Indices
S&P 500 1,064.80 +.08%
Dow 9,825.35 +.10%
NASDAQ 1,757.22 -1.11%
Russell 2000 517.39 -.44%
S&P Equity Long/Short Index 951.25 -.64%
Put/Call 1.05 -23.91%
NYSE Arms 1.20 -65.12%
Volatility(VIX) 17.98 -7.03%
AAII % Bulls 38.57 +24.46%
US Dollar 87.90 -.50%
CRB 269.19 +.26%
Futures Spot Prices
Gold 401.20 -.30%
Crude Oil 46.03 +5.89%
Unleaded Gasoline 134.68 +8.83%
Natural Gas 5.53 -1.28%
Base Metals 111.07 +2.27%
10-year US Treasury Yield 4.22% unch.
Average 30-year Mortgage Rate 5.85% -2.34%
Leading Sectors
HMO's +3.55%
Iron/Steel +3.07%
Telecom +1.39%
Lagging Sectors
Disk Drives -3.74%
Semis -5.23%
Networking -5.66%
*% Gain or loss for the week
Friday, August 13, 2004
Mid-day Update
S&P 500 1,063.56 +.03%
NASDAQ 1,755.73 +.18%
Leading Sectors
Energy +1.21%
Computer Boxmakers +1.18%
Commodity +.87%
Lagging Sectors
Biotech -.83%
Semis -.96%
Fashion -1.19%
Other
Crude Oil 46.0 +1.10%
Natural Gas 5.47 +.61%
Gold 401.30 +1.21%
Base Metals 111.07 +1.23%
U.S. Dollar 87.93 -.86%
10-Yr. T-note Yield 4.20% -1.54%
VIX 18.38 -3.51%
Put/Call 1.28 +23.08%
NYSE Arms 1.52 -45.32%
Market Movers
DELL +4.8% after meeting 2Q estimates, maintaining 3Q forecast and multiple upgrades.
DNA -5.3% after saying its Avastin colon-cancer drug may increase risk of heart attacks and strokes.
CNO -8.7% after announcing the departure of CEO William Shea.
SINA -9.5% after MDB Capital cut to Neutral and competitor SOHU trading halt.
ADI -4.8% after missing 3Q estimates and lowering 4Q outlook.
SCSC +9.9% after beating 4Q estimates and giving strong 1Q outlook.
RRGB +9.4% after beating 2Q estimates, raising 3Q/04 outlook and multiple upgrades.
DIGE +9.8% after yesterday's sharp decline on disappointing 4Q earnings.
KSS +4.5% after meeting 2Q estimates and maintaining guidance.
SCSS -10.3% after downgrade to Underweight at BB&T capital over concerns that mold forms in the company's mattresses.
Economic Data
Producer Price Index for July rose .1% versus estimates of a .3% increase and a .3% decline in June.
PPI Ex Food & Energy for July rose .1% versus estimates of a .1% rise and a .2% increase in June.
Trade Balance for June came in at -$55.8B versus estimates of -$47.0B and -$46.9B in May.
Preliminary Univ. of Mich. Consumer Confidence for August was 94.0 versus estimates of 97.2 and 96.7 in July.
Recommendations
CSCO raised to Overweight at Morgan Stanley. LXK raised to Overweight at Morgan Stanley. ROH raised to Overweight at JP Morgan. NILE raised to Outperform at JP Morgan. QLTY cut to Underweight at JP Morgan. BEAS raised to Buy at Merrill, target $8. Goldman Sachs reiterated Outperform on DELL and DNA. Citi SmithBarney reiterated Buy on MDT, target $61. Citi reiterated Buy on DELL, target $39. Citi reiterated Buy on SNMX, target $12. Citi reiterated Sell on WTW, target $31. Citi reiterated Buy on FD, target $58. Citi reiterated Buy on URBN, target $35. Citi reiterated Buy on BRCD, target $6.30. Citi reiterated Buy on WMT, target $65. Citi reiterated Buy on BEAS, target $11.50. Citi reiterated Buy on TGT, target $50.
