Today's Headlines

Bloomberg:
- Corn and soybeans may fall in Chicago as rains and cool weather aid reproduction of the two biggest US crops. Wheat may fall as drier weather firms muddy fields and allows increased harvesting in the Great Plains.
- US Treasuries are falling the most in a week today as a drop in a measure of the perceived risk of owning US corporate bonds reduced demand for the safety of government debt.
- Apple Inc. ran out of iPhones at more than half its stores less than a week after introducing the combination iPod music player and handset in the US. Buyers emptied outlets in 10 states, with 95 of 164 stores reporting sellouts last night, according to Apple’s web site.
- Billionaire Nelson Peltz said his Triarc Cos. investment company is considering a bid for Wendy’s Intl., the third-largest US hamburger chain.
- SAP AG(SAP) said it made “inappropriate” downloads of Oracle Corp.(ORCL) code, responding to a lawsuit that claims the German company stole programs from its competitor.

Wall Street Journal:
- KLM Royal Dutch Airlines, Eli Lilly and Britain’s Royal Mail Group Plc are among companies that are experimenting with letting employees pick their own computers or electronic equipment.
- Bear Stearns(BSC) intends to strengthen risk controls in its money-management business.
- More companies are using electronic signatures, or “e-signatures,” as a way of cutting costs and reducing fraud.
- Kana Software, Teneros Inc. and some other US technology companies are scaling back software development in India because salaries there have risen to as much as 75% of those in California’s Silicon Valley.

NY Times:
- Companies are adding “chief sustainability officers” and similar positions to their executive rosters. As well as ensuring environmentally sound practices, these executives work to discourage regulation and try to identify ways companies can make more money or improve their brands through “green” initiatives.

Washington Post:
- US officials say the next terrorist attack in the country will probably be similar to the failed attempts in Britain last weekend. Unsophisticated, simultaneous stacks by groups indirectly linked to al-Qaeda are difficult to prevent and are aimed at causing widespread panic rather than mass casualties, citing US intelligence and counter-terrorism officials.

Handelsblatt:
- German Chancellor Angela Merkel said the German armed forces should be given more scope to help police defend the country against terrorist attacks.
- The German government wants to boost subsidies for planemaker Airbus SAS, citing a draft of the 2008 budget law.

Ham Mihan:
- A black market in gasoline is emerging in Iran after the government imposed rationing, with fuel being sold for about six times the official price.

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Tuesday Watch

Late-Night Headlines
Bloomberg:
- Fremont General Corp.(FMT), whose loans to risky borrowers helped trigger the subprime mortgage crisis, named Alan W. Faigin as interim president and chief executive officer of its banking unit, replacing Kyle R. Walker.
- Apple Inc.(AAPL) sells its new iPhone handsets at more than double production costs, according to estimates by ISuppli Corp., a technology industry researcher. Excluding costs for logistics and royalties, Apple generates margins exceeding 55%. Apple will probably sell 4.5 million iPhones this year and more than 30 million units by 2011.
- China’s production of coal increased 7.1% to 1.1 billion metric tons in the first six months from a year ago.
- Australian police arrested an eighth suspect in connection with a terrorist attack on Glasgow International Airport and two attempted car bombings in London.
- Australia’s retail sales unexpectedly declined in May and building approvals slumped to a six-year low, signaling the central bank will leave interest rates unchanged tomorrow. The nation’s currency fell.

Wall Street Journal:
- Larry Ellison became a billionaire by making Oracle Corp. a giant in business software. Now he is poised to get even richer from a start-up that could compete with Oracle. NetSuite Inc., an Ellison-backed company, yesterday filed plans for an IPO.
- Investment firm Leonard Green & Partners LP said it has agreed to acquire a majority stake in closely held Container Store Inc., the latest in a string of acquisitions of retailers by private money.

Reuters:
- Treasury Secretary Henry Paulson reiterated his view that the US housing market may be past its worst, citing an interview. “In terms of looking at housing, most of us believe that it’s at or near the bottom,” Paulson said.

Financial Times:
- 750,000 a year killed by Chinese pollution. Beijing engineered the removal of nearly a third of a World Bank report on pollution in China because of concerns that findings on premature deaths could provoke “social unrest.

China Securities Journal:
- China’s securities brokerages earned commissions of more than $11.3 billion in the first half as the country’s stock market soared. Investors opened more than 18.7 million brokerage accounts for trading yuan-denominated A-shares listed on China’s two exchanges in the period, 650% the number opened in all of 2006.

Late Buy/Sell Recommendations
- None of note.

Night Trading
Asian Indices are +.50% to +1.0% on average.
S&P 500 indicated +.10%.
NASDAQ 100 indicated +.13%.

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Earnings of Note
Company/EPS Estimate
- None of note

Upcoming Splits
- (CXW) 2-for-1

Economic Releases
10:00 am EST
- Pending Home Sales for May are estimated to rise .5% versus a -3.2% decline in April.
- Factory Orders for May are estimated to fall -1.2% versus a .3% gain in April.

Afternoon:
- Total Vehicle Sales for June are estimated to rise to 16.3M versus 16.2M in May.

Other Potential Market Movers
- Weekly retail sales reports could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by automaker and technology stocks in the region. I expect US equities to remain mixed throughout the day. The Portfolio is 100% net long heading into the day.

