Trading for the Masses

Oil goes out at its highs @ 86.5 and Gold out @ the highs @ 765. Stocks rallied nicely into the close and we will see if the inflationary pressures have any regards for stocks. Back tomorrow for more earnings and hopefully a continued volatile strength in this market as the VIX hit over 20 today for the first time in 3 weeks or so.

Snow Powda!!

Ticker Sense Poll

Overcoming Adversity: How to Use Life’s Struggles to Drive Personal Growth

Whalebones

What they’re not telling us

Cake Sale

Indoor Recreation

First BCS poll is out and its the BUCKEYES

Two Tears

Profit Mirages

The markets are ripping this am, but not the markets you are thinking about, oil hitting 85 a barrel, gold @ 763 and the 10 year @ 4.712 already. Wow, yet equities are flat flat flat. C missed wildly and creating another massive bailout with some other major banks and the Treasury, again its the Frankenfund. Will it reanimate the distressed market securities? Hilarious times we are living in indeed.

Gapping up: TEK +33.0%, TELK +30.0%, ANTP +24.2%, BIIB +19.5%, GIGA +13.0%, PTR +11.7%, SNP +11.5%, TTG +11.3%, ELN +11.1%, TSTC +10.4%, EDU +7.8%, CSUN +4.3%, CHL +4.2%, PDLI +3.9%… Gapping down: CTEL -7.1%, MDT -5.0%, PHG -4.4%.

CSCO Cisco Systems may snap up Navini - Unstrung.com (32.92 )
Unstrung.com reports that Cisco Systems (CSCO) is now expected to make its move into WiMax before the end of the month, with Navini Networks the favorite target. CSCO is expected to buy Navini within the next few weeks, according to ThinkEquity Partners analyst Anton Wahlman and a private equity source, who asked not to be named. ThinkEquity has already issued a report saying that Navini is the most likely target for CSCO, in part because of the startup’s use of “beamforming” technology for WiMax, which can help increase directional signal strengh from WiMax base-station radios. Wahlman says CSCO will pay “between $200 mln and $230 mln” for Navini. Among the vendors that CSCO is said to have looked at are Navini, Airspan Networks (AIRN), Alvarion (ALVR), and Redline Communications.

SKS Saks: Financial players see Saks warming to offers - WWD (18.05 )
WWD reports the co be getting ready to entertain suitors. Sources indicated that the luxury retailer is opening the door to the possibility of a sale and may even have at least two interested buyers. Financial and industry sources said the $2.9 bln co has changed its sentiment about considering offers, and two weeks ago was approached by at least one entity trying to float the idea of an acquisition. Saks has received inquiries, and even offers, before. It has turned them away, saying the co is focused on its turnaround initiatives. Recently, however, the operations of the luxury retailer have progressed to the point where it could bring a higher price than what was on the table two years ago. And that, the sources said, explains why the co would be willing to at least look at an offer. A source close to Saks said that certain individuals at the retailer are “open to any [deal] that makes sense.” The source also said the co is doing fine and doesn’t need to sell immediately, but added that waiting another two or three years wouldn’t make sense considering the current economic backdrop.

CDC Games, a business unit of CDC Corp (CHINA), announces it has received multiple awards for its online games in China. For the third straight year, CDC Games’ hit title, Yulgang, won the Top 10 Most Popular Games Award at China Joy… TLC Vision Corp (TLCV) announces that J.E.G.C. O.C.C. was not able to complete the purchase of TLCV’s remaining 18,770,302 common shares of OccuLogix (OCCX) by the deadline of Oct 12, 2007… TRW Automotive Aftermarket, a business of TRW Automotive Holdings (TRW), has entered into an agreement to create a Joint Venture with ArvinMeritor (ARM) to distribute Gabriel and TRW branded shock absorber ranges for the European independent aftermarket. The intention is for the Joint Venture to begin operation and distribution in Jan ‘08…Science Applications International (SAI) announces that it won a contract from the Department of Defense, Business Transformation Agency, to support their Transformation Planning and Performance Directorate. The new single-award, firm fixed price/time and materials contract has a one-year base term, four one-year options and a value of more than $76 mln if all options are exercised.

