BETWEEN THE HEDGES

Sunday, October 18, 2009

Monday Watch

Posted by Gary .....at 10:41 PM

Weekend Headlines
Bloomberg:

- CME Group Inc.(CME) and the Chicago Board Options Exchange are in informal talks for a takeover, Crain’s said, citing people familiar with the discussions. An acquisition would value CBOE, the largest options marketplace in the U.S., at as much as $5 billion, Crain’s reported, without naming the people. There is no formal bid and negotiations are on hold until after Oct. 21, the deadline for filing appeals in a lawsuit that must be resolved for a deal to happen, Crain’s said.

- Following is a comparison of the top political donors from the 1989-2010 election cycle to political party as compiled by the Center for Responsive Politics. The last column is the difference in a firm’s average percentage of donations to Democrats from the 1989 to 2010 cycles compared to its 2010 cycle only donation. For example, Goldman Sachs(GS) has increased its percentage of donations from 64 percent to democrats to 75 percent in the latest cycle only.

- Harvard University’s failed bet that interest rates would rise cost the world’s richest school at least $500 million in payments to escape derivatives that backfired. Harvard paid $497.6 million to investment banks during the fiscal year ended June 30 to get out of $1.1 billion of interest-rate swaps intended to hedge variable-rate debt for capital projects, the school’s annual report said. The university in Cambridge, Massachusetts, said it also agreed to pay $425 million over 30 to 40 years to offset an additional $764 million in swaps. The transactions began losing value last year as central banks slashed benchmark lending rates, forcing the university to post collateral with lenders, said Daniel Shore, Harvard’s chief financial officer. Some agreements require that the parties post collateral if there are significant changes in interest rates. “When we went into the fall, we had some serious liquidity management issues we were dealing with and the collateral postings on the swaps was one,” Shore said in an interview yesterday. “In evaluating our liquidity position, we wanted to get some stability and some safety.” “Substantial losses” in Harvard’s General Operating Account, a pool of cash from which bills are paid, further put pressure on the school, the report said. The net asset value of the account fell to $3.7 billion from $6.6 billion during the fiscal year, according to the report.

- R. Hunter Biden, son of Vice President Joe Biden, won dismissal of a fraud lawsuit alleging he backed out of a deal to acquire an interest in Paradigm Global Advisors parent Paradigm Cos. Stephane Farouze, global head of fund derivatives for Deutsche Bank AG, claimed in a complaint filed in New York state court in Manhattan last year that Biden and his partner Anthony Lotito agreed to purchase Farouze’s interest in Paradigm when they were seeking to take over the company. Biden and Lotito countered that Farouze never held an interest in the hedge fund company and cut him out of the deal, according to court records. The lawsuit had to be dismissed because Farouze failed to allege specific facts about what fraud was committed and the transactions that gave rise to his claims, New York Supreme Court Justice Bernard Fried said in a ruling yesterday.

- Portfolio managers will sell financial stocks when they rise to start buying technology companies such as Cisco Systems Inc., according to Ralph Acampora, a partner at Altaira Wealth Management.Scottsdale, Arizona. “They’re going to get out of the financial stuff,” said Acampora, who retired in 2007 from Knight Capital Group Inc. as one of Wall Street’s best-known technical analysts, before returning this year to manage money at Geneva-based Altaira. “What are they going to rotate into? Simple, something they don’t own. What don’t they own? Remember the bubble -- technology crashed and burned.” Investors will take advantage of financial stocks’ volatility, using any gains in those companies to sell American International Group Inc., Bank of America Corp. and General Electric Co., and shift into stocks such as Cisco and Oracle Corp., Acampora said at a Security Traders Association conference today in

- The Alba trade bloc, led by Venezuelan President Hugo Chavez, agreed to create regional mining and agriculture businesses as the group concluded a second day of talks in Bolivia. The group also has plans for an import-export business, to be called Alba Exim, and an energy company, said Bolivian Finance Minister Luis Arce, speaking today at the meeting in Cochabamba. The agriculture business will be called Alba Alimentos, according to Arce. The companies will seek “sovereignty and the development of food security in all member countries,” Arce said. The Alba bloc emerged as an alternative to a U.S.-backed free trade zone in the Americas. The bloc is made up of nine countries including Bolivia, Ecuador, Cuba and Nicaragua.

