S&P 500 1,075.79 -.30%
NASDAQ 1,782.42 -1.45%
Leading Sectors
Airlines +2.21%
Biotech +1.99%
Drugs +.98%
Lagging Sectors
Internet -3.99%
Networking -4.68%
Semis -5.16%
Other
Crude Oil 44.77 -.07%
Natural Gas 5.63 +.29%
Gold 398.40 +.13%
Base Metals 109.37 +.82%
U.S. Dollar 88.85 +.07%
10-Yr. T-note Yield 4.27% -.41%
VIX 18.04 +3.26%
Put/Call .82 -20.39%
NYSE Arms 1.30 +170.83%
After-hours Movers
MAMA +5.76% after reporting strong 2Q results.
BOBE -10.47% after missing 1Q forecast and lowering 05 outlook.
AAP -4.39% after beating 2Q estimates, lowering 3Q/4Q forecast and announcing $200M stock buyback.
Recommendations
Goldman Sachs reiterated Outperform on FD, PFE and Underperform on RA, NSM.
After-hours News
U.S. stocks finished lower today after a late-afternoon rally pushed shares well off their lows for the day. After the close, Sony Corp. is being investigated by the U.S. International Trade Commission to determine if they company's digital cameras and cellular phones violate an Ampex Corp. patent, Kydo News Service. Crude oil rose after the Energy Department said that U.S. inventories declined and Tropical Storm Bonnie caused companies to reduce oil production in the Gulf of Mexico, Bloomberg reported. The U.S. government doesn't have to pay damages for destroying a pharmaceutical plant in Sudan that allegedly supplied chemical weapons to Osama bin Laden's al-Qaeda terror network, Bloomberg reported.
BOTTOM LINE: The Portfolio finished lower today as my declining technology longs more than offset my falling Chinese and Russian ADR shorts. I added a few new longs in the afternoon, bringing the Portfolio's market exposure to 75% net long. One of my new longs is TKLC and I am using a stop-loss of $16.50 on this position. Today's action was encouraging despite the damage in the technology sector. Most stocks finished well off their daily lows and the advance/decline line improved significantly in the afternoon. As well, the Arms Index spiked and the VIX rose, which is also positive. Finally, the CRB Index finished near its lows for the day which continues to point towards at least an intermediate-term peak in inflation worries. With demand for oil decelerating from the slowing U.S. and Chinese economies and supply increasing from OPEC and others, it is only a matter of time before oil heads back towards $35/bbl. in my opinion. As terrorism fears diminish somewhat over the next couple of months, it is likely the current terror premium will fall. I expect this to begin to happen within the next 6 weeks.
Wednesday, August 11, 2004
Mid-day Update
S&P 500 1,071.13 -.73%
NASDAQ 1,771.70 -2.05%
Leading Sectors
Biotech +1.73%
Airlines +1.19%
Drugs +.95%
Lagging Sectors
Internet -4.45%
Networking -4.96%
Semis -6.28%
Other
Crude Oil 44.45 -.25%
Natural Gas 5.64 -2.61%
Gold 397.90 -1.09%
Base Metals 109.37 +.82%
U.S. Dollar 88.72 -.07%
10-Yr. T-note Yield 4.27% -.41%
VIX 18.33 +4.92%
Put/Call .85 -17.48%
NYSE Arms 1.45 +200.0%
Market Movers
CSCO -9.8% after beating 4Q estimates, giving cautious outlook and multiple downgrades.
NSM -14.9% after cutting revenues estimates for 1Q and multiple downgrades.
UTSI -13.1% after requesting a five-day extension with respect to the filing of its quarterly report and Oppenheimer downgrade to Sell.
RSTI +18.0% after beating 3Q forecasts.
ELK +9.4% after missing 4Q estimates, lowering 1Q guidance and raising 05 outlook.
CYD -20.1% after disappointing 2Q results.
ANF -11.3% after meeting 2Q estimates, lowering 3Q forecast and multiple downgrades.
EAT -7.8% after meeting 4Q estimates, lowering 1Q forecast and Legg Mason downgrade to Hold.
OSIP +5.9% on bargain-hunting after missing 3Q estimates.
