Tuesday, January 04, 2005

Tuesday Watch

Earnings of Note
Company/Estimate
DLP/-.15
FINL/.05
OXM/.51

Splits
None of note.

Economic Data
Factory Orders for November estimated to rise 1.0% versus a .5% increase in October.
Total Vehicle Sales for December estimated at 16.9M versus 16.4M in November.
Domestic Vehicle Sales for December estimated at 13.5M versus 12.9M in November.
Minutes of Dec. 14 FOMC Meeting.

Recommendations
Goldman Sachs reiterated Outperform on STZ, KO, BAX, BSX, DNA, AMLN, MDT AMGN and Underperform on HRB. Goldman said to buy the common shares and sell short the bonds of companies where the equity yield is higher than the inflation-adjusted (real) bond yield, provided the dividend is secure.

Late-Night News
Asian indices are mostly lower on losses in China and Taiwan. China is close to injecting $30 billion into Industrial and Commercial Bank of China to pave the way for the overseas listing of the country’s largest lender, the Financial Times said. Ford Motor’s Jaguar Cars unit is negotiating with its parent company over additional funds after taking a charge of $1.03 billion to cover the cost of abandoning its growth strategy, the Financial Times said. Tatung, Taiwan's fourth-largest electronics maker, is selling laptop computers under its band name for the first time in US outlets run by Wal-Mart Stores, the Commercial Times reported. Sonus Networks CEO Ahmed told CNBC that the company's accounting problems are behind it, Bloomberg reported. Lazard LLC may be near completing plans for a $3.2 billion listing on the NYSE, the London-based Times said. Defense projects headed by Lockheed Martin and Northrop Grumman represent much of the $30 billion in proposed program cuts in the US within six years, Reuters reported. Prices for uranium, used to generate 16% of the world's electricity, may rise a quarter this year as stockpiles of the nuclear fuel dwindle and reactors being built in China, India and Russia seek supplies, Bloomberg reported.

Late-Night Trading
Asian Indices are -1.25% to unch. on average.
S&P 500 indicated -.02%.
NASDAQ 100 indicated +.03%.

BOTTOM LINE: I expect U.S. equities to open modestly lower in the morning on a continuation of today's profit-taking. However, stocks will likely begin to rally later in the afternoon ahead of Friday's employment data. The Shanghai Index is breaking down through technical support tonight. I continue to believe decelerating demand from Asia and Europe, increased supply and a stabilizing US dollar will lead to underperformance in commodity-related stocks in the intermediate-term. I also expect the yield on the benchmark 10-yr. T-note to test its lows during the first half of the year on decelerating inflation readings, a stabilizing US dollar and worries over global growth. The Portfolio is 75% net long heading into tomorrow.

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