I hope everyone gets out there to vote today--and remember, if you go to Starbucks (SBUX) and tell them you voted, you can get a free cup of coffee!

There are a few news items to pass along. First, Marvel Entertainment (MVL) saw its bottom line jump 40% last quarter thanks to the success of "Iron Man." The company earned 64 cents a share compared with 45 cents a year ago. This easily beat Wall Street's expectations of 45 cents a share.

For 2008 full-year earnings, Marvel expects a range of $2.45 to $2.65 a share on sales of $640 million to $670 million. For 2009, the company expects earnings of $1 to $1.35 a share on revenue of $618 million. That was below Wall Street's forecast but it was simply because the company moved up the DVD release for Iron Man. The stock is pulling back some today but is still an excellent buy.

Also, Graham (GHM) reported earnings of 43 cents a share which was a penny last than one year ago. Sales increased 4% to 23.9 million. James Line, Graham's CEO said, "As we had expected, the second quarter did not have the robust level of growth that we have been realizing over the course of the last two years, which was considered in the growth range we have provided. Looking beyond this fiscal year, both the rapid change in the price of oil and the significance of the global financial crisis, have caused a hesitation on the part of our customers to place large orders. Nonetheless, based on our research, we believe the long-term fundamentals of the markets we serve have not changed. We believe that Asia and the Middle East still need to expand their refining capacity and power facilities to meet their growing requirements. Likewise, we expect that refiners will continue to invest in existing facilities to provide the flexibility necessary to process lower quality crude oil."

The stock is down sharply today, but I still like Graham. The company noted that in the past year, their backlog has risen by 23%.

Interbank borrowing costs hit a five-month low this week. For those of you who may not remember, five months ago (on June 4, 2008), the Dow closed at 12,390.48 and Senator Hillary Clinton had yet to call off her campaign for the Democratic nomination for president.Seems a lifetime ago, doesn't it?

Here are the details: Thanks to numerous initiatives from the Fed and the Treasury Department, lending rates have finally relaxed to a level not seen since before the credit crisis. Specifically, the 3-month LIBOR rate dropped to 2.71% from 2.86% on Monday, its lowest point since early June. Better still, the overnight LIBOR rate fell for the seventh-straight day to 0.38% from 0.39%, the lowest level since the British Bankers' Association began tracking the rate in 1997.

LIBOR levels are a measure of bank confidence, and a measure of the "velocity of money." The biggest problem created by the financial meltdown was a credit freeze where banks wouldn't even lend to each other--let alone to businesses that needed to make payroll or pay for their inventory. That led to liquidity problems that forced businesses to cut back or lay off workers, and the trouble cascaded through the economy.

The fact that short-term loan rates have stabilizes is an inspiring sign of recovery.

I've been saying that Wall Street's path out of October's swoon will be strong fundamentals, and that's continuing to happen. This morning, Agrium (AGU) became the latest one of our stocks to report great third-quarter results. The company delivered an impressive seven-fold earnings increase over last year's third quarter. Agrium earned $2.31 a share which was 42 cents better than Wall Street's consensus estimate. The company also widened its guidance range for the second half of this year.

Jobless news is the main culprit of today's 443 point drop in the Dow. That adds up to a two-day decline of 929 points.

But I have to point out that profit-taking did play into the slump. After all, the Dow leapt 18% between October 28 and November 4 and a run like that can't last forever. Let's not forget that a month ago, the market was much worse off and has been trending up ever since.

You can read my top story for Nov. 6 to get the details on the market news. But here, I have to point out that we STILL have not pushed through the intraday lows of October 10. If you'll remember, that number is 7,773 for the Dow--a full 11% below today's intraday low! I'm not trying to act like the economy is rosy, but there's no denying that we are trending up if a nearly 1,000 point decline leaves the Dow 11% above the level we were at less than a month ago.

I remain convinced that we are bouncing along the bottom, and are on the verge of the rebound.

The government reported that the unemployment rate jumped to 6.5% for the month of October. That brings the jobless rate to a 14-year high.

The payroll report showed that 240,000 jobs were lost last month. The economy has now shed jobs for 10 straight months.

Clearly the economy is slowing down. I expect to see the GDP report for third quarter revised lower. I also think the number for the fourth quarter will be even worse than the third.

For investors, it's important that we focus on sectors of the economy that aren't so closely tied to the economic cycle. For example, in my Blue Chip Growth service, I recommend Colgate-Palmolive (CL). Obviously, during rough economic times, consumers are likely to pare back on their purchases of toothbrushes, soap and shampoo. Next year, Wall Street expects Colgate-Palmolive to earn $4.24 a share, which would be about a 10% increase over this year's profit.

