Late Night Headlines: Lehman Says Don't Bet Against Dollar

by: Between the Hedges

Late-Night Headlines

- Lehman Brothers (NYSE:LH) advised investors to stop betting on a drop in the US dollar in the next few weeks on speculation the Fed will lift its benchmark interest rate this month.
- The US dollar had its biggest gain against the euro in two months, and reached a six-week high versus the yen, as rising global interest rates sent emerging stock markets into a tailspin.
- Texas Instruments (NYSE:TXN) raised its second-quarter sales and profit forecasts as more consumers purchase handsets in India and China.
- Hedge funds focused on Asia had their worst month since September 2002 in May as the region’s stock indices tumbled, suggesting managers need to increase their hedging to weather the current emerging markets stocks sell-off.

Financial Times:
- IMF Chief Economist Raghuram Rajan says incentives for hedge fund managers are the reason for recent falls in risky assets prices.
- Nasdaq Stock Market’s (NASDAQ:NDAQ) proposed acquisition of London Stock Exchange Plc may be put on hold until 2007 at the earliest, citing Joe Gawronski, chief operating officer at Rosenblatt Securities.
- General Motors(NYSE:GM) will “reward” those suppliers who remain loyal to it in times of crisis.

New Zealand Herald:
- Restaurant Brands New Zealand Ltd. is considering opening Starbucks Coffee(NASDAQ:SBUX) stores at the nation’s airports and in regional towns as part of a plan to double the franchise’s outlets.

Shanghai Securities News:
- China’s money supply growth accelerated in May and banks almost doubled new yuan lending, suggesting the central ban may take further measures to damp lending.

Late Buy/Sell Recommendations
- Goldman Sachs:
- Rated (NYSE:MS), (NASDAQ:TRAD), (JEF) and (NASDAQ:AMTD) Outperform.
- Rated (AGE) Underperform.

Night Trading
Asian Indices are -.75% to +.50% on average.
S&P 500 indicated +.13%.
NASDAQ 100 indicated +.35%.

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Earnings of Note
Company/EPS Estimate
- None of note

Upcoming Splits
- (NYSE:B) 2-for-1
- (NYSE:CGI) 2-for-1
- (NASDAQ:EXPO) 2-for-1
- (FD) 2-for-1
- (NYSE:MAR) 2-for-1
- (NYSE:TRN) 3-for-2
- (NASDAQ:BECN) 3-for-2
- (NASDAQ:CEDC) 3-for-2

Economic Releases
8:30 pm EST
- The Trade Deficit for April is estimated to widen to -$65.0B versus -$62.0B in March.
- The Import Price Index for May is estimated to rise .7% versus a 2.1% gain in April.

BOTTOM LINE: Asian indices are slightly higher, boosted by technology stocks in the region after Texas Instruments(TXN) raised its forecast. It appears to me most US stocks have put in place meaningful bottoms. However, I continue to believe commodity, emerging market and deep cyclical stocks will underperform through year-end. I expect US equities to open modestly higher and to build on gains into the afternoon.