S&P 500 1,070.76 -.92%
NASDAQ 1,797.44 -1.33%
Leading Sectors
Utilities +1.07%
Homebuilders +.90%
Banks -.22%
Lagging Sectors
Iron/Steel -2.23%
Semis -2.66%
Fashion -2.67%
Other
Crude Oil 44.48 +.16%
Natural Gas 5.65 -1.09%
Gold 402.40 +1.98%
Base Metals 108.60 -1.28%
U.S. Dollar 88.31 -1.48%
10-Yr. T-note Yield 4.23% -3.88%
VIX 18.94 +3.38%
Put/Call 1.51 +93.59%
NYSE Arms 2.84 +.35%
Market Movers
NVT +15.6% on strong demand for its IPO.
NVDA -31.5% after missing 2Q estimates substantially and multiple downgrades.
BSX -5.6% after the FDA said it may broaden a probe of its products.
DOVP +21.85% after saying it may receive as much as $455 million from Merck for the right to experimental drugs for depression and other diseases.
PNRA +5.6% after Piper Jaffray upgrade to Market Perform.
DTSI -24.2% after disappointing 2Q results.
VSTA -25.9% after missing 2Q estimates, lowering 04 outlook and multiple downgrades.
GB -28.6% after missing 2Q forecast, lowering 04 guidance and multiple downgrades.
BCSI -31.9% after lowering 1Q forecast and downgrade by ThinkEquity to Accumulate.
Economic Data
Unemployment for July was 5.5% versus estimates of 5.6% and 5.6% in June.
Change in Non-farm Payrolls for July was 32K versus estimates of 240K and a downwardly revised 78K in June.
Change in Manufacturing Payrolls for July was 10K versus estimates of 10K and an upwardly revised -1K in June.
Recommendations
Goldman Sachs reiterated Outperform on CLX, ADP, WAG, STZ, UNH, DTV, BSX and AMLN. Goldman reiterated Underperform on DAL. Citi SmithBarney rated WYY Buy, target $73. Citi rated STT Buy, target $57. AMX raised to Buy at Deutsche Bank, target $40. BLX raised to Buy at Deutsche Bank, target $18.55. VLO raised to Buy at Deutsche Bank, target $80. PCO raised to Buy at Deutsche Bank, target $40. GB cut to Underweight at Morgan Stanley. RDEN raised to Overweight at JP Morgan. QLTI raised to Strong Buy at Raymond James, target $24. SONSE raised to Strong Buy at Raymond James, target $7.50.
Mid-day News
U.S. stocks are lower mid-day after a much weaker-than-expected jobs report and continuing worries over high energy prices. A study of about 1,800 women in Mexico found the risk of developing breast cancer was more than two times greater in those that had diets with high carbohydrate intake, the AP reported. Talk-show host Oprah Winfrey signed a three-year contract renewal yesterday that will keep her syndicated show on the air through the 2010-2011 tv season, the Chicago Sun-Times said. OPEC raised production to 30.02 million barrels a day in July, its highest in 25 years, according to Middle East Economic Survey estimates. The Moscow Arbitration Court ruled that the government's plan to seize the main oil unit of OAO Yukos Oil is illegal, Interfax reported. Janus Capital intends to start relying more on brokers to sell its mutual fund portfolios, marking a shift in the company's sales strategy, Denver's Rocky Mountain News reported. Bristol-Myers Squibb is closing a manufacturing plant in Syracuse, NY, as it streamlines operations worldwide to save money, Bloomberg reported. Shares of Barclays Plc, Britain's third-largest bank, surged as much as 11% after a report the company may get a bid from Citigroup, Bloomberg reported. Shares of MCI rose as much as 20% in early trading after the company said it will pay a .40 quarterly dividend to distribute cash to shareholders, Bloomberg said. DaimlerChrysler may run out of engines for its diesel-powered Jeep Liberty sport-utility vehicle based on interest the light truck is generating among prospective buyers, Bloomberg said. U.S. Treasury Notes soared after a report showed the economy added fewer jobs than forecast for a second straight month, raising speculation an economic slowdown in more than temporary, Bloomberg said. However, the U.S. unemployment rate fell to 5.5%, better than expectations of 5.6%, Bloomberg reported.
