S&P 500 1,128.75 +.47%
NASDAQ 1,906.77 +.13%
Leading Sectors
Oil Service +1.97%
Energy +1.55%
Semis +1.09%
Lagging Sectors
HMOs -.91%
I-Banks -1.05%
Broadcasting -1.28%
Other
Crude Oil 45.00 +2.55%
Natural Gas 5.15 +9.13%
Gold 407.20 +.17%
Base Metals 109.57 -.40%
U.S. Dollar 88.95 +.17%
10-Yr. T-note Yield 4.10% +.80%
VIX 14.10 -2.02%
Put/Call .85 +11.84%
NYSE Arms .67 -53.79%
Market Movers
QCOM -4.6% after boosting 4Q guidance, but not meeting optimistic projections.
CTAS +5.9% after meeting 4Q estimates and maintaining 05 guidance.
TEK +7.2% after beating 1Q estimates substantially and raising 2Q guidance.
ALO +10.7% after saying a U.S. appeals court lifted an order blocking the company from selling a generic version of the epilepsy treatment Neurontin, Pfizer's 4th largest drug.
TTEK -19.7% after cutting 4Q forecast.
SEE -7.95% after cutting 2004 outlook.
AXCA -8.3% on JP Morgan downgrade to Neutral.
NTBK -8.8% on Raymond James downgrade to Underperform.
FLML -25.2% after saying it ended an agreement with Bristol-Myers and Brean Murray downgrade to Sell.
Economic Data
Preliminary Univ. of Mich. Consumer Confidence for September was 95.8 versus estimates of 96.7 and a reading of 95.9 in August.
Recommendations
DO raised to Overweight at Lehman, target $37. TRDO raised to Outperform at Raymond James, target $12.50. ELOS rate Sector Outperform at CIBC, target $21. Goldman Sachs reiterated Outperform on GDT, PFE, BHI and NEM. Goldman reiterated Attractive view of Oil Service sector, favorites are RIG, DO, SLB, BHI and SII. Goldman raised NBP to Outperform, target $48. Citi SmithBarney said to increase exposure to Oil Service sector, favorites are NE, ESV and GSF. Citi reiterated Buy on JBL, target $32. Citi reiterated Buy on NT, target $5. Goldman reiterated Underperform on HRB. Laszlo Birinyi, president of Birinyi Associates, recommended purchase of shares of GOOG, EBAY and AMZN.
Mid-day News
U.S. stocks are modestly higher mid-day as strength in the energy sector more than offsets higher energy prices. Reuters has officially placed Canada's government-run healthcare system on its list of humanitarian emergencies. Homemade bombs were discovered near southeastern Moscow's Vykhino subway station and in the suburban town of Liubertsy, Interfax reported. The Chanel SA and Donna Karen fashion labels are showcasing clothes and accessories on new television shows, including "The Mountain," on Time Warner's WB Network to try to boost retail sales, the Wall Street Journal reported. Recent guilty pleas by senior Enron Corp. executives have helped prosecutors build their conspiracy and fraud case against former Enron leaders Jeff Skilling and Ken Lay, the Washington Post said. The FTC said rewards of $100,000 to $250,000 may be needed to persuade people to turn in senders of unsolicited e-mail, called spam, over the Internet, the AP reported. California racetrack owners who want to add slot machines to their businesses filed a lawsuit yesterday to derail agreements giving five American Indian tribes the right to have unlimited numbers of slot machines, the LA Times reported. Russian President Putin said Russian armed forces are preparing "preventive action against terrorists" after attacks that cost at least 430 lives over the past month, Interfax reported. Ford Motor raised its forecast for third-quarter earnings by 10 cents a share, Bloomberg reported. Circuit City said its second-quarter loss narrowed as the company sold more plasma-screen tvs and benefited form the acquisition of a Canadian retailer, Bloomberg said. Cooper Tire agreed to sell its Cooper-Standard Automotive business for $1.17 billion to the Cypress Group and Goldman Sachs Capital Partners, Bloomberg reported. Qualcomm increased its fourth-quarter and 2004 forecasts and said it is reviewing how it accounts for royalty payments, Bloomberg said. Crude oil rose for a second day on concern that shutdowns caused by Hurricane Ivan will further reduce U.S. inventories that have dropped 8.7% since the beginning of July, Bloomberg reported.
BOTTOM LINE: The Portfolio is slightly higher mid-day on strength in my Chinese ADRs and security-related stocks. I have not traded today and the Portfolio is still 100% net long. The tone of the market is weaker today with volume relatively light and the advance/decline line falling. While I expect energy prices to decline next week, a rise from current levels would likely begin to pressure stocks. I expect U.S. stocks to trade mixed-to-weaker into the afternoon.
Friday, September 17, 2004
Friday Watch
Earnings of Note
Company/Estimate
CC/-.11
CCL/1.20
BMET/.35
Splits
None of note.
Economic Data
Preliminary Univ. of Mich. Consumer Confidence for September estimated at 96.7 versus 95.9 in August.
Recommendations
Central European Distribution(CEDS), the largest distributor of vodka in Poland, will benefit as demand in the region grows for other varieties of imported alcohol, Business Week reported. ABX Air(ABXA), a provider of air cargo transportation and services, is benefiting as its largest customer, DHL Worldwide Express, boosts its business in the U.S., Business Week said.
