reason insurance contracts are treated differently than other contracts (and 'insurance law' is a separate body of law) is not because of their nature as 'insurance' but rather because they are issued by insurance companies. We regulate insurance companies with special rules for three reasons: (1) the inverted production cycle of insurance; (2) the unique governance problems inherent in a model in which the firm's creditors are policyholders; and (3) a view that state-based consumer protection is important to ensure a functioning market. This essay shows that none of these policy justifications obtain in credit derivative markets. Finally, the essay briefly discusses how a centralized clearinghouse or exchange can help improve the credit derivatives markets, as well as potential pitfalls with this solution.

- A major winter snowstorm that blanketed much of the mid-Atlantic with snow measured in feet, snarled traffic and wrecked holiday shopping has begun to move away and the digging out has begun. In its wake, the nor’easter left record-setting snow totals across a wide swath of the area. Snowfall totals from 1 to 2 feet were commonplace in what will go down as one of the biggest snowstorms in history on the East Coast. Among the notable records set:


- Hedge fund firm Appaloosa Management, run by David Tepper, has made about $7 billion of profit so far this year, the Wall Street Journal reported on Sunday, citing people familiar with the situation.

Financial Times:

- Representatives of more than 90 Dubai World bank creditors are expected in the emirate on Monday for a first face-to-face meeting between the company and its banks since it told them to prepare for the restructuring of the $22bn in debts needed to keep it out of the insolvency courts. Creditors will meet a six-strong co-ordinating committee, including HSBC and RBS, to hear Dubai World sketch out plans for its restructuring, now troubled developer Nakheel’s $4.1bn obligation on December’s sukuk will be paid off thanks to a $10bn bail-out loan from Abu Dhabi. To meet the government’s terms for further support on the remaining $5.9bn bail-out, Dubai World is expected to ask creditors to freeze debt repayments until May next year. That coincides with maturity on a tranche of its largest single debt, a $5.5bn bilateral loan. But a formal standstill request might not be made at Monday’s meeting.

- Global energy businesses are disappointed and confused by the climate deal agreed in Copenhagen, saying it does not provide enough certainty to justify the huge investments needed to cut carbon emissions. The deal – agreed by major economies including the US and China on Friday evening but not formally adopted by the United Nations – makes a commitment to limit the rise in global temperatures but does not specify caps on emissions to achieve that objective. Chief executives and business groups in Europe were particularly critical of the deal. Peter Voser – the chief executive of oil and gas group Royal Dutch Shell, which has supported limiting emissions – said “much more” was needed.

- Oil prices will remain trapped in the $70-$80 a barrel range in the first half of 2010 as demand recovers more slowly than expected, according to the world's top oil trading houses. The view of traders such as Vitol, Glencore, Trafigura, Gunvor and Mercuria will be scrutinized by the Organization of the Petroleum Exporting Countries, the oil cartel, which meets tomorrow in Luanda, Angola, to discuss its production policy during the northern hemisphere's winter. "Oil prices are likely to be stuck in the current range," Ian Taylor, chief executive of Vitol, the world's largest oil trader, told the Financial Times. Pierre Lorinet, chief financial officer of Trafigura, added: "The fundamentals do not support current prices." Glencore and Gunvor also see little upside for prices in early 2010, said people familiar with their trading views. The publicity-shy traders' outlook is important because they are at the centre of global flows, and their wide business relationships allow them to anticipate price cycles. Although these companies are largely unknown outside the energy industry, they collectively trade almost 15 per cent of the world's oil output, equal to the combined output of Iran, Iraq, Kuwait, UAE and Venezuela (see chart).

- The Irish government on Friday passed legislation making it easier for funds in offshore locations such as the Cayman Islands to move to Dublin. As uneasy investors demand access to more highly regulated funds, hedge fund managers are increasingly looking to bring their businesses onshore. Ireland hopes to seize this opportunity to shore up its alternative funds industry.

- European Banks Face Capital Crisis. Europe’s biggest banks may have to raise as much as £400 billion over the next two years to meet stringent new capital rules being imposed on the sector, according to banking sources. A sweeping overhaul of international banking regulation proposed last week by the Basel committee of global bank supervisors called for banks to hold more cash in reserve to prevent future crises. Analysts have estimated that the new rules could create a shortfall of about £280 billion for European institutions. However, sources close to negotiations with the Basel committee insist that the real number is much higher.

