Earnings of Note
Company/Estimate
ACDO/.39
DY/.35
CEN/.19
Splits
BAC 2-for-1
Economic Data
Personal Income for July estimated up .5% versus an increase of .2% in June.
Personal Spending for July estimated up .7% versus a decline of .7% in June.
PCE Deflator(YoY) for July estimated up 2.4% versus a 2.5% increase in June.
PCE Core(YoY) for July estimated up 1.5% versus a 1.5% increase in June.
Weekend Recommendations
Forbes on Fox had guests that were positive on COF, PVN, TGT and mixed on INTC, FPL. Bulls and Bears had guests that were positive on IDA, SU, HDWR, DPZ, NOK, GE, WTW, AMGN, IVX and negative on LLY, KKD. Cashin' In had guests that were positive on CCMP, CPWM, BAC, CRM and PRX. Wall St. Week w/Fortune had guests that were positive on NYT, YHOO, DCLK, SSP, GCI, INTC, IDTI, TM, GM, F, DD, TRFX, AMSWA and negative on CP, JPM. Barron's had positive columns on OSIS, ASE, VICL, DRXR, LOJN, XRAY and negative columns on CCU and CDL. Goldman Sachs reiterated Attractive view of Lodging and Cruise sectors. Goldman reiterated Outperform on EBAY.
Weekend News
Audi AG, which makes luxury cars for Volkswagen AG, is considering a plan to produce vehicles in the U.S. or Mexico to help reduce the risk of currency fluctuations, Die Welt reported. Russian investigators found traces of explosives in the wreckage of the second plane that crashed this week in Russia, Agence France-Presse reported. Wal-Mart canceled plans to build its first store in Washington, D.C., the Washington Post reported. Two men were arrested yesterday in connection with a plot to detonate a bomb on a New York City subway at the Herald Square station, the New York Post reported. The California state Legislature approved a package of bills allowing the importation of less expensive drugs from Canada, the LA Times reported. French government officials called for the release of two journalists kidnapped in Iraq by a group demanding the France rescind a ban on religious garb in the nation's schools, Agence France-Presse said. Brandsonsale.com, an Internet toy and clothing retailer, said "pimp" suits and "ho" dresses for children are among its best sellers for Halloween this year, the Washington Post reported. Target plans to spend $100 million to build a warehouse in DeKalb, Illinois, by 2006, Crain's Chicago Business said. Young adults are growing "bored" of sexually explicit ads and could be better targeted by more wholesome marketing methods, the Financial Times said, citing a survey by WPP Group. UBS AG, Europe's biggest bank by assets, plans to buy Charles Schwab's institutional research and trading unit for $265 million, the Wall Street Journal reported. Sanofi-Aventis SA, the world's third biggest drugmaker, said its experimental anti-craving pill, rimonabant, helped obese patients lose about 19 pounds and trim 3.5 inches from their waists in a study, Bloomberg reported. U.S. weather forecasters urged those in the northern Lesser Antilles and northeastern Caribbean Sea to "closely monitor" the progress of Hurricane Frances, which may become a Category 5 storm within 24 hours, Bloomberg said. Senator John McCain said Senator Kerry's anti-war activities after he returned from Vietnam are an appropriate subject for political debate, Bloomberg reported. Europe is slipping further behind the U.S. in competitiveness as the leaders of Germany, France and Italy, weakened by election setbacks, fail to take advantage of the economic recovery to reduce taxes and over-regulation, Bloomberg reported.
Late-Night Trading
Asian indices are mixed, -.50% to +.25% on average.
S&P 500 indicated -.23%.
NASDAQ indicated -.14%.
BOTTOM LINE: I expect U.S. stock to open modestly lower in the morning on fears over terrorism during the Republican Convention. However, equities should rise later in the day on short-covering and optimism over the recent fall in energy prices. The Portfolio is 125% net long heading into tomorrow.
Monday, August 30, 2004
Sunday, August 29, 2004
Chart of the Week
Click here for a graph of the recently released Poverty Rate (1959-2003).
Bottom Line: The current U.S. Poverty Rate of 12.5% is down from over 22% in 1959 and over 15% in 1983 and 1993. The stock market and economy began to collapse in 2000, resulting in a move higher in the poverty rate from very low levels. The ensuing corporate scandals, recession and 9/11 terrorist attacks resulted in an increase in poverty through 2003. However, recent data showing Americans' net worth at all-time high levels, very strong economic growth since the end of the recent recession and the creation of over 1.2 million new jobs this year will likely result in a fairly large decrease in the U.S. poverty rate for 2004.
