Morning Note...

Futures +45bps this morning as Initial Jobless Claims were lighter than expected.  For the period ending November 28^th, Initial Claims were 457k vs. 480k expected.  However, Continuing Claims (for the week ended November 21^st) were 5.465M vs. 5.4M expected.  In other economic news, Q3 Nonfarm Productivity was +8.1% vs. +8.5% expected, and Unit Labor Costs were not as low as expected, at -2.5% vs. the -4.1% estimate.  ISM non-manufacturing data is due to be released at 10am today, and the official Unemployment Rate and Change in Nonfarm Payrolls are due tomorrow morning.  In corporate news, disappointing retail sales numbers are trickling across the tape (see quote section below) this morning, BAC announced an $18B offering which – coupled with $26B in excess liquidity – would go towards paying back $45B in TARP funds, and GE & CMCSA confirmed their joint venture involving NBC Universal and Comcast’s cable networks.  Across the Atlantic, the ECB announced it would keep rates unchanged at 1% and Trichet stated the euro region’s recovery next year will be “anemic” and inflation will stay “subdued.”  Eurozone retail sales were slightly better-than-expected, at -1.9% year-over-year for October vs. -2.4%/e. 

Yesterday’s 2pm Fed Beige Book release hinted that economic conditions have improved modestly.  Recall that Bernanke’s reappointment hearings are today.  Further, Obama’s “Jobs Summit” is today at the White House.  From a technical perspective, the S&P broke out to new year-highs yesterday, but failed to follow through on the “breakout.”  It looks like we may breach those levels (SPX 1115.58) this morning, and it will be interesting to see if we hold the new highs if we achieve them. 

ADP tgt increased at BERN.  AKAM tgt increased at PIPR.  BofAMLCO ups WY.  CSFB ups FBR, TX.  FBRC ups BAC.  GSCO ups AVB, BKD.  JPHQ ups KMT, SHOR.  BARD ups ERII.  TWPT ups GIII.  UBSS ups AGO.  GSCO cuts KIM.  SNPS lower on earnings.  SIGM lower on earnings.  SEAC higher on earnings.  JMP initiates AMZN, EBAY with MP. 

Asia mixed overnight – Japan +4% on yen weakness (reflation).  Europe up roughly 50bps.  USD flat.  Oil +40bps.  Gold +15bps. 

Brightpoint News: 

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

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

MGIC INVT CORP            4.60      +8.24%             6820

ABERCROMBIE & FI        37.59    -5.79%              502644

FAMILY DOLLAR ST        29.00    -5.63%              21687

TENET HEALTHCARE       4.97      +5.07%             87587

MBIA INC                       3.76      +4.16%             73568

COMCAST CORP-A         15.50    +3.75%             1488956

INTL GAME TECH            18.28    -3.64%              150

WILLIAMS COS INC        20.88    +3.47%             1572

FIFTH THIRD BANC         10.85    +3.24%             33430

MACY'S INC                   15.78    -3.19%              174906

Today’s Trivia:  Name the US State associated with the following mottos… “Live Free or Die”… “Fatti maschii, parole femine (Manly deeds, womanly words)”… “Excelsior”… “Oro y plata (Gold and Silver)”

Yesterday's Answer:  Most estimates agree that somewhere between 100 billion and 115 billion people have ever lived on earth.  As a result, one could assume 5-6% of people who have ever been alive are alive today…

Best Quotes:   “Overall:  These comps were certainly worse than expected...

-4 companies beating expectations (LTD, JWN, ROST, KSS)

-3 companies were in-line (ZUMZ, AEO, GPS)

-16 companies missed (PLCE, ARO, COST, SSI, HOTT, BKE, APP, M, DDS, TJX, ANF, BJ, FDO, TGT, JCP, SKS)

Overall:  I would expect retailers to over-react to the downside on the open and close only underperforming the broad market by roughly 200 bps. 

Themes:

1) Don't forget the BAC Tarp re-payment and job-less claims better than expected will help support the market and retail. S&P futures up 5.

2) It seems there is a major value theme in this month's winners.  We would expect rotation back into a lot of those names for safety into year end.

3) Teens continue to be crazy trading vehicles.  Expect rotation from ARO to AEO today.  However, I actually think ANF could get interesting if hedgies overreact and puke their longs. 

4) Warehouse clubs were really disapointing relative to the value message outperformance.  I wonder if WMT is gaining share?  We haven't heard from them

5) In the department stores JWN and KSS were major winners.  Expect rotation into both names but I would rather own JWN at this point.  Macy's and Saks were not good although everyone saw that coming.  JCP probably better than headlines due to booking of internet sales in December instead of November. 

6) November weather was not good.  Valid excuse but won't matter today. 

What's moving:

ARO (8%), COST(2.5%), AEO+1.6%, ANF (7%), PLCE(9%), PSS+7%, PIR+14%, TJX(1%), BJ(2%), M(2%), FDO(5%), TGT(1.7%), KSS+0.3%, LTD+2%”

--from BCAP retail desk