Please spend some time today reflecting on our Veterans’s contributions to our way of life. Freedom is our choice because of those who fought for that to be the case. It is because of their sacrifices that we need to make sure our children have the same access to Life, Liberty, and the Pursuit of Happiness that we all do.

Let’s do a little history refresher on the G20, if you don’t mind. Occasionally, refresher history lessons are useful for all of us to keep perspective on larger trends. This is why in the past we have given history lessons in market structure (REG ATSèDecimalization è REG NMSè Today’s Fragmented Web held together by HFT glue), as well as how SOES bandits morphed into firms like Datek, Island, Instinet, and Nasdaq. Today we thought it useful to re-examine the G20, in light of the focus the world is placing on it this week.

The G20 was established in 1999 in the wake of the 1997 Asian Financial Crisis. Its purpose is to promote the financial stability of the world, and to achieve sustainable economic growth and development for its members. The members include Argentina, Australia, Brazil, Canada, China, Franc, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, Korea, Turkey, UK, and the USA. The EU is the 20^th member.

After Fall 2008 a few G20 meetings convened with the intent of addressing issues that fall into the below green quadrant. Agreements were made for global coordinated massive global stimulus. There was large agreement and cooperation.

Now two years later, the stimulus is still coming, and it is still increasing, which is not to everybody’s liking (Germany and China to name a few). Some analysts (think Amity Shlaes) feel “stimulus outlays can have the perverse effect of stimulating industries that are “really pretty weak, and maybe should fade.”  The cooperation among G20 members in prior meetings ground to a halt in Toronto earlier this year. The US favored continuing along the path of stimulus, while the EU wanted to focus more on austerity. India refereed.

So now all eyes are on Korea. It seems the issues dividing G20 members in June have only intensified. Again the world is watching the G20 closely for signs of cooperation, but this time not in stimulus actions. The G20 is being watched to see if its members can balance the needs of the lower left quadrant (long-term international) and the upper right quadrant (immediate national). Stated more specifically, can the G20 members balance each of their country’s desire to keep their currencies cheap for export growth, while mitigating the adverse consequences that puts each of them against with each other? Can they avoid protectionism?

The actions and signals sent from this G20 meeting will prove to be far more important to the markets than any tech company’s margins. Will this G20 meeting resemble Pittsburg or Toronto? We think this is the question everyone will be asking as we watch updates on business television.

Oh, and I want to include commentary from my friend Craig Cummings at Cantor Fitzgerald on the Fed:

“FED up!  It’s been wrong since the soft landing was abandoned.  After Reaganomics lit a fire under the economy ( with a notable giant hiccup in 1987) The Fed Chairman called for a “ soft landing”.  He wanted to pursue a policy of sustainable growth.  Its is widely agreed that this tactic slowed the economy and cost George Bush (’41) the election in 1992.  This was the beginning of the end for the FED.  Their independence waned and they became part of the mess in Washington run by politics and media pressure.  When Greenspan warned ( intelligently) of irrational exuberance in 1996 the markets got hammered and since then the Fed has been careful to do and say the “right things” so as not to do anything to hurt the stock market or slow the economy during election periods ( or any other time really).  The only truly independent group left is the Supreme Court.  The Fed should be the adult in the room and they are not.  We need to take the pain and deal with it.  QE2 is dangerous.. not just because we’re heaping more debt on ourselves but it’s indicative of our national will to ignore reality and keep pretending.  25% of all mortgages in the country are now underwater. There is a word for this…. FRAUD.  Banks are waiting and hoping.. The Government is waiting and hoping … Face it .. there are people that cant afford to own houses.. there are banks that aren’t solvent.  Take the pain and move on or we will have a “Japan-like” decade.  Ok  Rant over”

Where we left off 4:00pm EST:

DJIA                                             11,357.04                                      +10.29

S&P500                                          1,218.71                                        +5.31

NASDAQ Composite                     2,578.78                                        +15.80

Futures now at 7:30am EST:

DJIA:                                                   -36

S&P500:                                              -6.20

NASDAQ 100:                                    -19.25

Key Data out today:

09:55:              University of Michigan Confidence (I wonder how this number actually correlates with the performance of Ford and GM stock)

Since the prior close, some key stories:

–       G20 struggles for trade agreement.

–       Euro weakens over concern of EU bailouts.

–       CSCO has margin issues.

–       Too Big to Fail may embrace Insurers and Clearing firms. Hmmm.

–       Walmart Free Shipping.

–       Presidential Commission Deficit Reduction Proposal recommending tax cuts, as well as elimination of mortgage deduction, called unacceptable by many government officials (democrats mostly), the housing industry, and unions.

–       Greenspan criticizes Geithner/Bernanke, giving new meaning to Pot/Kettle Analogies worldwide.

–       Commodity Exchanges raise margin requirements as inflation runs wild in foods, metals, and things regular folks consume every day whilst their incomes remains lower than in 1999.

–       FDA unveils proposed Graphic Warning Labels on Cigarettes; Sal catches his teenage son smoking in the bathroom. Sal unhappy this morning.

–       FCC probes Google again on Data stuff.

–       Bond markets closed (Veterans Day).

Earnings:

Pre-market: KSS, VIA.B, ACM, AH, COWN, CRIC, EJ, FLO, MMS, SPH, THI,

After the Close: DIS, NVDA, SPWRA, ESE, CPA, AAV, ABTL

Significant Movers This Morning:

GRRF +17.4% (earnings), WYY +9%, BRKS +7.9% (earnings), IR +6.5% (to be added to the S&P 500), DNDN +6%,  FTK +5.9% (earnings), UEPS +3.8% (guidance), ANW -32.3% (earnings), SRDX -23% (earnings), CSCO -16% (earnings), RST -10% (earnings) ASTI -8.9% (stock offering) KLIC -6.5% (earnings) MITI -6.3% (stock offering) OPTR -5.7% (terminates study) DAR -5.2% (earnings) STXS -4.9% ($15M equity offering) CNQR -4.6% (earnings) CLNE -4.1% (secondary) MHR -4.1% (earnings) SUPG -3.6% (discontinues development) TTEK -3.6% (earnings) GLP -3.5% (1.7M unit offering).