Indices
S&P 500 1,228.81 +2.88%
DJIA 10,568.70 +2.57%
NASDAQ 2,151.69 +4.58%
Russell 2000 667.80 +3.85%
DJ Wilshire 5000 12,282.87 +3.25%
S&P Equity Long/Short Index 1,071.99 +4.49%
S&P Barra Growth 587.08 +3.16%
S&P Barra Value 637.50 +2.61%
Morgan Stanley Consumer 587.31 +2.97%
Morgan Stanley Cyclical 730.42 +2.18%
Morgan Stanley Technology 506.56 +7.18%
Transports 3,740.55 +6.61%
Utilities 432.38 +10.76%
S&P 500 Cum A/D Line 7,509.00 +2.48%
Bloomberg Crude Oil % Bulls 35.0 +23.67%
Put/Call .82 unch.
NYSE Arms .85 -55.26%
Volatility(VIX) 11.92 -1.0%
ISE Sentiment 170.00 +3.66%
AAII % Bulls 31.88 -31.57%
US Dollar 89.52 +.48%
CRB 332.97 +9.58%
Futures Spot Prices
Crude Oil 66.24 +13.23%
Unleaded Gasoline 209.68 +38.04%
Natural Gas 13.92 +80.79%
Heating Oil 212.96 +25.27%
Gold 471.60 +8.39%
Base Metals 129.51 +6.93%
Copper 172.70 +25.14%
10-year US Treasury Yield 4.32% +10.48%
Average 30-year Mortgage Rate 5.91% +6.10%
Leading Sectors
Energy +21.11%
Oil Service +20.54%
Biotech +13.69%
Semis +13.54%
I-Banks +13.25%
Lagging Sectors
Broadcasting -2.53%
Hospitals -2.94%
Gaming -4.65%
Retail -6.05%
Airlines -11.81%
This Year’s Winners
This Year’s Losers
*3-Month % Change
Friday, September 30, 2005
Stocks Mixed Mid-day as Rising Long-term Rates Offset Lower Energy Prices
Indices
S&P 500 1,226.08 -.13%
DJIA 10,535.33 -.17%
NASDAQ 2,142.72 +.06%
Russell 2000 665.07 +.01%
DJ Wilshire 5000 12,253.87 -.01%
S&P Barra Growth 585.31 -.14%
S&P Barra Value 636.51 -.13%
Morgan Stanley Consumer 584.77 +.06%
Morgan Stanley Cyclical 728.39 +.38%
Morgan Stanley Technology 504.68 +.53%
Transports 3,731.65 +.36%
Utilities 431.25 -.40%
Put/Call .74 -5.13%
NYSE Arms .76 -2.35%
Volatility(VIX) 12.24 unch.
ISE Sentiment 206.00 +21.89%
US Dollar 89.41 +.01%
CRB 333.04 -.54%
Futures Spot Prices
Crude Oil 66.00 -1.03%
Unleaded Gasoline 208.00 -7.62%
Natural Gas 14.20 +.03%
Heating Oil 206.50 -2.81%
Gold 472.00 -.80%
Base Metals 129.51 -1.24%
Copper 172.90 -.60%
10-year US Treasury Yield 4.33% +.87%
Leading Sectors %
Airlines +2.36%
Semis +1.74%
Nanotechnology +1.62%
Lagging Sectors
Oil Service -.73%
Energy -.79%
Gold & Silver -1.10%
S&P 500 1,226.08 -.13%
DJIA 10,535.33 -.17%
NASDAQ 2,142.72 +.06%
Russell 2000 665.07 +.01%
DJ Wilshire 5000 12,253.87 -.01%
S&P Barra Growth 585.31 -.14%
S&P Barra Value 636.51 -.13%
Morgan Stanley Consumer 584.77 +.06%
Morgan Stanley Cyclical 728.39 +.38%
Morgan Stanley Technology 504.68 +.53%
Transports 3,731.65 +.36%
Utilities 431.25 -.40%
Put/Call .74 -5.13%
NYSE Arms .76 -2.35%
Volatility(VIX) 12.24 unch.
ISE Sentiment 206.00 +21.89%
US Dollar 89.41 +.01%
CRB 333.04 -.54%
Futures Spot Prices
Crude Oil 66.00 -1.03%
Unleaded Gasoline 208.00 -7.62%
Natural Gas 14.20 +.03%
Heating Oil 206.50 -2.81%
Gold 472.00 -.80%
Base Metals 129.51 -1.24%
Copper 172.90 -.60%
10-year US Treasury Yield 4.33% +.87%
Leading Sectors %
Airlines +2.36%
Semis +1.74%
Nanotechnology +1.62%
Lagging Sectors
Oil Service -.73%
Energy -.79%
Gold & Silver -1.10%
BOTTOM LINE: The Portfolio is substantially higher mid-day on gains in my Internet longs, Semiconductor longs and Airline longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is neutral as the advance/decline line is slightly lower, most sectors are higher and volume is slightly below average. Measures of investor anxiety are lower. Today’s overall market action is neutral given the bounce in long-term rates, decline in energy prices and mixed economic data. I am seeing a number of leading indicators that point to a deceleration in unit labor costs, which comprise two-thirds of inflation. The Fed has stated numerous times that this is their chief focus with respect to inflation. I believe the net effects of the hurricanes will further dampen labor costs. I will be very surprised if the yield on the 10-year Treasury note breaches the high of 4.92% seen in June of last year any time soon. I expect US stocks to trade modestly higher from current levels into the close on short-covering and quarter-end window dressing.
Today's Headlines
Bloomberg:
- Procter & Gamble won approval from the US Federal Trade Commission for its $57 billion purchase of Gillette after agreeing to divest Gillette’s Right Guard deodorant and Rembrandt tooth-whitening brands.
- Gasoline futures in NY fell for a second day on signs that high prices are cutting demand from motorists.
- US Treasuries are falling after a manufacturing report for the Chicago region was much stronger than expected.
Wall Street Journal:
- Referrals by doctors in the more than $40 billion US medical laboratory testing business have come under scrutiny over whether physicians are profiting by sending work to outside labs that offer discounts.
- New Jersey, Michigan, Oklahoma and 10 other states have agreed to participate in a computer program that would add local taxes to residents’ purchases over the Internet.
NY Times:
- The cost of using natural gas to heat homes in the US may rise about $400 per household to an average $1,130 this winter because of tight supplies.
Financial Times:
- Philadelphia Federal Reserve Bank President Anthony Santomero said he expects US economic growth to rebound from a second-half slowdown caused by Hurricanes Katrina and Rita.
- Procter & Gamble won approval from the US Federal Trade Commission for its $57 billion purchase of Gillette after agreeing to divest Gillette’s Right Guard deodorant and Rembrandt tooth-whitening brands.
- Gasoline futures in NY fell for a second day on signs that high prices are cutting demand from motorists.
- US Treasuries are falling after a manufacturing report for the Chicago region was much stronger than expected.
Wall Street Journal:
- Referrals by doctors in the more than $40 billion US medical laboratory testing business have come under scrutiny over whether physicians are profiting by sending work to outside labs that offer discounts.
- New Jersey, Michigan, Oklahoma and 10 other states have agreed to participate in a computer program that would add local taxes to residents’ purchases over the Internet.
NY Times:
- The cost of using natural gas to heat homes in the US may rise about $400 per household to an average $1,130 this winter because of tight supplies.
Financial Times:
- Philadelphia Federal Reserve Bank President Anthony Santomero said he expects US economic growth to rebound from a second-half slowdown caused by Hurricanes Katrina and Rita.
Incomes/Spending Decline, Confidence Depressed by Hurricanes, Chicago Manufacturing Soars
- Personal Income for August is estimated to fall .1% versus estimates of a .1% decline and a .3% increase in July.
- Personal Spending for August is estimated to fall .5% versus estimates of a .2% fall and an upwardly revised 1.2% increase in July.
- PCE Core(MoM) for August rose .2% versus estimates of a .1% increase and a .1% gain in July.
- Final Univ. of Mich. Consumer Confidence for September fell to 76.9 versus estimates of 78.0 and a reading of 76.9 in August.
- Chicago Purchasing Manager for September rose to 60.5 versus estimates of 52.0 and a reading of 49.2 in August.
- Personal Spending for August is estimated to fall .5% versus estimates of a .2% fall and an upwardly revised 1.2% increase in July.
- PCE Core(MoM) for August rose .2% versus estimates of a .1% increase and a .1% gain in July.
- Final Univ. of Mich. Consumer Confidence for September fell to 76.9 versus estimates of 78.0 and a reading of 76.9 in August.
- Chicago Purchasing Manager for September rose to 60.5 versus estimates of 52.0 and a reading of 49.2 in August.
BOTTOM LINE: US personal spending fell in August by the most in three years and incomes unexpectedly dropped, Bloomberg reported. Uninsured property losses from hurricane Katrina reduced personal income by about $100 billion. The savings rate gained to -.7% from -1.1% in July. Incomes rose 5.6% in August from the same month last year, paced by a 6.6% gain in wages and salaries, Bloomberg reported. The year-over-year gain in incomes is almost twice the rate of inflation. Spending and incomes will likely take a larger hit in September as more of the effects of the hurricanes are felt.
US consumer confidence plunged by the most in 25 years after Hurricanes Katrina and Rita ravaged the Gulf Coast and pushed gasoline prices to record highs, Bloomberg reported. The expectations index, based on optimism about the next one to five years, dropped to 63.3 from 76.9. I expect consumer sentiment to bounce back sharply in October.
Chicago-area manufacturing expanded more than expected in September, signaling that firms are able to cope with higher energy prices after Hurricane Katrina and Rita, Bloomberg said. The prices paid component of the index rose to 76.3 from 62.9. The new orders component soared to 63.4 from 46.5 the month before. The employment component of the index fell to 48.4 from 51.7. This was a very impressive report given the headwinds from the hurricanes. I expect manufacturing to continue to contribute to economic growth through year-end.
Friday Watch
Late-Night Headlines
Bloomberg:
- China, producer of a third of the world’s steel, may increase output of the alloy by 25% this year, pushing down prices and increasing demand for steelmaking raw materials including iron ore and coking coal.
- The US dollar gained against the yen, heading for a third winning week, on speculation of further interest-rate increases by the Federal Reserve, which will lure funds from overseas.
- Japan’s consumer prices fell in August for a third month, suggesting more than seven years of deflation lingers and the central bank won’t rush to end its policy of flooding the world’s second-largest economy with cash.
- Crude oil is falling in NY amid concern high fuel prices after hurricanes Katrina and Rita are eroding energy demand.
Wall Street Journal:
- Delphi Corp. may have breached a loan agreement with bank lenders.
AFP:
- France’s jobless rate was unchanged for a second month in August at 9.9%, almost twice the rate in the United States.
Financial Times:
- Morgan Stanley plans to spend as much as $3 billion to quadruple its investment in Japan’s hotel sector.
- Liz Claiborne, the maker of the Mexx and Juicy Couture clothing brands, is considering re-establishing a presence in China after closing stores there in the 1990s.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on ENH, CAH, DO and RE.
- Reiterated Underperform on MU.
Business Week:
- Medis Technologies’(MDTL) shares may climb as the fuel-cell maker’s disposable, portable Power Packs used to recharge cellular telephones, are more widely adopted.
- NuVasive’s(NUVA) shares may benefit from growing sales at the make of tools and implants used to treat spinal problems.
Night Trading
Asian Indices are -.25% to +.50% on average.
S&P 500 indicated +.11%.
NASDAQ 100 indicated +.19%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
NDN/.11
DRL/.41
IPG/.15
SKS/-.20
TOM/-.06
Upcoming Splits
- RMD 2-for-1
Economic Releases
8:30 am EST
- Personal Income for August is estimated to rise .3% versus a .3% gain in July.
- Personal Spending for August is estimated to fall .2% versus a 1.0% increase in July.
- PCE Core(MoM) for August is estimated to rise .1% versus a .1% increase in July.
9:45 am EST
- Final Univ. of Mich. Confidence for September is estimated to rise to 78.0 versus a prior estimate of 76.9.
10:00 am EST
- Chicago Purchasing Manager for September is estimated to rise to 52.0 versus a reading of 49.2 in August.
