S&P 500 1,106.80 +1.09%
NASDAQ 1,921.38 +.38%
Leading Sectors
HMOs +4.4%
Insurance +4.25%
Airlines +3.60%
Lagging Sectors
Hospitals -.25%
Broadcasting -.32%
Disk Drives -.67%
Other
Crude Oil 54.55 +.02%
Natural Gas 8.16 +3.49%
Gold 426.40 -.81%
Base Metals 111.19 +.15%
U.S. Dollar 85.29 +.38%
10-Yr. T-note Yield 3.98% +.34%
VIX 16.07 -3.08%
Put/Call .73 unch.
NYSE Arms .61 -47.41%
Market Movers
DAL +27.2% after saying American Express agreed to provide as much as $600 million in financing, including $500 million to prepay for the airline's frequent-flier points.
FLEX -9.3% after missing 2Q estimates, lowering 3Q/4Q guidance and multiple downgrades.
QCOM -5.3% on Morgan Stanley downgrade to Underweight.
NVDA +12.7% after boosting 3Q sales estimate.
LCAV +15.0% after beating 3Q estimates substantially and raising 04/05 guidance.
HZO +16.2% after beating 4Q estimates substantially and reiterating 05 outlook.
SHOP +57.9% on strong demand for IPO.
COH +5.7% after beating 1Q estimates and raising 2Q/05 outlooks.
SEPR +5.7% after beating 3Q estimates.
EXBD +6.3% after beating 3Q estimates and raising 4Q/04 outlooks.
OMC +7.4% after beating 3Q estimates.
SLAB -18.6% after meeting 3Q estimates, lowering 4Q guidance substantially and multiple downgrades.
WIRE -18.6% on disappointing 3Q report.
TRMB -7.9% after beating 3Q estimates and lowering 4Q/04 outlooks.
TWP -8.1% after missing 3Q estimates and reiterating 04 outlook.
APOL -4.2% on Piper Jaffray downgrade to Market Perform.
OVNT -7.5% after missing 3Q estimates and lowering 4Q guidance.
DVA -8.4% after receiving a subpoena from U.S. prosecutors in NY for documents relating to their operations.
ATRS -7.3% after missing 3Q estimates, raising 4Q outlook and Jefferies downgrade to Hold.
AH -5.1% after announcing that it had priced at par its previously announced offering of $300 million in aggregate principal amount of 2.0% senior subordinated convertible notes.
CNCT -7.5% after beating 3Q estimates and lowering 4Q outlook.
*Insurance and HMO stocks up across the board on news that Spitzer would not pursue criminal charges against MMC.
Economic Data
Consumer Confidence for October fell to 92.8 versus estimates of 94.0 and a reading of 96.7 in September.
Recommendations
-Goldman Sachs reiterated Outperform on ENH, RIG, KO, IP, RE and AIG. Goldman reiterated Underperform on NFS, LVLT, AKS, RAI and MMC.
-Citi SmithBarney says to Buy IMCL for a trade into earnings on Thur., target $66. Citi also said to Buy HAIN on any weakness related to 1Q earnings, target $21. Citi reiterated Buy on KMB, target $72. Citi reiterated Buy on FLEX, target $17. Citi reiterated Buy on WLP, target $142. Citi reiterated Buy on DIS, target $30. Citi reiterated Buy on BWA, target $50. Citi reiterated Buy on VECO, target $26. Citi reiterated Buy on BJ, target $30. AMAT reiterated Buy on AMAT, target $22. Citi reiterated Buy on CMCSK, target $34. Citi reiterated Buy on SMTC, target $24. Citi reiterated Buy on INTX, target $18. Citi reiterated Buy on PHM, target $83.
-JP Morgan rated BBBY Overweight.
-Morgan Stanley downgraded QCOM to Underweight.
-Bank of America raised TRW to Buy, target $21. Bank of America downgraded SUP to Sell, target $18.