Late-Night News
Asian indices are mixed on strength in China and weakness in Japan. The U.S. agreed with France, Germany and the U.K. on a draft resolution for the United Nations that calls on Iran to immediately suspend all uranium enrichment activities, Agence France-Presse reported. China won't raise interest rates for at least three months, official news agency Xinhua reported. Bonds sold by Fannie Mae, the largest U.S. mortgage buyer, are no riskier than those sold by the 10 largest commercial banks, Business Week said. Alcatel SA may buy Spatial Wireless, a U.S. maker of mobile-phone operator devices, to expand into the American market after years of curtailment due to slow demand, the Wall Street Journal said. Crude oil prices may fall next week as companies including Royal Dutch/Shell Group restart platforms and tankers resume shipments in the Gulf of Mexico after Hurricane Ivan, a Bloomberg survey of traders and analysts shows. Honda Motor expects to almost double sales of so-called hybrid cars next year with the introduction of a third model, Bloomberg reported. President Bush leads Senator Kerry by 13 percentage points among likely voters, according to a Gallup poll conducted for CNN and USA Today. Dan Rather, of CBS News, is fighting to preserve his reputation after conceding misgivings about documents he used for a report attacking President Bush's military service, London's Telegraph reported.
Late-Night Trading
Asian Indices are -.75% to +.75% on average.
S&P 500 indicated -.12%.
NASDAQ 100 indicated -.14%
BOTTOM LINE: I expect U.S. equities to open mixed in the morning as the major indices continue to consolidate after recent gains. I am not sure how much the Consumer Confidence reading will be hurt by the hurricanes and bitter political climate. However, diminishing domestic terrorism fears, falling interest rates and increasing stock prices should help. The Portfolio is 100% net long heading into tomorrow.
Company/Estimate
CC/-.11
CCL/1.20
BMET/.35
Splits
None of note.
Economic Data
Preliminary Univ. of Mich. Consumer Confidence for September estimated at 96.7 versus 95.9 in August.
Recommendations
Central European Distribution(CEDS), the largest distributor of vodka in Poland, will benefit as demand in the region grows for other varieties of imported alcohol, Business Week reported. ABX Air(ABXA), a provider of air cargo transportation and services, is benefiting as its largest customer, DHL Worldwide Express, boosts its business in the U.S., Business Week said.
Late-Night News
Asian indices are mixed on strength in China and weakness in Japan. The U.S. agreed with France, Germany and the U.K. on a draft resolution for the United Nations that calls on Iran to immediately suspend all uranium enrichment activities, Agence France-Presse reported. China won't raise interest rates for at least three months, official news agency Xinhua reported. Bonds sold by Fannie Mae, the largest U.S. mortgage buyer, are no riskier than those sold by the 10 largest commercial banks, Business Week said. Alcatel SA may buy Spatial Wireless, a U.S. maker of mobile-phone operator devices, to expand into the American market after years of curtailment due to slow demand, the Wall Street Journal said. Crude oil prices may fall next week as companies including Royal Dutch/Shell Group restart platforms and tankers resume shipments in the Gulf of Mexico after Hurricane Ivan, a Bloomberg survey of traders and analysts shows. Honda Motor expects to almost double sales of so-called hybrid cars next year with the introduction of a third model, Bloomberg reported. President Bush leads Senator Kerry by 13 percentage points among likely voters, according to a Gallup poll conducted for CNN and USA Today. Dan Rather, of CBS News, is fighting to preserve his reputation after conceding misgivings about documents he used for a report attacking President Bush's military service, London's Telegraph reported.
Late-Night Trading
Asian Indices are -.75% to +.75% on average.
S&P 500 indicated -.12%.
NASDAQ 100 indicated -.14%
BOTTOM LINE: I expect U.S. equities to open mixed in the morning as the major indices continue to consolidate after recent gains. I am not sure how much the Consumer Confidence reading will be hurt by the hurricanes and bitter political climate. However, diminishing domestic terrorism fears, falling interest rates and increasing stock prices should help. The Portfolio is 100% net long heading into tomorrow.
Thursday, September 16, 2004
Thursday Close
S&P 500 1,123.50 +.28%
NASDAQ 1,904.08 +.40%
Leading Sectors
Homebuilders +1.44%
Fashion +1.30%
Iron/Steel +1.23%
Lagging Sectors
Commodity -.09%
Tobacco -.27%
HMOs -.42%
Other
Crude Oil 44.17 +.64%
Natural Gas 4.78 +1.29%
Gold 406.60 +.02%
Base Metals 110.01 +1.13%
U.S. Dollar 88.81 -.38%
10-Yr. T-note Yield 4.07% -2.22%
VIX 14.39 -1.71%
Put/Call .76 -19.15%
NYSE Arms 1.45 -22.46%
After-hours Movers
TEK +8.7% after beating 1Q estimates substantially and raising 2Q guidance.
CAMD +13.49% after reiterating 2Q guidance.
NTBK -7.54% after cutting 3Q outlook substantially.
MKSI -8.89% after cutting 3Q and 4Q guidance.
Recommendations
Goldman Sachs reiterated Outperform on PFE, NKE and NEM. Goldman reiterated Underperform on SGP, RAI and MRK.
