Morning Note...

Futures -15bps this morning, largely on economic data:  Mortgage Applications are -2.5% this week and CPI readings are a touch worse than expected, but do not as yet indicate looming inflationary pressure.  Month-over-month CPI is +0.3% vs. +0.2% expected.  Year-over-year CPI is -0.2% vs. the -0.3% expectation.  Housing starts were light, at 529k vs. 600k expected.  Building Permits were 552k vs. 580k expected.  Across the pond, BofE minutes indicate a three-way vote was split on whether to extend quantitative easing.  In Asia, Japan was lower as MUFG’s capital raise sparks concern.  Also on the tape this morning:  Paulson & Co. talks up their BAC investment, Goldman Sachs pledges $500M to help 10,000 small businesses, Templeton’s Mobius sees 40% upside to the BRICs, global shipping giant Maersk sees 3%-8% growth ahead in 2010, and Obama & Hu conclude talks with “promises of increased cooperation amid lingering friction over currency, trade, and human rights.”  (BBERG)

Yesterday was the 6^th lightest volume day of the year.  We may see more of the same into year end, barring new news (a surprise in economic data one way or another or a geopolitical event).  Initial Jobless Claims & Continuing Claims tomorrow.  Note that yesterday, retailers were generally cautious regarding the holiday shopping season.  Interesting housing commentary in the WSJ this morning: 

…while fewer houses are being built, there is still too much excess in the housing market. Economists estimate that annualized starts rose to 600,000 units in October, up from 590,000 the month before. Typically in recovery scenarios, annualized pace of starts increases back up to 1 mln units 6 months after the trough. However with a record 10.9% of all housing units, or 14.2 mln units, vacant, housing starts should remain subdued. Rental vacancies are also at a record 11.1%, compared with about 6% in past recoveries.

GSCO cuts TGT.  HSY started talks with Italy’s Ferrero about making a joint bid for CBRY LN.  BERN raises TGT estimates.  BKS adopts a poison pill at Yucaipa discloses 17% stake.  BERN positive BRCD ahead of Monday’s earnings.  ADI, CAKE added to Conviction Buy List at GSCO.  CSUN higher on earnings.  DRYS $300M convert offering.  CVH added to GSCO Conviction Sell.  OPCO ups GSIC.  RBCM ups FIS.  UBSS ups BSX, ZMH.  WELA ups DC.  BMOC cuts RIMM.  GSCO cuts VIP.  LDK higher on news it will sell its stake in a polysilicon plant.  VVUS higher on trial results.  CHS higher on earnings.  Cannacord initiates Buy on XOMA.  SOLF higher on earnings.  CITI ups PHM, SII.  BofAMLCO cuts STX.  SVA announces shelf offering.  BofAMLCO cuts WDC.  CRM lower on earnings.  ASMI raised at Fortis.  ADSK lower on earnings miss.  ALV higher on positive comments on production volume. 

Asia mixed overnight.  Europe holding on to slight gains.  Oil +50bps.  Gold +60bps. USD -35bps.  Bond prices are lower. 

Brightpoint News: 

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

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

AUTODESK INC              24.90    -7.78%              1002200

MBIA INC                       3.60      +3.75%             5135

COVENTRY HEALTH        23.00    -2.87%              3400

EASTMAN KODAK           4.15      -2.81%              6414

EXCEED CO LTD             9.69      +2.76%             700

ADV MICRO DEVICE        6.79      +2.57%             408048

LIZ CLAIBORNE               5.06      +2.43%             22740

SMITH INTL INC             27.47    +2.27%             1868782

NORDSTROM INC           34.03    -2.27%              1000

KEYCORP                       5.88      +2.26%             100

PULTE HOMES INC          9.80      +2.08%             114722

Today’s Trivia:  How many zeros are in a googol?

Yesterday's Answer:  A sonnet has 14 lines.   

Best Quotes: “Will The Calendar Help The Bulls? – Wall Street folklore is filled with seasonal cycles. There’s the famous “sell in May and go away” (no so hot this year). There are many, many more. In this morning’s Stockmarket Cycles update, Sue Davy pointed to another:

Because the major indexes and averages have moved rather convincingly above some important trenddetermining moving averages such as the 420 day (20 month) moving average, we would now expect any pullback to be contained at or above those moving averages, at least through the end of this year. In research that we did a decade or two ago, we noticed that not only does the period between Thanksgiving and Christmas tend to be bullish, you would also be hard-pressed to find any significant declines historically between those two holidays. The 5.5% decline between December 16 and December 23 last year is about as large a decline as has been seen from a high to a low between Thanksgiving and Christmas.

While we haven’t seen the study, the contention that the period shows virtually no significant selloff should give the bulls a sizeable sense of security.

On the other hand, practioners of the Elliot Wave claim a whopper of a correction is due. They debate whether it is imminent or likely in January/February. We expect the usual predictions of a “Santa Claus Rally” will pop up any day now.”  --Art Cashin, UBS Note