Thursday Watch

Late-Night Headlines
Bloomberg:
- Central banks and sovereign investment funds are buying mortgage-backed bonds at about the same rate as in recent years as their rising cash hoards offset falling appetite for the debt, according to UBS AG analysts.
- Washington Mutual(WM) said it is dedicating $1 billion to help subprime borrowers with their loans.
- Senator Joseph Lieberman, a Connecticut independent, issued a proposal that could ban institutional investors with more than $500 million in assets from buying commodities. A second proposal would limit the share of commodities held by investors across all exchanges and a third would impose position limits on financial investors not engaged in “bona fide” commodity investing. Lieberman’s measure would be one of at least five proposed in the Senate to try to curb any speculative effects on the price of commodities. Investment groups struck back at the congressional proposals, sending a letter to lawmakers today, cautioning them not to over-regulate financial services. Proposals to raise margin requirements, ban speculation or alter international agreements may undermine markets, the letter said.
- Coventry Health Care(CVH), the Maryland-based HMO, reduced its projected earnings for the second time on higher costs, pulling down shares of Aetna Inc.(AET), WellPoint Inc.(WLP) and other insurers.
- MSCI Inc. will decide within 12 months whether to reclassify South Korea and Israel as developed countries, elevating them from its emerging market indexes.
- China and the US agreed to negotiate an investment treaty and urged each other to strengthen their exchange rates in the fourth round of semiannual economic talks.

Wall Street Journal:
- Treasury Secretary Henry Paulson is expected to call for faster changes to the oversight of financial markets that would expand the role of the Federal Reserve.

MarketWatch.com:
- Is the oil market at $135 per barrel forming a bubble, vulnerable to being popped like Internet stocks did in March 2000? One adviser who has focused on these issues is John Dessauer, editor of the Investors World newsletter. In a recent communication to subscribers, he discussed the impact on the price of oil of the Commodity Futures Modernization Act, which Congress passed in December 2000. One consequence of that legislation, according to Dessauer, is that "the oil market has been grossly distorted." Dessauer estimates that if the government rolled back the regulatory changes made in that legislation, oil's price could fall back all the way to $80 per barrel. That would represent a 40% drop from where crude closed on Tuesday. Dessauer's analysis should give pause to investors and traders alike.
- Thermal solar technology catching the spotlight.
- Yahoo(YHOO) loses two more prominent execs.

NY Times:
- Four Western oil companies are in the final stages of negotiations this month on contracts that will return them to Iraq, 36 years after losing their oil concession to nationalization as Saddam Hussein rose to power. For an industry being frozen out of new ventures in the world’s dominant oil-producing countries, from Russia to Venezuela, Iraq offers a rare and prized opportunity. The impact, experts say, could be remarkable increases in Iraqi oil output.

Forbes.com:
- A trade group representing hedge funds spent $660,000 in the first quarter to lobby Congress against a proposal to hike taxes on the industry and on other regulatory issues.

CNNMoney.com:
- YouTube goes long. The popular video site is experimenting with full-length video to attract more advertisers.

Reuters:
- Hewlett-Packard(HPQ) obtains $8 billion loan commitment to help finance its acquisition of Electronic Data Systems(EDS).
- Japanese manufacturers’ business sentiment in June matched a five-year low set in May as firms felt the pinch from high raw material costs and a global economic slowdown.

Financial Times:
- It’s getting harder to resist the notion that the leveraged loan market may be on the road to recovery.

Daily Telegraph:
- Al Gore’s electricity bill goes through the (insulated) roof. Environment campaigner Al Gore is using more electricity than ever despite pledging to cut consumption more than a year ago, a libertarian research group claims. The TCPR branded him a “hypocrite” in February 2007 after discovering that his eight-bathroom house in Nashville, TN consumed nearly 221,000 kilowatt-hours of electricity in the previous year – more than 20 times the national average.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (SMTS), boosted target to $24.
- Reiterated Buy on (NUAN), added to Top Picks Live List, target $24.
- Upgraded (AIG) to Buy, target $42.
- Reiterated Buy on (TER), target $17.

Night Trading
Asian Indices are -2.0% to -1.25% on average.
S&P 500 futures -.07%.
NASDAQ 100 futures -.29%.

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/EPS Estimate
- (JW/A)/.35
- (CC)/-1.07
- (CCL)/.41
- (ATU)/.55
- (SJM)/.78
- (GRB)/.24
- (PDC)/.24

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- Initial Jobless Claims for this week are estimated to fall to 375K versus 384K the prior week.
- Continuing Claims are estimated to fall to 3135K versus 3139K the prior week.

10:00 am EST
- The Philly Fed for June is estimated at -10.0 versus -15.6 in May.
- Leading Indicators for May are estimated unch. versus a .1% gain in April.

Other Potential Market Movers
- The EIA weekly natural gas inventory report, (MCK) analyst meeting, (HIG) investor day, (ARO) analyst day, (TD) analyst meeting, (ESLR) analyst day, (MET) investor day, BIO International Convention, Deutsche Bank Consumer & Food Retail Conference, Merrill Lynch Transports Conference, BMO Capital eMerging Media Forum, William Blair Growth Stock Conference and Bank of America Homebuilders Conference could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down by financial and automaker 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.