Monday Watch

Weekend Headlines
Bloomberg:
- Global semiconductor sales will this year rise more than earlier forecast because of better-than-expected computer demand and inventory management, market researcher Gartner Inc. said.
- Wal-Mart Stores said May sales at US stores open at least one year are rising within its forecast range as shoppers spent more on food.
- OPEC nations may link their most profitable oil-field developments to less attractive refining ventures to spur international companies to invest in new refineries, the group's president said.
- President Bush said the US delivered a "series of devastating blows" to terrorists in the Middle East in recent weeks, highlighting several high-profile captures and a week-long offensive against insurgents near the Syrian border.
- Senator McCain said a meeting tomorrow among a dozen Republican and Democratic senators will be their last chance to head off a partisan showdown over President Bush's judicial nominees.
- The US dollar is poised for its longest winning streak against the euro since 2000 as some investors say the US currency's three-year bear market has ended, a Bloomberg News survey showed.
- Gold may fall for a fourth straight week in NY, the longest decline in a year, as a rally in the US dollar reduces the allure of precious metals, a Bloomberg survey showed.
- China's textile makers, who spent $14.3 billion last year on factories and materials, say local demand will buffer any slowdown in orders from Wal-Mart and Carrefour SA because of a looming trade war with the US and Europe.
- Chinese stocks are falling, paced by textile companies, after the government said it will raise export tariffs on products such as shirts and pants to ease trade tensions with the US and European Union.
- China's relations with Japan are at their lowest ebb in three decades and both governments must "strive" to improve ties between Asia's two largest economies, China's Vice Premier Wu Yi said.

Wall Street Journal:
- European and Japanese cellphone revenue is slowing or falling, making for bigger challenges for companies such as Britain's Vodfone, Sweden's TeliaSonera, and Japan's NTT DoCoMo.

New York Times:
- Merck CEO Clark plans to revitalize research and development at the company after it lost its position as the largest drugmaker.
- The popularity of sport-utility vehicles in the US is beginning to wane amid higher gas prices, and passenger cars are beginning to win back sales for the first time in 14 years.
- Maurice "Hank" Greenberg, the ousted head of American International Group, will likely continue to influence control over about $16 billion of the insurer's stock.
- Harvard University is starting to allow donors to invest with the university's endowment, a decision that's attracted attention in academic and investing circles.
- The UN is allowing its peacekeepers to be more aggressive in their operations by returning fire and searching for weapons because of failed missions in Rwanda, Bosnia and Somalia.

Washington Post:
- Democrats in the US House of Representatives are risking support from high-tech companies to oppose the Dominican Republic-Central America Free Trade Agreement.
- Sunni Muslims ended their two-year boycott of politics in post-Saddam Iraq yesterday with leaders agreeing to help draft a constitution and participate in elections.
- Jurors in criminal cases increasingly are refusing to convict suspects in the absence of the kind of forensic data that they see used on popular television crime shows.
- The US military plans to reduce the number of bases it holds in Iraq by 96% by moving its forces into four large airbases and turning the rest over to Iraqi troops.

Crains's New York Business:
- Washington Mutual, Bank of America, Citigroup and other banks are opening so many new branches in NY City, they may saturate the market.

LA Times:
- Shares of US retailers such as Pacific Sunwear of California and Abercrombie & Fitch fell Friday after Prudential analyst Stacy Pak downgraded them on concern that a glut of denim fashions may be developing.
- Murders in the Mexican border city of Tijuana jumped by 77% during the first four months of this year, fueled in part by fighting between drug cartels.

Business Insurance Magazine:
- Commercial health-insurance premiums probably will increase 7.5% to 9.5% this year, less than in previous years, as companies price their offerings at or near medical costs.

Financial Times:
- Time Warner has "failed" to integrate its America Online acquisition and to get full benefit from its joint bid for Adelphia Communications, citing John Malone, the US cable-tv investor.
- China overtook Italy as the world's fourth-most popular destination for tourists.
- UK company directors bought more stock in their own companies in the past month than since July, with technology shares among the most popular and retail the least.
- Mattel is investigating claims that children as young as 13 are employed at a Mexican factory that makes dolls clothes for the company.
- Two-thirds of international institutional investors say markets have scarcely considered, if at all, the possibility of a "No" vote in the French national referendum on the European Union constitution on May 29, citing Barclays Capital.

Sunday Telegraph:
- European Union leaders are preparing a plan to salvage the bloc's planned constitution should the French reject it narrowly in a referendum next week. Under the "Plan B," all 25 EU members will release an emergency joint statement that will say voting must continue. The UK would proceed with it referendum next spring and the French would then vote again after the constitution is approved by all other EU states. Should the French reject the treaty by a wide margin, the constitution would be doomed, as France was one of the EU's founding members, and leaders wouldn't attempt to revive it.

China Daily:
- Profit at China's steelmakers may drop by $568 million this year because of government efforts to slow exports of the metal.
- China dispatched 3 million doses of avian influenza vaccine to the northwestern province of Qinghai after confirming deaths of migratory birds there resulted from the virus.

Weekend Recommendations
Bulls and Bears:
- Had guests that were positive on TOL, CECO, MOT, FCS, GS, MER, TS, NCC and mixed on DIS.

Forbes on Fox:
- Had guests that were positive on DHI and mixed on OMM.

Cashin' In:
- Had guests that were positive on PEP, mixed on AMAT, HPQ, UHAL, HAS, K, NUE and negative on WMT.

Cavuto on Business:
- Had guests that were positive on WPO, VIA, WFT and negative on NYT.

Forbes:
- Had a positive article on AMCR and BCO.

Barron's:
- Had positive comments on AVID, MOT, SFA, SNE, PCAR, JAS, BWNG, DRRX, ILA, DYN, MYG and MSFT.
- Had negative comments on USU.

Goldman Sachs:
- Reiterated Outperform on IBM, DKS, AAP and ODP.

Night Trading
Asian indices are -1.0% to +.50% on average.
S&P 500 indicated -.04%.
NASDAQ 100 indicated -.10%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/Estimate
CPB/.33
DY/.25

Splits
ECA 2-for-1

Economic Releases
None of note

BOTTOM LINE: Asian Indices are mixed as strength in Japan and Australia is being offset by weakness in China and Taiwan. I expect US stocks to open modestly higher on a decline in energy prices and short-covering ahead of economic reports and Fed speeches. The Portfolio is 100% net long heading into the week.