Earnings Announcements
Company/Estimate
AWE/.01
HGSI/.41
SLB/.47
STE/.43
SII/.42
WY/.56
Splits
None of note.
Economic Data
Durable Goods Orders for March estimated +.7% vs. +2.5% last month.
Durable Goods Less Transportation estimated +1.4% vs. -.3% prior month.
Recommendations
Goldman Sachs reiterated Underperform on TSG, SIAL, PYX and CR. GS reiterated Outperform on VIAB, ITT, AMGN, DHR and FORM.
Late-Night News
Asian indices are mostly higher on strength in U.S. stocks and strong corporate earnings reports. Shares of Doral Financial(DRL), the fourth largest Puerto Rican bank by assets, are worth buying amid a housing shortage on the island that is boosting mortgage demand, Business Week said. Walt Disney is in talks with China's Central Television and media companies in Beijing and Shanghai on a production venture for a network in the mainland, the South China Morning Post reported. China plans to scrap the ceiling on bank lending rates in its latest attempt to curb credit growth and excess investments that are fueling inflation. "We're seeing the beginning of a turnaround for the national market," with the volume of help-wanted advertising rising after 3 years of decline, said Kenneth Goldstein, chief economist of the Conference Board, a New York research group.
Late-Night Trading
Asian Indices -.75% to +1.0%.
S&P 500 indicated +.31%.
NASDAQ indicated +.77%.
BOTTOM LINE: U.S. stocks should extend recent gains tomorrow on strong corporate earnings reports after the close today. Rising Asian shares, declining interest rates and falling crude prices should also boost stocks on the open. The Portfolio is 125% net long heading into trading tomorrow.
Friday, April 23, 2004
Thursday, April 22, 2004
Thursday Close
S&P 500 1,139.93 +1.41%
NASDAQ 2,032.91 +1.87%
Leading Sectors
Iron/Steel +4.13%
Internet +3.90%
Papers +3.88%
Lagging Sectors
Semis +.36%
Fashion -.03%
Disk Drives -.80%
Other
Crude Oil 36.79 +.22%
Natural Gas 5.62 -.05%
Gold 394.40 +.13%
Base Metals 107.20 -1.03%
U.S. Dollar 90.71 -.44%
10-Yr. Long-Bond Yield 4.38% -.91%
VIX 14.61 -6.35%
Put/Call .63 -10.0%
NYSE Arms .73 +40.38%
After-hours Movers
MSFT +4.89% after beating 3Q estimates, raising 05 earnings and lowering 05 sales forecasts.
BRCM +5.39% after beating 1Q estimates and raising 3Q guidance.
GLW +9.07% after beating 1Q estimates and raising 2Q guidance.
CLS +10.75% after beating 1Q estimates and raising 2Q forecast.
MCHP +6.60% after beating 4Q estimates, raising 1Q forecast and announcing 2.5M buyback.
GILD +7.23% after significantly beating 1Q forecast.
OHP -9.32% after WC ended talks to purchase the company.
ELX -6.79% after meeting 3Q estimates and lowering 4Q guidance.
PLCM -4.31% on profit-taking after beating 1Q estimates.
Recommendations
Goldman Sachs reiterated Outperform on MERQ, MSFT, AMGN, CAH, UPS,ACS and Underperform on VRSN, SGP and RKY.
After-hours News
U.S. stocks finished sharply higher Wednesday as numerous corporate earnings reports were better-than-expected, CEO's made positive comments regarding their company's outlook and interest rates fell. After the close, Microsoft CFO Connors said, "Overall corporate IT spending continues to improve and we expect to see healthy demand through the end of the year." Microsoft reported a 17% increase in fiscal third-quarter revenue, beating analyst estimates for both the top and bottom lines, Bloomberg reported. Corning CFO Flaws said they hired 500 workers in the first quarter, the first hiring increase since the stock market bubble burst in 2000, Bloomberg reported. Shares of Mohawk(MHK) will rise as demand for ceramic tile grows, Business Week said in its Inside Wall Street column. Imation Corp.(IMN) is selling more tapes and disks used to store computer data, boosted by the popularity of downloading music from the Internet, Business Week reported.
BOTTOM LINE: The Portfolio fell slightly today as I took losses in a few shorts early in the morning. I added a few more longs in the afternoon and the Portfolio is now 125% net long. After the close, Microsoft, Broadcom, Corning, Microchip Tech, Gilead Sciences and Amazon all beat estimates handily which should provide the catalyst for another positive day tomorrow.