BOTTOM LINE: The Portfolio is higher today as my steel and healthcare shorts are dropping substantially, more than offsetting losses in my biotech and gaming longs. I have not traded today and the Portfolio is still 50% net short. Anti-business political rhetoric and terrorism fears are resulting in a loss of confidence by executives. Thus, corporations are hiring fewer people and spending less. I continue to believe this weakness is temporary and economic growth will accelerate in the 4th quarter. I expect stocks to drift modestly lower into the close as buyers fail to materialize heading into a weekend with oil near record levels. However, with interest rates plunging, the Arms and Put/Call readings at very high levels and the VIX rising, a rally will likely materialize on Monday and follow-through on Tuesday with the Fed rate hike. I expect the Fed to raise rates 25 basis points and to make comments that they will take a "wait and see" approach with respect to further rate hikes. After Tuesday's rate increase, I expect the Fed to remain on hold at least through the October meeting.
Friday, August 06, 2004
Friday Watch
Earnings of Note
Company/Estimate
BRK/A/844.50
MXIM/.36
PWR/-.04
Splits
None of note.
Economic Data
Unemployment Rate for July estimated at 5.6% versus 5.6% in June.
Change in Non-farm Payrolls for July estimated at 240K versus 112K in June.
Change in Manufacturing Payrolls for July estimated at 10K versus -11K in June.
Consumer Credit for June estimated at $4.0B versus $8.2B in May.
Recommendations
Goldman Sachs reiterated Outperform on KO, DVN and AL. Goldman reiterated Attractive view of lodging sector. Shares of PTEN, the No. 2 provider of onshore-drilling services to oil-and-gas producers, are expected to rise on increased demand for drilling gear, Business Week reported.
Late-Night News
Asian indices are mostly lower on worries over declines in U.S. shares and higher oil prices. A31 Action Coalition, whose members include self-described anarchists, has called for a nationwide day of non-violent civil disobedience on Aug. 31 during the Republican Convention in midtown Manhattan, the NY Times reported. NYSE seat owners have requested that the exchange buy back more than a quarter of its seats to prevent their prices from declining further, Dow Jones reported. Gap Inc. wants to start a chain that sells moderately priced clothes aimed at women aged 35-50, Business Week reported. Krispy Kreme doesn't write down the value of franchises it buys back, Business Week reported. BP Plc shut a gasoline production unit at its Texas City refinery in the U.S. after a fire, Reuters reported. The U.S. government said North Korea is developing ballistic missile systems designed to carry nuclear warheads and having them tested in Iran, the AP reported. Electronic Data Systems gained a $34 million contract with New Zealand's tax department to replace and maintain computer equipment, the Dominion Post reported. Google is being investigated by California's Department of Corporations for possible securities-law violations between September 2001 and June 2004, Bloomberg reported.
Late-Night Trading
Asian Indices are -.75% to -.25% on average.
S&P 500 indicated +.11%.
NASDAQ 100 indicated +.18%
BOTTOM LINE: I expect U.S. stocks to open modestly higher as the Change in Non-farm Payrolls report likely meets expectations. However, continuing worries over terrorism, politics and high energy prices will likely result in weakening stock prices later in the day. A much better-than-expected jobs report could lead to an oversold short-covering rally for a few days and a much worse-than-expected report will further fuel fears of an economic slowdown and probably send stocks lower. The Portfolio is 50% net short heading into tomorrow.
Company/Estimate
BRK/A/844.50
MXIM/.36
PWR/-.04
Splits
None of note.
Economic Data
Unemployment Rate for July estimated at 5.6% versus 5.6% in June.
Change in Non-farm Payrolls for July estimated at 240K versus 112K in June.
Change in Manufacturing Payrolls for July estimated at 10K versus -11K in June.
Consumer Credit for June estimated at $4.0B versus $8.2B in May.
Recommendations
Goldman Sachs reiterated Outperform on KO, DVN and AL. Goldman reiterated Attractive view of lodging sector. Shares of PTEN, the No. 2 provider of onshore-drilling services to oil-and-gas producers, are expected to rise on increased demand for drilling gear, Business Week reported.
Late-Night News
Asian indices are mostly lower on worries over declines in U.S. shares and higher oil prices. A31 Action Coalition, whose members include self-described anarchists, has called for a nationwide day of non-violent civil disobedience on Aug. 31 during the Republican Convention in midtown Manhattan, the NY Times reported. NYSE seat owners have requested that the exchange buy back more than a quarter of its seats to prevent their prices from declining further, Dow Jones reported. Gap Inc. wants to start a chain that sells moderately priced clothes aimed at women aged 35-50, Business Week reported. Krispy Kreme doesn't write down the value of franchises it buys back, Business Week reported. BP Plc shut a gasoline production unit at its Texas City refinery in the U.S. after a fire, Reuters reported. The U.S. government said North Korea is developing ballistic missile systems designed to carry nuclear warheads and having them tested in Iran, the AP reported. Electronic Data Systems gained a $34 million contract with New Zealand's tax department to replace and maintain computer equipment, the Dominion Post reported. Google is being investigated by California's Department of Corporations for possible securities-law violations between September 2001 and June 2004, Bloomberg reported.
