Friday, March 04, 2005

Friday Watch

Late-Night News
Asian indices are mixed as strength in commodity-related stocks in the region is being offset by weakness in manufacturing shares. SonoSite Inc., which makes handheld ultrasound devices, plans to introduce a new device it says will match or exceed the quality of big systems, at a cheaper price, boosting the value of the $200 million handheld market, Business Week reported. HSBC Holdings Plc will tomorrow announce plans to overhaul its research unit in an attempt to compete with investment banks in the US, the Financial Times reported. Freddie Mac, the second-biggest provider of financing for US residential mortgages, said investors in Asia today bought 38% of its $3 billion two-year note sale, Reuters reported. China's domestic steel prices are unlikely to increase by as much as the 71.5% jump in the price of imported iron ore because of the nation's plentiful stocks of the raw material and possible slowing demand, the China Daily said. Taiwan's parliament may pass retaliatory legislation if China's National People's Congress enacts an anti-secession law aimed at the island, the China Times reported. Teva Pharmaceutical Industries may try to buy Impax Labs to regain its ranking as the world's No.1 maker of generic drugs, Business Week reported. Merrill Lynch is in talks with Mitsubishi Tokyo Financial Group to form a firm specializing in financial services for wealthy individuals, Nikkei English News reported. Nine Chinese insurers, holding 94% of the domestic insurance assets, applied for approval to invest directly in China's stock markets, the China Securities Journal reported. The European Union will seek to resume "open skies" talks with the US by demanding that European airlines are allowed to buy their ailing US counterparts, the Financial Times reported. Growth in the European Union economies may slow to 1.7% this spring, Financial Times Deutschland said. Intel has created a new cell-phone memory technology that the company says will help it regain the lead in the fastest-growing part of the industry, Bloomberg reported. Aon Corp. may pay $190 million to settle fraud investigations by Spitzer and two other states, Bloomberg said. The US Senate today voted to scrap the government's plan to resume imports of Canadian cattle, which opponents said would jeopardize domestic herds and US consumers by exposing them to mad cow disease, Bloomberg reported. Martha Stewart left federal prison in West Virginia after a five-month sentence for lying to regulators about a stock sale, Fox News reported. China, which raised oil imports 71% last year, plans to pass laws aimed at conserving power and encouraging development of renewable energy to curb pollution and a soaring energy bill, Bloomberg said. The price of pulp, used to make paper, will fall in 2005 because "there's too much" supply, said Anthony Paul, manager of futures trading at Sweden-based CellMark AB, the world's biggest pulp trader.

Late Recommendations
- Goldman Sachs: Reiterated Outperform on DEX, CAT, IR, PXD and SU. Reiterated Underperform on PCZ, GCO, CMOS and WTW.
- Business Week: Shares of Deere & Co.(DE) were recently bought by Dave Young, president of Paragon Capital Management and Prudential rates the stock "Accumulate," target $83.

Night Trading
Asian Indices are unch. to +.25% on average.
S&P 500 indicated +.13%.
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
Company/Estimate
CRDN/.37
NTLI/-1.11
SKS/.66
SKE/.41

Splits
None of note.

Economic Data
- The Unemployment Rate for February is estimated to remain unchanged at 5.2% versus 5.2% in January.
- Average Hourly Earnings for February are estimated to rise .2% versus a .2% increase in January.
- The Change in Non-farm Payrolls for February is estimated at 225K versus 146K in January.
- The Change in Manufacturing Payrolls for February is estimated at 7K versus -25K in January.
- Average Weekly Hours for February are estimated to rise to 33.8 versus 33.7 in January.
- The Final Univ. of Mich. Consumer Confidence reading for February is estimated to rise to 94.5 versus a prior estimate of 94.2.
- Factory Orders for January are estimated to fall .1% versus a .3% increase in December.

BOTTOM LINE: I expect US equities to open modestly higher and to build on gains throughout the day on lower-to-stable long-term interest rates, optimism over the US economy, bargain hunting and short-covering. More important than the actual employment report will be the bond market's reaction to the report. A substantial rise in long-term rates would likely send US stocks lower. The Portfolio is 100% net long heading into tomorrow.

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