Bloomberg:
- Emerging market currencies, bonds and stocks fell after the US Fed signaled inflation may accelerate, reducing the yield advantage of developing nation and other high-risk assets.
- Hedge fund managers worldwide earned $44.8 billion in fees last year, down 21% from a record 2003, as investment returns worsened, according to estimates by UBS AG.
- The Chicago Mercantile Exchange, the biggest US futures market, has put its acquisition plans on hold because of a “frenzy” of interest by competitors to go public.
- US sales of previously owned homes fell less than forecast in February to a 6.79 million annual rate, supported by cheap mortgage rates and growing employment.
- Crude oil is falling more than $2 a barrel in NY as the Energy Dept. reported that US inventories rose to the highest since July 2002.
- The US dollar is rising to a five-week high against the euro after US inflation accelerated at the fastest pace since 2002.
The Wall Street Journal:
- Microsoft is facing scrutiny from the European Commission because it may not be complying with the commission’s antitrust order on Windows software.
- US building costs rose 10.5% last year, as strong demand and higher prices spurred the biggest increase since the early 1980s.
- General Motors is in talks to sell a stake in its GMAC Commercial Mortgage unit to raise as much as $1 billion.
- Burlington Resources, BP PLC and Peoples Energy Corp. are meeting opposition to oil and gas drilling in the US West from an unlikely coalition of ranchers and environmentalists.
- Toyota Motor’s plan to become the world’s No.1 seller of cars worries investors who wonder if the Japanese carmaker might be giving up profit in search of market share.
- American International Group is being investigated over whether offshore companies it claimed were unaffiliated actually belonged to AIG.
- The FDA wants drugmakers to submit genetic testing data from the development stage to encourage the use of technology to evaluate how patients will respond to new medicines.
The New York Times:
- China’s economic growth is being driven predominately by an investment binge, sparking concern that the country’s financial system eventually might be stressed by unneeded factories and underused highways.
- Boston Scientific plans to use its right to buy closely held Cryovascular Systems, which has a technology to temporarily freeze the walls of blood vessels while blockages are being repaired.
- Gannett Co., Knight-Ridder Inc. and Tribune Co. are buying 75% of Topix.net, a Web site with links to news articles and government information.
Wednesday, March 23, 2005
Economic Releases
- The Consumer Price Index for February rose .4% versus estimates of a .3% increase and a .1% rise in January.
- The CPI Ex Food & Energy rose .3% versus estimates of a .2% increase and a .2% gain in January.
- Existing Home Sales for February fell to 6.79M versus estimates of 6.7M and 6.82M in January.
- The CPI Ex Food & Energy rose .3% versus estimates of a .2% increase and a .2% gain in January.
- Existing Home Sales for February fell to 6.79M versus estimates of 6.7M and 6.82M in January.
Morning Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on WFC and RIG.
- Reiterated Underperform on HBAN.
- Upgraded CK to Outperform.
- Reiterated Attractive view of Oil Service sector, saying significant upside is still likely.
Smith Barney:
- Upgraded MYK to Buy, target $18.50.
- Upgraded GPN to Buy, target $74.
- Reiterated Buy on AV, target $20.
- Reiterated Buy on CNI, target 62.50
- Reiterated Buy on FON, target $27.
- Reiterated Sell on MU, target $11.50.
- Reiterated Buy on RIMM, target $96.
Banc of America:
- Upgraded CPWR to Buy, target $10.
- Rated OMM Buy, target $27.
- Rated SFL Buy, target $24.
Legg Mason:
- Rated DTV Buy, target $18.
Deutsche Bank:
- Raised MCHP to Buy, target $30.
UBS:
- Rated HUN Buy, target $31.
- Reiterated Outperform on WFC and RIG.
- Reiterated Underperform on HBAN.
- Upgraded CK to Outperform.
- Reiterated Attractive view of Oil Service sector, saying significant upside is still likely.
Smith Barney:
- Upgraded MYK to Buy, target $18.50.
- Upgraded GPN to Buy, target $74.
- Reiterated Buy on AV, target $20.
- Reiterated Buy on CNI, target 62.50
- Reiterated Buy on FON, target $27.
- Reiterated Sell on MU, target $11.50.
- Reiterated Buy on RIMM, target $96.
Banc of America:
- Upgraded CPWR to Buy, target $10.
