Today's Headlines

Bloomberg:
- The risk of US companies defaulting fell, according to traders of credit-default swaps. Contracts on the Markit CDX North America Investment Grade Index of 125 companies in the US and Canada fell 2 basis points to 122.5, according to broker Phoenix Partners Group.
- The euro dropped the most versus the US dollar in more than a week as German business confidence fell in June to the lowest level since 2005, reducing bets the European Central Bank will increase borrowing costs this year.
- Gold fell in NY by the most in almost two weeks as the US dollar strengthened against the euro, reducing the appeal of the precious metal as an alternative investment.
- Wheat fell to a one-week low on expectations that US production will increase after farmers boosted planting to capitalize on prices that reached a record high in February. US stockpiles may nearly double to 13.3 million tons by May 31, the US Dept. of Agriculture said in a report earlier this month. Global production is expected to rise 8.5% to 662.9 million tons. World Inventories may rise to 132.1 million tons, up from 115.1 million tons the prior year.
- Crude oil is rising another $2/bbl. as historic investment fund speculation continues in the commodity despite decelerating demand, rising supplies and a firmer dollar.
- Bunge Ltd.(BG), the world’s largest oilseed processor, agreed to buy Corn Products(CPO) for $4.2 billion in stock.
- CME Group said it will pay a special dividend of about $350 million and purchase as much as $1.1 billion of its shares.
- Big Lots Inc.(BLI), the best-performing stock in the S&P 500 this year, now finds itself with the highest percentage of investors selling short.
- Rupee Steepest Slide Since ’93 Repels Funds on Prices. The Reserve Bank of India’s first interest-rate increase in 15 months is turning into a case of too little, too late for the rupee.

Wall Street Journal:
- Americans gave a record amount to charity in 2007, topping $300 billion for the first time, despite economic worries.
- Floods in the Midwest are making coast-bound shipments of American corn ethanol nearly impossible, creating an opportunity for ethanol from Brazil. Demand might really jump if a 54-cents-per-gallon import tariff on Brazilian sugarcane ethanol is removed, which may spark another wave of investment in the South American nation. Two US senators proposed such legislation this month as a way to lower ethanol prices in many parts of the country.
- Tribune(TRB) Starts Its Overhaul in Orlando. The Orlando Sentinel landed on newsstands Sunday with a new layout featuring more graphics, quick-read digests of top news, blog summaries and other changes aimed at making the newspaper more appealing to harried readers.
- Federal regulators are beginning an effort to crack down on stealth advertising in television shows, a move aimed at letting consumers know when companies have paid to use their products as props.
- Shares in many regional banks in the US have been the proverbial falling knives, and investors who tried to catch them got sliced. But valuations are now so low on some banks that their share prices reflect risks like sharply higher credit losses, future dilutive equity issuance and questionable management.
- Anti-Americanism Is Mostly Hype.

NY Times:
- ABC Moves to Expand Its Reach on Video Web Sites.

CNBC.com:
- Power Poll: Should the Government Crack Down on Oil Speculators?

USA Today:
- Roadside bomb attacks and fatalities in Iraq are down by almost 90% over the last year.
- Democratic presidential candidate Barack Obama has a 6 percentage-point lead over Republican John McCain among likely voters, a USA Today/Gallup Poll indicates. However, a majority of voters in the poll also said Obama doesn’t have sufficient experience and are concerned about his relationships with “people who hold radical political views,” citing the poll.

NY Post:
- In another sign that trading on the floor of the nation’s stock exchanges isn’t what it used to be, futures-brokerage giant RJ O’Brien & Assoc. is exiting the floor-trading business on NY’s commodities exchanges.

Lloyd’s List:
- Trading in freight derivatives overtook the physical market for hiring coal, iron ore and grain transporters for the first time, citing Ian Staples, an official at Freight Investor Services Ltd. Traders will buy and sell freight-derivatives contracts representing 2.4 billion metric tons of cargo this year. That’s 20% more than the volume of cargo that will actually be transported.

