ECRI Weekly Leading Index 135.70 +.15%
The OECD predicted the U.S. economy will expand 4.7% this year, the fastest pace in two decades, up from an earlier forecast of 4.2% growth. The OECD predicts China's economy will grow close to 8% this year, notwithstanding recent attempts by the government to curb growth. Inflation in OECD member countries is seen slowing to about 1.7% this year on average, the lowest level in more than three decades, the OECD said. "The world economy is experiencing a strong and sustainable recovery," said OECD chief economist Jean-Philippe Cotis.
Federal Reserve policy makers will eventually raise interest rates to ensure inflation doesn't accelerate as the U.S. economy expands at a "solid" pace with "strong" job growth, said Michael Moskow, president of the Federal Reserve Bank of Chicago. Furthermore, U.S. Treasury Undersecretary John Taylor said Japan's economy has escaped a 13-year slump, and government policies may deliver lasting growth.
China's industrial production and M2 both grew at 19% from a year earlier as imports jumped 43%, contributing to China's fourth monthly trade deficit, Bloomberg reported. The Chinese government is trying to engineer a gradual economic slowdown by curbing investment and lending in certain industries. Failure of these measures may force the central bank to raise interest rates, Bloomberg reported. China will probably succeed in cooling its economy without rising interest rates or changing the Yuan's peg to the dollar, Standard & Poor's said.
The European Central Bank said recent economic reports confirm its view of an accelerating recovery in the dozen euro nations, suggesting it sees no need to cut interest rates further. While euro economies expanded at a modest pace at the start of the year, most recent date have been more encouraging, said the ECB in its monthly report.
U.S. Producer Prices rose .7% in April versus economists' expectations of a .3% rise and a .5% rise in March. Excluding volatile food and energy prices, the core rate rose .2%, meeting expectations and the same as the prior month. "With the economy growing rapidly and more than a year of commodity-price increases, there's a pretty clear formula for rising goods prices," said Kevin Harris, an economist at MCM.
U.S. Advance Retail Sales fell .5% in April versus expectations of .2% decline and a 2.0% rise in March. Retail Sales Less Autos fell .1% versus expectations of a .2% fall and a 1.8% rise in March. An early Easter holiday this year probably contributed to the jump in March and detracted from sales last month, economists said. Rising wages and renewed optimism are likely to keep consumers buying after tax refunds have been spent and underpin the economy later this year, Bloomberg reported. The economy created 625,000 jobs in March and April, the biggest two-month increase since the stock market bubble burst in March/April 2000, Bloomberg reported. "You are still going to see fairly solid consumer spending in coming months," John Shin, an economist at Lehman Brothers said.
U.S. Consumer Prices rose .2% in April versus expectations of a .3% rise and a .4% gain in March. CPI Ex Food & Energy rose .3% versus expectations of a .2% rise and a .4% increase in March. The Fed's Moskow downplayed recent signs of inflation, saying the fall in the value of the dollar that has increased import prices and led to higher commodity prices is "likely temporary," Bloomberg reported. Consumer prices are now expected to rise 2.2% this year, well below the 3% average rise over the last 84 years, Bloomberg reported.
U.S. Industrial Production in April rose .8% versus expectations of a .5% rise and a .1% decline in March. This was the seventh increase in the last eight months as companies made more semiconductors, computers, furniture and appliances. The proportion of industrial capacity in use rose to 76.9%, the highest since July 2001. Record low inventories relative to sales and exports at an all-time high are triggering bottlenecks, encouraging manufacturers to boost production to try and keep pace, Bloomberg reported. "Manufacturing in going full steam ahead," said Robert McGee, chief economist at U.S. Trust.
The preliminary Univ. of Mich. Consumer Confidence reading for May was 94.2 versus expectations of 96.0 and 94.2 in April. The economy is doing very well and jobs are picking up, but rising gasoline prices and negative news from Iraq are overshadowing the many positives, Bloomberg reported. U.S. motorists will pay an average of $1.94/gallon for gas this summer because of soaring crude-oil costs, strong demand and tight fuel inventories, the Energy Department said May 11.
