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Tuesday Watch

Late-Night Headlines
Bloomberg:

- The euro’s rally against the U.S. dollar may be entering its “last stage,” and investors would likely benefit from selling the 16-nation currency against the greenback, UBS AG said in a note to clients yesterday. The euro is likely to drop toward $1.30, UBS analysts led by Mansoor Mohi-uddin, Zurich-based chief currency strategist, wrote in a research note.

- Investors should take off bets that Treasury prices will fall further because elevated yields will attract buyers, Deutsche Bank AG says. Deutsche shifted to a ‘neutral duration’ from a ‘duration underweight’ recommendation on U.S. debt on the expectation that the pressures that drove investors to sell Treasuries have nearly abated, New York-based analysts Mustafa Chowdhury and Marcus Huie wrote in a note to clients. Investors with cash will likely resume buying government debt if borrowing costs rise much further, while the Federal Reserve could shift from its “negligible” response to the borrowing cost increase by boosting the amount of money allocated for Treasury purchases, the analysts wrote.

- The cost of protecting Asia-Pacific corporate and government bonds from default fell, according to traders of credit-default swaps. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan dropped 10 basis points to 165 as of 8:46 am in Singapore, according to Royal Bank of Scotland Group Plc prices. The Markit iTraxx Japan fell 15 basis points to 155 at 9:20 am in Tokyo, Credit Suisse Group AG prices show. The Markit iTraxx Australia index was quoted 11 basis points lower at 173.5 as of 10:46 am in Sydney, according to Citigroup Inc. data.

- Microsoft Corp.(MSFT) will enable gamers to control Xbox 360 machines with body motions instead of hand-held controllers, a bid to gain an edge on Nintendo Co.’s market leading Wii. Xbox 360 consoles, including those already sold, will be able to track gestures and recognize voice commands and facial movements, Shane Kim, an Xbox vice president, said today in an interview. The features rely on a box with motion and voice sensors.

- EMC Corp.(EMC) made an unsolicited offer to acquire Data Domain Inc. for $1.8 billion in cash, topping a bid by NetApp Inc.(NTAP), which agreed to buy the company for $1.5 billion two weeks ago. DataDomain(DDUP) rose 16 percent in late trading after EMC offered $30 a share in cash. NetApp’s offer is valued at $25.56 a share, based on today’s closing price, making EMC’s bid 17 percent higher

- Israeli Prime Minister Benjamin Netanyahu rejected U.S. President Barack Obama’s demand for a halt to all construction in West Bank settlements. Netanyahu, who spoke at a meeting of the parliament’s Foreign Affairs and Defense Committee, said a call by the U.S. to stop all so-called natural growth in existing settlements was unreasonable, according to someone who was present at the meeting and spoke on condition of anonymity because the session was held behind closed doors. Netanyahu’s remarks come just three days before Obama is to make a speech to the Muslim world in Cairo, and two weeks after the president told the Israeli leader in Washington that all settlement building must stop. Most of the parties in Netanyahu’s ruling coalition, including his Likud party, oppose halting settlement expansion. The statement by Netanyahu may elevate tensions with the U.S. administration, said Yossi Alpher, who advised former Prime Minister Ehud Barak, now the defense minister, and today co- edit’s the bitterlemons.org Web site. “It’s a conscious decision by the Netanyahu government to defy a request by the Obama administration,” Alpher said. “The ball is now in Obama’s court.”

- JPMorgan Chase & Co.(JPM) and American Express Co.(AXP) will sell at least $5.5 billion of stock to satisfy a new Federal Reserve rule forcing firms that took bank rescue funds to tap equity markets before they can repay the money. JPMorgan, the second-largest U.S. bank by deposits, will sell $5 billion of stock, and American Express, the biggest U.S. credit-card company by purchases, plans to raise $500 million, the companies said today in separate statements. The Fed issued its rule today.

