S&P 500 1,103.66 +.04%
NASDAQ 1,932.97 +.52%
Leading Sectors
Oil Service +3.35%
HMOs +2.72%
Energy +2.18%
Lagging Sectors
Internet -.77%
Banks -.80%
Airlines -1.23%
Other
Crude Oil 54.92 +3.06%
Natural Gas 7.62 +6.98%
Gold 425.00 +.05%
Base Metals 112.66 -.49%
U.S. Dollar 86.35 -.56%
10-Yr. T-note Yield 3.98% -1.29%
VIX 14.85 -1.85%
Put/Call .87 -6.45%
NYSE Arms 1.11 -18.38%
After-hours Movers
MERQ +4.54% after beating 3Q estimates and raising 4Q guidance.
VRSN +7.36% after beating 3Q estimates, raising 4Q outlook and 05 guidance.
MACR +7.55% after beating 2Q estimates and raising 3Q guidance.
TSRA +8.30% after beating 3Q estimates and raising 4Q outlook.
CTXS +8.56% after beating 3Q estimates and raising 4Q guidance.
DRIV +3.96% after beating 3Q estimates, raising 4Q, 04 and 05 outlooks.
EBAY +3.11% after beating 3Q estimates and giving positive guidance.
POWI -4.89% after beating 3Q estimates and lowering 4Q guidance.
ERES -19.79% after missing 3Q estimates, lowering 4Q and 05 outlooks.
EPIC -7.93% after beating 3Q estimates substantially and reiterating 4Q and 05 guidance.
Recommendations
Goldman Sachs reiterated Outperform on PFE, MERQ, SYMC, EBAY and AMGN. Goldman reiterated Underperform on TER and VRSN.
After-hours News
U.S. stocks finished modestly higher today on a late-afternoon rally, led by energy stocks and a rebound in healthcare shares. After the close, Walt Disney's ABC tv network won't broadcast the Miss America beauty pageant next year, leaving the contest without a network TV contract for the first time in 50 years, the AP reported. T-Online Intl. AG said it plans to develop a product to compete with Apple Computer's iPod music player, the Financial Times Deutschland said. Scientists say they've fine-tuned the map of the human genome and improved the understanding of the genetic roosts for disorders including breast cancer and diabetes, according to a study in the Oct. 21 issue of the journal Nature. The UN hasn't sent enough election experts to help prepare the country for voting planned for January to choose a new government, Iraqi Foreign Minister Zebari said. PeopleSoft's founder Duffield opposes a possible sale to Oracle and plans acquisitions to expand the company and increase its price tag, the Financial Times Deutschland said. The growing number of obese Americans and the rising cost of caring for them is responsible for 27% of the increases in health-care costs since 1987, according to a study in the journal Health Affairs. EBay said third-quarter earnings surged 77% as the number of listings rose and the company expanded its PayPal e-mail payment service in Europe, Bloomberg said. A Blackstone Group LP affiliate agreed to buy Boca Resorts, an owner of luxury resorts in Florida, for about $1.25 billion, Bloomberg reported.
BOTTOM LINE: The Portfolio finished modestly higher today as strength in my retail and semiconductor longs more than offset weakness in my wireless and Russian ADR longs. I did not trade in the afternoon, thus leaving the Portfolio 125% net long. The tone of the market improved substantially throughout the day even as energy prices rose and earnings worries persisted. Today was likely very disappointing for the Bears and should spur further short-covering. If after-hours trading is any indication, tomorrow should be a good day for the Bulls.
Wednesday, October 20, 2004
Mid-day Update
S&P 500 1,101.65 -.14%
NASDAQ 1,929.06 +.32%
Leading Sectors
Oil Service +3.45%
HMOs +2.67%
Energy +2.0%
Lagging Sectors
Banks -1.17%
I-Banks -1.27%
Airlines -2.30%
Other
Crude Oil 54.80 +2.83%
Natural Gas 7.59 +6.56%
Gold 427.00 +1.28%
Base Metals 112.80 -.36%
U.S. Dollar 86.17 -.77%
10-Yr. T-note Yield 4.00% -.76%
VIX 15.01 -.79%
Put/Call .80 -13.98%
NYSE Arms 1.15 -15.44%
Market Movers
CFC -11.7% after missing 3Q estimates, lowering 04 guidance and boosting dividend.
MOT -5.7% after missing 3Q estimates slightly and reiterating 4Q outlook.
ERTS -4.6% after meeting 2Q estimates and lowering 3Q guidance.
JAKK -31.0% after World Wrestling Entertainment sued the maker of its action figures, alleging the company violated anti-bribery laws.
SGTL +22.0% after beating 3Q estimates and raising 4Q outlook.
FILE +18.2% after substantially beating 3Q estimates.
ATMI +12.7% after beating 3Q estimates.
PLCE +16.0% after saying it agreed to purchase the Disney Store chain in North America for an undisclosed amount.
AAP +11.7% after meeting 3Q estimates, reaffirming 4Q outlook and Goldman rating of Outperform.
CHRW +6.2% after beating 3Q estimates and Legg Mason upgrade to Hold.
ARTC +9.2% after meeting 3Q estimates and reaffirming 04/05 outlook.
ASTE -22.9% on disappointing 3Q results.
