Bull Radar

Style Outperformer:
Small-Cap Value (+.63%)

Sector Outperformers:
Gaming (+1.39%), Construction (+1.16%) and Steel (+1.10%)

Stocks Rising on Unusual Volume:
STEC, HMC, BBL, PTNR, AZN, BMY, CPX, APWR, BCSI, AIPC, FARO, JST, ILMN, AIXG, NUVA, DBRN, VPRT, ENOC, RINO, TKS, JCG, TIF, KOF, DE, KNM and COO

Stocks With Unusual Call Option Activity:
1) GPS 2) SQNM 3) JCG 4) TIF 5) MHS

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Wednesday Watch

Late-Night Headlines
Bloomberg:

- Yields on Fannie Mae and Freddie Mac mortgage securities fell to the lowest in more than six months, signaling that borrowing costs will decline as the Federal Reserve continues to buy $1.25 trillion of so-called agency home-loan bonds. Yields on Washington-based Fannie Mae’s current-coupon 30- year fixed-rate mortgage bonds tumbled 0.09 percentage point to 3.99 percent as of 2:59 p.m. in New York, the lowest since May 20, according to data compiled by Bloomberg. The declines exceeded drops in benchmark Treasury yields, which fell after a record $42 billion sale of five-year government debt drew the strongest demand in more than two years. Yield premiums tightened to a new 17-year low even as the Fed’s acquisitions meant to bolster the housing market slow, with the central bank purchasing a net $16 billion of mortgage bonds in the latest week, compared with an average of $22.2 billion. The average rate on a typical 30-year fixed-rate mortgage dropped to 4.83 percent in the latest week ended Nov. 19, according to McLean, Virginia-based Freddie Mac.

- Bank of America Corp.(BAC) shares are poised to surge -- just as soon as the lender finds someone to take the top job.

- Technology stocks may keep outperforming the broader U.S. market into next year as corporate spending rebounds, the head of T. Rowe Price Group Inc.’s technology fund said. Microsoft Corp.’s Windows 7 operating system may prompt businesses to boost investment, said Ken Allen, manager of T. Rowe’s Science and Technology Fund. Innovations including cloud computing may drive customer growth at companies such as Salesforce.com Inc. and Red Hat Inc. The fund favors companies with large market capitalizations such as Accenture Plc and International Business Machines Corp., Allen said. “The fourth quarter is likely to have year-over-year revenue growth” for the first time since the recession started, Allen said today at a news conference in New York. “Even in the downturn there has been a ton of innovation.” The biggest winners in any corporate spending rebound are likely to be Microsoft and Intel Corp., the world’s largest software and semiconductor companies, Allen said. Allen’s $2.56 billion fund has gained 60 percent this year, a better performance than 79 percent of comparable funds, according to data compiled by Bloomberg.

- Microsoft Corp.(MSFT), the world’s largest software maker, said Chief Financial Officer Chris Liddell is departing and will be replaced by Peter Klein, finance chief of the company’s business software division.

- J.Crew Group Inc.(JCG), the U.S. clothing retailer, rose 7.7 percent after the close of New York trading after reporting that third-quarter profit more than doubled. Net income advanced to $43.9 million, or 67 cents a share, from $19 million, or 30 cents, a year earlier, the New York- based company said today in a statement. Revenue climbed 14 percent to $414.1 million. Profit and sales beat analysts’ estimates. Analysts predicted profit of 59 cents and revenue of $409.9 million, the average of estimates compiled by Bloomberg. J.Crew said fourth-quarter earnings per share will be 37 cents to 42 cents a share. Analysts predict 41 cents, on average.

- Federal Reserve officials trimmed their forecasts earlier this month for the U.S. jobless rate in 2010 and 2011 as the economy rebounded while keeping their outlooks “broadly similar” to previous projections. Fed governors and regional-bank presidents predicted the unemployment rate will range from 9.3 percent to 9.7 percent in next year’s fourth quarter, down from the June projection of 9.5 percent to 9.8 percent, according to minutes of the Federal Open Market Committee’s Nov. 3-4 meeting released today.