Bottom Line: The current U.S. Poverty Rate of 12.5% is down from over 22% in 1959 and over 15% in 1983 and 1993. The stock market and economy began to collapse in 2000, resulting in a move higher in the poverty rate from very low levels. The ensuing corporate scandals, recession and 9/11 terrorist attacks resulted in an increase in poverty through 2003. However, recent data showing Americans' net worth at all-time high levels, very strong economic growth since the end of the recent recession and the creation of over 1.2 million new jobs this year will likely result in a fairly large decrease in the U.S. poverty rate for 2004.
Weekly Outlook
There are a number of important economic reports and some significant corporate earnings reports scheduled for release this week. Economic reports include Personal Income, Personal Spending, PCE Deflator(YoY), Chicago Purchasing Manager, Consumer Confidence, Construction Spending, ISM Manufacturing/Prices Paid, Total Vehicle Sales, Final 2Q Productivity, Final Unit Labor Costs, Initial Jobless Claims, Factory Orders, Unemployment Rate, Average Hourly Earnings, Change in Non-farm Payrolls, Average Weekly Hours and ISM Non-Manufacturing. Chicago Purchasing Manager, Consumer Confidence, ISM Manufacturing/Prices Paid, Change in Non-farm Payrolls and ISM Non-Manufacturing all have market-moving potential.
Accredo Health(ACDO), Cooper Companies(COO), Engineered Support Systems(EASI), Corinthian Colleges(COCO), Cardinal Health(CAH), Shuffle Master(SHFL), Mandalay Resort Group(MBG) and Albertson's(ABS) are some of the more important companies that release quarterly earnings this week. There are also several other events that have market-moving potential. The Republican National Convention, Boston Scientific's 2004 Update, Altera's Business Update and Intel's Mid-quarter Update could also impact trading this week.
Bottom Line: I expect U.S. stocks to finish the week higher on light volume as terrorism fears subside, optimism increases over the effects of falling energy prices on future economic growth, President Bush rises in the polls with pro-business political rhetoric and economic data show stabilizing growth. Measures of investor anxiety will likely fall again this week and then begin to head higher ahead of the 9/11 anniversary. My short-term trading indicators are still giving Buy signals and the Portfolio is 125% net long heading into the week.
Accredo Health(ACDO), Cooper Companies(COO), Engineered Support Systems(EASI), Corinthian Colleges(COCO), Cardinal Health(CAH), Shuffle Master(SHFL), Mandalay Resort Group(MBG) and Albertson's(ABS) are some of the more important companies that release quarterly earnings this week. There are also several other events that have market-moving potential. The Republican National Convention, Boston Scientific's 2004 Update, Altera's Business Update and Intel's Mid-quarter Update could also impact trading this week.
Bottom Line: I expect U.S. stocks to finish the week higher on light volume as terrorism fears subside, optimism increases over the effects of falling energy prices on future economic growth, President Bush rises in the polls with pro-business political rhetoric and economic data show stabilizing growth. Measures of investor anxiety will likely fall again this week and then begin to head higher ahead of the 9/11 anniversary. My short-term trading indicators are still giving Buy signals and the Portfolio is 125% net long heading into the week.
Saturday, August 28, 2004
Market Week in Review
S&P 500 1,107.77 +.86%
Click here for the Weekly Wrap by Briefing.com.
Bottom Line: Overall, last week's market action was positive. U.S. stocks were able to add to the very strong gains seen the prior week, notwithstanding fears of terrorism ahead of the Republican Convention and mixed economic data. Breadth continued to improve and most sectors registered gains. Technology and financial stocks led the way as inflation fears subsided and interest rates declined. Commodity prices fell across the board as evidenced by the 2.23% decrease in the CRB Index. Volume was very light, however I am not reading too much into this. Traders and investors usually go on vacation this time of year. The Olympics and terrorism jitters contributed to the lackluster environment as well. The main negative from last week's trading action was that investor complacency measures rose. However, it is hard to gauge how much of this was a result of the very low volume.
Click here for the Weekly Wrap by Briefing.com.