I currently rate Colgate-Palmolive a strong buy up to $69 a share.

After the closing bell yesterday, my #1 Emerging Growth stock, Fuel Systems Solutions (FSYS), announced outstanding earnings results for the third quarter. For the September quarter, the company earned 73 cents a share which nearly tripled the 26 cents Wall Street was expecting. It's hard for me to overstate how strong this quarter was for Fuel Systems Solutions. For last year's third quarter, the company lost two cents a share.

The company makes equipment that allows internal combustion engines run cleaner by using alternative fuels. At a time when many people pay lip service to environmentalism or spend time cooking up carbon-free schemes that may never see the real world, Fuel Systems Solutions makes its money helping vehicles go "green" and still meet market requirements.

As I write this, the shares are up over 42% in today's trading. Even for Fuel Systems, which has a nice habit for creaming Wall Street's forecasts, this was a great quarter. Bear in mind that three months ago, Fuel Systems saw its earnings soared 866% and it doubled Wall Street's forecast. The next day, the stock jumped 29%.

Fuel Systems's president said:

Even with recent energy price volatility, during the third quarter, Fuel Systems Solutions achieved 62 percent revenue growth, compared to the same period last year, driven by strong performance in our OEM and aftermarket transportation markets segments. Over the last year, the rapid and significant increase in demand for our products created critical mass. We scaled our production volumes and demonstrated our strong underlying earnings potential. While the global economic slowdown impacts near-term revenue visibility, we remain optimistic regarding the prospects for sustained organic growth in our markets. Our financial strength positions us to invest in incremental growth opportunities in existing and adjacent business segments and to further leverage our production and engineering platform across industrial and transportation end-user markets.

The company also raised its full-year sales forecast for the third time this year. Congratulations on an outstanding quarter.

Investor's Business Daily interviewed me for a story on what stocks will benefit from an Obama administration:

In alternative fuel, components maker Fuel Systems Solutions (FSYS) is a favorite of Louis Navellier, chairman and chief investment officer of Navellier & Associates, which runs about $3 billion for institutional and individual clients.

"Their products are used to convert buses to natural gas," Navellier said. "Fuel Systems is booming because of natural gas buses. They're very big in Europe. And Obama says he wants to spend $15 billion a year on alternative energy. Part of that has to go to companies like this."

The stock is 57% off its 52-week high. The company returned to profitability in 2006 after a string of losses. Analysts see earnings up 168% this year and 21% next year.

Bet On Batteries

Navellier also likes Sociedad Quimica Y Minera de Chile, (SQM) a producer of fertilizers and chemicals.

"They mine lithium. New hybrid cars from Mercedes and BMW will be using lithium batteries," he said.

Carmakers can devote less space and weight to batteries made of lithium. And these batteries charge faster than other types.

"The downside: They're expensive and carmakers are still making sure they won't catch fire like Sony laptop batteries," Navellier said.

The stock is 64% off its high, but sales and earnings have been on fire.

Navellier also likes the outlook for some railroads. "It's a much more fuel efficient way to move freight," he said. "We like names like CSX (CSX) and Norfolk Southern (NSC)."

As bad as the winless Lions are doing, the auto business in Detroit is in even worse shape. Yesterday, President-elect Obama asked President Bush to support immediate emergency aid for the auto industry. October was the worst month for the auto industry in 25 years! Let's look at some of the numbers:

• General Motors saw its sales drop 45% last month.
• Ford saw its sales drop 35%.
• Chrysler saw its sales drop 30%.
• Honda saw its sales drop 28%
• Toyota saw its sales drop 23%.

GM's sales chief Mark LaNeve said, "In my 27 years, I have never seen a month like this." He added, "It was like somebody turned off the lights in the month of October."

Last quarter, Ford and GM burned through $14.6 billion in cash. GM said that if it doesn't get help from the government or see a rebound in sales, the company's cash level could hit the minimum level it needs to be operational.

GM has canceled most of its new model research and development and lately seems more interested in adopting a survival strategy. The company's CEO Rick Wagoner said, "It's fair to say liquidity is the top priority for the company and the industry right now."

I should hope so, especially since at the end of September, GM's cash reserves declined to $16.2 billion, down from $21 billion three months earlier. GM needs a bare minimum of $11 billion to $14 billion to maintain normal working capital, so by early 2009, Rick Wagoner warned that GM "will fall significantly short" of the minimum capital needed to run its business.

Just today, analysts from Deutsche Bank downgraded GM to "sell" from "hold," saying they saw an equity value of $0 for the stock. Yikes! Shares tumbled more than 30% after the announcement. Given the dire state of the industry, the CEOs of GM, Ford and Chrysler met with Congressional leaders last Thursday about an emergency bailout package. The companies jointly requested up to $25 billion in loans to avoid bankruptcy protection.