After-hours News
U.S. stocks finished modestly higher today on optimism over falling interest rates and declining inflation fears. Mirant said its CEO, Marce Fuller, plans to resign, as its directors come up with a plan to exit from Chapter 11 bankruptcy protection, Dow Jones Newswires reported. General Electric is in talks to sell some or all of its GE Capital International Services unit in India for as much as $1 billion, the Wall Street Journal reported. SpectraSite, which owns and operates mobile-phone transmission towers, may be acquired by a larger rival such as Crown Castle International, Business Week reported. The benchmark 10-year U.S. Treasury note gained the most in six weeks after a measure of consumer prices advanced less than expected in August and an index of manufacturing fell, Bloomberg said. U.S. airport screeners will pat down some travelers and test their carry-on bags for bombs to tighten security a month after explosives destroyed two Russian passenger planes, Bloomberg reported. Texas Instruments said it will buy back $1 billion worth of its stock and increase its dividend by more than 17%, Bloomberg reported. Medicare said it will pay for brain scans to help detect Alzheimer's disease, which affects 4.5 million Americans, Bloomberg said. The U.S. mint will issue redesigned five-cents coins, each with a new image of President Thomas Jefferson on one side and either an American bison or the Pacific Ocean on the other, to celebrate the opening of the American West, Bloomberg reported. Tropical Storm Jeanne, which moved through the Caribbean today, is the fifth storm to threaten the U.S. this year, putting 2004 on a pace to be the worst season in 88 years, Bloomberg reported. Pfizer, GlaxoSmithKline and other antidepressant makers will be ordered within months by U.S. regulators to give U.S. doctors more information on suicidal behavior linked to the pills, Bloomberg reported. Hurricane Ivan weakened to a tropical storm today after slamming into the U.S. Gulf Coast and spawning tornadoes that caused at least eight deaths on Florida's panhandle and left more than 1.2 million people and businesses in the Southeast without power, Bloomberg said. A Palestinian living in Florida was charged by federal prosecutors with raising money for terrorists and recruiting them to commit "violent jihad" around the globe, the Justice Department said.
BOTTOM LINE: The Portfolio was unchanged today as my rising consumer-oriented shorts offset gains in my software and internet longs. I did not trade in the afternoon, thus leaving the Portfolio 100% net long. The overall tone today was constructive, however volume was light. Interest rates plunged again which will be viewed as a big positive once investors begin to see accelerating U.S. economic growth in the fourth quarter. Exaggerated inflation fears are diminishing which bodes well for the broad market. The S&P 500 has risen almost 6% off its lows for the year, yet the estimated P/E on the index is still below 17. With interest rates back near historically low levels and profit growth still at very high rates, the market deserves a premium multiple.
NASDAQ 1,904.08 +.40%
Leading Sectors
Homebuilders +1.44%
Fashion +1.30%
Iron/Steel +1.23%
Lagging Sectors
Commodity -.09%
Tobacco -.27%
HMOs -.42%
Other
Crude Oil 44.17 +.64%
Natural Gas 4.78 +1.29%
Gold 406.60 +.02%
Base Metals 110.01 +1.13%
U.S. Dollar 88.81 -.38%
10-Yr. T-note Yield 4.07% -2.22%
VIX 14.39 -1.71%
Put/Call .76 -19.15%
NYSE Arms 1.45 -22.46%
After-hours Movers
TEK +8.7% after beating 1Q estimates substantially and raising 2Q guidance.
CAMD +13.49% after reiterating 2Q guidance.
NTBK -7.54% after cutting 3Q outlook substantially.
MKSI -8.89% after cutting 3Q and 4Q guidance.
Recommendations
Goldman Sachs reiterated Outperform on PFE, NKE and NEM. Goldman reiterated Underperform on SGP, RAI and MRK.
After-hours News
U.S. stocks finished modestly higher today on optimism over falling interest rates and declining inflation fears. Mirant said its CEO, Marce Fuller, plans to resign, as its directors come up with a plan to exit from Chapter 11 bankruptcy protection, Dow Jones Newswires reported. General Electric is in talks to sell some or all of its GE Capital International Services unit in India for as much as $1 billion, the Wall Street Journal reported. SpectraSite, which owns and operates mobile-phone transmission towers, may be acquired by a larger rival such as Crown Castle International, Business Week reported. The benchmark 10-year U.S. Treasury note gained the most in six weeks after a measure of consumer prices advanced less than expected in August and an index of manufacturing fell, Bloomberg said. U.S. airport screeners will pat down some travelers and test their carry-on bags for bombs to tighten security a month after explosives destroyed two Russian passenger planes, Bloomberg reported. Texas Instruments said it will buy back $1 billion worth of its stock and increase its dividend by more than 17%, Bloomberg reported. Medicare said it will pay for brain scans to help detect Alzheimer's disease, which affects 4.5 million Americans, Bloomberg said. The U.S. mint will issue redesigned five-cents coins, each with a new image of President Thomas Jefferson on one side and either an American bison or the Pacific Ocean on the other, to celebrate the opening of the American West, Bloomberg reported. Tropical Storm Jeanne, which moved through the Caribbean today, is the fifth storm to threaten the U.S. this year, putting 2004 on a pace to be the worst season in 88 years, Bloomberg reported. Pfizer, GlaxoSmithKline and other antidepressant makers will be ordered within months by U.S. regulators to give U.S. doctors more information on suicidal behavior linked to the pills, Bloomberg reported. Hurricane Ivan weakened to a tropical storm today after slamming into the U.S. Gulf Coast and spawning tornadoes that caused at least eight deaths on Florida's panhandle and left more than 1.2 million people and businesses in the Southeast without power, Bloomberg said. A Palestinian living in Florida was charged by federal prosecutors with raising money for terrorists and recruiting them to commit "violent jihad" around the globe, the Justice Department said.
