Bloomberg:
- Royal Philips Electronics NV, Europe’s biggest maker of consumer electronics, said “lighter demand” in consumer markets in Europe this quarter is hurting the company’s plans for growth.
- A pause in ratifying the European Union constitution would be “sensible” after the French and Dutch rejections of the treaty, UK Prime Minister Tony Blair said.
- Research In Motion Co-Chief Executive Officer Balsillie said he has back-up technology to keep US BlackBerry devices running should a three-month-old patent settlement with NTP fall apart.
- The US dollar is falling against the euro for the first day in six after a government report showed inflation was declining and hedge funds sold Treasury positions.
- Crude oil is rising to the highest in more than two months after the Energy Dept. reported a larger-than-expected decline in US inventories.
Wall Street Journal:
- A US federal judge in NY ruled that Rocker Partners LP, a hedge fund, can sue former executives and others connected with Lernout & Hauspie Speech Products NV, a Belgian maker of speech-recognition software that collapsed five years ago.
- The US government is seeking to strengthen legislation regulating US mortgage companies, Fannie Mae and Freddie Mac, that it sees as too lenient.
- The US utility industry may see a rash of mergers if congress repeals a 70-year-old law that bars oil companies, banks and other outsiders from owning the energy-producing companies.
- OPEC agreed to raise oil output quotas by 500,000 barrels a day and will make a similar increase again later if needed.
NY Times:
- China’s government may set up a $15 billion fund to bolster the nation’s ailing stock market.
- US officials are pressing companies to offer a generous range of prescription choices as the insurers prepare policies for the new Medicare drug program.
Bond Buyer:
- New provisions in the pending Senate energy bill would allow the issuance of as much as $2 billion in tax-credit bonds to finance renewable-energy and clean-coal generation projects.
LA Times:
- Los Angeles County’s board of supervisors has voted to allow the sale of syringes to illegal drug addicts without a prescription in an effort to reduce the spread of HIV and AIDS.
Globe and Mail:
- China has 1,000 spies in Canada, more than in any other country, citing an interview with a defector.
Wednesday, June 15, 2005
Inflation Decelerating, Manufacturing Stabilizing, Oil Inventories Down
- The Consumer Price Index for May fell .1% versus estimates of unchanged and a .5% increase in April.
- The CPI Ex Food & Energy for May rose .1% versus estimates of a .2% increase and unchanged in April.
- Business Inventories for April rose .3% versus estimates of a .4% increase and a .5% gain in March.
- Empire Manufacturing for June rose to 11.7 versus estimates of 1.0 and a reading of -11.1 in May.
- Net Foreign Security Purchases for April fell to $47.4B versus estimates of $70.0B and $40.6B in March.
- Industrial Production for May rose .4% versus estimates of a .2% increase and a .3% decline in April.
- Capacity Utilization for May rose to 79.4% versus estimates of 79.3% and 79.1% in April.
- Summary of Weekly Petroleum Data for the Week Ending June 10, 2005.
- The EIA reported crude inventories fell 1.78M barrels versus estimates of a 1.0M barrel decline. Gasoline inventories fell 950K barrels versus estimates of a rise of 675K barrels. Distillate inventories rose 2.43M barrels versus estimates of a gain of 1.5M barrels.
- The CPI Ex Food & Energy for May rose .1% versus estimates of a .2% increase and unchanged in April.
- Business Inventories for April rose .3% versus estimates of a .4% increase and a .5% gain in March.
- Empire Manufacturing for June rose to 11.7 versus estimates of 1.0 and a reading of -11.1 in May.
- Net Foreign Security Purchases for April fell to $47.4B versus estimates of $70.0B and $40.6B in March.
- Industrial Production for May rose .4% versus estimates of a .2% increase and a .3% decline in April.
- Capacity Utilization for May rose to 79.4% versus estimates of 79.3% and 79.1% in April.
- Summary of Weekly Petroleum Data for the Week Ending June 10, 2005.
- The EIA reported crude inventories fell 1.78M barrels versus estimates of a 1.0M barrel decline. Gasoline inventories fell 950K barrels versus estimates of a rise of 675K barrels. Distillate inventories rose 2.43M barrels versus estimates of a gain of 1.5M barrels.
