BOTTOM LINE: The Portfolio is about even into the final hour as gains in my Retail longs and Medical longs are offsetting losses in my Commodity shorts. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is slightly positive as the advance/decline line is modestly higher, almost every sector is rising and volume is about average. It is a positive that the 10-year yield is stable in the face of a jump in energy prices and a good consumer confidence reading. I will closely monitor the bond’s response to tomorrow’s likely above-expectations economic reports and the Fed’s likely upbeat commentary. I expect US stocks to trade mixed-to-higher into the close from current levels on more economic optimism and stable long-term rates.
Tuesday, January 30, 2007
Stocks Slightly Higher into Final Hour on More Economic Optimism, Stable Long-Term Rates
Today's Headlines
Bloomberg:
- Carl Icahn, the billionaire shareholder activist, demanded a seat on the board of Motorola Inc.(MOT).
- Crude oil is surging above $56/bbl. as investment funds speculate that a strengthening economy and colder weather will boost consumption.
- France, the world’s biggest consumer of wine, will cede that spot to the US by 2010, a British survey showed.
- Natural gas is soaring 12%, the most in more than three months, on massive speculation by investment funds even as inventories are at record levels for this time of year and liquefied natural gas imports into the US are poised to soar.
Wall Street Journal:
- The SEC gave a provisional go-ahead to a market-based method of valuing employee stock options devised by Zions Bancorp.
- Delta Air agreed to consider a merger with another airline if it wards off a takeover bid from US Air.
- Iran’s President Mahmoud Ahmadinejad faces mounting criticism from politicians and clerics concerned about his nuclear policies, denunciations of Israel, rising inflation and higher government spending. Ahmadinejad-backed candidates failed to win in many contests for local posts and lost control of Tehran’s city council late last year. The president’s declining popularity may herald a broader attempt to curb his policies before a UN Security Council resolution ordering Iran to halt uranium enrichment takes effect Feb. 20.
- Amaranth Advisors, the hedge fund that imploded because of speculation in natural gas, paid Merrill Lynch(MER) about $250 million to take on some of its trading positions as the hedge fund collapsed in September.
- Exxon Mobil(XOM) plans to extract gas from the Barnett Shale field, the fastest-growing in the US, under an agreement with Harding Co. of Dallas.
NY Times:
- Individual investors in China are buying stocks in record numbers, driving up the Shanghai Composite Index, creating a market for day trading and providing capital for mutual funds. About 2.7 million investment accounts were opened last year, more than 300% higher than in 2005. One mutual fund raised $5 billion in a day.
- Bush administration efforts to get European governments to hold back support for exports to Iran and block financial transactions are being resisted. European governments provided $18 billion in loan guarantees for Iran in 2005.
NY Post:
- CNBC host Maria Bartiromo is in talks with the network to have her own show, using a format similar to that of Charlie Rose and Bill Moyers. Bartiromo filed at least eight applications to trademark her Wall Street nickname, the “Money Honey.”
USA Today:
- US Attorney General Alberto Gonzales plans to brief law enforcement agencies on a proposed $200 million federal grant program to fight violent crime in the US.
- Programs targeting reckless driving helped cut traffic deaths by at least 5% in 16 states last year.
Boston Globe:
- Kenneth Heebner bought shares of Goldman Sachs(GS), Morgan Stanley(MS), Lehman Brothers(LEH) and Merrill Lynch for his top-performing CGM Focus Fund.
Washington Times:
- Iran and North Korea are working together to develop long-range missiles.
Financial Times:
- Risks to the global economy have receded so much that the world has the “luxury” of worrying about mispriced financial markets, John Lipsky, new first deputy managing director of the IMF said. Lower fuel prices and a more steady US housing market have lowered risk.
La Tribune:
- Arcelor Mittal, the world’s biggest steel company, says European steel prices could drop 15 to 20%. Prices are under pressure in southern Europe from cheaper steel imports from China. Global steel production rose 8.8% last year and prices fell 10% on average in the fourth quarter.
Interfax:
- OAO Transneft, Russia’s oil pipeline operator, is looking at doubling the capacity of a link to the Primorsk port on the Gulf of Finland, citing Grigory Dvas, vice governor of the Leningrad region. The state-owned company may expand the Baltic pipeline system to carry 150 million tons a year.
- Carl Icahn, the billionaire shareholder activist, demanded a seat on the board of Motorola Inc.(MOT).
- Crude oil is surging above $56/bbl. as investment funds speculate that a strengthening economy and colder weather will boost consumption.
- France, the world’s biggest consumer of wine, will cede that spot to the US by 2010, a British survey showed.