Bottom Line: Overall, last week's data continued to paint a very bright picture of the current state of the U.S. and world economies. Economic growth is undeniably strong. Comments from European officials about the state of their economies were the most positive in a long time, which bodes well for many U.S. multinationals that have large exposure to the region. I also expect the Chinese government to succeed with their attempts at a soft-landing for its scorching economy. Low, but accelerating, inflation is a positive for stocks historically. Companies are regaining some pricing power, profits are soaring and hiring is accelerating. As well, most of the concerns about inflation revolve around crude oil and basic materials prices. While high oil prices are definitely having an impact, the media is making the problem out to be much worse than it really is at this point. Gas would have to reach $3.69/gallon, on an inflation-adjusted basis, to be equal to the prices American consumers paid at the heights of the Iran hostage crisis at the start of the 80's. Furthermore, basic materials prices will continue to fall in the near-term on an increasing U.S. dollar and slowing Chinese demand. I still expect the Fed to raise the Fed Funds rate 50 basis points at the June 29-30 meeting, while the market is anticipating a 25 basis point increase. A significant fall in the stock market or a sharp pullback in consumer spending could potentially push the rate hike out to a further date. Again, the main worry I have at this point is that the mainstream media's obsession with negativity is hurting investor psychology, thus potentially creating a self-fulfilling prophecy of slower economic growth.
Saturday, May 15, 2004
Weekly Scoreboard
Indices
S&P 500 1,095.70 -.27%
Dow 10,012.87 -1.03%
NASDAQ 1,904.25 -.72%
Russell 2000 543.76 -.50%
Total Market 258.36 -.42%
Volatility(VIX) 18.47 +1.88%
AAII Bullish % 32.89 -15.62%
US Dollar 91.66 +.55%
CRB 269.19 -1.17%
Futures Spot Prices
Gold 377.10 -.61%
Crude Oil 41.38 +3.50%
Natural Gas 6.40 +1.60%
Base Metals 102.02 -1.21%
10-year US Treasury Yield 4.77% -.06%
Average 30-year Mortgage Rate 6.34% +3.59%
Leading Sectors
Papers +2.77%
Commodity +1.06%
HMO's +1.02%
Lagging Sectors
Disk Drives -2.90%
Fashion -3.16%
Nanotechnology -3.52%
*% Gain or loss for the week
S&P 500 1,095.70 -.27%
Dow 10,012.87 -1.03%
NASDAQ 1,904.25 -.72%
Russell 2000 543.76 -.50%
Total Market 258.36 -.42%
Volatility(VIX) 18.47 +1.88%
AAII Bullish % 32.89 -15.62%
US Dollar 91.66 +.55%
CRB 269.19 -1.17%
Futures Spot Prices
Gold 377.10 -.61%
Crude Oil 41.38 +3.50%
Natural Gas 6.40 +1.60%
Base Metals 102.02 -1.21%
10-year US Treasury Yield 4.77% -.06%
Average 30-year Mortgage Rate 6.34% +3.59%
Leading Sectors
Papers +2.77%
Commodity +1.06%
HMO's +1.02%
Lagging Sectors
Disk Drives -2.90%
Fashion -3.16%
Nanotechnology -3.52%
*% Gain or loss for the week
Friday, May 14, 2004
Mid-day Report
S&P 500 1,099.46 +.28%
NASDAQ 1,915.62 -.55%
Leading Sectors
Energy +1.60%
Gaming +1.54%
Tobacco +1.41%
Lagging Sectors
Networking -2.12%
Disk Drives -3.18%
Iron/Steel -5.32%
Other
Crude Oil 41.33 +.61%
Natural Gas 6.42 -.93%
Gold 375.70 +.21%
Base Metals 102.06 +.47%
U.S. Dollar 91.68 -.29%
10-Yr. Long-Bond Yield 4.79% -1.23%
VIX 18.34 -2.92%
Put/Call .92 +1.28%
NYSE Arms 1.39 +40.40%
Market Movers
BEAS -20.3% after missing 1Q revenue estimates and multiple downgrades.
MERX -31.4% after cutting 4Q forecast substantially and downgrade to Underperform by RBC Capital.
JNPR -4.49% after rivals Hitachi, NEC and Furukawa said they will jointly develop next-generation Internet router equipment.
GCO +15.7% after significantly boosting 1Q forecast.
ISCA +7.45% after saying it will acquire Martinsville Speedway for $192M and sell North Carolina Speedway to Speedway Motorsports for $100.4M.