- General Motors Corp., the world’s largest carmaker until its 77-year reign ended last year, will be removed from the Standard & Poor’s 500 Index after filing for bankruptcy protection, S&P said. GM will be replaced by DeVry Inc.(DV), the second-largest publicly traded U.S. school owner by market value, after the close of trading tomorrow, S&P said in a statement.

- The four-week flood of money into developing-nation stock funds that drove the MSCI Emerging Markets Index to an eight-month high is sending the strongest sell signal since equities peaked in October 2007. Inflows totaled $12 billion, or 3.5% of developing-nation fund assets, the most since the 22-country benchmark hit its record high 19 months ago, said EPFR Global, which tracks $410 trillion in investments worldwide. The only other time since 2001 that funds attracted as much cash, in February 2006, the MSCI gauge lost 8.4% in four months. A slower-than-estimated economic recovery in China, the largest emerging market, may spark a retreat, said RBC Capital Markets. “Fund flows at their extremes are contrary indicators,” Leo Grohowski, who helps oversee about $132 billion as the New York-based CIO at BNY Mellon Wealth Management, said.

- Goldman Sachs Group Inc., which wants to return $10 billion this month to the U.S. government, is raising as much as HK$14.86 billion ($1.92 billion) by selling shares of Industrial & Commercial Bank of China Ltd. after the stock jumped 29 percent in two months. Goldman Sachs, based in New York, is offering 3.03 billion Hong Kong-traded shares, or a 0.9 percent stake in the Chinese bank, at HK$4.80 to HK$4.90 each, according to a sale document e-mailed to fund managers today. That’s as much as 6 percent below the stock’s HK$5.11 closing price yesterday.

- North Korean leader Kim Jong Il has named third son Kim Jong Un as his successor to lead the Stalinist state, the Dong-A Ilbo newspaper said, citing unidentified people familiar with the situation. North Korea notified its international diplomatic offices of the choice and is teaching its people a song in praise of the anointed leader, the South Korean daily said.

- Treasuries rose, snapping yesterday’s decline, as Federal Reserve purchases scheduled for the next two days and yields near a six-month high attracted investors.

- Treasury Secretary Timothy Geithner said Chinese officials are confident in the U.S. economy and the Obama administration’s actions to fight the recession and restore financial stability. “I’ve actually found a lot of confidence here in China, justifiable confidence, in the strength and resilience and dynamism of the American economy,” Geithner said in an interview in Beijing for CCTV, Chinese state-run television.

Wall Street Journal:

- Citigroup Inc. and Bank of America Merrill Lynch are expanding their teams that provide services to hedge funds, looking to become bigger players in that sector even as it has shrunk dramatically.

- In a rare case of a jetliner disappearing midflight, an Air France Airbus A330 plane with 228 people onboard was feared lost over the Atlantic Ocean on Monday after suffering an apparent electrical failure while flying through storms and turbulence en route from Rio de Janeiro to Paris.

- While we were poking fun at Silicon Valley’s incessant need to stick a hyped-up catchphrase on each and every development, the use of such jargon was actually important, because we think that the digital sector is now moving full bore into an entirely new cycle of profound change. ”So what’s the seminal development that’s ushering in the era of Web 3.0? It’s the real arrival, after years of false predictions, of the thin client, running clean, simple software, against cloud-based data and services.” The Apple iPhone and iPod Touch are the tip of this spear. It’s more than just those two products, of course, but it’s what they represent: the complete integration of computing into every part of our lives in a way that is seamless, ubiquitous and, ideally, dead simple.

- Target(TGT) has its bull's-eye on a new venture: online media. On Tuesday, the retailer plans to formally announce a partnership with DailyCandy.com, the email newsletter and Web site owned by cable operator Comcast that covers fashion and culture for a mostly female audience. The venture, called Red Hot Shop, will be a special section of Target.com that will feature products from up-and-coming designers selected by DailyCandy editors, along with articles and artwork by the DailyCandy team.

