Wake Up Call - Jan 19

Good Morning. This is your wake up call for Friday January 19, 2007. The time is 9:03 AM EST, and the S&P 500, Dow Industrials and NASDAQ indices are all indicating a lower open Friday. Strong results from Citigroup and Schlumberger are being offset by a weak report from IBM.

Asia:
Hang Seng Index +0.25%; Shanghai/Shenzhen 300 +3.41%; NIKKEI 225 -0.35%; BSE SENSEX 30 -0.25%; Ho Chi Minh +4.06%

U.K. & Europe:
DJ STOXX 50 Index -0.22%; FTSE 100 -0.27%; CAC 40 +0.07%; DAX -0.26%; Russian RTS Index +0.34%


KEY HEADLINE NEWS

• In yesterday's "Wake Up Call," we advised you to buy oil now. We went out on a limb and said that we would aggressively buy oil on any inventory induced price weakness, and you saw that prediction play out. The "quiet catalysts" continue to creep up on the market, and we retain our conviction. Oil is inching higher this morning despite some early volatility.
• The stock prices of big oil companies may come under some price pressure this morning, as the House passed legislation to roll back a tax subsidy. On the face of it, you might assume this could help some oil firms, whose shares have not fallen as far as the price of oil, make up some ground. If not for the presidential veto, we might have advised careful and selective entry into oil stocks, but it is clear to us that this bill will die before becoming law. The bill carries an attractive lure, however, in that it promises to return economic value taken from energy firms to help create value in alternative energy sources. However, Republicans argue that it increases the cost of domestic production, thus raising reliance on foreign oil. It appears to us that Congress wants this president's legacy to go on record with a fair amount of vetoes. Up until now, the president has had easy going of it, due to Congressional support. So, WSG advises buying into oil and using any weakness created by this legislation to buy into oil stocks as well.
• Schlumberger reported earnings today, posting revenue growth of 33% and EPS of $0.92, versus expectations for $0.83, based on a Bloomberg survey. SLB shares were up 2.5% in pre-market activity.
• U.K. retail sales rose 1.1% in December, versus consensus expectations for an increase of 0.6%. The news was not taken very positively in England, where the FTSE 100 dipped 0.27%. However, the slide in stocks seems to be on concern that the Bank of England may not be through with its plans for interest rates, having hiked as recently as last week.
• IBM earned $2.26 per share from continuing operations, versus consensus view for $2.19, based on data from Thomson Financial, as it benefited from cost cutting. IBM gained approximately $0.06 from tax benefits. However, IBM's shares were down more than 4% in pre-market activity, due to market disappointing hardware sales.

We urge you to read our section within the sidebar, entitled "Headline News", for further important information for traders and investors.

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