Earnings of Note
Company/Estimate
None of note.
Splits
None of note.
Economic Data
Durable Goods Orders for August estimated -.3% versus a 1.6% rise in July.
Durable Goods Less Transportation for August estimated +.8% versus a -.2% decline in July.
Existing Home Sales for August estimated at 6.63M versus 6.72M in July.
Recommendations
Goldman Sachs reiterated Outperform on MDT and WAG. Goldman reiterated Underperform on SCS and AMCC. Goldman reiterated Attractive view of Steel sector, favorites are ISG and STLD. Shares of Alliance Gaming are expected to rise as demand for gambling devices picks up in 2005, Business Week reported.
Late-Night News
Asian indices are mixed as strength in China is being offset by weakness in Japan. Matsushita Electric plans to begin supplying tv set-top boxes and software to Comcast, the largest U.S. cable tv operator, Nikkei English News reported. Taser International pitched its weapons to the San Francisco Police Dept. and used a stun gun on an officer to demonstrate its effectiveness, the San Francisco Chronicle said. While the dept. hasn't formerly asked the San Francisco Police Commission to adopt the device, Police Chief Heather Fong wants every officer in the 2,200-member force to be armed with the device, the paper reported. California regulators are expected to boost the fee rival telephone companies pay SBC Communications for access to copper lines linking homes and businesses to the phone network, the LA Times said. Boeing, IBM and Microsoft are among 28 companies that on Sept. 28 will announce a consortium dedicated to technology standardization for a military network, Business Week said. Google may be planning to offer Internet browser software, News.com reported. The European Commission will probably clear Oracle's $7.7 billion bid for PeopleSoft, the Financial Times said. Citigroup officials are being investigated by U.S. regulators for failing to supervise analysts and investment bankers and preventing conflicts of interest, Business Week reported. FedEx has applied for six weekly flights to the southern Chinese city of Guangzhou in 2006, the South China Morning Post reported. The U.S. Congress approved $146 billion in tax cuts for middle-income families and businesses, Bloomberg reported. Royal Philips Electronic, Europe's third-largest maker of semiconductors, reduced its third-quarter chip sales forecast as demand wanes, Bloomberg reported.
Late-Night Trading
Asian Indices are -1.0% to +.50% on average.
S&P 500 indicated +.09%.
NASDAQ 100 indicated unch.
BOTTOM LINE: I expect U.S. equities to open mixed in the morning as better economic numbers and declining energy prices offset weakness in Asia. The Portfolio is market neutral heading into tomorrow.
Friday, September 24, 2004
Thursday, September 23, 2004
Thursday Close
S&P 500 1,108.36 -.47%
NASDAQ 1,886.43 +.04%
Leading Sectors
Semis +.52%
Wireless +.51%
Internet +.44%
Lagging Sectors
Iron/Steel -1.07%
Fashion -1.49%
Airlines -2.84%
Other
Crude Oil 48.28 -.14%
Natural Gas 5.48 -2.65%
Gold 411.50 -.27%
Base Metals 116.23 +.82%
U.S. Dollar 88.44 -.08%
10-Yr. T-note Yield 4.02% +.96%
VIX 14.80 +.41%
Put/Call .92 -16.36%
NYSE Arms 1.60 -32.20%
After-hours Movers
ESIO -11.99% after missing 1Q estimates and lowering 2Q outlook.
FINL -3.09% after missing 2Q estimates.
Recommendations
Goldman Sachs reiterated Outperform on WMT.
After-hours News
U.S. stocks finished mixed today as worries that high energy prices would stall the economy were offset by optimism in the technology sector. After the close, China is cracking down on unauthorized steel plants as it tries to deflate the country's steel boom, and reduce shortages of power, coal and transport that threaten the economy, the Financial Times reported. Federal Reserve policy makers said the slowing in economic growth in the second quarter would be "short-lived" as they voted unanimously on Aug. 10 to raise interest rates, minutes of the meeting showed, Bloomberg said. Northern Trust may be fired tomorrow as custodian and index fund manager for the Illinois State Board of Investment, a 20-year client that overseas $10.4 billion for three of the state's five pension systems, Bloomberg reported. California Governor Schwarzenegger signed a law opening up car-pool lanes on highways to the most fuel-efficient gas-electric hybrid cars, a potential boost to Honda Motor and Toyota Motor in the largest U.S. auto market, Bloomberg said. Martha Stewart Living entered a five-year employment contract with its founder that will pay her a base salary of $900,000 annually and make her eligible to receive a bonus of as much as $1.35 million per year, Bloomberg said. Delta Air agreed to sell eight planes and four spare engines to FedEx as part of a plan to cut costs by eliminating some aircraft types, Bloomberg reported. Viacom is expanding its presence in China, including its second production venture in the country, Viacom CEO Redstone said.
