Earnings Announcements
Company/Estimate
FLML/unch.
PTMK/.31
BCF/.80
Splits
None of note.
Economic Data
Unemployment Rate for March is estimated at 5.6% vs. 5.6% in February.
Change in Non-farm Payrolls for March estimated +120K vs. +21K in February.
Change in Manufacturing Payrolls for March estimated +5K vs. -3K in February.
Average Weekly Hours for March estimated at 33.9 vs. 33.8 in February.
Recommendations
Goldman Sachs says AA will miss estimates by .04 when it reports next week. GS reiterated Underperform on GAS. GS reiterated Outperform on CAL.
Late-Night News
Asian stocks are mostly higher on strength in Japan as investors bid up exporters in anticipation of stronger sales to the U.S. Reebok(RBK) may be a takeover target of a U.S. apparel company seeking new brands, Business Week reported. European Union member states unanimously backed the ruling against Microsoft, the London-based Times said. Borland(BORL) may become a possible acquisition target of Microsoft, Business Week reported. ATS Medical(ATSI) is expected to rise to a new high this year as the maker of mechanical heart valves gains market share, Business Week reported. Governor Schwarzenegger hopes to raise as much as $2B more a year from Indian gambling revenue to help cover the budget deficit. In return, the Tribes want the right to add thousands of slot machines, the Wall Street Journal reported. U.S. forensics expert Henry Lee said Taiwan's President probably didn't stage his own shooting, Thompson TV reported. Israel may act against Palestinian leader Yasser Arafat in the future, the AP said. U.S. commanders in Iraq are preparing to occupy Fallujah and carry out combat operations and civil-affairs rebuilding missions to defeat resistance, Bloomberg reported. The U.S. plans to seek a new UN resolution covering peacekeeping troops in Iraq before it hands power to a provisional Iraqi government July 1, the U.S. State Dept. said.
Late-Night Trading
Asian Indices unch. to +1.25%.
S&P 500 indicated -.02%.
NASDAQ indicated -.07%.
BOTTOM LINE: Bond investors are so bearish heading into the "big" jobs report tomorrow that I believe it would take a number north of 250,000 to cause rates to rise substantially. I do not feel a number of this magnitude is likely as of yet. Executives and managers are definitely looking to hire more, but I feel that it will be a few more months before hiring really gets cranked up. I also think February's report was artificially low due to the California grocers strike and very bad weather. Thus, I am expecting a number between 120,000 to 150,000 and an unemployment rate of 5.5-5.6%. This should result in a positive reaction by the stock market as it will be viewed as a significant improvement, but not enough to cause rates to rise substantially. A number that is well below expectations or way above expectations will probably prompt a sell-off. However, with energy prices falling, great earnings reports on the horizon and the market's recent technical improvement, I expect any weakness will be temporary. The Portfolio is 75% net long heading into tomorrow.
Friday, April 02, 2004
Thursday, April 01, 2004
Thursday Close
S&P 500 1,132.17 +.53%
NASDAQ 2,015.01 +1.04%
Leading Sectors
Broadcasting +2.45%
Insurance +1.84%
Disk Drives +1.77%
Lagging Sectors
Retail -.75%
Energy -1.22%
Oil Service -2.69%
Other
Crude Oil 34.48 +.61%
Natural Gas 5.82 +.95%
Gold 427.10 -.40%
Base Metals 115.07 +1.47%
U.S. Dollar 87.21 +.09%
10-Yr. Long-Bond Yield 3.88% +1.14%
VIX 16.65 -.54%
Put/Call .57 -55.81%
NYSE Arms .88 -29.03%
After-hours Movers
MTLG +10.41% after raising 1Q guidance.
XMSR +6.21% after exceeding new subscriber target by 100,000.
SCHN +16.75% after exceeding 2Q forecast and raising 3Q guidance.
SIMG +10.8% after raising 1Q guidance.
MTLM +7.24% on SCHN report.
