Wednesday Watch

Late-Night Headlines
Bloomberg:
- Edward Lampert’s hedge fund group increased its stake in Citigroup Inc.(C) by more than 60%, purchasing almost 9.6 million shares during the second quarter.
- Berkshire Hathaway(BRK/A) bought stakes in Dow Jones(DJ) and Bank of America(BAC) and more than quadrupled its holdings of health insurers UnitedHealth Group(UNH) and WellPoint(WLP).
- China’s industrial production grew in July at the third-fastest pace of this year as exports soared and retail sales climbed. Output rose 18% from a year earlier, the National Bureau of Statistics said. That was less than the 18.5% median estimate of 18 economists surveyed by Bloomberg and slower than June’s 19.4% gain.
- Japan’s Finance Minister Koji Omi said the worst of the US housing-loan crisis may be over, thanks to the world’s largest central banks.

IBD:
- Mutual Funds Stand Strong Vs. Rivals.

Xinhua News Agency:
- China began a two-month campaign to crack down on phony journalists in an effort to “safeguard” the public interest and the credibility of news media.

Late Buy/Sell Recommendations
Citigroup:
- Rated (CPLA) Buy, target $60.

CSFB:
- Rated (LH) Overweight, target $89.

Night Trading
Asian Indices are -2.5% to -1.5% on average.
S&P 500 futures -.38%.
NASDAQ 100 futures -.20%

Morning Preview
US AM Market Call
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Pre-market Commentary
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Before the Bell CNBC Video(bottom right)
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Today in IBD
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Economic Preview/Calendar
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Earnings of Note
Company/EPS Estimate
- (CAI)/.63
- (DAKT)/.14
- (DE)/1.99
- (LDG)/.62
- (M)/.26
- (NTAP)/.20
- (PETM)/.30
- (CRM)/.09
- (SLE)/.13

Upcoming Splits
- (SHEN) 3-for-1

Economic Releases
8:30 am EST
- The Consumer Price Index for July is estimated to rise .1% versus a .2% gain in June.
- The CPI Ex Food & Energy for July is estimated to rise .2% versus a .2% gain in June.
- The Empire Manufacturing Index for August is estimated to fall to 18.0 versus 26.5 in July.

9:00 am EST
- Net Long-term TIC Flows for June are estimated to fall to $62.8 billion versus $126.1 billion in May.

9:15 am EST
- Industrial Production for July is estimated to rise .3% versus a .5% gain in June.
- Capacity Utilization for July is estimated at 81.7% versus 81.7% in June.

10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil drawdown of -2,500,000 barrels versus a -4,136,000 barrel decline the prior week. Gasoline supplies are expected to fall by -750,000 barrels versus a -1,723,000 barrel drawdown the prior week. Distillate supplies are estimated to rise by 1,250,000 barrels versus a 974,000 barrel increase the prior week. Finally, Refinery Utilization is expected to rise by .5% versus a -2.37% decline the prior week.

1:00 pm EST
- The NAHB Housing Market Index for August is estimated to fall to 23 versus 24 in July.

Other Potential Market Movers
- The weekly MBA Mortgage Application report could also impact trading today.

BOTTOM LINE: Asian indices are sharply lower, weighed down by financial and commodity stocks in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.