Tuesday, March 20, 2007

Wednesday Watch

Late-Night Headlines
Bloomberg:
- Asian economies including South Korea and Singapore are likely to expand at a slower pace in the first quarter as easing export orders curb production and consumer confidence ebbs, according to Capital Economics Ltd.
- Vietnam’s stocks are expected to drop 30% or more in coming months because earnings no longer support valuations after a rally that’s made them the world’s best performers, investors at a conference in Hanoi said. The market value of the Vietnam Index is $15.8 billion, up from $500 million at the end of 2005. Five stocks are valued at more than 100 times earnings, according to Vietcombank Securities. A CSFB report last month said net foreign buying on the Ho Chi Minh City bourse in January was about $700 million, larger than the comparable figure in Taiwan, a market 40 times larger than Vietnam.
- China Regulator Is Paper Tiger for Banks Funding Stocks Boom.
- Michael Mayo, the financial services analyst known for his coverage of Citigroup Inc. and JPMorgan Chase(JPM), is leaving Prudential Equity Group to join Deutsche Bank AG.
- Australian Prime Minister John Howard said his government is considering sending more troops to Afghanistan to help NATO forces counter Taliban insurgents.

WAFB:
- Louisiana Governor Kathleen Blanco will announce tonight that she won’t seek re-election.

Economic Times:
- Intl. Business Machines(IBM) is set to win an order of as much as $700 million from India’s Idea Cellular Ltd.

Shanghai Securities News:
- Sixteen steelmakers in China have agreed to suspend imports of iron ore from India after the South Asian nation’s government proposed a duty on shipments. The Indian ore, which is used to make steel and supplies medium- and small-sized steelmakers, accounted for 23% of China’s iron ore imports last year.

JoongAng Ilbo:
- South Korea and the US are seeking to remove North Korea’s plutonium form the country and destroy it overseas, citing a South Korean government official. The plan is one of the final goals in negotiations aimed at dismantling North Korea’s nuclear weapons program.

Late Buy/Sell Recommendations
Citigroup:
- The impact of mortgage market turmoil bears watching given the fluid nature of recent events. However, if we did not have underlying concerns about the state of the sub-prime mortgage holder, data could easily make the case for improvement in aggregate consumer well-being. Net worth rose sharply heading into 2007, mortgage rates have fallen slightly for most borrowers, and bank loans for real estate are growing overall, spurred by refinancing activity. While mortgage delinquencies have been rising for years, derivatives markets looked like a dam breaking in February, which paints an unrealistic view of recent economic developments. The aftermath of reckless lending at mid decade will play out for years whether the issue gets attention or not. But the credit issue looks far from able to generate a new cycle by itself, or drive immediate variation in broad consumer activity.

CSFB:
- The targets laid out for renewable energy growth plus the backdrop of increasing political and consumer concern over both greenhouse gas emissions and energy security, lead us to conclude that we are still only at the start of a multi-year, possibly multi-decade, global investment cycle in low-carbon generation and lower energy intensity. Political support for greater deployment of renewable energy forms is both clear and growing in the EU, in China, in the US and in the UK.

Night Trading
Asian Indices are unch. to +.50% on average.
S&P 500 indicated -.08%.
NASDAQ 100 indicated -.06%.

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
- (AIR)/.37
- (CHRS)/.19
- (FDX)/1.33
- (MKC)/.31
- (MS)/1.87
- (ROST)/.66

Upcoming Splits
- None of note

Economic Releases
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil build of 1,000,000 barrels versus a 1,180,000 barrel increase the prior week. Gasoline supplies are estimated to decline by -2,000,000 barrels versus a -2,486,000 barrel decline the prior week. Distillate supplies are expected to fall by -1,500,000 barrels versus a -2,733,000 barrel fall the prior week. Finally, refinery utilization is estimated to rise .5% versus a -.23% decline the prior week.

2:15 pm EST
- The FOMC is expected to leave the benchmark Fed Funds rate at 5.25%.

BOTTOM LINE: Asian indices are higher, boosted by mining and technology shares in the region. I expect US equities to open mixed and to rally into the afternoon, finishing modestly higher. I also expect the FOMC to leave the benchmark Fed Funds rate at 5.25%, make more dovish comments and maintain their policy bias towards tightening. The Portfolio is 100% net long heading into the day.

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