- Natural gas is soaring 12%, the most in more than three months, on massive speculation by investment funds even as inventories are at record levels for this time of year and liquefied natural gas imports into the US are poised to soar.
Wall Street Journal:
- The SEC gave a provisional go-ahead to a market-based method of valuing employee stock options devised by Zions Bancorp.
- Delta Air agreed to consider a merger with another airline if it wards off a takeover bid from US Air.
- Iran’s President Mahmoud Ahmadinejad faces mounting criticism from politicians and clerics concerned about his nuclear policies, denunciations of Israel, rising inflation and higher government spending. Ahmadinejad-backed candidates failed to win in many contests for local posts and lost control of Tehran’s city council late last year. The president’s declining popularity may herald a broader attempt to curb his policies before a UN Security Council resolution ordering Iran to halt uranium enrichment takes effect Feb. 20.
- Amaranth Advisors, the hedge fund that imploded because of speculation in natural gas, paid Merrill Lynch(MER) about $250 million to take on some of its trading positions as the hedge fund collapsed in September.
- Exxon Mobil(XOM) plans to extract gas from the Barnett Shale field, the fastest-growing in the US, under an agreement with Harding Co. of Dallas.
NY Times:
- Individual investors in China are buying stocks in record numbers, driving up the Shanghai Composite Index, creating a market for day trading and providing capital for mutual funds. About 2.7 million investment accounts were opened last year, more than 300% higher than in 2005. One mutual fund raised $5 billion in a day.
- Bush administration efforts to get European governments to hold back support for exports to Iran and block financial transactions are being resisted. European governments provided $18 billion in loan guarantees for Iran in 2005.
NY Post:
- CNBC host Maria Bartiromo is in talks with the network to have her own show, using a format similar to that of Charlie Rose and Bill Moyers. Bartiromo filed at least eight applications to trademark her Wall Street nickname, the “Money Honey.”
USA Today:
- US Attorney General Alberto Gonzales plans to brief law enforcement agencies on a proposed $200 million federal grant program to fight violent crime in the US.
- Programs targeting reckless driving helped cut traffic deaths by at least 5% in 16 states last year.
Boston Globe:
- Kenneth Heebner bought shares of Goldman Sachs(GS), Morgan Stanley(MS), Lehman Brothers(LEH) and Merrill Lynch for his top-performing CGM Focus Fund.
Washington Times:
- Iran and North Korea are working together to develop long-range missiles.
Financial Times:
- Risks to the global economy have receded so much that the world has the “luxury” of worrying about mispriced financial markets, John Lipsky, new first deputy managing director of the IMF said. Lower fuel prices and a more steady US housing market have lowered risk.
La Tribune:
- Arcelor Mittal, the world’s biggest steel company, says European steel prices could drop 15 to 20%. Prices are under pressure in southern Europe from cheaper steel imports from China. Global steel production rose 8.8% last year and prices fell 10% on average in the fourth quarter.
Interfax:
- OAO Transneft, Russia’s oil pipeline operator, is looking at doubling the capacity of a link to the Primorsk port on the Gulf of Finland, citing Grigory Dvas, vice governor of the Leningrad region. The state-owned company may expand the Baltic pipeline system to carry 150 million tons a year.
Consumer Confidence Near 5-Year High
- Consumer Confidence for January rose to 110.3 versus estimates of 110.0 and an upwardly revised 110.0 in December.
BOTTOM LINE: Confidence among US consumers approached the highest level since May 2002 this month as an expanding job market, rising wages, a strong stock market and falling energy prices gave Americans more money to spend, Bloomberg reported. The Present Situation Component of the index rose to 133.9 versus 130.5 the prior month. The Jobs Are Plentiful component rose to 29.9% versus 27.6% the prior month. The proportion of consumers planning to buy a car rose to 6.2% versus 5.4% the prior month. Those planning to buy a home rose to 3.3%, the highest since August, versus 2.9% the prior month. Gasoline prices fell to $2.23/gallon nationwide during January from $2.29/gallon in December. Sentiment in the central northeast remains depressed at 79.1. Sentiment in the south atlantic, central southwest, mountain and pacific regions remains robust at 120.2, 128.0, 132.8 and 128.3, respectively. I continue to believe both main measures of consumer confidence will make new cycle highs over the coming months as stocks rise further, housing continues to improve, wages continue to outpace inflation as unemployment remains low and gas prices fall further.
Monday, January 29, 2007
Tuesday Watch
Late-Night Headlines
Bloomberg:
- US airline pilots could fly to age 65 as long as the other person in the cockpit is under age 60, according to a rule aviation regulators may propose.
