Wednesday, March 19, 2008

Thursday Watch

Late-Night Headlines
- The Australian hedge funds industry body said it supports greater disclosure when investors sell borrowed shares, as regulators investigate whether market manipulation pushed some stocks to record lows in recent weeks. The Australian chapter of the Alternative Investment Management Assoc. rejected accusations hedge funds targeted troubled companies through short-selling and spreading rumors that company directors had received margin calls, AIMA’s Chairman Kim Ivey said.
- Wheat fell the maximum permitted by the Chicago Board of Trade as rains improved crop prospects in Australia and farmers worldwide prepared to sow more grain to take advantage of prices that reached a record high last month.
- Corn and soybeans fell the exchange limit in Chicago on speculation a rebound in the dollar will reduce the appeal of commodities as an inflation hedge.
- CIT Group Inc.(CIT), the largest independent commercial finance company in the US, may need to tap $7.3 billion in backup credit lines because its access to unsecured short-term debt has become “materially constrained,” Fitch Ratings said.
- Billionaire investor Joseph Lewis, the largest shareholder at Bear Stearns(BSC), said he may push the company to consider alternatives to the $339 million buyout offer from JPMorgan Chase(JPM).
- Nike Inc.(NKE), the world’s largest athletic-shoe maker, said third-quarter profit and revenue climbed more than analysts estimated on higher sales in China and Europe.
- Hillary Clinton’s daily schedules show that her formal policy role in the presidency of her husband, Bill Clinton, shrunk once Congress shelved the healthcare plan she helped craft in the administration’s first two years.

Wall Street Journal:
- The collapse of Bear Stearns(BSC) dealt a severe blow to investors, from big names like billionaire Joseph Lewis to thousands of employees of the brokerage firm. But there’s one group trying to contain their joy amid all the gloom on Wall Street: Investors who placed big bets against Bear Stearns. Large hedge funds – including Harbinger Capital Partners, Greenlight Capital, Tremblant Capital Group and Paulson & Co. – made millions of dollars as Bear Stearns’s shares tumbled and various bearish positions rose in value.
- It can’t be said that the rich are immune to stock market volatility, mightily as they might try with risk-averse strategies and hedge funds. And the wealthy have invested in hedge funds to the tune of more than $1 trillion over the past five years alone, according to Hennessee Group research. The most recent trend among the wealthy, however, is to pull out altogether. The number of wealthy people “not investing,” according to the Spectrem Affluent and Millionaire indices, is at an all-time low.
- Tuesday’s action was strong enough to trigger a bullish technical event know as a “Double Nine-To-One” signal.
-.Papa John’s Intl.(PZZA), the third-largest US pizza chain, is “surviving” higher commodities costs, CEO Nigel Travis said. While cheese and wheat are becoming more expensive, “some of the meat costs are going down,” Travis said.
- After 7 straight years of gains, is the $1,000-topping run in gold over? Central Florida dealers say they have been selling out of metal detectors as people hope to find gold treasure and the amount of small miner permits issued in Alaska has increased 35% in the past t 5 years. Dennis Gartman, of the Gartman Letter, had been bullish on gold but has recently cut his positions by about 95%.
- With the Fed’s Help, Market May Be Nearing a Bottom.
- Best Places For Business and Careers. Companies in the U.S. are facing myriad challenges, from the credit crunch to soaring commodity prices to corporate tax rates that are behind only Japan's among developed countries. What is a chief executive to do? Head south.
- Amid rising gas prices and increased dependence on foreign oil, a report by the National Research Council of the National Academies cites the work of US automakers as a beacon of hope to bring about dramatic solutions in personal transportation.
- Stock jitters: reasons not to sell.
- Steer clear of the new gold rush. The story of how the yellow metal offers investors the ultimate safe haven is spun from pretty thin straw.

- Akamai(AKAM) Shares Worth a Shot at These Prices.
- Survey Confirms iPhone Users are Hard-Core Internet Junkies.

- Ford, GM, AutoNation refute doom and gloom.

- Al Qaeda leader Osama bin Laden threatened the European Union with grave punishment on Wednesday over cartoons of the Prophet Mohammad. In an audio recording posted on the Internet, Bin Laden said the cartoons were part of a “crusade” in which he said the Catholic Pope Benedict was involved. Bin Laaden’s message was entitled “The Response Will Be What You See, Not What You Hear.”
- Verizon Wireless(VZ), the No. 2 US mobile service, aims this year to support a “few hundred thousand” devices from outside vendors this year through its open network initiative, CEO Lowell McAdam said.
- Morgan Stanley(MS) faces major challenges in the near-term, yet CFO Colm Kelleher said on Wednesday the bank has trimmed its exposure to risky assets, bulked up on cash and now intends to take advantage of opportunities created by market turmoil.
- Volatility in the S&P 500 Index is at a 70-year high.
- Bottoming process begins with Bear, not bear market.

Financial Times:
- Assets Hurt by Mark-to-Market Rules, De Grauwe Says.
- Chrysler on road to profitability, says CEO.
- Forbidden fields: Oil groups circle the prize of Iraq’s vast reserves. According to the oil ministry, only 27 out of 80 discovered fields are producing in Iraq, the result of decades of under-investment.

- Stock market manipulators yesterday tried to bring down one of Britain’s biggest banks by spreading false rumors through the city. The Financial Services Authority(FSA) said that it would pursue traders guilty of “market abuse” by spreading untrue claims that banks were on the brink of collapse. The authorities believe that the fear and uncertainty in financial markets are allowing unscrupulous traders to make multimillion-pound profits by whipping up hysteria about the stability of big banks. It is feared that short-sellers — investors who use falling share prices to make money — were deliberately spooking the market in order to profit from plunging stocks in a practice called trash ’n’ cash. Rumors that the American investment bank Bear Stearns was short of cash contributed to its near-collapse last week after its lenders were scared into demanding that it repay them immediately.

Late Buy/Sell Recommendations

- Reiterated Buy on (IGT), target $52.
- Maintained Buy on (NUAN), target $23.
- Reiterated Buy on (NKE), target $78.

Night Trading
Asian Indices are -3.25% to -1.25% on average.
S&P 500 futures -.72%.
NASDAQ 100 futures +.75%.

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
Rasmussen Business/Economy Polling
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
- (PLCE)/.92
- (WOR)/.26
- (BKS)/1.72
- (DDS)/.76
- (FDX)/.124
- (CCL)/.28

Upcoming Splits
- None of note

Economic Releases
8:30 am EST

- Initial Jobless Claims for this week are estimated to rise to 360K versus 353K the prior week.
- Continuing Claims are estimated to rise to 2840K versus 2835K prior.

10:00 am EST
- Philly Fed for March is estimated to rise to -19.0 versus -24.0 in February.
- Leading Indicators for February are estimated to fall .3% versus a .1% decline in January.

Other Potential Market Movers
- The (GAS) analyst meeting, (PEG) analyst meeting, weekly EIA natural gas inventory report, Lehman Healthcare Conference, Cowen Healthcare Conference, BB&T Manufacturing/Materials Conference and Bear Stearns Global Oil & Gas Conference could also impact trading today.

BOTTOM LINE: Asian indices are sharply lower, weighed down by mining and energy stocks in the region. I expect US equities to open modestly lower and to maintain losses into the afternoon. The Portfolio is 75% net long heading into the day.

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