Thursday, April 07, 2005

Mid-day Scoreboard

Indices
S&P 500 1,186.22 +.18%
DJIA 10,516.32 +.29%
NASDAQ 2,009.69 +.53%
Russell 2000 617.68 +.24%
DJ Wilshire 5000 11,694.81 +.20%
S&P Barra Growth 572.26 +.25%
S&P Barra Value 609.75 +.14%
Morgan Stanley Consumer 585.27 +.60%
Morgan Stanley Cyclical 748.61 +.38%
Morgan Stanley Technology 456.30 +.57%
Transports 3,699.19 -.38%
Utilities 363.98 +.46%
Put/Call .78 -20.41%
NYSE Arms .99 -14.21%
Volatility(VIX) 12.60 -4.18%
ISE Sentiment 144.00 -2.70%
US Dollar 84.77 +.12%
CRB 305.89 -.71%

Futures Spot Prices
Crude Oil 54.25 -2.86%
Unleaded Gasoline 156.25 -5.83%
Natural Gas 7.36 -2.62%
Heating Oil 152.50 -3.95%
Gold 428.10 -.26%
Base Metals 129.69 +.47%
Copper 150.40 -.30%
10-year US Treasury Yield 4.47% +1.10%

Leading Sectors
Gaming +1.87%
Broadcasting +1.24%
Semis +1.24%

Lagging Sectors
Restaurants -.94%
Energy -1.04%
Oil Service -1.53%

BOTTOM LINE: US stocks are higher mid-day on optimism over falling energy prices. The Portfolio is unchanged as gains in my Software and Internet longs are offsetting losses in my Retail longs and Base Metal shorts. I exited a few trading shorts and added a couple of longs this morning, thus leaving the Portfolio’s market exposure at 25% net long. One of my new longs is OSTK and I am using a $43 stop-loss on this position. The tone of the market is modestly positive as the advance/decline line is higher, most sectors are higher and volume is light. Consumer stocks and Tech are outperforming, while Energy-related shares are underperforming and measures of investor anxiety are mostly higher. Today’s overall market action is modestly positive, considering the decline in energy prices, the market’s oversold state and the rise in long-term interest rates. Wal-Mart’s lowered earnings outlook may actually prove to be a positive as consumers finally begin to retrench a bit, thus resulting in lower long-term interest rates. I expect US stocks to rise modestly into the close on optimism over falling energy prices and stabilizing long-term rates.

Today's Headlines

Bloomberg:
- Wal-Mart Stores said profit this quarter will be at the low end of it previous estimates of 56 cents to 58 cents a share.
- Computer Associates said it will acquire Concond Communications for $330 million.
- US motorists will spend an inflation-unadjusted record $2.28 a gallon on gas this summer because of surging crude oil costs and rising demand.
- Iraq’s new president Jalal Talabani and his deputies Adel Abdel Mahdi and Sheikh Ghazi al-Yawar swore oaths of allegiance as they took up their posts in the country’s first democratically elected government in more than 50 years.
- Pfizer agreed to suspend sales of its Bextra painkiller because of heart risks.
- US auto regulators today set new tire safety standards requiring that cars and light trucks be equipped with devices that warn motorists when tires are more than 25% under-inflated.
- Merck’s Vioxx painkiller probably won’t be sold in the US again.
- Crude oil is falling for a fourth day on speculation that US gas inventories will rise as refineries increase operating rates.

The Wall Street Journal:
- Saudi Arabia, worried that the recent rise in oil prices may depress global economic growth, is telling petroleum buyers that it will pump crude to the limit of its capacity.
- General Motors is encouraging employees to adopt healthier lifestyles to reduce spiraling medical insurance costs.
- The US Senate Appropriations Committee has approved $200 million in aid for Gaza and the West Bank without most of the restrictions set by the House.
- The US Secret Service found an increase in large criminal groups that steal financial data from individuals and trade or sell it on underground Web sites.
- Patent applications filed with the World Intellectual Property Organization by Chinese firms have increased by 38% to 1,782 in 2004.
- The FASB may tighten rules governing the way companies account for their transactions with insurance companies.

NY Times:
- As much as 93% of silicone breast implants ruptured within 10 years, citing health regulators.
- The FBI has detained two immigrant girls from NYC since March 24 on suspicion that the teenagers were planning to be suicide bombers.

Washington Post:
- Howard Dean’s failed US presidential campaign left a cadre of liberal political activists who want the Democratic Party to move left as it rebounds from Senator John F. Kerry’s defeat in 2004.