Financial Times:
- Facebook, the fast-growing social network, has taken a significant lead over MySpace in visitor numbers for the first time.
- Why the London loophole should be closed. Under current law, US traders can execute transactions in look-alike contracts in crude oil contracts on the New York Mercantile Exchange (Nymex) and on London's InterContinental Exchange (ICE), and US regulators have an eye only on what goes on in New York. That means that traders can arbitrage between the two markets, and the CFTC in effect regulates only half of the trading.

Financial Times Deutschland:
- Microsoft Corp.(MSFT) may make a new bid for Yahoo! Inc.(YHOO) if Yahoo’s management changes, citing Kevin Johnson, head of the software maker’s Platform & Services unit.

Milliyet:
- Iraq will allow state-run oil companies from six countries to apply for oil exploration and production licenses. Iraq aims to almost double production to 4 million barrels a day by next year with expertise from international companies.

Bear Radar

Style Underperformer:

Small-cap Value -1.27%

Sector Underperformers:

Airlinesirlind (-4.98%), Homebuilders (-2.54%) and Banks (-2.33%)

Stocks Falling on Unusual Volume:

BXS, XL, FCSX, XRTX, PENN, BWLD, LSTR, BG and CT

Stocks With Unusual Put Option Activity:

1) CSE 2) HBAN 3) MIR 4) FTO 5) BG

Economic Releases

- None of note

Bull Radar

Style Outperformer:

Mid-cap Growth (+.37%)

Sector Outperformers:

Oil Service (+3.32%), Energy (+2.40%) and Construction (+1.56%)

Stocks Rising on Unusual Volume:

GDP, BCE, PDO, RCNI, NOV, TESO, AZN, CME, VSAT, KNSY, DMRC, NCOC, FSYS, JRCC, AFAM, CASY, ESLR, SHPGY, ONXX, SOHU, IVGN, PFWD, VISN, ENER, CPO, HEW, FSF, BCE and VFC

Stocks With Unusual Call Option Activity:

1) JDSU 2) BG 3) WMB 4) GR 5) EMR

Links of Interest

Market Snapshot Commentary
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Sector Performance
WSJ Data Center
Top 20 Biz Stories
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In Play
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NYSE Unusual Volume
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Monday Watch

Weekend Headlines
Bloomberg:
- Refinery executives are buying more of their own stock than at any time since 2000, prompting investors to bet that a retreat in oil will boost profits and reverse the biggest share decline in a decade. Executives at 10 refining companies snapped up $2 million of their shares last month, twice what they sold., which helped raise the average level of purchases to the highest in eight years. Caxton Associates, Citadel Investment Group and Renaissance Technologies, which oversee $64 billion in hedge-fund assets, also boosted bets that the shares will rebound. “Anyone right now buying the refiners would have to be banking on a pullback in oil prices,” said Jack Ablin, who oversees $65 billion as chief investment officer at Harris Private Bank in Chicago.
- Saudi Arabia is ready to keep on increasing crude output after July if the market needs it, Saudi Oil Minister Ali al-Naimi said.
- Crude oil fell in NY after Saudi Arabia pledged to increase production next month and militants in Nigeria called a cease-fire in their attacks on oil pipelines and vessels.
- Walt Disney’s(DIS) ESPN, the most-watched sports channel is in partnership talks with the NFL to carry more games.
- McCain, Helped by Republican Party, Has More Money Than Obama.
- India’s central bank, which has raised interest rates to a six-year high and reduced cash in the banking system, will take further measures to curb the fastest inflation in 13 years, the government said.
- President Bush said lifting the ban on US offshore oil and gas drilling might eventually help reduce gasoline prices, and Congress should be held accountable if it doesn’t take action.
- Sales of sport-utility vehicles in China may slow after the government raised gasoline prices, Fitch Ratings Ltd. said.
- Japanese manufacturers said they are pessimistic about the outlook for the country’s export-led expansion because of surging energy and commodity costs and the risk of a US recession.

Wall Street Journal:
- As 2008 approaches its midpoint, two of the world’s worst-performing stock markets were not long ago investors’ biggest darlings – China and India.
- Fed, SEC Near Accord To Redraw Wall Street Regulation.

MarketWatch.com:
- Retail investors: Beware Hong Kong shenanigans. Changes in listing rules raise questions.

