Indices
S&P 500 1,196.06 -.13%
DJIA 10,460.97 -.73%
NASDAQ 2,071.43 unch.
Russell 2000 620.30 +.91%
DJ Wilshire 5000 11,833.39 +.17%
S&P Equity Long/Short Index 1,011.89 +.71%
S&P Barra Growth 577.39 -.38%
S&P Barra Value 614.19 +.11%
Morgan Stanley Consumer 583.64 -.95%
Morgan Stanley Cyclical 721.97 -.40%
Morgan Stanley Technology 482.75 +.08%
Transports 3,629.10 -.20%
Utilities 369.14 +1.60%
S&P 500 Cum A/D Line 7,538 +3.52%
Bloomberg Crude Oil % Bulls 44.0% -23.0%
Put/Call .99 +22.22%
NYSE Arms 1.50 +130.77%
Volatility(VIX) 12.15 -.74%
ISE Sentiment 170.00 -.58%
AAII % Bulls 48.61 +10.13%
US Dollar 88.04 +1.37%
CRB 306.70 +2.20%
Futures Spot Prices
Crude Oil 55.03 +8.11%
Unleaded Gasoline 155.71 +7.31%
Natural Gas 6.88 +10.52%
Heating Oil 159.95 +10.77%
Gold 424.50 +.43%
Base Metals 127.00 +4.06%
Copper 155.75 +7.75%
10-year US Treasury Yield 3.98% -2.41%
Average 30-year Mortgage Rate 5.62% -.53%
Leading Sectors
Gold & Silver +5.75%
Airlines +4.75%
Oil Service +3.03%
Lagging Sectors
Drugs -1.74%
Biotech -2.23%
Computer Hardware -2.40%
*5-Day % Change
Friday, June 03, 2005
Stocks Lower Mid-day on Growth Concerns
Indices
S&P 500 1,197.36 -.58%
DJIA 10,475.24 -.77%
NASDAQ 2,075.98 -1.04%
Russell 2000 621.42 -.61%
DJ Wilshire 5000 11,843.40 -.56%
S&P Barra Growth 578.10 -.76%
S&P Barra Value 614.23 -.48%
Morgan Stanley Consumer 583.95 -.79%
Morgan Stanley Cyclical 723.95 -.54%
Morgan Stanley Technology 483.30 -1.03%
Transports 3,624.61 -.69%
Utilities 368.05 -.10%
Put/Call 1.02 +7.37%
NYSE Arms 1.46 +27.75%
Volatility(VIX) 12.31 +3.97%
ISE Sentiment 166.00 -4.60%
US Dollar 88.05 +.34%
CRB 306.37 +.73%
Futures Spot Prices
Crude Oil 54.50 +1.62%
Unleaded Gasoline 154.30 +1.82%
Natural Gas 6.85 +.53%
Heating Oil 158.50 +2.78%
Gold 425.60 +.21%
Base Metals 127.00 +3.02%
Copper 155.80 +2.74%
10-year US Treasury Yield 3.96% +1.65%
Leading Sectors
Gold & Silver +1.37%
HMOs +1.10%
Oil Tankers +.93%
Lagging Sectors
Software -1.35%
Biotech -1.68%
Computer Hardware -1.69%
S&P 500 1,197.36 -.58%
DJIA 10,475.24 -.77%
NASDAQ 2,075.98 -1.04%
Russell 2000 621.42 -.61%
DJ Wilshire 5000 11,843.40 -.56%
S&P Barra Growth 578.10 -.76%
S&P Barra Value 614.23 -.48%
Morgan Stanley Consumer 583.95 -.79%
Morgan Stanley Cyclical 723.95 -.54%
Morgan Stanley Technology 483.30 -1.03%
Transports 3,624.61 -.69%
Utilities 368.05 -.10%
Put/Call 1.02 +7.37%
NYSE Arms 1.46 +27.75%
Volatility(VIX) 12.31 +3.97%
ISE Sentiment 166.00 -4.60%
US Dollar 88.05 +.34%
CRB 306.37 +.73%
Futures Spot Prices
Crude Oil 54.50 +1.62%
Unleaded Gasoline 154.30 +1.82%
Natural Gas 6.85 +.53%
Heating Oil 158.50 +2.78%
Gold 425.60 +.21%
Base Metals 127.00 +3.02%
Copper 155.80 +2.74%
10-year US Treasury Yield 3.96% +1.65%
Leading Sectors
Gold & Silver +1.37%
HMOs +1.10%
Oil Tankers +.93%
Lagging Sectors
Software -1.35%
Biotech -1.68%
Computer Hardware -1.69%
BOTTOM LINE: The Portfolio is lower mid-day on losses in my Internet and Homebuilding longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is negative as the advance/decline line is lower, most sectors are lower and volume is about average. Measures of investor anxiety are higher. Today’s overall market action is slightly negative, given recent gains and disappointing economic data. While treasuries are overbought near-term, I think a continuation of the recent rally is likely over the intermediate-term. I see further U.S. dollar gains, a flight of capital into the U.S., improving U.S. budget/trade deficits, slowing global growth and decelerating inflation readings as the catalysts. I expect US stocks to trade modestly higher into the close on short-covering and subsiding Fed worries.