IMPC -34.16% on disappointing 2Q earnings and 04 licensing revenue.
Chinese commodity stocks down across the board on concerns over potential hard-landing in China economy.
Economic Data
Consumer Price Index for April +.2% versus +.3% estimate and +.5% in March.
CPI Ex Food & Energy for April +.3% versus +.2% estimate and +.4% in March.
Business Inventories for March +.7% versus +.5% estimate and +.8% in February.
Industrial Production for April +.8% versus +.5% estimate and -.1% in March.
Capacity Utilization for April 76.9% versus estimates of 76.7% and 76.5% in March.
Preliminary Univ. of Mich. Consumer Confidence for May 94.2 versus 96.0 estimate and 94.2 in April.
Recommendations
Goldman Sachs said to Buy YHOO after analyst meeting confirmed thesis, sees 25-30% upside. GS reiterated Buy on INTC, CSCO, CTSH, HD, CEN and CAH. GS reiterated Underperform on PBG, BMY, SAY and FHCC. Goldman also said after its Beijing Commodity conference that it sees no signs of a slowdown in demand. Credit tightening polices by Chinese government are benefiting ACH. Overall, Goldman said only an unexpected sharp fall in growth would derail cyclical upturn, favorite beneficiaries are AL, NEM, AA, N and PDG. Citi SmithBarney said to Buy BEAS on weakness. Citi upgraded AEE to Buy and rated WR new Buy. Citi reiterated Buy on GTK, target $65. Citi reiterated Buy on YHOO, target $33. Citi reiterated Buy on WMT, target $64. Citi reiterated Buy on TGT, target $50. NVTL rated Overweight at JP Morgan. WEN raised to Overweight at JP Morgan. POP, GLT, RKT, WMO and WY raised to Buy at Deutsche Bank. ITW raised to Overweight at Lehman, target $120. ESRX raised to Buy at Merrill, target $89.
Mid-day News
U.S. stocks are mixed mid-day as falling interest rates and a strong energy sector are offsetting weakness in technology and basic materials shares. The U.S. would leave Iraq if the country's new administration asked it to do so after the planned handover of power on June 30, Agence France-Presse reported. Nortel said it's the subject of a criminal probe by the U.S. Attorney's Office in Texas. Panera Bread and Papa John's are among U.S. food companies facing an erosion in profits because of a surge in the cost of milk and other dairy products, Bloomberg reported. Airlines are battling losses as jet-fuel supplies drop close to record lows in some regions and prices soar. The worst may be yet to come as refiners sacrifice jet-fuel output to make gasoline, Bloomberg reported. Revlon and Samsonite joined a growing list of companies canceling sales of high-yield, high-risk debt as interest rates rise, Bloomberg said. Consumer prices are now expected to rise 2.2% this year, well below the 3% average rise over the last 84 years, Bloomberg reported.
BOTTOM LINE: The Portfolio is down slightly today as a couple of my security and biotech longs are rising substantially, almost offsetting loses in my tech long positions. The market is rising from its morning lows as expected. I have not traded as of yet and the Portfolio is still 125% net long. I want to reiterate that inflation is not currently a problem and that, historically, moderate inflation is good for stock prices as companies regain pricing power, boost profits and hire more workers. As I predicted months ago, when U.S. job growth accelerated the negative bias of the mainstream press would lead them to focus on inflation instead of the end of the so-called "jobless recovery." This, combined with the 24-7 reporting on torture, is eroding consumer and investor confidence. However, market action today is a big psychological positive for the Bulls as Dell's earnings, rising oil prices, the CPI and Consumer Confidence report could not move stocks substantially lower. I still expect a follow-through rally on good volume sometime in the next few days to confirm Wednesday's strong afternoon advance.
NASDAQ 1,915.62 -.55%
Leading Sectors
Energy +1.60%
Gaming +1.54%
Tobacco +1.41%
Lagging Sectors
Networking -2.12%
Disk Drives -3.18%
Iron/Steel -5.32%
Other
Crude Oil 41.33 +.61%
Natural Gas 6.42 -.93%
Gold 375.70 +.21%
Base Metals 102.06 +.47%
U.S. Dollar 91.68 -.29%
10-Yr. Long-Bond Yield 4.79% -1.23%
VIX 18.34 -2.92%
Put/Call .92 +1.28%
NYSE Arms 1.39 +40.40%
Market Movers
BEAS -20.3% after missing 1Q revenue estimates and multiple downgrades.
