Indices
S&P 500 1,194.20 +.52%
Dow 10,649.92 +1.01%
NASDAQ 2,135.20 +.33%
Russell 2000 642.08 +1.56%
S&P Equity Long/Short Index 1,007.77 +.83%
Put/Call .83 +33.87%
NYSE Arms 1.43 +3.62%
Volatility(VIX) 11.95 -6.35%
AAII % Bulls 52.53 +2.30%
US Dollar 82.16 -.53%
CRB 287.19 +3.82%
Futures Spot Prices
Gold 442.90 +1.68%
Crude Oil 46.28 +14.07%
Unleaded Gasoline 119.01 +10.4%
Natural Gas 7.46 +9.02%
Heating Oil 143.95 +17.41%
Base Metals 118.28 +3.57%
10-year US Treasury Yield 4.20% +1.20%
Average 30-year Mortgage Rate 5.68% -.53%
Leading Sectors
Iron/Steel +5.33%
Oil Service +4.38%
Utilities +2.94%
Lagging Sectors
Internet -.68%
Networking -1.80%
Airlines -1.81%
*% Gain or loss for the week
Friday, December 17, 2004
Mid-day Report
S&P 500 1,194.17 -.75%
NASDAQ 2,139.13 -.33%
Leading Sectors
Hospitals +.62%
Iron/Steel +.51%
Biotech +.29%
Lagging Sectors
Homebuilders -1.24%
Airlines -1.25%
Drugs -4.03%
Other
Crude Oil 45.80 +3.67%
Natural Gas 7.44 +6.29%
Gold 443.00 +1.07%
Base Metals 118.28 +.05%
U.S. Dollar 82.13 -.40%
10-Yr. T-note Yield 4.21% +.60%
VIX 12.24 -.24%
Put/Call .82 +22.39%
NYSE Arms 1.55 +124.64%
Market Movers
PFE -13.9% after saying Celebrex increased the risk of heart attacks in a study of cancer patients.
PLMO -19.7% after meeting 2Q estimates, but failing to give 3Q guidance.
OSIP +42.6% on AZN news.
ZOLT +19.5% after saying that it received a contract from Vestas Wind Systems A/S, the world's largest producer of wind turbine generators, to provide $80 million to $100 million of carbon fiber and materials during the next three years.
NKE +6.4% after beating 2Q estimates and giving strong 3Q/4Q guidance.
MATR +13.8% after boosting 05 guidance.
WLT +8.1% after announcing its Board approved up to $135 million for a capital investment program to significantly increase coal production capacity.
KMX +7.7% after beating 3Q estimates and raising 4Q outlook.
AHG +6.0% on multiple upgrades.
LF -11.55% after cutting 04 outlook substantially.
VIP -8.8% after denying a report it may receive a $322 million tax bill for 2002.
TELK -12.5% on AZN news.
AZN -8.8% after saying its Iressa lung cancer treatment didn’t help patients live longer in a study.
LEG -7.1% after lowering 4Q guidance.
Economic Data
Consumer Price Index for November rose .2% versus estimates of .2% and a .6% increase in October.
CPI Ex Food & Energy for November rose .2% versus estimates of .2% and a .2% increase in October.
Recommendations
-Goldman Sachs reiterated Outperform on DHR, DNA, PFE, NKE and Underperform on SCS.
-Citi SmithBarney reiterated Buy on PRE, target $71. Citi reiterated Buy on KBH, target $141. Citi reiterated Buy on DRS, target $52. Citi reiterated Buy on MXRE, target $24. Citi reiterated Sell on UST, target $38. Citi reiterated Buy on PBG, target $33. Citi reiterated Sell on GMR, target $35. Citi reiterated Sell on SEPR, target $40. Citi reiterated Sell on LF, target $10. Citi reiterated Buy on CCE, target $25. Citi reiterated Buy on GS, target $125. Citi reiterated Buy on CTAS, target $55.
-CSFB reiterated Outperform on DE.
-Banc of America rated SBSA Buy, target $12. BofA rated EVC Buy, target $10. BofA rated UVN Buy, target $33. BofA rated KWK Buy, target $43. BofA rated LNCR Buy, target $48. BofA rated AHG Buy, target $40.
-Bear Stearns downgraded PLMO to Underperform.
-JP Morgan rated LNG Overweight. JPM rated ONXX Overweight.
