S&P 500 1,154.88 +.33%
NASDAQ 2,055.11 +1.07%
Leading Sectors
Homebuilders +2.03%
Internet +1.9%
Semis +1.63%
Lagging Sectors
Oil Service -.37%
Energy -.43%
Defense -.62%
Other
Crude Oil 36.8 +.44%
Natural Gas 5.45 -.13%
Gold 393.50 +.08%
Base Metals 109.35 -1.09%
U.S. Dollar 89.12 -.02%
10-Yr. Long-Bond Yield 4.01% unch.
VIX 14.40 -1.03%
Put/Call .68 -5.56%
NYSE Arms .90 -8.16%
After-hours Movers
VTIV +30.24% on strong 4Q earnings.
TACT +8.33% on better-than-expected 4Q earnings, raised 1Q/04 guidance and 3-for-2 split.
TIVO +6.02% on strong 4Q subscriber growth and forecasting sustainable profitability by end of 06.
BSX +5.05% after FDA approval of Taxus stent and saying it will begin shipments immediately.
HLTH +3.47% after reporting 4Q and announcing $100M investment by PCG/Calpers.
SBL -9.73% after missing 4Q estimates, lowering guidance and saying government accounting probes are continuing.
Recommendations
Goldman Sachs says hot-rolled steel prices are being set at time of delivery, exceeding $500/ton for April, resulting in a high-probability of upside surprises for mills in 2Q. GS also saying that steel mill capacity utilization crossed over 90% last week. Goldman says FLEX had very positive mid-quarter call, but didn't raise guidance. SGA is expected to benefit from a recovery in ad spending, Business Week reported.
After-hours News
U.S. stocks finished the day mostly higher, led by homebuilders, biotech and technology on low volume ahead of Intel's mid-quarter update and tomorrow's jobs report. After the close, Intel said the midpoint of its guidance declined slightly because customers in Asia had seen a small inventory build. However, CFO Andy Bryant said the inventory overhang had been "worked through" by now. OPEC has begun a rhetorical campaign to talk down prices. A "senior OPEC official" told the Wall Street Journal that the cartel would take "certain action" if crude prices don't "moderate" in the next 2 weeks, reported TheStreet.com. Disney CEO Eisner said he won't leave the company after giving up the chairman's job to George Mitchell, President Iger told CNBC. Concerns are arising that unrest in Venezuela will affect oil output.
BOTTOM LINE: I believe Intel's call this evening was about what investors anticipated. The stock was down slightly after-hours. I expect Intel and the rest of the semis to rise tomorrow barring a broad market sell-off on the jobs report. The Portfolio had a very good day and is now 75% net long. The last couple of days have seen a rotation from commodity-related stocks into tech and biotech. I think this trend will continue in the short-term.
Thursday, March 04, 2004
Mid-day Update
S&P 500 1,154.59 +.31%
NASDAQ 2,050.54 +.84%
Leading Sectors
Homebuilders +2.09%
Internet +1.77%
Broadcasting +1.58%
Lagging Sectors
Banks -.02%
Energy -.28%
Defense -.74%
Other
Crude Oil 36.63 +2.32%
Natural Gas 5.43 +1.02%
Gold 393.60 +.23%
Base Metals 109.35 -1.09%
U.S. Dollar 89.16 +.25%
10-Yr. Long-Bond Yield 4.02% -.57%
VIX 14.25 -2.06%
Put/Call .67 -6.94%
NYSE Arms .71 -27.55%
Market Movers
ASKJ +33.9% after raising 1Q earnings/revenue guidance and announcing acquisition of the Excite Network.
MATK +12.1% after announcing that the FDA has completed a favorable review of the company's generally recognized as safe notification for use of the former OmegaTech DHA in food applications.
IMCL +7.6% after Carl Icahn raised stake to 6.9% and said Wall Street had underestimated the "great potential" of Erbitux.
PFCB +5.1% after Citi raised it to Buy and gave $60 price target.
CPTS +20% after saying the AMA panel will categorize the Essure birth control system as a Category I procedure, speeding up coverage of Essure by private insurance companies and Medicaid.