Today's Headlines
Bloomberg:
- Honda Motor, the no. 5 automaker in the US, said it will increase production of sport-utility vehicles and minivans at its factory in Lincoln, Alabama this year to meet rising demand.
- The EU will urge OPEC next week to boost production to prevent oil prices from doing more harm to Europe’s economy, said the EU’s top energy official.
- SAC Capital Advisers, the $6 billion hedge fund company run by Steven Cohen, may let investors put money in its funds for the first time since the firm opened in 1992.
- L-3 Communications plans to buy Titan for about $2.65 billion in cash and debt to increase sales of secure computer networks to US military and intelligence agencies.
- US 10-year Treasuries fell the most in seven days as some traders and investors said a rally that pushed yields to their lowest in more than a year was excessive.
- Crude oil is rising, heading for a second straight weekly gain, on speculation that refiners will struggle to meet growing demand for gasoline and diesel.
- The euro headed for its biggest weekly drop against the dollar since January after French and Dutch voters rejected the EU constitution.
Wall Street Journal:
- John Mack, former co-chief executive of CSFB, will join Pequot Capital Management as the hedge fund’s chairman.
- The US administration is giving a new priority to relations with China as a result of that country’s growing power and influence and potential to become a global rival.
- Time Warne Book Group and other US publishers are finding themselves stuck with an increasing amount of books stores can’t sell.
- Alcoa said its contract talks with the United Steelworkers of America will go before an arbitrator at the end of July.
- WildBlue Communications plans this week to become the first company to offer mass market Internet service via satellite.
NY Times:
- Time Warner’s AOL unit will introduce a free Internet portal at its AOL.com Web site to attract new customers and keep subscribers.
Washington Post:
- President Bush is poised to send dozens of new judicial nominations to the Senate in the next few weeks.
LA Times:
- California lawmakers yesterday passed two bills that would require weapons makers to stamp bullets sold in the state with an identification number or stamp one on when a weapon is fired.
Orange County Register:
- Bill Gross, the chief investment officer for PIMCO, said Chris Cox is the “perfect” choice to become the next chairman of the SEC.
Reuters:
- Italy should consider abandoning the euro and going back to the lira, citing Italian Labor Minister Roberto Maroni.
Financial Times:
- Agco is in talks with First Tractor to make Massey Ferguson tractors in China for the first time.
Aftenposten:
- Norwegian support for joining the European Union slumped after French and Dutch voters rejected the EU’s constitution in referendums in the past week.
Hurriyet:
- Turkey’s chances of becoming a European Union member have been reduced by French and Dutch rejections of the union’s constitution.
Sun:
- Two-thirds of all UK residents think there should be a referendum in the country on the EU constitution, yet only 22% are in favor of it.
Boersen:
- Danes will reject the proposed EU constitution in a September 27 referendum, following France and the Netherlands, citing Greens Analysis Institute poll.
Le Monde:
- Total SA, Europe’s largest oil refiner, was implicated in an investigation into Iraq’s oil-for-food program.
- Honda Motor, the no. 5 automaker in the US, said it will increase production of sport-utility vehicles and minivans at its factory in Lincoln, Alabama this year to meet rising demand.
- The EU will urge OPEC next week to boost production to prevent oil prices from doing more harm to Europe’s economy, said the EU’s top energy official.
- SAC Capital Advisers, the $6 billion hedge fund company run by Steven Cohen, may let investors put money in its funds for the first time since the firm opened in 1992.
- L-3 Communications plans to buy Titan for about $2.65 billion in cash and debt to increase sales of secure computer networks to US military and intelligence agencies.
- US 10-year Treasuries fell the most in seven days as some traders and investors said a rally that pushed yields to their lowest in more than a year was excessive.