MERX -31.4% after cutting 4Q forecast substantially and downgrade to Underperform by RBC Capital.
JNPR -4.49% after rivals Hitachi, NEC and Furukawa said they will jointly develop next-generation Internet router equipment.
GCO +15.7% after significantly boosting 1Q forecast.
ISCA +7.45% after saying it will acquire Martinsville Speedway for $192M and sell North Carolina Speedway to Speedway Motorsports for $100.4M.
IMPC -34.16% on disappointing 2Q earnings and 04 licensing revenue.
Chinese commodity stocks down across the board on concerns over potential hard-landing in China economy.
Economic Data
Consumer Price Index for April +.2% versus +.3% estimate and +.5% in March.
CPI Ex Food & Energy for April +.3% versus +.2% estimate and +.4% in March.
Business Inventories for March +.7% versus +.5% estimate and +.8% in February.
Industrial Production for April +.8% versus +.5% estimate and -.1% in March.
Capacity Utilization for April 76.9% versus estimates of 76.7% and 76.5% in March.
Preliminary Univ. of Mich. Consumer Confidence for May 94.2 versus 96.0 estimate and 94.2 in April.
Recommendations
Goldman Sachs said to Buy YHOO after analyst meeting confirmed thesis, sees 25-30% upside. GS reiterated Buy on INTC, CSCO, CTSH, HD, CEN and CAH. GS reiterated Underperform on PBG, BMY, SAY and FHCC. Goldman also said after its Beijing Commodity conference that it sees no signs of a slowdown in demand. Credit tightening polices by Chinese government are benefiting ACH. Overall, Goldman said only an unexpected sharp fall in growth would derail cyclical upturn, favorite beneficiaries are AL, NEM, AA, N and PDG. Citi SmithBarney said to Buy BEAS on weakness. Citi upgraded AEE to Buy and rated WR new Buy. Citi reiterated Buy on GTK, target $65. Citi reiterated Buy on YHOO, target $33. Citi reiterated Buy on WMT, target $64. Citi reiterated Buy on TGT, target $50. NVTL rated Overweight at JP Morgan. WEN raised to Overweight at JP Morgan. POP, GLT, RKT, WMO and WY raised to Buy at Deutsche Bank. ITW raised to Overweight at Lehman, target $120. ESRX raised to Buy at Merrill, target $89.
Mid-day News
U.S. stocks are mixed mid-day as falling interest rates and a strong energy sector are offsetting weakness in technology and basic materials shares. The U.S. would leave Iraq if the country's new administration asked it to do so after the planned handover of power on June 30, Agence France-Presse reported. Nortel said it's the subject of a criminal probe by the U.S. Attorney's Office in Texas. Panera Bread and Papa John's are among U.S. food companies facing an erosion in profits because of a surge in the cost of milk and other dairy products, Bloomberg reported. Airlines are battling losses as jet-fuel supplies drop close to record lows in some regions and prices soar. The worst may be yet to come as refiners sacrifice jet-fuel output to make gasoline, Bloomberg reported. Revlon and Samsonite joined a growing list of companies canceling sales of high-yield, high-risk debt as interest rates rise, Bloomberg said. Consumer prices are now expected to rise 2.2% this year, well below the 3% average rise over the last 84 years, Bloomberg reported.
BOTTOM LINE: The Portfolio is down slightly today as a couple of my security and biotech longs are rising substantially, almost offsetting loses in my tech long positions. The market is rising from its morning lows as expected. I have not traded as of yet and the Portfolio is still 125% net long. I want to reiterate that inflation is not currently a problem and that, historically, moderate inflation is good for stock prices as companies regain pricing power, boost profits and hire more workers. As I predicted months ago, when U.S. job growth accelerated the negative bias of the mainstream press would lead them to focus on inflation instead of the end of the so-called "jobless recovery." This, combined with the 24-7 reporting on torture, is eroding consumer and investor confidence. However, market action today is a big psychological positive for the Bulls as Dell's earnings, rising oil prices, the CPI and Consumer Confidence report could not move stocks substantially lower. I still expect a follow-through rally on good volume sometime in the next few days to confirm Wednesday's strong afternoon advance.
