China stocks and other emerging market plays are nothing new here, but I was surprised to see how many BRIC (Brazil – Russia – India – China) stocks placed in this week's IBD 100.

The IBD 100 is a list of technically and fundamentally leading stocks generated using the Investor Business Daily's proprietary techniques. While the exact formula is a black box, one thing is certain: the IBD 100 list is where mo-mo investors tend to lurk.

The following 10 European ADRs have daily trading volume of over 2.5 million shares:

1. Nokia (NOK)
2. Alcatel-Lucent (ALU)
3. ArcelorMittal (MT)
4. Ericsson (ERIC)
5. ABB
6. UBS
7. ING
8. Vimpel Communications (VIP)
9. Banco Santander (STD)
10. Statoil (STO)

While many tech stocks are up this year, Nokia is still down 18% YTD. The financial giant ING has lost 15% YTD. Due to the strong rebound of the Russian market, Vimpel Communications has soared over 167% so far this year.

VimpelCom (VIP) reported third-quarter 2009 earnings of 42 cents per ADS (based on an average exchange rate of 31.26 RUR/US$) that narrowly missed the Zacks Consensus Estimate of 44 cents. However, the result beat the year-ago earnings per ADS of 27 cents.

The second-largest Russian telecom carrier reported quarterly net income of RUR13.5 billion (US$432 million), more than double the net income of RUR6.5 billion (US$208 million) reported in the year-ago quarter. This significant year-over-year growth is largely attributable to foreign exchange gains from a strong Russian ruble versus the US dollar.

