Caterpillar Reaffirms Forecast...

Caterpillar Sees $60B In Revenue In 2010
Heavy-equipment maker reaffirms its 2008 per-share earnings and revenue forecast, and says it also expects revenues approaching $60 billion by 2010 and per-share earnings growth of 15% to 20% from 2005 through 2012. Shares rise 2% pre-market.

Cleveland Cliffs to Split Stock....

Cleveland-Cliffs Inc. (CLF). The Cleveland, OH-based mining company late Tuesday declared a two-for-one stock split, payable May 15 to shareholders of record as of May 1.

Earnings Due Today....

COMPANIES REPORTING EARNINGS

• American Eagle Outfitters Inc. (AEO). Expected to report Q4 earnings of $0.66 a share, according to analysts polled by Thomson Financial.

• Gymboree Corp. (GYMB). Expected to post Q4 profit of $0.95 a share, up 13.10% from the same quarter last year when the company earned $0.84.

• Men's Wearhouse Inc. (MW). Expected to report Q4 earnings of $0.17 a share.

Today's Top Stories....

• Mortgage applications for week to March 7 fall 1.9% on lower refinancing

• Boeing reiterates 787 schedule after Goldman Sachs warns of further delays - report

• Wyeth withdraws application for EU approval of hot flashes treatment

• Coach names ex-COO of Limited Brands its executive officer, effective March 17

• Kroger cut to 'underweight' by JP Morgan on likely underperformance

• Ruddick upped to 'overweight' at JP Morgan on growth prospects

• Toyota to raise monthly salaries by average 7,900 yen

• AstraZeneca's Seroquel patent infringement trial to start Aug. 11

Tuesday's Summary....

U.S. Markets

Dow +416.7 (+3.55%)
Nasdaq +86.4 (+3.98%)
S&P 500 +47.4 (+3.71%)

News That Moved the Market

Markets Surge. Tuesday's gains were the most since 2003. The market was propelled higher after the Fed announced a new Term Security Lending Facility, allowing borrowers to pledge a large assortment of debt securities as collateral including privately rated AAA mortgage backed securities. The plan will increase liquidity and generate more value for mortgage backed securities, which have become a thinly traded asset. The plan includes also raising the swap lines with the ECB and Swiss National Bank, putting an extra $12 billion into the U.S. markets. The markets opened sharply higher, and finished strong, with financials (+7.4%) leading the charge. Volume was high and for any technical analysis followers, Tuesday's jumps may have also created a double bottom, a very bullish signal.

Wellpoint Causes Health Insurer Sell-Off. Wellpoint (WLP, -28.31%) slashed its full-year guidance to $5.76 - $6.01/share from $6.41/share. The new forecast was well below analysts' estimates and caused a massive sell-off of all the large health insurers; UnitedHealth Group (UNH, -15.2%) and Humana (HUM, -24.7%) finished with massive losses as well.

Quick Tics:

Google's (GOOG, +6.3%) acquisition of DoubleClick was approved by European regulators…

Crude-oil futures ended the session at a new record closing high of $108.75/barrel..

Texas Instruments (TXN, -3.0%) lowered its first-quarter earnings forecast, the company's shares hit a 52-week low.

Wednesday's Notable Earnings

Hot Topic (HOTT) After Close
American Eagle Outfitters Inc (AEO) Before Open

Economic Events:

10:30 AM: Crude Inventories

Sorry...Been out all day at a conference....

Maybe I should go back out....

Nice rally...Dow up 350 and gaining into the close. Look for a follow thru rally tomorrow and then it might be time to put more money to work.

Monday's Trading Summary...

U.S. Markets

Dow -153.54 (-1.29%)
Nasdaq -43.15 (-1.95%)
S&P 500 -20.00 (-1.55%)

News That Moved the Market

Financials Push Markets Down Further. Stocks finished sharply lower Monday, with more bad news coming out of the financial sector. Bear Stearns (BSC, -11.1%) fell the most in 10 years after rumors spread that the company has liquidity issues. "There's an insolvency rumor and concerns on liquidity, that they just have no cash," said Michael Mainwald, head of equity trading at Lek Securities Corp. A spokesman for Bear said that there is "no truth" to the rumors, but the trust in the banks has disappeared in the last couple months and investors were noticeably rattled. Citigroup (C, -5.8%) fell under $20, to its lowest levels since 1998.

Lehman Brothers (LEH, -7.3%) announced plans to cut another 5% of its work force, citing weak credit markets and a slowing economy. Markets finished near their lows, with the financial sector ending down 2.0%.

Blackstone's Profits Plunge. Blackstone (BX, +2.9%) reported an 89% decrease in profits this morning. The company was hurt by its holdings in FGIC, the troubled bond insurer. The company's stock hit an all-time low, before finding bidders late in the session, and said it sees difficult market conditions continuing in 2008.

FBI Targets Countrywide, Subprime Lenders. Countrywide (CFC, -14.0%) lost more ground after The Wall Street Journal reported the company, along with 15 other subprime lenders, is under an FBI investigation. The FBI is taking a broad look at the subprime industry as a whole for fraud and other unlawful practices. The investigation is still in its early stages.

Goldman Sees FOMC Cutting Rates By 1.0% In Two Meetings. Goldman Sachs (GS, -2.8%) sees the FOMC dropping interest rates a full point by late April. There were talks of an intermeeting cut before next week's official FOMC meeting, but few really believe the Fed would think the situation is so dire, that it could not wait one week.

Quick Tics:

McDonalds (MCD, +2.9%) reported strong same store sales growth

NY Governor Eliot Spitzer has been linked to a prostitution ring

Oil closed up nearly 3% to $107.90/barrel.

TomorrowNotable Earnings

Boston Beer Company (SAM) Time Not Supplied
J. Crew Group, Inc. (JCG) After Close
Take-Two Interactive Software (TTWO) After Close
The Kroger Co. (KR) Before Open

Economic Events:

8:30 AM: Trade Balance

FBI Probes Countrywide...

The FBI has opened a criminal inquiry to probe whether Countrywide Financial (CFC) intentionally misrepresented its financial condition in SEC filings. The FBI is investigating more than a dozen subprime lenders' origination and securitization processes, and probing possible conflicts of interest between lenders and investors.

If Countrywide is found guilty of fraud, it could scuttle a planned $4B acquisition of the company by Bank of America (BAC).

Earnings Due Today....

COMPANIES REPORTING EARNINGS

• Foot Locker Inc. (FL). Expected to report Q4 earnings of $0.44 a share, according to analysts polled by Thomson Financial. This is a decrease of 36.71% from the same quarter last year when the company earned $0.70.

• Inter Parfums Inc. (IPAR). Expected to post Q4 earnings of $0.34 a share, up 25.93% from the same quarter last year when the company earned $0.27.

• The Blackstone Group (BX). Expected to post Q4 earnings of $0.29 a share.

• Vail Resorts (MTN). Expected to report Q2 earnings of $1.35 a share.

This Morning's Top Stories...

• Morgan Stanley cuts 2008 earnings estimates on raft of large-cap banks

• Chevron to develop LNG facility in Australia

• Siemens eager to settle with SEC before presidential election - report

• Nationwide Financial Services gets buyout offer from parent

• Wyeth to invest $280 million in Chinese nutritional manufacturing plant

Ciena Net Income Nearly Triples...

Ciena posts net income to $28.8 million, or 28¢ a share, amid increasing demand for gear allowing network operators to handle more traffic at lower costs. Excluding items, EPS jumps to 47¢; analysts expected 40¢. Shares rise 4% pre-market.

C'mon Ciena...we're not supposed to have good news...only the bad stuff...

Fed Moves to Bolster Liquidity...

To address heightened liquidity pressures in term funding markets, the Fed will increase the amounts outstanding in the Term Auction Facility to $100 billion. It also will initiate a series of term repurchase transactions that are expected to amount to $100 billion.

US Payrolls Fall, Raising Odds for Recession...

U.S. recession fears mount as employment falls by 63,000 in February, its fastest rate in five years, suggesting that the housing and credit crunch is gripping the broader economy. Unemployment rate surprisingly ticks down to 4.8%, triggered by a 450,000 decline in the size of the labor force, not a rise in employment. Data support expectations for additional Fed rate cuts.

Marvell Beats, but Conference Call Spooks...