TSS -12.4% after beating 3Q estimates, but Citi downgrade to Sell.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on FSL, AA, CFC, SBC, PFE, NRG, STN and FON. Goldman reiterated Underperform on INFA, UNM, CL, PRXL and AMCC. Goldman rated AAP Outperform. Citi SmithBarney upgraded DO to Buy, target $40. Citi upgraded OVNT to Buy, target $41. Citi reiterated Buy on STZ, target $47. Citi reiterated Sell on MEDI, target $19. Citi reiterated Buy on ERTS, target $60. Citi reiterated Buy on MDU, target $28. Citi reiterated Buy on AVO, target $46. Citi reiterated Buy on MAN, target $56. Citi reiterated Buy on FNM, target $81. Citi reiterated Buy on MO, target $65. Citi reiterated Buy on FON, target $24. PCLE, KR raised to Overweight at JP Morgan. CTCO, CTL, CMS rated Overweight at JP Morgan. SWY, CTB, CBB cut to Underweight at JP Morgan. MVK raised to Buy at Deutsche Bank, target $31. FON raised to Buy at Bank of America, target $23. SBC rated Buy at Legg Mason. PKG raised to Outperform at CSFB, target $25. CBD raised to Overweight at Morgan Stanley. MET raised to Buy at Merrill Lynch, target $43. PDLE rated Overweight at Prudential, target $27. OSCI rated Overweight at Prudential, target $8. TELK rated Underweight at Prudential, target $13. CELG rated Overweight at Prudential, target $68. CAL, DAL cut to Underperform at Bear Stearns.
Mid-day News
U.S. stocks are quietly mixed as gains in technology shares are offsetting losses in financials. The world's 1,500 oil tankers are booked up and their rates are rising to meet the growing global demand for oil, especially from China, the NY Times said. Connecticut Attorney General Blumenthal issued subpoenas to health insurers, employee-benefit providers and auto insurers as regulators widened their investigation of insurance practices, the NY Times said. New York is ending a program of allowing homeless families in city shelters to apply for U.S. rent vouchers or public housing, in favor of offering rent assistance for as long as five years, the NY Times reported. Target and Wal-Mart are putting more emphasis on selling products under their own store brands as they seek to set themselves apart from competitors, the NY Times said. Apple Computer reached an agreement with the rock band U2 to sell customized IPod digital music players emblazoned with the band's logo, the NY Post reported. California Governor Schwarzenegger plans to visit Ohio to campaign for President Bush, the San Francisco Chronicle reported. Bonds of Marsh & McLennan are trading at yields comparable to junk debt, and may weaken further, on concern a lawsuit filed by New York Attorney General Spitzer will cost it business, Bloomberg said. Iranian President Khatami today rejected calls from European nations to halt a nuclear program, raising the odds that the UN Security Council will have to consider the matter as early as next month, Bloomberg reported. An index of U.S. mortgage applications rose last week by the most in two months as a drop in borrowing costs boosted home purchases and refinancing, Bloomberg reported. Crude oil futures are rising after an Energy Department report showed that U.S. inventories of heating oil fell for a third week, Bloomberg reported.
Bottom Line: The Portfolio is unchanged mid-day as strength in my retail and semiconductor longs is being offset by weakness in my wireless and Russian ADR longs. I added a few longs into this mornings weakness bringing the Portfolio to 125% net long. One of my new longs is DITC and I am using a stop-loss of $24.50 on this position. Today's action is relatively positive considering higher energy prices and some earnings disappointments. Technology shares continue to outperform and exhibit bullish bullish behavior. I expect U.S. shares to rise into the close on short-covering and bargain-hunting.
NASDAQ 1,929.06 +.32%
Leading Sectors
Oil Service +3.45%
HMOs +2.67%
Energy +2.0%
Lagging Sectors
Banks -1.17%
I-Banks -1.27%
Airlines -2.30%
Other
Crude Oil 54.80 +2.83%
Natural Gas 7.59 +6.56%
Gold 427.00 +1.28%
Base Metals 112.80 -.36%
U.S. Dollar 86.17 -.77%
10-Yr. T-note Yield 4.00% -.76%
VIX 15.01 -.79%
Put/Call .80 -13.98%
NYSE Arms 1.15 -15.44%
Market Movers
CFC -11.7% after missing 3Q estimates, lowering 04 guidance and boosting dividend.
MOT -5.7% after missing 3Q estimates slightly and reiterating 4Q outlook.
ERTS -4.6% after meeting 2Q estimates and lowering 3Q guidance.
JAKK -31.0% after World Wrestling Entertainment sued the maker of its action figures, alleging the company violated anti-bribery laws.
SGTL +22.0% after beating 3Q estimates and raising 4Q outlook.
FILE +18.2% after substantially beating 3Q estimates.
ATMI +12.7% after beating 3Q estimates.
PLCE +16.0% after saying it agreed to purchase the Disney Store chain in North America for an undisclosed amount.
AAP +11.7% after meeting 3Q estimates, reaffirming 4Q outlook and Goldman rating of Outperform.
CHRW +6.2% after beating 3Q estimates and Legg Mason upgrade to Hold.
ARTC +9.2% after meeting 3Q estimates and reaffirming 04/05 outlook.
ASTE -22.9% on disappointing 3Q results.
