Wednesday Watch

Late-Night Headlines
Bloomberg:
- Australia’s economy grew at the slowest pace in moiré than a year in the fourth quarter as construction decline and bottlenecks at ports cut exports.
- Japanese businesses cut investment last quarter at twice the pace economists predicted, suggesting the government will trim its economic growth estimate next week.
- China’s key economic tasks for this year are to curb accelerating inflation and prevent overheating, Premier Wen Jiabao said.
- US bank regulators assured Congress the banking industry, bolstered by a long period of strong economic growth and low credit losses, remains strong amid losses stemming from the subprime-mortgage crisis.
- More than 30,000 Californians could benefit from new Federal Housing Administration rules raising loan limits to almost $730,000, Housing Secretary Alphonso Jackson said.
- China, the world’s biggest grain producer, will use imports of essential commodities and the sales of reserve stockpiles to stabilize supplies and prices, the Minister of Finance said.
- Sugar fell the most in nine months as investors such as hedge funds sold commodities.
- Goldman Sachs(GS) investment management co-head Peter Kraus is leaving after his division’s Global Alpha hedge fund suffered a 40% drop last year.
- Three years after Theo van Gogh was murdered in Amsterdam for making a film critical of Islam, the Netherlands is embroiled in another row over religion.

Wall Street Journal:
- McCain Clinches GOP Nomination; Clinton Notches Win in Ohio.
- Citigroup Inc.(C) executives are confident with the company’s capital levels and aren’t looking to raise additional funds from outside investors.
- Top crude oil consumer the US said Tuesday it is “imperative” to expand the use of renewable energy such as wind power and biofuels to reduce its dependence on foreign oil.
- Iran vowed to push ahead with uranium enrichment Tuesday, a day after the UN Security Council passed a third round of sanctions that Tehran called “worthless” and politically biased.

CNBC.com:
- Banks Hope to Reach Deal Soon on Ambac(ABK) Rescue.
- Some Bank Stocks Worth Buying Despite Bad News.

NY Times:
- The Bush administration and the Fed are inching closer toward a government rescue of distressed homeowners and mortgage lenders.

IBD:
- Big Solar Deal Shows Applied(AMAT) Is Heating Up.
- Microsoft’s(MSFT) Gamble With Xbox Business Has Turned Corner.

CNNMoney.com:
- The man who must keep Goldman(GS) growing. Lloyd Blankfein has a lot on his mind. The chief of Wall Street’s most successful investment bank has to outsmart treacherous markets while balancing the firm’s interests with those of its clients.
- Housing: Best time to buy in four years.

Morningstar:
- JPMorgan Chase(JPM) remains the biggest US hedge-fund manager as total assets of the biggest hedge-fund firms topped $1.6 trillion as of Jan. 1.

USA Today.com:
- Nike(NKE), Apple(AAPL) plug iPods into gym equipment.
- Businesses give veterans a big lift in starting new franchises.

SEC:
- The SEC sued a Salt Lake City hedge-fund manager for allegedly misleading clients about risks it took while making wrong-way bets on New Century Financial.

Reuters:
- SEC proposes tougher “naked” short selling rules.
- US growth stocks outperformed value stocks last month in all size categories except microcaps.

Financial Times:
- Al-Qaeda is losing the war of minds. The US “surge” in Iraq has been so manifestly successful that no serious person can deny that gains have been made. In large measure because of what is going on in Iraq, the tide within the Islamic world is beginning to run strongly against al-Qaeda – and this may be the single most important ideological development in recent years.
- Amazon.com(AMZN) to enter US wine market.

AFP:
- China’s south to build nation’s largest offshore wind farm.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (PX), target $90.
- Maintained Buy on (HOLX), target $81.
- Reiterated Buy on (TECD), target $50.
- Reiterated Buy on (ADBE), target lowered to $46.

Night Trading
Asian Indices are -1.0% to unch. on average.
S&P 500 futures -.04%.
NASDAQ 100 futures +.14%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
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Before the Bell CNBC Video(bottom right)
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Today in IBD
In Play
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Economic Preview/Calendar
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Earnings of Note
Company/EPS Estimate
- (BWS)/.42
- (BJ)/.74
- (SKS)/.19
- (ADCT)/.17
- (MATK)/.22
- (CMTL)/.79
- (MR)/.20
- (HRB)/.09
- (PETM)/.59
- (COST)/.74
- (CSK)/-.11
- (LDG)/.97
- (BIG)/.84

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- Final 4Q Non-farm Productivity is estimated to rise 1.8% versus prior estimates of a 1.8% gain.
- Final 4Q Unit Labor Costs are estimated to rise 2.1% versus prior estimates of a 2.1% gain.

10:00 am EST
- Factory Orders for January are estimated to fall 2.5% versus a 2.3% gain in December.
- ISM Non-Manufacturing for February is estimated to rise to 47.3 versus 44.6 in January.

10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil build of 2,400,000 barrels versus a 3,231,000 barrel increase the prior week. Gasoline supplies are estimated to rise 125,000 barrels versus a 2,355,000 barrel build the prior week. Distillate Supplies are expected to fall by -1,825,000 barrels versus a -2,575,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise .23% versus a 1.16% increase the prior week.

