Bloomberg:
- Jordan’s King Abdullah II said Iraq has made “great strides” since the US-led liberation of the country in March 2003 toppled dictator Saddam Hussein’s regime.
- Japan’s deflation will last for an eighth year, the central bank said, making it less likely it will soon end its policy of keeping rates at zero and pumping cash into the world’s second-largest economy.
- BHP Billiton, the world’s biggest mining company, said third-quarter iron ore production rose 14% to the second-highest ever.
- Confidence in French President Jacques Chirac fell to its lowest since he was re-elected in 2002, after his televised appeal to vote for the European Union constitution failed to win support, an opinion poll showed.
- US House and Senate Republicans reached a tentative agreement on a budget plan for the 2006 fiscal year that trims about $10 billion from spending on the Medicaid health program over five years and calls for about $70 billion in tax cuts.
- Crude oil is falling for a fourth straight day, dipping below $50 a barrel in NY, as a slowdown of the global economy coincides with rising inventories.
- US T-notes are rising after a government report showed the economy expanded at a slower pace than forecast in the first quarter.
Wall Street Journal:
- Iraq’s Daawa party, headed by Prime Minister Ibrahim al-Jaafari, is breaking with its anti-American tradition and cultivating ties with the US in a bid to stabilize the Middle East nation.
- Berkshire Hathaway’s annual meeting on April 30 will take place under a cloud of legal and regulatory scrutiny.
- Marvel Enterprises is setting up a studio to make its own movies based on its characters, and it will distribute them through Viacom’s Paramount Pictures.
- IBM secured a $352 million contract from the Univ. of Pittsburgh Medical Center.
- Emerson Electric, Bristol-Myers Squibb and other US companies are delaying the repatriation of foreign profit pending clarification of new US tax rules.
- Private equity firms such as Carlyle Group, Texas Pacific Group and KKR have been approached by Goldman Sachs and Morgan Stanley about being taken public.
- Apple’s Tiger operating system to retrieve old and missing files is far better than competing built-in search functions on either the Mac or Microsoft’s Windows, Walter Mossberg wrote.
- SBC Communications is to offer exclusive videos and music through an Internet site, called Blue Room.
- UnitedHealth Group plans to track the health risks of drugs based on its members’ medical claims, and market the data to regulators, drug companies and others.
NY Times:
- Internet phone resellers are flourishing as customers flock to buy services that replace more costly and annoying landline phones.
- Sprint Corp. said customers of its high-speed residential Internet service will be able to remotely access video, music and other media files on their home computers with a new service called Personal Media Link.
Tex Report:
- China’s Maanshan Iron & Steel Co. will lower prices of hot-rolled coil by $36 per metric ton for its domestic customers next month.
Thursday, April 28, 2005
US Economic Growth Slowing, Not Plunging
- Advance 1Q GDP rose 3.1% versus estimates of a 3.5% increase and a 3.8% gain in 4Q.
- Advance 1Q Personal Consumption rose 3.5% versus estimates of a 3.2% increase and a 4.2% gain in 4Q.
- Advance 1Q GDP Price Deflator rose 3.2% versus estimates of a 2.1% increase and a 2.3% gain in 4Q.
- Initial Jobless Claims for last week rose to 320K versus estimates of 320K and 299K the prior week.
- Continuing Claims fell to 2555K versus estimates of 2644K and 2631K prior.
- Advance 1Q Personal Consumption rose 3.5% versus estimates of a 3.2% increase and a 4.2% gain in 4Q.
- Advance 1Q GDP Price Deflator rose 3.2% versus estimates of a 2.1% increase and a 2.3% gain in 4Q.
- Initial Jobless Claims for last week rose to 320K versus estimates of 320K and 299K the prior week.
- Continuing Claims fell to 2555K versus estimates of 2644K and 2631K prior.
Bottom Line: The GDP report showed business spending on equipment and software rose at the slowest pace in 2 years and inventories increased by the most since the second quarter of 2000. This leads me to believe economic growth began to slow to below-average levels in March. The fact that the GDP deflator only rose 3.2% when commodities were near all-time highs is a positive. The deflator has risen around this rate 4 other times just since 2000. It rose 3.6% in March 2000. The trade deficit also pressured GDP as oil imports soared. I continue to believe declining commodity prices will help boost GDP growth in the second half of the year. I want to reiterate that I believe economic growth is slowing, not plunging. Recent housing data show booming sales and low supply, which should boost housing starts over the coming months. Moreover, personal consumption beat estimates and also illustrates the continuing strength of the consumer.