TSS -12.4% after beating 3Q estimates, but Citi downgrade to Sell.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on FSL, AA, CFC, SBC, PFE, NRG, STN and FON. Goldman reiterated Underperform on INFA, UNM, CL, PRXL and AMCC. Goldman rated AAP Outperform. Citi SmithBarney upgraded DO to Buy, target $40. Citi upgraded OVNT to Buy, target $41. Citi reiterated Buy on STZ, target $47. Citi reiterated Sell on MEDI, target $19. Citi reiterated Buy on ERTS, target $60. Citi reiterated Buy on MDU, target $28. Citi reiterated Buy on AVO, target $46. Citi reiterated Buy on MAN, target $56. Citi reiterated Buy on FNM, target $81. Citi reiterated Buy on MO, target $65. Citi reiterated Buy on FON, target $24. PCLE, KR raised to Overweight at JP Morgan. CTCO, CTL, CMS rated Overweight at JP Morgan. SWY, CTB, CBB cut to Underweight at JP Morgan. MVK raised to Buy at Deutsche Bank, target $31. FON raised to Buy at Bank of America, target $23. SBC rated Buy at Legg Mason. PKG raised to Outperform at CSFB, target $25. CBD raised to Overweight at Morgan Stanley. MET raised to Buy at Merrill Lynch, target $43. PDLE rated Overweight at Prudential, target $27. OSCI rated Overweight at Prudential, target $8. TELK rated Underweight at Prudential, target $13. CELG rated Overweight at Prudential, target $68. CAL, DAL cut to Underperform at Bear Stearns.
Mid-day News
U.S. stocks are quietly mixed as gains in technology shares are offsetting losses in financials. The world's 1,500 oil tankers are booked up and their rates are rising to meet the growing global demand for oil, especially from China, the NY Times said. Connecticut Attorney General Blumenthal issued subpoenas to health insurers, employee-benefit providers and auto insurers as regulators widened their investigation of insurance practices, the NY Times said. New York is ending a program of allowing homeless families in city shelters to apply for U.S. rent vouchers or public housing, in favor of offering rent assistance for as long as five years, the NY Times reported. Target and Wal-Mart are putting more emphasis on selling products under their own store brands as they seek to set themselves apart from competitors, the NY Times said. Apple Computer reached an agreement with the rock band U2 to sell customized IPod digital music players emblazoned with the band's logo, the NY Post reported. California Governor Schwarzenegger plans to visit Ohio to campaign for President Bush, the San Francisco Chronicle reported. Bonds of Marsh & McLennan are trading at yields comparable to junk debt, and may weaken further, on concern a lawsuit filed by New York Attorney General Spitzer will cost it business, Bloomberg said. Iranian President Khatami today rejected calls from European nations to halt a nuclear program, raising the odds that the UN Security Council will have to consider the matter as early as next month, Bloomberg reported. An index of U.S. mortgage applications rose last week by the most in two months as a drop in borrowing costs boosted home purchases and refinancing, Bloomberg reported. Crude oil futures are rising after an Energy Department report showed that U.S. inventories of heating oil fell for a third week, Bloomberg reported.
Bottom Line: The Portfolio is unchanged mid-day as strength in my retail and semiconductor longs is being offset by weakness in my wireless and Russian ADR longs. I added a few longs into this mornings weakness bringing the Portfolio to 125% net long. One of my new longs is DITC and I am using a stop-loss of $24.50 on this position. Today's action is relatively positive considering higher energy prices and some earnings disappointments. Technology shares continue to outperform and exhibit bullish bullish behavior. I expect U.S. shares to rise into the close on short-covering and bargain-hunting.
Wednesday Watch
Earnings of Note
Company/Estimate
ALTR/.18
AMGN/.62
CAI/.62
CHIR/.06
COF/1.30
DBD/.67
GLW/.11
CA/.16
CL/.58
EK/.72
EBAY/.27
GD/1.50
HET/1.04
HON/.43
JPM/.73
LIN/.38
LU/.03
MERQ/.24
ODP/.27
OSI/.52
PFCB/.28
PFE/.54
PMCS/.04
SEBL/.05
SYMC/.39
VRSN/.16
Splits
None of note.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on WFC, AFL, BSX, DO, STLD, FON, FORM and ZION. Goldman reiterated Underperform on MMC.
Late-Night News
Asian indices are lower on concerns that high energy prices are crimping growth in the region. U.K. ruling Labour party lawmakers are calling for vote in Parliament before the government agrees to a U.S. request for vote in Parliament before the government agrees to a U.S. request for British troops to be deployed to an area south of the Iraqi capital Baghdad, the BBC reported. XM Satellite Radio Holdings will announce an agreement with Major League Baseball to broadcast games starting in 2006, according to the Sports Business Daily. Kohlberg Kravis Roberts and Carlyle Group have returned $15.6 billion to investors in the past 18 months in two of the biggest ever pay-outs in the private equity industry, the Financial Times reported. The Chinese government may sign a 20-year contract to buy $14.6 billion of iron ore from Australian companies, the Australian Financial Review said. Whole Foods Market is seeking sites in London to open three or four superstores as part of a plan to expand into Europe, the Financial Times reported. Bank of America, JP Morgan Chase and other banks are pitching working ranches and farms as alternative investments, the Wall Street Journal said. Ex-Enron Chairman Ken Lay will face one criminal trial by himself and another with ex-Enron CEO Skilling, the AP reported. California insurance regulators will hire securities fraud specialist law firm Lerach Coughlin Stoia Geller Rudman & Robbins LLP for a possible investigation of insurance companies and payments to brokers, the Wall Street Journal reported. Pfizer will begin an ad campaign today for its Celebrex pankiller in U.S. newspapers and magazines and in tv commercials, the Wall Street Journal reported. Anheuser-Busch may pay as much as $1 billion for a stake in China's Henan Jinzing Beer Group, Agence France-Presse reported. Fannie Mae said the SEC opened a formal investigation after its federal regulator reported accounting errors, Bloomberg said.