CWTR Coldwater Creek downgraded to Hold from Buy at Stanford- tgt $7 (7.82 )

SNP China Petroleum (Sinopec) upgraded to Buy from Sell at Citigroup (148.95 )

DRQ Dril-Quip downgraded to Sell from Neutral at UBS (53.90 )

MSTR MicroStrategy upgraded to Buy from Neutral at Suntrust- tgt $96 saying channel checks suggest a better Q3 (79.45 )

IBM IBM: Q3 earnings preview - Credit Suisse (117.81 )
Credit Suisse notes IBM will report 3Q results on Oct 16, 2007 and they expect rev to be in-line with consensus of $24.1 bln, while EPS may be $0.01-0.02 above the Street’s $1.67 owing to a strong software mix. Firm expects mgmt to sign off on previously offered full year guidance of 14-15% earnings growth (implying EPS of $6.93-6.99). Of note, the appreciation of the Euro continues to benefit IBM, posting a gain of 8% y/y in 3Q. Firm is expecting another quarter of solid services bookings, ranging from $11.5-$12 bln.

Biotech M&A fever could overcome the Street - Wachovia
With BIIB’s board of directors effectively confirming acquisition speculation, the firm believes biotech M&A fever could overcome the Street. They notes that historically, M&A activity has always been a catalyst for the sector, which they believe will ignite its generally in-line performance this year as investors begin to speculate which biotech companies are next. Providing a partial remedies to future woes, they believe companies such as GILD, ALXN, PDLI, ONXX, and OSIP, could be acquisition candidates (as previously speculated in the media) and finish strong going into year-end. They expect valuations of companies driven by clinical progress of partnered products yet to hit the market will also benefit from M&A speculation, although they believe their near-term acquisition is highly unlikely. Such names fitting this profile include HGSI, EXEL, SGEN, VRTX, ALTU, PGNX and ITMN.

YHOO Yahoo!: Nollenberger previews GOOG, YHOO (28.48 )
Nielsen/Netratings, the top 10 online advertisers cut back their display ad spending by 10% in September. Most of this decline came from the top mortgage advertisers, which spent 14% less in September than in August. Therefore, firm believes this may negatively impact YHOO while having little to no impact on GOOG. Firm believes expectations for YHOO re low and that nearly all the focus will be on the ongoing reorganization, Jerry Yang’s first 100 days, recent acquisitions, and cost-cutting opportunities… Firm says according to their checks, European paid search spending was exceptionally strong in 3Q, up more than 10% Q/Q driven by travel and retail. In the United States, Comscore data suggests that searches on GOOG properties rose 8% sequentially as Google continued to gain share.

PTR PetroChina shares jump 13% in Asia - Reuters (216.13 )
Reuters reports shares of the co jumped 13% as news of increased production and hopes of major new discoveries spurred optimism about its performance in the fourth quarter. PetroChina’s third-quarter report showed oil and gas output grew 5.6%, up from a 3.7% year-on-year rise in the first half of 2007 and bringing PetroChina towards its full-year target of 5.3%, which it said it was on track to meet.

NLY Annaly Mortgage: Capitalized for improving operating environment; tgt raised to $20 - FBR (15.85 )
Friedman Billings raises their tgt to $20 from $17.50. Firm believes this tgt increase is warranted following the completion of the co’s roughly $1 bln equity offering. NLY will be putting this capital to work in an environment that they think will support 100 bps or more of spread, with a Federal Open Market Committee (FOMC) that has turned accommodative and a bond market with historically low premiums. The co will achieve value creation through a potential doubling of the dividend and buying a portfolio that could increase in value as interest rates on the short end of the curve head lower.