Mid-day News
U.S. stocks are modestly lower mid-day on worries over higher energy prices and weakness in the pharmaceutical sector. Oil prices will drop through March, losing as much as 25%, as inventories increase in industrialized countries, according to Merrill Lynch. Reuters Group is expected to buy Telerate, the bond data company, early next week, Financial News said. Cox Communications, Time Warner and Comcast are among cable companies laying their own fiber-optic networks or leasing them to offer new services combining telephone and the Internet as well as tv, the Wall Street Journal reported. Resistance to new financial regulations is rising in the US and Europe, the NY Times reported. The Los Angeles region likely attracted a record high number of visitors this year, thanks in part to a weaker US dollar providing bargains for foreign tourists, the LA Times reported. EBay agreed to buy privately held Rent.com for $415 million in cash and stock as it expands into classified listings, Bloomberg said. Pfizer said Celebrex posed a greater risk to the heart than a placebo in a long-term study of the painkiller, Bloomberg reported. AstraZeneca Plc's Iressa lung cancer treatment didn't help patients live longer in a study, Bloomberg said. Crude oil is rising, heading for its biggest weekly gain since March 2003, on expectations that below-normal temperatures will boost demand for heating oil, Bloomberg reported. President Bush signed into law a bill creating a director to oversee US intelligence gathering and making other changes the Sept. 11 commission said were needed to prevent future attacks, Bloomberg said. Eli Lilly said it added a safety warning to the label of its attention-deficit drug Strattera, Bloomberg reported.
NASDAQ 2,139.13 -.33%
Leading Sectors
Hospitals +.62%
Iron/Steel +.51%
Biotech +.29%
Lagging Sectors
Homebuilders -1.24%
Airlines -1.25%
Drugs -4.03%
Other
Crude Oil 45.80 +3.67%
Natural Gas 7.44 +6.29%
Gold 443.00 +1.07%
Base Metals 118.28 +.05%
U.S. Dollar 82.13 -.40%
10-Yr. T-note Yield 4.21% +.60%
VIX 12.24 -.24%
Put/Call .82 +22.39%
NYSE Arms 1.55 +124.64%
Market Movers
PFE -13.9% after saying Celebrex increased the risk of heart attacks in a study of cancer patients.
PLMO -19.7% after meeting 2Q estimates, but failing to give 3Q guidance.
OSIP +42.6% on AZN news.
ZOLT +19.5% after saying that it received a contract from Vestas Wind Systems A/S, the world's largest producer of wind turbine generators, to provide $80 million to $100 million of carbon fiber and materials during the next three years.
NKE +6.4% after beating 2Q estimates and giving strong 3Q/4Q guidance.
MATR +13.8% after boosting 05 guidance.
WLT +8.1% after announcing its Board approved up to $135 million for a capital investment program to significantly increase coal production capacity.
KMX +7.7% after beating 3Q estimates and raising 4Q outlook.
AHG +6.0% on multiple upgrades.
LF -11.55% after cutting 04 outlook substantially.
VIP -8.8% after denying a report it may receive a $322 million tax bill for 2002.
TELK -12.5% on AZN news.
AZN -8.8% after saying its Iressa lung cancer treatment didn’t help patients live longer in a study.
LEG -7.1% after lowering 4Q guidance.
Economic Data
Consumer Price Index for November rose .2% versus estimates of .2% and a .6% increase in October.
CPI Ex Food & Energy for November rose .2% versus estimates of .2% and a .2% increase in October.
Recommendations
-Goldman Sachs reiterated Outperform on DHR, DNA, PFE, NKE and Underperform on SCS.
-Citi SmithBarney reiterated Buy on PRE, target $71. Citi reiterated Buy on KBH, target $141. Citi reiterated Buy on DRS, target $52. Citi reiterated Buy on MXRE, target $24. Citi reiterated Sell on UST, target $38. Citi reiterated Buy on PBG, target $33. Citi reiterated Sell on GMR, target $35. Citi reiterated Sell on SEPR, target $40. Citi reiterated Sell on LF, target $10. Citi reiterated Buy on CCE, target $25. Citi reiterated Buy on GS, target $125. Citi reiterated Buy on CTAS, target $55.
-CSFB reiterated Outperform on DE.
-Banc of America rated SBSA Buy, target $12. BofA rated EVC Buy, target $10. BofA rated UVN Buy, target $33. BofA rated KWK Buy, target $43. BofA rated LNCR Buy, target $48. BofA rated AHG Buy, target $40.
-Bear Stearns downgraded PLMO to Underperform.
-JP Morgan rated LNG Overweight. JPM rated ONXX Overweight.