- Crude oil is rising, heading for a second straight weekly gain, on speculation that refiners will struggle to meet growing demand for gasoline and diesel.
- The euro headed for its biggest weekly drop against the dollar since January after French and Dutch voters rejected the EU constitution.
Wall Street Journal:
- John Mack, former co-chief executive of CSFB, will join Pequot Capital Management as the hedge fund’s chairman.
- The US administration is giving a new priority to relations with China as a result of that country’s growing power and influence and potential to become a global rival.
- Time Warne Book Group and other US publishers are finding themselves stuck with an increasing amount of books stores can’t sell.
- Alcoa said its contract talks with the United Steelworkers of America will go before an arbitrator at the end of July.
- WildBlue Communications plans this week to become the first company to offer mass market Internet service via satellite.
NY Times:
- Time Warner’s AOL unit will introduce a free Internet portal at its AOL.com Web site to attract new customers and keep subscribers.
Washington Post:
- President Bush is poised to send dozens of new judicial nominations to the Senate in the next few weeks.
LA Times:
- California lawmakers yesterday passed two bills that would require weapons makers to stamp bullets sold in the state with an identification number or stamp one on when a weapon is fired.
Orange County Register:
- Bill Gross, the chief investment officer for PIMCO, said Chris Cox is the “perfect” choice to become the next chairman of the SEC.
Reuters:
- Italy should consider abandoning the euro and going back to the lira, citing Italian Labor Minister Roberto Maroni.
Financial Times:
- Agco is in talks with First Tractor to make Massey Ferguson tractors in China for the first time.
Aftenposten:
- Norwegian support for joining the European Union slumped after French and Dutch voters rejected the EU’s constitution in referendums in the past week.
Hurriyet:
- Turkey’s chances of becoming a European Union member have been reduced by French and Dutch rejections of the union’s constitution.
Sun:
- Two-thirds of all UK residents think there should be a referendum in the country on the EU constitution, yet only 22% are in favor of it.
Boersen:
- Danes will reject the proposed EU constitution in a September 27 referendum, following France and the Netherlands, citing Greens Analysis Institute poll.
Le Monde:
- Total SA, Europe’s largest oil refiner, was implicated in an investigation into Iraq’s oil-for-food program.
Unemployment Falls, ISM Non-manufacturing Still Healthy
- The Unemployment Rate fell to 5.1% in May versus estimates of a 5.2% rate and a 5.2% rate in April.
- Average Hourly Earnings for May rose .2% versus estimates of a .2% increase and a .3% gain in April.
- The Change in Non-farm payrolls for May was 78K versus estimates of 175K and 274K in April.
- The Change in Manufacturing payrolls for May was -7K versus estimates of -5K and -9K in April.
- The ISM Non-manufacturing Index for May fell to 58.5 versus estimates of 60.0 and a reading of 61.7 in April.
- Average Hourly Earnings for May rose .2% versus estimates of a .2% increase and a .3% gain in April.
- The Change in Non-farm payrolls for May was 78K versus estimates of 175K and 274K in April.
- The Change in Manufacturing payrolls for May was -7K versus estimates of -5K and -9K in April.
- The ISM Non-manufacturing Index for May fell to 58.5 versus estimates of 60.0 and a reading of 61.7 in April.
BOTTOM LINE: US employers added 78,000 workers to their payrolls last month, the fewest since August 2003. The unemployment rate unexpectedly fell to 5.1% from 5.2% in April and is now the lowest since September 2001. There were job gains in education and health services, while losses were mainly in the information services, real estate and leisure/hospitality industries. This report should quell fears of an increase in unit labor costs and strengthen the view that the Fed has one more tightening before a “pause.”
The ISM Non-manufacturing Index fell to a two-year low in May, but is still at relatively high levels. The index of new orders for non-manufacturing companies rose to 59.7 from 58.8. The index of order backlogs rose to 56.5 from 54.0. Export orders increased to 62.0 from 52.5. The gauge of prices paid declined to 57.9 from 61.9. This is the lowest level for prices paid since August 2003 and is down 22% since October 2004. This is the third inflation measure in the last week that showed a substantial deceleration.
Friday Watch
Late-Night Headlines
Bloomberg:
- Crude oil stockpiles have risen 14 of the last 16 weeks and are now 8.4% above the five-year average.
- All Nippon Airways, Asia's second-largest airline by sales, said it may use Boeing's 777-300ER aircraft to replace 53 of its largest airplanes, passing over the A380 model made by Airbus SAS.
