Tuesday Watch

Late-Night Headlines
Bloomberg:
- China’s stocks are dropping another 6.4%, extending a slide that’s wiped out at least $402 billion of market value, or more than Taiwan’s gross domestic product since, May 30.
- Avaya Inc.(AV), a computer-networking company, said it agreed to be bought by Silver Lake Partners and TPG Inc. for $8.2 billion in cash.
- Google Inc.(GOOG), owner of the most popular Internet search engine, said more than half of its US customers can also buy radio ads through a company service that will be available to all US advertisers by the end of the month.
- comScore, a leader in measuring the digital world, today released its comScore Video Metrix rankings for March 2007, showing Google Sites as the top US streaming video property with 57.4 million unique people streaming and 1.2 billion video streams initiated. YouTube.com drove the lion’s share of the video streaming activity at the Google Sites property with 53.5 million unique streamers and 1.1 billion streams initiated.
- The euro rose to a record high versus the yen on prospects the European Central Bank will raise interest rates tomorrow, encouraging Japanese investors to seek the higher yields available in Europe.
- Citic Securities, the most profitable brokerage in China, plans to sell 350 million new shares, worth about $2.5 billion at yesterday’s closing price, to finance expansion.
- Rupert Murdoch held “constructive” talks today with Dow Jones’(DJ) controlling Bancroft family over his proposal to purchase the company for $5 billion.
- Bed Bath & Beyond(BBBY) said first-quarter profit was between 36 cents and 38 cents a share, less than the 40 cents analysts had estimated.
- Tropical Cyclone Gonu weakened slightly into a Category Four storm with winds of 249 kilometers per hour as it headed across the Arabian Sea toward the Gulf of Oman, the US Navy said.

Ming Pao Daily:
- Hong Kong’s de-facto central bank has prepared a contingency plan for the city’s financial system in case of a sharp tumble in China’s stock markets.

China Securities Journal:
- Mutual funds investing in Chinese stocks are being redeemed as investors have turned more wary after the recent slump in the domestic stock market. Fund managers have been pressed to “dump blue-chip stocks” from their portfolios to generate cash to meet investors’ redemption. The confidentiality of the Hong Kong Monetary Authority’s plan ranks as high as the documents related to the Hong Kong-US dollar peg, the Chinese newspaper said, without specifying what measures the government may take in the event of a meltdown in China’s stock markets.

Economic Daily:
- Hon Hai Precision Industry has won desktop computer orders from Dell Inc.(DELL), the first time Dell has outsourced such orders.

Late Buy/Sell Recommendations
Stifel, Nicolaus & Company:
- Reiterated Buy on (GOOG), raised estimates and target to $620 from $585. Google has quietly compiled and recently announced the launches of important initiatives such as iGoogle, Universal Search, Google Gears, an acquisition of FeedBurner, and an agreement with Hearst-Argyle(HTV). The products/initiatives that have been announced could change the landscape of commerce, community, search, and software, over time, in our opinion. We continue to believe many of Google’s initiatives will be “winner take all” over the long-term. Google has become the technology leader of this cycle and it has uniquely built its dominant franchise on consumer choice rather than previous positions that were built on customer lock-in. Google is, by far, our best large-cap idea.

Night Trading
Asian Indices are -.25% to +.25% on average.
S&P 500 indicated -.19%.
NASDAQ 100 indicated -.22%.

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
- (ABM)/.24
- (AMWD)/.46
- (BF/A)/.52
- (CPRT)/.41
- (SCHS)/-.45

Upcoming Splits
- (EPIQ) 3-for-2
- (PMFG) 2-for-1
- (NGA) 3-for-2

Economic Releases
10:00 am EST
- ISM Non-Manufacturing for May is estimated to fall to 55.8 versus a reading of 56.0 in April.

Other Potential Market Movers
- The Fed’s Bernanke speaking, Fed’s Warsh speaking, weekly retail sales reports, (VRSN) Analyst Day, (ONXX) Analyst Briefing, ASCO Annual Meeting, Deutsche Bank Media & Telecom Conference, Merrill Lynch Agricultural Chemical Conference, RBC Energy Conference, Sidoti Emerging Growth Institutional Investor Forum, Goldman Sachs Lodging/Gaming/Restaurant/Leisure Conference and Lehman Brothers Industrial Distribution Conference could also impact trading today.

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