Earnings of Note
Company/Estimate
ATK/.72
ALKS/-.20
AMLN/-.40
CLX/.83
CPN/-.10
BGG/1.53
ELX/.18
NVDA/.15
PNRA/.21
SLE/.43
TOL/1.14
XMSR/-.88
Splits
None of note.
Economic Data
Initial Jobless Claims for last week estimated at 340K versus 345K the prior week.
Continuing Claims estimated at 2920K versus 2960K prior.
Recommendations
Goldman Sachs reiterated Outperform on DDR and IR. Goldman reiterated Underperform on NFS, UNM and FISV.
Late-Night News
Asian indices are mostly higher on strength in exporters as crude oil prices fell today. Tyson Foods CEO John Tyson told CNBC that the market shouldn't be concerned about last week's departure of former CFO Steve Hankins, Bloomberg reported. Jemaah Islamiyah, a Southeast Asian Islamic group blamed for terrorist attacks in Indonesia, is struggling with a shortage of money, internal divisions and continuing arrests, the AP reported. Google said it's offering to repurchase 23.2 million of it own shares at a discount to the price it expects for its IPO, Bloomberg said. A senior al-Qaeda member in the U.K., alleged to have been in the final stages of planning an attack on London's Heathrow airport, has been arrested by British police, the London-based Times reported.
Late-Night Trading
Asian Indices are -.25% to +1.0% on average.
S&P 500 indicated -.04%.
NASDAQ 100 indicated +.11%
BOTTOM LINE: I expect U.S. stocks to open modestly higher tomorrow on optimism that oil prices may have peaked. However, unless there is follow-through to today's decline in crude prices, stocks will likely weaken as the day progresses ahead of tomorrow's labor report. The Portfolio is 25% net long heading into tomorrow.
Thursday, August 05, 2004
Wednesday, August 04, 2004
Wednesday Close
S&P 500 1,098.63 -.10%
NASDAQ 1,855.06 -.23%
Leading Sectors
Airlines +1.38%
Disk Drives +1.07%
Semis +.94%
Lagging Sectors
Energy -2.29%
Oil Service -2.50%
Fashion -2.66%
Other
Crude Oil 42.68 -.35%
Natural Gas 5.65 -.11%
Gold 394.70 unch.
Base Metals 110.59 -.51%
U.S. Dollar 89.68 +.12%
10-Yr. T-note Yield 4.42% -.13%
VIX 16.21 +1.12%
Put/Call .90 +23.29%
NYSE Arms 1.28 -18.99%
After-hours Movers
ICOS +5.52% after beating 2Q estimates.
KYPH +8.04% after beating 2Q estimates and raising 04 outlook.
JUPM +9.55% after beating 2Q estimates and raising 3Q and 4Q guidance.
UNTD -18.4% after missing 2Q estimates and lowering 3Q outlook.
LTON -15.8% after meeting 2Q estimates and lowering 3Q forecast.
Recommendations
Goldman Sachs reiterated Outperform on JTX, DOW, ROH, DD and GLK.
After-hours News
U.S. stocks finished slightly lower today as an afternoon rally, spurred by falling oil prices, boosted shares. After the close, Google, Yahoo! and other Internet search companies were accused in a California lawsuit of promoting illegal online gambling, The Recorder reported. U.S. accounting rules makers will force companies paying off debt by issuing shares to count those shares when calculating diluted earnings, possibly reducing per-share figures for some companies, Dow Jones Newswires reported. Crude oil futures fell from a record after OAO Yukos Oil said it was given access to funds needed for oil production and exports and after a report showed that U.S. gasoline supplies rose, Bloomberg reported. Reliant Energy, owner of power plants in 12 U.S. states, will receive a $108 million claim against Enron under a settlement between the two Houston energy companies, Bloomberg said.
BOTTOM LINE: The Portfolio finished slightly lower today as a few of my energy-related longs fell more than my technology shorts. I did not trade in the afternoon, leaving the Portfolio's market exposure at 25% net long. While today's afternoon decline in oil prices and subsequent stock rally was a welcome development, it still does not appear a bottom in stocks is in place. However, further declines in oil could spur a short-term rally. The psychology of the market is such that any rally will likely be met with selling until terror and political fears subside.
NASDAQ 1,855.06 -.23%
Leading Sectors
Airlines +1.38%
Disk Drives +1.07%
Semis +.94%
Lagging Sectors
Energy -2.29%
Oil Service -2.50%
Fashion -2.66%
Other
Crude Oil 42.68 -.35%
Natural Gas 5.65 -.11%
Gold 394.70 unch.
