Monday Watch

Weekend Headlines
Bloomberg:
- US stocks rallied, sending the S&P 500 to a record, after job growth exceeded forecasts and signaled the economy has weathered the August financial turmoil.
- The dollar posted the biggest weekly gains against the yen in more than a year, and the euro since August on signs the economy is weathering the housing slump.
- The average price for gasoline in the US dropped about 4 cents over the last two weeks, according to the Lundberg Survey.
- The widening gap between crude oil and the relatively low price of gasoline is signaling the first quarterly decline in oil prices in a year. While oil has fallen in the fourth quarter during 13 of the past 20 years because of the transition from peak summer demand, the pressure for another drop in the months ahead is the most intense since 2004 and may defer any rebound to record crude prices until the first half of 2008.
- Venezuela, the fourth-largest supplier of crude oil to the US, said its proven oil reserves have risen to 100 billion barrels. The energy and oil ministry said it has certified 12.4 billion additional barrels of proven reserves in the country’s Faja del Orinoco region, where the government assumed control of oil ventures with foreign companies earlier this year. Venezuela plans to lift its oil output to 5.9 million barrels a day, up from the current 2.4 million barrels a day, by 2012.
- South Korea, which imports almost all its energy needs, produced 22% more oil from its overseas projects in the first half of this year than a year earlier as more fields came on stream.
- President Bush dismissed as “baseless gossip” Arab press reports that he is preparing to attack Iran because of a dispute over its nuclear program. “I would call that empty propaganda,” Bush said.
- Iraqi President Jalal Talabani endorsed a plan to divide Iraq along ethnic lines into three separate regions under a limited central government.
- SAP AG(SAP), the world’s largest maker of business-management software, agreed to buy Business Objects SA(BOBJ) for “slightly” more than $6.8 Billion.
- Somewhere in the wreckage of securities backed by subprime mortgages and the resulting seizure in the credit markets, is a new paradigm on Wall Street where Goldman Sachs Group(GS), increasingly perceived as the world’s biggest hedge fund, will report record earnings for 2007.
- Au Optronics Corp.(AUO), the world’s third-largest maker of liquid-crystal displays, headed for its highest close in more than three years on Taiwan’s exchange after it said September sales were a record high.

Wall Street Journal:
- Apollo, Blackstone Express Interest in Northern Rock.

NY Times:
- College enrollment in Sun Belt states such as Arizona and California has exploded.
- Demand for high-end Manhattan apartments is like a “luxury-home arms race” compared with the slowing housing market nationwide, and wealthy residents are spending extra time and money on renovations, citing brokers.
- Syria, confident US power will wane in neighboring Iraq, is encouraging insurgents and loyalists from Saddam Hussein’s regime to gather in Damascus. The hospitality may win Syria influence should its guests succeed in toppling or replacing the US-backed Iraqi government.

CNBC.com:
- The US federal budge deficit fell to $161 billion in fiscal 2007 from $248 billion the prior year as growth in tax receipts, fueled by capital gains and other non-withheld income, outstripped spending growth, the Congressional Budget Office said on Friday.

MarketWatch.com:
- The top-performing investment newsletter writers over the past 10 years are also the most bullish.

IBD:
- Friday’s stronger-than-expected jobs report show a recession is likely off the table, propelling stocks to record highs.

A Dash of Insight:
- Bears Prepares for Fox Business News.

TheStreet.com:
- Cramer: Don’t Listen to Google Haters.(video)
- Apple’s ‘Leopard’ Operating System Could Hit the Spot.

CNNMoney.com:
- Dell vs. Apple: 10 Years Later.

Alaska Journal of Commerce:
- BP Plc(BP), Europe’s second-biggest oil company, said production in Alaska’s North Slope this year is ahead of its forecast, citing BP Alaska President Doug Suttles. Sixty new wells are being drilled in the bay this year, adding about 400,000 barrels per day of new production, citing Shuttles. During the past decade, 800 new wells have been drilled in Prudhoe Bay, which added 4 billion barrels of recoverable reserves for BP.

Oregonian:
- Ethanol and bio-diesel production in Oregon and Washington is poised to surge 30-fold in the next few years if all planned bio-fuel refineries are built.

USA Today:
- Web portals hope to expand ads beyond their own sites.
- Once-thriving securities-fraud lawsuits, hailed by shareholders and bashed by businesses, are facing an onslaught of legal challenges that could cripple the controversial class actions.

Reuters:
- US August machine tool demand rises sharply from July.

Financial Times:
- Tommy Hilfiger, the US clothing label that this week launched the first collection designed by former Arsenal star Thierry Henry, is being prepared for a stock market flotation with a price tag of up to $3 billion.
- Managing directors of the IMF are traditionally circumspect when talking about currency values. But with only a few weeks left in the job, Rodrigo Rato is unusually forthright. “Right no the dollar is undervalued” on many measures used by the IMF to evaluate currencies, he says, though he adds that it was “certainly overvalued a few years ago.”
- Investment banks are creating discounted securities to help them clear out billions of dollars of assets they had been holding for complex structured credit deals cancelled during the summer credit squeeze.
- Commodities bull story relies heavily on guesswork.

Times:
- Citigroup Inc.(C) plans to lend Northern Rock Plc as much as $20.4 billion to help cut the mortgage lender’s cost of borrowing.

Daily Telegraph:
- Goldman Sachs(GS) is starting a new private-equity fund to buy stakes in hedge funds.

Wirtschaftswoche:
- Germans are growing more pessimistic about the country’s economic outlook, citing an Allensbach poll. 37% of 1,000 respondents to the survey said they expect Germany’s economy to improve in coming months, a decline from 56% in April.

Handelsblatt:
- Goldman Sachs(GS) expects the world economy to weather effects of the US sub-prime mortgage crisis, citing CEO Lloyd Blankfein. “The market disturbance of August seems broadly overcome,” Blankfein said.

Yonhap News:
- North Korea will likely begin disabling its nuclear facilities in mid-October under a disarmament-for-aid deal signed last week, citing officials in Seoul.

Weekend Recommendations
Barron's:
- Made positive comments on (PAYX), (UNF), (CXW), (MFE), (SNPS), (CTAS), (GKSR) and (CAH).
- Made negative comments on (ERTS), (CREE) and (ARUN).

Morgan Stanley:
- Reiterated Overweight on (CELG), raised target to $82.
- Reiterated Overweight on (GPS), target $23.

Night Trading
Asian indices are +1.0% to +2.0% on average.
S&P 500 futures -.17%.
NASDAQ 100 futures -.21%

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
- (BMET)/.49
- (YUM)/.45

Upcoming Splits
- (PCAR) 3-for-2
- (RUSHA) 3-for-2

Economic Releases
- None of note

Other Potential Market Movers
- The (TEG) Financial Analyst Meeting, (ROC) Analyst Meeting and (HRL) Analyst Meeting could also impact trading today.

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