Thursday Watch

Late-Night Headlines
Bloomberg:
- Japan’s economy grew 3.7% last quarter, twice the forecast, as exports to Asia and emerging markets helped companies weather the US slowdown.
- Yahoo Inc.(YHOO), which rejected a $44.6 billion bid from Microsoft(MSFT) two days ago, sent a letter to shareholders defending the decision. The offer “substantially undervalues” the company, said Yahoo, which projects the online advertising market to grow to $75 billion by 2010.
- Morgan Stanley(MS) recommended investors scrap bets on the yen rising and buy the Australian dollar, because too many speculators are betting on Japan’s currency strengthening. Futures traders increased their bets to the highest since February 2004 that the yen will strengthen, the CFTC showed recently.
- Baidu.com Inc.(BIDU), operator of China's most used Internet search site, reported profit and sales that topped analysts' estimates after new services helped win users from rival Yahoo! Inc.(YHOO) The shares rose 7.2% in extended trading.
- ValueClick(VCLK) announced fourth quarter revenue rose 14% from year ago levels, exceeding previously issued guidance. The share jumped 7.7% in after-hours trading.
- Equininx(EQIX) reported fourth quarter revenue rose 46% from year-ago levels and boosted 2008 guidance. The stock gained 7.1% in extended trading.
- US Secretary of State Condoleezza Rice said Russian threats toward Ukraine are “unacceptable” and President Vladimir Putin’s government should know it can no longer intimidate former Soviet republics.
- News Corp.(NWS/A), Yahoo(YHOO) in Talks Over Combination, WSJ says.
- Billionaire Nelson Peltz’s Trian hedge funds disclosed a stake in restaurant chain Cheesecake Factory(CAKE). Trian owns 3.46 million shares, or just under 5%, of the casual dining chain, according to regulatory filings made today.
- Wachovia Corp.(WB), the fourth-largest US bank by assets, said investors are exaggerating concern about the company’s home loan defaults as lower interest rates reduce pressure on borrowers. Mortgages still contribute “significant profits” at the Charlotte, North Carolina-based bank and will continue making money even if losses from bad loans quadruple from current levels, Chief Risk Officer Donald Truslow said in a conference call. Lower interest rates are curbing payment increases on adjustable-rate mortgages, which will reduce delinquencies and charge-offs, Truslow said.
- Wheat growers in Australia, the world’s sixth-largest exporter of the commodity, may plant their biggest crop ever to benefit from record prices and improved growing conditions.
- MBIA Completes $1 Billion Common Stock Offering. Shares rise 4.5% in after-hours trading.

MarketWatch.com:
- Soaring and volatile prices took their toll on demand for gold in the fourth quarter, particularly in the jewelry and retail-investment sectors, an industry report said Wednesday.

CNBC.com:
- Tech Stock Renaissance: What to Buy.
- Treasury’s Paulson Gives Timeframe on Rebate Checks. US Treasury Secretary Henry Paulson on Wednesday repeated his view that the US economy will avoid recession this year and grow at a slower pace, and that the Treasury will act quickly to distribute tax rebate payments.

NY Times:
- Genetically engineered agriculture is spreading worldwide, and its biggest growth in 2007 was in the developing world.

SmartMoney.com:
- Clothing Chain Aeropostale(ARO) Popular With Teens, Investors.
- Stocks to Help You Save the Planet and Make Money.
- In Surprise, Small-Cap Profits Beating Big Caps.

USA Today.com:
- Google(GOOG) Apps can be a small firm’s best friend. Google doggedly pursues Microsoft’s(MSFT) Office business.
- President Bush, flanked by Congressional leaders of both parties, signed a $168 million economic stimulus package Wednesday that he called “a booster shot for our economy.” The package, aimed at heading off a serious downturn in the economy, will send rebate checks ranging from $300 to $1,200 to 130 million Americans. It also provides tax breaks for businesses.

Reuters:
- MBIA Inc.(MBI), the world’s biggest bond insurer, plans to tell a congressional panel tomorrow that regulators should limit the actions and statements of short sellers, citing a copy of written testimony. The prepared testimony said short sellers’ “unscrupulous and dangerous market manipulation” and their spreading of “half-truths and misleading information” should be curbed. Short sellers like Bill Ackman, founder of Pershing Square Capital Management, have worked hard to undermine market confidence in the bond insurers, wrote MBIA. MBIA said lawmakers should help restore confidence in the bond insurers, because their failure could have far-reaching effects on the US and global economies.
- Bookseller Borders Group(BGP) unveiled a new concept on Wednesday – a store where shoppers can mix and burn CDs, explore their genealogies and even publish their own novels.
- Morgan Stanley(MS) and Bear Stearns(BSC) issued the first commercial mortgage-backed securities deal of the year on Wednesday after agreeing to sweeten yields on a $1.2 billion issue.
- Hedge fund ups Countrywide(CFC) stake, attacks merger.

Financial Times:
- A Singapore sovereign wealth fund is expected to be the lead investor in a $6 billion fund that TPG, the private equity firm, is raising to invest in troubled financial firms.

TimesOnline:
- Google(GOOG) triggers handset battle over Gphone.

Business Standard:
- Air India, Jet Plan to Buy 60 Boeings.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (VCLK), target $30.
- Reiterated Buy on (CHKP), target $29.
- Reiterated Buy on (URBN), target $35.
- Reiterated Buy on (ANF), target $97.
- Maintained Buy on (DTV), target $30.
- Reiterated Buy on (ATI), target $100.
- Maintained Buy on (ERTS), target $69
- Reiterated Buy on (AGU), target $82
- Reiterated Buy on (HPQ), target $60.
- Reiterated Buy on (IGT), target $52.
- Upgraded (MDCO) to Buy, target $29.

Night Trading
Asian Indices are +.75% to +3.50% on average.
S&P 500 futures +.18%.
NASDAQ 100 futures +.38%.

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
- (CMCSA)/.17
- (MAR)/.62
- (FCL)/.18
- (GT)/.45
- (CCU)/.43
- (CPKI)/.17
- (CMG)/.56
- (N)/-.01
- (BRCD)/.15
- (PCLN)/.84
- (APPB)/.27
- (CKFR)/.53
- (TASR)/.07
- (CKP)/.52
- (IR)/.99
- (PTEN)/.52

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- The Trade Deficit for December is estimated to shrink to -$61.5 billion versus -$63.1 billion in November.
- Initial Jobless Claims for this week are estimated to fall to 347K versus 356K the prior week.
- Continuing Claims are estimated to fall to 2759K versus 2785K prior.

Other Potential Market Movers
- The Fed’s Bernanke speaking, Fed’s Evans speaking, weekly EIA natural gas inventory data, (SE) analyst meeting, (PNX) investor day, CSFB Software Conference, BB&T Capital Markets Transport Services Conference and Deutsche Bank Small/Mid-cap Growth Conference could also impact trading today.

BOTTOM LINE: Asian indices are sharply higher, boosted by technology and financial stocks in the region. I expect US equities to open modestly higher and to maintain gains into the afternoon. The Portfolio is 100% net long heading into the day.