Monday Watch

Weekend Headlines
Bloomberg:
- The Federal Reserve reduced the interest rate it charges banks and acknowledged for the first time that an extraordinary policy shift is needed to contain the subprime-mortgage collapse that began roiling the world’s financial markets two months ago.
- Sentinel Management Group, the cash-management firm that froze client withdrawals three days ago, was accused of selling investors’ assets at below-market rates to hedge fund company Citadel Investment Group.
- President Bush said local communities in Iraq are making progress toward creating a stable democracy faster than the national government.
- Hurricane Dean was on course to lash Jamica today with rain and sustained winds of about 145 miles per hour, then bear down on the Cayman Islands and Mexico’s Yucatan Peninsula.
- Senator Hillary Rodham Clinton warned Democrats not to “oversell” plans to withdraw US troops from Iraq, setting a cautious tone on the war that was echoed by the party’s two other leading presidential candidates.
- ‘Double Dip’ Stock-Buying Opportunities Emerge as Shares Fall.
- Economists at Wall Street’s biggest bond trading firms are rushing to change their interest-rate forecasts after the futures market more accurately predicted the Fed’s surprise rate cut.
- Crude oil is falling $.78/bbl. in NY on signs Hurricane Dean’s more southerly track may mean it will miss the largest oil production regions of the Gulf of Mexico.

Wall Street Journal:
- Frontrunners Hillary Clinton and Barack Obama held their own in Democrats' latest presidential debate, an event dominated by the questions about them that have come to define the party's contest: Is she too divisive, and he too inexperienced, to be elected and -- if elected -- to govern effectively?

NY Times:
- The John Edwards presidential campaign said on Friday that Mr. Edwards would divest his portfolio at a New York hedge fund of investments in subprime mortgage companies that have foreclosed on victims of Hurricane Katrina. But the campaign said he would keep his $16 million investments in the hedge fund, the Fortress Investment Group.
- The Fed’s Sudden Action Eases a Logjam in Corporate Borrowing.
- Google Wins the Most Hearts on the Web.

AccuWeatherr.com:
- Hurricane Dean path and strength projections.

MarketWatch.com:
- An analyst at Banc of American Securities upgraded shares of troubled mortgage lender Countrywide Financial(CFC) to neutral from sell Friday, saying that tapping its $11.5 billion credit facility should provide Countrywide the time needed to address liquidity and capital concerns.
- Short-term timing letters shorting the market is bullish evidence for contrarians.
- Dell embraces the ‘Stodgy Factor’ in tech.
- China’s Internet giants ready to rumble. Commentary: Google, Alibaba, and Focus Media target China advertising.
- Looking for growing small-cap niches. Citizens’ Gallipo likes Crocs(CROX), Priceline(PCLN) and BE Aerospace(BEAV).

IBD:
- Jumbo Rates Soon Might Settle Down.

Reuters:
- More US hedge funds likely to crumble in ’07.
- Cisco Systems(CSCO) is best known for selling routers and switches to telecom companies, but its strongest sales growth these days comes from an area that seldom gets much attention: hospitals.
- Italian Finance Minister Tommaso Padoa-Schioppa said steps by the US Federal Reserve and the European Central Bank to help ease the global credit crunch were “impeccable,” citing an interview.
- China eyes investing in private equity, hedge funds.
- More than half of the executives surveyed, from 240 leading companies across 24 countries and 20 industries, told the NYSE CEO Report 2008 they would budget more for customer relationship management in 2008.

Crain’s Chicago Business:
- Mesirow Financial Inc. CEO James Tyree wants to buy or start a commercial bank, hiring management for the new service from ABN Amro Bank’s LaSalle Bank unit.

USA Today:
- Companies see profit potential in green efforts.

Financial Times:
- Multinational companies with US subsidiaries could face huge new tax bills under a law passing through the US Congress, diplomats and business groups have warned.
- European central banks are standing ready this week to take further steps to east the credit squeeze following the US Fed’s unexpected move on Friday to stem the turmoil in money and credit markets.

Daily Telegraph:
- The future for quants looks somewhat cloudy. Given the losses and inherent problems that have been exposed by managing money in such a way, it is likely that any new money looking for a hedge fund home is unlikely to head down the quant route.

Sunday Times:
- American Express(AXP) plans to sell its private banking business for as much as $500 million.
- Toy jewelry imported from China contained levels of lead that could potentially cause brain damage and even kill children, citing Birmingham’s hallmark-setting Assay Office.

Financial Mail:
- Nasdaq Stock Market(NDAQ) is prepared to trump Borse Bubai’s $3.96 billion bid for Sweden’s OMX AB.

News of the World:
- The UK plans to send 2,000 extra troops to Afghanistan.

South China Morning Post:
- The recent global stock-market slide was “irrational” and the worst of the correction may be over, said Joseph Yam Chi-kong, chief executive of the Hong Kong Monetary Authority.

Economic Daily News:
- Taiwan’s central back may refrain from raising interest rates at a meeting in September after the Federal Reserve unexpectedly lowered its discount rate to contain the subprime-mortgage problem.

Kyodo:
- Brazilians are taking the final steps in order to kick off a giant entrepreneurial project that will produce billions of liters of fuel alcohol from sugar cane to be exported exclusively to Japan.

Weekend Recommendations
Barron's:
- Made positive comments on (MI), (EMC), (NBR), (MTN), (RDN), (CFC) and (CAB).

Citigroup:
- Reiterated Buy on (SNDK), target $71. Contract outlook puts potential upward pressure on our recently-raised (SNDK) estimates. Valuation looks benign (17.2x our 08 estimates) and near term catalysts are plentiful (contract pricing, new product activity (AAPL, others), EPS revisions, IDF (Sept.), CTIA (Oct) and new handsets ahead of 1Q08’s 3GSM).
- Upgraded (CNP) to Buy, target $19.50.

Night Trading
Asian indices are +2.75% to +4.5% on average.
S&P 500 futures -.31%.
NASDAQ 100 futures -.25%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Pre-market Stock Quote/Chart
Before the Bell CNBC Video(bottom right)
Global Commentary
WSJ Intl Markets Performance
Commodity Movers
Top 25 Stories
Top 20 Business Stories
Today in IBD
In Play
Bond Ticker
Economic Preview/Calendar
Daily Stock Events
Macro Calls
Upgrades/Downgrades
Rasmussen Business/Economy Polling
CNBC Guest Schedule

Earnings of Note
Company/Estimate
- (LOW)/.61
- (PERY)/-.14

Upcoming Splits
- (AAON) 3-for-2
- (ARO) 3-for-2
- (TXT) 2-for-1

Economic Releases
10:00 am EST
- Leading Indicators for July are estimated to rise .4% versus a -.3% decline in June.

Other Potential Market Movers
- The Oil & Gas Conference could also impact trading today.

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