Sunday, November 25, 2007

Monday Watch

Weekend Headlines
- US consumers spent $10.3 billion on holiday purchases the day after Thanksgiving, 8.3% more than a year earlier, according to data from ShopperTrak. The day after Thanksgiving, dubbed Black Friday, typically accounts for between 4.5% and 5% of all holiday sales. “It’s an extraordinary number, beyond what we anticipated,” Bill Martin, co-founder of ShopperTrak, said in an interview. ShopperTrak had expected an increase of no more than 4% to 5%.
- Asian stocks rose after a report showed US retail sales increased the day after Thanksgiving, showing consumers in the region’s biggest overseas market are buying products from electronics to clothes.

- Christie’s International set a record for a Chinese contemporary artist today when Cai Guo-qiang’s set of fourteen images sold for $9.5 million in Hong Kong, doubling its estimate.
-Treasury notes fell, pushing two-year yields up from the lowest since 2004, as reports on US holiday retail sales spurred gains in Asian stocks.
Hedge funds are shifting Asian investments out of Japan because of lower returns and poor corporate governance in the region’s biggest economy, Kathy Matsui, Goldman Sachs Group(GS) chief strategist in Tokyo said. Japan’s average return on equity will be about 10.2% this fiscal year, compared with 20% in the US and 15.7% in Asia, according to Matsui.
- The yen dropped from a two-year high against the dollar as global stocks climbed, encouraging investors to increase holdings of higher-yielding assets bought with money borrowed in Japan.

Wall Street Journal:
- Hedge Funds: Leveraging The Numbers. Size Can Be Deceiving When Borrowed Money Is Added to Calculation.
- As oil prices continue to flirt with record territory, traders are contending with a potential price damper: increased output from members of OPEC. Two reports late last week showed that OPEC is expected to boost oil production – according to one source of data, by as much as 720,000 barrels a day in the four weeks to Dec. 8 – as Saudi Arabia steps up deliveries to the US.

- When it comes to brand power, Harley-Davidson(HOG) punches above its weight.

NY Times:
- Two leading Democratic candidates for the US presidential nomination are shifting their focus on Iraq to the lack of political progress as violence in the country declines. Senators Hillary Rodham Clinton and Barack Obama acknowledge security improved after the recent US troop surge. Democratic candidates might be vulnerable to Republican critics if they continue to fault the Bush administration’s conduct of the Iraq war, the newspaper said.
- LA Auto Show: Driving Honda’s Fuel-Cell FCX.
- Troops in Diyala Province are among the soldiers who are leaving Iraq as the US begins its first major withdrawal, citing Colonel David Sutherland. “The redeployment without replacement reflects the overall improved security situation in Iraq,” Rear Admiral Gregory Smith told the Times.
- Despite concerns about a consumer spending slowdown, the video-game industry is poised for a blowout quarter, with plenty of big release to reel in casual gamers and enthusiasts.
- Retailers Ring Up Strong Start to Holiday Shopping. The lure of bargains trumped economic concerns at the start of the holiday shopping season as retailers logged sales that were significantly strong than a year ago, a customer traffic counter said. Judging by the lines outside Sears(SHLD) stores Friday, consumers were especially eager said John Ford, regional manager at Sears. “It exceeded our expectations. We had more customers at opening yesterday than we had in prior years,” Ford said of the number of people waiting outside fort the stores opening Friday. “I would tell you it was 50 to 100% higher than it was in previous years.” Penney Co.(JCP) reported “strong performance across all merchandise categories,” including fine jewelry, outerwear, and young men’s and children’s assortments. said Saturday its traffic to merchants increased 61% over last year’s Black Friday.
- Retail Execs Upbeat as Holiday Shopping Starts.
- E-Trade shares surge on deal talk.
- ‘Black Friday’ spending online up 22% over last year.

- Consumers Plug Into Electronics Deals.
- Apparel Fashioning Gains Among Online Shoppers.

Boston Globe:
- Group opposing wind farm off Cape saw big drop in contributions in ’06.