• Underwater mortgages could drown housing recovery. 23% of all U.S. homeowners with a mortgage, or 10.7M, now owe more to the bank than their house is worth, according to a report from First American CoreLogic this morning. More than 5.3M of those mortgages are at least 20% higher then the home's value. Noting the close correlation between negative equity and foreclosures, the firm calls the trend "an outstanding risk hanging over the mortgage market." While more than 40% of borrowers who took out a mortgage at the peak in 2006 are under water, prices have dropped so much that some borrowers who took out loans more than five years ago also owe more than their home's value. Given this, some say it's hard to believe we've broken out of the housing death spiral.
• China will punish non-compliant banks. Chinese banking regulators warned that banks which do not respect capital adequacy rules will face sanctions that could include limits on market access, overseas investments and new branches. The government's economic stimulus this year has generated a surge in bank lending, bringing it to nearly half of total GDP, at 7.37T yuan ($1.08T), and regulators fear a sharp increase in non-performing loans. The regulator recently raised the amount of reserves to 10% from 8%, and has limited the amount of subordinated bonds that banks could count toward capital requirements. Jitters that Chinese regulators will aggressively curb bank lending sent the Shanghai Composite index plunging 3.5% today.
• Fed pushes TARP repayments. Sources say the Fed has asked nine of the TARP recipient banks that underwent stress tests earlier this year to submit a schedule for repayment of the government's cash injections, and wants banks to repay the loans as soon as they have sufficient capital reserves. The request may turn up the pressure for banks accustomed to more flexibility on the timing and process of TARP repayments. Bank of America (BAC) is reportedly one of the banks, which have received about $142B of a total $700B in TARP funds.
• Corporate bond sales hit record. Corporate bond sales surged to a record annual high of $1.171T YTD - more than the $1.167T sold in all of 2007 - as companies take advantage of low interest rates to rebuild their balance sheets. Companies that could not sell debt during the financial crisis are borrowing more aggressively, and being careful to sell debt with longer maturities to avoid being trapped by refinancing risk as they were in 2008, analysts said. The bond sale surge was also supported by the FDIC's debt-guarantee program - companies issued $200B of debt guaranteed by the FDIC this year before the program ended on Oct. 31.
• HP triples share buybacks. Hewlett-Packard (HPQ) raised its share buyback purchases to $12B, three-times the size of those previously planned, as the company reported earnings that beat analyst estimates (see figures below). Revenue from emerging markets and China in particular, along with increased margin on services, boosted HP's earnings. But CEO Mark Hurd said on HP's earnings call that, although there were pockets of returning demand, in particular in printer sales, sales in Europe were still weak. By unit, Services revenue was up 8% to $8.9B; Enterprise Storage and Servers revenue fell 17% to $4.2B; Software revenue declined 16% to $967M; PC sales -12% to $9.9B; Imaging and Printing dropped 15% to $6.5B.
• NBCU IPO could scuttle deal. With right of first refusal, GE (GE) is reportedly leaning toward allowing an IPO of Vivendi's (VIVDY.PK) stake in NBC Universal, as talks over selling the unit to Comcast (CMCSA) stall. The annual window in which Vivendi could decide to sell ends Dec. 10; an IPO would likely scuttle GE's deal with Comcast.
• Where to stash the gold? Investors are piling money into gold, but are having trouble finding a place to put their holdings. According to the WSJ, HSBC (HBC) has asked retail clients to take their gold out of the vault to make room for their institutional investors' gold. Despite the price of gold hovering at about $1,170/ounce, investors are expected to increase holdings of physical gold bars and coins by 21%.
• Existing-home sales hit two-year high. Existing-home sales rose 23.5% year-on-year in October to 6.1M/year, a two-year high, according to a report by the National Association of Realtors released Monday. The $8,000 first-time homebuyer tax credit, due to expire in October, was largely responsible for the surge, the report said (it has since been extended to April). Sales of low-cost homes led the increase, although home prices did not decline sharply during the period. NAR chief economist Lawrence Yun warned that, "with such a sale spike, a measurable decline should be anticipated in December and early next year before another surge in spring and early summer."
• Strauss-Kahn warns of perversity. Today's uncertain regulatory environment is creating a culture of perverse incentives, IMF director Dominique Strauss-Kahn warns: "It might be encouraging a risk-taking culture - a Mardi Gras effect whereby financial institutions party now in expectation of lean times to come." What is needed, he said, is a timetable for reforming the financial sector, and detailed plans for implementation. "We may run out of time - if we wait too long to implement these reforms, it might be too late." Strauss-Kahn added that about half of the world's banking losses have yet to be disclosed.
• Credit-card charge-offs to increase. Credit-card delinquencies have been declining, but Moody's warned Monday they will likely increase in the coming year, driving up charge-offs. Moody's October credit card index showed a decrease in charge-offs to 10.04%, well below the 11.49% record high set in August. But Moody's forecasts that charge-offs will pick up again, hitting a peak of 11-13% in the first half of next year. The early-stage delinquency rate for the past three months is already 14% higher than the same period in 2008.
• SEC to watch for derivatives insiders. The SEC will monitor a wide range of financial instruments, including derivatives and CDS, for insider trading, director Robert Khuzami said on Monday. After the first case of insider trading on CDS in May, Khuzami said the agency will "roll back the curtain and look at patterns across all markets." But some were less than enthusiastic about the initiative, saying the cost of such monitoring outweighs possible benefits: "Do we really need to protect hedge funds from other hedge funds and investment banks in credit default swap trading? Isn't this just a distraction from the SEC's core duty of protecting the ordinary shareholder?"
• Pimco likes Treasurys. Pimco increased its holdings of U.S. government debt in its Total Return Fund to 63% from 48% (.pdf), the highest amount since 2004. Fund manager Bill Gross explained last week that under the "new normal," there is a risk of asset bubbles given that interest rates will remain low for a long time. Gross also raised holdings of corporate debt by 16%, but reduced exposure to mortgage bonds.
• Fujii wants action on deflation. Japanese Finance Minister Hirohisa Fujii said on Tuesday that the Bank of Japan should take action to avoid deflation, urging the bank to cut rates and to step up quantitative easing measures. The central bank said on Friday that growth was increasing, but the government said on the same day that Japan is in deflation for the first time in three years. The government may have trouble raising funds for economic stimulus, because it has set a ceiling of 44T yen ($495B) on bond sales for the next fiscal year. Deflation was one of the main causes of Japan's 'lost decade' in the 1990s.
• Twitter might list, but won't sell. Twitter co-founder Biz Stone says the company might eventually seek a stock market listing, but isn't up for sale. The company, which reportedly received an additional $100M in venture capital last year, is also planning to charge for some of the services it offers, and to introduce paid advertising. The platform had 44.5 million visitors in June, up 15 times from the previous year.
• No bidding war for Opel. European countries that host GM's Opel plants won't be engaging in a bidding war to keep them from closing. The EC chaired a meeting on Monday with the automaker, Spain, U.K., Poland, Belgium and Germany. Under the watchful eye of Competition Commissioner Nellie Kroes, participants agreed that countries could not exchange aid to Opel to preserve jobs at factories. GM is seeking to invest €3.3B ($4.9B) in Opel, but it wants governments to pay for part of that.
• PC sales to return to growth. Gartner reversed its 2009 PC sales forecast, and now expects growth of 2.8% (299M units) from a previous estimate of -2%, noting Q3 shipments were much stronger than expected. However, Gartner still expects dollar sales to dive 10.7% year-on-year to $217B due to "unprecedented declines" in average selling prices (ASPs) as customers settle for "good enough" - a trend it says is likely to continue.
• Icahn takes post on Fountainbleu. Carl Icahn outbid Penn National Gaming (PENN) Monday to become the "stalking horse" bidder for the stalled $3.5B Las Vegas casino the Fontainebleau. Icahn's $155M was $10M higher than Penn's bid, thus setting the base price for auction. The Icahn bid includes about $50M for DIP financing that would be paid back if it is outbid in the auction.
• Black Friday rush may be deceptive. Upscale shoppers are expected to fill retail stores in droves on Friday, but lower-income shoppers won't be in the crowd, according to a survey (.pdf) by Consumer Edge Research. Those earning $150K+ will be snapping up 'Black Friday' bargains, but for every consumer planning to increase how much money he will spend during the holiday, 2.5 say they plan to curb their spending. Preseason trends suggest electronics sales may be solid, while sales of apparel could get pummeled.
• Lehman to return $11B. The bankruptcy administrator for Lehman Bros. International, the defunct U.S. bank's foreign arm, proposed a plan that would return about $11B in assets which have been tied up in bankruptcy court to creditors. If 90% of creditors support the plan in a vote on Wednesday, PricewaterhouseCoopers will be able to give them their money back.