DB +7.2% on rumors that Citigroup Smith Barney may acquire it.
PDII -11.6% on disappointing 4Q.
Economic Data
Non-farm Productivity(final) up 2.6% in 4Q vs. 2.7% estimate.
Unit Labor Costs(final) -.4% in 4Q vs. expectations of -1.2%.
Initial Jobless Claims came in at 345K last week, meeting expectations.
Continuing Claims came in at 3,091K last week vs. a 3,075 estimate.
Factory Orders were down .5%, meeting expectations.
Recommendations
Goldman Sachs reiterating Outperform rating on AA. GS is upgrading CEN, PAYX to Outperform and reiterating Outperform rating on ADP as they have concluded that recent weak payroll trends were due to economic, not secular problems. GS re-initiating coverage on FDC with Outperform rating and $60 target. Citi Smith Barney reiterating Buy on GTK and $67 price target. Citi says Feb. gaming revenue in Atlantic City increased 20-25%, benefiting HET, CZR, AZR, BYD, MGG and DJT. Citi says DOW seeing increased levels of business activity globally, bodes well for PPG, MCH, EMN and NCX. Citi also raising price target on GMST to $9.50. Finally, Citi raising price target on NMG/A to $68, saying it is the best-positioned luxury retailer. TheStreet.com's Cramer is recommending selling brokerage stocks ahead of earnings as they have run too far in short-term. Cramer also saying that shorts are covering in the homebuilding sector as they anticipate a weaker-than-expected jobs report and a fall in interest rates tomorrow. Merrill Lynch raised VRTS to Buy with a target of $38.
Mid-day News
U.S. stocks are mostly higher mid-day, led by homebuilders, technology and biotechnology. U.S. factory orders, excluding transportation components are surging and new orders are likely to pick up dramatically, Brian Wesbury, a chief economist told CNBC. The ECB kept rates unchanged at 2%, ignoring calls from Schroeder to lower rates. U.S. worker productivity grew last quarter at less than a third of the pace of the previous three months, suggesting companies may increase hiring as the economy strengthens. First-time claims for unemployment insurance fell to 345K, near a 3-year low.
BOTTOM LINE: The Portfolio is having a very good day today and I have increased its market exposure to 75% net long. I added LRCX and NVLS this morning, a couple of beaten-up semi-equipment names, ahead of INTC's update after the close. I am using stops of $25.50 and $31.00, respectively. I also added a couple of biotech names on the technical break-out of the Nasdaq Biotech Index. I expect to see some weakness later this afternoon as traders hedge their gains today ahead of the important news scheduled for release before trading tomorrow.
NASDAQ 2,050.54 +.84%
Leading Sectors
Homebuilders +2.09%
Internet +1.77%
Broadcasting +1.58%
Lagging Sectors
Banks -.02%
Energy -.28%
Defense -.74%
Other
Crude Oil 36.63 +2.32%
Natural Gas 5.43 +1.02%
Gold 393.60 +.23%
Base Metals 109.35 -1.09%
U.S. Dollar 89.16 +.25%
10-Yr. Long-Bond Yield 4.02% -.57%
VIX 14.25 -2.06%
Put/Call .67 -6.94%
NYSE Arms .71 -27.55%
Market Movers
ASKJ +33.9% after raising 1Q earnings/revenue guidance and announcing acquisition of the Excite Network.
MATK +12.1% after announcing that the FDA has completed a favorable review of the company's generally recognized as safe notification for use of the former OmegaTech DHA in food applications.
IMCL +7.6% after Carl Icahn raised stake to 6.9% and said Wall Street had underestimated the "great potential" of Erbitux.
PFCB +5.1% after Citi raised it to Buy and gave $60 price target.
CPTS +20% after saying the AMA panel will categorize the Essure birth control system as a Category I procedure, speeding up coverage of Essure by private insurance companies and Medicaid.
DB +7.2% on rumors that Citigroup Smith Barney may acquire it.
PDII -11.6% on disappointing 4Q.