BOTTOM LINE: The Portfolio was unchanged today as my rising consumer-oriented shorts offset gains in my software and internet longs. I did not trade in the afternoon, thus leaving the Portfolio 100% net long. The overall tone today was constructive, however volume was light. Interest rates plunged again which will be viewed as a big positive once investors begin to see accelerating U.S. economic growth in the fourth quarter. Exaggerated inflation fears are diminishing which bodes well for the broad market. The S&P 500 has risen almost 6% off its lows for the year, yet the estimated P/E on the index is still below 17. With interest rates back near historically low levels and profit growth still at very high rates, the market deserves a premium multiple.
Mid-day Update
S&P 500 1,124.07 +.33%
NASDAQ 1,906.53 +.53%
Leading Sectors
Fashion +1.31%
Disk Drives +1.23%
Iron/Steel +1.15%
Lagging Sectors
HMOs -.38%
Tobacco -.39%
Oil Service -.39%
Other
Crude Oil 43.05 -1.15%
Natural Gas 4.68 -2.99%
Gold 406.40 -.10%
Base Metals 110.01 +1.13%
U.S. Dollar 88.89 -.29%
10-Yr. T-note Yield 4.09% -1.67%
VIX 14.38 -1.78%
Put/Call .65 -30.85%
NYSE Arms 1.15 -38.50%
Market Movers
RIMM +5.5% after announcing a new keyboard technology for cell-phones.
XMSR +5.3% after announcing XM Radio Online, a premium Internet music service.
NTMD +11.0% after saying data from a clinical trial of its treatment for heart failure in African Americans will be presented at the AHA meeting in November.
SWFT -10.7% after lowering 3Q estimates substantially.
NARA -7.8% after Keefe, Bruyette downgrade to Underperform.
MNT -7.0% after SunTrust Robinson downgrade to Neutral.
Economic Data
Consumer Price Index for August rose .1% versus estimates of a .1% gain and a .1% decline in July.
CPI Ex Food & Energy for August rose .1% versus estimates of a .2% increase and a .1% gain in July.
Initial Jobless Claims were 333K last week versus estimates of 340K and 317K the prior week.
Continuing Claims were 2882K versus estimates of 2880K and 2885K prior.
Recommendations
Goldman Sachs reiterated Outperform on AFL, BIIB, DHR, MERQ and GE. Goldman reiterated Underperform on AMCC and INFA. UBS rated TS Buy, target $50. Citi SmithBarney rated FRO Sell, target $28. Citi rated OSG Sell, target $45. Merrill Lynch rated NVT Buy, target $42. ITW raised to Overweight at Prudential, target $105. NAV cut to Underweight at Prudential, target $38. ASO cut to Sell at Deutsche Bank, target $22.
Mid-day News
U.S. stocks are modestly higher mid-day on a better-than-expected consumer inflation report and the passing of Hurricane Ivan. Iraqi Prime Minister Allawi will speak to a joint session of Congress and address the UN General Assembly during his visit to the U.S. next week, the Washington Post reported. Viacom and Blackstone Group could bid for Lions Gate Entertainment since Sony agreed to buy MGM, the New York Daily News reported. The Mondavi family may try to buy the Robert Mondavi Winery and other luxury-wine producing assets from Robert Mondavi, the NY Times said. CanWest Global Communications, Canada's largest media company, is shopping for cable operations in the U.S., the Globe and Mail reported. Coca-Cola's credit rating may finally be reduced after it lowered its forecast for second-half earnings, Bloomberg reported. U.S. consumer prices barely rose in August, restrained by cheaper automobiles and apparel, Bloomberg reported. Money manager Michael Price is betting on retailers such as Dillard's because of their real estate assets, Bloomberg said. International investors purchased a net $64 billion of U.S. Treasuries, stocks, corporate bonds and other securities in July, Bloomberg reported. Office Depot, which said Tuesday its third-quarter and year earnings would miss analysts estimates, will buy back as much as $500 million of its shares, Bloomberg reported. Charles Schwab and other U.S. retail brokerages will have a "delayed recovery" in profitability as long as market volatility remains near fifty-year lows, according to Sanford C. Bernstein analysts, Bloomberg reported. The Federal Reserve Bank of Philadelphia's index of regional manufacturing fell to 13.4 this month, below expectations, from 28.5 in August, Bloomberg said. Delta Air's corporate credit rating was lowered two levels by S&P after the airline offered to exchange debt to cut costs and avoid a bankruptcy filing, Bloomberg reported. Hurricane Ivan will cost insurers less than first estimated after the third storm to hit southern U.S. states in six weeks skirted New Orleans, Bloomberg said.
