Indices
S&P 500 1,198.78 +.80%
DJIA 10,542.55 +.68%
NASDAQ 2,075.73 +1.43%
Russell 2000 616.90 +1.23%
DJ Wilshire 5000 11,833.81 +.90%
S&P Equity Long/Short Index 1,007.12 +.21%
S&P Barra Growth 579.91 +.79%
S&P Barra Value 614.37 +.80%
Morgan Stanley Consumer 588.64 -.39%
Morgan Stanley Cyclical 725.72 +.80%
Morgan Stanley Technology 481.39 +1.11%
Transports 3,623.13 +.06%
Utilities 365.03 +.04%
S&P 500 Cum A/D Line 7,282 +.46%
Bloomberg Crude Oil % Bulls 57.0 +162.19%
Put/Call .81 -18.18%
NYSE Arms 1.23 +6.96%
Volatility(VIX) 12.15 -7.53%
ISE Sentiment 171.00 +19.58%
AAII % Bulls 44.14 +13.41%
US Dollar 86.42 -.21%
CRB 300.89 +2.59%
Futures Spot Prices
Crude Oil 51.85 +6.47%
Unleaded Gasoline 147.53 +4.19%
Natural Gas 6.37 -.78%
Heating Oil 144.58 +5.61%
Gold 422.70 +.40%
Base Metals 122.04 +2.06%
Copper 144.35 +5.13%
10-year US Treasury Yield 4.07% -1.21%
Average 30-year Mortgage Rate 5.65% -1.05%
Leading Sectors
Gold & Silver +7.10%
Energy +5.78%
Oil Service +5.19%
Lagging Sectors
Banks -.58%
Gaming -.73%
I-Banks -1.50%
*5-Day % Change
Friday, May 27, 2005
Stocks Quietly Higher Mid-day Ahead of Memorial Weekend
Indices
S&P 500 1,198.16 +.05%
DJIA 10,540.28 +.03%
NASDAQ 2,074.45 +.16%
Russell 2000 616.67 +.32%
DJ Wilshire 5000 11,826.83 +.11%
S&P Barra Growth 579.72 +.03%
S&P Barra Value 613.99 +.07%
Morgan Stanley Consumer 589.08 -.03%
Morgan Stanley Cyclical 725.53 +.09%
Morgan Stanley Technology 481.36 -.21%
Transports 3,629.04 -.20%
Utilities 364.59 +.35%
Put/Call 1.0 +31.58%
NYSE Arms 1.20 +84.57%
Volatility(VIX) 12.27 +.25%
ISE Sentiment 159.00 -4.79%
US Dollar 86.45 -.46%
CRB 300.94 +.28%
Futures Spot Prices
Crude Oil 51.75 +1.45%
Unleaded Gasoline 147.45 +1.84%
Natural Gas 6.38 +2.70%
Heating Oil 145.10 +.19%
Gold 422.50 +.45%
Base Metals 122.04 -.11%
Copper 144.50 -.31%
10-year US Treasury Yield 4.07% -.14%
Leading Sectors
Gold & Silver +3.47%
Steel +1.15%
Energy +1.13%
Lagging Sectors
Homebuilders -.36%
Software -.47%
Semis -.91%
S&P 500 1,198.16 +.05%
DJIA 10,540.28 +.03%
NASDAQ 2,074.45 +.16%
Russell 2000 616.67 +.32%
DJ Wilshire 5000 11,826.83 +.11%
S&P Barra Growth 579.72 +.03%
S&P Barra Value 613.99 +.07%
Morgan Stanley Consumer 589.08 -.03%
Morgan Stanley Cyclical 725.53 +.09%
Morgan Stanley Technology 481.36 -.21%
Transports 3,629.04 -.20%
Utilities 364.59 +.35%
Put/Call 1.0 +31.58%
NYSE Arms 1.20 +84.57%
Volatility(VIX) 12.27 +.25%
ISE Sentiment 159.00 -4.79%
US Dollar 86.45 -.46%
CRB 300.94 +.28%
Futures Spot Prices
Crude Oil 51.75 +1.45%
Unleaded Gasoline 147.45 +1.84%
Natural Gas 6.38 +2.70%
Heating Oil 145.10 +.19%
Gold 422.50 +.45%
Base Metals 122.04 -.11%
Copper 144.50 -.31%
10-year US Treasury Yield 4.07% -.14%
Leading Sectors
Gold & Silver +3.47%
Steel +1.15%
Energy +1.13%
Lagging Sectors
Homebuilders -.36%
Software -.47%
Semis -.91%
BOTTOM LINE: The Portfolio is higher mid-day on gains in my Internet, Wireless and Networking longs. I added to a few longs this morning and added PD short, thus leaving the Portfolio 100% net long. I am using a $92.50 stop-loss on this position. The tone of the market is modestly positive as the advance/decline line is slightly higher, most sectors are rising and volume is very light. Measures of investor anxiety are lower. Today’s overall market action is positive, given last week’s gains, rising energy prices and more positive economic data. The major indices and breadth are rising after the report of King Fahd's hospitalization. As well, the put/call and arms reading are modestly elevated. This leads me to believe the path of least resistance is higher today. I expect US stocks to rise modestly into the close on short-covering and more optimism.