Friday Watch
Earnings of Note
Company/Estimate
CPST/-.14
CHINA/.04
DRS/.54
LWAY/.06
Splits
NSM 2-for-1
Economic Data
Consumer Price Index for April estimated up .3% versus a .5% rise in March.
CPI Ex Food & Energy for April estimated up .3% versus a .5% rise in March.
Business Inventories for March estimated up .5% versus a .7% rise in February.
Industrial Production for April estimated up .5% versus a .2% decline in March.
Capacity Utilization for April estimated at 76.7% versus 76.5% in March.
Preliminary Univ. of Mich. Consumer Confidence for May estimated at 96.0 versus 94.2 in April.
Empire Manufacturing for May estimated at 34.75 versus 36.05 in April.
Recommendations
Goldman Sachs reiterated Outperform on BIIB. Sun Microsystems(SUNW) stock may reach $10 a share in a year if the company successfully shifts its focus from selling hardware and software to servicing and licensing, Business Week reported. Yak Communications(YAKC) which provides discount services for long-distance calling, may see its shares climb when it introduces a low-rate online service, Business Week reported.
Late-Night News
Asian indices are lower amid concerns that higher oil prices and credit tightening in China will raise material costs and slow global demand. The impact of the Sarbanes-Oxley rules may lead some of the U.S.'s top companies to reassess the costs of being listed, the Financial Times said. Advanced Neuromodulation Systems(ANSI) may be acquired by Johnson & Johnson, Business Week reported. Cisco Systems' Board authorized an additional $5 billion share buyback plan, Bloomberg reported. China's energy demands account for the recent surge in oil prices and also may soon cause a price decline, the Wall Street Journal said, citing Daniel Yergin, chairman of Cambridge Energy Research Associates. China's banking and planning regulators broadened their attempt to curb lending growth, adding petrochemicals, textiles and pharmaceuticals to a list of industries where credit is to be suspended or restricted, the China Securities Journal reported.
Late-Night Trading
Asian Indices -3.25% to -.25%.
S&P 500 indicated -.16%.
NASDAQ indicated -.21%.
BOTTOM LINE: I expect U.S. stocks to open lower tomorrow on weakness in Asia, a likely higher-than-expected CPI and a probable lower-than-expected Consumer Confidence reading. I also expect any extreme weakness in the morning will bring in bargain hunters later in the day. The Portfolio is 125% net long heading into tomorrow.
Company/Estimate
CPST/-.14
CHINA/.04
DRS/.54
LWAY/.06
Splits
NSM 2-for-1
Economic Data
Consumer Price Index for April estimated up .3% versus a .5% rise in March.
CPI Ex Food & Energy for April estimated up .3% versus a .5% rise in March.
Business Inventories for March estimated up .5% versus a .7% rise in February.
Industrial Production for April estimated up .5% versus a .2% decline in March.
Capacity Utilization for April estimated at 76.7% versus 76.5% in March.
Preliminary Univ. of Mich. Consumer Confidence for May estimated at 96.0 versus 94.2 in April.
Empire Manufacturing for May estimated at 34.75 versus 36.05 in April.
Recommendations
Goldman Sachs reiterated Outperform on BIIB. Sun Microsystems(SUNW) stock may reach $10 a share in a year if the company successfully shifts its focus from selling hardware and software to servicing and licensing, Business Week reported. Yak Communications(YAKC) which provides discount services for long-distance calling, may see its shares climb when it introduces a low-rate online service, Business Week reported.
Late-Night News
Asian indices are lower amid concerns that higher oil prices and credit tightening in China will raise material costs and slow global demand. The impact of the Sarbanes-Oxley rules may lead some of the U.S.'s top companies to reassess the costs of being listed, the Financial Times said. Advanced Neuromodulation Systems(ANSI) may be acquired by Johnson & Johnson, Business Week reported. Cisco Systems' Board authorized an additional $5 billion share buyback plan, Bloomberg reported. China's energy demands account for the recent surge in oil prices and also may soon cause a price decline, the Wall Street Journal said, citing Daniel Yergin, chairman of Cambridge Energy Research Associates. China's banking and planning regulators broadened their attempt to curb lending growth, adding petrochemicals, textiles and pharmaceuticals to a list of industries where credit is to be suspended or restricted, the China Securities Journal reported.
