Thursday, June 14, 2007

Friday Watch

Late-Night Headlines
- A Senate panel introduced legislation to force private equity firms to pay taxes as corporations instead of as partnerships when they sell shares to the public, a move that may affect firms that want to mimic a tax-saving structure being planned by Blackstone Group LP.
- The Bank of Japan kept interest rates unchanged for a fifth meeting as it awaits more evidence on the economy’s strength after consumer prices fell for a third month.
- China’s factory and property investment surged, adding to speculation that an interest-rate increase is imminent after exports, industrial production and inflation accelerated.
- Hamas forces took control of the Gaza Strip in fighting with Fatah loyalists, a Palestinian government minister said, after President Mahmoud Abbas dissolved the government formed by the factions.
- Higher energy costs have twice the impact on food prices than corn, the primary feedstock for ethanol produced in the US, according to a study released today and completed by John Urbanchuck, an economist at LECG LLC.
- Hertz Global Holdings(HTZ), the second-largest US car-rental company, plans to add 3,400 of Toyota Motor’s(TM) Prius gasoline-electric cars to its fleet as customers seek more fuel-efficient vehicles.
- The Senate released a $14 billion energy tax plan that extends by two years a tax credit for renewable electricity sources like wind and geothermal and offers incentives for biofuels.
- Nintendo Co. extended the lead of its Wii video-game console over Sony Corp.’s PlayStation 3 and Microsoft’s Xbox 360, selling more than 338,000 machines in the US in May.
- China Agri-Industries Holdings, the country’s leading bio-fuel producer, said it plans to build a plant to make fuel ethanol from sweet potato in eastern China’s Xuzhou city.
- The US Congress will pass a measure to prod China to raise the value of its currency after the US Treasury’s declined to label the country as a currency manipulator, House Speaker Nancy Pelosi predicted.
- The six-week global bond market-rout may be doing Ben S. Bernanke and Jean-Claude Trichet a favor. The higher market rates, if they continue, mean pricier loans for homes and credit cards, and will make it more expensive for companies to invest and make acquisitions. That in turn may limit the need for Federal Reserve Chairman Bernanke and European Central Bank President Trichet to raise interest rates to cool inflation pressures amid the strongest global economy in a generation.
- Senators, spurred by President Bush’s pledge to provide $4.4 billion for border security, reached an agreement to rescue a proposed overhaul of US immigration law.

Financial Times:
- Sony Corp.(SNE) Chairman Howard Stringer is considering cutting the price of the company’s PlayStation 3 video-game console to compete with rival Nintendo’s Wii player.

China Securities Journal:
- Conditions are “ripe” for China to scrap interest tax on bank deposits to boost returns on savings and slow stock investment.

Late Buy/Sell Recommendations

- Reiterated Buy on (CHTR), target raised to $5.30.

Morgan Stanley:
Reiterated Buy on (ADBE), target raised to $48.

Business Week:
- Shares of VCA Antech(WOOF) will rise 19% in the next year, citing Piper Jaffray analyst Michael Cox.
- Eastman Kodak’s(EK) shares are as much as 18% undervalued, and the stock could rise next year when restructuring costs are a thing of the past, according to Gregory MacArthur of Investment Advisor Viewpoint 2000.
- Bio-Reference Labs(BRLI), the third-largest US clinical test company, will benefit from specialty testing.

Night Trading
Asian Indices are +.25% to +.75% on average.
S&P 500 indicated -.06%.
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 Business/Economy Polling
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
- (WGO)/.47

Upcoming Splits
- (CPKI) 3-for-2
- (MRO) 2-for-1
- (STR) 2-for-1
- (PVA) 2-for-1

Economic Releases
8:30 am EST
- The Consumer Price Index for May is estimated to rise .6% versus a .4% gain in April.
- The CPI Ex Food & Energy for May is estimated to rise .2% versus a .2% gain in April.
- Empire Manufacturing for June is estimated to rise to 11.5 versus a reading of 8.0 in May.
- The 1Q Current Account Deficit is estimated to widen to -$201.0 billion versus -$195.8 billion in 4Q.

9:00 am EST
- Net Long-term TIC Flows for April are estimated to rise to $72.0 billion versus $67.6 billion in March.

9:15 am EST
- Industrial Production for May is estimated to rise .2% versus a .7% gain in April.
- Capacity Utilization for May is estimated at 81.6% versus 81.6% in April.

10:00 am EST
- The Preliminary Univ. of Mich. Consumer Confidence reading for June is estimated to fall to 87.9 versus 88.3 in May.

Other Potential Market Movers
- The Fed’s Lockhart speaking, Fed’s Bernanke speaking, Fed’s Yellen speaking, RBC Global Mining/Materials Conference and Needham Biotech/Medical Tech Conference
could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by technology 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 100% net long heading into the day.

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