Economic Data
Non-farm Productivity(final) up 2.6% in 4Q vs. 2.7% estimate.
Unit Labor Costs(final) -.4% in 4Q vs. expectations of -1.2%.
Initial Jobless Claims came in at 345K last week, meeting expectations.
Continuing Claims came in at 3,091K last week vs. a 3,075 estimate.
Factory Orders were down .5%, meeting expectations.
Recommendations
Goldman Sachs reiterating Outperform rating on AA. GS is upgrading CEN, PAYX to Outperform and reiterating Outperform rating on ADP as they have concluded that recent weak payroll trends were due to economic, not secular problems. GS re-initiating coverage on FDC with Outperform rating and $60 target. Citi Smith Barney reiterating Buy on GTK and $67 price target. Citi says Feb. gaming revenue in Atlantic City increased 20-25%, benefiting HET, CZR, AZR, BYD, MGG and DJT. Citi says DOW seeing increased levels of business activity globally, bodes well for PPG, MCH, EMN and NCX. Citi also raising price target on GMST to $9.50. Finally, Citi raising price target on NMG/A to $68, saying it is the best-positioned luxury retailer. TheStreet.com's Cramer is recommending selling brokerage stocks ahead of earnings as they have run too far in short-term. Cramer also saying that shorts are covering in the homebuilding sector as they anticipate a weaker-than-expected jobs report and a fall in interest rates tomorrow. Merrill Lynch raised VRTS to Buy with a target of $38.
Mid-day News
U.S. stocks are mostly higher mid-day, led by homebuilders, technology and biotechnology. U.S. factory orders, excluding transportation components are surging and new orders are likely to pick up dramatically, Brian Wesbury, a chief economist told CNBC. The ECB kept rates unchanged at 2%, ignoring calls from Schroeder to lower rates. U.S. worker productivity grew last quarter at less than a third of the pace of the previous three months, suggesting companies may increase hiring as the economy strengthens. First-time claims for unemployment insurance fell to 345K, near a 3-year low.
BOTTOM LINE: The Portfolio is having a very good day today and I have increased its market exposure to 75% net long. I added LRCX and NVLS this morning, a couple of beaten-up semi-equipment names, ahead of INTC's update after the close. I am using stops of $25.50 and $31.00, respectively. I also added a couple of biotech names on the technical break-out of the Nasdaq Biotech Index. I expect to see some weakness later this afternoon as traders hedge their gains today ahead of the important news scheduled for release before trading tomorrow.
Thursday Watch
Earnings Announcements
Company/Estimate
MSO/.07
NTLI/-2.60
OMX/.19
SPLS/.41
SBL/.09
TTWO/.70
TIVO/-.18
HLTH/.09
Splits
POG 2-for-1
Economic Data
Non-farm Productivity(revised) estimated at 2.7% vs. 2.7% reported.
Unit Labor Costs(revised) estimated at -1.2% vs. -1.3% reported.
Initial Jobless Claims estimated at 345K last week vs. 350K prior week.
Continuing Claims estimated at 3,075K last week vs. 3,102K prior week.
Factory Orders estimated down .5% for Jan. vs. a 1.1% rise in Dec.
Recommendations
Bill Gross, of PIMCO, recommends investors buy shorter-term debt to protect against the likelihood inflation will accelerate.
Late-Night News
The U.S. asked China to drop a law that will limit imports of pagers, laptop computers and other wireless products, the Asian Wall Street Journal said. The Bush administration is considering allowing select Iraqi delegates appoint an interim parliament to govern the country until direct elections can be held there, the Wall Street Journal reported. France's upper house of parliament approved a ban on religious apparel in state schools, Agence France-Presse reported. Japan will hold its first auction of inflation-indexed bonds today, betting investors will buy the debt on expectations a consumer price decline that began in 98 will end in coming years. Disney's board of directors said it would separate the positions of chief executive officer and chairman, installing George Mitchell as a non-executive chairman. The board "remains unanimous in its support of the company's management team and of Michael Eisner, who will continue to serve as CEO," the board said in an e-mailed statement. AT&T Wireless shares are hovering about 9% below the price that Cingular Wireless agreed to pay for the carrier, reflecting investor concern that the deal's consummation may be delayed. Asian stocks are rising after Japanese and South Korean business confidence surveys suggested that companies will increase spending in the next quarter.