NASDAQ 2,032.91 +1.87%
Leading Sectors
Iron/Steel +4.13%
Internet +3.90%
Papers +3.88%
Lagging Sectors
Semis +.36%
Fashion -.03%
Disk Drives -.80%
Other
Crude Oil 36.79 +.22%
Natural Gas 5.62 -.05%
Gold 394.40 +.13%
Base Metals 107.20 -1.03%
U.S. Dollar 90.71 -.44%
10-Yr. Long-Bond Yield 4.38% -.91%
VIX 14.61 -6.35%
Put/Call .63 -10.0%
NYSE Arms .73 +40.38%
After-hours Movers
MSFT +4.89% after beating 3Q estimates, raising 05 earnings and lowering 05 sales forecasts.
BRCM +5.39% after beating 1Q estimates and raising 3Q guidance.
GLW +9.07% after beating 1Q estimates and raising 2Q guidance.
CLS +10.75% after beating 1Q estimates and raising 2Q forecast.
MCHP +6.60% after beating 4Q estimates, raising 1Q forecast and announcing 2.5M buyback.
GILD +7.23% after significantly beating 1Q forecast.
OHP -9.32% after WC ended talks to purchase the company.
ELX -6.79% after meeting 3Q estimates and lowering 4Q guidance.
PLCM -4.31% on profit-taking after beating 1Q estimates.
Recommendations
Goldman Sachs reiterated Outperform on MERQ, MSFT, AMGN, CAH, UPS,ACS and Underperform on VRSN, SGP and RKY.
After-hours News
U.S. stocks finished sharply higher Wednesday as numerous corporate earnings reports were better-than-expected, CEO's made positive comments regarding their company's outlook and interest rates fell. After the close, Microsoft CFO Connors said, "Overall corporate IT spending continues to improve and we expect to see healthy demand through the end of the year." Microsoft reported a 17% increase in fiscal third-quarter revenue, beating analyst estimates for both the top and bottom lines, Bloomberg reported. Corning CFO Flaws said they hired 500 workers in the first quarter, the first hiring increase since the stock market bubble burst in 2000, Bloomberg reported. Shares of Mohawk(MHK) will rise as demand for ceramic tile grows, Business Week said in its Inside Wall Street column. Imation Corp.(IMN) is selling more tapes and disks used to store computer data, boosted by the popularity of downloading music from the Internet, Business Week reported.
BOTTOM LINE: The Portfolio fell slightly today as I took losses in a few shorts early in the morning. I added a few more longs in the afternoon and the Portfolio is now 125% net long. After the close, Microsoft, Broadcom, Corning, Microchip Tech, Gilead Sciences and Amazon all beat estimates handily which should provide the catalyst for another positive day tomorrow.
Mid-day Update
S&P 500 1,141.49 +1.56%
NASDAQ 2,033.59 +1.90%
Leading Sectors
Iron/Steel +4.32%
Internet +3.90%
Airlines +3.86%
Lagging Sectors
Nanotechnolgoy +.56%
Fashion -.03%
Disk Drives -.13%
Other
Crude Oil 36.90 +3.27%
Natural Gas 5.64 +.95%
Gold 393.80 +.61%
Base Metals 107.20 -1.03%
U.S. Dollar 91.07 -.05%
10-Yr. Long-Bond Yield 4.38% -.96%
VIX 14.12 -9.49%
Put/Call .64 -8.57%
NYSE Arms .69 +32.69%
Market Movers
KLAC -6.71% after beating 3Q estimates, but disappointing 4Q guidance and First Albany downgrade to neutral.
EBAY +7.13% after beating 1Q estimates and raising 2Q/04 guidance.
LSCP +23.7% after beating 1Q estimates substantially and raising 04 guidance significantly.
KVHI +19.8% after beating 1Q estimates and positive comments.
EYE +16.78% after beating 1Q estimates, lowering 2Q sales forecast and raising 04 guidance.
ESI +11.65% after beating 1Q estimates.
ROG +9.87% after beating 1Q estimates and raising 2Q guidance.
ASCL -19.31% after missing 1Q estimates substantially, lowering 2Q guidance and Needham downgrade to hold.
GTI -16.9% after missing 1Q estimates and lowering 2Q/04 guidance.
PLXS -12.6% on profit-taking after meeting 2Q estimates and raising 3Q guidance.
CCMP -10.4% after missing 2Q estimates and WR Hambrecht downgrade to Hold.
SSTI -6.97% on profit-taking after beating 1Q estimates and raising 2Q guidance.
Economic Data
Producer Price Index for March +.5% versus +.4% estimate and +.1% prior month.
PPI Ex Food & Energy for March +.2% versus +.1% estimate and +.1% prior month.
Initial Jobless Claims last week were 353K versus 340K estimate and 362K prior week.
Continuing Claims were 3019K versus 2988K estimate and 2967K prior week.