Mid-day News
U.S. stocks are mixed mid-day as positive news from Dell is being offset by rising energy prices. Hudson's Bay Co., Canada's biggest department-store chain, is in talks to sell all or part of its operations to U.S. retailer Target, the Globe and Mail reported. Aetna is using medical experts for advice on subscribers' conditions as part of its plan to cut costs and improve finances, the Wall Street Journal reported. General Electric's NBC said it signed a three-year contract with DreamWorks Television to get an ownership interest in and the first right to air its shows, the LA Times reported. McKesson Corp. and Cardinal Health are interested in buying PSS World Medical, Business Week reported. U.S. producer prices rose less than forecast last month, restrained by cheaper cars and the biggest drop in the cost of food in more than two years, Bloomberg reported. Google said regulators may force it to buy back shares sold in its IPO because an interview in Playboy magazine may have violated U.S. securities law, Bloomberg said. U.S. consumer confidence fell for the first time in three months in August, restrained by news of higher oil prices and slower job creation, Bloomberg reported. More than half of Americans surveyed said they approve of the job President Bush is doing, up from a low of 46% in May, according to a new Gallup Poll. Crude oil futures rose to a record $49.99 a barrel in New York on speculation a recall vote in Venezuela will disrupt shipments from the fourth-largest supplier to the U.S., Bloomberg reported. As well, hurricane Charley and Tropical Storm Bonnie caused companies to cut daily crude-oil production in the Gulf of Mexico by 18% and natural-gas output by 7.4%, Bloomberg reported. Hurricane Charley headed for Florida's west coast today, forcing the state to call for the evacuation of almost 2 million people, Bloomberg said.
BOTTOM LINE: The Portfolio is slightly higher today on strength in my homebuilding and internet longs and weakness in my Chinese ADR shorts. I have not traded and the Portfolio is still 25% net long. The market is being restrained today by worries over terrorism at the Olympics, potential disruptions to oil shipments in Venezuela and the disruption to oil production in the Gulf from Hurricane Charley. Inflation readings continue to decelerate and interest rates continue to fall, yet the mainstream press barely reports these positive developments and chooses to focus the overwhelming majority of their reports on high oil prices. Oil comprises less than 5% of inflation. I am not trying to minimize its importance. I just don't believe that one commodity that is trading 41% below its inflation-adjusted highs of almost 25 years ago deserves to receive this much attention. Moreover, consumers are now spending less than 2% of their discretionary income on gas versus 6% during the late 70's. Relatively few companies, outside of the airline industry, are being hurt significantly by high oil prices at this point. The deceleration in retail sales is more a function of less tax-cut stimulus, bad weather, less home re-financings and the huge spike in home sales during the first quarter rather than high gas prices. Again, I am not trying to say that high energy prices aren't worthy of reporting or they are not a negative, just that they don't deserve the amount of attention they are getting at this point.
NASDAQ 1,755.73 +.18%
Leading Sectors
Energy +1.21%
Computer Boxmakers +1.18%
Commodity +.87%
Lagging Sectors
Biotech -.83%
Semis -.96%
Fashion -1.19%
Other
Crude Oil 46.0 +1.10%
Natural Gas 5.47 +.61%
Gold 401.30 +1.21%
Base Metals 111.07 +1.23%
U.S. Dollar 87.93 -.86%
10-Yr. T-note Yield 4.20% -1.54%
VIX 18.38 -3.51%
Put/Call 1.28 +23.08%
NYSE Arms 1.52 -45.32%
Market Movers
DELL +4.8% after meeting 2Q estimates, maintaining 3Q forecast and multiple upgrades.
DNA -5.3% after saying its Avastin colon-cancer drug may increase risk of heart attacks and strokes.
CNO -8.7% after announcing the departure of CEO William Shea.
SINA -9.5% after MDB Capital cut to Neutral and competitor SOHU trading halt.
ADI -4.8% after missing 3Q estimates and lowering 4Q outlook.
SCSC +9.9% after beating 4Q estimates and giving strong 1Q outlook.
RRGB +9.4% after beating 2Q estimates, raising 3Q/04 outlook and multiple upgrades.
DIGE +9.8% after yesterday's sharp decline on disappointing 4Q earnings.
KSS +4.5% after meeting 2Q estimates and maintaining guidance.
SCSS -10.3% after downgrade to Underweight at BB&T capital over concerns that mold forms in the company's mattresses.
Economic Data
Producer Price Index for July rose .1% versus estimates of a .3% increase and a .3% decline in June.
PPI Ex Food & Energy for July rose .1% versus estimates of a .1% rise and a .2% increase in June.
Trade Balance for June came in at -$55.8B versus estimates of -$47.0B and -$46.9B in May.
Preliminary Univ. of Mich. Consumer Confidence for August was 94.0 versus estimates of 97.2 and 96.7 in July.