Stocks Finish Near Session Highs on Falling Long-term Rates, More Economic Optimism

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Stocks Sharply High into Final Hour on Falling Long-term Rates, More Economic Optimism, Short-Covering

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my I-Banking longs, Internet longs, Retail longs, Medical longs and Biotech longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is higher, almost every sector is gaining and volume is about average. I went to an Apple(AAPL) store and an AT&T(T) store over the weekend. The AT&T store was packed, and they were already out of stock of the iPhone on Saturday morning and directing people to the Apple Store. Apple appears to have done this intentionally and it seems like a good strategy. The Apple Store was packed on Sunday evening 30 minutes before the mall closed. There were about 50 people huddled around the iPhone display that had about 10 phones for demonstration. There were another 50 customers in the store checking out Macs and Apple TVs. The first thing that struck me about the iPhone was the design. It is a quantum leap from the current calculator look of most smart phones. It is ultra sleek and feels very well made. I am quite certain well-heeled trendsetters will love this phone. The real key to iPhone’s future success is the operating system, in my opinion. It is very easy to use, visually superior and performs flawlessly. It will likely take the competition a couple of years at least to catch up with this operating system. I use the internet quite often on my 8525, which is on AT&T's 3G network. The iPhone display models were using the store's wifi network. The internet was significantly faster than my 3G surfing experience and I am sure a 3G iPhone isn’t too far away. The iPhone browser is far superior to any others, in my opinion. The integration of YouTube and Google Maps is very impressive. The bottom line is that, in my opinion, the ramifications of this phone to the competition are still underestimated, notwithstaning the recent hype. If I were a long-term investor in Research In Motion(RIMM), I would be very concerned. As well, I think this phone could put a major manufacturer out of the business completely. A few tweaks, new functions and price drops and this phone will dominate the market like no other manufacturer ever has, in my opinion. Of course the competition won't stand still, but the operating system puts them so far behind it will be very hard to catch up. Finally, the "halo" effect is larger than ever. I continue to believe that Apple's future has never looked brighter and that even the most optimistic analysts are underestimating the company's financial prospects. At 33x forward conservative estimates, I still think the stock has substantial upside left from current levels. Apple remains my second-largest long position, right behind Google Inc.(GOOG). I expect US stocks to trade mixed-to-higher into the close from current levels on lower long-term rates, more economic optimism, bargain-hunting and short-covering.

Today's Headlines

Bloomberg:
- Russian President Putin, meeting with President Bush today, offered broader talks with the US and Europeans about a missile-defense system that Putin said could include a new Russian radar.
- Apple’s initial iPhone sales may have beat analysts’ top projections, suggesting CEO Jobs will reach his goal of making mobile phones as profitable to the company as computers and the iPod.
- The US, Norway and Sweden are the world’s most prosperous nations while Zimbabwe, Pakistan and Egypt score lowest for material wealth and life satisfaction, Legatum Global Holdings said in a study published today.
- The 10-year T-note yield is falling another 2 basis points today on diminishing inflation fears and elevated terrorism worries. The yield has plunged 32 basis points in just a few weeks.
- Walgreen Co.(WAG), the largest US drugstore chain, agreed to buy Option Care(OPTN) for $673 million in cash to gain 100 specialty pharmacies.
- Solarworld AG, Germany’s second-largest solar-energy company, said it won more than $677 million in orders as demand for renewable power jumps.
- China, the world’s second-largest corn producer, raised its forecast for this year’s harvest to a record as farmers planted more of the grain than previously estimated.
- Jim Rogers, chairman of Beeland Interests, says he’s sold out of emerging markets, with the exception of China.
- Trump Entertainment Resorts(TRMP), the casino company founded by real estate developer Donald Trump, failed to find a buyer after a three-month search, sending its shares to the biggest drop in two years.
- Charles Schwab(SCHW), the biggest discount brokerage, will spend $3.5 billion to give shareholders a special $1-a-share dividend and pay for its biggest stock buyback after selling the company’s private-banking unit.
- Manor Care Inc.(HCR), the operator of more than 500 long-term care centers, agreed to be taken private by Carlyle Group for about $4.9 billion, 20% more than the market value in April when the company put itself up for sale.

Wall Street Journal:
- Possible terrorist supporters, drugs suppliers and those looking to violate sanctions agreements may be turning to the commodities trade as a way of moving illicit funds.
- China’s food supply may be contaminated by heavy metals after decades of industrial pollution.
- Quiksilver(ZQK) may sell its Rossignol ski-equipment unit.
- Robert McGee, the chief economist at US Trust Corp., came in first in the Wall Street Journal’s forecaster rankings for the second time in six months.

USA Today:
- The US Defense Department approved a 700% increase in the production of special vehicles to protect Army soldiers in Iraq from roadside bombs.

NY Daily News:
- NYC’s murder rate fell 15% to 221 through June 24, a decline that may give the city the lowest number of homicides in more than 40 years, citing the city police department.

AP:
- Disbarred prosecutor Mike Nifong submitted a new resignation letter today in which he agreed to immediately leave as Durham County district attorney.

Dealogic:
- Europe is leading the world in IPOs so far this year, as companies in Kazakhstan and Russia join those in Western Europe in listing on European exchanges.

Shanghai Securities News:
- China’s mutual funds jumped 77% in net asset value in the first six months of this year compared with the end of 2006.