Late-Night Trading
Asian Indices -3.25% to -.25%.
S&P 500 indicated -.16%.
NASDAQ indicated -.21%.
BOTTOM LINE: I expect U.S. stocks to open lower tomorrow on weakness in Asia, a likely higher-than-expected CPI and a probable lower-than-expected Consumer Confidence reading. I also expect any extreme weakness in the morning will bring in bargain hunters later in the day. The Portfolio is 125% net long heading into tomorrow.
Thursday, May 13, 2004
Thursday Close
S&P 500 1,096.44 -.08%
NASDAQ 1,926.03 +.02%
Leading Sectors
Disk Drives +1.51%
Airlines +1.23%
Papers +1.09%
Lagging Sectors
Restaurants -1.22%
Gaming -1.32%
Iron/Steel -1.59%
Other
Crude Oil 41.02 -.15%
Natural Gas 6.48 -.05%
Gold 375.00 +.03%
Base Metals 101.58 -1.03%
U.S. Dollar 92.01 +.79%
10-Yr. Long-Bond Yield 4.86% +1.06%
VIX 18.86 +3.97%
Put/Call .91 -19.14%
NYSE Arms .99 +2.06%
After-hours Movers
BEAS -14.66% after missing 1Q revenue estimates.
DELL -2.99% after meeting 1Q estimates and keeping 2Q forecast unchanged.
ADIC -25.52% after missing 2Q estimates.
Recommendations
Bank of America upgraded CDX to Buy.
After-hours News
U.S. stocks finished mixed Thursday as rising interest rates and energy prices offset strength in technology and cyclical shares. After the close, Dell said first-quarter revenue rose 21% to a record $11.5 billion, exceeding expectations. Dell's CFO said corporate spending is the best in almost 4 years and that rising memory prices hurt gross margins, Bloomberg reported. United Nations' inspectors say they may have found evidence Iran sought to secretly refine uranium to a purity that could be used in nuclear weapons, Agence France-Presse reported. Verizon is preparing to seek cable-tv franchises in parts of Texas and eight other states, including California, Business Week reported. Raytheon said it settled a class action lawsuit from 1999 alleging the company misled investors, Bloomberg reported.
BOTTOM LINE: The Portfolio gained today as my tech, biotech and security longs rose and retail shorts fell. I did not trade and the Portfolio remains 125% net long. I will closely monitor the market's reaction tomorrow to Dell's earnings report, a likely higher-than-expected CPI report and a probable lower-than-expected Consumer Confidence reading. A slightly lower-to-neutral day would be a positive for the Bulls, while another big down day will show investor psychology remains negative and the Bears are still in control. An unexpectedly strong rally tomorrow would be very positive for the Bulls.
NASDAQ 1,926.03 +.02%
Leading Sectors
Disk Drives +1.51%
Airlines +1.23%
Papers +1.09%
Lagging Sectors
Restaurants -1.22%
Gaming -1.32%
Iron/Steel -1.59%
Other
Crude Oil 41.02 -.15%
Natural Gas 6.48 -.05%
Gold 375.00 +.03%
Base Metals 101.58 -1.03%
U.S. Dollar 92.01 +.79%
10-Yr. Long-Bond Yield 4.86% +1.06%
VIX 18.86 +3.97%
Put/Call .91 -19.14%
NYSE Arms .99 +2.06%
After-hours Movers
BEAS -14.66% after missing 1Q revenue estimates.
DELL -2.99% after meeting 1Q estimates and keeping 2Q forecast unchanged.
ADIC -25.52% after missing 2Q estimates.
Recommendations
Bank of America upgraded CDX to Buy.
After-hours News
U.S. stocks finished mixed Thursday as rising interest rates and energy prices offset strength in technology and cyclical shares. After the close, Dell said first-quarter revenue rose 21% to a record $11.5 billion, exceeding expectations. Dell's CFO said corporate spending is the best in almost 4 years and that rising memory prices hurt gross margins, Bloomberg reported. United Nations' inspectors say they may have found evidence Iran sought to secretly refine uranium to a purity that could be used in nuclear weapons, Agence France-Presse reported. Verizon is preparing to seek cable-tv franchises in parts of Texas and eight other states, including California, Business Week reported. Raytheon said it settled a class action lawsuit from 1999 alleging the company misled investors, Bloomberg reported.
