Economic Releases

- None of note

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Monday Watch

Weekend Headlines
Bloomberg:
- Just when many investors are acknowledging the sudden swoon of US stocks as a sign of a market top, some of Europe’s biggest money managers are anticipating a profit rebound for American companies and slowing earnings growth at home.
- Mobile-phone shipments worldwide this year will probably increase 20%, more than previously though estimated, because of higher Nokia Oyj sales and demand in China and India, JPMorgan Chase(JPM) said.
- Axel Weber, a member of the European Central Bank’s governing council, said the bank may have to raise interest rates further to quell inflation as the euro-region’s economy maintains its expansion.
- US Treasury Secretary Henry Paulson said the World Bank should focus on lending to poor countries and trim funds for China, India and other middle-income nations that are luring private capital.
- Federal Reserve Governor Frederic Mishkin said inflation measures that exclude food and energy costs are a “better guide” to underlying changes in prices.
- Johnson & Johnson(JNJ) and Boston Scientific(BSX) reported new safety data today for drug-coated stents that may help revive sales depressed by prior reports linking the devices to a higher risk of heart attacks.
- Russian Finance Minister Alexei Kudrin suggested the price of gold may decline because of a potential increase in production after the Natalka field was confirmed as the world’s third-largest deposit of the precious metal.
- Turkey’s military probably won’t attack Kurdish rebels in northern Iraq in the immediate future, US Defense Secretary Robert Gates said, after meeting his Turkish counterpart.

NY Times:
- The Gloomsayers Should Look Up.
- As Apple(AAPL) Gains PC Market Share, Jobs Talks of a Decade of Upgrades.
- Lottomatica SpA’s Gtech Holdings(GTK) and Scientific Games Corp.(SGMS), the two dominant suppliers of equipment and products to US state lotteries, plan to expand into other countries.
- Fight Against Coal Plants Is Creating Diverse Partnerships.

MarketWatch.com:
- US venture deals fewer in number, bigger in size.
- The end of Microsoft as we know it? Commentary: A holding company in the mold of KKR, Berkshire Hathaway.

Washington Post:
- One year ago, a 32-year-old trader at a giant hedge fund named Amaranth held huge sway over the price the country paid for natural gas. Trading on unregulated commodity exchanges, he made risky best that led to the fund’s collapse – and, according to a congressional investigation, higher gas bills for homeowners.

CNNMoney.com:
- Apple’s(AAPL) Earnings Preview: Firing On All Cylinders.

MSNBC.com:
- Commercial real estate market outlook upbeat.

MIT Review:
- The Blow-Up. This summer, as a meltdown in subprime credit market spilled over into other markets, all eyes were on the mathematically trained financial engineers known as “quants.” Who are these guys?

LA Times:
- Some firms replace offshoring with onshoring. Small US towns can match India in cost, Northrop Grumman(NOC) plans up to 50 sites for tech support, Dell opens a center in Idaho.

USA Today:
- Sporting goods makers who once treated technology as a threat are boosting revenue with online social-networking tools, mapping programs and wireless gadgets.

Seattle Times:
- Clean technologies propel venture capital funding. Shrugging off credit-related economic woes, venture capitalists be heavily on new companies in the third quarter, driven by opportunities in clean technologies, software and biotechnology.

AP:
- Iran named Deputy Foreign Minister Saeed Jalili as it nuclear envoy following the resignation of Ali Larijani, a move that may support President Mahmoud Ahmadinejad’s hard line stance on talks with Western governments.
- US teachers were fired or disciplined for sexual abuse in more than 2,500 cases during a five-year period.
- Half of likely US voters said they would never vote for Senator Hillary Clinton for president, a new survey by Zogby International shows. The latest Zogby survey showed 50% of those polled said they would never vote for her, compared with 46% of likely voters who said the same thing in a Zogby survey in March. Among Democratic women, 17% said they would not vote for Clinton.

Sydney Morning Herald:
- Russia, the world’s second-biggest oil exporter after Saudi Arabia, has forecast crude oil may drop to $60/bbl. within 10 years. “Oil is significantly overpriced,” Russia’s Finance Minister, Alexei Kudrin, said in Washington on Friday. Crude oil prices have “overshot their fundamentals and are likely to come down sharply,” Eric Chaney and Richard Berner, analysts at Morgan Stanley, wrote in a report on Friday.

