Sunday, November 26, 2006

Monday Watch

Weekend Headlines
Bloomberg:
- US retail sales rose a strong 6% to $8.96 billion on Black Friday, the first day of the holiday shopping season, as discounts and lower gasoline costs encouraged consumers to buy more gifts, according to ShopperTrak RCT.
- US shoppers spent 19% more over the Thansgiving weekend than last year, kicking off holiday gift buying with purchases of wide-screen televisions and clothes, the National Retail Federation said. Consumers spent an average $360.15 each over the weekend, up from m$302.81 a year earlier.
- China’s economy is unlikely to slow “sharply” in 2007 because rising consumer spending and industrial production will underpin growth, said Yao Jingyuan, chief economist of the National Bureau of Statistics.
- Palestinians fired rockets at Israel after a cease-fire agreement between Prime Minister Ehud Olmert and Palestinian Authority President Mahmoud Abbas went into effect, raising doubts about how long the truce can hold.
- Wal-Mart Stores(WMT) said November sales at US stores open at least a year fell .1%, the worst performance in more than a decade in the first month of the holiday season.

Barron’s:
- US philanthropists like billionaire investor Warren Buffet are developing longstanding relationships with causes they have a personal interest in, rather than donating to a general cause. Buffett has donated to organizations involved in family planning and abortion rights for years.
- Leveraged buyouts have accounted for 34% of merger activity this year, almost double from this time last year, as investment firms target companies stockpiling cash.

NY Times:
- Atlanta, GA has succeeded in luring young, college-educated workers from other US cities such as New York, NY and Washington, DC as the metropolises vie to retain their workforces. The number of 25- to 35-year-olds with college degrees increased 46% in Atlanta from 1990 to 2000, followed by San Francisco, Denver, Portland and Austin, citing a recent study.
- YRC Worldwide(YRCW) is focusing on its business in China as the trucking company follows customers to Asia, citing CEO Zollars.

Forbes:
- Your broker may be making a pretty penny lending your stock to a hedge fund without your knowledge. Here’s how to get a cut of the action.

Washington Post:
- Forty experts on warfare, the Middle East and topics such as Islamic militancy have been asked to devise options for the Iraq Study Group headed by former Secretary of State James Baker III.

San Jose Mercury News:
- US consumers may soon be able to use their mobile phones at retail stores instead of swiping debit or credit cards. Mobile phones may replace most cards found in consumers’ wallets, including gifts cards, reward cards and payment cards.

AP:
- NYSE Group(NYX) CEO John Thain is traveling to China next week to attract more listings from Asia.
- Israel and the Palestinians late yesterday agreed on a cease-fire to end Israel’s five-month military campaign in the Gaza Strip and the firing of rockets by Palestinian militants into the Jewish state.
- Sunni, Shiite and Kurdish leaders in Iraq appealed for an end to sectarian violence in a statement issued on national television.
- Somalia’s Islamist militia, which controls most of the country’s south, deployed forces within nine miles of the border with Ethiopia to the north. The militia seized control of the capital, Mogadishu, in June and has introduced Islamic law in areas it controls. Ethiopia’s Prime Minister Meles Zenawi said on Nov. 23 his country is preparing to defend itself against a holy war declared by the Islamic Courts.

Reuters:
- The US Transportation Security Administration has set a $28 annual fee it will charge airline passengers who join a privately run registry to enable them shorter waits for screening.

Financial Times:
- The National Association for Stock Car Auto Racing, or Nascar, wants to expand to China and western Europe by tying its licensing, sponsorship and media expertise with local partners, citing Chairman Brian France.
- Merck & Co.(MRK) plans to advertise its drugs more on the Internet and less on television, citing an interview with Peter Loescher, president of the Global Human Health unit.
- Kazakhstan’s Kashagan oil field, one of the world’s five biggest, will produce 25% more oil than forecast once it reaches full production.
- Cisco Systems(CSCO) plans a joint venture with Russia’s OAO Concern Sitronics, citing Paul Mountford, Cisco’s president of emerging markets.

De Telegraaf:
- Air France-KLM is in a “comfortable position” as consolidation in the US airline industry will enter a crucial phase in 2007, citing vice-chairman Leo van Wijk.

El Economista:
- Juan Miguel Villar Mir, Chairman of Obrascon Huarte Lain SA, may invest in Texas and will focus on construction and infrastructure companies.

Nihon Keizai:
- Nissan Motor(NSANY) will start selling all-electric cars by 2009. The automaker will develop its own lithium-ion battery to power the lightweight vehicles.
- Net purchases of Japanese stock and bond purchases by foreign investors may fall this year for the first time in four years.

Xinhua News Agency:
- China will have 459 million mobile phone users by year’s end, citing the Ministry of Information Industry.

AFP:
- Thousands of Islamists rallied in Pakistan’s economic center Karachi protesting changes to the country’s 27-year-old rape law. Pakistan’s parliament voted earlier this month to scrap provisions in the law that oblige women alleging rape to produce four male witnesses or face possible prosecution for adultery.

Al-Hayat:
- Saudi Arabia’s Oil Minister Ali al-Naimi said OPEC may agree to cut oil production for a second time in the third quarter at a meeting in Nigeria next month.
- Foreign direct investment, know as FDI, has reached $37 billion so far this year in Arab states compared with $7 billion for all of last year. The United Arab Emirates, Egypt, Kuwait, Morocco and Lebanon have received 73% of the total investment coming into the region.

Milliyet:
- Turkiye Petrolleri A.O., Turkey’s state oil company, has discovered 20 new oil wells near the border with Syria and will start pumping oil from half of them by mid-December.

Weekend Recommendations
Barron's:
- Made positive comments on (AVP) and (ASMI).
- Made negative comments on (VRTX).

Citigroup:
- Reiterated Buy on (MAR), raised target to $55.
- Reiterated Buy on (WMB), raised target to $35.
- Reiterated Buy on (HOLX), target $55.
- Rated (SPNS) Buy, target $21.
- We continue to believe Analog semi fundamentals are poised for a favorable 1H07 inflection, and with that another leg up in select stocks. Our top picks are (MRVL), (ISIL) and (FCS).
- Video game sales were strong over the holiday weekend, helped by promotions and despite limited PS3/Wii availability. Front line title pricing generally held, a good sign of publisher/retailer demand, and discounts tended to be bundled and of limited duration. Out estimates for game publishers/retailers are unchanged, but we see the greatest opportunity for upside at Activision, whose games were cited as next gen favorites, received good shelf space and were used in promotions.

Night Trading
Asian indices are -.25% to +.50% on average.
S&P 500 indicated -.05%
NASDAQ 100 indicated -.08%.

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
Conference Calendar
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/Estimate
- (DCI)/.42

Upcoming Splits
- (AME) 3-for-2

Economic Releases
- None of note

BOTTOM LINE: Asian Indices are mostly higher, boosted by technology and commodity shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the week.

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