Monday Watch

Weekend Headlines
Bloomberg:
- Paulson & Co.’s biggest credit hedge fund rose fivefold in 2007 after the New York-based investment firm with $20 billion in assets under management bet US subprime-mortgage defaults would soar.
- China will adjust its financial policies to fund domestic companies and financial institutions’ outbound investment and increase foreign-exchange outflows, Zhou Xiaochuan, governor of the People’s Bank of China, said.
- Federal Reserve Bank of Philadelphia President Charles Plosser said there is an “underlying stability” in the US economy and policy makers need not always cut interest rates in response to financial-market turmoil.
- President Bush said he will tell the nation next week his “vision for future involvement in Iraq” after consulting with military officials and Congress.
- More than 80% of suicide bombers staging attacks in Afghanistan are trained, recruited or sheltered in neighboring Pakistan, the UN said in a report published today.
- An al-Qaeda-linked group claimed responsibility for two bomb attacks in Algeria that killed at least 48 people, citing an Internet statement from the group.
- Investors such as hedge funds and private equity firms are helping to prevent a sharp decline of reinsurance rates that would threaten the industry’s profitability, Moody’s Investors Service said.
- If Federal Reserve officials cut their 5.25 percent target for the overnight lending rate when they meet on Sept. 18, it will be by only a quarter-percentage point with no promise of more to come.
- Japan’s economy contracted at almost twice the expected pace in the second quarter after companies pared spending on new equipment.

Wall Street Journal:
- Countrywide Financial(CFC) said it expects to reduce its work force by as much as 12,000, or about 20%, in the next three months.
- The global energy market is supplied with sufficient crude oil, forcing it to move the extra amount to inventories, thus taking the pressure off OPEC to raise its output when it meets next, said an Iranian oil official.
- Cellphone carriers don't seem to take chances with customer loyalty. Consumers who end a contract early typically incur a penalty of $150 or more. Fortunately, Web-based services now make it easier to unload a cellphone contract without taking a hit.

NY Times:
- Half of students in NYC’s public middle and high schools said in a city-sponsored survey that their peers with good grades aren’t respected.
- In the Green Marathon, Which Stocks Will Be the Winners?
- Dell Inc.(DELL) CEO and founder Michael Dell plans to buy smaller companies to add technology and intends to boost its computer and software sales to consumers.
- NYC’s downtown financial district is thriving with new businesses and residents, six years after the terror attacks that destroyed the World Trade Center.
- Foreign investors who, buoyed by the strong economies and currencies in their own countries, now see an opportunity to scoop up coveted Manhattan real estate.
- A company controlled by political fund-raiser Norman Hsu paid more than $100,000 to at least nine people who made campaign contributions to US Senator Hillary Rodham Clinton and others, citing financial records. The people who received the payments in 2003 from the company, Components Ltd., had a financial relationship with Hsu, who is now in custody after fleeing fraud charges in California. Components has “no obvious business purpose and appears to exist only on paper,” the Times said.
- In the race to become a major supplier of original video programming to the Web, Warner Brothers has decided to reverse its direction.
- Who’s the Most Charitable of Us All? Celebrities Don’t Always Make the Cut.

MarketWatch.com:
- 2008 Auto Review: Gas Sippers, Less Pain at the Pump.

CNBC.com:
- Stock Selloff Offers Good Opportunity for Investors.
- Job Cuts May Signal Slowdown, Not Recession.

TheStreet.com:
- Interdigital's(IDCC) licensing deal with Apple(AAPL) could indicate a 3G iPhone is coming.

CNNMoney.com:
- Amid the market uncertainty, leading private-equity shop Carlyle Group has raised $10 billion for two funds, new report says.
- Technology and financial services firms won a key patent reform victory Friday when the House approved legislation the industries have pushed for years by a vote of 220-175.
- 13 great fuel-efficient cars.

San Francisco Chronicle:
- Wells Fargo(WFC) will help mortgage customers who are struggling to make repayments and in some cases will change the terms of loans, citing CEO Stumpf.

MSNBC.com:
- The list of badly-hit hedge funds in August reads like a Who’s Who of the best-known on Wall Street, according to investors.

New Yorker:
- Profits of Doom. When Wall Street needs bad news.

Washington Post:
- British General Mike Jackson said it is “too soon” to declare the war in Iraq a failure and urged the US not to withdraw prematurely.

Energy Information Administration:
- Last Friday, EIA released monthly data for June, and for the 10^th month in a row, total oil demand was lower than suggested by the weekly data for the same period. Gasoline demand was also lower than suggested by the weekly data for the same period for the sixth time in a row.

AP:
- Democratic presidential candidate Christopher Dodd said he would end the US embargo with Cuba if he were elected.
- Hunt Oil Co., a closely held US oil and gas producer, has joined with Kurdistan’s regional government to explore for and drill petroleum wells in northern Iraq.

Financial Times:
- The surprise decision by a Sunni Arab party to rejoin the Iraqi government at the weekend was one of several last-minute moves designed to curb domestic US pressure to withdraw troops and to show that Iraqis are capable of compromise.
- Rodrigo de Rato, managing director of the IMF, has said the dramatic repricing of risk in the financial markets should be healthy for the medium-term stability of the global economy even if it results in short-term pain.

Sunday Tribune:
- Anglo Irish Bank Plc, the country’s third-largest lender by market value, plans to grow US lending by as much as 20% over the next three to five years, citing Finance Director Matt Moran. That would triple Anglo’s US portfolio to around $20.5 billion, or 20% of overall lending assets.

South China Morning Post:
- Hong Kong Exchanges and Clearing Ltd.’s plan to relax a rule that bans so-called short sales will probably be delayed, citing the chief of the city’s regulator.

Weekend Recommendations
Barron's:
- Made positive comments on (XTO) and (ATHR).
- Made negative comments on (IDT).

Citigroup:
- Reiterated Buy on (DD), target $56.
- Reiterated Buy on (MON), target $77
- Reiterated Buy on (COH), target $57.

Night Trading
Asian indices are -2.0% to -1.0% on average.
S&P 500 futures -.38%.
NASDAQ 100 futures -.33%.

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
- (DLLR)/.47
- (SHFL)/.13
- (TTWO)/-.72
- (VRNT)/.22

Upcoming Splits
- (FMC) 2-for-1

Economic Releases
3:00 pm EST
- Consumer Credit for July is estimated to fall to $8.0 billion versus $13.2 billion in June.

Other Potential Market Movers
- The Fed’s Lockhart speaking, Fed’s Yellen speaking, Fed’s Fisher speaking, Fed’s Mishkin speaking, Bear Stearns Healthcare Conference, Wachovia Global Transport/Packaging Conference, Oppenheimer Consumer Conference, Jeffries Media/Communications Conference, Morgan Stanley Industrials Conference and Lehman Brothers Financial Services Conference could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down by commodity and financial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the week.