CNBC.com:
- Are Small-Cap Stocks Signaling a Recovery? In times of economic uncertainty, investors don’t usually flock to volatile assets like small-company stocks. Despite all the bad news surrounding record-high oil prices, mounting job losses, and continuing troubles in housing, the Russell 2000 index of small stocks has soared 12.7 percent since mid-March. By comparison, the Standard & Poor’s 500 index of large stocks is up by a more modest 3.5 percent.

NY Times:
- Demand for certifications of homes as environmentally friendly is growing, reflecting the popularity of “green” living.
- The New Fight for Financial News. Thomson Reuters is going hard after Bloomberg LP, which has long been the marquee name on Wall Street for financial information.
- Papers Facing Worst Year for Ad Revenue. The flow of advertising dollars to Web sites from print has picked up speed.
- Obama’s Campaign Closely Linked With Ethanol.

IBD:
- Diabetes Care Drives Novo’s(NVO) Profit Growth.

TheStreet.com:
- Corning(GLW) said Friday that it continues to see strength in US liquid crystal television display sales in the first five months of 2008.

alternativeassetadviser:
- The MSCI Hedge Invest Strategy Indices subdivide the composite MSCI Hedge Invest Index, enabling a more granular investment exposure to the following distinct hedge fund strategies: Systematic Trading, Discretionary Trading, Event-Driven and Merger Arbitrage, Long Bias, Variable Bias, Equity Non-Directional, Convertible and Equity Arbitrage, and Fixed Income.

LA Times:
- Researchers have uncovered a new clue to the cause of Alzheimer’s disease.

Washington Post:
- European government officials are concerned that Barack Obama’s plan to talk with Iran about its nuclear program without demanding an end to uranium enrichment first will undermine diplomatic efforts. The European officials, speaking anonymously, said requiring the Iranians to the stop enrichment is at the core of UN resolutions designed to curb the nuclear program. Discarding that precondition might fray relations between Europeans and the US, the Europeans said.

Business Week:
- Marcial: Strong Signals for Qualcomm(QCOM). The rally in the stock looks to continue with the rollout of new devices that use the company’s wireless communications technology.

Portfolio.com:
- Countrywide’s(CFC) VIP Club. Senators Dodd and Conrad are among the government officials who scored VIP loans from CEO Angelo Mozilo. An exclusive Portfolio investigation.

Boston Herald.com:
- Look what your petrodollars helped finance: “The cause of the discord: The Jews conspired against Islam.” “In these verses is a call for jihad, which is the pinnacle of Islam.” God “prohibits killing the soul . . . unless for just cause . . . unbelief after belief, adultery and killing an inviolable believer intentionally.” These quotes are from Arabic language, secondary-school textbooks at northern Virginia’s Islamic Saudi Academy. The academy is operated by the Saudi Arabia Embassy and sponsored by the Saudi government. The Saudi state, in turn, is being funded quite lavishly by average American motorists who buy $4.08 gasoline, partially refined from Saudi crude oil. U.S. airlines, shippers, factories and other petroleum buyers inadvertently underwrite such Saudi-inspired hate.

USA Today:
- Google’s(GOOG) Cutts: Good directions drive traffic to your website.

CNNMoney.com:
- Stocks we love: 5 big earners.
- Selling big business on the iPhone.
- Gold: Don’t count on $1,000.

Reuters:
- US corn futures fell 2% in early Asian trading on Monday as improving weather conditions in the Midwest, which struggled with its worst flooding in 15 years, pulled thee grain from record highs last week.

Financial Times:
- Australia overtook the US as the most obese nation in the world, with more than a quarter of the population diagnosed with the condition, citing a study published yesterday. Four million Australians, or 26%, are obese, compared with 25% in the US, according to a study by The Baker Heart Institute in Melbourne.
- Royal Dutch Shell Plc, Europe’s biggest oil producer, delayed drilling in the waters off Alaska for a year because of a court case brought by environmentalists, citing a company manager. The delay will extend and aggravate the energy supply crisis in the US, according to Pete Slaiby, Shell’s general manager for Alaska.
- Bond insurers such as Ambac(ABK), MBIA(MBI) and FGIC are talking to banks about wiping out $125 billion of insurance on risky debt securities in what could be the only way to limit the financial damage surrounding the bond insurers. If agreements are struck about the value of these CDS contacts - and the discussions could take months - it could be significant for the entire financial system, which is clogged up by the uncertainty around the value of derivatives and complex bonds linked to mortgage-backed securities.
- Out of India. Market sell signals seldom come much clearer than this. Two of India’s top industrialists are poised to trade in controlling stakes in their businesses.

