Thursday, February 10, 2005

Thursday Watch

Late-Night News
Asian indices are mixed as gains in financial shares are offsetting losses in technology stocks in the region. Israel will increase the number of Palestinian prisoners released if its plan to disengage from the Gaza Strip and parts of the West Bank goes smoothly, the Israeli daily newspaper Haaretz said. Some of Saddam Hussein's top officials will go on trial before an Iraqi tribunal in televised proceedings within weeks, the AP reported. The US and the European Union may find it difficult to reach an agreement on subsidies to Boeing and Airbus SAS, the Wall Street Journal reported. Democratic Senator Joe Biden wrote in the Wall Street Journal that more foreign governments should work with the US to create a stable and united Iraq. Indian Prime Minister Singh has set a six-month target for changing labor and tax laws, developing a foreign direct investment policy and eliminating some subsidies, the Business Standard reported. China's central bank will remove restrictions on foreign banks issuing credit and debit cards in the country by the end of next year to foster more competition and improve management of the business, state news agency Xinhua reported. Huawei Technologies is among Chinese telecommunications equipment makers increasing business in other countries, forcing competitors to lower prices, the Wall Street Journal reported. SEC Chairman Donaldson said he will press for better disclosure on executive pay, the Wall Street Journal said. GlaxoSmithKline Plc expects to finish intermediate clinical trials this year on more than a dozen medicines, the Wall Street Journal reported.

Late Recommendations
-Goldman Sachs: Reiterated Outperform on ACS, TMK, STR and NFX. Reiterated Underperform on DE, AG and CNH.

Night Trading
Asian Indices are unch. to +.50% on average.
S&P 500 indicated +.09%.
NASDAQ 100 indicated +.20%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC 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

None of note.

Economic Data
-Trade Balance for December is estimated at -$57.0B versus -$60.3B in November.
-Initial Jobless Claims for last week are estimated at 325K versus 316K the prior week.
-Continuing Claims are estimated at 2700K versus 2696K prior.
-Monthly Budget Statement for January is estimated at $10.0B versus -$1.4B in December.

BOTTOM LINE: I expect US equities to open modestly higher on a bounce from today's sell-off. However, shares may weaken later in the afternoon on a resumption of today's worries. Long-term interest rates are falling for three main reasons: 1)Global economic growth is slowing 2)The US dollar is stabilizing 3)Inflation expectations are falling. In my opinion, the decline in rates is a positive. I expect fears of slowing growth will peak during the first half of the year. Low interest rates, weaker commodity prices, continuing employment gains and stimulative US reforms should boost growth in the second half of the year. I continue to expect the Fed to slow the pace of their rate hikes in the near future. The Portfolio is 50% net long heading into tomorrow.

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