Portfolio Manager's Commentary on Investing and Trading in the U.S. Financial Markets
Tuesday, June 24, 2008
Links of Interest
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In Play
Exchange Volume vs. Average
NYSE Unusual Volume
NASDAQ Unusual Volume
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Dow Jones Hedge Fund Indexes
Monday, June 23, 2008
Tuesday Watch
Late-Night Headlines
Bloomberg:
- John McCain, calling for “a swift conversion of American vehicles away from oil,” said he would spur a market for vehicles that emit little or no carbon dioxide by offering consumers a $5,000 tax credit to buy them. The presumptive Republican presidential nominee today also proposed a $300 million prize for the development of a battery with sufficient capacity and power to “leapfrog” those that now fuel plug-in hybrids or electric cars.
- General Motors Corp.(GM) reduced its North American truck production plan and added no-interest loans on many 2008 models after a consumer shift to cars contributed to a 16 percent drop in its U.S. sales through May.
- United Parcel Service(UPS) lowered its second-quarter profit forecast because of rising fuel costs and a slowing US economy.
- Ireland’s economy will fall into a recession this year for the first time in more than two decades, the Economic and Social Research Institute said, as it slashed its forecasts for construction, exports and consumer spending. Gross domestic product will drop by 0.4 percent this year, after rising 5.3 percent last year, the Dublin-based institute said in a report published today. The group, which reduced its forecasts for the second time this year, had predicted growth of 1.8 percent in March.
Wall Street Journal:
- China’s stock-market swoon has sent the benchmark Shanghai Composite Index down by more than half in eight months to below the 3000 level, where many investors had assumed the government would intervene to provide support. But the hoped for support hasn’t come, and some analysts argue that the government’s ability to rejuvenate stocks is dwindling.
- Google Inc.(GOOG) will introduce a service as early as tomorrow that will measure Web sites’ audience size, helping advertisers fine-tune their advertisements.
- The Securities and Exchange Commission plans to propose rules that may diminish the longstanding importance of credit ratings across various markets, including the $3.4 trillion money-market industry, in the latest blow to the rating business stemming from the credit crunch.
MarketWatch.com:
- Bond insurers trying to unwind contracts: report. Companies in talks with banks about ‘commuting’ $125 billion in guarantees.
CNBC.com:
- More Wall Street Firms to Be Bought Up: Analyst.
NY Times:
- The New York Times and International Herald Tribune are working on plans to combine their Web sites.
- China’s Visa Policy Threatens Olympics Tourism.
BusinessWeek.com:
- Inside the Latest iPhone. For the upcoming iPhone 3G, Apple(AAPL) has reduced manufacturing and component costs by more than $50 per unit, says iSuppli.
IBD:
- Surgical Tools Boost Alcon’s(ACL) Earnings, Sales.
VentureBeat:
- Research firm iSuppli says in a new study that solar panels will be on par with the grid in four years.
CNNMoney.com:
- Over the horizon, a housing recovery. Harvard report finds immigration, other demographic trends will fuel housing demand over the next decade.
Financial Times:
- Some of the world’s biggest hedge funds were revealed to have taken big positions betting on declines in a number of the most sensitive stocks in the UK market. The disclosures are the first to be made as a result of a ground-breaking move by the UK's Financial Services Authority to force short-sellers to reveal size-able net short positions in companies undergoing rights issues, in a bid to stamp out suspected market abuse.
- One of the most powerful jobs in American journalism went up for grabs on Monday with the announcement that Leonard Downie, the long-serving executive editor of the Washington Post, is stepping down in September.
Saudi Press Agency:
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Late Buy/Sell Recommendations
Morgan Stanley:
- Raised (MS) to Overweight, target $51.
- Rated (SYMC) Overweight, target $26.
CSFB:
- Rated (TOL) Outperform, target $24.
- Rated (KBH) Outperform, target $23.
- Rated (PHM) Outperform, target $14.
- Rated (RYL) Outperform, target $28.
- Rated (CTX) Outperform, target $19.
- Rated (HOV) Underperform, target $6.40.
- Rated (MTH) Underperform, target $16.
Night Trading
Asian Indices are -.50% to +.25% on average.
S&P 500 futures -.01%.
NASDAQ 100 futures +.01%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
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Before the Bell CNBC Video(bottom right)
Global Commentary
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Today in IBD
In Play
Bond Ticker
Economic Preview/Calendar
Daily Stock Events
Upgrades/Downgrades
Rasmussen Business/Economy Polling
Earnings of Note
Company/EPS Estimate
- (JBL)/.19
- (DRI)/.75
- (FUL)/.45
- (SONC)/.31
- (KR)/.55
Upcoming Splits
- None of note
Economic Releases
10:00 am EST
- Consumer Confidence for June is estimated to fall to 56.0 versus 57.2 in May.
- The House Price Index for April is estimated to fall .4% versus a .4% decline in March.
Other Potential Market Movers
- The S&P/CaseShiller Home Price Index, Richmond Fed Manufacturing Index, weekly retail sales report, (ALD) investor day, (POR) analyst day, (RDC) conference call, Jeffries Healthcare Conference, Bank of America Utilities Conference, Wachovia Nantucket Equity Conference, Deutsche Bank Alternative Energy Conference and UBS Global Financial Markets & Technology Conference could also impact trading today.
