Monday Watch

Weekend Headlines
Bloomberg:
- The yen dropped the most against the US dollar since November as first-quarter results at the world’s largest financial firms fueled speculation they will weather credit market losses.
- The global economy can cope with rising crude prices, which may climb to as high as $120 a barrel in the coming week, Libya’s top oil official said. The world economy “has not reached the tipping point where it can’t accept higher prices,” said Shokri Ghanem, chairman of Libya’s National Oil Corp. Saudi Arabia, the world’s largest oil exporter, has no plans to raise oil output because more crude wouldn’t bring down record prices, citing the country’s oil minister. More supplies would “destabilize” the market, Ali al-Naimi said. Crude oil prices have doubled in three years, touching a record $116.97 a barrel yesterday in NY.
- President Bush said that a free trade agreement with Colombia is “dead” unless House Speaker Nancy Pelosi revives it by allowing a vote on the measure.
- Saudi Arabia has started production at the Khursaniyah field that will eventually pump 500,000 barrels a day, the head of state-run oil company Saudi Aramco said. Khursaniyah will be producing 300,000 barrels a day within a month. Aramco is also working to add production capacity at its Shaybah, Manifa and Khurais oil fields, and by next year aims to have boosted its production capacity to 12.5 million barrels a day.
- The risk of Australian companies defaulting on their debt fell for a fifth straight session, credit-default swaps show. The Markit iTraxx Australia Series 9 Index decreased 6.5 basis points to 106.5 basis points in Sydney, according to Citigroup.
- GM(GM) Will Introduce Hybrid Car in China to Help Keep Sales Lead.

Wall Street Journal:
- Parties’ Split Most Apparent on Health Care. Democrats, Republicans Differ Over Roles of Government And Market to Revamp System.
- China Stocks, Once Frothy, Fall by 50% in 6 Months. The decline has wiped out nearly $2.5 trillion of wealth and is testing the government’s apparent resolve to let the market find equilibrium on its own. The plunge has slashed the savings of millions of Chinese investors who jumped into the market as it rose 600% in two years. It is crimping expansion in the country’s nascent financial sector and may put a squeeze in corporate coffers.
- Barack Obama and Hillary Clinton unveiled new critical television ads and attacked each other personally from the stump this weekend ahead of Tuesday’s Pennsylvania primary.
- India’s Hopes of Becoming Economic Superpower Fade.

MarketWatch.com:
- Wendy’s(WEN) rejects two bids from activist Peltz’s firms.
- Bank of England to unveil mortgage bailout.
- Google Inc.(GOOG) shares closed with a 19.9% gain Friday, one day after the company posted a 31% jump in first-quarter profit and dispelled many concerns about growth in its advertising business. Following Google's report, Jeffries & Co. analyst Youssef Squali raised his rating on Google's stock to buy from hold. Squali said that with 51% of its revenue coming from outside the U.S., Google has a lower exposure to the risk of a possible recession in the U.S. Squali also said that new "opportunities in display, video and mobile [markets] still provide ample headroom for Google to grow."

CNBC.com:
- Banks Are Coming Clean, And Investors Love It.
- Speculation Growing Fed May Be Done Cutting Rates.

TheStreet.com:
- Asia: Redefining Defensive China Stocks.

Business Week:
- It’s Spring. Ready to Buy a Home Yet? Spring has always been busy for real estate. Even though buyers and sellers remain cautious, now could be a good time to make a move.
- The World’s 50 Most Innovative Companies.
- Stocks: The Kings of Cash. S&P tracks down the blue chip names with the biggest cash stockpiles – and the top ratings from its equity analysts.
- Venture Capital Still Loves the Net. VC firms doubled their investment in US Web outfits in the first quarter.

Portfolio.com:
- Despite export boom, manufacturers cautious about job growth. If overseas demand for US products is stronger than expected in the year ahead, manufacturers may need to rethink their hiring plans, some economists say.

CNNMoney.com:
- The Dell of solar energy.
- 11 great green ideas. Entrepreneurs are risking their money to develop everything from hybrid vehicles to home solar-panel systems.

SmartMoney.com:
- Economic Recovery Already Underway. Economy recovery is already taking place. Most investors are just too gloomy to see it. What a difference a month makes!

Reuters:
- Chinese people took to the streets in several cities on Saturday to denounce calls for Tibetan independence and demand a French goods boycott following anti-China protests on the Paris leg of the Olympic torch relay.
- Google Inc.(GOOG), the world’s Internet services leader, plans to boost hiring in China by one-third this year and increase promotional spending to win market share. The company has hired around 800 new employees worldwide in each of the past two quarters, excluding acquisitions, half the rate of a year ago.
- China’s central banks needs to be careful that surging food prices don’t spread and push up the inflation rate, citing an official at the country’s central bank. A fall of the inflation rate to 8.3% in March from 8.7% the previous month mainly reflected “seasonal factors” and the government shouldn’t “relax,” said Du Jinfu, assistant governor of the People’s Bank of China. China has the possibility of stagflation, Hou Yunchun, deputy director of the research office under the State Council, warned.
- Tech results: So far so good, not out of woods yet. “From an economic standpoint, the two most mature of our markets(Europe and the US) are not showing any signs of weakness,” said Paul Otellini, CEO of Intel(INTC).
- Despite a wobbly economy and sliding freight volumes, US railroads have chugged along in recent quarters thanks to strong pricing – and barring a deep and prolonged recession they show no sign of stopping. “I think the railroads’ pricing power story is going to last for several more years at least,” said Keith Schoonmaker, an analyst at Morningstar.
- US Republican presidential candidate John McCain on Sunday touted his plans to slash unneeded spending to balance the federal budget and dismissed Democratic rivals as “out of touch” on the econoy.
- For Yahoo(YHOO), clock ticks down to Microsoft(MSFT) deadline.
- Boeing(BA) says unaware of further Dreamliner delay.

