S&P 500 1,113.56 -1.39%
NASDAQ 1,885.71 -1.85%
Leading Sectors
Broadcasting +.84%
Homebuilders +.36%
Oil Service -.11%
Lagging Sectors
Networking -2.89%
Semis -2.97%
I-Banks -3.30%
Other
Crude Oil 47.95 -.83%
Natural Gas 5.63 unch.
Gold 409.10 +.02%
Base Metals 115.28 +1.14%
U.S. Dollar 88.49 +.41%
10-Yr. T-note Yield 3.98% -1.42%
VIX 14.74 +7.91%
Put/Call 1.10 +59.42%
NYSE Arms 2.36 +177.65%
After-hours Movers
MERX +5.96% after beating 1Q estimates and raising 2Q guidance.
MSO +9.81% after saying it agreed to work with television producer Mark Burnett to create a primetime TV series featuring Martha Stewart.
COGN +3.12% after beating 2Q estimates and giving positive outlook.
BBBY -3.41% after beating 2Q estimates, but giving conservative 3Q guidance.
Recommendations
Goldman Sachs reiterated Outperform on CLX.
After-hours News
U.S. stocks fell today on profit-taking, worries over slowing earnings growth and rising energy prices. After the close, NATO allies are expected to send about 300 officers to Iraq to establish and operated a military academy outside Baghdad, the AP reported. Oil refiners asked to borrow crude oil from the U.S. Strategic Petroleum Reserve as they seek to recover from losses related to Hurricane Ivan, Dow Jones Newswires reported. Bed Bath & Beyond said second-quarter net income rose to $120 million, meeting analysts' estimates, Bloomberg reported. The U.S. Senate approved Porter Goss, a Republican congressman, to be director of the CIA, confirming President Bush's nominee to lead the agency through a reorganization recommended by the 9/11 commission, Bloomberg reported. US Airways will seek court permission Friday to impose new labor contract terms to reduce costs if tentative agreements with unions can't be reached, Bloomberg said.
BOTTOM LINE: The Portfolio finished lower today on declines in my Chinese ADR, internet and telecom-related longs. I exited a few more longs in the afternoon and added some new shorts in various sectors, thus leaving the Portfolio market neutral(longs-shorts=0% market exposure). One of my new shorts is SYMC and I am using a $52.60 stop-loss on this position. The tone of the market worsened into the afternoon as energy prices continued to rise. I do not expect this correction to bring stocks substantially lower. U.S. equities will likely trade weaker-to-neutral through mid-October before another upwards thrust in stock prices commences and lasts through year-end. The likely weakness over the next few weeks should be used by longer-term investors to build positions in favorite longs.
Wednesday, September 22, 2004
Mid-day Update
S&P 500 1,116.68 -1.11%
NASDAQ 1,894.44 -1.39%
Leading Sectors
Broadcasting +.19%
Oil Service +.12%
Homebuilders +.11%
Lagging Sectors
I-Banks -2.18%
Restaurants -2.25%
Semis -2.30%
Other
Crude Oil 48.20 +3.08%
Natural Gas 5.61 +.04%
Gold 408.90 -.32%
Base Metals 115.28 +1.14%
U.S. Dollar 88.55 +.48%
10-Yr. T-note Yield 3.99% -1.04%
VIX 14.48 +6.0%
Put/Call 1.08 +56.52%
NYSE Arms 1.71 +101.18%
Market Movers
FNM -6.9% after saying federal regulators uncovered practices that don't comply with generally accepted accounting principles, raising doubts about the validity of earnings.
MWD -5.2% after missing 3Q estimates and giving cautious outlook.
CMTL +10.0% after beating 4Q estimates and giving positive guidance.
COCO +9.8% after saying its Bryman College campus now can comply with the U.S. Education Department's rules to receive tuition reimbursements in advance.
TIBX +8.65% after beating 3Q estimates and announcing a $50 million share buyback.
ONYX +67.5% after Capital One(COF) agreed to buy it for $191 million.
PETD +9.81% after saying it will be added to the S&P 600.
CYH +9.1% after Fortsmann Little sold its remaining 23% stake in the rural-hospital chain for $560 million and multiple upgrades.
PCLN +7.4% after announcing $161m acquisition, reaffirming 3Q and boosting 4Q.