Bloomberg:
- China, producer of a third of the world’s steel, may increase output of the alloy by 25% this year, pushing down prices and increasing demand for steelmaking raw materials including iron ore and coking coal.
- The US dollar gained against the yen, heading for a third winning week, on speculation of further interest-rate increases by the Federal Reserve, which will lure funds from overseas.
- Japan’s consumer prices fell in August for a third month, suggesting more than seven years of deflation lingers and the central bank won’t rush to end its policy of flooding the world’s second-largest economy with cash.
- Crude oil is falling in NY amid concern high fuel prices after hurricanes Katrina and Rita are eroding energy demand.
Wall Street Journal:
- Delphi Corp. may have breached a loan agreement with bank lenders.
AFP:
- France’s jobless rate was unchanged for a second month in August at 9.9%, almost twice the rate in the United States.
Financial Times:
- Morgan Stanley plans to spend as much as $3 billion to quadruple its investment in Japan’s hotel sector.
- Liz Claiborne, the maker of the Mexx and Juicy Couture clothing brands, is considering re-establishing a presence in China after closing stores there in the 1990s.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on ENH, CAH, DO and RE.
- Reiterated Underperform on MU.
Business Week:
- Medis Technologies’(MDTL) shares may climb as the fuel-cell maker’s disposable, portable Power Packs used to recharge cellular telephones, are more widely adopted.
- NuVasive’s(NUVA) shares may benefit from growing sales at the make of tools and implants used to treat spinal problems.
Night Trading
Asian Indices are -.25% to +.50% on average.
S&P 500 indicated +.11%.
NASDAQ 100 indicated +.19%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
NDN/.11
DRL/.41
IPG/.15
SKS/-.20
TOM/-.06
Upcoming Splits
- RMD 2-for-1
Economic Releases
8:30 am EST
- Personal Income for August is estimated to rise .3% versus a .3% gain in July.
- Personal Spending for August is estimated to fall .2% versus a 1.0% increase in July.
- PCE Core(MoM) for August is estimated to rise .1% versus a .1% increase in July.
9:45 am EST
- Final Univ. of Mich. Confidence for September is estimated to rise to 78.0 versus a prior estimate of 76.9.
10:00 am EST
- Chicago Purchasing Manager for September is estimated to rise to 52.0 versus a reading of 49.2 in August.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology companies in the region after Micro Technology of the US reported a much better-than-expected quarter. I expect US equities to open modestly higher and to build on gains throughout the day. I am seeing evidence all over the globe of a substantial increase in energy demand destruction. While the effects of the hurricanes are propping up energy prices in the short-run, they greatly increased the odds of an outright collapse in oil over the intermediate-term. I can not stress enough how flawed I believe the peak oil theory is. These types of doomsday predictions were commonly accepted in the early 80s. It has taken over 20 years for oil to approach those inflation-adjusted prices. Is it really different this time? If anything the collapse may be even more breathtaking this go around as technological innovation is accelerating at a far more rapid pace. The Portfolio is 100% net long heading into the day.
Thursday, September 29, 2005
Stocks Finish Sharply Higher on Short-Covering and Quarter-End Window Dressing
Indices
S&P 500 1,227.68 +.89%
DJIA 10,552.78 +.76%
NASDAQ 2,141.22 +1.22%
Russell 2000 665.03 +1.37%
DJ Wilshire 5000 12,255.69 +.92%
S&P Barra Growth 586.11 +.73%
S&P Barra Value 637.35 +1.04%
Morgan Stanley Consumer 584.44 +.70%
Morgan Stanley Cyclical 725.61 +.53%
Morgan Stanley Technology 502.04 +1.06%
Transports 3,718.42 +1.70%
Utilities 432.98 +.92%
Put/Call .78 +6.85%
NYSE Arms .78 -1.14%
Volatility(VIX) 12.24 -3.09%
ISE Sentiment 169.00 +18.18%
US Dollar 89.40 -.08%
CRB 334.85 +.46%
Futures Spot Prices
Crude Oil 66.74 -.07%
Unleaded Gasoline 221.10 -1.80%
Natural Gas 14.09 -.75%
Heating Oil 212.47 -.77%
Gold 475.40 -.08%
Base Metals 131.13 +.54%
Copper 173.95 unch.
10-year US Treasury Yield 4.29% +.92%
Leading Sectors
Disk Drives +2.37%
Homebuilders +1.93%
Software +1.90%
Lagging Sectors
Broadcasting -.45%
Airlines -.63%
HMOs -2.30%
Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play
Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on FCX and SGMS.
Afternoon/Evening Headlines
Bloomberg:
- The New Orleans Police Dept. is investigating 12 officers for allegedly looting homes around the city during the Hurricane Katrina rescue and recovery effort.
- Gasoline futures retreated from a four-week high on expectations rising imports will help make up for output lost from refineries that are shut because of hurricane damage.
- President Bush’s job approval rating rose after he took a more visible role in the government response to Hurricane Rita than he did for Hurricane Katrina, a CNN/USA Today/Gallup poll showed.
Wall Street Journal:
- Bats were the source of the deadly SARS virus that killed more than 700 people in 2002 in an epidemic that began in southern China.
AP:
- Pictures showing abuses of Abu Ghraib prisoners in Iraq must be released to the public, a federal judge in NY ruled today. US District Judge Alvin Hellerstein ruled in favor of the ACLU and against the US military, which argued that the unnecessary images might aid al-Qaeda recruitment and result in more loss of life in the Middle East.
Die Welt:
- UPS will step up acquisitions in Europe and may consider a bid for Dutch package deliverer TNT NV.
S&P 500 1,227.68 +.89%
DJIA 10,552.78 +.76%
NASDAQ 2,141.22 +1.22%
Russell 2000 665.03 +1.37%
DJ Wilshire 5000 12,255.69 +.92%
S&P Barra Growth 586.11 +.73%
S&P Barra Value 637.35 +1.04%
Morgan Stanley Consumer 584.44 +.70%
Morgan Stanley Cyclical 725.61 +.53%
Morgan Stanley Technology 502.04 +1.06%
Transports 3,718.42 +1.70%
Utilities 432.98 +.92%
Put/Call .78 +6.85%
NYSE Arms .78 -1.14%
Volatility(VIX) 12.24 -3.09%
ISE Sentiment 169.00 +18.18%
US Dollar 89.40 -.08%
CRB 334.85 +.46%
Futures Spot Prices
Crude Oil 66.74 -.07%
Unleaded Gasoline 221.10 -1.80%
Natural Gas 14.09 -.75%
Heating Oil 212.47 -.77%
Gold 475.40 -.08%
Base Metals 131.13 +.54%
Copper 173.95 unch.
10-year US Treasury Yield 4.29% +.92%
Leading Sectors
Disk Drives +2.37%
Homebuilders +1.93%
Software +1.90%
Lagging Sectors
Broadcasting -.45%
Airlines -.63%
HMOs -2.30%
Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play
Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on FCX and SGMS.
Afternoon/Evening Headlines
Bloomberg:
- The New Orleans Police Dept. is investigating 12 officers for allegedly looting homes around the city during the Hurricane Katrina rescue and recovery effort.
- Gasoline futures retreated from a four-week high on expectations rising imports will help make up for output lost from refineries that are shut because of hurricane damage.
- President Bush’s job approval rating rose after he took a more visible role in the government response to Hurricane Rita than he did for Hurricane Katrina, a CNN/USA Today/Gallup poll showed.
Wall Street Journal:
- Bats were the source of the deadly SARS virus that killed more than 700 people in 2002 in an epidemic that began in southern China.
AP:
- Pictures showing abuses of Abu Ghraib prisoners in Iraq must be released to the public, a federal judge in NY ruled today. US District Judge Alvin Hellerstein ruled in favor of the ACLU and against the US military, which argued that the unnecessary images might aid al-Qaeda recruitment and result in more loss of life in the Middle East.
Die Welt:
- UPS will step up acquisitions in Europe and may consider a bid for Dutch package deliverer TNT NV.
BOTTOM LINE: The Portfolio finished substantially higher today on gains in my Internet longs, Semiconductor longs, Medical longs and Medical Information System longs. I did not trade in the afternoon, thus leaving the Portfolio 100% net long. The tone of the market was positive today as the advance/decline line finished at session highs, most sectors rose and volume was above average. Measures of investor anxiety were mostly lower into the close. Overall, today’s market action was very positive. The AAII % Bulls fell to 31.88% this week from 39.47% the prior week; this reading is approaching depressed levels. Likewise, the % Bears rose to 39.13% from 32.46% the prior week; this is approaching elevated levels. I expect more choppy trading over the next few weeks as bullish sentiment becomes depressed. This should pave the way for an upside breakout in late October/early November.
Stocks Higher Mid-day on Better-than-expected Economic Data
Indices
S&P 500 1,225.07 +.67%
DJIA 10,525.87 +.51%
NASDAQ 2,134.65 +.91%
Russell 2000 662.20 +.94%
DJ Wilshire 5000 12,227.18 +.69%
S&P Barra Growth 585.04 +.54%
S&P Barra Value 636.07 +.84%
Morgan Stanley Consumer 583.54 +.55%
Morgan Stanley Cyclical 725.14 +.46%
Morgan Stanley Technology 501.83 +1.02%
Transports 3,714.66 +1.60%
Utilities 432.96 +.92%
Put/Call .83 +13.70%
NYSE Arms .75 -3.20%
Volatility(VIX) 12.32 -2.45%
ISE Sentiment 179.00 +25.17%
US Dollar 89.38 -.10%
CRB 335.03 +.51%
Futures Spot Prices
Crude Oil 66.80 +.68%
Unleaded Gasoline 225.00 -3.82%
Natural Gas 14.40 +2.20%
Heating Oil 209.00 -2.39%
Gold 475.80 +.57%
Base Metals 131.13 +.54%
Copper 173.95 -.49%
10-year US Treasury Yield 4.28% +.83%
Leading Sectors %
Internet +1.72%
Disk Drives +1.71%
Software +1.52%
Lagging Sectors
Gaming -.54%
Airlines -.68%
HMOs -2.24%
S&P 500 1,225.07 +.67%
DJIA 10,525.87 +.51%
NASDAQ 2,134.65 +.91%
Russell 2000 662.20 +.94%
DJ Wilshire 5000 12,227.18 +.69%
S&P Barra Growth 585.04 +.54%
S&P Barra Value 636.07 +.84%
Morgan Stanley Consumer 583.54 +.55%
Morgan Stanley Cyclical 725.14 +.46%
Morgan Stanley Technology 501.83 +1.02%
Transports 3,714.66 +1.60%
Utilities 432.96 +.92%
Put/Call .83 +13.70%
NYSE Arms .75 -3.20%
Volatility(VIX) 12.32 -2.45%
ISE Sentiment 179.00 +25.17%
US Dollar 89.38 -.10%
CRB 335.03 +.51%
Futures Spot Prices
Crude Oil 66.80 +.68%
Unleaded Gasoline 225.00 -3.82%
Natural Gas 14.40 +2.20%
Heating Oil 209.00 -2.39%
Gold 475.80 +.57%
Base Metals 131.13 +.54%
Copper 173.95 -.49%
10-year US Treasury Yield 4.28% +.83%
Leading Sectors %
Internet +1.72%
Disk Drives +1.71%
Software +1.52%
Lagging Sectors
Gaming -.54%
Airlines -.68%
HMOs -2.24%
BOTTOM LINE: The Portfolio is substantially higher mid-day on gains in my Internet longs, Semiconductor longs, Medical longs and Medical Information Systems longs. I exited my QQQQ/IWM shorts this morning and added to my existing longs including GOOG, NTES, BBY, SKYW, MDRX, BRCM and ISRG, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is higher, most sectors are higher and volume is slightly above average. Measures of investor anxiety are mixed. Today’s overall market action is slightly positive given the bounce in long-term rates and better-than-expected economic data. Despite the GOP's current woes, Tradesports.com reports that a Republican president is likely in 2008. The percentage chance of a Republican winning the 2008 presidential election has risen to 50.7% over the last couple of months from a low of 45.0%. The chances of a Democrat winning have fallen to 48.5% from a high of 55.0%. I expect US stocks to trade mixed-to-higher from current levels into the close on short-covering and quarter-end window dressing.
