S&P 500 1,099.15 -.78%
NASDAQ 1,836.49 -1.37%
Leading Sectors
Airlines +.38%
Utilities +.17%
Telecom -.11%
Lagging Sectors
Internet -2.05%
Semis -2.28%
Biotech -2.59%
Other
Crude Oil 42.35 +.17%
Natural Gas 5.23 +.02%
Gold 409.40 -.15%
Base Metals 108.20 -.21%
U.S. Dollar 89.69 -.09%
10-Yr. T-note Yield 4.18% -1.10%
VIX 15.44 +4.96%
Put/Call .84 +12.0%
NYSE Arms 2.59 +153.92%
After-hours Movers
None of note.
Recommendations
Goldman reiterated Outperform on SYMC, NEM and PDG.
After-hours News
U.S. stocks finished lower today on the lowest volume of the year as buyers failed to materialize on worries over terrorism at the Republican Convention. After the close, Samsung Electronics, the world's largest memory-chip maker, may increase production of dynamic random-access memory chips because prices haven't fallen as much as for flash-memory chips, the Wall Street Journal reported. The benchmark 10-yr U.S. Treasury note rose for the fourth day in five after a measure of inflation was unchanged in July, Bloomberg reported. Surgery and other procedures to clear heart arteries are just as effective as drug treatment in the elderly and cause no more complications after a year, according to research in the new issue of Circulation. Merck's Zocor failed to reduce complications in the first four months after a heart attack, according to a study that may give an edge to Pfizer's Lipitor medicine, Bloomberg said. Crude oil futures in New York fell for the sixth session in seven, to $42.28 a barrel, as a decline in political unrest in Iraq reduced concern that supplies from the fifth-largest Middle East producer will be disrupted, Bloomberg reported.
BOTTOM LINE: The Portfolio finished lower today as weakness in my biotechnology and technology longs more than offset my declining steel shorts. I exited a few of my biotech and tech positions in the afternoon after their stop-losses were triggered. Thus, the Portfolio is now 100% net long. While today was unexpectedly weak and disappointing for the Bulls, I am not reading too much into it at this point. Trading activity was exceptionally light and measures of investor anxiety rose. Moreover, interest rates and energy prices continue to fall. I still expect stocks to rally as the week progresses. However, if the major U.S. indices fail to rise later in the week I will assume that the weakness I anticipated later in September has begun.
Monday, August 30, 2004
Mid-day Update
S&P 500 1,103.63 -.37%
NASDAQ 1,844.36 -.95%
Leading Sectors
Airlines +1.62%
Utilities +.37%
Insurance +.13%
Lagging Sectors
Internet -1.40%
I-Banks -1.54%
Biotech -2.08%
Other
Crude Oil 41.90 -2.96%
Natural Gas 5.19 +.02%
Gold 409.50 +.99%
Base Metals 108.20 -.21%
U.S. Dollar 89.69 -.09%
10-Yr. T-note Yield 4.19% -.78%
VIX 15.33 +4.28%
Put/Call .87 +16.0%
NYSE Arms 1.78 +74.51%
Market Movers
ACDO -23.2% after missing 4Q estimates and lowering 05 guidance.
TSN -7.7% after lowering 4Q estimates.
URI -16.7% after saying it received a subpoena from the U.S. SEC for some of its accounting records.
SWIR -7.9% after GMP cut to Reduce, target $19.
Economic Data
Personal Income for July rose .1% versus expectations of a .5% increase and a .2% rise in June.
Personal Spending for July rose .8% versus estimates of a .7% increase and an upwardly revised .2% decline in June.
PCE Deflator(YoY) for July rose 2.4% versus estimates of a 2.4% increase and a 2.5% rise in June.
PCE Core(YoY) for July rose 1.5% versus estimates of a 1.5% increase and a 1.5% rise in June.
Recommendations
Goldman Sachs reiterated Outperform on COH, MSFT, INTC, WMT, FD, FS and IGT. Citi SmithBarney reiterated Buy on LLY, target $82. Citi reiterated Buy on INTC, target $30. Citi reiterated Buy on PRU, target $55. PFGC downgraded to Sell at Deutsche Bank, target $19.50. NXTL raised to Sector Outperform at CIBC.