Tex Report:
- Japan’s iron ore imports from BHP Billiton have halved since March as steelmakers have refused to pay a levy on top of the 71.5% increase won by the world’s biggest mining company on iron ore price.

Ma’ ariv:
- Impax Labs, a US generic drugmaker, may be bought for as much as $1.5 billion to bidders that may include Teva Pharmaceutical Industries, the world’s biggest maker of generic drugs.

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

Economic Releases

- Initial Jobless Claims fell to 334K versus estimates of 330K and 353K the prior week.
- Continuing Claims rose to 2688K versus estimates of 2625K and 2598K prior.
- Wholesale Inventories for February rose .6% versus estimates of a .7% increase and a 1.0% increase in January.

Morning Buy/Sell Recommendations

Goldman Sachs:
- Reiterated Outperform on GE, YUM and FRNT.

Smith Barney:
- Cut GM to Sell, target $24.
- Reiterated Buy on HAL, target $56.
- Reiterated Buy on CMS, target $14.25
- Reiterated Buy on AA, target $42.

Morgan Stanley:
- Raised PRE to Overweight, target $72.
- Cut CB to Underweight.

Lehman Brothers:
- Upgraded BLS to Overweight, target $32.

Banc of America:
- Raised CPV to Buy, target $26.
- Reiterated Sell on FRX, target $37.

CIBC:
- Reiterated Sector Outperform on FVRL, target $9.
- Reiterated Sector Outperform on AEOS, target $36.

Bear Stearns:
- Rated PRSP Outperform, target $30.
- Rated FFIN Underperform.
- Rated SBIB Underperform.
- Rated TCBI Outperform, target $25.
- Reiterated Outperform on BBBY, target $46.

CSFB:
- Rated HXL Outperform, target $18.
- Raised BJS to Outperform, target $56.

Piper Jaffray:
- Raised EMBT to Outperform.

Deutsche Securities:
- Reiterated Buy on PFE, target $34.
- Reiterated Sell on SHOP, target $15.

UBS:
- Rated NUCO Reduce, target $22.

Thursday Watch

Late-Night Headlines
Bloomberg:
- Democratic Senators Patty Murray and Hillary Clinton said they would block confirmation of Lester Crawford as FDA chief because of delays in approving over-the-counter sales of Barr Pharmaceuticals' Plan B contraceptive.
- The NBA signed a multiyear marketing and content supply agreement with China Mobile Communications, which owns the world's largest mobile phone operator by subscribers, extending the league's reach in the most populous nation.

Wall Street Journal:
- General Motors is pressuring its suppliers in the US to lower prices so they are more in line with auto-parts markers outside the US.

Washington Post:
- The US military has accelerated the hand-off of counterinsurgency operations to Iraqi security forces since the country's Jan. 30 elections at a much faster pace than previously acknowledged.

Legal Week:
- The 50 largest American law firms had 12.3% profit growth in 2004 on $33 billion in fees.

Commercial Times:
- Taiwan's five flat-panel display makers lifted output by a combined 22% to 7 million units in March from the previous month.

Xinhua News Agency:
- China's 39 major passenger car assemblers' sales fell 8% in the first quarter from a year earlier.

Financial Times:
- Advertisers will come to rely more on mobile telephones, laptops and other wireless communications to reach customers as technology now allows viewers to increasingly avoid commercials on television.

Chinese-language Financial News:
- Bank of China, the nation's second-biggest lender, said it's in talks with Bank of America and other lenders on the sale of a stake in itself as a prelude to going public.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on IBM, DELL, KRB and BBBY.

Night Trading
Asian Indices are -.25% to +.50% on average.
S&P 500 indicated -.03%.
NASDAQ 100 indicated -.03%.

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
ACN/.32
STZ/.58
KKD/-.03
PIR/.26
VIP/.67
UTIW/.51

Splits
None of note

Economic Releases
8:30 EST:
- Initial Jobless Claims for last week are estimated to fall to 330K versus 350K the prior week.
- Continuing Claims are estimated to rise to 2625K versus 2608K prior.

10:00 EST:
- Wholesale Inventories for February are estimated to rise .7% versus a 1.0% increase in January.

3:00 EST:
- Consumer Credit for February is estimated to rise to $11.5B versus $7.5B in January.

BOTTOM LINE: Asian indices are mostly higher, led by a bounce in Chinese shares. The Chinese central bank said it will allow three commercial lenders to set up fund management units, boosting optimism capital will flow into stocks. I expect US equities to open mixed on earnings reports, stubbornly high energy prices and lower long-term interest rates. The Portfolio is Market Neutral heading into tomorrow.