Today's Headlines
Bloomberg:
- The cost of leasing a container ship has dropped almost 20% since a peak in June, Lloyd’s List reported.
- E*Trade Financial agreed to buy BrownCo, JPMorgan Chase’s online brokerage, for $1.6 billion in cash.
- The US, which imports three-fifths of the world’s beluga caviar, will ban shipments of the eggs from the Caspian Sea region to protect falling sturgeon stocks.
- The human immunodeficiency virus that causes AIDS appears to have weakened since the start of the pandemic more than two decades ago, according to a Belgian study published today in the journal AIDS.
- GE agreed to buy IDX Systems, a healthcares information technology provider, for about $1.2 billion.
- Ford will eliminate half its suppliers and sign long-term contracts with the rest to reduce costs and revive profit.
- Caterpillar may add $1 billion in sales over the next two years as the Gulf Coast cleans up and rebuilds from Hurricane Katrina, analysts said.
- John G. Roberts, backed by united Republicans in the US Senate and half the Democrats, won confirmation to be the nation’s 17th chief justice and take his place as the first new member of the Supreme Court in 11 years.
- US Treasuries are falling after a government report showed weekly jobless claims fell more than forecast.
- Gasoline futures retreated from a four-week high as rising imports may help make up for output lost from refineries that were shut because of hurricane damage.
Wall Street Journal:
- Vonage Holdings, a closely held provider of internet-based calling, has chosen Citigroup, UBS, Deutsche Bank and Bear Stearns to manage its proposed IPO.
- Victims of Hurricane Katrina have expressed praise for relief provided by the Salvation Army.
- General Electric, Bechtel and American Electric Power may announce today that they will start planning engineering and design of the first US big coal-fired power plant that would use cleaner-burning technologies.
- Tracking devices supplied by Bulldog Technologies and SC-integrity are helping shippers cut down on a boom in cargo theft.
- Walt Disney may announce today that it plans to sell a $49 digital-audio player aimed at children between 6 and 12 years of age to tap into growing demand for electronics.
NY Times:
- Guidant’s handling of problems with its heart devices may be under a US criminal probe.
- Some US middle-class families are paying less for houses with the help of government agencies, private developers, not-for-profit groups and employers.
LA Timest:
- Spain is investing $100 million in a campaign to improve business ties with the US and overcome recent political tensions between the two countries.
- The cost of leasing a container ship has dropped almost 20% since a peak in June, Lloyd’s List reported.
- E*Trade Financial agreed to buy BrownCo, JPMorgan Chase’s online brokerage, for $1.6 billion in cash.
- The US, which imports three-fifths of the world’s beluga caviar, will ban shipments of the eggs from the Caspian Sea region to protect falling sturgeon stocks.
- The human immunodeficiency virus that causes AIDS appears to have weakened since the start of the pandemic more than two decades ago, according to a Belgian study published today in the journal AIDS.
- GE agreed to buy IDX Systems, a healthcares information technology provider, for about $1.2 billion.
- Ford will eliminate half its suppliers and sign long-term contracts with the rest to reduce costs and revive profit.
- Caterpillar may add $1 billion in sales over the next two years as the Gulf Coast cleans up and rebuilds from Hurricane Katrina, analysts said.
- John G. Roberts, backed by united Republicans in the US Senate and half the Democrats, won confirmation to be the nation’s 17th chief justice and take his place as the first new member of the Supreme Court in 11 years.
- US Treasuries are falling after a government report showed weekly jobless claims fell more than forecast.
- Gasoline futures retreated from a four-week high as rising imports may help make up for output lost from refineries that were shut because of hurricane damage.
Wall Street Journal:
- Vonage Holdings, a closely held provider of internet-based calling, has chosen Citigroup, UBS, Deutsche Bank and Bear Stearns to manage its proposed IPO.
- Victims of Hurricane Katrina have expressed praise for relief provided by the Salvation Army.
- General Electric, Bechtel and American Electric Power may announce today that they will start planning engineering and design of the first US big coal-fired power plant that would use cleaner-burning technologies.
- Tracking devices supplied by Bulldog Technologies and SC-integrity are helping shippers cut down on a boom in cargo theft.
- Walt Disney may announce today that it plans to sell a $49 digital-audio player aimed at children between 6 and 12 years of age to tap into growing demand for electronics.
NY Times:
- Guidant’s handling of problems with its heart devices may be under a US criminal probe.
- Some US middle-class families are paying less for houses with the help of government agencies, private developers, not-for-profit groups and employers.
LA Timest:
- Spain is investing $100 million in a campaign to improve business ties with the US and overcome recent political tensions between the two countries.
US GDP Growth Streak Best Since 1986, Jobless Claims Starting to Fall Again
- Final 2Q GDP rose 3.3% versus estimates of 3.3% and a prior estimate of 3.3%.
- Final 2Q GDP Price Index rose 2.6% versus estimates of a 2.4% gain and prior estimates of a 2.4% gain.
- Final 2Q Personal Consumption rose 3.4% versus estimates of 3.0% and prior estimates of a 3.0% increase.
- Initial Jobless Claims for last week fell to 356K versus estimates of 418K and 435K the prior week.
- Continuing Claims rose to 2802K versus estimates of 2708K and 2658K prior.
- Final 2Q GDP Price Index rose 2.6% versus estimates of a 2.4% gain and prior estimates of a 2.4% gain.
- Final 2Q Personal Consumption rose 3.4% versus estimates of 3.0% and prior estimates of a 3.0% increase.
- Initial Jobless Claims for last week fell to 356K versus estimates of 418K and 435K the prior week.
- Continuing Claims rose to 2802K versus estimates of 2708K and 2658K prior.
BOTTOM LINE: The US economy grew at an above-average 3.3% annual rate in the second quarter, fueled by homebuilding and consumer spending, indicating the economy was strong entering the third quarter, before twin hurricanes slowed growth this month, Bloomberg reported. Growth in the US economy has now exceeded 3% for nine straight quarters, the longest streak since the 13 quarters that ended in March 1986. The core personal consumption expenditures index, Greenspan’s favorite inflation gauge, rose 1.7% versus a 2.4% over the first three months of the year. GDP will temporarily dip below average rates this quarter before rebounding back to more vigorous levels into year-end.
Workers dislocated by Hurricane Katrina pushed first-time claims for unemployment benefits to the highest in more than two years, Bloomberg said. About 103,000 claims last week were from people affected by the hurricanes. 214,000 people have now filed claims that were dislocated from the hurricanes. The four-week moving-average of claims rose to 376,250 from 347,250 the prior week. The insured employment rate, which tracks the unemployment rate, rose 2.1% from 2.0%. It appears as thought the worst is over for hurricane-related jobless claims. I expect claims to move modestly lower through year-end.
Wednesday, September 28, 2005
Thursday Watch
Late-Night Headlines
Bloomberg:
- Japan’s retail sales rose almost twice as much as expected in August as consumers spent their higher wages and bonuses, adding to signs that the world’s second-largest economy will expand for a fourth quarter.
- GE will buy a 7% stake in China’s Shenzhen Development Bank valued at $100 million.
- Police in London are investigating a number of new potential terrorist suspects who may be planning further attacks.
- Samsung Electronics plans to invest $33 billion in the next seven years on factories to triple chip sales.
China Business News:
- Shanghai’s home supply jumped 50% this month, while prices dropped 17%, citing Shanghai Property Exchange Center.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on MWV, HMA, DNA and MWV.
- Reiterated Underperform on EK.
Night Trading
Asian Indices are +.50% to +1.0% on average.
S&P 500 indicated +.02%.
NASDAQ 100 indicated +.09%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
FDO/.17
MU/-.08
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- Final 2Q GDP is estimated to rise 3.3% versus a prior estimate of a 3.3% increase.
- Final 2Q GDP Price Index is estimated to rise 2.4% versus a prior estimate of a 2.4% increase.
- Final 2Q Personal Consumption is estimated to rise 3.0% versus a prior estimate of a 3.0% gain.
- Initial Jobless Claims for last week are estimated to fall to 418K versus 432K the prior week.
- Continuing Claims are estimated to rise to 2708K versus 2666K prior.
Bloomberg:
- Japan’s retail sales rose almost twice as much as expected in August as consumers spent their higher wages and bonuses, adding to signs that the world’s second-largest economy will expand for a fourth quarter.
- GE will buy a 7% stake in China’s Shenzhen Development Bank valued at $100 million.
- Police in London are investigating a number of new potential terrorist suspects who may be planning further attacks.
- Samsung Electronics plans to invest $33 billion in the next seven years on factories to triple chip sales.
China Business News:
- Shanghai’s home supply jumped 50% this month, while prices dropped 17%, citing Shanghai Property Exchange Center.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on MWV, HMA, DNA and MWV.
- Reiterated Underperform on EK.
Night Trading
Asian Indices are +.50% to +1.0% on average.
S&P 500 indicated +.02%.
NASDAQ 100 indicated +.09%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
FDO/.17
MU/-.08
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- Final 2Q GDP is estimated to rise 3.3% versus a prior estimate of a 3.3% increase.
- Final 2Q GDP Price Index is estimated to rise 2.4% versus a prior estimate of a 2.4% increase.
- Final 2Q Personal Consumption is estimated to rise 3.0% versus a prior estimate of a 3.0% gain.
- Initial Jobless Claims for last week are estimated to fall to 418K versus 432K the prior week.
- Continuing Claims are estimated to rise to 2708K versus 2666K prior.
BOTTOM LINE: Asian indices are higher, boosted by cyclical companies in the region on strong economic reports from the US and Japan. I expect US equities to open modestly higher on gains in Asia and quarter-end window dressing. The Portfolio is 50% net long heading into the day.
Stocks Finished Mixed in Another Show of Resiliency
Indices
S&P 500 1,216.89 +.10%
DJIA 10,473.09 +.16%
NASDAQ 2,115.40 -.05%
Russell 2000 656.04 -.47%
DJ Wilshire 5000 12,143.63 +.03%
S&P Barra Growth 581.89 +.06%
S&P Barra Value 630.79 +.14%
Morgan Stanley Consumer 580.36 +.22%
Morgan Stanley Cyclical 721.82 +.01%
Morgan Stanley Technology 496.78 +.39%
Transports 3,656.23 +1.07%
Utilities 429.04 +1.03%
Put/Call .73 -7.59%
NYSE Arms .79 -16.27%
Volatility(VIX) 12.63 -1.02%
ISE Sentiment 143.00 -28.50%
US Dollar 89.47 -.15%
CRB 333.33 +1.93%
Futures Spot Prices
Crude Oil 66.28 -.11%
Unleaded Gasoline 230.00 -1.92%
Natural Gas 14.04 -.43%
Heating Oil 212.92 -.56%
Gold 472.50 -.13%
Base Metals 130.42 -.19%
Copper 174.50 -.17%
10-year US Treasury Yield 4.25% -.55%
Leading Sectors
Networking +2.18%
Gold & Silver +2.17%
Computer Services +1.43%
Lagging Sectors
Alternative Energy -.95%
REITs -.96%
Retail -1.32%
Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play
Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on EL.
- Reiterated Underperform on DE.
Afternoon/Evening Headlines
Bloomberg:
- Landry’s Restaurants, which yesterday completed the acquisition of two Golden Nugget Casino and Hotels in Nevada, may expand the operation to Gulf coast states such as Mississippi, CEO Fertitta said.
- A probe of Fannie Mae, the largest source of money for US home loans, turned up “new and pervasive accounting violations,” Dow Jones reported.
- Governor George Pataki said today he will direct development officials to drop plans for a museum of freedom at the World Trade Center site as officials said the center could be used for anti-US messages.
- A tropical storm system is developing in the Caribbean Sea and has the potential to develop into another hurricane.
- Television and radio indecency complaints to US regulators plummeted 98% in the second quarter after networks flagged racier programs.