- CIT Group Inc.(CIT), the 101-year-old commercial lender seeking to avoid collapse, changed the terms of its $29 billion debt exchange to increase support among its bondholders.

- Federal investigators are gearing up to file charges against a wider array of insider-trading networks, some linked to the criminal case against billionaire hedge-fund manager Raj Rajaratnam that shook Wall Street last week, people familiar with the matter said. The pending crackdown, based on at least two years of investigation, targets securities professionals including hedge- fund managers, lawyers and other Wall Street players, the people said, declining to be identified because the cases aren’t public.

- The euro fell for a second day versus the dollar on concern policy makers will discuss the European currency’s recent strength when they meet today.

- President Barack Obama is betting his presidency on the success of his health-care bill. The politics of health care may now be costing troops their lives in Afghanistan. Make no mistake. The situation in Afghanistan is spinning out of control. Yet only a few years ago, the situation in Iraq was analogous. Iraq turned around because of a new strategy and a surge in troops. The architects of the successful Iraq strategy have devised a new approach for Afghanistan that has a solid chance of success. The window of opportunity, though, is rapidly closing.

Wall Street Journal:

- The hedge-fund billionaire charged as part of a vast insider-trading case surfaced in an earlier, separate probe into U.S. fundraising by a Sri Lankan terrorist group, people familiar with the probe said. As part of that investigation, federal agents said they uncovered documents showing that Raj Rajaratnam, founder of the Galleon Group, was among several wealthy Sri Lankans in the U.S. whose donations to a Maryland-based charity made their way to the Liberation Tigers of Tamil Eelam, according to people familiar with the probe. The LTTE, commonly known as the Tamil Tigers, fought a brutal separatist war carrying out suicide bombings and political assassinations against the government of Sri Lanka from 1976 until it was defeated in May. Mr. Rajaratnam, 52 years old, was among six people arrested Friday in what the Federal Bureau of Investigation said is the largest-ever, hedge-fund insider-trading case. Federal prosecutors charged Mr. Rajaratnam with securities fraud and conspiracy to commit securities fraud.

- Global demand for business jets, already near a five-year low, is likely to erode further before rebounding slowly in 2011, according to the latest forecast by Honeywell International Inc.

- Supporters of incumbent President Hamid Karzai demonstrated to protest "foreign interference" in Afghanistan's drawn-out election process, as results of a vote recount were postponed and Karzai campaign officials suggested his camp may not accept the official results. As they await the recount, which aims to throw out fraudulent votes, officials from the Karzai campaign cast aspersions on the process, centering their criticism on the United Nations-backed Electoral Complaints Commission, which is re-tallying the numbers. In the U.S., officials reiterated concerns over whether the Afghan government and military could serve as an effective U.S. partner, as President Barack Obama weighed a request from his top general there for more troops.

- The biofuels industry, hit hard by the global credit crunch, is getting a shot in the arm from a new source–the oil majors.

- Civilian Courts Are No Place to Try Terrorists. We tried the first World Trade Center bombers in civilian courts. In return we got 9/11 and the murder of nearly 3,000 innocents.

- General Electric Co.(GE) and Vivendi SA are about $500 million apart in talks over what Vivendi should be paid for its minority stake in stake in television and movie company NBC Universal, according to people familiar with the matter.

MarketWatch.com:

- Taiwan Semiconductor Manufacturing Co.(TSM) , the world's largest contract chip maker by revenue, may see new record revenue in 2010 due to stronger than expected demand recovery, company chairman Morris Chang said Saturday. "Now I'm more optimistic about the world economy and the industry outlook," Chang told reporters on the sideline of TSMC's annual sports meet in Hsinchu, northern Taiwan, where the chip maker is based.

IBD:
- Hunt is chief executive of Nu Skin Enterprises (NUS), a direct seller that sells anti-aging skin-care and nutrition products in 48 markets worldwide. Revenue is expected to hit nearly $1.3 billion this year.

NY Times:

- Forecast for Microsoft(MSFT): Partly Cloudy.

- Millions of Americans work for foreign companies operating in the United States, but their stories are rarely told. As the country pulls out of a devastating recession, foreign employers could help revive the economy.

