Earnings Announcements
Company/Estimate
AFFX/-.08
AGI/.27
ALTR/.13
AMR/-1.04
CDN/.10
EBAY/.26
ERES/.18
FFIV/.14
F/.44
GD/1.19
HET/.66
JPM/.87
JNPR/.08
PFCB/.27
QCOM/.48
SIRI/-.10
SBUX/.17
TDW/.18
Splits
MTLM 2-for-1
Economic Data
Fed's Beige Book
Recommendations
Goldman Sachs reiterated Outperform on BSX, CAKE, ZION, TRMS, USB, COH, AHC, MUR. GS reiterated Underperform on INFA, DO and FSS.
Late-Night News
Asian indices are mixed on strength in Korea and weakness in Hong Kong. Hynix Semi will be able to survive alone because of a stronger semiconductor industry, JoonAng Ilbo reported. Carlyle Group, a U.S. private equity company, plans to invest as much as $1B in China during the next 18 months, the Asian Wall Street Journal reported. PricewaterhouseCoopers is willing to certify that Bank of China's bad loans are just one percentage point higher than the level estimated by the bank, the Financial Times reported.
Late-Night Trading
Asian Indices -1.0% to +1.0%.
S&P 500 indicated +.18%.
NASDAQ indicated +.63%.
BOTTOM LINE: Tech stocks are trading higher late-night on the heels of Motorola's exceptionally strong report. I expect Greenspan to begin hinting at an impending rate hike tomorrow. The markets took his positive comments today very poorly. I expect we have further downside in the short-run as there is still too much investor complacency as evidenced by the Put/Call, Arms, Bullish % and VIX readings. The Portfolio is 25% net long and I will likely initiate new shorts on any significant strength in the short-run.
Wednesday, April 21, 2004
Tuesday, April 20, 2004
Tuesday Close
S&P 500 1,118.15 -1.56%
NASDAQ 1,978.63 -2.07%
Leading Sectors
Fashion +.80%
Hospitals +.74%
Airlines +.16%
Lagging Sectors
Homebuilders -2.82%
Networking -3.52%
Semis -3.56%
Other
Crude Oil 36.20 -.82%
Natural Gas 5.55 -.14%
Gold 394.00 -1.08%
Base Metals 114.38 -.60%
U.S. Dollar 90.49 +.77%
10-Yr. Long-Bond Yield 4.41% +.60%
VIX 16.67 +8.11%
Put/Call .80 +21.21%
NYSE Arms 1.21 +24.74%
After-hours Movers
MOT +21.1% after beating 1Q estimates substantially and raising 2Q guidance substantially.
CVTX +6.95% after saying data from a recent study on its Ranexa drug shows positive results.
CACS +15.2% after beating 1Q estimates.
MKSI +9.07% after beating 1Q estimates substantially and raising 2Q guidance.
EZPW +14.95% after beating 2Q estimates and boosting 04 forecast.
SCSS -11.01% after meeting 1Q estimate, but lowering 2Q guidance.
WEBX -10.02% after meeting 1Q estimate, but lowering 04 forecast.
ISSX -7.81% after missing 1Q estimate.
ACS -7.32% after missing 3Q estimates, maintaining forecast.
SNTO -9.71% exceeding 4Q estimates, but disappointing guidance.
CALM -6.48% after announcing a 5M share secondary.
Recommendations
Goldman Sachs reiterated Outperform on TRI, CTSH, ALL, PFE, TRMS and STN.
After-hours News
U.S. stocks finished solidly lower today after bonds fell in response to comments by Alan Greenspan about the strength of the economy. After the close, General Electric's NBC said it has received FTC approval to acquire Vivendi Universal's U.S. entertainment assets, CNBC reported. U.S. venture capital funds are outpacing their European counterparts, raising almost 8 times more money in the first-quarter of 04 than a year ealier, the Financial Times said. California Governor Schwarzenegger signed an executive order calling for a network of 200 hydrogen fuel stations to be built along major highways in California by the end of the decade as a way to encourage consumers to buy clean air vehicles, Bloomberg reported. Motorola(MOT) said first-quarter profit tripled to the highest since at least 1990 as handset sales surged 67%, Bloomberg reported.