JBL +5.8% after meeting 4Q estimates and raising 1Q forecast.
LEAP -16.7% after saying it expects customer turnover to rise.
CBK -11.4% after missing 2Q revenue estimates.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on KO, IP and CSCO. Citi SmithBarney reiterated Sell on ADP. Citi reiterated Buy on GS, target $125. Citi reiterated Buy on JBL, target $32. Citi reiterated Buy on CSCO, target $30. Citi reiterated Buy on CYH, target $36. Citi reiterated Sell on AFL, target $40. Citi reiterated Buy on PLUG, target $13. Citi reiterated Buy on DIS, target $30. Citi reiterated Buy on SPLS, target $35. Citi reiterated Buy on AZO, target $91. CYH named Merrill Lynch Focus 1 stock of the week.
Mid-day News
U.S. stocks are lower mid-day on worries over rising energy prices and weaker earnings. CBS News said a producer broke network policy by putting a source in contact with an aide to Senator Kerry in the ongoing falsified document scandal, the NY Times reported. American Capital Strategies(ACAS), a buyout fund, plans to offer 11.5 million shares at $31.60 each, with 9 million of the shares to be borrowed by underwriters and sold "short," the NY Times reported. The Swift Boat Veterans for Truth will air a new commercial that accuses Senator Kerry of secretly meeting with enemy leaders in Paris during the Vietnam War, the Washington Post reported. Republican leader in the U.S. Congress are pushing to revive legislation that would encourage contributions to charities through tax breaks, the Washington Post reported. Canada's federal government will ban low-carb claims and trademarks that imply such claims, such as Unilever's Carb Options and General Mills' Carb Monitor, the Toronto Star reported. Royal Dutch/Shell plans to increase spending to $15 billion/yr. and drill more to replenish oil and gas reserves that had been overstated for years, Bloomberg said. Eastman Kodak said sales of digital products are increasing more than it expected as film sales decline faster than it anticipated, Bloomberg reported. FedEx said quarterly profit more than doubles, as international air shipments climbed and the company carried more U.S. ground freight, Bloomberg said. Morgan Stanley said fiscal third-quarter profit tumbled 34% as bond trading plunged, Bloomberg reported. GM and Ford will offer no-interest loans of as long as six years on most 2004 cars and trucks to clear them from dealer lots amid slow sales, Bloomberg said. Viacom's CBS television unit was fined a record $550,000 by the U.S. Federal Communications Commission for airing indecent material during the Super Bowl halftime show, which singer Janet Jackson's breast was exposed, Bloomberg reported. Computer Associates will pay $225 million to settle an investigation by U.S. regulators into how the software maker inflated sales by $2.2 billion and won't be prosecuted for the fraud in exchange for instituting accounting reforms, including and outside examiner, Bloomberg reported. The benchmark 10-year U.S. Treasury note's yield fell below 4% for the first time since April 2 on growing speculation that inflation won't accelerate, Bloomberg said. Crude oil futures are rising after an Energy Department report showed that U.S. inventories declined because Hurricane Ivan forced oil companies to shut production platforms in the Gulf of Mexico, Bloomberg reported.
BOTTOM LINE: The Portfolio is lower mid-day on declines in my Chinese ADR longs, internet and telecom-related longs. I exited a few long positions this morning and added some more technology shorts, thus leaving the Portfolio 50% net long. One of my new shorts is AAPL and I am using a $39 stop-loss on this position. Rising energy prices finally caught up with the Bulls today. The tone of the market is poor today, however it is good to see measures of investor anxiety rising. Base Metal prices are close to a breakout on demand from rebuilding in Florida and an acceleration of Chinese growth. A short-term mild correction has likely begun in U.S. stocks that may extend through the first few weeks in October. Over the next several weeks, investors will likely focus on relatively disappointing 3Q earnings, violence in Iraq and high energy prices. This should present one last opportunity to buy stocks at depressed levels before the fourth quarter rally I envision beginning in the latter part of October.