- Movie director Steven Spielberg, General Electric Co. chief executive Jeffrey Immelt and CBS News anchor Katie Couric are among more than 300 guests for President Barack Obama’s first state dinner. They will join a group of American and Indian executives, diplomats, public officials and celebrities who will be honoring Indian Prime Minister Manmohan Singh under heated tents on the White House South Lawn. Guests will dine on potato and eggplant salad with arugula from the White House garden; roasted potato dumplings with tomato chutney, chickpeas and okra, or an alternate choice of green curry prawns served with caramelized salsify, smoked collard greens and coconut aged basmati. Pumpkin pie tarts will be served for dessert as a reminder of the American tradition of Thanksgiving this week. The wine is domestic, from vineyards in California, Oregon and Virginia. The guest chef is Marcus Samuelsson of Manhattan’s Aquavit restaurant. Guests will sit at round tables for 10 covered in apple green-colored linens with dark purple flower arrangements as centerpieces. The arrangements are made of hydrangea, garden roses and sweet peas and, according to a White House statement, they pay “homage to the state bird of India, the Indian peacock.” For entertainment the White House is bringing in American singer and actress Jennifer Hudson and Indian composer and musician A.R. Rahman, who wrote some of the music for the movie “Slumdog Millionaire.” Jazz vocalist Kurt Elling, who Michelle Obama called a “hometown Chicago guy,” also will sing. Other guests include Honeywell International Inc. Chief Executive Officer David Cote, venture capitalist John Doerr, PepsiCo Co. Chief Executive Officer Indra Nooyi and Jeffrey Katzenberg, chief executive of Dreamworks Animation SKG Inc. Ratan Tata, chairman of Tata Group, Om Prakash Bhatt, chairman of the State Bank of India, and Senapathy Gopalakrishnan, chief executive officer of Bangalore-based Infosys Technologies Ltd., are among the Indian executives who were invited to the event. Several of Obama’s friends and fundraisers from Chicago are also listed as attendees, including Penny Pritzker, who led his presidential campaign fundraising effort and is chairman of Pritzker Realty Group. Chicago fundraiser John Rogers, chairman of Ariel Investments LLC, is on the list, as are Obama’s best friends Eric Whitaker and Marty Nesbitt, as well as their wives, Cheryl Whitaker and Anita Blanchard. Obama’s former Chicago law firm boss, Judd Miner, was invited, as was Newton Minow, a Chicago lawyer and Obama family friend who served as chairman of the Federal Communications Commission in the administration of President John F. Kennedy. Politicians invited included New Mexico Governor Bill Richardson, Colin Powell, who served as secretary of state under former President George W. Bush, and members of the Senate and House of Representatives.

- Japan’s exports fell at the slowest pace in a year in October as worldwide government spending boosted demand, sustaining the economic recovery.

- Australia’s economy has entered a “new upswing” that will last for several years, helping the nation’s households fund mortgage costs, said Ric Battellino, deputy governor of the central bank. The currency rose as investors increased bets the Reserve Bank will raise interest rates next week for a record third month after Battellino told a conference in Melbourne today that it’s “reasonable to assume we will see this growth extended for a few more years yet.”

Wall Street Journal:

- For some auto makers, the global recession has spelled bankruptcy or near extinction. For Volkswagen AG's Audi unit, it could be the biggest break in decades. Audi, founded a century ago, counts as one of the world's leading luxury brands. Yet it has failed to become a major player in the U.S. Now, the German car maker, based in this small city in Bavaria, is redoubling efforts to break out of its rut in the world's largest car market. Audi has invested heavily in the U.S. this year, a counterintuitive approach at a time when its chief rivals are cutting costs. The car maker increased 2009 marketing spending by 20%, pouring millions of dollars into Super Bowl and other high-impact ads, and has unveiled eight new models in the U.S. this year. The strategy appears to be working.

- The Obama administration's push to solve the nation's energy problems, a massive federal program that rivals the Manhattan Project, is spurring a once-in-a-generation shift in U.S. science. The government's multibillion-dollar push into energy research is reinvigorating 17 giant U.S.-funded research facilities, from the Oak Ridge National Laboratory here to the Lawrence Berkeley National Laboratory in California. After many years of flat budgets, these labs are ramping up to develop new electricity sources, trying to build more-efficient cars and addressing climate change. In fiscal 2009, the Obama administration increased the funding by 18%, to $4.76 billion, to the Department of Energy's Office of Science, which oversees 10 national labs and funds research at another seven. The office will receive $1.6 billion in government stimulus spending, as well, much of which it will also channel to these laboratories.

- The White House is considering a bipartisan commission to tackle the nation's swelling deficit, as it seeks to show resolve on a problem that threatens its broader agenda. Top White House officials, including budget director Peter Orszag, met Tuesday with Senate Budget Committee Chairman Sen. Kent Conrad to discuss establishing such a commission, which has been pushed by Mr. Conrad, a North Dakota Democrat, and his Republican counterpart on the committee, Sen. Judd Gregg of New Hampshire. Senior congressional officials said the idea was gaining traction. Two officials said the White House was likely to make its own proposal for a panel, which could have less power than the proposed Conrad-Gregg commission. White House aides said no final decision had been made.

- Commanders in Afghanistan say they will devote the majority of the fresh troops expected from the White House to securing the country's troubled south and will especially target this volatile city, the Taliban's main power base. President Barack Obama will announce his revamped war strategy in an address early next week, likely Tuesday. He is widely expected to adopt a plan that sends between 20,000 and 40,000 more troops to bolster a flagging military campaign and the 68,000 U.S. troops now fighting it.