CNBC.com:
- Traders are eagerly watching a relatively obscure technical indicator. Every time it turns higher, it almost always signals the start of a bull market! We’re talking about something known as the Coppock guide. According to Bloomberg the technical indicator has successfully signaled the start of a bull market all but once since World War II. Although it’s a rather complicated thing – essentially the Coppock guide signals a buy when it moves from a negative number to zero. And it's making that move right now!

NY Times:

- For decades, the United Automobile Workers had a simple strategy for getting what it wanted from the carmakers — it would go on strike. The tactic proved so successful that the mere threat of a walkout often won better wages, benefits and job security. Now, with General Motors and Chrysler in bankruptcy and the union a major shareholder in both through its retiree health fund, life has become a lot more complicated for the U.A.W.

CNNMoney:

- Whether a new iPhone will be unveiled at Apple’s (AAPL) World Wide Developers Conference — which begins a week from today — is still an open question, but all the signs of an impending announcement are now in place. Two weeks ago, we got specs and spot shortages (see here). Last week the leaked photos started showing up. The provenance of none of them is certain, but neither has any been shown to be a forgery. And at least one veteran Apple watcher says the latest batch “look very real” to him.

Politico:

- RNC Chairman Michael Steele takes a sharp line against the the White House auto industry plan; this is one whose politics will depend very much on how it works out.

LA Times:

- The State Lands Commission lashed out today at Gov. Arnold Schwarzenegger's attempt to reverse its rejection of the first new oil drilling in California waters since 1969. Lt. Gov. John Garamendi, the three-member panel's chair, called the governor's proposal "a naked power-grab." At a contentious hearing in Santa Monica, the commission passed a resolution urging legislators not to go along with Schwarzenegger's plan, which would revive a drilling project off the Santa Barbara County coast that the commission killed in January.

Pensions&Investments:

- CME Group Inc. and Citadel Investment Group have signed five prominent money managers to their fledgling credit-swap default joint venture. But the launch of the business — targeting a $29-trillion market — is being thwarted by an “oligopoly” of banks that want to keep business at a rival clearinghouse in which they have an economic interest, according to a letter from one of the founding hedge funds, New York-based BlueMountain Capital Management LLC. CME’s joint venture, CMDX, has been in the works for more than a year, but its ambitions to be a clearing destination for the insurance-like derivatives known as credit-default swaps have so far gone unfulfilled. CMDX’s main rival, IntercontinentalExchange Inc.’s ICE Trust clearinghouse, opened for business in March and has so far guaranteed $710 billion in credit-default swaps. ICE Trust is backed by a dozen or so Wall Street firms, including Morgan Stanley and Goldman Sachs Group Inc.

The other funds that have signed on to Chicago-based CMDX include bond-fund manager Pacific Investment Management Co. and hedge funds BlackRock Inc., D. E. Shaw & Co. and AllianceBernstein Holding LP.

USA Today.com:

- Americans are overwhelmingly opposed to closing the detention center for suspected terrorists at Guantanamo Bay and moving some of the detainees to prisons on U.S. soil, a USA TODAY/Gallup Poll finds. By more than 2-1, those surveyed say Guantanamo shouldn't be closed. By more than 3-1, they oppose moving some of the accused terrorists housed there to prisons in their own states. The findings underscore the difficult task President Obama faces in convincing those at home that he should follow through on his campaign promise to close the prison in Cuba, especially in the absence of a plan of where the prisoners would go.

- Prefab homes sprout green designs, improve affordability.

Reuters:

- SunTrust Banks Inc (STI), a U.S. Southeast regional bank ordered by federal regulators to raise $2.2 billion of equity capital, on Monday speeded up a previously announced capital-raising plan, hoping to benefit from recent investor demand for banks' securities. The Atlanta-based bank said it plans to sell $1.4 billion of common stock, raise $300 million of common equity from selling securities, and raise $250 million of common equity from buying back up to $1 billion of preferred and hybrid securities for cash. After the markets closed, the bank priced the offering of 108 million stocks at $13.00 per share, below Monday's closing price of $13.80. SunTrust said the underwriters will have up to 30 days to buy an additional 16.2 million shares.

