Tuesday, December 19, 2006

Wednesday Watch

Late-Night Headlines
Bloomberg:
- Wang Jian, executive vice secretary of the China Society of World Economy, said the country’s economic growth may slow to 8% next year, as the government’s moves to slow investments lead to excess supply. Wang was speaking today at a steel industry conference in Beijing.
- Codelco, the world’s biggest copper producer, reached wage agreements with two of its unions, averting a strike in Chile that threatened to halt output at its largest mine, a labor leader said.
- Goldman Sachs Group(GS), through its GS Power Holdings LLC unit, bought a stake in biodiesel producer Green Earth Fuels, whose majority investors include US buyout firm Carlyle Group.
- The November US semiconductor book-to-bill ratio rose to .97 from .94 in October.
- The use of cholesterol-lowering drugs called statins is associated with a reduced risk of advanced prostate cancer, according to a study to be published tomorrow.
- US Treasury Secretary Henry Paulson declined to brand China a currency manipulator, concluding that the nation is taking steps to make the yuan more flexible.
- Ericsson, the world’s biggest provider of telecom equipment, agreed to buy Redback Networks(RBAK) for $2.1 billion or $25/share.
- Australian Treasurer Costello has slashed the government’s forecast for economic growth in the 12 months to June 30 from 3.25% to 2.5%.
- The yen dropped to a record low against the euro on speculation the Bank of Japan will raise interest rates at a slower pace than the European Central Bank.
- Somalia’s Islamist militia said it is preparing for “full scale war” against the interim government. The militia seized control of the capital, Mogadishu, in June and has advanced across the Horn of Africa nation, imposing Islamic laws in areas it controls. The US government says the militia is run by al-Qaeda.
- The Thai baht led Asian currencies higher after the government scrapped penalties on overseas investors buying stocks, a day after imposing them.

Wall Street Journal:
- US hedge funds say they expect competition in attracting and keeping workers on board in 2007, citing an informal survey. Payouts to manager in 2007 will rise to 8% to 20% of profits, with average payouts rising 15%, up from 3% in 2006.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (GILD) and (UNH).

Morgan Stanley:
- Channel checks point to a strong pick-up in mall traffic and apparel sales. Following a relatively slow start to the holiday season, mall traffic levels have shown meaningful signs of improvement based on a number of recent channel checks. Moreover, online holiday sales are forecasted to be up 24% year-over-year. However, growth in online sales has been accelerating in recent days with sales up 33% on Dec. 14th and 38% on Dec. 15th. The National Retail Federation forecasts a 34% rise in gift cards, but based on anecdotal evidence we believe gift card sales could surpass this estimate. We continue to forecast total holiday sales growth of 4-5%.

Night Trading
Asian Indices are +.75% to +1.25% on average.
S&P 500 indicated +.10%.
NASDAQ 100 indicated +.17%.

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/EPS Estimate
- (COMS)/.00
- (ACN/.42
- (ATU)/.81
- (BBBY)/.52
- (KMX)/.25
- (FDO)/.36
- (FDX)/1.76
- (FINL)/-.08
- (MLHR)/.56
- (NKE)/1.12
- (PAYX)/.34

Upcoming Splits
- None of note

Economic Releases
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil drawdown of -2,000,000 barrels versus a -4,295,000 barrel decline the prior week. Gasoline supplies are expected to remain unch. versus a -174,000 barrel decline the prior week. Distillate inventories are estimated to fall by -600,000 barrels versus a -445,000 barrel decline the prior week. Refinery Utilization is expected to rise .5% versus a -1.36% decline the prior week.

BOTTOM LINE: Asian indices are higher, boosted by automaker and technology shares in the region. I expect US equities to open mixed and to rise into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.

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