*Semis and Networkers down across the board on CSCO/NSM reports.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Underperform on CL. Goldman reiterated Outperform on CSCO, DIS, COH, FD, NSM and SYMC. Citi SmithBarney cut NSM to Sell before earnings report, target $35. Citi reiterated Buy on CSCO, target $30. Citi reiterated Buy on AAP, target $50. Citi reiterated Buy on DIS, target $30. Merrill Lynch named MTD Focus 1 stock of the week. MCIP cut to Underperform at CSFB, target $11. WCG rated Buy at UBS, target $22. LSTR raised to Outperform at CSFB, target $60. UTSI cut to Sell at Oppenheimer.
Mid-day News
U.S. stocks are lower mid-day on weakness in the technology sector after disappointing comments from Cisco Systems. The U.K. approved the use of human cloning for medical research, allowing university scientists to clone embryos, Agence France-Presse reported. Donald Trump, who is seeking Chapter 11 bankruptcy protection for his hotel and casino company, wants to run gambling operations in Pennsylvania, the Philadelphia Inquirer reported. Motorola said it may have to pay an extra $500 million in tax after the U.S. IRS examined the company's payments between 1996 and 2000, Bloomberg reported. OAO Yukos Oil may soon have to cut output because cash is dangerously short after Russia froze bank accounts at the parent company over a $3.4 billion tax claim, Bloomberg said. Toys "R" Us is exploring the possible sale of its global toy business and spin-off of its Babies "R" Us chain, Bloomberg reported. The U.S.-led military coalition in Iraq said it was readying for "major assaults" on fighters backing the renegade Shiite cleric al-Sadr in the holy city of Najaf, Bloomberg said. Gold Fields, the world's fourth-largest gold producer, agreed to buy Iamgold Corp in a stock swap valued at about $2.1 billion, fending off a competing bid from Golden Star Resources to expand outside South Africa, Bloomberg reported.
BOTTOM LINE: The Portfolio is lower today as my technology longs are falling more than my Chinese and Russian ADR shorts. I exited a few semiconductor longs as they hit stop-losses and added some new Chinese ADR shorts, thus leaving the Portfolio with 50% net long market exposure. One of my new shorts is PKX and I am using a stop-loss of $36.75 on the position. While today is definitely a bad day for the Bulls, it could be worse. Most of the damage is concentrated in the technology sector. As I anticipated a few weeks ago, the CRB Index(a broad measure of commodity prices) is finally breaking down through its 200-day moving-average. Rising commodity prices have been the main source of recent inflation fears. This is a very positive development and the mainstream press is completely ignoring it in favor of negative stories on high oil prices. I continue to believe oil will break down within the next 6 weeks and head back towards $35/bbl. I expect U.S. stocks to rise modestly into the close.
NASDAQ 1,771.70 -2.05%
Leading Sectors
Biotech +1.73%
Airlines +1.19%
Drugs +.95%
Lagging Sectors
Internet -4.45%
Networking -4.96%
Semis -6.28%
Other
Crude Oil 44.45 -.25%
Natural Gas 5.64 -2.61%
Gold 397.90 -1.09%
Base Metals 109.37 +.82%
U.S. Dollar 88.72 -.07%
10-Yr. T-note Yield 4.27% -.41%
VIX 18.33 +4.92%
Put/Call .85 -17.48%
NYSE Arms 1.45 +200.0%
Market Movers
CSCO -9.8% after beating 4Q estimates, giving cautious outlook and multiple downgrades.
NSM -14.9% after cutting revenues estimates for 1Q and multiple downgrades.
UTSI -13.1% after requesting a five-day extension with respect to the filing of its quarterly report and Oppenheimer downgrade to Sell.
RSTI +18.0% after beating 3Q forecasts.
ELK +9.4% after missing 4Q estimates, lowering 1Q guidance and raising 05 outlook.
CYD -20.1% after disappointing 2Q results.
ANF -11.3% after meeting 2Q estimates, lowering 3Q forecast and multiple downgrades.
EAT -7.8% after meeting 4Q estimates, lowering 1Q forecast and Legg Mason downgrade to Hold.