Bottom Line: Overall, last week's market action was positive. U.S. stocks were able to add to the very strong gains seen the prior week, notwithstanding fears of terrorism ahead of the Republican Convention and mixed economic data. Breadth continued to improve and most sectors registered gains. Technology and financial stocks led the way as inflation fears subsided and interest rates declined. Commodity prices fell across the board as evidenced by the 2.23% decrease in the CRB Index. Volume was very light, however I am not reading too much into this. Traders and investors usually go on vacation this time of year. The Olympics and terrorism jitters contributed to the lackluster environment as well. The main negative from last week's trading action was that investor complacency measures rose. However, it is hard to gauge how much of this was a result of the very low volume.
Economic Week in Review
ECRI Weekly Leading Index 131.40 -.23%
Existing Home Sales for July were 6.72 million versus estimates of 6.81 million and 6.92 million in June. The 2.9% decline from June's record-high was the first drop in seven months, Bloomberg reported. The median sales price was $191,300, up 8.7% from July of last year. Economists attributed the higher prices to tight supply. Ted Wieseman, an economist at Morgan Stanley, said that a six month supply of houses is required for a balanced market, compared with the 4.3 months of supply NAR reported for July. "I've been looking for these numbers to fade for several months now, because they've been so incredibly high," said Joel Naroff, chief economist at Naroff Economic Advisors. Re-sales account for 85% of the residential real estate market. New home sales, which had their best months ever in May and June, account for the rest, Bloomberg reported.
Durable Goods Orders for July rose 1.7% versus estimates of a 1.0% rise and an increase of 1.1% in June. Durable Goods Less Transportation rose .1% in July versus estimates of a 1.3% increase and a .3% decline in June. The report showed bookings surged for commercial aircraft and demand increased for business equipment. Businesses, flush with profits amid rising sales, are using the cash to replace aging equipment and replenish inventories, Bloomberg reported. Orders waiting to be filled rose the most since March. Excluding defense hardware, which fell 16.2% last month, orders increased 2.7%, the biggest rise since March, as well. "We are very confident going forward," said Michael Splinter, CEO of Applied Materials.
New Home Sales for July were 1.13 million versus estimates of 1.3 million and 1.21 million in June. "Mortgage rates have been much lower recently, and I wouldn't write off the housing market until we see a clear turn," said Michael Englund, chief economist at Action Economics. The median selling price of new homes increased 9% from July of last year. The inventory of new homes for sale rose to a 4.2 month supply, Bloomberg reported.
Initial Jobless Claims for last week rose to 343K versus estimates of 335K and 333K the prior week. Continuing Claims rose to 2897K versus estimates of 2885K and 2892K prior. This was the first time claims rose in four weeks, boosted by more filings related to Hurricane Charley, Bloomberg said. "We may see some additional upward pressure for another two weeks," from job losses related to the hurricane, said Henry Willmore, chief U.S. economist at Barclays Capital. Hurricane recovery efforts are expected to create more jobs in Southwest Florida than are lost over the longer-run, Bloomberg reported.
Preliminary 2Q GDP rose 2.8% versus expectations of a 2.7% increase and a prior estimate of 3.0%. Preliminary 2Q Personal Consumption rose 1.6% versus estimates of a 1.3% rise and a prior estimate of 1.3%. Preliminary GDP Price Deflator rose 3.2% versus estimates of a 3.2% increase and a prior estimate of 3.2%. Corporate profits after taxes for the quarter rose 17.9% in the 12 months ended in June, Bloomberg said. Business investment in equipment and software was revised up in the quarter to the strongest pace since the third quarter of last year. The core personal consumption expenditures index, the Fed's favorite measure of inflation, rose 1.7% at an annual rate in the second quarter after a 1.8% rise initially reported and a 2.1% pace in the first three months of the year. Nominal GDP rose at a 6.1% annual rate for the second quarter after rising at a 7.4% pace in the first quarter, Bloomberg reported.
The final reading from the University of Michigan's Consumer Confidence Index came in at 95.9 versus estimates of 94.0 and a prior estimate of 94.0. "Confidence is relatively high because we're in the middle of an expansion with fairly rapid growth in the economy and low interest rates," Mike Englund, chief economist at Action Economics. Job gains typically contribute to optimism, and the median forecast of economists suggests that payrolls expanded at a faster pace this month after slowing in July, Bloomberg reported.
