Friday, April 25, 2008

Friday Watch

Late-Night Headlines
- The US dollar is headed for its biggest weekly gain in a month against the euro and a second winning week against the yen on increasing speculation the Federal Reserve will stop cutting interest rates.
- The cost of protecting Asian bonds from default declined, according to traders of credit-default swap indexes. The Markit iTraxx Japan Index fell 4.5 basis points to 84.5 basis points in Tokyo, according to Morgan Stanley.
- Samsung Electronics, Asia’s largest maker of semiconductors, flat screens and mobile phones, posted its biggest profit gain in more than two years as display and handset earnings countered a decline in chip prices.
- Gold tumbled to a three-week low as the US dollar extended gains against the euro, eroding the appeal of the precious metal as an alternative investment.
- South Korea’s economy expanded at the slowest pace in more than three years in the first quarter as consumers and companies curtailed spending.
- American Express(AXP), the biggest US credit-card lender, reported first-quarter profit that beat analysts’ estimates. The stock rose 4.5% in after-hours trading.
- Microsoft0MSFT) declined 5% in extended trading after it reported an 11% drop in third-quarter profit and forecast earnings that may miss analysts’ estimates as Windows software sales fell.
- Deckers Outdoor(DECK) advanced 11% in after-hours trading. The maker of Ugg boots posted a 20% first-quarter profit rise, surpassing analysts’ estimates, and forecast full-year earnings and revenue above its prior view.
- Cabot says stocks have bottomed. It also sees market putting pieces in place for next big move up.
- Contrarian analysis no longer as bullish on gold. I’m afraid that the gold bulls no longer can count on sentiment to support a rising market.
- Tax Rebate Checks To Go Out Earlier than Expected.

NY Times:
- Hugo Chavez Faces Criticism Over Venezuelan Nationalizations.
- Behind China’s Anti-Foreigner Fever. Much of the anger has been directed at CNN for its allegedly biased coverage of protests in Tibet and along the route of the Olympic flame.

- Entrepreneurs in the USA launched more small businesses in 2007 than the year before in the West, the Midwest and the South – apparently not scared of the economic slowdown that began last year, according to a report released Thursday.
- Big Wall Street investment companies are pulling back on their borrowing from the Federal Reserve’s emergency lending program, a sign that credit conditions may be improving a bit.

- US Treasury Secretary Henry Paulson cited encouraging signs of progress in calming financial markets, which he said made it possible to turn more attention to measures aimed at stimulating a slowing economy.
- Private equity giant TPG, fresh from two major financial services deals in recent weeks, is actively targeting investment opportunities at banks and brokerages.
- Biggest changes in Nasdaq short interest.

Financial Times:
- BlackRock(BLK) raised only just more than half the $500m it was hoping to secure in the listing of a fund of hedge funds on Thursday, dealing a blow to the US fund manager.
- Commodity prices fall? Surely not. “When you look at what is happening with commodities right now, there are just so many parallels with the credit bubble.” New players, such as asset managers, are joining the dance. And just as few of those whiz-kids who created collateralized debt obligations back in 2005 ever bothered to meet a subprime borrower, face to face, not many of these new commodities dealers have ever eyeballed a soybean farmer or nickel miner in their life. Javier Blas, the FT commodity correspondent, says that some of the energy traders he encounters these days have never seen a trading world where the price of oil was consistently below $50 a barrel, because they entered the game so recently. Pace those CDO dealers who used to say back in 2005 that their models showed it was almost impossible that AAA would ever default(or, for that matter, that house prices could fall.) Now, as long as commodity prices keep rising, this lack of historical knowledge need not matter too much.
- Merrill Lynch(MER) is holding talks with TPG to discuss closer ties – including the possibility of the private equity firm investing in Merrill if the investment bank needs more capital.
- Bubble trouble. Chinese investors have been finding out the hard way that the value of their equity investments can go down as well as up.

Late Buy/Sell Recommendations

- Reiterated Buy on (POT), target $243.
- Reiterated Sell on (F), target $6.
- Reiterated Buy on (LLL), target $123.

Night Trading
Asian Indices are -.25% to +.75% on average.
S&P 500 futures +.10%.
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
Rasmussen Business/Economy Polling
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
- (CRDN)/1.12
- (CVH)/.81
- (GT)/.47
- (IDXX)/.39
- (ITT)/.81
- (ERIC)/.28

Upcoming Splits
- None of note

Economic Releases
10:00 am EST

- The final Univ. of Mich. Consumer Confidence reading for April is estimated at 63.2 versus 63.2 in March.

Other Potential Market Movers
- The JPMorgan China Conference, (IFX) analyst meeting and (ETR) analyst conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and financial shares 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.

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