Financial Times:

- After months of financial gloom, summer has brought some relief. However, there is now a danger that policymakers and market participants are lulled into a false sense of security, which would be likely to lead to another negative feedback loop. To prevent such an outcome, quick and resolute action is needed. In particular, Europe must complete the job of putting the financial system on firmer ground. If one looks at earlier episodes of large-scale macro-financial distress, a number of key lessons emerge. Japan’s experience in the past two decades, in particular, make clear that a banking system populated by zombie banks is a major threat to recovery; banking systems remain dysfunctional until losses are fully recognized and disclosed; and procrastination increases the ultimate cost to the taxpayer. Sweden’s experience shows the benefits of expediting the clean-up. A dysfunctional banking system would represent a particular challenge for Europe, whose economies are much more dependent on banks than is that of the US. Big worries about the state of Europe’s banks remain, as current information is unsatisfactory and published accounts are not trusted. Recent International Monetary Fund estimates of potential future writedowns and recapitalization needs have added to these concerns, as they suggest that the European Union trails the US in the recapitalization process. Europe’s approach to stress testing has been half-hearted at best. We cannot wait another four months to discover that we do not yet know the true state of Europe’s banking system. Instead, a systematic European approach is needed.

- A leading Chinese financial official on Monday rejected suggestions the US dollar could be replaced quickly as the global reserve currency, as US Treasury secretary Tim Geithner arrived in China on his first official visit. “In the short term I don’t think we can find another currency to replace the US dollar,” said Guo Shuqing, chairman of China Construction Bank and former head of the country’s foreign exchange administrator. “The US dollar is the main currency because their economy is number one in terms of competitiveness, in terms of innovation.” Speaking in an interview with the Financial Times, Mr Guo also raised doubts about a proposal from China’s central bank governor, Zhou Xiaochuan, to replace the dollar with a “super-sovereign reserve currency” based on special drawing rights issued by the International Monetary Fund. “We’ve had SDRs for many years but everybody knows they don’t work so well,” said Mr Guo. “People worry about US dollars very much because of the imbalances in the current account but that has been the case for many years – they have had a deficit in the current account since the very beginning of the 1970s.” The bulk of China’s total international investment position is held in US dollar assets and only 6 per cent is in the form of direct investment.

China Daily:

- China's largest Internet search engine, Baidu.com Inc(BIDU), stands accused of abusing its dominant market position in the Internet industry's first test of the nation's Anti-Monopoly Law. Tangshan Renren Information Service Company (TRISC), claimed that the Web giant had monopolized China's search engine market and blacklisted its subsidiary website after TRISC cut back spending on advertising on Baidu.

Chosun Ilbo:

- North Korea built as many as four intercontinental ballistic missiles or rockets last year. The assessment by South Korean and the US intelligence agencies of the communist state’s capability is based on component purchases abroad, citing a South Korean official.

Yonhap:

- South Korea won approval from the US to buy laser-guided bombs capable of destroying North Korea’s underground military facilities, citing a South Korean military source.

Late Buy/Sell Recommendations
Citigroup:

- Reiterated Buy on (BDN), raised target to $9.

- Reiterated Buy on (ALTR), target $21.

CSFB:

- Reiterated Buy on (BRCM), boosted estimates, raised target to $29.

Morgan Keegan:

- Rated (GD) and (LMT) Outperform.

Night Trading
Asian Indices are +.50% to +1.75% on average.
S&P 500 futures -.06%.
NASDAQ 100 futures -.10%.

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Earnings of Note
Company/EPS Estimate
- (UNFI)/.34

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- (BOBE)/.39

- (PAY)/.16

- (HOV)/-1.51

Economic Releases

10:00 am EST

- Pending Home Sales for April are estimated to rise .5% versus a 3.2% gain in March.

