Monday Watch

Weekend Headlines
Bloomberg:
- Currency forecasters are betting that the US dollar rally is just getting started. The currency will strengthen 2.5% to $1.50 per euro by year-end, according to the mean estimate of 39 firms surveyed by Bloomberg. “We’ve seen a very significant shift in Fed emphasis; they’re now clearly focused on inflation and the need to control inflation expectations,” said Ian Stannard, senior foreign-exchange strategist in London at BNP Paribas SA, the most accurate currency forecaster in a 2007 Bloomberg survey.
- Finance chiefs from the world’s richest nations spoke out in favor of a strong US dollar after the currency rose the most against the euro in three years. ``A strong dollar is in our nation's interest,'' U.S. Treasury Secretary Henry Paulson told reporters today after meeting counterparts from the Group of Eight nations in Osaka, Japan. French Finance Minister Christine Lagarde said she was ``happy to hear Paulson clearly say how much the strong dollar policy is indispensable.''
- Finance ministers from the G-8 nations said surging food and fuel prices have replaced the credit squeeze as the biggest threat to the world economy.
- Lehman Brothers(LEH) shareholders rallied behind CEO Richard Fuld after a week-long decline in the stock, a management shake-up and the first quarterly loss since the investment bank went public. BlackRock Inc.(BLK), the largest publicly traded fund manager in the U.S., and Maurice ``Hank'' Greenberg, the former CEO of American International Group Inc.(AIG), the world's biggest insurer, bought stakes in Lehman this week and said they remain optimistic about the company's prospects. Putnam Investments LLC, the mutual fund firm that oversees about $173 billion, invoked the ``strong franchise'' Fuld has built in his four-decade career.
- Microsoft Corp.(MSFT) offered to buy $8 billion of Yahoo!(YHOO) shares at $35 each and acquire the Internet company’s search unit, a proposal that Yahoo spurned in favor of an agreement yesterday with rival Google Inc.(GOOG).
- The G-8 called on emerging markets to cease subsidizing the price of oil and food amid concern such support was propelling demand and prices higher.
- Arizona Senator John McCain condemned the US Supreme Court’s decision to allow detainees held at Guantanamo Bay, Cuba, access to federal courts. McCain called the court’s 5-4 ruling “one of the worst decisions in the history of this country,” warning that the court system would be clogged with petitions from the 270 inmates. He suggested that many of the inmates still present a threat. “Thirty of the people who have already been released from Guantanamo Bay have already tried to attack America again,” he said.
- China should tighten monetary policy, allow its currency to strengthen and try to cool the economy, said Yu Yongding, a former adviser to the People’s Bank of China.
- Senator Kent Conrad said he was given preferential treatment on a mortgage from Countrywide Financial Corp.(CFC) and will write a $10,500 check to charity.
- The cost of protecting Asia-Pacific bonds from default declined, according to traders of credit-default swaps. The Markit iTraxx Asia index of 20 high-risk, high-yield borrowers outside Japan fell 10 basis points to 505 in Hong Kong, according to BNP Paribas SA.

Wall Street Journal:
-.US federal banking regulators are pressing lenders with “sagging” balance sheets to reduce their dividends and increase capital.
- Honda Refuels In The Race For Green Cars. CEO Fukui Prepares For Hydrogen Rollout.

MarketWatch.com:
- Faced with an increasingly losing battle against inflation, investors in India are firmly on the backfoot, and looking for an excuse to cheer themselves up.
- How to use the Web to save on grocery bills, dining out and more.
- In 2010, US airlines are smaller, maybe smarter. Industry could stabilize for the benefit of passengers and investors.

NY Times:
- Saudi Arabia, the world’s largest petroleum exporter, plans to boost its daily output next month by about 500,000 barrels to what may be its highest level ever – 10 million a day, citing analysts and traders. The move was seen as a sign that the Saudis are becoming increasingly nervous about both the political and economic effect of high oil prices. In recent weeks, soaring fuel costs have incited demonstrations and protests from Italy to Indonesia. Current oil prices are making alternative fuels more viable, threatening the long-term prospects of the oil-based economy. The Saudis have concluded that they need to disrupt the momentum that has been building in commodity markets. The Australian prime minister, Kevin Rudd, said this month that it was time “to apply the blowtorch to the OPEC organization.” In Washington, bipartisan support is also growing to pass a law allowing the Justice Department to engage in antitrust proceedings against OPEC producers accused of curbing supplies to drive up prices. Saudi Arabia is completing a huge expansion program in its oil industry that is expected to bring its production capacity to 12.5 million barrels a day by next year.
- An ambitious effort to take interactive television into Americans homes is expanding after a test of the system began at a single station last month.

The Hill:
- The Republican leaders in the Senate and House on Wednesday seized on remarks by presumptive Democratic presidential nominee Senator Barack Obama, who said this week that he would have preferred a “gradual adjustment” in oil prices. “Yesterday we heard the Democrat nominee for president suggest that rising gas prices aren’t the problem,” Senate Minority Leader Mitch McConnell said. “If Obama really thinks consumers ought to shoulder higher energy costs while we make the transition to alternative fuels, he should answer a simple question: how high should gas prices go? $5? $6? $10 a gallon?” House Minority Leader John Boehner said.