Late-Night Trading
Asian Indices are -.75% to -.25% on average.
S&P 500 indicated +.11%.
NASDAQ 100 indicated +.18%
BOTTOM LINE: I expect U.S. stocks to open modestly higher as the Change in Non-farm Payrolls report likely meets expectations. However, continuing worries over terrorism, politics and high energy prices will likely result in weakening stock prices later in the day. A much better-than-expected jobs report could lead to an oversold short-covering rally for a few days and a much worse-than-expected report will further fuel fears of an economic slowdown and probably send stocks lower. The Portfolio is 50% net short heading into tomorrow.
Thursday, August 05, 2004
Thursday Close
S&P 500 1,080.70 -1.63%
NASDAQ 1,821.63 -1.80%
Leading Sectors
Gaming -.35%
Fashion -.44%
Homebuilders -.50%
Lagging Sectors
Iron/Steel -2.66%
Retail -3.17%
Airlines -3.68%
Other
Crude Oil 44.37 -.09%
Natural Gas 5.71 -.04%
Gold 395.00 +.05%
Base Metals 110.01 -.52%
U.S. Dollar 89.64 -.04%
10-Yr. T-note Yield 4.40% -.44%
VIX 18.32 +13.02%
Put/Call .78 -13.33%
NYSE Arms 2.83 +121.09%
After-hours Movers
DOVP +30.9% after saying it may receive as much as $455 million from Merck for the right to experimental drugs for depression and other diseases.
BSX -4.7% after the FDA said it may broaden a probe of its products.
DTSI -24.2% after disappointing 2Q results.
BCSI -24.2% after lowering 1Q estimates.
NVDA -22.1% after missing 2Q estimates substantially.
ATYT -5.6% on weakness from NVDA.
Recommendations
Prudential raised RL to Overweight. Goldman Sachs reiterated Outperform on PFE, GILD, DIS and AL. Goldman reiterated Underperform KPP.
After-hours News
U.S. stocks finished slightly lower today Google's IPO may be delayed be a week to the week of Aug. 16, CNBC reported. Saudi Arabia arrested one of its most wanted militants, Fares al-Zahrani, Agence France-Presse reported. Hedge funds had their first quarterly loss in two years in the three months to June 30, the Financial Times reported. Duke Energy CEO Anderson told CNBC that he sees natural gas prices around $5-$6 per million BTUs for the next couple of years, Bloomberg said. Pixar Animation Studios said second-quarter profit rose 91% as customers bought its "Finding Nemo" movie on home video. Coca-Cola overstated its volume of beverages sold for the past three years because of errors in reporting bottled-water sales in Indonesia, Bloomberg said.
BOTTOM LINE: The Portfolio finished unchanged today as my declining gaming and medical longs offset my falling Russian ADR and software shorts. A few of my medical and security longs hit stop-losses in the afternoon and I exited the positions, leaving the Portfolio 50% net short. It was a very bad day for the Bulls. Oil set new highs, the NASDAQ made new lows for the year, the advance/decline line was very poor and the Put/Call ratio fell. There were a few positives today. The Arms Index soared, the VIX is climbing, interest rates fell, the AAII % Bulls fell and initial jobless claims were better-than-expected. It finally appears that investor complacency is beginning to decline. This is a positive development and is necessary to set the stage for the very strong rally I see in the fourth quarter.
NASDAQ 1,821.63 -1.80%
Leading Sectors
Gaming -.35%
Fashion -.44%
Homebuilders -.50%
Lagging Sectors
Iron/Steel -2.66%
Retail -3.17%
Airlines -3.68%
Other
Crude Oil 44.37 -.09%
Natural Gas 5.71 -.04%
Gold 395.00 +.05%
Base Metals 110.01 -.52%
U.S. Dollar 89.64 -.04%
10-Yr. T-note Yield 4.40% -.44%
VIX 18.32 +13.02%
Put/Call .78 -13.33%
NYSE Arms 2.83 +121.09%
After-hours Movers
DOVP +30.9% after saying it may receive as much as $455 million from Merck for the right to experimental drugs for depression and other diseases.