BOTTOM LINE: The Portfolio is slightly higher mid-day as my rising software and Chinese ADR longs are more than offsetting my losses in consumer-oriented shorts. I took profits in one of my technology longs and added HNP long. I am using a stop-loss of $31.25 on this position. The tone of the market is pretty good today, however measures of investor anxiety are falling again. The extent of the decline in the Philly Fed is a bit worrisome, but I continue to expect an acceleration in economic growth during the fourth quarter. Interest rates are falling substantially today as another report shows that inflation is not the significant problem the bears and media made it out to be. As well, commodity prices are dropping again which is also a positive. I expect U.S. stocks to remain mixed into the close as worries over economic growth offset declining energy prices and interest rates.
NASDAQ 1,906.53 +.53%
Leading Sectors
Fashion +1.31%
Disk Drives +1.23%
Iron/Steel +1.15%
Lagging Sectors
HMOs -.38%
Tobacco -.39%
Oil Service -.39%
Other
Crude Oil 43.05 -1.15%
Natural Gas 4.68 -2.99%
Gold 406.40 -.10%
Base Metals 110.01 +1.13%
U.S. Dollar 88.89 -.29%
10-Yr. T-note Yield 4.09% -1.67%
VIX 14.38 -1.78%
Put/Call .65 -30.85%
NYSE Arms 1.15 -38.50%
Market Movers
RIMM +5.5% after announcing a new keyboard technology for cell-phones.
XMSR +5.3% after announcing XM Radio Online, a premium Internet music service.
NTMD +11.0% after saying data from a clinical trial of its treatment for heart failure in African Americans will be presented at the AHA meeting in November.
SWFT -10.7% after lowering 3Q estimates substantially.
NARA -7.8% after Keefe, Bruyette downgrade to Underperform.
MNT -7.0% after SunTrust Robinson downgrade to Neutral.
Economic Data
Consumer Price Index for August rose .1% versus estimates of a .1% gain and a .1% decline in July.
CPI Ex Food & Energy for August rose .1% versus estimates of a .2% increase and a .1% gain in July.
Initial Jobless Claims were 333K last week versus estimates of 340K and 317K the prior week.
Continuing Claims were 2882K versus estimates of 2880K and 2885K prior.
Recommendations
Goldman Sachs reiterated Outperform on AFL, BIIB, DHR, MERQ and GE. Goldman reiterated Underperform on AMCC and INFA. UBS rated TS Buy, target $50. Citi SmithBarney rated FRO Sell, target $28. Citi rated OSG Sell, target $45. Merrill Lynch rated NVT Buy, target $42. ITW raised to Overweight at Prudential, target $105. NAV cut to Underweight at Prudential, target $38. ASO cut to Sell at Deutsche Bank, target $22.
Mid-day News
U.S. stocks are modestly higher mid-day on a better-than-expected consumer inflation report and the passing of Hurricane Ivan. Iraqi Prime Minister Allawi will speak to a joint session of Congress and address the UN General Assembly during his visit to the U.S. next week, the Washington Post reported. Viacom and Blackstone Group could bid for Lions Gate Entertainment since Sony agreed to buy MGM, the New York Daily News reported. The Mondavi family may try to buy the Robert Mondavi Winery and other luxury-wine producing assets from Robert Mondavi, the NY Times said. CanWest Global Communications, Canada's largest media company, is shopping for cable operations in the U.S., the Globe and Mail reported. Coca-Cola's credit rating may finally be reduced after it lowered its forecast for second-half earnings, Bloomberg reported. U.S. consumer prices barely rose in August, restrained by cheaper automobiles and apparel, Bloomberg reported. Money manager Michael Price is betting on retailers such as Dillard's because of their real estate assets, Bloomberg said. International investors purchased a net $64 billion of U.S. Treasuries, stocks, corporate bonds and other securities in July, Bloomberg reported. Office Depot, which said Tuesday its third-quarter and year earnings would miss analysts estimates, will buy back as much as $500 million of its shares, Bloomberg reported. Charles Schwab and other U.S. retail brokerages will have a "delayed recovery" in profitability as long as market volatility remains near fifty-year lows, according to Sanford C. Bernstein analysts, Bloomberg reported. The Federal Reserve Bank of Philadelphia's index of regional manufacturing fell to 13.4 this month, below expectations, from 28.5 in August, Bloomberg said. Delta Air's corporate credit rating was lowered two levels by S&P after the airline offered to exchange debt to cut costs and avoid a bankruptcy filing, Bloomberg reported. Hurricane Ivan will cost insurers less than first estimated after the third storm to hit southern U.S. states in six weeks skirted New Orleans, Bloomberg said.
BOTTOM LINE: The Portfolio is slightly higher mid-day as my rising software and Chinese ADR longs are more than offsetting my losses in consumer-oriented shorts. I took profits in one of my technology longs and added HNP long. I am using a stop-loss of $31.25 on this position. The tone of the market is pretty good today, however measures of investor anxiety are falling again. The extent of the decline in the Philly Fed is a bit worrisome, but I continue to expect an acceleration in economic growth during the fourth quarter. Interest rates are falling substantially today as another report shows that inflation is not the significant problem the bears and media made it out to be. As well, commodity prices are dropping again which is also a positive. I expect U.S. stocks to remain mixed into the close as worries over economic growth offset declining energy prices and interest rates.
