Today's Headlines

Bloomberg:
- Google Inc.(GOOG), seeking to diversify beyond four-line text ads, is matching clients’ promotions with the most popular video clips on YouTube. The buzz-targeting program flags clips based on the number of viewers, users’ ratings and how many people tag them as a favorite, Google said. Almost 85 million people in the US watched a total of 4.3 billion videos on YouTube in March, ComScore said yesterday. Lions Gate Entertainment was the first client to use buss targeting to promote the movie “The Forbidden Kingdom,” which was released last month. The ads ran along with the top 500 YouTube videos in the music and entertainment category starting in March.
- Bernanke Says Fed to Boost Loans to Banks as Needed.
- Gold Drops Most in Two Weeks as Stronger US Dollar Curbs Demand.
- Crude oil is rising another $1.50/bbl. in NY, despite the IEA lowering global demand growth assumptions for oil and the Senate passing a bill to stop filling the SPR, as speculators continued to raise bets on the commodity on comments from Iran.
- Corn futures in Chicago fell for a third day as a government report showed planting of the US crop accelerated last week and on speculation drier weather forecast in the next several days will speed up sowing.
- As many as 60 people were killed and 200 injured as eight bombs exploded in the city of Jaipur, the capital of the northern Indian state of Rajasthan.
- Marijuana smokers who spend most of their time stoned are more likely to have higher levels of a protein that may raise risks of heart attack and stroke, scientists said.
- Billionaire investor Carl Icahn is considering mounting a proxy fight to take control of Yahoo! Inc. board seats.

Wall Street Journal:
- A new European Central Bank survey of bank lending in the euro currency zone suggests the global financial-market turmoil that started last summer is now taking a direct toll on corporate Europe.
- Emerging markets along Europe’s fringes are getting deeper into financial hot water as the global economy slows, raising the risk of market turmoil to come. Romania, Turkey, South Africa and Iceland have regularly reacted the most to bouts of risk aversion coursing through global markets.
- The U.S. Senate Tuesday approved an amendment that requires the government to temporarily halt filling the nation's Strategic Petroleum Reserve, according to media reports.

MacRumors.com:
- 3G iPhone with GPS, Video Conferencing, TV?

Forbes.com:
- The IEA has slashed its 2008 oil product demand forecast again in its monthly report, this time by 390,000 barrels per day, and hinted at more cuts in the future. “European consumers are to a certain extent shielded form the rise in oil prices, due to the weak dollar and high tax rates, but higher prices are nonetheless weighing on demand,” said the IEA’s in-house analysts. As well, some countries are investigating the budgetary reality of sustaining subsidies. Although demand from fast growing economies such as China and the Middle East will remain strong in the short-term, that looks unlikely to outweigh such falls from elsewhere. Clear evidence of a seasonal stock build would help, said the IEA. OPEC could kick-start the process by giving at least a clear indication that it will rapidly provide more oil if stocks do not build in the very near future. An even more powerful signal would be to provide more oil now, the IEA said.

AP:
- The US Marine Corps, Army, Navy and Air Force each met or exceeded their monthly recruiting goals in April. The Marine Corps signed 142% of the number it sought, enlisting 2,233 recruits against a goal of 1,577. That puts the corps on course to reach its goal of growing to 202,000 by the end of 2009, more than a year ahead of schedule.

KUNA:
- Kuwait, the fourth-largest oil producer in OPEC, will boost production capacity to 3 million barrels a day within a year from 2.6 million at present, citing Kuwait Oil Company Chairman Sami al-Rushaid.

Fars:
- Iran is reviewing a proposal to reduce its crude oil production, President Mahmoud Ahmadinejad said.

Bear Radar

Style Underperformer:

Large-cap Value -.23%

Sector Underperformers:

Banksirlind (-1.40%), I-Banks (-1.34%) and Hospitals (-.97%)

Stocks Falling on Unusual Volume:

HPQ, PPC, GENC, FOSL, NUAN and AKO/A

Stocks With Unusual Put Option Activity:

1) WNR 2) HPQ 3) FLR 4) CSIQ 5) AMT

Import Prices Decelerate, Retail Sales Ex Autos Rise, Inventories Rise Slightly

- The Import Price Index for April rose 1.8% versus estimates of a 1.6% gain and a 2.9% increase in March.