- Two Retailers Bet on Upturn.

NY Times:

- The Washington Post will close its last three remaining national bureaus in a cost-cutting move, Kris Coratti, the paper’s director of communications, said Tuesday. The decision effectively means The Post will cover national stories by traveling from its base in Washington.

Forbes:

- Real Estate Stocks: The Case For David Instead Of Goliath.

Las Vegas Business Press:

- A subsidiary of bank holding firm Goldman Sachs(GS) filed more than 50 lawsuits in Las Vegas courts against individual homeowners during a one-month span this year. Some local observers say the litigation could signal the beginning of a Wall Street backlash against defaulting borrowers. The financial giant's subsidiary, MTGLQ Investors, sued 55 borrowers in Clark County District Court as of press time. Some attorneys are calling the high volume of cases filed unusual and say the legal push may be the start of an investor movement to recoup home-loan losses. Note holders are tired of people walking away from their homes and leaving second-lien holders with no equity in the house to repay the loan, bankruptcy lawyer George Haines said.

FINalternatives:

- Nashville, Tenn.’s public pension plan is preparing to take the plunge into hedge funds. The Metropolitan Government of Nashville and Davidson County Employee Benefit Trust Fund will issue a request for proposals next month for a hedge fund manager. The investment will be Nashville-Davidson’s first-ever in hedge funds, and it looks to be a big one: The pension has allocated up to 10% of its assets to the mandate, which could total $185 million. The mandate will be funded from the pension’s equity portfolio.

Rasmussen:

- Republican candidates have extended their lead over Democrats to seven points, their biggest lead since early September, in the latest edition of the Generic Congressional Ballot. The latest Rasmussen Reports national telephone survey shows that 44% would vote for their district’s Republican congressional candidate while 37% would opt for his or her Democratic opponent.

CBSNews:

- A few days after leaked e-mail messages appeared on the Internet, the U.S. Congress may probe whether prominent scientists who are advocates of global warming theories misrepresented the truth about climate change. Sen. James Inhofe, an Oklahoma Republican, said on Monday the leaked correspondence suggested researchers "cooked the science to make this thing look as if the science was settled, when all the time of course we knew it was not," according to a transcript of a radio interview posted on his Web site. Aides for Rep. Darrell Issa, a California Republican, are also looking into the disclosure. The leaked documents (see our previous coverage) come from the Climatic Research Unit of the University of East Anglia in eastern England. In global warming circles, the CRU wields outsize influence: it claims the world's largest temperature data set, and its work and mathematical models were incorporated into the United Nations Intergovernmental Panel on Climate Change's 2007 report. That report, in turn, is what the Environmental Protection Agency acknowledged it "relies on most heavily" when concluding that carbon dioxide emissions endanger public health and should be regulated. Last week's leaked e-mails range from innocuous to embarrassing and, critics believe, scandalous. They show that some of the field's most prominent scientists were so wedded to theories of man-made global warming that they ridiculed dissenters who asked for copies of their data ("have to respond to more crap criticisms from the idiots"), cheered the deaths of skeptical journalists, and plotted how to keep researchers who reached different conclusions from publishing in peer-reviewed journals. As the leaked messages, and especially the HARRY_READ_ME.txt file, found their way around technical circles, two things happened: first, programmers unaffiliated with East Anglia started taking a close look at the quality of the CRU's code, and second, they began to feel sympathetic for anyone who had to spend three years (including working weekends) trying to make sense of code that appeared to be undocumented and buggy, while representing the core of CRU's climate model. Groups like the free-market Competitive Enterprise Institute, the target of repeated derision in the leaked e-mails, have said: "We have argued for many years that much of the scientific case for global warming alarmism was weak and some of it was phony. It now looks like a lot of it may be phony." ScienceMag.org published an article noting that deleting e-mail messages to hide them from a FOI request is a crime in the United Kingdom. George Monbiot, a U.K. activist and journalist who previously called for dramatic action to deal with global warming, wrote: "It's no use pretending that this isn't a major blow. The emails extracted by a hacker from the climatic research unit at the University of East Anglia could scarcely be more damaging." Complicating matters for congressional Republicans who'd like to hold hearings is that East Anglia, of course, is a U.K. university. The GOP may intend to press the Obama administration for details on how the EPA came to rely on the CRU's predictions, and whether the recent disclosure will change the agency's position.

