Monday Morning Musings

Morning News of Note:

• DGIN: Online Banking's Cash Machine REALIZING THAT ITS BAREBONES ONLINE BANKING system could never go head-to-head with the likes of Citibank's electronic products, Eastern Financial Florida Credit Union in 2002 opted for an end run: It outsourced its operation to Digital Insight. Four years later, the small credit union, bolstered by its upgraded online offerings, is competing vigorously for customers with Citi and other banking giants in Miami, Fort Lauderdale and Tampa. (Full Story) BARRONS
• WB GDW: Wachovia Strikes $26 Billion Deal For Golden West Wachovia Corp. struck a roughly $26 billion stock-and-cash deal to buy Golden West Financial Corp., making a big gamble on the volatile mortgage business as it extends its ambition to become a true national bank. Wachovia agreed to pay 1.051 shares of its stock, valued at $62.42 based on Friday's closing prices, plus $18.65 in cash for each share of Golden West. (Full Story) WSJ
• GM: GMAC sale could be threatened by Moody's rating-FT: Moody's placing General Motors' (GM) unsecured credit rating on review this past Friday is jeopardizing the $7.4B sale of the company's GMAC finance arm. However, the credit rating agency said it was likely to limit any cut to one grade, from B3 to Caa, which would leave General Motors two notches above the critical point of the sale
• YHOO: YHOO Yahoo overhauls online advertising -- Financial Times: Financial Times reports that Yahoo on Monday will unveil an anticipated overhaul of its online advertising system, rolling out new technology for handling targeted interactive ads. Story says that the overhaul is being seen on Wall Street as YHOO's most significant initiative this year, as it tries to better compete w/ GOOG. Story says that the system has been designed to initially handle keyword ads, but has also been built to target ads based on demographics or user behavior.
• Mad Money Summary: Cramer opened his show on Friday discussing his next composite play, Germany's SGL Carbon (SGG), which makes carbon and graphite-based products. Cramer then recommended a Brazilian bank, Banco Itau (ITU), which just became the largest bank in Brazil after buying the Brazilian business of Bank of America (BAC). Cramer then recommended buying Foster Wheeler (FWLT), saying, "If you think the president will push through new refineries, you will win with Foster Wheeler." In the "Lightning Round," Cramer was bullish on NightHawk Radiology (NHWK), CSX (CSX), Burlington Northern (BNI), Genesee & Wyoming (GWR), Lockheed Martin (LMT), Northrop Grumman (NOC), General Dynamics (GD), Suncor (SU), Marvell (MRVL), eBay (EBAY), Occidental Petroleum (OXY), GlobalSantaFe (GSF), Paychex (PAYX), Whole Foods Market (WFMI), Coldwater Creek (CWTR), Palm (PALM) and Procter & Gamble (PG), and was bearish on Martha Stewart Living Omnimedia (MSO), American Science and Engineering (ASEI), PW Eagle (PWEI), CalAmp (CAMP), Quality Systems (QSII), Christopher & Banks (CBK) and Research In Motion (RIMM).

Market Comments: Oil is trading lower this morning, and energy stocks with it, on the news that Iran's PM wrote a letter to Bush trying to make nice. Most other sectors are higher in early trading, and there were a few mergers on this Monday.

Wachovia (WB) is buying Golden West (GDW) and Thermo Electron is buying one of our stocks, Fisher Scientific (FSH), which is getting a nice pop. I usually sell the stocks into this kind of news, as it then becomes an arbitrage game until the merger is finalized.

We also have another FOMC meeting this Wednesday, so the markets may remain a bit cautious ahead of that as investors anxiously await further comments about whether or not the Fed may pause at its next (June) meeting.

long DGIN, FSH