- Advance Retail Sales for April fell .2% versus estimates of a .2% decline and a .2% increase in March.

- Retail Sales Ex Autos for April rose .5% versus estimates of a .2% gain and an upwardly revised .4% increase in March.

- Business Inventories for March rose .1% versus estimates of a .4% increase and a .5% gain in February.

BOTTOM LINE: Prices of goods imported into the US increased 1.8% in April, led by a jump in fuel costs and metals, Bloomberg said. The cost of imported petroleum and petroleum products increased 4.4% versus a 9.2% gain the prior month. Compared with a year earlier, petroleum prices soared 57.2%. Prices of unfinished metals jumped 7.1% last month. The price of consumer goods rose just .2% in April. As well, the price of goods from China rose .2% for the month. The 10-year TIPS spread, a good gauge of inflation expectations, is unch. at 2.41% on the report. This is still down from 2.68% on March 13^th. Despite the production disruptions related to the earthquake in China, the S&P Goldman Agriculture Commodity Spot Index is down for the second day in a row. This index is also down 18.1% from its March 12^th high. I still think inflation fears have peaked for the intermediate-term and that inflation gauges will decelerate through year-end as the dollar strengthens further and commodity prices fall.

Retail sales excluding autos rose .5% in April, more than twice what economists had forecast, Bloomberg reported. Treasuries are falling after this report indicated consumers are holding up well in the face of headwinds and that the Fed has finished lowering interest rates. Restaurant sales rose .9%, the most this year. Excluding autos, building materials and gasoline, the category used to calculate GDP, sales rose .4% in April versus a .4% gain the prior month. Filling station sales fell .4% even as gasoline prices rose as consumers purchased less of the fuel. Spending is projected to jump 2.3% in the third quarter as the bulk of the $117 billion in tax-rebate checks are spent. The government had sent out $27.2 billion in rebates as of May 9^th. Weekly retail sales rose 2.0% this week, up from a 1.6% gain the prior week and up from a .5% increase the week of March 4^th. Weekly retail sales have averaged a 1.8% weekly gain the last five weeks, up from a weekly average gain of 1.1% the prior five weeks and up from a weekly average gain of .6% the five weeks before that. Retail sales should continue to improve through year-end on improving consumer sentiment, rising stock prices, diminishing housing fears, decelerating inflation, lower energy prices, low interest rates and an improving job market.

Inventories are US businesses rose less than forecast in March, Bloomberg reported. The .1% gain in the value of unsold goods at factories, retailers and wholesalers was the smallest since March 2007. Sales rose 1%. Companies had enough goods on hand to last 1.27 months at the current sales pace, down from 1.28 months worth in February. Auto inventories fell .9%. Inventories at general merchandise stores, which include department stores, fell 1.1%. Overall, inventories at retailers fell .5% during the month. I expect business inventories to rise more in April in anticipation of improving demand.

Bull Radar

Style Outperformer:

Small-cap Growth (+.15%)

Sector Outperformers:

Construction (+4.17%), Airlines (+1.80%) and Alternative Energy (+.58%)

Stocks Rising on Unusual Volume:

CSIQ, FLR, FWLT, MHP, FSLR, RTP, MXWL, DELL, BBL, STP, PBR, IBKC, FSYS, DTSI, ARBA, KNXA, GIGM, WRNC, ENER, CSUN, SINA, BOOM, ULTR, UFPT, USNA, CRXL, HELE, KNSY, SOLF, PENN, BSI, VRX, BYI and LIZ

Stocks With Unusual Call Option Activity:

1) HPQ 2) FLR 3) MHP 4) EDS 5) TIF

Links of Interest

Market Snapshot Commentary
Market Performance Summary
Style Performance
Sector Performance
WSJ Data Center
Top 20 Biz Stories
IBD Breaking News
Movers & Shakers
Upgrades/Downgrades
In Play
Exchange Volume vs. Average
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
Option Dragon
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Intraday Chart/Quote
Dow Jones Hedge Fund Indexes

