S&P 500 1,194.20 +.52%
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Sunday, December 19, 2004
Saturday, December 18, 2004
Economic Week in Review
ECRI Weekly Leading Index 133.60 +.45%
Advance Retail Sales for November rose .1% versus estimates of a .1% decline and a .8% increase in October. Retail Sales Less Autos for November rose .5% versus estimates of a .3% increase and a 1.1% gain in October. "There certainly appears to be no sign of a consumer retrenchment," said David Greenlaw, chief U.S. fixed income economist at Morgan Stanley, who raised his estimate for spending this quarter to a 3.7% annual rate. "Usually the holiday season isn't defined until the week leading into Christmas and the week after Christmas" when people start cashing in gift cards, said National Retail Federation spokesman Scott Krugman. Purchases excluding gasoline, building materials and cars, the category used by the Commerce Department to gauge personal consumption in its GDP report, rose .4% in November after rising .8% for two months in a row, Bloomberg reported. The economy has created an average of 185,450 jobs/month so far this year, the best since 1999, helping fuel incomes and spending, Bloomberg said.
Industrial Production for November rose .3% versus estimates of a .2% increase and a .6% gain in October. Capacity Utilization for November was 77.6% versus estimates of 77.8% and 77.5% in October. "Demand for industrial goods has gotten stronger," said Sandy Cutler, chief executive officer of Eaton Corp. "If you look at machine goods builders currently, you're seeing lead times spread out."
Federal Reserve policy makers raised the benchmark US interest rate a quarter point to 2.25% and restated a plan to carry out further increase at a "measured" pace to keep inflation in check, Bloomberg reported. "Labor market conditions continue to improve gradually," the Fed said. "Inflation and longer-term inflation expectations remain well contained" and "output appears to be growing at a moderate pace despite the earlier rise in energy prices." "It really looks good for the rate of inflation in 2005," said Wayne Angell, of Angell Economics. The Fed also said it will begin releasing minutes of meetings three weeks after they take place, instead of six.
Empire Manufacturing for December rose to 29.93 versus estimates of 20.0 and a reading of 18.86 in November. "Things are brightening up for the early part of next year," said Michael Gregory, a senior economist at BMO Nesbitt Burns. The bank's measure of new orders soared to 40.2 from 16.9, the highest level in the three-year history of the survey, Bloomberg said. As well, the index of unfilled orders rose to 10.4 from -1.4 the month before. "Shipments and orders are up, and we are seeing some companies hiring more to handle the increased demand," said Randall Wolken, president of the Manufacturers Assoc. of Central NY. Consumer demand and corporate spending to replace aging equipment are fueling production as inventories near historic lows, Bloomberg reported. "The economy is now in very good shape," said Harvard University economist Martin Feldstein.
The NAHB Housing Market Index for December rose to 71 versus estimates of 70 and a reading of 70 in November. The NAHB last week raised its forecasts for new home sales this year to an ALL-TIME record of 1.18 million, Bloomberg said. "The combination of an improving economy and historically low interest rates are sustaining housing activity," said Jayanth Nazareth, an economist at JP Morgan Chase. "We see very strong demand patterns across the country in most major housing markets," said Stuart Miller, CEO of homebuilder Lennar.
Housing Starts for November fell to 1771K versus estimates of 1980K and an upwardly revised 2039K in October. Building Permits for November fell to 1988K versus estimates of 2000K and an upwardly revised 2018K in October. The decline in housing starts is not the beginning of substantial weakness in housing, economists told Bloomberg. November's starts declined from the best month of the year in October, when builders kicked into high gear following summer hurricanes. Building permits fell just 1.5% in November and a recent survey showed builders are the most optimistic in five years, Bloomberg reported. "There definitely is a rising backlog and that is because demand and contracts are exceeding the ability to produce," said Robert Toll, CEO of Tolls Brothers.
Initial Jobless Claims fell to 317K last week versus estimates of 342K and 360K the prior week. Continuing Claims were 2737K versus 2787K prior. Initial Jobless Claims dropped to the lowest level since July 3 and showed the largest weekly drop in three years, Bloomberg said. Companies are holding onto more workers and increasing hiring to meet demand. "It's getting incredibly difficult for companies to squeeze more out of what they've got and so it's becoming increasingly important for companies to hire," said Chris Low, chief economist at FTN Financial. 24% of US employers surveyed by Manpower Inc. expect to add to their staff from January through March of 2005, up from 20% who said they would do the same during the first quarter of this year.