BOTTOM LINE: Cheaper energy costs unexpectedly drove down consumer prices last month, the first decline since July 2004. This should further quell inflation fears. Consumer prices were up 2.8% for the 12 months ended in May, below the 40-year average of 3.0%. The cost of all goods including cars, apparel and food fell .4% last month.
Inventories at US businesses rose .3% in April, the smallest increase this year, as sales surged. The increase in sales pushed the inventory-sales ratio down to 1.3 months, an all-time low.
The Empire Manufacturing Index rose by the largest amount since May 2003. The reading is back to moderate levels from a weak one. The new orders component of the index rose to 8.2 from minus 8.2 a month earlier. The prices paid index fell to 30.6 from 41.6 in May.
International investors accumulated US assets at a slower-than-expected pace in April, amid evidence that hedge funds cut holdings of Treasuries. Japan, the largest foreign holder of US government securities, bought a net 5.7 billion in April.
US industrial production rose .4% in May, more than expected, helped by a rebound in demand for business equipment and consumer goods. Business investment is picking up again after a surge in 2004, when tax incentives siphoned orders from earlier this year. Production of autos and parts increased 1.2% in May after a 2.3% decline in April.
Distillate inventories were the main concern for traders. I wouldn't be surprised to see oil reverse lower later today.
Wednesday Watch
Late-Night Headlines
Bloomberg:
- Delays at the California ports of Los Angeles and Long Beach, adjacent harbors that form the busiest shipping point in the US, won't be as long as last year's waits, shipping companies and terminal operators said.
- Australia's dollar may end a three-year rally on concern exports will fall because a drought threatens 45% of the country's farmland this year.
- Shanghai's government, moving to avert summer blackouts that forced thousands of companies to slash production last year, asked factory owners to plan shutdowns and may also raise power prices.
- Acer Inc., the world's fifth-largest seller of PCs, said it expects sales to grow about 40-50% this year and next, fueled in part by market share gains from IBM.
- JPMorgan Chase agreed to pay investors $2.2 billion to resolve claims it helped Enron inflate revenue by hiding debt, in the largest fraud settlement by the company's investment bankers.
- China's industrial production grew at the fastest pace in three months, suggesting the government will further tighten investment curbs.
Dow Jones Newswires:
- Motorola plans to introduce 20 new high-speed mobile data handsets this year.
Guardian:
- Napster Inc., the online music service, will announce a worldwide joint venture with Ericsson AB for music downloads, citing Ericsson's vice-president of global services.
Nihon Keizai:
- AOC Holdings will sign an agreement today with Iraq's oil ministry to work on upgrading crude oil export infrastructure and cooperate on oil field surveys.
China Business News:
- DuPont may invest $1 billion to build a titanium dioxide plant in China's eastern province of Shandong.
The Beijing News:
- Qingdao Haier is reviewing Maytag's financial statements with a bank from Shandong province, as part of its plan to bid for the US appliance maker.
Asian Wall Street Journal:
- China will soon announce a new quota-allocation system for garment exports to curb growth in shipments.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on AVP, TRI, PRXL, HCA, CVD, EBAY and CL.
Night Trading
Asian Indices are +.25% to +.50% on average.
S&P 500 indicated -.06%.
NASDAQ 100 indicated unch.
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
BSC/2.37
TOM/.24
Upcoming Splits
CBL 2-for-1
HORC 2-for-1
ORLY 2-for-1
Economic Releases
8:30 EST:
- The Consumer Price Index for May is estimated to remain unchanged versus a .5% increase in April. The CPI Ex Food & Energy for May is estimated to rise .2% versus a .5% increase in April.
- Business Inventories for April are estimated to rise .4% versus a .4% increase in March.
- Empire Manufacturing for June is estimated at 1.0 versus a reading of -11.1.
9:00 EST:
- Net Foreign Security Purchases for April is estimated at $68.0B versus $45.7B in March.
9:15 EST:
- Industrial Production for May is estimated to rise .2% versus a .2% decline in April.
- Capacity Utilization for May is estimated to rise to 79.3% versus 79.2% in April.
1:00 EST:
- The NAHB Housing Market Index for June is estimated to rise to 71 versus a reading of 70 in May.
2:00 EST:
- Fed's Beige Book
Bloomberg:
- Delays at the California ports of Los Angeles and Long Beach, adjacent harbors that form the busiest shipping point in the US, won't be as long as last year's waits, shipping companies and terminal operators said.