Whether the government will act upon this request has yet to be decided. The reality is this is the worst vehicle market in almost two decades and it doesn't look like the pressures will ease up anytime soon. My advice is to avoid this ailing industry and any related companies.

Here's an update of a chart I first ran two weeks ago. This shows the high-low-close for the S&P 500 since early October. The blue line highlights the intra-day low from October 10th.

As you can see, even though the market has pulled back over the last week, we're still above the October 10th low. We've come close to the blue line, but so far, we haven't fallen through. This is a positive because it means that the market is merely bouncing along the bottom, and not plunging to a new low. Once investors become convinced that the blue line is really a brick wall, it will convince more investors to return to the market.

Much of the recent selling pressure, especially in commodities, has been been driven by the unwinding of highly leveraged positions of hedge funds. Bloomberg reports that the hedge fund industry shrunk by $100 billion last month.

The biggest market losses since the Great Depression and investor withdrawals hurt the $1.7 trillion hedge-fund industry that manages largely unregulated pools of capital. The index of global funds has lost 11 percent this year, set for the worst performance since 2000 when Eurekahedge began tracking the data.

"This wave of redemptions in the hedge-fund industry is going to last for at least another six months," said Toyomi Kusano, president of Kusano Global Frontier, a hedge-fund research firm in Tokyo. "There are some funds that halted withdrawals, but those funds would eventually have to defreeze, and that means another wave of redemptions."

Michael Lewis has written an essay in Portfolio on the end of Wall Street. I'll warn you, it's long but worth the read. Here's a sample:

At the end of 2004, Eisman, Moses, and Daniel shared a sense that unhealthy things were going on in the U.S. housing market: Lots of firms were lending money to people who shouldn't have been borrowing it. They thought Alan Greenspan's decision after the internet bust to lower interest rates to 1 percent was a travesty that would lead to some terrible day of reckoning. Neither of these insights was entirely original. Ivy Zelman, at the time the housing-market analyst at Credit Suisse, had seen the bubble forming very early on. There's a simple measure of sanity in housing prices: the ratio of median home price to income. Historically, it runs around 3 to 1; by late 2004, it had risen nationally to 4 to 1. "All these people were saying it was nearly as high in some other countries," Zelman says. "But the problem wasn't just that it was 4 to 1. In Los Angeles, it was 10 to 1, and in Miami, 8.5 to 1. And then you coupled that with the buyers. They weren't real buyers. They were speculators." Zelman alienated clients with her pessimism, but she couldn't pretend everything was good. "It wasn't that hard in hindsight to see it," she says. "It was very hard to know when it would stop." Zelman spoke occasionally with Eisman and always left these conversations feeling better about her views and worse about the world. "You needed the occasional assurance that you weren't nuts," she says. She wasn't nuts. The world was.

Once again, the S&P 500 tested its October 10th intra-day low, but this time the index broke it. Today's intra-day low was 820.13, which is 19.67 points below the low from October 10th.

The Dow, however, still held above its October 10th intra-day low of 7773.71. Today, the Dow dipped slightly below 8,000 to 7969.24, but that's still nearly 200 points above its intra-day low from October 10th.

That must have been a good sign for the bulls because at 1 p.m., the market abruptly turned around and began a furious rally. From today's low, the S&P 500 shot up over 90 points, or 11%. The Dow saw an intra-day swing of 866 points, or 10.9%.

Recently, the Commerce Department reported retail sales plunged by the largest amount on record in October. Specifically, purchases fell 2.8% in October, the fourth straight monthly decline. The automotive sector led the slump, with demand plunging 5.5% for the month after falling 4.8% in September.

We've seen the fallout of tighter consumer spending recently in the bankruptcy of electronics giant Circuit City, and in the lower guidance by behemoths Best Buy and others. Many economists are predicting this could be one of the worst holiday shopping seasons on record, with year-over-year sales declining for the first time in decades.

The biggest news at last weekend's G20 meeting was that President-elect Barack Obama stood up the U.S.'s major allies. Obama didn't attend the meeting personally, but he sent two of his surrogates from his transition team. Clearly, many international leaders want to establish friendly ties with the incoming Obama administration.

The G20 meeting was actually called by European Union and French President Sarkozy, who seems to want to get the G20 to agree to regulate hedge funds. Sarkozy has a good point because the tremendous leverage used by hedge funds may have inflated, then deflated, several key commodities and currencies. For example, the strong currencies in the world since mid-July are the Japanese Yen and the U.S. dollar even though these currencies also have the lowest interest rates. Shouldn't the currencies with lowest rates be performing the worst? Let me try to explain.

