S&P 500 1,140.75 +.40%
NASDAQ 2,047.79 +.63%
Leading Sectors
Hospitals +2.10%
Homebuilders +1.87%
Oil Service +1.75%
Lagging Sectors
Fashion -.44%
Restaurants -.48%
Disk Drives -.64%
Other
Crude Oil 36.98 -.13%
Natural Gas 6.14 -.24%
Gold 394.80 +.46
Base Metals 109.32 +1.34%
U.S. Dollar 88.76 -.73%
10-Yr. T-note Yield 4.59% -2.03%
VIX 14.34 -7.30%
Put/Call .78 -15.22%
NYSE Arms 1.07 +27.38%
After-hours Movers
DRS +16.05% after CNBC reported that LLL offered to buy the company.
CPKI +4.23% after raising 2Q forecast.
ABC -4.45% on CAH news.
MCK -5.36% on CAH news.
MERX -9.61% after missing 4Q estimates and lowering 1Q forecast.
CAH -13.20% after saying federal regulators are investigating its accounting and the company cut its fiscal 05 forecast.
ELX -13.99% after cutting 4Q and 1Q forecasts.
Recommendations
Goldman Sachs reiterated Underperform on S and Outperform on ADP.
After-hours News
U.S. stocks finished higher today, led by homebuilding and energy-related shares. Federal Reserve policy makers raised the U.S. benchmark interest rate by 25 basis points to 1.25% and reiterated that further increases can come at a "measured" pace, Bloomberg reported. After the close, the SEC said it knows of more than 40 hedge funds that were involved in trading abuses at mutual funds, SEC Chairman Donaldson said without naming them. More than 200,000 current and former employees at Boeing stood to receive a stock distribution today if the price remained above $44 a share, the Seattle Times reported. The al-Qaeda terrorist network plotted to bomb the Panama Canal, one of the world's most important shipping routes, Agence France-Presse reported. Texas Instruments may accelerate plans to build a new factory, the Dallas Morning News reported. Syngenta AG, the world's biggest maker of crop chemicals, said it will move its U.K.-based biotechnology research facilities to the U.S., the Financial Times said. Whitehouse.com, a pornography Web site that included parodies about first ladies and interns, removed all political references to quality for a trademark, the AP reported. Barneys New York may put itself up for sale as the company seeks to expand its chain of namesake stores, Bloomberg reported. Japan's Tankan survey showed executives at Japanese manufacturers are the most confident since the nation's asset-price bubble burst in 1991, helped by surging demand from China and the U.S., Bloomberg reported.
BOTTOM LINE: The Portfolio finished slightly higher today and I did not trade in the afternoon, thus leaving market exposure at 150% net long. While I was a little disappointed in the market's muted reaction to a break-down in the 10-yr T-note yield, a stronger upwards move may materialize over the course of a few days. Investor apprehension over tomorrow's ISM report, Friday's employment data and the possibility of terrorism over the July 4th holiday weekend may lead to a delayed positive response to the fall in interest rates. As well, it was positive that the CRB Index broke down through its recent trading range today. The recent fall in gas prices, subsiding inflation fears, rising consumer confidence, falling interest rates and exceptional fundamentals should provide the catalysts for a continuation of the recent rally.
Wednesday, June 30, 2004
Mid-day Update
S&P 500 1,135.15 -.23%
NASDAQ 2,035.04 +.01%
Leading Sectors
Nanotechnology +1.34%
Oil Service +1.33%
Hospitals +1.23%
Lagging Sectors
I-Banks -.62%
Restaurants -1.11%
Disk Drives -1.86%
Other
Crude Oil 36.25 +1.65%
Natural Gas 6.13 +.20%
Gold 395.80 +.76%
Base Metals 109.32 +1.34%
U.S. Dollar 89.02 -.44%
10-Yr. T-note Yield 4.62% -1.40%
VIX 15.56 +.58%
Put/Call .89 -3.26%
NYSE Arms 1.23 +46.43%
Market Movers
TASR +8.3% after receiving a $1.8 million contract to supply more of its stun guns to U.S. troops, the largest award in company history.
RIMM +15.2% after beating 1Q estimates and raising 2Q/3Q guidance.
CBH -8.3% after saying 2 officers of its Philly bank subsidiary have been suspended as a result of their indictment and multiple downgrades.
THOR -22.4% after lowering 2Q and 04 forecast.
ESIO +16.6% after beating 4Q estimates substantially and raising 1Q guidance significantly.
KMRT +5.9% after saying it will sell as many as 54 stores to Sears for about $621 million.
SMG +6.8% after raising 3Q and 04 forecasts.
GTK -10.5% after cutting 2Q and 05 guidance and multiple downgrades.
AZO -7.4% after reporting disappointing same-store-sales.
Economic Data
Chicago Purchasing Manager for June came in at 56.4 versus expectations of 65.0 and a reading of 68.0 in May.
Recommendations
ALK rated Underweight at JP Morgan. ARG rated Buy at Deutsche Bank, target $28. BRCM rated Outperform at CSFB, target $54. MRVL rated Outperform at CSFB, target $30. PUMP rated Outperform at Thomas Weisel, target $24. PDG raised to Overweight at Prudential, target $20. SSCC cut to Underweight at Prudential, target $15. Goldman Sachs reiterated Outperform on ROH, CIT, AMLN, BSX, KRB, WAG and MERQ. Citi SmithBarney said to swap out of CCI and into AMT or SSI. Citi said to Buy PFG ahead of quarter, target $42. Citi reiterated Buy on NFLX, target $42. Citi reiterated Buy on FLEX, target $26. Citi reiterated Buy on CYH, target $33. Citi reiterated Buy on HCA, target $48. Citi reiterated Buy on THC, target $17.50. Citi reiterated Buy on TGT, target $50. Citi reiterated Buy on AZO, target $98.
Mid-day News
U.S. stocks are slightly lower mid-day as investor apprehension rises ahead of the Fed's announcement later today. Procter & Gamble will run three two-minute advertisements that tell a story during a single program, as traditional 30-second commercials have lost some appeal, the Wall Street Journal reported. The U.S. Coast Guard will deploy 600 personnel to provide armed escorts for VIP and tour boats, board freighters entering the Boston Harbor and randomly search ships during the Democratic National Convention, the Boston Globe reported. French President Chirac vetoed a U.S.-backed plan for the new NATO response force to provide extra security in Afghanistan during elections, the Washington Times reported. The first Fed rate increase in four years is unlikely to cause investors to rapidly exit so-called carry trades, or positions that borrow at short-maturity interest rates to invest at longer-term rates, CBS MarketWatch reported. New York's Nassau County is mailing free prescription-drug discount cards to 500,000 homes in the largest locally sponsored effort in the U.S. to curb drug costs, the NY Times reported. Proposed legislation designed to revamp California's electricity grid received preliminary approval from a state Senate panel yesterday, the LA Times reported. A Minnesota man the FBI identified as a terror suspect before Sept. 11, received a license to haul hazardous waster and to drive a school bus, the Minneapolis Star Tribune reported. Ousted Iraqi President Hussein and 11 of his officials were handed over today by the U.S. into Iraqi legal custody, Bloomberg reported. The UNs' shipping agency said 53% of the world's ships and ports have adopted anti-terrorism security measures before tomorrow's deadline, reducing the threat of trade disruptions, Bloomberg said. An index of growth for Chicago-area manufacturers and other businesses fell more than forecast this month after reaching a 16-year high, Bloomberg reported.
BOTTOM LINE: The Portfolio is unchanged today as my longs are mixed. I have not traded and the Portfolio is still 150% net long. I expect U.S. stocks to rise into the afternoon as rates fall further after a 25 basis point increase in the Fed Funds rate and the retention of the word "measured" in the Fed's policy statement, with respect to the future pace of rate hikes. Volume and volatility will likely accelerate in the afternoon as well. The decline in the Chicago Purchasing Manager Index should have been expected after reaching a 16-year high last month. I do not currently believe the U.S. economy is in the midst of a significant slowdown, rather a pause that refreshes. 3-4% economic growth with lower inflation is more positive for stocks than 4+% growth with higher inflation.
NASDAQ 2,035.04 +.01%
Leading Sectors
Nanotechnology +1.34%
Oil Service +1.33%
Hospitals +1.23%
Lagging Sectors
I-Banks -.62%
Restaurants -1.11%
Disk Drives -1.86%
Other
Crude Oil 36.25 +1.65%
Natural Gas 6.13 +.20%
Gold 395.80 +.76%
Base Metals 109.32 +1.34%
U.S. Dollar 89.02 -.44%
10-Yr. T-note Yield 4.62% -1.40%
VIX 15.56 +.58%
Put/Call .89 -3.26%
NYSE Arms 1.23 +46.43%
Market Movers
TASR +8.3% after receiving a $1.8 million contract to supply more of its stun guns to U.S. troops, the largest award in company history.
RIMM +15.2% after beating 1Q estimates and raising 2Q/3Q guidance.
CBH -8.3% after saying 2 officers of its Philly bank subsidiary have been suspended as a result of their indictment and multiple downgrades.
THOR -22.4% after lowering 2Q and 04 forecast.
ESIO +16.6% after beating 4Q estimates substantially and raising 1Q guidance significantly.
KMRT +5.9% after saying it will sell as many as 54 stores to Sears for about $621 million.
SMG +6.8% after raising 3Q and 04 forecasts.
GTK -10.5% after cutting 2Q and 05 guidance and multiple downgrades.
AZO -7.4% after reporting disappointing same-store-sales.
Economic Data
Chicago Purchasing Manager for June came in at 56.4 versus expectations of 65.0 and a reading of 68.0 in May.
Recommendations
ALK rated Underweight at JP Morgan. ARG rated Buy at Deutsche Bank, target $28. BRCM rated Outperform at CSFB, target $54. MRVL rated Outperform at CSFB, target $30. PUMP rated Outperform at Thomas Weisel, target $24. PDG raised to Overweight at Prudential, target $20. SSCC cut to Underweight at Prudential, target $15. Goldman Sachs reiterated Outperform on ROH, CIT, AMLN, BSX, KRB, WAG and MERQ. Citi SmithBarney said to swap out of CCI and into AMT or SSI. Citi said to Buy PFG ahead of quarter, target $42. Citi reiterated Buy on NFLX, target $42. Citi reiterated Buy on FLEX, target $26. Citi reiterated Buy on CYH, target $33. Citi reiterated Buy on HCA, target $48. Citi reiterated Buy on THC, target $17.50. Citi reiterated Buy on TGT, target $50. Citi reiterated Buy on AZO, target $98.
Mid-day News
U.S. stocks are slightly lower mid-day as investor apprehension rises ahead of the Fed's announcement later today. Procter & Gamble will run three two-minute advertisements that tell a story during a single program, as traditional 30-second commercials have lost some appeal, the Wall Street Journal reported. The U.S. Coast Guard will deploy 600 personnel to provide armed escorts for VIP and tour boats, board freighters entering the Boston Harbor and randomly search ships during the Democratic National Convention, the Boston Globe reported. French President Chirac vetoed a U.S.-backed plan for the new NATO response force to provide extra security in Afghanistan during elections, the Washington Times reported. The first Fed rate increase in four years is unlikely to cause investors to rapidly exit so-called carry trades, or positions that borrow at short-maturity interest rates to invest at longer-term rates, CBS MarketWatch reported. New York's Nassau County is mailing free prescription-drug discount cards to 500,000 homes in the largest locally sponsored effort in the U.S. to curb drug costs, the NY Times reported. Proposed legislation designed to revamp California's electricity grid received preliminary approval from a state Senate panel yesterday, the LA Times reported. A Minnesota man the FBI identified as a terror suspect before Sept. 11, received a license to haul hazardous waster and to drive a school bus, the Minneapolis Star Tribune reported. Ousted Iraqi President Hussein and 11 of his officials were handed over today by the U.S. into Iraqi legal custody, Bloomberg reported. The UNs' shipping agency said 53% of the world's ships and ports have adopted anti-terrorism security measures before tomorrow's deadline, reducing the threat of trade disruptions, Bloomberg said. An index of growth for Chicago-area manufacturers and other businesses fell more than forecast this month after reaching a 16-year high, Bloomberg reported.
BOTTOM LINE: The Portfolio is unchanged today as my longs are mixed. I have not traded and the Portfolio is still 150% net long. I expect U.S. stocks to rise into the afternoon as rates fall further after a 25 basis point increase in the Fed Funds rate and the retention of the word "measured" in the Fed's policy statement, with respect to the future pace of rate hikes. Volume and volatility will likely accelerate in the afternoon as well. The decline in the Chicago Purchasing Manager Index should have been expected after reaching a 16-year high last month. I do not currently believe the U.S. economy is in the midst of a significant slowdown, rather a pause that refreshes. 3-4% economic growth with lower inflation is more positive for stocks than 4+% growth with higher inflation.
Wednesday Watch
Earnings of Note
Company/Estimate
VOXX/.09
STZ/.49
EMMS/.07
FRE/1.61
GIS/.72
MERX/-.02
MON/.85
Splits
None of note.
Economic Data
Chicago Purchasing Manager for June estimated at 65.0 versus 68.0 in May.
The Fed is expected to raise the Fed Funds Rate by 25 basis points.
Recommendations
Goldman Sachs reiterated Underperform on VTS and Outperform on MUR. Goldman sees another strong quarter for MOT and increased estimates.
Late-Night News
Asian indices are higher, led by exporters, after a better-than-expected consumer confidence report in the U.S. OPEC President Yusgiantoro said oil prices should continue to ease back to the organization's $22-$28 target band, the Financial Times said. Disney's ESPN is in talks with British Sky Broadcasting to start a 24-hour sports channel in the U.K., the London-based Times said. General Motors Vice Chairman Lutz said Western Europe may be discouraging investment in manufacturing through high labor and regulatory costs, the Financial Times said. Passive smoking may be more dangerous than previously thought, raising the risk of heart disease among non-smokers by as much as 60%, Bloomberg reported. The U.S. Department of Agriculture reported its second possible case of made cow disease in less than a week as part of a screening program that the government expanded following a confirmed case in December, Bloomberg reported.
Late-Night Trading
Asian Indices are +.25 to +1.25% on average.
S&P 500 indicated +.07%.
NASDAQ 100 indicated +.13%.
BOTTOM LINE: I expect U.S. stocks to open higher in the morning, led by technology and cyclical shares. The Chicago Purchasing Manager report will probably meet or fall slightly below expectations. I also expect the Fed to raise rates by 25 basis points and to keep the word "measured" in their policy statement with respect to the pace of future rate hikes. The extent of tomorrow's rally will likely be determined by the bond market's reaction to the rate increase and Fed statements. An increase in volatility and volume should be expected. Since May 17, the S&P 500 is up 5.0% and the Morgan Stanley Technology Index is up 10.3%. I continue to expect the rally will accelerate by no later than next Tuesday. However, if this does not occur I will have to re-think the current environment and the extent to which "irrational pessimism" is dominating investor psychology, thus leading to a continuation of the P/E multiple contractions that began in March of 2002. The Portfolio is 150% net long heading into tomorrow.
Company/Estimate
VOXX/.09
STZ/.49
EMMS/.07
FRE/1.61
GIS/.72
MERX/-.02
MON/.85
Splits
None of note.
Economic Data
Chicago Purchasing Manager for June estimated at 65.0 versus 68.0 in May.
The Fed is expected to raise the Fed Funds Rate by 25 basis points.
Recommendations
Goldman Sachs reiterated Underperform on VTS and Outperform on MUR. Goldman sees another strong quarter for MOT and increased estimates.
Late-Night News
Asian indices are higher, led by exporters, after a better-than-expected consumer confidence report in the U.S. OPEC President Yusgiantoro said oil prices should continue to ease back to the organization's $22-$28 target band, the Financial Times said. Disney's ESPN is in talks with British Sky Broadcasting to start a 24-hour sports channel in the U.K., the London-based Times said. General Motors Vice Chairman Lutz said Western Europe may be discouraging investment in manufacturing through high labor and regulatory costs, the Financial Times said. Passive smoking may be more dangerous than previously thought, raising the risk of heart disease among non-smokers by as much as 60%, Bloomberg reported. The U.S. Department of Agriculture reported its second possible case of made cow disease in less than a week as part of a screening program that the government expanded following a confirmed case in December, Bloomberg reported.
Late-Night Trading
Asian Indices are +.25 to +1.25% on average.
S&P 500 indicated +.07%.
NASDAQ 100 indicated +.13%.
BOTTOM LINE: I expect U.S. stocks to open higher in the morning, led by technology and cyclical shares. The Chicago Purchasing Manager report will probably meet or fall slightly below expectations. I also expect the Fed to raise rates by 25 basis points and to keep the word "measured" in their policy statement with respect to the pace of future rate hikes. The extent of tomorrow's rally will likely be determined by the bond market's reaction to the rate increase and Fed statements. An increase in volatility and volume should be expected. Since May 17, the S&P 500 is up 5.0% and the Morgan Stanley Technology Index is up 10.3%. I continue to expect the rally will accelerate by no later than next Tuesday. However, if this does not occur I will have to re-think the current environment and the extent to which "irrational pessimism" is dominating investor psychology, thus leading to a continuation of the P/E multiple contractions that began in March of 2002. The Portfolio is 150% net long heading into tomorrow.
Tuesday, June 29, 2004
Tuesday Close
S&P 500 1,136.23 +.25%
NASDAQ 2,034.93 +.75%
Leading Sectors
Broadband +2.76%
Disk Drives +2.56%
Iron/Steel +2.31%
Lagging Sectors
Utilities -.92%
Homebuilders -.98%
Retail -2.09%
Other
Crude Oil 35.60 -.17%
Natural Gas 6.11 -.05%
Gold 392.80 unch.
Base Metals 107.87 -1.41%
U.S. Dollar 89.42 +.79%
10-Yr. T-note Yield 4.68% -1.14%
VIX 15.48 -3.67%
Put/Call .92 +53.33%
NYSE Arms .84 -23.64%
After-hours Movers
ESIO +22.04% after beating 4Q estimates substantially and raising 1Q guidance significantly.
QTWW +10.78% after beating 4Q estimates.
RIMM +6.85% after beating 1Q estimates and raising 2Q/3Q guidance.
Recommendations
Goldman Sachs reiterated Outperform on CTSH and Underperform on ATI.
After-hours News
U.S. stocks finished higher today on falling oil prices, declining interest rates and a strong consumer confidence report. After the close, Bank of America said it bought about 160,000 DaimlerChrysler AG credit-card accounts for an undisclosed price, Bloomberg reported. Former President Clinton's memoir has sold almost 1 million copies, CNN reported. Carlyle Group and Providence Equity Partners will each buy a 27% stake in PanAmSat for about $953 million, or a total of $1.9 billion, Bloomberg said. The U.S. will begin talks tomorrow at the UN on a resolution to disarm the Arab Janjaweed militias accused of atrocities against black Africans in Sudan's Darfur region, Bloomberg reported. Crude oil in New York fell to the lowest price in almost three months on optimism over Iraq and increasing production for OPEC, Bloomberg reported. Research In Motion, the maker of BlackBerry e-mail pagers, reported sales more than doubled to $269 million form $104.5 million, topping estimates, Bloomberg said. The U.S. Financial Accounting Standards Board may consider delaying for as much as a year a rule requiring stock options to be expensed, Bloomberg reported.
BOTTOM LINE: The Portfolio finished higher today and I added a few new technology longs in the afternoon, leaving the Portfolio with 150% net long market exposure. One of my new longs is MOT and I am using a stop-loss of $17.75 on this position. The fact that interest rates fell on a much better-than-expected consumer confidence reading is very positive. Moreover, crude oil has fallen 14% from its recent highs in a very short period of time. Finally, stocks are responding very well to good news as evidenced by the after-hours action in ESIO and RIMM. I continue to expect a move higher in the major U.S. indices by week's end on an increase in volume.
NASDAQ 2,034.93 +.75%
Leading Sectors
Broadband +2.76%
Disk Drives +2.56%
Iron/Steel +2.31%
Lagging Sectors
Utilities -.92%
Homebuilders -.98%
Retail -2.09%
Other
Crude Oil 35.60 -.17%
Natural Gas 6.11 -.05%
Gold 392.80 unch.
Base Metals 107.87 -1.41%
U.S. Dollar 89.42 +.79%
10-Yr. T-note Yield 4.68% -1.14%
VIX 15.48 -3.67%
Put/Call .92 +53.33%
NYSE Arms .84 -23.64%
After-hours Movers
ESIO +22.04% after beating 4Q estimates substantially and raising 1Q guidance significantly.
QTWW +10.78% after beating 4Q estimates.
RIMM +6.85% after beating 1Q estimates and raising 2Q/3Q guidance.
Recommendations
Goldman Sachs reiterated Outperform on CTSH and Underperform on ATI.
After-hours News
U.S. stocks finished higher today on falling oil prices, declining interest rates and a strong consumer confidence report. After the close, Bank of America said it bought about 160,000 DaimlerChrysler AG credit-card accounts for an undisclosed price, Bloomberg reported. Former President Clinton's memoir has sold almost 1 million copies, CNN reported. Carlyle Group and Providence Equity Partners will each buy a 27% stake in PanAmSat for about $953 million, or a total of $1.9 billion, Bloomberg said. The U.S. will begin talks tomorrow at the UN on a resolution to disarm the Arab Janjaweed militias accused of atrocities against black Africans in Sudan's Darfur region, Bloomberg reported. Crude oil in New York fell to the lowest price in almost three months on optimism over Iraq and increasing production for OPEC, Bloomberg reported. Research In Motion, the maker of BlackBerry e-mail pagers, reported sales more than doubled to $269 million form $104.5 million, topping estimates, Bloomberg said. The U.S. Financial Accounting Standards Board may consider delaying for as much as a year a rule requiring stock options to be expensed, Bloomberg reported.