Reuters:

- American International Group Inc, the insurer that received billions of dollars in a U.S. bailout, has been authorized by its board to pay Chief Executive Robert Benmosche's $7 million compensation, after it laid to rest concerns that he may quit the post. The approval, which the company announced on Tuesday, means that AIG can pay Benmosche an already agreed annual salary of $3 million in cash and $4 million in fully-vested AIG stock. Benmosche could also be eligible for a performance bonus that would raise his total compensation as high as $10.5 million. As one of the largest recipients of U.S.Washington pay czar Kenneth Feinberg. Once the world's largest insurer, AIG was saved last September by a taxpayer bailout that has grown to as much as $180 billion, including more than $80 billion in loans. The company is around 80 percent-owned by U.S. taxpayers. aid, AIG has to comply with pay regulations imposed on the top 100 executives at companies that have received the largest loans under the U.S. Treasury's Troubled Asset Relief Program. Benmosche's pay package had already been approved by

- Facebook has established a dual-class stock structure to ensure voting control by existing owners, but has no plans to become a public company, it said on Tuesday.

- Short interest on the New York Stock Exchange and Nasdaq edged higher in early November, data from the exchanges showed on Tuesday, signaling that some investors are betting the equity run-up might hit some turbulence as 2009 winds down. The NYSE reported its short interest rose 2.3 percent to about 13.18 billion shares as of Nov. 13 from 12.88 billion shares as of Oct. 30. Short interest was equal to 3.45 percent of total shares outstanding. Short interest on the Nasdaq rose 2.1 percent to about 6.5 billion shares as of Nov. 13, from 6.36 billion shares as of Oct. 30. The Nasdaq said that represented 2.75 days average daily volume, compared to an average of 2.89 days for the previous period. Year-to-date, short-sellers have a negative return of 29.2 percent, which puts 2009 on track to possibly be one of the worst years ever, according to Strunk. "They are probably waiting to see what the holiday numbers look like for consumer confidence," he added.

- It's a crime so profitable that even dead people are in on the act. A U.S. Senate committee revealed last year that public health insurer Medicare had paid as much as $92 million from 2000 to 2007 for medical services or equipment ordered or prescribed by doctors who were dead at the time. Many had died more than five years before the date when they supposedly ordered or authorized the service. Healthcare fraud said to cost U.S.U.S. healthcare system -- especially since President Barack Obama wants to cover some of the cost of reforms by fighting abuse. Yet interviews with several law enforcement and healthcare experts indicate the president may be disappointed. Some fear the focus on fraud may come as too little, too late after years of government complacency and inaction. Experts like the FBI's John Gillies say the problem has been getting worse all the time, as mob figures and violent criminals are lured by fabulously easy money and relatively light prison sentences into fraud targeting Medicare, the federal health insurer for more than 43 million elderly and disabled Americans. "There are so many schemes involved. Take any aspect of the healthcare industry and there's a fraud going on in there right now," Gillies, special agent in charge of the FBI Miami Division, told Reuters in a recent interview.

Financial Times:

- Standard & Poor’s acknowledged on Tuesday that a new ranking of banks’ capital strength, which had sparked concerns over lower-ranked institutions such as UBS(UBS) and Citigroup(C), might have been misleading. The ratings agency published a study this week ranking 45 of the world’s leading financial institutions by a new risk-adjusted capital (RAC) ratio designed to better capture balance sheet strength. The assessment painted a markedly different picture of banks’ relative strength than under the current Basel II rules on capital adequacy, which has unsettled some investors. UBS, for example, which has a ratio of 15 per cent under the standard tier-one measure of capital strength, was given a ratio of just over 2 per cent in the S&P report. Citigroup, the US-based financial services group, was given a ratio of 2.1 per cent. However, because the published assessment was based on banks’ balance sheets as of the end of June, it failed to take into consideration any actions banks have taken since to clean up their books. “The report issued by S&P is not representative of UBS’s capital position in relation to its peers,” the Zurich-based bank said on Tuesday. “Their report shows a RAC as of June 20 2009 which does not take into account two important components of UBS’s capital.” S&P insiders said the agency planned to issue a supplementary statement “in the next few days” clarifying that UBS’s ratio would be 7.1 per cent, instead of 2.2 per cent, if capital actions carried out since June were factored in. Citigroup, which added $64bn in tier-one equity in the third quarter, would have a ratio of 6.1 per cent. It also stressed the point on a conference call with investors.

- Early this year, bookmakers would have given a private equity fund trying a leveraged buyout the same odds as a porcine airshow or an ice storm in July. A few trillion dollars of government bailout spending later and the impossible has become merely complicated as buyout shops and their bankers test the resuscitated leveraged loan market with growing regularity. “Loan issuance has picked up, really just in the last month,” one leveraged finance banker at a global bank told Debtwire. “The window of opportunity is open for the next few weeks and then it will slow down for the back half of December. But most banks are already talking about what deals will be coming in January,” he said. LBO issuance will continue apace if not accelerate in the near term, said multiple banking, private equity and buyside sources. As more new deals hit the market, bank risk appetite will grow as well, as reflected by Goldman’s full backstop for the IMS Health deal and a Barclays-led syndicate’s full backstop of the TASC deal.

