Key indicators suggest it is, and while this will be a slow-moving dissipation, top economists as well as the U.S. Federal Reserve now say the picture for the coming months looks a little less bleak.

Unemployment, considered to be one of the darkest spots of a recovery that has seen vast improvements in stock markets and marginal gains in housing and auto sales, is finally starting show signs of stabilization and in turn, has consumers loosening their iron grip on their wallets.

“Taken as a whole, the labor market data for the United States is suggesting we are in a gradual, steady improvement towards job growth at some point over the next three to six months and the decline in jobless claims is consistent with that,” said Zach Pandl, an economist at Nomura Global Economics (NYSE ADR: NMR) told The Wall Street Journal. “The trend has been very persistent since the end of August and we are expecting that to continue.”

The Labor Department said the four-week moving average for new jobless claims fell by 16,500 to 496,500, the 12th consecutive week there’s been such a decline. This is significant because the drop is seen by economists as a more accurate gauge since it irons out week-to-week volatility in the data.

Initial jobless claims for the week ended Nov. 21 fell to the lowest level since September 2008, with 466,000 claims, a decline of 35,000 from the previous week’s revised figure of 501,000.

The weekly report comes after other signs that this lagging indicator of the U.S. economy’s health is starting to catch up with the rest of the “green shoots,” including a panel of 48 economists polled by the National Association for Business Economics (NABE) that said job declines will swing back to growth in the second quarter next year.

“We have been losing jobs on the order of about 200,000 per month in the last couple of months,” NABE President Lynn Reaser said in an interview with National Public Radio (NPR . “We think a year from now, companies will be adding about 200,000 jobs per month.”

After the NABE survey results were published, minutes from the Fed’s meeting earlier this month revealed a slightly more optimistic picture for job creation by the end of 2010, revising a previous unemployment range of 9.5% to 9.8% to 9.3% to 9.7%.

Longer term, the Fed isn’t as optimistic for the end of 2012, when the NABE expects the unemployment rate to return to a normal level, which was 4.7% the month before the recession began in December 2007. Instead, the Fed expects the unemployment rate at the end of 2012 to hover between 6.8% and 7.5%.

Consumer Spending Picks Up Heading Into Holiday Season

Although the unemployment rate is still ticking up, more consumers made purchases in October on items excluding food and gas, which could bode well for retailers in a vicious fight for precious sales.

Consumer outlays, which account for two-thirds of the U.S. gross domestic product (GDP), gained 0.7% in October after falling 0.7 in September, according to Commerce Department data.

Call it feel-good spending, says Naroff Economic Advisors Inc. President and Chief Economist Joel Naroff.

“This was a very good report that provides some hope that the holiday shopping season will wind up not being the disaster so many had forecast,” Naroff wrote in a note to investors. “I have been making the point that consumers are starting to buy the little things that make their lives better and this report points to that possibility.”

In what probably isn’t a coincidence with the consumer spending data, disposable personal incomes gained 0.4% in October and personal savings dipped further in October to 4.4% of total after-tax income from September’s 4.6%.

Even though firms aren’t hiring, those who are employed may be seeing rewards for being a part of  the “doing more with less” movement amid the worst recession to grip the nation since the 1930s. Indeed, the productivity of U.S. workers rose at an annual rate of 9.5% in the third quarter, more than four times the average productivity in the past 25 years.

Confidence Remains Fragile

In spite of a strong rebound since the markets’ March 2009 lows and now signs of hope in the jobs market, consumers are now well aware that this recovery will be a lot slower than they would like as November’s consumer confidence slipped from the previous month.

The Reuters/University of Michigan Survey of Consumers fell to 67.4 in November from October’s 70.6 and 73.5 in September. While that’s still higher than the 55.3 in November 2008 that followed the market meltdown, it shows that consumers are still wary about bearing most of the responsibility for the United States’ economic recovery.

“The consumer is a long way from being a major contributor to the recovery,” said Nigel Gault, chief U.S. economist at IHS Global Insight Inc. “This recovery is going to be slower than normal.”