GENZ Genzyme says three-year analysis demonstrates robust, highly statistically significant treatment effect of Alemtuzumab compared to Rebi (71.71 ) Co announces that top-line, three-year data from a completed Phase 2 clinical trial comparing alemtuzumab with Rebif for the treatment of multiple sclerosis were presented this weekend at the 23rd Congress of the European Committee for Treatment and Research in Multiple Sclerosis. Overall efficacy results demonstrate that alemtuzumab provides a significant treatment effect that has been found to last three years among patients in the study. Analysis of the first co-primary endpoint showed that patients taking alemtuzumab experienced at least a 73% reduction in the risk for relapse after three years of follow up when compared to patients treated with interferon beta-1a. This difference was highly statistically significant in favor of the alemtuzumab patients with a p-value less than the pre-specified value assigned for the three-year analysis. Analysis of the other co-primary endpoint showed that patients taking alemtuzumab experienced at least a 70% reduction in the risk for progression of clinically significant disability when compared to patients treated with interferon beta-1a. This difference was statistically significant in favor of the alemtuzumab patients with a p-value less than the pre-specified value assigned for the three-year analysis. Results for the secondary endpoints support the findings seen in the co- primary endpoints. A total of six patients have been diagnosed with I.T.P. associated with Grade 3 or 4 thrombocytopenia in this trial and there have been no new cases of I.T.P reported in the past year in this study. Common non-serious adverse events included infusion reactions in the alemtuzumab patients and flu-like symptoms in patients using interferon beta- 1a. Severe infections were infrequent in the alemtuzumab patients and were resolved with or without an intervention. The incidence of all thyroid adverse events, including Graves’ disease, was less than expected compared to early reports in the literature on the use of alemtuzumab in M.S.

BIIB Biogen Idec: Color on evaluation of possible sale (69.43 )
CIBC notes on 10/12, BIIB announced that the co’s board of directors authorized mgmt to evaluate a potential sale of the co. Firm does not see this as a particularly surprising development, as there has been abundant speculation over the last several months that a deal might be considered. Firm believes this speculation has been the principal driver behind much of BIIB’s recent appreciation. Firm notes co did not identify potential acquirers. BIIB reported that one of these overtures came from Carl Icahn, who reported a 1% interest in the co in Aug. Firm believes it is very unlikely that BIIB’s board would consider a sale to Icahn, if a competitive offer from a major pharmaceutical company was on the table. Although it is difficult to speculate on potential acquirers, firm believes LLY, WYE, SNY, or one of several Japanese pharma cos could possibly be amongst the interested parties… Jefferies says despite several complicating factors, they believe a co sale is ultimately possible. However, given potential hurdles and recent BIIB share price appreciation, they do not advise chasing the stock here. They est fair value take-out range of $70-80 and are increasing their tgt to $73 from $52.

ODP Office Depot downgraded to Neutral at Credit Suisse- tgt cut to $24 from $30 (22.16 )
Credit Suisse downgrades ODP to Neutral from Outperform and cuts their tgt to $24 from $30 and removes it from their Focus List saying they have been concerned about the company’s direction for some time now, but maintained their Outperform rating due to valuation. Firm notes shares have bounced 25% off their lows in early September to what they now view as fair value. The firm says ODP is facing significant challenges in all business segments. Trends may have continued to get worse since the company pre-announced in early September and will likely remain pressured for some time despite easier comparisons.

Calyon notes reports of a new super conduit to bailout SIVs
Calyon notes there are press reports over the weekend that many of the country’s largest banks including Citigroup, Bank of America and JP Morgan are in discussions to create a new super conduit called the Single-Master Liquidity Enhancement Conduit with liquidity of up to $100 bln. Regulators here and abroad have also participated in the discussions. This vehicle will repackage credit securities to make them more transparent than existing commercial paper and more attractive to investors. The SMLEC will invest the proceeds into commercial paper and longer-term assets of levered Structured Investment Vehicles that some of these same banks created to invest in subprime mortgages.