- Rated OMM Buy, target $27.
- Rated SFL Buy, target $24.
Legg Mason:
- Rated DTV Buy, target $18.
Deutsche Bank:
- Raised MCHP to Buy, target $30.
UBS:
- Rated HUN Buy, target $31.
Wednesday Watch
Late-Night Headlines
Bloomberg:
- Paul Wolfowitz, President Bush's nominee to lead the World Bank, gained support from European Union nations including the Netherlands and Italy.
- The US 10-year T-note is rising in Asia for the first day in four on optimism a US government report on consumer prices tomorrow will ease concern inflation in quickening.
- Japanese exports rose at the slowest pace in more than a year in February as shipments of electronic equipment slumped, signaling the nation may not be able to rely on overseas demand to drive a recovery from recession.
- Crude oil is falling for a second day in NY on concern the Fed will accelerated the pace of US interest rate increases, slowing global economic growth and demand for fuel.
- The Fed's two-edged message -- that while inflation risks are rising, it needn't yet step up the pace of interest rate increases -- may reflect disagreements among policy makers that will be clarified in coming weeks, economists and former Fed officials said.
The NY Times:
- Borders Group, Piney Bowes and other companies are offering special discounts and employee programs as a way to attract older workers.
Financial Times:
- Hedge fund managers worldwide earned as much as $45 billion more than US mutual funds.
London-based Times:
- Millennium & Copthorne Hotels Plc, a British hotelier, plans to sell the Biltmore Hotel in Los Angeles for as much as $500 million.
Beijing Morning Post:
- China's film industry will grow 140% and be worth $12 billion by 2007, up from $5 billion in 2004.
China Business News:
- GE Energy plans to spend about $100 million to acquire Shanghai-based Xinhua Control Engineering Co. to gain access to the Chinese company's technology.
Korea Economic Daily:
- BHP Billiton is asking Japanese steelmakers to pay double for its iron ore this year, more than Brazil's Cia. Vale do Rio Doce's 71.5% increase.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on AMGN.
- Reiterated Attractive view of Hospital sector.
Banc of America:
- Reiterated Sell on BDY, target $8.
Night Trading
Asian Indices are -1.25% to unch. on average.
S&P 500 indicated -.09%.
NASDAQ 100 indicated -.27%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Analyst Actions
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
DRI/.51
FINL/.56
GME/.69
MLS/.49
Splits
ATVI 4-for-3
BZH 3-for-1
IIVI 2-for-1
Economic Releases
8:30 EST:
- The Consumer Price Index for February is estimated to rise .3% versus a .1% gain in January.
- The CPI Ex Food & Energy for February is estimated to rise .2% versus a .2% increase in January.
10:00 EST:
- Existing Home Sales for February are estimated to fall to 6.7M versus 6.8M in January.
Bloomberg:
- Paul Wolfowitz, President Bush's nominee to lead the World Bank, gained support from European Union nations including the Netherlands and Italy.
- The US 10-year T-note is rising in Asia for the first day in four on optimism a US government report on consumer prices tomorrow will ease concern inflation in quickening.
- Japanese exports rose at the slowest pace in more than a year in February as shipments of electronic equipment slumped, signaling the nation may not be able to rely on overseas demand to drive a recovery from recession.
- Crude oil is falling for a second day in NY on concern the Fed will accelerated the pace of US interest rate increases, slowing global economic growth and demand for fuel.
- The Fed's two-edged message -- that while inflation risks are rising, it needn't yet step up the pace of interest rate increases -- may reflect disagreements among policy makers that will be clarified in coming weeks, economists and former Fed officials said.
The NY Times:
- Borders Group, Piney Bowes and other companies are offering special discounts and employee programs as a way to attract older workers.
Financial Times:
- Hedge fund managers worldwide earned as much as $45 billion more than US mutual funds.
London-based Times:
- Millennium & Copthorne Hotels Plc, a British hotelier, plans to sell the Biltmore Hotel in Los Angeles for as much as $500 million.
Beijing Morning Post:
- China's film industry will grow 140% and be worth $12 billion by 2007, up from $5 billion in 2004.
China Business News:
- GE Energy plans to spend about $100 million to acquire Shanghai-based Xinhua Control Engineering Co. to gain access to the Chinese company's technology.