- Arrest of Hedge Fund Chief Unsettles the Industry.

The Business Insider:
- How did Goldman, Sachs & Co.(GS) -- saved a year ago by the US taxpayer -- magically make $3 billion in 3 months a year later? This as the US dollar collapses, unemployment soars and foreclosures hit a record? Goldman at the apex of the crisis is delivered this money -- which they then use to borrow against at $20 or $30 for every $1. Which at 30x equals $2.1 trillion in available capital. As one of the only banks in the world with money at the time, Goldman Sachs was able to buy billions in distressed assets around the world at record low prices -- only to watch $23.7 trillion in US taxpayer money be deployed during the past year to re-inflate the asset's values that Goldman had purchased with our tax money. The question is why did we give the banks billions of our money so they could then buy assets by the trillions with our money and they keep the profits? The answer is Henry Paulson, former Goldman Sachs CEO who ran the US Treasury, and Tim Geithner, current Treasury Secretary who at the time ran the New York Federal Reserve, willingly delivered Goldman Sachs the $70 Billion -- with no strings attached. So what can we do? We must demand the return of those investment gains made with America's money - it was stolen from us and we can get it back. Demand Claw Backs - and not from the future but from the past - That is where our money is. We must have an exchange for all credit derivatives -- the current version is riddled with loopholes that let banks avoid transparency by mobbing offshore and prohibiting government regulators from being able to force the use of the exchange by the banks. So how do you do it?

- 20 Year Old Buys Home With $183,000 FHA Loan And Just 3.5% Down.

CNNMoney.com:

- It's officially official. The Obama administration on Friday said the government ran a $1.42 trillion deficit in fiscal year 2009. That made it the worst year on record since World War II, according to data from the Treasury and the White House Office of Management and Budget. Tax receipts for the year fell 16.6% overall, while spending soared 18.2% compared to fiscal year 2008. The causes: rising unemployment, the economic slowdown and the extraordinary measures taken by lawmakers to stem the economic meltdown that hit in fall 2008. Consequently, the annual deficit rose 212% to the record dollar amount of $1.42 trillion, from $455 billion a year earlier. As a share of the economy, the deficit accounted for 10% of gross domestic product, up from 3.2% in 2008.

LA Times:

- In another sign of how deep the global recession has become, the ports of Los Angeles and Long Beach on Friday reported their worst combined import statistics for September in nine years. September is often the busiest month at the nation's biggest port complex, making it one of the best barometers of the health of the economy and international trade. The port of Los Angeles received 309,078 containers packed with imported goods in September, representing a decline of 16% from the same month last year and 27% from September 2006, L.A.'s best month ever for imports. Long Beach received 224,924 import containers in September, a drop of 19% from a year earlier and 32% from September 2007, the port's best September ever. For the first nine months of the year, imports, exports and empty containers through the port of Los Angeles were down 16% at just under 5 million containers while the Long Beach port saw a decline of nearly 25% at just under 3.7 million containers, compared with the same period last year. As dismal as those figures are for the two ports, which rank first and second in the U.S. in container volume and together rank fifth in the world, a greater worry goes beyond the immediate and substantial loss of local trade-related jobs: Some of the ports' most important tenants were so poorly positioned for the downturn that they might sink completely in a sea of billions of dollars of red ink, experts say.

Politico:

- Former Alaska GOP Gov. Sarah Palin penned a tough but wonky critique Saturday night of the health care bill approved this week by the Senate Finance Committee. In a more than 1,000-word essay posted on her Facebook page shortly before midnight, Palin knocked the bill sponsored by Committee Chairman Max Baucus (D-Mont.) for not setting up proper cost offsets, but offered none of the more incinedary, "death-panel" type claims that have marked her previous comments. "It attempts to offset the costs this will impose on insurance companies by requiring everyone to purchase coverage, which in theory would expand the pool of paying policy holders," Palin wrote. "However, the maximum fine for those who refuse to purchase health insurance is $750. Even factoring in government subsidies, the cost of purchasing a plan is much more than $750." "The result: many people, especially the young and healthy, will simply not buy coverage, choosing to pay the fine instead," the former Alaska governor continued. "They’ll wait until they’re sick to buy health insurance, confident in the knowledge that insurance companies can’t deny them coverage. Such a scenario is a perfect storm for increasing the cost of health care and creating an unsustainable mandate program."