News and Related Story Links:

• The Wall Street Journal:
  Consumer Spending Rebounds, As Jobless Claims Fall
• Money Morning:
  U.S. Economy Will Grow Faster Than Expected, Jobs to Return to Growth Next Year, Economists Say
• NPR:
  Economist: Job Growth Will Resume “Within the Next Few Months”
• Reuters/University of Michigan Surveys of Consumers:
  Lackluster Recovery Due to Weak Consumer Finances

GM May Keep Saab After Deal Falls Apart; Third Quarter GDP Revised Down; Home Prices Rise for Fourth Straight Month; European Commission Drops Qualcomm Antitrust Inquiry; Fitch Downgrades Mexico; Bank Rossi Takes Action

• General Motors Co.'s board will decide the future of its bankrupt Saab unit, and may shut it after Koenigsegg Group AB canceled a planned acquisition of the Swedish company, a person familiar with the matter told Bloomberg News. GM's board will review Saab's future at a Dec. 1 meeting and directors could opt to keep Saab, as they did when deciding earlier this month to cancel a sale of the Opel brand in Germany. The pullout by Koenigsegg, which said it ran out of time to complete a deal, is the third brand sale to falter since GM's July 10 bankruptcy exit. GM backed out of the Opel sale to a group led by Magna International Inc. (NYSE: MGA), and Penske Automotive Group Inc. (NYSE: PAG) withdrew from a plan to buy Saturn in September.

• The U.S. economy grew at a rate of 2.9% in the third quarter, down from the initial estimate of 3.5% the Commerce Department said yesterday (Tuesday). But most analysts said the revised data signaled the anemic economic recovery was intact, noting it was still the fastest pace since the third quarter of 2007. "We are still on the right path and a double-dip (recession) is not on the cards," said Jonathan Basile, an economist at Credit Suisse Group AG (NYSE: CS) told Reuters. The return to growth in the July-September period, after four straight quarters of declining output, probably ended the most painful U.S. recession in 70 years. The economy contracted at a 0.7% rate in the April-June period.

• The S&P/Case-Shiller home-price index of 20 U.S. cities showed home prices rose for a fifth straight month in September, pointing to improvement in real estate that's helping the economy emerge from recession.  The index rose 0.27% from the month prior on a seasonally adjusted basis, after a 1.13% rise in August. The gauge fell 9.36% from September 2008, more than forecast.  Still, it was the smallest year-over-year decline since the end of 2007. Rising home sales have helped stem the slump in property values that precipitated the worst recession since the 1930s. "The reduction of inventories we have seen has helped stabilize prices," said Michael Gregory, a senior economist at BMO Capital Markets in Toronto.

• The European Commission shut down antitrust proceedings against Qualcomm Inc. (Nasdaq: QCOM) as big technology companies dropped their four-year old complaints against the U.S. mobile chip supplier.  The Commission's decision came as Telefonaktiebolaget LM Ericsson (ADR Nasdaq: ERIC), the world's biggest mobile network equipment maker, and Texas Instruments Inc. (NYSE: TXN), Qualcomm's biggest wireless chip rival, both announced that they were withdrawing their complaints. The move marks the end of the case, which began in October 2005 when six large companies lodged complaints about Qualcomm's licensing practices.  The closing of the case means Qualcomm could be in a better position to return more cash to shareholders through share buybacks or a dividend increase. "We believe there was some overhanging concern that the EU could fine Qualcomm," UBS AG USA (NYSE: UBS) analyst Maynard Um told Reuters.

• Fitch Ratings Inc. yesterday (Tuesday) downgraded Mexico because of concern over the country's medium-term fiscal outlook and growth potential. Fitch dropped Mexico's rating to triple-B, two notches above non-investment grade, or "junk" status.

• Russia's central bank, Bank Rossii, cut its refinancing rate to 9% from 9.5% and reduced the repurchase rate charged on central bank loans to 8% from 8.5%, effective today (Wednesday). It last lowered them by half a percentage point on Oct. 30. "The narrower difference between the levels of domestic and external rates will help stem the ruble's strengthening," the central bank said in a statement.