OSIP +5.9% on bargain-hunting after missing 3Q estimates.
*Semis and Networkers down across the board on CSCO/NSM reports.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Underperform on CL. Goldman reiterated Outperform on CSCO, DIS, COH, FD, NSM and SYMC. Citi SmithBarney cut NSM to Sell before earnings report, target $35. Citi reiterated Buy on CSCO, target $30. Citi reiterated Buy on AAP, target $50. Citi reiterated Buy on DIS, target $30. Merrill Lynch named MTD Focus 1 stock of the week. MCIP cut to Underperform at CSFB, target $11. WCG rated Buy at UBS, target $22. LSTR raised to Outperform at CSFB, target $60. UTSI cut to Sell at Oppenheimer.
Mid-day News
U.S. stocks are lower mid-day on weakness in the technology sector after disappointing comments from Cisco Systems. The U.K. approved the use of human cloning for medical research, allowing university scientists to clone embryos, Agence France-Presse reported. Donald Trump, who is seeking Chapter 11 bankruptcy protection for his hotel and casino company, wants to run gambling operations in Pennsylvania, the Philadelphia Inquirer reported. Motorola said it may have to pay an extra $500 million in tax after the U.S. IRS examined the company's payments between 1996 and 2000, Bloomberg reported. OAO Yukos Oil may soon have to cut output because cash is dangerously short after Russia froze bank accounts at the parent company over a $3.4 billion tax claim, Bloomberg said. Toys "R" Us is exploring the possible sale of its global toy business and spin-off of its Babies "R" Us chain, Bloomberg reported. The U.S.-led military coalition in Iraq said it was readying for "major assaults" on fighters backing the renegade Shiite cleric al-Sadr in the holy city of Najaf, Bloomberg said. Gold Fields, the world's fourth-largest gold producer, agreed to buy Iamgold Corp in a stock swap valued at about $2.1 billion, fending off a competing bid from Golden Star Resources to expand outside South Africa, Bloomberg reported.
BOTTOM LINE: The Portfolio is lower today as my technology longs are falling more than my Chinese and Russian ADR shorts. I exited a few semiconductor longs as they hit stop-losses and added some new Chinese ADR shorts, thus leaving the Portfolio with 50% net long market exposure. One of my new shorts is PKX and I am using a stop-loss of $36.75 on the position. While today is definitely a bad day for the Bulls, it could be worse. Most of the damage is concentrated in the technology sector. As I anticipated a few weeks ago, the CRB Index(a broad measure of commodity prices) is finally breaking down through its 200-day moving-average. Rising commodity prices have been the main source of recent inflation fears. This is a very positive development and the mainstream press is completely ignoring it in favor of negative stories on high oil prices. I continue to believe oil will break down within the next 6 weeks and head back towards $35/bbl. I expect U.S. stocks to rise modestly into the close.
Wednesday Watch
Earnings of Note
Company/Estimate
AAP/.69
CYD/.42
FD/.46
FOX/.28
Splits
None of note.
Economic Data
Monthly Budget Statement for July estimated at -$61.8B versus -$54.2B in June.
Recommendations
Goldman Sachs reiterated Outperform on DELL.
Late-Night News
Asian indices are mixed after the U.S. Fed raised rates and Cisco Systems gave a disappointing outlook. U.S. merger and acquisition activity with France fell by 80% last year as acquisitions increased across the world, the Financial Times said. French wine production may rise by a fifth to a five-year high this year because of a larget grape harvest, adding to an excess of global supplies, Agence France-Presse said. The U.S. is considering stationing a second aircraft carrier in the Asia-Pacific region amid threats of nuclear weapons development by North Korea and potential conflict between Taiwan and China, Xinhua Financial News Service reported. Marsh & McLennan and Willis Group Holdings are being sued by a policyholder's group that argues the companies didn't properly disclose special commissions from insurers, the Wall Street Journal reported.
Late-Night Trading
Asian Indices are -.50% to +.75% on average.
S&P 500 indicated -.25%.