Recommendations
JP Morgan raised TK to Overweight. Deutsche Bank raised CB to Buy, target $82. Oppenheimer raised TRI to Buy, target $40. CIBC raised ADS to Sector Outperform, target $46. Legg Mason raised UOPX to Buy, target $108. Legg Mason raised KNGT to Buy, target $30. Lehman raised CTX to Overweight, target $64. Raymond James raised UPS to Outperform, target $80. Raymond James raised WEBX to Strong Buy, target $30. Goldman Sachs reiterated Underperform on FISV, CMI, RKY and F. GS upgraded GLK to Outperform. GS rated JNPR Outperform. GS reiterated Outperform on VOD, UPS, WEN, FDC, AIG, ADP, GDT, GLW, SBC, AIG, PHCC, CIT, BAX, CAH, IGT, TRI, FE, KLAC and KRB. Citi Smith Barney raised JNPR to 1S from 2S, target $32.50. Citi reiterated Buy on FFIV, target $45. Citi reiterated Buy on ATH, raised estimates and price target to $134. Citi believes NOC, LMT and LLL will beat estimates. Citi reiterated Buy on VIAB, target $54. Citi reiterated Buy on HOT, target $47. Citi reiterated Buy on RCL, target $50. Citi reiterated Buy on SBUX, raised earning and target to $46. Citi reiterated Buy on TEX after weak quarter. Citi reiterated Buy on CTX, target $88. TheStreet.com has a positive column on HDI.
Mid-day News
U.S. stocks are sharply higher mid-day on a slew of positive earnings reports, positive CEO comments and falling interest rates. The U.S. will be involved in the Middle East for many years, and needs to demonstrate its resolve or risk "losing face" in the region and elsewhere in the world, James Schlesinger wrote in the Wall Street Journal. Abbey Joseph Cohen, of Goldman Sachs, made bullish comments on the economy and U.S. stock market on CNBC. AIG, the world's largest insurance company, said first-quarter profit rose 36%, Bloomberg reported. UPS, the largest package-shipping company, said first-quarter profit rose 24%, Bloomberg said. American Express said first-quarter profit rose 15% as rising consumer confidence and tax cuts encouraged more spending on credit cards and travel, Bloomberg reported. Caterpillar, the world's largest maker of earthmoving equipment, said first–quarter profit rose more than 300% on strong sales. Jim Owens, CEO of Caterpillar, said "It appears the world economy will have one of the strongest, broadest recoveries in years." He also said, "We anticipate that keeping pace with volume growth will require additional hiring through the remainder of the year." As many as 3,000 people were killed or injured in North Korea today as two fuel-laden trains collided and exploded, Reuters reported.
BOTTOM LINE: The Portfolio is down slightly today as my shorts hurt performance early in the morning. I covered several of these positions as they hit stop losses. I also added a number of new long positions in a variety of sectors, thus bringing the Portfolio's market exposure to 100% net long. One of my new long positions is INTC. I put a stop-loss of $26.25 on this trade. I think the market is signaling the beginning of the next up-leg in the current bull-run. Psychology appears to have shifted from concentrating on the few negatives to focusing on the many positives. American net worth is at all-time highs, the U.S. and world economies are growing at the fastest pace since the early 80's, inflation and interest rates are relatively low, corporate profits are at all-time highs/executives are making very positive comments about the future, stock valuations are falling as earnings significantly exceed expectations, the job market is accelerating and there has not been any new significant terrorist attacks on U.S. soil. These huge positives are more than outweighing the tougher-than-expected road to democracy in Iraq and high energy prices. I continue to expect the major U.S. indices to experience another double-digit gain this year on top of last year's large increase.
NASDAQ 2,033.59 +1.90%
Leading Sectors
Iron/Steel +4.32%
Internet +3.90%
Airlines +3.86%
Lagging Sectors
Nanotechnolgoy +.56%
Fashion -.03%
Disk Drives -.13%
Other
Crude Oil 36.90 +3.27%
Natural Gas 5.64 +.95%
Gold 393.80 +.61%
Base Metals 107.20 -1.03%
U.S. Dollar 91.07 -.05%
10-Yr. Long-Bond Yield 4.38% -.96%
VIX 14.12 -9.49%
Put/Call .64 -8.57%
NYSE Arms .69 +32.69%
Market Movers
KLAC -6.71% after beating 3Q estimates, but disappointing 4Q guidance and First Albany downgrade to neutral.
EBAY +7.13% after beating 1Q estimates and raising 2Q/04 guidance.
LSCP +23.7% after beating 1Q estimates substantially and raising 04 guidance significantly.
KVHI +19.8% after beating 1Q estimates and positive comments.
EYE +16.78% after beating 1Q estimates, lowering 2Q sales forecast and raising 04 guidance.
ESI +11.65% after beating 1Q estimates.
ROG +9.87% after beating 1Q estimates and raising 2Q guidance.
ASCL -19.31% after missing 1Q estimates substantially, lowering 2Q guidance and Needham downgrade to hold.
GTI -16.9% after missing 1Q estimates and lowering 2Q/04 guidance.
PLXS -12.6% on profit-taking after meeting 2Q estimates and raising 3Q guidance.