NASDAQ 1,894.44 -1.39%
Leading Sectors
Broadcasting +.19%
Oil Service +.12%
Homebuilders +.11%
Lagging Sectors
I-Banks -2.18%
Restaurants -2.25%
Semis -2.30%
Other
Crude Oil 48.20 +3.08%
Natural Gas 5.61 +.04%
Gold 408.90 -.32%
Base Metals 115.28 +1.14%
U.S. Dollar 88.55 +.48%
10-Yr. T-note Yield 3.99% -1.04%
VIX 14.48 +6.0%
Put/Call 1.08 +56.52%
NYSE Arms 1.71 +101.18%
Market Movers
FNM -6.9% after saying federal regulators uncovered practices that don't comply with generally accepted accounting principles, raising doubts about the validity of earnings.
MWD -5.2% after missing 3Q estimates and giving cautious outlook.
CMTL +10.0% after beating 4Q estimates and giving positive guidance.
COCO +9.8% after saying its Bryman College campus now can comply with the U.S. Education Department's rules to receive tuition reimbursements in advance.
TIBX +8.65% after beating 3Q estimates and announcing a $50 million share buyback.
ONYX +67.5% after Capital One(COF) agreed to buy it for $191 million.
PETD +9.81% after saying it will be added to the S&P 600.
CYH +9.1% after Fortsmann Little sold its remaining 23% stake in the rural-hospital chain for $560 million and multiple upgrades.
PCLN +7.4% after announcing $161m acquisition, reaffirming 3Q and boosting 4Q.
JBL +5.8% after meeting 4Q estimates and raising 1Q forecast.
LEAP -16.7% after saying it expects customer turnover to rise.
CBK -11.4% after missing 2Q revenue estimates.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on KO, IP and CSCO. Citi SmithBarney reiterated Sell on ADP. Citi reiterated Buy on GS, target $125. Citi reiterated Buy on JBL, target $32. Citi reiterated Buy on CSCO, target $30. Citi reiterated Buy on CYH, target $36. Citi reiterated Sell on AFL, target $40. Citi reiterated Buy on PLUG, target $13. Citi reiterated Buy on DIS, target $30. Citi reiterated Buy on SPLS, target $35. Citi reiterated Buy on AZO, target $91. CYH named Merrill Lynch Focus 1 stock of the week.
Mid-day News
U.S. stocks are lower mid-day on worries over rising energy prices and weaker earnings. CBS News said a producer broke network policy by putting a source in contact with an aide to Senator Kerry in the ongoing falsified document scandal, the NY Times reported. American Capital Strategies(ACAS), a buyout fund, plans to offer 11.5 million shares at $31.60 each, with 9 million of the shares to be borrowed by underwriters and sold "short," the NY Times reported. The Swift Boat Veterans for Truth will air a new commercial that accuses Senator Kerry of secretly meeting with enemy leaders in Paris during the Vietnam War, the Washington Post reported. Republican leader in the U.S. Congress are pushing to revive legislation that would encourage contributions to charities through tax breaks, the Washington Post reported. Canada's federal government will ban low-carb claims and trademarks that imply such claims, such as Unilever's Carb Options and General Mills' Carb Monitor, the Toronto Star reported. Royal Dutch/Shell plans to increase spending to $15 billion/yr. and drill more to replenish oil and gas reserves that had been overstated for years, Bloomberg said. Eastman Kodak said sales of digital products are increasing more than it expected as film sales decline faster than it anticipated, Bloomberg reported. FedEx said quarterly profit more than doubles, as international air shipments climbed and the company carried more U.S. ground freight, Bloomberg said. Morgan Stanley said fiscal third-quarter profit tumbled 34% as bond trading plunged, Bloomberg reported. GM and Ford will offer no-interest loans of as long as six years on most 2004 cars and trucks to clear them from dealer lots amid slow sales, Bloomberg said. Viacom's CBS television unit was fined a record $550,000 by the U.S. Federal Communications Commission for airing indecent material during the Super Bowl halftime show, which singer Janet Jackson's breast was exposed, Bloomberg reported. Computer Associates will pay $225 million to settle an investigation by U.S. regulators into how the software maker inflated sales by $2.2 billion and won't be prosecuted for the fraud in exchange for instituting accounting reforms, including and outside examiner, Bloomberg reported. The benchmark 10-year U.S. Treasury note's yield fell below 4% for the first time since April 2 on growing speculation that inflation won't accelerate, Bloomberg said. Crude oil futures are rising after an Energy Department report showed that U.S. inventories declined because Hurricane Ivan forced oil companies to shut production platforms in the Gulf of Mexico, Bloomberg reported.