Mid-day News
U.S. stocks are modestly lower mid-day on worries over higher energy prices and weakness in the pharmaceutical sector. Oil prices will drop through March, losing as much as 25%, as inventories increase in industrialized countries, according to Merrill Lynch. Reuters Group is expected to buy Telerate, the bond data company, early next week, Financial News said. Cox Communications, Time Warner and Comcast are among cable companies laying their own fiber-optic networks or leasing them to offer new services combining telephone and the Internet as well as tv, the Wall Street Journal reported. Resistance to new financial regulations is rising in the US and Europe, the NY Times reported. The Los Angeles region likely attracted a record high number of visitors this year, thanks in part to a weaker US dollar providing bargains for foreign tourists, the LA Times reported. EBay agreed to buy privately held Rent.com for $415 million in cash and stock as it expands into classified listings, Bloomberg said. Pfizer said Celebrex posed a greater risk to the heart than a placebo in a long-term study of the painkiller, Bloomberg reported. AstraZeneca Plc's Iressa lung cancer treatment didn't help patients live longer in a study, Bloomberg said. Crude oil is rising, heading for its biggest weekly gain since March 2003, on expectations that below-normal temperatures will boost demand for heating oil, Bloomberg reported. President Bush signed into law a bill creating a director to oversee US intelligence gathering and making other changes the Sept. 11 commission said were needed to prevent future attacks, Bloomberg said. Eli Lilly said it added a safety warning to the label of its attention-deficit drug Strattera, Bloomberg reported.
Bottom Line: The Portfolio is slightly lower mid-day on losses in my semi and internet longs. I have not traded and the Portfolio is still 75% net long. Considering the news today, it is a mild positive that the major indices are only showing modest losses. Energy prices are spiking, interest rates are rising and the pharmaceutical sector is sustaining significant damage. Also on the positive side, the ARMS Index and Put/Call readings are soaring and the ECRI Weekly Leading Index rose again this week and is now at its highest level since the first week of May. I expect US stocks to trade mixed-to-higher into the close.
Thursday, December 16, 2004
Friday Watch
Earnings of Note
Company/Estimate
AGE/.56
KMX/.17
CC/-.08
FDO/.33
SCS/.04
Splits
None of note.
Economic Data
Consumer Price Index for November estimated to rise .2% versus a .6% increase in October.
CPI Ex Food & Energy for November estimated to rise .2% versus a .2% gain in October.
Recommendations
Goldman Sachs reiterated Outperform on AMGN, DNA and Underperform on FISV, VTS. Banc of America upgraded NBL to Buy. Shares of Keynote Systems(KEYN), which measures how well a company's web site can attract and service customers, are expected to rise following a recent price drop, Business Week reported.
Late-Night News
Asian indices are mostly higher, led by Japanese exporters. Adam Aron, chairman and chief executive officer of Vail Resorts, said the weaker US dollar is drawing more foreign visitors to the slopes, CNBC reported. Alltel, which sells wireless and local-telephone service, may be the next takeover target with the telecom industry, Business Week reported. Nissan Motor, Suzuki Motor Corp. and other Japanese carmakers face worsening shortages of steel next year as auto production reaches its seasonal peak, the Financial Times reported. The Standard & Poor's 500 Index will rise about 8% next year as corporate profit growth levels off, Business Week reported, citing a poll of strategists. Citigroup's consumer business profits from Asia may rise to about 20% within a few years, the Financial Times said. A US judge ordered a 10-day halt to the sale of OAO Yukos Oil's biggest unit, Agence France-Presse reported. The US, Europe and Arab countries may double aid for the Palestinians if they and Israel meet certain conditions aimed at calming their conflict, the NY Times reported.
Late-Night Trading
Asian Indices are unch. to +.75% on average.
S&P 500 indicated +.04%.
NASDAQ 100 indicated -.06%
Company/Estimate
AGE/.56
KMX/.17
CC/-.08
FDO/.33
SCS/.04
Splits
None of note.
Economic Data
Consumer Price Index for November estimated to rise .2% versus a .6% increase in October.
CPI Ex Food & Energy for November estimated to rise .2% versus a .2% gain in October.
Recommendations
Goldman Sachs reiterated Outperform on AMGN, DNA and Underperform on FISV, VTS. Banc of America upgraded NBL to Buy. Shares of Keynote Systems(KEYN), which measures how well a company's web site can attract and service customers, are expected to rise following a recent price drop, Business Week reported.
