Tuesday, February 22, 2005

Tuesday Watch

Weekend News
Emerging market bond prices rose to a record last week in comparison with US government debt as investors, struggling with low interest rates, diversify into higher-yielding securities, the Financial Times reported. Bonuses of as much as $15,000 tax-free being offered by the US National Guard to lure guardsmen are reservists to re-enlist are working, and some have signed on for six more years, the NY Times reported. "Podcasts," which use a recently developed technology that enables people to make broadcasts on their computers, are becoming more popular as computer users download them to portable players, the NY Times said. Identity theft at ChoicePoint, which collects data on driving, property records and other transactions, may involve as many as 500,000 victims, an AP report said. Doctors advocate more caution using painkiller drugs, including cardiac screening, in the wake of a FDA panel's decision against banning their sale, the NY Times reported. Japanese companies including Mitsubishi, Itochu, and Nippon Steel, are advising Iraq on developing its gas reserves and upgrading oil-export terminals, the Middle East Economic Digest reported. Abercrombie & Fitch may open its first store in Europe in 2006, the Telegraph reported. More investors are buying farmland, spending as much as $500,000 a field in the US Midwest, as people from cities look for secure investments to round out their portfolios, the LA Times reported. McDonald's Corp. has added fresh fruit and more vegetables to its menu in recent years, changing the produce industry as it seeks to deflect criticism about the nutritional value of its food, the NY Times reported. Some US companies, faced with high health-care benefit cots, are using cash and other incentives to make employees more conscious of their lifestyles, the Washington Post said. Denver International Airport and the businesses around it are expected to contribute almost $85 billion to Denver's economy by 2025, up from $15.3 billion now, the Denver Post reported. India may sell stakes in 44 state-run companies and begin the sale process after the budget, the Economic Times reported. Axa SA, Europe's second-biggest insurer, boosted its stake to 5.6% in Teva Pharmaceutical Industries, the world's biggest maker of generic drugs, Haaretz reported. A US federal advisory group will recommend soon that new-born babies should be checked fro 29 rare medical conditions, the NY Times reported. The US gave the Iraqi central bank approval to open a deposit account at the Federal Reserve Bank of New York to earn income on reserves of about $5 billion, Arabian Business magazine reported. Video game makers are turning away from movie-based games because of high marketing costs, the NY Times said. Taser International, which makes stun guns, has hired hundreds of police officers to help sell the devices to law enforcement agencies nationwide, the San Francisco Chronicle reported. Sirius Satellite Radio's agreement to acquire Howard Stern's radio show is the subject of a SEC insider-trading investigation, the NY Post reported. Toyota Motor plans to add two assembly factories in North America by 2010 as it attempts to increase sales in the world's richest auto market and challenge GM, the Wall Street Journal reported. US banks will acquire rivals, creating larger companies and smaller local banks will continue to thrive at the same time, the Financial Times reported. Iraq's largest political slate will select its candidate for prime minister tomorrow in a secret ballot, choosing between Ahmad Chalabi, former favorite of the US administration, and Ibrahim al-Jaafari, the interim vice-president, the AP reported. US regulators will allow fund managers to continue to receive independent stock research through "soft dollar" commissions paid by their clients, the Financial Times reported, citing an interview with SEC Chairman Donaldson. "I think you will see us moving in the direction of a tighter definition of what is allowable to be paid for via soft dollar," Donaldson said. Qwest Communications plans to make another bid for MCI as early as this week, the Wall Street Journal said. An increasing number of US companies are halting IPOs in order to consider acquisition offers from potential suitors, the Wall Street Journal reported. In an attempt to lift sales, Hasbro introduced the $30 I-DOG, a palm-sized electronic toy that wiggles after being plugged into portable music players, Bloomberg reported. Israeli Prime Minister Sharon signed orders to begin evacuating all 21 Israeli settlements in the Gaza Strip, and another four in the West Bank, after his cabinet approved the measures hours earlier, Bloomberg said. China criticized a joint statement by the US and Japan declaring the peaceful resolution of China's dispute with Taiwan as a strategic objective, Bloomberg reported. China's producer prices rose last month at the slowest pace in nine months as government lending curbs helped rein in industrial expansion, Bloomberg reported. China agreed to let selected commercial banks set up fund management companies, aiming to boost capital markets and prepare lenders for competition, Bloomberg reported. Israel released 500 Palestinian prisoners as part of acts of goodwill with the Palestinian Authority to try to make progress in the peace process, Haaretz reported. Novartis AG, Europe's fourth-largest drugmaker, agreed to buy German generic drugmaker Hexal AG and most of its US affiliate Eon Labs for $7.4 billion in cash to create the world's largest generic drugs company, Bloomberg reported. Macquarie Bank, Australia's biggest publicly traded investment bank, raised its 2005 price forecasts for aluminum, nickel, zinc and copper, saying global demand could outstrip supply by more than it expected, Bloomberg said. European Central Bank council member Wellink said inflation is under control, suggesting he sees no need to raise interest rates in coming months as the economy recovers from a fourth-quarter slowdown, Bloomberg reported. Toronto-Dominion Bank, Canada's No.2 bank, plans to buy at least one US lender this year and open more TD Waterhouse discount-brokerage offices using its new stake in Banknorth Group, Bloomberg said. China's consumer prices rose in January at their slowest pace in more than a year as harvests improved, helping stem gains in food costs, Bloomberg reported. Australia will send about more troops to Iraq to help with rebuilding the nation, Bloomberg said. Winn-Dixie Stores, which operates about 920 supermarkets in the southern US, filed for Chapter 11 bankruptcy protection, Bloomberg reported. President Bush and French President Chirac called for Syria to pull its troops out of Lebanon, Bloomberg said.

Weekend Recommendations
-Bulls and Bears: Had guests that were positive on LSS, NMG/A, NOK, MAR, LEXR, BMY, SGP, mixed on DV, MSFT and negative on MSO, EK, LLY, GNSS.
-Forbes on Fox: Had guests that were positive on COST, EMN and mixed on CMCSA, CHTR, VZ, SBC.
-Cashin' In: Had guests that were positive on BCS, ELP, PBR and mixed on ERICY, TSRA, ANPI, IMCL.
-Cavuto on Business: Had guests that were positive on TYC, ABB, FD, RHI and mixed on FNM.
-Barron's: Had positive comments on CRYP, NTLRF, WPTE and HET. Had negative comments on AIG.
-Goldman Sachs: Reiterated Outperform on MDT, MMM, DDR, BC and CEN. Reiterated Underperform on HC and CVC.

Night Trading
Asian Indices are mostly lower, -.75% to unch. on average.
S&P 500 indicated -.09%.
NASDAQ 100 indicated -.13%.

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

- None of note.

Economic Data
- Consumer Confidence for February is estimated to fall to 103.0 versus a reading of 103.4 in January.

BOTTOM LINE: I expect US stocks to open modestly lower in the morning on worries over higher energy prices and slowing global growth. The Shanghai A-Share Index is continuing its recent outperformance, rising about 1.5% tonight, breaking clearly above its 50-day moving-average. I may look to acquire shares in a Chinese ADR over the next few days. The Portfolio is 75% net long heading into the week.

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