BOTTOM LINE: The Portfolio is lower mid-day on declines in my Chinese ADR longs, internet and telecom-related longs. I exited a few long positions this morning and added some more technology shorts, thus leaving the Portfolio 50% net long. One of my new shorts is AAPL and I am using a $39 stop-loss on this position. Rising energy prices finally caught up with the Bulls today. The tone of the market is poor today, however it is good to see measures of investor anxiety rising. Base Metal prices are close to a breakout on demand from rebuilding in Florida and an acceleration of Chinese growth. A short-term mild correction has likely begun in U.S. stocks that may extend through the first few weeks in October. Over the next several weeks, investors will likely focus on relatively disappointing 3Q earnings, violence in Iraq and high energy prices. This should present one last opportunity to buy stocks at depressed levels before the fourth quarter rally I envision beginning in the latter part of October.
Wednesday Watch
Earnings of Note
Company/Estimate
BSC/1.98
BBBY/.39
CAG/.26
DRI/.43
DBRN/.37
FDX/1.08
MWD/.95
Splits
None of note.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on PAYX and CSCO.
Late-Night News
Asian indices are mostly lower on weakness in the region's exporters. Analysts and brokers are bracing for fallout in Japan on Citigroup after regulators shut the bank's Tokyo-based private banking unit, the Wall Street Journal reported. South Korean researchers discovered a gene that may be responsible for obesity, which may lead to more effective drugs for overweight people, the Korea Herald reported. Vodafone Group is to start selling a range of mobile phones superior to those of its competitors as it seeks to enter the so-called third-generation market, the Financial Times reported. Broadcom is shifting orders to Shanghai-based Semiconductor Manufacturing Intl. from Taiwan Semiconductor Manufacturing to cut costs, the Commercial Times said. An Iraqi group led by wanted terrorist al-Zarqawi said it executed a second U.S. hostage, Bloomberg reported. McDonald's received government approval to start franchising its fast-food restaurants in China, a change that will boost profit in the world's most populous nation, Bloomberg reported. OAO Yukos Oil said the Russian government may be considering ways to settle a $7.5 billion tax bill without breaking up the company, Bloomberg said. Sales gains at U.S. retailers are expected to rise 4.5% this holiday season on demand for plasma televisions and new fashionable clothing, Bloomberg said.
Late-Night Trading
Asian Indices are -1.50% to unch. on average.
S&P 500 indicated -.29%.
NASDAQ 100 indicated -.31%
BOTTOM LINE: I expect U.S. equities to open modestly lower in the morning on concerns over the continuing rise in energy prices. However, better earnings and short-covering could push shares higher later in the day. The Portfolio is 100% net long heading into tomorrow.
Company/Estimate
BSC/1.98
BBBY/.39
CAG/.26
DRI/.43
DBRN/.37
FDX/1.08
MWD/.95
Splits
None of note.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on PAYX and CSCO.
Late-Night News
Asian indices are mostly lower on weakness in the region's exporters. Analysts and brokers are bracing for fallout in Japan on Citigroup after regulators shut the bank's Tokyo-based private banking unit, the Wall Street Journal reported. South Korean researchers discovered a gene that may be responsible for obesity, which may lead to more effective drugs for overweight people, the Korea Herald reported. Vodafone Group is to start selling a range of mobile phones superior to those of its competitors as it seeks to enter the so-called third-generation market, the Financial Times reported. Broadcom is shifting orders to Shanghai-based Semiconductor Manufacturing Intl. from Taiwan Semiconductor Manufacturing to cut costs, the Commercial Times said. An Iraqi group led by wanted terrorist al-Zarqawi said it executed a second U.S. hostage, Bloomberg reported. McDonald's received government approval to start franchising its fast-food restaurants in China, a change that will boost profit in the world's most populous nation, Bloomberg reported. OAO Yukos Oil said the Russian government may be considering ways to settle a $7.5 billion tax bill without breaking up the company, Bloomberg said. Sales gains at U.S. retailers are expected to rise 4.5% this holiday season on demand for plasma televisions and new fashionable clothing, Bloomberg said.
Late-Night Trading
Asian Indices are -1.50% to unch. on average.
S&P 500 indicated -.29%.