Stocks Finish Mostly Lower, Weighed Down by Airline, Retail, REIT, Homebuilding, Insurance, HMO, Financial Shares
Market Summary
Top 20 Biz Stories
Today’s Movers
Market Performance Summary
WSJ Data Center
Sector Performance
ETF Performance
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Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Commentary
After-hours Movers
After-hours Real-Time Stock Bid/Ask
After-hours Stock Quote
After-hours Stock Chart
In Play
Stocks Mostly Lower into Final Hour on Financial Sector Concerns, Rising Oil
Today's Headlines
Bloomberg:
- The risk of US companies defaulting fell, according to traders of credit-default swaps. Contracts on the Markit CDX North America Investment Grade Index of 125 companies in the
- The euro dropped the most versus the US dollar in more than a week as German business confidence fell in June to the lowest level since 2005, reducing bets the European Central Bank will increase borrowing costs this year.
- Gold fell in NY by the most in almost two weeks as the US dollar strengthened against the euro, reducing the appeal of the precious metal as an alternative investment.
- Wheat fell to a one-week low on expectations that US production will increase after farmers boosted planting to capitalize on prices that reached a record high in February. US stockpiles may nearly double to 13.3 million tons by May 31, the US Dept. of Agriculture said in a report earlier this month. Global production is expected to rise 8.5% to 662.9 million tons. World Inventories may rise to 132.1 million tons, up from 115.1 million tons the prior year.
- Crude oil is rising another $2/bbl. as historic investment fund speculation continues in the commodity despite decelerating demand, rising supplies and a firmer dollar.
- Bunge Ltd.(BG), the world’s largest oilseed processor, agreed to buy Corn Products(CPO) for $4.2 billion in stock.
- CME Group said it will pay a special dividend of about $350 million and purchase as much as $1.1 billion of its shares.
- Big Lots Inc.(BLI), the best-performing stock in the S&P 500 this year, now finds itself with the highest percentage of investors selling short.
- Rupee Steepest Slide Since ’93 Repels Funds on Prices. The Reserve Bank of India’s first interest-rate increase in 15 months is turning into a case of too little, too late for the rupee.
Wall Street Journal:
- Americans gave a record amount to charity in 2007, topping $300 billion for the first time, despite economic worries.
- Floods in the Midwest are making coast-bound shipments of American corn ethanol nearly impossible, creating an opportunity for ethanol from Brazil. Demand might really jump if a 54-cents-per-gallon import tariff on Brazilian sugarcane ethanol is removed, which may spark another wave of investment in the South American nation. Two US senators proposed such legislation this month as a way to lower ethanol prices in many parts of the country.
- Tribune(TRB) Starts Its Overhaul in Orlando. The Orlando Sentinel landed on newsstands Sunday with a new layout featuring more graphics, quick-read digests of top news, blog summaries and other changes aimed at making the newspaper more appealing to harried readers.
- Federal regulators are beginning an effort to crack down on stealth advertising in television shows, a move aimed at letting consumers know when companies have paid to use their products as props.
- Shares in many regional banks in the US have been the proverbial falling knives, and investors who tried to catch them got sliced. But valuations are now so low on some banks that their share prices reflect risks like sharply higher credit losses, future dilutive equity issuance and questionable management.
- Anti-Americanism Is Mostly Hype.
NY Times:
- ABC Moves to Expand Its Reach on Video Web Sites.
CNBC.com:
- Power Poll: Should the Government Crack Down on Oil Speculators?
- Roadside bomb attacks and fatalities in Iraq are down by almost 90% over the last year.
- Democratic presidential candidate Barack Obama has a 6 percentage-point lead over Republican John McCain among likely voters, a USA Today/Gallup Poll indicates. However, a majority of voters in the poll also said Obama doesn’t have sufficient experience and are concerned about his relationships with “people who hold radical political views,” citing the poll.
Lloyd’s List:
- Trading in freight derivatives overtook the physical market for hiring coal, iron ore and grain transporters for the first time, citing Ian Staples, an official at Freight Investor Services Ltd. Traders will buy and sell freight-derivatives contracts representing 2.4 billion metric tons of cargo this year. That’s 20% more than the volume of cargo that will actually be transported.
Financial Times:
- Facebook, the fast-growing social network, has taken a significant lead over MySpace in visitor numbers for the first time.
- Why the London loophole should be closed. Under current law, US traders can execute transactions in look-alike contracts in crude oil contracts on the New York Mercantile Exchange (Nymex) and on London's InterContinental Exchange (ICE), and US regulators have an eye only on what goes on in New York. That means that traders can arbitrage between the two markets, and the CFTC in effect regulates only half of the trading.
Financial Times Deutschland:
- Microsoft Corp.(MSFT) may make a new bid for Yahoo! Inc.(YHOO) if Yahoo’s management changes, citing Kevin Johnson, head of the software maker’s Platform & Services unit.
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Bear Radar
Style Underperformer:
Small-cap Value -1.27%
Sector Underperformers:
Airlinesirlind (-4.98%), Homebuilders (-2.54%) and Banks (-2.33%)
Stocks Falling on Unusual Volume:
BXS, XL, FCSX, XRTX, PENN, BWLD, LSTR, BG and CT
Stocks With Unusual Put Option Activity:
1) CSE 2) HBAN 3) MIR 4) FTO 5) BG