Economic Daily News:

- Compal Electronics Inc. forecast fourth-quarter laptop shipments to rise 20% from the previous quarter, from a previous estimate of 10%, citing Compal President Ray Chen. This would boost 2009’s shipment target to 37 million units. The company also expects laptop shipments to rise 20% in 2010.

Late Buy/Sell Recommendations
Citigroup:

- Upgraded (VPRT) to Buy, target $62.

- Reiterated Buy on (JCG), boosted estimates, raised target to $49.

- Reiterated Buy on (AEO), target $19.

- Rated (JDSU) Buy, target $9.50.

Thomas Weisel:

- Rated (FARO) Overweight, target $24.

Morgan Stanley:

- Reiterated Overweight on (DLTR), target $60.

CSFB:

- Reiterated Outperform on (GME), boosted estimates, target $30.

- Reiterated Outperform on (MDT), target $49.

Night Trading
Asian Indices are -.25% to +.50% on average.

Asia Ex-Japan Inv Grade CDS Index 110.0 +4.5 basis points.
S&P 500 futures +.19%.
NASDAQ 100 futures +.17%.

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Earnings of Note
Company/EPS Estimate
- (TIF)/.23

- (DE)/.06

Economic Releases

8:30 am EST

- Personal Income for October is estimated to rise +.1% versus unch. in September.

- Personal Spending for October is estimated to rise +.5% versus a -.5% decline in September.

- PCE Core for October is estimated to rise +.1% versus a +.1% gain in September.

- Durable Goods Orders for October are estimated to rise +.5% versus a +1.4% gain in September.

- Durables Ex Transports for October are estimated to rise +.7% versus a +1.2% gain in September.

- Initial Jobless Claims for last week are estimated to fall to 500K versus 505K the prior week.

- Continuing Claims are estimated to fall to 5565K versus 5611K prior.

10:00 am EST

- Final Univ. of Mich. Consumer Confidence for November is estimated to rise to 67.0 versus 66.0 in October.

- New Home Sales for October are estimated to rise to 404K versus 402K in September.

10:30 am EST

- Bloomberg consensus estimates call for a weekly crude oil build of +1,500,000 barrels versus a -887,000 barrel decline the prior week. Gasoline inventories are expected to rise by +300,000 barrels versus a -1,755,000 decline the prior week. Distillate supplies are estimated unch. versus a -328,000 barrel decline the prior week. Refinery Utilization is estimated to rise +.33% versus a -.49% decline the prior week. Finally, natural gas inventories are estimated to rise by +5 bcf versus a +20 bcf gain the prior week.

Upcoming Splits
- None of Note

Other Potential Market Movers
- The Treasury’s 7-Year Note Auction, weekly MBA mortgage applications report and the (PBR) analyst meeting could also impact trading today.

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

Stocks Finish Slightly Lower, Weighed Down by REIT, Construction and I-Banking Shares

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Stocks Lower into Final Hour on Profit-Taking, China Worries, Economic Concerns

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Technology longs, Medical longs and Biotech longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is mildly negative as the advance/decline line is lower, most sectors are declining and volume is below average. Investor anxiety is high. Today’s overall market action is neutral. The VIX is falling -3.45% and is high at 20.43. The ISE Sentiment Index is above average at 194.0 and the total put/call is above average at .90. Finally, the NYSE Arms has been running above average most of the day, hitting 1.66 at its intraday peak, and is currently 1.08. The Euro Financial Sector Credit Default Swap Index is rising +7.13% to 74.63 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 +2.10% to 102.78 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is falling -1 basis point to 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 falling -13.29% to 28.13 basis points. The Libor-OIS spread is down -1 basis point to 13 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is down -6 basis points to 2.15%, which is down -50 basis points since July 7th. The 3-month T-Bill is yielding .03%, which is up +1 basis point today. The S&P 500 is consolidating yesterday’s surge above the key 1,100 level well today, after the bears were unable to gain morning traction despite a larger than expected downward revision to 3Q personal consumption, a -3.4% decline in China overnight, weakness in (IYR) and falling commodity prices. Large-cap growth stocks are outperforming. Many market leading stocks are substantially outperforming the broad market. HMO, Education, Drug, Biotech, Medical, Telecom, Semi, Steel, Oil Service, Energy and Utility shares are all higher on the day. Johnson Redbook weekly retail sales rose +2.1% this week vs. a +1.8% gain the prior week. This is the best showing since the week of Aug. 5^th, 2008. I still expect retail sales to exceed estimates this holiday shopping season on pent-up demand, rising stock prices, a stabilizing housing market and less fear. I suspect China will come under further pressure tonight. Nikkei futures indicate a -40 open in Japan and DAX futures indicate an +18 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on short-covering, diminishing healthcare reform worries, lower long-term rates, falling energy prices, technical buying, investment manager performance anxiety and seasonal strength.