Upgrades: CIBC upgrades Agrium (AGU 56.04) to Outperform from Sector Perform and raises their tgt to $63 from $56 saying they prefer fertilizer stocks over chemical stocks due to our outlook of a prolonged agricultural cycle. Firm says next year’s corn (most fertilizer intensive stock) acreage should remain high with farmers able to lock in US$4/bu corn making economics for corn more robust than for soybean or wheat. Downgrades: CIBC downgrades Methanex (MEOH 27.2 to Underperform from Sector Perform with a $23 tgt saying believe that the recent step-up in methanol prices is a short-term phenomena… Broadpoint downgrades BioScrip (BIOS 7.77) to Neutral from Buy based on valution… BofA downgrades BJ Wholesale (BJ 37.44) to Sell from Neutral… Bear Stearns downgrades BEA Systems (BEAS 18.82) to Peer Perfrom from Outperform… Bear Stearns downgrades China Telecom (CHA 89.03) to Underperform from Peer Perform… Citigroup downgrades BEA Systems (BEAS 18.82) to Hold from Buy. Miscellaneous: Deutsche Bank initiates FTI Consulting (FCN 55.04) with a Buy and $65 tgt.

ETN Eaton misses by $0.01, beats on revs; guides Q4 EPS below consensus (96.40 )
Reports Q3 (Sep) earnings of $1.67 per share, excluding charges & gains, $0.01 worse than the Reuters Estimates consensus of $1.68; revenues rose 7.0% year/year to $3.3 bln vs the $3.24 bln consensus. Co issues downside guidance for Q4, sees EPS of $1.65-1.75 vs. $1.85 consensus.

Upgrades: UBS upgrades Annaly (NLY 15.85) to Buy from Neutral… UBS upgrades Banco Santander Central (STD 19.5 Buy from Neutral… RBC upgrades Immunogen (IMGN 4.65) to Outperform from Sector Perform… RBC upgrades Novellus (NVLS 27.95) to Outperform from Sector Perform… Lehman upgrades Longs Drug (LDG 51.15) to Overweight from Equal Weight. Downgrades: UBS downgrades Cognos (COGN 51.90) to Neutral from Buy… UBS downgrades KB Home (KBH 28.94) to Neutral from Buy… RBC downgrades Seatlle Genetics (SGEN 13.04) to Sector Perform from Outperform… ThinkEquity downgrades Riverbed Tech (RVBD 47.94) to Accumulate from Buy and raises their tgt to $54 from $50 based on valuation… Stifel downgrades Coldwater Creek (CWTR 7.82) to Hold from Buy based on co’s guidance and our cautious outlook due to the difficult retail environment… J.P Morgan downgrades Bankunited (BKUNA 12.75) to Neutral from Overweight. Miscellaneous: Lehman raises their tgt on Apple (AAPL 167.25) to $190 from $160.

Sensex above 19K: ends up 640pts - The Business Standard
The Business Standard the index touched a fresh all-time intra-day high of 19,096, and finally ended with a smart gain of 3.5% (640 points) at 19,059. The Sensex took just four trading sessions to log the last 1,000 points… The BSE Metal index soared over 9% to 16,200. The Bankex and Oil & Gas index surged over 4% each to 9707 and 11,053, respectively. The market breadth was fairly positive -out of 2,838 stocks traded, 1,897 advanced, 876 declined and 65 were unchanged today

Asian oil stocks rise; PetroChina surpasses GE in market value - Bloomberg.com
Bloomberg.com reports Asian stocks rose, led by energy companies, as crude oil prices traded near a record. PetroChina surged as much as 10 percent, surpassing General Electric Co. to become the world’s second-largest company by market value… Japan’s Nikkei 225 Stock Average rose 0.2%, while the broader Topix index lost 0.1%.

European energy stocks rise, led by BP, Shell; Philips drops - Bloomberg.com
Bloomberg.com reports European energy stocks advanced, led by BP Plc and Royal Dutch Shell, after Citigroup raised its earnings estimates for the region’s oil companies and crude touched a record… National benchmarks climbed in 12 of the 17 western European markets that were open. France’s CAC 40 added 0.3%, as did the U.K.’s FTSE 100. Germany’s DAX dropped 0.1%. The Stoxx 50 and the Euro Stoxx 50, a measure for the euro region, were little changed.