Mid-day News
U.S. stocks are higher mid-day, led by HMO and Insurance shares, after Democratic Attorney General Spitzer said he would not pursue criminal charges against Marsh & McLennan. Political action committees supporting Senator Kerry and his bid for the White House are outspending backers of President Bush by more than 4 to 1, the AP reported. U.S. retailers, preparing for the holiday sales season, are waiting longer than usual for merchandise shipped from Asia due to a backload of cargo ships, railroads and truck lines, the NY Times reported. An NBC News crew, embedded with the U.S. Army during the liberation of Iraq last year, reported that the 380 tons of explosives that were recently reported missing were already gone when troops arrived, CNN reported. Iraqi Prime Minister Allawi said today he has asked the United Nations to send troops to help guard the country's January elections from terrorist attack, Agence France-Presse reported. Afghanistan's interim President Hamid Karzai has won a majority of 55.4% of the votes in the final count of the country's first presidential election, the Afghan Election Web site said. Senator Kerry grants special access to top Democratic California fundraisers, letting them listen in on conference calls and visit his family on retreats, the LA Times reported. The fundraisers, often well-connected or celebrities, have helped bring in more than $102 million from Californians for Kerry and Democratic causes, a record for contributions from a single state, the newspaper said. Hewlett-Packard is testing ways of using wireless tracking technology, known as radio frequency identification or RFID, that's aimed at replacing bar codes, the San Jose Mercury News reported. Comcast may report a fifth consecutive quarterly profit after expanding its video-on-demand service in an effort to keep subscribers from leaving for satellite-TV, Bloomberg reported. Mittal's $4.5 billion acquisition of Intl. Steel Group may prompt a spree of deals as the steel industry consolidates to cut costs, Bloomberg said. Monsanto won European Union approval for one of its gene-modified corn varieties to be used in food as the EU seeks to expand the biotech market after a six-year moratorium and ease a transatlantic trade dispute, Bloomberg reported. A U.S appeals court lifted a ban on sales of rebuilt toner cartridges that compete with products made by Lexmark Intl., Bloomberg said. U.S. consumer confidence fell more-than-expected in October as both political parties engage in historically negative rhetoric, Bloomberg said. A divided U.S. SEC ordered hedge fund managers to register with the agency, subjecting the private investment partnerships to SEC oversight for the first time, Bloomberg reported.
Bottom Line: The Portfolio is higher mid-day on strength in my internet, Russian telecom ADR and wireless longs. I have not traded today and the Portfolio is still 100% net long. The tone of the market is better today, however the advance/decline line is near even, technology stocks are underperforming and measures of investor anxiety are mostly lower. I expect U.S. stocks to trade mixed into the afternoon as political worries and domestic terrorism fears offset stabilizing energy prices and optimism over the MMC news.
Tuesday, October 26, 2004
Tuesday Watch
Earnings of Note
Company/Estimate
AKS/.54
ATVI/.09
AV/.18
AVID/.52
ABX/.04
NILE/.07
CTX/1.59
CECO/.28
CME/1.67
CTSH/.18
FFIV/.21
HAL/.36
LLL/.88
LMT/.65
MSTR/.51
RFMD/-.02
SINA/.28
TROW/.63
RIG/.05
VRTS/.21
WMS/.10
Splits
None of note.
Economic Data
Consumer Confidence for October estimated at 94.0 versus 96.8 in September.
Recommendations
Goldman Sachs reiterated Outperform on CIT, SII, ADP, AMT, VLTR and Underperform on VRTX.
Late-Night News
Asian indices are mixed as strength in Australia is being offset by weakness in Taiwan and China. Oracle's $7.7 billion takeover bid for Peoplesoft may today receive approval from the European Union's antitrust regulator, removing the last remaining regulatory obstacle, the Financial Times said. SLM Corp., the student-loan company known as Sallie Mae, is being investigated by the state of California for non-federally backed loans to students to for-profit career training schools, the Financial Times reported. News Corp. shareholders approved Rupert Murdoch's plan to move his media company to the U.S. from Australia, making it easier to raise money for expansion and allowing the stock to be added to the benchmark S&P 500 Index, Bloomberg reported.
Late-Night Trading
Asian Indices are -1.25% to +.50% on average.
S&P 500 indicated +.16%.
NASDAQ 100 indicated +.21%
BOTTOM LINE: I expect U.S. equities to open modestly lower in the morning on a weaker consumer confidence report. As I have said many times before, the constant barrage of negativity from the media and politicians is having an affect on consumer psychology. However, confidence should head higher in the intermediate-term as the election ends, domestic terrorism fears diminish and hiring improves. Stocks should attempt to rally later in the day on better earnings reports, declining energy prices, short-covering and bargain-hunting.
Company/Estimate
AKS/.54
ATVI/.09
AV/.18
AVID/.52
ABX/.04
NILE/.07
CTX/1.59
CECO/.28
CME/1.67
CTSH/.18
FFIV/.21
HAL/.36
LLL/.88
LMT/.65
MSTR/.51
RFMD/-.02
SINA/.28
TROW/.63
RIG/.05
VRTS/.21
WMS/.10
Splits
None of note.
