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Last Call: A Honey Boo Boo Market Day

NYSE traders floor
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NYSE traders floor

"Golly! Y'all smell like hairspray and desperation over there."

- Mama, Here Comes Honey Boo Boo

- Below, Mama may have been watching the S&P today after another down day, the Fed sues Wells Fargo, Microsoft trims CEO’s pay and Reed Hastings leaves Microsoft board.

Summary via Street Account:

  • DOW 13473.53 (-110.12) -0.81%; NASDAQ 3065.02 (-47.33) -1.52%; S&P 500 1441.48 (-14.40) -0.99%

U.S. equities finished loweron Tuesday, with the S&P 500 down for a third straight session. Growth fears garnered much of the blame after the IMF warned of the "alarmingly high" risks for a serious global slowdown. The lack of progress surrounding some key issues in the Eurozone sovereign debt crisis seemed to be another overhang. In addition, the deteriorating corporate profit backdrop remained in focus ahead of the unofficial start of Q3 earnings season after the close today. There were also reports of outsized volatility stemming from problems with computer-driven trades. Recovery concerns only seemed to be exacerbated by the geopolitical-driven strength in oil, though this dynamic did help the energy sector outperform. Consumer discretionary and tech were among the notable decliners.

The Word on the Street Tonight

Alcoa Kicks Off Earnings Season With a Beat/CNBC.com w/ Reuters: “Alcoa lowered its 2012 outlook for aluminum demand but reported quarterly earnings and revenue that topped analysts' expectations on Tuesday. The company now said it expects global demand to grow 6 percent, down from its prior estimate of 7 percent due to a China slowdown that slightly impacts the second-half outlook. In a number of sectors ''where China has really driven demand, we're seeing the pullback, and aluminum falls right in the middle of that mess," said Stephen Massocca, a fund manager at Wedbush Morgan.”

Yum Raises Outlook Despite Signs of China Slowdown/Reuters: “KFC parent Yum Brands raised its full-year outlook after sales at established restaurants in China held up despite cooling economic growth in the restaurant company's largest market. Shares of Yum, whose other chains include Pizza Hut and Taco Bell, jumped after the company's latest quarterly report topped expectations.”

Feds Sue Wells Fargo on Mortgage Fraud Charges/CNBC with Reuters: “The government filed a civil mortgage fraud lawsuit on Tuesday against Wells Fargo , the latest legal salvo against big banks for their lending during the housing boom. The complaint, brought by the U.S. Attorney in Manhattan, seeks damages and civil penalties from Wells Fargo for more than 10 years of alleged misconduct related to government-insured Federal Housing Administration loans. The lawsuit alleges the FHA paid hundreds of millions of dollars on insurance claims on thousands of defaulted mortgages as a result of false certifications by Wells Fargo, the fourth-biggest U.S. bank as measured in assets.”

Netanyahu Announces Early Israeli Election/AP: “Israel's prime minister on Tuesday ordered new parliamentary elections in early 2013, roughly eight months ahead of schedule, setting the stage for a lightning quick campaign that will likely win him re-election. For nearly four years, Prime Minister Benjamin Netanyahu has presided over a conservative coalition that has proven stable in a country where governments rarely serve out a full term. Re-election could grant him a fresh mandate to continue his tough stance toward Iran's suspect nuclear program, put the already deadlocked peace process with the Palestinians further into deep freeze and complicate relations with the U.S. if President Barack Obama is re-elected.”

Microsoft Trims Bonus for Ballmer on EU, Online Woes/WSJ – Shira Ovide: “Microsoft Corp.'s board reduced the bonus awarded to Chief Executive Steve Ballmer, citing factors that include the company's unprofitable online division and the its failure to hew to an agreement with European regulators. Mr. Ballmer's total compensation including salary and bonus was $1.32 million for the year ended June 30, according to a regulatory filing Tuesday. His compensation the prior fiscal year was $1.38 million. In the filing, Microsoft's board wrote that Mr. Ballmer's bonus of $620,000 was 91% of his bonus target. Among the considerations in setting the bonus were "slower than planned progress" in Microsoft's online division, which includes the Bing search engine, and the company's "failure to provide a browser choice screen" on some Microsoft-powered computers in Europe, according to the filing with the Securities and Exchange Commission. Mr. Ballmer's bonus in the prior fiscal year was $682,500.”

Netflix CEO to step down from Microsoft's board/AP – Michael Liedtke: “Netflix CEO Reed Hastings is leaving Microsoft's board of directors next month, giving him more time to focus on the myriad of challenges facing Netflix's video subscription service. The departure announced Tuesday comes five-and-half years after Hastings joined Microsoft's board. Hastings' connection with the world's largest software maker proved fruitful for Netflix Inc."

Microsoft is now your 'devices and services' company/CNET – Mary Jo Foley: “Microsoft really wants to make sure its shareholders, customers, partners and competitors realize it's not just a big software company any more. In an October 9 letter to shareholders, part of Microsoft's just-released fiscal 2012 annual report, CEO Steve Ballmer repeated his new "devices and services company" mantra to drive it home.” From the letter: "Last year in this letter I said that over time, the full value of our software will be seen and felt in how people use devices and services at work and in their personal lives. This is a significant shift, both in what we do and how we see ourselves -- as a devices and services company. It impacts how we run the company, how we develop new experiences, and how we take products to market for both consumers and businesses. The work we have accomplished in the past year and the roadmap in front of us brings this to life."

Wall Street Pay Remains High Even as Jobs Shrink/NY Times – Suzanne Craig & Ben Protess: “t still pays to be on Wall Street. Even as the financial industry in New York has slashed jobs by the thousands, the average worker who remains is collecting a near-record paycheck. In a report released on Tuesday, the New York State Comptroller, Thomas P. DiNapoli, said that the average pay package of securities industry employees grew slightly last year and was up 16.6 percent over the past two years, to $362,950. Wall Street’s total compensation rose 4 percent last year to more than $60 billion.”

Economic Data

1000 Aug Wholesale Inventories

1000 Aug JOLTS

1300 10-Yr Note Auction

1400 Beige Book

Earnings

Before the Bell:

Costco, Host Hotel & Resorts

After the Bell:

Ruby Tuesday

Key Guests

Shelley Moore Capito, R-WV (645a)

Richard LeFrak, The LeFrak Organization President (700a)

Rees Jones, Rees Jones President (750a)

Woody Johnson, New York Jets Owner (805a)

Jeff Fluhr, Stubhub Founder (1100a)

Dave Zier, Convergent Wealth Advisors CEO (1230p)

Ken Grier, The Macallan (200p)

Mellody Hobson, Ariel Investment President (500p)

Arthur Laffer, Laffer Associates Chairman (700p)

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