Monday, March 10, 2008

Tuesday Watch

Late-Night Headlines
Bloomberg:
- Bear Stearns(BSC) CEO Alan Schwartz denied that the firm lacked sufficient capital after speculation about a liquidity crisis pushed the stock down.
- Obama Rejects Clinton Suggestion of Vice Presidency. Barack Obama touted his front-runner status in the race of the Democratic presidential nomination today and rejected rival Hillary Clinton’s recent suggestion he might be her running mate.
- WellPoint Inc.(WLP), the second-largest US health insurer, said it cut its 2008 forecast because of unexpected medical costs, causing the company’s shares to fall 17% and ignite an industry-wide sell-off in after-hours trading.
- Texas Instruments(TXN) cut its first-quarter revenue and profit forecasts and the shares fell as much as 6.9% in extended trading.
- Asian currencies fell, led by the Indonesian rupiah and the South Korean won, on speculation credit-market losses will deepen, spurring foreign investors to reduce holdings of emerging market assets.
- China’s inflation accelerated to the fastest pace in 11 years in February as food and energy prices jumped, increasing the likelihood the central bank will raise interest rates.

Wall Street Journal:
- Spitzer Engulfed in Sex Scandal. New York Governor, Known as Crusader, Sees the Tables Turn.

MarketWatch.com:
- Google(GOOG) executives address ‘paid click’ decrease data. Google’s president of North America advertising and commerce, said that the recent slowing in paid clicks “was intentional on our part” and will result in “a long-term benefit for our business.” That’s because recent quality initiatives at the company have resulted in fewer unintentional clicks and a higher number of “conversions,” or revenue generated by intentional clicks. “Conversions actually go up for advertisers, which is a positive, but there are less clicks overall,” he said. David Eun, vice president of content partnerships, said that while Google has “purposely not taken the easy money” by loading YouTube users down with advertisements, he commented that “over the course of the next year, we’re going to turn up the dial a bit” in terms of serving video advertisements on YouTube. Google also sees Microsoft’s(MSFT) ongoing effort to acquire mutual rival Yahoo Inc.(YHOO) as a potential positive.
- Speculators triple there net long positions in crude oil last week. “The disconnect between slowing US growth and a soaring commodity, energy complex has truly been quite remarkable,” said Edward Meir, energy analyst at MF Global. “The two driving forces behind the current commodity price surge” are “the weaker dollar and the massive fund flows going into the sector, largely as a response to the lack of viable investment alternatives.” Government data showed speculators and managers of large investment funds, those who don’t need physical oil, dominated bets on rising oil prices, while refiners and other oil users were betting oil prices would move lower. Latest data from the US CFTC showed long positions from speculators, in which investors expect oil prices to move higher, outnumbered short positions, or bets on lower prices, by nearly 100,000 contracts last week. Net long positions more than tripled in one month. Analysts are worried the recent run-up in crude prices could reverse suddenly. “Absent strong US growth, these two variables(the dollar and fund flows) alone will have difficulty in sustaining the price advances we are seeing,” Meir added in a note to clients.

CNBC.com:
- Merrill Lynch CEO Says Worst is Over.

NY Times:
- Citigroup(C) to Inject $1 Billion in Six Hedge Funds.
- Blackstone Group’s(BX) Schwarzman Donates $100 Million to New York Library.

BusinessWeek.com:
- Blackstone(BX): Biding Its Time. The private-equity player has taken its lumps, but says it has lots of cash on hand to start investing in distressed assets.

Forbes.com:
- Top 10 Up-And-Coming Tech Cities.

CNNMoney.com:
- EC approval of Google-DoubleClick deal near.

Portfolio.com:
- So why was Governor Eliot Spitzer of New York in Washington when he was caught on a wiretap arranging to meet with a high-priced prostitute at a Washington hotel on the night before Valentine’s Day?

USA Today.com:
- BMW says it will spend $750 million to expand its manufacturing plant in South Caroline, creating 500 jobs.

Financial Times:
- Jean-Claude Trichet, European Central Bank president, has sounded the alarm over the relentless rise of the euro – signaling policymakers’ heightened concern about the economic damage threatened by the currency’s recent surge.
- Money sent home by Latin American migrant workers in the US grew last year at their slowest rate in a decade, a result of the US economic slowdown and the crackdown against illegal migration, combined with the strength of the Brazilian economy.

Daily Telegraph:
- Hedge fund industry hit by worst crisis in a decade.

Late Buy/Sell Recommendations
Citigroup:

- Maintained Buy on (DOX), target $46.
- Maintained Buy on (BRCD), target $10.

Night Trading
Asian Indices are -1.75% to +.25% on average.
S&P 500 futures +.38%.
NASDAQ 100 futures +.16%.

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
Upgrades/Downgrades
Rasmussen Business/Economy Polling
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
- (DKS)/.60
- (KR)/.47
- (DUF)/.23
- (SSI)/.76
- (JCG)/.39
- (TTWO)/-.61
- (GSF)/2.33

Upcoming Splits
- None of note

Economic Releases
8:30 am EST

- The Trade Deficit for January is estimated to widen to -$59.5 billion versus -$58.8 billion in December.

Other Potential Market Movers
- The Fed’s Kroszner speaking, IDB/TIPP Economic Optimism Index, weekly retail sales reports, (NTAP) analyst day, (CVX) analyst day, (BMC) analyst day, (EQT) analyst day, (CAT) analyst day, Bear Stearns Media Conference, Banc of America Consumer Conference, Piper Jaffray & ChinaVenture Conference and CSFB Communications Conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by mining and financial stocks in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.

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