BOTTOM LINE: The Portfolio gained today as my tech, biotech and security longs rose and retail shorts fell. I did not trade and the Portfolio remains 125% net long. I will closely monitor the market's reaction tomorrow to Dell's earnings report, a likely higher-than-expected CPI report and a probable lower-than-expected Consumer Confidence reading. A slightly lower-to-neutral day would be a positive for the Bulls, while another big down day will show investor psychology remains negative and the Bears are still in control. An unexpectedly strong rally tomorrow would be very positive for the Bulls.
Mid-day Update
S&P 500 1,097.96 +.06%
NASDAQ 1,928.69 +.16%
Leading Sectors
Airlines +2.10%
Disk Drives +2.10%
Homebuilders +1.15%
Lagging Sectors
Restaurants -1.13%
Gaming -1.31%
Iron/Steel -1.52%
Other
Crude Oil 40.57 -.49%
Natural Gas 6.44 +.55%
Gold 375.50 -.58%
Base Metals 101.58 -1.03%
U.S. Dollar 92.02 +.80%
10-Yr. Long-Bond Yield 4.84% +.66%
VIX 18.44 +1.65%
Put/Call .85 -24.09%
NYSE Arms .86 -11.34%
Market Movers
MAMA +25.0% after reported better-than-expected 1Q results.
PGTV +24.2% after a federal court dismissed DTV's claim against it.
CNJ -12.7% after it said plans to be acquired by Moulin Intl. could fall through.
DOX -13.3% after disappointing guidance at analyst meeting.
PNRA -10.54% after meeting 1Q estimates and lowering 2Q guidance.
Economic Data
Producer Price Index for April rose .7% versus expectations if a .3% rise and a .5% rise in March.
PPI Ex Food & Energy for April rose .2%, meeting expectations and the same as in March.
Advance Retail Sales for April fell .5% versus an expected fall of .2% and a 2.0% rise in March.
Retail Sales Less Autos for April fell .1% versus expectations of a .2% fall and a 1.8% rise in March.
Initial Jobless Claims for last week were 331K versus expectations of 325K and 318K prior week.
Continuing Claims were 2974K versus 2900K estimates and 2921K prior.
Recommendations
Goldman Sachs reiterated Outperform on GE, DIS, KO and WMT. GS upgraded UST to Outperform. Citi SmithBarney said to Buy HD and LOW ahead of quarterly reports. Citi reiterated Buy on DIS, target $32. Jim Cramer, of TheStreet.com, has a negative column on MO. AVID added to focus list at JP Morgan, target $57. NYT raised to Outperform at JP Morgan. SNDK rated Sector Outperform at CIBC, target $35. LEXR rated Sector Underperform at CIBC. ACI raised to Buy at Legg Mason, target $36. IMCL rated Buy at Oppenheimer, target $84. TMWD rated Strong Buy at Raymond James, target $7.
Mid-day News
U.S. stocks are mostly higher mid-day as rising technology and cyclical shares are more than offsetting falling consumer cyclicals. Boston's average house price rose to $558,055 during the first quarter, an increase of 8.6% from the year-earlier period and up 8.7% from the fourth quarter, the Boston Herald reported. The North American Electric Reliability Council, an industry group that monitors the U.S. power grid, said there should be no "uncontrolled blackouts" this summer, the NY Times reported. Bahrain and the U.S. will hold trade talks this month that may lead to a free-trade accord in two months, the first such U.S. agreement with a Persian Gulf state, the Bahrain news agency reported. The Greek militant group Revolutionary Struggle claimed responsibility for a triple bomb attack in Athens last week, saying business people and rich tourists who may attend the Olympic Games in August are "undesirable." Viacom's CBS may capture the biggest gain in U.S. advertising sales for the 04-05 tv season, Bloomberg reported. Nextel has won the goodwill of police and fire chiefs throughout the U.S. by offering to spend $1.36B to ensure its cell-phone towers stop interfering with emergency signals, Bloomberg said. Wal-Mart and Target said first quarter profit rose as shoppers spent tax refunds on clothing, Bloomberg reported. However, Wal-Mart said high gas prices may hurt sales later this year. U.S. Treasury notes are falling after the PPI rose more than forecast in April, leading to more inflation worries, Bloomberg reported.