Economic Data
Consumer Confidence for October estimated at 94.0 versus 96.8 in September.
Recommendations
Goldman Sachs reiterated Outperform on CIT, SII, ADP, AMT, VLTR and Underperform on VRTX.
Late-Night News
Asian indices are mixed as strength in Australia is being offset by weakness in Taiwan and China. Oracle's $7.7 billion takeover bid for Peoplesoft may today receive approval from the European Union's antitrust regulator, removing the last remaining regulatory obstacle, the Financial Times said. SLM Corp., the student-loan company known as Sallie Mae, is being investigated by the state of California for non-federally backed loans to students to for-profit career training schools, the Financial Times reported. News Corp. shareholders approved Rupert Murdoch's plan to move his media company to the U.S. from Australia, making it easier to raise money for expansion and allowing the stock to be added to the benchmark S&P 500 Index, Bloomberg reported.
Late-Night Trading
Asian Indices are -1.25% to +.50% on average.
S&P 500 indicated +.16%.
NASDAQ 100 indicated +.21%
BOTTOM LINE: I expect U.S. equities to open modestly lower in the morning on a weaker consumer confidence report. As I have said many times before, the constant barrage of negativity from the media and politicians is having an affect on consumer psychology. However, confidence should head higher in the intermediate-term as the election ends, domestic terrorism fears diminish and hiring improves. Stocks should attempt to rally later in the day on better earnings reports, declining energy prices, short-covering and bargain-hunting.
Monday, October 25, 2004
Monday Close
S&P 500 1,094.80 -.09%
NASDAQ 1,914.04 -.06%
Leading Sectors
Airlines +4.22%
Homebuilders +3.88%
Steel +3.61%
Lagging Sectors
HMOs -.64%
Restaurants -.80%
Biotech -1.27%
Other
Crude Oil 54.35 -1.49%
Natural Gas 7.92 -2.28%
Gold 430.10 +1.06%
Base Metals 111.02 -1.63%
U.S. Dollar 84.97 -1.05%
10-Yr. T-note Yield 3.97% -.10%
VIX 16.58 +8.51%
Put/Call .73 -1.35%
NYSE Arms 1.16 -8.66%
After-hours Movers
PHRM +5.3% after beating 3Q estimates and raising 04 outlook.
NVDA +11.7% after boosting 3Q sales estimate.
MMC +9.4% after CEO Greenberg resigned, 11 days after Spitzer probe was announced.
DAL +6.4% after saying American Express agreed to provide as much as $600 million in financing, including $500 million to prepay for the airline's frequent-flier points.
SLAB -20.7% after meeting 3Q estimates and lowering 4Q guidance substantially.
FLEX -7.5% after missing 2Q estimates and lowering 3Q/4Q guidance.
ATRS -7.1% after missing 3Q estimates and raising 4Q outlook.
Recommendations
Goldman Sachs reiterated Outperform on KO, BC and BSX. Goldman reiterated Underperform on ASH.
After-hours News
U.S. stocks finished slightly lower today as continuing worries over high energy prices, politics and terrorism offset a strong housing report. After the close, Time Warner and Comcast will be allowed to bid together for assets of Adelphia Communications, the Wall Street Journal reported. Japan will take action to prevent a rapid appreciation of the yen as the U.S. dollar declines, Reuters reported. Pitney Bowes, the word's largest maker of postal meters and mailing equipment, said third-quarter profit rose 15% on lower costs and higher sales of software and services, Bloomberg said. American Express said quarterly profit climbed 14% to a record as customers spent more on travel and carried larger loan balances, Bloomberg reported. Boston's wins over St. Louis in the first two games of the World Series, televised by Fox, drew the highest tv ratings for the start of the World Series since 1996, Bloomberg said. Electronic Data Systems said it delayed the release of third-quarter earnings while it reviews the value of a contract with the U.S. Navy, Bloomberg said. Toyota Motor's U.S. auto-loan unit said it will restate financial results for the past three years, raising profit and revenue because some fees paid to dealers were accounted for incorrectly, Bloomberg said.
BOTTOM LINE: The Portfolio had its best day of the year today on substantial strength in my internet, security and steel longs. I did not trade in the afternoon, thus leaving the Portfolio's market exposure at 100% net long. Notwithstanding the small losses in the major indices, most stocks were higher on the day. The VIX is moving up ahead of the election which is also a positive. Any sell-off related to weaker-than-expected economic reports over the next few days should be bought as the U.S. economy is poised to accelerate on the conclusion of the election without terrorism.