Recommendations
Bill Gross, who runs the world's biggest bond fund at PIMCO, said investors should buy "anything but Tresasuries." Goldman Sachs reiterated Buy on PG, BSX, AMGN, DNA and AVP. GS reiterated Outperform on PFE and Underperform on SGP and BMY ahead of quarterly reports. Cramer of TheStreet.com, says someone is buying a lot of April 75 calls on FRX, he thinks they will make money. The put/call ratio for the 10-yr. T-note was 3.4 on heavy volume a few days ago, reported TheStreet.com.
After-hours News
U.S. stocks finished mostly higher Thursday on better-than-expected economic reports, falling energy prices and a strong technology sector. The ISM manufacturing report and its employment component, both reached near 20-year highs, leading to speculation that Friday's jobs report will meet or exceed expectations. The Senate Banking Committee approved Senator Richard Shelby's bill to strengthen oversight of Fannie Mae and Freddie, the two largest U.S. mortgage finance companies. GM, Ford and Toyota said U.S. sales rose 3.8% in March, as they sold more light trucks and pickups. Sales at Chrysler dropped for the first time in six months as minivan sales declined. Gateway said it will close its 188 retail stores and cut 2,500 jobs. Experts who probed JFK's assassination and the murder of O.J. Simpson's wife combed evidence from the shooting of Taiwan President Chen Shui-bian this week, hired by prosecutors to bolster the credibility of the investigation.
BOTTOM LINE: The Portfolio significantly outperformed the market today as my longs were up substantially and shorts fell. I did not trade today, thus leaving market exposure at 75% net long. The recent survey showing bond investors were the most bearish in 7 years and the high put/call ratio on the 10-yr. T-note leads me to believe that interest rates will not rise dramatically on a much better-than expected jobs report. As well, the NASDAQ closing above the psychologically important 2000 level on good breadth today and numerous positive tech comments by CEO's over the last few weeks also factored into my decision to keep market exposure higher, heading into Friday's report, than I had anticipated last month.
NASDAQ 2,015.01 +1.04%
Leading Sectors
Broadcasting +2.45%
Insurance +1.84%
Disk Drives +1.77%
Lagging Sectors
Retail -.75%
Energy -1.22%
Oil Service -2.69%
Other
Crude Oil 34.48 +.61%
Natural Gas 5.82 +.95%
Gold 427.10 -.40%
Base Metals 115.07 +1.47%
U.S. Dollar 87.21 +.09%
10-Yr. Long-Bond Yield 3.88% +1.14%
VIX 16.65 -.54%
Put/Call .57 -55.81%
NYSE Arms .88 -29.03%
After-hours Movers
MTLG +10.41% after raising 1Q guidance.
XMSR +6.21% after exceeding new subscriber target by 100,000.
SCHN +16.75% after exceeding 2Q forecast and raising 3Q guidance.
SIMG +10.8% after raising 1Q guidance.
MTLM +7.24% on SCHN report.
Recommendations
Bill Gross, who runs the world's biggest bond fund at PIMCO, said investors should buy "anything but Tresasuries." Goldman Sachs reiterated Buy on PG, BSX, AMGN, DNA and AVP. GS reiterated Outperform on PFE and Underperform on SGP and BMY ahead of quarterly reports. Cramer of TheStreet.com, says someone is buying a lot of April 75 calls on FRX, he thinks they will make money. The put/call ratio for the 10-yr. T-note was 3.4 on heavy volume a few days ago, reported TheStreet.com.
After-hours News
U.S. stocks finished mostly higher Thursday on better-than-expected economic reports, falling energy prices and a strong technology sector. The ISM manufacturing report and its employment component, both reached near 20-year highs, leading to speculation that Friday's jobs report will meet or exceed expectations. The Senate Banking Committee approved Senator Richard Shelby's bill to strengthen oversight of Fannie Mae and Freddie, the two largest U.S. mortgage finance companies. GM, Ford and Toyota said U.S. sales rose 3.8% in March, as they sold more light trucks and pickups. Sales at Chrysler dropped for the first time in six months as minivan sales declined. Gateway said it will close its 188 retail stores and cut 2,500 jobs. Experts who probed JFK's assassination and the murder of O.J. Simpson's wife combed evidence from the shooting of Taiwan President Chen Shui-bian this week, hired by prosecutors to bolster the credibility of the investigation.