BOTTOM LINE: The Portfolio finished unchanged today as weakness in my homebuilding and security longs was offset by my falling retail and software shorts. I did not trade in the afternoon, thus the Portfolio is still market neutral. I continue to believe the major U.S. indices will consolidate recent gains over the near-term before another move higher beginning in the latter part of October. A sharp decline in energy prices, while unlikely, could result in the rally beginning sooner than I currently anticipate.
NASDAQ 1,886.43 +.04%
Leading Sectors
Semis +.52%
Wireless +.51%
Internet +.44%
Lagging Sectors
Iron/Steel -1.07%
Fashion -1.49%
Airlines -2.84%
Other
Crude Oil 48.28 -.14%
Natural Gas 5.48 -2.65%
Gold 411.50 -.27%
Base Metals 116.23 +.82%
U.S. Dollar 88.44 -.08%
10-Yr. T-note Yield 4.02% +.96%
VIX 14.80 +.41%
Put/Call .92 -16.36%
NYSE Arms 1.60 -32.20%
After-hours Movers
ESIO -11.99% after missing 1Q estimates and lowering 2Q outlook.
FINL -3.09% after missing 2Q estimates.
Recommendations
Goldman Sachs reiterated Outperform on WMT.
After-hours News
U.S. stocks finished mixed today as worries that high energy prices would stall the economy were offset by optimism in the technology sector. After the close, China is cracking down on unauthorized steel plants as it tries to deflate the country's steel boom, and reduce shortages of power, coal and transport that threaten the economy, the Financial Times reported. Federal Reserve policy makers said the slowing in economic growth in the second quarter would be "short-lived" as they voted unanimously on Aug. 10 to raise interest rates, minutes of the meeting showed, Bloomberg said. Northern Trust may be fired tomorrow as custodian and index fund manager for the Illinois State Board of Investment, a 20-year client that overseas $10.4 billion for three of the state's five pension systems, Bloomberg reported. California Governor Schwarzenegger signed a law opening up car-pool lanes on highways to the most fuel-efficient gas-electric hybrid cars, a potential boost to Honda Motor and Toyota Motor in the largest U.S. auto market, Bloomberg said. Martha Stewart Living entered a five-year employment contract with its founder that will pay her a base salary of $900,000 annually and make her eligible to receive a bonus of as much as $1.35 million per year, Bloomberg said. Delta Air agreed to sell eight planes and four spare engines to FedEx as part of a plan to cut costs by eliminating some aircraft types, Bloomberg reported. Viacom is expanding its presence in China, including its second production venture in the country, Viacom CEO Redstone said.
BOTTOM LINE: The Portfolio finished unchanged today as weakness in my homebuilding and security longs was offset by my falling retail and software shorts. I did not trade in the afternoon, thus the Portfolio is still market neutral. I continue to believe the major U.S. indices will consolidate recent gains over the near-term before another move higher beginning in the latter part of October. A sharp decline in energy prices, while unlikely, could result in the rally beginning sooner than I currently anticipate.
Mid-day Update
S&P 500 1,110.14 -.31%
NASDAQ 1,888.05 +.12%
Leading Sectors
Tobacco +1.45%
Restaurants +.83%
Wireless +.62%
Lagging Sectors
Homebuilders -1.31%
Fashion -1.47%
Airlines -1.56%
Other
Crude Oil 48.00 -.72%
Natural Gas 5.42 -3.62%
Gold 412.40 +.83%
Base Metals 115.22 -.05%
U.S. Dollar 88.27 -.27%
10-Yr. T-note Yield 3.99% +.29%
VIX 14.85 +.75%
Put/Call .71 -35.45%
NYSE Arms 1.43 -39.41%
Market Movers
FNM -3.91% after multiple downgrades.
CYBX +4.0% said the FDA approved its device for testing on life-threatening treatment-resistant depression.
