Morning Note...

Futures +30bps on another quiet holiday morning.  Commodity and mining stocks are higher as a positive “economic growth outlook” is cited.  This morning’s Bloomberg lead story mentions both Barton Biggs (Traxis Partners) and Marc Faber (Gloom Boom & Doom Report) as bullish in 2010, and highlights that they both accurately called the March 2009 low and subsequent rally.  Legg Mason’s Bill Miller is also noted as “being back” after posting a 43% ytd gain (see below for more on this story).  Note the US Treasury plans to sell a record-tying $118B of bonds this week - $42B in 5yr notes and $32B in 7yr notes will be auctioned today and tomorrow, respectively.  Yesterday’s 2yr note auction was less than impressive, drawing the highest yields since September.  Retailers (including JCP and HD) are bid higher this morning after a trade group (Intl Council of Shopping Centers) reported retail sales increased 2.3% during Christmas week.  CaseSchiller Home Price Index year-over-year was in-line, at -7.28%.  Consumer Confidence due at 10am. 

On a quiet morning, here’s a solid quote from ResearchEdge, addressing value-investor Bill Miller’s “return” to Wall Street:

Whether it was my having to endure Larry Kudlow's market call last night on CNBC, or scanning this Bloomberg article on my desk about Legg Mason's Bill Miller making a "comeback" this morning, it's all one and the same. These guys apparently don't have mirrors or a YouTube. They both missed calling the crash. They are both perpetually bullish. They, sadly, are both part of the incompetent old boy club that aids and abets an American culture of recklessly buying high.

I could not make this up if I tried, but this is a direct quote from Bill Miller after the SP500 closed at a year-to-date high of 1127 last night: "There is a lot of upside left." After the most expedited 9 month rally in modern stock market history (+66.7% from the March 9th lows), that's what you get. That advice, and Kudlow calling for a "mini-boom" last night are classic contrarian indicators.

Legg Mason's marketing machine will be the last to remind you, so I'll be the first this morning. Miller lost -55% of his clients' money in 2008, and has been beat by 99% of his peers on a 5 year basis. To his defense, he also remarked that "we positioned the fund for a recovery." Thank God for that proactive plan, Bill.

Whether it's Kudlow, or Miller, or Larry Summers (whose interest rate swap positions that he signed off on in 2006 almost blew up the Harvard Endowment), it's all one and the same folks. As your favorite market savants roll out their "2010 predictions", here's mine: these guys will miss calling out most of the 2010 risk, and swing with the monkeys from the market highs. They do not have a repeatable risk management process to do otherwise. They never have.

AMZN estimates raised at PIPR.  FNM is higher after announcing its mortgage portfolio shrunk.  BHP, RTP higher on sector strength.  NY Post article cautious about bank risks.  Cautious WSJ “Heard on the Street” column about bank auditor consistency and the rising gap between original loan values and the subsequent “fair value.”  CKSW raises guidance.  DBAB ups CTCM.  KBWI ups JEF.  IPSU settles $345M insurance claim.  JPHQ ups CZZ. 

Asia higher overnight.  Europe +50bps on average.  USD -37bps.  Gold flat.  Oil +75bps. 

Brightpoint News: 

Brightpoint PreMarket (yest close/premkt/% change/volume):

S&P 500 PreMarket (last/% change prior close/volume): 

FANNIE MAE                  1.35      +6.3 %  2989532

FREDDIE MAC                1.68      +5.0 %  1491664

SOUTHWEST AIR           11.72    +2.36% 500

WILLIAMS COS INC        21.75    +2.35% 214

AMERICAN INTERNA       32.13    +2.0 %  47814

Today’s Trivia:  Why is “CH” the official abbreviation for Switzerland as seen on license plates, domain names, etc?  What does it stand for?

Yesterday's Answer:  Mexico – Guadalajara, China – Beijing, France – Marseille. 

Best Quotes:   “The Terror Attempt And The Shifting Geo-Political Climate – Several things pop up as we review the foiled Detroit plane bombing. The bomber had received both equipment and training in Yemen. The Yemeni al Qaeda took responsibility for fostering the event. Add in that Saudi Arabia has felt threatened by Yemeni rebels. Will there be pressure to strike militarily against Yemen? With troops in Iraq and Afghanistan already strained, how could a third front be managed? We may see an increase in airstrikes but ground forces are unlikely, unless they come from Saudi Arabia. George Friedman’s team over at Stratfor thinks the Christmas attempt was a trial run. Had the improvised bomb been successful, the Yemeni team could just duplicate it and send scores more bombers into the field. Further, if it had exploded and destroyed the plane, we would not know what to watch out for. When Richard Reid’s shoe bomb failed, we were alerted to shoes as an explosive conveyance. Now its personal clothing. So the bomb makers will go back to the drawing boards. They will look for an efficient device and some new place to contain it. Keep your eye on the headlines.”  --Art Cashin, UBS

“THE US$ IS MIXED IN VERY LIGHT TRADING, rising marginally in value relative to the Japanese Yen but falling relative to the Canadian dollar and falling reasonably strongly relative to the Brazilian Real. However, as one would imagine, the trading activities thus far are uncommonly light and the volumes being transacted are uncommonly small. It will be worse tomorrow and even worse Thursday on New Year’s Eve.”  --Dennis Gartman