S&P 500 1,216.89 +.10%
DJIA 10,473.09 +.16%
NASDAQ 2,115.40 -.05%
Russell 2000 656.04 -.47%
DJ Wilshire 5000 12,143.63 +.03%
S&P Barra Growth 581.89 +.06%
S&P Barra Value 630.79 +.14%
Morgan Stanley Consumer 580.36 +.22%
Morgan Stanley Cyclical 721.82 +.01%
Morgan Stanley Technology 496.78 +.39%
Transports 3,656.23 +1.07%
Utilities 429.04 +1.03%
Put/Call .73 -7.59%
NYSE Arms .79 -16.27%
Volatility(VIX) 12.63 -1.02%
ISE Sentiment 143.00 -28.50%
US Dollar 89.47 -.15%
CRB 333.33 +1.93%
Futures Spot Prices
Crude Oil 66.28 -.11%
Unleaded Gasoline 230.00 -1.92%
Natural Gas 14.04 -.43%
Heating Oil 212.92 -.56%
Gold 472.50 -.13%
Base Metals 130.42 -.19%
Copper 174.50 -.17%
10-year US Treasury Yield 4.25% -.55%
Leading Sectors
Networking +2.18%
Gold & Silver +2.17%
Computer Services +1.43%
Lagging Sectors
Alternative Energy -.95%
REITs -.96%
Retail -1.32%
Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play
Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on EL.
- Reiterated Underperform on DE.
Afternoon/Evening Headlines
Bloomberg:
- Landry’s Restaurants, which yesterday completed the acquisition of two Golden Nugget Casino and Hotels in Nevada, may expand the operation to Gulf coast states such as Mississippi, CEO Fertitta said.
- A probe of Fannie Mae, the largest source of money for US home loans, turned up “new and pervasive accounting violations,” Dow Jones reported.
- Governor George Pataki said today he will direct development officials to drop plans for a museum of freedom at the World Trade Center site as officials said the center could be used for anti-US messages.
- A tropical storm system is developing in the Caribbean Sea and has the potential to develop into another hurricane.
- Television and radio indecency complaints to US regulators plummeted 98% in the second quarter after networks flagged racier programs.
BOTTOM LINE: The Portfolio finished slightly lower today on losses in my Energy-related shorts and Internet longs. I covered some of my IWM and QQQQ shorts in the afternoon, thus leaving the Portfolio 50% net long. The tone of the market was slightly negative today as the advance/decline line finished lower, sector performance was mixed and volume was about average. Measures of investor anxiety were mostly lower into the close. Overall, today’s market action was slightly positive given a 10% jump in natural gas prices and a 10% decline in Fannie Mae (FNM). Breadth, however, remained modestly negative throughout the day. I expect stocks to continue to trade mixed-to-lower over the next few weeks before a meaningful rally propels the major averages higher through year-end.
Stocks Slightly Higher Mid-day Even as Energy Prices Rise Again
Indices
S&P 500 1,218.73 +.25%
DJIA 10,482.36 +.25%
NASDAQ 2,120.98 +.17%
Russell 2000 656.44 -.41%
DJ Wilshire 5000 12,161.39 +.18%
S&P Barra Growth 582.81 +.21%
S&P Barra Value 631.99 +.33%
Morgan Stanley Consumer 581.55 +.43%
Morgan Stanley Cyclical 722.96 +.17%
Morgan Stanley Technology 497.68 +.56%
Transports 3,661.93 +1.22%
Utilities 428.90 +1.01%
Put/Call .74 -6.33%
NYSE Arms .73 -22.64%
Volatility(VIX) 12.50 -2.04%
ISE Sentiment 140.00 -30.0%
US Dollar 89.47 -.15%
CRB 333.45 +1.96%
Futures Spot Prices
Crude Oil 66.40 +2.04%
Unleaded Gasoline 232.50 +7.32%
Natural Gas 14.60 +15.36%
Heating Oil 215.00 +3.94%
Gold 472.90 +1.44%
Base Metals 130.42 -.19%
Copper 174.50 +.98%
10-year US Treasury Yield 4.25% -.64%
Leading Sectors %
Gold & Silver +2.18%
Networking +1.89%
Computer Services +1.54%
Lagging Sectors
Homebuilders -.98%
Retail -1.13%
REITs -1.15%
S&P 500 1,218.73 +.25%
DJIA 10,482.36 +.25%
NASDAQ 2,120.98 +.17%
Russell 2000 656.44 -.41%
DJ Wilshire 5000 12,161.39 +.18%
S&P Barra Growth 582.81 +.21%
S&P Barra Value 631.99 +.33%
Morgan Stanley Consumer 581.55 +.43%
Morgan Stanley Cyclical 722.96 +.17%
Morgan Stanley Technology 497.68 +.56%
Transports 3,661.93 +1.22%
Utilities 428.90 +1.01%
Put/Call .74 -6.33%
NYSE Arms .73 -22.64%
Volatility(VIX) 12.50 -2.04%
ISE Sentiment 140.00 -30.0%
US Dollar 89.47 -.15%
CRB 333.45 +1.96%
Futures Spot Prices
Crude Oil 66.40 +2.04%
Unleaded Gasoline 232.50 +7.32%
Natural Gas 14.60 +15.36%
Heating Oil 215.00 +3.94%
Gold 472.90 +1.44%
Base Metals 130.42 -.19%
Copper 174.50 +.98%
10-year US Treasury Yield 4.25% -.64%
Leading Sectors %
Gold & Silver +2.18%
Networking +1.89%
Computer Services +1.54%
Lagging Sectors
Homebuilders -.98%
Retail -1.13%
REITs -1.15%
BOTTOM LINE: The Portfolio is slightly lower mid-day on losses in my Internet longs and Energy-related shorts. I added back QQQQ/IWM shorts this morning and added back to my TLT long, thus leaving the Portfolio 25% net long. The tone of the market is neutral as the advance/decline line is lower, most sectors are higher and volume is average. Measures of investor anxiety are mostly lower. Today’s overall market action is slightly positive given the rise in energy prices and better-than-expected economic data. Given the spike in energy prices, measures of investor angst are relatively low. The 10-year T-note continues to rally. I expect US stocks to trade mixed-to-lower from current levels into the close on worries over higher energy prices.
Today's Headlines
Bloomberg:
- US Representative Tom Delay was indicted by a Texas grand jury on a single count of conspiracy.
- Gasoline and crude oil rose on speculation that supplies will fall because Hurricane Rita shut refineries and platforms.
- US Treasury Bonds are rallying as high energy prices increase speculation of an economic slowdown.
Wall Street Journal:
- Celgene Corp. may face concerns over the safety of its experimental blood cancer drug Revlimid after a clinical trail was suspended, citing the principal investigator of the study.
- Valero Energy, Tesoro Corp. and other US gasoline refiners are finding it increasingly difficult to decide whether to keep pumping gas or halt operations for scheduled maintenance.
- Dell is expected to announce a new line of desktop and notebook personal computers with prices between $1,100 to more than $6,000 aimed at more affluent customers.
- Morningstar, Reuters Group Plc, and a small New Jersey company, Sky Fund, are trying to fill a gap in the market by developing dependable ratings of hedge funds.
- New Orleans public schools will need massive repairs and reorganization after Hurricane Katrina set back efforts to turn around the corruption-plagued system.
- UPS may be hurt by a Dell decision to ship many computers to US post offices for customer pick-up rather than to buyers’ homes.
NY Times:
- NRG Energy Inc., the owner of power plants in 14 US states, is in advanced talks to acquire Texas Genco Holdings for at least $5 billion.
Financial Times Deutschland:
- Royal Philips Electronics NV, Europe’s biggest maker of televisions, expects the price decline for flat-panel televisions to end because of higher demand.
- US Representative Tom Delay was indicted by a Texas grand jury on a single count of conspiracy.
- Gasoline and crude oil rose on speculation that supplies will fall because Hurricane Rita shut refineries and platforms.
- US Treasury Bonds are rallying as high energy prices increase speculation of an economic slowdown.
Wall Street Journal:
- Celgene Corp. may face concerns over the safety of its experimental blood cancer drug Revlimid after a clinical trail was suspended, citing the principal investigator of the study.
- Valero Energy, Tesoro Corp. and other US gasoline refiners are finding it increasingly difficult to decide whether to keep pumping gas or halt operations for scheduled maintenance.
- Dell is expected to announce a new line of desktop and notebook personal computers with prices between $1,100 to more than $6,000 aimed at more affluent customers.
- Morningstar, Reuters Group Plc, and a small New Jersey company, Sky Fund, are trying to fill a gap in the market by developing dependable ratings of hedge funds.
- New Orleans public schools will need massive repairs and reorganization after Hurricane Katrina set back efforts to turn around the corruption-plagued system.
- UPS may be hurt by a Dell decision to ship many computers to US post offices for customer pick-up rather than to buyers’ homes.
NY Times:
- NRG Energy Inc., the owner of power plants in 14 US states, is in advanced talks to acquire Texas Genco Holdings for at least $5 billion.
Financial Times Deutschland:
- Royal Philips Electronics NV, Europe’s biggest maker of televisions, expects the price decline for flat-panel televisions to end because of higher demand.
Durable Goods Orders Rebound Sharply
- Durable Goods Orders for August rose 3.3% versus estimates of a .7% gain and a 5.3% decline in July.
- Durables Ex Transportation for August rose 4.2% versus estimates of a 1.0% gain and a 3.7% decline in July.
- Durables Ex Transportation for August rose 4.2% versus estimates of a 1.0% gain and a 3.7% decline in July.
BOTTOM LINE: US orders for durable goods rose a greater-than-expected 3.3% in August, rebounding as businesses sought to rebuild stocks depleted by surging sales, Bloomberg reported. Total shipments, a gauge of future sales, rose 1.7%, the most since December. As well, bookings for non-defense capital goods excluding aircraft, an indication of future business spending, rose 3.6% last month. Moreover, unfilled orders, a measure of future production, rose 1.7%. Durables will likely take a tumble for September on Katrina, however another push higher is likely thereafter through year-end.
Tuesday, September 27, 2005
Wednesday Watch
Late-Night Headlines
Bloomberg:
- Mississippi Governor Haley Barbour proposed moving casinos moored on the Mississippi River or along the state’s coast inland, in response to Hurricane Katrina damage.
Financial Times:
- SanDisk Corp., the world’s biggest flash-memory card maker, and music company EMI Group Plc have developed a music storage card that may replace CDs and DVDs.
- Deutsche Post AG’s DHL package-delivery unit may plan to start a chain of retail outlets in the US.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on BC and PAYX.
- Reiterated Underperform on HCC and MKL.
Night Trading
Asian Indices are +.25% to +.75% on average.
S&P 500 indicated +.02%.
NASDAQ 100 indicated unch.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
MKC/.34
RHAT/.07
RECN/.28
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- Durable Goods Orders for August are estimated to rise .7% versus a 4.9% decline in July.
- Durables Ex Transportation for August are estimated to rise 1.0% versus a 3.2% decline in July.
10:30 am EST
- Platt's estimates weekly crude inventories fell 2.7 million barrels, gasoline inventories fell 3.25 million barrels, distillate inventories declined 2.25 million barrels and refinery utilization dropped 9.5%.
Bloomberg:
- Mississippi Governor Haley Barbour proposed moving casinos moored on the Mississippi River or along the state’s coast inland, in response to Hurricane Katrina damage.
Financial Times:
- SanDisk Corp., the world’s biggest flash-memory card maker, and music company EMI Group Plc have developed a music storage card that may replace CDs and DVDs.
- Deutsche Post AG’s DHL package-delivery unit may plan to start a chain of retail outlets in the US.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on BC and PAYX.
- Reiterated Underperform on HCC and MKL.
Night Trading
Asian Indices are +.25% to +.75% on average.
S&P 500 indicated +.02%.
NASDAQ 100 indicated unch.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
MKC/.34
RHAT/.07
RECN/.28
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- Durable Goods Orders for August are estimated to rise .7% versus a 4.9% decline in July.
- Durables Ex Transportation for August are estimated to rise 1.0% versus a 3.2% decline in July.
10:30 am EST
- Platt's estimates weekly crude inventories fell 2.7 million barrels, gasoline inventories fell 3.25 million barrels, distillate inventories declined 2.25 million barrels and refinery utilization dropped 9.5%.
