Bloomberg:
- The European Commission said the economy of the euro region risks slowing more abruptly than forecast as the currency’s gains erode exports and record oil prices undermine investment and consumer spending.
- Adobe Systems agreed to buy Macromedia for about $3.4 billion to add Flash Web-design programs to its offerings.
- GE agreed to buy Bombardier’s inventory finance division for about $1.4 billion.
- Banc of America Securities’ Thomas McManus, who urged money managers to buy shares as the market bottomed in 2002, recommended for the first time in more than two years that investors increase their US stock holdings.
- The US dollar fell against the euro and yen on speculation slowing economic growth and low Treasury yields will curb returns on US assets.
Wall Street Journal:
- China auto stylists are developing distinctive designs to meet demands from local consumers for something that’s uniquely Chinese.
- The US and the UK are getting closer to an agreement to provide billions of dollars in debt relief for impoverished countries.
Automotive News:
- Ford Motor plans temporary shutdowns later this quarter at plants that produce mid-size and large sport-utility vehicles.
NY Times:
- Goldman Sachs, Merrill Lynch and Lehman Brothers are among investment banks that have contacted some of Morgan Stanley’s managing directors in an effort to hire them.
LA Times:
- Sony’s Sony Pictures Entertainment unit is building a digital library of its movies and television shows so filmmakers can use them more easily in DVDs, digital cable and Internet downloads.
Gulf News:
- United Arab Emirates Oil Minister Mohamed al-Hamli said there is no “urgency” for OPEC to boost oil-output quotas in May.
AFP:
- OPEC will increase output by 500,000 barrels a day in May to help meet growth in demand, citing the group’s president Sheikh Ahmad Fahd al-Sabah.
Monday, April 18, 2005
Morning Buy/Sell Recommendations
Please check the new Daily Action Table on the right side of this page.
Monday Watch
Weekend Headlines
Bloomberg:
- Wal-Mart Stores said April sales at US stores open at least a year are rising within its forecast range, led by general merchandise sales as shoppers bought less groceries.
- The Group of Seven industrial nations said "vigorous action" is required to protect the world economy from increased risks and sought to quell investors' mounting concern that growth is faltering.
- Extreme poverty in developing countries fell 25% since 1990 and may be further halved so long as economic growth rates in those countries maintain their pace.
- The US dollar is rising in Asia as regional stock markets slumped on signs of slower global growth, prompting some investors to buy Treasuries.
- Crude oil futures are falling for the fourth day in five on concern slowing global economic growth will reduce demand for fuels.
NY Times:
- Warner Music Group may be valued at $4 billion after an IPO next month.
- The US Dept. of Labor said it plans to increase the audits of national and local unions in an effort to spur enforcement and curb embezzlement of union funds.
- General Re, a re-insurer owned by Warren Buffett's Berkshire Hathaway, helped Reciprocal of America understate its liabilities, leading to its collapse two years ago.
Washington Post:
- Digital music players increasingly are being targeted by thieves in the Washington D.C. area where there is a ready market for the small and valuable devices.
Financial Times:
- Nasdaq Stock Market may announce tomorrow that it will buy Instinet Group fro $1.8 billion from Reuters Group.
AFP:
- China's government said today ties with Japan are the worst since the countries established diplomatic relations 33 years ago, and blamed the Japanese for the situation.
Economic Daily News:
- Taiwan's five flat-panel display makers may raise 17-inch screen prices as early as the end of April, following a move by Samsung Electronics to do so.
Asian Wall Street Journal:
- Silicon Valley's venture capital firm Doll Capital Management said it plans to tie up with Legend Capital in China to jointly invest in Chinese and US technology companies.
Il Sole/24 Ore:
- Merrill Lynch wants to expand retail banking operations in the US and Asia and is seeking to buy lenders in Japan and China.
Aleqtisadiah:
- Saudi Arabia is concerned that current crude prices may damage the economic health of its biggest customers in Asia, including China.
Middle East Economic Survey:
- Saudi Arabia plans to lift oil production from the Qatif and Abu Safah fields, which are now operating at partial capacity.
- Saudi Arabia is inviting companies to bid to manage the development of a $5 billion oilfield that will boost output of Arabian light oil by 1.2 million barrels a day by 2009.
Weekend Recommendations
Barron's:
- Had positive comments on SNA and negative comments on INTU.
Goldman Sachs:
- Reiterated Outperform on DNA, DKS and GE.
Night Trading
Asian indices are -3.0% to -1.25% on average.
S&P 500 indicated -.34%.
