Wednesday, December 26, 2007

Thursday Watch

Late-Night Headlines
- The yuan rose the most since China ended a fixed exchange rate to the dollar in 2005 as the central bank sought to curb inflation.
- Says 2007 Holiday Season Is ‘Best Ever.’

Wall Street Journal:
- Congress Adds $10 Billion In Earmarks to 2008 Budget.
- ‘Long-Short’ Funds Labor to Thrive.

NY Times:
- Las Vegas Wins Big. Revenues on the Vegas strip are rising, even as rival casinos struggle.
- Inside Apple(AAPL) Stores, a Certain Aura Enchants the Faithful.
- Apple(AAPL) driven to record by strong iPhone, Mac sales.
- Semiconductors: Healthy M&A Prospects. S&P says some recent deals show that chip companies are finding attractive prices and ways to improve by combining.
- The founder of Rembrandt Venture Partners offers predictions for next year and advice for entrepreneurs seeking funding.
- Hiring in ’08: Slower but steady gains.

- Social Networking Has Taken Off With Users, Investors Swelling.
- Asset-management firm Davis Selected Advisers seems to be calling a bottom in the US financial services market. On Wednesday, it said it had acquired a 5.1% stake in MBIA(MBI), the world’s largest bond insurer, just two days after it pumped $1.2 billion into Merrill Lynch(MER).
- Unprecedented losses at Bear Stearns(BSC) couldn’t shake Joseph Lewis’s interest in the troubled brokerage. The British billionaire is still buying shares even after the company’s abysmal fourth quarter.

- Publicity over Ford Flex gains muscle with leisurely test drives.

- Buffet bets on America with latest purchase.

Financial Times:
- Apple Inc.(AAPL) and News Corp.’s(NWS/A) Twentieth Century Fox will start a service that lets consumers download films and rent them for a limited time.

Late Buy/Sell Recommendations

- 8 Plausible and Interesting 2008 Outcomes: 1) The Republicans hold on to the White House – essentially, divided government remains the desire of the American people. 2) Oil prices fall to $70-75/bbl. alongside slower growth in the US and Europe, as well as Asia. 3) The US dollar strengthens to 1.25 vs. the Euro as the ECB finally cuts rates, while the trade deficit continues to decline. 4) Best performing sector in the S&P 500 is Financials. 5) The Chinese equity bubble bursts as pressures grow to rein in inflation, pollution, corruption, misallocation of resources along with trade protectionism threats forcing a more significant revaluation of the Yuan/Dollar peg. 6) Iran backs off its aggressive nuclear program as economic pressures force a change in priorities, especially as the US and neighboring countries begin negotiating with the government over Iraq and other local issues. 7) A carbon credit cap is imposed with carbon credit trading beginning, providing a new area for investors to seek profits and investment banks to trade. 8) Hedge fund consolidation picks up in earnest, with poor performance becoming the catalyst for change.

- 8 Questions We Are Not Hearing?: 1)Where should I consider buying real estate? General agreement is that prices are headed lower but no sense of where “value” is? 2) Doesn’t the yield curve steepness mean anything anymore for Financial sector earnings? 3) Why aren’t energy companies earning more with oil near $100/bbl. 4) Whatever happened to the problems of under-funded pension programs that were supposed to be the undoing of US public companies? 5) Why doesn’t the fact that 95% or more of equity mutual fund flows going to international funds in the past few years worry more people about a new stock investing craze outside the US? 6) Why has money continued to flow into hedge funds when their returns have been mediocre? 7) Whatever happened to the avian flu pandemic fears that dominated the investment mindset a couple of years ago? Are there such global fears dominating investors that may similarly fade away from public consciousness? 8) Why does anyone try to predict what price oil has to reach to end consumer spending when every benchmark in the past five years has been wrong?

Night Trading
Asian Indices are unch. to +1.25% on average.
S&P 500 futures -.17%.
NASDAQ 100 futures -.12%.

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
- (LUB)/.07
- (CBK)/.28
- (ACIW)/.33

Upcoming Splits
- (CAM) 2-for-1
- (TWIN) 2-for-1

Economic Releases
8:30 am EST

- Durable Goods Orders for November are estimated to rise 2.0% versus a .2% decline in October.
- Durables Ex Transports for November are estimated to rise .5% versus a .4% decline in October.
- Initial Jobless Claims for this week are estimated to fall to 340K versus 346K the prior week.
- Continuing Claims are estimated to fall to 2645K versus 2646K prior.

10:00 am EST
- Consumer Confidence for December is estimated to fall to 86.5 versus 87.3 in November.

10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil drawdown of -1,625,000 barrels versus a -7,586,000 barrel decline the prior week. Gasoline supplies are expected to rise by 1,550,000 barrels versus a 2,980,000 barrel increase the prior week. Distillate inventories are estimated to fall by -900,000 barrels versus a -2,158,000 barrel decrease the prior week. Finally, Refinery Utilization is estimated to rise by .7% versus a -.92% decline the prior week.

Other Potential Market Movers
- The weekly MBA mortgage applications report could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by technology shares and commodity 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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