Today's Headlines

Bloomberg:
- US stocks rallied for a third day on diminishing concern that mortgage losses will hurt earnings at homebuilders and banks and after Cisco Systems(CSCO) increased its sales forecast.
- Citigroup(C), the largest US bank, and food maker Kraft Foods(KFT) led at least 13 companies taking advantage of a renewed appetite for debt in the busiest day in a month.
- Lehman Brothers(LEH) led the biggest increase in the Amex Securities Broker/Dealer Index since June 2006, as investors bought beaten down shares.
- President Bush said the US economy is “thriving” and he criticized congressional Democrats for crafting tax-and-spend programs that he said may derail growth or disrupt the path to a balanced federal budget.
- Blackstone Group LP(BX) raised $21.7 billion for the world’s biggest private-equity fund, just as a global credit crunch slows leveraged buyouts.
- Nokia Oyj(NOK) will retreat from most development of chips in handsets and put four semiconductor makers including Texas Instruments(TXN) in charge of the designs to help cut costs.
- Mortgage applications in the US rose last week by the most since January, as cheaper borrowing costs encouraged more Americans to seek loans for home purchases and refinancing.
- Copper is falling in NY to the lowest in six weeks as global inventories of the metal jumped the most since 2005, easing supply concerns.
- Sugar is falling to a three-week low in NY on speculation that supplies from Brazil and India, the world’s biggest producers, will expand a glut of the sweetener.
- Uranium prices, which have plunged by 20% in the past 10 weeks, may fall as low as $95 a pound in the “next few months,” said Troika Dialog, Russia’s oldest investment bank.

Wall Street Journal:
- Walt Disney’s(DIS) ESPN may say today that it will revamp its ESPN360.com all-video Internet site, aiming to draw new viewers with more live programming.

NY Times:
- Roadside bombs supplied by Iran caused 23 of 69 combat deaths suffered by US-led forces in Iraq last month, citing Lieutenant General Raymond Odierno, the No. 2 US commander in Iraq.

NY Post:
- Democratic Governor Eliot Spitzer wants illegal immigrants to have access to protective services without facing the risk of deportation.

Washington Post:
- The US and Mexico are close to reaching an agreement for an aid package aimed at combating drug cartels in Mexico, citing US lawmakers, congressional aides and Mexican officials.

CNBC:
- Bear Stearns(BSC) CEO Cayne is planning to go to China in the next few weeks to look for a joint-venture partner or a partnership that would lead to a strategic investment in the company, Charles Gasparino reported.

Chronicle of Higher Education:
- An English-language university in North Korea is nearing completion and its backers hope it will open next spring.

Daily Telegraph:
- China suggested it will sell holdings of Treasuries should the US congress impose trade sanctions to force a yuan revaluation, citing two Chinese officials.

Wholesale Inventories at Record Lows, Sales Rise Again

- Wholesale Inventories for June rose .5% versus estimates of a .4% gain and a .5% increase in May.

BOTTOM LINE: Sales at US wholesalers rose faster than inventories in June, making it likely companies will continue to rebuild stocks, Bloomberg reported. Sales rose .6% versus a 1.3% gain in May. Distributors had 1.1 months worth of goods on hand at the current sales pace, matching the all-time low. Computer and hardware distributors showed the biggest gains in sales versus inventories. Sales of computer equipment jumped 5.4% in June. Sales of petroleum products fell 1.0%. I still believe inventory rebuilding will continue to help boost overall US economic growth over the intermediate-term as companies gain confidence in the sustainability of the current expansion.

Links of Interest

Market Snapshot Commentary
Market Performance Summary
Style Performance
Sector Performance
WSJ Data Center
Top 20 Biz Stories
IBD Breaking News
Movers & Shakers
Upgrades/Downgrades
In Play
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
Option Dragon
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Intraday Chart/Quote
Dow Jones Hedge Fund Indexes

Wednesday Watch

Late-Night Headlines
Bloomberg:
- The risk of owning corporate bonds fell again as the Federal Reserve said economic expansion will continue, according to credit-default swap traders.
- Cisco Systems(CSCO), the world’s largest maker of computer-networking equipment, said profit rose 25% as customers spent more on high-speed Internet gear. The company forecast sales that beat estimates, sending the shares 6% higher in after-hours trading.
- Priceline.com(PCLN), the online travel agency, reported second-quarter earnings that exceeded analysts’ estimates. The stock soared 10% in extended trading.
- Posco, Asia’s third-biggest steelmaker, cut prices of its stainless steel products for a third time this year after the cost of nickel, a key raw material, declined. Nickel prices have plunged 44% since May 4.
- Australia’s central bank raised its benchmark interest rate a quarter point to the highest in almost 11 years.
- The yen declined on speculation a gain in Asian stocks will give investors confidence to resume borrowing in Japan to buy higher-yielding assets.
- Japanese companies plan to order more machinery in the third quarter to increase production as the global economy expands.

Wall Street Journal:
- Apple’s(AAPL) New iMacs Aim for Windows Users.

MarketWatch.com:
- Pakistan, Venezuela and Nigeria are among the most unstable emerging markets and rank the lowest on Eurasia Group's Global Political Risk Index, a political stability ranking for 24 emerging markets.
- Apple Inc. unveiled new additions to its line of iMacs Tuesday, showing the company's continued presence in the PC space despite the recent hoopla over consumer electronics products such as the iPod and iPhone.