BOTTOM LINE: The Portfolio finished higher today and I added a few new technology longs in the afternoon, leaving the Portfolio with 150% net long market exposure. One of my new longs is MOT and I am using a stop-loss of $17.75 on this position. The fact that interest rates fell on a much better-than-expected consumer confidence reading is very positive. Moreover, crude oil has fallen 14% from its recent highs in a very short period of time. Finally, stocks are responding very well to good news as evidenced by the after-hours action in ESIO and RIMM. I continue to expect a move higher in the major U.S. indices by week's end on an increase in volume.
Mid-day Update
S&P 500 1,136.38 +.27%
NASDAQ 2,031.00 +.55%
Leading Sectors
Broadband +2.0%
Iron/Steel +1.75%
Disk Drives +1.74%
Lagging Sectors
Homebuilders -.51%
Utilities -.69%
Retail -2.17%
Other
Crude Oil 36.01 -.63%
Natural Gas 6.12 -1.14%
Gold 392.60 -2.14%
Base Metals 108.90 -.47%
U.S. Dollar 89.23 +.56%
10-Yr. T-note Yield 4.70% -.63%
VIX 15.63 -2.74%
Put/Call .92 +53.33%
NYSE Arms .82 -25.45%
Market Movers
WM -7.07% after lowering 04 earnings forecast substantially on rising mortgage rates.
TGT -4.2% after saying June sales will be "well below" its estimates.
QCOM +4.2% on technical break-out.
AIRT +16.99% after reporting strong 4Q earnings reports.
TZOO +15.0% after saying that its recently launched Newsflash e-mail alert service has proven to be a resounding success with travel providers.
JEC -13.6% after warning of lower-than-expected third-quarter and full-year profits.
Economic Data
Consumer Confidence for June came in at 101.9 versus estimates of 95.0 and a reading of 93.1 in May.
Recommendations
AJG cut to Underweight at JP Morgan. AHC raised to Buy at Deutsche Bank, target $90. PWAV rated Underperform at CSFB, target $7.50. WFII rated Outperform at CSFB, target $11. ATI raised to Sector Outperform at CIBC, target $22. Nile rated Outperform at Thomas Weisel. Goldman Sachs reiterated Outperform on MER, ACS, IP, CAN, AMT, IGT, PG and WFC. Goldman downgraded WM to Underperform. Goldman reiterated Underperform on F. Goldman reiterated Outperform on AV, saying it should be $18 now after NT news. Citi SmithBarney said it is cautious on AAPL near-term, would be buyers under $30.
Mid-day News
U.S. stocks are higher mid-day on a strong consumer sentiment report, declining interest rates and falling oil prices. Consumer confidence in the U.S. economy surged in June to the highest level in 2 years, spurred by the addition of 1.2 million new jobs this year, rising incomes and falling gasoline prices, Bloomberg reported. Microsoft will offer a streamlined version of its database and developer tools in a bid to attract nonprofessional software developers, the NY Times reported. Repairing botched cosmetic dentistry is a $10 billion industry in the U.S. the Wall Street Journal reported. New York City education officials said they removed 45 school principals for poor performance during the past academic year, the NY Times reported. Frontier Air and Northwest Air are ending intrusions into each other's flight routes, the Rocky Mountain News reported. Democratic Governor McGreevey yesterday signed into law a bill that imposes a 41% tax increase on income exceeding $500,000, affecting about 35,000 residents, the Star-Ledger reported. California Governor Schwarzenegger is expected to announce a contract agreement with the prison guards' union that would save the state $100 million during the next 2 years, the San Jose Mercury News reported. Bonds of Tyson Foods and other U.S. beef processors are weakening after the U.S. said yesterday a mad-cow screening test was positive and may indicate the second case since December, Bloomberg said. Crude oil futures tumbles to a nine-week low in London on indications supplies from OPEC are growing as Iraq takes control of its oil, easing concern pipelines there will be attacked, Bloomberg reported. Iraq's new government said it will get legal custody of Saddam Hussein tomorrow, Bloomberg said. Nortel said Flextronics agreed to buy its factories in Canada and Brazil for about $675 million to $725 million in cash, Bloomberg reported. The U.S. Supreme Court suspended enforcement of a federal criminal law that would bar commercial Web sites from making pornography available to children, Bloomberg reported. Siebel Systems faces a lawsuit by the SEC who says executives violated Red FD, Bloomberg reported.
BOTTOM LINE: The Portfolio is having a good day today as my internet and telecom equipment longs are rising substantially. I added a few new gaming, semi equipment, manufacturing and machinery longs this morning, leaving the Portfolio with 125% net long market exposure. One of my new longs is FLEX and I am using a stop-loss of $15.25 on the position. It is good to see that the very good news on the U.S. economy is finally starting to gain recognition with consumers, notwithstanding the media's intense focus on negativity. As well, it is positive that the Put/Call ratio is rising substantially today ahead of tomorrow's rate-hike. I expect U.S. stocks to rise modestly into the close on short-covering, falling interest rates and quarter-end repositioning.
NASDAQ 2,031.00 +.55%
Leading Sectors
Broadband +2.0%
Iron/Steel +1.75%
Disk Drives +1.74%
Lagging Sectors
Homebuilders -.51%
Utilities -.69%
Retail -2.17%
Other
Crude Oil 36.01 -.63%
Natural Gas 6.12 -1.14%
Gold 392.60 -2.14%
Base Metals 108.90 -.47%
U.S. Dollar 89.23 +.56%
10-Yr. T-note Yield 4.70% -.63%
VIX 15.63 -2.74%
Put/Call .92 +53.33%
NYSE Arms .82 -25.45%
Market Movers
WM -7.07% after lowering 04 earnings forecast substantially on rising mortgage rates.
TGT -4.2% after saying June sales will be "well below" its estimates.
QCOM +4.2% on technical break-out.
AIRT +16.99% after reporting strong 4Q earnings reports.
TZOO +15.0% after saying that its recently launched Newsflash e-mail alert service has proven to be a resounding success with travel providers.
JEC -13.6% after warning of lower-than-expected third-quarter and full-year profits.
Economic Data
Consumer Confidence for June came in at 101.9 versus estimates of 95.0 and a reading of 93.1 in May.
Recommendations
AJG cut to Underweight at JP Morgan. AHC raised to Buy at Deutsche Bank, target $90. PWAV rated Underperform at CSFB, target $7.50. WFII rated Outperform at CSFB, target $11. ATI raised to Sector Outperform at CIBC, target $22. Nile rated Outperform at Thomas Weisel. Goldman Sachs reiterated Outperform on MER, ACS, IP, CAN, AMT, IGT, PG and WFC. Goldman downgraded WM to Underperform. Goldman reiterated Underperform on F. Goldman reiterated Outperform on AV, saying it should be $18 now after NT news. Citi SmithBarney said it is cautious on AAPL near-term, would be buyers under $30.
Mid-day News
U.S. stocks are higher mid-day on a strong consumer sentiment report, declining interest rates and falling oil prices. Consumer confidence in the U.S. economy surged in June to the highest level in 2 years, spurred by the addition of 1.2 million new jobs this year, rising incomes and falling gasoline prices, Bloomberg reported. Microsoft will offer a streamlined version of its database and developer tools in a bid to attract nonprofessional software developers, the NY Times reported. Repairing botched cosmetic dentistry is a $10 billion industry in the U.S. the Wall Street Journal reported. New York City education officials said they removed 45 school principals for poor performance during the past academic year, the NY Times reported. Frontier Air and Northwest Air are ending intrusions into each other's flight routes, the Rocky Mountain News reported. Democratic Governor McGreevey yesterday signed into law a bill that imposes a 41% tax increase on income exceeding $500,000, affecting about 35,000 residents, the Star-Ledger reported. California Governor Schwarzenegger is expected to announce a contract agreement with the prison guards' union that would save the state $100 million during the next 2 years, the San Jose Mercury News reported. Bonds of Tyson Foods and other U.S. beef processors are weakening after the U.S. said yesterday a mad-cow screening test was positive and may indicate the second case since December, Bloomberg said. Crude oil futures tumbles to a nine-week low in London on indications supplies from OPEC are growing as Iraq takes control of its oil, easing concern pipelines there will be attacked, Bloomberg reported. Iraq's new government said it will get legal custody of Saddam Hussein tomorrow, Bloomberg said. Nortel said Flextronics agreed to buy its factories in Canada and Brazil for about $675 million to $725 million in cash, Bloomberg reported. The U.S. Supreme Court suspended enforcement of a federal criminal law that would bar commercial Web sites from making pornography available to children, Bloomberg reported. Siebel Systems faces a lawsuit by the SEC who says executives violated Red FD, Bloomberg reported.
BOTTOM LINE: The Portfolio is having a good day today as my internet and telecom equipment longs are rising substantially. I added a few new gaming, semi equipment, manufacturing and machinery longs this morning, leaving the Portfolio with 125% net long market exposure. One of my new longs is FLEX and I am using a stop-loss of $15.25 on the position. It is good to see that the very good news on the U.S. economy is finally starting to gain recognition with consumers, notwithstanding the media's intense focus on negativity. As well, it is positive that the Put/Call ratio is rising substantially today ahead of tomorrow's rate-hike. I expect U.S. stocks to rise modestly into the close on short-covering, falling interest rates and quarter-end repositioning.
Tuesday Watch
Earnings of Note
Company/Estimate
AM/.33
ESIO/.19
MKC/.29
Splits
None of note.
Economic Data
Consumer Confidence for June estimated at 95.0 versus 93.2 in May.
Recommendations
Goldman Sachs made positive comments on Lodging sector, saying current trends suggest Europe is beginning to recover and will act as a 'turbocharger' to the incredible strength in the U.S, favorites are HOT, FS and MAR. Goldman reiterated Buy on ITT, GDT, INTC, KO and STZ. Goldman reiterated Underperform on PBG and RKY.
Late-Night News
Asian indices are quietly mixed as strength in Korea is being offset by weakness in Hong Kong. Infineon Technologies AG and Nanya Technology are building the world's largest semiconductor plant that makes chips on 12-inch silicon wafers, the Economic Daily News reported. Grey Global might be an attractive takeover target for France's Publicis Groupe, the Wall Street Journal reported. General Electric is negotiating with Chinese suppliers to build locomotives in the country, China Daily reported. The Bush administration resumed direct diplomatic relations with Libya, ending 24 years of estrangement, Bloomberg said. Softbank, Japan's second-largest provider of high-speed Internet service, is starting a $250 million venture capital fund that will invest in similar companies based in the U.S. Hong Kong had its long-term debt rating outlook raised to stable from negative by S&P's Ratings Services, which cited improved prospects for the city to overcome its budget deficits. Gross revenue at the top 100 U.S. law firms rose 9.5% to $41.7 billion, aided by lawsuits, corporate work, increased billing rates and overhead management, the Wall Street Journal said.
Late-Night Trading
Asian Indices are -.50 to +.25% on average.
S&P 500 indicated -.03%.
NASDAQ 100 indicated +.17%.
BOTTOM LINE: I expect U.S. stocks to open mixed on falling oil prices and interest rate worries. It is unlikely the market will move substantially tomorrow ahead of events later in the week. The Portfolio is 100% net long heading into tomorrow.
Company/Estimate
AM/.33
ESIO/.19
MKC/.29
Splits
None of note.
Economic Data
Consumer Confidence for June estimated at 95.0 versus 93.2 in May.
Recommendations
Goldman Sachs made positive comments on Lodging sector, saying current trends suggest Europe is beginning to recover and will act as a 'turbocharger' to the incredible strength in the U.S, favorites are HOT, FS and MAR. Goldman reiterated Buy on ITT, GDT, INTC, KO and STZ. Goldman reiterated Underperform on PBG and RKY.
Late-Night News
Asian indices are quietly mixed as strength in Korea is being offset by weakness in Hong Kong. Infineon Technologies AG and Nanya Technology are building the world's largest semiconductor plant that makes chips on 12-inch silicon wafers, the Economic Daily News reported. Grey Global might be an attractive takeover target for France's Publicis Groupe, the Wall Street Journal reported. General Electric is negotiating with Chinese suppliers to build locomotives in the country, China Daily reported. The Bush administration resumed direct diplomatic relations with Libya, ending 24 years of estrangement, Bloomberg said. Softbank, Japan's second-largest provider of high-speed Internet service, is starting a $250 million venture capital fund that will invest in similar companies based in the U.S. Hong Kong had its long-term debt rating outlook raised to stable from negative by S&P's Ratings Services, which cited improved prospects for the city to overcome its budget deficits. Gross revenue at the top 100 U.S. law firms rose 9.5% to $41.7 billion, aided by lawsuits, corporate work, increased billing rates and overhead management, the Wall Street Journal said.
Late-Night Trading
Asian Indices are -.50 to +.25% on average.
S&P 500 indicated -.03%.
NASDAQ 100 indicated +.17%.
BOTTOM LINE: I expect U.S. stocks to open mixed on falling oil prices and interest rate worries. It is unlikely the market will move substantially tomorrow ahead of events later in the week. The Portfolio is 100% net long heading into tomorrow.
Monday, June 28, 2004
Monday Close
S&P 500 1,133.52 -.08%
NASDAQ 2,019.82 -.28%
Leading Sectors
Broadcasting +1.82%
Fashion +.96%
Airlines +.68%
Lagging Sectors
Oil Service -2.16%
Disk Drives -2.41%
Homebuilders -2.94%
Other
Crude Oil 36.19 -.14%
Natural Gas 6.22 +.39%
Gold 401.60 +.07%
Base Metals 109.41 -.07%
U.S. Dollar 88.70 -.19%
10-Yr. T-note Yield 4.74% +2.10%
VIX 16.07 +5.79%
Put/Call .60 -9.09%
NYSE Arms 1.10 -14.06%
After-hours Movers
NYB +7.07% on speculation over Citigroup takeover.
WM -9.9% after lowering 04 earnings forecast substantially on rising mortgage rates.
Recommendations
Goldman Sachs reiterated Underperform on FRX. Goldman reiterated Outperform on FS and IGT. A recent survey by Bank of America showed spending for business application software will increase over the next 6-12 months.
After-hours News
U.S. stocks finished slightly lower today on profit-taking after an early handover of power to Iraq and rising interest rates. After the close, New York Community Bancorp is close to an agreement to sell itself for around $6 billion, CNBC reported. General Motors said its U.S. sales this month are falling short of its expectations because of lagging customer demand, Bloomberg said. U.S regulators approved leeches for restoring circulation in blocked veins by removing pooled blood, the first FDA sanction for a treatment used for thousands of years, Bloomberg said. T-Mobile has asked mobile operators and handset manufactures to adopt a standard platform for the mobile music market, the Financial Times said. Target says its same-store-sales for June will come in well below its 5-7% forecast, Bloomberg reported.
BOTTOM LINE: The Portfolio finished substantially higher today and I took more profits in the afternoon and added to my oil service shorts, leaving the Portfolio with 100% net long market exposure. I added to my PTEN short and I am maintaining a $33.80 stop-loss on this position. The action in the bond market was disappointing today, however I do not expect a substantial rise in yields for the remainder of the week. I continue to expect a strong finish to the week for U.S. stocks on the Fed rate-hike, declining energy prices, quarter-end repositioning and positive economic reports.
NASDAQ 2,019.82 -.28%
Leading Sectors
Broadcasting +1.82%
Fashion +.96%
Airlines +.68%
Lagging Sectors
Oil Service -2.16%
Disk Drives -2.41%
Homebuilders -2.94%
Other
Crude Oil 36.19 -.14%
Natural Gas 6.22 +.39%
Gold 401.60 +.07%
Base Metals 109.41 -.07%
U.S. Dollar 88.70 -.19%
10-Yr. T-note Yield 4.74% +2.10%
VIX 16.07 +5.79%
Put/Call .60 -9.09%
NYSE Arms 1.10 -14.06%
After-hours Movers
NYB +7.07% on speculation over Citigroup takeover.
WM -9.9% after lowering 04 earnings forecast substantially on rising mortgage rates.
Recommendations
Goldman Sachs reiterated Underperform on FRX. Goldman reiterated Outperform on FS and IGT. A recent survey by Bank of America showed spending for business application software will increase over the next 6-12 months.
After-hours News
U.S. stocks finished slightly lower today on profit-taking after an early handover of power to Iraq and rising interest rates. After the close, New York Community Bancorp is close to an agreement to sell itself for around $6 billion, CNBC reported. General Motors said its U.S. sales this month are falling short of its expectations because of lagging customer demand, Bloomberg said. U.S regulators approved leeches for restoring circulation in blocked veins by removing pooled blood, the first FDA sanction for a treatment used for thousands of years, Bloomberg said. T-Mobile has asked mobile operators and handset manufactures to adopt a standard platform for the mobile music market, the Financial Times said. Target says its same-store-sales for June will come in well below its 5-7% forecast, Bloomberg reported.
BOTTOM LINE: The Portfolio finished substantially higher today and I took more profits in the afternoon and added to my oil service shorts, leaving the Portfolio with 100% net long market exposure. I added to my PTEN short and I am maintaining a $33.80 stop-loss on this position. The action in the bond market was disappointing today, however I do not expect a substantial rise in yields for the remainder of the week. I continue to expect a strong finish to the week for U.S. stocks on the Fed rate-hike, declining energy prices, quarter-end repositioning and positive economic reports.
Mid-day Update
S&P 500 1,141.52 +.64%
NASDAQ 2,037.69 +.61%
Leading Sectors
Airlines +3.05%
Broadcasting +1.92%
Internet +1.47%
Lagging Sectors
Homebuilders -1.34%
Disk Drives -1.44%
Oil Service -1.85%
Other
Crude Oil 36.18 -3.65%
Natural Gas 6.20 -2.41%
Gold 400.30 -.74%
Base Metals 109.41 -.07%
U.S. Dollar 88.83 -.05%
10-Yr. T-note Yield 4.71% +1.45%
VIX 15.21 +.13%
Put/Call .53 -19.70%
NYSE Arms .80 -37.50%
Market Movers
TASR +12.2% after saying the Dayton, Ohio Police placed a $436,000 order for the company's stun gun.
WPI -15.3% after cutting second-quarter sales and profit estimates after prices fell and a new birth-control pill was delayed and multiple downgrades.
MO +5.3% after a federal judge cleared the way for major U.S. cigarette makers to file a pre-trial appeal aimed at blocking a $280 billion fraud claim by the U.S. Department of Justice.
CCI -9.7% after saying National Grid Transco, Britain's power grid manager, agreed to buy the U.K. transmission towers of CCI for $2.04 billion.
TZOO +23.2% on short-covering and strength in Internet shares.
ATI +11.9% after saying it will have its first profit in more than two years, helped by a drop in retiree benefit costs and higher demand for flat-rolled stainless steel.
Economic Data
Personal Income rose .6% in May versus estimates of a .5% rise and a .6% increase in April.
Personal Spending rose 1.0% in May versus estimates of a .8% rise and a .2% increase in April.
PCE Deflator (YOY) for May rose 2.5% versus estimates of a 2.2% rise and a 2.0% increase in April.
Recommendations
ELP cut to Underweight at Morgan Stanley. WFMI rated Outperform at Prudential, target $105. TQNT cut to Underweight at Lehman, target $4. GENZ raised to Overweight at Lehman, target $54. FOX raised to Buy at Oppenheimer, target $32. WPI cut to Underweight at JP Morgan. Citi SmithBarney says to Buy JCP today, target $50. Citi also said to Buy IR, target $83. Citi reiterated Buy on CEY, target $44. Citi reiterated Sell on GDT, target $53. Goldman Sachs reiterated Outperform on BIIB, MUR, PXD, AMT and PPL.
Mid-day News
U.S. stocks are higher mid-day as falling oil prices and developments in Iraq boost investor spirits. The U.S.-led coalition formally ended its occupation of Iraq today by handing sovereignty to an interim Iraqi government ahead of schedule, Bloomberg reported. U.S. personal spending rose 1.0% in May, the biggest increase since 2001, as purchases of automobiles and other durable goods accelerated. A measure of prices tied to spending increased the most since 1990, reflecting higher fuel costs, Bloomberg reported. U.S. college students at public universities are spending almost a third less on tuition than they did in 1998, as new federal tax breaks and an increase in state and federal grants help ease education costs, USA Today reported. OAO Lukoil, Russia's biggest oil producer, plans to start crude-oil production in Iraq in 2005, Interfax news service reported. U.S. cable companies are developing new systems that ultimately may enable national television broadcasts to include different commercials aimed at varying audience groups, the NY Times reported. Sun Microsystems will unveil partnerships today meant to bolster the company's position in the mobile Internet business, the NY Times said. AOL won a patent for software that allows people to send instant messages or enter chat rooms while watching TV, the NY Times reported. Governor Schwarzenegger struck a deal with the California State Employees Association that would let the sate borrow almost $1 billion to balance the state's budget, the LA Times reported. Crude oil futures plunged to a two-month low after the U.S.-led coalition handed sovereignty to Iraq ahead of schedule, tempering concern that terrorists would disrupt the country's petroleum operations, Bloomberg reported. Wal-Mart said June sales will increase 2-4%, less than its original forecast, Bloomberg said. United Airlines was turned down for a federal loan guarantee and told it can't reapply, Bloomberg said. Cattle futures plunged the maximum allowed by the CME after the U.S. said a mad-cow screening test was positive, Bloomberg reported.