CCMP -10.4% after missing 2Q estimates and WR Hambrecht downgrade to Hold.
SSTI -6.97% on profit-taking after beating 1Q estimates and raising 2Q guidance.
Economic Data
Producer Price Index for March +.5% versus +.4% estimate and +.1% prior month.
PPI Ex Food & Energy for March +.2% versus +.1% estimate and +.1% prior month.
Initial Jobless Claims last week were 353K versus 340K estimate and 362K prior week.
Continuing Claims were 3019K versus 2988K estimate and 2967K prior week.
Recommendations
JP Morgan raised TK to Overweight. Deutsche Bank raised CB to Buy, target $82. Oppenheimer raised TRI to Buy, target $40. CIBC raised ADS to Sector Outperform, target $46. Legg Mason raised UOPX to Buy, target $108. Legg Mason raised KNGT to Buy, target $30. Lehman raised CTX to Overweight, target $64. Raymond James raised UPS to Outperform, target $80. Raymond James raised WEBX to Strong Buy, target $30. Goldman Sachs reiterated Underperform on FISV, CMI, RKY and F. GS upgraded GLK to Outperform. GS rated JNPR Outperform. GS reiterated Outperform on VOD, UPS, WEN, FDC, AIG, ADP, GDT, GLW, SBC, AIG, PHCC, CIT, BAX, CAH, IGT, TRI, FE, KLAC and KRB. Citi Smith Barney raised JNPR to 1S from 2S, target $32.50. Citi reiterated Buy on FFIV, target $45. Citi reiterated Buy on ATH, raised estimates and price target to $134. Citi believes NOC, LMT and LLL will beat estimates. Citi reiterated Buy on VIAB, target $54. Citi reiterated Buy on HOT, target $47. Citi reiterated Buy on RCL, target $50. Citi reiterated Buy on SBUX, raised earning and target to $46. Citi reiterated Buy on TEX after weak quarter. Citi reiterated Buy on CTX, target $88. TheStreet.com has a positive column on HDI.
Mid-day News
U.S. stocks are sharply higher mid-day on a slew of positive earnings reports, positive CEO comments and falling interest rates. The U.S. will be involved in the Middle East for many years, and needs to demonstrate its resolve or risk "losing face" in the region and elsewhere in the world, James Schlesinger wrote in the Wall Street Journal. Abbey Joseph Cohen, of Goldman Sachs, made bullish comments on the economy and U.S. stock market on CNBC. AIG, the world's largest insurance company, said first-quarter profit rose 36%, Bloomberg reported. UPS, the largest package-shipping company, said first-quarter profit rose 24%, Bloomberg said. American Express said first-quarter profit rose 15% as rising consumer confidence and tax cuts encouraged more spending on credit cards and travel, Bloomberg reported. Caterpillar, the world's largest maker of earthmoving equipment, said first–quarter profit rose more than 300% on strong sales. Jim Owens, CEO of Caterpillar, said "It appears the world economy will have one of the strongest, broadest recoveries in years." He also said, "We anticipate that keeping pace with volume growth will require additional hiring through the remainder of the year." As many as 3,000 people were killed or injured in North Korea today as two fuel-laden trains collided and exploded, Reuters reported.
BOTTOM LINE: The Portfolio is down slightly today as my shorts hurt performance early in the morning. I covered several of these positions as they hit stop losses. I also added a number of new long positions in a variety of sectors, thus bringing the Portfolio's market exposure to 100% net long. One of my new long positions is INTC. I put a stop-loss of $26.25 on this trade. I think the market is signaling the beginning of the next up-leg in the current bull-run. Psychology appears to have shifted from concentrating on the few negatives to focusing on the many positives. American net worth is at all-time highs, the U.S. and world economies are growing at the fastest pace since the early 80's, inflation and interest rates are relatively low, corporate profits are at all-time highs/executives are making very positive comments about the future, stock valuations are falling as earnings significantly exceed expectations, the job market is accelerating and there has not been any new significant terrorist attacks on U.S. soil. These huge positives are more than outweighing the tougher-than-expected road to democracy in Iraq and high energy prices. I continue to expect the major U.S. indices to experience another double-digit gain this year on top of last year's large increase.
Thursday Watch
Earnings Announcements
Company/Estimate
AMZN/.19
AXP/.62
AIG/1.06
AMGN/.56
APA/1.05
ABX/.07
BRCM/.27
CAH/.99
CAT/.70
GLW/.05
GDT/.55
HCA/.70
IGT/.32
MSFT/.29
PSFT/.18
Splits
None of note.
Economic Data
Producer Price Index for March estimated +.4% vs. +.1% in February.
PPI Ex Food & Energy for March estimated +.1% vs. +.1% in February.
Initial Jobless Claims last week estimated at 340K vs. 360K prior week.