Late-Night Trading
Asian Indices are -1.75% to -.50% on average.
S&P 500 indicated -.15%.
NASDAQ 100 indicated -.21%
BOTTOM LINE: I expect U.S. equities to open lower in the morning on weakness in Asia, worries over oil inventories, concerns over mounting lawsuits and earnings. However, stocks should attempt to rally later in the day on short-covering, declining energy prices, diminishing domestic terrorism fears, bargain hunting and optimism over better economic growth after the election. The Portfolio is 100% net long heading into tomorrow.
Company/Estimate
ALTR/.18
AMGN/.62
CAI/.62
CHIR/.06
COF/1.30
DBD/.67
GLW/.11
CA/.16
CL/.58
EK/.72
EBAY/.27
GD/1.50
HET/1.04
HON/.43
JPM/.73
LIN/.38
LU/.03
MERQ/.24
ODP/.27
OSI/.52
PFCB/.28
PFE/.54
PMCS/.04
SEBL/.05
SYMC/.39
VRSN/.16
Splits
None of note.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on WFC, AFL, BSX, DO, STLD, FON, FORM and ZION. Goldman reiterated Underperform on MMC.
Late-Night News
Asian indices are lower on concerns that high energy prices are crimping growth in the region. U.K. ruling Labour party lawmakers are calling for vote in Parliament before the government agrees to a U.S. request for vote in Parliament before the government agrees to a U.S. request for British troops to be deployed to an area south of the Iraqi capital Baghdad, the BBC reported. XM Satellite Radio Holdings will announce an agreement with Major League Baseball to broadcast games starting in 2006, according to the Sports Business Daily. Kohlberg Kravis Roberts and Carlyle Group have returned $15.6 billion to investors in the past 18 months in two of the biggest ever pay-outs in the private equity industry, the Financial Times reported. The Chinese government may sign a 20-year contract to buy $14.6 billion of iron ore from Australian companies, the Australian Financial Review said. Whole Foods Market is seeking sites in London to open three or four superstores as part of a plan to expand into Europe, the Financial Times reported. Bank of America, JP Morgan Chase and other banks are pitching working ranches and farms as alternative investments, the Wall Street Journal said. Ex-Enron Chairman Ken Lay will face one criminal trial by himself and another with ex-Enron CEO Skilling, the AP reported. California insurance regulators will hire securities fraud specialist law firm Lerach Coughlin Stoia Geller Rudman & Robbins LLP for a possible investigation of insurance companies and payments to brokers, the Wall Street Journal reported. Pfizer will begin an ad campaign today for its Celebrex pankiller in U.S. newspapers and magazines and in tv commercials, the Wall Street Journal reported. Anheuser-Busch may pay as much as $1 billion for a stake in China's Henan Jinzing Beer Group, Agence France-Presse reported. Fannie Mae said the SEC opened a formal investigation after its federal regulator reported accounting errors, Bloomberg said.
Late-Night Trading
Asian Indices are -1.75% to -.50% on average.
S&P 500 indicated -.15%.
NASDAQ 100 indicated -.21%
BOTTOM LINE: I expect U.S. equities to open lower in the morning on weakness in Asia, worries over oil inventories, concerns over mounting lawsuits and earnings. However, stocks should attempt to rally later in the day on short-covering, declining energy prices, diminishing domestic terrorism fears, bargain hunting and optimism over better economic growth after the election. The Portfolio is 100% net long heading into tomorrow.
Tuesday, October 19, 2004
Tuesday Close
S&P 500 1,103.23 -.97%
NASDAQ 1,922.90 -.70%
Leading Sectors
Semis +1.03%
I-Banks +.97%
Computer Boxmakers +.71%
Lagging Sectors
Insurance -3.30%
Iron/Steel -5.47%
HMOs -9.38%
Other
Crude Oil 53.25 -.08%
Natural Gas 7.25 +1.78%
Gold 421.40 -.05%
Base Metals 113.21 +.08%
U.S. Dollar 86.82 -.23%
10-Yr. T-note Yield 4.03% -.24%
VIX 15.13 +2.86%
Put/Call .93 +22.37%
NYSE Arms 1.36 +37.37%
After-hours Movers
MOT -5.59% after missing 3Q estimates slightly and reiterating 4Q outlook.
ERTS -4.31% after meeting 2Q estimates and lowering 3Q guidance.
SGTL +10.1% after beating 3Q estimates and raising 4Q outlook.
JAKK -5.58% after World Wrestling Entertainment sued the maker of its action figures, alleging the company violated anti-bribery laws.
MKSI -5.98% after beating 3Q estimates and lowering 4Q outlook.
Recommendations
Goldman Sachs reiterated Outperform on INTC, GLK, AMD and WFC.