- The president of one of America’s largest labor unions, Gerry McEntee, has emerged as a major obstacle to the White House’s efforts to maintain a unified front in the health care debate. The veteran president of the American Federation of State, County, and Municipal Employees (AFSCME) has crossed lines that few labor leaders – even those who quietly agree with him – would go near. McEntee led workers in chanting a barnyard epithet to describe Senate Finance Committee chairman Max Baucus’s health care bill, which would levy a new tax on expensive health care plans. He published an op-ed in U.S.A. Today warning, in terms that could be used against Democrats in the midterms, that the plan could tax the middle class and cost workers their health care. And he blew off a plea from White House Chief of Staff Rahm Emanuel and published an open letter promising to “oppose” legislation that contained the tax – published over the objections, several labor officials said, of other union presidents whose names appeared on the letter. "We have had just about enough of his gratuitous slaps,” said a senior White House official Friday, calling the politically charged language “outrageous and unacceptable” from an ally — even from one that had, the official noted, devoted substantial resources to health care efforts.

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).

Rolling Stone:

- Wall Street’s Naked Swindle. A scheme to flood the market with counterfeit stocks helped kill Bear Stearns and Lehman Brothers — and the feds have yet to bust the culprits.

Washington Post:

- A federal investigation into defense contracts awarded through congressional earmarks is increasingly focused on a former top aide to Rep. Peter J. Visclosky (D-Ind.) who worked with the congressman on funding requests from clients of a powerful lobbying firm, according to two sources familiar with the probe. Investigators have gathered evidence that Charles E. Brimmer, Visclosky's former longtime chief of staff, suggested to some lobbyists that companies seeking Visclosky's help in getting Pentagon funds would need to commit to a program of donations to the member of the Appropriations defense subcommittee, the sources said. The Justice Department is trying to determine whether Brimmer's proposal constituted quid pro quo, an illegal act in which a public official requests something of value in exchange for an official action.

- Three months before he was elected president, Barack Obama vowed not only to reform health care but also to pass the legislation in an unprecedented way. "I'm going to have all the negotiations around a big table," he said at an appearance in Chester, Va., repeating an assertion he made many times. He said the discussions would be "televised on C-SPAN, so that people can see who is making arguments on behalf of their constituents and who are making arguments on behalf of the drug companies or the insurance companies." But now, as a Senate vote on health-care legislation nears, those negotiations are occurring in a setting that is anything but revolutionary in Washington: Three senators are working on the bill behind closed doors. Senate Majority Leader Harry M. Reid (D-Nev.) sits at the head of a wooden table at his office as he and Sens. Christopher J. Dodd (D-Conn.) and Max Baucus (D-Mont.) work to merge two competing versions of health-care legislation into one bill. The three men will be joined by top aides as well as by members of President Obama's health-care team, led by White House Chief of Staff Rahm Emanuel. The sessions started on Wednesday and could be completed this week. The group will make such key decisions as whether to include a government-run insurance plan designed to compete with private insurance companies. In the sessions, Dodd in effect represents advocates of the government-insurance option and Baucus represents those less committed to that proposal. The tie-breaking votes are likely to be Reid and, on Obama's behalf, Emanuel. Obama and Reid have said they personally back the government-insurance option but have not ruled out supporting a bill that lacks such a provision. Although much of the writing of legislation happens in closed-door meetings, congressional Republicans have sharply criticized the ongoing process. "This bill is being written in the dark of night," said House Minority Leader John A. Boehner (R-Ohio), adding that "the president ought to keep his promise to the American people and open this process up." The Senate negotiations are now an invitation-only affair in Reid's office. The majority leader is unlikely to expand his group, even as some senators unhappy with parts of the legislation, such as John D. Rockefeller IV (D-W.Va.), have asked to be in the room. Reid, in particular, faces a balancing act. As majority leader, he is tasked with shepherding the bill and ensuring that it has the support of conservative Democrats necessary for passage. But liberal activists who could raise money and help him win next year, including the group MoveOn.org, are demanding he aggressively back the public option.