BOTTOM LINE: The Portfolio is having a very good day today as my security, internet and biotech longs are rising substantially and my oil service shorts are falling. I took profits in a few stocks from various sectors this morning, leaving the Portfolio with 125% net long market exposure. I expect U.S. equities to trade neutral to higher before a more substantial upwards move begins later in the week. Oil should continue to fall throughout the week and interest rates will likely rise modestly on more strong economic reports.
NASDAQ 2,037.69 +.61%
Leading Sectors
Airlines +3.05%
Broadcasting +1.92%
Internet +1.47%
Lagging Sectors
Homebuilders -1.34%
Disk Drives -1.44%
Oil Service -1.85%
Other
Crude Oil 36.18 -3.65%
Natural Gas 6.20 -2.41%
Gold 400.30 -.74%
Base Metals 109.41 -.07%
U.S. Dollar 88.83 -.05%
10-Yr. T-note Yield 4.71% +1.45%
VIX 15.21 +.13%
Put/Call .53 -19.70%
NYSE Arms .80 -37.50%
Market Movers
TASR +12.2% after saying the Dayton, Ohio Police placed a $436,000 order for the company's stun gun.
WPI -15.3% after cutting second-quarter sales and profit estimates after prices fell and a new birth-control pill was delayed and multiple downgrades.
MO +5.3% after a federal judge cleared the way for major U.S. cigarette makers to file a pre-trial appeal aimed at blocking a $280 billion fraud claim by the U.S. Department of Justice.
CCI -9.7% after saying National Grid Transco, Britain's power grid manager, agreed to buy the U.K. transmission towers of CCI for $2.04 billion.
TZOO +23.2% on short-covering and strength in Internet shares.
ATI +11.9% after saying it will have its first profit in more than two years, helped by a drop in retiree benefit costs and higher demand for flat-rolled stainless steel.
Economic Data
Personal Income rose .6% in May versus estimates of a .5% rise and a .6% increase in April.
Personal Spending rose 1.0% in May versus estimates of a .8% rise and a .2% increase in April.
PCE Deflator (YOY) for May rose 2.5% versus estimates of a 2.2% rise and a 2.0% increase in April.
Recommendations
ELP cut to Underweight at Morgan Stanley. WFMI rated Outperform at Prudential, target $105. TQNT cut to Underweight at Lehman, target $4. GENZ raised to Overweight at Lehman, target $54. FOX raised to Buy at Oppenheimer, target $32. WPI cut to Underweight at JP Morgan. Citi SmithBarney says to Buy JCP today, target $50. Citi also said to Buy IR, target $83. Citi reiterated Buy on CEY, target $44. Citi reiterated Sell on GDT, target $53. Goldman Sachs reiterated Outperform on BIIB, MUR, PXD, AMT and PPL.
Mid-day News
U.S. stocks are higher mid-day as falling oil prices and developments in Iraq boost investor spirits. The U.S.-led coalition formally ended its occupation of Iraq today by handing sovereignty to an interim Iraqi government ahead of schedule, Bloomberg reported. U.S. personal spending rose 1.0% in May, the biggest increase since 2001, as purchases of automobiles and other durable goods accelerated. A measure of prices tied to spending increased the most since 1990, reflecting higher fuel costs, Bloomberg reported. U.S. college students at public universities are spending almost a third less on tuition than they did in 1998, as new federal tax breaks and an increase in state and federal grants help ease education costs, USA Today reported. OAO Lukoil, Russia's biggest oil producer, plans to start crude-oil production in Iraq in 2005, Interfax news service reported. U.S. cable companies are developing new systems that ultimately may enable national television broadcasts to include different commercials aimed at varying audience groups, the NY Times reported. Sun Microsystems will unveil partnerships today meant to bolster the company's position in the mobile Internet business, the NY Times said. AOL won a patent for software that allows people to send instant messages or enter chat rooms while watching TV, the NY Times reported. Governor Schwarzenegger struck a deal with the California State Employees Association that would let the sate borrow almost $1 billion to balance the state's budget, the LA Times reported. Crude oil futures plunged to a two-month low after the U.S.-led coalition handed sovereignty to Iraq ahead of schedule, tempering concern that terrorists would disrupt the country's petroleum operations, Bloomberg reported. Wal-Mart said June sales will increase 2-4%, less than its original forecast, Bloomberg said. United Airlines was turned down for a federal loan guarantee and told it can't reapply, Bloomberg said. Cattle futures plunged the maximum allowed by the CME after the U.S. said a mad-cow screening test was positive, Bloomberg reported.
BOTTOM LINE: The Portfolio is having a very good day today as my security, internet and biotech longs are rising substantially and my oil service shorts are falling. I took profits in a few stocks from various sectors this morning, leaving the Portfolio with 125% net long market exposure. I expect U.S. equities to trade neutral to higher before a more substantial upwards move begins later in the week. Oil should continue to fall throughout the week and interest rates will likely rise modestly on more strong economic reports.
Monday Watch
Earnings of Note
Company/Estimate
SONC/.31
PKE/.23
Splits
MOV 2-for-1
Economic Data
Personal Income for May estimated to rise .5% versus a .6% rise in April.
Personal Spending for May estimated to rise .8% versus a .3% rise in April.
PCE Deflator (YOY) for May estimated to increase 2.2% versus a 1.9% rise in April.
Weekend Recommendations
Forbes on Fox had guests that were positive on MSFT, AMTD, HYSL, ADP, COP and mixed on HB. Bulls and Bears had guests that were positive on DE, MMC and mixed on RYVNX, BA, WMT and CX. Cashin' In had guests that were positive on MMM and mixed on AIB, STRA, MSFT, IHG, HDI and WMT. Louis Rukeyser's Wall Street had guests that were positive on TXN, EOG, SSL, TWP, WPI, PGN and SPLS. Wall St. Week w/Fortune did not have any stock recommendations. Barron's had positive comments on HNZ, TEU, ACTU, BYD, HD, BBBY, STN, CHS, COH, YHOO and WSM. Goldman Sachs reiterated Outperform on HD, ADP, MMP and PAYX. InformationWeek has a positive article on CSCO.
Weekend News
Iraqi militia fighters and clerics who oppose the U.S. presence in their country expressed disgust at the recent wave of violence by foreign insurgents that has killed Iraqis, the Washington Post reported. President Bush said the European Union statement endorsing Iraq's interim government and a pledge to help the country realize democracy represent an important step forward as Iraq prepares for free elections in January, Bloomberg reported. State Farm Mutual Automobile Insurance, United Services Automobile Association and Farmers Group are lowering car insurance premiums in many U.S. states, and may be joined by dozens of other insurers, the NY Times reported. Violence in Iraq may ease in the run up to elections in January as local security forces begin to take over from U.S. and British troops and people feel they can express their feelings democratically rather than through violence, the U.K.'s top representative said. The Green Party chose a California lawyer to be its presidential candidate instead of Ralph Nader, the LA Times reported. Teresa Heinz Kerry, wife of Senator John Kerry, controls a family fortune worth an estimated $1 billion, the LA Times reported. New Jersey next week will become the second state after New York to ban drivers from using hand-held cellular phones, the Newark Star-Ledger reported. Former President Clinton and Senator Ted Kennedy will get prime-time speaking spots next month at the Democratic National Convention, the LA Times reported. Senator John McCain, California Governor Schwarzenegger and former New York City Mayor Rudolph Giuliani will deliver key prime-time speeches at this summer's Republican convention, the NY Times said. Microsoft has teamed up with Sichuan Changhong Electric in southwestern China to develop digital home appliances, said Shanghai Securities News. Crude oil futures fell in New York on expectations the end of a strike in Norway and the restoration of exports from Iraq will add to U.S. supplies that are already higher than year-ago levels, Bloomberg said. The San Francisco Chronicle has an interesting editorial on the U.N. Oil-for-food scandal.
Late-Night Trading
Asian indices are mixed, -1.25% to +.50% on average.
S&P 500 indicated +.29%.
NASDAQ 100 indicated +.07%.
BOTTOM LINE: I expect U.S. stocks to open modestly higher tomorrow on falling oil prices and Middle East violence commensurate with market expectations, before the handover of power to Iraq on Wednesday. The Portfolio is 150% net long heading into tomorrow.
Company/Estimate
SONC/.31
PKE/.23
Splits
MOV 2-for-1
Economic Data
Personal Income for May estimated to rise .5% versus a .6% rise in April.
Personal Spending for May estimated to rise .8% versus a .3% rise in April.
PCE Deflator (YOY) for May estimated to increase 2.2% versus a 1.9% rise in April.
Weekend Recommendations
Forbes on Fox had guests that were positive on MSFT, AMTD, HYSL, ADP, COP and mixed on HB. Bulls and Bears had guests that were positive on DE, MMC and mixed on RYVNX, BA, WMT and CX. Cashin' In had guests that were positive on MMM and mixed on AIB, STRA, MSFT, IHG, HDI and WMT. Louis Rukeyser's Wall Street had guests that were positive on TXN, EOG, SSL, TWP, WPI, PGN and SPLS. Wall St. Week w/Fortune did not have any stock recommendations. Barron's had positive comments on HNZ, TEU, ACTU, BYD, HD, BBBY, STN, CHS, COH, YHOO and WSM. Goldman Sachs reiterated Outperform on HD, ADP, MMP and PAYX. InformationWeek has a positive article on CSCO.
Weekend News
Iraqi militia fighters and clerics who oppose the U.S. presence in their country expressed disgust at the recent wave of violence by foreign insurgents that has killed Iraqis, the Washington Post reported. President Bush said the European Union statement endorsing Iraq's interim government and a pledge to help the country realize democracy represent an important step forward as Iraq prepares for free elections in January, Bloomberg reported. State Farm Mutual Automobile Insurance, United Services Automobile Association and Farmers Group are lowering car insurance premiums in many U.S. states, and may be joined by dozens of other insurers, the NY Times reported. Violence in Iraq may ease in the run up to elections in January as local security forces begin to take over from U.S. and British troops and people feel they can express their feelings democratically rather than through violence, the U.K.'s top representative said. The Green Party chose a California lawyer to be its presidential candidate instead of Ralph Nader, the LA Times reported. Teresa Heinz Kerry, wife of Senator John Kerry, controls a family fortune worth an estimated $1 billion, the LA Times reported. New Jersey next week will become the second state after New York to ban drivers from using hand-held cellular phones, the Newark Star-Ledger reported. Former President Clinton and Senator Ted Kennedy will get prime-time speaking spots next month at the Democratic National Convention, the LA Times reported. Senator John McCain, California Governor Schwarzenegger and former New York City Mayor Rudolph Giuliani will deliver key prime-time speeches at this summer's Republican convention, the NY Times said. Microsoft has teamed up with Sichuan Changhong Electric in southwestern China to develop digital home appliances, said Shanghai Securities News. Crude oil futures fell in New York on expectations the end of a strike in Norway and the restoration of exports from Iraq will add to U.S. supplies that are already higher than year-ago levels, Bloomberg said. The San Francisco Chronicle has an interesting editorial on the U.N. Oil-for-food scandal.
Late-Night Trading
Asian indices are mixed, -1.25% to +.50% on average.
S&P 500 indicated +.29%.
NASDAQ 100 indicated +.07%.
BOTTOM LINE: I expect U.S. stocks to open modestly higher tomorrow on falling oil prices and Middle East violence commensurate with market expectations, before the handover of power to Iraq on Wednesday. The Portfolio is 150% net long heading into tomorrow.
Sunday, June 27, 2004
Chart of the Week
Bottom Line: Look for the Morgan Stanley Technology Index to convincingly break out of its recent downtrend and lead the major U.S. indices higher. Technology spending will accelerate is the second-half of this year, earnings estimates are too low and valuations have mostly come down to reasonable levels.
Weekly Outlook
There are a number of important economic reports and a few significant corporate earnings reports scheduled for release this week. Economic reports this week include Personal Income, Personal Spending, Consumer Confidence, Chicago Purchasing Manager, Initial Jobless Claims, Construction Spending, ISM Manufacturing, Vehicle Sales, Unemployment Rate, Average Hourly Earnings, Change in Non-farm/Manufacturing Payrolls, Average Weekly Hours and Factory Orders. Consumer Confidence, Chicago Purchasing Manager, ISM Manufacturing, Change in Non-farm Payrolls all have market-moving potential.
McKormick(MKC), Research in Motion(RIMM), Sonic(SONC), Emmis Communications(EMMS), Monsanto(MON), Constellation Brands(STZ), Biomet(BMET), ConAgra(CAG) and General Mills(GIS) are some of the more important companies that release quarterly earnings this week. There are also a couple of other events that have market-moving potential. The FMOC Policy Announcement, end of the quarter repositioning, handover of power to the Iraqi government and the NYSSA Homeland Security Industry Conference will also impact trading this week.
Bottom Line: I expect U.S. stocks to rise this week, possibly by a substantial margin, led by technology shares. The handover of power to the Iraqis, the Fed keeping the word "measured" in its policy statement with respect to the pace of rate-hikes, falling energy prices, the recent decline in interest rates and positive economic reports should provide the catalysts for a good week for U.S. stocks. The AAII % Bulls increased by a substantial amount last week which would normally be a negative. However, I believe that while investors may feel more bullish, they are waiting for the uncertainty surrounding events of the coming week to lift before they actually buy in a significant way.
Here are some of the reasons for my current bullish stance on U.S. stocks:
1)Recently, NASDAQ short interest hit an all-time high and NYSE short interest approached an all-time high, which should result in a significant amount of short-covering in the very near future as fundamentals continue to improve.
2)Interest rates have declined by almost 30 basis points in the last few weeks. The 10-yr T-note is yielding 4.64%, over 40% lower than in 1994.
3)Gas prices have fallen 13% from their recent highs.
4)Inflation for 2004 is set to rise less than the 40-year average of 3.0%.
5)Valuations for most U.S. stocks(S&P 500 04 P/E=17.3, down 66% from peak) are very reasonable given the strong economic backdrop and relatively low interest rate picture.
6)Corporate profits and growth are near all-time highs.
7)Corporate balance sheets are much cleaner and healthier.
8)Executive corruption is down.
9)U.S. and world economic growth are on pace to reach 20-year highs this year.
10)Japan(the world's second largest economy) is contributing meaningfully to world growth for the first time in almost 15 years.
11)China's growth is slowing, but still exceptional.
12)The big picture in Iraq is improving. The cost of the
War in Iraq is set to come in at only 1% of U.S. GDP versus 12% for the Vietnam War, 15% for the Korean War and 130% for WWII.
13)There have been no major terror acts on U.S. soil since 9/11.
14)U.S. home ownership is at all-time highs.
15)American's are the wealthiest in U.S. history. Moreover, 1 out of every 125 are now millionaires, even excluding home equity.
16)Job opportunities and wages are improving substantially. 1.2 million jobs have been created in the last 6 months.
17)The Unemployment rate is lower than the average rate over any 10-year period during the last 40 years.
18)The Budget Deficit will come in significantly below estimates for 2004 as substantial economic growth increases incomes and profits, resulting in increased government tax receipts.
19)Consumer sentiment is improving with job gains and income growth.
20)U.S. manufacturing, which has been in a depression for many years, is rebounding at one of the fastest paces on record.
21)Corporate spending on services and equipment is on the rise for the first time in several years.
22)Consumers are continuing to spend at a very healthy rate.
23)The massive overcapacity, in many sectors, generated during the Internet bubble is almost burned off.
24)Current U.S economic growth is the result of real companies with real business models generating real profits. During the Internet bubble, companies with poor management teams, flawed business models, corrupt accounting and no profits were artificially inflating economic growth.
25)Stock market internals are rapidly improving.
Finally, my short-term trading indicators are giving buy signals and the Portfolio is 150% net long heading into the week.
McKormick(MKC), Research in Motion(RIMM), Sonic(SONC), Emmis Communications(EMMS), Monsanto(MON), Constellation Brands(STZ), Biomet(BMET), ConAgra(CAG) and General Mills(GIS) are some of the more important companies that release quarterly earnings this week. There are also a couple of other events that have market-moving potential. The FMOC Policy Announcement, end of the quarter repositioning, handover of power to the Iraqi government and the NYSSA Homeland Security Industry Conference will also impact trading this week.
Bottom Line: I expect U.S. stocks to rise this week, possibly by a substantial margin, led by technology shares. The handover of power to the Iraqis, the Fed keeping the word "measured" in its policy statement with respect to the pace of rate-hikes, falling energy prices, the recent decline in interest rates and positive economic reports should provide the catalysts for a good week for U.S. stocks. The AAII % Bulls increased by a substantial amount last week which would normally be a negative. However, I believe that while investors may feel more bullish, they are waiting for the uncertainty surrounding events of the coming week to lift before they actually buy in a significant way.
Here are some of the reasons for my current bullish stance on U.S. stocks:
1)Recently, NASDAQ short interest hit an all-time high and NYSE short interest approached an all-time high, which should result in a significant amount of short-covering in the very near future as fundamentals continue to improve.
2)Interest rates have declined by almost 30 basis points in the last few weeks. The 10-yr T-note is yielding 4.64%, over 40% lower than in 1994.
3)Gas prices have fallen 13% from their recent highs.
4)Inflation for 2004 is set to rise less than the 40-year average of 3.0%.
5)Valuations for most U.S. stocks(S&P 500 04 P/E=17.3, down 66% from peak) are very reasonable given the strong economic backdrop and relatively low interest rate picture.
6)Corporate profits and growth are near all-time highs.
7)Corporate balance sheets are much cleaner and healthier.
8)Executive corruption is down.
9)U.S. and world economic growth are on pace to reach 20-year highs this year.
10)Japan(the world's second largest economy) is contributing meaningfully to world growth for the first time in almost 15 years.
11)China's growth is slowing, but still exceptional.
12)The big picture in Iraq is improving. The cost of the
War in Iraq is set to come in at only 1% of U.S. GDP versus 12% for the Vietnam War, 15% for the Korean War and 130% for WWII.
13)There have been no major terror acts on U.S. soil since 9/11.
14)U.S. home ownership is at all-time highs.
15)American's are the wealthiest in U.S. history. Moreover, 1 out of every 125 are now millionaires, even excluding home equity.
16)Job opportunities and wages are improving substantially. 1.2 million jobs have been created in the last 6 months.
17)The Unemployment rate is lower than the average rate over any 10-year period during the last 40 years.
18)The Budget Deficit will come in significantly below estimates for 2004 as substantial economic growth increases incomes and profits, resulting in increased government tax receipts.
19)Consumer sentiment is improving with job gains and income growth.
20)U.S. manufacturing, which has been in a depression for many years, is rebounding at one of the fastest paces on record.
21)Corporate spending on services and equipment is on the rise for the first time in several years.
22)Consumers are continuing to spend at a very healthy rate.
23)The massive overcapacity, in many sectors, generated during the Internet bubble is almost burned off.
24)Current U.S economic growth is the result of real companies with real business models generating real profits. During the Internet bubble, companies with poor management teams, flawed business models, corrupt accounting and no profits were artificially inflating economic growth.
25)Stock market internals are rapidly improving.
Finally, my short-term trading indicators are giving buy signals and the Portfolio is 150% net long heading into the week.
Market Week in Review
S&P 500 1,134.43 -.05%
U.S. indices finished mixed last week on a good pick-up in volume as technology shares outperformed substantially, offsetting declines in healthcare-related stocks. Stocks fell slightly on Monday, led lower by healthcare and energy-related shares. A mid-week rally began Tuesday, led by technology stocks, after SBC Communications announced a $6 billion capital spending spree to build a new fiber optic network. As well, the very successful IPO of Salesforce.com(CRM) boosted sentiment towards technology stocks. Finally, falling interest rates, increasing merger activity, strong corporate earnings reports and declining energy prices also spurred investor enthusiasm mid-week. The week ended on a mixed note as violence in the Middle East prevented investors from bidding shares higher in advance of the coming week's Iraqi handover of power. Moreover, the Russell rebalancing, end of the quarter repositioning and imminent Fed rate-hike continued to weigh on investors' psyche at week's end.
There were several notable movers last week. Shares of Taser International(TASR) rose 63.3% after boosting 04 annual revenue growth from 100% to 150% and speculation over a deal with Sharper Image to sell a personal version of its stun gun. NVE Corp.(NVEC) rose 46.7% after receiving a new patent on an innovative type of MRAM. PalmOne(PLMO) gained 62.5% after beating 4Q estimates and raising its 1Q forecast substantially. Dick's Sporting Goods(DKS) increased 14.5% after saying it would purchase Galyan's Trading for $305 million in cash. Career Education(CECO) fell 20.0% after the company said a SEC inquiry was raised to a formal investigation. Orasure Technologies(OSUR) gained 24.7% after it received FDA approval of it OraQuick Rapid HIV-1/2 Antibody Test. Shares of Performance Food Group(PFGC) fell 19.3% after lowering its second-quarter earnings estimate, saying the distribution of fruit products and retooling plants is costing more than anticipated. Finally, AT&T(T) fell 9.0% after it reduced its 2004 profit and revenue forecasts because it lowered prices to business customers.
Bottom Line: The tone of the market last week was very good, notwithstanding minimal movements in the major averages. The advance/decline line continued to improve and volume increased. Many sectors registered substantial gains with small-cap and technology shares outperforming significantly. According to Thomson First Call, positive-to-negative earnings pre-announcements are running at a record high. This is turning out to be one of the best years in recent history for stock-pickers as the major averages flounder while certain sectors and stocks register significant gains. Last weeks' market action, combined with declining interest rates and energy prices, bodes well for the future.