BOTTOM LINE: The Portfolio fell slightly today as my shorts could not offset losses in long positions. I added a few more shorts and exited a couple of winning longs in the afternoon, leaving the Portfolio with 25% net long market exposure. The weakness I expected in the tech sector came to fruition late in the afternoon, as traders used rising interest rates as an excuse to sell shares. Greenspan basically said the economy is doing very well, will continue to do well and that companies are slowly regaining some pricing power. These very obvious observations resulted in the large afternoon sell-off. I expect the Fed will broadly telegraph its first rate hike, which should occur at the June 28-30 meeting. Once the timing is certain, the U.S. equity markets can start working higher and eventually resume their bull run after it becomes clear that destructive inflation is not a problem. Until this time, I expect tech and interest-rate sensitive sectors to continue to underperform and the broad market to remain slightly negative to neutral.
NASDAQ 1,978.63 -2.07%
Leading Sectors
Fashion +.80%
Hospitals +.74%
Airlines +.16%
Lagging Sectors
Homebuilders -2.82%
Networking -3.52%
Semis -3.56%
Other
Crude Oil 36.20 -.82%
Natural Gas 5.55 -.14%
Gold 394.00 -1.08%
Base Metals 114.38 -.60%
U.S. Dollar 90.49 +.77%
10-Yr. Long-Bond Yield 4.41% +.60%
VIX 16.67 +8.11%
Put/Call .80 +21.21%
NYSE Arms 1.21 +24.74%
After-hours Movers
MOT +21.1% after beating 1Q estimates substantially and raising 2Q guidance substantially.
CVTX +6.95% after saying data from a recent study on its Ranexa drug shows positive results.
CACS +15.2% after beating 1Q estimates.
MKSI +9.07% after beating 1Q estimates substantially and raising 2Q guidance.
EZPW +14.95% after beating 2Q estimates and boosting 04 forecast.
SCSS -11.01% after meeting 1Q estimate, but lowering 2Q guidance.
WEBX -10.02% after meeting 1Q estimate, but lowering 04 forecast.
ISSX -7.81% after missing 1Q estimate.
ACS -7.32% after missing 3Q estimates, maintaining forecast.
SNTO -9.71% exceeding 4Q estimates, but disappointing guidance.
CALM -6.48% after announcing a 5M share secondary.
Recommendations
Goldman Sachs reiterated Outperform on TRI, CTSH, ALL, PFE, TRMS and STN.
After-hours News
U.S. stocks finished solidly lower today after bonds fell in response to comments by Alan Greenspan about the strength of the economy. After the close, General Electric's NBC said it has received FTC approval to acquire Vivendi Universal's U.S. entertainment assets, CNBC reported. U.S. venture capital funds are outpacing their European counterparts, raising almost 8 times more money in the first-quarter of 04 than a year ealier, the Financial Times said. California Governor Schwarzenegger signed an executive order calling for a network of 200 hydrogen fuel stations to be built along major highways in California by the end of the decade as a way to encourage consumers to buy clean air vehicles, Bloomberg reported. Motorola(MOT) said first-quarter profit tripled to the highest since at least 1990 as handset sales surged 67%, Bloomberg reported.
BOTTOM LINE: The Portfolio fell slightly today as my shorts could not offset losses in long positions. I added a few more shorts and exited a couple of winning longs in the afternoon, leaving the Portfolio with 25% net long market exposure. The weakness I expected in the tech sector came to fruition late in the afternoon, as traders used rising interest rates as an excuse to sell shares. Greenspan basically said the economy is doing very well, will continue to do well and that companies are slowly regaining some pricing power. These very obvious observations resulted in the large afternoon sell-off. I expect the Fed will broadly telegraph its first rate hike, which should occur at the June 28-30 meeting. Once the timing is certain, the U.S. equity markets can start working higher and eventually resume their bull run after it becomes clear that destructive inflation is not a problem. Until this time, I expect tech and interest-rate sensitive sectors to continue to underperform and the broad market to remain slightly negative to neutral.