NASDAQ 1,914.04 -.06%
Leading Sectors
Airlines +4.22%
Homebuilders +3.88%
Steel +3.61%
Lagging Sectors
HMOs -.64%
Restaurants -.80%
Biotech -1.27%
Other
Crude Oil 54.35 -1.49%
Natural Gas 7.92 -2.28%
Gold 430.10 +1.06%
Base Metals 111.02 -1.63%
U.S. Dollar 84.97 -1.05%
10-Yr. T-note Yield 3.97% -.10%
VIX 16.58 +8.51%
Put/Call .73 -1.35%
NYSE Arms 1.16 -8.66%
After-hours Movers
PHRM +5.3% after beating 3Q estimates and raising 04 outlook.
NVDA +11.7% after boosting 3Q sales estimate.
MMC +9.4% after CEO Greenberg resigned, 11 days after Spitzer probe was announced.
DAL +6.4% after saying American Express agreed to provide as much as $600 million in financing, including $500 million to prepay for the airline's frequent-flier points.
SLAB -20.7% after meeting 3Q estimates and lowering 4Q guidance substantially.
FLEX -7.5% after missing 2Q estimates and lowering 3Q/4Q guidance.
ATRS -7.1% after missing 3Q estimates and raising 4Q outlook.
Recommendations
Goldman Sachs reiterated Outperform on KO, BC and BSX. Goldman reiterated Underperform on ASH.
After-hours News
U.S. stocks finished slightly lower today as continuing worries over high energy prices, politics and terrorism offset a strong housing report. After the close, Time Warner and Comcast will be allowed to bid together for assets of Adelphia Communications, the Wall Street Journal reported. Japan will take action to prevent a rapid appreciation of the yen as the U.S. dollar declines, Reuters reported. Pitney Bowes, the word's largest maker of postal meters and mailing equipment, said third-quarter profit rose 15% on lower costs and higher sales of software and services, Bloomberg said. American Express said quarterly profit climbed 14% to a record as customers spent more on travel and carried larger loan balances, Bloomberg reported. Boston's wins over St. Louis in the first two games of the World Series, televised by Fox, drew the highest tv ratings for the start of the World Series since 1996, Bloomberg said. Electronic Data Systems said it delayed the release of third-quarter earnings while it reviews the value of a contract with the U.S. Navy, Bloomberg said. Toyota Motor's U.S. auto-loan unit said it will restate financial results for the past three years, raising profit and revenue because some fees paid to dealers were accounted for incorrectly, Bloomberg said.
BOTTOM LINE: The Portfolio had its best day of the year today on substantial strength in my internet, security and steel longs. I did not trade in the afternoon, thus leaving the Portfolio's market exposure at 100% net long. Notwithstanding the small losses in the major indices, most stocks were higher on the day. The VIX is moving up ahead of the election which is also a positive. Any sell-off related to weaker-than-expected economic reports over the next few days should be bought as the U.S. economy is poised to accelerate on the conclusion of the election without terrorism.
Mid-day Update
S&P 500 1,094.30 -.13%
NASDAQ 1,915.61 +.02%
Leading Sectors
Airlines +4.13%
Iron/Steel +3.57%
Homebuilders +3.46%
Lagging Sectors
Restaurants -.62%
I-Banks -.64%
Biotech -1.41%
Other
Crude Oil 55.18 +.02%
Natural Gas 7.97 -1.67%
Gold 430.10 +1.03%
Base Metals 111.02 -1.63%
U.S. Dollar 85.0 -1.01%
10-Yr. T-note Yield 3.95% +-.48%
VIX 16.52 +8.12%
Put/Call .76 +2.70%
NYSE Arms 1.23 -3.15%
Market Movers
GOOG +5.5% on continuing optimism over last week's earnings report.
ONXX -27.2% after the company said it doesn't expect to begin selling an experimental kidney-cancer treatment until 2006.
TXU +13.4% after boosting 05 estimates substantially, announcing 50M share buyback and boosting dividend.
ISG +24.0% Mittal agreed to Buy the company for $4.5B, forming the world's largest steel company.
*Steel stocks up across the board on ISG deal.
ADP +5.5% after beating 1Q estimates.
VFC +7.1% after beating 3Q estimates, raising 4Q outlook and boosting dividend.
JBSS -28.6% on disappointing 1Q earnings.