NASDAQ 100 indicated -.52%
BOTTOM LINE: I expect U.S. equities to open lower on weakness in networking and semiconductor stocks. I will closely monitor the market's reaction to Cisco's report to decide whether or not to decrease market exposure. The Portfolio is 100% net long heading into tomorrow.
Company/Estimate
AAP/.69
CYD/.42
FD/.46
FOX/.28
Splits
None of note.
Economic Data
Monthly Budget Statement for July estimated at -$61.8B versus -$54.2B in June.
Recommendations
Goldman Sachs reiterated Outperform on DELL.
Late-Night News
Asian indices are mixed after the U.S. Fed raised rates and Cisco Systems gave a disappointing outlook. U.S. merger and acquisition activity with France fell by 80% last year as acquisitions increased across the world, the Financial Times said. French wine production may rise by a fifth to a five-year high this year because of a larget grape harvest, adding to an excess of global supplies, Agence France-Presse said. The U.S. is considering stationing a second aircraft carrier in the Asia-Pacific region amid threats of nuclear weapons development by North Korea and potential conflict between Taiwan and China, Xinhua Financial News Service reported. Marsh & McLennan and Willis Group Holdings are being sued by a policyholder's group that argues the companies didn't properly disclose special commissions from insurers, the Wall Street Journal reported.
Late-Night Trading
Asian Indices are -.50% to +.75% on average.
S&P 500 indicated -.25%.
NASDAQ 100 indicated -.52%
BOTTOM LINE: I expect U.S. equities to open lower on weakness in networking and semiconductor stocks. I will closely monitor the market's reaction to Cisco's report to decide whether or not to decrease market exposure. The Portfolio is 100% net long heading into tomorrow.
Tuesday, August 10, 2004
Tuesday Close
S&P 500 1,079.04 +1.30%
NASDAQ 1,808.70 +1.92%
Leading Sectors
Airlines +3.34%
Iron/Steel +3.09%
Internet +2.78%
Lagging Sectors
Tobacco +.38%
Energy -.38%
Oil Service -.45%
Other
Crude Oil 44.49 -.07%
Natural Gas 5.76 -.48%
Gold 400.40 -.47%
Base Metals 108.48 +.50%
U.S. Dollar 88.75 +.41%
10-Yr. T-note Yield 4.30% +1.04%
VIX 17.44 -7.62%
Put/Call 1.03 +14.44%
NYSE Arms .48 -44.83%
After-hours Movers
CSCO -6.3% after beating 4Q estimates, but giving cautious outlook.
NSM -8.3% after cutting revenues estimates for 1Q.
ANF -7.6% after meeting 2Q estimates and lowering 3Q forecast.
UTSI -5.35% after requesting a five-day extension with respect to the filing of its quarterly report.
CSC -4.5% after meeting 1Q estimates and reaffirming 05 guidance.
Recommendations
Goldman Sachs reiterated Underperform on NFS. Goldman reiterated Outperform on FS and CFC.
After-hours News
U.S. stocks finished sharply higher today after the Fed raised rates 25 basis points and said recent economic weakness was temporary. After the close, the California Public Employees' Retirement System, the largest U.S. pension fund, posted its biggest annual return in six years on gains in its stocks, bonds and real estate holdings. Cisco Systems said fourth-quarter profit rose 41%, bolstered by surging revenue from new businesses such as Internet phone calling and security, Bloomberg said. Walt Disney said third quarter net income climbed 20%, boosted by higher revenue from its them parks and cable tv networks, Bloomberg said.
BOTTOM LINE: The Portfolio finished substantially higher today on strength in my alternative energy, security and internet longs and weakness in my Chinese ADR shorts. I did not trade in the afternoon, leaving the Portfolio 100% net long. Today was a good day for the Bulls as domestic terror news and disappointing Fed commentary couldn’t derail the rally. However, I want to see the market's reaction tomorrow to Cisco's report today before I conclude this is more than an oversold bounce.