Gulfnews.com:
- Saudi Arabia is not considering or revaluing its currency or moving away from its dollar peg, Finance Minister Ebrahim Al Assaf said yesterday.

Al-Arabiya:
- Saudi Arabia, the world’s largest oil exporter, will pump more crude oil if there was an emergency disruption to supplies, citing a government official.

Weekend Recommendations
Barron's:
- Made positive comments on (MMC), (VAR), (SHLD) and (MNST).

Citigroup:
- Reiterated Buy on (ADBE), target raised to $56.

Night Trading
Asian indices are -3.25% to -1.75% on average.
S&P 500 futures -.83%.
NASDAQ 100 futures -.88%

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Earnings of Note
Company/Estimate
- (CHKP)/.37
- (HAL)/.65
- (HAS)/.71
- (MRK)/.70
- (SGP)/.30
- (AXP)/.85
- (AAPL)/.84
- (KMB)/1.06
- (RCL)/1.78
- (TXN)/.50

Upcoming Splits
- (ARD) 2-for-1
- (CSNT) 2-for-1

Economic Data
- None of note

Other Potential Market Movers
- The Fed’s Kroszner speaking, (WSO) analyst meeting and (NCI) investor day could also impact trading today.

BOTTOM LINE: Asian indices are sharply 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 modestly higher. The Portfolio is 75% net long heading into the week.

Weekly Outlook

Click here for the Wall St. Week Ahead by Reuters.

Click here for Stocks in Focus for Monday by MarketWatch.com.

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

Economic reports for the week include:

Mon. – None of note

Tues. – Weekly retail sales reports, Richmond Fed Manufacturing Index

Wed. – Weekly MBA Mortgage Applications report, weekly EIA energy inventory data, Existing Home Sales

Thur. – Durable Goods Orders, Initial Jobless Claims, New Home Sales

Fri. – Univ. of Mich. Consumer Confidence report

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

Mon. – Halliburton(HAL), Hasbro(HAS), Merck(MRK), Schering-Plough(SGP), American Express(AXP), Apple Inc.(AAPL), Kimberly-Clark(KMB), Royal Carribean(RCL), Texas Instruments(TXN)

Tues. – Biogen Idec(BIIB), Brinker Intl.(EAT), Burlington Northern(BNI), Coach Inc.(COH), Smith International(SII), Whirlpool(WHR), United Parcel Service(UPS), AT&T(T), Altera Corp.(ALTR), Aflac(AFL), Broadcom(BRCM), Centex Corp.(CTX), Chubb Corp.(CB), Illumina Inc.(ILMN), Juniper Networks(JNPR), Microchip Tech(MCHP), Nabors Industries(NBR), Panera Bread(PNRA), Riverbed Tech(RVBD), Amazon.com(AMZN), CDW Corp.(CDWC), Cheesecake Factory(CAKE), Lexmark Intl(LXK), Lockheed Martin(LMT), Novellus Systems(NVLS), TD Ameritrade(AMTD)

Wed. – Autonation(AN), Carlisle Cos(CSL), CME Group(CME), Corning Inc.(GLW), Freeport-McMoRan(FCX), Moody’s Corp.(MCO), Northrop Grumman(NOC), Stanley Works(SWK), Tribune(TRB), Legg Mason(LM), PF Chang’s(PFCB), Boeing(BA), Norfolk Southern(NSC), Express Scipts(ESRX), Business Objects(BOB), Alcon(ACL), Amgen Inc.(AMGN), Monster Worldwide(MNST), Pulte Homes(PHM), Ryland Group(RYL), Akamai Technologies(AKAM), Anheuser-Busch(BUD), Conoco Philips(COP), F5 Networks(FFIV), General Dynamics(GD), Genzyme Corp.(GENZ), Lam Research(LRCX), Linens ‘n Things(LIN), Merrill Lynch(MER), Ryder System(R), Symantec Corp.(SYMC), Taser Intl.(TASR), VMware(VMW)