U.S. indices finished mixed last week on a good pick-up in volume as technology shares outperformed substantially, offsetting declines in healthcare-related stocks. Stocks fell slightly on Monday, led lower by healthcare and energy-related shares. A mid-week rally began Tuesday, led by technology stocks, after SBC Communications announced a $6 billion capital spending spree to build a new fiber optic network. As well, the very successful IPO of Salesforce.com(CRM) boosted sentiment towards technology stocks. Finally, falling interest rates, increasing merger activity, strong corporate earnings reports and declining energy prices also spurred investor enthusiasm mid-week. The week ended on a mixed note as violence in the Middle East prevented investors from bidding shares higher in advance of the coming week's Iraqi handover of power. Moreover, the Russell rebalancing, end of the quarter repositioning and imminent Fed rate-hike continued to weigh on investors' psyche at week's end.
There were several notable movers last week. Shares of Taser International(TASR) rose 63.3% after boosting 04 annual revenue growth from 100% to 150% and speculation over a deal with Sharper Image to sell a personal version of its stun gun. NVE Corp.(NVEC) rose 46.7% after receiving a new patent on an innovative type of MRAM. PalmOne(PLMO) gained 62.5% after beating 4Q estimates and raising its 1Q forecast substantially. Dick's Sporting Goods(DKS) increased 14.5% after saying it would purchase Galyan's Trading for $305 million in cash. Career Education(CECO) fell 20.0% after the company said a SEC inquiry was raised to a formal investigation. Orasure Technologies(OSUR) gained 24.7% after it received FDA approval of it OraQuick Rapid HIV-1/2 Antibody Test. Shares of Performance Food Group(PFGC) fell 19.3% after lowering its second-quarter earnings estimate, saying the distribution of fruit products and retooling plants is costing more than anticipated. Finally, AT&T(T) fell 9.0% after it reduced its 2004 profit and revenue forecasts because it lowered prices to business customers.
Bottom Line: The tone of the market last week was very good, notwithstanding minimal movements in the major averages. The advance/decline line continued to improve and volume increased. Many sectors registered substantial gains with small-cap and technology shares outperforming significantly. According to Thomson First Call, positive-to-negative earnings pre-announcements are running at a record high. This is turning out to be one of the best years in recent history for stock-pickers as the major averages flounder while certain sectors and stocks register significant gains. Last weeks' market action, combined with declining interest rates and energy prices, bodes well for the future.
Saturday, June 26, 2004
Economic Week in Review
ECRI Weekly Leading Index 132.30 -.30%
Durable Goods Orders for May fell 1.6% versus expectations of a 1.5% rise and a 2.6% fall in April. Durable Goods Orders Less Transportation for May fell .7% versus estimates of a 1.3% rise and a decline of 1.7% in April. "There is so much volatility in durable goods orders, and there was so much strength in February and March that it is too soon to say if the declines in April and May are meaningful," said Christopher Low, chief economist at FTN Financial. Company officials "haven't found the gas pedal yet, but they've got their foot off the brake" on spending for new equipment, said John Chambers, CEO of Cisco Systems. However, SBC Communications said it will spend $4-$6 billion over the next five years on building a fiber-optic network that offers digital television service, Bloomberg reported. Tax cuts approved last year included a greater allowance for depreciating investments in equipment, giving companies incentive to accelerate spending this year. This provision is set to expire in 2005, likely resulting in increased corporate spending in the second half of this year, Bloomberg said.
Initial Jobless Claims for last week were 349K versus estimates of 340K and 336K the prior week. Continuing Claims were 2967K versus estimates of 2875K and 2892K prior. The U.S. has added 1.2 million jobs from January through May and the average number of weekly claims this year has fallen to 347,000 from about 402,000 in 2003. "The longer trend is clearly that we're in a self-sustaining recovery, that employment growth will continue but not at the rate of the recent past," said Carl Steen, market analyst at MFR. However, companies may increase wages at an even faster rate as the economy grows, demand for their products continues to be high and the slack in the labor market lessens, Bloomberg reported.
New Home Sales for May were 1369K versus estimates of 1125K and an upwardly revised 1192K in April. The number of homes sold and waiting to be started rose to the second-highest level ever, suggesting builders are struggling to keep up with demand. The new-home sales pace so far this year corresponds with total 2004 sales of 1.343 million houses, which would shatter the record of 1.085 million new homes sold last year, Bloomberg reported. "Our home traffic is very strong, our sales are very strong and we have houses waiting to be started. Our backlog is at an all-time high," said Alan Levan, CEO of Levitt Corp. Furthermore, Levan said interest rates would have to rise another 200 to 300 basis points before borrowing costs started to erode demand. Finally, the inventory of new homes for sale fell to a record-low 3.3 months' supply in May from 3.9 months in April.
Final 1Q Gross Domestic Product rose 3.9% versus estimates of 4.4%. Final 1Q Personal Consumption rose 3.8% versus estimates of 3.9%. Final 1Q GDP Price Deflator rose 2.9% versus estimates of a 2.6% rise. The trade deficit subtracted .7 percentage points from growth, about twice as much as estimated last month. "The trade deficit could be viewed as a sign of strength in demand in the U.S. economy," said Michael Moran, chief economist at Daiwa Securities. The core personal consumption expenditures price index, a favorite measure of inflation watched by Greenspan, rose 2.0%, more than the 1.7% estimated last month.
The Final reading of the University of Michigan Consumer Confidence Index for June came in at 95.6 versus estimates of 95.0 and a 95.2 prior estimate. "Consumer confidence is improving" as some of the negative impact from higher gasoline prices and violence in the Middle East fades, said Wesley Beal, chief economist at IDEAglobal. "The employment recovery will be more than enough to keep consumers spending." The addition of 1.2 million jobs this year is boosting incomes, and retail gasoline prices have fallen the past four weeks, Bloomberg reported.
Existing Home Sales for May came in at 6.8 million versus estimates of 6.5 million and 6.63 million in April. The median price of an existing home climbed 3.6% to $183,600 last month, the highest on record, Bloomberg reported. "With employment picking up, driving personal income, people are certainly going to be able to afford more," said Ellen Beeson, an economist at Bank of Tokyo-Mitsubishi. "The housing markets are very, very healthy," said David Lereah, an economist with the housing association. "People think interest rates are still very reasonable and inventories are very tight," said Daryl Jesperson, chief executive officer of Re/Max International. "The surge in mortgage applications for purchase in the spring points to strength in purchases of existing homes over the next month or two" when those sales close, said Stephen Stanley, chief economist at RBS Greenwhich Capital.
Bottom Line: I believe Durable Goods Orders for May were below-expectations because of the extreme strength earlier in the year. I expect orders accelerated in June. As well, corporate spending on technology should lead the way in the second half of the year. Initial jobless claims were a bit above expectations due to the shortened government work-week and continued re-tooling of major auto plants. Hiring should remain strong throughout the second half of the year as corporate spending accelerates. Home sales continue to defy the bears and skeptics. While interest rates have risen, they are still relatively low by historical standards. Increasing job opportunities and incomes are more than offsetting rates increases. Moreover, Americans are the wealthiest than at any time in U.S. history. As a result, more people are moving from apartments to homes or purchasing second homes for vacation purposes. U.S. economic growth should remain very strong throughout the year as GDP rises at the fastest pace since 1984. Inflation pressures should moderate as the year progresses. Slowing Chinese demand and falling energy prices should help keep inflation relatively subdued throughout the remainder of the year. Inflation is set to rise about 2.4% this year, below the last 40-year average of 3.0%. Consumer confidence should continue to rise and break recent highs, as survey's point to more Americans figuring out how good things are economically, notwithstanding the media's attempts to underreport all positive news.
Durable Goods Orders for May fell 1.6% versus expectations of a 1.5% rise and a 2.6% fall in April. Durable Goods Orders Less Transportation for May fell .7% versus estimates of a 1.3% rise and a decline of 1.7% in April. "There is so much volatility in durable goods orders, and there was so much strength in February and March that it is too soon to say if the declines in April and May are meaningful," said Christopher Low, chief economist at FTN Financial. Company officials "haven't found the gas pedal yet, but they've got their foot off the brake" on spending for new equipment, said John Chambers, CEO of Cisco Systems. However, SBC Communications said it will spend $4-$6 billion over the next five years on building a fiber-optic network that offers digital television service, Bloomberg reported. Tax cuts approved last year included a greater allowance for depreciating investments in equipment, giving companies incentive to accelerate spending this year. This provision is set to expire in 2005, likely resulting in increased corporate spending in the second half of this year, Bloomberg said.
Initial Jobless Claims for last week were 349K versus estimates of 340K and 336K the prior week. Continuing Claims were 2967K versus estimates of 2875K and 2892K prior. The U.S. has added 1.2 million jobs from January through May and the average number of weekly claims this year has fallen to 347,000 from about 402,000 in 2003. "The longer trend is clearly that we're in a self-sustaining recovery, that employment growth will continue but not at the rate of the recent past," said Carl Steen, market analyst at MFR. However, companies may increase wages at an even faster rate as the economy grows, demand for their products continues to be high and the slack in the labor market lessens, Bloomberg reported.
New Home Sales for May were 1369K versus estimates of 1125K and an upwardly revised 1192K in April. The number of homes sold and waiting to be started rose to the second-highest level ever, suggesting builders are struggling to keep up with demand. The new-home sales pace so far this year corresponds with total 2004 sales of 1.343 million houses, which would shatter the record of 1.085 million new homes sold last year, Bloomberg reported. "Our home traffic is very strong, our sales are very strong and we have houses waiting to be started. Our backlog is at an all-time high," said Alan Levan, CEO of Levitt Corp. Furthermore, Levan said interest rates would have to rise another 200 to 300 basis points before borrowing costs started to erode demand. Finally, the inventory of new homes for sale fell to a record-low 3.3 months' supply in May from 3.9 months in April.
Final 1Q Gross Domestic Product rose 3.9% versus estimates of 4.4%. Final 1Q Personal Consumption rose 3.8% versus estimates of 3.9%. Final 1Q GDP Price Deflator rose 2.9% versus estimates of a 2.6% rise. The trade deficit subtracted .7 percentage points from growth, about twice as much as estimated last month. "The trade deficit could be viewed as a sign of strength in demand in the U.S. economy," said Michael Moran, chief economist at Daiwa Securities. The core personal consumption expenditures price index, a favorite measure of inflation watched by Greenspan, rose 2.0%, more than the 1.7% estimated last month.
The Final reading of the University of Michigan Consumer Confidence Index for June came in at 95.6 versus estimates of 95.0 and a 95.2 prior estimate. "Consumer confidence is improving" as some of the negative impact from higher gasoline prices and violence in the Middle East fades, said Wesley Beal, chief economist at IDEAglobal. "The employment recovery will be more than enough to keep consumers spending." The addition of 1.2 million jobs this year is boosting incomes, and retail gasoline prices have fallen the past four weeks, Bloomberg reported.
Existing Home Sales for May came in at 6.8 million versus estimates of 6.5 million and 6.63 million in April. The median price of an existing home climbed 3.6% to $183,600 last month, the highest on record, Bloomberg reported. "With employment picking up, driving personal income, people are certainly going to be able to afford more," said Ellen Beeson, an economist at Bank of Tokyo-Mitsubishi. "The housing markets are very, very healthy," said David Lereah, an economist with the housing association. "People think interest rates are still very reasonable and inventories are very tight," said Daryl Jesperson, chief executive officer of Re/Max International. "The surge in mortgage applications for purchase in the spring points to strength in purchases of existing homes over the next month or two" when those sales close, said Stephen Stanley, chief economist at RBS Greenwhich Capital.
Bottom Line: I believe Durable Goods Orders for May were below-expectations because of the extreme strength earlier in the year. I expect orders accelerated in June. As well, corporate spending on technology should lead the way in the second half of the year. Initial jobless claims were a bit above expectations due to the shortened government work-week and continued re-tooling of major auto plants. Hiring should remain strong throughout the second half of the year as corporate spending accelerates. Home sales continue to defy the bears and skeptics. While interest rates have risen, they are still relatively low by historical standards. Increasing job opportunities and incomes are more than offsetting rates increases. Moreover, Americans are the wealthiest than at any time in U.S. history. As a result, more people are moving from apartments to homes or purchasing second homes for vacation purposes. U.S. economic growth should remain very strong throughout the year as GDP rises at the fastest pace since 1984. Inflation pressures should moderate as the year progresses. Slowing Chinese demand and falling energy prices should help keep inflation relatively subdued throughout the remainder of the year. Inflation is set to rise about 2.4% this year, below the last 40-year average of 3.0%. Consumer confidence should continue to rise and break recent highs, as survey's point to more Americans figuring out how good things are economically, notwithstanding the media's attempts to underreport all positive news.
Friday, June 25, 2004
Weekly Scoreboard*
Indices
S&P 500 1,134.43 -.05%
Dow 10,371.84 -.43%
NASDAQ 2,025.47 +1.95%
Russell 2000 587.70 +3.0%
Volatility(VIX) 15.19 +1.33%
AAII % Bulls 56.41 +36.22%
US Dollar 88.88 -.20%
CRB 272.25 +.89%
Futures Spot Prices
Gold 403.20 +1.87%
Crude Oil 37.55 -3.59%
Natural Gas 6.35 -2.49%
Base Metals 109.49 +.15%
10-year US Treasury Yield 4.65% -1.27%
Average 30-year Mortgage Rate 6.25% -1.11%
Leading Sectors
Nanotechnology +9.41%
Disk Drives +8.01%
Networking +7.07%
Lagging Sectors
HMO's -2.43%
Drugs -2.57%
Broadcasting -3.76%
*% Gain or loss for the week
S&P 500 1,134.43 -.05%
Dow 10,371.84 -.43%
NASDAQ 2,025.47 +1.95%
Russell 2000 587.70 +3.0%
Volatility(VIX) 15.19 +1.33%
AAII % Bulls 56.41 +36.22%
US Dollar 88.88 -.20%
CRB 272.25 +.89%
Futures Spot Prices
Gold 403.20 +1.87%
Crude Oil 37.55 -3.59%
Natural Gas 6.35 -2.49%
Base Metals 109.49 +.15%
10-year US Treasury Yield 4.65% -1.27%
Average 30-year Mortgage Rate 6.25% -1.11%
Leading Sectors
Nanotechnology +9.41%
Disk Drives +8.01%
Networking +7.07%
Lagging Sectors
HMO's -2.43%
Drugs -2.57%
Broadcasting -3.76%
*% Gain or loss for the week
Mid-day Update
S&P 500 1,141.17 +.05%
NASDAQ 2,026.89 +.56%
Leading Sectors
Airlines +1.66%
Networking +1.53%
Semis +1.20%
Lagging Sectors
Fashion -.77%
Drugs -.94%
Defense -1.22%
Other
Crude Oil 37.20 -1.92%
Natural Gas 6.29 -2.93%
Gold 402.90 -.15%
Base Metals 109.49 -.52%
U.S. Dollar 89.0 +.34%
10-Yr. T-note Yield 4.66% +.25%
VIX 14.79 -.14%
Put/Call .63 -4.55%
NYSE Arms 1.0 -28.06%
Market Movers
TTN -21.6% after saying it wouldn't be able to settle a criminal probe by today's deadline and LMT won't extend its buyout offer again.
PAYX -6.3% after meeting 4Q estimates and lowering 05 guidance slightly.
CAB +32.5% on strong demand for IPO.
TASR +12.5% on continuing rumors of imminent deal to sell personal version of stun gun through Sharper Image stores and short squeeze.
SIMG +16.79% after raising 2Q guidance and Thomas Weisel upgrade to Outperform.
NKE +4.2% after beating 4Q estimates and announcing $1.5 billion share buy-back.
TEK +6.9% after beating 4Q estimates substantially and raising 1Q guidance.
MSA +7.9% on successful 2.63m share secondary.
REY -20.5% after lowering 3Q and 4Q forecasts.
SOL -12.68% after saying it is hiring consultants and adding staff members to address weakness in its internal accounting controls.
TTEK -12.9% after lowering 3Q and 4Q forecasts substantially and Robert Baird downgrade to Underperform.
ARB -6.1% after cutting 04 forecast.
Economic Data
Final 1Q GDP was +3.9% versus estimates of +4.4% and +4.4% prior.
Final 1Q personal Consumption was +3.8% versus estimates of +3.9% and 3.9% prior.
Final 1Q GDP Price Deflator was +2.9% versus 2.6% estimate and 2.6% prior.
Final U. of Mich. Consumer Confidence for June was 95.6 versus estimates of 95.0 and a reading of 95.2 prior.
Existing Home Sales for May were 6.80M versus estimates of 6.50M and 6.63M in April.
Recommendations
FTI rated Overweight at JP Morgan. CCUR cut to Sector Underperform at CIBC. HCA raised to Overweight at Morgan Stanley, target $49. ACH reiterated Overweight by Morgan Stanley. SIMG raised to Outperform at Thomas Weisel. DCN cut to Underweight at Prudential, target $15. JPM rated Outperform at Bear Stearns, target $45. FS raised to Outperform at Bear, target $71. DLM cut to Underperform at Bear. LYO raised to Buy at Merrill Lynch, target $20. Goldman Sachs reiterated Outperform on GCI, NKE, CLX, TYC, PAYX, MMP, N, AMGN and TRB. Goldman said to Buy INTC for potential upside to earnings estimates in second half. Goldman downgraded FRX to Underperform. ROH upgraded to Buy at Citi SmithBarney, target $47. Citi reiterated Buy on MAS, target $37. Citi reiterated Sell on BA, target $36. Citi reiterated Buy on ASD, target $46.
Mid-day News
U.S. stocks are slightly higher mid-day, led by technology, as energy prices fall and interest rates stabilize at lower levels. Iraqis, by a 2-to-1 margin, said they have confidence in the new interim government that will take over on June 30, citing a recent poll, the Washington Post reported. Pennsylvania soon might have more slot machines than New Jersey, cutting as much as 10% from Atlantic City's $4.5 billion gambling market, the Star-Ledger reported. New Jersey companies leased more office space in the second quarter than they vacated for the first time since the stock market bubble burst and economic growth plunged in 2000, the Star-Ledger reported. Celgene, which makes a drug aimed at lessening the severity of a blood cancer, could benefit from a pilot project by the U.S. government to reimburse patients for the cost of the drug, the Star-Ledger reported. Norway's government intervened for the second time in four years to end a labor strike that has threatened to halt all oil and gas production, Bloomberg reported. Pfizer will pay $620 million to acquire rights to Aventis SA's cancer drug, Bloomberg said. U.S. sales of previously owned homes rose to a record 6.8 million annual pace in May. The economy has created 1.2 million jobs so far this year and incomes are up 5.7% in 12 months, the most since 2000, which is underpinning housing demand as interest rates rise, Bloomberg reported. UN Secretary-General Annan said he and Colin Powell will demand that Sudan's government stop the killing in the Darfur region of the country, or face possible military intervention, Bloomberg reported. For the first time since former Federal Reserve Chairman Paul Volcker began his investigation into the Iraqi Oil-for-food program, the man charged with getting to the bottom of the scandal says he has uncovered "serious problems" with the program, Fox News reported.
BOTTOM LINE: The Portfolio up substantially today as my security, internet and telecom equipment longs are rising significantly. I have not traded today and the Portfolio is still 150% net long. Oil is headed for a test of its recent low of $36.80/bbl. I believe it will take out this low next week. U.S. stocks will likely remain mixed until the final hour. I then expect a modest rally as sellers finish ahead of a possible violent weekend in Iraq. The tone of the market is still very good, led by technology, as the advance/decline line continues to improve.
NASDAQ 2,026.89 +.56%
Leading Sectors
Airlines +1.66%
Networking +1.53%
Semis +1.20%
Lagging Sectors
Fashion -.77%
Drugs -.94%
Defense -1.22%
Other
Crude Oil 37.20 -1.92%
Natural Gas 6.29 -2.93%
Gold 402.90 -.15%
Base Metals 109.49 -.52%
U.S. Dollar 89.0 +.34%
10-Yr. T-note Yield 4.66% +.25%
VIX 14.79 -.14%
Put/Call .63 -4.55%
NYSE Arms 1.0 -28.06%
Market Movers
TTN -21.6% after saying it wouldn't be able to settle a criminal probe by today's deadline and LMT won't extend its buyout offer again.
PAYX -6.3% after meeting 4Q estimates and lowering 05 guidance slightly.
CAB +32.5% on strong demand for IPO.
TASR +12.5% on continuing rumors of imminent deal to sell personal version of stun gun through Sharper Image stores and short squeeze.
SIMG +16.79% after raising 2Q guidance and Thomas Weisel upgrade to Outperform.
NKE +4.2% after beating 4Q estimates and announcing $1.5 billion share buy-back.
TEK +6.9% after beating 4Q estimates substantially and raising 1Q guidance.
MSA +7.9% on successful 2.63m share secondary.
REY -20.5% after lowering 3Q and 4Q forecasts.
SOL -12.68% after saying it is hiring consultants and adding staff members to address weakness in its internal accounting controls.
TTEK -12.9% after lowering 3Q and 4Q forecasts substantially and Robert Baird downgrade to Underperform.
ARB -6.1% after cutting 04 forecast.
Economic Data
Final 1Q GDP was +3.9% versus estimates of +4.4% and +4.4% prior.
Final 1Q personal Consumption was +3.8% versus estimates of +3.9% and 3.9% prior.
Final 1Q GDP Price Deflator was +2.9% versus 2.6% estimate and 2.6% prior.
Final U. of Mich. Consumer Confidence for June was 95.6 versus estimates of 95.0 and a reading of 95.2 prior.
Existing Home Sales for May were 6.80M versus estimates of 6.50M and 6.63M in April.
