Tuesday, February 20, 2007

Wednesday Watch

Late-Night Headlines
Bloomberg:
- The yen strengthened against the dollar after NHK Television reported that Bank of Japan Governor Toshihiko Fukui proposed raising the central bank’s benchmark interest rate.
- Delphi Corp., the biggest auto-parts supplier to General Motors(GM), intends to sell its interiors business to billionaire industrialist Ira Rennert as part of an effort to exit bankruptcy.
- Australia’s central bank is “more confident” inflation pressures are easting in the Asia-Pacific region’s fifth-largest economy, Governor Glenn Stevens said.
- Archer Daniels Midland(ADM) expects biodegradable plastics to be the next growth market for corn byproducts. Archer Daniels, together with partner Metabolix, will open its first plant to produce 50,000 tons of biodegradable plastics next year in Clinton, Iowa. Archer Daniels also plans to increase ethanol capacity by 50% to 1.6 billion gallons a year by next year.
- NovaStar Financial(NFI), the 16th largest sub-prime mortgage lender in the US, had a $14.4 million loss for the fourth quarter. Shares plunged 33% in after-hours trading.

AP:
- An Austin, Texas, judge blocked Governor Rick Perry’s approval of TXU Corp.’s plan to build six coal-fired plants in the state. Plaintiffs, who included environmental groups, said the order was unconstitutional.

Xinhua News Agency:
- China plans to boost gold production to 260 tons this year after record output of 240 tons in 2006, citing the State Development and Reform Commission.

Late Buy/Sell Recommendations
Citigroup:
- Lobbyists and politicians noted at the Renewable Fuels Conference that they expect the next Renewable Fuel Standard to be finalized next month with enactment starting July 1st of this year. The current RFS standard mandates 7.5 billion gallons of renewable fuel use by 2012 though we are already above 5 billion gallons of use. The US consumes approximately 140 billion gallons of gasoline annually so obviously E10 adoption(10% of a fuel gallon being ethanol, 90% gas) across the country gets us to 14 billion renewable gallons with E20 getting us to 28 billion gallons. It was noted the government targets 76% of all US gasoline will be E10 blended by 2010, implying the new RFS likely has to be at least 11-12 billion gallons.
- Residential consumption of natural gas has not grown after reaching an early peak in 1973. Conservation drove consumption down to a low in 1983 from the peak in 1973. Since then, despite a 33% pickup in the housing stock, residential demand has only risen by 20%, just enough to return consumption to the 1973 level. Between climate change trends, conservation, migration to the South and West, residential consumption may not be a significant source of growth for natural gas consumption in the US.
- Reiterated Buy on (GILD), target raised to $86.

Night Trading
Asian Indices are -.50% to +.50% on average.
S&P 500 indicated -.08%.
NASDAQ 100 indicated -.04%.

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
- (ANF)/2.14
- (APCC)/.22
- (ADI)/.39
- (BRCD)/.12
- (CLF)/1.52
- (GMR)/.79
- (GGC)/-.20
- (GRT)/.26
- (HSIC)/.67
- (JBX)/.78
- (MHS)/.79
- (MRX)/.21
- (OII)/.56
- (OSIP)/-.14
- (PWR)/.16
- (ROG)/.55
- (RUTH)/.36
- (CRM)/.07
- (SNPS)/.20
- (TK)/1.11
- (TJX)/.51
- (TCC)/1.29
- (TRI)/.55
- (VCLK)/.18
- (WBMD)/.16
- (WFMI)/.41
- (ZLC)/1.87

Upcoming Splits
- (CMCSA) 3-for-2
- (TRMB) 2-for-1

Economic Releases
8:30 am EST
- The Consumer Price Index for January is estimated to rise .1% versus a .4% gain in December.
- The CPI Ex Food & Energy for January is estimated to rise .2% versus a .1% gain in December.

10:00 am EST
- Leading Indicators for January are estimated to rise .2% versus a .3% gain in December.

2:00 pm EST
- Minutes from Jan. 31 FOMC Meeting

BOTTOM LINE: Asian indices are mixed as gains in technology and steel shares are offsetting losses in energy stocks 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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