MSO +14.2% after it said it agreed to work with tv producer Mark Burnett, who created the popular "Survivor" series.
IMGC +10.9% after beating 1Q estimates, reiterating 2Q outlook and Needham upgrade to Strong Buy.
GPN +11.3% after beating 1Q estimates and raising 05 outlook.
DRI +6.3% after beating 1Q estimates.
CVS +4.44% after Matrix rated it Strong Buy.
STMP -12.2% after canceling appearance at ThinkEquity Conference.
APPX -9.5% after the Wall Street Journal reported that the SEC is investigating the company on suspicion that it may have misled investors on progress made with a cancer drug.
DECK -6.2% after RBC Capital cut it to Sector Perform.
Economic Data
Initial Jobless Claims for last week were 350K versus estimates of 335K and 336K prior.
Continuing Claims were 2883K versus estimates of 2880K and 2878K prior.
Leading Indicators fell .3% versus estimates of a .2% decline and a .3% decrease in July.
Recommendations
Goldman Sachs reiterated Outperform on AMR, SMP, CLX, BIIB, PFE, AMGN, FS, HOT, TPX and BC. Goldman reiterated Underperform on MKL, RAI, BSC and EK. Citi SmithBarney reiterated Buy on FNM, target $86. Citi reiterated Buy on COGN, target $44. Citi reiterated Buy on GPN, target $55. Citi reiterated Buy on MWD, target $72. Citi reiterated Buy on TGT, target $50. Citi said to Buy MSTR as strength at COGN will also benefit it, target $59.
Mid-day News
U.S. stocks are mixed mid-day on continuing worries that high energy prices are leading to slower economic growth. The International Accounting Standards Board plans to overhaul the rules on accounting for leased assets, the Wall Street Journal reported. U.S. government agencies such as the FBI and private groups such as the Search for International Terrorist Entities Institute monitor hundreds of suspected terrorist Web sites on the Internet and sometimes track users, the NY Times reported. U.S. President Bush lead Senator Kerry 49% to 41% among registered voters in Florida, a Quinnipiac University poll found. WebMD promoted Kevin Cameron to CEO and said the company may spin off or sell shares in its WebMD Health unit. Halliburton said it may sell its KBR unit, which is being investigated, to boost its share price, Bloomberg said. Iraqi interim Prime Minister Allawi said the conflict in his country is part of a global terrorist threat, pledging to defeat foreign fighters and hold elections on time in January, Bloomberg reported. Florida residents were advised to prepare for their fourth hurricane strike this season as Jeanne headed westward through the Bahamas on a path that may take the storm up the state's east coast as soon as Sunday, Bloomberg said. Crude oil is falling from a one-month high after a White House spokesman said the U.S. may loan oil to refiners from the Strategic Petroleum Reserve to make up for supply disruptions caused by Hurricane Ivan, Bloomberg reported. The average rate on a benchmark 30-year fixed mortgage in the U.S. fell to 5.7%, the lowest since early April, from 5.75% last week, Bloomberg reported.
BOTTOM LINE: The Portfolio is unchanged mid-day as my declining steel and security longs are being offset by my falling software and retail shorts. I have not traded today and the Portfolio is still market neutral. The tone of the market is relatively weak. Most measures of investor complacency are rising. The weekly reading from the AAII shows the % Bulls actually jumped 12.7% to 51.22%. As well, talk of tapping the strategic petroleum reserve is not sending oil prices lower, which is a negative. I expect stocks to decline modestly into the close.
NASDAQ 1,888.05 +.12%
Leading Sectors
Tobacco +1.45%
Restaurants +.83%
Wireless +.62%
Lagging Sectors
Homebuilders -1.31%
Fashion -1.47%
Airlines -1.56%
Other
Crude Oil 48.00 -.72%
Natural Gas 5.42 -3.62%
Gold 412.40 +.83%
Base Metals 115.22 -.05%
U.S. Dollar 88.27 -.27%
10-Yr. T-note Yield 3.99% +.29%
VIX 14.85 +.75%
Put/Call .71 -35.45%
NYSE Arms 1.43 -39.41%
Market Movers
FNM -3.91% after multiple downgrades.
CYBX +4.0% said the FDA approved its device for testing on life-threatening treatment-resistant depression.
MSO +14.2% after it said it agreed to work with tv producer Mark Burnett, who created the popular "Survivor" series.