Base Metals 110.59 -.51%
U.S. Dollar 89.68 +.12%
10-Yr. T-note Yield 4.42% -.13%
VIX 16.21 +1.12%
Put/Call .90 +23.29%
NYSE Arms 1.28 -18.99%
After-hours Movers
ICOS +5.52% after beating 2Q estimates.
KYPH +8.04% after beating 2Q estimates and raising 04 outlook.
JUPM +9.55% after beating 2Q estimates and raising 3Q and 4Q guidance.
UNTD -18.4% after missing 2Q estimates and lowering 3Q outlook.
LTON -15.8% after meeting 2Q estimates and lowering 3Q forecast.
Recommendations
Goldman Sachs reiterated Outperform on JTX, DOW, ROH, DD and GLK.
After-hours News
U.S. stocks finished slightly lower today as an afternoon rally, spurred by falling oil prices, boosted shares. After the close, Google, Yahoo! and other Internet search companies were accused in a California lawsuit of promoting illegal online gambling, The Recorder reported. U.S. accounting rules makers will force companies paying off debt by issuing shares to count those shares when calculating diluted earnings, possibly reducing per-share figures for some companies, Dow Jones Newswires reported. Crude oil futures fell from a record after OAO Yukos Oil said it was given access to funds needed for oil production and exports and after a report showed that U.S. gasoline supplies rose, Bloomberg reported. Reliant Energy, owner of power plants in 12 U.S. states, will receive a $108 million claim against Enron under a settlement between the two Houston energy companies, Bloomberg said.
BOTTOM LINE: The Portfolio finished slightly lower today as a few of my energy-related longs fell more than my technology shorts. I did not trade in the afternoon, leaving the Portfolio's market exposure at 25% net long. While today's afternoon decline in oil prices and subsequent stock rally was a welcome development, it still does not appear a bottom in stocks is in place. However, further declines in oil could spur a short-term rally. The psychology of the market is such that any rally will likely be met with selling until terror and political fears subside.
Mid-day Update
S&P 500 1,094.39 -.49%
NASDAQ 1,846.99 -.67%
Leading Sectors
Tobacco +.59%
Computer Boxmakers +.35%
Software +.22%
Lagging Sectors
Oil Service -1.77%
Airlines -2.15%
Fashion -2.65%
Other
Crude Oil 43.88 -.61%
Natural Gas 5.74 -1.31%
Gold 395.50 -.25%
Base Metals 110.46 -.63%
U.S. Dollar 89.63 +.06%
10-Yr. T-note Yield 4.39% -.66%
VIX 16.33 +1.75%
Put/Call .85 +16.44%
NYSE Arms 1.81 +14.56%
Market Movers
IACI -16.5% after missing 2Q revenue estimates, lowering 04 guidance and multiple downgrades.
VCLK -26.0% meeting 2Q forecast, announcing $29M Pricerunner acquisition and giving weaker 3Q/04 guidance.
SGP -5.4% after announcing plans to sell $1.25 billion of convertible preferred stock and use the proceeds to pay legal settlements.
VSAT +12.3% after beating 1Q revenue estimates and Sanders Morris Harris upgrade to Strong Buy.
PDLI +9.1% after better-than-expected 2Q and Lazard Freres upgrade to Buy.
UTHR +4.7% on continued optimism over 2Q report.
RL +3.1% after beating 1Q estimates and reaffirming 05 outlook.
IPXL -17.3% after missing 2Q estimates.
BCO -17.3% after reporting strong 2Q results, but saying they may revise them lower due to unpaid customs duties and value-added taxes.
ALO -14.6% after beating 2Q estimates, but lowering 04 outlook.
SFCC -9.8% after announcing it intends to offer $100 million in convertible senior notes due 2024.
CKFR -8.7% after beating 04 estimates, but weaker 05 outlook.
NTLI -7.2% after missing 2Q revenue estimates.
Economic Data
Factory Orders for June rose .7% versus estimates of a .5% rise and a .4% increase in May.
ISM Non-Manufacturing for July came in at 64.8 versus estimates of 61.5 and a reading of 59.9 in June.
