Jobless Claims Lower

- Initial Jobless Claims for last week fell to 328K versus estimates of 330K and 338K the prior week.
- Continuing Claims fell to 2526K versus estimates of 2564K and 2624K prior.

BOTTOM LINE: The number of Americans filing first-time claims for state unemployment benefits declined last week, Bloomberg reported. The four-week moving average rose to 339,000 versus 335,250 the prior week. The unemployment rate among those eligible for benefits, with tracks the US unemployment rate fell to 1.9% versus 2.0% the prior week. I expect tomorrow’s non-farm payroll report to come in below estimates and the unemployment rate to tick higher. However, over the intermediate-term I expect the labor market to remain healthy as companies gain confidence in the sustainability of the current expansion and technology, healthcare and financial firms expand.

Links of Interest

Market Snapshot
Detailed Market Summary
Quick Summary
Economic Commentary
Movers & Shakers
Today in IBD
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Intraday Chart/Quote

Thursday Watch

Late-Night Headlines
Bloomberg:
- Europe’s carbon-emissions trading program, meant to reduce pollution, is a “failure” as too many permits were given out for free, the UK’s Channel 4 News said, citing European Energy Commissioner Andris Piebalgs.
- Express Scripts(ESRX), vying with CVS Corp.(CVS) to buy Caremark RX(CMX), said it improved its offer with an added cash bonus.
- The New York Stock Exchange(NYX) plans to increase its capacity to handle orders by more than 60% to prevent computer slowdowns similar to those that last week forced some brokers to rely on pen and paper to complete transactions.
- 3M(MMM) sued companies including Sony Corp.(SNE), Lenovo Group Inc. and Matsushita Industrial Electric, accusing them of infringing patents for rechargeable lithium-ion batteries.
- Fremont General(FMT) was ordered to halt making subprime loans that borrowers can’t repay and to correct deficiencies in its commercial real-estate lending.
- Apple Inc.(AAPL) may introduce a new notebook this year that will save data on flash memory chips instead of a hard drive.
- India’s government is planning to charge tax on dividend income earned by individuals.
- The yen erased gains against the euro on speculation European Central Bank President Jean-Claude Trichet will raise borrowing costs today and signal higher interest rates are still needed.
- PetroChina Co. and China Petroleum and Chemical Corp., the nation’s two biggest oil companies, may double their production of natural gas and crude in Xinjiang by 2010, the province’s governor said. Production by PetroChina and Sinopec may reach the equivalent of 50 million tons of oil a year.

Wall Street Journal:
- Long layovers, missed flights and other travel problems are expected to result from the US moving to daylight-saving time three weeks earlier than usual.
- International Business Machines(IBM) plans to provide free and comprehensive financial advice to its 127,000 US employees.

AP:
- Saudi Arabia may build an oil refinery in the Dominican Republic to expand its access to the US fuel market, citing the Saudi’s embassy spokesman in Washington. A new Caribbean refinery would allow access to the US market, while avoiding environmental impact studies needed to build a refinery there.

London-based Times:
- Procter & Gamble(PG) may team up with private equity firms to pursue acquisitions, citing the CFO.

Seoul Economic Daily:
- South Korea has signed a non-binding agreement with the local government of the Kurdish town of Irbil, located in northern Iraq, to develop about 10 oil fields in the area.

Commercial Times:
- AU Optronics Corp.(AUO) sees signs of “recovery” in the display-panel industry after almost four months of “inventory correction,” citing company Executive VP Hui Hsiung. The recovery may be “V-shaped” if companies continue to carefully control their inventories, Hsiung said.

Late Buy/Sell Recommendations
Citgroup:
- Reiterated Buy on (SBUX), target $45.
- Raised (MNST) to Buy, target raised to $60.

Night Trading
Asian Indices are +.50% to +1.25% on average.
S&P 500 indicated +.21%.
NASDAQ 100 indicated +.20%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Conference Calendar
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
- (ANH)/-.04
- (BWS)/.63
- (CMN)/.14
- (COO)/.54
- (COST)/.66
- (GGC)/-.58
- (HOV)/-.76
- (KFY)/.32
- (MTZ)/.14
- (NSM)/.20
- (NEW)/-.74
- (TTWO)/-.26
- (TECD)/.60
- (URBN)/.21
- (VTS)/1.30
- (WIND)/.11

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- Initial Jobless Claims for last week are estimated to fall to 331K versus 338K the prior week.
- Continuing Claims are estimated to fall to 2564K versus 2640K prior.

