Thursday, June 14, 2007

Thursday Watch

Late-Night Headlines
- The yen traded near the weakest against the dollar since December 2002 as investors were enticed by the yield advantage on US Treasuries over Japanese debt.
- The chief US negotiator on dismantling North Korea’s nuclear bomb program said he expects progress on the issue “very soon” and plans talks with Japan, South Korea and China next week.
- China’s Premier Wen Jiabao said monetary policy needs a “moderate tightening” to prevent the economy from overheating, suggesting the central bank may raise interest rates.
- Brazil, the world’s biggest producer of sugarcane-based ethanol, plans to increase the required blend of the biofuel in domestic gasoline to 25% from 23% as farmers harvest a record crop and prices fall.
- Hyperion Resources Inc., a closely held Dallas-based investment firm, said it may build an oil refinery in South Dakota to capitalize on record gasoline prices.
- Teck Cominco Ltd., the world’s second-largest zinc producer, expects to triple gold output and double copper production in five years as it opens new mines.
- A US congressional panel narrowly approved a measure that delays permits for drilling for oil and gas on federal lands. “We believe that the net effect of this bill will be to make it much more difficult to produce oil and natural gas in the United States at a time when global demand is driving prices higher,” said Richard Ranger, upstream manager for the American Petroleum Institute.
- Crude steel output in China, supplier of a third of the world’s steel, rose 15.7% in May to a record. Output of steel products, including cold-rolled coils, rose 19.6% from a year earlier.
- New Zealand retail sales fell the most since February 2004, suggesting the central bank’s three-year battle to quell inflation by raising interest rates is starting to cool demand.

Wall Street Journal:
- JPMorgan Chase(JPM) agreed to move some operations and possibly it headquarters to the World Trade Center site.
- Sprint Nextel(S) is looking at new ways to fund its WiMax wireless broadband network, including teaming up with Clearwire Corp.

NY Times:
- Kellogg Co.(K) said it plans to stop advertising its products to children younger than 12 unless the foods meet nutritional guidelines.

Informa Global Markets:
- Bear Stearns(BSC) is seeking bids on $3.8 billion of residential mortgage-backed securities. The bonds are rated AAA to AA. The list is considered “mammoth” by industry standards and may be the result of an “unwind of mortgage exposure” by some investor.

Financial Times:
- Third Point LLC, a NY hedge fund run by Daniel S. Loeb, will today announce plans to list a $665-931 million fund in London. The listing of Third Point Offshore Investors, which will be based in Guernsey and invest exclusively in Third Point’s main hedge fund, is expected to attract mostly new European equity investors.

Shanghai Securities News:
- The People’s Bank of China should increase deposit rates and push up money market rates to mop up cash in the financial system, citing a State Council researcher. The central bank should raise the one-year deposit rate by between .27 percentage points and .54 percentage points, Chen Daofu wrote.

Late Buy/Sell Recommendations

- Reiterated Buy on (MSFT), target $36.
- Reiterated Buy on (SKS), target $24.
- We view eBay(EBAY) and Google(GOOG) as relatively interdependent. eBay has consistently been one of GOOG’s largest customers, accounting for perhaps 2% of Google’s gross revenue and profits in 2006. And Google has been one of eBay’s largest providers of leads, currently accounting for 5% of its traffic. We anticipate current tensions subsiding, but acknowledge long-term competitive/cooperative dynamics.

Night Trading
Asian Indices are +.50% to +1.25% on average.
S&P 500 indicated -.03%.
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
- (ADBE)/.35
- (BSC)/3.51
- (DLM)/.21
- (EFX)/.54
- (FORR)/.13
- (FRE)/1.14
- (GS)/4.78
- (PIR)/-.28
- (TBL)/.15

Upcoming Splits
- (ADVNA) 3-for-2
- (BNHN) 3-for-2
- (BWLD) 2-for-1
- (MIDD) 2-for-1
- (PEBK) 3-for-2

Economic Releases
8:30 am EST
- The Producer Price Index for May is estimated to rise .6% versus a .7% gain in April.
- The PPI Ex Food & Energy for May is estimated to rise .2% versus unch. in April.
- Initial Jobless Claims for last week are estimated to rise to 312K versus 309K the prior week.
- Continuing Claims are estimated to fall to 2503K versus 2535K prior

Other Potential Market Movers
- The weekly EIA natural gas inventory report, (SYMC) Analyst Meeting, (MAT) Analyst Meeting, (GD) Analyst Meeting, BOJ Policy Meeting, Bank of America Homebuilders Conference, Morgan Stanley Small-cap Executive Conference, RBC Global Mining/Materials Conference, Needham Biotech/Medical Tech Conference, CSFB Software Conference, Merrill Lynch Global Transport Conference, Thomas Weisel Alternative Energy Conference and Goldman Sachs Global Healthcare Conference
could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by technology and automaker stocks in the region. I expect US equities to open modestly higher and to maintain or build on gains into the afternoon. The Portfolio is 100% net long heading into the day.

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