IMGC +10.9% after beating 1Q estimates, reiterating 2Q outlook and Needham upgrade to Strong Buy.
GPN +11.3% after beating 1Q estimates and raising 05 outlook.
DRI +6.3% after beating 1Q estimates.
CVS +4.44% after Matrix rated it Strong Buy.
STMP -12.2% after canceling appearance at ThinkEquity Conference.
APPX -9.5% after the Wall Street Journal reported that the SEC is investigating the company on suspicion that it may have misled investors on progress made with a cancer drug.
DECK -6.2% after RBC Capital cut it to Sector Perform.
Economic Data
Initial Jobless Claims for last week were 350K versus estimates of 335K and 336K prior.
Continuing Claims were 2883K versus estimates of 2880K and 2878K prior.
Leading Indicators fell .3% versus estimates of a .2% decline and a .3% decrease in July.
Recommendations
Goldman Sachs reiterated Outperform on AMR, SMP, CLX, BIIB, PFE, AMGN, FS, HOT, TPX and BC. Goldman reiterated Underperform on MKL, RAI, BSC and EK. Citi SmithBarney reiterated Buy on FNM, target $86. Citi reiterated Buy on COGN, target $44. Citi reiterated Buy on GPN, target $55. Citi reiterated Buy on MWD, target $72. Citi reiterated Buy on TGT, target $50. Citi said to Buy MSTR as strength at COGN will also benefit it, target $59.
Mid-day News
U.S. stocks are mixed mid-day on continuing worries that high energy prices are leading to slower economic growth. The International Accounting Standards Board plans to overhaul the rules on accounting for leased assets, the Wall Street Journal reported. U.S. government agencies such as the FBI and private groups such as the Search for International Terrorist Entities Institute monitor hundreds of suspected terrorist Web sites on the Internet and sometimes track users, the NY Times reported. U.S. President Bush lead Senator Kerry 49% to 41% among registered voters in Florida, a Quinnipiac University poll found. WebMD promoted Kevin Cameron to CEO and said the company may spin off or sell shares in its WebMD Health unit. Halliburton said it may sell its KBR unit, which is being investigated, to boost its share price, Bloomberg said. Iraqi interim Prime Minister Allawi said the conflict in his country is part of a global terrorist threat, pledging to defeat foreign fighters and hold elections on time in January, Bloomberg reported. Florida residents were advised to prepare for their fourth hurricane strike this season as Jeanne headed westward through the Bahamas on a path that may take the storm up the state's east coast as soon as Sunday, Bloomberg said. Crude oil is falling from a one-month high after a White House spokesman said the U.S. may loan oil to refiners from the Strategic Petroleum Reserve to make up for supply disruptions caused by Hurricane Ivan, Bloomberg reported. The average rate on a benchmark 30-year fixed mortgage in the U.S. fell to 5.7%, the lowest since early April, from 5.75% last week, Bloomberg reported.
BOTTOM LINE: The Portfolio is unchanged mid-day as my declining steel and security longs are being offset by my falling software and retail shorts. I have not traded today and the Portfolio is still market neutral. The tone of the market is relatively weak. Most measures of investor complacency are rising. The weekly reading from the AAII shows the % Bulls actually jumped 12.7% to 51.22%. As well, talk of tapping the strategic petroleum reserve is not sending oil prices lower, which is a negative. I expect stocks to decline modestly into the close.
Thursday Watch
Earnings of Note
Company/Estimate
AGE/.55
FINL/.87
PSRC/-.02
SCS/.01
Splits
HUG 2-for-1
Economic Data
Initial Jobless Claims for last week are estimated at 335K versus 333K the prior week.
Continuing Claims are estimated at 2880K versus 2882K prior.
Leading Indicators for Aug. estimated -.2% versus -.3% in July.
Minutes of Aug. 10 FOMC Meeting.
Recommendations
Goldman reiterated Underperform on EK.