Korea Economic Daily:
- BHP Billiton is asking Japanese steelmakers to pay double for its iron ore this year, more than Brazil's Cia. Vale do Rio Doce's 71.5% increase.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on AMGN.
- Reiterated Attractive view of Hospital sector.
Banc of America:
- Reiterated Sell on BDY, target $8.
Night Trading
Asian Indices are -1.25% to unch. on average.
S&P 500 indicated -.09%.
NASDAQ 100 indicated -.27%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Analyst Actions
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
DRI/.51
FINL/.56
GME/.69
MLS/.49
Splits
ATVI 4-for-3
BZH 3-for-1
IIVI 2-for-1
Economic Releases
8:30 EST:
- The Consumer Price Index for February is estimated to rise .3% versus a .1% gain in January.
- The CPI Ex Food & Energy for February is estimated to rise .2% versus a .2% increase in January.
10:00 EST:
- Existing Home Sales for February are estimated to fall to 6.7M versus 6.8M in January.
BOTTOM LINE: Asian indices are mostly lower as commodity and exporter shares in the region decline on worries over slowing global demand. I expect US equities to open modestly lower in the morning on a slightly higher-than-expected CPI report. A significantly higher-than-expected report would lead to a larger morning decline. Again, I will key on the bond market for the direction of equities. I plan to increase market exposure into any morning losses using tight stops. The Portfolio is 25% net long heading into tomorrow.
Tuesday, March 22, 2005
Tuesday Close
Indices
S&P 500 1,171.71 -1.02%
DJIA 10,470.51 -.90%
NASDAQ 1,989.34 -.91%
Russell 2000 618.58 -.48%
DJ Wilshire 5000 11,570.94 -.92%
S&P Barra Growth 565.65 -.74%
S&P Barra Value 601.72 -1.29%
Morgan Stanley Consumer 570.62 -.50%
Morgan Stanley Cyclical 758.78 -.68%
Morgan Stanley Technology 450.70 -1.54%
Transports 3,754.23 +.13%
Utilities 351.89 -1.96%
Put/Call .98 +27.27%
NYSE Arms 1.04 +16.28%
Volatility(VIX) 14.27 +4.85%
ISE Sentiment 166.00 +25.76%
US Dollar 83.44 +.57%
CRB 313.02 -.15%
Futures Spot Prices
Crude Oil 55.68 -.62%
Unleaded Gasoline 156.63 -.55%
Natural Gas 7.21 -.51%
Heating Oil 153.95 -.46%
Gold 427.00 -1.07%
Base Metals 130.36 +.06%
Copper 148.25 -1.0%
10-year US Treasury Yield 4.64% +2.61%
Leading Sectors
Airlines +1.03%
Computer Service +.56%
Oil Service +.56%
Lagging Sectors
Utilities -1.96%
Insurance -2.10%
Software -2.44%
After-hours Movers
ATPL +36.0% after announcing a special, one-time cash dividend of $12.50 per common share.
Evening Review
Detailed Market Summary
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
Futures Recap
S&P 500 Gallery View
Timely Economic Charts
PM Market Call
Real-time/After-hours Stock Quote
In Play
Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on PAYX.
- Said BenQ’s newly developed ink cartridges will pressure printer margins of established printer vendors.
Legg Mason:
- Raised MKC to Buy, target $41.
Morgan Stanley:
- Raised SDS to Overweight.
Afternoon/Evening Headlines
Bloomberg:
- US Treasuries are still overvalued even after the recent rise in yields, said Bill Gross, chief investment officer at PIMCO.
- American International Group may have a “serious problem” if executives refuse to answer questions in an accounting investigation, NY Attorney General Eliot Spitzer said.
- The US dollar rose to the highest in a month against the euro and yen after the Fed raised its target interest rate a quarter point to 2.75% and suggested the pace of rate hikes may accelerate.
- US Treasury notes tumbled the most since November after the Fed raised its benchmark interest rate.
- AOL Latin America said it may file for bankruptcy protection because it doesn’t have enough cash to fund its business beyond September and pay its debt.
- Oracle Corp. said third-quarter profit fell 15% on costs to buy PeopleSoft and revenue lagged behind analysts’ expectations.
Financial Times:
- Hyundai Motor aims to increase sales in the US by one-sixth this year, mostly at the expense of Japanese rivals.