NASDAQ 1,808.70 +1.92%
Leading Sectors
Airlines +3.34%
Iron/Steel +3.09%
Internet +2.78%
Lagging Sectors
Tobacco +.38%
Energy -.38%
Oil Service -.45%
Other
Crude Oil 44.49 -.07%
Natural Gas 5.76 -.48%
Gold 400.40 -.47%
Base Metals 108.48 +.50%
U.S. Dollar 88.75 +.41%
10-Yr. T-note Yield 4.30% +1.04%
VIX 17.44 -7.62%
Put/Call 1.03 +14.44%
NYSE Arms .48 -44.83%
After-hours Movers
CSCO -6.3% after beating 4Q estimates, but giving cautious outlook.
NSM -8.3% after cutting revenues estimates for 1Q.
ANF -7.6% after meeting 2Q estimates and lowering 3Q forecast.
UTSI -5.35% after requesting a five-day extension with respect to the filing of its quarterly report.
CSC -4.5% after meeting 1Q estimates and reaffirming 05 guidance.
Recommendations
Goldman Sachs reiterated Underperform on NFS. Goldman reiterated Outperform on FS and CFC.
After-hours News
U.S. stocks finished sharply higher today after the Fed raised rates 25 basis points and said recent economic weakness was temporary. After the close, the California Public Employees' Retirement System, the largest U.S. pension fund, posted its biggest annual return in six years on gains in its stocks, bonds and real estate holdings. Cisco Systems said fourth-quarter profit rose 41%, bolstered by surging revenue from new businesses such as Internet phone calling and security, Bloomberg said. Walt Disney said third quarter net income climbed 20%, boosted by higher revenue from its them parks and cable tv networks, Bloomberg said.
BOTTOM LINE: The Portfolio finished substantially higher today on strength in my alternative energy, security and internet longs and weakness in my Chinese ADR shorts. I did not trade in the afternoon, leaving the Portfolio 100% net long. Today was a good day for the Bulls as domestic terror news and disappointing Fed commentary couldn’t derail the rally. However, I want to see the market's reaction tomorrow to Cisco's report today before I conclude this is more than an oversold bounce.
Mid-day Update
S&P 500 1,073.48 +.78%
NASDAQ 1,794.88 +1.14%
Leading Sectors
Airlines +3.12%
I-Banks +2.0%
Networking +1.95%
Lagging Sectors
Oil Service +.25%
Tobacco unch.
Energy -.26%
Other
Crude Oil 44.45 -.87%
Natural Gas 5.91 +3.81%
Gold 402.70 -.07%
Base Metals 108.48 +.50%
U.S. Dollar 88.35 -.05%
10-Yr. T-note Yield 4.24% -.46%
VIX 17.72 -6.25%
Put/Call 1.11 +23.33%
NYSE Arms .63 -27.59%
Market Movers
DISH +6.2% after beating 2Q estimates and announcing $1B share buyback.
CEPH -8.1% after it was cleared by U.S. antitrust enforcers to complete its $515M purchase of Cima Labs and updating outlook.
ACF +16.4% after beating 4Q estimates, raising 05 forecast and Piper Jaffray upgrade to Outperform.
TASR +6.6% after winning 4 large orders for its weapons from three police departments and reiterated 3Q outlook.
SNIC +12.5% after announcing it would buy Roxio's consumer-software division to Sonic Solutions.
SOL +16.1% after beating 1Q estimates and reaffirming 2Q/05 view.
ESE +11.8% after beating 3Q estimates substantially and raising 4Q outlook.
FOSL +11.4% after beating 2Q estimates and raising 04 forecast.
PLMO +4.7% after Friedman, Billings rated it Outperform.
NDC -30.0% after missing 4Q estimates substantially and lowering 1Q outlook.
ADRX -16.6% after missing 2Q estimates.
KDE -12.8% after missing 2Q estimates.
Economic Data
Preliminary 2Q Non-farm Productivity rose 2.9% versus estimates of 2.0% and a 3.7% rise in 1Q.
Preliminary 2Q Unit Labor Costs rose 1.9% versus estimates of 2.0% and a .3% rise in 1Q.