After-hours News
U.S. stocks finished modestly lower today led by significant declines in the insurance sector related to NY Attorney General Spitzer's probes. After the close, the family that controls Cox Communications will take the company private after raising its offer to buy out shareholders to $8.5 billion. MRIs may be a better guide for stroke treatment than CT scans, according to a study in the Oct. 20 Journal of the American Medical Association. A winter of lower-than-average temperatures and above-normal snowfall is expected in many parts of the eastern U.S., AccuWeather predicted. Motorola said third-quarter profit quadrupled to the highest level for the period in four years as new handset models revived sales, Bloomberg reported. The World Trade Center likely collapsed because jetliners that slammed into the twin towers knocked fireproofing loose, not because of missing or inadequate fire protection, according to findings released today by U.S. investigators, Bloomberg said. Bank of America said Jonathon Sandelman, who became president of the company's securities unit in February, is quitting to start a hedge fund, Bloomberg reported. Sinclair Broadcast Group said it will not broadcast in its entirety the documentary "Stolen Honor," a film by Vietnam Veterans critical of Senator Kerry's actions after the war, Bloomberg reported.
BOTTOM LINE: The Portfolio finished higher today on gains in my security, internet and retail longs. I exited a few longs in the steel and software sectors in the afternoon, bringing the Portfolio's market exposure to 100% net long. While the tone of the market was mostly negative, losses were contained mostly to insurance and base metal stocks. The Semiconductor Index, the most important sub-sector of technology, actually rose 1.03%. It is also good to see the spikes in some measures of investor anxiety. I will closely watch the market's reaction to tomorrow's oil inventory data and earnings reports before further shifting the Portfolio's market exposure.
NASDAQ 1,922.90 -.70%
Leading Sectors
Semis +1.03%
I-Banks +.97%
Computer Boxmakers +.71%
Lagging Sectors
Insurance -3.30%
Iron/Steel -5.47%
HMOs -9.38%
Other
Crude Oil 53.25 -.08%
Natural Gas 7.25 +1.78%
Gold 421.40 -.05%
Base Metals 113.21 +.08%
U.S. Dollar 86.82 -.23%
10-Yr. T-note Yield 4.03% -.24%
VIX 15.13 +2.86%
Put/Call .93 +22.37%
NYSE Arms 1.36 +37.37%
After-hours Movers
MOT -5.59% after missing 3Q estimates slightly and reiterating 4Q outlook.
ERTS -4.31% after meeting 2Q estimates and lowering 3Q guidance.
SGTL +10.1% after beating 3Q estimates and raising 4Q outlook.
JAKK -5.58% after World Wrestling Entertainment sued the maker of its action figures, alleging the company violated anti-bribery laws.
MKSI -5.98% after beating 3Q estimates and lowering 4Q outlook.
Recommendations
Goldman Sachs reiterated Outperform on INTC, GLK, AMD and WFC.
After-hours News
U.S. stocks finished modestly lower today led by significant declines in the insurance sector related to NY Attorney General Spitzer's probes. After the close, the family that controls Cox Communications will take the company private after raising its offer to buy out shareholders to $8.5 billion. MRIs may be a better guide for stroke treatment than CT scans, according to a study in the Oct. 20 Journal of the American Medical Association. A winter of lower-than-average temperatures and above-normal snowfall is expected in many parts of the eastern U.S., AccuWeather predicted. Motorola said third-quarter profit quadrupled to the highest level for the period in four years as new handset models revived sales, Bloomberg reported. The World Trade Center likely collapsed because jetliners that slammed into the twin towers knocked fireproofing loose, not because of missing or inadequate fire protection, according to findings released today by U.S. investigators, Bloomberg said. Bank of America said Jonathon Sandelman, who became president of the company's securities unit in February, is quitting to start a hedge fund, Bloomberg reported. Sinclair Broadcast Group said it will not broadcast in its entirety the documentary "Stolen Honor," a film by Vietnam Veterans critical of Senator Kerry's actions after the war, Bloomberg reported.
BOTTOM LINE: The Portfolio finished higher today on gains in my security, internet and retail longs. I exited a few longs in the steel and software sectors in the afternoon, bringing the Portfolio's market exposure to 100% net long. While the tone of the market was mostly negative, losses were contained mostly to insurance and base metal stocks. The Semiconductor Index, the most important sub-sector of technology, actually rose 1.03%. It is also good to see the spikes in some measures of investor anxiety. I will closely watch the market's reaction to tomorrow's oil inventory data and earnings reports before further shifting the Portfolio's market exposure.
Mid-day Update
S&P 500 1,106.75 -.65%
NASDAQ 1,930.36 -.32%
Leading Sectors
Semis +1.55%
I-Banks +1.11%
Boxmakers +1.02%
Lagging Sectors
Insurance -3.01%
Iron/Steel -5.06%
HMOs -7.82%
Other
Crude Oil 53.20 -.88%
Natural Gas 7.05 +3.66%
Gold 421.60 +.96%
Base Metals 113.21 +.08%
U.S. Dollar 86.83 -.22%
10-Yr. T-note Yield 4.04% -.05%
VIX 14.91 +1.36%
Put/Call .94 +23.68%
NYSE Arms 1.18 +19.19%
Market Movers
TASR +8.5% after beating 3Q estimates and raising 04 forecast.
MMC -4.8% on lingering worries over Spitzer probe.
UNH -8.5% after the NY Post reported that New York Attorney General Spitzer is widening a probe of insurance brokers' fees to include HMOs.
TXN +7.9% after beating 3Q estimates, reiterating 4Q guidance and making positive comments.
UNM -9.8% on Spitzer probe.