BOTTOM LINE: The Portfolio significantly outperformed the market today as my longs were up substantially and shorts fell. I did not trade today, thus leaving market exposure at 75% net long. The recent survey showing bond investors were the most bearish in 7 years and the high put/call ratio on the 10-yr. T-note leads me to believe that interest rates will not rise dramatically on a much better-than expected jobs report. As well, the NASDAQ closing above the psychologically important 2000 level on good breadth today and numerous positive tech comments by CEO's over the last few weeks also factored into my decision to keep market exposure higher, heading into Friday's report, than I had anticipated last month.
Mid-day Update
S&P 500 1,131.87 +.50%
NASDAQ 2,008.83 +.73%
Leading Sectors
Insurance +1.92%
Semis +1.38%
Broadcasting +1.25%
Lagging Sectors
Iron/Steel -.88%
Retail -.92%
Oil Service -1.59%
Other
Crude Oil 35.21 -1.57%
Natural Gas 5.92 -.30%
Gold 429.00 +.16%
Base Metals 115.07 +1.47%
U.S. Dollar 87.28 -.38%
10-Yr. Long-Bond Yield 3.87% +.94%
VIX 17.03 +1.73%
Put/Call .62 -51.94%
NYSE Arms .72 -41.94%
Market Movers
CADA +26.9% on positive comments about X-charge payment processing applications.
LSCP +22.2% after announcing higher reimbursement from the government for their prostate treatment.
PHTN +9.7% after multiple upgrades.
NDC -13.5% after saying it will delay 3Q results on accounting review.
MANU -16.9% after disappointing 4Q and lowering 1Q guidance, multiple downgrades.
SUPG -29.0% after disappointing Dacogen drug-study results.
Economic Data
Producer Price Index for February +.1% vs. expectations of a .3% rise.
PPI Ex Food & Energy for February +.1%, meeting expectations.
Initial Jobless Claims last week were 342K vs. expectations of 340K.
Continuing Claims were 3063K vs. expectations of 3008K.
Construction Spending for February was -.1% vs. expectations of unch.
ISM Manufacturing for March was 62.5 vs. expectations of 59.5.
ISM Prices Paid for March was 86.0 vs. 82.0 forecast.
Recommendations
UTSI raised to Buy at Deutsche Bank, target $33. WMAR rated Outperform at Thomas Weisel. IACI raised to Buy at Legg Mason, $41 target. DDS cut to sell at Merrill Lynch. Merrill Lynch downgraded many other retailers to Neutral on concern that rising rates will dampen consumer demand. Lehman raised AV price target to $18. LIZ and JNY cut to Underweight at Prudential. Goldman Sachs reiterated Outperform on ATYT, SVU, MRVL, DDR, GCI, WEN, VZ, SBC and BIIB. GS upgraded KRI to Outperform. GS reiterated Underperform on HUM. GS believes newspaper help-wanted ad revenues are poised for a significant rebound in 04-05. GS reiterated Attractive view on Oil Service sector. Goldman says cable companies will most directly and profoundly utilize VoIP, happening now and impact is broad. Favorite VoIP equipment vendors are NT, SONS, CSCO, AV and NT. GS reiterated Underperform on HRB and PNRA. Citi Smith Barney says March came in stronger-than-expected for datacom equipment, thinks 2Q will be exceptional. Citi's favorites are CSCO, FDRY, EXTR, FFIV and RDWR. Citi reiterated 1H on IGT. Citi thinks WFMI, OATS and COST benefited from California grocer strike. Citi reiterated 1H on BBY, target $64. TheStreet.com has positive article on YHOO.