Recommendations
STJ raised to Outperform at CSFB, target $76. DOX rated Outperform at Thomas Weisel. CMVT rated Outperform at Thomas Weisel. ET rated Overweight at Morgan Stanley, target $14.50. AMTD rated Overweight at Morgan Stanley, target $14. ISPH rated Overweight at Morgan Stanley, target $18. WCG rate Overweight at Morgan Stanley, target $20. CEPH cut to Underweight at Morgan Stanley. FCX raised to Overweight at Prudential, target $42. Goldman Sachs reiterated Outperform on FDC, AVP, AMGN, BIIB, NFX, FSH, BSX, MDT, GDT, BAX and DNA. Goldman reiterated Underperform on PSS. Goldman reiterated Attractive view of Gold sector, favorites are NEM and PDG. Citi SmithBarney reiterated Buy on URBN, target $35. Citi reiterated Buy on CHS, target $48. Citi reiterated Buy on TJX, target $27. Citi reiterated Buy on PLCE, target $30. Citi reiterated Buy on GPS, target $25. Citi reiterated Buy on BLS, target $32. Citi reiterated Buy on VIAB, target $50.
Mid-day News
U.S. stocks are higher mid-day on a reversal in oil prices and optimism over Greenspan's commentary after the rate announcement. Paul Volcker, the former Fed chairman who heads a panel investigating the corruption in the UN's former oil-for-food program in Iraq, said he will probably need a year to report his findings, the NY Times said. People who held mentally demanding jobs may be at a lower risk for developing Alzheimer's disease, the Wall Street Journal reported. Electric companies have fixed many of the problems that led to the largest blackout in U.S. history on Aug. 14, 2003, although many long-term power problems haven't been tackled, the Washington Post reported. Toy companies are selling their products in clothing stores, supermarkets and even Starbucks to boost sales and fight pressure to cut prices from discount retailers such as Wal-Mart, the NY Post said. U.S. Transportation Security Administration officials issued a directive ordering federal passenger screening for helicopter tours in New York City after officials learned that suspected al-Qaeda terrorist operatives had pictures and other information about the tours, the NY Times reported. Symantec estimates that as much as 30% of all Internet traffic is spam, CEO Thompson told CNBC. Kuwait's Supreme Petroleum Council approved a planned $7 billion development of oil fields in the north of the country, the Kuwait News Agency reported. President Bush named Representative Porter Goss, chairman of the House Intelligence Committee and a former U.S. intelligence officer, to head the CIA, Bloomberg reported. Kmart will scale back its sale of stores to Home Depot by as much as half from the plan announced in June, Bloomberg said. U.S. traffic deaths last year fell for the first time since 1988, as more people used seat belts, states cracked down on drunk driving and automakers built safer autos, Bloomberg reported. Crude oil fell on expectations that Iraq will start pumping oil through pipelines at normal rates after reducing the flow yesterday, Bloomberg said. A Pakistani man known as Kamran Shaikh appeared in U.S. federal court this morning after being spotted videotaping buildings in downtown Charlotte, NC, last month, the Charlotte Observer reported.
Bottom LINE: The Portfolio is up substantially today as my alternative energy and security longs are rising and my Chinese ADR shorts are declining. I added a few new longs this morning, bringing the Portfolio's market exposure to 100% net long. One of my new longs is GS and I am using an $84.50 stop-loss on the position. The tone of the market is much better than yesterday's. I expect U.S. stocks to rise modestly into the close after the rate-hike and Fed commentary.
NASDAQ 1,794.88 +1.14%
Leading Sectors
Airlines +3.12%
I-Banks +2.0%
Networking +1.95%
Lagging Sectors
Oil Service +.25%
Tobacco unch.
Energy -.26%
Other
Crude Oil 44.45 -.87%
Natural Gas 5.91 +3.81%
Gold 402.70 -.07%
Base Metals 108.48 +.50%
U.S. Dollar 88.35 -.05%
10-Yr. T-note Yield 4.24% -.46%
VIX 17.72 -6.25%
Put/Call 1.11 +23.33%
NYSE Arms .63 -27.59%
Market Movers
DISH +6.2% after beating 2Q estimates and announcing $1B share buyback.
CEPH -8.1% after it was cleared by U.S. antitrust enforcers to complete its $515M purchase of Cima Labs and updating outlook.
ACF +16.4% after beating 4Q estimates, raising 05 forecast and Piper Jaffray upgrade to Outperform.