Wednesday, September 15, 2004
Wednesday Close
S&P 500 1,120.37 -.71%
NASDAQ 1,896.52 -.99%
Leading Sectors
HMO's +1.15%
Oil Service +.36%
Gaming +.32%
Lagging Sectors
Disk Drives -2.03%
Networking -2.76%
Semis -3.23%
Other
Crude Oil 43.57 -.02%
Natural Gas 4.85 +.64%
Gold 406.30 -.12%
Base Metals 108.78 +.58%
U.S. Dollar 89.15 +.78%
10-Yr. T-note Yield 4.16% +.93%
VIX 14.64 +7.96%
Put/Call .94 +18.99%
NYSE Arms 1.87 +122.62%
After-hours Movers
None of note.
Recommendations
Goldman reiterated Outperform on BBY, KO and KRB. Goldman reiterated Underperform on RAI.
After-hours News
U.S. stocks finished lower today on profit-taking in the technology sector. After the close, Venezuela's congress may approve changes to the constitution next year that would allow President Chavez to be re-elected indefinitely, removing the current limit of two 6-year terms, Bloomberg reported. Infineon Technologies AG agreed to please guilty to fixing prices for digital memory chips and pay a $160 million criminal fine, the third largest U.S. antitrust enforcement penalty, Bloomberg reported. A judge cut in half a $268 million request for fees from lawyers who represented California consumers in an antitrust suit against Microsoft, Bloomberg said. Delta Air's outside auditors questioned the airline's ability to continue as a viable business, Bloomberg reported. Goldman Sachs agreed to pay $656 million for stakes in 12 U.S. power plants and a natural-gas pipeline from PG&E's National Energy & Gas Transmission unit, Bloomberg reported.
BOTTOM LINE: The Portfolio finished higher today on strength in my security and internet longs and weakness in my consumer-oriented shorts. I did not trade in the afternoon, thus leaving the Portfolio 100% net long. Measures of investor anxiety rose throughout the day, which is a positive. The advance/decline line was weak, however it finished well off its lows. Finally, energy prices reversed today, which is very positive considering the current and potential disruptions from Hurricane Ivan and the much-larger-than-expected drawdown in inventories reported this morning.
NASDAQ 1,896.52 -.99%
Leading Sectors
HMO's +1.15%
Oil Service +.36%
Gaming +.32%
Lagging Sectors
Disk Drives -2.03%
Networking -2.76%
Semis -3.23%
Other
Crude Oil 43.57 -.02%
Natural Gas 4.85 +.64%
Gold 406.30 -.12%
Base Metals 108.78 +.58%
U.S. Dollar 89.15 +.78%
10-Yr. T-note Yield 4.16% +.93%
VIX 14.64 +7.96%
Put/Call .94 +18.99%
NYSE Arms 1.87 +122.62%
After-hours Movers
None of note.
Recommendations
Goldman reiterated Outperform on BBY, KO and KRB. Goldman reiterated Underperform on RAI.
After-hours News
U.S. stocks finished lower today on profit-taking in the technology sector. After the close, Venezuela's congress may approve changes to the constitution next year that would allow President Chavez to be re-elected indefinitely, removing the current limit of two 6-year terms, Bloomberg reported. Infineon Technologies AG agreed to please guilty to fixing prices for digital memory chips and pay a $160 million criminal fine, the third largest U.S. antitrust enforcement penalty, Bloomberg reported. A judge cut in half a $268 million request for fees from lawyers who represented California consumers in an antitrust suit against Microsoft, Bloomberg said. Delta Air's outside auditors questioned the airline's ability to continue as a viable business, Bloomberg reported. Goldman Sachs agreed to pay $656 million for stakes in 12 U.S. power plants and a natural-gas pipeline from PG&E's National Energy & Gas Transmission unit, Bloomberg reported.
BOTTOM LINE: The Portfolio finished higher today on strength in my security and internet longs and weakness in my consumer-oriented shorts. I did not trade in the afternoon, thus leaving the Portfolio 100% net long. Measures of investor anxiety rose throughout the day, which is a positive. The advance/decline line was weak, however it finished well off its lows. Finally, energy prices reversed today, which is very positive considering the current and potential disruptions from Hurricane Ivan and the much-larger-than-expected drawdown in inventories reported this morning.
Mid-day Update
S&P 500 1,121.55 -.60%
NASDAQ 1,895.79 -1.02%
Leading Sectors
Oil Service +1.39%
HMO's +.78%
Broadcasting +.40%
Lagging Sectors
Telecom -1.70%
Networking -2.72%
Semis -3.15%
Other
Crude Oil 44.83 +.99%
Natural Gas 4.86 -1.38%
Gold 406.50 -.25%
Base Metals 108.78 +.58%
U.S. Dollar 89.24 +.88%
10-Yr. T-note Yield 4.15% +.70%
VIX 14.46 +6.64%
Put/Call 1.0 +26.58%
NYSE Arms 1.65 +96.43%
Market Movers
TASR +19.0% after U.K./Wales approval of its stun gun for police use and the availability on its web site of the consumer version.
KO -4.33% after lowering 2nd-Half forecast.
XLNX -6.06% after cutting 2Q forecast and Wachovia downgrade to Market Perform.
AMZ +37.3% after PacifiCare Health Systems(PHS) said it agreed to buy it for $502 million. PHS +5.3%.