NASDAQ 100 indicated -.31%
BOTTOM LINE: I expect U.S. equities to open modestly lower in the morning on concerns over the continuing rise in energy prices. However, better earnings and short-covering could push shares higher later in the day. The Portfolio is 100% net long heading into tomorrow.
Tuesday, September 21, 2004
Tuesday Close
S&P 500 1,129.30 +.63%
NASDAQ 1,921.18 +.69%
Leading Sectors
Homebuilders +3.75%
I-Banks +2.56%
Energy +2.53%
Lagging Sectors
Papers -.19%
Iron/Steel -.49%
Foods -.62%
Other
Crude Oil 46.82 +.13%
Natural Gas 5.64 +.57%
Gold 410.80 +.17%
Base Metals 113.98 +2.64%
U.S. Dollar 88.07 -.06%
10-Yr. T-note Yield 4.03% -.47%
VIX 13.66 -5.34%
Put/Call .69 -25.0%
NYSE Arms .85 -19.05%
After-hours Movers
JBL +7.08% after meeting 4Q estimates and raising 1Q forecast.
TIBX +3.20% after beating 3Q estimates and announcing a $50 million share buyback.
Recommendations
Goldman Sachs reiterated Outperform on AMGN and HOT.
After-hours News
U.S. stocks finished higher today on short-covering after a Fed rate hike and higher energy prices didn't send stocks lower. After the close, Comcast and the Atlanta Braves are jointly starting a channel devoted to 24-hour coverage of the baseball team, the Atlanta Journal-Constitution reported. China's central bank won't provide more financial support to state-owned commercial banks to help them reduce bad debts, People's Bank of China Governor Zhou Xiaochuan said. The elderly can cut their risk of dying by two-thirds over 10 years by exercising, eating fruits and vegetables, drinking moderately and not smoking, says a study in tomorrow's Journal of the American Medical Association, Bloomberg said. Paychex, which provides payroll services for small and medium-sized businesses, said fiscal first-quarter profit rose 9.2% because it added clients and increased prices, Bloomberg said. Federal Reserve policy makers raised the benchmark U.S. interest rate a quarter-point to 1.75% and restated a plan to carry out any further increases at a "measured" pace, Bloomberg reported.
BOTTOM LINE: The Portfolio finished slightly higher today on strength in my security, telecom equipment and homebuilding longs. I covered a few consumer-oriented shorts in the afternoon, thus leaving the Portfolio 100% net long. Today was another win for the Bulls as higher energy prices, violence in Iraq, earnings worries and a Fed rate-hike failed to send shares lower. It is also positive to see long-term interest rates continue to decline as they are now near levels where re-financings should accelerate. The strength in the I-banking stocks also bodes well for future gains. However, volume remained relatively weak today and measures of investor complacency rose.
NASDAQ 1,921.18 +.69%
Leading Sectors
Homebuilders +3.75%
I-Banks +2.56%
Energy +2.53%
Lagging Sectors
Papers -.19%
Iron/Steel -.49%
Foods -.62%
Other
Crude Oil 46.82 +.13%
Natural Gas 5.64 +.57%
Gold 410.80 +.17%
Base Metals 113.98 +2.64%
U.S. Dollar 88.07 -.06%
10-Yr. T-note Yield 4.03% -.47%
VIX 13.66 -5.34%
Put/Call .69 -25.0%
NYSE Arms .85 -19.05%
After-hours Movers
JBL +7.08% after meeting 4Q estimates and raising 1Q forecast.
TIBX +3.20% after beating 3Q estimates and announcing a $50 million share buyback.
Recommendations
Goldman Sachs reiterated Outperform on AMGN and HOT.
After-hours News
U.S. stocks finished higher today on short-covering after a Fed rate hike and higher energy prices didn't send stocks lower. After the close, Comcast and the Atlanta Braves are jointly starting a channel devoted to 24-hour coverage of the baseball team, the Atlanta Journal-Constitution reported. China's central bank won't provide more financial support to state-owned commercial banks to help them reduce bad debts, People's Bank of China Governor Zhou Xiaochuan said. The elderly can cut their risk of dying by two-thirds over 10 years by exercising, eating fruits and vegetables, drinking moderately and not smoking, says a study in tomorrow's Journal of the American Medical Association, Bloomberg said. Paychex, which provides payroll services for small and medium-sized businesses, said fiscal first-quarter profit rose 9.2% because it added clients and increased prices, Bloomberg said. Federal Reserve policy makers raised the benchmark U.S. interest rate a quarter-point to 1.75% and restated a plan to carry out any further increases at a "measured" pace, Bloomberg reported.