The worst-performing hedge funds this year are from a sector called "Convertible Arbitrage" funds that specialize in the "carry trade." That's where a hedge fund borrows in Japan or the U.S. at a low interest rate and invests in a country with a higher interest rate, such as Brazil or New Zealand. This arbitrage works great until the yen or dollar rallies and carry trade can come unwound very fast.

Another simple arbitrage strategy is to borrow on Treasuries to buy corporate bonds, but that strategy is also coming unwound due to rising defaults. No one really exactly how leveraged these hedge funds are. They're also being hit with massive redemptions which means they're being forced to sell their positions at fire sale prices.

Besides Sarkozy's call to regulate hedge funds, the other interesting call is coming from Number 10 Downing Street. Britain's Prime Minister Gordon Brown is urging a worldwide round of tax cuts. Brown said, "This is a chance for the world to work together so that a fiscal stimulus in one country can benefit from fiscal stimulus's that are taking place in other countries as well."

The fear is that the global recession will be very long and deep. The British government looks like it will go ahead with tax cuts. In the U.S., members of Congress are now discussing another stimulus package.

The G20 will meet again in April, and this time Obama will be in attendance. President Bush said that this meeting was a success because it helped establish a dialogue among the top industrial counties. The official statement after the meeting read: "Against this background of deteriorating economic conditions worldwide, we agreed that a broader policy response is needed, based on closer macroeconomic cooperation, to restore growth, avoid negative spillovers and support emerging market economies and developing countries."

This morning, the government reported on wholesale inflation for October, and the details are a bit confusing. The overall number showed that prices at the wholesale level dropped by 2.8% last month. That's the biggest drop ever, and it was far more than the 1.9% drop that Wall Street economists were expecting. This is an important number to watch because price trends tend to show up at the wholesale level before reaching consumers.

However, if we look at the core rate, which takes out volatile food and energy prices, then whole sale inflation rose 0.4% last month. That was more than the 0.1% expected by Wall Street.

Looking into the details, energy prices plunged in October. Gasoline dropped by 24.9%. Natural gas dropped by 5.9%, and home heating oil fell 9.6%.

Here's part of Ben Bernanke's Congressional testimony from earlier today:

The Federal Reserve has developed three programs to address these problems. The first allows money market mutual funds to sell asset-backed commercial paper to banking organizations, which are then permitted to borrow against the paper on a non-recourse basis from the Federal Reserve Bank of Boston. Usage of that facility peaked at around $150 billion. The facility contributed importantly to the ability of money funds to meet redemption pressures when they were most intense and remains available as a backstop should such pressures reemerge.

The second program involves the funding of a special-purpose vehicle that purchases highly rated commercial paper issued by financial and nonfinancial businesses at a term of three months. This facility has purchased about $250 billion of commercial paper, allowing many firms to extend significant amounts of funding into next year.

A third facility, expected to be operational next week, will provide a liquidity backstop directly to money market mutual funds. This facility is intended to give funds confidence to extend significantly the maturities of their investments and reduce over time the reliance of issuers on sales to the Federal Reserve's special-purpose vehicle. All of these programs, which were created under section 13(3) of the Federal Reserve Act, must be terminated when conditions in financial markets are determined by the Federal Reserve to no longer be unusual and exigent.
<.blockquote>

Yesterday, one of our Global Growth stocks, XTL Biopharmaceuticals (XTLB), saw its stock get almost completely wiped out. The company announced that its diabetic-pain treatment failed crucial tests and it didn't reduce patients' pain scores. The stock dropped from $2.10 to 13 cents, a 94% plunge.

My analysts have looked over the filings, and it doesn't look good. Since XTLB is a drug discovery firm, it won't make any revenue until it has a product that has been approved and licensed for distribution by the FDA. So in order to stay in business, the company must either receive milestone payments from the companies they license drug candidates' from, raise equity (which causes shareholder dilution), or raise debt (which is very costly in the current credit environment).

With the failure of XTLB's lead candidate, the other drug discovery candidates are at the preclinical stage and seem to be too far behind to have any chance of generating revenue without one of the above three scenarios occurring to maintain operations. In the most recent 20F filed at the end of March 2008, they mention they're burning though cash at about $1.5 million a month and have enough cash to last a year. This would imply that they have about 4.5 months left of cash to maintain operations.

What to do now: Since the stock will remain depressed, I wouldn't rush to sell it until we hear what the CEO has to say in the next day or so. However, if you're a shareholder, you may want to sell next year assuming you have enough capital losses to offset capital gains from this year.