Late-Night News
Asian indices are mostly higher, led by Japanese exporters. Adam Aron, chairman and chief executive officer of Vail Resorts, said the weaker US dollar is drawing more foreign visitors to the slopes, CNBC reported. Alltel, which sells wireless and local-telephone service, may be the next takeover target with the telecom industry, Business Week reported. Nissan Motor, Suzuki Motor Corp. and other Japanese carmakers face worsening shortages of steel next year as auto production reaches its seasonal peak, the Financial Times reported. The Standard & Poor's 500 Index will rise about 8% next year as corporate profit growth levels off, Business Week reported, citing a poll of strategists. Citigroup's consumer business profits from Asia may rise to about 20% within a few years, the Financial Times said. A US judge ordered a 10-day halt to the sale of OAO Yukos Oil's biggest unit, Agence France-Presse reported. The US, Europe and Arab countries may double aid for the Palestinians if they and Israel meet certain conditions aimed at calming their conflict, the NY Times reported.
Late-Night Trading
Asian Indices are unch. to +.75% on average.
S&P 500 indicated +.04%.
NASDAQ 100 indicated -.06%
BOTTOM LINE: I expect U.S. equities to open modestly lower on declines in technology stocks. However, equities should rally later in the day on lower energy prices and interest rates. The Portfolio is 75% net long heading into tomorrow.
Thursday Close
S&P 500 1,203.21 -.21%
NASDAQ 2,146.15 -.76%
Leading Sectors
Drugs +2.35%
Consumer +.57%
Tobacco +.28%
Lagging Sectors
Semis -1.60%
Broadcasting -1.94%
Software -2.02%
Other
Crude Oil 44.29 +.25%
Natural Gas 7.04 +.51%
Gold 438.70 +.11%
Base Metals 118.22 +.54%
U.S. Dollar 82.45 +1.0%
10-Yr. T-note Yield 4.18% +2.65%.
VIX 12.27 -.65%
Put/Call .67 +9.84%
NYSE Arms .69 -33.01%
After-hours Movers
IFIN +4.3% after raising 04 guidance.
NKE +4.4% after beating 2Q estimates and giving strong 3Q/4Q guidance.
TEK -6.0% after beating 2Q estimates and lowering 3Q outlook.
LF -16.0% after cutting 04 outlook substantially.
EFII -11.6% after cutting 4Q forecast substantially.
PLMO -14.4% after meeting 2Q estimates, but failing to give 3Q guidance.
TTWO -9.4% after missing 4Q estimates and lowering outlook.
Recommendations
None of note.
After-hours News
U.S. stocks finished modestly lower today on rising interest rates and worries over growth in the tech sector. After the close, Fidelity Investments, the world's largest mutual fund company, dismissed two employees and disciplined 14 others amid an investigation into whether workers accepted gifts from brokers seeking to win trading business, Bloomberg reported. Adobe Systems, the world's largest maker of graphic-design software, said fourth-quarter net income jumped 36% as sales surged for its Creative Suite publishing and design programs, Bloomberg said. A unit of Spain's Grupo Ferrovial SA won a contract to invest $7.2 billion in Texas to develop the first leg of the Trans-Texas Corridor Project with a toll road, rail line and other infrastructure form Oklahoma to Mexico, Bloomberg said. Nike said second-quarter earnings surges to $261.9 million after the Shox line spurred demand in Asia and the US, Bloomberg reported. European Union leaders agreed to begin membership talks with Turkey next Oct. 3, vowing to promote Turkish economic growth and build a bridge to the wider Muslim world, Bloomberg said.
NASDAQ 2,146.15 -.76%
Leading Sectors
Drugs +2.35%
Consumer +.57%
Tobacco +.28%
Lagging Sectors
Semis -1.60%
Broadcasting -1.94%
Software -2.02%
Other
Crude Oil 44.29 +.25%
Natural Gas 7.04 +.51%
Gold 438.70 +.11%
Base Metals 118.22 +.54%
U.S. Dollar 82.45 +1.0%
10-Yr. T-note Yield 4.18% +2.65%.
VIX 12.27 -.65%
Put/Call .67 +9.84%
NYSE Arms .69 -33.01%
After-hours Movers
IFIN +4.3% after raising 04 guidance.
NKE +4.4% after beating 2Q estimates and giving strong 3Q/4Q guidance.
TEK -6.0% after beating 2Q estimates and lowering 3Q outlook.
LF -16.0% after cutting 04 outlook substantially.
EFII -11.6% after cutting 4Q forecast substantially.
PLMO -14.4% after meeting 2Q estimates, but failing to give 3Q guidance.
TTWO -9.4% after missing 4Q estimates and lowering outlook.
Recommendations
None of note.
