Thursday Watch

Late-Night Headlines
Bloomberg:
- The US stock market posted its biggest gain in eight months, after the Federal Reserve indicated it is no longer biased toward higher interest rates. The S&P 500 is now 1.6% higher for the year.
- Short interest on the NYSE surged 10% to an all-time high of 10,510,000,000 shares from mid-February through mid-March.
- The ABX-HE-BBB-07-1 sub-prime index, which has been the source of much angst, rose again yesterday to 71.09. It is up from a low of 62.25 a couple of weeks ago.
- Imports of crude oil by Japan, the world’s largest user of the fuel after the US and China, fell for the 10th consecutive month in February, dropping 5.5% from a year earlier. Imports of liquefied natural gas jumped 15% to 5.35 million metric tons.
- Andy Lipow, president of Lipow Oil Assoc. LLC, expects oil to fall to $55.
- Fording Canadian Coal Trust, the world’s second-largest exporter of coal used to make steel, plans to sell coal at an average $91 ton in the year starting April 1, down 15% from a year earlier.
- Farallon Capital Management LLC held talks buy Accredited Home Lenders Holding(LEND) before agreeing this week to give the subprime mortgage company a loan.
- Motorola Inc.(MOT) said profit and sales will be “substantially” below its forecast this year because of falling mobile-phone prices. The company also named a new president and detailed a plan to step up its share buyback program amid a proxy fight with shareholder Carl Icahn. The shares fell 4.8% in after-hours trading.
- Wells Fargo(WFC), whose stock has languished this year amid investor concern about rising defaults at US mortgage lenders, may buy back up to 2.2% more of its shares.
- Roaring 40s Renewable Energy Pty., a venture between Hydro Tasmania and CLP Holdings Ltd. agreed to build three wind farms in China in a joint venture with Guohua Energy Investment, a unit of China Shenhua Energy.
- Japan’s trade surplus unexpectedly widened in February after exports to China and the US grew more than economists anticipated.

Financial Express:
- The Securities & Exchange Board of India may approve short selling of stock by institutional investors.

Efe:
- Cuba, which has increased oil production 700% since 1995, plans to increase drilling another 40% this year, according to a adviser at the Ministry of Basic Industries.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (EQIX), target $115.
- Reiterated Buy on (ROST), target $41.
- Reiterated Buy on (WYE), target $63.
- Raised (SKS) to Buy, target raised to $24.
- Reiterated Buy on (LMT), target $108.

Night Trading
Asian Indices are +.75% to +1.25% on average.
S&P 500 indicated -.09%.
NASDAQ 100 indicated -.10%.

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Earnings of Note
Company/EPS Estimate
- (COMS)/.01
- (ATU)/.70
- (BKS)/1.88
- (BGP)/1.60
- (CAG)/.30
- (FRED)/.26
- (GIS)/.70
- (KBH)/.32
- (NKE)/1.32
- (PALM)/.11
- (SCHL)/-.06
- (WSM)/1.04

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- Initial Jobless Claims for last week are estimated to rise to 323K versus 318K the prior week.
- Continuing Claims are estimated to fall to 2545K versus 2576K prior.

10:00 am EST
- Leading Indicators for February are estimated to fall -.4% versus a .1% increase in January.

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

Stocks Finish Sharply Higher as Fed Removes "Tightening" Bias

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Today's Headlines

Bloomberg:
- FedEx Corp.(FDX) said quarterly profit fell for the first time in three years and cut its earnings forecast for the current quarter because of a slowing economy. The shares are 2% lower on the report.
- Fremont General(FMT) will sell $4 billion of loans at a discount to reduce the risk of further losses. The shares are soaring 15% on the report.
- Morgan Stanley(MS) said first quarter profit rose 70% to an all-time high on trading gains and a jump in investment-banking fees. The shares are rising 4.4%.
- Investors in March were the most bearish on US equities since the market bottom in July of last year, a Merrill Lynch survey showed. Cash levels also reached the highest since August of last year.
- Russia is beginning to exert pressure on Iran to obey United Nations demands to stop enriching uranium as a way to disrupt a suspected bomb-development effort.
- Dell Inc.(DELL) said it plans to buy companies to boost its services unit, expanding sales outside its main business of selling PCs.
- Citadel Investment Group LLC, the hedge fund that bought ResMae Mortgage Corp. for $180 million earlier this month, now owns a 4.5% stake in Accredited Home Lenders Holding(LEND).
- Investment firms around the world that take stakes in hedge funds, known as funds of hedge funds, dropped in popularity because of high fees, according to a study by State Street Corp. in Boston. About a third of institutional investors such as pension- and endowment-fund managers said they don’t use funds of funds, up from a quarter a year earlier, State Street said today in its third annual hedge-fund study.
- Monsanto(MON) and BASF AG plan to spend as much as $1.5 billion to develop crops that have higher yields and resist drought.
- Honda, Continental Air, Goldman Sachs and Hewlett-Packard are among the leading companies featured in FORTUNE’s Special Report on “Going Green.”
- Nickel is falling for a third consecutive day in London on speculation the current prices will lead steelmakers to switch to cheaper alternative ingredients.

