S&P 500 1,156.86 +.17%
NASDAQ 2,047.63 -.36%
Leading Sectors
Homebuilders +3.26%
Restaurants +1.65%
Gaming +1.58%
Lagging Sectors
Semis -.86%
Software -.87%
Iron/Steel -2.03%
Other
Crude Oil 37.26 +1.69%
Natural Gas 5.44 -.26%
Gold 401.60 +2.14%
Base Metals 109.87 +.48%
U.S. Dollar 88.17 -1.10%
10-Yr. Long-Bond Yield 3.84% -4.32%
VIX 14.48 +.56%
Put/Call .78 +14.71%
NYSE Arms 1.37 +52.22%
After-hours Movers
None of note.
Recommendations
Goldman Sachs says ACV up on speculation of a takeover by L'Oreal. They would not chase stock at current levels. GS saying tight inventory at retailers should limit markdowns going forward. Goldman interprets the March 3rd letter from the CBO as an incremental shift towards supporting gov. drug price negotiation under Medicare, with potential negative implications for the role of private-sector managed care companies in negotiating drug price discounts.
After-hours News
The S&P 500 rose for the seventh day in eight, led by homebuilders, financials and consumer cyclicals after a report showed the economy generated fewer jobs than expected. This report resulted in a substantial bond market rally and a falling dollar, which in turn led to the eventual rally in U.S. stocks. After the close, Delphi said it faces potential losses of $10M a day if 2 suppliers halt shipments because of a price dispute, DJ Newswire reported. Crude Oil is now trading near a 1-yr. high on unrest in Venezuela. Martha Stewart Living shares plunged 36% from their intra-day high after Stewart was found guilty on 4 different charges.
BOTTOM LINE: The Portfolio finished the day slightly higher, as weakness in my tech positions was offset by strength in biotech and homebuilding stocks. The Portfolio is 100% net long heading into trading next week. The Morgan Stanley Tech Index is at a critical juncture technically. I suspect, after weekend reflection, investors will bid tech higher in the coming week. Interest rates near 50-yr lows, a P/E of 18.7 and falling for the S&P 500 on 04 estimates, strong GDP growth near 20-yr. highs, strong corporate profitability near all-time highs, strong consumer/corporate spending, improving debt-service ratios, a stabilizing U.S. currency and record low inflation are all characteristics of the current market environment and all very positive for U.S. equities. I will discuss potential negatives I see in this weekend's commentary.
Friday, March 05, 2004
Mid-day Update
S&P 500 1,157.31 +.21%
NASDAQ 2,051.56 -.17%
Leading Sectors
Homebuilders +2.50%
Restaurants +1.80%
Gaming +1.26%
Lagging Sectors
Semis -.61%
Fashion -.71%
Iron/Steel -1.97%
Other
Crude Oil 37.15 +1.39%
Natural Gas 5.43 -.49%
Gold 399.80 +1.68%
Base Metals 109.87 +.48%
U.S. Dollar 88.04 -1.20%
10-Yr. Long-Bond Yield 3.83% -4.70%
VIX 14.28 -.90%
Put/Call .75 +10.29%
NYSE Arms 1.32 +46.7%
Market Movers
AAPL +6.92% on Sony buyout rumors.
SBL -11.7% on continued weakness from 4Q report.
NUE -5.7% on Prudential downgrade to Neutral.
Homebuilders up across the board on a technical gap breakdown in interest rates.
Economic Data
Unemployment Rate came in at 5.6% in Feb., meeting expectations.
Change in Non-farm Payrolls was 21K in Feb. vs. expectations of 130K.
Change in Manufacturing Payrolls was -3K vs. expectations of down 2K.
Average Weekly Hours was 33.8, meeting expectations.
Recommendations
QCOM raised to Buy at Deutshe Bank and has $70 target. KWK cut to In-line at Goldman Sachs. PFCB raised to Buy at Citi Smith Barney, target $60. Citi also saying its sees recent positive trends in INTC's data points and investors should Buy now on weakness. Citi says March CIO Software Survey shows increased spending on applications, with emphasis on ERP, HRMS and CRM. Citi also saying that % of deployed applications that are web-based will grow from 25% today to 70% by 2010, benefiting BEAS and MSFT. Finally, Citi says MU's upcoming earnings report will be strong with outlook strong. Prudential raised BSX target to $53. X cut to Underweight at Prudential, target $28. TLB priced target raised to $43 at Prudential. Prudential also raised price target of MBG to $56. Lehman raised CNXT to Overweight. Raymond James raised BBY to Strong Buy. OSTK rated Strong Buy with $50 target at JMP Securities. Cramer, of TheStreet.com, says to buy tech on any short-term weakness from INTC call.