C Citigroup reports Q3 (Sep) results, beats on revs (47.87 )
Reports Q3 (Sep) earnings of $0.47 per share, including a $729 mln pre-tax gain on the sale of Redecard shares, may not be comparable to the Reuters Estimates consensus of $0.43; revenues rose 5.8% year/year to $22.66 bln vs the $20.81 bln consensus. Co said, “This was a disappointing quarter, even in the context of the dislocations in the sub-prime mortgage and credit markets. A significant amount of our income decline was in our fixed income business, where we have a long track record of strong earnings, and this quarter’s performance was well below our expectations. Although we generated strong momentum in many of our franchises, our fixed income results, along with higher credit costs in global consumer, led to significantly lower net income”.

Downgrades: Baird downgrades Dick’s Sporting Goods (DKS 67.94) to Neutral from Outperform after rise in stock since Q2 report; confident in fundamentals and long-term growth potential; recent warm weather may limit upside to Q3 results… … Baird downgrades Saul Centers (BFS 59.40) to Neutral from Outperform and raises their tgt to $61 from $58 based upon valuation… Wachovia downgrades Quest (DGX 57.12) to Market Perform from Outperform saying they believe that the prospects for stabilizing volumes and cost savings are reflected in the current valuation and in the consensus ‘08 EPS estimate… Wachovia downgrades Medco Health Solutions (MHS 92.26) to Market Perform from Outperform saying that the shares’ now trade at an all-time high, and they do not think that the 2008 EPS guidance given at Q3 will be a catalyst for the shares. Miscellaneous: Broadpoint Capital raises price target on Warnaco (WRNC 42.21) to $48 from $46 to reflect margin improvement related to restructuring the Swimwear Group, international growth, and a seasonally strong 4Q… Jefferies lowers their tgt on Complete Production (CPX 40.54) to 28.00 from $36.00 saying they believe the shares will probably trade sideways in the near term as earnings season is littered with cautious datapoints around U.S. activity levels and pricing… Jefferies raises their tgt on Nam Tai Eelctronics (NTE 12.80) to $13.50 from $12.00 saying they believe margins at Nam Tai bottomed during the March quarter and sequential improvement is now likely during the September quarter.

S&P futures vs fair value: +2.1. Nasdaq futures vs fair value: +1.5.

MAT Mattel reports Q3 (Sep) results, misses on revs (22.45 )
Reports Q3 (Sep) earnings of $0.61 per share, includes charges, may not be comparable to the Reuters Estimates consensus of $0.70; revenues rose 2.7% year/year to $1.84 bln vs the $1.92 bln consensus.

NLS Nautilus Grp: 9% workforce reduction another negative sign ahead of key holiday season - Merriman (7.78 )
Merriman notes Friday NLS announced that it would be laying off approx 140 employees, which represents about 9% of the co’s total employee base. Firm believes this layoff announcement only helps their theories and shows them that mgmt now sees weak sales as something that will continue — especially if the co is willing to make these moves ahead of (what is historically for Nautilus) the key holiday selling season. Firm believes that NLS bulls are likely to see this as a good sign that mgmt is finally taking steps to improve the co’s financial situationand the bears are likely to see this as another indication that 3Q and 4Q sales should come in below expectations.

Jefferies thinks Comtech (COGO 21.36) remains a direct beneficiary of the rising tech sector in China through more traditional markets (e.g., telecom, mobile phone, consumer) and also next generation opportunities (e.g., medical, auto and surveillance) that they believe can continue to drive superior growth rates versus most tech companies… Wachovia notes that Abbott Laboratories (ABT 52.64) is scheduled to report Q307 earnings on October 17 before the market opens. The firm forecasts Q307 EPS of $0.65 (+11%) for ABT, $0.01 below consensus, and sales of $6.239B (+11.9%, +7.4% proforma incl GDT and KOSP) below consensus ($6.251B). Their model suggests FX could add >$100 mln to the top line, driving results above consensus.