After-hours News
U.S. stocks finished modestly lower today on rising interest rates and worries over growth in the tech sector. After the close, Fidelity Investments, the world's largest mutual fund company, dismissed two employees and disciplined 14 others amid an investigation into whether workers accepted gifts from brokers seeking to win trading business, Bloomberg reported. Adobe Systems, the world's largest maker of graphic-design software, said fourth-quarter net income jumped 36% as sales surged for its Creative Suite publishing and design programs, Bloomberg said. A unit of Spain's Grupo Ferrovial SA won a contract to invest $7.2 billion in Texas to develop the first leg of the Trans-Texas Corridor Project with a toll road, rail line and other infrastructure form Oklahoma to Mexico, Bloomberg said. Nike said second-quarter earnings surges to $261.9 million after the Shox line spurred demand in Asia and the US, Bloomberg reported. European Union leaders agreed to begin membership talks with Turkey next Oct. 3, vowing to promote Turkish economic growth and build a bridge to the wider Muslim world, Bloomberg said.
BOTTOM LINE: The Portfolio finished lower today on losses in my technology longs. I exited a number of long positions in the afternoon, thus leaving the Portfolio 75% net long. Considering the positive news today, the major indices' action was disheartening for the bulls. Merger news, a rebounding US dollar, lower energy prices, strong earnings reports, lower jobless claims and a strong Philly Fed report failed to boost shares. Volume increased and the advance/decline line was poor. The FASB decision to force companies to expense employee stock options by mid-05 likely pressured tech shares. Large-cap value stocks outperformed today.
Mid-day Report
S&P 500 1,2004.29 -.12%
NASDAQ 2,157.66 -.23%
Leading Sectors
Drugs +1.73%
Biotech +.42%
Boxmakers +.42%
Lagging Sectors
Transports -1.27%
Software -1.27%
HMOs -1.52%
Other
Crude Oil 43.65 -1.22%
Natural Gas 7.06 -2.43
Gold 439.20 -.68%
Base Metals 118.22 +.54%
U.S. Dollar 82.30 +.82%
10-Yr. T-note Yield 4.18% +2.50%
VIX 12.25 -.81%
Put/Call .66 +8.20%
NYSE Arms .60 -41.75%
Market Movers
SYMC -8.0% after agreeing to buy Veritas Software(VRTS) for $13.5 billion, the biggest software purchase in six years.
ISON +23.1% on optimism over 2Q report.
SEPR +9.7% after saying it won FDA approval for its Lunesta sleeping pill and positive comments by JP Morgan.
ARBX +44.3% on strong demand for IPO.
AEA +28% on strong demand for IPO.
HUBG +18.3% on Bear Stearns upgrade to Outperform.
POG +14.3% after Noble Energy(NBL) agreed to acquire it for $2.76 billion to expand in the Rockies.
WYNN +7.2% after Prudential raised its price target from $62 to $95.
JOYG +10.6% after announcing 3-for-2 split, beating 4Q estimates and raising 05 outlook.
LVS +7.3% on continuing strong demand for IPO.
FLIR +7.1% after announcing 2-for-1 split, raising 05 eps and lowering 05 sales outlook.
MFE -11.3% on worries over slowing growth in anti-virus biz.
APOL -5.1% after meeting 1Q estimates, lowering 05 guidance slightly and Merrill Lynch downgrade to Neutral.
Economic Data
Current Account Balance for 3Q was -$164.7B versus estimates of -$170.6B and -$164.4B in 2Q.
Housing Starts for November were 1771K versus estimates of 1980K and 2039K in October.
Building Permits for November were 1988K versus estimates of 2000K and 2018K in October.
Initial Jobless Claims for last week were 317K versus estimates of 342K and 360K the prior week.
Continuing Claims were 2737K versus estimates of N/A and 2787K prior.
Philadelphia Fed. rose to 29.6 in December versus estimates of 20.5 and a reading of 20.7 in November.
Recommendations
-Goldman Sachs reiterated Outperform on CEN, MSFT.
-Bank of America downgraded IPCC to Sell.
-Citi SmithBarney upgraded COO to Buy, target $84. Citi rated CD Buy, target $28. Citi rated INTU Buy, target $54. Citi rated SY Buy, target $22.50. Citi reiterated Buy on FNM, target $81. Citi rated CHK Buy, target $20. Citi reiterated Buy on BBY, target $73. Citi reiterated Buy on TWX, target $22. Citi reiterated Buy on AMGN, target $90. Citi reiterated Buy on LEN, target $80. Citi reiterated Sell on SEPR, target $40.
-JP Morgan rated VVTV Overweight. JPM rated UVN Underweight.
-UBS raised BKS to Buy, target $38.
-Thomas Weisel cut AW to Underperform.
-CSFB cut TER to Underperform, target $14. CSFB cut CMOS to Underperform, target $7.50. CSFB cut KLIC to Underperform, target $7.50.