Recommendations
CSCO raised to Overweight at Morgan Stanley. LXK raised to Overweight at Morgan Stanley. ROH raised to Overweight at JP Morgan. NILE raised to Outperform at JP Morgan. QLTY cut to Underweight at JP Morgan. BEAS raised to Buy at Merrill, target $8. Goldman Sachs reiterated Outperform on DELL and DNA. Citi SmithBarney reiterated Buy on MDT, target $61. Citi reiterated Buy on DELL, target $39. Citi reiterated Buy on SNMX, target $12. Citi reiterated Sell on WTW, target $31. Citi reiterated Buy on FD, target $58. Citi reiterated Buy on URBN, target $35. Citi reiterated Buy on BRCD, target $6.30. Citi reiterated Buy on WMT, target $65. Citi reiterated Buy on BEAS, target $11.50. Citi reiterated Buy on TGT, target $50.
Mid-day News
U.S. stocks are mixed mid-day as positive news from Dell is being offset by rising energy prices. Hudson's Bay Co., Canada's biggest department-store chain, is in talks to sell all or part of its operations to U.S. retailer Target, the Globe and Mail reported. Aetna is using medical experts for advice on subscribers' conditions as part of its plan to cut costs and improve finances, the Wall Street Journal reported. General Electric's NBC said it signed a three-year contract with DreamWorks Television to get an ownership interest in and the first right to air its shows, the LA Times reported. McKesson Corp. and Cardinal Health are interested in buying PSS World Medical, Business Week reported. U.S. producer prices rose less than forecast last month, restrained by cheaper cars and the biggest drop in the cost of food in more than two years, Bloomberg reported. Google said regulators may force it to buy back shares sold in its IPO because an interview in Playboy magazine may have violated U.S. securities law, Bloomberg said. U.S. consumer confidence fell for the first time in three months in August, restrained by news of higher oil prices and slower job creation, Bloomberg reported. More than half of Americans surveyed said they approve of the job President Bush is doing, up from a low of 46% in May, according to a new Gallup Poll. Crude oil futures rose to a record $49.99 a barrel in New York on speculation a recall vote in Venezuela will disrupt shipments from the fourth-largest supplier to the U.S., Bloomberg reported. As well, hurricane Charley and Tropical Storm Bonnie caused companies to cut daily crude-oil production in the Gulf of Mexico by 18% and natural-gas output by 7.4%, Bloomberg reported. Hurricane Charley headed for Florida's west coast today, forcing the state to call for the evacuation of almost 2 million people, Bloomberg said.
BOTTOM LINE: The Portfolio is slightly higher today on strength in my homebuilding and internet longs and weakness in my Chinese ADR shorts. I have not traded and the Portfolio is still 25% net long. The market is being restrained today by worries over terrorism at the Olympics, potential disruptions to oil shipments in Venezuela and the disruption to oil production in the Gulf from Hurricane Charley. Inflation readings continue to decelerate and interest rates continue to fall, yet the mainstream press barely reports these positive developments and chooses to focus the overwhelming majority of their reports on high oil prices. Oil comprises less than 5% of inflation. I am not trying to minimize its importance. I just don't believe that one commodity that is trading 41% below its inflation-adjusted highs of almost 25 years ago deserves to receive this much attention. Moreover, consumers are now spending less than 2% of their discretionary income on gas versus 6% during the late 70's. Relatively few companies, outside of the airline industry, are being hurt significantly by high oil prices at this point. The deceleration in retail sales is more a function of less tax-cut stimulus, bad weather, less home re-financings and the huge spike in home sales during the first quarter rather than high gas prices. Again, I am not trying to say that high energy prices aren't worthy of reporting or they are not a negative, just that they don't deserve the amount of attention they are getting at this point.
Friday Watch
Earnings of Note
Company/Estimate
LWAY/.08
ZOLT/-.23
Splits
None of Note.
Economic Data
PPI for July estimated +.3% versus -.3% in June.
PPI Ex Food & Energy for July estimated +.1% versus +.2% in June.
Trade Balance for June estimated at -$47.0B versus -$46.0B in May.
Preliminary Univ. of Mich. Consumer Confidence for August estimated at 97.2 versus 96.7 in July.
Recommendations
Goldman Sachs reiterated Outperform on MDT, A, GE, CCL, RCL and AMLN. MATK will benefit from the fastest-growing baby-food market, Business Week reported.