- Don’t Settle for Stalemate in Afghanistan by Ike Skelton and Joe Lieberman. Six months ago the Obama administration concluded that the only way to stop Afghanistan's slide into insecurity and prevent the reemergence of a terrorist haven was to put in place an integrated counterinsurgency strategy focused on protecting the Afghan population, building up the Afghan national security forces and improving Afghan governance. We strongly supported the president's decision and continue to believe that he was right. He also made the right decision last week when, in a meeting with congressional leaders, he ruled out withdrawing U.S.Afghanistan. The key question confronting the administration now is not whether to pursue counterinsurgency in Afghanistan but whether to provide that counterinsurgency effort with the resources it needs. We believe that providing those resources will be critical. troops from

USAToday:

- A Goldman Sachs (GS) executive has been named the first chief operating officer of the Securities and Exchange Commission's enforcement division. The market watchdog agency said Friday that Adam Storch, vice president in Goldman Sachs' Business Intelligence Group, is assuming the new position of managing executive of the SEC division. The move came as the SEC has been revamping its enforcement efforts following the agency's failure to uncover Bernard Madoff's massive fraud scheme for nearly two decades despite numerous red flags.

AP:

- Brazilian officials are insisting security won't be a problem for the 2016 Olympics despite drug-gang violence that plunged Rio de Janeiro into a day of bloody chaos just two weeks after it was picked to host the games. An hourslong firefight between rival gangs in one of the city's slums killed at least 12 people, injured six and saw a police helicopter shot down and eight buses set on fire Saturday. Police said Sunday that they killed two other suspected drug traffickers in overnight clashes near the Morro dos Macacos ("Monkey Hill") slum where the gangs fought for territory a day earlier, but otherwise the area was largely peaceful as 2,000 officers were put on patrol to maintain order. Two officers died and four were injured Saturday when bullets from the gang battle ripped into their helicopter hovering overhead, forcing it into a fiery crash landing on a soccer field. Officials said they did not know if the gangs targeted the helicopter or it was hit by stray bullets. Gunfire on the ground killed 10 suspected gunmen and wounded two bystanders. Authorities said the violence would only toughen their resolve to improve security ahead of the Olympics and before 2014, when Brazil will host the World Cup soccer tournament with key games in Rio, the country's second-biggest city.

- President Barack Obama's communications director says it was Fox News Channel, not the White House, that picked a fight. Yet it was Anita Dunn's words during a CNN interview last week, saying Fox is like "a wing of the Republican Party," that ignited one of the most unusual verbal volleys between a presidential administration and journalists since Vice President Spiro Agnew complained during the Nixon years about the "nattering nabobs of negativism." Fox's coverage of health care demonstrations over the summer, former administration official Van Jones and the community activists ACORN clearly knocked the administration off stride. Fox said network executives have been told that no one from the administration would appear on a Fox show as a guest through the end of the year. Last week on his show, Beck placed a red phone on his desk, saying it was a hot line available to Dunn anytime she thought something untrue about Obama was being said on his show. "I don't think the White House actually wants a dialogue," Beck said. "They want to smear, isolate and destroy." Beck uncovered a speech Dunn had given where she referred to Mother Teresa and Mao Tse-Tung as "two of my favorite political philosophers." "I would think that what this reflects is a pent-up frustration or rage at the coverage they get, not only from Fox but elsewhere," said David Gergen, a CNN commentator and former White House aide. Gergen said he understands the temptation to go on the attack — he's done it himself — but it frequently turns out to be a mistake." My experience has been when the White House engages in personal or organizational attacks, it elevates the other side to virtually the same level of the White House, which is not their intent," he said. "It's going to spike Fox's ratings," which are already high this year. "Whether or not you like Fox News, all of us in the press need to be concerned about the administration of President Barack Obama trying to `punish' the cable news channel for its point of view," wrote television critic David Zurawik in the Baltimore Sun. Research has shown that Fox, easily the top-rated cable news network, has independents and moderates in its audience that the president shouldn't ignore, she said. In a written statement Sunday, Clemente accused the White House of continuing to "declare war on a news organization" rather than focusing on issues such as jobs and health care. "The door remains open and we welcome a discussion about the facts behind the issues," he said.