Recommendations
FTI rated Overweight at JP Morgan. CCUR cut to Sector Underperform at CIBC. HCA raised to Overweight at Morgan Stanley, target $49. ACH reiterated Overweight by Morgan Stanley. SIMG raised to Outperform at Thomas Weisel. DCN cut to Underweight at Prudential, target $15. JPM rated Outperform at Bear Stearns, target $45. FS raised to Outperform at Bear, target $71. DLM cut to Underperform at Bear. LYO raised to Buy at Merrill Lynch, target $20. Goldman Sachs reiterated Outperform on GCI, NKE, CLX, TYC, PAYX, MMP, N, AMGN and TRB. Goldman said to Buy INTC for potential upside to earnings estimates in second half. Goldman downgraded FRX to Underperform. ROH upgraded to Buy at Citi SmithBarney, target $47. Citi reiterated Buy on MAS, target $37. Citi reiterated Sell on BA, target $36. Citi reiterated Buy on ASD, target $46.
Mid-day News
U.S. stocks are slightly higher mid-day, led by technology, as energy prices fall and interest rates stabilize at lower levels. Iraqis, by a 2-to-1 margin, said they have confidence in the new interim government that will take over on June 30, citing a recent poll, the Washington Post reported. Pennsylvania soon might have more slot machines than New Jersey, cutting as much as 10% from Atlantic City's $4.5 billion gambling market, the Star-Ledger reported. New Jersey companies leased more office space in the second quarter than they vacated for the first time since the stock market bubble burst and economic growth plunged in 2000, the Star-Ledger reported. Celgene, which makes a drug aimed at lessening the severity of a blood cancer, could benefit from a pilot project by the U.S. government to reimburse patients for the cost of the drug, the Star-Ledger reported. Norway's government intervened for the second time in four years to end a labor strike that has threatened to halt all oil and gas production, Bloomberg reported. Pfizer will pay $620 million to acquire rights to Aventis SA's cancer drug, Bloomberg said. U.S. sales of previously owned homes rose to a record 6.8 million annual pace in May. The economy has created 1.2 million jobs so far this year and incomes are up 5.7% in 12 months, the most since 2000, which is underpinning housing demand as interest rates rise, Bloomberg reported. UN Secretary-General Annan said he and Colin Powell will demand that Sudan's government stop the killing in the Darfur region of the country, or face possible military intervention, Bloomberg reported. For the first time since former Federal Reserve Chairman Paul Volcker began his investigation into the Iraqi Oil-for-food program, the man charged with getting to the bottom of the scandal says he has uncovered "serious problems" with the program, Fox News reported.
BOTTOM LINE: The Portfolio up substantially today as my security, internet and telecom equipment longs are rising significantly. I have not traded today and the Portfolio is still 150% net long. Oil is headed for a test of its recent low of $36.80/bbl. I believe it will take out this low next week. U.S. stocks will likely remain mixed until the final hour. I then expect a modest rally as sellers finish ahead of a possible violent weekend in Iraq. The tone of the market is still very good, led by technology, as the advance/decline line continues to improve.
Friday Watch
Earnings of Note
Company/Estimate
None of note.
Splits
WCN 3-for-2
Economic Data
Final Gross Domestic Product for 1Q estimated +4.4% versus +4.4% prior.
Final Univ. of Mich. Consumer Confidence reading for June estimated at 95.0 versus 95.2 prior.
Existing Home Sales for May estimated at 6.5M versus 6.64M in April.
Recommendations
Goldman Sachs reiterated Outperform on BSX, PAYX, IR, ETN, AMGN and TYC. Goldman reiterated Underperform on DCLK. ASH shares may benefit from the sale of the company's stake in Marathon Ashland Petroleum, Business Week reported. ACAP's business is improving as the insurer raises premiums and its underwriting losses are falling, Business Week reported.
Late-Night News
Asian indices are mostly higher, led by Korean cyclicals after the country's largest steelmaker said it is raising prices. Iraqi intelligence agents sought al-Qaeda's help against Saudi Arabia in the mid-90's, the NY Times reported. Three unidentified gunmen shot dead Air France's top executive in Haiti, Agence France-Presse said. R.H. Donnelley(RHD), which publishes Yellow Pages directories, may grow by acting as a local advertising sales agent for large online companies, Business Week reported. Avon Products forecasts its sales in China will rise by half this year as the government lifts its ban on direct selling, the China Daily reported. California may face another energy crisis this summer when temperatures rise as new power-plant construction slows, older plants are shut down and electricity demand accelerates as the economy recovers, Business Week said. New shipping security rules due to be implemented next week could disrupt world trade as many ships and ports still haven't complied with the regulation, the Financial Times reported. AU Optronics plans to increase monthly capacity at a so-called "sixth-generation" plant in the central Taiwan city of Taichung to 200,000 sheets from 150,000 sheets, the Commercial Times reported today. Gold prices, down 7% from a 15-year high in April, may be little changed during the next six months because of rising U.S. interest rates and gains in the dollar, a survey of traders, analysts and investors showed. President Bush will nominate U.S. Representative Porter Goss, a former intelligence officer, as the new head of the CIA, Bloomberg reported. Lockheed Martin's planned $1.65 billion purchase of Titan Corp. has probably been derailed by a U.S. Justice Dept. probe into allegations that Titan consultants bribed foreign officials, Bloomberg said. Tokyo's core consumer prices unexpectedly fell in June, suggesting the central bank will keep interest rates close to zero for longer than economists predicted as it seeks to stamp out six years of deflation, Bloomberg reported. Bill Gross, of PIMCO, said the rise in debt yields over the last three months has made U.S. Treasuries "the market where our money is," Bloomberg reported. BellSouth will begin testing a broadband-on-demand service next month that will allow customers to boost their Internet connection, Business Week said.
Late-Night Trading
Asian Indices are unch. to +1.25% on average.
S&P 500 indicated +.07%.
NASDAQ 100 indicated +.07%.
BOTTOM LINE: I expect U.S. stocks to open modestly lower in the morning and rise later in the day, barring any significant terrorist actions in the Middle East. My short-term trading indicators are still giving buy signals and the Portfolio is 150% net long heading into tomorrow.
Company/Estimate
None of note.
Splits
WCN 3-for-2
Economic Data
Final Gross Domestic Product for 1Q estimated +4.4% versus +4.4% prior.
Final Univ. of Mich. Consumer Confidence reading for June estimated at 95.0 versus 95.2 prior.
Existing Home Sales for May estimated at 6.5M versus 6.64M in April.
Recommendations
Goldman Sachs reiterated Outperform on BSX, PAYX, IR, ETN, AMGN and TYC. Goldman reiterated Underperform on DCLK. ASH shares may benefit from the sale of the company's stake in Marathon Ashland Petroleum, Business Week reported. ACAP's business is improving as the insurer raises premiums and its underwriting losses are falling, Business Week reported.
Late-Night News
Asian indices are mostly higher, led by Korean cyclicals after the country's largest steelmaker said it is raising prices. Iraqi intelligence agents sought al-Qaeda's help against Saudi Arabia in the mid-90's, the NY Times reported. Three unidentified gunmen shot dead Air France's top executive in Haiti, Agence France-Presse said. R.H. Donnelley(RHD), which publishes Yellow Pages directories, may grow by acting as a local advertising sales agent for large online companies, Business Week reported. Avon Products forecasts its sales in China will rise by half this year as the government lifts its ban on direct selling, the China Daily reported. California may face another energy crisis this summer when temperatures rise as new power-plant construction slows, older plants are shut down and electricity demand accelerates as the economy recovers, Business Week said. New shipping security rules due to be implemented next week could disrupt world trade as many ships and ports still haven't complied with the regulation, the Financial Times reported. AU Optronics plans to increase monthly capacity at a so-called "sixth-generation" plant in the central Taiwan city of Taichung to 200,000 sheets from 150,000 sheets, the Commercial Times reported today. Gold prices, down 7% from a 15-year high in April, may be little changed during the next six months because of rising U.S. interest rates and gains in the dollar, a survey of traders, analysts and investors showed. President Bush will nominate U.S. Representative Porter Goss, a former intelligence officer, as the new head of the CIA, Bloomberg reported. Lockheed Martin's planned $1.65 billion purchase of Titan Corp. has probably been derailed by a U.S. Justice Dept. probe into allegations that Titan consultants bribed foreign officials, Bloomberg said. Tokyo's core consumer prices unexpectedly fell in June, suggesting the central bank will keep interest rates close to zero for longer than economists predicted as it seeks to stamp out six years of deflation, Bloomberg reported. Bill Gross, of PIMCO, said the rise in debt yields over the last three months has made U.S. Treasuries "the market where our money is," Bloomberg reported. BellSouth will begin testing a broadband-on-demand service next month that will allow customers to boost their Internet connection, Business Week said.
Late-Night Trading
Asian Indices are unch. to +1.25% on average.
S&P 500 indicated +.07%.
NASDAQ 100 indicated +.07%.
BOTTOM LINE: I expect U.S. stocks to open modestly lower in the morning and rise later in the day, barring any significant terrorist actions in the Middle East. My short-term trading indicators are still giving buy signals and the Portfolio is 150% net long heading into tomorrow.
Thursday, June 24, 2004
Thursday Close
S&P 500 1,140.62 -.30%
NASDAQ 2,015.57 -.27%
Leading Sectors
Fashion +2.13%
Homebuilders +1.83%
Nanotechnology +1.35%
Lagging Sectors
Telecom -1.30%
Broadcasting -1.30%
Oil Service -1.41%
Other
Crude Oil 37.87 +.80%
Natural Gas 6.46 +.78%
Gold 402.70 +1.82%
Base Metals 110.06 +1.80%
U.S. Dollar 88.69 -.82%
10-Yr. T-note Yield 4.64% -1.06%
VIX 14.81 +5.94%
Put/Call .66 -19.51%
NYSE Arms 1.39 +131.67%
After-hours Movers
SIMG +14.75% after raising 2Q guidance.
NKE +2.27% after beating 4Q estimates and announcing $1.5 billion share buy-back.
REY -10.14% after lowering 3Q and 4Q forecasts.
PSRC -4.95% after missing 4Q estimates and lowering 1Q forecast.
VRTY -4.0% after beating 4Q estimates, lowering 1Q forecast and announcing additional $50 share buy-back.
PAYX -3.54% after meeting 4Q estimates and lowering 05 guidance slightly.
Recommendations
Goldman Sachs reiterated Outperform on ATYT, BBY, HD, VIA/B, FS, AMD and UPS. Tom Kurlak made positive comments on semis on CNBC, saying they have a lot further to go.
After-hours News
U.S. stocks finished slightly lower today as violence in the Middle East increased investor jitters ahead of the June 30 handover of power to Iraq. After the close, the militia of Moqtada al-Sadr announced a truce in Baghdad and said they would protect important sites from attacks by terrorists, Agence France-Presse reported. John Mack, co-CEO of CSFB is leaving the company, the Wall Street Journal reported. ITV, the UK's largest commercial tv network, has secured what it says is a world exclusive interview with Monica Lewinsky in response to former President Clinton's version of events, the Guardian reported. Shares of International Game Technology, WMS Industries, Alliance Gaming and Penn National Gaming rose after Pennsylvania legislators and Governor Ed Rendell reached a tentative agreement on allowing slot-machine gambling in the state, Bloomberg reported. Nike said fourth-quarter earnings increased 24% as demand for products including Shox running shoes and Huarache 2K4 basketball sneakers bolstered sales in the U.S. and Asia, Bloomberg said. U.S. President Bush will appeal to NATO to take on a broader security role for Iraq and prod Europeans to reduce much of the country's $120 billion in debt, Bloomberg said.
BOTTOM LINE: The Portfolio finished substantially higher today as my Chinese ADR, security and RFID-related longs rose substantially and my oil-service shorts fell. I did not trade and the Portfolio is still 150% net long. It was a positive for the bulls today that significant violence in the Middle East could not take stocks substantially lower or move oil prices much higher. As well, the bears are losing their main source of pessimism as interest rates continue to fall. It was also good to see the ARMS index rise substantially, however I would also like to see the Put/Call and VIX readings rise more ahead of June 30. I continue to believe the market will consolidate recent gains before a gap up within the next 10 days.
NASDAQ 2,015.57 -.27%
Leading Sectors
Fashion +2.13%
Homebuilders +1.83%
Nanotechnology +1.35%
Lagging Sectors
Telecom -1.30%
Broadcasting -1.30%
Oil Service -1.41%
Other
Crude Oil 37.87 +.80%
Natural Gas 6.46 +.78%
Gold 402.70 +1.82%
Base Metals 110.06 +1.80%
U.S. Dollar 88.69 -.82%
10-Yr. T-note Yield 4.64% -1.06%
VIX 14.81 +5.94%
Put/Call .66 -19.51%
NYSE Arms 1.39 +131.67%
After-hours Movers
SIMG +14.75% after raising 2Q guidance.
NKE +2.27% after beating 4Q estimates and announcing $1.5 billion share buy-back.
REY -10.14% after lowering 3Q and 4Q forecasts.
PSRC -4.95% after missing 4Q estimates and lowering 1Q forecast.
VRTY -4.0% after beating 4Q estimates, lowering 1Q forecast and announcing additional $50 share buy-back.
PAYX -3.54% after meeting 4Q estimates and lowering 05 guidance slightly.
Recommendations
Goldman Sachs reiterated Outperform on ATYT, BBY, HD, VIA/B, FS, AMD and UPS. Tom Kurlak made positive comments on semis on CNBC, saying they have a lot further to go.
After-hours News
U.S. stocks finished slightly lower today as violence in the Middle East increased investor jitters ahead of the June 30 handover of power to Iraq. After the close, the militia of Moqtada al-Sadr announced a truce in Baghdad and said they would protect important sites from attacks by terrorists, Agence France-Presse reported. John Mack, co-CEO of CSFB is leaving the company, the Wall Street Journal reported. ITV, the UK's largest commercial tv network, has secured what it says is a world exclusive interview with Monica Lewinsky in response to former President Clinton's version of events, the Guardian reported. Shares of International Game Technology, WMS Industries, Alliance Gaming and Penn National Gaming rose after Pennsylvania legislators and Governor Ed Rendell reached a tentative agreement on allowing slot-machine gambling in the state, Bloomberg reported. Nike said fourth-quarter earnings increased 24% as demand for products including Shox running shoes and Huarache 2K4 basketball sneakers bolstered sales in the U.S. and Asia, Bloomberg said. U.S. President Bush will appeal to NATO to take on a broader security role for Iraq and prod Europeans to reduce much of the country's $120 billion in debt, Bloomberg said.
BOTTOM LINE: The Portfolio finished substantially higher today as my Chinese ADR, security and RFID-related longs rose substantially and my oil-service shorts fell. I did not trade and the Portfolio is still 150% net long. It was a positive for the bulls today that significant violence in the Middle East could not take stocks substantially lower or move oil prices much higher. As well, the bears are losing their main source of pessimism as interest rates continue to fall. It was also good to see the ARMS index rise substantially, however I would also like to see the Put/Call and VIX readings rise more ahead of June 30. I continue to believe the market will consolidate recent gains before a gap up within the next 10 days.
Mid-day Update
S&P 500 1,143.90 -.02%
NASDAQ 2,024.05 +.15%
Leading Sectors
Homebuilders +3.80%
Fashion +2.13%
Nanotechnology +1.89%
Lagging Sectors
Oil Service -.72%
Broadcasting -.73%
Telecom -1.45%
Other
Crude Oil 37.73 +.43%
Natural Gas 6.47 +.94%
Gold 402.50 +1.72%
Base Metals 110.06 +1.80%
U.S. Dollar 88.69 -.82%
10-Yr. T-note Yield 4.65% -.97%
VIX 14.49 +3.65%
Put/Call .58 -29.27%
NYSE Arms 1.10 +83.33%
Market Movers
T -9.32% after lowering 04 forecast and multiple downgrades.
ATYT +8.7% after beating 3Q estimates and raising 4Q forecast.
TASR +8.8% on continued speculation over Sharper Image deal and short squeeze.
OVTI +9.3% after beating 4Q estimates, restating 1-3 quarters.
UNTD -16.92% after comments by Schwab that competition is heating up and co. will cut prices and miss quarter.
ALD -11.3% after saying it's under investigation by the SEC.
DLM -9.0% after missing 1Q estimates and lowering 4Q/05 forecast.
*Education companies are down across the board after U.S. regulators raised their probe of CECO to a formal inquiry and a newspaper reported COCO may have helped students file fraudulent loan applications.
*Homebuilders up across the board on a fall in interest rates, strong new home sales and positive comments by TOL CFO.
Economic Data
Durable Goods Orders for May fell 1.6% versus expectations of a 1.5% rise and a 2.6% fall in April.
Durable Goods Orders Less Transportation for May fell .7% versus expectations of a 1.3% rise and a 1.7% fall in April.
Initial Jobless Claims for last week were 349K versus a 340K estimate and 336K prior week.
Continuing Claims were 2967K versus estimates of 2875K and 2892K prior.
New Home Sales for May were 1369K versus estimates of 1125K and 1192K in April.
Help Wanted Index for May was 39 versus estimates of 39 and 38 in April.
Recommendations
Goldman Sachs reiterated Attractive view of steel sector, favorites are NUE and ISG. Goldman reiterated Outperform on BBY, UPS and BSX. Goldman reiterated Underperform on T and SGP. Citi SmithBarney says to Buy BJ ahead of same-store-sales release, target $30. Citi said to Buy LPX and WY on weakness. Citi reiterating Sell on MU, target $12. Citi reiterated Buy on GIS, target $51.50. Citi reiterated Sell on T, target $14. Citi reiterated Buy on CVH, target $58. Citi reiterated Buy on COGN, target $41. Morgan Stanley raised USFC to Overweight, target $40. SGP raised to Overweight at Morgan Stanley, target $25. MCIA cut to Underperform at CSFB, target $10. XMSR rated Buy at Legg Mason, target $35. TSA rated Overweight at JP Morgan. MSFT raised to Buy at Bank of America, target $35.
Mid-day News
U.S. stocks are mixed today as falling interest rates and stable energy prices are offsetting Middle-eastern violence and mixed economic reports. The eight UK servicemen who were seized by Iran have arrived at the British Embassy in Tehran and appear to be in good condition, Bloomberg reported. Washington Mutual obtained the first-ever patent for a bank branch, the NY Daily News reported. The average tuition increase at state colleges and universities is expected to be 9% as the U.S. economy improves, down from the average of 14% in 03, the Wall Street Journal reported. One in three Americans would exclusively use a mobile phone rather than a fixed line, the NY Times reported. A group backed by veteran Democrats and vital to Senator Kerry's presidential bid employed felons to conduct door-to-door voter registration campaign in at least three key states, the AP reported. LA-area hotels and the hotel workers' union have halted negotiations after the hotels rejected a union call for contract expiration dates that could lead to a nationwide strike, the LA Times reported. Office vacancy rates in the Boston area are declining after about three years of increases, the Boston Herald reported. "All of the demographic groups we sell to are increasing in both size and affluence," Toll Brothers' CFO told CNBC. Violence erupted today in Iraq, with insurgents targeting Iraqi police forces, killing 66 Iraqis and 3 U.S. soldiers, Bloomberg said. France's economy will probably grow 2.3% this year, the fastest pace since 2000, as demand from China and the U.S. boosts exports and encourages investment, Bloomberg reported. Time Warner's AOL unit agreed to buy closely held Advertising.com for $435 million in cash to offer more customized services such as tracking responses to marketing campaigns, Bloomberg reported. U.S. new home sales surged 14.8% in May to a record, boosted by job and income gains this year that have offset a rise in mortgage rates, Bloomberg reported. Fifteen U.S. cities will get federal assistance in identifying and arresting their most violent criminals, the Justice Department said. The U.S. House Energy and Commerce Committee approved a measure designed to ban "spyware" computer programs that install themselves and monitor users' Web-surfing habits without their knowledge, Bloomberg said. NATO leaders may agree to help train Iraqi security forces, as requested by the country's interim prime minister, when they meet in Turkey next week, Bloomberg reported. The dollar and interest rates are falling today after U.S. orders for durable goods unexpectedly declined and bombs exploded in Turkey and Iraq, Bloomberg reported.
BOTTOM LINE: The Portfolio is having another very good day today as my Chinese ADR, security and RFID-related longs are rising substantially. I have not traded today and the Portfolio is still 150% net long. I expect U.S. stocks to rise modestly into the close as falling interest rates, a rising ARMS reading, short-covering and strength in technology shares offset Middle-east violence, mixed economic reports and a low Put/Call ratio.
NASDAQ 2,024.05 +.15%
Leading Sectors
Homebuilders +3.80%
Fashion +2.13%
Nanotechnology +1.89%
Lagging Sectors
Oil Service -.72%
Broadcasting -.73%
Telecom -1.45%
Other
Crude Oil 37.73 +.43%
Natural Gas 6.47 +.94%
Gold 402.50 +1.72%
Base Metals 110.06 +1.80%
U.S. Dollar 88.69 -.82%
10-Yr. T-note Yield 4.65% -.97%
VIX 14.49 +3.65%
Put/Call .58 -29.27%
NYSE Arms 1.10 +83.33%
Market Movers
T -9.32% after lowering 04 forecast and multiple downgrades.
ATYT +8.7% after beating 3Q estimates and raising 4Q forecast.
TASR +8.8% on continued speculation over Sharper Image deal and short squeeze.
OVTI +9.3% after beating 4Q estimates, restating 1-3 quarters.
UNTD -16.92% after comments by Schwab that competition is heating up and co. will cut prices and miss quarter.