Technical Difficulties
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Mid-day Update
S&P 500 1,134.74 -.10%
NASDAQ 2,019.45 -.05%
Leading Sectors
Nanotechnology +2.17%
Airlines +1.70%
Hospitals +1.70%
Lagging Sectors
Oil Service -1.25%
Commodity -1.26%
Broadband -1.69%
Other
Crude Oil 37.25 -.45%
Natural Gas 5.53 +.38%
Gold 398.40 -.70%
Base Metals 114.38 -.60%
U.S. Dollar 90.43 +.70%
10-Yr. Long-Bond Yield 4.39% +.19%
VIX 15.12 -2.08%
Put/Call .73 +10.61%
NYSE Arms 1.08 +11.34%
Market Movers
TASR -19.0% on profit-taking after beating 1Q estimates by "only" .02.
CHKP +9.7% after beating 1Q estimates.
GM +5.0% after substantially beating 1Q estimates and raising 2Q and 04 guidance.
JCOM +16.0% after beating 1Q estimates and raising 2Q guidance.
SPRT +11.33% after beating 1Q estimates and raising 2Q guidance.
HUG +8.95% after raising 1Q/2Q and 04 forecast.
LNCR +7.93% after beating 1Q estimates.
COH +7.19% after beating 3Q forecast and raising 04 guidance.
NFI -17.6% after saying it was notified by the SEC about an informal inquiry into some of its business practices.
NDC -13.19% after missing 3Q estimates and lowering 04 guidance.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on INTC, FON, PCS, BSX, PFE, MSFT, BC, KMI, KMR, CBL, DDR, UDR, VNO, ASN and SRE. Goldman reiterated Underperform on PPS, SLG, AKS and AVB. GS raised TPX to Outperform and lowered VRSN to Underperform. Citi Smith Barney said to Buy G on weakness, target $42. Citi reiterated Buy on MATK, target $90. Citi reiterated Buy on BC, target $49. ASH rated Overweight at JP Morgan. EMC raised to Buy 1 at UBS. PNRA raised to Outperform at Thomas Weisel, target $50. WOOF rated Buy at Bank of America, target $43. SMI rated Sell at Bank of America. CNF raised to Buy at Merrill Lynch, target $40.
Mid-day News
U.S. stocks are mixed mid-day as strength in a multitude of companies reporting better-than-expected earnings is being offset by weakness in commodity-related stocks. The Bush Administration thinks al-Qaeda will try to strike the U.S. before the election in November because of its success in changing the outcome of the Spanish election last month, the Washington Post reported, citing National Security Adviser Condoleezza Rice. California Governor plans steps to boost business in the state by balancing the budget and increasing energy supplies, the LA Times reported. Coca-Cola debuted tv ads last month for Powerade sports drink, part of its new strategy to focus on non-carbonated beverages to invigorate sales. Janus Capital said CEO Whiston is stepping down as the U.S. mutual fund company struggles to settle allegations that it permitted improper trading that hurt investors, Bloomberg reported. With 101 companies in the S&P 500 having reported 1st quarter results, earnings have jumped 19% and beat estimates by 6.8% on average, according to Thomson Financial. The semiconductor book-to-bill ratio came in at 1.10 versus expectations of 1.17, Bloomberg reported.
BOTTOM LINE: The Portfolio is up today as the majority of my longs are up and shorts are down. I added a few new homebuilding shorts this morning on their recent bounce. Sky-high ply-wood and copper prices, coupled with rising rates, should continue to pressure this group in the intermediate-term. The Portfolio is now 50% net long.
