Wednesday, December 19, 2007

Thursday Watch

Late-Night Headlines
- Hedge funds will open at the slowest pace since 2003, with 863 starting up through the first nine months of this year, according to a report published today by Hedge Fund Research. Funds also are closing at a slower rate, with liquidations at 408 through the third quarter. That’s on its way to being the lowest level since 2004. The smaller number of startups may be a byproduct of consolidation in the hedge-fund industry, as more money goes to the largest funds. Almost 90% of new capital went to funds with more than $1 billion under management in the third quarter.
- China, which produces one third of the world’s steel, may reduce net exports of the alloy by 20 million metric tons next year, an official from the China Iron and Steel Association said.
- Ayman al-Zawahiri, al Qaeda’s No. 2 leader, will field written questions from reporters over the Web.

Wall Street Journal:
- A Proposal for Reviving the Credit Markets.
- Where the jobs will be in 2008. America’s top employers expand retail, health-care positions. The hiring picture for 2008 appears to be one of steady growth at many of America’s biggest employees, with retiring baby boomers and the weak US dollar creating new opportunities in some surprising areas.
- Oracle(ORCL) posts strong gains, alleviating investor concern.
- Insiders remain optimistic about stocks.
- Nike(NKE) profit rises more than expected.
- Moves by Fed and ECB May Offer Relief for Homeowners.
- Red Robin(RRGB) Beefs Up Expansion, Branding Plans.
- The Blackstone Group LP(BX) is planning a $9 billion commercial mortgage-backed securities offering backed by Hilton Hotels next quarter, according to a Credit Suisse research note.

- Shop by phone gets new meaning.
- The government and major airlines struck a deal Wednesday that will cap the number of peak-hour flights at two of NYC’s busiest airports in a move aimed at reducing chronic air travel delays across the nation.

- S&P said on Wednesday that The Washington Post(WPO) will replace Temple-Inland(TIN) in the S&P 500 after the close of trading on Friday, December 28.

Financial Times:
- Bear Stearns’(BSC) market share in the prime brokerage business has dropped significantly during the credit squeeze.
- Year-end credit squeeze fears start to recede.
- Netsuite IPO prices at $26 per share. Shares in Netsuite, whose IPO has become the software industry’s most prominent since this summer’s launch of VMware(VMW), are set to open at an unexpectedly high level on Thursday, following a surge in interest that prompted the company to price the stock at double its most conservative estimate of a week ago.

Daily Telegraph:
- Mergers soar to record despite credit crisis.
- Troubled bond insurer ACA Capital Holdings has reached a last-minute deal with its counterparty banks, including Canadian Imperial Bank of Commerce, to starve off a potential slide into insolvency, according to people familiar with the matter.

Central News Agency:
-. Taiwan’s technology industry sales will rise as much as 30% this year, citing the Taipei Computer Association. The stable growth will continue in the first quarter next year, according to the association.

Late Buy/Sell Recommendations

- Reiterated Buy on (MS), target $75. Every major institutional business outside of mortgage produced excellent results, and the mortgage overhang is behind it. Subprime mortgage exposure declined over 80%, driven by aggressive writedowns. Furthermore, exposure to other areas including CMBS are much less of an issue based on the new disclosures provided.

- Rated (BXP), (KRC) and (TPGI) Outperform.
- Rated (MAA) and (PSB) Underperform.
- Reiterated Buy on (PAYX), target $50.
- Reiterated Buy on (ACN), target $60.

Night Trading
Asian Indices are -.25% to +.50% on average.
S&P 500 futures +.01%.
NASDAQ 100 futures +.17%.

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
- (PRGS)/.52
- (CAG)/.42
- (DFS)/.36
- (CTAS)/.53
- (AM)/.57
- (WOR)/.32
- (BSC)/-1.82
- (FDX)/1.51
- (RAD)/-.08
- (SCHL)/1.91
- (WGO)/.35
- (JBL)/.35
- (CSC)/.84
- (MU)/-.17
- (RHT)/.18
- (RECN)/.28
- (TIBX)/.15
- (SHFL)/.10
- (CCL)/.43
- (RIMM)/.62

Upcoming Splits
- None of note

Economic Releases
8:30 am EST

- Final 3Q GDP is estimated to rise 4.9% versus prior estimates of a 4.9% gain.
- Final 3Q Personal Consumption is estimated to rise 2.8% versus prior estimates of a 2.7% increase.
- Final 3Q GDP Price Index is estimated to rise .9% versus prior estimates of a .9% gain.
- Final 3Q Core PCE is estimated to rise 1.8% versus prior estimates of a 1.8% increase.
- Initial Jobless Claims for this week are estimated to rise to 335K versus 333K the prior week.
- Continuing Claims are estimated to fall to 2610K versus 2639K prior.

10:00 am EST
- Leading Indicators for November are estimated to fall .3% versus a .5% decline in October.

12:00 pm EST
- The Philly Fed for December is estimated to fall to 6.0 versus a reading of 8.2 in November.

Other Potential Market Movers
- The weekly EIA natural gas inventory report could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by technology shares and financial 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.

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