-Deutsche Bank rated JBHT Buy, target $46. Deutsche rated SCST Buy, target $25.
-Bear Stearns raised HUBG to Buy, target $70. Bear cut MFC to Underperform, target $45.
-Oppenheimer rated IDBE Buy, target $23.
Mid-day News
U.S. stocks are modestly lower mid-day as rising interest rates are more than offsetting lower energy prices, merger activity and strong economic reports. U.S. retailers including Gap, Nike and Build-A-Bear Workshop have aligned themselves with charities during this year's holiday shopping season to help appeal to customers, the NY Times reported. The average Wall Street bonus is up 15-20% this year, said Tom Cleary, a partner at Rhodes Associates. Sepracor CFO Southwell told CNBC that its newly approved sleeping pill Lunesta has the potential to reach $1 billion or more in sales. Peninsular & Oriental Steam Navigation, the largest UK shipping company, has been picked to establish a "green terminal" for the Port of Los Angeles, the LA Times reported. Illinois Governor Blagojevich wants to make renting or selling violent and sexually explicit video games to people under 18 illegal, the Chicago Sun-Times reported. The US dollar is "a little undervalued," said Mark Mobius, a managing director at Templeton Asset Management. Cendant agreed to buy the UK's Gullivers Travel and Octopus Travel for about $1.1 billion, Bloomberg reported. United Technologies agreed to buy Kidde of the UK for $2.8 billion in cash, Bloomberg said. FedEx said second-quarter net income almost quadrupled as international air shipments rose, Bloomberg said. Goldman Sachs said quarterly profit rose 23%, spurred by revenue from fixed-income trading and fees from providing merger advice, Bloomberg reported. Symantec will buy Veritas Software for $13.5 billion in stock to add data-storage products, Bloomberg said. The number of Americans filing first-time claims for unemployment insurance benefits fell by 43,000 last week to a five-month low, suggesting that more US companies are retaining workers to meet rising demand, Bloomberg reported. Johnson & Johnson agreed to acquire Guidant for $25.4 billion, Bloomberg said. Glamis Gold, which produces gold in Nevada and Honduras, made a hostile $3.38 billion takeover bid for Goldcorp, Canada's fourth-biggest gold producer, Bloomberg reported. The Philly Fed Index soared to 29.6 from 20.7 in November, substantially topping economists' estimates, Bloomberg said. The US dollar rose the most in two months against the euro after a report showed the US current-account deficit grew less than forecast in the third quarter, Bloomberg said.
NASDAQ 2,157.66 -.23%
Leading Sectors
Drugs +1.73%
Biotech +.42%
Boxmakers +.42%
Lagging Sectors
Transports -1.27%
Software -1.27%
HMOs -1.52%
Other
Crude Oil 43.65 -1.22%
Natural Gas 7.06 -2.43
Gold 439.20 -.68%
Base Metals 118.22 +.54%
U.S. Dollar 82.30 +.82%
10-Yr. T-note Yield 4.18% +2.50%
VIX 12.25 -.81%
Put/Call .66 +8.20%
NYSE Arms .60 -41.75%
Market Movers
SYMC -8.0% after agreeing to buy Veritas Software(VRTS) for $13.5 billion, the biggest software purchase in six years.
ISON +23.1% on optimism over 2Q report.
SEPR +9.7% after saying it won FDA approval for its Lunesta sleeping pill and positive comments by JP Morgan.
ARBX +44.3% on strong demand for IPO.
AEA +28% on strong demand for IPO.
HUBG +18.3% on Bear Stearns upgrade to Outperform.
POG +14.3% after Noble Energy(NBL) agreed to acquire it for $2.76 billion to expand in the Rockies.
WYNN +7.2% after Prudential raised its price target from $62 to $95.
JOYG +10.6% after announcing 3-for-2 split, beating 4Q estimates and raising 05 outlook.
LVS +7.3% on continuing strong demand for IPO.
FLIR +7.1% after announcing 2-for-1 split, raising 05 eps and lowering 05 sales outlook.
MFE -11.3% on worries over slowing growth in anti-virus biz.
APOL -5.1% after meeting 1Q estimates, lowering 05 guidance slightly and Merrill Lynch downgrade to Neutral.
Economic Data
Current Account Balance for 3Q was -$164.7B versus estimates of -$170.6B and -$164.4B in 2Q.
Housing Starts for November were 1771K versus estimates of 1980K and 2039K in October.
Building Permits for November were 1988K versus estimates of 2000K and 2018K in October.
Initial Jobless Claims for last week were 317K versus estimates of 342K and 360K the prior week.