BOTTOM LINE: The Portfolio having a very good day as my biotech, tech and security longs are rising and retail shorts are falling. I have not traded and the Portfolio is still 125% net long. I expect the major U.S. indices to finish neutral to higher today as bonds stabilize and oil inches lower.
NASDAQ 1,928.69 +.16%
Leading Sectors
Airlines +2.10%
Disk Drives +2.10%
Homebuilders +1.15%
Lagging Sectors
Restaurants -1.13%
Gaming -1.31%
Iron/Steel -1.52%
Other
Crude Oil 40.57 -.49%
Natural Gas 6.44 +.55%
Gold 375.50 -.58%
Base Metals 101.58 -1.03%
U.S. Dollar 92.02 +.80%
10-Yr. Long-Bond Yield 4.84% +.66%
VIX 18.44 +1.65%
Put/Call .85 -24.09%
NYSE Arms .86 -11.34%
Market Movers
MAMA +25.0% after reported better-than-expected 1Q results.
PGTV +24.2% after a federal court dismissed DTV's claim against it.
CNJ -12.7% after it said plans to be acquired by Moulin Intl. could fall through.
DOX -13.3% after disappointing guidance at analyst meeting.
PNRA -10.54% after meeting 1Q estimates and lowering 2Q guidance.
Economic Data
Producer Price Index for April rose .7% versus expectations if a .3% rise and a .5% rise in March.
PPI Ex Food & Energy for April rose .2%, meeting expectations and the same as in March.
Advance Retail Sales for April fell .5% versus an expected fall of .2% and a 2.0% rise in March.
Retail Sales Less Autos for April fell .1% versus expectations of a .2% fall and a 1.8% rise in March.
Initial Jobless Claims for last week were 331K versus expectations of 325K and 318K prior week.
Continuing Claims were 2974K versus 2900K estimates and 2921K prior.
Recommendations
Goldman Sachs reiterated Outperform on GE, DIS, KO and WMT. GS upgraded UST to Outperform. Citi SmithBarney said to Buy HD and LOW ahead of quarterly reports. Citi reiterated Buy on DIS, target $32. Jim Cramer, of TheStreet.com, has a negative column on MO. AVID added to focus list at JP Morgan, target $57. NYT raised to Outperform at JP Morgan. SNDK rated Sector Outperform at CIBC, target $35. LEXR rated Sector Underperform at CIBC. ACI raised to Buy at Legg Mason, target $36. IMCL rated Buy at Oppenheimer, target $84. TMWD rated Strong Buy at Raymond James, target $7.
Mid-day News
U.S. stocks are mostly higher mid-day as rising technology and cyclical shares are more than offsetting falling consumer cyclicals. Boston's average house price rose to $558,055 during the first quarter, an increase of 8.6% from the year-earlier period and up 8.7% from the fourth quarter, the Boston Herald reported. The North American Electric Reliability Council, an industry group that monitors the U.S. power grid, said there should be no "uncontrolled blackouts" this summer, the NY Times reported. Bahrain and the U.S. will hold trade talks this month that may lead to a free-trade accord in two months, the first such U.S. agreement with a Persian Gulf state, the Bahrain news agency reported. The Greek militant group Revolutionary Struggle claimed responsibility for a triple bomb attack in Athens last week, saying business people and rich tourists who may attend the Olympic Games in August are "undesirable." Viacom's CBS may capture the biggest gain in U.S. advertising sales for the 04-05 tv season, Bloomberg reported. Nextel has won the goodwill of police and fire chiefs throughout the U.S. by offering to spend $1.36B to ensure its cell-phone towers stop interfering with emergency signals, Bloomberg said. Wal-Mart and Target said first quarter profit rose as shoppers spent tax refunds on clothing, Bloomberg reported. However, Wal-Mart said high gas prices may hurt sales later this year. U.S. Treasury notes are falling after the PPI rose more than forecast in April, leading to more inflation worries, Bloomberg reported.
BOTTOM LINE: The Portfolio having a very good day as my biotech, tech and security longs are rising and retail shorts are falling. I have not traded and the Portfolio is still 125% net long. I expect the major U.S. indices to finish neutral to higher today as bonds stabilize and oil inches lower.
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