Mid-day News
U.S. stocks are modestly higher mid-day on strength in insurance and technology shares. American International Group(AIG), Pfizer(PFE) and Verizon(VZ) will be added to the Dow Jones Industrial Average on April 8, taking the place of AT&T(T), Eastman Kokak(EK) and Intl. Paper(IP). JC Penney is close to completing the sale of its Eckerd drugstore chain to CVS Corp. and Jean Coutu Group, the Wall Street Journal reported. A training manual by the terrorist group al-Jama'ah al-Islamiyyah discovered in Indonesia outlines plans to take over the world, CNN reported. Silver rose above $8 an ounce in London, the highest in more than 16 years. The ISM manufacturing index rose more-than-expected last month as production increased and more factories added workers than at any time since the 80's. "The breadth of the expansion as well as its speed is breathtaking," said Stephen Stanley, chief economist at RBS Greenwich Capital. The first quarter ISM employment index average of 62.5 was the highest since 1983.
BOTTOM LINE: The Portfolio is having a very good day today as several longs are up significantly and my shorts are down. I have not traded as of yet, leaving market exposure at 75% net long. It is good to see tech outperforming again. The bond market has moved down in anticipation of a strong employment report, thus cushioning the downside on a blow-out number. The NASDAQ is hovering above the psychologically important 2000 level. I may leave market exposure at 75% if this level can hold into the close. The writing is on the wall. The employment situation is improving. Whether it is this month or sometime in the near future, a strong jobs report is inevitable. The bond market's reaction will determine a lot as to the strength of the equity market for 04. It will be interesting to see where the mainstream media turns their negative focus next. I expect it will be inflation.
NASDAQ 2,008.83 +.73%
Leading Sectors
Insurance +1.92%
Semis +1.38%
Broadcasting +1.25%
Lagging Sectors
Iron/Steel -.88%
Retail -.92%
Oil Service -1.59%
Other
Crude Oil 35.21 -1.57%
Natural Gas 5.92 -.30%
Gold 429.00 +.16%
Base Metals 115.07 +1.47%
U.S. Dollar 87.28 -.38%
10-Yr. Long-Bond Yield 3.87% +.94%
VIX 17.03 +1.73%
Put/Call .62 -51.94%
NYSE Arms .72 -41.94%
Market Movers
CADA +26.9% on positive comments about X-charge payment processing applications.
LSCP +22.2% after announcing higher reimbursement from the government for their prostate treatment.
PHTN +9.7% after multiple upgrades.
NDC -13.5% after saying it will delay 3Q results on accounting review.
MANU -16.9% after disappointing 4Q and lowering 1Q guidance, multiple downgrades.
SUPG -29.0% after disappointing Dacogen drug-study results.
Economic Data
Producer Price Index for February +.1% vs. expectations of a .3% rise.
PPI Ex Food & Energy for February +.1%, meeting expectations.
Initial Jobless Claims last week were 342K vs. expectations of 340K.
Continuing Claims were 3063K vs. expectations of 3008K.
Construction Spending for February was -.1% vs. expectations of unch.
ISM Manufacturing for March was 62.5 vs. expectations of 59.5.
ISM Prices Paid for March was 86.0 vs. 82.0 forecast.
Recommendations
UTSI raised to Buy at Deutsche Bank, target $33. WMAR rated Outperform at Thomas Weisel. IACI raised to Buy at Legg Mason, $41 target. DDS cut to sell at Merrill Lynch. Merrill Lynch downgraded many other retailers to Neutral on concern that rising rates will dampen consumer demand. Lehman raised AV price target to $18. LIZ and JNY cut to Underweight at Prudential. Goldman Sachs reiterated Outperform on ATYT, SVU, MRVL, DDR, GCI, WEN, VZ, SBC and BIIB. GS upgraded KRI to Outperform. GS reiterated Underperform on HUM. GS believes newspaper help-wanted ad revenues are poised for a significant rebound in 04-05. GS reiterated Attractive view on Oil Service sector. Goldman says cable companies will most directly and profoundly utilize VoIP, happening now and impact is broad. Favorite VoIP equipment vendors are NT, SONS, CSCO, AV and NT. GS reiterated Underperform on HRB and PNRA. Citi Smith Barney says March came in stronger-than-expected for datacom equipment, thinks 2Q will be exceptional. Citi's favorites are CSCO, FDRY, EXTR, FFIV and RDWR. Citi reiterated 1H on IGT. Citi thinks WFMI, OATS and COST benefited from California grocer strike. Citi reiterated 1H on BBY, target $64. TheStreet.com has positive article on YHOO.