CNET CNET downgraded to Hold at Stifel (8.90 )
Stifel downgrades CNET to Hold from Buy based on valuation saying the recent rally is likely based on renewed takeover speculation. The firm notes former CEO Shelby Bonnie announced earlier last week that he and a couple former CNET execs have started politicalbase.com, a new website devoted to politics. They believe investors may be speculating that Mr. Bonnie, the 3rd largest CNET shareholder, who likely still has influence with CNET’s board, might be more open to encourage the board to sell CNET, now that he has another venture underway. The firm says this is a reasonable thesis and they continue to see upside of $10.50+, or 17.5x 2007E EBITDA, in a takeover scenario, with both Internet and media heavyweights as prospective buyers.

AMLN Amylin Pharms: 3Q07 preview; expecting flat Byetta quarter, focus shifting to LAR - Rodman & Renshaw (47.67 )
Rodman & Renshaw notes AMLN will report 3Q7 results on Wed, Oct 17, after markets close. Based on firm’s analysis of IMS sales and prescription data, firm believes Byetta sales will come in below both their and the Street consensus ests of $168 mln and $167 mln, respectively. While AMLN is not yet an EPS driven stock, firm is forecasting a 3Q07 EPS ($0.37) compared to the Street consensus ests of ($0.41).

GILD Gilead Sciences: BWS Financial remains confident in GILD beating consensus (43.30 )
Boutique firm BWS Financial notes GILD is scheduled to report third quarter results on Oct 18, 2007 after the market close. Firm is one of the highest ests in the consensus with an EPS est of $0.43 and rev est of $1.095 bln. The consensus is for EPS of $0.39 and rev of $1.04 bln. Firm says there have been several FDA marketing approvals since GILD reported second quarter results. While they do not believe these pose as much competition for GILD; they do believe that mgmt is likely to address the concern during the earnings call. Firm believes the high-end of the acquisitions scale for GILD is likely to be near $5 bln, but do consider GILD in the running to bid for Biogen IDEC (BIIB).

MOT Motorola to buy 50% of UIQ from Sony Ericsson, according to report - DJ (19.13 ) -Update-
DJ reports the co plans to buy 50% of mobile phone software co UIQ from Sony Ericsson, reports Swedish newletter Telekomnyheterna Monday. Telekomnyheterna didn’t disclose the purchase price but said the deal is set to be revealed at a press conference in London at 13:00 GMT Monday. Motorola recently launched a new phone based on UIQ’s software Telekomnyheterna said.

VMW VMware tgt corrected to $125 from $150 at Caris (102.98 )
Caris corrects their tgt on VMW to $125 from $150, the firm notes on Oct 12, they raised their tgt to $150 based on a DCF analysis. There was an error in that analysis that prompted a more thorough total addressable market review. As a result the firm is changing their tgt to $125 from $150. Firm reits Buy given the upside to their tgt and given the co’s exceptional position in its core server virtualization market.

Bond Watch: Aiming Lower
The market is slipping into the open after prices batted around unchanged through the night. That is likely to have changed at the open as trade gears up for the week ahead with some highish profile data due (CPI & housing) & earnings reports over in stock-land providing some volatility. The 2-10-yr yield spread continues to drift flatter at 45.1 & the short end gets re-calibrated to lowered Fed rate cut expectations. Bond prices in the EuroZone slumped on inflation concerns & ahead of much supply this week while in Japan bonds suffered from Fri’s stronger US retail data. The day head has little work with as data hits early & Fed-speak late. Technicals & equity gyrations are likely to help push trade through the day. Beyond those flows, trade will be left to speculate on inflation & housing data hitting on Wed. Pitifully slim pickings today. The buck is weak as currency trade is actually beginning to believe the ECB still has another hike left in its cycle. The euro is surging this morning on such sentiment as lifetime highs around 1.4280 are approaching. Spot gold spiked to 757.90 (+8.80) as the buck weakens & crude oil is way up at 84.93 (+1.24). The calendar has NY Empire index (8:30) while the Fed’s Bernanke talks late (19). The euro is at 1.4223 & the yen is at 117.8300 while the 10-yr is -01/32nds yielding 4.687%.