Late-Night Trading
Asian markets are mostly higher, ranging from -.3 to +1.4%.
S&P 500 indicated -.01%.
NASDAQ indicated +.24%.
BOTTOM LINE: It is probable the U.S. markets will remain relatively quiet tomorrow ahead of Fri.'s labor report and Intel's mid-quarter update after the close. I may add a few long positions in the semiconductor or biotech sectors at some point tomorrow. However, I do not plan to take the Portfolio's market exposure beyond 75% net long before Fri.
Company/Estimate
MSO/.07
NTLI/-2.60
OMX/.19
SPLS/.41
SBL/.09
TTWO/.70
TIVO/-.18
HLTH/.09
Splits
POG 2-for-1
Economic Data
Non-farm Productivity(revised) estimated at 2.7% vs. 2.7% reported.
Unit Labor Costs(revised) estimated at -1.2% vs. -1.3% reported.
Initial Jobless Claims estimated at 345K last week vs. 350K prior week.
Continuing Claims estimated at 3,075K last week vs. 3,102K prior week.
Factory Orders estimated down .5% for Jan. vs. a 1.1% rise in Dec.
Recommendations
Bill Gross, of PIMCO, recommends investors buy shorter-term debt to protect against the likelihood inflation will accelerate.
Late-Night News
The U.S. asked China to drop a law that will limit imports of pagers, laptop computers and other wireless products, the Asian Wall Street Journal said. The Bush administration is considering allowing select Iraqi delegates appoint an interim parliament to govern the country until direct elections can be held there, the Wall Street Journal reported. France's upper house of parliament approved a ban on religious apparel in state schools, Agence France-Presse reported. Japan will hold its first auction of inflation-indexed bonds today, betting investors will buy the debt on expectations a consumer price decline that began in 98 will end in coming years. Disney's board of directors said it would separate the positions of chief executive officer and chairman, installing George Mitchell as a non-executive chairman. The board "remains unanimous in its support of the company's management team and of Michael Eisner, who will continue to serve as CEO," the board said in an e-mailed statement. AT&T Wireless shares are hovering about 9% below the price that Cingular Wireless agreed to pay for the carrier, reflecting investor concern that the deal's consummation may be delayed. Asian stocks are rising after Japanese and South Korean business confidence surveys suggested that companies will increase spending in the next quarter.
Late-Night Trading
Asian markets are mostly higher, ranging from -.3 to +1.4%.
S&P 500 indicated -.01%.
NASDAQ indicated +.24%.
BOTTOM LINE: It is probable the U.S. markets will remain relatively quiet tomorrow ahead of Fri.'s labor report and Intel's mid-quarter update after the close. I may add a few long positions in the semiconductor or biotech sectors at some point tomorrow. However, I do not plan to take the Portfolio's market exposure beyond 75% net long before Fri.
Wednesday, March 03, 2004
Wednesday Close
S&P 500 1,151.03 +.17%
NASDAQ 2,033.36 -.31%
Leading Sectors
Insurance +.96%
Computer Service +.86%
Restaurants +.75%
Lagging Sectors
Telecom -.79%
Iron/Steel -.91%
Semis -1.90%
Other
Crude Oil 35.72 -.22%
Natural Gas 5.375 unch.
Gold 394.20 +.38%
Base Metals 110.55 -3.32%
U.S. Dollar 89.05 +.17%
10-Yr. Long-Bond Yield 4.05% +.33%
VIX 14.54 -2.09%
Put/Call .72 +2.86%
NYSE Arms .98 -27.94%
After-hours Movers
AFCI +4.21% after CNBC guest recommendation.
EVOL +15.25% more, after a 35% rise today on volume, no news.
SCOX +6.13% after suing Linux users AZ and DCS.
IMCL +3.81% on report that Carl Icahn boosted stake to 6.9%.