Late-Night News
Asian indices are mixed on weakness in Japan and strength in Korea. The U.S. SEC has looked at an interview the co-founders of Google did with Playboy magazine to see whether it violates the quiet period on the stock, the Wall Street Journal reported. Goldman Sachs won final regulatory approval in China to set up a joint venture investment bank, the South China Morning Post reported. Japan's GDP expanded at a less-than-expected 1.7% annual pace in the second quarter, as slowing Chinese growth curtailed exports, Bloomberg said. Moqtada al-Sadar, the Shiite Muslim cleric leading an insurgency in southern Iraqi cities, was wounded in three places during fighting in Najaf, Agence France-Presse reported.
Late-Night Trading
Asian Indices are -1.25% to +.75% on average.
S&P 500 indicated +.09%.
NASDAQ 100 indicated +.27%
BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning on a bounce in the technology sector. However, gains will likely be tempered by terrorism fears ahead of the Olympics. The Portfolio is 25% net long heading into tomorrow.
Company/Estimate
LWAY/.08
ZOLT/-.23
Splits
None of Note.
Economic Data
PPI for July estimated +.3% versus -.3% in June.
PPI Ex Food & Energy for July estimated +.1% versus +.2% in June.
Trade Balance for June estimated at -$47.0B versus -$46.0B in May.
Preliminary Univ. of Mich. Consumer Confidence for August estimated at 97.2 versus 96.7 in July.
Recommendations
Goldman Sachs reiterated Outperform on MDT, A, GE, CCL, RCL and AMLN. MATK will benefit from the fastest-growing baby-food market, Business Week reported.
Late-Night News
Asian indices are mixed on weakness in Japan and strength in Korea. The U.S. SEC has looked at an interview the co-founders of Google did with Playboy magazine to see whether it violates the quiet period on the stock, the Wall Street Journal reported. Goldman Sachs won final regulatory approval in China to set up a joint venture investment bank, the South China Morning Post reported. Japan's GDP expanded at a less-than-expected 1.7% annual pace in the second quarter, as slowing Chinese growth curtailed exports, Bloomberg said. Moqtada al-Sadar, the Shiite Muslim cleric leading an insurgency in southern Iraqi cities, was wounded in three places during fighting in Najaf, Agence France-Presse reported.
Late-Night Trading
Asian Indices are -1.25% to +.75% on average.
S&P 500 indicated +.09%.
NASDAQ 100 indicated +.27%
BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning on a bounce in the technology sector. However, gains will likely be tempered by terrorism fears ahead of the Olympics. The Portfolio is 25% net long heading into tomorrow.
Thursday, August 12, 2004
Thursday Close
S&P 500 1,063.23 -1.17%
NASDAQ 1,752.49 -1.68%
Leading Sectors
Broadcasting +.22%
Utilities -.28%
Drugs -.39%
Lagging Sectors
Computer Boxmakers -2.89%
Networking -3.26%
Disk Drives -3.87%
Other
Crude Oil 45.40 -.22%
Natural Gas 5.43 -.13%
Gold 396.90 +.08%
Base Metals 109.72 +.32%
U.S. Dollar 88.74 -.12%
10-Yr. T-note Yield 4.24% -.63%
VIX 19.08 +5.76%
Put/Call 1.04 +26.83%
NYSE Arms 2.78 +113.85%
After-hours Movers
ADI -6.53% after missing 3Q estimates and lowering 4Q outlook.
A +8.74% after beating 3Q forecast and giving positive 4Q guidance.
Recommendations
None of note.
After-hours News
U.S. stocks finished lower today after a Some Canadian cattle ranchers plan to sue the U.S. government for as much as $750 million, claiming it unfairly blocked exports of live cattle after the discovery of mad cow disease in Alberta last year, Canadian Press reported. New Jersey Democratic Governor McGreevey plans to resign in November after acknowledging he hid a homosexual affair from his family, Bloomberg reported. Dell Inc. said second-quarter net income rose 29% as it bolstered sales of servers and printers and expanded outside the U.S., Bloomberg said. The California Supreme Court ruled San Francisco Democratic Mayor Gavin Newsom didn't have the authority to issue wedding licenses to same-sex couples and voided more than 4,000 gay marriages the city performed earlier this year, Bloomberg reported. Google will begin taking bids in its auction-style initial share sale tomorrow, moving founders Brin and Page closer to a test of whether investors will pay the $108-$115/share the company is seeking, Bloomberg reported.
