Wednesday Watch

Late-Night Headlines
Bloomberg:
- Red Hat Inc.(RHT), the world’s largest seller of Linux operating-system programs, said profit rose 64% after sales of new products topped analysts’ estimates. The shares surged 5.1% in extended trading.
- Treasury Secretary Henry Paulson named a committee of asset managers and a panel of investors to write guidelines intended to help demystify hedge funds and reduce risk in US financial markets.
- Japan, the world’s third-largest oil consumer, imported 3.6% less crude oil in August compared with a year earlier. Imports of oil products, a category that includes gasoline and naphtha, slipped 2.8%. Liquefied petroleum gas imports rose 5.3%.
- Goldcorp Inc.(GG), the world’s third-largest gold producer by market value, plans to spend more than $3 billion to boost output in the next five years rather than buy new assets. “We buy low and sell high, so as the gold price increases, we’re building mines and selling our gold,” CEO McArthur said. “We’re not in purchasing mode, we’re in harvest mode.”
- Ethanol in Chicago fell, matching a two-year low, on concern supplies of the additive are building while the product’s transportation infrastructure lags.
- Indian Finance Minister Palaniappan Chidambaram said policy makers have few options to deal with a rupee exchange rate that is “way above the comfort level” because the currency is set by open markets.

MarketWatch.com:
- Bye-bye subprime loans, hello junk bonds.

NY Times:
- Halo 3 Arrives, Rewarding Gamers, and Microsoft.

CNNMoney.com:
- How to play the real estate bounce-back. 10 cities that are set to rise.

CNBC.com:
- Gloom Over Holiday Sales My Be Overdone.

Financial Times:
- Sovereign wealth funds have invested an estimated $35 billion in the shares of banks, securities houses and asset managers since the beginning of 2006 in a sign of the growing clout that state-backed investment vehicles are wielding in the financial sector.

Reuters:
- NYSE Euronext would be interested in expanding its reach in the Middle East, citing CEO John Thain.
- Steve Case, the founder of the AOL Internet service, is backing a new online payment company that promises to let users transfer funds for free and offer a credit card with sharply lower fees for merchants.
- Vilified as a Holocaust denier, a supporter of terrorism and a backer of Iraqi insurgents, the president of Iran was actually able to make New Yorkers burst into laughter – but not at a joke.

Business Standard:
- Google Inc.(GOOG) and Reliance Communications are in talks to lease part of the Indian company’s Pacific undersea cable network.

China Daily:
- China’s central bank may raise the interest rate on mortgage loans this week to curb rising home prices and property speculation. The People’s Bank of China may increase the rate to 1.1 times the nation’s 7.29% benchmark one-year lending rate. The rate for a five-year mortgage loan could reach as high as 8.61%.

Late Buy/Sell Recommendations
Citigroup:
- Rated (RIMM) Buy, target $115.

Night Trading
Asian Indices are unch. to +.1.0% on average.
S&P 500 futures +.22%.
NASDAQ 100 futures +.25%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Pre-market Stock Quote/Chart
Before the Bell CNBC Video(bottom right)
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Today in IBD
In Play
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Economic Preview/Calendar
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Earnings of Note
Company/EPS Estimate
- (BBBY)/.52
- (CPRT)/.35
- (GRB)/.11
- (PAYX)/.39

Upcoming Splits
- (FCSX) 3-for-2
- (LPHI) 5-for-4
- (NOV) 2-for-1

Economic Releases
8:30 am EST
- Durable Goods Orders for August are estimated to fall 4.0% versus a 6.0% increase in July.
- Durables Ex Transports for August are estimated to fall 1.0% versus a 3.8% gain in July.

10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil drawdown of -2,150,000 barrels versus a -3,874,000 barrel decline the prior week. Gasoline supplies are expected to fall by -325,000 barrels versus a 417,000 barrel build the prior week. Distillate inventories are estimated to rise by 1,060,000 barrels versus a 1,564,000 barrel increase the prior week. Finally, Refinery Utilization is expected to fall -1.0% versus a -.97% decline the prior week.

Other Potential Market Movers
- The Fed’s Poole speaking, weekly MBA Mortgage Applications report, (SPW) analyst meeting, Piper Jaffray Solar Power Conference, CSFB Chemical Conference, UBS Global Life Sciences Conference, Merrill Lynch Global Power/Gas Conference, Thomas Weisel Consumer Conference, RBC Financial Institutions Conference and Jeffries Shipping/Logistics/Offshore Services Conference could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by financial and technology stocks in the region. I expect US equities to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.