2:00 pm EST
- Fed’s Beige Book

Other Potential Market Movers
- The Fed’s Pianalto speaking, ADP Employment report, Challenger Job Cuts report, weekly MBA Mortgage Applications report, weekly EIA energy inventory report, (PFE) analyst meeting, (XOM) analyst meeting, (KWK) analyst meeting, (ARRS) analyst meeting, (TAP) analyst meeting, (JNJ) analyst meeting, Susquehanna Healthcare Conference, CSFB Under Followed Opportunities Conference, Morgan Stanley Tech Conference, CSFB Global Biotech Conference, Citi Global Real Estate Conference, Bear Stearns Retail/Restaurants/Consumer Conference, Citi Industrial Manufacturing Conference, CIBC Retail Conference and Raymond James Institutional Investor Conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and industrial 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 Gains in Tech and Medical Shares Offset Losses in Commodity and I-Banking Stocks

Evening Review
Market Summary
Top 20 Biz Stories
Today’s Movers
Market Performance Summary
WSJ Data Center
Sector Performance
ETF Performance
Style Performance
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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
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After-hours Stock Chart
In Play

Stocks Mixed into Final Hour as Short-Covering Offsets Rising Credit Angst

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Biotech longs, Gaming longs, Software longs, Computer longs and Commodity shorts. I added to my (QQQQ)/(IWM) hedges this morning and then covered them this afternoon, thus leaving the Portfolio 75% net long. The overall tone of the market is mildly negative as the advance/decline line is lower, sector performance is mixed and volume is heavy. Investor anxiety is high again. Today’s overall market action is neutral. The VIX is falling .6% today, but remains high at 26.0. The ISE Sentiment Index hit a historically depressed 36.0 and the total put/call hit a high 1.34 today. Finally, the NYSE Arms has been running above average all day, hitting a very high 1.98 this morning. The 10-year swap spread is rising another 4 basis points today to 74.75 basis points over Treasuries. It is now near levels seen near prior peaks in credit market angst in August and November of last year. The odds for a 75 basis point rate cut at the upcoming Fed meeting have risen to 78.0%. I still think the odds that a cut occurs before the scheduled meeting have risen substantially of late. Cisco’s(CSCO) CEO said this afternoon that he is more confident in his long-term forecast than he was during the last conference call. He said any US downturn should be mild and short-lived. As well, rumors are swirling about an imminent bailout for troubled bond insurer Ambac(ABK). The two stocks are leading a market surge into the close. Moreover, the decline in commodities is a huge broad market positive as it gives the Fed more leeway to be more aggressive if necessary. Nikkei futures indicate a -120 open in Japan and DAX futures indicate an +40 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on short covering, diminishing bond insurer angst, Fed rate cut speculation and bargain hunting.

Today's Headlines

Bloomberg:
- Commodities plunged the most in almost six weeks, as oil, gold and corn fell from record highs, on renewed concern that a slowing US economy will curb demand for raw materials.
- Federal Reserve Chairman Ben S. Bernanke urged lenders to forgive portions of mortgages held by homeowners at risk of defaulting.
- California sold $1.75 billion of bonds, attracting record demand from individuals enticed by the highest tax-exempt yields in more than three years.
- Investor Martin Whitman is standing by his bet on MBIA Inc.(MBI), boosting his stake in the bond insurer to 10% as there is “much profit” to be made at current prices whether the existing business model succeeds or fails.
- Apple Rises as Cook Reiterated iPhone Sales Estimates.

Wall Street Journal:
- World Has Enough Oil for a Century. We are nowhere close to reaching a peak in global oil supplies.

NY Times:
- Cepheid(CPHD) Triples as Demand for ‘Superbug’ Test Grows.
- Spitzer Helps Donors Skirt $10,000 Limit He Set. Despite his high-profile pledge not to accept donations greater than $10,000 – less than one-fifth the $55,900 allowed under state law – Gov. Eliot Spitzer’s political organization has raised more than $1 million above the cap he imposed on himself, by directing his donors to the Democratic state party account, which he controls.

MarketWatch:
- Apple(AAPL), Fnac Discuss Selling iPhone in France.

Washington Post:
- Two-thirds of Democrats surveyed said Senator Hillary Clinton should continue her presidential bid if she wins in either Ohio or Texas today, citing a Washington Post-ABC News poll.

Reuters:
- BHP Billiton(BHP) talks to lenders on record $55 billion loan.
- Bill Gross, manager of the world’s biggest bond fund, said he bought $1.5 billion in municipal bonds on Feb. 29 at “very attractive prices.”

Financial Times:
- Another hedge fund collapse in focus.

Iranian Students News Agency:
- Iranian Oil Minister Gholamhossein Nozari said his country will support a decrease in oil output at a meeting of OPEC in Viena tomorrow.

Bear Radar

Style Underperformer:

Large-cap Value -1.79%

Sector Underperformers:

Coal (-4.68%), Gold (-3.87%) and I-Banks (-3.43%)

Stocks Falling on Unusual Volume:

AMWD, TIE, IBN, C, TONE, TSRA, OMPI, LCAPA, THRX, NUVA, CETV, CEDC, HMIN, CLWR, CMED, SUSQ, PAAS, JTX, NCS, BKS,

Bull Radar

Style Outperformer:

Large-cap Growth (-.87%)

Sector Outperformers:

Utilities (+1.21%), Hospitals (+.66%) and Steel (-.12%)

Stocks Rising on Unusual Volume:

HOT, EXC, PEG, MAR, TS, UVV, IPCS, KTC, BMA, CRMT, TECD, VISN, COIN, GTLS, MDTH, JRJC, DECK, AMAT, FPIC, PSYS, ASIA, BEAV, FARO, AVTR, CRDN, CPLA, BRKR, AIRM, TSL and BRL