BOTTOM LINE: Asian indices are higher, boosted by utility and metal shares in the region. I expect US equities to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.

Stocks Finish Slightly Lower, Consolidating Yesterday's Gains

Indices
S&P 500 1,391.97 -.25%
DJIA 12,192.45 -.12%
NASDAQ 2,374.64 -.44%
Russell 2000 775.90 -.38%
Wilshire 5000 14,036.83 -.21%
Russell 1000 Growth 549.29 -.25%
Russell 1000 Value 802.23 -.23%
Morgan Stanley Consumer 684.21 -.49%
Morgan Stanley Cyclical 932.20 +.26%
Morgan Stanley Technology 552.54 -.96%
Transports 4,793.22 +.52%
Utilities 474.71 -.01%
MSCI Emerging Markets 108.81 -.34%

Sentiment/Internals
Total Put/Call 1.16 -4.92%
NYSE Arms .99 +207.64%
Volatility(VIX) 15.24 -4.51%
ISE Sentiment 66.0 -30.53%

Futures Spot Prices
Crude Oil 61.85 +1.93%
Reformulated Gasoline 189.65 +2.33%
Natural Gas 7.31 -2.07%
Heating Oil 176.57 +1.05%
Gold 651.0 +.74%
Base Metals 235.46 +.56%
Copper 279.15 +2.87%

Economy
10-year US Treasury Yield 4.49% - 4 basis points
US Dollar 83.74 -.36%
CRB Index 310.67 +1.23%

Leading Sectors
Oil Service +2.01%
Energy +1.46%
Retail +.98%

Lagging Sectors
Airlines -1.27%
Telecom -1.24%
REITs -1.41%

Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
- None of note

Afternoon/Evening Headlines
Bloomberg:
- Fremont General Corp. and New Century Financial Corp. led mortgage-lending stocks higher for a second day, buoyed by a report showing an increase in home-loan refinancing and rising prospects for takeovers.
- US Senator Charles Grassley proposed a legislative amendment that would subject hedge funds to increased oversight and routine inspections, reinstating rules struck down by a federal court last year.
- Brazil can ensure supplies of ethanol to Japan should the Asian country require that gasoline contain 3% of the biofuel, Agriculture Minister Luis Carlos Guedes Pinto said.
- Automakers will use higher-strength steel, aluminum and magnesium to lop 3.5% from the weight of their cars and light trucks by 2015, a materials-forecasting company predicted.
- Microsoft’s(MSFT) top executive in charge of the Internet search program will leave the company, the second defection from the online unit this week as the world’s largest software maker tries to narrow the gap with Google Inc.(GOOG).
- New Zealand’s central bank raised the benchmark interest rate a quarter point to a record to 7.5% and said it can’t rule out another increase.
- Former NY Mayor Rudolph Giuliani leads the Republican presidential candidates and is favored in a match-up against Democratic frontrunner Senator Hillary Clinton, a poll of three swing states found.

BOTTOM LINE: The Portfolio finished about even today as gains in my Retail longs offset losses in my Energy-related shorts. I added back (IWM)/(QQQQ) hedges in the final hour, thus leaving the Portfolio 75% net long. The tone of the market was slightly negative today as the advance/decline line finished modestly lower, sector performance was mostly negative and volume was above-average. Measures of investor anxiety were higher into the close. Today's overall market action was neutral after yesterday's sharp gains. However, the tech sector underperformed throughout the day. Natural gas is 2.2% lower as heating demand is projected at 23% below normal the next seven days. Nikkei futures are indicating a 29 point lower open in Japan. The Fed released its Beige Book earlier this afternoon. Here is a summary via Bloomberg:
- Dallas, New York, St. Louis and Boston noted some slowing.
- Most districts reported modest expansion.
- Housing market remained weak, but some signs of stabilization were noted.
- Price pressures are little changed.
- Pay increases moderate overall.
- Most districts showed labor market expansion.
- Steady growth in retail sales in most districts.
- Manufacturing is steady or expanding.
Surprisingly, the general tone of this report was upbeat. Moreover, it is very surprising and a big positive that manufacturing is "steady or expanding." I am disappointed with today's finish considering the news was better. I wouldn't be surprised to see some pre-jobs report jitters tomorrow.