MOND +31.0% after Constellation Brands offered $1.3 billion in cash to acquire it.
SSNC +19.2% after beating 3Q estimates, raising 4Q guidance and Suntrust upgrade to Buy.
PH +8.6% after beating 1Q estimates and raising 2Q outlook.
SWK +9.2% after beating 3Q estimates and raising 4Q/04 guidance.
CKFR +10.4% after beating 1Q estimates and raising 2Q forecast.
RTRSY +7.9% after meeting 3Q estimates and giving positive outlook.
STN +4.4% after beating 3Q estimates and raising 4Q outlook.
ETH +7.2% after beating 1Q estimates and making positive comments on 05.
JEF +8.3% after substantially beating 3Q estimates.
AET -10.3% on Spitzer probe.
WLP -6.7% on Spitzer probe.
BCC -11.5% on profit-taking after beating 3Q estimates.
NUE -8.22% on continuing worries over slowing demand from China.
Economic Data
Consumer Price Index for September rose .2% versus estimates of a .2% increase and a .1% gain in August.
CPI Ex Food & Energy for September rose .3% versus estimates of a .2% gain and a .1% rise in August.
Housing Starts for September were 1898K versus estimates of 1950K and 2020K in August.
Building Permits for September were 2005K versus estimates of 1950K and 1969K in August.
Recommendations
Goldman Sachs reiterated Outperform on IBM, EMC, CMA, DO, RIG and STN. Goldman reiterated Underperform on FRX. Citi SmithBarney said to Sell WEN and Buy MCD. Citi also said to Sell CSX and Buy CNI. Citi reiterated Buy on MSFT, target $33. Citi reiterated Sell on LF, target $10. Citi reiterated Sell on WTW, target $31. Citi reiterated Buy on FITB, target $58. Citi reiterated Buy on MMM, target $86. Citi reiterated Buy on ASD, target $46. Citi reiterated Buy on MATK, target $90. Citi reiterated Buy on CKFR, target $39. FST rated Buy at UBS, target $38. KWK rated Buy at UBS, target $48. WGR rated Buy at UBS, target $37. FLYI cut to Reduce at UBS, target $1.50. DAL cut to Reduce at UBS, target $2. SGU cut to Reduce at UBS, target $8. BHE rated Buy at Bank of America, target $37. PLXS rated Sell at Bank of America, target $9.
Mid-day News
U.S. stocks are modestly lower mid-day on worries over mounting legal duress in the insurance industry. New York Attorney General Spitzer began investigating health insurance policies sold by brokers to individuals, large corporations and local government, the NY Post reported. U.S. hedge funds opposed to a plan to require them to register as financial advisers have asked U.S. regulators to explore other ways to improve disclosure, the NY Post said. Canadian health-lobby organizations are pressuring their government to prohibit Internet-based pharmacies from selling drugs to the U.S., because they say the sales will lead to higher pharmaceutical prices and shortages in Canada, the Wall Street Journal reported. Senator Kerry is wrong when he says the 2001 battle of Tora Bora in Afghanistan was a "missed opportunity" in which the U.S. had al-Qaeda leader Osama bin Laden surrounded and let him escape, retired General Tommy Franks wrote in today's NY Times. The U.S. Army has been ordered to prepare a plan to shorten the 12-month tours of duty soldiers now serve in Afghanistan and Iraq, the NY Times reported. Google's new free search tool that indexes a computer's content for easy retrieval could allow public PC users to see other people's e-mails, passwords and data, the AP reported. Senator Kerry may have overstated President Bush's positions on Social Security and the draft as well as his responsibility for a shortage of flu shots, the NY Times reported, citing experts and candidate statements. The NHL, which has missed six days of its regular season because of a labor dispute, is now canceling games 45 days in the future instead of 30, TSN network of Canada reported. General Motors may face costs of $38 million per day if strikes bring its plants across Europe to a standstill, Reuters reported. Iraq is on course to hold its first free elections in January, UN Secretary General Annan said, calling on all nations to support the country, Bloomberg reported. EMC, the world's largest maker of data storage computers and software, said third-quarter profit rose as the company snatched sales from competitors and clients spent more on storage to meet government regulations, Bloomberg said. Boston Scientific, the world's largest maker of heart stents, said third-quarter net income more than doubled to $258 million after the company stemmed damage from three recalls of its top-selling product in the U.S., Bloomberg said. Merck said Vioxx's planned successor, Arcoxia, didn't elevate the risk of heart disease compared with a generic pain pill in a one-year study, Bloomberg reported. McDonald's started selling New York Reuben and Turkey BLT sandwiches at some U.S. and Canadian locations last quarter to take sales from Subway Restaurants, Bloomberg reported. Crude oil futures are falling for a second day in NY on speculation that high prices may dent the growth in oil demand and prompt development of increased production capacity, Bloomberg said. U.S. consumer prices accelerated in September, a gain that may strengthen the Fed's resolve to increase interest rates, Bloomberg said.
BOTTOM LINE: The Portfolio is higher mid-day on strength in my security, internet and retail longs. I have not traded and the Portfolio is still 125% net long. The tone of the market has deteriorated today as major U.S. insurance companies continue to fall substantially as a result of the Spitzer probes. As well, oil has risen from its lows for the day. On the positive-side, measures of investor anxiety are rising, technology stocks are mostly higher, leaders are beginning to break-out, interest rates are lower and another measure of consumer inflation remained relatively tame. I expect U.S. stocks to rise modestly into the close from current levels on short-covering and bargain-hunting.
