THE BULL & BEAR

[spencer_has_arrived]

Pre-market Summary

Following yesterday's modest declines, and despite Fannie Mae (FNM) cutting its dividend and OPEC deciding not to raise its production, futures indicate a sharply higher open for the mkt on a combination of strong economic data and a prevailing view that the Fed will be cutting interest rates again at its Dec 11 meeting. The Nov ADP employment report showed nonfarm private employment grew at 189K on a seasonally adjusted basis compared to the consensus est that called for a reading of 50K. There has been plenty of debate regarding the validity of this number and its ability to forecast the Nonfarm Payroll number in the subsequent Employment Report (out this Friday, Dec 7th). At the very least, expect the results to cause some analysts to adjust their Nonfarm Payroll ests for Friday. A strong number should help ease recession fears and could impact the FOMC's decision on interest rates, with investors currently hoping for a 50 basis point cut. This morning's other economic data was also better than expected. The final reading on Q3 Productivity showed a reading of 6.3% (consensus 5.9%), revised up from 4.9%, while Q3 Unit Labor Costs fell 2.0% (consensus -1.2%), revised down from -0.2%. With respect to Fannie, it is aiming to shore up its capital position in a manner reminiscent of Freddie Mac (FRE). Fannie is cutting its quarterly dividend to $0.35 from $0.50 and plans to issue $7 bln of non-convertible preferred stock in one or more offerings in Dec. OPEC, for its part, decided to keep output unchanged due to its uncertainty about the economic outlook, but also agreed to meet again in Jan. Crude oil is up +1.45 to $89.77 following the announcement, but are off morning highs. On a related note, the Dept. of Energy will release its weekly inventory statistics this morning at 10:30ET. Dow futures are currently +138; Nasdaq futures are currently +26.3; S&P futures are currently +16.4. For technical levels of interest, click here... The Bond mkt slid in early trade as this morning's economic data all came in better than expected (including weekly MBA Mortgage Applications, which increased 22.5%). The 10-yr is currently -09/32 to 3.926%. Note Treasury Secretary Paulson speaks today at 11:45ET on U.S.-China economic relations... In Europe, mkts were higher by mid-day as banks bounced and commodities rose on continued consolidation talk and rising oil prices. FTSE is currently +1.7%; DAX is currently +1.3%; CAC is currently +1.6%. In Asia, mkts ended higher on speculation the U.S. and U.K. will step up measures to contain subprime loan losses and support economic growth. Nikkei closed +0.8%; Hang Seng closed +1.6%; Shanghai Composite closed +2.6%... Notable pre-market Calls include Upgrades: TTWO at Kaufman; Downgrades: FNM and FRE at Credit Suisse, FNM also at Piper Jaffray, SKM at Bear Stearns, XMSR at Stifel Nicolaus, CMCSA and ERTS at Kaufman... On the Earnings calendar: CWST, CASY, CMTL, DDMX, GEF and NOVL are confirmed to report today after the close... On the Economic calendar, Oct Factory Orders (consensus 0.0%) and Oct ISM non-manufacturing (consensus 55.0) will both be released at 10:00ET.