AP:
- CBS Corp.(CBS) CEO Leslie Moonves told CBS employees that “there are no plans for a change – today, tomorrow and into the future,” to replace news anchor Katie Couric, citing a CBS executive. The same executive said that should the ratings for Couric’s news show keep lagging, her job may be reviewed after the US presidential election.
- Defying US and Israeli warnings, former President Jimmy Carter met again on Saturday with the exiled leader of the militant Hamas group and his deputy.

Financial Times:
- Iceland’s aggressive moves to fend off an alleged speculative attack by international hedge funds on its currency, banks and stock market seem to be working. The cost of insuring the debt of the country’s banks in the credit default swap market fell sharply this month, indicating that hedge funds were taking flight, analysts said. The Icelandic Financial Supervisory Authority is investigating an alleged speculative attack involving manipulation of the CDS market and distribution of misleading information.
- Rick Wagoner, General Motors(GM) CEO, has dismissed United Nations research that links biofuel production to rising food prices as “shockingly misinformed.” “Oil prices are a far bigger driver of higher food prices than ethanol,” he said.
- Efforts to recapitalize the US banking system have entered a new stage as a group of mutual funds and hedge funds led by Corsair Capital, a little-known private equity firm, prepare to put between $7 billion and $8 billion into National City(NCC), the tenth-largest US bank.
- BNP Paribas is in advanced talks to buy the equities prime brokerage unit of Bank of America(BAC) in a move that would boost the French group’s presence in the US and enable its US rival to scale down its investment banking business.
- Bank of America(BAC) plans to sell part of its 9% stake in China Construction Bank Corp. to shore up its capital.
- Union calls for Citigroup(C) break-up.

Daily Telegraph:
- UK tax attacks send companies packing. Capital gains tax reforms and the attack on non-doms are making Britain increasingly uncompetitive, writes Louise Armitstead.

International Herald Tribune:
- Democrats Barack Obama and Hillary Clinton are walking a delicate line as they promise to aggressively tackle global warming while trying to assure voters that they continue to believe in the future of coal. In states like Pennsylvania, where voters will cast ballots this Tuesday, and in West Virginia, Kentucky, Indiana and Montana – upcoming primary states – coal sways voters.

Il Sole 24 Ore:
- Expedia Inc.(EXPE) CEO Dara Khosrowshahi said the outlook for the world’s biggest online travel agency is “excellent.” The growth of the Internet and the increased popularity of traveling have made tourism the “top business in e-commerce,” Khosrowshahi said.

Handelsblatt:
- Cisco Systems(CSCO) maintained its long-term growth forecasts, citing CEO John Chambers. Cisco aims to grow 12% to 17% on average a year, citing Chambers.

O Estado de S. Paulo:
- Petroleo Brasileiro SA(PBR), Brazil’s state-controlled oil company, will start producing oil from so-called pre-salt reserves of the Tupi field in a pilot project in 2010 and at full speed by 2012. The field, which holds an estimated 5 billion to 8 billion barrels of oil equivalent beneath the seabed and salt layers off Brazil’s southeastern coast, will be the first ultra-deep reserve Petrobras will tap.

South China Morning Post:
- Hong Kong’s construction of private residential units has fallen to a record low in the first three months of the year, citing data from the city’s Transport and Housing Bureau.

Xinhua:
- China’s largest distribution center for small commodities Yiwu recorded a 4.07% year-on-year drop in exports to the United States in the first quarter, the first decline since the marketplace was launched three decades ago. The decline was a result of a number of factors, including the subprime crisis, the tight monetary policy adopted by China, Renminbi appreciation, price rises of raw materials, the ice and snow crisis early this year and the market’s closure for the Spring Festival.

Weekend Recommendations
Barron's:
- Made positive comments on (KMB), (UTX), (APC), (SYY), (TWX), (LBTYA) and (GOOG).
- Made negative comments on (DELL) and (BIDU).

Citigroup:
- Reiterated Buy on (AAPL), boosted estimates, target $212.
- Reiterated Buy on (AVP), target $55.
- Reiterated Buy on (ADI), target $37.
- Reiterated Buy on (MAN), target $77.
- Reiterated Buy on (SLB), boosted estimates, raised target to $120.

Morgan Stanley:
- Reiterated Overweight on (TKLC), target $17.

Night Trading
Asian indices are +.75% to +2.25% on avg.
S&P 500 futures +.12%.
NASDAQ 100 futures +.04%.

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
Upgrades/Downgrades
Rasmussen Business/Economy Polling
CNBC Guest Schedule

Earnings of Note
Company/Estimate
- (WFT)/1.00
- (DGX)/.70
- (MRK)/.85
- (HAS)/.14
- (BAC)/.41
- (GCI)/.77
- (ACI)/.47
- (LLY)/.96
- (HAL)/.64
- (MAT)/.00
- (NFLX)/.20
- (TXN)/.4
- (EFX)/.57
- (LNCR)/.71
- (STLD)/.64
- (NBR)/.76
- (ETH)/.39
- (NVLS)/.16
- (IEX)/.48
- (OMCL)/.18
- (SLG)/.45

Upcoming Splits
- (RBA) 3-for-1

Economic Data
- None of note

Other Potential Market Movers
- None of note

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