- Australia's dollar may end a three-year rally on concern exports will fall because a drought threatens 45% of the country's farmland this year.
- Shanghai's government, moving to avert summer blackouts that forced thousands of companies to slash production last year, asked factory owners to plan shutdowns and may also raise power prices.
- Acer Inc., the world's fifth-largest seller of PCs, said it expects sales to grow about 40-50% this year and next, fueled in part by market share gains from IBM.
- JPMorgan Chase agreed to pay investors $2.2 billion to resolve claims it helped Enron inflate revenue by hiding debt, in the largest fraud settlement by the company's investment bankers.
- China's industrial production grew at the fastest pace in three months, suggesting the government will further tighten investment curbs.
Dow Jones Newswires:
- Motorola plans to introduce 20 new high-speed mobile data handsets this year.
Guardian:
- Napster Inc., the online music service, will announce a worldwide joint venture with Ericsson AB for music downloads, citing Ericsson's vice-president of global services.
Nihon Keizai:
- AOC Holdings will sign an agreement today with Iraq's oil ministry to work on upgrading crude oil export infrastructure and cooperate on oil field surveys.
China Business News:
- DuPont may invest $1 billion to build a titanium dioxide plant in China's eastern province of Shandong.
The Beijing News:
- Qingdao Haier is reviewing Maytag's financial statements with a bank from Shandong province, as part of its plan to bid for the US appliance maker.
Asian Wall Street Journal:
- China will soon announce a new quota-allocation system for garment exports to curb growth in shipments.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on AVP, TRI, PRXL, HCA, CVD, EBAY and CL.
Night Trading
Asian Indices are +.25% to +.50% on average.
S&P 500 indicated -.06%.
NASDAQ 100 indicated unch.
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
BSC/2.37
TOM/.24
Upcoming Splits
CBL 2-for-1
HORC 2-for-1
ORLY 2-for-1
Economic Releases
8:30 EST:
- The Consumer Price Index for May is estimated to remain unchanged versus a .5% increase in April. The CPI Ex Food & Energy for May is estimated to rise .2% versus a .5% increase in April.
- Business Inventories for April are estimated to rise .4% versus a .4% increase in March.
- Empire Manufacturing for June is estimated at 1.0 versus a reading of -11.1.
9:00 EST:
- Net Foreign Security Purchases for April is estimated at $68.0B versus $45.7B in March.
9:15 EST:
- Industrial Production for May is estimated to rise .2% versus a .2% decline in April.
- Capacity Utilization for May is estimated to rise to 79.3% versus 79.2% in April.
1:00 EST:
- The NAHB Housing Market Index for June is estimated to rise to 71 versus a reading of 70 in May.
2:00 EST:
- Fed's Beige Book
BOTTOM LINE: Asian indices are mostly higher, led by exporters in the region on optimism over sales to the US. I expect US equities to open modestly higher on better-than-expected inflation data. The Portfolio is 100% net long heading into the day.
Tuesday, June 14, 2005
Stocks Close Modestly Higher on Strength in Retail
Indices
S&P 500 1,203.91 +.26%
DJIA 10,547.57 +.24%
NASDAQ 2,069.04 unch.
Russell 2000 634.39 +.85%
DJ Wilshire 5000 11,934.14%
S&P Barra Growth 578.52 +.16%
S&P Barra Value 621.06 +.35%
Morgan Stanley Consumer 584.02 +.33%
Morgan Stanley Cyclical 727.62 +.50%
Morgan Stanley Technology 477.79 -.89%
Transports 3,510.99 -.35%
Utilities 375.56 +.30%
Put/Call .82 -6.82%
NYSE Arms .93 +52.61%
Volatility(VIX) 11.79 +1.20%
ISE Sentiment 185.00 +56.78%
US Dollar 89.30 +.39%
CRB 304.96 +.22%
Futures Spot Prices
Crude Oil 55.02 +.04%
Unleaded Gasoline 153.90 -.12%
Natural Gas 7.27 +.58%
Heating Oil 163.93 +.04%
Gold 428.70 -.14%
Base Metals 123.18 -.24%
Copper 153.15 +.33%
10-year US Treasury Yield 4.11% +.52%
Leading Sectors
Retail +2.15%
Gaming +1.79%
Homebuilders +1.36%
Lagging Sectors
Semis -1.09%
Oil Tankers -1.22%
Gold & Silver -1.49%
Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play
Afternoon Recommendations
Goldman Sachs:
- Reiterated Underperform on WTW.