Continuing Claims estimated at 2998K vs. 2980K the prior week.
Recommendations
Goldman Sachs reiterated Outperform on AGI, FE, X, KLAC, CDL, AMR, TLAB, KMI, KMR, CVD and Underperform on EK and AZR.
Late-Night News
Asian indices are quietly mixed as strength in Japan is offset by a falling Taiwanese market. China will allow the yuan to fluctuate in a wider range against a basket of currencies, the Financial Times reported. Scotch whisky exports rose to a six-year high last year, boosted by sales to the U.S., the Financial Times said. Spending on advertising may increase 5.5% in the U.S. this year, the most in over three years, the FT said. SAP AG, the world's largest maker of business-management software, said profit increased 23% in the first quarter as license revenue rose for the first time in almost 3 years, boosted by U.S. spending. SAP's CEO Kagermann said orders in the U.S. look very good compared with last year.
Late-Night Trading
Asian Indices -1.25% to +.50%.
S&P 500 indicated -.09%.
NASDAQ indicated +.03%.
BOTTOM LINE: The bond market's reaction to the PPI and Initial Jobless Claims reports tomorrow will likely dictate the direction of the stock market. Corporate earnings are coming in significantly above expectations once again, however many stocks are selling off on good news, thus the P/E on the S&P 500 is contracting further. Tech stocks appear as though they are headed lower in the short-run, however I would use any weakness over the next couple of months to build long positions as I think tech will outperform in the second half of the year. I also continue to believe 04 will be a good year for stocks. Double-digit gains should be expected in the major U.S. indices, on top of last year's strong performances.
Company/Estimate
AMZN/.19
AXP/.62
AIG/1.06
AMGN/.56
APA/1.05
ABX/.07
BRCM/.27
CAH/.99
CAT/.70
GLW/.05
GDT/.55
HCA/.70
IGT/.32
MSFT/.29
PSFT/.18
Splits
None of note.
Economic Data
Producer Price Index for March estimated +.4% vs. +.1% in February.
PPI Ex Food & Energy for March estimated +.1% vs. +.1% in February.
Initial Jobless Claims last week estimated at 340K vs. 360K prior week.
Continuing Claims estimated at 2998K vs. 2980K the prior week.
Recommendations
Goldman Sachs reiterated Outperform on AGI, FE, X, KLAC, CDL, AMR, TLAB, KMI, KMR, CVD and Underperform on EK and AZR.
Late-Night News
Asian indices are quietly mixed as strength in Japan is offset by a falling Taiwanese market. China will allow the yuan to fluctuate in a wider range against a basket of currencies, the Financial Times reported. Scotch whisky exports rose to a six-year high last year, boosted by sales to the U.S., the Financial Times said. Spending on advertising may increase 5.5% in the U.S. this year, the most in over three years, the FT said. SAP AG, the world's largest maker of business-management software, said profit increased 23% in the first quarter as license revenue rose for the first time in almost 3 years, boosted by U.S. spending. SAP's CEO Kagermann said orders in the U.S. look very good compared with last year.
Late-Night Trading
Asian Indices -1.25% to +.50%.
S&P 500 indicated -.09%.
NASDAQ indicated +.03%.
BOTTOM LINE: The bond market's reaction to the PPI and Initial Jobless Claims reports tomorrow will likely dictate the direction of the stock market. Corporate earnings are coming in significantly above expectations once again, however many stocks are selling off on good news, thus the P/E on the S&P 500 is contracting further. Tech stocks appear as though they are headed lower in the short-run, however I would use any weakness over the next couple of months to build long positions as I think tech will outperform in the second half of the year. I also continue to believe 04 will be a good year for stocks. Double-digit gains should be expected in the major U.S. indices, on top of last year's strong performances.
Wednesday, April 21, 2004
Wednesday Close
S&P 500 1,124.09 +.53%
NASDAQ 1,995.63 +.86%
Leading Sectors
Wireless +3.38%
Hospitals +2.69%
Airlines +2.46%
Lagging Sectors
Fashion -1.32%
Papers -1.43%
Nanotechnology -1.54%
Other
Crude Oil 35.82 +.25%
Natural Gas 5.61 +.41%
Gold 391.70 +.08%
Base Metals 108.32 -5.30%
U.S. Dollar 91.08 -.04%
10-Yr. Long-Bond Yield 4.42% -.72%
VIX 15.60 -6.42%
Put/Call .70 -12.50%
NYSE Arms .52 -57.02%
After-hours Movers
JNPR -7.08% on profit-taking after beating 1Q estimates and raising 2Q guidance.
KLAC -8.51% after beating 3Q estimates, but disappointing 4Q guidance.
ERES +4.35% after beating 1Q estimates, announcing 3-for-2 stock split, 500,000 share buyback and raising 2Q/04 forecast.
EYE +4.88% after beating 1Q estimates and raising 04 guidance.