Thursday Watch
Late-Night Headlines
Bloomberg:
- BHP Billiton, the world's biggest mining company, had its second-highest quarterly iron ore production ever after expanding mines to meet rising demand from Asian steelmakers.
- Crude oil is falling in Tokyo and NY as rising US inventories ease concerns that refiners won't have enough supply to meet summer demand for gasoline.
Wall Street Journal:
- NY Democratic Attorney General Spitzer is investigating possible discriminatory practices in fixing interest rates and fees charged on mortgage loans.
Financial Times:
- Europe's drug industry is becoming increasingly less innovative than its US counterpart and must change its research and health care systems to catch up.
Business Standard:
- Las Vegas Sands is proposing to spend more than $2 billion on a casino and resort in Singapore with a colonial-era theme.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on DO, BXP and ENH.
- Reiterated Underperform on BE and SIAL.
Night Trading
Asian Indices are -.50% to +.75% on average.
S&P 500 indicated +.03%.
NASDAQ 100 indicated -.07%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
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
AET/1.07
ANDW/.11
ABX/.06
BZH/1.17
BDK/1.34
BMY/.34
CMCSA/.10
DOW/1.05
EMN/1.24
EL/.51
XOM/1.20
IVX/.14
KLAC/.56
K/.59
LIZ/.65
NXTL/.41
NOC/.91
PTEN/.31
SIRI/-.15
WEN/.40
Splits
None of note
Economic Releases
8:30 EST:
- Advance 1Q GDP is estimated to rise 3.5% versus a 3.8% increase in 4Q.
- Advance 1Q Personal Consumption is estimated to rise 3.2% versus a 4.2% increase in 4Q.
- Advance 1Q GDP Price Deflator is estimated to rise 2.1% versus a 2.3% gain in 4Q.
- Initial Jobless Claims for last week are estimated to rise to 320K versus 296K the prior week.
- Continuing Claims are estimated to rise to 2644K versus 2638K prior.
10:00 EST:
- Help Wanted Index for March is estimated at 41 versus a reading of 41 in February.
Bloomberg:
- BHP Billiton, the world's biggest mining company, had its second-highest quarterly iron ore production ever after expanding mines to meet rising demand from Asian steelmakers.
- Crude oil is falling in Tokyo and NY as rising US inventories ease concerns that refiners won't have enough supply to meet summer demand for gasoline.
Wall Street Journal:
- NY Democratic Attorney General Spitzer is investigating possible discriminatory practices in fixing interest rates and fees charged on mortgage loans.
Financial Times:
- Europe's drug industry is becoming increasingly less innovative than its US counterpart and must change its research and health care systems to catch up.
Business Standard:
- Las Vegas Sands is proposing to spend more than $2 billion on a casino and resort in Singapore with a colonial-era theme.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on DO, BXP and ENH.
- Reiterated Underperform on BE and SIAL.
Night Trading
Asian Indices are -.50% to +.75% on average.
S&P 500 indicated +.03%.
NASDAQ 100 indicated -.07%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
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
AET/1.07
ANDW/.11
ABX/.06
BZH/1.17
BDK/1.34
BMY/.34
CMCSA/.10
DOW/1.05
EMN/1.24
EL/.51
XOM/1.20
IVX/.14
KLAC/.56
K/.59
LIZ/.65
NXTL/.41
NOC/.91
PTEN/.31
SIRI/-.15
WEN/.40
Splits
None of note
Economic Releases
8:30 EST:
- Advance 1Q GDP is estimated to rise 3.5% versus a 3.8% increase in 4Q.
- Advance 1Q Personal Consumption is estimated to rise 3.2% versus a 4.2% increase in 4Q.
- Advance 1Q GDP Price Deflator is estimated to rise 2.1% versus a 2.3% gain in 4Q.
- Initial Jobless Claims for last week are estimated to rise to 320K versus 296K the prior week.
- Continuing Claims are estimated to rise to 2644K versus 2638K prior.
10:00 EST:
- Help Wanted Index for March is estimated at 41 versus a reading of 41 in February.
BOTTOM LINE: Asian indices are mixed as concerns over slower exports offset optimism over declining energy prices. I expect US equities to open modestly lower on a lower-than-expected GDP reading. However, stocks may rally later in the day as investors begin to anticipate less hawkish comments from the Fed. The Portfolio is 50% net long heading into tomorrow.
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