Existing Home Sales Up 10% in Oct.; IMF: Dollar Not at Risk; Cadbury Stock Gains On Rumors of Competing Bid; Microsoft and News Corp. in Discussing Possible Pact; Tyson Earnings Beats Street; Campbell Soup Raises Forecast; Holiday Shoppers Preparing to Pare Spending; Twitter IPO a Possibility

• October existing home sales in the United States gained 10% to a 6.1 million annual rate, up from a pace of 5.54 million in September, the National Association of Realtors (NAR) said yesterday (Monday). That beat a median estimate of 5.7 million in a survey of 66 economists taken by Bloomberg News. The gain is "an impressive increase and shows a lot of pent-up demand for housing," Dean Maki, chief U.S. economist at Barclays Capital Inc. told Bloomberg. "Buyers have enough confidence to take the plunge. The housing market recovery will be a durable one." Sales were up 23.5% compared to October 2008, when the financial crisis began in earnest.

• The U.S. dollar isn't under threat, International Monetary Fund (IMF) Managing Director Dominique Strauss-Kahn told Bloomberg Television. Instead, the main challenge will be preventing asset bubbles. "Even with the mountain of debt that we have in front of us, not only in the United States or the United Kingdom and other advanced economies, I don't believe confidence in the dollar is going to disappear soon," Strauss-Kahn said. "We are contemplating a very big increase in capital inflows in emerging markets with the risk of asset bubbles."

• Shares of Cadbury PLC (NYSE ADR: CBY) rose after reports that Nestle SA (OTC ADR: NSRGY) is weighing a bid for the British chocolatier. That comes after a $16.2 billion cash-and-stock bid by Kraft Foods Inc. (NYSE: KFT) and report that The Hershey Co. (NYSE: HSY) is considering a joint bid for Cadbury with Italian candy maker Ferrero SpA. Cadbury stock gained 1.89% to close at $53.80 in trading yesterday (Monday).

• In what could be could be a boon for ailing newspapers, Microsoft Corp. (Nasdaq: MSFT) has been in discussions with Rupert Murdoch's News Corp. (NYSE: NWS). A person familiar with the situation told the Financial Times that the companies are in the early stages of a plan that would involve the media giant being paid to "de-index" its news Web sites from Google Inc.'s (Nasdaq: GOOG) ubiquitous search engine. Another large online publisher approached by Microsoft said the plan "puts enormous value on content if search engines are prepared to pay us to index with them," the FT learned.

• Tyson Foods Inc. (NYSE: TSN) beat Thomson Reuters Corp. (NYSE: TRI) estimates of 26 cents per share when a goodwill impairment charge for its beef business was excluded, bringing the meat producer's earnings to 28 cents per share. Still, Tyson showed disappointing margins for its chicken business in the third quarter, sending its shares down 1.45% to close at $12.88 per share yesterday (Monday). Operating margin for that segment was 1.2%, well below average forecasts of 9%. "People invest in this stock because of its exposure to chicken and the segment continues to underperform its peers significantly," KeyBanc Capital Markets Inc. analyst Akshay Jagdale told Reuters.

• Falling ingredient prices helped Campbell Soup Co. (NYSE: CPB) report a profit of $304 million, or 87 cents per share, in its fiscal first quarter, compared to a net income of $260 million, or 70 cents a share, a year earlier. Thomson Reuters Corp. (NYSE: TRI) analysts were expecting earnings of 81 cents per share. Shares in the soup maker gained 1.41% to close at $34.60 yesterday (Monday) as it raised its sales and profit expectations for the year.

• Ninety-three percent of Americans say they will spend the same or less than last year this holiday season, an Associated Press/GfK SE poll of 1,006 adults showed. Roughly 20% of the respondents say they are suffering from debt-related stress, up from 15% in the spring. Eighty percent will use cash to pay for their holiday shopping, which generally means fewer purchases. "Cash serves as a very direct governing force upon spending," Alan Hilfer, director of psychology at Maimonides Medical Center in Brooklyn, N.Y. told The AP. "If you have $100 in your pocket, and that's all you can spend, you'll look around and make a decision based on the amount of money you have."

• Twitter Inc. co-founder Biz Stone says his company may eventually turn to equities markets if it needs more funding. "We are definitely not interested in selling the company," Stone said at an Oxford University event. "If an IPO's the only thing, then sure. But if there is some other way then that would be great too. Maybe some other new way will emerge." The social networking company, which has yet to turn a profit, received $100 million in capital from T. Rowe Price Group Inc. (Nasdaq: TROW) and private equity firm Insight Venture Partners in September, a person familiar with the matter told Reuters. The company's value is reported to be $1 billion.