NASDAQ 2,019.45 -.05%
Leading Sectors
Nanotechnology +2.17%
Airlines +1.70%
Hospitals +1.70%
Lagging Sectors
Oil Service -1.25%
Commodity -1.26%
Broadband -1.69%
Other
Crude Oil 37.25 -.45%
Natural Gas 5.53 +.38%
Gold 398.40 -.70%
Base Metals 114.38 -.60%
U.S. Dollar 90.43 +.70%
10-Yr. Long-Bond Yield 4.39% +.19%
VIX 15.12 -2.08%
Put/Call .73 +10.61%
NYSE Arms 1.08 +11.34%
Market Movers
TASR -19.0% on profit-taking after beating 1Q estimates by "only" .02.
CHKP +9.7% after beating 1Q estimates.
GM +5.0% after substantially beating 1Q estimates and raising 2Q and 04 guidance.
JCOM +16.0% after beating 1Q estimates and raising 2Q guidance.
SPRT +11.33% after beating 1Q estimates and raising 2Q guidance.
HUG +8.95% after raising 1Q/2Q and 04 forecast.
LNCR +7.93% after beating 1Q estimates.
COH +7.19% after beating 3Q forecast and raising 04 guidance.
NFI -17.6% after saying it was notified by the SEC about an informal inquiry into some of its business practices.
NDC -13.19% after missing 3Q estimates and lowering 04 guidance.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on INTC, FON, PCS, BSX, PFE, MSFT, BC, KMI, KMR, CBL, DDR, UDR, VNO, ASN and SRE. Goldman reiterated Underperform on PPS, SLG, AKS and AVB. GS raised TPX to Outperform and lowered VRSN to Underperform. Citi Smith Barney said to Buy G on weakness, target $42. Citi reiterated Buy on MATK, target $90. Citi reiterated Buy on BC, target $49. ASH rated Overweight at JP Morgan. EMC raised to Buy 1 at UBS. PNRA raised to Outperform at Thomas Weisel, target $50. WOOF rated Buy at Bank of America, target $43. SMI rated Sell at Bank of America. CNF raised to Buy at Merrill Lynch, target $40.
Mid-day News
U.S. stocks are mixed mid-day as strength in a multitude of companies reporting better-than-expected earnings is being offset by weakness in commodity-related stocks. The Bush Administration thinks al-Qaeda will try to strike the U.S. before the election in November because of its success in changing the outcome of the Spanish election last month, the Washington Post reported, citing National Security Adviser Condoleezza Rice. California Governor plans steps to boost business in the state by balancing the budget and increasing energy supplies, the LA Times reported. Coca-Cola debuted tv ads last month for Powerade sports drink, part of its new strategy to focus on non-carbonated beverages to invigorate sales. Janus Capital said CEO Whiston is stepping down as the U.S. mutual fund company struggles to settle allegations that it permitted improper trading that hurt investors, Bloomberg reported. With 101 companies in the S&P 500 having reported 1st quarter results, earnings have jumped 19% and beat estimates by 6.8% on average, according to Thomson Financial. The semiconductor book-to-bill ratio came in at 1.10 versus expectations of 1.17, Bloomberg reported.
BOTTOM LINE: The Portfolio is up today as the majority of my longs are up and shorts are down. I added a few new homebuilding shorts this morning on their recent bounce. Sky-high ply-wood and copper prices, coupled with rising rates, should continue to pressure this group in the intermediate-term. The Portfolio is now 50% net long.
Tuesday Watch
Earnings Announcements
Company/Estimate
MO/1.13
ASKJ/.18
AMCC/-.01
ONE/.81
BDK/.92
BSX/.22
CECO/.32
CTX/1.74
COH/.26
FRX/.38
GM/1.79
IR/.87
LU/.02
MOT/.07
PFE/.51
TASR/.22
WFC/.97
Splits
UNFI 2-for 1
Economic Data
None of note.
Recommendations
Goldman Sachs recommends Selling DQE and Buying AYE and RRI. GS reiterated Outperform on RE, MSFT, PKG, NSIT, BAX, BC and UDR. Goldman reiterated Underperform on MXT.