Late-Night News
Asian indices are lower following weakness in the U.S. over rising energy prices. IBM Japan and Cisco Systems are jointly developing and marketing a product to protect corporate networks from damage when virus-infected computers are linked to the system, the Nihon Keizai newspaper reported. Singapore's Straits Times Index may reach 2,300 in the next 12 months, boosted by companies moving to combine their businesses, the Straits Times said. China's consumer-price inflation will ease for the rest of the year as improving harvests reduce pressure on food costs to rise, Wen Wei Po reported. Australian police are investigating a potentially explosive device that was found in the cargo hold of a Virgin Blue Holdings plane at Sydney airport, Bloomberg said. Taiwan Semiconductor Manufacturing said its factory use will decline from its peak of 106% in the last quarter because customers are cutting inventory, Bloomberg said. China will attend talks of the G7 industrialized countries for the first time next week, reflecting the emerging importance of the world's biggest developing nation to the global economy, Bloomberg reported. Crude oil futures are falling tonight, snapping an 11% gain in the past week, as concern eased that disruptions at Russia's biggest oil exporter and hurricane damage in the Gulf will further cut supply, Bloomberg said. Donald Trump's Trump Hotels & Casino Resorts said it has ended talks with a CSFB investment unit, which had planned to invest $400 million in Trump Hotels and become the majority shareholder, Bloomberg reported. Fannie Mae CFO Howard is to blame for violating accounting rules that have potentially large financial consequences, said federal regulators. Lehman Brothers agreed to pay $222.5 million to resolve a suit filed by investors over the bank's role as underwrite for Enron, the bankrupt energy trader, Bloomberg reported. U.S. automakers are boosting advertising for passenger cars in an effort to regain market share from Japanese competitors such as Toyota Motor and Honda Motor, the Washington Post reported.
Late-Night Trading
Asian Indices are -.75% to -.25% on average.
S&P 500 indicated +.10%.
NASDAQ 100 indicated +.07%
BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning on stabilizing energy prices and better economic reports. However, shares may come under pressure later in the day on a continuation of today's sell-off. The Portfolio is market neutral heading into tomorrow.
Company/Estimate
AGE/.55
FINL/.87
PSRC/-.02
SCS/.01
Splits
HUG 2-for-1
Economic Data
Initial Jobless Claims for last week are estimated at 335K versus 333K the prior week.
Continuing Claims are estimated at 2880K versus 2882K prior.
Leading Indicators for Aug. estimated -.2% versus -.3% in July.
Minutes of Aug. 10 FOMC Meeting.
Recommendations
Goldman reiterated Underperform on EK.
Late-Night News
Asian indices are lower following weakness in the U.S. over rising energy prices. IBM Japan and Cisco Systems are jointly developing and marketing a product to protect corporate networks from damage when virus-infected computers are linked to the system, the Nihon Keizai newspaper reported. Singapore's Straits Times Index may reach 2,300 in the next 12 months, boosted by companies moving to combine their businesses, the Straits Times said. China's consumer-price inflation will ease for the rest of the year as improving harvests reduce pressure on food costs to rise, Wen Wei Po reported. Australian police are investigating a potentially explosive device that was found in the cargo hold of a Virgin Blue Holdings plane at Sydney airport, Bloomberg said. Taiwan Semiconductor Manufacturing said its factory use will decline from its peak of 106% in the last quarter because customers are cutting inventory, Bloomberg said. China will attend talks of the G7 industrialized countries for the first time next week, reflecting the emerging importance of the world's biggest developing nation to the global economy, Bloomberg reported. Crude oil futures are falling tonight, snapping an 11% gain in the past week, as concern eased that disruptions at Russia's biggest oil exporter and hurricane damage in the Gulf will further cut supply, Bloomberg said. Donald Trump's Trump Hotels & Casino Resorts said it has ended talks with a CSFB investment unit, which had planned to invest $400 million in Trump Hotels and become the majority shareholder, Bloomberg reported. Fannie Mae CFO Howard is to blame for violating accounting rules that have potentially large financial consequences, said federal regulators. Lehman Brothers agreed to pay $222.5 million to resolve a suit filed by investors over the bank's role as underwrite for Enron, the bankrupt energy trader, Bloomberg reported. U.S. automakers are boosting advertising for passenger cars in an effort to regain market share from Japanese competitors such as Toyota Motor and Honda Motor, the Washington Post reported.
Late-Night Trading
Asian Indices are -.75% to -.25% on average.
S&P 500 indicated +.10%.
NASDAQ 100 indicated +.07%
BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning on stabilizing energy prices and better economic reports. However, shares may come under pressure later in the day on a continuation of today's sell-off. The Portfolio is market neutral heading into tomorrow.
Wednesday, September 22, 2004
Wednesday Close
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.
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.
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.
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