CNF -6.1% after missing 3Q estimates and lowering 4Q guidance.
*Homebuilding stocks up across the board on strong existing home sales report.
Economic Data
Existing Home Sales for September were 6.75M versus estimates of 6.51M and 6.55M in August.
Recommendations
Goldman Sachs reiterated Outperform on NEM, VLTR, SII and PDG. Goldman reiterated Underperform on FISV, RAI and LSI. Citi SmithBarney upgraded semiconductor sector globally, favorites are INTC, ADI, FCS, IRF, LLTC, MCRL, MXIM, NSM, SMTC. Citi reiterated Buy on CTSH, target $40. Citi reiterated Buy on NE, target $57. Citi reiterated Buy on WMT, target $65. Citi reiterated Buy on PLCE, target $40. AIG raised to Buy at Deutsche Bank, target $69. SUP cut to Reduce at UBS, target $22. XL cut to Underweight at Morgan Stanley. OSTK raised to Buy at Legg Mason, target $69. CDX raised to Buy at Bank of America, target $31. ACE raised to Overweight at Morgan Stanley, target $41. IPCR raised to Overweight at JP Morgan. HCA cut to Underperform at CSFB, target $31. PHM raised to Outperform at CSFB, target $55. LRCX added to JP Morgan "Focus List", target $30.
Mid-day News
U.S. stocks are quietly mixed mid-day as a better-than-expected housing report is being offset by declining biotech shares. Delta Air is close to an agreement to give its pilots a big equity stake in return for cuts in pay and benefits, the Wall Street Journal reported. Barney New York plans to open 32 stores in the next five years, almost doubling its size, in hopes of finding a buyer for the company, the NY Post reported. AOL Music's Web site has become an important tool in the recording industry for promoting musicians and records, the NY Daily News said. Constellation Brands may face rivals in its bid to acquire California winemaker Robert Mondavi, the LA Times said. Applied Digital Solutions, which makes implantable chips to track people and pets, may face hurdles in selling chips that instantly provide patients' medical histories, Barron's reported. Deckers Outdoor's Ugg footwear remains in demand by retailers, even as fashion critics claim the sheepskin boots are out of style, the LA Times reported. U.S. Supreme Court Justice Rehnquist has been hospitalized for thyroid cancer, CNN reported. Ispat Intl. NV, part of the world's second-largest steelmaker, said it will buy LNM Holdings NV and then merge with Intl. Steel Group to create the world's largest steelmaker, Bloomberg reported. Violent crime in the U.S. declined 3% last year and has decreased 26% since 1994, according to the FBI's annual crime report. The European Union said it's ending sanctions on $4 billion of U.S. imports in about two months, Bloomberg reported. Norway's government intervened for the second time this year to forcibly end a labor conflict that threatened to shut down all oil and gas production from the world's third-largest crude exporter, Bloomberg said. The $866 billion hedge fund industry is making a last-ditch attempt to stop a U.S. SEC plan to impose new regulations on the private investment partnerships, Bloomberg reported. U.S. sales of previously owned houses rose in September to the third-highest pace on record, evidence that low borrowing costs were attracting buyers and helping sustain the economic expansion, Bloomberg said. RealClearPolitics.com has President Bush with an average national lead in the 3-way race for president of 3.1 percentage points in all major polls.
Bottom Line: The Portfolio is substantially higher mid-day on strength in my security, internet and telecom ADR longs. I added a few new longs this morning, bringing the Portfolio to 100% net long. One of my new longs is OS and I am using a $13.50 stop-loss on this position. The strong housing report is a very good sign for the U.S. economy and once again crushes the Bears hopes for a bursting of the so-called "housing bubble." I continue to expect the U.S. economy to grow around 4% for the 3rd quarter and accelerate to around 5% growth during the 4th quarter as election uncertainty lifts, oil falls in price and domestic terrorism fears diminish. I also believe technology shares will continue to outperform through year-end. It is probable that the major indices are very close or at a bottom for the year. I will look to add market exposure on any weakness through week's end.
NASDAQ 1,915.61 +.02%
Leading Sectors
Airlines +4.13%
Iron/Steel +3.57%
Homebuilders +3.46%
Lagging Sectors
Restaurants -.62%
I-Banks -.64%
Biotech -1.41%
Other
Crude Oil 55.18 +.02%
Natural Gas 7.97 -1.67%
Gold 430.10 +1.03%
Base Metals 111.02 -1.63%
U.S. Dollar 85.0 -1.01%
10-Yr. T-note Yield 3.95% +-.48%
VIX 16.52 +8.12%
Put/Call .76 +2.70%
NYSE Arms 1.23 -3.15%
Market Movers
GOOG +5.5% on continuing optimism over last week's earnings report.