Afternoon/Evening Headlines
Bloomberg:
- UK Prime Minister Tony Blair said he has a “sharp disagreement” with French President Jacques Chirac over the European Union’s budget that may be hard to resolve as EU leaders debate how the region is run and funded.
- Pfizer said its Exubera diabetes treatment, the first type of insulin to be inhaled rather than injected, was effective and didn’t harm patients’ lungs in three trials.
- President Bush called for an end to “partisan bickering” over Social Security as he extended his months-long campaign to save the system.
- Crude oil fell as ministers proposed that OPEC raise production quotas and give the group’s president the authority to further boost targets at a meeting tomorrow.
- TXU’s senior, unsecured debt rating was cut below investment grade by S&P on concern that the company is boosting its share price at the expense of creditworthiness.
- Viacom said its board approved Chairman Sumner Redstone’s plan to split into two parts, with CBS Television anchoring one business and the MTV cable networks in the second.
AP:
- The US will set new passport standards that include a digital photograph to match a person’s unique physical characteristics and an embedded identification chip.
Financial Times:
- The global music industry recovered in 2004 after a 20% decline between 1999 and 2003 due to online piracy and illegal music downloads, citing the OECD.
- European leaders must stop using anti-capitalist rhetoric if they want to avoid losing US investment.
S&P 500 1,203.91 +.26%
DJIA 10,547.57 +.24%
NASDAQ 2,069.04 unch.
Russell 2000 634.39 +.85%
DJ Wilshire 5000 11,934.14%
S&P Barra Growth 578.52 +.16%
S&P Barra Value 621.06 +.35%
Morgan Stanley Consumer 584.02 +.33%
Morgan Stanley Cyclical 727.62 +.50%
Morgan Stanley Technology 477.79 -.89%
Transports 3,510.99 -.35%
Utilities 375.56 +.30%
Put/Call .82 -6.82%
NYSE Arms .93 +52.61%
Volatility(VIX) 11.79 +1.20%
ISE Sentiment 185.00 +56.78%
US Dollar 89.30 +.39%
CRB 304.96 +.22%
Futures Spot Prices
Crude Oil 55.02 +.04%
Unleaded Gasoline 153.90 -.12%
Natural Gas 7.27 +.58%
Heating Oil 163.93 +.04%
Gold 428.70 -.14%
Base Metals 123.18 -.24%
Copper 153.15 +.33%
10-year US Treasury Yield 4.11% +.52%
Leading Sectors
Retail +2.15%
Gaming +1.79%
Homebuilders +1.36%
Lagging Sectors
Semis -1.09%
Oil Tankers -1.22%
Gold & Silver -1.49%
Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play
Afternoon Recommendations
Goldman Sachs:
- Reiterated Underperform on WTW.
Afternoon/Evening Headlines
Bloomberg:
- UK Prime Minister Tony Blair said he has a “sharp disagreement” with French President Jacques Chirac over the European Union’s budget that may be hard to resolve as EU leaders debate how the region is run and funded.
- Pfizer said its Exubera diabetes treatment, the first type of insulin to be inhaled rather than injected, was effective and didn’t harm patients’ lungs in three trials.
- President Bush called for an end to “partisan bickering” over Social Security as he extended his months-long campaign to save the system.
- Crude oil fell as ministers proposed that OPEC raise production quotas and give the group’s president the authority to further boost targets at a meeting tomorrow.
- TXU’s senior, unsecured debt rating was cut below investment grade by S&P on concern that the company is boosting its share price at the expense of creditworthiness.
- Viacom said its board approved Chairman Sumner Redstone’s plan to split into two parts, with CBS Television anchoring one business and the MTV cable networks in the second.
AP:
- The US will set new passport standards that include a digital photograph to match a person’s unique physical characteristics and an embedded identification chip.
Financial Times:
- The global music industry recovered in 2004 after a 20% decline between 1999 and 2003 due to online piracy and illegal music downloads, citing the OECD.
- European leaders must stop using anti-capitalist rhetoric if they want to avoid losing US investment.