Recommendations
VSH and CIEN cut to Underweight at JP Morgan. MOTV rated Overweight at JP Morgan. OI raised to Overweight at JP Morgan. CAT raised to Buy at UBS, target $85. HON cut to Reduce at UBS, target $33. GGB raised to Buy at Deutsche Bank, target $19. DVA raised to Overweight at Morgan Stanley, target $33. CLRK rated Sector Outperform at CIBC, target $15. ACDO raised to Buy at Bank of America, target $34. EELN rated Outperform at Thomas Weisel. KWK cut to Underperform at Raymond James. Goldman Sachs reiterated Outperform on IACI, PFGC, KO and COH. Goldman reiterated Underperform on MHX. Citi SmithBarney upgraded AMAT to Buy, target $21. Citi reiterated Buy on THC, target $17.50. Citi reiterated Buy on PCG, target $32. Citi reiterated Buy on JCP, target $50. Citi reiterated Buy on TYC, target $40. Citi reiterated Buy on HNT, target $30. Citi reiterated Buy on L, target $11. Citi reiterated Buy on MAS, target $37. Citi reiterated Buy on CKFR, target $39.
Mid-day News
U.S. stocks are modestly lower mid-day as oil prices remain high and some earnings reports disappointed investors. Atlantic Coast Airlines changed its name to FLYi Inc. today and began trading under the new ticker FLYI, Bloomberg reported. The U.S. FBI is monitoring suspected members of al-Qaeda and two allied terrorist groups in the New York City area, the New York Daily News reported. Microsoft Chairman Bill Gates is ready to make an offer to buy Nintendo if there is any sign the Japanese game console maker is up for sale, WirtschaftsWoche reported. Illinois started a program to invest $50 million of taxpayer money in venture capital funds to help create jobs and make the state more attractive to entrepreneurs, the Chicago Tribune reported. Tyson Foods will begin a $75 million ad campaign on Aug. 30 to brand itself as a protein provider instead of just a chicken company, the NY Times reported. A federal judge has ordered First Data to give the IRS information about certain transactions, the Denver Post reported. Doctors at two of the top three U.S. heart centers aren't using Boston Scientific Taxus stent, the world's most widely used device for propping open arteries, for most patients because they believe the risk of complications in implanting them is too high, Bloomberg reported. President Bush will be re-elected in November, according to five computer models that use economic performance to forecast the vote, Bloomberg reported. Eli Lilly said U.S. regulators cleared its Cymbalta drug for depression, a medicine that analysts estimate may reach $1.5 billion to $2 billion in annual sales, Bloomberg said. The ISM Non-Manufacturing Index, which accounts for 85% of the U.S. economy, expanded at a faster-than-expected pace in July, suggesting the expansion may be reaccelerating, Bloomberg reported. Saudi Aramco, the world's largest oil company, has started production at two new fields three months ahead of schedule and may delay the shutdown of older wells to help meet increased oil demand, Bloomberg said. Federal regulators approved TiVo's application to let viewers send recorded tv shows via the Internet to other people, a plan opposed by Hollywood, Bloomberg said.
BOTTOM LINE: The Portfolio is slightly higher today as my falling healthcare and retail shorts are more than offsetting declines in my biotech and gaming longs. I have not traded and the Portfolio is still 25% net long. The tone of the market is negative today as companies reporting minor disappointments are severely punished and the advance/decline line is weak. However, it is good to see the techs stabilizing and interest rates continuing to fall. As well, the Put/Call and Arms readings are spiking, which is a positive. Finally, economic data continue to show that the 2Q slowdown was only temporary and 3Q growth should exceed 4%. I continue to believe that overall fundamentals are very good and the current weakness in U.S. equities is a direct result of terrorism fears and worries over the outcome of the election. These fears and worries should reach their peaks within the next 2 months.
NASDAQ 1,846.99 -.67%
Leading Sectors
Tobacco +.59%
Computer Boxmakers +.35%
Software +.22%
Lagging Sectors
Oil Service -1.77%
Airlines -2.15%
Fashion -2.65%
Other
Crude Oil 43.88 -.61%
Natural Gas 5.74 -1.31%
Gold 395.50 -.25%
Base Metals 110.46 -.63%
U.S. Dollar 89.63 +.06%
10-Yr. T-note Yield 4.39% -.66%
VIX 16.33 +1.75%
Put/Call .85 +16.44%
NYSE Arms 1.81 +14.56%
Market Movers
IACI -16.5% after missing 2Q revenue estimates, lowering 04 guidance and multiple downgrades.
VCLK -26.0% meeting 2Q forecast, announcing $29M Pricerunner acquisition and giving weaker 3Q/04 guidance.
SGP -5.4% after announcing plans to sell $1.25 billion of convertible preferred stock and use the proceeds to pay legal settlements.
VSAT +12.3% after beating 1Q revenue estimates and Sanders Morris Harris upgrade to Strong Buy.
PDLI +9.1% after better-than-expected 2Q and Lazard Freres upgrade to Buy.
UTHR +4.7% on continued optimism over 2Q report.
RL +3.1% after beating 1Q estimates and reaffirming 05 outlook.