Mid-day News
U.S. stocks are mixed mid-day as they recover from an early morning sell-off. Homebuilders are leading the market again as interest rates broke to the downside on the much weaker-than-expected jobs report. The unemployment rate held steady at 5.6%. The 10-yr long-bond is having its best day since 2001. Flextronics(FLEX) says Qaulcomm's(QCOM) CDMA phone is gaining traction in China, Brazil and India. New York City's Taxi Commission proposal raises fares 26%, NY Daily reported. China's transportation system has bogged down under strains of rapid economic growth, causing delays in deliveries of raw materials and raising a risk of higher inflation, NY Times says. EchoStar would be forced to consider an acquisition or merger should rival Comcast succeed in buying Disney said Chairman Ergen, according to the Denver Post. Sun Microsystems credit rating was cut to "junk" by Standard & Poors.
BOTTOM LINE: While it is disappointing in the short-run that the U.S. isn't creating more jobs, it is actually better for the long-run. The Fed will not raise rates until it sees a couple of good jobs reports, in my opinion. Thus, the longer interest rates stay exceptionally low, the greater the pent-up demand for workers will be down the road. It is likely that the airwaves will be filled with negativity this weekend as media pundits continue to focus on the past instead of the future. These same pundits said that U.S. stocks, specifically technology, would remain in a bear market for a decade after the bubble of the 90's burst. They said corporate scandals would cause investors to flee U.S. stocks permanently. After 9-11, they said the U.S. would see many more attacks on U.S. soil in the near future. They said corporate spending wouldn't improve for years due to the overcapacity created during the 90's. They said a declining dollar would result in foreign selling of U.S. assets. They said U.S. budget and trade deficits would result in a crash in the economy and stock markets. All of these predictions proved to be wrong. Any investors that listened to this negativity likely missed out on the historically strong run we have had in U.S. stocks during the last 18 months. The economy is in very good shape and is getting better. With this improvement, job growth will come. Like I have said before, this recovery is in slow-motion as the U.S. economy continues to burn off the excess capacity created during the 90's bubble. We are close, but not there yet. Investors that focus on the future and all the recent positive developments with respect to the economy will be rewarded by year-end. The Portfolio is up today as I added a couple of interest-rate sensitive positions on the morning weakness and homebuilders continue to generate stunning profits. The Portfolio is now 100% net long.
NASDAQ 2,051.56 -.17%
Leading Sectors
Homebuilders +2.50%
Restaurants +1.80%
Gaming +1.26%
Lagging Sectors
Semis -.61%
Fashion -.71%
Iron/Steel -1.97%
Other
Crude Oil 37.15 +1.39%
Natural Gas 5.43 -.49%
Gold 399.80 +1.68%
Base Metals 109.87 +.48%
U.S. Dollar 88.04 -1.20%
10-Yr. Long-Bond Yield 3.83% -4.70%
VIX 14.28 -.90%
Put/Call .75 +10.29%
NYSE Arms 1.32 +46.7%
Market Movers
AAPL +6.92% on Sony buyout rumors.
SBL -11.7% on continued weakness from 4Q report.
NUE -5.7% on Prudential downgrade to Neutral.
Homebuilders up across the board on a technical gap breakdown in interest rates.
Economic Data
Unemployment Rate came in at 5.6% in Feb., meeting expectations.
Change in Non-farm Payrolls was 21K in Feb. vs. expectations of 130K.
Change in Manufacturing Payrolls was -3K vs. expectations of down 2K.
Average Weekly Hours was 33.8, meeting expectations.
Recommendations
QCOM raised to Buy at Deutshe Bank and has $70 target. KWK cut to In-line at Goldman Sachs. PFCB raised to Buy at Citi Smith Barney, target $60. Citi also saying its sees recent positive trends in INTC's data points and investors should Buy now on weakness. Citi says March CIO Software Survey shows increased spending on applications, with emphasis on ERP, HRMS and CRM. Citi also saying that % of deployed applications that are web-based will grow from 25% today to 70% by 2010, benefiting BEAS and MSFT. Finally, Citi says MU's upcoming earnings report will be strong with outlook strong. Prudential raised BSX target to $53. X cut to Underweight at Prudential, target $28. TLB priced target raised to $43 at Prudential. Prudential also raised price target of MBG to $56. Lehman raised CNXT to Overweight. Raymond James raised BBY to Strong Buy. OSTK rated Strong Buy with $50 target at JMP Securities. Cramer, of TheStreet.com, says to buy tech on any short-term weakness from INTC call.