BSX -4.7% after the FDA said it may broaden a probe of its products.
DTSI -24.2% after disappointing 2Q results.
BCSI -24.2% after lowering 1Q estimates.
NVDA -22.1% after missing 2Q estimates substantially.
ATYT -5.6% on weakness from NVDA.
Recommendations
Prudential raised RL to Overweight. Goldman Sachs reiterated Outperform on PFE, GILD, DIS and AL. Goldman reiterated Underperform KPP.
After-hours News
U.S. stocks finished slightly lower today Google's IPO may be delayed be a week to the week of Aug. 16, CNBC reported. Saudi Arabia arrested one of its most wanted militants, Fares al-Zahrani, Agence France-Presse reported. Hedge funds had their first quarterly loss in two years in the three months to June 30, the Financial Times reported. Duke Energy CEO Anderson told CNBC that he sees natural gas prices around $5-$6 per million BTUs for the next couple of years, Bloomberg said. Pixar Animation Studios said second-quarter profit rose 91% as customers bought its "Finding Nemo" movie on home video. Coca-Cola overstated its volume of beverages sold for the past three years because of errors in reporting bottled-water sales in Indonesia, Bloomberg said.
BOTTOM LINE: The Portfolio finished unchanged today as my declining gaming and medical longs offset my falling Russian ADR and software shorts. A few of my medical and security longs hit stop-losses in the afternoon and I exited the positions, leaving the Portfolio 50% net short. It was a very bad day for the Bulls. Oil set new highs, the NASDAQ made new lows for the year, the advance/decline line was very poor and the Put/Call ratio fell. There were a few positives today. The Arms Index soared, the VIX is climbing, interest rates fell, the AAII % Bulls fell and initial jobless claims were better-than-expected. It finally appears that investor complacency is beginning to decline. This is a positive development and is necessary to set the stage for the very strong rally I see in the fourth quarter.
Mid-day Update
S&P 500 1,088.04 -.96%
NASDAQ 1,834.66 -1.10%
Leading Sectors
Homebuilders +1.19%
Gaming +.16%
HMO's -.33%
Lagging Sectors
Defense -1.84%
Retail -2.42%
Airlines -2.70%
Other
Crude Oil 44.10 +2.85%
Natural Gas 5.72 +1.04%
Gold 394.10 -.15%
Base Metals 110.01 -.52%
U.S. Dollar 89.70 +.02%
10-Yr. T-note Yield 4.38% -.75%
VIX 17.13 +5.37%
Put/Call .78 -13.33%
NYSE Arms 1.55 +19.53%
Market Movers
GPS -6.6% after lowering 2Q guidance.
XMSR +4.6% after meeting 2Q estimates and boosting yearly subscriber forecast.
UNTD -20.4% after missing 2Q estimates and lowering 3Q outlook.
IST -23.6% on strong 2Q results.
KOSP +22.3% after beating 2Q estimates substantially and raising 3Q/04 outlook.
CUB +14.6% after reporting good 3Q results and raising dividend.
HANS +15.3% on strong 2Q results.
KIND +11.0% after substantially beating 2Q estimates and raising 04 outlook.
UVN +11.4% after beating 2Q estimates, reaffirming 3Q guidance and Merrill Lynch upgrade to Buy.
KYPH +12.0% after beating 2Q estimates and raising 04 outlook.
JOSB +7.8% on strong July same-store-sales report.
IPMT +7.2% after beating 2Q forecast and raising 04 guidance.
SHRP -19.6% after cutting 2Q/04 forecasts.
BWS -15.8% after cutting 2Q forecast.
EASI -11.8% after announcing retirement of CEO and Thomas Weisel downgrade to Peerperform.
WGR -8.5% on profit-taking after 2Q report.
ANN -10.1% after boosting 2Q guidance, but lowering 05 estimates.
TSO -11.6% on profit-taking after beating 2Q estimates and Oppenheimer downgrade to neutral.
TLB -7.8% after lowering 2Q outlook.
KWK -7.0% after missing 2Q estimates and multiple downgrades.
Economic Data
Initial Jobless Claims for last week were 336K versus an estimate of 340K and 347K prior week.
Continuing Claims were 2911K versus estimates of 2920K and 2946K prior.