IPXL -17.3% after missing 2Q estimates.
BCO -17.3% after reporting strong 2Q results, but saying they may revise them lower due to unpaid customs duties and value-added taxes.
ALO -14.6% after beating 2Q estimates, but lowering 04 outlook.
SFCC -9.8% after announcing it intends to offer $100 million in convertible senior notes due 2024.
CKFR -8.7% after beating 04 estimates, but weaker 05 outlook.
NTLI -7.2% after missing 2Q revenue estimates.
Economic Data
Factory Orders for June rose .7% versus estimates of a .5% rise and a .4% increase in May.
ISM Non-Manufacturing for July came in at 64.8 versus estimates of 61.5 and a reading of 59.9 in June.
Recommendations
VSH and CIEN cut to Underweight at JP Morgan. MOTV rated Overweight at JP Morgan. OI raised to Overweight at JP Morgan. CAT raised to Buy at UBS, target $85. HON cut to Reduce at UBS, target $33. GGB raised to Buy at Deutsche Bank, target $19. DVA raised to Overweight at Morgan Stanley, target $33. CLRK rated Sector Outperform at CIBC, target $15. ACDO raised to Buy at Bank of America, target $34. EELN rated Outperform at Thomas Weisel. KWK cut to Underperform at Raymond James. Goldman Sachs reiterated Outperform on IACI, PFGC, KO and COH. Goldman reiterated Underperform on MHX. Citi SmithBarney upgraded AMAT to Buy, target $21. Citi reiterated Buy on THC, target $17.50. Citi reiterated Buy on PCG, target $32. Citi reiterated Buy on JCP, target $50. Citi reiterated Buy on TYC, target $40. Citi reiterated Buy on HNT, target $30. Citi reiterated Buy on L, target $11. Citi reiterated Buy on MAS, target $37. Citi reiterated Buy on CKFR, target $39.
Mid-day News
U.S. stocks are modestly lower mid-day as oil prices remain high and some earnings reports disappointed investors. Atlantic Coast Airlines changed its name to FLYi Inc. today and began trading under the new ticker FLYI, Bloomberg reported. The U.S. FBI is monitoring suspected members of al-Qaeda and two allied terrorist groups in the New York City area, the New York Daily News reported. Microsoft Chairman Bill Gates is ready to make an offer to buy Nintendo if there is any sign the Japanese game console maker is up for sale, WirtschaftsWoche reported. Illinois started a program to invest $50 million of taxpayer money in venture capital funds to help create jobs and make the state more attractive to entrepreneurs, the Chicago Tribune reported. Tyson Foods will begin a $75 million ad campaign on Aug. 30 to brand itself as a protein provider instead of just a chicken company, the NY Times reported. A federal judge has ordered First Data to give the IRS information about certain transactions, the Denver Post reported. Doctors at two of the top three U.S. heart centers aren't using Boston Scientific Taxus stent, the world's most widely used device for propping open arteries, for most patients because they believe the risk of complications in implanting them is too high, Bloomberg reported. President Bush will be re-elected in November, according to five computer models that use economic performance to forecast the vote, Bloomberg reported. Eli Lilly said U.S. regulators cleared its Cymbalta drug for depression, a medicine that analysts estimate may reach $1.5 billion to $2 billion in annual sales, Bloomberg said. The ISM Non-Manufacturing Index, which accounts for 85% of the U.S. economy, expanded at a faster-than-expected pace in July, suggesting the expansion may be reaccelerating, Bloomberg reported. Saudi Aramco, the world's largest oil company, has started production at two new fields three months ahead of schedule and may delay the shutdown of older wells to help meet increased oil demand, Bloomberg said. Federal regulators approved TiVo's application to let viewers send recorded tv shows via the Internet to other people, a plan opposed by Hollywood, Bloomberg said.
BOTTOM LINE: The Portfolio is slightly higher today as my falling healthcare and retail shorts are more than offsetting declines in my biotech and gaming longs. I have not traded and the Portfolio is still 25% net long. The tone of the market is negative today as companies reporting minor disappointments are severely punished and the advance/decline line is weak. However, it is good to see the techs stabilizing and interest rates continuing to fall. As well, the Put/Call and Arms readings are spiking, which is a positive. Finally, economic data continue to show that the 2Q slowdown was only temporary and 3Q growth should exceed 4%. I continue to believe that overall fundamentals are very good and the current weakness in U.S. equities is a direct result of terrorism fears and worries over the outcome of the election. These fears and worries should reach their peaks within the next 2 months.