Afternoon

- Total Vehicle Sales for March are estimated to rise to 9.4M versus 9.3M in April.

Upcoming Splits
- None of note

Other Potential Market Movers
- Treasury Secretary Geithner Visiting China, the Fed’s Fisher speaking, weekly retail sales reports, KeyBanc Capital Markets Industrial/Automotive/Transportation Conference, Goldman Lodging/Gaming/Restaurant/Leisure Conference, (CAH) investor day, RBC Capital Markets Energy/Power Conference, (THC) investor day, (MDT) analyst meeting and the Cowen Display Conference could also impact trading today.

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

Stocks Finish at Session Highs, Boosted by Transportation, Technology, Commodity, Gaming, Hospital, Retail and Construction Shares

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In Play

Stocks Soaring into Final Hour on Less Economic Fear, Falling Credit Marke Angst, Technical Buying

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Technology longs, Medical longs, Defense longs and Retail longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is very positive as the advance/decline line is substantially higher, almost every sector is rising and volume is heavy. Investor anxiety is high. Today’s overall market action is very bullish. The VIX is rising 2.21% and is very high at 29.56. The ISE Sentiment Index is below average at 107.0 and the total put/call is slightly below average at .77. Finally, the NYSE Arms has been running very high most of the day, hitting 2.41 at its intraday peak, and is currently .80. The Euro Financial Sector Credit Default Swap Index is falling 3.14% today to 113.67 basis points. This index is down from its record March 10th high of 208.75. The North American Investment Grade Credit Default Swap Index is plunging 7.18% to 129.20 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is rising 6.91% to 56 basis points. The TED spread is now down 407 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is jumping 19.81% to 47.0 basis points. The Libor-OIS spread is falling 2.90% to 44 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is rising 11 basis points to 1.95%, which is down 69 basis points since July 7th. The 3-month T-Bill is yielding .09%, which is down 4 basis points today. Today’s stock gains are even more impressive considering the relative weakness in financials, likely related to the 24 point rise in the 10-year yield. It is noteworthy that several gauges of investor angst are rising today, despite sharp gains in the major averages as the S&P 500 breaks above its 200-day moving average on volume. US stocks are getting a bit extended short-term, however technical buying on today’s S&P 500 breakout and short-covering could lift us a bit further before a meaningful pullback occurs. Pending Home Sales for April, released tomorrow, could surprise on the upside. Nikkei futures indicate an +143 open in Japan and DAX futures indicate a -15 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, declining credit market angst, investment manager performance anxiety, technical buying and less economic fear.

Today's Headlines

Bloomberg:

- The S&P 500 will climb 15% through the end of the year as profit margins improve, Deutsche Bank AG said. The year-end forecast of 1,060 for the S&P 500 is an 18% increase from the bank’s previous projection of 900. Historically, profit margins have closely tracked the growth rate of GDP, which Deutsche Bank economists say bottomed in the first quarter. The aggregate margin for companies in the S&P 500 “remains well below the average of the last few years, implying considerable potential upside over the medium term.” Chada raised his earnings estimate for the index to $48.80 a share this year from $39.50. Excluding writedowns by financial companies, he predicted “underlying” profit of $64.60 a share, up from an earlier estimate of $58.30. For 2010, Chadha forecast underlying earnings of $77.0, up from $73.30. Chadha set a target of 1,260 for the S&P 500 for the end of 2010, a 37% advance from the May 29 close. The 1,060 year-end target for the S&P 500 is higher than all but two of the 11 Wall Street strategist forecasts compiled weekly by Bloomberg. Thomas Lee of JPMorgan and David Bianco, of Bank of America today, each forecast 1,100.

