Today's Headlines

Bloomberg:
- Hartford Financial Services Group(HIG), the sixth largest US insurer by market value, said worsening hedge fund results will reduce yields on its so-called alternative investments by at least half in the third quarter.
- Crude oil in NY is rising to a record $80.50/bbl. in NY as investment fund speculation rises ahead of a potential Fed rate cut that may bolster the economy.
- AOL, the Internet division of Time Warner(TWX), will move its corporate headquarters to NY and set up a network to help advertisers purchase online ads and track the effectiveness of their campaigns.
- Newell Rubbermaid Inc.(NWL), the maker of Graco baby buggies and Rolodex organizers, raised its full-year earnings and third-quarter sales forecasts, sending the shares toward their biggest gain since April 2006.
- An unfounded concern that the US economy will slip into a recession has pushed some stocks down too far, investor Laszlo Birinyi said.
- ITT Corp.(ITT), the world’s largest maker of night-vision goggles and pumps, agreed to purchase EDO Corp.(EDO) for about $1.58 billion in cash to bolster its defense electronics and communication services.

Wall Street Journal:
- Nokia(NOK) Agrees to Buy Cellphone-Ad Firm.
- BASF AG, the world’s biggest chemical company by sales, is ready to start buying businesses after a year of waiting on the sidelines, citing Kurt Bock, the company’s CFO.
- Time Warner Inc.(TWX) will confirm Jeffrey L. Bewkes as CEO before the end of the year.
- Paetec Holding last night sealed a deal to purchase telecom provider McLeodUSA for $492 million, marking the end of independence for one of the leading lights of the dot-com boom.
- Dartmouth College, Brigham Young University and Spain’s ESADE led the national , regional and international rankings of corporate recruiters’ favorite graduate schools of business in a Wall Street Journal/Harris Interactive survey.

China Securities Journal:
- PetroChina Co. will invest $1.33 billion in renewable energy sources, including coal-bed methane, wind and geothermal projects, by 2020, citing a company executive.

Arab News:
- Sheikh Salman ibn Fahad al-Oudah, a popular Saudi religious scholar, criticized Osama bin Laden’s negative impact on the global image of Islam and questioned violent tactics used by al-Qaeda in Iraq and Afghanistan, citing al-Oudah.

Empire Manufacturing Decelerates, Still Expanding

- Empire Manufacturing for September fell to 14.7 versus estimates of 18.0 and a reading of 25.1 in August.

BOTTOM LINE: The pace of manufacturing in NY slowed in September as factories shipped fewer goods and new orders declined, Bloomberg reported. The Empire Outlook for the next six months fell slightly, but at 48.8 is still near August’s two-year high of 50.4. The new orders component fell to 13.6 from 22.2 the prior month. The prices paid component rose to 35.1 from 34.4 in August. The 10-year yield is rising 3 basis points on the report as it still shows relatively healthy manufacturing activity in the region. I continue to believe manufacturing will continue to help boost overall economic growth as companies gain confidence is the sustainability of the current expansion and restock depleted inventories.

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Monday Watch

Weekend Headlines
Bloomberg:
- Former Federal Reserve Chairman Alan Greenspan told CBS’s “60 Minutes” program that he expects the US economy to withstand declining home values.
- China will need to follow the fifth interest rate increase this year with further tightening to curb the fastest inflation since 1996 and damp speculation in stocks and real estate, economists and analysts said.
- European finance ministers and central bankers said they would resist overreacting to turbulence in financial markets by rushing to impose unwieldy regulations.
- Treasury two-year note yields posted their biggest gain in five months as speculation eased that the Fed will lower its target rate by as much as half a percentage point.
- RWE AG, Germany’s second-largest utility, plans to invest “massively” to develop wind-generated electricity in France.
- Leap Wireless Intl.(LEAP), the provider of Cricket and Jump mobile-phone service, rejected a $4.7 billion takeover offer from larger rival MetroPCS Communications, calling the price too low.

Wall Street Journal:
- Blue Chips Record Best Week Since April Despite Oil’s Rise.
- Thirteen years after Hillary Rodham Clinton’s plan for heal care went down to disastrous defeat, she is back with a new proposal that again seeks to cover all Americans but reflects some lessons learned.
- Contract negotiations resumed Sunday between General Motors(GM) and the UAW union following widespread reports of progress over the weekend but with several tough issues remaining.
- The Dept. of Justice has launched an antitrust investigation of the market for flash memory, the chips used to store data in digital cameras, music players and other gadgets.