ALD -11.3% after saying it's under investigation by the SEC.
DLM -9.0% after missing 1Q estimates and lowering 4Q/05 forecast.
*Education companies are down across the board after U.S. regulators raised their probe of CECO to a formal inquiry and a newspaper reported COCO may have helped students file fraudulent loan applications.
*Homebuilders up across the board on a fall in interest rates, strong new home sales and positive comments by TOL CFO.
Economic Data
Durable Goods Orders for May fell 1.6% versus expectations of a 1.5% rise and a 2.6% fall in April.
Durable Goods Orders Less Transportation for May fell .7% versus expectations of a 1.3% rise and a 1.7% fall in April.
Initial Jobless Claims for last week were 349K versus a 340K estimate and 336K prior week.
Continuing Claims were 2967K versus estimates of 2875K and 2892K prior.
New Home Sales for May were 1369K versus estimates of 1125K and 1192K in April.
Help Wanted Index for May was 39 versus estimates of 39 and 38 in April.
Recommendations
Goldman Sachs reiterated Attractive view of steel sector, favorites are NUE and ISG. Goldman reiterated Outperform on BBY, UPS and BSX. Goldman reiterated Underperform on T and SGP. Citi SmithBarney says to Buy BJ ahead of same-store-sales release, target $30. Citi said to Buy LPX and WY on weakness. Citi reiterating Sell on MU, target $12. Citi reiterated Buy on GIS, target $51.50. Citi reiterated Sell on T, target $14. Citi reiterated Buy on CVH, target $58. Citi reiterated Buy on COGN, target $41. Morgan Stanley raised USFC to Overweight, target $40. SGP raised to Overweight at Morgan Stanley, target $25. MCIA cut to Underperform at CSFB, target $10. XMSR rated Buy at Legg Mason, target $35. TSA rated Overweight at JP Morgan. MSFT raised to Buy at Bank of America, target $35.
Mid-day News
U.S. stocks are mixed today as falling interest rates and stable energy prices are offsetting Middle-eastern violence and mixed economic reports. The eight UK servicemen who were seized by Iran have arrived at the British Embassy in Tehran and appear to be in good condition, Bloomberg reported. Washington Mutual obtained the first-ever patent for a bank branch, the NY Daily News reported. The average tuition increase at state colleges and universities is expected to be 9% as the U.S. economy improves, down from the average of 14% in 03, the Wall Street Journal reported. One in three Americans would exclusively use a mobile phone rather than a fixed line, the NY Times reported. A group backed by veteran Democrats and vital to Senator Kerry's presidential bid employed felons to conduct door-to-door voter registration campaign in at least three key states, the AP reported. LA-area hotels and the hotel workers' union have halted negotiations after the hotels rejected a union call for contract expiration dates that could lead to a nationwide strike, the LA Times reported. Office vacancy rates in the Boston area are declining after about three years of increases, the Boston Herald reported. "All of the demographic groups we sell to are increasing in both size and affluence," Toll Brothers' CFO told CNBC. Violence erupted today in Iraq, with insurgents targeting Iraqi police forces, killing 66 Iraqis and 3 U.S. soldiers, Bloomberg said. France's economy will probably grow 2.3% this year, the fastest pace since 2000, as demand from China and the U.S. boosts exports and encourages investment, Bloomberg reported. Time Warner's AOL unit agreed to buy closely held Advertising.com for $435 million in cash to offer more customized services such as tracking responses to marketing campaigns, Bloomberg reported. U.S. new home sales surged 14.8% in May to a record, boosted by job and income gains this year that have offset a rise in mortgage rates, Bloomberg reported. Fifteen U.S. cities will get federal assistance in identifying and arresting their most violent criminals, the Justice Department said. The U.S. House Energy and Commerce Committee approved a measure designed to ban "spyware" computer programs that install themselves and monitor users' Web-surfing habits without their knowledge, Bloomberg said. NATO leaders may agree to help train Iraqi security forces, as requested by the country's interim prime minister, when they meet in Turkey next week, Bloomberg reported. The dollar and interest rates are falling today after U.S. orders for durable goods unexpectedly declined and bombs exploded in Turkey and Iraq, Bloomberg reported.
BOTTOM LINE: The Portfolio is having another very good day today as my Chinese ADR, security and RFID-related longs are rising substantially. I have not traded today and the Portfolio is still 150% net long. I expect U.S. stocks to rise modestly into the close as falling interest rates, a rising ARMS reading, short-covering and strength in technology shares offset Middle-east violence, mixed economic reports and a low Put/Call ratio.
Thursday Watch
Earnings of Note
Company/Estimate
AGE/.65
APOL/.51
DLM/.33
FDO/.43
NKE/1.08
PAYX/.21
RAD/.05
VRTY/.12
Splits
None of note.
Economic Data
Durable Goods Orders for May estimated +1.5% versus -3.2% in April.
Durable Goods Less Transportation estimated +1.3% versus -2.6% in April.
Initial Jobless Claims for last week estimated at 340K versus 336K prior week.
Continuing Claims estimated at 1125K versus 1093K prior.
Help Wanted Index for May estimated at 39 versus 38 in April.
Recommendations
Goldman Sachs reiterated Outperform on BSX, remains a favorite idea. Goldman reiterated Outperform on TRB and AGR/A. Goldman reiterated Underperform on SGP and DJ. The Street.com has a positive column on JDSU, AVNX and MTZ, saying they will benefit from FTTP build-out.
Late-Night News
Asian indices are higher as investors in Japan, Hong Kong and Korea boosted shares of financial and technology companies. Asian companies, led by technology businesses, have raised $2.5 billion of equity capital in the U.S. this year, a fivefold increase from a year earlier, the Financial Times reported. Samsung Electronics has cut prices of LCD display televisions by as much as 20% because sales in the U.S. have lagged expectations, the DigiTimes Web site reported. Porsche AG plans to increase annual production by 33%, the Financial Times said. News Corp. is in talks with the owner of the biggest city daily newspaper in China's western region as it seeks to expand into the nation's print business, the China Securities Journal reported. British diplomats met eight UK servicemen held in Iran as talks take place to try to secure their release today, the BBC reported. Japanese service industries expanded in April and a survey showed confidence among corporate executives is higher this quarter, adding to optimism that the world's second largest economy will extend its longest recovery since 1997, Bloomberg reported. The U.S. Senate approved a $447.2 billion Defense Department authorization bill for the next fiscal year that preserves $13.9 billion for missile defense, raises military pay and increases the active duty army by 20,000 troops, Bloomberg reported.
Late-Night Trading
Asian Indices are unch. to +2.0% on average.
S&P 500 indicated -.04%.
NASDAQ 100 indicated -.17%.
BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on strength in Asia and a continuation of the technology stock rally. While the current rally may last a couple of days, a consolidation is likely before June 30. However, after this brief pause, I expect the current rally to resume for a few more weeks as U.S. stocks test the highs set in the first quarter. The Portfolio is 150% net long heading into tomorrow.
Company/Estimate
AGE/.65
APOL/.51
DLM/.33
FDO/.43
NKE/1.08
PAYX/.21
RAD/.05
VRTY/.12
Splits
None of note.
Economic Data
Durable Goods Orders for May estimated +1.5% versus -3.2% in April.
Durable Goods Less Transportation estimated +1.3% versus -2.6% in April.
Initial Jobless Claims for last week estimated at 340K versus 336K prior week.
Continuing Claims estimated at 1125K versus 1093K prior.
Help Wanted Index for May estimated at 39 versus 38 in April.
Recommendations
Goldman Sachs reiterated Outperform on BSX, remains a favorite idea. Goldman reiterated Outperform on TRB and AGR/A. Goldman reiterated Underperform on SGP and DJ. The Street.com has a positive column on JDSU, AVNX and MTZ, saying they will benefit from FTTP build-out.
Late-Night News
Asian indices are higher as investors in Japan, Hong Kong and Korea boosted shares of financial and technology companies. Asian companies, led by technology businesses, have raised $2.5 billion of equity capital in the U.S. this year, a fivefold increase from a year earlier, the Financial Times reported. Samsung Electronics has cut prices of LCD display televisions by as much as 20% because sales in the U.S. have lagged expectations, the DigiTimes Web site reported. Porsche AG plans to increase annual production by 33%, the Financial Times said. News Corp. is in talks with the owner of the biggest city daily newspaper in China's western region as it seeks to expand into the nation's print business, the China Securities Journal reported. British diplomats met eight UK servicemen held in Iran as talks take place to try to secure their release today, the BBC reported. Japanese service industries expanded in April and a survey showed confidence among corporate executives is higher this quarter, adding to optimism that the world's second largest economy will extend its longest recovery since 1997, Bloomberg reported. The U.S. Senate approved a $447.2 billion Defense Department authorization bill for the next fiscal year that preserves $13.9 billion for missile defense, raises military pay and increases the active duty army by 20,000 troops, Bloomberg reported.
Late-Night Trading
Asian Indices are unch. to +2.0% on average.
S&P 500 indicated -.04%.
NASDAQ 100 indicated -.17%.
BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on strength in Asia and a continuation of the technology stock rally. While the current rally may last a couple of days, a consolidation is likely before June 30. However, after this brief pause, I expect the current rally to resume for a few more weeks as U.S. stocks test the highs set in the first quarter. The Portfolio is 150% net long heading into tomorrow.
Wednesday, June 23, 2004
Wednesday Close
S&P 500 1,144.06 +.85%
NASDAQ 2,020.98 +1.35%
Leading Sectors
Networking +4.38%
Disk Drives +4.02%
Nanotechnology +4.02%
Lagging Sectors
Foods +.01%
Broadcasting -.11%
Gaming -.13%
Other
Crude Oil 37.62 +.13%
Natural Gas 6.42 +.08%
Gold 395.40 -.03%
Base Metals 108.11 +1.12%
U.S. Dollar 89.43 -.01%
10-Yr. T-note Yield 4.69% -.46%
VIX 13.98 -2.31%
Put/Call .82 +2.50%
NYSE Arms .60 -9.09%
After-hours Movers
OVTI +11.15% after beating 4Q estimates, restating 1-3 quarters.
MLHR -4.73% after missing 4Q forecast and widening 1Q forecast.
T -4.14% after lowering 04 forecast.
MU -3.88% after beating 3Q earnings estimates but missing revenue estimates.
BBBY -3.14% after beating 1Q estimates and maintaining 2Q guidance.
Recommendations
Goldman Sachs said Sprint's announcement of its EV-DO rollout will benefit LU, NT and MOT. Goldman says SBC's announcement of an incremental $4-6 billion in capex over the next 5 years will benefit TLAB, ALA and CIEN. Goldman reiterated Outperform on NT, CSCO and JNPR.
After-hours News
U.S. stocks finished higher today, led by technology shares, as interest rates and oil prices fell. After the close, the BBC said it plans to start an Arabic-language television channel to broadcast 24-hour news across the Middle East, the Financial Times said. MasterCard will team up with NameProtect, a private U.S. online fraud detection company, to fight illegal misuse of the Internet, the London-based Times said. Comdex, once the biggest U.S. technology trade show, has been canceled this year because companies' budgets were "better suited" to hosting an event in 2005, Bloomberg reported. U.S. Treasuries rose in New York for a second day in three after the government sold $25 billion of two-year notes at the highest yield since June 2002, Bloomberg reported. FedEx raised its earnings forecast for the fiscal year and said fourth-quarter profit climbed 47% on an expanding global economy, Bloomberg said. Time Warner may form a partnership to offer wireless service to its cable television customers, Bloomberg reported. Six former executives of Enron and Merrill Lynch face additional charges in their fraud trial scheduled to begin August 16, Bloomberg said. Delta Air Lines' $11.8 billion in debt securities was downgraded by Moody's Investors Service because of concerns that losses will continue and cash flow will be reduced without labor and operating cost reductions, Bloomberg reported. An AOL software engineer was arrested and charged today with scheming to steal the Internet provider's subscriber list and send "massive amounts" of spam, Bloomberg reported.
BOTTOM LINE: The Portfolio finished substantially higher today. I covered several shorts and added a few new longs in various sectors in the afternoon, bringing the Portfolio's market exposure to 150% net long. One of my new longs is ACH and I am using a stop-loss of $47 on this position. The summer rally I anticipated appears to have begun in earnest today. I expect this rally will continue in fits and starts for the next several weeks.
NASDAQ 2,020.98 +1.35%
Leading Sectors
Networking +4.38%
Disk Drives +4.02%
Nanotechnology +4.02%
Lagging Sectors
Foods +.01%
Broadcasting -.11%
Gaming -.13%
Other
Crude Oil 37.62 +.13%
Natural Gas 6.42 +.08%
Gold 395.40 -.03%
Base Metals 108.11 +1.12%
U.S. Dollar 89.43 -.01%
10-Yr. T-note Yield 4.69% -.46%
VIX 13.98 -2.31%
Put/Call .82 +2.50%
NYSE Arms .60 -9.09%
After-hours Movers
OVTI +11.15% after beating 4Q estimates, restating 1-3 quarters.
MLHR -4.73% after missing 4Q forecast and widening 1Q forecast.
T -4.14% after lowering 04 forecast.
MU -3.88% after beating 3Q earnings estimates but missing revenue estimates.
BBBY -3.14% after beating 1Q estimates and maintaining 2Q guidance.
Recommendations
Goldman Sachs said Sprint's announcement of its EV-DO rollout will benefit LU, NT and MOT. Goldman says SBC's announcement of an incremental $4-6 billion in capex over the next 5 years will benefit TLAB, ALA and CIEN. Goldman reiterated Outperform on NT, CSCO and JNPR.
After-hours News
U.S. stocks finished higher today, led by technology shares, as interest rates and oil prices fell. After the close, the BBC said it plans to start an Arabic-language television channel to broadcast 24-hour news across the Middle East, the Financial Times said. MasterCard will team up with NameProtect, a private U.S. online fraud detection company, to fight illegal misuse of the Internet, the London-based Times said. Comdex, once the biggest U.S. technology trade show, has been canceled this year because companies' budgets were "better suited" to hosting an event in 2005, Bloomberg reported. U.S. Treasuries rose in New York for a second day in three after the government sold $25 billion of two-year notes at the highest yield since June 2002, Bloomberg reported. FedEx raised its earnings forecast for the fiscal year and said fourth-quarter profit climbed 47% on an expanding global economy, Bloomberg said. Time Warner may form a partnership to offer wireless service to its cable television customers, Bloomberg reported. Six former executives of Enron and Merrill Lynch face additional charges in their fraud trial scheduled to begin August 16, Bloomberg said. Delta Air Lines' $11.8 billion in debt securities was downgraded by Moody's Investors Service because of concerns that losses will continue and cash flow will be reduced without labor and operating cost reductions, Bloomberg reported. An AOL software engineer was arrested and charged today with scheming to steal the Internet provider's subscriber list and send "massive amounts" of spam, Bloomberg reported.
BOTTOM LINE: The Portfolio finished substantially higher today. I covered several shorts and added a few new longs in various sectors in the afternoon, bringing the Portfolio's market exposure to 150% net long. One of my new longs is ACH and I am using a stop-loss of $47 on this position. The summer rally I anticipated appears to have begun in earnest today. I expect this rally will continue in fits and starts for the next several weeks.
Mid-day Update
S&P 500 1,135.47 +.09%
NASDAQ 2,004.78 +.53%
Leading Sectors
Nanotechnology +3.63%
Networking +3.50%
Iron/Steel +1.74%
Lagging Sectors
Insurance -.56%
Foods -.61%
Broadcasting -.63%
Other
Crude Oil 37.58 -1.75%
Natural Gas 6.36 -.81%
Gold 395.40 -.03%
Base Metals 108.11 +1.12%
U.S. Dollar 89.37 -.06%
10-Yr. T-note Yield 4.69% -.55%
VIX 14.52 +1.47%
Put/Call .94 +17.50%
NYSE Arms .74 +12.12%
Market Movers
CECO -17.7% after the company said it received a formal order of investigation from the SEC.
OSUR +25.8% after the FDA approved its test to detect HIV Type 2 in saliva.
PFGC -18.09% after cutting 2Q, 3Q and 4Q forecasts.
RJR +4.0% after winning FTC approval to acquire Brown & Williamson and saying it may sell some less popular cigarette brands to compete against Philip Morris.
MYL -9.2% after withdrawing its earnings forecast and suing the FDA after the agency delayed approval of the company's version of the Duragesic pain-relief skin patch.
IBPI -69.0% after saying it halted a trial of it iseganan drug for preventing pneumonia because participants who got the medicine had higher rates of pneumonia and death.
NVEC +14.22% on continued short squeeze following its announcement of a new patent.
MINI +15.07% after raising 2Q and 04 guidance.
TASR +8.02% on rumors of a deal with Sharper Image to sell a consumer version of its stun gun.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on KRI, PFGC, NKE and GCI. Goldman reiterated Attractive coverage view on Paper stocks, favorites are DTC, SPP and IP. Citi SmithBarney reiterated Buy ratings on FON, APCS and TEL. Citi reiterated Buy on GE, target $36. Citi reiterated Buy on MDC, target $100. Citi reiterated Buy on MWD, target $72. Citi reiterated Buy on GS, target $117. Citi reiterated Sell on IM, target $13. SFNT raised to Buy at Legg Mason, target $32. STA cut to Underweight at Morgan Stanley.
Mid-day News
U.S. stocks are mostly higher today as continued strength in computer networking shares boosts the entire tech sector. The U.S. military's Central Command has informally asked for as many as 25,000 more soldiers to send to Iraq, the Baltimore Sun reported. The Recording Industry Association of America filed lawsuits against 482 more computer users yesterday for alleged illegal Internet music copying, the AP reported. Saudi Arabia's leader, King Fahd, today offered an amnesty to suspected terrorists who turn themselves in within a month, Agence France-Presse reported. Tenet Healthcare, the U.S. hospital chain facing allegations it defrauded the government, doubled a junk-bond sale to $1 billion last week to give the company its biggest cash reserves since at least 1990, Bloomberg said. Eight U.K. servicemen who were seized by Iran with their naval vessels on a waterway between Iran and Iraq will be freed today, the U.K. and Iranian governments said. The SEC approved a pilot program that would ease short-selling restrictions on 1,000 stocks, Bloomberg reported. Shares of Salesforce.com, an Internet-based seller of business software, rose as much as 43% in their first trading after the company boosted its IPO to $110 million, Bloomberg said. Crude oil futures are falling after the Energy Department reported that U.S. inventories increased more than expected last week, Bloomberg reported. President Bush said the U.S. would add Vietnam to the list of countries under a pilot program to treat HIV and AIDS patients, and said the U.S. is committed to ending the modern-day "plague," Bloomberg reported. Bank of America will spit its stock 2-for-1 and boost the quarterly dividend 13% to .90/share, Bloomberg said.
BOTTOM LINE: The Portfolio is having a very good day today as a few of my semiconductor, security and base metal longs are rising substantially. I added a few new longs in various sectors this morning, leaving the Portfolio with 125% net long market exposure. One of my new longs is TLAB and I am using a stop-loss of $8 on this position. I expect stocks to rise modestly into the close on short-covering, falling energy prices and declining interest rates.
NASDAQ 2,004.78 +.53%
Leading Sectors
Nanotechnology +3.63%
Networking +3.50%
Iron/Steel +1.74%
Lagging Sectors
Insurance -.56%
Foods -.61%
Broadcasting -.63%
Other
Crude Oil 37.58 -1.75%
Natural Gas 6.36 -.81%
Gold 395.40 -.03%
Base Metals 108.11 +1.12%
U.S. Dollar 89.37 -.06%
10-Yr. T-note Yield 4.69% -.55%
VIX 14.52 +1.47%
Put/Call .94 +17.50%
NYSE Arms .74 +12.12%
Market Movers
CECO -17.7% after the company said it received a formal order of investigation from the SEC.
OSUR +25.8% after the FDA approved its test to detect HIV Type 2 in saliva.
PFGC -18.09% after cutting 2Q, 3Q and 4Q forecasts.
RJR +4.0% after winning FTC approval to acquire Brown & Williamson and saying it may sell some less popular cigarette brands to compete against Philip Morris.
MYL -9.2% after withdrawing its earnings forecast and suing the FDA after the agency delayed approval of the company's version of the Duragesic pain-relief skin patch.
IBPI -69.0% after saying it halted a trial of it iseganan drug for preventing pneumonia because participants who got the medicine had higher rates of pneumonia and death.
NVEC +14.22% on continued short squeeze following its announcement of a new patent.
MINI +15.07% after raising 2Q and 04 guidance.
TASR +8.02% on rumors of a deal with Sharper Image to sell a consumer version of its stun gun.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on KRI, PFGC, NKE and GCI. Goldman reiterated Attractive coverage view on Paper stocks, favorites are DTC, SPP and IP. Citi SmithBarney reiterated Buy ratings on FON, APCS and TEL. Citi reiterated Buy on GE, target $36. Citi reiterated Buy on MDC, target $100. Citi reiterated Buy on MWD, target $72. Citi reiterated Buy on GS, target $117. Citi reiterated Sell on IM, target $13. SFNT raised to Buy at Legg Mason, target $32. STA cut to Underweight at Morgan Stanley.