Marvell (MRVL) blasted past expectations with Q4 EPS of $0.20 vs. consensus of $0.11 and revenue of $845M vs. consensus of $783M. After gaining 6% in AH trading, things got ugly during the conference call after MRVL said 2008 costs would be higher than expected, and declined to offer a full-year forecast due to broad economic uncertainty.

Shares ended -5.4% in extended trading.

National Semi Soars on Margin Surprise...

National Semiconductor (NSM) posted FQ3 EPS of $0.28, better than consensus estimates of $0.24. Revenue was just short at $453.4M. NSM sees Q4 revenue of $440M-$460M, short of consensus estimates of $470.3M. NSM said Q3 bookings declined sequentially by approximately 14%, due primarily to weak orders for wireless handsets and personal mobile devices. But gross margins "held up well," it said, at 64.3%, up from 59.8% Y/Y.

Shares jumped 9.5% in AH trading.

Retail Sales Encourage....

Retail sales in February largely beat expectations. Same-store sales were up 1.9%, led by a 2.6% increase at Wal-Mart (WMT). Still, stores continue to expect a rough spring, and a number of retailers have stopped reporting monthly comps in order to focus on long-term strategy. "These month-to-month blips don't change the trend," economist Frank Badillo said. "

Shoppers are intent on slowing their spending, and that will continue in the months ahead." Analysts noted sales at discounters (WMT, FDO) were stronger than at middle-end retailers (TGT, JCP, KSS).

iPhone SDK Wows...

Apple's iPhone SDK impressed developers, who said the tool addresses all three core groups: Developers, IT departments, and end-users. Developers liked the functionality of iPhone APIs, and the ability to store data using popular SQL Lite. Apple is licensing technology from Microsoft (MSFT) that will enable it to interact with Microsoft Exchange, and will enable "wipe and lock" and "on-device data encryption" along with other IT tools.

Consumers get push email that turns the iPhone into an instant BlackBerry (RIMM) rival. What's still missing? Multiple carriers, and corporate management tools.

Sony, Microsoft Talk Blu-Ray....

Sony (SNE) is in talks with Microsoft (MSFT) about a Xbox 360 Blu-ray drive. On the one hand, Sony has touted the now de-facto standard Blu-ray as one of its PS3's advantages over the Xbox; on the other, the revenue from a Microsoft deal might be irresistible. Sony also said it has had discussions with Apple (AAPL), which has yet to offer Blu-ray drives on its computers.

Thursday's Market Summary....

U.S. Markets

Dow -214.60 (-1.75%)
Nasdaq -52.31 (-2.30%)
S&P 500 -29.36 (-2.20%)

News That Moved the Market

More Financial Woes Hit Stocks. The markets opened down and never were able to recover after numerous companies in the financial sector came out with bad news. Thornburg Mortgage (TMA, -51.5%) plummeted after its ratings were downgraded by the main ratings agencies. The company disclosed it was not able to meet a margin call of $28 million, triggering defaults in other lending agreements. Washington Mutual (WM, -8.1%) fell following S&P's downgrade of the company, citing a "severe residential mortgage credit cycle" as the catalyst for decision. WaMu was placed on CreditWatch with negative implications. Major indices finished near their lows, w ith the Dow closing just above 12,000. Whether it holds it tomorrow will be an important mental threshold for investors.

Foreclosures Spike. U.S. mortgage foreclosures hit all-time high at the end of last year, according to the Mortgage Bankers Association. New foreclosures increased to 0.83% of all home loans last quarter, with late payment jumping to a 23-year high.

Citi To Cut Mortgage Holdings by 20%. Citigroup (C, -4.4%) announced it will decrease its mortgage assets by $45 billion over the next year. The company will make fewer loans that it cannot sell.

Retail Sales Better Than Expected. Wal-Mart (WMT, +0.86%) reported higher than expected February sales, as more consumers turned to the low cost retailer. U.S. retailers' same store sales increased by 1.9%, beating estimates. About 60% of retailers reported higher than anticipated sales.

Quick Tics:

Merrill Lynch (MER, -7.0%) will exit the subprime lending industry

Crude increased to $105.47, up $0.95.

Tomorrow Notable Earnings

NONE

Economic Events:

8:30 AM: Jobs Report
3:00 PM: Consumer Credit

A Commodity Linked CD....

Now I've seen it all. Take a look at this CD that just came out. It is tied to the performance of Commodities.

Silverton Bank Commodity Linked CD

Maturity 9/30/2013

If held to maturity, purchasers get their original investment back plus a return of 125% of a basket tied to the performance of the following commodities:

Crude Oil, Coal, Copper, and the Live Cattle Index.

Smells like a top in Commodities to me.....

More Doom and Gloom...

The percentage of mortgages that were in foreclosure hit a record high in the fourth quarter, while mortgage delinquencies rose to a 23-year high, the Mortgage Bankers Association said Thursday. A record 2.04% of U.S. mortgages were somewhere in the foreclosure process at the end of the year, while a record-high 0.83% of loans entered foreclosure in the fourth quarter, the trade group's quarterly survey found. More homeowners fell behind on payments as well, with 5.82% of loans past due in the quarter. That was the highest delinquency rate since 1983. MBA Chief Economist Doug Duncan said declining home prices were the driving force behind the foreclosure record.

Really??? This is surprising....I would have thought it was more like 60% of the mortgages out there are in the foreclosure process....:-)

Will there be ANY Banks or Mortgage Companies This Time Next Year???

Maybe all of them will go out of business.... People will no longer be able to buy a home and we will have to keep our money in our mattresses.

That's the mentality now!!!

This is about the worst sentiment I've ever seen on a sector. I would say we are VERY close to a complete washout...which means we are VERY close to a bottom.

Technical Alert: Akamai Breaking Out...

Akamai (AKAM) is breaking out of a nice cup and handle formation this morning.

The stock is up .91 to $35.72 on decent volume. While the stock looks good here, a break above longer term resistance at $38 would be a more significant BUY signal.

Joy Global In-Line, But Raises Guidance...

Joy Global Corp.'s (JOYG) fiscal first-quarter net income rose 19% as sales climbed amid demand sparked by the continuing commodities boom abroad and "improving conditions" in the U.S. coal market.

The company boosted its fiscal-year earnings outlook, saying due to high coal prices the outlook for mining equipment looks "robust." Joy said global capacity constraints leave the U.S. the only country with the potential to substantially boost coal output - just as markets around the world are begging for more. "The U.S. has gone from being a regional market to being the swing supplier to the international coal market," the company said. U.S. coal exports rose 10 million tons in 2007, and Joy expects that rise to continue.

The heavy-mining equipment manufacturer reported net income for the quarter ended Feb. 1 of $71.1 million, or 65 cents a share, compared with $59.7 million, or 51 cents a share a year earlier. The latest quarter's results included 1 cent in earnings from discontinued operations. Revenue rose 14% to $640.3 million.

The mean per-share earnings estimate of analysts polled by Thomson Financial was 65 cents on revenue of $639 million.

Blockbuster Reports In-Line Earnings...

Blockbuster Inc.'s (BBI) fourth-quarter net income more than tripled as operating expenses fell and rental revenue jumped 11%. The company said its 2007 was a year of "transition" and that it expects to return to profitability in 2008 - forecasting net income where analysts had seen a loss. Blockbuster's shares rose in premarket trading.

The movie rental company reported net income of $41 million, or 18 cents a share, compared with $11.2 million, or 4 cents a share, a year earlier. Excluding charges, per-share earnings rose to 26 cents from 11 cents. Revenue grew 3.6% to $1.57 billion.

The mean per-share earnings estimate of analysts polled by Thomson Financial was 18 cents on revenue of $1.44 billion.

Makes sense....People aren't going to stop watching movies....they'll just stay at home and rent...NetFlix beat estimates recently and raised their guidance....looks like a trend to me.

ViewSonic Pulls IPO...

ViewSonic Corp. The Walnut, CA-based provider of visual display technology Wednesday withdrew its $143.75 million worth intial public offering with the U.S. Securities and Exchange Commission, saying the current market terms are not attractive.

Earnings Today....

COMPANIES REPORTING EARNINGS

Blockbuster Inc. (BBI). Expected to report Q4 earnings of $0.18 a share, according to analysts polled by Thomson Financial. This is an increase of 101.11% from the same quarter last year when the company earned $0.09.

Casey's General Stores Inc. (CASY). Expected to post Q3 earnings of $0.28 per share, up 25.45% from the same quarter last year when the company earned $0.22.