Here's the company's press release:

XTL Biopharmaceuticals Announces Top-Line Results From the Bicifadine Phase 2b Study for Diabetic Neuropathic Pain Study failed to meet its primary endpoint

VALLEY COTTAGE, N.Y., Nov. 18 /PRNewswire-FirstCall/ -- XTL Biopharmaceuticals Ltd. (Nasdaq: XTLB) announced today the top-line results from the Bicifadine Phase 2b clinical trial for the treatment of diabetic neuropathic pain. The trial's primary objective was to compare the efficacy of two doses of Bicifadine against placebo in reducing pain associated with diabetic neuropathy. The primary endpoint of the study was the reduction in pain score during the course of treatment. The company announced that the study failed to meet its primary endpoint. The trial also failed to meet key secondary analysis.

Ron Bentsur, CEO of the company, commented: "We are all very disappointed with the results of the study. We will devote the next few days to further analyze the data and decide on the appropriate course of action for the Bicifadine program, and for the company."

Here are links to the stories from AP and Reuters.

Thanks to lower energy costs, consumer prices are falling.

The Consumer Price Index, a key measure of how much Americans spend on groceries, clothing, entertainment and other goods and services, fell by 1 percent in October compared with prices in the previous month, the Labor Department reported Wednesday morning.

It was the steepest single-month drop in the 61-year history of the pricing survey and raised concerns about deflation as the economy contracts and demand for goods and services plunge. Another report released Wednesday indicated that new home construction continued to fall. "This month it's more than slowing, it's outright contraction," said James O'Sullivan, United States economist at UBS. "And yes, if you extrapolate that, it's deflation."

A continued decline in prices could worsen the economic slowdown by making it harder to pay off debts and would negate the impact of interest-rate cuts by the Federal Reserve.

Even excluding volatile food and energy prices, prices dropped 0.1 percent in October, the first such decline in more than two decades. Mr. O'Sullivan said that he expected core prices, which are up 2.2 percent this year to continue to fall back, but he does not expect them to slip into negative territory..

"You're going to see huge declines in a month's time in the November reports," Mr. O'Sullivan said. "That's the biggest part of the weakness."

Watch for deflation to become the latest worry.

The stock market fell to another new multi-year low today. The Dow lost 427 point to close below 8,000 for the first time in over five years.

The major catalyst for today's sell-off was news that the Federal Reserve cut its economic growth forecasts.

Fed officials lowered their economic growth projections to 0 percent to 0.3 percent for 2008 from 1 percent to 1.6 percent previously, according to the median forecast of Fed governors and district-bank presidents. The predictions for GDP next year ranged from a contraction of 0.2 percent to growth of 1.1 percent. In June, the so-called central tendency estimate was an expansion of 2 percent to 2.8 percent.

The panel estimated 2008 inflation, excluding food and energy, at 2.3 percent to 2.5 percent, from 2.2 percent to 2.4 percent in June. The Commerce Department's so-called core personal consumption expenditures price index is seen rising 1.5 percent to 2 percent next year, compared with forecasts of 2 to 2.2 percent in June.

The S&P 500 made a new intra-day low, but the Dow hasn't. We're still bouncing along the bottom. In 2002 and 2003, we bounced along the bottom for seven months. A new rally usually begins with a 20% spike.

The Fed needs to cut rates now. The next meeting is scheduled for December 16, which is too far away.

The stock market got hammered again today. The numbers are pretty staggering. The S&P 500 is now at its lowest level in 11 years. From its 2007 high, the S&P 500 is down by 52% which makes it the worst bear market since the Great Depression.

Citigroup dropped below $5 a share today. The bank wants the SEC to ban short-selling again, which must not be a good sign. There's more talk that Citi will merge or break up. Just recently, Citi talked about buying Wachovia with the government's help. They lost that battle, but there's no way Citi could make any major purchases today.

One of the few bright spots is the oil fell to a three-year low today. The price pre barrel is now under $50. Traders pay attention to these psychological barriers. There are now rumors that OPEC could cut production again before its meeting next month.

The housing crisis continues to take a toll on consumers. In previous economic slowdowns, consumers pulled the economy along. It's not happening this time. Lower gas prices will certainly help. Another boost came today from Fannie Mae and Freddie Mac. The companies said they will suspend foreclosures for about 16,000 households during the holidays.

Speaking of consumers, Wall Street was shocked today by the report on initial jobless claims. Claims jumped 27,000 to reach 542,000 which was 37,000 over consensus. In my view, the next stop will be 600,000.