Mid-day News
U.S. stocks are mixed mid-day as they recover from an early morning sell-off. Homebuilders are leading the market again as interest rates broke to the downside on the much weaker-than-expected jobs report. The unemployment rate held steady at 5.6%. The 10-yr long-bond is having its best day since 2001. Flextronics(FLEX) says Qaulcomm's(QCOM) CDMA phone is gaining traction in China, Brazil and India. New York City's Taxi Commission proposal raises fares 26%, NY Daily reported. China's transportation system has bogged down under strains of rapid economic growth, causing delays in deliveries of raw materials and raising a risk of higher inflation, NY Times says. EchoStar would be forced to consider an acquisition or merger should rival Comcast succeed in buying Disney said Chairman Ergen, according to the Denver Post. Sun Microsystems credit rating was cut to "junk" by Standard & Poors.
BOTTOM LINE: While it is disappointing in the short-run that the U.S. isn't creating more jobs, it is actually better for the long-run. The Fed will not raise rates until it sees a couple of good jobs reports, in my opinion. Thus, the longer interest rates stay exceptionally low, the greater the pent-up demand for workers will be down the road. It is likely that the airwaves will be filled with negativity this weekend as media pundits continue to focus on the past instead of the future. These same pundits said that U.S. stocks, specifically technology, would remain in a bear market for a decade after the bubble of the 90's burst. They said corporate scandals would cause investors to flee U.S. stocks permanently. After 9-11, they said the U.S. would see many more attacks on U.S. soil in the near future. They said corporate spending wouldn't improve for years due to the overcapacity created during the 90's. They said a declining dollar would result in foreign selling of U.S. assets. They said U.S. budget and trade deficits would result in a crash in the economy and stock markets. All of these predictions proved to be wrong. Any investors that listened to this negativity likely missed out on the historically strong run we have had in U.S. stocks during the last 18 months. The economy is in very good shape and is getting better. With this improvement, job growth will come. Like I have said before, this recovery is in slow-motion as the U.S. economy continues to burn off the excess capacity created during the 90's bubble. We are close, but not there yet. Investors that focus on the future and all the recent positive developments with respect to the economy will be rewarded by year-end. The Portfolio is up today as I added a couple of interest-rate sensitive positions on the morning weakness and homebuilders continue to generate stunning profits. The Portfolio is now 100% net long.
Friday Watch
Earnings Announcements
Company/Estimate
DOX/.24
DDS/.64
STAR/.23
OS/-.25
TSA/1.06
Splits
TRMB 3-for-2
Economic Data
Unemployment Rate for Feb. estimated at 5.6% vs. 5.6% in Jan.
Change in Non-farm Payrolls estimated at 130K in Feb. vs. 112K in Jan.
Change in Manufacturing Payrolls estimated at -2K in Feb. vs. -11K in Jan.
Average Weekly Hours worked in Feb. estimated at 33.8 vs. 33.7 in Jan.
Recommendations
Goldman Sachs reiterates Outperform on BSX and $52 target after Taxus stent approval. GS also reiterating Outperform on INTC, saying it is attractive at its current price with conservative 04 estimates. Rush Enterprises Inc. shares are likely to rise as demand for the dealer's Peterbilt 18-wheeler truck grows, Business Week Reported. Finally, shares of Lifetime Hoan may reach $30 in the next 18 months, Business Week reported.
Late-Night News
In another sign that the tech recovery is continuing, IDC and Gartner/Dataquest reported that the market for external storage systems was growing strongly by the end of 03. Chinese Premier Wen Jiabao reiterated the government's determination to oppose any moves toward independence by Taiwan, as the island prepares to go to the polls on March 20. China plans to boost its military capabilities, including developing high-tech weaponry, as it modernizes its armed forces, Premier Wen Jiabao said. He also predicted China's economy would grow 7% in 04. Bellsouth is close to an agreement to sell its Latin American operations to Telefonica SA for $5.8B, the Wall Street Journal reported. Russian engineers provided assistance for an Iraqi program to develop long-range ballistic missiles in the years just before the U.S. invasion, the NY Times reported. The U.S. current-account deficit and the falling dollar pose little risk to the economy because inflation isn't accelerating, said Paul McCulley of PIMCO.