Microsoft just launched its very successful Windows 7 operating system, which has produced a major new upgrade cycle in the industry. In England, for example, Amazon.com Inc. (Nasdaq: AMZN) had more success selling Windows 7 packages than it did Harry Potter books.  Windows 7 has major advantages over Vista, including speed, simplicity and booting time.  This is prompting Vista users, as well as those who skipped Vista, to upgrade.

Windows 7 will be closely followed by the launch of Office 2010 in the first half of next year.  Microsoft will herd businesses and consumers through a gauntlet of sales products: First, an upgrade of the operating system and then the core applications suite. The company is also releasing Windows Server 2008 R2, which will bring new cashflow. 

Microsoft is also looking forward to challenges facing its distributed computing platform concept by setting the launch of its cloud computing initiative with Windows Azure for Jan. 1.

All of this change is taking place at the cusp of a major new technology cycle that will have a profound impact on the industry.  So lets review these initiatives and their impact on the market and Microsoft stock.

The Cloud Computing Revolution

The thing to remember about the technology sector is that revolutionary changes, when they catch on, are superlative sources of profit.  Therefore, there is a high premium associated with producing the new technology that will gain widespread acceptance.  When this occurs new technologies leapfrog the old ones, no matter how established they might have been.

In this paradigm lies both the appeal of investing in high-tech companies – exploding profits – as well as the danger – the risk of sudden obsolescence.  The result is volatility, as tech stocks reflect the shifting expectations of success in the endless fight for technological supremacy. 

Hence, Microsoft, having reigned supreme in the PC market — enabled by the ever-increasing processing speeds produced mainly by Intel Corp. (Nasdaq: INTL) and its challenger Advanced Micro Devices Inc. (Nasdaq: AMD) – has succeeded in defending its dominant position against many challengers.

But in the fast-changing world of technology, the concept of cloud computing is gaining serious traction and poses a major long-term challenge to Microsoft’s core business.  The pendulum between distributed computing and centralized computing has started to swing pronouncedly in one direction – and it is not towards distributed computing. 

In distributed computing, each user has its own machine that computes and stores all of the data.  As users demanded more functionality, faster computing and more capacity to store data, the capabilities of computers had to improve.

But with centralized computing, most, if not all of those functions are performed in a centralized, remote location through the Internet.  That means a user needs only a very simple computer with a very good Internet connection to the “cloud” where data is stored and operations are carried out.  So instead of paying for an expensive computer, the user just pays for storage and capacity on a subscription basis.

That means the user can demand more storage or processing capabilities from the cloud instantly by paying more, or scale back instantly once needs decrease. The user also would have access to a huge array of software packages, which would be very expensive to replicate on a personal computer.
 
Lastly, and very importantly, there are huge economies of scale and quality issues from having the hardware and software in the cloud.  The cloud could have the fastest computers available, with the latest versions of every software package, all professionally maintained, constantly updated, and secured and backed up to the highest industry standards.  And because this is performed on a huge scale, the average cost per user would be much smaller than in the distributed model. 

All of this happens seamlessly through the Internet without the user’s knowledge and in a simple, secure way. And it is all accessible through the Internet with cheap netbooks, low-end PCs, and even smartphones.

The widespread availability of wireless and broadband Internet access is facilitating the cloud-computing revolution.

Cloud Computing Competition

Microsoft, the leader in personal computing, now finds itself facing a major technological shift – and a possible dilemma. It must position itself as a leader in the cloud-computing revolution, even though it is precisely this new technology that will ultimately cannibalize its distributed computing business.

History is full of examples of firms that became so successful in a certain technology, that when superior technologies later came, they were too slow to react and perished. And Microsoft’s success will depend on how it manages this transition over the next few years and its success on the new technology.

The risks in any new technology like cloud computing is that the winners are not easy to predict, and Microsoft is facing challenges there from other giants, like Google Inc. (Nasdaq: GOOG) and even Amazon, who have the resources to deploy very efficient clouds. 

In mobile phone computing, Microsoft has been unable to keep pace with leaders, like Apple Inc. (Nasdaq: AAPL), Research in Motion Ltd. (Nasdaq: RIMM) and Google. 

But the Microsoft’s Windows 7, Office 2010 and Windows Server 2008 R2 give the company a very strong short-term boost in its strongholds, the personal computing and server spaces. The Windows 7 and Office 2010 launches are integral to the new upgrade cycle in PCs, and the Azure launch puts the company at the forefront of the cloud computing initiative. 