NY Times:
- More Generics Slow the Surge in Drug Prices.
- Cooking Up More Uses for the Leftovers of Biofuel Production.
- The Seattle office market has made a spectacular recovery in the last few years. As a result many real estate investors want to park their money there.

Financial Times:
- Vodafone Group Plc is about to announce that it won’t exercise its right to sell part of its Verizon Communications(VZ) stake, valued at as much as $10 billion.
- Hedge funds hit critical list worldwide.
- A price war took hold of the US gaming market on Tuesday when Microsoft(MSFT) followed Sony’s(SNE) move last month to reduce the price of its core console.

International Finance News:
- China had a $120.9 billion increase in foreign reserves in the first half, most of it due to so-called “hot money,” citing figures from the customs department and the commerce ministry.

Xinhua News Agency:
- China seized more than 6,000 pieces of counterfeit jewelry inscribed with the Tiffany & Co.(TIF) name, citing local customs officials.

Late Buy/Sell Recommendations
Citigroup:
- Cisco Systems’ strong 4Q07 results add confidence to the outlook for communications IC suppliers exposed to the enterprise networking vertical. These are (IDTI), (XLNX) and (ALTR) in our universe.
- Reiterated Buy on (AKAM), target $58.
- Reiterated Sell on (TYC), target lowered to $45.

Morgan Stanley:
- Reiterated Overweight on (EMR), target raised to $54.

Night Trading
Asian Indices are +.25% to +1.75% on average.
S&P 500 futures +.17%.
NASDAQ 100 futures +.46%

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
Macro Calls
Upgrades/Downgrades
Rasmussen Business/Economy Polling
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
- (AAP)/.66
- (AIG)/1.61
- (ACF)/.62
- (AQNT)/.20
- (BRL)/.71
- (CELL)/.15
- (CVC)/-.02
- (CECO)/.26
- (FLS)/.86
- (FTO)/1.64
- (GGC)/.26
- (HANS)/.37
- (INSP)/-.11
- (JBX)/.89
- (LAMR)/.21
- (NWS/A)/.27
- (RL)/.85
- (BID)/1.47
- (S)/.22
- (STN)/.56
- (TOL)/.17

Upcoming Splits
- (HCSG) 3-for-2

Economic Releases
10:00 am EST
- Wholesale Inventories for June are estimated to rise .4% versus a .5% gain in May.

10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil drawdown of -2,750,000 barrels versus a -6,497,000 barrel decline the prior week. Gasoline supplies are expected to rise by 775,000 barrels versus a 586,000 barrel build the prior week. Distillate supplies are estimated to rise by 1,775,000 barrels versus a 2,889,000 barrel build the prior week. Finally, Refinery Utilization is expected to remain unch. versus a 1.96% gain the prior week.

Other Potential Market Movers
- The Fed’s Stern speaking, weekly EIA energy inventory report, weekly MBA Mortgage Applications report, CSFB Electric Equipment & Multi-Industry Conference, RBC Technology Conference and Canaccord Adams Global Growth Conference could also impact trading today.

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

Stocks Finish Higher on More Economic Optimism After FOMC Comments

Evening Review
Market Performance Summary
WSJ Data Center
Sector Performance
ETF Performance
Style Performance
Commodity Movers
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Commentary
After-hours Movers
After-hours Stock Quote
In Play

Stocks Building on Yesterday's Sharp Gains into Final Hour as Fed Leaves Rates Unch., Emphasizes Economic Strength

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Retail longs, Biotech longs and Internet longs. I have not traded today, thus leaving the Portfolio 100% net long. The overall tone of the market is slightly positive today as the advance/decline line is slightly higher, most sectors are higher and volume is heavy. My intraday gauge of investor angst is still elevated. The ISE Sentiment Index hit an all-time low of 39.0 this morning. It is extraordinary that this gauge of retail option trader sentiment this morning was showing more bearishness than during the major bear market lows during late 2002/early 2003. As well, the CBOE total put/call hit a very high 1.39 again this morning. The 10-day moving average remains near record levels. The VIX is down today but is still near levels last seen in 2003. Stocks are building on yesterday's strong gains. A Luminent Mortgage Capital (LUM) bankruptcy looks likely, and Goldman Sachs (GS) said that its Global Alpha fund is down 16% year-to-date, yet the financials are solidly higher. The financials ignoring new negative news is a significant positive for the broad market and a prime example of how much bad news is already factored into stock prices at current levels. The S&P 500 forward P/E is now 15.5, down from 16.1 at the beginning of the year despite earnings substantially beating estimates once again. Median S&P 500 earnings growth for second quarter is on pace to exceed first quarter's rate and come in at double-digit rates once again. As well, it is interesting to note the very positive comments recently from Harrah's Entertainment (HET) and Wynn Resorts (WYNN) regarding Las Vegas traffic trends. Urban Outfitters (URBN) said that second-quarter sales jumped 22%, with same-store-sales up 5%. Last night, after the close, Citigroup (C) had positive comments regarding the prospects for a better-than-expected back-to-school selling season. Finally, a Rasmussen poll today showed 70% of consumers think economic conditions are fair-to-excellent vs. 28% that view them as poor. This corresponds with the recent cycle high reached in the Conference Board's Confidence Index. These are just more data points that don't indicate the imminent collapse in consumer spending that is partially being factored into stocks at current levels. “Growth” stock leaders are especially strong again today, with many posting 1%-3% gains. I expect US stocks to trade modestly higher into the close from current levels on short-covering, more economic optimism and bargain hunting.