BOTTOM LINE: The Portfolio finished slightly higher today on strength in my security, telecom equipment and homebuilding longs. I covered a few consumer-oriented shorts in the afternoon, thus leaving the Portfolio 100% net long. Today was another win for the Bulls as higher energy prices, violence in Iraq, earnings worries and a Fed rate-hike failed to send shares lower. It is also positive to see long-term interest rates continue to decline as they are now near levels where re-financings should accelerate. The strength in the I-banking stocks also bodes well for future gains. However, volume remained relatively weak today and measures of investor complacency rose.
Mid-day Update
S&P 500 1,125.53 +.30%
NASDAQ 1,913.02 +.26%
Leading Sectors
Homebuilders +2.91%
Energy +2.0%
I-Banks +1.79%
Lagging Sectors
Tobacco -.28%
Iron/Steel -.47%
Foods -.93%
Other
Crude Oil 47.03 +1.47%
Natural Gas 5.43 +3.45%
Gold 411.00 +.98%
Base Metals 113.70 +2.39%
U.S. Dollar 88.39 -.67%
10-Yr. T-note Yield 4.07% +.33%
VIX 13.88 -3.81%
Put/Call .71 -22.83%
NYSE Arms .83 -20.95%
Market Movers
RHAT -14.0% after missing 2Q revenue estimates and lowering guidance.
PLMO -14.0% after substantially beating 1Q estimates, but giving conservative guidance on conference call.
TASR +4.0% after saying it received an order for 360 Taser X26 weapons from the U.S. Army National Guard.
TRMM +31.2% after saying it bought eFunds ATM portfolio for $150 million and Friedman, Billings rated it Outperform. EFD +14.8%.
RRGB +10.6% after boosting 3Q forecast substantially.
FDS +6.9% after beating 4Q estimates and raising 1Q outlook.
GLDB -11.1% after saying Silver Acquisition said it my cut its agreed purchase price significantly because of a reduction in GLDB's financial condition.
X -3.8% after Prudential downgrade to Neutral.
Economic Data
Housing Starts for August were 2000K versus estimates of 1930K and 1988K in July.
Building Permits for August were 1952K versus estimates of 1985K and 2066K in July.
Recommendations
Goldman Sachs reiterated Outperform on CVD, HOT and NKE. Goldman upgraded STR to Outperform. Citi SmithBarney reiterated Buy on TYC, ITT and MMM. Citi upgraded GRP to Buy, target $25. Citi upgraded BJS to Buy, target $62. Citi reiterated Buy on DOW, target $46. Citi reiterated Buy on JCP, target $50. Citi reiterated Buy on STZ, target $47. Citi reiterated Buy on VRTS, target $24. Citi reiterated Buy on KBH, target $111.00. HLT raised to Buy at Bank of America, target $23. HMT and HOT raised to Buy at Bank of America.
Mid-day News
U.S. equities are modestly higher mid-day on strength in homebuilding and investment-banking stocks. A U.S. panel might recommend this week that U.S. states expand their routine genetic screening of newborns to 30 diseases that are deemed treatable if detected early, the Wall Street Journal reported. Crude oil is rising to a one-month high of $47.18/bbl. on concern Russian exports will be disrupted after utilities cut some power supplies to OAO Yukos Oil, the country's top producer, Bloomberg reported. The Univ. of Michigan's business school is the preferred graduate business school in the U.S. among job recruiters, the Wall Street Journal reported. Senator John McCain is expected to propose a bill calling for broadcasters to only air digital television signals by 2009, Reuters reported. A new military headquarters in Washington will prepare for potential terrorist attacks in the U.S. capital and coordinate efforts of the area's military resources, the Washington Post said. P&G's application to sell a testosterone-laden skin patch, designed to boost the sex drives of women whose ovaries have been removed, was granted a priority review by the U.S. FDA, Bloomberg reported. Goldman Sachs said third-quarter profit rose 30%, buoyed by revenue from investment banking and debt trading, Bloomberg said. U.S. housing starts unexpectedly rose for a second month in August as mortgage rates near record lows attracted buyers, Bloomberg reported. American International Group said the SEC may sue the company's financial products division for violating U.S. securities laws, Bloomberg reported. Northrop Grumman won a $400 million award from the U.S. National Aeronautics and Space Administration to help design a nuclear-powered spacecraft to explore Jupiter's moons, Bloomberg said.