NY Times:
- Two surgeons who developed prosthetic heart valves that have prolonged the lives of millions of people are among the winners of this year’s Lasker awards, widely considered the nation’s most prestigious medical prizes.
- Many young people of the fast track to fat paydays in the financial industry are choosing to forgo MBA programs.
- Dream kitchens may soon include a computer along with the latest refrigerator or oven.
- REITs, Down Sharply, May Be a Good Buy.
- The future of XM, With or Without a Sirius Merger.

Barron’s:
- Michael Rothman, an analyst at International Strategy & Investment in NY, expects the price of oil will decline to as low as $45/bbl. on slowing demand, citing an interview.

MarketWatch.com:
- When Microsoft(MSFT) releases Halo 3 to video-game zealots later this month, the newest generation of the company’s popular action game is widely expected to shatter sales records.
- ABN Amro’s board declined to endorse either of two takeover offers the Amsterdam banking giant has received.
- Sina(SINA) aims at Baidu(BIDU) with blogger ads.
- Home Depot(HD), Enterprise Products(EPD) and Brookdale(BKD) make dividend fund’s ‘buy’ list.

Boston Globe:
- Massachusetts Governor Deval Patrick plans to propose as early as tomorrow that the state sell licenses for three resort casinos.

BusinessWeek.com:
- Homebuilders: Hitting Bottom at Last?

CNNMoney.com:
- Don’t believe the Yahoo(YHOO) takeover hype.
- Mortgage rates tumble.

LA Times:
- Tribune(TRB) may consider selling its Chicago Cubs baseball team in separate pieces to get more money and limit the influence of Major League Baseball’s authority over the sale.

Rocky Mountain News:
- Crocs Inc.(CROX), the maker of colorful casual footwear, plans to introduce new high-fashion style to expand beyond its popular clogs.

CNN:
- Former NFL star OJ Simpson and a second man were arrested in the alleged armed robbery of sports memorabilia at a Las Vegas hotel.

Washington Post:
- The number of foreign fighters traveling to Iraq from Syria has fallen to “half or two-thirds” the 80 to 90 monthly average of two or three months ago, Army General David Petraeus, the US commander in Iraq said.

Reuters:
- Business Objects(BOBJ), a French-American business intelligence software maker, is looking for a buyer and has appointed Goldman Sachs(GS) to find an investor.
- Next week’s IPOs: Just what the doctor ordered?

AP:
- The leader of al-Qaeda in Iraq offered $100,000 to kill Swedish cartoonist Lars Vilks for making images deemed insulting to Islam.

Financial Times:
- The $80 record crude oil prices are not sustainable as they are not supported by market fundamentals, OPEC said.
- Lehman(LEH) earnings first real signal of credit hit.
- Only three strategies adopted by hedge funds appear to have survived unscathed the rout of the sector last month, as the “absolute return” industry again mostly failed to protect investors against the market turmoil.
- France calls for Iran investment boycott.
- Chinese companies listed on the NYSE such as PetroChina Co. and China Mobile Ltd. have poor quality earnings, quoting an independent research firm.

Financial Times Deutschland:
- Deutsche Telekom AG’s T-Mobile unit will have the exclusive rights to sell Apple’s(AAPL) iPhone in five European countries.

WirtschaftsWoche:
- SAP AG(SAP) will unveil a new package of software for mid-sized businesses as it seeks to expand its product portfolio, citing CEO Kagermann.

Le Monde:
- A quick withdrawal of US troops from Iraq would have “devastating consequences,” Iraqi Foreign Minister Hoshyar Zebari said. Such a withdrawal could “blow up into a genuine civil war” and allow terrorist group al-Qaeda to establish a base in Iraq, Zebari said.

Australian:
- National Australia Bank Ltd., the nation’s largest, may be a potential buyer for the UK’s Northern Rock Plc, citing analysts.

Kyodo News:
- Eighty percent of 100 major Japanese companies expect the country’s economy to expand “moderately,” according to a survey by Kyodo.

Notimex:
- Mexican industrial companies are losing $150 million a day from factory shutdowns after six bomb blasts damaged government-owned natural-gas pipelines, cutting supply of the fuel.

Etemaad:
- Iran has “finalized” oil and gas projects with China and is seeking annual two-way trade of $20 billion by the end of 2007, citing Interior Minister Mostafa Pour Mohammadi.

Arab News:
- A group of Saudi Arabian women will send a petition to the government asking for the legal right to drive cars in the kingdom, citing a copy of the petition.

Weekend Recommendations
Barron's:
- Made positive comments on (NOK) and (PNCL).
- Made negative comments on (RDN).