Today's Headlines
Bloomberg:
- Manufacturers’ confidence in France, Europe’s third-largest economy, unexpectedly dropped to a 19-month low in May amid concern about the worsening growth outlook.
- Seven European countries including France, Germany and Spain have signed a treaty today to improve cross-border cooperation to clamp down on terrorism, crime and illegal immigration.
- Crude oil is rising for a fifth day, heading for the biggest weekly gain in 5 weeks, as US refiners boost gasoline output before the summer holiday season.
Wall Street Journal:
- US buyout firm Ripplewood Holdings LLC took RHJ International public two months ago in a $178M IPO, and the results will help determine whether other private-equity firms tap the markets in a similar way.
- The US government is sending 15 F-117 stealth fighters to South Korea and drafting a plan of action should six-party nuclear talks with North Korea fail.
- Paul Smith Ltd., Warnaco Group, Berkshire Hathaway’s Fruit of the Loom unit and other companies are rushing to sign agreements in China to buy clothing before the US and other countries apply quotas.
- Taiwan-based Via Technologies is introducing computer chips that may challenge Intel in the mobile computer market.
- General Motors and Ford Motor officially lose their investment-grade status on June 1 and $85 billion of their debt will land in the junk-bond market.
NY Times:
- US movie box-office receipts have fallen for 13 straight weekends from a year earlier as DVDs, the Internet and advances in home entertainment systems keep consumers home.
- US prosecutors charged four Tennessee state lawmakers with extorting money from a company created by the FBI to entrap the legislators.
- The US Homeland Security’s Customs and Border unit will attempt to boost port security by forcing importers to verify improvements and ensure that more high-risk containers are inspected.
- The risks associated with weight reduction, or bariatric, surgery have led to many physicians to stop offering the procedures to avoid higher malpractice premiums and lawsuits.
AFP:
- North Korea may face a famine on the scale of the country’s crisis in the mid 1990s, when millions died of hunger, citing a speech in Seoul by World Food Programme Asia Director Tony Banbury.
Reuters:
- China is maintaining US dollar holdings in the country’s foreign-currency reserves.
- Manufacturers’ confidence in France, Europe’s third-largest economy, unexpectedly dropped to a 19-month low in May amid concern about the worsening growth outlook.
- Seven European countries including France, Germany and Spain have signed a treaty today to improve cross-border cooperation to clamp down on terrorism, crime and illegal immigration.
- Crude oil is rising for a fifth day, heading for the biggest weekly gain in 5 weeks, as US refiners boost gasoline output before the summer holiday season.
Wall Street Journal:
- US buyout firm Ripplewood Holdings LLC took RHJ International public two months ago in a $178M IPO, and the results will help determine whether other private-equity firms tap the markets in a similar way.
- The US government is sending 15 F-117 stealth fighters to South Korea and drafting a plan of action should six-party nuclear talks with North Korea fail.