Mid-day News
U.S. stocks are mostly higher today as continued strength in computer networking shares boosts the entire tech sector. The U.S. military's Central Command has informally asked for as many as 25,000 more soldiers to send to Iraq, the Baltimore Sun reported. The Recording Industry Association of America filed lawsuits against 482 more computer users yesterday for alleged illegal Internet music copying, the AP reported. Saudi Arabia's leader, King Fahd, today offered an amnesty to suspected terrorists who turn themselves in within a month, Agence France-Presse reported. Tenet Healthcare, the U.S. hospital chain facing allegations it defrauded the government, doubled a junk-bond sale to $1 billion last week to give the company its biggest cash reserves since at least 1990, Bloomberg said. Eight U.K. servicemen who were seized by Iran with their naval vessels on a waterway between Iran and Iraq will be freed today, the U.K. and Iranian governments said. The SEC approved a pilot program that would ease short-selling restrictions on 1,000 stocks, Bloomberg reported. Shares of Salesforce.com, an Internet-based seller of business software, rose as much as 43% in their first trading after the company boosted its IPO to $110 million, Bloomberg said. Crude oil futures are falling after the Energy Department reported that U.S. inventories increased more than expected last week, Bloomberg reported. President Bush said the U.S. would add Vietnam to the list of countries under a pilot program to treat HIV and AIDS patients, and said the U.S. is committed to ending the modern-day "plague," Bloomberg reported. Bank of America will spit its stock 2-for-1 and boost the quarterly dividend 13% to .90/share, Bloomberg said.
BOTTOM LINE: The Portfolio is having a very good day today as a few of my semiconductor, security and base metal longs are rising substantially. I added a few new longs in various sectors this morning, leaving the Portfolio with 125% net long market exposure. One of my new longs is TLAB and I am using a stop-loss of $8 on this position. I expect stocks to rise modestly into the close on short-covering, falling energy prices and declining interest rates.
Wednesday Watch
Earnings of Note
Company/Estimate
ARRO/.35
BBBY/.25
FDX/1.33
MLHR/.17
MU/.09
OVTI/.31
WOR/.76
Splits
None of note.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on MERQ, AMGN and ADP. Goldman reiterated Attractive view on Energy sector seeing 30-50% upside, favorites are XOM, AHC, NFX, MUR, DVN and PXD.
Late-Night News
Asian indices are mixed as strength in Taiwan is being offset by weakness in China. Over 100 Goldman Sachs bankers may be able to sell stock worth $4.8 billion as the shares they were awarded at the securities firm's IPO are unlocked, the London-based Times said. Shanghai General Motors, which earned $965 million in net income last year, was the most profitable vehicle maker in China, the Shanghai Morning Post said. The U.S. won't repatriate Chinese citizens held at Guantanamo Bay because it's concerned they will be tortured or executed on their return, the Financial Times said. Salesforce.com, the maker of Internet-based sales software, raised $110 million in an IPO as it prepares to escalate its battle with business-software leaders including Siebel Systems, Bloomberg reported. Merrill Lynch plans to set up an investment banking venture in China that would manage share sales and trade bonds in the world's fastest growing major economy, Bloomberg said. U.S. Commerce Secretary Evans told China it will gave to cut barriers to American investment and trade, including cracking down on software piracy, to shore up support for free trade with the U.S., Bloomberg reported. Iran may release three U.K. navy vessels and eight crew members in the event an investigation shows they strayed inadvertently into Iranian waters, the Islamic Republic News Agency said. The Bank of Japan's Tankan survey, released next week, will show the number of executives at large manufacturers who are optimistic about business conditions has reached the highest level since 1991, Nikkei English News reported.
Late-Night Trading
Asian Indices -.50% to +1.0% on average.
S&P 500 indicated -.05%.
NASDAQ 100 indicated -.17%.
BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on strength in technology shares and falling energy prices. I continue to believe the U.S. markets will embark upon an outsized upwards move within the next few weeks. The Portfolio is 100% net long heading into tomorrow.
Company/Estimate
ARRO/.35
BBBY/.25
FDX/1.33
MLHR/.17
MU/.09
OVTI/.31
WOR/.76
Splits
None of note.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on MERQ, AMGN and ADP. Goldman reiterated Attractive view on Energy sector seeing 30-50% upside, favorites are XOM, AHC, NFX, MUR, DVN and PXD.
Late-Night News
Asian indices are mixed as strength in Taiwan is being offset by weakness in China. Over 100 Goldman Sachs bankers may be able to sell stock worth $4.8 billion as the shares they were awarded at the securities firm's IPO are unlocked, the London-based Times said. Shanghai General Motors, which earned $965 million in net income last year, was the most profitable vehicle maker in China, the Shanghai Morning Post said. The U.S. won't repatriate Chinese citizens held at Guantanamo Bay because it's concerned they will be tortured or executed on their return, the Financial Times said. Salesforce.com, the maker of Internet-based sales software, raised $110 million in an IPO as it prepares to escalate its battle with business-software leaders including Siebel Systems, Bloomberg reported. Merrill Lynch plans to set up an investment banking venture in China that would manage share sales and trade bonds in the world's fastest growing major economy, Bloomberg said. U.S. Commerce Secretary Evans told China it will gave to cut barriers to American investment and trade, including cracking down on software piracy, to shore up support for free trade with the U.S., Bloomberg reported. Iran may release three U.K. navy vessels and eight crew members in the event an investigation shows they strayed inadvertently into Iranian waters, the Islamic Republic News Agency said. The Bank of Japan's Tankan survey, released next week, will show the number of executives at large manufacturers who are optimistic about business conditions has reached the highest level since 1991, Nikkei English News reported.
Late-Night Trading
Asian Indices -.50% to +1.0% on average.
S&P 500 indicated -.05%.
NASDAQ 100 indicated -.17%.
BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on strength in technology shares and falling energy prices. I continue to believe the U.S. markets will embark upon an outsized upwards move within the next few weeks. The Portfolio is 100% net long heading into tomorrow.
Tuesday, June 22, 2004
Tuesday Close
S&P 500 1,134.41 +.36%
NASDAQ 1,994.15 +1.0%
Leading Sectors
Semis +3.47%
Disk Drives +2.98%
Networking +2.75%
Lagging Sectors
HMO's -.75%
Fashion -.79%
Broadcasting -1.23%
Other
Crude Oil 38.18 -.18%
Natural Gas 6.41 -.03%
Gold 396.20 +.18%
Base Metals 106.91 -2.66%
U.S. Dollar 89.43 +.20%
10-Yr. T-note Yield 4.72% +.72%
VIX 14.31 -6.23%
Put/Call .80 +5.26%
NYSE Arms .66 -49.62%
After-hours Movers
FSII +6.16% after beating 3Q estimates substantially and raising 4Q guidance.
Recommendations
Goldman Sachs reiterated Outperform on WMT, KR and MSFT.
After-hours News
U.S. stocks finished higher today led by technology shares on optimism over telecom spending. After the close, the European Union and the U.S. have failed to reach an agreement to spur competition in the airline market before a summit in Ireland this weekend, the Financial Times said. The EU is seeking to eventually remove the limit on foreign ownership of airlines, 25% in the U.S. and 49% in the EU, to access the U.S. domestic market, the FT said. Crude oil futures rose modestly today as refinery maintenance closings boosted concern gasoline supplies will be inadequate during the peak-demand summer months. About 10 million women in the U.S. are being screened unnecessarily for cervical cancer after having had a hysterectomy, an operation that usually removes the cervix and the risk of the disease, Bloomberg reported. SBC Communications will spend as much as $6 billion building a fiber-optic network that offers digital television service as it steps up competition with cable-TV providers, Bloomberg said.
BOTTOM LINE: The Portfolio finished unchanged on a late-day rally in my base metal and telecom equipment long positions. I added a few new semiconductor and financial longs in the afternoon, leaving the Portfolio with 100% net long market exposure. One of my new longs is PMCS and I am using a $12.50 stop-loss on this position. Volume increased and the advance/decline line improved greatly during the afternoon rally. Today's outperformance by tech is the beginning of a very strong move by the sector and is positive for the overall market, in my opinion.
NASDAQ 1,994.15 +1.0%
Leading Sectors
Semis +3.47%
Disk Drives +2.98%
Networking +2.75%
Lagging Sectors
HMO's -.75%
Fashion -.79%
Broadcasting -1.23%
Other
Crude Oil 38.18 -.18%
Natural Gas 6.41 -.03%
Gold 396.20 +.18%
Base Metals 106.91 -2.66%
U.S. Dollar 89.43 +.20%
10-Yr. T-note Yield 4.72% +.72%
VIX 14.31 -6.23%
Put/Call .80 +5.26%
NYSE Arms .66 -49.62%
After-hours Movers
FSII +6.16% after beating 3Q estimates substantially and raising 4Q guidance.
Recommendations
Goldman Sachs reiterated Outperform on WMT, KR and MSFT.
After-hours News
U.S. stocks finished higher today led by technology shares on optimism over telecom spending. After the close, the European Union and the U.S. have failed to reach an agreement to spur competition in the airline market before a summit in Ireland this weekend, the Financial Times said. The EU is seeking to eventually remove the limit on foreign ownership of airlines, 25% in the U.S. and 49% in the EU, to access the U.S. domestic market, the FT said. Crude oil futures rose modestly today as refinery maintenance closings boosted concern gasoline supplies will be inadequate during the peak-demand summer months. About 10 million women in the U.S. are being screened unnecessarily for cervical cancer after having had a hysterectomy, an operation that usually removes the cervix and the risk of the disease, Bloomberg reported. SBC Communications will spend as much as $6 billion building a fiber-optic network that offers digital television service as it steps up competition with cable-TV providers, Bloomberg said.
BOTTOM LINE: The Portfolio finished unchanged on a late-day rally in my base metal and telecom equipment long positions. I added a few new semiconductor and financial longs in the afternoon, leaving the Portfolio with 100% net long market exposure. One of my new longs is PMCS and I am using a $12.50 stop-loss on this position. Volume increased and the advance/decline line improved greatly during the afternoon rally. Today's outperformance by tech is the beginning of a very strong move by the sector and is positive for the overall market, in my opinion.
Mid-day Update
S&P 500 1,129.28 -.09%
NASDAQ 1,978.79 +.22%
Leading Sectors
Semis +2.46%
Networking +1.73%
Disk Drives +1.72%
Lagging Sectors
HMO's -.90%
Retail -.90%
Broadcasting -1.19%
Other
Crude Oil 37.80 +.10%
Natural Gas 6.37 +.49%
Gold 395.50 +.25%
Base Metals 106.91 -2.66%
U.S. Dollar 89.44 +.21%
10-Yr. T-note Yield 4.70% +.42%
VIX 15.11 -.85%
Put/Call .80 +5.26%
NYSE Arms .82 -37.40%
Market Movers
PLMO +38.2% after beating 4Q estimates and raising 1Q forecast substantially.
GLYN +49.9% after Dick's Sporting Goods(DKS) agreed to buy it for $305 million is cash.
TBUS +17.9% after announcing it received an order for security-related equipment that will be used during the Olympic Games.
DKS +14.86% after saying GLYN acquisition will boost 04 earnings.
LABS +5.11% after saying it will be added to the S&P SmallCap 600.
ALOG -8.27% after saying it received notice that L-3(LLL) had filed suit against it.
MRX -6.42% after lowering 05 e.p.s. and raising 05 sales forecasts.
FRX -5.6% after the U.K. asked for details of an unpublished study of Celexa.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on MRVL, DTV, KR, MCK, GLW, SYMC and SPG. Goldman reiterated Underperform on VRTX. Goldman expects AA to beat earnings estimates and AL to miss. Citi SmithBarney reiterated Buy on TYC, target $38. Citi reiterated Buy on ETN, target $78. Morgan Stanley cut TK to Underweight, target $38. Bank of America rated CRL Buy. QLGC raised to Buy at Merrill, target $34. NUVA rated Overweight at Lehman, target $16.
Mid-day News
U.S. stocks are quietly mixed today as strength in technology shares is being offset by weakness in retail and healthcare. The South Korean businessman being held hostage by an al-Qaeda linked militant group in Iraq was beheaded, CNBC reported. U.S. Commerce Secretary Donald Evans pressed Chinese Premier Wen Jiabao to float the yuan, curb government subsidies to industries and make clear the rules for imports and foreign investment, Bloomberg reported. The U.S. Senate passed a measure to stiffen fines against broadcasters that air indecent content, Bloomberg reported. A survey by E-Rewards found increasing problems with airlines' frequent-flier programs, 26% of respondents describing their recent experience in booking award travel as "much more difficult" or "virtually impossible," the NY Times reported. Donald Trump, who purchased 40 Wall Street for $1 million in 1995, may sell the 72-story, 1.3 million square foot building for $400 million or more, the NY Post reported. The United Auto Workers is cutting about 15% of its support staff, because of a decline in dues-paying members, the Detroit News reported. Tribune's LA Times cut about 160 positions at the newspaper, which faces lower-than-expected advertising sales, the Times reported. A recent report by UCLA forecasts the creation of 433,000 jobs in California through 05 on increased foreign trade and a rise in technology hiring, the LA Times reported. Iraq's transfer to a sovereign government next week will be an understated event because of security concerns, the Washington Times said. Iran is prepared to release eight British Royal Navy crew if the U.K. government apologizes for breaching Iranian sovereignty, Bloomberg reported. S&P 500 companies are very bullish, with positive-to-negative preannouncements at a record high according to Thomson First Call, IBD reported. Tradesports.com is showing a large jump in the chances of John Edwards being named the Democratic VP nominee.
BOTTOM LINE: The Portfolio is down slightly today as my longs are mostly lower and shorts are mixed. I have not traded today and the Portfolio is still 75% net long. Another quiet day as traders and investors remain apprehensive ahead of several market-moving events. Oil and interest rates are steady, however the ARMS Index is falling more than I would like to see. It is a positive that semis are outperforming. I expect stocks to remain mixed throughout the day.
NASDAQ 1,978.79 +.22%
Leading Sectors
Semis +2.46%
Networking +1.73%
Disk Drives +1.72%
Lagging Sectors
HMO's -.90%
Retail -.90%
Broadcasting -1.19%
Other
Crude Oil 37.80 +.10%
Natural Gas 6.37 +.49%
Gold 395.50 +.25%
Base Metals 106.91 -2.66%
U.S. Dollar 89.44 +.21%
10-Yr. T-note Yield 4.70% +.42%
VIX 15.11 -.85%
Put/Call .80 +5.26%
NYSE Arms .82 -37.40%
Market Movers
PLMO +38.2% after beating 4Q estimates and raising 1Q forecast substantially.
GLYN +49.9% after Dick's Sporting Goods(DKS) agreed to buy it for $305 million is cash.
TBUS +17.9% after announcing it received an order for security-related equipment that will be used during the Olympic Games.
DKS +14.86% after saying GLYN acquisition will boost 04 earnings.
LABS +5.11% after saying it will be added to the S&P SmallCap 600.
ALOG -8.27% after saying it received notice that L-3(LLL) had filed suit against it.
MRX -6.42% after lowering 05 e.p.s. and raising 05 sales forecasts.
FRX -5.6% after the U.K. asked for details of an unpublished study of Celexa.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on MRVL, DTV, KR, MCK, GLW, SYMC and SPG. Goldman reiterated Underperform on VRTX. Goldman expects AA to beat earnings estimates and AL to miss. Citi SmithBarney reiterated Buy on TYC, target $38. Citi reiterated Buy on ETN, target $78. Morgan Stanley cut TK to Underweight, target $38. Bank of America rated CRL Buy. QLGC raised to Buy at Merrill, target $34. NUVA rated Overweight at Lehman, target $16.
Mid-day News
U.S. stocks are quietly mixed today as strength in technology shares is being offset by weakness in retail and healthcare. The South Korean businessman being held hostage by an al-Qaeda linked militant group in Iraq was beheaded, CNBC reported. U.S. Commerce Secretary Donald Evans pressed Chinese Premier Wen Jiabao to float the yuan, curb government subsidies to industries and make clear the rules for imports and foreign investment, Bloomberg reported. The U.S. Senate passed a measure to stiffen fines against broadcasters that air indecent content, Bloomberg reported. A survey by E-Rewards found increasing problems with airlines' frequent-flier programs, 26% of respondents describing their recent experience in booking award travel as "much more difficult" or "virtually impossible," the NY Times reported. Donald Trump, who purchased 40 Wall Street for $1 million in 1995, may sell the 72-story, 1.3 million square foot building for $400 million or more, the NY Post reported. The United Auto Workers is cutting about 15% of its support staff, because of a decline in dues-paying members, the Detroit News reported. Tribune's LA Times cut about 160 positions at the newspaper, which faces lower-than-expected advertising sales, the Times reported. A recent report by UCLA forecasts the creation of 433,000 jobs in California through 05 on increased foreign trade and a rise in technology hiring, the LA Times reported. Iraq's transfer to a sovereign government next week will be an understated event because of security concerns, the Washington Times said. Iran is prepared to release eight British Royal Navy crew if the U.K. government apologizes for breaching Iranian sovereignty, Bloomberg reported. S&P 500 companies are very bullish, with positive-to-negative preannouncements at a record high according to Thomson First Call, IBD reported. Tradesports.com is showing a large jump in the chances of John Edwards being named the Democratic VP nominee.
BOTTOM LINE: The Portfolio is down slightly today as my longs are mostly lower and shorts are mixed. I have not traded today and the Portfolio is still 75% net long. Another quiet day as traders and investors remain apprehensive ahead of several market-moving events. Oil and interest rates are steady, however the ARMS Index is falling more than I would like to see. It is a positive that semis are outperforming. I expect stocks to remain mixed throughout the day.
Tuesday Watch
Earnings of Note
Company/Estimate
COMS/-.10
CBK/.27
MWD/1.06
DRI/.44
GS/1.95
GTK/.73
Splits
NOC 2-for-1
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on AGN, IR, ACS and BC.
Late-Night News
Asian indices are mostly lower as strength in China is being offset by weakness in Japan and Korea. The U.S. Financial Accounting Standards Board will hold a public hearing on Thursday into plans to require stock options to be treated as an expense, the Financial Times said. EBay may be close to completing its purchase of baazee.com, an Indian auction company, the Economic Times reported. Tiffany & Co. sued EBay over the sale of counterfeit Tiffany jewelry through the Internet auction site, the Wall Street Journal reported. The SEC will approve rules requiring mutual funds to have independent chairmen, the NY Times reported. China's measures to slow the economy are showing "clear" effects and the government is confident of meeting its projections for growth, Premier Wen Jiabao said. Goldman Sachs and Morgan Stanley have agreed to settle SEC allegations that they improperly awarded shares in companies carrying out IPOs between 1999 and 2000, the Wall Street Journal reported.
Late-Night Trading
Asian Indices -1.0% to +.50% on average.
S&P 500 indicated -.05%.
NASDAQ 100 indicated -.10%.
BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on strong corporate earnings reports. Here are some interesting reports by Media Tenor. The Portfolio is 75% net long heading into tomorrow.
Company/Estimate
COMS/-.10
CBK/.27
MWD/1.06
DRI/.44
GS/1.95
GTK/.73
Splits
NOC 2-for-1
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on AGN, IR, ACS and BC.
Late-Night News
Asian indices are mostly lower as strength in China is being offset by weakness in Japan and Korea. The U.S. Financial Accounting Standards Board will hold a public hearing on Thursday into plans to require stock options to be treated as an expense, the Financial Times said. EBay may be close to completing its purchase of baazee.com, an Indian auction company, the Economic Times reported. Tiffany & Co. sued EBay over the sale of counterfeit Tiffany jewelry through the Internet auction site, the Wall Street Journal reported. The SEC will approve rules requiring mutual funds to have independent chairmen, the NY Times reported. China's measures to slow the economy are showing "clear" effects and the government is confident of meeting its projections for growth, Premier Wen Jiabao said. Goldman Sachs and Morgan Stanley have agreed to settle SEC allegations that they improperly awarded shares in companies carrying out IPOs between 1999 and 2000, the Wall Street Journal reported.
Late-Night Trading
Asian Indices -1.0% to +.50% on average.
S&P 500 indicated -.05%.
NASDAQ 100 indicated -.10%.
BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on strong corporate earnings reports. Here are some interesting reports by Media Tenor. The Portfolio is 75% net long heading into tomorrow.
Monday, June 21, 2004
Monday Close
S&P 500 1,130.30 -.42%
NASDAQ 1,974.38 -.62%
Leading Sectors
Nanotechnology +2.58%
Utilities +.59%
Tobacco +.36%
Lagging Sectors
Oil Service -1.0%
Internet -1.17%
HMO's -2.10%
Other
Crude Oil 37.75 -.05%
Natural Gas 6.31 -.46%
Gold 394.40 -.03%
Base Metals 109.83 +.46%
U.S. Dollar 89.26 +.01%
10-Yr. T-note Yield 4.68% -.46%
VIX 15.26 +1.80%
Put/Call .76 -7.32%
NYSE Arms 1.31 +63.75%
After-hours Movers
GLYN +49.6% after Dick's Sporting Goods(DKS) agreed to buy it for $305 million is cash.
TBUS +22.5% after announcing it received an order for security-related equipment that will be used during the Olympic Games.
DKS +6.99% after saying GLYN acquisition will boost 04 earnings.
PLMO +19.7% after beating 4Q estimates and raising 1Q forecast substantially.
LABS +4.74% after saying it will be added to the S&P SmallCap 600.
Recommendations
TheStreet.com has a positive column on BBBY saying its sell-off is overdone. Goldman Sachs raised their long-term growth rate forecast for AVP to 15-17%, reiterated Outperform.