- Air America Radio, the bankrupt liberal talk-radio network, agreed to be sold to New York real estate investor Stephen L. Green for an undisclosed price. Green, 69, is chairman of SL Green Realty(SLG), the biggest owner of Manhattan office buildings.
- McDonald’s Corp.(MCD) has chosen the trans fat-free cooking oil it will use for frying at its 13,000 US stores, allowing the company to comply with laws aimed at improving health while maintaining the taste of its French fries.
- Baoshan Iron & Steel, the listed unit of China’s largest steelmaker, expects output of steel products to rise 10% to 23 million tons in 2007 from a year earlier.
- Korea Electric Power, the country’s dominant power supplier, and two other domestic companies will increase their investment in renewable energy 15% by 2008.
Gulf News:
- South Korean refiners plan to cut crude oil use by 20,000 barrels a day in February. The refiners are cutting fuel output because of profits from processing oil aren’t high enough to justify increased output.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (GLW), target $29. We think that the fiber-to-the-home trends at Verizon(VZ) suggests that 2007 should be a solid year of fiber/equipment spending, which will benefit Corning.
Night Trading
Asian Indices are -.25% to +.25% on average.
S&P 500 indicated unch.
NASDAQ 100 indicated +.04%.
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
Conference Calendar
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
- (MMM)/1.14
- (AFL)/.67
- (ALL)/1.84
- (APOL)/.62
- (BDK)/1.32
- (BKC)/.26
- (CME)/2.98
- (CB)/1.34
- (CL)/.77
- (COCO)/.10
- (CFC)/1.03
- (DBD)/.74
- (FLEX)/.22
- (IEX)/.64
- (ITW)/.73
- (K)/.46
- (LXK)/.95
- (MBI)/1.47
- (MRK)/.50
- (PBG)/.32
- (PPC)/-.07
- (PG)/.83
- (SAF)/1.53
- (SNDK)/.74
- (SII)/.71
- (UPS)/1.04
- (WYE)/.71
Upcoming Splits
- (SSI) 3-for-2
Economic Releases
10:00 am EST
- Consumer Confidence for January is estimated to rise to 110.0 versus 109.0 in December.
Bloomberg:
- US airline pilots could fly to age 65 as long as the other person in the cockpit is under age 60, according to a rule aviation regulators may propose.
- Air America Radio, the bankrupt liberal talk-radio network, agreed to be sold to New York real estate investor Stephen L. Green for an undisclosed price. Green, 69, is chairman of SL Green Realty(SLG), the biggest owner of Manhattan office buildings.
- McDonald’s Corp.(MCD) has chosen the trans fat-free cooking oil it will use for frying at its 13,000 US stores, allowing the company to comply with laws aimed at improving health while maintaining the taste of its French fries.
- Baoshan Iron & Steel, the listed unit of China’s largest steelmaker, expects output of steel products to rise 10% to 23 million tons in 2007 from a year earlier.
- Korea Electric Power, the country’s dominant power supplier, and two other domestic companies will increase their investment in renewable energy 15% by 2008.
Gulf News:
- South Korean refiners plan to cut crude oil use by 20,000 barrels a day in February. The refiners are cutting fuel output because of profits from processing oil aren’t high enough to justify increased output.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (GLW), target $29. We think that the fiber-to-the-home trends at Verizon(VZ) suggests that 2007 should be a solid year of fiber/equipment spending, which will benefit Corning.
Night Trading
Asian Indices are -.25% to +.25% on average.
S&P 500 indicated unch.
NASDAQ 100 indicated +.04%.
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
Conference Calendar
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
- (MMM)/1.14
- (AFL)/.67
- (ALL)/1.84
- (APOL)/.62
- (BDK)/1.32
- (BKC)/.26
- (CME)/2.98
- (CB)/1.34
- (CL)/.77
- (COCO)/.10
- (CFC)/1.03
- (DBD)/.74
- (FLEX)/.22
- (IEX)/.64
- (ITW)/.73
- (K)/.46
- (LXK)/.95
- (MBI)/1.47
- (MRK)/.50
- (PBG)/.32
- (PPC)/-.07
- (PG)/.83
- (SAF)/1.53
- (SNDK)/.74
- (SII)/.71
- (UPS)/1.04
- (WYE)/.71
Upcoming Splits
- (SSI) 3-for-2
Economic Releases
10:00 am EST
- Consumer Confidence for January is estimated to rise to 110.0 versus 109.0 in December.
BOTTOM LINE: Asian indices are mixed as weakness in energy stocks is being offset by strength in automaker shares in the region. I expect US equities to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.
Subscribe to:
Posts (Atom)