Tuesday, May 31, 2005

Monday Watch

Weekend Headlines
- France rejected the European Union's constitution in a national referendum, dealing a blow to President Jacques Chirac and European integration.
- China said it canceled export tariffs on 81 textile products amid a growing row with the US and the European Union over a surge in shipments since global quotas ended on Jan. 1.
- UK Prime Minister Tony Blair signaled he may scrap plans for a referendum on adopting the European Union constitution after French voters rejected the treaty.
- The US trade representative's office said it will ask the WTO to rule that European government loans to airplane maker Airbus SAS are illegal, setting up the biggest-ever dispute in WTO history.
- Crude oil is falling for the first time in six days on speculation US inventories will be sufficient to meet demand from refiners during the second half of the year.
- American International Group plans to restate five years of earnings today, and its correction of accounting flaws may make it easier for the company to settle a lawsuit with NY AG Spitzer.
- The Russian government will probably seize the rest of OAO Yukos Oil's assets, regardless of who is elected to the company's board.
- Norwegian support for joining the European Union fell to the lowest since 2001 in May, dropping for a third consecutive month, according to a poll by Sentio-Norsk Statistikk.
- Saudi Arabia's King Fahd Bin Abdul Aziz al-Saud is "doing well" and his medical tests are proceeding in a "normal way" a day after he was admitted to a hospital.
- Wal-Mart Stores said May sales at US stores open at least one year rose about 2.5% as shoppers spent more on groceries.
- Walt Disney's ESPN has told the NHL it won't exercise a contract option to televise games for the 2005-06 season.
- The European Central Bank may lower its 2005 growth forecast for the third time in six months and leave its key interest rate unchanged as business confidence slumps, surveys of economists showed.
- The euro fell to a seven-month low in Asia and had its biggest fluctuation of any currency on concern the rejection of the EU Constitution will slow the region's economic integration.

Wall Street Journal:
- Deutsche Bank AG, Royal Bank of Scotland Group Plc, BNP Paribas SA and Societe Generale SA are among European banks considering an offer for Germany's Commerzbank AG.
- Oil companies in Canada are racing to build pipelines between northern Alberta and the Pacific Coast amid increasing demand for the country's oil from China and the US.
- Hewlett-Packard will use Intel's Itanium chip in its NonStop computer line.

- The $1 trillion hedge-fund industry may face slowing investments and smaller fees as performance declines because there are too few investment opportunities and a shortage of talented fund managers.

New York Times:
- BAE Systems Plc and Northrop Grumman are vying to win a contract to supply US commercial airliners with systems designed to foil heat-seeking missiles.
- The US Chamber of Commerce, the Heritage Foundation, Families USA, Johnson & Johnson, Pfizer and 19 other groups are working together to devise a way for uninsured Americans to get health coverage.
- Companies such as closely held Winergy are seeking permission to build wind-turbine farms off the New Jersey coast as an alternative to energy from coal-fired power plants.
- ABC's "Good Morning America," the No. 2 US morning news show, is stealing viewers and forcing changes at rival NBC's "Today" show, the most profitable program on television.
- US FBI agents are making a bigger effort to go undercover to find terrorists and disturb their plans.

San Francisco Chronicle:
- Mobile-phone sales rose 17% to 180.6 million units worldwide in the first quarter from the year-earlier period, driven by consumer demand for camera phones and special offers.

Charlotte Observer:
- US Airways Group said Wellington Management agreed to invest $150 million in the airline after it acquires America West Holdings Corp.

Detroit Free Press:
- General Motors is expected next week to announce the expansion of its employee discounts to all consumers as the automaker seeks to winnow the number of unsold vehicles on dealers' lots.

- The perception that New Jersey is steeped in political corruption is more widespread than at any time in recent memory.

New York Post:
- New York Police Commissioner Ray Kelly wants the city to install about 400 surveillance cameras on high-crime streets.
- Zoom Systems, a San Francisco technology company, is marketing vending machines that can dispense consumer items including cell phones, Apple Computer iPods and portable DVD players.

- A Florida physician and a martial-arts expert in New York have been arrested for conspiring to aid terrorists.
- Wines prices at $11 and higher are selling better than less expensive bottles.

Financial Times:
- Advanced Micro Devices may introduce its first processors operating with two cores for desktop PCs tomorrow to compete with Intel.
- RadioShack's mobile phone products business is "a very long-term, sustainable" part of the No. 3 US electronics chain's future, citing an interview with CEO Edmondson.

Sunday Times:
- French rejection of the European Union constitution may see investors sell the euro and could lead to low economic growth and high inflation, or stagflation, for the region, citing economists.

- Polling booths opened today in Beirut as Lebanon began its first general election since Syria withdrew its soldiers after a 29-year military presence.
- Al-Qaeda leader in Iraq Abu Musab al-Zarqawi has been "lightly" wounded, citing a voice message attributed to Zarqawi and posted on the Internet.

Korea Herald:
- GE's finance unit is in final talks to invest $399 million in Hyundai Card Co., becoming the second-largest shareholder in the South Korean card issuer.

Economic Observer:
- China will scrap a 20% tax on stock dividends from June 1 as part of an attempt to bolster the nation's share markets.

Yomiuri newspaper:
- A regional Japanese government will ban sales to minors of the video game "Grand Theft Auto III," made by a US company Rockstar North and distributed in Japan by Capcom Co.

Weekend Recommendations
Bulls and Bears:
- Had guests that were positive on FDO, WCI, SLR, AIG, mixed on LPNT, TSO, CREE, XOM, NSS and negative on DUK, VLO.

Forbes on Fox:
- Had guests that were positive on XLE and mixed on SBUX, CSCO, DPZ, NKE, CI.

Cashin' In:
- Had guests that were positive on PTR, BIIB, HLT, mixed on OEH, PSD, DO and negative on ELN, GG, GT.

Cavuto on Business:
- Had guests that were positive on DELL, FL and mixed on BA.

Business Week:
- Named its Top 100 Small Companies.

- Had positive comments on PLT, GS and AZR.
- Had negative comments on AMLN, RHAT, CNWK, DJTE, PSUN, HLF, NUS, GS and A.

Goldman Sachs:
- Reiterated Outperform on FRNT, EBAY and LIZ.
- Reiterated Underperform on CVH and HRB.

Night Trading
Asian indices are unch. to +.25% on average.
S&P 500 indicated -.02%.
NASDAQ 100 indicated +.06%.

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

Earnings of Note

AGR/A 1-for-10
SRX 2-for-1
TMX 2-for-1
UNH 2-for-1

Economic Releases
10:00 a.m. EST
- Chicago Purchasing Manager for May is estimated to fall to 61.8 versus a reading of 65.6 in April.
- Consumer Confidence for May is estimated to fall to 96.0 versus 97.7 in April.

BOTTOM LINE: Asian Indices are mostly higher on strength in exporting shares in the region. I expect US stocks to open mixed as profit-taking offsets a rising dollar and lower long-term interest rates. The Portfolio is 50% net long heading into the week.

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