ASCL -17.57% after missing 1Q estimates substantially and lowering 2Q guidance.
SSTI -7.72% on profit-taking after beating 1Q estimates and raising 2Q guidance.
PLXS -10.97% on profit-taking after meeting 2Q estimates and raising 3Q guidance.
CTXS -11.95% after beating 1Q estimates, raising 2Q sales estimate, but lowering 2Q profit forecast.
AFCO -5.71% after missing 3Q estimates and weak guidance.
Recommendations
Goldman Sachs reiterated Outperform on UTX, SKYW, KO, RCL and Underperform on PLXS and OMI.
After-hours News
U.S. stocks finished higher Wednesday as Fed Chairman Greenspan said the U.S. economy is vigorous and broad-based inflation was not a problem as unit labor costs remain subdued. After the close, The Street.Com reported that Sony is in advance talks to join two buyout firms in a $5B acquisition of movie studio Metro-Goldwyn-Mayer. eBay said first-quarter earning surged 92% as more people listed items for sale and used its PayPal e-mail payment service. eBay also raised 04 profit and revenue forecasts, Bloomberg reported. Qualcomm said second-quarter profit more than quadrupled on surging demand for phones based on CDMA technology, Bloomberg reported. China conceded to U.S. demands to crackdown on the piracy of software and movies and abandon a standard for wireless encryption opposed by Intel and other chip companies, Bloomberg reported.
BOTTOM LINE: The Portfolio rose slightly today as one of my shorts fell substantially in afternoon trading, offsetting small loses elsewhere. I added to a couple of short positions in the afternoon and took profits in a few longs, bringing the Portfolio to a market neutral position(longs-shorts=0). I still feel that the market, specifically technology stocks, may have more work to do on the downside in the short-run. Complacency by investors is still too high. On a more positive note, China's talking down its economy and threatening to raise interest rates seems to be working. China's insatiable demand for raw materials has been one of the key drivers of commodity price increases. Commodity prices, as measured by the CRB Index, broke down through their 6-month uptrend line today. A rising U.S. dollar also pressures commodity prices. This should help the U.S. economy later in the year as investors begin to realize that a substantial rise in inflation is not in the cards for the foreseeable future.
NASDAQ 1,995.63 +.86%
Leading Sectors
Wireless +3.38%
Hospitals +2.69%
Airlines +2.46%
Lagging Sectors
Fashion -1.32%
Papers -1.43%
Nanotechnology -1.54%
Other
Crude Oil 35.82 +.25%
Natural Gas 5.61 +.41%
Gold 391.70 +.08%
Base Metals 108.32 -5.30%
U.S. Dollar 91.08 -.04%
10-Yr. Long-Bond Yield 4.42% -.72%
VIX 15.60 -6.42%
Put/Call .70 -12.50%
NYSE Arms .52 -57.02%
After-hours Movers
JNPR -7.08% on profit-taking after beating 1Q estimates and raising 2Q guidance.
KLAC -8.51% after beating 3Q estimates, but disappointing 4Q guidance.
ERES +4.35% after beating 1Q estimates, announcing 3-for-2 stock split, 500,000 share buyback and raising 2Q/04 forecast.
EYE +4.88% after beating 1Q estimates and raising 04 guidance.
ASCL -17.57% after missing 1Q estimates substantially and lowering 2Q guidance.
SSTI -7.72% on profit-taking after beating 1Q estimates and raising 2Q guidance.
PLXS -10.97% on profit-taking after meeting 2Q estimates and raising 3Q guidance.
CTXS -11.95% after beating 1Q estimates, raising 2Q sales estimate, but lowering 2Q profit forecast.
AFCO -5.71% after missing 3Q estimates and weak guidance.
Recommendations
Goldman Sachs reiterated Outperform on UTX, SKYW, KO, RCL and Underperform on PLXS and OMI.
After-hours News
U.S. stocks finished higher Wednesday as Fed Chairman Greenspan said the U.S. economy is vigorous and broad-based inflation was not a problem as unit labor costs remain subdued. After the close, The Street.Com reported that Sony is in advance talks to join two buyout firms in a $5B acquisition of movie studio Metro-Goldwyn-Mayer. eBay said first-quarter earning surged 92% as more people listed items for sale and used its PayPal e-mail payment service. eBay also raised 04 profit and revenue forecasts, Bloomberg reported. Qualcomm said second-quarter profit more than quadrupled on surging demand for phones based on CDMA technology, Bloomberg reported. China conceded to U.S. demands to crackdown on the piracy of software and movies and abandon a standard for wireless encryption opposed by Intel and other chip companies, Bloomberg reported.