Wednesday Watch
Earnings of Note
Company/Estimate
CI/1.25
CVS/.54
HIG/1.57
ICOS/-.93
IPMT/.30
RL/.11
TRK/.91
TOM/-.10
UVN/.19
Splits
None of note.
Economic Data
Factory Orders for June estimated +.5% versus -.3% in May.
ISM Non-Manufacturing for July estimated at 61.5 versus 59.9 in June.
Recommendations
Goldman Sachs reiterated Outperform on CZN, TYC and PCG. Goldman reiterated Underperform on VICL, CIEN and PPS.
Late-Night News
Asian indices are lower on continuing fears that high energy prices will damage growth in the region. Korea Exchange Bank will open a branch in Iraq for more than 3,000 South Korea troops who will be stationed in northern Iraq, Korea Economic Daily said. China Construction Bank's lending growth slowed in the first half of this year after it cut loans to the real estate industry, International Finance News said. Caterpillar workers will strike this week if negotiations don't lead to a new contract, the AP reported.
Late-Night Trading
Asian Indices are -1.25% to -.50% on average.
S&P 500 indicated -.37%.
NASDAQ 100 indicated -.40%
BOTTOM LINE: I expect U.S. stocks to open modestly lower in the morning on weakness in Asia and rising oil prices. My short-term trading indicators are giving sell signals. The Portfolio is 25% net long heading into tomorrow.
Company/Estimate
CI/1.25
CVS/.54
HIG/1.57
ICOS/-.93
IPMT/.30
RL/.11
TRK/.91
TOM/-.10
UVN/.19
Splits
None of note.
Economic Data
Factory Orders for June estimated +.5% versus -.3% in May.
ISM Non-Manufacturing for July estimated at 61.5 versus 59.9 in June.
Recommendations
Goldman Sachs reiterated Outperform on CZN, TYC and PCG. Goldman reiterated Underperform on VICL, CIEN and PPS.
Late-Night News
Asian indices are lower on continuing fears that high energy prices will damage growth in the region. Korea Exchange Bank will open a branch in Iraq for more than 3,000 South Korea troops who will be stationed in northern Iraq, Korea Economic Daily said. China Construction Bank's lending growth slowed in the first half of this year after it cut loans to the real estate industry, International Finance News said. Caterpillar workers will strike this week if negotiations don't lead to a new contract, the AP reported.
Late-Night Trading
Asian Indices are -1.25% to -.50% on average.
S&P 500 indicated -.37%.
NASDAQ 100 indicated -.40%
BOTTOM LINE: I expect U.S. stocks to open modestly lower in the morning on weakness in Asia and rising oil prices. My short-term trading indicators are giving sell signals. The Portfolio is 25% net long heading into tomorrow.
Tuesday, August 03, 2004
Tuesday Close
S&P 500 1,099.69 -.63%
NASDAQ 1,859.42 -1.73%
Leading Sectors
Energy +1.11%
Oil Service +.60%
Fashion +.43%
Lagging Sectors
Networking -2.22%
Airlines -2.32%
Semis -3.77%
Other
Crude Oil 44.10 -.09%
Natural Gas 5.83 -.01%
Gold 396.50 unch.
Base Metals 111.16 -.30%
U.S. Dollar 89.58 -.19%
10-Yr. T-note Yield 4.43% -.53%
VIX 16.03 +4.29%
Put/Call .73 -5.19%
NYSE Arms 1.58 +71.74%
After-hours Movers
GSLI +11.27% after reporting strong 2Q earnings.
IACI -13.8% after missing 2Q revenue estimates and lowering 04 guidance.
JILL -7.68% after meeting 2Q estimates, but giving no forward guidance.
CEPH -4.6% after meeting 2Q forecast, but lowering 04 outlook.
VCLK -24.4% after meeting 2Q forecast, announcing $29M Pricerunner acquisition and giving weaker 3Q/04 guidance.
Recommendations
Goldman Sachs reiterated Outperform on WAG, IR and ETN. Merrill Lynch named KMG Focus 1 stock of the week.
After-hours News
U.S. stocks finished lower today on continuing weakness in the technology sector, terrorism fears and weaker economic data. After the close, New York Attorney General Spitzer is expected to file a lawsuit against Express Scripts tomorrow, the Wall Street Journal reported. Bristol-Myers Squibb agreed to pay more than $75 million to settle U.S. SEC charges that the company used improper accounting to inflate sales, the Wall Street Journal reported. OPEC's crude oil output jumped to a 25-year high last month, raising concern that producers have little cushion left to cope with supply disruptions and check a rally that pushed prices to a record, Bloomberg said. IAC/InterActiveCorp, the Internet commerce and tv-shopping company controlled by Barry Diller, said second-quarter profit dropped 24% as sales and marketing expenses rose, Bloomberg said. Prudential Financial said quarterly profit more than doubled as income from the company's retirement savings and annuities units rose and it made money from investments, Bloomberg reported.