Joy Global Inc. (JOYG). Expected to post Q1 earnings of $0.65 per share, up 27.06% from the same quarter last year when the company earned $0.51.

Marvell Technology Group Ltd. (MRVL). Expect to report Q4 earnings of $0.11 per share, an increase of 266.67% from the same quarter last year when the company earned $0.03.

National Semiconductor Corp. (NSM). Expected to report Q3 earnings of $0.24 per share, up 6.82% from the same quarter last year when the company earned $0.22.

The Cooper Cos. Inc. (COO). Expected to post Q1 earnings of $0.45 per share, down 6.04% from the same quarter last year when the company earned $0.48.

Wind River Systems Inc. (WIND). Expected to post Q4 earnings of $0.09 per share, down 15.00% from the

Headlines That May Move the Market.....

-Wal-Mart Feb. same-store sales up 2.6%, ahead of Wall St. view

-Oil soars above $105 a barrel as NY blast sparks jitters

-Euro hits new high of $1.5347 against dollar ahead of ECB decision

-Joy Global Q1 net rises to $71 million

-Limited Brands Feb. same-store sales down 9%

-Afren to buy Devon Energy's interest in Cote d'Ivoire for $205 million

-Ingersoll-Rand backs 2008 earnings, revenue forecasts

-McDermott raised to 'buy' at Citi on Qatar project hopes, good results

-Novartis cancer drug Gleevec may harm fetus development - study

-McAfee plans further acquisitions

-Saks cut to 'neutral' at Bank of America; price target slashed to $13

TiVo Pares Losses....

Shares of TiVo Inc. (TIVO) rose 4.8% to $8.53 after the company reported that its fourth-quarter loss narrowed to 6 cents a share from 20 cents a share in the prior year, on better-than-anticipated sales of its standard digital video recorders.

Analysts polled by FactSet Research were expecting a loss of 11 cents a share.

The Alviso, Calif., digital recording technology company's service and technology revenue rose to $58.1 million from $57 million. For the quarter ending in April, TiVo expects to post a net loss of $1 million to $3 million on service and technology revenue of $53 million to $55 million.

Coldwater Creek Tumbles....

Shares of Coldwater Creek Inc. (CWTR) dropped to $4.37 after the company released disappointing first-quarter guidance. The company expects to report a first-quarter loss of 14 cents to 17 cents a share, below analysts' average estimate of a per-share loss of 4 cents.

The company also reported a fourth-quarter net loss of 19 cents a share compared with a net income of 17 cents a share a year earlier. Revenue totaled $345.5 million, decreasing from $366.6 million a year ago, the Sandpoint, Idaho apparel retailer said.

Analysts had forecast a net loss of 19 cents a share.

Harris Corp Raises Guidance..

Shares of Harris Corp. (HRS) rose 4.2% to $49.48 after the company said it expects fiscal 2009 earnings of $4 to $4.10 a share on revenue of $5.7 billion to $5.8 billion, driven by growth across all operating segments as a result of demand for its information-technology products and services.

Analysts had expected, according to a poll by Thomson Financial, earnings of $3.95 a share on $5.71 billion in revenue.

The Melbourne, Fla., communications equipment said it expects to finish fiscal 2008 with a substantial backlog, which is expected to drive double-digit revenue growth in RF Communications in fiscal 2009. The company also said it expects top-line growth and improved operating performance in its two commercial businesses in the fiscal year ending June 30, 2009.

Thornburg Crushed After Hours....

Shares of Thornburg Mortgage Inc. (TMA) plunged 44% to $1.92 in after-hours trading after the home-mortgage lender late Wednesday disclosed that its failure to meet a $28 million margin call caused a series of cross-defaults. Thornburg also said JPMorgan Chase Bank N.A., which made the original margin call, will "exercise its rights."

In Wednesday's disclosure, Thornburg didn't specify those rights, but in a previous filing with the Securities and Exchange Commission the company said that the lender has the "right to liquidate pledged collateral." Thornburg said it was loaned $320 million under reverse repurchase agreements made with JPMorgan.

The notice of default from JPMorgan triggered cross-defaults "under all of the Company's other reverse repurchase agreements and its secured loan agreements," the company said in Wednesday's filing. Thornburg offered no description of the amounts involved in the cross-defaults, but said its "obligations under those agreements are material."

PetsMart Profit Margin Falls...

PetSmart Inc. (PETM), which is hurting from soft consumer spending, posted a 2% drop in fiscal fourth-quarter net income as its profit margin fell and said it would slow capital spending as it tries to improve performance at its stores.

The nation's largest pet-food and supplies chain said Wednesday that net income for the quarter ended Feb. 3 fell to $75.4 million from $77 million. Earnings per share rose to 59 cents a share from 56 cents a share.

In January, PetSmart slashed its earnings forecast by 13 cents a share to a range of 57 cents to 61 cents a share, blaming weak sales and a challenging retail climate.

The latest results included costs to exit the State Line Tack business. Excluding those costs and an extra week of sales, earnings came to 52 cents a share. Net sales in the latest quarter rose 14% to $1.33 billion, with a $90 million benefit from an extra week of sales.

The latest forecast from analysts polled by Thomson Financial was for earnings, excluding items, of 59 cents a share on revenue of $1.33 billion.

Wednesday's Summary....

U.S. Markets

Dow +41.19 (+0.34%)
Nasdaq +12.53 (+0.55%)
S&P 500 +6.95 (+0.52%)

News That Moved the Market

Markets End Up After Digesting Ambac News. The markets finished the day up, but that was not before it tested the previous day's lows. For much of the day, most of the attention went to Ambac (ABK, -19.8%), which announced plans to raised $1.5 billion through sales of common shares and equity units. After the announcement, markets seemed disappointed with the news. Investors were looking for a true bailout that would solidify the company's balance sheet and extinguish concerns that Ambac would lose its AAA rating. Though S&P and Moody's did say they would probably confirm the bond insurer's AAA rating, the let down from the announcement pushed the markets down in the middle of the day. But like yesterday, the bottom fishers grabbed control in the afternoon and pushed the major indices back into the green to end the day.

Oil Rallies Off Inventory Decline. Crude spiked to a new record high of $104.95, before closing at $104.45. The jump was caused by OPEC's announcement that it will leave productions levels unchanged and an unexpected decline in inventories.

ISM Services Data Gives Market Hope. Before the bell the ADP Employment Report showed an unexpected decline in payrolls. Markets mostly shrugged off the figure and will pay much closer to Friday's Job's Report. The Institute for Supply Management services index data was better than expected and provided a much needed positive piece of economic data; markets were higher immediately after the announcement. Factory orders were also released, and were in-line with forecasts.

Quick Tics:

The Fed Beige Book survey showed economic growth has slowed, with 8 of the 12 Fed regional banks noticing a "weakening in the pace of business activity."

Goldman Sachs (GS, +0.7%) CEO Lloyd Blankfein believes the credit-market contraction is at least half way over.

Big Lots (BIG, +22.2%) jumped after increasing its 2008 profits forecasts.

Tomorrow Notable Earnings

Marvell Technology Group Ltd. (MRVL) After Close
National Semiconductor (NSM) After Close
Urban Outfitters (URBN) Before Open

Economic Events:

Chain Store Sales
Bank of England and European Central Bank Announcements
8:30 AM: Job Claims
10:00 AM: Pending Home Sales

US Stock Lose Gains on Ambac Disappointment...

Shares turn lower as details of Ambac's big bailout plan disappoint. Several sectors have fall into the red, including financials and both consumer staples and discretionary. Dow falls 50 points after being up more than 100 points earlier.

Updating our Beats and Raises Portfolio...

Here is an updated list of companies that, since January 1, have Beat Earnings Expectations AND have Raised Guidance for 2008.

Potash (POT)
Terex (TEX)
Intuitive Surgical (ISRG)
Hewlett-Packard (HPQ)
Medco Health (MHS)
Buffalo Wild Wings (BWLD)
Gamestop (GME)
Mosanto (MON)
JC Penney (JCP)
Zimmer Holdings (ZMH)
Sohu (SOHU)
Dolby Labs (DLB)
Research in Motion (RIMM)
Express Scripts (ESRX)
Boeing (BA)
Chattem (CHTT)
Corning (GLW)
IBM (IBM)
Netflix (NFLX)
EOG Resources (EOG)

These stocks are all down over the last week, might be an opportunity to Buy quality...