TASR +6.6% after winning 4 large orders for its weapons from three police departments and reiterated 3Q outlook.
SNIC +12.5% after announcing it would buy Roxio's consumer-software division to Sonic Solutions.
SOL +16.1% after beating 1Q estimates and reaffirming 2Q/05 view.
ESE +11.8% after beating 3Q estimates substantially and raising 4Q outlook.
FOSL +11.4% after beating 2Q estimates and raising 04 forecast.
PLMO +4.7% after Friedman, Billings rated it Outperform.
NDC -30.0% after missing 4Q estimates substantially and lowering 1Q outlook.
ADRX -16.6% after missing 2Q estimates.
KDE -12.8% after missing 2Q estimates.
Economic Data
Preliminary 2Q Non-farm Productivity rose 2.9% versus estimates of 2.0% and a 3.7% rise in 1Q.
Preliminary 2Q Unit Labor Costs rose 1.9% versus estimates of 2.0% and a .3% rise in 1Q.
Recommendations
STJ raised to Outperform at CSFB, target $76. DOX rated Outperform at Thomas Weisel. CMVT rated Outperform at Thomas Weisel. ET rated Overweight at Morgan Stanley, target $14.50. AMTD rated Overweight at Morgan Stanley, target $14. ISPH rated Overweight at Morgan Stanley, target $18. WCG rate Overweight at Morgan Stanley, target $20. CEPH cut to Underweight at Morgan Stanley. FCX raised to Overweight at Prudential, target $42. Goldman Sachs reiterated Outperform on FDC, AVP, AMGN, BIIB, NFX, FSH, BSX, MDT, GDT, BAX and DNA. Goldman reiterated Underperform on PSS. Goldman reiterated Attractive view of Gold sector, favorites are NEM and PDG. Citi SmithBarney reiterated Buy on URBN, target $35. Citi reiterated Buy on CHS, target $48. Citi reiterated Buy on TJX, target $27. Citi reiterated Buy on PLCE, target $30. Citi reiterated Buy on GPS, target $25. Citi reiterated Buy on BLS, target $32. Citi reiterated Buy on VIAB, target $50.
Mid-day News
U.S. stocks are higher mid-day on a reversal in oil prices and optimism over Greenspan's commentary after the rate announcement. Paul Volcker, the former Fed chairman who heads a panel investigating the corruption in the UN's former oil-for-food program in Iraq, said he will probably need a year to report his findings, the NY Times said. People who held mentally demanding jobs may be at a lower risk for developing Alzheimer's disease, the Wall Street Journal reported. Electric companies have fixed many of the problems that led to the largest blackout in U.S. history on Aug. 14, 2003, although many long-term power problems haven't been tackled, the Washington Post reported. Toy companies are selling their products in clothing stores, supermarkets and even Starbucks to boost sales and fight pressure to cut prices from discount retailers such as Wal-Mart, the NY Post said. U.S. Transportation Security Administration officials issued a directive ordering federal passenger screening for helicopter tours in New York City after officials learned that suspected al-Qaeda terrorist operatives had pictures and other information about the tours, the NY Times reported. Symantec estimates that as much as 30% of all Internet traffic is spam, CEO Thompson told CNBC. Kuwait's Supreme Petroleum Council approved a planned $7 billion development of oil fields in the north of the country, the Kuwait News Agency reported. President Bush named Representative Porter Goss, chairman of the House Intelligence Committee and a former U.S. intelligence officer, to head the CIA, Bloomberg reported. Kmart will scale back its sale of stores to Home Depot by as much as half from the plan announced in June, Bloomberg said. U.S. traffic deaths last year fell for the first time since 1988, as more people used seat belts, states cracked down on drunk driving and automakers built safer autos, Bloomberg reported. Crude oil fell on expectations that Iraq will start pumping oil through pipelines at normal rates after reducing the flow yesterday, Bloomberg said. A Pakistani man known as Kamran Shaikh appeared in U.S. federal court this morning after being spotted videotaping buildings in downtown Charlotte, NC, last month, the Charlotte Observer reported.
