Wednesday Watch

Late-Night Headlines
Bloomberg:
- The steepest yearend slump in global stocks since 2000 left equities with the cheapest valuations in 34 years. Equities yield 4.17 percentage points more in projected earnings than 10-year government bonds paid in interest at the end of 2007, according to an analysis of 29 countries by New York-based Lehman Brothers Holdings Inc. The gap is now the widest since September 1974, when adjusted for volatility, the data show. The last time the spread was wider, equities outperformed debt by 24 percentage points in the next 12 months, according to Lehman.
- Australian manufacturing expanded at the fastest pace in more than five years in December, buoyed by consumer and business spending.
- Candidates Kick Off 36-Hour Marathon of Campaigning in Iowa.
- Democratic presidential candidate Barack Obama is in first place in Iowa, and former Arkansas Governor Mike Huckabee is leading the Republican field, according to a Des Moines Register poll.

NY Times:
- US Educators Taking Aim on Boys’ Classroom Skills.
- Outside Groups Spend Heavily and Visibly to Sway 08 Election.

CNNMoney.com:
- The top 10 wireless trends for 2008.
- Energy and the presidential race. Where the top candidates stand on everything from a gas tax to a carbon cap to drilling in the Arctic National Wildlife Refuge.
- Survey: Mac OS hit record 7.3% share in December; iPhone up 33%. Reflecting strong holiday sales of both MacBooks and iPhones, Apple’s(AAPL) market share grew sharply in December, as measured by a Net Applications survey released today.

CNBC TV18:
- India will allow investors to short-sell stocks starting February 1.

IBD:
- Funds Notch Gains For Fifth Year In A Row. US diversified stock funds racked up a total return of 6.85% for the year through Dec. 27, according to Lipper Inc. Growth walloped value in all size groups. Mid-cap growth beat all other categories, averaging 17.04%.

Washingtonpost.com:
- Stock Market Shows Resilience In a Year of Economic Turmoil. Analysts Predict Continued Growth and Volatility in 2008.

Reuters:
- Home builders and financial issues, the biggest casualties of the subprime lending meltdown, were hit again by tax-motivated selling in recent weeks but could rebound a bit early in the new year, money managers said.
- Best and worst of the Dow’s 30 stocks for 2007.
- Mortgage and vehicle fleet company PHH Corp said on Tuesday it terminated its nearly $2 billion sale to General Electric Co and Blackstone, after the private equity firm failed to obtain required financing for the deal.
- California’s gasoline consumption drops again.
- Citigroup, Merrill top Wall St underwriters in 2007.

Financial Times:
- The Kuwait Investment Authority is following its peers in the Middle East in the hope of finding bargain investments in the US in the wake of the subprime mortgage crisis.

globeandmail.com:
- Commodities set to take breather in ’08.

Xinhua:
- Beijing started enforcing a stricter auto fuel standard yesterday as part of efforts to reduce pollution in time for the Olympic Games in August.

Late Buy/Sell Recommendations
- None of note

Night Trading
Asian Indices are -.25% to +.25% on average.
S&P 500 futures n/a.
NASDAQ 100 futures n/a.

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/EPS Estimate
- None of note

Upcoming Splits
- None of note

Economic Releases
10:00 am EST
- ISM Manufacturing for December is estimated to fall to 50.5 versus 50.8 in November.
- ISM Prices Paid for December is estimated to fall to 64.9 from 67.5 in November.
- Construction Spending for November is estimated to fall .4% versus a .8% decline in November.

2:00 pm EST
- Dec. 11 FOMC Minutes.

Other Potential Market Movers
- None of note

BOTTOM LINE: Asian indices are mixed as gains in energy shares offset losses in technology 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.