BOTTOM LINE: The Portfolio finished lower today as most of my longs declined, more than offsetting gains in my falling shorts. I exited some longs in the afternoon and added a few shorts, bringing the Portfolio's market exposure to 25% net long. One of my new shorts is MBT and I am using a $120.25 stop-loss on this position. The weakness I expected later in the week seems to have arrived early. I continue to expect U.S. stocks to sees new lows for the year within the next few weeks ahead of another Fed rate hike, the Olympics and the Republican convention. Longer-term investors should use any extreme weakness during this time period to add to favorite long positions.
NASDAQ 1,859.42 -1.73%
Leading Sectors
Energy +1.11%
Oil Service +.60%
Fashion +.43%
Lagging Sectors
Networking -2.22%
Airlines -2.32%
Semis -3.77%
Other
Crude Oil 44.10 -.09%
Natural Gas 5.83 -.01%
Gold 396.50 unch.
Base Metals 111.16 -.30%
U.S. Dollar 89.58 -.19%
10-Yr. T-note Yield 4.43% -.53%
VIX 16.03 +4.29%
Put/Call .73 -5.19%
NYSE Arms 1.58 +71.74%
After-hours Movers
GSLI +11.27% after reporting strong 2Q earnings.
IACI -13.8% after missing 2Q revenue estimates and lowering 04 guidance.
JILL -7.68% after meeting 2Q estimates, but giving no forward guidance.
CEPH -4.6% after meeting 2Q forecast, but lowering 04 outlook.
VCLK -24.4% after meeting 2Q forecast, announcing $29M Pricerunner acquisition and giving weaker 3Q/04 guidance.
Recommendations
Goldman Sachs reiterated Outperform on WAG, IR and ETN. Merrill Lynch named KMG Focus 1 stock of the week.
After-hours News
U.S. stocks finished lower today on continuing weakness in the technology sector, terrorism fears and weaker economic data. After the close, New York Attorney General Spitzer is expected to file a lawsuit against Express Scripts tomorrow, the Wall Street Journal reported. Bristol-Myers Squibb agreed to pay more than $75 million to settle U.S. SEC charges that the company used improper accounting to inflate sales, the Wall Street Journal reported. OPEC's crude oil output jumped to a 25-year high last month, raising concern that producers have little cushion left to cope with supply disruptions and check a rally that pushed prices to a record, Bloomberg said. IAC/InterActiveCorp, the Internet commerce and tv-shopping company controlled by Barry Diller, said second-quarter profit dropped 24% as sales and marketing expenses rose, Bloomberg said. Prudential Financial said quarterly profit more than doubled as income from the company's retirement savings and annuities units rose and it made money from investments, Bloomberg reported.
BOTTOM LINE: The Portfolio finished lower today as most of my longs declined, more than offsetting gains in my falling shorts. I exited some longs in the afternoon and added a few shorts, bringing the Portfolio's market exposure to 25% net long. One of my new shorts is MBT and I am using a $120.25 stop-loss on this position. The weakness I expected later in the week seems to have arrived early. I continue to expect U.S. stocks to sees new lows for the year within the next few weeks ahead of another Fed rate hike, the Olympics and the Republican convention. Longer-term investors should use any extreme weakness during this time period to add to favorite long positions.
Mid-day Update
S&P 500 1,105.09 -.14%
NASDAQ 1,877.83 -.75%
Leading Sectors
Energy +1.11%
Telecom +.81%
Oil Service +.76%
Lagging Sectors
Hospitals -1.11%
Retail -1.38%
Semis -2.47%
Other
Crude Oil 43.80 -.16%
Natural Gas 5.84 +.46%
Gold 394.20 -.05%
Base Metals 110.83 -.59%
U.S. Dollar 89.58 -.18%
10-Yr. T-note Yield 4.42% -.44%
VIX 15.34 -.20%
Put/Call .66 -14.29%
NYSE Arms 1.18 +28.26%
Market Movers
LGND -28.2% after missing 2Q estimates and lowering 04 outlook.
VSH -12.1% after missing 2Q estimates and lowering 3Q guidance.
UTHR +14.1% after substantially beating 2Q estimates.
AMED +13.7% after beating 2Q estimates and boosting 04 guidance.
SEM +14.0% after Legg Mason upgrade to Buy.
MNT +9.4% after beating 1Q estimates.
WPI +11.4% after beating 2Q estimates and raising 3Q guidance.