Earnings: Tue. Before Open

• Heinz (HNZ): FQ2 EPS of $0.76 beats by $0.06. Revenue of $2.67B (+2.5%) in-line. (PR)
• Vimpel-Communications (VIP): Q3 EPS of $0.43 misses by $0.02. Revenue of $2.28B (-19.9%) in-line. Mobile subscribers +1.7M Q/Q to 65.4M. (PR)
• Warner Music Group (WMG): FQ4 EPS of -$0.03 misses by $0.08. Revenue of $861M (+0.8%) vs. $820M. (PR)

Earnings: Mon. After Close

• Analog Devices (ADI): FQ4 EPS of $0.36 beats by $0.10. Revenue of $572M (-13%) vs. $524M. Sees Q1 EPS of $0.36-0.37 vs. $0.28, on revenues up 20% Y/Y. Shares +0.9% AH. (PR)
• Atwood Oceanics (ATW): FQ4 EPS of $0.75 beats by $0.06. Revenue of $131M (-18%) vs. $128M. Shares +0.1% AH. (PR)
• Brocade Communications Systems (BRCD): FQ4 EPS of $0.15 beats by $0.02. Revenue of $522M (+30.9%) in-line. Shares +0.7% AH. (PR) (-from Mon. evening)
• Hewlett-Packard (HPQ): FQ4 EPS of $1.14 beats by $0.01. Revenue of $30.8B (-8%) vs. $30.4B. China Q4 revenue up more than 20%. "HP's solid performance in services drove record profit, and the accelerated pace in signings creates strong momentum going into 2010." Shares -0.6% AH. (PR)
• Nuance Communications (NUAN): FQ4 EPS of $0.32 beats by $0.03. Revenue of $276M (+6%) vs. $272M. Shares +1.8% AH. (PR)

Today's Markets

Asia stocks dropped Tuesday, led by China on jitters regulators there will aggressively curb bank lending. Europe is flat at midday, as are futures after a quiet overnight session.

Bullish Calls:

Ciena (CIEN): "That was nonsense! [CEO] Gary Smith was on. He gave a great interview. Nobody even listened. I urge you to get the Barclays research report that came out today explaining why Ciena did not pay too much for Nortel's optical business... I think Ciena, at $12 today, was ridiculously cheap."