Business Week:
- 101 Best Web Freebies. scoured the Internet for the most useful free products and services available online that you probably don’t know about.
- One Man Who Gives Thanks Daily. Carnegie Mellon professor Randy Pausch, diagnosed with terminal cancer, has some words to live by that ring particularly true on Thanksgiving.
- The Best and Worst in Tech.
- Timing the Rally in Homebuilding Stocks. S&P thinks builders’ asset writedowns may have peaked.
- A Kiss-Off to Online Dating. The Web 2.0 generation isn’t going to hook up on eHarmony when it’s cooler to scope out the action on sites like Digg and Yelp.

Washington Times:
- Democrats represent the majority of the most affluent US congressional districts, even while defining themselves as the party of the poor and middle-income Americans. The newspaper cited a comparison of wealth concentrations by Washington-based policy research group the Heritage Foundation using US Internal Revenue Service data.

USA Today:
- Corn Belt farmers reap big-time harvests.
- Web auctions’ popularity helps live counterparts.
- Beat the mobs on ‘Cyber Monday.’ The Web kicks off its holiday-shopping season on the Monday after Thanksgiving. Nearly 75% of online retailers will offer special promotions on the Monday after Thanksgiving.
- Which states love small business? Attention libertarians! Find out where the cold, dead hand of the state weighs lightest.
- The world shops America. Tourists flock to Manhattan on Black Friday to take advantage of the weak dollar as well as holiday sales.
- The greatest gifts ever for sports fanatics.
- Holiday tech toys.
- iPod: The once and future stocking stuffer.

- Freddie Mac(FRE) to raise $5 billion in preferred stock sale.

Financial Times:
- Fresh emergency action to pump funds into the money markets was announced on Friday night by the European Central Bank amid renewed fears that liquidity in the credit markets is again starting to dry up.
- California homes deal to avert defaults. Arnold Schwarzenegger is once again leading US states to action on policy reform ahead of lawmakers on Capital Hill. Mr. Schwarzenegger’s deal with four of the state’s biggest mortgage lenders – Countrywide Financial, GMAC, Litton and HomeEq – is “nothing less than jaw-dropping in its ambition and implications”, according to Matt Fellowes, a fellow with the Brookings Institution.

- Warren Buffett, the legendary American investor, has emerged as a potential buyer of Northern Rock, the embattled high street bank.

De Morgen:
- European Central Bank governing council member Guy Quaden said economic growth in Europe will slow to 2% in 2008.

Welt am Sonntag:
- European Central Bank Executive Board member Juergen Stark said inflation pressure will ease in the second half of 2008 after increasing at the start of next year.

- Spending by Japanese companies will rise 11% this financial year, the fifth straight year of increases.

South China Morning Post:
- China’s $200 billion sovereign wealth fund plans to bid against BHP Billiton(BHP) for Rio Tinto(RTP).

AAJ television:
- Pakistan’s President Pervez Musharraf will relinquish his position as head of the army on Nov. 29, before he takes a presidential oath, citing the government’s chief lawyer Malik Mohammed Qayum.

Weekend Recommendations
- Made positive comments on (HOG).

- We believe Black Friday retail sales sere solid, w/strength at select value stores; clothing most popular; specialty & discounters gain share. We believe Black Friday traffic was robust(with cold weather likely driving demand for seasonal apparel). We observed the strongest traffic at (ARO), (AEO), (DIS), Hollister, Old Navy, and Victoria’s Secret, but traffic at AEO and Victoria’s Secret appeared softer than last year. We expect improving November sales(given our expectations for a strong 1H November, slight improving traffic, cold weather, pent-up demand, and easier comparisons) to drive stock prices higher.

Night Trading
Asian indices are +.5% to +2.75% on avg.
S&P 500 futures +.55%.
NASDAQ 100 futures +.70%

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)
Global Commentary
WSJ Intl Markets Performance
Commodity Movers
Top 25 Stories
Top 20 Business Stories
Today in IBD
In Play
Bond Ticker
Economic Preview/Calendar
Daily Stock Events
Macro Calls
Rasmussen Business/Economy Polling
CNBC Guest Schedule

Earnings of Note
- (DCI)/.48
- (DSW)/.34

Upcoming Splits
- None of note

Economic Data
- None of note

Other Potential Market Movers
- None of note

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

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