EDMC +7.0% on Legg Mason upgrade to Buy.
MVSN +7.1% after meeting 2Q estimates and raising 3Q revenue guidance.
PCLN -13.5% after meeting 2Q estimates and lowering 3Q forecast.
NTES -7.0% after disappointing 2Q and ThinkEquity downgrade to Source of Funds.
DVA -7.6% after missing 2Q estimates and lowering 04 outlook.
MICC -12.7% after disappointing 2Q.
Economic Data
Personal Income for June rose .2% versus estimates of a .3% rise and an increase of .6% in May.
Personal Spending for June fell .7% versus estimates of a .1% decline and a 1.0% increase in May.
PCE Deflator(YoY) for June rose 2.5% versus estimates of a 2.6% rise and a 2.5% increase in May.
PCE Core(YoY) for June rose 1.5% versus estimates of a 1.7% increase and a 1.6% rise in May.
Recommendations
Goldman Sachs reiterated Outperform on AMGN, IR, TYC, GILD, BSX, MDT, INTC, AMT, AMX, AGN and PXD. Goldman rated RAI Underperform. Goldman reiterated Underperform on UCL, SGP, PRXL and KZL. Citi SmithBarney said to Buy L, target $11. Citi reiterated Buy on CSCO, target $34. Citi upgraded CIT to Buy, target $44. Citi reiterated Buy on CAT, target $106. Citi reiterated Buy on JCP, target $50. Citi reiterated Buy on AMT, target $19. Citi reiterated Buy on GILD, target $75. Citi reiterated Buy on BEAS, target $11.50. Citi reiterated Sell on SPW, target $35. Citi reiterated Buy on FITB, target $65. Citi reiterated Buy on BCII, target $31. LIN raised to Overweight at JP Morgan. MKC cut to Underweight at Prudential, target $31. JTX rated Outperform at CSFB, target $22. EDMC raised to Buy at Legg Mason, target $35. SEM raised to Buy at Legg Mason, target $20.
Mid-day News
U.S. stocks are modestly lower mid-day on declines in technology shares and a weaker-than expected consumer spending report. The top three Bell phone companies are cutting consumer prices to levels that don't cover costs, while rivals who must pay the Bells for network access want regulators to look into what they say may be monopolistic behavior, the Wall Street Journal reported. A credible member of al-Qaeda told U.K. interrogators the group has plans for an attack in September inside the U.S., two months before the presidential election, Newsday reported. Alex, the first named storm of the 04 Atlantic season, became a hurricane early today, as it advanced off the coast of North Carolina, Bloomberg said. California homebuilders may obtain the most new-home permits since 1989 by the end of this year as they try to keep up with the growing population, the LA Times said. Tyco, the world's largest maker of electric connectors and security systems, said fiscal third-quarter profit rose 63% as it cut costs and sold more components. Tyco also raised its 2004 forecast, Bloomberg said. Wachovia said the SEC may recommend enforcement action against the company and some of its current former executives related to stock purchases, Bloomberg reported. The Core PCE, a measure of inflation watched by the Fed, was revised down for May and was unchanged in June, signaling a pause in recent price trends, Bloomberg said. Fidelity Brokerage agreed to pay $2 million to settle allegations that the company falsified or destroyed documents before regulatory inspections, Bloomberg reported. Crude oil futures retreated from a record in New York after a Saudi Arabian official said the country can boost production by 500,000 barrels a day to 10 million barrels a day immediately, and by more if needed, Bloomberg said. Pfizer said it is suing five Internet pharmacies and trying to seize the domain names of more than two dozen others to stop the sale of counterfeit Viagra, Bloomberg said.
BOTTOM LINE: The Portfolio is slightly lower today as weakness in my semi-equipment longs more than offsets my declining retail shorts. I have not traded today and the Portfolio is still 100% net long. I believe the weakness in personal spending for June was temporary and is already rebounding. Historically wet weather and the spike in home-buying during 2Q likely curtailed spending in June. I expect U.S. stocks to rise modestly into the close on stabilizing energy prices and falling interest rates.
NASDAQ 1,877.83 -.75%
Leading Sectors
Energy +1.11%
Telecom +.81%
Oil Service +.76%
Lagging Sectors
Hospitals -1.11%
Retail -1.38%
Semis -2.47%
Other
Crude Oil 43.80 -.16%
Natural Gas 5.84 +.46%
Gold 394.20 -.05%
Base Metals 110.83 -.59%
U.S. Dollar 89.58 -.18%
10-Yr. T-note Yield 4.42% -.44%
VIX 15.34 -.20%
Put/Call .66 -14.29%
NYSE Arms 1.18 +28.26%
Market Movers
LGND -28.2% after missing 2Q estimates and lowering 04 outlook.
