Will The 10-year Yield Weigh On The Market?

Morning News of Note:

• TWX: Time Warner's Malaise Persists Carl Icahn may have given up the fight too soon. Four months after the billionaire investor abandoned his campaign for control of Time Warner Inc., shares of the world's largest media concern are down about 10%, despite the company's increase of a planned stock buyback to $20 billion. Making matters worse, shares of several rival media companies -- News Corp., Comcast Corp. and Walt Disney Co. among them -- have risen by as much as 20% over the same period. (Full Story) WSJ
• SLB CAT GS FDX: What About a Few "Offensive" Stocks? DESPITE GROWING ANXIETY OVER RISING inflation and fears of a sharp economic downturn, not everyone on Wall Street believes that stocks tied to the economy are kaput. Sure, inflation anxiety has rattled stocks. In recent weeks, the broader stock market has faltered amid fears that an inflation-fighting Federal Reserve will keep raising short-term rates, risking a recession in the process. (Full Story) BARRONS
• QCOM: Qualcomm Says Intel Is Stalling Wireless Method Qualcomm Inc. is launching a verbal counterattack on Intel Corp. for tactics in an industry standard-setting effort, escalating a battle over a next-generation wireless technology. The standards board of the Institute of Electrical and Electronics Engineers last week disclosed that it had suspended the activities of a working group that was evaluating a technology proposal favored by Qualcomm. (Full Story) WSJ
• CYN: City National Corp-CYN lowers 2006 EPS growth guidance. CYN now sees 2006 EPS growth of 1%-4%, compared to earlier guidance of 8%-10%
• GOOG: Google testing free streaming premium videos-blog.searchenginewatch.com. According to Peter Chane, group business product manager for Google Video, Google (GOOG) is running a test on about 2,000 premium videos available for free streaming viewing. The videos cannot be saved when viewed. Inserted into the videos are a persistent banner ad and a video ad once that plays when the video is finished streaming
• Mad Money Summary: Cramer opened his show last night recommending Whirlpool (WHR), because the government let Whirlpool merge with Maytag. Although this is bad for consumers, it is good for investors, because Whirlpool now has 75% market share. Cramer then said it was a good time to be in insurance companies, and recommended buying Allstate (ALL), the "best play in the sector." Cramer then discussed Sealy (ZZ), which has been a house of pain since he recommended it. Although he admits he was wrong about it at the time, he says it is now cheap and a great buying opportunity. Cramer then welcomed Trinity Industries (TRN) CEO Tim Wallace to the show, and after talking to him, gave the stock two thumbs up. In the "Lightning Round," Cramer was bullish on Qualcomm (QCOM), General Motors (GM), Alamo Group (ALG), Valero Energy (VLO), Mitsubishi UFJ Financial (MTU), LifeCell (LIFC), VF Corp (VFC), UBS (UBS), Ciena (CIEN), LoopNet (LOOP), McDermott International (MDR), Micron Technology (MU), Continental Airlines (CAL), Southern Copper (PCU), Arena Pharmaceuticals (ARNA), Best Buy (BBY), Altria (MO), Alberto-Culver (ACV) and Biogen Idec (BIIB), and was bearish on Western Refining (WNR), Under Armour (UARM), Coherent (COHR), Hansen Natural (HANS), Electronic Arts (ERTS), Peru Copper (CUP) and Elan (ELN).

Market Comments: The markets opened under a bit of pressure this morning, but the SPX is currently clawing its way back.

There was some excitement in the energy patch as APC acquired both KMG and WGR today. That shows that there is still value in many energy stocks, and if the market isn't going to pay up for them, then we will see other companies step up their M&A activity.

The yield on the 10-year is making new yearly highs again. Normally, I would highlight this as worrisome. But with the fed funds rate likely moving to 5.25% next week, the 10-year yield is still trading slightly below that (5.21%). So the yield curve is still slightly inverted. My year-end prediction for the 10-year still stands at 5.50%.

I still think the market is consolidating nicely, and expect an upside breakout sometime next week. Skepticism is still running high, which only helps increase the probability of this event.

long GOOG, GS, SLB, TWX