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  • Aasia ja Euroopa turud rohelised. FTSE +0.6%; DAX +0.9%, Nikkei +1.6% ja Hang Seng +1.7% ning ka USA alustab plusspoolelt.
    Don't Trust Monday Morning's Good Vibes

    By Rev Shark
    RealMoney.com Contributor
    3/19/2007 8:24 AM EDT
    Click here for more stories by Rev Shark

    "The causes of events are ever more interesting than the events themselves."

    -- Marcus Tullius Cicero

    The market is set to open strongly this morning following big gains in overseas markets. The cause of the strength is acquisition activity like that surrounding ABN AMRO Holdings (NYSE) and, more importantly, a weak yen. The yen has been the primary market driver recently because of its importance in the carry trade.

    The carry-trade is where investors borrow funds in Japan at very low interest rates and invest them in other places at higher rates. As long as rates in Japan stay low and the yen does not rise in price vs. the currencies in which investors are concentrated, then the carry trade will continue to work.

    Japan is showing no inclination to raise interest rates so the focus is on the yen -- as long as it stays weak Japanese exporters are happy and the folks who borrowed yen and invested them elsewhere will continue to profit. It won't work forever but it seems that way now, and that is good enough for the market.

    Interest rates in China increased over the weekend and on Friday Chinese Premier Wen Jiabao commented that his country's growth was "unstable, imbalanced, uncoordinated and unsustainable."

    However, there seems to be no reaction to this development, which may indicate how strong the economy in China really is. The comment from the Premier is reminiscent of Alan Greenspan's famous "irrationally exuberance" speech, which did have a minor impact at the time when it was made on Dec. 5, 1996 but came over four years before the market eventually did top out. The obvious lesson is that strong markets tend to have momentum and chairmans and premiers don't alter the course of things very easily.

    For the moment things look pretty good but we have seen this story before on Monday mornings and the focus is going to quickly return to the U.S. economy, subprime mortgages and the Federal Open Market Committee interest rate decision that is due out Wednesday afternoon.

    Some are looking for the Fed to help out the bullish cause with an interest rate cut in the near future. The thinking is that the economy is slow enough and the subprime mortgage issue dire enough that the Fed will overlook the fact that core inflation is still substantially higher than what it is targeting. That discussion is going to dominate trading this week and is likely to be the driving force behind the action.

    For the technically inclined, there is little question that the market is troubled right now. We have been struggling to put together a bounce after the second sharp dip lower and on Friday it looked like the bulls were running out of juice. They are starting off the week with renewed vigor but we will have to see if they have the fortitude to keep it going. A strong Monday morning open isn't a good reason to believe that things are suddenly turning up for good.
  • Homme tuleb majandusandmeid USA ehitussektori (Housing Starts, Building Permits) kohta ning kolmapäeval teatab Föderaalreserv turule oma intressiotsuse. Eriti hoolikalt kuulatakse turuosaliste poolt just tulevase poliitika suhtes tehtavat sõnastust.

    Freeport-McMoRan FCX upgraded by Bear Stearns Peer Perform » Outperform $80
    DaimlerChrysler DCX upgraded by Goldman Sachs Sell » Neutral
    Kraft Foods KFT upgraded by Prudential Underweight » Neutral $32
    Walgreen WAG upgraded by JP Morgan Neutral » Overweight

    Ülespoole avanevad:

    Gapping up on strong earnings/guidance: FRPT +12.2%, GMET +4.7%, HRT +4.3%... M&A: THE +21.4% (to be acquired by Hercules Offshore for 42.01/share), SVM +13.2% (to be acquired by Clayton Dubilier & Rice for $15.63/share), ABN +9.6% (has attracted informal takeover approaches from several large European banks - WSJ), TTWO +8.4% (reschedules annual meeting of shareholders, board to consider possible sale of co), EAGL +5.9% (confirms enters into agreement to sell to investor group for $38/share)... Mortage lenders continue to squeeze higher on NFI & LEND news: NFI +24.2% (announces reduction in workforce), LEND +9.2% (receives notice of delisting; in discussions regarding a possible financing arrangement with a third party), FMT +7.1%, FBR +4.7%, NLY +4.0%, IMH +2.2%... Other news: ACAD +49.8% (announces positive results from ACP-103 Phase II Schizophrenia co-therapy trial), SIGA +31.9% (announces its smallpox drug candidate administered to critically ill human patient), JSDA +7.9% (Cramer interviews JSDA CEO on Mad Money), NSTK +6.5% (Cramer positive on stock), CPHD +5.9% (announces it received clearance from the FDA to market its Xpert EV test), SIRF +4.6% (upgraded to Buy at Opco).

    Allapoole avanevad:

    Gapping down on weak earnings/guidance: NT -3.1% (ALU -1.1% down in sympathy), MOVI -2.3%... Other news: AGIX -59.8% (announces AGI-1067 did not show difference from placebo in its composite primary endpoint; down in sympathy AZN -1.2%, which licenses AGI-1067), FICC -10.7% (co and C-Bass amend merger agreement to reduce purchase price to $4.00/share), HERO -3.1% (to acquire THE for a ~20% premium), CDE -2.9% (U.S. court to overturn controversial mine permit - Reuters), PSPT -2.9% (downgraded to Neutral at Cowen), RSH -2.4% (downgraded to Underweight at Morgan Stanley), KRY -1.9% (announced new CFO), SEPR -1.6% (downgraded to Underperform at Friedman Billings), CSX -1.5% (profit-taking after Friday's almost 3 point run).
  • UBS upgrades BEA Systems (BEAS 11.04) to Buy from Neutral

    Oppenheimer upgrades Sirf Tech (SIRF 27.63) to Buy from Neutral with a $34 tgt based on valuation and opportunity to capitalize on the ramp into RIMM, an initial ramp into Motorola which could provide some upside, all-important June quarter summer driving season for P.N.Ds all the while handset A.S.Ps near term are not impacted by handset-like pricing pressures and PND chip prices stable.

    MEMC Elec (WFR): Friedman Billings raises their rev/EPS ests above consensus and raises their tgt to $54 for $45. Firm says recent checks suggest that despite a flattening in poly spot prices, WFR has been able to sell higher than the previously expected amount of poly into the spot market, a trend that is expected to continue into 2Q07, therefore providing upside to their ests. Unlike the previous years when a combination of insufficient transparency and restatements of quarterly results made us doubt long-term growth prospects, they have now increased confidence in WFR's ability to capitalize on not only the shortage of poly, but also benefit from the secular growth of the solar industry.

    Stifel believes investors should accumulate EBAY shares in front of 1Q07 results (mid-April) for four reasons: 1) quarter is in line from a revenue standpoint with EPS upside potential; 2) PayPal's strategic position is improving; 3) Skype has added positive features and functionality in the past several weeks; and 4) eBay remains overcapitalized and could continue to act on its outstanding buyback or initiate a structured recapitalization.

    Piper Jaffray anticipates weaker than expected Q1 results for the solar industry. Firm thinks suppliers in China are well positioned, and while Suntech (STP) is the all-around leader in China, they believe JA Solar (JASO) offers better relative valuation. Firm thinks other names in China may be due for downward revisions. They continue to favor thin-film investments (FSLR and ENER) as it offers the lowest cost per watt and is immune to the polysilicon shortage. Their top pick for 2007 remains MEMC (WFR).

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