ONXX -27.2% after the company said it doesn't expect to begin selling an experimental kidney-cancer treatment until 2006.
TXU +13.4% after boosting 05 estimates substantially, announcing 50M share buyback and boosting dividend.
ISG +24.0% Mittal agreed to Buy the company for $4.5B, forming the world's largest steel company.
*Steel stocks up across the board on ISG deal.
ADP +5.5% after beating 1Q estimates.
VFC +7.1% after beating 3Q estimates, raising 4Q outlook and boosting dividend.
JBSS -28.6% on disappointing 1Q earnings.
CNF -6.1% after missing 3Q estimates and lowering 4Q guidance.
*Homebuilding stocks up across the board on strong existing home sales report.
Economic Data
Existing Home Sales for September were 6.75M versus estimates of 6.51M and 6.55M in August.
Recommendations
Goldman Sachs reiterated Outperform on NEM, VLTR, SII and PDG. Goldman reiterated Underperform on FISV, RAI and LSI. Citi SmithBarney upgraded semiconductor sector globally, favorites are INTC, ADI, FCS, IRF, LLTC, MCRL, MXIM, NSM, SMTC. Citi reiterated Buy on CTSH, target $40. Citi reiterated Buy on NE, target $57. Citi reiterated Buy on WMT, target $65. Citi reiterated Buy on PLCE, target $40. AIG raised to Buy at Deutsche Bank, target $69. SUP cut to Reduce at UBS, target $22. XL cut to Underweight at Morgan Stanley. OSTK raised to Buy at Legg Mason, target $69. CDX raised to Buy at Bank of America, target $31. ACE raised to Overweight at Morgan Stanley, target $41. IPCR raised to Overweight at JP Morgan. HCA cut to Underperform at CSFB, target $31. PHM raised to Outperform at CSFB, target $55. LRCX added to JP Morgan "Focus List", target $30.
Mid-day News
U.S. stocks are quietly mixed mid-day as a better-than-expected housing report is being offset by declining biotech shares. Delta Air is close to an agreement to give its pilots a big equity stake in return for cuts in pay and benefits, the Wall Street Journal reported. Barney New York plans to open 32 stores in the next five years, almost doubling its size, in hopes of finding a buyer for the company, the NY Post reported. AOL Music's Web site has become an important tool in the recording industry for promoting musicians and records, the NY Daily News said. Constellation Brands may face rivals in its bid to acquire California winemaker Robert Mondavi, the LA Times said. Applied Digital Solutions, which makes implantable chips to track people and pets, may face hurdles in selling chips that instantly provide patients' medical histories, Barron's reported. Deckers Outdoor's Ugg footwear remains in demand by retailers, even as fashion critics claim the sheepskin boots are out of style, the LA Times reported. U.S. Supreme Court Justice Rehnquist has been hospitalized for thyroid cancer, CNN reported. Ispat Intl. NV, part of the world's second-largest steelmaker, said it will buy LNM Holdings NV and then merge with Intl. Steel Group to create the world's largest steelmaker, Bloomberg reported. Violent crime in the U.S. declined 3% last year and has decreased 26% since 1994, according to the FBI's annual crime report. The European Union said it's ending sanctions on $4 billion of U.S. imports in about two months, Bloomberg reported. Norway's government intervened for the second time this year to forcibly end a labor conflict that threatened to shut down all oil and gas production from the world's third-largest crude exporter, Bloomberg said. The $866 billion hedge fund industry is making a last-ditch attempt to stop a U.S. SEC plan to impose new regulations on the private investment partnerships, Bloomberg reported. U.S. sales of previously owned houses rose in September to the third-highest pace on record, evidence that low borrowing costs were attracting buyers and helping sustain the economic expansion, Bloomberg said. RealClearPolitics.com has President Bush with an average national lead in the 3-way race for president of 3.1 percentage points in all major polls.