Mid-day News
U.S. stocks are quietly lower mid-day on profit-taking and terrorism worries ahead of the Republican Convention. Google stock options started trading Friday and volume was higher than may expected, the Wall Street Journal reported. Production at Ford's Hapeville, Georgia, plant was stopped at least for today because of a parts shortage, the AP reported. Venezuela, the world's fifth-largest oil supplier, expects oil prices to stabilize at $30/bbl. in the near future, El Universal reported, citing the country's oil minister. Washington and 11 other U.S. states have adopted laws barring suits for obesity against restaurants and food companies, the New York Post reported. Most big cell-phone companies intend to compile publicly accessible listings of wireless phone numbers starting in October, the NY Times said. UBS AG wants to make an acquisition such as a trust bank to target wealthy customers in the U.S., the Wall Street Journal reported. The U.S. Patent and Trademark Office turned down Donald Trump's initial attempt to register the expression, "You're Fired," for games and toys, the NY Times said. Radical cleric al-Sadr called on his followers across Iraq to stop fighting U.S.-led coalition troops and Iraqi forces and lay down their arms, the AP reported. France said it will maintain its law banning religious garb in state schools, rejected a demand by the Iraqi kidnappers of two French reporters for its revocation, Bloomberg reported. Crude oil futures in New York fell for the sixth session in seven amid reports that exports from Iraq, the Middle East's fifth-largest oil producer, were unaffected after an explosion damaged a pipeline, Bloomberg reported.
BOTTOM LINE: The Portfolio is lower mid-day on weakness in my biotechnology and technology longs. I have not traded and the Portfolio is still 125% net long. The weakness today is a worse than I expected, however measures of investor anxiety are rising, which is a positive. Moreover, I continue to expect oil prices to head toward the mid-$30's/bbl. within the next couple of months. With energy prices and interest rates dropping, I expect U.S. stocks to rise into the close on short-covering.
NASDAQ 1,844.36 -.95%
Leading Sectors
Airlines +1.62%
Utilities +.37%
Insurance +.13%
Lagging Sectors
Internet -1.40%
I-Banks -1.54%
Biotech -2.08%
Other
Crude Oil 41.90 -2.96%
Natural Gas 5.19 +.02%
Gold 409.50 +.99%
Base Metals 108.20 -.21%
U.S. Dollar 89.69 -.09%
10-Yr. T-note Yield 4.19% -.78%
VIX 15.33 +4.28%
Put/Call .87 +16.0%
NYSE Arms 1.78 +74.51%
Market Movers
ACDO -23.2% after missing 4Q estimates and lowering 05 guidance.
TSN -7.7% after lowering 4Q estimates.
URI -16.7% after saying it received a subpoena from the U.S. SEC for some of its accounting records.
SWIR -7.9% after GMP cut to Reduce, target $19.
Economic Data
Personal Income for July rose .1% versus expectations of a .5% increase and a .2% rise in June.
Personal Spending for July rose .8% versus estimates of a .7% increase and an upwardly revised .2% decline in June.
PCE Deflator(YoY) for July rose 2.4% versus estimates of a 2.4% increase and a 2.5% rise in June.
PCE Core(YoY) for July rose 1.5% versus estimates of a 1.5% increase and a 1.5% rise in June.
Recommendations
Goldman Sachs reiterated Outperform on COH, MSFT, INTC, WMT, FD, FS and IGT. Citi SmithBarney reiterated Buy on LLY, target $82. Citi reiterated Buy on INTC, target $30. Citi reiterated Buy on PRU, target $55. PFGC downgraded to Sell at Deutsche Bank, target $19.50. NXTL raised to Sector Outperform at CIBC.
Mid-day News
U.S. stocks are quietly lower mid-day on profit-taking and terrorism worries ahead of the Republican Convention. Google stock options started trading Friday and volume was higher than may expected, the Wall Street Journal reported. Production at Ford's Hapeville, Georgia, plant was stopped at least for today because of a parts shortage, the AP reported. Venezuela, the world's fifth-largest oil supplier, expects oil prices to stabilize at $30/bbl. in the near future, El Universal reported, citing the country's oil minister. Washington and 11 other U.S. states have adopted laws barring suits for obesity against restaurants and food companies, the New York Post reported. Most big cell-phone companies intend to compile publicly accessible listings of wireless phone numbers starting in October, the NY Times said. UBS AG wants to make an acquisition such as a trust bank to target wealthy customers in the U.S., the Wall Street Journal reported. The U.S. Patent and Trademark Office turned down Donald Trump's initial attempt to register the expression, "You're Fired," for games and toys, the NY Times said. Radical cleric al-Sadr called on his followers across Iraq to stop fighting U.S.-led coalition troops and Iraqi forces and lay down their arms, the AP reported. France said it will maintain its law banning religious garb in state schools, rejected a demand by the Iraqi kidnappers of two French reporters for its revocation, Bloomberg reported. Crude oil futures in New York fell for the sixth session in seven amid reports that exports from Iraq, the Middle East's fifth-largest oil producer, were unaffected after an explosion damaged a pipeline, Bloomberg reported.
BOTTOM LINE: The Portfolio is lower mid-day on weakness in my biotechnology and technology longs. I have not traded and the Portfolio is still 125% net long. The weakness today is a worse than I expected, however measures of investor anxiety are rising, which is a positive. Moreover, I continue to expect oil prices to head toward the mid-$30's/bbl. within the next couple of months. With energy prices and interest rates dropping, I expect U.S. stocks to rise into the close on short-covering.
Monday Watch
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.
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.
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.
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