- Wal-Mart shareholders, who have seen their shares post their biggest yearly decline in 11 years during the past twelve months, may press CEO Scott to make management changes at the company's annual meeting today.
- Google may follow the precedent of Berkshire Hathaway's chairman, Warren Buffett, and avoid splitting its shares even though the stock price is among the 10 highest in US markets.
Wall Street Journal:
- Sony's incoming CEO Howard Stringer will probably extend efforts to streamline the company's management as he seeks to revive the company.
NY Times:
- Nike has ended its endorsement agreement with NY Yankees first baseman Jason Giambi, whose name has been linked to steroid use.
China Daily:
- China may veto a proposed resolution to expand the UN Security Council and give permanent seats to Japan, Germany, India and Brazil.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on MFE.
Business Week:
- American Science and Engineering(ASEI), a maker of X-ray and imaging systems that detect explosives, illegal drugs and smuggled goods, may rise to $54 a share in a year as demand from the US and foreign governments rises.
- Peet's Coffee & Tea(PEET) shares may double in two years driven by earnings and sales growth, citing ThinkEquity Partners CEO Michael Moe.
- Alaska Airlines' parent may make a bid to buy America West Airlines(AWA), without disrupting the latter's plan to merge with US Airways.
Night Trading
Asian Indices are -.25% to +.50% on average.
S&P 500 indicated unch.
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)
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
None of note
Splits
None of note
Economic Releases
8:30 EST:
- The Unemployment Rate for May is estimated at 5.2% versus 5.2% in April.
- Average Hourly Earnings for May is estimated to rise .2% versus a .3% gain in April.
- The Change in Non-farm Payrolls for May is estimated at 175K versus 274K in April.
- The Change in Manufacturing Payrolls for May is estimated at -5K versus -6K in April.
- Average Weekly Hours for May is estimated to fall to 33.8 versus 33.9 in April.
10:00 EST:
- ISM Non-Manufacturing for May is estimated to fall to 60.0 versus 61.7 in April.
Bloomberg:
- Crude oil stockpiles have risen 14 of the last 16 weeks and are now 8.4% above the five-year average.
- All Nippon Airways, Asia's second-largest airline by sales, said it may use Boeing's 777-300ER aircraft to replace 53 of its largest airplanes, passing over the A380 model made by Airbus SAS.
- Wal-Mart shareholders, who have seen their shares post their biggest yearly decline in 11 years during the past twelve months, may press CEO Scott to make management changes at the company's annual meeting today.
- Google may follow the precedent of Berkshire Hathaway's chairman, Warren Buffett, and avoid splitting its shares even though the stock price is among the 10 highest in US markets.
Wall Street Journal:
- Sony's incoming CEO Howard Stringer will probably extend efforts to streamline the company's management as he seeks to revive the company.
NY Times:
- Nike has ended its endorsement agreement with NY Yankees first baseman Jason Giambi, whose name has been linked to steroid use.
China Daily:
- China may veto a proposed resolution to expand the UN Security Council and give permanent seats to Japan, Germany, India and Brazil.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on MFE.
Business Week:
- American Science and Engineering(ASEI), a maker of X-ray and imaging systems that detect explosives, illegal drugs and smuggled goods, may rise to $54 a share in a year as demand from the US and foreign governments rises.
- Peet's Coffee & Tea(PEET) shares may double in two years driven by earnings and sales growth, citing ThinkEquity Partners CEO Michael Moe.
- Alaska Airlines' parent may make a bid to buy America West Airlines(AWA), without disrupting the latter's plan to merge with US Airways.
Night Trading
Asian Indices are -.25% to +.50% on average.
S&P 500 indicated unch.
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)
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
None of note
Splits
None of note
Economic Releases
8:30 EST:
- The Unemployment Rate for May is estimated at 5.2% versus 5.2% in April.
- Average Hourly Earnings for May is estimated to rise .2% versus a .3% gain in April.
- The Change in Non-farm Payrolls for May is estimated at 175K versus 274K in April.
- The Change in Manufacturing Payrolls for May is estimated at -5K versus -6K in April.
- Average Weekly Hours for May is estimated to fall to 33.8 versus 33.9 in April.
10:00 EST:
- ISM Non-Manufacturing for May is estimated to fall to 60.0 versus 61.7 in April.
BOTTOM LINE: Asian indices are mostly higher, spurred by gains in technology shares in the region. I expect US equities to open mixed on slightly disappointing economic data. However, stocks may rise later in the day on lower energy prices and diminishing Fed worries. The Portfolio is 100% net long heading into the day.
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