BOTTOM LINE: Asian indices are higher, boosted by Financial companies in the region after S&P raised their debt ratings. I expect US equities to open mixed. However, stocks may rally later in the afternoon on short-covering ahead of quarter’s end. The Portfolio is 75% net long heading into the day.
Stocks Finish Mixed in Choppy Trading
Indices
S&P 500 1,215.66 unch.
DJIA 10,456.21 +.12%
NASDAQ 2,116.42 -.24%
Russell 2000 659.17 -.16%
DJ Wilshire 5000 12,139.58 -.02%
S&P Barra Growth 581.57 +.15%
S&P Barra Value 629.88 -.13%
Morgan Stanley Consumer 579.07 +.42%
Morgan Stanley Cyclical 721.72 -.01%
Morgan Stanley Technology 494.84 -.47%
Transports 3,617.49 +.05%
Utilities 424.65 +.41%
Put/Call .79 -35.77%
NYSE Arms .94 -5.09%
Volatility(VIX) 12.76 -2.15%
ISE Sentiment 200.00 +21.95%
US Dollar 89.60 +.55%
CRB 327.03 +.03%
Futures Spot Prices
Crude Oil 64.90 -.26%
Unleaded Gasoline 217.75 +.51%
Natural Gas 12.67 +.11%
Heating Oil 206.90 +.02%
Gold 466.40 +.04%
Base Metals 130.67 -.39%
Copper 172.60 -.12%
10-year US Treasury Yield 4.28% -.09%
Leading Sectors
HMOs +1.07%
Foods +.84%
Defense +.68%
Lagging Sectors
Computer Hardware -1.12%
Semis -1.23%
Gold & Silver -1.62%
Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play
Afternoon Recommendations
Goldman Sachs:
- Reiterated Underperform on SIRI.
Afternoon/Evening Headlines
Bloomberg:
- NBC’s television audience shrank in the first week of the season after new programs such as Martha Stewart’s reality show failed to stem viewer defections.
- Michael Brown, the former head of FEMA, defended the federal government’s response to Hurricane Katrina before a congressional committee and called the state and local governments in Louisiana “dysfunctional.”
- Pfizer said US regulators approved its cholesterol-lowering drug Lipitor to reduce risk of stroke and heart attack in patients with Type 2 diabetes.
- GM faces a “50-50” chance of a strike by the Canadian Auto Workers at midnight as the two sides negotiate.
S&P 500 1,215.66 unch.
DJIA 10,456.21 +.12%
NASDAQ 2,116.42 -.24%
Russell 2000 659.17 -.16%
DJ Wilshire 5000 12,139.58 -.02%
S&P Barra Growth 581.57 +.15%
S&P Barra Value 629.88 -.13%
Morgan Stanley Consumer 579.07 +.42%
Morgan Stanley Cyclical 721.72 -.01%
Morgan Stanley Technology 494.84 -.47%
Transports 3,617.49 +.05%
Utilities 424.65 +.41%
Put/Call .79 -35.77%
NYSE Arms .94 -5.09%
Volatility(VIX) 12.76 -2.15%
ISE Sentiment 200.00 +21.95%
US Dollar 89.60 +.55%
CRB 327.03 +.03%
Futures Spot Prices
Crude Oil 64.90 -.26%
Unleaded Gasoline 217.75 +.51%
Natural Gas 12.67 +.11%
Heating Oil 206.90 +.02%
Gold 466.40 +.04%
Base Metals 130.67 -.39%
Copper 172.60 -.12%
10-year US Treasury Yield 4.28% -.09%
Leading Sectors
HMOs +1.07%
Foods +.84%
Defense +.68%
Lagging Sectors
Computer Hardware -1.12%
Semis -1.23%
Gold & Silver -1.62%
Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play
Afternoon Recommendations
Goldman Sachs:
- Reiterated Underperform on SIRI.
Afternoon/Evening Headlines
Bloomberg:
- NBC’s television audience shrank in the first week of the season after new programs such as Martha Stewart’s reality show failed to stem viewer defections.
- Michael Brown, the former head of FEMA, defended the federal government’s response to Hurricane Katrina before a congressional committee and called the state and local governments in Louisiana “dysfunctional.”
- Pfizer said US regulators approved its cholesterol-lowering drug Lipitor to reduce risk of stroke and heart attack in patients with Type 2 diabetes.
- GM faces a “50-50” chance of a strike by the Canadian Auto Workers at midnight as the two sides negotiate.
BOTTOM LINE: The Portfolio finished slightly unchanged today as gains in my Medical longs offset losses in my Semiconductor longs. I covered my IWM and QQQQ shorts in the afternoon, thus leaving the Portfolio 75% net long. The tone of the market was slightly negative today as the advance/decline line finished modestly lower, most sectors were lower and volume was slightly below average. Measures of investor anxiety were lower into the close. Overall, today’s market action was slightly positive. Treasury-note yield reversed on Greenspan's comments and finished at session lows of 4.28%. I still have part of my iShares Lehman 20+ Year Treasury Bond (TLT) long and I am considering adding back to it.
Stocks Mixed Mid-day as Lower Oil Prices Offset Weaker Economic Data and Hawkish Fed Comments
Indices
S&P 500 1,215.09 -.04%
DJIA 10,452.94 +.09%
NASDAQ 2,116.70 -.22%
Russell 2000 658.09 -.32%
DJ Wilshire 5000 12,132.38 -.08%
S&P Barra Growth 581.10 +.07%
S&P Barra Value 629.81 -.15%
Morgan Stanley Consumer 578.66 +.35%
Morgan Stanley Cyclical 721.38 -.06%
Morgan Stanley Technology 495.08 -.42%
Transports 3,603.20 -.34%
Utilities 424.45 +.31%
Put/Call .81 -34.15%
NYSE Arms .98 -.45%
Volatility(VIX) 12.88 -1.30%
ISE Sentiment 230.00 +40.24%
US Dollar 89.62 +.57%
CRB 326.34 -.18%
Futures Spot Prices
Crude Oil 64.75 -1.55%
Unleaded Gasoline 216.00 +1.45%
Natural Gas 12.51 +.56%
Heating Oil 204.50 -.78%
Gold 465.90 -.77%
Base Metals 130.67 -.39%
Copper 172.30 -.78%
10-year US Treasury Yield 4.30% +.41%
Leading Sectors %
HMOs +1.18%
Foods +.76%
Defense +.55%
Lagging Sectors
Coal -1.0%
Semis -1.10%
Gold & Silver -2.19%
S&P 500 1,215.09 -.04%
DJIA 10,452.94 +.09%
NASDAQ 2,116.70 -.22%
Russell 2000 658.09 -.32%
DJ Wilshire 5000 12,132.38 -.08%
S&P Barra Growth 581.10 +.07%
S&P Barra Value 629.81 -.15%
Morgan Stanley Consumer 578.66 +.35%
Morgan Stanley Cyclical 721.38 -.06%
Morgan Stanley Technology 495.08 -.42%
Transports 3,603.20 -.34%
Utilities 424.45 +.31%
Put/Call .81 -34.15%
NYSE Arms .98 -.45%
Volatility(VIX) 12.88 -1.30%
ISE Sentiment 230.00 +40.24%
US Dollar 89.62 +.57%
CRB 326.34 -.18%
Futures Spot Prices
Crude Oil 64.75 -1.55%
Unleaded Gasoline 216.00 +1.45%
Natural Gas 12.51 +.56%
Heating Oil 204.50 -.78%
Gold 465.90 -.77%
Base Metals 130.67 -.39%
Copper 172.30 -.78%
10-year US Treasury Yield 4.30% +.41%
Leading Sectors %
HMOs +1.18%
Foods +.76%
Defense +.55%
Lagging Sectors
Coal -1.0%
Semis -1.10%
Gold & Silver -2.19%
BOTTOM LINE: The Portfolio is unchanged mid-day as gains in my Medical longs are offsetting losses in my Semiconductor longs. I added back QQQQ and IWM shorts this morning, thus leaving the Portfolio 50% net long. The tone of the market is negative as the advance/decline line is lower, most sectors are lower and volume is below average. Measures of investor anxiety are lower. Today’s overall market action is neutral given the decline in energy prices and worse-than-expected economic data. The Johnson Redbook same-store sales index rose 3.1% year-over-year last week vs. a 3.2% rise the prior week. This week's gain is up from a 1.5% increase in late April and the 21th week in a row the index has risen 3% or more. The Morgan Stanley Retail Index has stabilized over the last few days, but is still below its 200-day moving-average. Investors continue to anticipate a substantial drop-off in consumer spending that has yet to develop. I expect US stocks to trade mixed-to-higher from current levels into the close on short-covering.
Today's Headlines
Bloomberg:
- Golfers will be allowed to hone the accuracy of their shots by using laser-guided distance-measuring devices in competitions next year.
- Byron Wien, Morgan Stanley’s senior stock market strategist, is leaving to join hedge fund Pequot Capital Management.
- Oil refineries near Port Arthur, Texas, and Lake Charles, Louisiana, hit head-on by Hurricane Rita may be shut for a month, heightening the threat of shortages in an industry that has yet to recover from Katrina.
- Google is charging advertisers more for the ability to maintain their ads in prominent positions.
- The US dollar is rising to a two-month high against the euro and yen after Fed Reserve Bank of Kansas City President Hoenig added to speculation the central bank will keep raising interest rates.
- US Treasuries were little changed before a speech by Alan Greenspan in which the Federal Reserve chairman may reiterate that the economy is resilient and inflation remains a threat.
- Intel won its first ever order for a new mobile-phone processor in a contract to sell chips for Research in Motion’s Blackberry devices.
Wall Street Journal:
- Home Depot, Time Warner, Wal-Mart Stores and other big-name US stocks may be in the “bargain bin,” or trading at earnings multiples lower than they have in several years.
- DreamWorks SKG ended talks over a sale to General Electric’s NBC Universal studios.
- Wal-Mart has begun selling digital-photo prints for 15 cents at its retail stores and 13 cents at its members-only Sam’s Club stores.
NY Times:
- WellPoint, the largest US health-insurance provider, is close to an agreement to buy WellChoice, the biggest NY state health insurer, for about $6.5 billion.
- Genentech’s Avastin, which is approved to treat colorectal cancer, is being used by many specialists to treat age-related macular degeneration.
NY Post:
- The NYSE got a bid from private equity groups Bain Capital LLC and Blackstone Group for 30% of the exchange in late June.
Rocky Mountain News:
- EchoStar Communications will begin selling portable video players next month.
Financial Times Deutschland:
- Royal Philips Electronics NV, Europe’s biggest maker of televisions, expects the price decline for flat-panel televisions to end because of higher demand.
- Golfers will be allowed to hone the accuracy of their shots by using laser-guided distance-measuring devices in competitions next year.
- Byron Wien, Morgan Stanley’s senior stock market strategist, is leaving to join hedge fund Pequot Capital Management.
- Oil refineries near Port Arthur, Texas, and Lake Charles, Louisiana, hit head-on by Hurricane Rita may be shut for a month, heightening the threat of shortages in an industry that has yet to recover from Katrina.
- Google is charging advertisers more for the ability to maintain their ads in prominent positions.
- The US dollar is rising to a two-month high against the euro and yen after Fed Reserve Bank of Kansas City President Hoenig added to speculation the central bank will keep raising interest rates.
- US Treasuries were little changed before a speech by Alan Greenspan in which the Federal Reserve chairman may reiterate that the economy is resilient and inflation remains a threat.
- Intel won its first ever order for a new mobile-phone processor in a contract to sell chips for Research in Motion’s Blackberry devices.
Wall Street Journal:
- Home Depot, Time Warner, Wal-Mart Stores and other big-name US stocks may be in the “bargain bin,” or trading at earnings multiples lower than they have in several years.
- DreamWorks SKG ended talks over a sale to General Electric’s NBC Universal studios.
- Wal-Mart has begun selling digital-photo prints for 15 cents at its retail stores and 13 cents at its members-only Sam’s Club stores.
NY Times:
- WellPoint, the largest US health-insurance provider, is close to an agreement to buy WellChoice, the biggest NY state health insurer, for about $6.5 billion.
