Wednesday Watch

Late-Night Headlines
Bloomberg:
- Asian stocks fell for the first time in three days after China tripled the tax on securities transactions. The Chinese benchmark CSI 300 Index fell 6.4% on the news.
- Gold supply will exceed demand by 250 metric tons this year, a bigger surplus than forecast in October, as increased prices deter jewelry buyers, London-based research company Virtual Metals said. Jewelry consumption will decline 2.5% to 2,218 tons, a second annual drop, Virtual Metals said.
- NBC Universal named producer Ben Silverman as co-chairman of television and entertainment with Marc Graboff in a reshuffle aimed at lifting the network out of last place.
- US Secretary of State Condoleezza Rice insisted Iran must suspend uranium enrichment, rebuffing a suggestion by the International Atomic Energy Agency’s chief that the US and its allies relax the demand.
- CDW Corp.(CDWC) agreed to be bought by Madison Dearborn Partners LLC for about $7.3 billion amid a surge of private-equity investments in technology.
- Japan’s industrial production unexpectedly fell for a second month as manufacturers reduced output.
- Australia’s retail sales in April gained less than economists forecast as rising gasoline prices crimped spending at department stores.
- Nippon Steel Corp., Asia’s largest steelmaker, doesn’t plan to buy rival producers, Nippon President Mimura said.
- Steel Dynamics(STLD) said second-quarter profit may fall to the low end of the per-share range of 95 cents to $1 forecast by the company in mid-April because of lower than expected shipments and pricing for flat-rolled steel.
- Gilead Sciences(GILD) said its experimental drug for cystic fibrosis, a fatal lung disease, met the main goal of a study.
- Japan’s birthrate rose in 2006 for the first time in six years, citing a Health Ministry report that will be released in the latter half of next week.
- Thailand’s Prime Minister Surayud Chulanont said he will order emergency rule in Bangkok if court rulings that may ban Thailand’s two main political parties spark violent protests.

Wall Street Journal:
- Cantor Fitzgerald LP, the firm that lost hundreds of employees during the Sept. 11, 2001, attacks, will combine two units in a $1.3 billion deal. The new company, to be known as BGC Partners, will comprise eSpeed Inc., a publicly-held electronic-trading company controlled by Cantor, and BGC Partners, Cantor’s closely-held bond-trading unit.

Financial Times:
- Microsoft Corp.(MSFT) will release information today about a coffee table-shaped “surface computer” that the company says will open up a multibillion dollar area of computing, citing a demonstration by Microsoft(MSFT).

Economic Times:
- India may increase the amount of money local mutual funds can invest in equity and debt abroad.

Securities Times:
- Some Chinese banks started internal probes to prevent customers from using loans to buy stocks as the benchmark index reaches new highs daily. Banks told branches to look more closely at loans for working capital and small business operations so they aren’t diverted into the stock market.

Late Buy/Sell Recommendations
Citigroup:
- Retailing-softlines short interest rose 8.5% in May to a record 257,000,000 shares short on the heels of a prior peak in April on lingering worries over consumer spending. Retailers with the most significant increases in short interest include ANN +38%, CHRS +35%, CTR +29%, MW&URGI +26%, ANF/CMRG/LTD +25%, CBK +24%, GPS +23%, TJX +22%, DBRN +20%, CHIC +21%, TUES&ARO +15%, HOTT +12% and BEBE/PLCE/ROST +11%.

Morgan Stanley:
- Reiterated Overweight on (GILD).

Night Trading
Asian Indices are -.75% to -1.0% on average.
S&P 500 indicated -.28%.
NASDAQ 100 indicated -.28%.

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 Business & Economy Polling
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
- (CHS)/.26
- (DAKT)/.08
- (DLTR)/.37
- (DBRN)/.31
- (JAS)/-.07
- (JOYG)/.72
- (NOVL)/.01
- (PSS)/.59
- (RL)/.62
- (SMTC)/.10
- (THO)/.41
- (WSM)/.13

Upcoming Splits
- (NRG) 2-for-1
- (SRCL) 2-for-1
- (GEO) 2-for-1

Economic Releases
2:00 pm EST
- The Minutes of May 9 FOMC Meeting

Other Potential Market Movers
- The weekly MBA Mortgage Applications report, weekly retail sales reports, ADP Employment Change, (SPAR) analyst meeting, (IRBT) analyst meeting, (GNW) strategic update, FBR Growth Conference, Merrill Lynch Small-cap Tech Healthcare Conference, Bank of American Healthcare Conference, Deutsche Bank Energy/Utilities Conference, Sanford Bernstein Strategic Decisions Conference, Cowen Tech Conference and Lehman Wireless/Wireline Conference could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down by commodity and automaker stocks 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.