NASDAQ 1,930.36 -.32%
Leading Sectors
Semis +1.55%
I-Banks +1.11%
Boxmakers +1.02%
Lagging Sectors
Insurance -3.01%
Iron/Steel -5.06%
HMOs -7.82%
Other
Crude Oil 53.20 -.88%
Natural Gas 7.05 +3.66%
Gold 421.60 +.96%
Base Metals 113.21 +.08%
U.S. Dollar 86.83 -.22%
10-Yr. T-note Yield 4.04% -.05%
VIX 14.91 +1.36%
Put/Call .94 +23.68%
NYSE Arms 1.18 +19.19%
Market Movers
TASR +8.5% after beating 3Q estimates and raising 04 forecast.
MMC -4.8% on lingering worries over Spitzer probe.
UNH -8.5% after the NY Post reported that New York Attorney General Spitzer is widening a probe of insurance brokers' fees to include HMOs.
TXN +7.9% after beating 3Q estimates, reiterating 4Q guidance and making positive comments.
UNM -9.8% on Spitzer probe.
MOND +31.0% after Constellation Brands offered $1.3 billion in cash to acquire it.
SSNC +19.2% after beating 3Q estimates, raising 4Q guidance and Suntrust upgrade to Buy.
PH +8.6% after beating 1Q estimates and raising 2Q outlook.
SWK +9.2% after beating 3Q estimates and raising 4Q/04 guidance.
CKFR +10.4% after beating 1Q estimates and raising 2Q forecast.
RTRSY +7.9% after meeting 3Q estimates and giving positive outlook.
STN +4.4% after beating 3Q estimates and raising 4Q outlook.
ETH +7.2% after beating 1Q estimates and making positive comments on 05.
JEF +8.3% after substantially beating 3Q estimates.
AET -10.3% on Spitzer probe.
WLP -6.7% on Spitzer probe.
BCC -11.5% on profit-taking after beating 3Q estimates.
NUE -8.22% on continuing worries over slowing demand from China.
Economic Data
Consumer Price Index for September rose .2% versus estimates of a .2% increase and a .1% gain in August.
CPI Ex Food & Energy for September rose .3% versus estimates of a .2% gain and a .1% rise in August.
Housing Starts for September were 1898K versus estimates of 1950K and 2020K in August.
Building Permits for September were 2005K versus estimates of 1950K and 1969K in August.
Recommendations
Goldman Sachs reiterated Outperform on IBM, EMC, CMA, DO, RIG and STN. Goldman reiterated Underperform on FRX. Citi SmithBarney said to Sell WEN and Buy MCD. Citi also said to Sell CSX and Buy CNI. Citi reiterated Buy on MSFT, target $33. Citi reiterated Sell on LF, target $10. Citi reiterated Sell on WTW, target $31. Citi reiterated Buy on FITB, target $58. Citi reiterated Buy on MMM, target $86. Citi reiterated Buy on ASD, target $46. Citi reiterated Buy on MATK, target $90. Citi reiterated Buy on CKFR, target $39. FST rated Buy at UBS, target $38. KWK rated Buy at UBS, target $48. WGR rated Buy at UBS, target $37. FLYI cut to Reduce at UBS, target $1.50. DAL cut to Reduce at UBS, target $2. SGU cut to Reduce at UBS, target $8. BHE rated Buy at Bank of America, target $37. PLXS rated Sell at Bank of America, target $9.
Mid-day News
U.S. stocks are modestly lower mid-day on worries over mounting legal duress in the insurance industry. New York Attorney General Spitzer began investigating health insurance policies sold by brokers to individuals, large corporations and local government, the NY Post reported. U.S. hedge funds opposed to a plan to require them to register as financial advisers have asked U.S. regulators to explore other ways to improve disclosure, the NY Post said. Canadian health-lobby organizations are pressuring their government to prohibit Internet-based pharmacies from selling drugs to the U.S., because they say the sales will lead to higher pharmaceutical prices and shortages in Canada, the Wall Street Journal reported. Senator Kerry is wrong when he says the 2001 battle of Tora Bora in Afghanistan was a "missed opportunity" in which the U.S. had al-Qaeda leader Osama bin Laden surrounded and let him escape, retired General Tommy Franks wrote in today's NY Times. The U.S. Army has been ordered to prepare a plan to shorten the 12-month tours of duty soldiers now serve in Afghanistan and Iraq, the NY Times reported. Google's new free search tool that indexes a computer's content for easy retrieval could allow public PC users to see other people's e-mails, passwords and data, the AP reported. Senator Kerry may have overstated President Bush's positions on Social Security and the draft as well as his responsibility for a shortage of flu shots, the NY Times reported, citing experts and candidate statements. The NHL, which has missed six days of its regular season because of a labor dispute, is now canceling games 45 days in the future instead of 30, TSN network of Canada reported. General Motors may face costs of $38 million per day if strikes bring its plants across Europe to a standstill, Reuters reported. Iraq is on course to hold its first free elections in January, UN Secretary General Annan said, calling on all nations to support the country, Bloomberg reported. EMC, the world's largest maker of data storage computers and software, said third-quarter profit rose as the company snatched sales from competitors and clients spent more on storage to meet government regulations, Bloomberg said. Boston Scientific, the world's largest maker of heart stents, said third-quarter net income more than doubled to $258 million after the company stemmed damage from three recalls of its top-selling product in the U.S., Bloomberg said. Merck said Vioxx's planned successor, Arcoxia, didn't elevate the risk of heart disease compared with a generic pain pill in a one-year study, Bloomberg reported. McDonald's started selling New York Reuben and Turkey BLT sandwiches at some U.S. and Canadian locations last quarter to take sales from Subway Restaurants, Bloomberg reported. Crude oil futures are falling for a second day in NY on speculation that high prices may dent the growth in oil demand and prompt development of increased production capacity, Bloomberg said. U.S. consumer prices accelerated in September, a gain that may strengthen the Fed's resolve to increase interest rates, Bloomberg said.