In fact, Azure has a strong possibility of catching on, and there is no doubt that Microsoft has all the internal resources it needs – a rich balance sheet, tons of talent and strong management – to build the extremely costly data centers and necessary infrastructure that few other industry players can.

And the transition to cloud computing might not be as fast as its cost and functionality advantages suggest.  Cloud computing still has to overcome many hurdles, including corporate users’ attachment to their data and control of their systems. 

What does all this mean for Microsoft stock?

Microsoft will continue delivering very strong results over the short and medium-term, beating estimates on the back of this new upgrade wave, as well as the nascent revenue and profits from Azure.  These short-term catalysts are only partially priced into the stock right now.

Therefore, we recommend buying Microsoft on the basis of short and medium term catalysts. But we will continue to assess Microsoft’s success in the gradual transition into the cloud computing revolution as it unveils.

Microsoft stock closed Friday down 16 cents, or 0.57%, at $29.62 a share – more than twice its 52-week low of $14.87 and just shy of its 52-week high of $30.14.

Recommendation: Buy Microsoft Corp. (Nasdaq: MSFT) stock at market (**).

(**) – Special Note of Disclosure: Horacio Marquez holds no interest in Microsoft Corp.

[Editor's Note: Commodities are hot. In some cases, white hot.

Oil, gold and silver are the hot commodities of today. But the shrewdest investors will look toward the horizon, and try to project just what the commodity profit plays of the future will be.

If you need help, just ask Money Morning's Horacio Marquez.

As worries about oil escalate - whether those worries are about future supplies, future prices or global-warming - more and more muscle is being placed behind alternative power technologies. That's especially true in the hybrid vehicle market, where a specific technology has emerged as the clear leader.

The technology is lithium-based rechargeable batteries, and its emergence is sending lithium demand skyrocketing.

The profit potential of this market is stunning - but only for investors who can figure out the right way to play it.

Here's the thing: Marquez - a Money Morning contributing editor who also edits the Money Map VIP Trader - has uncovered the lithium-tech leader.
This company is a global player with a solid market cap and is well known within the hybrid industry. But surprisingly few investors know about the company, or have ever even heard its name.

To learn more about this company - to get in ahead of the masses - and to find out more about Marquez's Money Map VIP Trader, please click here.]

News and Related Links:

• Money Morning:
  Microsoft Releases Windows 7, Opens First Retail Store
• Money Morning:
  Buy, Sell or Hold: Amazon Stock is Positioned as a Long-Term Winner
• Money Morning:
  Buy, Sell or Hold: Amazon.com Inc. (Nasdaq: AMZN) Remains Unquestionably Bullish
• Money Morning:
  Buy, Sell or Hold: Amazon.com Inc. (Nasdaq: AMZN) Has Been a Boon to Investors, but Now It’s Time to Take Profits

• AOL LLC Chief Executive Tim Armstrong told employees yesterday (Thursday) that he will ask for 2,500 volunteers, about one-third of the company's workforce, to be laid off, The Wall Street Journal reported. The voluntary layoff program, which is part of an effort to trim some $300 million in annual costs, will begin on Dec. 4 and run through Dec. 11. AOL said the layoffs would result in restructuring charges of up to $200 million, which it announced last week

• U.S. Treasury Secretary Timothy Geithner yesterday (Thursday) fended off a Republican congressman's demand that he resign, Bloomberg News reported. Geithner was asked to step down from his post by U.S. Rep. Kevin Brady, R-TX, who said the public "has lost all confidence in [Geithner's] ability to the do the job." Geithner responded by blaming Republican leadership and the administration of George W. Bush for much of today's financial crisis. "I can't take responsibility for the legacy of crises you bequeathed the country," he said, noting that by virtually "any measure" the economy is "substantially stronger today than when [President Barack Obama} took office."

• Benchmark crude for December yesterday (Thursday) slid $2.12, or 2.66%, to settle at $77.46 a barrel on the New York Mercantile Exchange (NYMEX). The decline followed a similar slide in U.S. equities that drove the Dow Jones Industrial Average down 93.87 points, or 0.9%, and the Standard & Poor's 500 Index down 14.9 points, or 1.34%.