Earnings Due Today....

COMPANIES REPORTING EARNINGS

ADC (ADCT). Expected to report Q1 profit of $0.18 per share, according to analysts polled by Thomson Financial.

Brown Shoe Co. (BWS). Projected to report Q4 earnings of $0.37 a share.

Chico's FAS (CHS). Expected to report a Q4 loss of $0.15 a share.

Coldwater Creek (CWTR). Forecast to break even in Q4.

Comtech Telecommunications (CMTL). Likely to report Q2 earnings of $0.79 a share.

H&R Block (HRB). Estimated to post Q3 earnings of $0.06 a share, a decrease of 25% from the same quarter last year when the company earned $0.08.

PetSmart (PETM). Expected to post Q4 earnings of $0.62 a share, up 13.89% from the same quarter last year when the company earned $0.54.

Longs Drug Stores (LDG). Likely to report Q4 earnings of 40.97 a share.

Saks Inc. (SKS). Forecast to report Q4 earnings of $0.20 a share.

Tivo (TIVO). Likely to post a Q4 loss of $0.11 a share.

Yahoo in Talks with Time Warner..

The latest on Yahoo (YHOO) has it in talks with Time Warner (TWX) to take over its AOL unit, in exchange for which TWX would receive a sizeable minority stake in Yahoo. The combined company could save $1B annually. Oh, and Yahoo is still talking to News Corp. (NWS) to take over MySpace etc. for a stake in Yahoo.

With all these complex negotiations, it now seems likely Yahoo will push off a March 14 deadline by when Microsoft (MSFT) must make a push to take over the board, in order to get greater clarity on its defense stance. Many doubt a YHOO/AOL merger will float.

Apple Has No Plans for Buyback or Dividend...

Apple says at its annual shareholder meeting that it has no plans for a stock buyback or dividend. Apple also said it plans to sell the iPhone in Asia this year, targeting India and China.

Costco Reports In-Line Earnings...

Costco Wholesale Corp. (COST) posted a 31% increase in fiscal second-quarter net income on strong international growth and continued consumer flight toward discount retailers.
For the period ended Feb. 17, net income was $327.9 million, or 74 cents a share, compared with $249.5 million, or 54 cents a share, a year earlier.

Last year's second quarter included $53.4 million in charges.

The wholesale-club giant's revenue increased 12% to $17 billion as same-store sales rose 7%.
Chief Financial Officer Richard Galanti said in December that a Wall Street forecast of 74 cents a share for the quarter "sounds good," saying the retailer had "gotten off to a good start" in the period.

The latest mean estimates of analysts polled by Thomson Financial were for earnings of 74 cents a share on revenue of $16.9 billion.

Tuesday's Summary....

U.S. Markets

Dow -45.10 (-0.37%)
Nasdaq +1.68 (+0.07%)
S&P 500 -4.59 (-0.34%)

News That Moved the Market

Financial Rollercoaster Continues. The markets bounced back after strong selling in the first half of the session. Citigroup (C, -4.3%) was under pressure early after the head of Dubai International Capital said the bank needs more funds and Merrill Lynch (MER, +2.5%) lowered its earnings forecast for Citi. Shares of the mega bank hit a nine-year low before Citigroup responded to the news by saying it is comfortable with its capital levels and would not seek new funds. The markets rallied hard after Citi came out with the release and The Financial Times reported bond insurer Ambac (ABK, +7.2%) is close to an agreement to receive a capital infusion . The deal could announce the deal as early as Wednesday. Though there was a lot of other news, this market showed today that the financial headlines truly spark rallies and sell-offs.

Intel Decreases Profitability Forecast. Intel (INTC, +0.05%) lowered its gross profit-margin forecast for Q1, citing lower flash memory prices. The company now sees margins coming in between 53%-55%, down from 55%-57%.

Housing Still Troubled, Bernanke Wants Banks To Do More. Fed Chairman Ben Bernanke caused a sell-off early in the market when he said foreclosures in the troubled U.S. housing market were likely to continue. He suggested banks write down the principal amount on mortgage loans for home owners who are at risk of defaulting. "Principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure," he explained.

Quick Tics:

Jackson Hewitt Tax Service Inc. (JTX, -32.6%) reported a 34% drop in fiscal Q3 earnings

Cisco's (CSCO, -0.5%) CEO John Chambers helped the rally by saying the difficulties in the market would likely be "short-lived and shallow".

Commodities sold-off on demand concerns.

Tomorrow Notable Earnings:

Chico's FAS, Inc. (CHS) Before Open
Saks Incorporated (SKS) Before Open

Economic Events:

8:15 AM: ADP Employment Report
8:30 AM: Productivity and Costs
10:00 AM: Factory Orders
10:00 AM: ISM Non-Mfg Survey
10:30 AM: Crude Inventories
2:00 PM: Beige Book

US Stocks Recover....

U.S. stocks recover from their lows as investors grow hopeful that a rescue package could be crafted for No. 2 bond insurer Ambac Financial. And technology stocks got a boost after Cisco Systems CEO John Chambers says he is "even more comfortable" with networking giant's revenue forecasts. Nasdaq turns positive, and the Dow trades down about 76 points.

Technical Alert: Dow nears January lows....

The Dow is currently down 200 points to 12,059.

On January 22 and 23, the Dow closed right at the 12,000 level. A close under 12000 would be very negative for the market.

The S&P is currently at 1310. That is exactly where it closed on January 22 and 23.


This is the Retest everyone has been waiting for....We need to hold up here.

The Bearish Victory.....

by Jeff Miller

The disparity between expectations and data continues. Those with a bearish bent argue that there is already a recession, it will be terrible, it is not priced into the market, earnings estimates must move much lower, and there will be a general calamity on the scale of the 70's stagflation or even the Great Depression. Wow!

When stocks move lower, it seems to prove the point. This is most interesting and worth some thought.

Anyone who claims to provide a market edge, almost by definition, must find occasions when the market is wrong and the analyst has a superior viewpoint. The most bearish economic pundits now get to claim victory -- even if the economy never enters a recession!

It is not necessary to be right on the facts to be right on the market. As the market moves lower, there is a building sentiment that it "must test the January lows." This advice is usually offered in a deep and stern voice. If enough people believe it, it happens. It is seen as proof of the economic forecasts.

We are now a few points away from those lows in the S&P 500 and even closer in the Nasdaq.


Exactly my thoughts....

Upgrades this morning...

Here is a list of stock Upgraded by Analysts this morning...

Leapfrog (LF) by BMO Capital Markets
Quiksilver (ZQK) by Caris & Company
Saks (SKS) by Bear Stearns
Dillard's (DDS) by Credit Suisse
Crosstex Energy (XTEX) by RBC Capital Mkts
Vonage (VG) by Bear Stearns
Limelight Networks (LLNW) by Jefferies & Co
Diebold (DBD) by Robert W. Baird

Downgrades this morning...

Stocks that have been Downgraded this morning...

W&T Offshore WTI) by BMO Capital Markets
Barnes & Noble (BKS) by Credit Suisse
Thornburg Mortg (TMA) by RBC Capital Mkts
Goodrich Petroleum (GDP) by BMO Capital Markets
Barnes & Noble (BKS) by JP Morgan
Novell (NOVL) by Jefferies & Co
EOG Resources (EOG) by Oppenheimer
Diebold (DBD) by Jefferies & Co
ConocoPhillips (COP) by Lehman Brothers
Best Buy (BBY) by Banc of America Sec

Staples Down After Cutting 2008 Guidance

Shares of Staples Inc. (SPLS) fell 3.6% to $21.69 after the office-supplies retailer posted a drop in fiscal fourth-quarter net income and cut it 2008 guidance as it expects a "challenging" economic climate to continue.

The company reported fourth-quarter net income of $333.2 million, or 47 cents a share, compared with $336.5 million, or 46 cents a share a year earlier. The per-share earnings figure is higher because Staples' shares count fell 3.2%.

Revenue rose 0.7% to $5.32 billion. The latest mean per-share earnings estimate of analysts polled by Thomson Financial was 47 cents on revenue of $5.37 billion.

The company now expects a percentage gain in 2008 per-share earnings in the high-single digits on sales up in the mid-single digits. Analysts had projected per-share earnings growth of 11% to $1.42 on a 7% sales increase to $19.41 billion.

Citi Down as Merrill Cuts Estimates...