Recommendations
Cramer, of TheStreet.com, says he sees massive put buying on the semis and QQQs that should result in a tech bounce by Fri. TheStreet.com is also recommending covering shorts in N and AAII. TheStreet.com is also saying that ChevronTexaco's recent announcement that it is hiring another 5 rigs for development drilling in the waters off the shore of Angola is positive for GSF, ESV, NE, RDC, HAL, SLB, BHI and TDW. Goldman Sachs is reiterating its Outperform rating and $52 target on BSX. GS says DIS is seeing accelerating momentum at their Theme Parks. GS sees consumer credit outlook as benign and says bankruptcies are down 5.4% from 03 in January. Finally, Goldman reiterated its Outperform rating on BAX and $38 target.
After-hours News
U.S. stocks rebounded in the afternoon as interest rate and currency fears subsided, leaving the major averages mixed on the day. After the close, Smith Travel is reporting that business travel trends are accelerating. Former Disney director Stanley Gold told CNBC that its weak performance makes it vulnerable to the Comcast takeover. He stated that "The best thing to head off a Comcast offer is a new management and a high stock price." Some of Delphi Corp.'s suppliers have said they will break their contracts with the auto-parts maker if they don't get compensated for higher steel costs which could lead to temporary plant shutdowns, Dow Jones reported. Roger Noriega, the U.S. diplomat overseeing Haiti policy, rejected accusations of an American coup in the Caribbean country as he told Congress that former President Jean-Bertrand Aristide had undermined democracy and squandered economic aid.
BOTTOM LINE: The main weakness today was in tech and base metal stocks. Semis are selling off in anticipation of a bad call from INTC. The put buying in the SOX and the call itself should spark a rally in this sector. Base metal stocks are correcting from overbought levels and will likely continue to fall in the short-term. The Biotech index is very close to a technical breakout and my short-term indicators are all giving buy signals, thus I will look to add exposure in this sector on the technical breakout. The Portfolio is currently 50% net long, as I did not add any new positions in the afternoon.
NASDAQ 2,033.36 -.31%
Leading Sectors
Insurance +.96%
Computer Service +.86%
Restaurants +.75%
Lagging Sectors
Telecom -.79%
Iron/Steel -.91%
Semis -1.90%
Other
Crude Oil 35.72 -.22%
Natural Gas 5.375 unch.
Gold 394.20 +.38%
Base Metals 110.55 -3.32%
U.S. Dollar 89.05 +.17%
10-Yr. Long-Bond Yield 4.05% +.33%
VIX 14.54 -2.09%
Put/Call .72 +2.86%
NYSE Arms .98 -27.94%
After-hours Movers
AFCI +4.21% after CNBC guest recommendation.
EVOL +15.25% more, after a 35% rise today on volume, no news.
SCOX +6.13% after suing Linux users AZ and DCS.
IMCL +3.81% on report that Carl Icahn boosted stake to 6.9%.
Recommendations
Cramer, of TheStreet.com, says he sees massive put buying on the semis and QQQs that should result in a tech bounce by Fri. TheStreet.com is also recommending covering shorts in N and AAII. TheStreet.com is also saying that ChevronTexaco's recent announcement that it is hiring another 5 rigs for development drilling in the waters off the shore of Angola is positive for GSF, ESV, NE, RDC, HAL, SLB, BHI and TDW. Goldman Sachs is reiterating its Outperform rating and $52 target on BSX. GS says DIS is seeing accelerating momentum at their Theme Parks. GS sees consumer credit outlook as benign and says bankruptcies are down 5.4% from 03 in January. Finally, Goldman reiterated its Outperform rating on BAX and $38 target.
After-hours News
U.S. stocks rebounded in the afternoon as interest rate and currency fears subsided, leaving the major averages mixed on the day. After the close, Smith Travel is reporting that business travel trends are accelerating. Former Disney director Stanley Gold told CNBC that its weak performance makes it vulnerable to the Comcast takeover. He stated that "The best thing to head off a Comcast offer is a new management and a high stock price." Some of Delphi Corp.'s suppliers have said they will break their contracts with the auto-parts maker if they don't get compensated for higher steel costs which could lead to temporary plant shutdowns, Dow Jones reported. Roger Noriega, the U.S. diplomat overseeing Haiti policy, rejected accusations of an American coup in the Caribbean country as he told Congress that former President Jean-Bertrand Aristide had undermined democracy and squandered economic aid.