The complete list of Russian ADRs traded in the U.S.:

The following Twelve European ADRs are up more than 100% year-to-date as of October 23, 2009:

Company: Mechel Steel (MTL)
Country: Russia
YTD Change: 412%

Another day, another drop in the US Dollar and another boost to equities and precious metal prices. In NY, all the sectors traded higher, but Energy and Basic Materials (XLE +2.4% XLB +2.1%) were clearly favored. At the close, the S&P 500 (1,054.72 +14.26 +1.37%), DJIA (9,731.25 +131.50 +1.37%), and NASDAQ Composite (2,103.57 +35.42 +1.71%) lifted about +1.4%. Due to the commodity price sensitive drivers, the Toronto Exchange Composite (11,247.97 +145.35 +1.31%) and Venture market (1,281.40 +27.15 +2.16%) had a similar result.

Since this is a speculative US Dollar based market, let’s start there. Tuesday, the US Dollar pulled back ($USD 76.31 -0.39 -0.51%) almost to the 75 cent level. Accordingly, traders were buying risk. For the second day this week, the Euro (147.15 +0.64 +0.44%), Yen (112.63 +1.00 +0.90%) and particularly the Canadian Loonie (94.33 +0.94 +1.01%) soared, while the Pound was a laggard (159.14 -0.25 -0.16%), in fact falling a tad.

It was just last Thursday when the Financial sector was hammered (XLF -4.4%), and credit dependent speculation in the Basic Materials and Energy was also dampened (XLB -3.9% XLE -3.1%) as the equity market took a hit when traders feared that banking and credit issues are not behind us. What a difference a couple days make.

On Monday, however, after Goldman Sachs upgraded the large US banks, and futures prices in Crude Oil and Precious Metals were sent soaring at noon by fresh money sent in by the Fed, the S&P 500 (1,040.46 +15.25 +1.49%), DJIA (9,599.75 +112.08 +1.18%), and NASDAQ Composite (2,068.15 +20.04 +0.98%) all climbed a percentage point or more higher.

With the FOMC policy decision reported at 2:15pm ET Wednesday and traders focusing on the very important G-20 meetings getting underway in Pittsburgh Thursday, politics is front and center in capital markets, and some of those became what traders call fast markets. Crude Oil ($WTIC 68.97 -2.79 -3.89%), for example, plunged in a 30-minute selling spree in the morning, and the US Dollar ($USD 76.33 +0.25 +0.32%) briefly soared and Gold bullion contracts ($GOLD 1,008.20 -6.30 -0.62%) plummeted momentarily. Equity prices snapped shortly after the Fed reported. The issue apparently has to do with Permanent Open Market Operations (POMO) and whether the US Treasury is any longer capable or interested in sustaining a low interest rate debt market supporting, bank supporting, equity market supporting interventionist policy that is whacking the Dollar.

At the 4pm ET close in New York, the markets ended on a bearish note. The S&P 500 (1,060.87 -10.79 -1.01%), DJIA (9,748.55 -81.32 -0.83%), and NASDAQ Composite (2,131.42 -14.88 -0.69%) all closed sharply lower than at 2:39pm ET with the S&P 500 (9,906.73 +76.86 +0.78%), DJIA (9,906.73 +76.86 +0.78%), and NASDAQ Composite (2,166.02 +19.72 +0.92%) showing the usual green.

[Excerpted from Bill Cara's Daily Report]

This story is getting old. Just when it looks like the equitymarket needs a boost, the US Dollar plunges almost -1% ($USD 76.08-0.70 -0.92%) and Financials (XLF +2.3%) and Energy (XLE +1.6%) fall inline. How low can the Dollar go?

Nervous traders sold off oil and precious metals from the outset on Monday, and gapped the equity market lower at the open.

At the close, however, the markets ended mixed. The S&P 500 (1,064.66 -3.64 -0.34%) and DJIA (9,778.86 -41.34 -0.42%) closed lower with the defensive Healthcare sector (XLV +1.0%) trying to pull the market up. The NASDAQ Composite (2,138.04 +5.18 +0.24%) closed a tad higher, with leadership coming from Computer Networks and Biotech ($NWX +1.1% $BTK +0.8%).

