Wednesday, March 28, 2007

Wednesday Watch

Late-Night Headlines
- Crude oil is rising $.97/bbl. in NY on investment fund speculation of a confrontation in the Persian Gulf between US or British forces and Iran. US military and State Department officials said they had no information about a naval incident between Iran and the US. There is no US military activity in the Gulf outside of previously scheduled exercises, US Navy Commander Kevin Aandahl, a spokesman for the Fifth Fleet in Bahrain, said. “I’ve seen this happen before where there’s a totally unsubstantiated rumor” that has an effect on world markets, he said.
- China’s failure to curb investment may lead to overcapacity and falling prices, turning its expansion into a “curse,” the Asian Development Bank said.
- The yen strengthened on speculation Japanese investors are bringing funds back before the financial year ends on March 30. Gains may prove short-lived on speculation newly established mutual funds will buy higher-yielding overseas assets when the financial year begins next week.
- Kevin Bannon, who helps oversee $120 billion as chief investment officer at Bank of New York, see US economic growth of 2.5% and says stocks look cheap.

San Francisco Chronicle:
- San Francisco became the first US city to ban Walgreen Co.(WAG), Rite Aid Corp.(RAD) and other chains from using petroleum-based plastic checkout bags. The city’s board of supervisors voted 10-1 today to require that the stores use biodegradable plastic or recyclable paper bags starting in about six months for 50 large supermarkets and in a year for chain drugstores.

London-based Times:
- General Motors(GM) will not take part in the first round of bids for Chrysler. Canadia auto-parts supplier Magna Intl., Cerberus Capital Management LP and a group led by Blackstrone Group LP and Centerbridge Capital Partners LLC may submit bids in the first round.

- Germany, which holds the presidency of the European Union, has told Iran it must give the UK consular access to the 15 British sailors and marines it has been holding since March 23.

Late Buy/Sell Recommendations
- Commentary on overall handset demand has been constructive thus far. Brightpoint(CELL) expects global volumes for 1Q07 to decline around 10% Q-Q, at the high end of its 10%-15% Q-Q decline forecast. They noted that February turned out better than January(A surprise given the sluggish start to the month) and March looks good industry-wide.

- Reiterated Outperform on (GS), raised target to $225-$235.

Night Trading
Asian Indices are -.25% to +.25% on average.
S&P 500 indicated -.27%.
NASDAQ 100 indicated -.33%.

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
- (PAYX)/.35
- (RECN)/.27
- (SHFL)/.07

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- Durable Goods Orders for February are estimated to rise 3.5% versus a -8.7% decline in January.
- Durables Ex Transportation for February are estimated to rise 1.8% versus a -4.0% decline in January.

10:30 am EST
Bloomberg consensus estimates call for a weekly crude oil build of 2,025,000 barrels versus a 3,924,000 barrel increase the prior week. Gasoline supplies are expected to fall by -2,050,000 barrels versus a -3,450,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,500,000 barrels versus a -1,710,000 barrel decrease the prior week. Refinery Utilization is expected to rise by .5% versus a .74% increase the prior week.

BOTTOM LINE: Asian indices are mixed as slight gains in energy shares are offsetting slight losses in automaker shares in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.

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