- Manufacturing in the U.S. shrank less than forecast in May as new orders increased for the first time since the recession began, a sign that companies are growing more confident the slump will end this year. The Institute for Supply Management’s factory index rose to 42.8 from 40.1 in April. The new-orders measure jumped to 51.1 from 47.2. The ISM’s production index rose to 46, the highest since August, from 40.4 the prior month. A gauge of export orders rose to 48 from 44. The supplier delivery gauge, a measure of the time it takes to receive goods, increased to 49.8 from 44.9 the prior month. The measure of orders waiting to be filled rose to 48 from 40.5. The inventory index fell to 32.9 from 33.6.

- Leveraged loans in Europe rose to the highest in almost eight months as investors sought riskier assets amid signs the worst of the global recession may be over. An index of such loans compiled by Standard & Poor’s LCD, which tracks 17 portions of widely traded high-yield leveraged loans, rose to 82.14 cents on the dollar as of May 28, the highest since Oct. 2. The index has risen 36 percent this year.

- The cost of protecting corporate bonds from default fell to the lowest since October on speculation General Motors Corp.’s bankruptcy will be “pain- free” and that the worst of the global recession is over. Credit-default swaps on the Markit iTraxx Crossover Index of 45 companies with mostly high-risk, high-yield credit ratings dropped 20 basis points to 704, the lowest since Oct. 14, according to JPMorgan Chase & Co. prices at 12:10 p.m. in London. The Markit iTraxx Financial index of 25 European banks and insurers declined 5 basis points to 114 and the subordinated index fell 17.5 to 197.5.

- The Organization of Petroleum Exporting Countries increased oil output by 1.5 percent in May, the biggest gain since 2007, a Bloomberg News survey showed. Oil output averaged 28.15 million barrels a day last month, up 405,000 from April, according to the survey of oil companies, producers and analysts. The 11 OPEC members with quotas, all except Iraq, pumped 25.76 million barrels a day, 915,000 more than their target. “Some members have been suffering because of recent cutbacks and have decided to take advantage of the higher prices,” said Michael Lynch, president of Strategic Energy & Economic Research, in Winchester, Massachusetts. “There’s a feeling that the market can tolerate greater production because of the recent rise in prices.” Saudi Arabia, the world’s biggest oil exporter, increased daily production by 75,000 barrels to 8 million, the survey showed. Iran, OPEC’s second-biggest producer, raised daily output by 80,000 barrels to 3.78 million, the biggest increase of any member. The country’s production is now averaging 444,000 barrels a day above its target, exceeding the quota by more than any other member, according to the survey.

- US stocks are worth buying for the first time in six years, according to an indicator that has signaled bull markets all but once since World War II. The “Coppock Guide” was named for E.S.C. Coppock, who introduced what he described as a “very-long-term buying guide” in an October 1962 story for Barron’s. Leuthold Group LLC has a version known as VLT Momentum that Steve Leuthold, the research firm’s founder, developed after reading the Barron’s article. Coppock wrote that his indicator gave “a picture of the emotional factor” behind stock swings. He advised investors to buy shares in anticipation of “an important, sustained advance” when the guide started to increase from less than zero. That kind of shift occurred last month, according to data compiled by Bloomberg. The guide for the S&P 500 climbed to -409.4 from April’s -417.2, the lowest reading since June 1938. US stocks advanced 16 or 17 times in the first year after the broader index’s Coppock curve turned higher.

- Violent crime in the U.S. fell for the second year in a row in 2008, dropping 2.5 percent, the FBI said. All four categories of violent crime surveyed by the Federal Bureau of Investigation -- forcible rape, murder, robbery and aggravated assault -- declined in 2008 compared to the previous year, according to preliminary data released today.

- Tony Crescenzi, chief bond-market strategist at Miller Tabak & Co. will join Pacific Investment Management Co., a person familiar with his plans said.