NASDAQ 100 indicated -.53%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell Video(bottom right)
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
CNBC Guest Schedule
Earnings of Note
Company/Estimate
MMM/1.01
BAC/.97
LLY/.66
HAS/.04
LNCR/.48
NVLS/.21
STI/1.32
TXN/.23
Splits
EASI 3-for-2
SPLS 3-for-2
Economic Releases
1:00 EST
- The NAHB Housing Market Index for April is estimates to fall to 68 versus a reading of 69 in March.
Bloomberg:
- Wal-Mart Stores said April sales at US stores open at least a year are rising within its forecast range, led by general merchandise sales as shoppers bought less groceries.
- The Group of Seven industrial nations said "vigorous action" is required to protect the world economy from increased risks and sought to quell investors' mounting concern that growth is faltering.
- Extreme poverty in developing countries fell 25% since 1990 and may be further halved so long as economic growth rates in those countries maintain their pace.
- The US dollar is rising in Asia as regional stock markets slumped on signs of slower global growth, prompting some investors to buy Treasuries.
- Crude oil futures are falling for the fourth day in five on concern slowing global economic growth will reduce demand for fuels.
NY Times:
- Warner Music Group may be valued at $4 billion after an IPO next month.
- The US Dept. of Labor said it plans to increase the audits of national and local unions in an effort to spur enforcement and curb embezzlement of union funds.
- General Re, a re-insurer owned by Warren Buffett's Berkshire Hathaway, helped Reciprocal of America understate its liabilities, leading to its collapse two years ago.
Washington Post:
- Digital music players increasingly are being targeted by thieves in the Washington D.C. area where there is a ready market for the small and valuable devices.
Financial Times:
- Nasdaq Stock Market may announce tomorrow that it will buy Instinet Group fro $1.8 billion from Reuters Group.
AFP:
- China's government said today ties with Japan are the worst since the countries established diplomatic relations 33 years ago, and blamed the Japanese for the situation.
Economic Daily News:
- Taiwan's five flat-panel display makers may raise 17-inch screen prices as early as the end of April, following a move by Samsung Electronics to do so.
Asian Wall Street Journal:
- Silicon Valley's venture capital firm Doll Capital Management said it plans to tie up with Legend Capital in China to jointly invest in Chinese and US technology companies.
Il Sole/24 Ore:
- Merrill Lynch wants to expand retail banking operations in the US and Asia and is seeking to buy lenders in Japan and China.
Aleqtisadiah:
- Saudi Arabia is concerned that current crude prices may damage the economic health of its biggest customers in Asia, including China.
Middle East Economic Survey:
- Saudi Arabia plans to lift oil production from the Qatif and Abu Safah fields, which are now operating at partial capacity.
- Saudi Arabia is inviting companies to bid to manage the development of a $5 billion oilfield that will boost output of Arabian light oil by 1.2 million barrels a day by 2009.
Weekend Recommendations
Barron's:
- Had positive comments on SNA and negative comments on INTU.
Goldman Sachs:
- Reiterated Outperform on DNA, DKS and GE.
Night Trading
Asian indices are -3.0% to -1.25% on average.
S&P 500 indicated -.34%.
NASDAQ 100 indicated -.53%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell Video(bottom right)
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
CNBC Guest Schedule
Earnings of Note
Company/Estimate
MMM/1.01
BAC/.97
LLY/.66
HAS/.04
LNCR/.48
NVLS/.21
STI/1.32
TXN/.23
Splits
EASI 3-for-2
SPLS 3-for-2
Economic Releases
1:00 EST
- The NAHB Housing Market Index for April is estimates to fall to 68 versus a reading of 69 in March.
BOTTOM LINE: Asian Indices are sharply lower as worries over slowing global growth mount. I expect US stocks to open lower in the morning on weakness in Asia. While I do not want to get too aggressive into panic selling, I have begun initiating small positions in favorite longs. I plan to add to these on any further weakness or if I sense a turn is finally at hand. The Portfolio is 25% net long heading into the week.
Sunday, April 17, 2005
Weekly Outlook
There are several important economic reports and a number of significant corporate earnings reports scheduled for release this week.
Economic reports for the week include:
Mon. - NAHB Housing Market Index
Tues. - Producer Price Index, Housing Starts, Building Permits
Wed. - Consumer Price Index, Fed's Beige Book
Thur. - Initial Jobless Claims, Leading Indicators, Philadelphia Fed.