Stocks Slightly Higher into Final Hour as Sub-prime, Emerging Market Concerns Subside

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Retail longs and Semi longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is mixed as the advance/decline line is neutral, sector performance is mixed and volume is above average. Tractor Supply (TSCO) is breaking to a five-month high today. The stock is a play on the benefits related to rising ethanol production, an increase in auto production later this year and improving housing construction next year. Management has been very conservative in its forward guidance. Its valuation is below its historical average. It isn't too late to buy, in my opinion. I remain long the stock. Despite the apocalyptic projections for flash memory and recent market turbulence, SanDisk (SNDK) continues to display relative strength. It is rising .6% today, recouping all its recent losses. I am not long the stock, but its recent strength is very interesting and could bode well for the semi sector.I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering and bargain-hunting.

Today's Headlines

Bloomberg:
- Take-Two Interactive Software(TTWO) shareholders formed a group to replace the board and overthrow management of the video-game maker after four quarters of losses. Shares of Take-Two surged 19% after investors including Steven Cohen’s SAC Capital Advisors LLC and David Shaw’s DE Shaw hedge funds announced the plan today in a regulatory filing. 43% of the float is short.
- Fremont General and New Century Financial shares rose as mortgage-lending stocks rebounded for a second day, buoyed by a report showing an increase in home-loan refinancing and rising prospects for takeovers.
- Hedge funds run by Man Group Plc, Winton Capital Management and Transtrend BV were among those battered during last week’s global equity market decline.
- Nat gas futures are falling in NY on forecasts showing much warmer weather is on the horizon.
- Oil is rising $1.10/bbl. after a US government report showed supplies fell more than estimates.
- Coffee prices in NY fell to a four-month low after Brazil, the largest grower, reported exports jumped 14% in February, more than analysts forecast.
- Exxon Mobil(XOM) plans to spend almost $21 billion exploring for oil and expanding refineries this year. The company plans to begin pumping oil or gas from 20 projects in the next three years after seven start-ups in 2006.

Wall Street Journal:
- Dieter Zetsche, DaimlerChrysler’s(DCX) CEO, confirmed that the company is in talks with General Motors(GM) about sharing development costs of sport-utility vehicles.
- A Wal-Mart Stores Inc.(WMT) program to get employees to adopt one product as their favorite for the year and give it special shelf space has helped improve marketing.
- A group of media activists is blocking proposals by the FCC and media companies to ease rules on how many properties media companies can control in a local market.

NY Times:
- Some US companies are trying to develop a method to convert algae into fuel, with one California start-up, LiveFuels Inc., aiming to annually produce 20,000 gallons of fuel per acre of algae. The company is among a large group of alternative energy start-ups seeking backing from venture capitalists. Investments in clean energy by venture capitalists more than doubled to $2.4 billion in 2006.
- Sony Corp.(SNE) plans to introduce today an upgraded online service for its PlayStation game consoles in the US.
- Sirius Satellite Radio(SIRI) and XM Satellite Radio(XMSR) must persuade the FCC that prices wouldn’t increase if the companies merged.

LA Times:
- Sam Zell, the Chicago billionaire and real estate investor, is a “strong contender” to buy Tribune Co.(TRB).

Reuters:
- Former Fed Chairman Greenspan said the decline in US home sales has reached a bottom, citing a speech at a technology conference in NY.

Dow Jones:
- Hiroshi Watanabe, Japan’s vice finance minister for international affairs, said the yen’s weakness before its recent rally didn’t result from the carry trade.

Chronicle of Higher Education:
- Women have earned more science and engineering undergraduate degrees than men since 2000, and the number awarded to women has increased every year since 1966.

InformationWeek:
- A US Federal Aviation Administration official is considering choosing Google Inc.(GOOG) online applications instead of Microsoft Corp.’s Windows Vista operating system.

Financial Times:
- The rate of corporate defaults is unlikely to rise until mid-2008 because companies can refinance their way out of trouble, citing a presentation by Ernst & Young LLP in London. The annual default rate on mezzanine debt, which ranks after senior lenders in a default, was less than 2% in the final quarter last year.