Morning Look

"Men are apt to prefer a prosperous error to an afflicted truth." - Jeremy Taylor

Morning News of Note:

• WMT DEO: A Sober Wal-Mart Launches Drive Into Tricky Area: Liquor Retailer Teams With Diageo, Adds Shelf Space for Booze; A Web of State Regulations Some Store Managers Balk Two years ago, Wal-Mart Stores Inc. held a series of meetings with the world's top liquor makers at its alcohol-free headquarters in the middle of a dry county. The subject, say several people who were there: What did Wal-Mart need to do to sell more vodka, whiskey and rum? The results of those meetings are now starting to hit store shelves. In a move partially meant to spur flagging growth at stores open more than a year, Wal-Mart is pushing into hard liquor, one of the rare product categories where the world's largest retailer is very small. (Full Story) WSJ
• TWX: IN THE PIPELINE Carl Icahn may end up taking credit for the idea, but Time Warner management had been moving toward a complete spin-off of its cable unit long before the financier put the media giant in his crosshairs, The Post has learned. While no final decision has been made, spinning off the entire cable division — as opposed to the small portion the company has announced it will sell — has been gaining currency among Time Warner management (Full Story) NY Post
• DELL: Heard on the Steet..... 'Dell Effect' Is Under Strain As PC Maker Swells For years, Dell Inc. has touted the "Dell effect," using a build-to-order strategy and high volumes to lower prices on an array of computer products. The plan has worked for 15 years, allowing the Round Rock, Texas, computer maker to steamroll over rivals in markets for personal computers, servers and network storage. The aggressive tactic has allowed Dell to gobble up nearly one-fifth of the world-wide PC market and 34% of the U.S. market. (Full Story) WSJ
• OPEC Forecasts: Oil cartel OPEC nudged up its forecast for world oil demand growth in 2006 on Wednesday and predicted OPEC supplies would have to offset lower-than-expected output from non-OPEC countries. OPEC now expects world oil demand to grow by 1.57 million barrels per day (bpd) in 2006, an upward revision of 30,000 bpd and little changed from this year's growth rate. In its monthly report, OPEC's Vienna secretariat cited a "slightly more optimistic view of the world economy for the coming year." The United States will lead demand growth within the countries of the Organization for Economic Cooperation and Development, while China will make up about one-fourth of total world oil demand growth in 2006, said OPEC.
• Bulls/Bears: Bulls 57.3% vs 59.1% wk ago, Bears 22.5% vs 19.3% wk ago, correction 20.2% vs 21.6% wk ago

Market Comments: The market opened flat to slightly higher this am, despite a wosre than expected inflation report. The PPI came in at +1.0% vs. +0.5% est., and the Core PPI came in at +0.4% vs. +0.1% est. Energy prices have a lot to due with these readings, but I think inflation worries will subside in 2006.

Strong earnings from DELL and AMAT are helping the tech sector lead this am. Housing stocks are getting hit the hardest (-1.1%).

long DEO, TWX