Thur. – Apache Corp.(APA), Black & Decker(BDK), Comcast Corp.(CMCSA), Goodrich Corp.(GR), Intercontinental Exchange(ICE), L-3 Communications(LLL), Starwood Hotels(HOT), XM Satellite Radio(XMSR), Zimmer Holdings(ZMH), Aetna Inc.(AET), Motorola Inc.(MOT), Raytheon(RTN), Southern Co.(SO), Kla-Tencor(KLAC), Baidu.com(BIDU), Ingram Micro(IM), Kenneth Cole(KCP), McAfee Inc.(MFE), Microsoft Corp.(MSFT), CB Richard Ellis(CBG), Celegene(CELG), Cummins Inc.(CMI), Deckers Outdoor(DECK), Diamond Offshore(DO), Dow Chemical(DOW), EMC Corp.(EMC), Estee Lauder(EL), General Motors(GM), Harrah’s Entertainment(HET), ImClone Sytems(IMCL), MBIA Inc.(MBI), Sybase Inc.(SY), Wendy’s International(WEN)

Fri. – Baker Hughes(BHI), Countrywide Financial(CFC), Tidewater Inc.(TDW), BearingPoint(BE), Fortune Brands(FO), Ingersoll-Rand(IR), ITT Corp.(ITT), Southern Copper(PCU)

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

Mon. – Fed’s Kroszner speaking, (WSO) analyst meeting, (NCI) Investor Day

Tue. – (BSX) analyst meeting, (WMT) analyst meeting

Wed. – (ARTC) analyst meeting, (EW) analyst lunch, (GOOG) analyst day

Thur. – None of note

Fri. – None of note

BOTTOM LINE: I expect US stocks to finish the week modestly higher on better-than-expected earnings reports, bargain-hunting, rising Fed rate cut odds and short-covering. My trading indicators are giving mostly bullish signals and the Portfolio is 75% net long heading into the week.

Market Week in Review

S&P 500 1,500.63 -3.92%*

Click here for the Weekly Wrap by Briefing.com.

*5-day % Change

Weekly Scoreboard*

Indices
S&P 500 1,500.63 -3.92%
DJIA 13,522.02 -4.05%
NASDAQ 2,725.16 -2.87%
Russell 2000 798.79 -5.04%
Wilshire 5000 15,105.35 -3.91%
Russell 1000 Growth 614.54 -3.32%
Russell 1000 Value 829.92 -4.46%
Morgan Stanley Consumer 728.55 -3.42%
Morgan Stanley Cyclical 1,038.62 -4.62%
Morgan Stanley Technology 665.26 -3.43%
Transports 4,801.36 -2.82%
Utilities 498.66 -3.99%
MSCI Emerging Markets 154.18 -2.57%

Sentiment/Internals
NYSE Cumulative A/D Line 68,204 -7.01%
Bloomberg New Highs-Lows Index -226 -271.2%
CFTC Oil Large Speculative Longs 251,001 +1.5%
Bloomberg Crude Oil % Bulls 13.8 -39.7%
Total Put/Call 1.13 +48.68%
NYSE Arms 3.52 +255.55%
Volatility(VIX) 22.96 +29.50%
ISE Sentiment 101.0 -38.41%
AAII % Bulls 41.96 -23.21%
AAII % Bears 35.71 +38.57%

Futures Spot Prices
Crude Oil 88.60 +5.84%
Reformulated Gasoline 216.87 +3.82%
Natural Gas 7.04 +.84%
Heating Oil 233.06 +3.67%
Gold 768.40 +1.95%
Base Metals 252.66 -.59%
Copper 355.15 -2.76%

Economy
10-year US Treasury Yield 4.40% -29 basis points
4-Wk MA of Jobless Claims 316,500 +1.9%
Average 30-year Mortgage Rate 6.40% unch.
Weekly Mortgage Applications 656.30 +.66%
Weekly Retail Sales +2.6%
Nationwide Gas $2.81/gallon +.01/gallon
US Cooling Demand Next 7 Days 21.0% above normal
ECRI Weekly Leading Economic Index 139.90 -.36%
US Dollar Index 77.41 -1.04%
CRB Index 340.1 +1.98%

Best Performing Style
Large-Cap Growth -3.32%

Worst Performing Style
Small-cap Value -5.90%

Leading Sectors
Steel +.51%
Road & Rail -.09%
Computer Hardware -.37%
HMOs -.65%
Restaurants -1.20%

Lagging Sectors
Insurance 6.34%
Oil Service -6.74%
Retail -6.75%
Homebuilders -7.12%
I-Banks -7.64%

One-Week High-Volume Gainers

One-Week High-Volume Losers

*5-Day Change