Today's Headlines

Bloomberg:

- Medtronic Inc.(MDT), the biggest maker of heart-rhythm devices, said profit grew 59 percent, helped by sales of a new heart stent. The shares rose the most in a year after the company raised its earnings forecast.

- JPMorgan Chase & Co.(JPM) and Pacific Investment Management Co. are inundated with money from individuals attempting to mimic the performance of hedge funds speculating that the stock-market rally is over. So-called bear-market and long-short mutual funds, designed to protect against falling stock prices, attracted a record $10 billion this year through October, more than double the previous high in 2006, according to Morningstar Inc. Asset managers have opened 19 long-short funds, the most in one year. The funds’ rising popularity shows how skeptical small investors remain even after the Standard & Poor’s 500 Index recouped almost half the 57 percent loss incurred from October 2007 to the March 2009 low. Conventional mutual funds that only buy U.S. stocks posted $4.6 billion of redemptions in the first 10 months of the year, while bond funds added $280 billion.

- Investors should buy bullish options on U.S. retailers including Wal-Mart Stores Inc.(WMT) and Gap Inc.(GPS) because increases in home sales and bank lending suggest consumers will spend more, Jefferies Group Inc. said. “Retail firms are well positioned for a rebound in consumer spending,” derivatives strategist Scott Becker wrote in a report today. “With the consumer hunting for deals now more than ever, Black Friday may provide the upside catalyst for the retail space going into year end.” “Increases in existing home sales are also an indication of improving retail sales as stabilizing housing fundamentals allow for higher discretionary spending,” the New York-based strategist wrote. Becker also recommended buying call options giving the right to purchase shares of Abercrombie & Fitch Co., Urban Outfitters Inc., Coach Inc., Target Corp., Kohl’s Corp., Costco Wholesale Corp., Best Buy Co. and Lowe’s Cos., all of which have a “buy” rating at Jefferies. The day after the U.S. Thanksgiving holiday, Nov. 27 this year, is known as “Black Friday” and marks the beginning of the holiday shopping season. Retailers may lure 4.7 percent more consumers this year over the Black Friday weekend, the Washington-based National Retail Federation said today.

- Trading of bullish General Electric Co.(GE) options surged as an investor wagered on a 40 percent jump in the stock before January 2011. More than 225,000 calls changed hands as of 12:41 p.m. in New York, 2.5 times the four-week average. Contracts to buy GE shares for $22.50 by Jan. 21, 2011, were the most-active following a single trade of 131,500 contracts. Shares of GE added 0.7 percent to $16.13.

- Home prices in 20 U.S. cities rose for a fourth straight month in September, pointing to improvement in real estate that’s helping the economy emerge from recession. The S&P/Case-Shiller home-price index increased 0.27 percent from the prior month on a seasonally adjusted basis, after a 1.13 percent rise in August, the group said today in New York. The gauge fell 9.36 percent from September 2008, more than forecast, yet the smallest year-over-year decline since the end of 2007.

- China’s five largest banks submitted plans to regulators for raising money after unprecedented lending eroded their capital, according to four people with knowledge of the matter. Industrial & Commercial Bank of China Ltd., China Construction Bank Corp., Bank of China Ltd., Agricultural Bank of China and Bank of Communications Ltd. told the China Banking Regulatory Commission how they can bolster capital ratios after the watchdog evaluated their finances last week, the people said. Lenders were told to estimate potential deficits in 2010 based on their own loan forecasts and capital ratio targets, they said. Bank shares fell in Hong Kong trading today after Bank of China said it’s studying “various options” to replenish capital. “With China’s pace of credit growth, banks’ capital will be drained very quickly and that leaves little room for cushioning if asset quality worsens,” said Sheng Nan, a Shanghai-based analyst at UOB-Kayhian Investment Co.

- Commodity investors risk a “Sub- Prime II”-style crisis should assumptions underlying record levels of speculation prove unfounded, Citigroup Inc. said. “Thousands of very smart speculators have accumulated the biggest ever speculative physical raw-material positions ever witnessed in the belief that either the dollar will collapse or an ongoing global ‘Supercycle’ will shake off the effects of the credit crunch,” London-based Citigroup analyst Johan Bergtheil wrote in a report dated yesterday.