Bottom Line: The Portfolio is substantially higher mid-day on strength in my security, internet and telecom ADR longs. I added a few new longs this morning, bringing the Portfolio to 100% net long. One of my new longs is OS and I am using a $13.50 stop-loss on this position. The strong housing report is a very good sign for the U.S. economy and once again crushes the Bears hopes for a bursting of the so-called "housing bubble." I continue to expect the U.S. economy to grow around 4% for the 3rd quarter and accelerate to around 5% growth during the 4th quarter as election uncertainty lifts, oil falls in price and domestic terrorism fears diminish. I also believe technology shares will continue to outperform through year-end. It is probable that the major indices are very close or at a bottom for the year. I will look to add market exposure on any weakness through week's end.
Monday Watch
Earnings of Note
Company/Estimate
AFCI/.02
AXP/.69
BLS/.51
CNF/.77
EXBD/.37
EDS/.08
FLEX/.17
HLT/.13
INSP/.25
ISSX/.16
KMB/.90
K/.55
NBR/.46
PBI/.63
PHM/2.00
R/.79
DGX/1.27
ZMH/.53
Splits
CELG 2-for-1
PDCO 2-for-1
Economic Data
Existing Home Sales for September estimated at 6.51M versus 6.54M in August.
Weekend Recommendations
Wall Street Week w/Fortune had guests that were positive on GIS, CL, KO, FNM, GDW, BRK, RMK, MAT, FLDR, LNDC, MUR, CVX, MDX, IMDC,SYD and PDCO. Louis Rukeyser's Wall Street had guests that were positive on XOM, PFE, IBM, CMX, NFX, UNP, ADBL, PWN, PXP, VIP and LUKOY. Barron's had positive comments on WYE, DBD, NUHC, FNM, CMLS, COCO, LH, ESI, IACI and negative comments on PSUN, ARO, DKS. Goldman Sachs reiterated Outperform on UDR, ALL, SLB, IP, SPP, DTC, BBY, EBAY, DD, ROH, DOW, BC and ASN. Goldman reiterated Underperform on AVB, CYT, SIAL, CR and ATI.
Weekend News
Japan may extend loans to the Iraqi oil ministry to help fund oil and gas projects, the Middle East Economic Survey said. San Francisco transit police are for the first time patrolling the city's subway system with assault weapons and gas masks to deter potential terrorists as Election Day nears, the San Francisco Chronicle reported. President Bush may tap Ben Bernanke to replace Alan Greenspan as chairman of the U.S. Federal Reserve and John Kerry might nominate Alan Blinder if he is elected, Barron's said. Hamid Karzai has won the required majority of votes for outright victory in Afghanistan's presidential election, Agence France-Presse reported. Google is not developing a browser and won't enter any browser wars with Microsoft and Yahoo!, the Financial Times said. NY Democratic Attorney General Spitzer may bring a civil lawsuit against Aon Corp., the world's second largest insurance broker, for antitrust violations, the NY Times reported. Nu Skin Enterprises(NUS) expects its China sales to grow as much as 20-fold in three to five years, making the country its biggest international market, China Daily reported. Wal-Mart said U.S. sales at stores open at least a year are rising within its forecast of 2-4%, boosted by boys' and girls' wear and bedding, Bloomberg said. U.S. intelligence and law enforcement authorities said no direct evidence has been found to indicate plans for an election-related terrorist attack, Bloomberg said. The Fed can raise rates at a measured pace because U.S. economic growth is "solid" and rising energy costs haven't yet sparked concern about a broader acceleration of inflation, Fed Governor Susan Bies said. President Bush called on Congress to pass legislation he proposed to comply with guidelines set out by the federal commission studying the intelligence failures that led to the Sept. 11, 2001, attacks, Bloomberg reported. Northwestern Japan was jolted by aftershocks after a series of earthquakes killed 23 and injured more than 2,100, forcing thousands more to seek shelter in the deadliest temblor since 1995, Bloomberg reported. The creation of a U.S. insurance regulator is gaining support in Congress and among consumer groups after Spitzer disclosed his probe of improper sales practices, Bloomberg said.
Late-Night Trading
Asian indices are lower, -1.50% to -.50% on average.
S&P 500 indicated -.42%.
NASDAQ 100 indicated -.48%
BOTTOM LINE: I expect U.S. stocks to open modestly lower in the morning on weakness in Asia, worries over U.S. politics and high energy prices. The Portfolio is 75% net long heading into tomorrow.
Company/Estimate
AFCI/.02
AXP/.69
BLS/.51
CNF/.77
EXBD/.37
EDS/.08
FLEX/.17
HLT/.13
INSP/.25
ISSX/.16
KMB/.90
K/.55
NBR/.46
PBI/.63
PHM/2.00
R/.79
DGX/1.27
ZMH/.53
Splits
CELG 2-for-1
PDCO 2-for-1
Economic Data
Existing Home Sales for September estimated at 6.51M versus 6.54M in August.