The Philadelphia Fed. for December rose to 29.6 versus estimates of 20.5 and 20.7 in November. Lean inventories and rising sales suggest factories will need to boost production in coming months, Bloomberg said. The US dollar's decline since its mid-May high is contributing to demand for US products, by making exports cheaper, economists told Bloomberg. "There's every reason and hope that manufacturing will be really strong in 2005" unless the US dollar strengthens considerably, said Joel Naroff, president of Naroff Economic Advisors. The Philly Fed's new orders index rose to 26.4 from 22.1. The measure of shipments rose to 32.0, the highest since August, from 24.5. The index of unfilled orders rose to 7.7, the first positive reading in three months, from minus 1.2, Bloomberg reported. The prices-paid component fell to 52.2 from 53.9. The prices-received index fell to 20.0 from 28.0, Bloomberg said. Finally, a gauge measuring the average workweek rose to 18.6, a 10-month high.
Consumer Price Index for November rose .2% versus estimates of a .2% rise and a .6% gain in October. CPI Ex Food and Energy rose .2% in November versus estimates of a .2% increase and a .2% rise in October. Economist project the CPI to rise 3.3% this year, below the 3.4% rate in 2000 and slightly higher than the long-term average rate of 3.0%, Bloomberg said. The cost of all goods including cars, apparel and food fell .1% last month. President Bush's economic advisors recently predicted the decline in energy prices will bring inflation down to about 2% in 2005, Bloomberg reported. UBS Securities' economists recently projected all consumer prices to rise 1.7% next year as energy prices decline, Bloomberg reported.
Advance Retail Sales for November rose .1% versus estimates of a .1% decline and a .8% increase in October. Retail Sales Less Autos for November rose .5% versus estimates of a .3% increase and a 1.1% gain in October. "There certainly appears to be no sign of a consumer retrenchment," said David Greenlaw, chief U.S. fixed income economist at Morgan Stanley, who raised his estimate for spending this quarter to a 3.7% annual rate. "Usually the holiday season isn't defined until the week leading into Christmas and the week after Christmas" when people start cashing in gift cards, said National Retail Federation spokesman Scott Krugman. Purchases excluding gasoline, building materials and cars, the category used by the Commerce Department to gauge personal consumption in its GDP report, rose .4% in November after rising .8% for two months in a row, Bloomberg reported. The economy has created an average of 185,450 jobs/month so far this year, the best since 1999, helping fuel incomes and spending, Bloomberg said.
Industrial Production for November rose .3% versus estimates of a .2% increase and a .6% gain in October. Capacity Utilization for November was 77.6% versus estimates of 77.8% and 77.5% in October. "Demand for industrial goods has gotten stronger," said Sandy Cutler, chief executive officer of Eaton Corp. "If you look at machine goods builders currently, you're seeing lead times spread out."
Federal Reserve policy makers raised the benchmark US interest rate a quarter point to 2.25% and restated a plan to carry out further increase at a "measured" pace to keep inflation in check, Bloomberg reported. "Labor market conditions continue to improve gradually," the Fed said. "Inflation and longer-term inflation expectations remain well contained" and "output appears to be growing at a moderate pace despite the earlier rise in energy prices." "It really looks good for the rate of inflation in 2005," said Wayne Angell, of Angell Economics. The Fed also said it will begin releasing minutes of meetings three weeks after they take place, instead of six.
Empire Manufacturing for December rose to 29.93 versus estimates of 20.0 and a reading of 18.86 in November. "Things are brightening up for the early part of next year," said Michael Gregory, a senior economist at BMO Nesbitt Burns. The bank's measure of new orders soared to 40.2 from 16.9, the highest level in the three-year history of the survey, Bloomberg said. As well, the index of unfilled orders rose to 10.4 from -1.4 the month before. "Shipments and orders are up, and we are seeing some companies hiring more to handle the increased demand," said Randall Wolken, president of the Manufacturers Assoc. of Central NY. Consumer demand and corporate spending to replace aging equipment are fueling production as inventories near historic lows, Bloomberg reported. "The economy is now in very good shape," said Harvard University economist Martin Feldstein.