- India’s exports fell the most in at least 14 years as the worst global recession since the Great Depression slashed demand for the nation’s jewelry, clothing and other products. Merchandise shipments dropped 33.2 percent from a year earlier to $10.74 billion in April, the government said in New Delhi today. That was the biggest fall since at least April 1995, when Bloomberg data began. Exports slid 33 percent in March. Imports fell 36.6 percent in April from a year earlier and the trade deficit narrowed to $5 billion from $8.7 billion in the same month in 2008, today’s report showed. Oil imports slid 58.5 percent to $3.6 billion, while non-oil purchases dropped 24.6 percent to $12.11 billion.

- China’s Ministry of Commerce said it started an anti-dumping investigation into imports of some kinds of flat-rolled electrical steel from the US and Russia. The ministry has also started investigating subsidies on electrical steel imported from the US.

Wall Street Journal:

- Ford(F) Seeks to Gain Amid Rivals’ Pain. Ford Motor Co. is preparing an effort to gain market share while its two main rivals are bogged down in bankruptcy and restructuring. Ford, the only one of Detroit's Big Three that didn't need a bailout from the federal government, plans to increase production of cars and trucks in the third quarter by about 10% from the level of a year ago, a company official said. It will be Ford's first significant production increase in almost two years. In contrast, General Motors Corp., which is expected to file for Chapter 11 protection Monday, and Chrysler LLC, which is nearing the end of its bankruptcy reorganization, are planning to shut down their plants for nearly all of the third quarter. The difference in production plans will give Ford a chance to push sales through the prime summer selling months while GM and Chrysler focus on their internal issues. "This is a once-in-a-lifetime opportunity to separate us from our other domestic competitors," said a person familiar with the matter at Ford. "No one is going to gift-wrap it for us. You have to deliver the product people want to buy. That said, you have to take this historic opportunity to grab market share."

- Travelocity.com, a unit of Sabre Holdings Corp., and Orbitz Worldwide Inc. plan to announce Monday that they will stop charging a fee when customers book airline tickets over the Internet. During March and April, several major online travel agencies eliminated airline booking fees on a promotional basis through May 31. Then, last Thursday , Expedia.com, a unit of Expedia Inc., eliminated the fee on a long-term basis, forcing other large online agencies to do the same.

- General Motors Corp. filed for Chapter 11 bankruptcy early Monday, marking the humbling of an American icon that once dominated the global car industry and setting up a high-stakes gamble for U.S. taxpayers.

- Now that the Iraq war is going well, media coverage in America has all but vanished. So we thought you might like to know that the month that ended yesterday saw the fewest deaths from terrorist violence in that country since the U.S.-led invasion in 2003.

Washington Post:

- Cap-and-Trade: All Cost, No Benefit. The Obama administration and congressional Democrats have proposed a major cap-and-trade system aimed at reducing carbon dioxide emissions. Scientists agree that CO2 emissions around the world could lead to rising temperatures with serious long-term environmental consequences. But that is not a reason to enact a U.S. cap-and-trade system until there is a global agreement on CO2 reduction. The proposed legislation would have a trivially small effect on global warming while imposing substantial costs on all American households. And to get political support in key states, the legislation would abandon the auctioning of permits in favor of giving permits to selected corporations. The Congressional Budget Office recently estimated that the resulting increases in consumer prices needed to achieve a 15 percent CO2 reduction -- slightly less than the Waxman-Markey target -- would raise the cost of living of a typical household by $1,600 a year. Some expert studies estimate that the cost to households could be substantially higher. The future cost to the typical household would rise significantly as the government reduces the total allowable amount of CO2. Americans should ask themselves whether this annual tax of $1,600-plus per family is justified by the very small resulting decline in global CO2. Since the U.S. share of global CO2 production is now less than 25 percent (and is projected to decline as China and other developing nations grow), a 15 percent fall in U.S. CO2 output would lower global CO2 output by less than 4 percent. Its impact on global warming would be virtually unnoticeable. The U.S. should wait until there is a global agreement on CO2 that includes China and India before committing to costly reductions in the United States.