Shares of Citigroup Inc. (C) fell 2.8% to $22.45 before the opening bell Tuesday after Merrill Lynch cut its 2008 earnings estimates for the banking giant and forecast another very large writedown of Citi's subprime-related exposures.

Citing "continued deterioration in U.S. residential and commercial mortgage markets, corporate dept markets and key investment-banking categories," Merrill reduced first-quarter estimates to a loss of $1.66 a share, from its previous forecast for profit of 55 cents. Full-year 2008 earnings were cut to 24 cents a shares from $2.74 a share.

"We remain concerned about loss provision potential, the direction of long-term strategy, and weak markets for the Capital Markets businesses," Merrill Lynch said in a note to clients.

Intel Lowers Outlook...

Intel Corp. (INTC). The Santa Clara, Calif.-based chip maker said late Monday it is lowering its first-quarter gross margin forecast to 54%, plus or minus a point, from its previous forecast of 56%, plus or minus a couple of points, due to lower-than-expected prices for NAND flash memory chips. The company said all other expectations are consistent with the first-quarter outlook the company provided in January.

Will Verizon Make a Move on Sprint???

With shares of Sprint Nextel (S) so low, the time may be ripe for Verizon (VZ) to pursue it. Even at a 20% premium, VZ would be paying $450/customer, vs. the whopping $1,860 Cingular paid AT&T Wireless in 2004.

China Mobile Ready to Talk to Apple...

China Mobile (CHL) is not in talks with Apple (AAPL) to distribute the iPhone, but says it would like to be. Revenue sharing is assumed to be one of the issues holding up talks, which could see Apple gain access to China Mobile's 350 million subscribers.

Municipal Bonds VERY Attractive....

Munis: Dislocation of a lifetime. Seasoned muni bond investors say current yields -- 16% higher than Treasurys in 30-year debt and 60% higher on two-year notes (!) -- present the opportunity of a lifetime; tax exempt munis usually trade at a 10-20% discount to Treasurys. Prices are being lower by hedge funds who are now forced to sell their holdings to unwind complex bets gone bad.

I heard this yesterday from a friend in the Bond Business...

Monday's Trading Summary...

U.S. Markets:

Dow -7.49 (-0.06%)
Nasdaq -12.88 (-0.57%)
S&P 500 +0.71 (+0.05%)

News That Moved the Market:

Flat Day With Less Than Stellar Data. A late day rally left the markets mostly flat, but the S&P was able to eek out a gain for the first time in a week. The biggest piece of data released was the Institute for Supply Management's factory index, which fell to 48.3. The number represented a contraction, but was slightly better than expected. The Commerce Department also released data showing construction spending dropped by 1.7%, more than estimated by economists. Both numbers served as reminders that a recession may be coming if we are already not in one.

Diebold Rejects Takeover Bid. Diebold (DBD, +61.0%) announced that it has rejected United Technology's (UTX, -1.6%) $2.64 billion bid, saying the $40/share offer undervalued the company. Diebold has seen its stock price drop recently because the SEC is investigating its revenue recognition policies.

Fannie and Freddie Overhaul Appraisal Process. Fannie Mae (FNM, -4.4%) and Freddie Mac (FRE, -5.8%) agreed to only buy mortgages from lenders that used independent home appraisers. The deal was pushed by New York Attorney General Andrew Cuomo, and a new oversight group will be created to make sure the new standards are upheld. The rules should prevent inflated appraisals, which distort the value of mortgage-backed securities whose values are based on the homes.

Quick Tics:

GM (GM, -0.3%), Ford (F, -5.4%), and Toyota (TM, +0.5%) all reported declines in U.S. auto sales...

Warren Buffet announced he has withdrawn his offer to reinsure municipal bonds guaranteed by MBIA (MBI, -2.7%), Ambac (ABK, -10.8%) and FGIC.

Once again, gold and crude hit new highs in trading today.

Tomorrow Notable Earnings:

Staples, Inc. (STPL) Before Open

Economic Events:

9:00 AM: FOMC President Ben Bernanke Speaks (Oh, no...Not Again!!!)

Thornburg Getting Crushed...

Thornburg Mortgage (TMA) getting slammed, after company reported it's been hit with another wave of margin calls, worth about $270M, and is having trouble meeting them, seeing as it just met $300M worth of calls in February. "To date, we have not met the substantial majority of the most recent margins calls," company says in SEC filing.

TMA says it's working to meet the calls by either selling portfolio securities or raising debt or equity capital. Margin calls have been triggered by declines in the value of securities backed by Alt-A mortgage loans, company says. TMA down 54% at $4.12 on heavy volume.

This Morning's Upgrades...

Here is a list of stocks Upgraded this morning...

Methanex (MEOH) by CIBC Wrld Mkts
BioMed Realty (BMR) by Stifel Nicolaus
Pier 1 Imports (PIR) by Wachovia
Deutsche Telekom (DT) by JP Morgan
Lululemon Athletica (LULU) by BMO Capital Markets
OSI Pharm (OSIP) by Wachovia
Exelon (EXC) by Jefferies & Co
Northrop Grumman (NOC) by Oppenheimer
Seagate Tech (STX) by JP Morgan
Kohl's (KSS) by JP Morgan
Expeditors Intl (EXPD) by UBS
DeVRY (DV) by Lehman Brothers

This Morning's Downgrades....

Here is a list of companies Downgraded this morning...

Supertex (SUPX) by Piper Jaffray
Alnylam Pharmaceuticals (ALNY) by Needham & Co
Cablevision (CVC) by Pali Research
Apollo Group (APOL) by Banc of America Sec
Isle of Capri (ISLE) by Brean Murray
SW Energy (SWN) by Sun Trust Rbsn Humphrey
Western Digital (WDC) by JP Morgan
Ford Motor (F) by Citigroup
Omnicare (OCR) by Oppenheimer
DealerTrack (TRAK) by Lehman Brothers

Stock Splits Today....

STOCK-SPLITS TODAY:

New Jersey Resources (NJR). 3-for-2 split

OXBOW RES CORP (OXWR.PK). 3-for-1 split

Parexel (PRXL). 2-for-1 split.

End of an Era for Televisions....

Sony Corp. (SNE). The Japanese electronics giant today said it will end production of cathode ray tube (CRT) televisions by the end of the month, four decades after they were launched, as consumers switch to flat-screen TVs.

Sony ended production of CRTs in Japan in 2004, but continued to produce CRT TVs under the Trinitron brand at plants in Singapore and Malaysia to meet limited demand in Latin America and parts of Asia.

Chip Sales Top Targets...

January global chip sales gained 0.03% Y/Y, beating expectations. Excluding highly-competitive memory chips, semi sales were up 8.1% Y/Y. PC and mobile handset shipments were in-line with expectations, which forecast 12% and 12--15% sales growth in 2008 respectively. "

The U.S. economy has entered a period of slower growth that may impact consumer purchases of electronic products," SIA president George Scalise said. "However the emergence and growth of large consumer markets outside the U.S. has created new opportunities for chipmakers."

Northrup Wins $35B Contract...

Shares of Northrop Grumman (NOC) surged 7% in Frankfurt after it and partner EADS won a $35B+ Pentagon contract for 179 air tankers, beating out favorite Boeing (BA). Boeing shares were down 5%. Boeing can still appeal the decision.

Intel Goes Atomic...

Intel (INTC) is launching one of its trademark "branding campaigns" to market two new microchips. Now co-named Atom, the Silverthorne is targeted at MIDs (pocket-sized internet-enabled devices), while the Diamondville is for low-end laptops.

Intel's branding moves are closely watched, because the company uses its brands together with lucrative marketing incentives to dominate the market.

Will Commercial Real Estate be Next??

The impending fall of commercial real estate will take a heavy toll on firms with exposure to commercial property loans and mortgage-backed securities, such as Bear Stearns (BSC), Citigroup (C), JPMorgan (JPM), Lehman Brothers (LEH), Merrill Lynch (MER) and Morgan Stanley (MS). Goldman Sachs analyst William Tanona thin ks the above firms will write down $7.2B in Q1, and projects commercial real estate values will slide 21-26% over the next two years.

Microsoft Increasing Online Software Offerings...

Microsoft (MSFT) will announce plans to offer online software services that will handle email, calendars, contacts and video conferencing for small-to-medium-size companies for a per-user fee. MSFT will start testing its offerings today for free with select businesses, after which it will begin charging fees. How much? Only time will tell.