BOTTOM LINE: The Portfolio rose slightly today as one of my shorts fell substantially in afternoon trading, offsetting small loses elsewhere. I added to a couple of short positions in the afternoon and took profits in a few longs, bringing the Portfolio to a market neutral position(longs-shorts=0). I still feel that the market, specifically technology stocks, may have more work to do on the downside in the short-run. Complacency by investors is still too high. On a more positive note, China's talking down its economy and threatening to raise interest rates seems to be working. China's insatiable demand for raw materials has been one of the key drivers of commodity price increases. Commodity prices, as measured by the CRB Index, broke down through their 6-month uptrend line today. A rising U.S. dollar also pressures commodity prices. This should help the U.S. economy later in the year as investors begin to realize that a substantial rise in inflation is not in the cards for the foreseeable future.
Mid-day Update
S&P 500 1,121.69 +.32%
NASDAQ 1,986.04 +.38%
Leading Sectors
Wireless +3.15%
Hospitals +2.65%
Airlines +2.08%
Lagging Sectors
Nanotechnology -1.42%
Papers -1.53%
Iron/Steel -2.28%
Other
Crude Oil 35.99 -1.40%
Natural Gas 5.58 +.58%
Gold 394.50 -.95%
Base Metals 108.32 -5.30%
U.S. Dollar 90.93 +.49%
10-Yr. Long-Bond Yield 4.43% -.63%
VIX 16.01 -3.96%
Put/Call .75 -6.25%
NYSE Arms .57 -52.89%
Market Movers
MOT +18.55% after significantly beating 1Q estimates, raising 2Q guidance substantially and multiple upgrades.
F +10.12% after significantly beating 1Q estimates, raising 2Q and 04 guidance substantially and multiple upgrades.
SANM +14.7% after beating 2Q estimates and multiple upgrades.
FLIR +14.4% after beating 2Q estimates and raising 04 forecast.
Education Stocks up across the board on strong earnings from CECO and COCO.
POWI +9.12% on American Technology upgrade to Buy.
UTEK -21.05% after missing 1Q estimates.
WEBX -21.59% after meeting 1Q estimates, but lowering 2Q and 04 forecast.
DV -14.02% after missing 2Q estimates and CSFB downgrade to Underperform.
ISSX -14.84% after missing 1Q estimates and lowering 2Q and 04 forecast.
ACS -8.6% after missing 3Q forecast and lowering guidance.
SCSS -12.27% after meeting 1Q estimates, lowering 2Q guidance and raising 04 forecast.
Economic Data
None of note.
Recommendations
MOT raised to Sector Outperform at CIBC, target $25. GPI, CAO and PBY rated Outperform at Thomas Weisel. STX cut to Sell at Thomas Weisel. WSH raised to Overweight at Prudential, target $45. MXIM raised to Overweight at Prudential, target $58. MRVL, AGR/A and STM cut to Underweight at Prudential. NCI rated Outperform at CSFB, target $23. DV cut to Underperform at CSFB. GDW raised to Outperform at Bear Stearns, target $122. BCR raised to Outperform at Bear, target $115. SANM raised to Outperform at Bear, target $16. Goldman Sachs reiterated Outperform on MO, WMT, CFC, VIAB, ACS, DTV, CCU, VIAB, CDL, WON, CTSH and STA. Goldman reiterated Underperform on IPC, AMCC and SLG. Goldman downgraded OSI to Underperform. Citi Smith Barney said to Buy HLT based on belief they will materially increase dividend within next couple of quarters. Citi reiterated view that risk to oil prices is on the downside. Citi reiterated Sell on STX, target $7. Citi raised estimates and target to $25 on MOT. Citi Strongly reiterated Buy on WFC, target $67. Citi reiterated Buy on CKFR, target $39.
Mid-day News
U.S. stocks are mostly higher mid-day as Fed Chairman Greenspan said the U.S. economy is growing vigorously without any signs of broad-based inflation as unit labor costs remain subdued. Ask Jeeves CEO told CNBC that his company is big enough to avoid being bought after it agreed last month to acquire Interactive Search Holdings. A car bomb exploded today in the center of Saudi Arabia's capital, Riyadh, killing one. Five other bombs were defused, Saudi tv reported. Time Warner's AOL unit plans to widen its Internet audience and boost advertising sales by making some content free and more accessible to subscribers, the Wall Street Journal reported. Syria has given weapons to opposition forces in Iraq and has helped them cross the border, the Washington Times reported. The U.S. economy is in a "vigorous expansion" that has not yet produced "broad-based" inflation pressures, Fed Chairman Greenspan said. He said that while unit labor costs, which account for 70% of inflation, no longer seem to be falling rapidly, those costs have yet to post a decisive upturn. He also said, "As I have noted previously, the fed funds rate must rise at some point to prevent pressures on price inflation from eventually emerging." Separately, the Fed's Parry said, "The Fed will have to raise rates significantly at some point to prevent growth from triggering inflation."
