Options Expiration Will Cloud Today's Trading

Morning News of Note:

• Inflation: Poole Says Inflation Over His Comfort Zone; Fed May Need to Act Federal Reserve Bank of St. Louis President William Poole said U.S. inflation is above his comfort zone and that the Fed may need to act should price gains quicken. ``Core inflation is modestly above of what many of us have expressed as our comfort zone,'' Poole told reporters in Seoul today. ``It's certainly my view that if the inflation rate continues to be persistent like that, the Federal Reserve will simply have to pursue'' policies to keep inflation from quickening. (Full Story) Bloomberg
• MSFT: Gates Will Cede Day-to-Day Role At Microsoft Bill Gates -- the Harvard University dropout who created the business framework for modern computing and in the process became the world's richest man -- plans to give up his day-to-day role at Microsoft Corp. to spend more time helping the world's poor. Mr. Gates, 50 years old, said he would remain Microsoft's chairman, but begin a transition that in two years will remove him from overseeing product development at the software giant he co-founded in 1975. (Full Story) WSJ
• AAPL MSFT: MICROSOFT TUNED UP FOR NEXT IPOD BATTLE Microsoft is preparing to wage a high-stakes battle against Apple and its iPod digital music player, a move that could bring to mind the battle between the tech giant's Xbox video game console and Sony's PlayStation, The Post has learned. Microsoft is quietly laying the groundwork to launch its own digital music player and music service that would rival the iPod and the popular iTunes music service, according to multiple sources close to the major record labels. (Full Story) NY Post
• GOOG: Google tests online payment system Analysts have speculated whether Google would enter into direct competition with PayPal, dubbing its potential new service "GBuy" to capture commercial transaction data. Google's system aims to allow quicker purchases by a consumer from a marketer, and a beta version is expected soon, said Google CEO Eric Schmidt. (Full Story) CNET
• Mad Money Summary: Cramer opened his show suggesting Nucor (NUE) and Freeport (FCX) as his favorite values in commodities, due to the companies' histories of paying special dividends. Cnooc (CEO) also pays out special dividends, but is up 13%, so Cramer did not recommend buying it. Cramer then looked for opportunities in poor house stocks. He recommended Ralcorp (RAH), Perrigo (PRGO) and Dollar Tree (DLTR). Cramer then said you should avoid any company that borrows money to buyback stock or announces a convertible debt offering because these stocks drop after these announcements. One such company is Symantec (SYMC). In the "Lightning Round," Cramer was bullish on Jacobs Engineering Group (JEC), AutoZone (AZO), Panera Bread (PNRA), Yum! Brands (YUM), Genzyme (GENZ), Foster Wheeler (FWLT), Four Seasons Hotels (FS), Valero Energy (VLO), Legg Mason (LM), Halliburton (HAL), Anheuser-Busch (BUD), Boeing (BA) and Network Appliance (NTAP), and was bearish on Sonic Automotive (SAH), Cheesecake Factory (CAKE), Millennium Pharmaceuticals (MLNM), Chicago Bridge & Iron (CBI), Intrawest (IDR), Brookfield Asset Management (BAM), Bronco Drilling (BRNC) and Microsoft (MSFT).

Market Comments: The market has opened slightly lower this morning. Volume is already going through the roof, due to the options expiration in several contracts simultaneously. That will likely cloud today's trading. I expect the price action, irrespective of volume, to be fairly benign.

The Michigan Sentiment Index came in better than expected (82.4 vs. 79.0). Also, Boone Pickens was interviewed and predicted that oil would hit $80 by year-end. The current trend in oil is down, but a lot can happend between now and year-end.

Defensive stocks seem to be getting a bid this morning, which means people are still betting on a slowdown for the U.S. economy. Let's hope the Fed sees this and doesn't go too far in raising rates, if they haven't already!

long AAPL, GOOG, MSFT