• The Conference Board's Leading Economic Index climbed 0.3% to 103.8 in October, the highest level since September 2007. "The data indicate that economic recovery is finally setting in. We can expect slow growth through the first half of 2010," Conference Board economist Ken Goldstein said in a statement.

• U.S. President Barack Obama yesterday (Thursday) said that world powers could deploy new sanctions against Iran "within weeks," as the Middle Eastern nation had failed to embrace a deal that would ship roughly 75% of its low-enriched uranium to Russia and France for conversion into a power source. "Iran has taken weeks now and has not shown its willingness to say yes to this proposal," the president said at a joint news conference with South Korean President Lee Myung-bak in Seoul. "Our expectation is that, over the next several weeks, we will be developing a package of potential steps that we could take, that would indicate our seriousness to Iran."

• DirecTV Group Inc. (Nasdaq: DTV) Chairman John Malone told Bloomberg News that he won't rule out a possible takeover by AT&T Inc. (NYSE: T) or Verizon Communications Inc. (NYSE: VZ). "Our relationship will continue to broaden and intensify," said Malone. "It may lead to some more ownership-oriented relationship, or it may not." DirecTV has about 18 million customers, more than six times Verizon's FiOS TV service and 10 times AT&T's U-Verse TV service.

U.S. Rep: Give Regulators Power to Break Up Financial Giants; GM IPO Could Come in Q4 2010, Official Says; Fed May Not Increase Interest Rates Until 2012; Wells Fargo to Buy Back $1.3 Billion in Auction Debt; GE Says Appliance and Lighting Businesses Improving; October Housing Starts Miss Estimates; DirecTV Hires Pepsi Exec as New CEO; AMD to Pay Off $1 Billion in Debt;

• U.S. Rep. Paul Kanjorski, D-PA, chairman of the House Capital Markets Subcommittee revealed a proposal that would empower regulators to break up financial firms that pose a risk to the nation’s economy. Kanjorski’s plan took the form as an amendment to a bill in the House Financial Services Committee that proposed new powers for regulators to police, take over, restructure and close firms that are a “systematic risk.” Targeted at the 50 largest U.S. financial firms, the amendment would require the Financial Services Oversight Council to evaluate several factors in determining whether to take action, such as size, exposure, leverage and relationships.

• The U.S. government wants the eventual initial public offering (IPO) of General Motors Co. (NYSE: GRM) on a fast track and it could come as soon as the fourth quarter of next year, Reuters reports. "Private markets would like to see us exit this investment, and I think they will be more comfortable if we're on a sustained path out the door than if they think we're going to try to market time it to maximize return," Ron Bloom, head of the government’s autos task force told the news agency in an interview.

• Policymakers may not raise key interest rates until early 2012, according to U.S. Federal Reserve Bank of St. Louis President James Bullard. “If you look at the last two recessions, in each case the FOMC waited two and a half to three years before we started our tightening campaign,” Bullard said yesterday (Wednesday) in a speech in St. Louis. “If we took that as a benchmark, that would put us in the first half of 2012.”

• Wells Fargo & Co. (NYSE: WFC) agreed to repay roughly $1.3 billion to brokerage clients whose funds were frozen last year as the auction-rate securities market collapsed, the North American Securities Administrators Association (NASAA) said yesterday (Wednesday). The San Francisco-based bank also will pay a $1.9 million fine and reimburse investors that sold their holdings at a discount after the market collapsed.

• Revenue and profit growth for General Electric Co.’s (NYSE: GE) consumer and industrial division are slowly improving, unit President James Campbell said yesterday (Wednesday) at an Oppenheimer Holdings Inc. (NYSE: OPY) conference in New York. Campbell expects the unit, which includes GE’s appliance and lighting businesses, to show “slight” revenue growth in 2010 and “positive operating profit.”

• Housing starts in the United States fell 10.6% in October to a seasonally adjusted rate of 529,000, the Commerce Department said. That’s lower than the expected annual rate rise of 600,000 according to a media forecast of 77 economists polled by Bloomberg News.  

• The DirecTV Group Inc. (Nasdaq: DTV) named PepsiCo Inc.’s (NYSE: PEP) Michael White its next chief executive officer. White was vice chairman and CEO of Pepsi’s its international unit, and is credited by Pepsi CEO Indra Noovi as helping boost sales abroad to almost $20 billion — more than double the amount when he took the helm of that division in 2003.