The other big news today came when Democratic leaders on Capitol Hill rejected the automakers request for a bailout. House Speaker Nancy Pelosi said, "Until they show us the plan, we cannot show them the money." The Democrats gave them until December 2 to show them a plan. Earlier, the Big 3 asked for $25 billion of the $700 billion in TARP money, but Hank Paulson was opposed to that idea. There's also talk of giving them some money so they can last until March after Obama takes office, and the new president can craft a long-term strategy.

For months I've been warnings investors about the dangers of investing in Citigroup (C). The shares have been rated a Sell on my PortfolioGrader Pro stock-rating website for over a year. Now the stock is in plunging and the company wants the government to reinstate the short-selling ban. The New York Times reports:

The bank has posted four consecutive quarters of losses, caused by billions in write-downs. Nine of its investment funds have cratered this year. And now the bank could face a tsunami of new losses in its once-lucrative consumer loan business as the global economy weakens.

Within the bank's Manhattan offices, television screens have stopped displaying the company's stock price. Traders have begun making jokes comparing Citigroup to the Titanic.

It gets worse. Now that the stock is below $5 a share, many institutional investors can't own it, and that will prompt more selling.

Money managers don't necessarily have to sell Citi immediately. But they would have to get out before the end of the quarter if the stock doesn't recover and may opt to do so now to mitigate potential losses.

"They've got five, six weeks to make decision on whether they're going to get out," Malcolm says. "There's still a lot of institutional ownership of Citigroup. That could change quickly if they have to be out at the end of the year."

A fairly flat day on Wall Street suddenly became a nearly 500-point rally thanks to the news that President-Elect Obama will appoint Tim Geithner as the next Secretary of the Treasury. The appointment still needs to be confirmed by the Senate, but Geithner has evidently received a "yes" vote from Wall Street.

Geithner is currently the head of the New York Fed which is the "first among equals" in the Federal Reserve System. For example, other Reserve Bank presidents rotate on and off the Federal Open Market Committee, but the President of the New York Fed has a permanent seat.

In choosing Mr. Geithner, Mr. Obama would signal both a change at Treasury as well as continuity in its economic rescue efforts. With current Treasury Secretary Henry M. Paulson Jr. and Mr. Bernanke, Mr. Geithner -- who as head of the New York Fed is the central bank's eyes and ears on Wall Street -- has been part of a troika that has struggled this year to contain the credit crisis.

"You can't bring in a guy who needs on-the-job training," said Kenneth S. Rogoff, a professor of economics at Harvard who once worked with Mr. Geithner at the International Monetary Fund.

Along with Mr. Paulson and Mr. Bernanke, Mr. Geithner has come under criticism for the original construction of the $700 billion bailout plan, which has had to be overhauled and has so far failed to remedy the financial crisis.

But his association with the current administration's policies are balanced by his close connections to the centrist Democratic policies of President Clinton and his best-known Treasury secretary, Robert E. Rubin. Mr. Geithner served under Mr. Rubin as well as Mr. Summers at the Treasury Department in the 1990s, and rose to be undersecretary for international affairs.

Here's part of an interesting article from this week's Economist:

An important reason why the American economy has been so resilient and recessions so mild since 1982 is the energy of consumers. Their spending has been remarkably stable, not only because drops in employment and income have been less severe than of old, but also because they have been willing and able to borrow. The long rise in asset prices--first of stocks, then of houses--raised consumers' net worth and made saving seem less necessary. And borrowing became easier, thanks to financial innovation and lenders' relaxed underwriting, which was itself based on the supposedly reliable collateral of ever-more-valuable houses. On average, consumers from 1950 to 1985 saved 9% of their disposable income. That saving rate then steadily declined, to around zero earlier this year (see chart). At the same time, consumer and mortgage debts rose to 127% of disposable income, from 77% in 1990.

Those forces have now reversed. The stockmarket has fallen to the levels of a decade ago. House values have fallen 18% since their peak in 2006. Banks and other lenders have tightened lending standards on all types of consumer loans.

As a consequence, consumer spending fell at a 3.1% annual rate in the third quarter (in part because tax rebates boosted spending in the second), the steepest since the second quarter of 1980 when Jimmy Carter briefly imposed credit controls. More such declines are likely to follow. Richard Berner of Morgan Stanley projects that in the 12 months up to the second quarter of next year real consumer spending will fall by 1.6%--a post-war record. "The golden age of spending for the American consumer has ended and a new age of thrift likely has begun," he says.