- Genentech’s Avastin, which is approved to treat colorectal cancer, is being used by many specialists to treat age-related macular degeneration.
NY Post:
- The NYSE got a bid from private equity groups Bain Capital LLC and Blackstone Group for 30% of the exchange in late June.
Rocky Mountain News:
- EchoStar Communications will begin selling portable video players next month.
Financial Times Deutschland:
- Royal Philips Electronics NV, Europe’s biggest maker of televisions, expects the price decline for flat-panel televisions to end because of higher demand.
New Home Sales Fall, Consumer Confidence Plunges on Katrina Worries
- New Home Sales for August fell to 1237K versus estimates of 1350K and 1373K in July.
- Consumer Confidence for September fell to 86.6 versus estimates of 95.0 and a reading of 105.5 in August.
- Consumer Confidence for September fell to 86.6 versus estimates of 95.0 and a reading of 105.5 in August.
BOTTOM LINE: US new home sales last month fell by the most since November, Bloomberg reported. The average price of a new home rose last month to $220,300 from $215,000 the prior month. Today’s report puts new home sales for the year on pace to beat last year’s all-time record. The supply of new homes for sale at the current pace rose to 4.7 months from 4.1 months in July. New Home Sales in August declined 2.2% in the South, 18% in the West, 11% in the Midwest and 22% in the Northeast. New home sales will fall again next month as the full brunt of Katrina and Rita is felt.
Consumer confidence in the US dropped by the most in 15 years in September after Hurricane Katrina devastated the Gulf Coast and pushed gas prices to a record, Bloomberg said. The percentage of consumers that saw jobs as hard to get rose to 25.4% from 23.1%. The expectations component of the index fell to 71.7 from 93.3. Consumer Confidence will likely bounce back sharply in the fourth quarter.
Tuesday Watch
Late-Night Headlines
Bloomberg:
- The No. 2 al-Qaeda leader in Iraq, Abu Azzam, an adie to Abu Musab al Zarqawi, was fatally shot Sunday night, a Pentagon official said.
- Microsoft and Intel have thrown their support behind Toshiba’s HD DVD format, marking a setback for Sony’s Blu-ray standard.
- The US dollar is gaining versus the yen and euro after a Federal Reserve official fueled speculation the US central bank won’t pause in raising interest rates.
Wall Street Journal:
- Republican leaders in Congress are introducing bills aimed at expanding US capacity for refining crude oil and domestic natural-gas production.
Asian Wall Street Journal:
- Starbucks Corp. is releasing a new chilled coffee in plastic cups in Japan’s convenience stores.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on SYMC and EBAY.
- Rated BOW Underperform.
Night Trading
Asian Indices are -.50% to +.25% on average.
S&P 500 indicated +.06%.
NASDAQ 100 indicated +.03%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
PAYX/.28
Upcoming Splits
HIBB 3-for-2
Economic Releases
10:00 am EST
- New Home Sales for August are estimated to fall to 1350K versus 1410K in July.
- Consumer Confidence for September is estimated to fall to 95.0 versus a reading of 105.6 in August.
Bloomberg:
- The No. 2 al-Qaeda leader in Iraq, Abu Azzam, an adie to Abu Musab al Zarqawi, was fatally shot Sunday night, a Pentagon official said.
- Microsoft and Intel have thrown their support behind Toshiba’s HD DVD format, marking a setback for Sony’s Blu-ray standard.
- The US dollar is gaining versus the yen and euro after a Federal Reserve official fueled speculation the US central bank won’t pause in raising interest rates.
Wall Street Journal:
- Republican leaders in Congress are introducing bills aimed at expanding US capacity for refining crude oil and domestic natural-gas production.
Asian Wall Street Journal:
- Starbucks Corp. is releasing a new chilled coffee in plastic cups in Japan’s convenience stores.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on SYMC and EBAY.
- Rated BOW Underperform.
Night Trading
Asian Indices are -.50% to +.25% on average.
S&P 500 indicated +.06%.
NASDAQ 100 indicated +.03%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
PAYX/.28
Upcoming Splits
HIBB 3-for-2
Economic Releases
10:00 am EST
- New Home Sales for August are estimated to fall to 1350K versus 1410K in July.
- Consumer Confidence for September is estimated to fall to 95.0 versus a reading of 105.6 in August.
BOTTOM LINE: Asian indices are mostly higher, boosted by Energy-related companies in the region. I expect US equities to open modestly lower on weaker economic reports and hawkish Fed comments. However, stocks may rally later in the afternoon on short-covering ahead of quarter’s end. The Portfolio is 75% net long heading into the day.
Monday, September 26, 2005
Stocks Finish Modestly Higher Even as Energy Prices Rebound
Indices
S&P 500 1,215.63 +.03%
DJIA 10,443.63 +.23%
NASDAQ 2,121.46 +.22%
Russell 2000 660.20 +.72%
DJ Wilshire 5000 12,142.40 +.15%
S&P Barra Growth 580.71 -.07%
S&P Barra Value 630.73 +.12%
Morgan Stanley Consumer 576.62 -.10%
Morgan Stanley Cyclical 721.78 -.11%
Morgan Stanley Technology 497.16 +.18%
Transports 3,615.81 -.20%
Utilities 422.92 +.90%
Put/Call 1.23 +30.85%
NYSE Arms .99 +20.91%
Volatility(VIX) 13.04 +.62%
ISE Sentiment 164.00 -23.0%
US Dollar 89.11 -.20%
CRB 326.93 +1.18%
Futures Spot Prices
Crude Oil 65.95 +.20%
Unleaded Gasoline 214.00 +.51%
Natural Gas 12.59 +1.20%
Heating Oil 207.00 +.55%
Gold 470.10 +.13%
Base Metals 131.18 +.90%
Copper 173.70 +.03%
10-year US Treasury Yield 4.29% +1.06%
Leading Sectors
Oil Service +2.45%
Gold & Silver +2.07%
Energy +1.84%
Lagging Sectors
Papers -.44%
Banks -.51%
Gaming -.55%
Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play
Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on DIS.
Afternoon/Evening Headlines
Bloomberg:
- Difficulties securing regulatory approval to expand refinery capacity are a greater barrier to increasing the US supply of gasoline and other fuels than the availability of crude oil, Exxon Mobil CEO Raymond said.
- Left-wing anti-war protester Cindy Sheehan was arrested today trying to enter the gate at the northwest end of the White House.
- Chevron reported “severe” damage to an oil and natural gas platform, and drilling companies said eight rigs were missing, scattered or damaged as a result of Hurricane Rita.
NY Times:
- Sun Microsystems will introduce a new version of its StarOffice business software tomorrow, with features designed to make it more compatible with Microsoft’s Office software.
- JC Penney back-to-school circulars have drawn criticism from alcohol industry watchdogs for featuring beer-and liquor-branded T-shirts.
S&P 500 1,215.63 +.03%
DJIA 10,443.63 +.23%
NASDAQ 2,121.46 +.22%
Russell 2000 660.20 +.72%
DJ Wilshire 5000 12,142.40 +.15%
S&P Barra Growth 580.71 -.07%
S&P Barra Value 630.73 +.12%
Morgan Stanley Consumer 576.62 -.10%
Morgan Stanley Cyclical 721.78 -.11%
Morgan Stanley Technology 497.16 +.18%
Transports 3,615.81 -.20%
Utilities 422.92 +.90%
Put/Call 1.23 +30.85%
NYSE Arms .99 +20.91%
Volatility(VIX) 13.04 +.62%
ISE Sentiment 164.00 -23.0%
US Dollar 89.11 -.20%
CRB 326.93 +1.18%
Futures Spot Prices
Crude Oil 65.95 +.20%
Unleaded Gasoline 214.00 +.51%
Natural Gas 12.59 +1.20%
Heating Oil 207.00 +.55%
Gold 470.10 +.13%
Base Metals 131.18 +.90%
Copper 173.70 +.03%
10-year US Treasury Yield 4.29% +1.06%
Leading Sectors
Oil Service +2.45%
Gold & Silver +2.07%
Energy +1.84%
Lagging Sectors
Papers -.44%
Banks -.51%
Gaming -.55%
Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play
Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on DIS.
Afternoon/Evening Headlines
Bloomberg:
- Difficulties securing regulatory approval to expand refinery capacity are a greater barrier to increasing the US supply of gasoline and other fuels than the availability of crude oil, Exxon Mobil CEO Raymond said.
- Left-wing anti-war protester Cindy Sheehan was arrested today trying to enter the gate at the northwest end of the White House.
- Chevron reported “severe” damage to an oil and natural gas platform, and drilling companies said eight rigs were missing, scattered or damaged as a result of Hurricane Rita.
NY Times:
- Sun Microsystems will introduce a new version of its StarOffice business software tomorrow, with features designed to make it more compatible with Microsoft’s Office software.
- JC Penney back-to-school circulars have drawn criticism from alcohol industry watchdogs for featuring beer-and liquor-branded T-shirts.
BOTTOM LINE: The Portfolio finished slightly higher today on gains in my Internet longs and Oil Tanker shorts. I covered a few shorts in the afternoon and added NTES long, thus leaving the Portfolio 75% net long. I am using a stop-loss of $82 on this new long. The tone of the market was positive today as the advance/decline line finished higher, most sectors gained and volume was below average. Measures of investor anxiety were higher into the close. Overall, today’s market action was slightly positive. During the week ended Sept. 23, the information technology industry saw the greatest net insider selling in the S&P 500. Insiders sold $45,328,379 worth of stock and bought $134,257. Overall, insider selling in the S&P dropped considerably last week.
Stocks Mixed Mid-day as Rising Energy Prices Offset Relief Over Hurricane Rita
Indices
S&P 500 1,213.06 -.18%
DJIA 10,418.15 -.01%
NASDAQ 2,114.85 -.09%
Russell 2000 657.27 +.28%
DJ Wilshire 5000 12,113.18 -.08%
S&P Barra Growth 579.21 -.33%
S&P Barra Value 629.53 -.07%
Morgan Stanley Consumer 575.27 -.34%
Morgan Stanley Cyclical 719.67 -.40%
Morgan Stanley Technology 495.04 -.30%
Transports 3,606.18 -.48%
Utilities 423.05 +.94%
Put/Call 1.15 +22.34%
NYSE Arms 1.07 +30.99%
Volatility(VIX) 13.36 +3.09%
ISE Sentiment 162.00 -23.94%
US Dollar 89.17 -.13%
CRB 326.91 +1.18%
Futures Spot Prices
Crude Oil 65.70 +2.27%
Unleaded Gasoline 211.25 +1.29%
Natural Gas 12.29 -.28%
Heating Oil 204.00 +4.67%
Gold 470.10 +.62%
Base Metals 131.18 +.90%
Copper 173.75 +2.30%
10-year US Treasury Yield 4.29% +1.06%
Leading Sectors %
Gold & Silver +2.23%
Oil Service +1.88%
Energy +1.51%
Lagging Sectors
Telecom -.60%
Papers -.75%
Gaming -1.46%
S&P 500 1,213.06 -.18%
DJIA 10,418.15 -.01%
NASDAQ 2,114.85 -.09%
Russell 2000 657.27 +.28%
DJ Wilshire 5000 12,113.18 -.08%
S&P Barra Growth 579.21 -.33%
S&P Barra Value 629.53 -.07%
Morgan Stanley Consumer 575.27 -.34%
Morgan Stanley Cyclical 719.67 -.40%
Morgan Stanley Technology 495.04 -.30%
Transports 3,606.18 -.48%
Utilities 423.05 +.94%
Put/Call 1.15 +22.34%
NYSE Arms 1.07 +30.99%
Volatility(VIX) 13.36 +3.09%
ISE Sentiment 162.00 -23.94%
US Dollar 89.17 -.13%
CRB 326.91 +1.18%
Futures Spot Prices
Crude Oil 65.70 +2.27%
Unleaded Gasoline 211.25 +1.29%
Natural Gas 12.29 -.28%
Heating Oil 204.00 +4.67%
Gold 470.10 +.62%
Base Metals 131.18 +.90%
Copper 173.75 +2.30%
10-year US Treasury Yield 4.29% +1.06%
Leading Sectors %
Gold & Silver +2.23%
Oil Service +1.88%
Energy +1.51%
Lagging Sectors
Telecom -.60%
Papers -.75%
Gaming -1.46%
BOTTOM LINE: The Portfolio is unchanged mid-day as gains in my Oil Tanker shorts are offsetting losses in my Energy shorts. I added back QQQQ and IWM shorts this morning, thus leaving the Portfolio 50% net long. The tone of the market is modestly positive as the advance/decline line is slightly higher, most sectors are higher and volume is below average. Measures of investor anxiety are higher. Today’s overall market action is neutral given the rise in energy prices/long-term rates and better-than-expected economic data. The Baker Hughes U.S. Oil & Gas Rig Count rose to 1,451 active rigs last week, the highest level since December 1985. This is up 194% since April 1999. This is bearish for crude. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering.