The Detroit News:

- The world's most powerful laser, created to help keep tabs on the nation's nuclear weapons stockpile while also studying the heavens, has been unveiled. The super laser, known officially as the National Ignition Facility, was unveiled Friday at the Lawrence Livermore National Laboratory about 50 miles east of San Francisco.

Lloyd’s List:

- The number of supertankers sailing through Egypt’s Suez Canal fell 70% in the first quarter, citing data from the Lloyd’s Marine Intelligence Unit. 18 very large crude carriers navigated the waterway compared with 61 a year earlier. Overall westbound supertanker shipments from the Persian Gulf declined to 118 from 169 last year.

- The number of bulk carriers idle at ports around the world has risen over the last month, at a time when surging iron ore and coal shipments have seen rates more than double for larger vessels. A total of 382 bulk carriers above 10,000 dwt are classified as inactive, with no movement for 35 days.

- Tanker values still have some way to fall before they hit their low point despite having already declined by about half since last year’s peak level, an industry expert has warned. Charles Lawrie, of London-based Richardson Lawrie Associates, said the surplus capacity in the tanker fleet, which could be running at about 30% of overall supply in the next two or three years, will ensure that freight rates do not show genuine signs of recovery until 2012.

Reuters:
- Global semiconductor sales rose 6.4 percent in April to $15.6 billion from March, helped by moderate improvements in a number of end-demand drivers and inventory replenishment. The PC market, which is a major consumer of semiconductors, has been stronger than predicted earlier in the year, the Semiconductor Industry Association (SIA) said. "Consensus forecasts currently project that PC unit sales in 2009 will decline by about 6 percent compared to earlier forecasts of a decline in the range of 12 percent," said SIA President George Scalise. Cell phone unit sales are now expected to fall by around 7 percent compared with earlier forecasts of 15 percent for the year.

- Mexican truckers are suing the United States for $6 billion over Washington's refusal to allow Mexican haulers onto its roads as required under the NAFTA trade pact, a trucking association said on Monday. About 4,500 trucking companies represented by Mexico's National Cargo Transportation Association (Canacar) are involved in the lawsuit, according to Canacar. The United States agreed under NAFTA -- the North American Free Trade Agreement with Mexico and Canada -- to let Mexican trucks use its highways beginning in 1995.

- Global factory activity fared better in May than preceding months across major economies as output contracted at a much less fierce pace in a heavy recession, a survey showed on Monday. The global index, produced by JP Morgan with research and supply management organizations, rose to 45.3 in May from 41.8 in April. That was its highest level in nine months.

Financial Times:
- The reason the US government is putting $60 billion into General Motors can only be to slow the company’s decline so that workers, suppliers and communities can prepare for its eventual disappearance, said Robert Reich, who was labor secretary during the Clinton administration. He said the expenditure is plainly not an investment, for it’s unlikely taxpayers will get their money back, let alone any return; many younger people have never bought a GM car and wouldn’t consider doing so. Nor can the main point be to save jobs, because GM, told by the Treasury that it must shrink, plans to shut plants and shed at least 20,000 workers, Reich said. The purpose of the bailout can’t be to create a lean company, free of debt, which might one day be profitable, for that’s what a reorganization under the insolvency regime is supposed to achieve. Yet if the purpose of spending the $60 billion is to buy time to carry through social adjustments, there are better ways of using the cash.

IRNA:
- Iraqi Kurdistan held a ceremony attended by Iraqi and Kurdish officials as oil exports began from the region. The exports from the Taq-Taq and Tawke fields will amount to 100,000 barrels a day and the Kurdish regional government will try to raise this to 120,000 barrels a day in two years.

Bear Radar

Style Underperformer:
Large-cap Value (+2.35%)

Sector Underperformers:
Gold (+.09%), Biotech (+.46%) and Drugs (+.63%)

Stocks Falling on Unusual Volume:
GG, OSIP, MAPP, THOR and TAR

Stocks With Unusual Put Option Activity:
1) KWK 2) GNK 3) ESV 4) OSIP 5) DFS