• Advanced Micro Devices Inc. (NYSE: AMD) is using a $1.25 billion settlement it received from rival Intel Corp. (Nasdaq: INTC) and a new $500 million bond offering to pay off $1 billion in debt, it said yesterday (Wednesday). AMD will put the cash toward buying back $1 billion in 5.75% notes that mature in 2012.

Hu Silent on Yuan; Troubled U.S. Banks May Get Chinese Bailout; SEC Sanctions Doubled in Last Fiscal Year; October PPI Gains; Playboy CFO Quits Amid Talk of Buyout; U.S. Home Builders Still Discouraged; GM Could Lay Off Up to 10,000 European Workers; Costco Stops Coke Product Orders Over Price Dispute

• As expected, U.S. President Barack Obama yesterday (Tuesday) in a summit with Chinese President Hu Jintao urged Chinese policymakers to let the yuan appreciate. "I was pleased to note the Chinese commitment made in past statements to move toward a more market-oriented exchange rate over time," President Obama said as he stood next to Hu, who avoided the topic in his speech and instead spoke of the need to keep in close contact on "macroeconomic and financial policies and continue to consult, on an equal footing, to properly resolve and address economic and trade frictions."

• Chinese and U.S. regulators may reach a pact that would encourage financial institutions in China to invest in troubled small- and medium-sized U.S. banks, Reuters reported, citing bankers briefed on the plan. Two senior bankers said U.S. officials, investment bankers, and financial advisers invited them to look at several potential investments in mostly troubled U.S. banks. Bankers in China complained of the difficulty in setting up branches or investing in banks in the United States, thanks in part to U.S. regulators' strict supervision and approval process for financial deals. More than 100 U.S. banks have failed this year, most of them small- to medium-sized.

• The U.S. Securities and Exchange Commission (SEC) has opened more inquiries, brought claims faster and doubled sanctions in the latest fiscal year, it said yesterday (Tuesday). Fines and orders to forfeit illegal profits rose to $2.4 billion in the 12 months ended Sept. 30, compared to $1.03 billion in the previous year. New inquiries jumped 6% to 944, the SEC said in its 2009 Performance and Accountability Report.

• The Producer Price Index (PPI) for finished goods gained 0.3% in October, the Labor Department said yesterday (Tuesday). That follows a 0.6% decline in September and a 1.7% increase in August. So far this year, prices have increased in six of the first 10 months. Core prices, which exclude energy and food products, fell 0.6% last month after a 0.1% drop in September. Energy and food prices both gained 1.6% after declines in September of 2.4% and 0.1%, respectively.

• Playboy Enterprises Inc. (NYSE: PLA) Chief Financial Officer Linda Havard will resign after the end of the year as speculation that the company will be sold continues to circulate. Separately, Golden Gate Capital LP denied any involvement in talks to buy Playboy, which saw its stock fall 14.23% to close at $4.10 yesterday (Tuesday). Reuters reported last week the adult entertainment company was trying to sell itself for $300 million.

• U.S. homebuilders remained discouraged as the National Association of Home Builders' (NAHB) sentiment index held steady at 17 in November. A reading of 17 shows that roughly one in six builders think the market is good or fair. Before the housing bubble burst, the index had never been below 20 in its 24-year history; it's now been lower than 20 for 19 straight months and under the breakeven point of 50 for 43 consecutive months.

• General Motors Co. could cut up to 10,000 jobs in an effort to restructure its European operations, and it may finalize the deal within three weeks, Nick Reilly, interim head of its business there said yesterday (Tuesday) at a news conference. The automaker must reduce its production across the continent by between 20% and 25% as part of a $4.9 billion (3.3 billion euros) restructuring plan.

• Costco Wholesale Co. (Nasdaq: COST), one of the largest wholesale club retailers in the United States, said it will not order more products made by The Coca-Cola Co. (NYSE: KO) due to a price squabble, The Associated Press reported, citing a message on Costco's Web site. "Costco is committed to carrying name brand merchandise at the best possible prices," the message read. "At this time, Coca-Cola has not provided Costco with competitive pricing so that we may pass along the value our members deserve." A Costco executive confirmed the news but would not comment further. The dispute is not expected to last long, The AP reported.