BOTTOM LINE: The Portfolio finished lower today on weakness in my technology longs. I exited a few of these positions in the afternoon as they hit stop-losses, leaving the Portfolio 25% net long. It was another disappointing day for the Bulls. However, the Put/Call, Arms and VIX continue to rise as investor psychology is reaching much healthier levels. Moreover, interest rates and the CRB Index continue to fall, which is a positive. Finally, stocks are responding favorably to Dell's report after the close.
NASDAQ 1,752.49 -1.68%
Leading Sectors
Broadcasting +.22%
Utilities -.28%
Drugs -.39%
Lagging Sectors
Computer Boxmakers -2.89%
Networking -3.26%
Disk Drives -3.87%
Other
Crude Oil 45.40 -.22%
Natural Gas 5.43 -.13%
Gold 396.90 +.08%
Base Metals 109.72 +.32%
U.S. Dollar 88.74 -.12%
10-Yr. T-note Yield 4.24% -.63%
VIX 19.08 +5.76%
Put/Call 1.04 +26.83%
NYSE Arms 2.78 +113.85%
After-hours Movers
ADI -6.53% after missing 3Q estimates and lowering 4Q outlook.
A +8.74% after beating 3Q forecast and giving positive 4Q guidance.
Recommendations
None of note.
After-hours News
U.S. stocks finished lower today after a Some Canadian cattle ranchers plan to sue the U.S. government for as much as $750 million, claiming it unfairly blocked exports of live cattle after the discovery of mad cow disease in Alberta last year, Canadian Press reported. New Jersey Democratic Governor McGreevey plans to resign in November after acknowledging he hid a homosexual affair from his family, Bloomberg reported. Dell Inc. said second-quarter net income rose 29% as it bolstered sales of servers and printers and expanded outside the U.S., Bloomberg said. The California Supreme Court ruled San Francisco Democratic Mayor Gavin Newsom didn't have the authority to issue wedding licenses to same-sex couples and voided more than 4,000 gay marriages the city performed earlier this year, Bloomberg reported. Google will begin taking bids in its auction-style initial share sale tomorrow, moving founders Brin and Page closer to a test of whether investors will pay the $108-$115/share the company is seeking, Bloomberg reported.
BOTTOM LINE: The Portfolio finished lower today on weakness in my technology longs. I exited a few of these positions in the afternoon as they hit stop-losses, leaving the Portfolio 25% net long. It was another disappointing day for the Bulls. However, the Put/Call, Arms and VIX continue to rise as investor psychology is reaching much healthier levels. Moreover, interest rates and the CRB Index continue to fall, which is a positive. Finally, stocks are responding favorably to Dell's report after the close.
Mid-day Update
S&P 500 1,071.13 -.73%
NASDAQ 1,771.70 -2.05%
Leading Sectors
Broadcasting +1.06%
Drugs +.33%
Airlines -.19%
Lagging Sectors
Networking -2.86%
Disk Drives -3.03%
Computer Boxmakers -3.10%
Other
Crude Oil 45.23 +1.0%
Natural Gas 5.48 -2.39%
Gold 396.70 -.30%
Base Metals 109.11 -.24%
U.S. Dollar 88.85 +.02%
10-Yr. T-note Yield 4.28% +.18%
VIX 18.80 +4.32%
Put/Call .82 unch.
NYSE Arms 1.81 +39.23%
Market Movers
HPQ -16.2% after missing 3Q estimates and lowering 4Q forecast.
CYBX -44.5% after it failed to win U.S. regulatory approval to market its implantable nerve-stimulation device as a treatment for severe depression.
DIGE -34.5% after missing 4Q estimates and lowering 1Q guidance.
MICU +19.2% after announcing positive phase III results for Dalbavancin in skin and soft tissue infections.
WGII +10.0% after beating 2Q estimates.
TGT +6.4% after miss 2Q estimates, but maintaining 3Q guidance.
ANN +6.1% after meeting 2Q estimates and maintaining 3Q and 4Q forecasts.
PBY -25.0% after missing 2Q estimates substantially.
Economic Data
Import Price Index for July rose .2% versus estimates of a .4% rise and a .1% decline in June.
Advance Retail Sales for July rose .7% versus estimates of a 1.2% increase and an upwardly revised .5% decline in June.
Retail Sales Less Autos for July rose .2% versus estimates of a .4% increase and an upwardly revised .3% increase in June.
Initial Jobless Claims for last week fell to 333K versus estimates of 340K and 337K the prior week.
Continuing Claims fell to 2896K versus estimates of 2895K and 2901K prior.
Business Inventories for June rose .9% versus estimates of a .6% rise and an upwardly revised .7% increase in June.
