Today's Headlines

Bloomberg:
- China’s corn exports may drop as the country’s ethanol production rises more than 300% by 2010, according to the head of the China National Grain and Oils Information Center.
- Gold is falling $5.40/oz., resuming a decline that sent prices last week to their lowest level since March, on concern that higher global interest rates may cut demand for the metal as an alternative investment.
- Crude oil is falling $.60/bbl. on speculation that an Energy Dept. repot tomorrow will show US fuel inventories increased as refiners boosted operating rates.
- Copper in NY declined for the fifth time in six sessions, falling another 2.3%, as imports by China, the largest consumer of the metal, tumbled in May.
- The 10-year T-note yield is rising 7 basis points after reports in China and Japan showed consumer and producer prices rising, which the head of the UK central bank signaled borrowing costs may need to rise to keep inflation from accelerating.
- The US dollar is posting its longest rally against the euro since October as speculation increased that the Fed will hold interest rates steady this year as the economy accelerates.
- Lehman Brothers(LEH) said profit rose 27% to a record as a rally in stocks fueled equity trading and investment-banking revenue increased.

Wall Street Journal:
- European Central Bank policymakers are at odds over the part money-supply growth plays in price inflation, indicating that there’s no unanimity about how much to raise interest rates.
- UK entrepreneur Richard Branson plans to start an Internet marketplace called Virgin Charter, which will match passengers with companies that charter private jets.
- A large Bear Stearns(BSC) hedge fund has dropped 23% from the beginning of the year through late April as it was hit by problems with the US subprime mortgage market.
- The US plans to direct $200 million to provide small business loans in Latin America and help counter anti-capitalist sentiment in the region.
- Valero Energy(VLO), the largest US refiner, ConocoPhillips(COP) and Tesoro Corp.(TSO) have put on hold or canceled refinery expansions because of higher costs and worries over demand. The delays have helped boost gasoline prices to records and may put the industry under added criticism from consumer groups and Congress for not doing anything to boost capacity after record profits.
- Time Warner’s(TWX) Warner Bros. unit plans to release selected movies to video-on-demand services the same time they come out on DVD.
- Charles Schwab(SCHW), TD Ameritrade(AMTD) and other brokers are making it easier for individual investors to buy bonds.

NY Times:
- Seventeen executives have left Yahoo! Inc.(YHOO) since December, when CEO Semel reorganized the company into three units.
- Dog breeders who use genetics to produce pups with certain qualities are also breeding in health problems.
- Google Inc.(GOOG) will soon begin testing with Walt Disney(DIS) and Time Warner(TWX) a system that blocks copyrighted material from being uploaded onto its video-sharing Web site YouTube.

Washington Post:
- Senator Hillary Clinton’s lead over Senator Barack Obama in the race for the 2008 Democratic presidential nomination is largely due to her support from lower income, less educated women. Obama received more support from highly educated women, according to a recent Washington Post-ABC News poll.

NY Daily News:
- NY may sell resident-only permits to prevent outsiders from parking in neighborhoods as a way to avoid a proposed fee for driving into Manhattan.

Financial Times Deutschland:
- Google Inc.(GOOG) plans to start European versions of its YouTube video-sharing Web site.

Economic Daily News:
- AU Optronics(AUO) and Innolux are developing touch-panel technologies as they attempt to get orders for Apple’s iPhone.

Ham Mihan:
- A group of 57 Iranian economists has written a letter to President Mahmoud Ahmadinejad, warning about the “heavy costs” of the government’s economic policies which “lack scientific basis.”