Bottom Line: Overall, last week's economic data was mildly negative. While home sales have slowed from their blistering pace earlier in the year, the market remains very healthy. Supply is still low relative to demand. Mortgage rates averaged 6.29% in June when properties closed for the July readings. Since then, rates have fallen 47 basis points to an average mortgage rate of 5.82%. Durable Goods Orders should continue to remain robust through year-end as companies take advantage of tax incentives that are set to expire at the end of the year. Hurricane Charley is currently disrupting readings on jobless claims in a negative way. The hurricane is likely affecting other economic readings, as well. As rebuilding takes hold, the economy should benefit. U.S. GDP has recently slowed as a result of anti-business political rhetoric, less tax-cut stimulus, terrorism fears, higher commodities prices, the slowing Chinese economy, unseasonably wet weather and higher interest rates. Most of these problems are currently diminishing or reversing themselves which should lead to a substantial acceleration in GDP growth during the fourth quarter. Moreover, most of the trouble with the current slowdown is due to inflation, as nominal GDP grew 6.1% in the second quarter. Commodities prices have been the main source of inflation. Most commodities have now entered intermediate-term downtrends, which bodes well for future inflation readings and thus future GDP reports. Consumer confidence remains relatively strong and should rise with improvements in Iraq, subsiding terrorism fears, falling interest rates, declining energy prices and a pick-up in hiring.
Existing Home Sales for July were 6.72 million versus estimates of 6.81 million and 6.92 million in June. The 2.9% decline from June's record-high was the first drop in seven months, Bloomberg reported. The median sales price was $191,300, up 8.7% from July of last year. Economists attributed the higher prices to tight supply. Ted Wieseman, an economist at Morgan Stanley, said that a six month supply of houses is required for a balanced market, compared with the 4.3 months of supply NAR reported for July. "I've been looking for these numbers to fade for several months now, because they've been so incredibly high," said Joel Naroff, chief economist at Naroff Economic Advisors. Re-sales account for 85% of the residential real estate market. New home sales, which had their best months ever in May and June, account for the rest, Bloomberg reported.
Durable Goods Orders for July rose 1.7% versus estimates of a 1.0% rise and an increase of 1.1% in June. Durable Goods Less Transportation rose .1% in July versus estimates of a 1.3% increase and a .3% decline in June. The report showed bookings surged for commercial aircraft and demand increased for business equipment. Businesses, flush with profits amid rising sales, are using the cash to replace aging equipment and replenish inventories, Bloomberg reported. Orders waiting to be filled rose the most since March. Excluding defense hardware, which fell 16.2% last month, orders increased 2.7%, the biggest rise since March, as well. "We are very confident going forward," said Michael Splinter, CEO of Applied Materials.
New Home Sales for July were 1.13 million versus estimates of 1.3 million and 1.21 million in June. "Mortgage rates have been much lower recently, and I wouldn't write off the housing market until we see a clear turn," said Michael Englund, chief economist at Action Economics. The median selling price of new homes increased 9% from July of last year. The inventory of new homes for sale rose to a 4.2 month supply, Bloomberg reported.
Initial Jobless Claims for last week rose to 343K versus estimates of 335K and 333K the prior week. Continuing Claims rose to 2897K versus estimates of 2885K and 2892K prior. This was the first time claims rose in four weeks, boosted by more filings related to Hurricane Charley, Bloomberg said. "We may see some additional upward pressure for another two weeks," from job losses related to the hurricane, said Henry Willmore, chief U.S. economist at Barclays Capital. Hurricane recovery efforts are expected to create more jobs in Southwest Florida than are lost over the longer-run, Bloomberg reported.
Preliminary 2Q GDP rose 2.8% versus expectations of a 2.7% increase and a prior estimate of 3.0%. Preliminary 2Q Personal Consumption rose 1.6% versus estimates of a 1.3% rise and a prior estimate of 1.3%. Preliminary GDP Price Deflator rose 3.2% versus estimates of a 3.2% increase and a prior estimate of 3.2%. Corporate profits after taxes for the quarter rose 17.9% in the 12 months ended in June, Bloomberg said. Business investment in equipment and software was revised up in the quarter to the strongest pace since the third quarter of last year. The core personal consumption expenditures index, the Fed's favorite measure of inflation, rose 1.7% at an annual rate in the second quarter after a 1.8% rise initially reported and a 2.1% pace in the first three months of the year. Nominal GDP rose at a 6.1% annual rate for the second quarter after rising at a 7.4% pace in the first quarter, Bloomberg reported.