BOTTOM LINE: The Portfolio finished slightly higher on gains in my Retail, Networking longs and Oil Tanker shorts. I did not trade in the afternoon, thus leaving the Portfolio 100% net long. The tone of the market was modestly positive today as the advance/decline finished higher, sector performance was mixed and volume was very light. Measures of investor anxiety were mixed into the close. Overall, today’s market action was neutral considering the decline in energy prices and PPI decline. I expect the CPI to come in below consensus expectations tomorrow. Industrial Production may meet estimates, while I expect Empire Manufacturing to fall below expectations. The 10-year T-Note yield has recently bounced from around 3.8% to 4.12%. I would be surprised to see rates above 4.2%. I may look to add a long position in TLT on any further pullback.
Stocks Mixed Mid-day as Energy Prices Fall
Indices
S&P 500 1,204.07 +.24%
DJIA 10,547.27 +.23%
NASDAQ 2,066.21 -.18%
Russell 2000 631.40 +.38%
DJ Wilshire 5000 11,916.18 +.15%
S&P Barra Growth 578.02 +.09%
S&P Barra Value 620.40 +.25%
Morgan Stanley Consumer 583.54 +.24%
Morgan Stanley Cyclical 726.85 +.40%
Morgan Stanley Technology 477.36 -.98%
Transports 3,513.34 -.29%
Utilities 375.39 +.25%
Put/Call .84 -4.55%
NYSE Arms .70 +15.78%
Volatility(VIX) 11.94 +2.49%
ISE Sentiment 182.00 +54.24%
US Dollar 89.16 +.24%
CRB 305.01 +.24%
Futures Spot Prices
Crude Oil 55.30 -.58%
Unleaded Gasoline 154.80 -.90%
Natural Gas 7.26 unch.
Heating Oil 165.40 -.55%
Gold 429.30 -.42%
Base Metals 123.18 -.24%
Copper 152.65 -.84%
10-year US Treasury Yield 4.11% +.47%
Leading Sectors
Retail +2.01%
Gaming +1.74%
HMOs +1.27%
Lagging Sectors
Semis -.90%
Oil Tankers -.95%
Gold & Silver -1.76%
S&P 500 1,204.07 +.24%
DJIA 10,547.27 +.23%
NASDAQ 2,066.21 -.18%
Russell 2000 631.40 +.38%
DJ Wilshire 5000 11,916.18 +.15%
S&P Barra Growth 578.02 +.09%
S&P Barra Value 620.40 +.25%
Morgan Stanley Consumer 583.54 +.24%
Morgan Stanley Cyclical 726.85 +.40%
Morgan Stanley Technology 477.36 -.98%
Transports 3,513.34 -.29%
Utilities 375.39 +.25%
Put/Call .84 -4.55%
NYSE Arms .70 +15.78%
Volatility(VIX) 11.94 +2.49%
ISE Sentiment 182.00 +54.24%
US Dollar 89.16 +.24%
CRB 305.01 +.24%
Futures Spot Prices
Crude Oil 55.30 -.58%
Unleaded Gasoline 154.80 -.90%
Natural Gas 7.26 unch.
Heating Oil 165.40 -.55%
Gold 429.30 -.42%
Base Metals 123.18 -.24%
Copper 152.65 -.84%
10-year US Treasury Yield 4.11% +.47%
Leading Sectors
Retail +2.01%
Gaming +1.74%
HMOs +1.27%
Lagging Sectors
Semis -.90%
Oil Tankers -.95%
Gold & Silver -1.76%
BOTTOM LINE: The Portfolio is modestly higher mid-day on gains in my Oil Tanker shorts and Networking/Retail longs. I added a few new longs from various sectors this morning, thus leaving the Portfolio 100% net long. One of my new longs is HET and I am using a $71 stop-loss on this position. The tone of the market is modestly positive as the advance/decline line is slightly higher, sector performance is mixed and volume is very light. Measures of investor anxiety are mostly lower. Today’s overall market action is neutral, considering the decline in the PPI and energy prices. Several Fed members have stated that the Fed can continue raising rates at a "measured" pace. However, every time they make the caveat that it "will depend on the data." I continue to expect a 25-basis-point hike and the removal of the word "measured" from the policy statement at the June 30 meeting, thus paving the way for a pause. While I am less confident in this prediction than a few weeks ago, upcoming data should result in increased expectations for this outcome. I expect US stocks to trade mixed-to-higher into the close on lower energy prices and stabilizing long-term rates.
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