Recommendations
Goldman Sachs reiterated Outperform on STA and CLX. INCY raised to Buy at UBS, target $9. RHAT rated Sector Underperform at CIBC. BBBB rated Outperform at CSFB. BRW rated Buy at Legg Mason, target $24. CINF rated Buy at Legg Mason, target $46. PGR rated Buy at Legg Mason, target $95. RL raised to Overweight at Prudential, target $40. CHE rated Buy at Legg Mason, target $60. TDW cut to Underperform at CSFB, target $32. WFMI rated Sell at Bank of America, target $70. UVN raised to Buy at Merrill, target $35. DOW rated Overweight at Morgan Stanley, target $48. GGC rated Underweight at Morgan Stanley. LYO rated Overweight at Morgan Stanley, target $24.
Mid-day News
U.S. stocks are lower mid-day on terror worries, violence in Iraq and rising oil prices. Steel Dynamics said a Michigan judge dismissed a lawsuit filed by General Motors, the Wall Street Journal reported. KeySpan CEO Catell told CNBC that more customers are switching to natural gas from oil primarily drove second-quarter profit, Bloomberg said. Two men were arrested early today during a raid on a mosque in Albany, NY, on suspicions that they were planning to buy shoulder-launched surface-to-air missiles, CBS reported. Comcast plans to announce it and Electronic Arts agreed to offer fantasy football to Comcast's Internet subscribers, the Philadelphia Inquirer said. Eight out of 10 Germans would choose Senator Kerry over President Bush if they were voting in the U.S. election, a poll for ARD tv found. Walt Disney is introducing a personal computer geared toward children because market research shows parents want computers with content protection against inappropriate Web sites, COO Iger told CNBC. Senator Kerry, in an advertisement run by a group of Vietnam veterans, is accused of lying about his Vietnam War record, the NY Times reported. Shiite Muslim cleric Moqtada al-Sadr called for a national uprising against the U.S. and allied military forces as a two-month cease-fire between the two sides collapsed, the NY Times said. Persian Gulf oil tanker rates to Asia fell for the eight day in 10, close to a three-month low, as an increasing supply of ships competing for cargo forced owners to lower prices, Bloomberg said. Wal-Mart said July sales at U.S. stores open at least a year rose 3.2%, below estimates of 4.0%, Bloomberg reported. President Bush signed legislation that approves spending $416 billion for U.S. defense in the next fiscal year, Bloomberg said. Crude oil futures in New York and London rose to records on concern spare production capacity isn't available to substitute for a possible disruption of shipments for OAO Yukos Oil, Russia's biggest exporter, Bloomberg reported.
BOTTOM LINE: The Portfolio is slightly higher today as my Russian ADR and software shorts are falling more than my medical and gaming longs. A few of my longs hit stop-losses this morning and I exited the positions, thus leaving the Portfolio 25% net short. Another ugly day for the Bulls as the advance/decline line is poor and almost all sectors are lower. Oil, terror and war continue to weigh on investors' minds. It is good to see the VIX, Arms and % Bulls showing less complacency, however the Put/Call ratio is falling. Investor anxiety will likely accelerate next week as Google's IPO will be a negative and the Fed hikes rates, notwithstanding worries over slowing economic growth. I expect U.S. stocks to weaken on tomorrow's jobs report even if it meets or exceeds expectations.
NASDAQ 1,834.66 -1.10%
Leading Sectors
Homebuilders +1.19%
Gaming +.16%
HMO's -.33%
Lagging Sectors
Defense -1.84%
Retail -2.42%
Airlines -2.70%
Other
Crude Oil 44.10 +2.85%
Natural Gas 5.72 +1.04%
Gold 394.10 -.15%
Base Metals 110.01 -.52%
U.S. Dollar 89.70 +.02%
10-Yr. T-note Yield 4.38% -.75%
VIX 17.13 +5.37%
Put/Call .78 -13.33%
NYSE Arms 1.55 +19.53%
Market Movers
GPS -6.6% after lowering 2Q guidance.
XMSR +4.6% after meeting 2Q estimates and boosting yearly subscriber forecast.
UNTD -20.4% after missing 2Q estimates and lowering 3Q outlook.
IST -23.6% on strong 2Q results.
KOSP +22.3% after beating 2Q estimates substantially and raising 3Q/04 outlook.
CUB +14.6% after reporting good 3Q results and raising dividend.
HANS +15.3% on strong 2Q results.
KIND +11.0% after substantially beating 2Q estimates and raising 04 outlook.