Recommendations
Goldman Sachs reiterated Outperform on MER, CZN and AMD. Citi SmithBarney upgraded TPX to Buy, target $19. Citi said to Buy COGN, target $41. Citi reiterated Buy on AMAT, target $21. Citi reiterated Buy on FD, target $58. UBS raised MAR to Buy, target $57. UBS raised FHR to Buy, target $30.25. RFMD downgraded to Sell at Deutsche Bank, target $3.50. EAT cut to Sector Underperform at CIBC World Markets. KYPH cut to Sell at Bank of America, target $21. EAT cut to Underweight at Prudential, target $32. GET rated Overweight at JP Morgan. ADRX raised to Buy at Merrill Lynch, target $25.
Mid-day News
U.S. stocks are lower mid-day on disappointment over Hewlett Packard's quarterly report and rising oil prices. Russia may announce by early September terms for auctioning exploration licenses for Sukhoi Log, its biggest untapped gold field, with a starting price of at least $250 million, Interfax reported. U.S. National Security Adviser Condoleezza Rice called Dmitry Medvedev, Russian President Putin's chief of staff, to express concern about the country's handling of OAO Yukos Oil and its effect on the oil markets, the Wall Street Journal reported. OAO Yukos Oil's appeal to defer some of its tax payments was rejected by the Moscow Arbitration Court, Interfax reported. IBM plans to hire 18,000 workers in 2004, up from previous estimates of 10,000, Bloomberg reported. California Governor Schwarzenegger said he might campaign out of state for President Bush, the LA Times reported. Wal-Mart said second-quarter profit rose 16%, helped by new stores and sales at international outlets. The company also boosted its annual earnings forecast, Bloomberg reported. The U.S. State Department said that the potential for violence exists in Venezuela where voters go to the polls Sunday to cast ballots in recall referendum on President Chavez, Bloomberg reported. The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, for the second straight decline, Bloomberg said. Hewlett-Packard said third-quarter profit rose to $586 million, less than analysts expected, as sales of its server and storage computers fell, Bloomberg reported. Target said second-quarter earnings almost quadrupled because of a gain from the sale of the company's Marshall Field's chain, Bloomberg reported. U.S. retail sales rose .7% in July after a decrease in June that was less than initially reported, Bloomberg said. Hurricane Charley moved toward the Cayman Islands and Cuba, while Tropical Storm Bonnie weakened as it approached the Florida panhandle this morning, the U.S. National Hurricane Center said. The average rate on a 30-year fixed mortgage in the U.S. fell this week to 5.85%, the seventh decline in eight weeks, Bloomberg reported. Crude oil futures rose to records in New York and London on continuing worries over supply disruptions, Bloomberg reported. Iraqi and U.S.-led coalition forces in Najaf have captured weapons and about 1,200 militiamen as they battle with rebels loyal to cleric al-Sadr for an eighth day, Bloomberg reported.
BOTTOM LINE: The Portfolio is lower today on declines in my internet and computer longs. I have not traded today and the Portfolio is still 75% net long. Another disappointing day for the Bulls as the technology sector takes it on the chin once again. As well, investors remain fixated on oil, notwithstanding another drop today in the CRB Index(a broad measure of commodity prices). The VIX continues to move higher and the Arms is spiking again, which are positives. Stratfor.com, a well-respected global intelligence firm, said on a conference call today that the strategic situation in Iraq is much improved since April. They also believe that if terrorists are to hit domestically, it will occur this month. However, they said the odds of this happening have diminished considerably since August 1st. Finally, they believe there is as much as a $10/bbl. terror premium in oil. I expect U.S. stocks to rise slightly into the close, barring a significant change in oil prices.
NASDAQ 1,771.70 -2.05%
Leading Sectors
Broadcasting +1.06%
Drugs +.33%
Airlines -.19%
Lagging Sectors
Networking -2.86%
Disk Drives -3.03%
Computer Boxmakers -3.10%
Other
Crude Oil 45.23 +1.0%
Natural Gas 5.48 -2.39%
Gold 396.70 -.30%
Base Metals 109.11 -.24%
U.S. Dollar 88.85 +.02%
10-Yr. T-note Yield 4.28% +.18%
VIX 18.80 +4.32%
Put/Call .82 unch.
NYSE Arms 1.81 +39.23%
Market Movers
HPQ -16.2% after missing 3Q estimates and lowering 4Q forecast.
CYBX -44.5% after it failed to win U.S. regulatory approval to market its implantable nerve-stimulation device as a treatment for severe depression.
