Wednesday, November 28, 2007

Thursday Watch

Late-Night Headlines
- China Investment Corp., the nation’s $200 billion sovereign wealth fund, wants to stabilize financial markets, which have been rocked by subprime mortgage defaults. “CIC wants to be a stabilizing force in the international capital markets,” Chairman Lou Jiwei told a conference in Beijing today. He cited a “recent example” in which a sovereign wealth fund invested in a financial institution with subprime losses. China Investment plans to set up overseas branches in major financial centers and will mainly invest in publicly traded securities.
- National Australia Bank, the nation’s largest, agreed to buy US-based Great Western Bancorporation for $798 million, its biggest acquisition since the 1998 purchase of HomeSide Lending.
- Radiation from CT scans may be responsible for up to 2% of cancers in the US, a report in the New England Journal of Medicine found. “If a physician chooses not to order a CT scan on you today to save you the radiation exposure, the physician takes on the risk of missing something, and if something is missed, there is a good chance you’ll sue the physician for not finding it,” said Elaine Rabin, an emergency room physician at Mount Sinai Hospital in NYC. GE(GE) plans to begin selling a high-definition CT scanner next year that provides clearer images than conventional CT machines using half the radiation.
- EBay Inc.(EBAY) and may “exceed” Sanford C. Bernstein’s earnings estimates, the brokerage wrote.
- Zinc, the worst-performer on the London Metal Exchange this year, will drop another 11% in 2008 as the market returns to surplus, National Australia Bank Ltd. said.
- Crude oil prices aren’t fundamentally sustainable at $90 per barrel, said Thomas Petrie, vice chairman of Merrill Lynch(MER). Petrie, in an interview today, responded to comments made earlier by Saudi Arabian Oil Minister Ali al-Naimi, who said there is “no relationship” between today’s price and fundamental supply and demand.
- Kellogg(K) and chemical maker DuPont(DD) led 13 borrowers into the US bond market today.

Wall Street Journal:
- In a sign of continuing woes for hedge funds that use computer models to trade, GMN Capital closed shop, CEO and Managing Partner James Claus confirmed.

NY Times:
- For Toddlers, Toy of Choice Is Tech Device.
- Qualcomm Chief Welcomes iPhone’s Spread.
- Nine-to-one. Up volume swamped down volume in Wednesday’s trading.
- Trash Talk. Not convinced we are succumbing to fear-mongering? US consumers have taken $3-a-gallon gas and a drop in our home equity in stride. Yet the media seems hell-bent on convincing us multinational banks’ subprime mortgage losses and a weak dollar will torpedo the economy in a way the stock market’s collapse, mass layoffs and 9/11 scarcely did in 2001. Five signs we’re jawboning ourselves into a recession.

- Clear Skies for Airline Stocks.

- Tech Holiday Gift Guide. Tips help navigate the tech-buying maze.
- Resale values for Detroit makers’ vehicles go up.
- Robots dazzle at Japanese exhibit.

- Freddie Mac(FRE) shares post biggest gain in 19 years.
- Hedge fund firm Pequot Capital Management, whose flagship fund gained 37% this year, will soon shut down three smaller portfolios due to “poor” performance and meager assets.

Financial Times:
- The four US television networks in a pay dispute with Hollywood television writers over online video advertising are in line to generate $120 million of revenues in 2007 from free web streaming of their content, according to a leading media buyer.

China Daily:
- A Hong Kong-based maker of bead toys that caused recalls in the US and Australia apologized for using a toxic chemical and for damaging the reputation of the made-in-China label, citing the company.

Late Buy/Sell Recommendations

- Reiterated Buy on (NRGY), target $39.
- Reiterated Buy on (VMW), target $134. VMW’s recently introduced ESX Server 3i, is a thin hypervisor, that six of the leading OEMs(Dell, Fujitsu, Fujitsu Siemens Computers, HP, IBM and NEC) will pre-install on servers. We believe this is a significant step towards enhancing VMW’s already dominant position in the virtualization industry and is a pre-emptive strike against future Microsoft and Citrix/Xen releases in the battle for control of the x86 server virtualization market.

Night Trading
Asian Indices are +1.5% to +3.0% on average.
S&P 500 futures -.03%.
NASDAQ 100 futures -.18%.

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
Company/EPS Estimate
- (SFD)/.23
- (GRB)/.13
- (DLM)/.17
- (WMG)/.04
- (SHLD)/.53
- (AMWD)/.37
- (LULU)/.08
- (BF/B)/1.00
- (JCG)/.36
- (OVTI)/.32
- (BRCD)/.13
- (MENT)/-.02
- (HNZ)/.67
- (VIP)/.42
- (GCO)/.57
- (ZOLT)/.23
- (DELL)/.35
- (FRED)/.14
- (MIK)/.30
- (ZUMZ)/.28

Upcoming Splits
- None of note

Economic Releases
8:30 am EST

- Preliminary 3Q GDP is estimated to rise 4.9% versus prior estimates of a 3.9% increase.
- Preliminary 3Q Personal Consumption is estimated to rise 2.9% versus a prior estimate of a 3.0% gain.
- Preliminary 3Q GDP Price Index is estimated to rise .8% versus prior estimates of a .8% gain.
- Preliminary 3Q Core PCE is estimated to rise 1.8% versus prior estimates of a 1.8% gain.
- Initial Jobless Claims for this week are estimated at 330K versus 330K the prior week.
- Continuing Claims are estimated to rise to 2575K versus 2566K prior.

10:00 am EST
- New Home Sales for October are estimated to fall to 750K versus 770K in September.

Other Potential Market Movers
- The Fed’s Bernanke speaking, 3Q House Price Index, weekly EIA natural gas inventories report, (SAF) analyst day, (GPRO) analyst day, (STEC) analyst day, Bear Stearns Commodities & Capital Goods Conference, UBS Global Real Estate Conference, CSFB Tech Conference and the CSFB Aviation Conference could also impact trading today.

BOTTOM LINE: Asian indices are sharply higher, boosted by gains in automaker and technology 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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