Late-Night News
Asian indices are rising as Japanese technology stocks climb in anticipation of strong earnings reports. China's leaders are planning steps to try to cool the nation's booming economic growth, including a possible increase in interest rates, the Financial Times reported. The 10 suspected terrorists arrested yesterday in England were planning a suicide bombing attack at the Old Trafford soccer stadium during the Premiership match between Manchester United and Liverpool on Saturday, the Sun reported. DirectTV is near an agreement to sell its 81% stake in PanAmSat for $23.50/share to Kohlberg Kravis Roberts, the Wall Street Journal Reported.
Late-Night Trading
Asian Indices -.50% to +2.50%.
S&P 500 indicated +.05%.
NASDAQ indicated +.07%.
BOTTOM LINE: U.S. stocks should open higher tomorrow on strength in Asian technology shares. However, numerous corporate earnings reports will likely dictate the market's direction for the day. I will closely monitor the market's reaction to these reports and then decide whether or not to add or cut exposure. The Portfolio is 75% net long heading into tomorrow.
Company/Estimate
MO/1.13
ASKJ/.18
AMCC/-.01
ONE/.81
BDK/.92
BSX/.22
CECO/.32
CTX/1.74
COH/.26
FRX/.38
GM/1.79
IR/.87
LU/.02
MOT/.07
PFE/.51
TASR/.22
WFC/.97
Splits
UNFI 2-for 1
Economic Data
None of note.
Recommendations
Goldman Sachs recommends Selling DQE and Buying AYE and RRI. GS reiterated Outperform on RE, MSFT, PKG, NSIT, BAX, BC and UDR. Goldman reiterated Underperform on MXT.
Late-Night News
Asian indices are rising as Japanese technology stocks climb in anticipation of strong earnings reports. China's leaders are planning steps to try to cool the nation's booming economic growth, including a possible increase in interest rates, the Financial Times reported. The 10 suspected terrorists arrested yesterday in England were planning a suicide bombing attack at the Old Trafford soccer stadium during the Premiership match between Manchester United and Liverpool on Saturday, the Sun reported. DirectTV is near an agreement to sell its 81% stake in PanAmSat for $23.50/share to Kohlberg Kravis Roberts, the Wall Street Journal Reported.
Late-Night Trading
Asian Indices -.50% to +2.50%.
S&P 500 indicated +.05%.
NASDAQ indicated +.07%.
BOTTOM LINE: U.S. stocks should open higher tomorrow on strength in Asian technology shares. However, numerous corporate earnings reports will likely dictate the market's direction for the day. I will closely monitor the market's reaction to these reports and then decide whether or not to add or cut exposure. The Portfolio is 75% net long heading into tomorrow.
Monday, April 19, 2004
Monday Close
S&P 500 1,135.82 +.11%
NASDAQ 2,020.43 +1.24%
Leading Sectors
Broadband +2.11%
Wireless +2.10%
Biotech +1.93%
Lagging Sectors
Hospitals -1.11%
Airlines -1.26%
Homebuilders -1.34%
Other
Crude Oil 37.42 unch.
Natural Gas 5.51 -.02%
Gold 400.90 -.07%
Base Metals 115.07 +1.89%
U.S. Dollar 89.80 -.16%
10-Yr. Long-Bond Yield 4.37% +.83%
VIX 15.42 +3.21%
Put/Call .66 -14.29%
NYSE Arms .97 -32.64%
After-hours Movers
JCOM +10.34% after beating 1Q estimates and raising 2Q and 04 forecast.
SPRT +9.36% after beating 1Q estimates and raising 2Q and 04 forecast.
PXLW +6.80% after beating 1Q estimates and raising 2Q forecast.
MGAM +5.65% after announcing it will replace Pacific Sunwear in S&P 600.
NTPA -41.32% after missing 2Q forecast substantially.
Recommendations
Goldman Sachs reiterated Outperform on KO, CCE, CEN and PEP. APH raised to Buy 2 at UBS.