Stronger global economic data, except in Japan, spurred international equity prices, but the key story continues to be the collapse of the US Dollar, which is serving to make it easier for global traders to buy stocks and commodities listed or denominated in $USD.

At the close in New York on Thursday, the S&P 500 (1,042.73 -1.41 -0.14%), DJIA (9,605.41 -22.07 -0.23%) and NASDAQ Composite (2,080.90 -3.12 -0.15%) all had a positive session, and the strength was apparent from the opening bell.

Ukraine is ranked 72 out of 134 countries in the 2009 Global Competitiveness Index, showing little improvement over the previous year. Ukraine falls right in between Morocco and the Philippines as far as the index is concerned. The areas Ukraine is the weakest in are institutional environment, infrastructure, macroeconomic stability, and goods market efficiency.

Not being sure how the rankings in this index are tabulated, I have to say the new Ukraine presents a different picture. Of course, there are still negatives such as poor legal protection of investments, corruption and double standards, and contradictory legislature. However, there are so many good things coming out of Ukraine recently. And there is so much geographical potential.

This is the second quarter 2009 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out our series preface on hedge fund 13F filings.

Next up is John Griffin's hedge fund Blue Ridge Capital. Griffin is very similar to Stephen Mandel (whom we also just covered) in that they were both some of Julian Robertson's top men at legendary hedge fund Tiger Management. They both went on to form their own funds and as such are labeled 'Tiger Cubs.'

This is the second quarter 2009 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out our series preface on hedge fund 13F filings.

Next up is Eric Mindich's hedge fund firm, Eton Park Capital. Mindich started the fund back in 2004 with $3 billion under management with a $5 million minimum investment. Nowadays, Eton Park manages over $6 billion. The fund's investment strategy draws upon Mindich's time at Goldman Sachs where he focused on merger arbitrage. He was so good at his job that he became the youngest partner in Goldman Sachs' history at the age of 27. In addition to merger arbitrage, Eton Park focuses on long/short equity strategies and even invests up to 30% of its portfolio into private investments.

iShares FTSE/ Xinhua China 25 ETF (FXI) – We noted in our FX commentary this morning that Chinese concerns over the sluggish external environment, although weighing on regional stocks, were losing out to the more optimistic prospects carried by the S&P Case-Shiller index. Investors in Chinese stocks sought some protection from further slippage in the iShares China ETF as they bought protective put options at the September 40 strike as shares were a little higher today at $40.81. Around 8,000 puts were bought at premiums up to 1.25, which implies a further decline within a month to $38.75. However, further dated options indicated a rosier scenario. A bull call spread using January 2011 options involving 6,000 calls at the 40 strike bought against the sale of the same amount of 45 strike calls, depicts a “steady as she goes” approach to Chinese stocks. The trade cost 2.12 to enact meaning that the investor would make a maximum of 2.88 per contract in the event the FXI rose by at least 10% before 2011. To put that in perspective one year ago shares reached $47.75 while a price of $46.09 would be a 50% Fibonacci retracement of the major market decline. Doesn’t seem like too much to ask for.

Of the hundreds of European stocks that are listed on US exchanges, some stocks are traded heavily on a daily basis. The following are the ten European ADRs that have the most daily trading volume as of Monday:

• Nokia - NOK
• Alcatel-Lucent - ALU
• Vimpel Communications - VIP
• Banco Santander S.A - STD
• Mechel Steel - MTL
• Ericsson - ERIC
• ArcelorMittal - MT
• ABB
• Unilever - UN
• ASML

All the above stocks have daily volumes of over 3 million shares. Nokia (NOK) has the highest daily volume at about 50 million. The Finland-based maker of mobile phones is one of the world's most respected brands. Nokia makes cheap, quality phones for the emerging markets and is highly successful at marketing its phones in those markets. The stock is down about 17% YTD and it pays a 4.08% dividend. It is a long-term value play since it has an incredible brand and the company is very innovative compared to other mobile phone makers like Motorola (MOT), Samsung, etc. Ericsson (ERIC) of Sweden is a much smaller company compared to Nokia and does not have a huge market share in the cell phone manufacturing industry.