The NAHB Housing Market Index for December rose to 71 versus estimates of 70 and a reading of 70 in November. The NAHB last week raised its forecasts for new home sales this year to an ALL-TIME record of 1.18 million, Bloomberg said. "The combination of an improving economy and historically low interest rates are sustaining housing activity," said Jayanth Nazareth, an economist at JP Morgan Chase. "We see very strong demand patterns across the country in most major housing markets," said Stuart Miller, CEO of homebuilder Lennar.
Housing Starts for November fell to 1771K versus estimates of 1980K and an upwardly revised 2039K in October. Building Permits for November fell to 1988K versus estimates of 2000K and an upwardly revised 2018K in October. The decline in housing starts is not the beginning of substantial weakness in housing, economists told Bloomberg. November's starts declined from the best month of the year in October, when builders kicked into high gear following summer hurricanes. Building permits fell just 1.5% in November and a recent survey showed builders are the most optimistic in five years, Bloomberg reported. "There definitely is a rising backlog and that is because demand and contracts are exceeding the ability to produce," said Robert Toll, CEO of Tolls Brothers.
Initial Jobless Claims fell to 317K last week versus estimates of 342K and 360K the prior week. Continuing Claims were 2737K versus 2787K prior. Initial Jobless Claims dropped to the lowest level since July 3 and showed the largest weekly drop in three years, Bloomberg said. Companies are holding onto more workers and increasing hiring to meet demand. "It's getting incredibly difficult for companies to squeeze more out of what they've got and so it's becoming increasingly important for companies to hire," said Chris Low, chief economist at FTN Financial. 24% of US employers surveyed by Manpower Inc. expect to add to their staff from January through March of 2005, up from 20% who said they would do the same during the first quarter of this year.
The Philadelphia Fed. for December rose to 29.6 versus estimates of 20.5 and 20.7 in November. Lean inventories and rising sales suggest factories will need to boost production in coming months, Bloomberg said. The US dollar's decline since its mid-May high is contributing to demand for US products, by making exports cheaper, economists told Bloomberg. "There's every reason and hope that manufacturing will be really strong in 2005" unless the US dollar strengthens considerably, said Joel Naroff, president of Naroff Economic Advisors. The Philly Fed's new orders index rose to 26.4 from 22.1. The measure of shipments rose to 32.0, the highest since August, from 24.5. The index of unfilled orders rose to 7.7, the first positive reading in three months, from minus 1.2, Bloomberg reported. The prices-paid component fell to 52.2 from 53.9. The prices-received index fell to 20.0 from 28.0, Bloomberg said. Finally, a gauge measuring the average workweek rose to 18.6, a 10-month high.
Consumer Price Index for November rose .2% versus estimates of a .2% rise and a .6% gain in October. CPI Ex Food and Energy rose .2% in November versus estimates of a .2% increase and a .2% rise in October. Economist project the CPI to rise 3.3% this year, below the 3.4% rate in 2000 and slightly higher than the long-term average rate of 3.0%, Bloomberg said. The cost of all goods including cars, apparel and food fell .1% last month. President Bush's economic advisors recently predicted the decline in energy prices will bring inflation down to about 2% in 2005, Bloomberg reported. UBS Securities' economists recently projected all consumer prices to rise 1.7% next year as energy prices decline, Bloomberg reported.
Bottom Line: Overall, last week's economic data were positive. The Weekly Leading Index is now at its highest level since the first week of May. Retail sales are solid and will likely improve over the next few weeks. Internet retail continues to exhibit exceptional strength. Industrial production is continuing at healthy levels. I expect the Fed to pause after a 25 basis point hike on Feb. 2 and to raise rates less than currently expected in 05. Measures of manufacturing continue to accelerate from their pre-election lull. Inventory rebuilding and strong demand will likely keep manufacturing at relatively high levels for the next few months. At this point, I am not worried about the decline in housing starts from record-high levels. I expect long-term rates to fall modestly during the first half of 05 which should help maintain brisk demand. The labor market is healthy and continues to improve at a modest rate. This results in a muted increase in unit labor costs, thus holding inflation in check. Consumer inflation, currently near long-term average levels, should decelerate next year as commodity prices fall.
Friday, December 17, 2004
Weekly Scoreboard*
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
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
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.
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