Wall Street Journal:
- Sales of compact discs plunged 20% to 81.5 million units in the first quarter of this year from a year earlier. Digital sales have risen 54% to 173.4 million songs from a year earlier.
- The US Congress is focusing on improved collection of back taxes.
- A Starbucks Corp.(SBUX) stock drop may set its shares up for a gain as the company’s brand name may be more resilient than investors think.
- Thornburg Mortgage(TMA) top executives have bought more than $5 million in company shares last week after its shares reached a recent low, indicating their confidence in the company.

NY Times:
- Walt Disney’s(DIS) ABC may change the way it interrupts programs for commercials in an effort to retain viewers’ attention when advertising is shown.

NY Daily News:
- Transportation Security Administration officers will board Metro-North and Long Island Rail Road trains to supplement security checks on the busiest US commuter railroads.

AP:
- An Iranian dissident in the US said Iraqi insurgents are being trained for guerrilla warfare in secret camps in Iran with the cooperation of the Islamic Republic’s top leadership.

Financial Times:
- Accredited Home Lenders Holding(LEND) has a chance at survival. A recent loan allows the company to hang onto some of its new loans, rather than selling them at depressed prices.

Economic Releases

- None of note

Links of Interest

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Wednesday Watch

Late-Night Headlines
Bloomberg:
- Asian economies including South Korea and Singapore are likely to expand at a slower pace in the first quarter as easing export orders curb production and consumer confidence ebbs, according to Capital Economics Ltd.
- Vietnam’s stocks are expected to drop 30% or more in coming months because earnings no longer support valuations after a rally that’s made them the world’s best performers, investors at a conference in Hanoi said. The market value of the Vietnam Index is $15.8 billion, up from $500 million at the end of 2005. Five stocks are valued at more than 100 times earnings, according to Vietcombank Securities. A CSFB report last month said net foreign buying on the Ho Chi Minh City bourse in January was about $700 million, larger than the comparable figure in Taiwan, a market 40 times larger than Vietnam.
- China Regulator Is Paper Tiger for Banks Funding Stocks Boom.
- Michael Mayo, the financial services analyst known for his coverage of Citigroup Inc. and JPMorgan Chase(JPM), is leaving Prudential Equity Group to join Deutsche Bank AG.
- Australian Prime Minister John Howard said his government is considering sending more troops to Afghanistan to help NATO forces counter Taliban insurgents.

WAFB:
- Louisiana Governor Kathleen Blanco will announce tonight that she won’t seek re-election.

Economic Times:
- Intl. Business Machines(IBM) is set to win an order of as much as $700 million from India’s Idea Cellular Ltd.

Shanghai Securities News:
- Sixteen steelmakers in China have agreed to suspend imports of iron ore from India after the South Asian nation’s government proposed a duty on shipments. The Indian ore, which is used to make steel and supplies medium- and small-sized steelmakers, accounted for 23% of China’s iron ore imports last year.

JoongAng Ilbo:
- South Korea and the US are seeking to remove North Korea’s plutonium form the country and destroy it overseas, citing a South Korean government official. The plan is one of the final goals in negotiations aimed at dismantling North Korea’s nuclear weapons program.

Late Buy/Sell Recommendations
Citigroup:
- The impact of mortgage market turmoil bears watching given the fluid nature of recent events. However, if we did not have underlying concerns about the state of the sub-prime mortgage holder, data could easily make the case for improvement in aggregate consumer well-being. Net worth rose sharply heading into 2007, mortgage rates have fallen slightly for most borrowers, and bank loans for real estate are growing overall, spurred by refinancing activity. While mortgage delinquencies have been rising for years, derivatives markets looked like a dam breaking in February, which paints an unrealistic view of recent economic developments. The aftermath of reckless lending at mid decade will play out for years whether the issue gets attention or not. But the credit issue looks far from able to generate a new cycle by itself, or drive immediate variation in broad consumer activity.

CSFB:
- The targets laid out for renewable energy growth plus the backdrop of increasing political and consumer concern over both greenhouse gas emissions and energy security, lead us to conclude that we are still only at the start of a multi-year, possibly multi-decade, global investment cycle in low-carbon generation and lower energy intensity. Political support for greater deployment of renewable energy forms is both clear and growing in the EU, in China, in the US and in the UK.

Night Trading
Asian Indices are unch. to +.50% on average.
S&P 500 indicated -.08%.
NASDAQ 100 indicated -.06%.

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
- (AIR)/.37
- (CHRS)/.19
- (FDX)/1.33
- (MKC)/.31
- (MS)/1.87
- (ROST)/.66

Upcoming Splits
- None of note

Economic Releases
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil build of 1,000,000 barrels versus a 1,180,000 barrel increase the prior week. Gasoline supplies are estimated to decline by -2,000,000 barrels versus a -2,486,000 barrel decline the prior week. Distillate supplies are expected to fall by -1,500,000 barrels versus a -2,733,000 barrel fall the prior week. Finally, refinery utilization is estimated to rise .5% versus a -.23% decline the prior week.

2:15 pm EST
- The FOMC is expected to leave the benchmark Fed Funds rate at 5.25%.

BOTTOM LINE: Asian indices are higher, boosted by mining and technology shares in the region. I expect US equities to open mixed and to rally into the afternoon, finishing modestly higher. I also expect the FOMC to leave the benchmark Fed Funds rate at 5.25%, make more dovish comments and maintain their policy bias towards tightening. The Portfolio is 100% net long heading into the day.