CYBX +23.2% after Advanced Neuromodulation Systems(ANSI) said it is prepared to offer $520 million in cash and stock to buy the company.
BBY +5.09% after meeting 2Q estimates and re-affirming 05 outlook.
CLS -12.4% after cutting 3Q estimates and multiple downgrades.
BHE -8.56% on CLS news.
Economic Data
Empire Manufacturing for September rose to 28.34 versus estimates of 20.0 and a reading of 13.22 in August.
Business Inventories for July rose .9% versus estimates of a .8% increase and a 1.1% gain in June.
Industrial Production for August rose .1% versus estimates of a .5% gain and a .6% increase in July.
Capacity Utilization for August was 77.3% versus estimates of 77.4% and 77.3% in July.
Recommendations
Goldman Sachs reiterated Outperform on SYMC, DELL, EMC, DD, HD, YHOO, INTC, AMD, BBY, COH, LIZ, FCE, KO, KRB, GDT and IBM. Goldman reiterated Underperform on RAI, RNWK, FRX and PSS. Goldman lowered Computer Hardware and Software industries to Neutral from Attractive. Citi SmithBarney reiterated Buy on AFC, target $36. NVDA cut to Reduce at UBS, target $11. ADTN rated Buy at Deutsche Bank, target $30. FFIV rated Buy at Deutsche Bank, target $33. SONC rated Sector Outperform at CIBC, target $28. RFMD rated Underperform at CSFB, target $5.0. UTX raised to Overweight at JP Morgan. TSO raised to Overweight at Prudential, target $25. LABS rated Buy at Bank of America, target $35. PSUN raised to Buy at Bank of America, target $26. MIL rated Buy at Bank of America, target $57. Morgan Stanley lowered Auto and Auto Parts industries to Cautious from In-Line. STLD rated Buy at Merrill, target $45. KIND rated Buy at Merrill Lynch, target $31.
Mid-day News
U.S. stocks are lower mid-day as technology stocks give back some of their recent gains. CBS News, a unit of Viacom, may damage its credibility if documents it used in a report related to President Bush's National Guard service prove to be forgeries, the Wall Street Journal said. China's government will crack down harder on corruption and abuse of power among government officials, China Central tv said. Gander Mountain executives and directors have bought shares of the sporting-goods retailer following the company's IPO in April, the Wall Street Journal reported. Amazon.com is developing a search engine the company says will be more sophisticated than Google's, the NY Times reported. The number of Sudanese dying in the country's Darfur region from disease and violence is between 6,000 and 10,000 a month, the Washington Post reported. The median price of a home in Los Angeles County rose 20.4% from a year earlier, the LA Times reported. Tommy Hilfiger plans to snap up as many as five European brands to fuel growth in the region, Handelsblatt reported. A federal appeals court yesterday rejected a motion by the plaintiff in the Supreme Court's 1973 Roe v. Wade case to overturn the landmark ruling that legalized abortion in the U.S., the Dallas Morning News said. OPEC plans to boost quotas by 3.8% in a bid to lower near-record prices, said oil officials from Kuwait and Qatar, Bloomberg reported. Manufacturing in New York state grew at a faster-than-expected pace this month as rising orders and sales led to more hiring, Bloomberg reported. National Hockey League owners meet in New York today and may authorize a lockout of players if the parties fail to reach a new labor agreement before midnight, Bloomberg said. U.S. industrial production rose less-than-expected in August as the manufacture of business equipment slipped, mining output dropped, and utility production fell "significantly," Bloomberg reported. Jacob Goldfield, CIO for George Soros's flagship $8.3 billion hedge fund, resigned to start his own money management group, Bloomberg reported. The growth of Linux is being threatened by a $50 billion lawsuit against IBM, Bloomberg said. Six percent of adults with health insurance have bought low-cost drugs from Canada, according to a poll from the Civil Society Institute. Taser International said their weapons have been approved for use by police in England and Wales, Bloomberg reported. Martha Stewart asked a federal judge to let her begin serving her five-month prison term as soon as possible, while she appeals her conviction for obstructing justice, Bloomberg reported. Mobile, Alabama, residents made final preparations to face the most-powerful hurricane in 25 years as Hurricane Ivan takes aim at the city, Bloomberg said.
BOTTOM LINE: The Portfolio is higher mid-day as substantial gains in my security and internet longs and my declining consumer shorts are more than offsetting losses in other longs. I have not traded today and the Portfolio is still 100% net long. Measures of investor anxiety are climbing today which is a positive. While most stocks are lower, a number of market leaders are gaining. More bullish news for energy could not push prices substantially higher. I continue to believe oil will head towards $35/bbl. during the fourth quarter. U.S. stocks should trade mixed-to-higher into the afternoon on profit-taking and short-covering.
NASDAQ 1,895.79 -1.02%
Leading Sectors
Oil Service +1.39%
HMO's +.78%
Broadcasting +.40%
Lagging Sectors
Telecom -1.70%
Networking -2.72%
Semis -3.15%
Other
Crude Oil 44.83 +.99%
Natural Gas 4.86 -1.38%
Gold 406.50 -.25%
Base Metals 108.78 +.58%
U.S. Dollar 89.24 +.88%
10-Yr. T-note Yield 4.15% +.70%
VIX 14.46 +6.64%
Put/Call 1.0 +26.58%
NYSE Arms 1.65 +96.43%
Market Movers
TASR +19.0% after U.K./Wales approval of its stun gun for police use and the availability on its web site of the consumer version.