Mid-day News
U.S. stocks are modestly higher mid-day on strength in insurance and technology shares. American International Group(AIG), Pfizer(PFE) and Verizon(VZ) will be added to the Dow Jones Industrial Average on April 8, taking the place of AT&T(T), Eastman Kokak(EK) and Intl. Paper(IP). JC Penney is close to completing the sale of its Eckerd drugstore chain to CVS Corp. and Jean Coutu Group, the Wall Street Journal reported. A training manual by the terrorist group al-Jama'ah al-Islamiyyah discovered in Indonesia outlines plans to take over the world, CNN reported. Silver rose above $8 an ounce in London, the highest in more than 16 years. The ISM manufacturing index rose more-than-expected last month as production increased and more factories added workers than at any time since the 80's. "The breadth of the expansion as well as its speed is breathtaking," said Stephen Stanley, chief economist at RBS Greenwich Capital. The first quarter ISM employment index average of 62.5 was the highest since 1983.
BOTTOM LINE: The Portfolio is having a very good day today as several longs are up significantly and my shorts are down. I have not traded as of yet, leaving market exposure at 75% net long. It is good to see tech outperforming again. The bond market has moved down in anticipation of a strong employment report, thus cushioning the downside on a blow-out number. The NASDAQ is hovering above the psychologically important 2000 level. I may leave market exposure at 75% if this level can hold into the close. The writing is on the wall. The employment situation is improving. Whether it is this month or sometime in the near future, a strong jobs report is inevitable. The bond market's reaction will determine a lot as to the strength of the equity market for 04. It will be interesting to see where the mainstream media turns their negative focus next. I expect it will be inflation.
Quarterly Scoreboard
Indices
S&P 500 1,126.21 +1.28%
Dow 10,357.70 -.92%
NASDAQ 1,994.22 -.46%
Russell 2000 590.31 +5.99%
Wilshire 5000 11,039.42 +2.22%
Volatility(VIX) 16.74 -8.57%
AAII Bullish % 31.48 -51.95%
US Dollar 87.80 +1.15%
CRB 282.50 +12.10%
Futures Spot Prices
Gold 426.50 +1.89%
Crude Oil 35.74 +14.92%
Natural Gas 5.92 +15.68%
Base Metals 113.40 +12.22%
10-year US Treasury Yield 3.85% -9.41%
Average 30-year Mortgage Rate 5.40% -7.06%
Leading Sectors
Gaming +21.90%
Broadband +20.16%
Wireless +16.93%
Lagging Sectors
Semis -4.13%
Drugs -4.47%
Airlines -8.55%
*% Gain or loss for the 1st quarter
S&P 500 1,126.21 +1.28%
Dow 10,357.70 -.92%
NASDAQ 1,994.22 -.46%
Russell 2000 590.31 +5.99%
Wilshire 5000 11,039.42 +2.22%
Volatility(VIX) 16.74 -8.57%
AAII Bullish % 31.48 -51.95%
US Dollar 87.80 +1.15%
CRB 282.50 +12.10%
Futures Spot Prices
Gold 426.50 +1.89%
Crude Oil 35.74 +14.92%
Natural Gas 5.92 +15.68%
Base Metals 113.40 +12.22%
10-year US Treasury Yield 3.85% -9.41%
Average 30-year Mortgage Rate 5.40% -7.06%
Leading Sectors
Gaming +21.90%
Broadband +20.16%
Wireless +16.93%
Lagging Sectors
Semis -4.13%
Drugs -4.47%
Airlines -8.55%
*% Gain or loss for the 1st quarter
Thursday Watch
Earnings Announcements
Company/Estimate
DLP/.24
PIR/.54
SCHN/.47
Splits
None of note.
Economic Data
Producer Price Index for February estimated +.3% vs. +.6% in January.