BOTTOM LINE: The main weakness today was in tech and base metal stocks. Semis are selling off in anticipation of a bad call from INTC. The put buying in the SOX and the call itself should spark a rally in this sector. Base metal stocks are correcting from overbought levels and will likely continue to fall in the short-term. The Biotech index is very close to a technical breakout and my short-term indicators are all giving buy signals, thus I will look to add exposure in this sector on the technical breakout. The Portfolio is currently 50% net long, as I did not add any new positions in the afternoon.
Mid-day Update
S&P 500 1,148.18 -.08%
NASDAQ 2,028.72 -.53%
Leading Sectors
Computer Services +.57%
HMO's +.56%
Banks +.43%
Lagging Sectors
Homebuilders -1.18%
Iron/Steel -1.36%
Semis -1.93%
Other
Crude Oil 36.04 -1.69%
Natural Gas 5.43 -2.43%
Gold 391.60 -.56%
Base Metals 110.55 -3.32%
U.S. Dollar 89.43 +.58%
10-Yr. Long-Bond Yield 4.07% +.86%
VIX 14.93 +.47%
Put/Call .82 +17.14%
NYSE Arms 1.07 -21.32%
Market Movers
MAMA +37% on continued strength from 4Q report.
LGND +11.5% after significantly beating 4Q estimates and raising guidance.
COO +10.2% after beating 1Q estimates and raising guidance.
SEAC -19.9% after beating 4Q estimates and having lawsuit against CCUR thrown out.
BVF -9.3% after missing 4Q estimates and lowering guidance.
AZ -4.5% after 2Q beat estimates by cutting costs and raising prices, thus hurting sales.
Economic Data
ISM Non-Manufacturing came in at 60.8 in February vs. 63.5 forecast.
Recommendations
PAYX price target raised to $41 and rating raised to Outperform at SoundView. IGT rated new Buy at Bank of America, price target set at $50. BOFA also rated AGI Buy and set price target of $33. ESRX price target raised by CSFB to $86. Goldman Sachs recommends buying Yen against US dollar. GS says they would buy IBM, EMC and DELL on weakness related to STX report. GS says Tuesday's court decision reversing the FCC's UNE-P, handing a near-term victory to the RBOCs, is a non-event for communications equipment vendors and continues to favor JNPR, NT, SONS and CSCO. GS is expecting lumber prices to average 18% higher in 04 vs. 03 on continued strength in US housing market. Citi Smith Barney says XLNX experiencing packaging-related delivery constraints in March Q limiting upside, but making June Q better. Citi likes SAP and says its demand is improving with pipeline strong, win rates increasing and deal sizes stabilizing. TheSteet.com's Cramer says commodity rally may be in its very early stages still as demand will outstrip supply for years. Jason Goepfert of Sentimetrader.com says February market action bodes will for next few months, reported TheStreet.com
Mid-day News
U.S. stocks are falling mid-day as traders continue to speculate Friday's employment report will result in an immediate Fed rate hike. The US dollar and interest rates continued their recent rebound. Saudi Arabia will reduce the price of its shipments to the U.S. in April, compared with a benchmark grade, Reuters reported. Deutsche Telekom and France Telecom, Europe's two largest phone companies, had their credit raised by Moody's after they cut debt. Copper futures had their biggest decline in more than 4 years on concern that its price has risen so much that it will cut demand in the future. The ISM Non-Manufacturing Index declined to 60.8 in February from January's all-time high reading of 65.7. The employment component of the index fell slightly to 52.7 from January's 53.4, the highest reading since 1987. The Business Roundtable said that 33% of CEO's plan to increase hiring in the next 2 quarters, up from 25% last quarter. Railroads have hauled 5.5% more truck trailers and multi-use containers so far in 04 than 03, according to the Amer. Assoc. of Railroads. Arrow Electronics, the world's largest distributor of computer parts, is seeing a lot of demand from small and mid-sized businesses according to the CEO.