Weekend Recommendations
Wall Street Week w/Fortune had guests that were positive on GIS, CL, KO, FNM, GDW, BRK, RMK, MAT, FLDR, LNDC, MUR, CVX, MDX, IMDC,SYD and PDCO. Louis Rukeyser's Wall Street had guests that were positive on XOM, PFE, IBM, CMX, NFX, UNP, ADBL, PWN, PXP, VIP and LUKOY. Barron's had positive comments on WYE, DBD, NUHC, FNM, CMLS, COCO, LH, ESI, IACI and negative comments on PSUN, ARO, DKS. Goldman Sachs reiterated Outperform on UDR, ALL, SLB, IP, SPP, DTC, BBY, EBAY, DD, ROH, DOW, BC and ASN. Goldman reiterated Underperform on AVB, CYT, SIAL, CR and ATI.
Weekend News
Japan may extend loans to the Iraqi oil ministry to help fund oil and gas projects, the Middle East Economic Survey said. San Francisco transit police are for the first time patrolling the city's subway system with assault weapons and gas masks to deter potential terrorists as Election Day nears, the San Francisco Chronicle reported. President Bush may tap Ben Bernanke to replace Alan Greenspan as chairman of the U.S. Federal Reserve and John Kerry might nominate Alan Blinder if he is elected, Barron's said. Hamid Karzai has won the required majority of votes for outright victory in Afghanistan's presidential election, Agence France-Presse reported. Google is not developing a browser and won't enter any browser wars with Microsoft and Yahoo!, the Financial Times said. NY Democratic Attorney General Spitzer may bring a civil lawsuit against Aon Corp., the world's second largest insurance broker, for antitrust violations, the NY Times reported. Nu Skin Enterprises(NUS) expects its China sales to grow as much as 20-fold in three to five years, making the country its biggest international market, China Daily reported. Wal-Mart said U.S. sales at stores open at least a year are rising within its forecast of 2-4%, boosted by boys' and girls' wear and bedding, Bloomberg said. U.S. intelligence and law enforcement authorities said no direct evidence has been found to indicate plans for an election-related terrorist attack, Bloomberg said. The Fed can raise rates at a measured pace because U.S. economic growth is "solid" and rising energy costs haven't yet sparked concern about a broader acceleration of inflation, Fed Governor Susan Bies said. President Bush called on Congress to pass legislation he proposed to comply with guidelines set out by the federal commission studying the intelligence failures that led to the Sept. 11, 2001, attacks, Bloomberg reported. Northwestern Japan was jolted by aftershocks after a series of earthquakes killed 23 and injured more than 2,100, forcing thousands more to seek shelter in the deadliest temblor since 1995, Bloomberg reported. The creation of a U.S. insurance regulator is gaining support in Congress and among consumer groups after Spitzer disclosed his probe of improper sales practices, Bloomberg said.
Late-Night Trading
Asian indices are lower, -1.50% to -.50% on average.
S&P 500 indicated -.42%.
NASDAQ 100 indicated -.48%
BOTTOM LINE: I expect U.S. stocks to open modestly lower in the morning on weakness in Asia, worries over U.S. politics and high energy prices. The Portfolio is 75% net long heading into tomorrow.
Sunday, October 24, 2004
Chart of the Week
Dow Jones Transportation Average
Bottom Line: The Transportation Average reached a 5-year high last week and is now only 11.2% below its all-time high set May 12, 1999. Historically, this index is a leading indicator of economic growth. From 5/12/1999 through 3/8/2000 the index plummeted 40.6%, while the major indices rose, correctly predicting the most devastating broad market decline since the Great Depression and ensuing plunge in economic growth that began in early 2000. The Bears and many media pundits suggestion that high energy prices are pushing the U.S. economy towards recession do not correspond with the strength of this energy-intensive leading index.
Bottom Line: The Transportation Average reached a 5-year high last week and is now only 11.2% below its all-time high set May 12, 1999. Historically, this index is a leading indicator of economic growth. From 5/12/1999 through 3/8/2000 the index plummeted 40.6%, while the major indices rose, correctly predicting the most devastating broad market decline since the Great Depression and ensuing plunge in economic growth that began in early 2000. The Bears and many media pundits suggestion that high energy prices are pushing the U.S. economy towards recession do not correspond with the strength of this energy-intensive leading index.
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