Economic Releases

- None of note

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

Tuesday Watch

Late-Night Headlines
Bloomberg:
- The Senate unanimously voted to take up energy legislation that would raise US car fuel economy standards and increase the use of alternative fuels in an effort to reduce oil consumption.
- House Speaker Nancy Pelosi is losing support with Americans who don’t see Congress producing any real change. A 39% plurality of Americans disapprove of the California Democrat’s performance, according the latest Bloomberg/LA Times national survey; 36% approve. In January, the new speaker scored a 34% to 21% favorable rating.
- Texas Instruments(TXN) said second-quarter sales and profit will miss its highest estimates as demand for handsets and calculators declines. The stock fell $.70/share to $35.10 in after-hours trading.
- An index of energy and raw materials prices paid by companies in Japan rose 2.2% in May from a year earlier after climbing 2.3% in April, the Bank of Japan said.
- The yuan had the biggest gain in a month before the US Treasury Dept. is scheduled to name currency manipulators in a semiannual foreign-exchange report.
- The US dollar may strengthen for a fifth day against the euro as reports this week will probably show US economic growth is recovering, making an interest-rate cut this year less likely.
- Inflation in China accelerated in May, increasing the likelihood that interest rates will be raised. Consumer prices gained 3.4% from a year earlier versus a 3.0% rise in April and estimates of a 3.3% gain.

Wall Street Journal:
- Dow Jones’(DJ) controlling Bancroft family is expected to send News Corp.(NWS/A) a new list of proposals for creating a board that would ensure editorial independence at the Wall Street Journal.

DigiTimes:
- United Microelectronics and Texas Instruments(TXN) are jointly developing 45-nanometer and 32-nanometer chipmaking technology, citing Jackson Hu, the Taiwan company’s chairman.

Financial Times:
- The growth of cities in China has “devastated” the country’s historical buildings and cultural heritage, citing Qiu Baoxing, vice-minister for construction.

Daily Telegraph:
- Royal Bank of Scotland Group Plc and Bank of America Corp.(BAC) are understood to be approaching agreement over how to split ABN Amro Holding NV’s US division, LaSalle.

China Daily:
- About 60% of cities in China have polluted air and lack centralized sewage systems.

South China Morning Post:
- China suspended approvals of overseas listings by private companies because it wants them to sell shares to domestic investors.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (SNDK), target $52.

Morgan Stanley:
- Reiterated Overweight on (AAPL), target $150.

Night Trading
Asian Indices are -.25% to +.50% on average.
S&P 500 indicated -.12%.
NASDAQ 100 indicated -.12%.

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 Business/Economy Polling
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
- (FNSR)/.02
- (LEH)/1.87
- (SAPE)/.03
- (STEI)/.12
- (ROLL)/.41

Upcoming Splits
- (CROX) 2-for-1
- (WMS) 3-for-2
- (ADVNA) 3-for-2
- (BNHN) 3-for-2
- (BWLD) 2-for-1
- (MIDD) 2-for-1
- (PEBK) 3-for-2

Economic Releases
2:00 pm EST
- The Monthly Budget Statement for May is estimated to widen to -$70.0 billion versus -$42.9 billion in April.

Other Potential Market Movers
- The Fed’s Moskow speaking, Fed’s Lockhart speaking, former Fed head Greenspan speaking, weekly retail sales reports, JPMorgan Basics/Industrials Conference, Goldman Sachs Global Healthcare Conference and Bear Stearns Tech/Communications/Internet Conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by commodity stocks in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.

Stocks Finish Mixed as Rise in Rates, Oil Offsets Short-covering, Bargain-hunting

Market Performance Summary
Market Gauges
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
After-hours Stock Quote
In Play

Stocks Higher into Final Hour on Bargain-hunting, Short-covering

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my I-Banking longs, Medical longs and Software longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is neutral as the advance/decline line is mixed, sector performance is mixed and volume is about average. The 10-year yield is down 2 basis points from today's highs. This is helping to boost the major averages near session highs. As I said last week, I suspect that we have seen the highs for the year in the 10-year yield at 5.24% last Thursday morning. The most recent COT report showed large speculators cut their net long position in the 10-year significantly last week. Moreover, I expect this week's economic data to help bring rates back down. I still think there is a good chance that the 10-year yield can touch 5% again by week's end. Finally, I wouldn't be surprised to see another bout of commodity weakness in anticipation of another interest rate hike in China, which will further reduce diminishing inflation worries. I increased my core iShares Lehman 20+ Year Treasury Bond (TLT) long meaningfully into last week's weakness. I expect falling rates and better-than-expected earnings reports to propel stocks to new record highs over the coming weeks. I expect US stocks to trade mixed into the close from current levels as bargain hunting and short-covering offsets higher energy prices and profit-taking.