BOTTOM LINE: The U.S. equity markets seem to be overreacting to the rally in the U.S. dollar and interest rates. The dollar is up 5% after a decline of 30% from its all-time high. It is a positive that it is not falling at such a rapid rate. I do not believe, at this time, that we have begun a new bull market in the U.S. currency. Interest rates have barely moved up from their recent lows and yields are still down 11% since Sept. 03. Interest rates normally rise substantially before a series of Fed moves. That is not the case at this time. The Portfolio is down today as it took a hit on a recent buy of SEAC. I exited this position after it penetrated my stop-loss, notwithstanding my opinion that the fall is an overreaction to the court loss. I also trimmed some other longs, leaving the Portfolio with 50% net long market exposure. The market appears to be making a short-term bottom and I will look to increase exposure at the appropriate time.
NASDAQ 2,028.72 -.53%
Leading Sectors
Computer Services +.57%
HMO's +.56%
Banks +.43%
Lagging Sectors
Homebuilders -1.18%
Iron/Steel -1.36%
Semis -1.93%
Other
Crude Oil 36.04 -1.69%
Natural Gas 5.43 -2.43%
Gold 391.60 -.56%
Base Metals 110.55 -3.32%
U.S. Dollar 89.43 +.58%
10-Yr. Long-Bond Yield 4.07% +.86%
VIX 14.93 +.47%
Put/Call .82 +17.14%
NYSE Arms 1.07 -21.32%
Market Movers
MAMA +37% on continued strength from 4Q report.
LGND +11.5% after significantly beating 4Q estimates and raising guidance.
COO +10.2% after beating 1Q estimates and raising guidance.
SEAC -19.9% after beating 4Q estimates and having lawsuit against CCUR thrown out.
BVF -9.3% after missing 4Q estimates and lowering guidance.
AZ -4.5% after 2Q beat estimates by cutting costs and raising prices, thus hurting sales.
Economic Data
ISM Non-Manufacturing came in at 60.8 in February vs. 63.5 forecast.
Recommendations
PAYX price target raised to $41 and rating raised to Outperform at SoundView. IGT rated new Buy at Bank of America, price target set at $50. BOFA also rated AGI Buy and set price target of $33. ESRX price target raised by CSFB to $86. Goldman Sachs recommends buying Yen against US dollar. GS says they would buy IBM, EMC and DELL on weakness related to STX report. GS says Tuesday's court decision reversing the FCC's UNE-P, handing a near-term victory to the RBOCs, is a non-event for communications equipment vendors and continues to favor JNPR, NT, SONS and CSCO. GS is expecting lumber prices to average 18% higher in 04 vs. 03 on continued strength in US housing market. Citi Smith Barney says XLNX experiencing packaging-related delivery constraints in March Q limiting upside, but making June Q better. Citi likes SAP and says its demand is improving with pipeline strong, win rates increasing and deal sizes stabilizing. TheSteet.com's Cramer says commodity rally may be in its very early stages still as demand will outstrip supply for years. Jason Goepfert of Sentimetrader.com says February market action bodes will for next few months, reported TheStreet.com
Mid-day News
U.S. stocks are falling mid-day as traders continue to speculate Friday's employment report will result in an immediate Fed rate hike. The US dollar and interest rates continued their recent rebound. Saudi Arabia will reduce the price of its shipments to the U.S. in April, compared with a benchmark grade, Reuters reported. Deutsche Telekom and France Telecom, Europe's two largest phone companies, had their credit raised by Moody's after they cut debt. Copper futures had their biggest decline in more than 4 years on concern that its price has risen so much that it will cut demand in the future. The ISM Non-Manufacturing Index declined to 60.8 in February from January's all-time high reading of 65.7. The employment component of the index fell slightly to 52.7 from January's 53.4, the highest reading since 1987. The Business Roundtable said that 33% of CEO's plan to increase hiring in the next 2 quarters, up from 25% last quarter. Railroads have hauled 5.5% more truck trailers and multi-use containers so far in 04 than 03, according to the Amer. Assoc. of Railroads. Arrow Electronics, the world's largest distributor of computer parts, is seeing a lot of demand from small and mid-sized businesses according to the CEO.