No doubt this was spurred by the success around the Netsuite (N) IPO late last year. That stock ran from IPO price at $22 up to $45 and back down to $21. Not good news for Netsuite, UNLESS Microsoft decides to buy them out....

United Technologies Bids for Diebold...

United Technologies (UTX) made an unsolicited $2.63B cash bid for developer Diebold (DBD). The $40/share offer is well below Diebold's 52-week high of $54.50, but a 66% premium to its Friday close of $24.12/share, UTC says the bid is "compelling." Besides ATM machines, Diebold develops security systems and computer hardware that would help UTC's fledgling fire-and-security business grow revenue from a current $5.8B to $10B+.

The move is the latest in a string of unsolicited bids as buyers look to capitalize on deflated share prices.

Notable Earnings Due This Week...

Monday

Finisar Corp. (FNSR) 3Q .02 AMC
LeapFrog Enterp Inc. (LF) 4Q (.40) 5:00PM
Midway Games Inc. (MWY) 4Q (.22) AMC
SuperGen Inc. (SUPG) 4Q .06 AMC
VeriFone Hldgs Inc. (PAY) 1Q .35

Tuesday

Chico's FAS Inc. (CHS) 4Q (.12) AMC
Clearwire Corp. (CLWR) 4Q (1.04) BMO
Heelys Inc. (HLYS) 4Q .01 AMC
Jackson Hewitt Tax Svc Inc. (JTX) 3Q .97 BMO
Semtech Corp. (SMTC) 4Q .21 AMC
Staples Inc. (SPLS) 4Q .48
Take-Two Interactive Software Inc. (TTWO) 1Q (.50)
Tech Data Corp. (TECD) 4Q .87 BMO
Wellcare Health Plans Inc. (WCG) 4Q 1.610000

Wednesday

Big Lots Inc. (BIG) 4Q .84
BJ's Wholesale Club Inc. (BJ) 4Q .73 7:00AM
Brown Shoe Co. Inc. (BWS) 4Q .42 BMO
Coldwater Creek Inc. (CWTR) 4Q .00
Costco Wholesale Corp. (COST) 2Q .74
Encysive Pharms Inc. (ENCY) 4Q (.16)
FuelCell Energy Inc. (FCEL) 1Q (.24) AMC
H&R Block Inc. (HRB) 3Q .07 AMC
Men's Wearhouse Inc. (MW) 4Q .21
PETsMART Inc. (PETM) 4Q .60
Saks Inc. (SKS) 4Q .22 8:00AM
Solarfun Power Hldgs Co. Ltd. (SOLF) 4Q .22
Tivo Inc. (TIVO) 4Q (-.12) AMC
Trump Entertain Resorts Inc. (TRMP) 4Q (.36)

Thursday

Anthracite Capital Inc. (AHR) 4Q .27
Blockbuster Inc. (BBI) 4Q .19 BMO
Dynamic Materials Corp. (BOOM) 4Q .57 AMC
Gerber Scientific Inc. (GRB) 3Q .12 BMO
Jones Soda Co. (JSDA) 4Q (.02) 4:00PM
Joy Global Inc. (JOYG) 1Q .62 BMO
Marvell Tech Grp Ltd. (MRVL) 4Q .07
Orbitz Worldwide Inc. (OWW) 4Q .11
Progressive Corp. (PGR) 1Q .33
Urban Outfitters Inc. (URBN) 4Q .29 BMO
Wind River Syss Inc. (WIND) 4Q (.07) AMC

Friday

Ciena Corp. (CIEN) 1Q .36 BMO
Goldcorp Inc. (GG) 1Q .17
Volkswagen AG (VLKAY) 4Q .83

Asian Markets Tumble...

The Nikkei fell 4.49% to its lowest since Jan. 23, the Hang Seng was off 3.07%, and the U.S. dollar fell to 102.72 yen -- its lowest since January 2005. Investors continue to fret a potential U.S. recession, and are gearing up for yet another Fed rate cut.

Friday's Trading Summary...

U.S. Markets:

Dow -315.79 (-2.51%)
Nasdaq -60.09 (-2.58%)
S&P 500 -37.05 (-2.71%)

News That Moved the Market:

Weak Finish To a Weak a Month. The markets drifted lower the whole session, with 97% of the S&P 500 finishing with losses. AIG (AIG, -6.6%) sparked the sell-off late Thursday after announcing it lost $5.29 billion in its fiscal fourth quarter as a result of massive writedowns, and said it would not buyback any of its shares for the "foreseeable future." Stocks fell further after CNBC reported the Ambac (ABK, -5.6%) bailout had hit a significant snag. Rating agencies want the banks involved to inject more money than originally proposed. The deal is still not dead, but it was only fair that the market fall on the news after it rallied on the announcement of the deal late l ast Friday. For the month, the S&P 500 fell 3.5%, the Dow finished 3.0% lower, and the Nasdaq dropped 5.0%.

Mixed Economic Data. The Personal Consumption Expenditure indicator increased 0.4% while income rose 0.3%, both figures coming in slightly higher than expected. Core PCE was right in-line. Though this was good news, the markets moved little after it was released. The Chicago Purchasing Managers Index was announced just after the opening bell and disappointed investors, posting a reading of 44.5, well below the 49.5 expected and representing a contraction in manufacturing in the region.

Northrop wins Massive Government Contract Boeing Gets Snubbed. The Air Force announced it will use Northrop Grumman Corp. (NOC, -1.7% day; +5.3% A.H.) and EADS (an Airbus unit) to build new airborne fuel tankers, in a deal worth at least $35 billion. Additional needs such as maintenance and additional parts could add another $60 billion to the deal, making it one of the largest defense contracts ever. Most experts were expecting Boeing (BA, -2.4% day; -5.6% A.H.) to win the deal. Boeing is now expected to file a protest with the Government Accountability Office; the government did not say why Boeing was not chosen.

Quick Tics:

The Gap (GPS, +3.7%) was up after reporting a 21% increase in net income. Warren Buffet released his popular annual letter to shareholders Friday, noting "the party is over" for insurance companies and lenders should be admonished for fueling the housing bubble.

Monday's Notable Earnings:

Midway Games(MWY) After Close

Economic Events:

10:00 AM: Construction Spending
10:00 AM: ISM Index

Berkshire Hathaway 4Q Net Slides...

Berkshire Hathaway Inc. (BRKA BRKB) posted an 18% drop in fourth-quarter net income on lower investment gains and a drop in insurance underwriting fees, and Chairman Warren Buffett warned that the insurance business is likely to get tougher in 2008.

"That party is over," the billionaire investor wrote in his annual letter to shareholders. "It's a certainty that insurance-industry profit margins, including ours, will fall significantly in 2008."

The investment holding company reported net income of $2.95 billion, or $1,904 a Class A share, compared with $3.58 billion, or $2,323 a Class A share, a year earlier.

Analysts surveyed by Thomson Financial had expected the Omaha, Neb., company to post earnings of $1,606 a share.

Stocks Plunge on Inflation Worries....

Credit losses from American International Group combine with troubling growth and inflation data to diminish hopes that the U.S. stock market and the economy have seen the worst this year.

DJIA ends down 316 points, with all 30 components lower. The Nasdaq Composite falls 60 points.

Ugly Market....

Want to see some Bad Breadth:

NYSE

Advances 417
Declines 2528 6:1

Advancing Volume 34 Million shares
Declining Volume 373 Million shares 11:1


As a result:

Dow -216
S&P -24
Nasdaq -41


It is no longer coincidence that when Bush and Bernanke speak....the market sells off....

Today's Upgrades...

Stocks Upgraded this Morning...

Nippon Telegraph (NTT) by Credit Suisse
Deutsche Telekom (DT) by Citigroup
Quest Diagnostics (DGX) by Credit Suisse
Dell (DELL) by Friedman Billings
Deckers Outdoor (DECK) by RBC Capital Mkts
Entergy (ETR) by UBS
Repsol SA (REP) by UBS
Pfizer (PFE) by Lehman Brothers

Today's Downgrades....

Stocks Dowgraded this Morning....