Reuters:

- General Motors Co's bid to find an outsider to replace its chief financial officer is being complicated by pay restrictions imposed on companies that got big U.S. government bailouts, The Wall Street Journal said on Saturday.

- The dominance enjoyed by Amazon.com Inc's (AMZN) Kindle faces its first major test this holiday season, but industry experts say only a real technological leap will pose a threat.

Financial Times:

- Google(GOOG) is actively exploring a number of acquisitions as it prepares to embark on an ambitious phase of growth following the downturn, according to Eric Schmidt, chief executive. "We are clearly in the market" for deals, Mr Schmidt said, speaking in an interview with the Financial Times after the company announced earnings late on Thursday. He refused to comment on specific targets, but singled out acquisitions as an important part of the company's expansion plans. It is turning its attention back to long-term growth after an uncharacteristic focus on cost-cutting in recent months. But the Google chief also sought to reassure Wall Street that the company's next investment wave will be more disciplined than before. "We put in a lot of the management and expense control we should have had at the company years earlier," he said of internal changes the company had made during the downturn. The next wave of investment was likely to be in the new areas of advertising Google was trying to build to complement its existing search business, executives indicated. They made strongly positive comments about the growth in Google's display, video and mobile advertising businesses on Thursday. Although the company does not issue separate figures for these markets, Mr Schmidt said the number of searches conducted on mobile phones had risen 30 per cent compared with three months earlier, an indication of how fast the new markets are growing. Much of Google's spending was likely to be in areas that did not directly produce revenue, such as its Chrome OS operating system for small PCs and its Android software for mobile phones, it indicated. "Those strategies are very revenue-enhacing," the Google chief said. "Those Android phones will generate a lot of . . revenue through mobile ads."

- Consumer demand for high-definition television has been one of the few constants in the recession. But in the opinion of the head of Pace, the set-top box maker, a “supercycle” that will change the way we watch our main source of entertainment is beginning.

Folha de S. Paulo:

- Antonio Quintella, president of the Brazilian unit of Credit Suisse Group, expects a slow economic recovery in Brazil that will accelerate in coming years.

Aljazeera.net:

- Iran has promised a swift and crushing response to a suicide attack in the country's Sistan-Baluchestan province that killed at least 35 people, including 11 Revolutionary Guards commanders.Pisheen would be "seriously dealt with". According to Iranian state media, a Sunni group called Jundallah, or Soldiers of God, claimed responsibility for the attack.But Tehran has also indicated it believes foreign elements were involved in the attack, the deadliest in Iran in recent years. "We consider the recent terrorist attack to be the result of US action. This is the sign of America's animosity against our country," Ali Larijani, Iran's parliamentary speaker, said. Mahmoud Ahmadinejad, the Iranian president, said on Sunday that those behind the bombing in the city of Mohammad Marandi, an assistant professor at the University of Tehran, told Al Jazeera the attack could further damage Iran's relations with the US. "I think the greatest blow [from this attack] is to any Iranian trust with regards to the Americans," he told Al Jazeera. "On the one hand, the Americans are talking about rapprochement and building a new future, yet at the same time we see the Americans supporting groups in [Iran's] Kurdish regions as well as in Sistan-Baluchestan." But Washington has denied involvement with the group, which it has labelled as a "terrorist" organisation, and condemned the attack. "We condemn this act of terrorism and mourn the loss of innocent lives," Ian Kelly, the US state department spokesman, said in a statement soon after the blast occurred. "Reports of alleged US involvement are completely false," he said. Tehran has also suggested that Saudi Arabia and Britain have supported Jundallah to stir up trouble in the border area and have linked the group to al-Qaeda. The Revolutionary Guards vowed to hit back at those behind the attack. "The Guards will give a very harsh and crushing response to this group," General Mohammad Pakpour, commander of Guards' ground forces, was quoted as saying by the Fars news agency. Like Tehran, the Revolutionary Guards has also accused the West of involvement in the attack, saying in a statement that "surely foreign elements, particularly those linked to the global arrogance were involved".

Weekend Recommendations
Barron's:
- Made positive comments on (CME), (FISV), (DMRC), (MERX), (CSCD), (APC), (CWX), (EXH) and (ANSS).

Citigroup:

- Rated (MRVL) Buy, target $21.

- Reiterated Buy on (HAL), target $34.