VSH -12.1% after missing 2Q estimates and lowering 3Q guidance.
UTHR +14.1% after substantially beating 2Q estimates.
AMED +13.7% after beating 2Q estimates and boosting 04 guidance.
SEM +14.0% after Legg Mason upgrade to Buy.
MNT +9.4% after beating 1Q estimates.
WPI +11.4% after beating 2Q estimates and raising 3Q guidance.
EDMC +7.0% on Legg Mason upgrade to Buy.
MVSN +7.1% after meeting 2Q estimates and raising 3Q revenue guidance.
PCLN -13.5% after meeting 2Q estimates and lowering 3Q forecast.
NTES -7.0% after disappointing 2Q and ThinkEquity downgrade to Source of Funds.
DVA -7.6% after missing 2Q estimates and lowering 04 outlook.
MICC -12.7% after disappointing 2Q.
Economic Data
Personal Income for June rose .2% versus estimates of a .3% rise and an increase of .6% in May.
Personal Spending for June fell .7% versus estimates of a .1% decline and a 1.0% increase in May.
PCE Deflator(YoY) for June rose 2.5% versus estimates of a 2.6% rise and a 2.5% increase in May.
PCE Core(YoY) for June rose 1.5% versus estimates of a 1.7% increase and a 1.6% rise in May.
Recommendations
Goldman Sachs reiterated Outperform on AMGN, IR, TYC, GILD, BSX, MDT, INTC, AMT, AMX, AGN and PXD. Goldman rated RAI Underperform. Goldman reiterated Underperform on UCL, SGP, PRXL and KZL. Citi SmithBarney said to Buy L, target $11. Citi reiterated Buy on CSCO, target $34. Citi upgraded CIT to Buy, target $44. Citi reiterated Buy on CAT, target $106. Citi reiterated Buy on JCP, target $50. Citi reiterated Buy on AMT, target $19. Citi reiterated Buy on GILD, target $75. Citi reiterated Buy on BEAS, target $11.50. Citi reiterated Sell on SPW, target $35. Citi reiterated Buy on FITB, target $65. Citi reiterated Buy on BCII, target $31. LIN raised to Overweight at JP Morgan. MKC cut to Underweight at Prudential, target $31. JTX rated Outperform at CSFB, target $22. EDMC raised to Buy at Legg Mason, target $35. SEM raised to Buy at Legg Mason, target $20.
Mid-day News
U.S. stocks are modestly lower mid-day on declines in technology shares and a weaker-than expected consumer spending report. The top three Bell phone companies are cutting consumer prices to levels that don't cover costs, while rivals who must pay the Bells for network access want regulators to look into what they say may be monopolistic behavior, the Wall Street Journal reported. A credible member of al-Qaeda told U.K. interrogators the group has plans for an attack in September inside the U.S., two months before the presidential election, Newsday reported. Alex, the first named storm of the 04 Atlantic season, became a hurricane early today, as it advanced off the coast of North Carolina, Bloomberg said. California homebuilders may obtain the most new-home permits since 1989 by the end of this year as they try to keep up with the growing population, the LA Times said. Tyco, the world's largest maker of electric connectors and security systems, said fiscal third-quarter profit rose 63% as it cut costs and sold more components. Tyco also raised its 2004 forecast, Bloomberg said. Wachovia said the SEC may recommend enforcement action against the company and some of its current former executives related to stock purchases, Bloomberg reported. The Core PCE, a measure of inflation watched by the Fed, was revised down for May and was unchanged in June, signaling a pause in recent price trends, Bloomberg said. Fidelity Brokerage agreed to pay $2 million to settle allegations that the company falsified or destroyed documents before regulatory inspections, Bloomberg reported. Crude oil futures retreated from a record in New York after a Saudi Arabian official said the country can boost production by 500,000 barrels a day to 10 million barrels a day immediately, and by more if needed, Bloomberg said. Pfizer said it is suing five Internet pharmacies and trying to seize the domain names of more than two dozen others to stop the sale of counterfeit Viagra, Bloomberg said.
BOTTOM LINE: The Portfolio is slightly lower today as weakness in my semi-equipment longs more than offsets my declining retail shorts. I have not traded today and the Portfolio is still 100% net long. I believe the weakness in personal spending for June was temporary and is already rebounding. Historically wet weather and the spike in home-buying during 2Q likely curtailed spending in June. I expect U.S. stocks to rise modestly into the close on stabilizing energy prices and falling interest rates.
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