Friday Watch

Late-Night Headlines
Bloomberg:
- Crude oil may fall next week as US refineries increase gasoline production in preparation for the peak-demand summer driving season, according to a Bloomberg survey of 34 analysts and traders.
- New Century Financial Corp. will close its sub-prime home-lending unit after failing to find a buyer.
- A US House panel voted to expand a federal agency’s powers to help low-income borrowers at risk of losing their homes as Congress pushes legislative fixes for the sub-prime mortgage problems.
- US Treasury Secretary Paulson said the low returns that Chinese earn on their savings are “perverse” and undermine the nation’s goal of stimulating domestic consumption. China’s savers are earning about 2.5% on their roughly $2 trillion of assets. That means savers must save more out of their income, rather than spend, to meet their investment goals, he said.
- The oldest gauge of US transportation stocks reached a record last week, with a boost from Warren Buffett. For Keith Wirtz at Fifth Third Asset Management, it’s a sign more gains are ahead for the overall market.
- The US dollar is headed for the biggest weekly gain in four months against the euro as strength in manufacturing and services suggested the Fed will refrain from cutting interest rates in coming months.
- BP Plc(BP) forecast today that capacity at the Cushing, Oklahoma, crude-oil storage terminal, where futures contracts traded in NY are delivered, will increase by 25% to about 50 million barrels within 18 months.
- Crude oil production in April by OPEC rose 50,000 barrels per day, a Bloomberg survey showed.
- Venezuela’s dollar bonds fell to the lowest in more than six months on concern that President Chavez’s decision to withdraw from the International Monetary Fund will cause a default on the country’s debt.
- Venezuelan President Chavez threatened to seize the country’s largest steelmaker, Siderurgica Del Orinoco, saying the company is a monopoly that refuses to supply some businesses.

Wall Street Journal:
- Ellington Management Group LLC won an auction today with a bid of $58 million for a parcel of mortgage loans and residual rights owned by New Century Financial Corp.

Financial Times:
- UK Prime Minister Tony Blair may seek to become the first president of the European Union when he leave office.
- One Equity Partners LLC, the US private equity group affiliated to JPMorgan Chase(JPM), is understood to have expressed an interest in buying EMI Group Plc in a deal that could value it at more than $6 billion.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (NT), target $35.
- Reiterated Buy on (QLGC), target $21.

Business Week:
- Bank of America Corp.(BAC) shares may rise 27% within a year, citing Carl Birkelbach, chairman and CEO of Birkelbach Investment Securities.
- Accredited Home Lenders Holding(LEND), a sub-prime lender, is a potential takeover target. Matthew Howlett of the investment firm Fox-Pitt Kelton Ltd. told the magazine a sale is the “most-likely” long-term option for Accredited.
- Monsanto(MON) will be a leader in agribusiness growth worldwide, citing Robert Levitt, founder and CIO of Levitt Capital Management.

Night Trading
Asian Indices are +.25% to +.75% on average.
S&P 500 indicated -.05%.
NASDAQ 100 indicated -.04%.

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Earnings of Note
Company/EPS Estimate
- (ATK)/1.44
- (BHS)/.25
- (EK)/-.03
- (KBR)/.23
- (STN)/.59
- (WY)/.34

Upcoming Splits
- (AZZ) 2-for-1
- (CIG) 3-for-2

Economic Releases
8:30 am EST
- The Change in Non-farm Payrolls for April is estimated at 100K versus 180K in March.
- The Unemployment Rate for April is estimated to rise to 4.5% versus 4.4% in March.
- The Change in Manufacturing Payrolls for April is estimated at -14K versus -16K in March.
- Average Hourly Earnings for April are estimated to rise .3% versus a .3% increase in March.

BOTTOM LINE: Asian indices are higher, boosted by metal and 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.