Continuing Claims were 2737K versus estimates of N/A and 2787K prior.
Philadelphia Fed. rose to 29.6 in December versus estimates of 20.5 and a reading of 20.7 in November.
Recommendations
-Goldman Sachs reiterated Outperform on CEN, MSFT.
-Bank of America downgraded IPCC to Sell.
-Citi SmithBarney upgraded COO to Buy, target $84. Citi rated CD Buy, target $28. Citi rated INTU Buy, target $54. Citi rated SY Buy, target $22.50. Citi reiterated Buy on FNM, target $81. Citi rated CHK Buy, target $20. Citi reiterated Buy on BBY, target $73. Citi reiterated Buy on TWX, target $22. Citi reiterated Buy on AMGN, target $90. Citi reiterated Buy on LEN, target $80. Citi reiterated Sell on SEPR, target $40.
-JP Morgan rated VVTV Overweight. JPM rated UVN Underweight.
-UBS raised BKS to Buy, target $38.
-Thomas Weisel cut AW to Underperform.
-CSFB cut TER to Underperform, target $14. CSFB cut CMOS to Underperform, target $7.50. CSFB cut KLIC to Underperform, target $7.50.
-Deutsche Bank rated JBHT Buy, target $46. Deutsche rated SCST Buy, target $25.
-Bear Stearns raised HUBG to Buy, target $70. Bear cut MFC to Underperform, target $45.
-Oppenheimer rated IDBE Buy, target $23.
Mid-day News
U.S. stocks are modestly lower mid-day as rising interest rates are more than offsetting lower energy prices, merger activity and strong economic reports. U.S. retailers including Gap, Nike and Build-A-Bear Workshop have aligned themselves with charities during this year's holiday shopping season to help appeal to customers, the NY Times reported. The average Wall Street bonus is up 15-20% this year, said Tom Cleary, a partner at Rhodes Associates. Sepracor CFO Southwell told CNBC that its newly approved sleeping pill Lunesta has the potential to reach $1 billion or more in sales. Peninsular & Oriental Steam Navigation, the largest UK shipping company, has been picked to establish a "green terminal" for the Port of Los Angeles, the LA Times reported. Illinois Governor Blagojevich wants to make renting or selling violent and sexually explicit video games to people under 18 illegal, the Chicago Sun-Times reported. The US dollar is "a little undervalued," said Mark Mobius, a managing director at Templeton Asset Management. Cendant agreed to buy the UK's Gullivers Travel and Octopus Travel for about $1.1 billion, Bloomberg reported. United Technologies agreed to buy Kidde of the UK for $2.8 billion in cash, Bloomberg said. FedEx said second-quarter net income almost quadrupled as international air shipments rose, Bloomberg said. Goldman Sachs said quarterly profit rose 23%, spurred by revenue from fixed-income trading and fees from providing merger advice, Bloomberg reported. Symantec will buy Veritas Software for $13.5 billion in stock to add data-storage products, Bloomberg said. The number of Americans filing first-time claims for unemployment insurance benefits fell by 43,000 last week to a five-month low, suggesting that more US companies are retaining workers to meet rising demand, Bloomberg reported. Johnson & Johnson agreed to acquire Guidant for $25.4 billion, Bloomberg said. Glamis Gold, which produces gold in Nevada and Honduras, made a hostile $3.38 billion takeover bid for Goldcorp, Canada's fourth-biggest gold producer, Bloomberg reported. The Philly Fed Index soared to 29.6 from 20.7 in November, substantially topping economists' estimates, Bloomberg said. The US dollar rose the most in two months against the euro after a report showed the US current-account deficit grew less than forecast in the third quarter, Bloomberg said.
Bottom Line: The Portfolio is higher unchanged mid-day as gains in my semi and rfid longs are offsetting losses in my internet longs. I have not traded today and the Portfolio is still 125% net long. The underlying tone of the market is weaker today as interest rates rise on a better-than-expected Philly Fed report and lower jobless claims. Today's performance is a bit disappointing considering the merger activity, falling energy prices and strong economic/earnings reports. I do not view the weaker housing starts number as a problem, just a slowdown from scorching levels in October. I expect US stocks to trade mixed-to-weaker into the close.
Thursday Watch
Earnings of Note
Company/Estimate
FDX/1.27
ADBE/.42
APOL/.57
DRI/.23
CTAS/.44
CCL/.31
GS/2.32
KBH/4.13
NKE/.86
PLMO/.53
ZQK/.40
TTWO/1.55
TEK/.32
Splits
LCAV 3-for-2
Economic Data
Current Account Balance for 3Q estimated at -$170.6B versus -$166.2B in 2Q.