The final reading from the University of Michigan's Consumer Confidence Index came in at 95.9 versus estimates of 94.0 and a prior estimate of 94.0. "Confidence is relatively high because we're in the middle of an expansion with fairly rapid growth in the economy and low interest rates," Mike Englund, chief economist at Action Economics. Job gains typically contribute to optimism, and the median forecast of economists suggests that payrolls expanded at a faster pace this month after slowing in July, Bloomberg reported.
Bottom Line: Overall, last week's economic data was mildly negative. While home sales have slowed from their blistering pace earlier in the year, the market remains very healthy. Supply is still low relative to demand. Mortgage rates averaged 6.29% in June when properties closed for the July readings. Since then, rates have fallen 47 basis points to an average mortgage rate of 5.82%. Durable Goods Orders should continue to remain robust through year-end as companies take advantage of tax incentives that are set to expire at the end of the year. Hurricane Charley is currently disrupting readings on jobless claims in a negative way. The hurricane is likely affecting other economic readings, as well. As rebuilding takes hold, the economy should benefit. U.S. GDP has recently slowed as a result of anti-business political rhetoric, less tax-cut stimulus, terrorism fears, higher commodities prices, the slowing Chinese economy, unseasonably wet weather and higher interest rates. Most of these problems are currently diminishing or reversing themselves which should lead to a substantial acceleration in GDP growth during the fourth quarter. Moreover, most of the trouble with the current slowdown is due to inflation, as nominal GDP grew 6.1% in the second quarter. Commodities prices have been the main source of inflation. Most commodities have now entered intermediate-term downtrends, which bodes well for future inflation readings and thus future GDP reports. Consumer confidence remains relatively strong and should rise with improvements in Iraq, subsiding terrorism fears, falling interest rates, declining energy prices and a pick-up in hiring.
Weekly Scoreboard*
Indices
S&P 500 1,107.77 +.86%
Dow 10,195.01 +.84%
NASDAQ 1,862.09 +1.31%
Russell 2000 551.67 +.68%
S&P Equity Long/Short Index 953.30 +.22%
Put/Call .75 -21.88%
NYSE Arms 1.02 +54.54%
Volatility(VIX) 14.71 -8.06%
AAII % Bulls 41.53 +19.07%
US Dollar 89.77 +1.87%
CRB 270.33 -2.23%
Futures Spot Prices
Gold 405.40 -2.43%
Crude Oil 43.18 -7.58%
Unleaded Gasoline 117.69 -7.13%
Natural Gas 5.19 -8.85%
Base Metals 108.20 -2.30%
10-year US Treasury Yield 4.22% -.14%
Average 30-year Mortgage Rate 5.82% +.17%
Leading Sectors
Fashion +3.46%
Internet +2.06%
Computer Boxmakers +1.90%
Lagging Sectors
Semis -.95%
Broadcasting -2.11%
Iron/Steel -2.17%
*% Gain or loss for the week
S&P 500 1,107.77 +.86%
Dow 10,195.01 +.84%
NASDAQ 1,862.09 +1.31%
Russell 2000 551.67 +.68%
S&P Equity Long/Short Index 953.30 +.22%
Put/Call .75 -21.88%
NYSE Arms 1.02 +54.54%
Volatility(VIX) 14.71 -8.06%
AAII % Bulls 41.53 +19.07%
US Dollar 89.77 +1.87%
CRB 270.33 -2.23%
Futures Spot Prices
Gold 405.40 -2.43%
Crude Oil 43.18 -7.58%
Unleaded Gasoline 117.69 -7.13%
Natural Gas 5.19 -8.85%
Base Metals 108.20 -2.30%
10-year US Treasury Yield 4.22% -.14%
Average 30-year Mortgage Rate 5.82% +.17%
Leading Sectors
Fashion +3.46%
Internet +2.06%
Computer Boxmakers +1.90%
Lagging Sectors
Semis -.95%
Broadcasting -2.11%
Iron/Steel -2.17%
*% Gain or loss for the week
Subscribe to:
Posts (Atom)