UVN +11.4% after beating 2Q estimates, reaffirming 3Q guidance and Merrill Lynch upgrade to Buy.
KYPH +12.0% after beating 2Q estimates and raising 04 outlook.
JOSB +7.8% on strong July same-store-sales report.
IPMT +7.2% after beating 2Q forecast and raising 04 guidance.
SHRP -19.6% after cutting 2Q/04 forecasts.
BWS -15.8% after cutting 2Q forecast.
EASI -11.8% after announcing retirement of CEO and Thomas Weisel downgrade to Peerperform.
WGR -8.5% on profit-taking after 2Q report.
ANN -10.1% after boosting 2Q guidance, but lowering 05 estimates.
TSO -11.6% on profit-taking after beating 2Q estimates and Oppenheimer downgrade to neutral.
TLB -7.8% after lowering 2Q outlook.
KWK -7.0% after missing 2Q estimates and multiple downgrades.
Economic Data
Initial Jobless Claims for last week were 336K versus an estimate of 340K and 347K prior week.
Continuing Claims were 2911K versus estimates of 2920K and 2946K prior.
Recommendations
Goldman Sachs reiterated Outperform on STA and CLX. INCY raised to Buy at UBS, target $9. RHAT rated Sector Underperform at CIBC. BBBB rated Outperform at CSFB. BRW rated Buy at Legg Mason, target $24. CINF rated Buy at Legg Mason, target $46. PGR rated Buy at Legg Mason, target $95. RL raised to Overweight at Prudential, target $40. CHE rated Buy at Legg Mason, target $60. TDW cut to Underperform at CSFB, target $32. WFMI rated Sell at Bank of America, target $70. UVN raised to Buy at Merrill, target $35. DOW rated Overweight at Morgan Stanley, target $48. GGC rated Underweight at Morgan Stanley. LYO rated Overweight at Morgan Stanley, target $24.
Mid-day News
U.S. stocks are lower mid-day on terror worries, violence in Iraq and rising oil prices. Steel Dynamics said a Michigan judge dismissed a lawsuit filed by General Motors, the Wall Street Journal reported. KeySpan CEO Catell told CNBC that more customers are switching to natural gas from oil primarily drove second-quarter profit, Bloomberg said. Two men were arrested early today during a raid on a mosque in Albany, NY, on suspicions that they were planning to buy shoulder-launched surface-to-air missiles, CBS reported. Comcast plans to announce it and Electronic Arts agreed to offer fantasy football to Comcast's Internet subscribers, the Philadelphia Inquirer said. Eight out of 10 Germans would choose Senator Kerry over President Bush if they were voting in the U.S. election, a poll for ARD tv found. Walt Disney is introducing a personal computer geared toward children because market research shows parents want computers with content protection against inappropriate Web sites, COO Iger told CNBC. Senator Kerry, in an advertisement run by a group of Vietnam veterans, is accused of lying about his Vietnam War record, the NY Times reported. Shiite Muslim cleric Moqtada al-Sadr called for a national uprising against the U.S. and allied military forces as a two-month cease-fire between the two sides collapsed, the NY Times said. Persian Gulf oil tanker rates to Asia fell for the eight day in 10, close to a three-month low, as an increasing supply of ships competing for cargo forced owners to lower prices, Bloomberg said. Wal-Mart said July sales at U.S. stores open at least a year rose 3.2%, below estimates of 4.0%, Bloomberg reported. President Bush signed legislation that approves spending $416 billion for U.S. defense in the next fiscal year, Bloomberg said. Crude oil futures in New York and London rose to records on concern spare production capacity isn't available to substitute for a possible disruption of shipments for OAO Yukos Oil, Russia's biggest exporter, Bloomberg reported.
BOTTOM LINE: The Portfolio is slightly higher today as my Russian ADR and software shorts are falling more than my medical and gaming longs. A few of my longs hit stop-losses this morning and I exited the positions, thus leaving the Portfolio 25% net short. Another ugly day for the Bulls as the advance/decline line is poor and almost all sectors are lower. Oil, terror and war continue to weigh on investors' minds. It is good to see the VIX, Arms and % Bulls showing less complacency, however the Put/Call ratio is falling. Investor anxiety will likely accelerate next week as Google's IPO will be a negative and the Fed hikes rates, notwithstanding worries over slowing economic growth. I expect U.S. stocks to weaken on tomorrow's jobs report even if it meets or exceeds expectations.
Thursday Watch
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.
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.
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.
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