After-hours News
U.S. stocks finished slightly lower today on weakness in healthcare and energy shares. After the close, InterActiveCorp expects to make more acquisitions, Chairman and CEO Barry Diller said in an interview with CNBC. Erectile dysfunction in diabetic men may be a warning of "silent" heart disease, according to a study in the June 22 online version of the Circulation Journal. General Electric and Honeywell International reached separate agreements to provide equipment to Chinese companies and will sign the contracts tomorrow at a ceremony in Beijing with U.S. Commerce Secretary Donald Evans, Bloomberg reported. Cablevision, the largest cable-tv operator in the New York area, began offering a $90-a-month package of TV, telephone and Web-access service to lure customers from satellite and phone competitors, Bloomberg reported. California Governor Schwarzenegger signed new casino agreements with five Indian tribes to provide $1 billion to the state next year, meeting a campaign promise to tap gabling money to fill budget deficits, Bloomberg reported. The U.S. Senate killed an attempt by Democrats to give journalists access to the arrival of coffins carrying war dead home from Iraq, Bloomberg reported. The U.S. and the European Union agreed on terms for EU construction of its Galileo satellite navigation system, boosting a technology market that could grow to $300 billion by 2020 and benefiting companies such as Trimble Navigation and Garmin Ltd, Bloomberg reported.
BOTTOM LINE: The Portfolio finished near its highs for the day on strength in my base metal, security and telecom equipment longs and weakness in my Chinese ADR and software shorts. I added a few new healthcare IT and Oil Service shorts in the afternoon, leaving the Portfolio with 75% net long market exposure. One of my new shorts is PTEN and I am using a $33.25 stop-loss on this position. A number of stocks experienced eye-popping gains today, notwithstanding the market's overall quietly weak performance. This is positive for market psychology as it appears that good news is beginning to be rewarded again in a substantial fashion. NVEC, TASR and PLMO were a few of the highly-shorted companies that reported great news today and rose significantly. If my Portfolio were positioned substantially short right now I would be very worried over this type of action. As well, interest rates and energy prices continue to head lower which makes me more confident that the market is consolidating before a significant move up within the next few weeks.
NASDAQ 1,974.38 -.62%
Leading Sectors
Nanotechnology +2.58%
Utilities +.59%
Tobacco +.36%
Lagging Sectors
Oil Service -1.0%
Internet -1.17%
HMO's -2.10%
Other
Crude Oil 37.75 -.05%
Natural Gas 6.31 -.46%
Gold 394.40 -.03%
Base Metals 109.83 +.46%
U.S. Dollar 89.26 +.01%
10-Yr. T-note Yield 4.68% -.46%
VIX 15.26 +1.80%
Put/Call .76 -7.32%
NYSE Arms 1.31 +63.75%
After-hours Movers
GLYN +49.6% after Dick's Sporting Goods(DKS) agreed to buy it for $305 million is cash.
TBUS +22.5% after announcing it received an order for security-related equipment that will be used during the Olympic Games.
DKS +6.99% after saying GLYN acquisition will boost 04 earnings.
PLMO +19.7% after beating 4Q estimates and raising 1Q forecast substantially.
LABS +4.74% after saying it will be added to the S&P SmallCap 600.
Recommendations
TheStreet.com has a positive column on BBBY saying its sell-off is overdone. Goldman Sachs raised their long-term growth rate forecast for AVP to 15-17%, reiterated Outperform.
After-hours News
U.S. stocks finished slightly lower today on weakness in healthcare and energy shares. After the close, InterActiveCorp expects to make more acquisitions, Chairman and CEO Barry Diller said in an interview with CNBC. Erectile dysfunction in diabetic men may be a warning of "silent" heart disease, according to a study in the June 22 online version of the Circulation Journal. General Electric and Honeywell International reached separate agreements to provide equipment to Chinese companies and will sign the contracts tomorrow at a ceremony in Beijing with U.S. Commerce Secretary Donald Evans, Bloomberg reported. Cablevision, the largest cable-tv operator in the New York area, began offering a $90-a-month package of TV, telephone and Web-access service to lure customers from satellite and phone competitors, Bloomberg reported. California Governor Schwarzenegger signed new casino agreements with five Indian tribes to provide $1 billion to the state next year, meeting a campaign promise to tap gabling money to fill budget deficits, Bloomberg reported. The U.S. Senate killed an attempt by Democrats to give journalists access to the arrival of coffins carrying war dead home from Iraq, Bloomberg reported. The U.S. and the European Union agreed on terms for EU construction of its Galileo satellite navigation system, boosting a technology market that could grow to $300 billion by 2020 and benefiting companies such as Trimble Navigation and Garmin Ltd, Bloomberg reported.
BOTTOM LINE: The Portfolio finished near its highs for the day on strength in my base metal, security and telecom equipment longs and weakness in my Chinese ADR and software shorts. I added a few new healthcare IT and Oil Service shorts in the afternoon, leaving the Portfolio with 75% net long market exposure. One of my new shorts is PTEN and I am using a $33.25 stop-loss on this position. A number of stocks experienced eye-popping gains today, notwithstanding the market's overall quietly weak performance. This is positive for market psychology as it appears that good news is beginning to be rewarded again in a substantial fashion. NVEC, TASR and PLMO were a few of the highly-shorted companies that reported great news today and rose significantly. If my Portfolio were positioned substantially short right now I would be very worried over this type of action. As well, interest rates and energy prices continue to head lower which makes me more confident that the market is consolidating before a significant move up within the next few weeks.
Mid-day Update
S&P 500 1,136.11 +.10%
NASDAQ 1,9990.84 +.21%
Leading Sectors
Nanotechnology +2.90%
Utilities +1.02%
Semis +.91%
Lagging Sectors
Oil Service -.68%
Telecom -.78%
HMO's -1.17%
Other
Crude Oil 37.80 -3.08%
Natural Gas 6.33 -3.07%
Gold 394.20 -.38%
Base Metals 109.83 +.46%
U.S. Dollar 89.28 +.22%
10-Yr. T-note Yield 4.68% -.55%
VIX 15.03 +.27%
Put/Call .68 -17.07%
NYSE Arms 1.02 +27.50%
Market Movers
BFD +26.0% after announcing its acquisition by Banknorth for $195 million.
NVEC +30.9% after saying the U.S. Patent and Trademark Office issued the company a patent for an innovation type of MRAM.
OXM +18.78% after saying it agreed to buy Ben Sherman Ltd. for $146 million in cash.
TASR +17.58% after increasing it annual revenue growth forecast from 100% to 150% for 04.
SOTR +13.62% after agreeing to be acquired by Wachovia for $14.3 billion.
CPG +11.7% after agreeing to be acquired by Simon Property Group for $3.5 billion in cash and stock.
BBBB +10.7% on continuing strength after IPO.
IMDC +6.55% after settling a patent lawsuit with Ethicon Endo-Surgery for $17.3 million.
EASI +5.28% after saying it is in full-scale production of its armored cab design for the U.S. Army's Family of Medium Tactical Vehicles.
MIL +5.27% after positive Barron's mention.
LABS -8.58% after saying it plans to sell $90 million in convertible debt.
CYBX -4.67% on profit-taking.
ASKJ -5.1% on insider selling.
SOHU -7.33% on crackdown by Chinese government on online content and YHOO entering Chinese search market.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on SLR, PAYX, KO, PEP, STZ and ATYT. Goldman reiterated Underperform on PBG and RKY. Citi SmithBarney said to Buy MOT, target $25. Citi says their recent Semi Purchasing Manager survey was better than expectations and has positive implications for LLTC, MXIM, INTC, AMD and NSM. Citi reiterated Sell on MU, target $12. ARXX raised to Buy at Deutsche Bank, target $16.
Mid-day News
U.S. stocks are quietly higher today as investors continue to fear making big bets ahead of several market-moving events over the next couple of weeks. Iran seized three British navy vessels that reportedly entered the country's territorial waters, Agence France-Presse said. U.S. officials have been spending about $2.5 billion in Iraqi oil revenue on programs such as police cars and uniforms, as well as repairing schools, the NY Times reported. Abiomed, the maker of the experimental artificial heart, expects to become profitable by March 31 and to have annual revenue of $500 million by 2011, the Boston Globe reported. The leaders of the largest labor unions in the U.S. are considering reducing the number of unions to 15 from 65 to better focus their organizing and bargaining efforts, the LA Times reported. The AFL-CIO is undertaking its earliest and largest "get-out-the-vote" campaign ever for Democratic presidential contender John Kerry, the Washington Post reported. Geely Group this year plans to become the first Chinese automaker to sell cars in the U.S., Automotive News reported. Wal-Mart said June's sales are rising around the low end of its recent forecast, Bloomberg reported. Motorola expects to raise as much as $2.73 billion in an IPO of its Freescale Semiconductor unit, Bloomberg said. A privately funded and constructed spaceship was launched today from California's Mojave Desert on a mission to become the first non-governmental craft to leave the Earth's atmosphere, Bloomberg reported. The U.S. SEC is moving ahead with plans to bring hedge funds under greater government oversight over the opposition of most of the $800 billion industry, Bloomberg reported. Crude oil futures are falling as Iraq resumed partial exports through one of two pipelines shut after an attack early last week, Bloomberg said.
BOTTOM LINE: The Portfolio is having a very good day today as my security and telecom equipment longs are rising and short Chinese ADRs are falling. I added a few new technology longs this morning, bringing the Portfolio to 100% net long market exposure. The fundamentals are improving today on an acceleration in merger activity, falling energy prices and declining interest rates. I expect U.S. stocks to rise modestly into the close on short-covering.
NASDAQ 1,9990.84 +.21%
Leading Sectors
Nanotechnology +2.90%
Utilities +1.02%
Semis +.91%
Lagging Sectors
Oil Service -.68%
Telecom -.78%
HMO's -1.17%
Other
Crude Oil 37.80 -3.08%
Natural Gas 6.33 -3.07%
Gold 394.20 -.38%
Base Metals 109.83 +.46%
U.S. Dollar 89.28 +.22%
10-Yr. T-note Yield 4.68% -.55%
VIX 15.03 +.27%
Put/Call .68 -17.07%
NYSE Arms 1.02 +27.50%
Market Movers
BFD +26.0% after announcing its acquisition by Banknorth for $195 million.
NVEC +30.9% after saying the U.S. Patent and Trademark Office issued the company a patent for an innovation type of MRAM.
OXM +18.78% after saying it agreed to buy Ben Sherman Ltd. for $146 million in cash.
TASR +17.58% after increasing it annual revenue growth forecast from 100% to 150% for 04.
SOTR +13.62% after agreeing to be acquired by Wachovia for $14.3 billion.
CPG +11.7% after agreeing to be acquired by Simon Property Group for $3.5 billion in cash and stock.
BBBB +10.7% on continuing strength after IPO.
IMDC +6.55% after settling a patent lawsuit with Ethicon Endo-Surgery for $17.3 million.
EASI +5.28% after saying it is in full-scale production of its armored cab design for the U.S. Army's Family of Medium Tactical Vehicles.
MIL +5.27% after positive Barron's mention.
LABS -8.58% after saying it plans to sell $90 million in convertible debt.
CYBX -4.67% on profit-taking.
ASKJ -5.1% on insider selling.
SOHU -7.33% on crackdown by Chinese government on online content and YHOO entering Chinese search market.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on SLR, PAYX, KO, PEP, STZ and ATYT. Goldman reiterated Underperform on PBG and RKY. Citi SmithBarney said to Buy MOT, target $25. Citi says their recent Semi Purchasing Manager survey was better than expectations and has positive implications for LLTC, MXIM, INTC, AMD and NSM. Citi reiterated Sell on MU, target $12. ARXX raised to Buy at Deutsche Bank, target $16.
Mid-day News
U.S. stocks are quietly higher today as investors continue to fear making big bets ahead of several market-moving events over the next couple of weeks. Iran seized three British navy vessels that reportedly entered the country's territorial waters, Agence France-Presse said. U.S. officials have been spending about $2.5 billion in Iraqi oil revenue on programs such as police cars and uniforms, as well as repairing schools, the NY Times reported. Abiomed, the maker of the experimental artificial heart, expects to become profitable by March 31 and to have annual revenue of $500 million by 2011, the Boston Globe reported. The leaders of the largest labor unions in the U.S. are considering reducing the number of unions to 15 from 65 to better focus their organizing and bargaining efforts, the LA Times reported. The AFL-CIO is undertaking its earliest and largest "get-out-the-vote" campaign ever for Democratic presidential contender John Kerry, the Washington Post reported. Geely Group this year plans to become the first Chinese automaker to sell cars in the U.S., Automotive News reported. Wal-Mart said June's sales are rising around the low end of its recent forecast, Bloomberg reported. Motorola expects to raise as much as $2.73 billion in an IPO of its Freescale Semiconductor unit, Bloomberg said. A privately funded and constructed spaceship was launched today from California's Mojave Desert on a mission to become the first non-governmental craft to leave the Earth's atmosphere, Bloomberg reported. The U.S. SEC is moving ahead with plans to bring hedge funds under greater government oversight over the opposition of most of the $800 billion industry, Bloomberg reported. Crude oil futures are falling as Iraq resumed partial exports through one of two pipelines shut after an attack early last week, Bloomberg said.
BOTTOM LINE: The Portfolio is having a very good day today as my security and telecom equipment longs are rising and short Chinese ADRs are falling. I added a few new technology longs this morning, bringing the Portfolio to 100% net long market exposure. The fundamentals are improving today on an acceleration in merger activity, falling energy prices and declining interest rates. I expect U.S. stocks to rise modestly into the close on short-covering.
Monday Watch
Earnings of Note
Company/Estimate
PDG/.00
WAG/.32
APOG/.08
WWE/.19
Splits
CACH 3-for-2
PG 2-for-1
WGR 2-for-1
Economic Data
None of note.
Weekend Recommendations
Forbes on Fox had guests that were positive on APC, FCX, MMC, AH, DHB and IDNX. Bulls and Bears had guests that were positive on LYG, OXY, HPQ, NMG/A, TARO and mixed on ATYT and STX. Cashin' In had guests that were positive on SU, UPL,NOC and mixed on DEO. Louis Rukeyser's Wall Street had guests that were positive on CVX, CNF, FMC, MET, MSFT, TYC, MRK, AES and EP. Wall St. Week w/Fortune had guests that were positive on FRX, AGN, ELN, HCR, BEV and KIND. Barron's had a positive column on MIL. Barron's mid-year roundtable is positive on stocks for the second half of the year. Goldman Sachs reiterated Outperform on EBAY and raised 2Q estimates. Goldman said FLEX is oversold and to buy for a trade. Goldman reiterated Outperform on ATYT ahead of earnings report. ElectronicNews has a positive article on the semiconductor industry.
Weekend News
China will cut Internet access to unlicensed Internet cafes and strengthen its control over online chat rooms as part of a crackdown on "unhealthy" material on the Web, Xinhua reported. Baghdad's raw sewage began receiving treatment late last month for the first time in as many as 15 years, though officials made no fanfare about it for fear of the treatment plant being bombed, the NY Times reported. Telephone, cable and satellite prices will decline as they compete more with each other and fail to meet their growth goals, Barron's reported. Former President Bill Clinton, in a memoir to be released Tuesday, said his biggest disappointment while in office was his failure to bring Osama bin Laden to justice, Newsweek reported. Clinton lost his temper for several minutes during an interview that is scheduled to run Tuesday with the BBC's David Dimbleby when he was repeatedly questioned about his affair with Monica Lewinsky, the Sunday Telegraph reported. Las Vegas Sands, which operates the Venetian Casino Resort in Nevada, may have a market value of at least $4 billion after an IPO, Barron's reported. Al-Qaeda confirmed the death of the terrorist group's leader in Saudi Arabia, Agence France-Presse reported. Oil supplies resumed to Iraq's southern port of Basra after repairs were completed to a pipeline sabotaged by insurgents last week, the AP said. Exxon Mobil won a contract worth up to $1 billion to boost output from the Upper Zakum offshore oil field by a third over two years, Gulf News reported. Time Warner, whose profit has risen since Parsons became CEO in May 02, still faces U.S. federal accounting probes that began about two years ago, the NY Times reported. Pakistan and Saudi Arabia helped set the stage for the Sept. 11 attacks by cutting deals with Afghanistan's Taliban and Osama bin Laden that allowed the network to flourish, the LA Times reported. U.S. Justice Dept. prosecutors plan to ask a grand jury to return a fraud indictment against Enron's former Chairman Ken Lay, the Houston Chronicle reported. GE will offer financing products direct to consumers under the brand GE Money, the Financial Times reported. Chicago Sun-Times circulation officials set up fake sales accounts and told distributors to throw out newspapers to boost circulation numbers, the Wall Street Journal reported. The American Journal of Psychiatry published a positive study about Forest Lab's Celexa without acknowledging a negative one known to exist, the Wall Street Journal said. U.S. Treasury Secretary Snow said private sector forecasts that the U.S. economy will continue to generate 200,000 to 300,000 jobs a month this year are "reasonable," Bloomberg reported. Copper prices will probably rise for the second week in London and NY as U.S. demand for metal grows and inventories shrink, according to a Bloomberg survey. The South Korean government said it will stick to its plans to deploy 3,000 more troops in Iraq this summer, rejecting an ultimatum from Muslim militants who are threatening to behead a South Korean hostage unless the nation's soldiers are withdrawn, Bloomberg said.
Late-Night Trading
Asian indices are mixed, -.25% to +1.50% on average.
S&P 500 indicated +.27%.
NASDAQ 100 indicated +.51%.
BOTTOM LINE: I expect U.S. stocks to open higher tomorrow as strength in Japan and declining oil prices boost investor sentiment. One of the new longs I added Friday afternoon was PD and I am using a $70 stop-loss on this position. The Portfolio is 75% net long heading into the week.
Company/Estimate
PDG/.00
WAG/.32
APOG/.08
WWE/.19
Splits
CACH 3-for-2
PG 2-for-1
WGR 2-for-1
Economic Data
None of note.
Weekend Recommendations
Forbes on Fox had guests that were positive on APC, FCX, MMC, AH, DHB and IDNX. Bulls and Bears had guests that were positive on LYG, OXY, HPQ, NMG/A, TARO and mixed on ATYT and STX. Cashin' In had guests that were positive on SU, UPL,NOC and mixed on DEO. Louis Rukeyser's Wall Street had guests that were positive on CVX, CNF, FMC, MET, MSFT, TYC, MRK, AES and EP. Wall St. Week w/Fortune had guests that were positive on FRX, AGN, ELN, HCR, BEV and KIND. Barron's had a positive column on MIL. Barron's mid-year roundtable is positive on stocks for the second half of the year. Goldman Sachs reiterated Outperform on EBAY and raised 2Q estimates. Goldman said FLEX is oversold and to buy for a trade. Goldman reiterated Outperform on ATYT ahead of earnings report. ElectronicNews has a positive article on the semiconductor industry.
Weekend News
China will cut Internet access to unlicensed Internet cafes and strengthen its control over online chat rooms as part of a crackdown on "unhealthy" material on the Web, Xinhua reported. Baghdad's raw sewage began receiving treatment late last month for the first time in as many as 15 years, though officials made no fanfare about it for fear of the treatment plant being bombed, the NY Times reported. Telephone, cable and satellite prices will decline as they compete more with each other and fail to meet their growth goals, Barron's reported. Former President Bill Clinton, in a memoir to be released Tuesday, said his biggest disappointment while in office was his failure to bring Osama bin Laden to justice, Newsweek reported. Clinton lost his temper for several minutes during an interview that is scheduled to run Tuesday with the BBC's David Dimbleby when he was repeatedly questioned about his affair with Monica Lewinsky, the Sunday Telegraph reported. Las Vegas Sands, which operates the Venetian Casino Resort in Nevada, may have a market value of at least $4 billion after an IPO, Barron's reported. Al-Qaeda confirmed the death of the terrorist group's leader in Saudi Arabia, Agence France-Presse reported. Oil supplies resumed to Iraq's southern port of Basra after repairs were completed to a pipeline sabotaged by insurgents last week, the AP said. Exxon Mobil won a contract worth up to $1 billion to boost output from the Upper Zakum offshore oil field by a third over two years, Gulf News reported. Time Warner, whose profit has risen since Parsons became CEO in May 02, still faces U.S. federal accounting probes that began about two years ago, the NY Times reported. Pakistan and Saudi Arabia helped set the stage for the Sept. 11 attacks by cutting deals with Afghanistan's Taliban and Osama bin Laden that allowed the network to flourish, the LA Times reported. U.S. Justice Dept. prosecutors plan to ask a grand jury to return a fraud indictment against Enron's former Chairman Ken Lay, the Houston Chronicle reported. GE will offer financing products direct to consumers under the brand GE Money, the Financial Times reported. Chicago Sun-Times circulation officials set up fake sales accounts and told distributors to throw out newspapers to boost circulation numbers, the Wall Street Journal reported. The American Journal of Psychiatry published a positive study about Forest Lab's Celexa without acknowledging a negative one known to exist, the Wall Street Journal said. U.S. Treasury Secretary Snow said private sector forecasts that the U.S. economy will continue to generate 200,000 to 300,000 jobs a month this year are "reasonable," Bloomberg reported. Copper prices will probably rise for the second week in London and NY as U.S. demand for metal grows and inventories shrink, according to a Bloomberg survey. The South Korean government said it will stick to its plans to deploy 3,000 more troops in Iraq this summer, rejecting an ultimatum from Muslim militants who are threatening to behead a South Korean hostage unless the nation's soldiers are withdrawn, Bloomberg said.
Late-Night Trading
Asian indices are mixed, -.25% to +1.50% on average.
S&P 500 indicated +.27%.
NASDAQ 100 indicated +.51%.
BOTTOM LINE: I expect U.S. stocks to open higher tomorrow as strength in Japan and declining oil prices boost investor sentiment. One of the new longs I added Friday afternoon was PD and I am using a $70 stop-loss on this position. The Portfolio is 75% net long heading into the week.
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