DIGE -34.5% after missing 4Q estimates and lowering 1Q guidance.
MICU +19.2% after announcing positive phase III results for Dalbavancin in skin and soft tissue infections.
WGII +10.0% after beating 2Q estimates.
TGT +6.4% after miss 2Q estimates, but maintaining 3Q guidance.
ANN +6.1% after meeting 2Q estimates and maintaining 3Q and 4Q forecasts.
PBY -25.0% after missing 2Q estimates substantially.
Economic Data
Import Price Index for July rose .2% versus estimates of a .4% rise and a .1% decline in June.
Advance Retail Sales for July rose .7% versus estimates of a 1.2% increase and an upwardly revised .5% decline in June.
Retail Sales Less Autos for July rose .2% versus estimates of a .4% increase and an upwardly revised .3% increase in June.
Initial Jobless Claims for last week fell to 333K versus estimates of 340K and 337K the prior week.
Continuing Claims fell to 2896K versus estimates of 2895K and 2901K prior.
Business Inventories for June rose .9% versus estimates of a .6% rise and an upwardly revised .7% increase in June.
Recommendations
Goldman Sachs reiterated Outperform on MER, CZN and AMD. Citi SmithBarney upgraded TPX to Buy, target $19. Citi said to Buy COGN, target $41. Citi reiterated Buy on AMAT, target $21. Citi reiterated Buy on FD, target $58. UBS raised MAR to Buy, target $57. UBS raised FHR to Buy, target $30.25. RFMD downgraded to Sell at Deutsche Bank, target $3.50. EAT cut to Sector Underperform at CIBC World Markets. KYPH cut to Sell at Bank of America, target $21. EAT cut to Underweight at Prudential, target $32. GET rated Overweight at JP Morgan. ADRX raised to Buy at Merrill Lynch, target $25.
Mid-day News
U.S. stocks are lower mid-day on disappointment over Hewlett Packard's quarterly report and rising oil prices. Russia may announce by early September terms for auctioning exploration licenses for Sukhoi Log, its biggest untapped gold field, with a starting price of at least $250 million, Interfax reported. U.S. National Security Adviser Condoleezza Rice called Dmitry Medvedev, Russian President Putin's chief of staff, to express concern about the country's handling of OAO Yukos Oil and its effect on the oil markets, the Wall Street Journal reported. OAO Yukos Oil's appeal to defer some of its tax payments was rejected by the Moscow Arbitration Court, Interfax reported. IBM plans to hire 18,000 workers in 2004, up from previous estimates of 10,000, Bloomberg reported. California Governor Schwarzenegger said he might campaign out of state for President Bush, the LA Times reported. Wal-Mart said second-quarter profit rose 16%, helped by new stores and sales at international outlets. The company also boosted its annual earnings forecast, Bloomberg reported. The U.S. State Department said that the potential for violence exists in Venezuela where voters go to the polls Sunday to cast ballots in recall referendum on President Chavez, Bloomberg reported. The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, for the second straight decline, Bloomberg said. Hewlett-Packard said third-quarter profit rose to $586 million, less than analysts expected, as sales of its server and storage computers fell, Bloomberg reported. Target said second-quarter earnings almost quadrupled because of a gain from the sale of the company's Marshall Field's chain, Bloomberg reported. U.S. retail sales rose .7% in July after a decrease in June that was less than initially reported, Bloomberg said. Hurricane Charley moved toward the Cayman Islands and Cuba, while Tropical Storm Bonnie weakened as it approached the Florida panhandle this morning, the U.S. National Hurricane Center said. The average rate on a 30-year fixed mortgage in the U.S. fell this week to 5.85%, the seventh decline in eight weeks, Bloomberg reported. Crude oil futures rose to records in New York and London on continuing worries over supply disruptions, Bloomberg reported. Iraqi and U.S.-led coalition forces in Najaf have captured weapons and about 1,200 militiamen as they battle with rebels loyal to cleric al-Sadr for an eighth day, Bloomberg reported.
BOTTOM LINE: The Portfolio is lower today on declines in my internet and computer longs. I have not traded today and the Portfolio is still 75% net long. Another disappointing day for the Bulls as the technology sector takes it on the chin once again. As well, investors remain fixated on oil, notwithstanding another drop today in the CRB Index(a broad measure of commodity prices). The VIX continues to move higher and the Arms is spiking again, which are positives. Stratfor.com, a well-respected global intelligence firm, said on a conference call today that the strategic situation in Iraq is much improved since April. They also believe that if terrorists are to hit domestically, it will occur this month. However, they said the odds of this happening have diminished considerably since August 1st. Finally, they believe there is as much as a $10/bbl. terror premium in oil. I expect U.S. stocks to rise slightly into the close, barring a significant change in oil prices.