Tuesday Watch

Late-Night Headlines
Bloomberg:
- A strengthening US dollar should push investors away from energy and materials stocks and may make emerging markets “vulnerable,” Bear Stearns(BSC) said. Better-than-expected economic data and forecasts that the Fed has finished cutting interest rates should boost the US currency, Bear Stearns Chief Investment Strategist Jonathan Golub said. “We believe that the significant outperformance of emerging markets over the past several years can largely be explained by a weakened dollar and skyrocketing commodity prices,” Golub said. “These markets should be increasingly vulnerable in a strengthening dollar environment.”
- Some investment-grade bonds backed by auto loans are showing better returns than equity investments in financial companies, according to analysts at Wachovia Corp. Spreads on top-rated auto asset-backed securities have narrowed in recent weeks. The yield on AAA auto loan debt fell to 90 basis points over benchmark rates as of May 9, compared with a high of 150 basis points more than the benchmark on April 25, according to data from Deutsche Bank AG.
- Treasuries were little changed as investor demand for higher-yielding assets pushed Asian stocks higher and sent measures of corporate credit risk down.
- Yen May Extend Declines on Bets Worst of Financial Crisis Over.
- Corn and soybeans fell on speculation that drier weather forecast for the next 10 days will accelerate US planting, after delays from wet, cold conditions in the past month.
- Finmeccanica Agrees to Buy DRS Technologies for $4 Billion.
- London’s property market had the most widespread price declines in at least 14 years last month as the slump in financial services deepened and banks curbed lending, the Royal Institution of Chartered Surveyors said.
- China’s strongest earthquake in 58 years may reduce the nation’s energy demand as damaged power plants and transmission lines force companies to idle some generators. “Demand for oil was already down in April,” said Phil Flynn, a senior trader at Alaron Trading Corp.
- Flour Corp.(FLR) earnings jumped 63% on 32% revenue growth during the first quarter. The shares surged 7.6% in after-hours trading.

Wall Street Journal:
- CIT Group(CIT) Receives Buyer Interest for Lending Subsidiaries.

MarketWatch.com:
- Hewlett-Packard(HPQ) and Electronic Data Systems(EDS) confirmed Monday that they are in “advanced discussions” that could result in H-P acquiring the technology services giant and creating a more-formidable competitor to IBM Corp.(IBM).
- While the threat posed by Microsoft’s(MSFT) takeover bid appears to be receding, Yahoo Inc.(YHOO) may now be confronted by opportunistic investment funds seeking to cash in by pushing the company back toward a deal.

CNBC.com:
- Barton Biggs of hedge fund Traxis Partners says “we’ve seen the worst” and he is “feeling pretty bullish.” (video)
- JPMorgan(JPM) Makes Offers to 6,000 Bear Stearns(BSC) Staff.

USA Today.com:
- George Soros sees ‘reflexivity’ theory of economics as life’s work. Soros, now in his eighth decade and enjoying a personal fortune estimated at $9 billion, yearns to be seen as something other than a financial oracle or Democratic Party sugar daddy. Conservative websites routinely assail him as “anti-American.” The Hungarian émigré, who built a worldwide reputation by out-thinking markets, desperately wants to be acknowledged as a philosopher. His bid for such recognition – in a new book published last week – lies in a theory called “reflexivity,” which Soros argues should supplant conventional economic thought that’s based on coolly calculating rational actors. Soros makes no bones about his judgment that the current financial crisis is the “worst since the 1930s.” Despite Soros’ apocalyptic rhetoric, the Dow is hovering near 13,000 and unemployment is a relatively low 5%. Soros explains the disconnect with the tale of the man who falls off the Empire State building and thinks to himself halfway down: “So far, so good.” “That’s where we are right now,” Soros laughs. He says, when pressed, Americans ultimately won’t escape this episode without suffering a noticeable decline in their standard of living.