TimesOnline:
- Citigroup(C) and Goldman Sachs(GS) cut more staff as effect of credit crunch lingers.

Telegraph:
- Gordon Brown warns OPEC that Britain will cut demand. Britain is ready to spend up to £100 billion weaning households off the expensive energy imports that threaten family finances, Gordon Brown has warned oil-exporting countries. Describing the recent surge in oil prices as the third and worst oil shock to hit the world economy in three decades, Mr Brown promised to deliver British consumers "security of supply that's based on lowering our dependency on imported oil." At the OPEC meeting, he proposed a "new deal" between oil producers and consumers, pledging more transparency in energy markets to help oil states plan new investment in their production capacity. In exchange, the Prime Minister promised to urge Western governments to open their economies to investment from Gulf states enriched by a doubling in oil prices over the last year. Brown also served notice on the oil producers that Britain and other Western economies will dramatically increase efforts to reduce their demand for OPEC's oil. In a new renewable energy strategy to be published on Thursday, the Government will set out plans to reduce Britain's oil consumption by nearly 10 per cent in little more than a decade. The cut will be achieved by a major expansion in renewable power sources like wind, wave and solar generation, and a new drive to increase household energy efficiency.

Wirtschaftswoche:
- German export business confidence declined to the lowest since the end of 2001 in May as the global economy is slowing, citing figures from the Ifo research institute. Orders from abroad dropped 3.8% in April from March.

Le Temps:
- Hedge funds control as much as 30% of the world’s commodity trades, citing Syngenta AG CEO Michael T. Mack. That’s “sufficient to potentially disturb” normal price-fixing mechanisms, he said. Mack also reiterated Syngenta plans to introduce a corn seed with an enzyme that can boost the efficiency of ethanol factories next year.

South China Morning Post:
- China’s banking regulator warned of risky investment products being sold by the nation’s banks that are destabilizing the stock market, citing Li Fuan, head of the regulator’s innovation department. The “blind competition” among Chinese banks to introduce new products has increased risk and caused “chaos” in the market, Li said.

China Daily:
- China’s Guangdong province plans to boost its minimum wages to attract workers to the southern Pearl River Delta region and plug a labor shortage, citing a government official. Shenzhen has adopted a new minimum wage, effective on 1 July, with downtown workers getting at least a 17.6% raise from the prior year. Suburban workers’ minimum wage was boosted 20%, the report said.

Nikkei English News:
- OPEC plans to spend $220 billion by 2012 to increase oil production. $160 billion will be spent on drilling and other related operations to boost output by 5 million barrels a day. The remaining $60 billion will be spent to increase refining capacity by 3 million barrels a day. It is the largest five-year investment by the 13-nation oil producing cartel.

21^st Century Business Herald:
- China needs to keep tightening monetary policies at its current stage, citing an official of the People’s Bank o f China. The central bank fins the required reserve ratio a more effective tool than the interest rate, it said, citing the official.

Kuwait Times:
- Saudi Arabia May Convince OPEC Colleagues to Raise Output Too.

Haaretz.com:
- Israel is a long way from attacking Iran.

Weekend Recommendations
Barron's:
- Made positive comments on (MRO), (XOM), (NFX), (KFT), (RCN), (ONXX) and (SHOR).

Citigroup:
- Reiterated Buy on (OI), target $70.

Night Trading
Asian indices are -1.25% to -.50% on avg.
S&P 500 futures +.30%.
NASDAQ 100 futures +.19%.

Morning Preview
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Earnings of Note
Company/Estimate
- (WAG)/.59

Upcoming Splits
- None of note

Economic Releases
- None of note

Other Potential Market Movers
- The (ECA) analyst meeting, (FEIC) investor meeting and Wachovia Nantucket Equity Conference could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down by financial and automaker shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the week.