Sydney Morning Herald:
- Rio Tinto Group and Xstrata Plc may be studying a joint bid for WMC Resources Ltd. to top BHP Billiton’s A$7.85 a share offer.
China Daily:
- China’s central bank may raise interest rates again in the second quarter.
SportsBusiness Daily:
- General Motors will become the exclusive automobile partner of Major League Baseball as part of a $50 million agreement.
S&P 500 1,171.71 -1.02%
DJIA 10,470.51 -.90%
NASDAQ 1,989.34 -.91%
Russell 2000 618.58 -.48%
DJ Wilshire 5000 11,570.94 -.92%
S&P Barra Growth 565.65 -.74%
S&P Barra Value 601.72 -1.29%
Morgan Stanley Consumer 570.62 -.50%
Morgan Stanley Cyclical 758.78 -.68%
Morgan Stanley Technology 450.70 -1.54%
Transports 3,754.23 +.13%
Utilities 351.89 -1.96%
Put/Call .98 +27.27%
NYSE Arms 1.04 +16.28%
Volatility(VIX) 14.27 +4.85%
ISE Sentiment 166.00 +25.76%
US Dollar 83.44 +.57%
CRB 313.02 -.15%
Futures Spot Prices
Crude Oil 55.68 -.62%
Unleaded Gasoline 156.63 -.55%
Natural Gas 7.21 -.51%
Heating Oil 153.95 -.46%
Gold 427.00 -1.07%
Base Metals 130.36 +.06%
Copper 148.25 -1.0%
10-year US Treasury Yield 4.64% +2.61%
Leading Sectors
Airlines +1.03%
Computer Service +.56%
Oil Service +.56%
Lagging Sectors
Utilities -1.96%
Insurance -2.10%
Software -2.44%
After-hours Movers
ATPL +36.0% after announcing a special, one-time cash dividend of $12.50 per common share.
Evening Review
Detailed Market Summary
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
Futures Recap
S&P 500 Gallery View
Timely Economic Charts
PM Market Call
Real-time/After-hours Stock Quote
In Play
Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on PAYX.
- Said BenQ’s newly developed ink cartridges will pressure printer margins of established printer vendors.
Legg Mason:
- Raised MKC to Buy, target $41.
Morgan Stanley:
- Raised SDS to Overweight.
Afternoon/Evening Headlines
Bloomberg:
- US Treasuries are still overvalued even after the recent rise in yields, said Bill Gross, chief investment officer at PIMCO.
- American International Group may have a “serious problem” if executives refuse to answer questions in an accounting investigation, NY Attorney General Eliot Spitzer said.
- The US dollar rose to the highest in a month against the euro and yen after the Fed raised its target interest rate a quarter point to 2.75% and suggested the pace of rate hikes may accelerate.
- US Treasury notes tumbled the most since November after the Fed raised its benchmark interest rate.
- AOL Latin America said it may file for bankruptcy protection because it doesn’t have enough cash to fund its business beyond September and pay its debt.
- Oracle Corp. said third-quarter profit fell 15% on costs to buy PeopleSoft and revenue lagged behind analysts’ expectations.
Financial Times:
- Hyundai Motor aims to increase sales in the US by one-sixth this year, mostly at the expense of Japanese rivals.
Sydney Morning Herald:
- Rio Tinto Group and Xstrata Plc may be studying a joint bid for WMC Resources Ltd. to top BHP Billiton’s A$7.85 a share offer.
China Daily:
- China’s central bank may raise interest rates again in the second quarter.
SportsBusiness Daily:
- General Motors will become the exclusive automobile partner of Major League Baseball as part of a $50 million agreement.
BOTTOM LINE: US stocks fell today on worries over rising interest rates and inflation. The Portfolio finished higher on gains in my Chinese ADR shorts, Homebuilding shorts and Gaming longs. I took profits in a number of Tech longs in the afternoon and added a few new Homebuilding shorts, thus leaving the Portfolio 25% net long. One of my new shorts is HOV and I am using a $54 stop-loss on this position. The tone of the market deteriorated meaningfully into the afternoon as the advance/decline line dropped substantially, almost every sector fell and volume increased. Tech and interest-rate sensitive sectors underperformed, while small-caps outperformed and measures of investor anxiety were mostly higher. Overall, today’s market action was negative, considering recent losses, a firming US dollar and declining energy prices. The Bloomberg Crude Oil % Bulls is now at 64%, the highest reading since oil peaked in Oct. of last year. The bond market’s reaction to the Fed’s policy statements leads me to believe the 10-year T-note yield will test its highs set in June of last year. While today’s action was disheartening for the Bulls, a further spike in measures of investor anxiety from current levels will likely result in a much more durable and tradable bottom in the near future.