Today's Headlines
Bloomberg:
- Apollo Management raised $10 billion for the world’s second-largest takeover fund.
- The US economy is likely to remain strong after two hurricanes pummeled the Gulf Coast, two Federal Reserve officials said today.
- Palm Inc. plans to sell a Treo smartphone powered by Microsoft’s operating system, handing a win for Microsoft as it tries to make inroads into the mobile-phone market.
- Gasoline futures declined and crude oil was little changed after Hurricane Rita struck only a glancing blow to Houston’s oil hub, home to 12% of the nation’s refineries.
- US Treasuries are falling for a third day as two Fed officials said the economy remains strong after two hurricanes struck the Gulf Coast, bolstering views the central bank will keep raising interest rates.
Wall Street Journal:
- US companies such as Electronic Arts and Time Warner’s film studios are taking steps to fight piracy in China by aiming to profit alongside the illegal sellers.
- A US search for programs to scale back to offset costs from hurricanes Katrina and Rita could lead to trims in spending on farm subsidies and the Medicaid and Medicare health programs.
- The US National Highway Traffic Safety Administration is reviewing fuel efficiency requirements for larger vehicles after technological developments improved the safety of smaller cars.
- Andrew von Eschenbach, acting commissioner of the FDA, plans to review the drug-approval process to see if procedures can be streamlined.
- AMD plans to introduce today a speed boost for high end chips for servers and computer workstations.
- Janus Capital Group proposed that it switch to performance-based management fees that will let it collect more when its funds do well, and less when they don’t.
- Merrill Lynch, JPMorgan Chase and CSFB are among brokerage firms that have resumed or are planning buyout deals, attracted by the potential for big profits.
- The Bush administration plans to propose developing satellite systems that would be shared by federal agencies to cut costs and standardize domestic satellite operations.
Le Figaro:
- Total SA, Europe’s largest oil refiner, is prepared to spend around $10 billion to extract oil from Canadian oil sands.
- Apollo Management raised $10 billion for the world’s second-largest takeover fund.
- The US economy is likely to remain strong after two hurricanes pummeled the Gulf Coast, two Federal Reserve officials said today.
- Palm Inc. plans to sell a Treo smartphone powered by Microsoft’s operating system, handing a win for Microsoft as it tries to make inroads into the mobile-phone market.
- Gasoline futures declined and crude oil was little changed after Hurricane Rita struck only a glancing blow to Houston’s oil hub, home to 12% of the nation’s refineries.
- US Treasuries are falling for a third day as two Fed officials said the economy remains strong after two hurricanes struck the Gulf Coast, bolstering views the central bank will keep raising interest rates.
Wall Street Journal:
- US companies such as Electronic Arts and Time Warner’s film studios are taking steps to fight piracy in China by aiming to profit alongside the illegal sellers.
- A US search for programs to scale back to offset costs from hurricanes Katrina and Rita could lead to trims in spending on farm subsidies and the Medicaid and Medicare health programs.
- The US National Highway Traffic Safety Administration is reviewing fuel efficiency requirements for larger vehicles after technological developments improved the safety of smaller cars.
- Andrew von Eschenbach, acting commissioner of the FDA, plans to review the drug-approval process to see if procedures can be streamlined.
- AMD plans to introduce today a speed boost for high end chips for servers and computer workstations.
- Janus Capital Group proposed that it switch to performance-based management fees that will let it collect more when its funds do well, and less when they don’t.
- Merrill Lynch, JPMorgan Chase and CSFB are among brokerage firms that have resumed or are planning buyout deals, attracted by the potential for big profits.
- The Bush administration plans to propose developing satellite systems that would be shared by federal agencies to cut costs and standardize domestic satellite operations.
Le Figaro:
- Total SA, Europe’s largest oil refiner, is prepared to spend around $10 billion to extract oil from Canadian oil sands.
Existing Home Sales Exceed Estimates
- Existing Home Sales for August rose to 7.29M versus estimates of 7.12M and 7.15M in July.
BOTTOM LINE: US sales of previously owned homes unexpectedly surged to the second-highest level on record and prices reached an all-time high in August, spurred by job growth and interest rates within a percentage point of historic lows, Bloomberg reported. The median price rose 15.8% to a record $220,000. Sale rose 5.6% in the West, 1.9% in the Midwest and 1.7% in the Northeast. Sales fell .4% in the South. The supply of homes available for sale, another gauge of housing demand, increased to 4.7 months’ worth in August versus 4.6 months’ worth in July. This was a very positive report. I continue to believe the nationwide housing market is slowing to more sustainable healthy levels.
Monday Watch
Weekend Headlines
Bloomberg:
- Wal-Mart Stores said September sales at its US stores open at least a year are rising within its forecast, led by groceries.
- Iran will be referred to the UN Security Council after a divided nuclear safeguards group cited the Islamic Republic’s intention to make atomic fuel as evidence its motives might not be “peaceful.”
- Texas refineries probably escaped major damage from Hurricane Rita.
- Rita may cost insurers including Allstate Corp. and St. Paul Travelers Cos. $2.5 billion to $6 billion, less than some of last year’s storms in Florida.
- The two hurricanes that battered the southern US over the past month will have a “relatively modest” effect on the world’s largest economy, the president’s chief economic adviser and likely successor to Alan Greenspan said.
- Currency traders are the most bullish on the dollar since June as the highest yields on US Treasuries compared with Germany’s bunds in five years attract investors.
- Boeing reached a tentative labor agreement with its striking machinists after increasing pension payments and maintaining health-care benefits.
- The People’s Bank of China may name banks including HSBC Holdings, Citigroup and Bank of China as market makers in the yuan, a step toward a freely traded currency, bankers and traders familiar with the situation said.
- Nissan Motor will add more fuel-efficient cars next year and may follow with diesel-engine models, CEO Ghosen said.
- A London demonstration against the war in Iraq drew only 10,000 people after the turnout for a similar rally in Washington, DC fell far short of expectations on Saturday.
- Crude oil, gasoline and heating oil are falling in NY after refineries near Houston escaped a direct hit from Hurricane Rita, allowing the industry to prepare for increased energy demand as winter approaches.
Barron’s:
- Comcast and Time Warner may be interested in buying either of Viacom’s cable and CBS units when the company splits up, Legg Mason Wood Walker Managing Director Levin said.
Seattle Times:
- Microsoft Chairman Gates said the software maker has its most exciting products ever ready to be sold during the next 12 months.
NY Times:
- GE’s NBC Universal unit’s talks to acquire DreamWorks SKG probably won’t be finished by the end of their negotiating period next week.
- Yahoo! plans to add more video programs that are designed to be viewed online, citing the company.
- Christie Hefner, CEO and daughter of Playboy magazine founder Hugh Hefner, has plans to expand the company into online “entertainment” and licensing its brand.
- America Online’s decision to move from a subscription-based service to an advertising-based financial model is likely to succeed because of the company’s fiscal health and subscriber loyalty.
Crain’s Chicago Business:
- Chicago trails most of the nation when it comes to hiring people with skills in technology, such as computer programmers, according to a survey by Robert Half Technology.
Financial Times:
- Microsoft and Symantec will announce new company data-protection software this week after IBM released a product that can continuously back up information.
El Universal:
- Venezuela said it may seize or close oil fields operated by foreign companies if they don’t convert existing operating contracts to joint ventures by the Dec. 31 deadline.
Xinhua News Agency:
- China issued new regulations banning foreign investment in Web sites that carry news.
Gazeta Wyborcza:
- Google said it will open its first Polish office in the capital, Warsaw, citing the company.
Weekend Recommendations
Barron's:
- Had positive comments on AMD.
Goldman Sachs:
- Reiterated Outperform on ENH and RE.
Night Trading
Asian indices are +.25% to +1.25% on average.
S&P 500 indicated +.39%.
NASDAQ 100 indicated +.50%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/Estimate
JBL/.36
MU/-.08
WAG/.37
Upcoming Splits
- None of note
Economic Releases
10:00 am EST
- Existing Home Sales for August are estimated to fall to 7.12M versus 7.16M in July.
Bloomberg:
- Wal-Mart Stores said September sales at its US stores open at least a year are rising within its forecast, led by groceries.
- Iran will be referred to the UN Security Council after a divided nuclear safeguards group cited the Islamic Republic’s intention to make atomic fuel as evidence its motives might not be “peaceful.”
- Texas refineries probably escaped major damage from Hurricane Rita.
- Rita may cost insurers including Allstate Corp. and St. Paul Travelers Cos. $2.5 billion to $6 billion, less than some of last year’s storms in Florida.
- The two hurricanes that battered the southern US over the past month will have a “relatively modest” effect on the world’s largest economy, the president’s chief economic adviser and likely successor to Alan Greenspan said.
- Currency traders are the most bullish on the dollar since June as the highest yields on US Treasuries compared with Germany’s bunds in five years attract investors.
- Boeing reached a tentative labor agreement with its striking machinists after increasing pension payments and maintaining health-care benefits.
- The People’s Bank of China may name banks including HSBC Holdings, Citigroup and Bank of China as market makers in the yuan, a step toward a freely traded currency, bankers and traders familiar with the situation said.
- Nissan Motor will add more fuel-efficient cars next year and may follow with diesel-engine models, CEO Ghosen said.
- A London demonstration against the war in Iraq drew only 10,000 people after the turnout for a similar rally in Washington, DC fell far short of expectations on Saturday.
- Crude oil, gasoline and heating oil are falling in NY after refineries near Houston escaped a direct hit from Hurricane Rita, allowing the industry to prepare for increased energy demand as winter approaches.
Barron’s:
- Comcast and Time Warner may be interested in buying either of Viacom’s cable and CBS units when the company splits up, Legg Mason Wood Walker Managing Director Levin said.
Seattle Times:
- Microsoft Chairman Gates said the software maker has its most exciting products ever ready to be sold during the next 12 months.
NY Times:
- GE’s NBC Universal unit’s talks to acquire DreamWorks SKG probably won’t be finished by the end of their negotiating period next week.
- Yahoo! plans to add more video programs that are designed to be viewed online, citing the company.
- Christie Hefner, CEO and daughter of Playboy magazine founder Hugh Hefner, has plans to expand the company into online “entertainment” and licensing its brand.
- America Online’s decision to move from a subscription-based service to an advertising-based financial model is likely to succeed because of the company’s fiscal health and subscriber loyalty.
Crain’s Chicago Business:
- Chicago trails most of the nation when it comes to hiring people with skills in technology, such as computer programmers, according to a survey by Robert Half Technology.
Financial Times:
- Microsoft and Symantec will announce new company data-protection software this week after IBM released a product that can continuously back up information.
El Universal:
- Venezuela said it may seize or close oil fields operated by foreign companies if they don’t convert existing operating contracts to joint ventures by the Dec. 31 deadline.
Xinhua News Agency:
- China issued new regulations banning foreign investment in Web sites that carry news.
Gazeta Wyborcza:
- Google said it will open its first Polish office in the capital, Warsaw, citing the company.
Weekend Recommendations
Barron's:
- Had positive comments on AMD.
Goldman Sachs:
- Reiterated Outperform on ENH and RE.
Night Trading
Asian indices are +.25% to +1.25% on average.
S&P 500 indicated +.39%.
NASDAQ 100 indicated +.50%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/Estimate
JBL/.36
MU/-.08
WAG/.37
Upcoming Splits
- None of note
Economic Releases
10:00 am EST
- Existing Home Sales for August are estimated to fall to 7.12M versus 7.16M in July.