BOTTOM LINE: The Portfolio is higher mid-day on strength in my security, internet and retail longs. I have not traded and the Portfolio is still 125% net long. The tone of the market has deteriorated today as major U.S. insurance companies continue to fall substantially as a result of the Spitzer probes. As well, oil has risen from its lows for the day. On the positive-side, measures of investor anxiety are rising, technology stocks are mostly higher, leaders are beginning to break-out, interest rates are lower and another measure of consumer inflation remained relatively tame. I expect U.S. stocks to rise modestly into the close from current levels on short-covering and bargain-hunting.
Tuesday Watch
Earnings of Note
Company/Estimate
MO/1.25
BSX/.46
CDWC/.74
CAKE/.30
CYMI/.39
EMC/.09
ERTS/.35
DO/.04
F/.14
MCD/.61
MNST/.16
MOT/.19
RSH/.39
STX/.04
FON/.21
TASR/.15
TER/.23
WFC/1.06
Splits
None of note.
Economic Data
Consumer Price Index for September estimated to rise .2% versus a .1% increase in August.
CPI Ex Food & Energy for September estimated to rise .2% versus a .1% gain in August.
Housing Starts for September estimated at 1950K versus 2000K in August.
Building Permits for September estimated at 1950K versus 1969K in August.
Recommendations
Goldman Sachs reiterated Outperform on PXD, GDT, STLD, TPX, MMM, RE and ACN.
Late-Night News
Asian indices are higher, led by technology shares, after IBM, Texas Instruments and Fujitsu Ltd. beat earnings expectations. U.S. regulators may force all of the nation's insurance brokers to return commission payments even if there is no evidence individual clients were harmed, the Financial Times reported. General Motor's Cadillac Escalade EXT is more likely to get stolen than any other vehicle in the U.S., the Wall Street Journal reported. Wal-Mart Stores for the first time will move an annual meeting to decide purchases of electronics goods to China from the U.S., the Commercial Times said. California Governor Schwarzenegger endorsed a proposal to sell $3 billion of bonds to fund stem-cell research, two weeks before a vote that may make California the biggest U.S. sponsor of such studies, Bloomberg reported. Google's share price has risen 75% since the company's IPO in August, enriching founders, employees and investors, Bloomberg said.
Late-Night Trading
Asian Indices are +.50% to +1.0% on average.
S&P 500 indicated +.08%.
NASDAQ 100 indicated +.41%
BOTTOM LINE: I expect U.S. equities to open higher in the morning on short-covering, bargain-hunting, declining energy prices and President Bush's lead in the polls. The Portfolio is 125% net long heading into tomorrow.
Company/Estimate
MO/1.25
BSX/.46
CDWC/.74
CAKE/.30
CYMI/.39
EMC/.09
ERTS/.35
DO/.04
F/.14
MCD/.61
MNST/.16
MOT/.19
RSH/.39
STX/.04
FON/.21
TASR/.15
TER/.23
WFC/1.06
Splits
None of note.
Economic Data
Consumer Price Index for September estimated to rise .2% versus a .1% increase in August.
CPI Ex Food & Energy for September estimated to rise .2% versus a .1% gain in August.
Housing Starts for September estimated at 1950K versus 2000K in August.
Building Permits for September estimated at 1950K versus 1969K in August.
Recommendations
Goldman Sachs reiterated Outperform on PXD, GDT, STLD, TPX, MMM, RE and ACN.
Late-Night News
Asian indices are higher, led by technology shares, after IBM, Texas Instruments and Fujitsu Ltd. beat earnings expectations. U.S. regulators may force all of the nation's insurance brokers to return commission payments even if there is no evidence individual clients were harmed, the Financial Times reported. General Motor's Cadillac Escalade EXT is more likely to get stolen than any other vehicle in the U.S., the Wall Street Journal reported. Wal-Mart Stores for the first time will move an annual meeting to decide purchases of electronics goods to China from the U.S., the Commercial Times said. California Governor Schwarzenegger endorsed a proposal to sell $3 billion of bonds to fund stem-cell research, two weeks before a vote that may make California the biggest U.S. sponsor of such studies, Bloomberg reported. Google's share price has risen 75% since the company's IPO in August, enriching founders, employees and investors, Bloomberg said.
Late-Night Trading
Asian Indices are +.50% to +1.0% on average.
S&P 500 indicated +.08%.
NASDAQ 100 indicated +.41%
BOTTOM LINE: I expect U.S. equities to open higher in the morning on short-covering, bargain-hunting, declining energy prices and President Bush's lead in the polls. The Portfolio is 125% net long heading into tomorrow.
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