BOTTOM LINE: The Portfolio is unchanged mid-day as my security and software longs are rising and my steel and telecom longs are falling. I have not traded today and the Portfolio is still 75% net long. The tone of the market is pretty good today. Homebuilders are significantly outperforming. As well, i-banking stocks are under accumulation, which is positive for the broad market. However, measures of investor complacency and commodities prices are rising again. I expect the Fed to raise the Fed Funds' rate by 25 basis points this afternoon and say that diminishing inflation concerns will allow them to continue to raise rates at a measured pace. U.S. stocks should trade modestly higher into the afternoon on short-covering.
NASDAQ 1,913.02 +.26%
Leading Sectors
Homebuilders +2.91%
Energy +2.0%
I-Banks +1.79%
Lagging Sectors
Tobacco -.28%
Iron/Steel -.47%
Foods -.93%
Other
Crude Oil 47.03 +1.47%
Natural Gas 5.43 +3.45%
Gold 411.00 +.98%
Base Metals 113.70 +2.39%
U.S. Dollar 88.39 -.67%
10-Yr. T-note Yield 4.07% +.33%
VIX 13.88 -3.81%
Put/Call .71 -22.83%
NYSE Arms .83 -20.95%
Market Movers
RHAT -14.0% after missing 2Q revenue estimates and lowering guidance.
PLMO -14.0% after substantially beating 1Q estimates, but giving conservative guidance on conference call.
TASR +4.0% after saying it received an order for 360 Taser X26 weapons from the U.S. Army National Guard.
TRMM +31.2% after saying it bought eFunds ATM portfolio for $150 million and Friedman, Billings rated it Outperform. EFD +14.8%.
RRGB +10.6% after boosting 3Q forecast substantially.
FDS +6.9% after beating 4Q estimates and raising 1Q outlook.
GLDB -11.1% after saying Silver Acquisition said it my cut its agreed purchase price significantly because of a reduction in GLDB's financial condition.
X -3.8% after Prudential downgrade to Neutral.
Economic Data
Housing Starts for August were 2000K versus estimates of 1930K and 1988K in July.
Building Permits for August were 1952K versus estimates of 1985K and 2066K in July.
Recommendations
Goldman Sachs reiterated Outperform on CVD, HOT and NKE. Goldman upgraded STR to Outperform. Citi SmithBarney reiterated Buy on TYC, ITT and MMM. Citi upgraded GRP to Buy, target $25. Citi upgraded BJS to Buy, target $62. Citi reiterated Buy on DOW, target $46. Citi reiterated Buy on JCP, target $50. Citi reiterated Buy on STZ, target $47. Citi reiterated Buy on VRTS, target $24. Citi reiterated Buy on KBH, target $111.00. HLT raised to Buy at Bank of America, target $23. HMT and HOT raised to Buy at Bank of America.
Mid-day News
U.S. equities are modestly higher mid-day on strength in homebuilding and investment-banking stocks. A U.S. panel might recommend this week that U.S. states expand their routine genetic screening of newborns to 30 diseases that are deemed treatable if detected early, the Wall Street Journal reported. Crude oil is rising to a one-month high of $47.18/bbl. on concern Russian exports will be disrupted after utilities cut some power supplies to OAO Yukos Oil, the country's top producer, Bloomberg reported. The Univ. of Michigan's business school is the preferred graduate business school in the U.S. among job recruiters, the Wall Street Journal reported. Senator John McCain is expected to propose a bill calling for broadcasters to only air digital television signals by 2009, Reuters reported. A new military headquarters in Washington will prepare for potential terrorist attacks in the U.S. capital and coordinate efforts of the area's military resources, the Washington Post said. P&G's application to sell a testosterone-laden skin patch, designed to boost the sex drives of women whose ovaries have been removed, was granted a priority review by the U.S. FDA, Bloomberg reported. Goldman Sachs said third-quarter profit rose 30%, buoyed by revenue from investment banking and debt trading, Bloomberg said. U.S. housing starts unexpectedly rose for a second month in August as mortgage rates near record lows attracted buyers, Bloomberg reported. American International Group said the SEC may sue the company's financial products division for violating U.S. securities laws, Bloomberg reported. Northrop Grumman won a $400 million award from the U.S. National Aeronautics and Space Administration to help design a nuclear-powered spacecraft to explore Jupiter's moons, Bloomberg said.