BOTTOM LINE: The Portfolio is down slightly today as one of my longs is falling on its earnings report and my shorts are mostly higher. Greenspan and Parry's comments taken together lead me to conclude that the Fed will move sooner rather than later and they are in the initial stages of preparing the markets for this. I still expect the first rate hike at the June 28-30 meeting, barring several weaker-than-expected jobs reports. I have not traded today and the Portfolio is still 25% net long.
NASDAQ 1,986.04 +.38%
Leading Sectors
Wireless +3.15%
Hospitals +2.65%
Airlines +2.08%
Lagging Sectors
Nanotechnology -1.42%
Papers -1.53%
Iron/Steel -2.28%
Other
Crude Oil 35.99 -1.40%
Natural Gas 5.58 +.58%
Gold 394.50 -.95%
Base Metals 108.32 -5.30%
U.S. Dollar 90.93 +.49%
10-Yr. Long-Bond Yield 4.43% -.63%
VIX 16.01 -3.96%
Put/Call .75 -6.25%
NYSE Arms .57 -52.89%
Market Movers
MOT +18.55% after significantly beating 1Q estimates, raising 2Q guidance substantially and multiple upgrades.
F +10.12% after significantly beating 1Q estimates, raising 2Q and 04 guidance substantially and multiple upgrades.
SANM +14.7% after beating 2Q estimates and multiple upgrades.
FLIR +14.4% after beating 2Q estimates and raising 04 forecast.
Education Stocks up across the board on strong earnings from CECO and COCO.
POWI +9.12% on American Technology upgrade to Buy.
UTEK -21.05% after missing 1Q estimates.
WEBX -21.59% after meeting 1Q estimates, but lowering 2Q and 04 forecast.
DV -14.02% after missing 2Q estimates and CSFB downgrade to Underperform.
ISSX -14.84% after missing 1Q estimates and lowering 2Q and 04 forecast.
ACS -8.6% after missing 3Q forecast and lowering guidance.
SCSS -12.27% after meeting 1Q estimates, lowering 2Q guidance and raising 04 forecast.
Economic Data
None of note.
Recommendations
MOT raised to Sector Outperform at CIBC, target $25. GPI, CAO and PBY rated Outperform at Thomas Weisel. STX cut to Sell at Thomas Weisel. WSH raised to Overweight at Prudential, target $45. MXIM raised to Overweight at Prudential, target $58. MRVL, AGR/A and STM cut to Underweight at Prudential. NCI rated Outperform at CSFB, target $23. DV cut to Underperform at CSFB. GDW raised to Outperform at Bear Stearns, target $122. BCR raised to Outperform at Bear, target $115. SANM raised to Outperform at Bear, target $16. Goldman Sachs reiterated Outperform on MO, WMT, CFC, VIAB, ACS, DTV, CCU, VIAB, CDL, WON, CTSH and STA. Goldman reiterated Underperform on IPC, AMCC and SLG. Goldman downgraded OSI to Underperform. Citi Smith Barney said to Buy HLT based on belief they will materially increase dividend within next couple of quarters. Citi reiterated view that risk to oil prices is on the downside. Citi reiterated Sell on STX, target $7. Citi raised estimates and target to $25 on MOT. Citi Strongly reiterated Buy on WFC, target $67. Citi reiterated Buy on CKFR, target $39.
Mid-day News
U.S. stocks are mostly higher mid-day as Fed Chairman Greenspan said the U.S. economy is growing vigorously without any signs of broad-based inflation as unit labor costs remain subdued. Ask Jeeves CEO told CNBC that his company is big enough to avoid being bought after it agreed last month to acquire Interactive Search Holdings. A car bomb exploded today in the center of Saudi Arabia's capital, Riyadh, killing one. Five other bombs were defused, Saudi tv reported. Time Warner's AOL unit plans to widen its Internet audience and boost advertising sales by making some content free and more accessible to subscribers, the Wall Street Journal reported. Syria has given weapons to opposition forces in Iraq and has helped them cross the border, the Washington Times reported. The U.S. economy is in a "vigorous expansion" that has not yet produced "broad-based" inflation pressures, Fed Chairman Greenspan said. He said that while unit labor costs, which account for 70% of inflation, no longer seem to be falling rapidly, those costs have yet to post a decisive upturn. He also said, "As I have noted previously, the fed funds rate must rise at some point to prevent pressures on price inflation from eventually emerging." Separately, the Fed's Parry said, "The Fed will have to raise rates significantly at some point to prevent growth from triggering inflation."
BOTTOM LINE: The Portfolio is down slightly today as one of my longs is falling on its earnings report and my shorts are mostly higher. Greenspan and Parry's comments taken together lead me to conclude that the Fed will move sooner rather than later and they are in the initial stages of preparing the markets for this. I still expect the first rate hike at the June 28-30 meeting, barring several weaker-than-expected jobs reports. I have not traded today and the Portfolio is still 25% net long.
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