As if we don't have enough economic and geopolitical concerns to worry about, now we see the advent of pirates, who hijacked a Saudi supertanker fully laden with an estimated two million barrels of oil in an attack that marks a significant escalation by the Somalia pirates, operating off the east coast of Africa These pirates seized control of the Sirius Star, owned by Saudi Aramco, the world's largest oil company, 450 nautical miles southeast of Mombasa, far beyond the pirates' usual area of attacks in the Gulf of Aden. The South Korean-built ship was launched earlier this year and is operated by Vela International and registered in Liberia. It is estimated that this tanker was holding more than 25% of the daily exports from Saudi Arabia and was worth about $100 million. The 1,080 foot Sirius Star tanker is about three times the tonnage of a U.S. aircraft carrier, making it the largest vessel ever seized by pirates. This attack also took place farther out to sea than before, signaling that the pirates have become increasingly bold and organized.

Somali pirates operate from speed boats, heavily armed with machine guns and rocket-propelled grenades. This is not a one-time event. Pirates off the Somalia coast attacked 26 vessels and have taken 537 crewmembers hostage in the last quarter. In just the last two weeks, there were nine more vessels reported attacked, including the Saudi supertanker. These pirates board such huge ships by flinging grappling hooks from their speedboats. However, this latest incident suggests that these pirates are moving further south into the Indian Ocean as the Indian Navy, the British Royal Navy and U.S. Navy's Fifth Fleet have increased their patrols off the coast of Somalia.

The pirates have hugely extended their reach from the coast with the use of "mother ships", larger vessels from which they launch speedboats after they have identified their prey. The Indian Navy on Tuesday destroyed a ship that was believed to be one of the "mother ships." The Indian Navy said that "Fire broke out on the vessel and explosions were heard, possibly due to exploding ammunition that was stored on the vessel" and added that two speed boats fled the scene.

Insurers will continue raising rates for ships, making the trek through the Gulf of Aden and the Suez Canal until governments prove they can thwart the pirates. Approximately, 6,500 tankers, carrying 7% of the world's oil, used this route in 2007, according to Lloyd's Marine Intelligence Unit. Currently, pirates attack approximately 1 in 10 ships in the region. In May, insurers declared the Gulf of Aden a "war-risk" zone subject to a premium of tens of thousands of dollars per day according to insurance and shipping companies. This could now be extended to the long route around Africa. Container vessels, which carry most trade in manufactured goods, sail too high off the water for pirates to board and are relatively fast. However, slower-moving tankers and dry bulk vessels that carry oil, chemicals, coal, wheat and other commodities are vulnerable.

Norway's Frontline Ltd. (FRO) is down due to the escalation of piracy off Somalia, but a quick military response to the situation should benefit all marine shippers like Frontline. Already, Russia's North Atlantic Treaty Organization envoy, Dmitry Rogozin, called for a land military force to confront the pirates on their home turf. NATO has sent four warships into the Gulf of Aden on anti-piracy duties and to escort vessels, while a European Union anti-piracy operation off the coast of Somalia is set to begin on December 8. In the meantime, many shippers have decided to sail on a more costly route, wide around the pirate-invested regions of east Africa.

A deal has been reached to help Citigroup:

The complex plan calls for the government to back about $306 billion in loans and securities and directly invest about $20 billion in the company. The plan, emerging after a harrowing week in the financial markets, is the government's third effort in three months to contain the deepening economic crisis and may set the precedent for other multibillion-dollar financial rescues.

Citigroup executives presented a plan to federal officials on Friday evening after a weeklong plunge in the company's share price threatened to engulf other big banks. In tense, round-the-clock negotiations that stretched until almost midnight on Sunday, it became clear that the crisis of confidence had to be defused now or the financial markets could plunge further.

Whether this latest rescue plan will help calm the markets is uncertain, given the stress in the financial system caused by losses at Citigroup and other banks. Each previous government effort initially seemed to reassure investors, leading to optimism that the banking system had steadied. But those hopes faded as the economic outlook worsened, raising worries that more bank loans were turning sour.

Citigroup's stock plunged 60% last week and another 20% in the week before that. The New York Times has a good article summarizing what went wrong at the bank.

From 2003 to 2005, Citigroup more than tripled its issuing of C.D.O.'s, to more than $20 billion from $6.28 billion, and Mr. Maheras, Mr. Barker and others on the C.D.O. team helped transform Citigroup into one of the industry's biggest players. Firms issuing the C.D.O.'s generated fees of 0.4 percent to 2.5 percent of the amount sold -- meaning Citigroup made up to $500 million in fees from the business in 2005 alone.

Even as Citigroup's C.D.O. stake was expanding, its top executives wanted more profits from that business. Yet they were not running a bank that was up to all the challenges it faced, including properly overseeing billions of dollars' worth of exotic products, according to Citigroup insiders and regulators who later criticized the bank.

When Mr. Prince was put in charge in 2003, he presided over a mess of warring business units and operational holes, particularly in critical areas like risk-management and controls.

