Tuesday, April 10, 2007

Wednesday Watch

Late-Night Headlines
Bloomberg:
- The Dow Jones Industrial Average climbed for an eighth consecutive day, its longest streak since March 2003, propelled by improved profit outlooks.
- North Korea will start to implement a nuclear disarmament agreement within 30 days, after a dispute over $25 million of previously frozen funds was resolved yesterday.
- Most Americans expect a recession within a year even though the unemployment rate is at a five-year low, Americans’ net worth is at an all-time high and the DJIA is just off a record high, according to a new Bloomberg/LA Times poll. Nonetheless, 57% said the economy is doing well. 64% of those polled said their own finances are very or fairly secure. “People tend to be pretty optimistic about their own situation, but when it comes to the larger economy they’re much more pessimistic,” said Karlyn Bowman, a polling expert at the American Enterprise Institute in Washington. More than half of Americans expect homes in their neighborhood to hold their value over the next six months. Twice as many respondents said home prices will increase as those who predicted a decline, according to the poll.
- Alcoa(AA), the word’s largest aluminum company, reported its most profitable first-quarter ever as rising metal demand from China and the aerospace industry boosted prices. The stock rose .82 to $35.72 after-hours.
- The yen fell to a record low against the euro as signs of slower corporate spending in Japan raised speculation the interest-rate gap with Europe will widen.
- Chinese Premier Wen Jiabao and Japanese Prime Minister Shinzo Abe will discuss improved ties and environmental and energy issues today as Wen becomes China’s first leader to visit Japan in almost seven years.
- Japan’s machinery orders fell 5.2%, more than expected in February, highlighting concern among manufacturers that growth may slow this year.
- Luxury home prices in London rose at a record monthly pace in March as Russians and Middle Eastern buyers competed for a smaller number of properties with financiers from the City of London, real estate broker Knight Frank said.
- Standard & Poor’s plans in May to begin using a revised rating system for 2,000 high-yield secured loans and bonds that seeks to provide creditors with more detailed estimates of how much they may lose in a bankruptcy.
- LG.Philips LCD Co. led liquid-crystal display maker stocks higher after the company reported a loss that was smaller than some analysts estimated, fueling optimism industry profitability will improve.

Wall Street Journal:
- Nasdaq Stock Market(NDAQ) is in talks to acquire the Philadelphia Stock Exchange as it tries to enter the options-trading market. The Philadelphia exchange, the third-largest US options exchange by contracts traded, could be valued at $250 million to $300 million.
- Media entrepreneur John W. Kluge is expected to donate at least $400 million to Columbia University.

Reuters:
- Thomas H. Lee Partners LP hasn’t decided against increasing its $19 billion bid to acquire broadcaster Clear Channel Communications(CCU) with Bain Capital Partners LP.

Financial Times:
- Deputy finance ministers from the world’s seven leading industrial nations will meet with 20 hedge fund representatives this week to discuss targets for increasing transparency.
- Nielsen Media Research, whose television ratings are used to set advertising prices, will next month release ratings that measure the number of viewers during commercial breaks.

Xinhua News Agency:
- Microsoft Corp.(MSFT) signed agreements to use content from four Chinese Internet companies including Ctrip.com(CTRP) on its Web site in the Asian nation.

China Business News:
- China will scrap trade subsidies that clearly violate World Trade Organization rules, citing the Chinese Commerce Ministry’s director of foreign trade Wang Shouwen.

Late Buy/Sell Recommendations
Citigroup:
- Rated (AKAM) Buy, target $68. Our extensive and proprietary survey of over two dozen Internet content, commerce, software, and ad network companies, including the leading global Internet companies gives us confidence in AKAM’s ability to deliver sustainable revenue growth of 35-45% over the next few years. Three takeaways support our positive thesis: 1)The CDN market is robust and can support multiple players 2)AKAM’s position in Retail, Software, and Online Ad Network verticals is extremely strong 3) Its iTunes deal and exclusive provisioning of CBS’s March Madness, arguably the largest annual streaming event, show AKAM’s differentiation is valued by even the competitive Media & Entertainment segment.
- Reiterated Buy on (JCP), raised target to $114.
- Reiterated Buy on (MNST), target $55.

Piper Jaffray:
- Rated (SAPE) Outperform, target $9.

CSFB:
- AU Optronic’s(AUO) LCD panel shipments exceeded October peak: AU Optronics and Chi Mei Optoelectronics announced their March sales figures. Sales volume has recovered significantly since March. Panel prices have started turning higher in April, and we maintain our view that profitability for the panel makers will rebound from the Jan-Mar lows.

Night Trading
Asian Indices are unch. to +.75% on average.
S&P 500 indicated -.09%.
NASDAQ 100 indicated -.01%.

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
- (BBBY)/.79
- (CBK)/.05
- (DNA)/.67
- (PGR)/.46
- (RI)/.53

Upcoming Splits
- (GEF) 2-for-1

Economic Releases
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil build of 1,700,000 barrels versus a 4,307,000 barrel increase the prior week. Gasoline supplies are expected to fall by -1,400,000 barrels versus a -5,030,000 barrel drawdown the prior week. Distillate inventories are estimated to fall by -850,000 barrels versus a -77,000 barrel decline the prior week. Finally, Refinery Utilization is expected to rise .5% versus a .02% increase the prior week.

2:00 am EST
- Minutes of March 21 FOMC Meeting
- The Monthly Budget Deficit for March is estimated to shrink to -$90.0 billion versus -$120.0 billion in February.

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

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