Take-Two (TTWO) by Cowen & Co
Carrizo Oil & Gas (CRZO) by CapitalOne southcoast
Jackson Hewitt (JTX) by FTN Midwest
InterNAP (INAP) by RBC Capital Mkts
EOG Resources (EOG) by RBC Capital Mkts
BEA Systems (BEAS) by Deutsche Securities
R.H. Donnelley (RHD) by Bear Stearns
Omnicare (OCR) by Bear Stearns
Novartis AG (NVS) by HSBC Securities
American Intl Group (AIG) by Keefe Bruyette
MF Global (MF) by Lehman Brothers
R.H. Donnelley (RHD) by Deutsche Securities

Microsoft Optimistic on Yahoo Merger...

"We continue to have a very close dialogue with Yahoo's (YHOO) shareholders (and) Yahoo's management," Microsoft (MSFT) senior vice president Jean-Philippe Courtois said. Though the talks appear to be informal, the ice may be thawing.

Sears Lowers Bid For Restoration Hardware...

Late Thursday Sears (SHLD) revised its buyout bid for Restoration Hardware (RSTO) $4.55/share from a previous $6.75, and offered reverse break-up fee that is $5M greater than the break-up fee Restoration set in its negotiations with private-equity firm Catterton Partners. Sears offered $6.75/share in December after Restoration agreed to be acquired by Catterton for $6.70/share in November. Catterton later dropped its bid to $4.50/share. Sears apparently likes to one-up Catterton by increments of 5.

Is Someone Else Interested in Take Two???

In a SEC filing, Take-Two Interactive Software (TTWO) disclosed it has received additional interest since Electronic Arts (ERTS) made public its $2B bid for the company Sunday. It has not, however, received a written offer nor entered "substantive discussions" with any suitors.

Viacom CEO Philippe Dauman said yesterday he's not considering a bid for Take-Two.

As much as Electronic Arts has been criticized for overpaying here, I doubt anyone else will step in.

Deere to Buy Into Chinese Machinery Company...

Deere & Co. (DE) Friday said it would buy a 50%stake of Xuzhou Xuwa Excavator Machinery Co. for an undisclosed amount. Xuzhou, a Chinese manufacturer of construction equipment, is a subsidiary ofXuzhou Bohui Science and Technology Development Co. Deere said it was seeking government approval in China for the transaction.

Shares of Deere, a Moline, Ill.-based manufacturer of agricultural andforestry machinery, closed Thursday at $86.97.

Dell 4Q Down 6%, Misses Expectations...

Computer maker earns $679 million, or 31¢ a share, on revenue of $15.99 billion, as costs tied to a realignment hit bottom line. Analysts were expecting EPS 36¢ on sales of $16.24 billion. Expects double-digit sales growth in Asia.

Ambac Deal hits Snag...

At issue is a disparity between how much money a bank consortium is willing to invest in the troubled bond insurer and how much capital cushion ratings agencies require to maintain the company's rating, CNBC's Charlie Gasparino reports.

AIG Falls, Swings to $5.3B Loss....

Shares fall 5% pre-market after global insurer reports a $5.3 billion 4Q loss largely because of a write-down that exceeded many analysts' expectations. Write-down comes on derivatives that fell in value by $11.12 billion.

Thursday's Summary....

U.S. Markets:

Dow -112.10 (-0.88%)
Nasdaq -22.21 (-0.94%)
S&P 500 -12.34 (-0.89%)

News That Moved the Market

GDP and Initial Job Claims Disappoints. The markets began the day lower off worse than expected economic data and never recovered. Before the bell, the preliminary GDP reading was released, coming in at 0.6%, slightly less than economists' expectations. The figure matched the initial estimates from last month. Additionally, initial job claims increased to 373,000 which was above forecasts. Combined with the data from the last couple days, things are beginning to look bleak. "We have absolutely no momentum going into the first quarter,'' said Josh Shapiro, chief U.S. at Maria Fiorini Ramirez Inc. "Things are looking pretty grim for the economy. If we're not in a recession already, we're very close."

Bernanke Speaks, Market Drops. Fed Chairman Ben Bernanke appeared before the Senate Finance Committee today and yet again caused a sell-off. Bernanke, while answering questions, said he thought the current economic environment was more challenging than the 2001 recession and believed oil would remain high. The markets noticeably sold off when he said some small U.S. banks may fail, though he said he believed larger banks would be able to survive.

Dell Misses Analysts' Targets. Dell (DELL, +0.5% day; -1.3% A.H.) reported a drop in fourth-quarter earnings after the bell. Net income fell 6%, while sales increased 10%; both the top and bottom-lines missed analysts' forecasts.

Sprint Falls On Unlimited Plan Offer. Sprint (S, -9.6%) jumped into the wireless price war by offering unlimited voice calls, data, and Web surfing for $99.99/month. The company reported a $29.5 billion loss after taking a enormous charge related to its acquisition of Nextel Communications. It also suspended its dividend.

Quick Tics:

Oil rallied 1.8% while gold traded at another all-time high

Kohl's (KSS, -3.5% day, -0.7% A.H.) missed analysts' targets and reported same-store sales were down after the bell.

Tomorrow Notable Earnings:

NONE

Economic Events:

8:30 AM: Personal Income
8:30 AM: Personal Spending
9:45 AM: Chicago PMI
10:00 AM: Consumer Sentiment

Dell Disappoints...

Dell Inc. (DELL) after the close reported a fourth-quarter profit of $679 million, or 31 cents a share, on revenue of $16 billion. During the year-ago period, Dell earned $726 million, or 32 cents a share, on $14.47 billion in revenue.

Analysts surveyed by FactSet Research had forecast Dell to earn 36 cents a share on sales of $16.24 billion. Dell said it expects to incur more costs as part of its business realignment plans and such actions could hurt its performance in the near term.

The stock is down slightly in after hours trading.

Another Large Hedge Fund Unwinds....

Prominent London Hedge Fund Liquidates Fund
Peloton Partners, a large London-based hedge fund, is liquidating one of its funds in the latest casualty of the credit crisis. The firm is in the process of alerting investors that is winding down its Peloton ABS fund.

In my opinion this is why last years high fliers are getting crushed of late. This is the 2nd large hedge fund in the last week to fold. They sell their assets with no regard for price. Exactly what we have seen since January 1.

Bush Speaking on TV again....

and once again the Market sells off.

It's amazing how much Wall Street hates this guy.

Dow -95
S&P -8
Nasdaq -11

Only one guy they hate as much (Bernanke) and he'll be speaking later....ohhh nooo!!!

Today's Notable Movers:

Netflix (NFLX) up 1.57 to $34.00- continues to run after yesterday's earnings beat

LG Philips (LPL) up 1.17 to 24.63 - no news released but stock is breaking higher on abnormal volume. They are becoming household name in electronic display and TVs

Apple (AAPL) up 4.69 to $127.64 - on positive comments about iphone sales

EOG Resources Inc. (EOG) up 12.89 to $118.50 - boosted its 2009 and 2010 organic production growth estimates to 13% to 15% from the previously stated annual average of 10%.

Earnings Due Today....

COMPANIES REPORTING EARNINGS

• American International Group (AIG). Expected to post Q4 earnings of $0.60 cents a share, according to analysts polled by Thomson Financial.

• Barr Pharmaceuticals Inc. (BRL). Expected to post Q4 profit of $0.74 a share.

• Cablevision Systems Corp. (CVC). Expected to report Q4 earnings of $0.11 a share.

• Cooper Tire & Rubber Co. (CTB). Expected to report Q4 profit of $0.36 a share.

• Dell Inc. (DELL). Expected to report Q4 earnings of $0.36 a share.

• Fluor Corp. (FLR). Expected to report Q4 earnings of $1.18 a share.

• Gap Inc. (GPS). Expected to report Q4 earnings of $0.35 a share.

• Hansen Natural Corp. (HANS). Expected to report Q4 profit of $0.38 a share.

• Kohl's Corp. (KSS). Expected to report Q4 profit of $1.30 per share.

• Leap Wireless International Inc. (LEAP). Expected to post Q4 loss of $0.17 a share.

• Liberty Media Holding Corp. (LINTA). Expected to post Q4 profit of $0.30 a share.

• Rowan Cos. (RDC). Expected to report Q4 profit of $1.18 a share.

• Universal Health Services Inc. (UHS). Expected to post Q4 profit of $0.70 a share.

• United Rentals Inc. (URI). Expected to report Q4 profit of $0.73 a share.

• Viacom Inc. (VIA). Expected to post Q4 earnings of $0.83 a share.

• XM Satellite Radio Holdings Inc. (XMSR). Expected to post Q4 loss of $0.63 a share.

Sears Profits Get Cut in Half...

