Thursday, February 15, 2007

Friday Watch

Late-Night Headlines
Bloomberg:
- Secretary of State Condoleezza Rice, having just clinched a six-nation agreement aimed at scrapping North Korea’s nuclear-bomb program, heads to Israel today to try to make progress on an even more intractable issue: the dispute between Israel and the Palestinians.
- The US and North Korea will discuss ending the communist country’s designation as a state sponsor of terrorism, as they build links after reaching an accord on dismantling North Korea’s nuclear program.
- Japan’s fastest economic growth in almost three years last quarter may help the central bank justify raising interest rates, the lowest among major economies, according to economists.
- Crude oil may fall next week as warmer weather moves into the eastern half of the US, curbing demand for heating oil and natural gas, according to a Bloomberg News survey of 42 analysts, traders sand brokers.
- Japan said it will impose sanctions on Iran for its refusal to abandon its nuclear program in line with measures taken by the UN in December.
- Pacific Hydro Ltd., an Australian-based renewable energy producer, plans to invest more than $392 million in “the coming years” to build plants in Brazil after acquiring SES Ltda., a wind energy company.
- Aluminum may fall 11% in 2007 as global demand slows and output gains in China, said Minmetals StarFutures Co., a unit of China’s largest metals trader. The market may have a surplus of as much as 300,000 tons. Prices of the metal have already declined 15% from May 2006 highs.

New York Times:
- Television watchers with digital video recorders such as those made by TiVo Inc.(TIVO) aren’t skipping commercials as much as advertisers feared, citing new data from Nielsen.

Business Week:
- Companies are trying to bring down medical insurance costs by implementing health wellness programs that encourage employees to get fit.
AMR Corp.(AMR) could be a buyout target for a group including Goldman Sachs(GS) and British Airways Plc. The proposed bid for the world’s largest carrier is between $46 a share and $52 a share, or $9.8 billion to $11.1 billion.

Kyodo News:
- President Bush congratulated Chinese President Hu Jintao on China’s role in the six-nation agreement on dismantling North Korea’s nuclear weapons program.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (GOOG), target $600, No.1 Internet stock pick. Current valuation implies a very attractive risk-reward outlook. Recent industry datapoints continue to indicate a very robust profile for search advertising. Review of underlying drivers of Google’s search revenue demonstrates growth that is more sustainable than the market realizes. Tracking suggests that Google continues to gain market share. Google’s option value is underappreciated, with updated worldwide traffic analysis as support. ROIC analysis highlights materially very high value creation by Google. The potential loss of the Ask affiliate deal is a manageable risk.
- Reiterated Buy on (NFLX), target $30.
- Reiterated Sell on (TBL), target $23.

Business Week:
- Microvision(MVIS), which in January showed a prototype high-resolution video projector small enough to put into a mobile phone, is attracting investor inerest. Joel Achramowicz, analyst at MDB Capital, rates the stock “buy” and said he expects the stock to double in a year.
- Shares of CytRx Corp.(CYTR), which rose to a six-year high today, may triple in two years, citing Rodman Renshaw analyst Elemer Piros. The company is scheduled in 12 to 18 months to test for humans its so-called RNAi technology that shuts down genes that cause diabetes, obesity and Lou Gehrig’s disease.

Night Trading
Asian Indices are -.25% to unch. on average.
S&P 500 indicated -.22%.
NASDAQ 100 indicated -.30%.

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
Conference Calendar
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
- (CPB)/.63
- (GT)/.20
- (HRL)/.54
- (SJM)/.69

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- The Producer Price Index for January is estimated to decline -.6% versus a .9% gain in December.
- The PPI Ex Food & Energy for January is estimated to rise .2% versus a .2% gain in December.
- Housing Starts for January are estimated to fall to 1600K versus 1642K in December.
- Building Permits for January are estimated to fall to 1590K versus 1613K in December.

10:00 am EST
- The preliminary Univ. of Mich. Consumer Confidence for February is estimated to fall to 96.5 versus 96.9 in January.

BOTTOM LINE: Asian indices are slightly lower, weighed down by technology and automaker shares in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.

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