Night Trading
Asian indices are -.25% to unch. on average.
S&P 500 futures -.26%.
NASDAQ 100 futures unch.

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Earnings of Note
Company/Estimate
- (ADBE)/.40
- (FNM)/.70

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- Empire Manufacturing for September is estimated to fall to 18.0 versus 25.1 in August.

Other Potential Market Movers
- The (KCI) analyst meeting, (ADVS) Investor Day, Former Fed head Greenspan on NBC, Merriman Curhan Ford Investor Summit, Merrill Lynch Media Fall Preview, ThinkEquity Growth Conference, CSFB Homebuilders Conference, Raymond James Paper/Forest Products Conference and Bank of America Investor Conference could also impact trading today.

BOTTOM LINE: Asian indices are slightly lower, weighed down by commodity and financial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the week.

Weekly Outlook

Click here for Wall St. Week Ahead by Reuters.

There are several economic reports of note and some significant corporate earnings reports scheduled for release this week.

Economic reports for the week include:

Mon. – Empire Manufacturing

Tues. – Weekly retail sales reports, Producer Price Index, Net Long-term TIC Flows, NAHB Housing Market Index, FOMC Rate Decision

Wed. – Weekly EIA energy inventory report, weekly MBA Mortgage Applications report, Consumer Price Index, Housing Starts, Building Permits

Thur. – Initial Jobless Claims, Leading Indicators, Philly Fed

Fri. – None of note

Some of the more noteworthy companies that release quarterly earnings this week are:

Mon. – Adobe Systems(ADBE)

Tues. – Autozone(AZO), Best Buy(BBY), CBRL Group(CBRL), Darden Restaurants(DRI), Kroger Co.(KR), Lehman Brothers(LEH)

Wed. – Carmax(KMX), CKE Restaurants(CKR), Dress Barn(DBRN), General Mills(GIS), Herman Miller(MLHR), Morgan Stanley(MS)

Thur. – 3Com Corp.(COMS), American Greetings(AM), Bear Stearns(BSC), Carnival Corp.(CCL), Circuit City(CC), ConAgra Foods(CAG), FedEx Corp.(FDX), Goldman Sachs(GS), Nike Inc.(NKE), Oracle Corp.(ORCL), Pier 1 Imports(PIR), Scholastic Corp.(SCHL), Steelcase Inc.(SCS), Tektronix Inc.(TEK)

Fri. – Computer Sciences(CSC)

Other events that have market-moving potential this week include:

Mon. – (KCI) analyst meeting, (ADVS) Investor Day, Former Fed head Greenspan on NBC, Merriman Curhan Ford Investor Summit, Merrill Lynch Media Fall Preview, ThinkEquity Growth Conference, CSFB Homebuilders Conference, Raymond James Paper/Forest Products Conference, Bank of America Investor Conference

Tue. – (CMI) Investor Conference, (AHS) analyst meeting, (WM) Investor Day, (AMB) Investor Forum, (UTEK) analyst day, (PFE) analyst meeting, ThinkEquity Growth Conference, AG Edwards Emerging Growth Conference, CSFB Homebuilder Conference, Bank of America Investor Conference, Goldman Sachs Communacopia Conference, UBS Global Paper and Forest Products Conference, Keybanc Basic Materials & Packaging Conference, Merriman Curhan Ford Investor Summit

Wed. – (NCX) analyst meeting, RBC Consumer Conference, Keybanc Basic Materials & Packaging Conference, ThinkEquity Growth Conference, Bank of America Investor Conference, AG Edwards Emerging Growth Conference, UBS Global Paper and Forest Conference, Goldman Sachs Communacopia Conference

Thur. – (WW) analyst day, (NDAQ) analyst day, (NCI) analyst day, (CMS) analyst meeting, (BRCD) analyst meeting, Maxim Group Growth Conference, DA Davidson Engineering and Construction Conference, ThinkEquity Growth Conference, Merrill Lynch Global REITs Conference

Fri. – The Fed’s Plosser speaking

BOTTOM LINE: I expect US stocks to finish the week mixed as a lifting of the uncertainty regarding I-bank earnings, diminishing credit market fears, lower energy prices, a stronger US dollar and short-covering offsets more hawkish Fed commentary, only a 25 basis point fed funds rate cut and profit-taking. My trading indicators are now giving mostly bullish signals and the Portfolio is 100% net long heading into the week.

Market Week in Review

S&P 500 1,484.25 +2.11%*

Click here for the Weekly Wrap by Briefing.com.

*5-Day Change