BETWEEN THE HEDGES

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Retail longs, Computer longs, Internet longs, Biotech longs and Medical longs. I covered all of my (IWM/QQQQ) hedges and some of my (EEM) short today, thus leaving the Portfolio 100% net long. The tone of the market is mildly positive as the advance/decline line is slightly higher, sector performance is mixed and volume is above average. Investor anxiety is above average. Today’s overall market action is bullish. Nikkei futures indicate an +65 open in Japan and DAX futures indicate an +37 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, lower energy prices and less economic sector pessimism.

Bloomberg:

- Fiber Optics Bring Faster Internet, DVDs on Demand.

- European industrial production dropped the most on record in December, pointing to a deepening economic slump in the fourth quarter. Output in the euro region fell 12 percent from the year- earlier month after an 8.4 percent decline in November, the European Union’s statistics office in Luxembourg said today.

- The London interbank offered rate, or Libor, for overnight loans in British pounds fell below 1 percent for the first time amid expectations the Bank of England will cut its key interest rate to near zero. The rate dropped more than half a basis point to 99 basis points today, the British Bankers’ Association said, the lowest since the trade group began compiling the data in January 2001. The three-month pound overnight index swap rate, which shows traders’ expectations for the central bank’s key rate, was at 55 basis points, from 72 basis points a week ago.

- The average U.S. rate on a 30-year fixed mortgage fell this week as federal lawmakers negotiated an economic stimulus plan to revive the economy and resuscitate the housing market. The rate fell to 5.16 percent from 5.25 percent a week earlier, Freddie Mac, the McLean, Virginia-based mortgage buyer said today.

- Families whose children developed autism after taking vaccine combinations that contained thimerosal aren’t entitled to compensation from a $2.5 billion government trust fund, a panel of court-appointed experts ruled. Three “special masters” appointed by the U.S. Court of Federal Claims in Washington found today that the families failed to show thimerosal-containing vaccines taken with an “MMR” shot for measles, mumps and rubella can contribute to causing autism, immune-system dysfunction or gastrointestinal dysfunction.

- Crude oil fell to a three-week low in New York after a U.S. government report yesterday showed a bigger-than-expected increase in inventories. Supplies have gained in 18 of the past 20 weeks, leaving stockpiles the highest since July 2007, the Energy Department report showed. World oil consumption will drop 1.7 percent to 84.3 million barrels a day this year, consultant Wood Mackenzie said in a report today. “Inventories keep increasing and we continue to get reports downgrading demand forecasts,” said Tom Bentz, senior energy analyst at BNP Paribas in New York. “There’s increasing pressure on crude oil, especially the front month.” Supplies at Cushing, Oklahoma, where West Texas Intermediate oil is stored, climbed 1.7 percent to 34.9 million barrels last week, the highest since at least April 2004, when the department began keeping records for the location. The International Energy Agency yesterday reduced its global oil demand forecast for 2009, projecting consumption will decline by 1 million barrels a day, the biggest drop since 1982. The adviser to 28 developed nations trimmed its 2009 forecast by 570,000 barrels to 84.7 million a day because of a weaker economic outlook from the International Monetary Fund.

Wall Street Journal:

- The stock market tanked Tuesday after disappointment with the presentation from Treasury Secretary Tim Geithner. Many thought hedge-fund redemptions were a major catalyst, but they probably were not. Today’s selloff, however, could be the result of this. With many hedge fund withdrawal requests due 45 days before the end of the quarter — which would be Sunday for the quarter ending March 31 — traders are acting under the assumption that funds this week will be pushing for cash in an inevitable wave of selling out to meet redemptions.

- Even as job losses mount and profits plunge, some glimmers of stabilization are emerging in global markets. In the U.S., Europe and China, separate surveys of manufacturers' purchasing managers all inched upward in January, suggesting that the contraction in manufacturing activity could be slowing. The interest rates at which banks lend to one another are easing. And some credit markets are thawing. Analysts say rock-bottom official interest rates, promises of massive fiscal-stimulus packages and central banks' other efforts to revive markets have helped ease some tensions in financial markets and may help put a floor under falling business confidence.

CNBC.com:
- How worried was Wall Street about a lack clarity in Treasury Secretary Tim Geithner’s plan to save the banking system by buying toxic debt? So worried that Goldman Sachs(GS) called a meeting to figure out how to fix the problem. —This meeting known as the “Goldman Sachs rountable” took place just hours after Geithner’s speech (and the dismal market reaction) on Tuesday at the headquarters of Goldman Sachs(GS) in lower Manhattan. —Around 20 of the firm’s biggest hedge fund and private equity clients from around the country showed up—a testament to just how concerned financial industry insiders are about what few details Geithner presented.

Barron’s:

- Bernstein Research analyst Toni Sacconaghi asserted in a research note this morning that Apple (AAPL) officials in a briefing this week “appeared confident” about its guidance for the fiscal second quarter ending in March. Sacconaghi met this week with COO Tim Cook, CFO Peter Oppenheimer and SVP-Product Marketing Phil Schiller and says the three “projected a confident and unwavering tone.” In his note, Sacconaghi reported back on his meeting; here are some key bullet points:

NY Times:

- Laid-Off Foreigners Flee as Dubai Spirals Down.

KansasCityStar:

- It's still rough going out there. But a couple of executives from companies with a big local presence expressed some hope that maybe the nation's economy has stopped its downward spiral. Bill Zollars, chairman of trucking giant YRC Worldwide Inc.(YRCW), reiterated on Wednesday what he said at the end of January. "It appears to us that things have stabilizied a little bit in February," Zollars told transportation analysts at a conference in Florida.

San Francisco Chronicle:

- What Blu-ray is to high-def DVDs, and VHS is to videotape, a high-powered consortium led by Intel Corp.(INTC) and Chevron Corp.(CVX) is offering a similar industry standard, this one for corporate IT departments.

Politico:

- Earlier today, the Speaker's office told us some or all of the text would be made available online prior to Pelosi's press conference. If the House votes on Friday, as expected, the late posting means the text will be available for less than 24 hours -- far short of the 48 hours Dem leaders had previously pledged.

DW-World.DE:

- The EU Commission anticipates the ongoing economic crisis will translate to massive losses for all of Europe's industrial sectors, a German newspaper wrote. The crisis is hitting Europe faster than expected. An internal EU analysis of the crisis' effects described massive production and revenue losses in the construction and manufacturing industries, according to the paper. The announcement comes at the EU's business climate index hit its lowest levels since being introduced in 1985.

Vedomosti:

- Russian new car sales fell 33% in January.

China Securities Journal:
- China faces difficulty boosting fixed-asset investment growth this year as smaller gains in profits crimp company spending, citing a central bank official. Corporate profit growth has slowed “enormously,” suggesting that investment has been bolstered by government spending on infrastructure, citing Ruan Jianhong, deputy director of the People’s Bank of China’s survey and statistics department, said.

The National:

- Hotels in Abu Dhabi have discounted room rates by as much as 15 per cent, indicating that the global financial crisis is beginning to affect the core market of business tourism. The move follows steep discounts introduced by hotels in Dubai in December, where rates have come down by as much as 60 per cent to shore up the hard-hit leisure segment. The rate cuts have helped to boost occupancy levels, but analysts say the strategy threatens profits.

BETWEEN THE HEDGES

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Thursday, February 12, 2009

Stocks Finish at Session Highs, Boosted by Technology, Airline, HMO and Biotech Shares

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