Is The CME Buying The CBOT?

Stocks were lower Wednesday after yesterday’s rally.

The EIA said crude inventories rose 1.1 million barrels, more than
expected; gasoline rose 300K barrels; distillates rose 1.7 million barrels, more
than expected.

The economy grew at a faster pace than originally thought. Q1 final GDP
was revised higher, to 3.8%. More new homebuilding and stronger exports were
cited. For Q4 2004, GDP also grew at 3.8%.

The FOMC begins a two-day meeting today. Economists are looking for a quarter-point
rise–to 3.25%–and no major change in the policy statement. Specifically, the
words “accommodative” and “measured pace” are expected to remain intact. It is
also quarter end and half-year end. It will be the ninth increase in the past
year.

Will the Chicago Mercantile Exchange
(
CME |
Quote |
Chart |
News |
PowerRating)
merge with the Chicago Board of Trade (CBOT)? That was the rumor today,
and it sent CME up $34.95 to 305.95. Jeffries & Co. said CME could trade to $344
even after it paid a 30% takeover premium to buy the Board of Trade. The CBOT
confirmed it received interest from an undisclosed party. The CBOT is planning
an IPO, tentatively priced between $33 – $36.

Oracle
(
ORCL |
Quote |
Chart |
News |
PowerRating) beat by 0.03; revenue was $3.88 billion, in line.
The company cited the rapid integration of Peoplesoft and was optimistic for
2006.

Dow component AIG
(
AIG |
Quote |
Chart |
News |
PowerRating) reported Q1 earnings that beat by 0.22;
net income rose 44%. The company gave an upbeat outlook.

General Mills
(
GIS |
Quote |
Chart |
News |
PowerRating) missed by a penny; revenue fell 3%. The
company anticipates EPS growth of 7-8% on a diluted basis for 2006.

Monsanto’s
(
MON |
Quote |
Chart |
News |
PowerRating) earnings fell to 0.17 from 0.93 a year ago.

In IPO news, Footwear retailer DSW Inc. (DSW) priced at $19,
above the initial $15-$17 range. The stock closed at 24.10.  Also debuting
today were telecommunications clearinghouse Neustar (NSR, priced at $22)
and real estate fund Deerfield Triarc (DFR, priced at $16). NSR closed at
26.04 and DFR, 15.99.

Among newsletter writers, 55.1% are bullish, the highest level since
March. Bears are 19.1%, the lowest figure since December.

For the quarter, the S&P is +1.9%; for the year, -0.7%. Alcoa kicks
off the Q3 earnings season next week, reporting on July 7.

Trader talk: last summer was tough trading. What’s in store for this
summer?

AAA said it expects more drivers to hit the road this July 4 weekend
than did during Thanksgiving. This, despite higher gasoline prices.

Chrysler said it will match GM’s employee discounts if GM
extends its offer into next week. The promotion is working well for GM, but some
worry that sales will drop substantially after the promotion ends..

Thomson Financial predicts the growth rate for the
S&P 500 for Q2 will be 7.1%. Most companies report mid-July.

Thursday is the end of the quarter.

Strong sectors were:  Gold
(
$HUI.X |
Quote |
Chart |
News |
PowerRating) +4.43%    
Insurance  
(
$IUX.X.X |
Quote |
Chart |
News |
PowerRating)
+1.80%    Airlines  
(
$XAL.X.X |
Quote |
Chart |
News |
PowerRating)
+0.51%  

Weak sectors were:   Internet
(
$GIN.X |
Quote |
Chart |
News |
PowerRating)
-1.32%       Homebuilders
(
$HGX.X |
Quote |
Chart |
News |
PowerRating) -0.83%    Semis  
(
$SOX.X.X |
Quote |
Chart |
News |
PowerRating)
-0.89%

Morgan Stanley upgraded Motorola
(
MOT |
Quote |
Chart |
News |
PowerRating) to overweight.

Bank of America upgraded Chevron
(
CVX |
Quote |
Chart |
News |
PowerRating) to buy from neutral.

SigmaTel
(
SGTL |
Quote |
Chart |
News |
PowerRating) guided lower, saying revenues for Q2 would be
$68-72 million, down from $86-95 million.

Symbol Tech
(
SBL |
Quote |
Chart |
News |
PowerRating) lowered guidance, and now sees 0.02 – 0.05 vs.
0.06. The company is cutting 700 jobs.

JP Morgan cut Tyco
(
TYC |
Quote |
Chart |
News |
PowerRating) from its focus list.

Petco
(
PETCE |
Quote |
Chart |
News |
PowerRating) lowered its Q2 guidance.

Calpine is selling its oil and gas assets to Rosetta for $1.05
billion.