Mid-day Scoreboard
Indices
S&P 500 1,187.74 +.33%
DJIA 10,591.32 +.24%
NASDAQ 2,010.95 +.17%
Russell 2000 625.56 +.64%
DJ Wilshire 5000 11,720.97 +.36%
S&P Barra Growth 572.14 +.39%
S&P Barra Value 611.20 +.27%
Morgan Stanley Consumer 575.81 +.40%
Morgan Stanley Cyclical 769.49 +.73%
Morgan Stanley Technology 456.60 -.25%
Transports 3,793.59 +1.17%
Utilities 359.55 +.18%
Put/Call 1.02 +32.47%
NYSE Arms .86 -4.51%
Volatility(VIX) 13.35 -1.91%
ISE Sentiment 172.00 +30.30%
US Dollar 82.75 -.28%
CRB 313.54 +.02%
Futures Spot Prices
Crude Oil 57.05 -.71%
Unleaded Gasoline 159.00 -.35%
Natural Gas 7.32 +.03%
Heating Oil 156.50 -.54%
Gold 431.40 unch.
Base Metals 130.36 +.06%
Copper 149.90 +.67%
10-year US Treasury Yield 4.48% -.94%
Leading Sectors
Oil Service +2.67%
Iron/Steel +2.24%
Homebuilders +1.90%
Lagging Sectors
Papers -.12%
Insurance -.51%
Software -1.38%
Links of Interest
Market Internals
Movers & Shakers
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Hot Spots
Option Dragon
Real-time Intraday Chart/Quote
S&P 500 1,187.74 +.33%
DJIA 10,591.32 +.24%
NASDAQ 2,010.95 +.17%
Russell 2000 625.56 +.64%
DJ Wilshire 5000 11,720.97 +.36%
S&P Barra Growth 572.14 +.39%
S&P Barra Value 611.20 +.27%
Morgan Stanley Consumer 575.81 +.40%
Morgan Stanley Cyclical 769.49 +.73%
Morgan Stanley Technology 456.60 -.25%
Transports 3,793.59 +1.17%
Utilities 359.55 +.18%
Put/Call 1.02 +32.47%
NYSE Arms .86 -4.51%
Volatility(VIX) 13.35 -1.91%
ISE Sentiment 172.00 +30.30%
US Dollar 82.75 -.28%
CRB 313.54 +.02%
Futures Spot Prices
Crude Oil 57.05 -.71%
Unleaded Gasoline 159.00 -.35%
Natural Gas 7.32 +.03%
Heating Oil 156.50 -.54%
Gold 431.40 unch.
Base Metals 130.36 +.06%
Copper 149.90 +.67%
10-year US Treasury Yield 4.48% -.94%
Leading Sectors
Oil Service +2.67%
Iron/Steel +2.24%
Homebuilders +1.90%
Lagging Sectors
Papers -.12%
Insurance -.51%
Software -1.38%
Links of Interest
Market Internals
Movers & Shakers
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Hot Spots
Option Dragon
Real-time Intraday Chart/Quote
BOTTOM LINE: US stocks are modestly higher mid-day as long-term interest rates decline and energy prices stabilize. The Portfolio is higher on gains in my Chinese ADR shorts, Energy-related longs and Steel longs. I added a few longs from various sectors this morning, thus leaving the Portfolio’s market exposure 75% net long. One of my new longs is STN and I am using a $65 stop-loss on this position. The tone of the market is modestly positive as the advance/decline line is slightly higher, almost every sector is gaining and volume is very light. Commodities, Cyclicals and Small-caps are outperforming, while Tech is once again underperforming. Measures of investor anxiety are mostly lower, which is a negative. Today’s overall market action is decent ahead of the Fed’s commentary. I will closely monitor the bond market’s reaction to the news before further shifting the Portfolio’s market exposure. I expect US stocks to trade modestly higher into the close as volatility and volume increase on short-covering and bargain-hunting .
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