Bottom LINE: The Portfolio is up substantially today as my alternative energy and security longs are rising and my Chinese ADR shorts are declining. I added a few new longs this morning, bringing the Portfolio's market exposure to 100% net long. One of my new longs is GS and I am using an $84.50 stop-loss on the position. The tone of the market is much better than yesterday's. I expect U.S. stocks to rise modestly into the close after the rate-hike and Fed commentary.
Tuesday Watch
Earnings of Note
Company/Estimate
ANF/.43
AGI/.26
CSCO/.20
CSC/.57
DISH/.22
ECLG/.09
FOSL/.17
MAY/.35
OSIP/-1.18
DIS/.26
Splits
None of note.
Economic Data
Preliminary 2Q Non-farm Productivity estimated +2.0% versus +3.8% in 1Q.
Preliminary 2Q Unit Labor Costs estimated +2.0% versus +.8% in 1Q.
The Fed is expected to raise rates 25 basis points.
Recommendations
Goldman Sachs reiterated Outperform on BAC, BSX, UNH and SYMC. Goldman reiterated Underperform on DAL.
Late-Night News
Asian indices are quietly mixed ahead of the U.S. Fed rate announcement. California's power-grid operator predicted record demand for electricity Wednesday and extended its power use warning for another two days, Dow Jones News reported. Sony will use its game console chips in flat-panel tv for fall release, the Nihon Keizai said. Former Enron Chairman Lay asked a federal judge to separate his case from two other ex-Enron officers and schedule his trial on fraud charges to start Sept. 14, his lawyer said. China's industrial production rose in July at its slowest pace in a year, adding to evidence that the government's lending curbs are cooling growth in the world's seventh-largest economy.
Late-Night Trading
Asian Indices are -.25% to +.50% on average.
S&P 500 indicated +.08%.
NASDAQ 100 indicated +.11%
BOTTOM LINE: I expect U.S. stocks to open modestly lower ahead of the Fed rate announcement. However, stocks should rise later in the day after the hike and Fed comments. I expect the Fed will raise rates 25 basis points tomorrow and make comments that they are monitoring the recent weakness in some parts of the economy and will slow the pace of increase if necessary. Moreover, they will likely say they are seeing positive signs with respect to slowing inflation. The Portfolio is 25% net long heading into tomorrow.
Company/Estimate
ANF/.43
AGI/.26
CSCO/.20
CSC/.57
DISH/.22
ECLG/.09
FOSL/.17
MAY/.35
OSIP/-1.18
DIS/.26
Splits
None of note.
Economic Data
Preliminary 2Q Non-farm Productivity estimated +2.0% versus +3.8% in 1Q.
Preliminary 2Q Unit Labor Costs estimated +2.0% versus +.8% in 1Q.
The Fed is expected to raise rates 25 basis points.
Recommendations
Goldman Sachs reiterated Outperform on BAC, BSX, UNH and SYMC. Goldman reiterated Underperform on DAL.
Late-Night News
Asian indices are quietly mixed ahead of the U.S. Fed rate announcement. California's power-grid operator predicted record demand for electricity Wednesday and extended its power use warning for another two days, Dow Jones News reported. Sony will use its game console chips in flat-panel tv for fall release, the Nihon Keizai said. Former Enron Chairman Lay asked a federal judge to separate his case from two other ex-Enron officers and schedule his trial on fraud charges to start Sept. 14, his lawyer said. China's industrial production rose in July at its slowest pace in a year, adding to evidence that the government's lending curbs are cooling growth in the world's seventh-largest economy.
Late-Night Trading
Asian Indices are -.25% to +.50% on average.
S&P 500 indicated +.08%.
NASDAQ 100 indicated +.11%
BOTTOM LINE: I expect U.S. stocks to open modestly lower ahead of the Fed rate announcement. However, stocks should rise later in the day after the hike and Fed comments. I expect the Fed will raise rates 25 basis points tomorrow and make comments that they are monitoring the recent weakness in some parts of the economy and will slow the pace of increase if necessary. Moreover, they will likely say they are seeing positive signs with respect to slowing inflation. The Portfolio is 25% net long heading into tomorrow.
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