Fri. - None of note
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - 3M Co.(MMM), Bank of America(BAC), Eli Lilly(LLY), Hasbro(HAS), Novellus Systems(NVLS), Texas Instruments(TXN)
Tues. - Boston Scientific(BSX), CDW Corp.(CDWC), Cendant(CD), Coca-Cola(KO), General Motors(GM), Intel Corp.(INTC), Johnson & Johnson(JNJ), Juniper Networks(JNPR), Merrill Lynch(MER), MGM Mirage(MGG), Pfizer Inc.(PFE), RadioShack(RSH), Seagate Technology(STX), Washington Mutual(WM), Yahoo! Inc.(YHOO)
Wed. - Altria Group(MO), Caterpillar Inc.(CAT), eBay Inc.(EBAY), General Dynamics(GD), Harrah's Entertainment(HET), JPMorgan Chase(JPM), Motorola(MOT), Qualcomm(QCOM)
Thur. - Amgen(AMGN), Broadcom(BRCM), Google Inc.(GOOG), HCA Inc.(HCA), McDonald's(MCD), Office Depot(ODP), Starbucks(SBUX), Valero Energy(VLO)
Fri. - Barrick Gold(ABX), Eastman Kodak(EK)
Other events that have market-moving potential this week include:
Mon. - AG Edwards Media & Entertainment Conference
Tue. - AG Edwards Media & Entertainment Conference, Goldman Sachs Small-Cap Consumer/Retail Conference, Semi Book-to-Bill, Fed's Fianalto speaks
Wed. - Goldman Sachs Small-Cap Consumer/Retail Conference
Thur. - Merrill Lynch Deathcare Conference, Fed's Pianalto speaks
Fri. - Fed's Kohn and Fed's Hoenig speaks
Economic reports for the week include:
Mon. - NAHB Housing Market Index
Tues. - Producer Price Index, Housing Starts, Building Permits
Wed. - Consumer Price Index, Fed's Beige Book
Thur. - Initial Jobless Claims, Leading Indicators, Philadelphia Fed.
Fri. - None of note
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - 3M Co.(MMM), Bank of America(BAC), Eli Lilly(LLY), Hasbro(HAS), Novellus Systems(NVLS), Texas Instruments(TXN)
Tues. - Boston Scientific(BSX), CDW Corp.(CDWC), Cendant(CD), Coca-Cola(KO), General Motors(GM), Intel Corp.(INTC), Johnson & Johnson(JNJ), Juniper Networks(JNPR), Merrill Lynch(MER), MGM Mirage(MGG), Pfizer Inc.(PFE), RadioShack(RSH), Seagate Technology(STX), Washington Mutual(WM), Yahoo! Inc.(YHOO)
Wed. - Altria Group(MO), Caterpillar Inc.(CAT), eBay Inc.(EBAY), General Dynamics(GD), Harrah's Entertainment(HET), JPMorgan Chase(JPM), Motorola(MOT), Qualcomm(QCOM)
Thur. - Amgen(AMGN), Broadcom(BRCM), Google Inc.(GOOG), HCA Inc.(HCA), McDonald's(MCD), Office Depot(ODP), Starbucks(SBUX), Valero Energy(VLO)
Fri. - Barrick Gold(ABX), Eastman Kodak(EK)
Other events that have market-moving potential this week include:
Mon. - AG Edwards Media & Entertainment Conference
Tue. - AG Edwards Media & Entertainment Conference, Goldman Sachs Small-Cap Consumer/Retail Conference, Semi Book-to-Bill, Fed's Fianalto speaks
Wed. - Goldman Sachs Small-Cap Consumer/Retail Conference
Thur. - Merrill Lynch Deathcare Conference, Fed's Pianalto speaks
Fri. - Fed's Kohn and Fed's Hoenig speaks
BOTTOM LINE: I expect US stocks to finish the week modestly higher on bargain hunting, short-covering and lower energy prices. I continue to believe US growth is slowing and may even temporarily fall to around 2% before accelerating to more healthy levels later in the year. However, in my opinion, investors are overreacting to this slowdown and pricing in an imminent recession. Sentiment has finally reached levels normally associated with meaningful market bottoms. I also continue to expect the second half to be much better for US stocks than the first half as inflation decelerates, commodities prices fall, long-term interest rates remain low, low valuations tempt investors, growth accelerates, the US dollar remains firm, employment continues to improve and merger activity continues. As I stated last week, it is my belief that longer-term investors should use any further weakness over the coming weeks to begin building positions in favorite longs. Homebuilder, Retail, Biotech, Airline, Financial, Internet and Gaming shares should outperform in the second half, given my outlook. My trading indicators are still bearish and the Portfolio is 25% net long heading into the week.
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