"He inherited a gobbledygook of companies that were never integrated, and it was never a priority of the company to invest," said Meredith A. Whitney, a banking analyst who was one of the company's early critics. "The businesses didn't communicate with each other. There were dozens of technology systems and dozens of financial ledgers."

Problems with trading and banking oversight at Citigroup became so dire that the Federal Reserve took the unusual step of telling the bank it could make no more acquisitions until it put its house in order.

In 2005, stung by regulatory rebukes and unable to follow Mr. Weill's penchant for expanding Citigroup's holdings through rapid-fire takeovers, Mr. Prince and his board of directors decided to push even more aggressively into trading and other business that would allow Citigroup to continue expanding the bank internally.

One person who helped push Citigroup along this new path was Mr. Rubin.

From Bloomberg:

Based on last week's closing price, S&P 500 companies are trading at 9.24 times profit from continuing operations of $86.59 for 2009, using analysts' estimates compiled by Bloomberg. That's the smallest premium investors have ever paid for future earnings and the cheapest compared with historical income since President Reagan's second term in 1988, based on data compiled by Bloomberg and S&P.

Since late Friday, the Dow is up nearly 1,000 points.

This week's New Yorker has a looong article on Ben Bernanke. He's a sample:

Looking back on this period, Bernanke told me, "I and others were mistaken early on in saying that the subprime crisis would be contained. The causal relationship between the housing problem and the broad financial system was very complex and difficult to predict." Relative to the fourteen trillion dollars in mortgage debt outstanding in the United States, the two-trillion-dollar subprime market seemed trivial. Moreover, internal Fed estimates of the total losses likely to be suffered on subprime mortgages were roughly equivalent to a single day's movement in the stock market, hardly enough to spark a financial conflagration.

Here's a great explanation (using Girl Scout cookies) of the dynamics driving the deleveraging we're currently seeing in the market.

This is a reminder that the stock exchanges will be closed on Thursday for Thanksgiving. The exchanges will be open for an abbreviated session on Friday. The markets will close at 1 p.m. ET on Friday.

The numbers here are pretty staggering. Clearly, the chaos on Wall Street has impacted shoppers on Main Street.

The Commerce Department reported Wednesday that consumer spending plunged 1 percent last month, even worse than the 0.9 percent decline that had been expected.

It says personal incomes were up 0.3 percent last month, slightly better than the 0.1 percent gain analysts had expected.

The big decline in spending in October underscores concerns that the economy is falling into a deep recession. Consumer spending accounts for two-thirds of total economic activity.

In a second report, orders to factories for durable goods fell 6.2 percent, biggest decline in two years.

And in a third report, new jobless claims fell more than expected last week from a 16-year high, the government said Wednesday, though they remain at elevated levels due to the slowing economy.

The consumer spending report was for October. The bright spot is the consumer confidence rose after its dramatic plunge. This probably means that the fall in gas prices is helping counter the problems people in their 401k's.

Not every stock is plunging to new lows. One of my favorite Emerging Growth stocks, Strayer Education (STRA), just broke through to a new 52-week high today. Since last Thursday, the shares are up over 10%.

If you're not familiar with the education stock, here's a description from Hoover's:

Students who wander from the traditional learning path can turn to Strayer Education. The company's Strayer University has some 60 campuses in more than a dozen states in the eastern US and Washington, DC. Founded in 1892, the university serves more than 36,000 students, mostly working adults seeking associate's, bachelor's, and master's degrees in fields such as accounting, business administration, computer information systems, and computer networking. Strayer Education also offers Internet-based classes through its Strayer University Online, in which over 25,000 students are currently enrolled.

What got the stock moving was a great earnings for the third quarter. On October 30, Strayer reported Q3 earnings of 83 cents a share, two cents more than estimates. In last year's third-quarter, which is historically they're weakest quarter, Strayer made just 64 cents a share. In July, the company said to expect EPS of 79 to 81 cents, so they topped their aggressive forecast.

The company also raised its annual dividend from $1.50 a share to $2 a share, plus they increased their share repurchase program. For Q4, Strayer increased guidance to a range of $1.68 to $1.70 per share. For all of 2008, they see earnings per share coming in between $5.65 to $5.67 a share.

Strayer Education is rated "A - Strong Buy" on PortfolioGrader Pro.

I added Southwestern Energy (SWN) to my Blue Chip Growth Buy List in the latest issue of my large-cap service. It's also one of our Top 5 stocks for the month.

Although the stock has had a rough go it since June, I'm glad to see that SWN is up an amazing 55% from its low on Friday. The stock is currently up 16% in today's trading. This is a remarkable turnaround.

This is exactly what's going to continue to happen, money flooding to stocks with superior sales and earnings growth.