After-hours News
U.S. stocks finished mostly higher as the 1990-2000 support level held on the NASDAQ, providing the catalyst for tech and biotech stocks to strengthen throughout the day. After the close, Saudi Arabia said it was determined to stamp out terrorist groups, the country's leader Crown Prince Abdullah said, Reuters reported. The U.S. will lift economic sanctions on Libya this week after the country agreed to dismantle its nuclear weapons program, the Financial Times reported. The Index of Leading Economic Indicators showed a year-over-year gain of 4.4%, the most since 1984.
BOTTOM LINE: The Portfolio fell slightly today as I took some losses on a few shorts early in the morning. The unexpected and sustained strength in technology today led me to add a few new long positions in the afternoon. The Portfolio is now 75% net long. The 4.4% gain in the Leading Indicator Index is just another in a string of economic reports that show the best U.S. economic growth since the early 80's. The Federal Reserve has interest rates at emergency levels to combat the aftermath of the bursting stock market bubble, the ensuing recession, multiple corporate scandals, September 11th attacks and what appeared to be the beginnings of a deflationary spiral. Now that it is apparent that the U.S. economy has worked through most of these issues the Fed will likely raise rates from their current emergency levels at the June 28-30 meeting. This does not mean they are necessarily worried about inflation; rather rates should not be at emergency levels in the current vigorous economic climate. The quicker the Fed acts, the sooner stocks will resume their current bull run as it will sooth the concerns of investors that are overly concerned about an imminent and drastic rise in inflation.
NASDAQ 2,020.43 +1.24%
Leading Sectors
Broadband +2.11%
Wireless +2.10%
Biotech +1.93%
Lagging Sectors
Hospitals -1.11%
Airlines -1.26%
Homebuilders -1.34%
Other
Crude Oil 37.42 unch.
Natural Gas 5.51 -.02%
Gold 400.90 -.07%
Base Metals 115.07 +1.89%
U.S. Dollar 89.80 -.16%
10-Yr. Long-Bond Yield 4.37% +.83%
VIX 15.42 +3.21%
Put/Call .66 -14.29%
NYSE Arms .97 -32.64%
After-hours Movers
JCOM +10.34% after beating 1Q estimates and raising 2Q and 04 forecast.
SPRT +9.36% after beating 1Q estimates and raising 2Q and 04 forecast.
PXLW +6.80% after beating 1Q estimates and raising 2Q forecast.
MGAM +5.65% after announcing it will replace Pacific Sunwear in S&P 600.
NTPA -41.32% after missing 2Q forecast substantially.
Recommendations
Goldman Sachs reiterated Outperform on KO, CCE, CEN and PEP. APH raised to Buy 2 at UBS.
After-hours News
U.S. stocks finished mostly higher as the 1990-2000 support level held on the NASDAQ, providing the catalyst for tech and biotech stocks to strengthen throughout the day. After the close, Saudi Arabia said it was determined to stamp out terrorist groups, the country's leader Crown Prince Abdullah said, Reuters reported. The U.S. will lift economic sanctions on Libya this week after the country agreed to dismantle its nuclear weapons program, the Financial Times reported. The Index of Leading Economic Indicators showed a year-over-year gain of 4.4%, the most since 1984.
BOTTOM LINE: The Portfolio fell slightly today as I took some losses on a few shorts early in the morning. The unexpected and sustained strength in technology today led me to add a few new long positions in the afternoon. The Portfolio is now 75% net long. The 4.4% gain in the Leading Indicator Index is just another in a string of economic reports that show the best U.S. economic growth since the early 80's. The Federal Reserve has interest rates at emergency levels to combat the aftermath of the bursting stock market bubble, the ensuing recession, multiple corporate scandals, September 11th attacks and what appeared to be the beginnings of a deflationary spiral. Now that it is apparent that the U.S. economy has worked through most of these issues the Fed will likely raise rates from their current emergency levels at the June 28-30 meeting. This does not mean they are necessarily worried about inflation; rather rates should not be at emergency levels in the current vigorous economic climate. The quicker the Fed acts, the sooner stocks will resume their current bull run as it will sooth the concerns of investors that are overly concerned about an imminent and drastic rise in inflation.
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