Washington Post:
- In Europe, a Slide Toward Irrelevance. A mere two years ago, the British author and thinker Mark Leonard published a book titled "Why Europe Will Run the 21st Century." Today, one wonders to what degree Europe will even participate in the 21st century. It's not just the deadly blow struck by Ireland's rejection Thursday of the Lisbon Treaty reorganizing the European Union. I've spent six of the past eight years in the capital of the European Union, and I've noticed over this period a steady loss of self-confidence in Europe, a turning inward and a growing pessimism about the future. The pleasure Europeans take in the weak dollar and the high euro is a welcome distraction from deeply rooted fears that the Asian giants are overtaking and out-competing Europe in the international economy.

USA Today:
- Test Drive: Ford’s(F) new SUV is fun and sports Flex appeal.

CNNMoney.com:
- Early teardown: iPhone 3G could cost Apple(AAPL) as little as $100. The new iPhone costs Apple considerably less than the original to make. AT&T (T) and the other carriers could be subsidizing the $199 sale price by $200, according to Piper Jaffray’s Gene Munster, which means Apple may be charging its partners as much as $399 per phone. “If these numbers are true,” writes the Yankee Group’s Carl Howe, “the iPhone 3G could end up being the most profitable product Apple makes.”
- Apple(AAPL) and Intel(INTC): Best buddies.

Reuters:
- Martin Sullivan, CEO of AIG Inc.(AIG), has stepped down after three years at the helm of the world’s largest insurer.

Financial Times:
- China and the US are two of the largest energy producers and consumers in the world, so it is highly significant that the fourth China-US Economic Dialogue, which will be held in the US this week, will promote long-term co-operation in energy, the environment and other related areas.
- Hedge fund managers reacted with a mixture of surprise and indignation after the UK’s Financial Services Authority’s unexpected crackdown on short-selling during rights issues.

TimesOnline:
- Barclays Plc plans to raise $7.8 billion within two weeks through a share sale to sovereign wealth funds.

International Herald Tribune:
- GAIM International 2008, the global hedge fund industry conference that is being held form Tuesday through Thursday in Monaco, is taking place as the industry confronts poor returns and searches for a strategy for 2008.

Welt am Sonntag:
- Deutsche Telekom AG plans to sell the new version of Apple’s(AAPL) iPhone for as little as 1 euro to customers purchasing a two-year phone contract.

Herald Sun:
- Greenpeace declares war on coal. Greenpeace has called for all coal-fired power stations to be shut down by 2030 as part of a radical energy plan.

Yonhap News:
- The IMF may cut South Korea’s 2008 growth forecast to 4% because of high inflation and slowing global growth, citing the fund’s deputy managing director. The Washington-based fund in April forecast South Korea’s economy would expand 4.2% this year, compared with 5% growth in 2007.

News:
- Austrian Prime Minister Rudd will pressure Asian governments to remove fuel subsidies that “distort” the demand for petrol and push up prices.

Tokyo Shimbun:
- Toyota Motor(TM) is planning to introduce six new hybrid vehicles in Japan between 2009 and 2013. New autos will included minivans and sedans, with the first models to be released being mid-sized Lexus and Toyota sedans.

Emirates News Agency:
- Inflation in Abu Dhabi, the largest of the seven members of the United Arab Emirates, accelerated to 11.5% in the first quarter, driven by housing rents and food prices. Accelerating inflation would affect the UAE’s ability to attract foreign investment, according to the report.

Middle East Economic Digest:
- Royal Dutch Shell Plc is close to signing a joint venture agreement with Iraq’s South Gas Co. to develop gas in the south of the country, citing an Iraq oil ministry official. The venture will last five years and involve gathering at least 600 million cubic feet a day of gas that is currently flared from major oil fields, and possibly the construction of liquefied natural gas facilities.

Al-Jareeda:
- Kuwait MPs Submit Bill to Restrict Oil Output. Kuwait’s opposition lawmakers submitted a bill in parliament today that stipulates the emirate’s annual oil output shouldn’t exceed 1% of its proven reserves.

Weekend Recommendations
Barron's:
- Made positive comments on (SNDK), (ZMH), (AIZ), (FCX), (UPS), (T) and (CFC).
- Made negative comments on (SHPGY).

Citigroup:
- Reiterated Buy on (RIMM), target $165.

Night Trading
Asian indices are +.50% to +1.50% on avg.
S&P 500 futures -.04%.
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
Upgrades/Downgrades
Rasmussen Business/Economy Polling

Earnings of Note
Company/Estimate
- (TITN)/.13
- (LEH)/-.32
- (ADBE)/.46

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- Empire Manufacturing for June is estimated to rise to -1.5 versus -3.2 in May.

9:00 am EST
- Net Long-term TIC Flows for April are estimated at $63.3 billion versus $80.4 billion in March.

1:00 pm EST
- The NAHB Housing Market Index for June is estimated at 19 versus 19 in May.

Other Potential Market Movers
- The Fed’s Bernanke speaking, Fed’s Lacker speaking, (SSW) analyst meeting and BIO International Convention could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by technology and automaker shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the week.