Night Trading
Asian indices are -.75% to +.25% on avg.

Asia Ex-Japan Inv Grade CDS Index 102.50 +7.50 basis points.
S&P 500 futures -.33%.
NASDAQ 100 futures -.25%.

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/Estimate
- (GCI)/.40

- (HAS)/.92

- (ETN)/.90

- (BBT)/.25

- (ATHR)/.38

- (TXN)/.40

- (LNCR)/.52

- (AAPL)/1.42

- (RLI)/.94

- (IEX)/.35

- (BSX)/.14

- (STLD)/.21

- (BRO)/.29

- (PKG)/.25

- (WERN)/.20

Upcoming Splits

- None of note

Economic Releases

1:00 pm EST

- The NAHB Housing Market Index for October is estimated to rise to 20.0 versus 19.0 in September.

Other Potential Market Movers
- The Fed’s Bernanke speaking, TAF Auction, BOJ Minutes and the (DTE) analyst meeting could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and industrial stocks in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the week.

Weekly Outlook

Posted by Gary .....at 10:22 AM

Click here for Wall St. Week Ahead by Reuters.

Click here for Stocks to Watch Monday by MarketWatch.

Click here for TradeTheNews.com Weekly Calendar.

BOTTOM LINE: I expect US stocks to finish the week mixed as less financial sector pessimism, diminishing economic fear, mostly positive earnings reports and investment manager performance anxiety offset profit-taking, more short-selling and higher energy prices. My trading indicators are giving mostly bullish signals and the Portfolio is 100% net long heading into the week.

Friday, October 16, 2009

Market Week in Review

Posted by Gary .....at 9:40 PM

S&P 500 1,087.68 +1.51%*

Click here for the Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Posted by Gary .....at 7:43 PM

Indices
S&P 500 1,087.68 +1.51%
DJIA 9,995.91 +1.33%
NASDAQ 2,156.80 +.82%
Russell 2000 616.18 +.21%
Wilshire 5000 11,111.98 +1.97%
Russell 1000 Growth 478.32 +1.38%
Russell 1000 Value 562.78 +1.53%
Morgan Stanley Consumer 661.0 +1.66%
Morgan Stanley Cyclical 773.84 +2.62%
Morgan Stanley Technology 540.69 -.21%
Transports 4,023.15 +3.80%
Utilities 382.03 +1.29%
MSCI Emerging Markets 40.69 +2.16%

Lyxor L/S Equity Long Bias Index 956.70 +1.54%

Lyxor L/S Equity Variable Bias Index 858.26 +1.62%

Lyxor L/S Equity Short Bias Index 1,013.55 -4.02%

Sentiment/Internals
NYSE Cumulative A/D Line +62,455 +1.57%
Bloomberg New Highs-Lows Index +480 -48.05%
Bloomberg Crude Oil % Bulls 39.0 +14.71%
CFTC Oil Net Speculative Position +68,836 +37.66%

CFTC Oil Total Open Interest 1,263,193 +1.18%
Total Put/Call .75 +7.14%
OEX Put/Call .94 -7.84%
ISE Sentiment 129.0 -7.86%
NYSE Arms 1.64 +86.36%
Volatility(VIX) 21.43 -11.37%
G7 Currency Volatility (VXY) 13.07 +3.12%
Smart Money Flow Index 9,534.80 +1.76%

Money Mkt Mutual Fund Assets $3.404 Trillion -1.20%
AAII % Bulls 47.30 +35.14%
AAII % Bears 33.80 -17.56%

Futures Spot Prices
CRB Index 276.10 +4.62%

Crude Oil 78.53 +8.63%
Reformulated Gasoline 197.93 +11.03%
Natural Gas 4.78 +.15%
Heating Oil 202.97 +8.77%
Gold 1,051.50 +.13%
Bloomberg Base Metals 181.55 -1.39%
Copper 284.55 -.31%

US No. 1 Heavy Melt Scrap Steel 258.33 USD/Ton unch.