KO -4.33% after lowering 2nd-Half forecast.
XLNX -6.06% after cutting 2Q forecast and Wachovia downgrade to Market Perform.
AMZ +37.3% after PacifiCare Health Systems(PHS) said it agreed to buy it for $502 million. PHS +5.3%.
CYBX +23.2% after Advanced Neuromodulation Systems(ANSI) said it is prepared to offer $520 million in cash and stock to buy the company.
BBY +5.09% after meeting 2Q estimates and re-affirming 05 outlook.
CLS -12.4% after cutting 3Q estimates and multiple downgrades.
BHE -8.56% on CLS news.
Economic Data
Empire Manufacturing for September rose to 28.34 versus estimates of 20.0 and a reading of 13.22 in August.
Business Inventories for July rose .9% versus estimates of a .8% increase and a 1.1% gain in June.
Industrial Production for August rose .1% versus estimates of a .5% gain and a .6% increase in July.
Capacity Utilization for August was 77.3% versus estimates of 77.4% and 77.3% in July.
Recommendations
Goldman Sachs reiterated Outperform on SYMC, DELL, EMC, DD, HD, YHOO, INTC, AMD, BBY, COH, LIZ, FCE, KO, KRB, GDT and IBM. Goldman reiterated Underperform on RAI, RNWK, FRX and PSS. Goldman lowered Computer Hardware and Software industries to Neutral from Attractive. Citi SmithBarney reiterated Buy on AFC, target $36. NVDA cut to Reduce at UBS, target $11. ADTN rated Buy at Deutsche Bank, target $30. FFIV rated Buy at Deutsche Bank, target $33. SONC rated Sector Outperform at CIBC, target $28. RFMD rated Underperform at CSFB, target $5.0. UTX raised to Overweight at JP Morgan. TSO raised to Overweight at Prudential, target $25. LABS rated Buy at Bank of America, target $35. PSUN raised to Buy at Bank of America, target $26. MIL rated Buy at Bank of America, target $57. Morgan Stanley lowered Auto and Auto Parts industries to Cautious from In-Line. STLD rated Buy at Merrill, target $45. KIND rated Buy at Merrill Lynch, target $31.
Mid-day News
U.S. stocks are lower mid-day as technology stocks give back some of their recent gains. CBS News, a unit of Viacom, may damage its credibility if documents it used in a report related to President Bush's National Guard service prove to be forgeries, the Wall Street Journal said. China's government will crack down harder on corruption and abuse of power among government officials, China Central tv said. Gander Mountain executives and directors have bought shares of the sporting-goods retailer following the company's IPO in April, the Wall Street Journal reported. Amazon.com is developing a search engine the company says will be more sophisticated than Google's, the NY Times reported. The number of Sudanese dying in the country's Darfur region from disease and violence is between 6,000 and 10,000 a month, the Washington Post reported. The median price of a home in Los Angeles County rose 20.4% from a year earlier, the LA Times reported. Tommy Hilfiger plans to snap up as many as five European brands to fuel growth in the region, Handelsblatt reported. A federal appeals court yesterday rejected a motion by the plaintiff in the Supreme Court's 1973 Roe v. Wade case to overturn the landmark ruling that legalized abortion in the U.S., the Dallas Morning News said. OPEC plans to boost quotas by 3.8% in a bid to lower near-record prices, said oil officials from Kuwait and Qatar, Bloomberg reported. Manufacturing in New York state grew at a faster-than-expected pace this month as rising orders and sales led to more hiring, Bloomberg reported. National Hockey League owners meet in New York today and may authorize a lockout of players if the parties fail to reach a new labor agreement before midnight, Bloomberg said. U.S. industrial production rose less-than-expected in August as the manufacture of business equipment slipped, mining output dropped, and utility production fell "significantly," Bloomberg reported. Jacob Goldfield, CIO for George Soros's flagship $8.3 billion hedge fund, resigned to start his own money management group, Bloomberg reported. The growth of Linux is being threatened by a $50 billion lawsuit against IBM, Bloomberg said. Six percent of adults with health insurance have bought low-cost drugs from Canada, according to a poll from the Civil Society Institute. Taser International said their weapons have been approved for use by police in England and Wales, Bloomberg reported. Martha Stewart asked a federal judge to let her begin serving her five-month prison term as soon as possible, while she appeals her conviction for obstructing justice, Bloomberg reported. Mobile, Alabama, residents made final preparations to face the most-powerful hurricane in 25 years as Hurricane Ivan takes aim at the city, Bloomberg said.
BOTTOM LINE: The Portfolio is higher mid-day as substantial gains in my security and internet longs and my declining consumer shorts are more than offsetting losses in other longs. I have not traded today and the Portfolio is still 100% net long. Measures of investor anxiety are climbing today which is a positive. While most stocks are lower, a number of market leaders are gaining. More bullish news for energy could not push prices substantially higher. I continue to believe oil will head towards $35/bbl. during the fourth quarter. U.S. stocks should trade mixed-to-higher into the afternoon on profit-taking and short-covering.
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