Monday, February 28, 2005

Monday Watch

Weekend News
US and European Union officials reacted with dismay to Saudi Arabia's forecast that oil prices will remain at between $40 and $50 a barrel for the rest of this year, the Financial Times reported. Egyptian President Mubarak will allow parliament to amend the constitution to allow direct presidential polls, AFP reported. European regulators oppose Microsoft's proposed changes to its Windows operating system, Intl. Herald Tribune reported. The "BTK" serial killer suspect arrested by Wichita, Kansas, police confessed to at least six murders, the AP reported. Iran's ability to enrich uranium is "non negotiable," Hassan Rohani, the country's chief negotiator told European officials on a trip last week, Agence France-Presse reported. Sabawi Ibrahim al-Hassan, a half-brother of ousted Iraqi dictator Saddam Hussein, has been arrested, Fox News reported. Electronic Data Systems is likely to win a $7.6 billion contract for the UK's Ministry of Defense, the Sunday Telegraph reported. Billionaire investor George Soros plans to invest $3.8 billion in the commercial property market in London, the Observer reported. Reuters Group Plc, which owns 62% of Instinet Group, may receive $1.3 billion from the sale of its stake in the US-based electronic brokerage and trading business, the Telegraph said. CIA officers are increasingly fearful of punishment in connection with their interrogations of suspected terrorists, the NY Times reported. Martha Stewart is expected to return to work at the company she founded on March 7 after her release from prison, the NY Times reported. Medical malpractice lawyers will be the next target in President Bush's efforts to curb litigation, the NY Times reported. At least 13 states have agreed to raise graduation requirements at US high schools to better prepare students for college and the workforce, the AP reported. China announced measures for capital flows across its boarders designed to stem gains in the yuan, the Financial Times reported. PepsiCo, maker of food brands Pepsi-Cola and Doritos chips, is setting voluntary limits to advertising aimed at children due to obesity levels in the US and western Europe, the Financial Times said. Shanghai Baosteel Group, China's largest steel producer, expect national growth in production of the metal to slow by half this year as mills focus on high-quality steel for shipbuilding and trim output of steel for construction, the Asian Wall Street Journal reported. Universal Music and Sony BMG are among music labels that may be in talks with online retailers to raise wholesale prices for digital music downloads in the wake of the success of Apple Computer's iTunes service, the Financial Times said. Wal-Mart Stores said February sales at US stores open at least a year rose about 4%, at the high end of estimates, as shoppers purchased more groceries, Bloomberg reported. President Bush said he will intensify his campaign to win public support for his plan to restructure Social Security, and he called on lawmakers to share ideas on improving the system, Bloomberg said. OPEC isn't likely to raise output when it meets in Iran next month, the Qatari oil minister said, even though crude in NY has pushed through $50/bbl. and demand forecasts for 2005 have been revised upwards, Bloomberg reported. The US National Weather Service expects a "significant nor-easter" to begin showering snow and sleet on the mid-Atlantic region tomorrow morning, Bloomberg said. Royal Dutch/Shell Group, Europe's second-largest oil company, signed a contract to build a $7 billion liquefied natural gas plant in Qatar as it seeks to profit from surging global demand for the fuel, Bloomberg said. European pharmaceutical stocks, the region's worst performers last quarter, are poised to rise on reduced speculation about an increase in acquisitions, Bloomberg reported. North Korea's government told South Korean officials the communist country is willing to return to international disarmament talks in June, the Sankei newspaper reported. Yellow Roadway, the biggest US trucker, agreed to buy No. 2 regional carrier USF Corp. for about $1.37 billion to add next-day regional transportation services, Bloomberg reported. Federated Department Stores agreed to buy May Department Stores for about $36/share and may announce the deal tomorrow morning, Bloomberg reported. Wynn Resorts Ltd. and MGM Mirage submitted bids to develop a resort in Singapore that may include the city-state's first casino, Bloomberg said. France's Areva SA, US-based Westinghouse Electric and Russia's AtomStroyExport will bid for contracts to build nuclear reactors in China, Bloomberg reported. Templeton Asset Management's Mark Mobius is betting corporate governance improvements in South Korea and political stability in Taiwan will help drive stock prices in those markets higher, Bloomberg reported. Qwest Communications would amend its latest offer for MCI if necessary, the Wall Street Journal reported. China should widen the yuan's trading band against the US dollar to 5% before shifting to a peg against a basket of currencies, China Business Post reported.

Weekend Recommendations
-Bulls and Bears: Had guests that were positive on MO, MON, UN, NVS, TMX, RIO, SYY, TWX, RL, CAG, mixed on MCD and negative on RGC, MSO.
-Cashin' In: Had guests that were mixed on GLG, DUK and negative on RHAT.
-Cavuto on Business: Had guests that were positive on FDX, HOC, TOL, RYL, WPPGY and negative on FNM.
-Barron's: Had positive comments on GYI, CVCO, GM bonds and energy stocks. Had negative comments on tech and banks.
-Goldman Sachs: Reiterated Outperform on AVP, PAYX, BSX, WAG, AMGN, DNA, CL and EBAY.

Night Trading
Asian Indices are higher, +.50% to +1.0% on average.
S&P 500 indicated unch.
NASDAQ 100 indicated +.03%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell Video(bottom right)
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Analyst Actions
Macro Calls
CNBC Guest Schedule

Earnings of Note

- AAPL 2-for-1

Economic Data
- Personal Income for January is estimated to fall 2.6% versus a 3.7% increase in December.
- Personal Spending for January is estimated to rise .1% versus a .8% increase in December.
- The PCE Deflator for January is estimated to rise 2.2% versus a 2.4% gain in December.
- The PCE Core for January is estimated to rise 1.5% versus a 1.5% increase in December.
- New Home Sales for January are estimated to rise to 1125K versus 1098K in December.
- The Chicago Purchasing Manager for February is estimated at 60.2 versus a reading of 62.4 in January.

BOTTOM LINE: I expect US stocks to open modestly higher in the morning on optimism over merger activity, strong economic reports and gains in Asia. The Portfolio is 100% net long heading into the week.

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