- Paul Smith Ltd., Warnaco Group, Berkshire Hathaway’s Fruit of the Loom unit and other companies are rushing to sign agreements in China to buy clothing before the US and other countries apply quotas.
- Taiwan-based Via Technologies is introducing computer chips that may challenge Intel in the mobile computer market.
- General Motors and Ford Motor officially lose their investment-grade status on June 1 and $85 billion of their debt will land in the junk-bond market.
NY Times:
- US movie box-office receipts have fallen for 13 straight weekends from a year earlier as DVDs, the Internet and advances in home entertainment systems keep consumers home.
- US prosecutors charged four Tennessee state lawmakers with extorting money from a company created by the FBI to entrap the legislators.
- The US Homeland Security’s Customs and Border unit will attempt to boost port security by forcing importers to verify improvements and ensure that more high-risk containers are inspected.
- The risks associated with weight reduction, or bariatric, surgery have led to many physicians to stop offering the procedures to avoid higher malpractice premiums and lawsuits.
AFP:
- North Korea may face a famine on the scale of the country’s crisis in the mid 1990s, when millions died of hunger, citing a speech in Seoul by World Food Programme Asia Director Tony Banbury.
Reuters:
- China is maintaining US dollar holdings in the country’s foreign-currency reserves.
Incomes Rising, Inflation Decelerating, Confidence Stable
- Personal Income for April rose .7% versus estimates of a .7% increase and a .5% gain in March.
- Personal Spending for April rose .6% versus estimates of a .8% increase and an upwardly revised .9% gain in March.
- PCE Deflator(YoY) for April rose 2.7% versus a 2.4% increase in March.
- PCE Core(YoY) for April rose 1.6% versus a 1.7% gain in March.
- Final Univ. of Mich. Consumer Confidence for May rose to 86.9 versus estimates of 86.0 and a prior estimate of 85.3.
- Personal Spending for April rose .6% versus estimates of a .8% increase and an upwardly revised .9% gain in March.
- PCE Deflator(YoY) for April rose 2.7% versus a 2.4% increase in March.
- PCE Core(YoY) for April rose 1.6% versus a 1.7% gain in March.
- Final Univ. of Mich. Consumer Confidence for May rose to 86.9 versus estimates of 86.0 and a prior estimate of 85.3.
BOTTOM LINE: US personal spending rose for a third consecutive month, spurred by rising incomes as hiring accelerated. The PCE Core, the Fed’s favorite inflation gauge, rose 1.6%. This is well within their stated optimal range of 1.5-1.8%. Incomes were up 7.0% last month from April 2004, well above the inflation rate.
High gas prices and the incessant talk of a “housing bubble” continue to weigh on sentiment. However, the consumer continues to exhibit confidence by their actions. Record high home sales and better-than-expected retail sales illustrate this. As well, the current conditions index, which reflects whether it’s a good time to buy big-ticket items, actually rose to 104.9 in May from 104.4 in April. Finally, the average price of self-serve gas is falling. The average is now $2.17/gallon versus $2.32 in April. Rising stock prices should also help the next report.
Friday Watch
Late-Night Headlines
Bloomberg:
- China is preparing to complain to the WTO that the European Union and the US are abusing trade protection measures by imposing caps on the nation's textile exports.
- The euro headed for a fifth losing week, the longest such streak since August 2000, on expectations a French referendum will reject the European Union constitution and delay regional integration.
- US Senate Democrats dealt at least a temporary setback to President Bush's bid to install John Bolton as ambassador to the UN by blocking a Republican effort to hold a final vote on Bolton's nomination.
Wall Street Journal:
- Caremark Rx is near an agreement to pay $100 million in a settlement with the US Justice Department involving patients' pharmacy benefits.
Business Week:
- Google's plan to scan in the complete texts of millions of books so they can be searched electronically is a violation of copyright laws, citing unidentified publishers and attorneys.
- China's Chery Automobile and Honda Motor are both betting that China's auto industry is shifting into becoming an export base for the rest of the world from serving only the local market.
NY Times:
- US schools are putting more effort into educating minority students after the No Child Left Behind law gave greater attention to the statistical gap between their performance and that of white students and required annual improvement.