Thursday Watch
Earnings of Note
Company/Estimate
A/.27
ADI/.45
AEOS/.38
BEAS/.07
DELL/.31
KSS/.44
TGT/.47
TIF/.29
URBN/.22
WMT/.60
WTW/.49
Splits
None of note.
Economic Data
Import Price Index for July estimated +.4% versus -.2% in June.
Advance Retail Sales for July estimated +1.2% versus -1.1% in June.
Retail Sales Less Autos for July estimated +.4% versus -.2% in June.
Initial Jobless Claims for last week estimated at 340K versus 336K prior week.
Continuing Claims estimated at 2895K versus 2911K prior.
Business Inventories for June estimated +.6% versus +.4% in May.
Release of minutes from June 30 FOMC meeting.
Recommendations
Goldman Sachs reiterated their Attractive view of Paper sector, favorites are IP, DTC and SPP. Goldman reiterated Outperform on BSX and MDT.
Late-Night News
Asian indices are mixed on strength in Korea and weakness in China. Television Broadcasts Ltd., Hong Kong's biggest broadcaster, said it expects by month's end to sign an agreement with China that will give it legal access to the mainland, the South China Morning Post reported. U.S. coal prices have risen following growth in demand and declining domestic production, the Financial Times reported. Human trials of a pill that could prevent transmission of the HIV virus are in jeopardy after some prostitutes in Cambodia refused to take part because of the terms of the trials, the Wall Street Journal reported. Hurricane Charley rolled toward the southwestern coast of Florida and Tropical Storm Bonnie aimed to hit the Panhandle by morning, prompting Florida's governor to issue a statewide emergency, Bloomberg reported. Dan Benton's Andor Capital Management LLC, the eighth-biggest hedge fund at the end of 2003, lost almost half its assets in July, people familiar with the New York-based fund said.
Late-Night Trading
Asian Indices are -.75% to +.50% on average.
S&P 500 indicated +.02%.
NASDAQ 100 indicated +.04%
BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning on better economic data and a follow-through from today's afternoon rally. The Portfolio is 75% net long heading into tomorrow.
Company/Estimate
A/.27
ADI/.45
AEOS/.38
BEAS/.07
DELL/.31
KSS/.44
TGT/.47
TIF/.29
URBN/.22
WMT/.60
WTW/.49
Splits
None of note.
Economic Data
Import Price Index for July estimated +.4% versus -.2% in June.
Advance Retail Sales for July estimated +1.2% versus -1.1% in June.
Retail Sales Less Autos for July estimated +.4% versus -.2% in June.
Initial Jobless Claims for last week estimated at 340K versus 336K prior week.
Continuing Claims estimated at 2895K versus 2911K prior.
Business Inventories for June estimated +.6% versus +.4% in May.
Release of minutes from June 30 FOMC meeting.
Recommendations
Goldman Sachs reiterated their Attractive view of Paper sector, favorites are IP, DTC and SPP. Goldman reiterated Outperform on BSX and MDT.
Late-Night News
Asian indices are mixed on strength in Korea and weakness in China. Television Broadcasts Ltd., Hong Kong's biggest broadcaster, said it expects by month's end to sign an agreement with China that will give it legal access to the mainland, the South China Morning Post reported. U.S. coal prices have risen following growth in demand and declining domestic production, the Financial Times reported. Human trials of a pill that could prevent transmission of the HIV virus are in jeopardy after some prostitutes in Cambodia refused to take part because of the terms of the trials, the Wall Street Journal reported. Hurricane Charley rolled toward the southwestern coast of Florida and Tropical Storm Bonnie aimed to hit the Panhandle by morning, prompting Florida's governor to issue a statewide emergency, Bloomberg reported. Dan Benton's Andor Capital Management LLC, the eighth-biggest hedge fund at the end of 2003, lost almost half its assets in July, people familiar with the New York-based fund said.
Late-Night Trading
Asian Indices are -.75% to +.50% on average.
S&P 500 indicated +.02%.
NASDAQ 100 indicated +.04%
BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning on better economic data and a follow-through from today's afternoon rally. The Portfolio is 75% net long heading into tomorrow.
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