- Crude oil fell after a report showed that the U.S. economy grew at a slower level than previously estimated, and on forecasts that supplies gained. Oil retreated after the Commerce Department said that the economy expanded at a 2.8 percent annual rate in the third quarter, down from a 3.5 percent increase initially stated. “The fundamentals of this market are terrible and it’s been held higher by what’s happening elsewhere. The move is bigger than what we would normally see because the volume is so light.” “At least until the end of the year we see $80 as the top of the range,” said Tobias Merath, a commodity analyst at Credit Suisse Group in Zurich. “What’s limiting the potential in the short term is the supply glut in the distillate market.” “Oil should be at $50,” Schork said. “Look at Valero and Sunoco. They can’t make any money selling fuel, so they are shutting plants. If refineries are being shut, there’s no need for additional crude.” Valero Energy Corp., the largest U.S. refiner, said on Nov. 20 that it will close its Delaware City, Delaware, plant because of mounting losses after the recession eroded demand for gasoline and diesel. Philadelphia-based Sunoco Inc. idled its Eagle Point refinery in Westville, New Jersey, this month. “The floor has been set by the weaker dollar, higher inflation theme, while the ceiling has been set by weak refining margins, and a global recovery that is expected to be sluggish,” said Mike Wittner, head of oil market research at Societe Generale SA in London.

Wall Street Journal:

- Spurred by the release of a hot videogame and earlier-than-usual promotions on televisions, U.S. shoppers spent 6.1% more on electronics in the first half of November the month, through Nov. 14, than a year ago, according to a recent analysis from MasterCard SpendingPulse, a unit of MasterCard Advisors. Retailers such as Best Buy Co., Wal-Mart Stores Inc. and Amazon.com Inc. have begun earlier-than-usual promotions on TVs and videogames. And many people are buying laptops and netbooks loaded with Microsoft Corp.'s new Windows 7 operating system. Preseason Internet sales of a range of merchandise were up 19.4% over the first two weeks of November 2008. According to a preliminary Black Friday shopping survey conducted for the National Retail Federation by BIGresearch, up to 134 million people plan to shop this Friday, Saturday or Sunday, up from 128 million who planned to last year. Discount and department stores will be the biggest attractions for consumers this weekend, with 66% and 62%, respectively, planning to head to their favorite big-box store; 41% said they would shop at electronics stores; 36% planned to visit a clothing or clothing accessories store.

- Sen. Joseph Lieberman, speaking in that trademark sonorous baritone, utters a simple statement that translates into real trouble for Democratic leaders: "I'm going to be stubborn on this." Stubborn, he means, in opposing any health-care overhaul that includes a "public option," or government-run health-insurance plan, as the current bill does. His opposition is strong enough that Mr. Lieberman says he won't vote to let a bill come to a final vote if a public option is included. Probe for a catch or caveat in that opposition, and none is visible. Can he support a public option if states could opt out of the plan, as the current bill provides? "The answer is no," he says in an interview from his Senate office. "I feel very strongly about this." How about a trigger, a mechanism for including a public option along with a provision saying it won't be used unless private insurance plans aren't spreading coverage far and fast enough? No again. So any version of a public option will compel Mr. Lieberman to vote against bringing a bill to a final vote? "Correct," he says. This is, of course, more than just one senator objecting to one part of health legislation. This is the former Democratic vice presidential nominee, now an independent, Joe Lieberman, still counted on to be the 60th vote Democrats will need to force a final vote on health legislation. In opposing a public option, he is opposing the element some Democratic liberals have come to consider the cornerstone of a health-care bill.

CNBC:

- Federal Reserve officials are increasingly confident the U.S. economic recovery is sustainable, but they do not see employment picking up soon, according to minutes from their November meeting released on Tuesday.

- Boeing(BA) and Duke Energy(DUK) are among the companies awarded stimulus funds today as part of $4.5 billion set aside for enhancing smart grid technology.

MarketWatch.com

- Treasury bill yields are now as low as they were one year ago, during the darkest days of the panic and financial meltdown.

The Business Insider:

- Wall Street is starting to weigh in on AOL's(AOL) stock, which will start trading today. Here's Doug Anmuth of Barclays. His conclusion is slightly more optimistic than ours, but the underlying message is the same: You've got upside!

- As for what they're buying and holding, here's a list of the 50 "stocks that matter most" to hedge funds.

SmartMoney:

- BlackRock(BLK), Wall Street’s Newest Giant.

FinancialNews:

- Hedge funds remain the single most important investor group for investment banks, contributing nearly a third of overall equities revenues, with assets predicted to grow a further 10% this year.

SecuritiesIndustryNews:

- Don’t be surprised if more creative techniques involving the capturing of electronic messages or other evidence are used as the S.E.C. tries to step up its game, in the wake of the multibillion-dollar Ponzi scheme run by Bernard L. Madoff and other fallout of the two-year-old financial crisis. Prosecutors built their case against former Bear Stearns Cos. hedge-fund mangers Ralph Cioffi and Matthew Tannin around e-mail messages. “We will do everything we can to adopt whatever creative investigation techniques that appear appropriate to the case” being pursued, he said.

sandbox:

- It's been a week since Xbox Live launched access to Facebook on its online service - and the numbers are in. Two million players logged on to Facebook through their game consoles. This is a big deal. Xbox Live was already a thriving social hub, combining gameplay, community, and chat. Now with Facebook/Twitter access, it's unstoppable. What's Microsoft's big plan? To build "the largest social network connected to the TV," as a spokesperson puts it.