BOTTOM LINE: Asian Indices are higher, spurred by gains in exporting shares in the region as oil falls again. I expect US stocks to open modestly higher on lower energy prices, less damage than expected from Rita and gains in Asia. The Portfolio is 75% net long heading into the week.
Sunday, September 25, 2005
Weekly Outlook
There are a few important economic reports and some significant corporate earnings reports scheduled for release this week.
Economic reports for the week include:
Mon. - Existing Home Sales
Tues. - New Home Sales, Consumer Confidence
Wed. - Durable Goods Orders
Thur. - Final 2Q GDP, Final GDP Price Index, Final 2Q Personal Consumption, Initial Jobless Claims, Help Wanted Index
Fri. - Personal Income, Personal Spending, PCE Deflator, Final Univ. of Mich. Consumer Confidence, Chicago Purchasing Manager
A few of the more noteworthy companies that release quarterly earnings this week are:
Mon. - Jabil Circuit(JBL), Micron Technology(MU), Walgreen Co.(WAG)
Tues. - Lennar Corp.(LEN), Paychex Inc.(PAYX)
Wed. - Redhat Inc.(RHAT)
Thur. - Family Dollar Stores(FDO)
Fri. - Doral Financial(DRL), Saks Inc.(SKS), Tommy Hilfiger(TOM)
Other events that have market-moving potential this week include:
Mon. - UBS Global Life Sciences Conference, Thomas Weisel Partners Consumer Conference, Fed’s Moskow speaks
Tue. - Merrill Lynch Global Power Conference, Cambridge Energy Research Global Power Summit, CSFB Chemicals Conference, UBS Global Life Sciences Conference
Wed. - Merrill Lynch Global Power Conference, UBS Global Life Sciences Conference, CSFB Chemicals Conference
Thur. - CSFB Global Mining Equip. Conference, UBS Global Life Sciences Conference
Fri. - None of note
Economic reports for the week include:
Mon. - Existing Home Sales
Tues. - New Home Sales, Consumer Confidence
Wed. - Durable Goods Orders
Thur. - Final 2Q GDP, Final GDP Price Index, Final 2Q Personal Consumption, Initial Jobless Claims, Help Wanted Index
Fri. - Personal Income, Personal Spending, PCE Deflator, Final Univ. of Mich. Consumer Confidence, Chicago Purchasing Manager
A few of the more noteworthy companies that release quarterly earnings this week are:
Mon. - Jabil Circuit(JBL), Micron Technology(MU), Walgreen Co.(WAG)
Tues. - Lennar Corp.(LEN), Paychex Inc.(PAYX)
Wed. - Redhat Inc.(RHAT)
Thur. - Family Dollar Stores(FDO)
Fri. - Doral Financial(DRL), Saks Inc.(SKS), Tommy Hilfiger(TOM)
Other events that have market-moving potential this week include:
Mon. - UBS Global Life Sciences Conference, Thomas Weisel Partners Consumer Conference, Fed’s Moskow speaks
Tue. - Merrill Lynch Global Power Conference, Cambridge Energy Research Global Power Summit, CSFB Chemicals Conference, UBS Global Life Sciences Conference
Wed. - Merrill Lynch Global Power Conference, UBS Global Life Sciences Conference, CSFB Chemicals Conference
Thur. - CSFB Global Mining Equip. Conference, UBS Global Life Sciences Conference
Fri. - None of note
BOTTOM LINE: I expect US stocks to finish the week mixed. Equities will likely rise early in the week as Hurricane Rita’s damage was not as bad as feared. However, concerns regarding economic growth and earnings will likely pressure shares toward week’s end. My trading indicators are giving mostly bearish signals and the Portfolio is 75% net long heading into the week.
Economic Week in Review
ECRI Weekly Leading Index 134.30 -.30%
The NAHB Housing Market Index for September fell to 65 versus estimates of 67 and a reading of 67 in August. Optimism among US homebuilders was the lowest in more than two years in September as the cost of energy and lumber rose in the aftermath of Hurricane Katrina, Bloomberg said. “The housing market suddenly looks a little less frothy today,” said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi.
Housing Starts for August fell to 2009K versus estimates of 2025K and 2035K in July. Building Permits for August fell to 2124K versus estimates of 2130K and 2171K in July. US housing starts fell 1.3% last month, keeping construction on pace to surpass last year’s total, which was the highest since 1978, Bloomberg reported. Starts fell 5.2% in the Midwest, 4.1% in the Northeast and 6.6% in the South. Starts rose 13% in the West. Construction that was authorized but not yet started rose 5.7% to 238,700 units, which is the most since May 1979. “This number shows that activity is at least leveling off at a high rate,” said James O’Sullivan, a senior economist at UBS Securities.
The FOMC raised the benchmark interest rate 25 basis points to 3.75%. Federal Reserve Policy makers raised the Fed Funds rate for the 11th straight time and signaled they may do so again, saying the US economy faces only a “near-term” setback after Hurricane Katrina, Bloomberg reported. The US economy was “poised to continue growing at a good pace” before the storm, the Fed’s policy statement said. The policy statement also said “core inflation has been relatively low in recent months and longer-term inflation expectations remain contained.” “The bottom line: The strategy of gradually raising interest rates is not over, and unless the economy softens materially, more quarter-point hikes can be expected,” said Lynn Reaser, chief economist of the Investment Strategies Group at Bank of America.
Initial Jobless Claims for last week rose to 432K versus estimates of 450K and an upwardly revised 424K the prior week. Continuing Claims rose to 2666K versus estimates of 2690K and 2578K prior. Workers dislocated by Hurricane Katrina pushed first-time claims for unemployment benefits to the highest in more than two years, Bloomberg reported. About 103,000 claims last week were from people affected by the hurricane. In total, Katrina has been responsible for 214,000 jobless claims so far. The four-week moving-average of claims rose to 376,250 from 347,250 the prior week. The insured employment rate, which tracks the US unemployment rate, rose to 2.1% from 2.0%. “Initial Claims really only went up in places affected by the hurricane,” said Wesley Beal, chief US economist at IDEAglobal.com. “So, the one positive is there’s not a lot of evidence that there’s any weakness that’s developing nationwide.”
Leading Indicators for August fell .2% versus estimates of a .3% fall and a .1% decline in July. The index of leading US economic indicators fell in August for a second straight month as rising gasoline prices sapped consumer confidence. Five of the ten components of the index were actually positive. The declines in consumer confidence and building permits were mainly responsible for the overall decline. “The smaller than expected decline in the index is probably not as bad as the headline would suggest because it was mostly concentrated in consumer sentiment, which may likely bounce back if energy prices stabilize,” said Anthony Chan, senior economist at JPMorgan Asset Management.
The NAHB Housing Market Index for September fell to 65 versus estimates of 67 and a reading of 67 in August. Optimism among US homebuilders was the lowest in more than two years in September as the cost of energy and lumber rose in the aftermath of Hurricane Katrina, Bloomberg said. “The housing market suddenly looks a little less frothy today,” said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi.
Housing Starts for August fell to 2009K versus estimates of 2025K and 2035K in July. Building Permits for August fell to 2124K versus estimates of 2130K and 2171K in July. US housing starts fell 1.3% last month, keeping construction on pace to surpass last year’s total, which was the highest since 1978, Bloomberg reported. Starts fell 5.2% in the Midwest, 4.1% in the Northeast and 6.6% in the South. Starts rose 13% in the West. Construction that was authorized but not yet started rose 5.7% to 238,700 units, which is the most since May 1979. “This number shows that activity is at least leveling off at a high rate,” said James O’Sullivan, a senior economist at UBS Securities.
The FOMC raised the benchmark interest rate 25 basis points to 3.75%. Federal Reserve Policy makers raised the Fed Funds rate for the 11th straight time and signaled they may do so again, saying the US economy faces only a “near-term” setback after Hurricane Katrina, Bloomberg reported. The US economy was “poised to continue growing at a good pace” before the storm, the Fed’s policy statement said. The policy statement also said “core inflation has been relatively low in recent months and longer-term inflation expectations remain contained.” “The bottom line: The strategy of gradually raising interest rates is not over, and unless the economy softens materially, more quarter-point hikes can be expected,” said Lynn Reaser, chief economist of the Investment Strategies Group at Bank of America.
Initial Jobless Claims for last week rose to 432K versus estimates of 450K and an upwardly revised 424K the prior week. Continuing Claims rose to 2666K versus estimates of 2690K and 2578K prior. Workers dislocated by Hurricane Katrina pushed first-time claims for unemployment benefits to the highest in more than two years, Bloomberg reported. About 103,000 claims last week were from people affected by the hurricane. In total, Katrina has been responsible for 214,000 jobless claims so far. The four-week moving-average of claims rose to 376,250 from 347,250 the prior week. The insured employment rate, which tracks the US unemployment rate, rose to 2.1% from 2.0%. “Initial Claims really only went up in places affected by the hurricane,” said Wesley Beal, chief US economist at IDEAglobal.com. “So, the one positive is there’s not a lot of evidence that there’s any weakness that’s developing nationwide.”
Leading Indicators for August fell .2% versus estimates of a .3% fall and a .1% decline in July. The index of leading US economic indicators fell in August for a second straight month as rising gasoline prices sapped consumer confidence. Five of the ten components of the index were actually positive. The declines in consumer confidence and building permits were mainly responsible for the overall decline. “The smaller than expected decline in the index is probably not as bad as the headline would suggest because it was mostly concentrated in consumer sentiment, which may likely bounce back if energy prices stabilize,” said Anthony Chan, senior economist at JPMorgan Asset Management.
BOTTOM LINE: Overall, last week's economic data were modestly negative. Weather held down housing starts to an extent. August was the ninth-wettest month on record in the South and the sixth-wetting in the Central US. Moreover, starts in September will be negatively impacted by Hurricane Katrina. I continue to believe the nationwide housing market is slowing, not plunging, to more healthy and sustainable levels. So far, the US economy appears to be handling the effects of Katrina relatively well. However, a Fed “pause” is still likely before year-end as measures of inflation begin decelerating again over the coming months. I expect jobless claims to make another push higher this week as more Katrina/Rita victims file. September non-farm payrolls will fall substantially from recent levels as a result of the storm. However, payrolls will bounce back over the ensuing months as rebuilding begins in earnest. A rebound in consumer sentiment and increasing building permits should help boost the Leading Indicators during the fourth quarter. Finally, the ECRI Weekly Leading Index fell .30% to 134.30 and is forecasting decelerating healthy US economic growth.
Saturday, September 24, 2005
Market Week in Review
S&P 500 1,215.29 -1.83%*
Click here for the Weekly Wrap by Briefing.com.
*5-day % Change
Click here for the Weekly Wrap by Briefing.com.
BOTTOM LINE: Overall, last week's market performance was slightly negative considering another spike in unleaded gas futures and the potential catastrophic damage Hurricane Rita may have wrought. The advance/decline line fell, almost every sector declined and volume was slightly above average on the week. Measures of investor anxiety were mostly higher. The AAII % Bulls fell for the week and is now at below-average levels. In my opinion, while measures of investor fear are somewhat elevated from an intermediate-term standpoint, they are still registering too much complacency in the short-term for a sustainable rally to occur. One more shakeout is likely in October related to earnings worries which should set the stage for a strong year-end rally. The average 30-year mortgage rate rose to 5.80%, but is still only 59 basis points above all-time lows set in June 2003 and down from 2005 highs of 6.04% set in April. The benchmark 10-year T-note yield fell 3 basis points on the week as traders sought a safe haven from Rita and began to anticipate slower economic growth. The US dollar rose on increasing expectations for further Fed rate hikes and economic stagnation in Europe. Gold fell slightly on the week as traders worried less about inflation and more about slowing economic growth. Finally, most commodity prices rose in anticipation of further disruptions from another hurricane. While crude oil rose slightly on the week, it is still down around 12% from highs seen after Katrina. I continue to believe global oil demand destruction, which began a number of months ago, has accelerated meaningfully over the last few weeks and will send crude prices substantially lower over the intermediate-term.
*5-day % Change
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