Reuters:
- The ability to pay interest on bank reserves would give the US Federal Reserve a powerful tool to tap if it wanted to take further steps to ease credit strains but was worried lower interest rates might spark inflation.

Financial Times:
- Parts of the largely unregulated $62,000bn credit derivatives market may have to be subject to the kind of tighter controls that at present govern the insurance industry, NY’s insurance regulator said on Monday.
- Google(GOOG) triumphant: Search wars look settled. The scale of Google’s victory over Microsoft in online advertising is hard to exaggerate. (very good article)
- Wages the least of Europe’s worries. The ECB should stop trying to put out the inflation fire and instead end the growth freeze by cutting interest rates.

TimesOnline:
- There is talk that the US dollar’s long decline might be over. George Soros said recently that he was ending his long bearish stance on the dollar and had gone neutral. The dollar is now absurdly undervalued. In purchasing power parity terms, the US consumer is at something like a 40% disadvantage to his and her counterparts in Europe. The US trade deficit is plummeting. The financial crisis is probably past the worst. US interest rates may not have touched bottom, but they are surely close. Meanwhile, doubts about eurozone growth are starting to proliferate.
- UK Government backs down on corporate tax. Several big multinational British companies had said that they were prepared to move their headquarters from the UK amid concerns that the Treasury was preparing to tax the profits they derived overseas.

Commercial Times:
- Taiwan’s automobile sales in the first 10 days of May plunged 42.5% from a year earlier on the incoming government’s plan to raise fuel prices, citing figures from the transportation ministry.

South China Morning Post:
- China’s plan to let investors engage in margin lending and short selling of equities may not be launched until the close of the Olympics Games.

Tuoi Tre:
- Vietnam’s rice prices fell by 400 to 500 dong per kilogram, to between 5,200 dong and 5,500 dong a kilogram as farmers started harvesting a new crop in some areas, citing Nguyen Hoang Chuong, a trader based in the country’s main rice-producing area.

Late Buy/Sell Recommendations
Morgan Stanley:
- Concern over a reversal of the current yuan-appreciating trend, in response to potential US dollar strength, is rising. At the market level, this would make the overall offshore China equities universe less attractive for US dollar investors, although the aggregate impact on earnings would likely be limited. The Morgan Stanley FX Strategy team has turned cautious on Asian currencies for the first time in close to two years.

Night Trading
Asian Indices are -.25% to +1.5% on average.
S&P 500 futures +.05%.
NASDAQ 100 futures +.09%.

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

Earnings of Note
Company/EPS Estimate
- (FOSL)/.39
- (CSIQ)/.25
- (WMT)/.75
- (LIZ)/.10
- (TJX)/.40
- (AMAT)/.22
- (WFMI)/.31
- (ERTS)/.00
- (MELI)/.10

Upcoming Splits
- (CLF) 2-for-1

Economic Releases
8:30 am EST
- The Import Price Index for April is estimated to rise 1.6% versus a 2.8% gain in March.
- Advance Retail Sales for April are estimated to fall .2% versus a .2% gain in March.
- Retail Sales Ex Autos for April are estimated to rise .2% versus a .1% gain in March.

10:00 am EST
- Business Inventories for March are estimated to rise .4% versus a .6% rise in February.

Other Potential Market Movers
- The Fed’s Evans speaking, Fed’s Fisher speaking, Fed’s Hoenig speaking, Fed’s Yellen speaking, Fed’s Plosser speaking, Fed’s Warsh speaking, Fed’s Bernanke speaking, Fed’s Pianalto speaking, IBD/TIPP Economic Optimism Index, (GM) conference, (OI) analyst meeting, (JKHY) analyst conference, Goldman Sachs Power/Utility Conference, UBS Global Financial Services Conference, Bank of America Health Care Conference, Robert W. Baird Growth Stock Conference, Merrill Global Metals/Mining/Steel Conference, Merriman Curhan Ford Clean Tech Conference, Morgan Stanley Communications Conference and CSFB Semi/Hardware Conference could also impact trading today.

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