Retailer's 4Q profit falls by nearly half to $426 million, or $3.17 a share, from last year's $811 million, or $5.27 a share, on a lower margins and 7% revenue drop on markdowns. Analysts were expecting earnings of $3.05 a share.

Not surprising if you have been in one of their stores lately.

Wednesday's Summary....

U.S. Markets:

Dow +9.36 (+0.07%)
Nasdaq +8.79 (+0.37%)
S&P 500 -1.27 (-0.09%)

News That Moved the Market

Cap Lifted For Home Loan Providers. The markets took off early in the session on news that the Office of Federal Housing Enterprise Oversight decided to remove Fannie Mae's (FNM, +1.1%) and Freddie Mac's (FRE, -0.5%) $1.5 trillion mortgage portfolio cap. The cap was created after the two companies found $11.3 billion in accounting errors in 2006. The lenders should now be better able to provide financing for the U.S.'s troubled housing market.

Earlier in the morning, Fannie Mae reported a greater than expected $3.6 billion loss and shares of the company hit a 12-year low, but news of the regulator's decision turned the stock around. Later in the day, the markets sold off, as investors pocketed profits. It seems many do not want to leave profits on the table when a bad piece of data or headline could erase any gains.

Bernanke Signals Further Rate Cuts. Fed Chairman Ben Bernanke spoke in front of the Senate Banking Committee Wednesday and provided some relief to investors. Despite rising inflation pressures, he indicated the Fed would continue easing rates as economic downside risks remained the key focus.

Economic Data Misses Estimates. The Commerce Department reported durable goods fell 5.3%, which was slightly worse than expected. Meanwhile, new homes sales came in at 588,000, missing the 600,000 expected and representing a 13-year low. Both pieces of data were not horrible, but showed signs of a deteriorating economy.

Quick Tics:

The EU slapped Microsoft (MSFT, -0.4%) with a record $1.35 billion anti-trust fine.

The U.S. dollar hit a record low against the euro ($1.5118/euro) after Bernanke signaled further rate cuts.

Gold futures hit an all-time high of $967.70/ounce.

Nortel Networks (NT, -13.3%) reported steeper losses, announced job cuts, and released a worse than expected growth forecast for 2008.

Tomorrow Notable Earnings:

Cablevision Systems Corp.(CVC) Before Open
Dell, Inc. (DELL) Before Open
Gap Inc. (GPS) After Close
Kohls Corporation (KSS) After Close
Sears Holdings Corp (SHLD) Before Open
Viacom (VIA) After Close
XM Satellite Radio (XMSR) Before Open

Economic Events:

8:30 AM: GDP
8:30 AM: Chain Deflator
8:30 AM: Initial Job Claims

My Daughter Says Buy Abercrombie & Fitch....

No kidding. ANF is the owner of the Hollister chain...and this is the hottest store for young teens.

The stock is up .75 to $81.75 today. Technically...the stock has alot of resistance at $84-85 level. We'll keep an eye on it and let you know if it breaks out.

Technical Alert: Sony Corp.(SNE)

We have been following Sony Corp., as the company has had alot of wins over the past month. The stock is higher again today on high volume, currently up .60 to $49.50. It has climbed out of a base, up 20%, in the last two weeks.

Next resistance is at $55-56 level.

Technical Alert: Juniper (JNPR)

Juniper Networks is breaking higher out of one month base on higher volume.

The stock is up 1.25 to $28.75 today. The stock was looking strong in the low 30's back in December before the market sold off the first few weeks in January.

Technical Alert: Research in Motion (RIMM)

Research in Motion is breaking higher out of a cup and handle formation on higher volume.

The stock is up 3.12 to $110.87. The next level of resistance on the stock is at $122.

Upgrades this morning...

Stocks that have been Upgraded this Morning:

Healthways (HWAY) by Stifel Nicolaus
AXT Inc (AXTI) by Roth Capital
Medarex (MEDX) by BMO Capital Markets
SuperGen (SUPG) by Susquehanna Financial
Xilinx (XLNX) by UBS
Overseas Shipholding (OSG) by Bear Stearns
Tenet Healthcare (THC) by Jefferies & Co
Telefonica S.A. (TEF) by UBS

Downgrades this morning...

Here is a list of stocks that have been Downgraded this morning:

Autodesk (ADSK) by Needham & Co
Ceradyne (CRDN) by Morgan Joseph
Orthofix (OFIX) by Susquehanna Financial
NovaGold Resources (NG) by RBC Capital Mkts
K-Swiss (KSWS) by Susquehanna Financial
Solarfun Power (SOLF) by Banc of America Sec
JA Solar (JASO) by Banc of America Sec
Chesapeake Energy (CHK) by Citigroup
Quicksilver (KWK) by Citigroup
EOG Resources (EOG) by Citigroup
SW Energy (SWN) by Citigroup
Barrick Gold (ABX) by Credit Suisse
Ultra Petroleum (UPL) by JP Morgan

Costco Down as Goldman Cuts Rating on Co....

Shares of Costco Wholesale Corp. (COST) is down 2.4% to $64.86 after Goldman Sachs cut its rating on the warehouse retailer to neutral from buy.

In a note to clients, Goldman Sachs analyst Adrianne Shapira wrote that "with current relative valuation well above historic averages and limited remaining catalysts on the horizon, we view current risk/reward less compelling."

The stock appeared to be breaking out yesterday, but this downgrade should cause it to pull back. It has key support at $62.50.

Netflix Up After Boosting 1Q Outlook...

Shares of Netflix Inc. (NFLX) are up 6.9% to $31 before the opening bell Wednesday after the online DVD rental service boosted its first-quarter earnings outlook.

The Los Gatos, Calif., company said it now sees first-quarter earnings of 15 cents to 22 cents a share on revenue of $324 million to $328 million. The company had previously forecast first quarter earnings of 13 cents to 21 cents a share on revenue of $323 million to $328 million.

Analysts expect, on average, earnings of 20 cents a share on revenue of $325 million.
In addition, Netflix sees first-quarter ending subscribers of 8.16 million to 8.26 million, up from a prior view of 7.85 million to 8.05 million ending subscribers.

Not much of a raise, but...

US January Durable Goods Orders Drop 5.3%..

Orders for durable goods fall 5.3% to $212.80 billion and a barometer of capital spending by businesses slumps, an indication the sluggish economy might be restraining companies. Economists expected a smaller 4% decrease in durable goods orders.

US Stock futures dropped on the news...

Bernanke Speaks to Congress this Morning...

Eyes will be trained on Washington D.C. on Wednesday as Bernanke begins his two days of Congressional testimony, starting at 10 a.m. Eastern.

Vice Chairman Donald Kohn on Tuesday said that, despite signs that inflation actually strengthened in January, the nation's weak economy and fragile financial markets remain a bigger threat than higher prices. Kohn's views are generally thought to be closely aligned with Bernanke's.

In the last six months, traders have been selling off the market EVERY time either Bernanke or Bush appear on TV. It is obvious neither guy has any respect on Wall Street. Stock futures are already down in anticipation...

J&J, Amgen Fall on New Study...

Anemia drugs Aranesp and Procrit sold by Amgen (AMGN) and Johnson & Johnson (JNJ) raise the risk of death among cancer patients by about 10%, a new study of previous trials found. Amgen played down the study, saying the risks are already in the drugs' labels.

The FDA will convene in March to decide whether to impose further restrictions on the drugs, commonly used to treat chemotherapy-induced anemia. Shares of Amgen and J&J were down 3.2% and 1.15% in Europe.

Dollar Tumbles...

The U.S. dollar hit record lows against the euro after weak consumer confidence and surprise inflation raised the odds of further interest-rate cuts.

Consumer Confidence fell to 75 vs. 82 consensus, down from 87.3 -- its lowest in nearly 15 years. Both core (+0.4%) and headline (+1%) wholesale inflation surprised to the upside; 12-month PPI of 7.4% is at its highest in over 25 years.

EU Hits Mocrosoft With $1.3B Fine...

The EU fined Microsoft (MSFT) a record $1.3 billion for overcharging developers for interoperability information needed to develop Windows-compatible software. Microsoft noted the fines related to past issues that have been resolved.

Microsoft has dropped licensee royalty demands from 2.98%-3.87% to 0.5-0.7% and later to a flat fee of $14,000 for interoperability info and a worldwide patent license for 0.4%. There was speculation a penalty could go as high as $2.2B.