PPI Ex Food & Energy for February estimated +.1% vs. +.3% in January.
Initial Jobless Claims for last week estimated at 340K vs. 339K the prior week.
Continuing Claims estimated at 3008K vs. 3004K prior.
Construction Spending for February estimated unch. vs. -.3% in January.
ISM Manufacturing for March estimated at 59.5 vs. 61.4 in February.
ISM Prices Paid for March estimated at 82.0 vs. 81.5 in February.
Total Vehicle Sales for March estimated at 16.7M vs. 16.4M in February.
Domestic Vehicle Sales for March estimated at 13.4M vs. 13.2M in February.
Recommendations
Goldman Sachs reiterated Underperform on HUM. GS reiterated Outperform on PPL.
Late-Night News
Asian stocks are mixed as strength in Australian shares is offset by modest weakness in Hong Kong and Japan. Eliot Spitzer, NY's attorney general, asked state lawmakers to limit the amount auto dealers may mark up interest rates on consumer car loans, the WSJ reported. Sun Mirco's(SUNW) version of the Linux operating system is now available on personal computers sold on the Wal-Mart Web site, the AP reported. Sony sued Kodak over digital camera patents, Nikkei said. The Bank of Japan's Tankan survey showed sentiment among large manufacturers was the highest since 1997 and service companies became optimistic for the first time in 7 years as an export-led recovery spreads to consumers. Japan joined the U.S. and E.U complaint against China in the World Trade Organization over tax breaks that give Chinese chipmakers an unfair advantage in the world's fastest growing semiconductor market.
Late-Night Trading
Asian Indices -.25% to +.75%.
S&P 500 indicated +.11%.
NASDAQ indicated +.03%.
BOTTOM LINE: I expect U.S. stocks to rise modestly on light volume tomorrow ahead of Friday's employment report. I will use any strength to cut market exposure to 50% net long by the close. The numerous economic reports will likely result in above-average volatility.
Company/Estimate
DLP/.24
PIR/.54
SCHN/.47
Splits
None of note.
Economic Data
Producer Price Index for February estimated +.3% vs. +.6% in January.
PPI Ex Food & Energy for February estimated +.1% vs. +.3% in January.
Initial Jobless Claims for last week estimated at 340K vs. 339K the prior week.
Continuing Claims estimated at 3008K vs. 3004K prior.
Construction Spending for February estimated unch. vs. -.3% in January.
ISM Manufacturing for March estimated at 59.5 vs. 61.4 in February.
ISM Prices Paid for March estimated at 82.0 vs. 81.5 in February.
Total Vehicle Sales for March estimated at 16.7M vs. 16.4M in February.
Domestic Vehicle Sales for March estimated at 13.4M vs. 13.2M in February.
Recommendations
Goldman Sachs reiterated Underperform on HUM. GS reiterated Outperform on PPL.
Late-Night News
Asian stocks are mixed as strength in Australian shares is offset by modest weakness in Hong Kong and Japan. Eliot Spitzer, NY's attorney general, asked state lawmakers to limit the amount auto dealers may mark up interest rates on consumer car loans, the WSJ reported. Sun Mirco's(SUNW) version of the Linux operating system is now available on personal computers sold on the Wal-Mart Web site, the AP reported. Sony sued Kodak over digital camera patents, Nikkei said. The Bank of Japan's Tankan survey showed sentiment among large manufacturers was the highest since 1997 and service companies became optimistic for the first time in 7 years as an export-led recovery spreads to consumers. Japan joined the U.S. and E.U complaint against China in the World Trade Organization over tax breaks that give Chinese chipmakers an unfair advantage in the world's fastest growing semiconductor market.
Late-Night Trading
Asian Indices -.25% to +.75%.
S&P 500 indicated +.11%.
NASDAQ indicated +.03%.
BOTTOM LINE: I expect U.S. stocks to rise modestly on light volume tomorrow ahead of Friday's employment report. I will use any strength to cut market exposure to 50% net long by the close. The numerous economic reports will likely result in above-average volatility.
Subscribe to:
Posts (Atom)