Late-Night Trading
Asian markets are mostly higher with the exception of Taiwan(-1.29%), ranging from .5% to +1.0%.
S&P 500 indicated -.03%.
NASDAQ indicated -.07%.
BOTTOM LINE: The jobs report tomorrow has generated much anxiety among both bulls and bears. The uncertainty of the outcome is very high. I hear very few people talking about it meeting expectations. Most investors think it will either be much weaker-than-expected or much better-than-expected. Both of these outcomes would likely be negative for U.S. stocks in the short-term. I am expecting it to come in around expectations, which would likely result in a moderate fall in interest rates and the dollar. This result would also be the best for stocks and should provide the catalyst for a good rally. A much-weaker-than expected report would likely result in an initial sell-off and a rally in interest rate sensitive sectors later in the day, leaving the indices up moderately on the day. A much better-than-expected jobs report would be the worst for U.S. stocks, as interest rates and the dollar could spike dramatically. Under this scenario, I expect a fairly sharp decline for U.S. stocks. I also believe that the Intel conference call did not disappoint investors, thus barring a bad sell-off in the broad market, I expect semis to outperform tomorrow. The Portfolio is 75% net long and I will be looking to add exposure early on any weakness with an employment number that comes in around expectations.
Company/Estimate
DOX/.24
DDS/.64
STAR/.23
OS/-.25
TSA/1.06
Splits
TRMB 3-for-2
Economic Data
Unemployment Rate for Feb. estimated at 5.6% vs. 5.6% in Jan.
Change in Non-farm Payrolls estimated at 130K in Feb. vs. 112K in Jan.
Change in Manufacturing Payrolls estimated at -2K in Feb. vs. -11K in Jan.
Average Weekly Hours worked in Feb. estimated at 33.8 vs. 33.7 in Jan.
Recommendations
Goldman Sachs reiterates Outperform on BSX and $52 target after Taxus stent approval. GS also reiterating Outperform on INTC, saying it is attractive at its current price with conservative 04 estimates. Rush Enterprises Inc. shares are likely to rise as demand for the dealer's Peterbilt 18-wheeler truck grows, Business Week Reported. Finally, shares of Lifetime Hoan may reach $30 in the next 18 months, Business Week reported.
Late-Night News
In another sign that the tech recovery is continuing, IDC and Gartner/Dataquest reported that the market for external storage systems was growing strongly by the end of 03. Chinese Premier Wen Jiabao reiterated the government's determination to oppose any moves toward independence by Taiwan, as the island prepares to go to the polls on March 20. China plans to boost its military capabilities, including developing high-tech weaponry, as it modernizes its armed forces, Premier Wen Jiabao said. He also predicted China's economy would grow 7% in 04. Bellsouth is close to an agreement to sell its Latin American operations to Telefonica SA for $5.8B, the Wall Street Journal reported. Russian engineers provided assistance for an Iraqi program to develop long-range ballistic missiles in the years just before the U.S. invasion, the NY Times reported. The U.S. current-account deficit and the falling dollar pose little risk to the economy because inflation isn't accelerating, said Paul McCulley of PIMCO.
Late-Night Trading
Asian markets are mostly higher with the exception of Taiwan(-1.29%), ranging from .5% to +1.0%.
S&P 500 indicated -.03%.
NASDAQ indicated -.07%.
BOTTOM LINE: The jobs report tomorrow has generated much anxiety among both bulls and bears. The uncertainty of the outcome is very high. I hear very few people talking about it meeting expectations. Most investors think it will either be much weaker-than-expected or much better-than-expected. Both of these outcomes would likely be negative for U.S. stocks in the short-term. I am expecting it to come in around expectations, which would likely result in a moderate fall in interest rates and the dollar. This result would also be the best for stocks and should provide the catalyst for a good rally. A much-weaker-than expected report would likely result in an initial sell-off and a rally in interest rate sensitive sectors later in the day, leaving the indices up moderately on the day. A much better-than-expected jobs report would be the worst for U.S. stocks, as interest rates and the dollar could spike dramatically. Under this scenario, I expect a fairly sharp decline for U.S. stocks. I also believe that the Intel conference call did not disappoint investors, thus barring a bad sell-off in the broad market, I expect semis to outperform tomorrow. The Portfolio is 75% net long and I will be looking to add exposure early on any weakness with an employment number that comes in around expectations.
Thursday, March 04, 2004
Thursday Close
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.
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.
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.
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