Diamonds.net:

- U.S. weekly chain-store sales rose by 3.3 percent year on year for the week that ended November 21, 2009, according to the International Council of Shopping Centers (ICSC) and Goldman Sachs. The week's comparable-store sales increase reflected an easy year-on-year comparison, given the 0.8 percent drop recorded one year ago. Sales were flat compared with the previous week. November's overall sales performance relies heavily on the cash-register sales generated on November 27, or "Bargain Friday," as it is now referred to by ICSC, given the heavy discounts expected this year. Michael P. Niemira, ICSC's director of research and chief economist, noted, “ICSC Research expects that day and that subsequent Saturday to be very strong. For the month, ICSC Research now expects November sales up 4 to 6 percent as easy year-over-year comparisons will dominate the results.”

Rassmussen:

- The Rasmussen Reports daily Presidential Tracking Poll for Tuesday shows that 27% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. Forty-two percent (42%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -15. This is the lowest Approval Index rating yet measured for President Obama (see trends).

- Sixty-three percent (63%) of U.S. voters say political correctness prevented the military from responding to warning signs from Major Nidal Malik Hasan that could have prevented the Fort Hood shootings from taking place. A new Rasmussen Reports national telephone survey shows that just 16% disagree and do not believe political correctness kept military authorities from possibly stopping the killing of 13 people and the wounding of many others in the November 5 incident.

Politico:

- Seventy-five percent of U.S. women disagree with the recommendations of a government panel that urged fewer women to get mammograms, with 47 percent saying that they strongly disagree, according to a new Gallup Poll. New guidelines issued by the U.S. Preventive Services Task Force suggest women begin getting routine mammograms starting at age 50, rather than age 40, and that such tests should be every other year. Among women ages 35 to 49, 84 percent said that they will ignore the guidelines and get a mammogram before age 50, according to the poll. Women also said they believed the reasoning behind the government report was not based on health but rather on potential cost benefits: About 76 percent of women said cost was the main reason for the report’s findings, whereas 16 percent said it was based upon an assessment of risks and benefits. The report has received backlash from lawmakers and breast cancer survivors alike.

- President Barack Obama has settled on a new course for the eight-year war in Afghanistan that he said Tuesday will “finish the job” and that he will announce to Americans after Thanksgiving. “After eight years, some of those years in which we did not have, I think, either the resources or the strategy to get the job done, it is my intention to finish the job,” Obama said at a news conference following his meeting with the prime minister of India, Manmohan Singh. “And I feel very confident that when the American people hear a clear rationale for what we're doing there and how we intend to achieve our goals, that they will be supportive.” The president would not confirm reports that he will make his announcement in a prime-time address next Tuesday, Dec. 1, saying only that he’d announce his plan “shortly.”

SeekingAlpha:

- Greenlight’s Einhorn Exits Energy, Focuses on Healthcare.

Reuters:

- Ford Motor Co(F) will launch a new car model in India every 12-15 months over the next five years, with its new Figo small car is set to drive a tripling of sales in 2010, its India head said on Tuesday. The No 2 U.S. automaker by sales plans to use India as a global manufacturing hub for compact cars, eyeing the country's low-cost facilities to grow in a segment that it expects will make up 60 percent of all global car sales in 10 years.

- When Fairfax Financial Holdings Ltd sued a group of hedge funds in 2006 claiming they conspired to drive down the price of the company's shares, many viewed the litigation as a cynical attempt by the Canadian insurer to silence its critics. Some skeptics predicted the lawsuit filed with a New Jersey state court would be quickly dismissed and forgotten. But three years later, the lawsuit against Steven Cohen's SAC Capital Advisors, James Chanos' Kynikos Associates and others is going strong and creating headaches for two of the best-known U.S. hedge fund managers. Fairfax's lawyers are expected to start taking depositions of some of the hedge funds' executives and traders soon. The Securities and Exchange Commission, now prominently pursuing an insider-trading case against New York-based hedge fund firm Galleon Group, has taken notice of some of the allegations raised in the Fairfax lawsuit, launching its own investigation last year, said people familiar with the case.

- VeriSign Inc (VRSN) expects to return to double-digit revenue growth in 2011, driven by its core businesses and the launch of new services in 2010, its top executive said.

United Evening News:

- Quanta Computer Inc., the world’s largest maker of notebook computers, revised its forecast for January-March shipments to a decline of 5% on quarter, from an earlier estimate of a 10% drop, citing company vice chairman C.C. Leung. Shipments next year may rise at least 40%, he said.