Thursday, June 07, 2007

Friday Watch

Late-Night Headlines
- BNP Paribas SA, France’s largest bank by value, cut its forecast for the yen as rising global interest rates make it more lucrative to borrow and sell Japan’s currency to purchase higher-yielding assets.
- Crude oil may fall next week on rising fuel stockpiles and reduced concern about disruption of oil shipments from the Persian Gulf after cyclone Gonu, according to a Bloomberg survey of 44 analysts and traders.
- National Semi(NSM) said profit dropped less that expected as it recovered from an industry glut. The shares jumped 10.3% in after-hours trading.
- Broadcom(BRCM) won a trade agency ruling that would ban imports of mobile phones run on the newest types of chips made by Qualcomm Inc.(QCOM), a decision that could alter the US market for wireless service.
- The benchmark 10-year US Treasury note fell the most in more than three years after New Zealand Yields on inflation-protected Treasuries also rose, indicating that expectations of faster economic growth, rather than accelerating inflation, were the main reason for the sell-off. unexpectedly raised interest rates, igniting concern other central banks will respond to faster global growth.
- The Senate’s proposed overhaul of US immigration law failed a critical test vote as Democrats urged President Bush to rally Republicans to rescue the legislation.
- Bill Gross, manager of the world’s biggest bond fund, said he continues to expect a “mild bull market” for the next year. “We do like bond markets from this point forward for the next six months,” Gross said on PIMCO’s web site. “But we do suggest in 2008, 2009 and 2010 that interest rates will be moving mildly higher.” Gross reiterated that housing would slow the US economy and the Federal Reserve will cut interest rates in the “latter part of 2007.” Pimco’s $103 billion Total Return fund had trailed the performance of about 75% of comparable funds in the past year.
- North American steel producers including Ipsco Inc. filed petitions with US regulators alleging China is unfairly subsidizing and dumping steel products worth as much as $500 million a year.
- The judge in Representative William Jefferson’s bribery case issued an order freezing millions of shares of stock and hundreds of thousands of dollars in cash belonging to the Louisiana Democrat.
- The Bank of England, which left interest rates unchanged yesterday, may have to move faster to curb the UK’s worst bout of inflation in a decade.
- The yen is falling for the first day this week after Japan’s top currency official said there is no risk of a sudden carry trade unwinding.
- Edison Intl(EIX), the Rosemead California-based power producer, said it agreed to purchase $698 million worth of wind power turbines from India’s Suzlon Energy Ltd.
- Ethanol in Chicago fell to a 14-week low as supplies of the corn-based additive exceed demand.
- A Goldman Sachs Group(GS) unit and the buyout firm Kelso & Co. raised their estimate for a share sale in a Kansas refinery by 25% as surging gasoline profits spur demand for oil-processing plants.
- Nickel fell to a 10-week low, erasing its leading position this year on the London Metal Exchange, as stockpiles rose and the bourse imposed new rules to curb what one analyst described as “collusive” trading. Two or more companies, each holding 25% or more of LME-monitored nickel stockpiles, now need to make more metal available to other buyers.
- Copper prices fell for a third day in Shanghai on concern that buying by China, the world’s biggest consumer of the metal, may slow following a surge in imports this year and on expectations of weaker demand.
- China Petroleum, Asia’s biggest refiner, had its share-price target raised at Lehman Brothers because of the company’s oil and gas discoveries and improved chemical business performance. Sinopec, as Beijing-based China Petroleum is known, discovered an oil field in northwestern China’s Xinjiang region that holds geological reserves of as much as 1.47 billion barrels.
- Tata Motors Ltd., India’s third-largest vehicle market, has cut passenger car production by 20% as demand has slowed.
- Indonesia’s rupiah dropped the most since May 2006 on speculation declines in global equity markets will encourage investors to sell riskier assets.

London-based Times:
- Sysco Corp.(SYY), the largest US distributor of food to restaurants, has submitted a preliminary bid for UK food distributor Brake Bros Ltd.
- Florida Democratic congressman Robert Wexler yesterday introduced a Bill calling for the exclusion of so-called “skill games” from the US ban on Internet gambling.

Late Buy/Sell Recommendations

- We view (CIEN), (JDSU), (ECIL), and (FNSR) as best positioned to benefit from our bullish view on optical spending. Other beneficiaries include (SCMR) and (TLAB). (CSCO) will also benefit from a healthy optical market, but with limited financial impact as optical accounts for less than 2% of total revenues.

Morgan Stanley:
- Reiterated Overweight on (EBAY).

Business Week:
Inventors can capitalize on growth in southeastern Europe with shares of National Bank of Greece SA(NBG), the country’s largest bank, citing John Maloney, president of M&R Capital Management.
- MCF Corp.(MEM), an investment banking firm that provides financial services for small public companies, could have its sales almost double to $100 million in a year or two.

Night Trading
Asian Indices are -1.75% to -1.0% on average.
S&P 500 indicated +.09%.
NASDAQ 100 indicated +.08%.

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 Business/Economy Polling
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
- (KWD)/.20

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- The trade deficit for April is estimated to shrink to -$63.5 billion versus -$63.9 billion in March.

Other Potential Market Movers
- The Citi Power/Gas/Utilities Conference and Sandler O’Neil eBrokerage/Global Exchange Conference could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down by automaker and commodity stocks in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.

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