- Scotland Yard has warned businesses in London to expect a Mumbai-style attack on the capital. In a briefing in the City of London 12 days ago, a senior detective from SO15, the Metropolitan police counter-terrorism command, said: “Mumbai is coming to London.” The detective said companies should anticipate a shooting and hostage-taking raid “involving a small number of gunmen with handguns and improvised explosive devices”. The warning — the bluntest issued by police — has underlined an assessment that a terrorist cell may be preparing an attack on London early next year. During a “commando-style” raid by 10 gunmen on hotels and cafes in Mumbai in November 2008, 174 people were killed and more than 300 injured over three days. Officials now report an increase in “intelligence chatter” — communications captured by electronic eavesdropping agencies. One senior security adviser said the police warnings had intensified and become much more specific in the past fortnight.

The Independent:

- Goldman Sachs(GS) has threatened the UK Treasury with plans to move up to 20 per cent of its London-based staff to Spain in a standoff over tax and bonuses. It's believed that the Wall Street investment bank, which paid more than £2bn to the Exchequer's ailing coffers in corporation tax alone last year, has fired a warning shot across the Government's bows in response to the tax measures unveiled in the pre-Budget report earlier this month. Goldman Sachs International was the biggest contributor from the financial services sector to Britain's purse last year. Previous reports suggest that in some years the firm's staff have contributed more than £1bn in personal income tax to public coffers. A City source said: "Goldman could move a relatively large number of people if it wants to. Given how much Goldman and its staff contribute to the tax take, the firm has plenty of leverage. This is a bargaining position more than anything."

Globe and Mail:

- Battle for the oil sands. Across Alberta, companies have spent years developing new technologies that promise cheaper, greener production. In the next few months, some will move from the lab to the field in critical tests that could radically reshape the industry.

- Iranian troops who for three days controversially occupied a disputed border oil well left the facility during the night but remain on Iraqi soil, Iraq's government spokesman said Sunday. "The Iranian forces have pulled back 50 metres (yards) from the well and have taken their flag but we now demand they return to where they have come from and that negotiations begin on the demarcation of the border," said government spokesman Ali al-Dabbagh. A senior Iraqi security official, who declined to be named, told AFP that "according to military norms, this is not a full withdrawal." "We will continue to act diplomatically," the official said, adding the army did not issue any statement concerning the incident to avoid "any escalation."

21st Century Business Herald:

- China is reviewing property tax rules as part of an effort to curb gains in housing prices, citing government officials. The government is also reviewing rules regarding loan applications for second-home purchases, citing a meeting hosted by the Ministry of Housing and Urban-Rural Development and attended by deputy mayors from 200 cities. The ministry officials made it a top priority to curb excessive gains in housing prices in 2010.

Securities Times:

- Chinese banks may need to raise 500 billion yuan next year, citing Li Fuan, head of the banking innovation department at the China Banking Regulatory Commission.


- Iranian and Iraqi foreign ministers discussed a "misunderstanding" that led to the two countries' troops facing off over an oil well in East Maysan. Manouchehr Mottaki agreed with Iraq's Hoshyar Zebari to hold a technical committee meeting on border issues during a phone conversion yesterday, citing the foreign ministry.

- Saudi Rich List. Revealed: The Kingdom's top 50 Earners.

Weekend Recommendations
- Made positive comments on (GOOG), (DVN), (MOS), (JPM), (BAC), (WFC), (AAPL), (EQIX), (QCOM) and (C).


- Reiterated Buy on (GLW), target $20.50.

- Reiterated Buy on (LMT), target $86.

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

Asia Ex-Japan Inv Grade CDS Index 97.50 -2.50 basis points.
S&P 500 futures +.26%.
NASDAQ 100 futures +.36%.

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 In Play

SeekingAlpha Market Currents 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?

Politico Headlines
Rasmussen Reports Polling

Earnings of Note
- (WAG)/.48

- (CAG)/.47

- (JBL)/.28

Upcoming Splits

- None of note

Economic Releases

- None of note

Other Potential Market Movers
- The Chicago Fed National Activity Index for November
could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and automaker 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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