BOTTOM LINE: The U.S. equity markets seem to be overreacting to the rally in the U.S. dollar and interest rates. The dollar is up 5% after a decline of 30% from its all-time high. It is a positive that it is not falling at such a rapid rate. I do not believe, at this time, that we have begun a new bull market in the U.S. currency. Interest rates have barely moved up from their recent lows and yields are still down 11% since Sept. 03. Interest rates normally rise substantially before a series of Fed moves. That is not the case at this time. The Portfolio is down today as it took a hit on a recent buy of SEAC. I exited this position after it penetrated my stop-loss, notwithstanding my opinion that the fall is an overreaction to the court loss. I also trimmed some other longs, leaving the Portfolio with 50% net long market exposure. The market appears to be making a short-term bottom and I will look to increase exposure at the appropriate time.
Wednesday Watch
Earnings Announcements
Company/Estimate
AZ/1.00
CHS/.28
LDG/.42
MIK/1.32
NMG.B/1.03
SKS/.68
TOY/1.05
Splits
None of Note
Economic Data
ISM Non-Manufacturing estimated at 63.5 in Feb. vs. 65.7 in Jan.
Fed's Beige Book Report
Late-Night News
China's semiconductor consumption will jump 30% to $37B this year as expansion by television, mobile-phone and digital camera-makers fuels demand, Gartner Inc. said. It will rise another 27% to $47B in 05, with overseas chipmakers accounting for 90% of the market. Ask Jeeves will no longer allow advertisers and web site operators to pay to boost their ranking in its search index, the Wall Street Journal said. California's plan to sell as much as $15B in bonds appears headed for voter approval, the LA Times reported. South Korean business confidence reached a 17-month high in February as exports grew at their fastest pace in 15 years. Senator Kerry won primaries in 8 states on the biggest night of voting in the Democratic presidential nomination race. Kerry's victories prompted Senator Edwards to drop out of the race.
Late-Night Trading
Asian markets are mostly lower, ranging from unch. to -2.5%.
S&P 500 indicated -.06%.
NASDAQ indicated -.03%.
BOTTOM LINE: The weakness in Asia could lead to more selling in the U.S. markets in the morning. While I don't expect a substantial down day, modest deterioration is likely. I will closely monitor the relative strength of the Portfolio on the open before making any reductions in market exposure.
Company/Estimate
AZ/1.00
CHS/.28
LDG/.42
MIK/1.32
NMG.B/1.03
SKS/.68
TOY/1.05
Splits
None of Note
Economic Data
ISM Non-Manufacturing estimated at 63.5 in Feb. vs. 65.7 in Jan.
Fed's Beige Book Report
Late-Night News
China's semiconductor consumption will jump 30% to $37B this year as expansion by television, mobile-phone and digital camera-makers fuels demand, Gartner Inc. said. It will rise another 27% to $47B in 05, with overseas chipmakers accounting for 90% of the market. Ask Jeeves will no longer allow advertisers and web site operators to pay to boost their ranking in its search index, the Wall Street Journal said. California's plan to sell as much as $15B in bonds appears headed for voter approval, the LA Times reported. South Korean business confidence reached a 17-month high in February as exports grew at their fastest pace in 15 years. Senator Kerry won primaries in 8 states on the biggest night of voting in the Democratic presidential nomination race. Kerry's victories prompted Senator Edwards to drop out of the race.
Late-Night Trading
Asian markets are mostly lower, ranging from unch. to -2.5%.
S&P 500 indicated -.06%.
NASDAQ indicated -.03%.
BOTTOM LINE: The weakness in Asia could lead to more selling in the U.S. markets in the morning. While I don't expect a substantial down day, modest deterioration is likely. I will closely monitor the relative strength of the Portfolio on the open before making any reductions in market exposure.
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