Financial Times:
- Hedge funds and banks have lost about $1 billion because of credit-derivative price swings in the past three weeks, citing Goldman Sachs.
AFP:
- Senators Joe Lieberman and Lamar Alexander co-sponsored a bill that would provide $1.3 billion in five years for Chinese language instruction in US schools.
Asian Wall Street Journal:
- Merrill Lynch will invest $300 million for a venture with Pequot Capital Management, a US hedge fund.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on AIG, EBAY, YHOO and GOOG.
Business Week:
- Shares of Snap-On(SNA), the world's biggest maker of hand tools, storage units and diagnostic equipment for mechanics, may rise more than 30% as costs will fall under new CEO Jack Michaels.
- Shares of News Corp.(NWS) may rise as much as 50% within the next year as earnings from satellite unit Sky Italia and partially owned units DirectTV Group and British Sky Broadcasting will increase.
Night Trading
Asian Indices are to +% on average.
S&P 500 indicated +%.
NASDAQ 100 indicated -%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
CYBX/-.32
QSII/.32
VIP/.77
Splits
None of note
Economic Releases
8:30 EST
- Personal Income for April is estimated to rise .7% versus a .5% gain in March.
- Personal Spending for April is estimated to rise .8% versus a .6% increase in March.
9:45 EST
- Final Univ. of Mich. Consumer Confidence for May is estimated to rise to 86.0 versus a prior estimate of 85.3.
Bloomberg:
- China is preparing to complain to the WTO that the European Union and the US are abusing trade protection measures by imposing caps on the nation's textile exports.
- The euro headed for a fifth losing week, the longest such streak since August 2000, on expectations a French referendum will reject the European Union constitution and delay regional integration.
- US Senate Democrats dealt at least a temporary setback to President Bush's bid to install John Bolton as ambassador to the UN by blocking a Republican effort to hold a final vote on Bolton's nomination.
Wall Street Journal:
- Caremark Rx is near an agreement to pay $100 million in a settlement with the US Justice Department involving patients' pharmacy benefits.
Business Week:
- Google's plan to scan in the complete texts of millions of books so they can be searched electronically is a violation of copyright laws, citing unidentified publishers and attorneys.
- China's Chery Automobile and Honda Motor are both betting that China's auto industry is shifting into becoming an export base for the rest of the world from serving only the local market.
NY Times:
- US schools are putting more effort into educating minority students after the No Child Left Behind law gave greater attention to the statistical gap between their performance and that of white students and required annual improvement.
Financial Times:
- Hedge funds and banks have lost about $1 billion because of credit-derivative price swings in the past three weeks, citing Goldman Sachs.
AFP:
- Senators Joe Lieberman and Lamar Alexander co-sponsored a bill that would provide $1.3 billion in five years for Chinese language instruction in US schools.
Asian Wall Street Journal:
- Merrill Lynch will invest $300 million for a venture with Pequot Capital Management, a US hedge fund.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on AIG, EBAY, YHOO and GOOG.
Business Week:
- Shares of Snap-On(SNA), the world's biggest maker of hand tools, storage units and diagnostic equipment for mechanics, may rise more than 30% as costs will fall under new CEO Jack Michaels.
- Shares of News Corp.(NWS) may rise as much as 50% within the next year as earnings from satellite unit Sky Italia and partially owned units DirectTV Group and British Sky Broadcasting will increase.
Night Trading
Asian Indices are to +% on average.
S&P 500 indicated +%.
NASDAQ 100 indicated -%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
CYBX/-.32
QSII/.32
VIP/.77
Splits
None of note
Economic Releases
8:30 EST
- Personal Income for April is estimated to rise .7% versus a .5% gain in March.
- Personal Spending for April is estimated to rise .8% versus a .6% increase in March.
9:45 EST
- Final Univ. of Mich. Consumer Confidence for May is estimated to rise to 86.0 versus a prior estimate of 85.3.
BOTTOM LINE: Asian indices are higher on gains in exporting shares in the region. I expect US equities to open modestly higher on strong personal income/spending data, a better-than-expected revision to consumer sentiment and short-covering. The Portfolio is 100% net long heading into the day.
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