BOTTOM LINE: The Portfolio is unchanged mid-day as my security and software longs are rising and my steel and telecom longs are falling. I have not traded today and the Portfolio is still 75% net long. The tone of the market is pretty good today. Homebuilders are significantly outperforming. As well, i-banking stocks are under accumulation, which is positive for the broad market. However, measures of investor complacency and commodities prices are rising again. I expect the Fed to raise the Fed Funds' rate by 25 basis points this afternoon and say that diminishing inflation concerns will allow them to continue to raise rates at a measured pace. U.S. stocks should trade modestly higher into the afternoon on short-covering.
Tuesday Watch
Earnings of Note
Company/Estimate
AZO/2.55
CEN/.19
CBK/.15
PAYX/.23
LEH/1.55
JBL/.26
GTK/.37
GS/1.43
GIS/.60
FDS/.46
SCHL/-1.27
SRR/.17
Splits
None of note.
Economic Data
Housing Starts for August estimated at 1930K versus 1978k in July.
Building Permits for August estimated at 1985K versus 2066K in July.
FOMC expected to raise the Fed Fund's rate to 1.75%.
Recommendations
Goldman reiterated Outperform on AMLN and ENH.
Late-Night News
Asian indices are mostly higher on strength in the region's technology shares. U.S. government officials told Japanese counterparts in informal talks that the U.S. is wiling to accept a condition set by Japan for removing the country's ban on U.S. beef, Kyodo News Service said. Japan plans to extend its troop deployment in Iraq for a year beyond its current commitment through Dec. 14, the Nihon Keizai reported. CBS News arranged for former Texas National Guard officer Bill Burkett to talk with Joe Lockhart, an aide to Senator Kerry, after Burkett gave the network fake documents on President Bush's military service, USA Today reported. Starwood Hotels & Resorts Worldwide will name Steven Heyer, former President and COO of Coca-Cola, as its CEO, the Wall Street Journal reported.
Late-Night Trading
Asian Indices are -.25% to +.75% on average.
S&P 500 indicated +.04%.
NASDAQ 100 indicated -.03%
BOTTOM LINE: I expect U.S. equities to open mixed in the morning as relative strength in technology shares is offset by earnings concerns. The Portfolio is 75% net long heading into tomorrow.
Company/Estimate
AZO/2.55
CEN/.19
CBK/.15
PAYX/.23
LEH/1.55
JBL/.26
GTK/.37
GS/1.43
GIS/.60
FDS/.46
SCHL/-1.27
SRR/.17
Splits
None of note.
Economic Data
Housing Starts for August estimated at 1930K versus 1978k in July.
Building Permits for August estimated at 1985K versus 2066K in July.
FOMC expected to raise the Fed Fund's rate to 1.75%.
Recommendations
Goldman reiterated Outperform on AMLN and ENH.
Late-Night News
Asian indices are mostly higher on strength in the region's technology shares. U.S. government officials told Japanese counterparts in informal talks that the U.S. is wiling to accept a condition set by Japan for removing the country's ban on U.S. beef, Kyodo News Service said. Japan plans to extend its troop deployment in Iraq for a year beyond its current commitment through Dec. 14, the Nihon Keizai reported. CBS News arranged for former Texas National Guard officer Bill Burkett to talk with Joe Lockhart, an aide to Senator Kerry, after Burkett gave the network fake documents on President Bush's military service, USA Today reported. Starwood Hotels & Resorts Worldwide will name Steven Heyer, former President and COO of Coca-Cola, as its CEO, the Wall Street Journal reported.
Late-Night Trading
Asian Indices are -.25% to +.75% on average.
S&P 500 indicated +.04%.
NASDAQ 100 indicated -.03%
BOTTOM LINE: I expect U.S. equities to open mixed in the morning as relative strength in technology shares is offset by earnings concerns. The Portfolio is 75% net long heading into tomorrow.
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