Payrolls Data Hints at Slowdown

Morning News of Note:

• TWX: AOL to Add Free Phone to Instant Messaging Feature AOL is preparing to offer the 41 million users of its instant messaging system a free phone number that will allow people to call them from regular phones while they are online. The move is part of a broad effort by AOL — which has been buffeted by defections from its flagship dial-up Internet service — to capitalize on the continued popularity of its decade-old AIM instant message system. (Full Story) NY Times
• RTRSY CME: The Merc's New Take on Currencies Chicago Mercantile Exchange Holdings Inc. unveiled plans for a joint venture with Reuters Group PLC to trade additional currency products, part of a push to beef up its presence in the fastest-growing areas of the derivatives industry. Unlike other exchange operators, such as NYSE Group Inc. and Nasdaq Stock Market Inc., which are both looking to expand business through mergers with other exchanges, the Chicago Mercantile Exchange Holdings and other futures exchanges believe they can pick up business by expanding into the more loosely regulated and fragmented areas of the derivatives arena. (Full Story) WSJ
• LIZ Kate Spade: CLAIBORNE, VF WANT TO BAG KATE SPADE Apparel giants Liz Claiborne and the VF Corp. are squaring off to acquire Kate Spade, the handbag maker that was put up for sale earlier this year by majority owner The Neiman Marcus Group, The Post has learned. Final bids are due this week and the price is hovering around $130 million, sources said. (Full Story) NY Post
• CBS: CBS Launches Web-TV Channel With New Shows Ratcheting up its competition with Internet rivals such as Yahoo Inc. in the race to provide TV shows online, CBS Corp. unveiled a Web-based entertainment channel that will be stocked with original TV shows and, eventually, reruns of the network's hits. The broadband channel, called Innertube, launched yesterday on CBS.com with a handful of original shows, including a college-based reality series called "Greek to Chic." (Full Story) Washington Post
• LCDs: Digitimes reports Taiwan-based LCD component makers recently commented that demand for TV and PC applications will not pick up sharply until the third quarter. As LCD panel inventory levels surged rapidly in the first quarter, shipments from the companies for the second quarter are only expected to see slight growth or remain flat, the makers pointed out.
• Mad Money Summary: Cramer opened his show discussing ethanol, and recommended a "stealth ethanol play," Syngenta (SYT), which makes a special seed that could boost the ethanol industry. Then Cramer discussed the war between the cable companies and the phone companies, saying investors should not bet on either side, but "buy the arms dealer." To that end he suggested Arris Group (ARRS), which makes cable modems. Cramer then gave two thumbs up to Knight Capital Group (NITE), a company he was previously wary of because of a "regulatory nightmare," which has completely cleared up. Cramer then spoke to the CEO of Cano Petroleum (CFW) over the phone, saying the company, which is involved in advanced oil recovery, was very interesting. In the "Lightning Round," Cramer was bullish on General Motors (GM), Brocade (BRCD), Schlumberger (SLB), Northgate (NXG), Sirf (SIRF), Novatel Wireless (NVTL), Zoltec (ZOLT), American Capital (ACAS), Bank of Montreal (BMO), Toronto-Dominion Bank (TD), Royal Bank of Canada (RY), Vornado (VNO), Bucyrus (BUCY), Joy Global (JOYG), Flextronics (FLEX) and Zumiez (ZUMZ), and was bearish on Home Solutions of America (HOM), Cendant (CD), Kinetic Concepts (KCI), Agree Realty (ADC), BioCryst Pharmaceuticals (BCRX) and 24/7 Real Media (TFSM).

Market Comments: The nonfarm payrolls report came in below expectations at 138,000 vs. estimates of 200,000. The market is cheering this number, as it hints at a possible slowdown that would augment the Fed's case for a pause. This has the 10-year yield down 5 basis points to 5.10%.

Of course, this soft payrolls report doesn't really jibe with the other strong economic reports we have been getting, including retail sales, ISM services index, durable goods, new home sales, etc.

Regardless, the market is speaking, and the SPX has broken out to a new high at 1320. You know I don't really like too much strength too early, especially on a Friday. I would not be suprised to see some profit taking late in the day. But my stocks are looking good for the most part, so I won't complain.

long TWX