China Hot Rolled Domestic Steel Sheet 3,344 Yuan/Ton -1.70%

S&P GSCI Agriculture 325.02 +5.68%

Economy
ECRI Weekly Leading Economic Index 128.10 -.77%

Citi US Economic Surprise Index +43.70 +63.06%

Fed Fund Futures imply 63.1% chance of no change, 36.9% chance of 25 basis point cut on 11/04

US Dollar Index 75.60 -.49%

Yield Curve 246.0 +6 basis points

10-year US Treasury Yield 3.41% +3 basis points

Federal Reserve’s Balance Sheet $2.174 Trillion +2.55%

U.S. Sovereign Debt Credit Default Swap 20.0 unch.

10-year TIPS Spread 1.99% +14 basis points
TED Spread 23.0 +1 basis point
N. Amer. Investment Grade Credit Default Swap Index 99.03 -3.26%

Euro Financial Sector Credit Default Swap Index 66.57 -5.77%
Emerging Markets Credit Default Swap Index 254.94 +1.52%
CMBS Super Senior AAA 10-year Treasury Spread 503.0 unch.

M1 Money Supply $1.672 Trillion +1.02%

Business Loans 687.70 -1.02%
4-Wk MA of Jobless Claims 531,500 -1.70%

Continuing Claims Unemployment Rate 4.50% unch.
Average 30-year Mortgage Rate 4.92% +5 basis points
Weekly Mortgage Applications 742,900 -1.77%

ABC Consumer Confidence -48 -3 points
Weekly Retail Sales +.60% +280 basis points
Nationwide Gas $2.50/gallon +.03/gallon
US Cooling Demand Next 7 Days 16.0% below normal
Baltic Dry Index 2,728 +1.22%

Oil Tanker Rate(Arabian Gulf to US Gulf Coast) 25.0 unch.

Rail Freight Carloads 208,941 +1.28%

Iraqi 2028 Govt Bonds 77.0 +.26%

Best Performing Style
Large-Cap Value +1.53%

Worst Performing Style
Small-Cap Value -.06%

Leading Sectors
Steel +5.37%

Road & Rail +5.28%

Oil Service +5.27%

Energy +5.07%
Homebuilders +3.96%

Lagging Sectors
Medical Equipment -.77%
REITs -1.39%
Computer Hardware -2.0%
Computer Service -2.33%
HMOs -2.85%

One-Week High-Volume Gainers

One-Week High-Volume Losers

*5-Day Change

Stocks Lower into Final Hour on Profit-Taking, Earnings Disappointments, Economic Concerns

Posted by Gary .....at 3:38 PM

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Technology longs, Medical longs and Defense longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is negative as the advance/decline line is lower, most sectors are declining and volume is about average. Investor anxiety is high. Today’s overall market action is mildly negative. The VIX is falling -1.89% and is high at 21.31. The ISE Sentiment Index is below average at 126.0 and the total put/call is around average at .76. Finally, the NYSE Arms has been running very high most of the day, hitting 3.19 at its intraday peak, and is currently 1.50. The Euro Financial Sector Credit Default Swap Index is rising +3.16% today to 67.33 basis points. This index is down from its record March 10th high of 208.75. The North American Investment Grade Credit Default Swap Index is rising +2.36% to 99.03 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is unch. at 23 basis points. The TED spread is now down 441 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is rising +1.63% to 39.06 basis points. The Libor-OIS spread is down -1 basis point to 12 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is down 1 basis point to 1.98%, which is down 67 basis points since July 7th. The 3-month T-Bill is yielding .06%, which is up 1 basis point today. Large-cap Growth stocks are relatively firm today, led by (GOOG). The Transports are only .3% lower on the day despite profit-taking in other cyclicals. Moreover, Defense, Utility, Oil Tanker, Gold, Internet, Medical, Retail, Restaurant, Road & Rail and Food stocks are all higher on the day. On the negative side, Bank, Steel, Computer Service and Semi shares are all posting 2%+ losses. One of my longs, (GOOG), is breaking to a new 52-week high today on volume. I still favor the shares for both the short and long-run. Overall, today’s broad market losses aren’t too bad considering recent gains and the news today. I continue to believe we are just consolidating gains before another push higher commences. Nikkei futures indicate a -35 open in Japan and DAX futures indicate an +26 open in Germany on Monday. I expect US stocks to trade modestly higher into the close from current levels on short-covering, takeover speculation, investment manager performance anxiety, lower long-term rates and earnings optimism.