Housing Starts for November estimated at 1980K versus 2027K in October.
Building Permits for November estimated at 2000K versus 2018K in October.
Initial Jobless Claims for last week estimated at 342K versus 357K the prior week.
Continuing Claims estimated at N/A versus 2796K prior.
Philadelphia Fed. for December estimated at 20.5 versus 20.7 in November.
Minutes of Nov. 10 FOMC Meeting.
Recommendations
Goldman Sachs reiterated Outperform on BBBY, AMGN, IP and Underperform on AZR, HMT, VTS. Banc of America upgraded BIIB to Buy.
Late-Night News
Asian indices are quietly higher, led by Korean and Australian shares. Carlyle Group, a U.S. buyout fund, will acquire a 25% stake in China Pacific Life Insurance, the nation's third-biggest life insurer, for up to $400 million, in the biggest overseas private-equity purchase in China, the Financial Times reported. China's Supreme People's Court will issue new rules making piracy and counterfeiting of software and other goods a more severe criminal offense, stepping up the nation's crackdown on bootlegged intellectual property, China Daily reported. Isuzu Motors, Japan's largest truckmaker, is in talks with GM to get more steel as a worldwide shortage of the material crimps automakers, the Sankei newspaper said. Samsung said it expects to increase mobile phone sale by about 16% next year to more than 100 million units, Korea Economic Daily reported. Latin America's economy will grow by 5.5% this year, the fastest in 24 years, the Financial Times reported. Fannie Mae, the biggest source of money for U.S. home mortgages, failed to comply with accounting rules for financial contracts designed to protect against swings in interest rates, the SEC said. Johnson & Johnson agreed to acquire Guidant for $25.4 billion, adding electrical devices for treating heart disease to a lineup of thousands of health products ranging from Band-Aids to cardiac stents, Bloomberg reported.
Late-Night Trading
Asian Indices are +.25%. to +.50% on average.
S&P 500 indicated +.02%.
NASDAQ 100 indicated -.06%
Company/Estimate
FDX/1.27
ADBE/.42
APOL/.57
DRI/.23
CTAS/.44
CCL/.31
GS/2.32
KBH/4.13
NKE/.86
PLMO/.53
ZQK/.40
TTWO/1.55
TEK/.32
Splits
LCAV 3-for-2
Economic Data
Current Account Balance for 3Q estimated at -$170.6B versus -$166.2B in 2Q.
Housing Starts for November estimated at 1980K versus 2027K in October.
Building Permits for November estimated at 2000K versus 2018K in October.
Initial Jobless Claims for last week estimated at 342K versus 357K the prior week.
Continuing Claims estimated at N/A versus 2796K prior.
Philadelphia Fed. for December estimated at 20.5 versus 20.7 in November.
Minutes of Nov. 10 FOMC Meeting.
Recommendations
Goldman Sachs reiterated Outperform on BBBY, AMGN, IP and Underperform on AZR, HMT, VTS. Banc of America upgraded BIIB to Buy.
Late-Night News
Asian indices are quietly higher, led by Korean and Australian shares. Carlyle Group, a U.S. buyout fund, will acquire a 25% stake in China Pacific Life Insurance, the nation's third-biggest life insurer, for up to $400 million, in the biggest overseas private-equity purchase in China, the Financial Times reported. China's Supreme People's Court will issue new rules making piracy and counterfeiting of software and other goods a more severe criminal offense, stepping up the nation's crackdown on bootlegged intellectual property, China Daily reported. Isuzu Motors, Japan's largest truckmaker, is in talks with GM to get more steel as a worldwide shortage of the material crimps automakers, the Sankei newspaper said. Samsung said it expects to increase mobile phone sale by about 16% next year to more than 100 million units, Korea Economic Daily reported. Latin America's economy will grow by 5.5% this year, the fastest in 24 years, the Financial Times reported. Fannie Mae, the biggest source of money for U.S. home mortgages, failed to comply with accounting rules for financial contracts designed to protect against swings in interest rates, the SEC said. Johnson & Johnson agreed to acquire Guidant for $25.4 billion, adding electrical devices for treating heart disease to a lineup of thousands of health products ranging from Band-Aids to cardiac stents, Bloomberg reported.
Late-Night Trading
Asian Indices are +.25%. to +.50% on average.
S&P 500 indicated +.02%.
NASDAQ 100 indicated -.06%
BOTTOM LINE: I expect U.S. equities to open modestly higher on better-than-expected economic/earnings reports, short-covering and merger activity. The Portfolio is 125% net long heading into tomorrow.
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